Communications World International, Inc.
Form 10-SB
Exhibit 2 (c)
ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of the
31st day of December, 1998, by and among COMMUNICATIONS WORLD INTERNATIONAL,
INC., a Colorado corporation ("CommWorld"), COMMWORLD-NATIONAL CAPITOL AREA,
INC., a Virginia corporation ("Seller"), XXX XXXXXX ("Xxxxxx"), and ALPHA
COMMUNICATIONS & TECHNOLOGIES, INC., a Virginia corporation ("Purchaser").
R E C I T A L S:
- - - - - - - -
WHEREAS, Seller desires to transfer and sell and Purchaser desires to
purchase and acquire, substantially all of Seller's assets relating to the
operation of Seller's interconnect business operated in Alexandria, Virginia
(the "Business");
WHEREAS, Seller is the wholly-owned subsidiary of CommWorld and Xxxxxx is
the sole director, officer and shareholder of Purchaser; and
WHEREAS, Seller, CommWorld, Xxxxxx and Purchaser desire to enter into this
Agreement in order to set forth the terms and conditions of such transaction;
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
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1.01 Purchase And Sale. Seller hereby agrees to sell, assign, transfer
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and convey to Purchaser, and Purchaser hereby agrees to purchase, accept and
acquire from Seller, subject to the terms and conditions contained herein, the
following described real and personal property (collectively referred to as the
"Acquired Assets"):
(a) Real Property Lease. All of Seller's right, title and interest in
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and to the real property lease, including, without limitation, all leasehold
improvements and security deposits with respect thereto, listed and described on
Schedule 1.01(a) attached hereto (the "Real Property Lease").
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(b) Books, Records and Written Materials. All books of account,
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records, files, invoices, customer lists, supplier lists, promotional and
advertising materials, catalogs, brochures, manuals and handbooks and other
similar data reduced to writing or other storage media, but only to the extent
that same are used by Seller exclusively in connection with the
ASSET PURCHASE AGREEMENT - Page 1
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operations of the Business and located within the leased premises that are the
subject of the Real Property Lease (the "Leased Premises") (the "Books and
Records").
(c) Personal Property Leases. All of Seller's right, title and
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interest in and to those personal property leases described on Schedule 1.01(c)
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attached hereto (the "Personal Property Leases").
(d) Acquired Contracts. All rights and benefits of Seller in, to or
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under those agreements, contracts and purchase orders listed or described on
Schedule 1.01(d) attached hereto (the "Acquired Contracts").
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(e) Personal Property. All of Seller's right, title and interest in
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the tools, equipment, trade fixtures, furniture and other personal property
located within the Leased Premises (the "Personal Property").
(f) Software. All of Seller's right, title and interest in the
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software used by Seller exclusively with respect to the Business, as listed or
described on Schedule 1.01(f), attached hereto (the "Software").
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(g) Inventory. FORTY-FIVE THOUSAND AND NO/100 DOLLARS ($45,000.00) of
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inventory selected by Purchaser (based upon the book value thereof) (the "Base
Inventory").
1.02 Retained Assets. Notwithstanding anything contained hereunto the
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contrary, Seller shall, and hereby does, expressly retain all of Seller's right,
title and interest in and to all of Seller's assets, properties, rights and
interests, other than the Acquired Assets expressly and specifically described
above (the "Retained Assets"), including, without, limitation, Seller's: (a)
accounts receivables, (b) inventory not selected by Purchaser pursuant to
Section 1.01(g) or Section 7.08, (c) certain business records; (d) all of
Seller's rights to receive commissions and payments from customer accounts; (e)
all of Seller's right, title and interest in the service marks and related
logos, whether or not registered, and all goodwill associated therewith, used in
connection with this Business; (f) all of Seller's right, title and interest in
and to all of Seller's cash and cash equivalents in place at Closing; and (g)
any liabilities of the Alexandria Business not specifically assumed by
Purchaser.
1.03 Assignability and Consents. To the extent that the consummation of
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the transactions contemplated herein or the assignment of any of the Acquired
Contracts, the Real Property Lease or the Personal Property Leases shall require
the consent or waiver of any third party or any federal, state, county, parish,
local or foreign governmental entity or municipality or subdivision thereof or
any authority, arbitrator, department, commission, board, bureau, body, agency,
court or instrumentality thereof (each, a "Governmental Authority"), Seller
shall use all reasonable efforts to obtain the consent or waiver of each such
third party or Governmental Authority (each, a "Required Consent") to the
assignment thereof on or prior to the Closing Date, but the failure of Seller to
obtain any Required Consent, other than the Required Consent with
ASSET PURCHASE AGREEMENT - Page 2
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respect to the assignment of the Real Property Lease, shall not enable Purchaser
to terminate this Agreement.
1.04 Assumed Liabilities and Obligations. On the Closing Date, Purchaser
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shall assume and agrees to pay, perform and discharge as and when due, all of
the obligations and liabilities of Seller based upon events occurring on or
after the Closing Date under (i) the Real Property Lease, (ii) the Personal
Property Leases, and (iii) the Acquired Contracts. All of the foregoing to be
assumed by Purchaser hereunder are collectively referred to as the "Assumed
Liabilities."
1.05 Retained Liabilities and Obligations. Notwithstanding any other
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provision of this Agreement or doctrine of law to the contrary, Seller shall
retain, and Purchaser shall not assume or be liable with respect to, any
liability or obligation of Seller, except for the Assumed Liabilities. All of
the foregoing obligations and liabilities to be retained by Seller hereunder are
collectively referred to as the "Retained Liabilities."
1.06 Schedules. All references in this Agreement to "Schedules" shall
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mean the disclosure Schedules identified in this Agreement, which are
incorporated herein and shall be deemed a part of this Agreement for all
purposes. The disclosure of an item in a Schedule or under a heading in a
Schedule corresponding to a particular section or subsection of this Agreement
shall also be deemed a disclosure under (i) any other item of such Schedule,
(ii) any other Schedules, and (iii) any other section or subsection thereof.
Provided Seller complies with Section 5.01 hereof, Seller shall be permitted to
amend and/or supplement the Schedules as Seller deems necessary. Seller shall
provide written notice (including a copy of the amended Schedule as affected
thereby) of any such change as soon as practicable after Seller obtains actual
knowledge of any such event. In the event Seller notifies Purchaser in writing
that an amendment and/or supplement to a Schedule is necessary, (a) Purchaser
shall have the termination rights provided in Section 10.01(b) hereof, and (b)
provided that Purchaser fails to exercise such termination rights within three
(3) days after Purchaser's receipt of such notice, Purchaser's termination
rights with respect to such Schedule amendment and/or supplement shall terminate
and Purchaser shall be deemed to have irrevocably accepted same.
ARTICLE II
PURCHASE PRICE
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2.01 Purchase Price. In consideration for the Acquired Assets, at
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Closing, Purchaser shall (a) assume the Assumed Liabilities, and (b) pay to
Seller a total of FIFTY SEVEN THOUSAND FIVE HUNDRED SIXTY SEVEN AND NO/100
DOLLARS ($57,567.00) (the "Purchase Price"). The Purchase Price shall consist
of (i) 65,134 shares of Series C Preferred Stock, $1.00 par value per share, of
CommWorld, including any accumulated dividends thereon (the "Series C Stock"),
standing in the name of Xxxxxx on the books of CommWorld and represented by
stock certificate numbers 8 and 9 (for purposes of the Agreement the Series C
Stock shall be valued at $0.50 per share); and (ii) a promissory note in the
original principal amount of TWENTY-FIVE THOUSAND AND NO/100 DOLLARS
($25,000.00) in the form of Exhibit "A" attached hereto (the "Note"). In
addition, Purchaser shall pay to Seller on the
ASSET PURCHASE AGREEMENT - Page 3
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Closing Date cash in the amount of $5,000.00 as reimbursement for Seller's
office lease security deposit.
2.02 Removal of Inventory. Seller and CommWorld shall be permitted, for a
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period of thirty (30) days after Closing, to remove from the Leased Premises any
inventory of Seller located in the Leased Premises that is not selected by
Purchaser. Upon prior notice to Purchaser, Purchaser shall provide Seller and
CommWorld with reasonable access to the Leased Premises for the purposes of
removing said inventory. Purchaser shall use reasonable efforts to safeguard
Seller's inventory until it is removed by Seller and to keep Seller's inventory
segregated from Purchaser's inventory.
2.03 Allocation of Purchase Price. The Purchase Price and the Assumed
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Liabilities represent the amount agreed upon by the parties to be the value of
the Acquired Assets, it being further agreed that the Purchase Price and the
Assumed Liabilities shall be allocated among the Acquired Assets as the parties
may mutually agree in writing. Purchaser and Seller shall enter into such a
mutual written agreement within a reasonable period of time after the Closing
Date and (i) report the purchase and sale of the Acquired Assets in accordance
with such mutually agreed allocation, if any, for all federal, foreign, state
and local tax purposes, and (ii) file Internal Revenue Service Form 8594
pursuant to Section 1060 of the Internal Revenue Code of 1986, as amended. If
Purchaser and Seller do not enter into such a mutual written agreement within
ninety (90) days after the Closing Date, both Purchaser and Seller shall have
complete discretion in reporting such allocation.
ARTICLE III
CLOSING
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3.01 Closing. The closing of the transactions contemplated in this
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Agreement ("Closing") shall occur at the offices of CommWorld located at 0000
Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000, on December 31, 1998, or
such other date as the parties shall mutually agree (the "Closing Date").
Notwithstanding anything contained herein to the contrary, if the conditions to
Closing contemplated in Article VIII hereof have not occurred on or prior to the
scheduled Closing Date, either party shall have the right to extend the Closing
Date for a period not to exceed seven (7) days. Closing shall consist of the
delivery of the documents referenced in Section 3.02 below and the payment of
the Purchase Price as provided in Section 2.01 above, together with the
performance of the other matters required to occur at Closing pursuant to this
Agreement.
3.02 Closing Documents. At Closing, Seller, CommWorld, Xxxxxx and
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Purchaser, as appropriate, shall deliver, or cause to be delivered, the
following items:
(a) Promissory Note. Purchaser shall execute and deliver the Note in
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the original principal amount of $25,000.00 in the form attached hereto as
Exhibit "A";
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ASSET PURCHASE AGREEMENT - Page 4
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(b) Assignments. Purchaser and Seller shall each execute and deliver
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the Assignment of Leasehold Interest in the form attached hereto as Exhibit "B",
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with respect to the Real Property Lease;
(c) Xxxx of Sale and Assignment. Seller shall execute and deliver the
Xxxx of Sale and Assignment in the form attached hereto as Exhibit "C";
(d) Lien Releases. Seller shall deliver such lien releases as shall
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be necessary for Purchaser to acquire the Acquired Assets free and clear of all
liens, claims and encumbrances, except liens for 1998 personal property taxes
not yet delinquent and any contractual or statutory landlord's liens under, or
pursuant to, the Real Property Lease;
(e) Undertaking and Assumption Agreement. Purchaser shall execute and
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deliver the Undertaking and Assumption Agreement in the form attached hereto as
Exhibit "D";
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(f) Mutual Release. Xxxxxx and Seller shall execute and deliver the
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Mutual Release in the form attached hereto as Exhibit "E".
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(g) Franchise Agreement. Purchaser and CommWorld shall execute and
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deliver the Franchise Agreement in the form attached hereto as Exhibit "F".
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(h) Security Agreement. Purchaser and CommWorld shall execute and
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deliver the Security Agreement in the form attached hereto as Exhibit "G";
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(i) Officer's Certificates. Each of Seller and Purchaser shall
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deliver a fully executed Officer's Certificate, executed by a senior executive
officer and dated the Closing Date, confirming the matters expressed in Section
8.01(a) and Section 8.02(a), respectively;
(j) Certificate of Authorities. Each of Seller and Purchaser shall
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deliver (i) a certificate from the appropriate Governmental Authorities, dated
as of a date not more than seven (7) days prior to the Closing Date, attesting
to their certificate or articles of incorporation, good standing and existence,
(ii) a copy, certified by its Secretary, of the Bylaws, as amended and in effect
on the Closing Date, and resolutions duly adopted by the Board of Directors,
authorizing the transactions contemplated in this Agreement; and
(k) Other Documents. Seller shall deliver such other documents,
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certificates of xxxxxx, endorsements, assignments and instruments in form and
substance reasonably satisfactory to Purchaser and its counsel, as shall be
necessary, advisable or desirable to vest in Purchaser title to the Acquired
Assets.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
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4.01 Representations and Warranties of Seller. Seller hereby represents
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and warrants to Purchaser that the following are true and correct as of Closing:
ASSET PURCHASE AGREEMENT - Page 5
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(a) Corporate Status. Seller is a corporation duly organized, validly
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existing and in good standing under the laws of the State of Virginia.
(b) Authority. Seller has the requisite corporate power and authority
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to enter into this Agreement, and the other documents and agreements to be
entered into hereunder by Seller, and to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement by Seller, and the
other documents and agreements to be executed and delivered hereunder by Seller,
the performance by Seller of its obligations hereunder and thereunder and the
consummation by Seller of the transactions contemplated herein and therein have
been duly authorized by the board of directors of Seller, and no other corporate
proceedings on the part of the Seller are necessary to authorize the execution
and delivery of this Agreement, and the other documents and agreements to be
executed and delivered hereunder, the performance by the Seller of its
obligations hereunder and thereunder, and the consummation by Seller of the
transaction contemplated hereby and thereby. This Agreement, and the other
documents and agreements to be executed and delivered hereunder, have been, or
will be at Closing, duly executed and delivered by Seller and constitute the
valid and binding obligations of Seller, enforceable in accordance with their
respective terms.
(c) No Impediment to Performance. Neither the execution nor the
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performance of this Agreement by Seller, or the other documents and agreements
to be executed and performed by Seller hereunder, will conflict with or result
in any default under or in any violation of any provision of (i) the charter or
bylaws of Seller, (ii) any agreement, mortgage, contract, or other instrument to
which Seller is a party or by which Seller or any of its properties (including,
without limitation, the Acquired Assets) is bound except for mortgages or
security instruments which will be released at, or prior to, Closing, or (iii)
any applicable statute, regulation, ordinance, judgment, order or decree to
which Seller or any of its properties (including, without limitation, the
Acquired Assets) are subject.
(d) Title to Assets. Seller has good title to the Personal Property,
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free and clear of liens, security interests and encumbrances, except liens for
1998 personal property taxes not yet delinquent and any contractual or statutory
landlord's liens under, or pursuant to, the Real Property Lease.
(e) Compliance with Laws. Seller is in compliance in all material
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respects with all applicable federal, state or local laws, statutes, ordinances,
federal, state or local laws, statutes, ordinances, regulations, orders and
other requirements of any Governmental Authority having jurisdiction over the
Acquired Assets or the conduct of the Business.
(f) Limited Warranty; Disclaimer Of Certain Warranties And
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Representations. NOTWITHSTANDING ANY PROVISION TO THE CONTRARY IN THIS
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AGREEMENT, SELLER MAKES NO REPRESENTATION WHATSOEVER AS TO THE PHYSICAL
CONDITION OF THE ACQUIRED ASSETS. PURCHASER AGREES THAT AS BETWEEN PURCHASER AND
SELLER, WITH RESPECT TO THE ACQUIRED ASSETS, PURCHASER SHALL ACCEPT THE ACQUIRED
ASSETS
ASSET PURCHASE AGREEMENT - Page 6
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IN ITS "AS IS" CONDITION, WITH ALL FAULTS, AND SELLER EXPRESSLY DISCLAIMS ANY
WARRANTY OF MERCHANTABILTY OR FITNESS FOR ANY INTENDED OR PARTICULAR PURPOSE.
PURCHASER HEREBY WAIVES PURCHASER'S RIGHT TO RELY ON ANY REPRESENTATION,
WARRANTY, OR ASSURANCE HEREAFTER OR HERETOFORE MADE BY SELLER OR SELLER'S
EMPLOYEES. PURCHASER AGREES AND CONFIRMS THAT NEITHER SELLER NOR ANY OF SELLER'S
OFFICERS, EMPLOYEES AND/OR AGENTS HAVE MADE AFFIRMATIONS OF FACT OR PROMISES
RELATING TO THE ACQUIRED ASSETS.
4.02 Representations and Warranties of Purchaser. Purchaser hereby
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represents and warrants to Seller that the following are true and correct as of
Closing:
(a) Corporate Status. Purchaser is a corporation duly organized,
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validly existing and in good standing under the laws of the State of Virginia.
(b) Authority. Purchaser has the requisite corporate power and
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authority to enter into this Agreement, and the other documents and agreements
to be entered into hereunder by Purchaser, and to carry out its obligations
hereunder and thereunder. The execution and delivery of this Agreement by
Purchaser, and the other documents and agreements to be executed and delivered
hereunder by Purchaser, the performance by Purchaser of its obligations
hereunder and thereunder and the consummation by Purchaser of the transactions
contemplated herein and therein have been duly authorized by the board of
directors of Purchaser, and no other corporate proceedings on the part of the
Purchaser are necessary to authorize the execution and delivery of this
Agreement, and the other documents and agreements to be executed and delivered
hereunder, the performance by the Purchaser of its obligations hereunder and
thereunder, and the consummation by Purchaser of the transaction contemplated
hereby and thereby. This Agreement, and the other documents and agreements to be
executed and delivered hereunder, have been, or will be at Closing, duly
executed and delivered by Purchaser and constitute the valid and binding
obligations of Purchaser, enforceable in accordance with their respective terms.
(c) No Impediment to Performance. Neither the execution nor the
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performance of this Agreement by Purchaser, or the other documents and
agreements to be executed and performed by Purchaser hereunder, will conflict
with or result in any default under or in any violation of any provision of (i)
the articles or bylaws of Purchaser, (ii) any agreement, mortgage, contract or
other instrument to which Purchaser is a party or by which Purchaser or any of
its properties is bound except for mortgages or security instruments which will
be released at, or prior to, Closing, or (iii) any applicable statute,
regulation, ordinance, judgment, order or decree to which Purchaser or any of
its properties are subject.
(d) Compliance with Laws. Purchaser is in compliance in all material
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respects with all applicable federal, state or local laws, statutes, ordinances,
federal, state or local laws, statutes, ordinances, regulations, orders and
other requirements of any Governmental Authority having jurisdiction over the
conduct of Purchaser's business.
ASSET PURCHASE AGREEMENT - Page 7
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ARTICLE V
COVENANTS OF SELLER
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Seller hereby covenants to Purchaser that:
5.01 Conduct of the Business Pending Closing. Seller covenants and agrees
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that, prior to the earlier of (i) the Closing, or (ii) the termination of this
Agreement in accordance with the provisions hereof, except as otherwise agreed
to in writing by Purchaser, or otherwise expressly contemplated by this
Agreement, Seller will cause the Business to be conducted in the ordinary course
of business and consistent with past practice.
5.02 Reasonable Efforts. Seller agrees that prior to the Closing it will
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use all reasonable efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement; provided,
however, that, Seller shall not be required (i) to incur any expense (except
that Seller shall incur those fees and expenses, including fees of legal,
accounting and other advisors, and take such other actions which are normal and
customary for transactions of the type contemplated by this Agreement or are
otherwise provided to be taken by Seller pursuant to the terms of this
Agreement) or further obligation, (ii) to agree to any condition or obligation
affecting the business or assets of Seller or any of its affiliates, other than
conditions or obligations that become effective only upon consummation of the
transactions contemplated by this Agreement, or (iii) to agree to the amendment
or other modification of any terms of any material agreement constituting or
relating to any of the Acquired Assets, other than amendments or modifications
that become effective only upon consummation of the transactions contemplated by
this Agreement and which are consented to in writing by Purchaser.
ARTICLE VI
COVENANTS OF PURCHASER
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6.01 Maintenance of Records. Purchaser shall keep and maintain all
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documents and records relating to the Business acquired pursuant to the
transactions contemplated in this Agreement for a period of three (3) years
after Closing. Upon request, Purchaser shall make such documents and records
available to Seller and Seller's accountants, counsel and other designated
representatives for inspection and copying, at Seller's expense, during regular
business hours. Should Purchaser sell or otherwise dispose of all or
substantially all of the Business, the acquiror(s) shall be specifically
required to assume the obligations of this Section 6.01 as a part of any such
acquisition.
6.02 Reasonable Efforts. Purchaser agrees that prior to the Closing it
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will use all reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement;
provided, however, that, Purchaser shall not be required to (i) incur any
expense (except that Purchaser shall incur those fees and expenses, including
fees of legal, accounting and other advisors, and take such other actions which
are normal and customary for transactions of the type contemplated by this
Agreement or otherwise provided to
ASSET PURCHASE AGREEMENT - Page 8
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be taken by Purchaser pursuant to this Agreement) or further obligation, (ii) to
agree to any condition or obligation affecting the Business or the Acquired
Assets or Purchaser's business or assets that adversely affects Purchaser's
economic position with respect thereto or the business or assets of Purchaser or
any of its affiliates, or (iii) to the amendment or other modification of any
terms of any material agreement constituting or relating to any of the Acquired
Assets that adversely affects Purchaser's economic position with respect
thereto.
6.03 Collection of Receivables. Purchaser agrees that after Closing it
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will use all reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary to assist and cooperate with
Seller in the collection of all accounts receivable of the Business existing at
Closing.
ARTICLE VII
ADDITIONAL AGREEMENTS OF PURCHASER AND SELLER
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7.01 Employees and Subagents. As of the Closing Date those employees and
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independent contractors who work and provide services exclusively to the
Business (including Xxxxxx) and not to any of the businesses retained by Seller,
shall terminate their relationship with Seller. Seller shall use its reasonable
efforts, upon Purchaser's request, to ensure that such persons and entities
continue their relationship with the Business and Purchaser. Xxxxxx'x
employment agreement with Seller or CommWorld shall terminate at Closing.
7.02 Products. For a period of two (2) years after Closing, CommWorld
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will sell inventory to Purchaser at CommWorld's cost plus a five percent (5%)
royalty; provided, however, that such sales of product shall remain subject to
CommWorld's standard terms and conditions of sale (including credit approval),
as same may be amended from time to time by CommWorld. At the end of such two
(2) year period, the royalty will be determined by CommWorld on the basis of
Purchaser's purchase volumes.
7.03 Prorations. Base and percentage rents, insurance premiums, common
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area maintenance expenses, and ad valorem taxes (the "Prorated Expenses") for
the current year shall be prorated at Closing effective as of the date of
Closing. If Closing shall occur before the amount of any Prorated Expense is
fixed for the then current year, the apportionment of the Prorated Expense shall
be upon the basis of the Prorated Expense for the preceding year (applied to the
latest assessed valuation, if appropriate), but any difference in actual and
estimated Prorated Expenses for the year of sale actually paid by Purchaser
shall be adjusted between the parties upon receipt of written evidence of the
payment thereof. This Section 7.03 shall survive the Closing.
7.04 Brokers. Each party represents and warrants to the other party that
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such party has had no dealings with any person, firm, agent or finder in
connection with the negotiation of this Agreement and/or the consummation of the
purchase and sale contemplated herein, and no broker, agent, person, firm or
entity is entitled to any commission or finder's fee in connection with this
transaction as the result of any dealings or acts of such party. Each party
hereby agrees to indemnify, defend, protect and hold the other party harmless
from and against any costs,
ASSET PURCHASE AGREEMENT - Page 9
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expenses or liability for compensation, commission, fee, or charges which may be
claimed by any broker, agent, finder or other similar party by reason of any
dealings or act of the indemnifying party. This Section 7.04 shall survive the
Closing.
7.05 Casualty Loss. All risk of loss to the Acquired Assets shall remain
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upon Seller prior to Closing. If, prior to Closing, the Acquired Assets are
damaged or destroyed by fire or other casualty, to a material extent, Purchaser
may either terminate this Agreement by written notice to Seller or close. If
Purchaser elects to close, despite said material damage or destruction, there
shall be no reduction in the Purchase Price, and Seller shall assign to
Purchaser Seller's right, title and interest in and to all insurance proceeds
resulting or to result from said damage or destruction. Unless otherwise
provided herein, the term "material" shall mean damage or destruction, the cost
of repairing which exceeds ten percent (10%) of the Purchase Price. If, prior
to Closing, the Acquired Assets are damaged or destroyed by fire or other
casualty to less than a material extent, Seller shall either repair the same
prior to Closing, at Seller's expense, or reimburse Purchaser for the cost of
repairing the same by assigning any insurance proceeds resulting therefrom
(which insurance proceeds shall be sufficient to repair such damage) to
Purchaser or by allowing Purchaser to deduct such cost from the consideration
payable to Seller at Closing. If the extent of damage or the amount of
insurance proceeds to be made available is not able to be determined prior to
Closing, or the repairs are not able to be completed prior to said date, either
party, by written notice to the other, may postpone the date of Closing to such
date as shall be designated in such notice, but not more than thirty (30) days
after Closing.
7.06 Cancellation of Services. On the Closing Date, Seller will cancel
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all services of the Business, including, without limitation, telephone,
utilities, and pager services. Purchaser will be responsible for obtaining all
of the services in its name and transferring all telephone numbers to an account
established by Purchaser and Seller shall assist and cooperate in connection
therewith.
7.07 Purchase of Additional Inventory. On the Closing Date, Purchaser
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shall have the right to select and make purchases of inventory of the Business
in addition to the Base Inventory based upon the book value of such inventory
("Additional Inventory"). Purchaser shall execute a promissory note payable in
full no later than six (6) months of the Closing Date in the amount of the book
value of any Additional Inventory agreed to be purchased by Purchaser.
ARTICLE VIII
CONDITIONS OF CLOSING
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8.01 Obligation of Purchaser. The obligation of Purchaser to consummate
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the purchase and sale contemplated by the provisions of this Agreement shall be
subject to the fulfillment on or prior to the Closing Date of the following
conditions (any of which may be waived in writing, in whole or part, by
Purchaser):
(a) Representations and Warranties; Performance. The representations
and warranties of Seller set forth in this Agreement shall be true, correct and
complete when made on the date hereof, and, except for such changes in the
Schedules as are expressly permitted by
ASSET PURCHASE AGREEMENT - Page 10
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Section 1.06 hereof, as of the Closing Date (as though such representations and
warranties were made anew at and as of such date), except with respect to the
effect of transactions specifically permitted by the provisions of this
Agreement. Seller shall have duly performed in all material respects all
agreements and covenants herein required to be performed by Seller on or before
the Closing Date.
(b) Closing Documents. Seller shall deliver, or cause to be delivered,
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all of the documents required to be delivered pursuant to Section 3.02 above.
(c) Consents and Approvals. Except as otherwise provided in Section
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1.03 above, all material consents, approvals and novations, in form and
substance reasonably satisfactory to Purchaser, of third parties and each
Governmental Authority that shall be (i) required to consummate the transactions
contemplated hereby, or (ii) reasonably necessary to permit Purchaser to operate
the Business, shall have been obtained.
8.02 Obligation of Seller. The obligation of Seller to consummate the
--------------------
purchase and sale contemplated by the provisions of this Agreement shall be
subject to the fulfillment on or prior to the Closing Date of the following
conditions (any of which may be waived in writing, in whole or in part by
Seller):
(a) Representations and Warranties; Performance. The representations
-------------------------------------------
and warranties of Purchaser set forth in this Agreement shall be true, correct
and complete when made on the date hereof, and as of the Closing Date (as though
such representations and warranties were made anew at and as of such date),
except with respect to the effect of transactions specifically permitted by the
provisions of this Agreement. Purchaser shall have duly performed in all
material respects all agreements and covenants herein required to be performed
by Purchaser on or before the Closing Date.
(b) Consents and Approvals. Except as otherwise provided in Section
----------------------
1.03 above, all material consents, approvals and novations, in form and
substance reasonably satisfactory to Seller of third parties and each
governmental authority that shall be (i) required to consummate the transactions
contemplated hereby, or reasonably necessary to permit Purchaser to operate the
Business hall have been obtained.
(c) Closing Documents. Purchaser shall have delivered, or caused to
-----------------
be delivered, all of the documents required to be delivered pursuant to Section
3.02 above.
ARTICLE IX
INDEMNIFICATION
---------------
9.01 General Indemnification. Purchaser hereby agrees to indemnify and
-----------------------
save harmless Seller from any and all losses, claims, demands, actions, causes
of action, suits, proceedings, damages, liabilities, costs, and expenses,
including attorney's and other professional fees, of every nature and kind
whatsoever (collectively, "Losses") occurring subsequent to 11:59 p.m.,
Alexandria time, on the date of Closing; which may arise or exist with respect
to (i) any
ASSET PURCHASE AGREEMENT - Page 11
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failure of Purchaser to assume, pay, perform and discharge the Assumed
Liabilities, (ii) Purchaser's breach of any of Purchaser's representations,
warranties, obligations, covenants or agreements contained in this Agreement,
(iii) any action, claim, judicial or other proceeding asserted by any third
party against Seller with respect to any of the Assumed Liabilities, or (iv) any
liabilities or obligations accruing by Purchaser as a result of the operation of
the Business by Purchaser. Seller hereby agrees to indemnify and save harmless
Purchaser from any and all Losses occurring at or prior to 11:59 p.m.,
Alexandria time, on the date of Closing; which may arise or exist with respect
to (i) any failure of Seller to assume, pay, perform and discharge the Retained
Liabilities, (ii) Seller's breach of any of Seller's representations,
warranties, covenants or agreements contained in this Agreement, (iii) any
action, claim, judicial or other proceeding asserted by any third party against
Seller with respect to any of the Retained Liabilities, or (iv) any liabilities
or obligations accruing after the Closing Date as a result of the operation of
the Business by Seller.
9.02 Notification of Claim. Each indemnified party will promptly, and
---------------------
within fifteen (15) days (except in the case of litigation where such notice
shall be required within five (5) days) after notice to such indemnified party
of any claim as to which it asserts a claim for indemnification, notify the
indemnifying party of such claim and the amount thereof; provided, however, if
the indemnified party fails to give such notification the indemnifying party
shall be entitled to offset the incremental losses incurred by the indemnifying
party as a result of the failure by the indemnified party to give such notice
against Losses the indemnifying party would otherwise be required to pay.
During such fifteen (15) day notice period, without the indemnifying party's
prior written consent, the indemnified party shall not pay, settle or compromise
any such claim; provided, however, if the indemnified party pays, settles or
compromises any such claim, or any such litigation or proceeding during such
fifteen (15) day period, the indemnifying party shall be entitled to offset the
incremental losses incurred by the indemnifying party as a result of the
indemnifying party paying, settling or compromising any such claim, litigation
or proceeding during such fifteen (15) day period. Notice to an indemnified
party for the purpose of the preceding sentence shall mean the service of
process on such party in any legal action, receipt of any claim in writing or
similar form of actual written notice.
9.03 Defense of Claim. If, with respect to any claim which may give rise
----------------
to indemnity under this Agreement resulting from or arising out of any claim or
legal proceeding by a person other than the indemnified party (a "Third-Party
Claim"), the indemnifying party acknowledges in writing to the indemnified party
the indemnifying party's obligation to indemnify the indemnified party pursuant
hereto, the indemnifying party, at its sole cost and expense, may, upon written
notice to the indemnified party, assume the defense of such claim or related
legal proceeding. If the indemnifying party so assumes the defense of any such
claim or legal proceeding, the indemnifying party shall select counsel
reasonably acceptable to the indemnified party to conduct the defense of such
claim or legal proceeding and, at the sole cost and expense of the indemnifying
party, shall take all steps necessary in the defense or settlement thereof,
provided that the indemnifying party shall not expressly consent to a settlement
or compromise of, or expressly consent to the entry of any judgment arising
from, any such claim or legal proceeding without the prior written consent (not
to be unreasonably withheld) of the
ASSET PURCHASE AGREEMENT - Page 12
------------------------
indemnified party (it being understood that in considering whether or not to
give such consent the indemnified party is entitled to assess the implications
of such settlement, compromise or judgment on the future conduct of the
indemnified party's business activities). The indemnified party shall be
entitled to participate in (but not control) the defense of any such action,
with its own counsel and at its own expense. Whether or not the indemnifying
party chooses to defend any claim or litigation for which the indemnified party
may be entitled to indemnification hereunder, each of the parties hereto shall
cooperate in the defense thereof.
If, with respect to a Third-Party Claim, the indemnifying party
neither acknowledges nor disclaims in writing, or the indemnifying party
disclaims in writing to the indemnified party, the indemnifying party's
obligation to indemnify the indemnified party pursuant hereto, the indemnified
party may defend against such claim or related legal proceeding with such
counsel and in such manner as they deem appropriate, and may consent to the
settlement or compromise of, or consent to the entry of a judgment arising from,
such claim or legal proceeding without the consent of the indemnifying party.
From and after the date of delivery of notice of a Third-Party Claim
hereunder, at the reasonable request of the indemnifying party the indemnified
party shall grant the indemnifying party and its representatives full and
complete access to the books, records and properties of the indemnified party to
the extent reasonably related to the matters to which the Third-Party Claim
relates. The indemnifying party will not disclose to any third person (except
its representatives participating in such Third-Party Claim) any information
obtained pursuant to this Section which is designated as confidential by the
indemnified party and which is not otherwise generally available to the public,
except as may be required by applicable law. The indemnifying party shall
instruct its representatives not to disclose any such information (except as may
be required by applicable law). All such access shall be granted during normal
business hours, shall be subject to the normal safety regulations of the
indemnified party, and shall be granted under conditions which will not
interfere with the business and operations of the indemnified party.
ARTICLE X
TERMINATION AND REMEDIES
------------------------
10.01 Termination of Agreement. This Agreement and the transactions
------------------------
contemplated hereby may be terminated and abandoned at any time on or prior to
the Closing as follows:
(a) by the written consent of Purchaser and Seller;
(b) by Purchaser, (i) if there is or occurs an inaccuracy in any
material respect in the representations and warranties of Seller set forth in
this Agreement, which inaccuracy is not capable of being cured by December 31,
1998, (ii) if there has been a breach in any material respect of a covenant of
Seller, or a failure in any material respect on the part of Seller to comply
with its obligations hereunder, and such breach or failure is not capable of
being cured by December 31, 1998, (iii) if any of the conditions set forth in
Section 8.01 hereof are not satisfied
ASSET PURCHASE AGREEMENT - Page 13
------------------------
on or before December 31, 1998, or (iv) at such other times as are expressly
permitted by this Agreement;
(c) by Seller, (i) if there is or occurs an inaccuracy in any
material respect in the representations and warranties of Purchaser set forth in
this Agreement, which inaccuracy is not capable of being cured by December,
1998, (ii) if there has been a breach in any material respect of a covenant of
Purchaser, or failure in any material respect on the part of Purchaser to comply
with its obligations hereunder, and such breach or failure is not capable of
being cured by December 31, 1998, or (iii) if any of the conditions set forth in
Section 8.02 hereof are not satisfied on or before December 31, 1998; and
(d) by Purchaser or Seller (i) if the Closing Date shall not have
occurred before December 31, 1998, for any reason other than the failure of the
party seeking to terminate this Agreement to perform in any material respect its
obligations hereunder or the breach or inaccuracy in any material respect of a
representation or warranty made by such party, and (ii) at such other times as
are expressly permitted by this Agreement.
10.02 Obligations upon Termination. Except for obligations provided in
----------------------------
Section 6.01 hereof, in the event that this Agreement is terminated pursuant to
the provisions of Section 10.01(a) or (d) hereof, Seller shall have no
obligation to Purchaser and Purchaser shall have no obligation to Seller. In
the event that Seller or Purchaser shall terminate this Agreement pursuant to
Section 10.01(b) or (c) hereof, respectively, the right of Purchaser or Seller,
as the case may be, to pursue any and all rights it may have at law or equity or
hereunder shall survive unimpaired.
ARTICLE XI
MISCELLANEOUS PROVISIONS
------------------------
11.01 Notices. Any notice, consent, request, claim or other communication
-------
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand, (ii) delivered by facsimile with receipt thereof confirmed,
(iii) delivered by overnight courier, or (iv) delivered or deposited with the
U.S. Postal Service with sufficient postage prepaid to ensure delivery by
Registered or Certified Mail, Return Receipt Requested, with each such notice
being delivered to the following address or facsimile number:.
ASSET PURCHASE AGREEMENT - Page 14
------------------------
If to Purchaser: Alpha Communications & Technologies, Inc.
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: President
Facsimile: (000) 000-0000
with a copy to: Xxxxx Xxxxxxx, Esq.
Xxxxxxx & Associates, P.C.
00000 Xxxxx Xxxxxx, Xx. 000X
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
ASSET PURCHASE AGREEMENT - Page 15
------------------------
If to Seller: CommWorld-National Capitol Area
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: President
Facsimile: (000) 000-0000
with a copy to: Xxxxx X. Xxxxxx, Esq.
Xxxx, Xxxxxxxx & Xxxxxx PLLC
1400 One XxXxxxxx Plaza
0000 XxXxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Such addresses or facsimile numbers may be changed by any party by
notice given in the manner provided above.
11.02 Entire Agreement; Amendment. This Agreement, together with all
---------------------------
exhibits and the documents referred to herein, contains all the terms and
conditions agreed upon by the parties hereto with respect to the transactions
contemplated hereby, and shall not be amended or modified except by written
instrument signed by all of the parties.
11.03 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the xxxxxxxxxxxxxxx, xxxxx, xxxxxxx, successors and
assigns to the parties hereto.
11.04 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
UNDER THE LAWS OF THE STATE OF VIRGINIA.
11.05 Assignment. Purchaser shall not be permitted to assign this
----------
Agreement without the prior written consent of Seller.
11.06 Counterparts; Facsimile. This Agreement may be executed in
-----------------------
counterparts. Facsimile signatures shall be effective.
11.07 Time for Performance. Time is of the essence with respect to the
--------------------
performance of each party's duties and obligations under this Agreement. Strict
compliance with the times for performance is required.
11.08 Attorneys' Fees. The prevailing party in any legal proceeding
---------------
brought under or with relation to this Agreement or transaction shall be
entitled to recover court costs, reasonable attorneys' fees, and all other
litigation expenses from the non-prevailing parties.
11.09 Survival. The representations and warranties contained in this
--------
Agreement, shall survive the Closing for a period of one (1) year.
ASSET PURCHASE AGREEMENT - Page 16
------------------------
11.10 Jurisdiction and Venue. Any judicial proceedings brought by or
----------------------
against any party on any dispute arising out of this Agreement or any matter
related thereto shall be brought in the state or federal courts of Fairfax
County, Virginia, and, by execution and delivery of this Agreement, each of the
parties accepts for itself the exclusive jurisdiction and venue of the aforesaid
courts as trial courts, and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement after exhaustion of all
appeals taken (or by the appropriate appellate court if such appellate court
renders judgment).
11.11 Interest. To the extent that either Seller or Purchaser fails to
--------
pay or reimburse the other party as expressly provided hereunder, the party
failing to make such payment, in addition to the other rights and remedies
hereunder, shall also be required to pay the other party interest at the lesser
of (a) eighteen percent (18%) per annum, and (b) the highest rate permitted by
applicable law.
11.12 Expenses. Each party shall bear all expenses incurred by such party
--------
in connection with negotiating, documenting, consummating or investigating the
transactions contemplated herein.
Signature Page Follows
ASSET PURCHASE AGREEMENT - Page 17
------------------------
IN WITNESS WHEREOF, this Asset Purchase Agreement is entered into by Seller
and Purchaser as of the date first above written.
COMMWORLD:
COMMUNICATIONS WORLD INTERNATIONAL, INC., a
Colorado corporation
By:_________________________________
Printed Name:_______________________
Title:______________________________
SELLER:
COMMWORLD-NATIONAL CAPITOL
AREA, INC., a Virginia corporation
By:_________________________________
Printed Name:_______________________
Title:______________________________
PURCHASER:
ALPHA COMMUNICATIONS &
TECHNOLOGIES, INC., a Virginia
corporation
By:_________________________________
Xxx Xxxxxx, President
____________________________________
XXX XXXXXX
ASSET PURCHASE AGREEMENT - Page 18
------------------------
