ASSET PURCHASE AGREEMENT
THIS
AGREEMENT
is made
as of this 12:01 a.m.. on the 1st
day of
November 2007, by and among SITESTAR
CORPORATION,
a
Nevada corporation, with its principal place of business located at 0000
Xxxxxxxxxx Xxxx, #000, Xxxxxxxxx, Xxxxxxxx (the “Buyer”)
and
UNITED
SYSTEMS ACCESS, INC. d/b/a U.S.A. TELEPHONE, a
Delaware corporation (the
“Seller”),
with
its principal place of business at 0 Xxxxxxx Xxxx, Xxxxxxxxx, Xxxxx. The Seller
and the Buyer may sometimes be referred to herein individually as a
“Party”
or
collectively as “Parties.”
RECITALS:
A. The
Seller owns all of the issued and outstanding capital stock of each of United
Systems Access Telecom, Inc., a Delaware corporation (“USAT”), DFW Internet
Services, Inc., a Texas corporation (“DFW”), and InReach Internet, Inc., a
Delaware corporation (“IRI”) and DFW owns all of the issued and outstanding
capital stock of each of Xxxxxx.xxx Services, Inc., a Delaware corporation
(“ANI”), Clover Computer Corporation, a Delaware corporation (“CCC”), Internet
Express, Inc., a Texas corporation (“IEI”), ShreveNet, Inc., a Delaware
corporation (“SNI”), Xxxxx.xxx, Inc., a Delaware corporation (“TNI”), World
Trade Network, Inc., a Delaware corporation (“WTI”), and The River Internet
Access Co., a Delaware corporation (“RIA”) and SNI owns all of the issued and
outstanding capital stock of Shrevetel, Inc., a Louisiana corporation (“STI”)
and RIA owns all of the issued outstanding capital stock of Sense Networking,
Inc. (“SNW”) (collectively, USAT, DFW, IRI, ANI, CCC, IEI, SNI, TNI, WTI, RIA
and SNW are referred to as the “Operating Companies” and each as a “Operating
Company”); and
B. Among
other services, the Operating Companies provide dial-up Internet access for
their customers.
C. Seller
agrees to sell and Buyer agrees to purchase certain Assets, as defined below,
of
the Operating Companies used in the Internet Service Business (as said term
is
defined below), in accordance with the terms and conditions set forth in this
Agreement.
D. The
Parties to this Agreement desire to establish their mutual rights and
obligations with regard to the transactions by this Agreement.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained
in
this Agreement, and other good and valuable consideration, the parties hereto
agree as follows:
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I.
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DEFINITIONS.
As used herein, the following terms shall have the meaning set
forth:
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A. “Annualized
Dial-Up and E-mail Revenues”
shall
mean the sum of all revenues collected or recognized by the Operating Companies
in and for the month of October 2007 for services rendered to the Conveyed
Customers for dial-up and e-mail services multiplied by twelve
(12).
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B. “Assets”
shall
have the definition set forth in Section II.
C. “Closing”
shall
have the meaning of the Closing Date.
D. “Closing
Date”
shall
be November 1, 2007.
E. “Conveyed
Customers”
shall
mean those customers with Internet services as conveyed by the Operating
Companies to Buyer from the Customer List.
F. “Customer
List”
shall
have the meaning set forth in Section II.A.1.
G. “Customers
in Good Standing”
shall
be defined as all active or suspended Customers who, as of Closing, are no
more
than sixty (60) days past due on their account balance.
H. “Deferred
Revenue”
shall
mean the sum of money, as of Closing, that the Operating Companies have
collected as payment for services to Conveyed Customers to be rendered by Buyer
after Closing.
I. “Estimated
Conveyed Customers”
shall
mean 38,000 active Customers purchasing Internet Service from the Operating
Companies as of the Closing Date to be conveyed to Buyer from the Operating
Companies.
J. “Estimated
Annualized Dial-Up and Email Revenues”
shall
mean $6,000,000.
K. “Estimated
Deferred Revenue”
shall
mean $750,000.
L. “Internet
Business”
shall
mean the business of providing dial-up Internet access and dial-up Internet
e-mail services, but not including web hosting services for dial up customers
and not including dial up Internet access provided as a back-up by Seller or
the
Operating Companies to their commercial customers.
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II.
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PURCHASE,
SALE AND DELIVERY OF
ASSETS.
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A. Subject
to and in accordance with the terms and conditions of this Agreement and in
consideration of the Purchase Price provided in Section III below, Buyer agrees
to purchase, and Seller agrees to cause the Operating Companies to sell,
transfer, convey and assign all of their respective right, title, and interest
in and good and marketable title, free and clear of all liabilities,
obligations, security interests, liens (including tax liens), mortgages, leases
or leasehold interests, encumbrances and rights of others of any kind whatsoever
to the following assets used in the operation of the Internet
Business:
1. Any
and
all dial-up Customers in Good Standing and respective e-mail accounts including
Customer accounts and Customer contracts or agreements, of the Internet
Business, but not including the web hosting accounts of the Operating Companies
and not including the commercial accounts for whom Seller or the Operating
Companies provide dial-up Internet access as a back-up means of accessing the
Internet. Seller will provide Buyer with a true, correct, and complete list
of
all Customers (the “Customer
List”)
in
electronic format at or before Closing.
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2. All
intangible personal property specifically relating to the Assets, including
without limitation, Customer contracts and agreements.
3. Certain
Domain Names needed to provide email services and web hosting to the Customer
List including, XXXXXXXXX.XXX, XXX.XXX, XXXXXXXXXX.XXX, XXXX.XXX, XXX.XXX,
XXXXX.XXX, XXXX.XXX, XXXXXX.XXX, XXXXXXXXX.XXX, XXXX-XXXXX.XXX, XXXXX.XXX,
XXX-XXXXX.XXX, XXXXXXXXX.XXX, XXXXXXXXXX.XXX, XXXX.XXX.
4. The
brand
names and use of the websites for the domain names listed above.
The
above
shall be collectively referred to as the "Assets".
B. The
Seller shall pay all expenses, debts, deficiencies, obligations, liabilities,
assessments, claims, demands, fines or penalties related to any of the Assets
that arise from the operation of the Internet Business prior to the Closing
Date. Except as set forth in Section III E, the Buyer is not assuming or
undertaking to assume and shall have no responsibility for any liabilities
of
the Operating Companies whether fixed or contingent, past, present or future,
or
direct or indirect, arising out of or in connection with the Internet Business
or the Operating Companies ownership and use of the Assets, or any other acts
or
omissions of the Operating Companies in connection therewith prior to the
Closing.
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III.
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PURCHASE
PRICE; ADJUSTMENT AND
PAYMENT.
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A. Purchase
Price.
The
purchase price is THREE MILLION SEVEN HUNDRED-FIFTY THOUSAND DOLLARS
($3,750,000) (the “Purchase Price”) to be paid as provided in section III C
below and subject to adjustment as set forth in section III B below.
B. Adjustments
to Purchase Price.
The
Purchase Price is based on Seller’s estimate that the Annualized Dial-up and
E-mail Revenues are Six Million Dollars ($6,000,000) and that the Estimated
Deferred Revenue as of Closing is $750,000. In the event that the actual
Annualized Dial-up and E-mail Revenue or the actual Deferred Revenue as of
Closing differs from the estimates, the Purchase Price will be subject to
adjustment. Seller will verify the actual Annualized Dial-up and E-Mail Revenues
for the month of October 2007 and the actual amount of Deferred Revenue as
of
Closing by delivering its written certificate to the Purchaser within thirty
(30) days of Closing. The Purchase Price will be increased or decreased by
an
amount equal to the difference between the Estimated Annualized Dial-up and
E-mail Revenue and the actual Annualized Dial-up and E-mail Revenues multiplied
by seventy-five one hundredths (0.75). The Purchase Price will be increased
to
the extent that the actual Deferred Revenue is less than the Estimated Deferred
Revenue and the Purchase Price will be decreased to the extent that the actual
Deferred Revenue is greater than the Estimated Deferred Revenue. The purchase
price adjustment will be added to or subtracted from (as the case may be) the
Deferred Purchase Price Payment (as defined below) payable to Seller pursuant
to
Subsection C2 below.
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C. Payment
of Purchase Price.
The
Buyer will pay the total Purchase Price to the Seller as follows:
1. Payment
at Closing.
ONE
MILLION DOLLARS ($1,000,000) will be paid at Closing by wire transfer to an
account designated by Seller, and
2. Deferred
Payments.
One
Million Dollars shall be due on November 30, 2007 payable by wire transfer
to
the same account as specified immediately above (the “Second Installment”). The
Second Installment shall accrue interest at the rate of two percent (2%) per
month, prorated for any partial month, if paid after November 30, 2007. Starting
on January 1, 2008 and on the first day of each month thereafter, Buyer will
pay
to Seller thirty-six (36) monthly installments each of which shall be equal
to
one-thirty-sixth (1/36) of the balance of the Purchase Price (collectively,
the
“Deferred Purchase Price Payment”) via Bank Check to the Seller. Any adjustments
to the Purchase Price made pursuant to Subsection B above of this Section III
shall adjust the monthly installment payments as follows: the Adjusted Purchase
Price minus the cash payment at Closing and minus the Deferred Payments already
paid divided by the remaining months left on the installments. If any Deferred
Purchase Price Payment is not paid within fifteen (15) days of its due date,
Seller shall have the right to demand payment in full of the entire deferred
portion of the Purchase Price.
D. True-Up
of Monies Collected.
The
Buyer and Seller shall conduct a true-up on or before ninety (90) days regarding
monies collected by Buyer or Seller after Closing. If Buyer collects any money
due from the Conveyed Customers to the Seller after the Closing Date, Buyer
will
pay Seller that portion of the money for the services that were rendered by
Seller. If Seller collects any money due from Conveyed Customers to the Buyer
after the Closing Date, Seller will pay Buyer the portion of the money received
for the services that were rendered by Buyer. The parties have an additional
thirty (30) days to settle the amount due or this true-up may be subject to
dispute resolution as set forth below.
E. Assumption
of Liabilities.
The
Buyer shall assume and discharge the obligation to provide Internet Services
to
the Customers who have paid the Deferred Revenue to Seller. At Closing, Seller
will provide Buyer with a true and correct listing of the Deferred Revenue
and
the Customers to which the deferred revenue relates as of the Closing Date.
The
Buyer is not obligated to assume any telecommunications contracts related to
providing Internet services to Conveyed Customers.
F. Dispute
Resolution.
Purchaser shall provide written notice to Seller within thirty (30) days of
delivery of Seller’s certification of the Actual Monthly Revenue and the Actual
Deferred Revenue if Purchaser disputes the accuracy of the certification. A
dispute with respect to the certification shall not affect the obligation of
the
Purchaser to make timely payment of the monthly portion of the deferred portion
of the Purchase Price. A dispute as to the accuracy of the certification shall
first be referred to the outside accountants of the parties for resolution.
If
the parties are unable to reach agreement with respect to the matters in dispute
within thirty (30) days following referral of the dispute to the parties outside
accountants, the matter shall be resolved by binding arbitration before a single
arbitrator to be conducted in Portland, Maine. The arbitrator shall be an
independent certified public accountant selected by the outside legal counsel
of
the parties in the exercise of their reasonable business judgment. The cost
of
the arbitrator shall be shared equally by the parties. The arbitrator shall
render his decision in writing within sixty days of the referral of the dispute
to the arbitrator. The ruling of the arbitrator shall be final and not subject
to review or appeal.
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IV.
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REPRESENTATIONS
AND WARRANTIES OF SELLER.
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The
Seller represents and warrants to the Buyer, its successors and assigns, that
the following facts are true, complete, and correct as of the date of this
Agreement and will be true, correct, and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date
of
this Agreement throughout this Section IV, with the knowledge that Buyer is
purchasing the Assets in full reliance thereon):
A. Organization
of the Seller.
Seller
is a corporation duly organized, validly existing, and in good standing as
a
domestic corporation under the laws of the State of Delaware and has the
corporate power to carry on its business as now conducted and to perform its
obligations hereunder.
B. Authorization
of Transaction.
The
Seller has full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to perform its obligations
hereunder. Without limiting the generality of the foregoing, the board of
directors of the Seller has duly authorized the execution, delivery, and
performance of this Agreement by the Seller. This Agreement constitutes the
valid and legally binding obligation of the Seller, enforceable in accordance
with its terms and conditions.
C. Noncontravention.
Neither
the execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby (including the assignments and assumptions
referred to in Section II above), will (i) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which the Seller
is subject or any provision of the charter or bylaws of the Seller or (ii)
conflict with, result in a breach of, constitute a default under, result in
the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Seller is a party or by which
it
is bound or to which any of its assets is subject (or result in the imposition
of any security interest, lien, or encumbrance upon any of its assets). The
Seller does not need to give any notice to, make any filing with, or obtain
any
authorization, consent, or approval of any government or governmental agency
in
order for it to consummate the transactions contemplated by this Agreement
(including the assignments and assumptions referred to in Section II
above).
D. Legal
Compliance.
The
Seller has complied with all applicable laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all agencies
thereof), and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced against the
Seller alleging any failure so to comply.
E. Brokers'
Fees.
The
Seller has no liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by this
Agreement for which the Buyer could become liable or obligated.
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F. Title
to Assets.
The
Seller has good and marketable title to, or a valid leasehold or license
interest in, the properties and assets used by them, located on their premises,
or shown on Seller’s most recent balance sheet or acquired after the date
thereof, free and clear of all security interests, except for properties and
assets disposed of in the Ordinary Course of Business since the date of the
most
recent balance sheet. Without limiting the generality of the foregoing, the
Seller has good and marketable title to all of the Acquired Assets, free and
clear of any Security Interest or restriction on transfer. This Agreement and
all of the documents, instruments and agreements related hereto have been duly
and validly executed and delivered by the Seller, as appropriate, and are valid
and binding obligations of each of the Sellers, enforceable in accordance with
their terms. The Seller has paid all debts and liabilities related to the Assets
prior to the Closing Date, none of which debts or liabilities are being assumed
by the Buyer.
G. Contracts
and Agreements.
The
Seller will deliver to the Buyer, at closing, a correct and complete copy of
each written contract being transferred and assigned to the Buyer as part of
the
Assets and referred to in Section II.A.1. and a written summary setting forth
the material terms and conditions of each oral agreement being transferred
and
assigned to the Buyer as part of the Assets and referred to in Section II.A.1.
With respect to each such agreement: (A) the agreement is legal, valid, binding,
enforceable, and in full force and effect in all material respects; (B) no
party
is in material breach or default, and no event has occurred which with notice
or
lapse of time would constitute a material breach or default, or permit
termination, modification, or acceleration, under the agreement; and (C) no
party has repudiated any material provision of the agreement. Seller may assign
all accounts, contracts, agreements, and service agreements related in any
way
to the Internet Business Customers to Buyer without the consent of the Internet
Business Customers.
H. Internet
Service Business Warranties.
Substantially all of the Internet Service Business services provided by the
Seller have conformed in all material respects with all applicable contractual
commitments and all express and implied warranties, and the Seller has no
material liability (whether known or unknown, whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether liquidated
or unliquidated, and whether due or to become due) for damages in connection
therewith.
I. Internet
Business Liabilities.
The
Seller has no material liability (whether known or unknown, whether asserted
or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due) arising
out of any injury to individuals or property as a result of the ownership,
possession, or use of any of the Assets. The Seller agrees to indemnify Buyer
for all Liabilities incurred prior to the Closing Date.
J. Intellectual
Property.
The
Seller has not interfered with, infringed upon, misappropriated, or violated
any
material intellectual property rights of third parties in any material respect,
and the Seller has not ever received any charge, complaint, claim, demand,
or
notice alleging any such interference, infringement, misappropriation, or
violation (including any claim that any of the Seller must license or refrain
from using any Intellectual Property rights of any third party). To the
knowledge of the Seller, no third party has interfered with, infringed upon,
misappropriated, or violated any material Intellectual Property rights of the
Seller in any material respect.
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K. Litigation.
The
Seller is not (1) subject to any outstanding injunction, judgment, order,
decree, ruling, or charge or (ii) a party or, to its knowledge, threatened
to be
made a party to any action, suit, proceeding, hearing, or investigation of,
in,
or before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator, which,
individually or in the aggregate, if adversely determined, could materially
impair the Assets or the ability of either of the Seller to perform any of
its
obligations hereunder. Furthermore, there are no defaults by the Seller under
any applicable order, writ, injunction, decree or award of any court or
arbitrator or any governmental department, board, agency or instrumentality
which would materially impair either of the Seller’s ability to perform any of
its obligations hereunder.
L. Disclosure.
The
Seller has reviewed all information known to it and has disclosed to Buyer
all
known material information relevant to the Assets. None of the representations
and warranties made by Seller in this Agreement or in any document or exhibit
to
be furnished by it hereto, or on its behalf, contains or will contain any untrue
statements of material fact, or omit any fact the omission of which would be
materially misleading.
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V.
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REPRESENTATIONS
AND WARRANTIES OF BUYER.
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A. Organization
of Buyer.
Buyer
is corporation duly organized, validly existing, and in good standing as a
domestic corporation under the laws of the State of Nevada and has the corporate
power to carry on its business as now conducted and to perform its obligations
hereunder.
B. Authority
of Buyer.
Buyer
has full power and authority to enter into and perform this Agreement, and
all
proceedings necessary to duly authorize the execution and delivery of this
Agreement by the officer executing the same on the respective Buyer’s behalf
have been taken and this Agreement is the legal and binding obligation of the
Buyer, enforceable in accordance with its terms and conditions applicable to
Buyer.
C. Litigation.
There
are no actions, suits, proceedings or investigations pending or, to the
knowledge of Buyer, threatened against Buyer. Buyer is not in default with
respect to or subject to any outstanding judgment, order, writ, injunction,
decree, assessment or other similar command of any court or federal, state,
municipal or other governmental department, commission, board, bureau, agency
or
instrumentality, domestic or foreign, affecting it.
D. Compliance
with Laws.
Buyer
has complied with all laws, regulations and orders applicable to its
business.
E. Noncontravention.
The
execution and delivery by Buyer of this Agreement, the consummation by Buyer
of
the transactions contemplated hereby, and the compliance by Buyer with the
terms
hereof, will not:
1. conflict
with, violate or result in the breach of or contravene any of the terms
conditions or provisions of, or constitute a default under, Buyer’s articles of
incorporation, bylaws, or in any material respect, any law, regulation, order,
writ, injunction, decree, determination or award of any court, governmental
department, board, agency or instrumentality, domestic or foreign, or any
arbitrator applicable to Buyer or its assets and properties; or
7
2. result
in
the conflict with, the material breach of any term or provision of, the
termination of, or the acceleration or permitting the acceleration of the
performance required by the terms of, or constitute a default under or require
the consent of any party to, any loan agreement, indenture, mortgage, deed
of
trust or other contract, agreement or instrument, to which Buyer is a party
or
by which it is bound; or
3. conflict
with any organizational documents or other agreements, licenses or permits
of
any kind relating to the formation, management, operation or other activity
of
Buyer.
F. Governmental
Approvals.
No
authorization, approval or consent of any governmental or regulatory authority
or agency is necessary to permit Buyer to execute and deliver this Agreement
and
to perform its obligations hereunder.
G. Brokers'
Fees.
The
Buyer has no liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by this
Agreement for which the Seller could become liable or obligated.
H. Disclosures.
No
representation, warranty or covenant by Buyer in this Agreement, or any
certificate or any other instrument furnished or to be furnished to Seller
pursuant hereto or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of material fact or omits or
will
omit any material fact which will make the statements contained herein or
therein materially misleading.
I. Waiver.
The
applicable party may waive any condition specified in this Section V if its
president or other duly authorized officer executes a writing so stating at
or
prior to the Closing.
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VI.
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COVENANTS
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A. Payment
of Post-Closing Monies Received.
Seller
will immediately upon receipt (and no longer than a one weeks time) forward
to
Buyer any and all monies received or collected by the Seller on or after the
Closing Date on account of services provided to the Conveyed Customers by the
Buyer after the Closing Date. If Seller refuses to forward any and all monies
received or collected by the Seller after the Closing Date on account of
services rendered by the Buyer as aforesaid, the Buyer has the right to withhold
payment due to the Seller in such amount.
B. Domain
Transfer and Support.
After the Closing Date, the Seller will host e-mail accounts and personal
websites for the customers that are conveyed to the Buyer for a period of up
to
six (6) months following the Closing. During this six (6) month period, the
Buyer will move all e-mail accounts from Seller’s servers for the customers that
are using a transferred domain. Also, both Buyer and Seller will endeavor to
move all shared e-mail services to a mutually agreeable third party e-mail
provider for the customers that are using the domains that are not transferred
to Buyer. If, following the six (6) months, the Buyer and Seller cannot agree
on
a third party e-mail provider then e-mail will remain hosted on the Seller’s
e-mail platform for a nominal fee of $0.10 per mailbox per month. Alternatively
the Buyer may be selected to host all e-mail for the shared domains, if agreed
to by the Seller, for the nominal fee of $0.10 per mailbox per month. Payments
for e-mail services to be paid to the provider on the first of each month with
the first payment scheduled for May 1, 2008.
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The
Seller shall create an interface which allows for the proper management of
e-mail addresses for supporting the e-mail addresses that are hosted by the
Seller for the Buyer. Should the Buyer be selected to host mail in perpetuity
then it will be the responsibility of the Buyer to create an interface which
allows for the proper management of e-mail addresses for continued support
of
the Non-Conveyed Customers and Seller’s internal use with proper communication
between Buyer and Seller to prevent duplicate accounts. This management would
include additions, deletions, changes, and other e-mail related functions.
Should the Seller be chosen to host mail in perpetuity, the Seller shall
continue to provide this interface.
C. Non-Compete
Agreement:
Seller
has entered into a separate non-compete agreement regarding the Internet
Business. Seller further agrees to forward all sales leads exclusively to Buyer
if it relates to Internet Access.
D. Further
Acts.
Each
Party shall on the reasonable request of the other party execute and deliver
in
proper form any instruments and documents and perform any and all acts necessary
or desirable for perfecting in the other party title to all items intended
to be
transferred under this Agreement and placing that party in actual possession
of
the item(s).
E. Assistance
with Transition.
Seller
will provide reasonable transition services to Buyer for a period of up to
a
maximum of thirty (30) days in order to help the smooth transfer of all
Customers, contracts and other Assets to Buyer. From that point forward, up
to
one year, the Seller agrees to be available to the Buyer to provide assistance
by telephone on an “as-needed” basis. Seller also agrees to host e-mail and
personal websites for the Conveyed Customers who are using any of the conveyed
domains for a period of no more than six (6) months.
F. Escrow
of
Funds Pending Payment. Notwithstanding
anything to the contrary set forth in this Agreement or in any other document
executed or delivered in connection with this Agreement, until such time as
the
Second Installment is paid to Seller:
1. Only
that
customer information necessary for Buyer to provide customer support to the
Conveyed Customers will be provided to the Buyer;
2. Customer
billing and collection shall remain the responsibility of Seller;
3. All
payments from Conveyed Customers on account of services rendered on or after
November 1, 2007 shall be retained by Seller and Seller shall remain responsible
for payment of dial access operational expenses; and
4. Buyer
will not inform the Conveyed Customers that Buyer has acquired Seller’s Internet
Business.
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At
such
time as the Second Installment is paid in full, Seller will remit to Buyer
the
amounts collected from the Conveyed Customers on and after November 1, 2007,
less the amount of dial access operational expenses incurred with respect to
the
Conveyed Customers on or after November 1, 2007 through the date the Second
Installment is paid in full. On November 30, 2007 and on the last day of each
month thereafter until the Second Installment is paid in full, Seller may apply
the funds collected on account of the Conveyed Customers on or after November
1,
2007, less the amount of dial access operation expenses incurred with respect
to
the Conveyed Customers, to the payment of the Second Installment. Any amounts
applied to the Second Installment by Buyer in this fashion shall first be
applied to outstanding interest on the Second Installment. Buyer hereby
authorizes Seller to file a financing statement with the Secretary of State
of
Nevada or such other filing offices as Seller determines are appropriate to
provide notice of Seller’s rights under this Agreement. At such time as the
Second Installment is paid in full, together with all accrued interest, the
remaining customer data and billing and collection responsibility shall be
transferred to Buyer and Buyer shall be responsible for all expenses associated
with the operation of the Internet Business.
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VII.
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INDEMNIFICATION
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A. Buyer
agrees to indemnify, defend and hold the Seller and its successors and assigns,
harmless against any and all losses, damages, demands, claims, assessments,
actions, taxes, deficiencies, penalties, interest, reasonable attorney’s fees,
costs and expenses, arising out of, or incident to, any of the following (the
“Losses”): (i) any inaccuracy, misrepresentation or breach of any warranty made
by Buyer in this Agreement; and (ii) any failure by Buyer to perform in
accordance with the terms hereof any of the obligations or covenants to be
performed by it hereunder. The indemnification obligations of the Buyer under
this Section VII.A. and the representations, warranties, agreements and
covenants of the Buyer under this Agreement shall survive the Closing for a
period of one (1) year from the Closing Date, provided further, however that
the
one year limitation shall not be applicable to Buyer’s obligation to pay the
deferred portion of the Purchase Price. Notwithstanding anything to the contrary
set forth in this Agreement, Buyer shall not be liable for the first $200,000
in
Losses incurred by the Seller, provided further, however, that the foregoing
limitation shall not apply to the Buyer’s obligation to pay the deferred portion
of the Purchase Price.
B. The
Seller agrees to indemnify, defend and hold the Buyer and its shareholders,
directors, officers, affiliates, successors and assigns harmless against any
and
all Losses (as defined above) arising out of or incident to any of the
following:
1. any
inaccuracy, misrepresentation or breach of any representation or warranty made
by Seller in this Agreement;
2. any
failure by the Seller to perform in accordance with the terms hereof any of
the
agreements, obligations or covenants to be performed by it
hereunder;
3. any
liability of the Seller, whether accrued, absolute, contingent or otherwise,
and
whether due or to become due unless otherwise expressly assumed by Buyer
pursuant to this Agreement and the documents and agreements executed pursuant
hereto; and
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4. any
claim
related to the Sellers or to the Assets in which the principal event giving
rise
thereto occurred prior to Closing, including, but not limited to, claims of
ownership of Assets by customers or other parties, taxes of all kinds, any
claim
made under the Bulk Transfers Title of the Virginia Uniform Commercial Code,
and
any claim, damage or liability resulting from lack of compliance with laws
or
governmental regulations, whether federal, state or local.
The
indemnification obligations of the Seller under this Section VII.B. and the
representations, warranties, agreements and covenants of the Sellers under
this
Agreement shall survive the Closing for a period of one (1) year from the
Closing Date. Notwithstanding anything to the contrary set forth in this
Agreement, Seller shall not be liable for the first $200,000 in losses incurred
by the Buyer.
C. Within
thirty (30) days of the assertion of any claim or discovery of material facts
upon which Seller or Buyer (the “Indemnitee”) intends to base a claim for
indemnification hereunder, Indemnitee shall give written notice to the party
against whom the claim is made (the “Indemnitor”) of such claim or facts. The
Indemnitor shall have the right to participate jointly with the Indemnitee
in
the defense of any claim, demand, lawsuit or other proceeding in connection
with
which the Indemnitee claims indemnification hereunder and with respect to any
issue involved in such claim, demand, lawsuit or other proceeding as to which
the Indemnitor shall have acknowledged the obligation to indemnify the
Indemnitee hereunder, the Indemnitor shall have the sole right to settle or
otherwise dispose of such claim, demand, lawsuit or other proceeding on such
terms as the Indemnitor, in its or his sole discretion, shall deem
appropriate.
D. In
the
event the Indemnitor elects, within thirty (30) days of the receipt of the
original notice thereof, to contest such claim by written notice to the
Indemnitee, the Indemnitee will be entitled to be paid hereunder within five
(5)
days after the final determination of such contest either by written
acknowledgment of the Indemnitor or a final judgment of a court of competent
jurisdiction. If the Indemnitor does not so elect, the Indemnitee shall be
paid
promptly and in any event within thirty-five (35) days
after receipt by the Indemnitor of the notice of the claim.
|
VIII.
|
MISCELLANEOUS
|
A. This
Agreement shall not confer any rights or remedies upon any person other than
the
parties hereto and their respective successors and permitted
assigns.
B. This
Agreement (including the documents referred to herein) constitutes the entire
agreement among the parties hereto and supersedes any prior understandings,
agreements, or representations by or among the parties, written or oral, to
the
extent they have related in any way to the subject matter hereof.
C. This
Agreement shall be binding upon and inure to the benefit of the parties named
herein and their respective successors and permitted assigns. No party may
assign either this Agreement or any of his or its rights, interests, or
obligations hereunder without the prior written approval of the other
party.
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D. Each
party shall be responsible for its own legal and transactional expenses,
including the cost of any fees owed to any broker or finder engaged by a party
in connection with the transactions contemplated by this Agreement.
E. All
covenants, agreements, representations and warranties of the parties made herein
and in the certificates, lists, exhibits, schedules or other written information
delivered, attached, or furnished in connection therewith and herewith shall
be
deemed material and to have been relied upon by the other party, and, except
as
provided otherwise in this Agreement, shall survive the delivery of the
certificates representing the shares and the payment of the Purchase Price
and
shall bind the respective successors and permitted assigns of the parties,
whether so expressed or not, and, except as provided otherwise in this
Agreement, all such covenants, agreements, representations and warranties shall
inure to the benefit of each party’s respective successors and permitted
assigns, whether so expressed or not.
F. This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original but all of which together will constitute one and the same
instrument. The facsimile signature of any party shall be deemed to be an
original signature of such party and shall be given the same effect as an
original signature of such party.
G. The
section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this
Agreement.
H. This
Agreement shall be governed by and construed in accordance with the domestic
laws of the Commonwealth of Virginia.
I. The
Parties hereto have agreed upon the text of a press release announcing, among
other things, the execution of this Agreement, which press release shall be
disseminated promptly following the Closing hereof.
J. No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by both of the parties hereto. No waiver by
any
party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any prior
or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
K. Any
term
or provision of this Agreement that is invalid or unenforceable in any situation
in any jurisdiction shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or enforceability of
the
offending term or provision in any other situation or in any other
jurisdiction.
L. The
parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any of the provisions of this Agreement.
Any reference to any federal, state, local, or foreign statute or law shall
be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. The word “including” shall mean including
without limitation. The exhibits, if any, identified in this Agreement are
incorporated herein by reference and made a part hereof.
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M. All
notices and communications pursuant to this Agreement shall be in writing and
shall be deemed properly given and effective when received if (a) personally
delivered, (b) sent by a national delivery service providing evidence of
delivery, or (b) sent by facsimile, to the following:
If
to
Seller, to:
UNITED
SYSTEMS ACCESS, INC.
0
Xxxxxxx
Xxxx
Xxxxxxxxx,
Xxxxx 00000
000-000-0000
With
a
copy to:
Xxxxxxxx
Xxxxxxx & XxxXxxxx
000
Xxxxxxxxxx Xxxxxx
X.X.
Xxx
0000
Xxxxxxxx,
XX 00000-0000
Attn:
Xxxxxxxx X. Xxxxxx, Esq.
If
to
Company, to:
SITESTAR
CORPORATION
0000
Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx,
XX 00000
000-000-0000
N. If
either
party hereto shall breach any of the terms hereof, such party shall pay to
the
non-defaulting party all of the non-defaulting party's costs and expenses,
including attorney's fees, incurred by such party in enforcing the terms of
this
Agreement.
IN
WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals
as
of the day and year first written above.
| UNITED SYSTEMS ACCESS, INC. | SITESTAR CORPORATION | ||
|
By: L. Xxxxxxx Xxxx |
By: Xxxxx X. Xxxxxxxx, Xx. |
||
| Title: CEO | Title: President & CEO |
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