Exhibit 10.57
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of the 31st day of August, 2001, by and between (i) Network Access Solutions
Corporation, a Delaware corporation (the "Buyer") and (ii) CapuNet, LLC, a
Maryland limited liability company (the "Seller," and together with the Buyer,
the "Parties").
WHEREAS, Buyer and Seller each have determined that it is in the best
interests of their respective equity holders for Buyer to purchase and assume
certain assets and liabilities of Seller on the terms and subject to the
conditions of this Agreement (the "Transaction");
WHEREAS, the Seller is engaged in the business of providing digital
subscriber line, web hosting, dial-up and virtual private network services to
individual and business customers (the "Business") and Seller is also engaged in
the business of selling consulting and software development services and
products ("Other Products and Services") that are not included in the Business
for the purpose of the Transaction; and
WHEREAS, the Buyer desires to purchase, and the Seller desires to sell, on
the terms and conditions set forth herein, the contracts and assets constituting
the Business in exchange for the assumption of certain liabilities and
performance obligations under certain of the Seller's ongoing customer
agreements, all as described more fully below;
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements herein contained and for other good and valuable
consideration the receipt, adequacy and sufficiency of which are hereby
acknowledged, the Parties hereby agree as follows:
ARTICLE I
THE TRANSACTION
1.1 PURCHASE AND SALE OF ASSETS. The Seller hereby agrees to sell,
transfer, assign and deliver to the Buyer, and the Buyer hereby agrees to
purchase, accept and receive from the Seller, all of the Seller's right, title
and interest in, to and under the Purchased Assets (as hereinafter defined),
free and clear of any and all Liens (as hereinafter defined).
1.2 PURCHASED ASSETS. The "Purchased Assets" are all of the assets,
properties and rights of the Seller used in connection with and/or related to
the Business (other than Excluded Assets (as hereinafter defined)), including,
without limitation, the following scheduled items and the following other items
to the extent they relate in any way to the Business:
(a) all of the Seller's right, title and interest in, to and under the
Contracts (as defined in Section 3.7), and any sales orders, contract
extensions, rebids, existing proposals, bids, opportunities pursued,
purchase orders and other commitments thereunder;
(b) all of the Seller's right, title and interest in, to and with
respect to the accounts set forth on Schedule 1.2(b)(i) and its space and
operations in the central offices set forth on Schedule 1.2(b)(ii) and all
of the Seller's equipment installed in or used in connection therewith;
(c) all of the Seller's assets (whether in the possession of the
Seller or in the custody of third parties such as customers, vendors and
trade representatives) incidental to or used in performing the Contracts,
including, without limitation, machinery, office furniture and office
equipment inventories, spare parts, accessories and supplies;
(d) all of the Seller's Proprietary Rights (as defined in Section
3.9);
(e) all of the Seller's computer, telecommunications and other
equipment, software programs, source codes, object codes, operating
systems, information systems, proprietary interfaces, routines,
subroutines, modules, procedures, functions, program specifications and
related documentation, and all rights under licenses relating to the use
thereof to the extent such licenses are assignable;
(f) all of the Seller's customer, supplier, distributor and similar
agreements and other intangible assets;
(g) all of the Seller's written and electronic information relating to
the Seller's customers (including, without limitation, customer lists,
customer files and other written accounts of the Seller) incidental to or
used in performing the Contracts, and other reasonably and specifically
requested information, in each case, to the extent transferable, relating
to sales and marketing data, principal contacts, pricing information,
accounting records and information and contract performance information;
(h) all of the Seller's permits, franchises, approvals, registrations,
licenses and pending applications thereof, to the extent such licenses are
transferable under applicable law;
(i) all of the Seller's goodwill and going concern value and the
business appurtenant thereto;
(j) all of the Seller's deposits, credits, prepaid expenses, deferred
charges, advance payments, security deposits, rights to escrows and prepaid
items;
(k) all of the Seller's materials, supplies, fixtures, e-mail
addresses, internet names and addresses and telephone and fax numbers;
(l) all of the Seller's books, records, manuals, documents,
correspondence, files (electronic or otherwise), sales and credit reports,
sales and marketing data, pricing information, customer lists, principal
contacts, literature, brochures, advertising material and the like;
(m) all of the Seller's other rights to the Business as it is
presently being conducted, as it has been conducted in the past and as it
is proposed to be conducted in the future;
(n) all of the Seller's rights under leases for real property, and all
of the Seller's rights under all other leases, contracts, agreements and
purchase and sales orders;
(o) all of the Seller's claims, claims in action, causes of action and
judgments; and
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(p) all of the Seller's inventory and supplies held for resale.
1.3 EXCLUDED ASSETS. The Parties expressly understand and agree that the
Seller is not hereunder transferring to the Buyer the following assets (the
"Excluded Assets"):
(a) all of the Seller's cash, bank accounts, marketable securities,
certificates of deposit and cash equivalents;
(b) the Seller's certificate of formation, operating agreement, tax
returns, tax preparation work papers and other records relating to the
corporate organization of the Seller;
(c) the Seller's accounting records;
(d) all of the digital subscriber lines (the "EarthLink Circuits")
sold by the Seller to EarthLink, Inc. ("EarthLink") under the Purchase
Agreement dated as of May 21, 2001 (the "EarthLink Agreement") and proceeds
therefrom, which are set forth on Schedule 1.3(d);
(e) all of the Seller's assets and rights associated with the Other
Products and Services;
(f) all of the Seller's rights under the Lease Agreement between
NetComm, Inc. and 6000 Executive Associates Limited Partnership, dated
September 23, 1991, for office space serving as the Seller's headquarters;
(g) all of the Seller's other assets relating to the Business set
forth in Schedule 1.3 (g) to this Agreement; and
(h) all of the right, title and interest of Seller to receive the
amounts due to Seller under the Contracts and pursuant to the Seller's
other business activities, including any late payment charges with respect
to such amounts and including amounts invoiced in August 2001 for services
to be provided in September 2001 (collectively, the "Receivables").
1.4 NO ASSUMPTION OF LIABILITIES. Other than the liabilities and unearned
revenue set forth in Schedule 1.4 hereof (collectively, the "Assumed
Liabilities"), the Buyer shall not assume and shall not be liable or responsible
for any debt, obligation or liability of or relating to the Seller, the
Purchased Assets or the Business or otherwise of any kind, whether known or
unknown, contingent, absolute, or otherwise, and whether now existing or
hereafter arising, including without limitation, accounts payable, accrued
taxes, accrued wages, benefits and related labor compensation due to employees
of the Seller and other accrued liabilities.
1.5 ALLOCATION OF CONSIDERATION. The Parties agree to allocate the
Consideration (as defined in Section 2.1) for the Purchased Assets as provided
in Schedule 1.5. In addition, the Parties hereby undertake and agree to file
timely any information that may be required to be filed pursuant to Treasury
Regulations promulgated under Section 1060(b) of the Code. Neither the Seller
nor the Buyer shall file any tax return or other document or otherwise take any
position that is inconsistent with the allocation determined pursuant to this
Section.
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ARTICLE II
CONSIDERATION FOR TRANSFER
2.1 CONSIDERATION. Upon the terms and subject to the conditions set forth
in this Agreement, in reliance upon the representations, warranties, covenants
and agreements of the Seller contained herein, and in consideration of and in
exchange for the sale, conveyance, assignment, transfer and delivery of the
Purchased Assets, the Buyer agrees to provide to the Seller the following
consideration ("Consideration"):
(a) the Buyer shall assume the Assumed Liabilities; and
(b) the Buyer shall release any claim to the Receivables in lieu of
making a cash payment to the Seller in an amount representing the value
thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer, as of the date hereof, as
set forth below:
3.1 AUTHORITY. The Seller is a limited liability company duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it was organized and is duly qualified in every state or jurisdiction
where the Seller does business. The Seller has full power and authority and all
requisite rights, licenses, permits and franchises to own, lease and operate the
Purchased Assets and to carry on the Business as it is now conducted. The Seller
has full right, power and authority to execute and deliver this Agreement and
all of the other documents and instruments to be executed in connection herewith
(the "Related Documents") to which the Seller is a party and to carry out the
transactions contemplated hereby and thereby. All corporate and other acts or
proceedings required to be taken by the Seller to authorize the execution,
delivery and performance of this Agreement, the Related Documents to which the
Seller is a party and the transactions contemplated hereby and thereby have been
duly and properly taken.
3.2 VALIDITY. This Agreement and the Related Documents to which the Seller
is a party have been duly executed and delivered by the Seller and constitute
the valid and legally binding obligations of the Seller, enforceable against the
Seller in accordance with their respective terms. The execution and delivery of
this Agreement and the Related Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby do not and will
not result in the creation of any Lien or the termination or acceleration of any
obligation of or relating to the Seller and are not prohibited by, do not and
will not violate or conflict with any provision of, and do not and will not
constitute a default under or a breach of (i) the certificate of formation,
operating agreement or other constituent document of the Seller, (ii) any
license, instrument or agreement to which the Seller is a party or by which the
Seller or the Purchased Assets are bound, (iii) any order, writ, injunction,
decree or judgment of any court or governmental agency, or (iv) any law, rule or
regulation (collectively, the "Laws") applicable to the Seller, the Business or
the Purchased Assets. No approval, authorization, registration, consent, order
or other action of or filing with any person, court or governmental authority is
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required for the execution and delivery by the Seller of this Agreement or the
Related Documents to which it is a party or the consummation of the transactions
contemplated hereby and thereby.
3.3 CAPITALIZATION. All of the limited liability company interests of the
Seller are owned by NetComm, Inc., Xxxx X. Xxxxxx and Xxxxxx X. Xxxxxx. There
are not outstanding any options, warrants, rights, convertible securities or any
other instruments or agreements the conversion, exercise or operation of which
could give any other Person the right to acquire or exercise ownership rights
with respect to any limited liability company interests of the Seller that would
affect the approval of this Agreement or the Related Agreements or the
consummation of the transactions contemplated herein or therein. The Seller is
managed by Xxxx X. Xxxxxx.
3.4 FINANCIAL STATEMENTS. Schedule 3.4 includes true, complete and correct
copies of the unaudited balance sheet of the Seller (the "Balance Sheet") at
July 31, 2001 (the "Balance Sheet Date") and unaudited statements of income and
retained earnings of the Seller for the seven-month period ended July 31, 2001
and twelve-month period ended December 31, 2000 (collectively, the "Financial
Statements"). The Financial Statements are substantially (i) accurate, correct
and complete, (ii) prepared in accordance with the books of account and records
of the Seller, and (iii) fair presentations of the financial condition and the
results of operations of the Seller as of the dates and for the periods
indicated. To the Seller's knowledge, the Seller, the Business and the Purchased
Assets are not subject to any material liability or obligation (whether
absolute, accrued, contingent or otherwise) that is not disclosed or provided
for in the Financial Statements or in the schedules attached hereto. The
revenues set forth in any documents provided by the Seller to the Buyer
represent all material revenues from the Contracts or associated with the
Business and the Other Products and Services, and the costs provided by the
Seller to the Buyer represent all material direct costs associated with
fulfilling the Seller's obligations under the Contracts, operating the Business
and providing the Other Products and Services.
3.5 NO LIABILITIES. Except as disclosed on Schedule 3.5, there are no
Liabilities of the Seller relating to the Business or the Purchased Assets,
other than (i) those Liabilities reflected on the Balance Sheet and not
previously paid or discharged and (ii) Liabilities incurred since the Balance
Sheet Date in the ordinary course of business consistent with past practice that
are not in the aggregate material to the Business.
3.6 PURCHASED ASSETS. The Seller does not own any real property. Except for
the Liens listed in Schedule 3.6 (the "Assumed Liens"), the Seller is the sole
and exclusive legal and equitable owner of all right, title and interest in and
has good and marketable title to all of the Purchased Assets, free and clear of
any and all Liens, except for the Assumed Liens. All of the Purchased Assets may
be transferred to the Buyer without the consent or approval of any person, free
and clear of any Liens, except for the Assumed Liens. The Purchased Assets are
in operating order (reasonable wear and tear excepted). Schedule 1.3(d) sets
forth a true and correct list of all of the EarthLink Circuits and all other
assets sold to EarthLink under the EarthLink Agreement.
3.7 CONTRACTS. To the Seller's knowledge, Schedule 3.7 sets forth an
accurate and complete list of each note, bond, mortgage, contract, license,
lease, commitment, indenture, agreement or other arrangement of the Seller in
effect as of the date of this Agreement relating to
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the Business and to which the Seller is a party or which affects the Business or
the Purchased Assets (the "Contracts"). Each Contract is legal, valid, binding,
enforceable and in full force and effect. To the Seller's knowledge and except
as disclosed in Schedule 3.7, no Contract has been breached or cancelled by the
other party and the Seller has no knowledge of any anticipated breach by any
other party to any Contract. Except for customer payment delinquencies included
in the Receivables and the Seller's payment delinquencies to its vendors, no
event has occurred which with the passage of time or the giving of notice or
both would result in a default or breach under any of the Contracts. Except for
the Seller's current inability to make full payment to its creditors, the Seller
does not have a present expectation or intention of not fully performing any
material obligation pursuant to any Contract, nor does the Seller have any
reason to believe that any party to any Contract will not fulfill any of its
obligations under such Contract in all material respects or, except as disclosed
in Schedule 3.7, is insolvent or is threatened with insolvency. The Seller has
provided the Buyer with a true and correct copy or the original of all written
Contracts, in each case together with all amendments, waivers or any material
changes thereto. To the Seller's knowledge, Schedule 3.7 contains an accurate
and complete description of all oral Contracts and the material terms thereof.
Except as set forth on Schedule 3.7, no consent is required, and no change of
control provisions are triggered, with respect to any of the Contracts in
connection with the execution, delivery and performance of this Agreement or the
Related Documents or the consummation of the transactions contemplated hereby
and thereby.
3.8 MAJOR CUSTOMERS AND DISTRIBUTORS. Schedule 3.8 sets forth an accurate,
correct and complete list of the customers and distributors who accounted for 5%
or more of the revenue of the Business during the seven (7) months ended July
31, 2001. Except as disclosed in Schedule 3.8, the Seller does not have any
knowledge of any fact, condition or event (i) which would reasonably be expected
to cause the Buyer's relationship with any customer or distributor set forth in
Schedule 3.8 to be materially and adversely different than the relationship of
such customer or distributor with respect to the Business since January 1, 2001,
or (ii) which would materially and adversely affect any customer's or
distributor's ability to purchase products or services from the Buyer. Except as
disclosed in Schedule 3.8, no such customer or distributor has threatened to
terminate its relationship with the Seller or has since January 1, 2001
materially decreased, limited, or changed the terms and conditions for the
purchase of goods or services from the Business and, to the Seller's knowledge,
no such customer or distributor expects or intends to materially decrease, limit
or change the terms and conditions for the purchase of goods or services from
the Business after the consummation of the Transaction.
3.9 INTELLECTUAL PROPERTY. To the Seller's knowledge, the Seller has title
to and ownership of (or adequate licenses for) all patents, trademarks, service
marks, trade names, copyrights, trade secrets, information, proprietary rights
and processes (collectively "Proprietary Rights") used in its business as now
conducted and as proposed to be conducted, which rights are set forth on
Schedule 3.9. The Seller does not have actual knowledge of any conflict with or
infringement of the rights of others. Except as set forth on Schedule 3.9, to
the Seller's knowledge, there are no outstanding options, licenses, or
agreements of any kind relating to such Proprietary Rights, nor is the Seller
bound by or a party to any options, licenses or agreements of any kind with
respect to the Proprietary Rights of any other person or entity. The Seller has
not received any communications alleging that the Seller has violated or, by
conducting the Business as proposed, would violate any of the Proprietary Rights
of any other person or entity. To the best of the Seller's knowledge, none of
the Seller's current employees is, by virtue of such
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employee's activities in connection with the Business, violating, infringing or
appropriating any Proprietary Rights of any former employer of such employee.
3.10 RECEIVABLES.
The Receivables have a face value of approximately $200,000 and constitute
the genuine, legal, valid and binding payment obligations of the persons
obligated therefore, enforceable by the holder thereof in accordance with their
terms, except as enforceability may be subject to or limited by bankruptcy,
insolvency, reorganization, moratorium, liquidation or other similar laws
affecting the enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such enforceability shall be
considered in a proceeding in equity or at law. No facts are known to the Seller
that would cause the aggregate realizable value of the Receivables, taking into
account payment risk with respect thereto, to be materially different from the
face value of the Receivables.
3.11 TAXES.
(a) The Seller has timely filed all returns and reports required to be
filed for Taxes (as defined in Section 8.1) (collectively, the "Returns").
All Returns were correct and complete in all material respects. All Taxes
owed by the Seller (whether or not shown on any Return) have been paid when
due which, if not timely paid, could give rise to a claim or Lien against
the Purchased Assets or the Business, except where the failure to pay such
Taxes would not have a material adverse effect on the Seller. Except with
respect to the Returns listed on Schedule 3.11, the Seller is not currently
the beneficiary of any extension of time within which to file any Return.
(b) There is no action, suit, proceeding, investigation, audit or
claim now pending or, to the knowledge of the Seller, threatened by any
authority regarding any Taxes relating to the Seller or the Purchased
Assets which could give rise to a claim or Lien against the Purchased
Assets or the Business in an amount greater than $5,000.
(c) There are no liens or security interests on any of the Purchased
Assets that arose in connection with any failure (or alleged failure) to
pay any Taxes.
3.12 COMPLIANCE WITH LAWS. To the Seller's knowledge, the Seller has
complied and is currently in compliance in all material respects with all laws,
regulations, rules, orders, permits, judgments, decrees and other requirements
and policies imposed by any governmental authority applicable to the Business or
the Purchased Assets. The Seller has not received any notice or citation for
noncompliance with any of the foregoing, and, to the knowledge of the Seller,
there exists no condition, situation or circumstance, nor has there existed such
a condition, situation or circumstance, which, after notice or lapse of time, or
both, would constitute noncompliance with or give rise to future liability with
regard to any of the foregoing. The Seller has all licenses, permits, approvals,
or qualifications from any governmental authority reasonably necessary for the
conduct of the Business and all such items are in full force and effect.
3.13 LEGAL PROCEEDINGS. Except as described in Schedule 3.13, the Seller is
not engaged in or a party to or, to its knowledge, threatened with any
litigation, dispute, claim,
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action, suit or other proceeding. The Seller does not have knowledge of any
investigation threatened or contemplated by any governmental or regulatory
authority with respect to the Seller, the Business or any of the Purchased
Assets. Neither the Seller nor the Business nor any of the Purchased Assets are
subject to any judgment, order, writ, injunction, stipulation or decree of any
court or any governmental agency or any arbitrator.
3.14 EMPLOYEE BENEFIT PLANS. To the Seller's knowledge, neither the Seller
(nor any member of the Seller's controlled group within the scope of Code
Section 414(b), (c), (m) or (o)), has any liability to or in connection with any
multi-employer plan (within the meaning of Section 3(37) of ERISA) or any
employee benefit plan (within the meaning of Section 3(3) of ERISA) (a "Benefit
Plan") which could have an adverse impact upon the Purchased Assets or which
would subject the Purchased Assets to any Lien under ERISA or the Code.
3.15 TRANSACTIONS WITH AFFILIATES. Except as set forth on Schedule 3.15, no
Affiliate (as hereinafter defined) of the Seller (a) owns, directly or
indirectly, any interest in any entity which is a competitor, customer, or
supplier of the Business; (b) has any interest in, owns or has access to any
Purchased Assets, except for the Assumed Liens; or (c) is a party to any
contract, lease, agreement, arrangement or commitment used in the Business.
3.16 SOLVENCY. The Seller is not entering into this Agreement with actual
intent to hinder, delay or defraud creditors.
3.17 BOOKS AND RECORDS. To the Seller's knowledge, any written information
delivered or made available to Buyer is complete and accurate in all material
respects. Seller does not have any of its records, systems, controls, data or
information used by, concerning or related to the Business recorded, stored,
maintained, operated or otherwise wholly or partly dependent upon or held by any
means (including any electronic, mechanical or photographic process, whether
computerized or not) which (including all means of access thereto and therefrom)
are not under the exclusive ownership and direct control of the Seller.
3.18 BROKERS. The Seller has not retained any broker, finder or agent or
incurred any liability or obligation for any brokerage fees, commissions or
finders fees with respect to this Agreement or the Related Documents or the
transactions contemplated hereby or thereby.
3.19 DISCLOSURE. The representations and warranties of the Seller contained
in this Agreement and the Related Documents to which it is a party and each
schedule or other written statement delivered pursuant hereto or thereto do not
contain and will not contain any untrue statement of material fact and do not
omit and will not omit any material fact necessary in order to make the
statements and information contained herein or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Seller, as of the date
hereof, as set forth below:
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4.1 AUTHORITY. The Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. It has full right,
power, authority and sufficient assets with immediate liquidity, to execute and
deliver this Agreement and the Related Documents to which it is a party and to
carry out the transactions contemplated hereby and thereby. All corporate and
other acts or proceedings required to be taken by it to authorize the execution,
delivery and performance of this Agreement, the Related Documents to which it is
a party and the transactions contemplated hereby and thereby, have been duly and
properly taken.
4.2 VALIDITY. This Agreement and the Related Documents to which the Buyer
is a party have been duly executed and delivered and constitute its valid and
legally binding obligations, enforceable against it in accordance with their
respective terms. The execution and delivery of this Agreement and the Related
Documents to which the Buyer a party and the consummation of the transactions
contemplated hereby and thereby do not and will not result in the creation of
any Lien or the termination or acceleration of any obligation of or relating to
it and are not prohibited by, do not and will not violate or conflict with any
provision of, and do not and will not constitute a default under or a breach of
(i) its charter or by-laws, (ii) any license, instrument or agreement to which
it is a party or is bound, (iii) any order, writ, injunction, decree or judgment
of any court or governmental agency, or (iv) any Laws applicable to it. No
approval, authorization, registration, consent, order or other action of or
filing with any person, court or governmental authority is required for the
execution and delivery by the Buyer of this Agreement and the Related Documents
to which it is a party or the consummation of the transactions contemplated
hereby or thereby.
4.3 BROKERS. The Buyer has not retained any broker, finder or agent or
incurred any liability or obligation for any brokerage fees, commissions or
finders fees with respect to this Agreement or the Related Documents or the
transactions contemplated hereby.
ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
OF THE SELLER AND THE BUYER
The Seller hereby agrees to keep, perform and fully discharge the following
covenants and agreements.
5.1 CONDUCT OF BUSINESS. From to date hereof to and including the Closing
Date, the Seller shall conduct the Business in the ordinary course consistent
with past practice and with no less diligence and effort than would be applied
in the absence of this Agreement, shall seek to preserve intact the current
Business organization and shall use reasonable efforts to keep available the
services of the current officers and employees and to preserve their and the
Seller's relationships with customers, suppliers and others having business
dealings with the Business.
5.2 FURTHER ASSURANCES AND POST-CLOSING UNDERTAKINGS. From time to time
after the Closing Date, at the Buyer's request and without further
consideration, the Seller shall execute, acknowledge and deliver such documents,
instruments or assurances and take such other actions as the Buyer may
reasonably request to implement the transactions contemplated hereby, including,
with respect to assigning, conveying and transferring to the Buyer any of the
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Purchased Assets, obtaining any consents, permits or authorizations required
from any third party or any governmental authority for the transfer of the
Purchased Assets and the Business to the Buyer.
5.3 NONASSIGNABLE CONTRACTS.
(a) To the extent that the assignment by the Seller of any Contract is
not permitted without (i) the consent of the other party to the Contract,
or (ii) prior notice to such other party, then at the option of the Buyer,
neither this Agreement nor any Related Document shall be deemed to
constitute an assignment or an attempted assignment of the same, if such
assignment or attempted assignment would constitute a breach thereof. The
Seller shall use reasonable efforts to obtain any and all such consents,
approvals and novations, and to give all required notices after the date
hereof.
(b) If any necessary consent, approval or novation is not obtained,
the Seller shall cooperate with the Buyer in any arrangement reasonably
acceptable to the Buyer to provide the Buyer with all of the benefits under
such Contract, as if such consent, approval or novation had been obtained,
including (i) subleases from the Seller and undertakings by the Buyer of
the work necessary to complete Contracts as the agent of the Seller, (ii)
enforcing any rights of the Seller arising with respect thereto (including,
without limitation, the right to terminate in accordance with the terms
thereof upon the advice of the Buyer) and (iii) permitting the Buyer to
enforce any rights arising with respect thereto as if such non-conveyed
contracts had been sold, conveyed, assigned and delivered to the Buyer.
Nothing herein shall excuse the Seller from responsibility for any of its
representation and warranties or covenants herein.
5.4 NON-COMPETITION.
(a) For the period commencing with the Closing Date and ending on the
second (2nd) anniversary of the Closing Date, neither the Seller nor any of
its Affiliates shall, for any reason whatsoever, directly or indirectly,
for himself, herself, itself or on behalf of or in conjunction with any
other Person:
(i) engage as a stockholder, officer, director, owner, partner, joint
venturer, or in a managerial capacity, whether as an employee,
independent contractor, consultant or advisor, in any business
selling any products or services in direct competition with the
Business;
(ii) employ, or call upon for the purpose or with the intent of
enticing away from or out of the employ of the Buyer or its
Affiliates, any person who is at that time, or was within one (1)
year prior to that time, an employee of the Buyer or the Seller
(with respect to the Business) or their Affiliates; or
(iii) call upon any Person who or that is at that time, or has been
within one (1) year prior to that time, a customer of the Buyer
or the Seller (with respect to the Business) or their Affiliates
for the purpose of soliciting or selling products or services
related to the Business in competition with the Buyer or its
Affiliates; provided, however, that nothing contained in this
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Agreement shall prohibit the Seller from soliciting or selling to
any Person products or services related to the Other Products and
Services.
(b) Because of the difficulty of measuring economic losses to the
Buyer and its Affiliates as a result of a breach of the foregoing
covenants, and because of the immediate and irreparable damage that could
be caused to the Buyer and its Affiliates for which it would have no other
adequate remedy, the Seller agrees that the foregoing covenants may be
enforced by the Buyer in the event of breach by the Seller, in addition to,
but not in lieu of, any other available remedies, by injunctions and
restraining orders and other equitable remedies.
(c) It is agreed by the Parties that the covenants in this Section 5.4
impose a reasonable restraint on the Seller and its Affiliates in light of
the activities and business of the Buyer and its Affiliates on the date of
the execution of this Agreement and the current plans of the Buyer and its
Affiliates as known to the Seller.
(d) The covenants in this Section 5.4 are severable and separate, and
the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the
Parties that such restrictions be enforced to the fullest extent that the
court deems reasonable, and the Agreement shall thereby be reformed.
5.5 CONFIDENTIALITY. Except as permitted in Section 8.6, the Buyer and the
Seller shall hold in strict confidence, and shall use their respective best
efforts to cause their respective officers, directors, members, employees and
agents to hold in strict confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all information
concerning the other Party and its Affiliates and the Business which is created
or obtained prior to, on or after the date hereof in connection with the
transactions contemplated hereby, and neither the Buyer nor the Seller shall use
or disclose to others or permit the use of or disclosure of any such information
created or obtained except to the extent that such information can be shown to
have been: (i) known to the Party prior to commencement of discussions regarding
the Transaction; (ii) in the public domain through no fault of the disclosing
party; or (iii) made available to the Party on a non-confidential basis from a
source other than the other Party or its respective Affiliates.
5.6 SELLER'S EMPLOYEES. The Seller hereby consents to the Buyer's hiring of
the Seller's key employees at the Buyer's discretion in connection with the
transactions contemplated by this Agreement and the Related Documents and hereby
waives any provisions of any agreements between it and any such employee which
may be breached by, or may conflict with, such hiring in any way, including
without limitation any provisions with respect to confidential information,
non-solicitation or non-competition.
5.7 BULK TRANSFER COMPLIANCE. The Seller shall indemnify and hold harmless
the Buyer (and its officers, directors, shareholders and agents) against any and
all expense, loss, damage or liability, including court costs and reasonable
attorneys' fees, arising from or related to claims asserted by third parties due
to noncompliance by the Buyer or the Seller with applicable bulk transfer laws
and worker adjustment and retraining notification (WARN) laws.
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5.8 RELEASES OF THE SELLER. The Buyer shall use reasonable commercial
efforts to obtain creditor-executed releases of the Seller from all of the
claims of the creditors listed in Schedule 1.4 within 30 days of the Closing
Date.
5.9 SUSPENSION OF THE BUYER'S CUSTOMER ACCOUNTS. In connection with the
Seller's efforts to collect the Receivables, at anytime and from time to time
after the Closing Date, within three (3) business days of the receipt of the
Seller's written or e-mail notification, the Buyer shall suspend and/or restore
its services to such former customers of the Seller as directed in such
notifications provided that, for each such suspension to occur, such customers
shall have delinquent amounts payable to the Seller included in the Receivables
that remain unpaid. The Buyer shall promptly confirm in writing or by e-mail to
the Seller each such suspension and restoration of services. As an alternative
to suspending its service to a customer, at the Buyer's option, the Buyer may
pay to CapuNet such unpaid amounts and notify the customer that the customer's
payments to the Buyer have been or will be applied first towards the oldest
balance included in the Receivables. Upon collection of the full amount of a
suspended customer's balance included in the Receivables, the Seller shall
promptly notify the Buyer in writing or by e-mail to restore such services.
ARTICLE VI
CLOSING
6.1 CLOSING. The closing of the purchase and sale of the Purchased Assets
and the other transactions contemplated hereby (the "Closing") shall take place
at the offices of Xxxx Xxxxxxx, 0000 X Xxxxxx, X.X., Xxxxxxxxxx, XX 00000,
simultaneously with the execution of this Agreement (such date, the "Closing
Date").
6.2 CONDITIONS TO THE OBLIGATIONS OF THE BUYER. The obligations of the
Buyer to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction and fulfillment, on or before the Closing Date
hereunder, of the following conditions, all or any of which may be waived in
whole or in part by the Buyer:
(a) the Seller shall have duly executed and delivered or caused to
have been duly executed and delivered to the Buyer: (i) a Xxxx of Sale for
the Purchased Assets substantially in the form of EXHIBIT A hereof (the
"Xxxx of Sale"); (ii) an Assignment and Assumption Agreement substantially
in the form of EXHIBIT B hereof (the "Assignment"); (iii) all documents and
the instruments of conveyance and transfer required to vest in the Buyer
legal, valid and marketable title to the Purchased Assets, subject to the
Assumed Liens; (iv) evidence of limited liability company action of the
managing member of the Seller authorizing the execution and delivery of
this Agreement and the Related Documents to which it is a party and
consummation of the transactions contemplated herein; (v) the certificate
of an executive officer of the Seller on behalf of the Seller confirming
that the conditions in paragraphs (b) and (c) of this Section 6.2 have been
satisfied; and (vi) all such other documents, instruments and writings to
be delivered or reasonably required to be delivered by the Seller at or
prior to the Closing relating to the sale of the Purchased Assets;
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(b) the representations and warranties made herein by the Seller shall
be true and correct in all respects as of the Closing Date;
(c) the Seller shall have fully performed all covenants of the Seller
specified in this Agreement which are required to be performed by the
Seller as of the Closing Date;
(d) there will not be any action, suit or proceeding pending or
threatened before any court or quasi-judicial or administrative agency of
any federal, state, local or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling or
charge would prevent consummation of any of the transactions contemplated
by this Agreement;
(e) except as disclosed on Schedule 6.2(e), there shall have been,
between the Balance Sheet Date and the Closing Date, no material adverse
effect on the Purchased Assets or on the Business or the Seller's revenues,
costs, equipment, technology or relations with customers, suppliers,
distributors or regulators;
(f) the Settlement, Termination and Migration Agreement, of even date
herewith and substantially in the form attached hereto as EXHIBIT C (the
"Settlement Agreement"), among the Buyer, the Seller and Covad
Communications Company ("Covad") shall have been executed by each party
thereto;
(g) the Buyer shall have received a certificate, dated the date
hereof, from the Chief Financial Officer of Covad to the effect that the
Prior Liabilities (as defined in the Settlement Agreement) have, prior to
the date hereof, been written down on the books of Covad to equal an
aggregate of $450,000;
(h) the Seller shall have received consents under all Contracts set
forth on Schedule 6.2(h); and
(i) the Buyer shall be fully satisfied in its sole and absolute
discretion with the results of its review of, and its other due diligence
investigations with respect to, the Business.
6.3 CONDITIONS TO THE OBLIGATIONS OF THE SELLER. The obligation of the
Seller to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction and fulfillment, on or before the Closing Date, of
the following conditions, all or any of which may be waived in whole or in part
by the Seller:
(a) the Buyer shall have executed and delivered or caused to have been
executed and delivered to the Seller: (i) the Assignment; (ii) the
certificate of an executive officer of the Buyer on behalf of the Buyer
confirming that the conditions in paragraphs (c) and (d) of this Section
6.3 have been satisfied; and (iii) all such other documents, instruments
and writings to be delivered or reasonably required to be delivered by the
Buyer at or prior to the Closing relating to the sale of the Purchased
Assets;
(b) the Buyer shall have delivered to the Seller the Purchase Price;
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(c) the representations and warranties made herein by the Buyer shall
be true and correct in all respects as of the Closing Date; and
(d) the Buyer shall have fully performed all covenants of the Buyer
specified in this Agreement that are required to be performed by the Buyer
as of the Closing Date.
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
7.1 SURVIVAL. All covenants and agreements contained in this Agreement, the
Related Documents or any agreement or other document delivered pursuant hereto
or thereto shall survive the Closing and be enforceable until the covenant or
agreement has been fully performed. All representations and warranties contained
in this Agreement or in the Related Documents or in any agreement or other
document delivered pursuant hereto or thereto shall survive the Closing until
the first anniversary of the Closing Date hereof and shall thereafter expire,
except with respect to claims made prior to the first anniversary. The
representations and warranties set forth in this Agreement or in the Related
Documents or in any agreement or other document delivered pursuant hereto or
thereto shall not be affected by any investigation, verification or examination
by any party hereto or by anyone on behalf of any such party.
7.2 SELLER'S INDEMNIFICATION. The Seller covenants and agrees to indemnify,
defend, protect and hold harmless the Buyer from, against and in respect of all
Damages (as defined below) suffered, sustained, incurred or paid by the Buyer in
any action, proceeding or controversy between the Buyer and the Seller or any of
their respective members, officers, directors, employees, assigns, successors
and Affiliates or between the Buyer and a third party, in connection with,
resulting from or arising out of, directly or indirectly: (i) the material
inaccuracy of any representation or the material breach of any warranty set
forth in this Agreement or in any Related Document or in any certificate
delivered on the part of the Seller in connection with the Closing; (ii) the
nonfulfillment of any covenant or agreement on the part of the Seller set forth
in this Agreement, in any Related Document or in any agreement executed and
delivered by the Seller pursuant hereto or thereto; (iii) the bulk transfer or
bulk sale provisions of any applicable law; (iv) any Benefit Plan and any and
all benefits accrued under any Benefit Plan as of the Closing Date and any and
all other liabilities arising out in connection with the operation of a Benefit
Plan through the Closing Date; (v) any and all taxes which are imposed on the
Buyer in respect of the Seller's income, business, property or operations or for
which the Buyer may otherwise be liable as a successor to the Seller (x) for any
taxable period or portion thereof ending on or prior to the Closing Date, or (y)
resulting by reason of the several liability of the Seller pursuant to Treasury
Regulations Section 1.1502-6 or any analogous state, local or foreign law or
regulation or by reason of the Seller having been a member of any consolidated,
combined or unitary group on or prior to the Closing Date; and (vi) to the
extent not disclosed herein, the business, operations or assets of the Seller on
or before the Closing Date or any actions before the Closing Date of the Seller
or any of its respective members, officers, employees, assigns, successors and
Affiliates. All indemnification rights of the Buyer shall be deemed to apply in
favor of its officers, directors, employees, assigns, successors and Affiliates.
The term "Damages" shall mean all liabilities, losses, claims, damages, punitive
damages, causes of actions, lawsuits, administrative proceedings (including
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informal proceedings), investigations, audits, demands, assessments,
adjustments, judgments, settlement payments, deficiencies, penalties, fines,
excise taxes, interest (including interest from the date of such damages) and
costs and expenses (including, without limitation, reasonable attorneys' fees
and disbursements of every kind, nature and description).
7.3 BUYER'S INDEMNIFICATION. The Buyer covenants and agrees to indemnify,
defend, protect and hold harmless the Seller from, against and in respect of all
Damages suffered, sustained, incurred or paid by the Seller in any action,
proceeding or controversy between the Buyer and the Seller or any of its
respective members, officers, directors, employees, assigns, successors and
Affiliates or between the Seller and a third party, in connection with,
resulting from or arising out of, directly or indirectly: (i) the material
inaccuracy of any representation or the material breach of any warranty set
forth in this Agreement or in any Related Document or in any certificate
delivered on the part of the Buyer in connection with the Closing and (ii) the
nonfulfillment of any covenant or agreement on the part of the Buyer set forth
in this Agreement, in any Related Document or in any agreement executed and
delivered by the Buyer pursuant hereto or thereto. All indemnification rights of
the Seller shall be deemed to apply in favor of its officers, members,
employees, assigns, successors and Affiliates.
7.4 RIGHT TO SETOFF. In the event the Seller shall have an indemnification
obligation to the Buyer, the Buyer shall be permitted to seek satisfaction of
such obligation through an offset against the Purchase Price. No limitation on
such right of offset shall otherwise affect the Buyer's rights under this
Article VII or otherwise. The remedy of offset shall be in addition to and not
in limitation of any injunctive relief or other rights or remedies to which the
Buyer may be entitled at law or equity under this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
8.1 CERTAIN DEFINITIONS.
(a) The term "Affiliate" shall mean as to any party, any person which
directly or indirectly, is in control of, is controlled by, or is under
common control with, such party, including any person who would be treated
as a member of a controlled group under Section 414 of the Code, and any
officer or director of such party and, as to a party who is a natural
person, such person's spouse, parents, siblings and lineal descendants. For
purposes of this definition, an entity shall be deemed to be "controlled
by" a person if the person possesses, directly or indirectly, power either
to (i) vote ten percent (10%) or more of the securities (including
convertible securities) having ordinary voting power or (ii) direct or
cause the direction of the management or policies of such entity whether by
contract or otherwise.
(b) The term "Code" shall mean the United States Internal Revenue Code
of 1986, as amended.
(c) The term "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
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(d) The term "Liability" shall mean, without limitation, any direct or
indirect liability, indebtedness, guaranty, endorsement, claim, loss,
damage, deficiency, cost, expense, obligation or responsibility, either
accrued, absolute, contingent, mature, unmature or otherwise and whether
known or unknown, fixed or unfixed, xxxxxx or inchoate, liquidated or
unliquidated, secured or unsecured.
(e) The term "Lien" shall mean any lien, claim, pledge, option,
charge, easement, security interest, right-of-way, encumbrance, mortgage,
lease, license, covenant or any other right or restriction of any kind or
character, direct or indirect, whether accrued, absolute, contingent or
otherwise.
(f) The term "Taxes," or "Tax," shall mean all federal, state, local,
foreign, income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental,
customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax or charge by any governmental
authority of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.
8.2 AMENDMENTS AND WAIVER. No amendment, waiver or consent with respect to
any provision of this Agreement shall in any event be effective, unless the same
shall be in writing and signed by the Parties, and then such amendment, waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given.
8.3 NOTICES. Any notice required to be given hereunder shall be sufficient
if in writing, and sent by courier service (with proof of service), facsimile
transmission, hand delivery (with proof of service) or certified or registered
mail (return receipt requested and first-class postage prepaid), addressed as
follows:
If to the Buyer:
Network Access Solutions Corporation
Three Dulles Tech Center
00000 Xxxxxx Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxx
Facsimile: 000-000-0000
With a copy to:
Xxxx Xxxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: 202-663-8007
If to the Seller:
CapuNet, LLC
0000 Xxxxxxxxx Xxxxxxxxx
00
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxx
Facsimile: 000-000-0000
With a copy to:
Stein, Sperling, Bennett, Dejong, Xxxxxxxx and Xxxxxxxxx
00 Xxxx Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Facsimile: 301-340-8217
(or to such address as any party shall specify by written notice so given), and
shall be deemed to have been delivered as of the date so personally delivered or
mailed.
8.4 VALIDITY AND SEVERABILITY. Each provision of this Agreement shall be
construed in such a manner so as to give such provision the fullest legal force
and effect possible. To the extent any provision hereof (or part of such
provision) is held to be unenforceable or invalid when applied to a particular
set of facts, or otherwise, the unenforceability or invalidity of such
provisions (or part thereof) shall not affect the enforceability or validity of
the remaining provisions hereof (or the remaining parts of such provision),
which shall remain in full force and effect, nor shall such unenforceability or
invalidity render such provision (or part thereof) inapplicable to other facts
in the context of which such provision (or part thereof) would be held legally
enforceable and/or valid.
8.5 ENTIRE AGREEMENT. This Agreement, the Related Documents and the other
agreements and instruments executed by the Parties on the date hereof constitute
the entire agreement and understanding of the Parties with respect to the
matters set forth herein, and representations, promises, agreements or
understandings, written or oral, which are not contained herein or therein shall
be of no force or effect. Any and all prior agreements and understandings,
whether written or oral, are hereby terminated and canceled and deemed null and
void. No change, modification or waiver of any provision hereof shall be valid
or binding unless the same is in writing and signed by the party against whom
such change, modification or waiver is sought to be enforced; moreover, no valid
waiver of any provision of this Agreement at any time shall be deemed a waiver
of any other provision of this Agreement at such time or will be deemed a valid
waiver of such provision at any other time.
8.6 PUBLICITY. Except as otherwise required by law, no Party shall issue
any press release or make any other public statement, in each case relating to,
connected with or arising out of this Agreement or the matters contained herein,
without obtaining the prior approval of the other Party to the contents and the
manner of presentation and publication thereof; provided, that the Buyer and the
Seller shall have the right to communicate to customers, and the Seller to its
creditors, in general terms the Buyer's acquisition of the Business.
8.7 PARTIES IN INTEREST. This Agreement shall inure to the benefit of, and
shall be binding upon, the Parties and their respective heirs, executors or
administrators, personal or legal representatives, successors and assigns.
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8.8 HEADINGS. The headings in this Agreement are inserted for convenience
and reference only and are not intended to be used in construing or interpreting
any of the provisions of this Agreement.
8.9 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the internal laws of the State of Delaware, without resort to
any conflicts or choice of laws principles.
8.10 COUNTERPARTS. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute the same instrument.
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IN WITNESS WHEREOF, each of the Parties has executed this Agreement as of
the day and year first above written.
BUYER
NETWORK ACCESS SOLUTIONS CORPORATION
By: /S/ XXX XXXX
--------------------------------
Name: Xxx Xxxx
Title: CEO
SELLER
CAPUNET, LLC
By: /S/ XXXX X. XXXXXX
--------------------------------
Name: Xxxx X. Xxxxxx
Title: Managing Member
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--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
BETWEEN
NETWORK ACCESS SOLUTIONS CORPORATION
AND
CAPUNET, LLC
AUGUST 31, 2001
--------------------------------------------------------------------------------
LIST OF SCHEDULES AND EXHIBITS
SCHEDULE 1.2(b)(i)
Accounts Being Transferred
SCHEDULE 1.2(b)(ii)
Space and Operations in the Central Offices Being Transferred
SCHEDULE 1.3(d)
EARTHLINK CIRCUITS
SCHEDULE 1.3(g)
Excluded Assets Related to the Business
SCHEDULE 1.4
Assumed Liabilities and Unearned Revenue Obligations
SCHEDULE 1.5
Allocation of Consideration
SCHEDULE 3.4
Financial Statements
SCHEDULE 3.5
Other Liabilities
SCHEDULE 3.6
Assumed Liens
SCHEDULE 3.7
Contracts
SCHEDULE 3.8
Major Customers and Distributors
SCHEDULE 3.9
Proprietary Rights of Seller
SCHEDULE 3.11
Tax Returns
SCHEDULE 3.13
Legal Proceedings
SCHEDULE 3.15
Transactions with Affiliates
SCHEDULE 6.2(e)
Material Adverse Changes
SCHEDULE 6.2(h)
Required Consents
EXHIBIT A
Form of Xxxx of Sale
EXHIBIT B
Form of Assignment and Assumption Agreement
EXHIBIT C
Form of Covad Settlement Agreement