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EXHIBIT 2.5
ASSET PURCHASE AGREEMENT
AGREEMENT made as of this 4th day of February, 1999 between
TELEPHONETICS INTERNATIONAL, INC., a Florida corporation with a principal place
of business at ▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), ▇▇▇▇
▇▇▇▇▇▇ an individual residing at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇,
("Shareholder") and TELEPHONETICS, INC., a Delaware corporation having an office
at ▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Buyer").
W I T N E S S E T H :
WHEREAS, the Company desires to sell and the Buyer desires to purchase
on the date hereof (the "Closing Date") the business of the Company as a going
concern (the "Business") consisting of the Purchased Assets (hereinafter
defined), and the Assumed Liabilities (as hereinafter defined), for a purchase
price determined as set forth in Exhibit A (the "Purchase Price") and for the
assumption of the Assumed Liabilities (hereinafter defined); and
WHEREAS, the Shareholder is the owner of more than 97% of the common
stock of the Company; and
WHEREAS, the Shareholder joins in the execution of this Agreement as
the controlling Shareholder, director and officer of the Company and is familiar
with the material aspects of operations of the business of the Company,
including, without limitation, the Business.
WHEREAS, SAGE NETWORKS, INC., a Delaware corporation ("Parent") is the
owner of all of the capital stock of the Buyer.
NOW THEREFORE, in consideration of the mutual covenants and promises
contained in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by all parties, the
parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE;
REPRESENTATIONS AND WARRANTIES
SECTION 1. PURCHASE AND SALE. Subject to the terms and conditions of
this Agreement, the Company hereby sells, assigns and transfers to the Buyer and
the Buyer hereby
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purchases and acquires from the Company, all of the right, title and interest of
the Company in and to the Purchased Assets (as hereinafter defined) for the
Purchase Price set forth herein.
SECTION 2. REPRESENTATIONS OF THE COMPANY AND SHAREHOLDER. The
following agreements, representations and warranties are made by the Company and
the Shareholder, jointly and severally, to the Buyer.
(A) Corporate Matters; No Conflict. The Company is duly formed,
organized, is validly existing and in good standing under the laws of its state
of incorporation as set forth in Exhibit A, maintains offices only at the sites
listed on Exhibit A and has no other operations other than from those sites, is
qualified or authorized to transact business and is in good standing in each
other jurisdiction in which it is doing business, except where failure to be
qualified or be in good standing would not have a material adverse effect on the
business of the Company, and has the corporate power to enter into this
Agreement, to perform its obligations hereunder and to conduct its business as
currently conducted. The execution, delivery and performance of this Agreement
and the transactions contemplated hereby by the Company and by the Shareholder
will not (i) conflict with or violate the provisions of any applicable law
(including, without limitation, any bulk sales laws), rule or order or the
Company's Articles or Certificate of Incorporation, By-laws or any other
organizational or governing documents of the Company, (ii) conflict with or
constitute a default under any agreement or contract by which the Company or the
Shareholder is bound or (iii) require the consent or approval of, or filing
with, any governmental body or third party except as set forth on Exhibit C-5.
The execution, delivery and performance by the Company of this Agreement has
been duly authorized and approved by all requisite corporate action on the part
of the Company. The Shareholder are all the beneficial and/or record owners of
the issued and outstanding shares of capital stock of the Company and the
Shareholder own the number of shares of such stock set forth opposite his or her
name on Exhibit A. Also set forth on Exhibit A is the total number and type of
authorized shares and outstanding shares of capital stock of the Company. Set
forth on Exhibit B is a list of officers and directors of the Company, all trade
names used by the Company and all jurisdictions in which the Company is doing
business. This Agreement and the consummation of the transactions contemplated
hereby have been approved by the Shareholder (if required by its By-Laws or
applicable law) and by the board of directors of the Company, and the authorized
officers of the Company named on Exhibit A are jointly and severally authorized
and empowered by the Company to execute and deliver this Agreement in the name
and on behalf of the Company.
(B) Purchased Assets. (i) All vendor and customer contracts,
confidentiality agreements, purchase and sales orders, powers of attorney,
undertakings, commitments and other agreements to which the Company is a party
and which relate in any manner to the Business and/or the relationship between
the Company and the Customers (hereinafter defined), whether written or oral,
shall be referred to herein collectively as the "Business Agreements". The
Company has delivered to Buyer, on or before the Closing Date, true and correct
copies of all written Business Agreements. Attached hereto as Exhibit C-1 are
true and correct copies of the only forms of agreements which have been entered
into between the Company and its Customers concerning the Business. Attached
hereto as Exhibit C-2 is a
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schedule of all agreements which have been entered into between the Company and
its Customers concerning the Business, copies of which have been delivered to
Buyer prior to the Closing. Annexed as Exhibit C-2 is a detailed summary of all
oral Business Agreements, as well as a list of all Business Agreements between
the Company and vendors or service providers, or which relate to any strategic
partnerships, reselling arrangements or joint ventures between the Company and
others, concerning the Business. Listed on Exhibit C-3 is a description of each
and every real estate, equipment and personal property lease (collectively, the
"Leases" to which the Company is a party and which relates to the Business. The
Leases are also included within the definition of Business Agreements as said
term is used herein. Neither the Company nor any other party, is in default
under any Business Agreement and no other party to any Business Agreement has
made any claim or given the Company notice of any dispute under any Business
Agreement, except as set forth on Exhibit C-4. Each Business Agreement is in
full force and effect. The Company has the right to assign the Business
Agreements and the Company has obtained all required consents to the assignment
and transfer thereof, except as set forth on Exhibit C-5. The Company is not the
owner or lessee of any motor vehicles which are used in the Business except for:
▇▇▇▇ ▇▇▇▇▇▇'▇ leased 1997 Jaguar for which the monthly lease payments of
approximately $1,400 each shall be paid in full at the Closing through June 30,
1999. The Company does not own or lease any interest in any real property, or
lease any equipment used in the Business, except as expressly stated on Exhibit
C-3.
(ii) All of the tangible assets of the Company used in the Business,
including, without limitation, all machinery, office and other equipment,
furniture, computers and related equipment, recording equipment, business
machines, telephones and telephone systems, parts and accessories, inventory,
telephone numbers, facsimile numbers, e-mail addresses and Internet domain
addresses presently utilized by the Company in the Business, shall be referred
to herein collectively as the "Tangible Assets". Attached hereto as Exhibit E is
a true and correct list or description of the material Tangible Assets. As of
the Closing Date, each Tangible Asset is in good and operable condition,
reasonable wear and tear excepted.
(iii) All patents, trademarks, trade names (including, but not limited
to, those trade names listed on Exhibit B), service marks, service names, logos,
designs, formulations, copyrights and other trade rights and all registrations
and applications therefor, all know-how, trade secrets, technology or processes,
all Web sites and all computer programs, data bases and software documentation
owned or used by the Company in the Business, other than off-the-shelf software
licensed by the Company, shall be referred to herein collectively as the
"Intellectual Property". Attached hereto as Exhibit F is a true and correct copy
of all of the Intellectual Property. Such exhibit also indicates which of such
items have been patented or registered or are in the process of application for
same. The Company has taken all necessary and reasonable actions to protect its
rights in Intellectual Property owned by it and to the knowledge of the Company,
is not infringing on the rights of any third parties to Intellectual Property
used, but not owned by, the Company. Except as set forth on Exhibit B, the
Company is not obligated to pay any royalty or other consideration to any person
in connection with the use of Intellectual Property. To the knowledge of the
Company and the
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Shareholder, no other person is infringing the rights of the Company in any of
its Intellectual Property. Included among the Intellectual Property, among other
things, are all trade names utilized by the Company in the Business, including
those trade names listed on Exhibit B. On the Closing Date, the Company will
deliver to Buyer a Certificate of Amendment of the Company's Articles or
Certificate of Incorporation ("Certificate of Amendment") changing its corporate
name so as to delete the words "Telephonetics" and will cause the same to be
duly filed with the Secretary of State's Office for the State of its
incorporation within three (3) business days from the Closing Date. Promptly
after such filing, the Company will deliver proof of said filing to Buyer. On
the Closing Date, the Company will further deliver to Buyer written proof in
form and substance satisfactory to Buyer and its counsel that the Company will
no longer do business under any of the trade names listed on Exhibit B and
further, within three (3) business days from the Closing, the Company will cause
to be filed in all applicable governmental or quasi-governmental offices, any
required instruments to terminate any previously filed assumed name or similar
certificates regarding such trade names. Promptly after such filing, the Company
will deliver proof of said filing to Buyer. Also attached to Exhibit F is a true
and complete list of all software licensed by the Company and used in operating
and maintaining the Business (collectively, the "Licensed Software"). The
Company has valid and fully-paid licenses for all of the Licensed Software.
The Company will deliver at the Closing a true and complete copy of the
Company's customers list as of the Closing Date ("Customer List") relating to
the Business which includes the name and address of each Customer. The Company's
files regarding the Customers shall be delivered to Buyer at the Closing. All
customers of the Company relating to the Business, including, without
limitation, those customers included on the Customer List, shall be referred to
herein as the "Customers". The Customer List is described on Exhibit G hereof.
(v) All cash on hand and cash equivalents at the Closing ("Cash"), all
of the outstanding accounts, notes and other receivables of the Company relating
to the Business, including, without limitation, the outstanding accounts
receivable and all unbilled fees for services rendered or products sold prior to
the Closing Date (including the name, address and contact at the account) of the
Company relating to the Business as of the Closing Date shall be referred to
herein collectively as the "Accounts Receivable" set forth in Exhibit D in the
amount of cash on the Closing Date. Attached hereto as Exhibit D is a true and
correct aged list of all of the Accounts Receivable as of the Closing Date. The
Accounts Receivable are valid and arose in the ordinary course of the Business,
and are fully collectible net of reserves shown on Exhibit D.
(vi) As used herein, the term "Purchased Assets" shall be defined as
all classes of assets of the Company as shown on the Company's certified
financial statement as of December 31, 1998 (annexed as Exhibit H) including,
without limitation, the Business Agreements, the Tangible Assets, the
Intellectual Property, the Cash, the Accounts Receivable, the Customer List, the
Customers, covenants not to compete and confidentiality agreements signed by
employees of the Company, together with the good will and business opportunities
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of the Company as it relates to the Business, the Software Licenses, and all
other assets of the Company used in connection with the operation of the
Business as of the Closing Date, wherever located, tangible or intangible,
including without limitation, all data files, books and records regarding or
relating to the foregoing, whether in electronic, paper or other form of media
and all rights the Company may have under any insurance policies relating to the
Purchased Assets, excluding, however, Excluded Assets (as defined below). The
Purchased Assets are not subject to (i) any lease, lien or encumbrance of any
character whatsoever except as set forth on Exhibit M or (ii) any adverse claims
by any third parties. At the Closing upon consummation of the transactions
contemplated by this Agreement, Buyer will receive good and marketable title to
the Purchased Assets, free and clear of all liens, claims and encumbrances of
any character whatsoever. The Purchased Assets include all rights, properties,
interests and assets used by Company and/or necessary to permit Buyer to carry
on the Business as presently conducted by the Company except for Excluded
Assets.
(vii) The Company and the Shareholder reasonably expect that the
business represented by the Business Agreements will continue after the date
hereof. The Company provides music on hold service directly to approximately
5,000 customer locations. Pizza Hut has about 1,500 locations and Enterprise
Rent-a-Car has about 2,000 locations ("Pizza Hut and Enterprise are herein
called "Major Customers"). The Company provides music on hold and other services
to approximately 15,000 Lucent Technologies, Inc. ("Lucent") customers pursuant
to agreements described on Exhibit C-1. The names and addresses of all Customers
are included in the Company's Production Data Base, including without limitation
the Major Customers and the Lucent customers, referred to in the preceding
sentence, who have purchased from or through the Company Non-Lucent products. In
the normal course of its business and with the knowledge and without the
objection of Lucent, the Company sells its products and services and those of
third parties (in addition to music on hold products and services) which are
non-competitive with Lucent products to Lucent customers directly and Lucent has
not shared in the revenue derived from such sales. Neither the Company nor the
Shareholder has any knowledge that Lucent customers or any Major Customers
intends to terminate or reduce the amount of business they presently do with the
Company, and they have no knowledge of any state of facts which would lead them
to believe that Lucent or any of the Major Customers will terminate their
relationship with the Company or significantly reduce the amount of business
they presently do with the Company.
(viii) Excluded Assets. The Company is not selling and Purchaser is not
buying or acquiring hereunder the following items ("Excluded Assets") which are
not included in the defined term "Purchased Assets": (a) the Company's corporate
minute and stock books, tax returns and other records having to do solely with
the Company's organization and/or capitalization; (b) any rights to any of the
Company's claims for any federal, state or local tax refunds; (c) any rights
which accrue or will accrue to the Company under this Agreement or the
transactions contemplated hereby; and (d) all assets, if any, listed on Exhibit
L hereto.
(C) Financial Statements. The Company has delivered to the Buyer copies
of
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the Company's audited financial statements for the last three fiscal years of
the Company ended December 31, 1998, 1997 and 1996, respectively. Attached
hereto as Exhibit H is a copy of the Company's certified, audited financial
statements for the calendar year ended December 31,1998 and unaudited financial
statements for the month ending January 31, 1999 all of which reflect the
assets, liabilities, net worth, profit and loss, and cash flow of the Company
with respect to the Business. All financial statements referred to herein are
complete and correct in all material respects, present fairly the financial
condition and results of operations of the Company as at the dates of such
statements and have been prepared in accordance with generally accepted
accounting principles. The books of account and records of the Company have been
maintained in accordance with good business practice and reflect fairly all
properties, assets, liabilities and transactions of the Company. The Company has
no material liabilities or obligations of any kind (whether accrued, absolute,
direct, indirect, contingent or otherwise) which are not fully accrued or
reserved against in the Company's financial statements in accordance with
generally accepted accounting principles. Except as set forth on Exhibit I the
Company has no material bad debts as of the Closing Date ("material" shall mean
over $5,000 per occurrence or over $10,000 in the aggregate). Since the last day
of the Company's last fiscal year, the Company has conducted the Business only
in the ordinary and usual course and has not experienced any material adverse
change in the Business or the financial condition of the Company. Since January
l, l999, the Company has had no loss in net monthly recurring revenue from the
Business. Between January 1, 1999 and the Closing Date, the Company and the
Shareholder warrant and represent that they have not withdrawn, expended or
applied any cash or other assets of the Company, except in the ordinary course
of operations of the Business of the Company in accordance with past practices
of the Company, and that during such period, no amounts have been paid to the
Shareholder except for his regular salary and as provided in this Agreement.
(D) Assumed Liabilities. The Buyer shall not be liable for and is not
assuming any liabilities of the Company whatsoever, whether related or unrelated
to the Purchased Assets, or whether arising under the Business Agreement or
otherwise, unless specifically listed on Exhibit J hereto (the "Assumed
Liabilities"). The Company and the Shareholder understand and agree that the
Buyer is not assuming any liabilities of the Shareholder whatsoever. The Company
has no outstanding loans of any kind (except as may be included in the Assumed
Liabilities) and none of the Company's obligations have been guaranteed by any
other person or entity except that ▇▇▇▇ ▇▇▇▇▇▇ personally guaranteed the
Banker's Savings Bank loan.
(E) Existing Employment Arrangements. Except as set forth on Exhibit K
the Company has no employment agreements, labor or collective bargaining
agreements or employee benefit or welfare plans. The Company has no retirement
plans except for a 401K Plan. There are no pending or, to the knowledge of the
Company, threatened strikes, job actions or other labor disputes affecting the
Company or its employees and there have been no such disputes for the past three
years. Also set forth on Exhibit K is a true and complete list of all current
employees of the Company employed in connection with the Business, which list
provides, among other things, the name, title, job description and salary
information
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concerning each employee.
(F) Claims, Litigation, Disclosure. Except for the lawsuit entitled
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, et al, pending in the civil division of the
Pasco County, Florida, Circuit Court of the Sixth Judicial Circuit. bearing
docket number 98-5574CH ("TVIG Litigation"), there is no claim, litigation, tax
audit, proceeding or investigation pending or, to the Company's or the
Shareholder' knowledge, threatened against the Company or any of the
Shareholder, with respect to the Business or any of the Purchased Assets of the
Company (including, without limitation, any claims of infringement or actions of
opposition with respect to Intellectual Property), nor does the Company nor the
Shareholder know of any facts which would provide a basis for any such claim,
litigation, audit, proceeding or investigation.
(G) Taxes. Except as specifically set forth on Exhibit I , the Company
has correctly prepared and timely filed all Federal, state and local tax
returns, estimates and reports ("Tax Liabilities"), and paid all such taxes as
and when due. For purposes of this paragraph, Taxes shall mean all taxes,
charges, fees, levies or other assessments of any kind whatsoever (including,
without limitation, income, employment, franchise, sales, use and withholding
taxes). On or before the Closing, the Company shall pay off and satisfy all
Taxes and any of the Tax Liabilities which are then due and payable or payable
with respect to the Purchased Assets for the period ending on the Closing Date
whether or not then due, and provide Buyer with evidence thereof in form
satisfactory to Buyer and its counsel. The Company is not a party to any tax
sharing agreement.
(H) No Other Agreements to Sell Assets or Business. Neither the Company
nor the Shareholder is a party to any existing agreement which obligates the
Company or the Shareholder to sell to any other person or firm the Purchased
Assets (other than sales in the ordinary course of business), to issue or sell
any capital stock or any security convertible into or exchangeable for capital
stock of the Company or to effect any merger, consolidation or other
reorganization of the Company or to enter into any agreement with respect
thereto.
(I) No Brokers. The only broker, leasing agent, finder or similar
person or entity with whom the Company or the Shareholder has made contact or
had any dealings with or entered into any agreement, arrangement or
understanding with concerning this Agreement and to whom the Company and/or the
Shareholder is responsible to pay a finder's fee, brokerage commission or
similar payment to is the party or parties listed in item 6 on Exhibit A, if
any, and the Company and the Shareholder shall be solely responsible for the
payment of same.
(J) Environmental Compliance. (i) Neither the Company nor any operator
of the Company's properties is in violation, or alleged to be in violation, of
any federal, state or local judgment, decree, order, consent agreement, law
(including common law), license, rule or regulation pertaining to environmental
health or safety matters, including without limitation those arising under the
Resource Conservation and Recovery Act, as amended, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, as
amended, Water Act, as amended, the Federal Clean Air Act, as amended, the
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Toxic Substances Control Act, or any state or local analogue (hereinafter
"Environmental Laws").
(ii) Neither the Company nor the Shareholder has received a notice,
complaint, order, directive, claim or citation from any third party, including
without limitation any federal, state or local governmental authority,
indicating or alleging that the Company or any predecessor may have any
liability or obligation under any Environmental Law.
(iii) (A) No portion of the property of the Company has been used by
any person for the generation, handling, processing, treatment, storage or
disposal of Hazardous Materials except in accordance with applicable
Environmental Laws; (B) no underground tank or other underground storage
receptacle for Hazardous Materials, asbestos-containing materials or
polychlorinated biphenyls are located on any portion of any location occupied by
the Company each of which is listed as a Site on Exhibit A; (C) in the course of
any activities conducted by the Company or its invitees, agents, contractors,
licensees or employees in connection with the Business of the Company, no
Hazardous Materials have been generated or are being used except in accordance
with applicable Environmental Laws; and (D) there have been no releases (i.e.,
any past or present releasing, spilling, leaking, leaching, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, disposing or dumping) or
threatened releases of Hazardous Materials on, upon, into or from the property
currently or formerly owned, operated or leased by the Company, which releases
would have a material adverse effect on the value of any of the property or
adjacent properties or the environment.
(iv) The execution, delivery and performance of this Agreement is not
subject to any Environmental Laws which condition, restrict or prohibit the
sale, lease or other transfer of property or operations, including, without
limitation, any so-called "environmental cleanup responsibility acts" or
requirements for the transfer of permits, approvals, or licenses. There have
been no environmentally related audits, studies, reports, analyses (including
soil and groundwater analyses), or investigations of any kind performed with
respect to the currently or previously owned, leased, or operated properties of
the Company.
For purposes of this Section, "Hazardous Material" shall mean any
hazardous waste, as defined by 42 U.S.C. Sec. 6903(5), any hazardous substances
or wastes as defined by 42 U.S.C. Sec. 9601(14), any pollutant or contaminant as
defined by 42 U.S.C. Sec. 9601(33) or any toxic substances or wastes, oil or
hazardous materials or other chemicals or substances regulated by any public or
governmental authority.
(K) Year 2000. All products and services provided by the Company to its
Customers in the regular course of the Business, to the best of the Company's
knowledge, accurately processes or will process date and time data (including,
but not limited to calculating, comparing and sequencing) from, into and between
the years 1999 and 2000 and
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the twentieth century and the twenty-first century, including leap year
calculations and neither performance nor functionality of such technology will
be affected by dates prior to, during and after the year 2000. The Purchased
Assets do not include any obligations under warranty agreements, service
agreements or otherwise to remedy any information technology defect relating to
the year 2000.
(L) Licenses and Compliance with Laws. The Company holds no material
governmental or regulatory licenses, permits, consents or approvals in
connection with the Business, and the Company is in compliance with all material
laws and regulations applicable to the Business.
(M) Transactions with Affiliates. Except as set forth on Schedule N, no
shareholder, officer, director or employee of the Company or immediate family
member thereof has since January 1, 1999 (a) borrowed money from or loaned money
to the Company which remains outstanding; (b) obtained any contractual or other
claim, express or implied, of any kind whatsoever against the Company; (c)
acquired or sold any interest in any property or assets used by the Company in
its business; (d) engaged in any other transaction with the Company or; (e)
owned, directly or indirectly, any interest in (except not more than two percent
(2%) stockholdings for investment purposes in securities of publicly held and
traded companies), or served as an officer, director, employee or consultant of
or otherwise received renumeration from any person which is, or has engaged in
business as, a competitor, lessor, lessee, customer or supplier of the Company.
(N) Defective Products. The Seller has no knowledge of any latent
defects in the design or manufacture of any of the products or Inventory
included in the Purchased Assets.
(O) Common Stock. The Company acknowledges that it has received and
reviewed the Confidential Memorandum dated March 12, 1998, as last amended
January 31, 1999 (the "Offering") describing the offering by the Parent of up to
4,800,000 shares of its common stock, $.01 par value, ("Common Stock") to
persons or entities who sell Web hosting businesses to Parent or its affiliates.
The Company understands that the Common Stock to be issued by Parent to the
Company hereunder as part of the Purchase Price shall be subject to the terms of
the Offering, including without limitation, that the Common Stock will be issued
subject to a Right of First Refusal Agreement, the form of which is annexed as
an exhibit to the Offering.
(P) True and Complete. No representation or warranty made by Company or
the Shareholder in this Agreement, nor any statement, certificate or exhibit
furnished by or on behalf of Company pursuant to this Agreement, nor any
document or certificate delivered to Buyer pursuant to this Agreement, or in
connection with the transactions contemplated hereby, contains or shall contain
any untrue statement of a material fact, or omits or shall omit to state a
material fact necessary to make the statements contained therein not misleading.
Neither the Company nor the Shareholder has not failed to disclose to Buyer any
pending developments or circumstances of which any of them are aware which are
reasonably likely to have a material adverse effect on the Company or the
Business.
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SECTION 3. REPRESENTATIONS OF THE BUYER. Buyer represents and warrants
to the Company and the Shareholder as follows.
(A) Corporate Matters; No Conflict. Buyer is a wholly owned subsidiary
of the Parent. Each of the Buyer and Parent is duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, is in
good standing in each other jurisdiction in which it is doing business, except
where failure to be in good standing would not have a material adverse effect on
the business of Buyer or Parent, and has the corporate power to enter into this
Agreement, to perform its obligations hereunder and to conduct its business as
currently conducted. The execution, delivery and performance of this Agreement
and the transactions contemplated hereby (and thereby) by the Buyer and Parent,
respectively, will not (a) conflict with or violate the provisions of any
applicable law, rule or order or the Buyer's or the Parent's respective
Certificate of Incorporation or by-laws, (b) conflict with or constitute a
default under any agreement or contract by which the Buyer or Parent is bound or
(c) require the consent or approval of, or filing with, any governmental body or
third party. The execution, delivery and performance by the Buyer of this
Agreement has been authorized and approved by all requisite corporate action on
the part of the Buyer.
(B) No Brokers. The only broker, leasing agent, finder or similar
person or entity with whom the Buyer or Parent has made contact or had any
dealings with or entered into any agreement, arrangement or understanding with
concerning this Agreement and to whom the Buyer and/or the Parent is responsible
to pay a finder's fee, brokerage commission or similar payment to is the party
listed in item 7 on Exhibit A, if any, and the Buyer shall be solely responsible
for the payment of same.
(C) Authorization of Common Stock. The issuance and delivery by Parent
of the shares of Common Stock comprising part of the Purchase Price as described
in item 5 of Exhibit A has been authorized and approved by all requisite
corporate action on the part of Parent. Such shares of Common Stock are validly
issued, fully paid and non-assessable.
ARTICLE II.
CERTAIN COVENANTS OF THE COMPANY AND THE SHAREHOLDER
SECTION 1. NON-COMPETITION; NON-SOLICITATION.
(A) For a period commencing on the Closing Date and ending on the
second anniversary of the Closing Date, neither the Company nor the Shareholder
shall engage in any capacity in any Internet Web hosting business or in any
business which is similar to or in competition with the Business and which is
located or does business in any state in the United States or throughout the
World.
(B) The Company and the Shareholder understand that pursuant to this
Agreement they have received the following confidential and proprietary
information from Buyer: the Confidential memorandum dated March 12, 1998 as
amended. Neither the Company nor the Shareholder, nor any of its officers,
directors, employees, agents or
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contractors who received or learned of such confidential and proprietary
information shall at any time, either before or after the Closing Date, disclose
to any third party any such confidential or proprietary information of Buyer or
make use of any of such information except in evaluating whether to enter into
this Agreement. In connection with such evaluation, the Company and the
Shareholder may disclose such proprietary information to their legal and
financial consultants on a need to know basis on the condition that those
consultants are similarly prohibited from further disclosing such information as
provided herein. The Company and the Shareholder have received no other
confidential information regarding Parent.
(C) For a period commencing on the Closing Date and ending on the
second anniversary of the Closing Date, neither the Company, nor the
Shareholder, unless acting with the express written consent of the Buyer or
Parent, will, directly or indirectly, interfere with, solicit or endeavor to
entice away:
(i) any person who was an employee, subcontractor or
consultant of the Company, the Buyer, the Parent or any of their
affiliates during the twelve months immediately preceding the date of
such solicitation, interference or endeavor; or
(ii) with respect to any Internet Web hosting business or any
business similar to or in competition with the Business in which the
Company, Buyer, Parent, or any of their affiliates is or has been
engaged after the date of this Agreement, any person or entity who was
a customer or client of the Company or of the Buyer or of the Parent,
or any person or entity who requested or received a proposal from
Buyer, Parent or the Company.
THE COMPANY AND THE SHAREHOLDER, AND EACH OF THEM, EXPRESSLY ACKNOWLEDGES,
UNDERSTANDS AND AGREES (i) THAT REMEDIES AT LAW FOR ANY BREACH OF THIS ARTICLE
II, SECTION 1 WILL BE INADEQUATE, (ii) THAT THE DAMAGES RESULTING FROM SUCH
BREACH ARE NOT READILY SUSCEPTIBLE TO MEASUREMENT IN MONETARY TERMS AND (iii)
THAT BUYER AND/OR PARENT SHALL BE ENTITLED TO IMMEDIATE INJUNCTIVE RELIEF AND
MAY OBTAIN TEMPORARY AND PERMANENT ORDERS RESTRAINING ANY THREATENED OR FURTHER
BREACH OF THIS ARTICLE II, SECTION 1 BY THE COMPANY AND/OR THE SHAREHOLDER. THE
COMPANY AND THE SHAREHOLDER HAVE BEEN ADVISED BY THEIR RESPECTIVE COUNSEL WITH
RESPECT TO THE MEANING AND EFFECT OF THIS ARTICLE II, SECTION 1.
SECTION 2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
(A) The representations and warranties of the parties herein
contained shall survive the closing of the purchase contemplated by this
Agreement, notwithstanding any investigation at any time made by or on behalf of
the other party, provided that any claims for indemnification in accordance with
Article II, Section 2 below with respect to any representation or warranty must
be made (and will be null and void unless made) on or before
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the date twenty-four (24) months following the Closing Date (except in the case
of representations contained in Paragraphs (B)(vi), (G), (I) and (J) of Article
I, Section 2 hereof, which must be made within six (6) months following the
expiration of the applicable statute of limitations).
(B) The Company and the Shareholder, jointly and severally,
hereby agree to indemnify and hold Buyer, Parent, and their respective officers,
directors, stockholders, affiliates, employees, representatives and other agents
harmless from and against any and all claims, liabilities, losses, damages or
injuries, together with costs and expenses, including reasonable legal fees,
arising out of or resulting from (i) any breach, misrepresentation or material
omission of the representations and warranties made by the Company and/or the
Shareholder in this Agreement or in any Exhibit hereto or other documents
delivered in connection herewith, (ii) any breach in any material respect by the
Company and/or the Shareholder, or any of them, unless waived in writing by the
Buyer, of any covenant or agreement contained in or arising out of this
Agreement, or any other agreement delivered in connection herewith on the
Closing Date, including without limitation, the Employment Agreement, (iii) the
Business conducted by the Company prior to the Closing Date and any actions or
events associated therewith, (iv) any and all liabilities of the Company, other
than the Assumed Liabilities, and (v) any failure by the Shareholder or the
Company to comply with any provisions of the bulk sales or similar laws of any
jurisdiction which are applicable to this Agreement or the transactions
contemplated hereby.
(C) Buyer and Parent hereby agrees to indemnify and hold the
Company and the Shareholder harmless from and against any and all claims,
liabilities, losses, damages or injuries, together with costs and expenses,
including reasonable legal fees, arising out of or resulting from (i) any
breach, misrepresentation or material omission in the representations and
warranties made by the Buyer in this Agreement, (ii) any breach in any material
respect by Buyer, unless waived in writing by the Company, of any covenant or
agreement of Buyer contained in or arising out of this Agreement, or (iii) the
Business as conducted by Buyer, after the Closing Date.
(D) Any party claiming a right to indemnification hereunder
(the "Indemnified Party") shall give the other party from whom indemnification
is sought (the "Indemnifying Party") prompt written notice of any claim, demand,
action, suit, proceeding or discovery of fact upon which the Indemnified Party
intends to base a claim for indemnification under this Section 2, provided,
however, that no failure to give such notice shall excuse any Indemnifying Party
from any obligation hereunder except to the extent the Indemnifying Party is
materially prejudiced by such failure. The Indemnified Party shall have full
responsibility and authority with respect to the disposition of any action, suit
or proceeding brought against it; provided, however, that it will not settle any
such action, suit or proceeding without the prior written consent of the
Indemnifying Party, which will not be unreasonably withheld or delayed. In the
event any action, suit or proceeding is brought against the Indemnified Party
with respect to which the Indemnifying Party may have liability under the
indemnity agreements contained in Paragraphs (B) and (C) of Article II, Section
2 hereof, however, the
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Indemnifying Party shall have the right, without prejudice to the Indemnified
Party's rights under this Agreement, at the Indemnifying Party's sole expense,
to be represented by counsel of its own choosing and with whom counsel for the
Indemnified Party shall confer in connection with the defense of any such
action, suit, or proceeding. The Indemnified Party shall make available to the
Indemnifying Party and its counsel and accountants, all books and records of the
Indemnified Party relating to such action, suit or proceeding and the parties
agree to render to each other such assistance as may reasonably be requested in
order to insure the proper and adequate defense of any such action, suit or
proceeding.
(E) On the Closing Date 40,000 shares of Common Stock of
Parent which are part of the Purchase Price shall be delivered to the escrow
agent listed on Exhibit A (the "Escrow Agent") to be held in escrow in
accordance with the terms of an escrow agreement to be entered into between the
parties (the "Escrow Agreement") on or prior to the Closing Date. The Escrowed
Amount will be held in escrow by the Escrow Agent as security for any
indemnification obligation of the Company and the Shareholder, or any of them,
to Buyer pursuant to the terms of Article II, Section 2, Paragraph (B) of this
Agreement. Indemnity claims by Buyer pursuant to said Paragraph (B) shall be
satisfied by the reduction of the Escrowed Amount until the termination of the
Escrow Agreement and thereafter by the Company and the Shareholder, jointly and
severally. The Shareholder and the Company shall be afforded the opportunity to
settle any indemnification claim by a cash payment before the Common Stock held
in Escrow is taken by the Buyer. The Escrowed Amount does not constitute a limit
on the liability of the Company and the Shareholder to Buyer hereunder, it being
understood and agreed that the Company and each of the Shareholder, shall remain
jointly and severally liable to satisfy the amount of such claims which exceed
the Escrowed Amount. The Escrowed Amount shall be held by the Escrow Agent
pursuant to the terms of the Escrow Agreement which shall be agreed upon and
entered into by the Escrow Agent, the Company, the Shareholder and Buyer on or
before the Closing Date. Among other things, the Escrow Agreement will provide
that on March 31, 2000 , the Escrow Agent shall pay to the Company or its
designee such amount of the Escrow Amount then remaining, if any, as has not
previously been applied pursuant to the terms of said Escrow Agreement, unless
an indemnification claim by Buyer against the Company and/or the Shareholder is
then pending. The Shareholder shall have no liability under this Agreement in
excess of $3,000,000 plus the fair market value on the Closing Date of the
140,000 shares of . Common Stock which are delivered as part of the Purchase
Price.
ARTICLE III
CLOSING AND DELIVERIES AT CLOSING
SECTION 1. CLOSING. The closing of the purchase and sale of the
transaction contemplated herein shall take place on February 4, 1999, (the
"Closing"), at the offices of Parent, Sage Network, Inc., located at ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 12:00 p.m. The deliveries described in
Section 2 and 3 of this Article III will take
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place at the Closing.
SECTION 2. DELIVERIES BY THE COMPANY AND THE SHAREHOLDER. On the
Closing Date, the Company and the Shareholder will deliver, or cause to be
delivered, to the Buyer the following:
(A) Such instruments of assignment, transfer and/or conveyance
executed by the Company, and the Shareholder where applicable, as Buyer may
reasonably request in order to assign, convey and transfer to Buyer good and
marketable title to all of the Purchased Assets, free and clear of all liens,
claims, encumbrances and other charges, including, without limitation, a ▇▇▇▇ of
Sale.
(B) Physical delivery of all Tangible Assets, Customer Lists
and Customer Information by making them available at the Sites listed on Exhibit
A, together with any and all warranties, manuals, instructions, and other
literature in the possession of the Company or the Shareholder relating to the
ownership or operation of the Tangible Assets. In addition, such notices to
telephone companies and others required to transfer the Company's telephone and
facsimile numbers, e-mail addresses and domain addresses, used in the Business
to Buyer.
(C) Physical delivery of all original or certified copies of
documentation concerning the Intellectual Property, including, without
limitation, registrations and applications of any patents, trademarks or service
marks, original artwork, data bases, computer programs and software and physical
delivery of all books, files and records concerning the Purchased Assets.
(D) The following corporate documentation:
(i) The Company's Articles or Certificate of
Incorporation certified as of a date within thirty (30) days
prior to the Closing Date by the Secretary of State of the
state of the Company's organization;
(ii) Good Standing Certificates as of date within
thirty (30) days prior to the Closing Date from the Secretary
of State of the state of the Company's organization and each
other state in which the Company is qualified to do business;
(iii) The Company's By-Laws certified as of the
Closing Date by the President or Secretary of the Company as
being in full force and effect and unmodified; and
(iv) Corporate Resolutions of the Company's Board of
Directors and the Shareholder (if required by the Company's
By-Law's or applicable law),
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approving this Agreement and all the transactions contemplated
hereby, certified by the President or Secretary of the Company
as being in full force and effect and unmodified.
(E) The legal opinions of counsel to the Company and the
Shareholder, in a form acceptable to Buyer and its counsel.
(F) Evidence in form satisfactory to Buyer and its counsel
that the Taxes and Tax Liabilities, if any, have been paid off and satisfied
except as disclosed in the BDO ▇▇▇▇▇▇▇ audit for 1998.
(G) The Escrow Agreement duly executed by the Company.
(H) A copy of the Certificate of Amendment duly executed by
the President and Secretary of the Company which is to be filed in the Secretary
of State's Office for the State of the Company's incorporation pursuant to
Article I, Section 2, Paragraph (B) (iii) hereof.
(I) Copies of written proof in form and substance satisfactory
to Buyer and its counsel that the Company will no longer do business under any
of the trade names listed on Exhibit B as required pursuant to Article I,
▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇ (▇) (iii) hereof.
(J) The Company and the Shareholder shall use their reasonable
best efforts to deliver a Non-Competition, Non-Disclosure and Intellectual
Property Agreement in a form to be provided by Buyer after the Closing, executed
by each employee of the Company who will be employed by Buyer or its affiliate
after the Closing.
(K) Notices of termination of all employees of the Company
employed in connection with Business satisfactory to Buyer, which notices will
be delivered to the employees concurrently with the Closing.
(L) Employment Agreement ("Employment Agreement") and
Consulting Agreement ("Consulting Agreement") between ▇▇▇▇ ▇▇▇▇▇▇ and Buyer
executed by ▇▇▇▇ ▇▇▇▇▇▇.
(M) Employment Agreement between ▇▇▇▇▇▇▇▇ Fear and Buyer
executed by ▇▇▇▇▇▇▇▇ Fear.
(N) An Estoppel, Consent to Assignment and Assignment of each
of the Leases in forms satisfactory to Buyer executed by the Company and the
Lessors/Landlords of the Leases.
(O) Keys to all entrances and possession of the Sites listed
on Exhibit A.
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(P) Such notice or notices as Buyer may reasonably request in
order to notify the customers included on the Customer List that the Business
has been sold to Buyer.
(Q) Consent to a press release in form satisfactory to the
Company and Buyer relating to this Agreement and the transactions contemplated
hereby. Lucent will not be mentioned in such press release without its prior
consent.
(R) Execution and delivery of a Subscription Agreement and
Right of First Refusal Agreement in form satisfactory to Buyer signed by ▇▇▇▇
▇▇▇▇▇▇ covering the shares of Common Stock which are a part of the Purchase
Price.
(S) Consent to the Assignment of the Agreements between
Company and Lucent in form satisfactory to Buyer.
(T) Delivery of audited financial statements for the Company
performed by BDO ▇▇▇▇▇▇▇ LLP for the year ending December 31, 1998.
(U) Proof of settlement or a plan of settlement of the TVIG
litigation and delivery of releases and Discontinuance with Prejudice.
(V) Delivery of third party consents from Nel-Tech Labs, Inc.
and Inter-Tel Integrated Systems, Inc.
(W) Delivery of new agreements between Broadcast Music, Inc.
("BMI") and Buyer in form satisfactory to Buyer, which will include cancellation
of existing agreement.
SECTION 3. DELIVERIES BY THE BUYER.
On the Closing Date, the Buyer will deliver, or cause to be delivered,
to the Company and the Shareholder the following:
(A) The cash portion of the Purchase Price by cash, or certified or
official bank check payable to the order of the Company, or by wire transfer of
federal funds to the account of the Company, as the Company and Shareholder
shall direct in writing on or before the Closing Date; provided, however, Buyer
may, upon written agreement of all parties hereto, deduct from the Purchase
Price and pay directly amounts due any creditor of the Company, including,
without limitation, the Tax Liabilities (but excluding any amounts due for any
of the Assumed Liabilities), in which event, evidence of such payment shall be
presented at the Closing. Notwithstanding the foregoing, 40,000 shares of Common
Stock described in Section 2(E) of Article II, shall be paid to the Escrow Agent
to be held in accordance with the terms of the Escrow Agreement.
(B) Such instruments of assignment and assumption executed by the
Buyer, as the parties hereto reasonably may determine necessary to effectuate
the assignment to the Buyer of the Business Agreements and the assumption by
Buyer of the Assumed Liabilities.
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(C) The Escrow Agreement duly executed by the Buyer and the Escrow
Agent.
(D) The Employment Agreements and Consulting Agreement executed by
Buyer.
(E) Resolution of the Board of Directors of Buyer, authorizing the
execution of this Agreement and the transactions contemplated hereby.
(F) The Subscription Agreement executed by Parent.
(G) The Right of First Refusal Agreement executed by Parent.
(H) Certificates issued by Parent to the Company, representing the
shares of Common Stock for that portion of the Purchase Price to be paid in
Common Stock as set forth in item 5 of Exhibit A, which certificate shall be
properly legended to reflect that the Common Stock represented thereby has not
been registered under the Securities Act of 1933 as amended, and is subject to
the terms of the Right of First Refusal Agreement.
(I) Consent to a press release in form satisfactory to the Company and
Buyer relating to this Agreement and the transactions contemplated hereby.
ARTICLE IV
OBLIGATIONS FOLLOWING CLOSING
SECTION 1. FURTHER COOPERATION. The Company and the Shareholder will,
at any time and from time to time after the Closing Date, execute and deliver
such further instruments of conveyance, transfer and license, and take such
additional actions as Buyer, Parent or its successor and/or assigns, may
reasonably request, to effect, consummate, confirm or evidence the transfer to
Buyer of the Purchased Assets pursuant to this Agreement.
SECTION 2. TRANSITION ASSISTANCE AND ADJUSTMENTS.
(A) The Company shall reasonably cooperate and provide assistance to
the Buyer as shall be reasonably appropriate during the transition of the
Business and the Purchased Assets from the Company to the Buyer, or its
successors and/or assigns, after the Closing Date. All assistance shall be made
promptly when available after any request by Buyer. Buyer shall only reimburse
the Company for reasonable out-of-pocket expenses incurred in rendering such
assistance, but not for any time of any personnel.
(B) Buyer and its successors and/or assigns shall have the right at any
time and from time to time upon reasonable notice and during normal business
hours to examine and make copies of all corporate books, records and other
documents of the Company relating to the Business and generated prior to the
Closing Date which are not part of the Purchased Assets, which documents will be
maintained by the Company and the Shareholder for a period
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of three (3) years after the Closing Date.
(C) The Company and the Shareholder will reasonably cooperate with
Buyer in notifying the customers included on the Customer List that the Business
has been sold to Buyer, including, without limitation, executing any additional
notices which Buyer may reasonably request. Neither the Company nor the
Shareholder will, directly or indirectly, take any action which is designed or
intended to have the effect of discouraging customers, suppliers or vendors and
other business associates of the Business, from maintaining the same business
relationships with Buyer or its successors and/or assigns after the Closing Date
as were maintained with the Company and/or the Shareholder with respect to the
Business prior to the Closing Date.
(D) Following the Closing, the Company and the Shareholder or any
affiliate of the Company (as defined under federal securities laws), shall not
use the name "Telephonetics" or any confusingly similar name to said trade name
in any trade or business, other than as an employee of Buyer or an affiliate of
Buyer.
(E) The Company shall have the right to dissolve after the Closing;
however, the Shareholder shall continue to be liable under this Agreement.
SECTION 3. COLLECTION OF RECEIVABLES.
(a) After the Closing Date, the Buyer shall endeavor to collect all
Accounts Receivables included in the Purchased Assets and will deliver to the
Seller for immediate endorsement to the Buyer any checks payable to the Seller
that are received by the Buyer on account of such Accounts Receivables. The
Seller agrees that it will promptly transfer or deliver to the Buyer from time
to time any payments that the Seller may receive with respect to any claims,
contracts, licenses, leases, commitments, sales, orders, purchase orders,
Accounts Receivables of any character or any other items included in the
Purchased Assets required to be transferred by it to the Buyer pursuant to the
provisions hereof.
(b) The parties acknowledge that the Seller's Accounts Receivable over
90 days at the closing are $194,358. The parties agree that 360 days after the
Closing Date, the Shareholder shall pay to the Buyer an amount of money equal to
$155,486 less the actual collection of the Sellers Accounts Receivable which
were over ninety (90) days at the Closing Date. Payment shall be made by the
Shareholder in cash within five (5) business days after presentation by Buyer of
a statement for the collection of such Accounts Receivable over 90 day. Payments
received from customers shall be credited to the oldest invoices first unless
the Customer directs otherwise.
ARTICLE V
MISCELLANEOUS
SECTION 1. GOVERNING LAW; JURISDICTION. This Agreement shall be
governed
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by the laws of the State of New York. The parties hereto submit and consent to
the exclusive jurisdiction of the state courts of the State of New York in the
Counties of New York or West ▇▇▇▇▇▇▇ and the federal courts located therein with
respect to any legal actions relating to this Agreement, or any other agreements
delivered in connection herewith, between the Company and/or the Shareholder, on
the one hand, and the Buyer and/or Parent, on the other hand, and any
transactions contemplated thereby whenever an action is commenced by the Company
or Shareholder. The parties hereto submit and consent to the exclusive
jurisdiction of the state courts of Florida and any federal court located in
Florida with respect to any legal actions relating to this Agreement or any
other agreement delivered in connection herewith between the Company and/or the
Shareholder on one hand and the Buyer or Parent on the other hand, whenever an
action is commenced by the Buyer or the Parent.
SECTION 2. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which together shall
constitute one and the same instrument.
SECTION 3. CONFIDENTIALITY. The Company and the Shareholder, on the one
hand, and the Buyer, on the other hand, each agree not to disclose or use any
information acquired by it about the other party during the course of the
negotiations of this Agreement and the transactions to which it relates which is
confidential in nature or not otherwise generally available to the public
without the prior written consent of such other party unless required to do so
by applicable law or by order of a court of competent jurisdiction. Each party
shall be liable for any breach by its respective employees, officers,
directives, Shareholder, agents and/or contractors of the provisions of this
Section.
SECTION 4. AMENDMENTS. This Agreement supersedes any prior contracts
relating to the subject matter hereof between the Buyer, Parent, the Company and
the Shareholder. This Agreement cannot be changed, modified or amended and no
provision or requirement hereof may be waived without the consent in writing of
the parties hereto.
SECTION 5. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect. Each provision of this Agreement shall be deemed to be the agreement of
the parties hereto to the full extent that the power to enter into such
provisions shall have been conferred on the parties by law.
SECTION 6. BENEFIT; ASSIGNMENT. This Agreement is binding upon and
inures to the benefit of the parties, their successors and permitted assigns.
This Agreement may not be assigned or the duties of the parties hereunder
delegated to others without the prior written consent of all parties hereto,
except that Buyer may assign its rights, duties and obligations
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hereunder to Parent or an affiliate of Buyer or Parent without the Company's or
the Shareholder' consent; and further provided that the Company may assign its
rights, duties, and obligations hereunder to any entity or person formed in
connection with the winding down of its affairs, provided that Shareholder is
not relieved of any liability hereunder.
SECTION 7. CONSTRUCTION. All exhibits annexed hereto are hereby
incorporated herein by reference and made a part of this Agreement. Whenever
used in this Agreement and the context so requires, the singular shall include
the plural and the plural shall include the singular.
SECTION 8. IMPUTED KNOWLEDGE. Anywhere in this Agreement where it
refers to the "knowledge of" the Company, or words of similar import, the
knowledge of of the Shareholder shall be imputed to be the knowledge of the
Company. Anywhere in this Agreement where it refers to the "knowledge of" the
Buyer or the Parent, or words of similar import, the knowledge of ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ shall be imputed to be the knowledge of the Buyer and the Parent,
respectively.
SECTION 9. NOTICE. Any notice required or permitted to be given
hereunder shall be in writing and shall be deemed to have been duly given if
delivered or mailed by registered mail, postage prepaid: if to the Company at
its address set forth on the first page hereof, with copy to ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.,
▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or at such other
address as the Company or any of the Shareholder shall designate by notice to
Buyer, and if to Buyer or Parent at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, with
a copy to ▇▇▇▇▇ ▇. ▇▇▇▇▇, General Counsel, Sage Networks, Inc., ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and a copy to ▇▇▇▇▇ ▇'▇▇▇▇▇▇, Esq.,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇'▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
or at such other address as it shall designate by notice to the Company and the
Shareholder.
SECTION 10. EXPENSES. The Seller, the Company and the Shareholder shall
each pay their own expenses incurred in connection with the preparation,
execution and performance of this agreement including, without limitation all
fees, and expenses of agents, counsel, and accountants except that Buyer shall
assume the liability due of BDO ▇▇▇▇▇▇▇, LLP to prepare the audited financial
statements of the Company for the year ending December 31, 1998 in an amount not
to exceed $40,000 only if and when the Closing takes place.
SECTION 11. TRANSFER TAXES. The Seller shall be solely responsible for
paying all transfer taxes which are due as a result of the consummation of the
transactions provided for in this Agreement.
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[SIGNATURE PAGE OF ASSET PURCHASE AGREEMENT BETWEEN TELEPHONETICS, INC.
AND TELEPHONETICS INTERNATIONAL, INC. DATED AS OF FEBRUARY 4, 1999.]
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
TELEPHONETICS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its President
TELEPHONETICS INTERNATIONAL, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------
▇▇▇▇ ▇▇▇▇▇▇
Its President
AGREEMENT TO BE BOUND
Sage Networks, Inc. ("Parent") hereby agrees to be bound only by the
provisions of Article II, Section 2(C) of the foregoing Asset Purchase
Agreement.
SAGE NETWORK, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its Co-Chairman
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LIST OF EXHIBITS:
-----------------
Exhibit A - Basic Provisions
Exhibit 4.01(b) - Officers; Directors; Trade Names; Jurisdictions
Exhibit 4.01(c)(i)(1) - Forms of Business Agreements with Customers
Exhibit 4.01(c)(i)(2) - Summary of Oral Business Agreements and Copy of
Vendor/Service Provider and Other Agreements
Exhibit 4.01(c)(i)(3) - Leases
Exhibit 4.01(c)(i)(4) - Claims of Disputes Under Business Agreements
Exhibit 4.01(c)(i)(5) - Consents to Transfer or Assign Not Obtained
Exhibit 4.01(c)(ii) - Tangible Assets
Exhibit 4.01(c)(iii) - Intellectual Property
Exhibit 4.01(c)(iv) Server Customers
Exhibit 4.01(c)(v)(1) - Company's Financial Statements
Exhibit 4.01(c)(v)(2) - Liens; Encumbrances
Exhibit 4.01(d) - Bad Debts
Exhibit 4.01(e) - Existing Employment Agreements, Labor or Collective
Bargaining Agreements, Employee Benefit or Welfare
Plans, Description of Employees
Exhibit 4.01(g) - Tax Liabilities of the Company
Exhibit 4.01(l)(1) - Company's Credit and Debit Cards
Exhibit 4.01(l)(2) - Company's Bank Accounts and Authorized Signatories
23
DESCRIPTION OF EXHIBITS:
Exhibit A - Basic Provisions
Exhibit B - Ownership of Capital Stock of the Company; Description of
Capital Stock; Officers; Directors; Trade
Names; Jurisdictions
Exhibit C-1 - Forms of Business Agreements with Customers
Exhibit C-2 - Oral Business Agreements; Business Agreements with
Vendor/Service Providers, Resellers, Etc.
Exhibit C-3 - Leases
Exhibit C-4 - Claims of Disputes Under Business Agreements
Exhibit C-5 - Consents to Transfer or Assign Not Obtained
Exhibit D - Cash and Accounts Receivable
Exhibit E - Tangible Assets
Exhibit F - Intellectual Property and Software Licensing
Exhibit G - Customer List and Related Information
Exhibit H - Financial Statements
Exhibit I - Bad Debts and Tax Liabilities of the Company
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Exhibit J - Assumed Liabilities
Exhibit K - Existing Employment Agreements, Labor or Collective
Bargaining Agreements, Employee Benefit or Welfare
Plans, Description of Employees
Exhibit L - Excluded Assets
Exhibit M - Liens; Encumbrances
Exhibit N - Transactions with Affiliates
In accordance with Item 601(b)(2) of Regulation S-K all exhibits other than
Exhibit A have been omitted. The Company hereby agrees to furnish supplementally
a copy of any omitted exhibit to the Commission upon request.
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EXHIBIT A
TO
ASSET PURCHASE AGREEMENT
BETWEEN
TELEPHONETICS, INC.
and
TELEPHONETICS INTERNATIONAL, INC.
BASIC PROVISIONS
1. Name of Buyer: Telephonetics, Inc.
2. Name of Company: Telephonetics International, Inc.
(a) Names, addresses and stock ownership of shareholder of Company:
Name and Address Number of Shares (Type)
▇▇▇▇ ▇▇▇▇▇▇ 5,870,000- Common
▇▇▇▇▇▇▇▇ Fear 20,000- Common
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 10,000- Common
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 100,000- Common
Total Outstanding Shares 6,000,000- Common
(b) State of incorporation of Company: Florida
(c) Authorized Officers of the Company:
President - ▇▇▇▇ ▇▇▇▇▇▇
Vice President/Treasurer - ▇▇▇▇▇▇ ▇▇▇▇▇
Vice President/Secretary - ▇▇▇▇▇▇▇▇ Fear
(d) Address of each Site from which the Company conducts the Business:
(i) ▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(ii)
(iii) ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇
(iv)
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3. Residence addresses of Shareholder:
4. Purchase Price: $3,000,0000 in cash plus 140,000 shares of Common Stock of
Sage Networks, Inc.
5. Company and Shareholder's Broker: None
6. Buyer's Broker: None
7. Escrow Agent: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2
