ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made July , 1997,
among THE COTTON COMMUNICATION NETWORK, INC., a Texas corporation, also known as
The Network ("Seller"), ▇▇▇▇▇▇ ▇▇▇▇▇, majority shareholder of Seller
("Shareholder"), and DATA TRANSMISSION NETWORK CORPORATION, a Delaware
corporation ("Purchaser").
R E C I T A L S:
A. Purchaser owns and operates a satellite information transmission
system (the "DTN System") that provides its subscribers with access via
electronic transmission to various types of information services. Purchaser
offers certain information services which provide futures and options quotations
from the major commodity exchanges, including the cotton exchange. Purchaser
also offers other information services serving the agriculture industry as well
as other industries.
B. Seller operates a cotton trading network service (the "Service")
pursuant to which Seller delivers information to end users via the DTN System
(as optional services on certain of Purchaser's information services), provides
such end users with computer programs to process the information on their
personal computers, and allows such end users to communicate trades via a
phone-line based transmission system. Seller has approximately fifty customers
who subscribe to the Service. Seller also develops, markets, distributes,
licenses, maintains, and supports other systems and applications computer
programs. Seller's various lines of business are collectively referred to in
this Agreement as the "Business".
C. Seller and Purchaser desire to enter into this Agreement providing
for the sale to Purchaser of certain of the assets used in the operation of the
Business and assumption by Purchaser of certain liabilities relating to the
Business on the terms and conditions and subject to the exceptions set forth in
this Agreement.
In consideration of the recitals and provisions herein, the parties
agree as follows:
1. Assets To Be Purchased. Seller agrees to sell and Purchaser
agrees to purchase the Business and all of the Assets. The term "Assets" means,
except for the Excluded Assets (as defined at the end of this Section 1), if
any, all of the assets of Seller of every nature and kind, whether tangible or
intangible, and wherever situated, belonging to or used in the Business,
including without limitation all of the following:
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(a) The Business and goodwill as a going concern of Seller arising
out of the Business including the right to use the name "The
Network".
(b) The assets (other than cash and equivalents, investments,
notes and accounts receivable, prepaid expenses, and tax
refunds) listed on the balance sheet of Seller as of May 31,
1997 included in Schedule 9.4, including without limitation
the furniture, fixtures, equipment, supplies, leasehold
improvements, computer hardware and other fixed assets listed
on Schedule 1(b) attached hereto, subject to any changes in
the assets which may occur in the ordinary course of the
Business between May 31, 1997 and the Closing Date.
(c) All rights of Seller under contracts, leases and agreements
relating to the Business, whether written or oral, including
without limitation those listed on Schedule 1(c), but
excluding those (if any) which are Excluded Assets.
(d) All trade names, trademarks, service marks, patents, patent
rights, copyrights, and all applications for or registrations
thereof, together with the right to ▇▇▇ for past infringement
thereof, all inventions or discoveries whether patentable or
unpatentable, and all other proprietary rights belonging to or
used in the Business, including without limitation those
listed on Schedule 1(d).
(e) All computer software programs and associated documentation,
whether owned or licensed, used by Seller in the operation of
the Business, including without limitation those listed on
Schedule 1(e).
(f) All licenses, permits, approvals, qualifications, certificates
or the like issued or to be issued or held by Seller with
respect to the Business, including without limitation those
listed on Schedule 1(f).
(g) All of Seller's assignable insurance policies relating to the
Business or the Assets being acquired by Purchaser pursuant to
this Agreement, including all rights of Seller under such
insurance policies as are listed on Schedule 1(g).
(h) All warranties held by Seller with respect to the Assets to
the extent that such warranties are assignable.
(i) All of Seller's know-how, trade secrets and other technology
or procedures relating to the conduct of the Business.
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(j) All of Seller's customer lists, vendor lists, and books and
records of every nature and kind of or used in the Business.
(k) All telephone and facsimile numbers, including "800" numbers,
and post office boxes, of or used in the Business, as
described on Schedule 1(k).
The term "Excluded Assets" as used herein means those current assets of Seller
excluded in Section 1(b) and those contracts, leases and agreements, if any,
which relate to the Business and (i) have not been listed as Assumed Liabilities
on Schedule 3.1 and (ii) after Purchaser becomes aware of such non-listed assets
Purchaser declines to accept them.
2. Purchase Price and Payment. The purchase price payable by
Purchaser for the Assets, subject to the provisions of Section 5, shall be One
Million Dollars ($1,000,000) (the "Purchase Price"), payable without interest as
follows:
(a) Forty Thousand Dollars ($40,000) shall be paid to Seller at
Closing.
(b) Four monthly payments of Forty Thousand Dollars ($40,000) each
shall be paid to Seller commencing one month after the Closing
Date and continuing on the same day of each month for the next
three consecutive months thereafter.
(c) Four payments of Two Hundred Thousand Dollars ($200,000) each
shall be paid to Seller commencing on the second anniversary
date of the Closing Date and continuing on each of the next
three consecutive anniversary dates thereafter.
3. Assumption of Liabilities.
3.1 Assumed Liabilities. At the Closing Purchaser shall
assume, agree to perform, and discharge when due only those obligations of
Seller arising out of the contracts, leases and agreements listed on Schedule
3.1 with respect to the period from and after the Closing Date.
3.2 Excluded Liabilities. Seller and Purchaser agree that
Purchaser does not agree to assume and shall have no responsibility for any of
the debts, obligations or liabilities of Seller other than the Assumed
Liabilities (the "Excluded Liabilities"), all of which shall remain the sole
responsibility of and shall be paid and discharged by Seller as they become due.
The Excluded Liabilities include without limitation all of the following:
(a) Any tax liability or tax obligation of Seller, its directors,
officers, shareholders and agents which has been or may be
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asserted by any taxing authority, including without limitation
any such liability or obligation arising out of or in
connection with this Agreement or the transactions
contemplated hereby.
(b) Any liability or obligation of Seller whether incurred prior
to, at or subsequent to the Closing Date for any amounts due
or which may become due to any person or entity who is or has
been a holder of any debt or equity security of Seller.
(c) Any trade account payable or note payable of Seller or any
contract obligation of Seller (other than those referred to in
Section 3.1) whether incurred prior to, at or subsequent to
the Closing Date.
(d) Any liability or obligation arising out of any litigation,
suit, proceeding, action, claim or investigation, at law or in
equity or in arbitration, related to Seller's operation of the
Business prior to the Closing Date.
(e) Any claim, liability or obligation, known or unknown,
contingent or otherwise, the existence of which is a breach
of, or inconsistent with, any representation, warranty or
covenant of Seller set forth in this Agreement.
(f) Any liability or obligation specifically stated in this
Agreement or the Schedules hereto as not to be assumed by
Purchaser.
4. Allocation of Purchase Price. The Purchase Price shall be al-
located among the Assets and the Seller/Shareholder Non-Competition Agreement in
the manner described on Schedule 4. Seller and Purchaser each agree that they
will not take a position on any income tax return, before any governmental
agency charged with the collection of any income tax, or in any judicial
proceeding which is in any way inconsistent with the provisions of this Section
4.
5. Option of Purchaser to Unwind Agreement. At anytime after
the Closing, Purchaser may notify (the "Notice") Seller in writing of
Purchaser's election to terminate this Agreement and unwind the acquisition
contemplated by this Agreement, in which case the obligations of the parties
under all provisions of this Agreement (other than this Section) and under the
Seller/ Shareholder Non-Competition Agreement and the Shareholder Consulting
Agreement shall cease. If the Notice is given, then the obligations of Purchaser
to pay the remainder of the Purchase Price to Seller shall cease; provided that
Seller shall retain that portion of the Purchase Price paid to Seller prior to
the Notice. Seller may, at its option, reacquire from Purchaser any of the
Assets then held by Purchaser plus those improvements or enhancements made by
Purchaser
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to the computer software listed on Schedule 1(e) which are used by Purchaser
solely in connection with the cotton trading network. For purposes of
illustration and not by way of limitation, such improvements and enhancements
shall not include any computer software possessed by Purchaser prior to the
Closing or any computer software used by Purchaser in providing any of its
information services other than its cotton trading network service, even if it
also is used in providing such cotton trading network service. The consideration
to be given by Seller to Purchaser shall be the assumption by Seller of those
obligations of Purchaser arising out of the contracts, leases and agreements
listed on Schedule 3.1 and those additional contracts entered into by Purchaser
with customers to receive the cotton trading network service with respect to the
period from and after the date of such reacquisition. In addition, Seller may,
at its option, acquire from Purchaser any additional computer hardware which is
acquired by Purchaser after the date of this Agreement and used by Purchaser
solely in providing the cotton trading network service, for a cash purchase
price equivalent to Purchaser's net book value of the hardware (as determined by
Purchaser in the preparation of its financial statements) as of the last day of
the calendar quarter immediately preceding the date of the Notice. The
reacquisition and purchase by Seller as contemplated by this Section shall occur
at the option of Seller within thirty (30) days after the date of the Notice and
Seller shall be responsible for the sales taxes, if any, arising from such
transaction. If such reacquisition or purchase occurs, such property is to be
reacquired by and sold to Seller "AS IS" and Seller assumes the responsibility
and risks of all defects and conditions relating to such property. Purchaser
makes no representation and assumes no liability for the condition or
completeness of such property (including but not limited to the computer
software and any improvements or enhancements thereto) and Seller assumes all
risk in connection with the use thereof, and releases Purchaser from any
liability in connection with the use thereof by Seller or by any other person.
If the Notice is given, then Purchaser agrees that for a period of three (3)
years after the date of the Notice it will not offer on the DTN System a cotton
trading network service in direct competition with the Service; provided,
however, such restriction shall not preclude Purchaser from continuing to offer
during such three-year period those information services offered by Purchaser on
the date of this Agreement.
6. Information and Access. Seller shall allow Purchaser and
its representatives full access to all of Seller's books and records, files,
contracts, documents, facilities, attorneys and accountants pertaining to the
Business and Assets for purposes of Purchaser's due diligence review. Seller
shall furnish to Purchaser such financial and operating data and other
information concerning the Business and Assets as Purchaser may reasonably
request.
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7. Related Transactions.
7.1 Seller/Shareholder Non-Competition Agreements. At the
Closing, Seller and Shareholder shall execute and deliver a five (5) year
Confidentiality and Non-Competition Agreement in the form of Exhibit A
("Seller/Shareholder Non-Competition Agreement").
7.2 Shareholder Consulting Agreement. At the Closing,
Shareholder and Purchaser shall execute and deliver a Consulting Agreement in
the form of Exhibit B ("Shareholder Consulting Agreement").
7.3 Employees of the Business.
(a) Prior to the Closing Date Seller shall send a letter of
termination (in form and timing approved by Purchaser)
effective as of the Closing Date to all employees of the
Business who will no longer be employed by Seller following
the Closing. Seller shall be solely responsible for and shall
pay at Closing or as soon thereafter as required by law, all
salaries, bonuses, commissions, vacation pay, severance pay,
sick leave, profit-sharing plan contributions, health and
accident insurance, pension benefits, and all other employee
benefits of any kind accruing in favor of the employees of the
Business, and any payroll taxes owing thereon, through the
termination of their employment with Seller. If requested by
Purchaser, Seller will take such actions as may be necessary
to transfer to Purchaser Seller's unemployment compensation
insurance experience accounts relating solely to the Business
as of the Closing Date.
(b) Purchaser may, but is not obligated to, offer to employ as
Purchaser's own employees any of the persons actively
participating in the Business on the Closing Date. All
employees accepting employment under the employment terms and
conditions offered by Purchaser, if any, shall be eligible, as
other similarly situated new employees of Purchaser would be,
for those employee benefit plans which Purchaser has in effect
for its similarly situated existing employees as of the
Closing Date.
7.4 Continued Relationships With Clients. Seller and
Shareholder shall cooperate with Purchaser on communications with clients of the
Business prior to the Closing. Seller understands that Purchaser will expect
satisfactory assurances as to the continued level of business to be anticipated
from clients of the Business from and after the Closing.
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8. Closing.
8.1 Date and Place. The closing under this Agreement (the
"Closing") shall take place on or before ______________, 1997, at
________________________________________ or at such other place and time as may
be mutually agreed upon by the parties. The actual date of Closing is referred
to in this Agreement as the "Closing Date".
8.2 Deliveries by Seller and Shareholder. Seller and
Shareholder shall deliver to Purchaser at the Closing the following items and
documents, executed as appropriate by Seller and Shareholder: (a) possession of
all of the Assets; (b) such bills of sale and other instruments of transfer, in
form satisfactory to Purchaser, as are required or appropriate to convey to
Purchaser good and marketable title to the Assets, free and clear of all liens,
encumbrances, claims and restrictions of any nature; (c) the Shareholder
Consulting Agreement; (d) the Seller/Shareholder Non-Competition Agreement; (e)
all third party consents necessary for Seller and Shareholder to consummate the
transactions contemplated by this Agreement; (f) such other documents as
Purchaser may reasonably request in order to show that Seller and Shareholder
have fulfilled all of their other obligations required under this Agreement for
the Closing to occur; and (g) a certified copy of the resolutions of the
shareholders and Board of Directors of the Seller authorizing the execution and
delivery of this Agreement by Seller and the consummation of the transactions
contemplated by this Agreement.
8.3 Deliveries by Purchaser. Purchaser shall deliver to Seller
and Shareholder at the Closing the following documents, executed as appropriate
by Purchaser: (a) the portion of the Purchase Price specified in Section 2(a);
(b) the Shareholder Consulting Agreement; (c) all third party consents necessary
for Purchaser to consummate the transactions contemplated by this Agreement; (d)
such other documents as Seller and Shareholder may reasonably request in order
to show that Purchaser has fulfilled all of its other obligations required under
this Agreement for the Closing to occur; and (e) a certified copy of the
resolutions of the Board of Directors of the Purchaser approving the execution
and delivery of this Agreement by Purchaser and the consummation of the
transactions contemplated by this Agreement.
9. Representations and Warranties of Seller and Shareholder.
Seller and Shareholder hereby jointly and severally represent, warrant and
covenant to and with Purchaser, as of the date of this Agreement and also as of
the Closing Date, as follows:
9.1 Organization. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas.
Seller has all requisite corporate power and authority to own its assets and to
carry on the Business as now conducted. Seller is duly licensed or qualified to
do business as a foreign corporation and is in good standing in all
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jurisdictions in which it is required to be so licensed or qualified in order to
conduct the Business as presently conducted.
9.2 Authorization. Seller has the requisite corporate power
and authority to execute, deliver and perform this Agreement in accordance with
its terms. The execution, delivery and performance of this Agreement by Seller
have been duly authorized by all necessary corporate action and do not
contravene or constitute a default under any provision of the Articles of
Incorporation or Bylaws of Seller. This Agreement has been, and the other
agreements, documents and instruments required to be delivered by Seller in
accordance with the provisions hereof, will be duly executed and delivered on or
before Closing by Seller through its duly authorized officers. This Agreement
constitutes, and the other agreements, documents and instruments required to be
delivered by Seller or Shareholder (or both) in accordance with the provisions
of this Agreement when executed and delivered by Seller or Shareholder (or both)
will constitute, the legal, valid and binding obligation of Seller or
Shareholder (or both), enforceable against Seller or Shareholder (or both) in
accordance with its and their terms.
9.3 No Violation. The execution and delivery of this Agreement
does not, and the performance of the transactions contemplated hereby by Seller
and Shareholder will not, (i) create, permit or result at any time in the
creation or imposition of any lien, encumbrance, claim or charge of any nature
whatsoever with respect to the Assets; (ii) violate or conflict at any time with
any provision of Seller's Articles of Incorporation or Bylaws or of any
agreement to which Seller or Shareholder is a party or by which Seller,
Shareholder or any of the Assets is bound; and (iii) violate any law,
regulation, rule, or order of any court or governmental authority affecting
Seller, Shareholder, the Business or the Assets.
9.4 Financial Statements. Attached as Schedule 9.4 are true
and correct copies of (a) Seller's unaudited detailed income statements for the
Business for the fiscal years ending December 31, 1993, 1994, 1995, and 1996 and
for the five month period ended May 31, 1997, respectively, and (b) the
unaudited balance sheets of Seller as of December 31, 1993, 1994, 1995 and 1996
and as of May 31, 1997 (collectively, the "Financial Statements"). The Financial
Statements have been prepared in accordance with generally accepted accounting
principals consistently applied except for the omission of footnotes [and any
other exceptions] and fairly present the financial condition, assets and
liabilities, and results of operations of the Business as of such dates and for
such periods. All liabilities or obligations (whether absolute, accrued,
contingent or otherwise) of the Business as of the date of this Agreement are
fully reflected or reserved against in such balance sheet, except for the
additional liabilities or obligations of the Business accruing in the ordinary
course of the Business since the date of such balance sheet consistent with the
representations, warranties and covenants herein.
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9.5 Title to Assets. Seller has good and marketable title to
and the right to convey the Assets to Purchaser. There are not presently any,
and at Closing there will be no, liens, encumbrances, claims or restrictions of
any kind against any of the Assets. No person or entity other than Seller has or
claims any right, title or interest in and to any of the Assets or the Business.
None of the Assets are leased or being purchased on installment or conditional
sale contract, except as described on Schedule 9.5.
9.6 Necessary Consents. Except as disclosed on
Schedule 9.6, there are no consents of third parties or approvals of any
governmental authority required to be obtained by Seller or Shareholder in order
to consummate the transactions contemplated by this Agreement.
9.7 Litigation. Except as disclosed on Schedule 9.7, there are
no legal, administrative, governmental, arbitration or other actions,
proceedings or investigations pending or, to the knowledge of Seller and
Shareholder, threatened against Seller or Shareholder which would affect in any
respect the Assets or the Business or the ability of Seller and Shareholder to
consummate the transactions contemplated by this Agreement.
9.8 Taxes. Seller has duly and timely paid all taxes required
to be paid, and has duly and timely filed all returns/reports required to be
filed, with respect to the Business under applicable federal, state, local and
other laws and regulations. Seller will duly and timely pay all taxes owing, and
file all returns/reports required, with respect to the Business for any period
ending on or before the Closing Date.
There are no unpaid federal, state or local income, sales, payroll, property or
other taxes of any kind which could constitute a claim, charge or lien against
the Assets or the Business.
9.9 Employees and Sales Representatives; Employee Benefits.
Seller has furnished to Purchaser a true and correct list of the names, ages and
titles of all employees of Seller who work in the Business (whether full or part
time), together with the annual rate of compensation (including bonuses) being
paid to each such employee and the benefits (including without limitation
accrued vacation pay, sick pay, and severance pay) payable to each such employee
upon or with respect to their termination of employment with Seller effective as
of the Closing Date. Seller has also furnished to Purchaser a true and correct
list of the names, ages and titles of all non-employee sales representatives or
agents of Seller who work for the Business, together with the applicable
commissions or consulting fee rates with respect to each such person and the
respective commissions or consulting fees earned by each such person for the
last fiscal year of the Seller. Schedule 9.9 contains a complete list of each
benefit plan or arrangement, whether formal or informal and whether binding or
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not, maintained or contributed to by Seller for the benefit of any of the
employees or non-employee sales representatives or agents of the Business.
9.10 Contracts With Clients and Suppliers. Seller has listed
on Schedule 9.10 all of Seller's contracts (oral or written) with clients and
suppliers of the Business; Seller has no other contracts (oral or written) with
clients and suppliers of the Business. Seller has delivered to Purchaser true,
correct and complete copies of all written contracts relating to the Business,
and written summaries of the terms of all oral contracts relating to the
Business, and all of such contracts are presently in full force and effect and
are assignable. Seller has not received any notices from any clients or
suppliers of the Business that indicate that they intend to terminate any of
such contracts and, except as reflected in the copies delivered to Purchaser or
on Schedule 9.10, such contracts have not been amended and Seller and the other
parties to such contracts are not in default in any material respect under such
contracts. Seller has not been apprised and does not currently believe or have
reason to believe that any of the clients of the Business plan to cancel or
reduce the volume under any client contracts.
9.11 Other Contracts. Schedule 9.11 contains a complete list
of all of Seller's contracts (oral and written) relating to the Business, if
any, other than the contracts with clients and suppliers listed on Schedule
9.10. Seller has delivered to Purchaser true, correct and complete copies of all
such other written contracts relating to the Business and written summaries of
the terms of all such other oral contracts relating to the Business, and all of
such contracts are presently in full force and effect and are assignable, and,
except as reflected in the copies delivered to Purchaser or on Schedule 9.11,
such contracts have not been amended and Seller and the other parties to such
contracts are not in default in any material respect under such contracts.
9.12 Fixed Assets. Attached as Schedule 9.12 is a true and
correct list of all furniture, equipment, leasehold improvements and other fixed
assets of or used in the Business. All of such Assets are in good working
condition with no known material defects and shall be maintained in such
condition pending Closing.
9.13 Bulk Sales. Seller has taken any and all actions required
under the bulk sales laws of the State of Texas with respect to the transactions
contemplated by this Agreement and will satisfy on or before the Closing (or
make arrangements satisfactory to Purchaser in its sole discretion to satisfy)
all creditor claims, excluding Assumed Liabilities.
9.14 Insurance. Seller shall maintain in effect through the
Closing Date all policies of fire, casualty, public liability, workmen's
compensation and errors and omissions insurance presently in effect with respect
to the Business and the Assets.
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9.15 Necessary Assets. Except for any Excluded Assets,
the Assets include all property and rights reasonably required to operate the
Business in the manner the Business is presently operated by Seller. All of the
Assets are located at the Business in Lubbock, Texas.
9.16 Patents, Copyrights, Trademarks and Trade Names. Schedule
9.16 contains an accurate and complete description of all domestic and foreign
patents, copyrights, trademarks, service marks, trademark and service ▇▇▇▇
registrations, logos, corporate names, trade names, assumed or fictitious names,
copyrights and copyright registrations, and all applications for any of the
above, (collectively, "Intellectual Property"), presently owned or held by
Seller, or under which Seller owns or holds any license, and which are used in
the operation of the Business. Except with respect to the patents referred to in
Section 14.1(d), to the best knowledge of Seller and Shareholder, neither the
Service nor any Intellectual Property used in the operation of the Business
infringes on any patents, trademarks, service marks, copyrights, or any other
rights, of any person or entity. Seller is the sole owner of, has the sole and
exclusive right to use (without payment of any license fee, royalty or similar
charge), and has the full right and power to sell, has taken all reasonable
measures to maintain and protect, the Intellectual Property, and has granted no
licenses or other rights to utilize the Intellectual Property (except as
provided in the contracts listed on Schedule 9.10); and no claims have been
asserted by any person to the use of any such Intellectual Property or
questioning the validity or effectiveness of any such license, and, to the best
knowledge of Seller and Shareholder, there is no valid basis for any such
claims.
9.17 Compliance With Applicable Laws. In respect to its
ownership of the Assets and operation of the Business, Seller has not in the
past been in violation of and is not presently in violation in any material
respect of any applicable law, rule, regulation, order, ordinance, or judgment
of any governmental authority (collectively, "laws"). Seller has not received
notification of any claimed present or past failure of Seller to comply in any
material respect with any of such laws.
9.18 No Subsidiaries. Seller does not own any shares of
any corporation or any ownership or other investment interest, either of record,
beneficially or equitably, in any association, partnership, joint venture or
other legal entity.
10. Representations and Warranties by Purchaser. Purchaser
represents, warrants and covenants to and with Seller as follows:
10.1 Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Purchaser has all requisite corporate power and authority to own its assets and
to carry on its business as now conducted.
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10.2 Authorization. Purchaser has the requisite corporate
power and authority to execute, deliver and perform this Agreement. The
execution, delivery and performance of this Agreement by Purchaser have been
duly authorized by all necessary corporate action. This Agreement has been, and
the other agreements, documents and instruments required to be delivered by
Purchaser in accordance with this Agreement will be, duly executed and delivered
by Purchaser through its duly authorized officers, and this Agreement
constitutes, and the other agreements, documents and instruments when executed
and delivered will constitute, the legal, valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its and their terms.
10.3 No Violation. The execution and delivery of this
Agreement does not, and the performance of the transactions contemplated hereby
by Purchaser will not, (i) violate or conflict at any time with any provision of
Purchaser's Articles of Incorporation or Bylaws or of any agreement to which
Purchaser is a party or by which Purchaser is bound; and (ii) violate any law,
regulation, rule, or order of any court or governmental authority affecting
Purchaser.
10.4 Necessary Consents. There are no consents of
third parties or approvals of any governmental authority required to be obtained
by Purchaser in order to consummate the transactions contemplated by this
Agreement.
10.5 Litigation. There are no legal, administrative,
governmental, arbitration or other actions, proceedings or investigations
pending or, to the knowledge of Purchaser, threatened against Purchaser which
would affect in any respect the ability of Purchaser to consummate the
transactions contemplated by this Agreement.
11. Conditions to Closing.
11.1 Conditions to Purchaser's Obligations. Purchaser's
obligations under this Agreement are expressly conditioned upon each of the
following: (a) All of Seller's representations and warranties set forth in
Section 9 shall be true and correct as of the Closing Date.
(b) Seller and Shareholder shall have taken all actions required
of them under this Agreement and delivered to Purchaser all of
the closing items set forth in Section 8.2 of this Agreement.
(c) There shall have been no damage, destruction or loss to or of
the Assets, whether or not insured, other than ordinary wear
and tear and use in the ordinary course of business, between
the date of this Agreement and the Closing.
▇▇
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(▇) ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ satisfied in all respects, in its sole
judgment, with its business, legal, accounting, tax and
financial review of the Assets and Business;
(e) Purchaser shall obtain, upon terms and conditions satisfactory
to Purchaser in its sole judgment, an agreement with EWR Inc.
providing for Purchaser's access to, use of and interactivity
with (including but not limited to the right and ability of
Purchaser to download) the information and applications of
EWR's electronic warehouse receipt system.
(f) Purchaser shall have obtained, or satisfied itself that
it will obtain upon satisfactory terms and costs, such
permits, licenses or other rights (in addition to those
included in the Assets and however denominated) which may be
necessary, in Purchaser's sole and absolute judgement, to
enable Purchaser to develop and operate a cotton trading
network in the manner contemplated by Purchaser (which is to
exceed the scope of the Service offered by Seller) and without
infringing on any patents, trademarks, service marks,
copyrights, or proprietary rights of others. Seller
acknowledges that the Assets and Business may be of no use to
Purchaser unless certain conditions precedent to developing
such cotton trading network exist.
(g) This Agreement and the transactions contemplated hereby
shall have been approved by the Board of Directors of
Purchaser.
11.2 Conditions to Seller's and Shareholder's
Obligations. Seller's and Shareholder's obligations under this Agreement are
expressly conditioned upon each of the following:
(a) All of the representations and warranties of Purchaser
set forth in Section 10 are true and correct as of the Closing
Date; and
(b) Purchaser shall have taken all actions required of it under
this Agreement and delivered to Seller and Shareholder all of
the closing items set forth in Section 8.3 of this Agreement.
12. Conduct of Business. Until the Closing, Seller (a) will carry
on the Business in the ordinary course; (b) will not buy, sell or dispose of any
Assets except in the ordinary course of the Business; (c) will use its best
efforts to preserve its existing relations with its clients, employees,
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suppliers and others; (d) will not increase the compensation and benefits of any
of its employees without Purchaser's approval; (e) will not enter into, or
terminate, any material contracts without Purchaser's consent; and (f) will take
no actions, or fail to take any actions, which would cause its representations
and warranties in this Agreement to become untrue as of the Closing Date.
13. Broker. Each party warrants to the other that it has not used
a broker or finding agent in connection with this transaction and will hold the
other party harmless from any claim made by any person or entity claiming to
have been employed by such party as a broker or finding agent in connection with
the transactions contemplated by this Agreement.
14. Indemnification.
14.1 Indemnification Obligation of Seller and Shareholder.
Seller and Shareholder, jointly and severally, shall indemnify Purchaser and
hold Purchaser harmless from and against any and all liability, loss,
litigation, expense or claim (including reasonable attorney fees) arising out
of, resulting from, relating to, in the nature of or caused by:
(a) Any breach of any representation, warranty, covenant or
agreement made by Seller and/or Shareholder in this Agreement
or in any agreement, statement, certificate, instrument or
other document furnished or delivered or to be furnished or
delivered to Purchaser pursuant hereto or in connection with
the transactions contemplated by this Agreement;
(b) The ownership or operation of the Assets or the Business
prior to the Closing Date (except to the extent included in
the Assumed Liabilities);
(c) The Excluded Liabilities; and
(d) Any infringement or claim of infringement (notice of which
is given to Seller within five years after the Closing) of
either United States Patents Nos. 5063507 or 5285383
registered to Plains Cotton Cooperative Association by any
portion of the Service or the Assets as used in the cotton
trading network developed by Purchaser, but excluding any
infringement to the extent caused by the modification or
enhancement of the Service or the Assets by Purchaser (as an
example of such exclusion, if the infringement is caused by
Purchaser combining the Service with the providing of
electronic warehouse receipt processing); provided, however,
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the cumulative liability of Seller and Shareholder pursuant
to the indemnification obligations under this subsection (d)
alone shall not exceed the amount of the Purchase Price or,
in the case the Notice is given pursuant to Section 5 hereof,
the portion of the Purchase Price paid or payable under this
Agreement.
14.2 Indemnification Obligation of Purchaser. Purchaser shall
indemnify Seller and Shareholder and hold Seller and Shareholder harmless from
and against any and all liability, loss, litigation, expense or claim (including
reasonable attorney fees) arising out of, resulting from, relating to, in the
nature of or caused by:
(a) Any breach of any representation, warranty, covenant or
agreement made by Purchaser in this Agreement or in any
statement, certificate, instrument or other document or item
furnished or delivered or to be furnished or delivered to
Seller and Shareholder pursuant hereto or in connection with
the transactions contemplated by this Agreement;
(b) The ownership or operation of the Assets or the Business on
or after the Closing Date (except to the extent included in
the Excluded Liabilities); and
(c) The Assumed Liabilities.
15. Survival of Representations, Warranties, Covenants and
Indemnities. All representations, warranties, covenants and indemnities in this
Agreement shall survive the Closing, regardless of any investigations made prior
to Closing.
16. Governing Law. This Agreement shall be governed by the laws
of the State of Nebraska without regard to its conflicts of laws principles.
17. Modification. This Agreement may be modified only by a writ-
ing signed by all parties.
18. Schedules and Exhibits. All references to Schedules and
Exhibits herein, unless otherwise stated, means the schedules and exhibits
attached to this Agreement which are hereby incorporated by reference.
19. Notices. Notices to any party shall be deemed given when
deposited in the U.S. Mail, postage prepaid and addressed to the parties as
follows, and otherwise when received:
(The following addresses are for after the Closing)
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If to Seller or Shareholder:
The Cotton Communication Network, Inc.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, President
If to Purchaser:
Data Transmission Network Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, President
Any party may change its address for notice by giving notice to the other
parties as provided above.
20. Assignment and Binding Effect. This Agreement may not be as-
signed prior to the Closing by any party hereto without the prior written
consent of the other parties; provided, however, that Data Transmission Network
Corporation shall have the right to assign its rights and obligations under this
Agreement at any time prior to the Closing to a corporation which is a direct or
indirect wholly-owned subsidiary of Data Transmission Network Corporation.
Subject to the foregoing, all of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
parties and their respective successors and assigns.
21. Expenses. Each party shall pay its own expenses with
respect to the negotiation and preparation of documents and the consummation of
the transactions provided for in this Agreement.
22. Risk of Loss. Until the Closing, Seller shall bear the risk
of loss to the Assets or Business.
23. Exclusivity. Seller and Shareholder agree not to entertain
any discussions regarding the sale of the Business or Assets with any third
party while this Agreement remains in effect.
24. Post-Closing Effectuation. Following the Closing, each party
agrees to deliver to any other party to this Agreement such instruments and
documents, and to take such other actions, as may be reasonably requested by
such other party to this Agreement to more fully effectuate any of the
transactions contemplated by this Agreement.
25. Right of Set-off. Purchaser shall have the right to
offset against any obligations which Purchaser has to Seller any amount or
amounts which Seller hereafter owes Purchaser pursuant to the indemnification
provisions of this Agreement.
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26. Responsibility for Sales Taxes. Seller shall pay any and
all state and local sales taxes arising out of the sale of the Assets to
Purchaser.
27. Announcements. Neither Seller nor Purchaser shall make any
public announcements about the transactions contemplated by this Agreement
without the other's prior written consent; provided, however, that Purchaser
shall, after reasonable advance notice to Seller, be entitled to make such
public announcements about the transactions contemplated by this Agreement as
may be required by reason of its status as a public company.
28. Severability. If any term or provision of this Agreement
is judicially determined to be invalid or unenforceable, such invalidity or
unenforceability shall not affect the remainder of the Agreement which shall be
enforced so as to give effect as nearly as possible to the parties' original
intent.
29. Entire Agreement. This Agreement, including the Schedules
and Exhibits and the other agreements referenced herein to be executed pursuant
to this Agreement, contains the full understanding of the parties concerning its
subject matter. This Agreement may not be amended except in writing signed by
all parties and none of the provisions of this Agreement may be waived except in
writing signed by the party or parties against whom enforcement of such waiver
is sought.
30. Counterparts. This Agreement may be signed in one or more
counterparts each of which will be an original but which together constitute one
and the same instrument.
31. Confidentiality. Seller and Shareholder agree that following
the Closing and for a period of three (3) years thereafter, all Confidential
Information (as defined herein) shall be maintained in strict confidence by them
and shall not be disclosed to any third party without Purchaser's prior written
consent, except to the extent that information about the operating results of
the Business is required to be furnished by Seller or Shareholder in filings and
other reports to tax and other governmental authorities. For purposes of this
Section 32, "Confidential Information" means, in addition to the information
within that term in the Seller/Shareholder Non-Competition Agreement, the terms
of this Agreement and of all other agreements executed and delivered pursuant
hereto.
[Signature page follows]
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SIGNATURE PAGE TO
ASSET PURCHASE AGREEMENT
AMONG THE NETWORK, INC., ▇▇▇▇▇▇ ▇▇▇▇▇,
AND DATA TRANSMISSION NETWORK CORPORATION
IN WITNESS WHEREOF, the parties have executed this Agreement.
SELLER:
THE COTTON COMMUNICATION NETWORK,
INC.
By:
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, President
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, Shareholder
PURCHASER:
DATA TRANSMISSION NETWORK CORPORATION
By:
------------------------------------
Title:
---------------------------------
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