Active Link Communications, Inc.
Form 8-K
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made effective 1st day of
October 2001 ("Effective Date"), by and among Active Link Communications, Inc.,
IAC Acquisition Corporation and Digital Telecom, Inc., all Colorado Corporations
("Sellers"), and Carrier Solutions, LLC, a Texas Limited Liability Company.
RECITALS
A. Sellers are engaged in the business and operation of voice
interconnect sales and service, customer premise cable sales and integration in
the Denver, Colorado metropolitan area and National Account administration for
various customers (the "Business") as a going concern.
B. Sellers desires to sell to Purchaser and Purchaser desires
to buy from Sellers all assets and rights of Sellers in the Business as a going
concern on the terms and conditions set forth in this Agreement.
AGREEMENTS
In consideration of the premises and the mutual agreements
herein contained, the parties agree as follows:
I. TRANSFER OF ASSETS.
Subject to the terms and conditions of this Agreement, at
Closing Sellers agree to sell and deliver to Purchaser and Purchaser agrees to
purchase from Sellers as of the Effective Date all of Sellers' right and title
to and interest in all assets, properties and rights of every kind, located in
the Denver, Colorado metropolitan area related solely to the Business (the
"Purchased Assets"). The Purchased Assets shall include, the following:
1.01 Personal Property. All equipment, tools, furniture,
computers and other personal property ("Personal Property") listed on Schedule
1.01.
1.02 Real Property. There is no real property involved in the
transfer, but the parties have agreed to share certain real property assets as
set forth on Exhibit A.
1.03 Leases. All rights of Sellers under (including, without
limitation, all Sellers' rights to receive goods and services and to assert
claims and take other actions
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with respect to breaches, defaults and other violations of) all of the leases
set forth on Schedule 1.03 (the "Assumed Leases").
1.04 Contracts. All rights of Sellers under (including,
without limitation, all of Sellers' right to receive goods and services and to
assert claims and to take other action with respect to breaches, defaults and
other violations pursuant to) all of the contracts listed on Schedule 1.04 (the
Assumed Contracts").
1.05 Vehicles. All automobiles and trucks, owned, leased or
used in connection with the operation of the Business, which are listed on
Schedule 1.05 to this section ("Vehicles").
1.06 Intangible Assets. All of Sellers' right, title and
interest in and to all customer lists and goodwill related to the operations of
the Business. With regard to the trade name "Active Link" or any derivation
thereof, the Parties have agreed to the sharing of assets and facilities as set
forth on Exhibit A.
1.07 Inventory. All of Sellers' inventories, including raw
materials, work-in-process, finished goods, spare parts and supplies of the
Business, including all such items that Sellers have ordered but not physically
received by the time of the Effective Date ("Inventory"), as listed on Schedule
1.07.
1.08 Records and Documents. All records, and documents, books,
supplier, dealer and customer lists (together with all sales histories, prior
solicitations and bill results and all open order or bill files, backlog and
sales leads and all other sales and marketing information relating to the
Business), work orders, credit information and correspondence, drawings,
financial information and all other records and documents used in connection
with the operation of the Business ("Documents"); provided, however, that
Sellers' accounting, tax and corporate records, including its minute book, shall
remain property of Sellers but shall be available to representatives of
Purchaser from time to time upon reasonable advance notice in each instance for
review and reproduction.
1.09 Shared Assets. From the effective date and for a period
of 90 days thereafter, the Parties agree to share certain assets and facilities
as set forth on Exhibit A to this Agreement.
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II. ASSETS EXCLUDED FROM SALE.
There shall be excluded from sale under this Agreement all
assets not specifically identified in Section I.
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III. LIABILITIES.
Subject to the terms of this Agreement and as partial
consideration to this Agreement;
3.01 Assumed Liabilities. Purchaser shall assume and agree to
pay, perform and discharge the liabilities and obligations of Sellers, which
relate to the Business, only as set forth below on Schedule 3.01 (the "Assumed
Liabilities"). Purchaser shall pay, perform and discharge the Assumed
Liabilities in the ordinary course of business, except the "Donaldson Note,"
which will be extinguished and discharged in accordance with the agreement
attached as Exhibit B.
3.02 Excluded Liabilities. Notwithstanding any thing to the
contrary in this Agreement, Purchaser will not assume, pay or discharge any
debts, liabilities, obligations, contracts, loans, commitments or undertakings
of Sellers, whether fixed, contingent or otherwise, unless expressly described
in section 3.01. All liabilities retained by Sellers shall hereafter be referred
to as the "Excluded Liabilities" and shall include, without limitation, the
following:
(a) All liabilities of Sellers for federal, state or
local income, withholding, sales, use, corporate excise, franchise or other
taxes of Sellers for the operations of the Business prior to the Effective Date;
(b) All liabilities of Sellers for all environmental,
ecological, health, safety or other claims pertaining to the operations of the
Business prior to the Effective Date or the Excluded Assets;
(d) All liabilities of Sellers relating to wages or other
employee compensation or deferred compensation plans, pension plans and profit
sharing plans which accrued prior to the Effective Date, including all
liabilities of Sellers for workman's compensation claims arising out of
incidents occurring prior to the Effective Date, and all such liabilities of
Sellers for post-employment benefits for employees of Sellers, including former
employees who are retired as of the Effective Date and those employees who are
disabled as of the Effective Date or approved after the Effective Date for
disability occurring prior to the Effective Date, it being agreed for purposes
of this subsection (d) that (i) post-employment benefits shall include benefits
payable on account of severance, debts, disability for salaried employees,
long-term disability (but not sickness or accident benefits) for hourly
employees and medical expenses of eligible employees and their dependents;
(e) All liabilities of Sellers for claims of property
damage or personal injury relating to products sold or shipped in the ordinary
course of business prior to the Effective Date;
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(f) All liabilities of Sellers, the substance of which
would constitute a breach of any of Sellers' representations and warranties
contained in section 9;
(g) All liabilities of Sellers arising in connection with
its operations unrelated to the Business;
(h) Any liability of Sellers based on its tortious or
illegal conduct prior to the Effective Date;
(i) Any liability or obligation incurred by Sellers in
connection with the negotiation, execution or performance of this Agreement,
including, without limitation, all legal, accounting, brokers, finders, and
other professional fees and expenses;
(j) Liabilities incurred by Sellers after the Effective
Date; and
(k) All liabilities of Sellers relating to any Excluded
Assets, Excluded Contracts and Excluded Leases.
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IV PURCHASE PRICE.
4.01 Amount. In consideration of Sellers' sale, assignment
and transfer of the Purchased Assets and the performance by it of all the terms,
covenants and provisions of this Agreement on their part to be kept and
performed, Purchaser shall (i) pay to Sellers the sum of $ 300,000.00 and (ii)
assume the Assumed Liabilities ((i) and (ii) shall be referred to herein as the
"Purchase Price").
4.02 Manner of Payment of the Purchase Price. On October 1,
2001 Purchaser paid Sellers $100,000. At Closing, Purchaser shall (a) pay to
Sellers, by cashier's check or wire transfer, $100,000 (the "Cash Payment"); (b)
assume the Assumed Liabilities; and (c) deliver to Sellers a $100,000 Secured
Promissory Note in the form attached thereto as Exhibit C (the "Secured
Promissory Note").
4.03 Allocation of Purchase Price. The Purchase Price shall
be assigned and allocated to the Purchased Assets in the manner mutually agreed
upon by the parties and in accordance with the allocation described on Schedule
4.03 to this section.
4.04 Payments of Transfer Tax. All taxes levied or imposed in
connection with the sale and transfer of the Purchased Assets to Purchaser,
including, without limitation, any and all sales, use, transfer and excise taxes
imposed by federal, state, local or foreign taxing authorities, shall be borne
by Sellers and Sellers shall indemnify and hold Purchaser harmless with respect
to any such tax which might be levied on or collected from Purchaser.
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V. CLOSING.
The closing (the "Closing") of the transactions pursuant to
this Agreement shall take place as soon as possible, but no later than October
12, 2001, at the offices of Sellers or such other place as the Parties mutually
agree.
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VI. PURCHASER'S OBLIGATIONS AT CLOSING
Purchaser hereby agrees that it shall, prior to or at Closing,
deliver to Sellers:
6.01 Cashiers checks or wire transfers to Sellers in the
amount of the Cash Payment.
6.02 The Secured Promissory Note, duly executed by Purchaser.
6.03 Executed Exhibits to this Agreement.
6.04 A certificate signed by an Officer of Purchaser, in a
form satisfactory to Sellers, affirming the accuracy of the representations and
warranties set forth in Section VIII.
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VII. SELLERS' OBLIGATIONS AT CLOSING.
Sellers hereby agrees that it shall, at Closing and unless
waived by Purchaser, deliver or convey to Purchaser:
7.01 A General Bill of Sale duly executed by Sellers, in the
form attached hereto as Exhibit D.
7.02 Written consent by the Seller to the transfer or
assignment to Purchaser of all Purchased Assets including Assumed Leases under
section 1.03(a) and Assumed Contracts under section 1.07(a) where the consent of
any other party of such contract may, in the opinion of Purchaser's counsel, be
required for such assignment or transfer. Sellers shall use its best efforts to
identify and disclose on schedules 1.03(b) and 1.07(b), the leases and contracts
specified in section 1.03(b) and 1.07(b). It is understood that Purchaser will
be responsible for obtaining necessary consents to the Assumed Leases and Seller
will provide reasonable and good faith cooperation in connection with that
effort.
7.03 Titles and registrations to all Vehicles, duly executed
by Sellers.
7.04 Certified copies of resolutions adopted by the Boards of
Directors of Sellers authorizing the execution of this Agreement and the sale of
the Purchased Assets to Purchaser in accordance with the terms hereof.
7.05 At least two days prior to Closing, the schedules
required by this Agreement and the exhibits hereto, in a form reasonably
satisfactory to Purchaser.
7.06 A Certificate, signed by an Officer of Sellers, in a
form satisfactory to Purchaser, affirming the accuracy of the representations
and warranties set forth in Section IX.
7.07 Such other documents as Purchaser reasonably deems
necessary or appropriate to vest in it good title to all or any part of the
Purchased Assets.
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VIII. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Sellers as of the
Effective Date and the Closing:
8.01 Organization. Purchaser is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Texas and has the power to own its property and carry on its business
and is qualified to do business in the state of Colorado.
8.02 Authority. Purchaser has all necessary corporate power
to execute and deliver this Agreement and to consummate the transactions
provided for herein and, the execution and delivery of this Agreement by
Purchaser and the performance by it of the obligations to be performed hereunder
have been duly authorized by all necessary and appropriate action. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby do not and will not conflict with or result in a breach of,
or constitute a default under, the terms or conditions of the Articles of
Organization and Operating Agreement of Purchaser, any material judicial or
administrative order or process, any material agreement or instrument to which
Purchaser is a party or by which it is bound, or any material statute or
regulation of any governmental agency. This Agreement is, and each other
agreement and document to be executed by Purchaser pursuant hereto will when so
executed be a valid and binding obligation of Purchaser enforceable in
accordance with their terms.
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IX. REPRESENTATIONS AND WARRANTIES OF SELLERS
9.01 Corporate Organization. Sellers are corporations duly
organized, validly existing and in good standing under the laws of the State of
Colorado and have all corporate power and authority to own, operate and lease
their respective properties and carry on their respective businesses as now
conducted. Seller is duly licensed and qualified to do business in and is in
good standing under the laws of each state where failure to do so would have a
material adverse effect on the Business.
9.02 Authorization of Agreement. Sellers have all necessary
corporate power to execute and deliver this Agreement and to consummate the
transactions provided for herein and the execution and delivery of this
Agreement by Sellers and the performance by it of the obligations to be
performed hereunder have been duly authorized by all necessary and appropriate
action by the Boards of Directors of Sellers. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not conflict with or result in a breach of, or constitute a default
under, the terms or conditions of Sellers' Articles of Incorporation or By-Laws,
any court or administrative order or process or any statute or regulation of any
governmental agency, and the consummation of the transactions contemplated
hereby do not and will not result in the breach of, or constitute a default
under, any agreement or instrument to which Sellers are a party or by which
Sellers are bound. This Agreement is, and each other agreement and document to
be executed by Sellers pursuant hereto will be when so executed, a valid and
binding obligation of Sellers, enforceable in accordance with their terms.
9.03 Financial Statements. Seller has delivered to Purchaser
copies of unaudited financial statements prepared internally which in seller's
opinion and to its knowledge fairly represent the financial condition of the
Business as of their respective dates and the results of operations of the
business for the periods covered thereby. Seller's books of account, as well as
its minutebooks and stock records, are complete and correct and have been
maintained in accordance with sound business practices, including the
maintenance of an adequate system of internal controls.
9.04 Title to Purchased Assets. Sellers have good,
indefeasible and marketable title to all Purchased Assets, free and clear of all
mortgages, security interests, title retention agreements, options to purchase,
rights of first refusal, liens, encumbrances, restrictions and other burdens.
9.05 Contracts and Leases. To Sellers' knowledge, Sellers do
not have any oral or written enforceable rights or obligations or contracts with
respect to the Business or the Purchased Assets other than (a) the Assumed
Contracts and Assumed Leases and (b) the Excluded Leases and Excluded Contracts
listed on the schedules to sections 1.03 and 1.04. All Assumed Contracts and
Assumed Leases are legally valid and binding and in full force and effect with
respect to the parties thereto and to Sellers' knowledge, none of the other
parties to any of the Assumed Contracts or Assumed Leases
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are in default thereof. Sellers have no notice or knowledge of any claimed
breach of any of the Assumed Contracts or Assumed Leases or of the occurrence of
any event which after the passage of time or the giving of notice or both would
constitute a default by Sellers or any other party to any Assumed Contract or
Assumed Lease. None of the rights of Sellers under the Assumed Contracts or
Assumed Leases will be impaired in any respect by the consummation of the
transactions contemplated by this Agreement. Sellers have delivered to Purchaser
copies of all the Assumed Contracts described in sections 1.04(a) and 1.04(c) of
this Agreement and Assumed Leases described in sections 1.03(a) and 1.03(c) of
this Agreement and (y) used its best efforts to deliver to Purchaser copies of
all the Assumed Contracts described in section 1.04(b) and all the Assumed
Leases in section 1.03(b) of this Agreement in every case, which copies are true
and complete and include all amendments, modifications and supplements. Sellers
will not incur a loss in connection with the performance of any material
contract to which it is a party or on any material commitment that it has
undertaken in connection with the Business.
9.06 Litigation and Proceedings. There is no suit, action or
legal, administrative, arbitrative or other proceeding pending or, to Sellers'
knowledge, threatened against Sellers with respect to the Business or affecting
the Purchased Assets and Sellers is not under investigation with respect to any
charge concerning violation of any law or administrative regulation, foreign,
federal, local or state, in respect to the operation of the Business.
9.07 Compliance with Environmental Laws.
(a) The term "Environmental Laws" shall mean all federal,
state and local laws including statutes, regulations and other governmental
restrictions and requirements relating to the discharge of air pollutants, water
pollutants or process wastewater or the disposal of solid or hazardous waste or
otherwise relating to the environment or hazardous substances or employee health
and safety.
(b) To Sellers' knowledge the Business has been and is
being operated by Sellers in accordance with all Environmental Laws and
Environmental Permits. Sellers have not received any notice nor do Sellers have
any knowledge that the Business is not in compliance with all Environmental Laws
and Environmental Permits and no proceeding for the suspension, revocation or
cancellation of any Environmental Permit is pending or, to Sellers' knowledge,
threatened.
(c) There are no actions pending, or to the knowledge of
Sellers, actions, claims or investigations threatened against Sellers or the
Business that Sellers believe would have a material adverse effect on the
Business, which in any case asserts or alleges (i) the Sellers or the Business
violated any Environmental Law or Environmental Permit or is in default with
respect to any Environmental Permit or any order, writ, judgment, variance,
award or decree of any government authority; (ii) Sellers are required to clean
up or take remedial or other response action due to the disposal, discharge or
other release of any Hazardous Substance; or (iii) Sellers are required to
contribute to the cost of any past, present or future cleanup or remedial or
other response action which arises out of or is related to the disposal,
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discharge or other release or any Hazardous Substance by Sellers or the
Business. Sellers and the Business are not subject to any judgment, stipulation,
order, decree or agreement arising under Environmental Laws.
9.08 Government License and Regulation. Sellers have all
domestic and foreign governmental licenses and permits necessary to conduct the
Business and own and use the Purchased Assets and such licenses and permits are
in full force and effect, except where the failure to have such licenses and
permits would not have a material adverse effect. No proceeding is pending or,
to Sellers' knowledge, threatened regarding the revocation or limitation of any
such governmental license or permit and there is no basis or grounds for any
such revocation or limitation.
9.09 Restrictions on Personnel. None of the officers,
directors, employees or consultants of Sellers have entered into any agreement
which is now in effect with any person, corporation, partnership or business
organization (other than Sellers) requiring such person to assign any interest
in any invention or trade secrets related to the Business or to keep
confidential any such trade secrets or containing any prohibition or restriction
on competition or solicitation of customers.
9.10 Taxes. Prior to the Effective Date all federal, state,
county and local income, excise, sales, transfer, use, gross receipts, ad
valorem, payroll and other taxes, fees and assessments imposed on Sellers and
payable by Sellers and all federal and state payroll taxes required to be
withheld by Sellers have been or will be duly, timely and fully reported, paid
and discharged except to the extent such obligations are specifically assumed by
Purchaser.
9.11 Labor Matters.
(a) Sellers are not a party to or bound by any union
collective bargaining agreements or other labor contracts. Sellers are not, with
respect to the Business, a party to any pending arbitration or grievance
proceeding or other claim relating to any labor contract nor, to Sellers'
knowledge, is any such action threatened and no set of facts would constitute a
basis for any such action.
(b) Sellers are not bound by any court, administrative
agency, tribunal, commission or board decree, judgment, decision, arbitration
agreement or settlement relating to collective bargaining agreements, conditions
of employment, employment discrimination or attempts to organize a collective
bargaining unit which in any case may materially and adversely affect Sellers,
the Business or the Purchased Assets. Sellers have no notice or knowledge of any
employment discrimination, safety or unfair labor practice or other
employment-related investigation, claim or allegation against Sellers and no set
of facts constituting a basis for such an action.
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(c) Sellers have provided Purchaser all of Seller's
written employment policies presently in effect. There exist no such policies
not in writing.
(d) Sellers have made all required payments to the
appropriate governmental authorities with respect to applicable unemployment
compensation reserve accounts for Sellers' employees of the Business.
9.12 Employment Contracts. Except as set forth on the
schedule to this section, Sellers has no employment contract with any person,
nor any contract with any employee, involving termination, retirement or
termination pay, deferred compensation, profit sharing or pension plans,
employee benefit plans or other employee benefits or post-employment benefits of
any kind for employees of the Business. The schedule to this section lists (a)
the names, job descriptions, total compensation of each director, employee or
consultant of Sellers; (b) the fringe benefits currently furnished to such
persons; and (c) all loans, leases and other financial arrangements to or from
Sellers with any employee, officer, director or consultant.
9.13 Compliance with Law. The operation of the Business and
the use of the Purchased Assets do not violate any applicable federal, state,
local or international laws or ordinances or any other rule or regulation of any
international federal, state or local agency or body, including, without
limitation, all energy, safety, environmental, health, export, import,
antidiscrimination, antitrust, wage and hour and price and wage control laws,
orders, rules or regulations applicable to the Business and the Purchased Assets
that would have a material adverse effect on the Business.
9.14 Disabled Employees. No employee of the Business is
eligible for long-term disability but has not yet been certified as such. No
employee of the Business is on medical leave.
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X. COVENANTS AND AGREEMENTS OF PURCHASER.
Purchaser hereby covenants and agrees that:
10.01 Access to Certain Information. As soon as practicable
following the Closing, but in no event later than 90 days thereafter, Purchaser
shall deliver to Sellers, at Sellers' expense, such information and data as
Sellers may reasonably request, including that required by Sellers' customary
tax and accounting questionnaires, in order to enable Sellers to complete and
file all federal and state forms which may be required by law to be filed by it.
10.02 Record Retention. For a period of seven years following
the Closing Date, Purchaser agrees to maintain in a reasonably accessible place
the books and records, including magnetic media files, if any, delivered by
Sellers hereunder relating to the Company and the Business, to provide Sellers
and its representatives reasonable access to such books and records during
normal business hours and to provide copies of such books and records to Sellers
or its representatives at Sellers' expense.
10.03 Cooperation in Obtaining Consents. Purchaser's directors
and officers shall use their best efforts in response to any reasonable request
of Sellers to assist Sellers in obtaining any consents of third parties
necessary for the consummation of the transactions contemplated by this
Agreement.
10.04 Payment of Assumed Leases. Purchaser will pay on a
timely basis and discharge all obligations of the Assumed Leases.
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XI. COVENANTS AND AGREEMENTS OF SELLERS.
Sellers hereby covenants and agrees that:
11.01 Access to Books and Records After Closing. For a period
of seven years following the Closing Date, Sellers agree to maintain in a
reasonably accessible place any books and records not delivered to Purchaser
hereunder relating to Sellers and the Business wherever located, to provide
Purchaser and its representatives reasonable access to such books and records
during normal business hours and to provide copies of such books and records to
Purchaser or its representative at Purchaser's expense.
11.02 Liens and Encumbrances. Upon Purchaser's request,
Sellers shall promptly take all necessary action, including, but not limited to,
the posting of appropriate bonds, to secure the removal of all liens, if any,
arising prior to Closing if the obligation secured by the lien is not a
liability assumed by Purchaser hereunder.
11.03 Severance Benefits. Notwithstanding anything to the
contrary set forth above, the Parties agree to the following with respect to
certain employees of the Business:
(a) On or before the Closing, Purchaser will deliver to
Sellers a list of those existing employees of Sellers who will not be hired by
Purchaser as of the Closing.
(b) Sellers shall pay promptly when due all severance
pay, vacation pay and termination compensation, calculated in accordance with
Sellers' severance pay policy, except for employees of Sellers who will be
employed by Purchaser at the Closing, for all employees whose employment may be
terminated by Sellers on or prior to the Closing or who will not be hired by
Purchaser.
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XII. INDEMNIFICATION BY PURCHASER.
12.01 Indemnification. Purchaser hereby covenants and agrees
to indemnify, defend and hold Sellers and its successors harmless from and
against any damage, liability, loss, cost or deficiency (including, but not
limited to, reasonable attorneys' fees, and other costs and expenses incident to
proceedings or investigations or the defense or settlement of any claim) arising
out of, resulting from or relating to
(a) any inaccuracy in, or breach of, any representation
or warranty of Purchaser pursuant to this Agreement, including schedules and
documents delivered pursuant hereto;
(b) any failure by Purchaser to pay as due the Assumed
Liabilities; or
(c) any failure of Purchaser to duly perform or observe
any term, provision, covenant or agreement to be performed or observed by
Purchaser pursuant to this Agreement.
The obligations of Purchaser to indemnify and hold
Sellers harmless as described herein shall survive Closing and the consummation
of the transactions contemplated by this Agreement.
12.02 Procedures. The procedural rules set forth in section
13.02 shall apply with respect to indemnification by Purchaser except that the
parties' respective obligations under section 13.02 shall be reversed as
appropriate.
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XIII. INDEMNIFICATION BY SELLERS.
13.01 Indemnification. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Purchaser or
any information Purchaser may have, Sellers and its successors hereby agree to
jointly and severally indemnify, defend and hold Purchaser, each fiduciary of
Purchaser's employee benefit plans, each of Purchaser's subsidiaries,
shareholders, affiliates, officers, directors, employees, agents, successors and
assigns (Purchaser and such persons, collectively, "Purchaser's Indemnified
Persons") harmless from and against any demand, claim, damage, liability, loss
(which shall include any diminution in value), cost, deficiency or expense
(including, but not limited to, interest, penalties, costs of preparation and
investigation, and the reasonable fees, disbursements and expenses of attorneys,
accountants and other professional advisors) (collectively, "Losses") imposed or
incurred by Purchaser's Indemnified Persons, directly or indirectly, arising out
of, resulting from or relating to;
(a) any inaccuracy in or breach of any representation or
warranty of Sellers pursuant to this Agreement in any material respect, whether
or not Purchaser's Indemnified Persons relied thereon or had knowledge thereof,
including schedules and documents delivered pursuant hereto;
(b) any failure of Sellers to duly perform or observe any
term, provision, covenant or agreement to be performed or observed by Sellers
pursuant to this Agreement or documents contemplated by this Agreement;
(c) any and all liabilities or obligations of Sellers
other than the Assumed Liabilities, including, without limitation, liabilities
incurred by Purchaser arising out of noncompliance prior to Closing with the
Environmental Regulations or any other laws, rules or regulations, all
liabilities under any of Sellers' "employee benefit plans" as defined under
ERISA and the bulk sales liabilities referred to in section 17.07 hereof;
The obligations of Sellers to indemnify and hold Purchaser's
Indemnified Persons harmless as described herein shall survive Closing and the
consummation of the transactions contemplated by this Agreement, for a period of
one year from closing.
Notwithstanding anything in this Agreement to the contrary,
indemnification under this Agreement by Sellers and its successor shall be
limited to a maximum of $600,000.
13.02 Procedures. Purchaser shall give Sellers prompt notice
of any written claim, demand, assessment, action, suit or proceeding to which
the indemnity set forth in this section 13 applies. If the document evidencing
such claim or demand is a court pleading, Purchaser shall give such notice
within ten days of receipt of such
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pleading, otherwise, Purchaser shall give such notice within 30 days of the date
it receives written notice of such claim. Failure to give timely notice of a
matter which may give rise to an indemnification claim shall not affect the
rights of Purchaser's Indemnified Persons to collect such Loss from Sellers so
long as such failure to so notify does not materially adversely affect Sellers'
ability to defend such Loss against a third party.
If Purchaser's request for indemnification arises from the
claim of a third party, the written notice shall permit Sellers to assume
control of the defense of any such claim, or any litigation resulting from such
claim. Failure by Sellers to notify Purchaser of its election to defend a
complaint by a third party within five days shall be a waiver by Sellers of its
right to respond to such complaint and within twenty days after notice thereof
shall be a waiver by Sellers of its right to assume control of the defense of
such claim or action. If Sellers assume control of the defense of such claim or
litigation resulting therefrom, Sellers shall take all reasonable steps
necessary in the defense or settlement of such claim or litigation resulting
therefrom and Sellers shall hold Purchaser's Indemnified Persons, to the extent
provided in this section 13, harmless from and against all Loss arising out of
or resulting from any settlement approved by Sellers or any judgment in
connection with such claim or litigation. Notwithstanding Sellers' assumption of
the defense of such third-party claim or demand, Purchaser shall have the right
to participate in the defense of such third-party claim or demand at its own
expense. Sellers shall not, in the defense of such claim or litigation, consent
to entry of any judgment or enter into any settlement, except in either case
with written consent of Purchaser, which consent shall not be unreasonably
withheld. Purchaser shall furnish Sellers in reasonable detail all information
Purchaser may have with respect to any such third-party claim and shall make
available to Sellers and its representatives all records and other similar
materials which are reasonably required in the defense of such third-party claim
and shall otherwise cooperate with and assist Sellers in the defense of such
third-party claim.
If Sellers do not assume control of the defense of any such
third-party claim or litigation resulting therefrom, Purchaser may defend
against such claim or litigation in such manner as it may reasonably deem
appropriate, and Sellers shall indemnify Purchaser's Indemnified Persons from
any Loss indemnifiable under section 13.01 incurred in connection therewith.
13.03 Survival of Indemnification. The obligations of Sellers to
indemnify and hold Purchaser's indemnified persons shall survive for one year
from closing.
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XIV. BROKERS.
Purchaser and Sellers represent and warrant to each other that
there are no brokerage or finders' fees in connection with the transactions
contemplated hereby resulting from any actions taken by them and they hereby
indemnify, save and hold each other harmless from and against claims by any
broker or finder for a fee or expense which is based in any way on an agreement,
arrangement or understanding made or alleged to have been made by them relating
to the transactions contemplated hereby.
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XV. CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS.
The obligations of Sellers under this Agreement are, at the
option of Sellers, subject to the fulfillment at Closing of each of the
following conditions:
15.01 Accuracy of Representations and Warranties. All
representations and warranties of Purchaser contained in this Agreement shall be
true and correct in all respects and Purchaser shall have performed and
satisfied all covenants, conditions and agreements and delivered to Sellers all
documents and agreements required by this Agreement to be performed, satisfied
or delivered by Purchaser prior to Closing.
15.02 No Restraint on Transaction. No action, suit or
proceeding by any governmental agency or other party shall have been instituted
or threatened to be taken to restrain, prohibit or otherwise challenge the
legality of the transactions contemplated herein.
15.03 Waiver. The conditions precedent contained in this
section (or sections 6 and 7) may be waived in writing at or prior to Closing.
The parties agree to use best efforts to deliver such waivers to the other
parties promptly after any such condition is fulfilled.
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XVI. MISCELLANEOUS.
16.01 Further Assurances. Upon reasonable request, from time
to time, Sellers shall (or shall direct its directors and officers to, if
appropriate) execute and deliver all documents, make all rightful oaths, testify
in any proceedings and do all other acts which may be necessary or desirable in
the opinion of Purchaser to protect, defend or record the right, title or
interest of Purchaser in and to the Purchased Assets or to aid in the
prosecution, defense or other litigation of such rights arising from such right,
title or interest, all without further consideration.
16.02 Amendment and Severability. This Agreement may only be
amended by a written agreement of Sellers and Purchaser. If any provision,
clause or part of this Agreement or the application thereof under certain
circumstances, is held invalid, the remainder of this Agreement, or the
applications of each provision, clause or part under other circumstances, shall
not be affected thereby.
16.03 Waiver. The failure of Sellers or Purchaser to insist,
in any one or more instances, upon performance of any of the terms or conditions
of this Agreement, shall not be construed as a waiver or relinquishment of any
rights granted hereunder or the future performance of any such term, covenant or
condition. Moreover, Purchaser's decision to close this transaction
notwithstanding its constructive or actual knowledge of the breach by Sellers of
one or more of their representations, warranties or obligations hereunder shall
not relieve such parties of their indemnification obligations hereunder with
respect to such breach; in such case, Purchaser specifically is relying upon
Sellers' indemnification obligation, as well as the underlying representation,
warranty or contractual obligation. All rights and remedies granted in this
Agreement to Purchaser shall be cumulative and nonexclusive of all other rights
and remedies that Purchaser may have in equity.
16.04 Notices. Any notice to be given hereunder shall be
deemed given and sufficient if in writing and delivered or mailed by registered
or certified mail, in the case of Sellers, to:
David E. Welch, Vice President and Chief Financial Officer
7388 South Revere Parkway, Suite 1000
Englewood, Colorado 80112
Facsimile No. 303.649.9514
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with a copy to:
Robert M. Bearman, Esq.
Patton Boggs, LLP
1660 Lincoln Street, Suite 1900
Denver, CO 80264
Facsimile No. 303.894.9239
and, in the case of Purchaser, to:
C& L Communications, Inc.
1200 Network Blvd.
San Antonio, TX 78249
Facsimile No. 210.699.8686
with a copy to:
Carolyn Gillies, Esq.
Bieging, Shapiro & Burrus, LLP
4582 South Ulster Street Parkway, Suite 1650
Denver, CO 80237
Facsimile No. 720.488.7711
or to such other address as Sellers or Purchaser may designate by notice in
writing to the other.
16.05 Benefit. This Agreement shall be binding upon and inure
to the benefit and burden of and shall be enforceable by Purchaser, its
successors and assigns, and Sellers and its successors and assigns. This
Agreement may not be assigned by any party without the written consent of the
others.
16.06 Expenses. All expenses incurred by Sellers or Purchaser
in connection with the transactions contemplated hereby, including, without
limitation, legal and accounting fees shall be the responsibility of and for the
account of the party who ordered the particular service or incurred the
particular expense, except (a) as otherwise provided herein; and (b) any and all
federal, state or local income, sales, use or other taxes arising out of,
resulting from or relating to Sellers' sale of the Purchased Assets and any and
all real or personal property taxes or assessments applicable to the period
before the Closing Date, shall be paid by Sellers.
16.07 Bulk Sales. The parties hereby waive compliance with any
bulk sales act and all similar laws.
16.08 Public Announcement. No public announcement of the
transactions contemplated hereby shall be made by way of press release,
disclosure to the
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trade or otherwise except with the mutual approval of the parties; provided,
however, that this section shall not prevent Sellers from making such disclosure
to authorities or the public as deemed necessary by Sellers, in its sole
discretion, under the state and federal securities laws.
16.09 Specific Performance. In the event of any controversy
concerning the rights or obligations under this Agreement, such rights or
obligations shall be enforceable in a court of equity by a decree of specific
performance. Such remedy shall, however, be cumulative and nonexclusive and
shall be in addition to any other remedy which the parties may have.
16.10 Entire Agreement. This Agreement and the schedules and
other documents to be delivered pursuant hereto constitute the entire agreement
among the parties hereto and there are no agreements, representations or
warranties which are not set forth herein. All prior negotiations, agreements
and understandings are superseded hereby including, without limitations, that
certain letter of intent. This Agreement may not be amended or revised except be
a writing signed by the parties hereto. All parties being represented by
counsel, no one party shall be deemed the drafter of this Agreement with respect
to its interpretation.
SIGNATURE PAGE FOLLOWS
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[PURCHASER] [SELLERS]
Carrier Solutions, LLC Active Link Communications, Inc.
BY: /s/ Tim Atkinson BY: /s/ James M. Ciccarelli
---------------- ------------------------
Title: Executive Vice President Title: Chief Executive Officer
Attest: /s/ Michael Dozier Attest: /s/ David E. Welch
------------------ ------------------
IAC Acquisition Corporation
By: /s/ James M. Ciccarelli
-------------------------
Digital Telecom, Inc.
By: /s/ James M. Ciccarelli
-----------------------
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