AGREEMENT FOR THE PURCHASE AND SALE
OF CERTAIN ASSETS OF COMMUNICATE DIRECT, INC.
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TABLE OF CONTENTS
SECTION PAGE
SECTION PAGE
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Purchase and Sale of Assets.................................................. 1
1.1 Agreement to Purchase and Sell............................. 1
1.2 Assumed Liabilities........................................ 2
1.3 Update of Schedules........................................ 3
1.4 Sublease................................................... 3
1.5 Closing.................................................... 3
Purchase Price and Payment Terms....................................... ..... 3
2.1 Purchase Price............................................. 3
2.2 Method of Payment.......................................... 3
2.3 Allocation of the Purchase Price........................... 4
Representations and Warranties of Seller..................................... 4
3.1 Seller's Organization and Standing......................... 4
3.2 Seller's Corporate Authority............................... 5
3.3 Events Subsequent to October 31, 1996...................... 5
3.4 Title to Personal Property................................. 5
3.5 Litigation................................................. 5
3.6 Consents................................................... 5
3.7 Compliance with Law........................................ 6
3.8 Taxes...................................................... 6
3.9 Contracts.................................................. 6
3.10 Labor Relations............................................ 6
3.11 Benefit Plans.............................................. 6
3.12 Brokers and Finders........................................ 6
3.13 No Conflict or Violation................................... 6
3.14 Discounts and Credits...................................... 7
3.15 Disclaimer of Warranties................................... 7
Representations and Warranties of Buyer...................................... 7
4.1 Buyer's Organization and Standing.......................... 7
4.2 Buyer's Corporate Authority................................ 7
4.3 Litigation................................................. 7
4.4 Consents................................................... 7
4.5 Brokers and Finders........................................ 7
4.6 No Conflict or Violation................................... 8
4.7 Seller's Representations and Warranties.................... 8
Covenants of Seller.......................................................... 8
5.1 Conduct of Seller's Business Pending Closing............... 8
5.2 Access Pending Closing..................................... 8
5.3 Consents of Third Parties.................................. 8
5.4 Introductions to Customers................................. 8
Buyer's Covenants............................................................ 9
6.1 Books and Records.......................................... 9
6.2 Consents................................................... 9
6.3 Publicity.................................................. 9
Mutual Covenants............................................................. 9
7.1 Fairness Opinion........................................... 9
7.2 Operations Pending Closing................................. 9
7.3 Collection of Accounts Receivable.......................... 10
7.4 Employees.................................................. 10
Conditions to Buyer's Obligations to Close................................... 11
8.1 Representations and Warranties............................. 11
8.2 Performance................................................ 11
8.3 Updated Schedules.......................................... 11
8.4 Fujitsu Contract........................................... 12
8.5 Fairness Opinion........................................... 12
8.6 Assignment Documents....................................... 12
8.7 Tender of Possession....................................... 12
8.8 Sublease....................................................12
Conditions to Seller's Obligations to Close.................................. 12
9.1 Representations and Warranties............................. 12
9.2 Performance................................................ 12
9.3 Board Approval............................................. 12
9.4 Fairness Opinion........................................... 12
9.5 Assumption Documents....................................... 12
9.6 Payment Note............................................... 12
9.7 Release of Bank Loans...................................... 13
9.8 Sublease................................................... 13
Indemnification ............................................................. 13
10.1 Indemnification of Buyer................................... 13
10.2 Seller's Indemnification Limitations....................... 13
1010.3 Indemnification of Seller.................................. 13
10.4 Procedure for Indemnification.............................. 14
10.5 Survival................................................... 15
10.6 Exclusive Remedy........................................... 15
Miscellaneous................................................................ 15
11.1 Seller's Knowledge.......................... .............. 15
11.2 Written Agreement to Govern................................ 16
11.3 Severability............................................... 16
11.4 Notices.................................................... 16
11.5 Parties in Interest........................................ 17
11.6 Counterparts and Faxed Signatures.......................... 17
11.7 Law to Govern.............................................. 17
11.8 Successors and Assigns..................................... 17
11.9 Further Assurances......................................... 17
11.10 Gender, Number and Headings................................ 17
11.11 Schedules and Exhibits..................................... 18
11.12 Waiver of Provisions....................................... 18
11.13 Expenses................................................... 18
\42548\010\10AGTCDI.008
AGREEMENT FOR THE PURCHASE AND SALE
OF CERTAIN OF THE ASSETS OF
COMMUNICATE DIRECT, INC.
THIS AGREEMENT is made in Chicago, Illinois, this 9th day of December,
1996, by and between NEWTEL BUFFALO GROVE, INC., an Illinois corporation
("Buyer") and COMMUNICATE DIRECT, INC., an Illinois corporation ("Seller") and a
wholly-owned subsidiary of SoftNet Systems, Inc., a New York Corporation
("SoftNet").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of selling, maintaining,
repairing, servicing, moving and expanding telephone and data systems (the
"Business");
WHEREAS, Seller and Buyer have agreed that Seller shall sell and
transfer and Buyer shall purchase and assume, certain assets used by Seller in
the Business and certain of Seller's liabilities on the terms and subject to the
conditions set forth herein;
WHEREAS, Seller and Buyer acknowledge that, following the transactions
contemplated in this Agreement, Seller will continue to engage in the Business
and further acknowledge that nothing in this Agreement will in any way impair
Seller's right and ability to continue to engage in such Business; and
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto do hereby agree as follows:
1. Purchase and Sale of Assets
.1 Agreement to Purchase and Sell. Seller hereby agrees to sell, convey,
transfer, assign and deliver the following assets (the "Purchased Assets") to
Buyer at the Closing (as defined in Section 1.5 below), and Buyer hereby agrees
to purchase the Purchased Assets from Seller at the Closing, free and clear,
except as described on the schedules attached hereto, of all liens, pledges,
options, claims, security interests, successor liabilities and encumbrances of
whatever nature, or other similar right of any person, corporation, governmental
authority, partnership, company, trust or other entity, for the aggregate
Purchase Price (as defined in Section 2.1 below):
.1 The right, subject to the rights
described on Schedule 1.1.1, to the name
Communicate Direct, Inc.;
.2 The specific customer and mailing lists
described on Schedule 1.1.2;
.3 Specific accounts receivable, as
described on Schedule 1.1.3;
.4 Specific inventories and parts supplies,
subject to the rights as described on
Schedule 1.1.4;
.5 Specific computer software and hardware,
including certain computer software
currently owned by SoftNet, and rights under
certain computer hardware leases, all as
described on Schedule 1.1.5;
.6 Specific furniture and fixtures located
at the Seller's facility in Buffalo Grove,
Illinois (the "Facility"), as described on
Schedule 1.1.5;
.7 Tools and equipment and rights under
certain equipment leases, all as described
on Schedule 1.1.5;
.8 Rights under certain vehicle leases, as
described on Schedule 1.1.8;
.9 Deposits, as described on Schedule 1.1.9;
.10 Security alarm system and equipment
located at the Facility, as described on
Schedule 1.1.10; and
.11 Vendor warranties and guaranties, as
described on Schedule 1.1.11.
.2 Assumed Liabilities. Subject to and upon Closing, Buyer hereby agrees
to assume the following liabilities of Seller related to or incurred in
connection with the operation of the Business (the "Assumed Liabilities"):
.1 Accounts payable and accrued expenses, as
described on Schedule 1.2.1;
.2 Accrued sales tax, as described on
Schedule 1.2.2;
.3 Deferred revenue under service contracts,
as described on Schedule 1.2.3;
.4 Warranty obligations for repair and
replacement of defective workmanship or
materials, as described on Schedule 1.2.4;
.5 Obligations with respect to certain
vehicle leases, as described on Schedule
1.2.5;
.6 Obligations with respect to certain
equipment and computer hardware leases, as
described on Schedule 1.2.6;
.7 Liabilities and obligations for accrued
vacation, sick leave and holiday pay to
Buyer Employees (as defined in Section
7.4.1)
.3 Update of Schedules. Each of the Schedules attached hereto as of the
date hereof shall be updated by Seller on the Closing Date.
.4 Sublease. On or prior to the Closing, Buyer and Seller shall enter into
a sublease, substantially in the form of Exhibit A attached hereto (the
"Sublease") for the lease by Buyer of a portion of the Facility. Payments
required under the Sublease shall be jointly and severally guaranteed, pursuant
to a guaranty substantially in the form attached hereto as Exhibit B (the
"Sublease Guaranty"), up to a maximum aggregate amount of $400,000, by the
following: (a) ▇▇▇▇ ▇▇▇▇▇▇▇▇, (b) ▇▇▇▇ ▇▇▇▇▇, (c) ▇▇▇▇▇▇ ▇▇▇ and (d) ▇▇▇▇▇▇▇
FSublease. On or prior to the Closing, Buyer and Seller shall enter into a
sublease, substantially in the form of Exhibit A attached hereto (the
"Sublease") for the lease by Buyer of a portion of the Facility. Payments
required under the Sublease shall be jointly and severally guaranteed, pursuant
to a guaranty substantially in the form attached hereto as Exhibit B (the
"Sublease Guaranty"), up to a maximum aggregate amount of $400,000, by the
following: (a) ▇▇▇▇ ▇▇▇▇▇▇▇▇, (b) ▇▇▇▇ ▇▇▇▇▇, (c) ▇▇▇▇▇▇ ▇▇▇ and (d) ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇.
.5 Closing. The consummation of the purchase and sale of the Purchased
Assets and assumption of the Assumed Liabilities (the "Closing") shall take
place at the offices of Buyer's counsel, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, on such date and commencing at such time as
Seller and Buyer shall agree, but in no event later than 9:00 a.m. on December
9, 1996. The date of the Closing is referred to herein as the "Closing Date".
Upon Closing, the transactions contemplated hereby shall be deemed to have
occurred effective as of 12:01 a.m. on November 1, 1996 (the "Effective Date").
Seller shall deliver possession of the Purchased Assets and the Sublease to
Buyer, and Buyer shall assume the Assumed Liabilities and deliver to Seller the
Payment Note and the Payment Note Guaranties (as defined in Section 2.2.2
hereof) and the Sublease and the Sublease Guaranty at the Closing, all such
deliveries and assumption to be deemed to have occurred on and as of the
Effective Date.
2. Purchase Price and Payment Terms
.1 Purchase Price. The aggregate purchase price (the "Purchase Price") to
be paid to Seller by Buyer for the Purchased Assets shall be as follows:
.1 The assumption of the Assumed
Liabilities; plus
.2 The sum of the amounts shown in Sections
2.2.2, 2.2.3, and 2.2.4.
.2 Method of Payment. Buyer shall pay the Purchase Price to Seller in the
following manner on the Closing Date:
.1 Buyer shall assume the Assumed
Liabilities;
.2 $209,579 shall be paid by a promissory
note (the "Payment Note"), substantially in
the form attached hereto as Exhibit C.
.3 An amount equal to the outstanding
principal and accrued interest as of the
Closing shall be paid, on Seller's behalf,
to West Suburban Bank as payment in full of
indebtedness incurred by Seller to finance
certain leasehold improvements located at
the Facility.
.4 An amount equal to the outstanding
principal and accrued interest as of the
Closing shall be paid, on SoftNet's behalf,
to West Suburban Bank as payment in full of
indebtedness incurred by SoftNet to finance
certain computer software purchases.
The Payment Note shall be unsecured and Seller shall agree to subordinate
amounts due and owing under the Payment Note to debt incurred by Buyer to a bank
or other institutional lender, and to execute evidence of such subordination as
necessary, on such terms and conditions as Seller shall approve. Repayment of
the Payment Note shall be severally guaranteed, pursuant to individual
guaranties substantially in the form attached hereto as Exhibit D (the "Payment
Note Guaranties"), by each of the following: (a) ▇▇▇▇ ▇▇▇▇▇▇▇▇, (b) ▇▇▇▇ ▇▇▇▇▇,
(c) ▇▇▇▇▇▇ ▇▇▇, and (d) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
.3 Allocation of the Purchase Price. The Purchase Price shall be allocated
by Seller and Buyer among the Purchased Assets in the manner mutually determined
by Buyer and Seller in good faith and as set forth on Schedule 2.3. Buyer and
Seller shall (a) reflect the Purchased Assets in their books and for tax
reporting purposes in accordance with such allocations, (b) file all forms
required under Section 1060 of the Internal Revenue Code and all other tax
returns and reports in accordance with and based upon such allocation, and (c)
unless required to do so in accordance with a "determination", as defined in
Section 1313(a)(1) of the Internal Revenue Code, take no position in any tax
return, tax proceeding, tax audit or otherwise which is inconsistent with such
allocation.
3. Representations and Warranties of Seller
Seller hereby represents and warrants to Buyer, as of the date hereof, as
follows:
.1 Seller's Organization and Standing. Seller is a corporation which is
duly organized, validly existing and in good standing under the laws of the
State of Illinois. Seller is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is necessary under applicable law as a result of the conduct of
its business or the ownership of its properties, except in any jurisdiction
where the failure to do so would not have any material adverse effect on Seller.
Seller has full corporate power and authority to conduct its business as it is
presently being conducted and to own and lease its properties and assets.
.2 Seller's Corporate Authority. Seller has full corporate power and
authority to execute and deliver this Agreement and the other documents and
agreements referred to herein and to perform all of its obligations hereunder
and thereunder. Seller's execution and delivery of this Agreement and the other
documents and agreements referred to herein and Seller's performance of its
obligations hereunder and thereunder have been duly authorized by all necessary
corporate action. This Agreement and the other documents and agreements referred
to herein are a legal, valid and binding agreements of Seller and each is
enforceable against Seller in accordance with its terms except as may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
or by the unavailability of equitable remedies.
.3Events Subsequent to October 31, 1996. To the best of Seller's
knowledge, except to the extent set forth in Schedule 3.3 hereto, since October
31, 1996 there has not been:
(a) Any material damage, destruction, loss or
forfeiture (whether or not covered by insurance) affecting any of the
Purchased Assets; or
(b) Any material change in the Assumed Liabilities or
in the manner in which Seller operates the Business which may
reasonably be expected to have a material adverse effect on the
Purchased Assets or Assumed Liabilities; or
(c) Any written notice received by Seller from any
material customer indicating any intention to curtail, suspend or
terminate such customer's business relationship with Seller.
.4 Title to Personal Property. Seller has good and marketable title to the
Purchased Assets, free and clear of any and all liens, claims, security
interests, options, leases, restrictions or encumbrances of whatever nature,
except as described on Schedule 3.4.
.5 Litigation. Except as listed on Schedule 3.5, to Seller's knowledge
there is no suit, arbitration, claim, investigation, action or proceeding
pending or threatened before any court, arbitrator, administrative or regulatory
body, or any governmental agency to which Seller is a party and which will or
could have any material adverse effect upon any of the Purchased Assets or the
Assumed Liabilities or which will or could prevent or interfere with the
consummation of the transaction contemplated hereby. To Seller's knowledge, no
such judgment, order or decree has been entered, nor has any such determination
been made or liability been incurred, which has, or could have, such an effect.
.6 Consents. Except as specifically set forth on Schedule 3.6, Seller is
not required to obtain any consents or other approvals from any governmental
agency or other person (including any lessor, customer, supplier or lender) as a
result of the transactions contemplated hereby.
.7 Compliance with Law. Seller is not in default under or in violation of
any applicable statute, law, ordinance, decree, order, rule, regulation,
franchise, permit or license of any governmental body, which may result in a
material adverse effect upon any of the Purchased Assets or the Assumed
Liabilities.
.8 Taxes. Seller has timely filed all required federal, state and local
tax returns and reports relating to its business, and has paid all taxes due
with respect thereto. Seller does not have any federal, state or local tax
liabilities other than those reflected on such tax returns with respect to the
periods covered by such tax returns.
.9 Contracts. Except as set forth on Schedule 3.9, there is no contract,
agreement, commitment or arrangement, or any outstanding unaccepted offer,
whether written or oral, express or implied, fixed or contingent, to which
Seller is a party or by which it or any of the Purchased Assets is bound, which
has had, or may reasonably be expected to have, a material adverse effect upon
any of the Purchased Assets or the Assumed Liabilities.
.10 Labor Relations.ReSeller is not a party to or bound by any collective
bargaining agreement. To Seller's knowledge, there is no current union
organizational activity with respect to the employees of Seller and there has
not been any such activity in the past twelve months. To Seller's knowledge, no
allegation, charge or complaint of age, disability, sex or race discrimination
or similar charge has been made or threatened against Seller.
.11 Benefit Plans. Except as described on Schedule 3.11, there are no
employee benefit plans currently in effect with respect to any of Seller's
current or former employees.
.12 Brokers and Finders. Seller has not engaged or authorized any broker,
investment banker or other third party to act on its behalf, either directly or
indirectly, as a broker, finder or advisor in connection with the transactions
contemplated hereby.
.13 No Conflict or Violation. Assuming that all consents described on
Schedule 3.6 have been obtained and except as may result from any facts or
circumstances relating solely to Buyer, the execution and delivery of this
Agreement, the consummation of the transactions contemplated by this Agreement,
and the fulfillment of the terms hereof do not and will not result in (a) a
violation of or conflict with any provision of Seller's Articles of
Incorporation, Bylaws, or other organizational documents, (b) a breach of, or a
default under, any term or provision of any contract, agreement, indebtedness,
encumbrance, commitment, license, franchise, permit, authorization or concession
to which Seller is a party and affecting any of the Purchased Assets or Assumed
Liabilities, other than such breaches or defaults which would not have a
material adverse effect on the Purchased Assets or Assumed Liabilities, (c) a
violation by Seller of any statute, rule, regulation, ordinance, code, order,
judgment, writ, injunction, decree or award, other than such violations which
would not have a material adverse effect on the Purchased Assets or Assumed
Liabilities, or (d) an imposition of any encumbrance, restriction or charge on
any of the Purchased Assets.
.14 Discounts and Credits. Except as disclosed on Schedule 3.14, Seller
has not entered into any agreements, does not have any policy, and has not
engaged in any course of dealing relating to the granting of discounts or
credits to customers for any reason.
.15 Disclaimer of Warranties. Except with respect to the warranties and
representations specifically set forth in this Agreement, Seller makes no
warranty, express or implied, whether of merchantability, suitability or fitness
for a particular purpose, or quality as to the Purchased Assets or any part
thereof, or as to the condition or workmanship thereof, or the absence of any
defects therein, whether latent or patent.
4. Representations and Warranties of Buyer
Buyer hereby represents and warrants to Seller as of the date hereof as
follows:
.1 Buyer's Organization and Standing. Buyer is a corporation which is duly
organized, validly existing and in good standing under the laws of the State of
Illinois.
.2 Buyer's Corporate Authority. Buyer has full corporate power and
authority to execute and deliver this Agreement, the Payment Note and the other
documents and agreements referred to herein and to perform all of its
obligations hereunder and thereunder. Buyer's execution and delivery of this
Agreement, the Payment Note and the other documents and agreements referred to
herein and the performance of its obligations hereunder and thereunder have been
duly authorized by all necessary corporate action. This Agreement, the Payment
Note and the other documents and agreements referred to herein are legal, valid
and binding agreements of Buyer and each is enforceable against Buyer in
accordance with its terms except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws or by the unavailability
of equitable remedies.
.3 Litigation. There is no suit, arbitration, claim, investigation, action
or proceeding pending or threatened before any court, arbitrator, administrative
or regulatory body, or any governmental agency to which Buyer is a party and
which will or could prevent or interfere with the consummation of the
transaction contemplated hereby. No such judgment, order or decree has been
entered, nor has any such determination been made or liability been incurred,
which has, or could have, such an effect.
.4 Consents. Buyer is not required to obtain any consents or other
approvals from any governmental agency or other person (including any lessor,
customer, supplier or lender) as a result of the transactions contemplated
hereby.
.5 Brokers and Finders. Buyer has not engaged or authorized any broker,
investment banker or other third party to act on its behalf, either directly or
indirectly, as a broker, finder or advisor in connection with the transactions
contemplated hereby.
.6 No Conflict or Violation. The execution and delivery of this Agreement,
the Payment Note and the other documents and agreements referred to herein, and
the consummation of the transactions contemplated by this Agreement, and the
fulfillment of the terms hereof do not and will not result in (a) a violation of
or conflict with any provision of Buyer's Articles of Incorporation, Bylaws, or
other organizational documents, (b) a breach of, or a default under, any term or
provision of any contract, agreement, indebtedness, encumbrance, commitment,
license, franchise, permit, authorization or concession to which Buyer is a
party, or (c) a violation by Buyer of any statute, rule, regulation, ordinance,
code, order, judgment, writ, injunction, decree or award.
.7 Seller's Representations and Warranties. Buyer does not know of any
breach by Seller of its representations and warranties set forth in this
Agreement or in the other documents and agreements referenced herein.
5. Covenants of Seller
Seller hereby covenants and agrees with Buyer as follows:
.1 Conduct of Seller's Business Pending Closing. From the date hereof to
and including the Closing Date, Seller shall operate the Business only in the
usual and ordinary course, consistent with past practice, and shall not, without
the prior written consent of Buyer, take or omit to take any action, the effect
of which act or omission would render any of Seller's representations or
warranties set forth herein inaccurate as of the Closing Date.
.2 Access Pending Closing. From the date hereof to and including the
Closing Date, Seller shall cause Buyer and its directors, officers, employees,
accountants, and other agents and representatives to have the right of full and
complete access to Seller's facilities, books and records, during normal
business hours and on reasonable notice, for the purpose of making such
investigation of Seller's business, assets, liabilities, condition (financial or
other), operations and prospects as Buyer may reasonably deem necessary.
.3 Consents of Third Parties. Seller shall use its best efforts to obtain,
at its expense, all consents and other approvals of all lessors, lenders,
governmental authorities and other third parties which are required to be
obtained by Seller in connection with the transaction contemplated by this
Agreement.
.4 Introductions to Customers. From the date hereof to and including the
Closing Date, Seller shall provide Buyer with introductions to the appropriate
representatives of such of Seller's customers as Seller shall suggest or as
Buyer may reasonably request.
6. Buyer's Covenants
Buyer hereby covenants and agrees with Seller as follows:
.1 Books and Records. In connection with (i) any tax audit of Seller,
SoftNet or any of SoftNet's shareholders, or (ii) the preparation of any tax
return of Seller, SoftNet or any of SoftNet's shareholders, Buyer shall make
available to Seller, SoftNet or such shareholder for inspection or copying at
any reasonable time within seven (7) years after the Closing Date, at such
entity's or individual's request and expense, all books and records then in
Buyer's possession or control relating to Seller's Business which existed on the
Closing Date or which relate to any period prior to the Closing Date.
.2 Consents. Prior to the Closing, Buyer shall cooperate with Seller to
procure, upon reasonable terms and conditions, all consents and approvals
required hereunder and shall complete all filings, registrations and
certificates required to be made by Buyer in connection with the transaction
contemplated herein.
.3 Publicity. Except as required by applicable law, without the prior
written consent of Seller, (i) prior to the Closing, Buyer shall not disclose or
publish, or permit the disclosure or publication of, any information concerning
the execution and delivery of this Agreement, or the transactions contemplated
by this Agreement, to any third party and (ii) Buyer shall not disclose the
Purchase Price paid hereunder.
7 Mutual Covenants
The parties hereto hereby covenant and agree with one another as follows:
.1 Fairness Opinion. Buyer and Seller acknowledge that principals of Buyer
are directors and substantial shareholders of SoftNet; accordingly SoftNet and
Seller will obtain a so-called fairness opinion with respect to the subject
transaction in a form and from a firm acceptable to Seller.
.2 Operations Pending Closing. The Closing of the transaction contemplated
hereby shall be effective from and after the Effective Date and the parties
intend that all operations relating to the Purchased Assets shall be for Buyer's
account. Accordingly, (i) all cash receipts relating to the Purchased Assets
from and after the Effective Date shall be retained in Seller and used solely to
satisfy obligations relating to the Purchased Assets and (ii) all liabilities
and obligations relating to the Purchased Assets or the Buyer Employees in the
ordinary course of business from and after the Effective Date shall be the
responsibility of Buyer. No funds or assets relating to the Purchased Assets
shall be diverted to any other purpose, business or operation of Seller or
SoftNet. Seller shall use reasonable efforts to preserve the Business and the
Purchased Assets pending Closing and to retain existing customer, employee and
vendor relationships. If and to the extent the funds from operations of the
Business are inadequate to cover all payroll, employee benefit and related
employee costs or to provide other essential services to employees or customers,
then Seller or SoftNet shall provide the shortfall and funds so advanced by
Seller or SoftNet with respect to operations between the Effective Date and the
Closing shall be repaid by Buyer to Seller in cash at Closing.
.3 Collection of Accounts Receivable
.1 Subject to the terms of this Section 7.3, at the Closing,
Buyer will acquire hereunder, and thereafter Buyer shall have the right
and authority to collect for Buyer's account those accounts receivable
listed on Schedule 1.1.3 (collectively, the "Transferred Receivables")
and Seller shall, within five (5) days after receipt of any payment in
respect of any of the Transferred Receivables, properly endorse and
deliver to Buyer any cash, checks or other forms of payment (or the
appropriate portion thereof) received on account thereof or otherwise
relating thereto.
.2 Included in the Transferred Receivables are certain
accounts receivable which are over ninety (90) day's past due (the
"Aged Receivables"). Buyer hereby agrees to use all reasonable efforts
to collect the amounts outstanding under the Aged Receivables.
Additionally, notwithstanding anything to the contrary contained in
this Agreement or the other agreements and documents referred to
herein, Buyer and Seller hereby agree that Seller shall receive
seventy-five percent (75%) of any and all amounts collected with
respect to the Aged Receivables and Buyer shall receive twenty-five
percent (25%) thereof. Seller shall pay to Buyer the amounts due
pursuant to this Section 7.3.2 within five (5) days of Seller's receipt
thereof.
.3 If and to the extent that all of the Aged Receivables have
not been collected within 120 days of the Closing Date, Buyer shall
promptly assign to Seller such uncollected Aged Receivables and the
right to pursue collection thereof.
.4 Employees.
.1 Buyer shall offer employment to those current employees
(the "Buyer Employees") of the Business listed on Schedule 7.4.1 on
substantially equivalent salary, bonuses, benefits and positions.
Seller will use all reasonable efforts to retain all Buyer Employees
through the Closing. Buyer shall not incur any liability or obligation
with respect to any employee that does not accept employment with
Buyer. Buyer will not incur as a result of the transfer of the
Purchased Assets, any present, future or contingent liability or
obligation to pay any pension benefits, medical benefits, compensation
for loss of employment or other compensation or benefits to any
employee of Seller (including any Buyer Employee) terminated on or
prior to the Effective Date. Except as specifically provided in this
Section 7.4, Buyer shall be responsible for compensation, benefits and
other employee-related matters of the Buyer Employees arising out of
service on or after the Effective Date.
.2 Seller shall retain all liabilities, perform all
obligations and maintain all insurance under the Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA") with respect to its
employees and former employees of the Business and their covered
dependents, other than Buyer Employees who accept employment with
Buyer.
.3 Seller shall be liable for any severance, separation or
similar liabilities, that are payable (i) to any person whose right to
severance or separation benefits arises as a result of the transactions
contemplated by this Agreement (other than as a result of a breach by
Buyer of its obligations hereunder), (ii) to any person whose
employment with Seller was terminated prior to the Closing, and (iii)
to any employee of Seller not hired by Buyer. Buyer shall be liable for
any severance, separation or similar liabilities for all Buyer
Employees under Buyer's employment policies and procedures.
.4 Seller shall be liable for the administration and payment
of all workers' compensation liabilities and benefits with respect to
(i) Buyer Employees resulting from claims, events, circumstances,
exposures, conditions or occurrences occurring prior to the Effective
Date, and (ii) employees and former employees of Seller that do not
become Buyer Employees. Buyer shall be responsible for the
administration and payment of all workers' compensation liabilities and
benefits with respect to Buyer Employees resulting from claims reported
following the Effective Date, and resulting from events, circumstances,
exposures, conditions, or occurrences after the Effective Date,
provided Seller shall administer and pay all workers' compensation
liabilities and claims in the ordinary course of business from the
Effective Date through Closing and shall promptly assign to Buyer any
insurance proceeds attributable to the workers' compensation claims
accepted by Buyer.
8 Conditions to Buyer's Obligations to Close
Buyer's obligations to proceed with the Closing are subject to the
satisfaction on or before the Closing Date of each of the following conditions:
.1 Representations and Warranties. Each of the representations and
warranties of Seller contained herein shall be true and correct in all material
respects on and as of the Closing Date.
.2 Performance. Seller shall have duly performed or complied in all
material respects with all of the covenants, acts and obligations to be
performed or complied with by them hereunder at or prior to the Closing.
.3 Updated Schedules. Seller shall have delivered all Schedules hereto, in
accordance with Section 1.3 hereof.
.4 Fujitsu Contract. Buyer shall have received from Fujitsu Business
Communications a contract acceptable to Buyer for continued service and parts
for "imbedded base customers" which are essentially existing and prior customers
of Seller.
.5 Fairness Opinion. Seller shall have received the fairness opinion
described in Section 7.1.
.6 Assignment Documents. Seller shall deliver to Buyer an executed
assignment and ▇▇▇▇ of sale and such other instruments of transfer and corporate
consents and documents as Buyer may reasonably request to effect the transfer of
the Purchased Assets in accordance herewith.
.7 Tender of Possession. Seller shall tender to Buyer possession of all of
the Purchased Assets.
.8 Sublease. Seller shall deliver to Buyer an executed Sublease. Sublease.
9. Conditions to Seller's Obligations to Close
Seller's obligations to proceed with the Closing are subject to the
satisfaction on or before the Closing Date of each of the following conditions:
.1 Representations and Warranties. Each of the representations and
warranties of Buyer contained herein shall be true and correct in all material
respects on and as of the Closing Date.
.2 Performance. Buyer shall have duly performed or complied in all
material respects with all of the covenants, acts and obligations to be
performed or complied with by it hereunder at or prior to the Closing.
.3 Board Approval. Seller's and SoftNet's Boards of Directors shall have
approved the transactions contemplated hereby.
.4 Fairness Opinion. Seller shall have received the so-called fairness
opinion, as described in Section 7.1.
.5 Assumption Documents. Buyer shall deliver to Seller such instruments of
assumption and corporate consents and documents as Seller may reasonably request
to effect the assumption by Buyer of the Assumed Liabilities in accordance
herewith.
.6 Payment Note. Buyer shall tender to Seller the Payment Note and the
Payment Note Guaranty as described in Section 2.2 hereof.
.7 Release of Bank Loans. Buyer shall have tendered to West Suburban Bank
the amounts described in Sections 2.2.3 and 2.2.4 hereof and Seller and SoftNet
shall have received evidence of their release from the bank loans described
therein.
.8 Sublease. Buyer shall deliver to Seller an executed Sublease and the
Sublease Guaranty as described in Section 1.4 hereof.
10 Indemnification
.1 Indemnification of Buyer. Seller shall indemnify, defend and hold Buyer
and its officers, directors, shareholders, employees and agents, and their
respective heirs, executors, personal representatives, successors and assigns,
harmless from and against any and all costs, expenses, losses, damages, fines,
penalties or liabilities (including, without limitation, interest which may be
imposed by any third party in connection therewith, court costs, litigation
expenses, reasonable attorneys' and accountants' fees and expenses relating to
proof of claims) (collectively "Damages" herein), incurred by any of such
parties with respect to, in connection with, or arising from, or alleged to
result from, arise out of or in connection with:
.1 A breach by Seller of any representation,
warranty, covenant, restriction or agreement contained in this
Agreement or in any other document delivered pursuant hereto or in
connection herewith; and
.2 Any federal, state or local taxes or customs
duties payable by Seller and attributable to Seller's Business prior to
the Closing, other than those specifically included in the Assumed
Liabilities; and
.3 Any environmental condition or occurrence relating
to Seller's Business prior to the Closing; and
.4 Other than with respect to the Assumed
Liabilities, any other matter relating to the operation of Seller's
Business prior to the Closing, including without limitation,
obligations undertaken, accidents, injuries, property damage and
products liability.
.2 Seller's Indemnification Limitations. With respect to any indemnity
claims pursuant to Section 10.1, Seller's liability shall be limited to Damages
incurred by Buyer which when aggregated with other Damages incurred by Buyer,
exceed $25,000 and then, only to the extent of such excess. Seller's
indemnification obligations hereunder shall be limited to $209,579.
.3 Indemnification of Seller. Buyer shall indemnify, defend and hold
Seller and its shareholders, directors, officers, employees, agents, heirs,
executors, personal representatives, successors and assigns harmless from and
against any and all Damages incurred by any of such parties with respect to, in
connection with, arising from, or alleged to result from, arise out of, or in
connection with (i) a breach by Buyer of any representation, warranty, covenant,
restriction or agreement contained in this Agreement or in any other document
delivered pursuant hereto or in connection herewith, (ii) the Assumed
Liabilities or (iii) Buyer's use of the Purchased Assets following the Closing,
including without limitation, obligations undertaken, accidents, injuries,
property damage and products liability.
.4 Procedure for Indemnification.or Indemnification
.1 Any party which is entitled to be indemnified
hereunder (the "Indemnified Party") shall give notice hereunder to the
indemnifying party ("Indemnifying Party") promptly after obtaining
written notice of any claim as to which recovery may be sought against
such Indemnifying Party because of the terms of this Section 10 and, if
such indemnity shall arise from the claim of a third party, shall
permit the Indemnifying Party to assume the defense of any such claim
and any litigation resulting from such claim using such legal counsel
as shall be reasonably acceptable to the Indemnified Party. Any notice
given pursuant to this Paragraph 10.4.1 shall be accompanied by copies
of all materials in possession of the Indemnified Party which
reasonably relate to such claim. Notwithstanding the foregoing, the
right to indemnification hereunder shall not be affected by any failure
of an Indemnified Party to give such notice or related materials or
delay by an Indemnified Party in giving such notice or related
materials unless, except to the extent that the rights and remedies of
the Indemnifying Party shall have been prejudiced as a result of the
failure to give, or delay in giving, such notice or related materials.
Failure by an Indemnifying Party to notify an Indemnified Party of his
or its election to defend any such claim or action by a third party
within twenty-one (21) days after notice thereof shall have been given
to the Indemnifying Party shall be deemed a waiver by such Indemnifying
Party of his or its right to defend such claim or action.
.2 If the Indemnifying Party shall assume the defense
of such claim or litigation resulting therefrom, the obligations of the
Indemnifying Party hereunder as to such claim shall include, in
addition to the indemnification required hereby, the taking all steps
necessary in the defense or settlement of such claim or litigation.
Such Indemnifying Party shall not, in the defense of such claim or any
litigation resulting therefrom, consent to the entry of any judgment
(other than a judgment of dismissal on the merits without costs) except
with the written consent of the Indemnified Party (which consent shall
not be unreasonably withheld) or enter into any settlement (except with
the written consent of the Indemnified Party which consent shall not be
unreasonably withheld) which does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to the Indemnified
Party of a release from all liability in respect of such claim or
litigation. Anything in this Paragraph 10.4.2 to the contrary
notwithstanding, the Indemnified Party may, with separate counsel of
its choice and at its expense, participate in the defense of any such
claim or litigation.
.3 If the Indemnifying Party shall not assume the
defense of any such claim by a third party, or any litigation resulting
therefrom, after receipt of notice from such Indemnified Party, the
Indemnified Party may defend against such claim or litigation in such
manner as it deems appropriate, and unless the Indemnifying Party
shall, at its option, provide a bond to, or deposit with the
Indemnified Party a sum equivalent to the lesser of (x) the total
amount which may be required to be paid in indemnification pursuant to
this Section 10 or (y) the total amount demanded in such claim or
litigation plus the Indemnified Party's estimate of the costs of
defending the same, the Indemnified Party may settle such claim or
litigation on such terms as it may deem appropriate and shall have the
right to receive, subject to the terms of this Agreement, the Damages
incurred by the Indemnified Party in connection with the defense
against or settlement of such claim or litigation. If the Indemnifying
Party shall provide such bond or deposit, the Indemnified Party shall
not settle any such claim or litigation without the written consent of
the Indemnifying Party, which consent shall not be unreasonably
withheld.
.4 Subject to any limitation expressly established
herein, the Indemnified Party shall have the right to receive from the
Indemnifying Party the amount of all Damages incurred by the
Indemnified Party in connection with the defense against a claim or
litigation by a third party, whether or not resulting from, arising out
of, or incurred with respect to, the act of a third party.
.5 Notwithstanding anything to the contrary contained
herein, any and all amounts to be paid by Seller to Buyer pursuant to
this Section 10 shall be satisfied solely by set-off by Buyer against
payments, if any, to be made by Buyer to Seller pursuant to the Payment
Note, in reverse order of maturity.
.5 Survival. Seller's representations and warranties contained in Sections
3.1, 3.2, 3.4, 3.5 (with respect to pending suits, arbitrations, claims,
investigations, actions or proceedings only), 3.8, 3.12 and 3.15, and Buyer's
representations and warranties contained herein, shall each survive the Closing
for a period of ninety (90) days. No other representations and warranties of
Seller shall survive the Closing. The covenants and agreements of Buyer and
Seller set forth herein shall survive the Closing.
.6 Exclusive Remedy. The indemnification rights provided in this Section
10 shall be the sole and exclusive remedy available to each of the parties to
this Agreement as against the other party for any misrepresentation, breach of
warranty or failure to fulfill any covenant or agreement contained herein or in
connection with any of the transactions contemplated by this Agreement.
11. Miscellaneous
.1 Seller's Knowledge. As used in this Agreement, the term "Seller's
knowledge" and all other references to matters which are known by or to Seller,
shall refer to matters which are actually known by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇.
.2 Written Agreement to Govern. This Agreement sets forth the entire
understanding and supersedes all prior and contemporaneous oral or written
agreements among Seller, Buyer, SoftNet and Telcom Midwest, L.L.C. relating to
the subject matter contained herein, including the Term Sheet for the
Acquisition of the Assets of CDI which was executed between SoftNet and Buyer,
and merges all prior and contemporaneous discussions among Seller, Buyer and
SoftNet. No party hereto shall be bound by any definition, condition,
representation, warranty, covenant or provision other than as expressly stated
in this Agreement or as hereafter set forth in a written instrument executed by
such party.
.3 Severability. The parties hereto expressly agree that it is not the
intention of any party hereto to violate any public policy, statutory or common
law, rules, regulations, treaties or decisions of any government or agency
thereof. Except as otherwise expressly provided herein, if any provision of this
Agreement is judicially or administratively interpreted or construed as being in
violation of any such provision, such articles, sections, sentences, words,
clauses or combinations thereof shall be inoperative, and the remainder of this
Agreement shall remain binding upon the parties hereto.
.4 Notices. Any and all notices necessary or desirable to be served
hereunder shall be in writing and shall be deemed to have been duly given (a) if
delivered in person and a receipt is given; (b) if communicated by confirmed
facsimile utilizing the fax numbers referenced below; (c) if sent by overnight
delivery with a national overnight courier service, and addressed as set forth
below; or (d) if sent by registered or certified mail, return receipt requested,
prepaid, and addressed as follows:
If to Buyer:
Newtel Buffalo Grove, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
with a copy to:
Rudnick & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to Seller:
Communicate Direct, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: H. ▇▇▇▇▇▇ ▇▇▇▇, Esq.
or at such other address or addresses any party hereto may designate for itself
or himself from time to time in a written notice served upon each other party
hereto in accordance herewith.
.5 Parties in Interest. Other than those specific rights granted to
SoftNet herein, nothing in this Agreement, or in any other document referred to
herein, whether express or implied, is intended to: (i) confer any rights or
remedies on any persons other than the parties hereto and their respective
successors and assigns; (ii) relieve or discharge the obligations or liability
of any third parties; or (iii) give any third parties any right of subrogation
over or action against the parties to this Agreement or their respective
successors and assigns.
.6 Counterparts and Faxed Signatures. This Agreement may be executed in
any number of counterparts, and each counterpart shall constitute an original
instrument, but all such separate counterparts shall constitute one and the same
agreement. This Agreement may be executed by original signatures or by fax
copies of original signatures.
.7 Law to Govern. The validity, construction and enforceability of this
Agreement shall be governed in all respects by the laws of the State of Illinois
without regard to its conflict of laws rules.
.8 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that Buyer may not assign this Agreement or any of
the rights or obligations arising hereunder, without the prior written consent
of Seller, which consent shall not be unreasonably withheld.
.9 Further Assurances. At any time on or after the Closing, the parties
hereto shall each perform such acts, execute and deliver such instruments,
assignments, endorsements and other documents and do all such other things
consistent with the terms of this Agreement as may be reasonably necessary to
accomplish the transaction contemplated in this Agreement or otherwise carry out
the purposes of this Agreement.
. 10 Gender, Number and Headings. The masculine, feminine or neuter
pronouns used herein shall be interpreted without regard to gender, and the use
of the singular or plural shall be deemed to include the other whenever the
context so requires. The headings in this Agreement are inserted for convenience
of reference only and are not a part of this Agreement.
.11 Schedules and Exhibits. The Schedules and Exhibits referred to herein
and attached hereto are incorporated herein by such references as if fully set
forth in the text hereof.
.12 Waiver of Provisions. The terms, covenants, representations,
warranties and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party at
any time to require performance of any provisions hereof shall, in no manner,
affect the right at a later date to enforce the same. No waiver by any party of
any condition, or breach of any provision, term, covenant, representation or
warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be deemed to be or construed as a further or
continuing waiver of any such condition or of the breach of any other provision,
term, covenant, representation or warranty of this Agreement.
.13 Expenses. Each party shall bear its own expenses incident to this
Agreement and the transactions contemplated hereby, including without
limitation, all fees of counsel, accountants and consultants.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
NEWTEL BUFFALO GROVE, INC.
an Illinois limited liability corporation
By: ________________________________
COMMUNICATE DIRECT, INC.,
an Illinois corporation
By: ________________________________
EXHIBIT A
FORM OF SUBLEASE
SUBLEASE
AGREEMENT OF SUBLEASE made as of November 1, 1996 (hereinafter referred
to as this "Sublease") by and between Communicate Direct, Inc., having an office
at ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to
as "Sublessor"), and Newtel Buffalo Grove, Inc., an Illinois corporation
(hereinafter referred to as "Sublessee").
WITNESSETH:
WHEREAS, by that certain lease [undated], as amended from time to time
(hereinafter referred to as the "Lease" and attached hereto as Exhibit A),
American National Bank and Trust Company of Chicago, not personally but as
trustee under Trust Agreement No. 56658 dated December 30, 1982 (hereinafter
referred to as the "Lessor") leased to Sublessor the premises comprising
approximately 24,777 square feet (hereinafter referred to as the "Premises") and
known as ▇▇▇▇-▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇; and
WHEREAS, Sublessor desires to sublease approximately 14,370 square feet
of the Premises as shown on Exhibit B attached hereto, which shall include the
non-exclusive use of all common areas within the Premises (hereinafter referred
to as the "Demised Premises") to Sublessee and Sublessee desires to sublease the
Demised Premises from Sublessor.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants hereinafter set forth, the parties hereby agree as follow:
12 Subleasing and Term
.1 Upon the terms and conditions hereinafter
provided, Sublessor hereby leases to Sublessee and Sublessee hereby leases from
Sublessor the Demised Premises for a period which shall commence effective as of
the date hereof (hereinafter referred to as the "Commencement Date") and shall
end on April 30, 2002, unless such shall be terminated sooner or extended as
provided in this Sublease.
.2 Notwithstanding the above, in the event Sublessor
renews the Lease and Sublessee is not in default of this Sublease, Sublessee
shall have the right to renew this Sublease provided that there shall be an
equitable adjustment to rent payable hereunder to reflect any increased rent
payable by Sublessor pursuant to the Lease.
.3 Sublessee may use and occupy the Demised Premises
for general office purposes including sales and installation of
telecommunications systems, and for no other purpose.
13 Fixed Rent
Sublessee covenants and agrees to pay to Sublessor, beginning as of on
November 1, 1996 (the "Rent Commencement Date"), annual fixed rent (hereinafter
referred to as "Fixed Rent") on a monthly basis in an amount equal to 58%
(Sublessee's pro rata share) of monthly rent payable by Sublessor in the
Premises.
Fixed Rent shall be paid in advance, promptly on the first day of each
month, without any set-off, deduction or abatement except as specifically set
forth herein.
If the Sublessee takes full and actual possession of the Demised
Premises on any day other than the Commencement Date or if this Sublease ends on
any day other than the last day of a month, then the Fixed Rent for the first
month Fixed Rent is due hereunder or the last month of this Sublease shall be
prorated accordingly.
14 Additional Rent
.1 In addition to Fixed Rent to be paid pursuant to
Paragraph 2 hereof, during the term of this Sublease, beginning as of November
1, 1996, Sublessee shall pay to Sublessor 58% of all other rentals, charges,
fees and expenses provided in the Lease, including but not limited to all
additional rents, taxes, dues, fees, and charges set forth in the Lease due from
Sublessor, as lessee, to Lessor, in accordance with the terms of the Lease
(collectively "Additional Rent").
.2 Additional Rent shall be paid by Sublessee to
Sublessor at such time or times as such expenses shall become payable by
Sublessor to the Lessor under the Lease. Any such Additional Rent payments
applicable to the year in which this Sublease shall end shall be apportioned so
that the Sublessee shall pay its aforesaid share of only that amount which
corresponds with the portion of said year which is within the term hereby
demised.
.3 Bills for Additional Rent shall be sent to
Sublessee in the same detail as such bills are received by Sublessor from the
Lessor and shall be accompanied by Lessor's Statement in connection with
Additional Rent and a computation showing the amounts due from Sublessee.
.4 Sublessee shall be entitled to 58% of any refund
or credit to which Sublessor is entitled in connection with any overpayment of
Additional Rent by Sublessor to the Lessor with respect to the Demised Premises
during the term hereof. In the event of any such refund or credit from the
Lessor to Sublessor, Sublessor shall promptly notify Sublessee thereof and
shall, based on Lessor's treatment of such overpayment, refund or credit
Sublessee's share of such refund or credit as applicable.
.5 The obligations provided for in this Paragraph 3
shall survive the termination or expiration of this Sublease for a period of two
(2) years, provided, however, that Sublessee's obligations with respect to
unpaid Additional Rent for which Sublessee has received bills shall survive
until paid and Sublessor's obligations with respect to refunds or credits due
Sublessee which Sublessor has received or had a right to receive shall survive
until paid or credited to Sublessee.
15 Payments
.1 All payments of Fixed Rent, Additional Rent, and
other amounts payable by Sublessee to Sublessor pursuant to this Sublease shall
be made at the office of Sublessor as set forth at the head of this Agreement or
to such other place as may be designated by Sublessor in writing.
.2 All costs, charges and expenses which Sublessee
assumes or agrees to pay to Sublessor pursuant to this Sublease shall be deemed
Additional Rent, and, in the event of non-payment thereof, Sublessor shall have
all the rights and remedies herein provided for in case of non-payment of rent
under the Lease.
.3 If Sublessee shall fail to pay any amount due
hereunder within ten (10) calendar days of the date such payment is due,
Sublessee shall pay interest thereon at an Interest Rate which shall be 18% per
annum unless a lesser rate shall then be the maximum rate permissible by law
with respect thereto, in which event such lesser rate shall be charged, from the
date when such installment of payment shall have been due (and not the tenth day
thereafter) to the date of payment thereof.
16 Condition of Demised Premises
Sublessee acknowledges that it has inspected the Demised Premises and
is fully familiar with the physical conditions thereof and agrees to take the
same "as is". Sublessee shall make no alterations, improvements or additions to
the Demised Premises whatsoever without the consent of Sublessor and the Lessor
in accordance with the terms of the Lease and this Sublease.
17 Utility Costs and Janitorial Services
.1 Sublessee shall be responsible for payment of and
shall pay when due, electricity, natural gas, air conditioning, telephone or
other communication service(s) and all other utility services and janitorial
services in connection with the Demised Premises as shall be billed directly to
Sublessee by such utility or communication companies, or, if such services are
not billed directly to Sublessee, Sublessee shall pay to Sublessor 58% of such
costs.
18 Lessor's Services
If the Lessor fails to fulfill its obligations under Lease, Sublessor
agrees that it will cooperate with Sublessee to enable Sublessee to enforce such
obligations, but Sublessee shall pay and indemnify and hold Sublessor harmless
against any liability for all costs and expenses in the prosecution of any
proceedings or actions so taken by Sublessee except to the extent caused by a
default of Sublessor under the Lease or this Sublease.
19 Covenants and Representations of Sublessor
.1 Sublessor covenants and agrees that it will not
enter into any modification of the Lease or any other agreement with respect to
the Lease which would adversely affect the use by Sublessee of the Demised
Premises or increase the obligations of Sublessee or diminish its rights
hereunder.
.2 To Sublessor's knowledge, there are no defaults
existing under the Lease by the Lessor or Sublessor and no circumstances
currently exist which would constitute a default, and there is no existing basis
for Sublessor or Lessor to cancel the Lease or to exercise any other remedies
available to it by virtue of a default by Lessor or Sublessor respectively.
20 Incorporation of Lease
.1 Sublessor certifies that a true and complete copy
of the Lease is attached hereto as Exhibit A. Further, as of the date hereof
there have been no amendments to the Lease.
.2 This Sublease is subject and subordinate to the
terms and conditions of the Lease and any mortgages as provided therein.
Sublessee at its sole cost and expense shall at all times fully comply with all
of the covenants, terms, conditions and agreements of the Lease applicable to
Sublessee as if the Lease is a direct lease between Sublessee as tenant and
Lessor as landlord. Sublessee shall not do or allow to be done any act or
omission, on its part or on the part of any of its officers, directors,
customers, invitees, agents, servants, employees, contractors or third parties,
which would adversely affect Sublessor's rights, privileges, powers and
immunities under the Lease or which would be contrary to the requirements of the
Lease. In the event the obligations and restrictions imposed upon Sublessee in
this Sublease conflict with the obligations and restrictions imposed upon
Sublessor, as lessee under the Lease, then the more burdensome of such
restrictions and obligations shall be binding upon Sublessee.
.3 The time limits provided for in the provisions of
the Lease for the giving of notice, making demands, performance of any act
condition or covenant, or the exercise of any right, remedy or option, are
changed for the purposes of this Sublease as specifically stated elsewhere
herein, or if not so stated, by lengthening for Sublessor or shortening for
Sublessee, as the case may be, such limits by (i) five (5) days with respect to
all such periods of less than twenty (20) days but more than three (3) days, and
(ii) as much notice as reasonable practicable with respect to all periods of
less than three (3) days, so that notices may be given, demands made, or any
act, condition or covenant performed, or any right, remedy or option hereunder
exercised by Sublessor or Sublessee, as the case may be, within the time limit
relating thereto contained in the Lease.
.4 With respect to any such actions that Sublessee
desires to take for which the Lease requires the approval or consent of the
Lessor, Sublessee shall request such approval or consent from the Lessor and
Sublessor. Notwithstanding Sublessor's consent Sublessee shall not be permitted
to take such action for which the approval or consent of Lessor is necessary
without Lessor's express written approval or consent.
.5 No representations or warranties made in the Lease
by Lessor to Sublessor shall be incorporated into this Sublease as having been
made by Sublessor to Sublessee.
.6 In the event that Sublessee shall default in the
full performance of any of the terms, covenants or conditions on its part to be
performed under this Sublease, then Sublessor shall have the same rights and
remedies with respect to such default as are given to the Lessor under the Lease
with respect to defaults by Sublessor under the Lease, all with the same force
and effect as though the provision of the Lease with respect to defaults and the
rights and remedies of the Lessor under the Lease in the event thereof were set
forth at length in this Sublease.
21 Assignment and Subletting
Sublessee shall not assign or sub-sublet any part of the Demised
Premises without the prior written consent of Sublessor, which consent may be
withheld at Sublessor's reasonable discretion.
22 Subordination of Sublease
Except for as otherwise expressly provided herein, this Sublease is
subject and subordinate to the Lease, and the Sublessee shall have no greater
rights in and to the Demised Premises than Sublessor has as Lessee under the
Lease.
23 Broker
Sublessee and Sublessor each represents to the other that it knows of
no claim, or basis for any claim, against Sublessor for broker's commissions,
finder's fees or other compensation due and arising by reason of this
transaction. Sublessee shall indemnify and hold Sublessor harmless against any
claim for a brokerage commission, finder's fee or other compensation arising out
of any negotiations had by Sublessee with any other broker or finder with
respect to the subletting of the Demised Premises. Sub-lessor shall indemnify
and hold Sublessee harmless against any claims for a brokerage commission,
finder's fee or other compensation arising out of any negotiations had by
Sublessor with any other broker or finder with respect to the subletting or
renewal of the Demised Premises.
24 Signage
Sublessee shall be entitled to take over such signage space at the
Premises as is presently used by Sublessor. Sublessee acknowledges that its
signage is subject to Lessor's approval.
25 Parking Spaces
Sublessee shall be entitled to such number of parking spaces presently
reserved to Sublessor under the Lease as shall equal the ratio that the
aggregate rent Sublessee pays to Sublessor bears to the aggregate rent paid by
Sublessor to Lessor pursuant to the Lease.
26 Notices
All notices under the Sublease shall be in writing and shall be made by
certified mail, return-receipt requested, or delivered personally to the
addresses specified below or to such other address as either party may specify
in writing to the other party.
To Sublessor: Communicate Direct, Inc.
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▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: H. ▇▇▇▇▇▇ ▇▇▇▇, Esq.
To Sublessee: Newtel Buffalo Grove, Inc.
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▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇
With a copy to: Rudnick & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
27 Entire Agreement
This Sublease contains the entire agreement between the parties with
respect to the matters covered hereby and any executory agreement hereafter made
shall be ineffective to change, modify or discharge this Sublease, in whole or
in part, unless such executory agreement is in writing and signed by the party
against whom enforcement of the change, modification or discharge is sought.
28 Consent of Lessor
This Sublease shall take effect only when the Lessor executes and
deliver that certain Consent to Sublease through which Lessor specifically
consents to the terms and conditions of this Sublease.
29 Execution in Counterpart
This Sublease may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original, but such
counterparts together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Sublease to be
executed as of the day first above written.
For the Sublessor:
Communicate Direct, Inc.
By:
Its:
For the Sublessee:
Newtel Buffalo Grove, Inc.
By:
Its:
SoftNet Systems, Inc., a New York corporation ("Guarantor"), the
guarantor of the Lease described herein under that certain "Corporate Guaranty"
by Guarantor dated February 23, 1995 (the "Guaranty"), hereby consents to the
execution and delivery by Sublessor and Sublessee of this Sublease, and Lessor's
consent thereto. Guarantor acknowledges, ratifies and confirms its liabilities
and obligations with respect to the Lease under the Guaranty as of the date
hereof.
SoftNet Systems, Inc.
By:
Its:
The undersigned, as Lessor, hereby consents to this Sublease, provided,
however, that:
1. This consent to the Sublease shall in no way release Sublessor from
any of its covenants, agreements, liabilities and duties under the Lease and any
amendments thereto.
2. This consent to Sublease does not constitute approval by Lessor of
the terms of the Sublease.
3. Nothing herein contained shall be deemed a waiver of any of Lessor's
rights under the Lease.
4. This consent to Sublease shall be deemed limited solely to this
Sublease, and Lessor reserves the right to consent to any further or additional
subleases and to consent to any assignments of the Lease or Sublease.
American National Bank and Trust
Company of Chicago, not personally
but solely as Trustee under Trust
Agreement No. 56658 dated December 30, 1982.
By:
Its:
EXHIBIT A
THE LEASE
EXHIBIT B
DEMISED PREMISES
EXHIBIT B
FORM OF SUBLEASE GUARANTY
SUBLEASE GUARANTY
For value received, and in order to induce Communicate Direct, Inc.
("CDI") to enter into an asset purchase agreement (the "Asset Purchase
Agreement") with Newtel Buffalo Grove, Inc. ("Newtel") and to enter into a
Sublease (the "Sublease") with Newtel dated as of November 1, 1996 which
Sublease was executed in connection with the consummation of the transactions
contemplated by the Asset Purchase Agreement, the undersigned hereby, jointly
and severally, guarantee absolutely and unconditionally the prompt payment when
due, whether at maturity, by declaration, by demand or otherwise, and at any and
all times thereafter, of all indebtedness of Newtel to CDI, its successors and
assigns, pursuant to the Sublease, not withstanding any assignment by Newtel
thereof, up to a maximum guaranteed amount of $400,000, and all expenses
(including without limitation attorneys' fees and legal costs and expenses) paid
or incurred by CDI in endeavoring to collect such indebtedness or any part
thereof and in enforcing this Guaranty (collectively, the "Indebtedness").
This Guaranty is an absolute, unconditional, irrevocable, unlimited
guarantee of payment, irrespective of any circumstances which might otherwise
constitute a legal or equitable discharge or defense of any guarantor. Each
guarantor shall, immediately upon demand of CDI, render full payment of the
Indebtedness then due as guaranteed hereunder.
Each guarantor hereunder waives notice of acceptance of this Guaranty
and consents that, without notice to or further assent by any guarantor, the
Indebtedness hereby guaranteed may be renewed, extended, modified, accelerated,
prematured, released, settled or compromised by CDI as CDI in its sole
discretion may deem advisable. Each guarantor waives presentment for payment,
demand, protest and notice of dishonor.
No guarantor's obligations hereunder shall be released, discharged or
otherwise affected by any claim, set-off or other rights which such guarantor
may have against Newtel or CDI. No payments by any guarantor hereunder shall
entitle such guarantor, by subrogation or otherwise, to the rights of CDI to any
payment by Newtel.
If at any time all or any part of any payment received by CDI with
respect to the Indebtedness guaranteed hereby is rescinded or must be otherwise
restored or returned to Newtel for any reason whatsoever (including the
insolvency, bankruptcy or reorganization of Newtel or any guarantor), then each
guarantor's obligations hereunder shall, to the extent of such payment rescinded
or returned, be deemed to have continued in existence, notwithstanding such
previous receipt by CDI and each guarantor's obligations hereunder with respect
to such payment shall continue to be effective or reinstated, as the case may
be, at such time, all as though such previous payment to CDI had not been made.
CDI shall not be required to proceed against Newtel or to resort first
to any other remedy to enforce payment or collection of the Indebtedness
guaranteed hereby. CDI may pursue any or all of its remedies at one or at
different times. No failure or delay by CDI in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The obligations of each
guarantor and all of the rights and remedies of CDI herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law or
otherwise. No consent or waiver, express or implied, by CDI to any breach or
default by a guarantor in the performance of its obligations hereunder shall be
deemed or construed to be a consent to or a waiver of any other obligations of
such of any other guarantor hereunder.
Suit may be brought against the guarantors, jointly or severally, and
against any one or more of them, without impairing the rights of CDI against any
other guarantor; and CDI may settle with any guarantor for such sum as it may
see fit and release any guarantor from all further liability to CDI for such
Indebtedness without impairing the right of CDI to demand and collect the
balance of such Indebtedness from any other guarantor not so released.
The provisions of this guaranty shall be binding upon each guarantor
and his heirs, successors and assigns, provided that a guarantor may not assign
or otherwise transfer any of its rights or obligations under this Guaranty,
except the written consent of CDI.
This Guaranty shall accrue to the benefit of the transferee or assignee
of the Sublease. This Guaranty shall be governed by and construed in accordance
with the substantive laws of the State of Illinois, and each guarantor hereby
consents to the jurisdiction of Illinois courts of all matters relating to this
Guaranty.
IN WITNESS WHEREOF, the undersigned have caused this Guaranty to be
executed as of the 1st day of November, 1996.
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EXHIBIT C
FORM OF PAYMENT NOTE
PROMISSORY NOTE
$209,579 December 9, 1996
FOR VALUE RECEIVED, the undersigned, Newtel Buffalo Grove,
Inc., an Illinois corporation ("Newtel") promises to pay to Communicate Direct,
Inc., an Illinois corporation ("CDI") or any other holder hereof, the principal
sum of Two Hundred Nine Thousand Five Hundred Seventy-Nine Dollars ($209,579).
Interest shall accrue on the unpaid principal at an annual rate of ___%, from
and after November 1, 1996. Payment of accrued interest on the unpaid principal
shall be made quarterly on December 31, 1996 and March 31, 1997, and thereafter,
payments of the principal and accrued interest shall be made in equal quarterly
installments of _____________________ ($________) on the last day of June, and
September, December and March each year, beginning June 30, 1997 and ending
September 30, 2000.
Newtel may prepay all or any portion of the amounts due
pursuant to this Note without penalty or premium. All amounts due and owing to
CDI or any other holder hereof pursuant to this Note shall be deemed fully paid
and satisfied if, on or prior to May 8, 1998, Newtel pays to the holder hereof
an amount equal to (x) ninety-six percent (96%) of the unpaid principal
hereunder on the date of such repayment plus (y) all accrued and unpaid interest
on the full amount of the unpaid principal through such repayment date.
Payments of principal and interest are to be made in lawful
money of the United States of America in same day or immediately available
funds.
The occurrence of any of the following shall constitute a
default by Newtel (each an "Event of Default"): (i) the failure of Newtel to pay
any principal or interest of this Note when due; (ii) the failure of Newtel to
perform or observe any of the covenants contained in the Agreement for Purchase
and Sale of Certain Assets of Communicate Direct, Inc. dated December 9, 1996
between CDI and Newtel (the "Agreement"), (iii) any representation or warranty
made by Newtel in the Agreement shall be incorrect in any material respect when
made or as of the date hereof; (iv) the failure of Newtel to generally pay its
debts as they mature; and (v) the commencement by or against Newtel of any
bankruptcy, insolvency, arrangement, reorganization, receivership or similar
proceedings under any federal or state law, provided that in the event of any
such involuntary proceeding commenced against Newtel such proceeding is not
dismissed or discharged within thirty (30) days after commencement thereof.
Upon the occurrence of any Event of Default, the holder of
this Note may declare the principal balance hereof immediately due and payable.
Newtel agrees to pay all expenses, including reasonable
attorneys' fees and legal expenses, incurred by the holder of this Note in
endeavoring to collect any amounts payable hereunder which are not paid when
due, whether by acceleration or otherwise.
All parties hereto, whether as makers, endorsers, or
otherwise, severally waive presentment for payment, demand, protest and notice
of dishonor.
THIS NOTE HAS BEEN DELIVERED IN CHICAGO, ILLINOIS AND SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF ILLINOIS.
NEWTEL BUFFALO GROVE, INC.
By:
Name:
Title:
EXHIBIT D
FORM OF PAYMENT NOTE GUARANTY
PROMISSORY NOTE GUARANTY
For value received, and in order to induce Communicate Direct, Inc.
("CDI") to enter into an asset purchase agreement (the "Asset Purchase
Agreement") with Newtel Buffalo Grove, Inc. ("Newtel") and to accept the
Promissory Note (the "Note") of Newtel dated December 9, 1996 which Note was
issued in connection with the consummation of the transactions contemplated by
the Asset Purchase Agreement, the undersigned hereby guarantees absolutely and
unconditionally the prompt payment when due, whether at maturity, by
declaration, by demand or otherwise, and at any and all times thereafter, of (x)
up to a maximum of twenty-five percent (25%) of all indebtedness to CDI, its
successors and assigns, pursuant to the Note, notwithstanding any transfer by
Newtel of the Note, and all expenses (including without limitation attorneys'
fees and legal costs and expenses) paid or incurred by CDI or any other holder
of the Note in endeavoring to collect such indebtedness or any part thereof from
Newtel and (y) all expenses (including without limitation attorneys' fees and
legal costs and expenses) paid or incurred by CDI or any other holder of the
Note in enforcing this Guaranty (collectively, the "Indebtedness").
This Guaranty is an absolute, unconditional, irrevocable, unlimited
guarantee of payment, irrespective of any circumstances which might otherwise
constitute a legal or equitable discharge or defense of any guarantor. The
undersigned shall, immediately upon demand of the holder of the Note, render
payment of the Indebtedness then due as guaranteed hereunder.
The undersigned hereunder waives notice of acceptance of this Guaranty
and consents that, without notice to or further assent by the undersigned, the
Indebtedness hereby guaranteed may be renewed, extended, modified, accelerated,
prematured, released, settled or compromised by CDI or any other holder of the
Note as CDI or such holder in its sole discretion may deem advisable. The
undersigned waives presentment for payment, demand, protest and notice of
dishonor.
The undersigned's obligations hereunder shall not be released,
discharged or otherwise affected by any claim, set-off or other rights which he
may have against Newtel, CDI or any other holder of the Note. No payments by the
undersigned hereunder shall entitle him, by subrogation or otherwise, to the
rights of CDI or any other holder of the Note, to any payment by Newtel.
If at any time all or any part of any payment received by CDI or any
other holder of the Note with respect to the Indebtedness guaranteed hereby is
rescinded or must be otherwise restored or returned to Newtel for any reason
whatsoever (including the insolvency, bankruptcy or reorganization of Newtel or
the undersigned), then the undersigned's obligations hereunder shall, to the
extent of such payment rescinded or returned, be deemed to have continued in
existence, notwithstanding such previous receipt by CDI or such other holder of
the Note, and the undersigned's obligations hereunder with respect to such
payment shall continue to be effective or reinstated, as the case may be, at
such time, all as though such previous payment to CDI or such holder had not
been made.
Neither CDI nor any other holder of the Note shall be required to
proceed against Newtel or to resort first to any other remedy to enforce payment
or collection of the Indebtedness guaranteed hereby. CDI or such holder may
pursue any or all of its remedies at one or at different times. No failure or
delay by CDI or such holder in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The obligations of the undersigned and
all of the rights and remedies of CDI and any other holder of the Note herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law or otherwise. No consent or waiver, express or implied, by CDI
or such other holder to any breach or default by the undersigned in the
performance of his obligations hereunder shall be deemed or construed to be a
consent to or a waiver of any other obligations of such hereunder.
Suit may be brought against the undersigned and/or against any one or
more of the other guarantors of amounts owing pursuant to the Note, without
impairing the rights of CDI or any other holder of the Note, against the
undersigned or any other guarantor; and CDI or such other holder, may settle
with the undersigned or any guarantor for such sum as it may see fit and release
the undersigned or any guarantor from all further liability to CDI or such
holder for such Indebtedness without impairing the right of CDI or such holder
to demand and collect the Indebtedness from the undersigned or the appropriate
guaranteed amounts from any other guarantor not so released.
The provisions of this guaranty shall be binding upon the undersigned
and his heirs, successors and assigns, provided that the undersigned may not
assign or otherwise transfer any of his rights or obligations under this
Guaranty, except upon the written consent of CDI or any other holder of the
Note.
This Guaranty shall accrue to the benefit of the transferee, assignee
or holder of the Note. This Guaranty shall be governed by and construed in
accordance with the substantive laws of the State of Illinois, and the
undersigned hereby consents to the jurisdiction of Illinois courts of all
matters relating to this Guaranty.
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be
executed as of this 9th day of December, 1996.
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