Exhibit 99.1*
* Disclosure schedules and other attachments are omitted, but will be
furnished supplementally to the Commission upon request.
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement"), dated July 31, 2004, by
and between EasyLink Services Corporation, a Delaware corporation ("Seller"),
EasyLink Services USA, Inc., a Delaware corporation (the "Selling Subsidiary"),
Infocrossing Services, Inc., a Delaware corporation ("Buyer"), and Infocrossing,
Inc., a Delaware corporation ("Parent"). Certain capitalized terms herein shall
have the meanings ascribed to such terms in Section 11.9.
WHEREAS, Seller and the Selling Subsidiary are engaged, among other
things, in the business of providing outsourced services that screen incoming
and outgoing e-mail messages for viruses, spam, offensive content and oversized
attachments under the brand name MailWatch (the "MailWatch Service") (the
MailWatch Service being referred to herein as the "Services" or the "Business");
and
WHEREAS, upon the terms and subject to the conditions set forth herein
and for the consideration described herein, Seller and the Selling Subsidiary
desire to sell, and Buyer desires to purchase, certain of the assets relating to
the Business as specified herein for the purpose of Buyer carrying on the
Business as a going concern in succession to Seller and the Selling Subsidiary;
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto do
hereby agree as follows:
1. Purchase and Sale of Assets. Upon the terms and subject to the
conditions set forth in this Agreement and effective upon the Effective Time,
each of Seller and the Selling Subsidiary hereby sells, transfers, conveys,
assigns and delivers to Buyer, and Buyer hereby purchases and acquires from
Seller and the Selling Subsidiary, free and clear of all Liens (other than
Permitted Liens), all of Seller's and the Selling Subsidiary's right, title and
interest in and to all of the properties, assets, contracts, rights and choses
in action (collectively, "Property"), whether tangible, intangible, real,
personal, mixed, accrued, contingent or otherwise, to the extent used
exclusively or held for use exclusively in the conduct of the Business, as the
same shall exist as of the Closing, including, without limitation (collectively,
the "Assets"):
1.1 Contracts. Subject to Section 7.4, all of Seller's and the
Selling Subsidiary's right, title and interest in, to and under (a) the
contracts in existence on the date hereof to provide the Services to
customers to the extent relating to the period after the Closing, but
only to the extent that such contracts relate to the provision of the
Services (the "Customer Contracts"), and each customer of the Business
as of June 30, 2004 is listed on Schedule 1.1(a); (b) the contracts to
purchase telecommunications services listed on Schedule 1.1(b) (the
"Telecommunications Services Contracts"); (c) the software license
agreements listed on Schedule 1.1(c) (the "License Agreements") and (d)
the other contracts listed on Schedule 1.1(d) but only to the extent
that such contracts relate to the provision of the Services (the "Other
Contracts") (the Customer Contracts, the Telecommunications Services
Contracts, the License Agreements and the Other Contracts collectively
referred to herein as the "Business Contracts");
1.2 Intellectual Property. All of Seller's and the Selling
Subsidiary's right, title and interest in and to the Intellectual
Property, including but not limited to (a) all registrations and
applications for registrations, if applicable, for any trademarks
comprising such Intellectual Property (including but not limited to the
trademark registration listed on Schedule 1.2), and (b) the graphics
and other content displayed on the ▇▇▇.▇▇▇▇▇▇▇▇▇.▇▇▇ and
▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇ websites (the "Transferred Intellectual Property");
1.3 Domain Names. All of Seller's and the Selling Subsidiary's
right, title and interest in and to the domain names listed on Schedule
1.3 (the "Domain Names");
1.4 Equipment. All of Seller's and the Selling Subsidiary's
right, title and interest in and to all of the items of equipment
listed on Schedule 1.4 (the "Equipment");
1.5 Software. All of Seller's and the Selling Subsidiary's
right, title and interest in, to and under the Software (as defined
below) that (i) is used in the conduct of the Business, (ii) is not
used in the conduct of Seller's or the Selling Subsidiary's operations
other than the Business and (iii) is not used by Seller or the Selling
Subsidiary under a third party license agreement ("Business Exclusive
Software"). As used herein, "Software" means any computer program or
source or object code instructions for controlling the operation of a
central processing unit or computer. All Business Exclusive Software is
listed on Schedule 1.5;
1.6 Licenses and Permits. All of Seller's and the Selling
Subsidiary's right, title and interest in and to the licenses, permits,
approvals, franchises, registrations, accreditations or authorizations
(to the extent permitted by applicable law to be transferred) related
to the Business which are specified on Schedule 1.6 annexed hereto;
1.7 Books and Records. All books, accounting, financial and
other related records and documents, correspondence, manuals,
production records, standard operating procedures, customer lists,
suppliers lists and any other confidential or proprietary information
to the extent pertaining to the Business that are listed on Schedule
1.7 annexed hereto (collectively, the "Books and Records");
1.8 Claims. Claims, prepayments, refunds (other than income
tax refunds) causes of action, choses in action and rights of offset or
recoupment related to the Assets ("Claims") to the extent relating to
the period after the Closing; and
1.9 Goodwill. The goodwill associated with the Business.
Without limiting the generality of the foregoing, it is expressly
understood that the following Property shall not be included in the Assets to be
transferred hereunder:
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1.10 all cash, instruments, accounts receivable (including but
not limited to accounts receivable created after the Closing Date to
the extent arising out of Services delivered through the Closing Date)
and Claims, in each case to the extent existing or arising out of or
relating to the operation of the Business on or before the Closing
Date;
1.11 all Property expressly excluded from the Property
described in Sections 1.1 through 1.9 as a result of the express
limitations contained in such Sections;
1.12 all contracts referenced by Section 1.1(a) or listed on
Schedule 1.1(d) to the extent such contracts do not relate to the
provision of the Services;
1.13 all Internet Protocol address numbers used in the conduct
of the Business;
1.13 all Software other than Business Exclusive Software; and
1.14 in the case of Property other than the items included in
Sections 1.1 through 1.9, all Property that is used or held for use,
whether in whole or in part, in the conduct of Seller's or the Selling
Subsidiary's operations other than the Business, including but not
limited to shared routers, fire walls and similar Property.
2. Assumption of Liabilities; Pre- and Post- Closing Allocation of
Revenues and Expenses; Accounts Receivable Collection.
2.1 Assumption of Liabilities by Buyer. Upon the terms and
subject to the conditions set forth in this Agreement and effective upon the
Effective Time, Buyer hereby assumes and agrees thereafter to pay, perform,
satisfy and discharge the following obligations and liabilities of Seller and
the Selling Subsidiary in accordance with their respective terms (collectively,
the "Assumed Liabilities"):
(a) all of the liabilities and obligations of Seller or the
Selling Subsidiary under the Business Contracts to the extent arising out of or
relating to the period after the Closing Date (in each case, subject to Section
7.4), including but not limited to the obligations to make (i) the $240,000
(plus applicable sales tax, if any) payment due on or before August 18, 2004
under the License Purchase Order referenced on Schedule 1.1(c), (ii) the $36,570
(which includes NJ sales tax) payment due on or before August 19, 2004 under
Equipment Purchase Order No. 02-32047 dated July 21, 2004 referenced on Schedule
1.1(d) (it being understood that, if notwithstanding the foregoing Seller makes
any of the payments referenced in clause (i) or (ii) of this Section 2.1(a),
Buyer shall reimburse Seller for such amount);
(b) all liabilities and obligations arising from or in
connection with the Business or the Assets after the Closing Date in respect of
Hired Business Employees, subject to Section 7.5(b) and excluding the
liabilities and obligations set forth in Section 2.2(i); and
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(c) any liabilities or obligations for periods after the
Closing Date relating to infringement after the Closing Date by the Business
Exclusive Software or the Intellectual Property on the intellectual property
rights of any third party.
2.2 Excluded Liabilities. Buyer is not assuming or agreeing to
pay, perform, assume or discharge, and Buyer is not otherwise responsible for,
any liabilities of Seller or its subsidiaries, fixed or contingent, known or
unknown, other than the Assumed Liabilities, including, without limitation, the
following (collectively, the "Excluded Liabilities"):
(a) liabilities or obligations of Seller or its subsidiaries
for indebtedness to any of its stockholders or other equity owners or to any
Person affiliated or associated therewith;
(b) except as otherwise specifically provided herein,
liabilities or obligations of Seller or its subsidiaries with respect to this
Agreement or any of the transactions contemplated hereunder including, without
limitation, legal and accounting fees;
(c) liabilities or obligations for any severance or
post-termination benefits or other payments or awards (including, without
limitation, disability payments and workers compensation awards) owed to or
incurred on behalf of any employee of Seller or its subsidiaries terminated
prior to or at the Closing, including, without limitation, any obligations under
COBRA;
(d) any liabilities or obligations under any Seller Benefit
Plans;
(e) any liabilities or obligations of Seller or its
subsidiaries relating to ERISA or any liabilities or obligations of the Business
for periods through the Closing Date relating to ERISA;
(f) any liabilities or obligations for periods through the
Closing Date relating to infringement on or before the Closing Date by the
Business Exclusive Software or the Intellectual Property on the intellectual
property rights of any third party;
(g) subject to Sections 10.1 and 10.2 hereof, liabilities or
obligations incurred by Seller or its subsidiaries regardless of when such
obligation or liability is discovered which result from a violation or breach of
any representation, warranty, covenant or agreement of Seller or the Selling
Subsidiary included herein or made in connection herewith;
(h) liabilities or obligations related to any breach or
default (or an event which might, with the passing of time or the giving of
notice, or both, constitute a default) under any Business Contract arising out
of or relating to the period on or prior to the Closing Date;
(i) the $23,535.90 (which includes NJ sales tax) payment due
on or before July 21, 2004 under Equipment Purchase Order No. 02-32000 dated
June 22, 2004 referenced on Schedule 1.1(d), which shall be paid by Seller;
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(j) all accounts payable and accrued expenses of Seller or its
subsidiaries, and pertaining to the Business, including but not limited to, the
foregoing and the payment of employee salaries, benefits, vacation, sick pay,
payroll Taxes and severance and termination payments (other than any such
amounts for which an adjustment to the Purchase Price has been made pursuant to
Section 3.1 or for which pro ration to be paid by Buyer is required pursuant to
Section 2.3); and
(k) any liability for (i) Taxes of Seller or its subsidiaries,
(ii) Taxes arising out of or relating to the conduct of the Business during the
period through the Closing Date, (iii) income Taxes of Seller and its
subsidiaries arising in connection with the consummation of the Transaction and
(iv) the unpaid Taxes of any other person pursuant to Treasury Regulation
Section 1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee, successor, by contract or otherwise. Notwithstanding anything to the
contrary contained herein, transfer, sales or use Taxes, if any, arising from
the purchase or sale of the Business or the Assets shall be allocated 50% to
Seller and 50% to Buyer.
2.3 Pre- and Post-Closing Allocation of Revenues and Expenses.
Seller and the Selling Subsidiary, as applicable, shall be entitled to all
revenues, and shall be responsible for all expenses, liabilities and obligations
(other than the Assumed Liabilities specified in Section 2.1(a)(i) and (ii)), to
the extent attributable to the conduct of the Business for the period on or
before the Closing Date. Buyer shall be entitled to all revenues, and shall be
responsible for all expenses, liabilities and obligations, to the extent
attributable to the conduct of the Business for the period after the Closing
Date. Without limiting the generality of the foregoing, (i) Seller and the
Selling Subsidiary, as applicable, shall be entitled to all revenues, and shall
be responsible for all associated expenses (including but not limited to minimum
payment commitments under the License Agreements) for services provided on or
before the Closing Date and (ii) Buyer shall be entitled to all revenues, and
shall be responsible for all associated expenses (including but not limited to
minimum payment commitments under the License Agreements) for services provided
after the Closing Date. For purposes of determining the allocation of revenues
or expenses under a particular invoice or the allocation of other amounts or
liabilities for the period through the Closing Date or the period after the
Closing Date, unless otherwise provided herein below, such revenues, expenses,
amounts or liabilities shall be allocated based on the number of days in the
period covered by such invoice or to which such amounts or liabilities relate
that are on or before the Closing Date and the number of days in the period
covered by such invoice or to which such amounts or liabilities relate that are
after the Closing Date. For the avoidance of doubt, Seller shall be responsible
for charges arising out of failures on or before the Closing Date to meet
minimum commitments under License Agreements that contain minimum payment
commitments and Buyer shall be responsible for charges arising out of failures
after the Closing Date to meet such minimum commitments. Seller represents that
all minimum commitments under License Agreements that contain minimum
commitments that were due and payable on or before the Closing Date have been
paid in full. For the avoidance of doubt, Seller shall be responsible for paying
to each Hired Business Employee all unused or unpaid vacation days that are
accrued as of the Closing Date for such Hired Business Employee and Buyer shall
have no obligation to pay such Hired Business Employee for such days paid by
Seller regardless of whether such Hired Business Employee takes such accrued but
unpaid vacation days after the Closing Date. Buyer shall pay to Seller the
amount of all vacation days used by each Hired Business Employee on or before
the Closing Date in excess of the number of days that have been earned through
the Closing Date by such employee. At the end of 2004, the total number of sick
days and floating holidays taken by each Hired Business Employee shall be
calculated and Seller shall be responsible for 58.34% of such days (and shall
receive credit for any such days taken by such Hired Business Employee on or
before the Closing Date) and Buyer shall be responsible for 41.66% of such days.
To the extent that Seller and Buyer have agreed on the amount of any of the pre-
and post-closing allocations set forth in this Section 2.3 on or before the
Closing Date, such allocations shall be paid by adjustment to the cash portion
of the Purchase Price.
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3. Consideration for Sale of the Assets.
3.1 Purchase Price. Upon the terms and subject to the
conditions set forth in this Agreement and in consideration for the sale and
transfer of the Assets, at the Closing, Buyer shall assume the Assumed
Liabilities and shall (1) (i) pay to the Selling Subsidiary the sum of THREE
MILLION FIVE HUNDRED THOUSAND UNITED STATES DOLLARS (US$3,500,000), (ii) less
the portion of the total amount listed on Schedule 7.5(c)(ii) that is assumed by
Buyer but for which Seller is responsible under Section 2.3, payable by wire
transfer of immediately available funds to an account specified in writing by
Seller ("Cash Consideration"), and (2) cause Parent to issue and deliver to the
Selling Subsidiary that number of shares of Parent's Common Stock, par value
$.01 per share, as shall be obtained by dividing ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ DOLLARS (US$1,500,000) by the Closing Market Price
("Parent's Common Stock") ("Cash Consideration" and "Parent's Common Stock"
collectively referred to herein as the "Purchase Price").
3.2 Allocation of Purchase Price. Seller shall prepare an
allocation (the "Allocation") of the Purchase Price and the Assumed Liabilities,
as applicable, among the Assets in accordance with Section 1060 of the Code and
the Treasury regulations promulgated thereunder (and any similar provisions of
state, local or foreign law, as applicable), and shall deliver such Allocation
to Buyer within thirty (30) days after the Closing Date. Buyer and Seller shall
endeavor in good faith to agree upon the Allocation. Buyer, Parent, Seller and
the Selling Subsidiary shall file all Tax reports, returns and other statements
(including, but not limited to, Internal Revenue Service Form 8594), and conduct
any audit, Tax proceeding or Tax litigation relating thereto consistent with the
Allocation if finally agreed upon by Seller and Buyer. None of Buyer, Parent,
Seller or any Selling Subsidiary shall take any position (whether in audits, Tax
Returns, or otherwise) that is inconsistent with the agreed Allocation unless
required to do so by applicable law.
4. Closing.
4.1 Effective Date of Transaction. Subject to the terms and
conditions of this Agreement, the closing (the "Closing") of the transactions
contemplated hereby (the "Transaction") shall occur at 10:00 am New Jersey time
on the date hereof (the "Closing Date"). The transfer of the Assets and the
assumption of the Assumed Liabilities shall be effective as of 12:00 a.m.
immediately after the Closing Date (the "Effective Time").
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4.2 Closing.
(a) Upon the terms and subject to the conditions set forth
herein, the Closing shall take place at the offices of Seller at ▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or at such other place as the parties
may mutually agree.
(b) At the Closing (or within one business day after the
Closing Date), Seller shall deliver or cause to be delivered to Buyer the
following:
(1) the certificates required by Sections 8.1 and 8.2
hereof;
(2) resolutions duly adopted by the Board of Directors of
Seller and the Selling Subsidiary authorizing the transactions which are the
subject of this Agreement, certified by the Secretary of Seller and the Selling
Subsidiary, as applicable;
(3) a copy of the Certificate of Incorporation and all
amendments thereto of Seller and the Selling Subsidiary certified by the
Secretary of State of the State of Delaware;
(4) certificates of the Secretary of Seller and the
Selling Subsidiary, as applicable, to the effect that there have been no
amendments to the charter documents referred to in Sections 4.2(b)(3) hereof
since the date of the certifications referred to in such subsection;
(5) the consent of the third parties listed on Schedule
4.2(b)(5) annexed hereto required for the consummation by Seller and the Selling
Subsidiary of the Transaction, subject to Section 7.4;
(6) the Transition Services Agreement, executed by Seller;
(7) a certificate of Seller and the Selling Subsidiary
satisfying the requirements of Treasury Regulation 1.1445-2(b)(2); and
(8) a letter from Fitzpatrick, Cella, ▇▇▇▇▇▇ & ▇▇▇▇▇▇,
intellectual property counsel of Seller, permitting Buyer to rely on the
opinions set forth in the letter dated June 14, 2004 from such counsel to
Seller.
(c) At the Closing (or within one business day after the
Closing Date), Buyer shall deliver or cause to be delivered to Seller (or, in
the case of item (2) below, to the Selling Subsidiary) the following, unless
otherwise waived by Seller;
(1) the Cash Consideration;
(2) Parent's Common Stock;
7
(3) the certificates required by Sections 9.1 and 9.2
hereof;
(4) resolutions duly adopted by the Board of Directors of
each of Buyer and Parent authorizing the transactions which are the subject of
this Agreement, certified by the Secretary of each of Buyer and Parent; and
(5) the Transition Services Agreement, executed by Buyer.
5. Representations and Warranties of Seller.
Except as disclosed in the Disclosure Schedules attached hereto, each
of Seller and the Selling Subsidiary, jointly and severally, hereby represents
and warrants to Buyer as follows:
5.1 Seller's Organization and Authority. Each of Seller and
the Selling Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and lawful authority to carry on the Business as it is currently
being conducted. Each of Seller and the Selling Subsidiary is duly qualified or
licensed to do business as a foreign corporation and is in good standing as a
foreign corporation in each jurisdiction in which the ownership, operation or
lease of the Assets or the conduct of the Business requires qualification or
licensing to do business as a foreign corporation and in which the failure to so
qualify is reasonably likely to have a Material Adverse Effect.
5.2 Authorization. Each of Seller and the Selling Subsidiary
has all requisite corporate power and authority to execute and deliver this
Agreement and the other Transaction Agreements, to consummate the Transaction
and to perform fully its obligations hereunder and thereunder. The execution,
delivery and performance of this Agreement and the other Transaction Agreements
by Seller and the Selling Subsidiary and the consummation by Seller and the
Selling Subsidiary of the Transaction have been duly authorized by all necessary
corporate action of Seller and the Selling Subsidiary, and no other board of
directors, shareholder or other corporate proceeding by or on behalf of Seller
or the Selling Subsidiary is necessary to authorize the execution, delivery or
performance of this Agreement or any other Transaction Agreement, or the
consummation of the Transaction. This Agreement constitutes, and the other
Transaction Agreements when executed and delivered will constitute, the valid
and legally binding obligation of Seller and the Selling Subsidiary, enforceable
against Seller and the Selling Subsidiary in accordance with their terms.
5.3 Freedom to Contract. The execution, delivery and
performance of this Agreement and the other Transaction Agreements by Seller and
the Selling Subsidiary and the consummation by Seller and the Selling Subsidiary
of the Transaction will not: (i) violate or conflict with any provision of the
certificate of incorporation or by-laws of Seller or the Selling Subsidiary,
each as amended; (ii) violate any of the terms, conditions or provisions of any
applicable law, rule, statute, regulation, order, writ, injunction, judgment or
decree of any Governmental Authority (collectively, "Applicable Law"); (iii)
except as set forth on Schedule 5.3, conflict with or result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default or give rise to or result in any loss of benefit or right of
termination, amendment or acceleration under any of the terms, conditions or
provisions of any Contract (other than the Business Contracts which shall be
treated in accordance with the provisions of Section 7.4); or (iv) result in or
require the creation or imposition of, or result in the acceleration of, any
indebtedness or Lien of any nature upon, or with respect to the Business or any
of the Assets, except in the case of clauses (ii), (iii) and (iv) where such
conflict, breach or violation or default is reasonably likely to have a Material
Adverse Effect. Except as set forth on Schedule 5.3, no authorization, approval,
order, license, permit, franchise or consent of, and no registration,
declaration or filing with, any Governmental Authority or other Person (other
than under the Business Contracts), is required in connection with Seller's or
the Selling Subsidiary's execution, delivery and performance of this Agreement
or any other Transaction Agreement or the consummation of the Transaction.
8
5.4 Subsidiaries. Seller owns of record and beneficially all
of the outstanding capital stock of the Selling Subsidiary. No subsidiary of
Seller owns any Assets other than the Selling Subsidiary, and no subsidiary of
Seller operates any portion of the Business other than the Selling Subsidiary
and subsidiaries that may provide one or more of the services to be provided
under the Transition Services Agreement.
5.5 Title to Assets; Encumbrances, etc. Each of Seller and the
Selling Subsidiary has good title to all of the Assets, free and clear of any
mortgage, pledge, security interest, title defect, lien or encumbrance of any
kind (collectively, "Liens"); except for (i) Liens securing Taxes, assessments,
governmental charges or levies, or the claims of materialmen, carriers,
landlords and like persons, all of which are not yet due and payable, and (ii)
restrictions on assignment or transfer of rights under Business Contracts listed
on Schedule 7.4 (collectively, "Permitted Liens"). All of the Assets which are
tangible personal property are in good operating condition and repair
(reasonable wear and tear excepted) and are set forth on Schedule 5.5. Subject
to Section 7.4, upon the consummation of the Closing, good title to the Assets
will vest in Buyer, free and clear of any and all Liens, other than Permitted
Liens, and without incurring any penalty. No third party has any rights to
purchase any of the Assets, or any interest therein or portion thereof,
including rights of first offer or first refusal. The Assets, together with the
assets used in providing the services under the Transition Services Agreement,
constitute in all material respects all of the assets necessary to allow Buyer
to operate the Business, as currently conducted by Seller and its subsidiaries.
5.6 Real Property. None of the Assets consists of an interest
in real property. Each of Seller and the Selling Subsidiary has a good and
subsisting leasehold estate in the real property on which Buyer will collocate
equipment pursuant to the Transition Services Agreement (the "Leased Real
Property"), free and clear of all sublease agreements, Liens and other
exceptions to title, other than Permitted Liens, and is in sole possession of
each parcel of Leased Real Property that it leases. All rent presently due under
each lease of Leased Real Property has been paid in full.
5.7 Contracts. Schedule 5.7 sets forth a complete list of (a)
the Contracts related to the Business to which Seller and the Selling Subsidiary
are a party or bound, or pursuant to which Seller or the Selling Subsidiary is a
beneficiary, other than any Contracts with customers of the Business, and (b)
the customers of the Business as of June 30, 2004. Accurate and complete copies
of each Contract set forth on Schedule 5.7 have been made available by Seller to
Buyer, and, except as disclosed on Schedule 5.7, accurate and complete copies of
each written Contract with each customer listed on Schedule 5.7 have been made
available by Seller to Buyer to the extent in Seller's possession. Each Contract
set forth on Schedule 5.7 and each Contract with a customer of Seller that has
not expired in accordance with its terms is in full force and effect. Each of
Seller and the Selling Subsidiary has complied with all commitments and
obligations on its part to be performed or observed pursuant to each Contract
set forth on Schedule 5.7 and each Contract with a customer of Seller, except
where the failure to so comply individually or in the aggregate is not
reasonably likely to have a Material Adverse Effect. Neither Seller nor the
Selling Subsidiary is in default, or has received written notice that it is in
default, under any of the Contracts set forth on Schedule 5.7 or any Contract
with a customer of Seller, which default individually or in the aggregate is
reasonably likely to have a Material Adverse Effect. No claims have been made,
are pending or, to Seller's Knowledge, are threatened by any customer of the
Business alleging a breach of any express or implied warranties or
representations with respect to the Services, which claim individually or in the
aggregate is reasonably likely to have a Material Adverse Effect.
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5.8 Litigation and Claims. Except as set forth on Schedule
5.8, there is (a) no action, suit, litigation, proceeding or investigation by or
before any Governmental Authority pending or, to Seller's Knowledge, threatened,
against Seller or the Selling Subsidiary relating to the Business or the Assets
or that seeks to enjoin or obtain monetary damages in respect of the
consummation of the Transaction or (b) to Seller's Knowledge, no claim, cause of
action, choses in action or other liabilities relating to the Business or the
Assets which is reasonably likely to have a Material Adverse Effect. Neither
Seller nor the Selling Subsidiary is subject to any judgment, order or decree
entered in any lawsuit or proceeding that is applicable to the Business or the
Assets.
5.9 Compliance with Law. Neither Seller nor the Selling
Subsidiary is in violation of any Applicable Law relating to the Business or the
Assets, which is reasonably likely to have a Material Adverse Effect.
5.10 Governmental Licenses and Approvals. Schedule 5.10 sets
forth a list of all material governmental licenses, franchises and permits held
by Seller or the Selling Subsidiary in connection with the Business (all such
licenses, franchises and permits being referred to herein as the "Permits").
Each of Seller and the Selling Subsidiary has all of the Permits required under
Applicable Law for the conduct of the Business as currently conducted. As of the
Closing Date, each Permit, to the extent assignable, is being assigned to Buyer
and, following such assignment, shall be in full force and effect.
5.11 Employee Related Matters. To the extent relating to the
Business:
(a) Schedule 7.5(a)(i) is true and correct in all material
respects.
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(b) Neither Seller nor the Selling Subsidiary is subject to or
bound by any collective bargaining agreements with any unions, representatives
or other organizations which affect the Employees.
(c) Neither Seller nor the Selling Subsidiary has received
notice of any industrial or other such dispute with any of the Employees, any
union, employee representatives or other organization formed for a similar
purpose which is reasonably likely to have a Material Adverse Effect and no such
dispute is existing, pending or, to Seller's Knowledge, threatened.
(d) There is no collective bargaining agreement or other
arrangement to which Seller or the Selling Subsidiary is a party with which
Seller or the Selling Subsidiary has failed to comply which failure would
restrict the transactions contemplated by this Agreement or is reasonably likely
otherwise to have a Material Adverse Effect.
(e) There are no pending or, to Seller's Knowledge, threatened
inquiries or investigations involving or relating to the Employees by the Equal
Opportunities Commission, the Commission for Racial Equity, the Health and
Safety Executive or similar authorities that is reasonably likely to have a
Material Adverse Effect.
(f) There is no pending or, to Seller's Knowledge, threatened
litigation and, to Seller's Knowledge, no existing material dispute involving or
relating to any of the Employees other than routine claims for benefits in the
ordinary course of the operation of Seller and the Selling Subsidiary or for
which Buyer will have no liability after the Closing Date.
(g) To Seller's Knowledge, each of Seller and the Selling
Subsidiary has at all relevant times complied with all of its obligations under
statute and otherwise concerning the health and safety at work of the Employees,
except for failures to comply which individually or in the aggregate is not
reasonably likely to have a Material Adverse Effect, and there are no claims
pending or, to Seller's Knowledge, threatened by any party in respect of any
accident or injury which are not fully covered by insurance or by any Employee
in respect of any accident or injury or for which Buyer would have liability
after the Closing Date.
5.12 ERISA Matters.
(a) None of Seller, the Selling Subsidiary or any of their
respective ERISA Affiliates is or ever has been a party or made contributions to
any plan which is subject to Title IV of ERISA, Section 412 of the Code or
Section 302 of ERISA or any "multiemployer plan" as defined in Sections 3(37)
and 4001(a)(3) of ERISA. None of Seller, the Selling Subsidiary or any of their
respective ERISA Affiliates has, at any time, participated in any
union-sponsored multiemployer welfare benefit fund maintained pursuant to any
"employee welfare benefit plan" as defined in Section 3(1) of ERISA. None of
Seller, the Selling Subsidiary or any of their respective ERISA Affiliates
maintains any plan which is funded through a "welfare benefit fund" as defined
in Section 419(e) of the Code.
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(b) Except as set forth on Schedule 5.12(b), all health and
medical benefit coverage, and all death benefit coverage, under each Seller
Benefit Plan is provided solely through insurance. Any continuation coverage
provided under any Seller Benefit Plan in accordance with the COBRA provisions
of ERISA ss.ss.601 through 608 or Code ss.4980 B is paid for solely by Seller's
or the Selling Subsidiary's COBRA qualified beneficiary.
(c) None of the Seller Benefit Plans have participated in,
engaged in or been a party to any Prohibited Transaction which could result in
the imposition of a material liability for which Buyer could reasonably be
expected to become liable after the Closing Date. No officer, partner, director
or employee of Seller, the Selling Subsidiary or any of their respective ERISA
Affiliates has committed a material breach of any responsibility or obligation
imposed upon fiduciaries by Title I of ERISA or engaged in any Prohibited
Transaction with respect to any Seller Benefit Plan, in each case for which
Buyer could reasonably be expected to become liable after the Closing Date.
(d) There have been no acts or omissions with respect to any
Seller Benefit Plan or other Employee Benefit Plan by Seller, the Selling
Subsidiary or any of their respective ERISA Affiliates which has given rise to
or may give rise to any material fines, penalties or related charges for which
Buyer could reasonably be expected to become liable after the Closing Date. No
litigation or claim (other than routine liability claims) is pending with
respect to any Seller Benefit Plan.
(e) Each Seller Benefit Plan has at all times been maintained
in all material respects, by its terms and in operation, in accordance with all
Laws. Seller, the Selling Subsidiary and their respective ERISA Affiliates have
made full and timely payment of all amounts required to be contributed under the
terms of each Seller Benefit Plan and Laws or required to be paid as expenses
under such Employee Benefit Plan. None of Seller, the Selling Subsidiary or any
of their respective ERISA Affiliates has or will have on the Closing any
unsatisfied material liability, fine, penalty or tax with respect to any Seller
Benefit Plan or any other Employee Benefit Plan for which Buyer could reasonably
be expected to become liable after the Closing Date.
5.13 Business Revenues. Schedule 5.13 sets forth the revenues
of the Business for the year ended December 31, 2003 and for the six months
ended June 30, 2004 (the "Business Revenues"). The Business Revenues were
determined in accordance with United States generally accepted accounting
principles consistently applied.
5.14 Absence of Certain Developments. Except as disclosed on
Schedule 5.14, since March 31, 2004, each of Seller and the Selling Subsidiary
has operated the Business in the ordinary course consistent with past practice
and there has not been any:
(a) event which has had or is reasonably expected,
individually or in the aggregate (together with the items set forth in Schedule
5.14), to have a Material Adverse Effect;
(b) transactions not in the ordinary course of business, which
transactions have a value individually in excess of $25,000 or in excess of
$100,000 in the aggregate;
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(c) material damage, destruction or loss, whether or not
insured, affecting the Assets;
(d) failure to maintain in full force and effect insurance
coverage for destruction, damage to, or loss of the Assets in accordance with
Seller's practices applicable generally to Seller and its other domestic
operating subsidiaries;
(e) disposition of or lapse of any of its Intellectual
Property or any license, permit or authorization to use any Intellectual
Property, other than in the ordinary course of business and other than any
disposition or lapse that is not reasonably likely to have a Material Adverse
Effect; or
(f) agreement or understanding legally obligating it to take
any of the actions described above in this Section 5.14.
5.15 Business Software.
(a) The Business Exclusive Software is owned by Seller and the
Selling Subsidiary and is all Software that is material to the provision of the
Services (other than Software licensed from third parties under the License
Agreements or other third party shrink wrap Software). Except as disclosed on
Schedule 5.15, each of Seller and the Selling Subsidiary has all rights and
powers necessary to make the transfer of the Business Exclusive Software owned
by Seller and the Selling Subsidiary. To Seller's Knowledge, except as disclosed
on Schedule 5.15, there is no written claim by a third party that the use by
Seller or the Selling Subsidiary in the conduct of the Business of the Business
Exclusive Software infringes on the intellectual property rights of any third
party. Except as disclosed on Schedule 5.15, the Business Exclusive Software is
sufficient to permit Seller to provide the Services as currently provided.
Notwithstanding anything to the contrary contained herein, none of the
representations and warranties set forth above in this Section 5.15(a) shall
apply to the Provisioning Software (as defined on Schedule 1.5). Except as set
forth herein or in the Transition Services Agreement, the Business Exclusive
Software (including but not limited to the Provisioning Software) owned by
Seller and the Selling Subsidiary is transferred "As Is," without any support,
assistance, maintenance or warranties of any kind. Except as otherwise set forth
herein or in the Transition Services Agreement, Buyer assumes all responsibility
and risk for its use of any Software covered by this Agreement. Except as
otherwise set forth herein or in the Transition Services Agreement, Seller does
not make, and expressly disclaims, any express or implied warranties of any kind
whatsoever relating to Software, including but not limited to, implied
warranties of merchantability or fitness for a particular purpose, warranties of
title or non infringement, or any warranties that the Software is error free.
(b) Except as disclosed on Schedule 5.15, to Seller's
Knowledge, there is no claim which can be asserted by any Person against Seller
or the Selling Subsidiary with respect to the use of any item of Business
Exclusive Software challenging or questioning the validity or effectiveness of
such use of any such item. Except as disclosed on Schedule 5.15, no employee of
Seller or, to Seller's Knowledge, any other Person has a right to receive a
royalty or similar payment, or has any other monetary rights, in respect of any
item of Business Exclusive Software owned by Seller or the Selling Subsidiary.
Each of Seller and the Selling Subsidiary has taken reasonable measures to
protect the proprietary nature of each item of Business Exclusive Software, and
to maintain the confidentiality of all confidential information, that it owns or
uses and is not aware of any unauthorized disclosure of confidential
information. Except as disclosed on Schedule 5.15, to Seller's Knowledge, there
is no existing third party infringement, misuse or misappropriation of the
Business Exclusive Software. Notwithstanding anything to the contrary contained
herein, none of the representations and warranties set forth above in this
Section 5.15(b) shall apply to the Provisioning Software (as defined on Schedule
1.5).
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5.16. Intellectual Property.
(a) Schedule 5.16 annexed hereto sets forth an accurate and
complete list of all registered trademarks used in the conduct of the Business.
Except as disclosed on Schedule 5.16, each of Seller and the Selling Subsidiary
owns, is licensed or otherwise has the sole and exclusive right to use the
registered trademarks set forth on Schedule 5.16 (the "Registered Trademarks")
and, to Seller's Knowledge, all other Intellectual Property. None of the
licensed Intellectual Property is licensed from any employees or Affiliates of
Seller or its subsidiaries.
(b) Except as disclosed in Schedule 5.16, the use of the
Registered Trademarks and, to Seller's Knowledge, the other Intellectual
Property by Seller and the Selling Subsidiary does not infringe upon or
otherwise violate the rights of any third party in or to such Intellectual
Property, and, to Seller's Knowledge, no claim has been asserted with respect
thereto. Except as disclosed in Schedule 5.16, to Seller's Knowledge, there is
no claim which can be asserted by any Person against Seller or the Selling
Subsidiary with respect to the use of any item of Intellectual Property
challenging or questioning the validity or effectiveness of such use of any such
item. Except as disclosed in Schedule 5.16, no employee of Seller or, to
Seller's Knowledge, any other Person has a right to receive a royalty or similar
payment, or has any other monetary rights, in respect of any item of
Intellectual Property owned by Seller or the Selling Subsidiary. Each of Seller
and the Selling Subsidiary has taken reasonable measures to protect the
proprietary nature of each item of Intellectual Property, and to maintain the
confidentiality of all confidential information, that it owns or uses and is not
aware of any unauthorized disclosure of confidential information. Except as
disclosed in Schedule 5.16, to Seller's Knowledge, there is no existing third
party infringement, misuse or misappropriation of the Registered Trademarks or
the other Intellectual Property.
(c) The Selling Subsidiary has all right, title and interest
in, to and under the registration of the MailWatch trademark included in the
Transferred Intellectual Property (subject to any proceedings or actions in the
United States Patent and Trademark Office, if any) and has all rights and powers
to make the transfer of the MailWatch trademark and, to Seller's Knowledge, all
other Transferred Intellectual Property set forth herein.
(d) Except as set forth herein or in the Transition Services
Agreement, the Intellectual Property transferred hereunder is transferred "As
Is," without any support, assistance, maintenance or warranties of any kind.
Except as otherwise set forth herein or in the Transition Services Agreement,
Buyer assumes all responsibility and risk for its use of any Intellectual
Property covered by this Agreement. Except as otherwise set forth herein or in
the Transition Services Agreement, Seller does not make, and expressly
disclaims, any express or implied warranties of any kind whatsoever relating to
Intellectual Property, including but not limited to, implied warranties of
merchantability or fitness for a particular purpose, warranties of title or non
infringement, or any warranties that any Intellectual Property is error free.
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5.17 Taxes.
(a) To Seller's Knowledge, Seller and the Selling Subsidiary
have filed all Tax Returns that were required to be filed by them with respect
to the Business. All such Tax Returns were when filed, and continue to be,
correct and complete in all material respects. All Taxes due and payable prior
to the date hereof as shown on such Tax Returns and owed by Seller or the
Selling Subsidiary with respect to the Business have been timely paid. There are
no liens with respect to Taxes on any of the Assets, other than Permitted Liens.
(b) Seller and the Selling Subsidiary have withheld or
collected and paid all Taxes required to have been withheld or collected and
paid in connection with amounts paid or owing to any Employee.
(c) None of the Assumed Liabilities is an obligation to make a
payment that would not be deductible under Section 280G of the Code.
(d) For purposes of this Section 5.17, references to Seller
shall also refer to any predecessor companies of Seller within the previous six
years.
5.18 Customers. Schedule 5.18 lists the names and addresses of
the twenty (20) largest customers of the Business (based on revenues) during the
twelve-month period ended June 30, 2004, and the percentage of the Business
which each such customer represents or represented during such period. Except as
set forth in Schedule 5.18, Seller and the Selling Subsidiary have not received
any written notice, and to Seller's Knowledge, any other notice, that any such
customer has ceased, or will cease, to use the Services of the Business, or has
substantially reduced, or will substantially reduce, the use of such Services.
5.19 Interested Persons. To Seller's Knowledge, no officer,
director or employee of Seller or the Selling Subsidiary, or any Affiliate
(other than Seller and its direct and indirect subsidiaries), spouse, child, or
other relative of any of the foregoing persons or entities, has any interest in,
directly or indirectly, or any contractual relationship with, any customer or
supplier of the Business or with the Seller or the Selling Subsidiary with
respect to the Business (other than, with respect to employees, employment
agreements with the Seller or the Selling Subsidiary).
5.20 Brokers. Neither Seller nor the Selling Subsidiary has,
directly or indirectly, employed or utilized the services of any investment
banker, broker, finder, consultant or other intermediary in connection with this
Agreement or the Transaction.
5.21 Investment Experience. Seller (i) is an "accredited
investor" as that term is defined in Rule 501(a) promulgated under the
Securities Act, (ii) has such knowledge and experience of financial, business
and investment matters as to be capable of evaluating the merits and risks of
acquiring Parent's Common Stock, (iii) has the ability to bear the economic
risks of acquiring Parent's Common Stock, (iv) was not organized or reorganized
for the specific purpose of acquiring Parent's Common Stock and (v) has been
afforded the opportunity to ask questions of, and to receive answers from,
Parent and to obtain additional information, all as necessary for Seller to make
an informed investment decision with respect to the acquisition of Parent's
Common Stock.
15
5.22 Investment; Legend. Seller is acquiring Parent's Common
Stock for investment for its own account, not as a nominee or agent, and not
with the view to, or for resale in connection with, any distribution thereof.
Seller understands that the shares of Parent's Common Stock to be acquired have
not been, and except as provided herein will not be, registered under the
Securities Act. The availability of an exemption from the registration
provisions of the Securities Act depends upon, among other things, the bona fide
nature of the investment intent. Seller understands and acknowledges that
certificates representing Parent's Common Stock will bear a legend substantially
to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS."
5.23 Rule 144. Seller acknowledges that Parent's Common Stock
must be held indefinitely unless subsequently registered under the Securities
Act or unless an exemption from such registration is available. Seller is aware
of the provisions of Rule 144 promulgated under the Securities Act which permit
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions.
5.24 Disclaimer of Additional Representations and Warranties.
Except as expressly set forth in this Agreement, each of Seller and the Selling
Subsidiary makes no representations or warranties, express or implied, with
respect to Seller, the Selling Subsidiary, the Assets or the Business.
6. Representations and Warranties of Buyer and Parent.
Except as disclosed on the Disclosure Schedules hereto, each of Buyer
and Parent, jointly and severally, hereby represents and warrants to Seller as
follows:
6.1 Organization and Authority. Each of Buyer and Parent is a
corporation duly organized, validly existing and in good standing under the laws
of the State of [Delaware] and has all requisite corporate power and lawful
authority to execute and deliver this Agreement and the other Transaction
Agreements, to consummate the Transaction and to perform fully its obligations
under this Agreement and the other Transaction Agreements.
16
6.2 Authorization of Agreement. The execution, delivery and
performance of this Agreement and the other Transaction Agreements by Buyer and
Parent and the consummation by Buyer and Parent of the Transaction have been
duly authorized by all necessary corporate action of Buyer and Parent, and no
other board of directors, stockholder or other corporate proceedings by or on
behalf of Buyer or Parent is necessary to authorize the execution, delivery or
performance of this Agreement or any other Transaction Agreement or the
consummation of the Transaction. This Agreement constitutes, and the other
Transaction Agreements when executed and delivered will constitute, the valid
and legally binding obligations of Buyer and Parent, enforceable against Buyer
and Parent in accordance with their terms.
6.3 Freedom to Contract. The execution, delivery and
performance of this Agreement or any other Transaction Agreement by Buyer and
Parent and the consummation by Buyer and Parent of the Transaction will not: (i)
violate or conflict with any provisions of the certificate of incorporation or
by-laws of Buyer or Parent, each as amended; (ii) violate any of the terms,
conditions or provisions of any Applicable Law; or (iii) conflict with or result
in a violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default under any of the terms, conditions or provisions of
any material contract of Buyer or Parent except in the case of clauses (ii) and
(iii) where such conflict, breach or violation or default is not reasonably
likely to have a material adverse effect on the ability of the Buyer or Parent
to consummate the Transaction. No authorization, approval, order, license,
permit, franchise or consent of, and no registration, declaration or filing
with, any Governmental Authority, is required in connection with Buyer's or
Parent's execution, delivery and performance of this Agreement or any other
Transaction Agreement or the consummation of the Transaction.
6.4 Brokers. Neither Buyer nor Parent has, directly or
indirectly, employed or utilized the services of any investment banker, broker,
finder, consultant or other intermediary in connection with this Agreement or
the Transaction.
6.5 Validity of Parent's Common Stock. Parent's Common Stock,
when issued and delivered in accordance with the terms of this Agreement, will
be duly and validly issued, fully paid and nonassessable and will be free of
restrictions on transfer, other than restrictions on transfer under this
Agreement or under applicable federal and state securities laws, and will be
free of any preemptive or similar rights and liens or encumbrances, other than
any liens or encumbrances created by or imposed upon Seller.
6.6 SEC Reports. Complete and correct copies of all reports
and other filings required to be filed by Parent with the Securities and
Exchange Commission (the "SEC") pursuant to the Securities Act and the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder since and including the filing date of the registration statement
with respect to Parent's initial public offering (such reports and other filings
collectively referred to herein as the "SEC Filings") are available on the SEC's
▇▇▇▇▇ web site. As of their respective dates, the SEC Filings, in the aggregate,
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. At the time of filing, the SEC Filings complied as to form in all
material respects with the applicable requirements of the Securities Act and the
Securities Exchange Act of 1934, as amended, and the applicable rules and
regulations thereunder.
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6.7 Disclaimer of Additional Representations and Warranties.
Except as expressly set forth in this Agreement, each of Buyer and Parent makes
no representations or warranties, express or implied, with respect to Buyer or
Parent.
7. Covenants.
7.1 Public Announcements. Neither Seller nor Parent shall,
without the prior written approval of the other party, permit any of their
respective officers, directors or employees to make any public statement or
issue any press release with respect to this Agreement or the Transaction,
unless such statement or release is required by applicable law, regulation or
stock market rule (provided that the other party shall, to the extent
practicable, be given an opportunity to review and consent to such statement or
release).
7.2 Expenses. The parties to this Agreement shall bear their
respective expenses incurred in connection with the preparation, execution and
performance of this Agreement and the consummation of the Transaction,
including, without limitation, all fees and expenses of agents, representatives,
counsel and accountants; provided, however, all liability for documentary,
stamp, transfer or other similar Taxes (each, a "Transfer Tax") arising in
connection with the transactions contemplated pursuant to this Agreement shall
be allocated 50% to Seller and 50% to Buyer, and Seller shall file all necessary
Tax Returns and other documentation with respect to all such Transfer Taxes and
Buyer shall reasonably cooperate in the preparation, execution and filing of,
all Tax Returns, applications or other documents regarding any Transfer Taxes
that become payable in connection with the sale of the Assets, or otherwise.
Buyer shall reimburse Seller for the portion of the Transfer Taxes, if any, for
which it is liable promptly upon a request therefor.
7.3 Indemnification for Fees of Brokers and Finders.
Notwithstanding anything to the contrary contained in this Agreement, Buyer and
Parent, on the one hand, and Seller and the Selling Subsidiary, on the other,
agree to indemnify and save the other harmless from any claim or demand for
commission or other compensation by any broker, finder, agent or similar
intermediary claiming to have been employed by or on behalf of Buyer or Parent,
on the one hand, or Seller or the Selling Subsidiary, on the other hand.
7.4 Contracts. The Business Contracts set forth on Schedule
7.4 and the lease and Master Services Agreement referenced on Schedule 5.3 may
require the consent of the other party or parties thereto to any transfer or
assignment of Seller's or the Selling Subsidiary's rights thereunder or to the
provision of certain services under the Transition Services Agreement and such
consent shall not have been obtained as of the Closing Date. Seller, the Selling
Subsidiary and Buyer shall cooperate, and Seller and the Selling Subsidiary
shall use reasonable commercial efforts, to procure the consent to assignment to
Buyer of all Business Contracts set forth on Schedule 7.4 and to procure the
consent to provide the services under the Transition Services Agreement as
needed as promptly as practicable after the Closing. If, upon exercise by Seller
and the Selling Subsidiary of reasonable commercial efforts to procure such
consents, Seller determines that a Business Contract is not or will not be
assignable by Seller or the Selling Subsidiary to Buyer or Seller does not
receive such consent to provide a service under the Transition Services
Agreement in the manner contemplated thereunder, Seller and the Selling
Subsidiary shall, to the extent feasible and practicable, provide Buyer the
benefit of such Business Contract or service to the same extent as if Seller and
the Selling Subsidiary had not been prevented from assigning such Business
Contract to Buyer or from provided such service to Buyer to the extent legally
permissible without violating such contract, and Buyer shall act as Seller's and
the Selling Subsidiary's subcontractor and agent and, if the benefit of such
contract or service is provided to Buyer, shall perform all of the obligations
and assume all of the liabilities under such Business Contracts or the
Transition Services Agreement or shall reimburse Seller and the Selling
Subsidiary for its payment and performance thereunder, in each case, pursuant to
the terms of the Transition Services Agreement. Nothing in this Agreement or the
Transition Services Agreement shall be construed as an attempt to assign any
Business Contract that by its terms is not assignable or to provide any service
that may not be provided without the consent of the other party to such Business
Contract or such lease or Master Services Agreement referenced on Schedule 5.3.
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7.5 Employment Matters.
(a) Business Employees
(i) At the Closing, Buyer shall extend written offers of
employment contingent upon the consummation of the Closing, and
commencing immediately following the Closing, to each of the employees
of the Business who is listed on Schedule 7.5(a)(i) ("Business
Employees"). Schedule 7.5(a)(i) lists each Business Employee's name,
job title, location of employment, current year's salary and
commission, date of employment and current status (e.g., active,
disability, leave of absence, etc.) and any severance obligations owed
to such Business Employee in the event of the termination of employment
of such Business Employee. Business Employees who accept such offer and
who become employed by Buyer after the Closing shall be referred to as
"Hired Business Employees".
(ii) Buyer shall pay a bonus to each Hired Business
Employee that is employed by Buyer on the first anniversary of this
Agreement. Such bonus shall equal ten percent (10%) of such Hired
Business Employee's base salary on the day after the Closing Date.
(b) Seller Benefit Plans.
(i) Seller and the Selling Subsidiary shall retain all
liabilities with respect to benefits accrued and claims incurred with
respect to all Business Employees under any Employee Benefit Plans
established by Seller, the Selling Subsidiary and their respective
Affiliates through the Closing Date ("Seller Benefit Plans") and any
and all assets set aside with respect to the funding and payment of
such liabilities. Seller and the Selling Subsidiary shall also retain
any liabilities which may accrue after the Closing Date with respect to
any Business Employee who is not a Hired Business Employee, including
all responsibility to provide COBRA coverage to any such Business
Employees under the COBRA provisions of ERISA ss.ss.601 through 608 or
Code ss.4980 B.
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(ii) Except as otherwise provided in this Agreement, as of
the first moment after the Closing Date, all Hired Business Employees
will cease to participate as active employees in or accrue benefits
under the Seller Benefit Plans. Thereafter, no Hired Business Employee
shall assume or be entitled to participate in any Seller Benefit Plans,
except to the extent such plans provide by their terms for
participation after the Closing Date or as otherwise required by law or
by the terms of this Agreement.
(c) Buyer Benefit Plans.
(i) As of the first moment after the Closing Date and
thereafter, Buyer shall provide to all Hired Business Employees such
benefits as Buyer shall determine, which shall contain no restrictions
or limitations with respect to pre-existing conditions (other than
those which are not satisfied under Seller Benefit Plans as of the
Closing Date).
(ii) Buyer shall recognize, from and after the Closing
Date, each Hired Business Employee's service, as set forth on Schedule
7.5(a)(i) to this Agreement with respect to each such Employee, for
purposes of determining eligibility to participate and vesting under
any Employee Benefit Plan established by Buyer or any of its Affiliates
on or after the Closing Date or maintained by Buyer or any Affiliate
and in which Hired Business Employees will participate, including
without limitation all qualified pension, savings, or profit-sharing
plans, group health plans, vacation plans and policies, disability and
other welfare benefit plans (including retiree health, dental and life
insurance). Schedule 7.5(c)(ii) lists the dollar amount of any accrued
paid leave (whether vacation, sick leave or otherwise) of each Hired
Business Employee as of the Closing Date, based on the amount to which
each such employee is entitled to be paid for such leave.
(iii) Neither Seller nor its Affiliates shall have any
liabilities or obligations with respect to benefit claims under any
plans sponsored, maintained or contributed to by Buyer or any of its
Affiliates for or in respect of any Hired Business Employee.
(iv) For the avoidance of doubt, Buyer is not liable for
any severance payments to which the Hired Business Employees were
entitled pursuant to their employment with Seller.
7.6 Further Assurances. From and after the Closing Date,
Seller and the Selling Subsidiary, on the one hand, and Buyer, on the other
hand, agree to execute and deliver such further documents and instruments and to
do such other acts and things as Buyer or Seller, as the case may be, may
reasonably request in order to effectuate the Transaction. Following the
Closing, the parties will cooperate with each other in connection with tax
audits and in the defense of any legal proceedings, consistent with the other
provisions for defense of claims provided in Article 10. Without limiting the
foregoing, Seller and the Selling Subsidiary agree to take any and all
commercially reasonable actions which are necessary to transfer the domain names
referenced in Schedule 1.3 to Buyer.
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7.7 Receivables; Billing and Collections. In accordance with
the Transition Services Agreement, Seller and the Selling Subsidiary shall remit
all invoices for the Business for the month in which the Closing shall occur
(and for any previous months in which revenues attributable to the conduct of
the Business after the Closing were prepaid) and for so long thereafter as
provided in the Transition Services Agreement and shall remit to Buyer promptly
after each month-end after the sending of such invoices all payments received by
Seller or the Selling Subsidiary on such invoices to the extent attributable to
the conduct of the Business after the Closing in accordance with Section 2.3.
Each of Seller and the Selling Subsidiary shall use its customary procedures to
collect payments set forth in the invoices remitted in relation to the Business
which were remitted by Seller or the Selling Subsidiary pursuant to the previous
sentence. Each party agrees to remit to the other party any collections received
by such party on accounts receivable to the extent such other party is entitled
to such collections in accordance with Section 2.3. For purposes of determining
whether a payment belongs to Seller, the Selling Subsidiary or Buyer, (a) all
payments from an account debtor which relate to an invoice (including, without
limitation, by noting the invoice number on the form of payment, by including
the invoice with the payment or by the amount of payment precisely matching the
amount of the most recent invoice) shall be applied to such invoice, (b) all
partial payments from an account debtor which relate to an invoice that includes
both Services and other services shall be applied pro rata to the Services and
such other services in accordance with the respective amounts attributable to
the Services and such other services, respectively, unless otherwise directed by
the account debtor and (c) all payments from an account debtor which do not
relate to an invoice shall be applied first to unpaid accounts receivable owed
to Seller or the Selling Subsidiary unless such accounts receivable has been
disputed in writing by the account debtor. Buyer, Seller and the Selling
Subsidiary agree to provide each other with reasonable cooperation in connection
with the billing and collection of accounts receivable in furtherance of the
transactions contemplated hereby.
7.8 Use of EasyLink as Trademark and Trade Name. From and
after the Closing Date, Buyer shall not be entitled to use and shall cause the
Business to cease its use of the names EasyLink, EasyLink Services and variants
of the foregoing as a trademark, service ▇▇▇▇, trade name or corporate name.
7.9 Nasdaq National Market Listing; Registration Rights. If
required by the Nasdaq Stock Market on or before the date required by applicable
Nasdaq Stock Market rules, Parent shall cause the shares of Parent's Common
Stock issuable hereunder to be authorized for listing on The Nasdaq National
Market. If Parent shall file at any time after six (6) months after the Closing
Date a registration statement on Form S-3 with the SEC that includes shares for
resale by other equity securityholders, then Parent shall offer to include
Seller's shares of Parent's Common Stock received hereunder in such registration
statement on the same terms and conditions as applicable to such other
securityholders unless the underwriter or placement agent, if any, in connection
with such registration statement or the securities covered thereby determines
that the inclusion of the shares of Parent's Common Stock would adversely affect
the success of the offering.
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7.10 Access to Information. Each of Buyer and Seller will
provide the other with the right, at reasonable times and upon reasonable
notice, to have reasonable access to, and to copy and use, any records or
information in its possession and control and personnel under its supervision
which may be relevant in connection with the preparation of any Tax Returns, any
audit or other examination by any authority, or any judicial or administrative
proceedings relating to liability for Taxes. The party requesting assistance
hereunder shall reimburse the other party for reasonable expenses incurred in
providing such assistance. Any information obtained pursuant to this Section
7.10 shall be held in strict confidence and shall be used solely in connection
with the reason for which it was requested.
7.11 Non-Competition and Non-Solicitation. For a three year
period following the Closing Date, each of Seller, the Selling Subsidiary and
their respective Affiliates shall not, directly or indirectly, (a) engage in
activities which compete with the Business as currently conducted, (b) entice,
induce or solicit any customer of or licensor to the Business to cease in any
extent to be a customer of or licensor to the Business or (c) entice, induce or
solicit any employee or consultant of Buyer, Parent or their respective
subsidiaries with respect to the Business to leave the employment of, or no
longer render services to, Buyer, Parent or any of their respective
subsidiaries. Notwithstanding anything to the contrary contained herein, (i)
nothing contained herein shall be construed to prevent Seller and its Affiliates
from selling the products and services currently sold by them (other than the
Services) or scanning services relating to Seller's and its subsidiaries'
electronic data interchange or EDI services, production messaging services,
desktop fax, document capture and management and other fax-related services and
(ii) this Section 7.11 shall not apply to the activities of any Person that,
whether by merger, consolidation, stock purchase or asset purchase, (A) acquires
Seller, the Selling Subsidiary or any of their respective Affiliates or the
business or assets of any of the foregoing or (B) after the first anniversary of
the Closing Date, is acquired by Seller, the Selling Subsidiary or any of their
respective Affiliates; provided, however, that, in the case of clause (B), (x)
the revenues of such acquired Person relating to any portion of such Person's
business which are competitive with the Business cannot exceed twenty percent
(20%) of such Person's revenues for the twelve (12) month period as of the end
of the fiscal quarter of such Person ending immediately prior to the acquisition
of such Person, (y) Seller must have used its reasonable commercial efforts to
not purchase the portion of such Person's business which is competitive with the
Business and (z) if such portion of the business is acquired notwithstanding its
compliance with clause (y), Seller must use its reasonable commercial efforts to
divest the portion of such Person's business which is competitive with the
Business within twelve (12) months of its acquisition.
7.12 EasyLink Website and Customer Service Numbers; XWRK
Library. (a) Seller shall maintain, in the same manner and presentation as of
the Closing Date, all references on Seller's website to the Services (including,
without limitation, references to "Anti-Virus", "Anti-Spam", "Spam Blocking",
"Virus Protection" and "MailWatch") and shall cause any links from such
references to be directed to the website at the ▇▇▇.▇▇▇▇▇▇▇▇▇.▇▇▇ address or the
▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇ website, as applicable; provided, however, that Seller shall
not be required to so maintain such references or links for longer than six (6)
months after the Closing Date and shall remove such references at the request of
Buyer. Additionally, Seller shall direct any incoming calls to any phone numbers
of Seller relating to the Business as instructed by Buyer; provided, however,
that Seller shall not be required to so direct such calls for longer than six
(6) months after the Closing Date. Any prospective sales calls relating to the
Business shall be referred to Seller's sales department and shall be subject to
the referral agreement entered into between Seller and Buyer as of the Closing
Date.
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(b) Seller hereby grants to Buyer a perpetual, royalty free,
fully paid up, worldwide, transferable, assignable, sublicensable license to use
and modify the XWRK library software (including source code) for any purpose.
The XWRK library software is licensed to Buyer "As Is," without any support,
assistance, maintenance or warranties of any kind. Buyer assumes all
responsibility and risk for its use of the XWRK library software. Seller does
not make, and expressly disclaims, any express or implied warranties of any kind
whatsoever relating to XWRK library software, including but not limited to,
implied warranties of merchantability or fitness for a particular purpose,
warranties of title or non infringement, or any warranties that the XWRK library
software is error free.
8. Conditions Precedent to Buyer's and Parent's Obligations. The
obligations of Buyer and Parent are subject to the satisfaction, at or before
the Closing, of the conditions set out below. The benefit of these conditions is
for Buyer and Parent only and may be waived in writing by Buyer and Parent at
any time in their sole discretion.
8.1. Accuracy of Seller's Representations and Warranties. The
representations and warranties of Seller and the Selling Subsidiary shall be
true and correct as of the Closing, and Buyer shall have received certificates
attesting thereto signed by duly authorized officers of Seller and the Selling
Subsidiary.
8.2. Performance by Seller. Seller and the Selling Subsidiary shall
have performed, satisfied and complied with all covenants, agreements, and
conditions required by this Agreement and Buyer shall have received a
certificate signed by a duly authorized officer of Seller and the Selling
Subsidiary.
8.3 Deliverables. Seller shall have delivered to Buyer the required
deliverables set forth in Section 4.2(b).
9. Conditions Precedent to Seller's Obligations.
The obligations of Seller and the Selling Subsidiary are subject to the
satisfaction, at or before the Closing, of the conditions set out below. The
benefit of these conditions is for Seller and the Selling Subsidiary only and
may be waived by Seller and the Selling Subsidiary in writing at any time in
their sole discretion.
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9.1. Accuracy of Buyer's and Parent's Representations and Warranties.
The representations and warranties of Buyer and Parent shall be true and correct
as of the Closing, and Seller shall have received certificates attesting thereto
signed by duly authorized officers of Buyer and Parent.
9.2. Performance by Buyer and Parent. Buyer and Parent shall have
performed, satisfied and complied with all covenants, agreements and conditions
required by this Agreement and Seller shall have received a certificate signed
by a duly authorized officer of Buyer and Parent to such effect.
9.3 Deliverables. Buyer shall have delivered to Seller the required
deliverables set forth in Section 4.2(c).
10. Indemnification.
10.1 Indemnification by Seller. Seller and the Selling Subsidiary
shall, jointly and severally, indemnify Buyer, Parent, their respective
Affiliates and their respective officers, directors, employees, permitted
assigns and successors (collectively, the "Buyer Indemnified Parties") and hold
them harmless against and in respect of any and all judgments, costs, damages,
losses, liabilities, taxes and deficiencies and penalties and interest thereon
and costs and expenses, including reasonable attorneys' fees and expenses
(collectively, "Losses") to the extent resulting from (a) the breach of any
representation or warranty of Seller or the Selling Subsidiary in this Agreement
or the Transition Services Agreement, (b) the Excluded Liabilities, (c) the
failure to comply in any material respect with any covenant or agreement made by
Seller or the Selling Subsidiary hereunder or in the Transition Services
Agreement; and (d) any and all actions, suits, proceedings, claims, demands or
assessments incident to any of the foregoing.
10.2 Indemnification by Buyer. Buyer and Parent shall, jointly and
severally, indemnify Seller, its Affiliates and their respective officers,
directors, employees, permitted assigns and successors (collectively, the
"Seller Indemnified Parties" and, together with Buyer Indemnified Parties, the
"Indemnified Parties") and hold them harmless against and in respect of any and
all Losses to the extent resulting from (a) the breach of any representation or
warranty of Buyer or Parent in this Agreement or the Transition Services
Agreement, (b) the Assumed Liabilities, (c) the failure to comply in any
material respect with any covenant or agreement made by Buyer or Parent
hereunder or in the Transition Services Agreement; and (d) any and all actions,
suits, proceedings, claims, demands or assessments incident to any of the
foregoing.
10.3 Period of Indemnity. All representations and warranties of the
parties contained in this Agreement or the Transition Services Agreement, and
all indemnification obligations under Section 10.1 or 10.2 to the extent arising
out of a breach of such representations and warranties, shall survive the
execution and delivery of this Agreement and shall continue in full force and
effect until December 31, 2005 and thereafter shall terminate; provided,
however, that (a) to the extent any breach of a representation, warranty,
covenant or agreement involves any Losses in each case relating to or for ERISA,
Taxes or bulk transfer laws of any jurisdiction, the right to assert a claim and
any indemnity obligation shall survive until the expiration of the applicable
statute of limitations; provided, further, however, that if at or prior to the
expiration of such period the Indemnified Party has delivered a Claims Notice in
accordance with Section 10.5 but the underlying claim has not been fully
determined, such period will be extended as to such claim until it is finally
determined; and (b) the representations and warranties of Seller and the Selling
Subsidiary set forth in Sections 5.1 and 5.2 and of Buyer and Parent set forth
in Sections 6.1 and 6.2 shall survive indefinitely. All covenants or agreements
which by their terms are to be performed on or after the Closing Date shall
survive until fully discharged. Buyer's obligations with respect to Assumed
Liabilities and Seller's obligations with respect to Excluded Liabilities (other
than to the extent arising solely under Section 2.2(g)) shall survive
indefinitely.
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10.4 Limitations.
(a) No claim for indemnity shall be asserted by, and no liability for
such indemnity shall be enforced against, a party unless a Claims Notice (as
hereinafter defined) has been given by the Indemnified Party to the other
party(ies) (the "Indemnitor") prior to the expiration of the period for
asserting such claim under Section 10.3. All indemnification rights under this
Agreement are without duplication.
(b) Subject to the following sentence, the aggregate amount payable by
Seller and the Selling Subsidiary with respect to claims under clauses (a), (b)
(to the extent arising solely under Section 2.2(g)), (c) and (d) (to the extent
relating back to clauses (a), (b) (to the extent arising solely under Section
2.2(g)) and (c)) of Section 10.1 or by Buyer and Parent with respect to claims
under clauses (a), (c) and (d) (to the extent relating back to clauses (a) and
(c)) of Section 10.2 shall not exceed fifty percent (50%) of the Purchase Price,
and neither Seller or the Selling Subsidiary, on the one hand, nor Buyer or
Parent, on the other hand, shall have any liability for such claims except to
the extent that the aggregate amount of all such claims exceeds $100,000. There
shall be no threshold for recovery of Losses and no maximum limit for claims
under clauses (b) (other than to the extent arising solely under Section 2.2(g))
and (d) (to the extent relating back to clause (b), as so limited) of each of
Sections 10.1 and 10.2.
10.5 Notice to the Indemnitor. Promptly after the assertion of any
claim by a third party or occurrence of any event which may give rise to a claim
for indemnification from an Indemnitor under this Article 10, the Indemnified
Party shall notify the Indemnitor in writing of such claim (the "Claims
Notice"). The Claims Notice shall describe the asserted liability in reasonable
detail, and shall indicate the amount (estimated, if necessary and to the extent
feasible) of the Losses that have been or may be suffered by the Indemnified
Party. Failure by the Indemnified Party to give a Claims Notice to the
Indemnitor in accordance with the provisions of this Section 10.5 shall not
relieve the Indemnitor of its obligations hereunder except to the extent that
the Indemnitor has been actually prejudiced by such failure.
10.6 Reimbursement.
(a) Subject to Section 10.7, Seller agrees to reimburse Buyer on demand
for any payment made by Buyer or any loss, damage, cost or expense suffered by
the Buyer Indemnified Parties at any time after the date hereof to the extent
that the Buyer Indemnified Parties is entitled to indemnification therefor under
Section 10.
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(b) Subject to Section 10.7, Buyer agrees to reimburse Seller on demand
for any payment made by Seller or any loss, damage, cost or expense suffered by
Seller Indemnified Parties at any time after the date hereof to the extent that
the Seller Indemnified Parties is entitled to indemnification therefor under
Section 10.
10.7 Rights of Parties to Settle or Defend. In case of a claim made by
a person not a party to this Agreement against an Indemnified Party, the
Indemnitor may elect to compromise or defend, at its own expense, by its own
counsel any asserted liability; provided, that the Indemnitor may not settle
such asserted liability without the written consent of any Indemnified Party if
such settlement involves any admission of wrongful conduct on the part of any
Indemnified Party or imposes any restriction on any Indemnified Party. If the
Indemnitor elects to compromise or defend such asserted liability, it shall
within 30 calendar days upon being given the Claims Notice (or sooner, if the
nature of the asserted liability so requires) notify the Indemnified Party of
its intent to do so, and the Indemnified Party shall cooperate in the compromise
of, or defense against, such asserted liability. If the Indemnitor elects to
defend any claim, the Indemnified Party shall make available to the Indemnitor
any books, records or other documents within its control that are reasonably
necessary or appropriate for such defense. If the Indemnitor elects not to
defend the asserted liability or fails to notify the Indemnified Party of its
election as herein provided, the Indemnified Party may defend (at the reasonable
expense of the Indemnitor) such asserted liability as the Indemnified Party
considers appropriate; provided, that it may not settle such asserted liability
without the written consent of the Indemnitor. The parties agree to cooperate
fully with one another in the defense, settlement or compromise of any asserted
liability. In any event, the Indemnified Party and the Indemnitor may
participate, with separate counsel, at their own expense, in the defense of such
asserted liability.
10.8 Exclusive Remedies. The parties hereto acknowledge that the
indemnity rights set forth in this Article 10 are intended to be their exclusive
monetary remedies in connection with this Agreement; provided that nothing in
this Section 10.8 shall limit in any way the availability of specific
performance, injunctive relief or other equitable remedies to which a party may
otherwise be entitled.
11. Miscellaneous.
11.1 Entire Agreement. This Agreement (together with the Schedules
hereto) and the Transition Services Agreement contain, and are intended as, a
complete statement of all of the terms of the arrangements among the parties
with respect to the matters provided for herein and therein, and supersede any
previous agreements and understandings among the parties with respect to those
matters.
11.2 Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of New Jersey, without
regard to its principles of conflicts of law.
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11.3 Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered personally, mailed
by registered or certified mail, return receipt requested, sent by recognized
overnight delivery service (signature of receipt requested) or, to the extent
receipt is confirmed, by telecopy or telefax (provided that such party also
sends a copy by personal delivery or registered or certified mail, return
receipt requested, or recognized overnight delivery service, signature of
receipt requested), to the following addresses (or to such other address as a
party may have specified by notice given to the other party pursuant to this
provision):
If to Seller, to:
EasyLink Services Corporation
▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Legal Department at the same address
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
If to Buyer or Parent, to:
Infocrossing, Inc.
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice-Chairman
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ Berlin Shereff ▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
11.4 Severability. Any provision of this Agreement which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, but such invalidity or unenforceability shall not affect in
any way the remaining provisions hereof provided that such invalidity or
unenforceability does not deny any party the material benefits of the
transactions for which it has bargained.
27
11.5 Amendment; Waiver. No provision of this Agreement may be amended
or modified except by an instrument or instruments in writing signed by the
parties hereto. Each party may waive compliance by the other with any of the
provisions of this Agreement. No waiver of any provision hereof shall be
construed as a waiver of any other provision. Any waiver must be in writing and
signed by the party granting the waiver.
11.6 Assignment and Binding Effect. None of Buyer, Parent, Seller or
the Selling Subsidiary may assign its rights or obligations under this Agreement
without the prior written consent of the other; provided that Seller or the
Selling Subsidiary may assign any of its rights or delegate any of its duties to
any entity controlled by Seller and Buyer or Parent may assign any of its rights
or delegate any of its duties to any entity that is controlled by Parent or to
any lenders to Buyer or Parent to secure any debt obligations owed to such
lenders; provided, further, that Seller and Buyer, as applicable, shall remain
liable for all duties of Seller or Buyer, as applicable, so assigned. All of the
terms and provisions of this Agreement shall be binding on, and shall inure to
the benefit of, the parties and the respective successors and permitted assigns
of the parties.
11.7 No Third Party Beneficiaries. The representations, warranties,
covenants and agreements contained in this Agreement are for the sole benefit of
the parties hereto, Seller Indemnified Parties, Buyer Indemnified Parties and
the respective successors and permitted assigns of all of the foregoing and they
shall not be construed as conferring and are not intended to confer any rights
on any other persons, including the right to enforce any of the provisions of
this Agreement.
11.8 Counterparts. This Agreement may be executed in counterparts, all
of which shall be deemed an original, and each party hereto may become a party
hereto by executing a counterpart hereof. This Agreement and any counterpart so
executed shall be deemed to be one and the same instrument.
11.9 Certain Definitions. The following terms, as used herein, have the
following meanings:
"Affiliate," with respect to any Person, means any Person directly or
indirectly controlling, controlled by or under common control with such Person.
"Applicable Law" shall have the meaning specified in Section 5.3
"Assets" shall have the meaning specified in Article 1.
"Assumed Liabilities" shall have the meaning specified in Section 2.1.
"Business Day" shall mean any day of the year on which banks are not
required or authorized to be closed in the State of New York.
28
"Business Employees" shall have the meaning specified in Section
7.5(a)(i).
"Cash Consideration" shall have the meaning set forth in Section 3.1.
"Claims Notice" shall have the meaning specified in Section 10.5.
"Closing" shall have the meaning specified in Section 4.1.
"Closing Date" shall have the meaning specified in Section 4.1.
"Closing Market Price" shall mean the price equal to the average of the
last quoted sale prices per share of Parent's Common Stock on the NASDAQ
National Market for the ten (10) trading days ending with the trading day
immediately prior to the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated pursuant thereto.
"COBRA" means The Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, as set forth in Section 4980B of the Code and Part 6 of Title
I of ERISA.
"Contract" means any written or oral contract, agreement, purchase
order, mortgage, deed of trust, bond, indenture, lease, license, note,
franchise, certificate, option, warrant, right, instrument or other similar
document.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management policies of a Person, whether
through the ownership of voting securities, as an officer or director of such
Person, by contract or credit arrangement or otherwise.
"Effective Time" shall have the meaning specified in Section 4.1.
"Employee Benefit Plan" shall have the meaning given such term in
Section 3(3) of ERISA.
"Employees" shall mean the employees of Seller.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall mean, as to any person, any trade or business,
whether or not incorporated, which together with such person would be deemed, at
any time through the Closing Date, a single employer within the meaning of
Section 4001 of ERISA or Section 414(b), (c), (m) or (o) of the Code within the
previous six years.
"Excluded Liabilities" shall have the meaning specified in Section 2.2.
29
"Governmental Authority" means any government or political subdivision
thereof, whether federal, state, local or foreign, and any agency, department,
division, court, tribunal or instrumentality of any such government or political
subdivision.
"Hired Business Employee" shall have the meaning specified in Section
7.5(a)(i).
"Intellectual Property" shall mean (i) registered and unregistered
trademarks, service marks, brand names, trade dress and logos, and the goodwill
of the business associated therewith; (ii) registered and unregistered
copyrights; (iii) know-how, inventions, processes, formulae, discoveries and
ideas, whether patentable or not in any jurisdiction; (iv) patent rights,
including registered patents, patents pending and all divisions, re-issues,
re-examinations and extensions thereof; (v) trade secrets and confidential
information; (vi) domain names and websites; and (vii) any and all other
intellectual property and proprietary rights, in each case, relating exclusively
to or used exclusively in the Business, whether owned or licensed, as presently
conducted or as proposed to be conducted; provided, however, that "Intellectual
Property" shall not include Software.
"Knowledge" means, with respect to Seller, the actual knowledge, after
due inquiry, of the Chairman, the Chief Executive Officer or the Chief Financial
Officer of Seller.
"License Agreements" shall have the meaning set forth in Section 1.1.
"Liens" shall have the meaning specified in Section 5.5.
"Material Adverse Effect" means any effect that is, or is reasonably
likely to be, materially adverse to the Business and the Assets, taken as a
whole.
"Parent's Common Stock" shall have the meaning set forth in Section
3.1.
"Permitted Liens" shall have the meaning specified in Section 5.5.
"Person" means any natural person, firm, partnership, joint venture,
association, corporation, company, trust, business trust, Governmental Authority
or other entity.
"Prohibited Transaction" means a transaction that is prohibited under
Section 4975 of the Code or Section 406 of ERISA and not exempt under Section
4975 of the Code or Section 408 of ERISA, respectively.
"Provisioning Software" shall have the meaning set forth in Schedule
1.5.
"Purchase Price" shall have the meaning specified in Section 3.1.
"SEC Filings" shall have the meaning specified in Section 6.6.
30
"Seller Benefit Plan" shall have the meaning specified in Section
7.5(b).
"Taxes" or "Tax" refers to all federal, state, local and foreign taxes,
charges, fees, levies, imposts, duties or other assessments, including, without
limitation, income, gross receipts, excise, employment, sales, use,
telecommunications, transfer, license, payroll, franchise, severance, stamp,
occupation, windfall profits, environmental (including taxes under Internal
Revenue Code Section 59A), premium, federal highway use, commercial rent,
customs duties, capital stock, paid up capital, profits, withholding, Social
Security, single business and unemployment, disability, real property, personal
property, registration, ad valorem, value added, alternative or add-on minimum,
estimated, or other tax or governmental fee of any kind whatsoever, imposed or
required to be withheld by the United States or any state, local, foreign
government or subdivision or agency thereof, including any interest, penalties
or additions thereto.
"Tax Return" means any report, return, form, claim for refund,
declaration or other document or information return or statement required to be
supplied to any authority in connection with Taxes, including any schedule or
attachment thereto and any amendment thereof.
"Telecommunications Service Contracts" shall have the meaning specified
in Section 1.1.
"Transaction" shall have the meaning specified in Section 4.1.
"Transaction Agreements" mean this Agreement and the Transition
Services Agreement.
"Transfer Tax" shall have the meaning specified in Section 7.2.
"Transition Services Agreement" means the Transition Services Agreement
between Seller and Buyer entered into as of the date hereof.
11.10 Consent to Jurisdiction and Service of Process. Any legal action,
suit or proceeding arising out of or relating to this Agreement, the Transition
Services Agreement or the Transaction may be instituted in any state or federal
court located in New Jersey, and each party agrees not to assert, by way of
motion, as a defense, or otherwise, in any such action, suit or proceeding, any
claim that it is not subject personally to the jurisdiction of such courts, that
its property is exempt or immune from attachment or execution, that the action,
suit or proceeding is brought in an inconvenient forum, that the venue of the
action, suit or proceeding is improper or that this Agreement or the subject
matter hereof may not be enforced in or by such court, and hereby waives any
offsets or counterclaims in any such action, suit or proceeding. Each party
further irrevocably submits to the jurisdiction of any such court in any such
action, suit or proceeding. Any and all service of process and any other notice
in any such action, suit or proceeding shall be effective against any party if
given personally or by registered or certified mail, return receipt requested,
or by any other means of mail that requires a signed receipt, postage prepaid,
mailed to such party as herein provided, or by personal service on such party
with a copy of such process mailed to such party by registered or certified
mail, return receipt requested, postage prepaid. Nothing herein contained shall
be deemed to affect the right of any party to serve process in any manner
permitted by law or to commence legal proceedings or otherwise proceed against
any other party in any jurisdiction other than New Jersey in connection with
actions initiated by third parties in such other jurisdictions.
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11.11 Interpretation. Article titles, headings to sections and any
table of contents are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation hereof. The
Schedules referred to herein shall be construed with and as an integral part of
this Agreement to the same extent as if they were set forth verbatim herein. As
used herein, "include", "includes" and "including" are deemed to be followed by
"without limitation" whether or not they are in fact followed by such words or
words of like import; "writing", "written" and comparable terms refer to
printing, typing, lithography and other means of reproducing words in a visible
form; references to a person are also to its successors and permitted assigns;
except as the context may otherwise require, "hereof", "herein", "hereunder" and
comparable terms refer to the entirety hereof and not to any particular article,
section or other subdivision hereof or attachment hereto; references to any
gender include the other; except as the context may otherwise require, the
singular includes the plural and vice versa; references to any agreement or
other document are to such agreement or document as amended and supplemented
from time to time; references to "Article", "Section" or another subdivision or
to a "Schedule" are to an article, section or subdivision hereof or a "Schedule"
hereto.
11.12 Tax Matters.
(a) Seller and the Selling Subsidiary will be responsible for the
preparation and filing of all Tax Returns of or relating to the Business and the
Assets for all periods as to which Tax Returns are due on or before the Closing
Date, and shall pay all Taxes shown as due on such Tax Returns; provided,
however, that Buyer will reimburse Seller or the Selling Subsidiary, as
applicable, concurrently therewith to the extent that any payment made by Seller
or the Selling Subsidiary related to the operation of the Business or the
ownership of the Assets for any taxable period (or portion thereof) beginning
after the Closing Date.
(b) Buyer will be responsible for the preparation and filing of all Tax
Returns of or relating to the Business and the Assets (other than Tax Returns of
Seller or the Selling Subsidiary) for all periods as to which Tax Returns are
due after the Closing Date, and shall pay all Taxes shown as due on such Tax
Returns; provided, that Seller will reimburse Buyer concurrently therewith to
the extent that any payment made by Buyer relates to the operation of the
Business or the ownership of the Assets for any taxable period (or portion
thereof) ending on or prior to the Closing Date.
11.13 Buyer and Selling Subsidiary Obligations. Parent shall cause
Buyer to fully pay and perform all of its obligations under this Agreement and
under the Transition Services Agreement when due. If Buyer shall fail to fully
pay or perform one or more of its obligations hereunder or under the Transition
Services Agreement, Parent shall fully pay or perform such obligations on behalf
of Buyer when due. Seller shall cause the Selling Subsidiary to fully pay or
perform all of its obligations under this Agreement or the Transition Services
Agreement when due. If the Selling Subsidiary shall fail to fully perform one or
more of its obligations hereunder or under the Transition Services Agreement,
Seller shall perform such obligations on behalf of the Selling Subsidiary when
due.
32
IN WITNESS WHEREOF, the undersigned have executed this Asset Purchase
Agreement as of the date first above written.
EASYLINK SERVICES CORPORATION
By: s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President & Chief Executive Officer
EASYLINK SERVICES USA, INC.
By: s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
INFOCROSSING SERVICES, INC.
By: s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
INFOCROSSING, INC.
By: s/▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
33
