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EXHIBIT 2.8
STOCK PURCHASE AGREEMENT
AMONG
B.N. TECHNOLOGY, INC., ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
AND
SAGE NETWORKS, INC.
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TABLE OF CONTENTS
PAGE
Article I. PURCHASE AND SALE OF STOCK.......................................................................1
Section 1.01 Purchase and Sale.........................................................................1
Article II. PURCHASE PRICE..................................................................................2
Section 2.01 Purchase Price............................................................................2
Article III.................................................................................................2
Section 3.01 The Closing Date..........................................................................2
Section 3.02 Further Assurances........................................................................2
Article IV. REPRESENTATIONS AND WARRANTIES..................................................................2
Section 4.01 Representations and Warranties of the Primary Shareholder.................................2
Section 4.02 Representations of the Buyer.............................................................10
Article V. CERTAIN COVENANTS...............................................................................11
Section 5.01 Survival of Representations and Warranties; Indemnification..............................11
Section 5.02 Company Audit............................................................................12
Article VI. DELIVERIES AT CLOSING..........................................................................12
Section 6.01 Deliveries by the Company and the Shareholders...........................................12
Section 6.02 Deliveries by the Buyer..................................................................13
Article VII. OBLIGATIONS FOLLOWING CLOSING.................................................................14
Section 7.01 Further Cooperation......................................................................14
Section 7.02 Transition Assistance and Adjustments....................................................14
Section 7.03 Taxes. 14
Article VIII. MISCELLANEOUS................................................................................14
Section 8.01 Governing Law; Jurisdiction..............................................................14
Section 8.02 Counterparts.............................................................................15
Section 8.03 Confidentiality..........................................................................15
Section 8.04 Entire Agreement; Amendments.............................................................15
Section 8.05 Severability.............................................................................15
Section 8.06 Benefit; Assignment......................................................................15
Section 8.07 Construction.............................................................................15
Section 8.08 Imputed Knowledge........................................................................16
Section 8.09 Notices..................................................................................16
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STOCK PURCHASE AGREEMENT
AGREEMENT made as of this 31st day of August, 1998 between
B.N. TECHNOLOGY, INC., a California corporation with a principal place of
business at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, #▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Company"),
▇▇▇▇▇ ▇▇▇▇▇▇▇, an individual residing at the address set forth on Exhibit A,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, an individual residing at the address set forth on Exhibit A
(collectively, "Shareholders"), and SAGE NETWORKS, INC., a Delaware corporation
having an office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Buyer").
W I T N E S S E T H:
WHEREAS, the Shareholders are the holders of all of the
outstanding shares of the authorized capital stock of the Company;
WHEREAS, the Company conducts an Internet Web hosting business
(hereinafter, the "Business");
WHEREAS, the Shareholders wish to sell to the Buyer and Buyer
wishes to purchase from Shareholders all of the outstanding shares of the
Company and all associated goodwill, all on the terms and subject to the
conditions provided herein.
NOW THEREFORE, in consideration of the mutual covenants and
promises contained in this Agreement, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by all parties, the
parties hereto agree as follows:
ARTICLE I.
PURCHASE AND SALE OF STOCK
SECTION 1.01 PURCHASE AND SALE.
In reliance on the representations, warranties and covenants
herein and subject to the terms and conditions of this Agreement, on the Closing
Date the Shareholders will sell, convey, transfer and deliver to Buyer, and
Buyer will purchase from the Shareholders 100,000 shares of common stock, no par
value, of the Company, representing all of the issued and outstanding shares of
common stock of the Company (the "Company Common Stock").
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ARTICLE II.
PURCHASE PRICE
SECTION 2.01 PURCHASE PRICE.
In consideration of the sale and transfer of the Company
Common Stock by the Shareholders, subject to the terms and conditions of this
Agreement and on the basis of the representations and warranties of the Primary
Shareholder (as defined below) contained herein, on the Closing Date (as defined
below), Buyer shall pay to the Shareholders in cash the amount of $2,000,000
(Two Million Dollars) (the "Purchase Price"), by certified or official bank
check payable to the order of the Shareholders, or by wire transfer of federal
funds to the account of the Shareholders, as the Company and the Shareholders
shall direct in writing on or before the Closing Date.
ARTICLE III.
CLOSING
SECTION 3.01 THE CLOSING DATE.
The purchase and sale provided for in this Agreement (the
"Closing") shall take place on August 31, 1998 at the offices of ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m.
New York time, or as otherwise mutually agreed upon by the parties (the "Closing
Date").
SECTION 3.02 FURTHER ASSURANCES.
The Shareholders agree that, at any time and from time to time
after the Closing Date, they will, upon request, execute, acknowledge and
deliver, or cause to be executed, acknowledged or delivered, all such further
reasonable deeds, assignments, transfers, conveyances, powers of attorney and
assurances as may be reasonably required for the better assigning, transferring,
granting, conveying, assuring and confirming to Buyer the Company Common Stock
and any assets, properties or rights associated with the Business (including,
without limitation, the Company's internet address), or for defending or
compromising any of the liabilities and obligations of the Business.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 REPRESENTATIONS AND WARRANTIES OF THE PRIMARY
SHAREHOLDER.
▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "Primary Shareholder") represents and
warrants to Buyer as follows:
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(a) Organization; Good Standing; Stock Ownership; Capitalization.
(i) The Company is a corporation duly organized, validly
existing and in good standing under the laws of its state of
incorporation as set forth on Exhibit A, and has the corporate power
and authority to own or lease its properties and to conduct its
business as currently conducted. The Company maintains offices only at
the site(s) listed on Exhibit A and has no operations other than from
those site(s).
(ii) The Shareholders are all the beneficial and/or record
owners of the issued and outstanding shares of capital stock of the
Company and the Shareholders own the number of shares of such stock set
forth opposite his or her name on Exhibit A. The Shareholders are the
beneficial and record owners of the Company's capital stock, free and
clear of any liens, encumbrances or restrictions on transfer of any
nature whatsoever other than the obligations of Shareholders arising
under this Agreement to sell the Company's capital stock to Buyer.
Except for this Agreement and the transactions contemplated hereby, no
Shareholder has any legal obligation, absolute or contingent, to any
person or firm to sell the Company's capital stock or to enter into any
agreement with respect thereto. Other than the Shareholders, no other
person or entity has ever been a shareholder of the Company.
(iii) The Company's authorized capital consists exclusively of
100,000 shares of common stock, no par value, all of which are issued
and outstanding. All of the outstanding shares of capital stock of the
Company have been duly authorized and are validly issued, fully paid
and non-assessable. There are no existing options, calls or commitments
of any character whatsoever, or agreements to grant the same, relating
to the Company's capital stock. The Company has no outstanding
securities convertible into or exchangeable or exercisable for any
shares of common stock or any options, calls or commitments of any
character whatsoever with respect to the issuance of such convertible
securities. The Company owns no equity interests, convertible
securities, marketable securities, notes or other obligations evidenced
by written instruments of any other firm or entity. The Company has no
subsidiaries.
(b) Corporate Authorization. The execution, delivery and
performance by each Shareholder and the Company of this Agreement has been
authorized and approved by all requisite corporate and other action on the part
of such Shareholder and the Company, and no other corporate or other approval or
authorization is required on the part of any Shareholder, the Company, any
trustee or any other person by law or otherwise in order to make this Agreement
the valid, binding and enforceable obligations of such Shareholder and the
Company, respectively. This Agreement is enforceable against the Shareholders
and the Company in accordance with its terms. Set forth on Exhibit 4.01(b) is a
list of officers and directors of the Company, all trade names used by the
Business and all jurisdictions in which the Business is conducted.
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(c) The Company's Assets.
(i) All vendor and customer contracts, confidentiality
agreements, purchase and sales orders, powers of attorney,
undertakings, commitments and other agreements to which the Company is
a party and which relate in any manner to the Business and/or the
relationship between the Company and the Customers (hereinafter
defined) or its vendors, whether written or oral, shall be referred to
herein collectively as the "Business Agreements". The Company has
delivered to Buyer, on or before the Closing Date, true and correct
copies of all written Business Agreements and detailed summaries of all
oral Business Agreements. Attached hereto as Exhibit 4.01(c)(i)(1) are
true and correct copies of the only forms of agreements which have been
entered into between the Company and its Customers concerning the
Business and each Customer has entered into an agreement with Company
in such form. Annexed as Exhibit 4.01(c)(i)(2) is a detailed summary of
all oral Business Agreements, as well as a copy of all written Business
Agreements between the Company and vendors or service providers, or
which relate to any strategic partnerships, reselling arrangements or
joint ventures between the Company and others, concerning the Business.
Listed on Exhibit 4.01(c)(i)(3) is a description of each and every real
estate, equipment and personal property lease (collectively, the
"Leases") to which the Company is a party and which relates to the
Business. The Leases are also included within the definition of
Business Agreements as said term is used herein. Neither the Company
nor any other party is in default under any Business Agreement and no
other party to any Business Agreement has made any claim or given the
Company notice of any dispute under any Business Agreement, except as
set forth on Exhibit 4.01(c)(i)(4). Each Business Agreement is in full
force and effect and the Company has obtained all required consents to
permit the Company to continue to be a party to and enforce the
Business Agreements after the Closing of the sale of the Company Common
Stock to Buyer hereunder, except as set forth on Exhibit 4.01(c)(i)(5).
The Company is not the owner or lessee of any motor vehicles which are
used in the Business. The Company does not own or lease any interest in
any real property or lease any equipment used in the Business, except
as expressly stated on Exhibit 4.01(c)(i)(3).
(ii) All of the tangible assets of the Company used in the
Business, including, without limitation, all machinery, office and
other equipment, furniture, computers and related equipment, business
machines and telephones, telephone systems, parts and accessories
presently utilized by the Company in the Business, shall be referred to
herein collectively as the "Tangible Assets". Attached hereto as
Exhibit 4.01(c)(ii) is a true and correct list or description of the
material Tangible Assets. As of the Closing Date, each of the Tangible
Assets is in good and operable condition, reasonable wear and tear
excepted.
(iii) All patents, trademarks, trade names, service marks,
service names, logos, designs, formulations, copyrights and other trade
rights and all registrations and applications therefor, all know-how,
trade secrets, technology or processes, research and development, all
telephone numbers, facsimile numbers, e-
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mail addresses and Internet domain addresses (including, without
limitation, all Internet domain addresses of Customers parked on the
Company's servers), all Web sites and all computer programs, control
panels, surcharge calculators, data bases and software documentation
owned or used by the Business, if any, other than off-the-shelf
software licensed by the Company, shall be referred to herein
collectively as the "Intellectual Property". The "Intellectual
Property" comprises all intellectual property rights necessary or
advisable for the conduct of the Business as currently conducted.
Attached hereto as Exhibit 4.01(c)(iii) is a true and correct list of
all of the Intellectual Property (and where practicable, a copy
thereof). Exhibit 4.01(c)(iii) also indicates which of such items have
been patented or registered or are in the process of application for
same. The Company is the sole owner, free of any lien or encumbrance,
of all the Intellectual Property listed in Exhibit 4.01(c)(iii). The
Company has taken all necessary and reasonable actions to protect its
rights in Intellectual Property owned by it. The Company's rights in
the Intellectual Property are valid and enforceable. Except as
disclosed on Exhibit 4.01(c)(iii), the Company has received no demand,
claim, notice or inquiry from any Person in respect of the Intellectual
Property which challenges, threatens to challenge or inquires as to
whether there is any basis to challenge, the validity of, or the rights
of the Company in, the Intellectual Property, and the Company knows of
no basis for any such challenge. The Company is not in violation or
infringement of, and has not violated or infringed, any Intellectual
Property Rights of any other Person. To the knowledge of the Company,
no third party is infringing on the rights of the Company in and to the
Intellectual Property. Except on an arm's-length basis for value and
other commercially reasonable terms, the Company has not granted any
license with respect to the Intellectual Property to any Person. Also
attached to Exhibit 4.01(c)(iii) is a true and complete list of all
software licensed by the Company and used in operating and maintaining
the Business (collectively, the "Licensed Software"). The Company has
valid, royalty free and fully-paid licenses for all of the Licensed
Software.
(iv) Contained on a computer diskette provided by the Company
to Buyer, is a true and complete copy of the Company's customer list as
of July 31, 1998 relating to the Business which includes, in the case
of each customer, the name of the customer, its billing and domain
addresses, identity and contact information of each relevant contact
person, a statement of the monthly or annual (as indicated) service
charges relating to such customer and the Company's files regarding
such Customer (the "Customer List"). The Customer List does not include
approximately 1,100 new customers added since July 31, 1998 and 300
server customers whose domain names are listed on Exhibit 4.01(c)(iv).
Approximately 500 to 1000 customers included on the Customer List have
terminated since the formation of the Company. All customers of the
Company relating to the Business, including without limitation, those
customers included on the Customer List, together with the good will
and business opportunities of the Company as it relates to the Business
shall be referred to herein as the "Customers".
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(v) As used herein, the term "the Company's Assets" shall be
defined as all classes of assets of the Company as shown on the
Company's unaudited financial statement as of December 31, 1997
(annexed as Exhibit 4.01(c)(v)(1)), including, without limitation, the
Business Agreements, the Tangible Assets, the Intellectual Property,
together with all goodwill associated with and symbolized by the
trademarks, trade names, service marks, service names and logos
included therein, the Customer List, the Customers, the Software
Licenses and all other assets of the Company used in connection with
the operation of the Business, wherever located, tangible or
intangible, including without limitation, all rights the Company may
have under any insurance policies, and all books, records and files
(whether in paper or electronic format). The Company's Assets are not
subject to (i) any lien or encumbrance of any character whatsoever
except as set forth on Exhibit 4.01(c)(v)(2) or (ii) any adverse claims
by any third parties. The Company's Assets include all rights,
properties, interests and assets used by the Company and/or necessary
to permit the Company to carry on the Business as presently conducted
by the Company.
(vi) The Company and the Shareholders reasonably expect that
the business represented by the Business Agreements will continue after
the date hereof subject to normal customer turnover. Neither the
Shareholders nor the Company has any knowledge that any customers
included on the Customer List intend to terminate their relationship
with the Company or significantly reduce the amount of business they
presently do with the Company.
(d) Financial Statements. The Company has delivered to the Buyer (see
Exhibit 4.01(c)(v)(i)) copies of the Company's unaudited financial statements
for the last two fiscal years of the Company ended December 31, 1997 and 1996,
respectively, and unaudited financial statements for the six months ending June
30, 1998, each of which reflect the assets, liabilities, net worth, profit and
loss, and cash flow of the Company with respect to the Business at the date of
such statements and for the period then ended and a cash basis unaudited
statement for the month ending July 31, 1998. All financial statements referred
to herein are complete and correct in all material respects, present fairly the
financial condition and results of operations of the Company as at the dates of
such statements and have been prepared in accordance with generally accepted
accounting principles. The books of account and records of the Company have been
maintained in accordance with good business practice and reflect fairly all
properties, assets, liabilities and transactions of the Company. The Company has
no material liabilities or obligations of any kind (whether accrued, absolute,
direct, indirect, contingent or otherwise) which are not fully accrued or
reserved against in the Company's financial statements in accordance with
generally accepted accounting principles. Except as set forth on Exhibit 4.01(d)
the Company has no bad debts as of the Closing Date. Since the last day of the
Company's last fiscal year, the Company has conducted the Business only in the
ordinary and usual course and has not experienced any material adverse change in
the Business or the financial condition of the Company. Since July 31, 1998, the
Company has had no loss in net monthly recurring revenue from the Business.
Since July 31, 1998, there has not been any change in the number of shares of
capital stock of the Company issued or outstanding or any
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declaration, setting aside, or payment of any dividend or other distribution
(whether in cash, securities, property or otherwise) in respect of the Company's
capital stock. Between July 31, 1998 and the Closing Date, the Company and the
Shareholders warrant and represent that they have not withdrawn, expended or
applied any cash or other assets of the Company, except in the ordinary course
of operations of the Business of the Company in accordance with past practices
of the Company, including amounts that have been paid to any officer, director
or shareholder for salaries.
(e) Existing Employment Arrangements. Except as set forth on Exhibit
4.01(e) the Company has no employment agreements, labor or collective bargaining
agreements and there are no employee benefit or compensation plans agreements,
arrangements or commitments (including, but not limited to, "employee benefit
plans," as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")), maintained by the Company for any employees
of the Company or with respect to which the Company has liability, or makes or
has an obligation to make contributions ("Employee Plans").
Each Employee Plan that is an employee welfare benefit plan as
defined under Section 3(1) of ERISA is funded through an insurance company
contract. Each Employee Plan by its terms and operation is in compliance with
all applicable laws and all required filings with respect to Employee Plans have
been made. Neither the Company nor any entity that is or was at any time treated
as a single employer with the Company under Section 414(b), (c) (m) or (o) of
the Code has at any time maintained, contributed to or been required to
contribute to, or has any liability with respect to, any plan subject Title IV
of ERISA. The events contemplated by this Agreement (either alone or together
with any other event) will not (w) entitle any employees to severance pay,
unemployment compensation, or other similar payments under any Employee Plan or
law, (x) accelerate the time of payment or vesting or increase the amount of
benefits due under any Employee Plan or compensation to any Company employees or
(y) result in any payments (including parachute payments) under any Employee
Plan or law becoming due to any employee. There are no pending or, to the
knowledge of the Shareholders or the Company, threatened strikes, job actions or
other labor disputes affecting the Company or its employees and there have been
no such disputes for the past three years. Also set forth on Exhibit 4.01(e) is
a true and complete list of all employees of the Company employed in connection
with the Business, which list provides, among other things, the name, residence
address, title, job description and salary information concerning each employee.
(f) Claims, Litigation, Disclosure. There is no claim, litigation, tax
audit, proceeding or investigation pending or, to the Company's or any
Shareholder's knowledge, threatened against the Company, with respect to the
Business or any of the assets of the Company (including, without limitation, any
claims of infringement or actions of opposition with respect to Intellectual
Property), nor does the Company nor any Shareholder know of any facts which
would provide a basis for any such claim, litigation, audit, proceeding or
investigation.
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(g) Taxes. Except as specifically set forth on Exhibit 4.01(g) (the
"Tax Liabilities"), the Company has correctly prepared and timely filed all
Federal, state and local tax returns, estimates and reports, and paid all such
taxes as and when due. For purposes of this paragraph and Section 7.03, taxes
shall mean all taxes, charges, fees, levies or other assessments of any kind
whatsoever (including, without limitation, income, franchise, sales, use and
withholding taxes). The Company is not a party to any tax sharing agreement.
(h) No Other Agreements to Sell Assets or Business. The Company is not
a party to any existing agreement which obligates the Company or the
Shareholders to sell to any other person or firm the Company's Assets (other
than sales in the ordinary course of business), to issue or sell any capital
stock or any security convertible into or exchangeable for capital stock of the
Company or to effect any merger, consolidation or other reorganization of the
Company or to enter into any agreement with respect thereto.
(i) No Brokers. The only broker, leasing agent, finder or similar
person or entity with whom the Company or the Shareholders have made contact or
had any dealings with or entered into any agreement, arrangement or
understanding with concerning this Agreement and to whom the Company and/or the
Shareholders are responsible to pay a finder's fee, brokerage commission or
similar payment in connection with the transactions contemplated by this
Agreement is the party or parties listed in item 6 on Exhibit A, if any, and the
Shareholders shall be solely responsible for the payment of any such fee,
commission or payment.
(j) Environmental Compliance.
(i) To the best of the Shareholders' and the Company's
knowledge, neither the Company nor any operator of the Company's
properties is in violation, or alleged to be in violation, of any
federal, state or local judgment, decree, order, consent agreement, law
(including common law), license, rule or regulation pertaining to
environmental health or safety matters, including without limitation
those arising under the Resource Conservation and Recovery Act, as
amended, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), the Superfund Amendments
and Reauthorization Act of 1986, as amended, Water Act, as amended, the
Federal Clean Air Act, as amended, the Toxic Substances Control Act, or
any state or local analogue (hereinafter "Environmental Laws").
(ii) Neither the Company nor any Shareholder has received a
notice, complaint, order, directive, claim or citation from any third
party, including without limitation any federal, state or local
governmental authority, indicating or alleging that the Company or any
predecessor may have any liability or obligation under any
Environmental Law.
(iii) (A) To the best of the Shareholders' and the Company's
knowledge, no portion of the property of the Company has been used by
any person for the generation, handling, processing, treatment, storage
or disposal of Hazardous Materials except in accordance with applicable
Environmental Laws; (B) no
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underground tank or other underground storage receptacle for Hazardous
Materials, asbestos-containing materials or polychlorinated biphenyls
are located on any portion of any location occupied by the Company each
of which is listed as a Site on Exhibit A; (C) in the course of any
activities conducted by the Company or its invitees, agents,
contractors, licensees or employees in connection with the Business of
the Company, no Hazardous Materials have been generated or are being
used except in accordance with applicable Environmental Laws; and (D)
there have been no releases (i.e., any past or present releasing,
spilling, leaking, leaching, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, disposing or dumping) or threatened
releases of Hazardous Materials on, upon, into or from the property
currently or formerly owned, operated or leased by the Company, which
releases would have a material adverse effect on the value of any of
the property or adjacent properties or the environment.
(iv) The execution, delivery and performance of this Agreement
is not subject to any Environmental Laws which condition, restrict or
prohibit the sale, lease or other transfer of property or operations,
including, without limitation, any so-called "environmental cleanup
responsibility acts" or requirements for the transfer of permits,
approvals, or licenses. There have been no environmentally related
audits, studies, reports, analyses (including soil and groundwater
analyses), or investigations of any kind performed with respect to the
currently or previously owned, leased, or operated properties of the
Company.
For purposes of this Section, "Hazardous Material" shall mean
any hazardous waste, as defined by 42 U.S.C. Section 6903(5), any hazardous
substances or wastes as defined by 42 U.S.C. Section 9601(14), any pollutant or
contaminant as defined by 42 U.S.C. Section 9601(33) or any toxic substances or
wastes, oil or hazardous materials or other chemicals or substances regulated by
any public or governmental authority.
(k) Year 2000. To the best of the Shareholders' and the
Company's knowledge, based upon the best computer industry information and
technology available at the time of the Closing, all information technology
included in the Company's Assets, including, without limitation, in all products
and services (i) provided by the Business, whether to third parties or for
internal use or (ii) to the best of the Shareholders' and the Company's
knowledge after reasonable investigation, used in combination with any
information technology of its clients, customers, suppliers or vendors,
accurately processes or will process date and time data (including, but not
limited to, calculating, comparing and sequencing) from, into and between the
years 1999 and 2000 and the twentieth century and the twenty-first century,
including leap year calculations and neither performance nor functionality of
such technology will be affected by dates prior to, during and after the year
2000. The Company has no obligations under warranty agreements, service
agreements or otherwise to remedy any information technology defect relating to
the year 2000.
(l) Credit Card and Bank Accounts. Set forth on Exhibit
4.01(l)(1), is a true and complete list of the Company's employees whom have
been issued a Company credit and/or debit card, including the type of card and
account number. Set forth on Exhibit
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4.01(l)(2), is a true and complete list of the Company's bank accounts and the
authorized signatories for said accounts.
(m) Licenses and Compliance with Laws. The Company holds no
material governmental or regulatory licenses, permits, consents or approvals in
connection with the Business, and the Company is in compliance with all material
laws and regulations applicable to the Business.
(n) True and Complete. No representation or warranty made by
the Company or the Shareholders in this Agreement, nor any statement,
certificate or Exhibit furnished by or on behalf of Company pursuant to this
Agreement, nor any document or certificate delivered to Buyer pursuant to this
Agreement, or in connection with the transactions contemplated hereby, contains
or shall contain any untrue statement of a material fact, or omits or shall omit
to state a material fact necessary to make the statements contained therein not
misleading. Neither the Company nor any Shareholder has failed to disclose to
Buyer any pending developments or circumstances of which it is aware which are
reasonably likely to have a material adverse effect on the Business.
SECTION 4.02 REPRESENTATIONS OF THE BUYER.
Buyer represents and warrants to the Company as follows:
(a) Corporate Matters; No Conflict. The Buyer is duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. Buyer is in good standing in each other jurisdiction in which it is
doing business, except where failure to be in good standing would not have a
material adverse effect on the business of Buyer and has the corporate power to
enter into this Agreement, to perform its obligations hereunder and to conduct
its business as currently conducted. The execution, delivery and performance of
this Agreement and the transactions contemplated hereby (and thereby) by the
Buyer will not (a) conflict with or violate the provisions of any applicable
law, rule or order or the Buyer's Certificate of Incorporation or by-laws, (b)
conflict with or constitute a default under any agreement or contract by which
the Buyer is bound or (c) require the consent or approval of, or filing with,
any governmental body or third party. The execution, delivery and performance by
the Buyer of this Agreement has been authorized and approved by all requisite
corporate action on the part of the Buyer.
(b) No Brokers. The only broker, leasing agent, finder or
similar person or entity with whom the Buyer has made contact or had any
dealings with or entered into any agreement, arrangement or understanding with
concerning this Agreement and to whom the Buyer is responsible to pay a finder's
fee, brokerage commission or similar payment to is the party listed in item 7 on
Exhibit A, if any, and the Buyer shall be solely responsible for the payment of
any such fee, commission or payment.
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ARTICLE V.
CERTAIN COVENANTS
SECTION 5.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.
(a) The representations and warranties of the parties herein
contained shall survive the closing of the purchase contemplated by this
Agreement, notwithstanding any investigation at any time made by or on behalf of
the other party, provided that any claims for indemnification in accordance with
this Section 5.01 with respect to any representation or warranty must be made
(and will be null and void unless made) on or before the date twenty-four (24)
months following the Closing Date (except in the case of representations
contained in Section 4.01(c)(v), (g), (i) and (j), which must be made within six
(6) months following the expiration of the applicable statute of limitations).
(b) The Shareholders, jointly and severally, hereby agree to
indemnify and hold Buyer and its officers, directors, stockholders, affiliates,
employees, representatives and other agents harmless from and against any and
all claims, liabilities, losses, damages or injuries, together with costs and
expenses, including reasonable legal fees, arising out of or resulting from (i)
any breach, misrepresentation or material omission of the representations and
warranties made by the Primary Shareholder in this Agreement or in any Exhibit
hereto or other documents delivered in connection herewith, (ii) any breach in
any material respect by the Company and/or the Shareholders, or any of them,
unless waived in writing by the Buyer, of any covenant or agreement contained in
or arising out of this Agreement, or any other agreement delivered in connection
herewith on the Closing Date, including without limitation, the Employment
Agreements (hereafter defined), and (iii) any and all liabilities of the Company
arising prior to the Closing Date.
(c) Buyer hereby agrees to indemnify and hold the Shareholders
harmless from and against any and all claims, liabilities, losses, damages or
injuries, together with costs and expenses, including reasonable legal fees,
arising out of or resulting from (i) any breach, misrepresentation or material
omission in the representations and warranties made by the Buyer in this
Agreement, (ii) any breach in any material respect by Buyer, unless waived in
writing by the Shareholders, of any covenant or agreement of Buyer contained in
or arising out of this Agreement or (iii) any claim by Card Service
International with respect to the personal guarantee by ▇▇▇▇▇ ▇▇▇▇▇▇▇ of account
#54334200579122 with respect to charges incurred after the Closing Date.
(d) Any party claiming a right to indemnification hereunder
(the "Indemnified Party") shall give the other party from whom indemnification
is sought (the "Indemnifying Party") prompt written notice of any claim, demand,
action, suit, proceeding or discovery of fact upon which the Indemnified Party
intends to base a claim for indemnification under this Section 5.01, provided,
however, that no failure to give such notice shall excuse any Indemnifying Party
from any obligation hereunder except to the extent the Indemnifying Party is
materially prejudiced by such failure. The Indemnified
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Party shall have full responsibility and authority with respect to the
disposition of any action, suit or proceeding brought against it; provided,
however, that it will not settle any such action, suit or proceeding without the
prior written consent of the Indemnifying Party, which will not be unreasonably
withheld or delayed. In the event any action, suit or proceeding is brought
against the Indemnified Party with respect to which the Indemnifying Party may
have liability under the indemnity agreements contained in Section 5.01(b) and
(c), however, the Indemnifying Party shall have the right, without prejudice to
the Indemnified Party's rights under this Agreement, at the Indemnifying Party's
sole expense, to be represented by counsel of its own choosing and with whom
counsel for the Indemnified Party shall confer in connection with the defense of
any such action, suit, or proceeding. The Indemnified Party shall make available
to the Indemnifying Party and its counsel and accountants, all books and records
of the Indemnified Party relating to such action, suit or proceeding and the
parties agree to render to each other such assistance as may reasonably be
requested in order to insure the proper and adequate defense of any such action,
suit or proceeding.
SECTION 5.02 COMPANY AUDIT.
The Shareholders agree to cause to be performed on or before
September 30, 1998, an audit of the Company as at and for the years ended
December 31, 1996 and 1997 and for the six month period ended June 30, 1998 by
Frankel, Lodgen, Lacher, Golditch, Sardi & ▇▇▇▇▇▇, certified public accountants.
The Shareholders shall cooperate and provide assistance in connection with the
preparation of the audited financial statements for the Company, including,
without limitation, making themselves available to Buyer, its affiliates and/or
its auditors upon request, and using their best efforts to assist the Company's
internal accounting and auditing personnel, as well as its external accounting
personnel in connection with the preparation of such audit.
ARTICLE VI.
DELIVERIES AT CLOSING
SECTION 6.01 DELIVERIES BY THE COMPANY AND THE SHAREHOLDERS.
On the Closing Date, the Company and the Shareholders will
deliver, or cause to be delivered, to the Buyer the following:
(a) Shareholders shall have delivered to Buyer certificates
evidencing the Company Common Stock, free and clear of all liens and
encumbrances of any nature whatsoever, duly endorsed in blank for transfer or
accompanied by stock powers duly executed in blank and with all requisite
documentary or stock transfer tax stamps affixed.
(b) The following corporate documentation:
(i) The Company's Articles or Certificate of Incorporation
certified as of a date within thirty (30) days prior to the Closing
Date by the Secretary of State of the state of the Company's
organization;
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(ii) Good Standing Certificates as of date within thirty (30)
days prior to the Closing Date from the Secretary of State of the state
of the Company's organization and each other state in which the Company
is qualified to do business;
(iii) The Company's By-Laws certified as of the Closing Date
by the President or Secretary of the Company as being in full force and
effect and unmodified; and
(iv) Corporate Resolutions of the Company's Board of Directors
and the Shareholders (if required by the Company's By-Law's or
applicable law), approving this Agreement and all the transactions
contemplated hereby, certified by the President or Secretary of the
Company as being in full force and effect and unmodified.
(c) The legal opinions of counsel to the Company and the Shareholders,
in a form acceptable to Buyer and its counsel.
(d) The Escrow Agreement duly executed by the Shareholders.
(e) Resignation, in writing, of all the directors and officers of the
Company.
(f) Consents to the change of control with respect to all Business
Agreements (including, without limitation, Leases and Estoppel Certificates with
respect to the Leases).
(g) Consent to a press release in form satisfactory to, and
pre-approved by, the Company and Buyer relating to this Agreement and the
transactions contemplated hereby.
SECTION 6.02 DELIVERIES BY THE BUYER.
On the Closing Date, the Buyer will deliver, or cause to be
delivered, to the Company and the Shareholders the following:
(a) The Purchase Price in accordance with Section 2.01.
(b) The Escrow Agreement duly executed by the Buyer and the Escrow
Agent.
(c) Resolutions of the Board of Directors of Buyer, authorizing the
execution of this Agreement and the transactions contemplated hereby.
(d) The legal opinions of counsel to the Buyer, in a form acceptable to
the Company, Shareholders and their counsel.
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(e) Consent to a press release in form satisfactory to, and
pre-approved by, the Company and Buyer relating to this Agreement and the
transactions contemplated hereby.
ARTICLE VII.
OBLIGATIONS FOLLOWING CLOSING
SECTION 7.01 FURTHER COOPERATION.
The Shareholders will, at any time and from time to time after
the Closing Date, execute and deliver such further instruments of conveyance,
transfer and license, and take such additional actions as Buyer or its successor
and/or assigns, may reasonably request, to effect, consummate, confirm or
evidence the transfer to Buyer of the Company Common Stock and/or the Company's
Assets pursuant to this Agreement.
SECTION 7.02 TRANSITION ASSISTANCE AND ADJUSTMENTS.
The Shareholders shall cooperate and provide assistance to the
Buyer as shall be reasonably necessary during the transition of the Business and
the Company's Assets from the Company to the Buyer, or its successors and/or
assigns, after the Closing Date.
SECTION 7.03 TAXES.
The Shareholders will correctly prepare or cause to be
correctly prepared and timely filed all Federal, state and local tax returns,
estimates and reports (a) with respect to the Company for all periods prior to
the Closing Date and (b) with respect to the Shareholders in connection with the
transaction contemplated by this Agreement, and pay all such taxes, if any, as
and when due. The Shareholders acknowledge such taxes and accept and assume all
responsibility for such taxes.
ARTICLE VIII.
MISCELLANEOUS
SECTION 8.01 GOVERNING LAW; JURISDICTION.
This Agreement shall be governed by the laws of the State of
New York. The parties hereto submit and consent to the exclusive jurisdiction of
the state courts of the State of New York in the County of New York and the
federal courts located therein with respect to any legal actions relating to
this Agreement, or any other agreements delivered in connection herewith,
between the Company and the Shareholders, on the one hand, and the Buyer, on the
other hand, and any transactions contemplated thereby.
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SECTION 8.02 COUNTERPARTS.
This Agreement may be executed in several counterparts, each
of which shall be an original and all of which together shall constitute one and
the same instrument.
SECTION 8.03 CONFIDENTIALITY.
The Company and the Shareholders, on the one hand, and the
Buyer, on the other hand, each agree not to disclose or use any information
acquired by it about the other party during the course of the negotiations of
this Agreement and the transactions to which it relates which is confidential in
nature or not otherwise generally available to the public without the prior
written consent of such other party unless required to do so by applicable law
or regulation or by order of a court of competent jurisdiction or an
administrative agency. Each party shall be liable for any breach by its
respective employees, officers, directives, shareholders, agents and/or
contractors of the provisions of this Section 8.03.
SECTION 8.04 ENTIRE AGREEMENT; AMENDMENTS.
This Agreement supersedes all prior discussions and agreements
between the parties with respect to the subject matter hereof, and this
Agreement contains the sole and entire agreement among the parties with respect
to the matters covered hereby. This Agreement cannot be changed, modified or
amended and no provision or requirement hereof may be waived without the consent
in writing of the parties hereto.
SECTION 8.05 SEVERABILITY.
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect. Each provision
of this Agreement shall be deemed to be the agreement of the parties hereto to
the full extent that the power to enter into such provisions shall have been
conferred on the parties by law.
SECTION 8.06 BENEFIT; ASSIGNMENT.
This Agreement is binding upon and inures to the benefit of
the parties, their successors and permitted assigns. This Agreement may not be
assigned or the duties of the parties hereunder delegated to others without the
prior written consent of all parties hereto, except that Buyer may assign its
rights, duties and obligations hereunder to an affiliate of Buyer without the
Company's or the Shareholders' consent.
SECTION 8.07 CONSTRUCTION.
All exhibits annexed hereto are hereby incorporated herein by
reference and made a part of this Agreement. Whenever used in this Agreement and
the context so requires, the singular shall include the plural and the plural
shall include the singular.
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SECTION 8.08 IMPUTED KNOWLEDGE.
References in this Agreement to the "knowledge of" the
Company, or words of similar import, shall include the knowledge of any and all
of the Shareholders which knowledge shall be imputed to be the knowledge of the
Company. References in this Agreement to the "knowledge of" the Buyer, or words
of similar import, shall include the knowledge of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ which
knowledge shall be imputed to be the knowledge of the Buyer.
SECTION 8.09 NOTICES.
All notices and other communications hereunder shall be in
writing and deemed to have been duly given when delivered by hand, when received
by registered or certified mail, postage prepaid, return receipt requested, when
given by prepaid courier delivery services such as Federal Express, DHL or other
similar services on the day received, or when given by facsimile transmission
upon receipt by sender of confirmed answer-back, as follows:
(a) if to Buyer, at
Sage Networks, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Chief Operating Officer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Sage Networks, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, General Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: E. ▇▇▇ ▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
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(b) if to the Company or the Shareholders, at:
B.N. Technology, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, #▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Law Offices of ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Law Offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
[Signature Pages Follow]
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[SIGNATURE PAGE OF STOCK PURCHASE AGREEMENT BETWEEN SAGE NETWORKS, INC.,
B.N. TECHNOLOGY, INC. AND CERTAIN OTHER PARTIES DATED AUGUST 31, 1998]
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first above written.
SAGE NETWORKS, INC.
By: \s\ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Co-Chairman
B.N. TECHNOLOGY, INC.
By: \s\ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇, President
SHAREHOLDERS:
By: \s\ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
By: \s\ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
As Attorney-In-Fact for ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
The undersigned spouse of ▇▇▇▇▇ ▇▇▇▇▇▇▇ hereby consents to the
foregoing agreement pursuant to which my spouse agrees to convey all right,
title and interest in and to the common stock of B.N. Technology, Inc. to Sage
Networks, Inc. The undersigned further agrees that the undersigned's community
property interest, if any, in such common stock shall be subject to the
foregoing agreement and shall be transferred to Sage Networks, Inc. pursuant
thereto.
\s\ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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[SIGNATURE PAGE OF STOCK PURCHASE AGREEMENT BETWEEN SAGE NETWORKS, INC.,
B.N. TECHNOLOGY, INC. AND CERTAIN OTHER PARTIES DATED AUGUST 31, 1998]
The undersigned spouse of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ hereby consents the foregoing
agreement pursuant to which my spouse agrees to convey all right, title and
interest in and to the common stock of B.N. Technology, Inc. to Sage Networks,
Inc. The undersigned further agrees that the undersigned's community property
interest, if any, in such common stock shall be subject to the foregoing
agreement and shall be transferred to Sage Networks, Inc. pursuant thereto.
\s\ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
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LIST OF EXHIBITS:
-----------------
Exhibit A - Basic Provisions
Exhibit 4.01(b) - Officers; Directors; Trade Names; Jurisdictions
Exhibit 4.01(c)(i)(1) - Forms of Business Agreements with Customers
Exhibit 4.01(c)(i)(2) - Summary of Oral Business Agreements and Copy of
Vendor/Service Provider and Other Agreements
Exhibit 4.01(c)(i)(3) - Leases
Exhibit 4.01(c)(i)(4) - Claims of Disputes Under Business Agreements
Exhibit 4.01(c)(i)(5) - Consents to Transfer or Assign Not Obtained
Exhibit 4.01(c)(ii) - Tangible Assets
Exhibit 4.01(c)(iii) - Intellectual Property
Exhibit 4.01(c)(iv) - Server Customers
Exhibit 4.01(c)(v)(1) - Company's Financial Statements
Exhibit 4.01(c)(v)(2) - Liens; Encumbrances
Exhibit 4.01(d) - Bad Debts
Exhibit 4.01(e) - Existing Employment Agreements, Labor or Collective
Bargaining Agreements, Employee Benefit or Welfare
Plans, Description of Employees
Exhibit 4.01(g) - Tax liabilities of the Company
Exhibit 4.01(l)(1) - Company's Credit and Debit Cards
Exhibit 4.01(l)(2) - Company's Bank Accounts and Authorized Signatories
In accordance with Item 601(b)(2) of Regulation S-K all exhibits have been
omitted. The Company hereby agrees to furnish supplementally a copy of any
omitted exhibit to the Commission upon request.