<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported): June 9, 1998
------------
HOMECOM COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-29204 58-2153309
----------------------------------------------------------------
(State or Other Jurisdiction of (Commission (I.R.S. Employer
Incorporation or Organization file Number) (Identification No.)
3535 Piedmont Road, Atlanta, Georgia 30305
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (404) 237-4646
-----------------
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 9, 1998, the Company sold substantially all of the assets of
its HostAmerica Internet network outsourcing services division to Sage
Acquisition Corp. ("Sage") for $4,500,000 (the "Sale"). The purchase price was
established through arms' length negotiations between the Company and Sage. The
foregoing description of the Sale is qualified in its entirety by reference to
the full text of the Asset Purchase Agreement, dated as of June 9, 1998 (the
"Asset Purchase Agreement"), by and between the Company and Sage Acquisition
Corp., a Delaware corporation. The Asset Purchase Agreement is incorporated
herein by reference as Exhibit 10.44 to this Report.
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information
The following unaudited pro forma balance sheet as of March
31, 1998 gives effect to the disposition of assets described above as
if the transaction had occurred on that date. The following unaudited
statements of operations for the three months ended March 31, 1998 and
the year ended December 31, 1997 give effect to the disposition of
assets as though it had occurred on December 31, 1996.
The unaudited pro forma adjustments are based upon available
information and certain assumptions that management believes are
reasonable in the circumstances. The unaudited pro forma financial
information purports neither to represent what the Company's financial
position or results of operations would have actually been if the
disposition had occurred on March 31, 1998 or December 31, 1997 nor to
project the Company's financial position or results of operations for
any future date or period. The unaudited pro forma financial
information should be read in conjunction with the Company's financial
statements and notes thereto included in the Company's Annual Report
on Form 10-K.
(c) Exhibit list
<TABLE>
<CAPTION>
Exhibit Description
<S> <C>
10.44 Asset Purchase Agreement by and between
the Company and Sage Networks Acquisition Corp.
dated as of June 10, 1998.
10.45 Escrow Agreement by and between the
Company and Sage Networks Acquisition Corp.
dated as of June 10, 1998.
10.46 Transitional Services Agreement by and between
the Company and Sage Networks Acquisition Corp.
dated as of June 10, 1998.
10.47 Co-Location Agreement by and between the
Company and Sage Networks, Inc. dated as of
June 10, 1998
</TABLE>
<PAGE> 4
HOMECOM COMMUNICATIONS, INC.
BALANCE SHEET
March 31, 1998
(unaudited)
<TABLE>
<CAPTION>
Pro forma Pro forma,
Historical adjustments(1) as adjusted
----------- -------------- -----------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,221,000 $ 4,000,000 $ 6,221,000
Accounts receivable, net of allowance for uncollectible accounts
of $119,243 as of March 31, 1998 582,040 (148,412) 433,628
----------- ----------- -----------
Total current assets 2,803,040 3,841,588 6,654,628
FURNITURE, FIXTURES AND EQUIPMENT, NET 728,046 (250,000) 478,046
SOFTWARE DEVELOPMENT COSTS, NET 24,629 24,629
DEPOSITS 50,231 50,231
DEFERRED DEBT ISSUE COSTS 167,320 167,320
OTHER NON-CURRENT ASSETS 91,245 250,000 341,245
----------- ----------- -----------
Total assets $ 3,864,511 $ 3,851,588 $ 7,716,099
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 584,917 $ 584,917
Accrued salaries and payroll taxes payable 329,209 329,209
Unearned revenue 235,308 $ (250,000) (14,692)
Current portion of obligations under capital leases 63,104 -- 63,104
----------- ----------- -----------
Total current liabilities 1,212,538 (250,000) 962,538
CONVERTIBLE DEBENTURES, NET OF DISCOUNT OF $122,778
AS OF MARCH 31, 1998 1,000,000 1,000,000
OTHER LIABILITIES 76,435 76,435
OBLIGATIONS UNDER CAPITAL LEASES 76,157 -- 76,157
----------- ----------- -----------
Total liabilities 2,364,130 (250,000) 2,115,130
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.0001 par value, 15,000,000 shares authorized, 3,286,147
shares issued and outstanding at March 31, 1998 329 329
Preferred stock, $100 par value, 1,000,000 shares authorized, 20,000 shares
issued and outstanding at March 31, 1998; participating;
$2,000,000 liquidation value 200 200
Additional paid-in capital 8,471,572 8,471,572
Subscriptions receivable (337,501) (337,501)
Accumulated deficit (6,635,219) 4,101,588 (2,533,631)
----------- ----------- -----------
Total stockholders' equity 1,499,381 4,101,588 5,600,969
----------- ----------- -----------
Total liabilities and stockholders' equity $ 3,854,511 $ 3,851,588 $ 7,716,099
=========== =========== ===========
</TABLE>
(1) Pro forma adjustments to reflect the sale of the HostAmerica division.
<PAGE> 5
HOMECOM COMMUNICATIONS, INC.
Statement of Operations
Three months ended March 31, 1998
(unaudited)
<TABLE>
<CAPTION>
Pro forma Pro forma,
Historical adjustments (1) as adjusted
----------- --------------- -----------
<S> <C> <C> <C>
NET SALES:
Service sales $ 762,746 $ (317,806) $ 444,940
Equipment sales 119,681 -- 119,681
----------- ---------- -----------
Total net sales 882,427 (317,806) 564,621
COST OF SALES:
Cost of services 316,992 (115,421) 201,571
Cost of equipment sold 82,562 -- 82,562
----------- ---------- -----------
Total cost of sales 399,554 (115,421) 284,133
----------- ---------- -----------
GROSS PROFIT 482,873 (202,385) 280,488
OPERATING EXPENSES:
Sales and marketing 238,000 (18,050) 219,950
Product development 53,460 -- 53,460
General and administrative 1,013,596 (8,648) 1,004,948
Depreciation and amortization 78,393 -- 78,393
----------- ---------- -----------
Total operating expenses 1,383,449 (26,698) 1,356,751
----------- ---------- -----------
OPERATING LOSS (900,576) (175,687) (1,076,263)
OTHER EXPENSES (INCOME)
Interest expense 266,029 -- 266,029
Other expense (income), net (38,151) -- (38,151)
----------- ---------- -----------
LOSS BEFORE INCOME TAXES (1,128,454) (175,687) (1,304,141)
INCOME TAXES -- -- --
----------- ---------- -----------
NET LOSS (1,128,454) (175,687) $(1,304,141)
----------- ---------- -----------
PREFERRED STOCK DIVIDEND (441,176) -- (441,176)
----------- ---------- -----------
LOSS APPLICABLE TO COMMON SHAREHOLDERS $(1,569,630) $ (175,687) $(1,745,317)
=========== ========== ===========
BASIC AND DILUTED LOSS PER SHARE $ (0.51) $ (0.06) $ (0.57)
=========== ========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 3,079,382 3,079,383 3,079,382
=========== ========== ===========
</TABLE>
(1) Pro forma adjustments to reflect the elimination of operations of the
division sold.
<PAGE> 6
HOMECOM COMMUNICATIONS, INC.
Statement of Operations
Year ended December 31, 1997
(unaudited)
<TABLE>
<CAPTION>
Pro forma Pro forma,
Historical adjustments (1) as adjusted
----------- --------------- -----------
<S> <C> <C> <C>
NET SALES:
Service sales $ 2,792,306 $ (692,140) $ 2,100,166
Equipment sales 86,322 -- 86,322
----------- ---------- -----------
Total net sales 2,878,628 (692,140) 2,186,488
COST OF SALES:
Cost of services 1,645,646 (283,336) 1,362,310
Cost of equipment sold 68,974 -- 68,974
----------- ---------- -----------
Total cost of sales 1,714,620 (283,336) 1,431,284
----------- ---------- -----------
GROSS PROFIT 1,164,008 (408,804) 755,204
OPERATING EXPENSES:
Sales and marketing 1,367,247 (436,814) 930,433
Product development 435,810 -- 435,810
General and administrative 3,553,473 (485,791) 3,067,682
Depreciation and amortization 238,537 (92,810) 145,727
----------- ---------- -----------
Total operating expenses 5,595,067 (1,015,415) 4,579,652
----------- ---------- -----------
OPERATING LOSS (4,431,059) (606,611) (3,824,448)
OTHER EXPENSES (INCOME)
Interest expense 543,420 (130,660) 412,760
Other expense (income), net (93,298) (23,755) (69,543)
----------- ---------- -----------
LOSS BEFORE INCOME TAXES (4,881,181) (713,516) (4,167,665)
INCOME TAXES -- -- --
----------- ---------- -----------
NET LOSS $(4,881,181) (713,516) (4,167,665)
=========== ========== ===========
BASIC AND DILUTED LOSS PER SHARE $ (1.88) $ (.27) $ (1.60)
=========== ========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 2,602,515 2,602,515 2,602,515
=========== ========== ===========
</TABLE>
(1) Pro forma adjustments to reflect the elimination of operations of the
division sold.
<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1943, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HOMECOM COMMUNICATIONS, INC.
(Registrant)
Date: June 25, 1998 By: /s/ Harvey Sax
------------- -------------------------
Harvey Sax, President and
Chief Executive Officer
(Principal Executive Officer)
<PAGE> 8
Exhibit Index
<TABLE>
<CAPTION>
Exhibit Description
<S> <C>
10.44 Asset Purchase Agreement by and between
the Company and Sage Networks Acquisition Corp.
dated as of June 10, 1998.
10.45 Escrow Agreement by and between the
Company and Sage Networks Acquisition Corp.
dated as of June 10, 1998.
10.46 Transitional Services Agreement by and between
the Company and Sage Networks Acquisition Corp.
dated as of June 10, 1998.
10.47 Co-Location Agreement by and between the
Company and Sage Networks, Inc. dated as of
June 10, 1998
</TABLE>
<PAGE> 1
EXHIBIT 10.44
ASSET PURCHASE AGREEMENT
AGREEMENT made as of this tenth day of June, 1998 between
HOMECOM COMMUNICATIONS, INC., a Delaware corporation with a principal place of
business at 14 Piedmont Center, Suite 100, 3535 Piedmont Road, Atlanta, Georgia
30305 (the "Company"), and SAGE NETWORKS ACQUISITION CORP., a Delaware
corporation having an office at 215 First Street, Cambridge, Massachusetts 02142
("Buyer").
W I T N E S S E T H :
WHEREAS, the Company desires to sell and the Buyer desires to
purchase on the date hereof (the "Closing Date") substantially all of the
Internet Web hosting business of the Company as a going concern which including,
without limitation, the virtual hosting business under the trade name of
"HostAmerica".
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; REPRESENTATIONS AND WARRANTIES
SECTION 1. PURCHASE AND SALE. Subject to the terms and
conditions of this Agreement, the Company hereby sells, assigns and transfers to
the Buyer and the Buyer hereby purchases and acquires from the Company, as a
going concern, that portion of the Business (hereinafter defined) consisting of
all of the right, title and interest of the Company in and to the Purchased
Assets (as hereinafter defined) for a purchase price determined as set forth in
Exhibit A, as adjusted in accordance with Exhibit A (the "Purchase Price") and
for the assumption of the Assumed Liabilities (hereinafter defined). The Buyer
shall receive, at the Closing, the Buyer's Credit as set forth in Exhibit A. For
purposes of this Agreement, "Business" shall mean the Internet Web hosting
business conducted by the Company including, without limitation, the virtual
hosting business under the trade name of "HostAmerica", other than the Internet
Web hosting services provided by the Company to the Excluded Customers (as
hereinafter defined).
SECTION 2. REPRESENTATIONS OF THE COMPANY. The following
agreements, representations and warranties are made by the Company to the Buyer.
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<PAGE> 2
(A) Corporate Matters; No Conflict. The Company is duly
organized, validly existing and in good standing under the laws of the State of
Delaware and the State of Georgia. The fact that the Company has not qualified
to do business in any other state has not had a material adverse effect on the
Business. The Company maintains offices relating to the Business only at the
site(s) listed on Exhibit A and has no operations other than from those site(s).
The Company 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 by the Company will not (i) conflict with or violate, in any
material respect, the provisions of any applicable law (including, without
limitation, any bulk sales laws), rule or order, (ii) conflict with or violate
the Articles or Certificate of Incorporation, by-laws or any other
organizational or governing documents of the Company, (iii) in any material
respect, conflict with or constitute a default under any agreement or contract
by which the Company is bound or (iii) require the consent or approval of, or
filing with, any governmental body or third party except as set forth on Exhibit
C-5. The execution, delivery and performance by the Company of this Agreement
has been duly authorized and approved by all requisite corporate action on the
part of the Company. Set forth on Exhibit 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. This Agreement and the consummation of the
transactions contemplated hereby have been approved by the board of directors of
the Company, and the authorized officers of the Company named on Exhibit A are
authorized and empowered by the Company to execute and deliver this Agreement in
the name and on behalf of the Company. This Agreement and the consummation of
the transactions contemplated hereby do not require any approval by the
shareholders of the Company.
(B) Purchased Assets. (i) All vendor and customer
contracts, confidentiality agreements, purchase and sales orders 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), whether written or oral, shall be referred to herein
collectively as the "Business Agreements". The Company has not granted any
powers of attorney with respect to the Business. The Company has delivered to
Buyer, on or before the Closing Date, true and correct copies of all written
Business Agreements in its possession, including, without limitation, all
Business Agreements in electronic form. Except for the written Business
Agreements provided by the Company to the Buyer, all of the company's written
Business Agreements are in the standard form of customer service agreement
accessible on the Company's Web site for the Business or the reseller agreement
known as the Star VAR Agreement. The Company's general business practice is not
to make or enter into oral business arrangements. To the best knowledge of the
Company after reasonable investigation, there are no oral business arrangements
which relate to the Business which provide for payments by the customer
thereunder or contain obligations or liabilities of the Company thereunder, in
either case, in an amount of $1,000 individually or in an aggregate amount in
excess of $10,000. Attached hereto as Exhibit C-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. Also attached as part of Exhibit C-1
is a schedule stating the identity of the Customer to each of those agreements
which are in force and effect as of the Closing Date, together with a
designation of which form of agreement each such Customer has entered into.
Annexed as Exhibit C-2 is a copy of all written Business Agreements between the
Company and vendors or service providers, or which
2
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relate to any strategic partnerships, reselling arrangements or joint ventures
between the Company and others, concerning the Business. Listed on Exhibit C-3
is a description of each 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. The Company does not own, lease or use any real estate
in connection with the Business except the office and data facilities located at
the Sites. A copy of the lease for the data facility is annexed to Exhibit C-3
hereto. Neither the Company nor, to the knowledge of the Company, 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 C-4. Each Business
Agreement is in full force and effect and is enforceable by the Company in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency and similar laws. The Company has the right to assign the
Business Agreements to the Buyer and its affiliates and the Company has obtained
all required consents to the assignment and transfer thereof, except as set
forth on Exhibit C-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 personal property or any equipment used in the Business, except
as expressly stated on Exhibit C-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,
telephone systems, parts and accessories, telephone and facsimile numbers set
forth on Exhibit E, Web sites, e-mail addresses and Internet domain addresses
presently utilized by the Company in the Business, shall be referred to herein
collectively as the "Tangible Assets". Attached hereto as Exhibit E is a true
and correct list or description of the material Tangible Assets. The Tangible
Assets include all of the hardware, software (other than off-the-shelf software
licensed by the Company) and other equipment used to support, maintain and
service the customers which are parties to the Business Agreements. As of the
Closing Date, each of the Tangible Assets is in good and operable condition,
normal wear and tear excepted.
(iii) All patents, trademarks, trade names,
service marks, service names, logos, designs, Web sites, formulations,
copyrights and other trade rights and all registrations and applications
therefor, all know-how, trade secrets, technology or processes, and all computer
programs, control panels, surcharge calculators, data bases and software
documentation owned or used by the Company in the Business, other than
off-the-shelf software licensed by the Company, shall be referred to herein
collectively as the "Intellectual Property". Attached hereto as Exhibit F is a
true and correct copy of all of the Intellectual Property. Such exhibit also
indicates which of such items have been patented or registered or are in the
process of application for same. To the best knowledge of the Company, the
Company not infringing on the rights of any third parties to Intellectual
Property used, but not owned by, the Company. The Company has valid and
fully-paid licenses for all off-the-shelf software used by the Company in its
operation of the Business. Included among the Intellectual Property, among other
things, are all trade names utilized by the Company in the Business, including,
but not limited to, those trade names listed on Exhibit B. On the Closing Date,
the Company will deliver to Buyer written proof in form and substance
satisfactory to Buyer and its counsel that the Company will no
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longer do business under any of the trade names listed on Exhibit B and further,
within ten (10) days from the Closing, Company will cause to be filed in all
applicable governmental or quasi-governmental offices, any required instruments
to terminate any previously filed assumed name or similar certificates regarding
such trade names. Promptly after such filing, the Company will deliver proof of
said filing to Buyer.
(iv) The Company will deliver at the Closing a
true and complete copy of the Company's customer list as of a date not more than
five (5) business days prior to the Closing Date 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 (the "Customer List"). A statement of the monthly or annual (as
indicated) service charges relating to each customer on the Customer List and
the Company's paper and electronic files regarding each such customer,
including, without limitation, the data files residing on the Company's
accounting and billing systems, will be made available to Buyer from time to
time at Buyer's request after the Closing Date at the Company's corporate
headquarters listed on Exhibit A. All customers of the Company relating to the
Business, including without limitation, those customers included on the Customer
List (but expressly excluding those customers listed on Exhibit G-2 (the
"Excluded Customers")), 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".
(v) As used herein, the term "Purchased Assets"
shall be defined as the assets of the Company (including good will) utilized by
the Company to operate and maintain the Business, including, without limitation,
the Business Agreements, the Tangible Assets, the Intellectual Property, the
Customer List, the Customers and all other assets of the Company used in
connection with the operation of the Business, wherever located, tangible or
intangible, excluding, however, Excluded Assets (as defined below). The
Purchased Assets are not subject to (i) any lien or encumbrance of any character
whatsoever except as set forth on Exhibit M or (ii) any adverse claims by any
third parties. At the Closing upon consummation of the transactions contemplated
by this Agreement, Buyer will receive good and marketable title to the Purchased
Assets, free and clear of all liens, equipment leases, claims and encumbrances
of any character whatsoever, except as set forth on Exhibit M. The Purchased
Assets include all rights, properties, interests and assets used by Company
and/or necessary to permit Buyer to carry on the Business as presently conducted
by the Company except for Excluded Assets.
(vi) The Company reasonably expects that the
business represented by the Business Agreements will continue after the date
hereof subject to normal customer turnover. The Company has no knowledge that
any customers included on the Customer List, other than those listed on Exhibit
G-1, intend to terminate their relationship with the Company or significantly
reduce the amount of business they presently do with the Company.
(vii) Excluded Assets. The Company is not selling
and Purchaser is not buying or acquiring hereunder the following items
("Excluded Assets") which are not included in the defined term "Purchased
Assets": (a) all cash and cash equivalents and notes receivable; (b) the
Company's corporate minute and stock books, general ledger and accounting
records, tax returns and other records having to do solely with the Company's
organization and/or
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capitalization or with the other businesses of the Company; (c) all outstanding
billed and unbilled accounts receivable of the Company as of May 31, 1998 (the
"Closing Accounts Receivable"); (d) any rights to any of the Company's claims
for any federal, state or local tax refunds; (e) any rights which accrue or will
accrue to the Company under this Agreement or the transactions contemplated
hereby; (f) all rights the Company may have under any insurance policies
relating to the Purchased Assets, (g) the assets listed on Exhibit L and (h) the
assets not related to the Business.
(C) Financial Statements. The Company has delivered to
the Buyer copies of the Company's audited financial statements for the last
three fiscal years of the Company ended December 31, 1997, 1996 and 1995,
respectively. Attached hereto as Exhibit H is a certified audited balance sheet
and profit and loss statement for the fiscal year ended December 31, 1997 and
unaudited financial statements for the quarter ending March 31, 1998 and for the
month ending April 30, 1998, all of which reflect the assets, liabilities, net
worth, profit and loss, and cash flow of the Company with respect to the
Business. Exhibit H also sets forth a true and correct statement of the monthly
revenues of the Business for the period beginning on January 1, 1998 and ending
on April 30, 1998, in each case, determined in accordance with generally
accepted accounting principles. 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) with respect to the Business which
are not fully accrued or reserved against in the Company's financial statements
in accordance with generally accepted accounting principles. The Company has
previously provided to Buyer an accurate and complete schedule of the Company's
aged receivables with respect to the Business as of May 31, 1998. 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, except
as disclosed in the Company's filings with the Securities Exchange Commission.
Since April 30, 1998, the Company has had no loss in net monthly recurring
revenue from the Business. Between April 30, 1998 and the Closing Date, the
Company did not withdraw, expend or apply 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. The books and records
of the Company with respect to the Business relating to the fiscal years of the
Business ending December 31, 1995, 1996 and 1997, are adequate to permit an
audit of the Business at and for the fiscal years then ended.
(D) Assumed Liabilities. The Buyer shall not be liable
for and is not assuming any liabilities of the Company whatsoever, whether
related or unrelated to the Purchased Assets, or whether arising under the
Business Agreement or otherwise, except as specifically listed on Exhibit J
hereto (the "Assumed Liabilities"). The Company has no outstanding loans,
borrowings, guarantees or debt of any kind with respect to the Business except
as set forth on Exhibit M and none of the Company's obligations with respect to
the Business have been guaranteed by any other person or entity except as set
forth on Exhibit M.
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(E) Existing Employment Arrangements. Except as set forth
on Exhibit K the Company has no employment agreements, labor or collective
bargaining agreements or employee benefit or welfare plans or retirement plans,
in any such case with respect to the Business. All vacation pay, if any, due to
employees of the Company who are employed in the Business has been fully paid by
the Company, except as set forth on Exhibit K. No employees of the Company who
are employed in the Business are entitled to any sick pay, except as set forth
on Exhibit K. All vacation pay and sick pay due to employees of the Company who
are employed in the Business and terminated by the Company in connection with
the transactions contemplated by this Agreement shall be paid in full on the
Closing Date. There are no pending or, to the knowledge of 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 K 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. Except as set forth
on Exhibit D, there is no claim, litigation, tax audit, proceeding or
investigation pending or, to the Company's knowledge, threatened against the
Company, with respect to the Business or any of the Purchased Assets of the
Company (including, any claims of infringement or actions of opposition with
respect to Intellectual Property), nor does the Company know of any facts which
would provide a basis for any such claim, litigation, audit, proceeding or
investigation.
(G) Taxes. Except as specifically set forth on Exhibit I
(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, 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 to
sell to any other person or firm the Purchased Assets (other than sales in the
ordinary course of business).
(I) No Brokers. The only broker, leasing agent, finder or
similar person or entity with whom the Company has made contact or had any
dealings with or entered into any agreement, arrangement or understanding with
concerning this Agreement and to whom the Company is 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 4 on Exhibit A, if any, and the Company shall be solely responsible for the
payment of any such fee, commission or payment.
(J) Environmental Compliance. (i) To the best knowledge
of the Company, 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
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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) The Company has not 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) To the best knowledge of the Company, (a) 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
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) To the best knowledge of the Company, 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. To the best knowledge of the
Company, 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) Licenses and Compliance with Laws. The Company holds
no material governmental or regulatory licenses, permits, consents or approvals
in connection with the Business, and to the best knowledge of the Company, the
Company is in compliance with all material laws and regulations applicable to
the Business.
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(L) True and Complete. No representation or warranty made
by Company 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 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. The Company
has not 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 3. REPRESENTATIONS OF THE BUYER. Buyer represents and
warrants to the Company as follows.
(A) Corporate Matters; No Conflict. Buyer is a wholly
owned subsidiary of Sage Networks, Inc. ("Parent"). Each of the Buyer and Parent
is duly incorporated, validly existing and in good standing under the laws of
the State of Delaware, 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 or Parent, 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 and Parent, respectively, will not (a)
conflict with or violate the provisions of any applicable law, rule or order or
the Buyer's or the Parent's respective Certificate of Incorporation or by-laws,
(b) conflict with or constitute a default under any agreement or contract by
which the Buyer or Parent 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 or Parent 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 and/or the Parent is
responsible to pay a finder's fee, brokerage commission or similar payment to is
the party listed in item 5 on Exhibit A, if any, and the Buyer shall be solely
responsible for the payment of any such fee, commission or payment.
(C) No Litigation. There is no litigation pending or, to
the Buyer's knowledge, threatened against the Buyer, which would enjoin or
otherwise affect the transactions contemplated by this Agreement.
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ARTICLE II.
CERTAIN COVENANTS OF THE COMPANY AND THE BUYER
SECTION 1. NON-COMPETITION; NON-SOLICITATION. (A) Covenant of
the Company.
(1) For a period commencing on the Closing Date and
ending on the third anniversary of the Closing Date (the "Non-Competition
Period"), neither the Company nor any successor thereto or acquiror of
substantially all of the equity or assets thereof shall engage in any capacity
in an Internet Web hosting business which is similar to or in competition with
the Business. The parties understand and specifically acknowledge that the
Business operates world-wide and its location is not limited to a specific
geographical area. For this reason, the parties agree that the Company's
agreement not to compete in accordance with this Article II, Section 1 is not
limited to any specific geographical area but is world wide. Notwithstanding the
foregoing, the Company may, during the Non-Competition Period or thereafter:
(a) acquire, merge with or into or be acquired by (a
"Business Combination") any business entity which engages in the
Internet Web hosting business, so long as the Company offers, or causes
the successor in such Business Combination to offer (x) to sell,
transfer or assign to Buyer (in either case, free and clear of all
liens and encumbrances) all of the Web hosting customer base of such
entity (other than customers that are Financial Services Companies) at
a purchase price equal to 20% of the gross revenues of such acquired
Web hosting customer base during the five year period following the
date of the consummation of such Business Combination (which purchase
price shall be payable by the Buyer quarterly in arrears during such
five year period) and otherwise on customary terms and conditions for
such a sale, transfer or assignment or (y) to the extent that such web
hosting customer base cannot legally be sold, transferred or assigned,
to enter into a Co-location Agreement with the Buyer with respect to
such Web hosting customer base pursuant to which the Buyer shall
receive 80% of the gross revenues of such acquired Web hosting customer
base during the five year period following the date of the consummation
of such Business Combination (which payments shall be made to the Buyer
quarterly in arrears during such five year period) and otherwise on
customary terms and conditions for such a Co-location Agreement ((x)
and (y) shall collectively be referred to as the "Offer"); provided,
however, that the Company shall not be required to make an Offer with
respect to any Web hosting business that solely serves Financial
Services Companies (as hereinafter defined);
(b) to engage in a Web hosting business that solely
serves Financial Services Companies; or
(c) be acquired by or merge with a business entity that
is a public company with a market cap in excess of $100,000,000.
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(2) During the Non-Competition Period, the Company shall
make each Offer to the Buyer by written notice (the "Offer Notice"). The Offer
Notice shall set forth the name of the owner of the Web hosting business that is
the subject of the Offer, the annual revenues from the Web hosting customer base
to be acquired (determined in accordance with Article II, Section 1(1)(a)) and
the other material terms and conditions thereof. The Buyer may accept any Offer
within thirty (30) days of receipt of the Offer Notice. If Buyer accepts any
Offer, Buyer shall consummate the acquisition of such Web hosting business on
terms (other than purchase price) no less favorable than those contained in the
Offer Notice within thirty (30) days following the date of acceptance of such
Offer. If the Buyer does not accept any Offer within the required time or does
not consummate an accepted Offer within the required time, the Company may
consummate the Business Combination and shall not be deemed to be in violation
of the provisions of Article II, Section 1 (A) (1).
(3) For purposes of this Agreement, "Financial Services
Companies" shall mean banks, savings and loan associations, credit unions,
mortgage companies, insurance companies, broker-dealers, securities placement
agents, financial advisory firms, investor relations firms, hedge funds, mutual
funds and financial Web sites for other companies that offer financial services.
(4) Buyer and the Company acknowledge and agree that the
damages to Buyer as a result of the Company entering into any Business
Combination in breach of the provisions of Article II, Section 1(A)(1) of this
Agreement cannot be easily quantified. For this reason, Buyer and the Company
expressly agree that in the event of any such breach, the Company shall pay to
Buyer liquidated damages in the amount of $3,000,000 immediately upon the
occurrence of any such breach.
(5) The Company understands that pursuant to this
Agreement they have received confidential and proprietary information of Buyer,
Parent and their respective affiliates, including, without limitation, customer
lists and other trade secrets. Neither the Company nor any of its officers,
directors, shareholders, employees, agents or contractors who received or
learned of such confidential and proprietary information shall at any time,
either before or after the Closing Date, disclose to any third party any such
confidential or proprietary information of Buyer, Parent or their respective
affiliates or make use of any of such information except in evaluating whether
to enter into this Agreement or unless such information is made public by a
source other than the Company or such disclosure is required by law or
regulation or court or administrative order. In connection with such evaluation,
the Company may disclose such proprietary information to its legal and financial
consultants on a need to know basis on the condition that those consultants are
similarly prohibited from further disclosing such information as provided
herein.
(6) For a period commencing on the Closing Date and
ending on the second anniversary of the Closing Date, the Company, unless acting
with the express written consent of the Buyer or Parent, will not, directly or
indirectly, interfere with, solicit or endeavor to entice away:
(a) any person who was an employee,
subcontractor or consultant of the Company with respect to the
Business (provided on or after the Closing Date such employee,
subcontractor or consultant is engaged by Buyer or Parent to
render
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services with respect to Parent's Internet Web hosting and
related businesses), the Buyer, the Parent or any of their
affiliates during the twelve months immediately preceding the
date of such solicitation, interference or endeavor; or
(b) any person or entity who was a customer or
client of the Company or of the Buyer or of the Parent, or any
person or entity who requested or received a proposal from
Buyer, Parent or the Company, with respect to any Internet Web
hosting business similar to or in competition with the
Business in which the Company, Buyer, Parent, or any of their
affiliates is or has been engaged after the date of this
Agreement.
(B) Covenant of the Buyer.
(1) The Buyer understands that pursuant to this Agreement
it has received confidential and proprietary information of the Company and its
affiliates that is not related to the Business, including, without limitation,
customer lists and other trade secrets. Neither the Company nor any of its
officers, directors, shareholders, employees, agents or contractors who received
or learned of such confidential and proprietary information shall at any time,
either before or after the Closing Date, disclose to any third party any such
confidential or proprietary information of the Company and its affiliates or
make use of any of such information except in evaluating whether to enter into
this Agreement or unless such information is made public by a source other than
the Company or such disclosure is required by law or regulation or court or
administrative order. In connection with such evaluation, the Buyer may disclose
such proprietary information to its legal and financial consultants on a need to
know basis on the condition that those consultants are similarly prohibited from
further disclosing such information as provided herein.
(2) For a period commencing on the Closing Date and
ending on the second anniversary of the Closing Date, neither the Buyer nor the
Parent, unless acting with the express written consent of the Company will,
directly or indirectly, interfere with, solicit or endeavor to entice away any
person who was an employee, subcontractor or consultant of the Company during
the twelve months immediately preceding the date of such solicitation,
interference or endeavor.
(C) Mutual Covenant. Each of the Company and the Buyer
expressly acknowledges, understands and agrees (i) that remedies at law for any
breach of this Article II, Section 1 will be inadequate, (ii) that the damages
resulting from such breach are not readily susceptible to measurement in
monetary terms and (iii) that, in the case of a breach of Article II, Section 1
by the Company, Buyer and/or Parent, and in the case of a breach of Article II
by Buyer, the Company, shall be entitled to immediate injunctive relief and may
obtain temporary and permanent orders restraining any threatened or further
breach of this Article II, Section 1 by the Company or the Buyer, as the case
may be. Each of the Company and the Buyer has been advised by its counsel with
respect to the meaning and effect of this Article II, Section 1.
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SECTION 2. 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
Article II, Section 2 below with respect to any representation or warranty must
be made (and will be null and void unless made) on or before April 30, 2000
(except in the case of representations contained in Paragraphs (G), (I) and (J)
of Article I, Section 2 hereof, which must be made within six (6) months
following the expiration of the applicable statute of limitations).
(B) The Company hereby agrees to indemnify and hold
Buyer, Parent, and their respective 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 Company 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, 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, (iii) the Business conducted by the Company prior to the Closing
Date and any actions or events associated therewith, (iv) any and all
liabilities of the Company, other than the Assumed Liabilities, and (v) any
failure by the Company to comply with any provisions of the bulk sales or
similar laws of any jurisdiction which are applicable to this Agreement or the
transactions contemplated hereby.
(C) Buyer hereby agrees to indemnify and hold the Company
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 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 Company, of any covenant or
agreement of Buyer contained in or arising out of this Agreement, or any other
agreement delivered in connection herewith on the Closing Date or (iii) the
Business as conducted by Buyer, 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 (any of which
shall be a "Claim") upon which the Indemnified Party intends to base a claim for
indemnification under this Article II, Section 2, 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 Party shall not settle or compromise
any Claim by a third party without the prior written consent of the Indemnifying
Party, which will not be unreasonably withheld or delayed, unless suit in
respect of such Claim shall have been instituted against the Indemnified Party
and the Indemnifying Party shall not have chose to participate in the defense of
such suit after notification thereof if the
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Indemnifying Party is entitled to participate under paragraph (E) of this
Section.
(E) In connection with any Claim resulting from or
arising out of any claim or legal proceeding by a third party, the Indemnifying
Party, may, upon written notice to the Indemnified Party within 15 days
following the Indemnified Party's notice of the Claim, assume the defense of any
such action with its own counsel and its own expense if the Indemnifying Party
acknowledges to the Indemnified Party in writing its obligation to indemnify the
Indemnified Party pursuant to this Article II, Section 2 in respect of such
Claim; provided, however, that such counsel is reasonably acceptable to the
Indemnified Party and is able to represent the Indemnified Party without having
any conflict of interest. If the Indemnifying Party assumes the defense or
prosecution of any such action or proceeding, it shall take all steps reasonably
necessary in the defense, prosecution and settlement of such action or
proceeding. The Indemnifying Party shall not, in the defense or prosecution of
any such action or proceeding except with the written consent of the Indemnified
Party, consent to the entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof, a release by the third party
of the Indemnified Party from all liability in respect of the matter which is
the subject of such action or proceeding. The Indemnified Party shall cooperate
in the defense or prosecution of any such action or proceeding; provided that
the Indemnifying Party shall pay or reimburse the Indemnified Party for any
actual costs or expenses attributable to such cooperation.
(F) The obligations of the Company pursuant to paragraph
(B) of this Section and the obligations of the Buyer pursuant to paragraph (C)
of this Section shall, in each case be limited to an aggregate amount not in
excess of the Purchase Price. Neither the Company nor the Buyer shall make any
Claim hereunder unless and until the aggregate amount of such Claim exceeds
$50,000; provided, however, that if the aggregate amount of Claims by the Buyer
or the Company, respectively, exceeds $50,000, the obligations of the Company or
the Buyer, respectively, hereunder shall be with respect to the entire amount of
such Claims.
SECTION 3. SECURITY BOND. The Company may substitute a
security bond for the for amounts held in the Escrow Account pursuant to the
Escrow Agreementin order to secure its obligations to the Buyer under this
Agreement. Any such security bond shall be issued by a nationally recognized
security bonding firm reasonably satisfactory to the Buyer in an amount equal to
$250,000 and have such other terms and conditions as are reasonably satisfactory
to the Buyer (the "Security Bond"). The Security Bond will, by its terms,
require the payment to the Buyer of the amount of any Claim of the Buyer with
respect to which the Company has indemnified the Buyer, the Parent or any other
person pursuant to Article II, Section 2(B) of this Agreement upon the request
of the Buyer. Indemnity claims by Buyer, Parent or any such person shall be
satisfied first from the Security Bond and thereafter by the Company. The
Security Bond does not constitute a limit on the liability of the Company to
Buyer, the Parent or any such person hereunder, it being understood and agreed
that the Company shall remain liable to satisfy the amount of Claims which
exceed the amount of the Security Bond. The Security Bond shall be released on
May 1, 1999, to the extent that it has not previously been applied pursuant to
the terms hereof and thereof, unless a Claim for indemnification by Buyer,
Parent or any other person pursuant to Article II, Section 2(B) is then pending
against the Company.
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SECTION 4. ADDITIONAL COVENANTS OF THE COMPANY. (a) All
vacation pay and sick pay due to employees of the Company who are employed in
the Business and terminated by the Company in connection with the transactions
contemplated by this Agreement shall be paid in full on the Closing Date.
(b) The Company shall be solely responsible for the payment of any
and all Tax Liabilities which are payable with respect to the Purchased Assets
for the period ending on the Closing Date or arising out of the transfer of the
Purchased Assets, whether or not due or payable on or before the Closing Date.
Buyer shall have no obligation or liability with respect to any such Tax
Liabilities.
(c) The Company shall provide for the forwarding of all e-mails,
telephone calls and facsimiles relating to the Business to the Buyer. All
physical records relating to the Business have been, or promptly following the
Closing Date will be, delivered to Buyer at the Site located at Twelve Piedmont
Center Suite 110.
SECTION 5. ALLOCATION OF PURCHASE PRICE. The Buyer and the
Company agree that $250,000 of the Purchase Price shall be allocated to the
Tangible Assets for sales (and similar) tax purposes..
ARTICLE III
CLOSING AND DELIVERIES AT CLOSING
SECTION 1. CLOSING. The closing of the purchase and sale of
the transaction contemplated herein shall take place on June 10, 1998 (the
"Closing"), at the offices of Dewey Ballantine LLP, located at 1301 Avenue of
the American, New York, New York 10019 at 10:00 a.m. The deliveries described in
Section 2 and 3 of this Article III shall be made at the Closing.
SECTION 2. DELIVERIES BY THE COMPANY. On the Closing Date, the
Company will deliver, or cause to be delivered, to the Buyer the following:
(A) Such instruments of transfer or conveyance executed
by the Company, as Buyer may reasonably request in order to convey and transfer
to Buyer good and marketable title to all of the Purchased Assets, free and
clear of all liens, equipment leases, claims, encumbrances and other charges,
except as set forth in Exhibit M, including, without limitation, an Assignment
Agreement and a Bill of Sale.
(B) Physical delivery of all Tangible Assets by making
them available at the Sites listed on Exhibit A, together with any and all
warranties, manuals, instructions, and other literature in the possession of the
Company relating to the ownership or operation of the Tangible Assets. In
addition, such notices to telephone companies and others required to transfer
the Company's e-mail addresses and domain addresses, used in the Business to
Buyer.
(C) Physical delivery of all original or certified copies
of documentation concerning the Intellectual Property, by making them available
at the Sites listed on Exhibit A,
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including, without limitation, registrations and applications of any patents,
trademarks or service marks, original artwork, data bases, computer programs and
software.
(D) 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 and good standing
certificates certified as of recent date by the Secretary of
State of the state of the Company's organization and principal
place of business;
(ii) 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
(iii) Corporate Resolutions of the Board of
Directors of the Company, 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.
(E) The opinion of outside counsel to the Company, in a
form reasonably acceptable to Buyer and its counsel.
(F) An Assignment and Assumption Agreement, Bill of Sale
and Assignment of Trademark in a form reasonably acceptable to Buyer.
(G) The Escrow Agreement in substantially the form
attached hereto as Exhibit Q, duly executed by the Company and the Escrow Agent.
(H) Copies of written proof in form and substance
satisfactory to Buyer and its counsel that the Company will no longer do
business under any of the trade names listed on Exhibit B as required pursuant
to Article I, Section 2, Paragraph (B) (iii) hereof.
(I) The Company shall use its reasonable best efforts to
deliver a Non-Disclosure and Intellectual Property Agreement in a form to be
provided by Buyer prior to the Closing, executed by each employee of the Company
who will be employed by Buyer or its affiliate immediately following the
Closing.
(J) A certificate of an officer of the Company to the
effect that notices of termination of all employees of the Company employed in
connection with Business satisfactory to Buyer, will be delivered to such
employees promptly following the Closing.
(K) The Transitional Services Agreement in substantially
the form attached hereto as Exhibit N, the Co-Location Agreement (HomeCom) in
substantially the form attached hereto as Exhibit O, and the Non-Exclusive
Software License Agreement in substantially the form attached hereto as Exhibit
P, each executed by the Company.
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(L) Such notice or notices as Buyer may reasonably
request in order to notify the customers included on the Customer List that the
Business has been sold to Buyer.
(M) Consent to assignments of Business Agreements.
(N) A letter from Coopers & Lybrand, acceptable to Buyer,
to the effect that the books and records of the Company relating to the Business
for the fiscal years of the Company as at and ended December 31, 1996 and 1997
and for the period from January 1, 1998 to the Closing Date are auditable and
that Coopers & Lybrand has been engaged to complete such an audit on or before
the date 60 days following the Closing Date at a cost not to exceed $73,750.
SECTION 3. DELIVERIES BY THE BUYER.
On the Closing Date, the Buyer will deliver, or cause to be delivered,
to the Company the following:
(A) The Purchase Price by wire transfer of federal funds
to the account of the Company, as the Company shall direct in writing on or
before the Closing Date; provided, however, Buyer may, upon written agreement of
all parties hereto, deduct from the Purchase Price and pay directly amounts due
any creditor of the Company, including, without limitation, the Tax Liabilities
(but excluding any amounts due for any of the Assumed Liabilities), in which
event, evidence of such payment shall be presented at the Closing and Buyer may
deduct from the Purchase Price the aggregate amount of Deferred Revenues with
respect to the Business as set forth on a balance sheet for the Business as at
the Closing Date prepared in accordance with generally accepted accounting
principles.
(B) Such instruments of assignment and assumption
executed by the Buyer, as the parties hereto reasonably may determine necessary
to effectuate the assignment to the Buyer of the Business Agreements and the
assumption by Buyer of the Assumed Liabilities.
(C) The Transitional Services Agreement in substantially
the form attached hereto as Exhibit N and the Co-Location Agreement (HomeCom) in
substantially the form attached hereto as Exhibit O, each executed by the Buyer.
(D) Resolution of the Board of Directors of Buyer,
authorizing the execution of this Agreement and the transactions contemplated
hereby.
(E) The opinion of outside counsel to the Buyer, in a
form reasonably acceptable to the Company and its counsel.
(F) The Escrow Agreement in substantially the form
attached hereto as Exhibit Q, duly executed by the Buyer and the Escrow Agent.
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ARTICLE IV
OBLIGATIONS FOLLOWING CLOSING
SECTION 1. FURTHER COOPERATION. Each of the Company and the
Buyer 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, Parent or the Company or their respective
successors and/or assigns, may reasonably request, to effect, consummate,
confirm or evidence the transfer to Buyer of the Purchased Assets pursuant to
this Agreement.
SECTION 2. TRANSITION ASSISTANCE AND ADJUSTMENTS.
(A) The Company shall cooperate and provide assistance to
the Buyer as shall be reasonably necessary during the transition of the Business
and the Purchased Assets from the Company to the Buyer, or its successors and/or
assigns, after the Closing Date. Buyer shall reimburse the Company for
reasonable out-of-pocket expenses incurred in rendering such cooperation and
assistance, but not for any time of any personnel. The Company shall introduce
the Buyer to Bernd Harzog of Software Strategies (770 -475-4249), the consultant
retained by the Company in connection with the Company's negotiations with
Microsoft relating to the Company's inclusion in the Microsoft front page
program.
(B) Buyer and its successors and/or assigns shall have
the right at any time and from time to time upon reasonable notice and during
normal business hours to examine and make copies of all corporate books, records
and other documents of the Company relating to the Business and generated prior
to the Closing Date, which documents will be maintained by the Company for a
period of five (5) years after the Closing Date. The Company and its successors
and/or assigns shall have the right at any time and from time to time upon
reasonable notice and during normal business hours to examine and make copies of
all corporate books, records and other documents of the Buyer relating to the
Business acquired by the Buyer pursuant to this Agreement, which documents will
be maintained by the Buyer for a period of five (5) years after the Closing
Date.
(C) The Company will reasonably cooperate with Buyer in
notifying the customers included on the Customer List (other than the Excluded
Customers) that the Business has been sold to Buyer, including, without
limitation, executing any additional notices which Buyer may reasonably request.
The Company will not, directly or indirectly, take any action which is designed
or intended to have the effect of discouraging customers, suppliers or vendors
and other business associates of the Business, from maintaining the same
business relationships with Buyer or its successors and/or assigns after the
Closing Date as were maintained with the Company with respect to the Business
prior to the Closing Date.
(D) The Buyer shall use its reasonable commercial
efforts, without out-of-pocket cost to Buyer, to collect, on behalf of the
Company, all Closing Accounts Receivable of the Company. If payment of any
Closing Account Receivable is received by the Company, it shall promptly forward
to Buyer the full amount so received. The Company will cooperate with Buyer in
establishing a bank account of Buyer in the name of "HostAmerica" in order to
17
<PAGE> 18
facilitate the negotiation of checks received from customers of the Business
after the Closing. The Company shall promptly negotiate and forward to Buyer any
and all payments received by Company with respect to the Purchased Assets on and
after the Closing Date.
(E) All of the Company's right, title and interest in and
to the name "HostAmerica" constitutes a Purchased Asset and has been transferred
to the Buyer in accordance with this Agreement. Following the Closing, neither
the Company nor any affiliate of the Company (as defined under federal
securities laws), shall not use the name "HostAmerica" or any confusingly
similar name to said trade name in any trade or business. The Company expressly
acknowledges, understands and agrees (i) that remedies at law for any breach of
this Article IV, Section 2((E) will be inadequate, (ii) that the damages
resulting from such breach are not readily susceptible to measurement in
monetary terms and (iii) that the Buyer shall be entitled to immediate
injunctive relief and may obtain temporary and permanent orders restraining any
threatened or further breach of this Article IV, Section 2(E) by the Company.
The Company has been advised by its counsel with respect to the meaning and
effect of this Article IV, Section 2(E).
SECTION 3. AUDIT OF BUSINESS. The Company shall make available
to Buyer, on the terms and conditions set forth in the Transition Service
Agreement, its books, records and workpapers with respect to the Business
relating to the fiscal years of the Business ending December 31, 1995, 1996 and
1997, and its financial and accounting personnel, to the extent reasonably
required by Buyer and its independent accountants to complete an audit of the
Business at and for the fiscal years then ended.
ARTICLE V
MISCELLANEOUS
SECTION 1. GOVERNING LAW. This Agreement shall be governed by
the laws of the State of Georgia; provided, however, that the non-competition
covenant of the Company contained in Article II, Section 1 of this Agreement
shall be governed by the laws of the State of Delaware.
SECTION 2. 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 3. CONFIDENTIALITY. The Company, 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.
SECTION 4. AMENDMENTS. This Agreement supersedes any prior
contracts relating
18
<PAGE> 19
to the subject matter hereof between the Buyer, Parent, and the Company. 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 5. 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 6. 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 Parent or an affiliate of Buyer or Parent without the Company's
consent.
SECTION 7. 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.
SECTION 8. IMPUTED KNOWLEDGE. Any reference in this Agreement
to the "knowledge of" the Company, or words of similar import, the knowledge of
any and all of the officers or directors of the Company (including, without
limitation, its President and Chief Executive Officer, Harvey Sax), shall be
imputed to be the knowledge of the Company. Any reference in this Agreement to
the "knowledge of" the Buyer or the Parent, or words of similar import, the
knowledge of its officers and directors (including, without limitation, Buyer's
President and Parents Co-Chairman, Leonard J. Fassler) shall be imputed to be
the knowledge of the Buyer.
SECTION 9. 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 Acquisition Corp.
215 First Street
Cambridge, MA 02142
Attention: Rajat Bhargava
Telecopier No.:
19
<PAGE> 20
with copies to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, N.Y. 10019
Attention: E. Ann Gill, Esq.
Telecopier No.: (212) 259-6333
and
Sage Networks Acquisition Corp.
C/O McCarthy, Finger, Donovan, Drazen & Smith LLP
11 Martine Avenue
White Plains, NY 10606-1934
Attn: Bruce Klein, Esq.
(b) if to the Company, at:
HomeCom Communications, Inc.
14 Piedmont Center, Suite 100
3535 Piedmont Road
Atlanta, GA 30305
Attn:
Telecopier No.:
with a copy to:
Sims Moss Kline & Davis LLP
Suite 310
400 Northpark Town Center
1000 Abernathy Road NE
Atlanta, GA 30328
Attn: Raymond L. Moss, Esq.
Telecopier No.:
Each of the parties may, by notice given as aforesaid, change
its address for all subsequent notices.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
20
<PAGE> 21
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
SAGE NETWORKS ACQUISITION CORP.
By: /s/ Leonard J. Fassler
------------------------------------
Leonard J. Fassler, President
HOMECOM COMMUNICATIONS, INC.
By: /s/ Harvey Sax
------------------------------------
Harvey Sax, President
21
<PAGE> 22
DESCRIPTION OF EXHIBITS:
Exhibit A - Basic Provisions
Exhibit B - Officers; Directors; Trade Names; Jurisdictions
Exhibit C-1 - Forms of Business Agreements with Customers
Exhibit C-2 - Copy of all Business Agreements
Exhibit C-3 - Leases
Exhibit C-4 - Claims of Disputes Under Business Agreements
Exhibit C-5 - Consents to Transfer or Assign Not Obtained
Exhibit D - Litigation
Exhibit E - Tangible Assets
Exhibit F - Intellectual Property
Exhibit G-1 - Customer Terminations
Exhibit G-2 Excluded Customers
Exhibit H - Financial Statements
Exhibit I - Aged Receivables and Tax Liabilities of the Company
Exhibit J - Assumed Liabilities
Exhibit K - Existing Employment Agreements, Labor or Collective
Bargaining Agreements, Employee Benefit or Welfare Plans,
Retirement Plans, Description of Employees
Exhibit L - Excluded Assets
Exhibit M - Liens; Encumbrances
Exhibit N - Form of Transitional Services Agreement
Exhibit O - Form of Co-Location Agreement (HomeCom)
Exhibit P - Form of Non-Exclusive Software License Agreement
Exhibit Q - Form of Escrow Agreement
22
<PAGE> 23
EXHIBIT A
TO
ASSET PURCHASE AGREEMENT
BETWEEN
SAGE NETWORKS ACQUISITION CORP.
AND
HOMECOM COMMUNICATIONS, INC.
BASIC PROVISIONS
1. Name of BUYER: SAGE NETWORKS ACQUISITION CORP.
2. Name of COMPANY: HOMECOM COMMUNICATIONS, INC.
(a) STATE OF INCORPORATION of COMPANY: Delaware
(b) AUTHORIZED OFFICERS of the COMPANY:
[Name; Title]
----------------------
(c) Address of each SITE from which the COMPANY conducts the
Business:
3. PURCHASE PRICE: [$4,500,000 less the amount of the Deferred Revenues
properly set forth on a balance sheet for the Business as at the Closing Date,
prepared in accordance with generally accepted accounting principles.]
4. COMPANY'S BROKER:
5. BUYER'S BROKER: Am-Tech Associates
1
<PAGE> 24
**
POST CLOSING PURCHASE PRICE ADJUSTMENT. (i) The parties to
this Agreement agree that notwithstanding the Closing Date, revenues and
expenses of the Business should be adjusted as of June 1, 1998. Accordingly, not
more than forty-five (45) days following the Closing Date, the Company shall
deliver to Buyer a statement of revenues (including a statement of the change in
the balance of deferred revenues from June 1, to June 8, 1998) and direct
expenses of the Business (in each case, determined in accordance with generally
accepted accounting principles) for the period from June 1, 1998 to the Closing
Date (the "Closing Statement").
(ii) Within thirty (30) days after receipt of the Closing
Statement, Buyer shall communicate in writing to Seller any objection or
disagreement that it may have with the Closing Statement (an "Objection"). The
Company shall have fifteen (15) days after receipt of an Objection in which to
respond in writing to such Objection. If, after five (5) days following such
fifteen day period, Buyer and the Company have not resolved the matter in
dispute, such matter shall be submitted to KPMG Peat Marwick (or any other
independent certified public accountants, as Buyer and the Company may agree)
for determination. Such determination shall be made on or prior to the date that
is sixty (60) days following the date of the initial receipt by Buyer of the
Closing Statement and shall be binding on Buyer and the Company (the "Final
Determination"). The cost of such accountants shall be shared equally by the
Buyer and the Company.
(iii) If the revenues (after being adjusted by the change in
deferred revenues) exceed the direct expenses as set forth on the Closing
Statement (as resolved by the Buyer and the Company or as set forth in any Final
Determination), the Company shall pay the amount of such excess to Buyer. If the
direct expenses exceed the revenues (after such adjustment), the Buyer shall pay
the amount of such excess to the Company. Any payment pursuant to this Article
I, Section 2(b) shall be paid within five (5) business days after Buyer's and
the Company's resolution of the Closing Statement or receipt of the Final
Determination, if any.
<PAGE> 25
EXHIBIT B
TO
ASSET PURCHASE AGREEMENT
BETWEEN
SAGE NETWORK ACQUISITION CORP.
AND
HOMECOM COMMUNICATIONS, INC.
OFFICERS:
DIRECTORS:
TRADE NAMES:
JURISDICTIONS IN WHICH COMPANY IS DOING BUSINESS:
3
<PAGE> 26
EXHIBIT C-1
TO
ASSET PURCHASE AGREEMENT
BETWEEN
SAGE NETWORKS ACQUISITION CORP.
AND
HOMECOM COMMUNICATIONS, INC.
FORMS OF BUSINESS AGREEMENTS WITH CUSTOMERS
SEE ANNEXED
PERSONAL PROPERTY LEASES:
EQUIPMENT LEASES:
4
<PAGE> 27
EXHIBIT C-2
TO
ASSET PURCHASE AGREEMENT
BETWEEN
SAGE NETWORKS ACQUISITION CORP.
AND
HOMECOM COMMUNICATIONS, INC.
COPIES OF ALL BUSINESS AGREEMENTS AND VENDOR/SERVICE
PROVIDER AND OTHER AGREEMENTS
5
<PAGE> 28
EXHIBIT C-3
TO
ASSET PURCHASE AGREEMENT
BETWEEN
SAGE NETWORKS ACQUISITION CORP.
AND
HOMECOM COMMUNICATIONS, INC.
LEASES
6
<PAGE> 29
EXHIBIT C-4
TO
ASSET PURCHASE AGREEMENT
BETWEEN
SAGE NETWORKS ACQUISITION CORP.
AND
HOMECOM COMMUNICATIONS, INC.
CLAIMS OF DISPUTES UNDER BUSINESS AGREEMENTS
7
<PAGE> 30
EXHIBIT C-5
TO
ASSET PURCHASE AGREEMENT
BETWEEN
SAGE NETWORKS ACQUISITION CORP.
AND
HOMECOM COMMUNICATIONS, INC.
CONSENTS TO TRANSFER AND ASSIGNMENT NOT OBTAINED
8
<PAGE> 31
EXHIBIT E
TO
ASSET PURCHASE AGREEMENT
BETWEEN
SAGE NETWORKS ACQUISITION CORP.
AND
HOMECOM COMMUNICATIONS, INC.
TANGIBLE ASSETS
SEE ANNEXED
TELEPHONE NUMBERS:
- ------------------
- ------------------
FACSIMILE NUMBERS:
- -----------------
- -----------------
INTERNET DOMAIN ADDRESSES:
- -----------------
- -----------------
10
<PAGE> 32
EXHIBIT F
TO
ASSET PURCHASE AGREEMENT
BETWEEN
SAGE NETWORKS ACQUISITION CORP.
AND
HOMECOM COMMUNICATIONS, INC.
INTELLECTUAL PROPERTY
SEE ANNEXED
11
<PAGE> 33
EXHIBIT G
TO
ASSET PURCHASE AGREEMENT
BETWEEN
SAGE NETWORKS ACQUISITION CORP.
AND
HOMECOM COMMUNICATIONS, INC.
CUSTOMER LIST AND RELATED INFORMATION
SEE ANNEXED
12
<PAGE> 34
EXHIBIT G-1
TO
ASSET PURCHASE AGREEMENT
BETWEEN
SAGE NETWORKS ACQUISITION CORP.
AND
HOMECOM COMMUNICATIONS, INC.
CUSTOMER TERMINATIONS
13
<PAGE> 35
EXHIBIT G-2
TO
ASSET PURCHASE AGREEMENT
BETWEEN
SAGE NETWORKS ACQUISITION CORP.
AND
HOMECOM COMMUNICATIONS, INC.
EXCLUDED CUSTOMERS
<PAGE> 36
EXHIBIT H
TO
ASSET PURCHASE AGREEMENT
BETWEEN
SAGE NETWORKS ACQUISITION CORP.
AND
HOMECOM COMMUNICATIONS, INC.
FINANCIAL STATEMENTS
SEE ANNEXED
15
<PAGE> 37
EXHIBIT I
TO
ASSET PURCHASE AGREEMENT
BETWEEN
SAGE NETWORKS ACQUISITION CORP.
AND
HOMECOM COMMUNICATIONS, INC.
BAD DEBTS AND TAX LIABILITIES OF THE COMPANY
SEE ANNEXED
16
<PAGE> 38
EXHIBIT J
TO
ASSET PURCHASE AGREEMENT
BETWEEN
SAGE NETWORKS ACQUISITION CORP.
AND
HOMECOM COMMUNICATIONS, INC.
ASSUMED LIABILITIES
[1. Obligations of the Company to provide Internet Web hosting and related
services under those written customer agreements in force and effect as of the
Closing Date which are in the form of one of the form agreements annexed hereto
as Exhibit C-1.
17
<PAGE> 39
EXHIBIT K
TO
ASSET PURCHASE AGREEMENT
BETWEEN
SAGE NETWORKS ACQUISITION CORP.
AND
HOMECOM COMMUNICATIONS, INC.
EXISTING EMPLOYMENT AGREEMENTS, LABOR
OR COLLECTIVE BARGAINING AGREEMENTS AND
EMPLOYEE BENEFIT OR WELFARE PLANS AND
RETIREMENT PLANS
DESCRIPTION OF EMPLOYEES
SEE ANNEXED
18
<PAGE> 40
EXHIBIT L
TO
ASSET PURCHASE AGREEMENT
BETWEEN
SAGE NETWORKS ACQUISITION CORP.
AND
HOMECOM COMMUNICATIONS, INC.
EXCLUDED ASSETS
LICENSE AND SERVICES AGREEMENT DATED AS OF JUNE 18, 1997, BETWEEN HOMECOM
COMMUNICATIONS AND EXCALIBUR GROUP.
19
<PAGE> 41
EXHIBIT M
TO
ASSET PURCHASE AGREEMENT
BETWEEN
SAGE NETWORKS ACQUISITION CORP.
AND
HOMECOM COMMUNICATIONS, INC.
LIENS; ENCUMBRANCES
20
<PAGE> 42
EXHIBIT N
TO
ASSET PURCHASE AGREEMENT
BETWEEN
SAGE NETWORKS ACQUISITION CORP.
AND
HOMECOM COMMUNICATIONS, INC.
FORM OF TRANSITIONAL SERVICES AGREEMENT
SEE ANNEXED
<PAGE> 43
EXHIBIT N
TO
ASSET PURCHASE AGREEMENT
BETWEEN
SAGE NETWORKS ACQUISITION CORP.
AND
HOMECOM COMMUNICATIONS, INC.
FORM OF TIME WARNER CO-LOCATION AND SERVICES AGREEMENT
SEE ANNEXED
<PAGE> 44
EXHIBIT Q
TO
ASSET PURCHASE AGREEMENT
BETWEEN
SAGE NETWORKS ACQUISITION CORP.
AND
HOMECOM COMMUNICATIONS, INC.
ESCROW AGREEMENT
SEE ANNEXED
<PAGE> 1
EXHIBIT 10.45
ESCROW AGREEMENT
This ESCROW AGREEMENT (the "Escrow Agreement") dated as of June
10, 1998, by and among Sage Networks Acquisition Corp., a Delaware corporation
(the "Buyer"), HomeCom Communications Inc., a Delaware corporation (the
"Seller") and Sims Moss Kline & Davis LLP, a Georgia limited liability
partnership, ("Escrow Agent") (Buyer and Seller collectively referred to herein
as "Depositors").
WHEREAS, Buyer and Seller have entered into the Asset Purchase
Agreement (the "Purchase Agreement") dated June 10, 1998 pursuant to which
certain amounts are to be deposited into an escrow account; and
WHEREAS, Buyer and Seller desire to enter into this Agreement to
provide for such escrow account and the terms and conditions applicable thereto;
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants hereinafter set forth, the parties hereto agree as follows:
Section 1. ESTABLISHMENT OF ESCROW ACCOUNT. A special escrow
account shall be created and established by the Escrow Agent at the firm's
escrow account which is currently maintained at Wachovia Bank, N.A. which will
at all times be invested in direct obligations of the United States government
or otherwise invested as set forth in Section 4 hereof. Such account shall be
separate and apart from all other funds of Sellers and Buyer and shall be
designated as the "Escrow Account".
Section 2. DEPOSIT. (a) Upon execution of this Agreement by all
of the parties hereto, Buyer has deposited $250,000 in cash with the Escrow
Agent, and Escrow Agent hereby acknowledges receipt of such amount.
(b) For purposes of this Agreement, the cash amount deposited
under Subsection 2 hereof (the "Deposit Amount") together with accruals thereon
pursuant to Section 3 below, are referred to hereinafter as "Escrow Property".
Section 3. ACCRUAL ON ESCROW PROPERTY. Escrow Agent shall collect
all dividends, principal, interest, and any other payment or distribution on the
Deposit Amount (and any amounts accruing in respect thereof), and shall pay the
same as received to Seller but at least once per month.
Section 4. INVESTMENT BY ESCROW AGENT. From the date of deposit
hereunder until the termination of this Agreement, the Escrow Property shall
promptly be fully invested by Escrow Agent as directed by Seller from time to
time solely in direct obligations of, or obligations guaranteed as to all
principal and interest by, the United States of America, in each case with
maturity dates of 91 days or less and in no event maturing later than 1 year
following the Closing Date.
<PAGE> 2
Temporarily uninvested funds held hereunder shall be held in a
money market savings account established for that purpose or otherwise as
directed by Seller; provided, that the Depositors may direct Escrow Agent by
joint written instruction that such funds should thenceforth be held available
for immediate distribution, without the earning or accrual of interest thereon.
Section 5. REPORTING BY ESCROW AGENT. Escrow Agent shall furnish
to the Depositors monthly itemized summaries of the property held as Escrow
Property in the form of bank or similar account statements, including all
transactions made with respect to the Escrow Property from and after the date
hereof, all transactions made pursuant to Sections 3 and 4 hereof and all
distributions made pursuant to Section 7 hereof.
Section 6. DISTRIBUTION. Except as otherwise directed in writing
by the Depositors or as provided in Section 7 hereof, the Escrow Agent shall
release from escrow and distribute the Escrow Property to Seller on May 1, 1999.
Section 7. CONDITIONS TO DISBURSEMENT OF ESCROW PROPERTY. (a)
Except as otherwise provided in Section 6, upon (i) receipt by Escrow Agent of
written notice from Buyer, certifying that there exists certain conditions or
facts (which conditions or facts are to be specified in reasonable detail) which
under the Purchase Agreement entitle the Buyer to receipt of the Escrow Property
or any portion thereof from Escrow Agent; (ii) notification within five (5)
business days by Escrow Agent to the Seller of the notice received from the
Buyer which Escrow Agent shall give promptly upon receipt of Buyer's notice; and
(iii) a failure by Escrow Agent to receive by registered or certified mail
within ten (10) business days after receipt by the Seller of the Escrow Agent's
notification to the Seller, a written notice and certification from the Seller
of the non-existence of or disagreement with respect to the conditions or facts
certified by the Buyer, then Escrow Agent shall disburse to the Buyer, the
Escrow Property or the portion thereof designated in the notice and
certification referenced in clause (i) above. Escrow Agent may (but shall not be
required to) require as a condition to any such release of Escrow Property that
it be presented with satisfactory evidence of the satisfaction of such
conditions, which may include a certificate signed by each of the Depositors to
the effect that such conditions have been fulfilled. Any delivery made pursuant
to this paragraph shall not be deemed to prejudice any party's right to claim
that the Escrowed Property are owing to such party.
(b) If Escrow Agent does receive a notice and certificate from
the Seller as described in Section 7(a) above unless Escrow Agent resigns
pursuant to Section 9(a) or 9(c) herein or the Escrow Agent is removed pursuant
to Section 9(b), then Escrow Agent shall hold the disputed amount in escrow
until settlement of the controversy by a court of competent jurisdiction, by an
arbitrator designated in writing by both of the parties or by joint written
instructions from both parties.
2
<PAGE> 3
(c) Escrow Agent shall be permitted to disburse the Escrow
Property or a portion thereof in accordance with a final order, judgment or
decree of such court or arbitrator or in accordance with joint written
instructions from Seller and Buyer, as the case may be; provided, however, that
in the case of a final order, judgment or decree of a court of competent
jurisdiction, Escrow Agent shall not release any portion of the Escrow Property
until it receives from the party requesting release of the Escrow Property an
opinion of counsel to the effect that such order, judgment or decree represents
a final adjudication of such party's rights to that portion of the Escrow
Property in dispute and that the time for an appeal from such order, judgment or
decree has expired without an appeal having been perfected.
(d) Upon distribution of all the Escrow Property pursuant to
Depositors' instructions, the Escrow Agent shall be discharged from all
obligations under this Agreement and shall have no further duties or
responsibilities in connection herewith.
(e) The party that is entitled to the payment of any disputed
amount held pursuant to the Escrow Agreement shall be entitled to recover
reasonable attorney's fees and expenses actually incurred in connection with
prosecuting such claim from the party that is not entitled to such payment.
(f) In the event Escrow Agent is notified or becomes aware of any
disagreement between the Depositors with respect to the Escrowed Property,
Escrow Agent shall be entitled (but not required), at its option, to refuse to
comply with any notice, demand or other requirement hereof and may continue to
hold the Escrowed Property in escrow so long as such disagreement shall
continue; and, in so doing, Escrow Agent shall not become liable in any way to
any person for its failure or refusal to comply with any such notice or demand
until (i) either (A) the Depositors have settled or compromised their
disagreements, or (B) such disagreements have been fully adjudicated, and (ii)
Escrow Agent shall have been so notified in a writing signed by both Depositors.
It shall be the responsibility of the Depositors to notify the Escrow Agent of
any dispute, disagreement or other relevant matter between the Depositors with
respect to the Escrowed Property.
(g) In the event that such disagreements between the Depositors
shall not have been so settled, compromised or adjudicated within ten (10) days
following receipt by Escrow Agent of knowledge of the existence of such
disagreement, Escrow Agent may, but shall not be obligated to, interplead all
the Escrowed Property then held in escrow into a court of proper jurisdiction,
and thereupon Escrow Agent shall be fully and completely discharged of its
duties as Escrow Agent hereunder.
(h) It is agreed that the Escrow Agent shall act as a depository
only and shall not, except as expressly stated herein, be required to take
notice of any default or breach of warranty, representation, covenant or
agreement of any party contained in this Agreement or any other agreement
between the Depositors or their respective affiliates.
3
<PAGE> 4
(i) Each Depositor agrees to pay one-half of Escrow Agent's
reasonable and customary fees (if any) for its services hereunder and to
reimburse the Escrow Agent for one-half of its reasonable expenses and
disbursements incurred in the performance of such services.
Section 8. RESPONSIBILITIES OF ESCROW AGENT.
(a) Escrow Agent shall exercise the same degree of care toward
the Escrow Property as it exercises toward its own similar property and shall
not be held to any higher standard of care under this Agreement, nor deemed to
owe any fiduciary duty to the Depositors.
(b) Escrow Agent shall be obligated to perform only such duties
as are expressly set forth in this Agreement. No implied covenants or
obligations shall be inferred from this Agreement against Escrow Agent, nor
shall Escrow Agent be bound by the provisions of any agreement among the
Depositors beyond the specific terms hereof.
(c) Escrow Agent shall not be liable hereunder except for its own
gross negligence or willful misconduct and the Depositors jointly and severally
each agree to indemnify Escrow Agent for and hold it harmless as to any loss,
liability, or expense, including court costs and reasonable attorney fees,
incurred on the part of Escrow Agent and arising out of or in connection with
Escrow Agent's duties under this Agreement, except for any such loss, liability
or expense arising out of or in connection with Escrow Agent's gross negligence
or willful misconduct. Escrow Agent shall be entitled to advancement of any such
costs and expenses from the Depositors.
(d) Subject to Section 7(c) hereof, Escrow Agent shall be
entitled to rely upon any reasonable order, judgment, certification,
instruction, notice or other writing delivered to it in compliance with the
provisions of this Agreement without being required to determine the
authenticity or the correctness of any fact stated therein or the propriety or
validity thereof. Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and comporting with the provisions of
this Agreement and may assume that any person purporting to give notice or
receipt or advice or make any statement or execute any document in accordance
with the provisions hereof has been duly authorized to do so.
(e) At any time Escrow Agent may request in writing an
instruction in writing from the Depositors, and may at its own option include in
such request the course of action it proposes to take and the date on which it
proposes to act, regarding any matter arising in connection with its duties and
obligations hereunder and which is required by applicable law. Escrow Agent
shall not be liable for any action taken in accordance with such proposed course
of action without the Depositors' consent on or after the date specified in
Escrow Agent's request for instructions, provided that (i) the specified date
shall be at least five (5) business days after each Depositor has received
Escrow Agent's
4
<PAGE> 5
request for instructions and its proposed course of action, and (ii) prior to so
acting, Escrow Agent has not received the written instructions requested.
Notwithstanding anything to the contrary in Section 14 hereof, Escrow Agent's
request shall not be deemed to have been received by the Depositors until the
date of actual receipt.
(f) Escrow Agent may consult with, and obtain advice from, legal
counsel chosen by Escrow Agent in the event of any question as to any of the
provisions of this Agreement or the duties hereunder, and Escrow Agent shall,
except in the case of gross negligence or willful misconduct, incur no liability
and shall be fully protected in acting in good faith in accordance with the
written opinion and instructions of such counsel.
(g) Escrow Agent does not have any interest in the Escrow
Property deposited hereunder but is serving as escrow holder only and has only
possession thereof.
(h) In the event of ambiguity in the provisions governing the
Escrow Property or uncertainty on the part of Escrow Agent as to how to proceed,
Escrow Agent may refrain from taking any action other than to retain custody of
the Escrow Property deposited hereunder until it shall have received joint
written instructions signed by each Depositor; provided, that Escrow Agent, in
its sole and absolute discretion, deems it necessary for its protection to so
refrain. Escrow Agent shall promptly notify each Depositor of its decision to
refrain from taking any action in reliance on this Section 8(h).
Section 9. RESIGNATION OR REMOVAL OF ESCROW AGENT.
(a) Escrow Agent may resign at any time by giving written notice
thereof to each Depositor, but its resignation shall not become effective until
a successor escrow agent shall have been appointed by mutual agreement of the
Depositors and shall have accepted such appointment in writing. Until a
successor escrow agent is appointed by the Depositors and accepts such
appointment, the Escrow Agent's only duty hereunder shall be to hold any
then-remaining Escrow Funds in accordance with the original provisions of this
Escrow Agreement. Escrow Agent shall, upon receipt of the joint written
instructions of each Depositor, distribute the Escrow Property to such successor
escrow agent.
(b) The Depositors may remove Escrow Agent upon written notice to
Escrow Agent signed by each Depositor. Such removal shall take effect upon
delivery of the Escrow Property to a successor escrow agent designated in joint
written instructions signed by each Depositor, and Escrow Agent shall thereupon
be discharged from all obligations under this Agreement and shall have no
further duties or responsibilities in connection herewith. Escrow Agent shall
deliver the Escrow Property without unreasonable delay after receiving the
Depositors' designation of such successor escrow agent.
(c) If a successor escrow agent has not been appointed or has not
accepted such appointment within 30 calendar days after notice of resignation or
removal is given
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hereunder, Escrow Agent may petition any court of competent jurisdiction for the
appointment of a successor escrow agent. The reasonable costs, expenses and
attorney's fees which Escrow Agent incurs in connection with such a proceeding
shall be paid one-half by Buyer and one-half by Seller. Until a successor escrow
agent is appointed by the Depositors or such a court, as the case may be, Escrow
Agent shall continue to hold the Escrow Property in accordance with the terms of
this Agreement.
Section 10. CHOICE OF LAW AND JURISDICTION. This Agreement shall
be governed by and construed in accordance with the laws of the State of
Georgia. Venue for any dispute arising from or relating to this Agreement shall
lie in the state and federal courts of Fulton County, Georgia. Whenever possible
each provision of this Escrow Agreement shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited or invalid under such law, such provision shall be
deemed severed herefrom and ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
Section 11. BENEFITS AND ASSIGNMENT. Nothing in this Agreement,
expressed or implied, shall give or be construed to give any person, firm or
corporation, other than the parties hereto and their successors and permitted
assigns, any legal claim under any covenant, condition or provision hereof, all
the covenants, conditions and provisions contained in this Agreement being for
the sole benefit of the parties hereto and their successors and permitted
assigns. No party may assign any of its rights or obligations under this
Agreement to any person other than an affiliate thereof without the written
consent of all the other parties, which consent may be withheld in the sole
discretion of the party whose consent is sought.
Section 12. AMENDMENT. This Agreement may be modified only by a
written amendment signed by all the parties hereto.
Section 13. HEADINGS. The headings contained in this Agreement
are for convenience of reference only and shall have no effect on the
interpretation or operation hereof.
Section 14. NOTICES. Except as specified in Section 8(e), all
notices and other communications hereunder shall be in writing and deemed to
have been duly given when delivered by hand, upon receipt when mailed by
registered or certified mail, postage prepaid, return receipt requested, when
received if sent by prepaid courier delivery services such as Federal Express,
DHL or other similar services, or when given by facsimile transmission upon
receipt by sender of confirmed answer-back, as follows:
(a) if to Buyer, at
Sage Networks, Inc.
215 First Street - 3rd Floor D-Wing
Cambridge, Mass. 02142
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Attention: Rajat Bhargave
Telecopier No.: 617-374-4790
with a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, N.Y. 10019
Attention: E. Ann Gill, Esq.
Telecopier No.: (212) 259-6333
and
Sage Networks Acquisition Corp.
c/o McCarthy, Finger, Donovan, Drazen & Smith LLP
11 Martine Avenue
White Plains, NY 10606-1934
Attn: Bruce Klein, Esq.
(b) if to the Seller, at:
HomeCom Communications, Inc.
14 Piedmont Center, Suite 100
3535 Piedmont Road
Atlanta, GA 30305
Attn: Harvey Sax
Telecopier No.:
with a copy to:
Sims Moss Kline & Davis LLP
Suite 310
400 Northpark Town Center
1000 Abernathy Road NE
Atlanta, GA 30328
Attn: Raymond L. Moss, Esq.
Telecopier No. (770) 481-7210
(c) If to Escrow Agent:
Sims Moss Kline & Davis LLP
400 Northpart Town Center - Suite 310
1000 Abernathy Road, N.E.
Atlanta, GA 30328
Attention: Raymond L. Moss, Esq.
Telecopier No.: (770) 481-7210
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Each of the parties may, by notice given as aforesaid, change its
address for all subsequent notices.
Section 15. FURTHER ASSURANCES. In case at any time any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the parties hereto will take such further action (including the
execution and delivery of such further instruments and documents) as may be
reasonably requested by another party, at the sole cost and expense of the
requesting party (except that any expense of Escrow Agent hereunder shall, be
reimbursed one-half by Buyer and one-half by Seller).
Section 16. COUNTERPARTS. This Agreement may be executed by the
parties hereto individually or in any combination, in one or more counterparts,
each of which shall be an original and all of which shall together constitute
one and the same agreement.
Section 17. ENTIRE AGREEMENT. This Agreement and the Purchase
Agreement and the other agreements referred to therein constitute the entire
agreement among the parties hereto and supersedes any prior understandings,
agreements or representations by or among the parties, written or oral, that may
have related in any way to the subject matter hereof. No waiver, modification,
amendment, termination or rescission of this Escrow Agreement shall be effective
or binding upon the Escrow Agent unless Escrow Agent shall have specifically
consented thereto in writing.
Section 18. ESCROW AGENT AS SELLER'S COUNSEL. The Depositors
acknowledge, understand and agree that (i) Escrow Agent is and will remain
Seller's counsel and as such Escrow Agent has not and will not exercise any
independent professional judgment on Buyer's behalf, and (i) notwithstanding its
role as Escrow Agent hereunder, Escrow Agent may, in the event of a dispute
between the Depositors, act as Seller's counsel and represent Seller in any
dispute or litigation; provided, however that Escrow Agent (i) resigns and
appoints a successor or substitute escrow agent, (ii) petitions any court of
proper jurisdiction for the appointment of a successor escrow agent or (iii)
interpleads all Escrowed Property into a court of proper jurisdiction, which the
Depositors specifically agree Escrow Agent may do.
Section 19. DEFINITIONS. Terms used herein and not defined shall
have the meanings given such terms in the Purchase Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective duly authorized officers on the date first
written above.
SAGE NETWORKS ACQUISITION CORP.
/s/ Leonard J. Fassler
----------------------------------------
Name: Leonard J. Fassler
Title: President
Tax Identification No.:
HOMECOME COMMUNICATIONS INC.
/s/ Harvey Sax
----------------------------------------
Name: Harvey Sax
Title: President
Tax Identification No.:
SIMS MOSS KLINE & DAVIS LLP
/s/ Raymond L. Moss
----------------------------------------
Name: Raymond L. Moss
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EXHIBIT 10.46
TRANSITIONAL SERVICES AGREEMENT
This Transitional Services Agreement (the "Agreement") is entered into
on the tenth day of June, 1998, by and among HOMECOM COMMUNICATIONS, INC., a
Delaware corporation (the "Service Provider"), and SAGE NETWORKS ACQUISITION
CORP., a Delaware corporation, (the "Buyer").
WHEREAS, Buyer and the Service Provider has entered into the Asset
Purchase Agreement dated as of June 10, 1998, between Buyer and the Service
Provider as Seller (the "Purchase Agreement");
WHEREAS, in connection with the transactions contemplated by the
Purchase Agreement, the parties hereto desire to provide for certain transition
arrangements and services to be furnished by the Service Provider;
WHEREAS, this Agreement is being executed in connection with the
transactions contemplated by the Purchase Agreement; and
WHEREAS, terms used herein that are not defined herein shall have the
respective meanings set forth in the Purchase Agreement.
NOW, THEREFORE, in consideration of the matters described in the
foregoing recitals and the covenants and agreements herein contained, the
parties hereto, intending to be legally bound, agree as follows:
1. Use of Seller's Office Space and Data Facility. In connection with
the transition arrangements contemplated herein, the Service Provider shall make
available to Buyer such office space and space in its data facility leased by
the Service Provider and located at Twelve Piedmont Center, Suite 110, 3495
Piedmont Road, N.E., Atlanta, Georgia 30305 (the "Transition Location") as Buyer
shall reasonably request for a period ending December 31, 1998 (the "Transition
Period"). The space to be included in the Transition Location is more
specifically described in Exhibit A hereto. The space included in the Transition
Location shall be fully furnished with furniture and equipment of the amount and
kind that furnished the Transition Location during the two week period prior to
the
<PAGE> 2
Closing Date. Such available space should in all events be sufficient for Buyer
to continue to operate and maintain the Business during the Transition Period
and shall include up to six offices. During the period from the date hereof to
December 31, 1998, Buyer shall reimburse the Service Provider for one-half of
its rent payable by Service Provider pursuant to and in accordance with the
lease for the Transition Location which Service Provider represents is $11,993
per month; provided, however, that if the landlord for the Transition Location
shall require the Buyer to vacate the Transition Location prior to the end of
the Transition Period, Buyer's obligations to make such reimbursement shall
terminate on the date that Buyer vacates the Transition Location. Buyer shall
use its reasonable commercial efforts to provide the Service Provider with ten
(10) days prior notice of the date on which the Buyer will vacate the Transition
Location if Buyer intends to vacate same prior to the end of the Transition
Period. During the Transition Period, the Service Provider shall permit Buyer to
use the Transition Location as an office and data facility. The fixed portion of
the rent shall be due on the first day of each month. The variable portion of
the rent, if any, shall be due ten days after the receipt of an invoice from the
Service Provider.
2. Transition Accounting and Billing Services. During the Transition
Period (except during regular system back-ups), the Service Provider (a) shall
provide access to the accounting and billing software and systems (including
normal administrative and back-up functions) used by the Service Provider in the
Business to the Buyer and (b) shall provide such transitional support and
assistance in connection with the transfer of the accounting and billing records
and systems for the Business to the Buyer's accounting and billing systems as
shall be reasonably required by Buyer. The services provided pursuant to this
paragraph shall include all necessary passwords and ongoing access to such
services and systems. The services provided pursuant to this Section 2 shall be
at no cost to the Buyer.
3. Internet Services. During the Transition Period, the Service
Provider shall make available to Buyer all local loop and internet connectivity
services (the "Connectivity Services") presently used or projected to be used by
Service Provider in connection with the Business (as such term is defined in the
Purchase Agreement),
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including, without limitation the services provided pursuant to the Service
Provider's Internet Access Agreement for Resellers dated May 9, 1996 and with
networkMCI, Inc. dated May 9, 1996 and CRL Network Services Communications
Services Agreement dated January 14, 1997 and Internet Service Authorization
dated January 15, 1997 with CRL Network. All Connectivity Services shall have an
availability during the Transition Period as set forth in Exhibit A. During the
time that the Buyer occupies the Transition Location, Buyer shall reimburse the
Service Provider for the Connectivity Services in an amount equal to sixty-five
percent (65%) of the Service Provider's total costs for local loop and internet
services. The Buyer shall pay the costs of any additional local loop and
internet services required to service other customers of Buyer, if any, which
Buyer transfers from another location to the Transition Location.
4. Technical Transition Support. During the Transition Period, the
Service Provider shall provide such cooperation, assistance and technical
support to the Buyer as shall be reasonably required by Buyer in connection with
the Business, including, but not limited to the support described on Exhibit A.
The services provided pursuant to this Section 4 shall be at no cost to the
Buyer.
5. Telephone Services. (a) During the Transition Period, the Service
Provider shall make all local and long distance telephone service (including,
without limitation all 800 numbers) presently used or projected by the Service
Provider to be used in connection with the Business available to the Buyer.
Buyer shall reimburse the Service Provider for its actual costs incurred in
connection with such local and long distance telephone service promptly upon
receipt of the invoices therefor from the Service Provider.
(b) The Service Provider shall provide the Buyer with reasonable
access to its Siemens telephone system and automated attendant service and will
cooperate with Buyer (i) in connection with the reconfiguration of such system
to provide separate telephone service to Buyer during the Transition Period and
(ii) to secure additional equipment, connections and other services from Siemens
or otherwise in the same time and manner as such equipment, connections and
service are provided to the Service Provider. Any such reconfiguration
(including returning such system to its
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original configuration) and additional equipment, connections and services shall
be at the cost of the Buyer.
(c) Until December 31, 1999 the Service Provider will maintain an automated
attendant message containing Buyer's telephone numbers and call transfer
information on Service Provider's automated attendant service.
(d) After the Buyer vacates the Transition Location, until December 31, 1999,
the Buyer will maintain an automated or attended message service on the 800
number included as a Purchased Asset (as defined in the Purchase Agreement)
containing the Service Provider's telephone numbers and call transfer
information. Service Provider shall reimburse the Buyer for its actual costs
incurred in connection with such 800 number promptly upon receipt of the
invoices therefor from the Buyer.
6. Assistance with Audit. The Service Provider will make its personnel
and accounting records and workpapers available to Buyer and Buyer's independent
auditors as may be reasonably required in connection with Buyer's audit of the
Business. In addition the Service Provider will (i) prepare the financial
statements for the Business for the years ending and as at December 31, 1995,
1996 and 1997 and for the period ending on and as at the Closing Date and
provide such other information as Buyer's independent auditors may request in
connection with preparing such audit, in each case on or before June 15, 1998,
(ii) retrieve all detail items selected for audit on a timely basis and (iii)
provide in writing, at the request of such auditors, such representations and
other documents required by such auditors in connection with their certification
of such audit and the use of such audit by Buyer.
7. Security and Background Checks. If the Service Provider requires
security and background check for its personnel, Buyer agrees that the Service
Provider may request reasonable security and background checks for any personnel
hired by Buyer who were not previously employed by the Service Provider prior to
allowing any such personnel access to the Service Provider's network operations
center. Buyer will follow Service Provider's reasonable security procedures for
the network operations center.
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8. Notice of Customer and Vendor Issuers. The Service Provider shall
provide Buyer with notice of any customer communications or complaints relating
to the Business and any issues or potential issues with vendors, in each case,
promptly after Service Provider becomes aware of such communications, complaints
or issues in the normal course of business.
9. Indemnification. (a) Except as expressly provided herein, Buyer
does not assume, agree to pay, perform or discharge or otherwise have any
responsibility for any obligation or liability with respect to the Transition
Location or any of the Service Provider's personnel.
(b) The Service Provider agrees to indemnify, defend and hold Buyer
harmless from and against any and all demands, claims, losses, liabilities,
actions or causes of action, assessments, judgments, settlement payments,
damages, fines, penalties, costs and expenses (including, without limitation,
interest which may be imposed in connection therewith, reasonable fees and
disbursements of counsel and other experts, and the cost to Buyer of seeking
indemnification of any funds expended by reason of any of the events specified
in this Section 9) (the "Buyer Losses") incurred or suffered by Buyer based
upon, arising out of or otherwise in respect of the Transition Location other
than those proven by the Service Provider to have been caused by Buyer
(including, without limitation, any Buyer Losses with respect to Environmental
Laws not proven by the Service Provider to have been caused by Buyer), whether
or not such Buyer Losses occur, arise or are discovered during Buyer's use of
the Transition Location.
(c) The Buyer agrees to indemnify, defend and hold the Service Provider
harmless from and against any and all demands, claims, losses, liabilities,
actions or causes of action, assessments, judgments, settlement payments,
damages, fines, penalties, costs and expenses (including, without limitation,
interest which may be imposed in connection therewith, reasonable fees and
disbursements of counsel and other experts, and the cost to the Service Provider
of seeking indemnification of any funds expended by reason of any of the events
specified in this Section 9) (the "Service Provider Losses") incurred or
suffered by the Service Provider caused by Buyer (including, without limitation,
any Service Provider Losses with respect to Environmental Laws proven by the
Service Provider to have
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been caused by Buyer), whether or not such Service Provider Losses occur, arise
or are discovered during Buyer's use of the Transition Location.
(d) The obligations of the Company pursuant to Section 2(B) hereof and the
obligations of the Buyer pursuant to Section 2(C) hereof shall, in each case, be
limited to an aggregate amount not in excess of the Purchase Price (as defined
in the Purchase Agreement).
10. Specific Performance. Each of the parties acknowledges that money
damages would not be a sufficient remedy for any breach of this Agreement and
that irreparable harm would result if this Agreement were not specifically
enforced. Therefore, the rights and obligations of the parties under this
Agreement shall be enforceable by a decree of specific performance issued by any
court of competent jurisdiction, and appropriate injunctive relief may be
applied for and granted in connection therewith. A party's right to specific
performance shall be in addition to all other legal or equitable remedies
available to such party.
11. Notices. All notices, requests, demands, applications, services of
process and other communications which are required to be or may be given under
this Agreement shall be deemed to have been duly given if sent by telefax (with
confirming telefax receipt) or delivered by recognized courier service (with
receipt acknowledged) to the parties hereto at the following addresses:
If to Buyer:
Sage Networks Acquisition Corp.
215 First Street
Cambridge, Massachusetts 02142
Attention: Chief Operating Officer
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and
Sage Networks, Inc.
c/o McCarthy, Fingar, Donovan, Drazen & Smith, L.L.P.
11 Martine Avenue - 12th Fl.
White Plains, New York 10660
Attention: Bruce S. Klein, Esq.
General Counsel
with a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, NY 10019-6092
Attention: E. Ann Gill, Esq.
If to the Service Provider:
HomeCom Communications, Inc.
14 Piedmont Center, Suite 100
3535 Piedmont Road
Atlanta, Georgia 30305
Attention: General Counsel
with a copy to:
Sims Moss Kline & Davis LLP
Suite 310 - 400 Northpark Town Center
1000 Abernathy Road, N.E.
Atlanta, Georgia 30328
Attention: Raymond L. Moss, Esq.
or to such other address as any party shall furnish to the other by notice given
in accordance with this Section 11. Each such notice, request, demand,
application, service of process and other communication shall be deemed to have
been given only when actually received by the addressee.
12. No Assignment; Successors. This Agreement is not assignable by
either party hereto without the prior written consent of the other party;
provided, however, that Buyer may assign this agreement to any Affiliate of
Buyer and after December 31, 1998, the Service Provider may assign this
Agreement to any Affiliate of Service Provider. This Agreement shall inure to
the benefit of and be binding upon Service Provider and Buyer and their
successors and
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permitted assigns and any third party which succeeds to all or substantially all
of the assets and business of either such party.
13. No Benefit to Others. The covenants and agreements contained in
this Agreement are for the sole benefit of the parties hereto and, and they
shall not be construed as conferring any rights on any other persons.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed an original and all
of which together shall be deemed to be one and the same instrument.
15. Choice of Law. This Agreement shall be governed by and interpreted
under the laws of the State of Georgia without giving effect to any conflict of
laws provisions.
16. Separability. If any provision of this Agreement or the
application thereof to any person or circumstance is held invalid or
unenforceable in any jurisdiction, the remainder of this Agreement, and the
application of such provision to such person or circumstance in any other
jurisdiction or to other persons or circumstances in any jurisdiction, shall not
be affected thereby, and to this end the provisions of this Agreement shall be
separable.
17. Force Majeure; Cure Periods. (a) Neither party hereto shall be
deemed to be in breach of this Agreement as a result of the occurrence of any of
the following: if by reason of acts of God; strikes; lockouts or other
industrial disturbances; acts of public enemies; orders of any kind of the
Government of the United States, of the State of Georgia or of the State of New
York, or any department, agency, political subdivision, court or official of
either of them, or any civil or military authority; insurrections; riots;
epidemics; landslides; floods; washouts; droughts; arrests; restraint of
government and people; civil disturbances; explosions; breakage or accident to
machinery; partial or entire failure of utilities; or any cause or event not
reasonably within the control of such party, a party hereto is unable in whole
or in part to carry out any one or more of its agreements or obligations
contained in this Agreement, other than the obligations of such party make
payments to the other party hereunder, such party shall not be deemed in breach
of this Agreement by reason of not carrying out said agreement or agreements or
performing said obligation or obligations during the
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continuance of such inability. Any failure of a party hereto to perform its
obligations to make payments hereunder shall constitute a breach of this
Agreement regardless of the reason for such failure to perform.
(b) A party hereto may exercise its remedies at law and equity with
respect to any breach of (i) any provision of this Agreement, which breach
materially and adversely affects the Buyer's ability to conduct its Web hosting
business which remains uncured after 24 hours receipt by the Service Provider of
written notice from Buyer advising it with specificity of such breach, unless
within 48 hours of such notice such breach is cured or (ii) any other material
provision of this Agreement, which breach remains uncured following a reasonable
period in the light of the circumstances of such breach after receipt by the
party in breach of written notice from the other party advising it with
specificity of such breach, unless within such period the party in breach
commenced curing such breach and continues to act diligently until such breach
is cured.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement on
the date first above written.
SAGE NETWORKS ACQUISITION CORP.,
as Buyer
By:
---------------------------------
Name:
Title:
HOMECOM COMMUNICATIONS, INC.,
as Seller
By:
---------------------------------
Name:
Title:
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EXHIBIT A
SPACE INCLUDED IN TRANSITION LOCATION. The Buyer will have full access to
all areas of the Service Provider's data facility on a 24 hour, seven day a week
basis.
The Buyer will have access to the Service Provider's switches and SNMP
monitoring system in order to verify the Service Provider's calculations of the
reimbursements pursuant to Section 3. Monitoring capabilities will be provided
with the assistance of the Service Provider.
ACCOUNTING AND BILLING SERVICES. The Service Provider will provide
passwords and ongoing access to its Platinum accounting systems so that customer
accounts can be monitored. The Buyer will have access to Service Provider's
accounting personnel and books and records relating to the Business during
normal business hours.
AVAILABILITY. Network uptime will meet or exceed 99.0% on a monthly basis.
If network uptime for any one month is less than 99.0%, Buyer will not be
required to pay for bandwidth costs for that particular month. Network uptime is
defined as the periods when Buyer has access to the internet via the Service
Provider's network hardware and the Service Provider's internet bandwidth.
The Service Provider will continue to provide back-up and other network
system administration functions for any hardware and software with respect to
which it currently provides these services for the Business. The Buyer will use
its reasonable commercial efforts to obtain its own back-up and other network
system administrative function following the Closing Date (as defined in the
Purchase Agreement).
TECHNICAL SUPPORT. The Service Provider will provide all support reasonably
required by Buyer for all software applications that are being acquired by the
Buyer, including but not limited to, the HostAmerica Web site, the Customer
Control Panel, the Customer Access database, provisioning systems, and the
application that calculates customer surcharges for bandwidth and disk space.
The Service Provider will provide any available documentation and assist the
Buyer in understanding the operations of the software applications.
The Service Provider is installing a redundant T3 connection to the
internet. The Buyer's servers will have connectivity to such redundant T3
following installation by the Service Provider. Buyer's servers will also have
connectivity to the Service Provider's existing T1 and T3 services.
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The Service Provider will make the Buyer part of its page alert system so
that the Buyer will be notified of network problems, in the same manner that
employees of the Service Provider are currently notified of network problems.
The Service Provider will provide the Buyer with the capability to telnet
to the Service Provider's and the Buyer's servers through the Service Provider's
security systems. The Buyer will supply the Service Provider with a list of
people who will need this access and the Service Provider will add such people
to the Service Provider's authentication method.
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EXHIBIT 10.47
CO-LOCATION AGREEMENT
(Home-Com )
CO-LOCATION AGREEMENT made as of June 10, 1998 between SAGE NETWORKS,
INC., a Delaware corporation, having an office at 215 First Street, Cambridge,
Massachusetts 02142 ("Sage Networks") and HOMECOM COMMUNICATIONS, INC. a
Delaware corporation having an address at Fourteen Piedmont Center, Suite 100,
3535 Piedmont Road N.E., Atlanta, GA 30305 ("Customer").
WHEREAS, on the date hereof, Customer, as seller, sold substantially
all of its Internet Web hosting assets to an affiliate of Sage Networks, as
buyer, pursuant to the terms of that certain Asset Purchase Agreement between
said seller and buyer dated even date herewith (the "Purchase Agreement");
WHEREAS, Sage Networks is an Internet Web hosting service provider and
makes available to customers webservers and other computer equipment and service
that provides connectivity and access to the Internet;
WHEREAS, Customer desires to utilize Sage Networks Internet Web hosting
services and to co-locate one or more servers and other equipment with Sage
Networks in order to comply with its Web hosting obligations under and pursuant
to the License and Services Agreement dated as of June 18, 1997, between
Customer and Excalibur Group (the "Customer Agreement");
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS. For the purposes of this Agreement, the following terms shall
have the following meanings:
(a) "Customer Obligations" shall mean each of the obligations of the
Customer under this Agreement.
(b) "Default" shall have the meaning ascribed to it in Section 7 herein.
(c) "Hosting Services" shall mean the hosting services to be provided by
Sage Networks under this Agreement.
(d) "Term" shall have the meaning ascribed to it in Section 3 herein.
2. CO-LOCATION ARRANGEMENTS. (a) Sage Networks will permit Customer to locate
certain network and computer equipment and software (the "Customer's Equipment")
at Sage Network's data center (the "Customer Accessible Space"). The
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Customer Accessible Space is hereby accepted by Customer "as is". Sage Networks
shall provide network uptime availability for the Customer Equipment of 99%.
Network uptime is defined as the periods when the Customer has access to the
internet via Sage Networks network hardware and Sage Network's internet
bandwidth. Sage Networks shall provide or cause to be provided services which
support the overall operation of the Customer Accessible Space, such as
janitorial services, environmental systems maintenance and power plant
maintenance, at no additional charge to Customer.
(b) Customer may use the Customer Accessible Space only for the purposes of
installing, maintaining and operating hardware and software necessary to provide
Web hosting services in accordance with and pursuant to the Customer Agreement
(the "Co-Location Hosting"). Customer shall not interconnect the Customer
Equipment with equipment or services of any entity without the prior written
consent of Sage Networks. The Customer will provide the Customer's Equipment at
Customer's sole cost and expense. Customer shall setup, install, configure and
generally make ready the Customer's Equipment and software necessary to provide
the Co-Location Hosting. Sage Networks may move the Customer's Equipment to any
Sage Networks data center located in the Atlanta metropolitan area.
3. TERM. The term of this Agreement shall commence on the date that Sage
Networks vacates the Customer's premises and end on the last day of the latest
of the Initial Term and any Renewal Period (as such terms are defined in the
Customer Agreement) under the Customer Agreement (the Term ). Sage Networks may,
in its sole discretion, terminate this Agreement on 60 days prior written notice
to Customer.
4. FEES AND PAYMENT. (a) In consideration of the Hosting Services, Customer
shall pay Sage Networks a monthly fee (or ratable portion thereof for a partial
month) in an amount equal to the greater of (i) $3,500 per month or (ii) the sum
of 20% of the aggregate amounts payable to the Customer pursuant to the
Customer Agreement during such month. If the percentage of Sage Network's
bandwidth used by the Customer in relation to the number of customers served
under the Customer Agreement increases, the parties shall negotiate, in good
faith, an increase in the monthly fee payable to Sage Networks under this
Agreement.
(b) Payment in full of a portion of the monthly fee payable under this
Agreement in the amount of $3,500 per month is due within ten (10) days after
the first business day of each month during the Term. The balance of the monthly
fee payable under this Agreement is due within ten (10) days after receipt by
Customer of its payment with respect to such month under the Customer Agreement.
Sage Networks may impose and Customer shall pay, a debt service charge equal to
one and one-half percent (1. 5%) of the overdue balance (or such lesser amount
as may be required by law) for each month or fraction thereof that any monthly
fee payable hereunder remains unpaid.
(c) If Customer orders additional services from Sage Networks from its then
offered services, then such services will be paid for in accordance with Sage
Networks'
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standard fee and payment terms and conditions which will be provided to Customer
at the time of its ordering such services.
(d) All international, national, state and local taxes, fees, levies,
assessments and governmental charges, however designated, which are levied or
imposed with respect to the Hosting Services provided hereunder (other than
income taxes of Sage Networks) shall be paid by Customer and Sage Networks
shall have no liability with respect thereto.
5. WARRANTIES; ASSUMPTION OF RISK. CUSTOMER ACKNOWLEDGES THAT SAGE NETWORKS
HAS NOT MADE, AND DOES NOT MAKE ANY WARRANTY OR REPRESENTATION, EITHER EXPRESSED
OR IMPLIED, OF ANY KIND WHATSOEVER WITH RESPECT TO THE HOSTING SERVICES PROVIDED
HEREUNDER INCLUDING BUT NOT LIMITED TO: (1) ANY WARRANT OF DESIGN, CONDITION,
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, (2) AS TO ANY MATERIALS
OR WORKMANSHIP, (3) AS TO ANY LATENT DEFECTS, (4) AS TO ANY PATENT OR TRADEMARK
INFRINGEMENT, AND (5) AS TO THE COMPLIANCE WITH ANY REQUIREMENTS OF ANY LAW,
RULE, SPECIFICATION, OR CONTRACT PERTAINING THERETO. CUSTOMER FURTHER
ACKNOWLEDGES THAT THE INTERNET IS NEITHER OWNED NOR CONTROLLED BY ANY ONE
ENTITY; AS A RESULT, SAGE NETWORKS EXPRESSLY DISCLAIMS ANY AND ALL
REPRESENTATIONS, WARRANTIES OR GUARANTEES THAT THE CUSTOMER EQUIPMENT SHALL BE
ABLE TO ACCESS THE INTERNET AT ANY GIVEN TIME. SAGE NETWORKS REPRESENTS THAT IT
SHALL MAKE EVERY GOOD FAITH EFFORT THAT THE CUSTOMER EQUIPMENT HAS INTERNET
AVAILABILITY AS TO AS MANY USERS WITH AS MINIMAL INTERRUPTIONS OF HOSTING
SERVICE AS POSSIBLE; NEVERTHELESS, SAGE NETWORKS CANNOT AND DOES NOT WARRANT
THAT THERE WILL BE SATISFACTORY AND/OR UNINTERRUPTED CONNECTIONS TO THE
INTERNET. CUSTOMER USES SAG E NETWORK'S HOSTING SERVICES AT CUSTOMER'S OWN RISK.
6. ACCESS TO SYSTEM.
(a) During the Term and provided Customer is not then in default of any of
the material terms of this Agreement, including any payment terms, Customer and
its employees will be allowed root access to Customer Equipment so that Customer
can comply with its Web hosting obligations under the Customer Agreement.
Customer agrees not to attempt or allow any of its users to attempt access to
other webservers, computers, routers, hubs or any other devices connected to any
of Sage Networks' networks to which Customer does not have an account. If this
provision is breached, in addition to any other remedies Sage Networks may have
available at law, in equity or under this Agreement, Sage Networks will
immediately deny root access to Customer without penalty to Sage Networks.
(b) Customer is also entitled to physical access of the Customer Equipment
at Sage Networks' data center where the Customer Equipment is located 24 hours
per day,
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seven days a week; provided Customer is then in compliance with the terms of
this Agreement. Each such visit shall be subject to Sage Networks rules and
regulations then in effect concerning access to its data center, including,
without limitation, that all visitors (i) must sign in and out when entering and
leaving the premises, (ii ) must show proper identification and proof of
authorization from Customer in form satisfactory to Sage Networks, and (iii) may
be required to be in the company of Sage Networks personnel while at the
premises. In addition, Customer must maintain, at Customer's expense, during
the entire time this Agreement is in effect (i) Comprehensive General Liability
Insurance in an amount not less than Two Million U.S. Dollars ($2,000,000) per
occurrence for bodily injury and property damage, (ii) Employer's Liability
Insurance in an amount not less than Five Hundred Thousand U.S. Dollars
($500,000) per occurrence, and (iii) Worker's Compensation in an amount not less
than that prescribed by statutory limits. Within ten (10) days of the date
hereof, Customer shall furnish Sage Networks with certificates of insurance
which evidence the minimum levels of insurance set forth herein and which name
Sage Networks as additional insured.
7. DEFAULT, OFFSET AND ACCELERATION.
(a) As used herein, "Default" shall mean, with respect to Customer, any or
all of the following: (i) Customer's failure to pay when due any fees required
to be paid to Sage Networks pursuant to this Agreement; (ii) Customer's breach
of any other material provision of this Agreement including, without
limitation, the provisions contained in Section 10 "Prohibited Uses"; or (iii)
any breach by Customer of any law, statute or regulation, which, in the case of
a breach described in clause (ii) or (iii), remains uncured following a
reasonable period in the light of the circumstances of such breach after receipt
by Customer of written notice from Sage Networks advising it with specificity of
such Default, unless within such period Customer commenced curing such Default
and continues to act diligently until such Default is cured.
(b) Upon any Default by Customer, in addition to any and all other remedies
available at law or in equity to Sage Networks, Sage Networks may, at its option
(i) restrict access by Customer and/or the public to all or any part of
Customer's Equipment immediately upon Default and without notice to Customer,
(ii) terminate, withhold or suspend the Hosting Services, and/or (iii) terminate
this Agreement and accelerate the payment of the then unpaid fees for the
balance of the Initial Term of this Agreement and any other fees or charges
then due hereunder, and declare the same immediately due and payable whereupon
Customer shall pay all of such fees and/or charges immediately upon delivery of
written notice to Customer advising it of such acceleration of payment. Before
proceeding with any of the above remedies, Sage Networks may, but is not
required to, deliver a notice to cure such Default to Customer upon terms that
Sage Networks deems to be acceptable, which may include but is not limited to,
written assurance provided by Customer that such Default will not recur and the
charging of a reinstatement fee to be determined by Sage Networks.
(c) If Sage Networks asserts its rights under this Agreement and/or files
suit to enforce the terms and conditions hereof, Customer shall be liable for
any and all of
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Sage Networks' costs incurred in connection therewith, including but not limited
to, reasonable attorney's fees (whether or not litigation is commenced) and
court costs.
(d) As used herein, "Default" shall mean, with respect to Sage Networks,
Sage Network's breach of (i) any provision of this Agreement, which breach
materially and adversely affects the Customer's ability to perform its
obligations under the Customer Agreement and remains uncured after 24 hours
receipt by Sage Networks of written notice from Customer advising it with
specificity of such Default, unless within 48 hours of such notice such Default
is cured or (ii) any other material provision of this Agreement, which breach
remains uncured following a reasonable period in the light of the circumstances
of such breach after receipt by Customer of written notice from Sage Networks
advising it with specificity of such Default, unless within such period Sage
Networks commenced curing such Default and continues to act diligently until
such Default is cured.
(e) The provisions of this Section 7 are subject to the following
limitations: if by reason of acts of God; strikes; lockouts or other industrial
disturbances; acts of public enemies; orders of any kind of the Government of
the United States, of the State of Georgia or of the State of New York, or any
department, agency, political subdivision, court or official of either of them,
or any civil or military authority; insurrections; riots; epidemics; landslides;
floods; washouts; droughts; arrests; restraint of government and people; civil
disturbances; explosions; breakage or accident to machinery; partial or entire
failure of utilities; or any cause or event not reasonably within the control of
such party, a party hereto is unable in whole or in part to carry out any one
or more of its agreements or obligations contained in this Agreement, other than
the obligations of the Customer pursuant to Section 4 hereof, such party shall
not be deemed in Default by reason of not carrying out said agreement or
agreements or performing said obligation or obligations during the continuance
of such inability. Any failure of the Customer to perform its obligations under
Section 4 hereof shall constitute a Default regardless of the reason for such
failure to perform.
8. INDEMNIFICATION. Customer shall defend, indemnify, save and hold Sage
Networks, its officers, directors, contractors, employees, successors and/or
assigns harmless from any and all demands, liabilities, losses, costs and
claims, including reasonable attorneys' fees, compensatory damages, punitive
damages, trebled damages, and statutory damages which may be asserted against or
incurred by Sage Networks, its agents, directors, officers, contractors,
employees, successors and/or assigns arising or resulting from any service
provided or performed or agreed to be performed by Customer, its agents,
employees or assigns, or any product distributed, offered or sold by Customer,
its agents, employees or assigns under this Agreement.
9. CONTENT. Sage Networks will exercise no control whatsoever over, nor have
any responsibility or liability whatsoever for, the content of the information
passing through the Customer's Equipment, which shall be the sole responsibility
of Customer. Sage Networks shall make no effort to validate any information
passing through the Customer's Equipment for content, correctness, usability or
for any other reason.
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10. PROHIBITED USES.
(a) Customer shall not use, nor permit the use of or by any person, of
Customer's Equipment or any part thereof, including any links to other web
space, (i) to transmit any obscene communications with intent to annoy another
person or persons or to any person under 18 years of age, (ii) in violation of
any patent, trademark, service mark, or copyright law, or (iii) to transmit
unsolicited advertisements of services or products, a practice also known as
"spamming" or mail relay "spamming".
(b) Customer shall not use, nor permit the use of or by any person,
Customer's Equipment or any part thereof, including any links to other web
space, in violation of Sage Networks Usage Policy. Said Usage Policy is
incorporated into this Agreement as if fully set forth herein. Customer
acknowledges that it has reviewed the aforementioned Usage Policy and will
comply with its terms and conditions. Sage Networks reserves the right to amend
the Usage Policy from time to time and Customer shall be bound by any such
amendments, provided, however, if any such amendments materially modify
Customer's obligations hereunder, Customer shall promptly notify Sage Networks
of such effect and that it intends to terminate this Agreement if the Usage
Policy is not further amended to reasonably avoid such effect. Such termination
shall be effective 90 days following Sage Networks receipt of such notification
from Customer unless Sage Networks, in its sole discretion, further amends the
Usage Policy to reasonably avoid such effect and notifies Customer of such
amendment. Customer shall have the obligation to periodically visit Sage
Networks' Web site to review the Usage Policy and to make certain Customer is in
full compliance therewith other than as stated in the preceding sentence.
11. LIMITED LIABILITY.
(a) Under no circumstances, including negligence, shall Sage Networks, its
officers, agents or anyone else acting through or on Sage Networks behalf,
involved in creating, producing or distributing the Hosting Services provided
pursuant to this Agreement be liable for any claims, cause of action, direct,
indirect, incidental, special, or consequential, trebled, or punitive damages
that result or have alleged to have resulted from the use of or inability to use
the Hosting Services provided pursuant to this Agreement or that results from
mistakes, omissions, interruptions, deletion of files, errors, defects, delays
in operation, or transmission or any failure of performance, whether or not
limited to acts of God, communications failure, theft, destruction or
unauthorized access to Sage Networks' records, programs or services. Customer
hereby acknowledges that this paragraph shall apply to all content of the
Hosting Services provided pursuant to this Agreement.
(b) Notwithstanding the above, Customer's remedies for all damages, losses
from any and all claims, costs or causes of action, whether in contract, quasi-
contract, statutory, tort including negligence, or otherwise, arising under or
in connection with this
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Agreement, shall be limited to the aggregate dollar amount which Customer has
theretofore paid to Sage Networks under this Agreement.
(c) Nothing in this Agreement is intended to limit the obligations of the
parties thereto to provide indemnification pursuant to and in accordance with
the Purchase Agreement.
12. RESPONSIBILITY AND CONTROL.
(a) Customer shall inspect and monitor web space associated with the
Customer's Equipment weekly (or more frequently at Customer's option) to ensure
that no material therein is in violation of Section 10 "Prohibited Uses".
(b) Customer shall be solely responsible for the handling, processing and
filling any Customer orders generated by the Customer's Equipment, if any, and
for handling Customer inquires and/or complaints arising therefrom. Sage
Networks shall not b e liable for any taxes or other fees to be paid in
accordance with or related to the handling, processing or filling of Customer
orders or the sales generated from the Customer Equipment. Customer agrees to
take full responsibility for all taxes and fees of any nature associated with
such products sold or services provided.
13. TERMINATION. Except as may otherwise be provided in Section 3 or Section 7
hereof, this Agreement may not be terminated by either party prior to the
expiration of the Term. Any and all of Sage Networks proprietary software,
source code or other confidential information and trade secrets must be
returned to Sage Networks immediately upon the expiration of the Term of the
Agreement.
14. ASSIGNMENT PROHIBITED; SUCCESSORS. The Customer shall not assign this
Agreement without the prior written consent of Sage Networks. This Agreement
shall inure to the benefit of and be binding upon Customer and Sage Networks and
their successors and permitted assigns and any third party which succeeds to
all or substantially all of the assets and business of either such party.
15. CHOICE OF LAW AND FORUM. This Agreement shall be governed by and construed
in accordance with the laws of the State of Georgia.
16. ENTIRE AGREEMENT; SEVERABILITY. This Agreement sets forth the entire
agreement between Sage Networks and Customer with respect to the subject matter
hereof and supersedes all previous representations, understandings or agreements
and shall prevail notwithstanding any variance with terms and conditions of any
other prior writing between the parties. If any provision of this Agreement is
held to be invalid by a court of competent jurisdiction, then the remaining
provisions shall nevertheless continue in full force and effect.
17 NOTICES. All notices hereunder must be sent by certified mail, return
receipt requested, hand delivery to an officer of the party receiving the notice
against receipt, or
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by a commercial overnight courier service for next day delivery, to the ad
dresses stated above in this Agreement for the respective parties. Notice by any
method other than as provided herein shall be ineffective and without force
unless otherwise agreed to in writing by the receiving party. Notice is deemed
effective upon receipt. A copy of each notice to Sage Networks shall be sent to
the following:
Steven Maggs
Chief Executive Officer
Sage Networks, Inc.
18 Perimeter Park Drive
Building 18, Suite 111
Atlanta, GA 30341
Bruce S. Klein, Esq.
General Counsel
Sage Networks, Inc.
11 Martine Avenue, 12th Floor
White Plains, NY 10606
A copy of each notice to Customer shall be sent to the following:
Sims Moss Kline & Davis LLP
Suite 310 - 400 Northpart Town Center
1000 Abernathy Road, N.E.
Atlanta, Georgia 30328
Attention: Raymond L. Moss, Esq.
The notice addresses set forth in this Agreement may be changed by giving
written notice in accordance with this Agreement.
18. RISK OF LOSS. Sage Networks shall not bear the risk of loss or damage of
the Customer Equipment. Sage Networks shall bear the risk of loss or damage of
equipment that it provides for the Hosting Services. Neither the Customer nor
Sage Networks shall bear the risk of loss or damage of third party equipment
used in providing the Hosting Services.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date indicated above.
SAGE NETWORKS, INC.
By: /s/ Leonard J. Frassler
-------------------------------------
Leonard J. Fassler,
Co-Chairman
HOMECOM COMMUNICATIONS, INC.
By: /s/ Harvey Sax
-------------------------------------
Harvey Sax, President
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