UNITED STATES
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
March 7, 2007
Date of Report (Date of earliest event reported)
TelVue Corporation
(Exact name of registrant as specified in its charter)
Delaware 0-17170 51-0299879
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
16000 Horizon Way, Suite 500,
Mt. Laurel, New Jersey 08054
(Address of principal executive offices)
856-273-8888
(Registrant's telephone number, including area code)
N/A
(Former name or former address,
if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:
__ Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
__ Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
__ Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act(17 CFR 240.14d-2(b))
__ Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act(17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
TelVue Corporation ("TelVue") entered into a Stock Purchase Agreement
(the "Stock Purchase Agreement") with the stockholders holding all of the
issued and outstanding shares of capital stock of Princeton Server Group,
Inc. ("PSG"), effective March 7, 2007. The Transaction closed on March 12,
2007 as discussed further in Item 2.01 below. Under the terms and
conditions of the Stock Purchase Agreement, TelVue acquired all of the
issued and outstanding capital stock of PSG for a purchase price of $6.1
million in cash plus the forgiveness of a $400,000 loan (the
"Transaction"). The Stock Purchase Agreement contains customary
representations, warranties and covenants from each of the sellers of PSG
stock, PSG and its subsidiaries and TelVue.
Item 2.01 Completion of Acquisition or Disposition of Assets
On March 12, 2007, pursuant to the Stock Purchase Agreement, TelVue
closed the Transaction and acquired all of the issued and outstanding
shares of capital stock of PSG from the holders thereof for a purchase
price of $6.1 million in cash plus the forgiveness of a $400,000 loan. The
Transaction was subject to certain closing conditions, including the
procurement of third-party consents by PSG, the delivery of certificates
and opinions of counsel by the parties, and the absence of specified legal
proceedings or the occurrence of events which would have a material adverse
effect on the Transaction. The description of the Stock Purchase Agreement
and the Transaction are qualified in their entirety by reference to the
Stock Purchase Agreement that is filed as Exhibit 2.1 hereto and is
incorporated herein by reference. Further details regarding the
Transaction are contained in a Press Release dated March 7, 2007, which is
attached to this Current Report on Form 8-K as Exhibit 99.1. This press
release is incorporated into this Item 2.01 by reference.
PSG previously issued a 6% Convertible Note (the "Note") to TelVue on
December 26, 2006, pursuant to which PSG borrowed $400,000 from TelVue.
Under the terms of the Note, PSG was to make monthly payments commencing on
July 1, 2007 and running through January 1, 2012. Pursuant to the terms of
the Stock Purchase Agreement, the loan was forgiven.
On November 3, 2006, TelVue entered into a Line of Credit Note with
its majority stockholder, H.F. (Gerry) Lenfest, pursuant to which TelVue
may borrow up to the maximum principal amount of $10 million. In order to
finance the Transaction, TelVue has drawn upon the Line of Credit Note in
the amount of $6.1 million.
Item 9.01 Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
The consolidated financial statements of PSG required by this item
have not been filed on this initial Current Report on Form 8-K but will be
filed by amendment on or before May 29, 2007.
The audited consolidated financial statements of PSG required by
this item have not been filed on this initial Current Report on Form 8-K
but will be filed by amendment on or before May 29, 2007.
(b) Pro Forma Financial Information
The pro forma financial information required by this item has not
been filed on this initial Current Report on Form 8-K but will be filed by
amendment on or before May 29, 2007.
(d) Exhibits
2.1* Stock Purchase Agreement by and among TelVue Corporation and
stockholders holding all the issued and outstanding shares of capital stock
of Princeton Server Group, Inc. dated as of March 7, 2007.
99.1 Press Release dated March 7, 2007.
---------------------------------
*The schedules to the Stock Purchase Agreement have been omitted pursuant
to Item 601(b)(2) of Regulation S-B promulgated by the Securities and
Exchange Commission. The omitted schedules from this filing will be
provided upon request.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,the
registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Date: March 13, 2007 TelVue Corporation
By: /s/ Joseph Murphy
------------------
Name: Joseph Murphy
Title: President and Chief Executive Officer
EXHIBIT INDEX
2.1* Stock Purchase Agreement by and among TelVue Corporation and
stockholders holding all the issued and outstanding shares of capital stock
of Princeton Server Group, Inc. dated as of March 7, 2007.
99.1 Press Release dated March 7, 2007.
---------------------------------
*The schedules to the Stock Purchase Agreement have been omitted pursuant
to Item 601(b)(2) of Regulation S-B promulgated by the Securities and
Exchange Commission. The omitted schedules from this filing will be
provided upon request.
EXHIBIT 2.1*
STOCK PURCHASE AGREEMENT BY AND AMONG TELVUE COPPORATION AND THE
STOCKHOLDER HOLDING ALL THE ISSUED AND OUTSTANDING SHARES OF CAPITAL STOCK
OF PRINCETON SERVER GROUP, INC DATED MARCH 7, 2007. ____________________
*The schedules to the Stock Purchase Agreement have been omitted pursuant
to Item 601(b)(2) of Regulation S-B promulgated by the Securities and
Exchange Commission. The omitted schedules from this filing will be
provided upon request.
STOCK PURCHASE AGREEMENT
By and Among
TELVUE CORPORATION
AND
STOCKHOLDERS HOLDING ALL THE ISSUED AND OUTSTANDING SHARES OF CAPITAL STOCK
OF
PRINCETON SERVER GROUP, INC.
MARCH 7, 2007
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is entered into as
of March 7, 2007 by and among TelVue Corporation, a Delaware corporation
("TelVue") and the persons set forth on the signature page hereto
identified as "Sellers" (each a "Seller" and collectively, "Sellers").
Also party to this Agreement, solely for purposes of 2 and 4(a), are
the persons identified on the signature page of this
Agreement as "Minority Holders."
Sellers in the aggregate own 3,000,000 of the 3,963,000 shares of
issued and outstanding capital stock of Princeton Server Group, Inc. a New
Jersey corporation, f/k/a PSG Acquisition, Inc. and successor by merger to
Princeton Server Group, LLC ("PSG). The balance of PSG issued and
outstanding capital stock is owned by the Minority Holders.
TelVue, Sellers and the Minority Holders are referred to
collectively herein as the "Parties"). Unless expressly indicated
otherwise, all references in this Agreement to PSG shall also refer to its
predecessor entity Princeton Server Group, LLC.
This Agreement contemplates a transaction in which TelVue will
purchase from Sellers and the Minority Holders, and Sellers and the
Minority Holders will sell to TelVue, all of the issued and outstanding
capital stock of PSG on the terms and conditions set forth in this
agreement.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations,
warranties, and covenants herein contained, the Parties, intending to be
legally bound, hereby agree as follows.
1. Definitions.
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues, penalties,
fines, costs, amounts paid in settlement, Liabilities, obligations, Taxes,
liens, losses, expenses, and fees, including court costs and reasonable
attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of 1934, as
amended.
"Affiliated Group" means any affiliated group within the meaning of
Code 1504(a) or any similar group defined under a similar provision of
state, local or foreign law.
"Auditor" has the meaning set forth in 3(d) below.
"Closing" has the meaning set forth in 2(c) below.
"Closing Date" has the meaning set forth in 2(c) below.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of
ERISA and Code 4980B and of any similar state law.
"Code" means the Internal Revenue Code of 1986, as amended.
"Competing Transaction" has the meaning set forth in 6(g).
"Confidential Information" means any information concerning the
businesses and affairs of PSG that is not already generally available to
the public.
"Disclosure Schedule" has the meaning set forth in 5 below.
"Employee Benefit Plan" means any "employee benefit plan" (as such
term is defined in ERISA 3(3)) and any other employee benefit plan,
program or arrangement of any kind.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
3(1).
"Environmental, Health, and Safety Requirements" shall mean, as
amended and as now and hereafter in effect, all federal, state, local, and
foreign statutes, regulations, ordinances, and other provisions having the
force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations, and all common law concerning
public health and safety, worker health and safety, pollution, or
protection of the environment, including, without limitation, all those
relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, release, threatened release, control, or
cleanup of any hazardous materials, substances, or wastes, chemical
substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise, or radiation.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means each entity that is treated as a single
employer with PSG for purposes of Code 414.
"Escrowee" shall mean Firsttrust Bank, or such other entity agreed
upon by TelVue and Sellers which is independent of the Parties.
"Fiduciary" has the meaning set forth in ERISA 3(21).
"Financial Statements" has the meaning set forth in 5(g) below.
"Improvements" has the meaning set forth in 5(l) below.
"Indebtedness" means any note, bond, guarantee, debt security, or
other evidence of indebtedness for borrowed money created, incurred,
assumed, or guaranteed by PSG.
"Indemnified Party" has the meaning set forth in 9(d) below.
"Indemnifying Party" has the meaning set forth in 9(d) below.
"Intellectual Property" means all of the following in any
jurisdiction throughout the world: (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations, continuations-in-part,
revisions, extensions, and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, slogans, trade names, corporate names,
Internet domain names, and rights in telephone numbers, together with all
translations, adaptations, derivations, and combinations thereof and
including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets
and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information,
and business and marketing plans and proposals), (f) all computer software
(including source code, executable code, data, databases, and related
documentation), (g) all advertising and promotional materials, (h) all
other proprietary rights, and (i) all copies and tangible embodiments
thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable investigation,
except as otherwise specifically provided.
"Leased Real Property" means the real property located at 501
Forrestal Road, Princeton, NJ which consists of 2,218 square feet comprised
of offices numbered 202, 206, 226, 301, 322 and 329.
"Liability" means any liability or obligation of whatever kind or
nature (whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), including any liability
for Taxes.
"Lien" means any mortgage, pledge, lien, encumbrance, charge, or
other security interest, other than (a) liens for Taxes not yet due and
payable or for Taxes that the taxpayer is contesting in good faith through
appropriate proceedings, (b) purchase money liens and liens securing rental
payments under capital lease arrangements and (c) other liens arising in
the Ordinary Course of Business and not incurred in connection with the
borrowing of money.
"Material Adverse Effect" or "Material Adverse Change" means any
effect or change that would be (or could reasonably be expected to be)
materially adverse to the business, assets, condition (financial or
otherwise), operating results, operations, or business prospects of PSG or
to the ability of Sellers to consummate timely the transactions
contemplated hereby (regardless of whether or not such adverse effect or
change can be or has been cured at any time).
"Minority Holders" has the meaning set forth in the preamble to this
Agreement.
"Most Recent Balance Sheet" means the balance sheet contained within
the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in 5(g)
below.
"Most Recent Fiscal Month End" has the meaning set forth in 5(g)
below.
"Most Recent Fiscal Year End" has the meaning set forth in 5(g)
below.
"Multi-employer Plan" has the meaning set forth in ERISA 3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to
quantity and frequency).
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, any other business entity, or a
governmental entity (or any department, agency, or political subdivision
thereof).
"Prohibited Transaction" has the meaning set forth in ERISA 406 and
Code 4975.
"PSG" has the meaning set forth in the preface above.
"PSG Share" means any share of the common stock, par value $.01 per
share, of PSG owned or controlled by Sellers and the Minority Holders.
"Purchase Price" has the meaning set forth in 2(b) below.
"Real Property Laws" has the meaning set forth in 5(l) below.
"Reportable Event" has the meaning set forth in ERISA 4043.
"Representative" means Jesse Lerman, as agreed by the Sellers,
pursuant to the provisions set forth in 11(o) below.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" has the meaning set forth in the preface above.
"Shareholders Agreement" means the agreement among all Sellers,
Minority Holders and PSG dated as of June 30, 2006.
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership, association, or other business
entity of which (i) if a corporation, a majority of the total voting power
of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers, or trustees
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a
combination thereof or (ii) if a limited liability company, partnership,
association, or other business entity (other than a corporation), a
majority of the partnership or other similar ownership interests thereof is
at the time owned or controlled, directly or indirectly, by that Person or
one or more Subsidiaries of that Person or a combination thereof and for
this purpose, a Person or Persons own a majority ownership interest in such
a business entity (other than a corporation) if such Person or Persons
shall be allocated a majority of such business entity's gains or losses or
shall be or control any managing director or general partner of such
business entity (other than a corporation). The term "Subsidiary" shall
include all Subsidiaries of such Subsidiary.
"Systems" has the meaning set forth in 5(aa) below.
"Tax" or "Taxes" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Code 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property,
personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not and including any obligations to indemnify or otherwise
assume or succeed to the Tax liability of any other Person.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"TelVue" has the meaning set forth in the preface above.
"Third-Party Claim" has the meaning set forth in 9(d) below.
"Transaction Expenses" has the meaning set forth in 9(b) below.
"WARN Act" has the meaning set forth in 5(w) below.
2. Purchase and Sale of PSG Shares.
a. Basic Transaction. On and subject to the terms and conditions
of this Agreement, TelVue agrees to purchase from each Seller and each
Minority Holder, and each Seller and each Minority Holder agrees to sell to
TelVue, all of his or her or its PSG Shares in consideration of his, her or
its allocated share of the Purchase Price.
b. Purchase Price. TelVue agrees to pay to Sellers and Minority
Holders an aggregate amount (the "Purchase Price") of Six Million One
Hundred Thousand Dollars ($6,100,000.00). The Purchase Price shall be
allocated among Sellers and Minority Holders as set forth in 2(b) of the
Disclosure Schedule.
c. Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place on the fourth business day
following the satisfaction or waiver of all conditions to the obligations
of the Parties to consummate the transactions contemplated hereby (other
than conditions with respect to actions the respective Parties will take at
the Closing itself) or such other date as TelVue and the Representative may
mutually determine (the "Closing Date"); provided, however, that the
Closing Date shall be no earlier than March 12, 2007 and no later than
March 16, 2007.
d. Deliveries at Closing. At the Closing,
i. Sellers and Minority Holders will deliver to TelVue the
various certificates, instruments, and documents referred to in 8(a)
below,
ii. TelVue will deliver to Sellers the various certificates,
instruments, and documents referred to in 8(b) below,
iii. Each Seller and each Minority Holder will deliver to
TelVue stock certificates representing all of his, her, or its PSG Shares
endorsed in blank or accompanied by duly executed assignment documents;
iv. TelVue will pay One Million Dollars ($1,000,000.00) of
the Purchase Price by delivery to the Escrowee, to be held pursuant to the
terms of the Escrow Agreement substantially in the form of Exhibit A
attached hereto; and
v. TelVue will pay the balance of the Purchase Price, Five
Million One Hundred Thousand Dollars ($5,100,000.00) to Sellers and
Minority Holders by wire transfer of immediately available funds to the
bank account or accounts designated by the Representative (such designation
to be made at least three (3) business days prior to the Closing Date).
3. [Intentionally Left Blank]
4. Representations and Warranties Concerning Transaction.
a. Sellers' and Minority Holders' Representations and Warranties.
Each Seller and each Minority Holder (described in this 4(a) as
"Seller/Minority Holder") represents and warrants to TelVue solely for
himself, herself or itself that the statements contained in this 4(a) are
correct and complete as of the date of this Agreement with respect to
himself, herself, or itself.
i. Organization of Certain Sellers and Minority Holders.
Seller/ Minority Holder (if a corporation or other entity) is duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation or other formation.
ii. Authorization of Transaction. Seller/Minority Holder has
full power and authority (including full corporate or other entity power
and authority) to execute and deliver this Agreement and to perform his,
her, or its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of Seller/Minority Holder, enforceable in
accordance with its terms and conditions. Seller/Minority Holder need not
give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order to
consummate the transactions contemplated by this Agreement. The execution,
delivery, and performance of this Agreement and all other agreements
contemplated hereby have been duly authorized by Seller/Minority Holder.
iii. Non-contravention. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which Seller/Minority
Holder is subject or, if Seller/Minority Holder is an entity, any provision
of its charter, bylaws, or other governing documents, (B) conflict with,
result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract,
lease, license, instrument, or other arrangement to which Seller/Minority
Holder is a party or by which he, she, or it is bound or to which any of
his, her, or its assets are subject, or (C) result in the imposition or
creation of a Lien upon or with respect to the PSG Shares.
iv. Brokers' Fees. Seller/Minority Holder has no Liability to
pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement.
v. PSG Shares. Seller/Minority Holder holds of record and
owns beneficially the number of PSG Shares set forth next to his, her, or
its name in 5(b) of the Disclosure Schedule, free and clear of any
restrictions on transfer (other than any restrictions under the Securities
Act and state securities laws), Taxes, Liens, options, warrants, purchase
rights, contracts, commitments, equities, claims, and demands other than
imposed by the Shareholders Agreement. Other than this Agreement and the
Shareholders Agreement, Seller/Minority Holder is not a party to any
option, warrant, purchase right, or other contract or commitment that could
require Seller/Minority Holder to sell, transfer, or otherwise dispose of
any capital stock of PSG. Except for the Shareholders Agreement,
Seller/Minority Holder is not a party to any voting trust, proxy, or other
agreement or understanding with respect to the voting of any capital stock
of PSG. The Seller/Minority Holder hereby consents to the termination of the
Shareholders Agreement upon Closing, and agrees that without any further
action by PSG or any other Person, the Shareholders Agreement shall
terminate upon Closing hereunder.
b. TelVue's Representations and Warranties. TelVue represents and
warrants to Sellers and Minority Holders that the statements contained in
this 4(b) are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then
and as though the Closing Date were substituted for the date of this
Agreement throughout this 4(b)).
i. Organization of TelVue. TelVue is a Delaware corporation
duly organized, validly existing, and in good standing under the laws of
the jurisdiction of its incorporation.
ii. Authorization of Transaction. TelVue has full power and
authority (including full entity power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of TelVue,
enforceable in accordance with its terms and conditions. TelVue need not
give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order to
consummate the transactions contemplated by this Agreement. The execution,
delivery, and performance of this Agreement and all other agreements
contemplated hereby have been duly authorized by TelVue.
iii. Non-contravention. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which TelVue is subject
or any provision of its article of incorporation, bylaws, or other
governing documents or (B) conflict with, result in a breach of, constitute
a default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other
arrangement to which TelVue is a party or by which it is bound or to which
any of its assets are subject.
iv. Purchase Price. TelVue has adequate funds to pay the
Purchase Price in the manner contemplated herein, including without
limitation the ability to draw on a line of credit.
v. Brokers' Fees. TelVue has no Liability to pay any fees or
commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which any Seller or
Minority Holder could become liable or obligated.
5. Representations and Warranties Concerning PSG and Its Subsidiaries.
Sellers jointly and severally represent and warrant to TelVue that
the statements contained in this 5 are correct and complete as of the date
of this Agreement, except as set forth in the disclosure schedule delivered
by Sellers to TelVue on the date hereof and initialed by the Parties (the
"Disclosure Schedule"). The Disclosure Schedule is arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this 5.
a. Organization, Qualification, and Corporate Power. PSG is a
corporation duly organized, validly existing, and in good standing under
the laws of the State of New Jersey. PSG is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction where
such qualification is required, or where the failure to be so qualified
will not give rise to a Material Adverse Effect. PSG has full corporate
power and authority and all licenses, permits, and authorizations necessary
to carry on the businesses in which it is engaged and to own and use the
properties owned and used by it. 5(a) of the Disclosure Schedule lists the
directors and officers of PSG. Sellers have delivered to TelVue correct and
complete copies of the charter and bylaws of PSG (as amended to date). The
stock certificate books and the stock record books of PSG since PSG's
inception and the minute books of PSG since its inception (containing the
records of meetings of the stockholders, the board of directors, and any
committees of the board of directors), are correct and complete. PSG is not
in default under or in violation of any provision of its charter or bylaws.
b. Capitalization. The authorized capital stock of PSG consists
of 10,000,000 shares of common stock, each with a par value $0.01 per share,
of which 3,963,000 shares are issued and outstanding and no shares are held in
treasury. All of the issued and outstanding shares of capital stock of PSG
have been duly authorized, are validly issued, fully paid, and non-
assessable, and are held of record by the respective Sellers as set forth
in 5(b) of the Disclosure Schedule. Other than the Warrant issued to
TelVue on December 26, 2006 evidencing the right to purchase 129,630 shares
of PSG common stock, there are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require PSG
to issue, sell, or otherwise cause to become outstanding any of its capital
stock. Except as set forth in 5(b) of the Disclosure Schedule, there are
no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to PSG. Other than the
Shareholders Agreement, there are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of the capital
stock of PSG.
c. Non-contravention. Except as set forth in 5(c) of the
Disclosure Schedule, neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which PSG is subject or any
provision of the charter or bylaws of PSG or (ii) conflict with, result in
a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which PSG is a party or by which it is
bound or to which any of its assets is subject (or result in the imposition
of any Lien upon any of its assets). Except as set forth in 5(c) of the
Disclosure Schedule, PSG does not need to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate
the transactions contemplated by this Agreement.
d. Brokers' Fees. PSG does not have any Liability to pay any fees
or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
e. Title to Assets. Except as set forth in 5(e) of the Disclosure
Schedule, PSG has good and marketable title to, or a valid leasehold
interest in, the properties and assets used by it, located on its premises,
or shown on the Most Recent Balance Sheet or acquired after the date
thereof, free and clear of all Liens, except for properties and assets
disposed of in the Ordinary Course of Business since the date of the Most
Recent Balance Sheet.
f. Subsidiaries. PSG has no Subsidiaries. PSG does not control
directly or indirectly or have any direct or indirect equity participation
in any corporation, partnership, trust, or other business association nor
does it own or have any right to acquire, directly or indirectly, any
outstanding capital stock of, or other equity interests in, any Person.
g. Financial Statements. Attached to 5(g) of the Disclosures
Schedule are the following financial statements of PSG and its
predecessor(s) (collectively the "Financial Statements"): (i) compiled
balance sheets and statements of income, changes in stockholders' equity
and cash flows as of and for the fiscal years ended December 31, 2005 and
2006 (December 31, 2006 is hereinafter referred to as the "Most Recent
Fiscal Year End") and (ii) management prepared balance sheets and
statements of income, changes in stockholders' equity and cash flows (the
"Most Recent Financial Statements") as of and for the two (2) month period
ended February 28, 2007 (the "Most Recent Fiscal Month End"). The Financial
Statements present fairly the financial condition of PSG as of such dates
and the results of operations of PSG for such periods, are correct and
complete, and are consistent with the books and records of PSG (which books
and records are correct and complete); provided, however, that the Most
Recent Financial Statements are subject to normal year-end adjustments
(which will not be material individually or in the aggregate) and lack
footnotes and other presentation items. The reserves, or the absence(s)
thereof, reflected in the Financial Statements are adequate, appropriate
and reasonable.
h. Events Subsequent to Most Recent Fiscal Year End. Since the
Most Recent Fiscal Year End, there has not been any Material Adverse
Change. Without limiting the generality of the foregoing, since that date,
except as set forth in 5(h) of the Disclosure Schedule:
i. PSG has not sold, leased, transferred, or assigned any of
its assets, tangible or intangible, other than for fair consideration in
the Ordinary Course of Business;
ii. PSG has not entered into any agreement, contract, lease,
or license (or series of related agreements, contracts, leases, and
licenses) either involving more than $15,000 or outside the Ordinary Course
of Business;
iii. no party (including PSG) has accelerated, terminated,
modified, or cancelled any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) involving
more than $15,000 to which PSG is a party or by which it is bound;
iv. PSG has not imposed any Liens upon any of its assets,
tangible or intangible;
v. PSG has not made any capital expenditure (or series of
related capital expenditures) either involving more than $15,000 or outside
the Ordinary Course of Business, other than commitments to lease certain
equipment as set forth in Schedule 5(h) of the Disclosure Schedule;
vi. PSG has not made any capital investment in, any loan to,
or any acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans, and acquisitions) either
involving more than $15,000 or outside the Ordinary Course of Business;
vii. PSG has not issued any note, bond, or other debt security
or created, incurred, assumed, or guaranteed any indebtedness for borrowed
money or capitalized lease obligation either involving more than $15,000
singly or $30,000 in the aggregate;
viii. PSG has not delayed or postponed the payment of accounts
payable and other Liabilities outside the Ordinary Course of Business;
ix. PSG has not cancelled, compromised, waived, or released
any right or claim (or series of related rights and claims) either
involving more than $15,000 or outside the Ordinary Course of Business;
x. PSG has not transferred, assigned, or granted any license
or sublicense of any rights under or with respect to any Intellectual
Property other than in the Ordinary Course of Business;
xi. there has been no change made or authorized in the
charter or bylaws of PSG;
xii. PSG has not issued, sold, or otherwise disposed of any of
its capital stock, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any
of its capital stock;
xiii. PSG has not declared, set aside, or paid any dividend or
made any distribution with respect to its capital stock (whether in cash or
in kind) or redeemed, purchased, or otherwise acquired any of its capital
stock;
xiv. PSG has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to its property;
xv. PSG has not made any loan to, or entered into any other
transaction with, any of its directors, officers, and employees other than
in the Ordinary Course of Business;
xvi. PSG has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms of
any existing such contract or agreement;
xvii. PSG has not granted any increase in the base compensation
of any of its employees outside the Ordinary Course of Business or
increased the base compensation of any of its directors or officers;
xviii.PSG has not adopted, amended, modified, or terminated any
bonus, profit sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its directors, officers, and employees
(or taken any such action with respect to any other Employee Benefit Plan);
xix. PSG has not made any other change in employment terms for
any of its employees outside the Ordinary Course of Business or made any
other change in employment terms for any of its directors or officers;
xx. PSG has not made or pledged to make any charitable or
other capital contribution outside the Ordinary Course of Business;
xxi. there has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary
Course of Business involving PSG;
xxii. PSG has not discharged a material Liability or Lien
outside the Ordinary Course of Business;
xxiii.PSG has not changed its accounting or Tax practices,
policies, methodologies or principles;
xxiv. PSG has not made any loans or advances of money;
xxv. PSG has not disclosed any Confidential Information
outside the Ordinary Course of Business and for which PSG received an
appropriate and adequate non-disclosure or similar agreement; and
xxvi. PSG has not committed to any of the foregoing.
i. Undisclosed Liabilities. PSG has no Liabilities except for
those set forth on 5(i) of the Disclosure Schedule, and (i) Liabilities
set forth on the face of the Most Recent Balance Sheet, and (ii)
Liabilities that have arisen after the Most Recent Fiscal Month End in the
Ordinary Course of Business (none of which results from, arises out of,
relates to, is in the nature of, or was caused by any breach of contract,
breach of warranty, tort, infringement, or violation of law).
j. Legal Compliance. PSG has complied in all material respects
with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder
and including the Foreign Corrupt Practices Act, 15 U.S.C. 78dd-1 et seq.)
of federal, state, local, and foreign governments (and all agencies
thereof), and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced against any
of them alleging any failure so to comply.
k. Tax Matters.
i. PSG has timely filed all Tax Returns that it was required
to file under applicable laws and regulations. All such Tax Returns were
correct and complete in all respects and were prepared in substantial
compliance with all applicable laws and regulations. All Taxes due and
owing by PSG (whether or not shown on any Tax Return) have been paid. PSG
is not currently the beneficiary of any extension of time within which to
file any Tax Return. No claim has ever been made by an authority in a
jurisdiction where PSG does not file Tax Returns that PSG is or may be
subject to taxation by that jurisdiction. There are no Liens for Taxes
(other than Taxes not yet due and payable) upon any of the assets of PSG.
ii. PSG has withheld and paid all Taxes required to have been
withheld and paid in connection with any amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third
party.
iii. No Seller expects any authority to assess any additional
Taxes for any period for which Tax Returns have been filed. No foreign,
federal, state, or local tax audits or administrative or judicial Tax
proceedings are pending or being conducted with respect to PSG. PSG has not
received from any foreign, federal, state, or local taxing authority
(including jurisdictions where PSG has not filed Tax Returns) any (i)
notice indicating an intent to open an audit or other review, (ii) request
for information related to Tax matters, or (iii) notice of deficiency or
proposed adjustment for any amount of Tax proposed, asserted, or assessed
by any taxing authority against PSG. 5(k)(iii) of the Disclosure Schedule
lists all federal, state, local, and foreign income Tax Returns filed with
respect to PSG for taxable periods to date, indicates those Tax Returns
that have been audited, and indicates those Tax Returns that currently are
the subject of audit. Sellers have delivered to TelVue correct and complete
copies of all federal income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by PSG filed or
received to date.
iv. PSG has not waived any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
v. PSG has not filed a consent under Code 341(f) concerning
collapsible corporations. PSG is not a party to any agreement, contract,
arrangement or plan that has resulted or could result, separately or in the
aggregate, in the payment of (i) any "excess parachute payment" within the
meaning of Code 280G (or any corresponding provision of state, local or
foreign Tax law) and (ii) any amount that will not be fully deductible as a
result of Code 162(m) (or any corresponding provision of state, local or
foreign Tax law). PSG has not been a United States real property holding
corporation within the meaning of Code 897(c)(2) during the applicable
period specified in Code 897(c)(1)(A)(ii). PSG has disclosed on its
federal income Tax Returns all positions taken therein that could give rise
to a substantial understatement of federal income Tax within the meaning of
Code 6662. PSG is not a party to or bound by any Tax allocation or sharing
agreement. PSG (A) has not been a member of an Affiliated Group filing a
consolidated federal income Tax Return and (B) does not have any Liability
for the Taxes of any Person under Reg. 1.1502-6 (or any similar provision
of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
vi. 5(k) of the Disclosure Schedule sets forth the following
information with respect to PSG as of the most recent practicable date: (A)
the basis of PSG in its assets; (B) the amount of any net operating loss,
net capital loss, unused investment or other credit, unused foreign tax, or
excess charitable contribution allocable to PSG; and (C) the amount of any
deferred gain or loss allocable to PSG arising out of any intercompany
transaction.
vii. The unpaid Taxes of PSG (A) did not, as of the Most
Recent Fiscal Month End, exceed the reserve for Tax Liability (rather than
any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the face of the Most Recent
Balance Sheet (rather than in any notes thereto) and (B) do not exceed that
reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of PSG in filing its Tax
Returns. Since the date of the Most Recent Balance Sheet, PSG has not
incurred any liability for Taxes arising from extraordinary gains or losses
outside the Ordinary Course of Business.
viii. PSG will not be required to include any item of
income in, or exclude any item of deduction from, taxable income for any
taxable period (or portion thereof) ending after the Closing Date as a
result of any:
a) change in method of accounting for a taxable period
ending on or prior to the Closing Date;
b) "closing agreement" as described in Code 7121 (or
any corresponding or similar provision of state, local or foreign income
Tax law) executed on or prior to the Closing Date;
c) intercompany transaction or excess loss account
described in Treasury Regulations under Code 1502 (or any corresponding or
similar provision of state, local or foreign income Tax law);
d) installment sale or open transaction disposition
made on or prior to the Closing Date; or
e) prepaid amount received on or prior to the Closing
Date.
ix. PSG has not distributed stock of another Person, or has
had its stock distributed by another Person, in a transaction that was
purported or intended to be governed in whole or in part by Code 355 or
Code 361.
l. Real Property.
i. PSG does not own any real property, and PSG is not a
party to any agreement or option to purchase any real property or interest
therein. The Leased Real Property comprises all of the real property held
by PSG including, without limitation, all real property used or intended to
be used in, or otherwise related to, PSG's business.
ii. All buildings, structures, fixtures, building systems and
equipment, and all components thereof, (the "Improvements") are in such
condition and repair as is sufficient for the operation of PSG's business.
iii. To the Knowledge of any of the Sellers without
investigation, there is no condemnation, expropriation or other proceeding
in eminent domain, pending or threatened, affecting the Leased Real
Property or any portion thereof or interest therein. To the Knowledge of
any of the Sellers, there is no injunction, decree, order, writ or judgment
outstanding, or any claim, litigation, administrative action or similar
proceeding, pending or threatened, relating to the ownership, lease, use or
occupancy of the Leased Real Property or any portion thereof, or the
operation of PSG's business as currently conducted thereon.
iv. To the Knowledge of any of the Sellers without
investigation, the Leased Real Property is in compliance with all
applicable building, zoning, subdivision, health and safety and other land
use laws, including the Americans with Disabilities Act of 1990, as
amended, and all insurance requirements affecting the Leased Real Property
(collectively, the "Real Property Laws"), and PSG's current use and
occupancy of the Leased Real Property and operation of PSG's business
thereon do not violate any Real Property Laws. PSG has not received any
notice of violation of any Real Property Law. To the Knowledge of any of
the Sellers, there is no pending or anticipated change in any Real Property
Law that will materially impair the ownership, lease, use or occupancy of
the Leased Real Property or any portion thereof in the continued operation
of PSG's business as currently conducted thereon.
v. To the Knowledge of any of the Sellers without
investigation, all certificates of occupancy, permits, licenses,
franchises, approvals and authorizations (collectively, the "Real Property
Permits") of all governmental authorities, boards of fire underwriters,
associations or any other entity having jurisdiction over the Leased Real
Property that are required for PSG to use or occupy the Real Property or
operate PSG's business as currently conducted thereon, have been issued and
are in full force and effect. PSG has delivered to TelVue a true and
complete copy of all Real Property Permits.
v. PSG's current use and occupancy of the Leased Real
Property and the operation of PSG's business as currently conducted thereon
do not violate any easement, covenant, condition, restriction or similar
provision in any instrument of record or other unrecorded agreement
affecting such Real Property.
m. Intellectual Property.
i. Except as set forth on 5(m) of the Disclosure Schedule,
PSG owns and possesses or has the right to use pursuant to a valid and
enforceable written license, sublicense, agreement, or permission all
Intellectual Property necessary or desirable for the operation of the
business of PSG as presently conducted. Each item of Intellectual Property
owned or used by PSG immediately prior to the Closing will be owned or
available for use by PSG on identical terms and conditions immediately
subsequent to the Closing.
ii. PSG has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties, and PSG has never received any charge,
complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that PSG
must license or refrain from using any Intellectual Property rights of any
third party). To the Knowledge of any of the Sellers, no third party has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of PSG.
iii. 5(m)(iii) of the Disclosure Schedule identifies each
patent or registration that has been issued to PSG with respect to any of
its Intellectual Property, identifies each pending patent application or
application for registration that PSG has made with respect to any of its
Intellectual Property, and identifies each license, sublicense, agreement,
or other permission that PSG has granted to any third party with respect to
any of its Intellectual Property (together with any exceptions). Sellers
have delivered to TelVue correct and complete copies of all such patents,
registrations, applications, licenses, sublicenses, agreements, and
permissions (as amended to date) and have made available to TelVue correct
and complete copies of all other written documentation evidencing ownership
and prosecution (if applicable) of each such item. 5(m)(iii) of the
Disclosure Schedule also identifies each material unregistered trademark,
service mark, trade name, corporate name or Internet domain name, computer
software item (other than commercially available off-the-shelf software
purchased or licensed for less than a total cost of $1,000 in the
aggregate) and each material unregistered copyright used by PSG in
connection with any of its businesses. With respect to each item of
Intellectual Property required to be identified in 5(m)(iii) of the
Disclosure Schedule:
a) PSG owns and possesses all right, title, and
interest in and to the item, free and clear of any Lien, license, or other
restriction or limitation regarding use or disclosure;
b) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
c) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or, to the
Knowledge of any of the Sellers is threatened that challenges the legality,
validity, enforceability, use, or ownership of the item, and there are no
grounds for the same;
d) PSG has not ever agreed to indemnify any Person for
or against any interference, infringement, misappropriation, or other
conflict with respect to the item; and
e) no loss or expiration of the item is threatened,
pending, or reasonably foreseeable, except for patents expiring at the end
of their statutory terms (and not as a result of any act or omission by
Sellers, or PSG, including without limitation, a failure by Sellers or PSG
to pay any required maintenance fees).
iv. Except for software generally sold at retail and the
patents described in the Disclosure Schedule, PSG does not use any
Intellectual Property pursuant to license, sublicense, agreement, or
permission.
v. Sellers have complied in all material respects with and
are presently in compliance in all material respects with all foreign,
federal, state, local, governmental (including, but not limited to, the
Federal Trade Commission and State Attorneys General), administrative or
regulatory laws, regulations, guidelines and rules applicable to any
Intellectual Property and Sellers shall take all steps necessary to ensure
such compliance until Closing.
n. Tangible Assets. Except as set forth on 5(n) of the Disclosure
Schedule, PSG owns or leases all machinery, equipment, and other tangible
assets necessary for the conduct of its business as presently conducted.
Each such tangible asset has been maintained in accordance with normal
industry practice, is in good operating condition and repair (subject to
normal wear and tear), and is suitable for the purposes for which it
presently is used and presently is proposed to be used.
o. Inventory. The inventory of PSG consists of raw materials and
supplies, manufactured and purchased parts, goods in process, and finished
goods, substantially all of which is merchantable and fit for the purpose
for which it was procured or manufactured, and none of which is obsolete,
damaged, or defective, subject only to the reserve for inventory writedown
set forth on the face of the Most Recent Balance Sheet (rather than in any
notes thereto) as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of PSG.
p. Contracts. 5(p) of the Disclosure Schedule lists the following
contracts and other agreements to which PSG is a party:
i. any agreement (or group of related agreements) for the
lease of real or personal property to or from any Person providing for
lease payments in excess of $15,000 per annum;
ii. any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than 1 year, result
in a material loss to PSG, or involve consideration in excess of $15,000;
iii. any agreement concerning a partnership or joint venture;
iv. any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, in excess of $15,000
or under which it has imposed a Lien on any of its assets, tangible or
intangible;
v. any agreement concerning confidentiality or non-
competition;
vi. any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers,
and employees;
vii. any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $15,000 or providing severance benefits;
viii. any agreement under which it has advanced or loaned any
amount to any of its employees outside the Ordinary Course of Business or
which it has advanced or loaned any amount to any of its directors or
officers;
ix. any agreement under which the consequences of a default
or termination could have a Material Adverse Effect;
x. any settlement, conciliation or similar agreement, the
performance of which will involve payment after the Closing Date of
consideration in excess of $15,000;
xi. any agreement that provides that the terms and conditions
that would otherwise govern the relationship of the parties thereto will be
altered upon a change in control of PSG;
xii. any agreement under which PSG has advanced or loaned any
other Person amounts in the aggregate exceeding $15,000; or
xiii. any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $15,000.
Sellers have delivered to TelVue a correct and complete copy of each
written agreement (as amended to date) listed in 5(p) of the Disclosure
Schedule and a written summary setting forth the terms and conditions of
each oral agreement referred to in 5(p) of the Disclosure Schedule. With
respect to each such agreement: (A) the agreement is legal, valid, binding,
enforceable, and in full force and effect; (B) the agreement will continue
to be legal, valid, binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby; (C) no party is in breach or default, and no event has occurred
that with notice or lapse of time would constitute a breach or default, or
permit termination, modification, or acceleration, under the agreement; and
(D) no party has repudiated any provision of the agreement.
q. Notes and Accounts Receivable. All notes and accounts
receivable of PSG are reflected properly on their books and records, are
valid receivables subject to no setoffs or counterclaims, are current and
collectible, and will be collected in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts set forth on
the face of the Most Recent Balance Sheet (rather than in any notes
thereto) as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of PSG. 5(q) of the
Disclosure Schedule sets forth PSG's notes and accounts receivable as of
February 28, 2007.
r. Powers of Attorney. Except for those set forth on 5(r) of
the Disclosure Schedule There are no outstanding powers of attorney
executed on behalf of PSG.
s. Insurance. 5(s) of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which PSG has been a party, a
named insured, or otherwise the beneficiary of coverage at any time within
the past 5 years:
i. the name, address, and telephone number of the agent;
ii. the name of the insurer, the name of the policyholder,
and the name of each covered insured;
iii. the policy number and the period of coverage;
iv. the scope (including an indication of whether the
coverage was on a claims made, occurrence, or other basis) and amount
(including a description of how deductibles and ceilings are calculated and
operate) of coverage; and
v. a description of any retroactive premium adjustments or
other loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect; (B) the policy will
continue to be legal, valid, binding, enforceable, and in full force and
effect on identical terms following the consummation of the transactions
contemplated hereby; (C) Neither PSG nor any other party to the policy is
in breach or default (including with respect to the payment of premiums or
the giving of notices), and no event has occurred that, with notice or the
lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy; and (D) no
party to the policy has repudiated any provision thereof. PSG has been
covered during the past 5 years by insurance in scope and amount customary
and reasonable for the businesses in which they have engaged during the
aforementioned period. 5(s) of the Disclosure Schedule describes any self-
insurance arrangements affecting PSG.
t. Litigation. PSG (i) is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge and (ii) is not a
party or, to the Knowledge of any of the Sellers, threatened to be made a
party to any action, suit, proceeding, hearing, or investigation of, in, or
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator. None of
Sellers has any reason to believe that any such action, suit, proceeding,
hearing, or investigation may be brought or threatened against PSG or that
there is any basis for the foregoing.
u. Service/Product Warranties. Each service or product created,
sold, leased, or delivered by PSG has been in conformity with all
applicable contractual commitments and all express and implied warranties,
and PSG has no Liability for replacement or repair thereof or other damages
in connection therewith. 5(u) of the Disclosure Schedule includes copies
of the standard terms and conditions of sale or lease for PSG (containing
applicable guaranty, warranty, and indemnity provisions). No service or
product created, sold, leased, or delivered by PSG is subject to any
guaranty, warranty, or other indemnity beyond the applicable standard terms
and conditions of sale or lease set forth in 5(u) of the Disclosure
Schedule.
v. Service/Product Liability. PSG has no Liability arising out of
any damage or injury to entities, individuals or property as a result of
the ownership, possession, or use of any service or product created, sold,
leased, or delivered by PSG.
w. Employees.
i. With respect to the business of PSG:
a) there is no collective bargaining agreement or
relationship with any labor organization;
b) to the Knowledge of any of the Sellers, no
executive or manager of PSG (1) has any present intention to terminate his
or her employment or (2) is a party to any confidentiality, non-
competition, proprietary rights or other such agreement between such
employee and any Person besides PSG that would be material to the
performance of such employee's employment duties, or the ability of PSG or
TelVue to conduct the business of PSG;
c) no labor organization or group of employees has
filed any representation petition or made any written or oral demand for
recognition;
d) to the Knowledge of any of the Sellers, no union
organizing or decertification efforts are underway or threatened and no
other question concerning representation exists;
e) no labor strike, work stoppage, slowdown, or other
material labor dispute has occurred, and none is underway or, to the
Knowledge of any of the Sellers, threatened;
f) there is no workers compensation liability,
experience or matter that could have a Material Adverse Effect;
g) there is no employment-related charge, complaint,
grievance, investigation, inquiry or obligation of any kind, pending or
threatened in any forum, relating to an alleged violation or breach by PSG
(or its or their officers or directors) of any law, regulation or contract;
and,
h) no employee or agent of PSG has committed any act
or omission giving rise to material liability for any violation or breach
identified in (G) above.
ii. Except as set forth in 5(w) of the Disclosure Schedule,
(A) there are no employment contracts or severance agreements with any
employees of PSG, and (B) there are no written personnel policies, rules or
procedures applicable to employees of PSG.
iii. With respect to this transaction, any notice required
under any law or collective bargaining agreement has been given, and all
bargaining obligations with any employee representative have been, or prior
to the Closing Date will be, satisfied. Within the past 3 years, PSG has
not implemented any plant closing or layoff of employees that could
implicate the Worker Adjustment and Retraining Notification Act of 1988, as
amended, or any similar foreign, state, or local law, regulation, or
ordinance (collectively, the "WARN Act"), and no such action will be
implemented without advance notification to TelVue.
x. Employee Benefits.
i. 5(x) of the Disclosure Schedule lists each Employee
Benefit Plan that PSG maintains, to which PSG contributes or has any
obligation to contribute, or with respect to which PSG has any Liability.
a) Each such Employee Benefit Plan (and each related
trust, insurance contract, or fund) has been maintained, funded and
administered in accordance with the terms of such Employee Benefit Plan and
the terms of any applicable collective bargaining agreement and complies in
form and in operation in all respects with the applicable requirements of
ERISA, the Code, and other applicable laws.
b) All required reports and descriptions (including
Form 5500 annual reports, summary annual reports, and summary plan
descriptions) have been timely filed and/or distributed in accordance with
the applicable requirements of ERISA and the Code with respect to each such
Employee Benefit Plan. The requirements of COBRA have been met with respect
to each such Employee Benefit Plan and each Employee Benefit Plan
maintained by an ERISA Affiliate that is an Employee Welfare Benefit Plan
subject to COBRA.
c) All contributions (including all employer
contributions and employee salary reduction contributions) that are due
have been made within the time periods prescribed by ERISA and the Code to
each such Employee Benefit Plan that is an Employee Pension Benefit Plan
and all contributions for any period ending on or before the Closing Date
that are not yet due have been made to each such Employee Pension Benefit
Plan or accrued in accordance with the past custom and practice of PSG and
its Subsidiaries. All premiums or other payments for all periods ending on
or before the Closing Date have been paid with respect to each such
Employee Benefit Plan that is an Employee Welfare Benefit Plan.
d) Each such Employee Benefit Plan that is intended to
meet the requirements of a "qualified plan" under Code 401(a) has received
a determination from the Internal Revenue Service that such Employee
Benefit Plan is so qualified, and nothing has occurred since the date of
such determination that could adversely affect the qualified status of any
such Employee Benefit Plan. All such Employee Benefit Plans have been or
will be timely amended for the requirements of the Tax legislation commonly
known as "GUST" and "EGTRRA" and have been or will be submitted to the
Internal Revenue Service for a favorable determination letter on the GUST
requirements within the remedial amendment period prescribed by GUST.
e) There have been no Prohibited Transactions with
respect to any such Employee Benefit Plan or any Employee Benefit Plan
maintained by an ERISA Affiliate. No Fiduciary has any Liability for breach
of fiduciary duty or any other failure to act or comply in connection with
the administration or investment of the assets of any such Employee Benefit
Plan. No action, suit, proceeding, hearing, or investigation with respect
to the administration or the investment of the assets of any such Employee
Benefit Plan (other than routine claims for benefits) is pending or, to the
Knowledge of any of the Sellers, threatened.
f) Sellers have delivered to TelVue correct and
complete copies of the plan documents and summary plan descriptions, the
most recent determination letter received from the Internal Revenue
Service, the most recent annual report (Form 5500, with all applicable
attachments), and all related trust agreements, insurance contracts, and
other funding arrangements that implement each such Employee Benefit Plan.
ii. Neither PSG, nor any ERISA Affiliate contributes to, has
any obligation to contribute to, or has any Liability under or with respect
to any Employee Pension Benefit Plan that is a "defined benefit plan" (as
defined in ERISA 3(35)). No asset of PSG is subject to any Lien under
ERISA or the Code.
iii. Neither PSG nor any ERISA Affiliate contributes to, has
any obligation to contribute to, or has any Liability (including withdrawal
liability as defined in ERISA 4201) under or with respect to any
Multiemployer Plan.
iv. PSG does not maintain, contribute to or have an
obligation to contribute to, or have any Liability with respect to, any
Employee Welfare Benefit Plan providing health or life insurance or other
welfare-type benefits for current or future retired or terminated
directors, officers or employees (or any spouse or other dependent thereof)
of PSG or any of its Subsidiaries or of any other Person other than in
accordance with COBRA.
y. Guaranties. PSG is not a guarantor or otherwise is liable for
any Liability (including indebtedness) of any other Person.
z. Environmental, Health, and Safety Matters. Each of PSG and
its predecessors has complied in all material respects and is in
substantial compliance with all Environmental, Health, and Safety
Requirements. Neither PSG nor its predecessors or Affiliates have received
any written or oral notice, report or other information regarding any
actual or alleged violation of Environmental, Health, and Safety
Requirements, or any Liabilities, including any investigatory, remedial or
corrective obligations, relating to any of them or their facilities arising
under Environmental, Health, and Safety Requirements.
aa. Business Continuity. Except as set forth on 5(aa) of the
Disclosure Schedule, none of the computer software, computer hardware
(whether general or special purpose), telecommunications capabilities
(including all voice, data and video networks) and other similar or related
items of automated, computerized, and/or software systems and any other
networks or systems and related services that are used by or relied on by
PSG in the conduct of its business (collectively, the "Systems") have
experienced failures, breakdowns, or continued substandard performance in
the past twelve (12) months that has caused any substantial disruption or
interruption in or to the use of any such Systems by PSG.
bb. Certain Business Relationships with PSG. Except as set forth
in 5(bb) of the Disclosure Schedule, none of Sellers, their Affiliates,
Sellers' directors, officers, employees and shareholders and PSG's
directors, officers, employees, and shareholders has been involved in any
business arrangement or relationship with PSG within the past 12 months,
and none of Sellers, their Affiliates, Seller's directors, officers,
employees and shareholders and PSG's directors, officers, employees, and
shareholders owns any asset, tangible or intangible, that is used in the
business of PSG.
cc. Customers and Suppliers.
i. 5(cc) of the Disclosure Schedule lists the 5 largest
customers of PSG for each of the 2 most recent fiscal years and sets forth
opposite the name of each such customer the percentage of consolidated net
sales attributable to such customer. 5(cc) of the Disclosure Schedule also
lists any additional current customers that PSG anticipates shall be among
the 5 largest customers for the current fiscal year.
ii. Since the date of the Most Recent Balance Sheet, no
material supplier of PSG has indicated in writing that it shall stop, or
materially decrease the rate of, supplying materials, products or services
to PSG, and no customer listed on 5(cc) of the Disclosure Schedule has
indicated in writing that it shall stop, or materially decrease the rate
of, buying materials, products or services from PSG.
dd. Disclosure. The representations and warranties contained in
this 5 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this 5 not misleading.
6. Pre-Closing Covenants.
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing:
a. General. Each of the Parties will use his, her, or its
reasonable best efforts to take all actions and to do all things necessary,
proper, or advisable in order to consummate and make effective the
transactions contemplated by this Agreement (including satisfaction, but
not waiver, of the Closing conditions set forth in 8 below).
b. Notices and Consents. Sellers will cause PSG to give any
notices to third parties, and will cause PSG to use its reasonable best
efforts to obtain any third-party consents referred to in 5(c) above. Each
of the Parties will (and Sellers will cause PSG to) give any notices to,
make any filings with, and use its reasonable best efforts to obtain any
authorizations, consents, and approvals of governments and governmental
agencies in connection with the matters referred to in 4(a)(ii),
4(b)(ii), and 5(c) above.
c. Operation of Business. Sellers will not cause or permit PSG to
engage in any practice, take any action, or enter into any transaction
outside the Ordinary Course of Business. Without limiting the generality of
the foregoing, and further subject to 5(k) below, Sellers will not cause
or permit PSG, other than in the Ordinary Course of Business, to (i)
declare, set aside, or pay any dividend or make any distribution with
respect to its capital stock or redeem, purchase, or otherwise acquire any
of its capital stock (other than as set forth in 3(a) above), (ii) enter
into any agreement of the sort described in 5(p) above, or (iii) otherwise
engage in any practice, take any action, or enter into any transaction of
the sort described in 5(h) above.
d. Preservation of Business. Sellers will cause PSG to keep its
business and properties substantially intact, including its present
operations, physical facilities, working conditions, insurance policies,
and relationships with lessors, licensors, suppliers, customers, and
employees.
e. Full Access. Sellers will permit, and Sellers will cause PSG
to permit, representatives of TelVue (including legal counsel and
accountants) to have full access at all reasonable times, and in a manner
so as not to interfere with the normal business operations of PSG, to all
premises, properties, personnel, books, records (including Tax records),
contracts, and documents of or pertaining to PSG.
f. Notice of Developments. Notice of Developments. Sellers will
give prompt written notice to TelVue of any material development in the
business of PSG or any development causing any of the representations and
warranties in Section 4(a) or 5 above to become materially untrue or
incorrect.. TelVue will give prompt written notice to the Sellers of any
material adverse development causing any of its representations and
warranties in Section 4(b) above to become materially untrue or incorrect.
To the extent that (i) any disclosure by any Party pursuant to this 6(f)
triggers a Party's right to terminate this Agreement pursuant to Section10
below, (ii) such Party does not terminate this Agreement as a result of
such disclosure, and (iii) Closing occurs, such disclosure shall be deemed
to amend or supplement the Disclosure Schedule, except to the extent
otherwise agreed in writing by the Parties.
g. Exclusivity. None of Sellers will (and Sellers will not cause
or permit PSG to) (i) solicit, initiate, or encourage the submission of any
proposal or offer from any Person (other than TelVue) relating to the
acquisition of any capital stock or other voting securities, or any
substantial portion of the assets, of PSG, including any acquisition
structured as a merger, consolidation, or share exchange (any such
acquisition, a "Competing Transaction") or (ii) participate in any
discussions or negotiations regarding, furnish any information with respect
to, assist or participate in, or facilitate in any other manner any effort
or attempt by any Person to do or seek any Competing Transaction. None of
Sellers will vote their PSG Shares in favor of any Competing Transaction.
Sellers will notify TelVue immediately if any Person makes any proposal,
offer, inquiry, or contact with respect to any of the foregoing.
h. Maintenance of Leased Real Property. Sellers will cause PSG to
maintain the Leased Real Property, including all of the Improvements, in
substantially the same condition as existed on the date of this Agreement,
ordinary wear and tear excepted, and shall not demolish or remove any of
the existing Improvements, or erect new improvements on the Leased Real
Property or any portion thereof, without the prior written consent of
TelVue.
i. Leases. Except as contemplated by this Agreement, Sellers will
not cause or permit any of PSG's Leases to be extended or renewed, nor
shall PSG enter into any new lease, sublease, license or other agreement
for the use or occupancy of any real property, except as contemplated by
this Agreement.
j. Tax Matters. Without the prior written consent of TelVue,
Sellers will not cause or permit PSG to make or change any election, change
an annual accounting period, adopt or change any accounting method, file
any amended Tax Return, enter into any closing agreement, settle any Tax
claim or assessment relating to PSG, surrender any right to claim a refund
of Taxes, consent to any extension or waiver of the limitation period
applicable to any Tax claim or assessment relating to PSG, or take any
other similar action relating to the filing of any Tax Return or the
payment of any Tax, if such election, adoption, change, amendment,
agreement, settlement, surrender, consent or other action would have the
effect of increasing the Tax liability of PSG for any period ending after
the Closing Date or decreasing any Tax attribute of PSG existing on the
Closing Date.
k. Capital Expenditures. Prior to Closing, the Sellers shall
cause PSG to, make such capital expenditures as may be necessary or
desirable in the Ordinary Course of Business to maintain PSG's assets and
properties or to comply with applicable Environmental, Health and Safety
Requirements. Except as set forth in the preceding sentence, the Sellers
shall not permit PSG to make any capital expenditure for any other purpose
without the prior written consent of TelVue.
l. Employment Offers. Prior to Closing, TelVue will offer
employment to each employee of PSG identified on Exhibit B, which sets
forth the name, job title and description and compensation of each current
PSG employee. TelVue's offer shall be for terms and conditions that are
substantially identical to the current terms and conditions of each such
person's employment, and each such offer shall provide that each such
person shall be entitled to all benefits generally provided to comparable-
level TelVue employees and shall be credited for service at PSG.
7. Post-Closing Covenants.
The Parties agree as follows with respect to the period following the
Closing:
a. General. In case at any time after the Closing any further
actions are necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further actions (including
the execution and delivery of such further instruments and documents) as
any other Party may reasonably request, all at the sole cost and expense of
the requesting Party (unless the requesting Party is entitled to
indemnification therefore under 9 below).
b. Litigation Support. In the event and for so long as any Party
or PSG actively is contesting or defending against any action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand in
connection with (i) any transaction contemplated under this Agreement or
(ii) any fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure to act, or
transaction on or prior to the Closing Date involving PSG, each of the
other Parties will cooperate with him, her, or it and his, her, or its
counsel in the contest or defense, make available his, her, or its
personnel, and provide such testimony and access to his, her, or its books
and records as shall be necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending
Party or PSG, as applicable (unless the contesting or defending Party is
entitled to indemnification therefore under 9 below).
c. Transition. No Seller will take any action that is designed or
intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of PSG from maintaining the same
business relationships with PSG after the Closing as it maintained with PSG
prior to the Closing. Each Seller will refer all customer inquiries
relating to the business of PSG to PSG from and after the Closing.
d. Confidentiality. Each Seller will treat and hold as such all
of the Confidential Information, refrain from using any of the Confidential
Information except in connection with this Agreement, and deliver promptly
to TelVue or destroy, at the request and option of TelVue, all tangible
embodiments (and all copies) of the Confidential Information that are in
his, her, or its possession. In the event that any Seller is requested or
required pursuant to written or oral question or request for information or
documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process to disclose any Confidential
Information, such Seller will notify TelVue promptly of the request or
requirement so that TelVue may seek an appropriate protective order or
waive compliance with the provisions of this 7(d). If, in the absence of a
protective order or the receipt of a waiver hereunder, any of Sellers is,
on the advice of counsel, compelled to disclose any Confidential
Information to any tribunal or else stand liable for contempt, such Seller
may disclose the Confidential Information to the tribunal; provided,
however, that the disclosing Seller shall use his, her, or its reasonable
best efforts to obtain, at the reasonable request of TelVue, an order or
other assurance that confidential treatment will be accorded to such
portion of the Confidential Information required to be disclosed as TelVue
shall designate. The foregoing provisions shall not apply to any
Confidential Information that is generally available to the public
immediately prior to the time of disclosure unless such Confidential
Information is so available due to the actions of a Seller.
e. Non-Competition.
i. For a period of two years from and after the Closing
Date, no Seller, Person controlled by a Seller or immediate family member
of a Seller will, directly or indirectly, on his, her or its own behalf or
in combination with others:
a) Engage or participate, anywhere in the United
States, as an owner, partner, shareholder, agent, employee, consultant or
(without limitation by the specific enumeration of the foregoing)
otherwise, in any business engaged in the development, marketing or sale of
digital video encoding, storage and playout systems that are either (1)
designed primarily for distribution of video via traditional cable,
satellite, or airwave broadcast television, or (2) primarily targeted for
the PEG (public, educational and government) market (as such market is
contemplated under FCC regulations) or schools and other institutions of
higher learning; or
b) Take any actions calculated to persuade any
employees, customers, independent contractors, representatives or agents of
PSG to stop doing business with PSG or terminate their association with
PSG; or
c) Hire or solicit any employee of PSG for the
purposes of having any such employee terminate his or her employment with
PSG.
ii. Sellers, on their own behalf and on behalf of Persons
controlled by Sellers and immediate family members of Sellers, recognize
that the territorial, time and scope limitations of this 7(e) are
reasonable and necessary for the protection of TelVue, and in the event
that any such territorial, time or scope limitation is ruled unreasonable
by a court of competent jurisdiction, Sellers agree to empower and urge the
court to reduce any such territorial, time or scope limitations to
reasonable and enforceable limits under the circumstances, and this
Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed. In the event of any breach
of (i), the time period of the breached covenant shall be extended for
the period of such breach. TelVue shall be entitled to all rights and
remedies at law and in equity in connection with any breach of this 7(e)
by Sellers.
iii. Sellers acknowledge that payment of the Purchase Price
constitutes good and valid consideration for the covenants of the Sellers
in this 7(e).
(e)(i)(A) above shall not be construed to prohibit either (x) ownership
of less than five percent of the outstanding voting securities of any
entity where such class of securities is publicly traded, or (y) work for a
separate division or affiliate of a large parent entity (i.e., which has
combined annual revenues in excess of $100 million) where such division or
affiliate does not engage in the prohibited business, although another
division or affiliate of the parent entity may engage in such business.
f. Certain Severance Obligations. TelVue agrees that each PSG
employee who is hired by TelVue whose employment is terminated by TelVue
without cause (x) within six months following the Closing Date shall be
entitled to a severance benefit equal to two weeks base pay, and (y) more
than six months following the Closing Date shall be entitled to a severance
benefit in accordance with TelVue's then , in both cases for each year
(full and partial) that such person was employed by TelVue, PSG and PSG's
predecessors. Each such PSG employee shall be a third-party beneficiary of
this 7(f) and shall be entitled to enforce this 7(f) as if it were a
party to this Agreement. This 7(f) shall survive the Closing.
8. Conditions to Obligation to Close.
a. Conditions to TelVue's Obligation. TelVue's obligation to
consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
i. the representations and warranties set forth in 4(a) and
5 above shall be true and correct in all material respects at and as of
the Closing Date, except to the extent that such representations and
warranties are qualified by the term "material," or contain terms such as
"Material Adverse Effect" or "Material Adverse Change," in which case such
representations and warranties (as so written, including the term
"material" or "Material") shall be true and correct in all respects at and
as of the Closing Date;
ii. Sellers shall have performed and complied with all of
their covenants hereunder in all material respects through the Closing,
except to the extent that such covenants are qualified by the term
"material," or contain terms such as "Material Adverse Effect" or "Material
Adverse Change," in which case Sellers shall have performed and complied
with all of such covenants (as so written, including the term "material" or
"Material") in all respects through the Closing;
iii. PSG shall have procured all of the third-party consents
specified in 6(b) above;
iv. no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, (C)
adversely affect the right of TelVue to own the PSG Shares and to control
PSG, or (D) adversely affect the right of PSG to own its assets and to
operate its business (and no such injunction, judgment, order, decree,
ruling, or charge shall be in effect);
v. Each Seller and each Minority Holder shall have delivered
to TelVue a certificate to the effect that the condition set forth in
8(a)(i) above is satisfied as to his, her or its representations and
warranties in 4(a);
vi. Each Seller shall have delivered to TelVue a certificate
to the effect that each of the conditions specified above in 8(a)(ii)-(iv)
is satisfied in all respects;
vii. Sellers shall have made such deliveries as are called for
by this Agreement.
viii. There shall not have occurred a Material Adverse Effect.
ix. TelVue shall have received from counsel to Sellers an
opinion substantially in the form attached hereto as Exhibit C, addressed
to TelVue and dated as of the Closing Date;
x. TelVue shall have received the resignations, effective as
of the Closing, of each director and officer of PSG other than those whom
TelVue shall have specified in writing at least 5 business days prior to
the Closing;
xi. all actions to be taken by Sellers in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby shall be reasonably satisfactory in form
and substance to TelVue;
xii. no damage or destruction or other change shall have
occurred with respect to the Leased Real Property or any portion thereof
that, individually or in the aggregate, would materially impair the use or
occupancy of the Leased Real Property or the operation of PSG's business as
currently conducted thereon;
xiii. Each of the Sellers shall have executed and delivered to
TelVue the Agreement in the form attached hereto as Exhibit D, which is the
same form of agreement to be signed by each person who becomes an employee
of TelVue; and
xiv. TelVue, the Representative and the Escrowee shall have
entered into the Escrow Agreement attached hereto as Exhibit A.
TelVue may waive any condition specified in this 8(a) if it executes a
writing so stating at or prior to the Closing.
b. Conditions to Sellers' Obligation. The obligation of Sellers
to consummate the transactions to be performed by them in connection with
the Closing is subject to satisfaction of the following conditions:
i. the representations and warranties set forth in 4(b)
above shall be true and correct in all material respects at and as of the
Closing Date, the except to the extent that such representations and
warranties are qualified by the term "material," or contain terms such as
"Material Adverse Effect" or "Material Adverse Change," in which case such
representations and warranties (as so written, including the term material"
or "Material") shall be true and correct in all respects at and as of the
Closing Date;
ii. TelVue shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing, except to
the extent that such covenants are qualified by the term "material," or
contain terms such as "Material Adverse Effect" or "Material Adverse
Change," in which case TelVue shall have performed and complied with all of
such covenants (as so written, including the term "material" or "Material")
in all respects through the Closing;
iii. no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation (and
no such injunction, judgment, order, decree, ruling, or charge shall be in
effect);
iv. TelVue shall have delivered to Sellers a certificate to
the effect that each of the conditions specified above in 8(b)(i)-(iii) is
satisfied in all respects;
v. all actions to be taken by TelVue in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to Representative.
vi. Sellers shall have received from counsel to TelVue an
opinion substantially in the form attached hereto as Exhibit E, addressed
to Sellers and dated as of the Closing Date;
vii. all actions to be taken by TelVue in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby shall be reasonably satisfactory in form
and substance to Sellers;
viii. TelVue, the Representative and the Escrowee shall have
entered into the Escrow Agreement attached hereto as Exhibit A; and
ix. TelVue shall have executed and delivered to each of the
Sellers the Agreement in the form attached hereto as Exhibit D, which is
the same form of agreement to be signed by each person who becomes an
employee of TelVue
9. Remedies for Breaches of This Agreement.
a. Survival of Representations and Warranties. All of
the representations and warranties of Sellers contained in 5 above (other than
5(a), 5(b), 5(c), 5(d), 5(e), 5(k), 5(x) and 5(z) above) shall
survive the Closing hereunder (even if TelVue knew or had reason to know of
any misrepresentation or breach of warranty at the time of Closing) and
continue in full force and effect until March 16, 2008. All of the other
representations and warranties of the Parties contained in this Agreement
(including the representations and warranties of the Parties contained in
4 above and the representations and warranties of Sellers contained in
5(a), 5(b), 5(c), 5(d), 5(e),5(k), 5(x) and 5(z) above) shall
survive the Closing (unless the damaged Party knew or had reason to know of
any misrepresentation or breach of warranty at the time of Closing) and
continue in full force and effect until the expiration of the applicable
statutes of limitations (including any extension thereto), provided however
that the representations and warranties of Sellers contained in 4(a)(v)
shall survive indefinitely.
b. Indemnification Provisions for TelVue's Benefit.
i. In the event any Seller breaches any of his,
her or its representations, warranties, and covenants contained herein (in each
case, determined without giving effect to any qualifications therein
referencing the term "material" or other terms of similar import or
effect), and provided that TelVue makes a written claim for indemnification
against any Seller pursuant to 11(g) below within the survival period (if
there is an applicable survival period pursuant to 9(a) above) then the
Sellers shall be obligated jointly and severally to indemnify TelVue from
and against the entirety of any Adverse Consequences TelVue may suffer
(including any Adverse Consequences TelVue may suffer after the end of any
applicable survival period) resulting from, arising out of, relating to, in
the nature of, or caused by the breach. Notwithstanding the foregoing,
Sellers shall have no obligation to indemnify TelVue from and against any
Adverse Consequences resulting from, arising out of, relating to, in the
nature of, or caused by the breach of any representation or warranty of
Sellers contained in 5 above (other than 5(a), 5(b), 5(c), 5(d),
5(e),5(k), 5(x) and 5(z) above) until TelVue has suffered Adverse
Consequences by reason of all such breaches in excess of $50,000 (the
"Minimum").
ii. Notwithstanding the foregoing, (x) the Minimum
shall not be applicable to Adverse Consequences TelVue may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the
breach of the representations and warranties of Sellers contained in 5(a),
5(b), 5(c), 5(d), 5(e),5(k), 5(x) and 5(z) above; (y) once aggregate
Adverse Consequences suffered by TelVue exceed the Minimum, Sellers shall
be liable for indemnifying TelVue for all Adverse Consequences, i.e.,
including those less than or below the Minimum, and (z) individual claims
below $2,500.00 which are not part of a larger claim or one of a series of
related claims shall not be deemed to be Adverse Consequences for which
indemnity is required.
iii. Each of the Sellers agrees to jointly and
severally indemnify (subject to the limitations in (v) below) the TelVue from
and against the entirety of any Adverse Consequences the TelVue may suffer
resulting from, arising out of, relating to, in the nature of, or caused by
(x) any Liability of PSG (A) for any Taxes of PSG with respect to any Tax
year or portion thereof ending on or before the Closing Date (or for any
Tax year beginning before and ending after the Closing Date, but only to
the extent such Taxes are allocable (determined in a manner consistent with
5(k)) to the portion of such period beginning before and ending on the
Closing Date), to the extent such Taxes are not reflected in the reserve
for Tax Liability (rather than any reserve for deferred Taxes established
to reflect timing differences between book and Tax income) shown on the
face of the Closing Balance Sheet, (B) for the unpaid Taxes of any Person
(other than PSG) under Reg. 1.1502-6 (or any similar provision of state,
local, or foreign law), as a transferee or successor, by contract, or
otherwise, (y) any pre-Closing act, event or circumstance that could give
rise to any Liability with respect to any Environmental, Health or Safety
Matters; or (z) any Liability of PSG for any and all costs and expenses of
PSG (including all legal fees and accounting expenses) incurred in
connection with this Agreement and the transactions contemplated hereby but
not paid, or described and quantified on the Disclosure Schedule, on or
before the Closing Date (collectively, the "Transaction Expenses").
iv. The maximum aggregate amount of Adverse
Consequences required to be paid by Sellers pursuant to 9(b)(i) above
shall not exceed $3,250,000, provided, however, that the foregoing
limitation shall not apply to Adverse Consequences TelVue may suffer
resulting from, arising out of, relating to, in the nature of, or caused by
the breach of the representations and warranties of Sellers contained in
5(a), 5(b), 5(c), 5(d), 5(e),5(k), 5(x) and 5(z) above.
v. Notwithstanding the joint and several liability
of the Sellers, the aggregate liability of each Seller pursuant to this 9
(other than for breaches of 5(a), 5(b), 5(c), 5(d), 5(e),5(k), 5(x)
and 5(z)) shall be limited to the gross proceeds payable to such Seller as
set forth on 2(b) of the Disclosure Schedule.
c. Indemnification Provisions for Sellers' Benefit. In the event
TelVue breaches any of its representations, warranties, and covenants
contained herein and provided that the Representative makes a written claim
for indemnification against TelVue pursuant to 11(g) below within the
survival period (if there is an applicable survival period pursuant to
9(a) above), then TelVue agrees to indemnify each Seller from and against
the entirety of any Adverse Consequences suffered (including any Adverse
Consequences suffered after the end of any applicable survival period)
resulting from, arising out of, relating to, in the nature of, or caused by
the breach.
d.Matters Involving Third Parties.
i. If any third party notifies any Party or PSG (the
"Indemnified Party") with respect to any matter (a "Third-Party Claim")
that may give rise to a claim for indemnification against any other Party
(the "Indemnifying Party") under this 9, then the Indemnified Party shall
promptly notify each Indemnifying Party thereof in writing, and the
Indemnifying Party shall have a reasonable opportunity to participate in
discussions with the claimant and the Indemnified Party in an effort to
resolve the Third-Party Claim; provided, however, that no delay on the part
of the Indemnified Party in notifying any Indemnifying Party shall relieve
the Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party is thereby prejudiced.
ii. Any Indemnifying Party will have the right to assume
the defense of the Third-Party Claim with counsel of its choice reasonably
satisfactory to the Indemnified Party at any time within 15 days after the
Indemnified Party has given notice of the Third-Party Claim; provided,
however, that the Indemnifying Party must conduct the defense of the Third-
Party Claim actively and diligently thereafter in order to preserve its
rights in this regard; and provided further that the Indemnified Party may
retain separate co-counsel at its sole cost and expense and participate in
the defense of the Third-Party Claim.
iii. So long as the Indemnifying Party has assumed and is
conducting the defense of the Third-Party Claim in accordance with
9(d)(ii) above, (A) the Indemnifying Party will not consent to the entry
of any judgment on or enter into any settlement with respect to the Third-
Party Claim without the prior written consent of the Indemnified Party (not
to be unreasonably withheld) unless the judgment or proposed settlement
involves only the payment of money damages by one or more of the
Indemnifying Parties and does not impose an injunction or other equitable
relief upon the Indemnified Party and (B) the Indemnified Party will not
consent to the entry of any judgment on or enter into any settlement with
respect to the Third-Party Claim without the prior written consent of the
Indemnifying Party (not to be unreasonably withheld).
iv. In the event none of the Indemnifying Parties assumes
and conducts the defense of the Third-Party Claim in accordance with 9(d)(ii)
above, however, (A) the Indemnified Party may defend against, and consent
to the entry of any judgment on or enter into any settlement with respect
to, the Third-Party Claim in any manner it may reasonably deem appropriate
(and the Indemnified Party need not consult with, or obtain any consent
from, any Indemnifying Party in connection therewith) and (B) the
Indemnifying Parties will remain responsible for any Adverse Consequences
the Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third-Party Claim to the fullest
extent provided in this 9.
e. Determination of Adverse Consequences. The Parties shall
take into account the time cost of money in determining Adverse Consequences
for purposes of this 9. All indemnification payments under this 9 and 10(a)
shall be deemed adjustments to the Purchase Price.
f. Exclusive Remedy. The Parties acknowledge and agree that,
except in the case of fraud, willful misconduct or any equitable remedy the
Parties may have with respect to the transaction contemplated by this
Agreement, the indemnification provisions in this 9 shall be the exclusive
remedy of TelVue and Sellers with respect to PSG and the transactions
contemplated by this Agreement.
10. Termination.
a. Termination of Agreement. The Parties may terminate this
Agreement as provided below:
i. TelVue and Representative may terminate this Agreement
by mutual written consent at any time prior to the Closing;
ii. TelVue may terminate this Agreement by giving written
notice to Representative at any time prior to the Closing (A) in the event
any Seller or Minority Holder has breached any material representation,
warranty, or covenant contained in this Agreement, TelVue has notified
Representative of the breach, and the breach has continued without cure for
a period of thirty (30) days after the notice of breach, (B) if the
Closing shall not have occurred on or before March 16, 2007, by reason of
the failure of any condition precedent under 8(a) hereof (unless the
failure results primarily from TelVue itself breaching any representation,
warranty, or covenant contained in this Agreement), or (C) if TelVue
effects the funding described (d) below prior to Closing;
iii. Representative may terminate this Agreement by giving
written notice to TelVue at any time prior to the Closing (A) in the event
TelVue has breached any material representation, warranty, or covenant
contained in this Agreement, any Seller has notified TelVue of the breach,
and the breach has continued without cure for a period of 30 days after the
notice of breach or (B) if the Closing shall not have occurred on or before
March 16, 2007, by reason of the failure of any condition precedent under
8(b) hereof (unless the failure results primarily from any Seller or any
Minority Holder breaching any representation, warranty, or covenant
contained in this Agreement); and
b. Effect of Termination. If this Agreement is terminated
pursuant to 10, all rights and obligations of the Parties hereunder shall
terminate without any liability of any Party to any other Party.
c. Non Solicitation. If this Agreement is terminated:
i. other than pursuant to 10(a)(ii), for two years from
the date of such termination, neither PSG nor any Seller shall directly or
indirectly, for itself, himself/herself or for any other person, firm,
corporation or other entity, whether as a principal, agent, employee,
stockholder, partner, officer, member, director, sole proprietor, lender,
or otherwise, solicit any person who was employed by TelVue during the six
(6) months preceding the termination date or who, as an independent
contractor, worked primarily for TelVue at any time during that period, to
cease to work for TelVue or to work for or accept employment or any similar
engagement with any other person or entity; or
ii. other than pursuant to 10(a)(iii), for two years from
the date of such termination, TelVue shall not, directly or indirectly, for
itself or for any other person, firm, corporation or other entity, whether
as a principal, agent, stockholder, partner, officer, member, lender, or
otherwise, solicit any person who was employed by PSG during the six (6)
months preceding the termination date or who, as an independent contractor,
worked primarily for PSG at any time during that period, to cease to work
for PSG or to work for or accept employment or any similar engagement with
any other person or entity.
d. Funding Obligation of TelVue. If this Agreement is terminated
pursuant to 10(a)(i), 10(a)(ii)(A) or 10(a)(ii)(B) above, or if the
Closing does not occur on or before March 16, 2007 (other than as a result
of the Sellers' intentional failure to satisfy a condition precedent under
Section 8(a) hereof), TelVue agrees to advance to PSG within five (5) days
after request by Jesse Lerman the sum of $300,000 as a loan, on terms, and
to be evidenced by documentation, identical to the $400,000 loan from
TelVue to PSG dated December 26, 2006. This 10(d) shall survive any
termination of this Agreement.
11. Miscellaneous.
a. Press Releases and Public Announcements. No Party shall issue
any press release or make any public or private announcement or disclosure
relating to the subject matter of this Agreement without the prior written
approval of TelVue and Representative; provided, however, that any Party
may make any disclosure it believes in good faith is required by
applicable law (in which case the disclosing Party will use its reasonable
best efforts to advise the other Parties prior to making the disclosure).
b. No Third-Party Beneficiaries. Except as otherwise provided
herein, this Agreement shall not confer any rights or remedies upon any
Person other than the Parties and their respective successors and permitted
assigns.
c. Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or
among the Parties, written or oral, to the extent they relate in any way to
the subject matter hereof.
d. Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either
this Agreement or any of its rights, interests, or obligations hereunder
without the prior written approval of TelVue and Representative; provided,
however, that TelVue may (i) assign any or all of its rights and interests
hereunder to one or more of its Affiliates and (ii) designate one or more
of its Affiliates to perform its obligations hereunder (in any or all of
which cases TelVue nonetheless shall remain responsible for the performance
of all of its obligations hereunder).
e. Counterparts. This Agreement may be executed in one or more
counterparts (including by means of facsimile or other electronic
transmission), each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
f. Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Agreement.
g. Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) when
delivered personally to the recipient, (ii) one (1) business day after
being sent to the recipient by reputable overnight courier service (charges
prepaid), (iii) one (1) business day after being sent to the recipient by
facsimile transmission or electronic mail, or (iv) four (4) business days
after being mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid, and addressed to the intended
recipient as set forth below:
If to Sellers: Jesse Lerman
76A Cranbury Neck Road
Cranbury, NJ 08512
Copy to: Stevens & Lee, a Professional Corporation
600 College Road East , Suite 4400
Princeton, New Jersey 08540
Fax: 610-371-7929
Attn: Richard J. Pinto, Esq.
If to TelVue: TelVue Corporation
16000 Horizon Way
Suite 500
Mt. Laurel, NJ 08054
Fax: 856-866-7411
Attn: Joseph Murphy, President
Copy to: Saul Ewing LLP
1500 Market Street, 38th Floor
Philadelphia, PA 19102
Fax - 215-972-1926
Attn: Katayun Jaffari, Esq.
Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving
the other Parties notice in the manner herein set forth.
h. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of New Jersey
without giving effect to any choice or conflict of law provision or rule
(whether of the State of New Jersey or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State
of New Jersey.
i. Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
the TelVue and the Representative. No waiver by any Party of any provision
of this Agreement or any default, misrepresentation, or breach of warranty
or covenant hereunder, whether intentional or not, shall be valid unless
the same shall be in writing and signed by the Party making such waiver nor
shall such waiver be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or affect in
any way any rights arising by virtue of any prior or subsequent such
occurrence.
j. Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision
in any other situation or in any other jurisdiction.
k. Expenses. TelVue has and will pay the fees, expenses and
disbursements of TelVue and its agents, representatives, accountants and
counsel incurred in connection with the subject matter of this Agreement.
The Sellers and TelVue agree that PSG has and will pay the fees, expenses
and disbursements of the Sellers and PSG and their agents, representatives,
financial advisers, accountants and counsel incurred in connection with the
subject matter of this Agreement, and the Sellers and TelVue will cause PSG
to do so, it being understood that the Sellers will have no liability with
respect to any failure of PSG to make such payments after the Closing and
TelVue will have no liability with respect to any failure of PSG to make
such payments before the Closing. The fees and expenses of the Escrowee
shall be borne equally by TelVue and the Sellers.
l. Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the Parties and no presumption or burden
of proof shall arise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Agreement. Any reference to any
federal, state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise. The word "including" shall mean including
without limitation.
m. Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
n. Governing Language. This Agreement has been negotiated and
executed by the Parties in English. In the event any translation of this
Agreement is prepared for convenience or any other purpose, the provisions
of the English version shall prevail.
o. Representative. All Sellers, by signing this Agreement,
designate Jesse Lerman, or an entity controlled by him, to be their
Representative for purposes of this Agreement. All Sellers shall be bound
by any and all actions taken by the Representative on their behalf. TelVue
shall be entitled to rely upon any communication or writings given or
executed by the Representative. All communications or writings to be sent
to Sellers pursuant to this Agreement may be addressed to the
Representative and any communication or writing so sent shall be deemed
notice to all of the Sellers hereunder. All Sellers hereby consent and
agree that the Representative is authorized to accept deliveries, including
any notice, on behalf of Sellers pursuant hereto. The Representative is
hereby appointed and constituted the true and lawful attorney-in-fact of
all Sellers, with full power in its name and on their behalf to act
according to the terms of this Agreement in the absolute discretion of the
Representative; and in general to do all things and to perform all acts
including, without limitation, executing and delivering all agreements,
certificates, receipts, instructions and other instruments contemplated by
or deemed advisable in connection with 3, 9 and 10 of this Agreement.
This power of attorney and all authority hereby conferred is granted in
consideration of the mutual covenants and agreements made herein, and
shall be irrevocable and shall not be terminated by any act of the Sellers
or by operation of law or any other event. The Sellers agree jointly and
severally to defend, indemnify and hold harmless the Representative and, if
applicable, its officers, directors, employees, managers and members from
and against all losses, damages and expenses (including attorneys' fees) of
any kind resulting from, arising out of, or relating to this Agreement, the
Escrow Agreement or his or its services as Representative other than
losses, damages and expenses arising from the willful misconduct of the
Representative. Each of the Sellers hereby agrees that the Representative
shall have no liability to him or her for any actions taken, or omitted to
be taken, in connection with his or its service as the Representative,
other than for its willful misconduct.
[Execution Page Follows]
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the
date first above written.
TELVUE CORPORATION
By: /s/
------------------------------
JOSEPH MURPHY
Its: ______________________________
SELLERS:
/s/
--------------------------------------
JESSE LERMAN
(as a Seller, and in his capacity as
Representative)
/s/
--------------------------------------
PAUL ANDREWS
/s/
--------------------------------------
STEVEN GEORGES
/s/
--------------------------------------
JAMES FREDRICKSON
/s/
--------------------------------------
HARINI SUBRAHMANYAM
SIGNATURE PAGE (continued) TO STOCK PURCHASE AGREEMENT
BETWEEN TELVUE CORPORATION AND SHAREHOLDERS
OF PRINCETON SERVER GROUP, INC.
MINORITY HOLDERS:
AION CAPITAL MANAGEMENT, LLC
BY: /s/
------------------------------
RAY MOSER, MANAGER
/s/
------------------------------
SHUNMUGAM RAMALINGAM
/s/
------------------------------
CHANDRA SEKHARAN RAMALINGAM
/s/
------------------------------
P. RAVICHANDER
/s/
------------------------------
ANJU RAVICHANDER
/s/
------------------------------
V. SUBRAHMANYAM
/s/
------------------------------
SAVITHRI SUBRAHMANYAM
EXHIBITS
EXHIBIT A - ESCROW AGREEMENT
EXHIBIT B - LIST OF PSG EMPLOYEES AND EMPLOYMENT TERMS
EXHIBIT C - OPINION OF SELLERS' COUNSEL
EXHIBIT D - EMPLOYEE AGREEMENT
EXHIBIT E - OPINION OF TELVUE COUNSEL
DISCLOSURE SCHEDULE ITEMS
2(b) - Purchase Price Allocation
5(a) - Officers and Directors
5(b) - Capitalization
5(c) - Non-contravention
5(e) - Title
5(g) - Financial Statements
5(h) - Events since 12/31/06
5(i) - Undisclosed Liabilities
5(k)(iii) - Tax returns Filed
5(k) - Tax matters
5(l) - Real Property
5(m) - Intellectual Property
5(m)(iii) - Patents
5(n) - Tangible Assets not owned
5(p) - Contracts
5(q) - Notes and A/R
5(r) - Powers of Attorney
5(s) - Insurance
5(u) - Service/Product Warranties
5(w) - Employee contracts
5(x) - Employee Benefit Plans
5(aa) - Business Continuity
5(bb) - Relationships with affiliates
5(cc) - Customers and suppliers
9(b)(iii) - Transaction Expenses
EXHIBIT A - ESCROW AGREEMENT
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made and entered into as
of March ________, 2007 by and among TELVUE CORPORATION, a Delaware corporation
("Buyer"), ________________ ("Representative") in his capacity as
representative of certain former holders of common stock of PRINCETON
SERVER GROUP, INC., a New Jersey corporation ("PSG") and FIRSTRUST BANK
solely in its capacity as escrow agent hereunder (the "Escrow Agent").
Such former PSG shareholders are collectively referred to herein as
"Sellers" and individually as a "Seller." Buyer and Sellers are sometimes
referred to herein as "Interested Parties" or individually as an
"Interested Party."
BACKGROUND
WHEREAS, TelVue and Sellers have entered into an Stock Purchase
Agreement (the "Purchase Agreement") of even date herewith, pursuant to
which Buyer is purchasing all the issued and outstanding shares of capital
stock of PSG.
WHEREAS, the Purchase Agreement contemplates that a portion of the
Purchase Price (as defined therein) will be deposited in escrow with the
Escrow Agent to be held and distributed by the Escrow Agent on the terms
and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements contained herein, the parties hereto
agreeing to be legally bound hereby, agree as follows:
1. Appointment of Escrow Agent; Deposit of Escrowed Funds.
TelVue and Representative hereby appoint the Escrow Agent, as the
escrow agent and Escrow Agent accepts such appointment. The Buyer will
deliver to the Escrow Agent a wire transfer in the sum of One Million
Dollars ($1,000,000.00) (the "Original Escrowed Amount"), to be deposited
pursuant to Section 2(d) (iv) of the Purchase Agreement, as security for the
indemnification obligations of Sellers under the Purchase Agreement. As used
hereinafter, the term "Escrowed Funds" shall mean (a) the Original
Escrowed Amount, plus (b) any interest or other amounts accruing thereon or
with respect thereto, less (c) any amounts paid in respect of Claims (as
hereinafter defined) pursuant hereto.
2. Investment of Escrowed Funds.
(a) Until the release of the Escrowed Funds pursuant to Section 3
hereof, the Escrow Agent shall, invest and reinvest the Escrowed Funds in a
Firstrust Bank interest bearing money market account, Firstrust Bank
savings account or a Firstrust Bank certificate of deposit. All earnings
received from the investment of the Escrowed Funds shall be credited to,
and shall become a part of, the Escrowed Funds.
(b) The Escrow Agent is hereby authorized, in making or disposing
of any investment permitted by this Section 2, to deal with itself (in its
individual capacity) or with any one or more affiliates, whether it or such
affiliate is acting as an agent of the Escrow Agent or for any third person
or dealing as principal for its own account, so long as the terms of any
transaction with itself or any affiliate are not less favorable to
Interested Parties than those that could be obtained from third parties
unaffiliated with the Escrow Agent. The Escrow Agent or any of its
affiliates may receive compensation with respect to any investment directed
hereunder.
3. Release of Escrowed Funds.
(a) From time to time prior to 5:00 p.m. eastern time on March __,
2008, Buyer may deliver to the Representative a written notice (a "Claim")
requesting distribution to Buyer of a specified amount of the Escrowed
Funds in full or partial payment of Sellers' indemnification obligations to
Buyer pursuant to the Purchase Agreement. Buyer shall provide to the
Escrow Agent, upon filing such Claim with the Representative , a delivery
receipt or other appropriate proof of prior or contemporaneous delivery to
Representative of a copy of such Claim (a "Claim Delivery Notice"). If the
Escrow Agent has not received a written objection or approval from
Representative to such Claim within 20 calendar days following the date of
the Escrow Agent's receipt of such Claim Delivery Notice, then within 10
business days after the expiration of such 20-day period, the Escrow Agent
shall send a notice to Representative requesting Representative to notify
Escrow Agent whether such Claim has been approved or denied. Upon receipt
of approval of Claim from Representative, Escrow Agent shall pay to Buyer
from the Escrowed Funds, to the extent available, the amount specified in
the Claim plus all interest, if any, which shall have accrued on such
amount by its investment hereunder from and after the date hereof until
distribution of such amount to Buyer in payment thereof, and such interest
shall become part of the Escrowed Funds. Representative agrees that
before it attempts to give Escrow Agent any instructions concerning the
Escrowed Funds, Representative shall deliver to the Escrow Agent such
documentation as Escrow Agent may from time to time reasonably request to
evidence authority of Representative or its agents whom Representative may
designate to give instructions. At no time shall Escrow Agent disburse or
be obligated to disburse funds from the Escrowed Funds in an amount which
would result in an overdraft of the Escrowed Funds.
(b) If Representative delivers to the Escrow Agent a timely written
objection to any Claim, the Escrow Agent shall not distribute the amount
set forth in the Claim and shall withhold from the amount otherwise
distributable to Seller hereunder the amount of Escrowed Funds sufficient
to satisfy such Claim (plus accrued interest thereon) until the Escrow
Agent shall have received either: (i) written instructions signed on behalf
of each of TelVue and Representative (a "Written Instructions"); or (ii) a
final order of a court having jurisdiction of the matter (a "Final Order").
Upon receipt of Written Instructions or a Final Order, the Escrow Agent
shall distribute such Escrowed Funds, to the extent available, in
accordance therewith.
(c) By 5:00 p.m., eastern time on March __, 2009, the Escrow Agent
shall release to Representative all of the Escrowed Funds remaining less
the aggregate amount claimed by Buyer in each Claim which has theretofore
been made and which remains unresolved or unpaid at such date or, if such
Claim has been partially resolved, the portion thereof which is unresolved.
Thereafter and upon resolution of each outstanding Claim, the Escrow Agent
shall make the appropriate distribution of the Escrowed Funds retained in
respect of such Claim.
(d) All releases of Escrowed Funds shall be made as follows: (i)
if to Representative, by wire transfer to Representative of immediately
available funds at the wiring instructions set forth in Section 4(b) hereof
in the amount of such release, and (ii) if to Buyer, by wire transfer to
Buyer of immediately available funds at the wiring instructions set forth
in Section 4(b) hereof in the amount of such release.
(e) Buyer and Representative shall provide the Escrow Agent with
the relevant taxpayer identification number documented by an appropriate
Form W-9 upon execution of this Escrow Agreement. The parties acknowledge
that the failure so to provide such forms may prevent or delay
disbursements from the Escrowed Funds and may also result in the assessment
of a penalty and the Escrow Agent's being required to withhold tax on any
interest or other income earned on the Escrowed Funds. Any payments of
income shall be subject to applicable withholding regulations then in force
in the United States or any other jurisdiction, as applicable. Interest
income, except for interest income that is paid to Buyer in respect of
Claims, shall be attributed to Sellers. Escrow Agent shall deliver the
Form 1099 to Seller showing all interest earned. Seller and Representative
shall allocate such interest among themselves pursuant to this Agreement.
Seller is responsible for payment of taxes on all income earned on Escrowed
Funds.
(f) Under no circumstances shall this Agreement require the Escrow
Agent to release or distribute escrowed funds or property sooner than two
(2) business days after the Escrow Agent has received the requisite notices
or paperwork in good form, or passage of the applicable claim period or
release date, as the case may be, set forth herein.
4. Responsibility of Escrow Agent; Interpleader.
(a) The Escrow Agent shall not be responsible for the genuineness
of any signature or document presented to it pursuant to this Agreement and
may rely conclusively upon and shall be protected in acting upon any
judicial order or decree, certificate, notice, request, consent, statement,
instruction or other instrument believed by it in good faith to be genuine
or to be signed or presented by the proper person hereunder, or duly
authorized by such person or properly made. The parties represent to Escrow
Agent that Representative has authority to act as described in this
Agreement. Representative shall promptly notify the Escrow Agent of any
change in the status or authority of Representative and the Escrow Agent
shall be entitled to rely on any action taken by Representative in
accordance herewith until actual receipt of any such notice. Prior to
taking any action hereunder, the Escrow Agent may, if in doubt regarding
its obligations, seek instructions from TelVue and Representative or if
such instructions are in conflict, from a court of competent jurisdiction,
and may further request such evidence, documents, certificates or opinions
as it may deem appropriate. The Escrow Agent shall not be responsible for
any of the agreements contained herein, including without limitation the
Purchase Agreement, except the performance of its duties as expressly set
forth herein. The Escrow Agent shall be entitled to retain counsel and to
act in reliance upon the advice of such counsel in all matters pertaining
to this Agreement, and shall not be liable for any action taken or omitted
by it in good faith in accordance with such advice. The duties and
obligations of the Escrow Agent hereunder shall be governed solely by the
provisions of this Agreement, and the Escrow Agent shall have no duties
other than the duties expressly imposed herein and shall not be required to
take any action other than in accordance with the terms hereof. The Escrow
Agent shall not be bound by any notice of, or demand with respect to, any
waiver, modification, amendment, termination, cancellation, rescission or
supercession of this Agreement, unless in writing and signed on behalf of
the parties hereto and, if the duties of the Escrow Agent are affected
thereby, unless and until it shall have given its written consent thereto.
In the event of any controversy or dispute hereunder or with respect to any
question as to the construction of this Agreement, or any action to be
taken by the Escrow Agent hereunder, the Escrow Agent shall incur no
liability for any action taken, omitted to be taken, or suffered in good
faith, its liability hereunder to be limited solely to gross negligence or
willful misconduct on its part. In no event shall the Escrow Agent be
liable for indirect, punitive, special or consequential damage or loss
(including but not limited to lost profits) whatsoever, even if the Escrow
Agent has been informed of the likelihood of such loss or damage and
regardless of the form of action. TelVue and Representative, solely in its
capacity as Representative jointly and severally agree to indemnify and
hold the Escrow Agent (and its directors, officers and employees) harmless
against any losses, liabilities, reasonable out-of-pocket costs and
expenses, and damages incurred by the Escrow Agent as a consequence of any
action taken or omitted to be taken by it in the performance of its
obligations hereunder, including but not limited to attorneys' fees and
other costs and expenses of defending or preparing to defend against any
claim of liability, with the exception of any losses, liabilities and
damages arising from the Escrow Agent's gross negligence or willful
misconduct; provided, however, that damages, costs and expenses of the
Escrow Agent shall be borne by TelVue and the Sellers as set forth in
Sections 4(b) and 5. The foregoing indemnification provision and agreement
to hold harmless shall survive the termination of this Agreement. IT IS
THE EXPRESS INTENT OF TELVUE AND REPRESENTATIVE TO INDEMNIFY AND HOLD
HARMLESS THE ESCROW AGENT FROM ITS OWN NEGLIGENT ACTS OR OMISSIONS.
(b) Should any controversy arise involving the parties hereto or
any of them or any other person, firm or entity with respect to this
Agreement or the Escrowed Funds, or should a substitute escrow agent fail
to be designated as provided in Section 9 hereof, or if the Escrow Agent
should be in doubt as to what action to take, the Escrow Agent shall also
have the right, but not the obligation, to institute a petition for
interpleader in any court of competent jurisdiction to determine the rights
of the parties hereto. In the event the Escrow Agent is a party to any
dispute, the Escrow Agent shall have the additional right to refer such
controversy to binding arbitration. Should a petition for interpleader be
instituted, or should the Escrow Agent be threatened with litigation or
become involved in litigation or binding arbitration in any manner
whatsoever in connection with this Agreement or the Escrowed Funds, then,
the cost of attorneys' fees of the Escrow Agent and any and all other costs
and expenses incurred by the Escrow Agent in connection with or resulting
from such threatened or actual litigation or arbitration prior to any
disbursement hereunder shall be borne equally by Buyer, on the one hand,
and Seller on the other hand.
(c) The Escrow Agent shall not be obligated to take any legal or
other action hereunder which might in its judgment involve or cause it to
incur any expense or liability unless it shall have been furnished with
acceptable indemnification.
5. Expenses of the Escrow Agent.
To compensate the Escrow Agent for performing the herein-described
services, the parties agree to pay a monthly Escrow fee of $50.00 and any
other fees and charges charged by the Escrow Agent as set forth in the
applicable Commercial Banking Fee Schedule in effect from time to time or
as agreed upon by the parties hereto. Escrow Agent may debit the Escrowed
Funds under advice on a monthly basis for any fees due hereunder.
The expenses of the Escrow Agent (including fees and disbursements of
counsel) shall be borne equally by Buyer and Sellers, and if not paid
directly to the Escrow Agent when due may be charged by it against the
Escrowed Funds; provided, however, that Buyer and Sellers, shall promptly
reimburse to the Escrowed Funds the portion of such amounts for which each
is liable pursuant hereto. The Escrow Agent shall have no duty or
obligation to enforce any such reimbursement obligations.
6 Notices, Communications, Wiring Instructions.
(a) All notices, claims, requests, demands and other communications
called for or contemplated hereunder shall be in writing and shall be
deemed to have been duly given: (i) when delivered, if hand delivered
against a signed receipt therefor, (ii) on the next business day following
the date of dispatch if sent by internationally recognized courier service
via next day or next business day service, or (iii) when sent, if sent by
facsimile with a copy sent via hand delivery or courier service; in each
case addressed to the party entitled to receive the same at the address
specified below or such other address as each party may from time to time
notify to the other party in accordance herewith:
If to Buyer: TelVue Corporation
16000 Horizon Way
Suite 500
Mt. Laurel, NJ 08054
Fax: 856-866-7411
Attn: Joseph Murphy, President
With copies to: Saul Ewing LLP
1500 Market Street, 38th floor
Philadelphia, PA 19102-2186
Attn: Katayun l. Jaffari, Esq.
Fax: 215-972-7161
If to Representative:
Attn:
Fax:
With copies to: Stevens & Lee, a Professional Corporation
600 College Road East , Suite 4400
Princeton, New Jersey 08540
Attn: Richard J. Pinto, Esq.
Fax: 610-371-7929
If to Escrow Agent: Firstrust Bank
1931 Cottman Avenue
Philadelphia, PA 19111
Attn: Commercial Deposit Operations
Fax: 215-728-8693
(b) Wiring Instructions. Any funds to be paid to or by the Escrow
Agent hereunder shall be sent by wire transfer pursuant to the following
instructions (or by such method of payment and pursuant to such instruction
as may have been given in advance and in writing to or by the Escrow Agent,
as the case may be, in accordance with Section 6(a) above):
If to Buyer:
Bank:
ABA #:
A/C #:
Ref:
If to Seller:
Bank:
ABA #:
A/C #:
Ref:
If to the Escrow Agent:
Bank: Firstrust Bank
ABA #: 236073801
A/C #: TBD
Attn: Commercial Deposit Operations
7. Term; Amendments; Successors.
This Agreement shall continue until the date on which all of the
Escrowed Funds have been distributed as provided in Section 3 hereof, may
be amended only as provided in Section 4 hereof and shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
sucessors and assigns. The provisions of Section 4 and 5 shall survive
the termination of this Agreement.
8. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original and all of which taken together shall constitute
one and the same instrument. In making proof of this Agreement it shall be
necessary to produce or account for only one such counterpart signed by or
on behalf of the party sought to be charged herewith.
9. Successor Escrow Agent.
The Escrow Agent may resign on ten (10) business days prior written
notice to each of TelVue and Representative. Upon the resignation of the
Escrow Agent, TelVue and Representative shall unanimously appoint a
successor escrow agent or otherwise provide for the disposition of funds
held by the Escrow Agent by notice in writing to the Escrow Agent. The
Escrow Agent shall pay over the Escrowed Funds, less its unpaid fees and
expenses, as provided in said notice. If no successor escrow agent is
named by TelVue and Representative within twenty (20) business days after
the notice of resignation from the Escrow Agent, the Escrow Agent may apply
to a court of competent jurisdiction for appointment of a successor escrow
agent.
10. Action on Business Day.
If this Agreement would require the Escrow Agent to take action on
any day other than a Business Day (as hereinafter defined), the Escrow
Agent shall take such action on the next succeeding Business Day.
"Business Day" shall mean any day not a Saturday, Sunday or legal holiday
and a day on which commercial banks are open for business in the
Commonwealth of Pennsylvania. Any request which is made on a Saturday,
Sunday, legal holiday or after 3:00 PM (Eastern Time) on any Business Day
may be considered by Escrow Agent to have been made on the next business
day. Escrow Agent reserves the right to take up to twenty-four (24) hours
to determine whether such action can be acted on.
11. Construction.
THIS AGREEMENT SHALL BE CONSTRUED ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THECOMMONWEALTH OF PENNSYLVANIA. The sole remedy
for the resolution of disputes between the parties to this Agreement shall
be arbitration before one arbitrator, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, such arbitration
to be held in Philadelphia, Pennsylvania. In any such proceeding, TelVue
and Representative each hereby absolutely and irrevocably (a) waives any
objection to jurisdiction or venue, (b) waives personal service of any
summons, complaint, declaration or other process, and (c) agrees that the
service thereof may be made by certified or registered first-class mail
directed to such party, as the case may be, at their respective addresses
in accordance with Section 6 hereof.
12. Section Headings.
The headings of each Section, subsection or other subdivision of this
Agreement are for reference only and shall not limit or control the meaning
thereof.
13. Tax Indemnification.
Each of TelVue and Representative agrees (i) to assume any and all
obligations imposed now or hereafter by any applicable tax law with respect
to any payment or distribution of the Escrow Funds to such Interested Party
or performance of other activities under this Agreement with respect to
such Interested Party, (ii) to instruct the Escrow Agent in writing with
respect to the Escrow Agent's responsibility for withholding and other
taxes, assessments or other governmental charges applicable to such
Interested Party, and to instruct the Escrow Agent with respect to any
certifications and governmental reporting that may be required under any
laws or regulations that may be applicable in connection with its acting as
Escrow Agent under this Agreement with respect to such Interested Party,
and (iii) to indemnify and hold the Escrow Agent harmless from any
liability or obligation on account of taxes, assessments, additions for
late payment, interest, penalties, expenses and other governmental charges
that may be assessed or asserted against the Escrow Agent in connection
with or relating to any payment made to such Interested Party or other
activities performed under the terms of this Agreement with respect to such
Interested Party, including without limitation any liability for the
withholding or deduction of (or the failure to withhold or deduct) the
same, and any liability for failure to obtain proper certifications or to
report properly to governmental authorities in connection with this
Agreement, including costs and expenses (including reasonable legal fees
and expenses), interest and penalties. The foregoing indemnification and
agreement to hold harmless shall survive the termination of this Agreement.
14. Force Majeure.
The Escrow Agent shall not be responsible for delays or failures in
performance resulting from acts beyond its control. Such acts shall
include but not be limited to acts of God, strikes, lockouts, riots, acts
of war, epidemics, governmental regulations superimposed after the fact,
fire, communication line failures, computer viruses, power failures,
earthquakes or other disasters.
15. Binding Effect.
This Agreement shall be binding upon the respective parties hereto
and their heirs, executors, successors and assigns.
16. Modifications.
This Agreement may not be altered or modified without the express
written consent of the parties hereto. No course of conduct shall
constitute a waiver of any of the terms and conditions of this Escrow
Agreement, unless such waiver is specified in writing, and then only to the
extent so specified. A waiver of any of the terms and conditions of this
Escrow Agreement on one occasion shall not constitute a waiver of the other
terms of this Escrow Agreement, or of such terms and conditions on any
other occasion.
17. Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, and (b) certificates and other information previously or
hereafter furnished, may be reproduced by any photographic, photostatic,
microfilm, optical disk, micro-card, miniature photographic or other
similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or
administrative proceeding, whether or not the original is in existence and
whether or not such reproduction was made by a party in the regular course
of business, and that any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence.
18. Representative.
Notwithstanding anything to the contrary contained herein,
Representative shall have no personal liability for any amounts payable to
the Escrow Agent or otherwise hereunder and any liability of Representative
hereunder for payment shall be limited to the Escrow Funds available for
such payment.
19. Commercial Account Agreement.
Escrow Agent will comply with all applicable federal, state and local
laws and regulations, rules, court orders and other legal process. As long
as this Agreement remains in effect, transactions involving the Escrowed
Funds shall be subject to the provisions of the Escrow Agent's Commercial
Account Agreement, disclosures and fee schedules in effect from time to
time, provided that, to the extent of any inconsistency between the terms
of this Agreement and the terms of the aforesaid Commercial Account
Agreement, this Agreement shall control.
20. Severability.
In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not be affected or impaired.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the date first above written.
TELVUE CORPORATION.
By:
Name:
Title:
REPRESENTATIVE.
Name:
Escrow agent:
FIRSTRUST BANK
By:
Name:
Title:
EXHIBIT B - LIST OF PSG EMPLOYEES AND EMPLOYMENT TERMS
To be delivered at closing.
EXHIBIT C - OPINION OF SELLERS' COUNSEL
1. PSG is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of New Jersey, is duly qualified to
transact business in the State of New Jersey and, except where failure to
so qualify would not have a material adverse effect on PSG, its operations
or financial condition, is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions where the ownership
or leasing of its properties or the conduct of its business requires such
qualification.
2. PSG has all requisite corporate power and authority to conduct its
business as it is now being conducted and to own or use the properties and
assets that it purports to own or use.
3. The Stock Purchase Agreement constitutes the legal, valid and binding
obligations of each of the Sellers and the Minority Holders, enforceable
against each of them in accordance with its terms. The Escrow Agreement
has been duly executed by the Representative and constitutes the legal,
valid and binding obligations of the Representative and with respect to
that portion of the Escrowed Funds (as defined in the Escrow Agreement)
held on behalf each of the Sellers, enforceable against each of them in
accordance with its terms.
4. To our knowledge PSG is not in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any material indenture, mortgage, loan agreement, note or
other similar instrument to which PSG is a party or by which its properties
may be bound.
5. To our knowledge there is no action, proceeding or investigation
pending or overtly threatened against PSG or any of its material assets,
before any court, governmental body, self-regulatory organization or
administrative agency that questions the validity of the Stock Purchase
Agreement or might adversely affect PSG or its operations.
6. Neither the execution, delivery or performance of the Stock Purchase
Agreement will (i) conflict with, or result in a violation of any provision
of the Organizational Documents of PSG, (ii) violate in any material
respect any law applicable to PSG which in our experience is generally
applicable to the transactions of the type contemplated by the Stock
Purchase Agreement, (iii) to our knowledge, conflict with, or violate in
any material respect any of the terms or requirements of, or give any
governmental authority the right to revoke, withdraw, suspend, cancel,
terminate, or modify, any governmental authorization held by PSG or (iv) to
our knowledge, conflict with, or violate or breach in any material respect
any provision of, or give any person the right to declare a material
default or exercise any remedy with respect to such material default under,
or to accelerate the maturity or performance of, or to cancel, terminate,
or modify, any material contract to which PSG is a party or by which its
assets are bound.
EXHIBIT D - EMPLOYEE AGREEMENT
TELVUE CORPORATION
AGREEMENT WITH RESTRICTIVE COVENANTS
In consideration of TelVue Corporation or its subsidiaries, or
related business entities (hereinafter collectively "TelVue") employing me,
compensating me, providing me with benefits, investing the considerable
time, energy and funds TelVue will expend training and educating me in
various phases of employment and/or management related to TelVue's
business; providing me with marketing and/or sales support; providing me
with the benefit of TelVue's research, market strategies and business
plans; and other good and valuable consideration, the adequacy, sufficiency
and receipt of which is hereby acknowledged, and intending to be legally
bound, I hereby acknowledge that I understand and agree that the provisions
hereof are part of and a condition of my employment or continuing
employment with TelVue.
NON-COMPETITION
I agree that during my employment and for two (2) years immediately
following termination of my employment with TelVue for any reason, I will
not be employed by, be retained by, or otherwise provide services to,
directly or indirectly, any Conflicting Organization. Because TelVue's
business involves national competition, I agree that it is reasonable,
necessary and appropriate for this restraint to apply throughout the United
States of America.
NON-SOLICITATION OF CLIENTS
I agree that during my employment and for two (2) years immediately
following termination of my employment with TelVue for any reason, I will
not, either directly or indirectly, solicit (as defined below) on my own
behalf or on behalf of any business other than TelVue, any Clients of
TelVue upon whom I called or with whom I had contact or about whom I
obtained information or whose account I serviced or supervised during my
employment with TelVue (the "Restricted Clients"). My agreement "not to
solicit" means that I will not, either directly or indirectly, during my
employment and for a period of two years after the termination of my
employment for any reason, initiate any contact or communication with any
Restricted Client for the purpose of soliciting, inviting, encouraging,
recommending or requesting any Restricted Client to do business with a
Conflicting Organization in connection with a Conflicting Product or to
otherwise discontinue, in whole or in part, its patronage and business
relationship with TelVue. My agreement "not to solicit" includes not only
my conduct, but also the conduct of others acting on my behalf or in
concert with me.
NON-USE AND NON-DISCLOSURE OBLIGATIONS
I agree that all records and Confidential Information, whether original,
duplicated, computerized, memorized, handwritten, or in any other form, and
all information contained therein, are confidential and the sole and
exclusive property of TelVue. I understand that the business of TelVue and
the nature of my employment will require me to have access to Confidential
Information of and about TelVue and its Clients. During my employment and
for a period of five years thereafter, I will not use this information or
remove any such records from the offices of TelVue or its Clients except
for the sole purpose of conducting business on behalf of TelVue. During my
employment and for a period of five years thereafter, I agree not to
divulge or disclose this information to any third party and under no
circumstances will I reveal or permit this information to become known by
any competitor of TelVue.
MISAPPROPRIATION NOT PERMITTED
During and after the my employment with TelVue, I shall not (i)
divulge, furnish or make accessible to anyone or in any way or use, for my
benefit or for the benefit of any other individual, firm or entity (other
than in the ordinary course of TelVue's business), any Trade Secret or
Confidential Information; (ii) take or permit any action to be taken which
would reduce the value of the Trade Secrets or Confidential Information to
TelVue; or (iii) otherwise misappropriate or suffer the misappropriation of
the Trade Secrets or the Confidential Information.
DUTY OF LOYALTY
I agree that at all times during my employment, I owe TelVue a duty of
loyalty and a duty to act in good faith. I agree that during my
employment, I will not individually, or in combination with any other
employee, individual, or competitor of TelVue, violate or breach the terms
of this agreement.
INVENTIONS
a. If in the course of my employment with TelVue, I incorporate
into an TelVue product, process, software or machine a prior invention
owned by me or in which I have an interest, TelVue is hereby granted and
shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide
license to make, have made, modify, use and sell such prior invention, and
derivative works thereof, as part of or in connection with such product,
process, software or machine.
b. I agree that I shall promptly make full written disclosure to
TelVue, shall hold in trust for the sole right and benefit of TelVue, shall
assign and hereby assign to TelVue, or its designee, all of my rights,
title, and interest in and to any and all inventions, original works of
authorship, developments, concepts, improvements, designs, discoveries,
ideas, trademarks or trade secrets, whether or not patentable or
registerable under copyright or similar laws, which I may, solely or
jointly, conceive or develop or reduce to practice during my employment
with TelVue (collectively referred to as "Inventions"). I further
acknowledge that all Inventions which are made by me (solely or jointly
with others) within the scope of and during the period of my employment
with TelVue and which are protectible by copyright are "works made for
hire", as that term is defined in the United States Copyright Act. I
understand and agree that the decision whether or not to commercialize or
market any Invention developed by me (solely or jointly with others) is
within TelVue's sole discretion and for TelVue's sole benefit and that no
royalty will be due to me as a result of TelVue's efforts to commercialize
or market any such Invention.
c. I agree to keep and maintain adequate and current written
records of all Inventions made by me (solely or jointly with others) during
the term of my employment with TelVue. The records will be in the form of
notes, sketches, software, drawings, and any other format that may be
specified by TelVue. The records will be available to and remain the sole
property of TelVue at all times.
d. If TelVue is unable because of my mental or physical incapacity
or for any other reason to secure my signature on any such document, then I
hereby irrevocably designate and appoint TelVue and its duly authorized
officers and agents as my agent and attorney-in-fact to act for and in my
behalf and stead to execute and file any such document and to do all other
lawfully permitted acts to further the prosecution and issuance of letters
patent or copyright registrations thereon with the same legal force and
effect as if executed by me. The foregoing power-of-attorney is coupled
with an interest and irrevocable.
RETURN OF MATERIALS
I agree that upon the termination of my employment with TelVue or at the
request of TelVue at any time, I will immediately deliver to TelVue all
TelVue property, as well as all materials, and copies thereof in any form
whatsoever, that are in my possession or control and that contain or are
related in any way to any Confidential Information.
NON-RECRUITMENT OF EMPLOYEES
I acknowledge that TelVue has a protectable interest in maintaining a
stable and undisrupted workforce. In support of this interest, and in
further consideration for employment with the Company, I agree that during
my employment and for one (1) year immediately following termination of my
employment for any reason, I will not, on behalf of myself or on behalf of
any other person, firm, corporation, or entity, directly or indirectly
employ, solicit for employment, or otherwise seek to employ, retain,
divert, take away or engage as an independent contractor any of the
employees of TelVue or persons engaged as independent contractors by TelVue
with whom I had contact or about whom I gained information in the course of
my employment with TelVue, or in any other way assist or facilitate any
such employment, solicitation or retention effort.
NOTICE OF AGREEMENT TO SUBSEQUENT EMPLOYER
I agree that I will tell any prospective new employer, prior to accepting
employment that this Agreement exists, and further, I agree to provide a
true and correct copy of this Agreement to any prospective employer prior
to accepting employment. I further authorize TelVue to provide a copy of
this Agreement to my new employer.
TELVUE'S REMEDIES
In the event that I breach, or TelVue reasonably believes that I am about
to breach, any of the covenants of paragraphs I, II, III, V, or VIII, I
agree that TelVue will be entitled to injunctive relief. I recognize that
TelVue will suffer immediate and irreparable harm and that money damages
will not be adequate to compensate TelVue or to protect and preserve the
status quo. Therefore, I HEREBY AGREE THAT UPON A PROPER SHOWING TELVUE
SHALL BE ENTITLED TO THE ISSUANCE OF A TEMPORARY RESTRAINING ORDER, AND A
PRELIMINARY OR PERMANENT INJUNCTION ordering:
(a) that I immediately return to TelVue all Confidential Information as
defined in this Agreement, in any form whether original, copied,
computerized, handwritten, or recreated, and that I be enjoined and
restrained from using or disclosing all said Confidential Information and
records; and
(b) that, for a period of five years, commencing from the date any
injunction is issued by a court pursuant to this Agreement, I be enjoined
from using, divulging or disclosing any Confidential Information (as
defined in this Agreement) to any third party, and from revealing or
permitting this information to become known by any competitor of TelVue;
and
(c) that, for a period of two years, commencing from the date any
injunction is issued by a court pursuant to this Agreement, I be enjoined,
from being employed by, being retained by, or otherwise providing services
to, directly or indirectly, to any Conflicting Organization; and
(d) that, for a period of two years, commencing from the date any
injunction is issued by a court pursuant to this Agreement, I be enjoined
from soliciting any Client upon whom I called or with whom I had contact or
about whom I obtained information or whose account I serviced or supervised
during my employment with TelVue; and further, that I be enjoined from
accepting any business from any Client whom I have solicited in violation
of this Agreement; and
(e) that, for a period of one year, commencing from the date any injunction
is issued by a court pursuant to this Agreement, I be enjoined from
employing, soliciting for employment, or otherwise seeking to employ,
retain, divert or take away any of the employees of TelVue or persons
engaged as independent contractors by TelVue with whom I had contact or
about whom I gained information in the course of my employment with TelVue,
or in any other way assisting or facilitating any such employment,
solicitation or retention effort.
I further agree that the restraints set forth in paragraph II shall apply
to each and every Client upon whom I called, with whom I had contact, about
whom I obtained information, or whose account I serviced or supervised
during my employment with TelVue. I understand that the identity of
TelVue's Clients sometimes may be ascertained by referencing TelVue's
publications or other public resources. Nonetheless, I acknowledge that as
a result of my employment with TelVue, I will be acting as a representative
of TelVue's and I will be utilizing TelVue assets, resources and will be
benefiting from TelVue's goodwill, name recognition and reputation in
regard to these Clients. Accordingly, all Client relationships, whether
initiated by me or any other employee of TelVue, are the sole property of
TelVue and under no circumstances will they become my property.
GOVERNING LAW AND JURISDICTION
This Agreement will be governed by, construed, interpreted, and its
validity determined, under the law of the State of New Jersey, without
regard to conflict of laws principles. For the purposes of any action or
proceeding arising out of or relating to this Agreement, I hereby submit to
the exclusive jurisdiction of (a) the United States District Court for the
District of New Jersey or (b) the state court having jurisdiction for the
county in which I last worked for TelVue, or (c) the county in which I
resided when I last worked for TelVue.
ATTORNEYS' FEES
I further agree that if TelVue prevails in any suit or proceeding to
enforce its rights under this Agreement, I will indemnify TelVue for all
expenses of every nature and character incurred by TelVue including,
without limitation, all reasonable attorneys' fees. TelVue further agrees
that if I prevail in any suit or proceeding to enforce my right under this
Agreement, TelVue will indemnify me for all expenses of every nature and
character incurred by me including, without limitation, all reasonable
attorneys' fees.
NO WAIVER OF BREACH OR REMEDY
A waiver by TelVue of the breach of any of the provisions of this
Agreement by me shall not be deemed a waiver by TelVue of any subsequent
breach, nor shall recourse to any remedy hereunder be deemed a waiver of
any other or further relief or remedy provided for herein. No waiver shall
be effective unless made in writing and signed by the President of TelVue.
BINDING EFFECT & ASSIGNABILITY
This Agreement is assignable by TelVue. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors, assigns, affiliated
entities, and any party-in-interest. I agree and understand that, should
TelVue be acquired by, merge with, or otherwise combine with another
corporation or business entity, the surviving entity will have all rights
to enforce the terms of this Agreement against me without the need for any
formal assignment of the Agreement.
EMPLOYMENT AT WILL
Nothing by the way of this Agreement is intended to nor shall affect
the at-will nature of my employment with TelVue. My employment with TelVue
shall terminate at the will of either myself or TelVue, with or without
cause and with or without notice at any time. This at-will relationship
cannot be changed or altered in any way unless expressly modified in a
writing signed by the President of TelVue.
ENTIRE AGREEMENT
This Agreement contains the entire agreement of the parties, and
supersedes any existing Agreement entered into by me and TelVue relating
generally to the same subject matter and shall be effective as of the date
of complete execution by me. The parties may only change this Agreement by
executing an additional written and signed agreement.
MODIFICATION AND SEVERABILITY
If any provision of this Agreement is held to be unenforceable, then
this Agreement will be deemed amended to the extent necessary to render the
otherwise unenforceable provision, and the rest of the Agreement, valid and
enforceable. If a court declines to amend this Agreement as provided
herein, the invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of the remaining
provisions, which shall be enforced as if the offending provision had not
been included in this Agreement.
DEFINITIONS
(a) "Confidential Information" means TelVue's trade secrets. It
also means other TelVue, TelVue employee, and TelVue Client information
which is not generally known, and is proprietary to TelVue, its employees,
and its Clients. It includes, but is not limited to all items, materials
and information (whether or not reduced to writing and whether or not
patentable or copyrightable), that belong to TelVue or have been
confidentially provided to TelVue by its clients or other third parties and
that are related to (a) the past, present and future business endeavors of
TelVue, or (b) the research and development or inventions of TelVue, and
that are kept confidential and secret by TelVue. Confidential Information
includes, among other things: client data; business practices; sales
records; invoices; information contained in client files and information
provided by clients pertaining to those clients; financial information,
data or statements; the existence and contents of agreements entered into
by TelVue or its clients; product research and development; existing and
future product plans, designs, and performance specifications; marketing
plans, strategies or schematics; the prices TelVue obtains or has obtained
for the sale of, or at which it sells or has sold products or services; and
computer data, documentation, algorithms, processes and know-how; computer
programs and software, TelVue employee performance evaluations, employee
compensation information, and the information contained therein; and all
other non-public information of TelVue and its Clients and its employees.
"Confidential Information" does not include anything described above which
is now generally known by parties other than TelVue and/or its employees
(unless furnished by clients or third parties as described above), or
becomes generally known, through no act or failure to act of me.
(b) "Client" shall mean any individual, person, business or entity
that has consumed, obtained, retained and/or purchased any services or
products offered or sold by TelVue during the last twenty-four months, and
any individual, person, business or entity or that has been solicited by me
to consume, obtain, retain or purchase the services or products offered or
sold by TelVue.
(c) "Conflicting Organization" means any person, firm, corporation,
partnership, limited liability company or other organization engaged (or
about to become engaged) in research, development, marketing, selling, or
servicing with respect to a Conflicting Product. Conflicting Organization
does not include a distinct and wholly separate division or affiliate of a
large parent entity (i.e., which has combined annual revenues in excess of
$100 million) where such division or affiliate does not engage (or is about
to become engaged) in research, development, marketing, selling, or
servicing with respect to a Conflicting Product, although another division
or affiliate of the parent entity may engage in such research, development,
marketing, selling, or servicing. I acknowledge that should I become
employed by, be retained by, or otherwise provide services to, directly or
indirectly, such non-conflicting division or affiliate, that I must
nonetheless abide by the covenants contained in this Agreement in order to
ensure that TelVue's Confidential Information, goodwill and relationships
are not exploited by me on behalf of such non-conflicting division or
affiliate or another division or affiliate of the parent that is a
Conflicting Organization.
(d) "Conflicting Product" means any product or service which is the
same as, similar to, or competes with any TelVue product, process or
service with which I have worked, or about which I have acquired
Confidential Information.
I ACKNOWLEDGE AND AGREE THAT I HAVE READ AND UNDERSTAND THIS AGREEMENT,
THAT I HAVE BEEN GIVEN AN OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL
CONCERNING THE TERMS OF THIS AGREEMENT, AND THAT I AGREE TO THE TERMS OF
THIS AGREEMENT. FURTHERMORE, I ACKNOWLEDGE THAT I HAVE THE RIGHT TO RETAIN
A COPY OF THIS AGREEMENT AND UNDERSTAND THAT THE ORIGINAL OF THIS AGREEMENT
WILL BECOME PART OF MY PERSONNEL FILE.
TELVUE CORPORATION
BY: BY:
Employee's Signature Manager's Signature
Employee's Name (Print) Manager's Name (Print)
Title
DATE:_____________________________ DATE: _______________________________
EXHIBIT E - OPINION OF TELVUE COUNSEL
1. TelVue is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware.
2. TelVue has all corporate right, power and authority to execute and
deliver the Stock Purchase Agreement and the Escrow Agreement, and to
perform its obligations thereunder.
3. The Stock Purchase Agreement and the Escrow Agreement have been duly
authorized by all necessary corporate action on the part of TelVue, and
have been duly executed and delivered by an authorized officer of TelVue .
4. The Stock Purchase Agreement and the Escrow Agreement constitute the
legal, valid and binding obligations of TelVue, enforceable against it in
accordance with their respective terms.
5. To our knowledge there is no action, proceeding or
investigation pending or overtly threatened against TelVue, before any
court, governmental body, self-regulatory organization or administrative
agency that questions the validity of the Stock Purchase Agreement.
EXHIBIT 99.1
PRESS RELEASE DATED MARCH 7, 2007
FOR IMMEDIATE RELEASE Contact: Cass Oryl
215-564-3200 x16
coryl@braithwaitepr.com
TelVue Corp. To Acquire Princeton Server Group, Inc.
Deal Enables Company to Provide Innovative, Streamlined Solutions to
Municipal Cable Channels
March 7, 2007 (Mount Laurel, NJ) - TelVue Corporation (TEVE: OB) today
announced that it has executed a purchase agreement with Princeton Server
Group, Inc. (PSG) for $6.1 million in cash plus forgiveness of a $400,000
loan. The deal will become final on March 12, 2007. Once final, the
acquisition formalizes a long-term collaboration between the companies and
makes TelVue the only company that provides a comprehensive solution
featuring digital video equipment, localized content and production
services developed specifically for the public, education and government
(PEG) cable channel market.
TelVue Corp. is the parent company of TVTN, the nation's only network of
municipally-owned cable channels. The company helps municipalities enhance
their local cable channels by providing localized content, production
support and automation technology solutions. It also aggregates these
channels into a single point of negotiation, distribution and invoicing for
marketers interested in a unique "hyperlocal" cause-marketing opportunity.
Princeton Server Group is the leading provider of professional digital
video broadcast systems to hometown cable channels. The company's digital
media products leverage the communication power of television merged with
Internet technology to emulate traditional TV broadcast equipment at a
fraction of the cost.
PEG channels are provided by cable companies as part of their franchise
agreements with municipalities. The channels have the same production
capabilities as other cable channels but due to a lack of resources,
expertise or both, they are often little more than electronic bulletin
boards in many towns.
"This acquisition makes perfect sense for TelVue and our investors because
both companies serve the same client base with complementary offerings,"
said Joseph Murphy, co-founder, president and CEO of TelVue Corporation.
"In the near-term, we have the opportunity to cross-sell into each other's
customer base. Long-term, our intention is to develop integrated solutions
that enhance our customer's workflow, offer exciting new services like web
streaming and video-on-demand, and make it less costly and difficult to add
a professional touch to your hometown channel."
Hometown channel managers and operators that worked with both companies
independently served as the primary catalyst for the initial collaboration
between TelVue and Princeton Server Group. This group will reap the
benefits of their matchmaking, receiving cost savings from a unified
product/service/content solution; streamlined buying process for equipment,
services, content and support; equipment and service upgrades in lock step;
and most significantly, easier local video integration to make local cable
channels look and feel more like other cable channels.
"The digital video products we've developed for transitioning hometown
cable channels from legacy, tape-based workflow has positioned us as a
technology leader in the market," said Jesse Lerman, co-founder, president
and CEO of Princeton Server Group. "TelVue's content and production
support helps to showcase the full potential of our equipment, making it
easier and cheaper for municipalities to provide professional looking local
television channels."
"This acquisition is an important step in achieving our vision of
revitalizing the quality and availability of local media," said H.F.
"Gerry" Lenfest, Chairman of the Board of TelVue. "In an era of media
consolidation and regulatory change, TelVue and TVTN are the last best hope
for truly local television."
TelVue Inc. will act as a media holding company that operates Princeton
Server Group and TVTN as separate but complementary business units.
Princeton Server Group and TVTN will continue to operate at their current
locations in Princeton, NJ, and Mount Laurel, NJ, respectively.
About TelVue Corporation
TelVue Corporation is a publicly traded company that provides services
within the cable television industry. Services include television
programming on local public, education and government (PEG) channels
through its TelVue Virtual Television Networks service; and professional
digital video broadcast and video-on-demand systems to PEG channels through
its Princeton Server Group.
TelVue Corporation is a public company trading on the OTC Bulletin Board as
TEVE: OB. This announcement contains certain forward-looking statements
that are subject to risks and uncertainties. Such statements reflect
management's current views and are based on certain assumptions. Actual
results could differ materially from those currently anticipated as a
result of a number of factors, including, but not limited to, the risks and
uncertainties discussed in the TelVue Corporation's reports filed with the
Securities and Exchange Commission.