Exhibit 10.1
EXECUTION VERSION
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is entered into as of
August 1, 2007, by and between MCI COMMUNICATIONS SERVICES, INC., a Delaware
corporation ("Seller"), and ACQUISITION 1 CORP., a Delaware corporation
("Buyer"; each of Buyer and Seller shall be referred to from time to time as a
"Party" and collectively as the "Parties").
RECITALS
This Agreement is entered into in recognition of the following facts and
circumstances:
Seller is the owner of certain assets used in the operation by Seller of a
business of providing telecommunications relay services, including without
limitation any form of state relay services, Internet protocol relay services or
video relay services (the "Business"). Buyer wishes to purchase from Seller, and
Seller wishes to sell, transfer, assign and convey to Buyer, such assets as
hereinafter more fully described and substantially all of Seller's right, title
and interest in and to the Business, upon the terms and conditions set forth in
this Agreement.
As of the Closing, Stellar Nordia Services LLC ("Stellar") will provide
Buyer services in connection with the management of the Business. Inasmuch as
Stellar expects to employ the majority of the employees employed in the
Business, by virtue of employment offers it may make to such employees, and will
lease certain call centers from which the Business is operated, the Parties will
transition certain aspects of the Business directly from the Seller to Stellar
at the Closing pursuant to the Management Services Agreement between Stellar and
Buyer which shall be executed concurrent with the execution of this Agreement
(or pursuant to the Transition Services Agreement between Stellar and Buyer to
be executed on the Closing Date, as contemplated by the Management Services
Agreement).
As a condition to Seller's execution of this Agreement, GoAmerica, Inc.,
the parent company of Buyer, is executing a Guarantee in the form set forth as
Exhibit F to this Agreement.
In consideration of the premises, and of the mutual promises and
agreements herein contained, and intending to be legally bound, the Parties
hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The terms set forth below shall have the following
meanings in this Agreement:
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person, and
"control", "controlling" or "controlled" as to any Person shall mean the power,
whether exercised directly or through one or more intermediates, to direct or
cause the direction of the management and policies of such Person, whether
through the majority ownership of voting securities, by contract or otherwise.
"Agreement" is defined in the Preamble.
"AIM Measurement Period" is defined in Section 2.5(a).
"AIM Minutes" is defined in Section 2.5(a).
"Ancillary Documents" means, in each case, between the Buyer or its
designee and the Seller or its designee, the Bill of Sale, the Assignment and
Assumption Agreement, the Commercial Services Agreement, the IP License
Agreement, the Transition Services Agreement, and the Facilities Use Agreement.
"Asserted Liability" is defined in Section 8.4.1.
"Assignment and Assumption Agreement" is defined in Section 3.2.1(c).
"Assumed Closing Date Net Working Capital" is defined in Section 2.4.2(a).
"Assumed Liabilities" is defined in Section 2.2.
"Base Purchase Price" is defined in Section 2.4.1.
"Benefit Maintenance Period" is defined in Schedule 7.1.
"Bill of Sale" is defined in Section 3.2.1(b).
"Books and Records" is defined in Section 2.1.1(h).
"Business" is defined in the Recitals.
"Business Day" means any day of the year on which national banking
institutions in New York, New York are open to the public for conducting
business and are not required or authorized to close.
"Buyer" is defined in the Preamble.
"Buyer Indemnified Party" is defined in Section 8.2.
"Buyer Meeting" means a special or annual meeting of Buyer's stockholders
to be called for the purpose, among other things, of seeking the stockholder
approval described in Section 6.1.5.
"Buyer Objection Notice" is defined in Section 2.4.2(b).
"Buyer Plan" is defined in Schedule 7.1.
"Buyer's FSA" is defined in Schedule 7.1.
"Carve-Out Financial Statements" is defined in Section 5.4.
"Claim Notice" is defined in Section 8.4.1.
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"Closing" is defined in Section 3.1.
"Closing Date" is defined in Section 3.1.
"Closing Date Net Working Capital" is defined in Section 2.4.2(a).
"Closing Date Net Working Capital Schedule" is defined in Section
2.4.2(b).
"Closing Payment" is defined in Section 3.2.2(a).
"Code" means the Internal Revenue Code of 1986, as amended.
"Commercial Services Agreement" means an agreement to be entered into at
Closing between Buyer or Stellar and Seller or an Affiliate of Seller, providing
for the provision of certain commercial services by Seller and/or its Affiliates
after the Closing, which agreement will incorporate the services and pricing
terms set forth in Exhibit B.
"Commitment Letters" is defined in Section 4.2.6.
"Competing Business" is defined in Section 7.4.1.
"Contract" means any Customer Contract, Equipment Lease, Facilities Lease,
Service Contract or Vendor Contract.
"Conversation Minute" means a minute of use for a completed interstate or
intrastate TRS call placed through a TRS center beginning after call set-up and
concluding after the last message call unit.
"Customer Contract" is defined in Section 2.1.1(e).
"Deposit" is defined in Section 2.4.1.
"Dispute Resolution Request" is defined in Section 2.4.2(c) and Section
2.5(f).
"Earn-Out" shall mean an amount of up to eight million dollars
($8,000,000.00) in cash, to be paid by Buyer to Seller as additional
consideration for the Purchased Assets as provided herein. The Earn-Out shall be
in addition to the Purchase Price.
"Employee Liabilities" means accrued but unpaid liabilities for vacation
and sick leave in respect of the Transferred Employees as of the Closing Date,
except that with regard to Transition Employees who become Transferred
Employees, "Employee Liabilities" shall mean accrued but unpaid liabilities for
vacation and sick leave as of the date such employee begins employment with
Buyer or Stellar.
"Equipment Lease" is defined in Section 2.1.1(c).
"ERISA" is defined in Section 4.1.14.
"Excluded Assets" is defined in Section 2.1.4.
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"Excluded Contract" is defined in Section 2.1.3.
"Excluded Marks" is defined in Section 2.1.4(h).
"Facilities" is defined in Section 2.1.1(b).
"Facilities Lease" is defined in Section 2.1.1(b).
"Facilities Use Agreement" means an agreement to be entered into at
Closing between Buyer and Seller or an Affiliate of Seller providing for the use
by Buyer after the Closing of certain of the Shared Facilities, such agreement
to be in the form and substance of the agreement annexed hereto as Exhibit A.
"Financing Agreements" is defined in Section 4.2.6.
"Fixed Asset" is defined in Section 2.1.1(a).
"GAAP" means generally accepted United States accounting principles,
consistently applied.
"Governmental Consents" is defined in Section 4.1.10.
"Governmental Entity" means any government or any agency, bureau, board,
commission, court, department, official, tribunal or other instrumentality of
any government, whether federal, state, provincial, territorial or local,
domestic or foreign, that has, in each case, jurisdiction over the matter in
question.
"In-Scope Employee" is defined in Schedule 7.1.
"Intellectual Property" means all Statutory Intellectual Property and
Non-Statutory Intellectual Property.
"IP License Agreement" is defined in Section 2.1.2.
"Law" is defined in Section 4.1.9.
"Licensed Intellectual Property" is defined in Section 2.1.2.
"Lien" means any lien, pledge, charge, mortgage, hypothecation, deed of
trust, security interest or other encumbrance.
"Losses" is defined in Section 8.2.
"Management Services Agreement" means an agreement entered into between
Buyer and Stellar whereby Stellar will provide services to Buyer and which
contemplates that pursuant to a separate agreement a substantial portion of the
employees employed in the Business shall be offered employment by Stellar. A
summary of the terms of the Management Services Agreement is annexed hereto as
Exhibit C.
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"Material Adverse Effect" means any change, effect, event, occurrence,
condition or development or state of facts that is materially adverse to the
assets, liabilities, customer or supplier relationships, financial condition,
operations or results of operations of the Business; provided, however, in each
case, not including any change, effect, event, occurrence, condition or
development or state of facts that (A) is generally applicable to the U.S.
economy, (B) is generally applicable to the industry in which the Business
operates (including without limitation any revision of rates by NECA), (C)
results from the execution of this Agreement, the announcement of this
Agreement, the consummation of the transactions contemplated hereby, the
identity of Buyer or any breach by Buyer of any provision hereof, or (D) relates
to changes in generally accepted accounting principles generally applicable to
companies engaged in a business which is the same as or similar to the Business
occurring after the date of this Agreement.
"Material Contract" means any of the Customer Contracts and the Facilities
Leases.
"NECA" is defined in Section 2.1.1(f).
"Net Working Capital" means the sum of: (x) all Trade Receivables, plus
(y) prepaid expenses related to marketing, minus (z) Employee Liabilities.
"Non-Disclosure Agreement" is defined in Section 5.8.
"Non-Statutory Intellectual Property" means all unpatented inventions
(whether or not patentable), trade secrets, know-how and proprietary
information, including but not limited to (in whatever form or medium),
discoveries, ideas, formulas, drawings, designs, plans, proposals,
specifications, processes, procedures, data, information, manuals, reports,
financial, marketing and business data, and pricing and cost information,
correspondence and notes, and any rights or licenses in the foregoing which may
be granted without the payment of compensation or other consideration to and
without the consent of any Person; provided, however, that, notwithstanding
anything to the contrary, the definition of "Non-Statutory Intellectual
Property" shall not include any Statutory Intellectual Property.
"Non-Transferred Employee" is defined in Schedule 7.1.
"Order" is defined in Section 4.1.5.
"Party" is defined in the Preamble.
"Permitted Lien" means, other than any Lien that individually or together
with other Liens materially detracts from the value of the Business, any (i)
Lien for Taxes; (ii) mechanics', materialmen's, carriers', workers', repairers'
and statutory lien or right in rem or other similar Lien arising or incurred in
the ordinary and usual course of business that do not arise out of a current,
pending, or threatened dispute known to Seller; (iii) zoning, entitlement or
other land use or environmental regulation by Governmental Entities; (iv)
easement, covenant, condition, restriction, agreement, state of fact, right of
way or other matter or encumbrance of record or identified in the title reports
made available to Buyer; (v) lease or sublease to third party tenants; (vi) Lien
that does not materially interfere with the operation of the Business as
currently
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conducted; and (vii) Lien giving effect to a lessor's or licensor's interest in
personal property leased or licensed to the Seller.
"Person" means an association, a corporation, an individual, a
partnership, a limited liability company, an unlimited liability company, a
limited liability partnership, a trust or any other entity or organization.
"Plan" is defined in Section 4.1.14.
"Price Allocation" is defined in Section 2.6.
"Proceeding" is defined in Section 4.1.5.
"Property Taxes" is defined in Section 2.7(a).
"Proxy Statement" is defined in Section 5.5.1.
"Purchase Price" is defined in Section 2.4.1.
"Purchased Assets" is defined in Section 2.1.1.
"Retained Liabilities" is defined in Section 2.3.
"Retained Minutes" is defined in Section 2.5(b).
"Retained Minutes Percentage" is defined in Section 2.5(b).
"SEC" is defined in Section 5.4.
"Seller" is defined in the Preamble.
"Seller Indemnified Parties" is defined in Section 8.3.
"Seller Objection Notice" is defined in Section 2.5(e),
"Seller's FRP" is defined in Schedule 7.1.
"Service Contract" is defined in Section 2.1.1(a).
"Shared Facilities" is defined in Section 4.1.4(b).
"Standard Procedure" is defined in Schedule 7.1.
"Statutory Intellectual Property" means all (i) United States and foreign
patents and patent applications of any kind, (ii) United States and foreign
works of authorship, mask-works, copyrights, and copyright and mask work
registrations and applications for registration, (iii) Trademarks, and (iv) any
rights or licenses in the foregoing.
"Stellar" is defined in the Recitals.
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"Tax" means all U.S. federal, state, local, county, provincial, foreign or
other taxes, customs, tariffs, imposts, levies, duties, government fees or other
like assessments or charges of any kind, including, without limitation, all
income, franchise, gross receipts, sales, use, ad valorem, transfer, license,
recording, employment (including federal and state income tax withholding,
backup withholding, FICA, FUTA or other payroll taxes), environmental, excise,
severance, stamp, occupation, premium, prohibited transaction, property,
value-added, net worth, or any other taxes and any interest, penalties and
additions imposed with respect to such amounts.
"Tax Return" means any return, report or statement required to be filed
with respect to any Tax (including any attachments thereto, and any amendment
thereof), including any information return, claim for refund, amended return or
declaration of estimated Tax, and including, where permitted or required,
combined, consolidated or unitary returns for any group of entities that
includes Seller, any of the Subsidiaries, or any of their Affiliates.
"Termination Date" is defined in Section 9.1(a).
"Third Party Contractual Consents" is defined in Section 4.1.10.
"Third Party Intellectual Property" means any Intellectual Property that
is not owned by Seller or its Affiliates as of the Closing Date.
"Trade Payables" is defined in Section 2.2.
"Trade Receivables" is defined in Section 2.1.1(f).
"Trademarks" means all trademarks, service marks, trade names, Internet
domain names, logos, slogans, and other similar source identifiers, together
with all registrations and applications for any of the foregoing.
"Transferred Employee" is defined in Schedule 7.1.
"Transferred Intellectual Property" is defined in Section 2.1.1(g).
"Transition Employee" is defined in Schedule 7.1.
"Transition Services Agreement" means an agreement to be entered into at
Closing between Buyer and Seller or an Affiliate of Seller providing for the
provision of services by Seller and/or its Affiliates to Buyer, such agreement
to be in the form and substance of the agreement annexed hereto as Exhibit E.
"True-Up" is defined in Section 2.4.2(a).
"Vendor Contract" is defined in Section 2.1.1(d).
1.2 Interpretation. For purposes of this Agreement, unless a
different intention is stated, a reference to:
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(a) a "Recital," "Article," "Section," "Exhibit" or "Schedule"
is a reference to a recital, article, section, exhibit or schedule of this
Agreement;
(b) "Agreement" includes any Recital to this Agreement, and
words such as "herein," "hereinafter," "hereof," "hereto", and "hereunder" refer
to this Agreement as a whole, unless the context otherwise requires;
(c) words importing the plural shall include the singular and
vice versa, and the use of any gender shall include the other gender;
(d) any heading is to be ignored in construing this Agreement;
and
(e) the use of "include" or "including" shall mean without
limitation by reason of enumeration and shall not be interpreted restrictively.
ARTICLE II
TRANSFER OF ASSETS
2.1 The Purchased Assets.
2.1.1 Assets. Upon the terms and subject to the conditions
contained herein, at the Closing (except as otherwise noted below), Seller shall
grant, sell, convey, assign, transfer and deliver to Buyer (or at Buyer's
option, to one or more of its designated Affiliates, as specified in writing to
Seller at or prior to the Closing) upon the terms and subject to the conditions
of this Agreement and free and clear of all Liens except for Permitted Liens,
all right, title and interest of Seller in and to the following assets,
properties and rights of Seller and no others (collectively, the "Purchased
Assets"):
(a) All of the equipment, furniture, furnishings, fixtures,
computers and other office equipment and supplies and other tangible personal
property listed on Schedule 2.1.1(a) (the "Fixed Assets") (provided that the
assets noted as "Post-Transition" in the "Notes") column of such schedule shall
be retained by Seller during the term of the Transition Services Agreement and
shall be transferred to Buyer at the end of such term), and, to the extent
assignable without consent of the vendor party thereto or subject to the last
sentence of Section 2.1.3, all contracts for maintenance or servicing of the
Equipment listed on Schedule 2.1.1(a) (the "Service Contracts");
(b) All rights of Seller as of the Closing Date as lessee
under the real property leases (the "Facilities Leases") for the call center
facilities and the research and development facility (collectively, the
"Facilities") listed on Schedule 2.1.1(b);
(c) All rights of Seller as of the Closing Date under the
leases for equipment listed on Schedule 2.1.1(c) (the "Equipment Leases"); and
(d) All rights of Seller under its contracts and purchase
orders with vendors listed on Schedule 2.1.1(d) for goods or services to be used
in the Business (the "Vendor Contracts");
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(e) All rights of Seller under its contracts with customers of
the Business listed on Schedule 2.1.1(e) (the "Customer Contracts");
(f) All of Seller's trade accounts receivable (including
unbilled amounts for services rendered through and including the Closing Date)
from State Telecommunications Relay Services agencies, the National Exchange
Carrier Association ("NECA"), all other quasi-Governmental Entities and Customer
Contracts existing as of the Closing Date (and any causes of action relating to
such receivables), excluding accounts receivable from Affiliates of Seller (the
"Trade Receivables");
(g) All rights in and to the Intellectual Property identified
on Schedule 2.1.1(g) under the heading "Transferred Intellectual Property" (the
"Transferred Intellectual Property");
(h) Copies of all books and records directly related to the
operation of the Business, subject to reasonable redactions to exclude
information that relates to areas of Seller's business other than the Business
(the "Books and Records");
(i) All data maintained by Seller in the ordinary course of
business relating to all current customers and users of the services provided by
the Business including account information associated with customer accounts
involving the use of passwords;
(j) All Governmental Entity franchises, permits, licenses,
agreements, certifications, waivers and authorizations held or used by Seller or
any of its Affiliates in connection with, or required for, the Business to the
extent transferable;
(k) All of Seller's promotional and advertising materials
relating primarily to or necessary for the conduct of the Business as presently
conducted; and
(l) Any and all goodwill of Seller relating to the Business.
2.1.2 Licensed Intellectual Property. At the Closing, Seller
shall license or cause to be licensed to Buyer, and Buyer shall license from
Seller or Seller's Affiliates pursuant to an Intellectual Property License
Agreement, such agreement to be in the form and substance of the agreement
annexed hereto as Exhibit D (the "IP License Agreement"), the Intellectual
Property identified on Schedule 2.1.1(g) under the heading "Licensed
Intellectual Property" (the "Licensed Intellectual Property"). To the extent
that any Intellectual Property owned by Seller as of the Closing Date is or
would be infringed in the conduct of the Business as it exists on the Closing
Date (other than Intellectual Property used in the provision of services
pursuant to the Transition Services Agreement, Commercial Services Agreement
and/or Facilities Use Agreement), and such Intellectual Property is not
identified on Schedule 2.1.1(g), Seller shall license such Intellectual Property
to Buyer under the terms of the IP License Agreement as if such Intellectual
Property were listed on Schedule 2.1.1(g) under "Licensed Intellectual
Property."
2.1.3 Excluded Contracts. Seller shall use commercially
reasonable efforts to obtain all consents, approvals and waivers which are
required to be obtained from any Person under any applicable Contract in order
to permit the transfer of Seller's rights under each such
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Contract to Buyer. Notwithstanding anything to the contrary herein, Seller shall
not be required to transfer to Buyer, and the Purchased Assets shall not be
deemed to include, any rights under any Contract if (i) a consent, approval or
waiver is required to be obtained from any Person to permit the transfer of
Seller's rights under such Contract to Buyer, (ii) such consent does not
constitute a Third-Party Contractual Consent set forth on Schedule 4.1.10 and
(iii) after Seller has used commercially reasonable efforts to obtain such
consent, approval or waiver, such consent, approval or waiver shall not have
been obtained (each such Contract, an "Excluded Contract"). In the event that
any Excluded Contract requires Seller to perform services after the Closing and
the ability to provide such services has been transferred to Buyer pursuant to
this Agreement, then Buyer shall either (x) provide such services on Seller's
behalf, or (y) provide such services to Seller as may be reasonably required to
enable Seller to meet its obligations under such Excluded Contract, and Seller
shall remit to Buyer all payments received with respect to such services to the
extent provided by Buyer, less Seller's direct allocated costs incurred in
connection with providing such services and maintaining such Excluded Contract.
In the event that Buyer deems it prudent to obtain similar services as those
provided to Seller under any or all of the Excluded Contracts in order to
operate the Business after Closing, Seller shall either (a) provide Buyer (or
Buyer's designee), at Buyer's expense, with the same benefits of such
contract(s) on the same terms or (b) Seller shall reimburse Buyer for any
additional costs (above what Buyer would have paid to Seller pursuant to
subsection (a)) that Buyer or Buyer's designee incurs after using commercially
reasonable efforts to contract for such services. Notwithstanding anything to
the contrary in this Agreement, Seller shall keep in full force and effect all
Excluded Contracts that are necessary or desirable to operate the Business
properly during the transition period contemplated in any of the Ancillary
Documents.
2.1.4 Excluded Assets. Notwithstanding anything to the
contrary herein, Seller is not granting, selling, conveying, assigning,
transferring or delivering to Buyer, and Buyer is not purchasing, any of
Seller's right, title and interest in and to the following assets (the "Excluded
Assets"):
(a) All cash on hand and in financial institutions, cash
equivalents, marketable securities and bonds;
(b) Accounts receivable other than the Trade Receivables;
(c) All federal, state and local income and franchise Tax and
Property Tax credits and Tax refund claims with respect to any periods (or
portions thereof) ending on or prior to the Closing Date;
(d) Consideration paid to, and the other rights that accrue or
will accrue for the benefit of, Seller under this Agreement;
(e) Corporate minute books, stock certificate books, stock
registers, Tax Returns, books of account and other records having to do with the
corporate organization of Seller;
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(f) Insurance proceeds payable on account of casualty or
liability claims for which Seller may seek recovery under its existing insurance
policies with respect to any period (or portions thereof) ending on or prior to
the Closing Date;
(g) Except as otherwise provided in Schedule 7.1, any assets
of any Plan or book accruals relating to any Plan;
(h) Any Intellectual Property other than the Transferred
Intellectual Property, including any rights to use any trademark, trade name,
logo or other mark, name or symbolic representation containing the name
"Verizon" or "MCI" (collectively, the "Excluded Marks"); and
(i) The assets listed on Schedule 2.1.4.
2.2 Assumption of Liabilities by Buyer or Buyer's Designee. At the
Closing, Buyer and/or Buyer's designee shall accept and assume, and thereafter
be fully responsible for and perform, pay or otherwise discharge, in accordance
with the respective terms and subject to the respective conditions thereof, all
of the liabilities and obligations of Seller under the Contracts (other than the
Excluded Contracts) arising after the Closing (collectively, the "Trade
Payables"), as well as all liabilities with respect to Transferred Employees as
set forth on Schedule 7.1 as well as all liabilities and obligations arising out
of the ownership of the Purchased Assets or the operation of the Business after
the Closing, as well as any assessments, claims or liabilities (including
interest and/or penalties) for Taxes arising out of, accruing or resulting from
the operation of the Business or the use, ownership or operation of the
Purchased Assets after the Closing Date. The liabilities and obligations assumed
by Buyer pursuant to this Section 2.2 are collectively referred to as the
"Assumed Liabilities".
2.3 Retained Liabilities. Buyer shall not and does not by execution
and performance of this Agreement or otherwise (including under theories of
successor liability) assume or become liable for any obligations, liabilities or
indebtedness of Seller, whether relating to the Business or otherwise, whether
known or unknown, due or to become due, asserted or unasserted, accrued or
unaccrued, liquidated or unliquidated, absolute, contingent, executory or
otherwise, howsoever or whenever arising, that are not expressly assumed by
Buyer or Buyer's designee pursuant to Section 2.2 and Seller shall retain, pay
and discharge when due all such obligations, liabilities, and indebtedness
(other than the Assumed Liabilities) (the "Retained Liabilities"), including
without limitation the following:
(a) Any liabilities, obligations, penalties or damages arising
under or from as applicable (i) the Contracts in connection with any breaches or
defaults thereunder occurring on or before the Closing Date, including any
claims relating to any breaches by Seller of any warranty or representation
under any Contracts with respect to services rendered on or before the Closing
Date, (ii) any damages, fines, interest or penalties assessed against Seller by
any Governmental Entity arising out of acts or omissions occurring on or before
the Closing Date, (iii) any infringement by Seller on the rights of others in
connection with the Business occurring on or before the Closing Date or (iv)
fraud, breach, misfeasance, negligence, strict liability in tort, injury to
persons or property or under any other theory relating to the Business occurring
on or before the Closing Date;
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(b) Any assessments, claims or liabilities (including interest
and/or penalties) for Taxes arising out of, accruing or resulting from the
operation of the Business, or the use, ownership or operation of the Purchased
Assets on or before the Closing Date and/or resulting from the sale, transfer or
purchase of the Purchased Assets hereunder, except to the extent otherwise
provided in Section 2.7 or Section 10.1;
(c) Any liabilities arising under the Excluded Contracts,
except as otherwise provided in Section 2.1.3;
(d) Any liabilities related to any Plan, except as otherwise
provided in Schedule 7.1;
(e) Any liabilities related to claims or actions of any kind,
including with regard to the payment or nonpayment of bonuses prior to the
Closing Date, related to or arising out of the employment or termination by
Seller of prior or current employees, including In-Scope Employees; and
(f) Any other liabilities and obligations listed on Schedule
2.3(f).
2.4 Consideration.
2.4.1 Purchase Price; Deposit. The aggregate consideration for
the Purchased Assets shall be (a) cash in the amount of Fifty Million Dollars
($50,000,000.00) (the "Base Purchase Price", comprising the Deposit and the
Closing Payment), as it may be adjusted pursuant to Section 2.4.2 (as so
adjusted, the "Purchase Price"), (b) the Earn-Out, and (c) the assumption of the
Assumed Liabilities. Prior to or simultaneously with the execution of this
Agreement, Buyer shall pay to Seller a cash deposit (the "Deposit") in the
amount of One Million Dollars ($1,000,000.00) in immediately available United
States funds to an account designated by Seller.
2.4.2 Net Working Capital Adjustment.
(a) The amount of the Base Purchase Price set forth in Section
2.4.1 was determined, in part, based upon the assumption that the Closing Date
Net Working Capital will be Six Million Dollars ($6,000,000.00) (the "Assumed
Closing Date Net Working Capital"). Following the Closing, in accordance with
this Section 2.4.2, if applicable, the Purchase Price shall be adjusted to
reflect the actual Net Working Capital as of 12:01 a.m. on the Closing Date
("Closing Date Net Working Capital") (provided that any Employee Liabilities
which are paid out in cash by Seller or its Affiliates on or after the Closing
Date shall not be included in the calculation of Closing Date Net Working
Capital). This adjustment process shall be referred to as the "True Up." The
True Up shall work as follows: if the Closing Date Net Working Capital is
greater than Six Million Dollars ($6,000,000.00), then the Purchase Price shall
be adjusted upward in an amount equal to the dollar amount by which the Closing
Date Net Working Capital is greater than Six Million Dollars ($6,000,000.00). If
the Closing Date Net Working Capital is less than Six Million Dollars
($6,000,000.00), the Purchase Price will be adjusted downward in an amount equal
to the dollar amount by which the Closing Date Net Working Capital is less than
Six Million Dollars (($6,000,000.00), provided that any downward adjustment
shall be limited to a maximum of Six Million Dollars ($6,000,000.00). If the
amount of the Purchase
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Price is adjusted upward from the Base Purchase Price pursuant to this Section
2.4.2, then within ten (10) Business Days after the final determination of the
Closing Date Net Working Capital is made hereunder, Buyer shall pay to Seller an
amount equal to the amount by which the Purchase Price exceeds the Base Purchase
Price. If the amount of the Purchase Price is adjusted downward from the Base
Purchase Price, then within ten (10) Business Days after the final determination
of the Closing Date Net Working Capital is made hereunder, Seller shall pay to
Buyer an amount equal to the amount by which the Purchase Price is less than the
Base Purchase Price. For purposes of illustration only, if as of the Closing
Date the Trade Receivables are $7,000,000, the prepaid expenses are $1,000,000,
and the Employee Liabilities are $500,000, then the Closing Date Net Working
Capital would be $7,500,000, and Buyer would accordingly make an additional
payment of $1,500,000 to Seller.
(b) Within thirty (30) Business Days following the Closing
Date, Seller shall prepare and deliver to Buyer a schedule (the "Closing Date
Net Working Capital Schedule") setting forth in reasonable detail (including
appropriate supporting documentation) Seller's good faith determination of the
Closing Date Net Working Capital utilizing the same accounting methods,
policies, practices, procedures and adjustments as were used in the preparation
of the Carve-Out Financial Statements (and otherwise in accordance with GAAP).
If Buyer objects to any amount reflected on the Closing Date Net Working Capital
Schedule, Buyer must, within twenty (20) Business Days after receipt thereof,
give written notice (the "Buyer Objection Notice") to Seller specifying in
reasonable detail Buyer's objections. Any item included on or omitted from the
Closing Date Net Working Capital Schedule to which Buyer does not object in a
Buyer Objection Notice shall be deemed to be accepted by Buyer and any amounts
included within such item shall be deemed to be final, binding and conclusive.
If Buyer does not give a Buyer Objection Notice within such time period,
Seller's determinations of the amounts on the Closing Date Net Working Capital
Schedule shall be final, binding and conclusive on the Parties.
(c) With respect to any disputed amounts concerning the
Closing Date Net Working Capital Schedule, Buyer and Seller shall meet in person
and negotiate in good faith to resolve any such disputes during the ten (10)
Business Day period after Seller's receipt of a Buyer Objection Notice. If Buyer
and Seller are unable to resolve all such disputes within such period, then, at
the written request of either Party delivered to the other Party (a "Dispute
Resolution Request"), each of Buyer and Seller promptly shall appoint a
knowledgeable, responsible representative to meet and negotiate in good faith to
resolve the objections raised in the Buyer Objection Notice. Buyer and Seller
intend that these negotiations be conducted by experienced business
representatives empowered to decide the issues. The business representatives
will meet and attempt to resolve the objections raised in the Buyer Objection
Notice within ten (10) Business Days after the date on which the Dispute
Resolution Request is delivered. If the business representatives resolve the
dispute, such resolution will be memorialized in a written settlement and
release agreement, executed within five (5) Business Days thereafter. If the
business representatives do not resolve the dispute, Buyer and Seller hereby
agree to submit the items remaining in dispute for resolution to an independent
auditor, which shall be a recognized regional or national accounting firm
mutually acceptable to Buyer and Seller. The independent auditor shall, within
twenty (20) Business Days after such submission, determine and report to Buyer
and Seller upon such remaining disputed items, and such determination shall be
final, binding and conclusive on the Parties hereto. Following the retention of
the independent auditor and prior to the issuance of the independent auditor's
report,
13
the Parties agree promptly to provide the independent auditor with any and all
documents and information, financial or otherwise, reasonably requested by the
independent auditor. Buyer and Seller shall bear equally the fees, costs and
expenses of the independent auditor and shall each bear their own fees, costs
and expenses in connection therewith.
(d) After delivery of the Closing Date Net Working Capital
Schedule, Seller shall provide Buyer and its authorized representatives
reasonable access during normal business hours and without significant
disruption to the business of Seller or its Affiliates to (1) all Books and
Records and employees of Seller and its Affiliates having relevant information
concerning the Closing Date Net Working Capital Schedule and (2) all of Seller's
accountants who assisted Seller in preparing the Closing Date Net Working
Capital Schedule and such accountants' relevant supporting work papers (subject
to such reasonable arrangements regarding confidentiality as may be required by
such accountants). Seller shall use commercially reasonable efforts to cooperate
with such inquiries as Buyer and its authorized representatives shall make with
respect to the preparation of the Closing Date Net Working Capital Schedule.
Buyer shall provide Seller and its representatives reasonable access during
normal business hours, and without significant disruption to the Business, to
all books and records and employees of Buyer and its Affiliates having
information directly relevant to the Closing Date Net Working Capital Schedule
and/or the trial balance and balance sheet required to be prepared pursuant to
paragraph (b) of this Section 2.4 and reasonable cooperation and assistance in
connection with the preparation of the Closing Date Net Working Capital Schedule
and/or such trial balance and balance sheet.
2.5 Additional Consideration - Earn-Out.
(a) Certain Definitions. As used herein, "AIM Minutes" means
the total number of Conversation Minutes of Internet Protocol Relay service
provided using the AOL Instant Messenger service. As used herein, "AIM
Measurement Period" means the six-calendar-month period beginning on the first
day of the first calendar month following the month in which the Closing occurs;
provided, however, that if Seller shall have substantially failed to comply with
its covenants pursuant to Section 5.9, then such period shall instead begin on
the first day of the third calendar month following the month in which the
Closing occurs.
(b) As additional consideration, Buyer shall pay to Seller the
Earn-Out. The Earn-Out shall be determined based on the number of AIM Minutes
used by Buyer's customers during the AIM Measurement Period (the "Retained
Minutes"), and shall be calculated by dividing the aggregate number of Retained
Minutes by 12,207,834, with such quotient being expressed as a percentage (such
percentage quotient, the "Retained Minutes Percentage"). The Earn-Out payable by
Buyer to Seller shall be as follows, with no rounding up or down of percentages:
- --------------------------------------------------------------------------------
Retained Minutes Percentage (%) Amount of Earn-Out to be paid by Buyer
- --------------------------------------------------------------------------------
95-100 $8,000,000 (Eight million dollars)
- --------------------------------------------------------------------------------
90-94 $7,000,000 (Seven million dollars)
- --------------------------------------------------------------------------------
14
- --------------------------------------------------------------------------------
85-89 $5,000,000 (Five million dollars)
- --------------------------------------------------------------------------------
80-84 $2,000,000 (Two million dollars)
- --------------------------------------------------------------------------------
75-79 $1,000,000 (One million dollars)
- --------------------------------------------------------------------------------
In order to illustrate the Earn-Out calculation and payment, if the number of
Retained Minutes is 10,200,000, then the Retained Minutes Percentage would be
83.55% and the Earn-Out to be paid by Buyer to Seller would be $2,000,000.
(c) Timing of Earn-Out Payment. Buyer shall deliver payment of
the Earn-Out, if any, to Seller, in the same manner and to the same account as
the Purchase Price is to be delivered (unless Seller shall have specified an
alternate account), along with the calculation of Retained Minutes and
supporting documentation, including without limitation Buyer's NECA filings
reporting the AIM Minutes for the AIM Measurement Period, no later than twenty
(20) Business Days following the end of the AIM Measurement Period.
(d) Maintenance and Operation of AIM Business. Buyer covenants
that following the Closing until the termination of the AIM Measurement Period,
Buyer will conduct the business of providing Internet Protocol Relay service
using the AOL Instant Messenger service in substantially the manner conducted by
Seller immediately prior to the Closing (except for implementation of systems to
screen or block fraudulent calls and for changes in the ordinary course of
business which would not reasonably be expected to result in any diminution of
the Retained Minutes), and will in no event cause or permit any deterioration in
the quality, efficiency or responsiveness of such service, any reduction in the
advertising and promotion of such service, or any denigration of such service.
In the event Buyer fails to comply with its covenants under this subsection (d),
the amount of the Earn-Out payable to Seller will be fixed at $8,000,000 (Eight
Million Dollars), irrespective of the number of Retained Minutes. In the event
of (x) any termination, disruption or deterioration of AOL Instant Messenger
service or (y) any disruption of Internet protocol relay service not reasonably
under the control of Buyer during the period between the Closing and the
termination of the AIM Measurement Period, the amount of Earn-Out will be
equitably adjusted to reflect the number of Retained Minutes that would
reasonably be expected to have been accrued in the absence of such event.
(e) Seller's Objection Notice. If Seller objects to Buyer's
calculation of the Retained Minutes and Earn-Out payment, Seller must, within
twenty (20) Business Days after Seller's receipt of the calculation of the
Retained Minutes and Earn-Out, give written notice to Buyer specifying in
reasonable detail Seller's objections (the "Seller Objection Notice"). Any item
included on or omitted from the calculation of the Retained Minutes and Earn-Out
to which Seller does not object in a Seller Objection Notice shall be deemed to
be accepted by Seller and any amounts included within such item shall be deemed
to be final, binding and conclusive. If Seller does not give a Seller Objection
Notice within such time period, Buyer's determinations of the Retained Minutes
and the Earn-Out shall be final, binding and conclusive on the Parties.
15
(f) Resolution of Disputed Earn-Out. With respect to any
disputed amount concerning the Earn-Out, Buyer and Seller shall meet in person
and negotiate in good faith to resolve any such dispute during the ten
(10)-Business Day period after Buyer's receipt of a Seller Objection Notice. If
Buyer and Seller are unable to resolve any such dispute within such period,
then, at the written request of either Party delivered to the other Party (a
"Dispute Resolution Request"), each of Buyer and Seller shall promptly appoint a
knowledgeable, responsible representative to meet and negotiate in good faith to
resolve the objections raised in the Seller Objection Notice. Buyer and Seller
intend that these negotiations be conducted by experienced business
representatives empowered to decide the issues. The business representatives
will meet and attempt to resolve the objections raised in the Seller Objection
Notice within ten (10) Business Days after the date on which the Dispute
Resolution Request is delivered. If the business representatives resolve the
dispute, such resolution will be memorialized in a written settlement and
release agreement, executed within five (5) Business Days thereafter. If the
business representatives do not resolve the dispute, Buyer and Seller hereby
agree to submit the items remaining in dispute for resolution to an independent
auditor, which shall be a recognized regional or national accounting firm
mutually acceptable to Buyer and Seller. The independent auditor shall, within
twenty (20) Business Days after such submission, determine and report to Buyer
and Seller upon such remaining disputed items, and such determination shall be
final, binding and conclusive on the Parties hereto. Following the retention of
the independent auditor and prior to the issuance of the independent auditor's
report, the Parties agree promptly to provide the independent auditor with any
and all documents and information, financial or otherwise, reasonably requested
by the independent auditor. Buyer and Seller shall bear equally the fees, costs
and expenses of the independent auditor and shall each bear their own fees,
costs and expenses in connection therewith.
(g) Access to Books. After delivery of the Earn-Out payment
and calculation, Buyer shall provide Seller and its authorized representatives
reasonable access during normal business hours and without significant
disruption to the business of Buyer or its Affiliates to all books, records and
employees of Buyer and its Affiliates having relevant information concerning the
Retained Minutes. Buyer shall use commercially reasonable efforts to cooperate
with such inquiries as Seller and its authorized representatives shall make with
respect to the calculation of the Retained Minutes.
(h) Payment of Amounts Not in Dispute. Notwithstanding
anything in this Agreement to the contrary, if a Seller Objection Notice has
been delivered under subsection (e) above, and the dispute has not been resolved
by the payment due date, (i) the amount not in dispute shall be paid as required
hereunder and (ii) Buyer shall have no obligation to pay any amount in dispute
until twenty (20) Business Days after the date on which the dispute is resolved.
Any amount not paid when due shall bear interest at the lesser of (i) prime plus
three percent (3%) per annum and (ii) the maximum rate percent allowed by
applicable law.
2.6 Purchase Price Allocation. For all Tax purposes, the Purchase
Price and the amount of the Assumed Liabilities shall be allocated in the manner
set forth in this Section 2.6 (the "Price Allocation"). Buyer shall prepare a
proposed allocation in a manner consistent with Section 1060 of the Code and the
regulations promulgated thereunder and shall deliver such proposal to Seller for
its review and reasonable approval not later than ninety (90) Business Days
after the final Purchase Price is determined hereunder. Seller shall notify
Buyer of its agreement
16
to such proposal or of any modifications it wishes to make to such proposed
allocation and the basis for such modifications. If Seller proposes any
modifications, then Seller and Buyer will attempt in good faith to reach
agreement on the Price Allocation prior to the due date for the filing of IRS
Form 8594. In the event that Seller and Buyer are unable to agree on the Price
Allocation prior to such due date, then each Party will separately file an IRS
Form 8594. In the event that Buyer and Seller agree on the Price Allocation (i)
each Party agrees to timely file an IRS Form 8594 reflecting the Price
Allocation for the taxable year that includes the Closing Date and to make any
timely filing required by applicable state or local Law, (ii) such Price
Allocation shall be binding on Buyer and Seller for all Tax reporting purposes,
(iii) none of Buyer or Seller or any of their respective Affiliates shall take
any position inconsistent with such Price Allocation in connection with any Tax
proceeding, except to the extent required by applicable Law, and (iv) if any
Taxing Authority disputes such Price Allocation, the Party receiving notice of
the dispute shall promptly notify the other Party hereto of such dispute, and
the Parties hereto shall cooperate in good faith in responding to such dispute
in order to preserve the effectiveness of such Price Allocation.
2.7 Allocation of Taxes and Expenses.
(a) All state, county and local ad valorem Taxes on the
Purchased Assets ("Property Taxes") shall be prorated between Buyer and Seller
as of the Closing Date, computed by multiplying the amount of Property Taxes for
the fiscal period for which the same are levied by a fraction, the numerator of
which is the number of days in such fiscal period up to and including the
Closing Date and the denominator of which is the number of days in such fiscal
period. In connection with such proration of Property Taxes, in the event that
actual Property Tax figures are not available at the Closing Date, proration of
Property Taxes shall be based upon the actual Property Taxes for the preceding
fiscal period for which actual Property Tax figures are available, and
re-prorated when actual Property Tax figures become available. All utility
charges, gas charges, electric charges, water charges, water rents and sewer
rents, if any, relating to the Purchased Assets shall be apportioned between
Buyer and Seller as of the Closing Date, computed on the basis of the most
recent meter charges or, in the case of annual charges, on the basis of the
established fiscal year.
(b) All prorations and applicable payments to either Party in
connection with this Section 2.7 shall be made, insofar as feasible, on the
Closing Date, and the Purchase Price shall be adjusted accordingly. During the
three-month period subsequent to the Closing Date, Seller shall advise Buyer,
and Buyer shall advise Seller, of any actual changes to such prorations, and the
Purchase Price shall be increased or decreased, as applicable, at the end of
such three-month period. In the event Buyer or Seller shall receive bills after
the Closing Date for expenses incurred before the Closing Date that were not
prorated in accordance with this Section 2.7 or that were re-prorated in
accordance with this Section 2.7, then Buyer or Seller, as the case may be,
shall promptly notify the other Party as to the amount of the expense subject to
proration and the responsible Party shall pay its portion of such expense (or,
in the event such expense has been paid on behalf of the responsible Party,
reimburse the other Party for its portion of such expenses).
17
ARTICLE III
CLOSING
3.1 Closing. Unless this Agreement is terminated pursuant to Section
9.1, the closing ("Closing") of the transactions contemplated by this Agreement
shall take place at a time and place mutually convenient to and agreed to in
writing by the Parties, but not later than five (5) Business Days following the
satisfaction or waiver of all conditions to the Parties' obligations to proceed
with the Closing as set forth in ARTICLE VI. The date of the Closing is
sometimes herein referred to as the "Closing Date". All transactions at the
Closing shall be deemed to have taken place simultaneously.
3.2 Items to be Delivered at Closing. At the Closing and subject to
the terms and conditions herein set forth, the Parties shall make the following
deliveries:
3.2.1 Deliveries by Seller to Buyer at Closing. Seller shall
deliver, or cause to be delivered, to Buyer the following:
(a) A certificate dated as of the Closing Date and executed by
the President or Chief Financial Officer of Seller, certifying that the
conditions specified in Section 6.1.1 have been fulfilled and a certificate
dated as of the Closing Date and executed by the Secretary or an Assistant
Secretary of Seller, certifying as to the certificate of incorporation and
by-laws of Seller, the resolutions of Seller's Board of Directors authorizing
the sale of assets contemplated hereby and the incumbency of the officers of
Seller executing this Agreement and all other agreements contemplated hereby and
attaching current copies of such good standing certificates as Buyer shall
reasonably request;
(b) A bill of sale and other such assignments, endorsements,
and other good and sufficient instruments and documents of conveyance and
transfer (collectively, the "Bill of Sale"), in form reasonably satisfactory to
Buyer and its counsel, which shall be effective to vest in Buyer all of Seller's
right, title and interest in and to the Purchased Assets, executed by Seller;
(c) An assignment and assumption agreement (the "Assignment
and Assumption Agreement"), in form reasonably satisfactory to Buyer and its
counsel, whereby Buyer will assume from Seller the due payment, performance and
discharge of the Assumed Liabilities, executed by Buyer;
(d) The IP License Agreement, executed by Seller or the
appropriate Affiliate of Seller;
(e) The Transition Services Agreement, executed by Seller or
the appropriate Affiliate of Seller;
(f) The Facilities Use Agreement, executed by Seller or the
appropriate Affiliate of Seller;
(g) The Commercial Services Agreement, executed by Seller or
the appropriate Affiliate of Seller;
18
(h) The Closing Tax Certificate, executed by Seller or the
appropriate Affiliate of Seller, signed under penalties of perjury (i) stating
that Seller is not a foreign corporation, foreign partnership, foreign trust or
foreign estate, (ii) providing its U.S. Employer Identification Number and (iii)
providing its address, all pursuant to Section 1445 of the Code; and
(i) Such other agreements, documents and instruments as Buyer
and its counsel may reasonably request.
3.2.2 Deliveries by Buyer to Seller at Closing. Buyer shall
deliver, or cause to be delivered, to Seller the following:
(a) The wire transfer(s) of immediately available United
States Dollar funds in the aggregate amount of Forty Nine Million Dollars
($49,000,000.00) or such other amount as required by any adjustments to the
Purchase Price that are made in accordance with the first sentence of Section
2.7(b) (the "Closing Payment");
(b) A certificate dated as of the Closing Date and executed by
the President or Chief Financial Officer of Buyer, certifying that the
conditions specified in Section 6.2.1 have been fulfilled and a certificate
dated as of the Closing Date and executed by the Secretary or an Assistant
Secretary of Buyer, certifying as to the certificate of incorporation and
by-laws of Buyer, the resolutions of Buyer's Board of Directors authorizing the
purchase of assets contemplated hereby and the issuance of capital stock
contemplated by Section 6.1.5, the resolution of Buyer's stockholders
authorizing the issuance of capital stock contemplated by Section 6.1.5 and the
incumbency of the officers of Buyer executing this Agreement and all other
agreements contemplated hereby and attaching current copies of such good
standing certificates as Seller shall reasonably request;
(c) The Bill of Sale, executed by Buyer,
(d) The Assignment and Assumption Agreement, executed by
Buyer;
(e) The IP License Agreement, executed by Buyer;
(f) The Transition Services Agreement, executed by Buyer or
Stellar;
(g) The Facilities Use Agreement, executed by Buyer;
(h) The Commercial Services Agreement, executed by Buyer or
Stellar; and
(i) Such other agreements, documents and instruments as Seller
and its counsel may reasonably request.
3.3 Further Assurances. Each Party will cooperate with the other and
execute and deliver to the other Party such other instruments and documents and
shall use commercially reasonable efforts to take such other actions as may be
reasonably requested from time to time by the other Party as necessary to carry
out, evidence and confirm the intended purposes of this Agreement.
19
3.3.1 In addition to the actions to be taken pursuant to
Section 5.1, Seller agrees that it shall (at Buyer's expense) cause to be
performed such lawful acts and execute any other documents as Buyer may
reasonably request in order for Buyer to obtain the full benefit of this
Agreement and to permit Buyer's name to be duly recorded in each office, bureau
and tribunal in the appropriate jurisdiction as the registered owner or
proprietor of each of the rights hereby assigned. Such instruments and documents
shall include, without limitation, affidavits, including affidavits of use, and
other documents for filing in such jurisdictions as Buyer may from time to time
reasonably request.
3.3.2 To the extent that Seller is not the true, legal owner
with the full authority to assign all right, title and interest in any property
included in the Transferred Intellectual Property at the time of execution of
this Agreement, Seller shall immediately make all efforts to effect the transfer
of all right, title and interest in such property to Buyer without delay. This
provision includes, but is not limited to, any intellectual property included
within the Transferred Intellectual Property that is owned by an Affiliate of
Seller.
3.3.3 Seller shall, at any time upon reasonable request, and
at Buyer's expense, (i) communicate to Buyer, its successors, assigns or other
legal representatives, any facts relating to the Transferred Intellectual
Property and the history thereof known to said Seller, (ii) execute all
necessary assignment papers to cause the Transferred Intellectual Property to be
recorded in the name of Buyer, and (iii) make all rightful oaths and generally
do everything necessary or desirable to aid said Buyer, its successors and
assigns, to perfect title in the Transferred Intellectual Property anywhere
throughout the world.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Seller. Seller represents and
warrants to Buyer as follows:
4.1.1 Corporate Existence. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Seller is authorized to do business, and is in good standing, in each
state in which the ownership of Purchased Assets or conduct of the Business by
it requires it to be so authorized, except to the extent that any failure to be
so qualified would not have a Material Adverse Effect upon the Business.
4.1.2 Enforceable Obligations. The execution, delivery and
performance by each of Seller and its applicable Affiliate of this Agreement and
each Ancillary Document to which it is a party and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate or entity action on the part of Seller or
such applicable Affiliate. This Agreement, assuming due execution and delivery
thereof by Buyer, constitutes the legal, valid and binding obligation of Seller
enforceable against Seller in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar
Laws and equitable principles relating to or limiting creditors' rights
generally. Each of the Ancillary Documents, when duly executed and delivered by
Seller or its applicable Affiliate and assuming due execution and delivery
thereof by Buyer, will constitute a legally valid and binding obligation of
Seller or such applicable Affiliate
20
enforceable against it in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar Laws and
equitable principles relating to or limiting creditors' rights generally.
4.1.3 Title to Assets. Seller has good and valid title to or,
in the case of leased properties or properties held under license, a good and
valid leasehold or license interest in, all of the Purchased Assets and (ii)
Seller holds title to each Purchased Asset which it purports to own, free and
clear of any Liens other than Permitted Liens. The representations in this
Section 4.1.3 do not apply to Intellectual Property, as to which only the
representations in Section 4.1.4(c) shall apply.
4.1.4 Completeness of Assets; Maintenance of the Business.
(a) The Purchased Assets, together with the services to be
provided pursuant to the Transition Services Agreement, the Commercial Services
Agreement and the Facilities Use Agreement and the licenses granted pursuant to
the IP License Agreement and the Intellectual Property forming part of the
Excluded Assets, are sufficient for the conduct of the Business immediately
following the Closing in substantially the same manner as currently conducted,
other than the use of the Excluded Marks in the conduct of the Business. The
Fixed Assets listed on Schedule 2.1.1(a) constitute all the equipment,
furniture, furnishings, fixtures, computers and other office equipment and
supplies owned by Seller and material to the Business.
(b) Seller does not own any real property or any interest in
real property material to the operation of the Business, other than the
leasehold interests created under the Facilities Leases and leasehold interests
for the facilities described on Schedule 4.1.4(b) (the "Shared Facilities").
(c) The Intellectual Property listed on Schedule 2.1.1(g)
constitutes all the Intellectual Property known to Seller that is necessary for
the conduct of, or used by Seller in the Business. To the extent that it is
discovered that Intellectual Property owned by Seller as of the Closing Date is
required to conduct the Business as it is conducted on the Closing Date (other
than Intellectual Property used in the provision of services pursuant to the
Transition Services Agreement, Commercial Services Agreement and/or Facilities
Use Agreement), and such Intellectual Property is not listed on Schedule
2.1.1(g), Seller shall grant to Buyer a license to such Intellectual Property
under the terms of the IP License Agreement as if such Intellectual Property
were listed on Schedule 2.1.1(g) under "Licensed Intellectual Property." Seller
has good and valid title to or, in the case of Intellectual Property held under
license, a good and valid license interest in, all of the Intellectual Property
listed on Schedule 2.1.1(g) (excluding unregistered Trademarks), and Seller
holds title to all Transferred Intellectual Property which it purports to own,
free and clear of any Liens other than Permitted Liens. Seller has not received
any written notice of any pending or threatened action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand that (i) challenges
the legality, validity, enforceability, registration, use, or ownership of any
Licensed Intellectual Property or Transferred Intellectual Property (other than
as indicated on Schedule 2.1.1(g)) or (ii) asserts that any Licensed
Intellectual Property or Transferred Intellectual Property infringes or
misappropriates (or will infringe or misappropriate) any trademark, trade
secret, copyright, patent or other intellectual property of any third party
(other than as indicated on Schedule 2.1.1(g)). Seller has not, by any
21
of its acts or omissions, or by acts or omissions of its Affiliates, directors,
officers, consultants, agents, or representatives caused any of the Licensed
Intellectual Property rights, Transferred Intellectual Property rights or trade
secrets that are material to the Business to be transferred to any Person (other
than pursuant to the terms of this Agreement or pursuant to the terms of
software license agreements or non-disclosure agreements entered into in the
ordinary course of the Business). Seller has not, by any of its acts or
omissions, or by acts or omissions of its Affiliates, directors, officers,
consultants, agents, or representatives caused any of the Licensed Intellectual
Property rights, Transferred Intellectual Property rights (excluding any
unregistered Trademarks) or trade secrets that are material to the Business to
be abandoned, waived, extinguished, or adversely affected to any material
extent.
(d) To Seller's knowledge, the operation of the Business as
such business is currently conducted has not and does not (1) infringe or
misappropriate the Intellectual Property or other right of any Person or (2)
constitute unfair competition, passing off or unfair trade practices under the
laws of any jurisdiction where the Buyer does business.
(e) To Seller's knowledge, there is no unauthorized use,
unauthorized disclosure, infringement or misappropriation of any Intellectual
Property listed on Schedule 2.1.1(g) by any third party, including any employee.
Neither Seller nor any of its subsidiaries or affiliates has brought any action,
suit or proceeding for infringement or misappropriation of any Intellectual
Property listed on Schedule 2.1.1(g) or breach of any agreement related to such
intellectual property.
(f) No event, fact, circumstance, condition, development,
occurrence or change has occurred since December 31, 2006 which has had, or
which is reasonably likely to have, a Material Adverse Effect on the Business.
4.1.5 Litigation. Except as set forth on Schedule 4.1.5, no
litigation, including without limitation any arbitration, investigation or other
proceeding of or before any court, arbitrator, mediator or Governmental Entity
(collectively, "Proceedings") is pending or, to Seller's knowledge, threatened
against Seller with respect to the Purchased Assets, the Business or the
transactions contemplated by this Agreement which litigation would reasonably be
expected to materially and adversely affect Buyer's ownership, use or enjoyment
of the Purchased Assets. Seller is not a party to or subject to the provisions
of any judgment, order, writ, injunction, decree or award of any court,
arbitrator or Governmental Entity (collectively, "Orders") which would adversely
affect Buyer's ownership, use or enjoyment of the Purchased Assets.
4.1.6 Facilities Leases. Each Facilities Lease is in full
force and effect, all rents due to date under each such lease have been paid,
and there exists no default or event of default by Seller or, to the knowledge
of Seller, by any other party, or occurrence, condition or act which, with the
giving of notice, the lapse of time or the happening of any further event or
condition, would become a default or event of default under such lease.
4.1.7 Contracts and Commitments. Except as set forth on
Schedule 4.1.7, all of the Contracts (true copies of which have been provided to
Buyer) are (assuming due authorization and execution by the other party or
parties thereto) valid, binding and in full force
22
and effect. Except as set forth on Schedule 4.1.7, all amounts due to date under
each such Contract have been or will be paid, and there exists no event of
default by Seller, or occurrence, condition, or act which, with the giving of
notice, the lapse of time or the happening of any other event or condition,
would become an event of default, under any such Contract which would give rise
to a right of the other party to such contract to terminate such contract.
4.1.8 Trade Receivables. The Trade Receivables are valid, and
have arisen in the ordinary course of business consistent with past practices
and are not to Seller's knowledge subject to any valid defenses, set-offs or
counterclaims.
4.1.9 Compliance with Law. Seller's ownership and operation of
the Purchased Assets and the Business are, and have been, in compliance in all
material respects with all applicable federal, state and local laws, statutes,
Orders, ordinances and regulations ("Laws").
4.1.10 Governmental and Third Party Contractual Consents.
Except as set forth on Schedule 4.1.10, no consent or approval of, other action
by, or notice to, any Governmental Entity ("Governmental Consents") or any third
party pursuant to one or more contractual obligations ("Third Party Contractual
Consents") is required in connection with the execution and delivery by Seller
of this Agreement or the consummation by Seller of any of the transactions
contemplated hereby.
4.1.11 Restrictive Documents; Non-Contravention. Seller is not
subject to or a party to any charter, by-law, mortgage, Lien, lease, permit,
agreement, contract, instrument, law, rule, ordinance, regulation, order,
judgment or decree, or any other restriction of any kind or character, which
would prevent consummation of the transactions contemplated by this Agreement.
Except as set forth in Schedule 4.1.11, the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
will not (i) violate, conflict with or result in the breach of any provision of
the charter documents or by-laws of Seller or any Affiliate of Seller; (ii)
violate any order, writ, judgment, injunction, award or decree of any court,
arbitrator or Governmental Entity against, or to the knowledge of Seller binding
upon, Seller or the Purchased Assets; (iii) result in a violation by Seller of
any Law, or (iv) violate, conflict with or result in the breach of any term,
condition or provision of, or constitute a default or accelerate the performance
under, or require the consent of any other party to, any mortgage, indenture,
agreement, contract, commitment, lease, plan, license, permit, authorization or
other instrument, document or understanding, oral or written, to which Seller is
a party or by which Seller is otherwise bound.
4.1.12 Taxes.
(a) Except for matters that would not have a Material Adverse
Effect, Seller or the affiliated, combined or unitary tax group of which Seller
is or was a member, as the case may be, has filed, or there have been timely
filed on Seller's behalf, all Tax Returns in respect of the Purchased Assets
and/or the Business that are required to be filed by it and has paid all Taxes
shown thereon.
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(b) As of the date of this Agreement, there are no Proceedings
pending or to Seller's knowledge, threatened with respect to the Purchased
Assets and/or the Business in respect of any Tax.
This Section 4.1.12 represents the sole and exclusive representation and
warranty of Seller regarding Tax matters.
4.1.13 Employees.
(a) Schedule 4.1.13 is an accurate and complete list showing
the full names and job titles of all In-Scope Employees and all independent
contractors engaged by Seller in connection with the Business as of the date of
this Agreement. Seller has previously delivered to or made available to Buyer a
schedule indicating, for each of the In-Scope Employees, and independent
contractors the following information: work location, current annual salary or
other compensation, current maximum annual cash bonus incentive, the severance
payments and severance benefits to which any such employee would have been
entitled on account of an eligible termination under the Verizon Business
Severance Plan as in effect as of the Closing Date, net credited service date,
whether such employee is full or part-time, whether such employee is classified
as exempt or non-exempt for federal and state minimum wage and overtime pay
purposes, and whether such employee receives any benefits not generally
available to all of Seller's employees and independent contractors or is on
disability, worker's compensation or leave of absence. Seller has also
previously delivered to or made available to Buyer a description of the current
perquisite, holiday, vacation and leave of absence policies of Seller.
(b) Except as set forth in Schedule 4.1.13(b), no Proceeding
or Order is pending or, to Seller's knowledge, threatened against Seller
regarding the labor and employment practices of Seller with respect to the
Purchased Assets, the Business or the transactions contemplated by this
Agreement. There are no unfunded settlements with respect to any such pending or
threatened Proceeding or Order.
(c) Except as set forth in Schedule 4.1.13(c), no labor union
or other collective bargaining representative has been recognized or certified
as the exclusive bargaining representative of any In-Scope Employees; no union
or other collective bargaining representative represents any In-Scope Employees,
no representation petition is currently pending with respect to any In-Scope
Employees, no demands for recognition have been made by any union concerning
potential representation of In-Scope Employees, and, to Seller's knowledge, no
union or other collective bargaining representative is soliciting signed
authorizations from any In-Scope Employees for the purpose of representing such
employees; and Seller is not a party to, bound by or negotiating any collective
bargaining agreement applicable to any In-Scope Employees. There is no labor
strike or labor dispute, slow down, lockout or stoppage, unfair labor practice
charge or other material labor dispute actually pending or threatened against or
affecting the Purchased Assets or the Business.
4.1.14 Employee Benefit Plans. Schedule 4.1.14 lists all
employee benefit plans (including but not limited to plans as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) and all bonus, sales commission, stock
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option, stock purchase, restricted stock, incentive, deferred compensation,
retiree medical or life insurance, supplemental retirement, severance or other
benefit plans, programs, arrangements, or policies and all termination,
severance or other contracts or agreements, whether formal or informal, whether
or not set forth in writing, whether covering one person or more than one
person, and whether or not subject to any of the provisions of ERISA, which are
maintained, contributed to or sponsored by Seller or its Affiliates for the
benefit of the In-Scope Employees (each item listed on Schedule 4.1.14 being
referred to herein individually, as a "Plan" and collectively, as the "Plans").
Seller has made available to Buyer a complete and accurate copy of (i) each
written Plan and descriptions of any unwritten Plan (including all amendments
thereto whether or not such amendments are currently effective), (ii) each
summary plan description and summary of material modifications relating to the
Plan, (iii) each trust agreement or other funding arrangement with respect to
the Seller 401(k) Salary Savings Plan, and (iv) the two most recently filed IRS
Form 5500 relating to the 401(k) Plan. Neither Seller nor any person, trade or
business that together with Seller is or was treated as a single employer within
the meaning of section 414(b), (c), (m) or (o) of the Code or Section 40011(b)
of ERISA, sponsors, maintains or contributes to or has sponsored, maintained or
contributed to in the last six (6) years any multi-employer plan within the
meaning of Section 3(37) of ERISA. With respect to each Plan subject to Title IV
of ERISA, except as set forth on Schedule 4.1.14: (w) there is no accumulated
funding deficiency, as set forth in Section 412(a) of the Code or Section 302(a)
of ERISA; (x) to Seller's knowledge, no circumstance exists as a result of which
Seller could have any direct or indirect material liability to the Pension
Benefits Guaranty Corporation or the Internal Revenue Service for any excise tax
or penalty; (y) no notice of intent to terminate has been given under Section
4041 of ERISA; and (z) no proceeding to terminate has been initiated under
Section 4042 of ERISA.
4.1.15 Broker's and Finder's Fees. All negotiations relative
to this Agreement have been carried on by Seller directly without the retention
by Seller of any Person who may be entitled to any brokerage or finder's fee or
other commission in respect of this Agreement or the consummation of the
transactions contemplated hereby.
4.1.16 Corporate Approvals. The Board of Directors of Verizon
Communications Inc. have approved the consummation of the transactions
contemplated hereby.
4.2 Representations and Warranties of Buyer. Buyer represents and
warrants to Seller as follows:
4.2.1 Corporate Existence. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
4.2.2 Enforceable Obligations. The execution, delivery and
performance by each Buyer of this Agreement and each Ancillary Document to which
it is a party and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate or
entity action on the part of Buyer, other than the stockholder approval
described in Section 6.1.5. This Agreement assuming due execution and delivery
thereof by Seller, constitutes the legal, valid and binding obligation of Buyer
enforceable against Buyer in accordance with its terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium and other similar Laws and
equitable principles relating
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to or limiting creditors' rights generally. Each of the Ancillary Documents,
when duly executed and delivered by Seller or its applicable Affiliate and
assuming due execution and delivery thereof by Buyer, will constitute a legally
valid and binding obligation of Seller or such applicable Affiliate enforceable
against it in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar Laws and equitable
principles relating to or limiting creditors' rights generally. Buyer has
entered into the Management Services Agreement and the Management Services
Agreement constitutes a legally valid and binding obligation of the parties
thereto.
4.2.3 Litigation. No Proceeding is pending or, to Buyer's
knowledge, threatened against Buyer, with respect to the transactions
contemplated by this Agreement, and to Buyer's knowledge, no investigation that
might result in any such Proceeding is pending or threatened.
4.2.4 Governmental and Third Party Contractual Consents.
Except as set forth on Schedule 4.2.4, no Governmental Consents or Third Party
Contractual Consents are required in connection with the execution and delivery
by Buyer of this Agreement or the consummation by Buyer of any of the
transactions contemplated hereby.
4.2.5 Restrictive Documents; Non-Contravention. Buyer is not
subject to or a party to any charter, by-law, mortgage, Lien, lease, permit,
agreement, contract, instrument, law, rule, ordinance, regulation, order,
judgment or decree, or any other restriction of any kind or character, which
would prevent consummation of the transactions contemplated by this Agreement.
Except as set forth on Schedule 4.2.5, the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
will not (i) violate, conflict with or result in the breach of any provision of
the charter documents or by-laws of Buyer; (ii) violate any order, writ,
judgment, injunction, award or decree of any court, arbitrator or Governmental
Entity against, or to the knowledge of Buyer binding upon, Buyer; (iii) result
in a violation by Buyer of any Law; or (iv) violate, conflict with or result in
the breach of any term, condition or provision of, or require the consent of any
other party to any mortgage, indenture, agreement, contract, commitment, lease,
plan, license, permit, authorization or other instrument, document or
understanding, oral or written, to which Buyer is a party or by which Buyer is
otherwise bound.
4.2.6 Financing. Buyer has, prior to the date hereof,
delivered to Seller true and complete copies of written commitments of Clearlake
Capital Group, L.P. to provide Buyer with equity and debt financing sufficient
to fulfill its obligations to pay the Purchase Price and Earn-Out hereunder (the
"Commitment Letters"). Buyer or Buyer's affiliate has entered into Stock
Purchase Agreements and a Credit Agreement with Clearlake Capital Group, L.P.
(collectively, the "Financing Agreements") which provide for the provision of
financing on the terms provided for in the Commitment Letters.
4.2.7 Broker's and Finder's Fees. Other than Buyer's
engagement of Daniels & Associates, L.P., all negotiations relative to this
Agreement have been carried on by Buyer directly without the retention by Buyer
of any Person who may be entitled to any brokerage or finder's fee or other
commission in respect of this Agreement or the consummation of the transactions
contemplated hereby.
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4.2.8 Corporate Approvals. The Board of Directors of Buyer has
approved the consummation of the transactions contemplated hereby.
4.3 Warranties Exclusive. Except for the express representations and
warranties made by Seller in Section 4.1 and in the Ancillary Documents, Seller
makes no representations or warranties, express or implied, concerning the
Purchased Assets or the Business or the other matters covered therein. Except
for the express representations and warranties made by Buyer in Section 4.2,
Buyer makes no representations or warranties, express or implied, concerning the
matters described therein.
ARTICLE V
AGREEMENTS PENDING CLOSING
5.1 Cooperation. Upon the terms and subject to the conditions
hereof, each of the Parties agrees to use its commercially reasonable efforts to
take or cause to be taken all actions and to do or cause to be done all things
necessary, proper or advisable to consummate the transactions contemplated by
this Agreement, including without limitation obtaining all Government Consents
and Third Party Contractual Consents; provided, however, that to the extent the
assignment of any Contract or undertaking to be assigned to Buyer as provided
herein which is not listed on Schedule 4.1.10 requires the consent of another
party thereto, notwithstanding anything to the contrary in any other provision
of this Agreement, each Party waives the obligation to obtain such consents,
provided that the other Party uses commercially reasonable efforts to obtain
such consents and complies with Section 2.1.3. Seller and Buyer shall each be
responsible for 50% of all filing fees that are incurred in connection with any
Hart-Scott-Rodino Antitrust Improvements Act of 1976 compliance activities, if
any, relating to this Agreement but shall each be responsible for all of its own
non-filing expenses and legal fees incurred in connection with such filing.
5.2 Conduct of Business. Between the date of this Agreement and the
Closing Date, Seller shall:
(a) use commercially reasonable efforts to keep the Business
and its organization intact, to keep available the services of the key employees
of the Business, to maintain the goodwill of the customers and suppliers of the
Business, and to maintain the Purchased Assets in their present condition
(ordinary wear and tear excepted);
(b) conduct the Business in substantially the same manner as
the Business has been conducted heretofore and shall not engage in any
transaction relating to the Business other than in the ordinary and customary
course of business;
(c) comply with all applicable Laws;
(d) not create any Liens, other than Permitted Liens, on the
Purchased Assets;
(e) not become a party to any material Contract with respect
to the Business and not renew, terminate or amend any Material Contract;
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(f) not sell or otherwise dispose of any of the Purchased
Assets, except that the Seller may (i) sell inventory in the ordinary course of
business, and (ii) dispose of obsolete Purchased Assets;
(g) not increase, directly or indirectly, the compensation of
any In-Scope Employees, except for reasonable increases in the ordinary course
of business consistent with past practices, nor enter into any collective
bargaining agreement relating to the Business, nor create or materially modify
any Plan, or the level of benefits under any Plan, nor increase or decrease any
severance or termination pay benefit or any other fringe benefit; and
(h) not agree to take any action prohibited by paragraphs (d)
through (f) above.
5.3 No Negotiations. Between the date of this Agreement and the
Closing Date, neither the Seller nor any of its officers, directors, financial
advisors, attorneys or other agents shall, directly or indirectly, encourage,
solicit or participate in discussions or negotiations or enter into any
agreement with any corporation, partnership, person or other entity or group
concerning the sale of all or substantially all of the Purchased Assets or the
Business or concerning a merger, consolidation or other business combination
involving the Business.
5.4 Provision of Financial Statements. Although no financial
statements were historically prepared for the Business on a stand-alone basis,
Seller has commenced the preparation of, and shall use commercially reasonable
efforts promptly to provide to Buyer, balance sheets and income and cash flow
statements for the Business as of and for the years ended December 31 of each of
2004, 2005 and 2006 and as of the last day of and for such interim periods as
Buyer shall require in order to assure that the Proxy Statement and any Current
Report on Form 8-K to be filed by Buyer with the Securities and Exchange
Commission (the "SEC") prior to the Closing Date complies with all applicable
requirements of the SEC relating to the financial statements of the Business
(the "Carve-Out Financial Statements"). Seller shall also use commercially
reasonable efforts to provide Buyer with (i) an unqualified audit report signed
by the firm of Ernst & Young, LLP with respect to each of the annual Carve-Out
Financial Statements, (ii) a consent in form and substance reasonably
satisfactory to Buyer, executed by such accounting firm as of a date within two
(2) Business Days of each of the dates on which the Carve-Out Financial
Statements are filed with the SEC, consenting to the filing by Buyer of such
report with the SEC and (iii) an acknowledgment in form and substance reasonably
satisfactory to Buyer, executed by such firm as of a date within two (2)
Business Days of each such filing, confirming that such firm is independent with
respect to the Seller. When audited Carve-Out Financial Statements become
available, Seller will provide copies of them to Buyer. Buyer agrees to
reimburse Seller for the fees and expenses of Ernst & Young, LLP related to the
audited Carve-Out Financial Statements, up to One Hundred Thousand Dollars
($100,000.00), which amount shall be offset against or added to the amount of
the Net Working Capital Adjustment payable under Section 2.4.2. In addition, not
later than the 15th day of each calendar month following the execution of this
Agreement, Seller shall furnish to Buyer a profit and loss statement for the
Business for the preceding calendar month, in the form customarily prepared by
Seller.
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5.5 Proxy Statement and Other Filings.
5.5.1 Promptly after Buyer receives a copy of the Carve-Out
Financial Statements Buyer shall file with the SEC a proxy statement (the "Proxy
Statement") describing the Buyer Meeting at which Buyer will seek the
stockholder approval described in Section 6.1.5. Seller shall cooperate with
Buyer in the preparation of the Proxy Statement, it being understood and agreed
that such cooperation shall not require anything beyond preparation and
provision of the Carve-Out Financial Statements and the associated management's
discussion and analysis and review of information in the Proxy Statement
relating to Seller and its Affiliates. Buyer shall use its reasonable best
efforts to cause the SEC Staff to approve the mailing of the Proxy Statement to
Buyer's stockholders as promptly as practicable after such filing, and Buyer
shall thereafter transmit the Proxy Statement to its stockholders. Buyer shall
also use its commercially reasonable efforts to obtain all necessary state
securities law or "Blue Sky" permits and approvals required to carry out the
transactions contemplated by this Agreement.
5.5.2 The Parties shall cooperate and consult with each other
and use their commercially reasonable efforts promptly to prepare and file all
necessary documentation, to effect all applications, notices, petitions and
filings, and to obtain as promptly as practicable all Governmental Consents and
Third Party Contractual Consents and other permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement. The Parties shall have the right to review in advance, and to the
extent practicable each will consult the other on, in each case subject to
applicable laws relating to the exchange of information, all the information
relating to the Parties, as the case may be, and any of their respective
Affiliates, which appears in any filing made with, or written materials
submitted to, any third party or any Governmental Entity in connection with the
transactions contemplated by this Agreement. In exercising the foregoing right,
each of the Parties hereto shall act reasonably and as promptly as practicable.
Each Party will keep the other apprised of the status of matters relating to
completion of the transactions contemplated herein.
5.5.3 The Parties shall, upon request, furnish each other with
all information concerning themselves, their Affiliates, directors, officers and
shareholders and such other matters as may be reasonably necessary or advisable
in connection with the Proxy Statement and any other statement, filing, notice
or application made by or on behalf of the Parties or any of their respective
Affiliates to any Governmental Entity in connection with the transactions
contemplated by this Agreement. Each Party agrees promptly to advise the other
Parties if at any time prior to the Buyer Meeting any information provided by
such Party for the Proxy Statement becomes incorrect or incomplete in any
material respect and promptly to provide Buyer with the information needed to
correct such inaccuracy or omission.
5.6 Supplemental Disclosure. Seller shall have the right from time
to time prior to the Closing to supplement any Schedule with respect to any
matter that arises or becomes known by Seller after the date hereof and that
would have been required or permitted to be set forth or described in the
Disclosure Schedules had such matter existed or been known to Seller as of the
date of this Agreement. Any such supplemental disclosure will be deemed to have
cured any breach of any representation or warranty made in this Agreement (it
being understood that the consummation of the Closing will be deemed to
constitute a waiver of any such breach) arising
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before Closing, but will not be deemed to have been disclosed as of the date of
this Agreement for purposes of determining whether or not the condition set
forth in Section 6.1.1 has been satisfied.
5.7 Closing Conditions; Representations and Warranties. Each of the
Parties covenants and agrees that pending the Closing and except as otherwise
specified in this Agreement it shall use commercially reasonable efforts to
ensure that the Closing conditions contained in ARTICLE VI are met and that its
material representations and warranties remain true in all material respects on
an ongoing basis and shall promptly inform the other Party if it discovers that
any such Closing condition cannot be met or any such representation or warranty
was either materially incorrect when made or has become materially incorrect.
5.8 Access. Seller shall give Buyer's officers, employees, counsel,
accountants and other representatives access to and the right to inspect, during
normal business hours and on reasonable notice, the Purchased Assets and records
pertaining thereto, and shall permit them to consult with and interview Seller's
officers, employees, accountants, and agents for the purpose of making such
investigation of the Purchased Assets as Buyer shall reasonably desire to make,
provided that such inspection and investigation activities shall not
unreasonably interfere with Seller's business operations. Seller shall notify
Buyer as promptly as practicable of any significant change in the ordinary
course of business for the Business and of any material litigation or other
proceedings (threatened or pending) involving or affecting the Business or the
transactions contemplated by this Agreement and of any unbudgeted capital
expenditure or commitment in excess of $100,000, individually, or $500,000 in
the aggregate, relating to the Business, and shall use reasonable efforts to
keep Buyer fully informed of such events. Buyer shall give Seller's officers,
employees, counsel, accountants and other representatives access to all
documentation and information related to Buyer's financial condition and ability
to pay the Purchase Price and Earn-Out as reasonably requested by Seller, and
shall permit them to consult with Buyer's officers, employees, accountants,
agents and lenders for the purpose of assessing Buyer's financial condition and
ability to pay the Purchase Price and Earn-Out. Any information provided to
Buyer or Seller or their respective representatives in accordance with this
Section 5.8 or otherwise pursuant to this Agreement shall be subject to the
terms of the Non-Disclosure Agreement dated as of July 24, 2006, between Buyer
and Seller (the "Non-Disclosure Agreement").
5.9 Middleware Access. From the date of this Agreement, through
Closing, Seller shall license to Buyer, pursuant to the Transitional Use
Intellectual Property License Agreement being executed contemporaneously with
this Agreement, certain Intellectual Property for Buyer's use in developing
certain middleware (as such term is commonly used in the information
technology/telecommunications industries) in order to accomplish the transition
of Internet protocol-based traffic from Seller's network to Buyer's network. The
development of such middleware shall be at Buyer's sole expense, and Seller
shall have no obligation to assist in (beyond provision of access to such
technology and Intellectual Property), nor any liability for the failure to
develop, or for any results or consequences of the use of, any such middleware.
Any middleware so developed shall be and remain Seller's sole property unless
and until the Closing occurs, and shall be transferred by Seller to Buyer at
Closing. If this Agreement is terminated pursuant to Section 9.1, Buyer's access
to technology and
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Intellectual Property shall automatically be terminated and Buyer shall
immediately return to Seller all technology and Intellectual Property provided
to Buyer pursuant to this Section and all middleware developed pursuant to this
Section.
ARTICLE VI
CONDITIONS PRECEDENT TO THE CLOSING
6.1 Conditions Precedent to Buyer's Obligations. The obligations of
Buyer to consummate the transactions contemplated by this Agreement are subject
to the fulfillment or satisfaction, prior to or at the Closing, of each of the
following conditions precedent unless waived in writing by Buyer:
6.1.1 Representations, Warranties and Covenants. All
representations and warranties of Seller contained in this Agreement, in any
schedule or exhibit hereto or in any instrument, document or certificate
delivered by Seller to Buyer pursuant to the provisions hereof, shall be true in
all material respects (or, with respect to representations and warranties that
are qualified as to materiality, true in all respects) on the Closing Date with
the same effect as though such representations and warranties were made as of
such date, except for changes contemplated by this Agreement, and Seller shall
have performed in all material respects all covenants and agreements required by
this Agreement to be performed by it on or prior to the Closing Date.
6.1.2 No Litigation. No Proceedings by any Governmental Entity
or other Person shall be pending or threatened for the purpose of enjoining or
preventing, or which question the validity or legality of, any of the
transactions contemplated hereby.
6.1.3 Consents and Approvals. The Governmental Consents listed
in Schedules 4.1.10 and 4.2.4 and the Third Party Contractual Consents shall
have been obtained and shall be effective.
6.1.4 Carve-Out Financial Statements. Prior to the filing of
the Proxy Statement with the SEC and no later than two (2) Business Days before
the Closing, Seller shall have provided Buyer with the Carve-Out Financial
Statements and such other reports, consents, acknowledgments and writings as are
contemplated by Section 5.4.
6.1.5 Stockholder Approval. The stockholders of GoAmerica,
Inc. shall have approved the acquisition of the Purchased Assets contemplated by
this Agreement and the issuance of all shares of capital stock of GoAmerica,
Inc. specified in the Financing Agreements, such approval to conform to all
applicable requirements of The Nasdaq Stock Market and the laws of the State of
Delaware.
6.1.6 No Material Adverse Effect. No occurrence or condition
(alone or together with other occurrences or conditions) giving rise to a
Material Adverse Effect shall have occurred since the date of this Agreement.
6.2 Conditions Precedent to Seller's Obligations. The obligations of
Seller to consummate the transactions contemplated by this Agreement are subject
to the fulfillment or satisfaction, prior to or at the Closing, of each of the
following conditions precedent unless waived in writing by Seller:
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6.2.1 Representations, Warranties and Covenants. All
representations and warranties of Buyer contained in this Agreement, in any
schedule or exhibit hereto or in any instrument, document or certificate
delivered by Buyer to Seller pursuant to the provisions hereof, shall be true in
all material respects (or, with respect to representations and warranties that
are qualified as to materiality, true in all respects) on the Closing Date with
the same effect as though such representations and warranties were made as of
such date, except for changes contemplated by this Agreement, and Buyer shall
have performed in all material respects all covenants and agreements required by
this Agreement to be performed by it on or prior to the Closing Date.
6.2.2 No Litigation. No Actions by any Governmental Entity or
other Person shall have been instituted or threatened for the purpose of
enjoining or preventing, or which question the validity or legality of, any of
the transactions contemplated hereby.
6.2.3 Consents and Approvals. The Governmental Consents listed
in Schedules 4.1.10 and 4.2.4 and the Third Party Contractual Consents shall
have been obtained and shall be effective.
ARTICLE VII
OTHER AGREEMENTS
7.1 Employees and Employee Benefits. Buyer or Buyer's designee shall
make bona fide offers of employment to all In-Scope Employees (as defined in
Schedule 7.1) in accordance with, and shall otherwise in all respects comply
with, the procedures and obligations set forth in Schedule 7.1. Between the date
of this Agreement and the Closing Date, Seller shall permit Buyer or Buyer's
designee to conduct interviews with In-Scope Employees having rank of Manager or
above for purposes of planning Seller's post-Closing staffing, provided that
Buyer or Buyer's designee shall give reasonable prior notice of whom it wishes
to interview and its preferred dates for the interview, any such interviews
shall be coordinated through Seller, such interviews shall be at times and
locations satisfactory to Seller, and Seller shall have the right to have a
Seller representative present during any or all such interviews. To the extent
required by, and in accordance with, the Worker Adjustment and Retraining
Notification Act ("WARN") and any applicable state law, Seller shall provide any
required WARN notices to the In-Scope Employees.
7.2 Expenses. Each Party shall pay its own expenses relating to the
preparation of this Agreement, the carrying out of the provisions of this
Agreement and the consummation of the transactions contemplated hereby,
including without limitation the fees and expenses of their respective counsel,
accountants and financial advisers.
7.3 Public Announcements. No Party shall issue a press release, make
publicly available any document or make any public statement concerning this
Agreement, the terms hereof or the transactions contemplated hereby without
obtaining the prior written consent of the other Party, which consent shall not
be unreasonably withheld or delayed, except to the extent that such Party, or a
publicly held parent company of such Party, is required to issue such a press
release, to make available such a document or to make such a public statement
under the rules of
32
a stock exchange or self-regulatory association on which such Party's or such
Party's ultimate parent company's securities are listed, or pursuant to any
applicable Law.
7.4 Covenant Not to Compete or Solicit Employees.
7.4.1 Seller agrees that it will not, and will cause its
Affiliates not to, engage or participate, directly or indirectly, as principal,
agent, employer, consultant or in any other capacity whatsoever, in the conduct
or management of, or own (legally or beneficially), or have the right or option
to acquire, any direct or indirect interest in any business that engages,
directly or indirectly, in providing telecommunications relay services,
including without limitation any form of Internet protocol relay services or
video relay services, in the United States (a "Competing Business"), for a
period of two (2) years after the Closing Date. Notwithstanding the foregoing,
the foregoing covenant shall not prohibit Seller or its Affiliates from:
(a) owning, or having the right or option to acquire, any
passive investment not involving the furnishing of personal services, consulting
or any involvement in operations, in any business; provided that such investment
constitutes not more than ten percent (10%) of the aggregate equity interests in
such business and such equity interests are, at the time of acquisition by
Seller or its affiliates, registered under the Securities Exchange Act of 1934,
as amended;
(b) acquiring (including without limitation by purchase,
merger or consolidation) any entity which includes a Competing Business,
provided that such Competing Business accounted for not more than ten percent
(10%) of the revenues of such acquired entity in the last full fiscal year of
such entity prior to the acquisition;
(c) providing any service required to be provided by Seller or
its Affiliates by applicable Law.
7.4.2 Covenant Regarding Employees. Except (i) with respect to
the employees listed on Schedules 7.1(a) and 7.4.2, (ii) with Buyer's, Buyer's
Affiliates or Stellar's consent, or (iii) with respect to employees who are
terminated by Buyer, Buyer's Affiliates or Stellar, neither the Seller nor its
Affiliates will, for a period of one (1) year after the Closing Date, directly
or indirectly, employ, engage or contract (or contact or solicit for the purpose
of employing, engaging or contracting, other than through the general
solicitation of an open position) for the services in any capacity of any person
who is employed by the Business on the date hereof (or who is so employed
immediately prior to the Closing Date), unless (x) the employment of such Person
is terminated by Stellar, Buyer or Buyer's Affiliates prior to any such
employment, engagement, contract, contact or solicitation by Seller or its
Affiliates, or (y) such person responds to a general solicitation of an open
position.
7.4.3 Acknowledgment. Seller agrees that the covenants set
forth in this Section 7.4 are appropriate and reasonable when considered in
light of the nature and extent of the Business that is being effectively
acquired by Buyer hereunder, and which includes the goodwill of the business of
Seller. Seller acknowledges that (i) Buyer has a legitimate interest in
protecting the Business and the Purchased Assets, (ii) the covenants set forth
in this Section 7.4
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are not oppressive to Seller and contain reasonable limitations as to time,
scope, geographical area and activity, (iii) the covenants set forth in this
Section 7.4 do not harm in any manner whatsoever the public interest, (iv)
Seller is agreeing to such covenants in order, among other things, to induce
Buyer to enter into this Agreement and (v) Seller has received and will receive
substantial consideration and/or benefits from the consummation of the
transactions contemplated by this Agreement, including, but not limited to, the
payment of the Purchase Price in accordance with this Agreement.
7.4.4 Injunctive Relief. In the event that Seller violates the
foregoing covenants set forth in this Section 7.4, then, in addition to any
other rights and remedies available, Buyer shall have the right and remedy to
have the applicable covenant provisions specifically enforced by any court of
competent jurisdiction by way of an injunction or other legal equitable relief,
it being agreed that any breach of the applicable covenant would cause
irreparable injury to Buyer and damages would be an inadequate remedy.
ARTICLE VIII
INDEMNIFICATION
8.1 Survival of Representations and Warranties. All representations
and warranties made by the Parties in this Agreement or in any certificate,
schedule, exhibit, or instrument furnished hereunder shall survive the Closing
for a period of six (6) months after the Closing Date, except that the first
sentence of Section 4.1.3 shall survive the Closing indefinitely.
Notwithstanding the foregoing, it is acknowledged and understood that the
limitations set forth in this Section 8.1 shall not apply with respect to any
indemnification arising out of Sections 8.2(ii), 8.2(iii), 8.3(ii) or 8.3(iii).
8.2 Obligation of Seller to Indemnify. Seller hereby agrees to
indemnify Buyer, Buyer's Affiliates and Buyer's and its Affiliates' directors,
officers and employees (collectively the "Buyer Indemnified Parties") against,
and to protect, save and keep harmless the Buyer Indemnified Parties from, and
to assume liability for, payment of all liabilities, obligations, losses,
damages, penalties, claims, actions, suits, judgments, settlements,
out-of-pocket costs, expenses and disbursements (including reasonable costs of
investigation, and reasonable attorneys', accountants' and expert witnesses'
fees) of whatever kind and nature (collectively "Losses"), that may be imposed
on or incurred by the Buyer Indemnified Parties arising out of (i) the failure
of any representation or warranty by Seller contained in Section 4.1, or in any
certificate or instrument delivered by Seller hereunder, to be true in any
material respect (except to the extent that the representation is already
qualified by materiality, in which case such indemnification shall apply to the
failure of such representation to be true in any respect), or any material
breach (except to the extent that the representation is already qualified by
materiality, in which case such indemnification shall apply to any breach) by
Seller of a warranty contained in Section 4.1 or in any certificate or
instrument delivered hereunder, (ii) any failure by Seller to comply with or
perform any agreement or covenant contained in this Agreement or (iii)
liabilities (other than Assumed Liabilities) arising from operation of the
Business or ownership of the Purchased Assets prior to the Closing Date,
including without limitation all Retained Liabilities or (iv) liabilities in
respect of any employee benefit policies, plans, arrangements, practices or
agreements of Seller as well as any and all liabilities under Title IV of ERISA
that may be
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imposed on the Buyer Indemnified Parties or the Purchased Assets as a result of
being a member of Seller's controlled group for purposes of Section 414 of the
Code.
8.3 Obligation of Buyer to Indemnify. Buyer hereby agrees to
indemnify Seller, its Affiliates, and its and its Affiliates' directors,
officers and employees (collectively the "Seller Indemnified Parties"), and to
protect, save and keep harmless the Seller Indemnified Parties from, any Losses
that may be imposed on or incurred by the Seller Indemnified Parties arising out
of (i) the failure of any representation or warranty by Buyer contained in
Section 4.2, or in any certificate or instrument delivered by Buyer hereunder,
to be true in any material respect (except to the extent that the representation
is already qualified by materiality, in which case such indemnification shall
apply to the failure of such representation to be true in any respect), or any
material breach (except to the extent that the representation is already
qualified by materiality, in which case such indemnification shall apply to any
breach) of a warranty contained in Section 4.2 or in any certificate or
instrument delivered hereunder, (ii) any failure by Buyer to comply with or
perform any agreement or covenant by Buyer contained in this Agreement or (iii)
any Assumed Liability.
8.4 Indemnification Procedures.
8.4.1 Notice of Asserted Liability. In the event that any
Indemnified Party desires to make a claim against any Indemnifying Party in
connection with any Loss for which it may seek indemnification hereunder (an
"Asserted Liability"), the Indemnified Party shall give notice (a "Claim
Notice") to the Indemnifying Party of the Asserted Liability and of its claims
of indemnification with respect thereto. Failure to give such Claim Notice shall
not relieve the Indemnifying Party of its obligations under this ARTICLE VIII
except to the extent that the Indemnifying Party shall have been prejudiced
thereby. The Claim Notice shall describe the Asserted Liability in reasonable
detail and shall indicate the amount (estimated, if necessary) of the Losses
that have been or may be suffered by an Indemnified Party in connection with
such Asserted Liability.
8.4.2 Defense of Asserted Liability. In the case of a third
party claim, the Indemnifying Party may, at its option, control the defense of
the claim. Notwithstanding the foregoing, the Indemnified Party shall have the
right to retain counsel of its choice at its own expense and participate in the
defense of the claim. If the Indemnifying Party does not assume such defense or
the Indemnifying Party notifies the Indemnified Party within twenty (20)
Business Days that it will not assume such defense, the Indemnified Party may
control the defense of such claim and may settle the claim on behalf of and for
the account and risk of the Indemnifying Party, who shall be bound by the
result. In all cases, the Party without the right to control the defense of the
claim may participate in the defense at its own expense.
8.4.3 Cooperation. Each Party shall cooperate and shall use
its commercially reasonable efforts to cause its officers and employees to
cooperate in the defense or prosecution of any claim for which indemnification
is sought hereunder and furnish such records, information and testimony and
attend such conferences, discovery proceedings, hearings, trials, and appeals as
may be reasonably requested in connection therewith.
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8.4.4 Settlements. Except as provided in Section 8.4.2, no
Indemnifying Party will be subject to any liability for any settlement made
without its written consent (but such consent shall not be unreasonably withheld
or delayed). If an Indemnified Party refuses to consent to a bona fide offer of
settlement which provides solely for a monetary payment which the Indemnifying
Party wishes to accept, the Indemnified Party may continue to pursue such
matter, free of any participation by the Indemnifying Party, at the sole expense
of the Indemnified Party. In such event, the obligation of the Indemnifying
Party shall be limited to the amount of the offer of settlement which the
Indemnified Party refused to accept plus the costs and expenses of the
Indemnified Party prior to the date the Indemnifying Party notified the
Indemnified Party of the offer of settlement.
8.5 No Consequential or Punitive Damages. Notwithstanding anything
in this Agreement to the contrary, in no event shall any Party be liable for
indirect, special, consequential or punitive damages, including loss of future
revenue or income, or loss of business reputation or opportunity, arising out of
a breach of this Agreement, even if advised at the time of breach of the
possibility of such damages.
8.6 Limitations on Indemnification.
(a) No claim, action or other Asserted Liability with respect
to Losses arising out of a breach of a representation or warranty of Seller or
Buyer under this Agreement may be asserted until such time as claims, actions or
other Asserted Liabilities with respect to Losses arising out of breaches of
representations and warranties of Seller or Buyer, as applicable, under this
Agreement shall exceed $1,000,000.00 in the aggregate (in which case Seller or
Buyer, as applicable, shall be liable for all Losses only to the extent they are
in excess of $1,000,000.00). The total liability of Seller or Buyer (as
applicable) hereunder for breaches of representations and warranties shall not
exceed $5,000,000.00. Notwithstanding the foregoing, it is acknowledged and
understood that the limitations set forth in this Section 8.6 shall not apply
with respect to any indemnification arising out of Sections 8.2(ii), 8.2(iii),
8.3(ii) or 8.3(iii).
(b) If an inaccuracy in any of the representations and
warranties made by Seller or a breach of any covenant of Seller gives rise to an
adjustment in the cash Purchase Price, then such inaccuracy or breach shall not
give rise to an indemnification obligation under Section 8.2.
8.7 Mitigation. The Parties shall cooperate with each other with
respect to resolving any claim or liability with respect to which one Party is
obligated to indemnify the other Party hereunder, including by making
commercially reasonable efforts to mitigate or resolve any such claim or
liability. Each Party shall use commercially reasonable efforts to address any
claims or liabilities that may provide a basis for an Asserted Liability such
that each Party shall respond to any claims or liabilities in the same manner as
it would respond to such claims or liabilities in the absence of the
indemnification provisions of this Agreement. In the event that any Party shall
willfully fail to make such commercially reasonable efforts to mitigate or
resolve any claim or liability, then notwithstanding anything else to the
contrary contained herein, the other Party shall not be required to indemnify
any Person for any Loss that could reasonably be expected to have been avoided
if such Party, as the case may be, had made such efforts.
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8.8 Exclusive Remedies. After the Closing, except as set forth in
Section 7.4.4 or in the case of fraud or intentional misrepresentation, the
indemnification rights of the Parties under this ARTICLE VIII shall be the
Parties' exclusive rights and remedies and shall preclude assertion by any
Indemnified Party of any other rights or the seeking of any and all other
remedies against the Indemnifying Party for any claims based on this Agreement.
ARTICLE IX
TERMINATION
9.1 Termination.
(a) Anything herein or elsewhere to the contrary
notwithstanding, this Agreement shall terminate automatically if the Closing has
not occurred by midnight on December 31, 2007 (the "Termination Date"), except
that if one or more Governmental Consents have not been obtained by December 31,
2007, Buyer shall have the option of extending the Termination Date to midnight
on March 31, 2008, by providing written notice to Seller by no later than the
Termination Date. In addition, this Agreement may be terminated by written
notice of termination at any time before the Closing Date only as follows:
(i) by mutual consent of the Parties;
(ii) by Buyer, provided that it is not then in material
breach of any of its obligations under this Agreement, if Seller (i) fails in
any material respect to perform any of its covenants in this Agreement when
performance thereof is due or (ii) has breached in any material respect any of
the representations or warranties contained in Section 4.1 of this Agreement,
and does not cure such failure or breach within fifteen (15) Business Days after
Buyer delivers written notice thereof; provided, however, that Buyer shall not
be entitled to terminate this Agreement pursuant to this Section 9.1(a)(ii) if,
prior to the expiration of such fifteen (15) Business Day period, Seller
delivers a certificate signed by an officer of Seller certifying that (A) Seller
reasonably believes that such breach or failure is capable of being cured prior
to the Termination Date and (B) Seller shall use its reasonable best efforts to
cause such breach or failure to be cured prior to the Termination Date;
(iii) by Seller, provided that it is not then in
material breach of any of its obligations under this Agreement, if Buyer (i)
fails in any material respect to perform any of its covenants in this Agreement
when performance thereof is due or (ii) has breached in any material respect any
of the representations or warranties contained in Section 4.2 of this Agreement,
and does not cure such failure or breach within fifteen (15) Business Days after
Seller delivers written notice thereof; provided, however, that Seller shall not
be entitled to terminate this Agreement pursuant to this Section 9.1(a)(iii) if,
prior to the expiration of such fifteen (15) Business Day period, Buyer delivers
a certificate signed by an officer of Seller certifying that (A) Buyer
reasonably believes that such breach or failure is capable of being cured prior
to the Termination Date and (B) Buyer shall use its commercially reasonable
efforts to cause such breach or failure to be cured prior to the Termination
Date.
(b) In the event of termination pursuant to the provisions of
this Section 9.1, this Agreement shall become void and have no effect, without
any liability on the part of either
37
Party or its directors, officers or stockholders in respect of this Agreement,
unless a Party committed a breach of or a default hereunder or otherwise failed
to exercise commercially reasonable efforts to perform its obligations and to
fulfill the conditions to the other Party's obligations hereunder, in which case
the aggrieved Party shall be entitled to the remedy of specific performance in
addition to any other available legal or equitable remedies.
9.2 Effect of Termination.
9.2.1 In the event that this Agreement is validly terminated
in accordance with Section 9.1, then each of the Parties shall be relieved of
its respective duties and obligations arising under this Agreement from and
after the date of such termination and such termination shall be without
liability to Buyer or Seller; provided, that no such termination shall relieve
any Party from liability for any breach of this Agreement or other liability
arising prior to termination hereof; and provided further, that the obligations
of the Parties set forth in Sections 7.2, 7.3, 9.1(b) and 9.2.2 and ARTICLE X
shall survive any such termination and shall be enforceable hereunder.
9.2.2 If this Agreement is validly terminated by Seller
pursuant to Section 9.1(a)(iii), or by either Party as a result of the failure
of the Closing to occur by the Termination Date as a result of Buyer's failure
to effect the Closing notwithstanding the satisfaction or waiver of all the
conditions set forth in Section 6.1, then the Deposit (together with any
interest or other income that may have been earned thereon) shall be forfeited
to Seller, and Buyer shall have no claim whatsoever thereto. If this Agreement
is validly terminated for any other reason, then Seller shall refund the Deposit
(excluding any interest or other income that may have been earned thereon to
Buyer, to be paid by wire transfer of immediately available United States funds
to an account designated by Buyer.
ARTICLE X
MISCELLANEOUS
10.1 Transfer Taxes. Buyer and Seller shall each pay one-half (50%)
of all federal, state and local sales, documentary and other transfer Taxes, if
any, due as a result of the purchase, sale or transfer of the Purchased Assets
hereunder, whether imposed by Law upon Seller or Buyer. Each Party legally
responsible for collection and payment to the Taxing authority of such Taxes
shall make such payment, and the other Party shall upon invoice remit 50% of
such paid Taxes to the first Party. The Party legally responsible for the filing
of a Tax return with respect to any such sales, documentary or transfer Tax
shall indemnify, reimburse and hold harmless the other in respect of the failure
to file any reports or Tax returns required in connection therewith.
10.2 Waiver of Jury Trial; Certain Expenses. EACH PARTY HEREBY
WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDINGS UNDER THIS AGREEMENT. In the
event of the bringing of any proceeding by a Party against another Party in
respect of any dispute arising out of this Agreement or any matter related
hereto the prevailing Party shall be entitled to have and recover from the
opposing Party all reasonable expenses, including reasonable attorneys' fees,
incurred in connection therewith.
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10.3 Notices. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by a Party to the other
Party shall be in writing and shall be deemed to have been given (a) upon
personal delivery, if delivered by hand, (b) eight (8) Business Days after the
date of deposit in the mails, postage prepaid, if mailed by certified or
registered mail, or (c) the next business day if sent by a prepaid overnight
courier service, and in each case at the respective addresses set forth below or
such other address as such Party may have fixed by notice:
If to Seller, addressed to:
MCI Communications Services, Inc.
22001 Loudoun County Parkway
Ashburn, Virginia 20147
Facsimile: (703) 886-0895
Attention: Stephen R. Mooney
with a copy (which shall not constitute notice) to:
Verizon Communications Inc.
140 West Street, 29th Floor
New York, New York 10007
Facsimile: (908) 766-3813
Attention: Marianne Drost, Esq.
If to Buyer, addressed to:
GoAmerica, Inc.
433 Hackensack Avenue, 3rd Floor
Hackensack, New Jersey 07601
Facsimile: (201) 527-1084
Attention: Daniel R. Luis, CEO
with a copy (which shall not constitute notice) to:
Chadbourne & Parke LLP
1200 New Hampshire Avenue, N.W.
Suite 300
Washington, DC 20036
Facsimile (202) 974-5602
Attention: Dana Frix, Esq.
10.4 Successors and Assigns. This Agreement, and the Parties'
respective rights and obligations hereunder, may not be assigned, by any Party,
other than by change of control, merger, or operation of law. This Agreement
shall be binding upon and shall inure to the benefit of the Parties and their
respective heirs, executors, administrators, successors and permitted assigns.
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10.5 Severability. In the event any provision of this Agreement is
found to be invalid, illegal or unenforceable by a court of competent
jurisdiction, the remaining provisions of this Agreement shall nevertheless be
binding upon the Parties with the same effect as though the invalid, illegal or
unenforceable part had been severed and deleted.
10.6 Knowledge Convention. Whenever any statement herein or in any
Schedule, Exhibit, certificate or other document delivered to Buyer pursuant to
this Agreement is made "to Seller's knowledge" or words of similar intent or
effect, Seller shall be accountable only for those facts, circumstances or
events, which as of the date the representation is given, are actually known to
the persons identified on Schedule 10.6.
10.7 Entire Agreement. This Agreement, including the Exhibits and
Schedules hereto which form a part hereof and the Ancillary Documents contain
the entire understanding of the Parties with respect to the subject matter
contained herein and therein. This Agreement and the Ancillary Documents
supersede all prior agreements and understandings, whether written or oral,
between the Parties with respect to such subject matter, except for the
Non-Disclosure Agreement which remains in full force and effect in accordance
with its terms.
10.8 Amendments and Waivers. This Agreement may not be amended or
modified except by written instrument duly executed by each of the Parties. Any
term or provision of this Agreement may not be waived without the written
consent of the Party entitled to the benefit thereof by a written instrument
duly executed by such Party.
10.9 No Third Party Beneficiaries. Nothing in this Agreement shall
confer any rights, remedies or other benefits to any Person other than the
Parties, all persons entitled to indemnification hereunder and their respective
successors and assigns permitted under Section 10.4.
10.10 Governing Law. The interpretation and construction of this
Agreement, and all matters relating hereto, shall be governed by the laws of the
State of New York without reference to its conflict of laws provisions. Seller
and Buyer hereby voluntarily submit and consent to, and waive any defense to the
jurisdiction of the federal or state courts located in the State of New York as
to all matters relating to or arising from this Agreement.
10.11 Schedules and Exhibits. All Exhibits and Schedules referred to
herein are intended to be and hereby are specifically made a part of this
Agreement.
10.12 Counterparts. This Agreement may be executed and delivered
originally, by facsimile or electronic signature and in two or more
counterparts, each of which shall constitute an original, but all of which taken
together shall constitute one and the same instrument.
[Remainder of page intentionally left blank]
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[Signature page of Asset Purchase Agreement]
IN WITNESS WHEREOF, and intending to be legally bound, the Parties have
duly executed this Agreement as of the date first written above.
ACQUISITION 1 CORP. MCI COMMUNICATIONS SERVICES, INC.
By: /s/ Daniel R. Luis By: /s/ Francis J. Shammo
---------------------- ----------------------------------
Name: Daniel R. Luis Name: Francis J. Shammo
Title: President Title: Senior Vice President and
Chief Financial Officer