Exhibit 2.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made as of this 17th
day of July, 2001, by and among Wire One Technologies, Inc., a Delaware
corporation ("Buyer"), Advanced Acoustical Concepts, Inc., a Washington
corporation ("Seller"), and Lawrence F. Miller, William Othick and Wayne Lippy
(each, a "Shareholder", and collectively, the "Shareholders") (Seller and the
Shareholders are sometimes referred to individually as a "Seller Party", and
collectively as "Seller Parties").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Seller desires to sell, and Buyer desires to purchase,
substantially all of the assets, properties and rights owned by or used in the
business and operations conducted by Seller (collectively, the "Business"), upon
the terms and subject to the conditions set forth in this Agreement; and
WHEREAS, as consideration for such asset sale and purchase, (i) Buyer
desires to issue, and the Shareholders desire to receive, shares of Buyer's
common stock, $0.0001 par value ("Common Stock"), and (ii) Buyer shall assume
certain liabilities of Seller, upon the terms and subject to the conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises, agreements, representations, warranties, and covenants herein
contained, the parties hereby agree as follows:
1. Closing
1.1 Closing Date. The closing (the "Closing") of the transactions
contemplated hereby shall be held on the date hereof (the "Closing Date") at the
offices of counsel to Buyer, Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New
York, New York 10103, or such other location as may be mutually agreed upon by
the parties.
1.2 Sale of Assets. At the Closing, Seller shall sell to Buyer, free and
clear of all liens, mortgages, security interests, encumbrances, pledges,
charges, restrictions on transfer, or adverse claims (collectively, "Liens"),
and Buyer shall buy from Seller, all of Seller's right, title and interest in
the assets used in, or necessary for the operation of, the Business (the
"Assets") that are not Excluded Assets (as hereinafter defined), including,
without limitation, the following:
(a) all cash, cash equivalents, bank accounts and deposits;
(b) all accounts receivable, including accounts receivable from employees
(except for the account receivable, in the amount of $53,893, from Lawrence F.
Miller), and all notes and other negotiable instruments and rights to receive
payment generated in the conduct of the Business;
(c) all of Seller's finished goods, work-in-process, parts and maintenance
and other inventories generated in the conduct of the Business;
(d) all prepaid expenses arising from the conduct of the Business (except
any prepaid insurance premiums to the extent allocable to periods following the
Closing Date);
(e) all automobiles and leasehold interests in automobiles created by all
leases of automobiles under which Seller is a lessee or lessor;
(f) all office furniture, warehouse equipment, office and computer
equipment technical equipment, media room equipment, demonstration equipment,
hardware, fixtures, office supplies and other tangible property and any related
documentation and user materials, and Seller's rights under all related
warranties;
(g) all rent deposits, utility deposits and, to the extent transferable by
Seller, State of Ohio worker's compensation deposits;
(h) all real property and all leasehold interests created by all leases of
real property under which Seller is a lessee or lessor;
(i) all technology and intellectual property owned by or licensed to
Seller, whether now in existence or in development stage, including, without
limitation, all United States, international or foreign:
(i) patents, patent applications and statutory invention
registrations, including reissuances, divisions, continuations,
continuations in part, extensions and reexaminations thereof, all
inventions, and rights provided by international treaties or conventions
with respect to the foregoing, and all improvements thereto;
(ii) trademarks, service marks, trade dress, logos, proprietary icons,
trade names, corporate names, internet domain names and other source
identifiers (whether or not registered) including all common law rights
therein, and registrations and applications for registration therefor, all
rights provided by international treaties or conventions with respect to
the foregoing, and all reissuances, extensions and renewals and all
goodwill associated therewith;
(iii) copyrightable works, copyrights (whether or not registered), and
registrations and applications for registration therefor, and all rights
provided by international treaties or conventions with respect to the
foregoing;
(iv) confidential and proprietary information, including trade
secrets, technology, technical data, know-how, formulae, databases,
research, product plans, markets, developments, inventions, discoveries,
processes, formulas, algorithms, designs, drawings, business strategies and
customer and supplier lists;
(v) software (including all prior versions thereof), in object and
source formats, relating to or used in connection with the Business,
including: (A) all inventories of computer program code (in all media) for
said software; (B) any related documentation
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and user materials; (C) Seller's rights under all related warranties; and
(D) Seller's entire right, title and interest to the third party software
licensed by Seller relating to or used in connection with the Business,
including any related documentation and user materials, and Seller's rights
under all related warranties; and
(vi) all other proprietary rights, in each case, whether owned or
leased;
(j) all goodwill of the Business as a going concern;
(k) Seller's entire right, title and interest in, to and under all
contracts, agreements, licenses, permits, arrangements, permissions and other
commitments and arrangements, oral or written, with any person or entity
(including legal authorities) with respect to the Business;
(l) all rights of Seller under express or implied warranties from suppliers
or contractors with respect to the Assets;
(m) all claims, causes of action, choses in action, rights of recovery and
rights of set-off of any kind arising out of the Assets or the Business;
(n) all existing business and marketing records of the Business, including
accounting and operating records, asset ledgers, inventory records, budgets,
databases, event calendars, information and data respecting leased or owned
equipment, files, books, correspondence and mailing lists, creative, promotional
and advertising materials and brochures, and other business records;
(o) all media, including, without limitation disks, tapes and compact
discs, and other tangible property necessary for the transfer of the Assets from
Seller to Buyer pursuant to the terms and conditions of this Agreement; and
(p) all sales orders of Seller.
Without limitation of the foregoing, or the definition of "Assets"
contained herein, Schedule 1.2 hereto sets forth a description of specific
Assets that are being transferred pursuant to this Agreement.
1.3 Bill of Sale; Assumption Agreement; Power of Attorney. The sale and
delivery of the Assets shall be effected by a Bill of Sale and Assignment in
substantially the form of Exhibit A (the "Bill of Sale"), an Assumption
Agreement in substantially the form of Exhibit B (the "Assumption Agreement"), a
Power of Attorney in favor of Buyer in substantially the form of Exhibit C (the
"Power of Attorney") and such deeds, endorsements, assignments and other
instruments of transfer and conveyance, agreements, and documents reasonably
satisfactory in form and substance to Buyer and its counsel as may be requested
by Buyer.
1.4 No Other Liabilities or Obligations Assumed. Schedule 1.4 sets forth
the liabilities of Seller to be assumed by Buyer as of the Closing (the "Assumed
Liabilities"), which Assumed Liabilities Buyer hereby assumes. Except as
specifically set forth in Schedule 1.4, Buyer expressly does not, and shall not,
assume or be deemed to have assumed under this
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Agreement or by reason of any transaction contemplated hereunder or otherwise,
any debts, liabilities (contingent or otherwise) or obligations of Seller of any
nature whatsoever, whether the same are direct or indirect, fixed or contingent,
or known or unknown, whether arising under an agreement or contract or
otherwise. Notwithstanding any other provision of this Agreement, the Assumed
Liabilities shall not include (a) any debts, liabilities (contingent or
otherwise) or obligations of Seller with respect to those Assumed Liabilities
referred to in this Section arising out of any contract, agreement, commitment
or lease (i) required to be listed but not listed on Schedule 1.4 hereto
regardless of any knowledge thereof on the part of Buyer or (ii) the benefits of
which are not validly assigned to Buyer, or (b) any liabilities or obligations
of Seller (whether direct or indirect, contingent or otherwise) arising (i)
under or in connection with any Employee Benefit Plan (as hereinafter defined)
or (ii) under Title IV or Section 302 of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), Section 412 of the Internal Revenue Code of
1986, as amended (the "Code") or Section 4980B of the Code. Seller shall, and
hereby covenants to Buyer that it will as of the Closing Date or when due,
satisfy all of its liabilities or obligations that are not Assumed Liabilities.
1.5 Purchase Price; Payment.
(a) Purchase Price. The consideration to be paid by Buyer for the Assets
shall consist of:
(i) One Hundred Forty Five Thousand Four Hundred Twenty Nine (145,429)
shares of Common Stock to be issued at Closing (the "Shares"), such number
of shares being equal to the integral number of shares of Common Stock
(rounded up to the nearest share) that may be purchased for Seven Hundred
Ninety Three Thousand Seven Hundred Fifty Dollars ($793,750) (such sum, the
"Purchase Price") at a price per share of $5.458 (such per share price
being equal to the average of the closing sales prices of Buyer's Common
Stock on the Nasdaq National Market on the five (5) trading days
immediately preceding the Closing Date; and
(ii) Buyer's assumption of the Assumed Liabilities.
(b) Delivery of the Shares. At the Closing, Buyer shall:
(i) deliver to the Shareholders, as distributees by way of bonus,
dividend or other distribution by Seller, certificates representing One
Hundred Nine Thousand Seventy Two (109,072) of the Shares, which Shares
shall be distributed among the Shareholders in accordance with a written
notice (the "Distribution Notice") from Seller setting forth the
apportionment of the Shares among the Shareholders; and
(ii) deliver to Fulbright & Jaworski L.L.P., as escrow agent (the
"Escrow Agent"), Thirty Six Thousand Three Hundred Fifty Seven (36,357) of
the Shares (the "Escrowed Shares"), to be held in escrow pursuant to the
terms of an Escrow Agreement ("Escrow Agreement") substantially in the form
of Exhibit D as security for the Seller Parties' indemnification
obligations under this Agreement.
(c) Registration of the Shares.
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(i) Buyer shall:
(A) as soon as practicable after the Closing, taking into account
Buyer's other registration undertakings, prepare and file with the
Securities and Exchange Commission (the "SEC") a registration
statement on Form S-3 (the "Registration Statement") relating to the
resale of the Shares by the Shareholders;
(B) use its reasonable efforts, subject to receipt of necessary
information from the Shareholders, to cause the SEC to declare the
Registration Statement effective as promptly as practicable after the
Registration Statement is filed by Buyer;
(C) promptly prepare and file with the SEC (and provide notice to
the Shareholders of any such filing) such amendments and supplements
to the Registration Statement and the prospectus used in connection
therewith as may be necessary to keep the Registration Statement
effective until the earlier of (I) the date all of the Shares covered
by the Registration Statement have been sold by the Shareholders, or
(II) the date that is the second anniversary of the effective date of
the Registration Statement;
(D) furnish to each Shareholder such number of copies of
prospectuses as such Shareholder may reasonably request in order to
facilitate the public sale or other disposition by such Shareholder
pursuant to the Registration Statement of all or any of the Shares
owned by such Shareholder;
(E) notify each holder of Shares covered by such Registration
Statement at any time when a prospectus relating thereto is required
to be delivered under the Securities Act of 1933, as amended (the
"Securities Act"), of the happening of any event as a result of which
the prospectus included in such Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances then existing. Buyer will use reasonable best efforts to
amend or supplement such prospectus in order to cause such prospectus
not to include any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances then existing; provided, however, that Buyer, in good
faith, may delay the filing of any such amendment or supplement for a
reasonable period of time in order to permit Buyer (A) to effect
disclosure or disposition or consummation of any transaction requiring
confidential treatment which is being actively pursued at such time
and which would require disclosure in the Registration Statement or
(B) to negotiate, effect or complete any transaction which Buyer
reasonably believes might be jeopardized, delayed or made more costly
to Buyer by disclosure in the Registration Statement; and
(F) bear all expenses in connection with the procedures in
paragraphs (A) through (E) of this Section 1.5(c)(i) and the
registration of the Shares pursuant to the Registration Statement,
other than fees and expenses, if any, of counsel
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and other advisers to the Shareholders or underwriting discounts,
brokerage fees and commissions incurred by the Shareholders, if any.
(ii) (A) Notwithstanding the generality of the foregoing clauses, each
Shareholder agrees that upon notice from Buyer at any time or from time to
time during the time the prospectus relating to the Shares covered by the
Registration Statement and proposed to be sold by such Shareholder is
required to be delivered under the Securities Act of the happening of any
event as a result of which, in Buyer's opinion, the prospectus included in
the Registration Statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of the circumstances then existing, such Shareholder will forthwith
discontinue such Shareholder's disposition of such Shares pursuant to the
Registration Statement until the time of such Shareholder's receipt of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchaser of such Shares, such
prospectus shall not include, in Buyer's opinion, an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of the circumstances then existing.
(B) Each Shareholder shall furnish Buyer such information
regarding such Shareholder and the distribution of the Shares covered
by the Registration Statement as Buyer may from time to time
reasonably request in writing.
(C) Each Shareholder agrees to give at least two (2) Business
Days' prior written notice to Buyer of any proposed sale of the Shares
covered by the Registration Statement pursuant to the Registration
Statement and not to make such sale (I) unless such two (2) Business
Days elapse without response from Buyer, or (II) in the event Buyer
sends such Shareholder written notice stating that an amendment to the
Registration Statement or supplement to the prospectus must be filed
in accordance with the second sentence of Section 1.5(c)(i)(E), until
Buyer notifies the Shareholders that the Registration Statement has
been amended or the prospectus supplemented as required; provided,
however, that Buyer agrees to file such amendment or supplement
promptly upon the resolution of the disclosure issue necessitating
such delay, or, in any event, not more than 30 days after receipt of
Buyer's written notice.
(iii) Buyer will use its commercially reasonable efforts to cause the
Shares covered by and to be sold pursuant to the Registration Statement to
be listed on any securities exchanges or markets on which shares of Common
Stock are then listed.
(iv) (A) In the event of a registration of any of the Shares under the
Securities Act pursuant to this Section 1.5(c), Buyer will, to the extent
permitted by applicable law, indemnify and hold harmless each Shareholder
against all losses, claims, damages or liabilities, joint or several, to
which such Shareholder may become subject under the Securities Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act") or any
other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of Buyer), insofar as such losses,
claims, damages or liabilities
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(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, including the prospectus, financial statements and
schedules, and all other documents filed as a part thereof, as amended at
the time of effectiveness of the Registration Statement, including any
information deemed to be a part thereof as of the time of effectiveness
pursuant to paragraph (b) of SEC Rule 430A, or pursuant to SEC Rule 434, or
the prospectus, in the form first filed with the SEC pursuant to SEC Rule
424(b), or filed as part of the Registration Statement at the time of
effectiveness if no Rule 424(b) filing is required, or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
will reimburse each such Shareholder for any legal or other expenses
reasonably incurred by such Shareholder in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability or action; provided, however, that Buyer will not be liable in
any such case if and to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished in writing by such Shareholder specifically for use
in such Registration Statement. For purposes of this Section 1.5(c)(iv),
the term "Registration Statement" shall include any final prospectus,
exhibit, supplement or amendment included in or relating to, and any
document incorporated by reference in, the Registration Statement referred
to in Section 1.5(c)(i).
(B) Each Shareholder, severally and not jointly, will, to the extent
permitted by applicable law, indemnify and hold harmless Buyer, each
person, if any, who controls Buyer within the meaning of the Securities
Act, each officer of Buyer who signs the Registration Statement and each
director of Buyer, against all losses, claims, damages or liabilities,
joint or several, to which Buyer or such officer or director may become
subject under the Securities Act, the Exchange Act or any other federal or
state statutory law or regulation, or at common law or otherwise (including
in settlement of any litigation, if such settlement is effected with the
written consent of the Shareholders), insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, and will reimburse Buyer and
each such officer, director, underwriter and controlling person for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that such Shareholder will be liable hereunder
in any such case if and only to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement of a material fact or omission or alleged omission
of a material fact made in reliance upon and in conformity with information
pertaining to such Shareholder furnished in writing to Buyer by such
Shareholder specifically for use in the Registration Statement; and
provided further, however, that the liability of each Shareholder hereunder
shall not in
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any event exceed the proceeds received from the sale of his Shares covered
by such Registration Statement.
(C) Promptly after receipt by an indemnified party under this Section
1.5(c)(iv) of notice of the threat or commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party under this Section 1.5(c)(iv), promptly notify the
indemnifying party in writing thereof; but the omission to so notify the
indemnifying party will not relieve it from any liability which it may have
to any indemnified party for contribution or otherwise than under the
indemnity agreement contained in this Section 1.5(c)(iv) to the extent it
is not prejudiced as a result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying
party will be entitled to participate in, and, to the extent that it may
wish, jointly with all other indemnifying parties similarly notified, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be a
conflict between the positions of the indemnifying party and the
indemnified party in conducting the defense of any such action or that
there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right
to select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified
party or parties. Upon receipt of notice from the indemnifying party to
such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying
party will not be liable to such indemnified party under this Section
1.5(c)(iv) for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (1) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the
preceding sentence (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one separate
counsel, approved by such indemnifying party in the case of paragraph (A),
representing all of the indemnified parties who are parties to such action)
or (2) the indemnified party shall not have employed counsel reasonably
satisfactory to the indemnifying party to represent the indemnified party
within a reasonable time after notice of commencement of action, in each of
which cases the reasonable fees and expenses of counsel shall be at the
expense of the indemnifying party.
(D) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (1) any
indemnified party exercising rights under this Agreement makes a claim for
indemnification pursuant to this Section 1.5(c)(iv) but it is judicially
determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial
of the last right of appeal) that such indemnification may not be enforced
in such case notwithstanding the fact that this Section 1.5(c) provides for
indemnification in such case, (2) contribution under the Securities Act may
be required on the part of any such
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indemnified party in circumstances for which indemnification is provided
under this Section 1.5(c), or (3) the indemnification provided for by this
Section 1.5(c) is insufficient to hold harmless an indemnified party, other
than by reason of the exceptions provided therein, then, and in each such
case, Buyer and the Shareholders will contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (after
contribution from others) (x) in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and
the indemnified party on the other or (y) if the allocation provided by
clause (x) above is not permitted by applicable law, or provides a lesser
sum to the indemnified party than the amount hereinafter calculated, in
such proportion as is appropriate to reflect not only the relative fault
referred to in clause (x) above but also the relative benefits received by
the indemnifying party and the indemnified party from the registration of
the securities as well as the statements or omissions which resulted in
such losses, claims, damages or liabilities and any other relevant
equitable considerations. No Shareholder will be required to contribute any
amount in excess of the proceeds received from the sale of its Shares
covered by such Registration Statement and no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person or entity
who was not guilty of such fraudulent misrepresentation.
(v) The obligations of the Buyer and the Shareholders under this
Section 1.5(c)(iv) shall survive completion of any offering of Shares
pursuant to a Registration Statement and the termination of Buyer's
obligations under Section 1.5(c)(i). No indemnifying party, in the defense
of any such claim or litigation, shall, except with the consent of each
indemnified party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release
from all liability in respect to such claim or litigation.
(d) Allocation. Within 30 days following the Closing Date, Buyer, subject
to the approval of Seller, shall prepare and finalize a schedule setting forth
an allocation of the consideration described in Section 1.5(a) among the Assets
(the "Allocation Schedule"). Each party agrees to report the transactions
contemplated hereby for federal income tax and all other tax purposes
(including, without limitation, for purposes of Section 1060 of the Code) in a
manner consistent with the Allocation Schedule, and in accordance with all
applicable rules and regulations, and to take no position inconsistent with the
allocation set forth therein in any administrative or judicial examination or
other proceeding. Each of Buyer and Seller shall timely file the appropriate
forms in accordance with the requirements of Section 1060 of the Code and this
Section.
1.6 Excluded Assets. Anything to the contrary notwithstanding, the Assets
shall not include any of the following rights, properties or assets (the
"Excluded Assets"):
(a) This Agreement, and any of the other documents to be executed in
connection herewith (collectively, the "Other Transaction Documents"), or any
right, title or interest of Seller or any of the Shareholders hereunder or
thereunder;
(b) The Shares;
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(c) Any rights of Seller or any of the Shareholders to tax refunds or any
accrued prepaid taxes;
(d) Any and all rights of Seller with respect to the account receivable, in
the amount of $53,893, from Lawrence F. Miller;
(e) Any and all rights of Seller with respect to any claims, causes of
action, choses in action, rights of recovery and rights of set-off of any kind
with respect to SourceOne Financial LLC;
(f) Any records relating to the internal governance of Seller; or
(g) Any insurance policies of Seller or any right, title or interest of
Seller or any of the Shareholders thereunder, including any prepaid insurance
premiums to the extent allocable to periods following the Closing Date.
2. Representations and Warranties of Seller and the Shareholders
Seller and the Shareholders hereby, jointly and severally, represent and
warrant to Buyer as follows:
2.1 Organization and Standing. Seller (a) is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Washington, (b) has full right, power and authority to enter into and perform
and do all things contemplated under this Agreement and the Other Transaction
Documents to which it is a party necessary to give effect to the provisions of
this Agreement and such Other Transaction Documents, to own and lease the Assets
and to carry on and operate the Business as now being conducted and proposed to
be conducted by it under existing agreements, (c) is duly qualified or licensed
to do business and is in good standing as a foreign corporation in every
jurisdiction in which the character of the Assets or nature of the Business
requires such qualification, and (d) does not own any of the Assets, and does
not conduct any of the Business, through any other corporation, limited
liability company, partnership or other entity.
2.2 Authorization and Binding Obligations. The execution, delivery and
performance by Seller of this Agreement and the Other Transaction Documents to
which Seller is a party have been duly and validly authorized by all necessary
corporate action, including approval of the entire transaction by the requisite
vote of Seller's shareholders. This Agreement and the Other Transaction
Documents to which Seller is a party have been duly executed and delivered by
Seller and constitute valid and binding agreements of Seller, enforceable in
accordance with their respective terms, except as their enforceability may be
limited by bankruptcy, insolvency, moratorium or other laws relating to or
affecting creditors' rights generally and the exercise of judicial discretion in
accordance with general equitable principles. The Shareholders are the sole
owners of the issued and outstanding capital stock of Seller.
2.3 No Contravention. The execution, delivery and performance of this
Agreement and the Other Transaction Documents to which Seller is a party, the
consummation of the transactions contemplated hereby and thereby and the
compliance with the provisions
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hereof and thereof by Seller do not (a) violate any provision of the certificate
of incorporation or bylaws of Seller, (b) conflict with, result in the breach
of, or constitute a default under, or result in the creation of any Lien upon
any of the Assets, or require any authorization, consent, approval, exemption or
other action by or notice to any third party, court or other governmental or
administrative body, under the provisions of any agreement or other instrument
to which Seller is a party or by which any of the Assets are bound or affected
or (c) violate any laws, regulations, orders or judgments applicable to Seller.
2.4 Compliance with Laws. Seller has complied with, and is now in
compliance with, all laws, rules, regulations, orders, judgments and decrees of
any governmental, regulatory or administrative body, agency or authority, or any
court or judicial authority (each, an "Authority") applicable to the Business.
Seller possesses each franchise, license, permit, authorization, certification,
consent, variance, permission, order or approval of or from any Authority, and
has filed all filings, notices or recordings with any such Authority
(collectively, "Licenses") material to, or necessary for the conduct of, the
Business and is now and, has at all times in the past, been in compliance with
each of such Licenses. Each such License is identified on Schedule 2.4. No
proceeding or other action is pending or, to the best knowledge of Seller and
the Shareholders threatened, to revoke, amend, or limit any License, and Seller
and the Shareholders have no basis to believe that any such proceeding or action
would result from the consummation of the transactions contemplated by this
Agreement or by the Other Transaction Documents, or that any such License would
not be renewed in the ordinary course.
2.5 Environmental and Safety Laws. Seller is not in violation of any
applicable law relating to the environment or occupational health and safety,
and, to the knowledge of Seller and the Shareholders, no material expenditures
are or will be required by Seller in order to comply with any such existing law.
2.6 Tax Matters. Seller has, within the times and in the manner prescribed
by law, filed all required tax returns, including sales and use tax returns, has
paid or provided for all taxes, including sales and use taxes owed by Seller,
with respect to the Business (whether or not shown on any tax return to be due
and owing by it), has paid or provided for all deficiencies or other assessments
of taxes, interest or penalties owed by it, and all such tax returns were
correct and complete in all material respects when filed. No taxing Authority
has asserted, or will successfully assert, any claim for the assessment of any
additional taxes of any nature with respect to any periods covered by any such
tax returns, and all taxes or other charges required to be withheld or collected
by Seller with respect to the Business have been duly withheld or collected and,
to the extent required, have been paid to the proper taxing Authority or
properly segregated or deposited as required by law.
2.7 Employee Benefit Plans; ERISA; Employees.
(a) As used in this Agreement, the term "ERISA Affiliate" means any person
or entity (whether or not incorporated) which, by reason of its relationship
with Seller or a subsidiary is required to be aggregated with Seller or a
subsidiary under Sections 414(b), 414(c), 414(m) or 414(o) of the Code, or
which, together with Seller or a subsidiary is a member of a controlled group
within the meaning of Section 4001(a) of ERISA.
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(b) Schedule 2.7(b) lists each "employee benefit plan" as defined in
Section 3(3) of ERISA, whether or not subject to ERISA, and each other
employment, severance, consulting, confidentiality, deferred, incentive, fringe
benefit, change in control, retention, stock option or other equity based or
other compensatory or benefit plan, policy, agreement or arrangement that (i) is
maintained, administered, contributed to or required to be contributed to by
Seller, or its ERISA Affiliates or to which Seller or any ERISA Affiliate is a
party, and (ii) covers any current or former employee or other personnel of
Seller or any of its ERISA Affiliates who provides or has provided services to
or in connection with the Business (the "Business Employees"). Each such plan,
policy, agreement or arrangement is herein referred to as an "Employee Benefit
Plan." Copies of the Employee Benefit Plans, including, but not limited to, any
trust instruments, insurance contracts and all amendments thereto have been
furnished to Buyer. Neither Seller nor any of its ERISA Affiliates is or ever
was obligated to contribute to or a participating employer under a multiemployer
plan within the meaning of Section 3(37) of ERISA or an employee pension plan
covered by Title IV of ERISA, Section 302 of ERISA or Section 412 of the Code.
(c) With respect to any funded employee pension plan within the meaning of
Section 3(2) of ERISA, there has been no accumulated funding deficiency within
the meaning of Section 302(a)(2) of ERISA or Section 412 of the Code, which has
resulted or could result in the imposition of a Lien upon any of the Assets, and
no event has occurred and no circumstance exists under which Seller has incurred
or may incur, a liability (directly or indirectly), under Title IV of ERISA or
Section 4980B of the Code which could become a liability of Buyer or which could
result in the imposition of a Lien upon any of the Assets.
(d) Schedule 2.7(d) contains a true and complete list of all employees,
independent contractors, officers or directors of Seller who are employed or
performing services in the Business on the date hereof (collectively, the
"Closing Date Employees"), the title and rate of compensation of each Closing
Date Employee, and the amount of any accrued bonuses, vacation, sick leave,
maternity leave and other leave for such personnel as of the date of this
Agreement. Except as set forth on Schedule 2.7(d), Seller has paid, on or prior
to the Closing Date, or will pay, promptly following the Closing Date, all
accrued salary and bonuses, and accrued amounts for vacation, sick leave,
maternity leave and other leave due and payable on or prior to the Closing Date.
Seller has, on or prior to the Closing Date, notified each Closing Date Employee
that his or her employment by Seller shall be terminated as of the Closing.
Except as set forth in Schedule 2.7(d), Seller is not in default with respect to
any withholding or other employment taxes or payments with respect to accrued
vacation or severance pay on behalf of any employee or independent contractor
for which it is obligated on the date hereof, and has made all such necessary
payments or adjustments arising through the Closing Date. Seller has not
instituted any "freeze" of, or delayed or deferred the grant of, any
cost-of-living or other salary adjustment for any Closing Date Employee.
Schedule 2.7(d) lists the name, title and rate of compensation of each employee
of Seller whose employment was terminated within 90 days prior to the date of
this Agreement. Seller has not engaged in any unfair labor practice or
discriminated on the basis of race, color, religion, sex, national origin, age,
disability or handicap in its employment conditions or practices. No employee or
independent contractor has filed or, to the
12
best knowledge of Seller and the Shareholders, threatened any claims, and there
is no reasonable basis for a claim against Seller relating to employment or
similar matters (including, without limitation, compensation and benefits) with
Seller. There are not in existence or, to the best knowledge of Seller and the
Shareholders, threatened any work stoppages respecting employees or independent
contractors of Seller or unfair labor practice complaints against Seller. Seller
is not a party to any collective bargaining agreement, no representation
question exists respecting the Closing Date Employees and no collective
bargaining agreement is currently being negotiated by Seller covering its
employees, nor is any grievance procedure or arbitration proceeding pending
under any collective bargaining agreement and no claim therefor has been
asserted. Seller has not received notice from any union or any employee setting
forth demands for representation, elections or for present or future changes in
wages, terms of employment or working conditions. There have been no audits of
the equal employment opportunity practices of Seller, nor does any basis for any
such audit exist. Seller does not have any severance agreement, policy, practice
or other arrangement with respect to severance with any Closing Date Employee
other than the Employee Benefit Plans.
2.8 Litigation. Except for Kurt T. Johnson v. Advanced Acoustical Concepts,
Inc., et. al., Case No. 2001 CV 0833, filed in the Montgomery County Common
Pleas Court, there is no pending or, to the best knowledge of Seller and the
Shareholders, threatened, adverse claim, dispute, governmental investigation,
suit, action, arbitration, legal, administrative or other proceeding of any
nature, domestic or foreign, criminal or civil, at law or in equity, by or
against or otherwise affecting the Business or the Assets.
2.9 Agreements.
(a) Schedule 2.9(a) sets forth a true and complete list of all agreements
that involve payments to or by Seller in excess of $5,000 individually or
$15,000 in the aggregate, including, without limitation, all sales orders taken
by Seller, commitments, including guarantees of any indebtedness, or instruments
binding Seller as of the Closing Date with respect to the Business or the
Assets, and all powers of attorney. True and complete copies of each such
agreement, commitment or instrument have been delivered to Buyer.
(b) To the best knowledge of Seller and the Shareholders, each such
agreement is the valid and binding obligation of the other contracting party,
enforceable in all material respects in accordance with its terms against the
other contracting party, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar laws and by general principles of equity, has not been cancelled
in whole or in part and is in full force and effect.
(c) Seller has fulfilled all material obligations required to have been
performed by it prior to the date hereof with respect to each such agreement,
and neither Seller nor any Shareholder has any reason to believe that the other
contracting party will not be able to fulfill all of its or his obligations when
due in respect thereof.
(d) To the best knowledge of Seller and the Shareholders, no other
contracting party to any such agreement is now in breach thereof, and there are
not now, nor have there been in the twelve (12) month period prior to the date
hereof, any material disputes between Seller and any other contracting party.
(e) Each such agreement shall be validly assigned to Buyer at Closing.
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(f) Seller is not a party to, or bound by, any agreement or commitment that
restricts the conduct of the Business anywhere in the world.
(g) Schedule 2.9(g) sets forth a true and complete list of each proposed
agreement, commitment, arrangement, or other understanding under current
discussion between Seller and any third party that would, or reasonably could be
expected to, be required to be disclosed pursuant to any provision of this
Agreement, if same had been executed prior to and remained in effect as of the
date hereof. True and complete copies of the most recent draft of each such
agreement and all other documents evidencing the current state of such
discussions have been delivered to Buyer.
2.10 Suppliers and Customers.
(a) Schedule 2.10(a) lists all of the suppliers and customers with whom
Seller has done business within six (6) months prior to the Closing Date, and
lists each outstanding purchase order (or correspondence with respect to a
proposed purchase order) by Seller with respect to the Business, identifying in
each case the vendor, supplier, contractor or inventor and the items being
purchased and stating the quantity and price thereof.
(b) Except for delinquencies in payment of the suppliers identified on
Schedule 2.10(b), the relationships of Seller with the persons listed in
Schedule 2.10(a) are good commercial working relationships, and no such person
has canceled or otherwise terminated, or threatened to cancel or terminate, its
relationship with Seller, or decreased or limited materially, or threatened to
decrease or limit materially, its business done with Seller, and neither Seller
nor any Shareholder has any reason to believe that any such person would not
continue its business relationship with Buyer following the Closing on
substantially the same terms as such person has heretofore done business with
Seller.
2.11 Tangible Property. Except as set forth on Schedule 2.11, Seller has
good and marketable title to each item of tangible personal property that is an
Asset, free and clear of all liens and other encumbrances, and, with immaterial
exceptions, each such item of tangible personal property is in good operating
condition and repair, ordinary wear and tear excepted, and useable in the
ordinary course of business. Schedule 2.11 contains a complete and accurate list
setting forth a description of each item of tangible property that is an Asset,
and describes the nature of Seller's interest in any property listed thereon
that is not owned entirely by Seller free and clear of any Lien.
2.12 Intellectual Property.
(a) Seller owns, Buyer shall receive at Closing, and Seller's intellectual
property includes, all assets described in Section 1.2(i) used in or necessary
for the operation of the Business. Seller has no registered trademarks and
service marks, reserved trade names, registered copyrights, issued patents, or
applications for any of the foregoing, used in or necessary for the operation of
the Business.
(b) Schedule 2.12(b) sets forth the form and placement of the proprietary
legends and copyright notices displayed in or on any of the Assets, or any
software programs
14
included in the Assets. In no instance has the eligibility of such software
programs for protection under applicable copyright law been forfeited to the
public domain.
(c) Seller has promulgated and used best efforts to protect the trade
secrets of the Business. There has been no material unauthorized disclosure of
any trade secrets of the Business by any person or entity. The source code and
system documentation relating to any software programs included in the Assets
have at all times been maintained in confidence and have been disclosed by
Seller only on a confidential basis and only to employees, consultants, vendors,
suppliers and customers having "a need to know" the contents thereof.
(d) All personnel, including employees, agents, consultants, and
contractors, who have contributed to or participated in the conception and
development of Seller's proprietary software programs, technical documentation,
or intellectual property with respect to the Business, either (i) have been
party to a "work-for-hire" arrangement or agreement with Seller, in accordance
with applicable federal and state law, that by its terms accords to Seller
ownership of all tangible and intangible property thereby arising, or (ii) have
executed appropriate instruments of assignment in favor of Seller as assignee
that by their terms convey to Seller ownership of all tangible and intangible
property thereby arising.
(e) No intellectual property right or other claims have been asserted by
any person or entity to the use of any Asset, and Seller and the Shareholders
are not aware of any valid basis for any such claim. To the best knowledge of
Seller and the Shareholders, the use of any Asset by Seller does not infringe on
the intellectual property rights or other rights of any person or entity.
(f) As of the Closing Date, all intellectual property purchased by Buyer
pursuant to this Agreement is and shall be useable in the same form as on the
Closing Date, under the same circumstances as on the Closing Date, and in the
ordinary course of the Business as such business actually has been operated
prior to the Closing Date.
(g) Seller (i) has good and marketable title to each intangible Asset,
including, but not limited to, each item of intellectual property used in and
material to, or necessary for the operation of, the Business, free and clear of
any Lien, and (ii) is the sole and rightful owner of all right, title and
interest in and to each intangible Asset, and has the unrestricted right to
market, license and otherwise exploit each intangible Asset.
2.13 Third Party Components, Rights, etc.
(a) Seller has validly and effectively obtained the right and license to
use the third-party programs included in the Assets and, with respect to such
third-party programs, such other rights and licenses as provided for under the
agreements relating thereto, and Seller has the right to assign and transfer to
Buyer the foregoing rights and licenses.
(b) Except as set forth on Schedule 2.11, Seller has not granted,
transferred, or assigned any right, title or interest in or to any Asset to any
person or entity. There are no contracts, agreements, licenses, and other
commitments and arrangements in effect with respect to the marketing,
distribution, licensing, or promotion of any material Asset by any independent
salesperson, distributor, sublicensor, or other remarketer or sales
organization.
15
2.14 Insurance. Seller currently maintains the insurance policies set forth
on Schedule 2.14, which policies are in full force and effect and are sufficient
in amount (subject to reasonable deductibles) to allow Seller to replace any of
its properties that might be damaged or destroyed.
2.15 Seller's Financial Condition; Certain Transactions.
(a) Except as set forth on Schedule 2.15(a), as of the date hereof, Seller
has no direct or indirect indebtedness, liabilities, claims, losses, damages,
deficiencies, obligations or responsibilities, liquidated or unliquidated,
accrued, absolute, contingent, or otherwise.
(b) Since March 31, 2001 (the "Balance Sheet Date"), Seller has not:
(i) suffered any change, event or condition that, individually or in
the aggregate, has had or could reasonably be expected to have a material
adverse effect upon the Business or Seller's and the Shareholders' ability
to consummate the transactions contemplated herein;
(ii) entered into any transaction, contract or commitment individually
involving payments in excess of $10,000 (other than this Agreement or as
disclosed in Schedule 2.9(a) or Schedule 2.10(a)) relating to the Business
in any manner;
(iii) except in the ordinary course of business consistent with past
custom and practice, including as to quantity and frequency, incurred or
paid any liability or obligation, incurred any indebtedness for borrowed
money or assumed, guaranteed, endorsed or otherwise become responsible for
the obligations of any other individual, corporation or other entity;
(iv) entered into or amended any employment, consulting or other
agreement with, increased any compensation payable to, awarded any bonus
to, made any loan to, paid any expense or contribution on behalf of, given
any gift to, or otherwise conferred any benefit (directly or indirectly)
upon, any of its officers, employees, shareholders or consultants, except
in the ordinary course of business consistent with past custom and practice
including as to quantity and frequency;
(v) made any capital expenditures in excess of $10,000 other than
those made the ordinary course of business, consistent with past custom and
practice;
(vi) sold, transferred, leased, assigned or otherwise disposed of any
asset or properties of the Business, except in the ordinary course of
business, consistent with past custom and practice;
(vii) made any tax election or settled or compromised any federal,
state, local or other tax liability either not in accordance with past
practice, or which has had or could reasonably be expected to have a
material adverse effect upon the Business;
16
(viii) taken any action that was intended or may reasonably be
expected to result in any of the representations and warranties set forth
in this Agreement being or becoming untrue;
(ix) made a material change in the methods of accounting in effect at
December 31, 2000, except as required by generally accepted accounting
principles ("GAAP");
(x) except in the ordinary course of business consistent with past
practice and custom, created, renewed, amended or terminated or given
notice of a proposed renewal, amendment of termination of, any material
contract, agreement or lease for goods or services to which Seller is a
party or by which Seller or any of the Assets are bound; or
(xi) agreed to do any of the foregoing.
2.16 Seller Financial Statements. Seller has delivered to Buyer (i)
Seller's unaudited balance sheets as of December 31, 2000 and 1999, and related
statements of income, cash flow and shareholders' equity for the fiscal years
then ended (the "Year-End Financials") and (ii) Seller's balance sheet as of the
Balance Sheet Date and as of July 15, 2001 (each, a "Balance Sheet") and related
unaudited statements of income, cash flow and shareholders' equity for the
periods ended on the respective dates of the Balance Sheets (collectively, the
"Interim Financials"). The Year-End Financials and the Interim Financials are
correct in all material respects and have been prepared in material compliance
with GAAP. The Year-End Financials and Interim Financials present fairly in all
material respects the financial condition, operating results and cash flows of
Seller as of the dates and during the periods indicated therein, subject, in the
case of the Interim Financials, to normal year-end adjustments, which will not
be material in amount or significance. A true, correct and complete copy of
Seller's balance sheet as of July 15, 2001 is attached hereto as Exhibit E.
2.17 No Undisclosed Liabilities. Except as set forth on the Schedules to
this Agreement, Seller has no liability, indebtedness, obligation, expense,
claim, deficiency, guaranty or endorsement of any type, whether accrued,
absolute, contingent, matured, unmatured or other (whether or not required to be
reflected in financial statements in accordance with GAAP) (each a "Section 2.17
Liability") that has neither (i) been reflected in or reserved against in the
Balance Sheets, nor (ii) arisen since the respective dates of each Balance
Sheet, in the ordinary course of business consistent with Seller's practices
prior to that date, in an amount that, when aggregated with all other Section
2.17 Liabilities, exceeds Ten Thousand Dollars ($10,000).
2.18 Loans, Notes, Cash Accounts Receivable and Accounts Payable. Seller
has provided Buyer with an accurate and complete breakdown and aging of all
accounts receivable, notes receivable and other receivables of Seller as of the
Balance Sheet Date and as of July 15, 2001. All receivables (a) have arisen only
from bona fide transactions in the ordinary course of business consistent with
past practice, (b) represent valid obligations, and (c) are current and are
expected to be collectible in the aggregate face amounts thereof without any
counterclaim or set-off when due, except to the extent of the normal allowance
for doubtful accounts with respect to accounts receivable that are computed in a
manner consistent with
17
GAAP and as reflected in such balance sheet or with respect to receivables
arising subsequent to the Balance Sheet Date, as reflected in the books and
records of Seller, and (d) are owned by Seller free of all Liens. No discount or
allowance from any account receivable of Seller as of the Closing Date has been
made or agreed to (other than customary payment discounts in the ordinary course
of business consistent with past practice), and no such account receivable
represents billings prior to actual shipment of goods or provision of services.
Accounts payable of Seller reflected on the Balance Sheets arose and all
accounts payable of Seller arising after the dates thereof have arisen, from
bona fide transactions. For the purposes of this Agreement, any person or entity
shall be deemed to own subject to a Lien any property or asset which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such property or asset.
2.19 Interested Party Transactions. Neither the Shareholders nor any
manager of Seller (nor, to the actual knowledge of Seller and the Shareholders,
any ancestor, sibling, descendant or spouse of any of such persons, or any
trust, partnership or corporation in which any of such persons has or has had an
interest), has or has had, directly or indirectly, (i) an interest in any entity
that furnished or sold, or furnishes or sells, services, products or technology
that Seller furnishes or sells, or proposes to furnish or sell, or (ii) any
interest in any entity that purchases from or sells or furnishes to Seller, any
goods or services, or (iii) a beneficial interest in any agreements of Seller;
provided, however, that ownership of no more than one percent (1%) of the
outstanding voting stock of a publicly traded corporation shall not be deemed to
be an "interest in any entity" for purposes of this Section 2.19.
2.20 Assets. Except for the Excluded Assets, the Assets are all of the
assets, properties, goodwill, and rights of every nature, kind and description,
whether tangible or intangible, real, personal or mixed, wherever located, used
in and material to, or necessary for the operation of, the Business.
2.21 Brokers or Finders. Seller has not incurred, and will not incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement, the Other
Transaction Documents or any transaction contemplated hereby or thereby. Seller
and the Shareholders, jointly and severally, shall indemnify and hold Buyer
harmless with respect to any claim by any broker, agent, or finder claiming to
have acted on behalf of Seller or the Shareholders, respecting the subject
matter hereof.
2.22 No Misleading Statements. No information furnished by or on behalf of
Seller to Buyer contains any untrue statement of a material fact or omits to
state a material fact necessary to make such statement, in the light of the
circumstances under which it was made, not misleading. All written information,
in whatever form, furnished by Seller to Buyer was true and correct as of the
date so furnished and, except as the accuracy thereof is affected by the passage
of time, remains true and correct in all material respects as of the date
hereof.
3. Representations and Warranties of the Shareholders
Each of the Shareholders, severally and not jointly, represents, warrants
and covenants to Buyer that:
18
3.1 Binding Obligations. This Agreement and the Other Transaction Documents
to which such Shareholder is a party have been duly executed and delivered by
such Shareholder and constitute valid and binding agreements of such
Shareholder, enforceable in accordance with their respective terms, except as
their enforceability may be limited by bankruptcy, insolvency, moratorium or
other laws relating to or affecting creditors' rights generally and the exercise
of judicial discretion in accordance with general equitable principles. Such
Shareholder is a shareholder of Seller.
3.2 No Contravention. The execution, delivery and performance of this
Agreement and the Other Transaction Documents to which such Shareholder is a
party, the consummation of the transactions contemplated hereby and thereby and
the compliance with the provisions hereof and thereof by such Shareholder do not
(a) conflict with, result in the breach of, or constitute a default under, or
require any authorization, consent, approval, exemption or other action by or
notice to any third party, court or other governmental or administrative body,
under the provisions of any agreement or other instrument to which such
Shareholder is a party or by which the property of such Shareholder is bound or
affected or (b) violate any laws, regulations, orders or judgments applicable to
such Shareholder.
3.3 No Misleading Statements. No information furnished by or on behalf of
such Shareholder to Buyer contains any untrue statement of a material fact or
omits to state a material fact necessary to make such statement, in the light of
the circumstances under which it was made, not misleading. All written
information, in whatever form, furnished by such Shareholder to Buyer was true
and correct as of the date so furnished and, except as the accuracy thereof is
affected by the passage of time, remains true and correct in all material
respects as of the date hereof.
3.4 Securities Act Matters.
(a) He acknowledges that his representations and warranties contained
herein are being relied upon by Buyer as a basis for the exemption of the
issuance of the Shares hereunder from the registration requirements of the
Securities Act and any applicable state securities laws.
(b) He understands that (i) the Shares are not registered under the
Securities Act or any state securities laws by reason of their issuance in a
transaction exempt from the registration requirements of the Securities Act and
applicable state securities laws and (ii) the Shares must be held indefinitely
unless a subsequent disposition thereof is registered under the Securities Act
and applicable state securities laws or is exempt from such registration.
(c) He is acquiring the Shares for his own account and not with a view to,
or for sale in connection with, directly or indirectly, any distribution thereof
that would require registration under the Securities Act or applicable state
securities laws or would otherwise violate the Securities Act or such state
securities laws.
(d) He has relied upon independent investigations made by him or his
representatives and is fully familiar with the business, results of operations,
financial condition,
19
prospects and other affairs of Buyer and realizes that the Shares are a
speculative investment involving a high degree of risk for which there is no
assurance of any return.
(e) He has such knowledge and experience in financial and business affairs,
including investing in companies similar to Buyer, and is capable of determining
the information necessary to make an informed investment decision, of requesting
such information from Buyer, and of utilizing the information that it has
received from Buyer to evaluate the merits and risks of its investment in the
Shares and is able to bear the economic risk of his investment in the Shares,
and understands that he must do so for an indefinite period of time.
(f) He and his attorneys, accountants, investment and financial advisors,
if any, have been provided access to such information about Buyer as he or his
advisors, if any, have requested.
(g) He is an "accredited investor" as defined in Regulation D under the
Securities Act, or (i) has entered into an agreement (a "Purchaser
Representative Agreement") with a "purchaser representative" (as defined in
Regulation D) (the "Purchaser Representative") in substantially the form of
Exhibit F and (ii) has received copies of the SEC Documents (as defined below)
and of the disclosure statement entitled "Disclosure to Shareholders of Advanced
Acoustical Concepts, Inc."
(h) He understands that, until the Shares are registered pursuant to
Section 1.5(c) or until a sale pursuant to the provisions of Rule 144 under the
Securities Act, the Shares will bear the following legend (or a substantially
similar legend):
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
WITHOUT SUCH REGISTRATION OR THE DELIVERY TO THE COMPANY OF AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH DISPOSITION WILL
NOT REQUIRE REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED."
3.5 Brokers or Finders. Such Shareholder has not incurred, and will not
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement,
the Other Transaction Documents or any transaction contemplated hereby or
thereby. Seller and the Shareholders, jointly and severally, shall indemnify and
hold Buyer harmless with respect to any claim by any broker, agent, or finder
claiming to have acted on behalf of Seller or the Shareholders, respecting the
subject matter hereof.
4. Representations and Warranties of Buyer
Buyer represents and warrants to Seller and the Shareholders as follows:
20
4.1 Organization and Standing. Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware,
with full corporate right, power and authority to enter into and perform and do
all things contemplated under this Agreement and the Other Transaction Documents
to which it is a party necessary to give effect to the provisions of this
Agreement and such Other Transaction Documents.
4.2 Authorization and Binding Obligations. The execution, delivery and
performance by Buyer of this Agreement and the Other Transaction Documents to
which Buyer is a party have been duly and validly authorized by all necessary
corporate action, including approval of the entire transaction by the requisite
vote of the board of directors of Buyer. This Agreement and the Other
Transaction Documents to which Buyer is a party have been duly executed and
delivered by Buyer and constitute valid and binding agreements of Buyer,
enforceable in accordance with their respective terms, except as their
enforceability may be limited by bankruptcy, insolvency, moratorium or other
laws relating to or affecting creditors' rights generally and the exercise of
judicial discretion in accordance with general equitable principles.
4.3 No Contravention. The execution, delivery and performance of this
Agreement and the Other Transaction Documents to which Buyer is a party, the
consummation of the transactions contemplated hereby and thereby and the
compliance with the provisions hereof and thereof by Buyer do not (a) violate
any provision of the certificate of incorporation or bylaws of Buyer, (b)
conflict with, result in the breach of, or constitute a default under, or
require any authorization, consent, approval, exemption or other action by or
notice to any third party, court or other governmental or administrative body,
under the provisions of any agreement or other instrument to which Buyer is a
party or by which the property of Buyer is bound or affected, or (c) violate any
laws, regulations, orders or judgments applicable to Buyer.
4.4 Issuance of the Shares. Upon issuance hereunder, the Shares shall be
validly issued, fully paid and non-assessable and shall be free and clear of any
Liens, except that the Escrowed Shares shall be subject to the provisions of the
Escrow Agreement.
4.5 SEC Filings. The Common Stock is registered pursuant to Section 12(g)
of the Exchange Act, and Buyer has filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the Exchange Act, including material filed
pursuant to Section 13(a) or 15(d) thereof. Buyer has delivered or made
available to Seller and the Shareholders true and complete copies of the
following documents (the "SEC Documents") filed with the SEC:
(a) Buyer's Annual Report on Form 10-K for the year ended December 31,
2000;
(b) Buyer's Quarterly Report on Form 10-Q for the quarter ended March 31,
2001;
(c) Buyer's proxy statement (and the supplement thereto) in connection with
its Annual Meeting of Stockholders held on May 25, 2001; and
(d) Buyer's registration statement on Form S-3, filed on June 19, 2001.
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Buyer has not provided Seller or any Shareholder any material
non-public information or any information which, according to applicable
law, rule or regulation, should have been disclosed publicly by Buyer but
which has not been so disclosed. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC promulgated
thereunder and other federal, state and local laws, rules and regulations
applicable to such SEC Documents, and none of the SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The SEC Documents contain all material information concerning
Buyer, and no event or circumstance has occurred which would require Buyer
to disclose such event or circumstance in order to make the statements in
the SEC Documents not misleading on the date hereof but which has not been
so disclosed.
4.6 Brokers or Finders. Buyer has not incurred, and will not incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement, the Other
Transaction Documents or any transaction contemplated hereby or thereby. Buyer
shall indemnify and hold Seller and the Shareholders harmless with respect to
any claim by any broker, agent, or finder claiming to have acted on behalf of
Buyer respecting the subject matter hereof.
4.7 No Misleading Statements. No information furnished by or on behalf of
Buyer to Seller or the Shareholders contains any untrue statement of a material
fact or omits to state a material fact necessary to make such statement, in the
light of the circumstances under which it was made, not misleading. All written
information, in whatever form, furnished by Buyer to Seller or the Shareholders
was true and correct as of the date so furnished and, except as the accuracy
thereof is affected by the passage of time, remains true and correct in all
material respects as of the date hereof.
5. Closing Conditions and Deliveries
5.1 Conditions to Buyer's Obligations. The obligations of Buyer under this
Agreement are subject to the fulfillment on or before the Closing of each of the
following conditions, except such conditions as may be waived by Buyer:
(a) Delivery of Distribution Notice. Seller shall have delivered to Buyer
the Distribution Notice described in Section 1.5(b)(i).
(b) Delivery of Other Transaction Documents. Seller and the Shareholders
shall have delivered to Buyer the following Other Transaction Documents, duly
executed by all Seller Parties party to each such Other Transaction Document:
(i) the Bill of Sale;
(ii) the Assumption Agreement;
(iii) the Power of Attorney;
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(iv) an employment agreement between Lawrence F. Miller and Buyer (the
"Miller Employment Agreement") in substantially the form of Exhibit G;
(v) an employment agreement between William Othick and Buyer (the
"Othick Employment Agreement") in substantially the form of Exhibit H;
(vi) a consulting agreement between Wayne Lippy and Buyer (the "Lippy
Consulting Agreement") in substantially the form of Exhibit I;
(vii) the Escrow Agreement;
(viii) if any Shareholder is not an "accredited investor" (as defined
in Regulation D under the Securities Act), a Purchaser Representative
Agreement with respect to such Shareholder, duly executed by the Purchaser
Representative;
(ix) if any Shareholder is not an "accredited investor", a
representation letter to Buyer from the Purchaser Representative for such
Shareholder, in substantially the form of Exhibit J; and
(x) such other instruments of sale, transfer, conveyance or assignment
as Buyer and its counsel reasonably shall have requested prior to the
Closing Date for the sale, transfer, conveyance and assignment of the
Assets to Buyer.
(c) Secretary's Certificate. Seller shall have delivered to Buyer a
certification of the secretary of Seller, dated the Closing Date, (i) attaching
resolutions of the board of directors of Seller and the consent of the
shareholders of Seller in connection with the authorization and approval of the
execution, delivery and performance by Seller of this Agreement and the Other
Transaction Documents to which Seller is a party, certified as being in full
force and effect as of the Closing Date; and (ii) setting forth the incumbency
of the officers of Seller who have executed and delivered this Agreement and
each of the Other Transaction Documents to which Seller is a party, including
therein a signature specimen of each such officer.
(d) Good Standing Certificates. Seller shall have delivered to Buyer
certificates, dated as of the Closing Date or within three (3) Business Days
prior to the Closing Date, executed by the proper official in each jurisdiction,
as to the good standing of Seller in State of Washington and in each
jurisdiction in which the character of the Assets or nature of the Business
requires that Seller be qualified as a foreign corporation, including, without
limitation, the State of Ohio, the State of Missouri, and the State of New York.
(e) Consents. Seller shall have delivered to Buyer all written consents
which are required under any contract or agreement being assigned to Buyer
hereunder; provided, however, that as to any such contract or agreement the
assignment of which by its terms requires prior consent of any of the parties
thereto, if such consent is not obtained prior to or on the Closing Date, Seller
shall take all actions reasonably necessary to obtain such consents.
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(f) Termination of Security Interests. Seller shall have delivered written
documentation reasonably satisfactory to Buyer that SourceOne Financial, LLC's
security interest in the Assets has been terminated.
5.2 Conditions to Seller's and the Shareholders' Obligations. The
obligations of Seller and the Shareholders under this Agreement are subject to
the fulfillment on or before the Closing of each of the following conditions,
except such conditions as may be waived by Seller and the Shareholders:
(a) Delivery of Shares. Buyer shall have delivered to the Shareholders, in
accordance with the Distribution Notice, certificates representing the portion
of the Shares set forth in Section 1.5(b)(i), and shall have delivered to the
Escrow Agent the Escrowed Shares pursuant to Section 1.5(b)(ii).
(b) Other Transaction Documents. Buyer shall have delivered to Seller and
the Shareholders the following Other Transaction Documents, duly executed by
Buyer:
(i) the Assumption Agreement;
(ii) the Miller Employment Agreement;
(iii) the Othick Employment Agreement;
(iv) the Lippy Consulting Agreement; and
(v) the Escrow Agreement.
(c) Secretary's Certificate. Buyer shall have delivered to Seller a
certification of the secretary of Buyer, dated the Closing Date, (i) attaching
resolutions of the board of directors of Buyer in connection with the
authorization and approval of the execution, delivery and performance by Buyer
of this Agreement and the Other Transaction Documents to which Buyer is a party,
certified as being in full force and effect as of the Closing Date; and (ii)
setting forth the incumbency of the officers of Buyer who have executed and
delivered this Agreement and each of the Other Transaction Documents to which
Buyer is a party, including therein a signature specimen of each such officer.
6. Indemnification
6.1 Indemnification by Seller and the Shareholders.
(a) Joint and Several Obligations. Seller and each of the Shareholders,
jointly and severally, shall indemnify and hold harmless Buyer, its successors
and assigns, at all times after the Closing Date, against and in respect of:
(i) Liabilities of Seller. Other than liabilities expressly assumed by
Buyer as provided in Section 1.4 of this Agreement, all liabilities and
obligations of Seller of any kind or nature whatsoever relating to Seller,
whether accrued, absolute, fixed, contingent or otherwise, known or
unknown;
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(ii) Misrepresentations. Any damage, loss, cost, expense or liability
(including reasonable attorneys' fees) resulting to Buyer from any false,
misleading or inaccurate representation, breach of warranty or
non-fulfillment of any agreement or condition on the part of Seller under
this Agreement or any Other Transaction Document to which Seller is a party
or from any misrepresentation in or any omission from any certificate,
schedule or other instrument furnished or to be furnished to Buyer
hereunder;
(iii) Taxes. Any tax, including any use or sales tax, for which Seller
or any of Seller's officers and directors is or may be liable in respect of
the conduct of the Business prior to the Closing;
(iv) Conduct of Business. Any claim arising out of or in connection
with the conduct of the Business prior to the Closing;
(v) Bulk Sales Laws. Seller's failure to comply with any bulk sales or
similar law, except to the extent such failure involves an Assumed
Liability; and
(vi) Actions and Suits. All claims, actions, suits, proceedings,
demands, assessments, judgments, costs and expenses, including, without
limitation, legal fees and expenses, incident to any of the foregoing.
(b) Several Obligations. Each of the Shareholders, severally and not
jointly, shall indemnify and hold harmless Buyer, its successors and assigns, at
all times after the Closing Date, against and in respect of:
(i) Misrepresentations. Any damage, loss, cost, expense or liability
(including reasonable attorneys' fees) resulting to Buyer from any false,
misleading or inaccurate representation, breach of warranty or
non-fulfillment of any agreement or condition on the part of such
Shareholder under this Agreement or any Other Transaction Document to which
such Shareholder is a party or from any misrepresentation in or any
omission from any certificate, schedule or other instrument furnished or to
be furnished by such Shareholder to Buyer hereunder; and
(ii) Actions and Suits. All claims, actions, suits, proceedings,
demands, assessments, judgments, costs and expenses, including, without
limitation, legal fees and expenses, incident to any of the foregoing.
6.2 Indemnification by Buyer. Buyer shall indemnify and hold harmless
Seller and the Shareholders, at all times after the Closing Date, against and in
respect of:
(a) Assumed Liabilities. All Assumed Liabilities;
(b) Misrepresentations. Any damage, loss, cost, expense or liability
(including reasonable attorneys' fees) resulting to Seller and the Shareholders
from any false, misleading or inaccurate representation, breach of warranty or
non-fulfillment of any agreement or condition on the part of Buyer under this
Agreement or any Other Transaction Document to which Buyer is a party or from
any misrepresentation in or any omission from any certificate or other
instrument furnished or to be furnished to Seller or any Shareholder hereunder;
and
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(c) Actions and Suits. All claims, actions, suits, proceedings, demands,
assessments, judgments, costs and expenses, including, without limitation, legal
fees and expenses, incident to any of the foregoing.
6.3 Indemnification Procedure.
(a) A party that may be entitled to indemnification pursuant to Section 6.1
or 6.2 (the "Indemnitee") shall promptly give written notice (a "Notice of
Claim") to the party liable for such indemnification (the "Indemnitor"). A
Notice of Claim shall set forth (a) a description, in reasonable detail, of the
facts and circumstances with respect to the subject matter of such claim or
potential claim for indemnification, and (b) the anticipated total amount of the
indemnification claim (including any costs or expenses which have been or may be
reasonably incurred in connection therewith). Upon receipt of a Notice of Claim,
the Indemnitor may elect to cure the circumstances giving rise to the
indemnification claim (the "Event of Loss") within thirty (30) days after the
date of receipt of the Notice of Claim. If such cure cannot be effected within
such 30-day period, payment of the amount of actual damage, loss, cost, expense
or liability (including reasonable attorneys' fees) (collectively, "Damages")
due to the Indemnitee as set forth in the Notice of Claim shall be made by
Indemnitor no later than the thirtieth (30th) day after the date of the Notice
of Claim (or such later date as the Indemnitor receives written notice that the
Indemnitee has suffered Damages). The Indemnitee's failure to give prompt notice
or to provide copies of documents or to furnish relevant data shall not
constitute a defense (in whole or in part) to any claim by the Indemnitee
against the Indemnitor for indemnification, except and only to the extent that
such failure shall have caused or increased such liability or adversely affected
the ability of the Indemnitor to defend against or reduce its liability.
(b) If the Indemnitor shall reject any Damages as to which a Notice of
Claim is sent by the Indemnitee, the Indemnitor shall give written notice of
such rejection to the Indemnitee within thirty (30) days after the date of
receipt of the Notice of Claim.
(c) If any Notice of Claim relates to any claim made against an Indemnitee
by a third person, the Notice of Claim shall state the nature, basis and amount
of such claim. The Indemnitor shall have the right, at its election, by written
notice to the Indemnitee, to assume the defense of the claim as to which such
notice has been given. Except as provided in the next sentence, if the
Indemnitor so elects to assume such defense, it shall diligently and in good
faith defend such claim and shall keep the Indemnitee reasonably informed of the
status of such defense, and the Indemnitee shall cooperate fully with the
Indemnitor in the defense of such claim, provided that in the case of any
settlement providing for remedies other than monetary damages for which
indemnification is provided, the Indemnitee shall have the right to approve the
settlement, which approval shall not be unreasonably withheld or delayed. If the
Indemnitor does not so elect to defend any claim as aforesaid or shall fail to
defend any claim diligently and in good faith (after having so elected), the
Indemnitee may assume the defense of such claim and take such other action as it
may elect to defend or settle such claim as it may determine in its reasonable
discretion, provided that the Indemnitor shall have the right to approve any
settlement, which approval will not be unreasonably withheld or delayed.
6.4 Limitations on Indemnification.
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(a) Basket Amount.
(i) The indemnification provided for in Section 6.1 shall not apply
until Buyer's claims for Damages exceed $25,000 in the aggregate, whereupon
claim may be made for all amounts in excess of $25,000.
(ii) The indemnification provided for in Section 6.2 shall not apply
until Seller's and the Shareholders' collective claims for indemnification
exceed $25,000 in the aggregate, whereupon claim may be made for all
amounts in excess of $25,000.
(b) Indemnification Cap. Notwithstanding anything to the contrary in this
Agreement, in no event shall the aggregate amount of collective liability of
Seller and the Shareholders under Section 6.1 or the liability of Buyer under
Section 6.2 (including all respective costs, expenses and attorneys' fees paid
or incurred by Seller, the Shareholders or Buyer in connection therewith) exceed
the Purchase Price.
6.5 Payment of Indemnification Claims. In the event that Seller or the
Shareholders are entitled to indemnification pursuant to Section 6.2, Buyer
shall make payment of such indemnification claim in cash. In the event that
Buyer is entitled to indemnification pursuant to Section 6.1, the payment of
such indemnification by Seller or the Shareholders shall be in cash; provided,
however, that Buyer may elect to satisfy any part of the indemnification
obligation owed by any Shareholder by, jointly with that Shareholder, causing
the Escrow Agent to return to Buyer an integral number of Escrowed Shares
allocable to such Shareholder Indemnitor equal in value to the amount of the
indemnification obligation that Buyer has elected to satisfy in such manner. The
value of each such Escrowed Share shall be equal to the average of the closing
sale prices of the Common Stock on the Nasdaq National Market during the ten
(10) trading days immediately preceding the date upon which Buyer and the
Indemnitor Shareholder request that the Escrow Agent return such Escrowed Shares
to Buyer.
7. Post-Closing Covenants
7.1 Further Assurances; Cooperation. The parties shall, at any time, and
from time to time, after the Closing Date, execute and deliver such further
instruments of conveyance and transfer and take such additional action as may be
reasonably necessary to effect, consummate, confirm or evidence the transactions
contemplated by this Agreement and the Other Transaction Documents, including,
without limitation (i) inventorying and listing of the Assets, (ii) using their
best efforts to obtain any third party consents not obtained as of the Closing
Date, (iii) filing of tax returns, including, without limitation, the filing of
sales and use tax returns and notices as any party hereto may reasonably
require, (iv) conducting, at the expense of Buyer, a financial audit of the
Business in connection with the integration of the financial statements of the
Business into the financial statements of the Buyer; and (iv) cooperating to
facilitate the transition of Business customers and suppliers to Buyer.
7.2 Delivery of Assets. Seller agrees that it will transfer or make
available to Buyer, promptly after the receipt thereof, any property that Seller
receives after the Closing Date in respect of the Assets transferred or intended
to be transferred to Buyer under this Agreement.
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7.3 Books and Records. Buyer shall preserve and retain the corporate,
accounting, tax, legal and other records of the Business that shall come into
Buyer's possession as a result of the transactions contemplated hereby for a
period of not less than five (5) years from the Closing Date and give reasonable
access to Seller and the Shareholders, and Seller's officers, auditors, counsel,
and other representatives for the purpose of preparing or defending tax returns
or for other reasonable business purposes.
7.4 Destruction of Copies of Certain Assets. After the Closing Date, Seller
shall, upon the written request of Buyer, immediately destroy or erase all of
Seller's copies of computer software and Business records included in the Assets
and, upon Buyer's request, promptly confirm destruction of same by signing and
returning to Buyer an "affidavit of destruction" acceptable to Buyer; provided,
however, that Seller shall be entitled to retain a copy of those specific
records, and only those specific records, that contain information that (i) is
not related to the Business, (ii) is neither confidential nor privileged and
(iii) Seller has a reasonable need to retain.
7.5 Non-Solicitation; Non-Competition.
(a) For a period of two (2) years from the Closing Date, Seller shall not,
without Buyer's prior written consent, directly or indirectly, (i) solicit the
employment of any officer, senior manager or other key employee of Buyer or any
subsidiary of Buyer or (ii) hire any officer, senior manager or other key
employee whose employment Buyer or any subsidiary of Buyer has terminated within
90 days of such solicitation or hire; provided, however, that this Section
7.5(a) shall not prevent advertisements, solicitations, position listings or
notices of employment opportunities that are published or made available to the
public or hiring of personnel responding thereto.
(b) For a period of three (3) years from the Closing Date, Seller and the
Shareholders shall not, directly or indirectly, for purposes competitive with
the Business, call on, solicit, or take away for Seller or for any other person
or entity, any person or entity who or that is or was a customer of Buyer or any
of Buyer's subsidiaries during such three-year period, or that was a customer of
Seller on the Closing Date.
7.6 Employee Matters.
(a) Buyer does not and will not assume the sponsorship of, the
responsibility for contributions to, or any liability under or in connection
with, any Employee Benefit Plan. Without limiting the foregoing, Seller shall be
liable for continuation coverage (including any penalties, excise taxes or
interest resulting from the failure to provide continuation coverage) required
by Section 4980B of the Code with respect to (i) qualifying events incurred by
any Business Employee who does not become an employee of Buyer on or immediately
following the Closing (or covered dependents or qualified beneficiaries of such
employee), and (ii) any qualifying events which occur on or before the Closing
Date incurred by any Business Employee who becomes an employee of Buyer on or
immediately following the Closing Date (or covered dependents or qualified
beneficiaries of such employee). Buyer will in no event be deemed to be a
successor employer (within the meaning of Treasury Regulation Section
54.4980B-2) of Seller
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for purposes of applying the provisions of Section 4980B of the Code following
the Closing with respect to any current or former employee of Seller.
(b) Buyer shall, as of the Closing Date, offer employment to those Closing
Date Employees listed on Schedule 7.6(b). Any such Closing Date Employee who
accepts Buyer's offer of employment and who, within seven days of the Closing
Date, commences employment with Buyer by reporting for work and being actively
employed by Buyer for at least one day is hereinafter referred to as a
"Transferred Employee." Buyer shall provide or cause to be provided to
Transferred Employees compensation and benefits that are substantially
comparable, in the aggregate, to the compensation and benefits (exclusive of any
such compensation and benefits consisting of or based on any equity securities)
provided to them by Seller under the Employee Benefit Plans immediately prior to
the Closing. Subject to the satisfaction of applicable enrollment requirements,
each Transferred Employee (and his or her eligible spouse or dependents) who, as
of the Closing Date, participates in Employee Benefit Plans of Seller shall, as
soon as administratively feasible following such Transferred Employee's
commencement of employment with Buyer, become eligible to participate in
employee benefit plans maintained by Buyer for its employees.
(c) With respect to any Transferred Employee (including any dependent
thereof) who is hospitalized or is on short-term disability under any Employee
Benefit Plan on or prior to the Closing Date and who remains hospitalized or on
short-term disability after such date, Seller shall be responsible for claims
and expenses incurred both before and after the Closing Date in connection with
such individual, to the extent that such claims and expenses are covered by an
Employee Benefit Plan of Seller, until such time (if any) that, in the case of a
Transferred Employee, such individual commences full-time employment with Buyer,
and, in the case of a dependent of a Transferred Employee, such dependent's
hospitalization has terminated.
(d) Seller shall be responsible for, and Buyer does not and will not assume
any liability (direct or indirect, contingent or otherwise) that may arise under
or in connection with any state or local law similar to the Worker Adjustment
and Retraining Notification Act, 29 U.S. Stat.ss.2010 et. seq., as a result of
the transactions contemplated hereby.
8. Miscellaneous
8.1 Governing Law. This Agreement shall be governed in all respects by the
laws of the State of New York, without giving effect to any choice or conflict
of law provision or rule (whether of the State of New York or any other
jurisdiction that would cause the application of the laws of any jurisdiction
other than the State of New York).
8.2 Jurisdiction. Any suit, action or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with, this
Agreement, the Other Transaction Documents or the transactions contemplated
hereby or thereby shall be brought exclusively in a New York State or United
States Federal court sitting in New York County, and each of the parties hereby
expressly submits to such jurisdiction and venue of such court (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
that it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court
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or that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum.
8.3 Survival. Except as otherwise expressly provided herein, the several
representations, warranties, covenants, and agreements of the parties contained
in this Agreement or in any Other Transaction Document shall be deemed to be
material and to have been relied upon by Buyer, Seller and the Shareholders
notwithstanding any investigation made by Buyer, Seller or the Shareholders,
shall survive the Closing Date and shall remain operative and in full force and
effect for a period of two (2) years following the Closing Date, except insofar
as an indemnification claim has been asserted by any party and has not been
resolved prior to the end of such two-year period; provided, however, that the
representations and warranties of Seller and the Shareholders set forth in
Sections 2.5, 2.6 and 2.7 shall survive for the period of the applicable statute
of limitations, and the respective representations, warranties, covenants and
agreements of Buyer, Seller and the Shareholders contained in Sections 2.11,
2.12, 2.13, 2.17, 2.21, 3.5, 4.4, 4.6, 6.1(a)(i), 6.1(a)(iii), 6.1(a)(iv),
6.2(a), 6.5, 7.1, 7.2 and 8.11 shall continue without any time limitation.
8.4 Notices. Any notices authorized to be given hereunder shall be in
writing and deemed given, if delivered personally or by overnight courier, on
the date of delivery, if a Business Day, or if not a Business Day, on the first
Business Day following delivery, or if mailed, three days after mailing by
registered or certified mail, return receipt requested, and in each case,
addressed, as follows:
If to Buyer:
Wire One Technologies, Inc.
225 Long Avenue
Hillside, New Jersey 07205
Attention: Jonathan Birkhahn, Esq.
Facsimile: (973) 391-9776
and a copy to:
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Attention: Neil Gold, Esq.
Facsimile: (212) 318-3400
If to Seller Parties:
Advanced Acoustical Concepts, Inc.
5701 Webster Street
Dayton, Ohio 45414
Attention: Lawrence F. Miller
Facsimile: (937) 259-5899
and a copy to:
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Coolidge, Wall, Womsley & Lombard
33 West First Street
Suite 600
Dayton, Ohio 45402
Attention: Barbara Sager, Esq.
Facsimile: (937) 223-6705
or if delivered by facsimile, on a Business Day before 4:00 p.m. local time of
addressee, on transmission confirmed electronically, or if at any other time or
day on the first Business Day succeeding transmission confirmed electronically,
to the facsimile numbers provided above, or to such other address or facsimile
number as any party shall specify to the other, pursuant to the foregoing notice
provisions. When used in this Agreement, the term "Business Day" shall mean a
day other than a Saturday, Sunday or a day on which commercial banks in New
York, New York are generally closed for business.
8.5 Entire Agreement; Amendments. This Agreement and the Other Transaction
Documents (i) set forth the entire agreement of the parties respecting the
subject matter hereof, (ii) supersede any prior and contemporaneous
understandings, agreements, or representations by or among the parties, written
or oral, to the extent they related in any way to such subject matter , and
(iii) may not be amended orally, and no right or obligation of any party may be
altered, except as expressly set forth in a writing signed by such party.
8.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall for all purposes be deemed an original, and
all such counterparts shall together constitute but one document.
8.7 Headings. The section and subsection headings do not constitute any
part of this Agreement and are inserted herein for convenience of reference
only.
8.8 Public Announcements. Neither Buyer on the one hand nor Seller or any
Shareholder on the other shall make any press release or other public statement
concerning the matters covered by this Agreement without the approval of the
other party, except as in the opinion of counsel for the party making the
release or statement is required by law or applicable regulation, and shall, in
any event, to the extent practicable, permit the other party an opportunity to
review any such release or statement prior to dissemination.
8.9 Waiver. No waiver of a breach of, or default under, any provision of
this Agreement shall be deemed a waiver of such provision or of any subsequent
breach or default of the same or similar nature or of any other provision or
condition of this Agreement.
8.10 Binding Effect and Assignment. This Agreement shall be binding upon
and shall inure to the benefit of the parties and their successors and assigns.
Neither Seller nor the Shareholders, on the one hand, nor Buyer, on the other,
may assign any obligation under this Agreement except with the prior written
consent of the other party hereto.
8.11 Expenses. Each party shall bear its own expenses incurred with respect
to the preparation of this Agreement and the Other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby.
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IN WITNESS WHEREOF, the undersigned have executed this Asset Purchase
Agreement as of the date first written above.
BUYER:
WIRE ONE TECHNOLOGIES, INC.
By:______________________________________
Name: Jonathan Birkhahn
Title: Executive Vice President
Business Affairs and General
Counsel
SELLER:
ADVANCED ACOUSTICAL CONCEPTS, INC.
By:______________________________________
Name:
Title:
SHAREHOLDERS:
______________________________________
Lawrence F. Miller
______________________________________
William Othick
______________________________________
Wayne Lippy