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EXHIBIT 2.1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
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ASSET PURCHASE AGREEMENT (this "AGREEMENT"), dated as of August 13,
2001 between A NOVO BROADBAND, INC., a Delaware corporation ("BUYER"), ICS SUB,
INC., a Delaware corporation ("SELLER"), and BROADBAND SERVICES, INC., a
Delaware corporation ("PARENT").
R E C I T A L S :
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Seller is engaged in, among other businesses, the business of servicing
and repairing customer premise equipment and related equipment (including,
without limitation, line gears and power supplies) for broadband network
operators and equipment manufacturers (the "BUSINESS").
Seller is a wholly-owned subsidiary of Parent.
Each of Seller and Parent desires to sell to Buyer, and Buyer desires
to purchase from Seller and Parent, all right, title and interest of Seller and
Parent in and to all of the tangible and intangible assets, properties and
rights owned by Seller and Parent and used in connection with the operation of
the Business, and in connection therewith, Buyer is willing to assume certain
liabilities of Seller and Parent relating thereto, all upon the terms and
subject to conditions contained herein.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
covenants and agreements herein contained, the parties agree as follows:
1. PURCHASE AND SALE.
1.1 ACQUIRED ASSETS. (a) On the terms, and subject to the conditions of
this Agreement, on the Closing Date (as defined below), Seller (and Parent (with
respect only to the Parent Assigned Contracts (as defined below)) shall sell,
assign, transfer, convey and deliver to Buyer, and Buyer shall purchase from
Seller (and Parent (with respect only to the Parent Assigned Contracts)), all of
the right, title and interest of Seller (and Parent (with respect only to the
Parent Assigned Contracts)) in and to all tangible and intangible assets,
properties and rights used in connection with the operation of the Business
(such assets, properties and rights being referred to herein as the "ACQUIRED
ASSETS"), including, without limitation, the following assets, properties and
rights:
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(i) REAL PROPERTY LEASES. The leases or subleases of real
property described on SCHEDULE 1.1(a)(i), and any options to purchase the
underlying property, leasehold improvements and all other rights appurtenant to
such leases and subleases (collectively, "REAL PROPERTY LEASES");
(ii) MACHINERY AND EQUIPMENT. The machinery, equipment,
tools, furniture, furnishings, goods and other tangible items of personal
property used in the Business, whether owned or leased (collectively,
"MACHINERY"), and, to the extent transferable, all warranties and guarantees, if
any, existing for the benefit of Seller in connection with the Machinery,
including, without limitation, the Machinery described on SCHEDULE 1.1(a)(ii);
(iii) VEHICLES. All motor vehicles, vehicles and rolling
stock used in the Business, whether owned or leased (collectively, "VEHICLES"),
and, to the extent transferable, all warranties and guarantees, if any, existing
for the benefit of Seller in connection with the Vehicles, including, without
limitation, the Vehicles listed on SCHEDULE 1.1(a)(iii);
(iv) BOOKS AND RECORDS. All files, documents, instruments,
computer files, papers, books and records of Seller relating to the Business,
whether current or historical (collectively, "BOOKS AND RECORDS"), including,
but not limited to, advertising, marketing and sales programs, business and
strategic plans, customer lists, account records and design archives; PROVIDED,
HOWEVER, Seller shall retain all Books and Records which are primarily used or
related to operations other than the Business PROVIDED THAT Seller provides
Buyer with copies of all applicable portions of such retained Books and Records
that relate to the Business, the Acquired Assets or the Assumed Liabilities;
(v) RECEIVABLES. All accounts receivable, notes and other
amounts receivable from third parties arising from the conduct of the Business,
whether or not in the ordinary course of business, together with any unpaid
financing charges thereon, and all amounts which have been earned by Seller
relating to the Business but which have not yet been invoiced or billed
(collectively, "RECEIVABLES");
(vi) CONTRACTS. All commitments, contracts, agreements and
other legally binding arrangements, written or oral, to which Seller is a party
or by which Seller is bound relating to the Business (collectively, with the
Parent Assigned Contracts, "CONTRACTS"), subject to Article 3 herein;
(vii) LICENSES AND PERMITS. The licenses, permits,
certificates of authority, authorizations, approvals, franchises, orders,
registrations, qualifications, waivers and similar consents granted or issued to
Seller which are related to the Business (collectively, "LICENSES AND PERMITS"),
to the extent transferable;
(viii) INVENTORY. All raw materials, work in process and
finished products of the Business, wherever located (collectively, "INVENTORY");
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(ix) SECURITY DEPOSITS. All security deposits deposited by or
on behalf of Seller or Parent as lessee or sublessee under any lease or sublease
included in the Acquired Assets;
(x) INTELLECTUAL PROPERTY. The Intellectual Property (as
defined below) set forth on SCHEDULE 1.1(a)(x). For purposes of this Agreement,
"INTELLECTUAL PROPERTY" means (A) inventions, ideas or conceptions of
potentially patentable subject matter, whether or not patentable, whether or not
reduced to practice or whether or not yet made the subject of a pending patent
application or applications, (B) patents and patent applications (including any
continuations, continuations-in-part, divisionals, reissues, renewals and
applications for any of the foregoing) ((A) and (B) collectively, "PATENTS"),
(C) trademarks, service marks, trade dress, designs, logos, trade names,
corporate names and general intangibles of like nature, whether or not
registered, including all common law rights and registrations and applications
for registration thereof, together with all goodwill relating to the foregoing
(collectively, "TRADEMARKS"), (D) copyrights (registered or otherwise) and
registrations and applications for registration thereof, and all rights therein
provided by multinational treaties or conventions (collectively, "COPYRIGHTS"),
(E) computer software, including, without limitation, source code, operating
systems and specifications, data, data bases, files, documentation and other
materials related thereto, (F) trade secrets and confidential, technical or
business information (including, without limitation, ideas, formulas and
compositions), (G) technology (including, without limitation, know-how and
show-how), production processes and techniques, research and development
information, drawings, specifications, designs, sketches, design archives,
plans, proposals, technical data, copyrightable works, financial, marketing and
business data, pricing and cost information, business and marketing plans and
customer and supplier lists and information, whether or not confidential,
whether current or historical, (H) all web sites and domain names, and all
content contained therein, (I) all rights to obtain and rights to apply for
Patents, and to register Trademarks and Copyrights, (J) copies and tangible
embodiments of all the foregoing, in whatever form or medium, and (K) all rights
to sue and recover and retain damages (and costs and attorneys' fees) for
present and past infringement of any of the Intellectual Property rights
hereinabove set out;
(xi) SALES AND PROMOTIONAL MATERIALS. All sales and
promotional literature, customer lists and other sales-related materials owned,
used or employed in the Business, whether current or historical; PROVIDED THAT,
subject to Section 11.2 herein, Buyer shall not have the right to use any
materials while such materials contain Parent's or Seller's name;
(xii) CAUSES OF ACTION. All causes of action relating to the
Acquired Assets or the Business;
(xiii) GOODWILL. The goodwill of Seller (and Parent (with
respect only to the Parent Assigned Contracts)) relating to the Business;
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(xiv) CLOSING WORKING CAPITAL CALCULATION ASSETS. All assets,
properties and rights included in the calculation of the Closing Working
Capital; and
(xv) OTHER ASSETS. All other assets, properties and rights of
every kind and nature used or intended to be used in the operation of the
Business.
(b) PARENT ASSIGNED CONTRACTS. The term "ACQUIRED ASSETS" shall
also include the commitments, contracts, agreements and other legally binding
arrangements, written or oral, to which Parent is a party or by which Parent is
bound that are set forth on SCHEDULE 1.1(b) ("PARENT ASSIGNED CONTRACTS").
(c) RESTRICTIONS ON ACQUIRED ASSETS. Notwithstanding the
foregoing, it is understood and agreed that the term "ACQUIRED ASSETS" shall not
include any assets, properties or rights of Seller which are both (i) primarily
used in another business of Seller other than the Business and (ii) not
necessary for the operation of the Business as currently conducted by Seller;
PROVIDED, HOWEVER, this Section 1.1(c) shall not apply to the assets, properties
or rights listed on any schedule to Section 1.1(a) (or SCHEDULE 4.13) or the
assets, properties and rights described in Section 1.1(a)(v), (viii) or (xiv).
(d) ACQUIRED ASSETS FREE OF LIENS. All of the Acquired Assets
shall be sold, assigned, transferred, conveyed and delivered to Buyer free and
clear of all encumbrances, security interests, mortgages, pledges, restrictions,
charges and liens of any kind, except for the Assumed Liabilities (collectively,
"LIENS").
1.2 EXCLUDED ASSETS. Notwithstanding the foregoing, Seller shall not
sell, assign, transfer, convey or deliver, and Buyer shall not purchase,
pursuant to this Agreement, and the term "ACQUIRED ASSETS" shall not include,
any of the following (collectively, the "EXCLUDED ASSETS"):
(a) CASH. All cash and cash equivalents;
(b) CORPORATE ACCOUNTS, ETC. Any interest in and to the capital
stock of Seller and all minute books, stock records, income tax records and
similar corporate documents of Seller;
(c) RIGHTS UNDER AGREEMENTS. All rights of Seller or Parent under
this Agreement and any other agreements, instruments and certificates executed
and delivered by Buyer in connection with this Agreement;
(d) EXCLUDED CONTRACTS. Each Contract listed on SCHEDULE 1.2(d)
(collectively, the "EXCLUDED CONTRACTS"); and
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(e) OTHER ASSETS. The assets listed on SCHEDULE 1.2(e), and any
assets, properties or rights retained by Seller pursuant to Section 1.1(c)
above.
2. PURCHASE PRICE.
2.1 PURCHASE PRICE AND ALLOCATION. (a) The aggregate purchase price for
the Business and the Acquired Assets shall be (i) Eight Million Dollars
($8,000,000), subject to adjustment as provided in Section 2.3 (the "CASH
PURCHASE PRICE"), and (ii) the assumption by Buyer of the Assumed Liabilities
(as defined below), as set forth in Section 3.1 (collectively, the "PURCHASE
PRICE").
(b) ALLOCATION OF PURCHASE PRICE. (i) Prior to the Closing, Buyer
and Seller shall reasonably agree upon a schedule (the "ALLOCATION STATEMENT"),
allocating the Purchase Price among the Acquired Assets. Seller, Parent and
Buyer shall file Internal Revenue Service Form 8594 and any required attachments
thereto, together with all Federal, state, local and foreign Tax returns, in
accordance with the Allocation Statement and in accordance with Section 1060 of
the Internal Revenue Code of 1986, as amended, and the regulations thereunder
(the "CODE"). For all Tax purposes, Seller, Parent and Buyer agree to report the
transactions contemplated hereby (including the filing of any tax returns and
refund claims) in a manner consistent with the Allocation Statement. The
Allocation Statement shall be adjusted to reflect any adjustments made to the
Purchase Price pursuant to this Agreement adjusted in the manner set forth in
the Allocation Statement.
(ii) Not later than ten (10) days prior to the filing of
their respective Form 8594 relating to this transaction, each party shall
deliver to the other party a copy of its Form 8594.
2.2 PAYMENT OF CASH PURCHASE PRICE. The Cash Purchase Price shall be
payable by wire transfer of immediately available federal funds to such bank
account or accounts as shall be designated in writing by Seller to Buyer at
least three (3) business days prior to the Closing.
2.3 CASH PURCHASE PRICE ADJUSTMENT. (a) CALCULATION OF THE CASH
PURCHASE PRICE ADJUSTMENT. The Cash Purchase Price shall be increased or
decreased, on a dollar-for-dollar basis, by the amount by which the Working
Capital (as defined below) of the Business on the Closing Date (the "CLOSING
WORKING CAPITAL"), as finally determined pursuant to Section 2.3(d) and (e)
below, is greater or less than One Million Seven Hundred Fifty Three Thousand
Nine Hundred Eighty Two Dollars ($1,753,982) (the "BASE WORKING CAPITAL").
(b) ESTIMATED CLOSING NAV. Immediately prior to the Closing,
Seller and Buyer shall in good faith agree on an estimate of the Closing Working
Capital (the "ESTIMATED CLOSING WORKING CAPITAL"). If the Estimated Closing
Working Capital is greater than the Base
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Working Capital, then the Cash Purchase Price payable at the Closing shall be
increased by an amount equal to the excess. If the Estimated Closing Working
Capital is less than the Base Working Capital, then the Cash Purchase Price
payable at the Closing shall be decreased by an amount equal to the deficiency.
(c) BUYER'S CLOSING STATEMENT. Within thirty (30) days after the
Closing, Buyer will prepare and deliver to Seller a statement ("BUYER'S CLOSING
STATEMENT") setting forth its calculation of the Closing Working Capital.
Working Capital shall have the definition assigned to it in accordance with
GAAP, subject to the accounting principles set forth in SCHEDULE 2.3(c)
(collectively, the "ACCOUNTING PRINCIPLES"). Seller shall provide Buyer with the
access to books and records necessary for Buyer to prepare Buyer's Closing
Statement.
(d) CLOSING CALCULATION. Seller shall be entitled to reasonable
access to the records and working papers prepared by or for Buyer specifically
for the calculation of the Closing Working Capital to aid Seller's review of
Buyer's Closing Statement. If Seller believes that the Closing Working Capital
set forth on Buyer's Closing Statement has not been properly calculated in
accordance with this Section 2.3, it shall, within thirty (30) days after
receipt of Buyer's Closing Statement, give written notice ("SELLER'S OBJECTION")
to Buyer, setting forth the basis of Seller's objection and the adjustments to
Buyer's Closing Statement which Seller believes should be made. Failure to so
notify Buyer within such thirty (30) day period shall constitute acceptance and
approval by Seller of Buyer's Closing Statement. If any proposed change set
forth in Seller's Objection is not accepted by Buyer, then Buyer shall within
thirty (30) days after receipt of Seller's Objection give written notice to
Seller of Buyer's objection to such change ("BUYER'S OBJECTION"). Failure to so
notify Seller within such thirty (30) day period shall constitute acceptance and
approval by Buyer of Seller's Objection. For a period of twenty (20) days after
Buyer's Objection (the "NEGOTIATION PERIOD"), Seller and Buyer shall negotiate
in good faith to resolve any remaining disputes as expeditiously as possible.
If, after the Negotiation Period, any disputes still remain unresolved, then:
(e) DISPUTE RESOLUTION. Seller and Buyer promptly shall engage
KPMG or such other accounting firm as may be mutually acceptable to Buyer and
Seller (the "NEUTRAL ACCOUNTING FIRM") to resolve such disputes. The Neutral
Accounting Firm shall act as an arbitrator and shall resolve, solely on the
basis of any presentations submitted by Seller and Buyer, only those issues set
forth in Seller's Objection and Buyer's Objection which are still in dispute.
Each of Buyer and Seller shall make its complete submission to the Neutral
Accounting Firm within fourteen (14) days following the engagement of the
Neutral Accounting Firm. The failure by either party to make a submission prior
to the expiration of such fourteen (14) day period shall be deemed a waiver of
such party's right to make a submission to the Neutral Accounting Firm. The
parties shall instruct the Neutral Accounting Firm to resolve the remaining
disputes and to determine the Closing Working Capital (in a manner consistent
with the provisions of this Section 2.3) within thirty (30) days following the
date on which the last submission from a party is timely made. The Neutral
Accounting Firm shall resolve the
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remaining disputes and determine the Closing Working Capital not on the basis of
an independent review, but only within the disputed ranges. Such resolution
shall be set forth in a written statement delivered to Seller and Buyer, and
shall be final, binding and conclusive absent manifest error. Buyer's Closing
Statement, as may be adjusted following completion of the procedures set forth
in this Section 2.3, shall be the "CLOSING STATEMENT." The fees and any expenses
of the Neutral Accounting Firm shall be shared equally by Seller and Buyer.
(f) PAYMENT OF CASH PURCHASE PRICE ADJUSTMENT. If the Closing
Working Capital exceeds the Estimated Closing Working Capital, the Cash Purchase
Price shall be increased by an amount equal to such excess. If the Closing
Working Capital is less than the Estimated Closing Working Capital, the Cash
Purchase Price shall be decreased by an amount equal to such deficiency. Payment
of any adjustment in the Cash Purchase Price pursuant to this Section 2.3(f)
shall be made by wire transfer of immediately available federal funds to an
account designated in writing by Seller or Buyer, as the case may be, within
three (3) business days after the Closing Working Capital has been finally
determined, and shall include interest from the Closing Date to the date of
payment at the "prime rate" of Citibank, N.A. or any successor thereto in New
York, New York in effect on the Closing Date, calculated based on a 360-day year
and actual days elapsed.
3. LIMITED ASSUMPTION OF LIABILITIES.
3.1 ASSUMPTION OF LIABILITIES. Except as expressly provided herein,
Buyer shall not assume, or agree to pay, perform or discharge, any debts,
liabilities, obligations, claims, expenses, taxes, contracts, accounts payable
or commitments of any kind, character or description, whether accrued or fixed,
absolute or contingent, asserted or unasserted, liquidated or unliquidated,
matured or unmatured, known or unknown, or determined or undetermined
(collectively, "LIABILITIES"), of Seller, Parent or the Business. Subject to the
terms, conditions, representations and warranties contained herein, Buyer hereby
assumes, and agrees to pay, perform and discharge when due, (a) the Liabilities
of Seller and Parent relating to the operation of the Business which are to be
performed, paid or discharged from and after the Closing under the Assumed
Contracts (as defined below) and (b) the Liabilities counted in the calculation
of the Closing Working Capital, but only to the extent of the amount of such
Liabilities which are counted in the Closing Working Capital calculation ((a)
and (b) collectively, the "ASSUMED LIABILITIES"), and no other Liabilities of
Seller, Parent or the Business whatsoever.
3.2 EXCLUDED LIABILITIES. Except for the Assumed Liabilities to the
extent provided in Section 3.1, and regardless of whether any other Liabilities
may be disclosed to Buyer pursuant to Article 4 hereof or otherwise, or whether
Buyer has knowledge of same, Buyer shall not assume, pay, perform or discharge,
and shall have no liability or responsibility for, any other Liabilities of
Seller, Parent or the Business (the "EXCLUDED LIABILITIES"). It is expressly
understood and agreed that the Assumed Liabilities shall not include any
Liabilities (a) of Seller,
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Parent or the Business in respect of any period prior to the Closing (except as
expressly provided in Section 3.1(b) above), (b) of Seller, Parent or the
Business in respect of any period following the Closing under any Contract that
is not an Assumed Contract and (c) relating to any Excluded Asset.
3.3 ASSUMED CONTRACTS. For purposes of this Agreement, "ASSUMED
CONTRACTS" means those Contracts (including the Parent Assigned Contracts)
listed on SCHEDULE 4.13 which are not Excluded Contracts, but shall in no event
include any Contract relating to any Excluded Asset.
4. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants to Buyer as follows:
4.1 ORGANIZATION. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Parent is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Seller has all requisite power and authority to
own and hold the Acquired Assets, to conduct the Business as currently conducted
and is duly licensed, permitted or qualified to do business in each jurisdiction
in which the ownership of the Acquired Assets or the operation of the Business
makes such licensing or qualification necessary, except where the failure to be
so licensed, permitted or qualified would not cause Buyer to suffer a Buyer Loss
(as defined herein). All such jurisdictions are set forth on SCHEDULE 4.1.
Parent has all requisite power to own, hold and perform the Parent Assigned
Contracts.
4.2 AUTHORITY. Each of Seller and Parent has all requisite power and
authority to execute and deliver this Agreement, a bill of sale (the "BILL OF
SALE"), an assignment and assumption agreement (the "ASSUMPTION AGREEMENT"), the
Transition Services Agreement (as defined herein) and all other agreements or
documents executed and delivered in connection herewith (collectively, the
"TRANSACTION DOCUMENTS"), to carry out its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby, in each case
to the extent Seller or Parent is a party to each Transaction Document. Each of
Seller and Parent has obtained all necessary corporate approvals for the
execution and delivery of the Transaction Documents, the performance of its
obligations thereunder and the consummation of the transactions contemplated
thereby, in each case to the extent Seller or Parent is a party to each
Transaction Document. This Agreement has been, and upon its execution by Seller
and Parent, as the case may be, each of the other Transaction Documents will be,
duly executed and delivered by each of Seller and Parent and (assuming due
authorization, execution and delivery by the other parties hereto and thereto)
constitute each of Seller's and Parent's legal, valid and binding obligation,
enforceable against it in accordance with its terms, in each case to the extent
Seller or Parent is a party to each Transaction Document, except as
enforceability may be limited
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by bankruptcy, insolvency or similar laws affecting creditors' rights or subject
to general principles of equity.
4.3 NON-CONTRAVENTION. Except as set forth on SCHEDULE 4.3, none of the
execution and delivery by Seller or Parent of this Agreement or the other
Transaction Documents, the performance of their obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby, in each case to the extent Seller or Parent is a party to each
Transaction Document, will conflict with Seller's or Parent's Certificate of
Incorporation or Bylaws or will, with or without notice, the passage of time or
both, constitute a breach or violation of, be in conflict with, constitute or
create a default under, or result in the creation or imposition of any Liens
under, (a) any Contract, indenture, agreement, instrument, mortgage, lease or
commitment to which Seller or Parent is a party or by which any of them is or
any of their respective properties (including the Acquired Assets) are bound, or
to which any of them is subject or (b) any law, statute, ordinance, judgment,
decision, ruling, opinion, pronouncement, decree, order, regulation,
promulgation or rule (collectively, "LAW") of any federal, state, county, city,
municipal, local or foreign government or governmental agency or authority,
court, tribunal, arbitrator, commission, official or other instrumentality
(collectively, "GOVERNMENTAL AUTHORITY") relating to Seller, Parent or the
Business.
4.4 FINANCIAL STATEMENTS. (a) Seller has delivered to Buyer an
unaudited balance sheet for the Business as at May 31, 2001 (the "MAY 31 BALANCE
SHEET") and unaudited statements of income and cash flow for the Business for
the five-month period ended May 31, 2001 (collectively, the "UNAUDITED FINANCIAL
STATEMENTS"). Seller will deliver to Buyer audited balance sheets for the
Business as at December 31, 2000 and June 30, 2001 and audited statements of
income and cash flow for the Business for the twelve-month period ended December
31, 1999 and December 31, 2000 and the six-month period ended June 30, 2001,
together with the report thereon of Arthur Andersen LLP (including all notes
thereto, collectively, the "AUDITED FINANCIAL STATEMENTS" and together with the
Unaudited Financial Statements, the "FINANCIAL STATEMENTS"). The Audited
Financial Statements will be prepared and presented in compliance with GAAP and
the report thereon of Arthur Andersen LLP will have no material qualification as
to conformity with GAAP other than as appropriate to reflect that the Business
was not operated as a separate entity during the periods covered by the report.
The Unaudited Financial Statements (i) present fairly in all material respects
the financial condition and results of operations of the Business as at the
respective dates and for the respective periods covered thereby (subject to
normal and customary year end adjustments which are not material), (ii) are
correct and complete in all material respects and (iii) are consistent with the
books and records of Seller and Parent. The Audited Financial Statements
(including the notes thereto) (i) will present fairly in all material respects
the financial condition and results of operation of the Business as at the
respective dates and for the respective periods covered thereby in accordance
with GAAP, (ii) will be correct and complete in all material respects and (iii)
will be consistent with the books and records of Seller and Parent. The Audited
Financial Statements as at and for the six-month period ended June 30, 2001 will
contain no material differences from the
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Unaudited Financial Statements. The Unaudited Financial Statements are attached
hereto as SCHEDULE 4.4(a). Notwithstanding the provisions of this Section
4.4(a), Buyer acknowledges and agrees that it shall not rely on the financial
information delivered to it pursuant to this Section 4.4 for any purpose
whatsoever, including, without limitation, due diligence or valuation of the
Business or the Acquired Assets, except for relying on (x) that the Audited
Financial Statements delivered to Buyer comply with the requirements of United
States securities laws pursuant to which Buyer is required to file with the
Securities and Exchange Commission financial statements of the assets and
business acquired in connection with the transactions contemplated by the
Transaction Documents; (y) that the Closing Working Capital will be calculated
in the same manner and in accordance with the same accounting procedures used to
calculate the Base Working Capital; and (z) the matters described in the
immediately preceding sentence.
(b) The Business has no Liabilities except for (i) Liabilities set
forth on the May 31 Balance Sheet, (ii) Liabilities arising since May 31, 2001
in the ordinary course of business of the Business consistent with past practice
in amounts that will be discharged prior to the Closing or included in the
Closing Working Capital calculation and (iii) Liabilities set forth on SCHEDULE
4.4(b).
4.5 GOVERNMENTAL CONSENTS. Except as set forth on SCHEDULE 4.5, there
are no consents, approvals or authorizations of, or registrations,
qualifications or filings with, any Governmental Authority necessary or required
in connection with the execution and delivery of the Transaction Documents by
Seller or Parent, the performance of their obligations thereunder or the
consummation of the transactions contemplated thereby.
4.6 COMPLIANCE WITH LAWS. Except as disclosed in SCHEDULE 4.6, Seller
(and Parent (with respect only to the Parent Assigned Contracts)) have conducted
and continue to conduct the Business in all material respects in accordance with
all applicable Laws, and none of Seller (or Parent (with respect only to the
Parent Assigned Contracts)) is in violation of any such Laws in any material
respect. No notice has been received and, to the best of the knowledge of each
of Seller (and Parent (with respect only to the Parent Assigned Contracts)), no
investigation or review is pending or threatened by any Governmental Authority
or third party with regard to any alleged violation by Seller or Parent of any
such Law.
4.7 COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as disclosed in SCHEDULE
4.7, Seller (and Parent (with respect only to the Parent Assigned Contracts))
have conducted and continue to conduct in all material respects the Business in
accordance with all Laws and Licenses and Permits relating to the prevention,
remediation, reduction or control of pollution or to the protection of the
environment, natural resources and/or human health and safety, including,
without limitation, those relating to hazardous materials, asbestos and lead
removal, transport, storage, release and disposal. Neither Seller nor Parent has
received any written notice of, or entered into any order, settlement or decree
relating to: (a) any violation of the foregoing Laws or Licenses and Permits or
the institution or pendency of any suit, action, claim, proceeding or
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investigation by any Governmental Authority or any third party in connection
with any alleged violation thereunder or (b) the response to or remediation of
hazardous material at or arising from any of Seller's, Parent's or the Business'
leased or owned properties.
4.8 PERMITS. SCHEDULE 4.8 sets forth a true, complete and correct list
of all Licenses and Permits of any Governmental Authority currently held by
Seller relating to the Business. To Seller's knowledge, such Licenses and
Permits are the only Licenses and Permits necessary for the lawful operation of
the Business, except to the extent, the absence thereof, does not have a
material adverse effect on Seller's operation of the Business taken as a whole.
Seller is in compliance in all material respects with the terms of all such
Licenses and Permits. No event has occurred with respect to any such Licenses
and Permit which would permit the revocation, termination or suspension thereof
or would result in any impairment of the rights of the holder thereof. No notice
has been received and, to the best of the knowledge of Seller, no investigation
or review is pending or threatened by any Governmental Authority, with regard to
(a) any alleged violation by Seller of any such License and Permit or (b) any
alleged failure by Seller to have any such License and Permit. No Licenses and
Permits will be transferred or assigned to Buyer. Buyer shall be responsible for
obtaining the Licenses and Permits described on SCHEDULE 4.8 for the operation
of the Business after the Closing.
4.9 LITIGATION, ETC. Except as set forth on SCHEDULE 4.9, there are no
judicial or administrative actions, suits, arbitrations, proceedings, claims or
investigations pending or, to Seller's knowledge, threatened, relating to or
affecting Seller, Parent (with respect only to the Parent Assigned Contracts),
the Acquired Assets or the Business, or which question the validity of any
Transaction Document or challenge any of the transactions contemplated hereby or
the use of the Acquired Assets or the conduct of the Business after the Closing
by Buyer. To the best of the knowledge of Seller (and Parent (with respect only
to the Parent Assigned Contracts)), there are no facts or circumstances that may
give rise to any of the foregoing. Seller has not agreed to, and is not bound
by, any extension or waiver of the statute of limitations relating to any
pending or potential action, suit, claim, proceeding, arbitration or
investigation which could in any manner adversely affect the Acquired Assets or
the Business.
4.10 EMPLOYEES. (a) SCHEDULE 4.10(a) sets forth as of the date hereof a
list of all of the employees and independent contractors of Seller engaged
principally in the Business and the salary and benefits to which each is
receiving or may be entitled, which schedule shall be updated as of, and
delivered to Buyer, three business days prior to the Closing. Except as
disclosed on SCHEDULE 4.10(a), none of the employees of Seller engaged in the
Business is covered by any collective bargaining agreement, no collective
bargaining agreement is currently being negotiated and, to Seller's knowledge,
no attempt is currently being made or has been made during the past five years
to organize any employees of Seller engaged in the Business to form or enter
into a labor union or similar organization. There is, and, to Seller's
knowledge, during the past five years there has been, no labor strike, dispute,
slowdown, work stoppage or other labor difficulty pending, threatened against or
involving Seller or the Business.
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(b) SCHEDULE 4.10(b) sets forth a true and complete list of all
employee benefit plans and all bonus, stock option, stock purchase, incentive,
deferred compensation, retiree medical or life insurance, supplemental
retirement, severance, welfare or other employee benefit plans, programs or
arrangements, in each case for the benefit of, or relating to, current employees
or former employees of Seller engaged in the Business (collectively, the
"PLANS"). Seller has delivered to Buyer, with respect to each Plan, a copy of
the Plan document, summary Plan description and the most recent annual report
and Internal Revenue Service ("IRS") determination letter, if any.
(c) Any Plan intended to be a "qualified plan" under section
401(a) of the Code has received an IRS opinion letter or notification letter as
to the qualification status of such Plan.
(d) To Seller's knowledge, each Plan is in compliance with the
applicable provisions of the Code, the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and other applicable Laws relating to the Plan
(including, without limitation, the health care continuation requirements of
section 4980B of the Code and Part 6 of Subtitle B of Title I of ERISA). To
Seller's knowledge, the Plans have operated in accordance with their respective
terms.
(e) To Seller's knowledge, all reports required by any
Governmental Authority with respect to a Plan have been timely filed. To
Seller's knowledge, all contributions and premiums with respect to each Plan
have been timely made.
(f) Except as provided in SCHEDULE 4.10(f), neither Seller, Parent
nor any trade or business (whether or not incorporated) which, together with
Seller or Parent, would be treated as a single employer (an "ERISA AFFILIATE")
under ERISA, is a contributing employer to a multi-employer plan as defined in
Section 3(37) of ERISA. With respect to Plans subject to Title IV of ERISA,
except as disclosed on SCHEDULE 4.10(f), each of Seller and Parent has made full
and timely payment of all contributions required under the terms of each such
Plan, Section 412(m) of the Code and Section 302(e) of ERISA; the present fair
market value of all assets of each such Plan exceeds the present value of all
vested benefits under each such Plan, as determined on the most recent valuation
date of such Plan and in accordance with the provisions of ERISA and the
regulations thereunder for calculating the potential Liability of each of Seller
and Parent or any ERISA Affiliate under Title IV of ERISA; and no accumulated
funding deficiency (as defined in Section 412 of the Code and Section 302 of
ERISA) exists with respect to any such Plan. Buyer shall not incur any Liability
to the Pension Benefit Guaranty Corporation under ERISA as a result of the
purchase of the Acquired Assets and the Business.
(g) To Seller's knowledge, no reportable event (as defined in
section 4043(e) of ERISA), prohibited transaction (as defined in section 406 of
ERISA or section 4975 of the
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Code), accumulated funding deficiency (as defined in section 302 of ERISA) or
plan termination (as defined in Title IV of ERISA or section 411(d) of the Code)
has occurred with respect to any of the Plans.
(h) Other than the health care continuation requirements of the
Code and ERISA, there are no benefits to be provided to current retirees under
any of the Plans which constitutes a welfare benefit plan.
(i) There is no action, suit or proceeding, hearing or
investigation with respect to the administration or investment of the assets of
any Plan. Seller has no knowledge of any basis for any such action, suit,
proceeding, hearing or investigation.
(j) Upon execution and consummation of this Agreement, Buyer shall
have no Liability for any withdrawal Liability under Title IV of ERISA with
respect to any present or former employee of Seller or Parent under any Plan or
benefit or welfare plan of an ERISA Affiliate.
4.11 OWNERSHIP AND TRANSFER OF ACQUIRED ASSETS. Each of Seller (and
Parent (with respect only to the Parent Assigned Contracts)) has good and
marketable title to, or in the case of leased or subleased Acquired Assets,
valid and subsisting leasehold interests in, all of the Acquired Assets, and
such Acquired Assets are free and clear of all Liens. Each of Seller (and Parent
(with respect only to the Parent Assigned Contracts)) has the unrestricted right
to sell, transfer, assign, convey and deliver to Buyer all right, title and
interest in and to the Acquired Assets without penalty or other adverse
consequences, and upon the Closing, Buyer will own all of such Acquired Assets
free and clear of all Liens.
4.12 ASSETS USED BY THE BUSINESS. Except for the Excluded Contracts and
the assets, properties and rights described on SCHEDULE 4.12, the Acquired
Assets constitute all of the assets, properties and rights used in and necessary
to conduct the Business as currently conducted. All of the Acquired Assets are
in good operating condition and repair, ordinary wear and tear excepted, and are
suitable for the purposes for which they are used by Seller (it being understood
and agreed that the Acquired Assets which have been acquired by Seller but not
yet installed shall be deemed used for the purposes which they would be used by
Seller when installed). The Machinery listed on SCHEDULE 1.1(a)(ii) is all of
the material Machinery used in the Business. The Vehicles listed on SCHEDULE
1.1(a)(iii) are all of the material Vehicles used in the Business.
4.13 CONTRACTS. (a) SCHEDULE 4.13(a) sets forth a complete and accurate
list of all of the Contracts. Each of the Contracts constitutes a valid and
legally binding obligation of Seller (or Parent (in the case of Parent Assigned
Contracts)) and, to Seller's knowledge, of the other parties thereto enforceable
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights or subject to
general principles of equity. Seller (or Parent (in the case of Parent Assigned
Contracts)) is not, and, to
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Seller's knowledge, no other party is, in breach or default, and no event has
occurred with respect to Seller or Parent or, to Seller's knowledge, with
respect to any other party, which with or without notice or lapse of time or
both would constitute a breach or default, or permit termination, modification,
or acceleration, under any of the Contracts. Seller (or Parent (in the case of
Parent Assigned Contracts)) has not, and, to Seller's knowledge, no other party
has, repudiated any provision of any Contract.
(b) Seller has furnished or made available to Buyer a true and
correct copy of each Contract. Except for the Contracts listed on SCHEDULE
4.13(b), no Contract requires the consent of any other party thereto to
effectuate the assignment thereof to Buyer. All of the commitments, contracts,
agreements and other legally binding arrangements, written or oral, to which
Parent is a party or by which Parent is bound relating to the Business are set
forth on SCHEDULE 1.1(b). None of the Assumed Contracts will be breached by
Seller (or Parent (in the case of Parent Assigned Contracts)) as a result of
this Agreement, the other Transaction Documents or the transactions contemplated
hereby and thereby.
4.14 REAL PROPERTY. (a) Neither Seller nor Parent owns any real
property used in the operation of the Business. Seller has delivered to Buyer a
true and complete copy of every Real Property Lease. SCHEDULE 4.14(a) describes
each Real Property Lease by setting forth the name of the landlord or
sublandlord, a description of the leased premises, the commencement and
expiration dates of the current term, the security deposited by Seller or Parent
with the landlord or sublandlord, if any, the monthly rental (including base and
all additional rents) and whether the assignment of such Real Property Lease by
Seller or Parent to Buyer requires the consent of the landlord or sublandlord.
Seller or Parent (and no other person or entity) occupies the premises covered
by such Real Property Lease.
(b) ABSENCE OF NOTICE. Except as set forth in SCHEDULE 4.14(b),
neither Seller nor Parent has received any notice, oral or written, with respect
to matters which would adversely affect the use of the premises covered by the
Real Property Leases or which would require the expenditure of more than $10,000
to cure breaches, violations or like matters.
4.15 INVENTORY. All Inventory is carried on the Financial Statements at
the lower of cost or market. The Financial Statements contain, as of their
respective dates, adequate reserves for unuseable or unsaleable Inventory. All
Inventory has been maintained in the ordinary course of business consistent with
past practices, is of good and merchantable quality and consists substantially
of a quality, quantity and condition usable, leaseable or saleable in the
ordinary course of business consistent with past practices. Seller is not under
any Liability or obligation with respect to the return of any material amount of
Inventory in the possession of customers.
4.16 NO THIRD PARTY OPTIONS. There are no existing agreements, options,
commitments or rights with, of or to any person to acquire any assets,
properties or rights included in the Acquired Assets or any interest therein,
except for those contracts for the sale of
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Inventory entered into by Seller or Parent in the ordinary course of business
consistent with past practice.
4.17 TAXES. Except as set forth on SCHEDULE 4.17, with respect to the
Business: each of Seller and Parent (a) has timely filed all Tax returns
required to be filed by it, and (b) has paid all Taxes which were due and
payable by it prior to the date hereof; all Tax returns filed by Seller and
Parent were true and correct as of the date on which they were filed or as
subsequently amended; and all amounts required to be collected or withheld by
Seller or Parent with respect to Taxes have been duly collected or withheld and
any such amounts required to be remitted to any taxing authority have been duly
remitted. For purposes of this Agreement, "TAX" or "TAXES" means taxes of any
kind, levies or other like assessments, customs, duties, imposts, charges or
fees, imposed or payable to the United States, or to any state, local or foreign
government or subdivision or agency thereof, and, in each instance, such term
shall include any interest, penalties or additions to tax attributable to any
such Tax. With respect to the Business, none of Seller or Parent has received
notice of a claim by any taxing jurisdiction where any such entity does not file
Tax returns that such entity is or may be subject to taxation by such taxing
jurisdiction.
4.18 BOOKS OF ACCOUNT. The books, records and accounts of Seller
maintained with respect to the Business accurately and fairly reflect, in all
material respects, the transactions and the assets and liabilities of Seller
with respect to the Business. Seller has not engaged in any transaction or
series of transactions which would be deemed material to the Business except for
transactions reflected in the normally maintained books and records of the
Business.
4.19 EXISTING CONDITION. Since May 31, 2001, Seller has operated the
Business in the ordinary course of business consistent with past practice, and
there has not been any event, change, action, failure to act or transaction
which, individually or in the aggregate, could have a material adverse effect on
the assets, liabilities, businesses, financial condition, operations, results of
operations or prospects of the Business or the Acquired Assets, except for
material adverse effects resulting primarily from general economic conditions or
market conditions for the industry in which the Business operates. Without
limiting the generality of the foregoing, since May 31, 2001, there has been no
termination, cancellation or adverse change in the business relationship of
Seller or Parent with any client or customer of, or other person with whom
Seller or Parent has a commercial relationship affecting, the Business.
4.20 ACCOUNTS RECEIVABLE. All Receivables reflected in the Financial
Statements or included as Acquired Assets are or will be valid and existing and
resulting from transactions in the ordinary course of business consistent with
past practice.
4.21 INTELLECTUAL PROPERTY. Seller owns or possesses adequate licenses
or other valid rights to use all of the Intellectual Property set forth on
SCHEDULE 1.1(a)(x) (the "TRANSFERRED INTELLECTUAL PROPERTY"), which schedule
denotes if such Transferred Intellectual Property is
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owned or leased by Seller. There is no Intellectual Property used in the
Business except for the Transferred Intellectual Property. Seller is not aware
of (a) any assertion or claim challenging the validity of any Transferred
Intellectual Property; or (b) any infringement by another party of the
Transferred Intellectual Property. Except as set forth in SCHEDULE 4.21, the
rights of Seller in or to the Transferred Intellectual Property, and the
operation by Seller of the Business as currently conducted, do not conflict with
or infringe upon the Intellectual Property rights of any other person or entity,
and Seller has not received any claim or notice from any person or entity to
such effect. The consummation of the transactions contemplated by this Agreement
will not result in the termination or impairment of any of the Transferred
Intellectual Property. After the consummation of the transactions contemplated
hereby, Buyer shall own or possess adequate licenses or other valid rights to
use all of the Transferred Intellectual Property to the same extent, and in the
same manner, as Seller.
4.22 BROKERS, FINDERS, ETC. Neither Seller nor Parent is a party to any
agreement with any finder or broker, or in any way obligated to any finder or
broker, for any commissions, fees or expenses in connection with the origin,
negotiation, execution or performance of this Agreement and the transactions
contemplated hereby.
4.23 INSURANCE. Seller or Parent maintains insurance policies for the
Business (the "INSURANCE POLICIES"). To Seller's knowledge, no insurer under any
Insurance Policy has canceled or generally disclaimed liability under any such
policy. All of the Insurance Policies (including coverage amounts, annual
premiums and deductibles) are disclosed on SCHEDULE 4.23.
4.24 NO MISSTATEMENTS OR OMISSIONS. No representation or warranty made
in this Agreement, or statements made in any document, schedule or certificate
furnished pursuant to this Agreement, by Seller and/or Parent is false or
misleading as to any material fact, or omits to state a material fact required
to make any of the statements made herein or therein not misleading in any
material respect.
5. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Seller as follows:
5.1 ORGANIZATION OF BUYER. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
5.2 AUTHORITY. Buyer has all requisite power and authority to execute
and deliver this Agreement and the other Transaction Documents to which it is
party, to carry out its obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby. Buyer has obtained all
necessary corporate approvals for the execution and delivery of this Agreement
and the other Transaction Documents to which it is party, the performance of its
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obligations hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby. This Agreement has been, and upon execution by
Buyer of the other Transaction Documents to which it is party will be, duly
executed and delivered by Buyer and (assuming due authorization, execution and
delivery by the other parties hereto and thereto) constitute Buyer's legal,
valid and binding obligation, enforceable against it in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights or subject to general
principles of equity.
5.3 NON-CONTRAVENTION. Except as set forth in SCHEDULE 5.3, none of the
execution and delivery by Buyer of this Agreement or hereby, the performance of
its obligations hereunder and thereunder or the consummation by Buyer of the
transactions contemplated hereby and thereby will conflict with Buyer's
Certificate of Incorporation and Bylaws or will, with or without notice, the
passage of time or both, constitute a breach or violation of, be in conflict
with, constitute or create a default under, or result in the creation or
imposition of any Liens upon any property of Buyer pursuant to, (a) any
contract, indenture, agreement, instrument, mortgage, lease or commitment to
which Buyer is a party or by which any of its properties are bound, or to which
Buyer is subject or (b) any Law relating to Buyer.
5.4 GOVERNMENTAL CONSENTS. Except as set forth on SCHEDULE 5.4, there
are no consents, approvals or authorizations of, or registrations,
qualifications or filings with, any Governmental Authority necessary or required
in connection with the execution and delivery by Buyer of this Agreement and the
other Transaction Documents to which it is a party, the performance of its
obligations hereunder or thereunder or the consummation by Buyer of the
transactions contemplated hereby or thereby.
5.5 LITIGATION, ETC. There are no judicial or administrative actions,
suits, proceedings or investigations pending or threatened against Buyer which
question the validity of this Agreement or challenge any of the transactions
contemplated hereby.
5.6 BROKERS, FINDERS, ETC. Buyer is not a party to any agreement with
any finder or broker, or in any other way obligated to any finder or broker, for
any commissions, fees or expenses in connection with the origin, negotiation,
execution or performance of this Agreement or the transactions contemplated
hereby.
6. ADDITIONAL AGREEMENTS.
6.1 CONDUCT OF THE BUSINESS. Seller covenants and agrees that, between
the date hereof and the Closing Date, Seller shall cause the Business to be
conducted only in the ordinary course of business consistent with past
practices, and shall use its commercially reasonable efforts to maintain and
preserve intact the Business and its relationships with suppliers, customers,
employees and others having commercial relationships with it with a view toward
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preserving the Business, the Acquired Assets and the goodwill included therewith
for Buyer. Without limiting the generality of the foregoing, Seller covenants
and agrees that, between the date hereof and the Closing Date, without the prior
written consent of Buyer, Seller shall not with respect to the Business:
(i) merge with, enter into a consolidation agreement with or
acquire an interest in any person or entity, or acquire the assets or business
of any person or entity (other than in the ordinary course of business
consistent with past practice), or otherwise acquire any material assets or
enter into any business combination;
(ii) enter into or adopt any employment or severance
agreement with any employee of the Business or grant any increase in the
compensation or benefits of any employee of the Business, except for increases
in the ordinary course of business consistent with past practices;
(iii) guarantee any indebtedness or obligation on behalf of
any person or entity;
(iv) sell, transfer, lease, sublease, license or otherwise
dispose of any assets, properties or rights of the Business, except for
Inventory sold in the ordinary course of business consistent with past
practices;
(v) enter into any Contract, or amend to the detriment of the
Business the terms of, or surrender or waive any right under, any Contract,
except in all cases in the ordinary course of business consistent with past
practice PROVIDED THAT such Contacts, amendments, surrenders or waivers are not,
individually or in the aggregate, material;
(vi) hire any employees of the Business, except employees
hired on an at will basis in the ordinary course of business consistent with
past practices;
(vii) settle or compromise any Liability relating to the
Business which is an Assumed Liability, except in the ordinary course of
business consistent with past practices, provided that such settling or
compromising of Liabilities is not, individually or in the aggregate, material;
(viii) transfer or grant any rights with respect to the
Transferred Intellectual Property or allow any of the Transferred Intellectual
Property to be disclosed other than under appropriate non-disclosure agreements,
abandoned or otherwise become unavailable to the Business on the same terms and
conditions as such rights were available to the Business as of the date of this
Agreement;
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(ix) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization or otherwise permit its corporate existence, or any of the rights
or franchises or any license, permit or authorization under which the Business
operates, to lapse or be suspended or revoked;
(x) take any action, engage in any practice, fail to take any
action or enter into any transaction which could cause any representation or
warranty of Seller in this Agreement to be untrue or result in any breach of any
covenant or agreement made by Seller in this Agreement; or
(xi) enter into any agreement to take any actions otherwise
prohibited by this Section 6.1.
6.2 ACCESS TO INFORMATION. (a) From the date hereof until the Closing,
upon reasonable notice, Seller shall, and shall cause its officers, employees,
auditors and agents to, (i) afford the officers, employees, agents and
representatives of Buyer access, during normal business hours, to the offices,
personnel, properties, books and records of Seller relating to the Business and
(ii) furnish to the officers, employees, agents and representatives of Buyer
such additional financial and operating data and other information relating to
the Business as Buyer may from time to reasonably request.
(b) In order to facilitate the resolution of any claims made
against or by Seller or for any other reasonable purpose, for a period of seven
(7) years after the Closing, Buyer shall (i) retain the records relating to the
Acquired Assets and the Business delivered to Buyer corresponding to periods
prior to the Closing in a manner reasonably consistent with the prior practice
of Buyer and (ii) upon reasonable notice, afford the officers, employees, agents
and representatives of Seller reasonable access (including the right to make, at
Seller's expense, photocopies), during normal business hours, to such books and
records.
(c) In order to facilitate the resolution of any claims made
against or by Buyer or for any other reasonable purpose, for a period of seven
(7) years after the Closing, Seller shall (i) retain the books and records of
Seller relating to the Acquired Assets and the Business for periods prior to the
Closing which have not otherwise been delivered to Buyer and (ii) upon
reasonable notice, afford the officers, employees, agents and representatives of
Buyer reasonable access (including the right to make, at Buyer's expense,
photocopies), during normal business hours, to such books and records.
6.3 NOTICE OF DEVELOPMENTS. (a) Prior to the Closing Date, Seller and
Parent shall promptly notify Buyer in writing of (i) all events, circumstances,
facts or occurrences arising subsequent to the date of this Agreement which are
known to Seller or Parent: (A) which could result in any breach by Seller or
Parent of a representation or warranty or covenant in this Agreement; or (B)
which would reasonably be expected to allow Buyer to exercise its right to
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terminate this Agreement pursuant to Article 9; and (ii) all other material
developments which are known to Seller or Parent affecting the assets,
liabilities or obligations, business, financial condition, operations, results
of operations, customer or supplier relations, employee relations, projections
or prospects of the Business, except for developments which result primarily
from general economic conditions or market conditions for the industry in which
the Business operates.
(b) Prior to the Closing Date, Buyer shall promptly notify Seller
in writing of all events, circumstances, facts or occurrences arising subsequent
to the date of this Agreement which are known to Buyer which would reasonably be
expected to allow Seller or Parent to exercise its right to terminate this
Agreement pursuant to Article 9.
6.4 AUTHORIZATIONS AND CONSENTS; SUBCONTRACTS; CONDITIONS. (a) Each
party hereto shall use its commercially reasonable efforts to obtain the
authorizations, consents, orders and approvals of all Governmental Authorities
that may be or become necessary for the performance of its obligations under,
and the consummation of the transactions contemplated by, this Agreement and
will cooperate fully with the other parties in promptly seeking to obtain all
such authorizations, consents, orders and approvals. The parties hereto will not
take any action that will have the effect of delaying, impairing or impeding the
receipt of any such required authorizations, consents, orders or approvals.
(b) Each of Seller (and Parent (with respect only to the Parent
Assigned Contracts)) shall use its commercially reasonable efforts to obtain any
consents, approvals or estoppel letters which are necessary for Seller or Parent
to obtain in order to assign or otherwise transfer to Buyer the Assumed
Contracts, the Intellectual Property and the other Acquired Assets
(collectively, the "THIRD PARTY CONSENTS"). Without limiting the foregoing, each
of Seller and Parent shall use its commercially reasonable efforts to obtain
from Motorola (as defined herein) the assignment of the Motorola Agreement (as
defined herein) to Buyer, which assignment shall designate Buyer under the terms
of the Motorola Agreement as a "Preferred Vendor" having authorized service
centers at the Business' location at 196 Quigley Boulevard, New Castle,
Delaware, and a second location to be designated by Buyer in Hollywood, Florida,
subject to inspection, ASR Room Requirements and other conditions set forth in
the Motorola Agreement relating thereto.
(c) Seller shall deliver the Audited Financial Statements to Buyer
as promptly as practicable after the date hereof (but in any event by August 24,
2001). Each of Seller (and Parent (with respect only to the Parent Assigned
Contracts)) shall use its commercially reasonable efforts to cause all the
conditions in Section 7.2 within its control to be satisfied prior to the
scheduled Closing Date. Buyer shall use its commercially reasonable efforts to
cause all the conditions in Section 7.1 within its control to be satisfied prior
to the scheduled Closing Date.
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6.5 CONFIDENTIALITY. Seller and Parent acknowledge that during the
course of their ownership and operation of the Business they have produced and
had access to Confidential Information (as defined below). Accordingly, Seller
and Parent, jointly and severally, covenant and agree to, and Seller and Parent
shall cause their respective agents, representatives, affiliates, officers,
directors and employees to, treat and hold in confidence the Confidential
Information and not, directly or indirectly, disclose, publish or otherwise make
available any of the Confidential Information to the public or to any person or
use any of the Confidential Information for their own benefit or for the benefit
of any other person, other than Buyer. For purposes of this Agreement,
"CONFIDENTIAL INFORMATION" means all information (whether or not reduced to
written, electronic, magnetic or other tangible form) acquired in any way by
Seller or Parent during the course of their ownership and operation of the
Business concerning the products, services, projects, activities, business or
affairs of the Business or its customers, including, without limitation, (i) all
information concerning trade secrets of the Business, product hardware, related
software development, manuals, formulae, processes, methods, machines,
compositions, ideas, improvements or inventions of the Business, (ii) all sales
and financial information concerning the Business, (iii) all independent
contractor, customer and supplier lists of the Business, (iv) all information
concerning products, services or projects under development of the Business or
marketing plans for any of those products, services or projects, (v) all
information in any way concerning the customers of the Business and (vi) all
information relating to the transactions contemplated by this Agreement.
Notwithstanding the foregoing, (a) the term Confidential Information shall not
include information that is generally available to the public or becomes
generally available to the public other than as a result of a breach by Seller
or Parent of this Section 6.5 and (b) to the extent Seller and Parent use any
Confidential Information in their respective operations and businesses other
than the Business, each can continue to use the Confidential Information in such
other operations and businesses in a manner consistent with past practice prior
to the date hereof.
6.6 NO SOLICITATION OR NEGOTIATION. Seller and Parent, jointly and
severally, covenant and agree that between the date of this Agreement and the
Closing, none of Seller, Parent or any of their respective affiliates, officers,
directors, representatives or agents will (a) solicit, initiate, consider,
encourage, negotiate, discuss or accept any other proposals or offers from any
person or entity (i) to purchase all or any portion of the assets of the
Business (other than Inventory sold in the ordinary course of business
consistent with past practices), (ii) to enter into any business combination
with Seller with respect to the Business or (iii) with respect to the Business,
to enter into any other extraordinary transaction or transaction outside the
ordinary course of business consistent with past practice, or (b) participate in
any discussions, conversations, negotiations or other communications regarding,
or furnish to any other person or entity any information with respect to, or
otherwise cooperate in any way, assist or participate in, facilitate or
encourage any effort or attempt by any other person or entity to seek to do, any
of the foregoing. Seller and Parent covenant that neither has any agreement,
understanding or arrangement with respect to the foregoing. Seller and Parent
immediately shall cease, and cause to be terminated, all existing discussions,
conversations, negotiations and other communications
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with any persons or entities conducted heretofore with respect to any of the
foregoing. Seller and Parent shall notify Buyer promptly in writing if any such
proposal or offer, or any inquiry or other contact with any person or entity
with respect thereto, is made and shall, in any such notice to Buyer, indicate
in reasonable detail the identity of the person or entity making such proposal,
offer, inquiry or other contact and the terms and conditions of such proposal,
offer, inquiry or other contact. Seller and Parent covenant and agree not to,
without the prior written consent of Buyer, release any person or entity from,
or waive any provision of, any confidentiality or standstill agreement relating
to or affecting the Business to which Seller, Parent or any affiliate thereof is
a party.
6.7 NON-COMPETE. (a) Seller and Parent, jointly and severally, covenant
and agree that for a period of five (5) years from the Closing Date (the
"RESTRICTED PERIOD"), neither Seller nor Parent shall, directly or indirectly,
(i) be, or become, or have or acquire the right to become, directly or
indirectly, a record or beneficial owner of equity or profits interests in, or
manage, operate, control or engage in (as an officer, director, stockholder,
partner, consultant, owner, employee, agent, creditor or otherwise), any
business, person or entity that is then, or which then proposes to become, a
competitor of Buyer in the Business anywhere in North America; PROVIDED THAT,
the foregoing shall not restrict Seller or Parent from the ownership, solely as
an investment, of securities of any business, person or entity if such ownership
is (x) not as a controlling person of such business, person or entity, (y) not
as a member of a group that controls such business, person or entity and (z) not
as a direct or indirect beneficial owner of 5% or more of any class of
securities of such business, person or entity; (ii) induce or seek to influence
any employee of (or consultant to) Buyer to leave its employ (or terminate such
consultancy) or to become financially interested in a competing business; (iii)
aid a competitor of Buyer with respect to the Business in any attempt to hire a
person who shall have been employed by, or who was a consultant to, Buyer within
the one-year period preceding the date of any such aid; or (iv) induce or
attempt to influence any person who was a customer of Buyer during such period
to transact business with a competitor of Buyer with respect to the Business or
not to do business with Buyer. ___ The Restricted Period shall be extended by
the length of time during which Seller or Parent is in breach of the provisions
of this Section 6.7.
(b) Each of Seller and Parent acknowledges that the Restricted
Period contained in Section 6.7(a) is reasonable under the circumstances.
Moreover, it is the desire and intent of the parties that the provisions of
Section 6.7(a) be enforceable to the fullest extent permissible under the Laws
and public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, the parties agree that, should a Governmental Authority determine
subsequently that the terms of Section 6.7(a) are greater than reasonably
necessary to protect Buyer's or its affiliates' interests, the parties will
request that such Governmental Authority reform such terms by specifying the
greatest time period and/or geographic area that would not render such terms
unenforceable. Each of Seller and Parent specifically agrees that, in the event
of a breach or threatened breach by it or any of its respective affiliates of
the covenants contained in Section 6.7(a), Buyer and/or its affiliates would
suffer irreparable injury and shall be entitled
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to seek equitable relief by way of temporary or permanent injunction or any
other equitable remedies.
6.8 EMPLOYEES. Prior to the Closing, Buyer shall offer employment
effective as of the Closing to each of the employees listed on SCHEDULE 4.10(a)
with an asterisk (*) next to his or her name at compensation rates comparable to
the rates being received by each as of the Closing Date (assuming compliance by
Seller and Parent with Section 6.1(ii) and (vi) hereof). Except as set forth in
the previous sentence, Buyer shall have no obligation or Liability for (and
Seller or Parent, as the case may be, shall retain the obligation and Liability
for) any salary, compensation, benefits, severance or other amounts owed to or
claimed by any employee of Seller, Parent or any of their respective affiliates,
including, without limitation, for periods prior to the Closing or as a result
of Buyer's election not to offer employment to such employee as of the Closing.
Nothing in this Agreement shall confer upon any employee of Seller, Parent or
any of their respective affiliates any expectation, entitlement or right to
employment or employment for any length of term with Buyer or any compensation,
benefits or severance thereunder.
6.9 SATISFACTION OF LIABILITIES. Each of Seller and Parent shall pay,
perform and discharge when due all of its respective Excluded Liabilities.
6.10 PUBLIC DISCLOSURES. Prior to the Closing, no party to this
Agreement (nor any of its respective affiliates) will issue any press release or
make any other public disclosures concerning this Agreement or the transactions
contemplated hereby without the prior written consent of the other parties.
Notwithstanding the preceding sentence, nothing in this Section 6.10 will
preclude any party (or its affiliates) from making any disclosures required by
any Governmental Authority or Law; PROVIDED, HOWEVER, that the party required to
make public disclosure shall use reasonable efforts to allow the other parties
reasonable time to comment on such public disclosure in advance of such public
disclosure.
6.11 BULK SALES. Buyer hereby waives compliance with any bulk sales law
which may be applicable to the transactions contemplated hereby.
6.12 TRANSITION SERVICES AGREEMENT. At the Closing, Seller and/or
Parent, on the one hand, and Buyer, on the other hand, shall execute and deliver
to the other a Transition Services Agreement, in form and substance satisfactory
to the parties thereto (the "TRANSITION SERVICES AGREEMENT"), covering the
matters described on SCHEDULE 6.12.
7. CONDITIONS TO CLOSING.
7.1 CONDITIONS TO OBLIGATIONS OF SELLER AND PARENT. The obligation of
Seller and Parent to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment, at or prior to the Closing, of each of the
following conditions:
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(a) REPRESENTATIONS AND WARRANTIES; COVENANTS. The representations
and warranties of Buyer contained in this Agreement shall be true and correct in
all material respects on the Closing Date with the same force and effect as if
made on the Closing Date, except for such representations and warranties which
are made as of another date which shall be true and correct as of such other
date (other than in each case such representations and warranties which are
qualified as to materiality or material adverse effect, which representations
and warranties shall be true and correct in all respects on the relevant date),
and all of the covenants contained in this Agreement to be complied with by
Buyer on or prior to the Closing shall have been complied with by Buyer in all
material respects, and Seller shall have received a certificate of Buyer to such
effect signed by a duly authorized officer of Buyer;
(b) NO ORDER. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any Laws, injunction or other order
(whether temporary, preliminary or permanent), which is in effect materially
restricting, preventing or prohibiting consummation of the transactions
contemplated by this Agreement; PROVIDED THAT, the provisions of this Section
7.1(b) shall not apply to any action which Seller, Parent or any of their
respective affiliates shall have directly or indirectly solicited or encouraged;
(c) OTHER GOVERNMENTAL AND REGULATORY CONSENTS. Buyer shall have
delivered, made or obtained (i) all filings with Governmental Authorities
required to be made prior to the Closing and (ii) all consents, approvals,
permits and authorizations from Governmental Authorities required to be obtained
prior to the Closing, in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, other
than those which if not delivered, made or obtained would not have a material
adverse effect on the transactions contemplated hereby or the conduct of the
Business or the operation of the Acquired Assets after the Closing Date;
(d) RESOLUTIONS; INCUMBENCY. Seller shall have received a
certificate of the Secretary or Assistant Secretary of Buyer certifying (i) a
true and complete copy of the resolutions duly and validly adopted by the Board
of Directors of Buyer evidencing its authorization of the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
and (ii) the names and signatures of the officers of Buyer authorized to sign
this Agreement and the other documents to be delivered hereunder;
(e) ORGANIZATION DOCUMENTS. Buyer shall have delivered to Seller
(i) a copy of the certificate of incorporation of Buyer, certified by the
Secretary of State of the State of Delaware as of a date not earlier than thirty
(30) days prior to the Closing Date, and (ii) the Bylaws of Buyer, certified by
the Secretary or Assistant Secretary of Buyer, each accompanied by a certificate
of the Secretary or Assistant Secretary of Buyer, dated as of the Closing Date,
stating that no other amendments have been made to Buyer's certificate of
incorporation or bylaws and such governing instruments are in full force and
effect;
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(f) OTHER AGREEMENTS. Buyer shall have delivered to Seller
executed counterparts of the Transaction Documents not executed on the date
hereof; and
(g) CORPORATE MATTERS. All actions, proceedings, resolutions,
instruments and documents on the part of Buyer required to carry out this
Agreement and the transactions contemplated hereby shall have been approved on
the Closing Date by Seller and its counsel, in the exercise of their reasonable
judgment.
7.2 CONDITIONS TO OBLIGATIONS OF BUYER. The obligation of Buyer to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment, at or prior to the Closing, of each of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES; COVENANTS. The representations
and warranties of Seller contained in this Agreement shall be true and correct
in all material respects on the Closing Date with the same force and effect as
if made on the Closing Date, except for such representations and warranties
which are made as of another date which shall be true and correct as of such
other date (other than in each case such representations and warranties which
are qualified as to materiality or material adverse effect, which
representations and warranties shall be true and correct in all respects on the
relevant date), and all of the covenants contained in this Agreement to be
complied with by each of Seller and Parent on or before the Closing shall have
been complied with in all material respects, and Buyer shall have received a
certificate of Seller and Parent to such effect, signed by a duly authorized
officer of Seller or Parent, as the case may be;
(b) NO ORDER. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any Laws, injunction or other order
(whether temporary, preliminary or permanent), which is in effect materially
restricting, preventing or prohibiting consummation of the transactions
contemplated by this Agreement; PROVIDED THAT, the provisions of this Section
7.2(b) shall not apply to any action which Buyer or its affiliates shall have
directly or indirectly solicited or encouraged;
(c) OTHER GOVERNMENTAL AND REGULATORY CONSENTS; THIRD PARTY
CONSENTS. Seller (and Parent (with respect only to the Parent Assigned
Contracts)) shall have delivered, made or obtained (i)(A) all filings with
Governmental Authorities required to be made prior to the Closing and (B) all
consents, approvals, permits and authorizations from Governmental Authorities
required to be obtained prior to the Closing, in connection with the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby, other than those which if not delivered, made or obtained
would not have a material adverse effect on the transactions contemplated hereby
or the conduct of the Business or the operation of the Acquired Assets after the
Closing Date and (ii) consents to assignment of the Contracts listed on SCHEDULE
7.2(c);
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(d) RESOLUTIONS; INCUMBENCY. (i) Buyer shall have received a
certificate of the Secretary or Assistant Secretary of Seller certifying (A) a
true and complete copy of the resolutions duly and validly adopted by the Board
of Directors and the stockholders of Seller, evidencing its their authorization
of the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and (B) the names and signatures of the
officers of Seller authorized to sign this Agreement and the other documents to
be delivered hereunder; and
(ii) Buyer shall have received a certificate of the Secretary
or Assistant Secretary of Parent certifying (A) a true and complete copy of the
resolutions duly and validly adopted by the Board of Directors of Parent,
evidencing its authorization of the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby and (B) the names and
signatures of the officers of Parent authorized to sign this Agreement and the
other documents to be delivered hereunder;
(e) ORGANIZATION DOCUMENTS. (i) Seller shall have delivered to
Buyer (A) a copy of the certificate of incorporation of Seller, certified by the
Secretary of State of the State of Delaware as of a date not earlier than thirty
(30) days prior to the Closing Date, and (B) the Bylaws of Seller, certified by
the Secretary or Assistant Secretary of Seller, each accompanied by a
certificate of the Secretary or Assistant Secretary of Seller, dated as of the
Closing Date, stating that no other amendments have been made to Seller's
certificate of incorporation or bylaws and such governing instruments are in
full force and effect; and
(ii) Parent shall have delivered to Buyer (A) a copy of the
certificate of incorporation of Parent, certified by the Secretary of the State
of the State of Delaware as of a date not earlier than thirty (30) days prior to
the Closing Date, and (B) the Bylaws of Parent, certified by the Secretary or
Assistant Secretary of Parent, each accompanied by a certificate of the
Secretary or Assistant Secretary of Parent, dated as of the Closing Date,
stating that no other amendments have been made to Parent's certificate of
incorporation or bylaws and such governing instruments are in full force and
effect;
(f) OTHER AGREEMENTS. Seller and Parent, as the case may be, shall
have delivered to Buyer executed counterparts of the Transaction Documents not
executed on the date hereof;
(g) MOTOROLA ASSIGNMENT. Buyer shall have received the consent of
Motorola (as defined below) to the assignment from Parent to Buyer of the Repair
and Service Agreement (the "MOTOROLA AGREEMENT") dated as of August 15, 2000
between General Instruments Corporation, doing business as the Broadband
Communications Sector of Motorola, Inc. ("MOTOROLA"), and Parent and, which
assignment shall designate Buyer under the terms of the Motorola Agreement as a
"Preferred Vendor" having authorized service centers at the Business'
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location at 196 Quigley Boulevard, New Castle, Delaware, and a second location
to be designated by Buyer in Hollywood, Florida, subject to inspection, ASR Room
Requirements and other conditions set forth in the Motorola Agreement relating
thereto, which consent has been executed by Motorola, Parent and Buyer and is in
form and substance satisfactory to Buyer;
(h) RELEASE OF LIENS. Buyer shall have received evidence
satisfactory to Buyer in the reasonable exercise of its judgment of the release
of all Liens on the Acquired Assets;
(i) CORPORATE MATTERS. All actions, proceedings, resolutions,
instruments and documents on the part of Seller and Parent required to carry out
this Agreement and the transactions contemplated hereby shall have been approved
on the Closing Date by Buyer and its counsel, in the reasonable exercise of
their judgment;
(j) LEGAL OPINION. Buyer shall have received from Seller's and
Parent's counsel an opinion, in form and substance reasonably satisfactory to
Buyer and its counsel;
(k) NO MATERIAL ADVERSE EFFECT. No event or events shall have
occurred, or be reasonably likely to occur, which individually or in the
aggregate, have, or could have, a material adverse effect on the Acquired
Assets, the Business or its prospects or the ability of Seller or Parent to
consummate the transactions contemplated by this Agreement; and
(l) AUDIT OF THE BUSINESS. Buyer shall have received the Audited
Financial Statements in form and substance as required by Section 4.4(a) and
Buyer shall have determined that there are no material differences between the
Unaudited Financial Statements and the Audited Financial Statements as at and
for the six-month period ended June 30, 2001 other than differences arising in
the ordinary course of business consistent with past practice from May 31, 2001
to June 30, 2001 which are not materially adverse to the Business or its
prospects.
8. CLOSING.
8.1 CLOSING DATE. Unless this Agreement shall have been terminated and
the transactions contemplated hereby shall have been abandoned pursuant to
Article 9 hereof, the closing of the transactions contemplated by this Agreement
(the "CLOSING") shall take place at the offices of Kronish Lieb Weiner & Hellman
LLP, 1114 Avenue of the Americas, New York, New York 10036, at 10:00 a.m., New
York City time, on August 31, 2001 (or, if later, the date which is three
business days after the date on which the conditions to the Closing set forth in
Section 7.2(c), (g) and (l) have been satisfied or waived), or such other date,
time and place (including via mail and facsimile) as shall be agreed upon by
Seller and Buyer (the actual date being herein called the "CLOSING DATE"). All
references in this Agreement to the Closing Date shall be deemed made to the
Closing and vice versa.
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8.2 BUYER DELIVERIES. At the Closing, Buyer shall deliver to Seller:
(i) the Cash Purchase Price as provided in Article 2 hereof, (ii) the
agreements, documents, certificates and instruments to be delivered by Buyer
pursuant to Section 7.1 hereof and (iii) such other agreements, documents and
instruments as Seller and its counsel reasonably request.
8.3 SELLER DELIVERIES. At the Closing, Seller or Parent, as the case
may be, shall deliver to Buyer: (i) the Bill of Sale, (ii) the agreements,
documents, certificates, opinions and instruments to be delivered by Seller
and/or Parent pursuant to Section 7.2 hereof and (iii) such other agreements,
documents and instruments as Buyer and its counsel reasonably request.
9. TERMINATION OF AGREEMENT.
9.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing:
(a) by the mutual written consent of Buyer and Seller;
(b) by either Buyer, on the one hand, or Seller or Parent, on the
other hand, if the Closing shall not have occurred on or prior to September 30,
2001; PROVIDED, HOWEVER, that the right to terminate this Agreement under this
Section 9.1(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement shall have been the cause of, or shall have
resulted in, the failure of the Closing to occur on or prior to such date;
(c) by Buyer if between the date hereof and the date and time
scheduled for the Closing in Section 8.1 (as extended or accelerated in
accordance therewith): (i) an event or condition occurs that has resulted in, or
may reasonably be expected to result in, a material adverse effect on the
Acquired Assets, the Business or Seller's or Parent's ability to consummate the
transactions contemplated by this Agreement; (ii) any representation or warranty
of Seller or Parent contained in this Agreement (which is not qualified as to
materiality or material adverse effect) shall not have been true and correct
when made in any material respect or any representation or warranty of Seller or
Parent contained in this Agreement (which is qualified as to materiality or
material adverse effect) shall not have been true and correct when made in all
respects; (iii) Seller or Parent shall not have complied with any covenant or
agreement contained in this Agreement in any material respect; or (iv) Seller or
Parent makes a general assignment for the benefit of creditors, or any
proceeding shall be instituted by or against any of Seller or Parent seeking to
adjudicate any of them a bankrupt or insolvent or seeking liquidation, winding
up or reorganization, arrangement, adjustment, protection, relief or composition
of any of their respective debts under any Law relating to bankruptcy,
insolvency or reorganization; or
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(d) by Seller or Parent if between the date hereof and the date
and time scheduled for the Closing in Section 8.1 (as extended or accelerated in
accordance therewith): (i) any representation or warranty of Buyer contained in
this Agreement (which is not qualified to materiality or material adverse
effect) shall not have been true and correct when made in any material respect
or any representation or warranty of Buyer contained in this Agreement (which is
qualified as to materiality or material adverse effect) shall not have been true
and correct in all respects when made; or (ii) Buyer shall not have complied
with any covenant or agreement contained in this Agreement in any material
respect.
For the purpose of this Section 9.1, Seller and Parent shall be deemed the same
party to this Agreement.
9.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 9.1, this Agreement shall forthwith become void
except with respect to Sections 4.23 (Seller and Parent Brokers, Finders, etc.),
5.6 (Buyer Brokers, Finders, etc.) and 11.3 (Expenses), and Article 10 as it
relates to those provisions, which provisions of this Agreement shall survive
the termination; PROVIDED, HOWEVER, this Section 9.2 shall not relieve any party
from liability for any breach of this Agreement resulting in its termination.
9.3 WAIVER. (a) At any time prior to the Closing, any party hereto may
in writing (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties of the other parties hereto contained herein or
in any document delivered pursuant hereto or (iii) waive compliance with any of
the agreements or conditions of the other parties hereto contained herein. For
purposes of this Section 9.3, Seller and Parent shall be deemed the same party
to this Agreement.
(b) In the event that Buyer waives the provisions of Section 7.2(c)(ii)
with respect to any Assumed Contract described therein and elects to close the
transactions contemplated by this Agreement notwithstanding that the consent of
the party (other than Seller or Parent) to such Assumed Contract has not been
obtained, then (i) Seller (or Parent (in the case of a Parent Assumed Contract))
shall subcontract or license to Buyer such Assumed Contract on terms
substantially equivalent to those in such Assumed Contract and (ii) Buyer shall
be liable for any breaches or defaults under the Assumed Contract caused solely
by reason of the arrangement described in Section 9.3(b)(i) above. Nothing in
this Section 9.3(b) shall be deemed to relieve Seller or Parent of its
obligations under Section 6.4(b) or waive any provision of Article 7.
10. INDEMNIFICATION
10.1 INDEMNIFICATION. (a) Seller and Parent, jointly and severally,
agree to indemnify, defend and hold harmless Buyer, any subsidiary or affiliate
thereof and their respective officers, directors, stockholders, controlling
persons, employees, agents, successors and assigns
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(collectively, the "INDEMNIFIED BUYER GROUP") from and against any and all
Liabilities, losses (including, without limitation, diminution in value of the
Acquired Assets), damages, claims, costs, expenses (including, without
limitation, reasonable attorneys', accountants' and outside advisors' fees and
disbursements), judgments, interest and penalties (collectively, "BUYER LOSSES")
incurred as a result of, arising out of or in respect of :
(i) any breach by Seller or Parent of any of its respective
representations and warranties contained in this Agreement (including the
Schedules) or any Transaction Document (and in determining whether there has
been a breach of any representation or warranty contained in Section 4.6 or 4.7
of this Agreement and in determining the amount of the Buyer Loss arising out of
the breach of any representation or warranty contained in Section 4.6 or 4.7 of
this Agreement, such representation and warranty shall not be qualified by the
phrases "in all material respects" or "in any material respect");
(ii) any failure by Seller or Parent to perform any of its
respective covenants or agreements contained in this Agreement (including the
Schedules) or any Transaction Documents; or
(iii) any of the matters set forth in SCHEDULE 4.9, SCHEDULE
4.17 or SCHEDULE 4.21.
(b) Buyer agrees to indemnify, defend and hold harmless Seller,
Parent, any subsidiary or affiliate thereof and their respective officers,
directors, stockholders, controlling persons, employees, agents, successors and
assigns (collectively, the "INDEMNIFIED SELLER GROUP") from and against any and
all Liabilities, losses, damages, claims, costs, expenses (including, without
limitation, reasonable attorneys', accountants' and outside advisors' fees and
disbursements), judgments, interest and penalties (collectively, "SELLER
LOSSES") incurred as a result of, arising out of or in respect of:
(i) any breach by Buyer of any of its representations and
warranties contained in this Agreement (including the Schedules) or any
Transaction Document;
(ii) any failure by Buyer to perform any of its covenants or
agreements contained in this Agreement (including the Schedules) or any
Transaction Document; or
(iii) any failure by Buyer to pay, perform or discharge when
due any of the Assumed Liabilities.
10.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the parties set forth in this Agreement shall survive the
Closing and shall remain in full force and effect, regardless of any
investigation made by or on behalf of Seller, Parent or Buyer, as applicable,
for a period of eighteen (18) months after the Closing Date; PROVIDED THAT,
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(a) the representations and warranties made by Seller in (i) Sections 4.1, 4.2,
4.7, 4.11 and 4.22 shall survive indefinitely; and (ii) Sections 4.6 and 4.17
shall survive until the applicable statute of limitations for the legal and tax
matters contained therein has expired; and (b) the representations and
warranties made by Buyer in Sections 5.1, 5.2 and 5.6 shall survive
indefinitely. The agreements and covenants of the parties under this Agreement
shall remain in full force and effect until the applicable period under the
statute of limitations therefor has expired. No claim for the recovery of Losses
may be asserted by a member of the Indemnified Seller Group or the Indemnified
Buyer Group, as the case may be, after the applicable time period specified in
this Section 10.2; PROVIDED, HOWEVER, that claims first asserted in writing
within such time period shall not be extinguished.
10.3 LIMITATION ON INDEMNITY.
(a) LIMITATIONS FOR SELLER. Seller's and Parent's obligations to
indemnify members of the Indemnified Buyer Group set forth in Section 10.1(a)
shall be subject to the following limitations:
(i) No indemnification for Buyer Losses asserted against
Seller or Parent under Section 10.1(a)(i) shall be required unless and until the
cumulative amount of such Buyer Losses equals or exceeds eighty thousand dollars
($80,000) (the "SELLER THRESHOLD"), and then only to the extent that the
cumulative amount of Buyer Losses exceeds the Seller Threshold.
(ii) Seller's and Parent's combined liability to the
Indemnified Buyer Group under Section 10.1(a)(i) for Buyer Losses shall not
exceed eight million dollars ($8,000,000).
(iii) None of the limitations contained in Section 10.3(a)(i)
and (ii) shall apply to Seller's and Parent's indemnification obligations in
respect of the representations and warranties in Sections 4.1, 4.2, 4.7, 4.11,
4.17 or 4.22.
(iv) Other than claims based on fraud or claims for specific
performance or injunctive relief, the indemnity provided in this Article 10
shall be the sole and exclusive remedy of the indemnified party against the
indemnifying party at law or equity for any matter covered by Section 10.1(a).
(b) LIMITATIONS FOR BUYER. Buyer's obligation to indemnify members
of the Indemnified Seller Group set forth in Section 10.1(b) shall be subject to
the following limitations:
(i) No indemnification for Seller Losses asserted against
Buyer under Section 10.1(b)(i) shall be required unless and until the cumulative
amount of such Seller Losses equals or exceeds eighty thousand dollars ($80,000)
(the "BUYER THRESHOLD"), and then only to the extent that the cumulative amount
of Seller Losses exceeds the Buyer Threshold.
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(ii) Buyer's combined liability to the Indemnified Seller
Group under Section 10.1(b)(i) for Seller Losses shall not exceed eight million
dollars ($8,000,000).
(iii) None of the limitations contained in Section 10.1(b)(i)
and (ii) shall apply to Buyer's indemnification obligations in respect of the
representations and warranties in Sections 5.1, 5.2 or 5.6;
(iv) Other than claims based on fraud or claims for specific
performance or injunctive relief, the indemnity provided in this Article 10
shall be the sole and exclusive remedy of the indemnified party against the
indemnifying party at law or equity for any matter covered by Section 10.1(b).
10.4 NOTICE OF CLAIMS. An indemnified party shall give prompt written
notice (and in the case of a claim for the breach of a representation or
warranty such notice shall be given within the applicable survival period) to
the indemnifying party of any claim against the indemnified party which might
give rise to a claim by the indemnified party against the indemnifying party
under the indemnification provisions contained herein, stating the nature and
basis of the claim and the actual or estimated amount thereof, PROVIDED,
HOWEVER, that failure to give such notice will not affect the obligation of the
indemnifying party to provide indemnification in accordance with the terms of
Section 10.1 unless, and only to the extent that, the indemnifying party is
actually prejudiced thereby. In the event that any action, suit or proceeding is
brought against any indemnified party with respect to which the indemnifying
party may have Liability under the indemnification provisions contained herein,
the indemnifying party shall, upon written acknowledgment by the indemnifying
party that such action, suit or proceeding is an indemnifiable Buyer Loss or
Seller Loss pursuant to Section 10.1, have the right, at the cost and expense of
the indemnifying party, to defend such action in the name and on behalf of the
indemnified party (using counsel satisfactory to the indemnified party), and, in
connection with any such action, the indemnified party and the indemnifying
party agree to render to each other such assistance as may reasonably be
required in order to ensure proper and adequate defense of such action,
PROVIDED, HOWEVER, that an indemnified party shall have the right to retain its
own counsel, with fees and expenses paid by the indemnifying party, if
representation of such indemnified party by counsel retained by the indemnifying
party would be inappropriate because of actual or potential differing interests
between such indemnified party and the indemnifying party. If the indemnifying
party shall fail to defend such action, suit or proceeding, then the indemnified
party shall have the right to defend such action without prejudice to its rights
to indemnification under Section 10.1 and, in connection therewith, the
indemnified party and the indemnifying party agree to render to each other such
assistance as may reasonably be required in order to ensure proper and adequate
defense of such action. Neither the indemnified party nor the indemnifying party
shall make any settlement of any claim which might give rise to Liability of the
indemnifying party under the indemnification provisions
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contained herein without the written consent of each party, which consent shall
not be unreasonably withheld, delayed or conditioned.
11. GENERAL.
11.1 NOTICES. All communications provided for hereunder shall be
effective only if in writing and shall be deemed to be given when delivered in
person or by private courier when telefaxed with receipt of confirmation of
delivery, or three (3) days after being deposited in the United States mail,
first-class, registered or certified, return receipt requested, with postage
paid and,
If to Seller or
Parent: Broadband Services, Inc
8822 South Ridgeline Boulevard
Suite 400
Highland Ranch, Colorado 80129
Attn: Terrel E. Davis, Esq.
Tel: (720) 344-3913
Fax: (720) 344-3995
With a copy to: Sherman & Howard
633 17th Street
Suite 3000
Denver, Colorado 80202
Attn: Scott Pullara, Esq.
Tel: (303) 299-8318
Fax: (303) 298-0940
If to Buyer: A Novo Broadband, Inc.
3015 Greene Street
Hollywood, Florida 33020
Attn.: David Chisum
Tel: (954) 921-3872
Fax: (954) 922-9077
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With a copy to: Kronish Lieb Weiner & Hellman LLP
1114 Avenue of the Americas
New York, NY 10036
Attn: Russell S. Berman, Esq.
Tel: (212) 479-6120
Fax: (212) 479-6275
or to such other address as any such party shall designate by written notice to
the other parties hereto.
11.2 FURTHER ASSURANCES; ASSET RETURNS. Upon request from time to time,
each of Seller and Parent shall execute and deliver all documents, take all
rightful oaths and do all other acts that may be reasonably necessary or
desirable to effect the transfer of the Acquired Assets in accordance herewith.
From and after the Closing, Buyer shall have the right and authority to collect
for its own account all Receivables and other items that are included in the
Acquired Assets (and to reference Seller's and Parent's names for such limited
purpose) and to endorse with the name of Seller or Parent, as applicable, any
checks or drafts received with respect to any Receivables or other items
included in the Acquired Assets; PROVIDED THAT Buyer sends Seller a copy of such
check, draft or other item so endorsed within five (5) business days of
depositing it with Buyer's bank. If Seller, Parent or any of their respective
affiliates receives payment from and after the Closing Date of any Receivable
included in the Acquired Assets, it shall promptly remit such payment in full to
Buyer. In the event that Buyer receives any assets, properties or rights of
Seller that are not intended to be transferred pursuant to the terms of this
Agreement, Buyer agrees to promptly return such assets, properties or rights to
Seller.
11.3 EXPENSES. Except as set forth herein, Seller and Parent, on the
one hand, and Buyer, on the other hand, shall each pay their respective expenses
(including, without limitation, legal, investment banking, finder's, broker's
and accounting fees) incurred in connection with the origination, negotiation
and execution of this Agreement and the Transaction Documents. Seller and Parent
shall be responsible for the payment of all sales, use, excise, transfer,
recording or other similar Taxes, if any, which may be due or payable with
respect to the consummation of the transactions contemplated by this Agreement,
and shall file all necessary documentation and Tax returns with respect to such
Taxes.
11.4 NON-ASSIGNABILITY. This Agreement shall inure to the benefit of
and be binding on the parties hereto and their respective successors and
permitted assigns. This Agreement shall not be assigned by any party hereto
without the express prior written consent of the other party, and any attempted
assignment, without such consents, shall be null and void; PROVIDED, HOWEVER,
Buyer may assign this Agreement to a subsidiary so long as Buyer remains liable
for the obligations of such subsidiary under this Agreement.
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11.5 AMENDMENT; WAIVER. This Agreement may be amended, supplemented or
otherwise modified only by a written instrument executed by the parties hereto.
No waiver by either party of any of the provisions hereof shall be effective
unless explicitly set forth in writing and executed by the party so waiving.
Except as provided in the preceding sentence, no action taken pursuant to this
Agreement, including, without limitation, any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representations, warranties, covenants or
agreements contained herein or in any documents delivered or to be delivered
pursuant to this Agreement and in connection with the Closing hereunder. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach.
11.6 SCHEDULES AND EXHIBITS. All exhibits and schedules hereto are
hereby incorporated by reference and made a part of this Agreement. Each exhibit
and schedule shall be read independent of any other exhibit or schedule.
11.7 NO THIRD PARTY BENEFICIARIES. Except as provided in Article 10,
nothing herein, expressed or implied, shall create or establish any third-party
beneficiary hereto nor confer upon any person not a party to this Agreement
(including, without limitation, any employee or former employee of Seller,
Parent or any of their respective affiliates) any rights or remedies of any
nature or kind whatsoever under or by reason of this Agreement.
11.8 GOVERNING LAW. Each of this Agreement and the other Transaction
Documents (except as otherwise specifically provided therein) shall be governed
by, and construed in accordance with, the laws of the State of Delaware
applicable to a contract executed and performed in such State without giving
effect to the conflicts of laws principles thereof.
11.9 DISPUTES. Except for the dispute procedures set forth in Section
2.3 above relating to the determination of Closing Working Capital, requests for
injunctive relief and the enforcement of the award of the arbitrators under this
Section 11.9 (or Section 2.3), all disputes arising in connection with this
Agreement, any of the other Transaction Documents or their respective subject
matter (including the scope of this agreement to arbitrate) shall be resolved by
binding arbitration which shall be administered by the American Arbitration
Association ("AAA") in accordance with AAA's Commercial Arbitration Rules. The
arbitration shall be conducted and the award shall be rendered in Chicago,
Illinois or such other place as the parties to the arbitration agree before a
panel of three arbitrators. Each arbitrator shall be a retired judge or a
practicing attorney with no less than fifteen years of experience as such and
shall be experienced in arbitration and in commercial law. The arbitrators shall
be required to follow the law of the State of Delaware and the provisions of
this Agreement. For purposes of this Section 11.9, Seller and Parent shall be
considered the same party to a dispute.
The expenses of arbitration (including fees and expenses of counsel)
shall be borne or apportioned in accordance with the award of the arbitrators.
Judgment upon the award may be
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entered in any court of competent jurisdiction. All notices relating to any
arbitration hereunder shall be in writing and shall be effective if given in
accordance with the provisions of Section 11.1. The arbitration provisions set
forth herein shall be governed by the Federal Arbitration Act, Title 9, United
States Code.
By agreeing to arbitration, the parties do not intend to deprive any
court of its jurisdiction to issue a pre-arbitral injunction, pre-arbitral
attachment or other order in aid of arbitration proceedings and the enforcement
of any award. Without prejudice to such provisional remedies as may be available
under the jurisdiction of a court, the arbitrators shall have full authority to
grant provisional remedies or modify or vacate any temporary or preliminary
relief issued by a court, and to award damages for the failure of any party to
respect the arbitrators' orders to that effect. Each party understands and
agrees that the other parties will be irreparably damaged in the event its
obligations under this Agreement are not specifically enforceable. Each party,
therefore, agrees that in the event of a breach of any material provision of
this Agreement, the aggrieved party may elect to institute and proceed as
provided above.
11.10 SPECIFIC PERFORMANCE. The parties agree that due to the unique
subject matter of this transaction, monetary damages will be insufficient to
compensate the non-breaching party in the event of a breach of any part of this
Agreement. Accordingly, the parties agree that the non-breaching party shall be
entitled (without prejudice to any other right or remedy to which it may be
entitled) to an appropriate decree of specific performance or an injunction
restraining any violation of this Agreement or other equitable remedies to
enforce this Agreement (without establishing the likelihood of irreparable
injury or posting bond or other security), and the breaching party waives in any
action or proceeding brought to enforce this Agreement the defense that there
exists an adequate remedy at law.
11.11 ENTIRE AGREEMENT. This Agreement (including the exhibits and the
schedules) and the other Transaction Documents referred to herein (including,
without limitation, the letter agreement referred to in SCHEDULE 4.13(A)) set
forth the entire understanding of the parties hereto and supersede all prior
agreements whether written or oral relating to the same subject matter.
11.12 SECTION HEADINGS; TABLE OF CONTENTS; INTERPRETATION. The section
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement. Unless the context
of this Agreement otherwise requires, (a) words of any gender include each other
gender and neuter, (b) words using the singular or plural number also include
the plural or singular number, (c) the terms "hereof," "herein," "hereby" and
derivative or similar words refer to this entire Agreement and not to any
particular provision of this Agreement, (d) the term "Section" refers to the
specified Section of this Agreement, (e) the phrases "ordinary course of
business" and "ordinary course of business consistent with past practice" refer
to the business and practice of Seller and Parent in connection with the
operation of the Business, (f) the terms "include," "includes," "included" or
"including" shall be deemed to be followed by the words "without limitation,"
(g) the term "person" means and includes any
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individual or entity and (h) the term "Affiliate" or "affiliate" means, with
respect to any person or entity, any person or entity who or that directly or
indirectly through one or more intermediaries controls, is controlled by or is
under common control with such person or entity. All accounting terms used
herein and not expressly defined herein shall have the meanings given to them
under United States GAAP. Unless otherwise stated, all monetary amounts
specified in this Agreement shall be in United States Dollars. The parties
intend that each representation, warranty, covenant or agreement contained
herein shall have independent significance. If any party has breached any
representation, warranty, covenant or agreement contained herein in any respect,
the fact that there exists another representation, warranty, covenant or
agreement relating to the same subject matter (regardless of the relative levels
of specificity) which the party has not breached shall not detract from or
mitigate the fact that the party is in breach of the first representation,
warranty, covenant or agreement.
11.13 SEVERABILITY. If any provision of this Agreement shall be
declared by any court of competent jurisdiction to be illegal, void or
unenforceable, all other provisions of this Agreement shall not be affected and
shall remain in full force and effect.
11.14 SIGNATURES. This Agreement shall be effective upon delivery of
original signature pages or facsimile copies thereof executed by each of the
parties.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
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11.15 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument. The parties to this
Agreement need not execute the same counterpart.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
A NOVO BROADBAND, INC.
By: /s/ David E. Chisum
-----------------------------------
Name: David E. Chisum
Title: Chief Financial Officer
ICS SUB, INC.
By: /s/ Gary S. Stein
-----------------------------------
Name: Gary S. Stein
Title: President
BROADBAND SERVICES, INC.
By: /s/ Gary S. Stein
-----------------------------------
Name: Gary S. Stein
Title: President