EXHIBIT 99.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and entered into as of the
18th day of February, 2005, by and among dbsXmedia Inc., a Delaware corporation
(the "Buyer"); Loral Skynet Network Services, Inc., a Delaware corporation
("LSNS"), CyberStar L.P., a Delaware limited partnership ("CLP"), and CyberStar,
LLC ("CL") (collectively, LSNS, CLP, and CL are referred to herein as the
"Sellers"); and Netfran Development Corp. (under name change to Ariel Way,
Inc.), a Florida corporation ("AWI").
As used in this Agreement, a party's "Affiliate" shall mean any person or entity
directly or indirectly controlling, controlled by, or under common control with
the relevant party.
WITNESSETH
WHEREAS, Sellers are in the business of providing customers with business
television service;
WHEREAS, Buyer is a majority-owned subsidiary of AWI;
WHEREAS, AWI is currently changing its name from Netfran Development Corp. to
Ariel Way, Inc.;
WHEREAS, subject to the conditions hereinafter set forth, Sellers desire to
sell, assign, convey and transfer to Buyer, and Buyer desires to purchase and
acquire from Sellers, certain intangible and tangible assets used in connection
with the business and operations of the Sellers's business television services
business (the "BTV Business") as more specifically described herein.
NOW, THEREFORE, in consideration of the premises, and the mutual
representations, warranties, covenants and agreements hereinafter set forth, and
each intending to be legally bound hereby, the parties agree as follows:
1. PURCHASE AND SALE OF ASSETS
1.1 Assets To Be Acquired. Subject to the terms and conditions hereinafter set
forth, Sellers hereby agree to sell, assign, transfer, convey, and deliver to
Buyer, and Buyer hereby agrees to purchase, acquire and accept from Sellers, on
the Closing Date, all of the right, title, and interest of Sellers in and to
such equipment, customer contracts (the "Customer Contracts"), prepaid but
unamortized customer payments under the Customer Contracts, and other tangible
and intangible assets as are set forth in Exhibit A attached hereto and
incorporated herein (collectively the "Purchased Assets"), wherever located,
free and clear of all liens, claims, charges, security interests, restrictions,
and other encumbrances of any kind, except in the case of the Customer
Contracts, as may be set forth therein. Sellers agree to sell, and Buyer agrees
to purchase, the Purchased Assets "as is, where is", with no representation or
warranty of any kind, express or implied, as to their condition or
functionality, and Sellers specifically disclaim any warranty of merchantability
or fitness for a particular purpose. Buyer acknowledges that the Purchased
Assets set forth in Exhibit A-2 represent inventory stocks located at Sellers'
Amsterdam, Netherlands and Dulles, Virginia warehouses, and that such
inventories are subject to alteration or depletion between the execution date of
this Agreement and the Closing Date as Sellers operate the BTV Business in good
faith in the ordinary course of business by performing customer installations,
de-installations, maintenance operations, and repair operations. To the extent
that any alteration or depletion in the inventory stock of such assets is the
result of Sellers' normal operation of the BTV Business in the ordinary course
of business, Buyer agrees that it shall accept the then-current inventory stock
at Closing.
1.2 Assumed Liabilities. On the terms and subject to the conditions set forth
herein, on the Closing Date Buyer shall deliver to the Sellers an instrument of
assumption in form and substance reasonably satisfactory to Sellers pursuant to
which Buyer shall assume and agree to discharge: (a) all liabilities under the
Customer Contracts that arise and become due with respect to periods on or after
the Closing Date in accordance with the respective terms and subject to the
respective conditions thereof, and (b) any liability arising on or after the
Closing Date in connection with the purchase, operation, or ownership of the
Purchased Assets on or after the Closing Date, including but not limited to
obligations associated with any software licenses associated with equipment sold
to Buyer hereunder (collectively the "Assumed Liabilities").
1.4 Excluded Liabilities. Buyer shall not and does not hereby assume or agree to
assume: (a) all liabilities under the Customer Contracts that arise and become
due with respect to periods before the Closing Date in accordance with the
respective terms and subject to the respective conditions thereof, and (b) all
liabilities arising from the ownership or operation of the Purchased Assets
prior to the Closing, (collectively, the "Excluded Liabilities").
2. PURCHASE PRICE AND CLOSING
2.1 Purchase Price. The purchase price ("Purchase Price") for the sale and
transfer of the Purchased Assets is (i) four hundred thousand ($400,000) US
dollars, which amount is payable as set forth in Section 2.2 below (the "Cash
Payment"), and (ii) three hundred thousand (300,000) shares of the common stock
of AWI, the parent company of Buyer, which shares shall be issued as set forth
in Subsection 6.10(b) below (the "AWI Stock").
2.2 Cash Payment. Buyer shall pay the Cash Payment, in immediately available
funds, to the Sellers as follows:
(i) Two hundred fifty thousand ($250,000) dollars at the
Closing (the "First Payment");
(ii) Seventy-five thousand ($75,000) dollars on the first
anniversary of the Closing Date; and
(iii) Seventy-five thousand ($75,000) dollars on the second
anniversary of the Closing Date.
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2.3 Allocation. Buyer and Sellers shall jointly prepare a statement of the
Buyer's allocation of the Purchase Price to the various Purchased Assets (the
"Allocation Statement"). The Allocation Statement shall be binding and
conclusive upon the parties hereto. If the Buyer and the Sellers shall be unable
to prepare an Allocation Statement acceptable to both parties within thirty (30)
days after the Closing Date, the matter or matters in dispute shall be submitted
(with the expense to be shared equally by Buyer and Sellers) to a partner in
Deloitte & Touche selected by that firm's New York office. The decision of such
Deloitte & Touche partner shall be conclusive and binding upon the Buyer and the
Sellers, and shall be reflected in any statements or filings that are made by
Buyer or Sellers with respect to the transaction contemplated by this Agreement.
2.4 Closing.
(a) Closing Location. The closing ("Closing") of the sale and purchase
of the Purchased Assets and the assignment and assumption of the
Assumed Liabilities as well as the consummation of the other
transactions contemplated herein shall take place at the offices of
Loral Space & Communications, Ltd., 000 Xxxxx Xxxxxx, Xxx Xxxx, XX, at
10:00 a.m., local time on the third (3rd) business day following the
date on which all conditions to all parties' obligations to close shall
have been satisfied, or at such other place and time as may be mutually
agreed to by written notices delivered pursuant to Subsection 11.4
hereof by the parties hereto (the "Closing Date").
(b) Closing Payments.
(i) At the Closing, Buyer shall deliver to the Sellers the
"First Payment, in immediately available funds; and
(ii) Sellers shall deliver to Buyer an amount equal to the
prorated customer prepayments described in Exhibit A-4(1),
after deducting therefrom the security deposit to be paid by
Buyer pursuant to Section 4(A) of the TSA.
2.5 Closing Adjustments.
(a) Pre-Closing Adjustments. If between the date hereof and the Closing
Date there is any loss or destruction of any tangible Purchased Asset
resulting from theft, fire, accident, or any other casualty, whether or
not insured (collectively, a "Casualty Loss"), then Sellers shall
promptly give notice to Buyer of such Casualty Loss and the amount of
insurance, if any, payable to Sellers with respect thereto. If such
Casualty Loss does not prevent the fulfillment of a condition to
Buyer's obligations to consummate the transactions contemplated by this
Agreement, or if it does and Buyer waives such condition, Buyer shall
have the option, which shall be exercised by giving Sellers written
notice within ten (10) days after receipt of the above notice from
Sellers, or if there is not ten (10) days prior to the Closing Date, as
soon as possible but not less than twenty-four (24) hours prior to the
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Closing, of either (i) accepting the Purchased Assets without the
affected Purchased Asset, in which event any insurance proceeds payable
to Sellers with respect to such Purchased Asset (together with a
payment by Sellers at Closing of an amount equal to the deductible or
retained amount with respect to such Casualty Loss) shall be assigned
and/or paid to Buyer, (ii) requiring Sellers to pay Buyer at Closing an
amount equal to a binding estimate to be obtained by Sellers from a
qualified third party reasonably satisfactory to Buyer of the
reasonably estimated value of the affected Purchased Asset, in which
case Sellers shall retain all such insurance proceeds, or (iii) causing
the affected Purchased Asset to become an Excluded Asset and Buyer
shall be entitled to reduce the Purchase Price payable to Seller at
Closing pursuant to Section 1.3 in an amount equal to a binding
estimate to be obtained by Sellers from a qualified third party
reasonably acceptable to Buyer of the reasonably estimated value of the
affected Purchased Asset.
(b) Post-Closing Adjustments. There shall be no post-Closing adjustment
to the Purchase Price under this Agreement.
2.6 Transfer of Title. At the Closing, title and risk of loss to all of the
Purchased Assets shall pass to Buyer. Sellers shall present Buyer with a xxxx of
sale and such other instruments of title as are reasonably appropriate to convey
and assign all of the Purchased Assets to Buyer, and Buyer shall present Sellers
with a certificate of assumption for the Assumed Liabilities. From and after
Closing, Sellers shall cooperate with Buyer and execute, deliver and record such
instruments of title and other documents reasonably requested by Buyer in order
to more fully perfect Buyer's right, title, and interest thereto and therein.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby jointly and severally represent and warrant to Buyer as of the
date hereof and as of the Closing Date as follows:
3.1 Organization. LSNS is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware. CLP is a limited
partnership duly organized, validly existing, and in good standing under the
laws of the State of Delaware. CL is a limited liability company duly organized,
validly existing, and in good standing under the laws of the State of Delaware.
Each Seller has the requisite power and authority to own and operate the
Purchased Assets as currently owned and operated by it.
3.2 Authority. Subject to entry of an Order by the United States Bankruptcy
Court for the Southern District of New York (the "Bankruptcy Court") approving
this Agreement and the transactions contemplated herein (the "Bankruptcy Court
Approval"), each Seller has the necessary power and authority appropriate to a
corporation, limited partnership, or limited liability company, as the case may
be, to enter into and perform this Agreement and to consummate the transactions
contemplated hereby. Except for the Bankruptcy Court Approval, the execution,
delivery, and performance by each Seller of this Agreement have been duly
authorized and approved by appropriate management and ownership representatives.
3.3 Binding Effect. This Agreement, upon Bankruptcy Court Approval, will
constitute a valid and binding obligation of each Seller enforceable in
accordance with its terms, except as such enforcement may be limited by
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applicable bankruptcy, insolvency, moratorium, or similar laws from time to time
in effect which affect creditors' rights generally, and by legal and equitable
limitations on the enforceability of specific remedies.
3.4 No Conflict or Violation. Subject to obtaining Bankruptcy Court Approval,
the execution, delivery, and performance by each Seller of this Agreement and
the consummation of the transactions contemplated hereby will not violate or
conflict with any provision of the documents by which any Seller was organized
or formed. Such execution, delivery, and performance does not and will not
violate or result in a breach or default under any contract, lease, loan
agreement, mortgage, or other agreement to which any Seller is a party or by
which any Seller is bound, which violation or default would have a material
adverse effect on the Purchased Assets, or result in the creation of imposition
of any lien, charge, or encumbrance of any kind upon any of the Purchased
Assets.
3.5 Title. Each Seller has good, valid, and marketable title to the Purchased
Assets purported to be owned by it, which in the aggregate constitute all of the
Purchased Assets, free and clear of all liens, mortgages, security interests,
encumbrances, or any other rights of others (collectively the "Encumbrances"),
except in the case of the Customer Contracts, as for any Encumbrances as may bet
set forth therein. Notwithstanding the representation made in the previous
sentence, Sellers make no representation or warranty with respect to license
rights in and to any software incorporated into or used by any of the Purchased
Assets, and at Closing Seller shall transfer to Buyer only such software license
rights as Sellers may possess by virtue of Sellers' ownership of any Purchased
Asset that utilize such software and which, as such, transfer along with the
title to such Purchased Asset.
3.6 Customer Contracts. Each Customer Contract is valid, binding, and
enforceable against the parties thereto in accordance with its terms, and in
full force and effect on the date hereof. To the best of Sellers' knowledge,
Sellers are not in material default or materially delinquent in performance
under the Customer Contract, and no event has occurred which, with due notice or
lapse of time or both, would constitute such a default. To the best of Sellers'
knowledge, no other party to any Customer Contract is in material default in
respect thereof, and no event has occurred which, with due notice or lapse of
time or both, would constitute such a default
3.7 Condition. Unless specifically set forth in this Agreement, Sellers make no
representation or warranty of any kind, express or implied, with respect to the
functionality or condition of the Purchased Assets, and specifically disclaim
any warranty of merchantability or suitability for the purposes for which it is
presently used or may be proposed to be used. The Purchased Assets are sold "as
is, where is".
3.8 Brokers. No broker or finder has acted for Sellers in connection with this
Agreement or the transactions contemplated hereby. Sellers have not become
obligated to pay any fee or commission to any broker, finder, investment banker
or other intermediary in connection with the transactions contemplated by this
Agreement.
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4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers, as of the date hereof, and as
of the Closing Date, as follows:
4.1 Organization. Buyer is a corporation duly incorporated, validly existing,
and in good standing under the laws of Delaware, and has the requisite corporate
power and authority to own and operate and to carry on its business as currently
conducted.
4.2 Authority. Buyer has the necessary corporate power and authority to enter
into and perform this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery, and performance by Buyer of this Agreement has
been duly authorized and approved by all necessary actions of the Buyer's board
of directors and shareholders.
4.3 Binding Effect. This Agreement is a valid and binding obligation of Buyer,
enforceable in accordance with its terms except as such enforcement may be
limited by applicable bankruptcy, insolvency, moratorium, or similar laws from
time to time in effect which affect creditors' rights generally, and by legal
and equitable limitations on the enforceability of specific remedies.
4.4 No Conflict or Violation. The execution, delivery, and performance by Buyer
of this Agreement and the consummation of the transactions contemplated hereby
will not violate or conflict with any provision of Buyer's articles of
incorporation or bylaws, as amended, or conflict with or result in a material
breach of or a material default with respect to any of the terms, conditions, or
provisions of any applicable order, writ or decree of any court or of any
Governmental Agency applicable to Buyer, or of any contract, agreement, or other
instrument to which Buyer is a party or by which Buyer or any of its properties
or assets are bound, or of any applicable statute, rule or regulation to which
Buyer is subject.
4.5 Brokers. Buyer shall be responsible for all fees and expenses to any broker,
finder, investment banker or other intermediary that has acted for Buyer in
connection with this Agreement or the transactions contemplated hereby and there
is no broker, finder, investment banker, or other intermediary that has been
retained by or has acted for Buyer who might be entitled to any fee, commission,
or reimbursement of expenses from the Sellers upon consummation of the
transactions contemplated by this Agreement.
5. REPRESENTATION AND WARRANTIES OF AWI
5.1 Organization. AWI is a corporation duly incorporated, validly existing, and
in good standing under the laws of Florida, and has the requisite corporate
power and authority to own and operate and to carry on its business as currently
conducted. AWI as it presently exists is the result of (i) the acquisition by
Ariel Way, Inc., a Delaware corporation, of Netfran Development Corp., a Florida
corporation, followed by (ii) the successful reverse merger of Ariel Way, Inc.
into Netfran Development Corp, with Netfran Development Corp. emerging as the
surviving entity; the activities described in (i) and (ii) above have both been
completed. Netfran Development Corp is currently changing its name to Ariel Way,
Inc.
5.2 Authority. AWI has the necessary corporate power and authority to enter into
and perform this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery, and performance by AWI of this Agreement has
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been duly authorized and approved by all necessary actions of the AWI's board of
directors and shareholders.
5.3 Binding Effect. This Agreement is a valid and binding obligation of AWI,
enforceable in accordance with its terms except as such enforcement may be
limited by applicable bankruptcy, insolvency, moratorium, or similar laws from
time to time in effect which affect creditors' rights generally, and by legal
and equitable limitations on the enforceability of specific remedies.
5.4 No Conflict or Violation. The execution, delivery, and performance by AWI of
this Agreement and the consummation of the transactions contemplated hereby will
not violate or conflict with any provision of AWI's articles of incorporation or
bylaws, as amended, or conflict with or result in a material breach of or a
material default with respect to any of the terms, conditions, or provisions of
any applicable order, writ or decree of any court or of any Governmental Agency
applicable to AWI, or of any contract, agreement, or other instrument to which
AWI is a party or by which AWI or any of its properties or assets are bound, or
of any applicable statute, rule or regulation to which AWI is subject.
5.5 AWI Stock. When issued, the AWI Stock shall be duly authorized, validly
issued, fully paid and non-assessable, free and clear of any liens, pledges or
encumbrances of any kind except for the restrictions imposed on their subsequent
sale or offer to sell imposed by the Securities Act or applicable state law or
regulation.
5.6 Financial Means. AWI currently possesses, or will possess on the Closing
Date, the financial means to fully perform under the guaranty agreement it is to
execute in favor of Sellers pursuant to Subsection 6.10. AWI shares are, and the
AWI Stock when issued will be, publicly traded. AWI has no present intention to
cease the public trading of its stock.
6. COVENANTS
6.1 Affirmative Covenants of Sellers. With respect to the Purchased Assets,
except as may be agreed in writing by Buyer, Sellers shall at all times from the
date hereof through the Closing Date:
(a) Operate the BTV Business in the ordinary course of business and use
reasonable commercial efforts to prevent the occurrence of any event or
condition that would have a material adverse effect on the Purchased
Assets;
(b) Maintain clear, unencumbered title to the Purchased Assets and use
reasonable commercial efforts to maintain the tangible Purchased Assets
in good and customary repair, order and condition, reasonable wear and
tear, damage by fire and other casualty excepted;
(c) Use reasonable commercial efforts to obtain Bankruptcy Court
Approval of this Agreement as promptly as reasonably practicable
following the execution of this Agreement;
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(d) Promptly notify Buyer in writing of any material adverse change in
the Purchased Assets, or any material adverse change with respect to
the relationships of Sellers and any of the BTV Employees (as defined
in Subsection 6.3(a) below).
6.2 Negative Covenants. With respect to Sellers and the Purchased Assets,
Sellers will not do the following, without the written consent of Buyer, from
the date hereof through the Closing Date:
(a) sell, transfer, assign, license, or otherwise dispose of, or
encumber in any way, any of the Purchased Assets except in the ordinary
course of the BTV Business;
(b) amend, modify, or terminate any of the Customer Contracts or enter
into any new BTV Business customer contract that would, if executed,
become a Customer Contract;
(c) discourage or attempt to dissuade any customer under a Customer
Contract from becoming a Transferred Customer (as defined in Subsection
6.4(b)(ii) below).
(d) solicit the submission of proposals or offers from any person or
entity (other than Buyer) for, or enter into any agreement with any
person or entity (other than Buyer) relating to any possible
acquisition of the Purchased Assets not in the ordinary course of
business; and
(e) with respect to or in contemplation of any transaction prohibited
by (a) and (d) above, participate in any negotiations or provide any
confidential information regarding the Purchased Assets with any person
or entity other than Buyer;
(f) Notwithstanding the existence of the negative covenants made by
Sellers in Subsections 6.2(a), (d) and (e) above, Sellers, any of their
Affiliates, and any of their respective officers, directors, or
representatives may without liability for violation of any such
covenant take any and all actions of any kind if Sellers determine in
good faith that the taking or failing to take such action may be
inconsistent with any of the Sellers' fiduciary duties.
6.3 Employee Matters.
(a) Employees of Sellers. Buyer shall have no requirement to offer
employment to any of the employees of the Sellers, but may, at its
option, make offers of employment, as a new employee of Buyer, to up to
five (5) employees of the Sellers (or their Affiliates) whose duties
are primarily dedicated to the provision of the Sellers' BTV Business
(each, a "BTV Employee"). Buyer shall advise Sellers prior to the
Closing Date as to the identity of the employees whom Buyer intends to
make an employment offer, and the identity of each BTV Employee that
accepts an employment offer from Buyer (each, a "Transferred
Employee"). If a BTV Employee refuses Buyer's employment offer and the
employment of such BTV Employee with Sellers (or their Affiliates) is
thereafter terminated, but within one (1) year from the Closing Date
such terminated BTV Employee is hired by Buyer or any of its Affiliated
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companies that are engaged in the BTV Business, then Buyer shall
reimburse Sellers for any and all severance or related termination
payments, costs, and expenses paid by Sellers (or any Affiliate
thereof) to such terminated BTV Employee or incurred by Sellers (or any
Affiliate thereof) as a direct result of the termination of such
terminated BTV Employee's employment.
(b) Non-Transferred Employees. Buyer and Sellers shall cooperate with
each other in providing all BTV Employees that are not Transferred
Employees with work assignments that do not involve the operations of
the BTV Business. This transition will be completed as agreed upon
between Buyer and Sellers, but in no event later than ten business days
following the Closing Date; provided, however, that such employees may
after such time nevertheless work on BTV Business activities that are
associated with the transition of the Purchased Assets from Sellers to
Buyer.
(c) Loaned Equipment. For a period of forty-five (45) days after the
Closing Date, each Transferred Employee may continue to use the
Seller-owned computer and monitor that he or she had been using prior
to the Closing. At the end of such forty-five (45) day period, Buyer
may remove any computer files related to its operation of the BTV
Business and shall, at its own risk and expense, return all such loaned
equipment used by such Transferred Employees to the Seller facility
where each such Transferred Employee had been employed prior to
Closing. Upon its return, such loaned equipment shall be in the same
operational condition as it was in upon its loan to Buyer, reasonable
wear and tear accepted.
(d) Office Space. For a period of up to forty-five (45) days after
Closing, Sellers shall make available to each Transferred Employee
office space, a telephone, and an internet connection.
6.4 Non-Competition.
(a) Definition. For purposes of this Section 6.4, business television
("BTV") shall be defined as the provision to business customers of
service characterized by the aggregation and intra-customer
distribution via satellite of one-way multimedia broadcasts of
customer-specific or otherwise customer-oriented content that is
received from the customer for simultaneous distribution via satellite
to a number of geographically disbursed customer locations for viewing
at such locations solely by an intra-customer audience. For the
avoidance of doubt, BTV does not include the original transmission or
satellite turn retransmission for public audience (i.e. not
intra-company or private) viewing of live or recorded content via "free
to air" broadcast (e.g. ABC, NBC, CBS, Fox, BBC, etc.), subscription
cable (e.g. MTV, CNN, ESPN, etc.), and/or pay-per-view (e.g. Movies On
Demand, distribution of motion pictures to public theatres or hotel
chain guest rooms, etc.). By way of illustration and not limitation,
(i) typical intra-company BTV broadcasts are several minutes to a few
hours in duration (but may in certain instances include full-time
service combining customer-oriented, informative content with radio and
video entertainment), and (ii) typical BTV applications include
intra-company "Video Town Hall Meetings", training sessions, or
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distribution of other customer-provided or customer-defined corporate
oriented information to customer locations for viewing by its employees
or other selected persons.
(b) Prohibited Activities. Sellers agree that:
(i) for a period of three (3) years after the Closing Date,
they will not directly or indirectly engage in the provision
of BTV MPEG-II broadcast services; and
(ii) for a period of two (2) years after the Closing Date,
they will not, without prior written consent of Buyer, solicit
or provide satellite-based services of any kind to any
customer whose Customer Contract is a Purchased Asset and is
assigned to Buyer at Closing (a "Transferred Customer").
(c) Exemptions from Prohibitions. The prohibitions set forth in
Section, 6.4(b) above notwithstanding, for the avoidance of doubt
nothing in this Agreement shall be construed to prohibit Sellers at any
time from:
(i) providing BTV MPEG-II broadcast services for their own
internal use or the internal use of any of their Affiliates;
(ii) offering and/or providing any of their Global IP Services
product suite (i.e. non-MPEG-II services) to any customer that
is not a Transferred Customer;
(iii) offering and/or providing BTV services of any kind by
Global Access Telecommunication Services South Africa Holdings
(Pty) Ltd ("Global Access South Africa"), a private company
duly incorporated under the laws of the Republic of South
Africa, which company provides BTV services within South
Africa, and in which CLP owns a passive 25% ownership interest.
The exemption set forth in this Subparagraph 6.4(c)(iii) shall
apply only so long as CLP's ownership interest in Global Access
South Africa remains passive and does not exceed twenty-five
percent (25%) of the outstanding common stock.
(d) Sales Referrals. For a period of two (2) years after the Closing
Date, Sellers shall refer to Buyer all BTV sales leads acquired by
Sellers' sales staff; provided, however, that if such sales lead (i) is
not from a Transferred Customer during the two (2) year period after the
Closing Date and (ii) involves potential business suitable for Sellers'
Global IP Services product suite, then after informing Buyer of the
sales lead Sellers may offer and/or provide such prospective customer
with IP-based service pursuant to Subsection 6.4(c)(ii) of this
Agreement.
(e) Injunctive Relief. Sellers agree that a monetary remedy for a breach
of the non-competition agreement set forth in Subsection 6.4(b) above
will be inadequate and impracticable and further agree that such a
breach would cause the Buyer irreparable harm, and that the Buyer would
in such event be entitled to temporary and permanent injunctive relief
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without the necessity of proving actual damages. In the event of such a
breach, Sellers agree that, notwithstanding the binding arbitration
provisions of Subsection 11.13 of this Agreement, Buyer shall be
entitled to such injunctive relief, including temporary restraining
orders, preliminary injunctions and permanent injunctions as a court of
competent jurisdiction shall determine.
6.5 Teleport Services Agreement. At Closing, Buyer will execute a Teleport
Services Agreement (the "TSA") with LSNS no less than two (2) years in duration
in the form attached hereto as Exhibit B. Pursuant to the TSA, LSNS will provide
teleport services through its Mount Xxxxxxx facility, terrestrial access through
three identified points of presence, and satellite access on the Telstar 12 and
IA6 satellites (collectively, the "teleport services"). The monthly fee for
LSNS's provision of the teleport services shall be one hundred fifty thousand
($150,000) per month, and a security deposit equal to one month's charges shall
be paid by Buyer to LSNS at closing. An event of default of the AWI Guarantee
(defined in Subsection 6.10 below), a failure of AWI to deliver the AWI Stock as
required in Section 6.10(b) of this Agreement, or a default by Buyer or AWI
under this Agreement shall also constitute an event of default by Buyer under
the TSA.
6.6 Procurement of Seller's Services.
(a) Right of First Refusal.
(i) For a period of two (2) years following the Closing Date
(the "RFR Period"), Buyer shall xxxxx Xxxxxxx and their
Affiliated companies that on the relevant date together
constitute the business known as Loral Skynet (collectively,
"Loral Skynet") a right of first refusal with respect to the
following:
(x) for telecommunications services of any kind that
are of the type offered by Loral Skynet at the
relevant time, including but not limited to satellite
space segment (i.e. satellite transponder capacity)
and IP-based services, that are to be procured by the
Buyer (including any successor in interest) in order
to provide services to, or on behalf of, the
Transferred Customers, and
(y) for transponder capacity services to be procured
by the Buyer (including any successor in interest) in
order to provide services to, or on behalf of, any of
Buyer's customers, regardless of whether such
customer is a Transferred Customer.
(ii) During the RFR Period, when Buyer procures services of
the type described in Subparagraphs 6.6(a)(i)(x) or (y) above,
Buyer shall provide Loral Skynet with a written description
(the "Service Request") of its services requirement. Loral
Skynet shall then have two weeks from the date of its receipt
of the Service Request to deliver to Purchaser a written
proposal (the "Proposal") setting forth the material terms and
conditions under which Loral Skynet would be willing to
provide such service; provided, however, if Buyer notifies
11
Loral Skynet at the time it delivers a Service Request that it
requires Loral Skynet's Proposal within one (1) week in order
to meet customer deadlines, Loral Skynet shall provide a
Proposal within such shorter time frame. If Buyer receives a
Proposal from Loral Skynet within such two-week or one-week
period, as the case may be, then Buyer shall procure such
services from Loral Skynet on the terms and conditions set
forth in the Proposal.
(b) Exceptions to Right of First Refusal. Notwithstanding Buyer's
obligations set forth in Subsection 6.6(a) above:
(i) if Buyer secures a bona fide firm offer in writing
(the "Bona Fide Offer") from a qualified third party
containing terms and conditions that are
substantially more favorable to Buyer than those set
forth in the Proposal, then Buyer shall notify Loral
Skynet of such Bona Fide Offer. If Loral Skynet is
willing to substantially match the terms and
conditions set forth in such Bona Fide Offer, Buyer
shall procure the services from Loral Skynet on such
revised terms and conditions. If Loral Skynet
declines to substantially match the terms and
conditions of the Bona Fide Offer, Buyer may, for a
period of ninety (90) days after such refusal, enter
into a services agreement with the third party
identified in the Bona Fide Offer for procurement of
the services described in the relevant Service
Request; provided, however, that (i) if Buyer needs
additional time to close the services agreement with
the third party identified in the Bona Fide Offer, it
may by written notice to Sellers certifying Buyer's
need for such additional time extend the ninety (90)
day period by up to thirty (30) additional days (for
a total of one-hundred twenty (120) days), and (ii)
Buyer and such third party may not thereafter amend
such services agreement in any way that causes the
material terms and conditions to be more favorable to
the third party service provider; and
(ii) Sellers' right of first refusal for transponder
capacity shall be applicable only to capacity that is
either (x) on the IA-6 satellite or (y) on a
satellite that is owned and operated by Loral Skynet.
To ensure Buyer's effective understanding of Loral
Skynet's transponder capacity capabilities for
purposes of complying with its right of first refusal
obligation to Loral Skynet, on a quarterly basis
beginning on the Closing Date Loral Skynet shall
provide Buyer with documentation setting forth the
capabilities of its then-current IA-6 capacity and
its then-current Loral Skynet owned and operated
transponder capacity.
(iii) For purposes of this Subsection 6.6(b), Buyer and
Sellers agree that, when evaluating any Loral Skynet
Proposal against the Bona Fide Offer of any
prospective supplier that was delivered in connection
with the same Service Request, equipment and
installation costs associated with both the Proposal
12
and the Bona Fide Offer shall be taken into account
in order to provide a meaningful basis for
comparison.
(iv) Buyer may at any time provide service to any of its
customers using services provided by a third party
service provider if:
(x) without solicitation of Buyer, Buyer's customer
requests that Buyer procure services from a services
provider other than Loral Skynet;
(y) Buyer is then working with a third party services
provider and Buyer in good faith reasonably concludes
that the use of a services provider other than Loral
Skynet is invaluable to the success of the proposed
project; and
(z) The end-user customer's uplink and downlink
specifications require the use of services provided
by a provider other than Loral Skynet.
(ii) If during the RFR Period Loral Skynet begins to offer
new or additional types of telecommunications
services because (i) it introduces a new line of
products or services or (ii) another entity becomes
part of the group of companies known as Loral Skynet,
then Buyer may, in order to satisfy additional
requirements of a Transferred Customer, procure from
a third party supplier expansion of existing services
that were originally procured for such Transferred
Customer from such third party supplier at a time
after the Closing Date when Loral Skynet did not
offer such services, and such procurement shall not
be subject to Loral Skynet's right of first refusal.
(c) Certain Favorable Pricing. For a period of two (2) years following
the Closing Date, Loral Skynet shall offer Buyer favorable reseller
pricing for its SkyReach and occasional use capacity products as
follows:
(i) for occasional use space segment capacity, a price no
greater than two hundred seventy ($270) per hour per nine (9)
MHz channel; and
(ii) for Loral Skynet-provided components of SkyReach
services, Loral Skynet will offer Buyer no less than a ten
percent (10%) discount off of its then-current standard
rate-card pricing; provided, however, that if during such two
(2) year period Loral Skynet publishes a reseller rate-card,
Buyer will be offered a ten percent (10%) discount off of such
reseller rate-card pricing. Buyer acknowledges that SkyReach
equipment is to be purchased directly from the original
supplier, and that Loral Skynet makes no representation as to
pricing that such original equipment suppliers may offer.
6.7 Further Assurances. Sellers and Buyer shall each use their best efforts to
take all actions necessary, proper, or deemed by them advisable, to fulfill
promptly their obligations hereunder and to consummate the transactions
contemplated by this Agreement. Sellers and Buyer will coordinate and cooperate
13
with each other in exchanging such information and supplying such reasonable
assistance as may be requested by the other in connection with the foregoing.
From time to time after the Closing, Sellers will at their own expense, execute
and deliver, or cause to be executed and delivered, such documents to Buyer as
Buyer may reasonably request, and from time to time after the Closing, Buyer
will, at its own expense, execute and deliver such documents to Sellers as
Sellers may reasonably request, in order to more effectively consummate the
transactions contemplated by this Agreement.
6.8 Publicity. Sellers and Buyer shall coordinate all publicity relating to this
Agreement and the transactions contemplated thereby, and no party shall issue
any press release, publicity statement, or other public notice relating thereto
without providing the same to the other party for review at least three (3)
business days prior to release; provided, that either party may make such
disclosures as are necessary or advisable to comply with its obligations under
applicable law, stock exchange and NASD rules and accounting principles.
Notwithstanding the foregoing, Buyer may, without Sellers' prior approval, refer
to the fact that it is securing services from LSNS pursuant to the TSA, so long
as such references are limited to a statement of such fact and are not an
endorsement by LSNS (or any of its Affiliates) of any product or of the Buyer's
BTV Business.
6.9 Tax Matters.
(a) Seller Obligations. Sellers acknowledge their legal obligations to
pay taxes relating to all items of income, loss, gain, deduction, and
credit attributable to or relating to the ownership of the Purchased
Assets or the employment of the Transferred Employees up to the Closing
Date.
(b) Buyer Obligations. Buyer acknowledges its legal obligation to pay
taxes relating to all items of income, loss, gain, deduction, and
credit attributable to or relating to ownership of the Purchased Assets
or employment of the Transferred Employees on or after and including
the Closing Date.
(c) Tax on Transaction. Sellers shall be responsible for all income
taxes associated with their receipt of the Purchase Price, and Buyer
shall be responsible for assessment, transfer, consumption, and other
fees, charges, and taxes (including any penalties, interest and
additions to tax) ("Transfer Taxes") incurred with respect to the sale,
transfer, and purchase of the Purchased Assets under this Agreement.
Sellers and Buyer shall cooperate in timely making all filings,
returns, reports and forms as may be required to comply with the
provisions of such Transfer Tax laws. To the extent legally able to do
so, Buyer shall deliver to Sellers such properly completed exemption
certificates with respect to Transfer Taxes if such delivery would
reduce the amount of Transfer Taxes that otherwise be imposed.
(d) Bulk Sales Law. Buyer hereby waives compliance with the
requirements and provisions of any "bulk-transfer" laws of any
jurisdiction that may otherwise be applicable with respect to the sale
of any or all of the Purchased Assets to Buyer.
14
6.10 Affirmative Covenants of AWI
(a)_Parental Guaranty from AWI. At Closing, to guaranty Buyer's
obligations under this Agreement and the TSA, AWI shall at Closing
execute a Guaranty in the form attached hereto as Exhibit C (the "AWI
Guaranty");
(b) AWI Stock.
(i) Issuance. On the Closing Date, AWI shall issue the AWI
Stock to the Seller designated in writing by Sellers to AWI.
The AWI Stock shall stand in the name of such Seller in the
stock records of AWI and shall be duly authorized, validly
issued, fully paid, and non-assessable, free and clear of any
liens, pledges or encumbrances of any kind except any
restrictions on their subsequent sale or offer to sell by such
Seller imposed by the Securities Act of 1933, as amended (the
"Securities Act") or by any state securities law or
regulation.
(ii) Registration Rights.
(x) Piggyback Registration. If at any time AWI
proposes to file a registration statement under the
Securities Act with respect to an offering by AWI for
its own account or for the account of any of its
securityholders of any class of security (other than
a registration statement on Form S-4 or S-8 (or any
substitute form that may be adopted by the Securities
and Exchange Commission), then AWI shall give written
notice of such proposed filing to the Sellers and
such of their respective successors, assigns or
transferees who acquire the AWI Stock, directly or
indirectly, from the Sellers (collectively, the
"Holders"). As soon as practicable (but in no event
less than 15 days before the anticipated filing
date), and such notice shall offer such Holders the
opportunity to register such number of shares of AWI
Stock as each such Holder may request (which request
shall specify the number of shares of AWI Stock
intended to be disposed of by such Holder and the
intended method of distribution thereof) (a
"Piggy-Back Registration"). AWI shall use its best
efforts to cause the managing underwriter or
underwriters of a proposed underwritten offering to
permit the AWI Stock requested to be included in a
Piggy-Back Registration to be included on the same
terms and conditions as any similar securities of AWI
included therein to permit the sale or other
disposition of such AWI Stock in accordance with the
intended method of distribution thereof provided that
in no event shall any Holder be required to make any
representations, warranties to or agreements with AWI
or the underwriters other than representations,
warranties or agreements regarding such Holder. Any
15
Holder who requests inclusion of its AWI Stock in any
Piggy-Back Registration (a "Selling Holder") shall
have the right to withdraw its request for inclusion
at any time prior to the time such registration
becomes effective by giving written notice to AWI of
its request to withdraw. AWI may withdraw a
Piggy-Back Registration at any time prior to the time
it becomes effective, provided that AWI shall
reimburse the Selling Holders for all out-of-pocket
expenses (including counsel fees and expenses)
incurred prior to such withdrawal. Each of the
Holders shall be entitled to have its AWI stock
included in two (2) Piggyback Registrations pursuant
to this Section 6.10(b). All expenses incident to
AWI's performance or compliance with this Section
6.10(b), including without limitation, all
registration and filing fees, fees and expenses of
compliance with securities laws, printing expenses,
messenger and delivery expenses and fees and
disbursements of counsel for AWI and all independent
certified public accountants, underwriters and other
Persons retained by AWI shall be borne by AWI except
that the Selling Holders shall be responsible for any
underwriting discounts and selling commissions
applicable to their sale of the AWI Stock and all
fees and disbursements of counsel for the Selling
Holders.
(y) Registration Procedures. Whenever the Holders
have requested that any AWI Stock be registered
pursuant to Section 6.10(b)(ii)(x) above, AWI will:
(1) a reasonable time before filing a
registration statement or prospectus or any
amendments or supplements thereto, provide
the Selling Holders with copies of all such
documents as proposed to be filed;
(2) notify the Selling Holders of the time
when such registration statement has become
effective and furnish to the Selling Holders
such number of copies of the registration
statement, each amendment and supplement
thereto and the prospectus included in such
registration statement (including each
preliminary prospectus) and such other
documents as a Selling Holder may reasonable
request in order to facilitate the
disposition of the AWI Stock owned by such
Selling Holder;
(3) immediately notify the Selling Holders
at any time when a prospectus relating
thereto is required to be delivered under
the Securities Act, of the occurrence of an
event as a result of which the prospectus
included in such registration statement
contains an untrue statement of a material
fact or omits any fact necessary to make the
statements therein not misleading;
(4) advise the Selling Holders promptly
after AWI shall receive notice or obtain
knowledge of the issuance of any stop order
by the Securities and Exchange Commission
suspending the effectiveness of any such
registration statement or amendment thereto
or of the initation or threatening of any
proceeding for that purpose;
16
(5) furnish to each Selling Holder a signed
counterpart, addressed to such Selling
Holder, of (i) an opinion or opinions of
counsel to AWI and (ii) a comfort letter or
comfort letters from AWI's independent
public accountants, each in customary form
and covering such matters of the type
customarily covered by opinions or comfort
letters, as the case may be; and
(6) otherwise use its best efforts to comply
with all applicable rules and regulations of
the Securities and Exchange Commission, and
make available to its security holders as
soon as reasonably practicable, an earnings
statement covering a period of at least
twelve (12) months beginning after the
effective date of the registration
statement, which earnings statement shall
satisfy the provision of Section 11(a) of
the Securities Act of 1933, as amended.
(z) Indemnification. To the extent permitted by law,
AWI will indemnify each of the Selling Holders, each
of its officers, directors, partners, members,
managers, agents, representatives and affiliates of
the foregoing, and each person controlling each of
the Selling Holders within the meaning of the
Securities Act and the rules and regulations
thereunder (collectively, the "Holder Indemnitees"),
with respect to each registration which has been
effected pursuant to this Section 6.10(b), against
all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement)
of a material fact contained in any prospectus or
other document incident to any such registration,
qualification or compliance, or based on any omission
(or alleged omission) to state therein a material
fact required to be stated therein or necessary to
make the statements therein not misleading, or any
violation by AWI of the Securities Act or any rule or
regulation thereunder applicable to AWI in connection
with any such registration, qualification or
compliance, and will reimburse each of the Holder
Indemnitees for any legal and other expenses
reasonably incurred in connection with investigating
and defending any such claim, loss, damage, liability
or action; provided that AWI will not be liable in
any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or
is based on any untrue statement or omission based
upon written information furnished to AWI by the
Selling Holders and stated to be specifically for use
therein.
(iii) 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Securities
and Exchange Commission which may permit the sale of
restricted securities to the public without registration, AWI
agrees to use its reasonable best efforts to:
17
(x) make and keep public information available as
those terms are understood and defined in Rule 144
under the Securities Act;
(y) file with the Securities and Exchange Commission
in a timely manner all reports and other documents
required of AWI under the Securities Act and the
Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx");
and
(z) furnish to any Holder upon request, (1) a written
statement by AWI as to its compliance with the
reporting requirements of Rule 144, the Securities
Act and the Exchange Act, (2) a copy of the most
recent annual or quarterly report of AWI filed with
the Securities and Exchange Commission and such other
reports and documents so filed by AWI and (3) such
other information as Holder may reasonably request in
availing itself of any rule or regulation of the
Securities and Exchange Commission allowing such
Holder to sell any such securities without
registration.
6.11 This Section Intentionally Left Blank
6.12. Security Interest. To secure Buyer's obligations under this Agreement and
the TSA, Buyer shall at Closing xxxxx Xxxxxxx a first priority perfected
security interest in the Purchased Assets and all accounts receivable generated
under or otherwise relating to the Buyer's customer contracts, regardless of
whether or not such customer contract is a Customer Contract, by executing a
security agreement in the form attached hereto as Exhibit D (the "Security
Agreement"). During the term of the Security Agreement, Buyer shall not grant
any other lien, mortgage, or security interest, or other encumbrance in and to
the assets pledged to Sellers as collateral under the Security Interest.
6.13. Customer Contracts.
(a) Assignment to Buyer. At the Closing and effective as of the Closing
Date, Sellers shall assign to Buyer all of their rights under the
Customer Contracts. Effective upon and concurrently with such
assignment, Buyer shall assume each Customer Contract assigned to it.
All accounts receivable arising in connection with any Customer
Contract for service provided prior to the Closing Date shall remain
the property of Sellers, and all accounts receivable arising in
connection with any Customer Contract for service provided after the
Closing Date shall be the property of Buyer. If after the Closing Date,
Sellers, on the one hand, or Buyer, on the other hand, should receive
any funds from any third party which, pursuant to the terms of this
Agreement, belong to the other party, the party receiving such funds
shall hold such funds in trust for, and shall pay such funds over,
without right of setoff, to the party entitled to receive such funds.
Buyer and Sellers agree that when determining whether any Transferred
Customer payment made pursuant to a Customer Contract belongs to
Sellers or to Buyer, the following shall apply: (i) payments containing
reference to a specific invoice number shall be applied against such
invoice, and if such invoice was issued by the other party, the
receiving party shall forward such payment to the other party within
thirty (30) days; and (ii) if a party receives payment that is in
excess of all amounts due and payable to that party by such customer,
18
such receiving party shall, if the other party has outstanding invoices
from such customer, forward such excess amount to the other party
rather than retaining such excess amount for application against any
future amounts to be paid by such customer (with notice to such
customer of the treatment of its payment).
(b) Non-assignable Customer Contracts. Notwithstanding the foregoing,
no Customer Contract shall be assigned contrary to law or the terms of
such Customer Contract, except as such terms may be affected by order
of the Bankruptcy Court. In the event that the assignment of any
Customer Contract cannot be effected at Closing (each a "Non-assigned
Customer Contract"), such Non-assigned Customer Contract shall be held,
as and from the Closing Date, by Sellers in trust for Buyer and
thereafter, unless not permitted by such Customer Contract, the
performance obligations of Sellers under each such Non-assigned
Customer Contract shall be deemed to be subleased or subcontracted to
Buyer, until such time as its assignment from Sellers to Buyer has been
effected. Sellers shall reasonably cooperate with reasonable, lawful
arrangements designed to facilitate Buyer's exercise of reasonable
commercial efforts to effect performance under any Non-assigned
Customer Contract and enable Buyer to enjoy the benefits thereof.
Subject to the accounts receivable application requirements set forth
in Subsection 6.13(a), Sellers shall promptly pay over to Buyer any
money or other consideration received by them or their Affiliates in
respect of such Non-assigned Customer Contracts for services provided
after the Closing Date. Sellers agree that so long as any Customer
Contract remains a Non-assigned Customer Contract, Sellers shall not
amend or enter into any agreement or take any other action relating to
such Non-assigned Customer Contract without Buyer's prior written
consent. Buyer shall indemnify and hold Sellers and their Affiliates
harmless from and against any and all claims, losses, damages, expenses
or other liabilities directly or indirectly incurred by Sellers as a
result of the provision of service after the Closing Date under any
Non-assigned Customer Contract unless directly attributable to the
actions of the Sellers and such actions were not made at the direction
or instruction of Buyer or its Affiliates. As the expiration date of
any Non-assigned Customer Contract approaches, Sellers may, without
consent of Buyer, deliver written notice to the customer under any
Non-assigned Customer Contract in order to prevent automatic renewal of
such Non-assigned Customer Contract.
6.14 Location of Certain Purchased Assets. Buyer shall relocate all Purchased
Assets listed in Exhibit A-3 from Sellers' facilities within sixty (60) days
following the Closing Date. Such relocation shall be coordinated with Sellers so
as to minimize any disruption to Sellers' business and operations, and shall be
at Buyer's sole expense and risk. Purchased Assets listed in Exhibit A, page A-1
shall remain at Sellers' facilities through the term of the TSA, unless LSNS or
Loral Skynet provide prior written authorization of its removal.
6.15 Transition Matters. Sellers shall reasonably cooperate with and support
Buyer during the transition of the Purchased Assets from Sellers to Buyer, which
support shall include, but not be limited to, the following:
19
(a) Accounts and Records. Sellers shall provide Buyer with account and
operational information in its possession regarding the Transferred
Customers and the Customer Contracts, from the inception of such
Customer Contracts;
(b) Customer Communications. Sellers shall communicate with Transferred
Customers concerning the nature of Buyer's purchase of the Purchased
Assets, using reasonable commercial efforts to promote to Transferred
Customers the transition of their Customer Contracts from Sellers to
Buyer, and make reasonable commercial efforts to attend joint meetings
with certain Transferred Customers at Buyer's request. In addition,
prior to Closing the Buyer agrees that, except for routine operational
contacts (i.e., help desk, trouble resolution, etc.), it shall not
communicate with Transferred Customers without coordinating such
communications with Sellers and offering Sellers the opportunity to
participate therein;
(c) Telephone Numbers. Sellers shall provide reasonable support and
cooperation to Buyer in connection with the transfer of the telephone
numbers to be assigned to Buyer as Purchased Assets.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
7.1 Conditions. The obligations of Buyer under this Agreement to effect the
Closing shall be subject to the satisfaction (or waiver) on or prior to the
Closing Date, of all of the following conditions precedent:
(a) Representations and Warranties. All representations and warranties
of Sellers contained in this Agreement and in the other documents
delivered by Sellers to Buyer or its representatives pursuant to this
Agreement and or in connection with the transactions contemplated
hereby shall be true, complete and accurate in all material respects as
of the date when made and as of the Closing, except for changes
expressly permitted by this Agreement.
(b) Covenants. The covenants and agreements of each Seller to be
performed at Closing or prior to the Closing shall have been duly
performed in all material respects or shall be performed at Closing;
(c) Absence of Litigation. There shall not be in effect any order
enjoining or restraining the transactions contemplated by this
Agreement, and there shall not be instituted or pending any action or
proceeding before any Federal, state or foreign court or governmental
agency or other regulatory or administrative agency or instrumentality
(i) challenging the acquisition by Buyer of the Purchased Assets or
otherwise seeking to restrain, materially condition or prohibit
consummation of the transactions contemplated by this Agreement, or
seeking to impose any material limitations on any provision of this
Agreement, or (ii) seeking to compel Buyer or Sellers to dispose of or
hold separate a material portion or the Assets as a result of the
transactions contemplated by this Agreement.
20
(e) Officer's Certificate. Buyer shall have received a certificate,
dated the Closing Date, executed on behalf of each Seller by an
appropriate officer or representative stating that the representations
and warranties set forth in Section 3 hereof continue to be true and
correct in all material respects and the covenants and agreements of
each Seller to be performed at Closing or prior to the Closing shall
have been duly performed in all material respects or shall be performed
at Closing.
(f) Bankruptcy Court Approval. The Sellers shall have obtained
Bankruptcy Court Approval without the imposition of conditions or
limitations materially different than those contained herein with
respect to the sale of the Purchased Assets from Sellers to Buyer,
except for immaterial modifications, conditions, or limitations which
do not, individually or in the aggregate, adversely affect Buyer, and
the Bankruptcy Court Approval shall not have been vacated, stayed,
amended, reversed, or modified.
(g) Delivery of Documents. The execution and delivery to the Buyer by
the Sellers of the following, all dated as of the Closing Date:
(i) the xxxx of sale with respect to the Purchased Assets, and
all other documents required by the terms of this Agreement to
be executed and delivered by Sellers;
(ii) such other conveyances, instruments of title,
assignments, consents, and other documents as may be
reasonable necessary or proper to transfer to Buyer the
ownership of the Purchased Assets and the rights being
acquired by Buyer hereunder;
(iii) certified resolutions or other manifestations of consent
duly issued by of the board of directors or other management
body appropriate to the form of organization of each Seller
(i.e. corporation, limited partnership, limited liability
company) authorizing the execution and delivery of this
Agreement and the performance by Sellers of their obligations
hereunder;
(h) HBOS Consent. Written consent of HBOS to the assignment of its
Customer Contract(s) from LSNS to Buyer.
7.2 Waiver. Buyer may, in its sole discretion, waive in writing fulfillment of
any or all of the conditions set forth in Section 7.1 of this Agreement,
provided that such waiver granted by the Buyer pursuant to this Section 7.2
shall have no effect upon or as against any of the other conditions not so
waived.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
8.1 Conditions. The obligations of Sellers under this Agreement to effect the
Closing shall be subject to the satisfaction (or waiver) on or prior to the
Closing Date, of all of the following conditions precedent:
(a) Representations and Warranties. All representations and warranties
of Buyer and AWI contained in this Agreement and in the other documents
delivered by Buyer or AWI to Sellers or their representatives pursuant
21
to this Agreement and or in connection with the transactions
contemplated hereby shall be true, complete, and accurate in all
material respects as of the date when made and as of the Closing,
except for changes expressly permitted by this Agreement.
(b) Covenants. The covenants and agreements of Buyer and AWI to be
performed at Closing or prior to the Closing shall have been duly
performed in all material respects or shall be performed at Closing;
(c) Absence of Litigation. There shall not be in effect any order
enjoining or restraining the transactions contemplated by this
Agreement, and there shall not be instituted or pending any action or
proceeding before any Federal, state or foreign court or governmental
agency or other regulatory or administrative agency or instrumentality
(i) challenging the sale by Sellers of the Purchased Assets or
otherwise seeking to restrain, materially condition or prohibit
consummation of the transactions contemplated by this Agreement, or
seeking to impose any material limitations on any provision of this
Agreement, or (ii) seeking to compel Buyer or Sellers to dispose of or
hold separate a material portion or the Assets as a result of the
transactions contemplated by this Agreement.
(d) Officer's Certificate. Sellers shall have received a certificate
from Buyer and from AWI, dated the Closing Date and executed on behalf
of the Buyer and AWI, respectively, by an appropriate officer stating
that the representations and warranties set forth in Section 4 and 5 of
this Agreement, as the case may be, continue to be true and correct in
all material respects and the covenants and agreements of Buyer and AWI
to be performed at Closing or prior to the Closing shall have been duly
performed in all material respects or shall be performed at Closing.
(e) Bankruptcy Court Approval. The Sellers shall have obtained
Bankruptcy Court Approval without the imposition of conditions or
limitations materially different than those contained herein with
respect to the sale of the Purchased Assets from Sellers to Buyer,
except for immaterial modifications, conditions, or limitations which
do not, individually or in the aggregate, adversely affect Sellers, and
the Bankruptcy Court Approval shall not have been vacated, stayed,
amended, reversed, or modified.
(f) Delivery of Documents. The execution and delivery to Sellers by the
Buyer (and AWI, in the case of (iii) and (vi) below) of the following,
all dated as of the Closing Date:
(i) the TSA;
(ii) the Security Agreement;
(iii) the AWI Guaranty;
(iv) the certificate of assumption with respect to the Assumed
Liabilities in form reasonably acceptable to Sellers;
22
(v) certified resolutions of the board of directors of Buyer
duly authorizing the execution and delivery of this Agreement,
the TSA, and the Security Agreement and the performance by
Buyer of its obligations hereunder and thereunder; and
(vi) certified resolutions of the board of directors of AWI
duly authorizing the execution and delivery of this Agreement
and the AWI Guaranty and the performance by AWI of its
obligations hereunder and thereunder;
(g) HBOS Consent. Written consent of HBOS to the assignment of its
Customer Contract(s) from LSNS to Buyer, including HBOS's
agreement that during any renewal term of such Customer
Contract(s), LSNS shall be released from any and all liability
thereunder.
8.2 Waiver. Sellers may, in their sole discretion, waive in writing fulfillment
of any or all of the conditions set forth in Section 8.1 of this Agreement,
provided that such waiver granted pursuant to this Section 8.2 shall not
constitute a waiver by Sellers of any other conditions not so waived.
9. BANKRUPTCY COURT APPROVAL AND INDEMNIFICATION
9.1 Bankruptcy Court Approval. The Sellers shall obtain Bankruptcy Court
Approval of this Agreement and the sale of the Purchased Assets free and clear
of all liens, claims and encumbrances, that includes, among other things,
provisions selling and transferring free and clear of any assignment fee,
default, breach or claim of pecuniary loss, or condition to assignment, arising
under or related to the Customer Contracts existing as of the Closing
9.2 Indemnification By Buyer. The Buyer shall indemnify, defend, and hold
harmless each Seller and its and their Affiliates and all of their respective
directors, officers, employees, agents, partners, and controlling persons (each,
an "Indemnified Party") from and against any and all losses and damages incurred
or suffered by any Indemnified Party to the extent that such losses or damages
arise by reason of, or result from (i) the breach of any representation or
warranty of Buyer contained in this Agreement or in any certificate delivered by
Buyer at Closing, (ii) the breach by Buyer of any covenant or agreement
contained in this Agreement to the extent not waived by the relevant Seller,
(iii) the use, ownership, or operation of the Purchased Assets after the
Closing, (iv) any Assumed Liability on or after the Closing Date, (v) as set
forth in Section 1.2(b) of this Agreement, or (vi) any severance, salary,
benefits, or other employment obligations with respect to any Transferred
Employee arising our of or based on their employment by Buyer (or its
Affiliates).
9.3 Indemnification By AWI. AWI shall indemnify, defend, and hold harmless each
Indemnified Party from and against any and all losses and damages incurred or
suffered by any Indemnified Party to the extent that such losses or damages
arise by reason of, or result from (i) the breach of any representation or
warranty of AWI contained in this Agreement or in any certificate delivered by
AWI at Closing, or (ii) the breach by AWI of any covenant or agreement contained
in this Agreement to the extent not waived by the relevant Seller.
23
9.4 Defense of Third Party Claims.
(a) Notice. No right to indemnification hereunder shall be available to
any Indemnified Party with respect to a claim from any person not a
party to this Agreement unless such Indemnified Party shall have given
to the party obligated under this Agreement to provide indemnification
(an "Indemnitor") a written notice (a "Claim Notice") describing in
reasonable detail the facts giving rise to the claim for
indemnification hereunder and enclosing a copy of any papers served,
promptly upon the Indemnified Party becoming aware of such facts. In
the case of a lawsuit being filed against any Indemnified Party,
"promptly" shall mean as soon as practicable but in no event later than
thirty (30) days after the Indemnified Party is served with notice of
the suit. The failure to notify the Indemnitor under this Subsection
9.2(a) shall not relieve the Indemnitor of any liability that it may
have to the Indemnified Party otherwise than under this Section 9
unless such failure to notify shall have resulted in the waiver of any
affirmative defenses to any third party claims, whereupon such
liability of the Indemnitor to the Indemnified Party under this Section
9 shall be reduced only to the extent the Indemnitor must pay any such
third party claim by reason of the waiver of an affirmative defense.
(b) Defense of Claims. Upon receipt by the Indemnitor of a Claim
Notice, the Indemnitor may participate in, and at the request of the
Indemnified Party shall assume, the administration and defense of the
claim described therein. The Indemnified Party shall have the right to
approve the Indemnitor's selection of counsel with respect to any such
claim, such approval not to be withheld unreasonably. The fees and
expenses of the Indemnitor's counsel as well as the fees and expenses
of the Indemnified Party shall be borne by the Indemnitor.
(c) Settlement. Any Indemnified Party shall give written notice to the
Indemnitor of any proposed settlement of any third party claim. The
Indemnitor shall have the right, in its sole discretion, to settle with
money any claim for which indemnification has been sought hereunder. An
Indemnified Party may refuse to accept a settlement proposed by the
Indemnitor, but in such event (other than a proposed settlement
described in the foregoing sentence) the Indemnitor shall not be
obligated to pay more than the amount for which the Indemnitor was
willing to settle the claim (and any other Losses associated with such
settlement), and the Indemnified Party shall be responsible for all
Losses greater than such amount. Except following the refusal by an
Indemnified Party to accept a settlement proposed by the Indemnitor,
under the condition set forth in the preceding sentence, no Indemnified
Party may settle a claim for which indemnification has been sought
hereunder.
(d) Cooperation. Any Indemnified Party shall make available to any
Indemnitor and its attorneys and accountants, all books, records and
documents relating to any claim hereunder and the parties shall render
to each other reasonable assistance in the defense of any claim
hereunder which arises as the result of claims made by persons not a
party to this Agreement.
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10. TERMINATION
10.1 Termination Events. Subject to the provisions of Section 10.2, this
Agreement may, by written notice given at or prior to the Closing in the manner
hereinafter provided, be terminated and abandoned prior to Closing as follows:
(a) Mutual Consent. By written mutual consent of the parties hereto;
(b) By Sellers. Any Seller may terminate this Agreement if the Closing
shall not have occurred by April 30, 2005 because any of the conditions
set forth in Section 8 shall not have been met; or
(c) By Buyer. The Buyer may terminate this Agreement if the Closing
shall not have occurred by April 30, 2005 because any of the conditions
set forth in Section 7 shall not have been met.
(d) Breach.
(i) By Buyer or AWI. Sellers may terminate this Agreement by
written notice if a material default or breach shall be made
by Buyer or AWI with respect to the due and timely performance
of any of the respective covenants and agreements contained
herein, or with respect to the due compliance with any
representations and warranties contained in Section 4 or 5 of
this Agreement, and such default cannot be cured prior to
Closing and has not been waived; or
(ii) By Sellers. Buyer may terminate this Agreement by written
notice if a material default or breach shall be made by
Sellers with respect to the due and timely performance of any
of the respective covenants and agreements contained herein,
or with respect to the due compliance with any representations
and warranties contained in Section 3 of this Agreement, and
such default cannot be cured prior to Closing and has not been
waived.
10.2 Effect of Termination. In the event this Agreement is terminated pursuant
to Subsection 10.1 herein, all further rights and obligations of the parties
hereunder shall terminate, and neither Buyer nor Seller, nor any of their
Affiliates, nor any of the respective directors, officers or employees of Buyer
or Sellers or their Affiliates shall have any liability to any of the others,
except for the liability for expenses pursuant to Subsection 11.1 of this
Agreement.
11. MISCELLANEOUS
11.1 Expenses. Except as otherwise provided in this Agreement, each of the
respective parties to this Agreement shall pay their own costs and expenses
(including all legal, accounting, broker, finder and investment banker fees)
relating to this Agreement and the transactions contemplated by this Agreement.
11.2 Amendment. This Agreement shall not be amended or modified except by a
writing duly executed by Sellers and Buyer and AWI.
25
11.3 Effectiveness. This Agreement shall become effective upon issuance of the
Bankruptcy Court Approval order by the Bankruptcy Court.
11.4 Notices. All notices, requests, demands and other communications made in
connection with this Agreement shall be in writing and delivered by hand, by
facsimile (with machine confirmation of receipt), or by reputable international
courier service, return receipt required, addressed as follows:
If to Buyer: 0000 Xxxx Xxxxxxxxx Xxxxx
Xxxxxxxxx
XX. 00000
Attn: President
Phone: 000-000-0000
Fax: 000-000-0000
With a copy to: The Shieling
Xxxxxxxxxxxx
Xxxxx. XX00 0XX. Xxxxxx Xxxxxxx
Attn: CEO
Phone: 0000-0000000
Fax: 0000-0000000
If to any Seller: 000 Xxxxx Xx.
Xxxxxxxxxx, XX 00000
Attn: General Counsel
Phone: 000-000-0000
Fax: 000-000-0000
With a copy to: Loral Space & Communications Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: General Counsel
Phone: 000-000-0000
Fax: 000-000-0000
If to AWI: Ariel Way, Inc.
0000 Xxxxxx Xxxxxxxx Xxxxx - Xxxxx 0000
Xxxxxx, XX 00000
Attention: The President
Telephone: 000-000-0000
Facsimile: 000-000-0000
26
With a copy to: Xxxxxx Xxxx & Xxxxxx, LLP
0000 Xxxxxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxx Xxxxxxxxxx, Esq.
Telephone: 000 000-0000
Facsimile: 000 000-0000
Such addresses may be changed, from time to time, by means of a notice given in
the manner provided in this Subsection. Each notice, request, demand, or
communication which shall be delivered, shall be deemed sufficiently given,
served, sent, or received for all purposes at such time as it is delivered to
the addressee named above as to each party, with the signed messenger receipt,
return receipt or the delivery receipt being deemed conclusive evidence of such
delivery.
11.5 Severability. If any term, provision, condition or covenant of this
Agreement or the application thereof to any party or circumstances shall be held
to be invalid or unenforceable to any extent in any jurisdiction, then the
remainder of this Agreement and the application of such term, provision,
condition or covenant in any other jurisdiction or to persons or circumstances
other than those as to whom or which it is held to be invalid or unenforceable,
shall not be affected thereby, and each term, provision, condition and covenant
of this Agreement shall be valid and enforceable to the fullest extent permitted
by law.
11.6 Cumulative Remedies. The remedies provided herein are cumulative and not
exclusive and shall not preclude assertion by any party hereto of any other
rights or the seeking of any other remedies against the other party.
11.7 Waiver. Waiver of any term or condition of this Agreement by either of the
respective parties shall only be effective if in writing and shall not be
construed as a waiver of any subsequent breach or failure of the same term or
condition, or a waiver of any other term or condition, of this Agreement.
11.8 Assignment. No party to this Agreement may assign all or any portion of its
rights, obligations, or liabilities under this Agreement without the prior
written consent of the other parties hereto; provided, however, that Sellers may
assign their rights and obligations under this Agreement to a person who
acquires all or substantially all of any of their assets and assumes all of such
Seller's obligations hereunder, or in connection with the reorganization of
Sellers' businesses under supervision of the Bankruptcy Court. Any attempted
assignment in contravention hereof shall be null and void.
11.9 Successors and Assigns. The rights, liabilities and obligations of the
parties hereto arising under this Agreement shall attach to and be binding upon
the respective parties successors and permitted assigns.
11.10 No Third Party Beneficiaries. Nothing in this Agreement shall confer any
rights upon any person or entity who is not a party to this Agreement.
27
11.11 Counterparts. This Agreement may be signed in any number of counterparts
with the same effect as if the signatures to each counterpart were upon a single
instrument, and all such counterparts together shall be deemed an original of
this Agreement.
11.12 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to the
doctrine of conflicts of laws.
11.13 Dispute Resolution. Subject to Subsection 11.18 of this Agreement, the
parties agree and acknowledge that any and all disputes, disagreements, or
controversies arising from or in connection with this Agreement shall be
submitted to arbitration. If a dispute arises out of or relates to this
Agreement, or its breach, and the parties have not been successful in resolving
such dispute through negotiation, then within thirty (30) days of such
negotiation, the parties agree to submit the dispute to final and binding
arbitration under the Rules of Conciliation and Arbitration of the American
Arbitration Association (AAA). Where the amount in controversy is one million
dollars ($1,000,000.00 USD) or less, the arbitration will be conducted by a sole
arbitrator agreed upon by the parties. Where the amount in controversy exceeds
one million dollars ($1,000,000.00 USD), the arbitration will be conducted by a
three (3) arbitrator panel, with each party selecting one (1) arbitrator and the
third being chosen by the AAA. The arbitration shall be conducted under the
procedural rules of the AAA in effect on the date of this Agreement. The
arbitrator(s) shall apply the substantive (not the conflicts) law of the State
specified in Subsection 11.12 above. The arbitrator(s) may not limit, expand or
otherwise modify the terms of this Agreement or award exemplary or punitive
damages or attorney's fees. The arbitration, including arguments and briefs,
shall be in the English language and the arbitration shall take place in New
York, New York. The award shall be in United States dollars. Judgment upon the
award rendered in the arbitration may be entered in any court having
jurisdiction thereof. Each party shall bear its own expenses (including
attorney's fees) and an equal share of the costs of the arbitration. The
parties, their representative, other participants and the arbitrator(s) shall
hold the existence, content and result of the arbitration in confidence. Nothing
in this 11.13 shall be construed to preclude any party from seeking injunctive
relief in order to protect its rights pending arbitration. A request by a party
to a court for such injunctive relief shall not be deemed a waiver of the
obligation to arbitrate.
11.14 Construction.
(a) Words. All references in this Agreement to the singular shall
include the plural, the plural shall include the singular where
applicable, and all references to gender shall include both genders and
the neuter. All references in this Agreement to days shall be calendar
days unless specified as business days. All accounting terms not
otherwise identified herein shall have the meanings assigned to them in
accordance with GAAP consistently applied.
(b) Cross-References. References in this Agreement to any Section shall
include all Subsections and Paragraphs in such Section; and references
in this Agreement to any Subsection shall include all Paragraphs in
such Subsection. Words "herein," "hereof," "hereunder" and words of
similar import refer to this Agreement as a whole and not to any
particular paragraph or other subdivision unless the context otherwise
so admits.
28
(c) No Presumption. In interpreting any provision of this Agreement no
presumption shall be drawn against the party drafting the provision.
(d) Exhibits and Schedules. Exhibits and Schedules referred to herein
are hereby incorporated into and made part of this Agreement. Schedules
referred to herein are for purposes of inter-party disclosure and,
notwithstanding the parties, rights and remedies hereunder in the event
of inaccuracy, incompleteness or misrepresentation made or omitted in
any Schedule, such Schedules are not incorporated into or made a part
of this Agreement.
(e) Headings. The headings to each Section and Subsection herein are
for the purposes of convenience only and shall not be read or
interpreted as having any meaning or effect.
11.15 Certain Post Closing Operational Matters.
(a) Account Representative. Following Closing, Sellers shall assign an
account representative to work with Buyer on transition matters,
successful management of services provided to Buyer pursuant to
Subsection 6.6 above or under the TSA, and successful customer-supplier
management between the Sellers and Buyer.
(b) Engineering Support. Between the Closing Date and 31 December 2005,
Sellers shall provide, at Buyer's request, up to a total of fifteen
(15) hours of engineering support for purposes of providing technical
assistance to Buyer.
(c) Shared Bandwidth. Buyer acknowledges and agrees that Sellers will
continue to use one (1) MB (the "Shared Capacity") of the twelve (12)
MHz offered on the IA-6 satellite under the TSA until the expiration
thereof (including any extensions). Sellers may only increase their
usage of such Shared Capacity beyond such one (1) MB with Buyer's
written consent, which shall not be unreasonably withheld or delayed;
provided, however, if such requested increase in the Shared Capacity
results in Buyer incurring additional costs or expenses, Sellers shall
reimburse Buyer for such additional costs.
11.16 Survival.
(a) The representations and warranties of the parties hereto, and the
covenants contained in Section 6 that are by their terms to be fully
performed on or prior to the Closing Date (in case of the
representations and warranties, after being made on the Closing Date),
shall not survive, and shall terminate immediately following, the
Closing.
(b) The covenants and other agreements contained in this Agreement that
by their terms are to be performed after the Closing Date shall survive
the Closing.
11.17 Effectiveness. This Agreement shall become effective upon the Bankruptcy
Court's issuance of the Bankruptcy Court Approval.
11.18 Jurisdiction. The parties to this Agreement hereby submit to the
jurisdiction of the Bankruptcy Court and the courts of the State of New York.
The parties agree that the Bankruptcy Court shall be the exclusive forum for
29
enforcement of the Agreement until the closing of Sellers' chapter 11 cases, and
to adjudicate, if necessary, any and all disputes with respect thereto; provided
that if the Bankruptcy Court determines that it does not have subject matter
jurisdiction over any action or proceeding arising out of or relating to the
Agreement then such actions or proceedings shall be submitted to arbitration as
set forth in Subsection 11.13 of this Agreement.
11.19 Entire Agreement. This Agreement, including the Exhibits hereto and the
Schedules delivered hereunder, contain all of the terms, conditions and
representations and warranties agreed upon by the parties relating to the
subject matter of this Agreement and supersede all prior agreements,
negotiations, correspondence, undertakings and communications of the parties,
oral or written, respecting such subject matter.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date and year first above written.
DBSXMEDIA, INC
By:_____________________________________________
[Name]
[Title]
LORAL SKYNET NETWORK SERVICES, INC.
By:_____________________________________________
[Name]
[Title]
CYBERSTAR, L.P.
By: LORAL CYBERSTAR, L.L.C., its general partner
By:
-----------------------------------------------------
Name]
[Title]
CYBERSTAR, L.L.C.
By:_____________________________________________
[Name]
[Title]
NETFRAN DEVELOPMENT CORP. (UNDER NAME CHANGE TO ARIEL WAY, INC.)
By:_____________________________________________
Xxxx Xxxxxx
Chairman & CEO
EXHIBIT A
PURCHASED ASSETS
EXHIBIT B
TELEPORT SERVICES AGREEMENT
EXHIBIT C
GUARANTY OF AWI
EXHIBIT D
SECURITY AGREEMENT
