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EXHIBIT 10.19
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ASSET PURCHASE AGREEMENT
dated as of March 30, 2000
by and between
DATACOM INFORMATION SYSTEMS, LLC
AND
ITRON, INC.
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TABLE OF CONTENTS
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Page
I. DEFINITIONS; PURCHASE AND SALE.......................................................2
1.1 Defined Terms.................................................................2
1.2 Purchase and Sale.............................................................2
1.3 Licenses......................................................................3
1.4 Consideration to be Paid......................................................4
1.5 Assignment and Assumption Agreement...........................................4
1.6 Liabilities...................................................................4
1.7 The Closing...................................................................4
1.8 Assignment of Contracts and Rights............................................4
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................4
2.1 Due Organization..............................................................5
2.2 Authorization.................................................................5
2.3 Financial Statements..........................................................5
2.4 Liabilities and Obligations...................................................6
2.5 Permits and Intangibles.......................................................6
2.6 Personal Property; Real Property; Contracts...................................6
2.7 Insurance.....................................................................7
2.8 Compensation; Employment Agreements; Organized Labor Matters..................8
2.9 Employee Benefit Plans........................................................8
2.10 Conformity with Law; Litigation...............................................9
2.11 Taxes.........................................................................9
2.12 No Violations; All Required Consents Obtained................................10
2.13 Absence of Changes...........................................................11
2.14 Environmental Matters........................................................12
2.15 Intellectual Property........................................................12
2.16 Powers of Attorney...........................................................13
2.17 Assets.......................................................................13
2.18 Disclosure...................................................................13
2.19 Notices and Consents.........................................................13
2.20 Design Specifications........................................................13
III. REPRESENTATIONS AND WARRANTIES OF PURCHASER.........................................13
3.1 Due Organization.............................................................13
3.2 Authorization................................................................14
3.3 No Violations................................................................14
3.4 Validity of Obligations......................................................14
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IV. DELIVERIES..........................................................................14
4.1 Instruments of Transfer......................................................14
4.2 Opinion of Counsel...........................................................14
4.3 Warranty and Maintenance Agreement...........................................15
4.4 Good Standing Certificates...................................................15
4.5 Resolutions of Board of Directors of the Company.............................15
4.6 Resolutions of Board of Directors of Purchaser...............................15
4.7 Escrow Agreement.............................................................15
4.8 Letter of Credit.............................................................15
4.9 Termination Agreement........................................................15
4.10 Secretary's Certificate of the Company.......................................15
4.11 Secretary's Certificate of the Purchaser.....................................15
4.12 Software License Agreement...................................................16
4.13 Amendment to Partnership Agreement...........................................16
4.14 Comfort Letter...............................................................16
4.15 Consents.....................................................................16
4.16 Radio Frequency Sharing Agreement............................................16
4.17 EnSite Agreement.............................................................16
V. POST-CLOSING COVENANTS..............................................................16
5.1 Future Cooperation...........................................................16
5.2 Expenses.....................................................................16
5.3 Transfer Taxes...............................................................16
5.4 Certain Employee Matters.....................................................17
5.5 Patents and Intellectual Property............................................17
5.6 Settling of Accounts.........................................................17
5.7 Transitional Expenses........................................................18
VI. INDEMNIFICATION.....................................................................18
6.1 Survival of Representations and Warranties...................................18
6.2 General Indemnification by the Company ......................................18
6.3 Indemnification by Purchaser.................................................19
6.4 Third Person Claims..........................................................20
6.5 Method of Payment............................................................20
VII. TRANSACTIONS SUBSEQUENT TO THE CLOSING..............................................20
7.1 Non-solicitation.............................................................20
7.2 Independent Covenant.........................................................20
7.3 Injunctive Relief............................................................20
VIII. MISCELLANEOUS.......................................................................20
8.1 Successors and Assigns.......................................................20
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8.2 Entire Agreement.............................................................20
8.3 Counterparts.................................................................21
8.4 Brokers and Agents...........................................................21
8.5 Notices......................................................................21
8.6 Governing Law................................................................22
8.7 Disclaimer...................................................................22
8.8 Survival of Representations and Warranties...................................22
8.9 Effect of Investigation......................................................22
8.10 Exercise of Rights and Remedies..............................................22
8.11 Reformation and Severability.................................................23
8.12 Captions.....................................................................23
8.13 Press Releases and Public Announcements......................................23
8.14 No Third-Party Beneficiaries.................................................23
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EXHIBITS
Exhibit A - Defined Terms
ANNEXES
Annex I - Form of General Conveyance, Transfer and Assignment
Annex II - Form of Assignment and Assumption Agreement
Annex III - Form of Opinion of Counsel to the Company
Annex IV - Form of Warranty and Maintenance Agreement
Annex V - Form of Source Code Escrow Agreement
Annex VI - Form of Software License Agreement
Annex VII - Form of Amendment to Partnership Agreement
Annex VIII - Form of Escrow Agreement
Annex IX - Form of Radio Frequency Sharing Agreement
Annex X - Form of EnSite Agreement
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SCHEDULES
Schedule 1.2(a) - Equipment
Schedule 1.2(d) - Company Intellectual Property
Schedule 1.2(e) - Third Party Intellectual Property
Schedule 1.5 - Liabilities
Schedule 1.8 - Excluded Assets
Schedule 2.4 - Liabilities and Obligations
Schedule 2.5 - Permits and Intangibles
Schedule 2.6 - Property; Contracts
Schedule 2.7 - Insurance
Schedule 2.8 - Employee Matters
Schedule 2.9 - Employee Benefits
Schedule 2.10 - Litigation
Schedule 2.11 - Taxes
Schedule 2.12 - Consents
Schedule 2.13 - Absence of Changes
Schedule 2.14 - Environmental Matters
Schedule 2.15 - Intellectual Property
Schedule 2.16 - Power of Attorney
Schedule 5.6 - Designated Employees
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of the 30th day of March, 2000 by and between DATACOM INFORMATION
SYSTEMS, LLC, a Delaware limited liability company ("Purchaser"), and ITRON,
INC., a Washington corporation (the "Company").
WHEREAS, Purchaser is an affiliate of Duquesne Light Company, a
Pennsylvania corporation ("DLC");
WHEREAS, DLC and the Company are parties to that certain Amended and
Restated Utility Automated Meter Data Acquisition Equipment Lease and Services
Agreement dated January 15, 1996, as amended (as so amended, the "Services
Agreement");
WHEREAS, pursuant to the Services Agreement, the Company has been
providing equipment, software, facilities and services for the operation and
maintenance of a communications network for measuring electric power usage (the
"Fixed Network") from, among other places, the Company's operations center
located at Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxxxxxx (the
"Greentree Operations Center");
WHEREAS, concurrently herewith, the Company and DLC are terminating the
Services Agreement;
WHEREAS, the Company desires to sell or license to Purchaser, as the
case may be, (i) all assets and rights, whether owned, leased, licensed or
otherwise, which are operated from or which constitute the Greentree Operations
Center, (ii) all assets located in the Service Territory leased by or used to
provide services to DLC under the Services Agreement, and (iii) all rights under
leases, licenses and arrangements (A) in effect for the use of currently
required capacity of the Fixed Network or (B) arising out of the Greentree
Operations Center (collectively, together with the property set forth in Section
1.2, but not including the Excluded Assets, the "Assets") (the Assets, the Fixed
Network and the operation of the Assets from the Greentree Operations Center, as
of the effective date of this Agreement, constitute the "Business"), and
Purchaser desires to purchase the Assets and acquire the Business from the
Company upon the terms and conditions set forth in this Agreement (the
"Transaction");
WHEREAS, concurrently with the execution and delivery hereof, the
parties hereto are consummating the Transaction:
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NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants contained
herein, the parties hereto, intending to be legally bound, agree as follows:
I. DEFINITIONS; PURCHASE AND SALE
1.1 DEFINED TERMS. In addition to other words and terms defined
elsewhere in this Agreement (including the preamble and recitals), when used in
this Agreement and in the exhibits and schedules to this Agreement, the
capitalized words and terms set forth in Exhibit A attached hereto and
incorporated herein by reference shall have the meanings set forth in Exhibit A
unless otherwise defined herein or the context otherwise clearly requires.
1.2 PURCHASE AND SALE. Upon the terms and subject to the conditions of
this Agreement, the Company hereby sells, conveys, transfers, assigns and
delivers to Purchaser, and Purchaser hereby purchases from the Company, the
Assets, free and clear of all liens, claims and encumbrances of any kind. The
Assets include, but are not limited to, the following:
(a) Equipment. All of the equipment, encoder receiver
transmitters, cell control units, network control nodes, sentry meter modules,
single phase meters, telenetics omega cabinets, repeaters, computer hardware,
furniture, vehicles, machinery, fixtures, inventory, supplies, spare parts and
all other tangible personal property of every kind and description owned by the
Company and used in the operation of the Business (collectively, the
"Equipment"), including all warranties relating to such Equipment. The Equipment
consists of all of the items listed or described in Schedule 1.2(a).
(b) Leases. All right, title and interest of the Company in and
to the leases listed or described on Schedule 2.6 and the property, whether real
or personal, leased pursuant to such leases (the "Leases").
(c) Licenses, Franchises and Permits. Sufficient rights to and
under all FCC licenses, franchises, permits, authorizations, certificates,
approvals, registrations and other authorizations of governmental authorities
(collectively, the "Licenses") necessary to the operation of the Business or any
of the Assets, as set forth on Schedule 2.5.
(d) Company Intellectual Property License. A nonexclusive,
nontransferable, perpetual, irrevocable, fully paid up license, without right to
sublicense, on terms satisfactory to the Parties, (i) to use, in connection with
the Business the Intellectual Property belonging solely to the Company as
identified in Schedule 1.2(d) (the "Company Intellectual Property"); and (ii) to
reproduce and create, in connection with the Business (or have created)
derivative works from the
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Records and other copyrightable works.
(e) Third Party Intellectual Property Licenses. An assignment of
the licenses for third party Intellectual Property identified on Schedule
1.2(e).
(f) Patent License. A non-exclusive, nontransferable, perpetual,
irrevocable, fully paid up license, without the right to sublicense, to make or
have made and use for its internal requirements related to the Fixed Network
only, all inventions which are products which are described in the Deposit
Materials and described in any patent or patent application held by Company or
its successors or assigns, whether now or in the future, provided, however, that
Purchaser agrees not to exercise the rights relating to manufacture of such
inventions unless and until the Deposit Materials are delivered to Purchaser
pursuant to the Source Code Escrow Agreement.
(g) Books and Records. Copies of the Company's operating manuals,
procedures, warranties, books, records, papers and instruments of whatever
nature, and wherever located and in whatever medium that relate to the Greentree
Operations Center or the Assets or which are required or necessary in order for
Purchaser to Conduct the Business from and after the date hereof in the manner
in which it is presently being conducted (the "Records"); provided, however,
that such Records relating solely to the Company's obligations under the
Warranty and Maintenance Agreement shall not be transferred to Purchaser but
shall be made available for Purchaser to review.
The Company shall pay any fees required by any third parties for the rights
granted to Purchaser pursuant to this Section 1.2.
1.3 CONSIDERATION TO BE PAID. As consideration for the Assets, and
subject to the terms and conditions of this Agreement, the aggregate purchase
price shall be Thirty-Three Million Dollars ($33,000,000.00) (the "Purchase
Price") payable as follows on the Closing; provided that the Letter of Credit
has been delivered into an escrow satisfactory to Purchaser:
(a) to order of the Company for deposit with Xxxxx Fargo Bank,
National Association Account No. 4375688967, the amount of Five Million One
Hundred Thousand Dollars ($5,100,000.00) in immediately available funds by wire
transfer;
(b) to Mellon Bank, N.A., as Escrow Agent, the amount of One
Million Dollars ($1,000,000.00) to be distributed in accordance with the Escrow
Agreement attached hereto as Annex VIII (the "Escrow Agreement"); and
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(c) to order of the Company for deposit with Xxxxx Fargo Bank,
National Association Account No. 0000000000, the amount of Twenty-Six Million
Nine Hundred Thousand Dollars ($26,900,000.00) in immediately available funds by
wire transfer.
1.4 ASSIGNMENT AND ASSUMPTION AGREEMENT. Simultaneously with the
execution hereof, Purchaser and the Company shall deliver an agreement whereby
the Company assigns and Purchaser assumes, subject to any third party rights,
the Company's rights and obligations under the Leases and any contracts,
agreements, software licenses, and intellectual property licenses (as
applicable) disclosed on Schedule 2.6, in each case to the extent, and only to
the extent, that (1) the property, services or rights under the assumed
contract, agreements and licenses are to be provided or employed, as applicable,
after the Closing Date; (2) any obligations of Purchaser under the assumed
contracts, agreements, Leases and Licenses arise solely from responsibilities
arising after the Closing Date; and (3) neither the Company nor the other
parties thereto are in default thereunder as of the Closing Date.
1.5 LIABILITIES. Except as expressly set forth on Schedule 1.5,
Purchaser does not assume or agree to pay, perform or discharge, and shall not
be responsible for, any liabilities or obligations of the Company, whether
accrued, absolute, contingent or otherwise. The Company agrees that it shall
remain solely responsible for, and it hereby agrees to indemnify and hold
Purchaser harmless from, any and all liabilities and obligations of the Company
whether accrued, absolute, contingent or otherwise, which are not expressly
assumed by Purchaser hereunder.
1.6 THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") is occurring concurrently with the execution and
delivery hereof.
1.7 ASSIGNMENT OF CONTRACTS AND RIGHTS. Anything in this Agreement to
the contrary notwithstanding, this Agreement shall not constitute an agreement
to assign any Assets if an attempted assignment thereof, without the consent of
a third party thereto, would constitute a breach thereof or in any way affect
the rights of Purchaser or of the Company thereunder. If such consent is not
obtained, or if an attempted transfer or assignment thereof would be ineffective
or would affect the rights of the Company thereunder so that Purchaser would not
in fact receive all such rights, the Company will, at the Company's expense, (i)
use commercially reasonable efforts to obtain such consents; and (ii) provide
Purchaser with all the benefits under any such claims, contracts, licenses,
leases or commitments, necessary to Conduct the Business, until such consents
are obtained.
1.8 EXCLUDED ASSETS. Purchaser acknowledges and agrees that the Assets
do not include (a) the assets listed on Schedule 1.8 and (b) the rights granted
to the Company under Section 8.6 of the Services Agreement (collectively, the
"Excluded Assets").
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II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser as follows:
2.1 DUE ORGANIZATION. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Incorporation, and has full power and authority to own and operate its Assets
and to carry on its business as it is now being conducted. The Company is duly
authorized or qualified to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary, except where the failure to
be so authorized or qualified would not have a Material Adverse Effect. True,
complete and correct copies of the Charter Documents have been provided to
Purchaser.
2.2 AUTHORIZATION. (i) The representative of the Company executing this
Agreement on behalf of the Company has full power and authority to execute and
deliver this Agreement and (ii) the Company has full power and authority to
enter into this Agreement and all other agreements, documents and/or instruments
executed and/or delivered herewith (collectively, the "Transaction Documents")
and to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The Transaction Documents and the
transactions contemplated hereby have been duly approved by the Board of
Directors of the Company, and copies of resolutions adopted by the Board of
Directors of the Company approving the Transaction Documents and the
transactions contemplated hereby, certified by the Secretary or an Assistant
Secretary of the Company, have been delivered to Purchaser. This Agreement has
been duly and validly executed and delivered by the Company and constitutes the
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization or similar laws now or hereafter in effect relating
to creditors' rights generally.
2.3 FINANCIAL STATEMENTS. The Company has previously delivered to
Purchaser correct and complete copies of (i) the unaudited consolidated
statement of operations and balance sheet of the Company as of December 31,
1999; (ii) unaudited consolidating balance sheet and statement of income of the
Company as of and for its fiscal year ended December 31, 1999; and (iii) audited
consolidated financial statements of the Company as of and for its fiscal years
ended December 31, 1998, 1997 and 1996 (collectively, the "Financial
Statements"). The audited Financial Statements have been prepared from the books
and records of the Company in conformity with generally accepted accounting
principles applied on a basis consistent with preceding years and throughout the
periods involved ("GAAP"), and all the Financial Statements present fairly in
all material respects the financial position and results of operations of the
Company as of the dates of such statements and for the periods covered thereby.
The books of account of the Company have been
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kept accurately in all material respects in the ordinary course of business, the
transactions entered therein represent bona fide transactions, and the revenues,
expenses, assets and liabilities of the Company have been properly recorded
therein in all material respects.
2.4 LIABILITIES AND OBLIGATIONS. Other than liabilities arising in the
ordinary course of business after the Balance Sheet Date, and except as and to
the extent disclosed and adequately provided for in the Financial Statements
(including any notes thereto) or on Schedule 2.4 hereto, the Company has no
liabilities or obligations of any kind, whether accrued, absolute, secured or
unsecured, contingent or otherwise, which would be required to be reflected or
reserved against in a year-end balance sheet (including the notes thereto).
Except and to the extent disclosed on the Financial Statements (including any
notes thereto) or on Schedule 2.4, there are no claims, liabilities or
obligations pertaining to the Business, nor any reasonable basis for assertion
against the Company, of any claim, liability or obligation pertaining to the
Business, of any nature whatsoever.
2.5 PERMITS AND INTANGIBLES. The Company holds all Licenses required in
connection with the Business. Schedule 2.5 sets forth an accurate list of all
such Licenses, including permits, titles, licenses, and certificates owned or
held by the Company or any of its employees necessary to Conduct the Business
(collectively with the Licenses, the "Intangible Assets"). The Intangible Assets
and other governmental authorizations listed on Schedule 2.5 are valid and in
full force and effect and represent all the Licenses and other governmental
authorizations necessary for Purchaser to Conduct the Business and to own,
occupy or use the Assets. The Company has not received any notice that any
Person intends to cancel, terminate or not renew any such Intangible Assets or
other governmental authorization. The Company has conducted and is conducting
the Business in compliance with the requirements, standards, criteria and
conditions set forth in the Intangible Assets and other governmental
authorizations listed on Schedule 2.5 and is not in violation of any of the
foregoing. Except as set forth on Schedule 2.5, (a) the transactions
contemplated by this Agreement will not result in a default under or a breach or
violation of, or adversely affect the rights and benefits afforded to the
Business by, any such Intangible Assets or other governmental authorizations,
and (b) all of such rights and benefits are transferable to Purchaser and are
being transferred to Purchaser on the date hereof. Except as set forth on
Schedule 2.5, no violations have been recorded against any such Intangible
Asset, no citation, notice or warning has been issued by any governmental entity
with respect to any such Intangible Asset, no investigation or hearing has been
held by or before any governmental entity with respect to any such Intangible
Asset, the Company has not received any notice from any governmental entity that
it intends to cancel, revoke, terminate, suspend or not renew any such
Intangible Asset and the Company has no knowledge of any basis for any of the
foregoing.
2.6 PERSONAL PROPERTY; REAL PROPERTY; CONTRACTS. Schedule 2.6 hereto is
a correct and complete list setting forth the following information with respect
to the Assets (including in each
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case, where appropriate, whether or not the consent by a third party is required
for transfer to Purchaser):
(a) all leases of personal property by the Company in effect on
the date hereof necessary to Conduct the Business;
(b) all leases of real property to which the Company is a party
and necessary to Conduct the Business, and a brief description of the principal
buildings and structures located thereon and the Equipment located therein;
(c) all contracts pursuant to which the Company provides products
or renders services to third parties relating to the Business;
(d) all contracts pursuant to which the Company receives services
relating to the Business; and
(e) a description of each vehicle or other asset subject to a
state registry statute owned or leased by the Company and being transferred
hereunder, the state of registration thereof, the vehicle identification number
of each such vehicle, the odometer reading of each and, if subject to a lease
agreement, the name and address for notice of the lessor thereof.
Except as set forth on Schedule 2.6, (i) all personal property used by the
Company in connection with the Business is either owned by the Company or leased
by the Company pursuant to a lease included on Schedule 2.6, (ii) all of the
personal property listed on Schedule 2.6 is in good working order and condition,
ordinary wear and tear excepted, is suitable for the purposes for which it is
used and constitutes all personal property necessary to Conduct the Business,
and (iii) all contracts, leases and agreements included on Schedule 2.6 are in
full force and effect and constitute valid and binding agreements of the Company
(and, to the Company's knowledge, of the other parties to such agreements),
enforceable in accordance with their respective terms. Except as set forth on
Schedule 2.6, the Company has good and marketable title to, or a valid leasehold
interest in, the tangible and intangible personal property included in the
Assets, including without limitation, the Assets listed on Schedule 2.6, subject
to no security interest, pledge, lien, claim, conditional sales agreement,
encumbrance, charge or restriction on transfer.
2.7 INSURANCE. Schedule 2.7 sets forth a correct and complete list of
all insurance policies of which the Company is the owner, insured, loss payee or
beneficiary and which relate to the Business or any of the Assets and indicates
for each such policy the carrier, the risks insured against, the amounts of
coverage and deductibles, the annual premium, the cash surrender value, if any,
the expiration date and any pending claims thereunder. Such policies are
sufficient in the
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aggregate to cover all reasonably foreseeable damage to and liabilities arising
out of the Business and the Assets arising on or prior to the Closing. There is
no default with respect to any provision contained in any such policy, nor has
there been any failure to give any notice or present any material claim under
any such policy in a timely fashion or as otherwise required by such policy.
Except as otherwise disclosed on Schedule 2.7: (i) all premiums under such
policies which were due and payable on or prior to the date hereof have been
paid in full; (ii) no such policy provides for retrospective or retroactive
premium adjustments; (iii) the Company has not received notice of any material
increase in the premium under, cancellation or non-renewal of or disallowance of
any claim under any such policy; (iv) the Company has not been refused any
insurance, nor has its coverage been limited by any carrier; and (v) during the
four (4) year period prior to the date hereof, the Company has maintained, or
been the beneficiary of, general liability and product liability policies
reasonable, in both scope and amount, in light of the risks attendant to the
Business and which provide coverage comparable to coverage customarily
maintained by others in similar lines of business, and such policies have been
"occurrence" policies and not "claims made" policies.
2.8 COMPENSATION; EMPLOYMENT AGREEMENTS; ORGANIZED LABOR MATTERS.
Schedule 2.8 sets forth an accurate list showing all employees of the Company
employed at the Greentree Operations Center. As it relates to the Business,
except as otherwise disclosed on Schedule 2.8, the Company is not a party to any
employment, consulting or similar agreement, written or oral with any Person. As
it relates to the Business, except as otherwise disclosed on Schedule 2.8, (i)
no employees of the Company are represented by any labor union or similar
organization, (ii) the Company is not party to any collective bargaining or
similar agreement covering any of its employees and (iii) no labor union or
similar organization or group of employees has made a demand for recognition,
filed a petition seeking a representation proceeding or given the Company notice
of any intention to hold an election of a collective bargaining representative
at any time during the past three years. Upon consummation of the Transaction,
the Company shall not incur any liability pursuant to the Worker Adjustment and
Retraining Notification Act.
2.9 EMPLOYEE BENEFIT PLANS. Schedule 2.9 sets forth an accurate list
showing all Employee Benefit Plans of the Company relating to employees in
respect of the Business, copies of which have been provided to Purchaser. Each
Employee Benefit Plan that is intended to be qualified under Section 401(a) of
the Internal Revenue Code of 1986, as amended (the "Code") and exempt from tax
under Section 501(a) of the Code has been determined by the Internal Revenue
Service to be so qualified and exempt, and any such determination remains in
effect and has not been revoked.
Except for the Employee Benefit Plans described on Schedule 2.9, neither
the Company nor its ERISA Affiliates sponsor, maintain or contribute to, and
have not in the past sponsored, maintained or contributed to, any plan, program,
fund or arrangement relating to employees in respect of the Business that
constitutes an "employee pension benefit plan" as defined in Section 3(2)
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of the Employee Retirement Income Security Act ("ERISA"), including a defined
benefit plan subject to Title IV of ERISA or any "multi-employer plan" as
defined in Section 3(37) of ERISA. Neither the Company nor any ERISA Affiliate
has any current or contingent obligation to any "multi-employer plan." The
Company is not required to contribute to any retirement plan pursuant to the
provisions of any collective bargaining agreements establishing the terms and
conditions of employment of any of the Company's employees in respect of the
Business except as set forth on Schedule 2.9.
2.10 CONFORMITY WITH LAW; LITIGATION. Except as set forth on Schedule
2.10, there are no claims, actions, suits or proceedings, pending or to the best
knowledge of the Company threatened against or affecting the Business or any of
the Assets, at law or in equity, or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over the Company, the Business or any of the
Assets. Except as set forth on Schedule 2.10, no notice of any such claim,
action, suit or proceeding, whether pending or threatened, has been received by
the Company during the last three (3) years and to the best knowledge of the
Company, there is no basis therefor. Except as set forth on Schedule 2.10, the
Company has conducted for the past three (3) years and now conducts the Business
in compliance with all Governmental Rules, writs, injunctions, decrees and
orders of governmental authorities applicable to the Company with respect to the
Business or the Assets. The Company, with respect to the Business, is not in
violation of any Governmental Rules or any order of any court or federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over it. The Company has conducted and is as
of the date hereof conducting the Business in compliance with the requirements,
standards, criteria and conditions set forth in applicable Governmental Rules
and Licenses set forth on Schedule 2.5, except where any failure to comply has
not had and will not have a Material Adverse Effect and will not require any
material expenditure in connection with the ownership of the Assets or the
operation of the Business after the date hereof.
2.11 TAXES. With respect to the Business and the Assets:
(a) the Company has duly and timely filed all Tax Returns and has
paid all Taxes shown to be due thereon;
(b) the Company has paid all Taxes required to be paid and has
made sufficient provision in the Financial Statements for the payment of all
Taxes required to be accrued which are not yet payable. Without limiting the
foregoing, amounts required to have been withheld and paid by the company have
been withheld and paid prior to the date hereof to the proper governmental
entities or have been properly deposited in anticipation of such payment, and
all estimated Tax
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payments have been made and are sufficient to discharge all income Taxes with
respect to the periods covered;
(c) the Company's Tax Returns are true, complete and correct in
all respects;
(d) no deficiency in the payment of any Taxes for any period to
the date hereof has been assessed against the Company by any Taxing authority
which has not been discharged in full;
(e) except as listed on Schedule 2.11, no audits or other
proceedings have ever been instituted against the Company and, to the knowledge
of the Company, no audits or other proceedings are proposed or threatened
against the Company for any Taxes;
(f) except as set forth on Schedule 2.11, there are no
outstanding and unresolved notices from the Internal Revenue Service or any
other governmental entity of any proposed examination or of any proposed change
in reported information which may result either in a deficiency or assessment
against the Company;
(g) there are not now in force any waivers of, or agreements by
the Company to waive, any statute of limitation for the assessment of any Tax;
(h) there are no tax allocation or tax sharing agreements; and
(i) the Company has no liability for the taxes of any other
Person under Treasury Regulations Section 1.1502-6 or any similar provision of
state, local or foreign tax law.
2.12 NO VIOLATIONS; ALL REQUIRED CONSENTS OBTAINED. The Company is not
in violation of its Charter Documents. Neither the Company nor, to the best
knowledge of the Company, any other party thereto, is in default under any
Material Contracts. Except as set forth in Schedule 2.12, (a) the execution of
the Transaction Documents by the Company and the performance by the Company of
its obligations hereunder and thereunder and the consummation by the Company of
the transactions contemplated hereby (including, without limitation, the
assignment to Purchaser of the rights and benefits to which the Company is
entitled under the Material Contracts) will not result in any violation or
breach or constitute a default under, (i) any of the terms or provisions of the
Material Contracts or the Charter Documents, (ii) any Governmental Rule; or
(iii) any order, writ, judgment, injunction or decree issued by any governmental
entity, and (b) at and immediately subsequent to the Closing, Purchaser will be
entitled to the rights and benefits under the Material Contracts to which the
Company, with respect to the Business, is entitled immediately prior to the
Closing, and such rights and benefits will enable Purchaser to Conduct the
Business. Except as set forth on
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Schedule 2.12 (and except for consents already obtained), none of the Material
Contracts requires notice to, or the consent or approval of, any governmental
agency or other third party with respect to any of the transactions contemplated
hereby in order to remain in full force and effect and consummation of the
transactions contemplated hereby will not give rise to any right to termination,
cancellation or acceleration or loss of any right or benefit thereunder. Except
as set forth on Schedule 2.12, none of the Material Contracts prohibits the use
or publication of the name of any other party to such Material Contract, and
none of the Material Contracts prohibits or restricts the Company or,
immediately subsequent to the Closing, will prevent or restrict Purchaser from
freely providing services to any Person.
2.13 ABSENCE OF CHANGES. Since the Balance Sheet Date, the Company has
conducted the Business in the ordinary course of business and, except as set
forth on Schedule 2.13, there has not been:
(a) any Material Adverse Effect (contingent or otherwise);
(b) any damage, destruction or loss (whether or not covered by
insurance) affecting any of the Assets or the Business;
(c) any increase or any commitment to increase the compensation,
bonus, sales commissions or fee arrangement payable or to become payable by the
Company to any of its employees, consultants or agents in respect of the
Business, other than those that are normal, customary and consistent with past
practices;
(d) any sale or transfer, or any agreement to sell or transfer,
any of the Assets to any Person in the ordinary course of business;
(e) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the Assets (other than this
Agreement) or to obtain any service or Asset provided by the Business or
requiring consent of any party to the transfer and assignment of the Assets;
(f) any waiver, release or lapse of any material rights or claims
of the Company necessary to Conduct the Business;
(g) any amendment or termination of any Material Contract
necessary to Conduct the Business and to which the Company is a party;
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(h) any transaction by the Company that relates to the Business
which is outside the ordinary course of the business;
(i) any cancellation or termination of a Material Contract
necessary to Conduct the Business with a customer, supplier, service provider or
client prior to the scheduled termination date; or
(j) any mortgage or other lien or encumbrance upon the Assets
created, except (1) with respect to purchase money liens incurred in connection
with the acquisition of Equipment with an aggregate cost not in excess of
$10,000 necessary or desirable for the conduct of the Business, (2) (A) liens
for Taxes either not yet due or being contested in good faith and by appropriate
proceedings (and for which contested Taxes adequate reserves have been
established and are being maintained) or (B) materialmen's, mechanics',
workers', repairmen's, employees' or other like liens arising in the ordinary
course of business.
2.14 ENVIRONMENTAL MATTERS. Except as otherwise disclosed on Schedule
2.14:
(a) The Company's conduct of the Business, including without
limitation its possession and use of the Assets and its generation, use,
processing, treatment, storage, release, transport or disposal of Hazardous
Substances, is and has been in compliance with all applicable Environmental
Rules and has not given rise to any Damages under any Environmental Rule;
(b) The Company has not released any Hazardous Substances at the
Greentree Operations Center during Company's occupation thereof except as
permitted by applicable Environmental Rules; and
(c) No claim, demand, action or proceeding has been commenced or
asserted or, to the knowledge of Company, threatened and, to the knowledge of
Company, no investigation has been commenced, asserted or threatened alleging
(1) that any activity of the Company, or failure to act by the Company, has
given rise to any Damages under any Environmental Rule, (2) that the Company has
failed to comply with any Environmental Rules in its Conduct of the Business, or
(3) that the Company has potential responsibility for the release of Hazardous
Substances at the Greentree Operations Center during Company's occupation
thereof.
2.15 INTELLECTUAL PROPERTY. Except as disclosed in Schedule 2.15, (i)
Schedule 1.2(d) sets forth a correct and complete list of all proprietary
software, owned by the Company and used in connection with the Business as
currently conducted; (ii) Schedule 1.2(e) sets forth a correct and complete list
of all licenses or other agreements pursuant to which the Company has the right
to use
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any Intellectual Property that is owned by others and used in connection with
the Business as currently conducted, together with the names of the licensors
thereunder, the Intellectual Property covered thereby, the annual fee or other
consideration payable thereunder and the duration thereof, including any renewal
options; (iii) Schedules 1.2(d) and 1.2(e) collectively set forth a correct and
complete list of all Intellectual Property (other than patents) used in
connection with the Business as currently conducted; (iv) the Company has the
lawful right to make and use all Intellectual Property (including, but not
limited to, patent rights) that is necessary to Conduct the Business, and (v)
subject to the limitations of Section 6.6 of this Agreement, neither the
Company's use thereof nor Purchaser's use of such Intellectual Property
following the Closing infringes upon the lawful rights of any other Person.
Schedule 2.15 also identifies all consents which must be obtained, all filings
which must be made, and all other actions which must be taken in order to assign
or otherwise transfer the Company's rights in any Intellectual Property to
Purchaser to the extent contemplated by Section 1.2.
2.16 POWERS OF ATTORNEY. Schedule 2.16 sets forth a list as of the date
of this Agreement of the name of each Person holding any general or special
power of attorney from the Company which relates to the Business or the Assets
and a description of the terms of each such power.
2.17 ASSETS. The Assets being conveyed hereunder will permit Purchaser
to Conduct the Business.
2.18 DISCLOSURE. The Company has provided Purchaser with all available
information that Purchaser has requested in analyzing whether to consummate the
Transaction contemplated hereby. None of the information so provided nor any
representation or warranty of the Company contained in this Agreement is false
or misleading in any material respect, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements herein or therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to the Company which has
specific application to the Business or the Assets which materially adversely
affects or, so far as the Company can reasonably foresee, materially threatens,
the condition (financial or otherwise), prospects, or results of operations of
the Business or the Assets, which has not been described in this Agreement or
the Schedules hereto.
2.19 NOTICES AND CONSENTS. The Company has given any notices to third
parties and obtained any third party consents that may be necessary under the
terms of any Material Contract to transfer the Business and the Assets to
Purchaser pursuant to this Agreement.
2.20 DESIGN SPECIFICATIONS. The design specifications being placed in
escrow by the Company pursuant to the Source Code Escrow Agreement are all the
drawings, designs, inventions
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and know-how memorialized in writing in the Company's possession related to the
manufacture of the products set forth in Exhibit B to the Source Code Escrow
Agreement (the "Deposit Materials").
III. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Company as follows:
3.1 DUE ORGANIZATION. Purchaser is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the full power and authority to carry on its business as it is
now being conducted.
3.2 AUTHORIZATION. (i) The representative of Purchaser executing this
Agreement on behalf of Purchaser has the full power and authority to enter into
and bind Purchaser to the terms of this Agreement, and (ii) Purchaser has the
full legal right, power and authority to enter into this Agreement and the
transactions contemplated hereby.
3.3 NO VIOLATIONS. The execution and delivery of this Agreement by
Purchaser and the performance of its obligations hereunder and the consummation
by Purchaser of the transactions contemplated hereby will not result in any
violation or breach or constitute a default under any of the terms or provisions
of the Certificate of Formation or Operating Agreement of Purchaser.
3.4 VALIDITY OF OBLIGATIONS. The execution and delivery of this
Agreement by Purchaser and the performance by Purchaser of the transactions
contemplated herein have been duly and validly authorized by the Board of
Directors of Purchaser. This Agreement has been duly and validly authorized by
all necessary action, has been validly executed and delivered by Purchaser and
constitutes a legal, valid and binding obligation of Purchaser, enforceable in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization or similar laws now or hereafter in effect relating to creditor's
rights generally. A copy of the resolutions adopted by the Board of Directors
approving this Agreement and the transactions contemplated hereby, certified by
the Secretary or an Assistant Secretary of Purchaser, has been delivered to the
Company.
IV. DELIVERIES
Concurrently with or prior to the execution and delivery of this
Agreement, in addition to the deliveries described elsewhere herein, the parties
hereto are taking the following actions:
4.1 INSTRUMENTS OF TRANSFER. The Company and Purchaser are executing and
delivering to each other (a) a completed General Conveyance, Transfer and
Assignment, in the form attached as Annex I hereto, covering all of the Assets,
(b) an Assignment and Assumption Agreement, in the
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form attached hereto as Annex II, (c) Certificates of Title to any of the Assets
that consist of motor vehicles, (d) Intellectual Property licenses, and (e) such
other instruments of transfer as may be reasonably necessary or appropriate to
vest in Purchaser good and indefeasible title to the Assets. At all times
hereafter as may be necessary, the Company shall execute and deliver to
Purchaser such additional instruments of transfer as shall be reasonably
necessary or appropriate to vest in Purchaser good and indefeasible title to the
Assets and to comply with the purposes and intent of this Agreement.
4.2 OPINION OF COUNSEL. Counsel to the Company is delivering an opinion
dated the date hereof to Purchaser in the form attached as Annex III hereto.
4.3 WARRANTY AND MAINTENANCE AGREEMENT. The Company and Purchaser are
executing and delivering to each other a Warranty and Maintenance Agreement in
the form attached hereto as Annex IV (the "Warranty and Maintenance Agreement").
4.4 GOOD STANDING CERTIFICATES. The Company is delivering to Purchaser
certificates, dated as of a date no earlier than ten days prior to the date
hereof, duly issued by the appropriate governmental authority in the State of
Incorporation and in the Commonwealth of Pennsylvania, showing the Company is in
good standing and authorized to do business.
4.5 RESOLUTIONS OF BOARD OF DIRECTORS OF THE COMPANY. The Company is
delivering to Purchaser a certified copy of the resolutions of the Board of
Directors of the Company approving the Transaction Documents and authorizing the
consummation of the transactions contemplated hereby.
4.6 RESOLUTIONS OF BOARD OF DIRECTORS OF PURCHASER. Purchaser is
delivering to the Company a certified copy of the resolutions of the Board of
Directors of Purchaser approving the Transaction Documents and authorizing the
consummation of the transactions contemplated hereby.
4.7 SOURCE CODE ESCROW AGREEMENT. Purchaser, the Company and Fort Xxxx
Escrow Services, Inc., as escrow agent are executing and delivering a Source
Code Escrow Agreement in the form attached hereto as Annex V (the "Source Code
Escrow Agreement") pursuant to which each of the source code of the Intellectual
Property and design specifications for manufactured Equipment will be escrowed.
4.8 LETTER OF CREDIT. The Company is causing ABN AMRO Bank N.V. to issue
an Irrevocable Standby Letter of Credit for the benefit of Purchaser in the
amount of $5,000,000 (the "Letter of Credit").
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4.9 TERMINATION AGREEMENT. The Company and DLC are executing and
delivering a Termination Agreement pursuant to which all provisions not intended
to survive termination of the Services Agreement shall terminate.
4.10 SECRETARY'S CERTIFICATE OF THE COMPANY. The Company is delivering
to Purchaser a certificate of its corporate secretary or assistant secretary
dated as of the Closing and certifying its Charter Documents and incumbency of
its officers executing on its behalf this Agreement or any documents or
instruments in connection therewith.
4.11 SECRETARY'S CERTIFICATE OF PURCHASER. Purchaser is delivering to
the Company a certificate of its secretary or assistant secretary dated as of
the Closing and certifying its Certificate of Formation, Operating Agreement and
incumbency of its officers executing on its behalf this Agreement or any
document or instrument in connection therewith.
4.12 SOFTWARE LICENSE AGREEMENT. Purchaser and the Company are executing
and delivering a Software License Agreement in the form attached hereto as Annex
VI.
4.13 AMENDMENT TO PARTNERSHIP AGREEMENT. Purchaser and the Company are
each causing their respective affiliates to execute and deliver Amendment No. 2
to Agreement of Limited Partnership by and between JLK Technology, Inc. and
Genesis Services Pittsburgh, Inc. in the form attached hereto as Annex VII.
4.14 COMFORT LETTER. The Company has delivered to Purchaser a comfort
letter from Deloitte & Touche regarding accelerated depreciation treatment.
4.15 CONSENTS. Except as otherwise provided in the Escrow Agreement, the
Company is delivering to Purchaser all third party consents necessary under the
terms of any Material Contract to transfer the Assets to Purchaser under this
Agreement, as set forth on Schedule 2.12.
4.16 RADIO FREQUENCY SHARING AGREEMENT. Purchaser and the Company are
executing and delivering a Radio Frequency Sharing Agreement in the form
attached hereto as Annex IX.
4.17 ENSITE AGREEMENT. EnSite, L.P., the Company and Purchaser are
executing and delivering an agreement in the form attached hereto as Annex X.
V. POST-CLOSING COVENANTS
The parties to this Agreement further covenant and agree as follows:
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5.1 FUTURE COOPERATION. The Company and Purchaser shall each deliver or
cause to be delivered to the other following the date hereof such additional
instruments as the other may reasonably request for the purpose of transferring,
assigning and delivering to Purchaser and its assigns the Assets and the
Business and fully carrying out the intent of this Agreement. In the event
Purchaser shall assign any of its rights hereunder, or under any other
Transaction Documents, to an affiliate, the Company shall cooperate, at
Purchaser's cost, with Purchaser to obtain any necessary third party consents or
assignments.
5.2 EXPENSES. Purchaser will pay the fees, expenses and disbursements of
Purchaser and its agents, representatives, financial advisors, accountants and
counsel incurred in connection with the execution, delivery and performance of
this Agreement. The Company will pay the fees, expenses and disbursements of the
Company and its agents, representatives, financial advisors, accountants and
counsel incurred in connection with the execution, delivery and performance of
this Agreement.
5.3 TRANSFER TAXES. Purchaser shall pay any sales, use, transfer, real
property transfer, recording, gains, stock transfer and other similar taxes and
fees ("Transfer Taxes") imposed in connection with the Transaction. Purchaser
shall file all necessary documentation and returns with respect to such Transfer
Taxes.
5.4 CERTAIN EMPLOYEE MATTERS.
(a) Nothing in this Agreement (i) requires Purchaser to hire, or
to offer to hire, any employees of the Company, (ii) constitutes an offer to
employ such employees or (iii) requires Purchaser to pay any such Persons
severance pay in the event of termination of employment. Notwithstanding the
foregoing, Purchaser has made or will make offers of employment effective as of
April 1, 2000, to those employees of the Company working in the Business and
identified on Schedule 5.4, and the Company shall use its best efforts (which
shall not include the payment by the Company of any compensation in excess of
that which is owed to the employees in the form of salary, benefits and all
other obligations as of the Closing) to persuade such employees to accept such
offers.
(b) Purchaser does not and shall not assume or be responsible for
any obligations or liabilities arising out of any employment relationship
between the Company and any employee or former employee except as expressly
stated herein. Without limiting the generality of the foregoing, except as
expressly stated herein Purchaser shall have no liability or obligation in
connection with the Company's employees or former employees and their
beneficiaries for (i) contributions to or payment under employee benefit plans,
stock options, programs, arrangements or understandings, (ii) accrued, but
unused, sick leave, vacation pay and severance pay, if any, (iii)
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liabilities or obligations under any collective bargaining agreement or
bargaining relationship, or (iv) claims, demands, administrative proceedings or
suits arising out of or in connection with alleged unlawful employment practices
of the Company.
5.5 PATENTS AND INTELLECTUAL PROPERTY. The Company shall not enter into
any agreement, understanding or other arrangement that would adversely interfere
with or degrade the rights to Intellectual Property granted to Purchaser under
Section 1.2 of this Agreement.
5.6 SETTLING OF ACCOUNTS. Not later than 45 days after the Closing, the
parties shall reconcile all outstanding payments owed by either party to the
other pursuant to the Services Agreement.
5.7 TRANSITIONAL EXPENSES. Purchaser agrees to reimburse the Company for
any actual expenses incurred by the Company for services provided by third
parties to Purchaser that become Purchaser's responsibility after the Closing.
Purchaser reserves the right to audit the amount of all invoices submitted by
the Company to Purchaser for payment pursuant to this Section.
VI. INDEMNIFICATION
The Company and Purchaser each make the following covenants that are
applicable to them, respectively:
6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) The representations and warranties of the Company made in
this Agreement and in the documents and certificates delivered in connection
herewith shall survive for a period of three (3) years from the date hereof,
except that:
(i) such representations and warranties that relate to Taxes, as
set forth in Section 2.11, shall survive until the expiration of the
applicable statutes of limitations for such Taxes (including any
extensions thereof); and
(ii) such representations and warranties that relate to illegal
acts and fraud and abuse ("Illegal Acts"), and such representations and
warranties as set forth in Sections 2.5 (Permits and Intangibles), 2.9
(Employee Benefits Plans), 2.10 (Litigation), 2.14 (Environmental) and
2.15 (Intellectual Property) and 2.17 (Assets) hereof, shall survive for
a period of five (5) years after the date hereof.
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provided, however, that representations and warranties with respect to which a
claim is made within the applicable survival period shall survive until such
claim is finally determined and paid.
(b) The representations and warranties of Purchaser made in this
Agreement and in the documents and certificates delivered in connection herewith
shall survive for a period of three (3) years following the date hereof,
provided, however, that representations and warranties with respect to which a
claim is made within such three (3) year period shall survive until such claim
is finally determined and paid.
(c) The date on which a representation or warranty expires as
provided herein is herein called the "Expiration Date." No claim for
indemnification may be made with respect to a representation or warranty after
the Expiration Date, other than claims based on fraud.
6.2 GENERAL INDEMNIFICATION BY THE COMPANY. The Company covenants and
agrees that it will indemnify, defend, protect, and hold harmless Purchaser and
its subsidiaries, officers, directors, employees, stockholders, agents,
representatives and affiliates from and against all claims, damages, actions,
suits, proceedings, demands, assessments, adjustments, costs, fines, penalties
and expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) (collectively "Damages") incurred
by such indemnified Person or entity as a result of or incident to (i) any
breach of any representation or warranty of the Company set forth herein or in
the certificates or other documents delivered in connection herewith, (ii) any
breach or nonfulfillment of any covenant or agreement by the Company under this
Agreement, (iii) any violation of any laws of the Commonwealth of Pennsylvania
governing bulk sales, which is occasioned by the consummation of any of the
transactions contemplated hereby, (iv) any liability arising out of the
ownership or operation of the Assets or the Business prior to the Closing no
matter when reported; or (v) any liability arising out of obligations to
employees of the Business prior to the Closing no matter when reported.
6.3 INDEMNIFICATION BY PURCHASER. Purchaser covenants and agrees that it
will indemnify, defend, protect and hold harmless the Company, its officers,
directors and employees and the respective agents, representatives and
affiliates thereof from and against all Damages incurred by such indemnified
Person or entity as a result of (i) any breach of any representation or warranty
of Purchaser set forth herein or in the certificates or other documents
delivered in connection herewith; (ii) any breach or nonfulfillment of any
covenant or agreement by Purchaser under this Agreement; (iii) any liability
arising out of the ownership or operation of the Assets or the Business after
the Closing except for those obligations of the Company under any other
Transaction Document.
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6.4 THIRD PERSON CLAIMS. Promptly after any party hereto (the
"Indemnified Party") has received notice of or has knowledge of any claim by a
Person not a party to this Agreement ("Third Person") or the commencement of any
action or proceeding by a Third Person that may give rise to a right of
indemnification hereunder, such Indemnified Party shall give to the party
obligated to provide indemnification hereunder (an "Indemnifying Party") written
notice of such claim or the commencement of such action or proceeding; provided,
however, that the failure to give such notice will not relieve such Indemnifying
Party from liability under this Section with respect to such claim, action or
proceeding, except to the extent that the Indemnifying Party has been actually
prejudiced as a result of such failure. The Indemnifying Party (at its own
expense) shall have the right and shall be given the opportunity to associate
with the Indemnified Party in the defense of such claim, suit or proceedings,
provided that counsel for the Indemnified Party shall act as lead counsel in all
matters pertaining to the defense or settlement of such claims, suit or
proceedings. The Indemnified Party shall not, except at its own cost, make any
settlement with respect to any such claim, suit or proceeding without the prior
written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed. It is understood and agreed that in situations
where failure of the Indemnifying Party to settle a claim expeditiously could
have an adverse effect on the Indemnified Party, the failure of the Indemnifying
Party to act upon the Indemnified Party's request for consent to such settlement
within five business days of the Indemnifying Party's receipt of written notice
thereof from the Indemnified Party shall be deemed to constitute consent by the
Indemnifying Party of such settlement for purposes of this Section.
6.5 METHOD OF PAYMENT. All claims for indemnification shall be paid in
cash. If Purchaser reasonably believes that it or any other Indemnified Party
affiliated with it has suffered Damages for which it or such other Indemnified
Party would be entitled to indemnification pursuant to this Section, Purchaser
may, at its sole option and by notice in writing to the Company, elect to
set-off an amount equal to the amount of such Damages from any amounts then
owing by Purchaser to the Company; including any amounts owing under the
Warranty and Maintenance Agreement. Nothing in this Section is intended to limit
or restrict the ability of the parties to exercise any and all other remedies
under this Agreement or any other agreement at law or in equity.
6.6 LIMITED REMEDY FOR BREACH OF INTELLECTUAL PROPERTY INFRINGEMENT
CLAIMS. Company will have no liability under this Agreement for Damages of an
Indemnified Party for an allegation that the Intellectual Property infringes
rights of another Person except to the extent such Damages arise from an actual
or threatened claim by a Third Person against an Indemnified Party that the
Intellectual Property infringes the lawful rights of a Third Person. If a claim
is made by an Indemnified Party for Damages resulting from such an actual or
threatened claim, or the use of any Intellectual Property by an Indemnified
Party is enjoined by a court of competent jurisdiction, Company, shall, at
Company's option and sole cost and expense, either (a) procure the right to
continue use of such Intellectual Property, (b) replace the Intellectual
Property with material that is
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substantially similar in functionality and performance, but noninfringing, or
(c) modify the Intellectual Property to eliminate the infringement or
misappropriation, provided, however, that failure of Company to so procure,
replace, or modify shall not relieve Company of its indemnity obligations under
Section 6.2. Company will have no liability under this Article 6 or Section 2.15
for any infringement or misappropriation due to any repair, maintenance, service
modification to or alteration of the Fixed Network performed by any personnel
other than Company personnel (including its employees, agents and contractors)
or Company-trained Purchaser personnel (including its employees, agents and
contractors) after the date of this Agreement and which has not been approved by
Company in accordance with the terms of the Warranty and Maintenance Agreement;
or (ii) any combination of the Fixed Network in whole or in part with any
material or software not included in the Fixed Network which has not been
installed by Company personnel or Company-trained Purchaser personnel and which
has not been approved by Company in accordance with the terms of the Warranty
and Maintenance Agreement.
VII. TRANSACTIONS SUBSEQUENT TO THE CLOSING
7.1 NON-SOLICITATION. The Company agrees that for a period of two (2)
years commencing on the Closing Date, it shall refrain, and cause its affiliates
to refrain, from (i) hiring any individual set forth on Schedule 5.4 or (ii)
directly or indirectly soliciting or inducing any individual identified on
Schedule 5.4 to leave the employ of the Purchaser or any of its affiliates.
7.2 INDEPENDENT COVENANT. The Company acknowledges that its covenant set
forth in the Article VII is a material condition to Purchaser's execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby.
7.3 INJUNCTIVE RELIEF. The Company acknowledges and agrees that the
covenants and agreements set forth in this Article VII are necessary to protect
the legitimate business interests of Purchaser and that any breach of such
covenants and agreements will cause immediate and irreparable harm to Purchaser.
The Company acknowledges that damages for the violation of any such covenant or
agreement will not give full and sufficient relief to Purchaser and agrees that,
in the event of any violation of any such covenant or agreement, Purchaser shall
be entitled to injunctive relief with respect to any such breach, which remedy
shall be in addition to any other remedy which Purchaser may have on account of
such breach.
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VIII. MISCELLANEOUS
8.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the parties
hereunder may not be assigned (except as expressly permitted hereby or by
operation of law) and shall be binding upon and shall inure to the benefit of
the parties hereto, the successors of the Company and Purchaser and their
permitted assigns. Purchaser may assign its rights and obligations under this
Agreement, and/or any other Transaction Document, to any affiliate of Purchaser
at any time upon notice to the Company.
8.2 ENTIRE AGREEMENT. This Agreement (including the schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding of the Company and Purchaser
and supersede any prior agreement and understanding relating to the Transaction.
This Agreement, upon execution, constitutes a valid and binding agreement of the
parties hereto enforceable in accordance with its terms and may be modified or
amended only by a written instrument executed by the Company and Purchaser,
acting through their respective officers, duly authorized by their respective
Boards of Directors.
8.3 COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
8.4 BROKERS AND AGENTS. Each party represents and warrants that it
employed no broker or agent in connection with this transaction and agrees to
indemnify the other party hereto against all loss, cost, damages or expense
arising out of claims for fees or commission of brokers employed or alleged to
have been employed by such indemnifying party.
8.5 NOTICES. All notices and communications required or permitted
hereunder shall be in writing and may be given (i) by depositing the same in
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, (ii) by overnight
delivery service, addressed to the party to be notified, or (iii) by delivering
the same in Person or by facsimile to an officer or agent of such party, as
follows:
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If to Purchaser, addressed to it at:
DataCom Information Systems, LLC
000 Xxxxxxxxx Xxxx
Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: President
With a copy to:
Duquesne Light Company
Legal Xxxx, 00-000
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
If to the Company, addressed to it at:
Itron, Inc.
0000 X. Xxxxxxxx Xxxx
X.X. Xxx 00000
Xxxxxxx, XX 00000
Attn: President
or to such other address as any party hereto shall specify pursuant to this
Section from time to time.
8.6 GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the Commonwealth of Pennsylvania other than its principles governing
conflicts of laws. The parties irrevocably submits to the jurisdiction of the
Court of Common Pleas of Allegheny County, Pennsylvania and to the jurisdiction
of the United States District Court for the Western District of Pennsylvania for
the purposes of any action or proceeding arising out of or relating to this
Agreement or the other Transaction Documents or the subject matter hereof or
thereof and brought by any other party.
8.7 DISCLAIMER. EXCEPT AS OTHERWISE SET FORTH HEREIN OR IN ANY OTHER
TRANSACTION DOCUMENT, THE COMPANY HEREBY DISCLAIMS ALL OTHER WARRANTIES,
OBLIGATIONS AND LIABILITIES OF THE COMPANY, EXPRESS OR IMPLIED, ARISING BY LAW
OR OTHERWISE, WITH RESPECT TO ALL EQUIPMENT SOLD BY THE COMPANY HEREUNDER OR ANY
OTHER ITEMS SUBJECT TO THIS AGREEMENT, INCLUDING WITHOUT LIMITATION: (a) ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
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PURPOSE; (b) ANY IMPLIED WARRANTY ARISING FROM COURSE OF DEALING, COURSE OF
PERFORMANCE OR USAGE OF TRADE; AND (c) ANY IMPLIED WARRANTY OF NON-INFRINGEMENT.
8.8 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the parties made herein or in writing
delivered pursuant to the provisions of this Agreement shall survive the
consummation of the transactions contemplated hereby and any examination on
behalf of the parties until the applicable Expiration Date, or as otherwise
provided herein.
8.9 EFFECT OF INVESTIGATION. No investigation by the parties hereto in
connection with this Agreement or otherwise shall affect the representations and
warranties of the parties contained herein or in any certificate or other
document delivered in connection herewith and each such representation and
warranty shall survive such investigation.
8.10 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided
herein, no delay of or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
8.11 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
8.12 CAPTIONS. The headings of this Agreement are inserted for
convenience only, and shall not constitute a part of this Agreement or be used
to construe or interpret any provision hereof.
8.13 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. The Company shall not
issue any press release or make any public announcement relating to the subject
matter of this Agreement or the other Transaction Documents without the prior
written approval of Purchaser, which approval shall not be unreasonably
withheld; provided, however, that this Agreement (with confidential treatment
requested as appropriate) and a description of the Transaction may be included
in the Company's required filings with the Securities and Exchange Commission
and other regulatory agencies.
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8.14 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the parties and their respective
successors and permitted assigns.
* * * * * SIGNATURES APPEAR ON THE FOLLOWING PAGE * * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
DATACOM INFORMATION SYSTEMS, LLC
By:
------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
ITRON, INC.
By:
------------------------------------------
Name: XxXxx X. Xxxxxxx
Title: President and Chief Executive Officer
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EXHIBIT A
DEFINED TERMS
"Agreement" shall mean this Asset Purchase Agreement including
all exhibits, schedules and annexes hereto.
"Assets" shall have the meaning set forth in the preamble to this
Agreement.
"Balance Sheet Date" shall mean December 31, 1999.
"Business" shall have the meaning set forth in the preamble to
this Agreement.
"Charter Documents" shall mean the Articles of Incorporation and
By-laws, each as amended to date, of the Company.
"Closing" shall have the meaning set forth in Section 1.6.
"Code" shall have the meaning set forth in Section 2.9.
"Company" shall have the meaning set forth in the preamble to
this Agreement.
"Conduct the Business" shall mean the ability of Purchaser to own
and operate the Assets from and after the Closing in a manner sufficient to
enable, and capable of enabling Purchaser to perform all services (including,
but not limited to, data collection) as were actually provided by the Company
under the Services Agreement.
"Company Intellectual Property" shall have the meaning set forth
in Section 1.2(d).
"DLC" shall have the meaning set forth in the preamble to this
Agreement.
"Damages" shall have the meaning set forth in Section 6.2.
"Deposit Materials" shall have the meaning set forth in Section
2.20.
"Equipment" shall have the meaning set forth in Section 1.2(a).
"Employee Benefit Plan" shall mean any pension, retirement,
profit-sharing, deferred compensation, bonus, incentive, performance, stock
option, phantom stock, stock purchase, restricted
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stock, premium conversion, medical, hospitalization, vision, dental or other
health, life, disability, severance, termination or other employee benefit plan,
program, arrangement, agreement or policy, whether written or unwritten to which
the Company contributes, is obligated to contribute to, is a party to or is
otherwise bound, or with respect to which the Company may have any liabilities.
"Environmental Rule" shall mean any Governmental Rule which
relates to pollution or protection of human health, the environment or natural
resources and includes, without limitation, any Governmental Rule relating to
the generation, use, processing, treatment, storage, release, transport or
disposal of Hazardous Substances.
"ERISA Affiliate" shall mean (1) a member of any "controlled
group" (as defined in section 414(b) of the Code) of which the Company is a
member; (2) a trade or business, whether or not incorporated, under common
control (within the meaning of Section 414(c) of the Code) with the Company; or
(3) a member of any affiliated service group (within the meaning of Section
414(m) of the Code) of which the Company is a member.
"Excluded Assets" shall have the meaning set forth in Section
1.8.
"Escrow Agreement" shall have the meaning set forth in Section
1.3(b).
"Expiration Date" shall have the meaning set forth in Section
6.1(c).
"Financial Statements" shall have the meaning set forth in
Section 2.3.
"Fixed Network" shall have the meaning set forth in the preamble
to this Agreement.
"GAAP" shall have the meaning set forth in Section 2.3.
"Governmental Rule" shall mean any law, rule, regulation,
ordinance or code of any governmental entity.
"Greentree Operations Center" shall have the meaning set forth in
the preamble to this Agreement.
"Hazardous Substance" shall mean any substance which constitutes,
in whole or in part, toxic or hazardous substance or waste under any
Environmental Rule.
"Indemnified Party" shall have the meaning set forth in Section
6.4.
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"Indemnifying Party" shall have the meaning set forth in Section
6.4.
"Intangible Assets" shall have the meaning set forth in Section
2.5.
"Intellectual Property" shall mean software, registered and
unregistered trademarks, service marks, registered and common law copyrights,
and all applications therefor.
"Leases" shall have the meaning set forth in Section 1.2(b).
"Letter of Credit" shall have the meaning set forth in Section
4.8.
"Licenses" shall have the meaning set forth in Section 1.2(c).
"Material Adverse Effect" shall mean any occurrence of events or
circumstances of whatever nature which have a material adverse effect on the
business, prospects, operations or condition (financial or otherwise) of the
Company, Business, the Assets or Purchaser's ownership or operation of the
Assets or the Business.
"Material Contracts" shall mean any lease, instrument, License,
or agreement relating to the Business to which the Company is a party or by
which the Company or the Assets are bound.
"Person" shall mean any individual, corporation, joint venture,
general or limited partnership, limited liability company, trust, association,
unincorporated organization or other business entity.
"Purchase Price" shall have the meaning set forth in Section 1.3.
"Purchaser" shall have the meaning set forth in the preamble to
this Agreement.
"Records" shall have the meaning set forth in Section 1.2(g).
"Services Agreement" shall have the meaning set forth in the
preamble to this Agreement.
"Service Territory" shall mean the service territory of DLC as of
the Closing.
"State of Incorporation" shall mean the State of Washington.
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"Tax Return" shall mean any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
governmental entity in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any applicable laws, regulations, orders,
judgments and decrees relating to any Tax.
"Taxes" shall mean all taxes, charges, fees, levies or other
assessments including, without limitation, income, gross receipts, excise,
property, sales, withholding, social security, unemployment, occupation, use,
service, license, payroll, franchise, transfer and recording taxes, fees and
charges, imposed by the United States or any state, local or foreign government
or subdivision or agency thereof, whether computed on a separate, consolidated,
unitary, combined or any other basis, and any interest, fines, penalties or
additional amounts attributable to or imposed with respect to any such taxes,
charges, fees, levies or other assessments.
"Third Person" shall have the meaning set forth in Section 6.4.
"Transaction" shall have the meaning set forth in the preamble to
this Agreement.
"Transaction Documents" shall have the meaning set forth in
Section 2.2.
"Transfer Taxes" shall have the meaning set forth in Section 5.3.
"Warranty and Maintenance Agreement" shall mean the Warranty and
Maintenance Agreement executed by Company and Purchaser in the form attached
hereto as Annex IV.
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ANNEX I
GENERAL CONVEYANCE, TRANSFER AND ASSIGNMENT
Reference is hereby made to the Asset Purchase Agreement dated of even
date herewith (the "Asset Purchase Agreement") by and between DataCom
Information Systems, LLC, a Delaware limited liability company (the
"Purchaser"), and Itron, Inc., a Washington corporation (the "Seller"). Terms
defined in the Asset Purchase Agreement and not otherwise defined herein are
used herein with the meanings so defined.
1. For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Seller hereby sells, conveys, transfers,
assigns and delivers to the Purchaser all right, title and interest in and to
all of the Assets, to have and to hold the Assets hereby conveyed, transferred,
assigned and delivered, or intended so to be, unto the Purchaser, its successors
and assigns forever. All of the Assets are hereby sold to the Purchaser free and
clear of any option, lien, pledge, mortgage, security interest or other
encumbrance of any kind.
2. The Seller hereby irrevocably constitutes and appoints the Purchaser,
its successors and assigns, the true and lawful attorney of the Seller, with
full power of substitution, in the name of the Seller or otherwise, and on
behalf and for the benefit of the Purchaser, its successors and assigns, to
demand and receive from time to time any and all of the Assets hereby conveyed,
transferred, assigned and delivered, or intended so to be, and to institute,
defend and compromise any and all actions, suits or proceedings in respect of
any of the Assets hereby conveyed, transferred, assigned and delivered, or
intended so to be, that the Purchaser, its successors or assigns shall
reasonably deem desirable, and to do all acts and things in relation to the
Assets and interests which the Purchaser, its successors or assigns reasonably
deem desirable. The Seller hereby declares that the foregoing powers are coupled
with an interest and shall be irrevocable by it in any manner or for any reason.
3. The Seller further covenants and agrees that it will, from time to
time, make, execute, and deliver or cause to be made, executed, and delivered
all such other instruments, documents, and other assurances, usual and
customary, as the Purchaser may reasonably require to confirm, or more
effectively convey, transfer to and vest in the Purchaser, title to the Assets
as set for the herein.
4. This instrument shall be binding upon and inure to the benefit of the
respective successors and assigns of the Purchaser and the Seller.
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IN WITNESS WHEREOF, the Seller has caused this instrument to be duly
executed as of the ______ day of March, 2000.
ITRON, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
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