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EXHIBIT 10.29
ASSET PURCHASE AGREEMENT
BY AND AMONG
INTER-TEL, INCORPORATED
TELECOM MULTIMEDIA SYSTEMS, INC.,
STM WIRELESS, INC.,
RAMIN SADR AND
XXXXXXX XXXXXXXXXXX
DATED AS OF MAY 11, 1998
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made as of May 11, 1998,
by and among Inter-Tel, Incorporated, an Arizona corporation ("Buyer"), Telecom
Multimedia Systems, Inc., a California corporation (the "Company"), STM
Wireless, Inc. a Delaware corporation and a shareholder of the Company
("Parent"), Ramin Sadr, an individual resident in California and a shareholder
of the Company ("Sadr"), and Xxxxxxx Xxxxxxxxxxx, an individual resident in
California and a shareholder of the Company ("Meshkinpour" and collectively with
Parent and Sadr, "Shareholders").
RECITALS
1. Shareholders and the Company desire to sell, and Buyer desires to
purchase, certain assets (and assume certain liabilities) of the Company, for
the consideration and on the terms set forth in this Agreement.
2. As of the date of this Agreement, Parent owns 80% of the outstanding
Shares (as defined below) of the Company, Sadr owns 13% of the Shares of the
Company and Meshkinpour owns 7% of the Shares of the Company.
3. The Company and Shareholders desire to enter into this Agreement for
the purpose of setting forth certain representations, warranties, covenants and
other obligations made in connection with the purchase and sale of the Acquired
Assets (as defined below) and the Assumption of the Assumed Liabilities (as
defined below).
4. In connection with and as a condition subsequent to the execution and
delivery of this Agreement, as a condition precedent to the Closing (as defined
below), and in consideration of the respective obligations of the parties set
forth in this Agreement and the Contemplated Transactions (as defined below),
Parent, Meshkinpour and Sadr shall, immediately prior to the consummation of the
purchase and sale of the Acquired Assets and Assumed Liabilities contemplated
hereby, enter into and consummate a Share Purchase Agreement, pursuant to which
Parent shall purchase all of the Shares held by Sadr and Meshkinpour.
AGREEMENT
The parties, in consideration of the premises, the mutual
representations, warranties, covenants, obligations and agreements herein set
forth and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound, agree as
follows:
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"ACQUIRED ASSETS" means all right, title, and interest in and to all of
the assets of the Acquired Companies, including all of their (a) real property,
leaseholds and subleaseholds therein, improvements, fixtures, and fittings
thereon, and easements, rights-of-way, and other appurtenants thereto (such as
appurtenant rights in and to public streets), (b) tangible personal property
(such as
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machinery, equipment, inventories of raw materials and supplies, manufactured
and purchased parts, goods in process and finished goods, computers and other
office equipment, furniture, automobiles, trucks, tractors, trailers, tools,
jigs, and dies), (c) Intellectual Property Assets (including without limitation
all rights and obligations under the Named Contracts), goodwill associated
therewith, licenses and sublicenses granted and obtained with respect thereto,
and rights thereunder, remedies against infringements thereof, and rights to
protection of interests therein under the laws of all jurisdictions, (d) leases,
subleases, and rights thereunder, (e) agreements, contracts, indentures,
mortgages, instruments, Encumbrances, guaranties, other similar arrangements,
and rights thereunder, (f) accounts, notes, and other receivables, (g)
securities (such as the capital stock in its Subsidiaries), (h) claims,
deposits, prepayments, refunds, causes of action, chooses in action, rights of
recovery, rights of set off, and rights of recoupment (excluding any such item
relating to Taxes), (i) franchises, approvals, permits, licenses, orders,
registrations, certificates, variances, and similar rights obtained from
governments and governmental agencies, (j) books, records, ledgers, files,
documents, correspondence, lists, customer lists, plats, architectural plans,
drawings, and specifications, creative materials, advertising and promotional
materials, studies, reports, and other printed or written materials, and (k)
Cash (other than Cash resulting from accounts receivable reflected on the
Interim Balance Sheet); provided, however, that the Acquired Assets shall not
include (i) the corporate charter, qualifications to conduct business as a
foreign corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals, minute books,
stock transfer books, blank stock certificates, and other documents relating to
the organization, maintenance, and existence of the Company as a corporation or
(ii) any of the rights of the Company under this Agreement (or under any side
agreement between the Company on the one hand and the Buyer on the other hand
entered into on or after the date of this Agreement) or (iii) any Excluded
Asset.
"ACQUIRED COMPANIES" --the Company and its Subsidiaries, collectively.
"APPLICABLE CONTRACT" --any Contract (a) under which any Acquired
Company has or may acquire any rights, (b) under which any Acquired Company has
or may become subject to any obligation or liability, or (c) by which any
Acquired Company or any of the assets owned or used by it is or may become
bound.
"ASSUMED LIABILITIES" means (a) all obligations of the Company pursuant
to the agreements, contracts, leases, licenses, and other arrangements referred
to in the definition of Acquired Assets, and (b) all other Liabilities and
obligations of the Company set forth in an appendix to the Disclosure Schedule
under an express statement (that the Buyer has initialed) to the effect that the
definition of Assumed Liabilities will include the Liabilities and obligations
so disclosed; provided, however, that the Assumed Liabilities shall not include
(i) any Liability of the Company for Taxes, including for this purpose sales,
use or similar transfer Taxes, if any, attributable to this transaction, (ii)
any Liability of the Company for the unpaid Taxes of any Person under Reg.
ss.1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise, (iii) any obligation of the
Company to indemnify any Person by reason of the fact that such Person was a
director, officer, employee, or agent of any of the Company or its Subsidiaries
or was serving at the request of any such entity as a partner, trustee,
director, officer, employee, or agent of another entity (whether such
indemnification is for judgments, damages, penalties, fines, costs, amounts paid
in settlement, losses, expenses, or otherwise and whether such indemnification
is pursuant to any statute, charter document, bylaw, agreement, or otherwise),
(iv) any Liability of the
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Company for costs and expenses incurred in connection with this Agreement and
the Contemplated Transactions, (v) any Liability or obligation of the Company
pursuant to this Agreement (or pursuant to any side agreement between the
Company on the one hand and the Buyer on the other hand entered into on or after
the date of this Agreement), or (vi) any Liability of any Acquired Company to
the Parent or the Key Executives (other than as set forth on the Interim Balance
Sheet).
"ASSUMED OPTIONS" --the Options assumed by Buyer pursuant to Section 2.6
and the Substitution Agreements.
"BALANCE SHEET" --as defined in Section 3.4.
"BEST EFFORTS" --the commercially reasonable efforts that a prudent
Person desirous of achieving a result would use in similar circumstances to
ensure that such result is achieved as expeditiously as possible; provided,
however, that an obligation to use Best Efforts under this Agreement does not
require the Person subject to that obligation to take actions that would result
in a materially adverse change in the benefits to such Person of this Agreement
and the Contemplated Transactions.
"BREACH" --a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (a) any inaccuracy in or breach of, or any failure to perform or comply
with, such representation, warranty, covenant, obligation, or other provision,
or (b) any claim (by any Person) or other occurrence or circumstance that is or
was inconsistent with such representation, warranty, covenant, obligation, or
other provision, and the term "Breach" means any such inaccuracy, breach,
failure, claim, occurrence, or circumstance.
"BUYER" --as defined in the first paragraph of this Agreement.
"BUYER COMMON STOCK" --the Common Stock, no par value, of Buyer.
"CASH" means cash and cash equivalents (including marketable securities
and short term investments) calculated in accordance with GAAP.
"CASH-OUT OPTIONS" --all Options that are not Assumed Options.
"CASH-OUT OPTION AMOUNT" -- $555,560.
"CLOSING" --as defined in Section 2.4.
"CLOSING DATE" --the date and time as of which the Closing actually
takes place.
"CODE" --the Internal Revenue Code of 1986, as amended
"COMPANY" --as defined in the first paragraph of this Agreement.
"COMPANY EMPLOYEE PLAN" --any plan, program, policy, practice, contract,
agreement or other arrangement providing for compensation, severance,
termination pay, performance awards,
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stock or stock-related awards, fringe benefits or other employee benefits or
remuneration of any kind, whether written or unwritten or otherwise, funded or
unfunded, including without limitation, each "employee benefit plan," within the
meaning of Section 3(3) of ERISA which is or has been maintained, contributed
to, or required to be contributed to, by each Acquired Company or any Affiliate
(as defined in Section 3.13) for the benefit of any Employee.
"CONSENT" --any approval, assignment of rights or obligations, consent,
ratification, waiver, or other authorization (including any Governmental
Authorization).
"CONTEMPLATED TRANSACTIONS" --all of the transactions contemplated by
this Agreement, including:
(a) the sale of the Acquired Assets by the Company to Buyer and
Buyer's acquisition and ownership of the Acquired Assets and exercise of control
over the Acquired Assets;
(b) the execution, delivery, and performance of the Employment
Agreements, the Releases and the Escrow Agreement;
(c) the performance by Buyer, the Company and Shareholders of
their respective covenants and obligations under this Agreement.
"CONTRACT" --any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"DAMAGES" --as defined in Section 12.2.
"DISCLOSURE LETTER" --the disclosure letter delivered by the Company and
Shareholders to Buyer concurrently with the execution and delivery of this
Agreement.
"$" and "DOLLARS" --United States dollars.
"EMPLOYEE" --any current employee, officer, or director of each Acquired
Company or any Affiliate.
"EMPLOYEE AGREEMENT" --each management, employment, severance,
consulting, relocation, repatriation, expatriation, visas, work permit or
similar agreement or contract between each Acquired Company or any Affiliate and
any Employee or consultant.
"EMPLOYMENT AGREEMENTS" --Employment, Confidential Information,
Invention Assignment and Arbitration Agreements, which the Buyer has entered
into with each of the Key Executives and certain other former key employees or
consultants of the Company.
"ENCUMBRANCE" --any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
"ENVIRONMENTAL LAWS" --as defined in Section 3.19.
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"ERISA" --the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"ESCROW AGENT" --as named in Section 2.5.
"ESCROW AGREEMENT" --as defined in Section 2.5.
"ESCROW AMOUNT" --the sum of (x) $1,000,000 being deposited in escrow on
behalf of the Parent plus (y) $809,538 being deposited in escrow on behalf of
Sadr plus (z) $435,998 being deposited in escrow on behalf of Meshkinpour (plus
any interest accrued thereon and less any funds disbursed to any Indemnified
Person or Shareholder).
"EXCLUDED ASSETS" --the following assets, properties and rights of the
Company:
(a) accounts receivable as of March 31, 1998; and
(b) bank accounts in the name of Telecom Multimedia Systems, Inc.
"FACILITIES" --any real property, leaseholds, or other interests
currently or formerly owned or operated by any Acquired Company and any
buildings, plants, structures, or equipment (including motor vehicles, tank
cars, and rolling stock) currently or formerly owned or operated by any Acquired
Company.
"GAAP" --generally accepted United States accounting principles, applied
on a basis consistent with the basis on which the Balance Sheet and the other
financial statements referred to in Section 3.4 were prepared.
"GOVERNMENTAL AUTHORIZATION " --any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY" --any:
(a) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
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"HSR ACT" --the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 or
any successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"INTELLECTUAL PROPERTY ASSETS" --as defined in Section 3.20.
"INTERIM BALANCE SHEET" --as defined in Section 3.4.
"INTERNATIONAL EMPLOYEE PLAN" --each Company Employee Plan that has been
adopted or maintained by each Acquired Company, whether informally or formally,
for the benefit of Employees outside the United States.
"KEY EXECUTIVES" --Ramin Sadr and Xxxxxxx Xxxxxxxxxxx.
"KNOWLEDGE" --an individual or Person will be deemed to have "Knowledge"
of a particular fact or other matter if:
(a) such individual or Person is actually aware of such fact or
other matter; or
(b) a prudent individual or Person could be expected to discover
or otherwise become aware of such fact or other matter in the ordinary course of
conducting and managing a business enterprise.
A Person (other than an individual) will be deemed to have "Knowledge"
of a particular fact or other matter if any individual who is serving as a
director, officer, partner, executor, or trustee of such Person (or in any
similar capacity) has, or at any time had, Knowledge of such fact or other
matter.
"LEGAL REQUIREMENT" --any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"LIABILITY" --any liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
"NAMED CONTRACTS" --the License Agreement dated December 1, 1995 by and
between Parent and AT&T Corp.; the Patent License Agreement dated March 24, 1996
by and between the Company and Nippon Telegraph and Telephone Corporation; the
License Agreement dated June 1, 1996 by and between the Company and France
Telecom; and the License Agreement by and between the Company and Sipro Lab
Telecom, Inc.
"NET ACQUISITION AMOUNT" -- $23,765,288.
"NET ASSUMED OPTION AMOUNT" -- $450,296.
"OPTIONS" --all options or rights to purchase shares of capital stock of
the Company.
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"ORDER" --any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS" --an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such
Person and is taken in the ordinary course of the operations of such Person; and
(b) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority) and is not required to be specifically authorized by the
parent company (if any) of such Person.
"ORGANIZATIONAL DOCUMENTS" --(a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.
"PERSON" --any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"PROCEEDING" --any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"RELATED PERSON" --with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material Interest;
and
(d) any Person with respect to which such individual or one or
more members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person who beneficially owns, directly or indirectly,
five percent (5%) of the issued and outstanding equity securities or equity
interests in the specified Person;
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(b) any Person who beneficially owns, directly or indirectly,
five percent (5%) of voting securities or other voting interests in the
specified Person;
(c) any Person who has the right to designate a director in the
specified Person;
(d) any Person who has the right to appoint the chief executive
officer of the specified Person;
(e) any entity in which a Related Person owns twenty-five percent
(25%) or more of the issued and outstanding equity securities or equity
interests in such entity;"
(f) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar capacity);
(g) any Person in which such specified Person holds a Material
Interest;
(h) any Person with respect to which such specified Person serves
as a general partner or a trustee (or in a similar capacity); and
(i) any Related Person of any individual described in clause (b)
or (c).
For purposes of this definition, (a) the "Family" of an individual
includes (i) the individual, (ii) the individual's spouse, (iii) any other
natural person who is related to the individual or the individual's spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934
(the "Exchange Act")) of voting securities or other voting interests
representing at least 5% of the outstanding voting power of a Person or equity
securities or other equity interests representing at least 5% of the outstanding
equity securities or equity interests in a Person.
"RELEASES" --as defined in Section 2.5.
"REPRESENTATIVE" --with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"SECURITIES ACT" --the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"SHARES" --the issued and outstanding shares of capital stock of the
Company.
"SHARE PURCHASE AGREEMENT" --that certain Share Purchase Agreement to be
entered into among Parent, Sadr and Meshkinpour and pursuant to which Parent
shall acquire 100% of the Shares immediately prior to the Closing.
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"SUBSIDIARY" --with respect to any Person (the "Owner"), any corporation
or other Person of which securities or other interests having the power to elect
a majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries; when
used without reference to a particular Person, "Subsidiary" means a Subsidiary
of the Company.
"TAX" or "TAXES" --includes any federal, state, local, or foreign
income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
ss. 59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar, including FICA), unemployment, disability, real property,
personal property, sales, use, transfer, registration, value added, alternative
or add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"TAX RETURN" --any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body 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 Legal Requirement relating to any Tax.
"THREATENED" --a claim, Proceeding, dispute, action, or other matter
will be deemed to have been "Threatened" if any demand or statement has been
made (orally or in writing) or any notice has been given (orally or in writing)
that would lead a prudent Person to conclude that such a claim, Proceeding,
dispute, action, or other matter is likely to be asserted, commenced, taken, or
otherwise pursued in the future.
. Subject to the terms and conditions of this Agreement, at the Closing, Buyer
will purchase from the Company, and the Company will sell, transfer, convey and
deliver to Buyer, all of the Acquired Assets at the Closing for the
consideration specified below in this Section 2.
. Subject to the terms and conditions of this Agreement, Buyer agrees to assume
and become responsible for all of the Assumed Liabilities at the Closing. The
Buyer will not assume or have any responsibility whatsoever with respect to any
other obligation or Liability of the Company not included within the definition
of Assumed Liabilities.
. The aggregate purchase price (the "Purchase Price") for the Shares will be
equal to the Net Acquisition Amount.
. The purchase and sale (the "Closing") provided for in this Agreement will take
place at the offices of Buyer's counsel at Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
P.C., 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx, at 10:00 a.m. (local time) on
the later of (i) May 29, 1998 or (ii) the date that is two business days
following the termination of the applicable waiting period under the HSR Act, or
at such other time and place as the parties may agree. Subject to the provisions
of Section 11, failure to
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consummate the purchase and sale provided for in this Agreement on the date and
time and at the place determined pursuant to this Section 2.4 will not result in
the termination of this Agreement and will not relieve any party of any
obligation under this Agreement.
. At the Closing:
(a) The Company and Shareholders, as applicable, will deliver to
Buyer:
(i) signed and executed bills of sale and instruments of
assignment conveying the Acquired Assets, in each case in form
and substance reasonably satisfactory to Buyer and its counsel;
(ii) releases in the form of Exhibit 2.5(a)(ii) executed by
Parent and the Key Executives (collectively, the "Releases");
(iii) the Consents to the Named Contracts as set forth in
Section 5.9(a);
(iv) a Stock Option Substitution Agreement (the "Substitution
Agreement") in the form of Exhibit 2.5(a)(iv) executed by each
holder of an Assumed Option;
(v) a Cash-Out Option Agreement (the "Cash-Out Agreement") in
the form of Exhibit 2.5(a)(v) executed by each holder of a
Cash-Out Option; and
(vi) a certificate executed by the Company and Shareholders
representing and warranting to Buyer that the conditions set
forth in Sections 7.1 and 7.2 below have been satisfied.
(b) Buyer will deliver:
(i) to the Company, a wire transfer in the aggregate amount
of the difference obtained by subtracting the Escrow Amount from
the Net Acquisition Amount;
(ii) a Substitution Agreement with respect to each holder of
an Assumed Option;
(iii) a Cash-Out Option Agreement with respect to each holder
of a Cash-Out Option; and
(iv) to the Company, a certificate executed by Buyer
representing and warranting that the conditions set forth in
Sections 8.1 and 8.2 below have been satisfied.
(c) Buyer, the Company and Shareholders will enter into an escrow
agreement in the form of Exhibit 2.4(c) (the "Escrow Agreement") with a bank
reasonably acceptable to Buyer and Parent (the "Escrow Agent"), and Buyer will
deposit the Escrow Amount with the Escrow Agent.
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(d) Buyer will make bonus payments in the aggregate amount of
$80,000 to the following Employees: Xxxx Xxxxxxxxx, Xxxxxx Xxxxx and Xxxx
Xxxxxxxx.
(e) Parent and Buyer will enter into the Product Supply Agreement
in the form of Exhibit 2.5(e)(i) (the "Product Supply Agreement") and Parent,
Buyer and the Company will enter into Amendment No. 1 to License Agreement in
the form of Exhibit 2.5(e)(ii) (the "License Agreement").
.
(a) At the Closing, Buyer and each holder of an Option named on
Schedule A to the Substitution Agreement who is an employee or consultant of the
Company as of the Closing will deliver a Substitution Agreement pursuant to
which each Option held by such holder will be terminated and exchanged for an
option to purchase the number of shares of Buyer Common Stock as is set forth
opposite the name of each such holder on Schedule A to the form of Substitution
Agreement, at an exercise price as is set forth on said Schedule A.
(b) At the Closing, in full satisfaction of the obligation of the
Company and Buyer pursuant to the Cash-Out Options, Buyer will pay to each
holder of a Cash-Out Option an amount of cash equal to the product of the number
of shares subject to the holder's Cash-Out Option multiplied by a fraction, (x)
the numerator of which is the Cash-Out Option Amount and (y) the denominator of
which is the number of shares of capital stock of the Company subject to all
Cash-Out Options.
. The Company, Buyer and Parent agree to allocate the Purchase Price for the
Acquired Assets for all tax and accounting purposes in accordance with the
allocation formula set forth on Exhibit 2.7 hereto. The Company and Parent agree
not to file any Tax Return reflecting such allocation during the sixty (60) day
period following the Closing Date.
. Personal ad valorem property taxes attributable to the Acquired Assets for any
taxable period which includes the Closing Date shall be apportioned at the
Closing on a pro rata basis.
. The Company and each Shareholder jointly and severally (except for the
representations and warranties contained in Section 3.11 which are being made
solely by the Company and Parent) represent and warrant to Buyer as follows:
.
(a) Part 3.1 of the Disclosure Letter contains a complete and
accurate list for each Acquired Company of its name, its jurisdiction of
incorporation, other jurisdictions in which it is authorized to do business, and
its capitalization (including the identity of each stockholder and Option holder
and the number of shares held by each and the number of shares subject to
Options held by each). Each Acquired Company is a corporation duly organized,
validly existing, and in good standing under the laws of its jurisdiction of
incorporation, with full corporate power and authority to conduct its business
as it is now being conducted, to own or use the Acquired Assets and to perform
all its obligations under Applicable Contracts. Each Acquired Company is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each state or other
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jurisdiction in which either the ownership or use of the properties owned or
used by it, or the nature of the activities conducted by it, requires such
qualification.
(b) The Company has delivered to Buyer copies of the
Organizational Documents of each Acquired Company, as currently in effect.
.
(a) This Agreement constitutes the legal, valid, and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as such enforceability may be limited by laws of general
application relating to bankruptcy, insolvency and the relief of debtors and to
rules of law governing equitable remedies. The Company has the absolute and
unrestricted right, power, authority, and capacity to execute and deliver this
Agreement and to perform its obligations under this Agreement.
(b) Except as set forth in Part 3.2 of the Disclosure Letter,
neither the execution and delivery of this Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly or indirectly
(with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of
(A) any provision of the Organizational Documents of Shareholders
or the Acquired Companies, or (B) any resolution adopted by the
board of directors or the stockholders of Parent or any Acquired
Company;
(ii) contravene, conflict with, or result in a violation of,
or give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to exercise any
remedy or obtain any relief under, any Legal Requirement or any
Order to which any Acquired Company or Shareholders, or any of
the Acquired Assets, may be subject;
(iii) contravene, conflict with, or result in a violation of
any of the terms or requirements of, or give any Governmental
Body the right to revoke, withdraw, suspend, cancel, terminate,
or modify, any Governmental Authorization that is held by any
Acquired Company or that otherwise relates to the business of, or
any of the Acquired Assets;
(iv) cause any of the Acquired Assets to be reassessed or
revalued by any taxing authority or other Governmental Body;
(v) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to accelerate
the maturity or performance of, or to cancel, terminate, or
modify, any Applicable Contract; or
(vi) result in the imposition or creation of any Encumbrance
upon or with respect to any of the Acquired Assets.
Except (i) as set forth in Part 3.2 of the Disclosure Letter and (ii)
for the consents to be obtained by the Company prior to the Closing Date for the
assignment to the Buyer of the Named Contracts pursuant to Sections 5.9(a) and
7.3 hereof, neither any Shareholder nor any Acquired Company is or will be
required to give any notice to or obtain any Consent from any Person in
14
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
. The authorized equity securities of the Company consist of 5,000,000 shares of
common stock, no par value per share, of which 4,148,574 shares are issued and
outstanding and 600,786 shares of Series A Preferred Stock, no par value per
share, all of which shares are issued and outstanding. Except as set forth in
Part 3.3 of the Disclosure Letter, Parent is and will be on the Closing Date the
record and beneficial owner and holder of all of the Shares, free and clear of
all Encumbrances. With the exception of the Shares and except as set forth in
Part 3.3 of the Disclosure Letter, all of the outstanding equity securities and
other securities of each Acquired Company are owned of record and beneficially
by one or more of the Acquired Companies, free and clear of all Encumbrances,
and legend or other reference to any purported Encumbrance appears upon any
certificate representing equity securities of any Acquired Company. All of the
outstanding equity securities of each Acquired Company have been duly authorized
and validly issued and are fully paid and nonassessable. Except as described in
Part 3.3 of the Disclosure Letter, there are no Options or other Contracts
relating to the issuance, sale, or transfer of any equity securities or other
securities of any Acquired Company. All outstanding Options have an exercise
price of $1.00 per share, which price represented the fair market value of such
Options as of the date on which they were granted. None of the outstanding
equity securities or other securities of any Acquired Company was issued in
violation of the Securities Act or any other Legal Requirement, and all issued
and outstanding securities or other securities of any Acquired Company have been
accounted for in accordance with GAAP. No Acquired Company owns, or has any
Contract to acquire, any equity securities or other securities of any Person or
any direct or indirect equity or ownership interest in any other business.
. The Company has delivered to Buyer: (a) a consolidated balance sheet of Parent
at December 31, 1997 (including the notes thereto, the "Balance Sheet"), and the
related consolidated statements of income, changes in stockholders' equity, and
cash flow for the fiscal year then ended, together with the report thereon of
KPMG Peat Marwick LLP, independent certified public accountants, and (b) an
unaudited consolidated balance sheet of the Acquired Companies at March 31, 1998
(the "Interim Balance Sheet") and the related unaudited consolidated statements
of income for the three months then ended. Such financial statements and notes
fairly present the financial condition and the results of operations of the
Acquired Companies as of the respective dates of and for the periods referred to
in such financial statements, all in accordance with GAAP, subject, in the case
of interim financial statements, to normal recurring year-end adjustments (the
effect of which will not, individually or in the aggregate, be materially
adverse) and the absence of notes (that, if presented, would not differ
materially from those included in the Balance Sheet with respect to the Acquired
Companies); the financial statements referred to in this Section 3.4 reflect the
consistent application of such accounting principles throughout the periods
involved. No financial statements of any Person other than the Acquired
Companies are required by GAAP to be included in the consolidated financial
statements of the Company.
. The books of account, minute books, stock record books, and other records of
the Acquired Companies, all of which have been made available to Buyer, are
complete and correct and have been maintained in accordance with sound business
practices, including the maintenance of an adequate system of internal controls.
The minute books of the Acquired Companies contain accurate and complete records
of all meetings held of, and corporate actions taken by, the stockholders, the
Boards of Directors, and committees of the Boards of Directors of the Acquired
Companies, and no
15
meeting of any such stockholders, Board of Directors, or committee has been held
for which minutes have not been prepared and are not contained in such minute
books.
. Part 3.6 of the Disclosure Letter contains a complete and accurate list of all
real property, leaseholds, or other interests therein owned by any Acquired
Company. Except as set forth in Part 3.6 of the Disclosure Letter, the Acquired
Companies own all the properties and assets (whether real, personal, or mixed
and whether tangible or intangible) that they purport to own, located in the
facilities owned or operated by the Acquired Companies or reflected as owned in
the books and records of the Acquired Companies, including all of the properties
and assets reflected in the Balance Sheet (to the extent reflected thereon as
being the Company's assets) and the Interim Balance Sheet (except for assets
held under capitalized leases disclosed or not required to be disclosed in Part
3.6 of the Disclosure Letter and personal property sold since the date of the
Balance Sheet as being owned by an Acquired Company and the Interim Balance
Sheet, as the case may be, in the Ordinary Course of Business), and all of the
properties and assets purchased or otherwise acquired by the Acquired Companies
since the date of the Interim Balance Sheet (except for personal property
acquired and sold since the date of the Interim Balance Sheet in the Ordinary
Course of Business), which were subsequently purchased or acquired properties
and assets (other than inventory and short-term investments) are listed in Part
3.6 of the Disclosure Letter. Except as set forth in Part 3.6 of the Disclosure
Letter, the Acquired Assets reflected in the Balance Sheet (to the extent
reflected thereon as being the Company's assets) and the Interim Balance Sheet
are free and clear of all Encumbrances except, with respect to all such
properties and assets, (a) mortgages or security interests shown on the Balance
Sheet (to the extent reflected thereon as being the Company's assets) or the
Interim Balance Sheet as securing specified liabilities or obligations, with
respect to which no default (or event that, with notice or lapse of time or
both, would constitute a default) exists, (b) mortgages or security interests
incurred in connection with the purchase of property or assets after the date of
the Interim Balance Sheet (such mortgages and security interests being limited
to the property or assets so acquired), with respect to which no default (or
event that, with notice or lapse of time or both, would constitute a default)
exists, (c) liens for current taxes not yet due, (d) easements (including
unrecorded easements), covenants, rights-of-way or other Encumbrances or
restrictions relating to real property and (e) zoning, building or other real
property use restrictions, none of which items set forth in clauses (a) through
(e) above, individually or in the aggregate, materially impair the continued
use, value and operation of the Acquired Assets used in the businesses of the
Acquired Companies, as presently conducted or proposed to be conducted.
. Except as set forth in Part 3.7 in the Disclosure Letter, the Acquired Assets
comprise all of the assets, properties and rights of every type and description,
real, personal, tangible and intangible used by the Acquired Companies in the
conduct of their businesses and are sufficient for the continued conduct of the
Acquired Companies' businesses after the Closing in substantially the same
manner as conducted prior to the Closing.
. All accounts receivable from and after the date of the Interim Balance Sheet
as reflected on the accounting records of the Acquired Companies as of the
Closing Date (collectively, the "Accounts Receivable") represent or will
represent valid obligations arising from sales actually made or services
actually performed in the Ordinary Course of Business. Unless paid prior to the
Closing Date, the Accounts Receivable are or will be as of the Closing Date
collectible net of the respective reserves shown on the Interim Balance Sheet or
on the accounting records of the Acquired Companies as of the Closing Date
(which reserves are adequate and calculated consistent with past
16
practice and, in the case of the reserve as of the Closing Date, will not
represent a materially greater percentage of the Accounts Receivable as of the
Closing Date than the reserve reflected in the Interim Balance Sheet represented
of the Accounts Receivable reflected therein and will not represent a material
adverse change in the composition of such Accounts Receivable in terms of
aging). Subject to such reserves, each of the Accounts Receivable is or will be
collectible without any set-off. There is no contest, claim, or right of
set-off, other than returns in the Ordinary Course of Business, under any
Contract with any obligor of an Accounts Receivable relating to the amount or
validity of such Accounts Receivable. Part 3.8 of the Disclosure Letter contains
a complete and accurate list of all Accounts Receivable as of the date of the
Interim Balance Sheet, which list sets forth the aging of such Accounts
Receivable.
. All inventory of the Acquired Companies, whether or not reflected in the
Balance Sheet or the Interim Balance Sheet, consists of a quality and quantity
usable and salable in the Ordinary Course of Business, except for obsolete items
and items of below-standard quality, all of which have been written off or
written down to net realizable value in the Balance Sheet or the Interim Balance
Sheet or on the accounting records of the Acquired Companies as of the Closing
Date, as the case may be. All inventories not written off have been priced at
the lower of cost or market on a first in, first out basis. The quantities of
each item of inventory (whether raw materials, work-in-process, or finished
goods) are not excessive, but are reasonable in the present circumstances of the
Acquired Companies.
. Except as set forth in Part 3.10 of the Disclosure Letter, the Acquired
Companies have no liabilities or obligations of any nature (whether known or
unknown and whether absolute, accrued, contingent, or otherwise) except for (a)
Liabilities or obligations reflected or reserved against in the Balance Sheet or
the Interim Balance Sheet, (b) current liabilities incurred in the Ordinary
Course of Business since the respective dates thereof and (c) Liabilities not
expressly assumed pursuant to Section 2.2.
. To the extent the failure to do so would adversely affect the Company's and
Shareholders' ability to deliver free and clear title to the Acquired Assets or
Buyer's right to hold, own or use the Acquired Assets, Parent has filed within
the time period for filing or any extension granted with respect thereto all
federal, state, local, foreign and other returns, estimates and reports
("Returns") which it is required to file relating or pertaining to any and all
Taxes attributable to, levied or imposed upon, or incurred in connection with
the Acquired Assets or the Employees and each portion of any Tax Return
pertaining or related to the Acquired Assets or the Employees is true and
correct and has been completed in accordance with applicable law. Parent has
paid all Taxes relating to all the Acquired Assets and has withheld with respect
to its employees and paid to the appropriate taxing authority all federal, state
and local income taxes, FICA, FUTA and any other Taxes required to be withheld
with respect to the Acquired Assets or the Employees. There are (and immediately
following the Closing there will be) no Liens on the Acquired Assets relating to
or attributable to Taxes.
. Since the date of the Balance Sheet, no event has occurred and no circumstance
exists (including any transaction occurring between Company and any Shareholder)
that has resulted in any material adverse change in the business, operations,
properties, prospects, assets, or condition of any Acquired Company, and to
Shareholders' and the Company's Knowledge, no event has occurred or, except as
set forth in Part 3.12 of the Disclosure Letter, circumstance exists (including
any
17
transaction occurring between the Company and any Shareholder) that is
reasonably likely to result in such a material adverse change.
.
(a) Definitions. With the exception of the definition of
"Affiliate" set forth in Section 3.13(a)(i) below (which definition shall apply
only to this Section 3.13), for purposes of this Agreement, the following terms
shall have the meanings set forth below:
(i) "AFFILIATE" shall mean any other person or entity under
common control with any Acquired Company within the meaning of
Section 414(b), (c), (m) or (o) of the Code and the regulations
issued thereunder;
(ii) "COMPANY EMPLOYEE PLAN" shall mean any plan, program,
policy, practice, contract, agreement or other arrangement
providing for compensation, severance, termination pay,
performance awards, stock or stock-related awards, fringe
benefits or other employee benefits or remuneration of any kind,
whether written or unwritten or otherwise, funded or unfunded,
including without limitation, each "employee benefit plan,"
within the meaning of Section 3(3) of ERISA which is or has been
maintained, contributed to, or required to be contributed to, by
any Acquired Company or any Affiliate for the benefit of any
Employee;
(iii) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended;
(iv) "DOL" shall mean the United States Department of Labor;
(v) "EMPLOYEE" shall mean any current, former, or retired
employee, officer, or director of any Acquired Company or any
Affiliate;
(vi) "EMPLOYEE AGREEMENT" shall mean each management,
employment, severance, consulting, relocation, repatriation,
expatriation, visas, work permit or similar agreement or contract
between any Acquired Company or any Affiliate and any Employee or
consultant;
(vii) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended;
(viii) "FMLA" shall mean the Family Medical Leave Act of
1993, as amended;
(ix) "INTERNATIONAL EMPLOYEE PLAN" shall mean each Acquired
Company Employee Plan that has been adopted or maintained by the
Company, whether informally or formally, for the benefit of
Employees outside the United States;
(x) "IRS" shall mean the Internal Revenue Service;
18
(xi) "MULTIEMPLOYER PLAN" shall mean any "Pension Plan" (as
defined below) which is a "multiemployer plan," as defined in
Section 3(37) of ERISA;
(xii) "PBGC" shall mean the Pension Benefit Guaranty
Corporation; and
(xiii) "PENSION PLAN" shall mean each Company Employee Plan
which is an "employee pension benefit plan," within the meaning
of Section 3(2) of ERISA.
(b) Schedule. Part 3.13(b) of the Disclosure Letter contains an
accurate and complete list of each Company Employee Plan and each material
Employee Agreement. The Company does not have any plan or commitment to
establish any new Company Employee Plan, to modify any Company Employee Plan or
Employee Agree-ment (except to the extent required by law or to conform any such
Company Employee Plan or Employee Agreement to the requirements of any
applicable law, in each case as previously disclosed to Buyer in writing, or as
required by this Agreement), or to enter into any Company Employee Plan or
material Employee Agreement, nor does it have any intention or commitment to do
any of the foregoing.
(c) Documents. The Company has provided or made available to
Buyer: (i) correct and complete copies of all documents embodying to each
Company Employee Plan and each Employee Agreement including all amendments
thereto and written interpretations thereof; (ii) the most recent annual
actuarial valuations, if any, prepared for each Company Employee Plan; (iii) the
three (3) most recent annual reports (Form Series 5500 and all schedules and
financial statements attached thereto), if any, required under ERISA or the Code
in connection with each Company Employee Plan or related trust; (iv) if the
Company Employee Plan is funded, the most recent annual and periodic accounting
of Company Employee Plan assets; (v) the most recent summary plan description
together with the summary of material modifications thereto, if any, required
under ERISA with respect to each Company Employee Plan; (vi) all IRS
determination, opinion, notification and advisory letters, and rulings relating
to Company Employee Plans and copies of all applications and correspondence to
or from the IRS or the DOL with respect to any Com-pany Employee Plan; (vii) all
material written agreements and contracts relating to each Company Employee
Plan, including, but not limited to, administrative service agreements, group
annuity contracts and group insurance contracts; (viii) all communications
material to any Employee or Employees relating to any Company Employee Plan and
any proposed Company Employee Plans, in each case, relating to any amendments,
terminations, establishments, increases or decreases in benefits, acceleration
of payments or vesting schedules or other events which would result in any
material liability to Company; (ix) representative forms used for COBRA notices;
and (x) all registration statements and prospectuses prepared in connection with
each Company Employee Plan.
(d) Employee Plan Compliance. Except as set forth in Part 3.13(d)
of the Disclosure Letter, (i) each Acquired Company has performed all
obligations required to be performed by it under, is not in default or violation
of, and has no knowledge of any default or violation by any other party to each
Company Employee Plan, and each Company Employee Plan has been established and
maintained in all material respects in accordance with its terms and in
compliance with all applicable laws, sta-tutes, orders, rules and regulations,
including but not limited to ERISA or the Code; (ii) each Company Employee Plan
intended to qualify under Section 401(a) of the Code and each trust intended to
qualify under Section 501(a) of the Code has either received a favorable
determination letter from the IRS with respect to each such Plan as to its
qualified status
19
under the Code, including all amendments to the Code effected by the Tax Reform
Act of 1986 and subsequent legislation, or has remaining a period of time under
applicable U.S. Treasury regulations or IRS pronouncements in which to apply for
such a determination letter and make any amendments necessary to obtain a
favorable determination; (iii) no "prohibited transaction," within the meaning
of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise
exempt under Section 408 of ERISA, has occurred with respect to any Company
Employee Plan; (iv) there are no Proceedings pending, or, to the Knowledge of
Shareholders or any of the Acquired Companies, threatened or reasonably
anticipated (other than routine claims for benefits) against any Company
Employee Plan or against the assets of any Company Employee Plan; (v) each
Company Employee Plan can be amended, terminated or otherwise discontinued after
the Closing in accordance with its terms, without liability to Buyer, the
Company or any of its Affiliates (other than ordinary administration expenses
typically incurred in a termination event); (vi) there are no audits, inquiries
or Proceedings pending or, to the Knowledge of Shareholders or any of the
Acquired Companies, Threatened by the IRS or DOL with respect to any Company
Employee Plan; and (vii) neither Company nor any Affiliate is subject to any
penalty or tax with respect to any Company Employee Plan under Section 402(i) of
ERISA or Sections 4975 through 4980 of the Code.
(e) Pension Plans. Each Acquired Company does not now, nor has it
ever, maintained, established, sponsored, participated in, or contributed to,
any Pension Plan which is subject to Title IV of ERISA or Section 412 of the
Code.
(f) Multiemployer Plans. At no time has any Acquired Company
contributed to or been requested to contribute to any Multiemployer Plan.
(g) No Post-Employment Obligations. No Company Employee Plan
provides, or has any liability to provide, retiree life insurance, retiree
health or other retiree employee welfare benefits to any person for any reason,
except as may be required by COBRA or other applicable statute, and none of the
Acquired Companies has ever represented, promised or contracted (whether in oral
or written form) to any Employee (either individually or to Employees as a
group) or any other person that such Employee(s) or other person would be
provided with retiree life insurance, retiree health or other retiree employee
welfare benefit, except to the extent required by statute.
(h) No Acquired Company nor any Affiliate has, prior to the
Closing, and in any material respect, violated any of the health care
continuation requirements of COBRA, the requirements of FMLA or any similar
provisions of state law applicable to its Employees.
(i) Effect of Transaction
(i) Except as set forth in Part 3.13(i) of the Disclosure
Letter, the execution of this Agreement and the consummation of
the transactions contem-plated hereby will not (either alone or
upon the occurrence of any additional or subsequent events)
constitute an event under any Company Employee Plan, Employee
Agreement, trust or loan that will or may result in any payment
(whether of severance pay or other-wise), acceleration,
forgiveness of indebtedness, vesting, distri-bution, increase in
benefits or obligation to fund benefits with respect to any
Employee.
20
(ii) No payment or benefit which will or may be made by any
Acquired Company or its Affiliates with respect to any Employee
as a result of the transactions contemplated by this Agreement
will be characterized as an "excess parachute payment," within
the meaning of Section 280G(b)(1) of the Code.
(j) Employment Matters. Except as set forth in Part 3.13(j) of
the Disclosure Letter, each Acquired Company: (i) is in compli-ance with all
applicable foreign, federal, state and local laws, rules and regulations
respecting employment, employment practices, terms and conditions of employment
and wages and hours, in each case, with respect to Employees; (ii) has withheld
all amounts required by law or by agreement to be withheld from the wages,
salaries and other payments to Employees; (iii) is not liable for any arrears of
wages or any taxes or any penalty for failure to comply with any of the
foregoing; and (iv) is not liable for any material payment to any trust or other
fund or to any governmental or administrative authority, with respect to
unemployment compensation benefits, social security or other benefits or
obligations for Employees (other than routine payments to be made in the normal
course of business and consistent with past practice). There are no pending, or,
to the Knowledge of Shareholders and the Acquired Companies, Threatened or
reasonably anticipated claims or actions against any Acquired Company of
discrimination or harassment, under any worker's compensation policy or
long-term disability policy or otherwise. To the Knowledge of Shareholders or
any of the Acquired Companies, no Employee has violated any employment contract,
nondisclosure agreement or noncompetition agreement by which such employee is
bound due to such employee being employed by an Acquired Company and disclosing
to the Acquired Company or using trade secrets or proprietary information of any
other person or entity.
(k) Labor. No work stoppage or labor strike against any Acquired
Company is pending, or, to the Knowledge of Shareholders and the Acquired
Companies, Threatened or reasonably anticipated. Company does not know of any
activities or proceedings of any labor union to organize any Employees. There
are no actions, suits, claims, labor disputes or grievances pending, or, to the
Knowledge of Shareholders and the Acquired Companies, Threatened or reasonably
anticipated relating to any labor, safety or discrimination matters involving
any Employee, including, without limitation, charges of unfair labor practices
or discrimination complaints, which, if adversely determined, would,
individually or in the aggregate, result in any material liability to any
Acquired Company. Neither the Company nor any of its subsidiaries has engaged in
any unfair labor practices within the meaning of the National Labor Relations
Act. No Acquired Company is presently, nor has it been in the past, a party to,
or bound by, any collective bargaining agree-ment or union contract with respect
to Employees and no collective bargaining agreement is being negotiated by any
Acquired Company.
(l) International Employee Plan. Each International Employee Plan
has been established, maintained and administered in material compliance with
its terms and conditions and with the requirements prescribed by any and all
statutory or regulatory laws that are applicable to such International Employee
Plan. Furthermore, no International Employee Plan has unfunded liabilities, that
as of the Closing, will not be offset by insurance or fully accrued. Except as
required by law, no condition exists that would prevent any Acquired Company or
Buyer from terminating or amending any International Employee Plan at any time
for any reason.
21
.
(a) Except as set forth in Part 3.14 of the Disclosure Letter:
(i) each Acquired Company is, and at all times since its
inception has been, in full compliance with each Legal
Requirement that is or was applicable to it or to the conduct or
operation of its business or the ownership or use of any of the
Acquired Assets;
(ii) to the Knowledge of Shareholders and the Acquired
Companies, no event has occurred or circumstance exists that
(with or without notice or lapse of time) (A) is reasonably
likely to constitute or result in a violation by any Acquired
Company of, or a failure on the part of any Acquired Company to
comply with, any Legal Requirement, or (B) is reasonably likely
to give rise to any obligation on the part of any Acquired
Company to undertake, or to bear all or any portion of the cost
of, any remedial action of any nature; and
(iii) no Acquired Company has received, at any time since its
inception, any notice or other communication (whether written or,
to the Knowledge of Shareholders and the Acquired Companies,
oral) from any Governmental Body or any other Person regarding
(A) any actual, alleged, possible, or potential violation of, or
failure to comply with, any Legal Requirement, or (B) any actual
or alleged obligation on the part of any Acquired Company to
undertake, or to bear all or any portion of the cost of, any
remedial action of any nature.
(b) Part 3.14 of the Disclosure Letter contains a complete and
accurate list of each Governmental Authorization that is held by any Acquired
Company or that otherwise relates to the business of, or to any of the Acquired
Assets. Each Governmental Authorization listed or required to be listed in Part
3.14 of the Disclosure Letter is valid and in full force and effect. Except as
set forth in Part 3.14 of the Disclosure Letter:
(i) each Acquired Company is, and at all times since
inception has been, in full compliance with all of the terms and
requirements of each Governmental Authorization identified or
required to be identified in Part 3.14 of the Disclosure Letter;
(ii) to the Knowledge of Shareholders and the Acquired
Companies, no event has occurred or circumstance exists that is
reasonably likely to (with or without notice or lapse of time)
(A) constitute or result directly or indirectly in a violation of
or a failure to comply with any term or requirement of any
Governmental Authorization listed or required to be listed in
Part 3.14 of the Disclosure Letter, or (B) result directly or
indirectly in the revocation, withdrawal, suspension,
cancellation, or termination of, or any modification to, any
Governmental Authorization listed or required to be listed in
Part 3.14 of the Disclosure Letter;
(iii) no Acquired Company has received, at any time since
inception, any notice or other communication (whether written or,
to the Knowledge of Shareholders and the Acquired Companies,
oral) from any Governmental Body or any other Person regarding
(A) any actual, alleged, possible, or potential violation of, or
failure to comply with, any term or requirement of any
Governmental Authorization, or (B) any actual or proposed
revocation, withdrawal, suspension, cancellation, termination of,
or modification to any Governmental Authorization; and
22
(iv) all applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to
be listed in Part 3.14 of the Disclosure Letter have been duly
filed on a timely basis with the appropriate Governmental Bodies,
and all other filings required to have been made with respect to
such Governmental Authorizations have been duly made on a timely
basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed in Part 3.14 of the Disclosure
Letter collectively constitute all of the Governmental Authorizations necessary
to permit the Acquired Companies to lawfully conduct and operate their
businesses in the manner they currently conduct and operate such businesses and
to permit the Acquired Companies to own and use the Acquired Assets in the
manner in which they currently own and use such Acquired Assets. .
(a) Except as set forth in Part 3.15 of the Disclosure Letter,
there is no pending Proceeding:
(i) that has been commenced by or against any Acquired
Company or, to the Knowledge of Shareholders and the Acquired
Companies, that otherwise relates to the business of, or any of
the Acquired Assets; or
(ii) to the Knowledge of Shareholders and the Acquired
Companies, that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering
with, any of the Contemplated Transactions.
To the Knowledge of Shareholders and the Acquired Companies, (1) no such
Proceeding has been Threatened, and (2) no event has occurred or circumstance
exists that may give rise to or serve as a basis for the commencement of any
such Proceeding. The Company has delivered to Buyer copies of all pleadings,
correspondence, and other documents relating to each Proceeding listed in Part
3.15 of the Disclosure Letter.
(b) Except as set forth in Part 3.15 of the Disclosure Letter:
(i) there is no Order to which any of the Acquired Companies,
or any of the assets owned or used by any Acquired Company, is
subject;
(ii) no Shareholder is subject to any Order that relates to
the business of, or any of the Acquired Assets; and
(iii) to the Knowledge of Shareholders and the Acquired
Companies, no officer, director, agent, or employee of any
Acquired Company is subject to any Order that prohibits such
officer, director, agent, or employee from engaging in or
continuing any conduct, activity, or practice relating to the
business of any Acquired Company.
23
(c) Except as set forth in Part 3.15 of the Disclosure Letter:
(i) each Acquired Company is, and at all times since
inception has been, in full compliance with all of the terms and
requirements of each Order to which it, or any of the Acquired
Assets, is or has been subject;
(ii) to the Knowledge of Shareholders and the Acquired
Companies, no event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time)
a violation of or failure to comply with any term or requirement
of any Order to which any Acquired Company, or any of the
Acquired Assets, is subject; and
(iii) to the Knowledge of Shareholders and the Acquired
Companies, no Acquired Company has received, at any time since
inception, any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding
any actual, alleged, possible, or potential violation of, or
failure to comply with, any term or requirement of any Order to
which any Acquired Company, or any of the Acquired Assets, is or
has been subject.
. Except as set forth in Part 3.16 of the Disclosure Letter, since the date of
the Interim Balance Sheet, the Acquired Companies have conducted their
businesses only in the Ordinary Course of Business and there has not been any:
(a) change in any Acquired Company's authorized or issued capital
stock; grant of any stock option or right to purchase shares of capital stock of
any Acquired Company; issuance of any security convertible into such capital
stock; grant of any registration rights; purchase, redemption, retirement, or
other acquisition by any Acquired Company of any shares of any such capital
stock; or declaration or payment of any dividend or other distribution or
payment in respect of shares of capital stock;
(b) amendment to the Organizational Documents of any Acquired
Company;
(c) payment or increase by any Acquired Company of any bonuses,
salaries, or other compensation to any stockholder, director, officer, or
(except in the Ordinary Course of Business) employee or entry into any
employment, severance, or similar Contract with any director, officer, or
employee or prospective employee;
(d) adoption of, or increase in the payments to or benefits
under, modification or termination of any profit sharing, bonus, deferred
compensation, savings, insurance, pension, retirement, or other employee benefit
plan for or with any employees of any Acquired Company;
(e) damage to or destruction or loss of any asset or property of
any Acquired Company, whether or not covered by insurance, materially and
adversely affecting the properties, assets, business, financial condition, or
prospects of the Acquired Companies, taken as a whole;
(f) entry into, termination of, or receipt of notice of
termination of (i) any license, distributorship, dealer, sales representative,
joint venture, credit, or similar agreement, or
24
(ii) any Contract or transaction involving a total remaining commitment by or to
any Acquired Company of at least $10,000;
(g) sale (other than sales of inventory in the Ordinary Course of
Business), lease, assignment, or other disposition of any asset or property
(tangible or intangible) of any Acquired Company or mortgage, pledge, or
imposition of any lien or other Encumbrance on any material asset or property
(tangible or intangible) of any Acquired Company, including the sale, lease, or
other disposition of any of the Intellectual Property Assets;
(h) cancellation, compromise, waiver or release of any claims or
rights with a value to any Acquired Company in excess of $10,000;
(i) capital expenditure (or series of related capital
expenditures) involving more than $10,000 singly or $20,000 in the aggregate;
(j) capital investment in, loan to, or acquisition of the
securities or assets of, any other Person (or series of related capital
investments, loans, and acquisitions) relating to the Acquired Assets;
(k) issuance of any note, bond, or other debt security or other
creation, incurrence, assumption or guarantee of any indebtedness for borrowed
money or capitalized lease obligation;
(l) delay or postponement of the payment of accounts payable and
other Liabilities outside the Ordinary Course of business;
(m) material change in the accounting methods used by any
Acquired Company;
(n) grant of any license or sublicense of any rights by any
Acquired Company under or with respect to any Intellectual Property;
(o) pledge by any Acquired Company to make any charitable or
other capital contribution outside the Ordinary Course of Business;
(p) occurrence, event, incident, action, failure to act, or
transaction outside the Ordinary Course of Business involving any of the
Acquired Companies; or
(q) agreement, whether oral or written, by any Acquired Company
to do any of the foregoing.
25
.
(a) Part 3.17(a) of the Disclosure Letter contains a complete and
accurate list, and the Company has delivered to Buyer true and complete copies,
of:
(i) each Applicable Contract that involves performance of
services or delivery of goods or materials by one or more
Acquired Companies of an amount or value in excess of $50,000;
(ii) each Applicable Contract that involves performance of
services or delivery of goods or materials to one or more
Acquired Companies of an amount or value in excess of $50,000;
(iii) each Applicable Contract that was not entered into in
the Ordinary Course of Business and that involves expenditures or
receipts of one or more Acquired Companies in excess of $50,000;
(iv) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable
Contract affecting the ownership of, leasing of, title to, use
of, or any leasehold or other interest in, any real or personal
property (except personal property leases and installment and
conditional sales agreements having a value per item or aggregate
payments of less than $50,000 and with terms of less than one
year);
(v) each licensing agreement or other Applicable Contract
with respect to patents, trademarks, copyrights, or other
intellectual property, including agreements with current or
former employees, consultants, or contractors regarding the
appropriation or the non-disclosure of any of the Intellectual
Property Assets;
(vi) each collective bargaining agreement and other
Applicable Contract to or with any labor union or other employee
representative of a group of employees;
(vii) each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses,
costs, or liabilities by any Acquired Company with any other
Person;
(viii) each Applicable Contract containing covenants that in
any way purport to restrict the business activity of any Acquired
Company or any Affiliate of an Acquired Company or limit the
freedom of any Acquired Company or any Affiliate of an Acquired
Company to engage in any line of business or to compete with any
Person;
(ix) each Applicable Contract providing for payments to or by
any Person based on sales, purchases, or profits, other than
direct payments for goods;
(x) each power of attorney granted by an Acquired Company, or
by any officer or director of an Acquired Company, that is
currently effective and outstanding;
(xi) each Applicable Contract entered into other than in the
Ordinary Course of Business that contains or provides for an
express undertaking by any Acquired Company to be responsible for
consequential damages;
(xii) each Applicable Contract for capital expenditures in
excess of $50,000;
26
(xiii) each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by
any Acquired Company other than in the Ordinary Course of
Business; and
(xiv) each amendment, supplement, and modification (whether
oral or written) in respect of any of the foregoing.
(b) Except as set forth in Part 3.17(b) of the Disclosure Letter,
no Shareholder (and no Related Person of any Shareholder) possesses or may
acquire any right under, or has or may become subject to any obligation or
liability under, any Contract that relates to the business of, or any of the
assets owned or used by, any Acquired Company.
(c) Except as set forth in Part 3.17(c) of the Disclosure Letter,
each Applicable Contract identified or required to be identified in Part 3.17(a)
of the Disclosure Letter is in full force and effect and is valid and
enforceable in accordance with its terms, except as enforceability may be
limited by laws of general application relating to bankruptcy, insolvency and
the relief of debtors and to rules of law governing equitable remedies.
(d) Except as set forth in Part 3.17(d) of the Disclosure Letter:
(i) each Acquired Company is, and at all times since its
inception has been, in compliance with all applicable terms and
requirements of each Applicable Contract under which such
Acquired Company has or had any obligation or liability or by
which such Acquired Company or any of the Acquired Assets is or
was bound;
(ii) to the Knowledge of Shareholders and the Acquired
Companies, each other Person that has or had any obligation or
liability under any Applicable Contract under which an Acquired
Company has or had any rights is, and at all times since its
inception has been, in compliance with all applicable terms and
requirements of such Applicable Contract;
(iii) to the Knowledge of Shareholders and the Acquired
Companies, no event has occurred or circumstance exists that
(with or without notice or lapse of time) is reasonably likely to
contravene, conflict with, or result in a violation or breach of,
or give any Acquired Company or other Person the right to declare
a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify,
any Applicable Contract; and
(iv) no Acquired Company has given to or received from any
other Person, at any time since inception, any notice or other
communication (whether oral or written) regarding any actual,
alleged, possible, or potential violation or breach of, or
default under, any Applicable Contract.
(e) Except as disclosed in Part 3.17(e) of the Disclosure Letter,
there are no renegotiations of, attempts to renegotiate, or outstanding rights
to renegotiate any material amounts paid or payable to any Acquired Company
under current or completed Applicable Contracts
27
with any Person and no such Person has made written demand to Shareholders or
any Acquired Company for such renegotiation.
.
(a) The Company has delivered or made available to Buyer:
(i) true and complete copies of all policies of insurance to
which any Acquired Company is a party or under which any Acquired
Company, or any director of any Acquired Company, with respect to
his or her capacity as a director, is or has been covered at any
time within the two years preceding the date of this Agreement;
and
(ii) true and complete copies of all pending applications for
policies of insurance.
(b) Part 3.18(b) of the Disclosure Letter describes:
(i) any self-insurance arrangement by or affecting any
Acquired Company, including any reserves established thereunder;
and
(ii) all obligations of the Acquired Companies to third
parties with respect to insurance (including such obligations
under leases and service agreements) and identifies the policy
under which such coverage is provided.
(c) Part 3.18(c) of the Disclosure Letter sets forth, by year,
for the current policy year and each of the two preceding policy years, with
respect to the Company only:
(i) a summary of the loss experience under each policy;
(ii) a statement describing each claim under an insurance
policy for an amount in excess of $10,000, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by insurer, type of
insurance, and period of coverage; and
(C) the amount and a brief description of the claim;
and
(iii) a statement describing the loss experience for all
claims that were self-insured, including the number and aggregate
cost of such claims.
28
(d) Except as set forth on Part 3.18(d) of the Disclosure Letter:
(i) All policies to which any Acquired Company is a party or
that provide coverage to any Acquired Company, or any director or
officer of an Acquired Company:
(A) to the Knowledge of Shareholders and the Acquired
Companies are valid, outstanding, and enforceable;
(B) are sufficient for compliance with all Legal
Requirements and Contracts to which any Acquired Company is a
party or by which any of them is bound;
(C) will continue in full force and effect following
the consummation of the Contemplated Transactions; and
(D) do not provide for any retrospective premium
adjustment or other experienced-based liability on the part
of any Acquired Company.
(ii) No Shareholder and no Acquired Company has received (A)
any refusal of coverage or any notice that a defense will be
afforded with reservation of rights, or (B) any notice of
cancellation or any other indication that any insurance policy is
no longer in full force or effect or will not be renewed or that
the issuer of any policy is not willing or able to perform its
obligations thereunder.
(iii) The Acquired Companies have paid all premiums due, and
have otherwise performed all of their respective obligations,
under each policy to which any Acquired Company is a party or
that provides coverage to any Acquired Company or director
thereof.
(iv) The Acquired Companies have given notice to the insurer
of all claims that may be insured thereby.
. Except as set forth in part 3.19 of the Disclosure Letter:
(a) There are no claims, actions, suits, permit revocations,
requests for information, investigations, orders or other proceedings asserted
by third parties or governmental agencies ("Claim") involving the Acquired
Companies which arise under any U.S. or foreign laws, rules, regulations,
ordinances or policies relating to the protection of the environment or human
health, safety and welfare or reproductive capacity ("Environmental Laws").
Neither the Acquired Companies nor Shareholders have received any notice of any
pending Claim against the Acquired Companies relating to violations of
Environmental Laws by the Acquired Companies. Neither the Acquired Companies nor
Shareholders have any Knowledge of any fact or circumstance that it is
reasonably foreseeable that would give rise to a Claim, or any intent to
commence any other or additional investigations or proceedings against the
Acquired Companies regarding violations or alleged violations of Environmental
Laws.
(b) The Acquired Companies have not transported, used, stored,
manufactured, released, disposed of or exposed employees who have worked at the
Acquired Companies to any material which is regulated by any governmental
authority because it is toxic, radioactive or otherwise a danger to health and
the environment in violation of any Environmental Laws.
29
(c) There are and have been no citations or decisions by any
Governmental Body that any product manufactured, marketed or distributed at any
time by the Acquired Companies ("Product") is defective or fails to meet any
standards promulgated by any such governmental or regulatory body. Neither the
Acquired Companies nor Shareholders have Knowledge of any proceeding now pending
or Threatened which may result in such citation or decision. There are no
existing or Threatened claims against the Acquired Companies for services or
merchandise which are defective or fail to meet any service or product
warranties or any defects or problems which, if discovered by a third party,
would support such a claim. No claim has been asserted against the Acquired
Companies for renegotiation or price redetermination of any business
transaction, and other than concessions in the Ordinary Course of Business, to
the Knowledge of Shareholders and the Acquired Companies, there are no facts
upon which any such claim could be based. To the Knowledge of Shareholders and
the Acquired Company, there is no fact relating to any Product that may impose
upon the Acquired Companies a duty to warn customers of a defect in any Product,
or latent or overt defect in any Product which has been or is being distributed
by the Acquired Companies, which is likely to result in claims for breach of
warranty with respect to such Products in excess of the warranty reserve
reflected in the Financial Statements or to be reflected in the Balance Sheet.
For purposes of the foregoing, with respect to a software product, a "defect"
shall include, without limitation, any characteristic of the product which may,
when the product is used with the computer and operating system with which the
product is used, result in material undesired errors in processing or output,
cessation of system function, or loss of or damage to data, whether during the
operation of the product or during the operation of another program as a result
of effects caused by the product.
.
(a) Intellectual Property Assets--The term "Intellectual Property
Assets" includes:
(i) the name Telecom Multimedia Systems, Inc., all fictional
business names, trading names, registered and unregistered
trademarks, service marks, and applications in which the Acquired
Companies have an ownership interest or that are being used by
the Acquired Companies in connection with their business as
currently conducted (collectively, "Marks");
(ii) all patents, patent applications, and inventions and
discoveries that may be patentable in which the Acquired
Companies have an ownership interest or that are being used by
the Acquired Companies in connection with their business as
currently conducted (collectively, "Patents");
(iii) all copyrights in both published works and unpublished
works in which the Acquired Companies have an ownership interest
or that are being used by the Acquired Companies in connection
with their business as currently conducted (collectively,
"Copyrights");
30
(iv) all rights in mask works in which the Acquired Companies
have an ownership interest or that are being used by the Acquired
Companies in connection with their business as currently
conducted (collectively, "Rights in Mask Works"); and
(v) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process
technology, plans, drawings, and blue prints (collectively,
"Trade Secrets") owned, used, or licensed by any Acquired Company
as licensee or licensor.
(b) Agreements--Part 3.20(b) of the Disclosure Letter contains a
complete and accurate list of all Contracts relating to the Intellectual
Property Assets to which any Acquired Company is a party or by which any
Acquired Company is bound, except for any license implied by the sale of a
product and perpetual, paid-up licenses for commonly available software programs
with a value of less than $15,000 under which an Acquired Company is the
licensee. There are no outstanding and, to Shareholders' and the Acquired
Companies' Knowledge, no Threatened disputes or disagreements with respect to
any such agreement.
(c) Know-How Necessary for the Business
(i) Except as set forth in Part 3.20 of the Disclosure
Letter, the Intellectual Property Assets are all those necessary
for the operation of the Acquired Companies' businesses as they
are currently conducted. Except as set forth in Part 3.20(c) of
the Disclosure Letter and for Intellectual Property Assets
licensed to the Acquired Companies as described in Part 3.20(b)
of the Disclosure Letter, one or more of the Acquired Companies
is the owner of all right, title, and interest in and to each of
the Intellectual Property Assets, free and clear of all liens,
security interests, charges, Encumbrances, equities, and other
adverse claims, and has the right to use without payment to a
third party all of the Intellectual Property Assets.
(ii) Except as set forth in Part 3.20(c) of the Disclosure
Letter, the Acquired Companies have received written Contracts
that assign to one or more of the Acquired Companies all rights
to any inventions, improvements, discoveries, or information
relating to the business of any Acquired Company developed by
former or current employees during any such employee's employment
with the Acquired Companies. To the Knowledge of Shareholders and
the Acquired Companies, no employee of any Acquired Company has
entered into any Contract that restricts or limits in any way the
scope or type of work in which the employee may be engaged or
requires the employee to transfer, assign, or disclose
information concerning his work to anyone other than one or more
of the Acquired Companies.
(d) Patents
(i) Part 3.20(d) of the Disclosure Letter contains a complete
and accurate list and summary description of all Patents. Except
as set forth in Part 3.20(d) of the Disclosure Letter, one or
more of the Acquired Companies is the owner of all right, title,
and interest in and to each of the Patents, free and clear of all
liens, security interests, charges, Encumbrances, entities, and
other adverse claims or has the right to use such Patents
pursuant to a Contract set forth in Part 3.20(b) of the
Disclosure Letter.
31
(ii) Except as set forth in Part 3.20 of the Disclosure
Letter, all of the issued Patents owned by any Acquired Company
are currently in compliance with formal legal requirements
(including payment of filing, examination, and maintenance fees
and proofs of working or use), are valid and enforceable, and are
not subject to any maintenance fees or taxes or actions falling
due within ninety days after the Closing Date.
(iii) Except as set forth in Part 3.20 of the Disclosure
Letter, to the Knowledge of Shareholders and the Acquired
Companies, no Patent has been or is now involved in any
interference, reissue, reexamination, or opposition proceeding.
Except as set forth in Part 3.20(d) of the Disclosure Letter, to
Shareholders' and the Acquired Companies' Knowledge, there is no
potentially interfering patent or patent application of any third
party.
(iv) Except as set forth in Part 3.20 of the Disclosure
Letter, to Shareholders' and the Acquired Companies' Knowledge,
no Patent is infringed or has been challenged or Threatened in
any way. Except as set forth in Part 3.20 of the Disclosure
Letter, none of the products manufactured and sold, nor any
process or know-how used, by any Acquired Company infringes or is
alleged to infringe any patent or other proprietary right of any
other Person.
(v) Except as set forth in Part 3.20 of the Disclosure
Letter, all products made, used, or sold under the Patents have
been marked with the proper patent notice.
(e) Trademarks
(i) Part 3.20(e) of Disclosure Letter contains a complete and
accurate list and summary description of all Marks. Except as set
forth in Part 3.20 of the Disclosure Letter, one or more of the
Acquired Companies is the owner of all right, title, and interest
in and to each of the Marks, free and clear of all liens,
security interests, charges, Encumbrances, equities, and other
adverse claims or has the right to use such Marks pursuant to a
Contract set forth in Part 3.20(b) of the Disclosure Letter.
(ii) Except as set forth in Part 3.20 of the Disclosure
Letter, all Marks owned by any Acquired Company that have been
registered with the United States Patent and Trademark Office are
currently in compliance with all formal legal requirements
(including the timely post-registration filing of affidavits of
use and incontestability and renewal applications), are valid and
enforceable, and are not subject to any maintenance fees or taxes
or actions falling due within ninety days after the Closing Date.
(iii) Except as set forth in Part 3.20 of the Disclosure
Letter, to the Knowledge of Shareholders and the Acquired
Companies, no Xxxx has been or is now involved in any opposition,
invalidation, or cancellation and, to Shareholders' and the
Acquired Companies' Knowledge, no such action is Threatened with
the respect to any of the Marks.
(iv) Except as set forth in Part 3.20 of the Disclosure
Letter, to Shareholders' and the Acquired Companies' Knowledge,
there is no potentially interfering trademark or trademark
application of any third party.
32
(v) Except as set forth in Part 3.20 of the Disclosure
Letter, to Shareholders' and the Acquired Companies' Knowledge,
no Xxxx is infringed or has been challenged or threatened in any
way. Except as set forth in Part 3.20 of the Disclosure Letter,
none of the Marks used by any Acquired Company infringes or is
alleged to infringe any trade name, trademark, or service xxxx of
any third party.
(vi) Except as set forth in Part 3.20 of the Disclosure
Letter, all products and materials containing a Xxxx xxxx the
proper federal registration notice where permitted by law.
(f) Copyrights
(i) Part 3.20(f) of the Disclosure Letter contains a complete
and accurate list and summary description of all Copyrights.
Except as set forth in Part 3.20(f) of the Disclosure Letter, one
or more of the Acquired Companies is the owner of all right,
title, and interest in and to each of the Copyrights, free and
clear of all liens, security interests, charges, Encumbrances,
equities, and other adverse claims or has the right to use such
Copyright pursuant to a Contract set forth in Part 3.20(b) of the
Disclosure Letter.
(ii) Except as set forth in Part 3.20 of the Disclosure
Letter, all the Copyrights owned by any Acquired Company are
currently in compliance with formal legal requirements, are valid
and enforceable, and are not subject to any maintenance fees or
taxes or actions falling due within ninety days after the date of
Closing.
(iii) Except as set forth in Part 3.20 of the Disclosure
Letter, to Shareholders' and the Acquired Companies' Knowledge,
no Copyright is infringed or has been challenged or Threatened in
any way. Except as set forth in Part 3.20 of the Disclosure
Letter, none of the subject matter of any of the Copyrights
infringes or is alleged to infringe any copyright of any third
party or is a derivative work based on the work of a third party.
(iv) Except as set forth in Part 3.20 of the Disclosure
Letter, all works encompassed by the Copyrights have been marked
with the proper copyright notice to the extent required by
applicable law in order to protect the rights of the Acquired
Companies pursuant to such Copyrights.
(g) Trade Secrets
(i) With respect to each Trade Secret, the documentation
relating to such Trade Secret is current, accurate, and
sufficient in detail and content to identify and explain it and
to allow its full and proper use without reliance on the
knowledge or memory of any individual.
(ii) Shareholders and the Acquired Companies have taken all
reasonable and customary precautions to protect the secrecy,
confidentiality, and value of their Trade Secrets.
(iii) Except as set forth in Part 3.20 of the Disclosure
Letter, one or more of the Acquired Companies has good title and
an absolute (but not necessarily exclusive) right
33
to use the Trade Secrets. Except as set forth in Part 3.20 of
the Disclosure Letter, the Trade Secrets are not part of the
public knowledge or literature, and, to Shareholders' and the
Acquired Companies' Knowledge, have not been used, divulged, or
appropriated either for the benefit of any Person (other than
one or more of the Acquired Companies) or to the detriment of
the Acquired Companies. No Trade Secret is subject to any
adverse claim or has been challenged or, to the Knowledge of
Shareholders and the Acquired Companies, Threatened in any way.
. Since its inception, to the Knowledge of Shareholders and the Acquired
Companies, no Acquired Company or director, officer, agent, or employee of any
Acquired Company, or any other Person associated with or acting for or on behalf
of any Acquired Company, has directly or indirectly (a) made any contribution,
gift, bribe, rebate, payoff, influence payment, kickback, or other payment to
any Person, private or public, regardless of form, whether in money, property,
or services (i) to obtain favorable treatment in securing business, (ii) to pay
for favorable treatment for business secured, (iii) to obtain special
concessions or for special concessions already obtained, for or in respect of
any Acquired Company or any Affiliate of an Acquired Company, or (iv) in
violation of any Legal Requirement, (b) established or maintained any fund or
asset that has not been recorded in the books and records of the Acquired
Companies.
. Except as set forth in Part 3.22 of the Disclosure Letter, none of the
Acquired Companies has any accrued, contingent or other liabilities of any
nature, either matured or unmatured, relating to costs associated with insuring
that the computer systems, or any software utilized by the Acquired Companies or
other components of the Acquired Companies' information technology
infrastructure are Year 2000-compliant (whether or not required to be reflected
in financial statements in accordance with GAAP, and whether due or to become
due), except for: (a) liabilities identified as such in the "liabilities" column
of the Interim Balance Sheet; and (b) normal and recurring liabilities that have
been incurred by the Acquired Companies since the date of the Interim Balance
Sheet in the Ordinary Course of Business and consistent with past practices.
.
(a) No representation or warranty of the Company or Shareholders
in this Agreement and no statement in the Disclosure Letter omits to state a
material fact necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading.
(b) No notice given pursuant to Section 5.5 will contain any
untrue statement or omit to state a material fact necessary to make the
statements therein or in this Agreement, in light of the circumstances in which
they were made, not misleading.
. Except as set forth in Part 3.24 of the Disclosure Letter, no Shareholder,
Related Person of Shareholder, or of any Acquired Company has, or since the
Company's inception has had, any interest in any property (whether real,
personal, or mixed and whether tangible or intangible), used in or pertaining to
the Acquired Companies' businesses. Neither any Shareholder nor, to the
Knowledge of Shareholders and the Acquired Companies, any Related Person of any
Shareholder or of any Acquired Company is, or since the Company's inception has
owned (of record or as a beneficial owner) an equity interest or any other
financial or profit interest in, a Person that has (i) had business dealings or
a material financial interest in any transaction with any Acquired
34
Company, or (ii) engaged in competition with any Acquired Company with respect
to any line of the products or services of such Acquired Company (a "Competing
Business") in any market presently served by such Acquired Company. Except as
set forth in Part 3.24 of the Disclosure Letter, neither any Shareholder nor, to
the Knowledge of Shareholders and the Acquired Companies, any Related Person of
Shareholder or of any Acquired Company is a party to any Contract with, or has
any claim or right against, any Acquired Company.
. Except as set forth in Part 3.25 of the Disclosure Letter, none of the
Company, any Shareholder or any of its or their agents has incurred any
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement.
. Part 3.26(i) of the Disclosure Letter lists the current customers,
distributors and agents, from inception until the date of this Agreement, of the
products manufactured and services performed by or for the Acquired Companies,
and Part 3.26(ii) lists the current suppliers, from the date of inception until
the date of this Agreement, of the products and services material to the
businesses of the Acquired Companies. Except as set forth in Part 3.26(i) or
3.26(ii), neither Shareholders nor any of the Acquired Companies has, (based on
Shareholders' or the Acquired Companies' commercial dealings therewith),
received any notice of, and knows of no reasonable basis for, any development
which as a result of such dealings threatens to affect adversely its existing or
future arrangements with the foregoing suppliers and customers.
. True and complete copies of all documents referred to in the Agreement
(including without limitation this section) have been furnished, or made
available, to Buyer by the Company, Shareholder or the Acquired Companies.
. In addition to the representations and warranties set forth in Section 3
hereof, each Shareholder (unless otherwise indicated) severally represents and
warrants to Buyer as follows:
. This Agreement constitutes the legal, valid, and binding obligation of such
Shareholder, enforceable against such Shareholder in accordance with its terms,
except as such enforceability may be limited by laws of general application
relating to bankruptcy, insolvency and the relief of debtors and to rules of law
governing equitable remedies. Upon the execution and delivery by such
Shareholder of the Escrow Agreement and the Release (the "Shareholders' Closing
Documents"), the Shareholders' Closing Documents will constitute the legal valid
and binding obligations of such Shareholder, if applicable, enforceable against
Shareholders in accordance with their respective terms, except as enforceability
may be limited by laws of general application relating to bankruptcy, insolvency
and the relief of debtors and to rules of law governing equitable remedies. In
addition, upon the execution and delivery by Parent of the product Supply
Agreement and Amendment No. 1 to License Agreement (the "Parent's Closing
Documents"), the Parent's Closing Documents will constitute the legal and
binding obligations of Parent, enforceable against Parent in accordance with
their respective terms, except as enforceability may be limited by laws of
general application relating to bankruptcy, insolvency and the relief of debtors
and to rules of law governing equitable remedies.
. Each Shareholder has the absolute and unrestricted right, power, authority and
capacity to execute and deliver this Agreement and the Shareholders' Closing
Documents and to perform his or its obligations pursuant to this Agreement and
the Shareholders' Closing Documents. In addition,
35
Parent has the absolute and unrestricted right, power, authority and capacity to
execute the Parent's Closing Documents and to perform its obligations pursuant
to the Parent's Closing Documents.
. Buyer represents and warrants to the Company and Shareholders as follows:
. Buyer is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Arizona, with full corporate power and authority
to conduct its business as it is now being conducted and to own or use the
properties and assets that it purports to own or use.
.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Upon the execution and delivery by Buyer of the Escrow Agreement, the Employment
Agreements, the Product Supply Agreement and the License Agreement
(collectively, the "Buyer's Closing Documents"), the Buyer's Closing Documents
will constitute the legal, valid, and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms, except as such
enforceability may be limited by laws of general application relating to
bankruptcy, insolvency and the relief of debtors and to rules of law governing
equitable remedies. Buyer has the absolute and unrestricted right, power, and
authority to execute and deliver this Agreement and the Buyer's Closing
Documents and to perform its obligations under this Agreement and the Buyer's
Closing Documents.
(b) Except as set forth in Schedule 4.2, neither the execution
and delivery of this Agreement by Buyer nor the consummation or performance of
any of the Contemplated Transactions by Buyer will give any Person the right to
prevent, delay, or otherwise interfere with any of the Contemplated Transactions
pursuant to:
(i) any provision of Buyer's Organizational Documents;
(ii) any resolution adopted by the board of directors or the
stockholders of Buyer; or
(iii) any Legal Requirement or Order to which Buyer may be
subject.
Except as set forth in Schedule 4.2, Buyer is not and will not be
required to obtain any Consent from any Person in connection with the execution
and delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
. The authorized capital stock of Buyer consists of 100,000,000 shares of Buyer
Common Stock. At the close of business on March 31, 1998, _____ shares of Buyer
Common Stock were outstanding, and ______ shares of Buyer Common Stock were
issuable upon the exercise of outstanding stock options and warrants. As of
March 31, 1998, an aggregate of ____ shares of Buyer Common Stock were available
for future issuance pursuant to Buyer's stock option plans. No shares of Buyer
Common Stock are held by Buyer in its treasury, and no shares of Buyer Preferred
Stock were outstanding. All the outstanding shares of Buyer Common Stock are
validly issued, fully paid, nonassessable and free of preemptive rights.
36
. There is no pending Proceeding that has been commenced against Buyer and that
challenges, or may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the Contemplated Transactions. To Buyer's
Knowledge, no such Proceeding has been Threatened.
. Buyer has furnished the Company with a true and complete copy of each form,
statement, annual, quarterly and other report, registration statement (including
exhibits and amendments) and definitive proxy statement filed by Buyer with the
U.S. Securities and Exchange Commission ("SEC") since December 31, 1996 (the
"Buyer SEC Documents"), which are all the documents (other than preliminary
material) that Buyer was required to file with the SEC since such date. As of
their respective filing dates, the Buyer SEC Documents complied in all material
respects with the requirements of the Exchange Act and the rules and regulations
thereunder, and none of the Buyer SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading. Since the filing of the
most recent Quarterly Report on Form 10-Q included in the Buyer SEC Documents,
none of Buyer's organizational documents has been amended or modified.
. Buyer and its officers and agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement and will indemnify
and hold Shareholders harmless from any such payment alleged to be due by or
through Buyer as a result of the action of Buyer or its officers or agents.
.
. Between the date of this Agreement and the Closing Date, the Company and
Parent will, and will cause each Acquired Company and its Representatives to,
and each of Messrs. Sadr and Meshkinpour will, and will use their respective
Best Efforts to cause each Acquired Company and its Representatives to, (a)
afford Buyer and its Representatives reasonable access, during normal business
hours and upon reasonable notice, to each Acquired Company's personnel,
properties (including subsurface testing), contracts, books and records, and
other documents and data, (b) furnish Buyer and its Representatives with copies
of all such contracts, books and records, and other existing documents and data
as Buyer may reasonably request, and (c) furnish Buyer and its Representatives
with such additional financial, operating, and other data and information as
Buyer may reasonably request.
. Between the date of this Agreement and the Closing Date, the Company and
Parent will, and will cause each Acquired Company and its Representatives to,
and each of Messrs. Sadr and Meshkinpour will, and will use their respective
Best Efforts to cause each Acquired Company and its Representatives to:
(a) conduct the business of such Acquired Company only in the
Ordinary Course of Business;
(b) use their Best Efforts to preserve intact the current
business organization of such Acquired Company, keep available the services of
the current officers, employees, and agents of such Acquired Company, and
maintain the relations and good will with
37
suppliers, customers, landlords, creditors, employees, agents, and others having
business relationships with such Acquired Company;
(c) not sell, lease or otherwise dispose of, or agree to sell,
lease or otherwise dispose of, any of the Acquired Assets, except in the
Ordinary Course of Business consistent with prior practice;
(d) except for the transactions to be effected pursuant to the
Share Purchase Agreement, not declare or pay any dividends or agree to make any
other distribution with respect to any shares of the Company's capital stock;
(e) not alter or modify the Company's policies, practices or
procedures with respect to the origination and collection of accounts receivable
or the origination and payment of accounts payable (it being represented that
such policies, practices and procedures will have been in effect for at least
180 days prior to the Closing Date and it being understood that the Company will
maintain normal pricing, payment and other terms with its customers and
suppliers during such period);
(f) confer with Buyer concerning operational matters of a
material nature; and
(g) otherwise report periodically to Buyer concerning the status
of the business, operations, and finances of such Acquired Company.
. Except as otherwise expressly permitted by this Agreement, between the date of
this Agreement and the Closing Date, the Company and Parent will not, and will
cause each Acquired Company and its Representatives not to, and each of Messrs.
Sadr and Meshkinpour will not, and will use their respective Best Efforts to
cause each Acquired Company and its Representatives not to, without the prior
consent of Buyer, take any affirmative action, or fail to take any reasonable
action within their or its control, as a result of which any of the changes or
events listed in Section 3.16 is likely to occur.
. As promptly as practicable after the date of this Agreement, the Company and
Parent will, and will cause each Acquired Company and its Representatives to,
and each of Messrs. Sadr and Meshkinpour will, and will use their respective
Best Efforts to cause each Acquired Company and its Representatives to, make all
filings required by Legal Requirements to be made by them in order to consummate
the Contemplated Transactions. Between the date of this Agreement and the
Closing Date, the Company and Parent will, and will cause each Acquired Company
and its Representatives to, and each of Messrs. Sadr and Meshkinpour will, and
will use their respective Best Efforts to cause each Acquired Company and its
Representatives to, (a) cooperate with Buyer with respect to all filings that
Buyer elects to make or is required by Legal Requirements to make in connection
with the Contemplated Transactions, and (b) cooperate with Buyer in obtaining
all consents identified in Schedule 4.2 (including taking all actions requested
by Buyer to cause early termination of any applicable waiting period under the
HSR Act).
. Between the date of this Agreement and the Closing Date, each of the Company
and Shareholders will promptly notify Buyer in writing if the Company,
Shareholders or any Acquired Company becomes aware of any fact or condition that
causes or constitutes a Breach of any of the Company
38
and Shareholders' representations and warranties as of the date of this
Agreement, or if the Company, Shareholders or any Acquired Company becomes aware
of the occurrence after the date of this Agreement of any fact or condition that
would (except as expressly contemplated by this Agreement) cause or constitute a
Breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. Should any such fact or condition require any change in the
Disclosure Letter if the Disclosure Letter were dated the date of the occurrence
or discovery of any such fact or condition, the Company and Shareholders will
promptly deliver to Buyer a supplement to the Disclosure Letter specifying such
change. During the same period, the Company and Shareholders will promptly
notify Buyer of the occurrence of any Breach of any covenant of the Company or
Shareholders in this Section 5 or of the occurrence of any event that may make
the satisfaction of the conditions in Section 7 impossible or unlikely.
. Until such time, if any, as this Agreement is terminated pursuant to Section
11, Parent will not, and will cause each Acquired Company and their
Representatives not to, and each of Messrs. Sadr and Meshkinpour will not, and
will use their respective Best Efforts to cause each Acquired Company and its
Representatives not to, directly or indirectly solicit, initiate, or encourage
any inquiries or proposals from, discuss or negotiate with, provide any
non-public information to, or consider the merits of any unsolicited inquiries
or proposals from, any Person (other than Buyer) relating to any transaction
involving the sale of the business or assets (other than in the Ordinary Course
of Business) of any Acquired Company, or any of the capital stock of any
Acquired Company, or any merger, consolidation, business combination, or similar
transaction involving any Acquired Company.
. The Company and Parent shall comply in all respects, and provide Buyer all
information required to comply with the provisions of any so-called "bulk sales
law" of any relevant jurisdiction in connection with the sale of the Acquired
Assets to Buyer.
.
(a) The Company shall, and Parent shall cause the Company and its
Representatives to, at Shareholders' cost and expense, obtain prior to the
Closing any and all Consents necessary for the valid and binding assignment of
the Named Contracts to Buyer. All such Consents will be in writing and in form
and substance reasonably satisfactory to Buyer (including without limitation
economic terms and conditions that are no less favorable to Buyer than currently
exist for the Company), and executed counterparts thereof will be delivered to
Buyer no later than the Closing.
(b) Subject to the provisions of Section 5.9(a) above, to the
extent that the assignment or sublease of any Assumed Contract requires the
consent of a third party, this Agreement shall not constitute an agreement to
assign or sublease the same if an attempted assignment or sublease thereof,
without the Consent of a third party thereto, would constitute a breach thereof,
but each Shareholder and the Company shall use its Best Efforts to obtain the
consent of such other parties to all such contracts to the assignment or
sublease thereof to Buyer prior to the Closing Date; if such Consent is not
obtained or is obtainable only upon payment by
39
Buyer of amounts not otherwise required to be paid under the terms of such
contract, Shareholders and the Company will cooperate with Buyer in any
reasonable arrangement which is designed to provide for Buyer the benefits under
any such Assumed Contract including enforcement for the benefit of Buyer at the
sole expense of Buyer, of any and all rights of the Company against any third
party thereto arising out of the failure or refusal of such third party to
consent to such assignment or sublease.
. Between the date of this Agreement and the Closing Date, the Company and
Shareholders will use their Best Efforts to cause the conditions in Sections 7
and 8 to be satisfied.
.
. As promptly as practicable after the date of this Agreement, Buyer will, and
will cause each of its Related Persons to, make all filings required by Legal
Requirements to be made by them to consummate the Contemplated Transactions
(including all filings under the HSR Act). Between the date of this Agreement
and the Closing Date, Buyer will, and will cause each Related Person to,
cooperate with the Company and Parent with respect to all filings that the
Company and Parent are required by Legal Requirements to make in connection with
the Contemplated Transactions, and (ii) cooperate with the Company and Parent in
obtaining all consents identified in Part 3.2 of the Disclosure Letter; provided
that this Agreement will not require Buyer to dispose of or make any change in
any portion of its business or to incur any other burden to obtain a
Governmental Authorization.
. Except as set forth in the proviso to Section 6.1, between the date of this
Agreement and the Closing Date, Buyer will use its Best Efforts to cause the
conditions in Sections 7 and 8 to be satisfied.
. Buyer will, within three (3) business days of the filing thereof, deliver to
the Company a true and correct copy of all forms, statements, annual, quarterly
and other reports, registration statements and definitive proxy statements filed
by Buyer with the SEC after the date of this Agreement and prior to the Closing
Date.
. Except as otherwise expressly permitted by this Agreement, between the date of
this Agreement and the Closing Date, Buyer will not, without the prior consent
of the Company, (a) amend or repeal any of its Organizational Documents, (b)
declare or pay any dividend or make any other distribution or payment in respect
of its capital stock or (c) issue shares of Buyer Common Stock except (i) upon
the exercise of stock options outstanding on the date hereof or granted after
the date hereof pursuant to stock plans in effect on the date hereof, (ii)
pursuant to Buyer's employee stock purchase plan or (iii) at a price equal to
the fair value of such Common Stock on the date of issuance.
. To the extent the Company has paid any liabilities reflected on the Interim
Balance Sheet or any liabilities incurred in the Ordinary Course of Business
thereafter with the prior written consent of Buyer, then Buyer shall reimburse
the Company after the Closing for such amounts as soon as reasonably practicable
after demand by the Company.
40
6.6 Accounts Receivable. After the Closing, Buyer will use its
reasonable commercial efforts with respect to the collection of the Accounts
Receivable as of the Interim Balance Sheet.
. After the Closing, Buyer will use its Best Efforts to resolve amicably the
Allied matter disclosed in part 3.15 of the Disclosure Letter, including
providing reasonable customer support to Allied.
. Buyer's obligation to purchase the Shares and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
.
(a) All of the Company's and Shareholders' representations and
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been true
and correct in all material respects as of the date of this Agreement, and must
be true and correct in all material respects as of the Closing Date as if made
on the Closing Date, without giving effect to any supplement to the Disclosure
Letter, except in such cases where the failure to be so true and correct does
not have a material adverse effect on the Acquired Companies, taken as a whole.
(b) Each of the Company's and Shareholders' representations and
warranties in Section 3.12 must have been accurate in all respects as of the
date of this Agreement, and must be accurate in all respects as of the Closing
Date as if made on the Closing Date, without giving effect to any supplement to
the Disclosure Letter.
.
(a) All of the covenants and obligations that the Company and
Shareholders are required to perform or to comply with pursuant to this
Agreement at or prior to the Closing (considered collectively), and each of
these covenants and obligations (considered individually), must have been duly
performed and complied with in all material respects.
(b) Each document required to be delivered by the Company or
Shareholders pursuant to Section 2.5 must have been delivered by the Company or
Shareholders, as applicable, and each of the other covenants and obligations in
Sections 5.4 and 5.8 must have been performed and complied with in all material
respects.
. Each of the Consents required to fully and validly assign the Named Contracts
to Buyer shall have been obtained and shall be in full force and effect.
. Each of the following documents must have been delivered to Buyer:
(a) an opinion of Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx, A Professional
Corporation, dated the Closing Date, in substantially the form of Exhibit 7.4(a)
and reasonably satisfactory to Buyer;
41
(b) an opinion of Xxxxx & Xxxxxx LLP, dated the Closing Date, in
substantially the form of Exhibit 7.4(b) and reasonably satisfactory to Buyer;
(c) Parent and the Company shall have delivered to Buyer bills of
sale conveying the Acquired Assets, in each case in form and substance
reasonably satisfactory to Buyer and its counsel; and
(d) such other documents as Buyer may reasonably request for the
purpose of (i) enabling its counsel to provide the opinion referred to in
Section 8.4(a), (ii) evidencing the accuracy of any of the Company's and
Shareholders' representations and warranties, (iii) evidencing the performance
by the Company and any Shareholder of the Company of, or the compliance by the
Company and any Shareholder with, any covenant or obligation required to be
performed or complied with by the Company or such Shareholder, (iv) evidencing
the satisfaction of any condition referred to in this Section 7 or (v) otherwise
facilitating the consummation or performance of any of the Contemplated
Transactions.
. Since the date of this Agreement, there must not have been commenced or
Threatened against Buyer, or against any Person affiliated with Buyer, any
Proceeding (a) involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, or (b) that may have the
effect of preventing, delaying, making illegal, or otherwise interfering with
any of the Contemplated Transactions.
. There must not have been made or Threatened by any Person any claim asserting
that such Person (a) is the holder or the beneficial owner of, or has the right
to acquire or to obtain beneficial ownership of, any stock of, or any other
voting, equity, or ownership interest in, any of the Acquired Companies, or (b)
is entitled to all or any portion of the Purchase Price payable for the Shares.
. Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), materially contravene, or conflict with, or result in a material
violation of, or cause Buyer or any Person affiliated with Buyer to suffer any
material adverse consequence under, (a) any applicable Legal Requirement or
Order, or (b) any Legal Requirement or Order that has been published by or
before any Governmental Body.
. The Share Purchase Agreement shall be in full force and effect as of the
Closing and shall not have been amended or modified. The transactions
contemplated by the Share Purchase Agreement shall have been consummated
immediately prior to the Closing.
. The Company's and Shareholders' obligation to sell the Acquired Assets and to
take the other actions required to be taken by Shareholders at the Closing is
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by Shareholders, in whole or in
part):
. All of Buyer's representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), must have been true and correct in all material respects as of
the date of this Agreement and must be true and correct in all
42
material respects as of the Closing Date as if made on the Closing Date, except
in such cases where the failure to be so true and correct does not have a
material adverse effect on Buyer.
.
(a) All of the covenants and obligations that Buyer is required
to perform or to comply with pursuant to this Agreement at or prior to the
Closing (considered collectively), and each of these covenants and obligations
(considered individually), must have been performed and complied with in all
material respects.
(b) Buyer must have delivered each of the documents required to
be delivered by Buyer pursuant to Section 2.5 and must have made the cash
payments required to be made by Buyer pursuant to Section 2.5(b)(i) .
. Each of the Consents identified in Part 3.2 of the Disclosure Letter must have
been obtained and must be in full force and effect.
. Buyer must have caused the following documents to be delivered to
Shareholders:
(a) an opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional
Corporation, dated the Closing Date, in the form of Exhibit 8.4(a); and
(b) such other documents as Shareholders may reasonably request
for the purpose of (i) enabling their counsel to provide the opinion referred to
in Section 7.4(a), (ii) evidencing the accuracy of any representation or
warranty of Buyer, (iii) evidencing the performance by Buyer of, or the
compliance by Buyer with, any covenant or obligation required to be performed or
complied with by Buyer, (iv) evidencing the satisfaction of any condition
referred to in this Section 8, or (v) otherwise facilitating the consummation of
any of the Contemplated Transactions.
. Since the date of this Agreement, there must not have been commenced or
Threatened against Shareholders, or against any Person affiliated with
Shareholders, any Proceeding (a) involving any challenge to, or seeking damages
or other relief in connection with, any of the Contemplated Transactions, or (b)
that may have the effect of preventing, delaying, making illegal, or otherwise
interfering with any of the Contemplated Transactions.
. Neither the consummation or the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), materially contravene or conflict, result in a material violation of, or
cause Shareholders to suffer any material adverse consequences under, (a) any
applicable Legal Requirement or Order, or (b) any Legal Requirement or Order
that has been published by or before any Governmental Body.
43
.
(a) Parent understands that Buyer shall be entitled to protect
and preserve the going concern value of the business (as presently conducted)
related to the Acquired Assets (including Internet Protocol ("IP") business
communication products such as IP PBXs, IP ACD systems and IP wired telephones)
(the "Buyer's Business") to the extent permitted by law and that Buyer would not
have entered into this Agreement absent the provisions of this Section 10.
Parent agrees that neither it nor any of its affiliates or Subsidiaries will (i)
prior to the fourth anniversary of the Closing Date, use the Licensed Technology
(defined below) to engage in any business competing with the Buyer's Business,
(ii) prior to the fourth anniversary of the Closing Date, directly or indirectly
induce any employee of Buyer or any Subsidiary of Buyer to leave such employ, or
to accept any other position of employment or assist any other Person in hiring
such employee and (iii) at any time communicate or divulge to any Person other
than Buyer any secret or confidential information, knowledge or data related to
the Acquired Assets or the Buyer's Business, all of which it agrees to hold in a
fiduciary capacity for the benefit of Buyer. For the purposes of this Section
10(a) and Section 10(b), the phrase "directly or indirectly engage in" shall
include having a direct or indirect ownership interest (other than ownership of
less than 5% of the outstanding voting securities of a Person who has voting
securities registered under Section 12 of the Exchange Act) in any Person which
engages in the business in question. In addition, for the purposes of this
Section 10(a), "Licensed Technology" means the technology licensed by Buyer to
Parent pursuant to that certain Amendment No.1 to License Agreement of even date
herewith between Buyer and Parent.
(b) Buyer understands that Parent shall be entitled to protect
and preserve the going concern value of its business to the extent permitted by
law and that Parent would not have entered into this Agreement absent the
provisions of this Section 10. Buyer agrees that neither it nor any of its
affiliates or Subsidiaries will (i) prior to the fourth anniversary of the
Closing Date, use the Acquired Assets to (x) engage in the sales or marketing of
satellite and wireless communication products or (y) license or sublicense the
Acquired Assets to direct, current competitors of Parent in the business of
sales and marketing of satellite and wireless communication products, (ii) prior
to the fourth anniversary of the Closing Date, directly or indirectly induce any
employee of Parent or a Subsidiary of Parent (other than employees of the
Company) to leave such employ, or to accept any other position of employment or
assist any other Person in hiring such employee and (iii) at any time
communicate or divulge to any Person other than Parent any secret or
confidential information, knowledge or data related to the business of Parent,
all of which it agrees to hold in a fiduciary capacity for the benefit of
Parent.
(c) Notwithstanding any provision of this Agreement, it is
understood and agreed that the remedy of indemnity payment pursuant to Section
12 and other remedies at law would be inadequate in the case of any Breach of
the covenants contained in Section 10 and Parent agrees that Buyer and Parent
shall be entitled to equitable relief, including the remedy of specific
performance, with respect to any Breach or attempted Breach of such covenants.
.
. This Agreement may, by notice given prior to or at the Closing, be terminated:
(a) by either Buyer, on the one hand, or the Company and/or
Shareholders, on the other, if a material Breach of any provision of this
Agreement has been committed by the other party and such Breach has not been
waived;
44
(b) (i) by Buyer if any of the conditions in Section 7 has not
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Buyer to comply with
its obligations under this Agreement) and Buyer has not waived such condition on
or before the Closing Date; or (ii) by the Company and/or Shareholder, if any of
the conditions in Section 8 has not been satisfied as of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other than through
the failure of Shareholders to comply with their obligations under this
Agreement) and the Company and/or Shareholders have not waived such condition on
or before the Closing Date;
(c) by mutual consent of Buyer, the Company and Shareholders; or
(d) by any of Buyer, the Company or Shareholders if the Closing
has not occurred on or before June 30, 1998, or such later date as the parties
may agree upon; provided, however, that the right to terminate this Agreement
under this Section 11.1(d) shall not be available to any party whose action or
failure to act has been a principal cause of or resulted in the failure of the
Contemplated Transactions to occur on or before such date and such action
constitutes a Breach of this Agreement.
. Each party's right of termination under Section 11.1 is in addition to any
other rights it may have under this Agreement or otherwise, and the exercise of
a right of termination will not be an election of remedies. If this Agreement is
terminated pursuant to Section 11.1, all further obligations of the parties
under this Agreement will terminate, except that the obligations in Sections
13.1 and 13.3 will survive; provided, however, that if this Agreement is
terminated by a party because of the Breach of the Agreement by the other party
or because one or more of the conditions to the terminating party's obligations
under this Agreement is not satisfied as a result of the other party's failure
to comply with its obligations under this Agreement, the terminating party's
right to pursue all legal remedies will survive such termination unimpaired.
.
. All representations, warranties, covenants, and obligations in this Agreement,
the Disclosure Letter, the supplements to the Disclosure Letter, the certificate
delivered pursuant to Section 2.4(a)(vi), and any other certificate or document
delivered pursuant to this Agreement will survive the Closing, subject to the
time limitations set forth in Section 12.4. The right to indemnification,
payment of Damages or other remedy based on such representations, warranties,
covenants, and obligations will not be affected by any investigation conducted
with respect to, or any Knowledge acquired (or capable of being acquired) at any
time, whether before or after the execution and delivery of this Agreement or
the Closing Date, with respect to the accuracy or inaccuracy of or compliance
with, any such representation, warranty, covenant, or obligation. If any party
acquires knowledge of a Breach of any such representation, warranty, covenant or
obligation, it shall promptly notify the breaching party of such Breach.
. Shareholders will indemnify and hold harmless Buyer, and its Representatives,
stockholders, controlling persons, and affiliates (collectively, the
"Indemnified Persons") for, and will pay to the Indemnified Persons the amount
of, any loss, liability, claim, damage, expense (including costs of
investigation and defense and reasonable attorneys' fees) or diminution of
value, whether or not
45
involving a third-party claim (collectively, "Damages"), arising, directly or
indirectly, from or in connection with:
(a) any Breach of any representation or warranty made by the
Company or Shareholders in this Agreement, the Disclosure Letter, the
supplements to the Disclosure Letter (provided that Buyer shall not be entitled
to indemnification with respect to representations and warranties made in this
Agreement that are corrected by supplements to the Disclosure Letter if such
supplements have been agreed to and accepted by Buyer in writing or Buyer
effects the Closing after having received such supplement) or any other
certificate or document delivered by the Company or Shareholders pursuant to
this Agreement;
(b) any Breach of any representation or warranty made by the
Company or Shareholders in this Agreement as if such representation or warranty
were made on and as of the Closing Date other than any such Breach that is
disclosed in a supplement to the Disclosure Letter;
(c) any Breach by the Company or Shareholders of any covenant or
obligation of the Company or Shareholders in this Agreement;
(d) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with the Company or Shareholders
(or any Person acting on their behalf) in connection with any of the
Contemplated Transactions;
(e) any Liability of the Company or the Shareholders which is not
an Assumed Liability (including any Liability of the Company or the Shareholders
that becomes a Liability of the Buyer by operation of law under any bulk
transfer law of any jurisdiction, under any common law doctrine of defacto
merger or successor liability, or otherwise);
(f) any Liability in respect of any Taxes relating to the
Acquired Assets attributable to any period beginning before and ending on the
Closing Date; or
(g) any liability with respect to any Damages arising, directly
or indirectly, from or in connection with the Company's dispute with Allied
Communications Holdings, LLC set forth in Part 3.15 of the Disclosure Letter.
Absent fraud, deliberate misrepresentation or wilful misconduct, the
remedies provided in this Section 12.2 will be the exclusive contractual
remedies that may be available to Buyer or the other Indemnified Persons.
. Buyer will indemnify and hold harmless Shareholders, and will pay to
Shareholders the amount of any Damages arising, directly or indirectly, from or
in connection with (a) any Breach of any representation or warranty made by
Buyer in this Agreement or in any certificate delivered by Buyer pursuant to
this Agreement, (b) any Breach by Buyer of any covenant or obligation of Buyer
in this Agreement, or (c) any claim by any Person for brokerage or finder's fees
or commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer (or any Person acting on its
behalf) in connection with any of the Contemplated Transactions.
46
. If the Closing occurs, Shareholders will have no liability (for
indemnification or otherwise) with respect to any representation or warranty, or
covenant or obligation to be performed and complied with prior to the Closing
Date, other than those in Sections 3.3, 3.11 and 3.20 unless on or before the
date that is two years after the date of the Closing Buyer notifies Shareholders
of a claim specifying the factual basis of that claim in reasonable detail to
the extent then known by Buyer; a claim with respect to Section 3.20, may be
made on or before the date that is three years after the date of the Closing; a
claim with respect to Sections 3.3 and 3.11 or a noncontractual claim for
indemnification or reimbursement not based upon any representation or warranty
or any covenant or obligation to be performed and complied with prior to the
Closing Date, may be made at any time, subject to applicable statutes of
limitations. If the Closing occurs, Buyer will have no liability (for
indemnification or otherwise) with respect to any representation or warranty, or
covenant or obligation to be performed and complied with prior to the Closing
Date, unless on or before the date that is two years after the date of the
Closing Shareholders notify Buyer of a claim specifying the factual basis of
that claim in reasonable detail to the extent then known by Shareholders.
.
(a) Shareholders will have no liability (for indemnification or
otherwise) with respect to the matters described in clause (a), clause (b),
clause (g) or, to the extent relating to any failure to perform or comply prior
to the Closing Date, clause (c) of Section 12.2 until the total of all Damages
with respect to all such matters in the aggregate exceeds $300,000, whereupon
Shareholders shall have liability with respect to all such Damages in excess of
such $300,000 amount. The maximum liability (for indemnification or otherwise)
with respect to the matters set forth in Section 3.20 shall be $6,000,000 and,
in addition, the maximum liability (for indemnification or otherwise) with
respect to all other matters (except for matters related to Sections 3.3 and
3.11 and indemnification pursuant to Section 12.2(g)) shall be $3,000,000. The
Shareholders' liability (for indemnification or otherwise) with respect to the
matters set forth in Section 3.20 shall be exclusive of their liability with
respect to all other matters, and no Indemnified Person shall be permitted to
claim Damages for other matters if such matters are directly related to Damages
sought with respect to the matters set forth in Section 3.20. There shall be no
maximum liability with respect to matters related to Sections 3.3 and 3.11 and
with respect to indemnification pursuant to Section 12.2(g).
(b) The liability of each Shareholder pursuant to Section 12.2
with respect to any claim for indemnification, the payment of Damages or other
remedy based on the joint and several representations, warranties, covenants and
obligations of the Shareholders (whether claimed against the Escrow Amount or
otherwise) shall be equal to such Shareholder's "Pro Rata Portion" of Damages
incurred by Indemnified Persons, as set forth below. For the purposes of this
Agreement, Parent's Pro Rata Portion shall equal 72.5%, Sadr's Pro Rata Portion
shall equal 17.875% and Meshkinpour's Pro Rata Portion shall equal 9.625%.
. Buyer will have no liability (for indemnification or otherwise) with respect
to the matters described in clause (a) or, to the extent relating to any failure
to perform or comply prior to the Closing Date Clause (b) of Section 12.3 until
the total of all Damages with respect to all such matters in the aggregate
exceeds $300,000, whereupon Buyer shall have liability only with respect to such
Damages in excess of such $300,000 amount.
47
. Upon notice to Shareholders specifying in reasonable detail the basis for such
set-off, Buyer may give notice of a Claim in such amount under the Escrow
Agreement. Neither the exercise of nor the failure to give a notice of a Claim
under the Escrow Agreement will constitute an election of remedies or limit
Buyer in any manner in the enforcement of any other remedies that may be
available to it.
.
(a) Promptly after receipt by an indemnified party under Section
12.2 or Section 12.3 of notice of the commencement of any Proceeding against it,
such indemnified party will, if a claim is to be made against an indemnifying
party under such Section, give notice to the indemnifying party of the
commencement of such claim, but the failure to notify the indemnifying party
will not relieve the indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying party demonstrates
that the defense of such action is prejudiced by the indemnifying party's
failure to give such notice.
(b) If any Proceeding referred to in Section 12.8(a) is brought
against an indemnified party and it gives notice to the indemnifying party of
the commencement of such Proceeding, the indemnifying party will, be entitled to
participate in such Proceeding and, to the extent that it wishes (unless (i) the
indemnifying party is also a party to such Proceeding and the indemnified party
determines in good faith that joint representation would be inappropriate, or
(ii) the indemnifying party fails to provide reasonable assurance to the
indemnified party of its financial capacity to defend such Proceeding and
provide indemnification with respect to such Proceeding), to assume the defense
of such Proceeding with counsel reasonably satisfactory to the indemnified party
and, after notice from the indemnifying party to the indemnified party of its
election to assume the defense of such Proceeding, the indemnifying party will
not, as long as it diligently conducts such defense, be liable to the
indemnified party under this Section 12 for any fees of other counsel or any
other expenses with respect to the defense of such Proceeding, in each case
subsequently incurred by the indemnified party in connection with the defense of
such Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims made in
that Proceeding are within the scope of and subject to indemnification; (ii) no
compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party's consent (which consent shall not be
unreasonably withheld) unless (A) there is no finding or admission of any
violation of Legal Requirements or any violation of the rights of any Person and
no effect on any other claims that may be made against the indemnified party,
and (B) the sole relief provided is monetary damages that are paid in full by
the indemnifying party; and (iii) the indemnified party will have no liability
with respect to any compromise or settlement of such claims effected without its
consent. If notice is given to an indemnifying party of the commencement of any
Proceeding and the indemnifying party does not, within ten days after the
indemnified party's notice is given, give notice to the indemnified party of its
election to assume the defense of such Proceeding, the indemnifying party will
be bound by any determination made in such Proceeding or any compromise or
settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its affiliates other than as a result of
monetary damages for which it would be entitled to
48
indemnification under this Agreement, the indemnified party may, by notice to
the indemnifying party, assume the exclusive right to defend, compromise, or
settle such Proceeding, but the indemnifying party will not be bound by any
determination of a Proceeding so defended or any compromise or settlement
effected without its consent (which may not be unreasonably withheld).
(d) Shareholders hereby consent to the non-exclusive jurisdiction
of any court in which a Proceeding is brought against any Indemnified Person for
purposes of any claim that an Indemnified Person may have under this Agreement
with respect to such Proceeding or the matters alleged therein, and agree that
process may be served on Shareholders with respect to such a claim anywhere in
the world; provided that the indemnified party is subject to the personal
jurisdiction of such court.
. A claim for indemnification for any matter not involving a third-party claim
may be asserted by notice to the party from whom indemnification is sought.
.
.
(a) Except as otherwise expressly provided in this Agreement,
each party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants. The Shareholders will pay all amounts
payable to any finder or investment banker in connection with this Agreement and
the Contemplated Transactions. Buyer will pay one-half and Parent will pay
one-half of the HSR Act filing fee.
(b) In the event of termination of this Agreement, the obligation
of each party to pay its own expenses will be subject to any rights of such
party arising from a Breach of this Agreement by another party.
. Any public announcement or similar publicity with respect to this Agreement or
the Contemplated Transactions will be issued, if at all, at such time and in
such manner as Buyer, the Company and Shareholders jointly determine. Unless
consented to by Buyer in advance or required by Legal Requirements, prior to the
Closing the Company and the Parent shall, and shall cause the Acquired Companies
and their Representatives to, and each of Messrs. Sadr and Meshkinpour shall,
and shall use their respective Best Efforts to cause each Acquired Company and
its Representatives to, keep this Agreement strictly confidential and may not
make any disclosure of this Agreement to any Person. Unless consented to by
Shareholders in advance or required by Legal Requirements, prior to the Closing
Buyer shall keep this Agreement strictly confidential and may not make any
disclosure of this Agreement to any Person. The Company, the Shareholders and
Buyer will consult with each other concerning the means by which the Acquired
Companies' employees, customers, and suppliers and others having dealings with
the Acquired Companies will be informed of the Contemplated Transactions, and
Buyer will have the right to be present for any such communication.
. Between the date of this Agreement and the Closing Date, Buyer, the Company
and Shareholders will maintain in confidence, and will use their Best Efforts to
cause the directors, officers,
49
employees, agents, and advisors of Buyer, Shareholders and the Company to
maintain in confidence, any written confidential or proprietary information
identified as confidential or proprietary when originally furnished by another
party in connection with this Agreement or the Contemplated Transactions, unless
(a) such information is already known to such party or to others not bound by a
duty of confidentiality or such information becomes publicly available through
no fault of such party, (b) the use of such information is necessary or
appropriate in making any filing or obtaining any consent or approval required
for the consummation of the Contemplated Transactions, or (c) the furnishing or
use of such information is required by or necessary or appropriate in connection
with legal proceedings upon the advice of legal counsel.
If the Contemplated Transactions are not consummated, each party will
return or destroy as much of such written information as the other party may
reasonably request.
. Shareholders shall furnish to the Buyer the most current on file Forms W-4 and
W-5 of each new employee as of the Closing Date. Shareholders shall send to the
appropriate Social Security Administration office a duly completed Form W-3 and
accompanying copies of the duly completed Form W-2. It is the intent of the
parties that the obligations of Buyer and Shareholders under this Section 13.4
shall be carried out in accordance with Section 5 of the Internal Revenue
Service's Revenue Procedure 96-60.
. All notices, consents, waivers, and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (a) delivered
by hand (with written confirmation of receipt), (b) sent by telecopier (with
written confirmation of receipt), provided that a copy is mailed by registered
mail, return receipt requested, or (c) when received by the addressee, if sent
by a nationally recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses and telecopier numbers set forth below
(or to such other addresses and telecopier numbers as a party may designate by
notice to the other parties):
The Company and Shareholders:
STM Wireless, Inc.
Xxx Xxxxxxx
Xxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
with a copy to: Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: X. X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
and with a copy to: Xxxxx & Xxxxxx LLP
000 Xxxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
50
Buyer: Inter-Tel, Incorporated
000 X. 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxx Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
with a copy to: Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Xxxxxxx X. Xxxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
. Any dispute or disagreement arising between any of the parties hereto shall be
resolved according to the following dispute resolution procedure. First, such
dispute shall be addressed to each party's designated officers for discussion
and attempted resolution. If any such dispute cannot be mutually resolved by
such officers within five (5) business days, then such dispute shall be
immediately referred to the president of each party for discussion and attempted
resolution. If such dispute cannot be mutually resolved by such parties'
representatives within fifteen (15) days (or such longer period as may be
mutually agreed upon), then such dispute or disagreement shall be referred to
arbitration in Los Angeles, California, in accordance with arbitration rules
(the "Arbitration Rules") of the American Arbitration Association ("AAA") in
effect on the date such notice is given, except that such arbitration shall be
before one arbitrator, which arbitrator shall be mutually agreed upon by the
parties, or if the parties fail to agree, shall be appointed by the AAA in
accordance with the Arbitration Rules. Once appointed, the arbitrator shall
appoint a time and place for a prehearing status conference not more than
fifteen (15) days from the date of his or her appointment, and shall appoint a
time and place for a final hearing not more than forty-five (45) days from the
date of the status conference. The final hearing shall conclude no later than
thirty (30) days after its commencement. The decision of the arbitrator shall be
binding upon each party. The arbitrator shall render a written decision stating
with reasonable detail the reasons for the award adopted. The arbitrator may
base his decision on evidence provided by the parties and, in addition, upon
evidence which the parties provide at the request of the arbitrator. Any cash
component of the adopted award shall be payable in the United States dollars
through a bank in the United States. Each party shall bear its own cost of
preparing for and presenting its case; and the cost of arbitration, including
the fees, and expenses of the arbitrator, will be shared equally by the parties
to such arbitration. The arbitration award shall be final and binding upon the
parties and may be confirmed by the judgment of any court having appropriate
jurisdiction including without limitation California.
. The parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents, and
(c) to do such other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this Agreement and the
documents referred to in this Agreement.
. The rights and remedies of the parties to this Agreement are cumulative and
not alternative. Neither the failure nor any delay by any party in exercising
any right, power, or privilege under this Agreement or the documents referred to
in this Agreement will operate as a waiver of such right,
51
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
. This Agreement supersedes all prior agreements between the parties with
respect to its subject matter and constitutes (along with the documents referred
to in this Agreement) a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This Agreement
may not be amended except by a written agreement executed by the party to be
charged with the amendment. No party may rely upon any statement or
representation made by any other party relating to this Agreement unless stated
or represented herein.
. The disclosures in the Disclosure Letter, and those in any Supplement thereto,
must relate only to the representations and warranties in the Section of the
Agreement to which they expressly relate and not to any other representation or
warranty in this Agreement.
. No party may assign any of its rights under this Agreement without the prior
consent of the other parties except that Buyer may assign any of its rights
under this Agreement to any wholly-owned Subsidiary of Buyer. Subject to the
preceding sentence, this Agreement will apply to, be binding in all respects
upon, and inure to the benefit of the successors and permitted assigns of the
parties. Nothing expressed or referred to in this Agreement will be construed to
give any Person other than the parties to this Agreement any legal or equitable
right, remedy, or claim under or with respect to this Agreement or any provision
of this Agreement. This Agreement and all of its provisions and conditions are
for the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
. If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable. . The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
. With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
52
. After the Closing Date, neither the Company nor Shareholders nor any of its or
their affiliates shall do business as, or use in the conduct of their businesses
or otherwise the name, Telecom Multimedia Systems, Inc., TMSI or any similar
words.
. This Agreement will be governed by the laws of the State of California without
regard to conflicts of laws principles.
. This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
* * *
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
INTER-TEL, INCORPORATED TELECOM MULTIMEDIA SYSTEMS, INC.
By: By:
----------------------------- -----------------------------
Title: Title:
----------------------------- -----------------------------
STM WIRELESS, INC.
By:
-----------------------------
Title:
-----------------------------
Ramin Sadr, an individual
Xxxxxxx Xxxxxxxxxxx, an individual
[Signature Page to Asset Purchase Agreement]
