EXHIBIT 10.22
ASSET PURCHASE AGREEMENT
This Agreement, dated as of October 25, 2002, is made by and between
New Millennium Development Group, Inc., a Florida corporation ("NMDG"),
hereinafter be referred to collectively as "Sellers") and Universal
Broadband Communications, Inc., a Nevada corporation ("UBC"), hereinafter
referred to as ("Purchaser").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Sellers are engaged in the business of, among other things,
sales and services related to long distance services in the United States
(the "Purchased Business"); and
WHEREAS, Purchaser desires to purchase from Sellers, and Sellers
desire to sell to Purchaser, all of Sellers' right, title and interest in
and to certain of the tangible and intangible assets of Sellers relating
to or used in connection with the Purchased Business, together with the
goodwill associated with such assets, all as more fully described below,
on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties hereby agree as follows:
ARTICLE I
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PURCHASE AND SALE OF ASSETS
1.01 SALE AND PURCHASE OF ASSETS. Subject to, and upon the terms
and conditions contained herein, at the Closing (as hereinafter defined)
Sellers shall sell, transfer, assign, convey and deliver to Purchaser,
and Purchaser shall purchase, accept and acquire from Sellers, all of
Sellers' right, title and interest in and to all of the tangible and
intangible assets of Sellers relating to or used in connection with the
Purchased Business, other than the Excluded Assets (as hereinafter
defined) (collectively, the "Assets"), wherever such assets are located,
and whether in the possession of Sellers, any of their suppliers or any
of their distributors or sales agents, together with the business as a
going concern associated with such Purchased Business, in each case free
and clear of all Encumbrances (as hereinafter defined) other than the
Permitted Liens (as hereinafter defined). The Assets include, without
limitation:
(a) INVENTORY. All of Sellers' inventory relating to the
Purchased Business and listed in Schedule 1.01(a) hereto (the
"Inventory");
(b) CONTRACTS, LICENSES, PERMITS AND LEASES. All of Sellers'
rights under assignable contracts, licenses, permits, leases with
regard to the Purchased Business, including all permits, licenses,
franchises, approvals and authorizations by governmental or
regulatory authorities or bodies relating to the Purchased Business
("Authorizations"), to the extent that the authorities or bodies
approve the transfer or assignment of the Authorizations, by Sellers
to Purchaser and which are listed on Schedule 1.01(b);
(c) PREPAID EXPENSES. All security deposits;
(d) FURNITURE, FIXTURES AND EQUIPMENT. All furniture, fixed
assets, equipment and personal property of Sellers used in
connection with the Purchased Business, including, without
limitation, all furnishings, materials, supplies and other
miscellaneous items of tangible personal property wherever located;
(e) ASSUMED CONTRACTS. All of Sellers' right, title and
interest in and to the Assumed Contracts (as hereinafter defined);
(f) TRADE SECRETS, KNOW-HOW, ETC. All trade secrets,
inventions, protocols, know-how, formulae, processes, procedures,
recipes, records of inventions, test information, drawings,
diagrams, designs, operating manuals and other proprietary
information of Sellers used in connection with the Purchased
Business;
(g) TOLL-FREE NUMBERS AND PIN NUMBERS. Any toll-free
telephone numbers and Personal Identification Numbers (PINs) used in
the Purchased Business;
(h) COMPUTERS AND SOFTWARE. All computer systems and software
of Sellers and all electronic databases and other data processing
and storage materials (regardless of format or medium) of Sellers
and used in connection with the Purchased Business;
(i) INTANGIBLE ASSETS AND GOODWILL. All other tangible and
intangible materials, supplies, personal property and other assets
of Sellers used in or relating to the Purchased Business, including,
without limitation, the goodwill of the Purchased Business as a
going concern.
1.02 EXCLUDED Assets. Notwithstanding the provisions of Section
1.01 hereof, the following assets (the "Excluded Assets") are not
included in the Assets and shall be excluded from the Assets for all
purposes hereunder:
(a) all cash, cash equivalents, billed accounts receivable and
known unbilled accounts receivable as of the date of Closing;
(b) Sellers' corporate charter, minute and stock record books,
and corporate seals and tax returns;
(c) insurance policies of Sellers and rights in connection
therewith, and rights arising from any refunds due with respect to
insurance premium payments therefor;
(d) all rights to refunds, credits or overpayments with
respect to Taxes paid or accrued by Sellers. For purposes of this
Agreement, the terms "Tax" and "Taxes" shall mean and include any
and all foreign, national, Federal, state, local or other income,
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franchise, sales, gross receipts, use, value added, goods and
services, withholding, employment, payroll, social security,
unemployment, real and personal property taxes, stamp duty,
environmental (including taxes under Code Section 59A), customs duty
and intangibles tax, alternative or add on minimum or estimated tax,
and all other taxes of any nature, deficiencies, fees, assessments,
interest, penalties or any other governmental charges, duties,
impositions and liabilities of whatever nature, including, without
limitation, any installment payment for taxes and contributions or
other amounts determined with respect to compensation paid to
directors, officers, employees or independent contractors, from time
to time imposed by or required to be paid to any governmental
authority (including penalties and additions to taxes thereon,
penalties for failure to file a return or report and interest on any
of the foregoing);
(e) Sellers' rights, title and interest in and to all
arrangements or understandings under the Excluded Contracts (as
hereinafter defined); and
1.03 ASSUMED LIABILITIES. Purchaser hereby agrees not to assume,
as of the Closing Date, any liabilities and obligations of Sellers
(collectively, the "Assumed Liabilities"):
1.04 EXCLUDED LIABILITIES. Except as expressly provided in Section
1.03 above, Purchaser shall not assume any liabilities or obligations of
(or claimed through) Sellers, whether relating to the Assets, the
Purchased Business or otherwise, it being expressly acknowledged and
agreed by the parties that all such liabilities and obligations, and any
claims or disputes relating thereto, whether existing as of the Closing
Date or arising thereafter, fixed or contingent, known or unknown,
asserted or unasserted (collectively, the "Excluded Liabilities"), are
and shall remain the liabilities and obligations of Sellers for all
purposes. The Excluded Liabilities shall include, without limitation,
any and all debts, liabilities, obligations, contracts, commitments,
claims, disputes, actions, lawsuits, judgments, assessments, fines,
penalties, levies, surcharges, losses, deficiencies and damages arising
out of or related to:
(a) all accounts payable, accrued expenses and other current
liabilities of Sellers relating to the Purchased Business,
(b) contracts, arrangements or understandings between Sellers
and any of their existing and former stockholders, directors,
officers and any other Related Parties (as hereinafter defined);
(c) any Employees or Former Employees (as those terms are
hereinafter defined) of Sellers (whether or not such Employees
become Accepting Employees or any of their beneficiaries, heirs or
assignees of any kind or nature whatsoever, including, without
limitation, accrued wages or vacation pay, obligations arising under
any severance, stock option, retirement, pension, health (including,
without limitation, retiree health obligations) or other benefit
plans (including 401(k) matching benefits, any funding deficiency
arising with respect to any such plan), or any of their
beneficiaries, heirs or
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assignees, except to the extent that such obligation or liability
arises solely out of the Purchaser's employment of the Accepting
Employees after the Closing Date, including, without limitation,
arising from Purchaser's benefit plans, except as set forth in
Section 1.03(c) hereof;
(d) Taxes of Sellers or any Related Parties (as such term is
defined in Section 3.21), including, without limitation, all Taxes
imposed on Sellers by reason of the sale of the Assets and the
Purchased Business to Purchaser hereunder or by reason of any
subsequent liquidation, dissolution or winding up of any of the
Sellers;
(d) all legal, investment banking, accounting and other
professional fees incurred by Sellers in connection with the
negotiation, execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby;
(e) all contracts, agreements and arrangements of Sellers.
(f) all pending or threatened litigation and any other
liabilities or obligations of (or claimed through) Sellers, whether
arising before, on or after the Closing Date.
(g) any obligation of Sellers to indemnify any person by
reason of the fact that such person was a director, officer,
employer or agent of any of the Sellers or was serving at the
request of any such 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); and
(h) all liabilities and obligations of Sellers under any
Benefit Plan (as defined in Section 3.13(c) hereof) other than as
set forth in Section 1.03(c) hereof.
Sellers jointly and severally covenant and agree to pay and
discharge in full, or to cause to be paid and discharged in full, all
Excluded Liabilities in a due and timely manner.
ARTICLE II
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CONSIDERATION; CLOSING
2.01 PURCHASE PRICE. Subject to the terms and conditions of this
Agreement, the purchase price (the "Purchase Price") payable for the
Assets shall be at time of closing:
(a) UBC shall issue 5,000,000 (five million) shares of its
Company Common stock with a $.001 par value per share.
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(b) An additional 5,000,000 (five million) shares of its
Company Common stock as an earn-out, so long as the assets purchased
from NMDG are revenue producing of seven million dollars
($7,000,000) in a twelve (12) month period, beginning December 1,
2002.
(c) NMDG shall receive 49% (forty-nine) percent ownership of
UBC International, Inc., prior to any stock splits.
2.02 TIME AND PLACE. The closing of the transactions contemplated
hereby (the "Closing") shall occur at UBC's office on October 30, 2002
(the "Closing Date"), or at such other time as shall be mutually agreed
to in writing by the parties hereto. The Closing shall commence at 10:00
a.m., local time, on the Closing Date and proceed promptly to conclusion.
2.03 DELIVERIES.
(a) Deliveries by Sellers. Sellers shall deliver to Purchaser
at the Closing the following:
(i) a Xxxx of Sale of Assets in the form attached hereto
as Exhibit B;
(ii) an Assignment and Assumption Agreement in the form
attached hereto as Exhibit C, together with such other
assignments and instruments of transfer as Purchaser shall deem
necessary or appropriate to vest and confirm in Purchaser good
and marketable title to the Assets;
(iii) a certificate, dated as of the Closing Date and
executed by an appropriate officer of each of the Sellers, to
the effect that (A) each of the representations and warranties
of the Sellers made herein is true and correct in all material
respects on the Closing Date as though such representations and
warranties were made on such date, (B) the Sellers have
performed and complied in all material respects with all
covenants and obligations under this Agreement which are
required to be performed or complied with by such party on or
prior to the Closing Date;
(v) the third party consents hereto with respect to the
Assumed Contracts, in form and substance reasonably
satisfactory to Purchaser;
(vii) copies, certified as of the Closing Date by a proper
officer of each of the Sellers, of the resolutions of the
Boards of Directors of each of the Sellers authorizing the
execution, delivery and performance of this Agreement and the
documents to be executed by Sellers hereunder referred to in
this Section 2.05(a) by Sellers;
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(viii) possession of all items of tangible personal
property included among the Assets, wherever located;
(b) DELIVERIES BY PURCHASER. Purchaser shall deliver to
Sellers at the Closing the following:
(i) a certificate, dated as of the Closing Date and
executed by an appropriate officer of the Purchaser, to the
effect that (A) each of the representations and warranties of
the Purchaser made herein is true and correct in all material
respects on the Closing Date as though such representations and
warranties were made on such date, (B) the Purchaser has
performed and complied in all material respects with all
covenants and obligations under this Agreement which are
required to be performed or complied with by such party on or
prior to the Closing Date;
(ii) a copy, certified by a proper officer of Purchaser,
of the resolutions of the Board of Directors of Purchaser
authorizing the execution, delivery and performance of this
Agreement and the documents to be executed by Purchaser
hereunder;
(vi) counterparts of each of the documents and agreements
that are to be executed by Purchaser hereunder, duly executed
by Purchaser;
(vii) a certificate representing 5,000,000 (five million)
shares of Purchaser's restricted registered Common Stock issued
in the name of New Millennium Development Group, Inc.;
(viii) a Consultant Agreement for Xxxx Xxxxxxx
ARTICLE III
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REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby jointly and severally represent and warrant to
Purchaser that:
3.01 ORGANIZATION AND GOOD STANDING. Each Seller is a corporation
duly organized, validly existing and in good standing under the laws of
the state of its incorporation as listed in Schedule 3.01 hereto, and has
all requisite corporate power and authority to own, lease and operate the
properties and assets it now owns, leases or operates and to carry on its
business as presently conducted. Each Seller is duly qualified and
licensed to do business and is in good standing in each jurisdiction
where the nature of its business makes such qualification necessary,
which jurisdictions are listed on Schedule 3.01 hereto, except where the
failure to be qualified or licensed would not have a material adverse
effect on the assets, business, liabilities, financial
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condition, results of operation or prospects of such Seller (a "Material
Adverse Effect"). No material portion of the Purchased Business is owned
or conducted by any entity other than the Sellers.
3.02 AUTHORIZATION AND VALIDITY. (a) Each Seller has all requisite
corporate and other power and authority to execute, deliver and perform
its obligations under this Agreement. The execution, delivery and
performance of this Agreement and the other documents executed by any of
the Sellers hereunder (the "Ancillary Agreements") by the Sellers, and
the consummation of the transactions contemplated hereby and thereby,
have been duly authorized by all necessary corporate action by each
Seller, and no other corporate action on the part of any Seller is
necessary to authorize the execution and delivery of this Agreement or
the Ancillary Agreements or the performance of this Agreement or the
Ancillary Agreements by any Seller and the consummation of the
transactions contemplated hereby and thereby. This Agreement and each
Ancillary Agreement has been duly executed and delivered on behalf of
each Seller that is a party thereto and constitutes the legal, valid and
binding obligation of each such Seller, enforceable against each such
Seller in accordance with its terms, except that the enforceability of
this Agreement and the Ancillary Agreements is subject to bankruptcy,
insolvency, reorganization and similar laws of general applicability
relating to or affecting creditors' rights and limitations on the
availability of the remedy of specific performance and other equitable
relief.
(b) No consent of the shareholders of any Seller is required in
order to authorize such Seller to consummate the transactions
contemplated under this Agreement and the Ancillary Agreements.
3.03 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution,
delivery and performance by the Sellers of this Agreement and the
Ancillary Agreements, and the consummation of the transactions
contemplated hereby and thereby, will not: (i) violate or conflict with
any provision of the Certificate of Incorporation or By-Laws of any of
the Sellers; (ii) violate or conflict with, result in the breach of,
constitute an event of default (or an event which, with the lapse of
time, or the giving of notice, or both, would constitute an event of
default) under, or result in the creation in any party of any right to
accelerate, modify, cancel or terminate, any contract or other
instrument, to which any of the Sellers is a party or by which any of the
Sellers or any of the Assets is bound, or result in the creation of any
Encumbrance or other right of any third party upon any of the Assets;
(iii) violate or conflict with any law, rule, regulation, ordinance,
code, judgment, order, writ, injunction or decree of any court or any
governmental body or agency thereof of any jurisdiction to which any of
the Sellers or any of the Assets may be subject; or (iv) require any
registration, declaration or filing with, or permit, license, exemption,
order, franchise, approval, consent or other authorization of, or the
giving of notice to, any governmental or regulatory body, agency or
authority in the United States or any other jurisdiction in which the
Purchased Business is conducted, except as listed on Schedule 3.03
hereto.
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3.04 FINANCIAL STATEMENTS. The pro forma financial statements (the
"Pro Forma Financial Statements") of the Purchased Business for the ten
(10) months ended October 31, 2001, attached hereto as Schedule 3.04(a)
(i) have been prepared from, and are consistent with, the books and
records of Seller, (ii) have been prepared to the extent applicable in
accordance with U.S. generally accepted accounting principles ("GAAP")
consistently applied during the periods covered thereby, except as
otherwise specifically identified in Schedule 3.04 and in the Pro Forma
Financial Statements, and (iii) fairly present the financial condition of
the Purchased Business as at the dates, and for the periods, stated
therein in accordance with GAAP consistently applied, except as otherwise
identified in Schedule 3.04 and in the Pro Forma Financial Statements.
The books and records of Sellers are accurate and complete in all
material respects and are maintained in accordance with good business
practices. All accrued but unused vacation and sick pay of the Accepting
Employees has been fully accrued on the Pro Forma Financial Statements.
3.05 ABSENCE OF CHANGES OR EVENTS. Since December 31, 2001, the
Purchased Business has been carried on in the ordinary course in a manner
consistent with past practice. Sellers have not, since December 31,
2001, (a) incurred any obligation or liability relating to the Assets or
the Purchased Business (whether absolute, accrued, contingent or
otherwise), other than in the ordinary course of business and consistent
with past practice; (b) mortgaged, pledged, granted a security interest
in or subjected to any Encumbrance any of the Assets; (c) sold or
transferred any of the Assets, other than in the ordinary course of
business, or canceled any debts or claims or waived or released any
rights of the Purchased Business; (d) leased, licensed or granted to any
third party any rights in any of the Assets; (e) experienced any event,
circumstance or condition which has had, or with the passage of time is
reasonably likely to have, a Material Adverse Effect; (f) suffered any
material damage, destruction or loss of physical property or goods,
whether or not covered by insurance, relating to the Assets; (g) made any
change in any accounting principles or practices or in its method of
applying such accounting principles or practices, or made any material
change in any business practice affecting the Purchased Business; (h)
granted any material increase in the salary, commission rate or other
compensation (including, without limitation, bonuses, profit sharing or
deferred compensation) payable or to become payable to any Employee,
Former Employee, consultant or agent of the Purchased Business other than
in the ordinary course of business consistent with past practice; (i)
waive any material right or cancel or enter into any material contract,
lease, license, obligation, commitment, purchase or sale, debt or claim
relating to the Purchased Business other than in the ordinary course of
business; or (j) entered into any agreement to do any of the foregoing.
3.06 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed, and
except (i) for liabilities and obligations incurred pursuant to the
Assumed Contracts, (ii) for liabilities and obligations reflected in the
Pro Forma Financial Statements, or (iii) for liabilities and obligations
incurred in the ordinary course of business since October 31, 2001,
Sellers have no liabilities or obligations of any nature, whether
absolute or contingent, accrued or unaccrued, or known or unknown related
to the Assets or the Purchased Business and for which Purchaser shall be
liable after the Closing.
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3.07 NO CLAIMS OR LITIGATION. Except as disclosed, there are no
suits, actions, claims, proceedings (including, without limitation,
arbitral and administrative proceedings) or governmental investigations
pending or, to the knowledge of Sellers, threatened against or
contemplated against any of the Sellers (or any of their affiliates,
including directors, officers, employees or agents) relating to or
affecting, directly or indirectly, the Assets or the Purchased Business.
There are no such suits, actions, proceedings, claims or investigations
pending or, to the knowledge of Sellers, threatened challenging the
validity or propriety of, or otherwise involving, this Agreement or the
transactions contemplated hereby. There is no judgment, order,
injunction, decree or award issued by any court, arbitrator, governmental
body or agency thereof to which any of the Sellers is a party and which
would materially affect the Assets or the Purchased Business or by which
any of the Assets are bound, which is unsatisfied or which requires
continuing compliance therewith by any of the Sellers.
3.08 TAXES. All Tax returns and reports relating to the Assets and
the Purchased Business required to be filed by Sellers on or before the
date hereof have been duly and timely filed and all such returns and
reports are complete and correct. All Taxes, assessments, fees and other
governmental charges imposed on or with respect to the Assets which have
become due and payable through and including the date hereof have been
paid in a due and timely manner or have been accrued for in the books and
records of Sellers. Sellers have paid or will pay when due any and all
Taxes, assessments, fees and other governmental charges arising with
respect to periods through the Closing Date which are imposed on or with
respect to the Assets and the Purchased Business. As of the date hereof,
(i) none of the Sellers has agreed to the extension of limitation period
for any Tax, (ii) there is no Tax audit pending against any of the
Sellers, (iii) there are no Tax liens on any of the Assets (other than
any lien for current Taxes not yet due and payable), and (iv) to the
knowledge of Sellers, there is no basis for the assertion of any such Tax
liens.
3.09 TITLE TO ASSETS AND RELATED MATTERS. (a) Sellers have good
and marketable title to the Assets, free and clear of any and all
mortgages, pledges, security interests, liens, charges, equities, claims,
conditional sales contracts, restrictions, reservations, options, rights
and other encumbrances of any nature whatsoever (collectively,
"Encumbrances"), except for Permitted Liens. For purposes of this
Agreement, "Permitted Liens" shall mean (i) statutory liens for Taxes not
yet delinquent provided such liens are discharged through the timely
filing of Tax returns, (ii) Encumbrances disclosed in Schedule 3.09(a)
and (iii) other liens of an immaterial nature or amount which do not
impair or interfere with the use of any property or assets of Sellers
(including the Assets) in any material respect. As of the Closing Date,
Sellers shall convey to Purchaser, and Purchaser shall acquire, good and
marketable title to the Assets, free and clear of any Encumbrances,
except for Permitted Liens. The Assets constitute all tangible and
intangible assets relating to, used in, held for use in or necessary for
the conduct of the Purchased Business as currently conducted.
(b) Here sets forth a complete and correct list of all equipment,
machinery, instrumentation, vehicles, furniture, fixtures and other items
of personal property currently owned, leased or used by Sellers in the
Purchased Business and included in the Assets with a book
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value in each case of $50,000 or more as of December 31, 2001. All such
personal property is in good operating condition and repair (ordinary
wear and tear excepted), is physically located at the locations set
forth, and is owned by Sellers or is leased by Sellers under one of the
leases. None of such personal property is subject to any agreement or
commitment for its use by any person other than Sellers in connection
with Sellers' conduct of the Purchased Business. The maintenance and
operation of such personal property is and has been effected in material
compliance with all laws, regulations, ordinances, contractual
commitments and obligations applicable thereto. No assets leased by
Sellers and used in the Purchased Business are owned or used, directly or
indirectly, by any Related Party.
(c) Here sets forth a complete and correct list and description of
all material real property owned ("Owned Premises") or leased by any of
the Sellers relating to the Purchased Business (collectively, the "Leased
Premises") and a complete and correct list and summary description of all
tangible personal property leases relating to the Purchased Business to
which any of the Sellers is a party. Sellers have previously delivered
or made available to Purchaser complete and correct copies of the titles
and any mortgage or deed or trust documents with respect to all Owned
Premises and each lease with respect to the Leased Premises (and any
amendments thereto). (i) none of the Sellers is in default under any
material lease or deed of trust with respect to any Owned Premises, (ii)
each such lease is in full force and effect, (iii) all lease payments due
to date on any such lease have been paid and neither any Seller nor (to
the knowledge of Sellers) any other party is in default under any such
lease, and no event has occurred which constitutes, or with the lapse of
time or the giving of notice or both would constitute, a default by any
Seller or (to the knowledge of Sellers) any other party under such lease,
(iv) there are no disputes or disagreements between any Seller and any
other party with respect to any such lease and (v) there are no leases,
subleases, licenses or other agreements (either written or oral) which
grant occupancy rights in favor of any other party with respect to the
Premises.
(d) The long distance services sold by the Sellers are not subject
to any claims by any end-users of such services and, to the knowledge of
the Sellers, conform in all material respects with all Federal, state and
local laws, ordinances, rules, regulations and similar governmental and
regulatory requirements.
3.10 COMPUTER SOFTWARE. Here sets forth a complete and correct
list of all computer systems and software (other than noncustomized,
commercially available computer programs) which are owned by any of the
Sellers and used in the Purchased Business (the "Proprietary Software").
Title to all computer programs constituting the Proprietary Software will
be assigned to Purchaser free and clear of all Encumbrances at the
Closing. Except as set forth in Schedule 3.10 hereto, Sellers represent
and warrant that the Seller identified on Schedule 3.10 with respect to
each item of Proprietary Software is the owner of the Proprietary
Software and that, to the knowledge of Sellers, the Proprietary Software
does not infringe any copyright, trade secret or trademark of any other
person, and that the Seller identified as owning each item of Proprietary
Software has the right to assign the Proprietary Software to Purchaser
free and clear of any Encumbrances.
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3.11 INTANGIBLE RIGHTS. Here sets forth a complete and correct
list of all patents, patent applications, unpatented inventions,
trademarks and service marks, logos, trademark and service xxxx
registrations (and applications therefor), trade or business names and
copyrights owned or used by any of the Sellers in connection with the
Purchased Business (collectively, the "Intangible Rights"), all of which
are valid and subsisting and are included in the Assets. The Seller
identified opposite the listing of each such Intangible Right is the sole
and exclusive owner of, and has good and marketable title to, such
Intangible Right, free and clear of all Encumbrances, none of which
rights, to the knowledge of Sellers, conflicts with the rights of others.
3.12 here are no licenses, agreements or commitments outstanding or
effective granting any other person any right to use, operate under,
license or sublicense, or otherwise concerning, the Intangible Rights.
None of the Sellers has received any notice or claim that any of the
Intangible Rights infringes upon or conflicts with the rights of any
other person. To the knowledge of Sellers, there is no infringement or
violation by any other person of Sellers' rights in any of the Intangible
Rights. The Assets include all trade secrets, protocols, know-how,
product formulae, product formulations, systems, manufacturing processes,
procedures, recipes, records of invention, test information, drawings,
diagrams, designs and operating manuals currently used in the Purchased
Business. No patents are used in the conduct of the Purchased Business.
3.13 CONTRACTS. (a) Except as set forth in Schedule 3.12(a) or
Schedule 3.12(b) hereto or other schedules to this Agreement, none of the
Sellers is a party to, or subject to:
(i) any written contract, arrangement or understanding, or
series of related written contracts, arrangements or
understandings, that is related to the Purchased Business and
involves annual expenditures or receipts of more than $50,000;
(ii) any lease of personal property that is material to the
Purchased Business;
(iii) any lease of real property that is material to the
Purchased Business;
(iv) any license agreement currently in effect which grants
rights with respect to any of the Assets that is material to the
Purchased Business;
(v) any written contract, arrangement or understanding
currently in effect not made in the ordinary course of business that
is material to the Purchased Business;
(vi) any note, bond, indenture, credit facility, mortgage,
pledge, security agreement or other contract, arrangement or
understanding relating to or evidencing indebtedness for money
borrowed, or a security interest, pledge or mortgage in the Assets;
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(vii) any express warranty, indemnity or guaranty issued by any
of the Sellers that is material to the Purchased Business;
(viii) any written contract, arrangement or understanding
granting to any person the right to use any of the Assets that is
material to the Purchased Business;
(ix) other than those license agreements set forth on Schedule
3.12(a) pursuant to clause (iv) above, any written contract,
arrangement or understanding restricting any Seller's right to
engage in any business activity or compete with any business that is
material to the Purchased Business;
(x) any written contract, arrangement or understanding with a
Related Party that is material to the Purchased Business;
(xi) any other agreement that is material to the Purchased
Business, including, but not limited to, joint venture agreements,
purchase and sale agreements and collective bargaining, union,
consulting and employment contracts; and
(xii) any outstanding commitment or obligation to enter into
any contract or arrangement of the nature described in subsections
(i) through (xi) of this subsection 3.12(a).
Sellers have previously delivered or made available to
Purchaser complete and correct copies (or, in the case of oral contracts,
a complete and correct description) of each contract, agreement,
arrangement and understanding (and any amendments or supplements thereto)
listed on Schedule 3.12(a) hereto (the "Material Contracts"). None of
the Sellers is a party or subject to any oral contract, arrangement or
understanding, or series of related oral contracts, arrangements or
understandings, that is material to the Purchased Business.
(b) Here lists those Material Contracts which are to be
assumed by Purchaser at the Closing pursuant to this Agreement (the
"Assumed Contracts"). Except as set forth in Schedule 3.12(b) hereto,
(i) each Assumed Contract is in full force and effect; (ii) neither any
Seller nor (to the knowledge of Sellers) any other party is in material
default under any such contract, and no event has occurred which
constitutes, or with the lapse of time or the giving of notice or both
would constitute, a default by any Seller or (to the knowledge of
Sellers) a default by any other party under such contract, other than
those defaults that would not have, individually or in the aggregate, a
Material Adverse Effect; (iii) to the knowledge of Sellers, there are no
disputes or disagreements between any Seller and any other party with
respect to any such contract; and (iv) none of the Sellers is currently
renegotiating any of its contracts, nor is any of the Sellers paying
liquidated damages in lieu of performing any of its contracts.
(c) Schedule 3.12(c) hereto identifies all Excluded Contracts.
12
3.14 EMPLOYEES; EMPLOYEE BENEFITS. (a) Schedule 3.13(a) hereto
sets forth the names of all current employees of Sellers employed in the
Purchased Business and who Purchaser proposes to employ upon Closing (the
"Employees"), including each Employee's job title, current salary and
bonus potential, date of birth and date of employment. Except as set
forth on Schedule 3.13(a), there are no outstanding loans from any of the
Sellers to any such Employee, or any former employee of Sellers who were
employed in the Purchased Business ("Former Employees"), agent or
consultant of any of the Sellers. Complete and correct copies or
descriptions of all written and, to the knowledge of Sellers, oral
employment agreements between any of the Sellers and any Employee, and
all written and, to the knowledge of Sellers, oral employment policies,
and all amendments and supplements thereto, have previously been
delivered to Purchaser and are listed on Schedule 3.13(a). Except as set
forth on Schedule 3.13(a), since December 31, 2000, none of the Sellers
has, except in the ordinary course of business and consistent with past
practice, increased the salary or other compensation payable or to become
payable to or for the benefit of any of the Employees. Except as set
forth in Schedule 3.13(a), Sellers have accrued or reflected in the Pro
Forma Financial Statements all obligations for salaries, vacation,
medical, severance and other benefits and other compensation of any kind
with respect to the Employees, in each case to the extent required to be
reflected in the Pro Forma Financial Statements by GAAP, and neither
Purchaser nor Sellers will incur any liability, including any "parachute
payment" under Section 280G of the Code, under any severance agreement,
employment agreement, similar agreement or Benefit Plan solely as a
result of the consummation of the transactions contemplated by this
Agreement.
(b) With respect to the Purchased Business and the Employees,
except as disclosed on Schedule 3.13(b), Sellers have complied in all
material respects with all applicable laws, statutes and regulations with
respect to employees, including, without limitation, those governing
payment of minimum wages and overtime rates, labor standards, working
conditions, the withholding and payment of Taxes from compensation, terms
and conditions of employment, immigration, workplace safety, workers'
compensation, disability pay, discriminatory practices, including,
without limitation, with respect to employment and discharge, or
otherwise relating to the conduct of employers with respect to employees
or potential employees (collectively, the "Employee Laws"), and there
have been no claims made or threatened thereunder against Sellers.
Sellers will transfer to Purchaser at the Closing, the employee records
and I-9 forms with respect to the Accepting Employees in proper order as
required by law. Except as set forth on Schedule 3.13(b), there are no
disputes or other proceedings pending or, to the knowledge of Sellers,
threatened between Sellers and any of the Employees; no labor union or
other collective bargaining unit represents or has ever represented any
of the Employees in connection with their employment with Sellers; none
of the neither Sellers has knowledge of any organizational effort by any
labor union or other collective bargaining unit currently under way or
threatened with respect to any Employees; no consent of any labor union
or other collective bargaining unit representing Employees is required to
consummate the transactions contemplated by this Agreement.
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(c) Schedule 3.13(c) hereto sets forth a list of each defined
benefit and defined contribution plan, multiemployer plan, stock based
plan, executive compensation program or arrangement, bonus plan,
incentive compensation plan, agreement or arrangement, supplemental
retirement plan or arrangement, vacation pay, sickness, disability or
death benefit plan (whether provided through insurance, on a funded or
unfunded basis or otherwise), medical or life insurance plan, severance
pay, termination or salary continuation agreement or plan, and each other
employee benefit plan, program or arrangement which is maintained by
Sellers for the benefit of or relating to any of the Employees or to any
Former Employees or their dependents, survivors or beneficiaries, whether
or not legally binding, or for which Sellers could reasonably have any
liabilities, all of which are hereinafter referred to as the "Benefit
Plans."
(d) Each Benefit Plan has been administered to date in accordance
with the applicable provisions of ERISA, the Code and applicable law and
with the terms and provisions of all documents, contracts or agreements
pursuant to which such Benefit Plan is maintained; there is no
arbitration, claim or suit pending or, to the knowledge of Sellers,
threatened, involving a Benefit Plan (other than routine claims for
benefits), and there is no basis for such a claim; none of the Benefit
Plans nor, to the knowledge of Sellers, any fiduciary thereof has been
the direct or indirect subject of an order or investigation or
examination by a governmental or quasi-governmental agency. Except as
set forth on Schedule 3.13(d) hereto, each Benefit Plan which is an
"employee pension benefit plan" (as defined in Section 3(2) of ERISA)
meets the requirements of Section 401(a) of the Code; the trust, if any,
forming part of such plan is exempt from United States Federal Income Tax
under Section 501(a) of the Code; a favorable determination letter has
been issued by the Internal Revenue Service (the "IRS") after January 1,
1994 with respect to each such plan and related trust and each amendment
thereto. With respect to each Benefit Plan, Sellers have heretofore
delivered to Purchaser complete and correct copies of the following
documents, where applicable: (i) the most recent annual report (Form
5500 series), together with schedules, as required, filed with the IRS,
and any financial statements and opinions required by Section 103(a)(3)
of ERISA, (ii) the most recent determination letter issued by the IRS,
(iii) the most recent summary plan description and all modifications,
(iv) the text of the Benefit Plan and of any trust, insurance or annuity
contracts maintained in connection therewith, and (v) the most recent
actuarial report relating to the Benefit Plan.
(e) Except as set forth on Schedule 3.13(e) hereto, all
contributions required to be made to or with respect to each Benefit Plan
with respect to the service of Employees or Former Employees prior to the
date hereof have been made or have been accrued for in the books and
records of the Purchased Business for all periods through the date
hereof. None of the Sellers has any obligation to provide
post-retirement medical or other benefits to Employees or Former
Employees or their survivors, dependents and beneficiaries, except as may
be required by Section 4980B of the Code or Part 6 of Title I of ERISA.
3.15 MAJOR CUSTOMERS. Schedule 3.14 hereto sets forth a complete
and correct list of the twenty (20) largest customers of the Purchased
Business in terms of revenue recognized (after taking into account any
discounts or rebates granted to such customers) during the ten (10)
months
14
ended December 31, 2001, showing the total amount billed by Sellers to
each such customer in connection with the Purchased Business for such
period. Except as set forth and described in Schedule 3.14 hereto, since
December 31, 2001, none of the Sellers has received any written notice or
other written communication terminating or materially reducing, or
setting forth an intention to terminate or materially reduce in the
future, or otherwise reflecting a material adverse change in, the
business relationship between such customer and Sellers.
3.16 CONSULTANTS, SALES REPRESENTATIVES AND OTHER AGENTS.
Schedule 3.15 hereto sets forth a complete and correct list of the names
and addresses of each consultant, sales representative or other agent
currently engaged by any of the Sellers with respect to the Purchased
Business and each other distributor used by any of the Sellers with
respect to the Purchased Business who is not an Employee of Sellers and
who has received (or is expected to receive) $50,000 or more from Sellers
in 2001 or 2002, a summary description of the services provided by each
such person, the commission rates or other compensation applicable with
respect to each such person and the amount of commissions or other
compensation earned by each such person during the 2000 calendar year and
to date. Schedule 3.15 hereto also sets forth a list of all written
agreements between Sellers and any such person, complete and correct
copies of which agreements have previously been delivered by Sellers to
Purchaser. Each such agreement is cancelable by Sellers without penalty
on not more than thirty (30) days' notice, except as specifically set
forth on Schedule 3.15.
3.17 SUPPLIERS; INVENTORIES. (a) Schedule 3.16(a) hereto sets
forth a complete and correct list and description (including price and
other terms) of all supply contracts, agreements and understandings
relating to the Purchased Business between any of the Sellers and (i) any
subsidiary or other affiliate of any Seller, and (ii) all other suppliers
of goods and services who are currently providing goods or services to
the Purchased Business which are expected to involve, for the
twelve-month period ending March 31, 2001, an aggregate value of $50,000
or more. Except as set forth in Schedule 3.16(a), no supplier identified
in Schedule 3.16(a) hereto pursuant to clause (ii) of the preceding
sentence has given any Seller any notice (written or oral) terminating,
suspending or reducing, or setting forth an intention to terminate,
suspend or reduce in the future, or otherwise reflecting an adverse
change in, the business relationship between such supplier and such
Seller and, to the knowledge of Sellers, there has not been any adverse
change in the business relationship of any of the Sellers with any such
supplier. None of the Sellers has received notice from the supplier of
any product or service which is material to the Purchased Business as to
the possible shortage or other disruption in the supply of such key
product or service.
(b) Schedule 1.01(a) hereto sets forth a correct and complete
schedule of all Inventory. Except as disclosed on Schedule 1.01(a)
hereto, the Inventory is owned by Sellers free and clear of any
Encumbrances and is of merchantable quality.
3.18 ABILITY TO CONDUCT THE PURCHASED BUSINESS. There is no
agreement, arrangement or understanding with any person, or any judgment,
order, writ, injunction or decree of any court or governmental body or
agency thereof of any jurisdiction, that restricts Sellers'
15
conduct of the Purchased Business as of the date hereof. Sellers have in
force, and are in compliance with the terms and conditions of, all
material licenses, permits, exemptions, consents, authorizations and
approvals of governmental authorities or agencies thereof used or
required under any existing Federal, state, local or foreign statute,
law, ordinance, rule or regulation (or any proposed statute, law,
ordinance, rule or regulation known to any of the Sellers) in connection
with the Purchased Business.
3.19 COMPLIANCE WITH APPLICABLE LAW AND REGULATIONS. To the
knowledge of Sellers, neither the Assets nor Sellers' operation of the
Purchased Business as presently conducted are in material violation of
any applicable foreign or domestic law, rule, regulation, ordinance,
code, judgment, order, injunction, writ or decree of any Federal, state,
local or foreign court or governmental body or agency thereof, or trade
organization, to which Sellers may be subject, including, without
limitation, any rules or regulations of the Federal Communications
Commission and similar regulatory bodies of any foreign country, state or
locality. No claims are currently pending against any of the Sellers,
and none of the Sellers has received any notice alleging any such
violation, nor, to the knowledge of Sellers, is there any inquiry,
investigation or proceeding relating thereto.
3.20 INSURANCE. Attached hereto as Schedule 3.19 is a complete and
correct list of all policies of insurance maintained by Sellers which
relate to the Assets or the Purchased Business, specifying, with respect
to each such policy, the identities of the insured and of the insurer,
the policy number, the risk insured against, the limits of coverage, the
deductible amount (if any), any outstanding or pending claims thereunder,
the premium rate and the date through which coverage will continue by
virtue of premiums already paid. All of such policies are in full force
and effect as of the date hereof. To the knowledge of Sellers, the
policies of insurance identified in Schedule 3.19 adequately insure the
Purchased Business and the Assets.
3.21 TRANSACTIONS WITH RELATED PARTIES. Schedule 3.20 hereto
contains an accurate and complete list of, and sets forth the principal
terms and conditions of, all material agreements, arrangements and
understandings relating to or affecting the Purchased Business between
Sellers and any of the following (each, a "Related Party"): (i) each
shareholder, member, director and officer of each of the Sellers; (ii)
the spouses, children and other lineal descendants of any shareholder,
member, director or officer of each of the Sellers (collectively, "near
relatives"); (iii) any trust for the benefit of any shareholder, member,
director or officer of any of the Sellers or any of their respective near
relatives; and (iv) any corporation, partnership, joint venture or other
entity owned or controlled by any shareholder, member, director or
officer of any of the Sellers or any of their respective near relatives.
3.22 ENVIRONMENTAL MATTERS. For purposes of this Agreement, the
following definition shall apply:
(i) the term "Governmental Entity" shall mean and include,
without limitation, the United States Environmental Protection
Agency, the United States Department of
16
Labor or any other Federal, state, local or regional person or body
having authority to administer, implement or enforce any
Environmental Law.
3.23 NO TRANSACTIONS. There are no agreements, arrangements or
understandings involving the purchase, sale or other disposition of the
Purchased Business, whether through a sale of assets, a sale of the
capital stock of any of the Sellers, a merger or otherwise, other than
this Agreement.
3.24 FINDER'S FEE. Sellers have not incurred any obligation for
any finder's, broker's or agent's fee in connection with this Agreement
or the transactions contemplated hereby.
3.25 RELIANCE. The foregoing representations and warranties are
made by Sellers with the knowledge and expectation that Purchaser is
placing complete reliance thereon in entering into, and performing its
obligations under, this Agreement, and the same shall not be affected in
any respect whatsoever by any investigation heretofore or hereafter
conducted by or on behalf of Purchaser whether in contemplation of this
Agreement, the consummation of the transactions contemplated hereby or
otherwise.
3.26 DISCLOSURE. No representation and warranty of Sellers
contained in this Agreement (including, without limitation, the Schedules
hereto), nor any other statement, schedule, certificate or other document
delivered or to be delivered by Sellers to Purchaser pursuant hereto or
in connection with the transactions contemplated by this Agreement,
contains or will contain any untrue statement of a material fact or omits
or will omit to state a material fact necessary in order to make the
statements made herein or therein, in the light of the circumstances in
which they were made, not misleading.
ARTICLE IV
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REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby makes the following representations and warranties
to Sellers:
4.01 ORGANIZATION AND GOOD STANDING OF PURCHASER. Purchaser is a
corporation duly organized, validly existing and in good standing under
the laws of the State of California and has all requisite corporate power
and authority to own, lease and operate its property and assets and to
carry on its business as presently conducted.
4.02 AUTHORITY; BINDING EFFECT; PERFORMANCE. Purchaser has all
requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement, the Note and the Pledge Agreement.
The execution, delivery and performance of this Agreement, the Note and
the Pledge Agreement by Purchaser, and the consummation of the
transactions contemplated hereby, have been duly authorized by all
necessary corporate action by Purchaser, and no other corporate action on
the part of Purchaser is necessary to authorize the execution and
17
delivery of this Agreement, the Note and the Pledge Agreement or the
performance of this Agreement, the Note and the Pledge Agreement by
Purchaser and the consummation of the transactions contemplated hereby.
This Agreement, the Note and the Pledge Agreement have been duly executed
and delivered on behalf of Purchaser and constitute legal, valid and
binding obligations of Purchaser, enforceable against Purchaser in
accordance with their terms. The security interest created by the Pledge
Agreement in the collateral described therein shall be a first priority
security interest securing payment of the Note to the extent that such
collateral is not already subject to an existing security interest
assumed by the Purchaser pursuant to Section 1.03 hereof.
4.03 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution,
delivery and performance of this Agreement by Purchaser, and the
consummation of the transactions contemplated hereby, will not: (i)
violate or conflict with any provision of the Certificate of
Incorporation or By-Laws of Purchaser; (ii) violate or conflict with,
result in the breach of or constitute an event of default (or an event
which, with the lapse of time, or the giving of notice, or both, would
constitute an event of default) under, or result in the creation in any
party of the right to accelerate, modify, cancel or terminate, any
contract or other instrument to which Purchaser is a party or by which
Purchaser or any of its assets is bound, or result in the creation of any
Encumbrance or other right of any third party upon any of the assets of
Purchaser; (iii) violate or conflict with any law, rule, regulation,
ordinance, code, judgment, order, writ, injunction or decree of any court
or any governmental body or agency thereof of any jurisdiction to which
Purchaser or any of its assets is subject, or (iv) require any
registration, declaration or filing with, or permit, license, exemption,
order, franchise, approval, consent or other authorization of, or the
giving of notice to, any governmental or regulatory body, agency or
authority in the United States.
4.04 NO CLAIMS OR LITIGATION. There are no suits, actions,
proceedings, claims or investigations pending or, to the knowledge of
Purchaser, threatened against Purchaser challenging the validity or
propriety of, or otherwise involving, this Agreement or the transactions
contemplated hereby.
4.05 FINDER'S FEE. Purchaser has not incurred any obligation for
any finder's, broker's or agent's fee in connection with this Agreement
or the transactions contemplated hereby.
4.06 RELIANCE. The foregoing representations and warranties are
made by Purchaser with the knowledge and expectation that Sellers are
placing complete reliance thereon in entering into, and performing its
obligations under, this Agreement, and the same shall not be affected in
any respect whatsoever by any investigation heretofore conducted by or on
behalf of Sellers whether in contemplation of this Agreement or
otherwise.
4.07 DISCLOSURE. No representation and warranty of Purchaser
contained in this Agreement (including, without limitation, the Schedules
hereto), nor any other statement, schedule, certificate or other document
delivered or to be delivered by Purchaser to Sellers
18
pursuant hereto or in connection with the transactions contemplated by
this Agreement, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary in
order to make the statements made herein or therein, in the light of the
circumstances in which they were made, not misleading.
ARTICLE V
---------
PURCHASER'S COVENANTS AND COVENANTS OF BOTH PARTIES
5.01 CONSUMMATION OF AGREEMENT. Each of the parties agrees to
perform its obligations hereunder and to use its reasonable best efforts
to cause the consummation of the transactions contemplated by this
Agreement in accordance with, and subject to, the terms and conditions of
this Agreement.
5.02 CONFIDENTIALITY. Purchaser will, and will use its best
efforts to cause its employees and agents to, hold in strict confidence,
unless compelled to disclose by judicial or administrative process or, in
the opinion of counsel, by other requirements of law, all Confidential
Information (as hereinafter defined). Purchaser will provide notice to
Sellers and an opportunity to eliminate or modify any such requirement of
law before any such disclosure. Purchaser will not disclose the
Confidential Information to any person, except as otherwise may
reasonably be necessary to carry out the transactions contemplated by
this Agreement, including any business or due diligence review by or on
behalf of Purchaser. If this Agreement is terminated as provided
hereinafter, then Purchaser shall return or cause to be returned promptly
to Sellers all documents and all copies thereof furnished by Sellers and
held by Purchaser or its representatives containing such Confidential
Information. For the purposes hereof, "Confidential Information" shall
mean all information of any kind concerning Sellers in connection with
the transactions contemplated by this Agreement except information: (i)
ascertainable or obtained from public or published information; (ii)
received from a third party not known by Purchaser to be under an
obligation to Sellers to keep such information confidential; or (iii)
which is or becomes known to the public (other than through a breach of
this Agreement); or (iv) which was in Purchaser's possession prior to
disclosure thereof to Purchaser in connection herewith.
5.03 EMPLOYEES. (a) Effective as of the Closing Date, Purchaser
(or an affiliate of Purchaser) shall offer to employ such of the
Employees as Purchaser shall determine in its sole discretion and shall
employ those Employees who accept Purchaser's offer of employment (the
"Accepting Employees") on such terms and conditions of employment as
Purchaser (or, if applicable, an affiliate of Purchaser) shall determine
in its sole discretion. From and after the Closing Date, all Accepting
Employees shall become employees of Purchaser (or an affiliate of
Purchaser), under Purchaser's (or an affiliate of Purchaser's) exclusive
control and direction. The Sellers shall permit the Purchaser throughout
the period prior to the Closing Date to meet with Employees at such
reasonable times as shall be approved by a representative of the Sellers
and to distribute to such Employees such forms and other documents
relating to employment by the
19
Purchaser after the Closing Date as the Purchaser shall reasonably
request. The Sellers shall use their best efforts to cause any Employee
who may be offered employment by the Purchaser to accept such offer and
to become an employee of the Purchaser effective on the Closing Date.
(b) The Purchaser shall not assume or have any obligations or
liabilities to any Employee or Former Employee or to any dependent,
survivor or beneficiary thereof, arising out of or relating to such
person's employment with the Seller or any of its affiliates or any
predecessor thereto, the termination thereof, the consummation of the
transactions contemplated by this Agreement, or the sponsorship by the
Sellers or any affiliate or predecessor thereof of any employee benefit
plan, including the Benefit Plans other than vacation pay and sick pay of
the Accepting Employees that is accrued but unused or otherwise arising
on the date of termination of each Accepting Employee.
(c) Purchaser shall not be required to assume, establish or
continue any of the Benefit Plans or employment policies or practices of
Sellers, or any obligations thereunder, nor shall Purchaser or any of its
affiliates become a successor employer with respect to any Benefit Plan,
nor shall Purchaser or any of its affiliates be obligated by this
Agreement to make any provision with respect to employee benefits,
employment policies or practices after the Closing Date. Sellers shall
be solely responsible for any compensation, severance or other
obligations to Employees (including Accepting Employees) and Former
Employees arising under any Benefit Plan or otherwise out of their
employment with Sellers or termination thereof.
5.04 ACCESS AFTER CLOSING. (a) Purchaser and each of the Sellers
agree to retain all accounting (including, without limitation,
accountants' work papers), business, financial and Tax records in its
possession (i) relating to the Purchased Business in existence on the
Closing Date and either sold to Purchaser hereunder or retained by
Sellers thereafter, as the case may be, or (ii) coming into existence
after the Closing Date which relate to the Purchased Business for
pre-Closing periods, in each case for a period of three years from the
Closing Date, provided that, after such date, each party shall make
reasonable arrangements for the other party's continued access to such
records. In addition, from and after the Closing Date, Purchaser and
each of the Sellers agree that, subject to receiving appropriate
assurances of confidentiality and restrictions on use, they will not
unreasonably withhold access by the other party and its attorneys,
accountants and other representatives (after reasonable notice and during
normal business hours), to such personnel, books, records and documents
relating to the Purchased Business as the other party may reasonably deem
necessary to properly prepare for, file, prove, answer, prosecute and/or
defend any financial statements, Tax return, filing, audit, judicial or
administrative proceeding, protest, claim, suit, inquiry or other
proceeding.
(b) The party requesting assistance hereunder shall pay to the
party whose assistance is requested the reasonable costs of the party
providing such assistance.
5.05 MAIL AND COMMUNICATIONS. (a) Sellers shall promptly remit to
Purchaser any mail or other communications, including, without
limitation, any written inquiries, and payments
20
received by Sellers related to the Purchased Business or the Assets and
any invoices received by Sellers relating to the Assumed Liabilities
which are received by Sellers from and after the Closing Date.
(b) Purchaser shall promptly remit to Sellers any mail or other
communications related to Sellers and any invoices received by Purchaser
related to the Excluded Liabilities which are received by Purchaser from
and after the Closing Date.
5.06 NOTICE OF DEVELOPMENTS. Each party will give prompt written
notice to the other party of any material adverse development causing a
breach of any of its own representations, warranties or covenants
hereunder. No disclosure by any party pursuant to this Section 5.06,
however, shall be deemed to amend or supplement the Disclosure Schedule
or to prevent or cure any misrepresentation, breach of warranty or breach
of covenant. As used herein, "Disclosure Schedule" means the Schedules
attached hereto and referred to herein.
ARTICLE VI
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COVENANTS
6.01 BUSINESS OPERATIONS. From the date hereof through the Closing
Date Sellers (and Purchaser under the Management Agreement) shall operate
the Purchased Business only in the ordinary course, will not introduce
any new method of management or operation and shall use their
commercially reasonable efforts to preserve the Purchased Business
intact, to retain its present customers and suppliers so that they will
be available to Purchaser after the Closing and to cause consummation of
the transactions contemplated by this Agreement in accordance with its
terms and conditions. Sellers (and Purchaser under the Management
Agreement) shall not take any action that might materially impair the
Purchased Business or Assets without the prior consent of Purchaser.
Without limitation of the generality of the foregoing, none of the
Sellers and Purchaser will, and none of the Sellers and Purchaser will
permit any of its subsidiaries to engage in any practice, take any
action, or enter into any transaction of the sort described in Section
3.05 above. Each Seller and Purchaser will keep, and will cause each of
its subsidiaries to keep, the Purchased Business and its properties
substantially intact, including its present operations, physical
facilities, good will, working conditions and relationships with lessors,
licensors, suppliers, distributors, customers and Employees.
6.02 ACCESS; DUE DILIGENCE. Sellers shall permit Purchaser and its
authorized representatives full access to, and make available for
inspection, all of the Assets and Purchased Business, including Sellers'
employees, customers and suppliers, and furnish Purchaser all documents,
records and information with respect to the affairs of Sellers as
Purchaser and its representatives may reasonably request, all for the
sole purpose of permitting Purchaser to become familiar with the business
and assets and liabilities of Sellers.
21
6.03 MATERIAL CHANGE. Prior to the Closing, Sellers and Purchaser
shall promptly inform the other party in writing of any material adverse
change in the condition of the Purchased Business. Notwithstanding the
disclosure of any such material adverse change, the parties shall not be
relieved of any liability for, nor shall the providing of such
information be deemed a waiver of, the breach of any representation or
warranty of any party contained in this Agreement.
6.04 APPROVALS OF THIRD PARTIES. As soon as practicable after the
execution of this Agreement, but in any event prior to the Closing Date,
Sellers will use their best efforts to secure all necessary approvals and
consents of third parties to the consummation of the transactions
contemplated by this Agreement. To the extent that any Sellers' rights
under any agreement, contract, license, commitment, or any other Asset to
be assigned hereunder may not be assigned without the consent of another
person which has not been obtained prior to the Closing, Seller shall use
commercially reasonably efforts to obtain any such required consents as
promptly as possible after the Closing. If any such consent has not been
obtained or if any attempted assignment would be ineffective or would
impair Purchaser's rights under the instrument in question so that
Purchaser would not in effect acquire the benefit of all such rights,
then the Sellers, to the maximum extent permitted by law and the
instrument, shall act as Purchaser's agent in order to obtain for
Purchaser the benefits thereunder and shall cooperate, to the maximum
extent permitted by law and the instrument, with Purchaser in any other
reasonable arrangement designed to provide such benefits to Purchaser.
Sellers shall bear all costs and expenses relating to obtaining the third
party consents required of Seller and contemplated by this Section 6.04.
6.05 HIRING EMPLOYEES. Sellers will cooperate with all reasonable
requests made by Purchaser for the purpose of allowing Purchaser to hire
those employees of Sellers designated by Purchaser, such employment to be
effective as of the Closing Date.
6.06 TAX RETURNS AND PAYMENTS. Sellers shall prepare and file all
Federal, state, local and foreign returns for all Taxes due or claimed to
be due on or before the Closing Date by any governmental authority with
respect to Sellers and the Purchased Business or the Assets, and shall
promptly pay all such Taxes when due. Sellers shall be solely
responsible for, and shall make timely payment of, all sales, use,
transfer, excise, documentary, real property transfer gains, value added
and other similar Taxes payable in connection with this Agreement, the
additional agreements referred to in Section 205(a) hereof, or arising
from the sale, transfer, assignment, delivery or conveyance of the Assets
hereunder or of any assets thereunder. Sellers shall prepare and file
all necessary tax returns and other filings in connection with the Taxes
referred to in this Section 6.06, shall provide all information,
documents and affidavits necessary for any such filings, and shall pay
all fees and charges incurred in connection therewith. Sellers jointly
and severally shall indemnify, defend and hold harmless on an after-tax
basis Purchaser against and from any and all liability, cost, loss or
expense to Purchaser arising out of the imposition of any Taxes referred
to in this Section 6.06.
22
6.07 FURTHER ASSURANCES. Sellers shall, at any time and from time
to time after the Closing, upon the request and at the expense of
Purchaser but without further consideration, do, execute, acknowledge,
deliver and file, or shall cause to be done, executed, acknowledged,
delivered and filed, all such further acts, deeds, transfers,
conveyances, assignments or assurances as may be reasonably requested by
Purchaser to transfer, convey and assign to Purchaser's possession and
use, the Assets and the Purchased Business and to comply with all
applicable legal requirements, including, without limitation, making any
required governmental filings, in connection with the purchase of the
Assets and the Purchased Business by Purchaser. Without limiting the
foregoing, upon the request and at the expense of Purchaser, at any time
during the period commencing on the Closing Date and ending on the third
anniversary of the Closing Date, Sellers shall take all steps necessary
to assign all material licenses, permits, exemptions, consents,
authorizations or approvals to Purchaser in cases where such assignment
is permitted.
6.08 EXCLUSIVITY. Sellers shall not (i) solicit, initiate or
encourage the submission of any proposal or offer from any person
relating to the acquisition of any capital stock or other voting
securities of any of their affiliates engaged in the Purchased Business,
or any substantial portion of the Assets or the Purchased Business
(including any acquisition structured as a merger, consolidation, or
share exchange); or (ii) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate
in, or facilitate in any other manner any effort or attempt by any person
to do or seek any of the foregoing. Sellers shall notify the Purchaser
immediately if any person makes any proposal, offer, inquiry, or contact
with respect to any of the foregoing.
6.09 POST-CLOSING FUNDS. Sellers covenant and agree that any cash,
cash proceeds or other funds received by Sellers from and after the
Closing Date which constitute Assets or proceeds of Assets (including,
without limitation, funds deposited into bank accounts of Sellers after
the Closing Date) will be promptly remitted by Sellers to Purchaser, free
and clear of all Encumbrances of any nature whatsoever and, pending such
remittance, shall be held in trust for the benefit of Purchaser.
6.10 REGULATORY COMPLIANCE. Sellers shall comply with the
provisions of all laws, rules, regulations, ordinances, codes, orders and
decrees applicable to the Purchased Business.
23
ARTICLE VII
-----------
PURCHASER'S CONDITIONS PRECEDENT
Except as may be waived in writing by Purchaser in Purchaser's sole
discretion, the obligations of Purchaser hereunder are subject to the
fulfillment at or prior to the Closing of each of the following
conditions:
7.01 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Sellers contained herein shall be true and correct in all
material respects as of the Closing as though such representations and
warranties were made on such date, subject to any changes contemplated by
this Agreement.
7.02 PERFORMANCE. Sellers shall have performed and complied in all
material respects with all covenants or conditions required by this
Agreement to be performed and complied with by them on or prior to the
Closing.
7.03 DELIVERIES. Sellers shall have delivered each of the
documents required pursuant to Section 2.05(a) in each case in form and
substance satisfactory to Purchaser.
7.04 PROCEEDINGS. No action, proceeding or order by any court or
governmental body or agency shall have been threatened in writing,
asserted, instituted or entered to restrain, enjoins or, otherwise
prohibits the carrying out of the transactions contemplated by this
Agreement.
7.05 APPROVALS, PERMITS, ETC. All consents, authorizations,
approvals, exemptions, licenses or permits of, or registrations,
qualifications, declarations or filings with, any governmental or
regulatory body or agency thereof that are (i) required in connection
with the consummation of the transactions contemplated hereby and (ii)
are necessary for Purchaser to properly conduct the Purchased Business,
except as set forth on Schedule 7.05 hereto, shall have been transferred
by Sellers or otherwise obtained.
ARTICLE VIII
------------
SELLERS' CONDITIONS PRECEDENT
Except as may be waived in writing by Sellers in Sellers' sole
discretion, the obligations of Sellers hereunder are subject to
fulfillment at or prior to the Closing of each of the following
conditions:
8.01 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Purchaser contained herein shall be true and correct in all
material respects as of the Closing as though such representations and
warranties were made on such date, subject to any changes contemplated by
this Agreement.
24
8.02 PERFORMANCE. Purchaser shall have performed and complied in
all material respects with all covenants or conditions required by this
Agreement to be performed and complied with by it on or prior to the
Closing.
8.03 DELIVERIES. Purchaser shall have delivered each of the
documents required pursuant to Section 2.05(b) in each case in form and
substance satisfactory to Purchaser and its counsel.
8.04 PROCEEDINGS. No action, proceeding or order by any court or
governmental body or agency shall have been threatened in writing,
asserted, instituted or entered to restrain, enjoins or otherwise
prohibits the carrying out of the transactions contemplated by this
Agreement.
8.05 RELEASE. The Release shall have been obtained by Sellers.
ARTICLE IX
----------
INDEMNIFICATION
9.01 SELLERS' INDEMNITY. Subject to the terms and conditions of
this Article IX, Sellers jointly and severally hereby agree to indemnify,
defend and hold Purchaser and its officers, directors, shareholders,
employees, agents, attorneys, affiliates or successors in interest or
transferees of any of the foregoing persons harmless from and against and
to promptly pay all losses, claims, obligations, demands, assessments,
penalties, liabilities, suits, fines, deficiencies, interest, costs,
actual or punitive damages, reasonable attorneys' fees and expenses
(whether contingent, fixed or unfixed, liquidated or unliquidated or
otherwise) (collectively, "Damages"), asserted against or incurred by
Purchaser by reason of or resulting from a misrepresentation, breach or
nonfulfillment of, or any failure to perform by any of the Sellers of any
representation, warranty or covenant contained herein or in any agreement
executed pursuant hereto and any liabilities other than Assumed
Liabilities.
9.02 PURCHASER'S INDEMNITY. Subject to the terms and conditions of
this Article IX, Purchaser hereby agrees to indemnify, defend and hold
Sellers and their officers, directors, shareholders, employees, agents,
attorneys, affiliates or successors in interest or transferees of any of
the foregoing persons harmless from and against and to promptly pay all
Damages asserted against or incurred by reason of or resulting from:
(a) a breach or misrepresentation, nonfulfillment of, or
failure to perform by Purchaser of any representation, warranty or
covenant contained herein or in any agreement executed pursuant
hereto; or
(b) the failure of Purchaser to pay, perform and discharge
when due the deferred portion of the Purchase Price or any Assumed
Liabilities.
25
9.03 CONDITIONS OF INDEMNIFICATION. The respective obligations and
liabilities of Sellers and Purchaser (the "indemnifying party") to the
other (the "party to be indemnified") under Sections 9.01 and 9.02 hereof
with respect to claims resulting from the assertion of liability by third
parties shall be subject to the following terms and conditions:
(a) Promptly after receipt of notice of commencement of any action
evidenced by service of process or other legal pleading, or with
reasonable promptness after the assertion in writing of any claim by a
third party, the party to be indemnified shall give the indemnifying
party written notice thereof together with a copy of such claim, process
or other legal pleading. The indemnifying party shall have the right to
join in the defense, settlement, adjustment or compromise thereof by
representatives of its own choosing and at its own expense; provided,
however, that the party to be indemnified may participate in the defense,
settlement, adjustment or compromise with counsel of its own choice and
at its own expense.
(b) In the event that the indemnifying party, by the 30th day after
receipt of notice of any such claim (or, if earlier, by the 10th day
preceding the day on which an answer or other pleading must be served in
order to prevent judgment by default in favor of the person asserting
such claim), does not elect to join in the defense, settlement,
adjustment or compromise of such claim, or, in the reasonable judgment of
the party to be indemnified, the defense is being handled in such a
manner that the indemnified party's reputation or future business
prospects will be damaged, the party to be indemnified will (upon further
notice to the indemnifying party) have the right to undertake the
defense, adjustment, compromise or settlement of such claim on behalf of
and for the account and risk of the indemnifying party and at the
indemnifying party's expense, subject to the right of the indemnifying
party to participate in the defense of such claims at any time prior to
settlement, adjustment, compromise or final determination thereof.
(c) Anything in this Section 9.03 to the contrary notwithstanding,
the indemnifying party shall not settle any claim without the consent of
the party to be indemnified unless such settlement involves only the
payment of money and the claimant provides to the party to be indemnified
an unconditional release from all liability in respect of such claim and
does not include a statement as to admission of fault, culpability or a
failure to act on behalf of a party to be indemnified. If the settlement
of the claim involves more than the payment of money, the indemnifying
party shall not settle the claim without the prior consent of the party
to be indemnified, which consent shall not be unreasonably withheld.
(d) An indemnified party's failure to give timely notice or to
furnish the indemnifying party or parties with any relevant data and
documents in connection with any claim shall not constitute a defense (in
part or in whole) to any claim for indemnification by such party, except
any only to the extent that such failure shall result in any material
prejudice to the indemnifying party or parties. If so desired by any
indemnifying party or parties, such party or parties may, by giving the
indemnified party or parties written notice in which the
26
indemnifying party or parties acknowledge that such claim is properly
subject to indemnification hereunder, elect, at such party's or parties'
sole expense, to assume control of the defense, settlement, adjustment or
compromise of any claim, provided that such indemnifying party shall
obtain the consent of all indemnified parties before entering into any
settlement, adjustment or compromise of such claim, or ceasing to defend
against such claim, if as a result thereof, or pursuant thereto, there
would be imposed on an indemnified party any liability or obligation not
covered by the indemnification obligations of the indemnifying parties
under this Agreement (including, without limitation, any injunctive
relief or other remedy).
(e) The parties hereby acknowledge and agree that, notwithstanding
the procedures established in subsection 9.03(a) above, Purchaser shall
be entitled to make payments to persons, and to treat such payments as
claims hereunder without complying with the procedures set forth in
subsection 9.03(a), to the extent that such payments relate to
liabilities and obligations owed to persons or entities with whom or with
which Purchaser has an ongoing business relationship, where such
liabilities and obligations relate to the Purchased Business but do not
constitute Assumed Liabilities, where Purchaser in good faith has
reasonably determined that such amounts continue to be due and payable
and where Purchaser has notified Sellers of such claim and Sellers have
not discharged such liability or obligation within five (5) days of
receipt of such notice.
(f) With respect to any claims asserted pursuant to this Section
9.03 and outstanding or unresolved on the date scheduled for any payment
under the Note, the Purchaser may upon giving written notice to the
Sellers of the amount of such claims, withhold such amount from the
scheduled payment. Any amounts so withheld shall be held by the
Purchaser for the Sellers' account and use to offset the amounts of such
claims finally determined to be due to the Purchaser either by the
Sellers' acknowledgment of such claim, by a settlement agreement or by a
final determination by a court of competent jurisdiction.
(g) The party to be indemnified and the indemnifying party will
each cooperate with all reasonable requests of the other.
9.04 SURVIVAL. The rights of the parties to seek indemnification
under this Article IX shall terminate on the following dates, except as
to those claims with respect to which notice shall have been duly given
prior to the relevant termination date:
(a) in the case of claims for indemnification relating to
Taxes and other governmental assessments and charges of any nature
whatsoever (including, without limitation, all claims brought under
subsection 9.01 or for breach of the representations and warranties set
forth in Section 3.08 or for breach or nonfulfillment of the covenants
set forth in Section 6.11), the date of expiration of the relevant
statute of limitations, including any extensions thereof;
(b) in the case of claims for indemnification arising from the
failure or alleged failure on the part of Sellers or Purchaser to comply
with the requirements of any bulk
27
sales, fraudulent conveyance or other law for the protection of
creditors, the date of expiration of the relevant statute of limitations,
including any extensions thereof; and
(c) in the case of all other claims for indemnification
arising under this Agreement, on the first anniversary of the date
hereof.
9.05 THRESHOLD. The parties shall not have any liability pursuant
to this Article IX, or any other provision of this Agreement, unless and
until the aggregate amount of Damages accrued pursuant to Section 9.01 or
9.02 or otherwise pursuant to this Agreement is greater than or equal to
$100,000 (the "Liability Threshold"); provided, however, that once the
aggregate amount of Damages against a party shall equal or exceed the
Liability Threshold, such party shall thereafter be liable on a
dollar-for-dollar basis for the full amount of all Damages initially
excluded under the Liability Threshold.
9.06 REMEDIES NOT EXCLUSIVE. The remedies provided in this Article
IX shall not be exclusive of any other rights or remedies available by
one party against the other, either at law or in equity.
9.07 REMEDIES NOT AFFECTED BY INVESTIGATION. The representations,
warranties, covenants and undertakings of Sellers hereunder are made with
the knowledge that Purchaser is placing complete reliance thereon in
entering into this Agreement, and the same shall not be affected or
deemed waived by reason of any investigation made or knowledge gained by
or on behalf of Purchaser (including, without limitation, by any of its
advisors, consultants or representatives or otherwise) prior to the
Closing or by reason of the fact that Purchaser or any of such advisors,
consultants or representatives knew or should have known that any such
representation or warranty is or might be inaccurate, or that any
covenant or undertaking has been or might have been breached, at or prior
to the Closing, and no claims by Purchaser with respect thereto shall be
waived or otherwise affected as a result of such knowledge on the part of
Purchaser (or any of its advisors, consultants or representatives), and
Sellers shall not raise any such matter as a defense.
ARTICLE X
---------
MISCELLANEOUS
10.01 AMENDMENT. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by the party
against which enforcement of the amendment, modification or supplement is
sought.
10.02 ASSIGNMENT. Neither this Agreement nor any right created
hereby shall be assignable by either party hereto.
10.03 NOTICE. Any notice or communication must be in writing and
given by depositing the same in the United States mail, addressed to the
party to be notified, postage
28
prepaid and registered or certified with return receipt requested, or by
delivering the same in person. Such notice shall be deemed received on
the date on which it is hand-delivered or on the third business day
following the date on which it is so mailed. For purposes of notice, the
addresses of the parties shall be:
If to Sellers: New Millennium Development Group, Inc.
000 Xxxxxx Xxxxxx
Xxxx Xxxx Xxxxx, XX 00000
Attn: Xxxx Xxxxxxx
If to Purchaser: Universal Broadband Communications, Inc.
00000 Xxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxx Xxxxx
Any party may change its address for notice by written notice given to
the other parties.
10.04 MUTUAL CONFIDENTIALITY. The parties shall keep this
Agreement and its terms confidential, but any party may make such
disclosures after the Closing as it reasonably considers are required by
law, but each party will notify the other parties in advance of any such
disclosure. In the event that the transactions contemplated by this
Agreement are not consummated for any reason whatsoever, the parties
hereto agree not to disclose or use any confidential information they may
have concerning the affairs of the other parties, except for information
which is required by law to be disclosed. For purposes of this Section
10.04, confidential information includes, but is not limited to:
customer lists and files, prices and costs, business and financial
records, surveys, reports, plans, proposals, financial information,
information relating to personnel contracts, stock ownership, liabilities
and litigation. Should the transactions contemplated hereby not be
consummated, nothing contained in this Section shall be construed to
prohibit the parties hereto from operating a business in competition with
each other. Purchaser and the Sellers shall consult with each other in
releasing information concerning this Agreement and the transactions
contemplated hereby. Each of the parties to this Agreement shall furnish
to the other drafts of all releases prior to publication.
10.05 ENTIRE AGREEMENT. This Agreement and the exhibits hereto
supersede all prior agreements and understandings relating to the subject
matter hereof, except that the obligations of any party under any
agreement executed pursuant to this Agreement shall not be affected by
this Section.
10.06 COSTS, EXPENSES AND LEGAL FEES. Whether or not the
transactions contemplated hereby are consummated, each party hereto shall
bear its own costs and expenses (including attorneys' fees), except that
each party hereto agrees to pay the costs and expenses, including
reasonable attorneys' fees, incurred by the other parties in successfully
(a) enforcing any of the
29
terms of this Agreement, or (b) proving that the other parties breached
any of the terms of this Agreement in any material respect.
10.07 SEVERABILITY. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws
effective during the term hereof, such provision shall be fully severable
and this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision never comprised a part hereof; and the
remaining provisions hereof shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision
or by its severance herefrom. Furthermore, in lieu of such illegal,
invalid or unenforceable provision, there shall be added automatically as
part of this Agreement, a provision as similar in its terms to such
illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
10.08 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations, warranties and covenants contained herein shall survive
the Closing for one (1) year and all statements contained in any
certificate, exhibit or other instrument delivered by or on behalf of
Sellers or Purchaser pursuant to this Agreement shall be deemed to have
been representations and warranties by Sellers or Purchaser, as the case
may be, and shall survive the Closing and any investigation made by any
party hereto or on its behalf for one (1) year.
10.09 CAPTIONS. The captions in this Agreement are for convenience
of reference only and shall not limit or otherwise affect any of the
terms or provisions hereof.
10.10 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
10.11 BULK TRANSFER LAWS. Prior to the Closing, the parties hereto
will comply in all respects with any applicable bulk transfer laws,
including any notice required to be made to the Internal Revenue Service
or any state tax authority.
10.12 NUMBER AND GENDER. Whenever the context requires, references
in this Agreement to the singular number shall include the plural, the
plural number shall include the singular and words denoting gender shall
include the masculine, feminine and neuter.
10.13 GOVERNING LAW. The Parties hereby agree that this Agreement
shall be governed and construed in accordance with the laws of the State
of California, without giving effect to principles of conflicts of law
thereunder.
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ARTICLE XI
----------
TERMINATION
11.01 TERMINATION OF AGREEMENT. Certain of the parties may
terminate this Agreement as provided below:
(a) the Purchaser and the Sellers may terminate this Agreement
by mutual written consent at any time prior to the Closing;
(b) the Purchaser may terminate this Agreement by giving
written notice to the Sellers on or before the later of (i) the date
upon which the Sellers deliver all of the schedules to Purchaser and
(ii) October 15, 2002, if the Purchaser in its reasonable discretion
is not satisfied with the results of its continuing business, legal,
and accounting due diligence regarding the Purchased Business;
(c) the Purchaser may terminate this Agreement by giving
written notice to the Sellers at any time prior to the Closing (i)
in the event the Sellers have breached any representation,
warranty, or covenant contained in this Agreement in any material
respect, the Purchaser has notified the Sellers of the breach, and
the breach has continued without cure for a period of five (5) days
after the breach or (ii) if the Closing shall not have occurred on
or before October 30, 2002, by reason of the failure of any
condition precedent under Article VII hereof (unless the failure
results primarily from the Purchaser itself breaching any
representation, warranty, or covenant contained in this Agreement);
and
(d) The Sellers may terminate this Agreement by giving
written notice to the Purchaser at any time prior to the
Closing (i) in the event that the Purchaser has breached any
material representation, warranty or covenant contained in this
Agreement in any material respect, Sellers have notified
Purchaser of the breach and the breach has continued without
cure for a period of five (5) days after the notice of breach
or (ii) if the Closing shall not have occurred on or before
October 30, 2002, by reason of the failure of any condition
precedent under Article VIII hereof (unless the failure results
from any of the Sellers breaching any representation, warranty
or covenant contained in this Agreement.
11.02 EFFECT OF TERMINATION. If any party terminates this
Agreement pursuant to Section 11.01 above, all rights and obligations of
the parties hereunder shall terminate without any liability of any party
to any other party, except for any liability for breach of contract of
any party then in breach.
31
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have each caused to be affixed hereto its or his/her hand and
seal the day indicated.
SELLERS:
-------
NEW MILLENNIUM DEVELOPMENT GROUP, INC.
By: /s/ XXXX XXXXXXX
-----------------------------
Name: Xxxx Xxxxxxx
Its: CEO, Chairman
PURCHASER:
---------
UNIVERSAL BROADBAND COMMUNICATIONS, INC.
By: /s/ XXXX XXXXX
-----------------------------
Name: Xxxx Xxxxx
Its: CEO
32
ASSETS
------
SCHEDULE 1.01
See Attached:
1. Original Asset Network Inventory
2. Household Goods Descriptive Inventory
3. NOC equipment
33
