PURCHASE AND CONTRIBUTION AGREEMENT
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PURCHASE AND CONTRIBUTION AGREEMENT dated as of March 30th, 2001 (the
"Agreement") by and among 5th Avenue Channel Corp., a Florida corporation
("FAVE") and Go2America, LLC, a Wisconsin limited liability company ("G2A"), and
the individual members of G2A, Xxxxxxx Xxxxxx ("Xxxxxx"), Xxxxxxxx Xxxxxx
("Xxxxxx") and Xxxxx Xxxxxxxxxxxx ("Xxxxxxxxxxxx"). For purposes of this
Agreement, Kostka, Viegut, and Xxxxxxxxxxxx shall sometimes collectively be
referred to as the "G2A Members".
PREAMBLE
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WHEREAS, FAVE and G2A wish to combine certain assets of their respective
businesses and feel that the consolidation of these aspects of their respective
businesses into a newly created Wisconsin corporation ("hereinafter referred to
as "NEWCO"), which will be an 80% owned subsidiary of FAVE and owned 20% by G2A
or the G2A members furthers a valid business purpose in that it will enhance
their opportunities for further growth and development and create efficiencies
that would not otherwise be achievable by each of the parties individually: and
WHEREAS, G2A, the G2A Members, and FAVE have agreed to the formation and
capitalization of NEWCO by contribution of certain assets of FAVE and all of the
assets of G2A, as a result of which NEWCO would become an 80% owned subsidiary
of FAVE and 20% owned by G2A or the G2A Members, as more fully set forth in this
Purchase and Contribution Agreement.
WHEREAS, the Board of Directors of FAVE and all of the G2A Members have
resolved that the transactions described herein are in the best interests of the
parties and their respective shareholders and owners and have authorized and
approved the execution and delivery of this Purchase and Contribution Agreement.
WHEREAS, G2A, the G2A Members, and FAVE wish to consummate the
contemplated transaction qualifying as capitalization under Section 351 of the
Internal Revenue Code of 1986, as Amended ("Code"), and as such, that G2A will
contribute substantially all of its assets and FAVE will contribute certain
assets described herein to the newly formed NEWCO, in exchange for all of the
outstanding shares of common stock in NEWCO, such that FAVE will be the sole and
exclusive owner of 80% of the outstanding shares of common stock of NEWCO and
G2A or the G2A Members will be the sole and exclusive owner of 20% of the
outstanding shares of common stock in NEWCO upon the completion of the
contemplated transaction.
WHEREAS, in further consideration for the contribution of substantially
all of the assets of G2A to XXXXX, X0X or the G2A Members will receive a total
of 1,850,000 of common stock in the FAVE corporation, which shares shall include
registration rights subject to such restrictions as are set forth in the
Registration Rights Agreement to be executed by the parties upon the closing of
the transaction contemplated hereunder.
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WHEREAS, in further consideration for the contribution of assets of G2A
to XXXXX, X0X or the G2A Members will receive a total cash payment at closing in
a total combined amount calculated as set forth in this Agreement.
NOW THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties,
intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINED TERMS
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1.1 "Act" means The Communication Act of 1934, as amended.
1.2 "Application" means a pending application by FAVE (each as hereinafter
defined) to the FCC (as hereinafter defined) for a License (as hereinafter
defined).
1.3 "ARA" means an Airtime Royalty Agreement (or other equivalent agreement)
between an Party and FAVE.
1.4 "Accounts Receivable" shall mean all accounts receivable, loans
receivable, notes receivable and other receivables that exist immediately
prior to the Closing as determined in accordance with generally accepted
accounting principles, consistently applied. "Accounts Receivable" shall
include any right to payment under any credit card or debit card program.
1.5 "Authorization" means any license, permit, authorization, franchise,
grant, registration, certificate, consent and waiver awarded to FAVE or a
FAVE Subsidiary or to G2A by a Governmental Authority which is used,
useable or held for use in or in conjunction with or otherwise associated
with the provision of FAVE's Wireless Cable services and/or the ITFS, MMDS
or MDS frequencies conveyed by FAVE pursuant to this Agreement, including
but not limited to approval to utilize such frequencies for two-way
transmission, and the G2A Operating System, including the licenses,
permits, authorizations, franchises, grants, registrations, certificates,
consents and waivers.
1.6 "Affiliate" of any Person means any other Person controlling, controlled
by or under common control with such Person, where "control" means the
possession, directly or indirectly, of the power to direct the management
and policies of a Person whether through the ownership of voting
securities, contract or otherwise, and, in the case of a partnership or
limited liability company, any partner or member of such partnership or
limited liability company.
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1.7 "Broadcast Station" means a television broadcast station, a television
translator station, a low power television station, an educational
television broadcasting station, and includes every category of broadcast
station that may enjoy must-carry rights under FCC Rules, but does not
include a "superstation" as defined by FCC Rule 76.64(c)(2) actually
received by the wireless cable system by satellite downlink.
1.8 "CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
1.9 "Closings" means, the closing and final consummation of the transaction
contemplated under the terms of this Agreement.
1.10 "Closing Date" means, the date upon which the Closing takes place.
1.11 "Contracts" means shall mean those agreements (other than those included
in the G2A Excluded Assets and other than the Leases) under which a Party
conducts its business using the assets being contributed by such Party,
including but not limited to those agreements described in Schedule "A"
for the FAVE Contracts and Schedule "B" for the G2A Contracts.
1.12 "Contributed Assets" means the FAVE Assets being contributed to NEWCO by
FAVE and/or the G2A Assets being contributed to NEWCO by G2A pursuant to
the terms of this Agreement, as the context shall require.
1.13 "Conveyance Documents" shall mean and include all documents referred to in
this Agreement or otherwise required to consummate the transaction
contemplated hereby, including but not limited to bills of sale,
assignments of leases, assignments of equipment leases, assignments of
contracts, employment agreements, assignments of tradenames and other
intangible assets, and any other documents reasonably required to
consummate the contribution of assets contemplated by this Agreement and
place NEWCO in full ownership and operating control of the Assets.
1.14 "Copyright Act" means the Copyright Act of 1976, as amended.
1.15 "Copyright Office" means the United States Copyright Office of the Library
of Congress.
1.16 "Copyright Rules" means the rules and regulations promulgated by the
Copyright Office under authority of the Copyright Act, as set forth in
Part 201, Volume 37 of the Code of Federal Regulations.
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1.17 "Costa Rican Frequencies" shall mean the microwave and other frequencies
owned, leased or otherwise available for use by FAVE and which are being
contributed by FAVE pursuant to this Agreement.
1.18 "Encumbrance" means all liens, any mortgage, deed of trust, pledge,
hypothecation, security interest, encumbrance, claim, lien, lease or
charge of any kind, whether voluntarily incurred or arising by operation
of law or otherwise, affecting any assets or property, including any
agreement to give or grant any of the foregoing, any conditional sale or
other title retention agreement and the filing of or agreement to give any
financing statement with respect to any assets or property under the
Uniform Commercial Code or comparable law of any jurisdiction, any
easements, covenants, agreements, understandings, defects or
irregularities affecting title to any assets or property. that attaches to
or could in the future attach to any of the Contributed Assets.
1.19 "Equipment" shall mean all machinery, equipment, furniture, fixtures,
office furnishings, tools, software, routers, servers, subscriber
equipment, parts and other items of tangible personal property used or
useable in the operation of the Wireless Cable Business conducted by FAVE
and any applicable FAVE Subsidiary or the business conducted by G2A, as
the case may be, including but not limited to those items listed on
Schedule "C" with respect to FAVE and Schedule "D" with respect to G2A.
1.20 "Equipment Leases" means any lease pertaining to any personal property
used in connection with the business of a Party which Equipment Leases
pertaining to FAVE are listed in Schedule "E" and pertaining to G2A are
listed in Schedule "F."
1.21 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
1.22 "Excluded Assets" means the assets of G2A which are specifically excluded
from the G2A Assets being conveyed to NEWCO under the terms of this
Agreement, which Excluded Assets shall be listed in Schedule "G," Excluded
Assets of G2A are specifically limited to those listed in Schedule "G".
1.23 "FAA" means the Federal Aviation Administration (or in the case of a
foreign Market, the equivalent Governmental Authority in such country) or
any successor agency(ies) with jurisdiction over towers and other antenna
structures.
1.24 "FAA RULES" means the rules promulgated by the FAA (or in the case of a
foreign Market, the equivalent Governmental Authority in such country) and
applicable to antenna towers and other structures.
1.25 "FCC" means the Federal Communications Commission (or in the case of a
foreign Market, the equivalent Governmental Authority in such country).
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1.26 "FCC Consent" shall mean the consent of the FCC (or in the case of a
foreign Market, the equivalent Governmental Authority in such country) to
the transfer of control or assignment of any ITFS, MDS and MMDS License or
Application.
1.27 "FCC Permit" shall mean a permit issued by the FCC (or in the case of a
foreign Market, the equivalent Governmental Authority in such country) to
FAVE to construct a facility to transmit signals over one or more
ITFS/MMDS/MDS Channels in any Market.
1.28 "FCC Permittee" shall mean a person who holds an FCC Permit as authorized
by the FCC (or in the case of a foreign Market, the equivalent
Governmental Authority in such country).
1.29 "FCC Proceeding" means a Proceeding relating to Applications or Licenses.
1.30 "FCC Rules" means the rules and regulations promulgated by the FCC (or in
the case of a foreign Market, the equivalent Governmental Authority in
such country) under authority of the Act, as set forth in Volume 47 of the
Code of Federal Regulations.
1.31 "FCC License" means the license granted by the FCC for use of
MMDS/MDS/ITFS frequencies in any Market.
1.32 "G2A Assumed Liabilities" means the liabilities and obligations of G2A
which are being assumed by NEWCO in the transaction contemplated under
this Agreement, which shall include any and all obligations and all
liabilities, contingent or fixed, all contractual obligations under
executory contracts, all notes and loans payables, refunds and rebates,
equipment lease obligations, real property lease obligations, and all
other obligations and liabilities of every nature and kind, including but
not limited to the liabilities described in Schedule "H" attached hereto
and made a part hereof.
1.33 "Governmental Body" means any Federal, state, municipal, political
subdivision or other governmental department, court, commission, board,
bureau, agency or instrumentality, domestic or foreign.
1.34 "FAVE Basic Subscriber" means a current Subscriber to a FAVE Operating
System's regular monthly basic services.
1.35 "FAVE Basic Subscriber" means a current Subscriber to a FAVE Operating
System's regular monthly basic services.
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1.36 "G2A Operating System" means the Internet Service Provider business and
system which will be contributed by G2A to the capitalization of NEWCO as
described in this Agreement.
1.37 "Inventory" means all inventory, supplies, installable equipment, parts,
and other items used in connection with the business of a Party.
1.38 "Intellectual Property Rights" means the following rights limited to the
Wisconsin Wireless Operations and the Wireless VIPER Technology all (i)
patents, patent applications, patent disclosures and inventions, (ii)
trademarks, service marks, trade dress, trade names, logos and corporate
names and registrations and applications for registration thereof together
with all of the goodwill associated therewith, (iii) copyrights
(registered or unregistered) and copyrightable works and registrations and
applications for registration thereof, (iv) mask works and registrations
and applications for registration thereof, (v) computer software, data,
data bases and documentation thereof, (vi) trade secrets and other
confidential information (including, without limitation, ideas, formulas,
compositions, inventions (whether patentable or unpatentable and whether
or not reduced to practice), know-how, manufacturing and production
processes and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data, copyrightable
works, financial and marketing plans and customer and supplier lists and
information), (vii) other intellectual property rights and (viii) copies
and tangible embodiments thereof (in whatever form or medium) as relates
and limited to the Wisconsin Wireless Operations.
1.39 "ITFS" refers to wireless cable channels that must be owned by qualified
non-profit educational organizations.
1.40 "Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or
other title retention agreement or lease in the nature thereof), any sale
of receivables with recourse, any filing or agreement to file a financing
statement as debtor under the Uniform Commercial Code or any similar
statute other than to reflect ownership by a third Party of property
leased under a lease which is not in the nature of a conditional sale or
title retention agreement, or any subordination arrangement in favor of
another Person (other than any subordination arising in the ordinary
course of business).
1.41 "LOS Households" means line-of-sight households, assuming a 35-mile radius
of signal coverage and 30-foot receiving antennas, employing a 30% tree
discount, and excluding households which are not line-of-sight households.
1.42 "Markets" means, (i) with respect to the FAVE markets, the markets for
which FAVE has obtained MMDS/MDS or equivalent frequencies from the FCC
(or equivalent governmental authority in Costa Rica), including the La
Crosse, Wisconsin BTA and the
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Costa Rica Microwave Frequencies and (ii) with respect to G2A markets, the
markets in which G2A has an Internet POP access on the Closing Date. The
Wausau/Stevens Point, Wisconsin BTA, the Hickory, North Carolina BTA, are
subject to further action by the FCC, such circumstances having been
disclosed to G2A. FAVE shall use its best efforts to secure all necessary
FCC approvals to permit use of the Wausau/Stevens Point Wisconsin and
Hickory North Carolina MMDS frequencies in sufficient time to meet
build-out deadlines as provided under FCC rules, so that NEWCO shall have
full use and enjoyment of such MMDS frequencies in those markets. In the
event these licenses are not secured this shall not affect any of the
other terms of this agreement.
1.43 "Material Adverse Effect" means any event or circumstance which results
in, or is reasonably likely to result in, a material adverse change in the
business, operations, properties, prospects of the relevant Party taken as
a whole other than general economic change over which the relevant Party
has no control. A "FAVE Material Adverse Effect" means a Material Adverse
Effect to the operations of FAVE, a Material Adverse Effect effecting the
FAVE Assets, or a Material Adverse Effect to the potential business of
NEWCO. A "G2A Material Adverse Effect" means a Material Adverse Effect to
the operations of G2A, a Material Adverse Effect effecting the G2A Assets,
or a Material Adverse Effect to the potential business of NEWCO.
1.44 "MDS" shall mean a Multipoint Distribution Service, including (unless
otherwise specified), the former Operational Fixed Service ("OFS")
H-channels.
1.45 "MMDS" means the Multichannel Multipoint Distribution Service. "ORDER"
means any order, judgment, injunction, or FCC ruling issued, made, entered
or rendered by any court, administrative agency or other Governmental
Authority or by any arbitrator.
1.46 "Organizational Documents" means the Articles of Incorporation and all
amendments thereto, Bylaws, initial meeting minutes, subscriptions
agreements, tax elections, and all other documents and agreements involved
in the formation and organization of FAVE or any of relevant FAVE
Subsidiary and G2A.
1.47 "Person" means any individual, corporation, partnership, joint venture,
estate, trust, cooperative, foundation, union, syndicate, league,
consortium, coalition, committee, society, firm, company or other
enterprise, association, organization or other entity or Governmental
Authority.
1.48 "Person" means any individual, corporation, partnership, joint venture,
estate, trust, cooperative, foundation, union, syndicate, league,
consortium, coalition, committee, society, firm, company or other
enterprise, association, organization or other entity or Governmental
Authority.
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1.49 "Records" means files and records, in whatever form, including system
diagrams, engineering studies, technical information and data,
correspondence, books of account, employment records, subscriber files and
information, purchase and sales records and correspondence, files, records
and other written materials, relating to the Wireless Cable Business of
FAVE, in every form available, including papers form and computer data
file form.
1.50 "Records" means files and records, in whatever form, including system
diagrams, engineering studies, technical information and data,
correspondence, books of account, employment records, subscriber files and
information, purchase and sales records and correspondence, files, records
and other written materials, relating to the Wireless Cable Business of
FAVE, in every form available, including papers form and computer data
file form.
1.51 "Subscriber Agreements" means all contracts or agreements with a FAVE
Basic Subscriber for provision of wireless cable service.
1.52 "Subsidiary" means, a company in which the Parent owns over 50% of the
voting stock, and, in the case of FAVE Subsidiaries, any company owning or
controlling the Costa Rica Frequencies, regardless of the percentage of
ownership by FAVE. The capitalized term "Subsidiary" means any subsidiary
of FAVE.
1.53 "Wireless Cable Business" means the business of transmitting programming
to subscribers through the use of MMDS, MDS or ITFS licenses.
1.54 "Wireless Camera Technology" means the Viper wireless camera technology
and all patent and other rights applicable thereto, as more completely
described in Schedule "K" attached hereto.
1.55 "FAVE Lease/License Binder" means the ITFS/MMDS/MDS Data Sheets relating
to the Markets delivered by the FAVE to G2A in connection with this
Agreement.
1.56 "FAVE Operating System" means the wireless cable systems operated by FAVE
in the La Crosse BTA, which shall be contributed to NEWCO from FAVE
pursuant to the terms of this Agreement.
1.57 "G2A Operating System" means the Internet Service Provider business and
system operated by G2A in all locations serviced by G2A, which shall be
contributed to NEWCO from G2A.
1.58 "FAVE Assets" means and includes:
(a) All right, title, and interest of FAVE or any subsidiary of FAVE in and
to all assets, real, personal and mixed, tangible and intangible,
located in Wisconsin and used in the conduct of the Wireless Cable
Business in the La Crosse, Wisconsin BTA, and operations of FAVE or any
Subsidiary of FAVE in the La Crosse, Wisconsin BTA (the "Business"),
including but not limited to the assets listed in Schedule "L" attached
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hereto, and all Authorizations, ARAs, which are specifically listed in
Schedule "M," Governmental Permits, Licenses, FCC Permits, Equipment,
Records, Intellectual Property Rights, Inventory, Subscriber Agreements,
Subscriber Equipment, Applications, FCC Consents, FCC Permits, the FAVE
Operating System, ITFS leases and licenses, MDS/MMDS licenses, leases
and Approvals, Real Property Leases, Equipment Leases, subscriber
receiver equipment, head in site equipment, transmitters and related
equipment, Accounts Receivable, prepaid subscriber amounts and
receivables due from subscribers, all telephone numbers, trade names,
service marks and service names, and applications therefore, loans
receivable, notes receivable and other receivables arising from the
operation of the Wireless Cable Business immediately prior to the
Closing as determined in accordance with generally accepted accounting
principles, consistently applied, all real property interests
(including, without limitation, tower location leases) and all
buildings, structures, improvements, and fixtures of every nature
located thereon and interests therein owned or leased by FAVE or a FAVE
Subsidiary and used or useful in the conduct of the Wireless Cable
Business, tangible assets, Intellectual Property Rights, Records,
computer hardware, software and similar materials and rights, all of the
right, title and interest in and to the good will and other intangible
assets of the Wireless Cable Business, all MDS, MMDA and/or ITFS
licenses and/or leases applicable to the La Crosse Wisconsin BTA,
including but not limited to those MMDS frequencies listed in Schedule
"N" and all two-way approvals applicable to the MMDA and MDS frequencies
in the La Crosse BTA, any and all site lease options and site leases
applicable to the La Crosse cable operations (collectively as the "FAVE
Site Agreements") and FAVE's financial records and books of account or
copies thereof relating to the Wireless Cable Business; provided that
the right to utilize the MMDS frequencies shall be contractually granted
or leased to NEWCO, on a royalty free basis, and without restriction on
use, until such time as the FCC approves transfer of control of such
licenses to NEWCO. FAVE shall use its best efforts, with the reasonable
cooperation of NEWCO, to cause the FCC to approve the transfer of such
MMDS frequencies to NEWCO as expeditiously as possible following the
Closing.
(b) All right, title and interest in and to all MDS, MMDA and/or ITFS
licenses and/or leases applicable to the Hickory, North Carolina BTA and
all Authorizations, Applications, FCC Permits, FCC Consents, FCC
Licenses, Contracts, Intellectual Property, Records and other beneficial
assets used in connection therewith, free and clear of all Liens and
Encumbrances; provided that the right to utilize the MMDS frequencies
shall be contractually granted or leased to NEWCO, on a royalty free
basis, and without restriction on use, until such time as the FCC
approves transfer of control of such licenses to NEWCO. FAVE shall use
its best efforts, with the reasonable cooperation of NEWCO, to cause the
FCC to approve the transfer of such MMDS frequencies to NEWCO as
expeditiously as possible following the Closing. This transaction is not
dependent or conditional on FAVE's ability to retain right, title and
interest in and to all
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MDS, MMDA and/or ITFS licenses and/or leases
applicable to the Hickory, North Carolina BTA.
(c) All right, title and interest in and to all MDS, MMDA and/or ITFS
licenses and/or leases applicable to the Wausau, Xxxxxxx Point,
Rhinelander, Wisconsin BTA and all Authorizations, Applications, FCC
Permits, FCC Consents, FCC Licenses, Contracts, Intellectual Property,
Records and other beneficial assets used in connection therewith, which
FAVE represents and warrants includes rights as the owner of the entire
BTAs, free and clear of all Liens and Encumbrances; provided that the
right to utilize the MMDS frequencies shall be contractually granted or
leased to NEWCO, on a royalty free basis, and without restriction on
use, until such time as the FCC approves transfer of control of such
licenses to NEWCO. FAVE shall use its best efforts, with the reasonable
cooperation of NEWCO, to cause the FCC to approve the transfer of such
MMDS frequencies to NEWCO as expeditiously as possible following the
Closing. This transaction is not dependent or conditional on FAVE's
ability to retain right, title and interest in and to all MDS, MMDA
and/or ITFS licenses and/or leases applicable to the Wausau, Xxxxxxx
Point, Rhinelander, Wisconsin BTA.
(d) All right, title and interest in and to all MDS, MMDA and/or ITFS (or
microwave frequencies under Costa Rica law) licenses and/or leases
applicable to the country of Costa Rica and all Authorizations,
Applications, governmental approvals and permits, governmental consents,
governmental licenses, beneficial contracts, Intellectual Property,
Records and other beneficial assets used in connection therewith,
including permission to use the frequencies for two-way transmission,
free and clear of all Liens and Encumbrances; or, all right, title and
interest in and to 100% of the outstanding shares and/or other ownership
interests in the FAVE Subsidiary that owns and controls, directly or
indirectly through subsidiaries, the Costa Rica microwave frequencies.
(e) All right, title and interest in and to all Intellectual Property
Rights, including patents, patent applications, copyrights, trade secret
rights, Records, and all other rights related to or necessary for the
full use and enjoyment of the Wireless Camera Technology; all right,
title and interest, in the United States and in every other country
throughout the world, in and to the Wireless Camera Technology; all
right, title and interest in and to the application for Letters Patent
of the United States filed on the 16th day of June, 2000 in the United
States Patent and Trademark Office (the "Application"), and all
divisions, renewals and continuations thereof; all right, title, and
interest in and to all Letters Patent in the United States, including
United States Letters Patent No. P00044601, which may be granted as a
result of the Application or otherwise which may be available relating
to the Wireless Camera Technology; all right, title, and interest in and
to all reissues and extensions in and to the Applications or any Letters
Patents or other patent rights; all right, title and interest in and to
all applications for Letters Patent or other patent rights; all right,
title and interest in and to any other proprietary rights and
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intellectual property rights that relate directly or indirectly to the
Wireless Camera Technology, including but not limited to trade secrets,
confidentiality agreements, trade secret protection programs, inventor's
certificate, employee certificates of original creation, work for hire
agreements, employee proprietary rights covenants, assignments of any
rights in and to the Wireless Camera Technology or any portion of the
Wireless Camera Technology, all utility models, design schmematics,
engineering studies or diagrams, utility certificates, patent
importations, foreign patent or trade secret rights, industrial design
registration which may be filed, and which may be granted, upon said
inventions in any countries or regions foreign to the United States, and
all reissues, renewals and extensions thereof; all trademark and service
xxxx rights used in connection with the Wireless Camera Technology,
including but not limited to any intent to use applications and rights
which may exist under common law; all copyrights used or which the FAVE
anticipates being used in connection with the Wireless Camera Technology
or the marketing of the Wireless Camera Technology; and all other rights
of every nature or kind used or useable in connection with the Wireless
Camera Technology.
(f) Rights, claims and causes of action held by FAVE or any FAVE Subsidiary
related to the operation of the Wireless Cable Business or any of the
MMDS/MDS frequencies being conveyed pursuant to the terms of this
Agreement or which have accrued as a result of the operation of Wireless
Cable Business, and all other claims and of every kind under or pursuant
to all warranties, representations and guarantees (express or implied)
made by suppliers in connection with products, materials or services
included in the FAVE Assets.
1.59 "G2A Assets" means the right, title and interest of G2A or any G2A
Affiliates or Joint Ventures, in and to all of its assets, other than the
Excluded Assets, used or useable in the operation of G2A's business as
operated and as operating at on and after the Closing Date, tangible and
intangible, wherever located, whether known or unknown, and whether or not
appearing on the books and records of G2A, as the same may exist on the
Closing Date, including but not limited to all assets listed in Schedule
"___",Contracts, Real Property Leases, Equipment Leases, Intellectual
Property Rights, Accounts Receivable, Inventory, Authorizations,
Governmental Permits, Accounts Receivable, prepaid subscriber amounts and
receivables due from subscribers, all telephone numbers, trade names,
service marks and service names, and applications therefore, loans
receivable, notes receivable and other receivables arising from the
operation of the G2A Operating System immediately prior to Closing as
determined in accordance with generally accepted accounting principles,
consistently applied, all real property interests (including without
limitation, tower leases and tower locations) and all buildings,
structures, improvements, and fixtures of every nature and kind located
thereon and interests therein owned or leased by G2A or a G2A Affiliate,
Subsidiary or Joint Venture and used in the conduct of the G2A Operating
System.
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ARTICLE II
FORMATION OF NEWCO
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2.1 FORMATION OF THE NEWCO. The parties acknowledge and agree that G2A shall
prepare and file the Articles of Incorporation relative to NEWCO with the
Wisconsin Secretary of State. The authorized capital of NEWCO as set forth in
the Articles of Incorporation shall be 1,000,000 shares of common stock, $.01
par value, which shall be divided into Class A Common Stock and Class B Common
Stock. The Class A Common Stock and the Class B Common Stock shall have
identical rights and privileges except that (i) the holders of Class A Common
Stock shall elect two (2) members to the NEWCO Board of Directors and the
holders of Class B Common Stock shall elect three (3) members to the NEWCO Board
of Directors, (ii) each share of Class A Common Stock will be entitled to one
vote in any action taken by the Shareholder of the Corporation, (iv) each share
of Class B Common Stock shall have sufficient number of votes such that the
holders of Class B Common Stock shall constitute 51% of the votes cast in any
action taken by the Shareholders of NEWCO, and (v) each share of Class A Common
Stock shall have sufficient number of votes such that the holders of Class A
Common Stock shall constitute 49% of the votes cast in any action taken by the
Shareholders of NEWCO. Except with respect to the election of the Board of
Directors of NEWCO, the Class A Common Stock and the Class B Common stock shall
vote together as a single group. These voting rights with respect to voting
power of the Shareholders of NEWCO are limited to daily operational events and
not applicable to decisions that would materially affect the structure,
disposition of assets, operations or leadership of the company, voting rights in
the case of the aforementioned events shall be proportionately distributed in
accordance with share ownership, one vote is equal to one share owned.
2.2 THE PARTIES AGREE THAT THE POWERS OF THE DIRECTORS WILL BE RESTRICTED AND,
EXCEPT WITH THE WRITTEN CONSENT OF ALL OF THE SHAREHOLDERS:
a. NO DIVIDENDS SHALL BE DECLARED;
b. no management or consulting fees shall be paid;
c. no additional shares in the capital stock of the
Corporation shall be issued or allotted;
d. there shall be no material change in the nature of
the business of the Corporation nor any action
taken which may lead to or result in such material
change;
e. the Corporation shall not directly nor indirectly
make loans or advances, give guarantees for,
invest in, or give security for or guarantee the
debts of any other corporation or person;
f. the Corporation shall not shall not sell, lease,
exchange or dispose of its undertaking or any part
thereof as an entirety or substantially as an
entirety;
g. the Corporation shall not hypothecate, mortgage,
pledge or otherwise encumber its assets or any of
them except as may be
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required by its bankers in connection with its
normal banking activities and arrange lines of
credit;
h. the number of Directors shall not be increased nor
decreased;
i. if at any time or from time to time additional
shares in the capital of the Corporation are to be
allotted, issued or sold, then they shall be
allotted, issued and sold to the Shareholders pro
rata in relation to their then existing
Proportionate Shareholdings; and
j. there will be no amendments to any of the
Corporation's by-laws or the Articles of
Incorporation.
2.3 NEWCO BOARD OF DIRECTORS. Upon formation of NEWCO, FAVE, as Parent
and sole incorporator to the new subsidiary shall appoint an initial Board
of Directors of NEWCO, with G2A electing 3 members of the Board of
Directors and FAVE electing 2 members of the Board of Directors as set
forth in Schedule "O" hereto. Following election of such Board of
Directors, the Board of Directors shall take appropriate actions to elect
initial officers of NEWCO as set forth in Schedule "P" hereto. The
officers and directors as selected shall continue as the officers and
directors of NEWCO following the consummation of the transaction set forth
in this Agreement, subject to the terms and conditions set forth in the
NEWCO Articles of Incorporation and Bylaws.
2.4 NEWCO BYLAWS. Following formation of NEWCO and appointment of the Board
of Directors, the Board of Directors and the Shareholders as appropriate,
shall take all necessary formation and organizational actions, including
but not limited to adoption of corporate Bylaws in the form attached
hereto as Exhibit "A."
ARTICLE III
CONTRIBUTION OF ASSETS AND CLOSING
----------------------------------
3.1 CONTRIBUTIONS BY G2A AND FAVE. Subject to and upon the terms and
conditions of this Agreement and the terms and conditions set forth in the
Assignment Agreement attached hereto as Exhibit "B," which shall be
executed and delivered by both FAVE and G2A at the Closing, and following
the formation of NEWCO as described in Article I above:
(a) FAVE shall transfer, assign, convey and deliver good and marketable
title to FAVE Assets (as defined below) to NEWCO, and NEWCO shall
acquire the FAVE Assets from FAVE, free and clear of any Encumbrances
other than Encumbrances specifically assumed by NEWCO and listed on
Schedule "Q" hereof, solely in exchange for the issuance of eighty
percent (80%) of the total share of Common Stock in NEWCO, which shall
consist solely of shares of Class "A" Common Stock Closing ("FAVE
NEWCO Shares"), with such number of shares to be determined by
agreement of the parties prior to the Closing. The transfer,
assignment and conveyance of the FAVE Assets shall be made by the
execution and delivery at Closing of a warranty xxxx of sale ("Xxxx of
Sale"), stock transfers, and such other
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recordable deeds and instruments of assignment, transfer and
conveyance as NEWCO shall request. Upon the Closing hereof, FAVE shall
transfer and deliver all of the fully executed Conveyance Documents,
and NEWCO shall deliver FAVE Shares to FAVE.
(b) G2A shall transfer, assign, convey and deliver good and marketable
title to the G2A Assets (as defined below) to NEWCO, and NEWCO shall
acquire the G2A Assets from G2A, and assume the G2A Assumed
Liabilities from G2A, solely in exchange for the issuance of twenty
percent (20%) of the total shares of Common Stock in NEWCO, which
shall consist solely of shares of Class "B" Common Stock ("G2A NEWCO
Shares"), the transfer of certain shares of voting common stock in
FAVE as more fully described in Section 3.2 of this Agreement, and
payment of $200,000 to be held in escrow ("the "Escrow Amount") as
described in section 3.3 below. The transfer, assignment and
conveyance of the G2A Assets shall be made by the execution and
delivery at Closing of a warranty xxxx of sale ("Xxxx of Sale"), stock
transfers, and such other recordable deeds and instruments of
assignment, transfer and conveyance as NEWCO shall request. Upon the
Closing hereof, G2A shall transfer and deliver all of the fully
executed Conveyance Documents, and NEWCO shall deliver the G2A Shares
to G2A. NEWCO shall also take assignment of and assume all G2A Assumed
Liabilities that exist on the Closing Date.
3.2 TRANSFER OF SHARES IN FAVE CORPORATION. On the Closing Date, FAVE
shall deliver to G2A, or to the G2A Members at the election of G2A, an
amount equal to 1,850,000 shares of common voting stock in FAVE, a Florida
corporation, free and clear of all Liens, Encumbrances, or restrictions,
except for such restrictions as are set forth in the Registration Rights
Agreement, attached hereto as Exhibit "C" ("Registration Rights Agreement")
which shall be executed by FAVE as of the Closing Date and as a condition
to the closing of the transactions contemplated hereby. Such shares shall
include registration rights as set forth in the Registration Rights
Agreement.
3.3 PAYMENT TO G2A. The Escrow Amount ($200,000.00 referred to in Section
shall deliver to G2A, or to the G2A Members at the election of G2A, an
amount equal to 1,850,000 shares of common voting stock in FAVE, a Florida
corporation, free and clear of all Liens, Encumbrances, or restrictions,
except for such restrictions as are set forth in the Registration Rights
Agreement, attached hereto as Exhibit "C" ("Registration Rights Agreement")
which shall be executed by FAVE as of the Closing Date and as a condition
to the closing of the transactions contemplated hereby. Such shares shall
include registration rights as set forth in the Registration Rights
Agreement.
3.4 CLOSING. G2A and FAVE shall as promptly as possible notify each other
when the conditions to such Party's obligations to complete the
transactions contemplated by this Agreement have been satisfied or waived.
The Closing shall take place at the offices of 5th
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Avenue Channel Corp. at a mutually acceptable time following the
satisfaction or waiver of the conditions set forth in this Agreement (other
than conditions involving actions which will take place at the Closing) or
at such other time, date and place as G2A and FAVE shall agree in writing.
The date on which the Closing occurs is hereafter referred to as the
"Closing Date."
ARTICLE IV
GENERAL REPRESENTATIONS AND WARRANTIES OF FAVE
----------------------------------------------
FAVE represents and warrants to G2A and the G2A Members, that all of
the statements contained in this Article IV are true and complete as of the date
of this Agreement (or, if made as of a specified date, as of such date), and
will be true and complete as of the Closing Date as though made on the Closing
Date.
4.1 ORGANIZATION; QUALIFICATION OF FAVE. FAVE (a) is a corporation duly
organized, validly existing and in good standing under the laws of the
state of Florida; (b) has all required Permits and full corporate power and
authority to carry on its business as it is now being conducted and to own
the properties and assets it now owns; and (c) is duly qualified to do
business as a foreign corporation and is in good standing in every
jurisdiction in which ownership of property or the conduct of its business
requires such qualification or, if FAVE is not so qualified in any such
jurisdiction, it can become so qualified in such jurisdiction without
causing a FAVE Material Adverse Effect. FAVE has heretofore delivered to
G2A complete and correct copies of the certificate of incorporation and
by-laws of FAVE as presently in effect. G2A acknowledges facts relative to
the current status and potential liabilities related to the MMDS frequency
licenses in the Wausau/Stevens Point, Wisconsin and the Hickory North
Carolina BTAs as set forth in FAVE's filings with the Securities and
Exchange Commission. FAVE represents, warrants, covenants and agrees that
FAVE shall use its best efforts and its own expense, with the assistance of
its new subsidiary NEWCO to bring into good standing, the FCC frequency
licenses in the Wausau/Stevens Point, Wisconsin BTAs and the Hickory, North
Carolina BTA and to provide for use of such frequencies for two-way
transmission, and to seek FCC approval of the transfer of ownership of such
licenses. The Closing and binding nature of this agreement is not dependent
or conditional on FAVE's ability to bring into good standing, the FCC
frequency licenses in the Wausau/Stevens Point, Wisconsin BTA's and the
Hickory, North Carolina BTA.
4.2 SUBSIDIARIES AND AFFILIATES. FAVE has disclosed to G2A the name and
jurisdiction of incorporation of each FAVE Subsidiary and, as of the date
hereof, the approximate percent of the outstanding shares of each FAVE
Subsidiary owned by FAVE. FAVE has provided G2A with a complete and
accurate list of each other entity of which, as of the date hereof, FAVE
has a direct or indirect equity ownership interest. Each FAVE Subsidiary
(a) is a corporation or limited liability company duly organized or formed,
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validly existing and in good standing under the laws of its state of
incorporation; (b) has all required Permits and full corporate or limited
liability company power and authority to carry on its business as it is now
being conducted and to own the properties and assets it now owns; and (c)
is duly qualified to do business as a foreign corporation or limited
liability company in good standing in every jurisdiction in which ownership
of property or the conduct of its business requires such qualification or,
if a FAVE Subsidiary is not so qualified in any such jurisdiction, it can
become so qualified in such jurisdiction without causing a FAVE Material
Adverse Effect. FAVE has heretofore made available to G2A complete and
correct copies of the Organizational Documents, of each FAVE Subsidiary, as
presently in effect.
4.3 CAPITALIZATION OF FAVE.
(a) The authorized capital stock of FAVE consists of (i) fifty
million (50,000,000) shares of FAVE Common Stock, of which, as of the
date hereof, approximately twenty-eight million (28,000,000) shares
were issued and outstanding, all of which are duly authorized, validly
issued, fully paid and non-assessable and were not issued in violation
of any preemptive or similar rights of any Person.
(b) Except as set forth above, and except as disclosed on Schedule "____"
attached hereto, and except for the transactions contemplated by this
Agreement and the issuance of shares under employee and director stock
option plans and employee stock purchase plans of FAVE and its
affiliates, (the terms of which have been fully disclosed in writing to
G2A) as of the date hereof, (i) there are no securities outstanding
which are convertible into or exercisable or exchangeable for shares of
capital stock of FAVE, and (ii) there are no outstanding options,
rights, Contracts, warrants, subscriptions, conversion rights or other
agreements or commitments pursuant to which FAVE may be required to
purchase, redeem, issue or sell any shares of capital stock or other
securities of FAVE.
(c) The issued and outstanding shares of capital stock of, or other other
interests in, each of the FAVE Subsidiaries that are owned by FAVE or
any of its Subsidiaries have been duly authorized and are validly
issued, and, with respect to capital stock, are fully paid and
nonassessable, and were not issued in violation of any preemptive or
similar rights of any Person. All such issued and outstanding shares or
other equity interests that are indicated as owned by FAVE or one of
the FAVE Subsidiaries are owned beneficially by FAVE or such
Subsidiaries as set forth therein and free and clear of all Liens and
encumbrances.
4.4 AUTHORIZATION OF AGREEMENT. FAVE and each relevant FAVE Subsidiary
has all requisite corporate power and authority to execute and deliver this
Agreement and each instrument required hereby to be executed and delivered
by them at the Closing, to perform their obligations hereunder and
thereunder and to consummate the transactions contemplated
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hereby and thereby. The Board of Directors of FAVE has approved the
Transaction. The execution and delivery by FAVE of this Agreement and each
instrument required hereby to be executed and delivered by them at the
Closing and the performance of their obligations hereunder and thereunder
have been duly and validly authorized by all requisite corporate action on
the part of FAVE. This Agreement has been duly executed and delivered by
FAVE and, assuming due authorization, execution and delivery hereof by
FAVE, constitutes the legal, valid and binding obligation of FAVE,
enforceable against the Buyers in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium or similar Laws now or
hereafter in effect relating to creditors' rights generally or to general
principles of equity.
4.5 CONSENTS AND APPROVALS; No Violations. None of the execution, delivery or
performance of this Agreement by FAVE, or the consummation by FAVE of any
of the transactions contemplated hereby, will (i) conflict with or result
in any breach of any provision of the Organizational Documents of FAVE or
any FAVE Subsidiary, (ii) require any Consent of any Governmental Entity,
(iii) require any Consent of any other Person (including consents from
parties to loans, Contracts, leases and other agreements to which FAVE or
any affiliate of FAVE is a Party), (iv) result in a violation or breach of,
or constitute (with or without due notice or the passage of time or both) a
default (or give rise to any right of termination, amendment, cancellation
or acceleration) under, any of the terms, conditions or provisions of any
Contract, or (v) violate any Law, Order or Permit applicable to FAVE or any
affiliate of FAVE or any of their properties or assets, excluding from the
foregoing clauses (iii), (iv) and (v) such absences of required consents,
violations, breaches or defaults which would not, individually or in the
aggregate, have a FAVE Material Adverse Effect or adversely affect FAVE's
ability to consummate the Transaction.
4.6 FINANCIAL STATEMENTS.
(a) FAVE has timely filed as of the date hereof and will file as of the
Closing Date all reports required to be filed by it with the Securities
and Exchange Commission (the "SEC") pursuant to the federal securities
Laws and the SEC rules and regulations thereunder. Each of such reports
complied in all material respects with applicable requirements of the
Exchange Act (collectively, the "FAVE SEC Reports"). None of the FAVE
SEC Reports, as of their respective dates, contained or will contain
any untrue statement of a material fact or omitted or will omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, truthful or not misleading.
(b) The consolidated statements of financial position and the related
consolidated statements of operations, stockholders' equity and cash
flows (including the related notes thereto) of FAVE included in the
FAVE SEC Reports (the "FAVE Financial Statements") complied in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect
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thereto, have been prepared in conformity with United States generally
accepted accounting principles ("GAAP") (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on
a basis consistent with prior periods (except as otherwise noted
therein), and present fairly the consolidated financial position of
FAVE as at their respective dates, and the consolidated results of its
operations and its cash flows for the periods presented therein
subject, in the case of the unaudited interim financial statements, to
normal and recurring year-end adjustments.
4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the last quarterly
filing with the SEC, (i) the business of FAVE and its Subsidiaries has been
carried on only in the ordinary and usual course consistent with past
practice and (ii) there has not occurred any event, development or change
which, individually or in the aggregate, has resulted in or is reasonably
likely to result in a FAVE Material Adverse Effect.
4.8 LITIGATION. There is no Litigation pending, or to the Knowledge of FAVE,
threatened, against or involving FAVE or any FAVE Subsidiary or any of
their respective assets as to which there is a reasonable possibility of an
adverse determination and that, if determined adversely to FAVE or any FAVE
Subsidiary, would reasonably be expected, individually or in the aggregate,
to have a FAVE Material Adverse Effect or, as of the date hereof, which in
any way may prevent, enjoin, alter or delay the Transaction or have a
Material Adverse Effect on the FAVE Assets or the operation of NEWCO
following consummation of the transaction contemplated hereby.
4.9 COMPLIANCE WITH LAWS. FAVE and each FAVE Subsidiary is and has been in
compliance with all applicable Laws, except for violations which do not,
and would not reasonably be expected to have, individually or in the
aggregate, a FAVE Material Adverse Effect or have a Material Adverse Effect
on the FAVE Assets or the operation of NEWCO following consummation of the
transaction contemplated hereby. Neither FAVE nor any FAVE Subsidiary has
received any notice or other communication (whether written or oral) from
any Person regarding any actual, alleged, possible or potential violation
of or failure to comply with any Law, except for violations which do not,
and would not reasonably be expected to have, individually or in the
aggregate, a FAVE Material Adverse Effect. Neither FAVE, any person
controlling, controlled by or under common control with FAVE, nor any
Venture Fund is or has been an investment company as defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act"),
or required to be registered under the Investment Company Act, in each
case, after giving effect to Rule 3a-2 thereunder. Immediately after giving
effect to the Closing of the Transaction, none of FAVE, any FAVE
Subsidiary, Newco nor any Person controlling, controlled by or under common
control with, FAVE will be an investment company as defined in Section 3(a)
of the Investment Company Act, without giving effect to Rule 3a-2
thereunder.
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4.10 ENVIRONMENTAL MATTERS. Except as is not reasonably likely to result in a
FAVE Material Adverse Effect or have a Material Adverse Effect on the FAVE
Assets or the operation of NEWCO following consummation of the transaction
contemplated hereby:
(a) FAVE and each of the FAVE Subsidiaries (i) has been and is in
compliance with all applicable Environmental Laws; (ii) has obtained
all Permits required for the operation of its businesses by any
applicable Environmental Law (collectively "Environmental Permits") and
all such Environmental Permits are in full force and in effect, no
appeal nor any other action is pending to revoke any such Environmental
Permit; and (iii) is in compliance with all such Environmental Permits,
and has filed in a timely manner all applications to renew such
Environmental Permits or to obtain new Environmental Permits to the
extent such applications are currently required.
(b) There has been no release of any Hazardous Material that would
reasonably be likely to form the basis of any Environmental Claim
against FAVE or any FAVE Subsidiary at the properties owned or leased
by FAVE or any FAVE Subsidiary (the "FAVE Properties"). To the
Knowledge of FAVE, FAVE Properties are not adversely affected by any
Release or threatened Release of a Hazardous Material originating or
emanating from any other property. There were no Releases of Hazardous
Materials on properties formerly owned or operated by FAVE or any FAVE
Subsidiary, or any predecessors thereof, during the period of such
operation or ownership, that would reasonably be likely to result in an
Environmental Claim against FAVE or any FAVE Subsidiary.
(c) Neither FAVE nor any FAVE Subsidiary has manufactured, used, generated,
stored, treated, transported, disposed of, released, or otherwise
managed any Hazardous Material at any of the Parties' Properties.
(d) Neither FAVE nor any FAVE Subsidiary: (i) has any liability for
response or corrective action for natural resources damage, or any
other harm pursuant to any Environmental Law, (ii) is subject to, or
has Knowledge of, any Environmental Claim involving FAVE or any FAVE
Subsidiary, or (iii) has any Knowledge of any condition or occurrence
at any of the FAVE Properties which could form the basis of an
Environmental Claim against FAVE or any FAVE Subsidiary, or any of the
FAVE Properties.
(e) The FAVE Properties are not subject to any, and neither FAVE nor any
FAVE Subsidiary has any Knowledge of any, imminent restriction on the
ownership, occupancy, use or transferability of the FAVE Properties in
connection with any (i) Environmental Law or (ii) Release or threatened
Release of any Hazardous Material.
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(f) There are no conditions or circumstances at the FAVE Properties that
pose a risk to the environment or the health and safety of any Person,
or would require any remedial action.
(g) Neither FAVE nor any FAVE Subsidiary has been subject to any inquiry or
request for information related to its disposal, treatment, storage or
recycling, or the arrangement for said activities, of any Hazardous
Material or waste, at any property other than the FAVE Properties.
(h) To the Knowledge of FAVE, neither FAVE nor any FAVE Subsidiary or any
predecessor thereto has disposed, recycled, treated, stored, or
arranged for said activities, at any property that is listed or
proposed for listing on the Federal National Priorities List, the
Federal CERCLIS list, or any list compiled pursuant to state statutes
or Laws that are analogous to the Federal Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. 9601 et seq.
(i) The FAVE Properties do not contain any underground storage tanks,
landfills, electrical equipment containing polychlorinated biphenyls,
surface impoundments, friable asbestos-containing materials, or
hazardous waste treatment, storage or disposal units that either have
or require a Permit pursuant to any Law.
(j) Neither FAVE nor any FAVE Subsidiary has received a communication
(written or oral) that alleges that FAVE or any FAVE Subsidiary is not
in compliance with any Environmental Law.
(k) As used in this Agreement:
(i) "Environmental Claim" means any investigation, notice of
violation, demand, allegation, action, suit, Order, consent
decree, penalty, fine, Lien, proceeding or claim (whether
administrative, judicial or private in nature) arising: (i)
pursuant to, or in connection with, an actual or alleged violation
of any Environmental Law; (ii) in connection with any Hazardous
Material or actual or alleged activity associated with any
Hazardous Material; (iii) from any abatement, removal, remedial,
corrective or other response action in connection with any
Hazardous Material, Environmental Law or Order; or (iv) from any
actual or alleged damage, injury, threat or harm to health,
safety, natural resources or the environment.
(ii) "Environmental Law" means any Law pertaining to: (i) the
protection of health, safety and the indoor or outdoor
environment; (ii) the conservation, management or use of natural
resources and wildlife; (iii) the protection or use of surface
water and ground water; (iv) the management, manufacture,
possession,
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presence, use, generation, transportation, treatment, storage,
disposal, release, threatened release, abatement, removal,
remediation or handling of, or exposure to, any Hazardous
Material; or (v) pollution (including any release to air, land,
surface water and ground water); and includes the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. 9601 et seq., and the Solid Waste Disposal Act, 42 U.S.C.
6901 et seq., the Hazardous Materials Transportation Act, 49
U.S.C. 5101, et seq. The Clean Water Act, 33 U.S.C. 1251 et seq.,
the Clean Air Act, 42 U.S.C. 7401 et seq., the Toxic Substances
Control Act, 15 U.S.C. 2601 et seq., the Emergency Planning and
Community Right to Know Act, 42 U.S.C. 1986, the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. 136 et seq.,
the Occupational Safety and Health Act, 29 U.S.C. 651 et seq., any
similar state laws and the regulations related thereto or other
Laws.
(iii) "Hazardous Material" shall mean any substance, chemical, compound,
product, solid, gas, liquid, waste, by-product, pollutant,
contaminant or material which is hazardous or toxic, and includes
asbestos or any substance containing asbestos, polychlorinated
biphenyls, petroleum (including crude oil or any fraction
thereof), and any hazardous or toxic waste, material or substance
regulated under any Environmental Law.
(iv) "Hazardous Material" shall mean any substance, chemical, compound,
product, solid, gas, liquid, waste, by-product, pollutant,
contaminant or material which is hazardous or toxic, and includes
asbestos or any substance containing asbestos, polychlorinated
biphenyls, petroleum (including crude oil or any fraction
thereof), and any hazardous or toxic waste, material or substance
regulated under any Environmental Law.
4.11 INTELLECTUAL PROPERTY.(THE FOLLOWING SECTIONS ONLY REFER TO THE VIPER
TECHNOLOGY AND THE WIRELESS CABLE OPERATIONS OF FAVE)
(a) Intellectual Property.(The following sections only refer to the VIPER
technology and the Wireless Cable Operations of FAVE)
(b) There is no pending or, to the Knowledge of FAVE, threatened (in
writing) claim, suit, arbitration or other adversarial proceeding
(collectively, "Claims") before any court, agency, arbitral tribunal,
or registration authority in any jurisdiction (i) involving any item of
material Intellectual Property owned by FAVE or a FAVE Subsidiary as
related to the Wireless Cable Operations, (ii) alleging that the
activities or the conduct of FAVE's or a FAVE Subsidiary's business as
related to the Wireless Cable Operations does or will infringe upon,
violate or constitute the unauthorized use of the intellectual property
rights of any third Party or (iii) challenging the ownership, use,
validity, enforceability or registrability of any material Intellectual
Property by FAVE or a FAVE Subsidiary. There are no
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settlements, forbearances to xxx, consents, judgments, or orders or
similar obligations (other than license agreements in the ordinary
course of business) which (a) restrict FAVE's or a FAVE Subsidiary's
rights to use any material Intellectual Property, (b) restrict FAVE's
or a FAVE Subsidiary's business as related to the Wireless Cable
Operations in order to accommodate a third Party's intellectual
property rights or (c) permit third parties to use any Intellectual
Property owned by FAVE or a FAVE Subsidiary as related to the Wireless
Cable Operations, except for such Claims as have not resulted, and
could not reasonably be expected to result, in a FAVE Material Adverse
Effect.
(c) To the Knowledge of FAVE, no third Party is making unauthorized use of
or infringing in any material respect upon any material Intellectual
Property owned by FAVE or a FAVE Subsidiary as related to the Wireless
Cable Operations.
(d) FAVE and its Subsidiaries have taken commercially reasonable actions to
protect each item of material Intellectual Property owned by any of
them, except where the failure to take such actions has not resulted
and could not reasonably be expected to result in a FAVE Material
Adverse Effect.
(e) Neither FAVE nor any FAVE Subsidiary is in material violation of any
agreement relating to any Intellectual Property material to its
business or operations, except for such violations as have not
resulted, and could not reasonably be expected to result, in a FAVE
Material Adverse Effect. The consummation of the transactions
contemplated hereby will not result in the loss or material impairment
of FAVE's or a FAVE Subsidiary's rights to own or use any Intellectual
Property material to its business or operations, except where such loss
or impairment could not reasonably be expected to result in a FAVE
Material Adverse Effect.
4.12 BROKERS. No broker, finder, investment banker or other Person is entitled
to any brokerage, finder's or other fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of FAVE or any FAVE Subsidiary.
4.13 TAXES.
(a) Each of FAVE and its Subsidiaries has (i) duly and timely filed
(including all applicable extensions granted without penalty) all
material Tax Returns required to be filed, and such Tax Returns are
true, correct and complete in all material respects, and (ii) paid in
full or made adequate provision in the financial statements of FAVE (in
accordance with GAAP) for all material Taxes shown to be due on such
Tax Returns.
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(b) (i) neither FAVE nor its Subsidiaries has requested any extension of
time within which to file any Tax Return in respect of any taxable
period and no request for waivers of the time to assess any Taxes are
pending or outstanding, (ii) with respect to each taxable period of
FAVE and its Subsidiaries, the federal and state income Tax Returns of
FAVE and its Subsidiaries have been audited by the Internal Revenue
Service or the appropriate state Tax Authorities or the time for
assessing and collecting income Tax with respect to such taxable period
has closed and such taxable period is not subject to review, (iii) all
Taxes due with respect to completed and settled examinations or
concluded litigation relating to FAVE or any of its Subsidiaries have
been paid in full or adequate provision has been made for any such
amounts in the financial statements of FAVE (in accordance with GAAP)
and (iv) there are no material liens for Taxes upon the assets or
property of any of FAVE or its Subsidiaries except for statutory liens
for Taxes not yet due.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF FAVE RELATING SPECIFICALLY TO THE FAVE ASSETS
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5.1 REPRESENTATIONS AND WARRANTIES RELATING TO MMDS FREQUENCIES. FAVE
represents and warrants to G2A and the G2A Members, that all of the
statements contained in this Section 5.1 are true and complete as of the
date of this Agreement (or, if made as of a specified date, as of such
date), and will be true and complete as of the Closing Date as though made
on the Closing Date.
(a) Set forth on Schedule "R" hereto is a list of each of the transmitter
site leases and transmitter site lease option agreements (the "FAVE
Site Agreements") held by a FAVE Company on the date of this Agreement.
Except as set forth on Schedule "R", each FAVE Site Agreement will be
in full force and effect on the Closing Date and will create lease or
lease option rights owned by NEWCO. There is no material default under
any FAVE Site Agreement, and, to FAVE's knowledge, no Party to any FAVE
Site Agreement has given any other Party thereto any notice of material
default thereunder. Schedule "R" accurately sets forth, for each FAVE
Site Agreement, the parties, the location of the real property subject
thereto, the rental payments and the term. True copies of all FAVE Site
Agreements have been provided to G2A.
(b) FAVE will provide G2A with a list of frequencies and channels ("license
diagram") that will be listed as an exhibit to this agreement. Such
list will accurately reflect those frequencies and channels that are
being granted to NEWCO pursuant to this agreement.
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(c) (i) None of the material real property leased to or under lease option
granted pursuant to a FAVE Site Agreement is subject to any
condemnation proceeding, (ii) no lease of any such real property exists
which would materially interfere with the use of such property as
contemplated in the FAVE Site Agreement for the property, (iii) there
is no existing written notice covering future condemnation thereof, and
(iv) FAVE has no reason to believe that any such real property will be
condemned or subject to material condemnation proceedings.
(d) There are no leases, rental agreements, option agreements, employment
contracts, or contracts for service or maintenance existing and
relating to or connected with the occupancy or operation of any of the
real property subject to a FAVE Site Agreement other than as listed on
Schedule "R". True and complete copies of all such agreements have been
provided to G2A. Neither FAVE nor any Affiliate of FAVE has any
interest, present or future, in any of such real property.
(e) All of the real property subject to FAVE Site Agreements is accessible
directly from public streets or is accessible in accordance with valid
public or private easements which, if necessary, are included in the
applicable FAVE Site Agreement.
(f) The FAVE Operating System may be considered to include or provide
programming to any "cable system," as that term is defined in 47 U.S.C.
Section 522(7). The FAVE Operating Subsidiary may be referred to as a
"cable operator," as that term is defined in 47 U.S.C. Section 522(5).
(g) Each license, conditional license or other FCC authorization (each an
"FCC License") allowing the construction or the operation of station
facilities by a lessor of channel capacity who is obligated to lease
the capacity of the station (in whole or in part) under a lease
agreement or management/option agreement held by a FAVE Company, is in
full force and effect, and neither the licensee of such FCC License nor
the FCC License is subject to any complaint, investigation or
proceeding by or before the FCC, or on appeal from the FCC, which looks
toward or would result in the revocation, modification or non-renewal
of the FCC License. Each of such FCC Licenses for an MMDS, MDS or ITFS
station has a construction completion date which has not elapsed or, if
such date has elapsed, a properly filed request to the FCC to extend
that date for at least six (6) months shall be filed by FAVE on a
timely basis. The FCC has granted one or more FCC Licenses to each
lessor of the channel capacity subject to the lease and lease/option
agreements of the FAVE Companies allowing that lessor to construct
and/or operate each station required for the lessor to provide to the
lessee under each such agreement executed by such lessor the channel
capacity subject to that agreement.
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(h) Schedule "S" hereto sets forth true and correct information concerning
the Subscriber rates and offered programming channels for the FAVE
Operating Systems as of the date of this Agreement.
(i) Schedule "___" hereto sets forth true and correct information
concerning the Subscriber rates and offered programming channels for
the G2A Operating Systems as of the date of this Agreement.
(j) Except for ordinary wear and tear, the equipment used in each FAVE
Operating System, including but not limited to Equipment and Subscriber
Equipment, is in good operating condition, does not require and is not
reasonably expected to require any special or extraordinary
expenditures to remain in such condition, and can be used for its
intended purpose.
(k) All transmitters used in FAVE Operating Systems meet all material
applicable FCC type acceptance and frequency stability requirements.
(l) No FAVE Operating System has received any complaint that it, or any
channels used in it, is causing interference to any reception,
transmission or detection system.
(m) Neither any FAVE Company, nor any lessor of transmission capacity used
in any FAVE Operating System, requires any additional FCC authorization
for any FAVE Operating System to operate as currently operated.
(n) FAVE owns (or has a valid leasehold interest in) all assets used or
held for use in the Lacrosse wireless cable system and licenses the
Costa Rica wireless microwave frequencies.
(o) FAVE has the written consent to the retransmission of each Broadcast
Station whose signal is "retransmitted" by a FAVE Operating System. The
term "retransmitted" means the receipt and retransmission of a signal,
but does not include the reception described in FCC Rule 76.64(e). A
true and complete list of each FAVE Operating System retransmission
consent agreement, including the duration and the payment terms of such
agreement, is set forth on Schedule "T" hereto.
(p) FAVE or the appropriate FAVE Subsidiary has not filed at the FCC the
FCC Forms 395M because FAVE meets a specific exemption and does not
fall into a category that the requirement is intended for as is found
in Rule 76.77.
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(q) To the knowledge of FAVE, the conduct of each FAVE Company's business
has not infringed, misappropriated or conflicted with and does not
infringe, misappropriate or conflict with any Intellectual Property
Rights of other Persons, nor would any future conduct as presently
contemplated infringe, misappropriate or conflict with any Intellectual
Property Rights of other Persons.
(r) There are no material actions, suits, proceedings, orders,
investigations or claims pending or threatened against or affecting any
FAVE or any FAVE Subsidiary, as related to the FAVE Assets, at law or
in equity, or before or by any Governmental Body (including, without
limitation, any actions, suits, proceedings or investigations with
respect to the transactions contemplated by this Agreement); neither
FAVE nor any FAVE Subsidiary is subject to any material arbitration
proceedings as related to the FAVE Assets under collective bargaining
agreements or otherwise or, to the best of FAVE's knowledge, any
material governmental investigations or inquiries; and, to the best of
FAVE's knowledge, there is no basis for any of the foregoing. Neither
FAVE nor any FAVE Subsidiary has received any opinion or memorandum or
legal advice from legal counsel to the effect that it is exposed, from
a legal standpoint, to any liability which may be material to its
business. Items relative to this paragraph (r) which are disclosed in
FAVE's public filings shall be excepted from the representations set
forth in this paragraph (r).
(s) Except as otherwise expressly noted on the Schedules attached hereto,
FAVE and, to the best of FAVE's Knowledge the FCC Licensees and the FCC
Permittees are in material compliance with, and not in default under or
in violation of, the Act, the FCC Rules, the FAA Rules, the Copyright
Act, the Copyright Rules, other Legal Requirements applicable to the
FCC Licenses or FCC Permits being contributed to NEWCO pursuant to the
terms hereof. Except as otherwise expressly noted on the Schedules
attached hereto, FAVE has no Knowledge and has received no notice of
noncompliance with, default under or violation of the Act, the FCC
Rules, the FAA Rules, the Copyright Act, the Copyright Rules, other
Legal Requirements and the applicable FCC Licenses or FCC Permits. No
condition exists or event has occurred with respect to FAVE and, to the
best of FAVE's Knowledge, the FCC Licensees, the FCC Permittees, or any
of the FCC Licenses or FCC Permits which, in itself or with giving of
notice or the lapse of time or both, would (i) constitute or result in
a violation of the Act, any FCC Rule, any FAA Rule, the Copyright Act
or the Copyright Rules, (ii) constitute a default in the due
performance and observation of any term, covenant or condition of any
of the FCC Licenses or FCC Permits, (iii) result in a forfeiture, the
denial, dismissal or the suspension, termination, revocation, material
impairment, material adverse modification or nonrenewal of any FCC
License or FCC Permit, or (iv) adversely affect any of the material
rights of FAVE, any FCC Licensee or FCC Permittee under any of the FCC
Licenses or FCC Permits. (Items relative to this
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paragraph (s) which are disclosed in FAVE's public filings shall be
excepted from the representations set forth in this paragraph (s).
(t) Except as would not have a Material Adverse Effect, FAVE has, and at
the Closing Date will have, complied in all respects with all
applicable Legal Requirements and Orders of any Governmental Authority
having jurisdiction over it or its operations with respect to each
Market, including, but not limited to, all FCC Rules and any laws
(including Environmental Laws), rules or regulations regulating, if
applicable, zoning, fair and equal employment practices, the safety of
the workplace, the discharge of materials into the Environment or
otherwise relating to the protection of the Environment, antitrust,
antimonopoly or anticompetitive activities, wages, hours, collective
bargaining and the payment of withholding and social security taxes.
There are no Orders outstanding or in effect against or relating to
FAVE, the FAVE Assets, the transactions contemplated by this Agreement,
other than Orders issued with respect to the Wireless Cable industry
generally and in the normal course of regulation, which could,
individually or in the aggregate, (i) have a Material Adverse Effect,
(ii) hinder FAVE's ability to fully perform its material obligations
under this Agreement, or (iii) eliminate or materially diminish the
benefits of this Agreement for NEWCO. FAVE has not received any notice
(written or otherwise) from any Person to the effect that, or otherwise
been advised that, FAVE or any FAVE Asset is not in compliance with any
applicable law, ordinance, regulation, building or zoning law relating
to the Assets or the Business and FAVE has no reason to anticipate that
any presently existing circumstances are likely to result in a
violation of any such law, statute, ordinance or regulation.
(u) FAVE has not accepted the electrical interference to the Channels from
any source, has not consented to the grant of any application involved
with the FCC that is likely to result in any electrical interference to
the channels, and has not failed to timely petition to deny any
application that proposes facilities that would theoretically or
actually cause objectionable electrical interference to the Channels.
Except as otherwise expressly noted on the Schedules attached hereto,
and to the best of FAVE's Knowledge, no FCC Licensee or FCC Permittee
in any Market is likely to experience interference which will adversely
impact operation of the facilities it has constructed and/or operated,
or could be constructed or operated once such facilities are
constructed and operated, or is likely to create interference which
will adversely impact the operation of other facilities licensed by the
FCC to other Persons; for purposes of this Section, interference shall
be deemed to exist if within an FCC Licensee's protected service area,
the ratio of the desired signal to the undesired signal, at the antenna
input terminals of the affected received, is less than 45 dB.
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(v) Listed on Schedule "U" attached hereto are all the amendments
submitted, and the notices, reports and other documents filed by FAVE
or any other Party and, to the best of FAVE's Knowledge, the FCC
Licensees with respect to each Market, the FCC Licenses, the FCC
Permits, the Assets and each Market to and with the FCC, the FAA and
any other Governmental Authority. Except as otherwise expressly noted
on Schedule "U," FAVE and, to the best of FAVE's Knowledge the FCC
Licensees and the FCC Permittees have each timely submitted to the FCC,
the FAA and all other Governmental Authorities all notices, reports and
other documents which have been or are required by the Act, the FCC
Rules, the FAA Rules and other Legal Requirements with respect to each
Market, the FCC Licenses, the FCC Permits, the Assets and each Market,
except where the failure to do so would not (i) have a Material Adverse
Effect, (ii) hinder FAVE's ability to fully perform its material
obligations under this Agreement, or (iii) eliminate or materially
diminish the benefits of this Agreement for NEWCO. No petitions to deny
or informal objections have been filed against any of the amendments
listed on Schedule "U." True, complete and accurate copies of all
amendments, notices, reports and other documents filed by FAVE and to
the best of FAVE's Knowledge, the FCC Licensees and the FCC Permittees
with respect to each Market, the FCC Licenses, the FCC Permits, the
Assets and each Market with the FCC, the FAA, the Copyright Office and
other Governmental Authorities have been delivered to NEWCO by FAVE.
(w) There are no claims for brokerage commissions, finders' fees or similar
compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement binding upon any FAVE
Company.
(x) Each FAVE Company has complied in all material respects with all laws
relating to the employment of labor (including, without limitation,
provisions thereof relating to wages, hours, equal opportunity,
collective bargaining and the payment of social security and other
taxes), and FAVE is not aware that any FAVE Company has any material
labor relations problems (including, without limitation, any union
organization activities, threatened or actual strikes or work stoppages
or material grievances).
(y) (a) FAVE owns, holds or possesses, and at the Closing Date will own,
hold or possess, all Governmental Permits which are necessary to
entitle it to own or lease, operate and use the FAVE Assets and to
carry on and conduct its business as currently conducted except with
respect to Applications for which Licenses have not been granted, if
any. To FAVE's knowledge, there are no existing or threatened
investigations, inquiries or proceedings by or before the FCC which
could result in the revocation, cancellation, suspension, forfeiture or
material adverse modification of any FCC authorization or Application
except for those items
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disclosed in FAVE's public filings with the SEC. (b) The FCC Licenses
and the FCC Permits listed on Schedule "V" attached hereto, constitute
all of the FCC Authorizations held or leased by FAVE with respect to
each Market and are all of the FCC Authorizations used, useable, held
for use in or in conjunction with or otherwise associated with,
required or necessary to the lawful operation of each Market or the
Business. Except as otherwise expressly noted on Schedule "V," each of
the FCC Licenses and the FCC Permits (i) is currently and validly held
by the Person identified as the holder thereof on Schedule "V," (ii)
authorizes said holder to construct and operate a facility transmitting
video and audio programming and two-way transmission of broadband
Internet transmission on the Channels, (iii) was validly issued, (iv)
is validly existing and in full force and effect, and (v) is not
subject to any conditions other than such conditions as are generally
applicable to licenses and permits issued by the FCC with respect to
ITFS, MDS or MMDS Channels.
(z) From the date of this agreement through the Closing Date, FAVE shall
maintain the current operation and ITFS, MMDS and MDS frequencies
subject to this Agreement in accordance with good engineering practices
and in compliance with the rules and regulations of the FCC and shall
conduct the business of the station in the usual manner and shall
exercise good faith and due diligence in the operation of the station
in accordance with the terms of its licenses; shall keep all of the
FAVE Assets in a normal state of repair and operating efficiency,
customary in such business and shall use its best efforts to preserve
the business organization intact, and to preserve the goodwill
associated with the FAVE Assets.
(aa) As of the Closing, the FAVE shall hold all licenses necessary or
appropriate for the operation of wireless two-way transmission in each
of the Markets and such licenses shall be current and in good standing.
(bb) NEWCO, after the Closing, will own or lease all tangible assets
necessary for the conduct of the business in the Lacrosse markets as
presently conducted. Each such tangible asset which is personal
property is free from material defects, has been maintained in
accordance with normal industry practice, is in good operating
condition and repair (subject to normal wear and tear) and is suitable
for the purposes for which it is presently used, other than defects and
failures which would not, individually or in the aggregate, have a
Material Adverse Effect. None of the Assets are subject to any Lien or
Encumbrance.
(cc) As of the Closing Date, FAVE will use its best efforts to bring the
obligations that are currently in default with the FCC on the
Hickory/Wausau/Xxxxxxx Point MMDS frequency licenses into good
standing, to have such frequencies approved for two-way transmission,
to have conditional approval permitting build out
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issued, to make all payments necessary to bring such licenses current
through the Closing Date and to have the transfer of control to NEWCO
approved by the FCC.
(dd) The representations and warranties of FAVE contained in this Agreement
and all information contained in any exhibit, schedule or attachment
hereto or in any certificate or other writing delivered by, or on
behalf of, FAVE shall be true and correct in all material respects on
the Closing Date as though then made, except as affected by the
transactions expressly contemplated by this Agreement.
(ee) Schedule "W" is a complete and correct list of all Intellectual
Property owned or used by FAVE or any FAVE Subsidiary related to the
FAVE Assets. No person has any right to receive any royalty or similar
payment arising from the Intellectual Property. Except as set forth on
said Schedule "W," FAVE owns, and at the Closing Date will own, each of
said properties; has not granted, and at the Closing Date will not have
granted, to any other Person any interest in any of said properties, as
licensee or otherwise, with the exception of a limited license
agreement granted by FAVE for distribution of the VIPER prototype in
Italy, a copy of such license having been provided to G2A prior to the
execution of this Agreement; and has, and at the Closing Date will
have, filed all certificates, affidavits and other documents, and taken
all other actions, necessary to retain its title to said properties and
to keep the same in effect. None of said properties is invalid and none
infringes upon the personal or property rights of any third Party. From
and after the Closing, NEWCO will own or will have the right to use all
of the Intellectual Property required or desirable to conduct the
Business as it is conducted by FAVE in any Market or as it is
contemplated to be conducted by this Agreement and NEWCO.
(ff) (a) Schedule "A" is a complete and correct list of all Contracts
relating directly or indirectly to the FAVE Assets, other than (i)
policies of insurance which are listed in Schedule "X," (ii) purchase
orders or sales orders, if any, executed in the ordinary course of
business at current prices, (iii) commitments not exceeding ONE
THOUSAND DOLLARS ($1,000) for any single contract, and (iv) contracts
that are cancelable on notice of thirty (30) days or less and will not
involve a commitment in excess of ONE THOUSAND DOLLARS ($1,000) for the
remaining term of such contract. (b) Except as set forth on Schedule
"A" FAVE has performed, and at the Closing Date FAVE will have
performed, in all respects all obligations required to be performed by
it under each of the Contracts. Except as set forth on Schedule "A" all
of the Contracts are, and at the Closing Date will be, legal, valid and
binding obligations enforceable in accordance with their respective
terms and in full force and effect and there are no defaults (or events
which, with notice or lapse of time or both, would constitute a
default) by FAVE, or any other Party to any such Contract. Except as
otherwise set forth in Schedule
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"A," no default under any of the Contracts will be caused by the
consummation of the transactions contemplated hereby. Any Contracts set
forth in the name of other Persons, as lessee, have been duly and
validly assigned with all requisite consents and approvals of all
parties thereto (including, without limitation, the Institutions) to
FAVE, and remain in full force and effect as if FAVE were the initial
"lessee" thereunder. There exists no management or related agreements
between FAVE and any of its Affiliates with respect to the Assets which
would require NEWCO to make any payment whatsoever in the form of
management fees or related payments to FAVE or its Affiliates with
respect to the Assets and Business following the Closing. (c) Except as
expressly noted on Schedule "A," no default or termination has been
threatened in writing under any of the Contracts by any Party thereto.
Except as otherwise expressly noted on Schedule "A," the Capacity Lease
Agreements comply in all respects with the Act and the FCC Rules and,
each of the Capacity Lease Agreements, and all amendments thereto, have
been filed with and approved by the FCC. Each of the Capacity Lease
Agreements, with respect to ITFS, MMDS, MDS Channels provides the
lessee (FAVE) thereunder with the right to transmit video and audio
programming and two-way data transmission on the associated Channels
allows for "channel mapping" and "channel loading", and provides for an
initial term of at least ten (10) years, none of which expires prior to
May 1st, 2005. (d) Each Site Lease and Site Option allows for the use
and operation on the leased property of transmitters, antenna
structures, antennas and other associated facilities and permits the
transmission from the property of signals containing video and audio
programming. (e) True, complete and accurate copies of all Contracts
have been delivered to NEWCO by FAVE.
5.2 REPRESENTATIONS AND WARRANTIES RELATED TO WIRELESS CAMERA TECHNOLOGY.
FAVE represents and warrants to G2A and the G2A Members, that all of the
statements contained in this Section 5.2 are true and complete as of the
date of this Agreement (or, if made as of a specified date, as of such
date), and will be true and complete as of the Closing Date as though made
on the Closing Date.
(a) That it has the full and unencumbered authority and right to
convey the entire right, title and interest herein assigned, free
and clear of all liens, encumbrances, claims or claims of
ownership and that it has not executed and will not execute any
agreement in conflict herewith.
(b) That it will communicate to said Assignee or nominees all facts
known to it pertaining to the Wireless Camera Technology and that
it will deliver to NEWCO all documentation and other items
relating directly or indirectly to the rights granted hereunder,
and will arrange for its officers and employees to testify in all
legal proceedings, sign all lawful papers, execute all divisional,
continuing and reissue applications, make all rightful oaths and
declarations and
Purchase and Contribution Agreement -31- March 30, 2001
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in general perform all acts necessary or proper to aid said
Assignee or nominees in obtaining, maintaining and enforcing all
lawful patent or other grants of protection of said inventions in
any and all countries and regions.
(c) That FAVE: (i) was the sole owner of all rights, title and
interest in the Wireless Camera Technology, (ii) has not assigned,
transferred, licensed, with the exception of the limited license
agreement for distribution of the VIPER technology in Italy,
pledged or otherwise encumbered any Wireless Camera Technology or
agreed to do so, (iii) has full power and authority to enter into
this Agreement and to make the assignment of the Wireless Camera
Technology as provided herein, (iv) is not aware of any violation,
infringement or misappropriation of any third Party's rights (or
any claim thereof) by the Wireless Camera Technology, (v) was not
acting within the scope of employment by any third Party when
conceiving, creating or otherwise performing any activity with
respect to the Wireless Camera Technology and (vi) is not aware of
any questions or challenges with respect to the patentability or
validity of any claims of any existing patents or patent
applications relating to the Wireless Camera Technology.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF G2A
-------------------------------------
G2A represents and warrants to FAVE, that all of the statements contained in
this Article VI are true and complete as of the date of this Agreement (or, if
made as of a specified date, as of such date), and will be true and complete as
of the Closing Date as though made on the Closing Date.
6.1 ORGANIZATION; QUALIFICATION XX X0X. X0X (a) is a limited liability
company duly organized, validly existing and in good standing under
the laws of the state of Wisconsin; (b) has all required Permits and
full corporate power and authority to carry on its business as it is
now being conducted and to own the properties and assets it now owns;
and (c) is duly qualified to do business as a foreign corporation and
is in good standing in every jurisdiction in which ownership of
property or the conduct of its business requires such qualification
or, if G2A is not so qualified in any such jurisdiction, it can become
so qualified in such jurisdiction without causing a G2A Material
Adverse Effect. G2A has heretofore delivered to G2A complete and
correct copies of all Organizational Documents as presently in effect.
6.2 SUBSIDIARIES AND AFFILIATES. G2A has disclosed to FAVE the name and
jurisdiction of incorporation of each G2A Subsidiary, Joint Venture
and Affiliates, as of the date hereof, the approximate percent of the
outstanding
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shares of each G2A Subsidiary owned by X0X. X0X has provided FAVE with
a complete and accurate list of each other entity of which, as of the
date hereof, G2A has a direct or indirect equity ownership interest.
Each G2A Subsidiary (a) is a corporation or limited liability company
duly organized or formed, validly existing and in good standing under
the laws of its state of incorporation; (b) has all required Permits
and full corporate or limited liability company power and authority to
carry on its business as it is now being conducted and to own the
properties and assets it now owns; and (c) is duly qualified to do
business as a foreign corporation or limited liability company in good
standing in every jurisdiction in which ownership of property or the
conduct of its business requires such qualification or, if a G2A
Subsidiary is not so qualified in any such jurisdiction, it can become
so qualified in such jurisdiction without causing a G2A Material
Adverse Effect. G2A has heretofore made available to FAVE complete and
correct copies of the Organizational Documents, of each G2A
Subsidiary, as presently in effect.
6.3 CURRENT MEMBERS. G2A currently has three (3) holders of limited
liability company interests. As of the date hereof, (i) there are no
securities outstanding which are convertible into or exercisable or
exchangeable for limited liability company interests in G2A, and (ii)
there are no outstanding options, rights, Contracts, warrants,
subscriptions, conversion rights or other agreements or commitments
pursuant to which G2A may be required to purchase, redeem, issue or
sell any limited liability company interests or other securities of
G2A.
6.4 AUTHORIZATION OF AGREEMENT. G2A has all requisite corporate power
and authority to execute and deliver this Agreement and each
instrument required hereby to be executed and delivered by them at the
Closing, to perform their obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The G2A
Members have approved the Transaction. The execution and delivery by
G2A of this Agreement and each instrument required hereby to be
executed and delivered by them at the Closing and the performance of
their obligations hereunder and thereunder have been duly and validly
authorized by all requisite action on the part of G2A. This Agreement
has been duly executed and delivered by G2A and, assuming due
authorization, execution and delivery hereof by G2A, constitutes the
legal, valid and binding obligation of G2A, enforceable against G2A in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium or similar Laws now or hereafter in effect
relating to creditors' rights generally or to general principles of
equity.
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6.5 CONSENTS AND APPROVALS; NO VIOLATIONS. None of the execution,
delivery or performance of this Agreement by G2A, or the consummation
by G2A of any of the transactions contemplated hereby, will (i)
conflict with or result in any breach of any provision of the
Organizational Documents of G2A or any G2A Subsidiary, (ii) require
any Consent of any Governmental Entity, (iii) require any Consent of
any other Person (including consents from parties to loans, Contracts,
leases and other agreements to which G2A or any affiliate of G2A is a
Party), (iv) result in a violation of, or constitute (with or without
due notice or the passage of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any Contract, or
(v) violate any Law, Order or Permit applicable to G2A or any
affiliate of G2A or any of their properties or assets, excluding from
the foregoing clauses (iii), (iv) and (v) such absences of required
consents, violations, or defaults which would not, individually or in
the aggregate, have a G2A Material Adverse Effect or adversely affect
G2A's ability to consummate the Transaction.
6.6 LITIGATION. There is no Litigation pending, or to the Knowledge of
G2A, threatened, against or involving G2A or any of their respective
assets as to which there is a reasonable possibility of an adverse
determination and that, if determined adversely to G2A, would
reasonably be expected, individually or in the aggregate, to have a
G2A Material Adverse Effect or, as of the date hereof, which in any
way may prevent, enjoin, alter or delay the Transaction or have a
Material Adverse Effect on the G2A Assets or the operation of NEWCO
following consummation of the transaction contemplated hereby.
6.7 COMPLIANCE WITH LAWS. G2A is and has been in compliance with all
applicable Laws, except for violations which do not, and would not
reasonably be expected to have, individually or in the aggregate, a
G2A Material Adverse Effect or have a Material Adverse Effect on the
G2A Assets or the operation of NEWCO following consummation of the
transaction contemplated hereby. G2A has not received any notice or
other communication (whether written or oral) from any Person
regarding any actual, alleged, possible or potential violation of or
failure to comply with any Law, except for violations which do not,
and would not reasonably be expected to have, individually or in the
aggregate, a G2A Material Adverse Effect.
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6.8 ABSENCE OF CERTAIN CHANGES OF EVENTS. Since September 1st, 2001 (i)
the business of G2A and its subsidiaries has been carried on only in
the ordinary course consistent with past practices and (ii) there has
not occurred any event, development or change which, individually of
in the aggregate, has resulted in or is reasonably likely to result in
a G2A Material Adverse Effect.
6.9 ABSENCE OF CERTAIN CHANGES OF EVENTS. Since September 1st, 2001 (i)
the business of G2A and its subsidiaries has been carried on only in
the ordinary course consistent with past practices and (ii) there has
not occurred any event, development or change which, individually of
in the aggregate, has resulted in or is reasonably likely to result in
a G2A Material Adverse Effect.
(a) G2A and the G2A Subsidiaries (i) has been and is in compliance
with all applicable Environmental Laws; (ii) has obtained all
Permits required for the operation of its businesses by any
applicable Environmental Law (collectively "Environmental
Permits") and all such Environmental Permits are in full force
and in effect, no appeal nor any other action is pending to
revoke any such Environmental Permit; and (iii) is in compliance
with all such Environmental Permits, and has filed in a timely
manner all applications to renew such Environmental Permits or
to obtain new Environmental Permits to the extent such
applications are currently required.
(b) There has been no release of any Hazardous Material that would
reasonably be likely to form the basis of any Environmental
Claim against G2A or any G2A Subsidiary at the properties owned
or leased by G2A or any G2A Subsidiary (the "G2A Properties").
To the Knowledge of X0X, X0X Properties are not adversely
affected by any Release or threatened Release of a Hazardous
Material originating or emanating from any other property. There
were no Releases of Hazardous Materials on properties formerly
owned or operated by G2A or any G2A Subsidiary, or any
predecessors thereof, during the period of such operation or
ownership, that would reasonably be likely to result in an
Environmental Claim against G2A or any G2A Subsidiary.
(c) There has been no release of any Hazardous Material that would
reasonably be likely to form the basis of any Environmental Claim
against G2A or any G2A Subsidiary at the properties owned or
leased by G2A or any G2A Subsidiary (the "G2A Properties"). To
the Knowledge of X0X, X0X Properties are not adversely affected
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by any Release or threatened Release of a Hazardous Material
originating or emanating from any other property. There were no
Releases of Hazardous Materials on properties formerly owned or
operated by G2A or any G2A Subsidiary, or any predecessors
thereof, during the period of such operation or ownership, that
would reasonably be likely to result in an Environmental Claim
against G2A or any G2A Subsidiary.
(d) Neither G2A nor any G2A Subsidiary has manufactured, used,
generated, stored, treated, transported, disposed of, released,
or otherwise managed any Hazardous Material at any of the G2A
Properties.
(e) Neither G2A nor any G2A Subsidiary: (i) has any liability for
response or corrective action for natural resources damage, or
any other harm pursuant to any Environmental Law, (ii) is subject
to, or has Knowledge of, any Environmental Claim involving G2A or
any G2A Subsidiary, or (iii) has any Knowledge of any condition
or occurrence at any of the G2A Properties which could form the
basis of an Environmental Claim against G2A or any G2A
Subsidiary, or any of the G2A Properties.
(f) The G2A Properties are not subject to any, and neither G2A nor
any G2A Subsidiary has any Knowledge of any, imminent restriction
on the ownership, occupancy, use or transferability of the G2A
Properties in connection with any (i) Environmental Law or (ii)
Release or threatened Release of any Hazardous Material.
(g) There are no conditions or circumstances at the G2A Properties
that pose a risk to the environment or the health and safety of
any Person, or would require any remedial action.
(h) Neither G2A nor any G2A Subsidiary has been subject to any
inquiry or request for information related to its disposal,
treatment, storage or recycling, or the arrangement for said
activities, of any Hazardous Material or waste, at any property
other than the G2A Properties.
(i) To the Knowledge of G2A, neither G2A nor any G2A Subsidiary or
any predecessor thereto has disposed, recycled, treated, stored,
or arranged for said activities, at any property that is listed
or proposed for listing on the Federal National Priorities List,
the
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Federal CERCLIS list, or any list compiled pursuant to state
statutes or Laws that are analogous to the Federal Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.
9601 et seq.
(j) The G2A Properties do not contain any underground storage tanks,
landfills, electrical equipment containing polychlorinated
biphenyls, surface impoundments, friable asbestos-containing
materials, or hazardous waste treatment, storage or disposal
units that either have or require a Permit pursuant to any Law.
(k) Neither G2A nor any G2A Subsidiary has received a communication
(written or oral) that alleges that G2A or any G2A Subsidiary is
not in compliance with any Environmental Law.
(l) As used in this Agreement:
a. "Environmental Claim" means any investigation, notice of
violation, demand, allegation, action, suit, Order,
consent decree, penalty, fine, Lien, proceeding or claim
(whether administrative, judicial or private in nature)
arising: (i) pursuant to, or in connection with, an
actual or alleged violation of any Environmental Law;
(ii) in connection with any Hazardous Material or actual
or alleged activity associated with any Hazardous
Material; (iii) from any abatement, removal, remedial,
corrective or other response action in connection with
any Hazardous Material, Environmental Law or Order; or
(iv) from any actual or alleged damage, injury, threat
or harm to health, safety, natural resources or the
environment.
b. "Environmental Law" means any Law pertaining to: (i) the
protection of health, safety and the indoor or outdoor
environment; (ii) the conservation, management or use of
natural resources and wildlife; (iii) the protection or
use of surface water and ground water; (iv) the
management, manufacture, possession, presence, use,
generation, transportation, treatment, storage,
disposal, release, threatened release, abatement,
removal, remediation or handling of, or exposure to, any
Hazardous Material; or (v) pollution (including any
release to air, land, surface water and ground water);
and includes the Comprehensive
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Environmental Response, Compensation and Liability Act
of 1980, 42 U.S.C. 9601 et seq., and the Solid Waste
Disposal Act, 42 U.S.C. 6901 et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. 5101, et seq.
The Clean Water Act, 33 U.S.C. 1251 et seq., the Clean
Air Act, 42 U.S.C. 7401 et seq., the Toxic Substances
Control Act, 15 U.S.C. 2601 et seq., the Emergency
Planning and Community Right to Know Act, 42 U.S.C.
1986, the Federal Insecticide, Fungicide and Rodenticide
Act, 7 U.S.C. 136 et seq., the Occupational Safety and
Health Act, 29 U.S.C. 651 et seq., any similar state
laws and the regulations related thereto or other Laws.
c. "Hazardous Material" shall mean any substance, chemical,
compound, product, solid, gas, liquid, waste,
by-product, pollutant, contaminant or material which is
hazardous or toxic, and includes asbestos or any
substance containing asbestos, polychlorinated
biphenyls, petroleum (including crude oil or any
fraction thereof), and any hazardous or toxic waste,
material or substance regulated under any Environmental
Law.
d. "Release" means any release, spill, emission, leak,
injection, deposit, disposal, discharge, dispersal,
leaching, or migration into the atmosphere, soil,
surface water, groundwater or property (indoors or
outdoors).
6.9 INTELLECTUAL PROPERTY.
(a) To the Knowledge of X0X, X0X and its Subsidiaries own or otherwise
have valid rights to use all Intellectual Property material to
their business and operations as currently conducted.
(b) There is no pending or, to the Knowledge of G2A, threatened (in
writing) claim, suit, arbitration or other adversarial proceeding
(collectively, "Claims") before any court, agency, arbitral
tribunal, or registration authority in any jurisdiction (i)
involving any item of material Intellectual Property owned by G2A
or a G2A Subsidiary, (ii) alleging that the activities or the
conduct of G2A's or a G2A Subsidiary's business does or will
infringe upon, violate or constitute the unauthorized use of the
intellectual property rights of any third Party or (iii)
challenging the ownership, use, validity, enforceability or
registrability of any material Intellectual Property by G2A or a
G2A Subsidiary. There are no
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settlements, forbearances to xxx, consents, judgments, or orders
or similar obligations (other than license agreements in the
ordinary course of business) which (a) restrict G2A's or a G2A
Subsidiary's rights to use any material Intellectual Property, (b)
restrict G2A's or a G2A Subsidiary's business in order to
accommodate a third Party's intellectual property rights or (c)
permit third parties to use any Intellectual Property owned by G2A
or a G2A Subsidiary, except for such Claims as have not resulted,
and could not reasonably be expected to result, in a G2A Material
Adverse Effect.
(c) To the Knowledge of G2A, no third Party is making unauthorized use
of or infringing in any material respect upon any material
Intellectual Property owned by G2A or a G2A Subsidiary.
(d) G2A and its Subsidiaries have taken commercially reasonable
actions to protect each item of material Intellectual Property
owned by any of them, except where the failure to take such
actions has not resulted and could not reasonably be expected to
result in a G2A Material Adverse Effect.
6.10 Neither G2A nor any G2A Subsidiary is in material violation of any
agreement relating to any Intellectual Property material to its
business or operations, except for such violations as have not
resulted, and could not reasonably be expected to result, in a G2A
Material Adverse Effect. The consummation of the transactions
contemplated hereby will not result in the loss or material impairment
of G2A's or a G2A Subsidiary's rights to own or use any Intellectual
Property material to its business or operations, except where such
loss or impairment could not reasonably be expected to result in a G2A
Material Adverse Effect.
6.11 TAXES.
(a) G2A, as it relates to assets contributed, G2A Subsidiary have (i)
duly and timely filed (including all applicable extensions granted
without penalty) all material Tax Returns required to be filed,
and such Tax Returns are true, correct and complete in all
material respects, and (ii) paid in full or made adequate
provision in the financial statements of the G2A (in accordance
with GAAP) for all material Taxes shown to be due on such Tax.
(b) (i) neither G2A nor its Subsidiaries has requested any extension
of time within which to file any Tax Return in respect of any
taxable period and no request for waivers of the time to assess
any Taxes are pending or outstanding, (ii) with respect to the
taxable period of the G2A and their Subsidiaries, the federal and
state income Tax Returns of G2A and their Subsidiaries have been
audited by the Internal Revenue Service or the appropriate state
Tax Authorities or the time for assessing and collecting income
Tax
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with respect to such taxable period has closed and such taxable
period is not subject to review, (iii) all Taxes due with respect
to completed and settled examinations or concluded litigation
relating to either G2A or any of their Subsidiaries have been paid
in full or adequate provision has been made for any such amounts
in the financial statements of G2A (in accordance with GAAP) and
(iv) there are no material liens for Taxes upon the assets or
property of any of G2A or its Subsidiaries except for statutory
liens for Taxes not yet due.
6.12 BROKERS. No broker, finder, investment banker or other Person is
entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of G2A or any G2A Subsidiary.
ARTICLE VII
COVENANTS RELATING TO CONDUCT OF BUSINESS OF NEWCO
--------------------------------------------------
7.1 FUNDING OF THE NEWCO BUSINESS. Prior to and as a condition precedent
to the Closing of the transaction contemplated hereby, FAVE shall use
its best efforts to receive a firm commitment for an investment into
the operation of NEWCO. Such investment shall be raised from sale of
shares of common stock in FAVE Channel Corporation if possible using
the best efforts of FAVE. Alternatively, such amount may be raised
from the sale of shares in NEWCO or from such other agreed upon
financing arrangement. All of the proceeds from such offering shall be
distributed from FAVE to NEWCO to be used in connection with the
buildout of the Wireless Internet Business in the Wisconsin market
using two-way MMDS frequencies.
7.2 ADDITIONAL CAPITAL REQUIREMENTS OF NEWCO. FAVE understands and agrees
that additional capital will be required for the build-out of the MMDS
frequencies in the Wausau, Xxxxxxx Point BTA and the Hickory, North
Carolina BTA and Costa Rica Market and that such additional capital
will need to be provided on a timely basis in order to meet FCC Rules
regarding build-out of BTA frequencies within 5 years following the
initial grant of a license. FAVE with the assistance of NEWCO agrees
to use its best efforts to obtain sufficient capital to fund a
complete build-out of MMDS/MDS frequencies in the Wausau/Xxxxxxx Point
BTA (pending grant and approval of the licenses by the FCC), Hickory,
North Carolina BTA (pending grant and approval of the licenses by the
FCC), and Costa Rica Market and for enhancement to the La Crosse BTA
to accommodate two-way use of the frequencies in that market for
broadband wireless Internet access.
7.3 CONDUCT OF THE WIRELESS CABLE BUSINESS PRIOR TO CLOSING. During the
period from the date of this Agreement to the Closing Date (unless G2A
shall otherwise agree in writing and except as otherwise contemplated
by this Agreement), FAVE will conduct the operations of the Wireless
Cable Business in the ordinary course of business consistent with past
practice
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and shall use its best efforts to preserve intact its current business
organizations, keep available the services of their current officers
and employees, maintain its material contracts and preserve its
relationships with customers, suppliers and others having business
dealings with it.
ARTICLE VIII
SALE OF NEWCO SHARES; BOARD MEMBERSHIP; VOTING AGREEMENT
--------------------------------------------------------
8.1 LOCK-UP. Without the prior written consent of FAVE, neither G2A nor
any of the G2A Members may offer to sell, contract to sell, or
otherwise sell, dispose of, loan, pledge, transfer or grant any rights
with respect to, or enter into any short sale or otherwise hedge
against (collectively, a "Share Disposition") any shares of stock
received in FAVE Channel Corporation pursuant to Section 3.2 of this
Agreement ("Acquisition Shares")on or prior to the expiration of 180
days following the Closing Date; provided, that the terms of this
Section 8.1 shall not apply to any distribution of shares in FAVE
Corporation from G2A to the G2A Members, provided that such G2A
Members shall agree to abide by the provisions of this Section 8.1.
After the expiration of 180 days after the Closing Date, G2A or any
G2A Member may transfer or otherwise dispose of the Acquisition Shares
only: (i) pursuant to the Registration Rights Agreement, (ii) pursuant
to Rule 144 promulgated under the Securities Act, to the extent
applicable, or (iii) pursuant to privately negotiated sales; provided
that (A) neither G2A nor the G2A Members shall knowingly sell a number
of Acquisition Shares equal to more than 25% of the then outstanding
shares of Common Stock of FAVE to any single Person (or affiliates of
such Person) other than to a broker-dealer for resale, (B) during the
period from 180 days to 360 days after the Closing, G2A or the G2A
Members shall not sell more than 50% of the Acquisition Shares, and
(C) G2A and the G2A Members shall not, other than pursuant to an
underwritten public offering pursuant to the Registration Rights
Agreement, sell a number of Acquisition Shares on any day equal to
more than 20% of the average daily trading volume for FAVE Common
Stock during the prior week, provided such average trading volume
exceeds 500,000 shares per day.
8.2 RIGHTS OF FIRST OFFER IN NEWCO SHARES. In the event of a proposed
Share Disposition of any portion of the shares of stock owned by FAVE
in NEWCO, FAVE shall first offer such NEWCO Acquisition Shares to the
G2A Members by delivery of a written notice (the "Offer Notice") to
each individual G2A Member specifying the number of NEWCO Acquisition
Shares proposed to be sold or transferred, the price to be paid for
such shares and the other material terms and conditions of the
proposed sale. The G2A Members shall have the right to purchase any
portion or all of the NEWCO Acquisition Shares specified in the Offer
Notice, which right may be exercised only by delivery to FAVE within
10 business days after the Offer Notice shall have been delivered of a
written notice (the "Acceptance Notice) setting forth its acceptance
of FAVE's offer. In the event that the G2A Members exercise their
right to purchase the NEWCO Acquisition Shares or any portion thereof,
the price to be paid therefore shall be the lesser of (i) the price
set forth in the Offer Notice
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divided into a per share price relative to the number of shares that
the purchaser elects to purchase, or (ii) the Option Exercise Price
(as defined below) calculated into a per share price. In the event
that the G2A Members do not deliver an Acceptance Notice to FAVE by
the close of business on the thirty-first business day following
FAVE's delivery of an Offer Notice (the "Last Acceptance Day"), FAVE
shall be free to sell or transfer up to the number of NEWCO
Acquisition Shares specified in the Offer Notice for a period of 30
days after the Last Acceptance Day to one or more Persons; provided,
however, that any NEWCO Acquisition Shares not sold within such 10 day
period shall thereafter be offered to the G2A Members in accordance
with this Section 8.2. In the event that the G2A Members deliver an
Acceptance Notice prior to the Last Acceptance Day, the closing of the
purchase of NEWCO Acquisition Shares by the purchasing Party(s) shall
take place 60 days after the date of Acceptance Notice.
8.3 REGISTRATION RIGHTS. The G2A Members, G2A (as the case may be) and
FAVE will at the Closing enter into a Registration Rights Agreement
relating to the shares of stock in FAVE Corporation being distributed
to G2A or the G2A Members pursuant to the terms of this Agreement.
Such Registration Rights Agreement shall be substantially in the form
attached hereto as Exhibit "C" (the "Registration Rights Agreement").
8.4 G2A BOARD MEMBERSHIP ON FAVE BOARD.
(a) The Board of Directors of FAVE (the "FAVE Board"), shall elect,
effective as of the Closing Date, a member of the FAVE Board
designated by G2A (the "G2A Designee"). In connection with any
meeting of the stockholders of FAVE at which members of the Board
are to be elected and at which the term of the G2A Designee
expires, the Board, or the applicable committee, shall nominate
and recommend to its stockholders one G2A Designee. In the event
that a G2A Designee dies, retires, or is otherwise removed from
the Board, the Board shall elect as a replacement a new G2A
Designee.
(b) VOTING AGREEMENT. On the Closing Date, Xxx Xxxxx shall enter into
a Voting Agreement with the G2A Members, in form attached hereto
as Exhibit "D" in which they agree to cast their votes as
shareholders in FAVE Channel Corporation to elect a G2A Designee
to the Board of Directors of FAVE in any shareholder vote for the
election of members to the FAVE Board.
ARTICLE IX
ADDITIONAL AGREEMENTS
---------------------
9.1 ACCESS AND INFORMATION. Prior to the Closing Date, each of the parties
will, and will cause its Subsidiaries to (i) afford to the other Party
and its officers, directors, employees, accountants, consultants,
legal counsel, agents and other representatives (collectively, the
"Representatives") full access, at reasonable times upon reasonable
prior notice, to the
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officers, employees, agents, properties, offices and other facilities
of such Party and its Subsidiaries and to their books and records,
(ii) furnish promptly to the other Party and its Representatives such
information concerning the business, properties, contracts, records
and personnel of such Party and its Subsidiaries (including financial,
operating and other data and information) as may be reasonably
requested, from time to time, by or on behalf of the other Party. No
investigation by any Party hereto shall affect any representation or
warranty in this Agreement of any Party hereto or any condition to the
obligations of the parties hereto.
9.2 REASONABLE BEST EFFORTS. Upon the terms and subject to the conditions
set forth in this Agreement, each of the parties agrees to use
reasonable best efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement including
(i) the obtaining of all necessary actions or nonactions, waivers or
Consents from Governmental Entities and the making of all necessary
registrations and filings and the taking of all steps as may be
necessary to obtain an approval or waiver from, or to avoid an action
or proceeding by, any Governmental Entity, (ii) the obtaining of all
necessary Consents or waivers from third parties, (iii) the defending
of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated by this Agreement, including seeking to have
any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed, and (iv) the execution and
delivery of any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of,
this Agreement.
9.3 PUBLICITY. The parties will consult with each other and will mutually
agree upon any press releases pertaining to the Transaction and shall
not issue any such press releases prior to such consultation and
agreement, except as may be required by applicable Law or by
obligations pursuant to any listing agreement with any national
securities exchange, in which case the Party proposing to issue such
press release shall use its reasonable efforts to consult in good
faith with the other Party before issuing any such press releases.
ARTICLE X
CLOSING CONDITIONS
------------------
10.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO COMPLETE THE TRANSACTION. The
respective obligations of each Party to complete the Transaction are
subject to the satisfaction at or prior to the Closing Date of the
following conditions:
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(b) INJUNCTION. There shall not be in effect any Law or Order of a
court or governmental or regulatory agency of competent
jurisdiction directing that the transactions contemplated hereby
not be consummated; provided, however that prior to invoking this
condition each Party shall use its reasonable efforts to have any
such Order vacated.
(c) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the parties shall be true and this Agreement and on the Closing
Date as though made on and as of the Closing Date (except to the
extent that a representation or warranty expressly speaks as of a
specified date or period of time); provided, however, that for
purposes of this Section, such representations and warranties
shall be deemed to be true and correct unless the failure or
failures of such representations and warranties to be so true and
correct, without regard to any materiality qualifiers contained
therein, individually or in the aggregate, results or would
reasonably be likely to result in an AV Material Adverse Effect.
(d) PERFORMANCE. Each of the parties shall have performed and complied
with or caused to be performed or complied with their covenants
and agreements under this Agreement to be performed or complied
with at or prior to Closing.
(e) CERTIFICATION OF CONDITIONS. Each of the parties shall have
received on the Closing Date a certificate dated the Closing Date
and executed by an executive officer of each other Party
certifying to the fulfillment of the conditions in this Article.
(f) MATERIAL ADVERSE EFFECT. There shall not have occurred any event
or condition which individually or in the aggregate has resulted
in, or is reasonably likely to result in, a Material Adverse
Effect to the business to be conducted by NEWCO following
consummation of this transaction, any of the FAVE Assets, any of
the G2A Assets.
(g) REGISTRATION RIGHTS AGREEMENT. The Registration Rights Agreement
shall have been executed by all parties thereto and delivered to
G2A and the G2A Members and FAVE.
(h) EMPLOYMENT AGREEMENTS. The G2A Members shall each have executed
Employment Agreements in mutually acceptable form and providing
for mutually acceptable terms, conditions, compensation and other
matters.
10.2 ADDITIONAL CONDITIONS TO THE OBLIGATION G2A AND THE G2A MEMBERS TO
CONTRIBUTE THE G2A ASSETS. The obligation of G2A and the G2A Members
to complete the Transaction
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and contribute the G2A Assets is subject to the satisfaction at or
prior to the Closing Date of the following conditions , any and all of
FAVE's obligations may be waived in whole or in part by G2A and the
G2A Members to the extent permitted by applicable Law:
(a) REPRESENTATIONS AND WARRANTIES OF FAVE. The representations and
warranties of FAVE set forth in this Agreement shall be true and
correct on the Closing Date as though made on and as of the
Closing Date (except to the extent that a representation or
warranty expressly speaks as of a specified date or period of
time;
(b) REPRESENTATIONS AND WARRANTIES OF FAVE. The representations and
warranties of FAVE set forth in this Agreement shall be true and
correct on the Closing Date as though made on and as of the
Closing Date (except to the extent that a representation or
warranty expressly speaks as of a specified date or period of
time;
(c) FAVE WILL USE BEST EFFORTS TO OBTAIN FCC APPROVAL OF CHANGE OF
OWNERSHIP AND CONTROL. FAVE will use best efforts to obtain FCC
Approval of change of ownership and control, if for any reason
FAVE is unable to obtain FCC approval of change of ownership and
control of the licenses it shall not affect the binding nature of
this agreement.
(d) FIRM COMMITMENT ON CAPITAL INTO NEWCO. FAVE shall have used its
best efforts to obtain a "best efforts" commitment, with NEWCO as
a beneficiary to such commitment, to provide the capital described
in Section 5.1 of this Agreement raised from the sale of FAVE
common stock or NEWCO stock or any other agreed upon financial
arrangement, which firm commitment shall contain as the only
condition precedent to funding that the transaction described in
this Agreement be closed, and the amounts specified in Section 6.1
shall be distributed into the accounts of NEWCO, however this
Closing and binding agreement is not dependent or conditional on
the receipt of this commitment prior to or immediately following
this Closing.
(e) FCC WAIVER OF HICKORY LICENSE DEFAULT. FAVE (or the relevant
Subsidiary of FAVE), shall use best efforts to receive a waiver
from the FCC that provides that any default relative to the
Hickory FCC license, including any potential deficiency related to
the Hickory market, will not cause a default in the Wisconsin
markets, and that all payments made on the Wisconsin markets
MMDS/MDS frequencies shall be applied only to payment due relative
to the Wisconsin markets. If such waiver is not achieved prior to
Closing, FAVE shall use its best efforts to obtain approval in
sufficient time for the timely completion of all build-out
requirements under FCC rules and regulations, however the Closing
and binding nature of this agreement is not conditional or
dependent on obtaining the abovementioned approval.
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(f) TOWER APPROVALS IN WAUSAU/XXXXXXX POINT BTA. FAVE and G2A shall
use its best efforts to obtain approval to place transmission
equipment on necessary towers in the Wausau/Stevens Point,
Wisconsin BTA, including Rib Mountain Tower, Star Lake area tower,
and such other Wisconsin area tower locations as are necessary in
the opinion of G2A for the build-out of the Wausau/Xxxxxxx Point
BTA, from all necessary Governmental Authorities and all parties
who control such towers.
(g) FCC APPROVAL UNDER TRANSFER OF OWNERSHIP RULES. FAVE shall use its
best efforts to have FCC counsel apply for approval of the
transfer of ownership of the licenses to NEWCO and shall use its
best efforts to obtain such approval following Closing.
(h) FCC APPROVAL ON TWO-WAY TRANSMISSIONS. FAVE shall use its best
efforts to receive approval from the FCC permitting two-way
transmission of the MMDS/MDS frequencies for the La Crosse,
Wisconsin BTA and FAVE shall use its best efforts following the
Closing to obtain such approval relative to the Wausau/Stevens
Point, Wisconsin BTA and Hickory, North Carolina BTA.
(i) OPINION OF COUNSEL REGARDING COSTA RICA OWNERSHIP STRUCTURE AND
COSTA RICA FREQUENCIES. FAVE shall obtain and deliver to G2A, an
opinion of counsel, in form acceptable to G2A, opining that the
Costa Rica frequencies are available build-out and use for two-way
transmission of broadband Internet access and that the current
ownership structure of the Costa Rican microwave frequencies is
permissible under Costa Rican law.
ARTICLE XI
TERMINATION, AMENDMENT, EXPENSES
--------------------------------
11.1 TERMINATION. This Agreement may be terminated at any time prior to the
Closing Date:
(a) by mutual written consent of FAVE and G2A;
(b) by either FAVE or G2A:
a. if there shall be any Order of a Court or Governmental Entity
having jurisdiction over a Party hereto which is final and
nonappealable permanently enjoining, restraining or
prohibiting the consummation of the transaction contemplated
hereunder; or
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b. if the Closing shall not have been consummated before March
30, 2001 (the "Termination Date"); provided, however, that
the right to terminate this Agreement under this Section
shall not be available to any Party whose failure to fulfill
any obligation under this Agreement has been a cause of; or
resulted in, the failure of the Closing Date to occur on or
before the Termination Date.
(c) By G2A:
a. upon a material breach of any covenant or agreement on the
part of FAVE set forth in this Agreement, or if any
representation or warranty is or becomes inaccurate in a
manner such that the conditions set forth in this Agreement
would not be satisfied (a "Terminating FAVE Breach"); or
b. if there has occurred an event that cannot reasonably be
cured prior to the Termination Date and which would create a
Material Adverse Effect on the business or prospects of NEWCO
or the MMDS/MDS frequencies being contributed by FAVE
hereunder.
(d) by FAVE:
a. upon a material breach of any contract or agreement on the
part of G2A set forth in this Agreement, or if any
representation or warranty of G2A is or becomes inaccurate in
a manner such that the conditions set forth in this Agreement
would not be satisfied (a "Terminating G2A Breach"); provided
that, if such Terminating G2A Breach is curable by G2A
through the exercise of its reasonable efforts, provided G2A
continues to exercise such reasonable efforts, FAVE may not
terminate this Agreement under this Section until the
Termination Date; or
b. if there has occurred a Material Adverse Effect that
materially and adversely affects the value of the G2A Assets.
11.2 EFFECT OF TERMINATION. In the event of termination of this Agreement
and the abandonment of the Transaction pursuant to this Article XI,
written notice thereof shall as promptly as practicable be given to
the other parties to this Agreement, and this Agreement shall
terminate and the transactions contemplated hereby shall be abandoned,
without further action by any of the parties hereto except as provided
in this Section 11.2. If this Agreement is terminated as provided
herein, this Agreement shall forthwith become void and have no effect
except that the obligations of the parties set forth in any
Confidentiality Agreement between the parties shall remain in effect.
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11.3 SURVIVAL. All "best efforts" obligations survive the closing and are
agreed to be pursued on an ongoing basis, but there is no
representation that these best efforts will result in obtaining the
pursued result.
11.4 AMENDMENT. This Agreement may be amended by the parties hereto at any
time prior to the Closing Date. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
11.5 WAIVER. At any time prior to the Closing Date, any Party hereto may
(a) extend the time for the performance of any of the obligations or
other acts of the other Party hereto, (b) waive any inaccuracies in
the representations and warranties of the other Party contained herein
or in any document delivered pursuant hereto and (c) waive compliance
by the other Party with any of the agreements or conditions contained
herein. Any such extension or waiver will be valid only if set forth
in an instrument in writing signed by the Party or parties to be bound
thereby.
11.6 EXPENSES. All expenses incurred by the parties hereto will be borne
solely and entirely by the Party which has incurred such expenses,
provided that any approved, normal and reasonable legal, accounting,
investment banking or similar fees and expenses of G2A and the G2A
Members in connection with the preparation of agreements and in
connection with the Transaction shall be paid by FAVE.
ARTICLE XII
TAX MATTERS
-----------
12.1 TAX INDEMNIFICATION.
(a) INDEMNIFICATION BY FAVE. Any cash payments made to XXXXX, X0X, and
the G2A members in accordance with section 3.3 above shall be
offset against any amounts owed as a result of this Tax
Indemnification section. FAVE shall indemnify XXXXX, X0X, and the
G2A Members in respect of, and hold XXXXX, X0X, and the G2A
Members harmless on an after-Tax basis, against any federal or
state income tax liability which may arise from the consideration
received by G2A, any G2A Member, or NEWCO from the transaction
contemplated under this Agreement, including but not limited to
any tax liability that may result from the distribution of shares
of stock in FAVE Channel Corporation to G2A and/or the G2A
Members, any tax liability on any cash amounts paid to G2A and/or
the G2A Members as provided in this Agreement, any tax liability
which arises from the contribution of the FAVE Assets to NEWCO as
provided in this Agreement, and/or any tax liability which may
arise from the contribution by G2A of the G2A Assets to NEWCO and
the receipt by G2A and/or the G2A Members of shares of stock in
NEWCO. The indemnification contained in this provisions shall
include all costs and expenses of audit, accounting expenses,
attorney fees and all additional costs
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and expenses that any arise related to any actual or alleged tax
liability arising from the transaction set forth in this
Agreement.
(b) TRANSFER TAXES. Any sales, use, transfer, stamp, conveyance, value
added, recording, registration, documentary, filing or other
similar Taxes and fees, whether levied on FAVE, G2A, and G2A
Member, or NEWCO, resulting from this Agreement or the
transactions contemplated hereby shall be paid by FAVE.
(c) NOTIFICATION OF TAX CLAIMS. G2A or the G2A Members shall promptly
notify FAVE in writing of any Tax Claim that may reasonably be
likely to result in liability of FAVE under this Agreement.
(d) TREATMENT OF THE CONTRIBUTIONS. To the extent permitted under the
Code, each of the parties hereto shall treat the contributions
referenced in this Agreement and receipt of shares of stock in
NEWCO as a transaction described in Section 351 of the Code for
all tax purposes, and shall take no position inconsistent
therewith in any Tax Return, any proceeding before any
Governmental Entity, Taxing Authority or otherwise. The parties
will promptly notify each other of any audits, examinations,
actions, or proceedings by any Taxing Authority regarding the
transactions contemplated or referred to herein.
(e) TAX DISPUTES. If the parties disagree as to the calculation of a
Tax or the amount of any payment to be made under this Agreement
or disagree as to the application or interpretation of any
provision under this Article IX, the parties shall cooperate in
good faith to resolve any such dispute, and any agreed-upon amount
shall be paid to the appropriate Party. If the parties are unable
to resolve any such dispute within fifteen business days
thereafter, such dispute shall be resolved by an internationally
recognized accounting firm acceptable to both FAVE, each of the
G2A Members and G2A. The decision of such firm shall be final and
binding provided that a written opinion of such accounting firm is
provided for the benefit of the parties. The fees and expenses
incurred in connection with such decision shall be paid by FAVE.
Following the decision of such accounting firm, the parties shall
each take (or cause to be taken) any action that is necessary or
appropriate to implement such decision, including, without
limitation, the filing of amended Tax Returns and the prompt
payment of underpayments or overpayment, with interest calculated
on such underpayments or overpayment at the prime rate from the
date such payment was due.
ARTICLE XIII
GENERAL MATTERS
---------------
13.1 INTERPRETATION.
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(a) When a reference is made in this Agreement to a section or
article, such reference shall be to a section or article of this
Agreement unless otherwise clearly indicated to the contrary.
(b) Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the
words "without limitation."
(c) The words "hereof", "herein" and "herewith" and words of similar
import shall, unless otherwise stated, be construed to refer to
this Agreement as a whole and not to any particular provision of
this Agreement, and article, section, paragraph, exhibit and
schedule references are to the articles, sections, paragraphs,
exhibits and schedules of this Agreement unless otherwise
specified.
(d) The plural of any defined term shall have a meaning correlative to
such defined term, and words denoting any gender shall include all
genders. Where a word or phrase is defined herein, each of its
other grammatical forms shall have a corresponding meaning.
(e) A reference to any Party to this Agreement or any other agreement
or document shall include such Party's successors and permitted
assigns.
(f) A reference to any legislation or to any provision of any
legislation shall include any amendment, modification or
re-enactment thereof; any legislative provision substituted
therefor and all regulations and statutory instruments issued
thereunder or pursuant thereto.
(g) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question
of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties, and no presumption
or burden of proof shall arise favoring or disfavoring any Party
by virtue of the authorship of any provision of this Agreement.
13.2 SURVIVAL OF REPRESENTATIONS. The representations and warranties in
this Agreement shall survive the Closing Date. This Section 13.2 shall
not limit any covenant or agreement of the parties, which by its terms
shall survive the Closing Date.
13.3 NOTICES. Any notice, request, instruction or other document to be
given hereunder by any Party to another Party shall be in writing and
shall be deemed given when delivered personally, upon receipt of a
transmission confirmation (with a confirming copy sent by overnight
courier) if sent by facsimile or like transmission, and on the next
business day when sent by Federal Express, United Parcel Service,
Express Mail, or other reputable overnight courier, to the Party at
the following addresses (or such other addresses for a Party as shall
be specified by like notice):
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(a) If to G2A:
Go2America, LLC
000 Xxxxx 0xx Xxxxxx
Xxxxxx, Xxxxxxxxx 00000
With a copy to:
(b) If to the G2A Members:
(c) If to FAVE:
Attn: Xxxx Xxxxxxxxx
5th Avenue Channel Corp.
0000 XX 000xx Xx.
Xxxxx Xxxxx, XX 00000
With a copy to:
Attn: Xxxxxx X. Xxxxx
Law Offices of Xxxxxx X. Xxxxx
5601 Building
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx, XX 00000
13.4 ENTIRE AGREEMENT NO ASSIGNMENT GOVERNING LAW. This Agreement (a)
constitutes the entire agreement and supersedes all other agreements
and understandings, both written and oral, between the parties with
respect to the subject matter hereof; (b) shall not be assigned by any
Party (by operation of law or otherwise) without the prior written
consent of the other parties, and (c) shall be governed by and be
construed in accordance with the laws of the State of Florida without
giving effect to the principles of conflicts of laws thereof.
13.5 PARTIES IN INTEREST. This Agreement shall be binding upon and inure
solely to the benefit of each Party hereto and their respective
successors and assigns, and nothing in this
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Agreement, express or implied, is intended to confer upon any other
person any rights or remedies of any nature whatsoever under or by
reason of this Agreement.
13.6 COUNTERPARTs. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which together shall constitute one and
the same instrument.
13.7 HEADINGS. The section and other headings contained in this Agreement
are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
13.8 SEVERABILITY. In case any term, provision, covenant or restriction
contained in this Agreement is held to be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining terms, provisions, covenants or
restrictions contained herein, and of such term, provision, covenant
or restriction in any other jurisdiction, shall not in any way be
affected or impaired thereby.
END OF AGREEMENT EXCEPT FOR SIGNATURE PAGE
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Signature Page
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
0xx XXXXXX CHANNEL CORPORATION
By: /s/ XXX XXXXX
----------------------------
Xxx Xxxxx, Its CEO/President
Go2America, LLC
By: /s/ XXXXXXXX XXXXXX
----------------------------
Xxxxxxxx Xxxxxx
Its: Member
By: /s/ XXXXXXX XXXXXX
----------------------------
Xxxxxxx Xxxxxx
Its: Member
By: /s/ XXXXX XXXXXXXXXXXX
--------------------------
Xxxxx Xxxxxxxxxxxx
Its: Member
Go2America, LLC Members, Individually
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By: /s/ XXXXXXXX XXXXXX
----------------------------
Xxxxxxxx Xxxxxx
Its: Member
By: /s/ XXXXXXX XXXXXX
----------------------------
Xxxxxxx Xxxxxx
Its: Member
By: /s/ XXXXX XXXXXXXXXXXX
----------------------------
Xxxxx Xxxxxxxxxxxx
Its: Member
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LISTING OF SCHEDULES
Schedule Description
A FAVE Contract List
B G2A Contract List
C FAVE Equipment List
D G2A Equipment List
E FAVE Equipment Leases
F G2A Equipment Leases
G Excluded Assets
H G2A Assumed Liabilities
I G2A Property Leases
J FAVE Property Leases
K Viper Camera Technology Description
L FAVE LaCrosse Fixed Assets
M FAVE Authorizations
N MMDS/ITFS Frequency Listing By Market
O Initial NEWCO Board of Directors
P Initial NEWCO Officers
Q FAVE Assumed Liabilities
R FAVE Transmitted Site Leases/Agreements
S La Crosse Cable Subscriber Rates
T Retransmission Terms
U FCC Filings
V FCC Licenses and Permits
W FAVE Intellectual Property
X Insurance Policies
LISTING OF EXHIBITS
A NEWCO Bylaws
B Form Assignment Agreement
C Registration Rights Agreement
D Voting Agreement
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