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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
Pursuant to Item 601(b)(2) of Regulation S-K, the exhibits and schedules
to this Asset Purchase Agreement have been omitted. Such exhibits and schedules
will be submitted to the Securities and EXchange Commission upon request.
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ASSET PURCHASE AGREEMENT
AMONG
COMPAQ COMPUTER CORPORATION
AND
DIGITAL EQUIPMENT CORPORATION
(COLLECTIVELY, "SELLER")
AND
ABOVENET COMMUNICATIONS INC.
("PURCHASER")
AND
PX ACQUISITION CORP.
("SUB")
DATED AS OF MAY 21, 1999
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TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS........................................... 1
1.1 Definitions........................................... 1
1.2 Interpretation........................................ 5
ARTICLE II SALE AND PURCHASE OF PURCHASED ASSETS; ASSUMPTION
OF ASSUMED OBLIGATIONS................................ 6
2.1 Purchased Assets...................................... 6
2.2 Assignment of Contracts, Leases and Other Assets...... 7
2.3 Excluded Assets....................................... 8
2.4 Assumed Obligations................................... 9
2.5 No Other Liabilities Assumed.......................... 9
2.6 Allocation of Taxes................................... 10
2.7 Minimization of Taxes................................. 11
2.8 Allocation of Consideration........................... 11
2.9 Cooperation and Records Retention..................... 11
2.10 529 Xxxxxx Street..................................... 11
2.11 Unearned Revenue and Prepaid Credits.................. 12
2.12 Accounts Receivable................................... 12
ARTICLE III PURCHASE PRICE AND PAYMENT............................ 12
3.1 Payment of Purchase Price............................. 12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER.............. 12
4.1 Organization, Good Standing and Qualification......... 13
4.2 Authority............................................. 13
4.3 Consents and Approvals; No Conflicts, etc. ........... 13
4.4 No Adverse Effect or Changes.......................... 14
4.5 Title to Properties................................... 15
4.6 No Undisclosed Liabilities............................ 15
4.7 Condition of Purchased Assets......................... 15
4.8 Equipment............................................. 15
4.9 Material Customer Sales Order......................... 15
4.10 PAIX Intellectual Property............................ 15
4.11 Permits............................................... 16
4.12 Compliance with Laws and Regulations;
Governmental Licenses, Etc. ........................ 16
4.13 Employment and Labor Matters.......................... 16
4.14 Capital Improvements.................................. 16
4.15 Taxes................................................. 16
4.16 No Defaults or Violations............................. 17
4.17 Litigation............................................ 17
4.18 Major Customers....................................... 17
4.19 Environmental Matters................................. 17
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4.20 Employees and Employee Benefit Plans.................. 18
4.21 Due Diligence......................................... 18
4.22 Brokers............................................... 18
4.23 PAIX Financial Statements............................. 18
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
AND SUB............................................... 19
5.1 Organization, Good Standing and Qualification......... 19
5.2 Authority............................................. 19
5.3 Consents and Approvals; No Conflicts, etc. ........... 20
5.4 Broker................................................ 20
ARTICLE VI COVENANTS OF SELLER................................... 20
6.1 Preservation of Business.............................. 20
6.2 Cooperation........................................... 22
6.3 Access to Information and Facilities.................. 22
6.4 Xxxx-Xxxxx-Xxxxxx Act................................. 22
6.5 PAIX Financial Statements............................. 22
6.6 Consents and Approvals................................ 22
6.7 Supplemental Information.............................. 23
6.8 Regulatory Approvals; Transfer of Permits............. 23
6.9 Accounts Receivable................................... 23
6.10 Filing of Tax Returns................................. 23
6.11 No Shop............................................... 23
6.12 Non-Solicitation...................................... 23
6.13 Post-Closing Audit Assistance......................... 24
ARTICLE VII COVENANTS OF THE PURCHASER............................ 24
7.1 Implementing Agreement................................ 24
7.2 Consents and Approvals................................ 24
7.3 Xxxx-Xxxxx-Xxxxxx Act................................. 24
7.4 Supplemental Information.............................. 24
7.5 Cooperation........................................... 24
ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASER
AND SUB............................................... 25
8.1 Representations and Warranties........................ 25
8.2 Performance........................................... 25
8.3 Authorizations........................................ 25
8.4 Proceedings and Documents............................. 25
8.5 Xxxx of Sale.......................................... 25
8.6 Assignment and Assumption Agreement................... 25
8.7 Injunctions, Temporary Restraining Orders and
Third Party Actions................................. 25
8.8 No Adverse Change or Event............................ 26
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ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER......... 26
9.1 Representations and Warranties........................ 26
9.2 Performance........................................... 26
9.3 Authorizations........................................ 26
9.4 Proceedings and Documents............................. 26
9.5 Payment of Cash....................................... 26
9.6 Assignment and Assumption Agreement................... 26
9.7 Injunctions, Temporary Restraining Orders and
Third Party Actions................................. 27
9.8 No Adverse Change or Event............................ 27
ARTICLE X EMPLOYEES, BENEFIT PLANS AND CORPORATE FUNCTIONS...... 27
10.1 Employees............................................. 27
ARTICLE XI CLOSING............................................... 28
11.1 Closing............................................... 28
11.2 Deliveries by Seller.................................. 28
11.3 Deliveries by the Purchaser or Sub.................... 29
11.4 PAIX Facilities Lease................................. 29
ARTICLE XII POST-CLOSING CONTRACTUAL OBLIGATIONS.................. 29
12.1 OC3 Circuit........................................... 30
12.2 Internet Access....................................... 30
12.3 Right of First Refusal................................ 30
12.4 Pricing Terms......................................... 31
12.5 Future Services....................................... 31
12.6 Reseller Programs..................................... 31
12.7 Non-Competition....................................... 31
12.8 Nonrelocation of PAIX................................. 31
12.9 Cooperation........................................... 31
12.10 Termination........................................... 32
ARTICLE XIII TERMINATION........................................... 32
13.1 Termination........................................... 32
13.2 Effect of Termination................................. 32
ARTICLE XIV INDEMNIFICATION....................................... 32
14.1 Survival of Representations and Warranties............ 32
14.2 Indemnification by Seller............................. 33
14.3 Indemnification by the Purchaser...................... 33
14.4 Claims................................................ 33
14.5 Notice of Third Party Claims; Assumption of Defense... 33
14.6 Settlement or Compromise.............................. 34
14.7 Failure of Indemnifying Person to Act................. 34
14.8 Limits of Seller to Indemnify......................... 34
14.9 Limits of the Purchaser to Indemnify.................. 35
14.10 Maximum Payments; Remedy.............................. 35
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ARTICLE XV MISCELLANEOUS......................................... 35
15.1 Expenses.............................................. 35
15.2 Amendment............................................. 35
15.3 Notices............................................... 35
15.4 Payments in Dollars................................... 36
15.5 Waivers............................................... 37
15.6 Assignment............................................ 37
15.7 No Third Party Beneficiaries.......................... 37
15.8 Publicity............................................. 37
15.9 Further Assurances.................................... 37
15.10 Severability.......................................... 37
15.11 Remedies Cumulative................................... 37
15.12 Entire Understanding.................................. 38
15.13 Applicable Law........................................ 38
15.14 Counterparts.......................................... 38
EXHIBITS
--------
EXHIBIT A Form of Xxxx of Sale
EXHIBIT B Form of Assignment and Assumption Agreement
EXHIBIT C Form of Lease to Existing PAIX Facilities Located at
000 Xxxxxx Xxxxxx, Xxxx Xxxx, Xxxxxxxxxx
SCHEDULES
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SCHEDULE 2.1(a) Equipment
SCHEDULE 2.1(c) PAIX Intellectual Property
SCHEDULE 2.2(a) Personal Property Leases
SCHEDULE 2.2(b) Seller Purchase Orders
SCHEDULE 2.2(c) Customer Sales Orders
SCHEDULE 2.2(d) Vendor Contracts
SCHEDULE 2.2(e) Other Contracts
SCHEDULE 2.2(f) Permits
SCHEDULE 2.3 Excluded Assets
SCHEDULE 4.20 Service Providers
SCHEDULE 10.1 Continuing Employees (from Site)
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, made as of the 21st day of May, 1999, by
and between COMPAQ COMPUTER CORPORATION, a Delaware corporation, and DIGITAL
EQUIPMENT CORPORATION, a Massachusetts corporation, (collectively, "SELLER");
ABOVENET COMMUNICATIONS INC., a Delaware corporation ("PURCHASER"); and PX
ACQUISITION CORP., a Delaware corporation and wholly owned subsidiary of
Purchaser ("SUB"). Certain capitalized terms used herein are defined in ARTICLE
I,
WITNESSETH:
WHEREAS, Seller operates a business, within Compaq's Digital Systems
Research Labs Division, known as the Palo Alto Internet Exchange ("PAIX") which
offers class A data center Internet interconnection and related services to
telecommunications carriers, internet service providers, multi-homed content
providers and enterprise customers (the "PAIX BUSINESS"); and
WHEREAS, the Purchaser wishes to purchase from Seller and Seller wishes to
sell to the Purchaser PAIX, all upon the terms and conditions hereinafter set
forth:
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, agreements and warranties herein contained, the parties agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The following terms shall have the following meanings
for the purposes of this Agreement:
"AFFILIATE" means, with respect to any specified Person any other Person
which, directly or indirectly, owns or controls, is under common ownership or
control with, or is owned or controlled by, such specified Person.
"AGREEMENT" means this Asset Purchase Agreement, including all exhibits
and schedules hereto, as it may be amended from time to time in accordance with
the terms hereof.
"ASSUMED CONTRACTS" is defined in SECTION 2.2.
"ASSUMED OBLIGATIONS" is defined in SECTION 2.4.
"ACCOUNTS PAYABLE" means all accounts payable of the PAIX Business at the
Closing Date.
"ACCOUNTS RECEIVABLE" means all accounts receivable of the PAIX Business
billed prior to the Closing Date.
"BUSINESS DAY" means any day of the year other than (i) any Saturday or
Sunday or (ii) any other day on which banks located in San Francisco,
California generally are closed for business.
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"BUSINESS MATERIAL ADVERSE EFFECT" means a material adverse effect on the
assets, liabilities, condition (financial or otherwise), properties or
operations of the PAIX Business or Purchased Assets, taken as a whole.
"CASH" means all cash, certificates of deposit, bank deposits and other
cash equivalents, together with all accrued but unpaid interest thereon.
"CLOSING" means the consummation of the transactions contemplated herein
in accordance with ARTICLE XI.
"CLOSING DATE" means the date on which the Closing occurs or is to occur.
"CODE" means the United States Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means all trade secrets, confidential
information and all other data of or pertaining to a party hereto or to its
financial affairs or products that is made available to the other party or its
respective representatives, except information that (a) is in the public domain
through no fault of the other party, (b) was previously known by the other
party prior to the disclosure, (c) was properly disclosed to the other party by
another person without restriction, or (d) can be shown to have been
independently developed by the other party.
"CONTINUING EMPLOYEE" is defined in SECTION 10.1.
"CONTRACT" means any written contract, lease, sales order, purchase order,
or agreement.
"CUSTOMER SALES ORDERS" is defined in SECTION 2.2(c).
"DOLLARS" or numbers preceded by the symbol "$" mean amounts in United
States Dollars.
"EMPLOYEE" means each employee of Seller who is employed primarily in the
conduct of the PAIX Business immediately prior to the Closing.
"ENVIRONMENTAL LAW" means any Law which relates to or otherwise imposes
liability or standards of conduct concerning discharges, emissions, releases or
threatened releases of noises, odors or any pollutants, contaminants or
hazardous or toxic wastes, substances or materials, whether as matter of
energy, into ambient air, water, or land, or otherwise relating to the
manufacture,processing, generation, distribution, use, treatment, storage,
disposal, cleanup, transport or handling of pollutants, contaminants, or
hazardous or toxic wastes, substances or materials, including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, the
Superfund Amendments and Reauthorization Act of 1986, as amended, the Resource
Conservation and Recovery Act of 1976, as amended, the Toxic Substances Control
Act of 1976, as amended, the Federal Water Pollution Control Act Amendments of
1972, the Clean Water Act of 1977, as amended, any so-called "Superfund" or
"Superlien" Law (including those already referenced in this definition) and any
other Law of any Governmental Authority having a similar subject matter.
"ENVIRONMENTAL PERMIT" means any permit, license, approval, consent or
other authorization required by or pursuant to any applicable Environmental Law.
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"EQUIPMENT" is defined in SECTION 2.1(a).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" means, with respect to any Person, each corporation,
trade or business that is, along with such Person part of the controlled group
of corporations, trades or businesses under common control within the meaning
of sections 414(b) or (c) of the Code.
"EXCLUDED ASSETS" is defined in SECTION 2.3.
"EXCLUDED EMPLOYEE" is defined in SECTION 10.1.
"EXCLUDED OBLIGATIONS" is defined in SECTION 2.5.
"GAAP" means U.S. generally accepted accounting principles, consistently
applied, at the time in effect.
"GOVERNMENTAL AUTHORITY" means the government of the United States or any
foreign country or any state or political subdivision thereof and any entity,
body or authority exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"XXXX-XXXXX-XXXXXX ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"HAZARDOUS SUBSTANCE" means any material or substance which (i)
constitutes a hazardous substance, toxic substance or pollutant (as such terms
are defined by or pursuant to any Environmental Law) or (ii) is regulated
or controlled as a hazardous substance, toxic substance, pollutant or other
regulated or controlled material, substance or matter pursuant to any
Environmental Law.
"INDEBTEDNESS" of any Person means all obligations (a) for borrowed money,
(b) evidenced by notes, bonds, debentures or similar instruments, (c) for the
deferred purchase price of goods or services (other than trade payables or
accruals incurred in the ordinary course of business), (d) under capital leases
and (e) in the nature of guarantees of the obligations described in clauses (a)
through (d) above of any other Person.
"INDEMNIFIED PERSON" means the Person or Persons entitled to, or claiming
a right to, indemnification under ARTICLE XIII.
"INDEMNIFYING PERSON" means the Person or Persons claimed by the
Indemnified Person to be obligated to provide indemnification under ARTICLE
XIII.
"INFORMATION AND RECORDS" is defined in SECTION 2.1(c).
"INVENTORIES" is defined in SECTION 2.1(b).
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"LAW" means any law, statute, regulation, ordinance, rule, order, decree,
judgment, consent decree, settlement agreement or governmental requirement
enacted, promulgated, entered into, agreed to or imposed by any Governmental
Authority.
"LEASED ASSETS" means all assets subject to any of the Personal Property
Leases, or otherwise leased by Seller in connection with the operation of the
PAIX Business.
"LIEN" means any mortgage, lien (except for any lien for taxes not yet due
and payable), charge, restriction, pledge, security interest, lease or
sublease, claim, right of any third party, easement, encroachment or
encumbrance of any kind, whether accrued, absolute, contingent or otherwise.
"LOSS" or "LOSSES" means any and all liabilities, losses, costs, claims,
damages (including consequential damages), penalties and expenses (including
reasonable attorneys' fees and expenses and costs of investigation and
litigation) reduced by the amount of any recovery under insurance policies. In
the event any of the foregoing are indemnifiable hereunder, the terms "Loss"
and "Losses" shall include reasonable attorneys' fees and expenses and costs of
investigation and litigation incurred by the Indemnified Person in enforcing
such indemnity.
"OTHER CONTRACTS" is defined in SECTION 2.2(e).
"PAIX" is defined in the first recital hereof.
"PAIX FINANCIAL STATEMENTS" means the audited and unaudited financial
statements of the PAIX Business prepared by PricewaterhouseCoopers LLP and
delivered or to be delivered to Purchaser in accordance with this Agreement.
The PAIX Financial Statements consist of the following: (i) audited Financial
Statements as of December 26, 1998 and December 27, 1997, and for each of the
three years in the period ended December 26, 1998 ("1998 PAIX YEAR-END
FINANCIALS"), (ii) unaudited Financial Statements as of March 31, 1999 and for
the three months then ended ("3/31 PAIX QUARTERLY FINANCIALS"), (iii) unaudited
Statements of Revenues and Direct Expenses for the period from December 28,
1998 to the Closing Date ("PAIX CLOSING DATE FINANCIALS"), (iv) unaudited
closing balance sheet as of the Closing Date ("PAIX CLOSING BALANCE SHEET"),
and (v) unaudited Statements of Revenues and Direct Expenses for the period
from July 1, 1997 to June 30, 1998 and from July 1, 1998 to the Closing Date
("ADDITIONAL PAIX FINANCIAL INFORMATION").
"PAIX INTELLECTUAL PROPERTY" is defined in SECTION 2.1(d).
"PERMITS" is defined in SECTION 2.2(f).
"PERMITTED ENCUMBRANCES" means any Liens for taxes that are due and
payable, but not yet delinquent and any statutory Liens which may arise if
there is a non-payment or other non-performance by Purchaser or Sub
post-closing of any Assumed Liability.
"PERSON" means any individual, corporation, proprietorship, firm,
partnership, limited partnership, trust, association or other entity.
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"PURCHASE PRICE" means the amount of cash delivered pursuant to SECTION
3.1.
"PURCHASED ASSETS" is defined in SECTIONS 2.1 and 2.2.
"PURCHASER" means AboveNet Communications Inc., a Delaware corporation.
"PURCHASER MATERIAL ADVERSE EFFECT" means a material adverse effect on the
assets, liabilities, and financial condition of Purchaser, taken as a whole.
"RELATED AGREEMENTS" means the Xxxx of Sale attached hereto as EXHIBIT A
and the Assignment and Assumption Agreement attached hereto as EXHIBIT B.
"SELLER" means Compaq Computer Corporation, a Delaware corporation.
"SELLER PURCHASER ORDERS" is defined in SECTION 2.2(b).
"SUB" means PX Acquisition Corp., a Delaware corporation.
"TAX RETURN" means any report, return, form or other information statement
required to be supplied to a Governmental Authority in connection with any
Taxes.
"TAXES" (and, with correlative meaning, "TAX" and "TAXABLE") means any and
all taxes, including without limitation (i) any income, profits, alternative or
add-on minimum tax, gross receipts, sales, use, value-added, ad valorem,
transfer, franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, net worth, premium, property, environmental or
windfall profit tax, custom duty or other tax, governmental fee or assessment or
charge of any kind whatsoever, together with any interest or any penalty,
addition to tax or additional amount imposed by a Governmental Entity
responsible for the imposition of any such tax (domestic or foreign), (ii) any
liability for the payment of any amounts of the type described in clause (i)
above as a result of being a member of an affiliated, consolidated, combined or
unitary group for any Taxable period or as the result of being a transferee or
successor thereof and (iii) any liability for the payment of any amounts of the
type described in clause (i) or (ii) above as a result of any express or implied
obligation to indemnify any other Person.
"VENDOR CONTRACTS" is defined in SECTION 2.2(d).
1.2 Interpretation. The headings preceding the text of Articles and
Sections included in this Agreement and the headings to Schedules attached to
this Agreement are for convenience only and shall not be deemed part of this
Agreement or given any effect in interpreting this Agreement. The use of the
masculine, feminine or neuter gender or the singular or plural form of words
shall not limit any provision of this Agreement. The use of the terms
"including" or "include" shall in all cases mean "including, without limitation"
or "include, without limitation," respectively. Reference to any "Law" means as
amended, modified, codified, replaced or re-enacted, in whole or in part, and in
effect on the date hereof, including rules, regulations, enforcement procedures
and any interpretations promulgated thereunder. Underscored references to
Articles, Sections, clauses, Exhibits or Schedules shall refer to those portions
of this Agreement, and underscored referenced to a clause shall, unless
otherwise identified, refer to the appropriate clause within the same Section
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in which such reference occurs. The use of the terms "hereunder," "hereof,"
"hereto" and words of similar import shall refer to this Agreement as a whole
and not to any particular Article, Section or clause of or Exhibit or Schedule
to this Agreement.
ARTICLE II
SALE AND PURCHASE OF PURCHASED ASSETS;
ASSUMPTION OF ASSUMED OBLIGATIONS
2.1 Purchased Assets. Subject to the terms and conditions of this
Agreement, Seller shall sell, transfer, convey, assign and deliver to Sub, and
Sub shall purchase from Seller, at the Closing all rights, title and interests
to the assets, properties and rights (contractual or otherwise) free and clear
of all liens and encumbrances, except for Permitted Encumbrances, used
primarily in the conduct of the PAIX Business, as currently conducted, of every
nature, kind and description, tangible and intangible, insofar as they relate
to the PAIX Business as presently conducted by Seller wheresoever located
(collectively, the "PURCHASED ASSETS"), but not including the "EXCLUDED
ASSETS," as defined in SECTION 2.3. The Purchased Assets shall include, without
limitation, the following to the extent they are used primarily in the conduct
of the PAIX Business as currently conducted by Seller, and are not Excluded
Assets:
(a) Equipment. The machinery, equipment, computer hardware, furniture,
tools, spare parts, supplies, maintenance equipment and supplies, materials and
other items of personal property of every kind and description of Seller
necessary to conduct the PAIX Business and physically located in the PAIX
facilities in Palo Alto, California and not included in Excluded Assets (the
"EQUIPMENT"). The Equipment includes the items which are set forth on SCHEDULE
2.1(a):
(b) Information and Records. The books and records of the PAIX Business,
which generally consist of the price lists, marketing information, sales
records, supplier lists and files, customer lists and files (including customer
credit and collection information), financial records and files, personnel and
labor relations records and other business information (other than the
Intellectual Property, which is separately referenced in SECTION 2.1(c) used
primarily in the conduct of the PAIX Business (the "INFORMATION AND RECORDS");
(c) Intellectual Property. All Seller's trade secrets, financial
information, product plans, client and customer lists, client and customer
account information (including customer payment histories), contractor and
consultant and employee lists, contractor and consultant and employee work
histories and account information, marketing plans and strategies, forecasts
and other business information, improvements, inventions, formulas, ideas,
research and development information, works of authorship, processes, computer
programs, applications, algorithms, techniques, schematics, designs, plans,
proposals, know-how, data, patents, patent applications, trademarks and their
associated goodwill, trademark applications, copyrights and their respective
moral rights, copyright applications, design rights, trade secret rights,
confidential and other proprietary information that are used primarily in the
conduct of the PAIX Business (other than Excluded Assets). Seller's interest in
computer software and data, including without limitation, all source and object
codes, all manuals and other user materials, and all intangible data contained
in or stored on computer hardware used primarily in the conduct of the PAIX
Business as currently conducted, and
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other rights (including, without limitation, all Seller's rights to the names,
trademarks, tradenames and servicemarks listed on SCHEDULE 2.1(c) hereto) owned,
used, licensed or held for use by Seller primarily in connection with the PAIX
Business (including, without limitation, any applications for or extensions,
renewals, continuations or divisions of any of the foregoing (the "PAIX
INTELLECTUAL PROPERTY");
(d) Other Intangibles. Proven research and development, customer lists
and goodwill of the PAIX Business;
(e) Warranty Rights. All rights, if any, under express or implied
warranties from suppliers of the PAIX Business;
(f) Prepaid Expenses. Prepaid expenses, if any, exclusively related to
the PAIX Business in the following categories; prepaid taxes, prepaid insurance
premiums and prepaid supplies that relate to or pertain to any Purchased
Assets; and
(g) Records. Originals of all invoices and other records relating to
Assumed Obligations, warranties on all supplies and equipment purchased
hereunder, manuals related to Purchased Assets, drawings, files, papers and all
other records of Seller used primarily in the conduct of the PAIX Business
(except that no copies shall be provided of all minute books and stock transfer
ledgers) (collectively the "RECORDS").
2.2 Assignment of Contracts, Leases and Other Assets. Subject to the
terms and conditions of this Agreement, Seller will assign and transfer to Sub,
and Sub will take assignment of, effective as of the Closing Date, all of
Seller's right, title and interest in and to the following Contracts related to
the PAIX Business (collectively referred to herein as the "ASSUMED CONTRACTS"
all of which shall be deemed included in the term "PURCHASED ASSETS"):
(a) Personal Property Leases. All leases of equipment, machinery,
vehicles and other personal property set forth on SCHEDULE 2.2(a) (the
"PERSONAL PROPERTY LEASES");
(b) Seller Purchase Orders. Subject to SECTION 2.5(b), all purchase
orders and other similar Contracts for the purchase by the PAIX Business in the
ordinary course of business of goods, materials and/or services, including
those set forth on SCHEDULE 2.2(b), and such other similar Contracts entered
into between the date of this Agreement and the Closing Date in the ordinary
course of business consistent with past practice of the PAIX Business, and in
accordance with the provisions of this Agreement, including SECTION 6.1(b) (the
"SELLER PURCHASE ORDERS");
(c) Customer Sales Orders. Subject to SECTION 2.5(b), all purchase orders
and other Contracts for the sale by the PAIX Business in the ordinary course of
business of goods, materials and/or services, including those set forth on
SCHEDULE 2.2(c), and such other similar Contracts entered into between the date
of this Agreement and the Closing Date in the ordinary course of business
consistent with past practice of the PAIX Business, and in accordance with the
provisions of this Agreement, including SECTION 6.1(b) (the "CUSTOMER SALES
ORDERS");
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(d) Vendor Contracts. Subject to SECTION 2.5(b), all agreements and other
Contracts for the purchase by the PAIX Business of products, equipment or
services from suppliers, vendors and distributors, set forth on SCHEDULE 2.2(d)
and such other similar Contracts entered into between the date of this
Agreement and the Closing Date in the ordinary course of business consistent
with past practice of the PAIX Business, and in accordance with the provisions
of this Agreement, including SECTION 6.1(b) (the "VENDOR CONTRACTS");
(e) Other Contracts. Subject to SECTION 2.5(b), all other Contracts
primarily related to the conduct of the PAIX Business, set forth on SCHEDULE
2.2(e) and such other similar Contracts entered into between the date of this
Agreement and the Closing Date in the ordinary course of business consistent
with past practice of the PAIX Business and in accordance with the provisions
of this Agreement, including SECTION 6.1(b) (the "OTHER CONTRACTS"); and
(f) Permits. All licenses, certificates, permits, variances, interim
permits, permit applications, approvals, franchises, rights, code approvals and
private product approvals under any Law, including those set forth on SCHEDULE
2.2(f) (the "PERMITS").
Notwithstanding anything in this Agreement to the contrary, this Agreement
shall not constitute an agreement to assign any Contract or Permit, or any
claim or right or any benefit or obligation under or resulting from any such
Contract or Permit, if such assignment, without the consent of a third party
thereto, would constitute a breach or violation of such Contract or Permit. If
such a consent is required or if an attempted assignment is ineffective, Seller
shall use its best efforts to obtain the consent of such other party to an
assignment to Sub. To the extent that any consents necessary to assign,
transfer, sublease or sublicense any of the Purchased Assets are not obtained,
Seller shall, if requested by Purchaser, commencing on the Closing Date and
continuing for the duration of each such Purchased Asset, use reasonable
efforts to (i) provide to Sub the benefits of such Purchased Asset not
assigned, transferred or subleased due to Seller's failure or inability to
obtain such consent or waiver, (ii) cooperate with Purchaser to reach a
reasonable and lawful arrangement designed to provide such benefits to Sub
during such period and (iii) enforce at the request of Purchaser, at
Purchaser's expense, any rights of Seller under any such Purchased Asset
against the issuer thereof or the other party or parties thereto (including the
right to elect to terminate such of the foregoing in accordance with the terms
thereof upon the request of Purchaser).
2.3 Excluded Assets. The following assets of Seller shall be retained by
Seller and are not being sold or assigned to Sub (collectively, the "EXCLUDED
ASSETS"):
(a) all Cash and marketable securities of Seller, whether or not related
to the PAIX Business;
(b) all other assets owned by Seller (wherever located) which are not
used primarily in conducting the PAIX Business or which are set forth on
SCHEDULE 2.3;
(c) Accounts Receivable; and
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(d) all permits used or relied upon by Seller in connection with the PAIX
Business that are not specific to the PAIX Business per se (e.g., Seller's
qualification to do business as a foreign corporation in the State of
California).
2.4 Assumed Obligations. At the Closing, Sub shall assume, and agree to
pay, perform, fulfill and discharge when due, the following obligations of
Seller (the "ASSUMED OBLIGATIONS"):
(a) the obligations of Seller which are required to be performed, and
which accrue, after the Closing Date under the following Contracts (but not any
liabilities of Seller in respect of a breach of or default under such
Contracts arising prior to the Closing), to the extent such Contracts, and all
rights of Seller thereunder, are effectively assigned to the Purchaser on the
Closing Date pursuant to SECTION 2.2: (i) the Personal Property Leases; (ii)
Seller Purchase Orders; (iii) the Customer Sales Orders; (iv) the Vendor
Agreements; (v) the Other Contracts; and (vi) the Permits; and
(b) any liabilities and obligations, with respect to any warranty claim
or refund relating to cabling installed for customers of the PAIX Business
prior to the Closing.
2.5 No Other Liabilities Assumed. Notwithstanding anything in this
Agreement to the contrary, except as specifically set forth in SECTION 2.4,
neither the Purchaser nor Sub nor any of their Affiliates shall assume or
otherwise be liable in respect of, or be deemed to have assumed or otherwise be
liable in respect of, any of the following whatsoever (the "EXCLUDED
OBLIGATIONS"):
(a) except as expressly provided in this Agreement, all costs, expenses
and liabilities of Seller in connection with the negotiation, execution,
delivery and closing of this Agreement and the transactions contemplated hereby
(including, without limitation, the fees and expenses of Seller's attorneys,
investment bankers and other advisers);
(b) the obligation to make payment when due under all Accounts Payable;
(c) any obligations or liabilities arising out of or relating to any
Excluded Assets;
(d) liabilities for Taxes of Seller, whether or not arising out of or
relating to the operations of the PAIX Business or the Purchased Assets which
relate to periods on or prior to the Closing Date, except as specifically
provided in Section 2.6;
(e) any liabilities and obligations, for death, personal injury, other
injury to persons or property damage resulting from, caused by or arising out
of, directly or indirectly, the use or performance or nonperformance of any of
the products or services sold in connection with the PAIX Business (or any
executory contract or commitment or part or component thereof) prior to the
Closing Date, including without limitation any liabilities or obligations for
failure to warn, breach of express or implied warranties of merchantability or
fitness for any purpose or use, with respect to any products or services
developed, licensed or sold in connection with the PAIX Business at any time,
prior to the Closing Date;
(f) any liabilities and obligations resulting from, caused or arising out
of, directly or indirectly, the conduct of the PAIX Business or ownership,
lease or possession of any of the Purchases Assets at any time prior to the
Closing that constitute, may constitute or are alleged to
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constitute a tort, breach of contract or violation of any domestic or foreign
statute, law, ordinance, rule or regulation or any court or domestic or foreign
statute, law, ordinance, rule or regulation of any court or domestic or foreign
governmental agency, authority or instrumentality, including, without
limitation, such of the foregoing as relate to employment, environmental and
occupational safety and health matters;
(g) any claims by employees, contractors, consultants, temporary
employees or former employees, former contractors, former consultants or former
temporary employees (or any other service provider or former service provider)
arising out of such Service Provider's provision of services to Seller
(including, without limitation, claims arising prior to, or following, the
Closing out of termination by Seller of such services or termination by Seller
of any agreement, written or oral, by, between or among, or for the benefit of,
such person prior to, or following, the Closing), except to the extent assumed
by Purchaser pursuant to SECTION 2.4(a);
(h) any obligations arising out of or associated with any Seller employee
benefit plans, including qualified plans under ERISA; and
(j) any liabilities and obligations, with respect to any return,
warranty, claim or refund or similar liabilities relating to products or
services developed, licensed or sold in connection with the PAIX Business or
the Purchased Assets prior to the Closing, except to the extent assumed by
Purchaser pursuant to SECTION 2.4(b).
2.6 Allocation of Taxes. All sales, use and transfer taxes, if any, due
upon the sale or transfer of the Purchased Assets shall be paid by Seller. With
respect to all non-delinquent personal and real property taxes arising as a
result of the ownership or use of the Purchased Assets (other than taxes on
income) Seller shall be responsible for the payment of all such Taxes for the
period prior to and including the Closing Date and Purchaser shall be
responsible for all such Taxes for the period after the Closing Date. All such
Taxes assessed on an annual basis shall be prorated on the assumption than an
equal amount of Tax applies to each day of the year, regardless of how
installment payments are billed or made and any supplemental property Taxes or
assessments which arise out of a revaluation of a Purchased Asset which
revaluation would not have occurred except for the change in ownership of the
Purchased Asset shall be allocated to periods after the Closing Date and shall
accordingly be borne by Purchaser. Any supplemental taxes attributable to
events occurring prior to and including the Closing Date shall be the sole
responsibility of Seller, irrespective of when such taxes are assessed. If
supplemental taxes for which Seller is responsible hereunder are assessed after
the Closing Date, Seller shall promptly pay the same. Any payment of Taxes due
from one party to the other pursuant to the foregoing provisions of this
SECTION 2.6 shall be paid at the Closing Date. If the current year's Taxes and
assessments are not available at the Closing Date, for purposes of appointment
between Seller and Purchaser and payment pursuant to this SECTION 2.6 the
amount thereof shall be estimated on the basis of the prior year's Taxes and
assessments, and any incremental payment shall be adjusted after receipt of the
final Tax statements, but within fifteen days after such statements are
provided by the Tax authorities. For purposes of this Agreement income and
similar Taxes (including any franchise or other Taxes measured by reference to
income or receipts) for any taxable period that includes the Closing Date shall
be allocated to the period up to and including the Closing Date, on the one
hand, and the period following the Closing Date, on the other hand, by
utilizing the so-called closing of the books method
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whereby the tax for each of such periods is separately computed as though the
Closing Date constituted the end of a taxable period.
2.7 Minimization of Taxes. Purchaser and Seller agree to take all actions
reasonably requested by the other to minimize any sales, use and other transfer
taxes and fees incurred in connection with the assignment, conveyance, transfer
and/or delivery of the Purchased Assets hereunder, including, without
limitation the transfer via means of electronic transmission of all assets
capable of being so transmitted. Seller and Purchaser further agree to deliver
to the other all certificates reasonably requested by the other to verify the
fact of such electronic transmissions or other actions.
2.8 Allocation of Consideration. The parties hereto agree to negotiate
reasonably and in good faith to agree, within ninety days after the Closing
Date, upon an allocation for all federal, state and local Tax purposes the
consideration received by Seller for the Purchased Assets, in accordance with
section 1060 of the Code. If the parties hereto are not so able to agree, then
the parties shall designate a mutually agreeable nationally recognized
independent auditing firm to arbitrate the parties' disputes with respect to
such allocation. If the parties hereto are so able to agree or after the
arbitrator has made his determination, then (i) the mutually agreed or
arbitrated allocation shall be reduced to writing; (ii) all financial reports,
and income and other tax returns and information reports of either party hereto
will be prepared and filed in a manner consistent with such allocation; and
(iii) no party hereto will take any position inconsistent with such allocation
in any subsequent Tax returns or proceedings. The fees and expenses of such
auditors incurred in acting as arbitrator shall be borne equally by the
parties. Purchaser and Seller each agree to file IRS Form 8594, and any
corresponding state tax forms, on a timely basis.
2.9 Cooperation and Records Retention. Purchaser and Seller shall (a) each
provide the other with such assistance as may reasonably be requested by them in
connection with the preparation of any Tax Returns, or in connection with any
audit or other examination by any taxing authority or any judicial or
administrative proceedings relating to liability for Taxes, (b) each retain and
provide the other with any records or other information which may be relevant to
any such Tax Return, audit or examination, proceeding or determination, and (c)
each provide the other with any final determination of any such audit or
examination, proceeding or determination that affects any amount required to be
shown on any Tax Return of the other for any period. Without limiting the
generality of the foregoing, Purchaser and Seller shall retain, until the
applicable statute of limitations (including any extensions) have expired,
copies of all Tax Returns, supporting work schedules and other records or
information which may be relevant to such Tax Returns for all tax periods or
portions thereof ending before or including the Closing Date and shall not
destroy or otherwise dispose of any such records without first providing the
other party with a reasonable opportunity to review and copy the same. Purchaser
shall keep the original copies of the records at its facilities in California
and elsewhere, if applicable, and, at Seller's expense, shall provide copies of
the Records to Seller upon Seller's request.
2.10 000 Xxxxxx Xxxxxx. Notwithstanding anything to the contrary herein,
(a) Seller shall pay when due all amounts owing for the construction of
improvements and the installation of equipment at the PAIX facilities at 000
Xxxxxx Xxxxxx, Xxxx Xxxx, Xxxxxxxxxx occurring on or prior to the date a
Certificate of Occupancy is issued with respect thereto (whether before or
after the
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Closing Date) and (b) Purchaser shall pay when due all amounts owing for the
construction of such improvements and the installation of such equipment
occurring after such date. To best of Seller's knowledge and belief, such
construction and installation should be substantially complete on or before
June 30, 1999.
2.11 Unearned Revenue and Prepaid Credits. If the Closing Balance Sheet
includes any item of "Unearned Income," then Seller shall pay that amount to
Purchaser within thirty days after the date the Closing Balance Sheet is
delivered to Seller and Purchaser by Seller's auditors. Purchaser and Seller
acknowledge that certain PAIX Business customers overpaid against pre-Closing
invoices issued by PAIX and that some of said overpayments will still be
outstanding as of the Closing (i.e., Seller will not have credited the same
against invoices or reimbursed the overpaid amount to the customer). Purchaser
may grant credits against PAIX Business post-Closing invoices issued by it,
provided the customer's claim for the credit being allowed is properly
supported by an outstanding pre-Closing credit memo issued by PAIX or by other
reasonable documentary evidence of such overpayment ("ALLOWED CREDITS"). If the
Allowed Credits actually granted by Purchaser in the first six months
pre-Closing exceed $100,000 in the aggregate, then Purchaser may invoice Seller
for the full amount of such Allowed Credits (which invoice shall be due and
payable thirty days after its receipt by Seller and shall be accompanied by
copies of all detail supporting Purchaser's invoice). Any Allowed Credits
granted by Purchaser more than six months post-Closing are not reimbursable by
Seller.
2.12 Accounts Receivable. The parties agree to cooperate with each other
during the six months following the Closing Date (or such longer or shorter
period as they mutually agree) in the collection by Seller of the Accounts
Receivable and the collection by Purchaser of the post-Closing accounts
receivable of the PAIX Business ("POST-CLOSING A/R"), as reasonably requested
by the other from time-to-time. During such periods of cooperation, each party
shall remit to the other party, within thirty days after the close of each
post-Closing calendar month, any payment of invoices by a customer of the PAIX
Business to the wrong party (i.e., payment in error to Purchaser of amounts
owed under an Accounts Receivable or to Seller of amounts owed under a
Post-Closing A/R).
ARTICLE III
PURCHASE PRICE AND PAYMENT
3.1 Payment of Purchase Price. On the Closing Date, in consideration for
the transfer of the Purchased Assets, Sub shall deliver to Seller a wire
transfer in immediately available funds, in an amount equal to Seventy Million
Dollars ($70,000,000.00) (the "PURCHASE PRICE").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Subject to the exceptions and qualifications set forth or referenced on
the Seller's Disclosure Letter to Purchaser and Sub, dated as of the date
hereof ("SELLER'S DISCLOSURE LETTER"), Seller hereby makes the following
representations to the Purchaser and Sub which Seller warrants are true
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and correct as of the date of this Agreement and shall be true and correct as
of the Closing Date. The Seller's Disclosure Letter shall be arranged in
Sections corresponding to the numbered and lettered Sections contained in this
ARTICLE IV. No fact or circumstance disclosed to Purchaser and Sub shall
constitute an exception to these representations and warranties unless such
fact or circumstance is set forth in the Seller's Disclosure Letter. When a
representation or warranty is made herein to "Seller's knowledge" (or
similarly), such representations or warranty is made based solely on the
direct, personal knowledge of the officers of the Digital Systems Research Labs
Division of Seller and do not include any knowledge that may be imputed from
the present or former employees of the PAIX Business, other than its General
Manager and its Technical Operations Manager.
4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Seller is a
corporation duly organized, validly existing, and in good standing under the
laws of Delaware. Seller has all necessary corporate powers to own its
properties and to carry on the PAIX Business as now owned and operated, is duly
qualified to transact business and is in good standing in all jurisdictions in
which the nature of the PAIX Business or of its properties make such
qualification necessary.
4.2 AUTHORITY. Seller has all requisite corporate power and authority to
enter into this Agreement, the Related Agreements and the xxxx of sale and all
deeds and other conveyance documents used to consummate the transactions set
forth in them. The execution and delivery of this Agreement and the Related
Agreements, and the consummation of the transactions set forth in them, have
been duly authorized by all necessary corporate action on the part of Seller.
This Agreement and the Related Agreements have been duly and validly executed
and delivered by Seller.
4.3 CONSENTS AND APPROVALS; NO CONFLICTS, ETC.
(a) Except in connection, or in compliance, with the provisions of the
Xxxx-Xxxxx-Xxxxxx Act, no consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority is
required to be made or obtained by Seller in connection with the execution and
delivery of this Agreement, the Related Agreements, or the consummation by
Seller of the transactions contemplated hereby or thereby.
(b) The execution, delivery and performance by Seller of this Agreement
and its respective Related Agreements do not (with or without notice or lapse
of time, or both) (i) to Seller's knowledge, violate any Law applicable to any
of the Purchased Assets or the PAIX Business; (ii) violate or conflict with,
result in a breach or default under any Assumed Contract; (iii) permit the
acceleration of the maturity of any Indebtedness secured by any of the
Purchased Assets or create any Lien, other than Permitted Encumbrances, on any
of the Purchased Assets; or (iv) violate or conflict with any provision of any
of the articles of incorporation, bylaws or similar organizational instruments
of Seller.
(c) Provided the conditions set forth in ARTICLE IX are satisfied, the
execution and delivery of this Agreement and the Related Agreements, and the
consummation of the transactions set forth in them, do not or will not conflict
with, result in any violation of or default or give rise to a right of
termination, cancellation or acceleration of any obligation under, (i) any
provision of Seller's articles of incorporation or bylaws, or (ii) any material
agreement or instrument, permit,
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license, judgment, order, statute, law, ordinance, rule or regulation
applicable to Seller or its properties or assets.
4.4 No Adverse Effect or Changes. Since December 26, 1998, Seller has
conducted the PAIX Business in all respects in the ordinary course and
consistent with past practices. Without limiting the foregoing, since December
26, 1998, Seller, with respect to the PAIX Business only, has not:
(a) suffered any Business Material Adverse Effect;
(b) suffered any material damages, destruction or Loss to any of its
assets or properties or the PAIX Business (whether or not covered by insurance);
(c) incurred any obligation or entered into any Contract which either (i)
required a payment by Seller in excess of, or a series of payments which in the
aggregate exceed, $100,000, other than purchases of inventory or supplies in
the ordinary course of business, or (ii) has a term of, or requires the
performance of any obligations by Seller over a period in excess of, twelve
months and which is not terminable without penalty by Seller by thirty days
notice or less;
(d) entered into or authorized any Assumed Contract requiring a payment
or payments by Seller in excess of $100,000;
(e) acquired, leased or encumbered any assets outside the ordinary course
of business or any assets which are material to Seller with respect to the PAIX
Business and having a value or requiring a payment or payments by Seller in
excess of $250,000;
(f) terminated, modified, amended or otherwise altered or changed any of
the terms or provisions of any Assumed Contract.
(g) sold, leased, abandoned or otherwise disposed of any real property or
any material amounts of machinery, equipment or other operating property;
(h) sold, assigned, transferred, licensed or otherwise disposed of
any patent, trademark, trade name, brand name (or pending application for any
patent or trademark) that is part of the PAIX Intellectual Property, except in
the ordinary course of its business;
(i) suffered any labor dispute in connection with the PAIX Business;
(j) permitted or allowed any of the Purchased Assets to be subjected to
any mortgage, deed of trust, pledge, lien, security interest or other
encumbrance of any kind, except Permitted Encumbrances;
(k) made any material amendment to or terminated any agreement which, if
such agreement were not so amended or terminated, would be required to be
disclosed on SELLER'S DISCLOSURE LETTER; or
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(l) agreed to take any action described in this SECTION 4.4 or in
SECTION 6.1 or which would constitute a material breach of any of the
representations contained in this Agreement.
4.5 Title to Properties. Seller has good and valid title to, is the
lawful owner of, the Purchased Assets, free and clear of any Lien, except for
Permitted Encumbrances. Seller has the full right to sell, convey, transfer,
assign and deliver the Purchased Assets to Sub, and, at and as of the Closing,
Seller will convey the Purchased Assets to Sub by deeds, bills of sale,
certificates of title and instruments of assignment and transfer, in form
reasonably satisfactory to counsel for Purchaser and Seller, free and clear of
all Liens, except for Permitted Encumbrances.
4.6 No Undisclosed Liabilities. Seller does not have any liabilities
which primarily relate to the PAIX Business or Purchased Assets, either accrued
or contingent, whether due or to become due, which individually or in the
aggregate, would be reasonably likely to have a Material Adverse Effect on the
PAIX Business or the Purchased Assets other than (a) liabilities reflected in
the PAIX Financial Statements, (b) liabilities specifically described in this
Agreement or the Seller Disclosure Letter, (c) Normal or recurring liabilities
incurred in the ordinary course of business consistent with past practices, and
(d) Excluded Liabilities.
4.7 Condition of Purchased Assets. All of the tangible Purchased Assets,
whether real or personal, owned or leased, are in good operating condition and
repair (with the exception of normal wear and tear).
4.8 Equipment. SCHEDULE 2.1(a) sets forth a true, accurate and complete
list of all of the Equipment used primarily in the conduct of the PAIX Business
as currently conducted by Seller as of the date of this Agreement. The Personal
Property Leases set forth on SCHEDULE 2.2(a) constitute all leases by Seller as
of said date of any material item of personal property used by Seller primarily
in the conduct of the PAIX Business. All of the Equipment and all of the other
personal property leased by Seller under the Personal Property Leases is or has
been utilized by Seller in the ordinary course of the PAIX Business. Seller has
delivered, or otherwise made available for review, to the Purchaser true,
accurate and complete copies of all Personal Property Leases.
4.9 Material Customer Sales Order. SCHEDULE 2.2(b) sets forth a list of
all of the material Customer Sales Orders as of the date specified on SCHEDULE
2.2(b).
4.10 PAIX Intellectual Property. Seller owns all right, title and interest
in and to or has a license to use the PAIX Intellectual Property. Seller has
the full right and power to transfer the PAIX Intellectual Property (including,
without limitation, rights therein that are licensed to Seller). No claims in
writing have been asserted against Seller (or to Seller's knowledge have been
asserted against others) by any person challenging Seller's use of any
trademarks, tradenames, copyrights, trade secrets, software, technology,
know-how or processes that is part of the PAIX Intellectual Property or
challenging or questioning the validity or effectiveness of any Seller's
licenses or agreements relating thereto. None of the services offered by the
PAIX Business nor the use of any trademark, tradename, copyright, software,
technology, know-how or processes that is part of the PAIX Intellectual
Property by Seller in the PAIX Business infringes on the rights of or
constitutes misappropriation of any proprietary information or intellectual
property right of any third person or entity, including without limitation any
patent, trade secret, copyright, trademark or tradename.
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4.11 PERMITS.
(a) Seller holds all Permits necessary to conduct and operate the PAIX
Business. All Permits held by Seller are in full force and effect and, except
as set forth on the SELLER'S DISCLOSURE LETTER, will be transferred to Sub upon
the Closing.
(b) Seller is in compliance in all material respects with all Permits.
Seller has not received any written notice from a Governmental Authority that
any of the Permits will be revoked or not renewed, in whole or in part, in the
ordinary course of events (whether as a result of the acquisition of PAIX by
the Purchaser or otherwise).
4.12 COMPLIANCE WITH LAWS AND REGULATIONS; GOVERNMENTAL LICENSES; ETC.
Seller is in compliance in all material respects with all statutes, laws, and
regulations with respect to or directly affecting the Purchased Assets and the
PAIX Business including, without limitation, laws, rules and regulations
relating to occupational health and safety, equal employment opportunities,
fair employment practices, and sex, race, religious and age discrimination.
Seller is not subject to any order, injunction or decree issued by any
governmental body, agency, authority or court which could impair the ability of
Seller to consummate the transactions contemplated hereby or which could
materially adversely affect Sub's ownership, use and enjoyment of the Purchased
Assets or the value thereof.
4.13 EMPLOYMENT AND LABOR MATTERS. None of the employees of PAIX is
covered by any collective bargaining agreement, no collective bargaining
agreement is currently being negotiated and, to the knowledge of Seller, no
attempt is currently being made to organize any employees of PAIX to form or
enter a labor union or similar organization.
4.14 CAPITAL IMPROVEMENTS. Except for the improvements to the facility at
000 Xxxxxx Xxxxxx, Xxxx Xxxx, Xxxxxxxxxx, which are currently being
constructed, there are no material capital expenditures necessary for
conducting the PAIX Business to which Seller has committed or for which it has
contracted and which in any event have not been completed prior to the date
hereof.
4.15 TAXES. Seller has timely filed all Tax Returns primarily related to
the PAIX Business and has timely made all other filings in respect of Taxes
primarily related to the PAIX Business required to have been made by Seller for
all periods beginning on or after January 1, 1997. All Taxes shown as due on
all such Tax Returns and other filings have been paid. There are no Tax Liens
(other than Liens for current taxes due and payable, but not yet delinquent)
upon the Purchased Assets. All Taxes which Seller is required by Law to
withhold or collect, including sales and use taxes, any amounts required to be
withheld for Taxes of employees and other withholding taxes, have been duly
withheld or collected and, to the extent required, have been paid over to the
proper Governmental Authorities or are held in separate bank accounts for such
purposes. Neither Purchaser, Sub nor any affiliate thereof will become directly
or indirectly liable for any Taxes (regardless of whether attributable to
periods prior to and including the Closing Date) imposed upon Seller or
attributable to the actions or activities of Seller, except in accordance with
the tax allocation provisions of SECTION 2.6 and except for Taxes attributable
to accounts receivable of the PAIX Business issued by and paid to Purchaser or
Sub after the Closing Date that arise out of or relate to the conduct of the
PAIX Business before the Closing Date.
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4.16 NO DEFAULTS OR VIOLATIONS
(a) Neither Seller nor, to Seller's knowledge, the other contracting
party thereunder is in material default under the terms of any Assumed
Contract.
(b) No written notice from any Governmental Authority has been received
by Seller claiming any violation of any Law (including any building, zoning or
other ordinance) with respect to the PAIX Business or the Purchased Assets.
4.17 LITIGATION.
(a) There are no actions, suits, arbitrations, regulatory proceedings or
other litigation, pending or, to the knowledge of Seller, threatened in writing
against Seller with respect to the PAIX Business or any of the Purchased
Assets, and Seller is not aware of any facts or circumstances which may give
rise to any of the foregoing. All of the proceedings pending or threatened
against Seller with respect to the PAIX Business, if any, are fully covered by
insurance policies (or other indemnification agreements, with third parties)
and are being defended by the insurers (or such third parties), subject to such
deductibles as are set forth on such Schedule. Seller has not with respect to
the PAIX Business entered into any agreement to settle or compromise any
proceeding pending or threatened against it which has involved any obligation
other than the payment of money or for which Seller has any continuing
obligation. Seller is not a party to any decree, order or arbitration award (or
agreement entered into any administrative, judicial or arbitration proceeding
with any governmental authority) with respect to the Purchased Assets or the
PAIX Business.
(b) There are no claims, actions, suits, proceedings or investigations
pending or, to the knowledge of Seller, threatened by or against Seller with
respect to this Agreement or the Related Agreements, or in connection with the
transactions contemplated hereby or thereby, and Seller has no reason to
believe there is a valid basis for any such claim action, suit, proceeding, or
investigation.
4.18 MAJOR CUSTOMERS.
(a) Since December 26, 1998, there has not been any material adverse
change in the business relationship, and there has been no material dispute,
between Seller and any of the ten largest customers of PAIX in terms of revenue
during each of the two (2) most recently completed fiscal years and the portion
of current fiscal year prior to the date of this Agreement (collectively, the
"MAJOR CUSTOMERS"), and Seller has no knowledge that any Major Customer intends
to reduce its purchases of services provided by the PAIX Business.
4.19 ENVIRONMENTAL MATTERS.
(a) Seller has all permits, licenses and other authorizations required
under applicable laws and regulations relating to pollution control and
protection of the environment necessary for its operations of the PAIX
Business. To the best of its knowledge, Seller is not in violation of any of
the terms or conditions of any such permits, licenses or authorizations or of
any law or regulation, order or other requirement of governmental authorities
with respect to the pollution of the
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atmosphere, surface water, groundwater or noise, the handling of toxic or
hazardous waste materials or other matters related to the environment. There
are no pending, as to which Seller has received notice, or threatened civil or
criminal actions, notices of violations or administrative proceedings relating
to pollution control or protection of the environment that would have a
Business Material Adverse Effect, and there is, to Seller's knowledge, no basis
for any such action, notice or proceeding.
(b) Past disposal by Seller (or its predecessors) of hazardous or
industrial wastes relating to the PAIX Business has not given rise to claims by
any governmental agency or third party nor, to Seller's knowledge, is there any
factual basis for any such claims.
(c) There are no conditions, circumstances, activities, practices,
incidents, actions or plans which would be reasonably likely to interfere with
or prevent compliance or continued compliance by Seller with any environmental
laws currently in force or with any existing regulation, code, order, decree,
judgment, injunction, notice or demand letter issued, entered, promulgated or
approved thereunder, or which may give rise to any common law or other legal
liability, including without limitation, liability under the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") or similar
state or local laws, or to the knowledge of Seller, any foreign laws, or
otherwise form the basis of any claim, action, demand, suit, proceeding,
hearing, notice of violation, study or investigation, based on or related to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling by Seller, or the emission, discharge, release or
threatened release by Seller into the workplace or the environment, of any
pollutant, contaminant, chemical or industrial, toxic or hazardous material,
substance or waste in conducting the PAIX Business. Without in any way limiting
the foregoing, no release, emission or discharge to the environment of any
hazardous substance (as that term is currently defined under CERCLA or under
any applicable analogous state law) has occurred or is currently occurring in
connection with the conduct of the PAIX Business.
4.20 EMPLOYEES AND EMPLOYEE BENEFIT PLANS. SCHEDULE 4.20 sets forth a
full and complete list of all employees and consultants of Seller primarily
employed in connection with the PAIX Business (collectively, "SERVICE
PROVIDERS") as of the date of this Agreement and their current rate of
compensation by Seller (including commission structure, if applicable). Seller
has not made any commitment, promise or statement to any Service Provider
regarding employment or engagement by Purchaser following the Closing Date or
regarding compensation levels for Service Providers following the Closing Date.
4.21 DUE DILIGENCE. Seller has delivered or made available for inspection
all documents requested by Purchaser and which are referred to in this ARTICLE
IV or in any Schedule delivered by Seller to Purchaser.
4.22 BROKERS. Neither the Purchaser nor any Affiliate of the Purchaser has
or shall have any liability, or otherwise suffer or incur any Loss, as a result
of or in connection with any brokerage or finder's fee or other commission of
any Person retained by Seller in connection with any of the transactions
contemplated by this Agreement.
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4.23 PAIX FINANCIAL STATEMENTS.
(a) The 1998 PAIX Year-End Financials, when delivered, will fairly
represent the financial condition of the PAIX Business in all material respects
as of the periods and dates covered thereby, subject to the following
exceptions and qualifications: (i) all intangible assets are excluded, (ii) the
PAIX Business has never been operated as a stand-alone business or as an
independent division, (iii) any corporate, G&A and other services provided the
PAIX Business by Seller either were not charged or were passed to the PAIX
Business on in the form of a corporate overhead or intra-company charge
consistent with Seller's standard practices, (iv) the PAIX Business as operated
made use of corporate infrastructure and resources and equipment shared with
other operating units, and (v) for the foregoing reasons, the 1998 PAIX Year
End Financials do not include all the costs and expenses or accounts that would
be found if the PAIX Business had been operated as a stand-alone concern.
(b) The 3/31 PAIX Quarterly Financials, the PAIX Closing Date Financials,
the PAIX Closing Balance Sheet, and the Additional PAIX Financial Information
will be prepared in a manner consistent with the 1998 PAIX Year-End Financials.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND SUB
Subject to the exceptions and qualifications set forth or referenced on
the Purchaser's Disclosure Letter to Seller, dated as of the date hereof
("PURCHASER'S DISCLOSURE LETTER"), the Purchaser and Sub hereby make the
following representations and warranties to the Seller which Purchaser warrants
are true and correct as of the date of this Agreement and shall be true and
correct as of the Closing Date:
5.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Purchaser and Sub
are corporations duly organized, validly existing and in good standing under the
laws of Delaware, with all requisite corporate power and authority to own, lease
and operate their respective properties and to carry on their respective
businesses as they are now being owned, leased, operated and conducted. The
Purchaser is licensed or qualified to do business, and is in good standing as a
foreign corporation, in each jurisdiction where the nature of the properties
owned, leased or operated by it, and the business transacted by it, require such
licensing or qualification, except where the failure to be so qualified would
not have a Purchaser Material Adverse Effect. Purchaser is, and Sub will be
prior to the Closing, duly qualified to transact business and is in good
standing in California.
5.2 AUTHORITY. The Purchaser and Sub have all requisite corporate power
and authority to enter into this Agreement and the Related Agreements and to
consummate the transactions set forth in them. The execution and delivery of
this Agreement and the Related Agreements, and the consummation of the
transactions set forth in them, have been duly authorized by all necessary
corporate action on the part of Purchaser and Sub. This Agreement and the
Related Agreements have been duly and validly executed and delivered by
Purchaser and Sub.
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5.3 Consents and Approvals; No Conflicts, etc.
(a) Except in connection, or in compliance, with the provisions of the
Xxxx-Xxxxx-Xxxxxx Act, no consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority is
required to be made or obtained by Purchaser in connection with the execution
and delivery of this Agreement, the Related Agreements, or the consummation by
Purchaser of the transactions contemplated hereby or thereby.
(b) Except as set forth on the PURCHASER'S DISCLOSURE LETTER, the
execution, delivery and performance by Purchaser of this Agreement and its
respective Related Agreements do not (with or without notice or lapse of time,
or both) (i) to Purchaser's knowledge, violate any Law applicable to Purchaser
or any of its respective properties or assets; (ii) violate or conflict with,
result in a breach or default under any Contract to which Purchaser is a party
or by which Purchaser or any of its respective assets or properties are bound;
(iii) permit the acceleration of the maturity of any Indebtedness of Purchaser
secured by any of its assets or properties; or (iv) violate or conflict with
any provision of any of the articles of incorporation, bylaws or similar
organizational instruments of Purchaser.
(c) Provided the conditions set forth in ARTICLE X are satisfied, the
execution and delivery of this Agreement and the Related Agreements, and the
consummation of the transactions set forth in them, do not or will not conflict
with, result in any violation of or default or give rise to a right of
termination, cancellation or acceleration of any obligation under, (i) any
provision of Purchaser's articles of incorporation or bylaws, or (ii) any
material agreement or instrument, permit, license, judgment, order, statute,
law, ordinance, rule or regulation applicable to Purchaser or its properties or
assets.
5.4 Broker. Other than advisory fees payable to CIBC World Markets and
Xxxxx Xxxxx Xxxxxx & Company, neither Purchaser nor any Affiliate of Purchaser
has or shall have any liability or otherwise suffer or incur any Loss as a
result of, or in connection with, any brokerage or finder's fee or other
commission of any Person retained by the Purchaser in connection with any of
the transactions contemplated by this Agreement.
ARTICLE VI
COVENANTS OF SELLER
Seller agrees to perform each of the following covenants:
6.1 Preservation of Business.
(a) Until the Closing, Seller shall incur and pay expenses and otherwise
operate the PAIX Business only in the usual, regular and ordinary course and in
a manner consistent with past practice, and shall use its commercially
reasonable efforts to (i) preserve intact the present business organization and
personnel of the PAIX Business, and (ii) preserve the goodwill and advantageous
relationships of the PAIX Business with customers, suppliers, distributors,
independent contractors, employees and other Persons material to the operation
of their respective businesses.
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(b) Without limiting the generality of SECTION 6.1(a) until the Closing,
except as set forth on SELLER'S DISCLOSURE LETTER or with the prior written
consent of the Purchaser, Seller will not with respect to the PAIX Business:
(i) incur any obligation or enter into any Contract either (x)
outside of the ordinary course of business or (y) which either (A) requires
a payment by Seller in excess of, or a series of payments which in the
aggregate exceed, $100,000 or provides for the delivery of goods or
performance of services, or any combination thereto having a value in
excess of $100,000, or (B) has a term of, or requires the performance of
any obligations by Seller over a period in excess of, twelve months, unless
such Contract is terminable, without penalty, on thirty days notice or
less;
(ii) do any act or omit to do any act, or permit any act or omission
to act, which would cause a material breach of any of the Assumed
Contracts;
(iii) sell, lease, abandon, transfer, convey, assign or otherwise
dispose of any of the Purchased Assets, except in the ordinary course of
business;
(iv) except for capital expenditures contemplated by clause (vi),
acquire, lease or encumber any assets that are part of the Purchased Assets
outside the ordinary course of business of the PAIX Business;
(v) authorize or make any capital expenditures with respect to assets
that are part of the Purchased Assets which individually or in the
aggregate are in excess of $100,000;
(vi) terminate, rescind, modify, amend, reduce, discount, waive or
forego any material payment or material right or otherwise alter or change
any of the material terms or provisions of any Assumed Contract;
(vii) fail to maintain the Purchased Assets in good working condition
and repair according to the general standards it has maintained up to the
date of this Agreement;
(viii) fail to pay and discharge any trade payables not disputed by
Seller as they become due in accordance with existing practices;
(ix) waive or release any material right or claim relating to any
Purchased Assets; or
(x) agree to do any of the things described in the preceding clauses
of this SECTION 6.1(b).
(c) Without limiting the generality of SECTION 6.1(a), until the Closing,
except as set forth on SELLER'S DISCLOSURE LETTER, Seller shall:
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(i) maintain its books, accounts and records with respect to the
PAIX Business in the usual, regular and ordinary manner, and on a basis
consistent with its past practices,
(ii) continue to carry its existing insurance with respect to the
PAIX Business through the Closing Date, and
(iii) duly comply with all Laws applicable to the PAIX Business or the
Purchased Assets or as may be required for the valid and effective
transfer and assignment of the Purchased Assets.
6.2 Cooperation. Seller will take all reasonable actions necessary to
comply promptly with all legal requirements which may be imposed with respect
to the consummation of the transactions contemplated by this Agreement and will
promptly cooperate with and furnish information to Purchaser in connection with
any such requirements imposed upon Purchaser in connection with the
consummation of the transactions contemplated by this Agreement. Seller will
take all reasonable actions necessary to obtain (and will cooperate with
Purchaser in obtaining) any consent, approval, order or authorization of, or
any registration, declaration or filing with, any governmental entity, domestic
or foreign, or other person, required to be obtained or made by Seller (or by
Purchaser) in connection with the taking of any action contemplated by this
Agreement.
6.3 Access to Information and Facilities. Until the Closing, Seller shall
give the Purchaser and the Purchaser's representatives access during normal
business hours to all of the facilities, properties, Contracts and records of
Seller primarily related to the PAIX Business, and shall make the officers and
employees of Seller available to the Purchaser and its representatives as the
Purchaser and its representatives shall from time to time reasonably request.
The Purchaser and its representatives will be furnished with any and all
information concerning the PAIX Business which the Purchaser or its
representatives reasonably request, subject to any confidentiality obligations.
6.4 Xxxx-Xxxxx-Xxxxxx Act. Seller shall comply promptly with all legal
requirements that may be imposed on Seller with respect to this Agreement and
the Related Agreements and the transactions contemplated hereby (which actions
shall include furnishing all required information) under the Xxxx-Xxxxx-Xxxxxx
Act and in connection with any other approvals of or filings with any
Governmental Authority that may be required in order to effect the Closing
hereunder and shall promptly cooperate with and furnish information to the
Purchaser in connection with any such requirements imposed upon the Purchaser
in connection with this Agreement and the Related Agreements and the
transactions contemplated hereby and thereby.
6.5 PAIX Financial Statements. Seller shall deliver to Purchaser (i) the
1998 PAIX Year-End Financials and the 3/31 PAIX Quarterly Financials on or
before June 21, 1999 and (ii) the PAIX Closing Date Financials, the PAIX
Closing Balance Sheet, and the Additional PAIX Financial Information on or
before forty-five days after the Closing Date.
6.6 Consents and Approvals. Seller shall use its best efforts to obtain
all consents, approvals, certificates and other documents required in
connection with the performance by it of this Agreement, the Related Agreements
and the consummation of the transactions contemplated hereby
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and thereby, Seller shall make all filings, applications, statements and
reports to all Governmental Authorities and other Persons which are required to
be made prior to the Closing Date by or on behalf of Seller or any of its
respective Affiliates pursuant to any applicable Law or Contract in connection
with this Agreement and the transactions contemplated hereby.
6.7 SUPPLEMENTAL INFORMATION. From time to time prior to the Closing,
Seller will promptly disclose in writing to Purchaser any matter hereafter
arising which, if existing, occurring or known at the date of this Agreement
would have been required to be disclosed to Purchaser hereunder or which would
render inaccurate any of the representations, warranties or statements set
forth in ARTICLE IV hereof.
6.8 REGULATORY APPROVALS; TRANSFER OF PERMITS. Prior to the Closing,
Seller will execute and file, or join in the execution and filing, of any
application or other document that may be necessary in order to obtain the
authorization, approval or consent of any Governmental Entity that may be
reasonably required, or that Purchaser may reasonably request, in connection
with the consummation of the transactions contemplated by this Agreement.
Seller will use its best efforts to obtain all such authorizations, approvals
and consents. Seller will promptly prepare and file with the appropriate
Governmental Entity all applications necessary to obtain the transfer of the
licenses, approvals and permits that are part of the Purchased Assets.
6.9 ACCOUNTS RECEIVABLE. Seller hereby covenants and agrees to deliver to
Purchaser, within five business days after the Closing, an Accounts Receivable
aging report as of the closing.
6.10 FILING OF TAX RETURNS. Seller shall properly file all returns and
reports relating to taxes that Seller is required by any applicable law to file
with respect to taxes arising in or related to periods on or prior to the
Closing Date or related to transactions or events occurring on or prior to the
Closing Date and shall pay all such Taxes when due.
6.11 NO SHOP. Between the Effective Date and the sooner of the Closing
Date or June 30, 1998, Seller shall not directly, or indirectly through any
officer, director, employee, representative or agent of Seller engaged for that
purpose, (a) solicit any proposal or offer for a merger, consolidation,
business combination, sale of all or substantially all of the assets or similar
transactions involving the PAIX Business, other than the transactions
contemplated by this Agreement (any of the foregoing being referred to in this
Agreement as an "ACQUISITION PROPOSAL"); (b) engage in negotiations or
discussions concerning, or provide any non-public information to any person or
entity relating to, any Acquisition Proposal; or (c) agree to, approve or
recommend any Acquisition Proposal.
6.12 NON-SOLICITATION. For a period of one year after the Closing Date,
Seller shall ensure that no employee of Seller's Digital Research Labs Division
shall directly solicit any then employee of Purchaser or Sub who is a former
employee of the PAIX Business and who became an employee of Purchaser or Sub as
of the Closing Date, to become an employee of Seller. For purposes of this
SECTION 6.12, "directly solicit" shall include engaging an agent specifically to
solicit such person but shall not include activities not directed specifically
at such person such as job postings, general job advertising, hosting or
attending job fairs, and responding to unsolicited resumes or job applications.
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6.13 Post-Closing Audit Assistance. Seller shall provide Purchaser and
Sub with such reasonable assistance, including access to Seller's employees and
records during normal business hours, as may be reasonably requested by
Purchaser in connection with a post-Closing audit of the PAIX Business for
the period from January 1, 1999 to the Closing Date conducted at Purchaser's
expense.
ARTICLE VII
COVENANTS OF THE PURCHASER
The Purchaser agrees to perform each of the following covenants:
7.1 Implementing Agreement. Subject to the terms and conditions hereof,
the Purchaser shall take all action required of it to fulfill its obligations
under this Agreement and shall use its best efforts to facilitate the
consummation of the transactions contemplated hereby.
7.2 Consents and Approvals. The Purchaser shall use its best reasonable
efforts to obtain all material consents, approvals, certificates and other
documents required in connection with the performance by it of this Agreement
and the consummation of the transactions contemplated hereby. The Purchaser
shall make all filings, applications, statements and reports to all
Governmental Authorities and other Persons which are required to be made prior
to the Closing Date by or on behalf of the Purchaser or any of its respective
Affiliates pursuant to any applicable Law or Contract in connection with this
Agreement and the transactions contemplated hereby.
7.3 Xxxx-Xxxxx-Xxxxxx Act. The Purchaser shall comply promptly with all
legal requirements that may be imposed on the Purchaser with respect to this
Agreement and the Related Agreements and the transactions contemplated hereby
and thereby (which actions shall include furnishing all information) required
under the Xxxx-Xxxxx-Xxxxxx Act and in connection with any other approvals of
or filings with any Governmental Authority) that may be required in order to
effect the Closing hereunder and shall promptly cooperate with and furnish
information to Seller in connection with any such requirements imposed upon
Seller in connection with this Agreement and the Related Agreements and the
transactions contemplated hereby and thereby.
7.4 Supplemental Information. From time to time prior to the Closing,
the Purchaser will promptly disclose in writing to Seller any matter hereafter
arising which, if existing, occurring or known at the date of this Agreement
would have been required to be disclosed to Seller hereunder or which would
render inaccurate any of the representations, warranties or statements set
forth in ARTICLE V hereof.
7.5 Cooperation. Purchaser will take all reasonable actions necessary to
comply promptly with all legal requirements which may be imposed with respect
to the consummation of the transactions contemplated by this Agreement and will
promptly cooperate with and furnish information to Seller in connection with
any such requirements imposed upon Seller in connection with the consummation
of the transactions contemplated by this Agreement. Purchaser will take all
reasonable actions necessary to obtain (and will cooperate with Seller
in obtaining) any consent, approval, order or authorization of, or any
registration, declaration or filing with, any governmental
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entity, domestic or foreign, or other person, required to be obtained or made
by Purchaser (or by Seller) in connection with the taking of any action
contemplated by this Agreement.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASER AND SUB
The obligations of the Purchaser and Sub under ARTICLE II and ARTICLE III
of this Agreement at the Closing are subject to the fulfillment to Purchaser's
and Sub's satisfaction on or prior to the Closing Date of each of the following
conditions (any or all of which may be waived by Purchaser or Sub in its sole
discretion):
8.1 Representations and Warranties. Each representation and warranty made
by Seller pursuant to ARTICLE IV hereof shall be true and correct in all
material respects on the date of this Agreement and shall be true and correct
in all material respects on the Closing Date with the same force and effect as
if such representation and warranty had been made on and as of the Closing Date.
8.2 Performance. All covenants, agreements and conditions contained in
this Agreement to be performed or compiled with by Seller on or prior to the
Closing Date shall have been performed or compiled with by Seller in all
material respects.
8.3 Authorizations. The waiting period applicable to the consummation of
the transactions contemplated by this Agreement under the Xxxx-Xxxxx-Xxxxxx Act
shall have expired or been terminated, and all authorizations, approvals or
permits, if any, of any Governmental Authority or regulatory body that are
required in connection with the transfer of the Purchased Assets pursuant to
this Agreement shall have been duly obtained and shall be effective on and as
of the Closing.
8.4 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Purchaser's counsel, which shall have received all such counterpart original
and certified or other copies of such documents as it may reasonably request.
8.5 Xxxx of Sale. Seller shall have delivered to Sub the Xxxx of Sale
attached hereto as EXHIBIT A, pursuant to which Seller shall sell, transfer and
convey the Purchased Assets to Sub.
8.6 Assignment and Assumption Agreement. Seller shall have entered into
the Assignment and Assumption Agreement in substantially the form attached
hereto as EXHIBIT B, at or prior to the Closing, and the Assignment and
Assumption Agreement shall be in full force and effect, without amendment or
modification.
8.7 Injunctions, Temporary Restraining Orders and Third Party Actions.
The Closing is neither the subject of an injunction or temporary restraining
order issued by a court nor has a third party brought a legal action against
Purchaser, Sub or Seller claiming that damages have been or will be caused by
the occurrence of the Closing or the purchase of the Purchased Assets by Sub in
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accordance with this Agreement, and such injunction, temporary restraining
order or legal action has not been dismissed.
8.8 No Adverse Change or Event. No event shall have occurred which could
reasonably be expected to have a Business Material Adverse Effect; provided,
however, that for the purposes of this SECTION 8.8 only, "BUSINESS MATERIAL
ADVERSE EFFECT" shall mean an effect on the business, operations, liabilities,
condition (excluding financial condition) of the PAIX Business which is
materially adverse; and, provided further, that a decline in the revenues from
operations of the PAIX Business shall not be deemed to be a Business Material
Adverse Effect for the purposes of this SECTION 8.8.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller under ARTICLE II and ARTICLE III of this
Agreement at the Closing Date are subject to the fulfillment to Seller's
satisfaction, on or prior to the Closing Date of each of the following
conditions:
9.1 Representations and Warranties. Each representation and warranty made
by the Purchaser and Sub in ARTICLE V hereof shall be true and correct in all
material respects on the date of this Agreement and shall be true and correct
in all material respects on the Closing Date with the same force and effect as
if such representation and warranty had been made on and as of the Closing Date.
9.2 Performance. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Purchaser and Sub on or
prior to the Closing Date shall have been performed or complied with by the
Purchaser and Sub in all material respects.
9.3 Authorizations. The waiting period applicable to the consummation of
the transactions contemplated by this Agreement under the Xxxx-Xxxxx-Xxxxxx Act
shall have expired or been terminated, and all authorizations, approvals or
permits, if any, of any governmental authority or regulatory body that are
required in connection with this Agreement, the transactions contemplated
hereby and the lawful issuance of the Common Stock pursuant to this Agreement
shall have been duly obtained and shall be effective on and as of the Closing.
9.4. Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to
Seller's counsel, which shall have received all such counterpart original and
certified or other copies of such documents as it may reasonably request.
9.5 Payment of Cash. Sub shall have delivered to Seller cash by a wire
transfer in immediately available funds, in an amount equal to Seventy Million
Dollars ($70,000,000.00).
9.6 Assignment and Assumption Agreement. Sub shall have entered into the
Assignment and Assumption Agreement in substantially the form attached hereto
as EXHIBIT B, at or prior to the
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Closing, and the Assignment and Assumption Agreement shall be in full force and
effect, without amendment or modification.
9.7 Injunctions, Temporary Restraining Orders and Third Party Actions.
The Closing is neither the subject of an injunction or temporary restraining
order issued by a court nor has a third party brought a legal action against
Purchaser, Sub or Seller claiming that damages have been or will be caused by
the occurrence of the Closing or the purchase of the Purchased Assets by Sub in
accordance with this Agreement, and such injunction, temporary restraining
order or legal action has not been dismissed.
9.8 No Adverse Change or Event. No event shall have occurred which could
reasonably have a Purchaser Material Adverse Effect; provided, however, that
for the purposes of this SECTION 9.8 only, "Purchaser Material Adverse Effect"
shall mean an effect on the business, operations, liabilities, condition
(excluding financial condition) of the Purchaser and Sub, taken together, which
is materially adverse to its ability to perform its obligations under ARTICLE
XII; and, provided, further, that a decline in the revenues from operations of
the Purchaser shall not be deemed to be a Purchaser Material Adverse Effect for
the purposes of this Section.
ARTICLE X
EMPLOYEES, BENEFIT PLANS AND CORPORATE FUNCTIONS
10.1 Employees. SCHEDULE 10.1 sets forth the Employees of Seller who will
be offered employment by the Purchaser. Seller's employees not included on
SCHEDULE 10.1 will not be offered employment by the Purchaser (the "EXCLUDED
EMPLOYEES"). Seller shall make all Employees (other than Excluded Employees)
who desire to be hired by the Purchaser available to the Purchaser for
interviews upon reasonable advance written notice. Effective as of the Closing
Date, the Purchaser shall make offers of employment to each such Employee and
on such terms and conditions as will be mutually agreed to by Seller and the
Purchaser. Any Employee who accepts the Purchaser's offer of employment
pursuant to this SECTION 10.1 as of the Closing Date shall be referred to
herein as a "CONTINUING EMPLOYEE." With respect to all employees (including
Excluded Employees and Continuing Employees), Seller shall be solely
responsible for and shall pay (each of which shall be deemed to be Excluded
Obligations):
(a) all wages, bonuses, vacation pay, pay for other compensated absences
and other remuneration (including discretionary benefits) earned or accrued by
such employees as of the close of business on the Closing Date to or on behalf
of the appropriate employee, including any related payroll burden (FICA and
other pension or other employee benefit plan contributions and employment
taxes) with respect thereto to the appropriate Governmental Authority or other
Person, whether or not such pay is vested or has been accrued on the books of
Seller at such close of business, based upon the remuneration of such employees
normally used in computing such vacation pay or pay for other compensated
absences;
(b) workers' compensation claims or amounts payable in connection with or
arising out of events occurring on or prior to the Closing Date; and
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(c) all severance payments (if any) due to any Employees as a result of
the termination of their employment with Seller.
ARTICLE XI
CLOSING
11.1 Closing. The Closing shall take place at the offices of Pillsbury
Madison & Sutro LLP at 0000 Xxxxxxx Xxxxxx, Xxxx Xxxx, Xxxxxxxxxx at 10:00 a.m.
(local time) on the later of (a) June 24, 1999 or (b) the next business day
after the date that the conditions precedent set forth in SECTION 8.3 and
SECTION 9.3 have been satisfied, or at such other place and/or time as the
parties may agree (the "CLOSING DATE"). If the conditions precedent set forth
in SECTION 8.3 and SECTION 9.3 are satisfied before June 21, 1999, however,
then the Closing Date shall occur at the aforesaid location and time on the
third business day after the date that Seller has delivered to Purchaser the
1998 PAIX Year-End Financials and the 3/31 PAIX Quarterly Financials. The
Closing, and all transactions to occur at the Closing, shall be deemed to have
taken place at, and shall be effective as of, the close of business on the
Closing Date.
11.2 Deliveries by Seller. At the Closing, in addition to any other
documents or agreements required under this Agreement, Seller shall deliver to
the Purchaser or Sub, as appropriate, the following:
(a) A Xxxx of Sale in the form set forth in EXHIBIT A, duly executed by
Seller;
(b) An Assignment and Assumption Agreement in the form set forth in
EXHIBIT B, duly executed by Seller and
(c) A cross receipt in the form satisfactory to each of Seller's legal
counsel and Purchaser's legal counsel.
(d) Subject to the last paragraph of SECTION 2.2, consents for all
Contracts assigned to Sub whereby consent is required for Seller to assign such
Contracts;
(e) A closing certificate dated the Closing Date and signed by an
authorized officer of Seller confirming that the conditions set forth in
SECTIONS 8.1, 8.2, 8.7 (to the extent applicable to Seller), and 8.8 have been
satisfied;
(f) To the extent not previously delivered, a copy of the PAIX Financial
Statements;
(g) An affidavit stating, under penalty of perjury Seller's United States
taxpayer identification number and that Seller is not a foreign person
pursuant to section 1445(b)(2) of the Code;
(h) Properly completed and executed Internal Revenue Service Form W-8, as
applicable; and
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(i) All clearance certificates or similar documents which Seller has
identified as being required by a state taxing authority in order to relieve
Sub of an obligation to withhold any portion of the Purchase Price.
11.3 Deliveries by the Purchaser or Sub. At the Closing, in addition to
any other documents or agreements required under this Agreement, the Purchaser
or Sub, as appropriate, shall deliver to Seller the following:
(a) The Purchase Price to Seller at the Closing pursuant to SECTION 3.1;
(b) A certificate of the Purchaser's secretary certifying resolutions of
the board of directors of the Purchaser approving this Agreement and it Related
Agreements and the transactions contemplated hereby (together with an
incumbency and signature certificate regarding the officer(s) signing on behalf
of the Purchaser) and a certificate of Sub's secretary certifying resolutions
of the board of directors of Sub approving this Agreement and its Related
Agreements and the transactions contemplated hereby (together with an
incumbency and signature certificate regarding the officer(s) signing on behalf
of the Sub);
(c) An Assignment and Assumption Agreement in the form set forth in
EXHIBIT B, duly executed by the Purchaser,
(d) A cross receipt in the form satisfactory to each of Seller's legal
counsel and Purchaser's legal counsel
(e) A closing certificate dated the Closing Date and signed by an
authorized officer of Purchaser confirming that the conditions set forth in
SECTIONS 9.1, 9.2, 9.7 (to the extent applicable to Purchaser), and 9.8 have
been satisfied; and
(f) Such other documents relating to the transactions contemplated in
this Agreement and the Related Agreements as Seller may reasonably request.
11.4 PAIX Facilities Lease. At the Closing, Sub shall execute and Seller
shall procure the landlord's signature to a lease in the form attached as
EXHIBIT C, pertaining to the existing PAIX facilities located at 000 Xxxxxx
Xxxxxx, Xxxx Xxxx, Xxxxxxxxxx.
ARTICLE XII
POST-CLOSING CONTRACTUAL OBLIGATIONS
In connection with the transfer of assets under this Agreement, the
parties agree to certain post-closing obligations as set forth in this ARTICLE
XII. In no event shall these post-closing obligations be deemed conditions,
precedent or subsequent, to the sale, assignment, purchase and assumption of
the Purchased Assets, nor shall any breach of these post-closing obligations
affect in any way the finality of such sale, assignment, purchase and
assumption of the Purchased Assets. For purposes of this ARTICLE XII,
"PURCHASER'S NETWORK" or "PURCHASER'S NETWORK FACILITIES" means the dark fiber
routes or loops as they exist on the Closing Date and any routes or loops that
may be added thereafter by Purchaser, including any routes or loops of an
entity that is acquired by
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Purchaser, whether directly or indirectly, by merger, consolidation or sale of
all or substantially all of Purchaser's assets. In the event the Purchaser is
acquired by another entity or sells any or all of its network assets,
"PURCHASER'S NETWORK" or "PURCHASER'S NETWORK FACILITIES" will mean all the
dark fiber routes or loops comprising Purchaser's Network as it exists
immediately prior to the Closing of such acquisition or sale (plus in the case
of a partial sale of network assets by Purchaser, any additional dark fiber
routes or loops acquired or added by Purchaser thereafter).
12.1 XX0 Xxxxxxx. Purchaser (which, for the purposes of this ARTICLE XII,
includes its business divisions and any 80%-owned subsidiaries, wherever located
and whether existing now or in the future) will, as of the Closing Date, and for
twenty years thereafter (the "Connectivity Period"), make available at no charge
to Seller (which, for the purposes of this ARTICLE XII, includes its business
divisions and any subsidiaries designated by Seller from time to time, wherever
located and whether existing now or in the future) unrestricted and unlimited
use of one OC3(1) circuit between each pair of nodes on any and all dark fiber
routes or loops on Purchaser's Network. Purchaser will provide Seller with a
list of all existing dark fiber routes on Purchaser's Network at the Closing
date and will provide Seller with prior notice of any new proposed dark fiber
routes to allow Seller to properly plan for the utilization of such routes.
During the Connectivity Period, Purchaser may re-route the circuits between
nodes so long as there is no material adverse effect on service quality
(including up-times, bit-error rates and latency times) and Purchaser continues
to provide connectivity between all node pairs on Purchaser's Network to Seller
in accordance with this SECTION 12.1.
12.2 Internet Access. In addition to the OC3 dark fiber routes provided to
Seller pursuant to SECTION 12.1, Purchaser will, as of the Closing Date, make
available to Seller at no charge unrestricted and unlimited use of up to a
maximum of 155 Mbps bandwidth of Internet access at any of Purchaser's Network
Facilities. This Internet access will have an associated service level
agreement that meets or exceeds the service level agreements of any Purchaser's
customers at any time during this period of Internet access. This Internet
access will also provide the necessary address space, appropriate configuration
and ability to advertise Seller's own addresses to ensure Seller is able to
fully utilize this Internet access. To the extent that a third party manages
Seller's Internet connectivity, Seller will have the right to make all or a
portion of this 155 Mbps bandwidth of Internet access available to the third
party for Seller's sole use, subject to Purchaser's prior approval, which
approval will not be unreasonably withheld. Any elimination of Purchaser's
capability to provide Internet access, whether by sale or otherwise, in no way
reduces Purchaser's foregoing obligation to continue to provide 155 Mbps
bandwidth of Internet access at no charge to Seller.
12.3 Right of First Refusal. Seller will have a first right of refusal for
up to 5% of the available space in all Purchaser's existing facilities to
utilize as Seller sees fit for internal or resale purposes. Seller will have a
right of first refusal for up to 10% of available space in Purchaser's
-----------
(1) An OC3 circuit is defined as one that provides at least 155,000,000 bits
per second (155 Mbps) bandwidth.
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future facilities provided Seller enters into a binding agreement on terms
mutually satisfactory to Seller and Purchaser, which terms include at least a
five year commitment by Seller and pricing pursuant to SECTION 12.4 below. Such
agreement must be entered into by the parties prior to the beginning of any
construction for such future facility. Seller will be given sufficient notice of
any planned expansion of capacity to allow Seller to determine space
requirements and have these requirements incorporated into Purchaser's planning
process. In addition, Purchaser will make available to the Alta Vista Company,
on pricing terms under SECTION 12.4 hereof, for as long as the Alta Vista
Company requires it, 2,500 square feet of space suitable for the installation,
operation and use of Alta Vista's computer systems in both Purchaser's San Xxxx
and Washington D.C. facilities.
12.4 Pricing Terms. Purchaser will make available to Seller all of
Purchaser's products and services (including, without limitation, co-location
space) at prices comparable to Purchaser's Top Customers. "PURCHASER'S TOP
CUSTOMERS" shall be those ten customers from which Purchaser recognized the
most revenue in its immediately preceding four fiscal quarters. The pricing
terms to be offered to Seller for any services under this SECTION 12.4 shall be
the average price paid by Purchaser's Top Customers for the same quality
services in the relevant rolling four fiscal quarter period. The foregoing will
apply whether Seller procures Purchaser's products and services for Seller's
internal requirements or for resale to Seller's customers.
12.5 Future Services. Purchaser will grant Seller a right to offer to
Purchaser, and to any of Purchaser's customers or prospective customers to
which Purchaser proposes to provide services, a range of existing Seller
services, including, without limitation, Network Systems Integration Services,
Operations Management Services, Customer Services, Alta Vista services and
Xxxxxx.xxx services. Purchaser will give Seller sufficient notice consistent
with the timeframe allowed for Purchaser by the customer or prospective
customer to develop a proposal in connection with such service requirements.
12.6 Reseller Programs. Each party will have the right to participate in
the other party's reseller programs as they exist now or in the future, on the
same basis and subject to the same qualification and other requirements as the
other participants therein.
12.7 Non-Competition. Seller will not, for a period equal to the term of
one year from the Closing Date, make any direct investments, or additional
direct investments in the event an investment falling within the category set
forth in this provision has already occurred, in Exodus Communications, Globix,
InterNap and Frontier or any of their respective subsidiaries that results in
Seller acquiring a twenty percent or more ownership interest in any of their
respective equity securities.
12.8 Nonrelocation of PAIX. Purchaser will not move PAIX from its current
location at 000 Xxxxxx Xxxxxx, Xxxx Xxxx, Xxxxxxxxxx and will take all
reasonable actions required to maintain the Internet interconnection
capabilities of the PAIX Business for a period of five years after the date of
closing. After this time Purchaser will give Seller twelve months advanced
notification of any plans to relocate the PAIX Business or the Internet
interconnection capabilities of PAIX.
12.9 Cooperation. Purchaser agrees to establish periodic management
reviews with Seller to ensure that the terms of this ARTICLE XII are being
carried out and to explore further business
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relationships between Seller and Purchaser. Each party agrees to cooperate fully
with the other party and to execute such further instruments, documents and
agreements and to give such further written assurances, as may be reasonably
requested by the other party, to better evidence and reflect the transactions
described in and contemplated by this ARTICLE XII, and to carry into effect the
intents and purposes of this ARTICLE XII. The parties also agree to attempt to
resolve, reasonably and in good faith, any disputes or issues that may arise in
connection with the performance of their obligations under this ARTICLE XII.
12.10 Termination. Except as otherwise mutually agreed by Seller and
Purchaser in writing, the provisions of this ARTICLE XII shall survive the
Closing and shall terminate (a) on the date specified in the pertinent
provision or (b) if no date is specified, on the fifth anniversary of the
Closing Date.
ARTICLE XIII
TERMINATION
13.1 Termination. This Agreement may be terminated at any time on or
prior to the Closing Date:
(a) With the mutual written consent of Seller and the Purchaser;
(b) By Seller or the Purchaser, if the Closing shall not have taken
place on or before July 31, 1999; provided that the right to terminate this
Agreement under this clause (b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of or
resulted in the failure of the Closing to occur on or before such date.
(c) By a party if the other party materially default under or breaches
this Agreement and such default or breach is not cured by such other party
within thirty days after its receipt of written notice thereof from such party.
13.2 Effect of Termination. If this Agreement is terminated pursuant to
SECTION 13.1, all obligations of the parties hereunder shall terminate, except
for the obligations set forth in SECTION 14, which shall survive the
termination of this Agreement, and except that no such termination shall
relieve any party from liability for any prior breach of this Agreement.
ARTICLE XIV
INDEMNIFICATION
14.1 Survival of Representations and Warranties. The representations and
warranties in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Closing Date for a period ending on the second
anniversary of the Closing Date. This SECTION 14.1 shall survive the Closing
Date and continue in full force and effect thereafter, but shall not limit any
covenant or agreement which by its terms contemplates performance after the
Closing Date.
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14.2 Indemnification by Seller. Seller agrees to indemnify the Purchaser
against, and agrees to hold it harmless from, any and all Losses incurred or
suffered by the Purchaser relating to or arising out of or in connection with
any of the following:
(a) Excluded Obligations;
(b) any liabilities or obligations resulting from the operation of the
PAIX Business by Seller prior to the Closing Date unless such liability or
obligation would constitute an Assumed Obligation; or
(c) breach of its representations, warranties or covenants contained in
this Agreement.
14.3 Indemnification by the Purchaser. The Purchaser agrees to indemnify
Seller against, and agrees to hold it harmless from, any and all Losses
incurred or suffered by Seller relating to or arising out of or in connection
with any of the following:
(a) the Assumed Obligations;
(b) any liabilities or obligations resulting from the operation of PAIX
by the Purchaser from and after the Closing Date unless such liability or
obligation would constitute an Excluded Obligation; or
(c) breach of its representations, warranties or covenants contained in
this Agreement.
14.4 Claims. As soon as is reasonably practicable after becoming aware of
a claim for indemnification under this Agreement the Indemnified Person shall
promptly give notice to the Indemnifying Person of such claim and the amount
the Indemnified Person will be entitled to receive hereunder from the
Indemnifying Person; provided that the failure of the Indemnified Person to
give notice shall not relieve the Indemnifying Person of its obligations under
or this ARTICLE XIV except to the extent (if any) that the Indemnifying Person
shall have been prejudiced thereby. If the Indemnifying Person does not object
in writing to such indemnification claim within thirty days of receiving notice
thereof, the Indemnified Person shall be entitled to recover promptly from the
Indemnifying Person the amount of such claim (but such recovery shall not limit
the amount of any additional indemnification to which the Indemnified Person
may be entitled pursuant to ARTICLE XIV), and no later objection by the
Indemnifying Person shall be permitted. If the Indemnifying Person agrees that
it has an indemnification obligation but objects that it is obligated to pay
only a lesser amount, the Indemnified Person shall nevertheless be entitled to
recover promptly from the Indemnifying Person the lesser amount, without
prejudice to the Indemnified Person's claim for the difference.
14.5 Notice of Third Party Claims; Assumption of Defense. The Indemnified
Person shall give notice as promptly as is reasonably practicable to the
Indemnifying Person of the assertion of any claim, or the commencement of any
suit, action or proceeding, by any Person not a party hereto in respect of
which indemnity may be sought under this Agreement; provided that the failure
of the Indemnified Person to give notice shall not relieve the Indemnifying
Person of its obligations under this ARTICLE XIV except to the extent (if any)
that the Indemnifying Person shall have been
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prejudiced thereby. The Indemnifying Person may, at its own expense (a)
participate in the defense of any claim, suit, action or proceeding and (b)
upon notice to the Indemnified Person at any time during the course of any such
claim, suit, action or proceeding, assume the defense thereof; provided that
(i) the Indemnifying Person's counsel is reasonably satisfactory to the
Indemnified Person, and (ii) the Indemnifying Person shall thereafter consult
with the Indemnified Person upon the Indemnified Person's reasonable request
for such consultation from time to time with respect to such claim, suit,
action or proceeding. If the Indemnifying Person assumes such defense, the
Indemnified Person shall have the right (but not the obligation) to participate
in the defense thereof and to employ counsel, at its own expense, separate from
the counsel employed by the Indemnifying Person. If, however, the Indemnified
Person reasonably determines in its judgment that representation by the
Indemnifying Person's counsel of both the Indemnifying Person and the
Indemnified Person would present such counsel with a conflict of interest, then
such Indemnified Person may employ separate counsel to represent or defend it
in any such claim, action, suit or proceeding and the Indemnifying Person shall
pay the fees and disbursements of such separate counsel. Whether or not the
Indemnifying Person chooses to defend or prosecute any such claim, suit, action
or proceeding, all of the parties hereto shall cooperate in the defense or
prosecution thereof.
14.6 Settlement or Compromise. Any settlement or compromise made or caused
to be made by the Indemnified Person or the Indemnifying Person, as the case may
be, of any such claim, suit, action or proceeding of the kind referred to in
SECTION 14.5 shall also be binding upon the Indemnifying Person or the
Indemnified Person, as the case may be, in the same manner as if a final
judgment or decree had been entered by the court of competent jurisdiction in
the amount of such settlement or compromise; provided that no obligation,
restriction or Loss shall be imposed on the Indemnified Person as a result of
such settlement without its prior written consent. The Indemnified Person will
give the Indemnifying Person at least thirty days' notice of any proposed
settlement or compromise of any claim, suit, action or proceeding it is
defending, during which time the Indemnifying Person may reject such proposed
settlement or compromise; provided that from and after such rejection, the
Indemnifying Person shall be obligated to assume the defense of and full and
complete liability and responsibility for such claim, suit, action or proceeding
and any and all Losses in connection therewith in excess of the amount of
unindemnifiable Losses which the Indemnified Person would have been obligated to
pay under the proposed settlement or compromise.
14.7 Failure of Indemnifying Person to Act. In the event that the
Indemnifying Person does not elect to assume the defense of any claim, suit,
action or proceeding, then any failure of the Indemnified Person to defense or
to participate in the defense of any such claim, suit, action or proceeding or
to cause the same to be done, shall not relieve the Indemnifying Person of its
obligations hereunder.
14.8 Limits of Seller to Indemnify. The Purchaser shall not be entitled to
receive any disbursement with respect to any Loss under SECTION 14.2 arising in
respect of any individual occurrence or circumstance unless the amount of the
Loss arising in respect of such occurrence or circumstance, individually,
exceeds a $10,000 level; provided, however, that in the event the aggregate
Losses of the Purchaser under SECTION 14.2 shall exceed $100,000, then the
Purchaser shall be entitled to recover the total of its Losses including any
amounts below the $10,000 level for each such occurrence or circumstance. The
Purchaser shall not be entitled to receive any
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disbursement with respect to any Loss under SECTION 14.2 if the amount of all
such disbursements previously paid by Seller pursuant to such Section exceeds
the dollar value of the Purchase Price.
14.9 Limits of the Purchaser to Indemnify. Seller shall not be entitled
to receive any disbursement with respect to any Loss under SECTION 14.3 arising
in respect of any individual occurrence or circumstance unless the amount of the
Loss arising in respect thereof, in the aggregate, exceeds a $10,000 level;
provided, however, that in the event such aggregate Losses of Seller under
SECTION 14.3 shall exceed $100,000, then Seller shall be entitled to recover
the total of its Losses under such section including any amounts below the
$10,000 level for each such occurrence or circumstance. Seller shall not be
entitled to receive any disbursement with respect to any Loss under SECTION
14.3 if the amount of all such disbursements previously paid pursuant to such
Section exceeds the dollar value of the Purchase Price.
14.10 Maximum Payments; Remedy. Except as otherwise provided in this
SECTION 14.10, SECTION 14.2 and SECTION 14.3 hereof, from and after the Closing
Date this ARTICLE XIV shall provide the sole and exclusive remedy for any and
all damages or other liability sustained or incurred by the Indemnified Parties
or their successors and assigns as the result of any breach of any
representation, warranty or covenant contained in this Agreement or any claim
of negligent misrepresentation against the Purchaser or the Seller in
connection with this Agreement and the transactions contemplated hereby.
Notwithstanding anything to the contrary herein, the existence of this ARTICLE
XIV and of the rights and restrictions set forth herein do not limit any type
of statutory or common law remedy (i.e., not based on any indemnity right
provided in this ARTICLE XIV) with respect to any knowing (meaning actual
knowledge) or intentional breaches of the representation and warranties or
covenants of the Purchaser or the Seller contained in this Agreement or a
certificate of any officer of the Purchaser or the Seller delivered pursuant to
this Agreement, or in the event of fraud, provided such remedy may only be
pursued against the person who committed or authorized such knowing (meaning
actual knowledge) or intentional breaches of such representations, warranties
or covenants.
ARTICLE XV
MISCELLANEOUS
15.1 Expenses. Each party hereto shall bear its own expenses with respect
to the transactions contemplated hereby.
15.2 Amendment. This Agreement may be amended, modified or supplemented
but only in writing by the Purchaser and Seller.
15.3 Notices. Any notice, request, instruction or other document to be
given hereunder by a party hereto shall be in writing and shall be deemed to
have been given (a) when received if given in person or from courier or a
courier service with confirmed delivery, (b) on the date of transmission if
sent by confirmed facsimile or (c) five Business Days after being deposited in
the mail, certified or registered, postage prepaid:
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If to Seller, addressed as follows:
Compaq Computer Corporation
00000 Xxxxx Xxxxxxx 000
XX: 110605
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (281) 7616
with a copy to:
Compaq Computer Corporation
00000 X. Xxxxxx Xxxxxx
XX: CAC07-16
Xxxxxxxxx, XX 00000
Attention: X. Xxxxxxxx Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to the Purchaser, addressed as follows:
AboveNet Communications Inc.
00 X. Xxx Xxxxxxxx Xxxxxx, #0000
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Xxxxxxx Xxxx and Xxxxx Xxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx Xxxxxxxx & Xxxxxxxxx, LLP
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Or to such other individual or address as a party hereto many designate
for itself by notice given as herein provided.
15.4 Payments in Dollars. Except as otherwise provided herein or in a
Related Agreement, all payments pursuant hereto shall be made in Dollars in
same day or immediately available funds, without any setoff, deduction or
counterclaim whatsoever.
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15.5 Waivers. The failure of a party hereto at any time or times to
require performance of any provision hereof shall in no manner affect its right
at a later time to enforce the same. No waiver by a party of any condition or
of any breach of any term, covenant, representation or warranty contained in
this Agreement shall be effective unless in writing, and no waiver in any one
or more instances shall be deemed to be a further or continuing waiver of any
such condition or breach in other instances or a waiver of any other condition
or breach of any other term, covenant, representation or warranty.
15.6 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns;
provided that no assignment of any rights or obligations shall be made prior to
the Closing Date by a party without the written consent of the other party.
15.7 No Third Party Beneficiaries. This Agreement is solely for the
benefit of the parties hereto and, to the extent provided herein, their
respective Affiliates, directors, officers, employees, agents and
representatives and, in the case of ARTICLE XII, their successors-in-interest,
and no provision of this Agreement shall be deemed to confer upon third parties
any remedy, claim, liability, reimbursement, cause of action or other right. In
particular, but without limitation, the provisions of ARTICLE X may not be
enforced by any person or entity other than Purchaser or Seller and ARTICLE X
does not create or convey any third party beneficiary rights to any person.
15.8 Publicity. Prior to the Closing Date, except as required by Law or
the rules of any stock exchange or Nasdaq, no public announcement or other
publicity regarding the transactions referred to herein shall be made by the
Purchaser or Seller or any of their respective Affiliates, officers, directors,
employees, representatives or agents, without the prior written agreement of the
Purchaser and Seller, in any case, as to form, content, timing and manner of
distribution or publication, which agreement shall not be unreasonably withheld.
15.9 Further Assurances. Upon the reasonable request of the Purchaser,
Seller will on and after the Closing Date execute and deliver to the Purchaser
such other documents, releases, assignments and other instruments as may be
required to effectuate completely the transfer and assignment to the Purchaser
of, and to vest fully in the Purchaser title to, each of the Purchased
Assets, and to otherwise carry out the purposes of this Agreement. Similarly,
upon the reasonable request of Seller, the Purchaser will on and after the
Closing Date execute and deliver to Seller such other documents and do and
perform such other acts and things as may be necessary or desirable for
effecting completely the consummation of this Agreement and the transactions
contemplated hereby.
15.10 Severability. If any provision of this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality or enforceability of
the other provisions hereof shall not be affected thereby, and there shall be
deemed substituted for the provision at issue a valid, legal and enforceable
provision as similar as possible to the provision at issue.
15.11 Remedies Cumulative. The remedies provided in this Agreement shall
be cumulative and shall not preclude the assertion of any other rights or
remedies available by law, in equity or otherwise.
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15.12 Entire Understanding. This Agreement and the Related Agreements set
forth the entire agreement and understanding of the parties hereto in respect
to the transactions contemplated hereby and supersede any and all prior
agreements, arrangements and understandings among the parties relating to the
subject matter hereof.
15.13 Applicable Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of California
without giving effect to the principles of conflicts of law thereof.
15.14 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
[The remainder of this page is intentionally left blank]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the date first above written.
SELLER
COMPAQ COMPUTER CORPORATION
By /s/ XXXXXX X. XXXXXXX, XX.
--------------------------------------
Name Xxxxxx X. Xxxxxxx, Xx.
-------------------------------------
Title VP Corporate Development
------------------------------------
DIGITAL EQUIPMENT CORPORATION
By /s/ XXXXXX X. XXXXXXX, XX.
--------------------------------------
Name Xxxxxx X. Xxxxxxx, Xx.
-------------------------------------
Title VP Strategic Business Development
------------------------------------
PURCHASER
ABOVENET COMMUNICATIONS INC.
By /s/ XXXXXX X. XXXXXX
--------------------------------
Name Xxxxxx X. Xxxxxx
-------------------------------
Title President and CEO
------------------------------
46
SUB
PX ACQUISITION CORP.
By /s/ XXXXXX X. XXXXXX By /s/ XXXX ROUND
-------------------------------- ------------------------------------
Name Xxxxxx X. Xxxxxx Name Xxxx Round
------------------------------- -----------------------------------
Title President Title CTO
------------------------------ ----------------------------------
By /s/ XXXXXXX XXXX
--------------------------------
Name Xxxxxxx Xxxx
-------------------------------
Title CFO
------------------------------
