EXHIBIT 2
ASSET PURCHASE AGREEMENT
AMONG
METROCALL HOLDINGS, INC.,
METROCALL, INC.,
WEBLINK WIRELESS I, L.P.
AND
WEBLINK WIRELESS, INC.
-------------
Dated as of November 18, 2003
NY2:\1333240\12\SKQG12!.DOC\76830.0236
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.....................................................................................1
1.1 Certain Definitions..................................................................................1
ARTICLE II PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES..........................................9
2.1 Purchase and Sale of Assets..........................................................................9
2.2 Excluded Assets.....................................................................................12
2.3 Assumption of Liabilities...........................................................................13
2.4 Excluded Liabilities................................................................................15
2.5 Further Conveyances and Assumptions; Consent of Third Parties.......................................16
2.6 Indemnification Procedures..........................................................................17
2.7 Bulk Sales Laws.....................................................................................19
2.8 Purchase Price Allocation...........................................................................19
2.9 Parent Guarantee....................................................................................20
ARTICLE III CONSIDERATION..................................................................................20
3.1 Consideration.......................................................................................20
3.2 Payment of Consideration on the Initial Closing Date................................................20
3.3 Payment of Consideration on the License-Related Asset Purchase Closing Date.........................20
ARTICLE IV CLOSING AND DELIVERIES.........................................................................20
4.1 Initial Closing.....................................................................................20
4.2 License-Related Asset Purchase Closing..............................................................21
4.3 Sellers Closing Documents...........................................................................21
4.4 Purchaser Closing Documents.........................................................................22
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLERS......................................................23
5.1 Organization and Good Standing......................................................................23
5.2 Authorization of Agreement..........................................................................23
5.3 Conflicts; Governmental Consents....................................................................24
5.4 Financial Statements................................................................................24
5.5 No Undisclosed Liabilities..........................................................................25
5.6 Absence of Certain Developments.....................................................................25
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TABLE OF CONTENTS
(CONTINUED)
PAGE
5.7 Real Property.......................................................................................25
5.8 Tangible Personal Property..........................................................................25
5.9 Intellectual Property...............................................................................25
5.10 Material Contracts..................................................................................26
5.11 Employee Benefits Plans.............................................................................26
5.12 Labor...............................................................................................28
5.13 Litigation..........................................................................................28
5.14 Compliance with Laws; Permits.......................................................................28
5.15 Financial Advisors..................................................................................28
5.16 Taxes...............................................................................................29
5.17 Employees on Leave..................................................................................29
5.18 Title to Purchased Assets and Related Matters.......................................................29
5.19 Ownership of Membership Interest....................................................................29
5.20 No Other Representations or Warranties; Schedules...................................................29
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER....................................................30
6.1 Organization and Good Standing......................................................................30
6.2 Authorization of Agreement..........................................................................30
6.3 Conflicts; Governmental Consents....................................................................31
6.4 SEC Documents; Undisclosed Liabilities..............................................................31
6.5 Capitalization......................................................................................33
6.6 Absence of Certain Developments.....................................................................34
6.7 Taxes...............................................................................................34
6.8 Litigation..........................................................................................34
6.9 Financial Advisors..................................................................................34
6.10 Condition of the Business...........................................................................34
6.11 Elimination of Transfer Restrictions................................................................35
ARTICLE VII POST-CLOSING COVENANTS.........................................................................35
7.1 Access to Information...............................................................................35
7.2 Preservation of Records.............................................................................36
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TABLE OF CONTENTS
(CONTINUED)
PAGE
7.3 Publicity...........................................................................................36
7.4 Negative Covenant...................................................................................36
7.5 Notification........................................................................................36
7.6 Sellers' Reasonable Best Efforts....................................................................37
7.7 Purchaser's Reasonable Best Efforts.................................................................37
7.8 Non-Solicitation....................................................................................37
7.9 Employment..........................................................................................37
7.10 Employee Benefits...................................................................................38
7.11 Confidentiality.....................................................................................39
7.12 Tax Reporting.......................................................................................40
7.13 Assumption in Bankruptcy............................................................................40
7.14 No Negotiation......................................................................................40
7.15 Change of Name; Use of Names........................................................................41
ARTICLE VIII CONDITIONS TO LICENSE-RELATED ASSET PURCHASE CLOSING...........................................41
8.1 Conditions Precedent to the Obligations of Purchaser and Sellers....................................41
8.2 Condition Precedent to the Obligations of Each Seller...............................................41
ARTICLE IX MISCELLANEOUS..................................................................................42
9.1 No Survival of Representations and Warranties.......................................................42
9.2 Payment of Sales, Use or Similar Taxes..............................................................42
9.3 FCC Applications....................................................................................42
9.4 Expenses............................................................................................42
9.5 Submission to Jurisdiction; Consent to Service of Process...........................................42
9.6 Entire Agreement; Amendments and Waivers............................................................43
9.7 Governing Law.......................................................................................43
9.8 Notices.............................................................................................43
9.9 Severability........................................................................................44
9.10 Binding Effect; Assignment..........................................................................44
9.11 Non-Recourse........................................................................................45
9.12 Counterparts........................................................................................45
iii
SCHEDULES
---------
Schedule 1.1(a) Equipment Leases
Schedule 1.1(b) FCC Licenses
Schedule 1.1(c) Subsequent Transferred Employees
Schedule 1.1(d) Nonassignable Contracts
Schedule 1.1(e) Purchased Contracts
Schedule 2.1(b)(v) Excluded Corporate Headquarters Furniture and Fixtures
Schedule 2.1(b)(xii) Bank Accounts
Schedule 2.1(b)(xiv) Permits
Schedule 2.3(a)(viii) Severance Agreements/Transaction Bonus
Schedule 2.4(e) Affiliate Liabilities
Schedule 5.1(b) Seller Subsidiaries
Schedule 5.3(a) No Conflicts
Schedule 5.3(b) Governmental Consents
Schedule 5.4 Financials
Schedule 5.5 Undisclosed Liabilities
Schedule 5.6 Certain Developments
Schedule 5.7 Real Property
Schedule 5.8 Tangible Personal Property
Schedule 5.9 Intellectual Property
Schedule 5.10 Material Contracts
Schedule 5.11(a) Employee Benefits Plans
Schedule 5.11(c) Qualified Plans
Schedule 5.11(g) Accelerated Benefit Liabilities
Schedule 5.12(b) Labor
Schedule 5.13 Legal Proceedings
Schedule 5.16 Taxes
Schedule 6.3(a) No Conflict
Schedule 6.3(b) Governmental Consents
Schedule 6.4(c) SEC Documents
Schedule 6.5(b) Securities
Schedule 6.6 Certain Developments
Schedule 6.7 Taxes
Schedule 6.8 Legal Proceedings
Schedule 6.9 Financial Advisors
Schedule 7.1(b) Services
Schedule 7.10(c) Liabilities With Respect to Transferred Employees
EXHIBITS
--------
Exhibit A-1 - Form of Warrant
Exhibit A-2 - Form of Warrant
Exhibit B - Form of Registration Rights Agreement
Exhibit C - Form of Xxxx of Sale
Exhibit D - Form of Assignment and Assumption Agreement
Exhibit E - Form of Management and Spectrum Lease Agreement
Exhibit F - Form of Indemnification Agreement
Exhibit G - Form of Substitute Severance Agreement
iv
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of November 18, 2003 (this
"Agreement"), by and among Metrocall Holdings, Inc., a Delaware corporation
("Parent"), Metrocall, Inc., a Delaware corporation ("Purchaser"), WebLink
Wireless I, L.P., a Texas limited partnership ("Company") and WebLink Wireless,
Inc., a Delaware corporation ("WebLink", together with Company, "Sellers").
W I T N E S S E T H:
WHEREAS, Sellers and the Subsidiaries presently conduct the
Business;
WHEREAS, Purchaser and/or its Affiliates are party to certain
existing operating agreements with Sellers;
WHEREAS, Sellers desire to sell, transfer and assign to
Purchaser, and Purchaser desires to acquire and assume from Sellers,
respectively, all of the Purchased Assets and Assumed Liabilities, all as more
specifically provided herein; and
WHEREAS, certain terms used in this Agreement are defined in
Section 1.1;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter contained, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Certain Definitions.
(a) For purposes of this Agreement, the following terms shall
have the meanings specified in this Section 1.1:
"Accounts Receivable" means (a) all trade accounts receivable and
other rights to payment from customers of Sellers and the full benefit of all
security for such accounts or rights to payment, including all trade accounts
receivable representing amounts receivable in respect of goods shipped or
products sold or services rendered to customers of Sellers, (b) all other
accounts or notes receivable of Sellers and the full benefit of all security for
such accounts or notes and (c) any claim, remedy or other right related to any
of the foregoing.
"Affiliate" means, with respect to any Person, any other Person
that, directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person, and the term
"control" (including the terms "controlled by" and "under common control with")
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through
ownership of voting securities, by contract or otherwise.
"Assumed Liabilities" means Initial Assumed Liabilities, the
Subsequent Transferred Employee Liabilities and the License-Related Assumed
Liabilities.
"Business" means the business of Sellers and the Subsidiaries as
presently conducted.
"Business Day" means any day of the year on which national
banking institutions in New York are open to the public for conducting business
and are not required or authorized to close.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contract" means any contract, licenses, indenture, note, bond,
lease, commitment or other agreement.
"Corporate Headquarters" means Company's corporate headquarters
located at 0000 Xxx Xxxxxxx, Xxxxxx, Xxxxx.
"Equipment Leases" means collectively, leases for the equipment
used in the Business including those set forth in Schedule 1.1(a).
"ERISA" means the Employment Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"FCC" means the United States Federal Communications Commission
and any successor agency.
"FCC Applications" means the applications requesting the FCC's
consent to the transfer of control or assignment of the FCC Licenses from
Sellers to Purchaser.
"FCC Approval" means the FCC's grant, in writing and by Final
Order, of the FCC Applications, whether by public notice, order or letter to the
parties.
"FCC Licenses" means all licenses issued by the FCC and held by
Sellers or the License Subsidiaries to construct, own and operate paging or
other wireless systems and all construction permits or conditional
authorizations that have been applied for by, or issued by the FCC to, Sellers
or the License Subsidiaries, as listed on Schedule 1.1(b), including, if any,
those acquired after the date hereof and prior to the License-Related Purchased
Asset Closing Date.
"Final Order" means FCC Approval or other action by a
Governmental Body for which (a) no petition or request for reconsideration or
review by the FCC or any other Governmental Body has been filed; (b) no appeal
or petition for judicial review has been filed; and (c) no reconsideration or
review has been undertaken by the FCC or other Governmental Body, as the case
may be, on its own motion; and (d) the time for the filings or actions described
in (a) through (c) has passed.
2
"Furniture and Equipment" means all furniture, fixtures,
furnishings, equipment, vehicles, leasehold improvements and other tangible
personal property owned or used by the Sellers, or which the Sellers have the
right to use, in the conduct of the Business, including all artwork, desks,
chairs, tables, hardware, copiers, telephone lines and numbers, telecopy
machines and other telecommunication equipment, cubicles and miscellaneous
office furnishings and supplies.
"GAAP" means generally accepted accounting principles in the
United States as in effect on the date of any financial statement with respect
to which such term is used or, to the extent not related to any such financial
statements, as of the date hereof.
"Governmental Body" means any government or governmental or
regulatory body thereof, or political subdivision thereof, whether federal,
state, local or foreign, or any agency, instrumentality or authority thereof, or
any court or arbitrator (public or private).
"HIPAA" means the Health Insurance Portability and Accountability
Act of 1996.
"Income Taxes" means any Taxes based on or measured by gross or
net income other than Taxes that are in the nature of sales and use Taxes.
"Indebtedness" of any Person means, without duplication, (i) the
principal of and premium (if any) in respect of (A) indebtedness of such Person
for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or
other similar instruments for the payment of which such Person is responsible or
liable; (ii) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such Person and
all obligations of such Person under any title retention agreement (but
excluding trade accounts payable and other accrued current liabilities arising
in the ordinary course of business); (iii) all obligations of such Person under
leases required to be capitalized in accordance with GAAP; (iv) all obligations
of such Person for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction; (v) all obligations of the
type referred to in clauses (i) through (iv) of other Persons for the payment of
which such Person is responsible or liable, directly or indirectly, as obligor,
guarantor, surety or otherwise, including guarantees of such obligations; and
(vi) all obligations of the type referred to in clauses (i) through (v) of other
Persons secured by any Lien on any property or asset of such Person (whether or
not such obligation is assumed by such Person).
"Initial Transferred Employees" means all employees of Sellers
other than Subsequent Transferred Employees, including those employees on an
approved leave of absence, vacation or short term disability, that were employed
by Sellers immediately prior to the Initial Closing Date.
"IRS" means the Internal Revenue Service.
"Knowledge of Purchaser" or "Purchaser's Knowledge" means the
actual knowledge of Xxxxxxx Xxxxx, Xxxxxx Xxxxxxx and Xxxx Xxxx.
3
"Knowledge of Sellers" or "Sellers' Knowledge" means the actual
knowledge of Xxxx Xxxxxxxxx, Xxxxx Xxxxxxxx, Xxxx Xxxx, and Xxxxx Xxxxxx.
"Law" means any foreign, federal, state, local law, statute,
code, ordinance, rule or regulation.
"Legal Proceeding" means any judicial, administrative or arbitral
actions, suits, pleadings, complaints or proceedings (public or private) by or
before a Governmental Body.
"Liability" means any debt, liability or obligation (whether
direct or indirect, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, or due or to become due) and including all costs and expenses
relating thereto.
"License Subsidiaries" means PageMart PCS Holdings LLC, a
Delaware limited liability company, and PageMart II Holdings LLC, a Delaware
limited liability company.
"License Subsidiary Interests" means all of the Membership
Interests.
"Lien" means any lien, encumbrance, pledge, mortgage, deed of
trust, security interest, claim, lease, charge, option, right of first refusal,
right of set-off or recoupment, easement, servitude or transfer restriction.
"Long-Term Indebtedness" means Indebtedness of Sellers comprised
of its Tranche A Term Notes, Tranche B Term Notes, Tranche C PIK Notes, Tranche
D PIK Notes and Tranche E PIK Notes.
"Material Adverse Effect" means (i) a material adverse effect on
the business, assets, properties, results of operations or financial condition
of Sellers and the Subsidiaries (taken as a whole) or (ii) a material adverse
effect on the ability of Sellers to consummate the transactions contemplated by
this Agreement, other than an effect resulting from an Excluded Matter.
"Excluded Matter" means any one or more of the following: (i) the effect of any
change that generally affects any industry in which Sellers or any of the
Subsidiaries operates; (ii) the effect of any action taken by Purchaser or its
Affiliates with respect to the transactions contemplated hereby or with respect
to Sellers or the Subsidiaries; (iii) any matter within the specific Knowledge
of Purchaser on the date hereof; or (iv) the effect of any changes in applicable
Laws or accounting rules.
"Membership Interests" means 100% of the limited liability
company membership interests in the License Subsidiaries.
"Network" means the telecommunications network facilities,
including transmitters, switches, terminals, telephone numbers (including Direct
Inward Dialing numbers), circuits and all telephone interconnection facilities,
and transmitting antennae necessary for operation under the FCC Licenses.
4
"Nonassignable Contracts" shall mean any Contract listed on
Schedule 1.1(d).
"Order" means any order, injunction, judgment, decree, ruling,
writ, assessment or arbitration award of a Governmental Body.
"Ordinary Course of Business" means the ordinary and usual course
of normal day-to-day operations of the Business consistent with past practice.
"Parent Common Stock" means shares of common stock, $0.01 par
value, of Parent.
"Permits" means any approvals, authorizations, consents,
franchises, licenses, permits, certificates or authorization of a Governmental
Body.
"Permitted Encumbrances" means (i) all defects, exceptions,
restrictions, easements, rights of way and encumbrances as do not in any
material respect detract from the value thereof and do not in any material
respect interfere with the present or contemplated use of the property subject
thereto; (ii) statutory liens for current Taxes, assessments or other
governmental charges not yet delinquent or the amount or validity of which is
being contested in good faith by appropriate proceedings, provided an
appropriate reserve is established therefor; (iii) mechanics', carriers',
workers', repairers' and similar Liens arising or incurred in the Ordinary
Course of Business; (iv) zoning, entitlement and other land use and
environmental regulations by any Governmental Body; (v) liens securing debt as
disclosed in the Financial Statements; (vi) title of a lessor under a capital or
operating lease; (vii) such other imperfections in title, charges, easements,
restrictions and encumbrances which would not result in a Material Adverse
Effect; and (vii) rights of Verizon Wireless Messaging Services under Section
5.6 of the Amended and Restated Strategic Alliance Agreement dated as of January
1, 2003.
"Person" means any individual, corporation, partnership, firm,
joint venture, limited liability company, association, joint-stock company,
trust, unincorporated organization, Governmental Body or other entity.
"Purchased Assets" means the Initial Purchased Assets and the
Licensed-Related Purchased Assets.
"Purchased Contracts" means all Contracts (including customer
Contracts and Nonassignable Contracts) related to the Purchased Assets or the
Business and rights thereunder, including the Contracts listed on Schedule
1.1(e).
"Purchased Intellectual Property" means all intellectual property
rights owned by Seller and the Subsidiaries, all intellectual property rights
used in the Business, whether owned or held by WebLink, Company or the
Subsidiaries or any third party, including without limitation, the following:
(i) all patents and applications therefor, including continuations, divisionals,
continuations-in-part, or reissues of patent applications and patents issuing
thereon (collectively, "Patents"), (ii) all trademarks, service marks, trade
names, service names, brand names, trade dress rights, logos, Internet domain
names and corporate names, together with the goodwill associated with any of the
foregoing, and all applications, registrations and renewals thereof,
(collectively, "Marks"), (iii) all copyrights and registrations and applications
therefor, works of authorship and mask work rights (collectively, "Copyrights")
and (iv) all right, title and interest of Sellers and the Subsidiaries in and to
any Software and Technology owned by Seller and the Subsidiaries.
5
"Purchaser Material Adverse Effect" means (i) a material adverse
effect on the business, assets, properties, results of operations or financial
condition of Parent, Purchaser and their subsidiaries (taken as a whole) or (ii)
a material adverse effect on the ability of Purchaser to consummate the
transactions contemplated by this Agreement, other than an effect resulting from
an Excluded Matter. "Excluded Matter" means any one or more of the following:
(i) the effect of any change that generally affects any industry in which
Purchaser or any of its subsidiaries operates; (ii) the effect of any action
taken by Sellers or their Affiliates with respect to the transactions
contemplated hereby or with respect to Purchaser; (iii) any matter within the
specific Knowledge of the Sellers on the date hereof; or (iv) the effect of any
changes in applicable Laws or accounting rules.
"Parent Ordinary Course of Business" means the ordinary and usual
course of normal day-to-day operations of the business of Parent.
"Purchaser Ordinary Course of Business" means the ordinary and
usual course of normal day-to-day operations of the business of Purchaser.
"Securities Act" means the Securities Act of 1933, as amended.
"Severance Agreements" shall mean the Employment Agreements, the
Key Employee Severance Plan and the Employee Severance Agreements listed on
Schedule 2.3(a)(viii).
"Software" means any and all (i) computer programs, including any
and all software implementations of algorithms, models and methodologies,
whether in source code or object code, (ii) databases and compilations,
including any and all data and collections of data, whether machine readable or
otherwise, (iii) descriptions, flow-charts and other work product used to
design, plan, organize and develop any of the foregoing, screens, user
interfaces, report formats, firmware, development tools, templates, menus,
buttons and icons, and (iv) all documentation including user and operations and
maintenance manuals and other training documentation related to any of the
foregoing.
"Subsequent Transferred Employees" means all employees of Sellers
listed on Schedule 1.1(c).
"Subsidiary" means any Person of which a majority of the
outstanding voting securities or other voting equity interests are owned,
directly or indirectly, by Sellers.
6
"Tax" or "Taxes" means (i) all federal, state, local or foreign
taxes, charges, fees, imposts, levies or other assessments, including, without
limitation, all net income, gross receipts, capital, sales, use, ad valorem,
value added, transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise,
severance, stamp, occupation, property and estimated taxes, customs duties,
fees, assessments and charges of any kind whatsoever, (ii) all interest,
penalties, fines, additions to tax or additional amounts imposed by any taxing
authority in connection with any item described in clause (i), and (iii) any
transferee liability in respect of any items described in clauses (i) and/or
(ii).
"Tax Return" means all returns, declarations, reports, estimates,
information returns and statements required to be filed in respect of any Taxes.
"Technology" means, collectively, all designs, formulae,
algorithms, procedures, methods, techniques, ideas, know-how, research and
development, technical data, programs, subroutines, tools, materials,
specifications, processes, inventions (whether patentable or unpatentable and
whether or not reduced to practice), apparatus, creations, improvements, works
of authorship and other similar materials, and all recordings, graphs, drawings,
reports, analyses, and other writings, and other tangible embodiments of the
foregoing, in any form whether or not specifically listed herein, and all
related technology.
"Transaction Documents" shall mean this Agreement, the
Registration Rights Agreement, the Assignment and Assumption Agreement, the Xxxx
of Sale, the Management and Spectrum Lease Agreement, the Warrants and the
Indemnification Agreement.
"Transferred Employees" shall mean Initial Transferred Employees
and Subsequent Transferred Employees.
(b) Terms Defined Elsewhere in this Agreement. For purposes
of this Agreement, the following terms have meanings set forth on the pages
indicated:
Accountants..................................................................19
Asset Acquisition Statement..................................................19
Balance Sheet................................................................25
Balance Sheet Date...........................................................25
Claim........................................................................16
COBRA........................................................................27
Company.......................................................................1
Copyrights....................................................................6
Documents....................................................................23
Employee Benefit Plans.......................................................26
Encumbrances.................................................................16
Excluded Assets..............................................................12
Excluded Lease...............................................................12
Excluded Liabilities.........................................................15
7
Excluded Loss................................................................19
Excluded Matter............................................................4, 6
Financial Statements.........................................................24
Indemnification Agreement....................................................21
Initial Assumed Liabilities..................................................13
Initial Closing..............................................................20
Initial Closing Date.........................................................20
Initial Purchased Assets......................................................9
Inventory....................................................................12
Licensed-Related Purchased Assets............................................10
License-Related Asset Purchase Closing.......................................21
License-Related Asset Purchase Closing Date..................................21
License-Related Assumed Liabilities..........................................15
Losses.......................................................................16
Management and Spectrum Lease Agreement......................................21
Marks.........................................................................6
Material Contracts...........................................................26
Negotiation Period...........................................................19
Parent........................................................................1
Parent Securities............................................................33
Patents.......................................................................5
Personal Property Leases.....................................................25
Preferred Stock..............................................................34
Purchaser.....................................................................1
Purchaser Documents..........................................................30
Purchaser Plans..............................................................38
Qualified Plans..............................................................27
Real Property Leases.........................................................25
Registration Rights Agreement................................................20
Reimbursement................................................................11
Representatives..............................................................40
Revised Statements...........................................................19
SEC Documents................................................................31
Sellers.......................................................................1
Subsequent Closing Date......................................................21
Transaction..................................................................39
Transfer Taxes...............................................................42
Warrants.....................................................................20
WebLink.......................................................................1
(c) Other Definitional and Interpretive Matters. Unless
otherwise expressly provided, for purposes of this Agreement, the following
rules of interpretation shall apply.
Calculation of Time Period. When calculating the period of time
before which, within which or following which any act is to be done or step
taken pursuant to this Agreement, the date that is the reference date in
calculating such period shall be excluded. If the last day of such period is a
non-Business Day, the period in question shall end on the next succeeding
Business Day.
8
Dollars. Any reference in this Agreement to $ shall mean U.S.
dollars.
Exhibits/Schedules. The Exhibits and Schedules to this Agreement
are hereby incorporated and made a part hereof and are an integral part of this
Agreement. Any capitalized terms used in any Schedule or Exhibit but not
otherwise defined therein shall be defined as set forth in this Agreement.
Gender and Number. Any reference in this Agreement to gender
shall include all genders, and words imparting the singular number only shall
include the plural and vice versa.
Headings. The provision of a Table of Contents, the division of
this Agreement into Articles, Sections and other subdivisions and the insertion
of headings are for convenience of reference only and shall not affect or be
utilized in construing or interpreting this Agreement. All references in this
Agreement to any "Section" are to the corresponding Section of this Agreement
unless otherwise specified.
Herein. The words such as "herein," "hereinafter," "hereof," and
"hereunder" refer to this Agreement as a whole and not merely to a subdivision
in which such words appear unless the context otherwise requires.
Including. The word "including" or any variation thereof means
"including, without limitation" and shall not be construed to limit any general
statement that it follows to the specific or similar items or matters
immediately following it.
(d) The parties hereto have participated jointly in the
negotiation and drafting of this Agreement and, in the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as jointly drafted by the parties hereto and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
provision of this Agreement.
ARTICLE II
PURCHASE AND SALE OF ASSETS;
ASSUMPTION OF LIABILITIES
2.1 Purchase and Sale of Assets. (a) On the terms and subject to
the conditions set forth in this Agreement, (i) at the Initial Closing,
Purchaser shall purchase, acquire and accept from Sellers, and Sellers shall
sell, transfer, assign, convey and deliver to Purchaser, all of Sellers' right,
title and interest in, to and under the Initial Purchased Assets; and (ii) at
the License-Related Asset Purchase Closing, Purchaser shall purchase, acquire
and accept from Sellers, and Sellers shall sell, transfer, assign, convey and
deliver to Purchaser, all of Sellers' right, title and interest in, to and under
the License-Related Purchased Assets.
9
(b) "Initial Purchased Assets" shall mean all of the
assets, properties and rights (whether tangible or intangible, real, personal or
mixed, fixed, contingent or otherwise, and wherever located) of Sellers and
their Subsidiaries, including Sellers' Network, wherever they may be located, as
of the date hereof (other than the Excluded Assets and the Licensed-Related
Purchased Assets), including the following:
(i) all Accounts Receivable of Sellers and Subsidiaries
other than Excluded Assets;
(ii) all inventory of Sellers and Subsidiaries
("Inventory");
(iii) all credits and prepaid expenses or obligations,
including such credits or prepaid expenses pursuant to any agreement with Xxxx
Mobility;
(iv) the Real Property Leases (as hereinafter defined) and
all improvements, fixtures and other appurtenances related thereto, other than
the Excluded Lease;
(v) the Furniture and Equipment of Sellers and
Subsidiaries, other than furniture and fixtures physically located in Corporate
Headquarters set forth on Schedule 2.1(b)(v);
(vi) Purchased Intellectual Property, including without
limitation the name "WebLink Wireless" and all related Marks;
(vii) to the extent assignable, all rights in, to and under
the Purchased Contracts other than the Nonassignable Contracts, and all rights
to receive payment for products and services sold, to the extent payment for
products and services sold prior to the Initial Closing Date has not been
received prior to the Initial Closing (billed and unbilled) and to receive goods
and services purchased pursuant to such Purchased Contracts and to assert claims
and take other actions in respect of breaches or other violations thereof;
(viii) all books, records, files or papers of Sellers and
Subsidiaries, whether in hard copy or computer format that are or have been used
in, held for use in or intended to be used in, the Business (other than those
constituting License-Related Purchased Assets), including but not limited to
documents relating to products, services, marketing, advertising, promotional
materials, Purchased Intellectual Property, personnel files (except with respect
to "protected health information" under HIPAA) for Transferred Employees and all
files, customer files and documents (including credit information), supplier
lists, records, literature and correspondence (other than Sellers' payroll
system and related licenses);
(ix) Sellers' and Subsidiary's rights in, to and under the
Equipment Leases;
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(x) except as provided in Section 2.2(i) hereof, all assets
and any rights under any Employee Benefit Plan, including Sellers' and any
Subsidiary's pension plans, supplemental retirement plans, and any agreement
relating to employee benefits, employment or compensation of Sellers and
Subsidiaries or their respective employees, including the funds held by the
Sellers and Subsidiaries with respect to flexible spending accounts of the
Initial Transferred Employees;
(xi) any security, vendor, utility or other deposits,
including any security deposits given in favor of lessors or licensors of real
property, any rights to receive from such lessors unpaid construction
allowances, reimbursement for prepaid estimated expenses in excess of actual
expenses and other restricted cash or cash due and owing in respect of such
leases owed to Sellers by such lessor prior to the Initial Closing Date (such
amounts, the "Reimbursement"); provided, however, that the foregoing shall not
apply to any deposits or claims with respect to the Excluded Lease or other
Excluded Assets;
(xii) to the extent assignable, all rights, including
without limitation, all deposits and moneys existing on or after the Initial
Closing Date, with respect to the bank accounts (other than bank accounts of
WebLink) listed on Schedule 2.1(b)(xii);
(xiii) all marketing materials and works-in-progress, and
all related prepaid expenses, for use in the Business after the Initial Closing;
(xiv) to the extent assignable all Permits used by Sellers
or their Subsidiaries in the Business including those listed on Schedule
2.1(b)(xiv) and Section 2.2(f), but excluding sales and use tax permits and
qualifications to do business in any state or district;
(xv) all supplies owned by Sellers and their Subsidiaries;
(xvi) to the extent assignable, all rights of Sellers and
their Subsidiaries under non-disclosure or confidentiality, non-compete, or
non-solicitation agreements with employees and agents of Sellers or with third
parties including to the extent assignable, any confidential information of
third parties which is subject to an obligation of confidentiality assumed by
Purchaser;
(xvii) to the extent assignable, all rights of Sellers and
their Subsidiaries under or pursuant to all warranties, representations and
guarantees, made by third parties, including suppliers, manufacturers and
contractors;
(xviii) cash, cash equivalents, bank deposits or similar
cash items other than those covered by Section 2.2(a) hereof;
(xix) except as provided in Section 2.2(i) hereof, any
claims, causes of actions, counterclaims, setoffs or defenses and insurance
coverage Sellers or their Subsidiaries may have with respect to any Assumed
Liabilities;
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(xx) assets of License Subsidiaries other than the FCC
Licenses; and
(xxi) all goodwill and other intangible assets associated
with the Business, including customer and supplier lists and the goodwill
associated with the Purchased Intellectual Property.
(c) "License-Related Purchased Assets" shall mean the
following:
(i) all books, records, files or papers of Sellers and
their Subsidiaries, whether in hard copy or computer format that are used in,
held for use in or intended to be used in, the Business related to FCC Licenses;
(ii) to the extent assignable, Sellers' payroll system and
related licenses, but such assets will not be transferred prior to March 31,
2004;
(iii) all License Subsidiaries Interests or, at the option
of the Purchaser in lieu of such Membership Interests, the FCC Licenses, in
which event such Membership Interests shall be deemed Excluded Assets; and
(iv) except in the circumstance in which the Purchaser
exercises its option pursuant to Section 2.1(c)(ii) hereof to purchase only the
FCC Licenses, minute books, books and records and certificates of License
Subsidiaries.
2.2 Excluded Assets. Nothing herein contained shall be deemed to
sell, transfer, assign or convey the Excluded Assets to Purchaser, and Sellers
shall retain all right, title and interest to, in and under the Excluded Assets.
"Excluded Assets" shall mean each of the following assets of Sellers:
(a) all cash, cash equivalents, bank deposits or similar
cash items of WebLink in an amount equal to $13,500,000 minus $3,865,000, being
the amount of any severance that is payable pursuant to the Severance Agreements
and transaction bonuses listed on Schedule 2.3(a)(viii), provided, however, that
any portion of such amount not paid to such employees, including under the
substitute severance agreements, by April 15, 2004 shall be repaid to Sellers
within five (5) Business Days from such date by wire transfer of immediately
available funds into accounts designated by Sellers;
(b) all shares of Arch Wireless, Inc. common stock owned by
Sellers;
(c) the real estate lease associated with the Corporate
Headquarters (the "Excluded Lease") and the Facility Management Agreement with
Xxxxxx Management Services, Inc. dated December 22, 2000;
(d) any claim, right or interest of Sellers in or to any
refund, rebate, abatement or other recovery for Taxes, together with any
interest due thereon or penalty rebate arising therefrom, whether or not filed
as of the date hereof (i) in respect of any Tax period prior to the Initial
Closing Date, with respect to Taxes related to the Business, and (ii) in respect
of any Tax period, with respect to all Taxes not related to the Business.
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(e) any (i) books and records that Sellers are required by
Law to retain; provided, however, that Purchaser shall have the right to make
copies of any portions of such retained books and records that relate to the
personnel records, the Business or any of the Purchased Assets; (ii) minute
books, stock ledgers and stock certificates of Sellers and the Subsidiaries
other than License Subsidiaries; and (iii) Contracts, books and records
primarily relating to Excluded Assets and Excluded Liabilities;
(f) any claims, causes of action, counterclaims, setoffs or
defenses Sellers may have with respect to any Excluded Liability;
(g) any partnership interest in Company or stock in a
Subsidiary except those set forth in Section 2.1(c)(ii);
(h) all furniture and fixtures physically located in the
Corporate Headquarters as set forth on Schedule 2.1(b)(v); and
(i) (i) the Company 401(k) Plan and (ii) all insurance
policies and all deposits, refunds and return premiums related thereto and to
the Aetna medical self-insurance plan, other than the Employee Benefit Plans and
other than any right of coverage or recovery in connection with pending claims
for wrongful termination by a Seller or any Subsidiary.
2.3 Assumption of Liabilities. (a) On the terms and subject to
the conditions set forth in this Agreement, at the Initial Closing, Purchaser
shall assume, effective as of the Initial Closing Date, the Initial Assumed
Liabilities and shall timely perform and discharge in accordance with their
respective terms, all Initial Assumed Liabilities. "Initial Assumed Liabilities"
shall mean all Liabilities of Sellers under the Purchased Contracts and all
Liabilities of Sellers, (other than the Excluded Liabilities, Subsequent
Transferred Employee Liabilities and License-Related Assumed Liabilities,
including the following Liabilities:
(i) all Liabilities of Sellers under the Purchased
Contracts, including any Liabilities relating to or arising from any
investigations, claims, demands or Legal Proceedings arising from such Purchased
Contracts as a result of the consummation of the transactions contemplated
hereby;
(ii) all Liabilities of Sellers arising out of, relating to
or with respect to (x) the employment or performance of services for Sellers or
any of their Subsidiaries, or termination of employment or the performance of
services by Sellers or any of their Subsidiaries, of any Initial Transferred
Employees on or before the Initial Closing Date, (y) workers' compensation and
other employment-related claims against Sellers or any of their Subsidiaries
that relate to the period ending on the Initial Closing Date, irrespective of
whether such claims are made prior to or after the Initial Closing, and (z) any
Employee Benefit Plan other than, in the cases of each of (x), (y) and (z), any
liabilities related to the Aetna medical self-insurance plan, the Company 401(k)
plan (but not including any employer matching contributions outstanding for any
period for services rendered ending on or prior to the Initial Closing Date) and
equity awards granted to Transferred Employees;
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(iii) all Liabilities of Sellers arising from the sale of
products and services in the Ordinary Course of Business;
(iv) all accounts payable (including, for the avoidance of
doubt, (i) invoiced accounts payable and (ii) accrued but uninvoiced accounts
payable) and accrued expenses of Sellers;
(v) all Liabilities for any Taxes of Sellers or any of
their Affiliates arising out of or relating to the Business or the Purchased
Assets, except for (x) the liability described in Section 2.4(d) hereof, (y) all
Liabilities for or in respect of Income Taxes and (z) all Liabilities in respect
of any Tax to the extent such Liabilities are a return of any refund, rebate,
abatement or other recovery in respect of such Tax, including any interest
thereon and penalty rebate arising therefrom, received by Sellers or any of
their Affiliates pursuant to Section 2.2(d) hereof, whether or not application
for such refund, rebate, abatement or other recovery has been filed as of the
date hereof (the Liabilities in respect of Taxes described in the preceding
clauses (x), (y) and (z), "Excluded Taxes");
(vi) all other Liabilities with respect to the Business,
the Initial Purchased Assets or the Initial Transferred Employees, other than
the License-Related Assumed Liabilities;
(vii) all Liabilities relating to amounts required to be
paid by Purchaser hereunder.
(viii) all Liabilities with respect to the payment of
amounts under the Severance Agreements (including any severance payments
relating to the Company's general severance practices if provided for under such
Severance Agreement) listed on Schedule 2.3(a)(viii) and the transaction bonus
payments listed on Schedule 2.3(a)(viii).
(b) On the terms and subject to the conditions set forth in
this Agreement, on the Subsequent Transfer Date, Purchaser shall assume,
effective as of the Subsequent Transfer Date, the Subsequent Transferred
Employee Liabilities and shall timely perform and discharge in accordance with
their respective terms, all Subsequent Transferred Employee Liabilities.
"Subsequent Transferred Employee Liabilities" shall mean (i) all Liabilities of
Sellers arising out of, relating to or with respect to (x) the employment or
performance of services for Sellers or any of their Subsidiaries, or termination
of employment or the performance of services by Sellers or any of their
Subsidiaries, of any Subsequent Transferred Employees on or before the
Subsequent Transfer Date, (y) workers' compensation and other employment-related
claims against Sellers or any of their Subsidiaries that relate to the period
ending on the Subsequent Transfer Date, irrespective of whether such claims are
made prior to or after the Subsequent Transfer Date, and (z) any Employee
Benefit Plan other than, in the cases of each of (x), (y) and (z), any
liabilities related to the Aetna medical self-insurance plan, the Company 401(k)
plan (but not including any employer matching contributions outstanding (and
which have not been billed as an Expense under the Management Agreement)
relating to any period for services rendered ending on of before the Subsequent
Transfer Date) and equity awards granted to the Subsequent Transferred
Employees; and (ii) all other Liabilities with respect to the Subsequent
Transferred Employees.
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(c) On the terms and subject to the conditions set forth in
this Agreement, at the License-Related Asset Purchase Closing, Purchaser shall
assume, effective as of the License-Related Asset Purchase Closing Date, the
License-Related Assumed Liabilities and shall timely perform and discharge in
accordance with their respective terms, all License-Related Assumed Liabilities.
"License-Related Assumed Liabilities" shall mean all (i) Liabilities with
respect to the Business or the License-Related Purchased Assets, other than the
Initial Assumed Liabilities, Subsequent Transferred Employee Liabilities and the
Excluded Liabilities.
2.4 Excluded Liabilities. Purchaser will not assume or be liable
for any Excluded Liabilities. "Excluded Liabilities" shall mean the following
Liabilities of Sellers or their Affiliates:
(a) the Excluded Lease;
(b) all Long-Term Indebtedness;
(c) all Liabilities relating to or arising out of Excluded
Assets;
(d) the outstanding New York State excise tax liability
relating to an Order Granting Motion to Approve Settlement of Claims with the
New York State Department of Taxation entered on October 22, 2002 in WebLink's
Chapter 11 proceeding under the United States Bankruptcy Code;
(e) any Liabilities of Sellers owing to any Affiliate of
Sellers and Stockholders of WebLink other than Liabilities described in Schedule
2.4(e);
(f) any Liabilities of Sellers to KPMG, Xxxxxxxxx Xxxxx
International and other Person engaged by Sellers for tax consulting services in
connection with such services;
(g) any Liabilities of Sellers incurred or to be incurred
in connection with the negotiation and execution of this Agreement and relating
to amounts required to be paid by Sellers hereunder, including with respect to
the fairness opinion to be delivered to Sellers by Xxxxxx Capital Partners;
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(h) any Liabilities of Sellers or any Affiliates thereof to
their respective security holders or creditors in connection with the execution,
delivery or performance of this Agreement or otherwise;
(i) Liabilities for which Sellers have expressly assumed
responsibility pursuant to this Agreement;
(j) any Liabilities of Sellers or their Subsidiaries for
indemnification, including related reimbursement or advancement of expenses
under such indemnification or other amounts, to any officer, director, employee
or agent of Sellers or their Affiliates; and
(k) any Liabilities of Sellers or any of their Affiliates
for or in respect of any Excluded Taxes.
2.5 Further Conveyances and Assumptions; Consent of Third
Parties.
(a) From time to time following the Initial Closing or the
License-Related Asset Purchase Closing, as applicable, Sellers and Purchaser
shall, and shall cause their respective Affiliates to, execute, acknowledge and
deliver all such further conveyances, notices, assumptions, releases and such
other instruments, and shall take such further actions, as may be reasonably
necessary or appropriate to assure fully to Purchaser and its respective
successors or assigns, all of the properties, rights, titles, interests,
estates, remedies, powers and privileges intended to be conveyed to Purchaser
under this Agreement and the other Transaction Documents and to assure fully to
Sellers and its Affiliates and their successors and assigns, the assumption of
the Liabilities and obligations intended to be assumed by Purchaser under this
Agreement and the other Transaction Documents, and to otherwise make effective
the transactions contemplated hereby and thereby.
(b) Assuming the proper filing of the UCC-3 financing
statements by Purchaser, at the Initial Closing and the License-Related Asset
Purchase Closing, the Initial Purchased Assets or License-Related Purchased
Assets, as applicable, shall be sold, transferred, assigned and conveyed to
Purchaser free and clear of all liens, mortgages, licenses, pledges, security
interests, conditional sales agreements, charges, claims, options, rights of
set-off or recoupment, conditions, easements and restrictions of record and any
other encumbrances of any kind or nature whatsoever (collectively,
"Encumbrances") other than Permitted Encumbrances (which for purposes of this
Section 2.5(b) shall exclude liens securing debt as disclosed in the Financial
Statements).
(c) Purchaser agrees that it shall indemnify the Sellers
and their Affiliates (collectively, "Indemnified Parties" and individually, an
"Indemnified Party") from and against any amounts and expenses, including any
Liabilities relating to or arising from any investigations, claims, demands or
Legal Proceedings ("Losses") relating to, resulting from or arising out of any
claim of any Person alleging that an Indemnified Party is liable or otherwise
responsible for any Assumed Liabilities (a "Claim").
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(d) With respect to Purchased Contracts or Permits that
Purchaser believes are useful for the Business after the Initial Closing Date,
Sellers shall, and shall cause their Affiliates to, use their commercially
reasonable efforts to cooperate with Purchaser at its request following the
Initial Closing Date in endeavoring to obtain consents without any obligation on
the part of Sellers or their respective Affiliates to incur any fees or expenses
in connection therewith.
(e) Without any further action on its behalf or on behalf
of Sellers, Purchaser shall be deemed to have been assigned each Nonassignable
Contract, and any other Purchased Contract that has not yet been assigned,
whether or not assignable, at the earlier of (a) the receipt of third party
consents to the assignment of such Nonassignable Contract, or (b) December 31,
2004, the earlier of such dates, the "Nonassignable Contract Assignment Date".
Nothing in this Agreements shall require Sellers or any of its Affiliates to
incur any out-of-pocket expenses or Liabilities or provide any financial
accommodation or to remain or become secondarily or contingently liable for any
Assumed Liability in order to obtain any such consent except for reasonable
legal fees related to such efforts in connection with the License-Related
Purchased Assets Closing. Purchaser and Sellers shall use their respective
commercially reasonable efforts to obtain, or cause to be obtained, any consent,
substitution, approval or amendment required to novate all Liabilities under any
and all Purchased Contracts or other Liabilities that constitute Assumed
Liabilities or to obtain in writing the unconditional release of Sellers and
their Affiliates so that, in all cases, Purchaser shall be solely responsible
for such Liabilities after the applicable Closing with respect to such Assumed
Liabilities.
(f) The transfer of the FCC Licenses held by the License
Subsidiaries indirectly as a result of the sale of Company's Membership Interest
therein or directly, if so elected by Purchaser, shall be subject to obtaining
FCC Approval prior to such transfer. Control over the License Subsidiaries
and/or their FCC Licenses shall not be conveyed by Company or assumed by
Purchaser until the FCC Approval has been obtained by Final Order.
2.6 Indemnification Procedures.
(a) Procedures for Making Claims. In the event that any
Claim shall be asserted by any Person in respect of which payment may be sought
by an Indemnified Party under Section 2.5(c) hereof, such Indemnified Party
shall promptly provide reasonable written notice to Purchaser stating
specifically the nature and dollar amount of any such Claim to the extent known
at such time. Written notice to Purchaser of the existence of any Claim shall be
given by Sellers within fifteen (15) days after its becoming aware of (i) the
Claim giving rise to a Loss or (ii) the assertion a third party Claim with
respect to which Purchaser is obligated under Section 2.5(c) hereof to provide
indemnification or reimbursement; provided, however, that the failure of Sellers
to give such notice shall not relieve Purchaser of its obligations under Section
2.5(c) hereof, except to the extent that such Purchaser is actually prejudiced
by such failure to give notice.
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(b) Defense of Claims.
(i) The Purchaser, at its own expense and through counsel
chosen by it, may elect to defend against, negotiate, settle or otherwise deal
with any Claim which relates to any Losses; and if it so elects, it shall,
within 30 (thirty) Business Days after receiving notice of Claim (or sooner, if
the nature of such Claim so requires), notify the Indemnified Party of its
intent to do so, and such Indemnified Party shall cooperate fully in the
defense, negotiation or settlement of any such Claim. After notice from the
Purchaser to the Indemnified Parties of its election to defend against,
negotiate, settle or otherwise deal with any such Claim, Purchaser shall not be
liable to the Indemnified Parties under this Agreement for any legal or other
expenses subsequently incurred by the Indemnified Parties in connection with the
defense, negotiation or settlement thereof; provided, however, that all
Indemnified Parties shall have the right to collectively employ one (and only
one) counsel to represent such Indemnified Parties in respect of such Claim
hereunder (which counsel shall be reasonably acceptable to the Purchaser) if, in
the reasonable opinion of counsel to the Indemnified Parties, a conflict of
interest between the Indemnified Parties and the Purchaser may exist in respect
of such Claim that would make such separate representation advisable, and in
that event (x) the reasonable fees and expenses of such separate counsel shall
be paid by the Purchaser and (y) each of the Purchaser and the Indemnified
Parties shall have the right to direct its own defense in respect of such Claim;
provided, further, that the Purchaser shall not be required to pay for more than
one additional counsel (excluding local counsel) for Indemnified Parties in
connection with any Claim hereunder. The parties hereto agree to cooperate fully
with each other in connection with any Claims hereunder. If the Purchaser elects
not to defend against, negotiate, settle or otherwise deal with such Claim, or
fails to notify the Indemnified Parties of its election within thirty (30)
Business Days after request by the Indemnified Parties to assume the defense of
any such Claim, the Indemnified Parties may assume control of the defense of
such Claim at Purchaser's expense. Notwithstanding anything in this Section 2.6
to the contrary, neither the Purchaser nor the Indemnified Parties may, without
the prior written consent of the other party, settle or compromise any such
Claim or permit a default or consent to the entry of any judgment unless the
claimant and such party provide to such other party an unqualified written
release from all liability in respect of such Claim, and such settlement or
compromise does not materially and adversely impair the ability of the
Indemnified Parties to conduct their respective businesses, and does not contain
any admission of wrongdoing on the part of any of the Indemnified Parties.
Notwithstanding the foregoing, if a settlement offer solely for money damages is
made by the applicable third party claimant, and the Purchaser notifies the
Indemnified Parties in writing of the Purchaser's willingness to accept the
settlement offer and pay the amount called for by such offer, and the
Indemnified Parties decline to accept such offer, the Indemnified Parties may
continue to contest such Claim, free of any participation by the Purchaser, and
the amount of any ultimate liability with respect to such Claim that the
Purchaser has an obligation to pay hereunder shall be limited to the lesser of
(A) the amount of the settlement offer that the Indemnified Parties declined to
accept plus the Losses of the Indemnified Parties relating to such Claim through
the date of its rejection of the settlement offer or (B) the aggregate Losses of
the Indemnified Parties with respect to such Claim.
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(ii) After any final decision, judgment or award shall have
been rendered by a Governmental Body of competent jurisdiction and the
expiration of the time in which to appeal therefrom, or a settlement shall have
been consummated, or the Indemnified Parties and the Purchaser shall have
arrived at a mutually binding agreement with respect to a Claim hereunder, the
Indemnified Parties shall forward to the Purchaser notice of any sums due and
owing by the Purchaser pursuant to this Agreement with respect to such matter.
(c) No Consequential Damages. Notwithstanding anything in
this Agreement to the contrary, no party hereto (or any of its Affiliates)
shall, in any event, be liable to any other party hereto (or any of its
Affiliates) for any consequential, incidental, special or punitive damages of
such other party (or its Affiliates) (collectively, an "Excluded Loss"),
including loss of future revenue, income or profits, diminution of value or loss
of business reputation or opportunity relating to any claim or loss hereunder;
provided, that to the extent that any Loss constitutes the payment of any amount
to a third party that is not an Indemnified Person, such Loss shall not be
reduced by the amount thereof that would otherwise constitute an Excluded Loss.
2.7 Bulk Sales Laws. Purchaser hereby waives compliance by
Sellers and the Subsidiaries with the requirements and provisions of any "bulk
transfer" Laws of any jurisdiction that may otherwise be applicable with respect
to the sale of any or all of the Purchased Assets to Purchaser.
2.8 Purchase Price Allocation.
(a) Sellers and Purchaser shall act in good faith to
attempt to agree to the allocation of the purchase price (including the Assumed
Liabilities) among the Purchased Assets. In accordance with such allocation and
upon such agreement, Purchaser shall prepare and deliver to Sellers copies of
Form 8594 and any required exhibits thereto (the "Asset Acquisition Statement").
Purchaser shall prepare and deliver to Sellers from time to time revised copies
of the Asset Acquisition Statement (the "Revised Statements") so as to report
any matters on the Asset Acquisition Statement that need updating (including
purchase price adjustments, if any) consistent with the allocation as agreed
upon or determined in accordance with this Section 2.8. The purchase price for
the Initial Purchased Assets and License-Related Purchased Assets shall be
allocated in accordance with the Asset Acquisition Statement or, if applicable,
the last Revised Statements, provided by Purchaser to Sellers, and all income
Tax Returns and reports filed by Purchaser and Sellers shall be prepared
consistently with such allocation.
(b) If the Sellers and Purchaser fail to agree to such
matters within 60 days (the "Negotiation Period") after the date hereof, the
allocation of the purchase price among the Purchased Assets will be resolved by
submission to an independent accounting firm of national recognition reasonably
acceptable to Sellers and Buyer (the "Accountants"). If the purchase price
allocation is submitted to the Accountants for resolution, (x) each party will
furnish to the Accountants such work papers and other documents and information
relating to the purchase price allocation as the Accountants may request and are
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available to that party (or its independent public accountants), and will be
afforded the opportunity to present to the Accountants any material relating to
the determination and to discuss the determination with the Accountants; (y) the
determination by the Accountants, as set forth in a notice delivered to the
Sellers and Purchaser by the Accountants will be binding and conclusive on the
Sellers and Purchaser; and (z) the fees of the Accountants for such
determination shall be allocated by the Accountant equally between Purchaser and
Sellers.
2.9 Parent Guarantee. Parent hereby guarantees to Sellers (and
their Affiliates) the full payment of any obligation of Purchaser hereunder,
including, but not limited to, all Initial Assumed Liabilities and
License-Related Assumed Liabilities.
ARTICLE III
CONSIDERATION
3.1 Consideration. The aggregate consideration for the Purchased
Assets shall be (i) 500,000 shares of Parent Common Stock and (ii) warrants to
purchase an aggregate of 25,000 shares of Parent Common Stock (the "Warrant
Shares") plus, as of the License-Related Asset Purchase Closing Date, up to
100,000 Warrant Shares (to the extent that the right to purchase such additional
Warrant Shares shall not have vested as of such date pursuant to the Management
and Spectrum Lease Agreement), for an exercise price of $40 per share,
exercisable at any time and from time to time, in whole or in part, before the
third anniversary of the delivery of such warrants by Purchaser to Company, in
the form attached hereto as Exhibit A-1 and Exhibit A-2 (the "Warrants"). The
Parent and Purchaser shall use their best efforts to register for resale the
500,000 shares of Parent Common Stock and those shares to be issued pursuant to
the terms of the Warrants, whether or not such Warrants are delivered pursuant
to this Agreement or the Management and Spectrum Lease Agreement, within 120
days of the Initial Closing pursuant to a Registration Rights Agreement in the
form attached hereto as Exhibit B (the "Registration Rights Agreement").
3.2 Payment of Consideration on the Initial Closing Date. (a) On
the Initial Closing Date, Parent shall deliver 500,000 shares of Parent Common
Stock to Company.
(b) Warrants. On the Initial Closing Date, Parent shall
deliver to Company, Warrants to purchase 25,000 Warrant Shares.
3.3 Payment of Consideration on the License-Related Asset
Purchase Closing Date. On the License-Related Asset Purchase Closing Date, the
Company's right to purchase all remaining Warrant Shares pursuant to the
Warrants shall vest, if not previously vested.
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ARTICLE IV
CLOSING AND DELIVERIES
4.1 Initial Closing. The closing of the sale and purchase of the
Initial Purchased Assets and the assumption of the Initial Assumed Liabilities
(the "Initial Closing") shall take place at the offices of Xxxxxxx Xxxx & Xxxxx
LLP located at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx (or at such other place as
the parties may mutually agree) at 10:00 a.m. (New York City time) on November
18, 2003 ("Initial Closing Date").
4.2 License-Related Asset Purchase Closing. The closing of the
sale and purchase of the License-Related Purchased Assets and the assumption of
the License-Related Assumed Liabilities ("License-Related Asset Purchase
Closing") shall take place at the offices of Xxxxxxx Xxxx & Xxxxx LLP located at
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (or at such other place as the
parties may mutually agree) at 10:00 a.m. (New York City time) on the 5th
Business Day after the conditions listed in Section 8.1 and Section 8.2 have
been satisfied or at such other time as the parties may mutually agree
("License-Related Asset Purchase Closing Date").
4.3 Sellers Closing Documents.
(a) At the Initial Closing, Sellers shall deliver or cause
to be delivered the following:
(i) A certificate of a duly authorized officer of Sellers,
dated the Initial Closing Date, to the effect that (A) the representations and
warranties of Sellers set forth in this Agreement qualified as to materiality or
Material Adverse Effect are true and correct at and as of the Initial Closing
Date, and those not so qualified are true and correct in all material respects
at and as of the Initial Closing Date, except to the extent such representations
and warranties relate to an earlier date (in which case such representations and
warranties qualified as to materiality were true and correct, and those not so
qualified were true and correct in all material respects, on and as of such
earlier date), and (B) Sellers have performed and complied in all material
respects with all obligations and agreements required by this Agreement to be
performed or complied with by it on or prior to the Initial Closing Date;
(ii) A duly executed xxxx of sale in the form of Exhibit C
hereto;
(iii) A duly executed Assignment and Assumption Agreement
in the form of Exhibit D hereto;
(iv) A duly executed Management and Spectrum Lease
Agreement in the form of Exhibit E hereto;
(v) A duly executed Registration Rights Agreement in the
form of Exhibit B hereto; and
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(vi) A duly executed Indemnification Agreement in the form
of Exhibit F hereto.
(b) At the License-Related Asset Purchase Closing, Sellers
shall deliver or cause to be delivered the following:
(i) A duly executed xxxx of sale in the form of Exhibit C
hereto;
(ii) A duly executed Assignment and Assumption Agreement in
the form of Exhibit D hereto; and
(iii) Except in the event Purchaser has elected to purchase
the FCC Licenses in lieu of the License Subsidiary Interests, evidence of all
consents required in connection with the assignment of the License Subsidiary
Interests. Sellers and Purchaser shall execute and deliver such certificates,
bills of sale and other documents as the other may reasonably request to
consummate the transfer from Sellers to Purchaser of the License Subsidiary
Interests.
4.4 Purchaser Closing Documents.
(a) At the Initial Closing, Purchaser shall deliver or
cause to be delivered to Sellers (unless otherwise indicated) the following:
(i) A certificate of a duly authorized officer of
Purchaser, dated the Initial Closing Date, to the effect that (A) the
representations and warranties of Purchaser set forth in this Agreement
qualified as to materiality or Material Adverse Effect are true and correct at
and as of the Initial Closing Date, and those not so qualified are true and
correct in all material respects at and as of the Initial Closing Date, except
to the extent such representations and warranties relate to an earlier date (in
which case such representations and warranties qualified as to materiality were
true and correct, and those not so qualified were true and correct in all
material respects, on and as of such earlier date), and (B) Purchaser has
performed and complied in all material respects with all obligations and
agreements required by this Agreement to be performed or complied with by it on
or prior to the Initial Closing Date;
(ii) A duly executed Assignment and Assumption Agreement
with respect to the Initial Assumed Liabilities;
(iii) A duly executed Management and Spectrum Lease
Agreement;
(iv) A duly executed Registration Rights Agreement;
(v) Duly executed Warrants to purchase 125,000 Warrant
Shares in the form of Exhibits A-1 and A-2 hereto; and
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(vi) Stock certificates representing 500,000 shares of
Parent Common Stock, duly endorsed in blank or accompanied by stock transfer
powers and with all requisite legends and stock transfer tax stamps attached.
(b) At the License-Related Asset Purchase Closing, Purchaser
delivered or caused to be delivered to Sellers a certificate of a duly
authorized officer of Purchaser, dated as of the License-Related Asset Closing
Date, to the effect that all of the rights under the Warrants to purchase all
remaining Warrant Shares have vested upon such License-Related Asset Purchase
Closing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby represent and warrant to Purchaser that:
5.1 Organization and Good Standing.
(a) Each Seller is duly organized, validly existing and in
good standing under the laws of its formation and has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now conducted. Each Seller is duly qualified or authorized to do business and
is in good standing under the laws of each jurisdiction in which the conduct of
its business or the ownership of its properties requires such qualification or
authorization, except where the failure to be so qualified, authorized or in
good standing would not have a Material Adverse Effect.
(b) Schedule 5.1(b) hereto sets forth a true and complete
list of all Subsidiaries, together with the jurisdiction of incorporation or
organization of each Subsidiary. Each such Subsidiary is duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its
incorporation or organization and has all requisite power and authority to own,
lease and operate its properties and to carry on its business as now conducted.
Each Subsidiary is duly qualified or authorized to do business and is in good
standing under the laws of each jurisdiction in which the conduct of its
business or the ownership of its properties requires such qualification or
authorization, except where the failure to be so qualified, authorized or in
good standing would not be reasonably expected to have a Material Adverse
Effect. Complete and correct copies of the Certificate of Incorporation, Bylaws
or similar organizational documents of each Subsidiary have been made available
to Purchaser.
5.2 Authorization of Agreement. Each Seller has all requisite
corporate or entity power and authority to execute and deliver this Agreement ,
the Transaction Documents to which such Seller is a signatory and each other
agreement, document, instrument or certificate contemplated by this Agreement or
to be executed by such Seller in connection with the consummation of the
transactions contemplated hereby and thereby (the "Documents"), and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by each Seller of this Agreement and each Document to
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which it is a party and the consummation of the transactions contemplated hereby
and thereby have been duly authorized by all requisite corporate or entity
action on behalf of such Seller and no other corporate or entity proceedings on
the part of either Seller or its general partner or manager, as applicable, is
necessary. This Agreement has been, and each of the Documents will be at or
prior to delivery thereof on the Initial Closing Date or License-Related Asset
Purchase Closing Date, as applicable, duly and validly executed and delivered by
each Seller party thereto and (assuming the due authorization, execution and
delivery by the other parties hereto and thereto) this Agreement constitutes,
and each of the Documents when so executed and delivered will constitute, the
legal, valid and binding obligation of each Seller party thereto, enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
5.3 Conflicts; Governmental Consents.
(a) Except as set forth on Schedule 5.3(a) hereto, none of
the execution and delivery by each Seller of this Agreement or the Documents to
which it is a party, the consummation of the transactions contemplated hereby or
thereby, or compliance by each Seller with any of the provisions hereof or
thereof will conflict with, or result in any violation of or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination or cancellation under, any provision of (i) the By-laws or
Certificate of Incorporation of WebLink, or the certificate of limited
partnership and partnership agreement of Company, or comparable organizational
documents of any Subsidiary; (ii) any Permit to which either Seller or any
Subsidiary is a party or by which any of the properties or assets of either
Seller or any other Subsidiary is bound; (iii) any Order of any Governmental
Body applicable to either Seller or any Subsidiary or by which any of the
properties or assets of each or any Subsidiary is bound; or (iv) any applicable
Law, other than, in the case of clauses (ii), (iii) and (iv), such conflicts,
violations, defaults, terminations or cancellations, that would not in the
aggregate have a Material Adverse Effect.
(b) Except as set forth on Schedule 5.3(b), no consent,
waiver, approval, Order, Permit or authorization of, or declaration or filing
with, or notification to, any Governmental Body is required on the part of a
Seller or any Subsidiary in connection with the execution and delivery of this
Agreement or the Documents to which it is a party or the compliance by either
Seller with any of the provisions hereof or thereof, or the consummation of the
transactions contemplated hereby or thereby, except (A) obtaining FCC Approval,
and (B) for such consents, waivers, approvals, Orders, Permits or authorizations
the failure of which to obtain would not in the aggregate be reasonably expected
to have a Material Adverse Effect.
5.4 Financial Statements. The Sellers have delivered to Purchaser
copies of (i) the audited consolidated balance sheet of WebLink and its
subsidiaries as at December 31, 2002 and the related audited consolidated
statements of income and of cash flows of WebLink and its subsidiaries for the
2002 periods and (ii) the unaudited consolidated balance sheet of WebLink and
24
its subsidiaries as at September 30, 2003 and the related unaudited consolidated
statements of income and cash flows of WebLink and its subsidiaries (without
related notes and schedules) for the 2003 periods (such audited and unaudited
statements, including the related notes and schedules to such audited
statements, are referred to herein as the "Financial Statements"), copies of
which are attached hereto as Schedule 5.4. Except (i) as set forth in the notes
thereto, if any, and (ii) as disclosed in Schedule 5.4 hereto, each of the
Financial Statements has been prepared in accordance with GAAP consistently
applied and presents fairly in all material respects the consolidated financial
position, results of operations and cash flows of WebLink and its subsidiaries
as at the dates and for the periods indicated therein.
For the purposes hereof, the unaudited consolidated balance sheet
of WebLink and its subsidiaries as at September 30, 2003 is referred to as the
"Balance Sheet" and September 30, 2003 is referred to as the "Balance Sheet
Date".
5.5 No Undisclosed Liabilities. (a) Except as set forth on
Schedule 5.5, neither Seller nor any Subsidiary has any Liabilities of any kind
that would have been required to be reflected or reserved against or otherwise
described on the Balance Sheet prepared in accordance with GAAP, except
liabilities (i) as and to the extent set forth on the unaudited balance sheet of
WebLink and the Subsidiaries as of September 30, 2003, (ii) incurred after the
Balance Sheet Date in the Ordinary Course of Business consistent with past
practice, as have not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect and (iii) incurred
after the Balance Sheet Date not in the Ordinary Course of Business that are in
the aggregate, immaterial in amount.
5.6 Absence of Certain Developments. Except as contemplated by
this Agreement or as set forth on Schedule 5.6 hereto, since the Balance Sheet
Date (i) Sellers and the Subsidiaries have conducted the Business only in the
Ordinary Course of Business and (ii) there has not been any event, change,
occurrence, circumstance or development that has had or would reasonably be
expected to have a Material Adverse Effect.
5.7 Real Property. No Seller nor any Subsidiaries has any fee
interest in real property. Schedule 5.7 hereto sets forth a true, correct and
complete list of all leases of real property by a Seller or a Subsidiary
involving annual payments in excess of $50,000, other than the Excluded Lease
(individually, a "Real Property Lease" and collectively, the "Real Property
Leases"). To the Knowledge of Sellers, neither Seller nor any Subsidiary has
received any written notice of any default or event that with notice or lapse of
time, or both, would constitute a default by Seller or any Subsidiary under any
material Real Property Lease.
5.8 Tangible Personal Property. Schedule 5.8 sets forth all
leases of personal property by Sellers or a Subsidiary (other than leases of
pagers where a Seller or a Subsidiary is a lessor) ("Personal Property Leases")
involving annual payments in excess of $50,000. To the Knowledge of Sellers, no
Seller nor any Subsidiary has received any written notice of any default or any
event that with notice or lapse of time, or both, would constitute a default by
any Seller or any Subsidiary under any of the Personal Property Leases.
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5.9 Intellectual Property. Except as set forth on Schedule 5.9,
Sellers and the Subsidiaries own or have valid licenses to use all material
Purchased Intellectual Property used by them in the Ordinary Course of Business,
except to the extent the failure to be the owner or the valid licensee would not
have a Material Adverse Effect. Except as set forth on Schedule 5.9, to the
Knowledge of Sellers, (i) the material Purchased Intellectual Property used by
Sellers and the Subsidiaries are not the subject of any challenge received by
Sellers or any of the Subsidiaries in writing and (ii) neither Seller nor any
Subsidiary has received any written notice of any default or any event that with
notice or lapse of time, or both, would constitute a default under any material
Purchaser Intellectual Property license to which a Seller or any Subsidiary is a
party or by which it is bound.
5.10 Material Contracts.
(a) Schedule 5.10 sets forth all of the following Contracts
to which a Seller or any of the Subsidiaries is a party or by which it is bound
(collectively, the "Material Contracts"):
(i) Contracts with any current officer or director of
either Seller or any of the Subsidiaries;
(ii) Contracts with any labor union or association
representing any employee of either Seller or any of the Subsidiaries;
(iii) Contracts for the pending sale of any of the assets
of either Seller or any of the Subsidiaries other than in the Ordinary Course of
Business, for consideration in excess of $15,000;
(iv) Contracts relating to any pending acquisitions by
either Seller or any of the Subsidiaries of any operating business or the
capital stock of any other Person;
(v) Contracts relating to the incurrence of Indebtedness
other than the Long-Term Indebtedness, or the making of any loans, in each case
involving amounts in excess of $10,000, other than equipment leases in the
Ordinary Course of Business; and
(vi) any other Contract which involves the future
expenditure of more than $100,000 or annual revenues of more than $500,000.
(b) Except as set forth on Schedule 5.10, neither Seller
nor any Subsidiary has received any written notice of any default or event that
with notice or lapse of time, or both, would constitute a default by a Seller
and the Subsidiaries under any Material Contract, except for defaults that would
not have a Material Adverse Effect.
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5.11 Employee Benefits Plans.
(a) Schedule 5.11(a) lists "employee benefit plans", as
defined in Section 3(3) of ERISA, and all other material employee benefit
arrangements or payroll practices, including, without limitation, bonus plans,
consulting or other compensation agreements, incentive, equity or equity-based
compensation, or deferred compensation arrangements, stock purchase, severance
pay and practices, sick leave, vacation pay, salary continuation, disability,
hospitalization, medical insurance, life insurance and scholarship programs
maintained by Sellers and the Subsidiaries or to which Sellers and the
Subsidiaries contributed or are obligated to contribute thereunder for current
or former employees of Sellers and the Subsidiaries (the "Employee Benefit
Plans"). Neither the Seller or any of the Subsidiaries has, at any time within
the last six years, maintained, contributed to, or had any obligation to
contribute to, or has any liability (fixed or contingent) with respect to, any
plan subject to Title IV of ERISA or to the funding requirements of Section 412
of the Code including any plan which constituted a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA or any plan subject to Sections 4063 or
4064 of ERISA ("multiple employer plan").
(b) True, correct and complete copies of the following
documents, with respect to each of the Employee Benefit Plans (as applicable),
have been made available to Purchaser: (A) any plans and related trust
documents, and all amendments thereto, (B) the most recent Forms 5500 for the
past three (3) years and schedules thereto, (C) the most recent financial
statements and actuarial valuations for the past three (3) years, (D) the most
recent IRS determination letter, (E) the most recent summary plan descriptions
(including letters or other documents updating such descriptions) and (F)
written descriptions of all non-written agreements relating to the Employee
Benefit Plans.
(c) Each of the Employee Benefit Plans intended to qualify
under Section 401 of the Code ("Qualified Plans") has been determined by the IRS
to be so qualified, and, except as disclosed on Schedule 5.11(c), to the
Knowledge of Sellers, nothing has occurred with respect to the operation of any
such plan which could reasonably be expected to result in the revocation of such
favorable determination.
(d) All contributions and premiums required by law or by
the terms of any Employee Benefit Plan or any agreement relating thereto have
been timely made (taking into account any waivers granted with respect thereto)
to any funds or trusts established thereunder or in connection therewith in all
material respects.
(e) None of the Employee Benefit Plans which are "welfare
benefit plans" within the meaning of Section 3(1) of ERISA provide for
continuing benefits or coverage for any participant or any beneficiary of a
participant post-termination of employment except as may be required under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA").
(f) Each of the Employee Benefit Plans has been maintained,
in all material respects, in accordance with its terms and all provisions of
applicable Law.
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(g) Except as set forth on Schedule 2.3(a)(viii) and
Schedule 5.11(g) hereto, neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will (i) result in
any payment becoming due to any employee (including severance or transaction
bonuses) of a Seller or any of the Subsidiaries; (ii) increase any benefits
otherwise payable under any Employee Benefit Plan; or (iii) result in the
acceleration of the time of payment or vesting of any such benefits.
(h) Neither the Seller nor any of the Subsidiaries has
incurred or will incur any actual or contingent liability with respect to any
plan subject to Title IV of ERISA, including any withdrawal liability, or be
required to make any contributions to a multiemployer plan, as a result of any
of them being members of a "controlled group" of corporations, or treated as a
single employer with, Seller within the meaning of Section 414(b), 414(c),
414(m) or 414(n) of the Code arising from or incurred with respect to any period
prior to the Initial Closing Date.
5.12 Labor.
(a) Neither Seller nor any of the Subsidiaries is a party
to any labor or collective bargaining agreement.
(b) Except as set forth on Schedule 5.12(b), there are no
(i) strikes, work stoppages, work slowdowns or lockouts pending or, to the
Knowledge of Sellers, threatened against or involving a Seller or any of the
Subsidiaries, or (ii) unfair labor practice charges, grievances or complaints
pending or, to the Knowledge of Sellers, threatened by or on behalf of any
employee or group of employees of Sellers or any of the Subsidiaries, except in
each case as would not have a Material Adverse Effect.
5.13 Litigation. Except as set forth on Schedule 5.13, there are
no (i) Legal Proceedings pending or, to the Knowledge of Sellers, threatened,
and (ii) to the Knowledge of Sellers, investigations, charges, claims or demands
pending or threatened, against Sellers or the Subsidiaries before any
Governmental Body, which, in case of each of (i) and (ii), if adversely
determined, would reasonably be expected to have a Material Adverse Effect.
There are no (i) Legal Proceedings pending or, to the Knowledge of Sellers,
threatened, and (ii) to the Knowledge of Sellers, investigations, charges,
claims or demands pending or threatened, that, in case of each of (i) and (ii),
are reasonably likely to prohibit or restrain the ability of a Seller to enter
into this Agreement or consummate the transactions contemplated hereby.
28
5.14 Compliance with Laws; Permits.
(a) Sellers and the Subsidiaries are in compliance with all
Laws of any Governmental Body applicable to the Business, except where the
failure to be in compliance would not have a Material Adverse Effect. Neither
Seller nor any Subsidiary has received any written notice of or been charged
with the violation of any Laws, except where such violation would not have a
Material Adverse Effect.
(b) Sellers and the Subsidiaries currently have all Permits
which are required for the operation of the Business, except where the absence
of which would not have a Material Adverse Effect. Neither Seller nor any of the
Subsidiaries is in default or violation (and no event has occurred which, with
notice or the lapse of time or both, would constitute a default or violation) of
any term, condition or provision of any Permit to which it is a party, except
where such default or violation would not have a Material Adverse Effect.
5.15 Financial Advisors. Except for Xxxxxx Capital Partners, no
Person has acted, directly or indirectly, as a broker, finder or financial
advisor for Sellers in connection with the transactions contemplated by this
Agreement and no Person is entitled to any fee or commission or like payment
from Purchaser in respect thereof.
5.16 Taxes.
(a) Except as set forth on Schedule 5.16, and except for
matters that would not have a Material Adverse Effect, (i) Sellers have timely
filed all Tax Returns required to be filed with the appropriate Tax authorities
in all jurisdictions in which such Tax Returns are required to be filed (taking
into account any extension of time to file granted or to be obtained on behalf
of Sellers); and (ii) all Taxes shown to be payable on such Tax Returns have
been paid.
(b) Neither Seller is a Foreign Person within the meaning
of Section 1445 of the Code.
5.17 Employees on Leave. As of the date hereof, Sellers do not
have more than twenty (20) employees who would constitute Initial Transferred
Employees on an approved leave of absence.
5.18 Title to Purchased Assets and Related Matters. Except for
Permitted Encumbrances, the Sellers own good and transferable title to all
Purchased Assets free and clear of all Encumbrances.
5.19 Ownership of Membership Interest. The Company owns the
Membership Interests, free and clear of any Encumbrances other than Permitted
Encumbrances, and has the right, power and authority to sell and transfer the
Membership Interests to Purchaser in the manner provided herein. Assuming the
proper filing of the UCC-3 financing statements by Purchaser, the transfer and
delivery of the Membership Interests as contemplated by this Agreement will
transfer good and marketable title to the Membership Interests, free and clear
of any Encumbrances. The Membership Interests are not subject to any voting
trust or voting or similar agreement, nor is any proxy in effect with respect
thereto.
29
5.20 No Other Representations or Warranties; Schedules. Except
for the representations and warranties contained in this Article V (as modified
by the Schedules hereto), neither Seller nor any other Person makes any other
express or implied representation or warranty with respect to Sellers, the
Subsidiaries, the Business, the Purchased Assets and the Assumed Liabilities, or
the transactions contemplated by this Agreement, and Sellers disclaim any other
representations or warranties, whether made by a Seller, any Affiliate of
Sellers or any of their respective officers, directors, employees, agents or
representatives. Except for the representations and warranties contained in this
Article V (as modified by the Schedules hereto), Sellers (i) expressly disclaim
and negate any representation or warranty, expressed or implied, at common law,
by statute, or otherwise, relating to the condition of the Purchased Assets
(including any implied or expressed warranty of merchantability or fitness for a
particular purpose, or of conformity to models or samples of materials) and (ii)
hereby disclaim all liability and responsibility for any representation,
warranty, projection, forecast, statement, or information made, communicated, or
furnished (orally or in writing) to Purchaser or its Affiliates or
representatives (including any opinion, information, projection, or advice that
may have been or may be provided to Purchaser by any director, officer,
employee, agent, consultant, or representative of Sellers or any of its
Affiliates). Sellers make no representations or warranties to Purchaser
regarding the probable success or profitability of the Business. The disclosure
of any matter or item in any schedule hereto shall not be deemed to constitute
an acknowledgment that any such matter is required to be disclosed.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Parent and Purchaser jointly and severally hereby represent and
warrant to Company that:
6.1 Organization and Good Standing. Each of Parent and Purchaser
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now conducted.
Each of Parent and Purchaser is duly qualified or authorized to
do business as a foreign corporation and is in good standing under the laws of
each jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification or authorization, except where the
failure to be so qualified, authorized or in good standing would not have a
Purchaser Material Adverse Effect.
6.2 Authorization of Agreement. Each of Parent and Purchaser has
all requisite corporate power and authority to execute and deliver this
Agreement, the Transaction Documents to which either the Parent or Purchaser is
a signatory and each other agreement, document, instrument or certificate
contemplated by this Agreement or to be executed by each of Parent and Purchaser
30
in connection with the consummation of the transactions contemplated hereby and
thereby (the "Purchaser Documents"), and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by each
of Parent and each of Parent and Purchaser of this Agreement and each Purchaser
Document and the consummation of the transactions contemplated and hereby and
thereby have been duly authorized by all requisite corporate action on behalf of
each of Parent and Purchaser. This Agreement has been, and each of the Purchaser
Documents will be at or prior to the time of delivery thereof to Sellers, duly
and validly executed and delivered by each of Parent and Purchaser and (assuming
the due authorization, execution and delivery by the other parties hereto and
thereto) this Agreement constitutes, and each Purchaser Document when so
executed and delivered will constitute, the legal, valid and binding obligation
of each of Parent and Purchaser, enforceable against each of Parent and
Purchaser in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
6.3 Conflicts; Governmental Consents.
(a) Except as set forth on Schedule 6.3(a) hereto, none of
the execution and delivery by each of Parent and Purchaser of this Agreement or
the Purchaser Documents, the consummation of the transactions contemplated
hereby or thereby, or compliance by each of Parent and Purchaser with any of the
provisions hereof or thereof will conflict with, or result in any violation of
or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination or cancellation under, any provision of (i) the
certificate of incorporation and by-laws of either Parent or Purchaser; (ii) any
Contract or Permit to which either Parent or Purchaser is a party or by which
any of the properties or assets of either Parent or Purchaser are bound; (iii)
any Order of any Governmental Body applicable to either Parent or Purchaser or
by which any of the properties or assets of either Parent or Purchaser are
bound; or (iv) any applicable Law other than, in the case of clauses (ii), (iii)
and (iv), such conflicts, violations, defaults, terminations or cancellations,
that would not have a Purchaser Material Adverse Effect.
(b) Except as set forth on Schedule 6.3(b), no consent,
waiver, approval, Order, Permit or authorization of, or declaration or filing
with, or notification to, Governmental Body is required on the part of either
Parent or Purchaser in connection with the execution and delivery of this
Agreement or the Purchaser Documents or the compliance by either Parent or
Purchaser with any of the provisions hereof or thereof or the consummation of
the transactions contemplated hereby or thereby, except for (A)(i) obtaining FCC
Approval and (ii) any filings contemplated by the Registration Rights Agreement;
and (B) for such consents, waivers, approvals, Orders, Permits or authorizations
the failure of which to obtain would not have a Purchaser Material Adverse
Effect.
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6.4 SEC Documents; Undisclosed Liabilities.
(a) Parent has filed all required reports, schedules, forms
and registration, proxy and other statements with the SEC since January 1, 2000
(collectively, and in each case including all exhibits and schedules thereto and
documents incorporated by reference therein, the "SEC Documents"). None of
Parent's subsidiaries are required to file periodic reports with the SEC
pursuant to the Exchange Act. As of their respective effective dates (in the
case of SEC Documents that are registration statements filed pursuant to the
Securities Act) and as of their respective SEC filing dates (in the case of all
other SEC Documents), the SEC Documents complied in all material respects with
the requirements of the Exchange Act and the Securities Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder applicable to
such SEC Documents, and none of the SEC Documents as of such respective dates
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent that information contained in any SEC Document
has been revised or superseded by a later-filed SEC Document, none of the SEC
Documents contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial statements of Parent included in the
SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP (except, in the case
of unaudited quarterly statements, as indicated in the notes thereto) applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present in all material respects the consolidated
financial position of Parent and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited quarterly statements, to
normal year-end audit adjustments none of which has been or will be,
individually or in the aggregate, material).
(b) Parent is in compliance in all material respects with
the provisions of Section 13(b) of the Exchange Act.
(c) Except as set forth in the SEC Documents filed prior to
the date hereof or on Schedule 6.4(c) hereto, or for events (or series of
related matters) as to which the amounts involved do not exceed $60,000, since
the filing of Parent's proxy statement dated August 7, 2003, no event has
occurred that would be required to be reported as a "Certain Relationship or
Related Transaction" pursuant to Item 404 of Regulation S-K promulgated by the
SEC. Neither Parent nor any of its subsidiaries nor, to the Knowledge of
Purchaser, any director, officer, agent, employee or other Person acting on
behalf of Parent or any of its subsidiaries, has, in any material respect, (i)
used any corporate or other funds for unlawful contributions, payments, gifts,
or entertainment, or made any unlawful expenditures relating to political
activity to government officials or others or established or maintained any
unlawful or unrecorded funds in violation of Section 30A of the Exchange Act or
(ii) accepted or received any unlawful contributions, payments, gifts or
expenditures.
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(d) To the Knowledge of Purchaser, neither Parent nor any of
its subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) whether or not required, if known,
to be reflected or reserved against on a consolidated balance sheet of Parent
prepared in accordance with GAAP or the notes thereto, except liabilities (i) as
and to the extent set forth on the unaudited balance sheet of Parent and its
subsidiaries as of September 30, 2003 (including the notes thereto) included in
Parent's Report on Form 10-Q for the period then ended, (ii) incurred after the
Balance Sheet Date in the Parent Ordinary Course of Business consistent with
past practice, as have not had and would not reasonably be expected to have,
individually or in the aggregate, a Purchaser Material Adverse Effect, and (iii)
incurred after the Balance Sheet Date not in the ordinary course that are in the
aggregate, immaterial in amount.
6.5 Capitalization.
(a) The authorized capital stock of Parent consists of
16,000,000 shares, divided into (i) 8,500,000 shares of Parent Series A
Preferred Stock ("Parent Preferred Stock"), $0.01 par value per share, of which,
as of September 30, 2003, 4,196,187 shares were issued and outstanding, and (ii)
7,500,000 shares of Parent Common Stock, par value $0.01 per share ("Parent
Common Stock"), of which, as of September 30, 2003, 4,961,160 shares were issued
and outstanding. All of the outstanding shares of capital stock of Parent have
been validly issued and are fully paid and nonassessable. As of September 24,
2003, 410,000 shares of Parent Common Stock were reserved for issuance and
410,000 were issuable upon the exercise of outstanding options and warrants;
38,840 shares of Parent Common Stock and 6,170 shares of the Parent Preferred
Stock were reserved for issuance to satisfy certain unpaid claims in connection
with Parent's emergence from Chapter 11 proceeding on October 8, 2002. Holders
of Parent Preferred Stock currently have 95% of the voting power of Purchaser.
(b) Except as set forth above and on Schedule 6.5(b), there
are outstanding (i) no shares or other voting securities of Parent, (ii) no
securities of Parent or any of its subsidiaries convertible into or exchangeable
or exercisable for shares of other securities of Parent, (iii) no options,
preemptive or other rights to acquire from Parent or any of its subsidiaries,
and no obligations of Parent or any of its subsidiaries to issue, any shares,
voting securities or securities convertible into or exchangeable or exercisable
for shares or other securities of Parent and (iv) no equity equivalent interests
in the ownership or earnings of Parent or its subsidiaries or other similar
rights (collectively "Parent Securities"). As of the date hereof, there are no
outstanding rights or obligations of Parent or any of its subsidiaries to
repurchase, redeem or otherwise acquire any Parent Securities. Except as set
forth on Schedule 6.5(b) hereto, here are no voting agreements, voting trusts or
other agreements or understandings to which Parent is a party or by which it is
bound relating to the voting or registration of any shares of capital stock of
Parent.
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(c) The shares of Parent Common Stock to be issued to
Sellers pursuant to this Agreement, upon delivery to Sellers of share
certificates therefor, will be (i) validly issued, fully paid and nonassessable,
(ii) free and clear of all Liens, and (iii) issued in compliance with all
applicable U.S. federal and state securities laws.
(d) Immediately upon giving effect to the transactions
contemplated by this Agreement, including the issuance and sale of shares of
Parent Common Stock and the issuance of the Warrants, 125,000 shares of Parent
Common Stock shall be reserved for issuance upon the exercise of the Warrants.
Such shares, when issued upon the exercise of the Warrants in accordance with
the terms of the Warrants, will be (i) validly issued, fully paid and
nonassessable, (ii) free and clear of all Liens, and (iii) issued in compliance
with all applicable U.S. federal and state securities laws.
(e) Parent Common Stock and Parent Preferred Stock
constitute the only classes of equity securities of Parent or its subsidiaries
registered or required to be registered under the Exchange Act.
6.6 Absence of Certain Developments.
(a) Except as contemplated by this Agreement or as set forth
on Schedule 6.6 hereto, since the Balance Sheet Date (i) each of Parent and
Purchaser has conducted its business only in the Parent Ordinary Course of
Business or Purchaser Ordinary Course of Business, as applicable, and (ii) there
has not been any event, change, occurrence or circumstance that has had a Parent
Material Adverse Effect.
6.7 Taxes.
(a) Except as set forth on Schedule 6.7 hereto, and except
for matters that would not have a Purchaser Material Adverse Effect, (i) each of
Parent and Purchaser has timely filed all Tax Returns required to be filed with
the appropriate Tax authorities in all jurisdictions in which such Tax Returns
are required to be filed (taking into account any extension of time to file
granted or to be obtained on behalf of each of Parent and Purchaser); and (ii)
all Taxes shown to be payable on such Tax Returns have been paid.
(b) Purchaser is not a Foreign Person within the meaning of
Section 1445 of the Code.
6.8 Litigation. Except as set forth on Schedule 6.8 hereto, there
are no Legal Proceedings pending or, to the Knowledge of Purchaser, threatened
against Purchaser or any of its subsidiaries before any Governmental Body,
which, if adversely determined, would have a Parent Material Adverse Effect.
There are no Legal Proceedings pending or, to the Knowledge of Purchaser,
threatened that are reasonably likely to prohibit or restrain the ability of
Purchaser to enter into this Agreement or consummate the transactions
contemplated hereby. There are no Legal Proceedings pending or, to the Knowledge
of Purchaser, threatened that are reasonably likely to prohibit or restrain the
ability of Purchaser to enter into this Agreement or consummate the transactions
contemplated hereby.
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6.9 Financial Advisors. Except as set forth on Schedule 6.9
hereto, no Person has acted, directly or indirectly, as a broker, finder or
financial advisor for Purchaser in connection with the transactions contemplated
by this Agreement and no Person is entitled to any fee or commission or like
payment from Company in respect thereof.
6.10 Condition of the Business. Notwithstanding anything
contained in this Agreement to the contrary, Purchaser acknowledges and agrees
that Sellers are not making any representations or warranties whatsoever,
express or implied, beyond those expressly given by Sellers in Article V hereof
(as modified by the Schedules hereto), and Purchaser acknowledges and agrees
that the Purchased Assets and the Business are being transferred on a "where is"
and, as to condition, "as is" basis. Purchaser further represents that neither
it nor any of its Affiliates nor any other Person has made any representation or
warranty, express or implied, as to the accuracy or completeness of any
information regarding or any of the Subsidiaries, the Business or the
transactions contemplated by this Agreement not expressly set forth in this
Agreement, and none of Sellers, any of its Affiliates or any other Person will
have or be subject to any liability to Purchaser or any other Person resulting
from the distribution to Purchaser or its representatives or Purchaser's use of,
any such information, including any confidential memoranda distributed on behalf
of Sellers relating to the Business or other publications or data room
information provided to Purchaser or its representatives, or any other document
or information in any form provided to Purchaser or its representatives in
connection with the sale of the Business and the transactions contemplated
hereby. Purchaser acknowledges that it has conducted to its satisfaction, its
own independent investigation of the Business and, in making the determination
to proceed with the transactions contemplated by this Agreement, Purchaser has
relied on the results of its own independent investigation. The disclosure of
any matter or item in any schedule hereto shall not be deemed to constitute an
acknowledgment that any such matter is required to be disclosed.
6.11 Elimination of Transfer Restrictions. Parent represents,
warrants and covenants that (i) Parent has consented to the elimination of any
transfer restrictions otherwise applicable to the Registrable Securities (as
defined in the Registration Rights Agreement), including pursuant to the
Parent's Amended and Restated Certificate of Incorporation; provided, that the
foregoing shall not apply to the restriction on foreign ownership of Parent's
securities set forth in Section 4.5 of the Parent's Amended and Restated
Certificate of Incorporation, and (ii) subject to any restrictions on sale or
transfer imposed by law, the Registrable Securities are freely transferable by
the Holder (as defined in the Registration Rights Agreement) or any other
Investor (as defined in the Registration Rights Agreement).
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ARTICLE VII
POST-CLOSING COVENANTS
7.1 Access to Information. (a) From and after the Initial
Closing, each of Parent and Purchaser will make or cause to be made available to
the Sellers and their agents and employees all business records and files
(except for those business records and files the provision of which is
prohibited by Law) during regular business hours as may be reasonably necessary
for (A) preparing or reviewing tax returns and financial statements and
responding to tax audits covering operations and transactions at or prior to
such Closing, (B) investigating, settling, preparing for the defense or
prosecution of, defending or prosecuting any action, (C) preparing reports to
stockholders and Governmental Bodies or (D) such other purposes for which access
to such documents is reasonably necessary.
(b) From and after the Initial Closing each of Parent and
Purchaser shall provide to Sellers for three (3) years after the date hereof
access at reasonable times and upon reasonable notice to financial and
accounting systems purchased hereunder to the extent that such access is
reasonably required by Sellers and the other services listed on Schedule 7.1(b)
hereto.
7.2 Preservation of Records. Each of Parent and Purchaser agrees
that it shall preserve and keep the records held by it relating to the Business
for a period of six years from the Initial Closing Date. In the event each of
Parent and Purchaser wishes to destroy such records after that time, Purchaser
shall first give ninety (90) days prior written notice to Company and shall have
the right at its option and expense, upon prior written notice given to
Purchaser within that ninety (90) day period, to take possession of the records
within one hundred and eighty (180) days after the date of such notice.
7.3 Publicity.
(a) None of Sellers, Parent or Purchaser shall issue any
press release or public announcement concerning this Agreement or the
transactions contemplated hereby without obtaining the prior written approval of
the other party hereto, which approval will not be unreasonably withheld or
delayed, unless, in the judgment of Sellers or Purchaser, disclosure is
otherwise required by applicable Law or by applicable rules of any stock
exchange, provided that, to the extent required by applicable Law, the party
intending to make such release shall use its commercially reasonable efforts
consistent with applicable Law to consult with the other party with respect to
the text thereof.
(b) Each of Purchaser and each Seller agrees that the terms
of this Agreement shall not be disclosed or otherwise made available to the
public and that copies of this Agreement shall not be publicly filed or
otherwise made available to the public, except where such disclosure,
availability or filing is required by applicable Law and only to the extent
required by such Law.
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7.4 Negative Covenant.
(a) Except as otherwise expressly permitted herein, between
the date of this Agreement and each applicable Nonassignable Contract Assignment
Date, Sellers shall not, without the prior written consent of Purchaser, which
consent shall not be unreasonably withheld, make any modification to any such
Nonassignable Contract.
(b) Except as otherwise expressly permitted herein, between
the date of this Agreement and the License-Related Asset Purchase Closing Date,
Sellers shall not, without the prior written consent of Purchaser, (i) enter
into any compromise or settlement of any litigation, proceeding or governmental
investigation relating to the License-Related Purchased Assets, or the
License-Related Assumed Liabilities; or (ii) terminate the employment of any
employee listed on Schedule 1.1(c).
7.5 Notification.
Between the date of this Agreement and the License-Related Asset
Purchase Closing Date, Sellers shall promptly notify Purchaser of the occurrence
of any breach of any covenant of Sellers in this Article 7 or of the occurrence
of any event that may make the satisfaction of the conditions in Article 8
impossible or unlikely.
7.6 Sellers' Reasonable Best Efforts.
Sellers shall use their reasonable best efforts, without the
obligation to incur any costs, expenses or Liabilities, except for reasonable
legal fees related to the License-Related Asset Purchase Closing as provided in
Section 2.5(e) hereof, to cause the conditions in Sections 8.1 to be satisfied.
7.7 Purchaser's Reasonable Best Efforts. Purchaser shall use its
reasonable best efforts to cause the conditions in Sections 8.1 to be satisfied.
7.8 Non-Solicitation.
(a) Each Seller agrees that for a period of three years from
the Initial Closing Date, it shall not employ or solicit or offer or induce or
receive or accept the performance of services by any senior or management
employee of the Business while such Persons are employed by Purchaser.
(b) If Each Seller acknowledges that Purchaser would be
irreparably harmed by any breach of this Section 7.8 and that there would be no
adequate remedy at law or in damages to compensate Purchaser for any such
breach. Each Seller agrees that Purchaser shall be entitled to injunctive relief
requiring specific performance by each Seller and its Affiliates of this Section
7.8 without the necessity of proving actual damages or the posting of a bond,
and each consents to the entry thereof.
7.9 Employment.
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(a) Prior to the Initial Closing Date, Purchaser shall offer
employment to each of the Initial Transferred Employees to commence immediately
following the Initial Closing. On March 31, 2004 (the "Subsequent Transfer
Date"), Purchaser shall offer employment to each Subsequent Transferred
Employee, who is still employed by Seller, to commence on the Subsequent
Transfer Date. Each such offer of employment shall be at the same salary or
hourly wage rate in effect immediately prior to the Initial Closing Date, or, in
the case of the Subsequent Transferred Employees, the Subsequent Transfer Date.
Each of the Transferred Employees shall be entitled to any sick leave, personal
days and vacation time they would be entitled to if they remained employed by
Sellers. Notwithstanding the foregoing, this Section 7.9 shall not prohibit
Purchaser from terminating the employment of any Transferred Employee at any
time or for any reason. For the avoidance of doubt, nothing in this Agreement
shall create a contract of employment or alter the "at-will" employment status
of any Transferred Employee.
(b) As a condition of the offers of employment to
Transferred Employees with Severance Agreements listed on Schedule 2.3(a)(viii),
Purchaser and each Transferred Employee will enter into a "substitute severance
agreement" substantially in the form attached hereto as Exhibit G as a
replacement for such Transferred Employee's Severance Agreement. Payments under
the "substitute severance agreements" shall be made by the Purchaser to
Transferred Employees in accordance with their terms and Sellers shall have no
liability with regard to payments under the "substitute severance agreements" or
the Severance Agreements. Any Transferred Employee who does not enter into a
substitute severance agreement within 3 days of the Initial Closing Date (the
"Eligibility Period") will not become an employee of Purchaser and shall receive
payments under the Severance Agreement applicable to such Transferred Employee,
and, in such case, Purchaser will promptly, and in no event in more than one
Business Day after the expiration of the Eligibility Period, reimburse Sellers
for its severance pay costs (including severance pay, employer contributions for
FICA and FUTA and any accrued vacation, sick or personal days) which were
otherwise Assumed Liabilities of Purchaser under this Agreement. Such
reimbursement shall constitute an Expense under the Management Agreement.
(c) Purchaser and Sellers agree that the payroll taxes of
the Transferred Employees shall be treated in accordance with the Standard
Procedure of Section 4 of Revenue Procedure 96-60.
7.10 Employee Benefits.
(a) From and after the Initial Closing, or in the case of
the Subsequent Transferred Employees, the Subsequent Transfer Date, Purchaser
shall provide, or cause to be provided to each of the Transferred Employees,
benefits under the employee benefits plans of Purchaser (the "Purchaser Plans")
that are, in each case, substantially equivalent on an aggregate basis to those
provided to employees of the Purchaser. For purposes of this Section 7.10(a),
coverage under any Employee Benefit Plan assumed pursuant to Section 2.3(a)(ii)
may be considered coverage under a Purchaser Plan after the Initial Closing
Date.
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(b) For purposes of eligibility, vesting and benefit accrual (but
not for purposes of any employer contribution to the Purchasers' defined
contribution plan based on the Purchaser's financial performance for calendar
year 2003) , under the Purchaser Plans, Purchaser shall credit each Transferred
Employee with his or her years of service with Company, the Subsidiaries and any
predecessor entities, to the same extent as such Transferred Employee was
entitled immediately prior to the Initial Closing Date, or in the case of the
Subsequent Transferred Employees, the Subsequent Transfer Date, to credit for
such service under any similar Employee Benefit Plan. The Purchaser Plans shall
not deny Transferred Employees coverage on the basis of pre-existing conditions
unless a Transferred Employee was denied coverage under Employee Benefit Plan
and shall credit such Transferred Employees for any deductibles and
out-of-pocket expenses paid in the year of initial participation in the
Purchaser Plans.
(c) Except as required by applicable Law, Purchaser shall be
responsible for all Liabilities with respect to Transferred Employees
attributable to their accrued and unused vacation, sick days and personal days
through the Initial Closing Date or, in the case of the Subsequent Transferred
Employees, the Subsequent Transfer Date. Schedule 7.10(c) to this Agreement
contains a true and correct list of all such Liabilities as of the payroll date
ending immediately prior to the Initial Closing Date described in this Section
7.10(c).
(d) Sellers and Purchaser shall take all actions necessary
or appropriate so that, effective as of the Initial Closing Date (A) Purchaser
shall be designated the "plan sponsor" (as defined in Section (3)(16)(B) of
ERISA) of the Employee Benefit Plans assumed pursuant to sections 2.1(b)(x) and
2.3(a)(ii) of this Agreement and insurance contracts related to the Sellers'
insured health and welfare plans are assigned by the Sellers to the Purchaser;
(B) the elections, contribution levels and coverage levels of the Initial
Transferred Employees under Seller's flexible spending account plans shall
continue to apply until the end of the plan year and the Transferred Employees
shall be reimbursed for claims incurred at any time during the plan year in
which the Initial Closing Date occurs from and after the Initial Closing Date on
the same basis and the same terms and conditions as immediately prior to the
Initial Closing Date; and, (C) Transferred Employees will be eligible to
participate in the Purchaser's 401(k) defined contribution plan; provided that
the Purchaser (or its appropriate representative) receives payroll deduction
elections from Transferred Employees, and Purchaser's 401(k) plan shall provide
for receipt of "direct rollovers" of benefits from the Sellers' 401(k) Plan.
(e) The Purchaser's health and welfare plan shall provide
continuation coverage under COBRA to all "M& A Qualified Beneficiaries" (as
defined in Treasury Regulation 54.4980B-9, Q&A-4) in accordance with the terms
of the Purchaser's health plan; provided that, during the period between the
Initial Closing Date and the Subsequent Closing Date, the Subsequent Transferred
Employees shall continue to participate in a health and welfare of the Seller or
a health and welfare plan of the selling group (as defined in Treasury
Regulation 54.4980B-9, Q&A-3).
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(f) On or prior to December 9, 2003, Purchaser shall pay the
Transferred Employees the transaction bonuses listed on Schedule 2.3(a)(viii).
With respect to such transaction bonuses, Purchaser shall satisfy any tax
withholding obligation and shall be responsible for payment of the employer
contributions for FICA and FUTA required by Law with respect to each such
Transferred Employee.
7.11 Confidentiality. Notwithstanding anything to the contrary
set forth herein or in any other agreement to which the parties hereto are
parties or by which they are bound, the obligations of confidentiality contained
herein and in the confidentiality agreement between Purchaser and Company dated
November 14, 2002, as they relate to the transactions contemplated by this
Agreement, shall not apply to the tax structure or tax treatment of the
transactions contemplated by this Agreement, and each party hereto (and any
employee, representative, or agent of any party hereto) may disclose to any and
all persons, without limitation of any kind, the tax structure and tax treatment
of the transactions contemplated by this Agreement and all materials of any kind
(including opinions or other tax analysis) that are provided to such party
relating to such tax treatment and tax structure; provided, however, that such
disclosure shall not include the name (or other identifying information not
relevant to the tax structure or tax treatment) of any person and shall not
include information for which nondisclosure is reasonably necessary in order to
comply with applicable securities laws.
7.12 Tax Reporting. Sellers and Purchaser agree that the purchase
and sale of the Purchased Assets pursuant to this Agreement is intended to be
treated as a taxable sale for federal, state and local income tax purposes and,
accordingly, will consistently report it as such and will not take any actions,
and will cause their Affiliates not to take any actions, which are inconsistent
with such treatment.
7.13 Assumption in Bankruptcy.
(a) In the event that after the execution of this Agreement
a Seller files a voluntary petition or is the subject of an involuntary petition
for relief under Chapter 11 of the U.S. Bankruptcy Code (a "WLNK Bankruptcy
Filing"), such Seller hereby agrees, to the extent permitted by Law, to seek
assumption of this Agreement and each of the Documents as soon as possible after
the filing of such petition.
(b) In the event of a WLNK Bankruptcy Filing, such Seller
hereby agrees, to the extent permitted by Law, to seek assumption as soon as
possible thereafter of any contract for which a consent, waiver, authorization
or approval of a third party was required but not sought or obtained to the
extent that, prior to or after such WLNK Bankruptcy Filing, any such third party
has notified Seller that the assignment of such contract was void and/or that
Seller is in breach of such contract as a result of the assignment thereof to
the Purchaser pursuant to this Agreement.
(c) In the event that any funds are paid to any Seller or
any of its subsidiaries in respect of the Business on or after the Initial
Closing Date, all such funds shall be (i) received and held in trust by such
Seller or subsidiary of a Seller and (ii) immediately transferred to Purchaser
by wire transfer in same day funds, free and clear of any Encumbrances.
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7.14 No Negotiation. Neither the Sellers nor any of their
Affiliates (and their respective officers, directors, employees, accountants,
consultants, legal counsel, financial advisors, agents and other representatives
(collectively, "Representatives") shall directly or indirectly solicit,
initiate, encourage or entertain any inquiries or proposals or offer (including,
without limitation, any proposal or offer to its stockholders) from any Person,
discuss or negotiate with, provide any nonpublic information to or consider the
merits of any inquiries or proposals from any Person (other than Purchaser)
relating to any business combination transaction involving Sellers, including,
without limitation, the sale of Sellers' stock, the merger or consolidation of
Sellers or the sale of Sellers' business or any of the assets (other than in the
Ordinary Course of Business); enter into or maintain or continue discussions or
negotiate with any Person in furtherance of such inquiries; enter into any
agreement with respect to any such transaction; or authorize or knowingly permit
any of Sellers' or their Affiliates' Representatives, to take any such action.
Sellers shall notify Purchaser of any such inquiry or proposal within
twenty-four (24) hours of receipt or awareness of the same by Sellers and shall
promptly furnish a copy of any such written proposal or a detailed description
of any such oral proposal to Purchaser. Notwithstanding the foregoing, it is
being hereby agreed by Parent, Purchaser and Sellers that this Section 7.14
shall not in any way be applicable to the Excluded Assets or Liabilities.
7.15 Change of Name; Use of Names. As soon as practicable after
the Initial Closing Date, each Seller will change its corporate or limited
partnership name, as applicable, to such other name as does not contain the word
"WebLink". After the Initial Closing Date, Sellers shall not have any right,
title or interest in or to, the name WebLink Wireless and all related Marks;
provided, however, that Sellers shall have until November 15, 2004 to replace
stationery and other documents and forms, and to replace or repaint signs,
vehicles and other items, that on the Initial Closing Date bear the "WebLink
Wireless" or other related Marks, during which period of time Sellers may use
such Marks on inventory, documents, forms and other items that have not yet been
replaced or repainted.
ARTICLE VIII
CONDITIONS TO LICENSE-RELATED ASSET PURCHASE CLOSING
8.1 Conditions Precedent to the Obligations of Purchaser and
Sellers. The obligations of Purchaser and Sellers to consummate the transaction
contemplated herein to be consummated on the License-Related Asset Purchase
Closing Date is subject to the satisfaction on or prior to the License-Related
Asset Purchase Closing Date of the conditions set forth below, any of which may
be waived in writing by each of Purchaser and Sellers:
(a) Sellers shall have obtained all consents required in
connection with the FCC Approval.
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(b) No preliminary or permanent injunction or other order
issued by, and no Proceeding or Order by or before, any Governmental Body in the
United States or by any United States Governmental Entity, nor any Law or Order
promulgated or enacted by any United States Governmental Body, shall be in
effect or pending which materially delays, restrains, enjoins or otherwise
prohibits or seeks to restrain, enjoin or otherwise prohibit the transactions
contemplated hereby.
(c) All consents, waivers, authorizations and approvals of
any Governmental Body as are necessary in connection with the transactions
contemplated by this Agreement in connection with the License-Related Asset
Purchase Closing shall have been obtained.
(d) As of the License-Related Asset Purchase Closing Date,
the purchase of License-Related Purchased Assets deliverable on such date shall
be legally permitted by all Laws and regulations to which Purchasers and Sellers
are subject, except where the failure to comply with such Laws or regulations
would not be reasonably expected to have a Material Adverse Effect.
8.2 Condition Precedent to the Obligations of Each Seller. The
obligations of each Seller to consummate the transactions contemplated herein to
be consummated on the License-Related Asset Purchase Closing Date are subject to
the delivery, on or prior to the License-Related Asset Purchase Closing Date, of
the Certificate required pursuant to Section 4.4(c) relating to the vesting of
rights under the Warrants to purchase all remaining Warrant Shares that have not
yet vested.
ARTICLE IX
MISCELLANEOUS
9.1 No Survival of Representations and Warranties. The
representations and warranties of the parties contained in this Agreement shall
not survive Closing and no claims may be asserted with respect thereto after
Closing.
9.2 Payment of Sales, Use or Similar Taxes. Purchaser and Sellers
shall each be responsible for (and shall indemnify and hold harmless Sellers or
Purchaser as the case may be, against) one-half of any sales, use, stamp,
documentary, filing, recording, transfer or similar fees or taxes or
governmental charges (including real property transfer gains taxes, UCC-3 filing
fees, FAA, ICC, DOT, real estate and motor vehicle registration, title recording
or filing fees and other amounts payable in respect of transfer filings) in
connection with the transactions contemplated by this Agreement (other than
taxes measured by or with respect to income imposed on Seller or its Affiliates)
(all such non-excepted Taxes, "Transfer Taxes"). Sellers shall file all
necessary documents (including all Tax Returns) with respect to all such amounts
in a timely manner.
9.3 FCC Applications. Sellers and Purchaser agree to file the FCC
Applications within ten (10) days following the date hereof. Each party hereto
shall diligently take or cooperate in the taking of all steps that are necessary
or appropriate for the prosecution and favorable consideration of the FCC
Applications. The Parties agree to undertake all actions and file such material
as shall be reasonably necessary or required to obtain any necessary waivers or
other authority in connection with the FCC Applications.
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9.4 Expenses. Except as otherwise provided in this Agreement,
each of Company and Purchaser shall bear its own expenses incurred in connection
with the negotiation and execution of this Agreement and each other agreement,
document and instrument contemplated by this Agreement and the consummation of
the transactions contemplated hereby and thereby.
9.5 Submission to Jurisdiction; Consent to Service of Process.
(a) The parties hereto hereby irrevocably submit to the
non-exclusive jurisdiction of any federal or state court located within the
State of New York over any dispute solely between the parties hereto arising out
of or relating to this Agreement or any of the transactions contemplated hereby
and each party hereby irrevocably agrees that all claims in respect of such
dispute or any suit, action proceeding related thereto may be heard and
determined in such courts. The parties hereby irrevocably waive, to the fullest
extent permitted by applicable law, any objection which they may now or
hereafter have to the laying of venue of any such dispute brought in such court
or any defense of inconvenient forum for the maintenance of such dispute. Each
of the parties hereto agrees that a judgment in any such dispute may be enforced
in other jurisdictions by suit on the judgment or in any other manner provided
by law.
(b) Each of the parties hereto hereby consents to process
being served by any party to this Agreement in any suit, action or proceeding by
delivery of a copy thereof in accordance with the provisions of Section 9.8.
9.6 Entire Agreement; Amendments and Waivers. This Agreement and
the other Transaction Documents (including the schedules and exhibits hereto and
thereto) represent the entire understanding and agreement between the parties
hereto with respect to the subject matter hereof. This Agreement can be amended,
supplemented or changed, and any provision hereof can be waived, only by written
instrument making specific reference to this Agreement signed by the party
against whom enforcement of any such amendment, supplement, modification or
waiver is sought. No action taken pursuant to this Agreement, including without
limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representation, warranty, covenant or agreement contained herein. The waiver by
any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a further or continuing waiver of such breach or as a
waiver of any other or subsequent breach. No failure on the part of any party to
exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of such
right, power or remedy by such party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
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9.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and performed in such State.
9.8 Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given (i) when delivered
personally by hand (with written confirmation of receipt), (ii) when sent by
facsimile (with written confirmation of transmission) or (iii) one business day
following the day sent by overnight courier (with written confirmation of
receipt), in each case at the following addresses and facsimile numbers (or to
such other address or facsimile number as a party may have specified by notice
given to the other party pursuant to this provision):
If to Company, to:
WebLink Wireless, Inc.
0000 Xxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
Telecopier: (000) 000-0000
With a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
If to Purchaser, to:
Metrocall, Inc.
0000 Xxxxxxxx Xxxxxxx
0xx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
With a copy to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxx
9.9 Severability. If any term or other provision of this
Agreement is invalid, illegal, or incapable of being enforced by any law or
public policy, all other terms or provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal, or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.
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9.10 Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights in any Person or entity not a party to this
Agreement, other than the Indemnified Parties. No assignment of this Agreement
or of any rights or obligations hereunder may be made by any of Sellers or
Purchaser, directly or indirectly (by operation of law or otherwise), without
the prior written consent of the other party hereto and any attempted assignment
without the required consents shall be void; provided, however, that Purchaser
may assign this Agreement and any or all rights or obligations hereunder
(including, without limitation, Purchaser's rights to purchase the Purchased
Assets) to any Affiliate of Purchaser, provided that Purchaser shall not be
relieved of such obligations. Upon any such permitted assignment, the references
in this Agreement to Purchaser shall also apply to any such assignee unless the
context otherwise requires.
9.11 Non-Recourse. Except as set forth in the Indemnification
Agreement, no past, present or future director, officer, employee, incorporator,
member, partner, stockholder, Affiliate, agent, attorney or representative of
Company or any of their respective Affiliates shall have any liability for any
obligations or liabilities of Company under this Agreement of or for any claim
based on, in respect of, or by reason of, the transactions contemplated hereby
and thereby.
9.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[Signatures Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Asset
Purchase Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first written above.
METROCALL, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President and CEO
METROCALL HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President and CEO
WEBLINK WIRELESS, INC.
By: /s/ X. Xxxx Buckenham
-----------------------------------------
Name: X. Xxxx Buckenham
Title: President and CEO
WEBLINK WIRELESS I, L.P.
By: WEBLINK WIRELESS, INC., in its
capacity as general partner
By: /s/ X. Xxxx Buckenham
---------------------------------------
Name: X. Xxxx Buckenham
Title: President and CEO
46
