EXHIBIT 10.2
Attachment A to the notarial deed ___/1997
of the notary public ___________________
Purchase Agreement
between
I. o.tel.o communications GmbH & Co.
Am Bonneshof 35,
40474 Dusseldorf - hereinafter "Seller 1"-
II. Geotek Communications GmbH
Xx Xxxxxxxxxxx 00
00000 Xxxxx -hereinafter "Seller 2"-
-hereinafter jointly the "Sellers"-
and
III. Geotek Communications, Inc.
000 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000, XXX -hereinafter "Geotek Communications"-
and
IV. RegioKom Deutschland Gesellschaft fur BundelfunkdienstembH
Heynstr 19
13187 Berlin -hereinafter the "Buyer"-
(1 to 4 hereinafter also referred to as the "Party" or jointly as the "Parties)
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Contents
Preamble
Section 1 Purchase and Assignment of the Limited Partnership Interests in
Terrafon KG
Section 2 Purchase and Assignment of the Shares in Terrafon GmbH
Section 3 Conditions Precedent
Section 4 Purchase Price, Escrow Account
Section 5 Cooperation
Section 6 Representations and Warranties
Section 7 Non-compliance with the Representations and Warranties
Section 8 Tax Assessments, Audits and Public Charges
Section 9 Period between Signing and Closing
Section 10 Geotek Communications Guarantee
Section 11 Lease Guarantees
Section 12 Channel Fees Indemnification
Section 13 Liability of the Sellers as Several Debtors
Section 14 Secrecy; Non-competition Covenants
Section 15 Expenses and Taxes
Section 16 Law; Language; Arbitration
Section 17 Final Regulations
Section 18 Partial Invalidity
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Preamble
I. Seller 1 with registered office in Dusseldorf, registered with the
Commercial Register of the Lower Court of Dusseldorf under number HRA
13103, and Seller 2 with registered office in Salzgitter and an office in
Essen, registered with the Commercial Register of the Lower Court of
Salzgitter under number HRB 913 are the sole limited partners in Terrafon
Bundelfunk GmbH & Co. KG (hereinafter "Terrafon KG") with registered office
in Essen, registered with the Commercial Register of the Lower Court of
Essen under number HRA 6637. They hold the following registered limited
partnership interests in the capital of Terrafon KG with a total face value
of DM 30,000,000, whereby the limited partnership interest of each limited
partner corresponds to its maximum liability as registered in the
Commercial Register:
A. Seller 1 holds a registered limited partnership interest in the amount
of DM 15,000,000, and thereby holds 50% in the capital of
Terrafon KG, and
B. Seller 2 holds a registered limited partnership interest in the amount
of DM 15,000,000, and thereby holds 50% in the capital of Terrafon KG.
II. Further Seller 1 and Seller 2 are the sole shareholders of Terrafon
Bundelfunk Geschaftsfuhrungs Gesellschaft mbH (hereinafter "Terrafon GmbH")
with registered office also in Essen, registered with the Commercial
Register of the Lower Court of Essen under number HRB 12247. The
registered capital of Terrafon GmbH amounts to DM 55,000, whereby Seller 1
holds one share with a face value of DM 27,500, and Seller 2 holds one
share with a face value of DM 27,500. Terrafon GmbH is the sole general
partner of Terrafon KG, but has no capital interest in Terrafon KG.
Terrafon GmbH is and has been engaged solely in its business as general
partner of Terrafon KG.
III. Accordingly, Seller 1 and Seller 2 are the sole limited partners in
Terrafon KG and the sole shareholders in Terrafon GmbH (hereinafter
jointly referred to as the "Terrafon Companies").
IV. Seller 2 is an indirect wholly-owned subsidiary of Geotek Communications.
V. Prior to the date hereof, certain corporate mergers and restructuring have
taken place which are in more detail described in Enclosure A.
VI. The Sellers have agreed to sell and assign, and the Buyer, having its
registered office in Berlin, registered with the Commercial Register of the
Lower Court of Charlottenburg under HRB 39499, and being a wholly owned
subsidiary of RegioKom Verwaltungsgesellschaft mbH with registered office
in Frankfurt am Main, registered with the Commercial Register of the Lower
Court of Frankfurt am Main under HRB 39579, has agreed to acquire, the
limited partnership interests in Terrafon KG, as well as the shares in
Terrafon GmbH, held by the Sellers, as of December 31, 1997, 24.00 p.m. for
the Sellers / January 1, 1998, 0.00 a.m. for the Buyer
(the "Effective Date").
Based on the above, the Parties enter into the following agreement:
Section I.
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Purchase and Assignment of the Limited Partnership Interests in Terrafon KG
A. Effective as of the Effective Date Seller 1 sells its registered
limited partnership interest of DM 15,000,000 in Terrafon KG to the
Buyer, who accepts it.
B. Effective as of the Effective Date Seller 2 sells its registered
limited partnership interest of DM 15,000,000 in Terrafon KG to the
Buyer, who accepts it.
C. The assignment of the limited partnership interests sold pursuant to
Section 1.1 and Section 1.2 will be consummated subject to the
conditions precedent listed in Section 3.1 by the assignment of its
registered limited partners interest in Terrafon KG in the total
amount of DM 15,000,000 by Seller 1 to the Buyer, and by the
assignment of its registered limited partnership interest in Terrafon
KG in the total amount of DM 15,000,000 by Seller 2 to the Buyer.
The Buyer accepts the assignments. The limited partnership interests
mentions in Section 1.1 and Section 1.2 will be hereinafter referred to as
the "Sold Limited Partnership Interests".
D. The Sold Limited Partnership Interests together with the rights to
receive profits will be sold and assigned as of the Effective Date.
X. Xxxxxx 1 and Seller 2 hereby consent to the sale and assignment of the
Sold Limited Partnership Interests to the Buyer in accordance with
Section 16.1 of the Partnership Agreement of Terrafon KG. The consent
of the sole managing director of Terrafon GmbH on behalf of Terrafon
KG to the assignments of the Sold Limited Partnership Interests to the
Buyer is enclosed as Enclosure 1. The Sellers represent (zusichern)
that there are no further corporate consent requirements.
Section II.
Purchase and Assignment of the Shares in Terrafon GmbH
A. Effective as of the Effective Date Seller 1 sells its share of DM
27,500 in Terrafon GmbH to the Buyer, who accepts it.
B. Effective as of the Effective Date Seller 2 sells its share of DM
27,500 in Terrafon GmbH to the Buyer, who accepts it.
C. The assignment of the shares sold pursuant to Section 2.1 and Section
2.2 will be consummated subject to the conditions precedent listed in
Section 3.1 by the assignment of its share with a face value of DM
27,500 by Seller 1 to the Buyer, and by the assignment of its share
with a face value of DM 27,500 by Seller 2 to the Buyer.
The Buyer accepts the assignments. The shares mentioned in Section 2.1 and
Section 2.2 with a face value of DM 27,500 each will be hereinafter
referred to as the "Sold Terrafon Shares".
D. The Sold Terrafon Shares will be sold and assigned as of the Effective
Date together with the rights to receive dividends.
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X. Xxxxxx 1 and Seller 2, in their capacities as sole shareholders of
Terrafon GmbH, hereby consent to the sale and assignments of the Sold
Terrafon Shares to the Buyer in compliance with Section 9.1 of the
Articles of Association of the Terrafon GmbH and they hereby waive
their preemptive rights under Section 9.3 of said Articles.
Section III.
Conditions Precedent
A. The assignments of the Sold Terrafon Shares, and the Sold Limited
Partnership Interests are subject to the conditions precedent
("Conditions Precedent") that:
1. the required consent of the Federal Ministry for Post and
Telecommunication, which in turn will require the consent of the
Federal Cartel Office, is granted;
2. Buyer provides for (i) the release pursuant to Section 11.1 a) of
the relevant guarantors by the Relevant Lessors of the Guarantees
issued by Xxxxxx Aktiengesellschaft and RWE Telliance
Aktiengesellschaft in connection with the Leasing Agreements
referred to in Section 11.1, or (ii) bank guarantees in favor of
the Relevant Lessors pursuant to Section 11.1 b);
3. the Buyer is duly registered in the Commercial Register of the
Lower Court of Essen as new limited partner of Terrafon KG, as
special successor to the Sold Limited Partnership Interests; and
4. the payment of the Purchase Price (as defined in Section 4.1) and
of the purchase price for the Loan (as defined in Section 9.5).
The day on which all Conditions Precedent mentioned are fulfilled is
hereinafter called the "Closing Date". The Buyer may waive in writing the
Condition Precedent in Section 3.1 c).
B. If the Closing Date is a date later than February 16, 1998 due to no
fault of the Sellers and the Buyer, but other than solely due to a
failure of the Commercial Register of the Lower Court of Essen to
register the Buyer pursuant to 3.1 c), the Sellers jointly, or the
Buyer, may decide to withdraw from this Agreement by written notice to
the relevant other Party or Parties with no obligations remaining
under this Agreement (provided that the Conditions Precedent pursuant
to Section 3.1 have not been fulfilled in the meantime prior to the
giving of such notice).
Section IV.
Purchase Price; Escrow Account
A. As consideration for the sale and assignments of the Sold Limited
Partnership Interests and the Sold Terrafon Shares (hereinafter
jointly referred to as "Sold Interests"), including the rights
mentioned in Sections 1.4 and 2.4, and all other rights granted
hereunder, the Buyer will pay to the Sellers a purchase price
("Purchase Price") of DM 14 million (in words; fourteen million German
marks). The Purchase Price will be allotted as follows:
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a. - DM 27,500 for the Sold Terrafon Share of Seller 1 -
b. - DM 6,972,500 for the Sold Limited Partnership Interest of
Seller 1 -
c. - DM 27,500 for the Sold Terrafon Share of Seller 2 -
d. - DM 6,972,500 for the Sold Limited Partnership Interest of
Seller 2 -
B. The Purchase Price mentioned in Section 4.1 is due within 10 working
days after proof that the Conditions Precedent as stipulated in
Section 3.1 a) to c) have been fulfilled.
C. The Purchase Price is payable as follows:
4.3.1 DM 6,500,000 (in words six million five hundred thousand German marks)
to the account no 0000000 of Seller 1 with the Commerzbank AG,
Dusseldorf branch (bank code 300 400 00);
4.3.2 DM 6,500,000 (in words six million five hundred thousand German marks)
to the account no. ABA#000000000, Attn.: Corporate Trust A/C # CT-968C
Geotek Communications, Inc. SR. Discount Notes Custody Account;
4.3.3 The remaining part of the Purchase Price (DM 1,000,000) shall be paid
into Escrow as follows:
In order to secure the indemnification of the Buyer by the Sellers set
forth in Section 12, and the claims of the Buyer against the Sellers
pursuant to Sections 7 and 8, if any, the Parties shall enter into the
Escrow Agreement ("Escrow Agreement") substantially in the form set out in
Enclosure 2 and instruct their relevant Agents (as defined in Escrow
Agreement) to also execute the same.
The Buyer shall fund as per the Closing Date, in satisfaction of its
obligation to pay the Purchase Price, the Escrow Account (as defined in the
Escrow Agreement) by a payment of DM 1,000,000 (the "Escrow Funds").
The DM 1,000,000 (plus interest, minus fees, costs, charges and Agents'
Indemnification Amounts (as defined in the Escrow Agreement) in whole (the
"Escrow Funds") shall serve as a security for claims of the Buyer under
Sections 7 and 8, made pursuant to joint representations and warranties of
the Sellers and as a security for the indemnity obligations of the Sellers
pursuant to Section 12. DM 500,000 (plus pro rata interest, minus pro rata
fees, costs, charges and Agents' Indemnification Amounts) shall serve as
security for the claims of the Buyer against Seller 1 in connection with
representations and warranties made solely by Seller 1. DM 500,000 (plus
pro rata interest, minus pro rata fees, costs, charges and Agents'
Indemnification Amounts) shall serve as security for the claims of the
Buyer against Seller 2 in connection with representations and warranties
made solely by Seller 2.
The Parties shall give joint written instructions to the Agents pursuant to
litC1 of the Escrow Agreement, to release the Escrow Funds to the Buyer (to
an account to be identified in writing by the Buyer):
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a. up to 100% of the Escrow Funds, to the extent there are
payment obligations of the Sellers towards the Buyer
pursuant to (a) an agreement between Seller 1, Seller 2 and
the Buyer that Seller 1 and Seller 2 owe moneys to the Buyer
pursuant to representations and warranties made jointly by
the Sellers under Sections 7 and 8, or the indemnification
under Section 12, or (b) the ruling of the Arbitration Panel
as set forth in the Arbitration Agreement provided for in
Section 16.2, stating the obligations of the Sellers to pay
moneys to the Buyer based on a breach of representations and
warranties of the Sellers under Sections 7 and 8, or the
indemnification under Section 12; in each case such
agreement to be entered into, and the ruling issued prior to
the expiration of the day 15 months after the Closing Date;
b. up to 50% of the Escrow funds, to the extent there are
payment obligations of Seller 1 towards the Buyer pursuant
to (a) an agreement between Seller 1 and the Buyer that
Seller 1 owes moneys to the Buyer pursuant to
representations and warranties made solely by Seller 1 under
Sections 7 and 8; or (b) the ruling of the Arbitration Panel
as set forth in the Arbitration Agreement provided for in
Section 16.2, stating the obligation of Seller 1 to pay
moneys to the Buyer based on a breach of the representations
and warranties of Seller 1 under Sections 7 and 8; such
agreement to be entered into, and the ruling issued prior to
the expiration of the day 15 months after the
Closing Date; and
c. up to 50% of the Escrow Funds, to the extent there are
payment obligations of Seller 2 towards the Buyer pursuant
to (a) an agreement between Seller 2 and the Buyer that
Seller 2 owes moneys to the Buyer pursuant to
representations and warranties made solely by Seller 2 under
Sections 7 ad 8; or (b) a ruling of the Arbitration Panel as
set forth in the Arbitration Agreement provided for in
Section 16.2, stating the obligation of Seller 2 to pay
moneys to the Buyer based on a breach of the representations
and warranties of Seller 2 under Sections 7 and 8; such
agreement to be entered into, and the ruling issued prior to
the expiration of the day 15 months after the Closing Date.
(hereinafter the "Buyer's Indemnification")
The Parties will instruct the Agents under the Escrow Agreement in
accordance with lit. C.1 of the Escrow Agreement to pay the Escrow Funds
(500,000 DM per Seller plus pro rata interest, minus pro rata fees, costs,
charges and Agents' Indemnification Amounts),
- at 100% if no Buyer's Indemnification has been made prior to the
Expiration Date;
- if a Buyer's Indemnification has been made prior to the Expiration
Date, the Sellers and the Buyer agree to instruct the Agents to pay,
if (x) a Buyer's Indemnification has been made against the Seller 1 -
(ii) above - to Seller 1 an amount equal to the difference between
such indemnification amount and DM 500,000 (plus pro rata interest,
minus pro rata fees, charges, costs and Agents' Indemnification
Amounts); (y) a Buyer's
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Indemnification has been made against the Seller 2 - (iii) above -, an
amount equal to the difference between such indemnification amount and
DM 500,000 (plus pro rata interest, minus pro rata fees, charges,
costs and Agents' Indemnification Amounts); and (z) a Buyer's
Indemnification has been made against the Seller jointly - (i) above
-, an amount equal to the difference between such indemnification
amount and DM 1,000,000 (plus pro rata interest, minus pro rata fees,
charges, costs and Agents' Indemnification Accounts), to each Seller
at 50%.
"Expiration Date" shall mean the earlier of (i) an agreement among the
Parties that no claims under Sections 7, 8 or 12 will be raised by the
Buyer; (ii) a ruling of the appropriate arbitration panel or enforceable
court ruling, to the same effect; and (iii) the day 15 months after the
Closing Date.
The Parties will give full force and effect to the above. The Parties
hereby commit not to take any action against any of the Agents (same for an
instruction to replace them in accordance with the Escrow Agreement) other
than as permitted expressly by the Escrow Agreement. The Parties also
commit to each other not to take enforcement actions against the Escrow
Funds (Pfandungen), and hereby waive (verzichten) the right to attach any
of the Escrow Funds (other than in accordance with a final arbitration
ruling in accordance with the Arbitration Agreement provided for in Section
16.2 or other decision of a competent court of law).
Section V.
Cooperation
The Parties agree to participate in all business negotiations and legal
transactions which are necessary to fulfill this Agreement. In particular, the
Parties will cooperate and use their best efforts in order that the Conditions
Precedent in Section 3.1 will be fulfilled. The Seller 1, Seller 2 and the
Buyer shall apply in notarial form for the registration of the assignment of the
Sold Limited Partnership Interests (See Section 3.1c)), and procure that also
Terrafon GmbH joins the application.
Upon the Buyer's request Seller 2 and Geotek Communications will procure that a
fairness opinion by a mutually agreeable firm, confirming that the Purchase
Price is fair to Geotek Communications, will be provided to the Buyer, at the
Buyer's and Sellers' 50:50 expense, prior to the Closing Date.
Section VI.
Representations and Warranties
A. Sellers represent and warrant in the form of an independent guarantee
(selbstandiges Garantieversprechen) to the Buyer that the following
information is true, correct and complete:
1. As of today and the Closing Date:
Terrafon KG is a limited partnership, duly established and duly
existing according to the laws of the Federal Republic of Germany.
Terrafon GmbH is a limited liability company duly established and duly
existing according to the laws of the Federal Republic of Germany.
The statements regarding Terrafon KG and Terrafon GmbH
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made in clause 1, clause 2 and clauses 3, 5 and 6 of the Preamble are
true, correct and complete.
2. The Terrafon Companies do not hold, either directly or
indirectly, any interests in other companies, partnerships or
businesses. They have also no other corporate relationships with
third parties. This Agreement and its execution do not violate
any agreement by which one of the Terrafon Companies is bound.
3. The Partnership Agreement of Terrafon KG dated June 12, 1997 and
the Articles of Association of Terrafon GmbH dated March 19, 1997
attached as Enclosure 3 remain unchanged and valid. There are no
supplementary or side agreements to these documents. In
particular, there are no subpartnership agreements, silent
partnership agreements, or enterprise contracts in accordance
with Section 291 ff of the Stock Corporation Act, or any similar
agreements or liability bonds arising from terminated enterprise
contracts. The excerpts from the Commercial Register of the
Lower Court of Essen for the Terrafon Companies as of October 28,
1997 and October 29, 1997 are correct as enclosed and will remain
the same until the Closing Date save for necessary registrations
of changes in the management of the Terrafon Companies.
4. The audited financial accounts of Terrafon KG (including the
auditor's report) and the accounts of the Terrafon GmbH as of
June 30, 1997, the copies of which are enclosed as Enclosure 4
and Enclosure 5 (the "Terrafon Financial Accounts") have been
prepared with the diligence of a prudent business man (Sorgfalt
eines ordentlichen Kaufmannes); and the audited financial
accounts of Terrafon KG (including auditor's report), (i) are in
accordance with the German legal requirements as set forth in the
relevant auditor's report, (ii) present, giving regard to
applicable GAAP (Grundsatze ordnungsmabiger Buchfuhrung) a view
corresponding to actual facts and circumstances as regards the
net worth, financial position and results of each company
(Section 322 HGB) as of June 30, 1997, recognizing that the
auditor's certificate is dated October 30, 1997; and the
declarations of completeness (Vollsabdigkeitserklarungen) are
true and correct. The Sellers confirm that the assessment of the
equipment and fixed assets as mentioned in the auditor's report
on page 27 of the Report section has been carried out and did not
give rise to significant corrections.
Each of the monthly management accounts of the Terrafon KG as of June
30, July 31, August 31, September 30, October 31 and November 30, 1997
which are enclosed as Enclosure 6 (i) have been prepared in good faith
with the care of a prudent business man (Sorgfalt eines ordentlichen
Kaufmannes) on a consistent basis; and (ii) no facts are known to the
Sellers which render these accounts materially incorrect or
misleading.
5. As of June 30, 1997 non of the Terrafon Companies had liabilities
(including but not limited to uncertain liabilities), contingent
liabilities (including but not limited to guarantee or product
indemnity liabilities) or imminent losses from pending
transactions, other than those which are included in the Terrafon
Financial Accounts, or for which there are sufficient reserves in
the Terrafon
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Financial Accounts.
The Terrafon Companies will have, as of the Closing Date, no
shareholder loans or other indebtedness towards the shareholders, nor
long term (i.e. payable 12 months or later) bank indebtedness, or
indebtedness towards other financial institutions, other than current
overdrafts not in excess of DM 100,000, and no other long term
contractual debt in each case in excess of DM 200,000 which cannot be
terminated without leaving payment obligations in excess of DM
200,000, other than disclosed in Enclosure 7.
6. As of June 30, 1997 the Terrafon Companies assumed the pension
payment obligations as set forth in Enclosure 8. Since then, no
subsequent pension commitments or promises have been made.
Notwithstanding the above mentioned pension payment obligations no
Terrafon Company has any direct or indirect obligations to pay any
old-age pensions, invalidity pensions, sickness benefits, widow's
benefits or similar benefits towards any present or former employees,
independent of whether the rights of the employees to these
obligations may be lapse or not.
7. The Terrafon Companies own no real estate (Grundbesitz), and hold
no rights similar to real estate rights (usufruct rights), except
for real estate rights to a piece of real estate registered in
the Land Registry of Berlin-Kopenick folio 0000 X, xxxxxx 000000,
xxxx 000, parcel 1.
8. Enclosure 9 to this Agreement contains a complete list of all
employees of each Terrafon Company. As of the Closing Date the
Terrafon Companies will have no more than 78 employees.
9. With the exception of those mentioned in Enclosure 10, none of
the Terrafon Companies is bound in any way by any shop
agreements, or any other collective bargaining agreement, or shop
practices (betriebliche Ubungen) (other than by what is customary
in the industry).
10. The Terrafon Companies hold the licenses granted by BMPT as
listed in Enclosure 11 (the "Licenses") and have not been
notified by any third party of a breach of third party industrial
property rights or know-how necessary to conduct their business.
The Licenses are valid, and will be valid and unrevoked, as of
the Closing Date. The Terrafon Companies are in compliance with
the terms and conditions of the Licenses except for immaterial
non-compliance. Save for the acts required under this Agreement,
the Sellers will refrain from any activities which could endanger
the present status of the Licences. The Terrafon Companies have
not been notified of any challenges to the Licences. The
statements made in this subclause j) are subject to the changes
in the Licenses required by the BMPT in connection with the
implementation of this Agreement.
11. The books and files of the Terrafon Companies have been kept and
stored
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correctly, and will remain at the disposal of the relevant
company also after the Closing Date.
12. As of October 31, 1997 the Terrafon Companies were in the
possession of at least 142 base stations (Basistationen and
Relaisstationen) and at least 903 channels.
13. Terrafon KG has at least 38,200 Subscribers; the term
"Subscriber" is defined as a Subscriber (Teilnehmer) booked in
and invoiced in the month of December, 1997. The average invoice
per Subscriber will amount to DM 42 for the month of December
1997 (excluding VAT).
14. To the best knowledge and belief of the Sellers, the Terrafon
Companies, their operations and their businesses are in
compliance in all material respects with applicable laws and
regulations.
15. Except as disclosed in Enclosure 12 there is no litigation or
administrative proceeding (Verwaltungsstreitverfahren) pending
(rechtshangig) against the Terrafon Companies, and the management
has not received any notice with regard to intended litigation or
administrative proceedings against the Terrafon Companies.
16. Except as listed in Enclosure 13, the Terrafon Companies are not
a party to or bound by any of the following category or type of
contracts or commitments:
a. joint venture, cooperation or similar agreements other than
listed in Annex A No. 7 of Enclosure 13;
b. any lease agreement other than listed in Annex A Nos. 1 and
2 of Enclosure 13 with respect to SMR Equipment which would
be in excess of a total commitment of DM 50,000 p.a. or DM
150,000 in total;
c. any lease agreement with respect to other equipment,
excluding car lease agreements in the ordinary course of
business, providing for an annual commitment in excess of DM
80,000 or a total commitment in excess of DM 200,000;
d. except for base stations and radio sites: any lease and
sublease agreement regarding premises (Grundstick und
R umlichkeiten) other than listed in Annex A Nos. 3 and 4 of
Enclosure 13 providing for annual rent payments in excess of
DM 60,000 (including side costs) or binding for a term
beyond December 31, 2002;
e. any material agreement, other than listed in Annex A Nos. 5
and 6 of Enclosure 13, regarding the purchase, maintenance
and service of SMR equipment and/or software in excess of
total payment obligations of DM 100,000;
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f. any material agreement with customers, other than listed in
Annex A Nos. 8, 9 and 10 of Enclosure 13 with a commitment
to provide dedicated infrastructure and/or software which
would result in a financial investment in excess of DM
250,000 in total;
g. any roaming agreement which cannot be terminated at once;
h. any employment agreement with managing directors and key
employees other than Xx. Xxxxxxxxx, Xx. Xxxxxx, Xx. Xxxxxxxx
and Xx. Xxxxxxxxxx;
i. any commitment to guarantee or to secure indebtedness of
third parties;
j. any loan to a managing director or any employee in excess of
DM 25,000;
k. any contracts or commitments other than referred to in the
foregoing clauses (i) through (x) which involve an expense
or commitment of more than DM 200,000 annually and any other
contracts or commitments of an exceptional nature which are
of particular importance to the Terrafon Companies.
The Terrafon Companies have complied in all material respects with the
agreements listed in Enclosure 13.
17. As of signing, all accounts receivable of the Terrafon Companies
which are reflected in their books represent actual bona fide
obligations owing to them in the ordinary course of business.
18. The Terrafon Companies own, possess or lease materially all
assets necessary to conduct their business as presently
conducted.
19. The Terrafon Companies have not made any profit distributions
since June 30, 1997, and have not declared any dividend or paid
any interest on shareholder loans or repaid any shareholder loans
since that date. They will not make any profit distributions and
not pay any dividend or pay any interest on shareholder loans or
repay any shareholder loans until the Closing Date.
20. Except as in the ordinary course of business, there are no
agreements between the Terrafon Companies on the one side and any
of the Sellers or any former shareholders/partner on the other
side (including any affiliate or related party of such Sellers or
former shareholder/partners) except as disclosed in Enclosure 14
still in force, and no Seller or former shareholder/partner,
including any affiliate or related party of such Seller or former
shareholder/partner has any right or claim in or to any of the
Terrafon Companies or their assets.
21. Since June 30, 1997
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- the Terrafon Companies have continued to conduct their respective
business in a normal and ordinary fashion and consistent with
past practice; and
- no changes or events (other than changes or events in the general
economy or the business of SMR Operators in general) have
occurred which had or reasonably can be expected to have a
material adverse effect on the business of the Terrafon Companies
or their operations or profitability or net worth.
X. Xxxxxxx represent and warrant (each with regard to the Sold Limited
Partnership Interest, and the Sold Terrafon Share sold by it) to the
Buyer in the form of an independent guarantee that the following
information is true, correct and complete, and will be correct and
complete as of the Closing Date:
The limited partnership interests in Terrafon KG and the shares in Terrafon
GmbH sold by Seller 1 and Seller 2, respectively, are fully paid up, and
the contributions were not repaid to the partners/shareholders, and neither
the limited partnership interest nor any limited partner is subject to
assessment (Nachschu ). Seller 1 and Seller 2, respectively, are the sole
owners of the Sold Limited Partnership Interests and the Sold Terrafon
Shares, and have unlimited power to sell and dispose of them. The Sold
Limited Partnership Interests and the Sold Terrafon Shares together with
all other partner's/shareholders' rights associated with them are validly
existing, free of pledges and any other rights of third parties pursuant to
Sections 434 ff BGB. Upon the transfer of the Sold Limited Partnership
Interests and Sold Terrafon Shares, the Buyer will acquire the full and
unlimited ownership of these. The Sold Limited Partnership Interests and
the Sold Terrafon Shares are not subject to any preemption rights, options
or other acquisition rights of third parties. This Agreement and its
execution do not violate any agreements by which Seller 1 or Seller 2,
respectively, is bound.
Section 7
Non-Compliance with the Representations and Warranties
7.1 Should any of the representations and warranties made by the Sellers in
accordance with Section 6 prove either fully or partly to be incorrect, the
relevant Seller making the representation, or warranting the fact has to
put the Buyer in a position in which it would be, if the warranties and
representations were correct by restoring the condition corresponding to
the relevant representation and warranty (Wiederherstellungsanspruch).
Where the representations or warranties were made jointly, such obligation
exists as a joint obligation of the Sellers, whereby financial obligations
(monetary damages) are borne severally by the Sellers at 50% each. A
restoration claim by the Buyer can only be asserted within a period of 3
months by written declaration (also by xxxxxxx) to the Sellers. This time
limit shall commence at the time when the management of the Buyer
(Geschaftsfuhrung) is made aware of the facts which are the basis of such
restoration claim.
Sections 377, 378 HGB do not apply.
7.2 If the Sellers do not completely fulfill the restoration claim effectively
asserted pursuant to Section 7.1 within one month following the receipt of
the notice of the claim, the restoration claim will become invalid, and the
Buyer will be entitled to monetary damages for the incorrect and
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unrestored representations and warranties. Only direct damages of the
Terrafon Companies or the Buyer, but no indirect damages (consequential
damages), are to be compensated.
7.3 As far as the information provided for in Section 6 are based on the best
knowledge and belief of the Sellers, the Sellers are only liable, if at
least one of the Sellers had knowledge of the incorrectness or
incompleteness, or, if the incorrectness or incompleteness remained unknown
to one or more of them as a result of failure to apply the customary care.
The knowledge of the following persons shall be imputed upon both Sellers:
Xx. Xxxx, Xx. Xxxx, Xx. Xxxxxxx, Xx. Xxxxxx, Mr. Xxxxxxxxxxx, Mr. Xxxxxxxx,
Xx. Xxxxxxxx, Messrs. Xxxxxxxx and Xxxxxxxx.
7.4 Claims for breach of the representations and warranties can be asserted by
the Buyer only, if they exceed DM 100,000 individually. Provided however
that related claims under any particular representation and warranty clause
(e.g. 6.1 a) or b) or c) and so forth) shall count as one individual claim.
Claims for the breach of the representations and warranties in the amount
of or more than DM 100,000 individually can only be asserted by the Buyer,
if their aggregate amounts exceeds DM 500,000, in which case the entire
amount can be claimed. Representation or warranty claims are limited to a
maximum amount of DM 10 million. The special regulations for tax and
public charges as included in Section 8 remain unaffected by the above
limitation.
7.5 All claims for representations and warranties asserted by the Buyer become
statute-barred after December 31, 1999. This does not apply to claims made
as a result of or in connection with taxes and other public charges
(Section 8), for which a special clause is provided for under Section 8.
Furthermore, it does not apply to claims based on breach of representations
and warranties for ownership free from rights of third parties in or to the
Sold Interests, which shall expire within 8 (eight) years following the
Closing Date.
7.6 The representations and warranties provided for by this Agreement shall be
conclusive (abschlieBend). No other representations or warranties, whether
express or implied are being given by the Sellers. In particular, claims
based on theories of culpa in contrahendo, positive Forderungsverletzung,
and the like are excluded. The consequences for a breach of
representations and warranties made by the Sellers in this Agreement are
exclusively the remedies provided for by this Agreement. In particular,
the Buyer shall have no right to rescind, reverse or void the contract or
demand anything else than monetary damages; if, however, any of the Sellers
should fail to deliver proper title to the Sold Interests, the Buyer shall
have the rights set forth in Section 320 pp. of the German Civil Code,
after reasonable notice to the Seller. All other rights in connection with
express or implied representations and warranties are hereby excluded.
Irrespective of the limitations in this Section 7 the Parties shall retain
the rights under the concept of "cessation of the basis for a business
transaction" (Wegfall der Geschaftsgrundlage) developed by the German
Federal Court of Justice (BGH) allowing for the adjustment or avoidance of
the contract under very exceptional circumstances making it unbearable for
a party (schlechthin unzumutbar) to adhere to a contract.
7.7 Claims under the representations and warranties shall be excluded if the
facts giving rise to the relevant claims were disclosed to the Buyer in
writing or the Buyer and its representations had knowledge of such facts at
the time of the signing of this Agreement.
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The knowledge of the following persons shall be imputed upon the Buyer:
Messrs. von Xxxxxxxxxx, Xxxxx, Xxxx, Xxxxxxxx, Xxxxxxx, Xxxxxxx Xxxxxxxxx,
Xxxxxx, Xxxx, Xxxxxx.
Section 8
Tax Assessments, Audits and Public Changes
8.1 Sellers represent and warrant to the Buyer in the form of an independent
guarantee that the following information is true, correct and complete.
a) as of today the Terrafon Companies submitted all tax declarations
correctly and in time, and the tax declarations for 1996 will be
submitted by February 28, 1998;
b) for all taxes (including but not limited to tax deductibles, accessory
claims, interest and surcharges), contributions (including but not
limited to social insurance contributions), and other public charges,
which apply to the period up to and including the Effective Date, and
which have not been fully paid up by that time, sufficient reserves
have been made in the Terrafon Financial Accounts or will be made in
the accounts as of the Effective Date;
c) in the period from 01.01.1997 up to and including Effective Date no
tax liabilities accrued or will accrue for the Terrafon Companies,
which are based on activities or lack of activities beyond the scope
of the normal business activities (Handlungen und Unterlassungen) of
the Terrafon Companies. In particular, no legal transactions have
been carried out or will be carried out within these periods which
could be interpreted by the inland revenue office as being hidden
profit distribution/withdrawals or hidden deposits;
d) as of today, there were tax inspections at the Terrafon Companies for
the period between 1992 and 1994 and a VAT special inspection at
Terrafon KG for the period from March until July 1997. The results of
these inspections are and have been taken into complete consideration
in the Terrafon Financial Accounts.
8.2 The Buyer will inform the Sellers without delay, if the inland revenue
office either announces or commences a tax inspection of the Terrafon
Companies for the period up to and including December 31, 1997, and, if
need be, up to and including the Closing Date. The Buyer will give the
Sellers and their advisers the opportunity to inform themselves about the
progress of the tax inspection and to have direct contact with the tax
officials, who are involved in the tax inspection. The Sellers and their
advisers are authorized to take part in all discussions, in particular, in
the formal conclusive meeting and to express their opinions accordingly.
If no agreement can be reached with the inland revenue office, the Buyer is
obliged to file an appeal against the tax-assessment notice, which concerns
the personal taxes of the Sellers for the period up to and including
December 31, 1997, and, if need be, up to and including the Closing Date,
as advised by the Sellers and at their costs. In case Buyer does not
comply with this obligation, the Buyer has to indemnify the Sellers for
their additional personal tax payment obligations resulting from such
non-compliance.
8.3 In case the representations and warranties in Section 8.1 are untrue or
incorrect or incomplete, the
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Sellers are obliged to put the Buyer in a position in which it would be, if
the representations and warranties were correct. However, payments for tax
arrears in the assessment period prior to and including 1997, based on a
tax inspection of the corporate, trade, property, and value added tax of
Terrafon GrabH, and the trade or value added tax of Terrafon KG can only be
asserted if the individual amount of such payment or the aggregate amount
of payments related to each other are in excess of DM 50,000 or more.
8.4 Claims which apply either directly or indirectly to taxes, contributions or
other expenses in accordance with Section 8 for the period until the
Effective Date, will become statute-barred 6 months after they became
legally final and binding.
Section 9
Period between Signing and Closing
9.1 Subject to Section 9.2 below, the Sellers undertake to cause the Terrafon
Companies to conduct their business in a normal and ordinary fashion and
consistent with past practice and to give the Buyer reasonable access to
the Terrafon Companies and its management and employees. The financial
matters of the Terrafon Companies will be reviewed regularly (once a week)
with a representative of the Buyer, who shall be currently informed by the
Terrafon Companies.
9.2 The Sellers undertake to cause the Terrafon Companies from today's date up
to and including the Closing Date not to enter into any agreement providing
for a consideration of more than DM 25,000 if the consideration is paid on
a nonrecurrent basis and of more than DM 10,000 a year if the consideration
is paid on a recurrent basis without the prior written consent of the Buyer
(except according to the agreed upon Business Plan). Furthermore, Sellers
undertake to cause the Terrafon Companies not to enter into any agreements
or be involved in any business referred to or concerning matters referred
to in 6.1.b), 6.1.c) 1st and 2nd sentence, 6.1.e), last para, 6.1.f),
6.1.g), 6.1.i), 6.1.j), 6.1.I), 6.1.p) or 6.1.t) without the prior written
consent of the Buyer.
9.3 Notwithstanding the obligations contained in Article 9.2 above, the Sellers
undertake to inform the Buyer, and to seek the Buyer's prior written
consent, with respect to the transactions subject to
shareholders'/partners' approval in the Articles of Association/the
Partnership Agreement of the Terrafon Companies.
9.4 The Buyer will make available to both Sellers not later than February 14,
1998 audited accounts of the Terrafon Companies as of December 31, 1997,
The Buyer will procure that the auditors of the Sellers will have access to
all information necessary to review the audited accounts of the Terrafon
Companies as of December 31, 1997.
9.5 Seller 1 and Geotek Communications commit to lend, at 50% each, by way of
loan agreement providing for no interest or security (collateral), to be
concluded between Seller 1 and Geotek Communications and Terrafon KG,
sufficient amounts to Terrafon KG in order to meet the minimum funding
requirements set out in the Business Plan enclosed as Enclosure 15 (the
"Loan"). As of the Closing Date the Buyer hereby purchases the Loan so
extended to Terrafon KG from the relevant leaden (50% each) at face value,
and pay to them interest of 6% p.a. on the Loan from the date of funding,
each Seller at 50% of such amount. The relevant purchase
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agreement will contain representations as regards existence (Bestand),
assignability and documentation.
The purchase price for the Loan shall become due and payable on the Closing
Date, to the accounts of Seller 1 and Seller 2 (who shall receive the
purchase price for the Loan for Geotek Communications) as designated in
Section 4.3.1 and Section 4.3.2, respectively.
Section 10
Geotek Communications Guarantee
If Seller 2 fails to perform any of its obligations pursuant to this Agreement,
Geotek Communications hereby unconditionally and irrevocably guarantees the
complete performance when due of all such obligations of Seller 2. With respect
to payment obligations, Geotek Communications guarantees to make payment upon
first written demand of the Buyer stating that and to which extent Seller 2
failed to perform its payment obligations.
Section 11
Lease Guarantees
11.1 RWE Telliance Aktiengesellschaft, Essen and Xxxxxx
Aktiengesellschaft, Wuppertal have issued certain guarantees as
listed in Enclosure 16 vis-a-vis various leasing companies
("Relevant Lessors"), to cover obligations of the Terrafon
Companies under the leasing agreement with GEFA-Leasing AG dated
December 28, 1993 and the leasing agreement with Deutsche Leasing
AG dated July 12, 1993 (jointly referred to as the "Leasing
Agreements"), and Geotek Communications has issued an indemnity
as listed in Enclosure 17 vis-a-vis Xxxxxx Aktiengesllschaft
(jointly referred to as the "Guarantees"). Buyer undertakes, but
only if and when the Condition Precedent referred to in Section
3.1a) has been fulfilled, either
a) to provide for the release of the Guarantees in the form of
release declarations signed by the Relevant Lessors to be
presented to the relevant guarantors, or
b) to provide for one or more bank guarantees of reputable banks or
Sparkassen holding a European banking licence, to be issued in
favor of the Relevant Lessors substantially in the form of
Enclosure 18.
Section 12
Channel Fees Indemnification
It is presently disputed between the Sellers and the Buyer. whether or not
Terrafon KG has overpaid certain channel fees provided for in the Annual
Financial Statements of Terrafon KG as of December 31, 1995 in the amount of DM
3,339,000 plus surcharge and interest, if any (the "1995 Overpaid Fees"), or was
or is obliged to pay channel fees for the period from January 1, 1996 through
July 31, 1996 in the amount of DM 2,972,878.35 plus surcharge and interest, if
any (the "1996 Fees").
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It is hereby agreed between the Sellers and the Buyer that Terrafon KG leaves
all negotiations, and possible legal actions and defense against the assessment
of the 1995 Overpaid Few or the 1996 Fees ("Defense"), to the Sellers jointly in
the name of Terrafon KG. All costs and expense in connection with the Defense
are to be borne by the Sellers.
In the event the 1995 Overpaid Fees will be recovered finally (endgultig) in
whole or in part by Terrafon KG, the Buyer agrees to pay 50% of the amount of
the recovered fees net of costs and expenses by way of an increase in the
Purchase Price to each Seller not later than 15 days following a final
settlement of the 1996 Fees. In the event the 1996 Fees should become payable
following an indemnification Event, the Sellers, at 50% each, will pay to
Terrafon KG, the face amount of the 1996 Fees ("Channel Fee Indemnification")
first by an off-set with possible enforceable counter claims of Terrafon KG as
regards the 1995 Overpaid Fees, then by an instruction to the Agents (as defined
in the Escrow Agreement) to release all available ESCROW Funds to the Buyer to
the extent necessary to satisfy such claims, and if such ESCROW Funds should
prove insufficient, by direct payment to the BAPT. In the event the 1996 Fees
should be recovered finally (endgultig) later in whole or in part, or in the
event that the 1995 Overpaid Fees should be recovered finally (endgultig) later
in whole or in put, the Buyer will pay to the Sellers (at 50% each) the relevant
amounts paid by them (or deemed paid by the Sellers) due to the Channel Fee
Indemnification (plus excess, if any, of the 1995 Overpaid Fees over the Channel
Fee Indemnification). In the event an agreement should be reached between
Terrafon KG (represented by the Sellers), and the BAPT as regards the 1995
Overpaid Fees and the 1996 Fees, for instance by way of refund of the 1995
Overpaid Fees, and agreement to effect only a partial payment of the 1996 Fees,
the Channel Fee Indemnification shall be reduced by the amount recovered with
respect to the 1995 Overpaid Fees and any remaining balance shall be paid to the
Sellers.
In any event, however, Terrafon KG or the Buyer may withhold payments due
to the Sellers under the foregoing provisions to the extent Terrafon KG's
liability for the 1996 Fees is still outstanding, provided that they shall pay
any withheld amounts to the Sellers, at 50% each, within 15 days from the date
they or any of them is no longer entitled to withhold the amounts.
Section 13
Liability of the Sellers as Several Debtors
The Sellers have several, but no joint liability for all claims arising out of
and in connection with this Agreement and its execution as several debtors
(Section 420 BGB) unless expressly stated otherwise.
Section 14
Secrecy; Non-Competition Covenants
14.1 Each Seller and Geotek Communication undertakes for a period of 5 years to
keep strictly secret all matters and in particular all business and trade
secrets of Terrafon KG or Terrafon GmbH known to it (and not being public
knowledge) and not to disclose such matters and secrets, directly or
indirectly, to any third party, nor to cause such disclosure by third
parties (other than required by law or pursuant to regulatory
requirements), nor to use such matters or seats for itself.
14.2 Each Seller and Geotek Communications undertakes for a period of 2 years
from the day
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of this Agreement not to cause or influence any worker, employee, agent or
adviser (excluding lawyers, certified public accountants and tax advisers)
now or since January 1, 1997 employed or retained by Terrafon KG, Terrafon
GmbH or the Buyer to work in any way whatsoever for it, for an enterprise
in which it holds an interest, or for a competitor, or to terminate an
existing relationship with Terrafon KG, Terrafon GmbH or the Buyer unless
it has obtained the prior written consent of the Buyer.
14.3 Each Seller and Geotek Communications undertakes for a period of 5 years
from the day of this Agreement not to provide SMR-services in Germany, nor
to assist third parties, directly or indirectly, in the rendering of such
services, nor to hold it any way whatsoever an interest in a company which
renders such services. Excluded from this restriction is the acquisition
and holding for investment purposes of shares or convertible debentures of
a company listed on a major stock exchange which is engaged in the
rendering of such services, provided that the respective Seller does not
acquire directly and/or indirectly shares or convertible debarittues which
consist or can be converted to consist of more than 5% of the share capital
of the respective company.
Section 15
Expenses and Taxes
15.1 Transfer taxes, notary fees and other public expenses which are incurred in
connection with this Agreement and its execution, shall be borne by the
Buyer.
15.2 Each party to this Agreement shall bear the fees of their own advisers
(including the appointed accountants and auditors).
Section 16
Law; Language, Arbitration
16.1 Solely, German substantive law shall apply. This Agreement is executed in
the English version. and only the English version shall apply.
16.2 The Parties agree on the Arbitration Agreement set forth in Enclosure 19.
Section 17
Final Regulations
17.1 Amendments and supplements to this Agreement including this Article have to
be made in writing as long as no stricter form is required by law. Oral
agreements are excluded.
17.2 The Enclosures form an integral part of this Agreement. The headings in
this Agreement are only intended for better orientation within the text of
the Agreement and have no significance for the interpretation of the
contents of the Agreement.
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17.3 The Parties may assign rights under this Agreement only to their respective
affiliates within the meaning of Sections 15 ff. of the German Stock
Corporation Act.
17.4 The right to set-off or withholding shall be excluded unless the relevant
counterclaim is undisputed or adjudicated by final judgement or arbitration
panel ruling.
17.5 Default interest (Verzugszinsen) for obligations under this Agreement shall
be at least 10% p.a. A showing of higher damages shall be permitted.
Section 18
Partial Invalidity
18.1 If any provision of this Agreement should, for any reason, become partly or
completely invalid or impracticable (undurehfilhrbar), the remaining terms
of the Agreement will retain their validity. This also applies to an
omission in the Agreement. Instead of the invalid or impracticable term or
in replacement of the omission, a suitable term should apply, which,
provided it is legally possible, best meets the intent of the Parties, or
their possible intent, if they had considered the issue before the
execution of the Agreement taking into consideration the purpose of the
Agreement.
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