EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of December 31, 1998 (the "Effective Date"), by and between
Vicom, Inc., a Minnesota corporation ("Buyer"), and Enstar Networking
Corporation, a Minnesota corporation ("Seller").
RECITALS
A. Seller is engaged in the business of providing products and
services to design, build and maintain corporate network infrastructures (the
"Business").
B. Seller desires to sell and assign to Buyer, and Buyer
desires to purchase from Seller, on the terms and subject to the conditions set
forth in this Agreement, the assets of Seller identified in Article I of this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements and the conditions set forth in this
Agreement, Buyer and Seller hereby agree as follows:
ARTICLE I
TRANSFER OF ASSETS; ASSUMPTION OF LIABILITIES
1.01 TRANSFER OF ASSETS . On the terms and subject to the
conditions set forth in this Agreement, Seller shall, at the Closing (as defined
in Section 3.01 hereof), sell, transfer and assign to Buyer, and Buyer shall
purchase and acquire from Seller, all of Seller's right, title and interest, as
of the Closing Date (as defined in Section 3.01 hereof), in and to the following
assets of Seller (collectively, the "Assets"):
(a) The accounts receivable of Seller as of the Effective Date
(the "Accounts Receivable"), all of which are listed on Schedule 1.01(a) hereto;
(b) The work in progress of Seller as of the Effective Date
(the "WIP"), all of which is listed on Schedule 1.01(b) hereto;
(c) The inventory of Seller as of the Effective Date (the
"Inventory"), all of which is listed on Schedule 1.01(c) hereto; and
(d) The fixed assets of Seller listed on Schedule 1.01(d)
hereto (the "Fixed Assets");
(e) The open order backlog of Seller (gross profit) as of the
Effective Date (the "Backlog"), all of which is listed on Schedule 1.01(e)
hereto.
1.02 EXCLUDED ASSETS . No assets of any kind, other than those
specifically enumerated in Section 1.01 hereof, shall be sold to Buyer or
purchased by Buyer from Seller.
1.03 LIABILITIES ASSUMED. Buyer shall assume all liabilities
of Seller with respect to (a) the Lease Agreement dated September 23, 1998 by
and between Lexmark Office One Partners, LLP, and Seller and (b) the maintenance
contracts of Seller listed on Schedule 1.03 hereto.
1.04 EXCLUDED LIABILITIES. Buyer shall not assume, and nothing
contained in this Agreement shall be construed as an assumption by Buyer of, any
other liabilities, obligations or undertakings of Seller of any nature
whatsoever, whether accrued, absolute, fixed or contingent, known or unknown due
or to become due, unliquidated or otherwise.
ARTICLE II
PURCHASE PRICE
2.01 AMOUNT AND MANNER OF PAYMENT . The purchase price (the
"Purchase Price") for the Assets shall consist of the following:
(a) One Million Three Hundred Fifty Thousand (1,350,000)
shares of the Common Stock, par value $.01, of Buyer (the "Shares"); and
(b) A promissory note of Buyer in the form of Exhibit A
attached hereto (the "Closing Date Note"), in the principal amount of Seven
Hundred Fifty Thousand Dollars ($750,000). The Closing Date Note shall be
delivered by Buyer to Seller subject to the requirement that Seller shall hold
the Closing Date Note until the amount of the Book Value (defined below) of the
Assets is determined pursuant to Section 2.02 hereof, and, pursuant to Section
2.02, Seller and Buyer have exchanged the Closing Date Note for the Promissory
Note of Buyer in the form of Exhibit B attached hereto (the "Adjusted Note")
pursuant to Section 2.02 hereof.
2.02 ADJUSTMENT TO PURCHASE PRICE .
(a) The Purchase Price shall be decreased, on a
dollar-for-dollar basis, by the amount, if any (the "Purchase Price Downward
Adjustment"), by which the Book Value (as defined below) of the Assets as
determined on the Adjustment Date (as defined below) is less than $1,675,000;
provided that, to the extent the Purchase Price Downward Adjustment is
attributable to the collection of Accounts Receivable in an amount less than the
aggregate amount shown on Schedule 1.01(a) (an "AR Adjustment"), the AR
Adjustment shall made only to the extent that such amount exceeds five percent
(5%) of the aggregate amount shown on Schedule 1.01(a). The Purchase Price
Downward Adjustment shall be reflected by a substitution of the Adjusted Note
(in an amount equal to $750,000 less the Purchase Price Downward Adjustment) for
the Closing Date Note pursuant to Section 2.02(e) hereof.
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(b) The Purchase Price shall be increased, on a
dollar-for-dollar basis, by the amount, if any (the "Purchase Price Upward
Adjustment"), by which the Book Value of the Assets as determined on the
Adjustment Date is greater than $1,675,000. The Purchase Price Upward Adjustment
shall be paid to Seller in cash pursuant to the provisions of Section 2.02(e).
(c) "Book Value" shall mean (i) with respect to the Accounts
Receivable, the total dollar amount of the Accounts Receivable collected on or
before April 30, 1999 or, if later, the final collection date of any such
Account Receivable, but in any event, no later than June 30, 1999 (the
"Adjustment Date"), (ii) with respect to the WIP, the Inventory and the Fixed
Assets, the total dollar amount of such Assets as shown on the Final Asset List
(as defined below), and with respect to the Backlog, the total dollar amount of
the gross profit realized with respect to the Backlog on or before the
Adjustment Date as determined in accordance with the billing practices and
revenue recognition practices of Seller applied consistently throughout the
applicable period.
(d) "Final Asset List" shall mean the asset list of Seller as
of the Effective Date prepared in accordance with Sellers past practices and
delivered as provided in Section 2.02(e).
(e) As soon as practicable after the Closing Date (but in all
events prior to the Adjustment Date), Buyer shall (i) prepare the Final Asset
List and (ii) calculate the Purchase Price Downward Adjustment or the Purchase
Price Upward Adjustment, as the case may be (in either case, the "Purchase Price
Adjustment"), and deliver the same to Seller. If Seller does not agree with the
Final Asset List or the amount of the Purchase Price Adjustment, then the
accounting firms and representatives of Buyer and Seller shall meet and work in
good faith to resolve the issues pertaining to the Final Asset List or the
Purchase Price Adjustment and the computation thereof. If as a result of the
meeting or meetings Buyer and Seller agree on the Purchase Price Adjustment,
then the amount so agreed upon shall become the final Purchase Price Adjustment.
In the case of a Purchase Price Downward Adjustment the principal amount of the
Adjusted Note shall be based on such Purchase Price Downward Adjustment. In the
case of a Purchase Price Upward Adjustment, Seller Buyer shall promptly make a
cash payment to Seller in the amount of such Purchase Price Adjustment. If
within ten (10) days after delivery to Seller of the Purchase Price Adjustment
calculated by Buyer (or such longer period as the parties may mutually agree)
Buyer and Seller are unable to agree on the Final Asset List or the Purchase
Price Adjustment and the computation thereof, then Seller and Buyer shall retain
a mutually agreeable arbitrator or arbitrators using the applicable Commercial
Arbitration Rules of the American Arbitration Association (the "Arbitrator") to
resolve the dispute. The Arbitrator's work shall be limited to resolving the
dispute arising in connection with the Final Asset List or the Purchase Price
Adjustment and the computation thereof, and the decision of the Arbitrator shall
result in a Purchase Price Adjustment which shall, for purposes of this
Agreement, be and become the final Purchase Price Adjustment. The decision of
the Arbitrator shall be final and binding and not reviewable for error of any
kind. Each party shall bear its own costs in connection with the preparation and
review of the Purchase Price Adjustment and in resolving any disputes related
thereto, except that the fees and costs of the Arbitrator, if one is retained,
shall be paid one-half by the Seller and one-half by the Buyer. Within five (5)
business days of the agreement of Buyer and Seller, or resolution of any dispute
regarding the Purchase Price
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Adjustment (whether such resolution is by settlement or by decision of the
Arbitrator), Buyer shall deliver to Seller (i) in the case of a Purchase
Price Downward Adjustment, the Adjusted Note, dated the Closing Date, in the
principal amount established based on the final Purchase Price Downward
Adjustment, in exchange for which Seller shall cancel the Closing Date Note
and shall deliver the same back to Buyer in full satisfaction of all
principal and accrued interest owing thereunder and (ii) in the case of a
Purchase Price Upward Adjustment, a cash payment in the amount of the
Purchase Price Upward Adjustment.
2.03 ALLOCATION OF PURCHASE PRICE . The Buyer and Seller have
allocated the Purchase Price among the Assets as set forth on Schedule 2.03,
which schedule shall be updated as of the Closing Date in such a manner as
determined by Buyer subject to Seller's consent (which shall not be unreasonably
withheld), after taking into account the applicable Treasury Regulations and the
fair market value of such items. Buyer shall prepare for filing all of the tax
returns, information returns and statements ("Returns") that may be required
with respect to the transaction provided for herein pursuant to Section 1060 of
the Internal Revenue Code of 1986, as amended (the "Code"), any Treasury
Regulations promulgated thereunder, any other similar provision of the Code and
any other similar, applicable foreign, state or local tax law or regulation.
Seller shall provide information that may be required by Buyer for the purpose
of preparing such Returns, execute and file such Returns as requested by Buyer
and file all other returns and tax information on a basis that is consistent
with such Returns prepared by Buyer.
ARTICLE III
CLOSING
3.01 CLOSING . The closing of the transactions contemplated by
this Agreement (the "Closing") will take place at the offices of Xxxxxx &
Xxxxxxx, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx at 10:00 a.m. on January
8, 1999, or at such other place and on such other date as is mutually agreeable
to Buyer and Seller. The date on which the Closing occurs is referred to herein
as the "Closing Date," and the Closing shall be deemed effective as of 8:00
a.m., Minneapolis time, on the Effective Date.
3.02 GENERAL PROCEDURE . At the Closing, each party shall
deliver to the party entitled to receipt thereof the documents required to be
delivered pursuant to Article VIII hereof and such other documents, instruments
and materials (or complete and accurate copies thereof, where appropriate) as
may be reasonably required in order to effectuate the intent and provisions of
this Agreement, and all such documents, instruments and materials shall be
satisfactory in form and substance to counsel for the receiving party. The
conveyance, transfer, assignment and delivery of the Assets shall be effected by
Seller's execution and delivery to Buyer of a xxxx of sale substantially in the
form attached hereto as Exhibit C (the "Xxxx of Sale") and such other
instruments of conveyance, transfer, assignment and delivery as Buyer shall
reasonably request to cause Seller to transfer, convey, assign and deliver the
Assets to Buyer.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
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Seller hereby represents and warrants to Buyer that, except as
set forth in the Disclosure Schedule delivered by Seller to Buyer on the date
hereof (the "Disclosure Schedule") (which Disclosure Schedule sets forth the
exceptions to the representations and warranties contained in this Article IV):
4.01 INCORPORATION AND CORPORATE POWER . Seller is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Minnesota and has all requisite corporate power and
authority to own the Assets being sold to Buyer.
4.02 EXECUTION, DELIVERY; VALID AND BINDING AGREEMENT . The
execution, delivery and performance of this Agreement by Seller and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Seller, and, except for approval by
Seller's shareholders, no other proceedings on its part are necessary to
authorize the execution, delivery and performance of this Agreement. This
Agreement has been duly executed and delivered by Seller and, assuming that this
Agreement is the valid and binding agreement of Buyer, constitutes the valid and
binding obligation of Seller, enforceable in accordance with its terms, except
as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights or by general principles of equity.
4.03 AUTHORITY; NO BREACH . Seller has the requisite corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution, delivery and performance of this Agreement
by Seller and the consummation of the transactions contemplated hereby do not
conflict with or result in any breach of any of the provisions of, or constitute
a default under, result in a violation of, result in the creation of a right of
termination or acceleration or any lien, security interest, charge or
authorization, consent, approval, exemption or other action by or notice to any
court or other governmental body, under the provisions of the Articles of
Incorporation or Bylaws of Seller or any indenture, mortgage, lease, loan
agreement or other agreement or instrument by which Seller or the Assets are
bound or affected (other than consents required under Section 8.01(c) hereof,
which Seller undertakes to obtain prior to the Closing Date), or any law,
statute, rule or regulation or order, judgment or decree to which Seller or the
Assets are subject. No consent, approval or authorization of any governmental or
regulatory authority is required to be obtained by Seller in connection with its
execution, delivery and performance of this Agreement.
4.04 BOOK VALUE. Except as provided in Section 4.09 hereof,
the Book Value of the Assets as of the Effective Date is not less than
$1,675,000.
4.05 BROKERAGE. No third party shall be entitled to receive
any brokerage commissions, finder's fees, fees for financial advisory services
or similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of Seller,
except for the fees of Xxxxxxxxx, Agio, Xxxxx & Company, whose fees will be
borne by Seller.
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4.06 TITLE TO ASSETS . Seller owns good and marketable title
to the Assets, free and clear of all liens and encumbrances, except for (i)
liens for current taxes not yet due and payable, (ii) liens set forth under the
caption referencing this Section 4.06 in the Disclosure Schedule, and (iii)
assets disposed of in the ordinary course of business.
4.07 INVENTORY . The Disclosure Schedule describes under the
caption referencing this Section 4.07 all of the inventory comprising any of the
Assets. Seller's inventory of purchase parts, work in process and finished goods
relating to the Business consists of items of a quality and quantity usable and,
with respect to finished goods only, salable at the Seller's normal profit
levels, in each case, in the ordinary course of the business. Seller's inventory
of finished goods generated by the Business is not obsolete or damaged and is
merchantable and fit for its particular use. Seller has on hand or has ordered
and expects timely delivery of such quantities of raw materials and has on hand
such quantities of work in process and finished goods as are reasonably required
timely to fill current orders on hand with respect to the Business which require
delivery within 30 days and to maintain the manufacture and shipment of products
at its normal level of operations. As of the date of the relevant dates, the
values at which such inventories are carried on the books of Seller will be
determined in accordance with generally accepted accounting principles.
4.08 TAX MATTERS . To the best of Seller's knowledge, there
are no liens for any taxes, charges, fees, levies, or other assessments,
including, without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license, withholding,
payroll, employment, social security, unemployment, excise, estimated,
severance, stamp, occupation, property, or other taxes, customs duties, fees,
assessments, or charges of any kind whatsoever, including, without limitation,
all interest and penalties thereon, and additions to tax or additional amounts
imposed by any taxing authority, domestic or foreign ("Taxes") upon any of the
assets, except liens for Taxes not yet due.
4.09 ACCOUNTS RECEIVABLE. Not less than 95% in dollar amount
of the Accounts Receivable are valid receivables, are not subject to valid
counterclaims or setoffs, and are collectible in accordance with their terms on
or before the Adjustment Date.
4.10 LITIGATION . Except as set forth in the Disclosure
Schedule under the caption referencing this Section 4.10, there are no actions,
suits, proceedings, orders or investigations pending or, to the best knowledge
of Seller, threatened against Seller, at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, affecting the Business
or the Assets, and there is no reasonable basis known to Seller for any of the
foregoing.
4.11 WARRANTIES . The Disclosure Schedule summarizes under the
caption referencing this Section 4.11 all claims outstanding, pending or, to the
best of Seller's knowledge, threatened for breach of any warranty relating to
any products of the Business sold by Seller prior to the date hereof.
4.12 CUSTOMERS AND SUPPLIERS . To the best of Seller's
knowledge, the Disclosure Schedule, under the caption referencing this Section
4.12, lists the current customers and suppliers of Seller, and no customer or
supplier listed on the Disclosure Schedule under the
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caption referencing this Section 4.12 has indicated that it will stop or
decrease the rate of business done with Seller except for changes in the
ordinary course of Seller's business.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that:
5.01 INCORPORATION AND CORPORATE POWER . Buyer is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Minnesota, with the requisite corporate power and authority
to enter into this Agreement and perform its obligations hereunder.
5.02 EXECUTION, DELIVERY; VALID AND BINDING AGREEMENT . The
execution, delivery and performance of this Agreement by Buyer and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all requisite corporate action, and no other corporate proceedings
on its part are necessary to authorize the execution, delivery or performance of
this Agreement. This Agreement has been duly executed and delivered by Buyer and
constitutes the valid and binding obligation of Buyer, enforceable in accordance
with its terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights or by general principles
of equity.
5.03 NO BREACH . The execution, delivery and performance of
this Agreement by Buyer and the consummation by Buyer of the transactions
contemplated hereby do not conflict with or result in any breach of any of the
provisions of, constitute a default under, result in a violation of, result in
the creation of a right of termination or acceleration or any lien, security
interest, charge or encumbrance upon any assets of Buyer, or require any
authorization, consent, approval, exemption or other action by or notice to any
court or other governmental body, under the provisions of the Articles of
Incorporation or Bylaws of Buyer or any indenture, mortgage, lease, loan
agreement or other agreement or instrument by which Buyer is bound or affected,
or any law, statute, rule or regulation or order, judgment or decree to which
Buyer is subject.
5.04 BROKERAGE . No third party shall be entitled to receive
any brokerage commissions, finder's fees, fees for financial advisory services
or similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of Buyer.
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ARTICLE VI
COVENANTS OF SELLER
6.01 CONDUCT OF THE BUSINESS . Seller agrees to observe each
term set forth in this Section 6.01 and agrees that, from the date hereof until
the Closing Date, unless otherwise consented to by Buyer in writing:
(a) Seller shall not, directly or indirectly, sell, pledge,
dispose of or encumber any of the Assets, except in the ordinary course of
business.
(b) Seller shall not cancel or terminate its current insurance
policies covering the Assets and the Business, or cause any of the coverage
thereunder to lapse, unless simultaneously with such termination, cancellation
or lapse, replacement policies providing coverage equal to or greater than the
coverage under the canceled, terminated or lapsed policies for substantially
similar premiums are in full force and effect.
(c) Seller shall (i) file any Tax returns, elections or
information statements with respect to any liabilities for Taxes of Seller or
other matters relating to Taxes of Seller which affect the Assets and pursuant
to applicable law must be filed prior to the Closing Date; (ii) promptly upon
filing provide copies of any such Tax returns, elections or information
statements to Buyer; (iii) make any such Tax elections or other discretionary
positions with respect to Taxes taken by or affecting Seller only upon prior
consultation with and consent of Buyer; and (iv) not amend any Return.
6.02 ACCESS TO BOOKS AND RECORDS . Between the date hereof and
the Closing Date, Seller shall afford to Buyer and its authorized
representatives (the "Buyer's Representatives") full access at all reasonable
times and upon reasonable notice to the offices, properties, books, records,
officers, employees and other items of the Business, and otherwise provide such
assistance as is reasonably requested by Buyer in order that Buyer may have a
full opportunity to make such investigation and evaluation as it shall
reasonably desire to make of the Business and the Assets. In addition, Seller
and its officers and directors shall cooperate fully (including providing
introductions where necessary) with Buyer to enable Buyer to contact such third
parties, including customers, prospective customers, specifying agencies,
vendors or suppliers of the Business, as Buyer deems reasonably necessary to
complete its due diligence; provided that Buyer agrees not to initiate such
contacts without the prior approval of Seller, which approval will not be
unreasonably withheld.
6.03 CONDITIONS . Seller shall take all commercially
reasonable actions necessary to cause the conditions set forth in Section 8.01
to be satisfied and to consummate the transactions contemplated herein as soon
as reasonably possible after the satisfaction thereof (but in any event within
three business days of such date).
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ARTICLE VII
COVENANTS OF BUYER
Buyer covenants and agrees with Seller as follows:
7.01 CONDITIONS. Buyer shall take all commercially reasonable
actions necessary to cause the conditions set forth in Section 8.02 to be
satisfied and to consummate the transactions contemplated herein as soon as
reasonably possible after the satisfaction thereof (but in any event within
three business days of such date).
ARTICLE VIII
CONDITIONS TO CLOSING
8.01 CONDITIONS TO BUYER'S OBLIGATIONS . The obligation of
Buyer to consummate the transactions contemplated by this Agreement is subject
to the satisfaction of the following conditions on or before the Closing Date:
(a) The representations and warranties set forth in Article IV
hereof shall be true and correct in all material respects at and as of the
Closing Date as though then made, except that any such representation or
warranty made as of a specified date (other than the date hereof) shall only
need to have been true on and as of such date.
(b) Seller shall have performed in all material respects all
of the covenants and agreements required to be performed and complied with by it
under this Agreement prior to the Closing.
(c) Seller shall have obtained, or caused to be obtained, each
consent and approval required in order to complete the transactions contemplated
hereby.
(d) There shall not be threatened, instituted or pending any
action or proceeding, before any court or governmental authority or agency,
domestic or foreign, challenging or seeking to make illegal, or to delay or
otherwise directly or indirectly restrain or prohibit, the consummation of the
transactions contemplated hereby or seeking to obtain material damages in
connection with such transactions.
(e) On the Closing Date, Seller shall have delivered to Buyer
the following:
(i) the Xxxx of Sale and such other instruments of
conveyance, transfer, assignment and delivery as Buyer shall have
reasonably requested pursuant to Section 3.02 hereof;
(ii) a certificate of an officer of Seller, dated the
Closing Date, stating that the conditions set forth in subsections
8.01(a) and (b) above have been satisfied; and
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(iii) a certificate of the Secretary of Seller as to
the currency of the Articles of Incorporation and Bylaws of Seller and
the resolutions adopted by the board of directors and shareholder of
Seller with respect to the transactions contemplated by this Agreement
(with copies of such documents attached).
(f) Buyer shall have completed to its satisfaction its due
diligence review of Seller's business and the Assets.
(g) Buyer and Seller shall have entered into a transition
services agreement (the "Transition Services Agreement") on terms and conditions
mutually satisfactory to Buyer and Seller with respect to services to be
provided to Buyer by Seller, at Seller's cost, until March 31, 1999 or earlier
terminated by Buyer. The principal purpose of the Transition Services Agreement
is to ensure the smooth transition from Seller to Buyer of vendors, customers,
employee benefits and open work orders.
(h) Buyer and Seller shall have entered into a Stock Purchase
and Registration Rights Agreement in the form Attached hereto as Exhibit D (the
"Stock Purchase Agreement").
8.02 CONDITIONS TO SELLER'S OBLIGATIONS . The obligations of
Seller to consummate the transactions contemplated by this Agreement are subject
to the satisfaction of the following conditions on or before the Closing Date:
(a) The representations and warranties set forth in Article V
hereof will be true and correct in all material respects at and as of the
Closing as though then made;
(b) Buyer shall have performed in all material respects all
the covenants and agreements required to be performed by it under this Agreement
prior to the Closing;
(c) There shall not be threatened, instituted or pending any
action or proceeding, before any court or governmental authority or agency,
domestic or foreign, challenging or seeking to make illegal, or to delay or
otherwise directly or indirectly restrain or prohibit, the consummation of the
transactions contemplated hereby or seeking to obtain material damages in
connection with such transactions.
(d) On the Closing Date, Buyer will have delivered to Seller,
or in the case of the certificates representing the Shares, at Sellers's option,
to such designee of Seller as shall become a party to the Stock Purchase
Agreement:
(i) a certificate or certificates representing the
Shares;
(ii) the Closing Date Note;
(ii) a certificate of the President of Buyer, dated
the Closing Date, stating that the conditions set forth in subsections
8.02(a) and (b) above have been satisfied; and
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(iii) a certificate of the Secretary of Buyer as to
the currency of the Articles of Incorporation and Bylaws of Seller and
the resolutions adopted by the board of directors of Buyer with respect
to the transactions contemplated by this Agreement (with copies of such
documents attached).
(e) Buyer and Seller shall have entered into the Stock
Purchase Agreement.
ARTICLE IX
TERMINATION
9.01 TERMINATION . This Agreement may be terminated at any
time prior to the Closing:
(a) by the mutual consent of Buyer and Seller;
(b) by either Buyer or Seller if there has been a material
misrepresentation, breach of warranty or breach of covenant on the part of the
other in the representations, warranties and covenants set forth in this
Agreement;
(c) by either Buyer or Seller if the transactions contemplated
hereby have not been consummated on or before January 15, 1999; provided that,
neither Buyer nor Seller will be entitled to terminate this Agreement pursuant
to this Section 9.01(c) if such party's willful breach of this Agreement has
prevented the consummation of the transactions contemplated hereby; or
(d) by Buyer if, after the date hereof, there shall have been
a material adverse change in the condition of the Business or Assets or if,
after the date hereof, an event shall have occurred which, so far as reasonably
can be foreseen, would result in any such change, except to the extent such
change is directly caused by Buyer.
9.02 EFFECT OF TERMINATION . In the event of termination of
this Agreement by either Buyer or Seller as provided in Section 9.01, this
Agreement shall become void and there shall be no liability on the part of
either Buyer or Seller, or their respective stockholders, officers, or
directors, except that Sections 11.01, 11.02 and 11.10 hereof shall survive
indefinitely, and except with respect to willful breaches of this Agreement
prior to the time of such termination.
ARTICLE X
SURVIVAL
10.01. SURVIVAL, INDEMNIFICATION. The covenants,
representations and warranties contained in this Agreement shall survive the
closing.
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ARTICLE XI
ADDITIONAL AGREEMENTS
11.01 ELECTION OF DIRECTORS. To the extent permitted by
applicable law, commencing at the first meeting of its Board of Directors of
Buyer following the Closing Date, Buyer will cause one individual to be selected
by Seller to be appointed to its Board of Directors, and thereafter, for so long
as Seller continues to hold not less than 10% of the Shares, at each meeting of
the shareholders of Buyer at which directors are to be elected, to cause such
individuals to be nominated, and to use its best efforts to cause such
individual or a substitute selected by Seller, to be elected, to such Board of
Directors. Seller shall have the absolute right to replace or fill vacancies
with respect to the director selected by it.
11.02 SELLER EMPLOYEES. Buyer will use its best efforts to
employ Seller's employees listed on Schedule V on terms comparable to their
current employment terms and to maintain such employment on comparable terms
through the Adjustment Date.
11.03 PURCHASE RIGHTS. Through June 30, 1999, Seller will use
its best efforts to ensure that Buyer can continue to purchase cable and
networking equipment at the same cost of goods structure currently obtained by
Seller, subject to changes in market conditions and manufacturer's standard
pricing and discount structures.
11.05 LEASE. Buyer and Seller shall use their best efforts to
cooperate and accomplish the assignment, from Seller to Buyer, of the Lease
Agreement dated September 23, 1998 by and between Lexmark Office One Partners,
LLP, and Seller.
11.06 BUSINESS PRACTICES. Buyer will continue to treat Backlog
in accordance with the billing practices and revenue recognition practices of
Seller throughout the period prior to the Adjustment Date. Buyer will pay all
vendors on terms and conditions consistent with past practices of Seller
throughout the period prior to the Adjustment Date.
ARTICLE XII
MISCELLANEOUS
12.01 CONFIDENTIALITY; PRESS RELEASES AND ANNOUNCEMENTS . The
existence of this Agreement and the negotiations between Buyer and Seller
relative to the transactions contemplated hereby are confidential information
and Buyer and Seller shall each use their best efforts to maintain the
confidentiality of that information. Prior to the Closing Date, neither party
hereto shall issue any press release (or make any other public announcement)
related to this Agreement or the transactions contemplated hereby or make any
announcement to the employees, customers or suppliers of Seller without prior
written approval of the other party hereto, except as may be necessary, in the
opinion of counsel to the party seeking to make disclosure, to comply with the
requirements of this Agreement or applicable law. If any such
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press release or public announcement is so required, the party making such
disclosure shall consult with the other party prior to making such
disclosure, and the parties shall use all reasonable efforts, acting in good
faith, to agree upon a text for such disclosure which is satisfactory to both
parties.
12.02 EXPENSES . Except as otherwise expressly provided for
herein, Seller and Buyer will pay all of their own expenses (including
attorneys' and accountants' fees) in connection with the negotiation of this
Agreement, the performance of their respective obligations hereunder and the
consummation of the transactions contemplated by this Agreement (whether
consummated or not).
12.03 FURTHER ASSURANCES . Seller agrees that, on and after
the Closing Date, it shall take all appropriate action (without incurring any
out-of-pocket expenses) and execute any documents, instruments or conveyances of
any kind which may be reasonably necessary or advisable to carry out any of the
provisions hereof, including, without limitation, putting Buyer in possession
and operating control of the Assets.
12.04 AMENDMENT AND WAIVER. This Agreement may not be amended
or waived except in a writing executed by the party against which such amendment
or waiver is sought to be enforced. No course of dealing between or among any
persons having any interest in this Agreement will be deemed effective to modify
or amend any part of this Agreement or any rights or obligations of any person
under or by reason of this Agreement.
12.05 NOTICES. All notices, demands and other communications
to be given or delivered under or by reason of the provisions of this Agreement
will be in writing and will be deemed to have been given when personally
delivered or three business days after being mailed by first class U.S. mail,
return receipt requested, or when receipt is acknowledged, if sent by facsimile,
telecopy or other electronic transmission device. Notices, demands and
communications to Buyer and Seller will, unless another address is specified in
writing, be sent to the address indicated below:
NOTICES TO SELLER OR SELLER: WITH A COPY TO:
Seller, Inc. Xxxxxx & Xxxxxxx LLP
7450 Flying Cloud Drive 000 Xxxxx Xxxxx Xxxxxx
Xxxx Xxxxxxx, Xxxxxxxxx 00000 Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: President Attention: Xxxxxxx X. Xxxxxxxxxxxx
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
NOTICES TO BUYER: WITH A COPY TO:
Xxx Xxxxxx Xxxxxx Xxxx
Vicom, Inc. Vicom, Inc.
0000 Xxxxxxx Xxxxxx Xxxxx 0000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxxxxxxxx 00000 Xxx Xxxx, Xxxxxxxxx 00000
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
12.06 ASSIGNMENT . This Agreement and all of the provisions
hereof will be binding upon and inure to the benefit of the parties hereto and
their respective successors and
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permitted assigns, except that neither this Agreement nor any of the rights,
interests or obligations hereunder may be assigned by either party hereto
without the prior written consent of the other party hereto.
12.07 SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
12.08 COMPLETE AGREEMENT. This Agreement and the Exhibits
hereto, the Disclosure Schedule and the other documents referred to herein
contain the complete agreement between the parties and supersede any prior
understandings, agreements or representations by or between the parties, written
or oral, which may have related to the subject matter hereof in any way.
12.09 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts taken together will constitute one and the
same instrument.
12.10 GOVERNING LAW. The internal law, without regard to
conflicts of laws principles, of the State of Minnesota will govern all
questions concerning the construction, validity and interpretation of this
Agreement and the performance of the obligations imposed by this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
VICOM, INC.
By
Its___________________________________
ENSTAR NETWORKING CORPORATION
By______________________________________
Its___________________________________
15
Exhibit A
THIS PROMISSORY NOTE IS SUBJECT TO THE TERMS OF THAT CERTAIN ASSET PURCHASE
AGREEMENT BETWEEN MAKER AND PAYEE DATED AS OF DECEMBER 31, 1998
PROMISSORY NOTE
$750,000 December 31, 1998
FOR VALUE RECEIVED, the undersigned, VICOM, INC., a Minnesota limited
liability company (the "Maker"), hereby promises to pay to the order of ENSTAR
NETWORKING CORPORATION, a Minnesota corporation (the "Payee,") which term
includes any subsequent registered holder hereof) at Minneapolis, Minnesota or
at such other place as the Payee may from time to time hereafter designate to
the Maker in writing, the principal sum of Seven Hundred Fifty Thousand and
no/100 Dollars ($750,000).
The unpaid principal balance hereof from time to time outstanding shall
bear interest at the rate of nine percent (9%) per annum, payable quarterly in
arrears on or before March 31, June 30, September 30 and December 31, commencing
March 31, 1999.
The principal hereof is payable on or before December 31, 2003.
This Note may be prepaid by Maker at any time, and shall be prepaid
upon the occurrence of a Liquidity Event. "Liquidity Event" shall mean (i) any
merger or consolidation of Maker in which the beneficial owners of Maker's
capital stock immediately prior to such transaction hold in the aggregate less
than a majority of the voting power in the surviving entity, (ii) a sale of
substantially all of the assets of Maker, or (iii) the dissolution, liquidation
or winding up of Maker. In the event Maker sells equity securities for cash in a
private placement or public offering (but not including (x) the sale of stock
upon the exercise of convertible securities or warrants outstanding on the date
hereof, (y) the sale of stock upon the exercise of employee stock options or (z)
the sale by Maker of not more than $600,000 in preferred stock in a private
placement to close in January 1999), Maker shall use 25% of the net proceeds
from such sale of equity securities to repay all or a portion of this Note.
The occurrence of any one or more of the following events shall
constitute an Event of Default, and upon the occurrence of any Event of Default,
Payee may declare this Note to be, and the same shall forthwith become,
immediately due and payable and the Payee may exercise all rights and remedies
as may otherwise be allowed by law:
(1) The Maker shall fail to make any payment of principal or
interest hereon when due and such failure shall continue for 10 days
after the due date thereof.
(2) The Maker shall become insolvent or shall generally not
pay its debts as they mature or shall apply for, shall consent to, or
shall acquiesce in the appointment of a
16
custodian, trustee or receiver for the Maker or for a substantial part
of the property thereof or, in the absence of such application, consent
or acquiescence, a custodian, trustee or receiver shall be appointed
for the Maker or for a substantial part of the property thereof; or any
bankruptcy, reorganization, debt arrangement or other proceedings under
any bankruptcy or insolvency law shall be instituted by or against the
Maker and, if instituted against the Maker, shall have been consented
to or acquiesced in by the Maker or shall remain undismissed for 90
days, or an order for relief shall have been entered against the Maker.
(3) Any execution or attachment shall be issued whereby any
substantial part of the property of the Maker shall be taken or
attempted to be taken and the same shall not have been vacated or
stayed within 90 days after the issuance thereof.
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT
TO CONFLICT OF LAWS PRINCIPLES THEREOF.
The Maker hereby waives presentment for payment, notice of dishonor,
protest and notice of protest.
The Maker shall pay principal and interest under this Note without any
deduction whatsoever, including, but not limited to, any deduction for any
setoff or counterclaim.
If this Note is not paid when due, the Maker shall pay all of the
Payee's costs of collection including reasonable attorneys' fees.
This Note may be transferred to a subsequent registered holder, upon
surrender to the Maker, as registrar, of this Note, duly endorsed, or
accompanied by a written instrument of transfer in form satisfactory to Maker,
duly executed by the Payee hereof or the Payee's attorney duly authorized in
writing.
VICOM, INC.
By__________________________
Its_______________________
17
Exhibit B
THIS PROMISSORY NOTE IS SUBJECT TO THE TERMS OF THAT CERTAIN ASSET PURCHASE
AGREEMENT BETWEEN MAKER AND PAYEE DATED AS OF DECEMBER 31, 1998
PROMISSORY NOTE
$___________________ December 31, 1998
FOR VALUE RECEIVED, the undersigned, VICOM, INC., a Minnesota limited
liability company (the "Maker"), hereby promises to pay to the order of ENSTAR
NETWORKING CORPORATION, a Minnesota corporation (the "Payee,") which term
includes any subsequent registered holder hereof) at Minneapolis, Minnesota or
at such other place as the Payee may from time to time hereafter designate to
the Maker in writing, the principal sum of _________________ Dollars
($_________).
This Note replaces that certain Promissory Note dated January __, 1999
from Maker to Payee in the principal amount of $750,000.
The unpaid principal balance hereof from time to time outstanding shall
bear interest at the rate of nine percent (9%) per annum, payable quarterly in
arrears on or before March 31, June 30, September 30 and December 31, commencing
March 31, 1999.
The principal hereof is payable on or before December 31, 2003.
This Note may be prepaid by Maker at any time, and shall be prepaid
upon the occurrence of a Liquidity Event. "Liquidity Event" shall mean (i) any
merger or consolidation of Maker in which the beneficial owners of Maker's
capital stock immediately prior to such transaction hold in the aggregate less
than a majority of the voting power in the surviving entity, (ii) a sale of
substantially all of the assets of Maker, or (iii) the dissolution, liquidation
or winding up of Maker. In the event Maker sells equity securities for cash in a
private placement or public offering (but not including (x) the sale of stock
upon the exercise of convertible securities or warrants outstanding on the date
hereof, (y) the sale of stock upon the exercise of employee stock options or (z)
the sale by Maker of not more than $600,000 in preferred stock in a private
placement to close in January 1999), Maker shall use 25% of the net proceeds
from such sale of equity securities to repay all or a portion of this Note.
The occurrence of any one or more of the following events shall
constitute an Event of Default, and upon the occurrence of any Event of Default,
Payee may declare this Note to be, and the same shall forthwith become,
immediately due and payable and the Payee may exercise all rights and remedies
as may otherwise be allowed by law:
(1) The Maker shall fail to make any payment of principal or
interest hereon when due and such failure shall continue for 10 days
after the due date thereof.
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(2) The Maker shall become insolvent or shall generally not
pay its debts as they mature or shall apply for, shall consent to, or
shall acquiesce in the appointment of a custodian, trustee or receiver
for the Maker or for a substantial part of the property thereof or, in
the absence of such application, consent or acquiescence, a custodian,
trustee or receiver shall be appointed for the Maker or for a
substantial part of the property thereof; or any bankruptcy,
reorganization, debt arrangement or other proceedings under any
bankruptcy or insolvency law shall be instituted by or against the
Maker and, if instituted against the Maker, shall have been consented
to or acquiesced in by the Maker or shall remain undismissed for 90
days, or an order for relief shall have been entered against the Maker.
(3) Any execution or attachment shall be issued whereby any
substantial part of the property of the Maker shall be taken or
attempted to be taken and the same shall not have been vacated or
stayed within 90 days after the issuance thereof.
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT
TO CONFLICT OF LAWS PRINCIPLES THEREOF.
The Maker hereby waives presentment for payment, notice of dishonor,
protest and notice of protest.
The Maker shall pay principal and interest under this Note without any
deduction whatsoever, including, but not limited to, any deduction for any
setoff or counterclaim.
If this Note is not paid when due, the Maker shall pay all of the
Payee's costs of collection including reasonable attorneys' fees.
This Note may be transferred to a subsequent registered holder, upon
surrender to the Maker, as registrar, of this Note, duly endorsed, or
accompanied by a written instrument of transfer in form satisfactory to Maker,
duly executed by the Payee hereof or the Payee's attorney duly authorized in
writing.
VICOM, INC.
By__________________________
Its_______________________
19
Exhibit C
XXXX OF SALE
THIS XXXX OF SALE is made and entered into, effective December 31, 1998
by and between Enstar Networking Corporation, a Minnesota corporation,
("Seller"), in favor of Vicom, Inc., a Minnesota corporation ("Buyer").
Pursuant to an Asset Purchase Agreement dated as of December 31, 1998
by and among Buyer and Seller (the "Purchase Agreement"), Seller has agreed to
transfer to Buyer substantially all of the assets of Seller (the "Assets") as
defined in the Purchase Agreement.
For good and valuable consideration paid by Buyer to Seller, the
receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereunder, Seller has bargained and sold, and does hereby grant,
bargain, sell, convey, transfer, assign and deliver the Assets to Buyer. Except
as noted in the Purchase Agreement, Buyer does not assume any of Seller's
liabilities or obligations, and in no event shall Buyer be deemed to have
assumed, guaranteed or agreed to discharge any of such liabilities or
obligations.
For the consideration aforesaid, Seller hereby irrevocably constitutes
and appoints Buyer the true and lawful attorney of Seller, with full power of
substitution, and gives and grants unto Buyer full power and authority in the
name of Seller, or in the name of Buyer, at any time and from time to time, (a)
to collect, assert or enforce any claim, right or title of any kind in or to the
Assets, to institute and prosecute all actions, suits and proceedings which
Buyer may deem proper in order to collect, assert or enforce any such claim,
right or title, to defend and compromise all actions, suits and proceedings in
respect of any of the Assets, and to do all such acts and things in relation
thereto as Buyer shall deem advisable, and (b) to take all actions which Buyer
may deem reasonable and proper in order to provide for Buyer the benefits of or
under any of the Assets where any required consent of a third party to the
assignment thereof to Buyer shall not have been obtained; with like power and as
fully as Seller could or might have done, hereby ratifying and confirming all
and whatever Buyer shall lawfully do or cause to be done. Seller acknowledges
and agrees that such powers are coupled with an interest and shall not be
revocable by it in any manner or for any reason and that Buyer shall be entitled
to retain for its own account any amounts collected pursuant to such powers,
including any amounts payable as interest in respect thereof.
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This Xxxx of Sale shall be binding upon Seller and its successors and
assigns, and shall inure to the benefit of Buyer and its successors and assigns.
IN WITNESS WHEREOF, Seller has caused this Xxxx of Sale to be
duly executed by a duly authorized officer, as of the date first above written.
ENSTAR NETWORKING CORPORATION
By
Its___________________________________
21
Exhibit D
STOCK PURCHASE AND REGISTRATION RIGHTS AGREEMENT
22
Schedule 1.03
MAINTENANCE CONTRACTS
23
Schedule 2.03
PURCHASE PRICE ALLOCATION
The Purchase Price shall be allocated as follows:
24
DISCLOSURE SCHEDULES
4.02 Seller has not obtained a required landlord consent to assignment of
the Lease Agreement dated September 23, 1998 by and between Lexmark Office One
Partners, LLP, and Seller
4.06 Encumbrance on assets -- U.S. Bank financing statement.
Performance bonds on open jobs in the ordinary course of business.
4.07 See Schedule 1.01(c)
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