ASSET CONTRIBUTION AGREEMENT
by and among
THIRD MILLENNIUM COMMUNICATIONS, INC.
GALAXY INFORMATION SERVICES, LLC
and
THE OFFICIAL INFORMATION COMPANY
Dated as of May 3, 2000
TABLE OF CONTENTS
ARTICLE I....................................................................1
1.1 DEFINITIONS......................................................1
1.2 SINGULAR/PLURAL; GENDER..........................................8
ARTICLE II...................................................................9
2.1 CONTRIBUTION.....................................................9
2.2 ISSUANCE OF LLC UNITS AND WARRANTS...............................9
2.3 CLOSING DATE DELIVERIES..........................................9
2.4 ASSUMPTION OF LIABILITIES........................................9
2.5 TAXES............................................................9
2.6 RISK OF LOSS.....................................................9
ARTICLE III.................................................................10
3.1 XXXX-XXXXX-XXXXXX NOTIFICATION..................................10
3.2 OTHER GOVERNMENTAL APPROVALS....................................10
ARTICLE IV..................................................................10
4.1 ORGANIZATION....................................................10
4.2 AUTHORIZATION; ENFORCEABILITY...................................10
4.3 ABSENCE OF CONFLICTING AGREEMENTS...............................11
4.4 TITLE TO CONTRIBUTED ASSETS; LIENS AND ENCUMBRANCES.............11
4.5 EQUIPMENT.......................................................11
4.6 CONTRACTS.......................................................12
4.7 LEASES..........................................................12
4.8 INTANGIBLE PROPERTY.............................................13
4.9 FINANCIAL STATEMENTS............................................14
4.10 NO MATERIAL ADVERSE CHANGE......................................14
4.11 NO LITIGATION; COMPLIANCE WITH LAW..............................15
4.12 TAXES...........................................................16
4.13 ACCOUNTS RECEIVABLES............................................16
4.14 INSURANCE.......................................................16
4.15 BROKERS.........................................................16
4.16 POWERS OF ATTORNEY..............................................17
4.17 EMPLOYEES.......................................................17
4.18 EMPLOYEE BENEFIT PLANS/LABOR RELATIONS..........................18
4.19 ENVIRONMENTAL COMPLIANCE........................................19
4.20 INTEREST IN CUSTOMERS, SUPPLIERS AND COMPETITORS................19
4.21 PROPER BUSINESS PRACTICES.......................................19
4.22 INVESTMENT INTENT...............................................20
4.23 ACCREDITED INVESTOR.............................................20
4.24 DISCLOSURE OF INFORMATION.......................................20
4.25 DISCLOSURE......................................................20
ARTICLE V...................................................................21
5.1 ORGANIZATION....................................................21
5.2 AUTHORIZATION; ENFORCEABILITY...................................21
5.3 AUTHORIZATION OF LLC UNITS......................................21
5.4 GALAXY'S CAPITALIZATION.........................................21
5.5 ABSENCE OF CONFLICTING LAWS AND AGREEMENTS......................22
5.6 SUBSIDIARIES....................................................23
5.7 FINANCIAL STATEMENTS............................................23
5.8 OWNERSHIP OF PROPERTIES.........................................25
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5.9 REGISTRATION RIGHTS.............................................25
5.10 PRIVATE OFFERING................................................25
5.11 NO BROKERS......................................................25
5.12 LITIGATION......................................................25
5.13 EMPLOYEES, LABOR RELATIONS, LABOR AGREEMENT.....................26
5.14 TAXES...........................................................27
5.15 ENVIRONMENTAL MATTERS...........................................28
5.16 ERISA...........................................................28
5.17 INTELLECTUAL PROPERTY RIGHTS....................................29
5.18 COMPLIANCE WITH LAWS............................................30
5.19 AGREEMENTS......................................................30
5.20 DISCLOSURE......................................................30
ARTICLE VI..................................................................30
6.1 ACCESS AND INSPECTION PERIOD....................................30
6.2 NOTICE OF ADVERSE CHANGES.......................................31
6.3 OPERATIONS OF THE BUSINESS PENDING CLOSING......................31
6.4 OPERATIONS OF GALAXY PENDING CLOSING............................33
6.5 CONSENTS........................................................34
6.6 COOPERATION.....................................................34
6.7 EXCLUSIVITY.....................................................34
6.8 RELEASE OF LIENS................................................34
6.9 TAX RETURNS AND PAYMENTS........................................34
6.10 PUBLIC ANNOUNCEMENT.............................................34
6.11 BEST EFFORTS....................................................35
ARTICLE VII.................................................................35
7.1 COMPLIANCE WITH AGREEMENT.......................................35
7.2 PROCEEDINGS AND INSTRUMENTS SATISFACTORY........................35
7.3 REPRESENTATIONS AND WARRANTIES..................................35
7.4 NO MATERIAL ADVERSE CHANGE......................................35
7.5 EVENT OF LOSS...................................................35
7.6 DELIVERIES AT CLOSING...........................................36
7.7 OTHER DOCUMENTS.................................................36
7.8 POSSESSION; INSTRUMENTS OF CONVEYANCE AND TRANSFER..............36
7.9 APPROVALS AND CONSENTS..........................................36
7.10 ABSENCE OF INVESTIGATIONS AND PROCEEDINGS.......................36
7.11 GOVERNMENTAL CONSENTS...........................................36
7.12 NO LIENS........................................................36
7.13 EMPLOYMENT AGREEMENTS...........................................36
7.14 EVW AGREEMENTS..................................................37
ARTICLE VIII................................................................37
8.1 COMPLIANCE WITH AGREEMENT.......................................37
8.2 PROCEEDINGS AND INSTRUMENTS SATISFACTORY........................37
8.3 REPRESENTATIONS AND WARRANTIES..................................37
8.4 NO MATERIAL ADVERSE CHANGE......................................37
8.5 DELIVERIES AT CLOSING...........................................38
8.6 OTHER DOCUMENTS.................................................38
8.7 ABSENCE OF INVESTIGATIONS AND PROCEEDINGS.......................38
8.8 GOVERNMENTAL CONSENTS...........................................38
8.9 GALAXY OPTIONS..................................................38
ARTICLE IX..................................................................39
9.1 RECORDS.........................................................39
9.2 EMPLOYEES.......................................................39
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ARTICLE X...................................................................40
10.1 INDEMNIFICATION BY 3MC..........................................40
10.1 INDEMNIFICATION BY 3MC..........................................40
10.2 INDEMNIFICATION BY TOIC.........................................41
10.3 NOTIFICATION OF CLAIMS; ELECTION TO DEFEND......................42
10.4 LIMITS FOR RECOVERY OF LOSSES...................................43
ARTICLE XI..................................................................43
11.1 TERMINATION.....................................................43
11.2 RIGHTS ON TERMINATION...........................................43
11.3 FURTHER ASSURANCES..............................................43
11.4 SURVIVAL........................................................44
11.5 ENTIRE AGREEMENT; AMENDMENT; AND WAIVERS........................44
11.6 EXPENSES........................................................44
11.7 BENEFIT; ASSIGNMENT.............................................44
11.8 NOTICES.........................................................44
11.9 COUNTERPARTS; HEADINGS..........................................45
11.10 SEVERABILITY....................................................45
11.11 NO RELIANCE.....................................................46
11.12 JUDICIAL INTERPRETATION.........................................46
11.13 SATURDAYS, SUNDAYS AND LEGAL HOLIDAYS...........................46
11.14 GOVERNING LAW; WAIVER OF JURY TRIAL.............................46
11.15 INCOME TAX POSITION.............................................46
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ASSET CONTRIBUTION AGREEMENT
This ASSET CONTRIBUTION AGREEMENT is entered into as of May 3, 2000, by
and among THIRD MILLENNIUM COMMUNICATIONS, INC., a Georgia corporation ("3MC"),
GALAXY INFORMATION SERVICES, LLC, a Delaware limited liability company
("Galaxy"), and THE OFFICIAL INFORMATION COMPANY, a Delaware corporation
("TOIC").
R E C I T A L S:
A. 3MC owns and operates an E-Products business division which sells
products and services through 3MC's ExpoExchange, e-booths and e-merchandise
(the "Business").
B. 3MC is willing to contribute to Galaxy and Galaxy is willing to
accept from 3MC substantially all of the assets of 3MC related to the Business
in exchange for 6,133,590 LLC Units (as defined herein) of Galaxy, on the terms
and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the Recitals and the mutual
covenants, conditions and agreements set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. Except as specified otherwise, when used in this
Agreement and any Exhibits or Schedules, the following terms shall have the
meanings specified:
"ACCOUNTS RECEIVABLE" shall mean all accounts receivable of 3MC
relating to the Business immediately prior to the Closing, as determined in
accordance with GAAP;
"AFFILIATE" as applied to any specified Person, means any other Person
that, directly or indirectly, controls, is controlled by or is under common
control with such specified Person. For purposes of the foregoing, "control,"
when used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise, and the terms "controlled" and "controlling" shall have
meanings correlative to the foregoing. In the case of a Person who is an
individual, the term "Affiliate" shall include, with respect to such specified
Person, (i) members of such specified Person's immediate family (as defined in
Instruction 2 of Item 404(a) of Regulation S-K under the Securities Act), and
(ii) trusts, the trustee or the beneficiaries of which are such specified Person
or members of such Person's immediate family as determined in accordance with
the foregoing clause (i). Notwithstanding the foregoing, Galaxy and its
Affiliates shall not be deemed Affiliates of 3MC for purposes of this Agreement;
"AGREEMENT" shall mean this Asset Contribution Agreement, together with
the Schedules and Exhibits, as the same shall be amended from time to time in
accordance with the terms hereof;
"APPLICABLE LAWS" with respect to any Person, shall mean all provisions
of laws, statutes, ordinances, rules, regulations, permits, certificates or
orders of any Governmental Authority applicable to such Person or any of its
assets or property or to which such Person or any of its assets or property is
subject, and all judgments, injunctions, orders and decrees of all courts and
arbitrators in proceedings or actions in which such Person is a party or by
which it or any of its assets or properties is or may be bound or subject;
"ASSUMED LIABILITIES" shall mean the obligations of 3MC under the
Contracts listed on Schedule 1.2, the Leases listed on Schedule 1.6, and
Contracts and Leases, if any, entered into after the date hereof and prior to
the Closing Date in accordance with this Agreement, in each case arising from
and accruing with respect to the operation of the Business after the Closing
Date;
"ASSUMPTION AGREEMENT" shall mean an instrument in the form of EXHIBIT
"A" attached hereto;
"AUDIT" shall mean any audit, assessment of Taxes, other examination by
any Tax Authority, proceeding or appeal of such proceeding relating to Taxes;
"XXXX OF SALE AND ASSIGNMENT" shall mean the instrument in the form of
EXHIBIT "B" attached hereto;
"BUSINESS" shall have the meaning set forth in the Recitals;
"CASH" shall mean all moneys of 3MC, whether in the form of cash, cash
equivalents, marketable securities, short term investments or deposits in bank
or other financial institution accounts of any kind;
"CLAIM" shall mean any claim, demand, assessment, judgment, order,
decree, action, cause of action, litigation, suit, investigation or other
proceeding;
"CLOSING" shall mean the conference to be held at 10:00 a.m., Atlanta
time on the Closing Date at the offices of Galaxy's counsel, Xxxxxxxxx Traurig,
at 0000 Xxxxxxxxx Xxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000, or at such other
time and place as the parties may mutually agree to in writing, at which the
transactions contemplated by this Agreement shall be consummated;
"CLOSING DATE" shall mean (i) the later of May 31, 2000, or as soon as
practicable thereafter as the conditions set forth in Section 7.11 and 8.8 have
been satisfied or (ii) on such other date as the parties may mutually agree. The
Closing shall be deemed effective as of 12:01 a.m. on the first day subsequent
to the Closing Date;
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"CODE" shall mean the Internal Revenue Code of 1986, as amended and the
rules and regulations promulgated thereunder;
"CONTRACT ASSIGNMENT" shall mean the Assignment and Assumption of
Contracts, in the form of EXHIBIT "C" attached hereto;
"CONTRACTS" shall mean those agreements (other than those included in
the Retained Assets and other than the Leases) under which 3MC conducts the
Business, whether written, oral, or implied, including, without limitation,
those agreements listed on Schedule 1.2;
"CONTRIBUTED ASSETS" shall mean: (a) the Contracts; (b) the Customer
Lists; (c) the Equipment; (d) the Intangible Property; (e) the Leases (other
than with respect to real property); (f) the Licenses; (g) the Miscellaneous
Assets; and (h) the Records;
"COPYRIGHTS" shall mean all copyrights (including computer software,
data and documentation) and any registrations and applications to register or
renew the registration thereof owned, leased, licensed or used by 3MC in
connection with the Business including, without limitation, those items listed
on Schedule 1.3;
"CUSTOMER LISTS" shall mean all lists, documents, information in
whatever form or media, including without limitation computer disks and programs
and other computer readable media used by, prepared for the benefit of, or in
the possession of 3MC concerning past, present and potential customers,
advertisers or vendors of the Business;
"DOCUMENTS" shall mean this Agreement and the other documents,
agreements and certificates executed pursuant to or in connection with this
Agreement;
"ENVIRONMENTAL CLAIM" shall mean with respect to a Person any claim,
action, cause of action, investigation of which such Person or any of its
Subsidiaries, including any of their management employees, have actual knowledge
after reasonable inquiry, or written notice by any third party alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries or penalties) arising out
of, based on or resulting from (a) the presence, or release into the
environment, of any Material of Environmental Concern at any location owned,
leased, used or operated by the such Person or any of its Subsidiaries, or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law;
"ENVIRONMENTAL LAWS" shall mean all Applicable Laws relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata and natural resources), including, without limitation, laws and
regulations relating to emissions, discharges, releases or threatened releases
of Materials of Environmental Concern, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Materials of Environmental Concern;
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"EQUIPMENT" shall mean all of the machinery, computers, equipment,
furniture, fixtures, furnishings, parts, vehicles and other items of tangible
personal property owned or leased by 3MC and used in connection with the
operation of the Business, including, without limitation, those items listed on
Schedule 1.4 (other than those items included in the Retained Assets);
"EQUITY INTEREST" shall mean (i) with respect to a corporation, any and
all issued and outstanding capital stock and warrants, options or other rights
to acquire capital stock or securities convertible into any form of equity
interest and (ii) with respect to a partnership, limited liability company or
similar Person, any and all units, interests, or other equivalents of, or other
ownership interests in any such Person and warrants, options or other rights to
acquire any such units or interests or securities convertible into any form of
equity interest;
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended;
"EVENT OF LOSS" shall mean any loss, taking, condemnation, damage or
destruction of or to any of the Contributed Assets;
"GAAP" shall mean United States generally accepted accounting
principles consistently applied;
"GALAXY BENEFIT PLANS" shall mean (i) all employee benefit plans
(within the meaning of Section 3(3) of ERISA), (ii) all current or deferred
compensation, pension, profit sharing, vacation or severance plans or programs
and (iii) all medical, hospital, accident, disability or death benefit plans
maintained by Galaxy or any of its domestic Subsidiaries or maintained for the
benefit of any current or former employee, officer or director of Galaxy or any
of its Subsidiaries;
"GALAXY" shall mean Galaxy Information Services, LLC, a Delaware
limited liability company;
"GALAXY'S CLOSING CERTIFICATE" shall mean the certificate of an officer
of Galaxy in the form of EXHIBIT "D-1" attached hereto;
"GALAXY'S OPINION OF COUNSEL" shall mean the opinion of counsel of
Galaxy in the form of EXHIBIT "E" attached hereto;
"GALAXY OPTIONS" shall mean options to purchase Class C LLC Units
issued pursuant to Galaxy's Option Plan;
"GALAXY'S OPTION PLAN" shall mean Galaxy's 2000 Unit Option Plan;
"GALAXY'S PERFORMANCE CERTIFICATE" shall mean the certificate of Galaxy
in the form of EXHIBIT "F" hereto;
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"GOVERNMENTAL AUTHORITY" shall mean any domestic or foreign government
or political subdivision thereof, whether on a federal, state or local level and
whether executive, legislative or judicial in nature, including any agency,
authority, board, bureau, commission, court, department or other instrumentality
thereof;
"HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended;
"INTANGIBLE PROPERTY" shall mean (a) the Copyrights; (b) the Trade
Secrets; (c) the Trademarks; (d) the Patents; (e) all computer software used in
the Business (other than those items included in the Retained Assets),
including, without limitation, those items listed on Schedule 1.5 (including the
object code and the source code to the extent referenced on such Schedule and
all documentation with respect to such software), world wide web sites and web
pages; (f) licenses of any of the foregoing; and (g) all goodwill associated
therewith;
"IRS" shall mean the Internal Revenue Service;
"LEASES" shall mean the leases, subleases and other agreements with
respect to Equipment or real property to which 3MC is a party with respect to
the Business, as listed on Schedule 1.6;
"LICENSES" shall mean the licenses, permits and authorizations issued
by any Governmental Authority to 3MC for the operation of the Business, as
listed on Schedule 1.7;
"LIEN" shall mean any mortgage, deed of trust, pledge, hypothecation,
security interest, encumbrance, claim, lien, lease (including any capitalized
lease) or charge of any kind, whether voluntarily incurred or arising by
operation of law or otherwise, including without limitation any agreement to
give or grant any of the foregoing, any conditional sale or other title
retention agreement and the filing of or agreement to give any financing
statement with respect to any of the Contributed Assets under the Uniform
Commercial Code of the State of Georgia, or comparable law of any other
jurisdiction;
"LLC AGREEMENT" shall mean the Third Amended and Restated Limited
Liability Company Agreement of Galaxy, to be dated as of the Closing Date, in
the form of Exhibit "G" hereto;
"LLC UNITS" shall mean the Class B limited liability company units in
Galaxy;
"MATERIAL ADVERSE EFFECT" shall mean with respect to a Person (a) a
material adverse effect upon the business, operations, properties, assets,
prospects or condition (financial or otherwise) of such Person and its
Subsidiaries, taken as a whole, or (b) a material adverse effect on the ability
of such Person to perform its obligations under this Agreement or any of the
other Documents;
"MATERIALS OF ENVIRONMENTAL CONCERN" shall mean chemicals, pollutants,
contaminants, industrial, toxic or hazardous wastes, substances or constituents,
petroleum and
5
petroleum products (or any by-product or constituent thereof), asbestos or
asbestos-containing materials or PCBs, except for cleaning, maintenance, and
similar products stored or used in de minimis quantities;
"MISCELLANEOUS ASSETS" shall mean all tangible and intangible assets
used by 3MC in the operation of the Business on the date hereof and as of the
Closing Date and not otherwise specifically referred to in this Agreement,
including any warranties related to any of the Contributed Assets, excepting
therefrom only the Retained Assets;
"ORDER" shall mean any judgment, writ, decree, injunction, order,
stipulation, compliance agreement or settlement agreement issued or imposed by,
or entered into with, a Governmental Authority, whether or not having the force
of law;
"PATENTS" shall mean all of those foreign and United States patents
including registrations and applications to register patents, owned, licensed,
used or filed by 3MC with respect to the Business, including, without
limitation, those set forth on Schedule 1.8;
"PERMITTED LIENS" shall mean solely with respect to 3MC, Liens existing
on the Closing Date to remain on the Contributed Assets after the Closing Date
as agreed to by Galaxy, and with respect to 3MC or Galaxy, (a) Liens for Taxes
not yet delinquent or subject to penalty; (b) statutory Liens of landlords,
carriers, warehousemen, mechanics, materialmen and other Liens imposed by law
created in the ordinary course of business of either 3MC or Galaxy, as the case
may be, consistent with past practices for amounts not yet due; and (c) Liens
(other than any Lien imposed by ERISA) incurred or deposits made in the ordinary
course of business of either 3MC or Galaxy, as the case may be, consistent with
past practices in connection with worker's compensation, unemployment insurance
or other types of social security;
"PERSON" shall mean any natural person, general or limited partnership,
corporation, association, limited liability company or other entity;
"RECORDS" shall mean all files and records related to the Business,
including without limitation schematics, technical information and engineering
data, programming information, correspondence, books of account, employment
records, customer files, purchase and sales records and correspondence,
advertising records, files and literature and other written materials of 3MC
with respect to the Business other than Records which are Retained Assets;
"RETAINED ASSETS" shall mean (a) the Cash; (b) Accounts Receivable, (c)
any and all claims of 3MC with respect to the Business relating to transactions
prior to the Closing Date including, without limitation, claims for tax refunds
and refunds of License fees except to the extent such claims relate to Assumed
Liabilities or the Contributed Assets; (d) all of those assets of Seller used in
connection with the Business that do not constitute Contributed Assets, as
listed on Schedule 1.10; and (e) all assets related to 3MC's employee benefit
plans except as provided on Section 9.2 of this Agreement;
"RETAINED LIABILITIES" shall mean all obligations and liabilities of
3MC whether now existing or previously or hereafter incurred, other than the
Assumed Liabilities, which Retained Liabilities shall include but not be limited
to (a) all Taxes that result from or have accrued in
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connection with the operation of the Business, or relate to periods, prior to
the Closing Date; (b) liabilities, claims and obligations arising under
Contracts and Leases transferred to Galaxy in accordance with this Agreement to
the extent such liabilities, claims and obligations arise during or relate to or
have accrued in connection with any period prior to the Closing; (c) all
liabilities, claims and obligations accruing with respect to or in connection
with the operation of the Business prior to the Closing; (d) all liabilities
related to 3MC's employee benefit plans except as provided in Section 9.2 of
this Agreement; (e) all liabilities related to any severance pay required to be
paid to 3MC Employees in respect of any period prior to the Closing Date; and
(f) all liabilities and obligations of 3MC under this Agreement and any other
agreement entered into in connection herewith;
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder, all as the same may from time to
time be in effect;
"SHAREHOLDERS AGREEMENT" means the Amended and Restated Shareholders
Agreement to be entered into at the Closing between TOIC (or its assignee) and
3MC in the form of Exhibit "H" attached hereto, with such other changes as
mutually agreed to by TOIC (or its assignee) and 3MC;
"SUBSIDIARY" shall mean with respect to any Person, any corporation,
partnership, limited liability company, joint venture or other legal entity of
which such Person, as the case may be (either alone or through or together with
any other Subsidiary) owns, directly or indirectly, stock or other equity
interests the holders of which are generally entitled to more than 50% of the
vote for the election of the board of directors or other governing body of such
corporation or other legal entity;
"TAX" shall mean any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever imposed by any
Governmental Authority, including any interest, penalty, or addition thereto,
whether disputed or not;
"TAX AUTHORITY" shall mean the Internal Revenue Service and any other
domestic or foreign governmental authority responsible for the administration of
any Tax;
"TAX RETURNS" shall mean all Federal, state, local and foreign tax
returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax Return relating to Taxes;
"TOIC" shall mean The Official Information Company, a Delaware
corporation;
"TOIC CLOSING CERTIFICATE" shall mean the certificate of TOIC in the
form of Exhibit "D-2" attached hereto;
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"3MC" shall mean Third Millennium Communications, Inc., a Georgia
corporation;
"3MC's Closing Certificate" shall mean the certificate of 3MC in the
form of EXHIBIT "I" attached hereto;
"3MC EMPLOYEE" shall mean an employee of 3MC with respect to the
Business immediately prior to the termination thereof pursuant to Section 9.2;
"3MC'S OPINION OF COUNSEL" shall mean the legal opinion of counsel to
3MC addressed to Galaxy in the form of EXHIBIT "J" attached hereto;
"3MC'S PERFORMANCE CERTIFICATE" shall mean the certificate of the
Secretary of 3MC in the form of EXHIBIT "K" attached hereto;
"TRADE SECRETS" shall mean all proprietary information owned, leased,
licensed or used by 3MC relating to the Business in any form or media, including
without limitation trade secrets, ideas, confidential business and technical
information, inventions, designs, know-how, processes and Customer Lists;
"TRADEMARKS" shall mean all of those foreign, Internet and United
States trade names, trademarks, service marks, trade dress and domain names,
including registrations and applications to register or renew the registrations
of any of the foregoing, trademark and service xxxx registrations and trademark
and service xxxx applications owned, licensed, leased or used by 3MC with
respect to the Business, including, without limitation, those set forth on
Schedule 1.11;
"TRANSFERRED EMPLOYEE" shall mean a 3MC Employee who becomes an
employee of Galaxy pursuant to Section 9.2; and
"TRANSITION AGREEMENT" shall mean that certain Transition Services
Agreement to be entered into at Closing by and among TOIC, Galaxy and 3MC,
substantially in the form of EXHIBIT "L" attached hereto; and
"WARRANTS" shall mean the warrants to be issued to 3MC hereunder to
purchase LLC Units of Galaxy, in the form of EXHIBIT "M" attached hereto.
1.2 SINGULAR/PLURAL; GENDER. Where the context so requires or permits,
the use of the singular form includes the plural, and the use of the plural form
includes the singular, and the use of any gender includes any and all genders.
8
ARTICLE II
CONTRIBUTION
2.1 CONTRIBUTION. At the Closing on the Closing Date, and subject to
all of the terms and conditions of this Agreement, 3MC shall sell, assign,
convey, transfer and deliver to Galaxy, and Galaxy shall purchase all of 3MC's
right, title and interest, legal and equitable, in and to the Contributed
Assets, free and clear of all Liens except Permitted Liens. 3MC shall not
transfer, convey or assign to Galaxy, but shall retain, all of its right, title
and interest in and to the Retained Assets.
2.2 ISSUANCE OF LLC UNITS AND WARRANTS. At the Closing on the Closing
Date, subject to all of the terms and conditions of this Agreement, as
consideration for the purchase of the Contributed Assets, Galaxy shall issue to
3MC 6,133,590 LLC Units and the Warrants.
2.3 CLOSING DATE DELIVERIES. At the Closing on the Closing Date:
(a) 3MC shall deliver, or cause to be delivered, to Galaxy,
properly executed and dated as of the Closing Date: (i) the Assumption
Agreement; (ii) the Xxxx of Sale and Assignment; (iii) the Contract Assignment;
(iv) 3MC's Closing Certificate; (v) 3MC's Opinion of Counsel; (vi) 3MC's
Performance Certificate; (vii) the LLC Agreement; (viii) the Transition
Agreement; (ix) the agreement issuing the Warrants; (x) the Shareholders'
Agreement; and (xi) such other documents as provided in Article VII hereof or as
Galaxy shall reasonably request; and
(b) Galaxy shall deliver, or cause to be delivered, to 3MC,
properly executed and dated as of the Closing Date: (i) the Assumption
Agreement; (ii) the Xxxx of Sale and Assignment; (iii) the Contract Assignment;
(iv) Galaxy's and TOIC's Closing Certificate; (v) Galaxy's Opinion of Counsel;
(vi) Galaxy's Performance Certificate; (vii) certificates representing 6,133,590
LLC Units registered in the name of 3MC; (viii) the LLC Agreement; (ix) the
Transition Agreement; (x) the agreement issuing the Warrants; (xi) the
Shareholders' Agreement executed by TOIC; and (xii) such other documents as
provided in Article VIII hereof or as 3MC shall reasonably request.
2.4 ASSUMPTION OF LIABILITIES. At the Closing, Galaxy shall assume and
agree to pay, perform and discharge the Assumed Liabilities. Except for the
Assumed Liabilities or such other charges as are specifically allocated to
Galaxy elsewhere in this Agreement, Galaxy does not and shall not assume or
become obligated to pay any debt, obligation or liability of any kind or nature
of 3MC or the Business, whether or not incurred or accrued in connection with
the operation of the Business.
2.5 TAXES. All Taxes applicable to, imposed upon or arising out of the
transfer to Galaxy of the Contributed Assets as contemplated by this Agreement
shall be paid by 3MC.
2.6 RISK OF LOSS. The risk of all Events of Loss prior to the Closing
shall be upon 3MC and the risk of all Events of Loss at or subsequent to the
Closing shall be upon Galaxy.
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ARTICLE III
GOVERNMENTAL APPROVALS
3.1 XXXX-XXXXX-XXXXXX NOTIFICATION. Galaxy and 3MC agree that as soon
as practicable, but in no event later than three (3) days after the execution of
this Agreement, each will complete and file the "Antitrust Improvements Act
Notification and Report Form for Certain Mergers and Acquisitions" as, and if,
required by the HSR Act and will promptly complete and file responses to all
requests for additional data and information which may be made under such the
HSR Act. Galaxy and 3MC shall each pay one-half (1/2) of all HSR Act filing fees
relating to the transactions contemplated hereby, irrespective of whether the
transactions contemplated hereby are consummated, and each party shall be
responsible for all other fees and expenses incurred on such party's behalf in
connection therewith.
3.2 OTHER GOVERNMENTAL APPROVALS. Promptly following the execution of
this Agreement, the parties shall proceed to prepare and file with the
appropriate governmental authorities any requests for approvals or waivers that
are required from governmental authorities in connection with the Closing, and
shall diligently and expeditiously prosecute, and shall cooperate fully with
each other in the prosecution of, such requests for approvals or waivers and all
proceedings necessary to secure such approvals and waivers.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF 3MC
3MC represents and warrants to Galaxy, all of which representations and
warranties shall survive the Closing in accordance with Section 11.4, the
following:
4.1 ORGANIZATION. 3MC is a corporation duly organized, validly existing
and in good standing under the laws of the State of Georgia. 3MC has the power
and authority to own, lease and operate the Contributed Assets and to conduct
the Business as it is now being conducted. 3MC is not required to be qualified
as a foreign corporation to transact business in any jurisdiction. 3MC has
previously delivered to Galaxy complete and correct copies of the articles of
incorporation and bylaws of 3MC, and such documents remain in effect on the date
hereof.
4.2 AUTHORIZATION; ENFORCEABILITY. The execution, delivery and
performance by 3MC of this Agreement and all of the Documents and the
consummation by 3MC of the transactions contemplated hereby and thereby are
within the corporate power of 3MC and have been duly authorized by all necessary
corporate action by 3MC, and no other corporate proceedings or approvals are
required on the part of 3MC to authorize this Agreement or the Documents or to
consummate the transactions contemplated hereby or thereby. This Agreement is,
and the Documents will be, when executed and delivered by 3MC, the valid and
binding obligations of 3MC, enforceable against 3MC in accordance with their
respective terms subject only to bankruptcy, insolvency, reorganization,
moratorium or similar laws at the time in effect
10
affecting the enforceability or right of creditors generally and by general
equitable principles which may limit the right to obtain equitable remedies and
to the extent the indemnification provisions contained herein and in the
Documents may be limited by applicable federal or state securities laws.
4.3 ABSENCE OF CONFLICTING AGREEMENTS. Except as set forth on Schedule
4.3, neither the execution, delivery or performance of this Agreement or the
other Documents in accordance with their terms by 3MC, nor the consummation of
the sale and purchase of the Contributed Assets or any other transaction as
contemplated by this Agreement does or will, after the giving of notice, or the
lapse of time or both, or otherwise:
(a) violate or conflict with, result in a breach of, or
constitute a default under, the articles of incorporation or bylaws or other
organizational documents of 3MC; violate or conflict in any material respect
with any Applicable Law; or violate, be in conflict with, or constitute a breach
or default (or any event which with the passage of time or notice or both would
become a default) under any material Contract;
(b) result in the creation of any Lien upon any of the
Contributed Assets;
(c) terminate, amend or modify, or give any party the right to
terminate, amend, modify, abandon or refuse to perform, any material Contract;
(d) accelerate or modify, or give any party the right to
accelerate or modify, the time within which, or the terms under which, any
duties or obligations are to be performed, or any rights or benefits are to be
received, under any material Contract; or
(e) require the consent, waiver, approval, permit, license,
clearance or authorization of, or any declaration or filing with, any
Governmental Authority or other Person except that Galaxy may have certain
obligations under state and federal securities laws in connection with the
issuance of the LLC Units.
4.4 TITLE TO CONTRIBUTED ASSETS; LIENS AND ENCUMBRANCES. The
Contributed Assets include all of the assets and rights of every type, real,
personal and mixed, tangible and intangible that are used in the operation of
the Business as currently conducted, with the exception of the Retained Assets.
3MC does not own any Subsidiaries with respect to the Business. Except as set
forth on Schedule 4.4, 3MC owns good and marketable title to, or has valid and
enforceable license or leasehold interests in, all of the Contributed Assets
free and clear of any and all Liens except Permitted Liens.
4.5 EQUIPMENT. Except as set forth on Schedule 4.5, each of the items
of Equipment is in good condition and repair, ordinary wear and tear excepted.
The list of Equipment on Schedule 1.4 is a true and correct list of all items of
tangible personal property having a book value in excess of $1,000 used in the
operation of the Business as currently conducted, other than the Retained
Assets.
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4.6 CONTRACTS. Except as set forth on Schedule 4.6:
(a) 3MC has performed in all material respects each material
term, covenant and condition of each of the Contracts, and no material default
on the part of 3MC or, to the knowledge of the officers of 3MC, any other party
thereto, or any event which with the passing of time or giving of notice would
constitute a default on the part of 3MC or, to the knowledge of the officers of
3MC, any other party thereto, exists under any of the Contracts;
(b) each of the Contracts is in full force and effect and
constitutes the legal and binding obligation of 3MC and, to the knowledge of the
officers of 3MC, the other parties thereto, in accordance with its terms;
(c) 3MC has furnished true and complete copies of all material
Contracts, including all amendments, modifications and supplements thereto, and
Schedule 1.2 contains an accurate list of all material Contracts and summaries
of all oral contracts; and
(d) each of the Contracts is fully assignable to Galaxy
without the consent, approval or waiver of any other Person.
4.7 LEASES. Except as set forth on Schedule 4.7:
(a) 3MC has performed in all material respects each material
term, covenant and condition of each of the Leases which is required to be
performed by 3MC at or before the date hereof, and no default on the part of 3MC
and, to the knowledge of the officers of 3MC, any other party thereto, or event
which with the passing of time or giving of notice or both would constitute a
default on the part of 3MC or, to the knowledge of the officers of 3MC, any
other party thereto, exists under any Lease;
(b) each of the Leases is in full force and effect and
constitutes the legal and binding obligation of 3MC and, to the knowledge of the
officers of 3MC, each other party thereto, in accordance with its terms; 3MC has
not received notice that the lessor of any of the Leases intends to cancel such
Lease or to exercise or not exercise any option thereunder;
(c) 3MC has furnished true and complete copies of the Leases
to Galaxy, including any and all amendments thereto;
(d) there are no leasing commissions or similar payments due,
arising out of, resulting from or with respect to any Lease which is owed by
3MC;
(e) each of the Leases is fully assignable to Galaxy without
the consent, waiver or approval of any Person (other than for real estate Lease,
which is not being assigned to Galaxy); and
(f) 3MC does not own any Real Property that is used in the
Business.
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4.8 INTANGIBLE PROPERTY. Except as set forth on Schedule 4.8:
(a) there are no Claims instituted, pending or, to the
knowledge of the officers of 3MC, threatened by any Person pertaining to or
challenging the right of 3MC to use any of the Intangible Property;
(b) to the knowledge of the officers of 3MC, the conduct of
the Business does not infringe or otherwise conflict with or infringe, in any
material respect, with any rights of any Person in respect of any Intangible
Property and to the knowledge of the officers of 3MC, none of the Intangible
Property is being infringed or is otherwise available for use by any third party
without a license or permission from 3MC;
(c) to the knowledge of the officers of 3MC, 3MC owns, or is
validly licensed or otherwise has the right to use or exploit, as currently used
or exploited, all Intangible Property material to the Business, free of any
obligation to make any payment (whether of a royalty, license fee, compensation
or otherwise) except with respect to certain Customer Lists; 3MC with respect to
the Business is not, nor will it be as a result of the execution and delivery of
this Agreement and the other Documents or the performance of any obligations
hereunder and thereunder, in breach of any material license or other agreement
relating to any of the Intangible Property.
(d) all registered Copyrights and Patents (including pending
registrations) and all Trademarks are listed on Schedules 1.3, 1.8 and 1.11,
respectively;
(e) 3MC currently owns, licenses, or otherwise has the legal
right to use, the computer software that is in included as Intangible Property
(including any upgrade, alteration or enhancement with respect thereto), and all
of such software is being used in compliance with any applicable license or
other agreement;
(f) set forth on Schedule 4.8(f) is a correct and complete
list, in all material respects, of all domain names (i) registered to or used by
3MC in connection with the Business, (ii) the registration fees for which are
paid by 3MC in connection with the Business or (iii) registered to any employee
of 3MC in connection with the Business and 3MC owns and has registered, or is
validly licensed or otherwise has the right to use, all of such domain names;
(g) all former and current consultants or contractors of 3MC
in connection with the Business have executed and delivered valid written
instruments with 3MC that assign to 3MC all rights to any material inventions,
improvements, discoveries or information developed by them for 3MC; all
employees of 3MC in connection with the Business who participated in the
creation or contributed to the development of the material Intangible Property
were employees of 3MC at the time of rendering such services and such services
were within the scope of their employment or such employees have otherwise
validly assigned such Intangible Property to 3MC;
(h) 3MC has taken reasonable security measures, including
entering into appropriate confidentiality and nondisclosure agreements with all
of its employees, consultants and contractors with respect to material aspects
of the Business, and any other Persons with
13
access to their trade secrets or know how, to protect the secrecy,
confidentiality and value of all such trade secrets or know how and, to the
knowledge of the officers of 3MC, there has not been any material breach by any
party to any such agreement; and
(i) all material software, hardware and other computer and
information technology (collectively, "Information Technology") of 3MC in
connection with the Business is Date Data Compliant as that term is hereinafter
defined. "Date Data Compliant" means that any and all of the Information
Technology has the ability to (i) accept input and furnish output of data
involving dates or portions of dates correctly and without ambiguity as to the
20th or 21st centuries; (ii) manage, store, manipulate, sort, sequence and
perform calculations with respect to (collectively, "process") data involving
dates or portions of dates before, during and after January 1, 2000 (including
single century or multi-century date formulae) without malfunction and (iii)
process correctly leap years, including the year 2000, provided that all other
products (e.g., software or hardware) used with the Information Technology
properly exchange date data with it.
4.9 FINANCIAL STATEMENTS. 3MC has made available to Galaxy true and
complete copies of (i) its unaudited financial statements for the years ended
December 31, 1997 and 1998, each prepared, without a report and unissued, by its
independent public accountant; and (ii) its unaudited financial statements for
the year ended December 31, 1999 and financial statements for the three months
ended March 31, 2000, each as prepared by the Company (collectively, the "3MC
Financial Statements"). The 3MC Financial Statements are attached hereto as
Schedule 4.9. The 3MC Financial Statements have been prepared in accordance with
GAAP applied on a basis consistent throughout the periods covered thereby and
present fairly in all material respects the financial condition of 3MC or the
Business, as applicable, as at the dates indicated and the results of its
operations and changes in cash flow for the periods then ended, except that (i)
the unaudited 3MC Financial Statements do not contain all footnotes required by
GAAP and (ii) the unaudited financial statements for (x) the year ended December
31, 1999, and (y) the period ended March 31, 2000, were not prepared on a
consolidated basis in accordance with GAAP. 3MC's auditors have informed 3MC
that the unaudited Financial Statements of the Business are capable of being
audited.
4.10 NO MATERIAL ADVERSE CHANGE. Except as set forth on Schedule 4.10,
since December 31, 1999:
(a) 3MC, with respect to the Business, has not entered into
any transaction that was not in the ordinary course of business other than the
transactions contemplated herein;
(b) there has been no sale, assignment, transfer, mortgage,
pledge, encumbrance or lease of any material asset or property of the Business
other than with respect to a Permitted Lien other than the transactions
contemplated herein;
(c) there has been no declaration, payment, or commitment for
the payment, by 3MC with respect to the Business of a bonus or other additional
salary, compensation, or benefit to any employee of 3MC with respect to the
Business that was not in the ordinary course of business, except for normal
year-end bonuses paid in the ordinary course of business;
14
(d) there has been no release, compromise, waiver or
cancellation of any material debt to or material claim by 3MC with respect to
the Business, or waiver of any valuable right of 3MC with respect to the
Business;
(e) there has been no change in accounting methods or
practices or revaluation of any asset of 3MC with respect to the Business or
write-off as uncollectible any Accounts Receivable, except in the ordinary
course of business, none of which individually or in the aggregate is material;
(f) there has been no material damage or destruction to, or
loss (whether or not covered by insurance) adversely affecting any of the assets
of the Business;
(g) there has been no loan or guaranty by 3MC of any loan to
any employee or consultant (or any member of their immediate families) of 3MC
with respect to the Business, or any agreement or commitment therefor other than
travel expense advances made by 3MC in the ordinary course of business;
(h) 3MC, with respect to the Business, has not, to the
knowledge of the officers of 3MC, ceased to transact business with any customer
that, as of the date of such cessation, represented more than 5% of the annual
gross revenues of the Business;
(i) there has been no termination or resignation of any key
employee or officer of 3MC with respect to the Business, and to the knowledge of
the officers of 3MC, no such termination or resignation is threatened except as
previously communicated to Galaxy;
(j) there has been no material amendment or termination of any
material oral or written contract, agreement or license related to the Business;
(k) 3MC, with respect to the Business, has not failed to
satisfy any of its debts, obligations or liabilities related to the Business as
the same become due and owing in accordance with past practices and in the
ordinary course of business;
(l) there has been no agreement or commitment by 3MC to do any
of the foregoing; and
(m) there has been no other event or condition of any
character pertaining to and materially and adversely affecting the assets,
business, operations or condition (financial or otherwise) of the Business.
4.11 NO LITIGATION; COMPLIANCE WITH LAW. Except as set forth on
Schedule 4.11:
(a) there is no suit, action, claim, investigation or
proceeding pending or, to the knowledge of the officers of 3MC, threatened
against or affecting the Contributed Assets or the Business, nor is there (i)
any Order or Claim outstanding against 3MC with respect to the Business or (ii)
any rule or regulation of any Governmental Authority, any of which has had or
15
would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Business.
(b) 3MC owns and operates, and has owned and operated, the
Business and the Contributed Assets and carries on and conducts, and has carried
on and conducted, the Business in material compliance with all material
Applicable Laws and all Orders. 3MC holds all material Licenses necessary to
operate the Business as now conducted and such Licenses are in full force and
effect. 3MC is in material compliance with all material Licenses and all of such
Licenses are fully assignable to Galaxy.
4.12 TAXES. Except as set forth on Schedule 4.12:
(a) 3MC has duly and timely filed all required Tax Returns for
all years and periods (and portions thereof) for which any such Tax Returns were
due, and any and all amounts shown on such returns and reports to be due and
payable have been paid in full except as may be contested in good faith. All of
such Tax Returns are true and complete in all material respects. 3MC has, with
respect to the Business, withheld all Tax required to be withheld under
applicable law and regulations, and such withholdings have either been timely
paid to the proper governmental agency or, if not yet due to the governmental
agency, set aside in accounts for such purpose.
(b) There are, and after the date of this Agreement will be,
no Tax deficiencies (including penalties and interest) or claims of any kind
assessed against or relating to 3MC or the Contributed Assets with respect to
any taxable periods ending on or before, or including, the Closing Date of a
character or nature that would result in Liens or Claims on any of the
Contributed Assets or on Galaxy's title or use of the Contributed Assets or that
would result in any claim against, or liability or obligation of, Galaxy.
4.13 ACCOUNTS RECEIVABLES. All of the Accounts Receivables arose in the
ordinary course of business, in connection with bona fide transactions completed
in accordance with the terms and provisions of any agreements or understandings
related thereto and are collectible in the ordinary course of business in the
amounts set forth on the 3MC Financial Statements. 3MC has previously provided
Galaxy with a recent true and complete aging report, which shows the time
elapsed since invoice date for all Accounts Receivable. There are no setoffs,
counterclaims or disputes with respect to the Accounts Receivable that would
result in claims in excess of the reserve for bad debts set forth on the most
recent 3MC Financial Statements
4.14 INSURANCE. Schedule 4.14 is a true and complete list of all
liability and casualty insurance, errors and omissions insurance and worker's
compensation insurance policies insuring the business, properties and assets of
3MC with respect to the Business. All of such policies are in full force and
effect and are for such coverage and in such amounts as is usual and customary
for businesses similar to that of the Business. 3MC is not in default with
respect to such insurance policies, nor has 3MC failed to give any notice or
present any claim under any policies in due and timely fashion.
4.15 BROKERS. Except for The Xxxxxxxx-Xxxxxxxx Company, Ltd. ("RH"), no
broker or finder is entitled to any broker's or finder's fee in connection with
the transactions
16
contemplated hereby based upon arrangements made by or on behalf of 3MC. The
fees of RH shall be paid and satisfied at Closing by 3MC.
4.16 POWERS OF ATTORNEY. There are no Persons holding a power of
attorney on behalf of 3MC which would enable such Persons to sell the
Contributed Assets or take any other action which would result in Liens or
claims on any of the Contributed Assets or adversely effect Galaxy's title or
use of the Contributed Assets.
4.17 EMPLOYEES.
(a) Schedule 4.17 is a true and complete list of all employees
of 3MC with respect to the Business, which list identifies the name, position
and date of hire of each such employee, and the following compensation
information for fiscal years 1999 and 2000: (i) annual base salary, (ii) annual
bonus, (iii) commissions, (iv) perquisites, (v) severance, and (vi) all other
items of compensation. The consummation of the transactions contemplated under
this Agreement will not cause Galaxy to incur or suffer any liability relating
to, or obligation to pay, severance, termination, or other payments to any
Person. Schedule 4.17 includes all employees of 3MC with respect to the Business
who are on unpaid leave pursuant to the Family and Medical Leave Act of 1993.
(b) 3MC, with respect to the Business, is not and has not to
the knowledge of its officers engaged in any unfair labor practice. There is (i)
no unfair labor practice charge or complaint pending or, to the knowledge of the
officers of 3MC, threatened against 3MC with respect to the Business before the
National Labor Relations Board or any corresponding state, local or foreign
agency, and no grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is so pending or threatened, (ii) no strike,
labor dispute, slowdown or stoppage pending or threatened against 3MC with
respect to the Business, and (iii) no union representation claim or question
existing with respect to the employees of 3MC with respect to the Business. 3MC
is not a party to any collective bargaining agreement with respect to the
Business and no representation campaign or election is now in progress with
respect to any employee of 3MC with respect to the Business; and there are no
labor disputes, grievances, controversies, strikes or requests for union
representation pending, or, to the knowledge of the officers of 3MC, threatened,
relating to or affecting the Business and to the knowledge of the officers of
3MC, no event has occurred that could give rise to any such dispute,
controversy, strike or request for representation.
(c) Except as disclosed on Schedule 4.17, 3MC has not violated
in any material respect any material Applicable Laws relating to employment or
employment practices or the terms and conditions of employment, including,
without limitation, discrimination in the hiring, promotion or pay of employees,
wages, hours of work, plant closings and layoffs, collective bargaining,
immigration and occupational safety and health. Except as disclosed on Schedule
4.17, to the knowledge of the officers of 3MC, no charges with respect to
employees of 3MC with respect to the Business are pending before the Equal
Employment Opportunity Commission or any other corresponding state agency, and
3MC has at all times been in material compliance with all material Applicable
Laws prohibiting discrimination in the workplace including, without limitation,
Applicable Laws that prohibit discrimination and/or harassment on
17
account of race, national origin, religion, gender, disability, age, immigration
status, workers compensation status or otherwise.
(d) Except as disclosed on Schedule 4.17, 3MC, with respect to
the Business, is not a party to or bound by any currently effective employment
contract, deferred compensation arrangement, bonus plan, incentive plan, profit
sharing plan, retirement agreement or other employee compensation plan or
agreement. To the knowledge of the officers of 3MC, no employee of 3MC with
respect to the Business, nor any consultant with whom 3MC has contracted with
respect to the Business, is in violation of any term of any employment contract,
proprietary information agreement or any other agreement relating to the right
of any such individual to be employed by, or to contract with, 3MC because of
the nature of the business to be conducted by 3MC; and to the knowledge of the
officers of 3MC the continued employment by Galaxy of 3MC's employees with
respect to the Business, and the performance of 3MC's contracts with its
independent contractors, will not result in any such violation. 3MC has not
received any notice alleging that any such violation has occurred. Except as
provided in the contracts listed in Schedule 4.17, no employee of 3MC has been
granted the right to continued employment by 3MC or to any material compensation
following termination of employment with 3MC. None of the officers of 3MC is
aware that any officer or key employee, or that any group of key employees,
intends to terminate his, her or their employment with 3MC or with Galaxy after
the Closing, nor does 3MC have a present intention to terminate the employment
of any officer, key employee or group of key employees other than in connection
with the Closing.
4.18 EMPLOYEE BENEFIT PLANS/LABOR RELATIONS.
(a) Except as disclosed in Schedule 4.18, there are no
employee benefit plans, agreements or arrangements maintained by 3MC with
respect to the Business, including (i) "employee benefit plans" within the
meaning of Section 3(3) of ERISA; (ii) current or deferred compensation,
pension, profit sharing, vacation or severance plans or programs; or (iii)
medical, hospital, accident, disability or death benefit plans (all of the
foregoing, collectively, "3MC Benefit Plans"). All 3MC Benefit Plans are and
have been administered in accordance with, and are in material compliance with,
all material Applicable Laws and the terms of the 3MC Benefit Plans.
(b) All 3MC Benefit Plans that are subject to ERISA have been
administered in accordance with, and are in material compliance with, the
applicable provisions of ERISA. Each of the 3MC Benefit Plans that is intended
to meet the requirements of Section 401(a) of the Code has been determined by
the Internal Revenue Service to meet such requirements within the meaning of
such provision. No 3MC Benefit Plan is subject to Title IV of ERISA or Section
412 of the Code. 3MC has not engaged in any nonexempt "prohibited transactions,"
as such term is defined in Section 4975 of the Code or Section 406 of ERISA,
involving 3MC Benefit Plans that would subject 3MC to the penalty or tax imposed
under Section 502(i) of ERISA or Section 4975 of the Code. Neither 3MC nor any
subsidiary has engaged in any transaction described in Section 4069 of ERISA
within the last five years. Except as disclosed in Schedule 4.18 or pursuant to
the terms of the 3MC Benefit Plans, neither the execution and delivery hereof
nor the consummation of the transactions contemplated hereby will (i) result in
any payment (including severance, unemployment compensation or golden parachute)
becoming due to any director or other employee of 3MC with respect to the
Business, (ii) increase any benefit otherwise payable under any 3MC
18
Benefit Plan or (iii) result in the acceleration of the time of payment or
vesting of any such benefit to any extent.
4.19 ENVIRONMENTAL COMPLIANCE. Except as set forth on Schedule 4.19:
(a) 3MC with respect to the Business is and has been in
material compliance with all Environmental Laws, and 3MC has not received any
written communication that alleges that 3MC with respect to the Business is not
in compliance with any Environmental Laws, and there are no circumstances that
may prevent or interfere with such compliance in the future.
(b) There is no Environmental Claim pending or to the
knowledge of the officers of 3MC threatened against 3MC with respect to the
Business, or against any Person whose liability for any Environmental Claim 3MC,
with respect to the Business, has retained or assumed either contractually or by
operation of law.
(c) To the knowledge of the officers of 3MC, there are no past
or present actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge, presence or
disposal of any Material of Environmental Concern, that could form the basis of
any Environmental Claim against 3MC with respect to the Business, or against any
Person whose liability for any Environmental Claim 3MC, with respect to the
Business, has retained or assumed either contractually or by operation of law.
(d) Without in any way limiting the generality of the
foregoing, Schedule 4.19 sets forth (i) all permits, licenses and other
governmental authorizations currently held by 3MC with respect to the Business,
or required for the operation of the Business, under any Environmental Law,
license and authorization, (ii) all on-site and to the knowledge of the officers
of 3MC off-site locations where 3MC with respect to the Business has stored,
disposed or arranged for the disposal of Materials of Environmental Concern,
(iii) to the knowledge of the officers of 3MC, all underground storage tanks,
and the capacity and contents of such tanks, located on property owned, leased
or controlled by 3MC with respect to the Business, (iv) to the knowledge of the
officers of 3MC, the location and condition of any asbestos or lead (including
furnishings or lead-based paints) contained in or forming part of any building,
building component, structure or office space owned, leased or controlled by
3MC, and (v) to the knowledge of the officers of 3MC, all PCBs or PCB-containing
items that are used or stored at any property owned, leased or controlled by 3MC
with respect to the Business and that are the responsibility of 3MC to operate
and maintain.
4.20 INTEREST IN CUSTOMERS, SUPPLIERS AND COMPETITORS. Except as
provided in Schedule 4.20 hereto, no officer or director of 3MC, and no family
member of any of the foregoing, has any direct or indirect interest in any
customer, supplier, advertiser or competitor of 3MC with respect to the
Business, or in any Person with whom 3MC, with respect to the Business, is doing
business, whether in existence as of the date hereof or proposed, other than the
ownership of stock of publicly traded corporations that does not exceed 1% of
the issued and outstanding stock of such corporation.
4.21 PROPER BUSINESS PRACTICES. Neither 3MC nor any of its officers or
directors, and to the knowledge of the officers of 3MC any employees, agents and
representatives of 3MC
19
have, to obtain or retain business, directly or indirectly, offered, paid or
promised to pay, or authorized the payment of any money or thing of value, or
any commission payment to (i) any person who is an official, officer, agent,
employee or representative of any governmental body or of any existing or
prospective customer, (ii) any political party or official thereof, (iii) any
candidate for political or political party office, or (iv) any other individual
or entity while knowing or having reason to believe that all or any portion of
such money or thing of value would be offered to any such person or entity
referred to in clause (i), (ii) or (iii) above. Except as set forth on Schedule
4.21, 3MC has made all payments to third parties by check, by credit card, by
wire transfer or by the issuance of 3MC common stock. Each transaction is
properly and accurately recorded on the books and records of 3MC, and each
document on which entries in 3MC's' books and records are based is complete and
accurate in all material respects. 3MC maintains a system of internal accounting
controls adequate to insure that 3MC maintains no off-the-books accounts and
that its material assets are used only in accordance with 3MC's management
directives.
4.22 INVESTMENT INTENT. 3MC is purchasing the LLC Units solely for its
own account and not as nominee or agent for any other Person and not with a view
to, or for offer or sale in connection with, any current distribution thereof
(within the meaning of the Securities Act) that would cause the original
purchase of the LLC Units to be in violation of the securities laws of the
United States or any state thereof, without prejudice, however, to its right at
all times to sell or otherwise dispose of all or any part of such LLC Units
pursuant to a registration statement under the Securities Act or pursuant to an
exemption from the registration requirements of the Securities Act, and subject,
nevertheless, to the disposition of its property being at all times within its
control.
4.23 ACCREDITED INVESTOR. 3MC is knowledgeable, sophisticated and
experienced in business and financial matters and in investing in privately held
business enterprises and is capable of evaluating the risks of investment in the
LLC Units; [and] it acknowledges that the LLC Units have not been registered
under the Securities Act and understands that the LLC Units must be held
indefinitely unless they are subsequently registered under the Securities Act or
such sale is permitted pursuant to an available exemption from such registration
requirement; it is able to bear the economic risk of its investment in the LLC
Units and is presently able to afford the complete loss of such investment; and
it is an "accredited investor" as defined in Regulation D promulgated under the
Securities Act.
4.24 DISCLOSURE OF INFORMATION. 3MC represents it has received all the
information it considers necessary or appropriate for deciding whether to
purchase the LLC Units. 3MC further represents that it has had an opportunity to
ask questions and receive answers from Galaxy regarding the terms and conditions
of the LLC Units and the business, properties, prospects and financial condition
of Galaxy. The foregoing, however, does not limit or modify the representations
and warranties of TOIC or Galaxy in Article V of this Agreement or the right of
3MC to rely thereon.
4.25 DISCLOSURE. No statement by 3MC contained in this Agreement
(including the Exhibits and Schedules hereto) or the Documents contains or will
contain any untrue statement
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of a material fact or omits or will omit to state a material fact necessary in
order to make the statements herein or therein contained not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF GALAXY
Galaxy severally and not jointly makes the representations set forth
below with respect to Galaxy and/or its Subsidiaries. TOIC severally and not
jointly makes the representations set forth below with respect to TOIC and/or
its Subsidiaries. All of the representations and warranties of the parties shall
survive the Closing in accordance with Section 11.4.
5.1 ORGANIZATION. Galaxy is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware.
TOIC is a Delaware corporation duly incorporated, validly existing and in good
standing in the State of Delaware. On the Closing Date, Galaxy will be duly
qualified to do business in each jurisdiction where the character of its
properties owned or held under lease or the nature of its activities makes such
qualification required. Galaxy has full power to purchase the Contributed Assets
pursuant to this Agreement. Galaxy has previously delivered to 3MC complete and
correct copies of its certificate of formation, which remain in effect on the
date hereof.
5.2 AUTHORIZATION; ENFORCEABILITY. The execution, delivery and
performance by each of Galaxy and TOIC of this Agreement and all of the
Documents and the consummation by Galaxy and TOIC of the transactions
contemplated hereby and thereby are within the power of Galaxy and TOIC and have
been duly authorized by all necessary action by Galaxy and TOIC and no other
proceedings or approvals are required on the part of Galaxy and TOIC to
authorize this Agreement or the Documents or to consummate the transactions
contemplated hereby or thereby. This Agreement is, and the other Documents will
be, when executed and delivered by Galaxy and TOIC, the valid and binding
obligations of Galaxy and TOIC, enforceable against Galaxy and TOIC in
accordance with their respective terms, subject only to bankruptcy, insolvency,
reorganization, moratorium or similar laws at the time in effect affecting the
enforceability or right of creditors generally and by general equitable
principles which may limit the right to obtain equitable remedies and to the
extent the indemnification provisions contained herein and in the Documents may
be limited by applicable federal or state securities laws.
5.3 AUTHORIZATION OF LLC UNITS. The issuance of the LLC Units to 3MC
has been duly authorized by Galaxy, and the LLC Units when issued to 3MC
pursuant hereto will be fully paid and non-assessable, free of restrictions on
transfer other than under this Agreement, the LLC Agreement and applicable state
and federal securities laws.
5.4 GALAXY'S CAPITALIZATION.
(a) As of the Closing Date, after giving effect to the
transactions contemplated by this Agreement, (A) there will be issued and
outstanding 22,210,463 Class A LLC Units, 6,133,590 Class B LLC Units and
1,655,947 Class C LLC Units, all of which will be validly
21
issued, fully paid and nonassessable; and (B) there will be reserved for
issuance 3,000,000 Class C LLC Units to be issued under the Galaxy Option Plan
and 13,500,000 Class B LLC Units to be issued upon exercise of the Warrants.
Except as set forth above and on Schedule 5.4 hereto, as of the date hereof,
after giving effect to the transactions contemplated by this Agreement and the
other Documents, no Equity Interests of Galaxy will be issued or outstanding and
there are not, and as of the date hereof there will not be, any options,
agreements, instruments or securities relating to the issued or unissued Equity
Interests of Galaxy or any Subsidiary of Galaxy, or obligating Galaxy or any
Subsidiary of Galaxy to issue, transfer, grant or sell any Equity Interests in
Galaxy or any Subsidiary of Galaxy.
(b) Galaxy has complied with all federal and state securities
laws in connection with the issuance of all outstanding Equity Interests, except
where such failure would not have a Material Adverse Effect on Galaxy.
(c) Except as listed on Schedule 5.4, and except as
contemplated by the LLC Agreement, there are no preemptive rights, voting
agreements, transfer restrictions (except those imposed by applicable federal
and state securities laws) or registration rights affecting the Equity Interests
in Galaxy.
5.5 ABSENCE OF CONFLICTING LAWS AND AGREEMENTS. Except as set forth on
Schedule 5.5, neither the execution, delivery or performance of this Agreement
or the other Documents in accordance with their terms by each of Galaxy and
TOIC, nor the consummation of the sale and purchase of the Contributed Assets or
any other transaction contemplated by this Agreement, does, or will after the
giving of notice or the lapse of time or otherwise:
(a) violate, conflict with, result in a breach of, or
constitute a default under, the certificate of formation, certificate of
incorporation or other organizational documents of Galaxy or TOIC; (ii) violate
or conflict in any material respect with any Applicable Law; or (iii) violate,
conflict with, result in a breach of, or constitute a default under any material
contract to which Galaxy is a party or by which any of its assets are bound, or
constitute a default under any contract which is material to TOIC or any of its
Subsidiaries, taken as a whole, to which TOIC or its Subsidiaries is a party or
by which their assets are bound;
(b) terminate, amend or modify, or give any party the right to
terminate, amend, modify, abandon or refuse to perform, any material contract to
which Galaxy is a party or any contract which is material to TOIC and its
Subsidiaries, taken as a whole, to which TOIC or any of its Subsidiaries is a
party;
(c) accelerate or modify, or give any party the right to
accelerate or modify, the time within which, or the terms under which, any
duties or obligations are to be performed, or any rights or benefits are to be
received, under any material contract to which Galaxy is a party or any contract
that is material to TOIC or any of its Subsidiaries, taken as a whole, to which
TOIC or any of its Subsidiaries is a party; or
(d) require the consent, waiver, approval, permit, license,
clearance or authorization of, or any declaration or filing with, any
Governmental Authority except for, (i) required filings under the Securities Act
or state "blue sky" laws as a result of the issuance of the
22
LLC Units pursuant hereto or the exercise of rights under the registration
rights provisions set forth in the LLC Agreement, or (ii) where the failure to
obtain such consents, approvals, authorizations or permits or to make such
filings or notifications, would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Galaxy or TOIC and
its Subsidiaries, taken as a whole, or prevent or delay in any material respect
consummations of the transactions contemplated hereby, or otherwise prevent
Galaxy or TOIC from performing their obligations under this Agreement or the
other Documents.
5.6 SUBSIDIARIES. Schedule 5.6 hereto sets forth a list of all
Subsidiaries of Galaxy and the respective state or jurisdiction of incorporation
or organization. Except as set forth on Schedule 5.6, all of the issued and
outstanding Equity Interests of such Subsidiaries have been duly and validly
issued and are fully paid and nonassessable and are owned, directly or
indirectly, by Galaxy. Each Subsidiary of Galaxy is duly incorporated or
organized and is in good standing in its respective state or jurisdiction of
incorporation and has the corporate authority to own, lease or operate its
properties and to conduct its business as currently conducted and as proposed to
be conducted. Each Subsidiary of Galaxy is duly qualified to transact business
and is in good standing as a foreign entity in each state or jurisdiction in
which such qualification is required.
5.7 FINANCIAL STATEMENTS; SEC FILINGS.
(a) Galaxy has made available to 3MC Galaxy's unaudited
financial statements for the years ended December 31, 1997, 1998 and 1999, and
its unaudited financial statements including balance sheet at March 31, 2000
(collectively, "Galaxy's Financial Statements"). Galaxy's Financial Statements
are attached hereto as Schedule 5.7. Galaxy's Financial Statements have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods indicated, except that the unaudited Financial Statements do not contain
all footnotes required by GAAP. Galaxy's Financial Statements fairly present in
all material respects the financial condition and operating results of Galaxy as
of the dates, and for the periods, indicated therein.
(b) TOIC has made available to 3MC accurate and complete
copies (excluding copies of exhibits) of each report, registration statement (on
a form other than Form S-8) and definitive proxy statement filed by TOIC with
the Securities and Exchange Commission ("SEC") between December 31, 1997, and
the date of this Agreement (the "TOIC SEC Documents"). As of the time it was
filed with the SEC (or, if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing): (i) each of the TOIC SEC
Documents complied in all material respects with the applicable requirements of
the Securities Act or the Securities Exchange Act of 1934, as amended (as the
case may be); and (ii) none of the TOIC SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
consolidated financial statements contained in the TOIC SEC Documents: (i)
complied as to form in all material respects with the published rules and
regulations of the SEC applicable thereto; (ii) were prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods covered, except as may be indicated in the notes to such
financial statements and (in the case of unaudited statements) as permitted by
Form 10-Q of the SEC, and
23
except that unaudited financial statements may not contain footnotes and are
subject to year-end audit adjustments (which are not reasonably expected to be,
individually or in the aggregate, material in amount; and (iii) fairly present
in all material respects the consolidated financial position of TOIC and its
Subsidiaries as of the respective dates thereof and the consolidated results of
operations of TOIC and its Subsidiaries for the periods covered thereby.
(c) Except as set forth on Schedule 5.7 hereto, subsequent to
December 31, 1999, there has not been (i) any transaction that was not in the
ordinary course of business or any material adverse change in the properties,
business, operations, assets or condition (financial or otherwise) of Galaxy and
its Subsidiaries taken as a whole, (ii) any incurrence, satisfaction or
discharge of any Lien on any asset or property of Galaxy or any of its
Subsidiaries, other than with respect to a Permitted Lien, (iii) any release,
waiver, compromise or cancellation of any material debt to or material claim by
Galaxy or any of its Subsidiaries, or waiver of any valuable right, (iv) any
payment of dividends on, or other distributions with respect to, or any direct
or indirect redemption or acquisition of, any shares of the capital stock of
Galaxy or any of its Subsidiaries, or any agreement or commitment therefor, (v)
any mortgage, pledge, sale, assignment, transfer, encumbrance or lease of any
material tangible or intangible assets of Galaxy or any of its Subsidiaries,
except in the ordinary course of business, (vi) any loan or guaranty by Galaxy
or any of its Subsidiaries to or for the benefit of any officer, director,
employee, consultant or stockholder, or any member of their immediate families,
or any agreement or commitment therefor, other than travel expense advances made
by Galaxy or any of its Subsidiaries to its officers, directors, employees,
consultants or stockholders in the ordinary course of business, (vii) any
material damage, destruction or loss (whether or not covered by insurance)
affecting the assets of Galaxy or any of its Subsidiaries, (viii) any
declaration, payment or commitment for the payment by Galaxy or any of its
Subsidiaries of a bonus or other additional salary, compensation or benefits to
any employee of Galaxy or any of its Subsidiaries other than in the ordinary
course of business, (ix) any material change to a material oral or written
contract, or license by which Galaxy or any of its Subsidiaries or any of their
assets is bound or subject, (x) any sale, assignment or transfer of any
intellectual property rights or any other material intangible or tangible assets
of Galaxy or any of its Subsidiaries, other than in the ordinary course of
business, (xi) any change in accounting methods or practices or revaluation of
any asset of Galaxy or any of its Subsidiaries or write-off as uncollectible any
accounts receivable of Galaxy or any of its Subsidiaries, except in the ordinary
course of business, none of which individually or in the aggregate is material,
(xii) any termination or resignation of any key employee or officer of Galaxy or
any of its Subsidiaries and to the knowledge of the officers of Galaxy, no such
termination or resignation is threatened, (xiii) any failure to satisfy debts,
obligations or liabilities of Galaxy or any of its Subsidiaries as the same
became due and owing in accordance with past practices and in the ordinary
course of business; (xiv) to the knowledge of officers of Galaxy, any ceasing to
transact business with any customer that as of the date of such cessation
represented more than 5% of the annual gross revenues of Galaxy and its
Subsidiaries, taken as a whole; and (xv) any agreement or commitment by Galaxy
or any of its Subsidiaries to do any of the foregoing.
(d) Except as set forth on Schedule 5.7 since December 31,
1999, neither Galaxy nor any of its Subsidiaries has incurred any liabilities or
obligations (whether absolute, accrued, fixed, contingent, liquidated,
unliquidated or otherwise and whether due or to become due) of any nature,
except for liabilities, obligations or contingencies (i) which are reflected in
24
the unaudited balance sheet of Galaxy at December 31, 1999, (ii) which were
incurred in the ordinary course of business after December 31, 1999, and
consistent with past practices, (iii) which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Galaxy or
(iv) which arise as a result of this Agreement. Since December 31, 1999, there
has been no change in any significant accounting (including tax accounting)
policies, practices or procedures of Galaxy or its Subsidiaries.
5.8 OWNERSHIP OF PROPERTIES. Except as set forth on Schedule 5.8,
Galaxy possesses good, valid and marketable title to, and owns its property and
assets free and clear of all Liens other than Permitted Liens. With respect to
the property and assets it leases, Galaxy is in compliance with such leases and,
to the knowledge of the officers of Galaxy, holds a valid leasehold interest
free of any Liens other than Permitted Liens. Such properties, assets and
leasehold interests are all of the assets that are necessary to conduct the
business of Galaxy as presently conducted.
5.9 REGISTRATION RIGHTS. Except as contemplated in the LLC Agreement,
Galaxy has not granted or agreed to grant any registration rights, including
piggyback rights, to any Person. To the best of the knowledge of the officers of
Galaxy, except as contemplated in the LLC Agreement, no member of Galaxy has
entered into any agreements with respect to the voting of LLC Units.
5.10 PRIVATE OFFERING. Assuming the accuracy of the representations and
warranties set forth in Sections 4.22, 4.23 and 4.24, the offer and sale of the
LLC Units and the Warrants to 3MC hereunder is exempt from the registration
delivery requirements of the Securities Act.
5.11 NO BROKERS. No broker or finder is entitled to any broker's or
finder's fee in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of Galaxy.
5.12 LITIGATION.
(a) Except as set forth on Schedule 5.12, there is no
proceeding, suit, action, claim or investigation whether commenced, or to the
knowledge of the officers of Galaxy, threatened against or affecting Galaxy or
any of its Subsidiaries or any of their respective properties or assets, except
for such proceedings that would not reasonably be expected to have, singly or in
the aggregate, a Material Adverse Effect on Galaxy, and there is no proceeding
seeking to restrain, enjoin, prevent the consummation of or otherwise challenge
this Agreement or any of the other Documents.
(b) Except as set forth on Schedule 5.12, neither Galaxy nor
any of its Subsidiaries is subject to (i) any Claim, (ii) any Order or (iii) any
rule or regulation of any Governmental Authority that has had a Material Adverse
Effect on Galaxy or that would reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on Galaxy.
25
5.13 EMPLOYEES, LABOR RELATIONS, LABOR AGREEMENT.
(a) Neither Galaxy nor any of its Subsidiaries, nor any Person
for whom Galaxy or any of its Subsidiaries is or may be responsible by law or
contract, is engaged in any unfair labor practice that would reasonably be
expected to have, singly or in the aggregate, a Material Adverse Effect on
Galaxy. There is (i) no unfair labor practice charge or complaint pending or, to
the knowledge of the officers of Galaxy, threatened against Galaxy or any of its
Subsidiaries, or any Person for whom Galaxy or any of its Subsidiaries is or may
be responsible by law or contract, before the National Labor Relations Board or
any corresponding state, local or foreign agency, and no grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement is so pending or threatened, (ii) no strike, labor dispute, slowdown
or stoppage pending or threatened against Galaxy or any of its Subsidiaries, or
any Person for whom either Galaxy or any of its Subsidiaries is or may be
responsible by law or contract, and (iii) no union representation claim or
question existing with respect to the employees of Galaxy or any of its
Subsidiaries, or any Person for whom either Galaxy or any of its Subsidiaries is
or may be responsible by law or contract, and no union organizing activities
taking place. Neither Galaxy nor any of its Subsidiaries, nor any Person for
whom Galaxy or any of its Subsidiaries is or may be responsible by law or
contract, is a party to any collective bargaining agreement.
(b) Except as disclosed on Schedule 5.13, neither Galaxy nor
any of its Subsidiaries has violated in any material respect any Applicable Laws
relating to employment or employment practices or the terms and conditions of
employment, including, without limitation, discrimination in the hiring,
promotion or pay of employees, wages, hours of work, plant closings and layoffs,
collective bargaining, immigration and occupational safety and health. Except as
disclosed on Schedule 5.13, to the knowledge of the officers of Galaxy or any of
its Subsidiaries, no charges with respect to or relating to Galaxy or any of its
Subsidiaries are pending before the Equal Employment Opportunity Commission or
any other corresponding state agency, and Galaxy and each of its Subsidiaries
have at all times been in material compliance with all Applicable Laws
prohibiting discrimination in the workplace including, without limitation,
Applicable Laws that prohibit discrimination and/or harassment on account of
race, national origin, religion, gender, disability, age, immigration status,
workers compensation status or otherwise.
(c) Except as disclosed on Schedule 5.13, no employee has any
agreement or contract, written or verbal, regarding his employment. Except as
disclosed on Schedule 5.13, Galaxy is not a party to or bound by any currently
effective employment contract, deferred compensation arrangement, bonus plan,
incentive plan, profit sharing plan, retirement agreement or other employee
compensation plan or agreement. To the knowledge of the officers of Galaxy, no
employee of Galaxy, nor any consultant with whom Galaxy has contracted, is in
violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual to
be employed by, or to contract with, Galaxy because of the nature of the
business to be conducted by Galaxy; and to the knowledge of the officers of
Galaxy the continued employment by Galaxy of its present employees, and the
performance of Galaxy's contracts with its independent contractors, will not
result in any such violation. Galaxy has not received any notice alleging that
any such violation has occurred. Except as provided in the contracts listed in
Schedule 5.13, no employee of Galaxy has been
26
granted the right to continued employment by Galaxy or to any material
compensation following termination of employment with Galaxy. Galaxy is not
aware that any officer or key employee, or that any group of key employees,
intends to terminate his, her or their employment with Galaxy, nor does Galaxy
have a present intention to terminate the employment of any officer, key
employee or group of key employees.
5.14 TAXES.
Except as otherwise disclosed in Schedule 5.14:
(a) Galaxy and its Subsidiaries have timely filed or will
timely file or cause to be timely filed, all material Tax Returns (or
extensions) required by Applicable Laws to be filed by any of it prior to or as
of the Closing Date. All such Tax Returns and amendments thereto are or will be
true, complete and correct in all material respects.
(b) Galaxy and its Subsidiaries have paid, or where payment is
not yet due, have established, or will establish or cause to be established on
or before the Closing Date, an adequate accrual for the payment of, all material
Taxes due with respect to any period ending prior to or as of the Closing Date.
(c) To the knowledge of the officers of Galaxy, no Audit by a
Tax Authority is pending or threatened with respect to any Tax Returns filed by,
or Taxes due from, Galaxy or its Subsidiaries. No issue has been raised by any
Tax Authority in any Audit of Galaxy or its Subsidiaries that if raised with
respect to any other period not so audited would reasonably be expected to
result in a material proposed deficiency for any period not so audited. No
deficiency or adjustment for any Taxes has been threatened, proposed, asserted
or assessed against Galaxy or its Subsidiaries. There are no Liens for Taxes
upon the assets of Galaxy or its Subsidiaries, except Liens for current Taxes
not yet due.
(d) Neither Galaxy nor its Subsidiaries have given or been
requested to give any waiver of statutes of limitations relating to the payment
of Taxes or has executed powers of attorney with respect to Tax matters, which
will be outstanding as of the Closing Date.
(e) Neither Galaxy nor its Subsidiaries are a party to, or are
bound by any tax sharing, cost sharing or similar agreement or policy relating
to Taxes.
(f) Neither Galaxy nor its Subsidiaries have entered into
agreements that would result in the disallowance of any tax deductions pursuant
to Section 280G of the Code. No "consent" within the meaning of Section 341(f)
of the Code has been filed with respect to Galaxy or its Subsidiaries.
(g) Galaxy has not elected to be an association taxable as a
Corporation for federal or state income tax purposes. Galaxy has not made any
elections pursuant to the Code (other than elections that relate solely to
methods of accounting, depreciation or amortization) that would have,
individually or in the aggregate, a Material Adverse Effect on Galaxy.
27
(h) Galaxy has withheld or collected from each payment made to
each of its employees, the amount of Taxes required to be withheld or collected
therefrom, and has paid the same to the proper Tax Authorities or authorized Tax
depositaries.
5.15 ENVIRONMENTAL MATTERS.
(a) Each of Galaxy and its Subsidiaries is in material
compliance with all Environmental Laws, and neither Galaxy nor any of its
Subsidiaries has received any written communication that alleges that Galaxy or
its Subsidiaries is not in compliance with any Environmental Laws, and there are
no circumstances that may prevent or interfere with such compliance in the
future.
(b) There is no Environmental Claim pending or to the
knowledge of the officers of Galaxy threatened against Galaxy or any of its
Subsidiaries with respect to the operations or business of Galaxy or its
Subsidiaries, or against any Person whose liability for any Environmental Claim
Galaxy or its Subsidiaries has retained or assumed either contractually or by
operation of law.
(c) To the knowledge of the officers of Galaxy, there are no
past or present actions, activities, circumstances, conditions, events or
incidents, including, without limitation, the release, emission, discharge,
presence or disposal of any Material of Environmental Concern, that could form
the basis of any material Environmental Claim against Galaxy or its
Subsidiaries, or against any Person whose liability for any Environmental Claim
Galaxy or its Subsidiaries has retained or assumed either contractually or by
operation of law.
(d) Without in any way limiting the generality of the
foregoing, Schedule 5.15 sets forth (i) all permits, licenses and other
governmental authorizations currently held by Galaxy, or required for the
operation of its business, under any Environmental Law, license and
authorization, (ii) all on-site and to the knowledge of the officers of Galaxy
off-site locations where Galaxy has stored, disposed or arranged for the
disposal of Materials of Environmental Concern, (iii) to the knowledge of the
officers of Galaxy, all underground storage tanks, and the capacity and contents
of such tanks, located on property owned, leased or controlled by Galaxy, (iv)
to the knowledge of the officers of Galaxy, the location and condition of any
asbestos or lead (including furnishings or lead-based paints) contained in or
forming part of any building, building component, structure or office space
owned, leased or controlled by Galaxy, and (v) to the knowledge of the officers
of Galaxy, all PCBs or PCB-containing items that are used or stored at any
property owned, leased or controlled by Galaxy and that are the responsibility
of Galaxy to operate and maintain.
5.16 ERISA.
(a) All Galaxy Benefit Plans are disclosed on Schedule 5.16.
All Galaxy Benefit Plans are and have been administered in accordance with, and
are in material compliance with, all Applicable Laws. All Galaxy Benefit Plans
that are subject to ERISA have been administered in accordance with, and are in
material compliance with, the applicable provisions of ERISA. Each of the Galaxy
Benefit Plans that is intended to meet the requirements of Section 401(a) of the
Code has been determined by the Internal Revenue Service to meet such
requirements
28
within the meaning of such provision. No Galaxy Benefit Plan is subject to Title
IV of ERISA or Section 412 of the Code. Galaxy has not engaged in any nonexempt
"prohibited transactions," as such term is defined in Section 4975 of the Code
or Section 406 of ERISA, involving Galaxy Benefit Plans that would subject
Galaxy to the penalty or tax imposed under Section 502(i) of ERISA or Section
4975 of the Code. Neither Galaxy nor any Subsidiary has engaged in any
transaction described in Section 4069 of ERISA within the last five years.
Except as disclosed in Schedule 5.16 or pursuant to the terms of the Galaxy
Benefit Plans, neither the execution and delivery hereof nor the consummation of
the transactions contemplated hereby will (i) result in any payment (including
severance, unemployment compensation or golden parachute) becoming due to any
director or other employee of Galaxy, (ii) increase any benefit otherwise
payable under any Galaxy Benefit Plan or (iii) result in the acceleration of the
time of payment or vesting of any such benefit to any extent.
(b) No notice of a "reportable event," within the meaning of
Section 4043 of ERISA, for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Galaxy Benefit Plan that is an
"employee pension benefit plan" within the meaning of Section 3(2) of ERISA and
that is intended to meet the requirements of Section 401(a) of the Code, or by
any entity that is considered one employer with Galaxy under Section 4001 of
ERISA or Section 414 of the Code, within the 12-month period ending on the
Closing Date. Neither Galaxy nor any Subsidiary has incurred any liability to
the Pension Benefit Guaranty Corporation in respect of any Galaxy Benefit Plan
that remains unpaid.
5.17 INTELLECTUAL PROPERTY RIGHTS. Each of Galaxy and its Subsidiaries
owns or possesses adequate licenses or other rights to use all intellectual
property rights (including without limitation, patents, trademarks, trade names,
service marks, copyrights and applications for any of the foregoing, know-how,
trade secrets, proprietary processes, and other confidential information)
(collectively, "Intellectual Property Rights") material to its business as
currently conducted and as proposed to be conducted, and neither Galaxy nor any
of its Subsidiaries has received any written notice of infringement of or
conflict with asserted rights of others with respect to the use of Intellectual
Property Rights other than as disclosed on Schedule 5.17. There are no Claims
instituted, pending or, to the knowledge of the officers of Galaxy, threatened
by any Person pertaining to or challenging the right of Galaxy to use any
Intellectual Property Rights. To the knowledge of the officers of Galaxy, all
Intellectual Property Rights material to its business as currently conducted and
as proposed to be conducted are valid and enforceable and Galaxy has performed
all acts and has paid all required fees and taxes to maintain all registrations
and applications of such Intellectual Property Rights in full force and effect.
To the knowledge of the officers of Galaxy, neither Galaxy nor any of its
Subsidiaries, in the conduct of their business as now conducted or as proposed
to be conducted, infringes or conflicts with any material right of any third
party, known to Galaxy. Neither Galaxy nor any of its Subsidiaries is, nor will
it be as a result of the execution and delivery of this Agreement and the other
Documents or the performance of any obligations hereunder and thereunder, in
breach of any material license or other agreement relating to any Intellectual
Property Rights. To the knowledge of the officers of Galaxy, no third party is
infringing or has infringed any Intellectual Property Rights of Galaxy or its
Subsidiaries. Galaxy currently owns, licenses, or otherwise has the legal right
to use, the computer software that is in included as Intellectual Property
Rights
29
(including any upgrade, alteration or enhancement with respect thereto), and all
of such software is being used in compliance with any applicable license or
other agreement.
5.18 COMPLIANCE WITH LAWS. Each of Galaxy and its Subsidiaries has
obtained and has maintained in good standing any material Licenses required to
be obtained by it under all Applicable Laws relating to its business, and any
such licenses, permits, consents and authorizations remain in full force and
effect. Each of Galaxy and its Subsidiaries is in compliance, in all material
respects, with all Applicable Laws and Orders.
5.19 AGREEMENTS. Except as set forth on Schedule 5.19 hereto, Galaxy
and its Subsidiaries is not a party to any written or oral (a) contract with any
labor union; (b) material contract for the future purchase of fixed assets or
for the future purchase of materials, supplies or equipment in excess of normal
operating requirements; (c) contract for the employment of any officer,
individual employee or other person on a full-time basis or any contract with
any Person on a consulting basis providing for a payment to such officer,
employee or other person in excess of $100,000 per year; (d) agreement or
indenture relating to the borrowing of money or to the mortgaging, pledging or
otherwise placing a material Lien on any assets of Galaxy; (e) guaranty of any
material obligation for borrowed money; (f) material lease or agreement under
which Galaxy is lessee of or holds or operates any property, real or personal,
owned by any other party; (g) material lease or agreement under which Galaxy is
lessor of or permits any third party to hold or operate any property, real or
personal, owned or controlled by Galaxy; (h) contract with any present or former
officer, director, stockholder or Affiliate of Galaxy or its Subsidiaries; or
(i) any other contract, agreement, arrangement or understanding, other than
customer contracts, which is material to the business of Galaxy. All such
contracts constitute the valid and binding obligations of Galaxy and, to the
knowledge of the officers of Galaxy, the other parties thereto, enforceable in
accordance with their terms, except as enforcement may be limited by general
principles of equity and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally. For the purposes of this Section 5.19,
"material" shall mean any contract involving more than $100,000.
5.20 DISCLOSURE. No statement of fact by Galaxy contained herein
(including the Schedules and Exhibits hereto) or in the Documents in connection
herewith contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary in order to make the
statements herein or therein contained, in light of the circumstances in which
they were made, not misleading.
ARTICLE VI
CERTAIN MATTERS PENDING THE CLOSING
From and after the date of this Agreement and until the Closing, 3MC
and Galaxy, as applicable, shall comply with the following provisions:
6.1 ACCESS AND INSPECTION PERIOD. Each of 3MC and Galaxy and its
respective authorized agents, officers and representatives shall have reasonable
access to the other party (and, in the case of Galaxy, to the Contributed
Assets) to conduct such examination and
30
investigation of the other party (and, in the case of Galaxy, to the Business
and the Contributed Assets) as it deems reasonably necessary, provided that such
examinations shall be during normal business hours and shall not unreasonably
interfere with either party's normal operations and activities.
6.2 NOTICE OF ADVERSE CHANGES. Pending the Closing, each of 3MC and
Galaxy shall give the other party prompt written notice of the occurrence of any
of the following:
(a) an Event of Loss with respect to the Business or event of
loss with respect to Galaxy's assets, as applicable, that involves or would
reasonably be expected to involve more than $50,000.00;
(b) the commencement or filing of any decree, judgment, order,
proceeding or litigation at law or in equity, arbitration or other proceeding
before any commission, agency or administrative or regulatory body or authority
which could have a Material Adverse Effect on the Business or the Contributed
Assets or Galaxy, as applicable;
(c) any material labor grievance, strike, request for union
representation, controversy or dispute affecting the business or operations of
the Business or Galaxy's employees, as applicable;
(d) any material violation by 3MC with respect to the
Business, or Galaxy or written notice of any alleged material violation, of any
federal, state or local law, statute, ordinance, rule or regulation;
(e) any event or occurrence which would cause any of such
party's representations and warranties to become incomplete, misleading or
inaccurate;
(f) any notice of a material breach, material default, claimed
material default or termination of any material Contract or material Lease or
material agreement of Galaxy other than any termination of such Contract or
Lease pursuant to its terms; or
(g) any other material adverse developments with respect to
the Business or Galaxy, as applicable.
6.3 OPERATIONS OF THE BUSINESS PENDING CLOSING. Except as otherwise
consented to in writing by Galaxy, after the date hereof and prior to the
Closing, 3MC shall:
(a) operate the Business in the ordinary course of business in
accordance with past practices;
(b) operate the Business in accordance with applicable
governmental requirements, rules and regulations;
(c) maintain the Equipment in good working order, ordinary
wear and tear excepted, and replace any of the Equipment which shall be worn
out, broken, lost, stolen or
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destroyed, which Equipment would have been replaced in the ordinary course of
business in accordance with past practices;
(d) not sell, lease, mortgage, pledge or otherwise dispose of
any of the Contributed Assets, except for transactions in the ordinary and
regular course of the operation of the Business;
(e) not enter into any "golden parachute" or other severance
arrangement with any employee, or increase or otherwise change the rate or
nature of the compensation (including wages, salaries and bonuses) which is paid
or payable to any Person employed by the Business, except pursuant to existing
compensation and fringe benefit plans, practices and arrangements which have
been disclosed to Galaxy; not enter into, renew or allow the renewal of, any
employment or consulting agreement or other contract or arrangement with respect
to the performance of personal services with respect to the Business;
(f) with respect to the Business, not enter into, or become
obligated under, any agreement or commitment on behalf of 3MC except for: (i)
agreements entered into in the ordinary and regular course of the operation of
the Business; or (ii) those other agreements or commitments otherwise permitted
under this Section 6.3; or change, amend, terminate or otherwise modify any
Contract or Lease except for those which terminate or expire by their own terms;
(g) maintain in full force and effect policies of liability
and casualty insurance and workers compensation insurance of substantially the
same type, character and coverage as the policies currently carried with respect
to the Business;
(h) not adopt, or commit to adopt, any employee benefit plan
or arrangement or other pension, profit sharing, deferred compensation or
similar plan, program or trust on behalf of personnel of 3MC with respect to the
Business;
(i) not enter into any collective bargaining agreement
applicable to any employees of 3MC with respect to the Business;
(j) follow the usual and customary policy of 3MC with respect
to the Business with respect to collecting Accounts Receivable;
(k) make reasonable commercial efforts to promote and
advertise the Business and make expenditures therefor consistent with past
practices and protect the business, business prospects and market share of the
Business;
(l) not acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any Person or division thereof or any
assets that are material, individually or in the aggregate, to the Business;
(m) not compromise or settle any litigation to which 3MC is a
party, if such settlement or compromise will adversely affect the Contributed
Assets or Business;
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(n) perform all Contracts and Leases in accordance with their
terms and pay all accounts payable, liabilities and all other obligations of 3MC
with respect to the Business when due;
(o) maintain the books, records and accounts of 3MC with
respect to the Business in the ordinary course of business consistent with past
practice; and
(p) not take or agree to take any action inconsistent with the
representations and warranties of 3MC contained herein or the consummation of
the Closing as contemplated by this Agreement.
6.4 OPERATIONS OF GALAXY PENDING CLOSING. Except as otherwise consented
to in writing by 3MC, after the date hereof and prior to the Closing, Galaxy
shall:
(a) operate its business in the ordinary course of business in
accordance with past practices;
(b) operate its business in accordance with applicable
governmental requirements, rules and regulations;
(c) not sell, lease, mortgage, pledge or otherwise dispose of
a material amount of its assets, except for transactions in the ordinary and
regular course of the operation of its business;
(d) not merge Galaxy or consolidate Galaxy with any business
or any Person or division thereof or agree to do either of the foregoing;
(e) maintain in full force and effect policies of liability
and casualty insurance and workers compensation insurance of substantially the
same type, character and coverage as the policies currently carried;
(f) perform all contracts and leases in accordance with their
terms and pay all accounts payable, liabilities and all other obligations of
Galaxy when due;
(g) maintain the books, records and accounts of Galaxy
consistent with past practice;
(h) not enter into any "golden parachute" arrangement or
collective bargaining agreement applicable to any employees of Galaxy; and
(i) not take or agree to take any action inconsistent with the
representations and warranties of Galaxy contained herein or the consummation of
the Closing as contemplated by this Agreement.
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6.5 CONSENTS. 3MC will use its commercially reasonable efforts to
obtain all consents and approvals from third Persons whose consent or approval
is required pursuant to any Contract or Lease prior to the Closing Date.
6.6 COOPERATION. Galaxy and 3MC will cooperate in all respects in
connection with:
(a) securing any nongovernmental approvals, consents, and
waivers of third parties listed in Schedule 4.3; and
(b) giving notices to any Governmental Authority, or securing
the permission, approval, determination, consent or waiver of any Governmental
Authority, required by law in connection with the transfer of the Contributed
Assets from 3MC to Galaxy.
6.7 EXCLUSIVITY. Neither 3MC nor anyone acting on behalf of 3MC shall
directly or indirectly, solicit or initiate discussions concerning, or enter
into negotiation with, or furnish information that is not publicly available to,
any Person concerning, any proposal for a merger, sale of assets, sale of shares
of capital stock or other takeover or business combination transaction involving
3MC or the Business and will notify Galaxy immediately in writing if 3MC becomes
aware that any inquiries or proposals are received by, any information is
requested from, or any negotiations or discussions are sought to be initiated
with 3MC with respect to any of the foregoing transactions; provided, however,
that 3MC may sell shares of its capital stock provided that such sales do not
result in a change of control of 3MC.
6.8 RELEASE OF LIENS. At or prior to the Closing, 3MC shall obtain the
release of all Liens disclosed in the Schedules hereto and any other Liens
(other than Permitted Liens) on the Contributed Assets and shall duly file
releases or terminations of all such Liens in each Governmental Agency or office
in which any such Lien or evidence thereof shall have been previously filed such
that 3MC shall transfer the Contributed Assets to Galaxy free and clear of all
Liens (other than Permitted Liens).
6.9 TAX RETURNS AND PAYMENTS.
(a) All Tax returns, estimates and reports required to be
filed by 3MC with respect to the Business prior to the Closing Date or relating
to periods prior to the Closing Date will be timely filed when due with the
appropriate governmental agencies or extensions will have been granted; and
(b) all Taxes pertaining to ownership of the Contributed
Assets or operation of the Business prior to the Closing Date will be paid by
3MC when due and payable unless protested in good faith.
6.10 PUBLIC ANNOUNCEMENT. No party hereto shall issue any press release
or public announcement or otherwise divulge the existence of this Agreement or
the transactions contemplated hereby without prior approval of the other parties
hereto which shall not be unreasonably withheld, except as and to the extent
that such party shall be obligated by law or
34
regulation, in which case the other party shall be so advised and the parties
shall use their best efforts to cause a mutually agreeable release or
announcement to be issued.
6.11 BEST EFFORTS Without limiting the specific obligations of any
party hereto under any agreement or covenant hereunder, each party hereto shall
use its commercially reasonable efforts to take all action and do all things
necessary in order to consummate the transactions contemplated by this
Agreement, including, without limitation, satisfaction, but not waiver, of the
closing conditions set forth in Article VII and Article VIII.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF GALAXY
Each and every obligation of Galaxy to be performed on the Closing Date
shall be subject to the satisfaction prior to or at the Closing of the following
express conditions precedent:
7.1 COMPLIANCE WITH AGREEMENT. 3MC shall have performed and complied in
all material respects with each of its obligations under this Agreement which
are to be performed or complied with by it prior to or at the Closing.
7.2 PROCEEDINGS AND INSTRUMENTS SATISFACTORY. All proceedings,
corporate or other, required to be taken by 3MC in connection with the
performance of this Agreement, and all documents incident thereto, shall be
complete in all material respects to the reasonable satisfaction of Galaxy and
Galaxy's counsel, and 3MC shall have made available to Galaxy for examination
the originals or true and correct copies of all documents which Galaxy may
reasonably request in connection with the transactions contemplated by this
Agreement.
7.3 REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by 3MC in this Agreement which are qualified in any respect as to
materiality or Material Adverse Effect shall be true and correct as of the
Closing Date with the same force and effect as though such representations and
warranties had been made on the Closing Date (except for representations and
warranties made as of a specified date, which need only be true as of such
date); all other representations and warranties made by 3MC in this Agreement
shall be true and correct in all material respects as of the Closing Date with
the same force and effect as though such representations and warranties had been
made on the Closing Date (except for representations and warranties made as of a
specified date, which need only be true as of such date).
7.4 NO MATERIAL ADVERSE CHANGE. Between the date of this Agreement and
the Closing, there shall have been no material adverse change in the financial
condition or results of operation of 3MC, with respect to, or affecting, the
Business, nor any material adverse change in the condition of the Contributed
Assets.
7.5 EVENT OF LOSS. Between the date of this Agreement and the Closing,
the Business shall not have sustained an Event of Loss which individually or in
the aggregate would cost in
35
excess of Three Hundred Thousand Dollars ($300,000) to repair and which repair
shall not have been completed on or prior to the Closing Date to Galaxy's
reasonable satisfaction; provided, however, 3MC may elect to extend the Closing
for a reasonable period of time not to exceed sixty (60) days necessary to
complete such repairs.
7.6 DELIVERIES AT CLOSING. 3MC shall have delivered or caused to be
delivered to Galaxy the documents, each properly executed and dated as of the
Closing Date, required pursuant to Section 2.3(a).
7.7 OTHER DOCUMENTS. 3MC shall have delivered to Galaxy such
certificates and documents of officers of 3MC and public officials as shall be
reasonably requested by Galaxy's counsel to establish the good standing of 3MC,
and the due authorization of this Agreement and the transactions contemplated
hereby by 3MC.
7.8 POSSESSION; INSTRUMENTS OF CONVEYANCE AND TRANSFER. 3MC shall have
delivered to Galaxy at the Closing such other documents as shall be effective to
vest in Galaxy good title to the Contributed Assets as contemplated by this
Agreement.
7.9 APPROVALS AND CONSENTS. There shall have been secured such
permissions, approvals, determinations, consents and waivers as listed on
Schedule 7.9.
7.10 ABSENCE OF INVESTIGATIONS AND PROCEEDINGS. There shall be no
decree, judgment, order, or litigation at law or in equity, no arbitration
proceedings, and no proceeding before or by any commission, agency or other
administrative or regulatory body or authority pending to which 3MC is a party
with respect to the Business or the Contributed Assets, which would materially
adversely affect the ability of Galaxy to operate the Business or to use the
Contributed Assets in the same manner as operated and used by 3MC. Without
limiting the generality of the foregoing, no action or proceeding or formal
investigation by any Person or governmental agency shall be pending with the
object of challenging or preventing the Closing and no other proceedings shall
be pending with such object or to collect damages from Galaxy or 3MC on account
thereof and for which Galaxy is not indemnified hereunder.
7.11 GOVERNMENTAL CONSENTS. All authorizations, consents or approvals
of any and all governmental regulatory authorities necessary in connection with
the consummation of the transactions contemplated by this Agreement shall have
been obtained and be in full force and effect. The applicable waiting period,
including any extensions thereof, under the HSR Act shall have expired or been
terminated, and there shall have been no adverse change to the transactions
contemplated by this Agreement, and no materially adverse requirement imposed on
Galaxy, required in order to obtain approvals under the HSR Act.
7.12 NO LIENS. On the Closing Date and simultaneously with the Closing,
there shall not be any Liens on the Contributed Assets except Permitted Liens.
7.13 EMPLOYMENT AGREEMENTS. Galaxy shall have entered into employment
agreements with Xxxxxxx Xxxxx and Xxxx Xxxxx and amended and restated employment
36
agreements with Xxxxxxx Xxxxxxx and Xxxxxx Xxxxx, in each case on terms
reasonably satisfactory to Galaxy.
7.14 EVW AGREEMENTS. 3MC shall have terminated its Contracts with
Exhibitor Visibility Worldwide LLC relating to the Business in a manner
reasonably satisfactory to Galaxy.
Notwithstanding the above, if any of the conditions set forth in this
Article VII have not been satisfied, Galaxy may in its sole discretion elect to
proceed with the consummation of the transactions contemplated hereby.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF 3MC
Each and every obligation of 3MC to be performed on the Closing Date
shall be subject to the satisfaction prior to or at the Closing of the following
express conditions precedent:
8.1 COMPLIANCE WITH AGREEMENT. Galaxy shall have performed and complied
in all material respects with all of its obligations under this Agreement which
are to be performed or complied with by it prior to or at the Closing.
8. 2 PROCEEDINGS AND INSTRUMENTS SATISFACTORY. All proceedings to be
taken by Galaxy and TOIC in connection with the transactions contemplated by
this Agreement, and all documents incident thereto, shall be complete to the
reasonable satisfaction of 3MC and 3MC's counsel, and Galaxy and TOIC shall have
made available to 3MC for examination the originals or true and correct copies
of all documents which 3MC may reasonably request in connection with the
transactions contemplated by this Agreement.
8.3 REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by Galaxy and TOIC in this Agreement which are qualified in any respect as
to materiality or Material Adverse Effect shall be true and correct as of the
closing Date with the same force and effect as though such representations and
warranties had been made on the Closing Date (except for representations and
warranties made as of a specified date, which need only be true as of such
date); all other representations and warranties made by Galaxy and TOIC in this
Agreement shall be true and correct in all material respects as of the Closing
Date with the same force and effect as though such representations and
warranties had been made on the Closing Date (except for representations and
warranties made as of a specified date, which need only be true as of such
date).
8.4 NO MATERIAL ADVERSE CHANGE. Between the date of this Agreement and
the Closing, there shall have been no material adverse change in the financial
condition or results of operation of Galaxy and its Subsidiaries, taken as a
whole. Between December 31, 1999, and the Closing Date there shall have been no
material adverse change in the financial condition or results of operation of
TOIC and its Subsidiaries, taken as a whole.
37
8.5 DELIVERIES AT CLOSING. Galaxy shall have delivered or caused to be
delivered to 3MC the documents, each properly executed and dated as of the
Closing Date required pursuant to Section 2.3(b).
8.6 OTHER DOCUMENTS. Galaxy shall have delivered to 3MC such
certificates and documents of officers of Galaxy and of public officials as
shall be reasonably requested by 3MC's counsel to establish the existence and
good standing of Galaxy and TOIC and the due authorization of this Agreement and
the transactions contemplated hereby by Galaxy and TOIC.
8.7 ABSENCE OF INVESTIGATIONS AND PROCEEDINGS. There shall be no
decree, judgment, order, or litigation at law or in equity, no arbitration
proceedings, and no proceeding before or by any commission, agency or other
administrative or regulatory body or authority pending to which Galaxy is a
party, which would materially adversely affect the ability of Galaxy to operate
its business and no other proceeding shall be pending with the object of
challenging or preventing the Closing.
8.8 GOVERNMENTAL CONSENTS. All other material authorizations, consents
or approvals of any and all Governmental Authorities shall have been obtained
and be in full force and effect. The applicable waiting period, including any
extensions thereof, under the HSR Act shall have expired or been terminated, and
there shall have been no adverse change to the transactions contemplated by this
Agreement, and no materially adverse requirement imposed on 3MC, required in
order to obtain approvals under the HSR Act.
8.9 GALAXY OPTIONS. At the Closing, Galaxy shall have adopted the
Galaxy Option Plan which shall include options to purchase not less than 10% of
the LLC Units outstanding on the Closing Date). The Galaxy Option Plan shall
provide for (i) vesting of the Galaxy Options over a three year period with
initial vesting of 33% on the first anniversary of the date of grant, and
additional vesting of 8.25% each three-month period thereafter; (ii) an exercise
price of $4.89 per LLC Unit; (iii) vested options shall not be exercisable until
an initial public offering of Galaxy's securities or a sale of all or
substantially all of the assets of Galaxy or the LLC Units (a "Liquidity
Event"), provided that (x) Galaxy shall have the right, but not the obligation
to buy the vested Galaxy Options of a Galaxy employee who terminates employment
prior to a Liquidity Event and (y) the terminated employee may retain his vested
Galaxy Options until the occurrence of a Liquidity Event, at which time such
options shall be exercisable for a reasonable period; and (iv) in connection
with an initial public offering of Galaxy's securities, the Galaxy Options will
be converted to options in a corporation providing substantially equivalent
value to the employee.
Notwithstanding the above, if any of the conditions set forth in this
Article VIII have not been satisfied, 3MC may nevertheless elect to proceed with
the consummation of the transactions contemplated hereby.
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ARTICLE IX
FURTHER AGREEMENTS
9.1 ACCESS TO RECORDS. From and after the Closing Date, Galaxy and its
accountants shall have reasonable access to the financial records of 3MC
relating to the Business as Galaxy deems reasonably necessary to complete an
audit of 3MC's Financial Statements, provided that such examinations shall be
during 3MC's normal business hours and shall not unreasonably interfere with its
normal operations and activities.
9.2 EMPLOYEES.
(a) Galaxy may at any time after the date of this Agreement
approach 3MC's Employees and make arrangements or enter into agreements with
such employees concerning becoming employees of Galaxy although Galaxy assumes
by this Agreement no obligation to employ or continue the employment of any
Person for any period of time after the Closing. All such offers of employment
shall be expressly conditioned upon the consummation of the Closing. 3MC agrees
to fully cooperate with Galaxy in connection with its offer to hire any 3MC
Employees and will not take any action, directly or indirectly, to prevent any
3MC Employee from becoming employed by Galaxy from and after the Closing.
(b) As of the Closing, 3MC shall terminate the employment of
the 3MC Employees and Galaxy will, as of the Closing, extend to the 3MC
Employees listed on Schedule 9.2 offers of employment in comparable positions
and with comparable compensation and benefits (excluding stock options) not less
favorable than those in effect immediately prior to the Closing. All 3MC
Employees who become so employed by Galaxy shall constitute a Transferred
Employee. 3MC agrees to fully cooperate with Galaxy in connection with its offer
to employ the 3MC Employees listed on Schedule 9.2.
(c) 3MC shall retain responsibility for payment of salaries
and other cash compensation (including, any deferred or incentive compensation)
to Transferred Employees with respect to periods of employment with 3MC prior to
the later of the Closing Date, or the date a Transferred Employee becomes
employed by Galaxy.
(d) Effective as of the Closing through December 31, 0000,
Xxxxxx intends, to the extent practicable and reasonable, to provide the
Transferred Employees and their dependents the opportunity to participate in
group welfare plans maintained or established by Galaxy on the same terms and
conditions as the group welfare plans maintained by 3MC immediately prior to the
Closing (providing for a waiver of any pre-existing conditions and providing
that credit for expenses incurred on or before the Closing Date shall be taken
into account for purposes of satisfying applicable deductibles, co-payments and
out-of-pocket maximums under the group health plans). As soon as practicable
following the Closing, Galaxy and 3MC shall cause the assets, liabilities and
obligations with respect to the Transferred Employees under 3MC's Code Section
125 cafeteria plan (including the flexible spending
39
accounts and dependent care accounts) to be transferred to the Code Section 125
cafeteria plan in which Galaxy employees participate as of the Closing.
(e) Effective as of the Closing, Galaxy shall assume all
responsibility for continuation coverage requirements pursuant to Section 4980B
of the Code with respect to all "qualifying events" (as such term is defined in
Section 4980B of the Code) occurring prior to, on or after the Closing with
respect to any Transferred Employee or any "qualified beneficiary" (as defined
in Section 4980B of the Code) of a Transferred Employee.
(f) With respect to the Transferred Employees, Galaxy will
recognize all accrued and unused vacation and sick days which have accrued to
the Transferred Employees through the Closing Date under 3MC's benefit plans and
programs and Galaxy will allow the Transferred Employees to take their accrued
vacation and sick days at any time following the Closing Date in accordance with
the vacation and sick policies of Galaxy in effect as of the Closing Date. From
and after the Closing through December 31, 2000, Galaxy agrees to recognize and
give credit for service under its vacation and sick benefit plans and policies
all years of service and years of experience recognized by 3MC under its
vacation and sick benefit programs and policies immediately prior to the Closing
with respect to the Transferred Employees.
(g) Effective as of the Closing, Galaxy shall provide the
Transferred Employees with the opportunity to participate in the 401(k) defined
contribution plan provided to other similarly situated employees of Galaxy on
the same basis and under the same terms as provided to such similarly situated
employees; provided, however, that for purposes of eligibility to make employee
pre-tax deferrals (but not for purposes of receiving employer matching
contributions) and for purposes of vesting service under such plan, the
Transferred Employees shall receive credit for all years of service with 3MC
prior to the Closing.
(h) Nothing express or implied in this Agreement shall confer
upon any employee or former employee of 3MC or Galaxy any rights or remedies,
including, without limitation, any rights of employment or continued employment
or any rights to compensation or benefits for any specified period, of any
nature or kind whatsoever under or by reason of this Agreement.
ARTICLE X:
INDEMNIFICATION
10.1 INDEMNIFICATION BY 3MC.
(a) 3MC shall indemnify and hold Galaxy and TOIC and their
officers, directors, managers, members and employees (collectively, the "Galaxy
Indemnified Parties") harmless from and against, and agree promptly to defend
each of the Galaxy Indemnified Parties from and reimburse each of the Purchaser
Indemnified Parties for, any and all losses, damages, costs, expenses,
liabilities, obligations and claims of any kind (including, without limitation,
reasonable attorney fees and other legal costs and expenses) (collectively,
"Losses") that any of
40
the Galaxy Indemnified Parties may at any time suffer or incur, or become
subject to, as a result of or in connection with: (i) any breach or inaccuracy
of any of the representations and warranties made by 3MC in or pursuant to this
Agreement; (ii) any failure by 3MC to carry out, perform, satisfy or discharge
any covenants, agreements, undertakings or liabilities or obligations under this
Agreement or under any of the documents delivered by 3MC pursuant to this
Agreement; or (iii) the Retained Liabilities.
(b) Notwithstanding any other provision to the contrary, 3MC
shall not have any liability under Section 10.1(a)(i) above unless a claim has
been asserted with respect to the matters set forth in Section 10.1(a)(i) within
two years of the Closing Date except with respect to matters arising under
Sections 4.4, 4.12, 4.18 and 4.19, in which event Galaxy or TOIC must have
asserted a claim within the applicable statute of limitations. Notwithstanding
any provision set forth in this Agreement to the contrary, for purposes of
determining whether any Losses have occurred or the amount of any such Losses,
the representations and warranties of 3MC hereunder shall be considered without
regard to any materiality or knowledge qualifications set forth therein.
Notwithstanding any implication to the contrary contained herein, the parties
acknowledge and agree that a decrease in the value of the LLC Units would not,
by itself, constitute a Galaxy Indemnified Parties' Loss, unless and to the
extent a decrease in the value of the LLC Units has been demonstrated to be as a
result of any event described in Sections 10.1(a)(i), (ii) or (iii) above.
10.2 INDEMNIFICATION BY TOIC.
(a) TOIC shall indemnify and hold 3MC and its directors,
officers and employees (collectively, the "3MC Indemnified Parties") harmless
from and against, and agree to promptly defend each of the 3MC Indemnified
Parties from and reimburse each of the 3MC Indemnified Parties for, any and all
Losses that any of the 3MC Indemnified Parties may at any time suffer or incur,
or become subject to, as a result of or in connection with: (i) any breach or
inaccuracy of any representations and warranties made by Galaxy or TOIC in or
pursuant to this Agreement; (ii) any failure by Galaxy or TOIC to carry out,
perform, satisfy or discharge any covenants, agreements, undertakings or
liabilities or obligations under this Agreement or under any of the documents
delivered by Galaxy pursuant to this Agreement; or (iii) the Assumed
Liabilities.
(b) Notwithstanding any other provision to the contrary Galaxy
and TOIC shall not have any liability under Section 10.2(a)(i) above unless a
claim has been asserted with respect to the matters set forth in Section
10.2(a)(i) within two years of the Closing Date. Notwithstanding any provision
set forth in this Agreement to the contrary, for purposes of determining whether
any Losses have occurred or the amount of any such Losses, the representations
and warranties of Galaxy and TOIC hereunder shall be considered without regard
to any materiality or knowledge qualifications set forth therein.
Notwithstanding any implication to the contrary contained herein, the parties
acknowledge and agree that a decrease in the value of the LLC Units would not,
by itself, constitute a 3MC Indemnified Parties' Loss, unless and to the extent
a decrease in the value of the LLC Units has been demonstrated to be as a result
of any event described in Sections 10.2(a)(i), (ii) or (iii) above.
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10.3 NOTIFICATION OF CLAIMS; ELECTION TO DEFEND.
(a) A party entitled to be indemnified pursuant to Section
10.1 or 10.2 hereof, as the case may be (the "Indemnified Party"), shall notify
the party liable for such indemnification (the "Indemnifying Party") in writing
of any claim or demand (a "Claim") that the Indemnified Party has determined has
given or could give rise to a right of indemnification under this Agreement.
Subject to the Indemnifying Party's right to defend in good faith third party
Claims as hereinafter provided, the Indemnifying Party shall satisfy its
obligations under this Article V within 30 days after the receipt of written
notice thereof from the Indemnified Party. Any amounts paid thereafter shall
include interest thereon for the period commencing at the later of (i) the end
of such 30-day period and (ii) the date the claim is paid by the Indemnified
Party and ending on the actual date of payment, at a rate of 15% per annum, or,
if lower, at the highest rate of interest permitted by applicable law at the
time of such payment.
(b) If the Indemnified Party shall notify the Indemnifying
Party of any Claim pursuant to Section 10.3(a) hereof, and if such Claim relates
to a Claim asserted by a third party against the Indemnified Party that the
Indemnifying Party acknowledges is a Claim for which it must indemnify or hold
harmless the Indemnified Party under Section 10.1 or 10.2 hereof, as the case
may be, the Indemnifying Party shall have the right, at its sole cost and
expense, to employ counsel of its own choosing to defend any such Claim asserted
against the Indemnified Party; provided, however, that if the Indemnified Party
(i) reasonably believes that its interests with respect to a Claim (or any
material portion thereof) are in conflict with the interests of the Indemnifying
Party with respect to such Claim (or portion thereof), and (ii) promptly
notifies the Indemnifying Party, in writing, of the nature of such conflict,
then the Indemnified Party shall be entitled to choose, at the sole cost and
expense of the Indemnifying Party, independent counsel to defend such Claim (or
the conflicting portion thereof). The Indemnified Party shall have the right to
participate in the defense of any such Claim at its own expense (except to the
extent provided in the foregoing sentence), but the Indemnifying Party shall
retain control over such litigation (except as provided in the foregoing
sentence). The Indemnifying Party shall notify the Indemnified Party in writing,
as promptly as possible (but in any case before the due date for the answer or
response to a claim) after the date of the notice of claim given by the
Indemnified Party to the Indemnifying Party under Section 10.3(a) hereof of its
election to defend in good faith any such third party Claim. So long as the
Indemnifying Party is defending in good faith any such Claim asserted by a third
party against the Indemnified Party (or has been relieved of the obligation to
defend such Claim in accordance with this Section 10.3(b) as a result of a
conflict of interest between the Indemnified Party and the Indemnifying Party),
the Indemnified Party shall not settle or compromise such Claim without the
prior written consent of the Indemnifying Party. The Indemnified Party shall
cooperate with the Indemnifying Party in connection with any such defense and
shall make available to the Indemnifying Party or its agents all records and
other materials in the Indemnified Party's possession reasonably required by it
for its use in contesting any third party Claim; provided, however, that the
Indemnifying Party shall have agreed, in writing, to keep such records and other
materials confidential except to the extent required for defense of the relevant
Claim. Whether or not the Indemnifying Party elects to defend any such Claim,
the Indemnified Party shall have no obligations to do so. Within 30 days after a
final determination (including, without limitation, a settlement) has been
reached with respect to any Claim contested pursuant to this Section 10.3(b),
the Indemnifying
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Party shall satisfy its obligations with respect thereto. Any amounts paid
thereafter shall include interest thereon for the period commencing at the end
of such 30-day period and ending on the actual date of payment, at a rate of 15%
per annum, or, if lower, at the highest rate of interest permitted by applicable
law at the time of such payment.
10.4 LIMITS FOR RECOVERY OF LOSSES.
Neither party shall be liable as the Indemnifying Party for any Claims
under Section 10(a)(i) or 10(b)(i) unless and until the aggregate amount of all
Claims of the Indemnified Parties under such Sections equals or exceeds $75,000,
in which case the Indemnifying Party shall be liable for all Claims of the
Indemnified Parties under such Sections without regard to such $75,000
limitation. In all cases, and notwithstanding anything herein to the contrary,
each party shall be subject to a maximum aggregate limit of all Claims against
it equal to $10 million.
ARTICLE XI
TERMINATION; MISCELLANEOUS
11.1 TERMINATION. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing Date, as
follows:
(a) by mutual written agreement of 3MC, Galaxy and TOIC;
(b) by Galaxy and TOIC, upon a material breach hereof by 3MC
which has not been cured within 20 days after 3MC's receipt of written notice
from Galaxy and TOIC notifying it of such default and which would cause any of
the conditions set forth in Article VII of this Agreement not to have been
fulfilled by June 30, 2000;
(c) by 3MC, upon a material breach hereof by Galaxy or TOIC
which has not been cured within 20 days after Galaxy's receipt of written notice
from 3MC notifying it of such default which would cause any of the conditions
set forth in Article VIII of this Agreement not to have been fulfilled by June
30, 2000; and
(d) by Galaxy, 3MC and TOIC if the Closing has not occurred on
or before June 30, 2000, provided that the party seeking to terminate this
Agreement shall not then be in material breach of this Agreement.
11.2 RIGHTS ON TERMINATION. If this Agreement is terminated because of
a willful and material breach hereof by either party, the nonbreaching party
shall be entitled to pursue all legal and equitable remedies against the
breaching party for such breach including specific performance.
11.3 FURTHER ASSURANCES. From time to time after the Closing Date, upon
the reasonable request of any party hereto, the other party or parties hereto
shall execute and deliver
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or cause to be executed and delivered such further instruments of conveyance,
assignment and transfer and take such further action as the requesting party may
reasonably request in order to effectuate fully the purposes, terms and
conditions of this Agreement.
11.4 SURVIVAL. The representations and warranties of Galaxy, 3MC and
TOIC in this Agreement shall survive the Closing until the date that is two
years from the Closing Date except with respect to the representations and
warranties set forth in Sections 4.4, 4.12, 4.19 and 4.20 which shall survive
the Closing for the applicable statute of limitations. The agreements of Galaxy
and 3MC set forth in Articles IX, X and XI in this Agreement shall survive the
Closing indefinitely.
11.5 ENTIRE AGREEMENT; AMENDMENT; AND WAIVERS. This Agreement and the
agreements required to be delivered pursuant hereto constitute the entire
agreement between the parties pertaining to the subject matter hereof, and
supersede all prior and contemporaneous agreements, understandings, negotiations
and discussions of the parties, whether oral or written, and there are no
warranties, representations or other agreements between the parties in
connection with the subject matter hereof, except as specifically set forth
herein. No amendment, supplement, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision of this Agreement, whether or
not similar, unless otherwise expressly provided. Time is of the essence of this
Agreement. All remedies, either under this Agreement or by law or otherwise
afforded to any party, shall be cumulative and not alternative.
11.6 EXPENSES. Except as otherwise specifically provided herein,
whether or not the transactions contemplated by this Agreement are consummated,
each of the parties shall pay the fees and expenses of its respective counsel,
accountants and other experts incident to the negotiation, drafting and
execution of this Agreement and consummation of the transactions contemplated
hereby.
11.7 BENEFIT; ASSIGNMENT. This Agreement shall be binding upon and
shall inure to the benefit of and shall be enforceable by Galaxy, TOIC and 3MC
and their respective proper successors and assigns. This Agreement (and any
rights, obligation or liabilities hereunder) may not be assigned or delegated in
whole or in part by any party without the prior written consent of the other
parties; provided, however, that Galaxy may assign in whole or in part its
rights, obligations or liabilities hereunder to an Affiliate of Galaxy or to any
Person who purchases all or substantially all of the assets or stock of Galaxy
whether by merger or otherwise, and Galaxy may collaterally assign this
Agreement to any lender of Galaxy or such Affiliate.
11.8 NOTICES. All notices and other communications delivered hereunder
(whether or not required to be delivered hereunder) shall be deemed to be
sufficient and duly given if contained in a written instrument (a) personally
delivered, (b) sent by telecopier, (c) sent by nationally recognized overnight
courier guaranteeing next Business Day delivery or (d) sent by first class
registered or certified mail, postage prepaid, return receipt requested, in each
case addressed as follows:
44
if to the Company:
Third Millennium Communications, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxxxx, Chairman
Telecopier number: 000-000-0000
with a copy (which shall not constitute Notice) to:
Xxxxxxxxxx Xxxxxxxx LLP
0000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxx, Esq.
Telecopier number: (000) 000-0000
if to the Purchaser or TOIC:
c/o The Official Information Company
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxx Xxxxxx, President and CEO
Telecopier number: (000) 000-0000
with a copy (which shall not constitute Notice) to:
Xxxxxx Xxx Xxxxxxx, Esq.
Xxxxxxxxx Traurig, LLP
0000 Xxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Telecopier number: (000) 000-0000
11.9 COUNTERPARTS; HEADINGS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute but one and the same Agreement. Facsimile counterpart
signatures to this Agreement shall be acceptable and binding. The Table of
Contents and Article and Section headings in this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
11.10 SEVERABILITY. If any provision, clause or part of this Agreement
or the application thereof under certain circumstances is held invalid or
unenforceable, the remainder of this Agreement, or the application of such
provision, clause or part under other circumstances, shall not be affected
thereby.
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11.11 NO RELIANCE. Except for any assignees permitted by Section 11.7
of this Agreement:
(a) no third party is entitled to rely on any of the
representations, warranties and agreements of Galaxy, TOIC or 3MC contained in
this Agreement; and
(b) Galaxy, TOIC and 3MC assume no liability to any third
party because of any reliance on the representations, warranties and agreements
of Galaxy, TOIC or 3MC contained in this Agreement.
11.12 JUDICIAL INTERPRETATION. Should any provision of this Agreement
require judicial interpretation, the parties hereto agree that the court
interpreting or construing the same shall not apply a presumption that the terms
hereof shall be more strictly construed against one party by reason of the rule
of construction that a document is to be construed more strictly against the
party which itself or through its agent prepared the same, it being agreed that
the agents of each party have participated in the preparation hereof.
11.13 SATURDAYS, SUNDAYS AND LEGAL HOLIDAYS. If the time period by
which any acts or payments required hereunder must be performed or paid expires
on a Saturday, Sunday or legal holiday, then such time period shall be
automatically extended to the close of business on the next regularly scheduled
business day.
11.14 GOVERNING LAW; WAIVER OF JURY TRIAL. THIS AGREEMENT SHALL BE
CONSTRUED AND INTERPRETED ACCORDING TO THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
EACH OF THE PARTIES HERETO HEREBY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, THEIR RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR
ANY OF THE OTHER DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT
MATTER OF THE HOLDER'S INVESTMENT IN THE COMPANY CONTEMPLATED HEREBY. THE SCOPE
OF THIS JURY TRIAL WAIVER SHALL BE LIMITED TO DISPUTES BETWEEN THE COMPANY AND
THE HOLDER AND SHALL NOT EXTENT TO DISPUTES BETWEEN THE COMPANY AND ANY OTHER
PERSON.
11.15 INCOME TAX POSITION. Neither Galaxy nor 3MC nor TOIC shall take a
position for income tax purposes which is inconsistent with this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Asset Contribution
Agreement as of the day and year first above written.
GALAXY INFORMATION SERVICES, LLC
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
THIRD MILLENNIUM COMMUNICATIONS, INC.
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
THE OFFICIAL INFORMATION COMPANY
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
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