Exhibit 2.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made and entered into
as of the 27th day of January, 2003, by and between Video Network
Communications, Inc., a Delaware corporation ("Purchaser"), and Xxxxxxxx
Communications, LLC, a Delaware limited liability company ("WCLLC"), and
Xxxxxxxx Communications Procurement, LP, a Delaware limited partnership (each, a
"Seller" and collectively, "Sellers").
Recitals
A. Purchaser desires to acquire from Sellers, and Sellers desires to sell
to Purchaser, certain equipment and other assets as provided in Section 1.1 used
by WCLLC in its webcasting business, which business includes, among other
things, the production and distribution of multi-media presentation materials
using streaming media technology (the "Webcasting Business").
B. Purchaser and Sellers (the "Parties") desire to evidence their agreement
to the terms and conditions of the purchase and sale of said equipment and
assets as set forth in this Agreement.
In consideration of the recitals and the representations, warranties and
covenants set forth in this Agreement, the Parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Assets. At the Closing (as hereinafter defined), upon the terms and
subject to the conditions contained herein, Sellers shall sell, transfer,
assign, convey and deliver to Purchaser, and Purchaser shall purchase, accept
and acquire from Sellers, all assets and properties (whether personal or mixed
or tangible or intangible) necessary to conduct the Webcasting Business,
including, without limitation, the following equipment, software, contracts,
intellectual property and other personal property relating to the Webcasting
Business, including but not limited to all of the equipment presently located at
000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX, as well as certain other equipment to be
transferred from WCLLC's facility at Oklahoma City, Oklahoma (collectively, the
"Assets"):
(a) the equipment listed in Schedule 1.1(a) (the "Equipment");
(b) the software listed in Schedule 1.1(b) (the "Licensed Software")
subject to the license agreements applicable thereto (the "Software Licenses");
(c) the patents, trademarks, copyrights, trade names, mask works,
servicemarks, service names, technology, know-how, processes, trade secrets,
inventions, proprietary data, formulae, research and development data (including
all intellectual property relating to work in process), computer software
programs and other intangible property and any applications for the same, but
excluding the Licensed Software, (the "Intellectual Property"), in each case
owned or licensed by Sellers or any affiliate of Sellers and used or held for
use in the Webcasting Business (the "Business Intellectual Property"),
including, without limitation, those intellectual property rights listed in
Schedule 1.1(c);
(d) all user manuals, training materials, technical specifications and
other documentation in Sellers' possession with respect to the Equipment and the
Licensed Software to the extent Sellers have the right to transfer the same to
Purchaser;
(e) the real property lease listed in Schedule 1.1(e) (the "Real
Property Lease");
(f) the customer contracts listed in Schedule 1.1(f) (the "Customer
Contracts");
(g) all goodwill associated with the Webcasting Business or the
Assets, together with the right to represent to third parties that Purchaser is
the successor to the Webcasting Business;
(h) all of Sellers' rights, claims, credits, causes of action or
rights of set-off against third parties relating to the Assets, including,
without limitation, unliquidated rights under manufacturers' and vendors'
warranties and all rights under the Real Property Lease and the Customer
Contracts;
(i) all furniture, fixtures, machinery, equipment and other personal
property located at 000 Xxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx; and
(j) all credits, prepaid expenses, deposits and retentions held by
third parties and that relate to the Webcasting Business, including, without
limitation, those held by third parties under the Customer Contracts.
Notwithstanding the foregoing, the Assets to be sold, assigned, transferred,
conveyed, and delivered to Purchaser pursuant to this Agreement shall exclude,
and Sellers shall retain, the equipment listed in Schedule 1.1(a)(ii) (the
"Excluded Assets").
1.2 Purchase Price. In consideration for the purchase of the Assets and
subject to the terms and conditions set forth herein, at the Closing Purchaser
shall pay to Sellers $750,000 (the "Purchase Price"). Payment of the Purchase
Price shall be made by wire transfer to an account designated in writing by
Sellers. Sellers and Purchaser agree that as soon as reasonably practicable
after the Closing, and prior to the filing of any Tax Return which includes
information related to the transactions contemplated by this Agreement, the
Purchase Price and the Assumed Liabilities (as defined below) shall be allocated
among the Assets and the covenant not to compete set forth in Section 4.12
hereof in accordance with an allocation schedule (the "Purchase Price Allocation
Schedule") proposed by Purchaser and reasonably acceptable to Sellers, which
shall be prepared in a manner required by Section 1060 of the Internal Revenue
Code of 1986, as amended (the "Code"), and other applicable law and delivered by
Purchaser to
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Sellers at least thirty (30) days after the Closing. Each Seller and Purchaser
shall prepare mutually acceptable and substantially identical initial and
supplemental IRS Forms 8594 "Asset Acquisition Statements Under Section 1060"
consistent with the Purchase Price Allocation Schedule which the Parties shall
use to report the transactions contemplated by this Agreement to the applicable
Tax authorities.
1.3 Delivery of Assets. Title to and possession of the Assets shall be
delivered and transferred by Sellers to Purchaser at the Closing in accordance
with the terms of this Agreement.
1.4 Assumption of Liabilities; Excluded Liabilities. At the Closing, upon
the terms and subject to the conditions contained herein, Purchaser shall
assume, and agree to be responsible for and comply with, the following
(collectively, the "Assumed Liabilities"): all of Sellers' duties, obligations
and liabilities arising after the Closing Date (as hereinafter defined) under
the Software Licenses, the Real Property Lease, the Customer Contracts and the
contracts listed on Schedule 1.4 (collectively, the "Assigned Contracts") and
the liabilities and obligations of Purchaser as set forth in Sections 4.5 and
4.7. Other than the Assumed Liabilities, Purchaser does not and will not assume,
and hereby expressly disclaims any assumption of, any duties, debts, liabilities
or obligations (absolute or contingent) of any kind of Sellers (or any
predecessor of Sellers or any prior owner of all or part of the Webcasting
Business and the Assets) of whatever nature, whether presently in existence or
arising hereafter, including but not limited to (collectively, the "Excluded
Liabilities"): (a) all of Sellers' duties, debts, obligations and liabilities
arising on or prior to the Closing Date; (b) all liabilities and obligations for
accounts payable arising on or prior to the Closing Date; (c) all liabilities
and obligations relating to indebtedness for borrowed money; (d) all liabilities
and obligations of Sellers for any Taxes (as defined in Section 3.1(k)(vii)),
including, without limitation, any liability of Sellers for the Taxes of any
other person under Treasury Regulations Section 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract or otherwise and any Taxes which may arise out of or be assessable in
respect of the transactions contemplated by this Agreement, other than any such
liabilities and obligations for Taxes that Purchaser is liable pursuant to
Section 4.5; (e) all liabilities and obligations arising out of, relating to or
otherwise in connection with any actual or threatened claims or litigation with
respect to the operation of the Webcasting Business or any events, actions,
occurrences, omissions, circumstances or conditions occurring or existing on or
prior to the Closing Date (whether asserted prior to, on or after the Closing
Date), including, without limitation, any such liabilities or obligations
relating to any products sold or services rendered by Sellers prior to the date
hereof; (f) all liabilities and obligations of any kind in respect of any past
or present stockholders, directors, officers, employees or consultants of
Sellers or the Webcasting Business, whether under any contract or agreement,
pursuant to any pension plan or employee benefit or welfare plan, or otherwise,
including, without limitation, any employment, severance, retention, equity or
other incentive agreements and arrangements (except for severance obligations
specifically assumed under Section 4.7(c) hereof), any and all liabilities with
respect to claims against Sellers, Purchaser, and the affiliates, directors,
owners and agents of each, which may arise as a result of such employees',
stockholders', directors', officers' or consultants' employment, consultancy, or
other relationship with Sellers, or the termination thereof, and all liabilities
relating to or arising in connection with the requirements of Section 4980B of
the Code, or Part 6 of Title I, Subtitle B of
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the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), to
provide continuation of health care coverage under any employee welfare benefit
plan; (g) all liabilities and obligations relating to the Excluded Assets; (h)
all liabilities and obligations (including, without limitation, attorneys' and
expert witness fees) resulting from the litigation disclosed on Schedule 3.1(h)
as provided in Section 6.4; and (i) any other liabilities and obligations of or
relating to Sellers in any manner whatsoever.
1.5 Letter of Credit. Purchaser shall provide a security deposit or post a
letter of credit as such is required by the landlord under the terms of the Real
Property Lease; provided that (i) the landlord under the Real Property Lease has
consented in writing, in form and substance reasonably satisfactory to
Purchaser, to the assignment of the Real Property Lease to Purchaser and (ii)
all the closing conditions set forth in Article V have been satisfied or waived.
ARTICLE II
CLOSING
2.1 Closing. The consummation of the purchase and sale of the Assets
contemplated hereby (the "Closing") will take place at the offices of Sellers in
Tulsa, Oklahoma, at 10:00 a.m. (local time), on January 31, 2003, or at such
other time and place as the Parties may mutually agree (the "Closing Date").
2.2 Closing Obligations. At the Closing, subject to the conditions set
forth herein, (a) each Party shall execute and deliver to the other Party a Xxxx
of Sale and Assignment and Assumption of Liabilities substantially in the form
of Exhibit A and such instruments of assignment, conveyance and transfer
(including, without limitation, an assignment agreement covering trademarks and
other intellectual property transferred to Purchaser) as shall reasonably be
requested by Purchaser to effect or evidence the sale, assignment, conveyance,
transfer and delivery of the Assets to Purchaser, in each case in form and
substance reasonably satisfactory to Purchaser, (b) Purchaser shall deliver the
Purchase Price in accordance with Section 1.2, and (c) each Party shall execute
and deliver to the other Party a Transition Services Agreement, a
Telecommunications Services Agreement, and a Webcasting Services Agreement
substantially in the form of Exhibits B, C and D (collectively, the "Services
Agreements") and all other instruments, agreements, certificates and documents
required to be delivered by such Party at or prior to the Closing Date pursuant
to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Sellers. Each Seller jointly and
severally represents and warrants to Purchaser as follows:
(a) Organization. Each Seller is a limited liability company or
limited partnership, as applicable, duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has the requisite power
and authority to own, lease and operate its properties, to conduct the
Webcasting Business as it is presently being conducted, and to enter into and
perform its obligations under this Agreement. Each Seller is duly qualified to
do business as a foreign entity and is in good standing in each jurisdiction
where such qualification is necessary,
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except for those jurisdictions where the failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect. For purposes
of this Agreement, "Material Adverse Effect" means any event (or events in the
aggregate) which has had, or could reasonably be expected to have, a material
adverse effect on the business, condition (financial or otherwise), operations,
properties or results of operations of the Webcasting Business or the Assets.
(b) Authority. Each Seller has full power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The execution,
delivery and performance of this Agreement by Sellers have been duly authorized
by all necessary company action, and no further company action is necessary on
the part of either Seller for Sellers to execute and deliver this Agreement and
to consummate and perform Sellers' obligations hereunder.
(c) Validity and Binding Effect; Noncontravention. This Agreement has
been duly executed and delivered on behalf of each Seller and constitutes the
legal, valid and binding obligation of each Seller, enforceable against such
Seller in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and general equitable
principles, regardless of whether enforceability is considered in a proceeding
at law or in equity. Neither the execution and delivery by Sellers, nor the
consummation or performance by Sellers of any of the transactions to be
consummated or performed by it under this Agreement, will directly or indirectly
(with or without notice or lapse of time): (i) violate or constitute a breach of
any provision of Sellers' limited liability company agreement, limited
partnership agreement or other applicable organization document; (ii) constitute
a violation by Sellers of any applicable judgment, law, statute, ordinance,
regulation, code, rule or order of any governmental authority (collectively,
"Laws"); (iii) conflict with, give rise to a right of acceleration or
termination under, result in any payment or benefit becoming due thereunder,
result in the increase of any payment or benefit due thereunder, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any Contract (as hereinafter defined), note, indenture, agreement, lease
or other instrument directly relating to the Webcasting Business or the Assets,
or (iv) result in the creation or imposition of any Lien (as hereinafter
defined) upon the Assets.
(d) Title to Properties; Absence of Liens; Condition and Sufficiency
of Assets.
(i) WCLLC has a valid leasehold interest in the real property relating
to the Real Property Lease. At the Closing Sellers will transfer and convey to
Purchaser good and marketable title to, or a valid leasehold interest in, all of
the Assets, free and clear of all liens, pledges, claims, security interests and
encumbrances of every kind and nature (collectively, "Liens"). It is
acknowledged that Sellers will be required to satisfy and remove any Liens and
purchase any Assets covered by leases at or prior to the Closing.
(ii) The Assets constitute all the rights, properties, assets and
resources necessary for Purchaser to conduct the Webcasting Business in
substantially the same manner as conducted by Sellers as of the date hereof and
as of the Closing Date.
(iii) All of the Assets are adequately maintained and are in
satisfactory operating condition and repair and free from any material defects,
reasonable wear and tear excepted, and
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are suitable for the uses for which they are being used and are performing the
functions for which they were intended.
(iv) EXCEPT AS MAY BE EXPRESSLY STATED IN THIS AGREEMENT, THE ASSETS
ARE BEING SOLD WITHOUT WARRANTY, EXPRESS OR IMPLIED, REGARDING TITLE TO THE
ASSETS, INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES BY THE
ASSETS, OR THE OPERATION, FITNESS FOR A PARTICULAR PURPOSE, OR MERCHANTABILITY
OF THE ASSETS, AND PURCHASER IS BUYING THE ASSETS IN AN "AS IS" CONDITION AND,
WITH RESPECT TO THE ASSETS LOCATED AT 000 XXXXXXX XXXXXX, XXX XXXX, XXX XXXX, XX
A "WHERE IS" BASIS.
(e) Intellectual Property. Schedule 3.1(e) sets forth: (i) all
trademark, trade name, service xxxx, copyright, patent and domain name
registrations and applications for registration that are included in the
Business Intellectual Property; and (ii) all material Intellectual Property
license agreements to which Sellers are a party which relate to the Webcasting
Business. Except as shown on Schedule 3.1(e), WCLLC solely owns all right, title
and interest in and to, or has valid license to use, free and clear of any
Liens, all of the Intellectual Property used or held for use in the Webcasting
Business in the manner required for the normal operation of the Webcasting
Business; Purchaser and Seller agree to cooperate to determine the required
number of licenses required by the Purchaser to operate the Webcasting Business
as intended by the Purchaser and the extent to which Purchaser has licenses that
will cover any of the Licensed Software for which a license is not being
transferred. Except as set forth in Schedule 3.1(e), neither the validity nor
the enforceability of any item of the Business Intellectual Property, nor the
title or rights to use thereof of Sellers or any affiliate thereof, are being
challenged in any litigation to which Sellers or any affiliate thereof is a
party, nor to the knowledge of Sellers, is any such litigation threatened
against Sellers or any affiliate thereof or threatened or pending against any
other person. To the knowledge of Sellers, no person is infringing upon,
misappropriating or violating any of the Business Intellectual Property, nor is
any person threatening actions that would infringe upon, misappropriate or
violate any of the Business Intellectual Property. Except as set forth in
Schedule 3.1(e), to the knowledge of Sellers, neither the conduct of the
Webcasting Business, nor the use of any Business Intellectual Property,
infringes upon, misappropriates or violates the Intellectual Property or other
property rights of any other person, and none of Sellers or any affiliate
thereof has received any written notice of any claim or other assertion by any
other person with respect to any of the foregoing. Neither the execution of this
Agreement nor the consummation of the transactions contemplated hereby will
alter or impair any Business Intellectual Property or any rights associated with
such Business Intellectual Property. Sellers are in material compliance with all
Contracts entered into with other persons with respect to the Business
Intellectual Property. Each of the Sellers and any applicable affiliate thereof
has taken all commercially reasonable steps (including measures to protect
secrecy and confidentiality) to protect its right, title and interest in and to
all the Business Intellectual Property, including, without limitation, by
assuring that (i) each person who has access to confidential or proprietary
information of the Webcasting Business has a contractual or legal obligation of
confidentiality to such Seller with respect to such information; and (ii) each
employee and independent contractor of such Seller or the Webcasting Business
involved in the invention, creation, reduction to practice or other development
of any Business Intellectual Property has a contractual or legal obligation to
such Seller to transfer to such Seller, for no
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additional consideration, all right, title and interest in and to any inventions
and authored works (including computer code), whether or not patentable,
copyrightable or otherwise protectable under the Law, made during the course of
their employment and/or contractual relationship with such Seller or the
Webcasting Business.
(f) Absence of Certain Changes or Events. Except as set forth on
Schedule 3.1(f), since October 31, 2002, Sellers have (i) used commercially
reasonable efforts to (x) preserve the business organization of the Webcasting
Business intact, (y) keep available to the Webcasting Business the services of
all Employees (as defined herein) and (z) preserve the goodwill of the
suppliers, customers, employees and others having business relations with the
Webcasting Business; (ii) conducted the Webcasting Business in the ordinary
course; (iii) continued to make payments with respect to obligations of the
Webcasting Business in the ordinary course in accordance with past practice; and
(iv) maintained its Assets and properties in at least as good order and
condition as existed on October 31, 2002 (other than wear and tear as may be
accounted for by reasonable use) and as is necessary to continue to conduct the
Webcasting Business. Since October 31, 2002, there has not been, individually or
in the aggregate, a Material Adverse Effect.
(g) Compliance with Law. Sellers have complied, and are in compliance,
with: (a) all applicable Laws and (b) any judgment, injunction, order or decree
relating to the Assets or the business or operations of the Webcasting Business.
Sellers have not received any written notice from any governmental authority or
any other third party that Sellers or any subsidiary thereof are not currently
in compliance with any applicable Laws or any judgments, injunctions, orders or
decrees related to the Assets or the Webcasting Business.
(h) Litigation. Except as set forth on Schedule 3.1(h), there is no
pending or, to the knowledge of Sellers, threatened litigation, arbitration,
administrative proceeding or other legal action, investigation or proceeding
against Sellers relating to the Webcasting Business or any Asset. Sellers are
not aware of any event, cause or condition which might reasonably give rise to
or properly form the basis of any such suit, action, investigation, arbitration
or proceeding.
(i) No Other Liabilities or Contingencies. Except as set forth on
Schedule 3.1(i), there exists no liabilities, obligations or commitments of any
nature (whether direct or indirect, known or unknown, absolute or contingent,
liquidated or nonliquidated, due or to become due, accrued or unaccrued, matured
or unmatured), of Sellers that relates to the Assets or the Webcasting Business,
except the Assumed Liabilities (none of which (i) relates to (A) breach of a
contract to which Sellers are a party, (B) breach of warranty, (C) tort, (D)
infringement of Intellectual Property or other property rights or (E) violation
of any Laws or any judgment, injunction, order or decree or (ii) has had or
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect) and the Excluded Liabilities.
(j) Consents and Approvals. Except as set forth on Schedule 3.1(j), no
consent, waiver, agreement, approval, or authorization of, or declaration,
filing, notice or registration to or with, any governmental authority or other
person or entity is (i) required for the execution, delivery and performance by
Sellers of this Agreement, (ii) necessary in order to ensure the legality,
validity, binding effect or enforceability against Sellers of this Agreement or
any document, certificate, instrument and agreement to be delivered at the
Closing or the
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consummation of the transactions contemplated hereby or thereby or (iii)
necessary in order that the Webcasting Business be conducted following the
Closing Date substantially in the same manner as the Webcasting Business is
conducted as of the date hereof and as of the Closing Date.
(k) Tax Matters.
(i) Each Seller, its subsidiaries, each member of any affiliated group
of corporations, within the meaning of Section 1504 of the Code, which any
Seller or their subsidiaries is or has been a member, and each member of any
group of corporations with respect to which any Seller or their subsidiaries
files or has filed a combined or unitary tax return (each such entity, a
"Taxpayer") has timely filed with the appropriate taxing authorities all tax
returns required to be filed through the date hereof and will timely file any
such tax returns required to be filed on or prior to the Closing Date. Such tax
returns are true, complete and accurate in all material respects. No claim has
ever been made by a taxing authority in a jurisdiction where a Taxpayer does not
file tax returns that such entity is or may be subject to taxation by that
jurisdiction.
(ii) All Taxes due and payable for which any Taxpayer is liable have
been paid in full. All Taxes required to be withheld by any Taxpayer have been
collected and withheld and have been timely paid to the respective governmental
agencies.
(iii) No deficiencies for Taxes have been claimed, proposed or
assessed by any taxing authority against any Taxpayer and there are no pending
audits, examinations or other proceedings in respect of any Taxes. No extension
or waiver of a statute of limitations relating to Taxes is in effect with
respect to any Taxpayer.
(iv) There are no liens for Taxes on any of the Assets, other than
liens for current Taxes not yet due and payable.
(v) None of the Assets directly or indirectly secures any debt the
interest on which is tax-exempt under Section 103(a) of the Code. None of the
Assets is property required to be treated as being owned by any other person
pursuant to the "safe harbor lease" provisions of former Section 168(f)(8) of
the Code. None of the Assets is "tax exempt use property" within the meaning of
Section 168(h) of the Code.
(vi) Notwithstanding the foregoing, the representations and warranties
set forth in Section 3.1(k)(i), Section 3.1(k)(ii) and Section 3.1(k)(iii)
hereof shall not be applicable to the extent that the Assets cannot be made
subject to Tax liens and Purchaser cannot be held liable for Taxes relating to
matters constituting any breach of such representations and warranties.
(vii) For purposes of this Agreement, "Tax" or "Taxes" shall mean (i)
any and all taxes, fees, levies, duties, tariffs, imposts, and other charges of
any kind (together with any and all interest, penalties, additions to tax and
additional amounts imposed with respect thereto) imposed by any government or
taxing authority, including, without limitation, taxes or other charges on or
with respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation, or net worth; taxes or other
charges in the nature of excise,
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withholding, ad valorem, stamp, transfer, value added or gains taxes; license,
registration and documentation fees; customs' duties, tariffs and similar
charges; and any other tax, governmental fee or other like assessment, charge or
tax of any kind whatsoever and (ii) liability for the payment of any amounts of
the type described in clause (i) relating to any person as a result of being
party to an agreement to indemnify such other person, being a successor or
transferee of such other person or being a member of the same affiliated group
of corporations, within the meaning of Section 1504 of the Code.
(l) Employee Benefit Plans. Except as provided by Section 4.7, neither
the execution and delivery of this Agreement or other related agreements by the
Sellers nor the consummation of the transactions contemplated hereby or any
related transactions will result in any liability to Purchaser under any
"employee benefits plans" as defined in Section 3(3) of ERISA and any other
pension, retirement, profit sharing, deferred compensation, bonus, severance,
commission, incentive compensation (including cash, stock and option plans or
arrangements), life insurance, health and disability insurance, hospitalization
and all other employee benefit plans, agreements or arrangements (including,
without limitation, any contracts or agreements with trustees, insurance
companies or others relating to any such employee benefit plans or arrangements)
(whether written or oral) established, maintained or contributed to by Sellers
or any ERISA Affiliate, or with respect to which Sellers or any ERISA Affiliate
could have liability, in each case with respect to the current or former
employees, directors, officers or consultants of the Webcasting Business (the
"Employee Benefit Plans"). "ERISA Affiliate" means any entity (whether or not
incorporated) which is (or at any relevant time was) a member of a "controlled
group of corporations" with, under "common control" with, or a member of an
"affiliated service group" with Sellers, each as defined in Section 414(b), (c),
(m) or (o) of the Code, or under "common control" with Sellers within the
meaning of Section 4001(b)(1) of ERISA.
(m) Labor Matters. With respect to the Webcasting Business: (i)
Sellers are in compliance in all material respects with all Laws relating to the
employment of labor, including all such laws relating to wages, hours, the
Worker Adjustment and Retraining Notification Act, as amended, collective
bargaining, discrimination, civil rights, safety and health workers'
compensation and the collection and payment of withholding and/or social
security taxes and similar taxes; (ii) none of Sellers or any of its affiliates
is a party to any collective bargaining agreement or other contract with or
commitment to any labor union or association representing any employee of the
Webcasting Business, nor does any labor union or collective bargaining agent
represent any such employee; (iii) no collective bargaining agreement, contract
or other commitment has been requested by, or is under discussion by management
of Sellers or any affiliate thereof (or any management group or association of
which any of them are members or otherwise a participant) with, any group of
employees of the Webcasting Business or others with respect to such employees,
nor are there any representation proceedings or petitions seeking a
representation proceeding presently pending against Sellers with the National
Labor Relations Board or any labor relations tribunal with respect to the
employees of the Webcasting Business, nor are there any other current activities
known to Sellers to organize any such employees into a collective bargaining
unit; (iv) there is no unfair labor practice charge or complaint pending or, to
the knowledge of Sellers, threatened that relates to the Webcasting Business;
(v) during the past three years, there has been no labor strike, slow-down, work
stoppage or arbitration involving any of the employees of the Webcasting
Business; (vi) Sellers have good labor
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relations and has no knowledge (A) of any facts indicating that the consummation
of the transactions contemplated hereby will have a material adverse effect on
labor relations with respect to the Employees, or (B) that any Employee of the
Webcasting Business intends to leave Sellers' employ; and (vii) except as set
forth in Schedule 3.1(m), none of the Sellers or any affiliate thereof has any
written or unwritten employment agreement or contract between Seller or any
affiliate thereof, on the one hand, and any employee, officer, director,
consultant or manager of the Webcasting Business, on the other hand.
(n) Contracts and Commitments.
(i) Except for the Assigned Contracts and the other contracts,
agreements, leases, licenses, commitments, sales and other instruments relating
to the Webcasting Business and set forth in Schedule 3.1(n)(i) (collectively,
the "Contracts"), Sellers are not a party or bound by any contract, commitment,
arrangement or plan relating to the Webcasting Business or any of the Assets.
Each Contract disclosed in any Schedule to this Agreement or required to be
disclosed pursuant to this Section is a valid and binding agreement of Sellers
and is in full force and effect, and neither Sellers nor, to the knowledge of
Sellers, any other party thereto is in default or breach in any respect under
the terms of any such Contract, nor, to the knowledge of Sellers, has any event
or circumstance occurred that, with notice or lapse of time or both, would
constitute any event of default thereunder. True and complete copies of each
such Contract have been delivered to Purchaser.
(ii) Except as set forth and described in Schedule 3.1(n)(ii), no
Seller is a party to or bound by any contract, commitment, arrangement or plan
relating to the Webcasting Business or the Assets that limits the freedom of any
Seller to compete in any line of business or with any person or in any area or
to own, operate, sell, transfer, pledge or otherwise dispose of or encumber any
Asset or which would so limit the freedom of Purchaser after the Closing Date.
(o) Real Property.
(i) Sellers do not own any real property related to the Webcasting
Business.
(ii) Sellers have delivered or made available to Purchaser a complete
and accurate copy of the Real Property Lease. Sellers have not received notice
of, or has knowledge of, condemnation or eminent domain proceedings pending or
threatened against any Leased Property. Other than for exceptions to the
following which are set forth on Schedule 3.1(o)(ii):
(A) the Real Property Lease is in full force and effect and is
valid, binding and enforceable in accordance with its respective terms;
(B) no amount payable under the Real Property Lease is past due
beyond any applicable cure period;
(C) Sellers are in compliance in all material respects with all
covenants, commitments and obligations on their part to be performed or observed
under the Real Property Lease and, to Sellers' knowledge, there is no failure by
any other party to such Real Property Lease to comply in all respects with all
of its commitments and obligations;
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(D) Sellers have not received any written notice of a material
default (which has not been cured), offset or counterclaim under any Real
Property Lease; and
(E) Sellers have not subleased, assigned, mortgaged, pledged or
otherwise encumbered its interest under the Real Property Lease or entered into
any license, sublease or occupancy agreement with respect to any property
related to the Real Property Lease, nor have Sellers entered into any agreement
or commitment to take any such action.
(p) Affiliate Transactions. Schedule 3.1(p) sets forth a list of the
material products and services provided by or on behalf of each Seller or any of
their affiliates in connection with or in support of the operation of the
Webcasting Business. Except as set forth on Schedule 3.1(p), none of any Seller
or any of their affiliates has entered into any transaction, contract,
agreement, arrangement or understanding relating to the Webcasting Business that
will continue after the Closing Date other than, in each case, on an arm's
length basis.
(q) Bankruptcy. Upon information and belief of Sellers, the Purchase
Price plus the assumption of the Assumed Liabilities being paid in consideration
for the sale, assignment, transfer, conveyance and delivery of the Assets
constitutes fair consideration and a reasonably equivalent value for the Assets
and the Webcasting Business under the Untied States Bankruptcy Code and the
Uniform Fraudulent Conveyance Act and will not constitute a fraudulent
conveyance within the meaning of such or similar Laws to which Sellers are
subject.
(r) Full Disclosure. The representations and warranties contained in
this Section 3.1 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained in this Section 3.1, in light of the circumstances in
which made, not misleading.
3.2 Representations and Warranties of Purchaser. Purchaser represents and
warrants to Sellers as follows:
(a) Organization of Purchaser. Purchaser is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization and has the requisite power and authority to own,
lease and operate its properties and to conduct its business as it is presently
being conducted.
(b) Authority. Purchaser has full power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The execution,
delivery and performance of this Agreement by Purchaser have been duly
authorized by all necessary company action, and no further company action is
necessary on the part of Purchaser for Purchaser to execute and deliver this
Agreement and to consummate and perform its obligations hereunder.
(c) Validity and Binding Effect; Noncontravention. This Agreement has
been duly executed and delivered by Purchaser and constitutes the legal, valid
and binding obligation of Purchaser, enforceable against Purchaser in accordance
with its terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and general equitable principles, regardless of
whether enforceability is considered in a proceeding at law or in equity.
Neither
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the execution and delivery by Purchaser, nor the consummation or performance by
Purchaser of any of the transactions to be consummated or performed by it under
this Agreement, will directly or indirectly (with or without notice or lapse of
time): (i) violate or constitute a breach of any provision of Purchaser's
organizational documents; (ii) constitute a violation by Purchaser of any
applicable Laws, which violation would result in a material adverse effect on
the ability of Purchaser to purchase the Assets or pay the Purchase Price, in
each case on the terms and subject to the conditions set forth herein (a
"Purchaser Material Adverse Effect"); or (iii) conflict with, give rise to a
right of acceleration or termination under, result in any payment or benefit
becoming due thereunder, result in the increase of any payment or benefit due
thereunder, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any contract, note, indenture, agreement, lease or
other instrument relating to Purchaser, in each case, other than such of the
foregoing matters, which, or the absence of which, would not result in a
Purchaser Material Adverse Effect.
(d) Funding. Purchaser has adequate funds available in an amount
sufficient to pay the Purchase Price and consummate the transactions
contemplated by this Agreement.
3.3 Brokers' Fees. Each Party represents and warrants to the other Party
that it has not incurred any liability for brokerage fees, finder's fees,
agent's commissions, or other similar forms of compensation in connection with
or in any way related to the transactions contemplated by this Agreement for
which such other Party may become liable.
ARTICLE IV
COVENANTS
4.1 Conduct Prior to the Closing Date. Until the Closing Date, except as
set forth on Schedule 4.1, Sellers will continue to conduct the Webcasting
Business in the ordinary and usual course consistent with past practice, and has
used commercially reasonable efforts to (i) preserve the Assets intact, (ii)
keep available to the Webcasting Business the services of all Employees and
(iii) preserve the goodwill of the suppliers, customers, employees and others
having business relations with the Webcasting Business. Without limiting the
generality of the foregoing, each Seller will not, and will cause its affiliates
not to, do or suffer to be done any of the following with respect to the
Webcasting Business or the Assets, without the prior written consent of
Purchaser:
(a) dispose or contract to dispose of, or acquire or contract to
acquire any material Asset;
(b) enter into any transaction, contract, agreement, arrangement or
understanding with or for the benefit of any affiliate or any Seller relating to
the Webcasting Business or the Assets other than the Services Agreements;
(c) encumber or subject any of the Assets to any Lien;
(d) (i) adopt any new Employee Benefit Plan, except as may be required
by applicable Law, or amend any existing Employee Benefit Plan in any material
respect, except for
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changes which are less favorable to participants in such plans or as may be
required by applicable Law or (ii) increase any compensation of employees of the
Webcasting Business, except for (A) normal increases in the ordinary and usual
course of business or (B) the payment of cash bonuses to employees pursuant to
and consistent with existing plans or programs, or (iii) enter into or amend any
employment, severance, termination, non-competition, non-solicitation or
confidentiality or similar agreement with any employee of the Webcasting
Business;
(e) fail to keep in satisfactory operating condition and repair all of
the Assets, normal wear and tear excepted;
(f) fail to satisfy the obligations of Sellers under all Contracts,
instruments and arrangements relating to the Assets or the Webcasting Business;
(g) enter into any transaction, contract, agreement, arrangement or
understanding relating to the Webcasting Business or the Assets that limits the
freedom of any Seller to compete in any line of business or with any person or
in any area or to own, operate, sell, transfer, pledge or otherwise dispose of
or encumber any Asset or which would so limit the freedom of Purchaser after the
Closing Date;
(h) (i) take or agree or commit to take any action that would (A) make
any representation or warranty of Sellers contained in this Agreement or any
related document untrue or inaccurate in any respect at, or as of any time prior
to, the Closing Date or (B) impair or prevent Sellers from consummating the
transactions contemplated by this Agreement and any related documents, or (ii)
omit or agree or commit to omit to take any action necessary to prevent (A) any
representation or warranty of Sellers contained in this Agreement or any related
document from being untrue or inaccurate in any respect at, or as of any time
prior to, the Closing Date or (B) Sellers from failing to consummate the
transactions contemplated by this Agreement and any related documents; or
(i) agree or commit to do any of the foregoing.
4.2 Access to Assets and Information. From the date hereof until the
Closing Date, Sellers will afford to Purchaser and its representatives
reasonable access to the Assets and Employees and Sellers' books and records
with respect thereto during normal business hours.
4.3 Payment of Expenses. Each of Purchaser and Sellers shall bear its own
expenses incurred in connection with the transactions contemplated herein,
including all fees and expenses of agents, representatives, counsel and
accountants engaged by it, whether or not the Closing occurs.
4.4 Further Assurances. From time to time after the Closing, each Party
will execute and deliver such further instruments of conveyance and transfer and
take such other action as the other Party may reasonably request in order more
effectively to convey and transfer the Assets to Purchaser and to assist in
completing the transactions contemplated by this Agreement.
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4.5 Taxes. Purchaser shall bear, pay, and indemnify Sellers against all
applicable sales, transfer and/or use taxes, and any related penalties and
interest, payable in connection with the transfer of the Assets to Purchaser as
contemplated by this Agreement. Purchaser shall be responsible for remitting all
such sales, transfer and/or use taxes to the appropriate governmental
authorities except in cases where applicable Law dictates that Sellers have the
requirement to xxxx and remit such taxes. All real property Taxes, personal
property Taxes and similar ad valorem obligations levied with respect to the
Assets for a taxable period which includes (but does not end on) the Closing
Date shall be apportioned between Sellers and Purchaser based on the number of
days of such taxable period which fall on or before the Closing Date (a
"Pre-Closing Tax Period") and the number of days of such taxable period after
the Closing Date (a "Post-Closing Tax Period"). Sellers shall be liable for the
proportionate amount of such Taxes that is attributable to the Pre-Closing Tax
Period, and Purchaser shall be liable for the proportionate amount of such Taxes
that is attributable to the Post-Closing Tax Period.
4.6 Consents and Approvals; Commercially Reasonable Efforts. Sellers and
Purchaser will use all commercially reasonable efforts to obtain all necessary
consents and approvals of all persons and governmental authorities (including,
without limitation, the consents and approvals set forth on Schedule 3.1(j)) to
the consummation of the transactions contemplated by this Agreement and to
fulfill all other applicable covenants and closing conditions. Each of Sellers
and Purchaser will use its commercially reasonable efforts in good faith to take
or cause to be taken all actions and to do, or cause to be done, all things
necessary, proper or advisable to ensure that the conditions set forth in
Article V are satisfied and to consummate and make effective the transactions
contemplated by this Agreement as soon as practicable insofar as such matters
are within its respective control.
4.7 Employees.
(a) On the Closing Date, Sellers shall terminate the employment of
each individual who is an employee of Sellers on the Closing Date and whose name
is listed on Schedule 4.7 (collectively, the "Employees") and shall not, and
shall cause their affiliates not to, solicit for employment any Employees
(subject to Section 4.12), and Purchaser shall make an offer of employment to
each of the Employees at the same or higher level of compensation as was made
available to such Employee by Sellers immediately prior to the Closing. Except
as specifically provided herein nothing in this Agreement shall (x) prevent
Purchaser from altering the terms, salary, wages or benefits after the Closing
of any Employee who accepts such offer of employment (each, a "Hired Employee")
or (y) create any obligation on the part of Purchaser to continue the employment
of any Hired Employee for any definite period of time following the Closing. The
Parties acknowledge that Sellers have heretofore disclosed to Purchaser the
levels of compensation and employee benefits made available to the Employees by
Sellers.
(b) Purchaser further agrees that the Hired Employees shall be
credited for their service with Sellers before the Closing Date for purposes of
eligibility and vesting (but not for purposes of benefits accruals) in the
employee plans provided by Purchaser on and after the Closing Date, including
vacation, severance pay, 401(k), pension, medical, dental and disability plans.
The Hired Employees' benefits under Purchaser's group health plans shall not be
subject
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to any exclusions for any pre-existing conditions and no waiting periods shall
be applicable with respect to the Hired Employees.
(c) Purchaser agrees to provide severance benefits to any Hired
Employee whose employment with Purchaser terminates within two years from the
Closing and who would have been entitled to such benefits according to the terms
of the Change in Control Severance Protection Plan II attached as Exhibit E (the
"Severance Plan") had such Hired Employee been a "participant" in such plan at
the time of such Hired Employee's termination. The severance benefits paid to
any such terminated Hired Employee shall be at least equal to the benefits that
such Hired Employee would have been entitled to receive under the Severance Plan
had such Hired Employee been a "participant" in such plan at the time of such
Hired Employee's termination. For purposes of determining the amount required to
be paid, the affected Hired Employee's title shall be deemed to be the higher of
the title which the Hired Employee held immediately prior to October 15, 2002
and the title which the Hired Employee held immediately prior to the Closing.
(d) Sellers shall bear the entire cost and expense of all workers'
compensation claims made by the Employees before, on or after the Closing Date
relating to events or circumstances occurring on or prior to the Closing Date.
Purchaser shall bear the entire cost and expense of all workers' compensation
claims made by the Hired Employees on or after the Closing Date arising from
events or circumstances occurring after the Closing Date.
(e) Purchaser shall indemnify, defend and hold harmless Sellers and
their Related Persons from and against all Claims with respect to the
termination of a Hired Employee's employment after the Closing Date, except,
other than as provided by Section 4.7(c), for Claims arising out of agreements,
understandings or arrangements between a Hired Employee and a Seller or any of
its affiliates.
(f) Sellers shall not take any action or fail to take any action with
respect to any employees of the Webcasting Business that shall give rise to any
liability of Purchaser under the Workers Adjustment and Retraining Notification
Act, or any similar state or local Law, rule or regulation.
4.8 Public Announcements. Prior to the Closing, Sellers and Purchaser shall
consult with each other before issuing any press release or otherwise making any
public statement with respect to the transactions contemplated by this Agreement
and shall not issue any press release or make any such public statement prior to
obtaining the approval of the other Party; provided, however, that such approval
shall not be required where such release or announcement is required by
applicable Law.
4.9 Confidentiality Agreement. The Nondisclosure Agreement, dated November
7, 2002, between Sellers and Purchaser (the "Confidentiality Agreement") shall
remain in full force and effect following the execution of this Agreement until
the Closing, unless terminated as described therein, and is hereby incorporated
herein by reference and shall constitute a part of this Agreement for all
purposes.
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4.10 Confidentiality; Access to Information.
(a) After the Closing, Sellers and their affiliates will hold, and
will use their best efforts to cause their respective officers, directors,
employees, accountants, counsel, consultants, advisors and agents to hold, in
confidence, unless compelled to disclose by judicial or administrative process
or by other requirements of Law, all confidential documents and information
concerning the Webcasting Business, except to the extent that such information
can be shown to have been (i) in the public domain through no fault of Sellers
or their affiliates or (iii) later lawfully acquired by Sellers from sources
other than those related to its prior ownership of the Webcasting Business. The
obligation of Sellers and their affiliates to hold any such information in
confidence shall be satisfied if they exercise the same care with respect to
such information as they would take to preserve the confidentiality of their own
similar information.
(b) On and after the Closing Date, Sellers will afford promptly to
Purchaser and its agents reasonable access to its books of account, financial
and other records (including, without limitation, accountants' work papers),
information, employees and auditors to the extent necessary or useful for
Purchaser in connection with any audit, investigation, dispute or litigation or
any other reasonable business purpose relating to the Webcasting Business.
4.11 Notices of Certain Events. Between the date hereof and the Closing
Date, Sellers shall give prompt notice in writing to Purchaser of: (i) any
information that indicates that, to the knowledge of Sellers, any of their
representations or warranties contained herein was not true and correct as of
the date hereof or will not be true and correct at and as of the Closing Date
with the same force and effect as if made at and as of the Closing Date; (ii)
the occurrence or non-occurrence of any event which will result, or has a
reasonable prospect of resulting, in the failure of any condition, covenant or
agreement contained in this Agreement to be complied with or satisfied; (iii)
any failure of any Party to comply with or satisfy any condition, covenant or
agreement to be complied with or satisfied by it hereunder; (iv) any notice or
other communication from any person or entity alleging that the consent of such
person or entity is or may be required in connection with the transactions
contemplated by this Agreement; (v) any notice or other communication from any
governmental or regulatory agency or authority in connection with the
transactions contemplated by this Agreement; and (vi) any actions, suits,
claims, investigations or proceedings commenced or, to its knowledge threatened
against, relating to or involving or otherwise affecting Sellers or the
Webcasting Business that, if pending on the date of this Agreement, would have
been required to have been disclosed pursuant to this Agreement. Notwithstanding
the foregoing such notices shall not be deemed to cure, or relieve Sellers of
any liability or obligation with respect to, any breach of or failure to satisfy
any representation, warranty, covenant or condition under this Agreement.
4.12 Noncompetition.
(a) Sellers agree that for a period of eighteen (18) months from the
Closing Date, neither it nor any of its subsidiaries, or the subsidiaries of
WilTel Communications Group, Inc. shall: (i) engage, either directly or
indirectly, as a principal or for its own account or solely or jointly with
others, or as stockholders in any corporation or joint stock association, in any
business that directly competes with the Webcasting Business in the United
States (the "Restricted Territory"); (ii) directly or indirectly, solicit or
attempt to solicit business or
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patronage of any person, partnership, or corporation or other business entity
within the Restricted Territory, for the purpose of production and distribution
of multi-media presentation materials using streaming media technology; provided
however that providing network services to another person who competes with the
Webcasting Business will not be considered a breach of this provision; or (iii)
solicit for employment any Hired Employee.
(b) If any provision contained in this Section 4.12 shall for any
reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Section 4.12, but this Section 4.12 shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein. It
is the intention of the Parties that if any of the restrictions or covenants
contained herein is held to cover a geographic area or to be for a length of
time which is not permitted by applicable Law, or in any way construed to be too
broad or to any extent invalid, such provision shall not be construed to be
null, void and of no effect, but to the extent such provision would be valid or
enforceable under applicable Law, a court of competent jurisdiction shall
construe and interpret or reform this Section 4.12 to provide for a covenant
having the maximum enforceable geographic area, time period and other provisions
(not greater than those contained herein) as shall be valid and enforceable
under such applicable Law. Sellers acknowledge that Purchaser would be
irreparably harmed by any breach of this Section 4.12 and that there would be no
adequate remedy at law or in damages to compensate Purchaser for any such
breach. Sellers agree that Purchaser shall be entitled to injunctive relief
requiring specific performance by Sellers of this Section 4.12, and Sellers
consent to the entry thereof.
4.13 Transition Assistance. From the date hereof, Sellers will not in any
manner take or cause to be taken any action which is designed, intended or might
reasonably be anticipated to have the effect of discouraging customers, clients,
sponsors, suppliers, vendors, lessors and other associates of the Webcasting
Business from maintaining the same business relationships with Purchaser after
the date of this Agreement as were maintained with the Webcasting Business prior
to the date of this Agreement.
4.14 Nonassignable Contracts. Notwithstanding anything set forth herein to
the contrary, no Contracts, properties, rights or other Assets shall be deemed
sold, transferred or assigned to Purchaser pursuant to this Agreement if the
attempted sale, transfer or assignment thereof to Purchaser without the consent
or approval of another party or governmental authority would be ineffective or
would constitute a breach of contract or a violation of any Law or would in any
other way materially and adversely affect the rights of Sellers (or Purchaser as
transferee or assignee) and such consent or approval is not obtained on or prior
to the Closing Date. In such case, to the extent possible: (i) the beneficial
interest in or to such Contracts, properties or other Assets (collectively, the
"Beneficial Rights") shall in any event pass as of the Closing Date to Purchaser
pursuant to this Agreement and (ii) Purchaser shall assume or discharge the
liabilities of Sellers under such Beneficial Rights (the "Retained Liabilities")
as agent for Sellers, and Sellers shall act as Purchaser's agent in receipt of
any benefits, rights or interests received from the Beneficial Rights and in
discharging any Retained Liabilities. Purchaser and Sellers shall use reasonable
efforts (and bear their respective costs) without payment of any fees, penalties
or other amounts to any third party to obtain or secure consents or approvals
for the contracts, properties, rights or other Assets that may be necessary to
effect the legal and valid sale, transfer
17
or assignment of Contracts, properties, rights or other Assets underlying the
Beneficial Rights and Retained Liabilities. Purchaser and Sellers shall make or
complete such transfers as soon as reasonably practicable and cooperate with
each other in any other reasonable arrangement designed to provide for Purchaser
the Beneficial Rights including enforcement at the cost and for the account of
Purchaser of any and all rights of Sellers against the other party thereto, and
to provide for the discharge by Purchaser of Retained Liability under such
Contracts, properties or other Assets.
ARTICLE V
CONDITIONS
5.1 Conditions to Obligation of Sellers. The obligation of Sellers to
effect the Closing is subject to the satisfaction of the following conditions,
any or all of which may be waived in whole or in part by Sellers:
(a) Representations and Warranties. The representations and warranties
of Purchaser set forth in Sections 3.2 and 3.3 that are qualified as to
materiality or Purchaser Material Adverse Effect shall be true and correct in
all respects and that are not so qualified shall be true and correct in all
material respects, in each case as of the date of this Agreement and on and as
of the Closing Date with the same force and effect as though made on and as of
the date of this Agreement and the Closing Date.
(b) Covenants and Agreements. Purchaser shall have performed all
covenants and agreements required to be performed by it under this Agreement on
or prior to the Closing Date.
(c) Compliance Certificate. Purchaser shall have delivered to Sellers
a certificate, dated as of the Closing Date and signed by a duly authorized
officer of Purchaser, to the effect that the conditions set forth in Sections
5.1(a) and (b) hereof have been satisfied.
5.2 Conditions to Obligation of Purchaser. The obligation of Purchaser to
effect the Closing is subject to the satisfaction of the following conditions,
any or all of which may be waived in whole or in part by Purchaser:
(a) Representations and Warranties. The representations and warranties
of Sellers set forth in Sections 3.1 and 3.3 that are qualified as to
materiality or Material Adverse Effect shall be true and correct in all respects
and that are not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement and on and as of the
Closing Date with the same force and effect as though made on and as of the date
of this Agreement and the Closing Date.
(b) Covenants and Agreements. Sellers shall have performed all
covenants and agreements required to be performed by it under this Agreement on
or prior to the Closing Date.
(c) Compliance Certificate. Sellers shall have delivered to Purchaser
a certificate, dated as of the Closing Date and signed by a duly authorized
officer of Sellers, to the effect that the conditions set forth in Sections
5.1(a) and (b) hereof have been satisfied.
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(d) Consents and Approvals. All consents and approvals referred to in
Schedule 5.2(d) shall have been obtained to the reasonable satisfaction of
Purchaser.
(e) Material Adverse Effect. Since October 31, 2002, there shall have
been no event or development that has had or could be reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect.
(f) No Injunction or Litigation. No judgment or ruling shall have been
rendered which has the effect of enjoining the consummation of the transactions
contemplated by this Agreement. No suit, action, litigation or other proceeding
shall have been instituted or threatened before any court or governmental agency
for the purpose of enjoining or preventing the transactions contemplated by this
Agreement or that question the validity or legality of the transactions
contemplated hereby and which could reasonably be expected to damage Purchaser
materially or materially adversely affect the value of the Assets or the
Webcasting Business if the transactions contemplated by this Agreement are
consummated.
(g) FIRPTA Affidavit and Clearance Certificates. Purchaser shall have
received an affidavit from each Seller, sworn to under penalty of perjury,
setting forth such Seller's name, address and federal tax identification number
and stating that such Seller is not a "foreign person" within the meaning of
Section 1445 of the Code. Sellers shall also provide Purchaser with a clearance
certificate or similar document(s) which may be required by any state taxing
authority in order to relieve Purchaser of any obligation to withhold any
portion of the purchase price hereunder.
ARTICLE VI
INDEMNIFICATION AND SURVIVAL
6.1 Indemnification. Each of the Sellers (jointly and severally) and
Purchaser, as the case may be (each an "Indemnifying Party"), hereby agrees to
indemnify, defend and hold harmless the other Party, and its directors,
officers, managers, employees and controlled and controlling persons and
entities (collectively, "Related Persons"), from and against any and all Claims
(as hereinafter defined) asserted against, resulting to, imposed upon or
incurred by such Party or such Party's Related Persons (each, an "Indemnified
Person"), arising out of or resulting from: (a) the inaccuracy or breach of any
representation or warranty of the Indemnifying Party contained in or made
pursuant to this Agreement; (b) the breach of any covenant or agreement of the
Indemnifying Party contained in or made pursuant to this Agreement or (c) with
respect to Purchaser and its Related Persons, any Excluded Liabilities or, with
respect to each Seller and its Related Persons, any Assumed Liabilities, as
applicable. As used in this Article VI, the term "Claim" shall include: (x) all
debts, liabilities and obligations, (y) all losses, diminutions in value,
damages, costs and expenses, including pre- and post-judgment interest,
penalties, court costs, expert witness fees and attorneys' fees and expenses,
and (z) all demands, claims, actions, costs of investigation, causes of action,
proceedings, arbitrations, judgments, settlements and assessments.
Notwithstanding the foregoing: (i) an Indemnified Person shall not be entitled
to seek indemnification under Section 6.1(a) for breach of any representation or
warranty by the Indemnifying Party unless the aggregate amount of assessments,
damages, fines, taxes, penalties, costs and expenses required to be paid
pursuant to
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Claims ("Losses") in respect of all such breaches of representations and
warranties and pursuant to Section 6.4 exceeds Twenty-five Thousand Dollars
($25,000), at which point the Indemnifying Party shall be obligated to indemnify
the Indemnified Person from and against all such Losses; and (ii) in no event
shall an Indemnifying Party be liable under Section 6.1(a) in respect of
breaches of representations or warranties for Losses and under Section 6.4 in
excess of Two Million Dollars ($2,000,000), in the aggregate, except that such
limitations in clause (i) and (ii) above shall not apply to any Unlimited
Representation Claim (as hereafter defined).
6.2 Defense of Third Party Claims. In the event any Claim is asserted
against any Indemnified Person by a third party, the Indemnified Person shall
with reasonable promptness notify the Indemnifying Party of such Claim;
provided, however, that the failure of any Indemnified Person to give such
notice shall not relieve any Indemnifying Party of its obligations under this
Article VI, except to the extent that such Indemnifying Party is actually
materially prejudiced by such failure to give notice. In any such proceeding,
following receipt of notice properly given, the Indemnifying Party shall be
entitled, at its sole discretion, to assume the entire defense of such Claim
(with counsel selected by it which is reasonably satisfactory to the Indemnified
Person or Persons), and the Indemnifying Party shall bear the entire cost of
defending such Claim. The Indemnifying Party shall not have the right to settle
any such Claim without the written consent of the Indemnified Person or Persons.
In the event of the assumption of the defense by the Indemnifying Party, the
Indemnifying Party shall not be liable for any further legal expenses
subsequently incurred by the Indemnified Persons in connection with such defense
unless otherwise agreed to in writing by the Indemnifying Party; provided,
however, the Indemnified Persons shall have the right to participate in such
defense, at their own cost, and the obligation to cooperate therewith.
6.3 Survival. The representations and warranties made in this Agreement
shall survive (notwithstanding any investigation made at any time by or on
behalf of a Party) for a period of one year after the Closing, except with
respect to Claims asserted in writing prior to the end of such one-year period
in which case such representation or warranty shall survive with respect to such
Claim until the final resolution of any such Claim; provided, however, that, (a)
the representations and warranties contained in Sections 3.1(a), 3.1(b), 3.1(c),
3.1(d)(i), 3.2(a), 3.2(b), 3.2(c) and 3.3 and Claims arising out of fraud or
deceit (each, an "Unlimited Representation Claim") shall survive the Closing
indefinitely and (b) the representations and warranties contained in Sections
3.1(k) and 3.1(l) shall survive the Closing until the expiration of any
applicable statute of limitations periods plus 60 days, except with respect to
Claims asserted in writing prior to the end of the applicable time period in
which case such representation or warranty shall survive with respect to such
Claim until the final resolution of any such Claim. The covenants and agreements
made in this Agreement shall survive the Closing and continue to be applicable
and binding thereafter until the expiration of applicable statute of limitations
periods, except with respect to Claims asserted in writing prior to the end of
the applicable time period in which case such covenant or agreement shall
survive with respect to such Claim until the final resolution of any such Claim.
The obligations of each Indemnifying Party to indemnify, defend and hold
harmless an Indemnified Person pursuant to Section 6.1(c) shall survive the
Closing without time limitation and shall not terminate at any time.
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6.4 Starguide Litigation. WCLLC agrees to indemnify, defend and hold
harmless Purchaser and its Related Persons from and against any and all Claims
asserted against, resulting to, imposed upon or incurred by Purchaser in
connection with the litigation disclosed on Schedule 3.1(h) or any other
litigation that Starguide (as defined in Schedule 3.1(h)) may bring against
either Purchaser or Sellers relating directly to the infringement claims which
are the subject of the litigation disclosed in section 3.1(h) (the "Covered
Litigation"). The Parties agree to reasonably cooperate, at Sellers' expense, in
the Covered Litigation; provided that Sellers will not consent to any
settlement, compromise or discharge (including the consent to entry of judgment)
of such litigation which would impact Purchaser's operation of the Webcasting
Business or Purchaser's ability to use the Assets as they are used on the date
hereof in the operation of the Webcasting Business without Purchaser's prior
written consent (which consent shall not be unreasonably withheld).
ARTICLE VII
TERMINATION
7.1 Termination Rights. This Agreement may be terminated at any time prior
to the Closing: (a) by mutual written consent of Purchaser and Sellers; or (b)
by either Seller or Purchaser if: (i) the Closing has not occurred by February
14, 2003 (provided, however, that the right to terminate this Agreement pursuant
to this clause (i) shall not be available to any Party whose breach of any
representation or warranty or failure to perform any covenant or agreement under
this Agreement has been the cause of or resulted in the failure of the Closing
to occur on or before such date); or (ii) any governmental authority shall have
issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the Closing and such order,
decree, ruling or other action shall have become final and nonappealable
(provided, however, that the right to terminate this Agreement pursuant to this
clause (ii) shall not be available to any Party until such Party has used all
commercially reasonable efforts to remove such injunction, order, decree or
ruling).
7.2 Effect of Termination. If this Agreement is terminated by either Seller
or Purchaser pursuant to the provisions of Section 7.1, this Agreement shall
forthwith become void, and there shall be no further obligation under this
Agreement on the part of any Party or its respective affiliates, directors,
officers, or stockholders to any other Party, except pursuant to the provisions
of Sections 4.3, 4.8 and 4.9, Article VII and Article VIII, which provisions
shall remain in full force and effect in accordance with their terms; provided,
however, that the termination of this Agreement shall not relieve any Party from
any liability for damages incurred as a result of a breach by such Party of its
representations, warranties, covenants, agreements or other obligations
hereunder occurring prior to such termination.
ARTICLE VIII
MISCELLANEOUS
8.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive law of the State of New York without giving
effect to the principles of conflicts of law thereof.
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8.2 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same agreement.
8.3 Assignment; Binding Effect; Third Parties. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by
either Party (whether by operation of Law or otherwise) without the prior
written consent of the other Party; provided that without such consent Purchaser
may assign its rights and obligations hereunder to any of its direct or indirect
subsidiaries, in which event such assignee shall be substituted for Purchaser
for purposes of this Agreement to the extent appropriate, but without affecting
any liability of Purchaser hereunder who shall otherwise remain primarily liable
hereunder. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the Parties and their
respective successors and assigns. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give any person, other than the
Parties and their successors and permitted assigns, any rights or remedies under
or by reason of this Agreement.
8.4 Entire Agreement. This Agreement (including the Exhibits and Schedules
hereto and any documents referred to therein) and the Services Agreements
constitutes the entire agreement between the Parties, and supersedes all prior
understandings, agreements (other than the Confidentiality Agreement),
arrangements and representations between the Parties, written or oral, to the
extent they relate in any way to the subject matter hereof or thereof.
8.5 Notices. All notices, requests, demands, claims and other
communications required or permitted to be given hereunder shall be in writing
and shall be sent by: (a) personal delivery (effective upon delivery); (b)
facsimile (effective on the next day after transmission); or (c) registered or
certified mail, return receipt requested and postage prepaid (effective on the
third day after being so mailed), in each case addressed to the intended
recipient as set forth below:
If to Purchaser:
Video Network Communications, Inc.
c/o Moneyline/Telerate
000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxx
Facsimile: (000) 000-0000
If to Sellers:
Xxxxxxxx Communications, LLC
Xxx Xxxxxxxxxx Xxxxxx
Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx, General Counsel
Facsimile: (000) 000-0000
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Either Party may change its addresses for receiving notices by giving written
notice of such change to the other Party in accordance with this Section 8.5.
8.6 Litigation Costs. If any Party should hereafter institute litigation
against any other Party alleging that such other Party has breached this
Agreement or any instrument delivered pursuant hereto, the nonprevailing Party
(whether plaintiff or defendant) in such action shall reimburse the prevailing
Party for the prevailing Party's reasonable attorneys' fees, witness fees, court
costs and all other costs in connection with such litigation.
8.7 Amendments and Waivers. This Agreement may be amended, and rights
hereunder may be waived, only by a written instrument signed by the Party to be
charged with such amendment or waiver.
8.8 Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
8.9 References and Interpretation. All references in this Agreement to
Schedules, Exhibits, Articles, Sections, subsections and other subdivisions
refer to the corresponding Schedules, Exhibits, Articles, Sections, subsections
and other subdivisions of or to this Agreement unless expressly provided
otherwise. Titles appearing at the beginning of any Articles, Sections,
subsections or other subdivisions of this Agreement are for convenience only, do
not constitute any part of this Agreement, and shall be disregarded in
construing the language hereof. Schedules and Exhibits to this Agreement are
attached hereto and by this reference incorporated herein for all purposes. The
words "this Agreement," "herein," "hereby," "hereunder" and "hereof," and words
of similar import, refer to this Agreement as a whole and not to any particular
subdivision unless expressly so limited. The words "this Article," "this
Section" and "this subsection," and words of similar import, refer only to the
Article, Section or subsection hereof in which such words occur. The word "or"
is not exclusive, and the word "including" (in its various forms) means
including without limitation. Words, terms and titles (including terms defined
herein) in the singular form shall be construed to include the plural and vice
versa, unless the context otherwise requires. The Parties acknowledge that the
Parties and their counsel have reviewed and revised this Agreement and that the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting Party shall not be employed in the interpretation
of this Agreement. Information set forth in each Schedule specifically refers to
the section of this Agreement to which such information is responsive, and no
disclosure made in any particular Schedule shall be deemed made in any other
Schedule unless expressly made therein (by cross-reference or otherwise) or
unless, and only to the extent that, it is reasonably apparent from the
disclosure that such disclosure contains information which also modifies another
representation and warranty therein. Any capitalized terms used in any Schedule,
but not otherwise defined therein, shall have the meanings as defined in this
Agreement.
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8.10 Bulk Sales. The Parties do not contemplate sending notices that may be
provided for under any so-called bulk transfer Laws (the "Bulk Transfer Laws")
of any jurisdiction in connection with the sale of Assets. Except as provided in
Section 4.5, Sellers agree to indemnify Purchaser against all liability, damage
or expense which Purchaser incurs due to the failure to send notices pursuant to
any Bulk Transfer Laws.
8.11 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
8.12 Knowledge. For purposes of this Agreement, "knowledge" of Sellers
shall mean the actual knowledge, after due inquiry, of the following: Xxxxx
Xxxxx, Xxxx Xxxxxxxx, Xxx Xxxxxx, Xxxxx XxXxxxxx.
8.13 Specific Performance. Sellers hereby acknowledge and agrees that money
damages would not be adequate compensation for the damages that Purchaser would
suffer by reason of a breach of this Agreement by Sellers or a failure of
Sellers to perform any of its obligations under this Agreement and hereby waives
any defense that a remedy at law would be adequate in any action for specific
performance. Therefore, Sellers hereby agree that in addition to and without
limiting any other remedy or right Purchaser may have, Purchaser shall have the
right to an injunction, temporary restraining order or other equitable relief in
any court of competent jurisdiction enjoining any such breach and enforcing
specifically the terms and provisions hereof.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized representatives as of the date first above written.
"Purchaser" "Sellers"
Video Network Communications, Inc. Xxxxxxxx Communications, LLC
By: /s/ Xxxx Xxxxx By: /s/ Xxxxx X. Xxxxx
--------------------------- ------------------------------------
Name: Xxxx Xxxxx Name: Xxxxx X. Xxxxx
Title: Director and Attorney-in-Fact Title: Vice President & GM, Vyvx
Xxxxxxxx Communications
Procurement, LP
By: /s/ Xxx Xxxxxxx
-----------------------------
Name: Xxx Xxxxxxx
Title: Vice President
(Asset Purchase Agreement)
