Exhibit 2.2
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of December 31, 1998 (the "Effective Date"), by and between
Vicom, Inc., a Minnesota corporation ("Buyer"), and Enstar Networking
Corporation, a Minnesota corporation ("Seller").
RECITALS
A. Seller is engaged in the business of providing products and
services to design, build and maintain corporate network infrastructures
(the "Business").
B. Seller desires to sell and assign to Buyer, and Buyer desires
to purchase from Seller, on the terms and subject to the conditions set
forth in this Agreement, the assets of Seller identified in Article I of this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreement and the conditions set forth in
this Agreement, Buyer and Seller hereby agree as follows:
ARTICLE I
TRANSFER OF ASSETS; ASSUMPTION OF LIABILITIES
1.01 Transfer of Assets. On the terms and subject to the
conditions set forth in this Agreement, Seller shall, at the Closing (as
defined in Section 3.01 hereof), sell, transfer and assign to Buyer, and
Buyer shall purchase and acquire from Seller, all of Seller's right, title
and interest, as of the Closing Date (as defined in Section 3.01 hereof), in
and to the following assets of Seller (collectively, the "Assets"):
(a) The accounts receivable of Seller as of the Effective Date
(the "Accounts Receivable"), all of which are listed on Schedule 1.01(a)
hereto;
(b) The work in progress of Seller as of the Effective Date
(the "WIP"), all of which is listed on Schedule 1.01(b) hereto;
(c) The inventory of Seller as of the Effective Date (the
"Inventory"), all of which is listed on Schedule 1.01(c) hereto; and
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(d) The fixed assets of Seller listed on Schedule 1.01(d)
hereto (the "Fixed Assets");
(e) The open order backlog of Seller (gross profit) as of the
Effective Date (the "Backlog"), all of which is listed on Schedule 1.01(e)
hereto.
1.02 Excluded Assets. No assets of any kind, other than those
specifically enumerated in Section 1.01 hereof, shall be sold to Buyer or
purchased by Buyer from Seller.
1.03 Liabilities Assumed. Buyer shall assume all liabilities
of Seller with respect to (a) the Lease Agreement dated September 23, 1998
by and between Lexmark Office One Partners, LLP, and Seller and (b) the
maintenance contracts of Seller listed on Schedule 1.03 hereto.
1.04 Excluded Liabilities. Buyer shall not assume, and nothing
contained in this Agreement shall be construed as an assumption by Buyer of,
any other liabilities, obligations or undertakings of Seller of any nature
whatsoever, whether accrued, absolute, fixed or contingent, known or unknown
due or to become due, unliquidated or otherwise.
ARTICLE II
PURCHASE PRICE
2.01 Amount and Manner of Payment. The purchase price (the
"Purchase Price") for the Assets shall consist of the following:
(a) One Million Three Hundred Fifty Thousand (1,350,000) shares
of the Common Stock, par value $.01, of Buyer (the "Shares"); and
(b) A promissory note of Buyer in the form of Exhibit A attached
hereto (the "Closing Date Note"), in the principal amount of Seven Hundred
Fifty Thousand Dollars ($750,000). The Closing Date Note shall be delivered
by Buyer to Seller subject to the requirement that Seller shall hold the
Closing Date Note until the amount of the Book Value (defined below) of the
Assets is determined pursuant to Section 2.02 hereof, and, pursuant to
Section 2.02, Seller and Buyer have exchanged the Closing Date Note for the
Promissory Note of buyer in the form of Exhibit B attached hereto (the
"Adjusted Note") pursuant to Section 2.02 hereof.
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2.02 Adjustment to Purchase Price.
(a) The Purchase Price shall be decreased on a dollar-for-dollar
basis, by the amount, if any (the "Purchase Price Downward Adjustment"), by
which the Book Value (as defined below) of the Assets as determined on the
Adjustment Date (as defined below) is less than $1,675,000; provided that, to
the extent the Purchase Price Downward Adjustment is attributable to the
collection of Accounts Receivable in an amount less than the aggregate amount
shown on Schedule 1.01(a) (an "AR Adjustment"), the AR Adjustment shall be made
only to the extent that such amount exceeds five percent (5%) of the aggregate
amount shown on Schedule 1.01(a). The Purchase Price Downward Adjustment
shall be reflected by a substitution of the Adjusted Note (in an amount equal
to $750,000 less the Purchase Price Downward Adjustment) for the Closing Date
Note pursuant to Section 2.02(e) hereof.
(b) The Purchase Price shall be increased, on a dollar-for-dollar
basis, by the amount, if any (the "Purchase Price Upward Adjustment"), by
which the Book Value of the Assets as determined on the Adjustment Date is
greater than $1,675,000. The Purchase Price Upward Adjustment shall be paid
to Seller in cash pursuant to the provisions of Section 2.02(e).
(c) "Book Value" shall mean (i) with respect to the Accounts
Receivable, the total dollar amount of the Accounts Receivable collected on
or before April 30, 1999 or, if later, the final collection date of any such
Account Receivable, but in any event, no later than June 30, 1999 (the
"Adjustment Date"), (ii) with respect to the WIP, the Inventory and the
Fixed Assets, the total dollar amount of such Assets as shown on the Final
Asset List (as defined below), and with respect to the Backlog, the total
dollar amount of the gross profit realized with respect to the Backlog on
or before the Adjustment Date as determined in accordance with the billing
practices and revenue recognition practices of Seller applied consistently
throughout the applicable period.
(d) "Final Asset List" shall mean the asset list of Seller as of
the Effective Date prepared in accordance with Sellers past practices and
delivered as provided in Section 2.02(e).
(e) As soon as practicable after the Closing Date (but in all
events prior to the Adjustment Date), Buyer shall (i) prepare the Final Asset
List and (ii) calculate the Purchase Price Downward Adjustment or the Purchase
Price Upward Adjustment, as the case may be (in either case, the "Purchase
Price Adjustment"), and deliver the same to Seller. If Seller does not agree
with the Final Asset List or the amount of the Purchase Price Adjustment, then
the accounting firms and representatives of Buyer and Seller shall meet and
work in good faith to resolve the issues pertaining to the Final Asset List or
the Purchase Price Adjustment and the computation thereof. If, as a result of
the meeting or meetings, Buyer and Seller agree on the Purchase Price
Adjustment, then the amount so agreed upon shall become the final Purchase Price
Adjustment. In the case of a Purchase Price Downward Adjustment, the principal
amount of the Adjusted Note shall be based on such Purchase Price Downward
Adjustment. In the case of a Purchase Price Upward Adjustment, Buyer shall
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promptly make a cash payment to Seller in the amount of such Purchase Price
Adjustment. If within ten (10) days after delivery to Seller of the Purchase
Price Adjustment calculated by Buyer (or such longer period as the parties may
mutually agree) Buyer and Seller are unable to agree on the Final Asset List or
Purchase Price Adjustment and the computation thereof, then Seller and Buyer
shall retain a mutually agreeable arbitrator or arbitrators using the applicable
Commercial Arbitration Rules of the American Arbitration Association (the
"Arbitrator") to resolve the dispute. The Arbitrator's work shall be limited to
resolving the dispute arising in connection with the Final Asset List or the
Purchase Price Adjustment and the computation thereof, and the decision of the
Arbitrator shall result in a Purchase Price Adjustment which shall, for purposes
of this Agreement, be and become the final Purchase Price Adjustment. The
decision of the Arbitrator shall be final and binding and not reviewable for
error of any kind. Each party shall bear its own costs in connection with the
preparation and review of the Purchase Price Adjustment and in resolving any
disputes related thereto, except that the fees and costs of the Arbitrator, if
one is retained, shall be paid one-half by the Seller and one-half by the Buyer.
Within five (5) business days of the agreement of Buyer and Seller, or
resolution of any dispute regarding the Purchase Price Adjustment (whether such
resolution is by settlement or by decision of the Arbitrator), Buyer shall
deliver to Seller (i) in the case of a Purchase Price Downward Adjustment, the
Adjusted Note, dated the Closing Date, in the principal amount established based
on the final Purchase Price Downward Adjustment, in exchange for which Seller
shall cancel the Closing Date Note and shall deliver the same back to Buyer in
full satisfaction of all principal and accrued interest owing thereunder and
(ii) in the case of a Purchase Price Upward Adjustment, a cash payment in the
amount of the Purchase Price Upward Adjustment.
2.03 Allocation of Purchase Price. The Buyer and Seller have
allocated the Purchase Price among the Assets as set forth on Schedule 2.03,
which schedule shall be updated as of the Closing Date in such a manner as
determined by Buyer subject to Seller's consent (which shall not be
unreasonably withheld), after taking into account the applicable Treasury
Regulations and the fair market value of such items. Buyer shall prepare for
filing all of the tax returns, information returns and statements ("Returns")
that may be required with respect to the transaction provided for herein
pursuant to Section 1060 of the Internal Revenue Code of 1986, as amended
(the "Code"), any Treasury Regulations promulgated thereunder, any other similar
provision of the Code and any other similar, applicable foreign, state or local
tax law or regulation. Seller shall provide information that may be required by
Buyer for the purpose of preparing such Returns, execute and file such Returns
as requested by Buyer and file all other returns and tax information on a basis
that is consistent with such Returns prepared by Buyer.
ARTICLE III
CLOSING
3.01 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of Xxxxxx & Xxxxxxx,
000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx at 10:00 a.m. on January 8, 1999,
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or at such other place and on such other date as is mutually agreeable to Buyer
and Seller. The date on which the Closing occurs is referred to herein as the
"Closing Date," and the Closing shall be deemed effective as of 8:00 a.m.,
Minneapolis time, on the Effective Date.
3.02 General Procedure. At the Closing, each party shall deliver to
the party entitled to receipt thereof, the documents required to be delivered
pursuant to Article VIII hereof and such other documents, instruments and
materials (or complete and accurate copies thereof, where appropriate) as may
be reasonably required in order to effectuate the intent and provisions of this
Agreement, and all such documents, instruments and materials shall be
satisfactory in form and substance to counsel for the receiving party. The
conveyance, transfer, assignment and delivery of the Assets shall be effected
by Seller's execution and delivery to Buyer of a xxxx of sale substantially in
the form attached hereto as Exhibit C (the "Xxxx of Sale") and such other
instruments of conveyance, transfer, assignment and delivery as Buyer shall
reasonably request to cause Seller to transfer, convey, assign and deliver the
Assets to Buyer.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer that, except as set
forth in the Disclosure Schedule delivered by Seller to Buyer on the date
hereof (the "Disclosure Schedule") (which Disclosure Schedule sets forth the
exceptions to the representations and warranties contained in this Article IV):
4.01 Incorporation and Corporate Power. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Minnesota and has all requisite corporate power and authority to own the
Assets being sold to Buyer.
4.02 Execution, Delivery; Valid and Binding Agreement. The
execution, delivery and performance of this Agreement by Seller and the
consumation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Seller, and, except for approval by
Seller's shareholders, no other proceedings on its part are necessary to
authorize the execution, delivery and performance of this Agreement. This
Agreement has been duly executed and delivered by Seller and, assuming that
this Agreement is the valid and binding agreement of Buyer, constitutes the
valid and binding obligation of Seller, enforceable in accordance with its
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights or by general principles of equity.
4.03 Authority; No Breach. Seller has the requisite corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution, delivery and performance of this
Agreement by Seller and the consummation of the transactions contemplated
hereby do not conflict with or result in any breach of any of the provisions
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of, or constitute a default under, result in a violation of, result in the
creation of a right of termination or acceleration or any lien, security
interest, charge or authorization, consent, approval, exemption or other action
by notice to any court or other governmental body, under the provisions of the
Articles of Incorporation or Bylaws of Seller or any indenture, mortgage, lease,
loan agreement or other agreement or instrument by which Seller or the Assets
are bound or affected (other than consents required under Section 8.01(c)
hereof, which Seller undertakes to obtain prior to the Closing Date), or any
law, statute, rule or regulation or order, judgment or decree to which Seller
or the Assets are subject. No consent, approval or authorization of any
governmental or regulatory authority is required to be obtained by Seller in
connection with its execution, delivery and performance of this Agreement.
4.04 Book Value. Except as provided in Section 4.09 hereof, the
Book Value of the Assets as of the Effective Date is not less than $1,675,000.
4.05 Brokerage. No third party shall be entitled to receive any
brokerage commissions, finder's fees, fees for financial advisory services or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of Seller,
except for the fees of Xxxxxxxxx, Agio, Xxxxx & Company, whose fees will be
borne by Seller.
4.06 Title to Assets. Seller owns good and marketable title to the
Assets, fee and clear of all liens and encumbrances, except for (i) liens for
current taxes not yet due and payable, (ii) liens set forth under the caption
referencing this Section 4.06 in the Disclosure Schedule, and (iii) assets
disposed of in the ordinary course of business.
4.07 Inventory. The Disclosure Schedule describes under the
caption referencing this Section 4.07 all of the inventory comprising any of
the Assets. Seller's inventory of purchase parts, work in process and finished
goods relating to the Business consists of items of a quality and quantity
usable and, with respect to finished goods only, salable at the Seller's normal
profit levels, in each case, in the ordinary course of the business. Seller's
inventory of finished goods generated by the Business is not obsolete or
damaged and is merchantable and fit for its particular use. Seller has on hand
or has ordered and expects timely delivery of such quantities of raw materials
and has on hand such quantities of work in process and finished goods aa are
reasonably required timely to fill current orders on hand with respect to the
Business which require delivery within 30 days and to maintain the manufacture
and shipment of products at its normal level of operations. As of the date of
the relevant dates, the values at which such inventories are carried on the
books of Seller will be determined in accordance with generally accepted
accounting principles.
4.08 Tax Matters. To the best of Seller's knowledge, there are no
liens for any taxes, charges, fees, levies, or other assessments, including,
without limitation, all net income, gross income, gross receipts, sales, use,
ad valorem, transfer, franchise, profits, license, withholding, payroll,
employment, social security, unemployment, excise, estimated, severance, stamp,
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occupation, property, or other taxes, customs duties, fees, assessments, or
charges of any kind whatsoever, including, without limitation, all interest
and penalties thereon, and additions to tax or additional amounts imposed by
any taxing authority, domestic or foreign ("Taxes") upon any of the assets,
except liens for Taxes not yet due.
4.09 Accounts Receivable. Not less than 95% in dollar amount of
the Accounts Receivable are valid receivables, are not subject to valid
counterclaims or setoffs, and are collectible in accordance with their terms
on or before the Adjustment Date.
4.10 Litigation. Except as set forth in the Disclosure Schedule
under the caption referencing this Section 4.10, there are no actions, suits,
proceedings, orders or investigations pending or, to the best knowledge of
Seller, threatened against Seller, at law or in equity, or before or by any
federal, state, municipal or other governmental department, commissions, board,
bureau, agency or instrumentality, domestic or foreign, affecting the Business
or the Assets, and there is no reasonable basis known to Seller for any of the
foregoing.
4.11 Warranties. The Disclosure Schedule summarizes under the
caption referencing this Section 4.11 all claims outstanding, pending or, to
the best of Seller's knowledge, threatened for beach of any warranty relating
to any products of the Business sold by Seller prior to the date hereof.
4.12 Customers and Supplies. To the best of Seller's knowledge, the
Disclosure Schedule, under the caption referencing this Section 4.12, lists the
current customers and suppliers of Seller, and no customer or supplier listed on
the Disclosure Schedule under the caption referencing this Section 4.12 has
indicated that it will stop or decrease the rate of business done with Seller
except for changes in the ordinary course of Seller's business.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that:
5.01 Incorporation and Corporate Power. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Minnesota, with the requisite corporate power and authority to enter into
this Agreement and perform its obligations hereunder.
5.02 Execution, Delivery; Valid and Binding Agreement. The
execution, delivery and performance of this Agreement by Buyer and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all requisite corporate action, and no other
corporate proceedings on its part are necessary to authorize the execution,
delivery or performance of this Agreement. This Agreement has been duly
executed and delivered by Buyer and constitutes the valid and binding
obligation of Buyer, enforceable in accordance with its terms except as such
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enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights or by general principles of equity.
5.03 No Breach. The execution, delivery and performance of
this Agreement by Buyer and the consummation by Buyer of the transactions
contemplated hereby do not conflict with or result in any breach of any of
the provisions of, constitute a default under, result in a violation of,
result in the creation of a right of termination or acceleration or any
lien, security interest, charge or encumbrance upon any assets of Buyer,
or require any authorization, consent, approval, exemption or other action by
or notice to any court or other governmental body, under the provisions of the
Articles of Incorporation or Bylaws of Buyer or any indenture, mortgage,
lease, loan agreement or other agreement or instrument by which Buyer is
bound or affected, or any law, statute, rule or regulation or order, judgment
or decree to which Buyer is subject.
5.04 Brokerage. No third party shall be entitled to receive any
brokerage commissions, finder's fees, fees for financial advisory services
or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf
of Buyer.
ARTICLE VI
COVENANTS OF SELLER
6.01 Conduct of the Business. Seller agrees to observe each term set
forth in this Section 6.01 and agrees that, from the date hereof until the
Closing Date, unless otherwise consented to by Buyer in writing:
(a) Seller shall not, directly or indirectly, sell, pledge, dispose
of or encumber any of the Assets, except in the ordinary course of business.
(b) Seller shall not cancel or terminate its current insurance
policies covering the Assets and the Business, or cause any of the coverage
thereunder to lapse, unless simultaneously with such termination, cancellation
or lapse, replacement policies providing coverage equal to or greater than the
coverage under the canceled, terminated or lapsed policies for substantially
similar premiums are in full force and effect.
(c) Seller shall (i) file any Tax returns, elections or information
statements with respect to any liabilities for Taxes of Seller or other matters
relating to Taxes of Seller which affect the Assets and pursuant to applicable
law must be filed prior to the Closing Date; (ii) promptly upon filing provide
copies of any such Tax returns, elections or information statements to Buyer;
(iii) make any such Tax elections or other discretionary positions with respect
to Taxes taken by or affecting Seller only upon prior consultation with and
consent of Buyer; and (iv) not amend any Return.
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6.02 Access to Books and Records. Between the date hereof and the
Closing Date, Seller shall afford to Buyer and its authorized representatives
(the "Buyer's Representatives") full access at all reasonable times and upon
reasonable notice to the offices, properties, books, records, officers,
employees and other items of the Business, and otherwise provide such
assistance as is reasonably requested by Buyer in order that Buyer may have a
full opportunity to make such investigation and evaluation as it shall
reasonably desire to make of the Business and the Assets. In addition, Seller
and its officers and directors shall cooperate fully (including providing
introductions where necessary) with Buyer to enable Buyer to contact such third
parties, including customers, prospective customers, specifying agencies,
vendors or suppliers of the Business, as Buyer deems reasonably necessary to
complete its due diligence; provided that Buyer agrees not to initiate such
contacts without the prior approval of Seller, which approval will not be
unreasonably withheld.
6.03 Conditions. Seller shall take all commercially reasonable
actions necessary to cause the conditions set forth in Section 8.01 to be
satisfied and to consummate the transactions contemplated herein as soon as
reasonably possible after the satisfaction thereof (but in any event within
three business days of such date).
ARTICLE VII
COVENANTS OF BUYER
Buyer covenants and agrees with Seller as follows:
7.01 Conditions. Buyer shall take all commercially reasonable
actions necessary to cause the conditions set forth in Section 8.02 to be
satisfied and to consummate the transactions contemplated herein as soon as
reasonably possible after the satisfaction thereof (but in any event within
three business days of such date).
ARTICLE VIII
CONDITIONS TO CLOSING
8.01 Conditions to Buyer's Obligations. The obligations of Buyer to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) The representations and warranties set forth in Article IV
hereof shall be true and correct in all material respects at and as of the
Closing Date as though then made, except that any such representation or
warranty made as of a specific date (other than the date hereof) shall only
need to have been true on and as of such date.
(b) Seller shall have performed in all material respects all of
the convenants and agreements required to be performed and complied with by
it under this Agreement prior to the Closing.
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(c) Seller shall have obtained, or caused to be obtained, each
consent and approval required in order to complete the transactions
contemplated hereby.
(d) There shall not be threatened, instituted or pending any
action or proceeding, before any court or governmental authority or agency,
domestic or foreign, challenging or seeking to make illegal, or to delay or
otherwise directly or indirectly restrain or prohibit, the consummation of
the transactions contemplated hereby or seeking to obtain material damages
in connection with such transactions.
(e) On the Closing Date, Seller shall have delivered to Buyer
the following:
(i) the Xxxx of Sale and such other instruments of
conveyance, transfer, assignment and delivery as Buyer shall have
reasonably requested pursuant to Section 3.02 hereof;
(ii) a certificate of an officer of Seller, dated the Closing
Date, stating that the conditions set forth in subsections 8.01(a) and
(b) above have been satisfied; and
(iii) a certificate of the Secretary of Seller as to the
currency of the Articles of Incorporation and Bylaws of Seller and the
resolutions adopted by the board of directors and shareholder of
Seller with respect to the transactions contemplated by this Agreement
(with copies of such documents attached).
(f) Buyer shall have completed to its satisfaction its due diligence
review of Seller's business and the Assets.
(g) Buyer and Seller shall have entered into a transition services
agreement (the "Transition Services Agreement") on terms and conditions mutually
satisfactory to Buyer and Seller with respect to services to be provided to
Buyer by Seller, at Seller's cost, until March 31, 1999 or earlier terminated to
Buyer. The principal purpose of the Transition Services Agreement is to ensure
the smooth transition from Seller to Buyer of vendors, customers, employee
benefits and open work orders.
(h) Buyer and Seller shall have entered into a Stock Purchase and
Registration Rights Agreement in the form Attached hereto as Exhibit D (the
"Stock Purchase Agreement").
8.02 Conditions to Seller's Obligations. The obligations of Seller
to consummate the transactions contemplated by this Agreement are subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) The representations and warranties set forth in Article V hereof
will be true and correct in all material respects at and as of the Closing as
though then made;
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(b) Buyer shall have performed in all material respects all the
covenants and agreements required to be performed by it under this Agreement
prior to the Closing;
(c) There shall not be threatened, instituted or pending any action
or proceeding, before any court or governmental authority or agency, domestic or
foreign, challenging or seeking to make illegal, or to delay or otherwise
directly or indirectly restrain or prohibit, the consummation of the
transactions.
(d) On the Closing Date, Buyer will have delivered to Seller, or
in the case of the certificates representing the Shares, at Seller's option,
to such designee of Seller as shall become a party to the Stock Purchase
Agreement:
(i) a certificate or certificates representing the Shares;
(ii) the Closing Date Note;
(iii) a certificate of the President of Buyer, dated the
Closing Date, stating that the conditions set forth in subsections
8.02(a) and (b) above have been satisfied; and
(iv) a certificate of the Secretary of Buyer as to the
currency of the Articles of Incorporation and Bylaws of Seller and
the resolutions adopted by the board of directors of Buyer with
respect to the transactions contemplated by this Agreement (with
copies of such documents attached).
(e) Buyer and Seller shall have entered into the Stock Purchase
Agreement.
ARTICLE IX
TERMINATION
9.01 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by the mutual consent of Buyer and Seller;
(b) by either Buyer or Seller if there has been a material
misrepresentation, breach of warranty or breach of covenant on the part of the
other in the representations, warranties and covenants set forth in this
Agreement;
(c) by either Buyer or Seller if the transactions contemplated
hereby have not been consummated on or before January 15, 1999; provided that,
neither Buyer nor Seller will be entitled to terminate this Agreement pursuant
to this Section 9.01(c) if such party's willful breach of this Agreement has
prevented the consummation of the transactions contemplated hereby; or
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(d) by Buyer if, after the date hereof, there shall have been a
material adverse change in the condition of the Business or assets or if,
after the date hereof, an event shall have occurred which, so far as reasonably
can be foreseen, would result in any such change, except to the extent such
change is directly caused by Buyer.
9.02 Effect of Termination. In the event of termination of this
Agreement by either Buyer or Seller as provided in Section 9.01, this
Agreement shall become void and there shall be no liability on the part of
either Buyer or Seller, or their respective stockholders, officers, or
directors, except that Section 11.01, 11.02 and 11.10 hereof shall survive
indefinitely, and except with respect to willful breaches of this Agreement
prior to the time of such termination.
ARTICLE X
SURVIVAL
10.01 Survival, Indemnification. The covenants, representations
and warranties contained in this Agreement shall survive the closing.
11.01 Election of Directors. To the extent permitted by applicable
law, commencing at the first meeting of its Board of Directors of Buyer
following the Closing Date, Buyer will cause one individual to be selected
by Seller to be appointed to its Board of Directors, and thereafter, for so
long as Seller continues to hold not less that 10% of the Shares, at each
meeting of the shareholders of Buyer at which directors are to be elected,
to cause such individuals to be nominated, and to use its best efforts to
cause such individual or a substitute selected by Seller, to be elected,
to such Board of Directors. Seller shall have the absolute right to replace
or fill vacancies with respect to the director selected by it.
11.02 Seller Employees. Buyer will use its best efforts to employ
Seller's employees listed on Schedule V on terms comparable to their current
employment terms and to maintain such employment on comparable terms through
the Adjustment Date.
11.03 Purchase Rights. Through June 30, 1999, Seller will use its
best efforts to ensure that buyer can continue to purchase cable and networking
equipment at the same cost of goods structure currently obtained by Seller,
subject to changes in market conditions and manufacturer's standard pricing
and discount structures.
11.05 Lease. Buyer and Seller shall use their best efforts to
cooperate and accomplish the assignment, from Seller to Buyer, of the Lease
Agreement dated September 23, 1998 by and between Lexmark Office One Partners,
LLP, and Seller.
11.06 Business Practices. Buyer will continue to treat Backlog in
accordance with the billing practices and revenue recognition practices of
Seller throughout the period prior to the Adjustment Date. Buyer will pay all
vendors on terms and conditions consistent with past practices of Seller
throughout the period prior to the Adjustment Date.
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ARTICLE XII
MISCELLANEOUS
12.01 Confidentiality; Press Releases and Announcements. The
existence of this Agreement and the negotiations between Buyer and Seller
relative to the transactions contemplated hereby are confidential information
and Buyer and Seller shall each use their best efforts to maintain the
confidentiality of that information. Prior to the Closing Date, neither party
hereto shall issue any press release (or make any other public announcement)
related to this Agreement or the transactions contemplated hereby or make any
announcement to the employees, customers or suppliers of Seller without prior
written approval of the other party hereto, except as may be necessary, in
the opinion of counsel to the party seeking to make disclosure, to comply
with the requirements of this Agreement or applicable law. If any such press
release or public announcement is so required, the party making such disclosure
shall consult with the other party prior to making such disclosure, and the
parties shall use all reasonable efforts, acting in good faith, to agree upon
a text for such disclosure which is satisfactory to both parties.
12.02 Expenses. Except as otherwise expressly provided for herein,
Seller and Buyer will pay all of their own expenses (including attorneys' and
accountants' fees) in connection with the negotiation of this Agreement, the
performance of their respective obligations hereunder and the consummation of
the transactions contemplated by this Agreement (whether consummated or not).
12.03 Further Assurances. Seller agrees that, on and after the
Closing Date, it shall take all appropriate action (without incurring any
out-of-pocket expenses) and execute any documents, instruments or conveyances
of any kind which may be reasonably necessary or advisable to carry out any of
the provisions hereof, including , without limitation, putting Buyer in
possession and operating control of the Assets.
12.04 Amendment and Waiver. This Agreement may not be amended or
waived except in writing executed by the party against which such amendment or
waiver is sought to be enforced. No course of dealing between or among any
persons having any interest in this Agreement will be deemed effective to modify
or amend any part of this Agreement or any rights or obligations of any person
under or by reason of this Agreement.
12.05 Notices. All notices, demands and other communications to be
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be deemed to have been given when personally delivered
or three business days after being mailed by first class U.S. mail, return
receipt requested, or when receipt is acknowledged, if sent by facsimile,
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telecopy or other electronic transmission device. Notices, demands and
communications to Buyer and Seller will, unless another address is specified
in writing, be sent to the address indicated below:
Notices to Seller or Sellers: with a copy to:
Seller, Inc. Xxxxxx & Xxxxxxx LLP
7450 Flying Cloud Drive 000 Xxxxx Xxxxx Xxxxxx
Xxxx Xxxxxxx, Xxxxxxxxx 00000 Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: President Attention: Xxxxxxx X. Xxxxxxxxxxxx
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
Notices to Buyer: with a copy to:
Xxx Xxxxxx Xxxxxx Xxxx
Vicom, Inc. Vicom, Inc.
0000 Xxxxxxx Xxxxxx Xxxxx 0000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxxxxxxxx 00000 Xxx Xxxx, Xxxxxxxxx 00000
Telecopy: (000) 000-0000 Telecopy: (000) 000-0000
12.06 Assignment. This Agreement and all of the provisions hereof
will be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, except that neither this
Agreement nor any of the rights, interests or obligations hereunder may be
assigned by either party hereto without the prior written consent of the
other party hereto.
12.07 Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
12.08 Complete Agreement. This Agreement and the Exhibits hereto,
the Disclosure Schedule and the other documents referred to herein contain the
complete agreement between the parties and supersede any prior understandings,
agreements or representations by or between the parties, written or oral,
which may have related to the subject matter hereof in any way.
12.09 Counterparts. This Agreement may be executed in one or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the
same instrument.
12.10 Governing Law. The internal law, without regard to conflicts
of laws principles, of the State of Minnesota will govern all questions
concerning the construction, validity and interpretation of this Agreement and
the performance of the obligations imposed by this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
VICOM, INC.
By
---------------------------
Its------------------------
ENSTAR NETWORKING CORPORATION
By
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Its------------------------
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