STOCK PURCHASE AGREEMENT
BY AND AMONG
AT&T CORP.,
AMERICAN TRANSTECH INC.
AND
MATRIXX MARKETING INC.
DATED DECEMBER 20, 1997
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT ("Agreement") is made as of the 20th day
of December, 1997, by and among AT&T Corp., a New York corporation ("AT&T" or
the "Seller"), American Transtech Inc., a Delaware corporation ("the Company"),
and MATRIXX Marketing Inc., an Ohio corporation (the "Buyer").
R E C I T A L S:
WHEREAS, the Seller owns all of the issued and outstanding shares of
capital stock of the Company, without par value (the "Company Stock");
WHEREAS, the Company is, including through its affiliate AT&T Canada
Enterprises, Inc. ("ACE"), engaged primarily in the business of providing
telephony-based customer care and employee care services, including, without
limitation, telemarketing, lead generation, customer service, product support,
transaction processing, account servicing, problem resolution and technical
support in the United States (the "U.S. Business") and Canada (the "Canadian
Business" and together with the U.S. Business, the "Business"); and
WHEREAS, the Buyer wishes to purchase, pursuant to the stock purchase
and the asset purchase contemplated herein and subject to all the terms and
conditions hereof, the Company Stock and the Canadian Assets (as defined below)
from the Seller, and the Seller wishes to sell the Company Stock and the
Canadian Assets to the Buyer:
A G R E E M E N T:
NOW, THEREFORE, in consideration of the foregoing premises, the terms,
conditions and other covenants and agreements contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed, the parties hereto agree as follows:
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SECTION 1
SALE AND PURCHASE
1.1 PURCHASE AND SALE. Subject to all the terms and conditions hereof
and in reliance on the representations and warranties and agreements contained
herein, at the Closing (as defined below) the Seller shall sell the Company
Stock and the Canadian Assets to the Buyer and the Buyer shall purchase the
Company Stock and the Canadian Assets from the Seller for the amount of
consideration set forth in Section 1.2.
1.2 CONSIDERATION.
(a) The consideration (the "Purchase Price") for the Company
Stock and the Canadian Assets shall be U.S. $625 million. The Purchase Price
shall be subject to adjustment as provided in Section 1.6.
(b) On the Closing Date (as defined below), subject to the terms
and conditions hereof and in reliance upon the representations, warranties and
agreements contained herein, (i) the Seller shall sell to the Buyer, and the
Buyer shall purchase from the Seller, the Company Stock and the Canadian Assets,
and (ii) the Buyer agrees to deliver to the Seller the Purchase Price, by wire
transfer of immediately available United States funds, to a bank account
designated in writing by the Seller.
1.3 ASSUMPTIONS. In addition to the debts, obligations and
liabilities of the Company, the Buyer shall assume the debts, obligations and
liabilities of the Seller Entities (as defined below) (i) which are directly
related to the Business listed in Section 1.3 of the Seller's and the Company's
disclosure schedule (the "Disclosure Schedule") attached hereto, (ii) which
relate to or arise out of the Canadian Business, as conducted at any time prior
to, on or after the Closing, including all debts, liabilities and obligations
relating to or arising out of the Canadian Assets (including the ownership and
the operations thereof) and the Canadian Contracts (as defined below) and (iii)
which relate to the employees of the Canadian Business on the Closing Date to be
assumed in accordance with the Employee Matters Agreement (as defined below)
(collectively, the "Assumed Liabilities").
1.4 ASSIGNMENT OF CONTRACTS. The Seller agrees to assign and the
Buyer agrees, following the Closing, to cause the Company to accept the
assignment of the contracts relating primarily to the Business to which any of
the Seller Entities is a party (the "Assigned Contracts"), including (i) the
contracts listed on Section 1.4 of the Disclosure Schedule and
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(ii) all contracts relating primarily to the Canadian Business (the "Canadian
Contracts"). The Buyer agrees, following the Closing, to cause the Company
to assume full responsibility for all of the payments and other obligations
of the Seller under such contracts and further agrees, following the Closing,
to cause the Company to indemnify and hold the Seller harmless from any and
all liabilities, costs, expenses, obligations and damages and reasonable
attorney's fees, court costs and other out-of-pocket expenses (collectively,
"Losses") arising out of or in connection with such contracts which Losses
arise following the Closing.
1.5 CANADIAN ASSETS. The "Canadian Assets" shall mean, except for
those assets that are listed on Section 1.5 of the Disclosure Schedule, all
right, title and interest of the Seller Entities in and to all of the assets,
properties and rights, whether tangible or intangible, whether real, personal or
mixed, whether fixed, contingent or otherwise, and wherever located, which are
primarily used by the Canadian Business. The "Seller Entities" shall mean, as
applicable, one or more of Seller and its direct or indirect wholly owned
subsidiaries, including ACE but excluding the Company.
1.6 POST-CLOSING ADJUSTMENT. (a) For purposes of this Section 1.6,
the following terms shall have the meanings set forth below:
(i) "Net Assets Amount" shall mean (x) Total Assets minus (y)
Total Liabilities.
(ii) "Total Assets" shall mean total assets of the Business as
reflected on the Adjusted Closing Balance Sheet (as defined below),
derived and calculated in the same manner as in the unaudited
September 30, 1997 balance sheet of the Business (the "Unaudited
Balance Sheet").
(iii) "Total Liabilities" shall mean total liabilities of the
Business as reflected on the Adjusted Closing Balance Sheet, derived
and calculated in the same manner as in the Unaudited Balance Sheet.
(b) Within 60 days following the Closing, the Buyer shall prepare, or
cause to be prepared, and deliver to the Seller a balance sheet (the "Closing
Balance Sheet") which shall set forth the assets and liabilities of the Business
acquired under this Agreement or any Ancillary Document (as hereinafter defined)
as of the close of business on the day immediately preceding the Closing Date.
The Closing Balance Sheet shall be prepared in the same manner as that in which
the
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Unaudited Balance Sheet was prepared (which is in accordance with US
generally accepted accounting principles ("GAAP"), except as disclosed in
Section 2.5 of the Disclosure Schedule), except that (i) the following items
shall be excluded from the Closing Balance Sheet and the Unaudited Balance
Sheet: assets and liabilities related to pensions, postretirement benefits
and compensated absences, income tax assets and liabilities (current or
deferred) and intercompany balances other than ordinary course intercompany
balances referred to in Section 4.7; (ii) any other asset which is reflected
on the Unaudited Balance Sheet that is required to be reflected on the
Closing Balance Sheet shall be recorded on the Closing Balance Sheet on the
same basis on which it was recorded on the Unaudited Balance Sheet, provided
that such amounts shall be adjusted in accordance with the Company's
accounting policies and principles, consistently applied; and (iii) no
reserves (including asset valuation allowance), liabilities or similar items
reflected on the Unaudited Balance Sheet or created thereafter shall be
reversed or shall be reallocated to cover any other reserve, liability or
similar item required to be provided for on the Closing Balance Sheet, other
than in the ordinary course in accordance with past practice. The Closing
Balance Sheet shall be accompanied by a schedule setting forth the
calculation of the Net Assets Amount.
(c) The Seller and the Seller's accountants shall, within 60 days
after the delivery by the Buyer of the Closing Balance Sheet and the
accompanying schedule, complete their review of the Closing Balance Sheet and
the Net Assets Amount derived from the Closing Balance Sheet. In the event that
the Seller determines that the Closing Balance Sheet has not been prepared, or
that the Net Assets Amount has not been determined, on the basis set forth in
Section 1.6(b), the Seller shall inform the Buyer in writing ("Seller's
Objection"), setting forth a description in reasonable detail of the basis of
its objection and the adjustments to the Closing Balance Sheet and the Net
Assets Amounts which the Seller believes should be made, on or before the last
day of such 60-day period. The Buyer shall then have 30 days to review and
respond to Seller's Objection. If the Buyer and the Seller are unable to
resolve all of their disagreements with respect to Seller's Objection within 10
days following the completion of the Buyer's review of Seller's Objection, they
shall refer their remaining differences to a "Big Six" or other nationally
recognized firm of independent public accountants as to which the Buyer and the
Seller mutually agree (or, in the event the parties cannot agree, as chosen by
the American Arbitration Association) (such accounting firm, the "CPA Firm"),
which shall determine on the basis of the standards sets forth in Section
1.6(b), and only with respect to the remaining differences so submitted, whether
and to what extent,
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if any, the Closing Balance Sheet and the Net Assets Amount require
adjustment. During such 30-day review period and the subsequent 10-day
period, the parties shall seek in good faith to resolve in writing any
differences which they may have with respect to any matter specified in
Seller's Objection. The parties shall instruct the CPA Firm to deliver its
written determination to the Buyer and the Seller no later than the 20th day
after the remaining differences underlying Seller's Objection are referred to
the CPA Firm. The CPA Firm's determination shall be conclusive and binding
upon the Seller and the Buyer, and shall be based solely on presentations by
the Buyer and the Seller. Prior to Closing the Seller and the Buyer will
agree reasonably and in good faith on Procedures for CPA Firm review. The
CPA Firm shall address only those issues in dispute, and may not assign a
value to any item greater than the greatest value for such item claimed by
either party or less than the smallest value for such item claimed by either
party. The fees, costs and expenses of the CPA Firm (i) shall be borne by
the Seller in the proportion that the aggregate dollar amount of such
disputed items so submitted that are unsuccessfully disputed by the Seller
(as finally determined by the CPA Firm) bears to the aggregate dollar amount
of such items so submitted and (ii) shall be borne by the Buyer in the
proportion that the aggregate dollar amount of such disputed items so
submitted that are successfully disputed by the Seller (as finally determined
by the CPA Firm) bears to the aggregate dollar amount of such items so
submitted. The Seller and the Buyer shall make available to the CPA Firm all
relevant books and records and any work papers (including those of the
parties' respective accountants) relating to the Unaudited Balance Sheet and
the Closing Balance Sheet and all other items reasonably requested by the CPA
Firm. The "Adjusted Closing Balance Sheet" shall be (i) the Closing Balance
Sheet in the event that (x) Seller's Objection is not delivered to the Buyer
during the 60-day period specified above, or (y) the Buyer and the Seller so
agree, (ii) the Closing Balance Sheet, adjusted in accordance with Seller's
Objection, in the event that the Buyer does not respond to Seller's Objection
within the 30-day period following receipt by the Buyer of Seller's Objection
or the Buyer agrees with the Seller's Objection, or (iii) the Closing Balance
Sheet, as adjusted by either (x) the mutual agreement of the Buyer and the
Seller or (y) the CPA Firm.
(d) The Buyer shall provide the Seller and its accountants reasonable
access to the books and records of the Company, to any other information,
including work papers of its accountants, and to any employees of the Company to
the extent reasonably necessary for the Seller to prepare Seller's Objection, if
any, to respond to any objections the Buyer has with respect to such Seller's
Objection and, if applicable, to present such Seller's Objection to the CPA
Firm. The Seller
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shall provide the Buyer and its accountants reasonable access to the books
and records of the Seller, any other information, including work papers of
its accountants, and to any employees of the Seller to the extent reasonably
necessary for the Buyer to prepare the Closing Balance Sheet and review any
Seller's Objection.
(e) If the Net Assets Amount is less than the amount by which the
total assets of the Business, as reflected on the Unaudited Balance Sheet, minus
the total liabilities of the Business, as reflected on the Unaudited Balance
Sheet (such excess amount, the "Target Amount"), the Seller shall make an
adjustment payment to the Buyer in an amount equal to the difference between the
two amounts and, if the Net Assets Amount is greater than the Target Amount, the
Buyer shall make an adjustment payment to the Seller in an amount equal to the
difference between the two amounts. Any adjustment payment payable pursuant to
this Section 1.6(e) shall be paid, together with interest thereon at an annual
rate equal to the reference rate from time to time of The Chase Manhattan Bank
N.A. plus 1.5% from and including the Closing Date to but not including the date
of payment, promptly, but in any event within 5 business days, following
issuance of the Adjusted Closing Balance Sheet by wire transfer of immediately
available funds to a bank account or accounts designated by the party to be
paid.
(f) Notwithstanding any other provisions herein to the contrary, any
liabilities included in the calculation of the Net Assets Amount will not
constitute a breach of any of the Seller's representations or warranties in
Section 2 hereof and will not give rise to any obligation on the part of the
Seller to indemnify the Buyer or any member of the Buyer's Indemnified Group (as
defined below) with respect to such liabilities. The conclusion of the CPA
Firm's review pursuant to this Section 1.6 and the payment of any adjustment
payment set forth in Section 1.6(e) shall be deemed a mutual waiver and release
by the parties hereto with respect to any matters so reviewed by the CPA Firm.
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SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Buyer that the
following representations and warranties are true and correct on the date
hereof. The Seller makes no representations or warranties to the Buyer except
as set forth in this Agreement, the Ancillary Agreements (as defined below) or
the Disclosure Schedules.
2.1 DUE AUTHORIZATION AND EXECUTION. Each of the Seller and the
Company has all necessary corporate power and authority to enter into this
Agreement and the Ancillary Agreements and to consummate the transactions
contemplated herein and therein. No additional corporate proceeding or action
on the part of the Seller and the Company is necessary to authorize and approve
the execution and delivery of this Agreement or the Ancillary Agreements or the
performance by the Seller and the Company of their obligations hereunder or
thereunder. This Agreement has been duly executed and delivered by the Seller
and the Company and, assuming due execution and delivery by the Buyer,
constitutes the legal, valid and binding obligation of each of the Seller and
the Company enforceable against it in accordance with its terms, except as such
enforcement may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the enforcement of
creditors' rights in an action (whether considered at law or in equity)
generally or (b) equitable principles (whether considered in an action at law or
in equity).
2.2 ORGANIZATION. Each of the Seller and the Company is a
corporation duly organized, validly existing and in good standing under the laws
of its states of incorporation. The Seller has all requisite corporate power
and authority to own the Company Stock. Each of the Company and the Seller
Entities has all requisite corporate power and authority to own, operate and
lease its properties and to carry on the part of the Business it is now
conducting, as now conducted. The Company is duly qualified or licensed to do
business as a foreign corporation and is in good standing in all other
jurisdictions where it currently conducts business that require such
qualification or licensing except where the failure to so qualify or be licensed
would not, in the aggregate, have a Material Adverse Effect (as defined below)
on the Business, taken as a whole. The Seller has made available to the Buyer
complete and correct copies of the Company's charter and bylaws, each as amended
to the date hereof.
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2.3 THE COMPANY SUBSIDIARIES. The Company does not own, directly or
indirectly, 25% or more of any equity interests in any other person or entity.
2.4 CAPITALIZATION. The Company's authorized capital stock consists
of one share of Company Stock, of which one share is issued and outstanding.
All of the issued and outstanding shares of the Company Stock are duly
authorized and validly issued, fully paid and non-assessable, with no liability
attaching to the holders thereof, and are owned beneficially and of record by
the Seller free and clear of any encumbrances. There are no outstanding
preemptive, conversion or other rights, options, warrants or agreements granted
or issued by or binding upon the Company for the purchase or acquisition of any
shares of its capital stock.
2.5 FINANCIAL STATEMENTS. The Company has provided to the Buyer the
unaudited balance sheet of the Business as of December 31, 1996 and the
Unaudited Balance Sheet, and the related statements of income of the Business
for the year ended December 31, 1996 and the nine months ended September 30,
1997 (such unaudited financial statements of the Business shall hereinafter
collectively be referred to as the "Company Financial Statements"). The Company
Financial Statements present fairly in all material respects the financial
position of the Business as of the respective dates indicated and the results of
operations for the respective periods indicated and have been prepared in
conformity with U.S. generally accepted accounting principles ("GAAP"), except
as disclosed in Section 2.5 of the Disclosure Schedule, throughout and among the
periods covered thereby.
2.6 PROPERTIES. Except as set forth in Section 2.6 of the Disclosure
Schedule, (i) the assets owned or leased by the Company and the Canadian Assets,
together with the Company's contractual and other intangible rights (including,
without limitation, rights under the Assigned Contracts), constitute all the
assets necessary to conduct the Business as it is being conducted on the date
hereof, (ii) the Company owns or holds under valid leases all real property and
plants and all material machinery and equipment necessary for the conduct of the
U.S. Business as it is being conducted on the date hereof, and (iii) the Company
has good title to all real and material personal properties reflected on the
Unaudited Balance Sheet (other than properties disposed of in the ordinary
course of business since September 30, 1997 which assets are not in the
aggregate material to the Business) except for Permitted Encumbrances (as
defined below).
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2.7 CONTRACTS. Each of the contracts, agreements, leases and
licenses ("Contracts") to which the Company is a party or is bound and which are
material to the Business, properties, assets, liabilities, results of operations
or financial condition of the Business, taken as a whole (the "Material
Contracts"), including, without limitation:
(a) each Contract with any customer of the Company providing for
payments to the Company or an Affiliate of the Company of at
least $1,000,000 for the nine months ended September 30, 1997;
(b) each lease relating to real property;
(c) each other Contract involving payments in excess of $1,000,000
for the nine months ended September 30, 1997 in respect of
ongoing services, unless cancelable on 60 days' or less notice
for a nominal payment or such services may be replaced without
resulting in a Material Adverse Effect on the Business, taken as
a whole; and
(d) each Contract that contains a covenant not to compete (where the
Company is the obligor thereunder) or other restrictive covenant
that will materially impair the Buyer's ability to conduct the
Business after the Closing in the manner in which it is being
conducted on the date hereof.
Each Material Contract is listed on Section 2.7 of the Disclosure Schedule and
is to the knowledge of the Seller, valid and binding on the other parties
thereto, except as would not, in the aggregate, have a Material Adverse Effect
on the Business, taken as a whole. With respect to the Material Contracts,
there have been no uncured or unwaived material defaults by the Company or, to
the knowledge of the Seller, the other party or parties thereto, and to the
Seller's knowledge there are no facts or conditions that have occurred or that
are anticipated to occur which, through the passage of time or the giving of
notice, or both, would constitute a material default by the Company or, to the
knowledge of the Seller, by the other party or parties thereto which would have,
in the aggregate, a Material Adverse Effect on the Business, taken as a whole.
Subject to the provisions of Section 4.5 and as disclosed in Section 2.8 of the
Disclosure Schedule, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated herein will require the
consent of any party to any of such Material Contracts, the failure of which to
obtain would have a Material Adverse Effect on the Business, taken as a whole.
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2.8 CONFLICTS. Except as disclosed in Section 2.8 of the Disclosure
Schedule, neither the execution and delivery of, nor the consummation of the
transactions contemplated in, this Agreement or the Ancillary Agreements will
result in any of the following: (a) a violation of the charter, bylaws or other
governing instruments of the Company; (b) a default or an event that, with
notice or lapse of time, or both, would constitute a default, breach or
violation of any Contract to which the Company is a party or by which it is
bound; (c) an event that would permit any person or entity to terminate any
Contract to which the Company is a party or to accelerate the maturity of any
Indebtedness (as defined below) or other obligation of the Company; (d) the
creation or imposition of any lien, mortgage, pledge, charge or encumbrance of
any kind upon any asset of the Company; (e) a violation or breach of any
statute, ordinance, rule or regulation applicable to the Company or any writ,
injunction or decree of any court or governmental instrumentality to which the
Company is a party or by which any of its properties is bound; (f) a loss or
adverse modification of any license, franchise or other authorization granted to
or otherwise held by the Company; or (g) except with regard to those matters
discussed in Section 2.9 below or disclosed in Section 2.9 of the Disclosure
Schedule, the necessity to obtain the consent or approval of, or give notice to
or register with any government or nongovernment third party, in each of the
cases set forth in (a) through (g) above subject to exceptions which would not,
individually or in the aggregate, have a Material Adverse Effect on the
Business, taken as a whole.
2.9 FILINGS. Other than in connection with, or in compliance with,
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), or the Competition Act of Canada (the "Competition Act"), if applicable,
no notice to or filing with, and no authorization, consent or approval of, any
domestic or foreign court or any public or governmental body or authority
(including, without limitation, the Federal Communications Commissions (the
"FCC")) is necessary for the consummation by the Seller and the Company of the
transactions contemplated in this Agreement, except for notices or filings (i)
that are applicable solely as a result of the specific regulatory status of the
Buyer or its Affiliates and (ii) the failure of which to give or make, and
authorizations, consents and approvals the failure of which to obtain, would
not, individually or in the aggregate, have a Material Adverse Effect on the
Business, taken as a whole, or a material adverse effect on the Seller's or the
Company's ability to consummate the transactions contemplated by this Agreement.
2.10 COMPLIANCE WITH LAW. Neither the Company nor the Canadian
Business is in violation of any governmental laws,
11
regulations or orders relating to the operation, conduct or ownership of the
Business, which violations, individually or in the aggregate, have or would
have a Material Adverse Effect on the Business, taken as a whole. Section
2.10 of the Disclosure Schedule sets forth a list of all licenses, permits
and certificates from governmental agencies ("Licenses") held by the Company,
including Licenses, if any, issued by the FCC. The Company and the Canadian
Business have all Licenses necessary for the conduct of the Business as now
conducted, the failure of which to have, individually or in the aggregate,
would have a Material Adverse Effect on the Business, taken as a whole.
2.11 LITIGATION. Other than as listed in Section 2.11 of the
Disclosure Schedule, there is no claim, suit, proceeding or action pending that,
if adversely determined, would have a Material Adverse Effect on the Business,
taken as a whole. The Company is not subject to any outstanding order, writ,
injunction or decree that, individually or in the aggregate, would have a
Material Adverse Effect on the Business, taken as a whole, or a material adverse
effect on the Seller's ability to consummate the transactions contemplated by
this Agreement.
2.12 FEES, COMMISSIONS AND EXPENSES. The Company has not paid or
agreed to pay, nor received any claim with respect to, any brokerage
commissions, finders' fees or similar compensation in connection with the
transactions contemplated in this Agreement other than to XX Xxxxxxxxxx (which
has been or shall be paid by Seller) without any cost to the Company.
2.13 ABSENCE OF CHANGE. Except as set forth in Section 2.13 of the
Disclosure Schedule or as set forth herein, since September 30, 1997 there has
not been (a) any change that would, individually or in the aggregate, have a
Material Adverse Effect on the Business, taken as a whole, or (b) any physical
damage, destruction or loss that would, individually or in the aggregate, after
taking into account any insurance recoveries payable in respect thereof, have a
Material Adverse Effect on the Business, taken as a whole. Since September 30,
1997, the Business has been operated in the ordinary course in a manner
consistent with past practice. Neither the Seller nor any of its affiliates
has, since September 30, 1997, taken any of the actions with respect to the
Business that, in accordance with Section 4.1(b), are not permitted to be taken
between the date of this Agreement and the Closing Date other than as
contemplated by this Agreement and the Ancillary Agreements.
2.14 UNDISCLOSED LIABILITIES. Neither the Business nor the Company has
any liabilities or obligations of any kind whatsoever (whether absolute,
accrued, contingent, determined,
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determinable or otherwise) which would have a Material Adverse Effect on the
Business, taken as a whole, other than (a) liabilities reflected, reserved
against or otherwise disclosed in the Company Financial Statements, (b)
liabilities accruing after September 30, 1997 in the ordinary course of
business or in accordance with this Agreement, and (c) liabilities otherwise
reflected herein or in Section 2.14 of the Disclosure Schedule.
2.15 ENVIRONMENTAL MATTERS. (a) Except as set forth in Section 2.15
of the Disclosure Schedule:
(i) the Company and the Canadian Business holds all environmental permits,
certificates, licenses, approvals, registrations and authorizations
required for operating the Business ("Environmental Permits"), except for
those the failure to so hold would not have a Material Adverse Effect on
the Business, taken as a whole;
(ii) neither the Company nor the Seller has received any written notice
that (A) any such Environmental Permits are not in full force and effect,
(B) the Business is not in compliance in all material respects with the
terms of such Environmental Permits, or (C) the Company (or the Seller with
respect to the Company) is a potentially responsible party under CERCLA (as
defined below) or any similar state law; and
(iii) the operations of the Business have been and are in compliance in all
material respects with all applicable Environmental Laws (as defined below)
except as would not have a Material Adverse Effect on the Business, taken
as a whole.
(b) The Seller has made available to the Buyer any and all
environmental audits, reports and studies that have been performed with respect
to the properties of the Business.
2.16 LABOR MATTERS. For the past three years the Company has not
experienced any work stoppages. In addition, except as described in the Section
2.16 of Disclosure Schedule, on the date hereof there are, to the Seller's
knowledge, no material formal grievances, allegations of unfair labor practices
or similar occurrences pending between the Company and its employees.
2.17 TAX MATTERS.
(a) For purposes of this Agreement, (i) "Tax" means any of the Taxes,
and "Taxes" means, with respect to
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the Company, (A) all net income, capital gains, gross income, gross receipts,
sales, use, ad valorem, franchise, capital, profits, license, and other
withholding, employee payroll withholding, employment, payroll, transfer,
conveyance, documentary, stamp, property, value added, customs duties,
minimum taxes, and any other taxes, fee, charges, levies, excises, duties or
assessments of any kind whatsoever, together with additions to tax or
additional amounts, interests and penalties relating thereto that may be
imposed by the federal Government or any state, local or foreign government
on or with respect to the Company, and (b) any liability of the Company for
the payment of any amount of the type described in clause (A) as a result of
the Company being a transferee or a member of an affiliated or combined group
or as a result of being a member of a partnership prior to the Closing Date,
and (ii) "Tax Returns" means all returns, reports and forms required to be
filed with any Governmental Body in respect of any Taxes.
(b) Except as set forth on Schedule 2.17, the Company has, except
where a failure to do so would not have a Material Adverse Effect, (i) timely
filed or will file when due (or has filed and has paid all assessed penalties
and interest), including extensions thereof, all Tax Returns required to be
filed by or with respect to the Company prior to the Closing; and (ii) paid in
full or accrued on the Unaudited Financial Statements, all Taxes for all periods
ending on or prior to the Closing Date. Except as set forth on Schedule 2.17,
the Company is not a party to any pending action or proceeding, nor, to Seller's
knowledge, is any such action or proceeding threatened by any Governmental Body,
for the assessment or collection of any material Taxes, and no claim for
assessment or collection of any material Taxes has been asserted against the
Company which has not been settled with all amounts due having been paid or
contested in good faith.
2.18 PRICING. The prices set forth in Exhibit A to the Teleservices
Supply Agreement reflect the current pricing structure of the Company for
services to the Seller. Since January 1, 1997, the Company has not made changes
in its pricing structure for services to the Seller that, in the aggregate, are
material to the Business, taken as a whole.
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SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller that the following
representations and warranties are true and correct on the date hereof:
3.1 DUE AUTHORIZATION AND EXECUTION. The Buyer has all necessary
corporate power and authority to enter into this Agreement and the Ancillary
Agreements and to consummate the transactions contemplated herein and therein.
No additional corporate proceeding or action on the part of the Buyer is
necessary to authorize and approve the execution and delivery of this Agreement
or the Ancillary Agreements or the performance by the Buyer of their obligations
hereunder or thereunder. This Agreement has been duly executed and delivered by
the Buyer and, assuming due execution and delivery by the Seller and the
Company, constitutes the legal, valid and binding obligation of the Buyer
enforceable against it in accordance with its terms, except as such enforcement
may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the enforcement of creditors' rights
in an action (whether considered at law or in equity) generally or (b) equitable
principles (whether considered at law or in equity).
3.2 ORGANIZATION AND AUTHORITY. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation. The Buyer has all requisite corporate power and authority to
own, operate and lease its properties and to carry on its business as now
conducted. The Buyer is duly qualified or licensed to do business as a foreign
corporation and is in good standing in all jurisdictions where it currently
conducts business that require such qualification or licensing except where the
failure to so qualify or be licensed would not, in the aggregate, have a
material adverse effect on the Buyer's ability to consummate the transactions
contemplated by this Agreement.
3.3 CONFLICTS. Neither the execution and delivery of, nor the
consummation of the transactions contemplated in, this Agreement or the
Ancillary Documents will result in any of the following: (a) a violation of the
charter, bylaws or other governing instruments of the Buyer; (b) a default or an
event that, with notice or lapse of time, or both, would constitute a default,
breach or violation of any Contract to which the Buyer is a party or by which
the Buyer is bound; (c) an event that would permit any person or entity to
terminate a Contract to which the Buyer is a party or by which the Buyer is
bound, or
15
to accelerate the maturity of any Indebtedness or other obligation of the
Buyer; (d) the creation or imposition of any lien, mortgage, pledge, charge
or encumbrance of any kind upon any asset of the Buyer; (e) a violation of
any statute, ordinance, rule or regulation applicable the Buyer, or any writ,
injunction or decree of any court or governmental instrumentality to which
the Buyer is a party or by which the Buyer or its properties is bound; (f) a
loss or adverse modification of any license, franchise or other authorization
granted to or otherwise held by the Buyer; or (g) except with regard to those
matters discussed in Section 3.4 below, the necessity to obtain the consent
or approval of, or give notice to or register with any government or
nongovernment third party; except, in each of the cases set forth in (a)
through (g) above, subject to exceptions which would not, individually or in
the aggregate, have a Material Adverse Effect on the Buyer or a material
adverse effect on the Buyer's ability to consummate the transactions
contemplated by this Agreement.
3.4 FILINGS. Other than in connection with, or in compliance with,
the HSR Act or the Competition Act, if applicable, no notice to or filing with,
and no authorization, consent or approval of, any domestic or foreign court or
any public or governmental body or authority is necessary for the consummation
by the Buyer of the transactions contemplated in this Agreement, except for
notices or filings the failure of which to give or make, and authorizations,
consents and approvals the failure of which to obtain, would not, individually
or in the aggregate, have a Material Adverse Effect on the Buyer or a material
adverse effect on its ability to consummate the transactions contemplated by
this Agreement.
3.5 INVESTMENT INTENT; RESTRICTED SECURITIES. The Buyer is acquiring
the Company Stock solely for investment for its own account and not with the
view to, or for resale in connection with, any distribution thereof and not with
any intent to participate prior to the Closing Date in the formulation,
determination or direction of the Company's basic business decisions. The Buyer
understands that the Company Stock has not been and is not being registered
under the Securities Act of 1933, as amended (the "Securities Act"), by reason
of specified exemptions therefrom which depend upon, among other things, the
bona fide nature of its investment intent as expressed herein and as explicitly
acknowledged hereby, and that the Company Stock is a "Restricted Security" under
the federal securities laws inasmuch as it is being acquired from the Seller in
a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act only in certain limited sets of circumstances. The Buyer
agrees that the Company Stock may not
16
be sold, transferred, offered for sale, pledged, hypothecated or otherwise
disposed of without registration under the Securities Act except pursuant to
an exemption from such registration available under the Securities Act.
3.6 INVESTIGATION AND EXPERIENCE. The Buyer is an "accredited
investor" within the meaning of Rule 501 under the Securities Act. The Buyer
has carefully reviewed the representations and warranties concerning the Seller
and the Company contained in this Agreement and understands that this investment
involves substantial risks. The Buyer has had an opportunity to discuss the
Company's business, management and financial affairs with the Seller and the
Company's management. The officers of the Seller and the Company have answered,
to the Buyer's satisfaction, all inquiries made thereby. The Buyer is
experienced in evaluating and investing in companies such as the Company and has
knowledge and experience in financial and business matters such that the Buyer
is capable of evaluating the merits and risks of an investment in the Company
and has the capacity to protect its own interests in connection with this
Agreement and the transactions contemplated herein.
3.7 FEES, COMMISSIONS AND EXPENSES. The Buyer has not paid or agreed
to pay, nor received any claim with respect to, any brokerage commissions,
finders' fees or similar compensation in connection with the transactions
contemplated in this Agreement, other than Broadview Associates, which will be
paid by the Buyer.
3.8 AVAILABILITY OF FUNDS. The Buyer has available, and will have
available on the Closing Date, sufficient funds to enable them to consummate the
transactions contemplated by this Agreement.
SECTION 4
ADDITIONAL COVENANTS AND AGREEMENTS
4.1 AGREEMENTS OF THE SELLER. The Seller agrees that:
(a) Between the date of this Agreement and the Closing Date, the
Seller will provide monthly financial results and any revisions to the Company's
projections to the Buyer with respect to the Business's overall operations and
matters not in the ordinary course of business, and shall make available to the
Buyer reasonable access to the Company's officers to discuss such information.
The Seller and the Company will cooperate in all reasonable respects with the
17
Buyer and its representatives and counsel in the preparation of any documents or
other material which may be required by any governmental agency.
(b) Unless otherwise agreed to in writing by the Buyer, and
other than with respect to the Ancillary Agreements and the transfer of the
Canadian Assets as contemplated herein, between the date of this Agreement and
the Closing Date, the Seller will cause the operations of the Business to be
conducted in the ordinary course except as expressly contemplated by this
Agreement and the transactions contemplated hereby and shall use all reasonable
efforts to maintain and preserve organization of the Business and to retain the
services of its officers and key employees and maintain relationships with
customers, suppliers, lessees, licensees and other third parties in order to
prevent its goodwill and ongoing Business from being impaired in any material
respect. Without limiting the generality of the foregoing, unless otherwise
agreed to in writing by the Buyer, and other than as disclosed in Section 4.1(b)
of the Disclosure Schedule or with respect to the Ancillary Agreements and the
transfer of the Canadian Assets as contemplated herein, the Seller will: (i)
not permit the Company to amend its certificate of incorporation or bylaws; (ii)
not permit the Company or the Business to incur any Indebtedness other than
loans from the Seller in the ordinary course of business consistent with past
practice and not permit the Company or the Business to lend money to, advance,
invest in, or otherwise provide financing for or guarantee the obligations of,
any person; (iii) not permit the Company to issue, deliver, sell, purchase or
redeem, or authorize or propose the issuance, delivery, sale or purchase or
redemption of any shares of its capital stock or any class of securities
convertible into, or rights, warrants or options to acquire, any such shares or
other convertible securities; (iv) not permit the Company to adjust, split,
combine or reclassify its capital stock or declare, set aside or pay any
dividend or distribution with respect to its capital stock or other convertible
securities, other than as contemplated by this Agreement; (v) not permit the
Company to sell or convey its assets outside the ordinary course; (vi) not
permit the Company to change its method of accounting or accounting principles,
method, estimate or practice; (vii) not permit the Company to cancel, terminate
or amend any customer contract the effect of which would have a Material Adverse
Effect on the Business, taken as a whole; (viii) not permit the Company to merge
or consolidate with any person; (ix) not permit the Company to acquire assets or
capital stock or other interest in any other entity; (x) not permit the Company
to enter into, modify or amend and employment, severance, stay-pay, termination
or similar agreements or arrangements or grant any bonus, salary increase,
18
severance or termination pay to any employee, officer, director or consultant
other than in the ordinary course of business consistent with past practice;
(xi) not permit the Company to enter into, adopt or amend any employee benefit
or similar plan; (xii) not permit the Company to enter into, modify or waive any
confidentiality, standstill or non-compete agreement or arrangement; (xiii) not
permit the Company to incur capital expenditures in excess of the amounts set
forth in Schedule A hereto; (xiv) not take and not permit the Company to take
any action that is reasonably likely to result in the representations and
warranties set forth in Section 2 becoming false or inaccurate in any material
respect as of the Closing Date; (xv) not permit the Company to enter into or
consummate any transactions with an Affiliate of the Company which transaction
is outside the ordinary course of business or unrelated to the Business; and
(xvi) not, and not permit the Company to, agree in writing or otherwise to do
any of the things prohibited by this paragraph (b).
(c) Intentionally omitted.
(d) Between the date of this Agreement and the Closing Date, the
Seller will not transfer its shares of the capital stock of the Company to any
other person.
(e) The Seller and the Company shall permit representatives of
the Buyer to have full access at all reasonable times to the Company's premises,
properties, books, records, contracts and documents, in each case to the extent
related to the Business, and shall cause their independent accountants to give
the Buyer access to the work papers of the Seller's accountants to the extent
such work papers are related to the Business. The Seller and the Company shall
use reasonable efforts to permit the Buyer to have access to the Company's
customers and suppliers. Information obtained by the Buyer pursuant to this
Section 4.1(e) shall be subject to the provisions of the Confidentiality
Agreement, which agreement remains in full force and effect. No investigation
conducted pursuant to this Section 4.1(e) or otherwise shall affect or be deemed
to modify any representation or warranty made in this Agreement. If, in the
course of any investigation pursuant to this Section 4.1(e), the Buyer discovers
any breach of any representation or warranty contained in this Agreement or any
Ancillary Agreement or any circumstance or condition that upon Closing would
constitute such a breach, the Buyer shall promptly so inform the Seller.
(f) The Seller agrees that neither it nor any of its Affiliates
shall, for a period of five years from the Closing Date, engage in any of the
following activities in the United States or Canada: (i) form any entity that
competes
19
with the Company in selling or providing to third parties telemarketing,
telephony-based customer care and/or employee care services which are
substantially similar to the services offered by the Business as of the date
hereof (such business, the "Competing Business"); (ii) acquire any entity
that engages in, as its principal business, the Competing Business (a
"Competitor"); (iii) directly and intentionally solicit, divert, take away or
appropriate any of the customers of the Company with the intent of diverting
the outsourced customer care and/or employee care teleservices business of
such customer; or (iv) provide to any Competitor consulting services directly
relating to sale or provision by such Competitor of telemarketing,
telephony-based customer care and/or employee care services which are
substantially similar to the services offered by the Business as of the date
hereof. It is understood that the provisions of this Section 4.1(f) shall
not prevent the Seller from providing any telecommunications services, and
consulting services related thereto, to any party including a Competing
Business. Notwithstanding any other provision herein to the contrary, prior
to such five-year period, upon the termination of the Teleservices Supply
Agreement to be entered into by and among the Seller, the Company and the
Buyer, in accordance with the terms thereof, nothing in this Section 4.1(f)
shall restrict the Seller from taking any action to ensure that the Seller
shall have continued reliable access to adequate service providers for the
services being performed for Seller by the Company immediately prior to such
termination. Seller agrees that following such five year period and prior to
termination of the Teleservices Supply Agreement, Seller will not engage in
any of the activities set forth in clauses (i) through (iv) without having
given Buyer at least six months' notice of its intention to do so.
4.2 AGREEMENTS OF THE BUYER AND THE COMPANY. Each of the Buyer
and the Company agrees that, for a period of three years from and after the
Closing, to the extent that the Company delivers requests for proposals to
potential contractors with respect to the right to provide to the Company any
Outsourced Business (as defined below) (which right is either a new right or
a renewal of an existing right), the Company shall, and the Buyer shall cause
the Company to, deliver a request for proposal to AT&T Solutions Inc. ("AT&T
Solutions") and permit AT&T Solutions to bid for such Outsourced Business on
the same terms, including timing considerations, as the other potential
contractors that are sent requests for proposals; provided, that the
foregoing shall not apply in the event that, due to special needs, it is not
practicable in the Company's reasonable judgment with respect
20
to a specific request to include AT&T Solutions in such request. "Outsourced
Business" means the outsourcing of services relating to telecommunications,
systems integration, and consulting related to networked information
architecture and information transmission.
4.3 ANCILLARY AGREEMENTS. (a) On or prior to the Closing Date, the
Buyer shall execute and deliver to the Seller, or its designee, and the Seller,
or its designee, shall execute and deliver to the Buyer the following
agreements: (i) a Teleservices Supply Agreement in the form attached as Exhibit
A, (ii) an Employee Matters Agreement in the form reasonably agreed upon by the
parties prior to the Closing in accordance with paragraph (b) below, (iii) an
Interim Services Agreement in the form reasonably agreed upon by the parties
prior to the Closing in accordance with paragraph (b) below, (iv) an Amended
Contract Tariff Option in the form reasonably agreed upon by the parties prior
to the Closing in accordance with paragraph (b) below and (v) an Intellectual
Property Agreement in the form reasonably agreed upon by the parties prior to
the Closing in accordance with paragraph (b) below (collectively, the "Ancillary
Agreements").
(b) The parties hereto hereby agree that as soon as reasonably
practicable following the date of this Agreement, the parties shall agree
reasonably and in good faith on (i) the terms and conditions of the form of the
Interim Services Agreement, which shall provide, among other things, that for a
period of up to six months following the Closing Date, at the request of the
Company, the Seller shall provide to the Company, at cost, transitional services
on an interim basis to allow for an orderly transition in connection with the
consummation of the transactions contemplated hereby; (ii) the terms and
conditions of the form of the Employee Matters Agreement, which shall provide,
among other things, for certain commitments with respect to certain of the
Company's employees and employee benefit plans as set forth in Exhibit B hereto;
(iii) the terms and conditions of the form of the Intellectual Property
Agreement; and (iv) appropriate modifications to the Tariff Option in existence
as of the date hereof between the Seller and the Buyer to reflect the
obligations of the Company under the section entitled "Use of Seller's Services"
in the Teleservices Supply Agreement.
4.4 COMPLIANCE WITH ANTITRUST LAWS. The Buyer and the Seller shall
cooperate with the other in making filings under the HSR Act and shall use its
best efforts to take, or cause to be taken, all actions necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, including using its best efforts to
resolve such objections, if any, as the
21
Antitrust Division of the Department of Justice (the "Antitrust Division") or
the Federal Trade Commission (the "FTC") or state antitrust enforcement or
other governmental authorities (collectively, the "Regulatory Agencies") may
assert under the antitrust laws with respect to the transactions contemplated
hereby. In the event an action is instituted by any person challenging the
transactions contemplated hereby as violative of the antitrust laws, each of
the Buyer and the Seller shall use its best efforts to resist or resolve such
action. The Buyer further agrees to use its best efforts to commit to or
effect the sale or other disposition of such of the assets owned or acquired
by it pursuant hereto as are required to be divested in order to avoid the
entry of, or to effect the dissolution of, any injunction, temporary
restraining order or other order in any suit brought by a governmental
authority or private party challenging the transactions contemplated by this
Agreement as violative of the antitrust laws or which would otherwise have
the effect of preventing the consummation of the transactions contemplated by
this Agreement.
4.5 REGULATORY CONSENTS. The parties shall cooperate with each other
and use their respective best efforts to obtain all consents and approvals of
the Regulatory Agencies required for the consummation of the transactions
contemplated by this Agreement and to defend such consents and approvals in any
administrative or judicial review proceeding and, if such consents or approvals
impose any condition on the Company or the Seller, to use their best efforts to
comply with or, if appropriate, attempt to remove such condition. In
furtherance thereof, the parties shall file with the Regulatory Agencies, as
promptly as practicable after the date hereof, all applications and other
filings that must be delivered to the Regulatory Agencies in order to obtain
such consents and approvals. These applications and other filings shall
include, but not be limited to, those necessary to transfer control of the
Company to the Buyer, including without limitation those required by applicable
rule, regulation, or order of the Regulatory Agencies.
4.6 OTHER CONSENTS. The parties agree to cooperate in obtaining any
consents of any third parties (in addition to the Antitrust Division, the FTC or
other parties or agencies, whose consents or approvals are covered elsewhere
herein) required in connection with the transactions contemplated hereunder
(each, a "Required Consent"). The parties agree that in the event such a
Required Consent is not obtained prior to the Closing, the Seller will,
subsequent to the Closing, cooperate with the Buyer and the Company in
attempting to obtain the Required Consent. In no event, however, shall the
Seller be obligated to pay any money to any person or to offer or grant other
financial or other accommodations to any person
22
in connection with obtaining any Required Consent. If after reasonable
efforts, such Required Consent has not been obtained, the Seller will use its
best efforts to provide the Company with the rights and benefits of the
affected contract or agreement at least as favorable to the Company as the
affected contract (an "Alternative Arrangement"), and the Buyer shall assume
the obligations and burdens thereunder to the extent and for so long as the
Company receives the benefits thereof. Except for the Required Consents
listed in Section 4.6 of the Disclosure Schedule, the failure by the parties
to obtain any Required Consent shall not relieve either party from its
obligation to consummate at the Closing the transactions contemplated by this
Agreement.
4.7 TERMINATION OF INTERCOMPANY OBLIGATIONS. Subject to Section 4.3
and as set forth on the Company Disclosure Schedule, and except for intercompany
obligations incurred by the Company in the ordinary course of business
(including but not limited to telecommunications services provided to the
Company by the Seller), the parties agree that on or immediately before the
Closing, the Seller shall cancel or cause to be canceled all obligations
(including but not limited to loans, accrued interest, advances, and accrued
payments and fees) owing by the Company to the Seller or its Affiliates, and the
Company shall cancel all obligations (including but not limited to loans,
accrued interest, advances, accrued payments and fees, and all receivables for
services performed on or prior to the Closing Date, whether or not billed to the
Company or its Affilliates) owing by the Seller or its Affiliates to the Company
immediately prior to the Closing, such cancellation to be effective on or before
the Closing Date. The parties further agree that, from and after the Closing,
all existing intercompany agreements between the Seller or its Affiliates and
the Company (except for this Agreement and the Ancillary Agreements) shall be
terminated.
4.8 COVENANT OF REASONABLE BEST EFFORTS AND GOOD FAITH. Each party
will use its reasonable best efforts and act in good faith to cause to be
satisfied all conditions to Closing to the extent in the control of such party.
4.9 NOTIFICATION OF CERTAIN MATTERS. Each party hereto shall provide
to the other parties prompt written notice of (a) the occurrence, or failure to
occur, of any event which it becomes aware that has caused or would be likely to
cause any representation or warranty contained in this Agreement of any party
hereto to be untrue or inaccurate at any time from any date hereof to the
Closing Date and (b) the failure of any party to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied hereunder. No such notification shall affect the
23
representations, warranties or covenants of the parties or the conditions to
their respective obligations.
4.10 TAX MATTERS.
(a) Except to the extent Taxes are reserved for on the Adjusted
Closing Balance Sheet, the Seller shall idemnify, defend and hold harmless the
Buyer and the Company (i) for any and all Taxes of the Company with respect to
all taxable periods of the Company ending on or prior to the Closing Date, and
(ii) all Taxes allocated to the Seller pursuant to Section 4.10(b).
(b) If, with respect to any Tax, the taxable period of the Company
does not terminate on the Closing Date (a "Split Period"), the Tax, whether
based on income, capital, ownership of property or otherwise, attributable to
the taxable period of the Company that includes the Closing Date shall be
allocated to (i) the Seller for the period up to and including the Closing Date,
and (ii) the Buyer for the period subsequent to the Closing Date. The Buyer
shall indemnify, defend and hold harmless the Seller and its Affiliates with
respect to all Taxes allocated to the Buyer pursuant to this Section 4.10(b).
Any indemnification hereunder shall be subject to the provisions of Section
4.10(f). For purposes of this Section 4.10, Taxes for the period up to and
including the Closing Date shall be determined on the basis of a closing of the
books as of the Closing Date, except that any such Tax imposed annually based on
ownership of assets on a particular date, or similar Tax shall be prorated to
the period prior to and including the Closing Date and the period thereafter.
(c) The Buyer and the Seller shall take all steps necessary to make
a timely election under Section 338(h)(10) of the Internal Revenue Code of
1986, as amended (and any comparable election under state or foreign tax law)
with respect to the Buyer's acquisition of the Company Stock from the Seller.
The Seller agrees to pay all taxes attributable to such election. The Buyer
and the Seller shall cooperate fully with each other in the making of such
election. In particular and not by way of limitation, in order to effect such
election, the Buyer and the Seller shall jointly execute necessary copies of
Internal Revenue Service Form 8023 and all attachments required to be filed
therewith pursuant to applicable Treasury Regulations.
(d) The Seller shall be solely responsible for and shall prepare or
cause to be prepared, and file or cause to be filed, all Tax Returns of the
Company with respect to periods ending on or before Closing Date. The Buyer
shall prepare or cause to be prepared, and file or cause to be filed, all Tax
24
Returns of the Company with respect to periods ending after the Closing Date.
(e) With respect to any Tax Return for a split period, the Buyer
shall deliver, at least thirty (30) business days prior to the due date for
filing of such Tax Return (including extensions), to the Seller a statement
setting forth the amount of Taxes for which the Seller is responsible pursuant
to this Agreement or that are allocable to the Seller pursuant to Section
4.10(b), as the case may be (the "Statement"), and copies of such Tax Return.
The Seller shall have the right to review and approve or disapprove such Tax
Return and the Statement prior to the filing of such Tax Return. The Seller
and the Buyer agree to negotiate and resolve in good faith any issue arising as
a result of the review of such Tax Return and the Statement and to mutually
consent to the filing as promptly as possible of such Tax Return. In the event
the parties are unable to resolve any dispute within ten (10) business days
following the delivery of such Tax Return and the Statement. The Seller and
the Buyer shall jointly select a public accounting firm with nationally
recognized tax expertise ("Tax Arbitrator") to resolve the dispute. If the Tax
Arbitrator has not resolved the dispute within five (5) business days prior to
the due date (including extensions) for the filing of the Tax Return in
question, then the Buyer may file such Tax Return on the determination having
been made and without the Seller's consent. Notwithstanding the filing of
such Tax Return, the Tax Arbitrator shall make a determination with respect to
any dispute issue, and the amount of Taxes for which the Seller is responsible
under this Agreement or that are allocable to the Seller the pursuant to
Section 4.10(b), as the case may be, shall be as determined by the Tax
Arbitrator. The fees and expenses of the Tax Arbitrator shall be shared
equally by the Buyer and the Seller. Not later than five (5) business days
before the due date for the payment of Taxes with respect to such Tax Return or
(ii) in the event of a dispute, five (5) business days after notice to the
Seller of resolution thereof, the Seller shall pay to the Buyer an amount equal
to the Taxes shown on the Statement as being the responsibility of the Seller
under this Agreement or allocable to the Seller pursuant to Section 4.10(b), or
in such notice (as the case may be). Notwithstanding, the foregoing, in the
case of a dispute, the Seller shall pay to the Buyer not later than five (5)
business days before the due date for the payment of Taxes with respect to such
Tax Return, the amount of Taxes that the Seller reasonably believes at such
time is properly the responsibility of the Seller under this Agreement or
allocable to Seller pursuant to Section 4.10(b). No payment pursuant to this
Section 4.10(e) shall excuse the Seller from its indemnification obligations
pursuant to this Agreement if the amount of Taxes as ultimately determined (on
audit or
25
otherwise) for the periods covered by such Tax Returns that are the
responsibility of the Seller exceeds the amount of the Seller's payment under
this Section 4.10(e).
(f) Whenever any taxing authority sends a notice of audit, initiates
an examination of the Company or otherwise asserts a claim, makes an
assessment, or disputes the amount of Taxes (i) for any taxable period for
which the Seller is or may be liable under this Agreement, or (ii) for any
taxable period that involves an issue that could potentially effect a taxable
period for which the Seller is or may be liable under this Agreement, the Buyer
shall promptly inform the Seller, and the Seller shall have the right to
control, at its cost, any resulting proceedings and to determine whether and
when to settle any such claim, assessment or dispute to the extent such
proceedings or determinations affect the amount of Taxes for which the Seller
is liable under this Agreement. Whenever any taxing authority sends a notice
of an audit, initiates an examination of the Company or otherwise asserts a
claim, makes an assessment or disputes the amount of Taxes (i) for any taxable
period for which the Buyer is liable under this Agreement or (ii) for any
taxable period that involves an issue that could potentially affect a taxable
period for which the Buyer is or may be liable under this Agreement, the Seller
shall promptly inform the Buyer, and the Buyer shall have the right to control,
at its cost, any resulting proceedings and to determine whether and when to
settle any such claim, assessment or dispute, except to the extent such
proceedings affect the amount of Taxes for which the Seller is liable under
this Agreement.
(g) Each of the Buyer and the Seller will provide the other with
such assistance as may reasonably be requested by either of them in connection
with the preparation of any Tax Return, any audit or other examination by any
taxing authority, or any judicial or administrative proceedings relating to
liability for Taxes, and each will retain and provide the other with any
records or information which may be relevant to such return, audit or
examination proceedings or determination. Such assistance shall include making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder and shall
include providing copies of any relevant tax return and supporting work
schedules. The party requesting assistance hereunder shall reimburse the other
for reasonable expense incurred in providing such assistance. Without limiting
in anyway the foregoing provisions of this Section 4.10(g), the Buyer hereby
agrees that it will retain, until the appropriate statues of limitation
(including any extensions) expire, copies of all Tax Returns, supporting work
schedules and other records or information which it possesses and which may be
relevant to
26
such returns of the Company for all taxable periods ending or prior to the
Closing Date, and that such records shall be maintained until the expiration
of the applicable statute of limitations, including any extensions thereto.
Further, the Buyer will not destroy or otherwise dispose of such records
without first providing the Seller with a reasonable opportunity to review
and copy such records.
(h) Any and all tax sharing agreements or practices among or between
the Company on the one hand and the Seller or any of its affiliates on the
other hand shall be terminated as of the Closing Date and no payments relating
thereto shall be made subsequent to the Closing Date unless set forth in the
Adjusted Closing Balance Sheet.
(i) For purposes of the Agreement, the allocation of the Purchase
Price to the assets of the Company shall be as agreed to by the Buyer and the
Seller, or, if the Buyer and the Seller cannot agree, then the assets on which
agreement has not been reached shall be subject to an appraisal by an
independent appraiser which shall be acceptable to both parties, the cost of
such appraisal to be borne equally by both parties. The amount of the Purchase
price allocated to such assets so appraised shall be equal to their respective
appraised fair market values. Unless otherwise prohibited by law, all foreign,
federal, state, and local income Tax Returns filed by the Buyer and the Seller
shall be filed consistently with the allocations made pursuant to the
Agreement.
SECTION 5
CONDITIONS TO THE CLOSING OF THE SELLER AND THE COMPANY
The obligation of the Seller and the Company to consummate the
Closing is subject to the fulfillment on or prior to the Closing Date of each
of the following conditions, any of which may be waived in whole or in part by
the Seller and the Company:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Buyer in Section 3 hereof shall be true and correct in
all respects as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date except for
representations and warranties that speak as of a specific date or time other
than the Closing Date (which need only be true and correct in all material
respects as of such date or time).
27
5.2 PERFORMANCE. All covenants contained herein to be performed or
complied with by the Buyer on or prior to the Closing Date shall have been
performed or complied with in all material respects.
5.3 OFFICER'S CERTIFICATE. The Seller shall have received a
certificate executed by an officer of the Buyer and dated as of the Closing
Date to the effect that the conditions set forth in Sections 5.1 and 5.2 have
been satisfied at and as of the Closing Date.
5.4 HSR WAITING PERIOD; PROHIBITIONS. The HSR Act waiting period
shall have expired or have been terminated, and there shall have been no
statute, rule, injunction or other order promulgated, enacted, entered or
enforced by any state, federal or foreign government or governmental authority
(including, without limitation, under the Competition Act) or by any court,
domestic or foreign, of competent jurisdiction which shall remain in effect
which restrains, prohibits or delays the consummation of the transactions
contemplated by this Agreement.
5.5 ANCILLARY AGREEMENTS. Each of the Ancillary Agreements shall
have been duly executed and delivered by the parties thereto.
SECTION 6
CONDITIONS TO THE CLOSING OF THE BUYER
The obligation of the Buyer to consummate the Closing is subject to
the fulfillment on or prior to the Closing Date of each of the following
conditions, any of which may be waived in whole or in part by the Buyer:
6.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Seller and the Company in Section 2 hereof, and the
Intellectual Property Agreement, if any, shall be true and correct in all
respects as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date except for
representations and warranties that speak as of a specific date or time other
than the Closing Date (which need only be true and correct in all material
respects as of such date or time).
6.2 PERFORMANCE. All covenants, agreements and conditions contained
herein to be performed or complied with by the Seller and the Company on or
prior to the Closing Date
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shall have been performed or complied with in all material respects.
6.3 OFFICERS CERTIFICATE. The Buyer shall have received a
certificate executed by an officer of each of the Seller and the Company and
dated as of the Closing Date to the effect that the conditions set forth in
Section 6.1 and 6.2 have been satisfied at and as of the Closing Date.
6.4 HSR WAITING PERIOD; PROHIBITIONS. The HSR Act waiting period
shall have expired or have been terminated, and there shall have been no
statute, rule, injunction or other order promulgated, enacted, entered or
enforced by any state, federal or foreign government or governmental authority
(including, without limitation, under the Competition Act) or by any court,
domestic or foreign, of competent jurisdiction which shall remain in effect
which restrains, prohibits or delays the consummation of the transactions
contemplated by this Agreement.
6.5 ANCILLARY AGREEMENTS. Each of the Ancillary Agreements shall
have been duly executed and delivered by the parties thereto.
SECTION 7
CLOSING, EXCHANGE AND DELIVERY
7.1 CLOSING DATE AND PLACE OF CLOSING. Unless otherwise agreed by
the parties in writing, the consummation of the transactions described herein
(the "Closing") shall take place at the offices of Wachtell, Lipton, Xxxxx &
Xxxx, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, at ten o'clock a.m. local time
on the fifth business day following the date on which the satisfaction or
waiver of the last to occur of the conditions described in Sections 5 and 6,
other than conditions that by their terms are to be satisfied at Closing occurs
(the "Closing Date"). For federal income tax purposes, the Closing shall be
deemed to have occurred at the close of business on the Closing Date. The
Buyer and the Seller agree to report all transactions not in the ordinary
course of business occurring on the Closing Date after the Buyer's purchase of
the Company Stock and the Canadian Assets on the Buyer's federal income Tax
Return to the extent permitted by Section 1.1502-76(b)(1)(ii)(B) of the
Regulations. For this purpose, the deemed asset sale pursuant to the parties'
election under Section 338(h)(10) of the Code shall not be considered to be a
transaction not in the ordinary course of business.
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7.2 EXCHANGE AND DELIVERY.
(a) On the Closing Date, subject to the terms and conditions
hereof and in reliance upon the representations, warranties and agreements
contained herein, the Seller shall deliver to the Buyer the Company Stock as
provided in Section 1.2, and the Buyer shall deliver to the Seller the Purchase
Price at the Closing, as provided in Section 1.2. All stock certificates
delivered by the Seller at the Closing shall be duly endorsed or accompanied by
a stock transfer power duly endorsed in blank.
(b) On the Closing Date, subject to the terms and conditions
hereof and in reliance upon the representations, warranties and agreements
contained herein, the Seller shall deliver to the Buyer:
(i) the minute and stock books of the Company;
(ii) copies of the certificate of incorporation and bylaws
of the Company as are in full force and effect on the Closing Date;
(iii) the written resignation, effective as of the Closing
Date, of all the officers and each member of the Board of Directors of the
Company;
(iv) a special corporate warranty deed from Seller
conveying fee simple title to the real property located at 0000 Xxxxxxxxxx
Xxx, Xxxxxxxxxxxx, XX, to the Company or the Buyer's designee, said
conveyance to be subject to Permitted Encumbrances; and
(v) an assignment of lease assigning to the Company the
Seller's interest as tenant in that certain lease with Cypress Broward
Trade Centre, Inc., as landlord for premises located at 000 Xxxx Xxxxxxx
Xxxxx Xxxx, Xx. Lauderdale, FL.
(c) On the Closing Date, ACE shall deliver an assignment of
leases assigning to the Company its rights as tenant under the Canada leases
set forth on the Disclosure Schedule, and the Company shall deliver an executed
counterpart thereof to ACE wherein the Company shall agree to assume all of the
tenant's obligations under such leases.
(d) On the Closing Date, the Seller shall deliver assignments
and instruments of assumption with respect to (i) the Assumed Liabilities,
including those listed in Section 1.3 of the Disclosure Schedule, (ii) the
Assigned
30
Contracts, including those listed in Schedule 1.4 of the Disclosure Schedule,
and (iii) to the extent assignable, the confidentiality agreements described
in Section 4.1(h).
SECTION 8
TERMINATION
8.1 RIGHT OF PARTIES TO TERMINATE. This Agreement may be terminated:
(a) by the mutual consent of the Seller and the Buyer;
(b) by either the Seller or the Buyer by written notice to the other
party if the Closing shall not have occurred on or prior to March 31,
1998; PROVIDED, HOWEVER, that the right to terminate this Agreement under
this Section 8.1(b) shall not be available to any party whose failure to
fulfill or perform any material obligation under this Agreement has been
the cause of, or has substantially resulted in, the failure of the Closing
to occur on or before such date;
(c) by either the Seller or the Buyer in the event any court of competent
jurisdiction in the United States or other federal, state or local
government body shall have issued a final order, decree or ruling or taken
any other action, no longer subject to appeal, prohibiting the
transactions contemplated hereby;
(d) by the Seller in the event that the Buyer is in material breach of
any of its representations, warranties or covenants hereunder which
individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect on the Buyer or a material adverse effect on its
ability to consummate the transactions contemplated by this Agreement,
such that the breach (i) cannot be cured by the Closing Date or (ii) has
not been cured within 30 days of the date on which the Buyer receives
written notice thereof from the Seller; or
(e) by the Buyer in the event that the Seller or the Company is in
material breach of any of its representations, warranties and covenants
hereunder which individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect on the Business, taken as a
whole, or a material adverse effect on the Seller's ability to consummate
the transactions contemplated by this Agreement, in each case such that
the breach (i) cannot be cured by the Closing Date or (ii) has
31
not been cured within 30 days of the date on which the Seller and the
Company receives written notice thereof from the Buyer.
8.2 EFFECT OF TERMINATION. In the event of a termination pursuant
to Section 8.1, the parties hereto shall be released from all liabilities and
obligations arising hereunder, except for those obligations set forth in
Section 11, 12.1, 12.4, 12.9 and this Section 8.2; PROVIDED, HOWEVER, that none
of the Buyer, the Seller or the Company shall be relieved from liabilities for
any breach of this Agreement.
SECTION 9
SURVIVAL OF REPRESENTATIONS
9.1 SURVIVAL. The agreements of the Seller and the Buyer that
involve actions to be completed or obligations in effect (i) prior to the
Closing shall not survive the Closing and (ii) after the Closing shall survive
the Closing in accordance with their terms. The representations and warranties
contained in this Agreement (except for those contained in Section 2.4, which
shall not terminate, and except for those contained in Section 2.17, which
shall survive until the expiration of the applicable statute of limitations
with respect to the items represented or warranted, including any extensions or
waivers thereof) shall survive the Closing and shall remain in full force and
effect until one year after the Closing. No party hereto shall have any
liability for whatsoever with respect to any such representations and
warranties after the survival period expires, except for claims then pending or
theretofore asserted in writing by any party hereto in accordance with the
terms and conditions of this Agreement.
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SECTION 10
INDEMNIFICATION
10.1 AGREEMENT TO INDEMNIFY. (a) From and after the Closing Date,
each party shall indemnify, defend, and hold harmless the other party hereto
and any Affiliate of the other party and each of their respective directors,
officers, employees, agents and representatives, and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, the
"Indemnified Group") from and against any and all Losses incurred or suffered
by any of the Indemnified Group to the extent that the Losses arise out of, or
result from (x) the failure of any representation or warranty contained in this
Agreement to have been true when made and as of the Closing Date; or (y) the
material breach of any covenant or agreement of the indemnifying party which
survives the Closing to the extent not waived by the other party hereto. No
indemnity may be sought pursuant to this Section 10.1 with respect to any of
the representations and warranties unless written notice ("Notice") thereof,
setting forth in reasonable detail the claimed misrepresentation or breach of
warranty, shall have been delivered to the party alleged to have breached such
representation or warranty prior to the expiration of such representation or
warranty.
(b) From and after the Closing Date, the Seller shall indemnify,
defend and hold harmless the Buyer and the Buyer's Indemnified Group from and
against all Losses to the extent the Losses arise out of or result from any
employee matters to the extent provided for in the Employee Matters Agreement.
(c) From and after the Closing Date, the Buyer shall indemnify,
defend and hold harmless the Seller and the Seller's Indemnified Group from and
against all Losses to the extent the Losses arise out of or result from (i) any
employee matters to the extent provided for in the Employee Matters Agreement;
(ii) any taxes of the Company due in respect of any period ending after the
Closing; (iii) any failure of the Buyer to discharge any of the Assumed
Liabilities whether known or unknown, accrued or contingent, or now or
subsequently incurred; or (iv) any Losses of the Company or any of its
Subsidiaries or Affiliates or arising out of or resulting from any of the
businesses, assets, operations or activities of the Company, any of its
Subsidiaries or Affiliates (including any predecessor of the Company, any
Subsidiary or any Affiliate, and any former business, asset, operation,
activity or subsidiary of any of the foregoing) heretofore, currently or
hereafter owned or conducted, as the case may be, including,
33
without limitation, any Losses based on negligence, gross negligence, strict
liability or any other theory of liability, whether in law (whether common or
statutory) or equity. The Company shall be jointly and severally liable for
the Buyer's indemnification obligations pursuant to this Agreement,
including, without limitation, pursuant to this Section 10.
10.2 INDEMNIFICATION PROCEDURE. The member of the Indemnified Group
seeking indemnification under this Agreement (the "Indemnified Party") shall
promptly notify the indemnifying party of any fact upon which the Indemnified
Party intends to base a claim for indemnification hereunder. Notice shall in
all events be considered prompt if given (a) no later than 30 days after the
Indemnified Party learns of the facts upon which it will claim such
indemnification or (b) if earlier, in sufficient time to allow the indemnifying
party to exercise its rights pursuant to this Section 10.2; PROVIDED, HOWEVER,
that the failure to provide such notice of claims promptly (so long as notice
of claims is given before the date on which the applicable representation or
warranty ceases to survive) shall not affect the obligations of the
indemnifying party hereunder except to the extent the indemnifying party is
prejudiced thereby. (Claims for which notice has been given meeting the above
requirements are hereinafter referred to as "Notified Claims.") The
indemnifying party shall have the right, at its own cost, to participate
jointly in the defense of any claim, demand, lawsuit or other proceeding in
connection with which the Indemnified Party has claimed indemnification
hereunder, and may elect to take over the defense of such claim. If the
indemnifying party makes such an election, (x) it shall keep the Indemnified
Party informed as to the status of such matter and shall send promptly copies
of all pleadings to the Indemnified Party, (y) with respect to any issue
involved in such claim, it shall have the sole right, with respect to claims or
portions of claims seeking monetary damages only, to settle or otherwise
dispose of such claim on such terms as it, in its sole discretion, shall deem
appropriate; PROVIDED, HOWEVER, that the consent of the Indemnified Party to
the settlement or disposition shall be required if such settlement or
disposition shall result in any liability to, equitable relief against or
adverse business effect on the Indemnified Party, which consent shall not be
unreasonably withheld, and (z) the Indemnified Party shall have the right to
participate jointly in the defense of such claim, but shall do so at its own
cost not subject to reimbursement under Section 10.1. If the indemnifying
party does not elect to take over the defense of a claim, the Indemnified Party
shall have the right to contest, compromise or settle such claim in the
exercise of its reasonable judgment; PROVIDED, HOWEVER, that the consent of the
indemnifying party to any compromise or settlement of such claim shall be
required if
34
such compromise or settlement shall result in any liability to the
indemnifying party, which consent shall not be unreasonably withheld.
10.3 MEASURE OF AND LIMITATION UPON INDEMNIFICATION.
(a) The amount of the indemnifying party's liability under this
Agreement shall be determined taking into account any applicable insurance
proceeds actually received by, and tax related benefits or tax refunds that
actually reduce the overall impact of the Losses upon, the Indemnified Party.
(b) The Seller's liability for claims made under clause (a) of
Section 10.1 shall be subject to the following limitations: (i) the Seller
shall have no liability for such claims until the aggregate amount of the
Losses incurred by the Buyer's Indemnified Group shall exceed $1 million, in
which case the Seller shall be liable only for the portion of the Losses
exceeding $1 million, and (ii) the Seller's aggregate liability for all such
claims shall not exceed $50,000,000.
(c) The provisions of this Section 10, except the procedural
provisions of Section 10.2 and the measure of indemnification provisions of
Section 10.3(a), shall not apply to any indemnification provisions expressly
set forth in any other Section of this Agreement or any Ancillary Agreements
(the "Special Indemnifications"). The indemnification provided in this
Section 10 shall (except for the remedies provided for by the Special
Indemnifications) be the sole and exclusive remedy after the Closing Date for
damages available to the parties to this Agreement for breach of any of the
terms, representations or warranties contained herein or in any Ancillary
Agreement or any right, claim, or action arising from the transactions
contemplated by this Agreement or any Ancillary Agreement. Without limiting
the generality of the foregoing, the Buyer expressly waives, releases and
agrees not to make any claim against the Seller or its Affiliates, except for
indemnification claims made pursuant to this Section 10 (or the Special
Indemnities), for the recovery of any cost or damages, whether directly or by
way of contribution, or for any other relief whatsoever, under the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, or any federal, state or local statute
or regulation or any federal, state or local common law, whether now existing
or applicable or hereinafter enacted or applicable, providing for any right of
recovery for any environmental matter relating to or arising out of the
premises owned or used by the Company. Except as otherwise specifically
provided hereunder, the parties (including for this purposes their Affiliates)
shall not be liable for incidental, indirect, special or consequential damages
(including lost profits or
35
lost revenues) under this Agreement, regardless of whether such liability
arises in tort, contract, breach of warranty, indemnification or otherwise.
SECTION 11
CONFIDENTIALITY
11.1 CONFIDENTIAL INFORMATION. The parties acknowledge and continue
to be bound to, and all information and materials provided under this Agreement
are subject to, the terms and conditions of the Confidentiality Agreement by
and between the Seller and the Buyer entered into in connection with the
transactions contemplated hereby.
11.2 SECURITIES LAWS. Each party acknowledges that it is aware, and
will advise its directors, officers, employees and representatives who are
informed as to the matters which are the subject of this Agreement, that the
U.S. securities laws prohibit any person or entity who has material, nonpublic
information concerning the matters which are the subject of this Agreement from
purchasing or selling securities of a company which may be a party to a
transaction of the type contemplated herein.
SECTION 12
MISCELLANEOUS
12.1 GOVERNING LAW. This Agreement shall be governed in all respects
by the laws of the State of New York without reference to the choice of law
principles thereof.
12.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the terms and provisions of this Agreement shall inure to the benefit
of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto; PROVIDED, HOWEVER, that no party hereto
will assign its rights or delegate its obligations under this Agreement without
the express prior written consent of each other party hereto.
12.3 ENTIRE AGREEMENT. This Agreement, the Ancillary Agreements, the
Exhibits and Schedules hereto constitute the full and entire understanding and
agreement among the parties with regard to the subject matter hereof and
supersede all other prior agreements and understanding, both written and oral,
among the parties.
36
12.4 NOTICES. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
given by personal delivery or by Federal Express or similar overnight courier,
or by facsimile transmission immediately followed by such personal delivery or
overnight courier, addressed as follows:
If to the Buyer:
MATRIXX Marketing Inc.
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx III, General Counsel
With a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx
If to the Seller or the Company:
AT&T Corp.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Xx. Xxxxxxx Xxxx
Director, Mergers & Acquisitions
With a copy to the same address and:
Attention: Vice President Law and
Corporate Secretary
12.5 SEVERABILITY. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
The parties agree to negotiate in good faith a new, substitute provision or
provisions which will achieve, so far as practicable, the intent and purposes
of the invalid, illegal or unenforceable provision. Nothing contained in this
Agreement shall require any party to take any action which is contrary to any
license, permit, consent, approval, authorization, qualification or order of
any governmental agency or which is otherwise contrary to applicable law.
37
12.6 NO THIRD-PARTY BENEFICIARIES. Nothing in this Agreement,
express or implied, is intended or shall be construed to confer upon or to give
any person, firm or corporation, other than the parties hereto, any rights or
remedies under or by reason of this Agreement.
12.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
12.8 TITLES AND SUBTITLES. The titles and subtitles of the sections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
12.9 EXPENSES. Each party shall bear its own expenses with respect
to this Agreement and the transactions contemplated herein. Seller agrees that
all its expenses, including the fees and expenses of its counsel and financial
advisor, in connection with this Agreement and such transactions will be paid
by the Seller and will not be allocated to the Company. All filing fees
charged with respect to any joint filings made by the parties with respect to
the actions contemplated by this Agreement shall be paid one-half by the Seller
and one-half by the Buyer.
12.10 PUBLIC STATEMENTS AND PRESS RELEASES. The parties hereto
covenant and agree that, except as provided below, each will not make, issue or
release a public announcement, press release, public statement or public
acknowledgment of the existence of, or reveal publicly the terms, conditions
and status of, the transactions provided for herein or in the Ancillary
Agreements without the prior written consent of the other party as to the
content and time of release of and the media in which such statement or
announcement is to be made; PROVIDED, HOWEVER, that in the case of
announcements which counsel for either party believes such party is required by
law or under stock exchange (or similar securities trading) requirement to
make, issue or release, the making, issuing or releasing of any such
announcement by such party shall not constitute a breach of this Agreement if
such party shall have given, to the extent reasonably possible, not less than
twenty-four (24) hours' prior notice to the other party or parties and shall
have attempted, to the extent reasonably possible, to clear the content and
time of such announcement, statement, acknowledgment or revelation with the
other party or parties. Each party hereto agrees that it will not unreasonably
withhold any such consent or clearance.
38
12.11 SPECIFIC PERFORMANCE. The parties agree that (a) the Company
Stock constitutes unique property that cannot be readily obtained on the open
market and (b) the Seller will, during the pendency of this Agreement, be
incurring opportunity and other costs which are not susceptible to
quantification. For these reasons, each of the Buyer and the Seller agrees
that the other would be irreparably injured if this Agreement is not
specifically enforced. Therefore, each party shall have the right specifically
to enforce the other's performance under this Agreement, and each party agrees
to waive the defense in any such suit in which the other has an adequate remedy
at law and to interpose no opposition, legal or otherwise, as to the propriety
of specific performance as a remedy. Each party's right to seek specific
performance shall be in addition to, and not in lieu of, any other rights or
remedies that may be available to it in the event of the other's breach or
default hereunder.
12.12 TRANSFER TAXES. All transfer, documentary, sales, use, stamp,
registration and other such taxes and fees (including any penalties and
interest related thereto) incurred in connection with the transactions
contemplated under this Agreement (including any transactions undertaken to
enable the Buyer to acquire the Canadian Assets, including any real property
gains, transfer or similar taxes imposed by any state or subdivision) shall be
borne and paid by the Buyer, and the Buyer will, at its own expense, file all
necessary tax returns and other documentation with respect to all such taxes
and fees, and, if required by applicable law, the Seller will, and will cause
its Affiliates to, join in the execution of any such tax returns and other
documentation.
12.13 DISPUTE RESOLUTION. The parties shall use and strictly adhere
to the following dispute resolution processes, except as otherwise expressly
provided in this Section 12.13, to resolve any and all disputes, controversies
or claims, whether based on contract, tort, statute, fraud, misrepresentation
or any other legal or equitable theory (hereinafter "Dispute(s)"), arising out
of or relating to this Agreement (and any prior agreement this Agreement
supersedes), including without limitation, its making, termination, non-
renewal, its alleged breach and the subject matter of this Agreement:
(a) NEGOTIATION. The parties shall first attempt to settle
each Dispute through good faith negotiations. The aggrieved party shall
initiate such negotiations by giving the other party(ies) written notice of the
existence and nature of the Dispute. The other party(ies) shall in a writing
to the aggrieved party acknowledge such notice of Dispute within ten (10)
business days. Such acknowledgment may also set forth any
39
Dispute that the acknowledging party desires to have resolved in accordance
with this Section.
(b) MEDIATION. Thereafter, if any Dispute is not resolved by
the parties through negotiation within thirty (30) calendar days of the date of
the notice of acknowledgment, either party may terminate informal negotiations
with respect to that Dispute and request that the Dispute be submitted to non-
binding mediation. Any mediation of a Dispute under this Section shall be
conducted by the CPR Institute for Dispute Resolution ("CPR") in accordance
with the then current CPR "Model Mediation Procedure for Business Disputes"
("Model Procedures") and the procedures specified in this Section to the extent
that they conflict with, modify or add to such Model Procedures. Any demand
for initiation of mediation of a Dispute must be in writing to both the other
party(ies) involved and to the CPR and must set forth the nature of the
Dispute. Each party to the mediation shall bear its own expenses with respect
to mediation and the parties shall share equally the fees and expenses of the
CPR and the mediator. The failure by a party to timely pay its share of the
mediation fees and expenses of the CPR and the mediator shall be a bar to
arbitration under paragraph (b) of this Section 12.13 of that party's
Dispute(s). Any mediation under this Section shall be conducted within the
State of New York at a site selected by the mediator that is reasonably
convenient to the parties. Each party shall be represented in the mediation by
representatives having final settlement authority with respect to the
Dispute(s). All information and documents disclosed in mediation by any party
shall remain private and confidential to the disclosing party and may not be
disclosed by any other party outside the mediation. No privilege or right with
respect to any information or document disclosed in mediation shall be waived
or lost by such disclosure.
(c) ARBITRATION. Any Dispute not finally resolved after
negotiation and mediation in accordance with Sections 12.13(a) and 12.13(b)
shall, upon the written demand of any involved party delivered to other
party(ies) and the CPR, be finally resolved through binding arbitration in
accordance with the then current CPR "Non-Administered Arbitration Rules"
("Arbitration Rules") and the procedures specified in this Section to the
extent that they conflict with, modify or add to such Arbitration Rules. Any
Dispute of any other party not finally resolved after negotiation and mediation
pursuant to this Section may be made a part of the arbitration demanded by
another party, provided that the written notice of demand for arbitration of
that Dispute is received by the CPR before selection of an arbitrator of the
CPR. Any demand for arbitration of a Dispute received by the CPR after the
selection of the arbitrator must be resolved
40
through a separate arbitration proceeding in accordance with this Section.
Each party shall bear its own expenses with respect to arbitration and the
parties shall share equally the fees and expenses of the CPR and the
arbitrator. Unless otherwise mutually agreed by the parties in writing, the
arbitration shall be conducted by one (1) neutral arbitrator. The
arbitration shall be conducted in the State of New York at a site selected by
the arbitrator that is reasonably convenient to the parties. The arbitrator
shall be bound by and strictly enforce the terms of the Agreement and may not
limit, expand, or otherwise modify the terms of this Agreement. The
arbitrator shall make a good faith effort to apply applicable law, but an
arbitration decision and award shall not be subject to review because of
errors of law. The arbitrator shall have the sole authority to resolve
issues of the arbitrability of any Dispute, including the applicability or
running of any statute of limitations. The arbitrator shall not have power
to award damages in connection with any Dispute in excess of actual
compensatory damages or to award punitive damages or any damages that are
excluded under the Limitation of Liability Section of this Agreement and each
party irrevocably waives any claim thereto. The arbitrator shall not have
the power to order pre-hearing discovery of documents or the taking of
depositions. The arbitrator may compel, to the extent provided by the FAA,
attendance of witnesses and the production of documents at the hearing. The
arbitrator's decisions and award shall be made and delivered to the parties
within six months of selection of the arbitrator by the CPR and judgment on
the award by the arbitrator may be entered by any court having jurisdiction
thereof.
(d) INTERPRETATION AND ENFORCEMENT. This Section shall be
interpreted, governed by and enforced in accordance with the United States
Arbitration Act, 9 U.S.C. Section 1-14 (the "Federal Arbitration Act" or
"FAA"). The laws of the State of New York, except those pertaining to choice
of law, arbitration of disputes and those pertaining to the time limits for
bringing an action that conflict with the terms of this Dispute Resolution
provision, shall govern all other substantive matters pertaining to the
interpretation and enforcement of the other terms of this Agreement with
respect to the any Dispute. Any party to a Dispute, which is the subject of a
notice initiating the Dispute resolution procedures under this Section, may
seek a temporary injunction in any state or federal court of competent
jurisdiction to the limited extent necessary to preserve the status quo during
the pendency of final resolution of a Dispute in accordance with this Section.
If court proceedings to stay litigation of a Dispute or compel arbitration of a
Dispute are necessary, the party who unsuccessfully opposes such proceedings
shall pay all associated costs, expenses, and attorneys' fees that the other
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party reasonably incurs in connection with such court proceedings. An order to
pay such costs, expenses and attorney fees shall become part of any decision
and award of the arbitrator of the Dispute. An arbitrator appointed pursuant
to Section 12.13(c) to resolve a Dispute may also issue such injunctive orders
and shall have the power to modify or dissolve the injunctive order of any
court to the extent it pertains to the Dispute which the arbitrator has been
selected to finally resolve. The parties, their representatives, other
participants, and the mediator and arbitrator shall hold the existence,
content, and result of the mediation and arbitration of a Dispute in confidence
except the limited extent necessary to enforce a final settlement agreement or
to obtain and secure enforcement of or a judgment on an arbitration decision
and award.
(e) STATUTES OF LIMITATIONS. The statute(s) of limitation
applicable to any Dispute shall be tolled upon initiation of the Dispute
resolution procedures under this Section and shall remain tolled until the
Dispute is resolved by mediation or arbitration under this Section. Tolling
shall cease if the aggrieved party with a Dispute does not initiate mediation
within sixty (60) calendar days after good faith negotiations are terminated by
any party and, after mediation of a Dispute, if the aggrieved party with a
Dispute does not initiate a demand for arbitration with sixty (60) calendar
days after mediation is terminated. However, any Dispute is forever barred
that has not expressly been made the subject of the written notice required
under Section 12.13(a) within 365 days after the date the Party asserting the
Dispute first knows or should have known of the existence of the acts or
omissions that give rise to such Dispute.
(f) TRADEMARKS, PATENTS AND COPYRIGHTS. Unless the parties
mutually agree in writing, Disputes relating to trademarks (including service
marks), patents and copyrights shall not be resolved in accordance with the
Dispute resolution procedures set forth in this Section 12.14 and shall be
resolved as otherwise provided in this Agreement.
12.15 DEFINITIONS. "Affiliate" of a Person means any Person
controlling, controlled by, or under common control with, such Person. For
purposes of this definition, "control" means the ownership of or the right to
vote a majority of the voting power of such Person or the ability to elect or
right to designate a majority of the board of directors or similar governing
body of such Person.
"Environmental Law" means the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA), 42 U.S.C. Section 9601 et
seq.; the Resource Conservation and Recovery Act
42
(RCRA), 42 U.S.C. Section 6901 et seq.; the Federal Water Pollution Control
Act, 33 U.S.C. Section 1251 et seq.; the Clean Air Act, 42 U.S.C. Section
7401 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. Section
1471 et seq.; the Toxic Substances Control Act, 15 U.S.C., Section 2601-2629;
the Safe Drinking Water Act, 42 U.S.C. Section 300f-300j; and the California
Safe Drinking Water and Toxic Enforcement Act of 1986 (California Proposition
65, Cal. Health and Safety Code Section 2500 et seq.), as amended from time
to time; and any other federal, state or local laws and ordinances that
relate to the protection of the environment or the protection of public
health and safety from environmental concerns, or that regulate in any way,
or establish liability with respect to, Hazardous Materials or Wastes and the
regulations implementing such statutes, as well as any common law causes of
action that relate to the protection of the environment or the protection of
public health and safety from environmental concerns.
"Hazardous Materials or Wastes" means any toxic or hazardous substance,
material or waste which is or becomes subject to or regulated by any local
governmental authority or the United States Government, and includes, but is
not limited to, any hazardous substance pursuant to Section 311 of the Federal
Water Pollution Control Act (33 U.S.C. Section 1321), any hazardous waste
pursuant to Section 1004 of the Federal Resource Conservation and Control Act,
42 U.S.C. Section 6901, et seq., any hazardous substance pursuant to Section
101 of the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Section 9601 et seq., any regulated substance pursuant to
Subchapter IX, Solid Waste Disposal Act, 42 U.S.C. Section 6991, any regulated
substance under the Toxic Substances Control Act, 15. U.S.C. Section 2601 et
seq., any petroleum product or waste, or any derivative therefrom, or any other
substance which requires remediation under any applicable law or regulation.
"Indebtedness" means indebtedness for borrowed money only.
"Knowledge" means the actual knowledge of the persons listed on Schedule A
hereto.
"Material Adverse Effect", with respect to any entity, means a material adverse
effect on the financial condition, business, assets, liabilities or results of
operations of such entity and its consolidated subsidiaries, taken as a whole.
"Permitted Encumbrances" means (1) liens for current taxes and assessments not
yet past due; (2) inchoate mechanics' and materialmen's liens for construction
in progress; (3) workmen's, repairmen's, warehousemen's and carriers' liens
arising in the ordinary course of business; (4) all matters of record, liens
and other imperfections of title and
43
encumbrances, which matters, liens and imperfections, in the aggregate, would
not have a Material Adverse Effect on the Company; (5) easements,
rights-of-way, restrictions and other similar encumbrances on real property;
and (6) zoning, entitlement and other land use and environmental regulations
by governmental agencies.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers or
representatives.
The Buyer
MATRIXX Marketing Inc.
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President and Chief Executive Officer
The Seller
AT&T Corp.
By: /s/ X. XxXxxxxx
------------------------------------
Name: X. XxXxxxxx
Title: Executive Vice President
Consumer Markets Division
The Company
American Transtech Inc.
By: /s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
Title: Financial Vice President,
Mergers & Acquisitions
45
