EXHIBIT 2.1
CONFORMED COPY
ACQUISITION AGREEMENT
By and Among
XXXXXXXXX HOLDINGS LTD.,
SCSK5406 APS,
LOOP TELECOM, S.A.,
THE SHAREHOLDERS OF LOOP TELECOM, S.A.,
-------------------
AND
COVAD COMMUNICATIONS GROUP, INC.
Dated as of September 8, 2000
TABLE OF CONTENTS
Page
ARTICLE I.Definitions 2
Section 1.1 Definitions...............................................................................2
ARTICLE XX.Xxxx and Purchase of the Shares, 6
Section 2.1 Agreement to Sell and Purchase............................................................6
Section 2.2 Closing...................................................................................7
Section 2.3 Use of Proceeds...........................................................................8
Section 2.4 Payment of the balance of the Subscription Price and the Purchase Price....................8
ARTICLE III.Representations and Warranties 8
Section 3.1 Representations and Warranties of the Company, the Loop Shareholders and the Seller.......8
Section 3.2 Representations and Warranties of Loop and the Loop Shareholders.........................12
Section 3.3 Representations and Warranties of .......................................................25
Section 3.4 Representations and Warranties of the Seller............................................26
Section 3.5 Representations and Warranties of the Purchaser.........................................28
ARTICLE IV.Conduct of Business Pending the Closing 30
Section 4.1 Conduct of the Business Pending the Closing..............................................30
Section 4.2 Restriction on Conduct of Business of the Company and Loop..........................30
Section 4.3 Access to Information....................................................................33
Section 4.4 No Solicitation..........................................................................33
ARTICLE V.Other Agreements 34
Section 5.1 Conversion..........................................................................34
Section 5.2 [Intentionally Omitted].............................................................34
Section 5.3 Public Statements...................................................................35
Section 5.4 Reasonable Commercial Efforts.......................................................35
Section 5.5 Notification of Certain Matters..........................................................35
Section 5.6 Tax Elections............................................................................36
Section 5.7 Further Assurances.......................................................................36
ARTICLE VI.Conditions Precedent 36
Section 6.1 Conditions to Obligations of Purchaser and Seller........................................36
Section 6.2 Additional Conditions of the Purchaser...................................................37
Section 6.3 Additional Conditions of the Seller......................................................38
ARTICLE VII.Term 39
Section 7.1 Termination..............................................................................39
Section 7.2 Effect of Termination....................................................................40
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ARTICLE VIII.Miscellaneous 40
Section 8.1 Survival of Representations and Warranties...............................................40
Section 8.2 Notices..................................................................................40
Section 8.3 Entire Agreement; Amendment..............................................................42
Section 8.4 Counterparts.............................................................................42
Section 8.5 Governing Law............................................................................42
Section 8.6 Indemnification by the Loop Shareholders.................................................43
Section 8.7 Fees and Expenses........................................................................43
Section 8.8 Indemnification by Loop and the Loop Shareholders........................................43
Section 8.9 Successors and Assigns; Third Party Beneficiaries........................................45
Section 8.10 Indemnification by the Purchaser........................................................45
Section 8.11 Arbitration.........................................................................46
Section 8.12 Exclusive Remedy.........................................................................47
Section 8.13 Specific Performance....................................................................47
Section 8.14 Headings, Captions and Table of Contents................................................47
Section 8.15 Interpretation and Construction.........................................................47
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SCHEDULES
3.1(d) - Company Consents
3.1(f) - Company Financial Statements
3.2(d) - Loop Consents
3.2(e) - Voting Arrangements
3.2(f) - Loop Financial Statements
3.2(h) - Permits
3.2(l) - Company Employees / Consulting Agreements
3.2(m) - Material Agreements
3.2(q) - Intellectual Property
3.2(w) - Transactions with Affiliates
3.2(x) - Brokers and Finders
3.2(aa) - Board Members
3.3(d) - Ownership of Loop's Common Stock
EXHIBITS
Exhibit A - Board Resolution
Exhibit B - Loop Shareholders Agreement
Exhibit C - Loop Shareholders Resolution
Exhibit D - Loop Stock Option Plan
Exhibit E - [Intentionally Omitted]
Exhibit F - Purchaser's First Note
Exhibit G - Purchaser's Second Note
Exhibit H - Employment Term Sheet
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ACQUISITION AGREEMENT
ACQUISITION AGREEMENT, dated as of September 8, 2000 (this
"AGREEMENT"), by and among (i) Xxxxxxxxx Holdings Ltd., a company organized
under the laws of the British Virgin Islands (the "SELLER"), (ii) SCSK5406 APS,
a company organized under the laws of Denmark (to be known by Closing as Loop
Holdings Europe APS) (the "COMPANY"), (iii) Loop Telecom, S.A., a corporation
organized under the laws of Spain ("LOOP"), (iv) Messrs. Xxxxxx Xxxxxxx, a U.S.
citizen, Xxxxx Xxxxxxxx, a U.S. citizen, Xxxxxxx Xxxxxxx Xxxxxx, a Spanish
citizen, Xxxxxxx Xxxxxxx Xxxxxx, a Spanish citizen, Xxxxxx Xxxxxxx Xxxxxx, a
Spanish citizen, Xxx Xxxxx Xxxxxxx Xxxxxx, a Spanish citizen, Xxxxx Xxxxxxx
Xxxxxx, a Spanish citizen, Xxxxxxxx Xxxxxxx Xxxxxx, a Spanish citizen, Xxxx Xxxx
Xxxxxxx Xxxxxx, a Spanish citizen, (all the Xxxxxxx Xxxxxx individuals, the
"XXXXXXX FAMILY", and together with Xxxxxxx X.X. the "MENDALA GROUP"), Xxxxxxx
X.X., a company organized under the laws of Spain and Rosental Equity Partners
LLC, a limited liability company organized under the laws of Delaware (all the
aforesaid individuals, Xxxxxxx X.X. and Xxxxxxxx Equity Partners LLC,
collectively, the "LOOP SHAREHOLDERS" and each of them a "LOOP SHAREHOLDER"),
and (v) Covad Communications Group, Inc., a Delaware corporation (the
"PURCHASER"). Capitalized terms not otherwise defined where used shall have the
meanings ascribed thereto in Article I.
WHEREAS, Loop provides Internet Protocol based broadband data and
telecommunications services to enterprises and independent professionals in
Spain and Portugal;
WHEREAS, subject to the terms and conditions of this Agreement, (i)
the Seller owns 100% of the outstanding capital stock of the Company; (ii) the
Company will own at Closing certain securities in Loop; and (iii) the Purchaser
intends to purchase from the Seller, and the Seller intends to sell to the
Purchaser, 100% of the outstanding shares of capital stock of the Company;
WHEREAS, the Company currently has a registered capital stock in the
total amount of 125,000 Danish Krona which is fully paid in and is exclusively
composed of shares of common stock, with a par value of 1.000 Danish Krona each,
with the exclusion of any other category of shares, warrants, rights or other
securities;
WHEREAS, Loop currently has a registered capital stock in the total
amount of euro 354,285.6 which is fully paid in and is exclusively composed of
shares of common stock, with a par value of euro 0.24 each, with the exclusion
of any other category of shares, warrants, rights or other securities other than
its existing stock option plan;
WHEREAS, at the Closing, and in accordance with the Loop Shareholders
Resolution, the Loop Shareholders and the Company will hold all of the
outstanding shares of common stock of Loop and will have entered into certain
agreements which will be effective
upon the Closing and which relate to the governance and management of Loop and
the transfer of shares of capital stock of Loop;
WHEREAS, the Seller, the Company, Loop, the Loop Shareholders and the
Purchaser desire to set forth certain agreements herein.
NOW THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained and intending to be
legally bound hereby, the parties hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section I.1 DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings set forth below: -----------
"ACTIVITY LICENSE LOSSES" shall have the meaning set forth in
Section 8.8
"AFFILIATE" shall mean, with respect to any Person, any other
Person that directly or indirectly controls, is controlled by, or
is under common control with, such Person. As used in this definition,
"control" (including its correlative meanings, "controlled by" and
"under common control with") shall mean the possession, directly or
indirectly, of power to direct or cause the direction of management or
policies (whether through ownership of securities or partnership or
other ownership interests, by contract or otherwise).
"ANCILLARY DOCUMENTS" shall mean the Loop Shareholders Agreement,
the Loop Shareholders Resolution and the Board Resolution.
"ARROW LOSSES" shall have the meaning set forth in Section 8.8
"BOARD MEETING" shall have the meaning set forth in Section
3.2(y).
"BOARD RESOLUTION" shall mean the resolution to be passed on the
Closing Date at the Board Meeting substantially in the form of Exhibit
A hereto.
"BUSINESS DAY" shall mean any day, other than a Saturday, Sunday
or a day on which commercial banks in New York, New York (U.S.A.) or
Barcelona, Spain, are authorized or obligated by law or executive
order to close.
"CLOSING" and "CLOSING DATE" shall have the meanings set forth in
Section 2.2(a).
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"COMMON STOCK" shall mean the common stock, par value euro 0.24
(0.0024 after the Closing) per share, of Loop, each of which is
entitled to three votes.
"COMPANY" shall have the meaning set forth in the preamble
hereto.
"COMPANY'S FINANCIAL STATEMENTS" shall have the meaning set forth
in Section 3.1(f).
"CONTRACTUAL OBLIGATION" shall mean, as to any Person, any
provision of any note, bond or security issued by such Person, or
of any mortgage, indenture, deed of trust, lease, license, franchise,
contract, agreement, instrument or undertaking to which such Person is
a party or by which it or any of its property is subject.
"DANISH GAAP" shall mean generally accepted accounting principles
in Denmark in effect from time to time.
"EMPLOYMENT TERM SHEETS" shall mean the term sheets substantially
in the form attached as Exhibit H hereto.
"ESCROW AGREEMENT" shall have the meaning set forth in the
Shareholders Agreement.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 3.2(f).
"GAAP" shall mean generally accepted accounting principles in
Spain in effect from time to time including, in the case of the
unaudited interim accounts referred to in Section 3.2 (f)(I), such
modifications to the generally accepted accounting principles in Spain
as are customarily applied to unaudited interim financial statements.
"GOVERNMENTAL ENTITY" shall mean any nation or government, any
state or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any self-regulating
organization, securities exchange or securities trading system.
"INTELLECTUAL PROPERTY" shall have the meaning set forth in
Section 3.2(q)(A).
"LABOR PLAN LOSSES" shall have the meaning set forth in Section
8.8.
"LIABILITIES" shall have the meaning set forth in Section 3.1(l).
"LIEN" shall mean any mortgage, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or security
agreement of any kind or nature whatsoever
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(including, without limitation, any conditional sale or other title
retention agreement or any financing lease having substantially
the same effect as any of the foregoing).
"LOOP SHAREHOLDERS AGREEMENT" shall mean the Loop Shareholders
Agreement in substantially in the form of Exhibit B, attached hereto,
which shall be effective as of the date of the Closing.
"LOOP SHAREHOLDERS" shall have the meaning set forth in the
preamble hereto.
"LOOP SHAREHOLDERS MEETING" shall have the meaning set forth in
Section 3.2(y).
"LOOP SHAREHOLDERS RESOLUTION" shall mean the resolutions of the
Loop Shareholders substantially in the form of Exhibit C.
"LOSSES" shall have the meaning set forth in Section 8.8(a).
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect
individually or in the aggregate on (i) with respect to the
Company or Loop, the assets, business condition, results of operations
or financial condition of the Company or Loop or (ii) with respect to
any party, the ability of such party to timely perform its obligations
under this Agreement or any Ancillary Document to which it is a party.
The dollar thresholds set forth in the definition of "Material
Agreement" shall not affect the meaning and interpretation of
"Material Adverse Effect."
"MATERIAL AGREEMENT" shall mean any contract, lease, restriction,
agreement, instrument or commitment to which the entity at issue
is a party or by which its properties are bound (i) which provides a
benefit to such entity of, or commits such entity to expend, euro
50,000 or more (or, in the case of any agreement with any customer of
such entity, euro 10,000 or more), (ii) which if breached by any party
thereto would result in liability or loss to such entity of euro
50,000 or more (or in the case of any agreement with any customer of
such entity, euro 10,000 or more) or (iii) which is otherwise material
to the business conducted by Loop.
"MENDALA GROUP" shall have the meaning set forth in the preamble.
"XXXXXXX FAMILY" shall have the meaning set forth in the
preamble.
"PARTIES" shall mean the Company, the Loop Shareholders, the
Seller, Loop and the Purchaser, collectively, and "PARTY" shall
mean any of the Company, the Loop Shareholders, the Seller, Loop or
the Purchaser.
"PERMITS" shall have the meaning set forth in Section 3.2(h).
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"PERMITTED LIENS" shall mean (i) mechanics', carriers',
repairmen's or other like Liens arising or incurred in the
ordinary course of business, (ii) Liens arising under original
purchase price conditioned sales contracts and equipment leases with
third parties entered into in the ordinary course of business
consistent with past practice, (iii) statutory Liens for Taxes not yet
due and payable and (iv) other encumbrances or restrictions or
imperfections of title which do not materially impair the continued
use and operation of the assets to which they relate.
"PERSON" shall mean an individual, corporation, unincorporated
association, partnership, group (as defined in Section 13(d)(3)
of the Exchange Act), trust, joint stock company, joint venture,
business trust or unincorporated organization, limited liability
company, any Governmental Entity or any other entity of whatever
nature.
"PREFERRED STOCK" shall mean the preferred stock, par value euro
0.0024 per share, of Loop, to be issued to the Company which will
be convertible at any time into shares of Common Stock of Loop with a
1:1 conversion ratio and shall include the same dividend rights as the
Common Stock of Loop, as well as the following additional rights
(which are reflected in Loop's by-laws as amended by the Loop
Shareholders' Resolutions): the holders of the Preferred Stock shall
receive, upon liquidation of Loop, a liquidation quota which will
comprise paid-in par value, issue premium and any paid-in ancillary
contribution (PRESTACION ACCESORIA) attached to such Preferred Stock
before holders of Common Stock of Loop receive any amount upon the
liquidation of Loop. Each share of Preferred Stock shall have one
vote.
"PURCHASER" shall have the meaning set forth in the preamble
hereto.
"PURCHASER'S FIRST NOTE" shall be the note substantially in the
form of Exhibit F attached hereto.
"PURCHASER'S NOTES" shall mean the Purchaser's First Note and the
Purchaser's Second Note.
"PURCHASER'S SECOND NOTE" shall be the note substantially in the
form of Exhibit G attached hereto.
"REQUIREMENT OF LAW" shall mean, as to any Person, the
certificate of incorporation and by-laws or other organizational
documents of such Person, and any law, statute, order, treaty, rule or
regulation, or judgment, decree, determination or order of any
arbitrator, court or other Governmental Entity, applicable to or
binding upon such Person or any of its property.
"SHARES" shall have the meaning set forth in Section 2.1(a).
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"STOCK OPTION PLAN" shall mean the stock option plan of Loop
substantially in the form attached hereto as Exhibit D.
"SUBSIDIARY" shall mean, as to any Person, a corporation,
partnership, limited liability company, joint venture or other
entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the
time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries, or both, by
such Person.
"SURVIVING REPRESENTATIONS AND WARRANTIES" shall mean the
representations and warranties contained in Section 3.1(e)(ii) and
3.2(e)(ii).
"TAX" or, collectively, "TAXES" shall mean any and all federal,
state, local and foreign taxes, assessments and other
governmental charges, duties, impositions and liabilities, including
taxes based upon or measured by gross receipts, income, profits,
sales, use and occupation, and value added, ad valorem, transfer,
gains, franchise, withholding, payroll, recapture, employment, excise,
unemployment insurance, social security, business license, occupation,
business organization, stamp, environmental and property taxes,
together with all interest, penalties and additions imposed with
respect to such amounts. For purposes of this Agreement, "Taxes" also
includes any obligations under any agreements or arrangements with any
other person with respect to Taxes of such other person (including
pursuant to Treas. Reg. Section 1.1502-6 or comparable provisions of
state, local or foreign tax law) and including any liability for taxes
of any predecessor entity.
"TAX RETURNS" shall mean any return, amended return or other
report required to be filed with respect to any Tax, including
declaration of estimated tax and information returns.
ARTICLE II.
SALE AND PURCHASE OF THE SHARES,
Section II.1 AGREEMENT TO SELL AND PURCHASE.
(a) Upon and subject to the terms and conditions set forth in
this Agreement, and in reliance upon the representations and warranties
hereinafter set forth, the Purchaser agrees to
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purchase from the Seller, or to cause one of its Affiliates to purchase from the
Seller, and the Seller agrees to sell, transfer and deliver to the Purchaser, or
to one of its Affiliates if and as instructed by the Purchaser in writing at
least two Business Days before the Closing, all of the outstanding shares of
capital stock of Company on a fully diluted basis (the "SHARES"), at the Closing
provided for in Section 2.2 hereof, for an aggregate purchase price equal to the
equivalent in euros (at the exchange rates that will be fixed three Business
Days before each of the respective payment dates, as detailed in Section 2.1(b))
of US$ 50,000,000 (the "PURCHASE PRICE") to be paid as specified in Section
2.1(b).
(b) The Parties agree that the Purchase Price shall be paid in
three installments, as follows:
(x) US$ 15 million at Closing (the "FIRST INSTALLMENT");
(y) US$ 15 million six months after Closing (the "SECOND INSTALLMENT"); and
(z) US$ 20 million (the "LAST PAYMENT") twelve months after Closing (the
"LAST PAYMENT DATE").
The Parties also agree that (i) at Closing the Purchaser, or one of its
Affiliates, shall deliver to Seller the amount indicated under (x) above in
immediately available funds and two promissory notes, in substantially the forms
attached hereto as Exhibit F (the "PURCHASER'S FIRST NOTE") and Exhibit G (the
"PURCHASER'S SECOND NOTE", and together with the Purchaser's First Note, the
"PURCHASER'S NOTES"), in the amounts and with the maturity dates set forth under
(y) and (z) above; (ii) the Purchaser, or one of its Affiliates, shall pay to
the Seller the equivalent in euros of the aforesaid amounts, at the times and at
the exchange rates indicated in Section 2.1(a); and (iii) no interest shall
accrue on the outstanding portion of the Purchase Price at any moment, subject
to Section 2.4.
Section II.2 CLOSING. (a) Subject to the satisfaction or
waiver of the conditions set forth in this Agreement, the "CLOSING" shall take
place at the offices of Cuatrecasas, in Barcelona, Spain, on September 21, 2000,
as long as all conditions in Sections 6.1 and 6.2 are satisfied by that date or,
if this is not the case, within three Business Days after the conditions in
Sections 6.1 and 6.2 are satisfied or waived by the Purchaser or the Company, as
the case may be (the "CLOSING DATE"), or at such other time and place as may be
mutually agreed upon by Purchaser and the Company.
(b) At the Closing: (i) the Seller shall deliver to the
Purchaser, against payment of the amount indicated in Section 2.1(b)(x) and
delivery of the Purchaser's Notes, the certificates of the Shares, registered in
the name of the Purchaser, or its Affiliate if nominated pursuant to Section
2.1(a), and which at Closing shall represent 100% of the outstanding capital
stock of the Company, on a fully diluted basis; (ii) the Purchaser, in payment
for the Shares, against delivery of the relevant share certificates, shall
deliver to the Seller the Purchaser's Notes and immediately available funds, by
wire transfer to such account as the Seller shall specify in writing at least
three Business Days prior to the Closing Date, in the total amount indicated in
Section 2.1(b)(x); and (iii) each Party shall take or cause to happen such other
actions, and shall execute and deliver such other instruments or documents, as
shall be required hereunder or reasonably requested by another Party to this
Agreement or the Ancillary Documents.
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Section II.3 USE OF PROCEEDS. The proceeds of the sale of the
Shares shall be used by the Seller to pay off any outstanding debt,
promissory note or payment obligation that the Seller may have towards the
Company and/or Loop as soon as any such debt, promissory note or payment
obligation falls due.
Section II.4 PAYMENT OF THE BALANCE OF THE SUBSCRIPTION PRICE AND
THE PURCHASE PRICE. The Purchaser shall timely pay the remaining two
installments of the Purchase Price, as reflected in the Purchaser's Notes, to
the Seller in immediately available funds, by wire transfer to the same bank
account to which the amount indicated in Section 2.1 (b) (x) will be paid
pursuant to Section 2.2(b)(ii) or to such different account as the Seller shall
specify in writing at least three Business Days prior to the relevant payment
date, it being understood that, should the Purchaser fail to timely pay either
of the amounts indicated in the Purchaser's Notes, interest at the rate of eight
percent (8%) per year shall accrue on the amounts from time to time outstanding
from the date on which any such amount was due under Section 2.1 (b) to the date
of the actual payment thereof.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Section III.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY, THE
LOOP SHAREHOLDERS AND THE SELLER. Subject to Section 8.8 the Company, the Loop
Shareholders and the Seller jointly and severally represent and warrant to the
Purchaser as of the date hereof and as of the Closing Date as follows, it being
understood that the Purchaser is relying on the following representations and
warranties to effect the transactions contemplated herein:
(a) ORGANIZATION OF THE COMPANY. The Company is a corporation
duly organized, validly existing, and registered with the Commercial
Registry of Denmark, registration number CVR25507258, under the laws of
Denmark and has all requisite corporate power and authority to own, operate
and lease its properties and to carry on its businesses as they are now
being conducted. The Company is duly licensed or qualified as a foreign
corporation for the transaction of business under the laws of each other
jurisdiction in which its ownership or leasing of properties, or the
conduct of its businesses requires such licensing or qualification, except
where the failure to be so licensed or qualified in any such jurisdiction
would not have a Material Adverse Effect. The Company has no Subsidiaries.
(b) [Intentionally Omitted]
(c) AUTHORIZATION; NO CONFLICTS. The Company has full corporate power
and authority to enter into this Agreement and the Ancillary Documents and
to perform its obligations hereunder and thereunder. The execution,
delivery and performance by the Company of this Agreement and each
Ancillary Document have been duly authorized
8
by all necessary corporate action. The consummation of the Company's
obligations under this Agreement and the Ancillary Documents shall be duly
authorized by all necessary corporate action prior to Closing. This
Agreement has been, and on or prior to the Closing Date each Ancillary
Document will be, duly and validly executed and delivered by the Company.
This Agreement constitutes, and upon its execution and delivery on or prior
to the Closing Date, each Ancillary Document will constitute, a valid and
legally binding obligation of the Company enforceable against the Company
in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors generally and by general equitable principles. The
execution, delivery and performance of this Agreement and the Ancillary
Documents by the Company, the consummation of the transactions by the
Company contemplated hereby and thereby and the compliance by the Company
with the provisions hereof and thereof will not conflict with, violate or
result in a breach of any provision of, require a consent, approval or
notice under, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of or accelerate the performance required by, or result in a
right of termination or acceleration under, or result in the creation of
any Lien upon any of the properties or assets of the Company under, (i) the
articles of incorporation, by-laws or other governing instrument of the
Company, (ii) any Contractual Obligation of the Company or (iii) assuming
that the filings, consents and approvals specified in Schedule 3.1(d) have
been obtained or made and any waiting period applicable thereto has expired
or been terminated, any Requirement of Law applicable to the Company,
except, in the case of clauses (ii) and (iii) above, such conflicts,
violations, breaches, consents, approvals, notices, defaults, terminations,
accelerations or Liens which would not have a Material Adverse Effect.
(d) CONSENTS. Except as set forth in Schedule 3.1(d), no consent,
approval, order or authorization of, registration, declaration or
filing with, or notice to, any Governmental Entity is required on the
part of the Company in connection with the execution and delivery by
the Company of this Agreement and the Ancillary Documents, the
consummation by the Company of the transactions contemplated hereby and
thereby or the performance by the Company of its obligations hereunder
and thereunder, except for such consents, approvals, orders,
authorizations, registrations, declarations, filings or notices of
which the failure to make or obtain would not have a Material Adverse
Effect.
(e) CAPITALIZATION. (i) The authorized capital stock of the
Company consists of 1,000 shares of common stock, all of which are
issued and outstanding, and no shares of common stock are held in
treasury and reserved for issuance upon exercise of outstanding stock
options. No shares of Preferred Stock are designated, and no shares are
issued and outstanding. All of the issued and outstanding shares of the
Company's capital stock have been duly and validly authorized and
issued and are fully paid and not subject to preemptive rights other
than in favor of the Loop Shareholders, as described in the Company's
by-laws, which rights have been fully and effectively waived.
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(ii) Upon delivery of and payment of the First Installment
for the Shares on the Closing Date as provided herein, such
Shares will be duly and validly authorized and issued, fully paid and
not subject to preemptive rights, and the Purchaser will acquire good
title thereto, free and clear of all Liens (other than any Lien
created by the Purchaser), and will be promptly entered in the
Company's shareholders ledger.
(iii) (1) No equity securities of the Company are or may
become required to be issued by reason of any options, warrants,
rights to subscribe to, calls, preemptive rights, or commitments of
any character whatsoever, (2) there are outstanding no securities or
rights convertible into or exchangeable for shares of any capital
stock of the Company and (3) there are no contracts, commitments,
understandings or arrangements by which the Company is or will be
bound to issue additional shares of its capital stock or securities or
rights convertible into or exchangeable for shares of its capital
stock or options, warrants or rights to purchase or acquire any
additional shares of its capital stock. As of the Closing Date and
after giving effect to the Closing (and to all transactions to be
effected simultaneously therewith), there shall be issued no class or
series of stock entitled to any preference other than the Shares.
(iv) The consummation of the transactions contemplated by
this Agreement will not trigger the anti-dilution provisions or
other price adjustment mechanisms of any outstanding subscriptions,
options, warrants, calls, contracts, preemptive rights, demands,
commitments, conversion rights or other agreements or arrangements of
any character or nature whatsoever under which the Company is or may
be obligated to issue or acquire its capital stock.
(f) FINANCIAL STATEMENTS. (I) The Company has delivered to the
Purchaser its interim balance sheet as of August 31, 2000 (the
"COMPANY'S FINANCIAL STATEMENTS"), a copy of which is attached hereto
as Schedule 3.1 (f).
(II)The Company's Financial Statements (i) are accurate,
(ii) have been prepared in compliance with all applicable laws
and regulations and in accordance with Danish GAAP, applied on a
consistent basis throughout the periods indicated and with each other,
and (iii) reflect and fairly present, according to Danish GAAP, the
authentic economic and financial condition and operating results of
the Company as of the dates, and for the periods, indicated therein.
(III) All Liabilities of the Company are duly reflected in
the Company's Financial Statements and its assets are valued
according to Danish GAAP. All the provisions which should be made as
part of a sound accounting and financial management practice or that
are required to be made according to any applicable law or regulation
including, but not limited to, those referring to tax liabilities,
have been duly made and provided for in the Company's Financial
Statements.
(IV)The Company is the full and legal owner of all the
assets (whether tangible or intangible) which are reflected in the
asset side of the balance sheet components of
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the Company's Financial Statements, free from any mortgages,
pledges, charges, encumbrances, liens, attachments or any other type
of rights "in rem".
(V) Since the date of the latest Company's Financial
Statements: (i) nothing has occurred which might adversely
materially affect the financial condition, operating results, assets,
prospects, goodwill, or business transactions of the Company as
reflected in the Company's Financial Statements; (ii) all actions and
transactions carried out by the Company have been duly recorded and
accounted for; (iii) there has been no change in the accounting
policies and valuation criteria used by the Company; and (iv) no
action or transaction has been initiated, conducted, taken or closed
outside the ordinary course of business and market practices
customarily applied by the Company, and its business has been carried
on without any interruption or material alteration in its nature,
scope or manner.
(g) COMPLIANCE WITH APPLICABLE LAW. The Company is and has been
at all times since its date of incorporation, in compliance with all
applicable Requirements of Law, other than where the failure to be in
compliance would not have a Material Adverse Effect.
(h) TITLE TO PROPERTIES; INSURANCE. The Company has good and
valid title to its material properties and assets, including all
properties and assets listed on the Company's Financial Statements (or
valid title insurance enforceable for the fair value of such
properties or assets) and all of such properties and assets are free
of all Liens other than Permitted Liens. For greater clarity, at
Closing, except as set forth in this Agreement and the Ancillary
Documents, the shares of Loop Preferred Stock will be free and clear
of all Liens and Permitted Liens.
(i) OWNERSHIP OF LOOP'S PREFERRED STOCK. All shares of Loop's
Preferred Stock will be owned by the Company on the Closing Date
free and clear of any Liens, pledges, security interests, claims or
other encumbrances. There are no contracts, commitments or agreements
relating to voting, purchase or sale of Loop's capital stock between
the Company and any other Person, and no such agreements will exist at
Closing other than the Loop Shareholders Agreement.
(j) TAXES. (i) The Company has complied, and is current and
up-to-date, with all required tax payments, declarations,
returns, filings, information disclosures or any other obligations
established in any applicable law or regulations under any competent
jurisdiction as well as any other fees, duties or payments to any
Governmental Entity or to any third party as may be required to
conduct its business; (ii) there is no action, proceeding,
investigation, audit or claim of any nature now pending nor to the
best knowledge of the Company, are there any facts which could give
rise to any such action, proceeding, investigation, audit or claim,
against the Company with respect to any Taxes and (iii) the Company is
not aware of any material change in law which has been introduced or
proposed and which would have a material effect on the Taxes of the
Company..
11
(k) ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Company
nor any officer, employee or agent thereof, nor any other Person
acting on behalf of the Company, has, directly or indirectly, since
the date of its incorporation, given or agreed to give any gift or
similar benefit to any customer, supplier, governmental employee or
other Person or entity who is or may be in a position to help or
hinder the Company (or assist the Company in connection with any
actual or proposed transaction) which (x) subjects the Company, to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding which would have a Material Adverse Effect, (y) if not
given in the past, could have had a Material Adverse Effect or (z) if
not continued in the future, could have a Material Adverse Effect.
(l) ABSENCE OF UNDISCLOSED LIABILITIES. The Company does not have
any obligations or liabilities of any nature (matured or
unmatured, accrued or unaccrued, known or unknown, fixed or
contingent) (collectively, the "LIABILITIES") other than (i) to the
extent set forth or adequately provided for in the Company's Financial
Statements as of August 31, 2000, and (ii) those incurred in
connection with the execution and performance of this Agreement and
the Ancillary Documents.
(m) BROKERS AND FINDERS. The Company has not utilized any broker,
finder, placement agent or financial advisor or incurred any liability
for any fees or commissions in connection with any of the transactions
contemplated hereby or by the Ancillary Documents.
(n) REAL PROPERTY. The Company does not own or lease any real
property.
(o) REPRESENTATIONS COMPLETE. None of the representations and
warranties made by the Company and the Seller herein or in any
Schedule hereto, or in any certificate furnished by the Company or the
Seller pursuant to this Agreement, when all such documents are read
together in their entirety, contains or will contain at the Closing
any untrue statement of a material fact, or omits or will omit at the
Closing to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the
circumstances under which made, not misleading.
Section III.2 REPRESENTATIONS AND WARRANTIES OF LOOP AND THE LOOP
SHAREHOLDERS. Subject to Section 8.8, Loop and the Loop Shareholders jointly and
severally represent and warrant to the Purchaser as of the date hereof and as of
the Closing Date as follows, it being understood that the Purchaser is relying
on the following representations and warranties to effect the transactions
contemplated herein:
(a) ORGANIZATION OF LOOP. Loop is a corporation duly organized,
validly existing, and registered with the Commercial Registry of
Barcelona, Spain, under the laws of Spain and has all requisite
corporate power and authority to own, operate and lease its properties
and to carry on its businesses as they are now being conducted. Loop
is duly licensed or qualified as a foreign corporation for the
transaction of business under the
12
laws of each other jurisdiction in which its ownership or leasing
of properties, or the conduct of its businesses requires such
licensing or qualification, except where the failure to be so licensed
or qualified in any such jurisdiction would not have a Material
Adverse Effect. Loop has no Subsidiaries.
(b) [Intentionally Omitted]
(c) AUTHORIZATION; NO CONFLICTS. Loop has full corporate power
and authority to enter into this Agreement and the Ancillary
Documents and to perform its obligations hereunder and thereunder. The
execution, delivery and performance by Loop of this Agreement and each
Ancillary Document have been duly authorized by all necessary
corporate action. The consummation of Loop's obligations under this
Agreement and each Ancillary Document shall be duly authorized by all
necessary corporate action prior to Closing. This Agreement has been,
and on or prior to the Closing Date each Ancillary Document will be,
duly and validly executed and delivered by Loop. This Agreement
constitutes, and upon its execution and delivery on or prior to the
Closing Date, each Ancillary Document will constitute, a valid and
legally binding obligation of Loop enforceable against Loop in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors generally and by general equitable
principles. The execution, delivery and performance of this Agreement
and the Ancillary Documents by Loop, the consummation of the
transactions by Loop contemplated hereby and thereby and the
compliance by Loop with the provisions hereof and thereof will not
conflict with, violate or result in a breach of any provision of,
require a consent, approval or notice under, or constitute a default
(or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of or
accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of any
Lien upon any of the properties or assets of Loop under, (i) the
articles of incorporation, by-laws or other governing instrument of
Loop, (ii) any Contractual Obligation of Loop or (iii) assuming that
the filings, consents and approvals specified in Schedule 3.2(d) have
been obtained or made and any waiting period applicable thereto has
expired or been terminated, any Requirement of Law applicable to Loop,
except for the amendment to Loop's by-laws required to create the
Preferred Stock and, in the case of clauses (ii) and (iii) above, such
conflicts, violations, breaches, consents, approvals, notices,
defaults, terminations, accelerations or Liens which would not have a
Material Adverse Effect.
(d) CONSENTS. Except as set forth in Schedule 3.2(d), no consent,
approval, order or authorization of, registration, declaration or
filing with, or notice to, any Governmental Entity is required on the
part of Loop in connection with the execution and delivery by Loop of
this Agreement and the Ancillary Documents, the consummation by Loop
of the transactions contemplated hereby and thereby or the performance
by Loop of its obligations hereunder and thereunder, except for (i)
the filing of all notices, reports and other documents required by,
and the expiration of all waiting periods under, the rules and
regulations promulgated by the Spanish Comision del Xxxxxxx de las
13
Telecomunicaciones and Portuguese Instituto das Comunicacoes de
Portugal, and (ii) such consents, approvals, orders, authorizations,
registrations, declarations, filings or notices of which the failure
to make or obtain would not have a Material Adverse Effect.
(e) CAPITALIZATION. (i) As of the date hereof, the authorized
capital stock of Loop consists of 1,476,190 shares of Common
Stock, all of which are issued and outstanding, and 118,095 shares of
Common Stock are held in treasury and reserved for issuance upon
exercise of outstanding stock options. As of the date hereof, no
shares of Preferred Stock are designated, and no shares are issued and
outstanding. As of the Closing, 100% of the Shares of Preferred Stock,
representing 70% of the outstanding capital of Loop, will be issued
and outstanding, and held by Holdco. All of the issued and outstanding
shares of Loop's capital stock have been duly and validly authorized
and issued and are fully paid and not subject to preemptive rights
other than in favor of the Loop Shareholders, as described in Loop's
by-laws.
(ii) Each share of Loop's Preferred Stock indicated as being
owned or to be owned by the Company on Schedule 3.1(i) is, or at
Closing shall be, duly and validly authorized and issued, fully paid
and not subject to preemptive rights, other than those pertaining to
the Loop Shareholders, which shall have been previously waived by
them, and the Company has, or at Closing shall have, good title
thereto, free and clear of all Liens, and has been, or at Closing will
have been, entered in Loop's shareholder ledger (Libro Registro de
Socios).
(iii)Other than the requirement to issue Preferred Stock
pursuant to the terms and conditions of this Agreement and the
possible conversion of stock options into shares of Common Stock
pursuant to the Stock Option Plan (substantially in the form attached
hereto as Exhibit D), (1) no equity securities of Loop are or may
become required to be issued by reason of any options, warrants,
rights to subscribe to, calls, preemptive rights, or commitments of
any character whatsoever, (2) there are no outstanding securities or
rights convertible into or exchangeable for shares of any capital
stock of Loop and (3) there are no contracts, commitments,
understandings or arrangements by which Loop is or will be bound to
issue additional shares of its capital stock or securities or rights
convertible into or exchangeable for shares of its capital stock or
options, warrants or rights to purchase or acquire any additional
shares of its capital stock. Loop is not subject to any obligation
(contingent or otherwise) to repurchase, redeem or otherwise acquire
or retire any of its capital stock. As of the Closing Date and after
giving effect to the Closing (and to all transactions to be effected
simultaneously therewith), there shall be issued no class or series of
stock entitled to any preference other than the Preferred Stock.
(iv) Except for the Loop Shareholders Agreement and as set
forth on Schedule 3.2(e), neither Loop nor any of the Loop
Shareholders is a party to, and there are no voting trusts, proxies or
any other agreements or understandings with respect to the voting of
any capital stock of Loop.
14
Acquisition Agreement
(v) The consummation of the transactions contemplated by
this Agreement will not trigger the anti-dilution provisions or
other price adjustment mechanisms of any outstanding
subscriptions, options, warrants, calls, contracts, preemptive
rights, demands, commitments, conversion rights or other
agreements or arrangements of any character or nature whatsoever
under which Loop is or may be obligated to issue or acquire its
capital stock.
(f) FINANCIAL STATEMENTS. (I) Loop has delivered to the Purchaser
its financial statements (balance sheet, profit and loss account and
annual report) and management reports (INFORMES DE GESTION) audited by
Xxxxxx Xxxxxxxx as at, and for the fiscal year closed on, December 31,
1999, and its interim unaudited accounts as of June 30, 2000
(collectively, the "FINANCIAL STATEMENTS"), copies of which are
attached hereto as Schedule 3.2 (f).
(II) The Financial Statements (i) are accurate, (ii) have
been prepared in compliance with all applicable laws and
regulations and in accordance with GAAP, applied on a consistent
basis throughout the periods indicated and with each other, and
(iii) reflect and fairly present, according to GAAP, the
authentic economic and financial condition and operating results
of Loop as of the dates, and for the periods, indicated therein.
(III) All Liabilities of Loop are duly reflected in the
Financial Statements and its assets are valued according to GAAP
and, in particular, according to the principle of prudent
valuation (PRINCIPIO DE PRUDENCIA VALORATIVA). All the provisions
which should be made as part of a sound accounting and financial
management practice or that are required to be made according to
any applicable law or regulation including, but not limited to,
those referring to tax liabilities, have been duly made and
provided for in the Financial Statements.
(IV) Loop is the sole and legal owner of all the assets
(whether tangible or intangible) which are reflected in the asset
side of the balance sheet components of the Financial Statements,
free from any mortgages, pledges, charges, encumbrances, liens,
attachments or any other type of rights "in rem" other than
Permitted Liens.
(V) Loop has duly deposited its annual accounts and
management reports since the date of its incorporation with the
Barcelona Commercial Registry.
(VI) Since December 31, 1999: (i) nothing has occurred which
might adversely materially affect the financial condition,
operating results, assets, prospects, goodwill, or business
transactions of Loop as reflected in the Financial Statements;
(ii) all actions and transactions carried out by Loop have been
duly recorded and accounted for; (iii) there has been no change
in the accounting policies and valuation criteria used by Loop;
and (iv) no action or transaction has been initiated, conducted,
taken or closed outside the ordinary course of business and
market practices customarily applied by Loop, and
15
its business has been carried on without any interruption or material
alteration in its nature, scope or manner.
(g) COMPLIANCE WITH APPLICABLE LAW. Loop is and has been at all
times since its date of incorporation, in compliance with all
applicable Requirements of Law, other than where the failure to be in
compliance would not have a Material Adverse Effect.
(h) PERMITS. (A) Loop (x) has all licenses, permits, orders,
approvals, registrations, authorizations and qualifications of or with
all Governmental Entities necessary to enable it to own its properties
and conduct its businesses as presently conducted, including without
limitation (i) a Class A Licence and Authorization to provide public
fixed telephony services in the Barcelona province, Spain, (ii) a
Class C Authorization for the operation of public data networks in
Spain, and (iii) a Class B1 Licence to install or exploit a public
network for providing wireline services in Barcelona and Madrid,
Spain, and (y) has applied for all licences necessary in light of
Loop's present and presently contemplated business to operate in the
voice and data markets in Portugal and has no reason to believe that
such licenses will not be granted (all licenses authorizations and
other permits under (x) and (y) above, collectively, the "PERMITS"),
except to the extent that the failure to have or to be granted any
such Permits would not have a Material Adverse Effect. Loop is in
compliance with the Permits, except to the extent that the failure to
be in compliance with any such Permits would not have a Material
Adverse Effect.
(B) Particularly, set forth on Schedule 3.2(h) is a list of
(i) all licenses or other Permits relating to telecommunications
services that have been granted to Loop and (ii) all applications for
any such licenses or other Permits that are pending before the
competent Governmental Entities as of the date hereof. The licenses
and other Permits detailed in Schedule 3.2(h) are the only licenses or
Permits that are required by applicable law to be held by Loop in
order to conduct the business of Loop as it is currently conducted.
(i) LEGAL PROCEEDINGS. There are no legal or administrative
proceedings or arbitrations, and no claims, actions or governmental
investigations of any nature pending against Loop or to which Loop or
any of its properties or assets is subject, and, to the best knowledge
of each of Loop and the Loop Shareholders, there has not been
threatened any such proceeding, arbitration, claim, action or
governmental investigation against Loop, in each case, which would, if
adversely determined, have a Material Adverse Effect. Loop has not
been permanently or temporarily enjoined or barred by any order,
judgment or decree of any Governmental Entity from engaging in or
continuing any conduct or practice in connection with the businesses
conducted by Loop.
(j) ABSENCE OF CERTAIN CHANGES. Since December 31, 1999 (the
"BALANCE SHEET DATE") Loop has conducted its business in the ordinary
course, consistent with past practice and there has not occurred:
16
(i) any change, event or condition (whether or not covered
by insurance) that has resulted in, or might reasonably be
expected to result in, a Material Adverse Effect to Loop; or
(ii) any transaction, event or occurrence which, had it
occurred subsequent to the date of this Agreement and prior to
the Closing, would have required the Purchaser's consent pursuant
to Section 4.2 of this Agreement (other than transactions, events
or occurrences occurring after the date of this Agreement and
prior to the Closing with the Purchaser's written consent
pursuant to Section 4.2 of this Agreement).
(k) SOCIAL SECURITY. Loop has at all times complied with all laws
and regulations governing Social Security (SEGURIDAD SOCIAL) and has
punctually and correctly made all required payments, filings
(including forms TC-1 and TC-2) and information disclosures.
(l) LABOR MATTERS (1) Attached as Schedule 3.2(l) is a list of
the employees on the payroll of Loop and a detailed breakdown showing
all of their benefits and entitlements, their seniority, occupational
category, annual gross salary and a calculation of the maximum amounts
that should be paid as severance liability in the event of a
disciplinary dismissal (DESPIDO DISCIPLINARIO), an objective dismissal
(DESPIDO OBJETIVO) or a collective dismissal (DESPIDO COLECTIVO). Loop
has no employees on its payroll in addition to those identified in the
aforesaid Schedule.
(2) Loop is in compliance in all material respects with all
applicable laws, regulations, agreements, contracts and policies
relating to employment, discrimination in employment, terms and
conditions of employment, wages, hours and occupational safety and
health and employment practices except when failure of such compliance
would not have a Material Adverse effect.
(3) Loop has at all times complied with the laws and
regulations governing employment relations including any applicable
collective bargaining agreements (CONVENIOS COLECTIVOS), and is
up-to-date in the payment of all remuneration due to its employees.
For the purposes of this Agreement "remuneration" shall include
salary; extra payments; bonuses; premiums; incentives; stock options;
profit sharing arrangements; travel, accident, disability, life or
medical insurance; formal or informal pension plans; company cars;
loans; luncheon vouchers; or any other type of labor condition or
compensation (whether in cash or in kind, whether formal or informal)
received by any employee, executive, officer or director of Loop.
Attached as Schedule 3.2(l) is a description of the remuneration to
which the above-mentioned persons are entitled. Loop is not committed
to any remuneration which is not mentioned in such Schedule. There is
no remuneration which has not been accounted for or for which a
provision has not been made.
17
(4) Loop has withheld all amounts required by law or by
agreement to be withheld from the wages, salaries, and other payments
to employees, and Loop is not liable for any arrears of wages or any
taxes or any penalty for failure to comply with any of the foregoing.
(5) Loop has not entered into senior executive employment
contracts (CONTRATOS DE ALTA DIRECCION) as regulated in Royal Decree
1382/1985, dated August 1, 1985.
(6) No senior executive has left Loop since the date of
Loop's incorporation. No current or former employee, executive,
officer or director of Loop is entitled to any kind of termination
indemnity or severance payment different to that established under any
applicable law, regulation or collective bargaining agreement, or is
entitled to any other compensation for normal or early termination.
(7) No employee of Loop has given notice to Loop, and the
management of Loop is not otherwise aware, that any such employee
intends to terminate his or her employment with Loop.
(8) As of the date hereof, there are no pending, or to the
best knowledge of each of Loop and the Loop Shareholders, threatened
claims against Loop under any employees compensation plan or policy or
for long-term disability.
(9) Except as forth in Schedule 3.2(l) and the Employment
Term Sheets (which shall become effective on the Closing Date),
substantially in the form attached hereto as Exhibit H, Loop has not
entered into any employment contracts.
(10) There are no controversies pending or, to the best
knowledge of each of Loop and the Loop Shareholders, threatened,
between Loop and any of its employees, which controversies have
resulted, or could reasonably be expected to result, in an action,
suit, complaint, proceeding, claim, arbitration or investigation
before any governmental agency, administrative agency, court,
commission or tribunal, foreign or domestic by or on behalf of any
employee, prospective employee, former employee, retiree, labor
organization or other representative of such employees, which, if
adversely determined, would have a Material Adverse Effect.
(11) There is no unfair labor practice charge or complaint
pending or, to the best knowledge of each of Loop and the Loop
Shareholders, threatened against or otherwise affecting Loop.
(12) There is no labor strike, slowdown, work stoppage,
collective bargaining or other individual or collective labor dispute,
lockout or other labor controversy in effect, threatened against or
otherwise affecting Loop, and Loop has not experienced any such labor
controversy since the date of its incorporation.
(13) Loop is not a party to any employee benefit plans.
18
(14) Loop has not closed any plant or facility, effectuated
any layoffs of employees or implemented any early retirement, since
the date of its incorporation, nor has Loop planned or announced any
such action or program for the future.
(15) Loop shall not, at any time within the 90-day period
prior to the Closing Date, effectuate a "plant closing" or "mass
layoff", affecting in whole or in part any site of employment,
facility, operating unit or employee.
(16) Except as disclosed in Schedule 3.2(l) Loop is not a
party to any employment agreement or consulting agreement with any
Person, nor is any such contract or agreement presently being
negotiated. Schedule 3.2(l) shall set forth all compensation
arrangements under any employment agreement or consulting agreement
listed thereon.
(m) MATERIAL AGREEMENTS. Loop has made available to the Purchaser
a true and correct copy of all Material Agreements, a list of which is
set forth on Schedule 3.2(m). Each Material Agreement is valid,
binding, in full force and effect and enforceable by Loop in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors generally and by general equitable
principles. Loop has performed all material obligations required to be
performed by it under the Material Agreements and it is not (with or
without the lapse of time or the giving of notice, or both) in breach
or default in any material respect thereunder and, to the best
knowledge of each of Loop and the Loop Shareholders, no other party to
any of the Material Agreements is (with or without the lapse of time
or the giving of notice, or both) in breach or default in any material
respect thereunder, except for any such breach, default or
non-performance which would not have a Material Adverse Effect. Except
as disclosed in Schedule 3.2(m), none of the Material Agreements
contains any change in control provision or any other clause that
would entitle any of the other parties to such Material Agreements to
terminate or renegotiate them as a result of the performance of the
transactions contemplated hereby. Loop is not a party to any agreement
that contains a non-competition clause which restrict Loop's ability
to conduct business.
(n) TITLE TO PROPERTIES; INSURANCE. Loop has good, marketable and
valid title to all of its material properties and assets, including
all properties and assets listed on its Financial Statements (or valid
title insurance enforceable for the fair value of such properties or
assets) and all of such material properties and assets are free of all
Liens other than Permitted Liens. Loop does not own any real property.
Loop has at all times maintained in full force and effect property
damage, liability and other insurance with reputable insurers at
levels of coverage and subject to self insurance and deductible
amounts reasonable and customary in the applicable industry. All of
the material tangible assets of Loop are in good operating condition
and repair, ordinary wear and tear excepted and taking into account
the respective ages of such assets. The condition of all material
leased personal property of Loop is consistent in all material
respects
19
with the condition required of such property by the terms of the
applicable lease. The assets owned or leased by Loop are sufficient to
carry on Loop's business as currently conducted.
(o) TAXES. (i) Loop has complied, and is current and up-to-date,
with all required tax payments, declarations, returns, filings,
information disclosures or any other obligations established in any
applicable law or regulations under any competent jurisdiction as well
as any other fees, duties or payments to any Governmental Entity or to
any third party as may be required to conduct its business; (ii) there
is no action, proceeding, investigation, audit or claim of any nature
now pending nor to the best knowledge of each of Loop and the Loop
Shareholders are there any facts which could give rise to any such
action, proceeding, investigation, audit or claim, against Loop with
respect to any Taxes and (iii) Loop and the Loop Shareholders are not
aware of any material change in law which has been introduced or
proposed and which would have a material effect on the Taxes of Loop.
(p) ENVIRONMENTAL MATTERS.
(i) Loop holds and is in compliance with all Environmental
Permits, and is in compliance with all applicable Environmental
Laws;
(ii) Loop has not received any Environmental Claim, nor to
the best knowledge of each of Loop and the Loop Shareholders is
any Environmental Claim threatened, which would result in a
Material Adverse Effect;
(iii) Hazardous Materials have not been generated,
transported, treated, stored, disposed of, released or threatened
to be released by Loop at, on, from or under any property or
facility currently or previously owned, operated or otherwise
used by Loop, in violation of any Environmental Law, which would
result in a Material Adverse Effect;
(iv) There are no past or present actions, activities,
events, conditions or circumstances, including without limitation
the release, threatened release, emission, discharge, generation,
treatment, storage or disposal of Hazardous Materials by Loop,
that would give rise to a Material Adverse Effect;
(v) Loop has not assumed, contractually or by operation of
law, any liabilities under any Environmental Laws;
(vi) Loop has not entered into, has not agreed to, and is
not subject to any judgment, decree, order or other similar
requirement of any Governmental Entity under any Environmental
Laws, including without limitation those relating to compliance
with Environmental Laws or to investigation, cleanup, remediation
or removal of Hazardous Substances; and
20
(vii) For purposes of this Agreement, the following terms
shall have the following meanings:
"ENVIRONMENTAL CLAIM" means any written notice, claim,
demand, action, suit, complaint, proceeding which has been
served upon or delivered or otherwise transmitted to Loop by
any Person alleging liability or potential liability
(including without limitation liability or potential
liability for investigatory costs, cleanup costs,
governmental response costs, natural resource damages,
property damage, personal injury, fines or penalties)
arising out of, relating to, based on or resulting from (i)
the presence, discharge, emission, release or threatened
release of any Hazardous Materials at, on, from or under any
property or facility currently or previously owned or used
by Loop, (ii) circumstances forming the basis of any
violation or alleged violation of any Environmental Law or
Environmental Permit, or (iii) otherwise relating to
liabilities under any Environmental Law.
"ENVIRONMENTAL PERMITS" means all permits, licenses,
registrations and other governmental authorizations required
under Environmental Laws for Loop to conduct its operations.
"ENVIRONMENTAL LAWS" means all applicable statutes,
rules, regulations, ordinances, orders, and decrees of any
Governmental Entity relating in any manner to contamination,
pollution or protection of human health or the environment.
"HAZARDOUS MATERIALS" means all hazardous, dangerous or
toxic substances, wastes, materials or chemicals, petroleum
(including, but not limited to, crude oil or any fraction
thereof) and petroleum products, pollutants, contaminants
and all other materials or substances regulated pursuant to
any Environmental Law.
(q) INTELLECTUAL PROPERTY. (A) Loop owns, or is licensed, or
otherwise possesses legally enforceable rights to use, all
intellectual property, including without limitation, patents,
trademarks, trade names, service marks, domain names, trade dress,
copyrights, copyrightable works, mask works, hardware, discoveries,
databases, systems, networks, documentation, drawings, research and
development, schematics, technology, know-how, trade secrets,
inventions, ideas, algorithms, processes, computer software programs
or applications (in source code and/or object code form), and
proprietary information or material ("INTELLECTUAL PROPERTY") that are
used in and material to the business of Loop as currently conducted.
(B) Schedule 3.2(q) lists (i) all registered Intellectual
Property and any applications therefor and (ii) all licenses,
sublicenses, royalty, consent and other agreements as to which Loop is
a party or is otherwise bound and which concern Intellectual Property,
including any Intellectual Property incorporated or included in any
product of Loop, but excluding Commercial Software. "COMMERCIAL
SOFTWARE" means
21
packaged commercially available software which has been licensed to
Loop pursuant to standard end-user licenses but is in no way a
component of, incorporated in or specifically required to develop or
support any of the services, products or business of Loop.
(C) To the best knowledge of each of Loop and the Loop
Shareholders, there is no unauthorized use, disclosure, infringement
or misappropriation (each an "INFRINGEMENT") of any Intellectual
Property rights of Loop by any third party, including any employee or
former employee of Loop, other than any such unauthorized disclosures,
infringements or misappropriations as would not have a Material
Adverse Effect on Loop. Loop has not agreed to indemnify any other
Person against any charge of Infringement of any Intellectual
Property, other than indemnification provisions contained in end-user
purchase orders arising in the ordinary course of business.
(D) All material Intellectual Property owned or used by Loop
is valid and subsisting. There has not been any suit, action or claim
alleging an Infringement by Loop of any third party, and to the best
knowledge of each of Loop and the Loop Shareholders no such action is
threatened or imminent. The manufacturing, marketing, licensing or
sale of products and services of Loop and the operation of its
business does not infringe any patent, trademark, service xxxx,
copyright, trade secret or other proprietary right of any third party.
As of the date of this Agreement, Loop has not brought any action for
Infringement of Intellectual Property or breach of any agreement
involving Intellectual Property against any third party. There are no
outstanding or, to the best knowledge of each of Loop and the Loop
Shareholders, threatened or imminent actions or orders that seek to
limit or challenge the use, ownership, validity, enforceability or
value of any Intellectual Property of Loop nor, to the best knowledge
of each of Loop and the Loop Shareholders, is there a valid basis for
any such action or order, other than any of the foregoing that would
not have a Material Adverse Effect on Loop if determined adversely to
Loop.
(E) Loop has secured valid written assignments from all
consultants and employees who contributed to the creation or
development of the Intellectual Property of Loop of the rights to such
contributions that Loop does not already own by operation of law.
(F) Loop has taken all reasonably necessary and appropriate
steps to protect and preserve the confidentiality of all Intellectual
Property that is confidential in nature ("CONFIDENTIAL INFORMATION")
and material to Loop. All use, disclosure or appropriation of material
Confidential Information owned by Loop by or to any unaffiliated third
party has been pursuant to the terms of a written agreement between
Loop and such third party. All use, disclosure or appropriation by
Loop of material Confidential Information not owned by Loop has been
pursuant to the terms of a written agreement between Loop and the
owner of such Confidential Information, or is otherwise lawful. Loop
has taken all reasonably necessary and desirable steps to protect and
preserve the integrity and
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security of its software, systems and networks and the information
thereon from any unauthorized use, access or appropriation.
(G) There are no actions that must be taken by Loop within
60 days after the Closing Date that, if not taken, will result in the
loss of any material Intellectual Property right, including the
payment of any fees or the filing of any responses or documents needed
to obtain, maintain, perfect, preserve or renew any Intellectual
Property.
(r) ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither Loop nor any
officer, employee or agent thereof, nor any other Person acting on
behalf of Loop, has, directly or indirectly, since the date of its
incorporation, given or agreed to give any gift or similar benefit to
any customer, supplier, governmental employee or other Person or
entity who is or may be in a position to help or hinder Loop (or
assist Loop in connection with any actual or proposed transaction)
which (x) subjects Loop, to any damage or penalty in any civil,
criminal or governmental litigation or proceeding which would have a
Material Adverse Effect, (y) if not given in the past, could have had
a Material Adverse Effect or (z) if not continued in the future, could
have a Material Adverse Effect.
(s) ABSENCE OF UNDISCLOSED LIABILITIES. Loop does not have any
Liabilities other than (i) to the extent set forth or adequately
provided for in the Balance Sheet included in the Financial Statements
as of June 30, 2000 (the "LATEST BALANCE SHEET"), (ii) executory
obligations to be performed after the Closing under Contractual
Obligations in the agreements listed Schedule 3.2(m), (iii) those of
the type set forth in the Latest Balance Sheet incurred in the
ordinary course of business since the Latest Balance Sheet date and
consistent with past practice and (iv) those incurred in connection
with the execution and performance of this Agreement and the Ancillary
Documents.
(t) RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement,
judgment, injunction, order or decree binding upon Loop that has or
could reasonably be expected to have the effect of prohibiting or
impairing any current or future business practice of Loop, any
acquisition of property by Loop or the conduct of business by Loop as
currently conducted or as proposed to be conducted by Loop.
(u) CUSTOMERS AND SUPPLIERS. No customer which individually
accounted for more than 5% of Loop's gross revenues during the 12
month period preceding the date hereof, and no supplier of Loop has
canceled or otherwise terminated, or made any written threat to Loop
to cancel or otherwise terminate its relationship with Loop, or has
decreased materially its services or supplies to Loop in the case of
any such supplier, or its usage of the services or products of Loop in
the case of such customer, and to the best knowledge of each of Loop
and the Loop Shareholders, no such supplier or customer intends to
cancel or otherwise terminate its relationship with Loop or to
decrease materially its services or supplies to Loop or its usage of
the services or products of Loop, as the case may be. Loop has not
knowingly breached any agreement
23
with, or engaged in any fraudulent conduct with respect to, any
customer or supplier of Loop. None of the agreements that Loop has
with any of its customers or suppliers contains any change in control
provision or any other clause that would entitle any of the other
parties to such agreements to terminate or renegotiate them as a
result of the performance of the transactions contemplated hereby.
(v) YEAR 2000 COMPLIANCE. There have been no Year 2000 Compliance
problems with any computer hardware, software, databases, automated
systems and other computer and telecommunications equipment owned or
used by Loop ("SYSTEMS") or any products or services designed,
manufactured, distributed, sold or provided by Loop (collectively,
"PRODUCTS"). "YEAR 2000 COMPLIANCE" or "YEAR 2000 COMPLIANT" means,
with respect to the Systems, Products or other equipment or materials
in question, that such can be used before, during and after the
calendar year 2000 A.D., and will operate during each such time
period, either on a stand-alone basis or by interacting or
interoperating with third-party software (provided that such
third-party software is Year 2000 Compliant), without error relating
to the processing, calculating, comparing, sequencing or other use of
date-related data.
(w) TRANSACTIONS WITH AFFILIATES. Except as set forth on Schedule
3.2(w), no officer, director, employee, Loop Shareholder or Affiliate
of Loop or any individual related by blood, marriage or adoption to
any such individual or any entity in which any such entity or
individual owns any beneficial interest, is a party to any agreement,
contract, commitment or transaction with Loop or has any material
interest in any material property used by Loop; PROVIDED that the
following events need not be disclosed: (a) dividends, redemptions,
stock purchases and other distributions otherwise permitted under this
Agreement, (b) the payment of reasonable fees to directors of Loop who
are employees of Loop, (c) any transaction with an officer or member
of the board of directors of Loop in the ordinary course of business
consistent with past practice involving compensation, indemnity,
employee benefit arrangements or expense reimbursement, (d) loans or
advances to employees otherwise permitted under this Agreement; (e)
customary employment arrangements and benefit programs on reasonable
terms as approved by the board of directors of Loop or a committee
thereof; and (f) any contract or agreement disclosed pursuant to any
provision of Section 3.2 (1).
(x) BROKERS AND FINDERS. Neither Loop nor any Loop Shareholder
has utilized any broker, finder, placement agent or financial advisor
or incurred any liability for any fees or commissions other than as
set forth in Schedule 3.2(x) which Schedule sets forth the amount of
such fees or commissions in connection with any of the transactions
contemplated hereby or by the Ancillary Documents. Subject to Section
8.6, Loop is solely responsible for all fees or other amounts that may
be payable to each Person listed on Schedule 3.2(x).
(y) CORPORATE ACTIONS. Loop will take prior to Closing all
actions necessary in accordance with applicable law and its articles
of incorporation and by-laws to hold and convene (A) a meeting of Loop
Shareholders (the "LOOP SHAREHOLDERS Meeting") to
24
approve the Loop Shareholders Resolution which shall approve (i) the
increase of Loop's capital stock by authorizing the issuance of the
shares of Preferred Stock, (ii) if necessary, the transactions
contemplated in this Agreement and in the Ancillary Documents and
(iii) the amendment of Loop's by-laws to permit the conversion of the
Company's Shares of Loop Preferred Stock into Loop Common Stock upon
the Company's request, and (B) a Board meeting (the "BOARD MEETING")
immediately thereafter to approve the Board Resolutions, which will
have been raised to the status of public deed (DOCUMENTO PUBLICO)
before a Spanish notary public. All the Loop Shareholders will attend
the Loop Shareholders Meeting, in person or by proxy, and will vote in
favor of the Loop Shareholders Resolution. The Loop Shareholders will
cause all their representatives in the Board to attend the Board
Meeting and to vote in favor of the Board Resolutions. At the Loop
Shareholders Meeting all the Loop Shareholders will waive their
pre-emptive rights on the Preferred Stock to be issued to the Company.
(z) Prior to the Closing Loop will have been converted from an
S.A. to an S.L. under Spanish law.
(aa) Schedule 3.2(aa) sets forth the initial seven members of the
Board to be elected in accordance with the Loop Shareholders
Agreement.
(bb) REPRESENTATIONS COMPLETE. None of the representations and
warranties made by Loop and the Loop Shareholders herein or in any
Schedule hereto, or in any certificate furnished by Loop or any of the
Loop Shareholders pursuant to this Agreement, when all such documents
are read together in their entirety, contains any untrue statement of
a material fact, or omits to state any material fact necessary in
order to make the statements contained herein or therein, in the light
of the circumstances under which made, not misleading.
Section III.3 REPRESENTATIONS AND WARRANTIES OF THE LOOP
SHAREHOLDERS. The Loop Shareholders, severally and not jointly, represent
and warrant to, and agree with, the Purchaser as follows, it being
understood that the Purchaser is relying on the following representations
and warranties to effect the transactions contemplated herein:
(a) ORGANIZATION, STANDING AND POWER. With respect to each Loop
Shareholder that is not an individual, it is a corporation duly
organized, validly existing under the laws of its jurisdiction of
organization. It has the corporate power to own its properties and to
carry on its business as now being conducted and as currently proposed
to be conducted and is duly qualified to do business in each
jurisdiction in which the failure to be so qualified would have a
Material Adverse Effect on it ability to consummate the transactions
contemplated hereby.
(b) AUTHORIZATION; NO CONFLICTS. Each Loop Shareholder has all
requisite corporate or other power and authority to enter into this
Agreement and the Ancillary Documents and to consummate the
transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Ancillary Documents and the
25
consummation of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of
each such Loop Shareholder, where applicable. This Agreement and the
Ancillary Documents have been duly executed and delivered by each such
Loop Shareholder and constitutes its valid and binding obligation
enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors
generally and by general equitable principles. The execution and
delivery of this Agreement and the Ancillary Documents by each such
Loop Shareholder does not, and the consummation of the transactions
contemplated hereby and thereby will not, conflict with, or result in
any violation of, or default under (with or without notice or lapse of
time, or both), or give rise to a right of termination, cancellation
or acceleration of any obligation or loss of any benefit under or make
additional liabilities or fees due under (i) any provision of its
organizational documents, if applicable, (ii) any Contractual
Obligation or (iii) any statute, law, ordinance, rule, regulation,
judgment, decree, stipulation, settlement or order applicable to it.
(c) CONSENTS. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to such Loop Shareholder in connection
with the execution and delivery of this Agreement or the Ancillary
Documents or the consummation of the transactions contemplated hereby
or thereby, except for such consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not
have a Material Adverse Effect on Loop and would not prevent,
materially alter or delay any of the transactions contemplated by this
Agreement.
(d) OWNERSHIP OF LOOP'S COMMON STOCK. Each share of Loop's Common
Stock indicated as being owned by such Loop Shareholder on Schedule
3.3(d) is, or at Closing shall be, owned by such Loop Shareholder free
and clear of any Liens, pledges, security interests, claims or other
encumbrances. There are no contracts, commitments or agreements
relating to voting, purchase or sale of Loop's capital stock between
or among any such Loop Shareholder and any other Person, other than as
disclosed in Schedule 3.2(e).
(e) OWNERSHIP OF THE COMPANY'S STOCK. Each share of the Company's
capital stock is, or at Closing shall be, owned by the Seller free and
clear of any Liens, pledges, security interests, claims or other
encumbrances. There are no contracts, commitments or agreements
relating to voting, purchase or sale of the Company's capital stock
between the Seller and any other Person.
SECTION III.4 REPRESENTATIONS AND WARRANTIES OF THE SELLER. The
Seller represents and warrants to, and agrees with, the Purchaser as
follows, it being understood that the Purchaser is relying on the following
representations and warranties to effect the transactions contemplated
herein:
26
(a) ORGANIZATION, STANDING AND POWER. Seller is a corporation
duly organized, validly existing under the laws of jurisdiction
of organization. It has the corporate power to own its properties and
to carry on its business as now being conducted and as currently
proposed to be conducted and is duly qualified to do business in each
jurisdiction in which the failure to be so qualified would have a
material adverse effect on it ability to consummate the transactions
contemplated hereby.
(b) AUTHORIZATION; NO CONFLICTS. The Seller has all requisite
corporate or other power and authority to enter into this
Agreement and the Ancillary Documents and to consummate the
transactions contemplated hereby and thereby. This Agreement and any
Ancillary Documents to which Seller is a party have been duly executed
and delivered by the Seller and constitutes its valid and binding
obligation enforceable against it in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors
generally and by general equitable principles. The execution and
delivery of this Agreement and any Ancillary Documents to which Seller
is a party by the Seller does not, and the consummation of the
transactions contemplated hereby and thereby will not, conflict with,
or result in any violation of, or default under (with or without
notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of
any benefit under or make additional liabilities or fees due under (i)
any provision of its organizational documents, if applicable, (ii) any
Contractual Obligation or (iii) any statute, law, ordinance, rule,
regulation, judgment, decree, stipulation, settlement or order
applicable to it.
(c) CONSENTS. No consent, approval, order or authorization of,
or registration, declaration or filing with, any Governmental
Entity is required by or with respect to the Seller in connection with
the execution and delivery of this Agreement or the Ancillary
Documents or the consummation of the transactions contemplated hereby
or thereby, except for (i) any such consents, approvals, orders,
authorizations, registrations, declarations or filings required to be
made or obtained by Loop which may include or implicate the Seller, or
(ii) such consents, authorizations, filings, approvals and
registrations which, if not obtained or made, would not have a
Material Adverse Effect on Loop and would not prevent, materially
alter or delay any of the transactions contemplated by this Agreement.
(d) OWNERSHIP OF LOOP'S COMMON STOCK. Each share of Loop's
Common Stock indicated as being owned by such Loop Shareholder on
Schedule 3.3(d) is, or at Closing shall be, owned by such Loop
Shareholder free and clear of any Liens, pledges, security interests,
claims or other encumbrances. There are no contracts, commitments or
agreements relating to voting, purchase or sale of Loop's capital
stock between or among any such Loop Shareholder and any other Person,
other than as disclosed in Schedule 3.2(e).
(e) OWNERSHIP OF THE COMPANY'S STOCK. Each share of the
Company's capital stock is, or at Closing shall be, owned by the
Seller free and clear of any Liens, pledges,
27
security interests, claims or other encumbrances. Except for this
Agreement, there are no contracts, commitments or agreements relating
to voting, purchase or sale of the Company's capital stock between the
Seller and any other Person.
Section III.5 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser represents and warrants to, and agrees with, the Seller and the
Loop Shareholders as follows, it being understood that the Seller is relying on
the following representations and warranties to effect the transactions
contemplated herein:
(a) ORGANIZATION. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware (U.S.A.) and has the requisite power and authority to enter
into this Agreement and the Ancillary Documents to which it is a party
and to carry out its obligations hereunder and thereunder. The
Purchaser is duly licensed or qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of
the State of California.
(b) AUTHORIZATION; NO CONFLICTS. The execution and delivery of
this Agreement and the Ancillary Documents to which the Purchaser is a
party and the consummation of the transactions contemplated hereby and
thereby have been authorized by all necessary corporate action on
behalf of the Purchaser. This Agreement has been, and on or prior to
the Closing Date each of the Ancillary Documents to which the
Purchaser is a party will be, duly and validly executed and delivered
on behalf of the Purchaser and this Agreement is, and upon their
execution and delivery on or prior to the Closing Date each of the
Ancillary Documents to which the Purchaser is a party will be, a valid
and binding obligation of the Purchaser, enforceable against it in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors generally and by general equitable
principles. The execution, delivery and performance of this Agreement
and the Ancillary Documents to which the Purchaser is a party, the
consummation by the Purchaser of the transactions contemplated hereby
and thereby and the compliance by Purchaser with the provisions hereof
and thereof will not conflict with, violate or result in a breach of
any provision of, require a consent, approval or notice under, or
constitute a default (or an event, which, with notice or lapse of time
or both, would constitute a default) under, (i) any organizational
document of the Purchaser, (ii) any Contractual Obligation of the
Purchaser, or (iii) assuming that the clearances, filings, consents
and approvals specified in Schedule 3.3(c) have been obtained or made
and any waiting period applicable thereto has expired or been
terminated, any Requirement of Law applicable to the Purchaser,
except, in the case of clauses (ii) and (iii) above, such conflicts,
violations, breaches, consents, approvals, notices, defaults,
terminations, accelerations or Liens which would not have a Material
Adverse Effect.
(c) CONSENTS AND APPROVALS. No consent, approval, order or
authorization of, registration, declaration or filing with, or notice
to, any Governmental Entity is required on the part of Purchaser in
connection with the execution and delivery by Purchaser of this
Agreement and the Ancillary Documents to which the Purchaser is a
party, the
28
consummation by the Purchaser of the transactions contemplated
hereby and thereby or the performance by the Purchaser of its
obligations hereunder and thereunder, except for such consents,
approvals, orders, authorizations, registrations, declarations,
filings or notices of which the failure to make or obtain would not
have a Material Adverse Effect. The Purchaser is fully qualified under
applicable law to consummate the transactions contemplated by this
Agreement and the Ancillary Documents.
(d) BROKERS AND FINDERS. The Purchaser is solely responsible for
all fees or other amounts that may be payable by the Purchaser to
any broker, finder, placement agent or financial advisor in connection
with any of the transactions contemplated hereby or by the Ancillary
Documents.
(e) ACQUISITION FOR INVESTMENT. The Purchaser is acquiring the
Shares for investment, for its own account, not as a nominee or agent,
and not with a view to, or for resale in connection with, any
distribution thereof in the United States or to a U.S. Person (as that
term is defined in Regulation S under the United States Securities Act
of 1933, as amended (the "SECURITIES ACT")). The Purchaser believes it
has received all information it considers or appropriate to make an
informed investment decision with respect to the Shares to be
purchased by the Purchaser. The Purchaser further has had an
opportunity to ask questions and receive answers from the Seller
regarding the terms and conditions of the offering of the Shares and
to obtain additional information necessary to verify any information
furnished to the Purchaser or to which the Purchaser had access. The
Purchaser understands that the purchase of the Shares involves
substantial risk. The Purchaser has experience as an investor in
securities of companies organized under the laws of countries other
than the United States and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment in the Shares and
has such knowledge and experience in financial and business matters,
that it is capable of evaluating the merits and risks of an investment
in the Shares and protecting its own interests in connection with this
investment. Purchaser is an "Accredited Investor" as such term is
defined in Rule 501(a) of Regulation D under the Securities Act.
Purchaser acknowledges that the Shares have not been registered under
the Securities Act or the securities laws of any state of the United
States and may not be resold or transferred in the United States or to
a U.S. Person unless they are subsequently registered under the
Securities Act or the applicable laws of any state, or unless an
exemption from registration is available. Purchaser acknowledges that
the Company is under no obligation to undertake any such registration
or to facilitate the availability of any such exemption. Purchaser
further understands that there is no current market for the Shares in
the United States or elsewhere, that no such market is likely to
develop, that the Company is under no obligation to create or xxxxxx
the creation of any such market and that, due to the absence of any
such market, Purchaser may be required to hold the Shares
indefinitely.
(f) Purchaser and its Affiliates have on hand sufficient funds
to pay the Purchase Price hereunder.
29
ARTICLE IV.
CONDUCT OF BUSINESS PENDING THE CLOSING
Section IV.1 CONDUCT OF THE BUSINESS PENDING THE CLOSING. During the
period from the date of this Agreement and continuing until the earlier of
the termination of this Agreement or the Closing, the Company and Loop agree,
and the Loop Shareholders undertake to cause Loop, (except to the extent
expressly permitted or required by this Agreement or as consented to in advance
in writing by the Purchaser), to carry on its business in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted. Each
of the Company and Loop further agrees to pay its debts and Taxes when due,
subject to good faith disputes over such debts or Taxes and to file required
reports, statements, returns and other forms and documentation required to be
filed under any applicable laws or regulations with respect to Taxes
(collectively, "TAX RETURNS"), to pay or perform other obligations when due, and
to use all reasonable efforts consistent with past practice and policies to
preserve intact its present business organizations, keep available the services
of its present officers and key employees and preserve its relationships with
customers, suppliers, distributors, licensors, licensees, and others having
business dealings with it, in order to preserve its goodwill and ongoing
business. Each of the Company and Loop agrees to promptly notify the Purchaser
of any event or occurrence not in the ordinary course of its business, and of
any event that could reasonably be expected to have a Material Adverse Effect
either of them.
Section IV.2 RESTRICTION ON CONDUCT OF BUSINESS OF THE COMPANY AND
LOOP. During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Closing, except as expressly
provided for in this Agreement and the Ancillary Documents, the Company or Loop
shall not, and the Loop Shareholders shall cause both the Company and Loop not
to, do, cause or permit any of the following, without the prior written consent
of the Purchaser:
(a CHARTER DOCUMENTS. Cause or permit any amendments to its articles
of association, bylaws or other organizational documents;
(b DIVIDENDS; CHANGES IN CAPITAL STOCK. Declare or pay any dividends
on or make any other distributions (whether in cash, stock or property) in
respect of any of its capital stock (including capital reserves), or split
(except for any split contemplated in the Loop Shareholders' Resolution),
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or repurchase or otherwise
acquire, directly or indirectly, any shares of its capital stock except
from former employees, directors and consultants to the extent required in
accordance with agreements providing for the repurchase of shares in
connection with any termination of service to it;
(c STOCK OPTION ARRANGEMENTS, ETC. Except as contemplated by the Stock
Option Plan accelerate, amend or change the period of exercisability or
vesting of options or
30
other rights granted under its stock plans or authorize cash payments
in exchange for any options or other rights granted under any of such
plans;
(d MATERIAL AGREEMENTS. Enter into any Material Agreement or violate,
amend or otherwise modify or waive any of the terms of any of its Material
Agreements;
(e ISSUANCE OF SECURITIES. Except as provided for in this Agreement,
issue, deliver or sell or authorize or propose the issuance, delivery or
sale of, or purchase or propose the purchase of, any shares of its capital
stock or securities convertible into, or subscriptions, rights, warrants or
options to acquire, or other agreements or commitments of any character
obligating it to issue any such shares or other convertible securities;
(f INTELLECTUAL PROPERTY. Transfer to any person or entity any rights
to its Intellectual Property other than pursuant to non-exclusive,
non-source code licenses in the ordinary course of business consistent with
past practice;
(g EXCLUSIVE RIGHTS. Enter into or amend any agreements pursuant to
which any other party is granted exclusive marketing or other exclusive
rights of any type or scope with respect to any of its products or
technology;
(h DISPOSITIONS. Sell, lease, license or otherwise dispose of or
encumber any of its properties or assets which are material, individually
or in the aggregate, to its business, taken as a whole except for (i) sales
of products and services in the ordinary course of business or (ii) sales
of obsolete or unused equipment;
(i INDEBTEDNESS. Incur any indebtedness for borrowed money in excess
of euro 100,000 in the aggregate, guarantee any indebtedness of other
Persons (other than the Company), or issue or sell any debt securities or
guarantee any debt securities of other Persons;
(j PAYMENT OF OBLIGATIONS. Pay, discharge or satisfy in an amount in
excess of euro 10,000 in any one case or euro 50,000 in the aggregate, any
claim, liability or obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise) arising other than in the ordinary course of
business other than the payment, discharge or satisfaction of liabilities
reflected or reserved against in the Financial Statements;
(k CAPITAL EXPENDITURES. Make any capital expenditures, capital
additions or capital improvements, other than capital expenditures,
additions and improvements not exceeding euro 250,000 in the aggregate
during any individual calendar month;
(l INSURANCE. Materially reduce the amount of any insurance coverage
provided by existing insurance policies;
31
(m TERMINATION OR WAIVER. Terminate or waive any right of substantial
value, commence voluntary bankruptcy, receivership or similar proceedings,
or terminate its legal existence;
(n EMPLOYEE BENEFIT PLANS. (i) Increase or accelerate the compensation
or fringe benefits of any current or former director or employee of Loop
(except for increases in salary or wages in the ordinary course of business
consistent with past practice), (ii) grant any severance or termination pay
to any current or former director or employee of Loop or (iii) establish,
adopt, enter into, amend or terminate any company plan or any plan,
agreement, program, policy, trust, or other arrangement that would be a
company plan if it were in existence as of the date of this Agreement;
(o LAWSUITS. Commence a lawsuit other than (i) for the routine
collection of bills, (ii) in such cases where it in good faith determines
that failure to commence suit would result in the material impairment of a
valuable aspect of its business or result in a loss of rights of
substantial value, PROVIDED that it consults with the Purchaser prior to
the filing of such a suit or (iii) for a breach of this Agreement;
(p ACQUISITIONS. Acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets
of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to its business;
(q TAXES; ACCOUNTING. Make or change any material election in respect
of Taxes, change any annual Tax accounting period, adopt or change any
accounting method, file any material Tax Return or any amendment to a
material Tax Return, enter into any closing agreement relating to any Tax,
settle any claim or assessment in respect of Taxes, surrender any right to
claim a Tax refund, or consent to any extension or waiver of the limitation
period applicable to any claim or assessment in respect of Taxes;
(r NOTICES. Fail to give all notices and other information required to
be given to the employees of Loop any collective bargaining unit
representing any group of employees of the Company, and any applicable
Governmental Entity any applicable law in connection with the transactions
provided for in this Agreement;
(s REVALUATION. Revalue any of its assets, including without
limitation writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business;
(t LOANS; CAPITAL CONTRIBUTIONS. Make any loans or advances to, or
guarantees for the benefit of, or any capital contributions to, any Person,
or form any Subsidiary, other than advances of expenses to employees made
in the ordinary course of business consistent with past practice.
32
(u CHARITABLE CONTRIBUTIONS. Make any charitable contributions or
pledges exceeding euro 10,000 in the aggregate.
(v OTHER. Take or agree in writing or otherwise to take, any of the
actions described in Sections 4.2 (a) through (u) above, or any action
which would make any of its representations or warranties contained in this
Agreement untrue or incorrect or prevent it from performing or cause it not
to perform its covenants hereunder.
Section IV.3 ACCESS TO INFORMATION. (a) The Company and Loop
shall afford the Purchaser and its accountants, counsel and other
representatives reasonable access during normal business hours during the period
prior to the Closing to (i) all of the Company's and Loop's properties, books,
contracts, commitments and records, and (ii) all other information concerning
the business, properties, personnel of the Company and Loop as the Purchaser may
reasonably request. The Company and Loop agree to provide to the Purchaser and
its accountants, counsel and other representatives copies of internal financial
statements promptly upon request to the extent that any such internal financial
statements are prepared by the Company or Loop, as the case may be, in the
ordinary course of business.
(b Subject to compliance with applicable law, from the date hereof
until the Closing, each of the Purchaser, Loop and the Company shall confer on a
regular and frequent basis with one or more representatives of the other party
to report operational matters of materiality and the general status of the
Company's and Loop's ongoing operations.
(c No information or knowledge obtained in any investigation pursuant
to this Section 4.3 or otherwise shall affect or be deemed to modify any
representation or warranty contained herein or the conditions to the obligations
of the Parties to consummate the transactions contemplated hereby.
(d The Company and Loop shall provide the Purchaser and its
accountants, counsel and other representatives reasonable access, during normal
business hours, during the period prior to the Closing, to all of the Company's
and Loop's Tax Returns and other records and workpapers relating to Taxes and
shall provide to the Purchaser and its representatives, promptly upon request,
the following information: (i) the types of Tax Returns being filed by the
Company or Loop in each taxing jurisdiction, (ii) the year of the commencement
of the filing of each such type of Tax Return, (iii) all closed years with
respect to each such type of Tax Return filed in each jurisdiction, (iv)
all material Tax elections filed in each jurisdiction by the Company or Loop,
(v) any deferred intercompany gain with respect to transactions to which the
Company or Loop have been a party, and (vi) receipts for any Taxes paid to
foreign Tax authorities.
Section IV.4 NO SOLICITATION. (a) Prior to the Closing, neither Loop,
the Loop Shareholders nor the Company shall authorize or permit any officer,
director or employee of, or any investment banker, attorney or other advisor or
representative of, Loop, the Company or the Loop Shareholders to, directly or
indirectly, (i) take any action to solicit, initiate, encourage or knowingly
facilitate any Material Transaction Proposal (as defined in Section 4.4 (c)) or
the submission of a Material Transaction Proposal or (ii) enter into or
participate in any discussions
33
or negotiations regarding, or furnish to any person any information with
respect to, a Material Transaction Proposal. The Company, Loop and/or the Loop
Shareholders will promptly notify the Purchaser of receipt of any request for
information or any Material Transaction Proposal, the material terms and
conditions of such request or Material Transaction Proposal and the identity of
the Person making any such request or Material Transaction Proposal, and will
keep the Purchaser fully informed on a current basis of the status and details
of any such request or Material Transaction Proposal. The Company, Loop and/or
the Loop Shareholders will immediately cease and cause to be terminated any
existing activities, discussions and negotiations conducted heretofore with
respect to any Material Transaction Proposal.
(b Prior to the Closing, neither the Loop Shareholders nor the
Company or Loop shall (i) approve or recommend or propose publicly to approve or
recommend any Material Transaction Proposal, or (ii) cause or agree to cause the
Company or Loop to enter into any agreement (including, without limitation, any
letter of intent or agreement in principle) related to a Material Transaction
Proposal.
(c As used herein, "MATERIAL TRANSACTION PROPOSAL" means any
inquiry, proposal or offer from any Person relating to (i) the direct or
indirect acquisition or purchase of 5% or more of the assets (based on the fair
market value thereof) of the Company or Loop or of 5% or more of any class of
equity securities of the Company or Loop or any tender offer or exchange offer
(including by the Company or Loop) that if consummated would result in any
Person beneficially owning 5% or more of any class of equity securities of the
Company or Loop, or (ii) any merger, consolidation, business combination, sale
of all or substantially all assets, recapitalization, liquidation, dissolution
or similar transaction involving the Company or Loop other than the transactions
contemplated by this Agreement.
ARTICLE V.
OTHER AGREEMENTS
Section V.1 CONVERSION. Upon the request of the Company, Loop and
the Loop Shareholders shall promptly after such request is made take all actions
necessary in accordance with applicable law, any request of the Spanish
Companies Registrar and Loop's articles of incorporation and by-laws to give
effect to the amendment to Loop's by-laws, previously approved in the Loop
Shareholders Resolution, to permit the conversion of the Company's shares of
Loop's Preferred Stock into shares of Loop's Common Stock (the "CONVERSION").
Section V.2 [Intentionally Omitted]
Section V.3 PUBLIC STATEMENTS. Each of the Seller, the Company,
the Loop Shareholders and the Purchaser agrees to hold in strict confidence and
not to disclose to others the status of any discussions or relations among the
Parties with respect to the subject matter of
34
this Agreement or the Ancillary Documents until such time as the Parties
mutually agree to publicly disclose such information or are legally obligated to
disclose such information or are obligated by applicable stock exchange rules to
disclose such information. Before any Party or any Affiliate of such party shall
release any information concerning this Agreement or the Ancillary Documents or
the matters contemplated hereby or thereby which is intended for or may result
in public dissemination thereof, such Party shall cooperate with the other
Parties, shall furnish drafts of all documents or proposed oral statements to
the other Parties, provide the other Parties the opportunity to review and
comment upon any such documents or statements and shall not release or permit
release of any such information without the consent of the other Parties, except
to the extent required by applicable law or the rules of any securities exchange
or automated quotation system on which its securities or those of its Affiliate
are traded.
Section V.4 REASONABLE COMMERCIAL EFFORTS. Subject to the
terms and conditions provided in this Agreement, each Party shall execute and
deliver such additional instruments and other documents and shall use reasonable
commercial efforts to take promptly, or cause to be taken, all actions, and to
do promptly, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated hereby by the time that this Agreement requires them
to be consummated, to obtain all necessary waivers, consents and approvals and
to effect all necessary registrations and filings, including without limitation
the filings and consents set forth on Schedule 3.1(d), Schedule 3.2(d) and
Schedule 3.3(c) hereto (collectively, the "REQUIRED CONSENTS") and to remove any
injunctions or other impediments or delays, legal or otherwise, in order to
consummate and make effective the transactions contemplated by this Agreement
for the purpose of securing to the Parties hereto the benefits contemplated by
this Agreement; PROVIDED that notwithstanding anything to the contrary in this
Agreement, no Party nor any of their Affiliates shall be required to make any
disposition, including, without limitation, any disposition of, or any agreement
to hold separate, any Subsidiary, asset or business, and no Party hereto nor any
of their Affiliates shall be required to make any payment of money nor shall any
Party or its Affiliates be required to comply with any condition or undertaking
or take any action which, individually or in the aggregate, would materially
adversely affect the economic benefits to such Party of the transactions
contemplated hereby and the Ancillary Documents, taken as a whole or materially
adversely affect any other business of such Party or its Affiliates. Moreover,
the Seller and the Loop Shareholders agree to cause the Company and/or Loop to
duly and timely perform all of their obligations under this Agreement which are
to be performed from the date hereof until, and including, the Closing Date.
Section 5.5 NOTIFICATION OF CERTAIN MATTERS. Each Party to this
Agreement shall give prompt notice to each other Party of the occurrence or
non-occurrence of any event, the occurrence or non-occurrence of which is likely
to cause any condition of any Party contained in Article VI of this Agreement to
not be satisfied at or prior to Closing; PROVIDED, HOWEVER, that the delivery of
any notice pursuant to this Section 5.5 shall not limit or otherwise affect any
remedies available to the Party receiving such notice. No disclosure by any
Party pursuant to this Section 5.5, however, shall be deemed to amend or
supplement the disclosures set forth on
35
the Schedules to ARTICLE III or prevent
or cure any misrepresentations, breach of warranty or breach of covenant.
Section 5.6 TAX ELECTIONS. The Purchaser shall have the authority to
file, or to cause the Company or Loop to file, any election with respect to
Loop and the Company for United States federal tax purposes, including an
election in accordance with section 754 of the United State Internal Revenue
Code of 1986, as amended and the regulations thereunder. Loop and the Company
shall provide any information that the Purchaser reasonably requests in order to
make any such election, and the Company and the Loop Shareholders shall
cooperate and take such action as necessary for purposes of this Section 5.6.
Section 5.7 FURTHER ASSURANCES. The Parties agree to cooperate with
one another to execute and deliver such other documents, and do all such other
further things as may be reasonably required to carry out the transactions
contemplated by this Agreement or the Ancillary Documents.
ARTICLE VI.
CONDITIONS PRECEDENT
Section VI.1 CONDITIONS TO OBLIGATIONS OF PURCHASER AND SELLER.
The respective obligations of the Purchaser and the Seller to consummate and
effect the transactions contemplated hereby shall be subject to the satisfaction
at or prior to the Closing of each of the following conditions, any of which may
be waived, in writing, by agreement of the Purchaser and the Seller:
(a NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal or
regulatory restraint or prohibition preventing the consummation of the
Closing shall be in effect, nor shall any proceeding brought by an
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, seeking any of the foregoing be
pending; nor shall there be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to
the Closing hereunder, which makes the consummation of the transactions
provided for herein or in the Ancillary Documents illegal. In the event
an injunction or other order shall have been issued, each Party agrees
to use its reasonable commercial efforts to have such injunction or
other order lifted.
(b APPROVALS. All permits, consents, authorizations, orders and
approvals of, and filings and registrations required under applicable
law, rule or regulation for or in connection with the execution and
delivery of this Agreement and the Ancillary Documents and the
consummation by the Parties hereto of the transactions contemplated
hereby and thereby shall have been obtained or made and all statutory
36
waiting periods thereunder in respect thereof shall have expired,
except where the failure to obtain any permit, consent, authorization,
order or approval, or make any filing or registration would not have a
Material Adverse Effect.
Section 6.2 ADDITIONAL CONDITIONS OF THE PURCHASER. The
obligation of the Purchaser to purchase the Shares at the Closing is subject to
the satisfaction or waiver of each of the following conditions precedent at or
prior to the Closing:
(a) REPRESENTATIONS AND WARRANTIES; COVENANTS. (i) The
representations and warranties of the Seller, the Company and the Loop
Shareholders contained in this Agreement and the Ancillary Documents
shall be true and correct in all material respects on and as of the
date of this Agreement or the date of such Ancillary Documents, as the
case may be (provided that if such representations and warranties are
already subject to a materiality qualification then the materiality
qualification in this Section 6.2(a)(i) shall not apply); and on and as
of the Closing Date, with the same effect as though made on and as of
such date (provided that if such representations and warranties are
already subject to a materiality qualification, then the materiality
qualification in this Section 6.2(a)(i) shall not apply), except to the
extent any such representation and warranty is made as of a specified
date, in which case such representation and warranty shall be true and
correct in all material respects on and as of such specified date
(provided that if such representations and warranties are already
subject to a materiality qualification, then the materiality
qualification in this Section 6.2(a)(i) shall not apply), and (ii) the
Company and the Loop Shareholders shall have performed in all material
respects all obligations, agreements, undertakings, covenants and
conditions of this Agreement and the Ancillary Documents required to be
performed by them at or prior to the Closing Date; provided that if
such obligations, agreements, undertakings, covenants and conditions
are already subject to a materiality qualification, then the
materiality qualification in this Section 6.2(a)(ii) shall not apply.
(b) COMPANY CERTIFICATE. The Seller, the Company, Loop and the
Loop Shareholders shall have delivered to the Purchaser a certificate,
dated the Closing Date, signed by its chief executive officer or its
chief financial officer, or in the case of a Loop Shareholder by such
Loop Shareholder, in form and substance reasonably satisfactory to the
Purchaser, to the effect that the conditions set forth in Section
6.2(a) have been satisfied.
(c THIRD PARTY CONSENTS. The Purchaser shall have been furnished
with evidence satisfactory to it of (i) the consent or approval of
those Persons whose consent or approval shall be required in connection
with the transactions contemplated hereby and (ii) the consent or
approval of any other Persons (if any) whose consent or approval is
necessary in connection with the transactions contemplated hereby in
order to prevent breach or termination of any contract, agreement,
right, license, permit or other asset of the Company or Loop, other
than in the case of this clause (ii) any such consents or approvals the
failure of which to obtain would not reasonably be expected to have a
Material Adverse Effect on the Company or Loop.
37
(d INJUNCTIONS OR RESTRAINTS ON CONDUCT OF BUSINESS. No temporary
restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal or regulatory
restraint provision limiting or restricting the Purchaser's conduct or the
operation of the business of the Company or Loop following the Closing
shall be in effect, and no proceeding brought by an administrative agency
or commission or other Governmental Entity, domestic or foreign, seeking
the foregoing shall be pending.
(e NO MATERIAL ADVERSE EFFECT. There shall not have occurred any
Material Adverse Effect on the Company or Loop. For the purpose of this
Section 6.2(e), a Material Adverse Effect shall mean a material adverse
effect that (i) affects the ability of the Company or Loop to continue to
carry out the business as conducted by the Company or Loop, as the case may
be, or as contemplated to be conducted by the Company or Loop, as the case
may be, or (ii) affects the ability of Loop or the Company to timely
perform their obligations under this Agreement or the Ancillary Documents
to which it is a party.
(f CONVERSION OF LOOP TO AN S.L. Loop shall have been converted from
an S.A. to an S.L. under Spanish law, and in accordance with the Loop
Shareholders Resolution.
(g LOOP SHAREHOLDERS RESOLUTIONS. The Loop Shareholders Resolution
shall have been approved by the Loop Shareholders at the Loop Shareholders
Meeting and not have been amended, modified or revoked. The Loop
Shareholders Resolution shall have been raised to the status of public deed
(DOCUMENTO PUBLICO) before a Spanish notary public.
(h The Board Resolution shall have been approved by the Loop Board and
not have been amended; modified or revoked. The Board Resolution shall have
been raised to the status of public deed (DOCUMENTO PUBLICO) before a
Spanish notary public.
(i The powers of attorney granted in favor of Xx. Xxxxxxxx Xxxxxxx
Xxxxxx and Xx. Xxxxxx Xxxxx Benet shall have been revised to the
satisfaction of the Purchaser.
Section 6.3 ADDITIONAL CONDITIONS OF THE SELLER. The obligations of
(i) the Seller to sell the Shares at the Closing are subject to satisfaction or
waiver of each of the following conditions precedent at or prior to the Closing:
(a) REPRESENTATIONS AND WARRANTIES; COVENANTS. (i) The representations
and warranties of the Purchaser contained in this Agreement and the
Ancillary Documents shall be true and correct in all material respects on
and as of the date of this Agreement or the date of such Ancillary
Documents, as the case may be; and on and as of the Closing Date with the
same effect as though made on and as of such date, except to the extent any
such representation and warranty is made as of a specified date, in which
case such representation and warranty shall be true and correct in all
material respects
38
on and as of such specified date, and (ii) the Purchaser shall have
performed in all material respects all obligations, agreements,
undertakings, covenants and conditions of this Agreement and the Ancillary
Documents required to be performed by it at or prior to the Closing.
(b) THE PURCHASER'S CERTIFICATE. The Purchaser shall have delivered to
the Company a certificate, dated the Closing Date, in form and substance
reasonably satisfactory to the Company to the effect that the foregoing
conditions set forth in Section 6.3(a) have been satisfied.
(c) NO MATERIAL ADVERSE EFFECT. There shall not have occurred any
Material Adverse Effect on the Purchaser; PROVIDED, HOWEVER, that
fluctuations in the market value of the Purchaser's stock shall not be
deemed to constitute a Material Adverse Effect on the Purchaser except to
the extent accompanied by other demonstrable material adverse effects
occurring with respect to the Purchaser's and its Subsidiaries businesses,
taken as a whole.
(d) THIRD PARTY CONSENTS. The Seller shall have been furnished with
evidence satisfactory to it of the consent or approval of those Persons
whose consent or approval shall be required for the Purchaser to consummate
the transactions contemplated hereby, other than in the case that the
failure to obtain any such consents or approvals would not reasonably be
expected to have a Material Adverse Effect on the Seller.
(e) ESCROW AGREEMENT. The Purchaser shall have executed the Escrow
Agreement which shall be in full force and effect.
ARTICLE VII.
TERM
Section VII.1 TERMINATION. This Agreement may be terminated on or any
time prior to the Closing:
(a by the mutual written consent of all Parties hereto; or
(b by either the Seller or the Purchaser if the Closing shall have not
have occurred on or prior to September 22, 2000 (the "TERMINATION DATE"),
unless the failure of such occurrence shall be due to the failure of the
Party seeking to terminate this Agreement to perform or observe its
agreements set forth herein required to be performed or observed by such
the Seller, the Company, Loop or the Loop Shareholders, on the one hand, or
the Purchaser, on or before the Closing; or
(c by the Seller or the Purchaser pursuant to notice if any
Governmental Entity of competent jurisdiction shall have denied any
approval under any of the laws, rules or regulations described in Section
3.1(d), 3.2(d), 3.3(c), 3.4(c) or 3.5(c) necessary for the
39
consummation of the transactions contemplated hereby by a final and
unappealable order.
Section VII.2 EFFECT OF TERMINATION. In the event of the
termination of this Agreement as provided in Section 7.1, this Agreement
shall forthwith become void, except for the obligations set forth in this
Section and in Sections 5.3 and 8.7 and there shall be no liability or
obligation on the part of the Parties hereto except as otherwise provided
in this Agreement. The termination of this Agreement under Section 7.1(b)
shall not relieve any Party of any liability for breach of this Agreement
prior to the date of termination.
ARTICLE VIII.
MISCELLANEOUS
Section VIII.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made herein or in any certificates delivered in
connection with the Closing shall survive for a period of twenty-four (24)
months after the Closing, PROVIDED, HOWEVER, that (a) the Surviving
Representations and Warranties shall not terminate pursuant to this Section 8.1
and shall continue to survive indefinitely and (b) the representations and
warranties in Sections 3.1(j), 3.2(k), 3.2(l), 3.2(o) and 3.2(p) shall survive
until 30 days after the expiration of the applicable statute of limitations
relating to the matters covered therein, PROVIDED, HOWEVER, that the Company,
Loop or the Seller shall not waive any statute of limitations without the prior
written consent of the Purchaser.
Section VIII.2 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given, if
delivered personally, by telecopier or sent by overnight courier as follows:
(a If to the Purchaser or the Company (after Closing), to:
COVAD COMMUNICATIONS GROUP, INC.
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxx
Fax: (000) 000-0000
40
(b If to the Seller or the Company (before Closing) to:
Xxxxxxxxx Holdings Ltd.
c/o Loop Telecom, S.A.
World Trade Center, Norte, 6(a)Planta
Xxxx xx Xxxxxxxxx, x/x
00000 Xxxxxxxxx
Attention: Xxxxx Xxxxxxxx / Xxxx Xxxxx
Fax: (x00 00) 000-0000
with a copy to:
Cuatrecasas
Xxxxx xx Xxxxxx, 000
00000 Xxxxxxxxx
Attention: Xxxxxx Xxxx
Fax: (x00 00) 000-0000
(c If to Loop, to:
Loop Telecom, S.A.
World Trade Center, Norte, 6(a) Planta
Xxxx xx Xxxxxxxxx, x/x
00000 Xxxxxxxxx
Attention: Xxxxx Xxxxxxxx / Xxxx Xxxxx
Fax: (x00 00) 000-0000
with a copy to:
Cuatrecasas
Xxxxx xx Xxxxxx, 000
00000 Xxxxxxxxx
Attention: Xxxxxx Xxxx
Fax: (x00 00) 000-0000
(d) if to any of the Loop Shareholders
Xx.Xxxxx Rosental
Xxxxx Xxxxxxxx 000, 0(0)0(x)
Xxxxxxxxx 00000
Xxxxx
Fax: (x00 00) 000-0000
41
with a copy to:
Cuatrecasas
Xxxxx xx Xxxxxx, 000
00000 Xxxxxxxxx
Attention: Xxxxxx Xxxx
Fax: (x00 00) 000-0000
or to such other address or addresses as shall be designated in writing. All
notices shall be effective when received.
Section VIII.3 ENTIRE AGREEMENT; AMENDMENT. This Agreement, the
Ancillary Documents and the documents described herein and therein or attached
or delivered pursuant hereto or thereto set forth the entire agreement between
the Parties hereto with respect to the transactions contemplated by this
Agreement. Any provision of this Agreement may be amended or modified in whole
or in part at any time by an agreement in writing among the Parties hereto
executed in the same manner as this Agreement. No failure on the part of any
Party to exercise, and no delay in exercising, any right shall operate as a
waiver thereof nor shall any single or partial exercise by any Party of any
right preclude any other or future exercise thereof or the exercise of any other
right. This Agreement and the Shareholders Agreement shall govern in the event
of a conflict with Loop's by-laws.
Section VIII.4 COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to constitute an
original, but all of which together shall constitute one and the same document.
SECTION VIII.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, U.S.A.,
APPLICABLE TO CONTRACTS EXECUTED AND PERFORMED WITHIN SUCH STATE.
Section VIII.6 INDEMNIFICATION BY THE LOOP SHAREHOLDERS. The Loop
Shareholders agree to indemnify and save harmless Loop and each of its partners,
officers, directors, employees, agents and Affiliates in their respective
capacities as such (the "LOOP FEE INDEMNITEES") from and against, and shall pay
to Loop an amount equal to, 70% of the fees or other amounts that may be payable
to each Person listed on Schedule 3.2(x) in excess of US$ 1,000,000. The
provisions of Section 8.8(b) (but not Section 8.8(e)) shall apply, MUTATIS
MUTANDIS, to any claim for indemnification by the Loop Fee Indemnitees against
the Loop Shareholders pursuant to this Section 8.6.
Section VIII.7 FEES AND EXPENSES. The Purchaser shall bear its
own costs and expenses incurred in connection with this Agreement and the
Ancillary Documents and the transactions contemplated hereby, including the fees
and expenses of its accountants and counsel. Subject to Section 8.6, the Company
shall bear the reasonable costs and expenses incurred by the Seller, the Company
and the Loop Shareholders in connection with this
42
Agreement and the Ancillary Documents and the transactions contemplated hereby,
including fees and expenses of their respective accountants and counsels.
Section VIII.8 INDEMNIFICATION BY LOOP AND THE LOOP SHAREHOLDERS.
(a) Subject to Section 8.8(e), the Seller, Loop and the Loop Shareholders agree
to jointly and severally indemnify and save harmless the Purchaser and each of
the respective partners, officers, directors, employees, agents and Affiliates
of the Purchaser in their respective capacities as such (the "PURCHASER
INDEMNITEES"), from and against any and all actions, suits, claims, proceedings,
costs, damages, judgments, amounts paid in settlement (subject to Section
8.8(b)) and expenses (including without limitation reasonable attorneys' fees
and disbursements)(collectively, "LOSSES"), relating to or arising out of (i)
any inaccuracy in or breach of the representations, warranties, covenants or
agreements made by the Company, the Seller, Loop or the Loop Shareholders
herein; (ii) Arrow Capital Associates Inc.'s lack of a license from the Bank of
Spain relating to the lease, dated June 23,2000 between Loop and Arrow Capital
Associates Inc. ("ARROW LOSSES"); (iii) Loop's lack of an activity license
(LICENSAD DE ACTIVIDAD) ("ACTIVITY LICENSE LOSSES") or (iv) Loop's lack of an
evaluation and plan of prevention of labor risks under Spain's Law 31/1995, of
November 8, on PREVENTION OF LABOR RISK ("LABOR PLAN LOSSES").
(b A Purchaser Indemnitee shall give written notice to Loop and
the Loop Shareholders' Agent of any claim with respect to which it seeks
indemnification promptly after the discovery by such party of any matters giving
rise to a claim for indemnification; PROVIDED that the failure of any Purchaser
Indemnitee to give notice as provided herein shall not relieve Loop and the Loop
Shareholders of their obligations under this Section 8.8 or the Loop
Shareholders of their obligations under Section 8.9 unless and to the extent
that Loop or the Loop Shareholders shall have been materially prejudiced by the
failure of such Purchaser Indemnitee to so notify Loop or the Loop Shareholders'
Agent. In case any such action, suit, claim or proceeding is brought against a
Purchaser Indemnitee, Loop and the Loop Shareholders shall be entitled to
participate in the defense thereof and, to the extent that they may wish, to
assume the defense thereof, with counsel reasonably satisfactory to the
Purchaser, and after notice from Loop and/or the Loop Shareholders of its/their
election so to assume the defense thereof, Loop and/or the Loop Shareholders
will not be liable to such Purchaser Indemnitee under this Section 8.8 for any
legal or other expense subsequently incurred by such Purchaser Indemnitee in
connection with the defense thereof; PROVIDED, HOWEVER, that (i) if Loop and/or
the Loop Shareholders shall elect not to assume the defense of such claim or
action or (ii) if outside legal counsel to the Purchaser Indemnitee reasonably
determines that there may be a conflict between the positions of Loop and/or the
Loop Shareholders, on the one hand, and of the Purchaser Indemnitee, on the
other hand, in defending such claim or action, then separate counsel shall be
entitled to participate in and conduct the defense, and Loop and/or the Loop
Shareholders shall be liable for any legal or other expenses reasonably incurred
by the Purchaser Indemnitee in connection with the defense (but only with
respect to one such separate counsel). Loop and/or the Loop Shareholders shall
not be liable for any settlement of any action, suit, claim or proceeding
effected without its written consent; PROVIDED, HOWEVER, that Loop and/or the
Loop Shareholders shall not unreasonably withhold, delay or condition their
consent. Loop and the Loop Shareholders further agree that they will not,
without the
43
Purchaser Indemnitee's prior written consent (which consent shall
not be unreasonably withheld), settle or compromise any claim or consent to
entry of any judgment in respect thereof in any pending or threatened action,
suit, claim or proceeding in respect of which indemnification may be sought
hereunder unless such settlement or compromise includes an unconditional release
of the Purchaser and each other Purchaser Indemnitee from all liability arising
out of such action, suit, claim or proceeding.
(c) Notwithstanding anything contained herein to the contrary,
the indemnification provided in Section 8.8(a) above shall not apply unless the
aggregate of all amounts subject to indemnification under section 8.8(a) exceeds
US$100,000 (the "BASKET"); PROVIDED, HOWEVER, that for the purposes of
calculating the Basket, materiality limitations set forth in the representations
and warranties shall be of no effect. The Basket shall not apply to Losses
relating to or arising out of (i) any inaccuracy in or breach of the
representations and warranties made in Section 3.1(i), Section 3.1(j), Section
3.1(l), Section 3.3(d), Section 3.3(e), Section 3.4(d) and Section 3.4(e); (ii)
any Arrow Losses; (iii) any Activity License Losses; or (iv) any Labor Plan
Losses. In any event, the maximum amount that Loop and the Loop Shareholders
will be required to pay under Section 8.2(a) in respect of all claims by
Purchaser Indemnities thereunder shall not exceed US$50,000,000. No claim for
indemnification under Section 8.2(a) may be made by any Purchaser Indemnitee in
respect of any representation or warranty following the expiration of the
applicable survival period, if any, specified with respect to such
representation or warranty in Section 8.1.
(d) The Purchaser shall not be permitted to seek indemnification
pursuant to this Section 8.8 from any Loop Shareholder for any Losses, unless
prior to seeking such indemnification , the Purchaser shall first have sought to
obtain indemnification with respect to such matter from Loop.
(e) The Purchaser shall not be permitted to seek indemnification
pursuant to this Section 8.8 from any Loop Shareholder for any Losses in excess
of such Loop Shareholder's "INDEMNITY PERCENTAGE" which shall be determined on a
pro rata basis calculated by dividing the number of Loop Common Shares held by
such Loop Shareholder by the aggregate number of Common Shares held by all Loop
Shareholders; provided, however, that the indemnification in this Section 8.8
shall be joint and several among the members of the Mendala Group; joint and
several between Xxxxxx Xxxxxxx and Xxxxx Xxxxxxxx (the "XXXXXXX-XXXXXXXX
GROUP"); and several between the Xxxxxxx-Xxxxxxxx Group and the Mendala Group.
(f) The indemnification provided for in this Section 8.8 shall be
the exclusive post-Closing remedy available to the Purchaser with respect to any
inaccuracy in or breach of any representation or warranty made by Loop and/or
the Loop Shareholders in this Agreement; PROVIDED that nothing herein shall
prevent the Purchaser from pursuing any remedies legally available for fraud or
fraudulent misrepresentation.
Section VIII.9 SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES.
Subject to applicable law and the following sentence, the Purchaser may assign
its rights under this Agreement in whole or in part only to any Affiliate of the
Purchaser, but no such assignment shall relieve the Purchaser of its obligations
hereunder. The Purchaser shall not assign any
44
rights under this Agreement to any Affiliate if (a) such assignment would cause
any representation or warranty of the Purchaser to become materially untrue or
incorrect, (b) such Affiliate does not expressly assume pursuant to a document
in form and substance reasonably satisfactory to the Seller and the Loop
Shareholders all of the obligations of the Purchaser associated with the rights
proposed to be assigned or (c) such assignment would materially delay or impair
consummation of the transactions contemplated by this Agreement or the Ancillary
Documents. Neither the Seller, the Company, Loop nor any of the Loop
Shareholders may assign any of its rights or delegate any of its duties under
this Agreement without the prior written consent of the Purchaser. Any purported
assignment in violation of this Section shall be void. Nothing herein shall
create or be deemed to create any third party beneficiary rights in any person
or entity not a party hereto.
Section VIII.10 INDEMNIFICATION BY THE PURCHASER. (a) Subject to
Section 8.12, the Purchaser agrees to indemnify and save harmless Loop, the Loop
Shareholders, the Seller and each of their respective partners, officers,
directors, employees, agents and Affiliates in their respective capacities as
such (the "LOOP INDEMNITEES") from and against any and all Losses relating to or
arising out of any inaccuracy in or breach of the representations, warranties,
covenants or agreements made by such Purchaser herein.
(b) The provisions of Section 8.8(b) shall apply, MUTATIS
MUTANDIS, to any claim for indemnification by the Loop Indemnitees against the
Purchaser pursuant to this Section 8.10.
(c) Notwithstanding anything contained herein to the contrary,
the indemnification provided in Section 8.9(a) above shall not apply unless the
aggregate of all amounts subject to indemnification under section 8.9(a) exceeds
US$100,000. In any event, the maximum amount that the Purchaser will be required
to pay under Section 8.9(a) in respect of all claims by Loop Indemnities
thereunder shall not exceed US$7,000,000. No claim for indemnification under
Section 8.9(a) may be made by any Loop Indemnitee in respect of any
representation or warranty following the expiration of the applicable survival
period, if any, specified with respect to such representation or warranty in
Section 8.1.
(d) The indemnification provided for in this Section 8.10 shall
be the exclusive post-Closing remedy available to the Loop Indemnitees with
respect to any inaccuracy in or breach of any representation or warranty made by
the Purchaser in this Agreement; PROVIDED that nothing herein shall prevent the
Loop Indemnitees from pursuing any remedies legally available for fraud or
fraudulent misrepresentation.
Section VIII.11 ARBITRATION. (a) Any controversy, dispute or
claim arising out of, in connection with or in relation to this Agreement shall
be exclusively determined by arbitration in accordance with this Section 8.11,
without recourse to the ordinary courts of law to which all Parties expressly
renounce, except for actions under Section 8.13. Any such arbitration shall be
held in New York, New York, USA under the rules of arbitration then in effect of
the International Chamber of Commerce (the "RULES"). The laws of New York, New
45
York (U.S.A.) shall be the substantive applicable laws and the proceedings shall
be conducted in English by a panel of three arbitrators, who shall all be fluent
in the English language.
(b) For the purpose of this Section 8.11, the Seller and the Loop
Shareholders shall be considered as only one party in the arbitration
proceedings and the Seller and the Loop Shareholders hereby constitute and
appoint Xxxxx Xxxxxxxx (the "AGENT") as the agent for and on behalf of the
Seller and the Loop Shareholders to give and receive notices and communications,
to demand arbitration, appoint arbitrators and comply with orders or awards of
arbitrators and to take all actions necessary or appropriate in the Agent's
judgment for the accomplishment of the foregoing.
(c) Either the Purchaser or the Agent (the "CLAIMANT") may, by
written notice to the other and the International Court of Arbitration of the
International Chamber of Commerce (the "COURT"), demand arbitration of the
matter, it being understood that the Claimant shall also appoint one arbitrator
in the said written notice. Within 10 days after such written notice is sent,
the party in receipt thereof (the "RESPONDENT") shall select one arbitrator by
written notice to the Claimant and the Court, and the two arbitrators so
selected shall select a third arbitrator, who shall act as the chairman of the
arbitration panel, within 10 days of the appointment of the arbitrator selected
by the Respondent. Should (i) the Respondent fail to select its arbitrator
within the term granted to the Respondent or (ii) the two arbitrators appointed
by the Claimant and the Respondent fail to select the third arbitrator by the
term granted to them, then the selection of the concerned arbitrator shall be
made by the Court, pursuant to the Rules. The decision of the arbitrators as to
the matter brought to their attention shall be binding and conclusive upon the
Parties to this Agreement.
(d) Each Party shall bear its own expenses (including, attorneys'
fees and expenses) incurred in connection with any such arbitration, and the
fees and expenses of each arbitrator and the administrative fees relating to
such arbitration shall be allocated by the arbitrators for the account of the
losing party.
Section VIII.12 EXCLUSIVE REMEDY. The First Call Option (as
defined in the Loop Shareholders Agreement) and the Second Call Option (as
defined in the Loop Shareholders Agreement) shall be the sole and exclusive
remedies available to the Seller and/or the Loop Shareholders with respect to a
failure by the Purchaser to pay the Second Installment or the Last Payment.
Section VIII.13 SPECIFIC PERFORMANCE. Subject to Section 8.12,
the Parties hereto agree that irreparable damage would occur in the event any
provision of this Agreement was not performed in accordance with the terms
hereof and that the Parties shall be entitled to an injunction or injunctions by
a court of competent jurisdiction to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement or of any award
issued by the arbitrators pursuant to Section 8.11 in addition to any other
remedy to which they are entitled at law or in equity.
46
Section VIII.14 HEADINGS, CAPTIONS AND TABLE OF CONTENTS. The
Section headings, captions and table of contents contained in this Agreement are
for reference purposes only, are not part of this Agreement and shall not affect
the meaning or interpretation of this Agreement.
Section VIII.15 INTERPRETATION AND CONSTRUCTION. The language
used in this Agreement will be deemed to be the language chosen by the parties
to express their mutual intent, and no rule of strict construction will be
applied against any party. Unless the context otherwise requires: (a) "or" is
disjunctive but not exclusive, (b) words in the singular include the plural, and
in the plural include the singular, and (c) the words "hereof", "herein", and
"hereunder" and words of similar import when used in this Agreement refer to
this Agreement as a whole and not to any particular provision of this Agreement,
and Section references are to this Agreement unless otherwise specified. Except
to the extent that the context otherwise requires "include", "includes" and
"including" are deemed to be followed by "without limitation" whether or not
they are in fact followed by such words or words of like import.
47
IN WITNESS WHEREOF, this Agreement has been executed by the
parties hereto or by their respective duly authorized representatives, all as of
the date first above written.
XXXXXXXXX HOLDINGS LTD.
By: /s/ XXXX XXXXX
--------------------
Name: Xxxx Xxxxx
Title: Power of Xxxxxxxx
XXXX0000 APS
By: /s/ XXXX XXXXX
-------------------
Name: Xxxx Xxxxx
Title: Power of Attorney
LOOP TELECOM, S.A.
By: /s/ XXXXX XXXXXXXX
------------------------
Name: Xxxxx Xxxxxxxx
Title: CEO
COVAD COMMUNICATIONS GROUP, INC.
By: /s/ XXXXXX XXXXXXXXX
-------------------------
Name: Xxxxxx Xxxxxxxxx
Title: CEO
THE SHAREHOLDERS OF LOOP TELECOM, S.A.
By: /s/ XXXXX XXXXXXXX
-------------------------
PER POWER OF ATTORNEY
Xxxxxx Xxxxxxx
By: /s/ XXXXX XXXXXXXX
------------------------
Xxxxx Xxxxxxxx
By: /s/ XXXXXXX XXXXXXX XXXXXX
-------------------------
Xxxxxxx Xxxxxxx Xxxxxx
By: /s/ XXXXXXX XXXXXXX XXXXXX
-------------------------
PER POWER OF ATTORNEY
Xxxxxxx Xxxxxxx Xxxxxx
By: /s/ XXXXXXX XXXXXXX XXXXXX
-------------------------
PER POWER OF ATTORNEY
Xxxxxx Xxxxxxx Xxxxxx
By: /s/ XXXXXXX XXXXXXX XXXXXX
-------------------------
PER POWER OF ATTORNEY
Xxx Xxxxx Xxxxxxx Xxxxxx
By: /s/ XXXXXXX XXXXXXX XXXXXX
-------------------------
PER POWER OF ATTORNEY
Xxxxx Xxxxxxx Xxxxxx
By: /s/ XXXXXXX XXXXXXX XXXXXX
-------------------------
PER POWER OF ATTORNEY
Xxxxxxxx Xxxxxxx Xxxxxx
By: /s/ XXXXXXX XXXXXXX XXXXXX
-------------------------
PER POWER OF ATTORNEY
Xxxx Xxxx Xxxxxxx Xxxxxx
XXXXXXX X.X.
By: /s/ XXXXXXX XXXXXXX XXXXXX
-------------------------
Name: Xxxxxxx Xxxxxxx Xxxxxx
Title: Power of Attorney
ROSENTAL EQUITY PARTNERS LLC
By: /s/ XXXXX XXXXXXXX
-------------------------
Name: Xxxxx Xxxxxxxx
Title: Manager
