EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
AMONG
CALIFORNIA MICROWAVE, INC.,
CALIFORNIA MICROWAVE SERVICES DIVISION, INC.
AND
TELSCAPE INTERNATIONAL, INC.
dated as of May 18, 1998
TABLE OF CONTENTS
PAGE
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SECTION 1 Definitions.............................................. 1
SECTION 2 Stock Purchase........................................... 4
2.1 Sale of Stock............................................ 4
2.2 Excluded Assets.......................................... 5
2.3 Assumption of Certain Liabilities........................ 6
2.4 Excluded Liabilities..................................... 6
2.5 Purchase Price........................................... 6
2.6 Post-Closing Adjustment of Purchase Price; Preparation of
Adjusted Schedule 2.3 and Closing Date Balance Sheet..... 7
2.7 Due To/From Parent....................................... 9
2.8 The Closing.............................................. 9
2.9 Deliveries............................................... 9
2.10 Continued Employment by Buyer of Certain
Employees of the Company................................. 10
2.11 GE Agreement............................................. 10
2.12 Books and Records........................................ 10
2.13 Further Assurances....................................... 10
SECTION 3 Representations and Warranties of the Seller and
the Company.............................................. 11
3.1 Organization and Qualification........................... 11
3.2 Authorization............................................ 11
3.3 Investment in Others..................................... 11
3.4 Capitalization........................................... 11
3.5 Government Approvals and Filings......................... 12
3.6 Third-Party Consents..................................... 12
3.7 No Violation............................................. 12
3.8 Financial Statements..................................... 12
3.9 Accounts Receivable...................................... 13
3.10 Inventories.............................................. 13
3.11 Personal Property........................................ 13
3.12 Intellectual Property.................................... 13
3.13 Contracts................................................ 14
3.14 Litigation............................................... 16
3.15 Compliance with Laws..................................... 16
3.16 Environmental Matters.................................... 16
3.17 Employee Matters......................................... 17
3.18 Leased Property.......................................... 17
3.19 Absence of Certain Changes............................... 17
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3.20 Tax Representations...................................... 18
3.21 Affiliate Transactions................................... 18
3.22 Undisclosed Liabilities.................................. 19
3.23 Certificate, By-Laws, and Minutes........................ 19
3.24 Disclosure............................................... 19
SECTION 4 Representations and Warranties of Buyer.................. 19
4.1 Organization............................................. 19
4.2 Authorization............................................ 20
4.3 Governmental Approvals................................... 20
4.4 Third Party Consents..................................... 20
4.5 No Violation............................................. 20
4.6 Investment Intent........................................ 20
4.7 Disclosure............................................... 20
SECTION 5 Other Tax Matters........................................ 21
5.1 Cooperation.............................................. 21
5.2 Retention................................................ 21
5.3 Section 338(h)(10) Election.............................. 21
5.4 Allocation of Purchase Price............................. 21
SECTION 6 Indemnification.......................................... 22
6.1 Indemnity to the Seller.................................. 22
6.2 Indemnity to Buyer....................................... 23
6.3 Third Party Claims....................................... 23
6.4 Procedures for Asserting Claims.......................... 25
6.5 Expiration of Representations and Warranties, etc........ 26
6.6 Exclusive Remedy......................................... 27
SECTION 7 Conditions to the Obligations of Buyer................... 27
7.1 Representations and Warranties........................... 27
7.2 Performance.............................................. 27
7.3 Governmental Approvals and Filings....................... 27
7.4 Third Party Consents..................................... 28
7.5 Officers' Certificates................................... 28
7.6 No Injunction............................................ 28
7.7 No Material Adverse Change............................... 28
7.8 Supply Agreement......................................... 28
7.9 Release of Liens......................................... 28
7.10 Leases................................................... 28
SECTION 8 Conditions to the Seller's Obligations................... 29
8.1 Representations and Warranties........................... 29
8.2 Performance.............................................. 29
8.3 Governmental Approvals and Filings....................... 29
8.4 Officer's Certificate.................................... 29
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8.5 No Injunction............................................ 29
8.6 Supply Agreement......................................... 30
8.7 Execution of Sublease.................................... 30
SECTION 9 Certain Covenants........................................ 30
9.1 Operation of Business Prior to Closing................... 30
9.2 Communications with Customers and Suppliers.............. 30
9.3 Non-Competition.......................................... 30
9.4 Novations................................................ 31
9.5 Use of Business Names by Buyer........................... 31
9.6 Consents; Cooperation.................................... 32
9.7 Notice of Developments................................... 33
9.8 Non-Solicitation......................................... 33
9.9 Pre-Closing Access....................................... 33
9.10 Cooperation with Respect to Borregas Avenue
Lease.................................................... 34
SECTION 10 Termination.............................................. 34
10.1 Termination.............................................. 34
10.2 Procedure and Effect of Termination...................... 35
SECTION 11 Miscellaneous Provisions; Other Agreements............... 35
11.1 Expenses................................................. 35
11.2 Brokerage................................................ 35
11.3 Amendment and Notification............................... 35
11.4 Waiver................................................... 35
11.5 Notices.................................................. 36
11.6 Binding Nature; Assignment............................... 37
11.7 Governing Law and Jurisdiction........................... 37
11.8 Press Releases........................................... 38
11.9 Headings................................................. 38
11.10 Entire Agreement......................................... 38
11.11 Counterparts............................................. 38
11.12 Attorneys' Fees.......................................... 38
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EXHIBIT A Balance Sheet
EXHIBIT B Supply Agreement
EXHIBIT C Form of Sublease
EXHIBIT D Form of Sublease
Schedule 2.2(a) Excluded Assets
Schedule 2.3 Assumed Liabilities
Schedule 2.10 Employees
Schedule 3.6 Third Party Consents
Schedule 3.8 Financial Statements
Schedule 3.10 Inventories
Schedule 3.11 Liens, List of Fixed Assets
Schedule 3.12 Intellectual Property
Schedule 3.13(a) Contracts
Schedule 3.13(b) Defaults and Enforceability
Schedule 3.13(c)(i) Required Consents
Schedule 3.13(c)(ii)Other Consents
Schedule 3.14 Litigation
Schedule 3.16 Environmental Matters
Schedule 3.19(b) Absence of Certain Changes
Schedule 3.21 Affiliate Transactions
Schedule 3.22 Liabilities
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STOCK PURCHASE AGREEMENT
This Agreement (the "Agreement") is entered into as of May 18, 1998,
among California Microwave, Inc., a Delaware corporation (the "Seller"),
California Microwave Services Division, Inc. (the "Company") and Telscape
International, Inc., a Texas corporation ("Buyer").
RECITALS:
A. The Seller and Buyer have agreed, subject to the conditions
hereafter set forth (i) that Buyer shall acquire all of the outstanding capital
stock of the Company, and (ii) that Buyer shall assume certain liabilities, as
specified herein.
B. The business of the Company is comprised of the satellite hub
operations of the Company located in Mountain View, California which provide,
via leased (to its customers) satellite communications links, data broadcast and
interactive communication services and the products operation of the Company in
Sunnyvale, California which manufactures and sells the Equatorial, radar test
equipment, frequency converter, frequency source, amplifier and Radiolink
product lines and the warranty sales and depot services relating to those
product lines.
C. Capitalized terms used herein without separate definitions have the
meanings given to such terms in Section 1.
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties and covenants hereinafter set forth, the parties
hereby agree as follows:
SECTION 1
Definitions
As used herein, the terms defined in the first paragraph of this
Agreement or elsewhere in this Agreement shall have the meanings defined for
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them therein, and the following terms shall have the following respective
meanings.
1.1 "Assets" shall have the meaning set forth in Section 2.1 hereof.
1.2 An "Affiliate" of a person or entity shall mean a person or entity
that directly or indirectly controls, is controlled by or is under common
control with that person or entity.
1.3 "Assumed Liabilities" has the meaning set forth in Section 2.4.
1.4 "Balance Sheet" shall mean the balance sheet of the Company, dated
April 25, 1998 and attached hereto as Exhibit A.
1.5 "Benefit Arrangement" shall mean an employment, severance or other
similar contract, arrangement or policy and each plan or arrangement providing
for medical and dental benefits or reimbursements, welfare benefits, insurance
coverage (including any self-insured arrangements), workers' compensation,
disability benefits, severance benefits, supplemental unemployment benefits,
vacation and holiday benefits, retirement benefits, deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation or other forms of
incentive compensation or post-retirement insurance, compensation or other
fringe benefits.
1.6 "Business" shall mean the business currently conducted by the
Company and described in Recital B to this Agreement.
1.7 "Closing" shall mean the closing of the transactions contemplated
by this Agreement.
1.8 "Closing Date" shall mean May 22, 1998, or such later date on
which all of the conditions to Closing set forth in Sections 7 and 8 shall have
been satisfied.
1.9 "Closing Date Balance Sheet" shall mean the balance sheet prepared
and agreed upon pursuant to Section 2.6.
1.10 "CMI Corporate Assets" means the assets owned or used by Seller,
including the leasehold improvements on the approximately 12,000 square
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feet of space used by Seller's corporate headquarters at the 0000 Xxxxxxxx
Xxxxxx, Xxxxxxxxx facility, which are described in Schedule 2.2(a) attached to
this Agreement.
1.11 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.12 "Contracts" has the meaning set forth in Section 3.13(a).
1.13 "Environmental Liability" shall mean any loss, damage, claim or
cost (including reasonable attorneys fees) related to any federal, state or
local environmental laws, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act 42 USC Section 9601, et
seq., Resource Conservation and Recovery Act 42 USC Section 6901, et seq., Clean
Water Act 33 USC Section 1251, et seq., Clean Air Act 42 USC Section 7401, et
seq., Toxic Substances Control Act 15 USC Section 2601, et seq., Oil Pollution
Act of 1990 33 USC Section 1001, et seq., all as amended.
1.14 "Fixed Assets" shall mean those fixed assets owned by the Company
and used in the Business, including without limitation, the fixed assets located
at the Company's Borregas Avenue, Sunnyvale facility (excluding the CMI
Corporate Assets) and at the Company's 000 Xxxxxxxx Xxxxx, Xxxxxxxx View
facility.
1.15 "GAAP" shall mean United States generally accepted accounting
principles, consistently applied and consistent with past practices.
1.16 "Intangible Assets" shall mean long-term assets (other than
prepaid expenses) that lack physical existence under GAAP, e.g., goodwill,
patents, copyrights and trademarks.
1.17 "Intellectual Property" shall mean all patents, patent
applications (whether or not filed), registered and unregistered copyrights,
copyright applications, inventions, trade secrets, research and development
data, and Know-how, computer software or other intellectual property, the
trademarks, service marks, tradenames, logos and any applications or canceled
rights pertaining thereto, in each case primarily used in the conduct of the
Business (other than the Excluded Intellectual Property).
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1.18 "Know-how" shall include, but not be limited to, all technical
information, trade secrets, product design rights, specifications, manuals,
reports, documents (i.e., active and archived books, records, personal computer
and paper files, other papers, tapes, microfilms, information storage media of
any kind and other similar documents), drawings, procedures, processes,
programs, devices, software and other source/object code, datafeed designs,
facility layouts, product quality plans, CPE listings, training materials, flow
charts, recorded media, research and development data, notebooks, marketing
information, original brochure artwork, customer lists (including contact names,
addresses and phone numbers), engineering changes, boilerplate proposals, other
tangible embodiments of information, and proprietary rights other than
copyrights, patents, and trademarks in every country of the world.
1.19 "Permitted Liens" shall mean Liens (i) for Taxes not yet due and
payable, (ii) removed or discharged on or prior to the Closing Date or (iii) on
or related to the Property that are of public record and that would appear as a
title exception in a policy of title insurance with respect to the Property.
1.20 "Property" means the real property and improvements thereon which
are the subject of the leases listed in Schedule 3.13(a) of this Agreement.
1.21 "Taxes" shall mean all federal, state, local and foreign taxes,
including income, employment (including social security, withholding and state
disability), excise, property, sales, use, franchise, and other taxes, together
with all interest, additions to tax and penalties relating thereto.
1.22 "To Seller's and the Company's knowledge", as used herein, shall
refer to the actual knowledge of Xxxxxx X. Xxxxxxxx, E. Xxxxxxx Xxxxx, Xxxxxxx
Xxxxxxxx, Xxxxx X. Xxxxx and Xxxxx Xxxx.
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SECTION 2
Stock Purchase
2.1 SALE OF STOCK. Subject to and upon the terms and conditions set
forth in this Agreement, at the Closing, Seller shall sell, assign and transfer
to Buyer, and Buyer shall purchase and acquire from Seller, all of the
outstanding capital stock of the Company, free and clear of any liens or
encumbrances or rights or claims of others. With the exceptions stated in
Section 2.2, the assets held by the Company at the time of transfer of the
outstanding capital stock of the Company to Buyer (the "Assets") shall include
(subject only to the obtaining of any requisite consents or novations in
accordance with the provisions of this Agreement), without limitation:
(a) all of the Fixed Assets, Intellectual Property and Contracts
of the Business;
(b) all of the accounts receivable of the Business;
(c) all inventories of raw material, work in process finished
products, goods, spare parts, replacement and component parts and office and
other supplies of the Business;
(d) all of the other assets that are reflected on the Closing
Date Balance Sheet;
(e) all of the books and records primarily relating to the
Business (including those located at Iron Mountain);
(f) all rights under express or implied warranties from Seller's
suppliers with respect to the Assets; and
(g) all rights under licenses (including Federal Communications
Commission ("FCC") fixed sites, transportable and blanket authority licenses),
permits and governmental authorizations relating to the Assets and the
operations associated therewith; provided that all rights under FCC licenses
shall be transferred only upon receipt of any required FCC approval.
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2.2 EXCLUDED ASSETS. Notwithstanding anything contained in Section 2.1
hereof to the contrary, the Assets do not include any of the following
(hereafter referred to collectively as the "Excluded Assets"):
(a) the CMI Corporate Assets and the other assets listed on
Schedule 2.2(a);
(b) the name and xxxx "California Microwave" and any name or xxxx
derived from or including the foregoing (the "Excluded Intellectual Property");
(c) all cash and cash equivalents and similar type investments,
such as certificates of deposit, treasury bills and other marketable securities;
(d) all books and records relating to or used in the business of
Seller and not primarily relating to or used in the Business (including those
located at Iron Mountain);
(e) all insurance policies maintained by Seller and all rights of
action, lawsuits, claims and demands, rights of recovery and set-off, and
proceeds, under or with respect to such insurance policies, except to the extent
the coverage thereof remains available after the Closing for claims relating to
the Assets or Assumed Liabilities that are not reflected in the value of the
Assets or Assumed Liabilities as shown on the Closing Date Balance Sheet or
Adjusted Schedule 2.3;
(f) except to the extent reflected on the Closing Date Balance
Sheet, all right, title and interest of the Seller in and to prepaid Taxes of
the Business, and any claims for any refund, rebate or abatement with respect to
Taxes of the Business for any period or portion thereof through the Closing Date
and any interest payable with respect thereto; and
(g) all rights to causes of action, lawsuits, claims and demands
of any nature available to or being pursued by Seller with respect to (i) the
assets and matters listed in clauses (a) through (f) of this Section 2.2 or (ii)
the Excluded Liabilities.
2.3 ASSUMPTION OF CERTAIN LIABILITIES. Effective as of the Closing,
and to the extent such liabilities and obligations are reflected in the Adjusted
Schedule 2.3 provided for in Section 2.6 hereof, Buyer shall assume and shall
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thereafter pay, perform or be responsible for the liabilities and obligations
relating to the Business listed on Schedule 2.3 attached hereto, subject to
adjustments therein that occur in the ordinary course of business prior to the
Closing and are reflected on Adjusted Schedule 2.3. The liabilities and
obligations listed on Schedule 2.3 were incurred by the Business prior to April
25, 1998, but were not assumed by the Company.
2.4 EXCLUDED LIABILITIES. Other than for (a) the liabilities assumed
pursuant to Section 2.3 above, (b) all liabilities and obligations to be
performed from and after the Closing Date under or relating to Contracts
included in the Assets (other than liabilities and obligations relating to any
failure to comply with, or any violation of, any Contract prior to the Closing);
and (c) all other liabilities and obligations of the Company relating to or
arising out of the operation of the Business to the extent reflected on the
Closing Date Balance Sheet (collectively, the "Assumed Liabilities"), as of the
Closing neither Buyer nor the Company shall be responsible for any debts,
claims, commitments, liabilities or obligations of Seller or the Business of any
kind whatsoever (including, without limitation, any liabilities relating to the
employees of the Seller or the Company arising prior to or as a result of the
Closing ("Seller's Employee Liabilities"), other than liabilities that arise as
of the Closing out of agreements or arrangements entered into by Buyer or its
Affiliates with any of such employees ("Buyer's Employee Liabilities") or any
debts, claims, commitments, liabilities or obligations relating to the Assets
(collectively, the "Excluded Liabilities").
2.5 PURCHASE PRICE. The purchase price payable by Buyer to Seller for
the outstanding capital stock of the Company and for the covenant not to compete
provided for in Section 9.3 shall be $8,154,843, payable in cash at the Closing
by wire transfer of immediately available funds to such bank account as is
specified by Seller in written instructions given to Buyer at least three days
prior to the Closing, plus assumption of the Assumed Liabilities (the "Purchase
Price").
2.6 POST-CLOSING ADJUSTMENT OF PURCHASE PRICE; PREPARATION OF
ADJUSTED SCHEDULE 2.3 AND CLOSING DATE BALANCE SHEET.
(a) CALCULATION OF ADJUSTMENT. The Purchase Price shall be
adjusted as follows:
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(i) It shall be increased by the amount that the Closing
Date Net Assets (as hereinafter defined) are greater than $1,665,031 (the
"Target Net Assets"); or
(ii) it shall be decreased by the amount that the Closing
Date Net Assets are less than the Target Net Assets.
(iii) The Target Net Assets shall be the net book value of
the Company as reflected on the Balance Sheet less the amount of liabilities
shown on Schedule 2.3.
(iv) The "Closing Date Net Assets" shall be the net book
value of the Company as reflected on the Closing Date Balance Sheet less the
amount of liabilities shown on Schedule 2.3 as adjusted to reflect the changes
therein occurring between April 24, 1998 and the Closing ("Adjusted Schedule
2.3").
(v) The Closing Date Balance Sheet shall be prepared in
accordance with GAAP, except that the Closing Date Balance Sheet accounts
receivable and inventory reserves shall be determined in a manner consistent
with that used in determining the accounts receivable and inventory reserves
reflected on the Balance Sheet. The Closing Date Balance Sheet shall not reflect
any Intangible Assets not reflected on the Balance Sheet without the written
consent of Buyer.
(vi) The amount of any decrease or increase to the Purchase
Price pursuant to this Section 2.6(a) plus interest from the Closing Date at the
Prime Rate (as hereinafter defined) shall be paid by Seller or Buyer, as the
case may be, by wire transfer in immediately available funds within five (5)
business days after the Closing Date Balance Sheet is agreed to by Seller and
Buyer or is determined by the Neutral Auditor (as hereinafter defined). For
purposes of this Agreement, "Prime Rate" means the prime rate of interest in
effect on the Closing Date as stated in the "Money Rates" section of the Wall
Street Journal.
(b) PREPARATION OF CLOSING DATE BALANCE SHEET AND ADJUSTED
SCHEDULE 2.3. As soon as practicable, and in any event within thirty (30) days
after the Closing Date, Seller shall cause the balance sheet for the Company as
of the close of business on the Closing Date (the "Closing Date Balance Sheet")
to
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be prepared in accordance with GAAP, except that the Closing Date Balance Sheet
accounts receivable and inventory reserves shall be determined in a manner
consistent with that used in determining the accounts receivable and inventory
reserves reflected on the Balance Sheet. Also, as soon as practicable, and in
any event within 30 days after the Closing, Seller shall cause the Adjusted
Schedule 2.3 to be prepared on a basis consistent with Schedule 2.3. The
Adjusted Schedule 2.3 and Closing Date Balance Sheet shall be accompanied by a
certificate of Seller's Chief Financial Officer stating that the same present
fairly, in all material respects, the financial condition of the Business as of
the Closing Date. Buyer shall provide Seller and Neutral Auditor such access to
the books and records as may reasonably be required for the preparation and/or
review of the Adjusted Schedule 2.3 and Closing Date Balance Sheet.
(c) REVIEW OF ADJUSTED SCHEDULE 2.3 AND CLOSING DATE BALANCE
SHEET. After receipt of the Adjusted Schedule 2.3 and Closing Date Balance
Sheet, Buyer shall have thirty (30) days to review it. Buyer and its authorized
representatives shall have full access to all books and records and appropriate
employees of the Seller and the Company and its accountants to the extent
required to complete their review of the Adjusted Schedule 2.3 and Closing Date
Balance Sheet, including work papers used in preparation thereof. Unless the
Buyer delivers written notice to Seller on or prior to the 45th day after
receipt of the Adjusted Schedule 2.3 and Closing Date Balance Sheet specifying
in reasonable detail all disputed items and the basis therefor, the parties
shall be deemed to have accepted and agreed to the Adjusted Schedule 2.3 and
Closing Date Balance Sheet. If Buyer so notifies the Seller of an objection to
the Adjusted Schedule 2.3 and/or the Closing Date Balance Sheet, the parties
shall, within thirty (30) days following the date of such notice (the
"Resolution Period"), attempt to resolve their differences in good faith and any
resolution by them as to any disputed amount shall be set forth in a written
statement signed by each of Seller and Buyer and shall be final, binding,
conclusive and nonappealable for all purposes under this Agreement.
(d) RESOLUTION. If at the conclusion of the Resolution Period the
parties have not reached an agreement on the objections, then all amounts
remaining in dispute may, at the election of either party, be submitted to Price
Waterhouse or another large international accounting firm not otherwise engaged
by either party that is mutually acceptable to Buyer and Seller (the "Neutral
Auditor"). Each party agrees to execute, if requested by the Neutral Auditor, a
reasonable engagement letter. All fees and expenses relating to the work, if
any,
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to be performed by the Neutral Auditor shall be borne equally by Seller and
Buyer, unless the Neutral Auditor finds one party acted in bad faith in which
case that party pays all. Except as provided in the preceding sentence, all
other costs and expenses incurred by the parties in connection with resolving
any dispute hereunder before the Neutral Auditor shall be borne by the party
incurring such cost and expense. The Neutral Auditor shall act as an arbitrator
to determine, based solely on the presentations by Seller and Buyer, and not by
independent review, only those issues still in dispute and such determination
shall be within the range of positions taken by Seller and Buyer with respect to
the applicable disputed item. The Neutral Auditor's determination shall be made
within thirty (30) days of its engagement (which engagement shall be made no
later than five (5) business days after election by either party to submit the
objections to the Neutral Auditor) or as soon thereafter as possible, shall be
set forth in a written statement delivered to Seller and Buyer and shall be
final, binding, conclusive and nonappealable for all purposes hereunder.
2.7 DUE TO/FROM PARENT. As of the date of the Balance Sheet, the
Company opened Due to Parent and Due from Parent Accounts, each of which shows a
zero balance on the Balance Sheet. At the time of payment of the purchase price
adjustment pursuant to Section 2.6 hereof, Buyer shall remit to Seller the
amount by which the Due to Parent Account exceeds the Due from Parent Account or
Seller shall remit to Buyer the amount by which the Due from Parent Account
exceeds the Due to Parent Account, as the case may be, in each case together
with interest from the Closing Date at the Prime Rate on the amount payable.
2.8 THE CLOSING. The Closing shall take place at the offices of
Howard, Rice, Nemerovski, Canady, Xxxx & Xxxxxx, A Professional Corporation,
Three Embarcadero Center, 7th Floor, San Francisco, California at 10:00 a.m.,
local time, on the Closing Date, or at such other place or time as may be agreed
to by the Seller and Buyer.
2.9 DELIVERIES. At the Closing, Seller shall deliver to Buyer (a) such
assignments and other good and sufficient instruments of transfer as shall be
satisfactory in form and substance to Buyer, and shall be effective to vest in
Buyer good and marketable title, free and clear of any liens and encumbrances or
rights and claims of others, to all of the outstanding stock of the Company, (b)
all of the Company's minute books and stock books, and (c) such resignations of
members of the Board of Directors and officers of the Company as Buyer shall
request prior
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to the Closing Date. In addition, the parties shall deliver the certificates and
documents referred to in Sections 7 and 8 hereof.
2.10 CONTINUED EMPLOYMENT BY BUYER OF CERTAIN EMPLOYEES OF THE
COMPANY. Buyer intends after the Closing to continue the employment of the
employees currently employed by the Company (i) at the Company's Mountain View,
California facility and (ii) the Company's Sunnyvale, California facility and
listed on Schedule 2.10 attached hereto. Such employees shall have comparable
jobs in terms of position, salary and job location (each of which is specified
next to such employee's name on Schedule 2.10 attached hereto) and shall, on
their date of employment by Buyer, be eligible to participate in the medical,
dental, life insurance, profit sharing, deferred pay and vacation plans, if any,
available to employees of Buyer generally. Nothing herein, however, is intended
to create any third-party beneficiary rights.
2.11 GE AGREEMENT. Subject to receiving the required consent under the
"Agreement for the Sale of Assets" between GE Capital Spacenet Services, Inc.
and California Microwave, Inc., dated as of March 31, 1995 (the "GE Agreement"),
the Company shall continue to receive the benefits of Section 2.10 of the GE
Agreement to the extent they remain applicable. Pursuant to the GE Agreement, GE
Americom presently provides the Company with C-band space segment on Spacenet IV
that permits the Company to provide services to data broadcast customers on
eight (8) 5 MHz channels using 87,187 bits per second (bps) of satellite
capacity at a monthly charge of $86,315. Seller is presently providing services
to one Equastar (2-way service) customer, GTE GSC FSD-NWWS, and pays GE Americom
$28,800 per month for use of the required 5 MHz channels on Spacenet IV,
transponder number 3; this price is guaranteed for the remainder of the term of
this Agreement.
2.12 BOOKS AND RECORDS. From and after the Closing and until the sixth
anniversary thereof, (i) Seller agrees to grant to Buyer, upon reasonable notice
and during normal business hours, reasonable access to any books and records
that pertain to the operations of the Business but that are not books and
records that primarily relate to the Business or otherwise included in the
Assets and reasonable access to all books and records primarily relating to the
Business that are located at Iron Mountain, and (ii) Buyer agrees to grant to
Seller, upon reasonable notice and during normal business hours, reasonable
access to any books and records included in the Assets that pertain to the
operation of the
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Business on or prior to the Closing Date, for any reasonable business purpose of
Seller.
2.13 FURTHER ASSURANCES. Each party agrees, at any time and from time
to time after the Closing Date, upon reasonable request from the other party, to
do, execute, acknowledge and deliver, as appropriate, such further acts, deeds,
assignments, transfers, conveyances, and powers of attorney as may reasonably be
required for the better assigning, transferring, granting, conveying, assuring
and confirming to such other party, or its successors and assigns, of any of the
assets, properties or liabilities to be assigned to it or retained by such party
as provided herein.
SECTION 3
Representations and Warranties of the Seller and the Company
Except as disclosed in the Schedules dated as of the date hereof and
delivered to Buyer concurrently herewith, the Seller and the Company represent
and warrant to Buyer as follows:
3.1 ORGANIZATION AND QUALIFICATION. The Seller and the Company are
corporations duly organized, validly existing and in good standing under the
laws of the state of Delaware. The Company has full corporate power and
authority to carry on the Business as it is now being conducted and to own or
hold under lease the properties and assets of the Business owned or held under
lease. The Company is duly qualified or licensed to do business as a foreign
corporation and is in good standing in every state in which the Business is
conducted that requires such qualification and where the failure to be so
qualified would have a material adverse effect on the business.
3.2 AUTHORIZATION. The Seller and the Company have the full corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The Seller and the Company have taken all
action required to authorize the execution and delivery of this Agreement, the
performance of Seller's and the Company's obligations hereunder and the
consummation of the transactions contemplated hereby. The Agreement is a valid
and binding agreement of the Seller and the Company, enforceable against the
Seller and the Company in accordance with its terms, subject to laws
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of general application relating to bankruptcy, insolvency and the enforcement of
creditors' rights and general equitable principles.
3.3 INVESTMENT IN OTHERS. The Company does not own any investment
(whether as a debt, equity or other interest) in any other corporation or
business entity, nor does the Company directly or indirectly control any other
corporation or business entity.
3.4 CAPITALIZATION. The authorized and outstanding shares of capital
stock of the Company are 10,000 shares and 1,000 shares, respectively, of $.001
par value common stock. All of the outstanding shares are owned by Seller free
of any rights or claims of others, are duly and validly issued and outstanding
and are fully paid and nonassessable. There are no outstanding rights, options,
warrants, conversion rights, preemptive rights or other rights or agreements for
the purchase or acquisition from the Company of any shares of its capital stock.
3.5 GOVERNMENT APPROVALS AND FILINGS. Other than filings required by
the Federal Communications Commission and government novations, no approval or
declaration, filing or registration with any governmental or regulatory
authority is required to be made or obtained by the Seller and the Company in
connection with the execution and delivery by the Seller and the Company of this
Agreement, the performance by the Seller and the Company of their obligations
hereunder or the consummation by the Seller and the Company of the transactions
contemplated hereby.
3.6 THIRD-PARTY CONSENTS. No consent, approval or authorization of, or
notice to, any third party is required to be obtained or given by the Seller and
the Company in connection with the execution or delivery by the Seller or the
Company of this Agreement, the performance by the Seller and the Company of
their obligations hereunder or the consummation by the Seller and the Company of
the transactions contemplated hereby, except for any consents required by
customer contracts, required novations of government contracts set forth on
Schedules 3.13(c)(1) and 3.13(c)(2) and for consents, approvals, authorizations
or notices which are set forth on Schedule 3.6 to this Agreement.
3.7 NO VIOLATION. Neither the execution and delivery of the Agreement
nor the consummation of the transactions contemplated hereby will: (a) violate
any provisions of the Certificate of Incorporation or Bylaws of the Seller or
the Company, each as amended to date; (b) violate, be in conflict with,
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constitute a default under, or cause the termination or the acceleration of the
maturity of any material obligation of the Seller or the Company; (c) result in
the creation or imposition of any security interest, lien or other encumbrance
upon any of the Assets (other than Permitted Liens); or (d) violate any statute
or law, or any judgment, decree, order, regulation or rule of any court or
governmental authority to which the Seller or the Company, or any of the Assets,
is bound or subject other than violations which are not reasonably likely to
have a material adverse effect on the Assets or the operation, condition
(financial or otherwise) or employee, supplier and customer relationships of the
Business (a "Material Adverse Effect").
3.8 FINANCIAL STATEMENTS. Seller has delivered to Buyer (a) the
unaudited balance sheet and the related unaudited statement of operations of the
Business as at and for the fiscal year ended June 30, 1997; (b) the unaudited
balance sheet and the related statement of operations of the Business as at and
for the ten-month period ended April 24, 1998; and (c) the Balance Sheet. Such
financial statements are in accordance with the books and records of the
Business, have been prepared in accordance with GAAP (except with respect to the
lack of footnotes and other presentation items) and fairly present in all
material respects the financial condition and results of operations of the
Business as at and for the periods specified (with the exception that the
statements do not reflect any allocation of the CMI corporate expenses set forth
in Schedule 3.8 and the Balance Sheet must be read in conjunction with Schedule
2.3).
3.9 ACCOUNTS RECEIVABLE. All of the accounts receivable of the Company
represent valid obligations and are from sales actually made or services
actually performed in the ordinary course of business, and, subject to the
reserve therefor on the Balance Sheet or to be reflected on the Closing Date
Balance Sheet, as applicable, Seller knows of no reason such accounts are not
collectible in the ordinary course of business.
3.10 INVENTORIES. Except as set forth on Schedule 3.10 to this
Agreement, and net of reserves as reflected in the Balance Sheet or to be
reflected in the Closing Date Balance Sheet, the inventories of the Company are
of such quality as to be usable or saleable in the ordinary course of business.
3.11 PERSONAL PROPERTY. The Company has good and marketable title to
all of the personal property of the Business included in the Assets (except
property with respect to which the Company is lessee, as to which the Company
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holds a valid leasehold interest) free and clear of all liens, claims,
encumbrances, security interests, rights of others, assessments, charges,
servitudes, claims, interests in land, impositions, easements, rights of way,
zoning restrictions, restrictions on use of property or imperfections of title
of the Company or its properties (collectively, "Liens"), except for Permitted
Liens, the rights of lessors under leases which are identified in Schedule 3.13
to this Agreement and other Liens identified in Schedule 3.11 which will be
released prior to Closing. The Assets of the Company are in good operating
condition (subject to normal wear and tear) and constitute all of the assets
used in the conduct of the Business (other than Excluded Assets) as currently
conducted by the Company and constitute all assets owned or used by the Company
which are necessary for the conduct of the Business as currently conducted.
Schedule 3.11 to this Agreement contains a list that is true and complete in all
material respects of the Fixed Assets.
3.12 INTELLECTUAL PROPERTY. Schedule 3.12 identifies all Intellectual
Property included in the Assets of the Company. Except as set forth on Schedule
3.12, to Seller's and the Company's knowledge the Business is being carried on
without conflicts with or infringement of patents, patent applications,
licenses, copyrights, trade secrets, trademarks, or other intellectual property
rights of others. The Seller and the Company do not know of any claim alleging
such a conflict or infringement, or of any conflicts or infringements currently
pending. Schedule 3.12 to this Agreement contains a list that is true and
complete in all material respects of the Intellectual Property. The Intellectual
Property included and the Excluded Intellectual Property constitute all of the
intellectual property used in the conduct of the Business as currently conducted
by the Company and constitute all intellectual property owned or used by the
Company which is necessary for the conduct of the Business as currently
conducted.
3.13 CONTRACTS.
(a) Schedule 3.13(a) contains a complete and correct list of all
agreements, contracts, commitments, orders, licenses, leases, and other
instruments and arrangements (whether written or oral) of the types described
below to which the Company is or at the Closing will be a party or by which it
or any of its assets is or at the Closing will be bound in connection with the
Business, the Assets or the Assumed Liabilities (collectively, the "Contracts"):
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(i) leases, licenses, permits, franchises and government
approvals;
(ii) employment, consulting, agency, collective bargaining
or other similar contracts, agreements, and other instruments and arrangements
relating to or for the benefit of employees, sales representatives,
distributors, dealers, agents, or (if material) independent contractors;
(iii) loan agreements, indentures, letters of credit,
mortgages, security agreements, pledge agreements, deeds of trust, bonds, notes,
guarantees, and other agreements and instruments relating to the borrowing of
money or obtaining of or extension of credit;
(iv) licenses, licensing arrangements and other contracts
providing in whole or in part for the use of, or limiting the use of, any
Intellectual Property;
(v) brokerage or finder's agreements;
(vi) joint venture, partnership and similar contracts
involving a sharing of profits or expenses (including but not limited to joint
research and development and joint marketing contracts);
(vii) asset purchase agreements and other acquisition or
divesture agreements, including but not limited to any agreements relating to
the sale, lease or disposal of any Assets (other than sales of inventory in the
ordinary course of business) or involving continuing indemnity or other
obligations;
(viii) vany contract with respect to which any amount could
reasonably be expected to be paid or received thereunder in the future;
(ix) sales agency, manufacturer's representative, marketing
or distributorship agreements;
(x) contracts, agreements or arrangements with respect to
the representation of the Business in foreign countries;
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(xi) any agreement, understanding, contract or commitment
(written or oral) with (x) any employee, agent, consultant, distributor, dealer
or franchisee, or (y) any Affiliate;
(xii) any collective bargaining agreements with any unions,
guilds, shop committees or other collective bargaining groups;
(xiii) any guarantee of the payment or performance of any
person or agreement to indemnify any person, or act as a surety, or other
agreement to be contingently or secondarily liable for the obligations of any
person other than the endorsement of checks in the ordinary course of business;
and
(xiv) any other contracts, agreements or commitments that
are material to the Business.
(b) There does not exist under any Contract any event of default
or event or condition that, after notice or lapse of time or both, would
constitute a violation, breach or event or default thereunder on the part of
Seller or the Company or, to the knowledge of Seller, any other party thereto
except as set forth in Schedule 3.13(b). Except as set forth in Schedule
3.13(b), each Contract is a legal, valid, binding and enforceable obligation of
the Company and, to the knowledge of Seller and the Company, the other parties
thereto.
(c) Except as set forth in Schedules 3.13(c)(1) and (2), no
consent of any third party is required under any Contract as a result of or in
connection with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby.
3.14 LITIGATION. Other than as listed on Schedule 3.14, there is no
action, suit, claim, proceeding or investigation pending or, to the knowledge of
the Seller and the Company, threatened against or involving the Business or the
Assets, and the Seller and the Company know of no basis for the commencement of
any action, suit, claim, proceeding or investigation involving the Business.
There is no outstanding judgment, order, writ, injunction or decree involving
the Business.
3.15 COMPLIANCE WITH LAWS. The Seller and the Company have complied
and are in compliance with all laws, rules, regulations, statutes,
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ordinances, orders, judgments and decrees applicable to the Business and the
operations, properties, employees and equipment of the Business, except for such
noncompliance as would not be reasonably likely to result in a Material Adverse
Effect, and to Seller's and the Company's knowledge, no condition exists which
will result in a violation of any such laws, rules, regulations, statutes,
ordinances, orders, judgments or decrees.
3.16 ENVIRONMENTAL MATTERS. To Seller's and the Company's knowledge,
(i) the Business and the Assets are currently in compliance in all material
respects with all applicable environmental, health and safety laws and
requirements; (ii) there are no past or present events, conditions or
circumstances which may give rise to any liabilities under any environmental,
health or safety laws or requirements now in force arising from the operations
of the Business, including, but not limited to, any liabilities associated with
any past operations of the Business; (iii) the Business has obtained all
environmental, health and safety permits necessary for its operations and all
such permits are in good standing and the Business is in compliance in all
material respects with all terms and conditions of such permits; (iv) the
Business has kept all material records and has made all material filings
required by applicable federal, state and local environmental laws; (v) the
Business has not been required to and has not filed any notice under federal or
state law (including, but not limited to the laws referred to in Section 1.13
hereof), indicating past, present or future treatment, storage, or disposal of
any hazardous substance or waste as those terms are defined in the laws referred
to in Section 1.13 or any state law equivalent, or reporting a release or spill
of a hazardous substance or contaminant at, on, under or about any of the
Assets; (vi) except as shown on Schedule 3.16, there has been no disposal,
discharge or release of any hazardous waste or substance relating to any of the
Assets; (vii) except as shown on Schedule 3.16, there is not now, nor has there
ever been on any of the Assets (a) any above ground or underground storage tanks
or surface impoundments, (b) any friable asbestos-containing material, or (c)
any electrical or other equipment containing polychlorinated biphenyls; (viii)
no environmental lien has attached to any of the Assets or the Business; and
(ix) the Business has no liability pursuant to any environmental, health or
safety laws. Neither Seller nor the Company has had notice or communication from
any federal, state or local regulatory authority of any claim, investigation,
order, violation, or noncompliance related to Environmental Liabilities.
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3.17 EMPLOYEE MATTERS.
(a) The employees of the Company (the "Business Employees") are
not covered by any collective bargaining agreement.
(b) There is no strike, labor dispute, work slowdown or work
stoppage actually pending or, to the knowledge of the Seller and the Company,
threatened against the Seller and the Company relating to the Business.
(c) With respect to the Business Employees, the Seller and the
Company are in compliance in all material respects with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and each Benefit Arrangement has been maintained
in compliance in all material respects with all applicable laws and the
documents and agreements, if any, governing such Benefit Arrangements, in each
case except for such noncompliance as would not be reasonably likely to result
in a Material Adverse Effect.
3.18 LEASED PROPERTY. All lease agreements relating to the Business
are valid, binding and enforceable in accordance with their terms, and are in
full force and effect; there are no existing defaults by the Seller and the
Company thereunder or, to Seller's and the Company's knowledge, of any other
party thereto. Subject to obtaining any requisite consents to the assignment of
the lease agreements, the consummation of the transactions contemplated hereby
will not have a material adverse effect on the right of the Company to the
continued use and possession of the leased property on the terms and conditions
specified in the lease agreements therefor for the purposes for which the leased
property is now used by the Business.
3.19 ABSENCE OF CERTAIN CHANGES.
(a) Since April 25, 1998, the Company has not with respect to the
Business entered into any transaction which is not in the usual and ordinary
course of business and there has been no material adverse change in the
Business.
(b) Since April 25, 1998, the Company has conducted its
operations related to the Business in the ordinary course of business, has used
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commercially reasonable efforts to maintain its respective businesses, assets,
relations with employees, suppliers, licenses and operations related to the
Business as an ongoing business in accordance with past custom and practice.
Without limiting the generality of the foregoing, except as disclosed on
Schedule 3.19(b) since April 25, 1998, in each case as related to the Business:
(i) the Company has not sold, leased, transferred, or
assigned any of its assets, tangible or intangible, other than in the ordinary
course of business;
(ii) no party (including the Seller or the Company) has
accelerated, terminated, modified, or canceled any contract, lease, sublease,
license, or sublicense (or series of related contracts, leases, subleases,
licenses, and sublicenses), excluding all purchase orders and sales orders,
involving more than $25,000 to which the Company is a party or by which it or
its assets is bound;
(iii) the Company has not made any capital expenditure (or
series of related capital expenditures) either involving more than $25,000 or
outside the ordinary course of business;
(iv) the Company has not made any capital investment in, any
loan to, or any acquisition of the securities or assets of any other person
other than in the ordinary course of business;
(v) the Company has not canceled, compromised, waived, or
released any right or claim (or series of related rights and claims), except for
any right or claim (or series of rights or claims) under any purchase order or
sales orders, either involving more than $10,000 or outside the ordinary course
of business; and
(vi) the Company has not committed to any of the foregoing.
3.20 TAX REPRESENTATIONS. All Taxes attributable to the Seller and its
Affiliates relating to the Business that are or were due and payable (without
regard to whether such taxes have been assessed) have been paid, except where
failure to do so would not materially and adversely affect the Business.
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3.21 AFFILIATE TRANSACTIONS. Except as set forth on Schedule 3.21,
none of the Seller's or the Company's Affiliates, officers, directors or any of
their employees related to or employed in the Business, is presently a party to
any material transaction with the Company with respect to the Business, the
Assets of the Company or the Assumed Liabilities, including, without limitation,
any arrangement (other than for services in the ordinary course of business as
officers, directors or employees of the Seller or the Company) providing for (a)
the furnishing of material services by, (b) the rental of material real or
personal property from, (c) any loan to, or (d) otherwise requiring material
payments to, any such person.
3.22 UNDISCLOSED LIABILITIES. Except as set forth on Schedule 3.22, to
Seller's and the Company's knowledge, neither the Company nor the Seller has any
liabilities with respect to the Business (and except as set forth on Schedule
3.22, to Seller's and the Company's knowledge, there is no basis for any present
or future action, suit, proceeding, hearing, investigation, charge, complaint,
claim or demand against the Seller or the Company giving rise to any liability
with respect to the Business), except for (a) liabilities set forth on the
Balance Sheet or Schedule 2.3, (b) liabilities which have arisen in the ordinary
course of business, and (c) liabilities set forth in any of the Schedules to
this Agreement.
3.23 CERTIFICATE, BY-LAWS, AND MINUTES. The Company has heretofore
delivered to Buyer accurate and complete copies of its Certificate of
Incorporation, By-Laws, and director and shareholder minutes and written
consents. Nothing contained in any of the foregoing prevents or adversely
affects the consummation of the transactions contemplated by this Agreement.
3.24 DISCLOSURE. To Seller's and the Company's knowledge, no
representation or warranty of the Seller and the Company contained in the
Agreement, or in any statement or certificate furnished Buyer pursuant to the
Agreement, contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
made herein or therein, in the light of the circumstances in which they were
made, not misleading.
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SECTION 4
Representations and Warranties of Buyer
Buyer represents and warrants to the Seller and the Company as
follows:
4.1 ORGANIZATION. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas, and has all
requisite power and authority to own its properties and to carry on its
businesses as now being conducted.
4.2 AUTHORIZATION. Buyer has full corporate power and authority to
enter into the Agreement and to consummate the transactions contemplated hereby,
and has taken all action required to authorize the execution and delivery of the
Agreement, the performance of its obligations hereunder and the consummation by
them of the transactions contemplated hereby. This Agreement is a valid and
binding agreement of Buyer enforceable against it in accordance with its terms,
subject to laws of general application relating to bankruptcy, insolvency and
the enforcement of creditors' rights and general equitable principles.
4.3 GOVERNMENTAL APPROVALS. Other than filings required by the Federal
Communications Commission and government novations, no approval or declaration,
filing or registration with any governmental or regulatory authority is required
to be made or obtained by Buyer in connection with its execution or delivery of
the Agreement, the performance of its obligations hereunder or its consummation
of the transactions contemplated hereby, except for approvals which will be
obtained, or declarations, filings or registrations which will be made, on or
before the Closing Date.
4.4 THIRD PARTY CONSENTS. No consent, approval or authorization of, or
notice to, any third party is required to be obtained or made by Buyer in
connection with the execution and delivery by Buyer of this Agreement, the
performance by Buyer of its obligations hereunder or the consummation by Buyer
of the transactions contemplated hereby, except for consents, approvals,
authorizations or notices which will be obtained or made on or before the
Closing Date and except for government novations.
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4.5 NO VIOLATION. Neither the execution and delivery of the Agreement
nor the consummation of the transactions contemplated hereby will: (a) violate
any provisions of the Certificate of Incorporation or Bylaws of the Buyer, each
as amended to date; (b) violate, be in conflict with, constitute a default
under, or cause the termination or the acceleration of the maturity of any
material obligation of the Buyer; (c) violate any statute or law, or any
judgment, decree, order, regulation or rule of any court or governmental
authority to which the Buyer, is bound or subject other than violations which
are not reasonably likely to have a material adverse effect on the business,
operation or financial condition of the Buyer.
4.6 INVESTMENT INTENT. Buyer is acquiring the shares of common stock
of the Company without a view to the distribution thereof in violation of
applicable securities laws.
4.7 DISCLOSURE. To Buyer's knowledge, no representation or warranty of
Buyer contained in the Agreement, or in any statement or certificate furnished
to the Seller pursuant to the Agreement, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements made herein or therein, in the light of the
circumstances in which they were made, not misleading.
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SECTION 5
Other Tax Matters
5.1 COOPERATION. Buyer and the Seller shall each at their own expense
cooperate with, and make available to, each other such tax data and other
information as may be reasonably required in connection with (i) the preparation
or filing of any tax return, election, consent or certification, or any claim
for refund or the preparation of Seller's consolidated financial statements,
(ii) any determinations of liability for Taxes, or (iii) any audit, examination
or other proceeding in respect of Taxes ("Tax Data"). Such cooperation shall
include without limitation making their respective employees and independent
auditors reasonably available on a mutually convenient basis for all reasonable
purposes, including without limitation to provide explanations and background
information and to permit the copying of books, records, schedules, workpapers,
notices, revenue agent reports, settlement or closing agreements and other
documents containing the Tax Data ("Tax Documentation"). If a third party is
retained in connection with any review hereunder, the party retaining such third
party shall be responsible for any fees and expenses of such third party.
5.2 RETENTION. The Tax Data and the Tax Documentation shall be
retained until one year after the expiration of all applicable statutes of
limitations (including extensions thereof); PROVIDED, HOWEVER, that in the event
an audit, examination, investigation or other proceeding has been instituted
prior to the expiration of an applicable statute of limitations, the Tax Data
and Tax Documentation relating thereto shall be retained until there is a final
determination thereof (and the time for any appeal has expired).
5.3 SECTION 338(h)(10) ELECTION. Seller and Buyer agree to jointly
file, not later than the 15th day of the ninth month beginning after the month
in which the Closing occurs, an election pursuant to Section 338(h)(10) of the
Internal Revenue Code.
5.4 ALLOCATION OF PURCHASE PRICE. Buyer shall prepare an allocation of
the Purchase Price among the Assets of the Company in accordance with the Code
and shall deliver such allocation to Seller within thirty (30) days following
the Closing. Buyer and Seller shall use their commercially reasonable efforts to
agree upon a final allocation of the Purchase Price prior to the Closing, and
such
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allocation (if agreed upon) shall be the basis upon which each of Buyer and
Seller prepare any tax returns with respect to the transactions contemplated by
this Agreement.
SECTION 6
Indemnification
6.1 INDEMNITY TO THE SELLER. Subject to the provisions of Section 6.5
hereof relating to the survival of representations and warranties and the other
limitations contained herein, from and after the Closing, Buyer agrees to
indemnify, defend and hold harmless the Seller and each of its Affiliates,
officers, directors, employees, agents and shareholders (collectively, the
"Seller Indemnitees") against all claims, losses, liabilities, damages,
deficiencies, costs and expenses, including without limitation, losses resulting
from the defense, settlement and/or compromise of a claim and/or demand and/or
assessment, reasonable attorneys', accountants' and expert witnesses' fees,
costs and expenses of investigation, and the costs and expenses of enforcing the
indemnification provided hereunder (hereafter individually a "Loss" and
collectively "Losses") incurred by any of the Seller Indemnitees and arising out
of or relating to: (i) any Assumed Liabilities; (ii) any misrepresentation or
breach of any representation or warranty made by Buyer in this Agreement or in
any written statement, certificate or schedule furnished by Buyer pursuant to
the provisions of this Agreement; and (iii) any breach of any covenant,
agreement or obligation of Buyer contained in this Agreement or any other
agreement, instrument or document executed by Buyer in connection with this
Agreement. Notwithstanding the foregoing, damages based on a breach of
representation or warranty shall constitute Losses for the purpose of this
Section 6.1 only to the extent of the direct damages incurred (excluding
consequential damages, whether or not foreseeable).
Buyer shall not be required to indemnify Seller Indemnitees with
respect to any claim for indemnification resulting from or arising out of
matters described above pursuant to this Section, other than for any breach of
the representations contained in Sections 4.1 and 4.2 hereof or Buyer's Employee
Liabilities, unless and until the aggregate amount of all claims against Seller
Indemnitees exceeds $150,000 and then only to the extent such aggregate amount
exceeds $150,000. Claims thereafter may be asserted regardless of
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amount. Other than for any breach of the representations contained in Sections
4.1 and 4.2 hereof, Buyer's maximum liability to Seller Indemnitees shall not
exceed $4,250,000 in the aggregate.
6.2 INDEMNITY TO BUYER. Subject to the provisions of Section 6.5
hereof relating to the survival of representations and warranties and the other
limitations contained herein, from and after the Closing, the Seller agrees to
indemnify, defend and hold harmless Buyer and the Company and their Affiliates,
officers, directors, employees, agents and shareholders (collectively, the
"Buyer Indemnitees") against all Losses incurred by any of the Buyer Indemnitees
and arising out of or relating to: (i) all Excluded Liabilities (with the
exception that as to any Environmental Liability, this indemnity shall extend
only to any Environmental Liability directly allocable to Seller's or the
Company's occupancy of or operations on the Property prior to the Closing); (ii)
any misrepresentation or breach of any representation or warranty made by the
Seller in this Agreement or in any written statement, certificate or schedule
furnished by the Seller pursuant to the provisions of this Agreement; and (iii)
any breach of any covenant, agreement or obligation of the Seller contained in
this Agreement or any other agreement, instrument or document executed by Seller
in connection with this Agreement. Notwithstanding the foregoing, damages based
on a breach of representation or warranty shall constitute Losses for the
purpose of this Section 6.2 only to the extent of the direct damages incurred
(excluding consequential damages, whether or not foreseeable).
Seller shall not be required to indemnify Buyer Indemnitees with
respect to any claim for indemnification resulting from or arising out of
matters described above pursuant to this Section, other than for any breach of
the representations contained in the first two sentences of Section 3.1, Section
3.2, Section 3.4 and Section 3.20 or any Environmental Liability for which
Seller is responsible hereunder or Seller's Employee Liabilities, unless and
until the aggregate amount of all claims against Buyer Indemnitees exceeds
$150,000 and then only to the extent such aggregate amount exceeds $150,000.
Claims thereafter may be asserted regardless of amount. Other than for any
breach of the representations contained in the first two sentences of Section
3.1, Section 3.4, the first sentence of Section 3.11, Section 3.20 or any
Environmental Liability for which Seller is responsible hereunder, Seller's
maximum liability to Buyer Indemnitees under this Section shall not exceed
$4,250,000 in the aggregate.
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6.3 THIRD PARTY CLAIMS.
(a) The Buyer, on behalf of any Buyer Indemnitee wishing to claim
indemnification under Section 6.2, and the Seller, on behalf of any Seller
Indemnitee wishing to claim indemnification under Section 6.1, upon learning of
any claim, action, suit, proceeding and/or investigation as to which such Buyer
Indemnitee or Seller Indemnitee may be entitled to be indemnified pursuant to
Section 6 of this Agreement (as applicable, an "Indemnified Party"), shall
notify the other party (the "Indemnifying Party") pursuant to this Section 6 in
writing; provided, however, that no failure so to notify the Indemnifying Party
shall relieve the Indemnifying Party of any obligation to indemnify the
Indemnified Party unless and to the extent such failure so to notify prejudices
the position of the Indemnifying Party in responding to such claim, action, suit
and/or proceeding.
(b) If the facts giving rise to any indemnification provided for
in this Section 6 involve any actual and/or threatened claim and/or demand by
any person other than the Indemnified Party, the Indemnified Party shall tender
to the Indemnifying Party the defense or prosecution of such claim and any
litigation resulting therefrom. The Indemnifying Party shall be entitled to
assume the defense of such claim. The Indemnifying Party shall then take all
steps reasonably necessary in the defense, prosecution or settlement of such
claim or litigation and will hold the Indemnified Party harmless from and
against all Losses caused by and/or arising out of any settlement thereof
approved by the Indemnified Party (which approval shall not be unreasonably
withheld or delayed) or any judgment in connection therewith (other than the
Indemnified Party's expenses of participation in such defense, prosecution
and/or settlement). If the defense or prosecution of a third party claim is
assumed by the Indemnifying Party, the Indemnified Party shall be entitled, at
its own expense, to participate in such settlement or defense through counsel
chosen by the Indemnified Party. If the Indemnifying Party does not assume the
defense of any such claim or legal proceeding resulting therefrom within 30 days
after the date of receipt of the notice referred to in Subsection 6.4 below (or,
if earlier, by the tenth day preceding the day on which an answer or other
pleading must be served in order to prevent judgment by default in favor of the
person asserting such claim), (a) the Indemnified Party may defend against such
claim or legal proceeding, in such manner as it may deem appropriate, including,
but not limited to, settling such claim or legal proceeding, after giving notice
of the same to the Indemnifying Party, on such terms as the Indemnified Party
may deem appropriate, and (b) the
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Indemnifying Party shall be entitled to participate in (but not control) the
defense of such action, with its counsel and at its own expense. In the event
that the Indemnifying Party proposes a settlement to any such claim or legal
proceeding, which settlement is satisfactory to the party instituting such claim
or legal proceeding and includes (i) an unconditional release of the Indemnified
Party from all liability with respect to such claim or litigation or the
dismissal of such claim or litigation against the Indemnified Party with
prejudice and (ii) provision that all damages and settlement payments are to be
made by the Indemnifying Party and the Indemnified Party withholds its consent
to such settlement, then in any such case the Indemnifying Party shall have no
obligation to indemnify the Indemnified Party under this Section against and in
respect of the amount by which the damages resulting from a final judgment
relating to such claim or legal proceeding exceeds the amount of the proposed
settlement.
6.4 PROCEDURES FOR ASSERTING CLAIMS.
(a) The Indemnified Party shall give written notice to the
Indemnifying Party of any claim for Losses for which the Indemnified Party
claims a right of indemnification under this Section 6 (a "Claim Notice"). If
known to the Indemnified Party, any such Claim Notice shall include (i) a
summary description of the facts upon which such claim is based and shall
specify the estimated amount of the Loss thereof and (ii) the amount which is
payable to the Indemnified Party pursuant to this Section 6.
(b) The Indemnifying Party shall have 30 days (or such shorter
time as may be required to avoid materially prejudicing the Indemnified Party's
position) following delivery of the Claim Notice to make such investigation of
the claim as it deems necessary or desirable. In connection with the
Indemnifying Party's evaluation of any Claim Notice, the Indemnified Party
shall, at the Indemnifying Party's expense, provide the Indemnifying Party with
reasonable access to the books and records of the Indemnified Party and, subject
to the implementation of reasonable procedures to protect the confidentiality of
such information, supply such factual and technical information as the
Indemnifying Party may reasonably require in connection with the evaluation of
such Claim Notice. On or prior to the expiration of such 30-day (or shorter)
period, the Indemnifying Party shall, by written notice to the Indemnified Party
(a "Response Notice"), either (i) admit liability in whole, or (ii) admit that
the claim is so covered by this Section 6 but dispute the amount of the claim,
or (iii) dispute that any amount of the claim is so covered. If the Indemnifying
Party fails to deliver a
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timely Response Notice to the Indemnified Party with respect to a specified
claim for indemnification, then the Indemnifying Party shall have been deemed to
admit liability in whole with respect to such Indemnified Party's claim for
indemnification.
(c) If the Indemnifying Party delivers to the Indemnified Party a
timely Response Notice pursuant to Section 6.4(b) disputing the amount of the
claim or disputing that the claim is covered by this Section 6 or if any other
dispute arises with respect to this Agreement, then the Indemnifying Party and
the Indemnified Party shall use their commercially reasonable best efforts to
resolve such dispute. In the event the Indemnifying Party and the Indemnified
Party resolve the dispute, they shall both execute a memorandum setting forth
such resolution and, if applicable, the amount payable by the Indemnifying Party
to the Indemnified Party. In the event the Indemnifying Party and the
Indemnified Party are unable to resolve such dispute within 30 days from the
Indemnified Party's receipt of the Response Notice pursuant to Section 6.4(b),
the Indemnifying Party and the Indemnified Party shall determine whether they
can agree upon a third-party impartial arbitrator (the "Arbitrator") to whom to
submit the matter in dispute for final and binding arbitration pursuant to Title
9 of the California Code of Civil Procedure (Section 1280, et seq.) (the
"California Arbitration Law").
If the Indemnifying Party and the Indemnified Party fail to agree on
the Arbitrator within 10 days, each party shall select an Arbitrator who shall
be a member of the American Arbitration Association (the "AAA"). If one party
does not so select such an Arbitrator within the time specified, then the issue
shall be resolved solely by the Arbitrator chosen by the other party in
accordance with the foregoing procedure. If each party does select such an
Arbitrator as provided herein, then within five (5) days of the appointment of
the second of the two Arbitrators, the two Arbitrators shall select a third
Arbitrator. If the two original Arbitrators are unable to agree upon the
selection of a third Arbitrator, then either party may request that the San
Francisco AAA appoint a third Arbitrator. All Arbitrators selected for
arbitration hereunder shall be members of the AAA, shall not be affiliated with
any of the parties and shall have expertise in the subject matter which is the
basis of the dispute. In the event AAA is no longer in business and/or will not
perform such service at the time of the disputes, the Arbitrator shall be
selected by a judicial court of competent jurisdiction.
The Arbitrator(s) and the Indemnifying Party and the Indemnified Party
shall meet within ten days of the election of the Arbitrator(s) for a
preliminary conference regarding procedures to be followed in connection with
the arbitration.
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Within thirty (30) days thereafter, the parties shall meet in San Jose,
California, with such Arbitrator(s) at a place and time designated by the
Arbitrator(s) after consultation with the parties and present their respective
positions on the dispute. Each party shall have no longer than eight hours to
present is position, the entire proceeding before the arbitrator shall be on no
more than three consecutive days, and the award shall be made in writing no more
than 30 days following the end of the proceeding. Such award shall be a final
and binding determination of the dispute and shall be fully enforceable as an
arbitration award in accordance with the California Arbitration law. The
Arbitrator(s) shall have discretion to award attorneys' fees and expenses in
connection with such proceeding. Each party shall bear one-half of the
Arbitrator(s)' fees and expenses.
6.5 EXPIRATION OF REPRESENTATIONS AND WARRANTIES, ETC. All
representations and warranties contained in this Agreement shall survive the
Closing for a period of 24 months; provided that the representations and
warranties stated in Section 3.2, Section 3.4 and Section 4.2 shall survive
indefinitely and the representations and warranties contained in Section 3.16
and Section 3.20 shall survive the Closing for the applicable statute of
limitations.
6.6 EXCLUSIVE REMEDY. The indemnifications provided for in this
Section 6 shall be the sole and exclusive post-Closing remedies available to
either party against the other party for any claims under or based upon this
Agreement.
SECTION 7
Conditions to the Obligations of Buyer
The obligations of Buyer to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction or written waiver of
Buyer (provided that no such waiver shall constitute a waiver of the Buyer
Indemnitees' rights under Section 6 hereof or in any way relieve the Seller of
any obligation under Section 6 hereof), on or before the Closing Date, of each
of the following conditions:
7.1 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by the Seller and the Company in this Agreement (including all
Exhibits and Schedules hereto) or in any written statement, list or certificate
furnished pursuant to an express requirement hereof (a) that is qualified as to
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materiality shall be true and correct and (b) that is not qualified as to
materiality shall be true and correct in all material respects, in each case on
and as of the Closing Date and will be deemed to be made again as of the Closing
Date.
7.2 PERFORMANCE. With respect to agreements, covenants, obligations
contained in this Agreement and required to be performed or complied with by the
Seller and the Company on or prior to the Closing Date, the Seller and the
Company shall have performed or complied with, in all material respects, such
agreements, covenants and obligations.
7.3 GOVERNMENTAL APPROVALS AND FILINGS. All approvals and all
declarations, filings and registrations with government agencies required to
consummate the transactions contemplated hereby shall have been obtained or
made, and shall be in full force and effect, provided that with respect to
required FCC consents and government novations, such FCC consents and government
novations shall be obtained within 120 days of the Closing Date or as soon as
reasonably possible thereafter.
7.4 THIRD PARTY CONSENTS. All approvals, consents and authorizations
from and notices to third parties required to consummate the transactions
contemplated hereby (except for those set forth on Schedule 3.13(c)(2) or as
otherwise provided in Section 7.3 hereof) shall have been obtained and shall be
in full force and effect.
7.5 OFFICERS' CERTIFICATES. The Seller and the Company shall represent
in a certificate signed by an officer of Seller and an officer of the Company,
both acting in such capacity and delivered to Buyer at the Closing that the
conditions set forth in Sections 7.1 and 7.2 have been satisfied and that there
has been no material adverse change in the properties, business, operations,
financial conditions or prospects of the Company.
7.6 NO INJUNCTION. There shall not be in effect any preliminary or
permanent injunction or other order issued by any state or federal court which
prevents the transactions contemplated hereby, and no proceedings with respect
to any such injunction or order shall be pending.
7.7 NO MATERIAL ADVERSE CHANGE. The properties, operations and
financial condition of the Business shall not have been adversely affected in
any material way as a result of any fire, accident, other casualty or otherwise,
nor shall
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there have occurred any material adverse change since April 25, 1998 in the
properties, results of operations, or financial condition of the Business.
7.8 SUPPLY AGREEMENT. Seller shall have entered into a supply
agreement, providing for the supply by Seller to the Company of satellite
communications products, substantially in the form of Exhibit B hereto (the
"Supply Agreement"), and the Supply Agreement shall be in full force and effect
as of the Closing Date.
7.9 RELEASE OF LIENS. As of the Closing, all Liens (other than
Permitted Liens) on the Assets shall have been released.
7.10 LEASES. Buyer shall have received the consent of the landlord to
the Sublease (as defined in Section 8.7) and Buyer shall have received the
consent of the landlord to the assignment to Buyer of the lease for Seller's
Mountain View facility, provided however, that if such landlord's consent is not
required for assignment to Buyer of the lease for Seller's Mountain View
facility, then landlord shall so indicate in writing.
SECTION 8
Conditions to the Seller's Obligations
The obligations of the Seller to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction or written
waiver of Seller (provided that no such waiver shall constitute a waiver of the
Seller Indemnitees' rights under Section 6 hereof or in any way relieve the
Buyer of any obligation under Section 6 hereof), on or before the Closing Date,
of each of the following conditions:
8.1 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by Buyer in this Agreement or in any written statement, list or
certificate furnished pursuant to an express requirement hereof (a) that is
qualified as to materiality shall be true and correct and (b) that is not
qualified as to materiality shall be true and correct in all material respects,
in each case on and as of the Closing Date and will be deemed to be made again
as of the Closing Date.
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8.2 PERFORMANCE. With respect to agreements, covenants and obligations
of this Agreement required to be performed or complied with by Buyer on or prior
to the Closing Date, Buyer shall have performed or complied with, in all
material respects, such agreements, covenants and obligations.
8.3 GOVERNMENTAL APPROVALS AND FILINGS. All approvals and all
declarations, filings and registrations with government agencies required to
consummate the transactions contemplated hereby shall have been obtained or
made, and shall be in full force and effect, provided that with respect to
required FCC consents and government novations, such FCC consents and government
novations shall be obtained within 120 days of the Closing Date or as soon as
reasonably possible thereafter.
8.4 OFFICER'S CERTIFICATE. Buyer shall represent in a certificate
signed by an officer of Buyer acting in such capacity and delivered to Seller at
Closing that the conditions set forth in Sections 8.1 and 8.2 have been
satisfied.
8.5 NO INJUNCTION. There shall not be in effect any preliminary or
permanent injunction or other order issued by any state or federal court which
prevents the transactions contemplated hereby, and no proceedings with respect
to any such injunction or order shall be pending.
8.6 SUPPLY AGREEMENT. Buyer shall have entered into the Supply
Agreement and the Supply Agreement shall be in full force and effect as of the
Closing Date.
8.7 EXECUTION OF SUBLEASE. Seller and the Company shall have entered
into a sublease (or such other arrangement as is mutually satisfactory to Seller
and Buyer) for the use by the Company of approximately 29,000 square feet of the
Borregas Avenue facility in substantially the form of Exhibit C hereto (the
"Sublease") and the Sublease shall be in full force and effect as of the Closing
Date.
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SECTION 9
Certain Covenants
9.1 OPERATION OF BUSINESS PRIOR TO CLOSING. The Business shall be
operated by Seller and the Company in the ordinary course in substantially the
same manner as heretofore conducted from the date hereof to the Closing. The
Business shall be operated by the Seller and the Company in a manner that will
not cause any of the Seller's and the Company's representations and warranties
set forth in Section 3.19 to be untrue when taken or at the Closing Date. From
the date hereof until Closing, Seller and the Company agree to pay the
liabilities reflected on Schedule 2.3 and liabilities incurred in the ordinary
course of the Business of the Company in accordance with past practices.
9.2 COMMUNICATIONS WITH CUSTOMERS AND SUPPLIERS. The Seller and Buyer
will mutually agree upon all communications with suppliers and customers
relating to this Agreement and the transactions contemplated hereunder prior to
the Closing Date.
9.3 NON-COMPETITION. For three years following the Closing, neither
Seller nor any of its Affiliates shall engage or be interested, directly or
indirectly (except as a holder of not more than five percent of the combined
voting power of the outstanding stock of a publicly held company), (a) in
manufacturing or selling the products currently being manufactured or sold by
the Business, or (b) in providing the satellite services currently being
provided by the Business, except that this provision shall not preclude (i)
Seller or any of its Affiliates from being acquired by any person or entity that
provides such products or services or restrict the activities of any such person
or entity after the acquisition (provided that such acquisition is not merely in
connection with a reincorporation or similar reorganization of Seller), or (ii)
Seller or any of its Affiliates from manufacturing or selling any of the
products that the Seller or any of its Affiliates (other than the Company)
currently manufactures or sells.
Inasmuch as the remedy at law for any breach by Seller of the covenant
contained in this Section 9.3 is inadequate, the Buyer shall be entitled to
injunctive relief to enforce the same.
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9.4 NOVATIONS. Seller agrees to use its commercially reasonable
efforts to obtain any novation required in connection with any of the Contracts
listed on Schedule 3.13(c) within 90 days of the Closing Date and agrees pending
the obtaining of such novations to take all commercially reasonable action
necessary to assure the receipt by Buyer of all benefits accruing under those
Contracts from and after Closing.
9.5 USE OF BUSINESS NAMES BY BUYER.
(i) Concurrently with the Closing, Buyer agrees to amend the
Certificate of Incorporation of the Company to change the name of the Company to
a name that does not include "California Microwave."
(ii) Buyer acknowledges that Seller has the absolute and
exclusive proprietary right to all names, marks, trade names, trademarks,
service names and service marks (collectively, "Names") incorporating
"California Microwave" or any similar Name and to all corporate symbols or logos
(collectively, "Logos") incorporating California Microwave or any similar name.
All rights of Seller and its Affiliates to the same and the goodwill represented
thereby and pertaining thereto are being retained by Seller. Buyer agrees that
it will not, and will cause the Business not to, use the California Microwave
Name or any similar Name or any Logo incorporating such Name or any similar Name
in any manner, including in connection with the sale of any products or services
or otherwise in the conduct of the Business, except as expressly permitted by
clause (iii) of this Section 9.5.
(iii) For a period of nine (9) months from the Closing Date (the
"Window Period"), Seller shall and hereby irrevocably grants, effective as of
the Closing Date, on a fully-paid, royalty-free basis, the Buyer the right to
use the California Microwave Logo and the California Microwave Name in
connection with the operation of the Business as currently conducted including,
during the Window Period, to (A) use any molds or castings included in the
equipment or machinery included in the Assets despite the appearance thereon and
on the products manufactured therewith of the California Microwave Name or the
California Microwave Logo, (B) market and sell all such products produced by the
Business and (C) use any other assets on hand included in the Acquired Assets,
including, without limitation, any catalogs, invoices, packaging material or
stationery, bearing the California Microwave Name or California Microwave Logo
(PROVIDED, HOWEVER, that Buyer shall use its commercially reasonable efforts to
cease its use of the
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California Microwave Name and the California Microwave Logo within six (6)
months). Immediately upon the expiration of the Window Period, Buyer shall cease
to use in any manner the California Microwave Name or the California Microwave
Logo incorporating such Name and remove or obliterate such Name or the
California Microwave Logo from any molds, castings, products or other assets and
clearly and prominently xxxx the new name of the Business thereon. At all times
following the Closing, Buyer shall not indicate that Buyer or the Business is
affiliated with Seller or any of its affiliates.
9.6 CONSENTS; COOPERATION. Seller, the Company and Buyer will use
their commercially reasonable efforts:
(a) to obtain prior to the earlier of the date required (if so
required) or the Closing Date, all authorizations, consents, orders, permits or
approvals of, or notices to, or filings, registrations or qualifications with,
all governmental authorities or any other person or entity that are required on
their respective parts, for the consummation of the transactions contemplated by
this Agreement;
(b) to defend, consistent with applicable principles and
requirements of law, any lawsuit or other legal proceeding, whether judicial or
administrative, whether brought derivatively or on behalf of third persons
(including governmental authorities) challenging this Agreement or the
transactions contemplated hereby;
(c) to furnish to each other such information and assistance as
may reasonably be requested in connection with the foregoing; and
(d) to (i) take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement (excluding
satisfying the closing conditions in Section 7 or 8 hereof insofar as they
relate to the truth of representations and warranties but including otherwise
satisfying the closing conditions in Sections 7 and 8) and (ii) refrain from
taking any action which reasonably could be expected to render any
representation or warranty contained in this Agreement untrue or incorrect in
any material respect (except to the extent a representation or warranty or
covenant is qualified by materiality in which case the Seller will refrain from
taking any action that would render such representation or warranty untrue or
incorrect) as of Closing.
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9.7 NOTICE OF DEVELOPMENTS. The Seller and the Company will give
prompt notice to the Buyer of any fact, to the Seller's and Company's knowledge,
that would, if it were true on the Closing Date, constitute a breach of the
Seller's and the Company's representations and warranties in this Agreement.
Each party to this Agreement will give prompt written notice to the other of any
material development affecting the ability of such party to consummate the
transactions contemplated by this Agreement. No disclosure by any party to this
Agreement pursuant to this Section 9.7, however, shall be deemed to amend or
supplement any Schedule to this Agreement or to prevent or cure any
misrepresentation, breach of representation or warranty, or breach of covenant.
9.8 NON-SOLICITATION.
(a) The Seller agrees that for a period of three (3) years from
the Closing Date neither the Seller, nor any direct or indirect subsidiary of
Seller shall, for themselves or for any other person or entity, directly
solicit, hire or take away or directly attempt to solicit, hire or take away any
of E. Xxxxxxx Xxxxx, Xxxxxxx Xxxxxxxx, Xxxxx X. Xxxxx, Xxxxxxxx Xxxxxx, Xxx
Xxxxx, Xxxxxx Xxxxx and Xxxxx Xxxx (collectively, the "Key Transferred
Employees").
(b) The Seller agrees that for a period of three (3) years from
the Closing Date neither the Seller nor any direct or indirect subsidiary of
Seller shall, for themselves or for any other person or entity directly solicit
or directly attempt to solicit any employee of the Company who is not a Key
Transferred Employee and for a period of nine (9) months neither the Seller nor
any direct or indirect subsidiary of Seller shall, for themselves or for any
other person or entity, directly hire any employee of the Company who is not a
Key Transferred Employee.
9.9 PRE-CLOSING ACCESS. Between the date hereof and the Closing,
Seller and the Company will during normal business hours (a) provide to Buyer
and its representatives full access to the premises, property, files, books,
records, documents, and other information concerning the Business, (b) furnish
to Buyer and its representatives financial, technical, legal and operating data
and other information pertaining to the Business, (c) make available for
inspection and copying by Buyer copies of any documents relating to the
foregoing and (d) permit Buyer and its representatives to conduct reasonable
interviews of the employees, representatives and auditors of Seller concerning
the Business; provided, however, that any such investigation will be conducted
in such a manner as not to
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interfere unreasonably with the operation of the Business. During the period
from the date hereof to the Closing, all information provided to Buyer or its
representatives by or on behalf of Seller or its representatives will be
maintained by Buyer in the strictest confidence. From and after the Closing
Date, the Seller will maintain any information retained by it (whether pursuant
to the terms of this Agreement or otherwise) that relates to the Business in the
strictest confidence.
9.10 COOPERATION WITH RESPECT TO BORREGAS AVENUE LEASE. From and after
the Closing Date, Buyer and Seller shall use their commercially reasonable
efforts to obtain consent to the assignment to the Company of the Borregas
facility lease. In the event such assignment occurs, the Company will sublease
to Seller approximately 12,000 square feet on substantially the same terms as
set forth in Exhibit D.
SECTION 10
Termination
10.1 TERMINATION. This Agreement may be terminated and abandoned at
any time prior to the Closing:
(a) with the mutual consent of Buyer and Seller;
(b) by Buyer, if Seller and the Company have (a) breached in any
respect any representation or warranty qualified as to materiality or (b)
breached in any material respect any representation or warranty that is not
qualified as to materiality or any covenant or agreement contained in this
Agreement, and such breach has not been remedied within five days after receipt
of written notice from Buyer specifying such breach and demanding that such
breach be remedied;
(c) by Seller and the Company, if Buyer has (a) breached in any
respect any representation or warranty qualified as to materiality or (b)
breached in any material respect any representation or warranty that is not
qualified as to materiality or any covenant or agreement contained in this
Agreement, and such breach has not been remedied within five days after receipt
of written notice from Seller specifying such breach and demanding that such
breach be remedied;
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(d) by either Buyer or Seller and the Company if the Closing has
not occurred by May 29, 1998, (the "Cut-Off Date") or if any condition contained
in Section 7 or 8 of this Agreement becomes incapable of fulfillment by the
Cut-Off Date; provided that this Agreement may not be terminated by any party
that is in breach of any representation, warranty or covenant of such party
contained in this Agreement if such breach has caused the Closing not to occur
by the Cut-Off Date; or
(e) by Buyer at any time prior to 5 p.m. New York City time on
May 15, 1998, if the results of Buyer's due diligence investigation of the
Business, the Assets and the Assumed Liabilities (including but not limited to
legal, environmental, financial and accounting due diligence investigations
thereof) are not satisfactory to Buyer in its sole discretion.
10.2 PROCEDURE AND EFFECT OF TERMINATION. Any termination of this
Agreement shall be effected by written notice signed by the party or parties
having the right to terminate this Agreement in accordance with Section 10.1
hereof, which written notice shall specify the provision of Section 10.1
pursuant to which such termination is being made. Upon such termination, this
Agreement shall become null and void and of no further force and effect, except
for the provisions of Section 11.1 relating to expenses and Section 11.8
relating to announcements, and except that such termination shall not relieve
any party then in breach of any representation, warranty, covenant or agreement
contained in this Agreement from liability in respect of such breach.
SECTION 11
Miscellaneous Provisions; Other Agreements
11.1 EXPENSES. Except as otherwise specifically provided herein, each
party hereto shall bear its own fees and expenses in connection with this
Agreement.
11.2 BROKERAGE. The parties represent to each other that none of them
has retained any broker or paid or agreed to pay any brokerage fee, finder's fee
or commission to any agent or broker for or on account of this Agreement or the
transactions contemplated herein.
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11.3 AMENDMENT AND NOTIFICATION. Subject to the provisions of Section
11.6 relating to assignability, this Agreement may be amended, modified and
supplemented only by written agreement of Buyer and the Seller.
11.4 WAIVER. Any breach of any obligation, covenants, agreement or
condition contained herein may be expressly waived by the party or parties
having the right to a remedy for such breach, in writing, setting forth with
particularity the breach being waived and the scope of the waiver, but such
waiver shall not operate as a waiver of, or estoppel with respect to, any other
breach.
11.5 NOTICES. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand, via reputable overnight courier service,
or facsimile transmission with receipt confirmed (provided a copy is also sent
by mail):
(a) If to Seller and Company (prior to the Closing), to:
California Microwave, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Facsimile No: 408/743-3482
with a copy to:
Howard, Rice, Nemerovski, Canady,
Xxxx & Rabkin
A Professional Corporation
Three Xxxxxxxxxxx Xxxxxx
Xxxxxxx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile No: 415/217-5910
or to such other persons or addresses as the Seller shall furnish to Buyer in
writing.
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(b) If to the Buyer, to:
Telscape International, Inc.
0000 Xxxx Xxx Xxxxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxx
Facsimile No: 713/968-0930
with a copy to:
Xxxxxxx & Berlin, Chartered
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxx, Esq.
Facsimile No: 202/424-7643
or to such other persons or addresses as Buyer shall furnish to the Seller in
writing.
(c) If to the Company (after the Closing), to:
California Microwave Services Division, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Facsimile No: 408/743-0963
or to such other persons or addresses as Company (after the Closing) shall
furnish to the Seller and the Buyer in writing.
11.6 BINDING NATURE; ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other parties
hereto, which consent will not be unreasonably withheld or delayed, and any
attempted assignment without such prior written consent shall be null and void;
provided however that Buyer may, without the consent of Seller, assign (a) its
rights and
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interest in this Agreement to any of its lenders provided that such assignment
shall not relieve Buyer of any of its liabilities or obligations hereunder and
(b) all of its rights and interest in this Agreement and liabilities and
obligations hereunder to an Affiliate of Buyer, and such assignee shall, upon
execution of an instrument of assignment by Buyer and such assignee (and
subsequent delivery to Seller of such instrument), become the "Buyer" for all
purposes of this Agreement and all references in this Agreement to the Buyer
shall be deemed to refer to such assignee for all purposes of this Agreement
provided that such assignment shall not relieve Buyer of any of its liabilities
or obligations hereunder.
11.7 GOVERNING LAW AND JURISDICTION. This Agreement shall be governed
by and construed in accordance with the laws of the State of California, without
reference to the principles of conflicts of law.
11.8 PRESS RELEASES. Each of the parties to this Agreement hereby
agrees that no press release or similar public announcement or communication
will be made or caused to be made concerning the execution or performance of
this Agreement or the transactions contemplated hereunder unless specifically
approved in advance by Buyer and the Seller, subject to any applicable
disclosure obligations pursuant to law provided that the party proposing to
issue any press release or similar public announcement or communication in
compliance with any such disclosure obligations shall use commercially
reasonable efforts to consult in good faith with the other party before doing
so.
11.9 HEADINGS. The headings contained in this Agreement are inserted
for convenience only and shall not constitute a part hereof.
11.10 ENTIRE AGREEMENT. This Agreement, together with the Exhibits and
Schedules hereto and any agreements entered into concurrently herewith that
refer to this Agreement, constitutes the entire agreement among the parties
hereto pertaining to the subject matter hereof, and supersedes all prior and
contemporaneous agreements, understandings, documents, negotiations and
discussions, whether oral or written, of the parties hereto.
11.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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11.12 ATTORNEYS' FEES. If any dispute arises hereunder, the prevailing
party shall be entitled to recovery of reasonable attorneys' fees.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed the day and year first above written.
CALIFORNIA MICROWAVE, INC.,
a Delaware corporation
By:
Title:
CALIFORNIA MICROWAVE SERVICES
DIVISION, INC., a Delaware corporation
By:
Title:
TELSCAPE INTERNATIONAL, INC.
By:
Title:
-43-
EXHIBIT B
SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT (this "AGREEMENT") is dated _____ ___, 1998 and is
entered into between California Microwave, Inc., a Delaware corporation
("SELLER"), and California Microwave Services Division, Inc., a Delaware
corporation ("BUYER").
RECITALS
A. Seller, Buyer and Telscape International, Inc. have entered into an
stock purchase agreement dated as of ________ __, 1998, as amended (the
"PURCHASE AGREEMENT"), with respect to the acquisition by Telscape
International, Inc. from Seller of all of the outstanding capital stock of
Buyer.
B. The business of Buyer is comprised of (i) the satellite hub operations
located in Mountain View, California, which provide, via leased (to its
customers) satellite communications links, data broadcast and interactive
communication services and (ii) the products operation in Sunnyvale, California,
which manufactures and sells the Equatorial, radar test equipment, frequency
converter, frequency source, amplifier and Radiolink product lines and the
warranty sales and depot services relating to those product lines (collectively,
such businesses are the "BUSINESS").
C. On and after the date hereof (the "Closing Date"), Seller and Buyer
desire to continue certain arrangements pursuant to which Seller supplies
certain products to Buyer.
NOW THEREFORE, as a condition to the closing of the transactions
contemplated by the Purchase Agreement, and in consideration of the mutual
covenants, representations and warranties made herein, and of the mutual
benefits to be derived hereby, the parties hereto agree as follows:
1. SUPPLY OF PRODUCTS BY SELLER. Upon the terms and subject to the
conditions hereof, for three years from the Closing Date, Seller shall sell to
Buyer, and Buyer shall purchase from Seller, all of the Business's requirements
of the products listed on EXHIBIT A and any extensions and improvements of those
products (the "PRODUCTS"). Without limiting the obligation of Buyer to purchase
its requirements of Products under the preceding sentence, the quantities of
Products to be purchased by Buyer pursuant to this Section shall be at the sole
discretion of Buyer and no minimum quantities of Products are required to be
purchased hereunder. Notwithstanding the preceding two sentences, if Seller
provides written notice to Buyer specifying any Products subject to this Section
that Seller intends to discontinue providing to its customers, Seller will be
relieved of any obligation to sell to Buyer, and Buyer will be relieved of any
obligation to buy from Seller, any such Products as of six months from the date
that Seller so notifies Buyer. Exhibit A may be amended to add or delete
products therefrom or for any other purpose by written agreement of Buyer and
Seller.
2. PRICES. Seller shall sell the Products at prices no less favorable than
the prices given to other Customers of such products in like quantities, except
that in no event shall such prices be greater for a given Product than (i) those
prices listed opposite such Products' name on EXHIBIT A attached hereto and (ii)
the lowest price provided by Seller to Buyer for any such Product during the six
calendar months preceding the date of the most recent purchase order of Buyer so
long as, in the case of item (ii), Buyer has purchased at least $_______ of
Products from Seller during such six month period.
As used in this Agreement, "Customer" shall mean any end user,
reseller, agent, government entity or distributor.
3. ADDITIONAL TERMS AND CONDITIONS. Any sale of the Products by Seller
under this Agreement shall be subject to and governed by the then-current
standard terms and conditions (including as to warranty) of Seller, which terms
and conditions shall be no less favorable than those given to other Customers
for the same or similar Products in like quantities.
4. SPECIFICATIONS. Seller shall manufacture and deliver the Products in
accordance with the electrical, mechanical, physical, environmental and other
specifications as in effect as of the Closing Date, or if the Product is
non-standard, then according to the specifications agreed to in writing by Buyer
and Seller from time to time. In the event an improvement or a technical change
in the specifications of the Products is made by the Seller, then it shall be
required to provide Products that meet such improved or changed specifications.
5. MAINTENANCE OF STANDARDS. If Seller fails to maintain the quality,
delivery or performance standards currently applicable to the Products, or fails
to achieve standards of quality or performance specified by Buyer with respect
to new variations of standard Products, then Buyer shall have such remedies as
may be provided in the then-current standard terms and conditions of Seller, and
if Seller fails to cure any such deficiency in any Product to be sold by it
hereunder within sixty (60) days after written notice thereof by Buyer, Buyer
shall no longer be obligated to purchase such Product pursuant to this
Agreement.
6. ORDERING. Each order by Buyer for Products of Seller (a "PURCHASE
ORDER") will specify each Product being purchased, the quantity, any appropriate
specifications corresponding to each such Product, and the date of delivery,
provided that the number of days from the date of the Purchase Order through the
date of delivery is at least sixty (60) days. Notwithstanding the foregoing, the
parties hereafter may agree in writing to use a blanket purchase agreement with
specific agreed call out schedules in lieu of the foregoing ordering mechanism.
-2-
7. DELIVERY.
(a) All Products sold hereunder will be delivered freight paid FOB
(Seller's plant).
(b) Buyer reserves the right to inspect the Products sold by Seller
and to confirm the quantity of the Products within thirty (30) days from the
date of delivery. Any claims for discrepant deliveries shall be reported by
Buyer to Seller in writing within such 30-day period. If Buyer fails to make
such a claim within the time specified, such order will be deemed accepted by
Buyer. Upon Seller receiving notice from Buyer of such discrepancy, Buyer will
have such remedies as may be provided in the then-current standard terms and
conditions of Seller.
(c) Seller will keep Buyer promptly and regularly informed of
difficulties that Seller expects in meeting Buyer's needs for delivery in
accordance with lead time(s) stated in any Purchase Order.
8. RAW AND PACKAGING MATERIALS. Seller will purchase and supply all raw
materials and packaging materials necessary for the manufacture of the Products
sold by it hereunder. Seller will be responsible for the sampling and testing of
all such raw materials and packaging materials and for ensuring an adequate
inventory of such raw materials and packaging materials to supply the Products
sold by it hereunder within the delivery time provided for in Section 6.
9. TERMS OF SALE. With respect to any Products sold hereunder, Seller will
invoice Buyer at the time of delivery. Each invoice will be itemized in
reasonable detail. Buyer will pay to Seller the undisputed amount of such
invoice within 30 days of the date of delivery of the Product.
10. CONFIDENTIALITY. Each party will preserve the confidentiality of the
other party's Confidential Information (defined below), will not use same except
in connection with the performance of its obligations hereunder, and will return
same upon request by the other party. This Section will survive expiration or
earlier termination of this Agreement for a period of three years thereafter.
"CONFIDENTIAL INFORMATION" means all proprietary information (including but not
limited to formulas, compilations, data, know-how, specifications, techniques,
inventions, devices, projections, drawings and plans, whether of a technical,
operational, financial or other nature) which hereafter is, or in the past has
been, disclosed in writing and marked as confidential by either party (the
"DISCLOSING Party") to the other party (the "RECEIVING PARTY"), and which is of
such a nature that its value would be impaired if disclosed to third parties,
but shall not include any such information that: (i) becomes part of the public
domain through no fault of the Receiving Party; (ii) at the time of receipt is
known to the Receiving Party as shown by its written records; (iii) becomes
known to the Receiving Party from another source and the Receiving Party is not
aware that such source is under an obligation to another person or entity to
keep such information confidential; (iv) is required to be disclosed by the
Receiving Party as a result of judicial or administrative process or by other
requirements of law; or (v) was independently
-3-
developed by the Receiving Party, without reference to the Confidential
Information, provided such independent development can be reasonably supported
by the Receiving Party's written records.
11. TERM. This Agreement shall commence on the date first set forth above
and shall expire on the third anniversary of the Closing Date unless earlier
terminated pursuant to Section 12.
12. TERMINATION.
(a) Either party may terminate this Agreement for any material
breach of this Agreement by the other party if the party seeking to terminate
has specified such breach in writing and such breach has not been cured by the
breaching party within thirty (30) days after receipt of the written notice.
(b) Termination under this Section will be effected by notice given
by the terminating party to the other party.
(c) Any termination of this Agreement will not affect any of the
rights of either party hereto that arose prior to such termination or any
liability resulting from either party's breach of this Agreement.
13. CONSEQUENCES OF TERMINATION. Upon expiration or earlier termination of
this Agreement, each party will promptly return to the other all documents,
samples and other tangible items containing or representing Confidential
Information and all copies thereof, and certify, if requested by the other
party, that it has complied with the terms of this sentence. This Section will
survive expiration or earlier termination of this Agreement.
14. SALES CONVEY NO RIGHT TO MANUFACTURE OR COPY. The Products offered for
sale hereunder are offered for sale and are sold by each party subject in every
case to the condition that such sale does not convey any license, expressly or
by implication, to manufacture, duplicate or otherwise copy or reproduce any of
the Products, unless expressly provided in such sale.
15. EXPORT CONTROL COMPLIANCE. Buyer agrees to comply fully with the
United States Export Control Administration Regulations, the United States
Department of State International Traffic in Arms Regulations and any other
United States government regulations applicable to the export or disclosure of
Products provided hereunder or Confidential Information hereunder insofar as
they may control or limit the sale or use of Products. Buyer also agrees to
comply fully with the United States Foreign Corrupt Practices Act.
16. FORCE MAJEURE. Except for Buyer's payment obligations to Seller for
the Products previously delivered or provided hereunder, failure of either party
to perform its obligations under this Agreement (including but not limited to
failure to make sales or deliveries of the Products) shall be excused to the
extent that such failure is attributable to any cause beyond the reasonable
control of the defaulting party, including, without limitation, acts of God,
fires, earthquakes, wars, sabotage,
-4-
accidents, embargo, riots, labor disputes, actions of any government or
governmental agency or failure of same to act where action is required, and the
inability of such party to obtain material from its suppliers or to obtain
equipment or transportation; and the time during which such party may perform
will be extended to coincide with the time performance has been prevented,
hindered or delayed as a result of the foregoing. Should either party wish to
claim relief from its obligations hereunder by reason of this Section, such
party shall give notice to the other party without delay of the occurrence of
the event or circumstances in question.
17. GOVERNING LAW. This Agreement shall be governed in all respects,
including, without limitation, as to validity, interpretation and effect, by the
internal laws of the State of California, without giving effect to the conflict
of laws rules thereof. The parties hereby agree that this Agreement shall not be
governed by the United Nations Convention on Contracts for the International
Sale of Goods.
18. ASSIGNMENT. The Agreement shall not be assignable or otherwise
transferable by either party hereto without the prior written consent of the
other party, which consent will not be unreasonably withheld. This Agreement
will bind and inure to the benefit of the successors and permitted assigns of
the parties hereto. References to a party herein also are deemed to be
references to any successor or permitted assign of such party.
19. ALL NOTICES, consents, approvals, requests, demands, waivers and
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if: (a)
delivered personally, (b) mailed by first-class, registered or certified mail,
return receipt requested, postage prepaid, or (c) sent by next-day or overnight
mail or delivery or (d) sent by facsimile transmission or telegram.
If to Buyer, to
California Microwave Services Division, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxx Xxxxxxxx
If to Seller, to
California Microwave, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile:408/743-3482
Attn: Xxxxxx X. Xxxxxxxx
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
-5-
All such notices, requests, demands, waivers and other communications
shall be deemed to have been received (w) if by personal delivery on the day
after such delivery, (x) if by certified or registered mail, on the seventh
business day after the mailing thereof, (y) if by next-day or overnight mail or
delivery, on the day delivered, and (z) if by facsimile or telegram, on the next
day following the day on which such facsimile or telegram was sent, provided
that a copy is also sent by certified or registered mail.
20. GENERAL.
(a) It is agreed that each of parties hereto is acting as an
independent contractor and nothing contained in this Agreement shall be
construed to constitute either as a partner, agent or employee of the other.
Neither party is authorized to act for or bind the other except as specifically
provided herein.
(b) The failure of a party at any time to require performance by the
other party of any provision hereof shall in no way affect the right of the
party thereafter to enforce same against the other party, nor shall waiver by
either party of the breach of any provision hereof be taken or held to be a
waiver of any succeeding breach of such provision or as a waiver of the
provision itself or as a waiver of a breach of any other provision.
(c) If any term or provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of law or public policy, such
provision will be narrowed (or deleted, if necessary) to the minimum extent
necessary to make it and the rest of this Agreement enforceable.
(d) This Agreement or any provision hereof may not be waived or
discharged orally, but only by a statement in writing signed by the party
against whom enforcement of the waiver or discharge is sought.
(e) This Agreement constitutes the entire agreement between the
parties relating to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings of the parties relating thereto.
The terms of this Agreement may not be amended except by a writing signed by
both parties.
(f) This Agreement may be executed with counterpart signature pages
or in any number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
(g) The agreements that comprise this Agreement and any terms and
conditions of either party that apply to a sale of products or services
hereunder shall have the following order of priority in the event of a conflict
between any of them: (i) this Agreement and (ii) the terms and conditions of
Seller then in effect with respect to such sale.
-6-
(h) The headings contained in this Agreement are inserted for
reference only and shall not be used to aid in the construction hereof.
-7-
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
CALIFORNIA MICROWAVE, INC.
By:
Name:
Title:
CALIFORNIA MICROWAVE SERVICES DIVISION, INC.
By:
Name:
Title:
-8-
