Exhibit 2.1
ASSET PURCHASE AGREEMENT
AMONG
METROCALL HOLDINGS, INC.,
METROCALL, INC.,
WEBLINK WIRELESS I, L.P.
AND
WEBLINK WIRELESS, INC.
-------------
Dated as of November 18, 2003
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.......................................................................1
1.1 Certain Definitions...................................................................1
ARTICLE II PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES............................9
2.1 Purchase and Sale of Assets...........................................................9
2.2 Excluded Assets......................................................................12
2.3 Assumption of Liabilities............................................................13
2.4 Excluded Liabilities.................................................................15
2.5 Further Conveyances and Assumptions; Consent of Third Parties........................16
2.6 Indemnification Procedures...........................................................17
2.7 Bulk Sales Laws......................................................................19
2.8 Purchase Price Allocation............................................................19
2.9 Parent Guarantee.....................................................................20
ARTICLE III CONSIDERATION....................................................................20
3.1 Consideration........................................................................20
3.2 Payment of Consideration on the Initial Closing Date.................................20
3.3 Payment of Consideration on the License-Related Asset Purchase
Closing Date.........................................................................20
ARTICLE IV CLOSING AND DELIVERIES...........................................................20
4.1 Initial Closing......................................................................20
4.2 License-Related Asset Purchase Closing...............................................21
4.3 Sellers Closing Documents............................................................21
4.4 Purchaser Closing Documents..........................................................22
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLERS........................................23
5.1 Organization and Good Standing.......................................................23
5.2 Authorization of Agreement...........................................................23
5.3 Conflicts; Governmental Consents.....................................................24
5.4 Financial Statements.................................................................24
5.5 No Undisclosed Liabilities...........................................................25
5.6 Absence of Certain Developments......................................................25
i
TABLE OF CONTENTS
(CONTINUED)
PAGE
5.7 Real Property........................................................................25
5.8 Tangible Personal Property...........................................................25
5.9 Intellectual Property................................................................25
5.10 Material Contracts...................................................................26
5.11 Employee Benefits Plans..............................................................26
5.12 Labor................................................................................28
5.13 Litigation...........................................................................28
5.14 Compliance with Laws; Permits........................................................28
5.15 Financial Advisors...................................................................28
5.16 Taxes................................................................................29
5.17 Employees on Leave...................................................................29
5.18 Title to Purchased Assets and Related Matters........................................29
5.19 Ownership of Membership Interest.....................................................29
5.20 No Other Representations or Warranties; Schedules....................................29
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PURCHASER......................................30
6.1 Organization and Good Standing.......................................................30
6.2 Authorization of Agreement...........................................................30
6.3 Conflicts; Governmental Consents.....................................................31
6.4 SEC Documents; Undisclosed Liabilities...............................................31
6.5 Capitalization.......................................................................33
6.6 Absence of Certain Developments......................................................34
6.7 Taxes................................................................................34
6.8 Litigation...........................................................................34
6.9 Financial Advisors...................................................................34
6.10 Condition of the Business............................................................34
6.11 Elimination of Transfer Restrictions.................................................35
ARTICLE VII POST-CLOSING COVENANTS...........................................................35
7.1 Access to Information................................................................35
7.2 Preservation of Records..............................................................36
ii
TABLE OF CONTENTS
(CONTINUED)
PAGE
7.3 Publicity............................................................................36
7.4 Negative Covenant....................................................................36
7.5 Notification.........................................................................36
7.6 Sellers' Reasonable Best Efforts.....................................................37
7.7 Purchaser's Reasonable Best Efforts..................................................37
7.8 Non-Solicitation.....................................................................37
7.9 Employment...........................................................................37
7.10 Employee Benefits....................................................................38
7.11 Confidentiality......................................................................39
7.12 Tax Reporting........................................................................40
7.13 Assumption in Bankruptcy.............................................................40
7.14 No Negotiation.......................................................................40
7.15 Change of Name; Use of Names.........................................................41
ARTICLE VIII CONDITIONS TO LICENSE-RELATED ASSET PURCHASE CLOSING.............................41
8.1 Conditions Precedent to the Obligations of Purchaser and Sellers.....................41
8.2 Condition Precedent to the Obligations of Each Seller................................41
ARTICLE IX MISCELLANEOUS....................................................................42
9.1 No Survival of Representations and Warranties........................................42
9.2 Payment of Sales, Use or Similar Taxes...............................................42
9.3 FCC Applications.....................................................................42
9.4 Expenses.............................................................................42
9.5 Submission to Jurisdiction; Consent to Service of Process............................42
9.6 Entire Agreement; Amendments and Waivers.............................................43
9.7 Governing Law........................................................................43
9.8 Notices..............................................................................43
9.9 Severability.........................................................................44
9.10 Binding Effect; Assignment...........................................................44
9.11 Non-Recourse.........................................................................45
9.12 Counterparts.........................................................................45
iii
SCHEDULES
Schedule 1.1(a) Equipment Leases
Schedule 1.1(b) FCC Licenses
Schedule 1.1(c) Subsequent Transferred Employees
Schedule 1.1(d) Nonassignable Contracts
Schedule 1.1(e) Purchased Contracts
Schedule 2.1(b)(v) Excluded Corporate Headquarters Furniture
and Fixtures
Schedule 2.1(b)(xii) Bank Accounts
Schedule 2.1(b)(xiv) Permits
Schedule 2.3(a)(viii) Severance Agreements/Transaction Bonus
Schedule 2.4(e) Affiliate Liabilities
Schedule 5.1(b) Seller Subsidiaries
Schedule 5.3(a) No Conflicts
Schedule 5.3(b) Governmental Consents
Schedule 5.4 Financials
Schedule 5.5 Undisclosed Liabilities
Schedule 5.6 Certain Developments
Schedule 5.7 Real Property
Schedule 5.8 Tangible Personal Property
Schedule 5.9 Intellectual Property
Schedule 5.10 Material Contracts
Schedule 5.11(a) Employee Benefits Plans
Schedule 5.11(c) Qualified Plans
Schedule 5.11(g) Accelerated Benefit Liabilities
Schedule 5.12(b) Labor
Schedule 5.13 Legal Proceedings
Schedule 5.16 Taxes
Schedule 6.3(a) No Conflict
Schedule 6.3(b) Governmental Consents
Schedule 6.4(c) SEC Documents
Schedule 6.5(b) Securities
Schedule 6.6 Certain Developments
Schedule 6.7 Taxes
Schedule 6.8 Legal Proceedings
Schedule 6.9 Financial Advisors
Schedule 7.1(b) Services
Schedule 7.10(c) Liabilities With Respect to Transferred
Employees
EXHIBITS
Exhibit A-1 - Form of Warrant
Exhibit A-2 - Form of Warrant
Exhibit B - Form of Registration Rights Agreement
Exhibit C - Form of Xxxx of Sale
iv
Exhibit D - Form of Assignment and Assumption Agreement
Exhibit E - Form of Management and Spectrum Lease Agreement
Exhibit F - Form of Indemnification Agreement
Exhibit G - Form of Substitute Severance Agreement
v
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of November 18, 2003 (this
"Agreement"), by and among Metrocall Holdings, Inc., a Delaware corporation
("Parent), Metrocall, Inc., a Delaware corporation ("Purchaser"), WebLink
Wireless I, L.P., a Texas limited partnership ("Company") and WebLink Wireless,
Inc., a Delaware corporation ("WebLink", together with Company, "Sellers").
W I T N E S S E T H:
WHEREAS, Sellers and the Subsidiaries presently conduct the Business;
WHEREAS, Purchaser and/or its Affiliates are party to certain existing
operating agreements with Sellers;
WHEREAS, Sellers desire to sell, transfer and assign to Purchaser, and
Purchaser desires to acquire and assume from Sellers, respectively, all of the
Purchased Assets and Assumed Liabilities, all as more specifically provided
herein; and
WHEREAS, certain terms used in this Agreement are defined in Section
1.1;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter contained, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Certain Definitions.
(a) For purposes of this Agreement, the following terms shall
have the meanings specified in this Section 1.1:
"Accounts Receivable" means (a) all trade accounts receivable and
other rights to payment from customers of Sellers and the full benefit of all
security for such accounts or rights to payment, including all trade accounts
receivable representing amounts receivable in respect of goods shipped or
products sold or services rendered to customers of Sellers, (b) all other
accounts or notes receivable of Sellers and the full benefit of all security for
such accounts or notes and (c) any claim, remedy or other right related to any
of the foregoing.
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person, and the term
"control" (including the terms "controlled by" and "under common control with")
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through
ownership of voting securities, by contract or otherwise.
"Assumed Liabilities" means Initial Assumed Liabilities, the
Subsequent Transferred Employee Liabilities and the License-Related Assumed
Liabilities.
"Business" means the business of Sellers and the Subsidiaries as
presently conducted.
"Business Day" means any day of the year on which national banking
institutions in New York are open to the public for conducting business and are
not required or authorized to close.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contract" means any contract, licenses, indenture, note, bond, lease,
commitment or other agreement.
"Corporate Headquarters" means Company's corporate headquarters
located at 0000 Xxx Xxxxxxx, Xxxxxx, Xxxxx.
"Equipment Leases" means collectively, leases for the equipment used
in the Business including those set forth in Schedule 1.1(a).
"ERISA" means the Employment Retirement Income Security Act of 1974,
as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FCC" means the United States Federal Communications Commission and
any successor agency.
"FCC Applications" means the applications requesting the FCC's consent
to the transfer of control or assignment of the FCC Licenses from Sellers to
Purchaser.
"FCC Approval" means the FCC's grant, in writing and by Final Order,
of the FCC Applications, whether by public notice, order or letter to the
parties.
"FCC Licenses" means all licenses issued by the FCC and held by
Sellers or the License Subsidiaries to construct, own and operate paging or
other wireless systems and all construction permits or conditional
authorizations that have been applied for by, or issued by the FCC to, Sellers
or the License Subsidiaries, as listed on Schedule 1.1(b), including, if any,
those acquired after the date hereof and prior to the License-Related Purchased
Asset Closing Date.
"Final Order" means FCC Approval or other action by a Governmental
Body for which (a) no petition or request for reconsideration or review by the
FCC or any other Governmental Body has been filed; (b) no appeal or petition for
judicial review has been filed; and (c) no reconsideration or review has been
undertaken by the FCC or other Governmental Body, as the case may be, on its own
motion; and (d) the time for the filings or actions described in (a) through (c)
has passed.
2
"Furniture and Equipment" means all furniture, fixtures, furnishings,
equipment, vehicles, leasehold improvements and other tangible personal property
owned or used by the Sellers, or which the Sellers have the right to use, in the
conduct of the Business, including all artwork, desks, chairs, tables, hardware,
copiers, telephone lines and numbers, telecopy machines and other
telecommunication equipment, cubicles and miscellaneous office furnishings and
supplies.
"GAAP" means generally accepted accounting principles in the United
States as in effect on the date of any financial statement with respect to which
such term is used or, to the extent not related to any such financial
statements, as of the date hereof.
"Governmental Body" means any government or governmental or regulatory
body thereof, or political subdivision thereof, whether federal, state, local or
foreign, or any agency, instrumentality or authority thereof, or any court or
arbitrator (public or private).
"HIPAA" means the Health Insurance Portability and Accountability Act
of 1996.
"Income Taxes" means any Taxes based on or measured by gross or net
income other than Taxes that are in the nature of sales and use Taxes.
"Indebtedness" of any Person means, without duplication, (i) the
principal of and premium (if any) in respect of (A) indebtedness of such Person
for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or
other similar instruments for the payment of which such Person is responsible or
liable; (ii) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such Person and
all obligations of such Person under any title retention agreement (but
excluding trade accounts payable and other accrued current liabilities arising
in the ordinary course of business); (iii) all obligations of such Person under
leases required to be capitalized in accordance with GAAP; (iv) all obligations
of such Person for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction; (v) all obligations of the
type referred to in clauses (i) through (iv) of other Persons for the payment of
which such Person is responsible or liable, directly or indirectly, as obligor,
guarantor, surety or otherwise, including guarantees of such obligations; and
(vi) all obligations of the type referred to in clauses (i) through (v) of other
Persons secured by any Lien on any property or asset of such Person (whether or
not such obligation is assumed by such Person).
"Initial Transferred Employees" means all employees of Sellers other
than Subsequent Transferred Employees, including those employees on an approved
leave of absence, vacation or short term disability, that were employed by
Sellers immediately prior to the Initial Closing Date.
"IRS" means the Internal Revenue Service.
"Knowledge of Purchaser" or "Purchaser's Knowledge" means the actual
knowledge of Xxxxxxx Xxxxx, Xxxxxx Xxxxxxx and Xxxx Xxxx.
3
"Knowledge of Sellers" or "Sellers' Knowledge" means the actual
knowledge of Xxxx Xxxxxxxxx, Xxxxx Xxxxxxxx, Xxxx Xxxx, and Xxxxx Xxxxxx.
"Law" means any foreign, federal, state, local law, statute, code,
ordinance, rule or regulation.
"Legal Proceeding" means any judicial, administrative or arbitral
actions, suits, pleadings, complaints or proceedings (public or private) by or
before a Governmental Body.
"Liability" means any debt, liability or obligation (whether direct or
indirect, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, or due or to become due) and including all costs and expenses
relating thereto.
"License Subsidiaries" means PageMart PCS Holdings LLC, a Delaware
limited liability company, and PageMart II Holdings LLC, a Delaware limited
liability company.
"License Subsidiary Interests" means all of the Membership Interests.
"Lien" means any lien, encumbrance, pledge, mortgage, deed of trust,
security interest, claim, lease, charge, option, right of first refusal, right
of set-off or recoupment, easement, servitude or transfer restriction.
"Long-Term Indebtedness" means Indebtedness of Sellers comprised of
its Tranche A Term Notes, Tranche B Term Notes, Tranche C PIK Notes, Tranche D
PIK Notes and Tranche E PIK Notes.
"Material Adverse Effect" means (i) a material adverse effect on the
business, assets, properties, results of operations or financial condition of
Sellers and the Subsidiaries (taken as a whole) or (ii) a material adverse
effect on the ability of Sellers to consummate the transactions contemplated by
this Agreement, other than an effect resulting from an Excluded Matter.
"Excluded Matter" means any one or more of the following: (i) the effect of any
change that generally affects any industry in which Sellers or any of the
Subsidiaries operates; (ii) the effect of any action taken by Purchaser or its
Affiliates with respect to the transactions contemplated hereby or with respect
to Sellers or the Subsidiaries; (iii) any matter within the specific Knowledge
of Purchaser on the date hereof; or (iv) the effect of any changes in applicable
Laws or accounting rules.
"Membership Interests" means 100% of the limited liability company
membership interests in the License Subsidiaries.
"Network" means the telecommunications network facilities, including
transmitters, switches, terminals, telephone numbers (including Direct Inward
Dialing numbers), circuits and all telephone interconnection facilities, and
transmitting antennae necessary for operation under the FCC Licenses.
4
"Nonassignable Contracts" shall mean any Contract listed on Schedule
1.1(d).
"Order" means any order, injunction, judgment, decree, ruling, writ,
assessment or arbitration award of a Governmental Body.
"Ordinary Course of Business" means the ordinary and usual course of
normal day-to-day operations of the Business consistent with past practice.
"Parent Common Stock" means shares of common stock, $0.01 par value,
of Parent.
"Permits" means any approvals, authorizations, consents, franchises,
licenses, permits, certificates or authorization of a Governmental Body.
"Permitted Encumbrances" means (i) all defects, exceptions,
restrictions, easements, rights of way and encumbrances as do not in any
material respect detract from the value thereof and do not in any material
respect interfere with the present or contemplated use of the property subject
thereto; (ii) statutory liens for current Taxes, assessments or other
governmental charges not yet delinquent or the amount or validity of which is
being contested in good faith by appropriate proceedings, provided an
appropriate reserve is established therefor; (iii) mechanics', carriers',
workers', repairers' and similar Liens arising or incurred in the Ordinary
Course of Business; (iv) zoning, entitlement and other land use and
environmental regulations by any Governmental Body; (v) liens securing debt as
disclosed in the Financial Statements; (vi) title of a lessor under a capital or
operating lease; (vii) such other imperfections in title, charges, easements,
restrictions and encumbrances which would not result in a Material Adverse
Effect; and (vii) rights of Verizon Wireless Messaging Services under Section
5.6 of the Amended and Restated Strategic Alliance Agreement dated as of January
1, 2003.
"Person" means any individual, corporation, partnership, firm, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization, Governmental Body or other entity.
"Purchased Assets" means the Initial Purchased Assets and the
Licensed-Related Purchased Assets.
"Purchased Contracts" means all Contracts (including customer
Contracts and Nonassignable Contracts) related to the Purchased Assets or the
Business and rights thereunder, including the Contracts listed on Schedule
1.1(e).
"Purchased Intellectual Property" means all intellectual property
rights owned by Seller and the Subsidiaries, all intellectual property rights
used in the Business, whether owned or held by WebLink, Company or the
Subsidiaries or any third party, including without limitation, the following:
(i) all patents and applications therefor, including continuations, divisionals,
continuations-in-part, or reissues of patent applications and patents issuing
thereon (collectively, "Patents"), (ii) all trademarks, service marks, trade
names, service names, brand names, trade dress rights, logos,
5
Internet domain names and corporate names, together with the goodwill associated
with any of the foregoing, and all applications, registrations and renewals
thereof, (collectively, "Marks"), (iii) all copyrights and registrations and
applications therefor, works of authorship and mask work rights (collectively,
"Copyrights") and (iv) all right, title and interest of Sellers and the
Subsidiaries in and to any Software and Technology owned by Seller and the
Subsidiaries.
"Purchaser Material Adverse Effect" means (i) a material adverse
effect on the business, assets, properties, results of operations or financial
condition of Parent, Purchaser and their subsidiaries (taken as a whole) or (ii)
a material adverse effect on the ability of Purchaser to consummate the
transactions contemplated by this Agreement, other than an effect resulting from
an Excluded Matter. "Excluded Matter" means any one or more of the following:
(i) the effect of any change that generally affects any industry in which
Purchaser or any of its subsidiaries operates; (ii) the effect of any action
taken by Sellers or their Affiliates with respect to the transactions
contemplated hereby or with respect to Purchaser; (iii) any matter within the
specific Knowledge of the Sellers on the date hereof; or (iv) the effect of any
changes in applicable Laws or accounting rules.
"Parent Ordinary Course of Business" means the ordinary and usual
course of normal day-to-day operations of the business of Parent.
"Purchaser Ordinary Course of Business" means the ordinary and usual
course of normal day-to-day operations of the business of Purchaser.
"Securities Act" means the Securities Act of 1933, as amended.
"Severance Agreements" shall mean the Employment Agreements, the Key
Employee Severance Plan and the Employee Severance Agreements listed on Schedule
2.3(a)(viii).
"Software" means any and all (i) computer programs, including any and
all software implementations of algorithms, models and methodologies, whether in
source code or object code, (ii) databases and compilations, including any and
all data and collections of data, whether machine readable or otherwise, (iii)
descriptions, flow-charts and other work product used to design, plan, organize
and develop any of the foregoing, screens, user interfaces, report formats,
firmware, development tools, templates, menus, buttons and icons, and (iv) all
documentation including user and operations and maintenance manuals and other
training documentation related to any of the foregoing.
"Subsequent Transferred Employees" means all employees of Sellers
listed on Schedule 1.1(c).
"Subsidiary" means any Person of which a majority of the outstanding
voting securities or other voting equity interests are owned, directly or
indirectly, by Sellers.
6
"Tax" or "Taxes" means (i) all federal, state, local or foreign taxes,
charges, fees, imposts, levies or other assessments, including, without
limitation, all net income, gross receipts, capital, sales, use, ad valorem,
value added, transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise,
severance, stamp, occupation, property and estimated taxes, customs duties,
fees, assessments and charges of any kind whatsoever, (ii) all interest,
penalties, fines, additions to tax or additional amounts imposed by any taxing
authority in connection with any item described in clause (i), and (iii) any
transferee liability in respect of any items described in clauses (i) and/or
(ii).
"Tax Return" means all returns, declarations, reports, estimates,
information returns and statements required to be filed in respect of any Taxes.
"Technology" means, collectively, all designs, formulae, algorithms,
procedures, methods, techniques, ideas, know-how, research and development,
technical data, programs, subroutines, tools, materials, specifications,
processes, inventions (whether patentable or unpatentable and whether or not
reduced to practice), apparatus, creations, improvements, works of authorship
and other similar materials, and all recordings, graphs, drawings, reports,
analyses, and other writings, and other tangible embodiments of the foregoing,
in any form whether or not specifically listed herein, and all related
technology.
"Transaction Documents" shall mean this Agreement, the Registration
Rights Agreement, the Assignment and Assumption Agreement, the Xxxx of Sale, the
Management and Spectrum Lease Agreement, the Warrants and the Indemnification
Agreement.
"Transferred Employees" shall mean Initial Transferred Employees and
Subsequent Transferred Employees.
(b) Terms Defined Elsewhere in this Agreement. For purposes of this
Agreement, the following terms have meanings set forth on the pages indicated:
Accountants................................................................19
Asset Acquisition Statement................................................19
Balance Sheet..............................................................25
Balance Sheet Date.........................................................25
Claim......................................................................16
COBRA......................................................................27
Company.....................................................................1
Copyrights..................................................................6
Documents..................................................................23
Employee Benefit Plans.....................................................26
Encumbrances...............................................................16
Excluded Assets............................................................12
Excluded Lease.............................................................12
Excluded Liabilities.......................................................15
7
Excluded Loss..............................................................19
Excluded Matter..........................................................4, 6
Financial Statements.......................................................24
Indemnification Agreement..................................................21
Initial Assumed Liabilities................................................13
Initial Closing............................................................20
Initial Closing Date.......................................................20
Initial Purchased Assets....................................................9
Inventory..................................................................12
Licensed-Related Purchased Assets..........................................10
License-Related Asset Purchase Closing.....................................21
License-Related Asset Purchase Closing Date................................21
License-Related Assumed Liabilities........................................15
Losses.....................................................................16
Management and Spectrum Lease Agreement....................................21
Marks.......................................................................6
Material Contracts.........................................................26
Negotiation Period.........................................................19
Parent......................................................................1
Parent Securities..........................................................33
Patents.....................................................................5
Personal Property Leases...................................................25
Preferred Stock............................................................34
Purchaser...................................................................1
Purchaser Documents........................................................30
Purchaser Plans............................................................38
Qualified Plans............................................................27
Real Property Leases.......................................................25
Registration Rights Agreement..............................................20
Reimbursement..............................................................11
Representatives............................................................40
Revised Statements.........................................................19
SEC Documents..............................................................31
Sellers.....................................................................1
Subsequent Closing Date....................................................21
Transaction................................................................39
Transfer Taxes.............................................................42
Warrants...................................................................20
WebLink.....................................................................1
(c) Other Definitional and Interpretive Matters. Unless otherwise
expressly provided, for purposes of this Agreement, the following rules of
interpretation shall apply.
Calculation of Time Period. When calculating the period of time before
which, within which or following which any act is to be done or step taken
pursuant to
8
this Agreement, the date that is the reference date in calculating such period
shall be excluded. If the last day of such period is a non-Business Day, the
period in question shall end on the next succeeding Business Day.
Dollars. Any reference in this Agreement to $ shall mean U.S. dollars.
Exhibits/Schedules. The Exhibits and Schedules to this Agreement are
hereby incorporated and made a part hereof and are an integral part of this
Agreement. Any capitalized terms used in any Schedule or Exhibit but not
otherwise defined therein shall be defined as set forth in this Agreement.
Gender and Number. Any reference in this Agreement to gender shall
include all genders, and words imparting the singular number only shall include
the plural and vice versa.
Headings. The provision of a Table of Contents, the division of this
Agreement into Articles, Sections and other subdivisions and the insertion of
headings are for convenience of reference only and shall not affect or be
utilized in construing or interpreting this Agreement. All references in this
Agreement to any "Section" are to the corresponding Section of this Agreement
unless otherwise specified.
Herein. The words such as "herein," "hereinafter," "hereof," and
"hereunder" refer to this Agreement as a whole and not merely to a subdivision
in which such words appear unless the context otherwise requires.
Including. The word "including" or any variation thereof means
"including, without limitation" and shall not be construed to limit any general
statement that it follows to the specific or similar items or matters
immediately following it.
(d) The parties hereto have participated jointly in the
negotiation and drafting of this Agreement and, in the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as jointly drafted by the parties hereto and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
provision of this Agreement.
ARTICLE II
PURCHASE AND SALE OF ASSETS;
ASSUMPTION OF LIABILITIES
2.1 Purchase and Sale of Assets. (a) On the terms and subject to the
conditions set forth in this Agreement, (i) at the Initial Closing, Purchaser
shall purchase, acquire and accept from Sellers, and Sellers shall sell,
transfer, assign, convey and deliver to Purchaser, all of Sellers' right, title
and interest in, to and under the Initial Purchased Assets; and (ii) at the
License-Related Asset Purchase Closing, Purchaser shall purchase, acquire and
accept from Sellers, and Sellers shall sell, transfer, assign, convey and
deliver to Purchaser, all of Sellers' right, title and interest in, to and under
the License-Related Purchased Assets.
9
(b) "Initial Purchased Assets" shall mean all of the assets,
properties and rights (whether tangible or intangible, real, personal or mixed,
fixed, contingent or otherwise, and wherever located) of Sellers and their
Subsidiaries, including Sellers' Network, wherever they may be located, as of
the date hereof (other than the Excluded Assets and the Licensed-Related
Purchased Assets), including the following:
(i) all Accounts Receivable of Sellers and Subsidiaries other
than Excluded Assets;
(ii) all inventory of Sellers and Subsidiaries ("Inventory");
(iii) all credits and prepaid expenses or obligations, including
such credits or prepaid expenses pursuant to any agreement with Xxxx Mobility;
(iv) the Real Property Leases (as hereinafter defined) and all
improvements, fixtures and other appurtenances related thereto, other than the
Excluded Lease;
(v) the Furniture and Equipment of Sellers and Subsidiaries,
other than furniture and fixtures physically located in Corporate Headquarters
set forth on Schedule 2.1(b)(v);
(vi) Purchased Intellectual Property, including without
limitation the name "WebLink Wireless" and all related Marks;
(vii) to the extent assignable, all rights in, to and under the
Purchased Contracts other than the Nonassignable Contracts, and all rights to
receive payment for products and services sold, to the extent payment for
products and services sold prior to the Initial Closing Date has not been
received prior to the Initial Closing (billed and unbilled) and to receive goods
and services purchased pursuant to such Purchased Contracts and to assert claims
and take other actions in respect of breaches or other violations thereof;
(viii) all books, records, files or papers of Sellers and
Subsidiaries, whether in hard copy or computer format that are or have been used
in, held for use in or intended to be used in, the Business (other than those
constituting License-Related Purchased Assets), including but not limited to
documents relating to products, services, marketing, advertising, promotional
materials, Purchased Intellectual Property, personnel files (except with respect
to "protected health information" under HIPAA) for Transferred Employees and all
files, customer files and documents (including credit information), supplier
lists, records, literature and correspondence (other than Sellers' payroll
system and related licenses);
(ix) Sellers' and Subsidiary's rights in, to and under the
Equipment Leases;
10
(x) except as provided in Section 2.2(i) hereof, all assets and
any rights under any Employee Benefit Plan, including Sellers' and any
Subsidiary's pension plans, supplemental retirement plans, and any agreement
relating to employee benefits, employment or compensation of Sellers and
Subsidiaries or their respective employees, including the funds held by the
Sellers and Subsidiaries with respect to flexible spending accounts of the
Initial Transferred Employees;
(xi) any security, vendor, utility or other deposits, including
any security deposits given in favor of lessors or licensors of real property,
any rights to receive from such lessors unpaid construction allowances,
reimbursement for prepaid estimated expenses in excess of actual expenses and
other restricted cash or cash due and owing in respect of such leases owed to
Sellers by such lessor prior to the Initial Closing Date (such amounts, the
"Reimbursement"); provided, however, that the foregoing shall not apply to any
deposits or claims with respect to the Excluded Lease or other Excluded Assets;
(xii) to the extent assignable, all rights, including without
limitation, all deposits and moneys existing on or after the Initial Closing
Date, with respect to the bank accounts (other than bank accounts of WebLink)
listed on Schedule 2.1(b)(xii);
(xiii) all marketing materials and works-in-progress, and all
related prepaid expenses, for use in the Business after the Initial Closing;
(xiv) to the extent assignable all Permits used by Sellers or
their Subsidiaries in the Business including those listed on Schedule
2.1(b)(xiv) and Section 2.2(f), but excluding sales and use tax permits and
qualifications to do business in any state or district;
(xv) all supplies owned by Sellers and their Subsidiaries;
(xvi) to the extent assignable, all rights of Sellers and their
Subsidiaries under non-disclosure or confidentiality, non-compete, or
non-solicitation agreements with employees and agents of Sellers or with third
parties including to the extent assignable, any confidential information of
third parties which is subject to an obligation of confidentiality assumed by
Purchaser;
(xvii) to the extent assignable, all rights of Sellers and their
Subsidiaries under or pursuant to all warranties, representations and
guarantees, made by third parties, including suppliers, manufacturers and
contractors;
(xviii) cash, cash equivalents, bank deposits or similar cash
items other than those covered by Section 2.2(a) hereof;
(xix) except as provided in Section 2.2(i) hereof, any claims,
causes of actions, counterclaims, setoffs or defenses and insurance coverage
Sellers or their Subsidiaries may have with respect to any Assumed Liabilities;
11
(xx) assets of License Subsidiaries other than the FCC Licenses;
and
(xxi) all goodwill and other intangible assets associated with
the Business, including customer and supplier lists and the goodwill associated
with the Purchased Intellectual Property.
(c) "License-Related Purchased Assets" shall mean the following:
(i) all books, records, files or papers of Sellers and their
Subsidiaries, whether in hard copy or computer format that are used in, held for
use in or intended to be used in, the Business related to FCC Licenses;
(ii) to the extent assignable, Sellers' payroll system and
related licenses, but such assets will not be transferred prior to March 31,
2004;
(iii) all License Subsidiaries Interests or, at the option of the
Purchaser in lieu of such Membership Interests, the FCC Licenses, in which event
such Membership Interests shall be deemed Excluded Assets; and
(iv) except in the circumstance in which the Purchaser exercises
its option pursuant to Section 2.1(c)(ii) hereof to purchase only the FCC
Licenses, minute books, books and records and certificates of License
Subsidiaries.
2.2 Excluded Assets. Nothing herein contained shall be deemed to sell,
transfer, assign or convey the Excluded Assets to Purchaser, and Sellers shall
retain all right, title and interest to, in and under the Excluded Assets.
"Excluded Assets" shall mean each of the following assets of Sellers:
(a) all cash, cash equivalents, bank deposits or similar cash
items of WebLink in an amount equal to $13,500,000 minus $3,865,000, being the
amount of any severance that is payable pursuant to the Severance Agreements and
transaction bonuses listed on Schedule 2.3(a)(viii), provided, however, that any
portion of such amount not paid to such employees, including under the
substitute severance agreements, by April 15, 2004 shall be repaid to Sellers
within five (5) Business Days from such date by wire transfer of immediately
available funds into accounts designated by Sellers;
(b) all shares of Arch Wireless, Inc. common stock owned by
Sellers;
(c) the real estate lease associated with the Corporate
Headquarters (the "Excluded Lease") and the Facility Management Agreement with
Xxxxxx Management Services, Inc. dated December 22, 2000;
(d) any claim, right or interest of Sellers in or to any refund,
rebate, abatement or other recovery for Taxes, together with any interest due
thereon or
12
penalty rebate arising therefrom, whether or not filed as of the date hereof (i)
in respect of any Tax period prior to the Initial Closing Date, with respect to
Taxes related to the Business, and (ii) in respect of any Tax period, with
respect to all Taxes not related to the Business.
(e) any (i) books and records that Sellers are required by Law to
retain; provided, however, that Purchaser shall have the right to make copies of
any portions of such retained books and records that relate to the personnel
records, the Business or any of the Purchased Assets; (ii) minute books, stock
ledgers and stock certificates of Sellers and the Subsidiaries other than
License Subsidiaries; and (iii) Contracts, books and records primarily relating
to Excluded Assets and Excluded Liabilities;
(f) any claims, causes of action, counterclaims, setoffs or
defenses Sellers may have with respect to any Excluded Liability;
(g) any partnership interest in Company or stock in a Subsidiary
except those set forth in Section 2.1(c)(ii);
(h) all furniture and fixtures physically located in the
Corporate Headquarters as set forth on Schedule 2.1(b)(v); and
(i) (i) the Company 401(k) Plan and (ii) all insurance policies
and all deposits, refunds and return premiums related thereto and to the Aetna
medical self-insurance plan, other than the Employee Benefit Plans and other
than any right of coverage or recovery in connection with pending claims for
wrongful termination by a Seller or any Subsidiary.
2.3 Assumption of Liabilities. (a) On the terms and subject to the
conditions set forth in this Agreement, at the Initial Closing, Purchaser shall
assume, effective as of the Initial Closing Date, the Initial Assumed
Liabilities and shall timely perform and discharge in accordance with their
respective terms, all Initial Assumed Liabilities. "Initial Assumed Liabilities"
shall mean all Liabilities of Sellers under the Purchased Contracts and all
Liabilities of Sellers, (other than the Excluded Liabilities, Subsequent
Transferred Employee Liabilities and License-Related Assumed Liabilities,
including the following Liabilities:
(i) all Liabilities of Sellers under the Purchased Contracts,
including any Liabilities relating to or arising from any investigations,
claims, demands or Legal Proceedings arising from such Purchased Contracts as a
result of the consummation of the transactions contemplated hereby;
(ii) all Liabilities of Sellers arising out of, relating to or
with respect to (x) the employment or performance of services for Sellers or any
of their Subsidiaries, or termination of employment or the performance of
services by Sellers or any of their Subsidiaries, of any Initial Transferred
Employees on or before the Initial Closing Date, (y) workers' compensation and
other employment-related claims against Sellers or any of their Subsidiaries
that relate to the period ending on the Initial Closing
13
Date, irrespective of whether such claims are made prior to or after the Initial
Closing, and (z) any Employee Benefit Plan other than, in the cases of each of
(x), (y) and (z), any liabilities related to the Aetna medical self-insurance
plan, the Company 401(k) plan (but not including any employer matching
contributions outstanding for any period for services rendered ending on or
prior to the Initial Closing Date) and equity awards granted to Transferred
Employees;
(iii) all Liabilities of Sellers arising from the sale of
products and services in the Ordinary Course of Business;
(iv) all accounts payable (including, for the avoidance of doubt,
(i) invoiced accounts payable and (ii) accrued but uninvoiced accounts payable)
and accrued expenses of Sellers;
(v) all Liabilities for any Taxes of Sellers or any of their
Affiliates arising out of or relating to the Business or the Purchased Assets,
except for (x) the liability described in Section 2.4(d) hereof, (y) all
Liabilities for or in respect of Income Taxes and (z) all Liabilities in respect
of any Tax to the extent such Liabilities are a return of any refund, rebate,
abatement or other recovery in respect of such Tax, including any interest
thereon and penalty rebate arising therefrom, received by Sellers or any of
their Affiliates pursuant to Section 2.2(d) hereof, whether or not application
for such refund, rebate, abatement or other recovery has been filed as of the
date hereof (the Liabilities in respect of Taxes described in the preceding
clauses (x), (y) and (z), "Excluded Taxes");
(vi) all other Liabilities with respect to the Business, the
Initial Purchased Assets or the Initial Transferred Employees, other than the
License-Related Assumed Liabilities;
(vii) all Liabilities relating to amounts required to be paid by
Purchaser hereunder.
(viii) all Liabilities with respect to the payment of amounts
under the Severance Agreements (including any severance payments relating to the
Company's general severance practices if provided for under such Severance
Agreement) listed on Schedule 2.3(a)(viii) and the transaction bonus payments
listed on Schedule 2.3(a)(viii).
(b) On the terms and subject to the conditions set forth in this
Agreement, on the Subsequent Transfer Date, Purchaser shall assume, effective as
of the Subsequent Transfer Date, the Subsequent Transferred Employee Liabilities
and shall timely perform and discharge in accordance with their respective
terms, all Subsequent Transferred Employee Liabilities. "Subsequent Transferred
Employee Liabilities" shall mean (i) all Liabilities of Sellers arising out of,
relating to or with respect to (x) the employment or performance of services for
Sellers or any of their Subsidiaries, or termination of employment or the
performance of services by Sellers or any of their Subsidiaries, of any
Subsequent Transferred Employees on or before the Subsequent Transfer Date, (y)
workers' compensation and other employment-related claims against
14
Sellers or any of their Subsidiaries that relate to the period ending on the
Subsequent Transfer Date, irrespective of whether such claims are made prior to
or after the Subsequent Transfer Date, and (z) any Employee Benefit Plan other
than, in the cases of each of (x), (y) and (z), any liabilities related to the
Aetna medical self-insurance plan, the Company 401(k) plan (but not including
any employer matching contributions outstanding (and which have not been billed
as an Expense under the Management Agreement) relating to any period for
services rendered ending on of before the Subsequent Transfer Date) and equity
awards granted to the Subsequent Transferred Employees; and (ii) all other
Liabilities with respect to the Subsequent Transferred Employees.
(c) On the terms and subject to the conditions set forth in this
Agreement, at the License-Related Asset Purchase Closing, Purchaser shall
assume, effective as of the License-Related Asset Purchase Closing Date, the
License-Related Assumed Liabilities and shall timely perform and discharge in
accordance with their respective terms, all License-Related Assumed Liabilities.
"License-Related Assumed Liabilities shall mean all (i) Liabilities with respect
to the Business or the License-Related Purchased Assets, other than the Initial
Assumed Liabilities, Subsequent Transferred Employee Liabilities and the
Excluded Liabilities.
2.4 Excluded Liabilities. Purchaser will not assume or be liable for
any Excluded Liabilities. "Excluded Liabilities" shall mean the following
Liabilities of Sellers or their Affiliates:
(a) the Excluded Lease;
(b) all Long-Term Indebtedness;
(c) all Liabilities relating to or arising out of Excluded
Assets;
(d) the outstanding New York State excise tax liability relating
to an Order Granting Motion to Approve Settlement of Claims with the New York
State Department of Taxation entered on October 22, 2002 in WebLink's Chapter 11
proceeding under the United States Bankruptcy Code;
(e) any Liabilities of Sellers owing to any Affiliate of Sellers
and Stockholders of WebLink other than Liabilities described in Schedule 2.4(e);
(f) any Liabilities of Sellers to KPMG, Xxxxxxxxx Xxxxx
International and other Person engaged by Sellers for tax consulting services in
connection with such services;
(g) any Liabilities of Sellers incurred or to be incurred in
connection with the negotiation and execution of this Agreement and relating to
amounts required to be paid by Sellers hereunder, including with respect to the
fairness opinion to be delivered to Sellers by Xxxxxx Capital Partners;
15
(h) any Liabilities of Sellers or any Affiliates thereof to their
respective security holders or creditors in connection with the execution,
delivery or performance of this Agreement or otherwise;
(i) Liabilities for which Sellers have expressly assumed
responsibility pursuant to this Agreement;
(j) any Liabilities of Sellers or their Subsidiaries for
indemnification, including related reimbursement or advancement of expenses
under such indemnification or other amounts, to any officer, director, employee
or agent of Sellers or their Affiliates; and
(k) any Liabilities of Sellers or any of their Affiliates for or
in respect of any Excluded Taxes.
2.5 Further Conveyances and Assumptions; Consent of Third Parties.
(a) From time to time following the Initial Closing or the
License-Related Asset Purchase Closing, as applicable, Sellers and Purchaser
shall, and shall cause their respective Affiliates to, execute, acknowledge and
deliver all such further conveyances, notices, assumptions, releases and such
other instruments, and shall take such further actions, as may be reasonably
necessary or appropriate to assure fully to Purchaser and its respective
successors or assigns, all of the properties, rights, titles, interests,
estates, remedies, powers and privileges intended to be conveyed to Purchaser
under this Agreement and the other Transaction Documents and to assure fully to
Sellers and its Affiliates and their successors and assigns, the assumption of
the Liabilities and obligations intended to be assumed by Purchaser under this
Agreement and the other Transaction Documents, and to otherwise make effective
the transactions contemplated hereby and thereby.
(b) Assuming the proper filing of the UCC-3 financing statements
by Purchaser, at the Initial Closing and the License-Related Asset Purchase
Closing, the Initial Purchased Assets or License-Related Purchased Assets, as
applicable, shall be sold, transferred, assigned and conveyed to Purchaser free
and clear of all liens, mortgages, licenses, pledges, security interests,
conditional sales agreements, charges, claims, options, rights of set-off or
recoupment, conditions, easements and restrictions of record and any other
encumbrances of any kind or nature whatsoever (collectively, "Encumbrances")
other than Permitted Encumbrances (which for purposes of this Section 2.5(b)
shall exclude liens securing debt as disclosed in the Financial Statements).
(c) Purchaser agrees that it shall indemnify the Sellers and
their Affiliates (collectively, "Indemnified Parties" and individually, an
"Indemnified Party") from and against any amounts and expenses, including any
Liabilities relating to or arising from any investigations, claims, demands or
Legal Proceedings ("Losses") relating to, resulting from or arising out of any
claim of any Person alleging that an Indemnified Party is liable or otherwise
responsible for any Assumed Liabilities (a "Claim").
16
(d) With respect to Purchased Contracts or Permits that Purchaser
believes are useful for the Business after the Initial Closing Date, Sellers
shall, and shall cause their Affiliates to, use their commercially reasonable
efforts to cooperate with Purchaser at its request following the Initial Closing
Date in endeavoring to obtain consents without any obligation on the part of
Sellers or their respective Affiliates to incur any fees or expenses in
connection therewith.
(e) Without any further action on its behalf or on behalf of
Sellers, Purchaser shall be deemed to have been assigned each Nonassignable
Contract, and any other Purchased Contract that has not yet been assigned,
whether or not assignable, at the earlier of (a) the receipt of third party
consents to the assignment of such Nonassignable Contract, or (b) December 31,
2004, the earlier of such dates, the "Nonassignable Contract Assignment Date".
Nothing in this Agreements shall require Sellers or any of its Affiliates to
incur any out-of-pocket expenses or Liabilities or provide any financial
accommodation or to remain or become secondarily or contingently liable for any
Assumed Liability in order to obtain any such consent except for reasonable
legal fees related to such efforts in connection with the License-Related
Purchased Assets Closing. Purchaser and Sellers shall use their respective
commercially reasonable efforts to obtain, or cause to be obtained, any consent,
substitution, approval or amendment required to novate all Liabilities under any
and all Purchased Contracts or other Liabilities that constitute Assumed
Liabilities or to obtain in writing the unconditional release of Sellers and
their Affiliates so that, in all cases, Purchaser shall be solely responsible
for such Liabilities after the applicable Closing with respect to such Assumed
Liabilities.
(f) The transfer of the FCC Licenses held by the License
Subsidiaries indirectly as a result of the sale of Company's Membership Interest
therein or directly, if so elected by Purchaser, shall be subject to obtaining
FCC Approval prior to such transfer. Control over the License Subsidiaries
and/or their FCC Licenses shall not be conveyed by Company or assumed by
Purchaser until the FCC Approval has been obtained by Final Order.
2.6 Indemnification Procedures.
(a) Procedures for Making Claims. In the event that any Claim
shall be asserted by any Person in respect of which payment may be sought by an
Indemnified Party under Section 2.5(c) hereof, such Indemnified Party shall
promptly provide reasonable written notice to Purchaser stating specifically the
nature and dollar amount of any such Claim to the extent known at such time.
Written notice to Purchaser of the existence of any Claim shall be given by
Sellers within fifteen (15) days after its becoming aware of (i) the Claim
giving rise to a Loss or (ii) the assertion a third party Claim with respect to
which Purchaser is obligated under Section 2.5(c) hereof to provide
indemnification or reimbursement; provided, however, that the failure of Sellers
to give such notice shall not relieve Purchaser of its obligations under Section
2.5(c) hereof, except to the extent that such Purchaser is actually prejudiced
by such failure to give notice.
17
(b) Defense of Claims.
(i) The Purchaser, at its own expense and through counsel chosen
by it, may elect to defend against, negotiate, settle or otherwise deal with any
Claim which relates to any Losses; and if it so elects, it shall, within 30
(thirty) Business Days after receiving notice of Claim (or sooner, if the nature
of such Claim so requires), notify the Indemnified Party of its intent to do so,
and such Indemnified Party shall cooperate fully in the defense, negotiation or
settlement of any such Claim. After notice from the Purchaser to the Indemnified
Parties of its election to defend against, negotiate, settle or otherwise deal
with any such Claim, Purchaser shall not be liable to the Indemnified Parties
under this Agreement for any legal or other expenses subsequently incurred by
the Indemnified Parties in connection with the defense, negotiation or
settlement thereof; provided, however, that all Indemnified Parties shall have
the right to collectively employ one (and only one) counsel to represent such
Indemnified Parties in respect of such Claim hereunder (which counsel shall be
reasonably acceptable to the Purchaser) if, in the reasonable opinion of counsel
to the Indemnified Parties, a conflict of interest between the Indemnified
Parties and the Purchaser may exist in respect of such Claim that would make
such separate representation advisable, and in that event (x) the reasonable
fees and expenses of such separate counsel shall be paid by the Purchaser and
(y) each of the Purchaser and the Indemnified Parties shall have the right to
direct its own defense in respect of such Claim; provided, further, that the
Purchaser shall not be required to pay for more than one additional counsel
(excluding local counsel) for Indemnified Parties in connection with any Claim
hereunder. The parties hereto agree to cooperate fully with each other in
connection with any Claims hereunder. If the Purchaser elects not to defend
against, negotiate, settle or otherwise deal with such Claim, or fails to notify
the Indemnified Parties of its election within thirty (30) Business Days after
request by the Indemnified Parties to assume the defense of any such Claim, the
Indemnified Parties may assume control of the defense of such Claim at
Purchaser's expense. Notwithstanding anything in this Section 2.6 to the
contrary, neither the Purchaser nor the Indemnified Parties may, without the
prior written consent of the other party, settle or compromise any such Claim or
permit a default or consent to the entry of any judgment unless the claimant and
such party provide to such other party an unqualified written release from all
liability in respect of such Claim, and such settlement or compromise does not
materially and adversely impair the ability of the Indemnified Parties to
conduct their respective businesses, and does not contain any admission of
wrongdoing on the part of any of the Indemnified Parties. Notwithstanding the
foregoing, if a settlement offer solely for money damages is made by the
applicable third party claimant, and the Purchaser notifies the Indemnified
Parties in writing of the Purchaser's willingness to accept the settlement offer
and pay the amount called for by such offer, and the Indemnified Parties decline
to accept such offer, the Indemnified Parties may continue to contest such
Claim, free of any participation by the Purchaser, and the amount of any
ultimate liability with respect to such Claim that the Purchaser has an
obligation to pay hereunder shall be limited to the lesser of (A) the amount of
the settlement offer that the Indemnified Parties declined to accept plus the
Losses of the Indemnified Parties relating to such Claim through the date of its
rejection of the settlement offer or (B) the aggregate Losses of the Indemnified
Parties with respect to such Claim.
18
(ii) After any final decision, judgment or award shall have been
rendered by a Governmental Body of competent jurisdiction and the expiration of
the time in which to appeal therefrom, or a settlement shall have been
consummated, or the Indemnified Parties and the Purchaser shall have arrived at
a mutually binding agreement with respect to a Claim hereunder, the Indemnified
Parties shall forward to the Purchaser notice of any sums due and owing by the
Purchaser pursuant to this Agreement with respect to such matter.
(c) No Consequential Damages. Notwithstanding anything in this
Agreement to the contrary, no party hereto (or any of its Affiliates) shall, in
any event, be liable to any other party hereto (or any of its Affiliates) for
any consequential, incidental, special or punitive damages of such other party
(or its Affiliates) (collectively, an "Excluded Loss"), including loss of future
revenue, income or profits, diminution of value or loss of business reputation
or opportunity relating to any claim or loss hereunder; provided, that to the
extent that any Loss constitutes the payment of any amount to a third party that
is not an Indemnified Person, such Loss shall not be reduced by the amount
thereof that would otherwise constitute an Excluded Loss.
2.7 Bulk Sales Laws. Purchaser hereby waives compliance by Sellers
and the Subsidiaries with the requirements and provisions of any "bulk transfer"
Laws of any jurisdiction that may otherwise be applicable with respect to the
sale of any or all of the Purchased Assets to Purchaser.
2.8 Purchase Price Allocation.
(a) Sellers and Purchaser shall act in good faith to attempt to
agree to the allocation of the purchase price (including the Assumed
Liabilities) among the Purchased Assets. In accordance with such allocation and
upon such agreement, Purchaser shall prepare and deliver to Sellers copies of
Form 8594 and any required exhibits thereto (the "Asset Acquisition Statement").
Purchaser shall prepare and deliver to Sellers from time to time revised copies
of the Asset Acquisition Statement (the "Revised Statements") so as to report
any matters on the Asset Acquisition Statement that need updating (including
purchase price adjustments, if any) consistent with the allocation as agreed
upon or determined in accordance with this Section 2.8. The purchase price for
the Initial Purchased Assets and License-Related Purchased Assets shall be
allocated in accordance with the Asset Acquisition Statement or, if applicable,
the last Revised Statements, provided by Purchaser to Sellers, and all income
Tax Returns and reports filed by Purchaser and Sellers shall be prepared
consistently with such allocation.
(b) If the Sellers and Purchaser fail to agree to such matters
within 60 days (the "Negotiation Period") after the date hereof, the allocation
of the purchase price among the Purchased Assets will be resolved by submission
to an independent accounting firm of national recognition reasonably acceptable
to Sellers and Buyer (the "Accountants"). If the purchase price allocation is
submitted to the Accountants for resolution, (x) each party will furnish to the
Accountants such work papers and other documents and information relating to the
purchase price allocation as
19
the Accountants may request and are available to that party (or its independent
public accountants), and will be afforded the opportunity to present to the
Accountants any material relating to the determination and to discuss the
determination with the Accountants; (y) the determination by the Accountants, as
set forth in a notice delivered to the Sellers and Purchaser by the Accountants
will be binding and conclusive on the Sellers and Purchaser; and (z) the fees of
the Accountants for such determination shall be allocated by the Accountant
equally between Purchaser and Sellers.
2.9 Parent Guarantee. Parent hereby guarantees to Sellers (and their
Affiliates) the full payment of any obligation of Purchaser hereunder,
including, but not limited to, all Initial Assumed Liabilities and
License-Related Assumed Liabilities.
ARTICLE III
CONSIDERATION
3.1 Consideration. The aggregate consideration for the Purchased
Assets shall be (i) 500,000 shares of Parent Common Stock and (ii) warrants to
purchase an aggregate of 25,000 shares of Parent Common Stock (the "Warrant
Shares") plus, as of the License-Related Asset Purchase Closing Date, up to
100,000 Warrant Shares (to the extent that the right to purchase such additional
Warrant Shares shall not have vested as of such date pursuant to the Management
and Spectrum Lease Agreement), for an exercise price of $40 per share,
exercisable at any time and from time to time, in whole or in part, before the
third anniversary of the delivery of such warrants by Purchaser to Company, in
the form attached hereto as Exhibit A-1 and Exhibit A-2 (the "Warrants"). The
Parent and Purchaser shall use their best efforts to register for resale the
500,000 shares of Parent Common Stock and those shares to be issued pursuant to
the terms of the Warrants, whether or not such Warrants are delivered pursuant
to this Agreement or the Management and Spectrum Lease Agreement, within 120
days of the Initial Closing pursuant to a Registration Rights Agreement in the
form attached hereto as Exhibit B (the "Registration Rights Agreement").
3.2 Payment of Consideration on the Initial Closing Date. (a) On the
Initial Closing Date, Parent shall deliver 500,000 shares of Parent Common Stock
to Company.
(b) Warrants. On the Initial Closing Date, Parent shall deliver
to Company, Warrants to purchase 25,000 Warrant Shares.
3.3 Payment of Consideration on the License-Related Asset Purchase
Closing Date. On the License-Related Asset Purchase Closing Date, the Company's
right to purchase all remaining Warrant Shares pursuant to the Warrants shall
vest, if not previously vested.
20
ARTICLE IV
CLOSING AND DELIVERIES
4.1 Initial Closing. The closing of the sale and purchase of the
Initial Purchased Assets and the assumption of the Initial Assumed Liabilities
(the "Initial Closing") shall take place at the offices of Xxxxxxx Xxxx & Xxxxx
LLP located at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx (or at such other place as
the parties may mutually agree) at 10:00 a.m. (New York City time) on November
18, 2003 ("Initial Closing Date").
4.2 License-Related Asset Purchase Closing. The closing of the sale
and purchase of the License-Related Purchased Assets and the assumption of the
License-Related Assumed Liabilities ("License-Related Asset Purchase Closing")
shall take place at the offices of Xxxxxxx Xxxx & Xxxxx LLP located at 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (or at such other place as the parties may
mutually agree) at 10:00 a.m. (New York City time) on the 5th Business Day after
the conditions listed in Section 8.1 and Section 8.2 have been satisfied or at
such other time as the parties may mutually agree ("License-Related Asset
Purchase Closing Date").
4.3 Sellers Closing Documents.
(a) At the Initial Closing, Sellers shall deliver or cause to be
delivered the following:
(i) A certificate of a duly authorized officer of Sellers, dated
the Initial Closing Date, to the effect that (A) the representations and
warranties of Sellers set forth in this Agreement qualified as to materiality or
Material Adverse Effect are true and correct at and as of the Initial Closing
Date, and those not so qualified are true and correct in all material respects
at and as of the Initial Closing Date, except to the extent such representations
and warranties relate to an earlier date (in which case such representations and
warranties qualified as to materiality were true and correct, and those not so
qualified were true and correct in all material respects, on and as of such
earlier date), and (B) Sellers have performed and complied in all material
respects with all obligations and agreements required by this Agreement to be
performed or complied with by it on or prior to the Initial Closing Date;
(ii) A duly executed xxxx of sale in the form of Exhibit C
hereto;
(iii) A duly executed Assignment and Assumption Agreement in the
form of Exhibit D hereto;
(iv) A duly executed Management and Spectrum Lease Agreement in
the form of Exhibit E hereto;
(v) A duly executed Registration Rights Agreement in the form of
Exhibit B hereto; and
21
(vi) A duly executed Indemnification Agreement in the form of
Exhibit F hereto.
(b) At the License-Related Asset Purchase Closing, Sellers shall
deliver or cause to be delivered the following:
(i) A duly executed xxxx of sale in the form of Exhibit C hereto;
(ii) A duly executed Assignment and Assumption Agreement in the
form of Exhibit D hereto; and
(iii) Except in the event Purchaser has elected to purchase the
FCC Licenses in lieu of the License Subsidiary Interests, evidence of all
consents required in connection with the assignment of the License Subsidiary
Interests. Sellers and Purchaser shall execute and deliver such certificates,
bills of sale and other documents as the other may reasonably request to
consummate the transfer from Sellers to Purchaser of the License Subsidiary
Interests.
4.4 Purchaser Closing Documents.
(a) At the Initial Closing, Purchaser shall deliver or cause to
be delivered to Sellers (unless otherwise indicated) the following:
(i) A certificate of a duly authorized officer of Purchaser,
dated the Initial Closing Date, to the effect that (A) the representations and
warranties of Purchaser set forth in this Agreement qualified as to materiality
or Material Adverse Effect are true and correct at and as of the Initial Closing
Date, and those not so qualified are true and correct in all material respects
at and as of the Initial Closing Date, except to the extent such representations
and warranties relate to an earlier date (in which case such representations and
warranties qualified as to materiality were true and correct, and those not so
qualified were true and correct in all material respects, on and as of such
earlier date), and (B) Purchaser has performed and complied in all material
respects with all obligations and agreements required by this Agreement to be
performed or complied with by it on or prior to the Initial Closing Date;
(ii) A duly executed Assignment and Assumption Agreement with
respect to the Initial Assumed Liabilities;
(iii) A duly executed Management and Spectrum Lease Agreement;
(iv) A duly executed Registration Rights Agreement;
(v) Duly executed Warrants to purchase 125,000 Warrant Shares in
the form of Exhibits A-1 and A-2 hereto; and
22
(vi) Stock certificates representing 500,000 shares of Parent
Common Stock, duly endorsed in blank or accompanied by stock transfer powers and
with all requisite legends and stock transfer tax stamps attached.
(b) At the License-Related Asset Purchase Closing, Purchaser
delivered or caused to be delivered to Sellers a certificate of a duly
authorized officer of Purchaser, dated as of the License-Related Asset Closing
Date, to the effect that all of the rights under the Warrants to purchase all
remaining Warrant Shares have vested upon such License-Related Asset Purchase
Closing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby represent and warrant to Purchaser that:
5.1 Organization and Good Standing.
(a) Each Seller is duly organized, validly existing and in good
standing under the laws of its formation and has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now conducted. Each Seller is duly qualified or authorized to do business and
is in good standing under the laws of each jurisdiction in which the conduct of
its business or the ownership of its properties requires such qualification or
authorization, except where the failure to be so qualified, authorized or in
good standing would not have a Material Adverse Effect.
(b) Schedule 5.1(b) hereto sets forth a true and complete list of
all Subsidiaries, together with the jurisdiction of incorporation or
organization of each Subsidiary. Each such Subsidiary is duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its
incorporation or organization and has all requisite power and authority to own,
lease and operate its properties and to carry on its business as now conducted.
Each Subsidiary is duly qualified or authorized to do business and is in good
standing under the laws of each jurisdiction in which the conduct of its
business or the ownership of its properties requires such qualification or
authorization, except where the failure to be so qualified, authorized or in
good standing would not be reasonably expected to have a Material Adverse
Effect. Complete and correct copies of the Certificate of Incorporation, Bylaws
or similar organizational documents of each Subsidiary have been made available
to Purchaser.
(c) Authorization of Agreement. Each Seller has all requisite
corporate or entity power and authority to execute and deliver this Agreement ,
the Transaction Documents to which such Seller is a signatory and each other
agreement, document, instrument or certificate contemplated by this Agreement or
to be executed by such Seller in connection with the consummation of the
transactions
23
contemplated hereby and thereby (the "Documents"), and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance by each Seller of this Agreement and each Document to which it is a
party and the consummation of the transactions contemplated hereby and thereby
have been duly authorized by all requisite corporate or entity action on behalf
of such Seller and no other corporate or entity proceedings on the part of
either Seller or its general partner or manager, as applicable, is necessary.
This Agreement has been, and each of the Documents will be at or prior to
delivery thereof on the Initial Closing Date or License-Related Asset Purchase
Closing Date, as applicable, duly and validly executed and delivered by each
Seller party thereto and (assuming the due authorization, execution and delivery
by the other parties hereto and thereto) this Agreement constitutes, and each of
the Documents when so executed and delivered will constitute, the legal, valid
and binding obligation of each Seller party thereto, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
5.3 Conflicts; Governmental Consents.
(a) Except as set forth on Schedule 5.3(a) hereto, none of the
execution and delivery by each Seller of this Agreement or the Documents to
which it is a party, the consummation of the transactions contemplated hereby or
thereby, or compliance by each Seller with any of the provisions hereof or
thereof will conflict with, or result in any violation of or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination or cancellation under, any provision of (i) the By-laws or
Certificate of Incorporation of WebLink, or the certificate of limited
partnership and partnership agreement of Company, or comparable organizational
documents of any Subsidiary; (ii) any Permit to which either Seller or any
Subsidiary is a party or by which any of the properties or assets of either
Seller or any other Subsidiary is bound; (iii) any Order of any Governmental
Body applicable to either Seller or any Subsidiary or by which any of the
properties or assets of each or any Subsidiary is bound; or (iv) any applicable
Law, other than, in the case of clauses (ii), (iii) and (iv), such conflicts,
violations, defaults, terminations or cancellations, that would not in the
aggregate have a Material Adverse Effect.
(b) Except as set forth on Schedule 5.3(b), no consent, waiver,
approval, Order, Permit or authorization of, or declaration or filing with, or
notification to, any Governmental Body is required on the part of a Seller or
any Subsidiary in connection with the execution and delivery of this Agreement
or the Documents to which it is a party or the compliance by either Seller with
any of the provisions hereof or thereof, or the consummation of the transactions
contemplated hereby or thereby, except (A) obtaining FCC Approval, and (B) for
such consents, waivers, approvals, Orders, Permits or authorizations the failure
of which to obtain would not in the aggregate be reasonably expected to have a
Material Adverse Effect.
5.4 Financial Statements. The Sellers have delivered to Purchaser
copies of (i) the audited consolidated balance sheet of WebLink and its
subsidiaries as at December 31, 2002 and the related audited consolidated
statements of income and of cash flows of WebLink and its subsidiaries for the
2002 periods and (ii) the unaudited
24
consolidated balance sheet of WebLink and its subsidiaries as at September 30,
2003 and the related unaudited consolidated statements of income and cash flows
of WebLink and its subsidiaries (without related notes and schedules) for the
2003 periods (such audited and unaudited statements, including the related notes
and schedules to such audited statements, are referred to herein as the
"Financial Statements"), copies of which are attached hereto as Schedule 5.4.
Except (i) as set forth in the notes thereto, if any, and (ii) as disclosed in
Schedule 5.4 hereto, each of the Financial Statements has been prepared in
accordance with GAAP consistently applied and presents fairly in all material
respects the consolidated financial position, results of operations and cash
flows of WebLink and its subsidiaries as at the dates and for the periods
indicated therein.
For the purposes hereof, the unaudited consolidated balance sheet of
WebLink and its subsidiaries as at September 30, 2003 is referred to as the
"Balance Sheet" and September 30, 2003 is referred to as the "Balance Sheet
Date".
5.5 No Undisclosed Liabilities. (a) Except as set forth on Schedule
5.5, neither Seller nor any Subsidiary has any Liabilities of any kind that
would have been required to be reflected or reserved against or otherwise
described on the Balance Sheet prepared in accordance with GAAP, except
liabilities (i) as and to the extent set forth on the unaudited balance sheet of
WebLink and the Subsidiaries as of September 30, 2003, (ii) incurred after the
Balance Sheet Date in the Ordinary Course of Business consistent with past
practice, as have not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect and (iii) incurred
after the Balance Sheet Date not in the Ordinary Course of Business that are in
the aggregate, immaterial in amount.
5.6 Absence of Certain Developments. Except as contemplated by this
Agreement or as set forth on Schedule 5.6 hereto, since the Balance Sheet Date
(i) Sellers and the Subsidiaries have conducted the Business only in the
Ordinary Course of Business and (ii) there has not been any event, change,
occurrence, circumstance or development that has had or would reasonably be
expected to have a Material Adverse Effect.
5.7 Real Property. No Seller nor any Subsidiaries has any fee interest
in real property. Schedule 5.7 hereto sets forth a true, correct and complete
list of all leases of real property by a Seller or a Subsidiary involving annual
payments in excess of $50,000, other than the Excluded Lease (individually, a
"Real Property Lease" and collectively, the "Real Property Leases"). To the
Knowledge of Sellers, neither Seller nor any Subsidiary has received any written
notice of any default or event that with notice or lapse of time, or both, would
constitute a default by Seller or any Subsidiary under any material Real
Property Lease.
5.8 Tangible Personal Property. Schedule 5.8 sets forth all leases of
personal property by Sellers or a Subsidiary (other than leases of pagers where
a Seller or a Subsidiary is a lessor) ("Personal Property Leases"ERROR! BOOKMARK
NOT DEFINED.) involving annual payments in excess of $50,000. To the Knowledge
of Sellers, no Seller nor any Subsidiary has received any written notice of any
default or any event that with
25
notice or lapse of time, or both, would constitute a default by any Seller or
any Subsidiary under any of the Personal Property Leases.
5.9 Intellectual Property. Except as set forth on Schedule 5.9,
Sellers and the Subsidiaries own or have valid licenses to use all material
Purchased Intellectual Property used by them in the Ordinary Course of Business,
except to the extent the failure to be the owner or the valid licensee would not
have a Material Adverse Effect. Except as set forth on Schedule 5.9, to the
Knowledge of Sellers, (i) the material Purchased Intellectual Property used by
Sellers and the Subsidiaries are not the subject of any challenge received by
Sellers or any of the Subsidiaries in writing and (ii) neither Seller nor any
Subsidiary has received any written notice of any default or any event that with
notice or lapse of time, or both, would constitute a default under any material
Purchaser Intellectual Property license to which a Seller or any Subsidiary is a
party or by which it is bound.
5.10 Material Contracts.
(a) Schedule 5.10 sets forth all of the following Contracts to
which a Seller or any of the Subsidiaries is a party or by which it is bound
(collectively, the "Material Contracts"):
(i) Contracts with any current officer or director of either
Seller or any of the Subsidiaries;
(ii) Contracts with any labor union or association representing
any employee of either Seller or any of the Subsidiaries;
(iii) Contracts for the pending sale of any of the assets of
either Seller or any of the Subsidiaries other than in the Ordinary Course of
Business, for consideration in excess of $15,000;
(iv) Contracts relating to any pending acquisitions by either
Seller or any of the Subsidiaries of any operating business or the capital stock
of any other Person;
(v) Contracts relating to the incurrence of Indebtedness other
than the Long-Term Indebtedness, or the making of any loans, in each case
involving amounts in excess of $10,000, other than equipment leases in the
Ordinary Course of Business; and
(vi) any other Contract which involves the future expenditure of
more than $100,000 or annual revenues of more than $500,000.
(b) Except as set forth on Schedule 5.10, neither Seller nor any
Subsidiary has received any written notice of any default or event that with
notice or lapse of time, or both, would constitute a default by a Seller and the
Subsidiaries under any Material Contract, except for defaults that would not
have a Material Adverse Effect.
26
5.11 Employee Benefits Plans.
(a) Schedule 5.11(a) lists "employee benefit plans", as defined
in Section 3(3) of ERISA, and all other material employee benefit arrangements
or payroll practices, including, without limitation, bonus plans, consulting or
other compensation agreements, incentive, equity or equity-based compensation,
or deferred compensation arrangements, stock purchase, severance pay and
practices, sick leave, vacation pay, salary continuation, disability,
hospitalization, medical insurance, life insurance and scholarship programs
maintained by Sellers and the Subsidiaries or to which Sellers and the
Subsidiaries contributed or are obligated to contribute thereunder for current
or former employees of Sellers and the Subsidiaries (the "Employee Benefit
Plans"). Neither the Seller or any of the Subsidiaries has, at any time within
the last six years, maintained, contributed to, or had any obligation to
contribute to, or has any liability (fixed or contingent) with respect to, any
plan subject to Title IV of ERISA or to the funding requirements of Section 412
of the Code including any plan which constituted a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA or any plan subject to Sections 4063 or
4064 of ERISA ("multiple employer plan").
(b) True, correct and complete copies of the following documents,
with respect to each of the Employee Benefit Plans (as applicable), have been
made available to Purchaser: (A) any plans and related trust documents, and all
amendments thereto, (B) the most recent Forms 5500 for the past three (3) years
and schedules thereto, (C) the most recent financial statements and actuarial
valuations for the past three (3) years, (D) the most recent IRS determination
letter, (E) the most recent summary plan descriptions (including letters or
other documents updating such descriptions) and (F) written descriptions of all
non-written agreements relating to the Employee Benefit Plans.
(c) Each of the Employee Benefit Plans intended to qualify under
Section 401 of the Code ("Qualified Plans") has been determined by the IRS to be
so qualified, and, except as disclosed on Schedule 5.11(c), to the Knowledge of
Sellers, nothing has occurred with respect to the operation of any such plan
which could reasonably be expected to result in the revocation of such favorable
determination.
(d) All contributions and premiums required by law or by the
terms of any Employee Benefit Plan or any agreement relating thereto have been
timely made (taking into account any waivers granted with respect thereto) to
any funds or trusts established thereunder or in connection therewith in all
material respects.
(d) None of the Employee Benefit Plans which are "welfare benefit
plans" within the meaning of Section 3(1) of ERISA provide for continuing
benefits or coverage for any participant or any beneficiary of a participant
post-termination of employment except as may be required under the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA").
(d) Each of the Employee Benefit Plans has been maintained, in
all material respects, in accordance with its terms and all provisions of
applicable Law.
27
(g) Except as set forth on Schedule 2.3(a)(viii) and Schedule
5.11(g) hereto, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment becoming due to any employee (including severance or transaction
bonuses) of a Seller or any of the Subsidiaries; (ii) increase any benefits
otherwise payable under any Employee Benefit Plan; or (iii) result in the
acceleration of the time of payment or vesting of any such benefits.
(h) Neither the Seller nor any of the Subsidiaries has incurred
or will incur any actual or contingent liability with respect to any plan
subject to Title IV of ERISA, including any withdrawal liability, or be required
to make any contributions to a multiemployer plan, as a result of any of them
being members of a "controlled group" of corporations, or treated as a single
employer with, Seller within the meaning of Section 414(b), 414(c), 414(m) or
414(n) of the Code arising from or incurred with respect to any period prior to
the Initial Closing Date.
5.12 Labor.
(a) Neither Seller nor any of the Subsidiaries is a party to any
labor or collective bargaining agreement.
(b) Except as set forth on Schedule 5.12(b), there are no (i)
strikes, work stoppages, work slowdowns or lockouts pending or, to the Knowledge
of Sellers, threatened against or involving a Seller or any of the Subsidiaries,
or (ii) unfair labor practice charges, grievances or complaints pending or, to
the Knowledge of Sellers, threatened by or on behalf of any employee or group of
employees of Sellers or any of the Subsidiaries, except in each case as would
not have a Material Adverse Effect.
5.13 Litigation. Except as set forth on Schedule 5.13, there are no
(i) Legal Proceedings pending or, to the Knowledge of Sellers, threatened, and
(ii) to the Knowledge of Sellers, investigations, charges, claims or demands
pending or threatened, against Sellers or the Subsidiaries before any
Governmental Body, which, in case of each of (i) and (ii), if adversely
determined, would reasonably be expected to have a Material Adverse Effect.
There are no (i) Legal Proceedings pending or, to the Knowledge of Sellers,
threatened, and (ii) to the Knowledge of Sellers, investigations, charges,
claims or demands pending or threatened, that, in case of each of (i) and (ii),
are reasonably likely to prohibit or restrain the ability of a Seller to enter
into this Agreement or consummate the transactions contemplated hereby.
28
5.14 Compliance with Laws; Permits.
(a) Sellers and the Subsidiaries are in compliance with all Laws
of any Governmental Body applicable to the Business, except where the failure to
be in compliance would not have a Material Adverse Effect. Neither Seller nor
any Subsidiary has received any written notice of or been charged with the
violation of any Laws, except where such violation would not have a Material
Adverse Effect.
(b) Sellers and the Subsidiaries currently have all Permits which
are required for the operation of the Business, except where the absence of
which would not have a Material Adverse Effect. Neither Seller nor any of the
Subsidiaries is in default or violation (and no event has occurred which, with
notice or the lapse of time or both, would constitute a default or violation) of
any term, condition or provision of any Permit to which it is a party, except
where such default or violation would not have a Material Adverse Effect.
5.15. Financial Advisors. Except for Xxxxxx Capital Partners, no
Person has acted, directly or indirectly, as a broker, finder or financial
advisor for Sellers in connection with the transactions contemplated by this
Agreement and no Person is entitled to any fee or commission or like payment
from Purchaser in respect thereof.
5.16 Taxes.
(a) Except as set forth on Schedule 5.16, and except for matters
that would not have a Material Adverse Effect, (i) Sellers have timely filed all
Tax Returns required to be filed with the appropriate Tax authorities in all
jurisdictions in which such Tax Returns are required to be filed (taking into
account any extension of time to file granted or to be obtained on behalf of
Sellers); and (ii) all Taxes shown to be payable on such Tax Returns have been
paid.
(b) Neither Seller is a Foreign Person within the meaning of
Section 1445 of the Code.
5.17 Employees on Leave. As of the date hereof, Sellers do not have
more than twenty (20) employees who would constitute Initial Transferred
Employees on an approved leave of absence.
5.18 Title to Purchased Assets and Related Matters. Except for
Permitted Encumbrances, the Sellers own good and transferable title to all
Purchased Assets free and clear of all Encumbrances.
5.19 Ownership of Membership Interest. The Company owns the Membership
Interests, free and clear of any Encumbrances other than Permitted Encumbrances,
and has the right, power and authority to sell and transfer the Membership
Interests to Purchaser in the manner provided herein. Assuming the proper filing
of the UCC-3 financing statements by Purchaser, the transfer and delivery of the
Membership Interests as contemplated by this Agreement will transfer good and
marketable title to the Membership Interests, free and clear of any
Encumbrances. The
29
Membership Interests are not subject to any voting trust or voting or similar
agreement, nor is any proxy in effect with respect thereto.
5.20 No Other Representations or Warranties; Schedules. Except for the
representations and warranties contained in this Article V (as modified by the
Schedules hereto), neither Seller nor any other Person makes any other express
or implied representation or warranty with respect to Sellers, the Subsidiaries,
the Business, the Purchased Assets and the Assumed Liabilities, or the
transactions contemplated by this Agreement, and Sellers disclaim any other
representations or warranties, whether made by a Seller, any Affiliate of
Sellers or any of their respective officers, directors, employees, agents or
representatives. Except for the representations and warranties contained in this
Article V (as modified by the Schedules hereto), Sellers (i) expressly disclaim
and negate any representation or warranty, expressed or implied, at common law,
by statute, or otherwise, relating to the condition of the Purchased Assets
(including any implied or expressed warranty of merchantability or fitness for a
particular purpose, or of conformity to models or samples of materials) and (ii)
hereby disclaim all liability and responsibility for any representation,
warranty, projection, forecast, statement, or information made, communicated, or
furnished (orally or in writing) to Purchaser or its Affiliates or
representatives (including any opinion, information, projection, or advice that
may have been or may be provided to Purchaser by any director, officer,
employee, agent, consultant, or representative of Sellers or any of its
Affiliates). Sellers make no representations or warranties to Purchaser
regarding the probable success or profitability of the Business. The disclosure
of any matter or item in any schedule hereto shall not be deemed to constitute
an acknowledgment that any such matter is required to be disclosed.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Parent and Purchaser jointly and severally hereby represent and
warrant to Company that:
6.1 Organization and Good Standing. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now
conducted.
Each of Parent and Purchaser is duly qualified or authorized to do
business as a foreign corporation and is in good standing under the laws of each
jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification or authorization, except where the
failure to be so qualified, authorized or in good standing would not have a
Purchaser Material Adverse Effect.
6.2 Authorization of Agreement. Each of Parent and Purchaser has all
requisite corporate power and authority to execute and deliver this Agreement,
the Transaction Documents to which either the Parent or Purchaser is a signatory
and each other agreement, document, instrument or certificate contemplated by
this Agreement or
30
to be executed by each of Parent and Purchaser in connection with the
consummation of the transactions contemplated hereby and thereby (the "Purchaser
Documents"), and to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance by each of Parent and each of Parent and
Purchaser of this Agreement and each Purchaser Document and the consummation of
the transactions contemplated and hereby and thereby have been duly authorized
by all requisite corporate action on behalf of each of Parent and Purchaser.
This Agreement has been, and each of the Purchaser Documents will be at or prior
to the time of delivery thereof to Sellers, duly and validly executed and
delivered by each of Parent and Purchaser and (assuming the due authorization,
execution and delivery by the other parties hereto and thereto) this Agreement
constitutes, and each Purchaser Document when so executed and delivered will
constitute, the legal, valid and binding obligation of each of Parent and
Purchaser, enforceable against each of Parent and Purchaser in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
6.3 Conflicts; Governmental Consents.
(a) Except as set forth on Schedule 6.3(a) hereto, none of the
execution and delivery by each of Parent and Purchaser of this Agreement or the
Purchaser Documents, the consummation of the transactions contemplated hereby or
thereby, or compliance by each of Parent and Purchaser with any of the
provisions hereof or thereof will conflict with, or result in any violation of
or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination or cancellation under, any provision of (i) the
certificate of incorporation and by-laws of either Parent or Purchaser; (ii) any
Contract or Permit to which either Parent or Purchaser is a party or by which
any of the properties or assets of either Parent or Purchaser are bound; (iii)
any Order of any Governmental Body applicable to either Parent or Purchaser or
by which any of the properties or assets of either Parent or Purchaser are
bound; or (iv) any applicable Law other than, in the case of clauses (ii), (iii)
and (iv), such conflicts, violations, defaults, terminations or cancellations,
that would not have a Purchaser Material Adverse Effect.
(b) Except as set forth on Schedule 6.3(b), no consent, waiver,
approval, Order, Permit or authorization of, or declaration or filing with, or
notification to, Governmental Body is required on the part of either Parent or
Purchaser in connection with the execution and delivery of this Agreement or the
Purchaser Documents or the compliance by either Parent or Purchaser with any of
the provisions hereof or thereof or the consummation of the transactions
contemplated hereby or thereby, except for (A)(i) obtaining FCC Approval and
(ii) any filings contemplated by the Registration Rights Agreement; and (B) for
such consents, waivers, approvals, Orders, Permits or authorizations the failure
of which to obtain would not have a Purchaser Material Adverse Effect.
31
6.4 SEC Documents; Undisclosed Liabilities.
(a) Parent has filed all required reports, schedules, forms and
registration, proxy and other statements with the SEC since January 1, 2000
(collectively, and in each case including all exhibits and schedules thereto and
documents incorporated by reference therein, the "SEC Documents"). None of
Parent's subsidiaries are required to file periodic reports with the SEC
pursuant to the Exchange Act. As of their respective effective dates (in the
case of SEC Documents that are registration statements filed pursuant to the
Securities Act) and as of their respective SEC filing dates (in the case of all
other SEC Documents), the SEC Documents complied in all material respects with
the requirements of the Exchange Act and the Securities Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder applicable to
such SEC Documents, and none of the SEC Documents as of such respective dates
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent that information contained in any SEC Document
has been revised or superseded by a later-filed SEC Document, none of the SEC
Documents contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial statements of Parent included in the
SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP (except, in the case
of unaudited quarterly statements, as indicated in the notes thereto) applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present in all material respects the consolidated
financial position of Parent and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited quarterly statements, to
normal year-end audit adjustments none of which has been or will be,
individually or in the aggregate, material).
(b) Parent is in compliance in all material respects with the
provisions of Section 13(b) of the Exchange Act.
(c) Except as set forth in the SEC Documents filed prior to the
date hereof or on Schedule 6.4(c) hereto, or for events (or series of related
matters) as to which the amounts involved do not exceed $60,000, since the
filing of Parent's proxy statement dated August 7, 2003, no event has occurred
that would be required to be reported as a "Certain Relationship or Related
Transaction" pursuant to Item 404 of Regulation S-K promulgated by the SEC.
Neither Parent nor any of its subsidiaries nor, to the Knowledge of Purchaser,
any director, officer, agent, employee or other Person acting on behalf of
Parent or any of its subsidiaries, has, in any material respect, (i) used any
corporate or other funds for unlawful contributions, payments, gifts, or
entertainment, or made any unlawful expenditures relating to political activity
to government officials or others or established or maintained any unlawful or
unrecorded
32
funds in violation of Section 30A of the Exchange Act or (ii) accepted or
received any unlawful contributions, payments, gifts or expenditures.
(d) To the Knowledge of Purchaser, neither Parent nor any of its
subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) whether or not required, if known, to be
reflected or reserved against on a consolidated balance sheet of Parent prepared
in accordance with GAAP or the notes thereto, except liabilities (i) as and to
the extent set forth on the unaudited balance sheet of Parent and its
subsidiaries as of September 30, 2003 (including the notes thereto) included in
Parent's Report on Form 10-Q for the period then ended, (ii) incurred after the
Balance Sheet Date in the Parent Ordinary Course of Business consistent with
past practice, as have not had and would not reasonably be expected to have,
individually or in the aggregate, a Purchaser Material Adverse Effect, and (iii)
incurred after the Balance Sheet Date not in the ordinary course that are in the
aggregate, immaterial in amount.
6.5 Capitalization.
(a) The authorized capital stock of Parent consists of 16,000,000
shares, divided into (i) 8,500,000 shares of Parent Series A Preferred Stock
("Parent Preferred Stock"), $0.01 par value per share, of which, as of September
30, 2003, 4,196,187 shares were issued and outstanding, and (ii) 7,500,000
shares of Parent Common Stock, par value $0.01 per share ("Parent Common
Stock"), of which, as of September 30, 2003, 4,961,160 shares were issued and
outstanding. All of the outstanding shares of capital stock of Parent have been
validly issued and are fully paid and nonassessable. As of September 24, 2003,
410,000 shares of Parent Common Stock were reserved for issuance and 410,000
were issuable upon the exercise of outstanding options and warrants; 38,840
shares of Parent Common Stock and 6,170 shares of the Parent Preferred Stock
were reserved for issuance to satisfy certain unpaid claims in connection with
Parent's emergence from Chapter 11 proceeding on October 8, 2002. Holders of
Parent Preferred Stock currently have 95% of the voting power of Purchaser.
(b) Except as set forth above and on Schedule 6.5(b), there are
outstanding (i) no shares or other voting securities of Parent, (ii) no
securities of Parent or any of its subsidiaries convertible into or exchangeable
or exercisable for shares of other securities of Parent, (iii) no options,
preemptive or other rights to acquire from Parent or any of its subsidiaries,
and no obligations of Parent or any of its subsidiaries to issue, any shares,
voting securities or securities convertible into or exchangeable or exercisable
for shares or other securities of Parent and (iv) no equity equivalent interests
in the ownership or earnings of Parent or its subsidiaries or other similar
rights (collectively "Parent Securities"). As of the date hereof, there are no
outstanding rights or obligations of Parent or any of its subsidiaries to
repurchase, redeem or otherwise acquire any Parent Securities. Except as set
forth on Schedule 6.5(b) hereto, here are no voting agreements, voting trusts or
other agreements or understandings to which Parent is a party or by which it is
bound relating to the voting or registration of any shares of capital stock of
Parent.
33
(c) The shares of Parent Common Stock to be issued to Sellers
pursuant to this Agreement, upon delivery to Sellers of share certificates
therefor, will be (i) validly issued, fully paid and nonassessable, (ii) free
and clear of all Liens, and (iii) issued in compliance with all applicable U.S.
federal and state securities laws.
(d) Immediately upon giving effect to the transactions
contemplated by this Agreement, including the issuance and sale of shares of
Parent Common Stock and the issuance of the Warrants, 125,000 shares of Parent
Common Stock shall be reserved for issuance upon the exercise of the Warrants.
Such shares, when issued upon the exercise of the Warrants in accordance with
the terms of the Warrants, will be (i) validly issued, fully paid and
nonassessable, (ii) free and clear of all Liens, and (iii) issued in compliance
with all applicable U.S. federal and state securities laws.
(e) Parent Common Stock and Parent Preferred Stock constitute the
only classes of equity securities of Parent or its subsidiaries registered or
required to be registered under the Exchange Act.
6.6 Absence of Certain Developments.
(a) Except as contemplated by this Agreement or as set forth on
Schedule 6.6 hereto, since the Balance Sheet Date (i) each of Parent and
Purchaser has conducted its business only in the Parent Ordinary Course of
Business or Purchaser Ordinary Course of Business, as applicable, and (ii) there
has not been any event, change, occurrence or circumstance that has had a Parent
Material Adverse Effect.
6.7 Taxes.
(a) Except as set forth on Schedule 6.7 hereto, and except for
matters that would not have a Purchaser Material Adverse Effect, (i) each of
Parent and Purchaser has timely filed all Tax Returns required to be filed with
the appropriate Tax authorities in all jurisdictions in which such Tax Returns
are required to be filed (taking into account any extension of time to file
granted or to be obtained on behalf of each of Parent and Purchaser); and (ii)
all Taxes shown to be payable on such Tax Returns have been paid.
(b) Purchaser is not a Foreign Person within the meaning of
Section 1445 of the Code.
6.8 Litigation. Except as set forth on Schedule 6.8 hereto, there
are no Legal Proceedings pending or, to the Knowledge of Purchaser, threatened
against Purchaser or any of its subsidiaries before any Governmental Body,
which, if adversely determined, would have a Parent Material Adverse Effect.
There are no Legal Proceedings pending or, to the Knowledge of Purchaser,
threatened that are reasonably likely to prohibit or restrain the ability of
Purchaser to enter into this Agreement or consummate the transactions
contemplated hereby. There are no Legal Proceedings pending or, to the Knowledge
of Purchaser, threatened that are reasonably likely to
34
prohibit or restrain the ability of Purchaser to enter into this Agreement or
consummate the transactions contemplated hereby.
6.9 Financial Advisors. Except as set forth on Schedule 6.9 hereto, no
Person has acted, directly or indirectly, as a broker, finder or financial
advisor for Purchaser in connection with the transactions contemplated by this
Agreement and no Person is entitled to any fee or commission or like payment
from Company in respect thereof.
6.10 Condition of the Business. Notwithstanding anything contained in
this Agreement to the contrary, Purchaser acknowledges and agrees that Sellers
are not making any representations or warranties whatsoever, express or implied,
beyond those expressly given by Sellers in Article V hereof (as modified by the
Schedules hereto), and Purchaser acknowledges and agrees that the Purchased
Assets and the Business are being transferred on a "where is" and, as to
condition, "as is" basis. Purchaser further represents that neither it nor any
of its Affiliates nor any other Person has made any representation or warranty,
express or implied, as to the accuracy or completeness of any information
regarding or any of the Subsidiaries, the Business or the transactions
contemplated by this Agreement not expressly set forth in this Agreement, and
none of Sellers, any of its Affiliates or any other Person will have or be
subject to any liability to Purchaser or any other Person resulting from the
distribution to Purchaser or its representatives or Purchaser's use of, any such
information, including any confidential memoranda distributed on behalf of
Sellers relating to the Business or other publications or data room information
provided to Purchaser or its representatives, or any other document or
information in any form provided to Purchaser or its representatives in
connection with the sale of the Business and the transactions contemplated
hereby. Purchaser acknowledges that it has conducted to its satisfaction, its
own independent investigation of the Business and, in making the determination
to proceed with the transactions contemplated by this Agreement, Purchaser has
relied on the results of its own independent investigation. The disclosure of
any matter or item in any schedule hereto shall not be deemed to constitute an
acknowledgment that any such matter is required to be disclosed.
6.11 Elimination of Transfer Restrictions. Parent represents, warrants
and covenants that (i) Parent has consented to the elimination of any transfer
restrictions otherwise applicable to the Registrable Securities (as defined in
the Registration Rights Agreement), including pursuant to the Parent's Amended
and Restated Certificate of Incorporation; provided, that the foregoing shall
not apply to the restriction on foreign ownership of Parent's securities set
forth in Section 4.5 of the Parent's Amended and Restated Certificate of
Incorporation, and (ii) subject to any restrictions on sale or transfer imposed
by law, the Registrable Securities are freely transferable by the Holder (as
defined in the Registration Rights Agreement) or any other Investor (as defined
in the Registration Rights Agreement).
35
ARTICLE VII
POST-CLOSING COVENANTS
7.1 Access to Information. (a) From and after the Initial Closing, each of
Parent and Purchaser will make or cause to be made available to the Sellers and
their agents and employees all business records and files (except for those
business records and files the provision of which is prohibited by Law) during
regular business hours as may be reasonably necessary for (A) preparing or
reviewing tax returns and financial statements and responding to tax audits
covering operations and transactions at or prior to such Closing, (B)
investigating, settling, preparing for the defense or prosecution of, defending
or prosecuting any action, (C) preparing reports to stockholders and
Governmental Bodies or (D) such other purposes for which access to such
documents is reasonably necessary.
(b) From and after the Initial Closing each of Parent and Purchaser
shall provide to Sellers for three (3) years after the date hereof access at
reasonable times and upon reasonable notice to financial and accounting systems
purchased hereunder to the extent that such access is reasonably required by
Sellers and the other services listed on Schedule 7.1(b) hereto.
7.2 Preservation of Records. Each of Parent and Purchaser agrees that it
shall preserve and keep the records held by it relating to the Business for a
period of six years from the Initial Closing Date. In the event each of Parent
and Purchaser wishes to destroy such records after that time, Purchaser shall
first give ninety (90) days prior written notice to Company and shall have the
right at its option and expense, upon prior written notice given to Purchaser
within that ninety (90) day period, to take possession of the records within one
hundred and eighty (180) days after the date of such notice.
7.3 Publicity.
(a) None of Sellers, Parent or Purchaser shall issue any press release
or public announcement concerning this Agreement or the transactions
contemplated hereby without obtaining the prior written approval of the other
party hereto, which approval will not be unreasonably withheld or delayed,
unless, in the judgment of Sellers or Purchaser, disclosure is otherwise
required by applicable Law or by applicable rules of any stock exchange,
provided that, to the extent required by applicable Law, the party intending to
make such release shall use its commercially reasonable efforts consistent with
applicable Law to consult with the other party with respect to the text thereof.
(b) Each of Purchaser and each Seller agrees that the terms of this
Agreement shall not be disclosed or otherwise made available to the public and
that copies of this Agreement shall not be publicly filed or otherwise made
available to the public, except where such disclosure, availability or filing is
required by applicable Law and only to the extent required by such Law.
36
7.4 Negative Covenant.
(a) Except as otherwise expressly permitted herein, between the date
of this Agreement and each applicable Nonassignable Contract Assignment Date,
Sellers shall not, without the prior written consent of Purchaser, which consent
shall not be unreasonably withheld, make any modification to any such
Nonassignable Contract.
(b) Except as otherwise expressly permitted herein, between the date
of this Agreement and the License-Related Asset Purchase Closing Date, Sellers
shall not, without the prior written consent of Purchaser, (i) enter into any
compromise or settlement of any litigation, proceeding or governmental
investigation relating to the License-Related Purchased Assets, or the
License-Related Assumed Liabilities; or (ii) terminate the employment of any
employee listed on Schedule 1.1(c).
7.5 Notification.
Between the date of this Agreement and the License-Related Asset Purchase
Closing Date, Sellers shall promptly notify Purchaser of the occurrence of any
breach of any covenant of Sellers in this Article 7 or of the occurrence of any
event that may make the satisfaction of the conditions in Article 8 impossible
or unlikely.
7.6 Sellers' Reasonable Best Efforts.
Sellers shall use their reasonable best efforts, without the obligation to
incur any costs, expenses or Liabilities, except for reasonable legal fees
related to the License-Related Asset Purchase Closing as provided in Section
2.5(e) hereof, to cause the conditions in Sections 8.1 to be satisfied.
7.7 Purchaser's Reasonable Best Efforts. Purchaser shall use its reasonable
best efforts to cause the conditions in Sections 8.1 to be satisfied.
7.8 Non-Solicitation.
(a) Each Seller agrees that for a period of three years from the
Initial Closing Date, it shall not employ or solicit or offer or induce or
receive or accept the performance of services by any senior or management
employee of the Business while such Persons are employed by Purchaser.
(b) If Each Seller acknowledges that Purchaser would be irreparably
harmed by any breach of this Section 7.8 and that there would be no adequate
remedy at law or in damages to compensate Purchaser for any such breach. Each
Seller agrees that Purchaser shall be entitled to injunctive relief requiring
specific performance by each Seller and its Affiliates of this Section 7.8
without the necessity of proving actual damages or the posting of a bond, and
each consents to the entry thereof.
7.9 Employment.
37
(a) Prior to the Initial Closing Date, Purchaser shall offer employment to
each of the Initial Transferred Employees to commence immediately following the
Initial Closing. On March 31, 2004 (the "Subsequent Transfer Date"), Purchaser
shall offer employment to each Subsequent Transferred Employee, who is still
employed by Seller, to commence on the Subsequent Transfer Date. Each such offer
of employment shall be at the same salary or hourly wage rate in effect
immediately prior to the Initial Closing Date, or, in the case of the Subsequent
Transferred Employees, the Subsequent Transfer Date. Each of the Transferred
Employees shall be entitled to any sick leave, personal days and vacation time
they would be entitled to if they remained employed by Sellers. Notwithstanding
the foregoing, this Section 7.9 shall not prohibit Purchaser from terminating
the employment of any Transferred Employee at any time or for any reason. For
the avoidance of doubt, nothing in this Agreement shall create a contract of
employment or alter the "at-will" employment status of any Transferred Employee.
(b) As a condition of the offers of employment to Transferred Employees
with Severance Agreements listed on Schedule 2.3(a)(viii), Purchaser and each
Transferred Employee will enter into a "substitute severance agreement"
substantially in the form attached hereto as Exhibit G as a replacement for such
Transferred Employee's Severance Agreement. Payments under the "substitute
severance agreements" shall be made by the Purchaser to Transferred Employees in
accordance with their terms and Sellers shall have no liability with regard to
payments under the "substitute severance agreements" or the Severance
Agreements. Any Transferred Employee who does not enter into a substitute
severance agreement within 3 days of the Initial Closing Date (the "Eligibility
Period") will not become an employee of Purchaser and shall receive payments
under the Severance Agreement applicable to such Transferred Employee, and, in
such case, Purchaser will promptly, and in no event in more than one Business
Day after the expiration of the Eligibility Period, reimburse Sellers for its
severance pay costs (including severance pay, employer contributions for FICA
and FUTA and any accrued vacation, sick or personal days) which were otherwise
Assumed Liabilities of Purchaser under this Agreement. Such reimbursement shall
constitute an Expense under the Management Agreement.
(c) Purchaser and Sellers agree that the payroll taxes of the Transferred
Employees shall be treated in accordance with the Standard Procedure of Section
4 of Revenue Procedure 96-60.
7.10 Employee Benefits.
(a) From and after the Initial Closing, or in the case of the Subsequent
Transferred Employees, the Subsequent Transfer Date, Purchaser shall provide, or
cause to be provided to each of the Transferred Employees, benefits under the
employee benefits plans of Purchaser (the "Purchaser Plans") that are, in each
case, substantially equivalent on an aggregate basis to those provided to
employees of the Purchaser. For purposes of this Section 7.10(a), coverage under
any Employee Benefit Plan assumed pursuant to Section 2.3(a)(ii) may be
considered coverage under a Purchaser Plan after the Initial Closing Date.
38
(b) For purposes of eligibility, vesting and benefit accrual (but not for
purposes of any employer contribution to the Purchasers' defined contribution
plan based on the Purchaser's financial performance for calendar year 2003) ,
under the Purchaser Plans, Purchaser shall credit each Transferred Employee with
his or her years of service with Company, the Subsidiaries and any predecessor
entities, to the same extent as such Transferred Employee was entitled
immediately prior to the Initial Closing Date, or in the case of the Subsequent
Transferred Employees, the Subsequent Transfer Date, to credit for such service
under any similar Employee Benefit Plan. The Purchaser Plans shall not deny
Transferred Employees coverage on the basis of pre-existing conditions unless a
Transferred Employee was denied coverage under Employee Benefit Plan and shall
credit such Transferred Employees for any deductibles and out-of-pocket expenses
paid in the year of initial participation in the Purchaser Plans.
(c) Except as required by applicable Law, Purchaser shall be responsible
for all Liabilities with respect to Transferred Employees attributable to their
accrued and unused vacation, sick days and personal days through the Initial
Closing Date or, in the case of the Subsequent Transferred Employees, the
Subsequent Transfer Date. Schedule 7.10(c) to this Agreement contains a true and
correct list of all such Liabilities as of the payroll date ending immediately
prior to the Initial Closing Date described in this Section 7.10(c).
(d) Sellers and Purchaser shall take all actions necessary or appropriate
so that, effective as of the Initial Closing Date (A) Purchaser shall be
designated the "plan sponsor" (as defined in Section (3)(16)(B) of ERISA) of the
Employee Benefit Plans assumed pursuant to sections 2.1(b)(x) and 2.3(a)(ii) of
this Agreement and insurance contracts related to the Sellers' insured health
and welfare plans are assigned by the Sellers to the Purchaser; (B) the
elections, contribution levels and coverage levels of the Initial Transferred
Employees under Seller's flexible spending account plans shall continue to apply
until the end of the plan year and the Transferred Employees shall be reimbursed
for claims incurred at any time during the plan year in which the Initial
Closing Date occurs from and after the Initial Closing Date on the same basis
and the same terms and conditions as immediately prior to the Initial Closing
Date; and, (C) Transferred Employees will be eligible to participate in the
Purchaser's 401(k) defined contribution plan; provided that the Purchaser (or
its appropriate representative) receives payroll deduction elections from
Transferred Employees, and Purchaser's 401(k) plan shall provide for receipt of
"direct rollovers" of benefits from the Sellers' 401(k) Plan.
(e) The Purchaser's health and welfare plan shall provide continuation
coverage under COBRA to all "M& A Qualified Beneficiaries" (as defined in
Treasury Regulation 54.4980B-9, Q&A-4) in accordance with the terms of the
Purchaser's health plan; provided that, during the period between the Initial
Closing Date and the Subsequent Closing Date, the Subsequent Transferred
Employees shall continue to participate in a health and welfare of the Seller or
a health and welfare plan of the selling group (as defined in Treasury
Regulation 54.4980B-9, Q&A-3).
39
(f) On or prior to December 9, 2003, Purchaser shall pay the Transferred
Employees the transaction bonuses listed on Schedule 2.3(a)(viii). With respect
to such transaction bonuses, Purchaser shall satisfy any tax withholding
obligation and shall be responsible for payment of the employer contributions
for FICA and FUTA required by Law with respect to each such Transferred
Employee.
7.11 Confidentiality. Notwithstanding anything to the contrary set forth
herein or in any other agreement to which the parties hereto are parties or by
which they are bound, the obligations of confidentiality contained herein and in
the confidentiality agreement between Purchaser and Company dated November 14,
2002, as they relate to the transactions contemplated by this Agreement, shall
not apply to the tax structure or tax treatment of the transactions contemplated
by this Agreement, and each party hereto (and any employee, representative, or
agent of any party hereto) may disclose to any and all persons, without
limitation of any kind, the tax structure and tax treatment of the transactions
contemplated by this Agreement and all materials of any kind (including opinions
or other tax analysis) that are provided to such party relating to such tax
treatment and tax structure; provided, however, that such disclosure shall not
include the name (or other identifying information not relevant to the tax
structure or tax treatment) of any person and shall not include information for
which nondisclosure is reasonably necessary in order to comply with applicable
securities laws.
7.12 Tax Reporting. Sellers and Purchaser agree that the purchase and
sale of the Purchased Assets pursuant to this Agreement is intended to be
treated as a taxable sale for federal, state and local income tax purposes and,
accordingly, will consistently report it as such and will not take any actions,
and will cause their Affiliates not to take any actions, which are inconsistent
with such treatment.
7.13 Assumption in Bankruptcy.
(a) In the event that after the execution of this Agreement a Seller
files a voluntary petition or is the subject of an involuntary petition for
relief under Chapter 11 of the U.S. Bankruptcy Code (a "WLNK Bankruptcy
Filing"), such Seller hereby agrees, to the extent permitted by Law, to seek
assumption of this Agreement and each of the Documents as soon as possible after
the filing of such petition.
(b) In the event of a WLNK Bankruptcy Filing, such Seller hereby
agrees, to the extent permitted by Law, to seek assumption as soon as possible
thereafter of any contract for which a consent, waiver, authorization or
approval of a third party was required but not sought or obtained to the extent
that, prior to or after such WLNK Bankruptcy Filing, any such third party has
notified Seller that the assignment of such contract was void and/or that Seller
is in breach of such contract as a result of the assignment thereof to the
Purchaser pursuant to this Agreement.
(c) In the event that any funds are paid to any Seller or any of its
subsidiaries in respect of the Business on or after the Initial Closing Date,
all such funds shall be (i) received and held in trust by such Seller or
subsidiary of a Seller and (ii) immediately transferred to Purchaser by wire
transfer in same day funds, free and clear of any Encumbrances.
40
7.14 No Negotiation. Neither the Sellers nor any of their Affiliates (and
their respective officers, directors, employees, accountants, consultants, legal
counsel, financial advisors, agents and other representatives (collectively,
"Representatives") shall directly or indirectly solicit, initiate, encourage or
entertain any inquiries or proposals or offer (including, without limitation,
any proposal or offer to its stockholders) from any Person, discuss or negotiate
with, provide any nonpublic information to or consider the merits of any
inquiries or proposals from any Person (other than Purchaser) relating to any
business combination transaction involving Sellers, including, without
limitation, the sale of Sellers' stock, the merger or consolidation of Sellers
or the sale of Sellers' business or any of the assets (other than in the
Ordinary Course of Business); enter into or maintain or continue discussions or
negotiate with any Person in furtherance of such inquiries; enter into any
agreement with respect to any such transaction; or authorize or knowingly permit
any of Sellers' or their Affiliates' Representatives, to take any such action.
Sellers shall notify Purchaser of any such inquiry or proposal within
twenty-four (24) hours of receipt or awareness of the same by Sellers and shall
promptly furnish a copy of any such written proposal or a detailed description
of any such oral proposal to Purchaser. Notwithstanding the foregoing, it is
being hereby agreed by Parent, Purchaser and Sellers that this Section 7.14
shall not in any way be applicable to the Excluded Assets or Liabilities.
7.15 Change of Name; Use of Names. As soon as practicable after the Initial
Closing Date, each Seller will change its corporate or limited partnership name,
as applicable, to such other name as does not contain the word "WebLink". After
the Initial Closing Date, Sellers shall not have any right, title or interest in
or to, the name WebLink Wireless and all related Marks; provided, however, that
Sellers shall have until November 15, 2004 to replace stationery and other
documents and forms, and to replace or repaint signs, vehicles and other items,
that on the Initial Closing Date bear the "WebLink Wireless" or other related
Marks, during which period of time Sellers may use such Marks on inventory,
documents, forms and other items that have not yet been replaced or repainted.
ARTICLE VIII
CONDITIONS TO LICENSE-RELATED ASSET PURCHASE CLOSING
8.1 Conditions Precedent to the Obligations of Purchaser and Sellers. The
obligations of Purchaser and Sellers to consummate the transaction contemplated
herein to be consummated on the License-Related Asset Purchase Closing Date is
subject to the satisfaction on or prior to the License-Related Asset Purchase
Closing Date of the conditions set forth below, any of which may be waived in
writing by each of Purchaser and Sellers:
(a) Sellers shall have obtained all consents required in connection with
the FCC Approval.
41
(b) No preliminary or permanent injunction or other order issued by, and
no Proceeding or Order by or before, any Governmental Body in the United States
or by any United States Governmental Entity, nor any Law or Order promulgated or
enacted by any United States Governmental Body, shall be in effect or pending
which materially delays, restrains, enjoins or otherwise prohibits or seeks to
restrain, enjoin or otherwise prohibit the transactions contemplated hereby.
(c) All consents, waivers, authorizations and approvals of any
Governmental Body as are necessary in connection with the transactions
contemplated by this Agreement in connection with the License-Related Asset
Purchase Closing shall have been obtained.
(d) As of the License-Related Asset Purchase Closing Date, the purchase
of License-Related Purchased Assets deliverable on such date shall be legally
permitted by all Laws and regulations to which Purchasers and Sellers are
subject, except where the failure to comply with such Laws or regulations would
not be reasonably expected to have a Material Adverse Effect.
8.2 Condition Precedent to the Obligations of Each Seller. The obligations
of each Seller to consummate the transactions contemplated herein to be
consummated on the License-Related Asset Purchase Closing Date are subject to
the delivery, on or prior to the License-Related Asset Purchase Closing Date, of
the Certificate required pursuant to Section 4.4(c) relating to the vesting of
rights under the Warrants to purchase all remaining Warrant Shares that have not
yet vested.
ARTICLE IX
MISCELLANEOUS
9.1 No Survival of Representations and Warranties. The representations and
warranties of the parties contained in this Agreement shall not survive Closing
and no claims may be asserted with respect thereto after Closing.
9.2 Payment of Sales, Use or Similar Taxes. Purchaser and Sellers shall
each be responsible for (and shall indemnify and hold harmless Sellers or
Purchaser as the case may be, against) one-half of any sales, use, stamp,
documentary, filing, recording, transfer or similar fees or taxes or
governmental charges (including real property transfer gains taxes, UCC-3 filing
fees, FAA, ICC, DOT, real estate and motor vehicle registration, title recording
or filing fees and other amounts payable in respect of transfer filings) in
connection with the transactions contemplated by this Agreement (other than
taxes measured by or with respect to income imposed on Seller or its Affiliates)
(all such non-excepted Taxes, "Transfer Taxes"). Sellers shall file all
necessary documents (including all Tax Returns) with respect to all such amounts
in a timely manner.
9.3 FCC Applications. Sellers and Purchaser agree to file the FCC
Applications within ten (10) days following the date hereof. Each party hereto
shall
42
diligently take or cooperate in the taking of all steps that are necessary or
appropriate for the prosecution and favorable consideration of the FCC
Applications. The Parties agree to undertake all actions and file such material
as shall be reasonably necessary or required to obtain any necessary waivers or
other authority in connection with the FCC Applications.
9.4 Expenses. Except as otherwise provided in this Agreement, each of
Company and Purchaser shall bear its own expenses incurred in connection with
the negotiation and execution of this Agreement and each other agreement,
document and instrument contemplated by this Agreement and the consummation of
the transactions contemplated hereby and thereby.
9.5 Submission to Jurisdiction; Consent to Service of Process.
(a) The parties hereto hereby irrevocably submit to the non-exclusive
jurisdiction of any federal or state court located within the State of New York
over any dispute solely between the parties hereto arising out of or relating to
this Agreement or any of the transactions contemplated hereby and each party
hereby irrevocably agrees that all claims in respect of such dispute or any
suit, action proceeding related thereto may be heard and determined in such
courts. The parties hereby irrevocably waive, to the fullest extent permitted by
applicable law, any objection which they may now or hereafter have to the laying
of venue of any such dispute brought in such court or any defense of
inconvenient forum for the maintenance of such dispute. Each of the parties
hereto agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
(b) Each of the parties hereto hereby consents to process being served
by any party to this Agreement in any suit, action or proceeding by delivery of
a copy thereof in accordance with the provisions of Section 9.8.
9.6 Entire Agreement; Amendments and Waivers. This Agreement and the other
Transaction Documents (including the schedules and exhibits hereto and thereto)
represent the entire understanding and agreement between the parties hereto with
respect to the subject matter hereof. This Agreement can be amended,
supplemented or changed, and any provision hereof can be waived, only by written
instrument making specific reference to this Agreement signed by the party
against whom enforcement of any such amendment, supplement, modification or
waiver is sought. No action taken pursuant to this Agreement, including without
limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representation, warranty, covenant or agreement contained herein. The waiver by
any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a further or continuing waiver of such breach or as a
waiver of any other or subsequent breach. No failure on the part of any party to
exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of such
right, power or remedy by such party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
43
9.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and performed in such State.
9.8 Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed given (i) when delivered personally by
hand (with written confirmation of receipt), (ii) when sent by facsimile (with
written confirmation of transmission) or (iii) one business day following the
day sent by overnight courier (with written confirmation of receipt), in each
case at the following addresses and facsimile numbers (or to such other address
or facsimile number as a party may have specified by notice given to the other
party pursuant to this provision):
If to Company, to:
WebLink Wireless, Inc.
0000 Xxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
Telecopier: (000) 000-0000
With a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
If to Purchaser, to:
Metrocall, Inc.
0000 Xxxxxxxx Xxxxxxx
0xx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
With a copy to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxx
9.9 Severability. If any term or other provision of this Agreement is
invalid, illegal, or incapable of being enforced by any law or public policy,
all other terms or provisions of this Agreement shall nevertheless remain in
full force and effect so long
44
as the economic or legal substance of the transactions contemplated hereby is
not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal, or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the greatest extent
possible.
9.10 Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights in any Person or entity not a party to this
Agreement, other than the Indemnified Parties. No assignment of this Agreement
or of any rights or obligations hereunder may be made by any of Sellers or
Purchaser, directly or indirectly (by operation of law or otherwise), without
the prior written consent of the other party hereto and any attempted assignment
without the required consents shall be void; provided, however, that Purchaser
may assign this Agreement and any or all rights or obligations hereunder
(including, without limitation, Purchaser's rights to purchase the Purchased
Assets) to any Affiliate of Purchaser, provided that Purchaser shall not be
relieved of such obligations. Upon any such permitted assignment, the references
in this Agreement to Purchaser shall also apply to any such assignee unless the
context otherwise requires.
9.11 Non-Recourse. Except as set forth in the Indemnification Agreement, no
past, present or future director, officer, employee, incorporator, member,
partner, stockholder, Affiliate, agent, attorney or representative of Company or
any of their respective Affiliates shall have any liability for any obligations
or liabilities of Company under this Agreement of or for any claim based on, in
respect of, or by reason of, the transactions contemplated hereby and thereby.
9.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[Signatures Follow]
45
IN WITNESS WHEREOF, the parties hereto have caused this Asset
Purchase Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first written above.
METROCALL, INC.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
------------------
Title: President and CEO
-----------------
METROCALL HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
------------------
Title: President and CEO
-----------------
WEBLINK WIRELESS, INC.
By: /s/ X. Xxxx Buckenham
----------------------------
Name: X. Xxxx Buckenham
------------------
Title: President and CEO
-----------------
WEBLINK WIRELESS I, L.P.
By: WEBLINK WIRELESS, INC., in its
capacity as general partner
By: /s/ X. Xxxx Buckenham
----------------------------
Name: X. Xxxx Buckenham
-----------------
Title: President and CEO
------------------
EXHIBIT A-1
FORM OF WARRANT
EXHIBIT A-2
FORM OF WARRANT
EXHIBIT B
FORM OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT C
FORM OF XXXX OF SALE
EXHIBIT D
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT E
FORM OF MANAGEMENT AND SPECTRUM LEASE AGREEMENT
EXHIBIT F
FORM OF INDEMNIFICATION AGREEMENT
EXHIBIT G
FORM OF SUBSTITUTE SEVERANCE AGREEMENT
