EXHIBIT 2.2
EXECUTION COPY
ASSET PURCHASE AGREEMENT
BY AND AMONG
NACT ACQUISITION, INC.
AND
NACT TELECOMMUNICATIONS, INC.,
NACT LIMITED AND
VERSO TECHNOLOGIES INC.
JANUARY 21, 2005
TABLE OF CONTENTS
ARTICLE 1 TRANSFER OF ASSETS AND LIABILITIES..................................................................... 1
1.1 Definitions................................................................................. 1
1.2 Assets to be Sold........................................................................... 1
1.3 Excluded Assets............................................................................. 3
1.4 Assumed Liabilities......................................................................... 3
1.5 Liabilities Not Assumed..................................................................... 3
1.6 Seller Employees and Employee Benefit Plans................................................. 5
ARTICLE 2 PURCHASE PRICE; ADJUSTMENT; ALLOCATION................................................................. 6
2.1 Purchase Price.............................................................................. 6
2.2 Allocation of Purchase Price................................................................ 6
ARTICLE 3 CLOSING; CLOSING DATE.................................................................................. 6
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER AND VERSO..................................................... 7
4.1 Due Organization, Authority and Qualification............................................... 7
4.2 Shareholder; Subsidiaries................................................................... 7
4.3 Authority to Execute and Perform Agreements................................................. 7
4.4 Financial Statements; Liabilities........................................................... 7
4.5 Inventory; Accounts Receivable.............................................................. 8
4.6 No Material Adverse Change.................................................................. 8
4.7 Taxes....................................................................................... 8
4.8 Compliance with Laws........................................................................ 8
4.9 Permits..................................................................................... 9
4.10 No Breach................................................................................... 9
4.11 Environmental Matters....................................................................... 9
4.12 Claims and Proceedings...................................................................... 10
4.13 Contracts................................................................................... 11
4.14 Prepayments and Deposits.................................................................... 12
4.15 Leased Real Property........................................................................ 12
4.16 Product Warranty............................................................................ 13
4.17 Bank Accounts; Powers....................................................................... 13
4.18 Tangible Property........................................................................... 13
4.19 Intellectual Property....................................................................... 13
4.20 Title to the Assets; Adequacy of Assets..................................................... 15
4.21 Suppliers and Customers..................................................................... 16
4.22 Employee Benefit Plans...................................................................... 16
4.23 Labor Matters............................................................................... 17
4.24 Insurance................................................................................... 18
4.25 Seller Employees............................................................................ 18
4.26 Business Products........................................................................... 18
4.27 Operations of Seller........................................................................ 18
4.28 Related Party Transactions.................................................................. 19
4.29 Brokers' Fees............................................................................... 20
4.30 Solvency.................................................................................... 20
4.31 Security Interests.......................................................................... 20
4.32 U.K. Assets................................................................................. 20
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PURCHASER............................................................ 20
5.1 Due Organization and Authority.............................................................. 20
5.2 Authority to Execute and Perform Agreements................................................. 20
5.3 No Breach................................................................................... 21
5.4 Broker's Fees............................................................................... 21
5.5 Financing................................................................................... 21
ARTICLE 6 COVENANTS AND AGREEMENTS............................................................................... 22
6.1 Examinations and Investigations............................................................. 22
6.2 Publicity................................................................................... 22
6.3 Seller's Required Consents.................................................................. 22
6.4 Notification of Certain Matters............................................................. 22
6.5 Continued Solvency.......................................................................... 22
6.6 Corporate Names............................................................................. 23
6.7 Assets of the Business held by Verso........................................................ 23
6.8 Financing Statements........................................................................ 23
6.9 U.K. Assets................................................................................. 23
6.10 Transition Services......................................................................... 23
6.11 Provo Lease Bank Account.................................................................... 24
6.12 Seller Received Cash........................................................................ 24
6.13 Webconnect Consumer......................................................................... 25
ARTICLE 7 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASERS.................................................. 25
7.1 Representations and Covenants............................................................... 25
7.2 Seller's Required Consents.................................................................. 25
7.3 Opinion of Counsel to Seller and Verso...................................................... 25
7.4 Additional Closing Documents of Seller...................................................... 25
7.5 Material Adverse Effect..................................................................... 26
7.6 No Claims................................................................................... 26
7.7 Release of Liens and Guarantees............................................................. 26
7.8 FIRPTA Affidavit............................................................................ 26
7.9 NTS License Agreement....................................................................... 26
7.10 Reciprocal Reseller Agreement............................................................... 26
7.11 Call Center Services Agreement.............................................................. 26
ARTICLE 8 CONDITIONS PRECEDENT TO THE OBLIGATION OF SELLER....................................................... 27
8.1 Representations and Covenants............................................................... 27
8.2 Instrument of Assumption.................................................................... 27
8.3 Delivery of the Cash Consideration.......................................................... 27
8.4 NTS License Agreement....................................................................... 27
8.5 Reciprocal Reseller Agreement............................................................... 27
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8.6 Call Center Services Agreement.............................................................. 27
ARTICLE 9 POST-CLOSING COVENANTS AND AGREEMENTS.................................................................. 27
9.1 Further Assurances.......................................................................... 27
9.2 Consent of Third Parties.................................................................... 28
9.3 Provision of Data........................................................................... 28
9.4 Accounts Receivable Payment and Collection.................................................. 28
9.5 Confidentiality............................................................................. 28
9.6 Non-Competition; Non-Solicitation........................................................... 29
ARTICLE 10 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS..................................... 30
ARTICLE 11 INDEMNIFICATION....................................................................................... 30
11.1 Obligation of Seller to Indemnify........................................................... 30
11.2 Obligation of Purchaser to Indemnify........................................................ 31
11.3 Notice and Opportunity to Defend............................................................ 32
11.4 Characterization of Indemnity Payments...................................................... 33
11.5 Exclusivity................................................................................. 33
11.6 No Consequential Damages.................................................................... 33
11.7 Net of Insurance............................................................................ 33
11.8 Reliance on the Management Group............................................................ 33
ARTICLE 12 MISCELLANEOUS......................................................................................... 34
12.1 Certain Definitions......................................................................... 34
12.2 Notices..................................................................................... 41
12.3 Entire Agreement; No Third Party Beneficiaries.............................................. 41
12.4 Specific Performance........................................................................ 42
12.5 Waivers and Amendments; Non-Contractual Remedies............................................ 42
12.6 Binding Effect; Assignment.................................................................. 42
12.7 Counterparts and Facsimile.................................................................. 42
12.8 Exhibits and Schedules...................................................................... 42
12.9 Headings.................................................................................... 42
12.10 Usage .................................................................................. 43
12.11 Interpretation.............................................................................. 43
12.12 Currency.................................................................................... 43
12.13 Severability................................................................................ 43
12.14 Fees; Expenses and Certain Taxes............................................................ 43
12.15 WAIVER OF JURY TRIAL........................................................................ 43
12.16 GOVERNING LAW............................................................................... 43
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EXHIBITS
Exhibit A Form of Xxxx of Sale
Exhibit B Form of Assignment of Business Intellectual Property
Exhibit C Form of Instrument of Assumption
Exhibit D Form of NTS License Agreement
Exhibit E Form of Reciprocal Reseller Agreement
Exhibit F Form of Call Center Services Agreement
Exhibit G Form of Assignment, Agreement and Consent relating to the
Provo Lease
SCHEDULES
Schedule 1.3 Excluded Assets
Schedule 1.4 Assumed Contracts
Schedule 1.6 Seller Employees
Schedule 4.1 Qualifications to do Business
Schedule 4.4 Financial Statements
Schedule 4.5(a) Inventory
Schedule 4.5(b) Accounts Receivable
Schedule 4.8 Compliance with Laws
Schedule 4.9 Permits
Schedule 4.10 Seller's Required Consents
Schedule 4.11 Environmental Matters
Schedule 4.11(b) Environmental Law Permits
Schedule 4.11(d) Environmental Law Notices
Schedule 4.12 Claims
Schedule 4.13(a) Material Contracts
Schedule 4.13(b) Business Contracts
Schedule 4.14 Prepayments and Deposits
Schedule 4.15 Leased Real Property
Schedule 4.16 Product Warranty
Schedule 4.17 Bank Accounts; Powers
Schedule 4.18 Tangible Property
Schedule 4.19 Intellectual Property
Schedule 4.21 Suppliers and Customers
Schedule 4.22 Employee Benefit Plans
Schedule 4.24 Insurance
Schedule 4.25 Compensation of Seller Employees
Schedule 4.27 Operations of Seller
Schedule 4.28 Related Party Transactions
Schedule 4.31 Financing Statements
Schedule 4.32 U.K. Subsidiary Assets
Schedule 12.1 December Operating Current Liabilities
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT, dated as of January 21, 2005 (this
"Agreement"), is by and among NACT Acquisition, Inc., a Delaware corporation,
("Purchaser") and NACT Telecommunications, Inc., a Delaware corporation
("Seller"), Verso Technologies Inc., a Minnesota corporation ("Verso"); and
solely for the purposes of Section 6.9 herein, NACT Limited, an English private
limited company ("U.K. Subsidiary").
WHEREAS, Purchaser wishes to purchase from Seller, and Seller wishes to
sell to Purchaser, certain of the assets, properties, rights and businesses of
Seller upon the terms and subject to the conditions of this Agreement (the
"Contemplated Transactions").
NOW THEREFORE, in consideration of the foregoing, of the representations,
warranties, covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties hereto, the parties hereto agree as follows:
ARTICLE 1
TRANSFER OF ASSETS AND LIABILITIES
1.1 DEFINITIONS. Capitalized terms used herein without definitions shall
have the meanings ascribed to them in Section 12.1 and in other sections herein
where such capitalized terms are defined.
1.2 ASSETS TO BE SOLD. On the terms and subject to the conditions set
forth in this Agreement, at the Closing, Seller shall sell, transfer, convey,
assign and deliver to Purchaser and Purchaser shall purchase from Seller, all of
Seller's right, title and interest in and to all of the Assets (as herein
defined) (which includes the Business as a going concern), free and clear of all
Liens, other than Permitted Liens. At the Closing, Seller shall execute and
deliver to Purchaser (x) a Xxxx of Sale substantially in the form of Exhibit A
hereto (the "Xxxx of Sale") and (y) a customary assignment of the Business
Intellectual Property substantially in the form of Exhibit B hereto (the
"Assignment of Business Intellectual Property"). The "Assets" consist of all
right, title and interest of Seller in and to:
(i) All rights under all written and oral (a) contracts and
agreements with customers of the Business, (b) purchase orders, sales orders and
other orders and commitments issued by customers of the Business, (c) other
licenses, leases, contracts and agreements which are used in or relate to the
Business, including, without limitation, License Agreements and (d) to the
extent not included in the foregoing, Assumed Contracts (as herein defined)
(collectively, the "Business Contracts");
(ii) All rights to trades receivable, accounts receivable,
notes receivable and other monies receivable relating to or arising out of the
Business (the "Accounts Receivable");
(iii) All rights with respect to claims made under or pursuant
to the Business Insurance Policies (as herein defined) through the Closing;
(iv) All product records, customer correspondence, production
records, contract files, technical, accounting, manufacturing and procedural
manuals, customer lists, employment records, studies, reports or summaries
relating to any environmental conditions or consequences of any operation,
present or former, as well as all studies, reports or summaries relating to any
environmental aspect or the general condition of any of the Assets, to the
extent that any of the foregoing are used in or relate to the Business;
(v) All rights under express or implied warranties and
guarantees relating to any of the Assets or relating to or arising out of the
Business;
(vi) All inventory of the Business, whether located at 000
Xxxx 0000 Xxxxx, Xxxxx, Xxxx or at any other location, including all inventory
of the Business consisting of work in process and finished products (the
"Inventory");
(vii) All property, plant, equipment, fixed assets, furniture
and fixtures, and tangible personal property, including machinery, equipment,
furniture, fixtures, buildings and other improvements, leasehold improvements,
vehicles, structures, computers, supplies, office equipment and other property,
in each case, relating to or used in connection with the Business other than the
Inventory (the "Tangible Property");
(viii) All deposits and other similar assets related to or
made in connection with any of the Assets as well as all prepayments or deposits
received by Seller from customers of the Business (collectively, the
"Prepayments and Deposits");
(ix) All rights of Seller under any non-disclosure agreements,
non-solicitation agreements, non-competition agreements, confidentiality
agreements or other restrictive agreements or covenants entered into with any
Seller Employee or any other person to the extent such rights relate to the
Business or the Assets to the extent such agreements are assignable;
(x) All goodwill of the Business and all Intellectual Property
used or held for use by or in connection with the Business together with all
income, royalties, damages and payments due or payable at the Closing or
thereafter (including, without limitation, damages and payments for past or
future infringements or misappropriations thereof) with respect thereto, the
right to xxx and recover for past infringements or misappropriations thereof,
any and all corresponding rights that, now or hereafter, may be secured
throughout the world and all copies and tangible embodiments of any such
Intellectual Property (the "Business Intellectual Property");
(xi) All franchises, approvals, permits, licenses, orders,
registrations, certificates, variances and other similar permits and rights
obtained from any government or similar type entity in connection with the
conduct of the Business, and all pending applications therefore, to the extent
the foregoing are by their terms or by law assignable;
(xii) Any and all cash received by Verso or Seller from any
customer of the Business on or after January 14, 2005 (the "Seller Received
Cash"); and
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(xiii) Except for the Excluded Assets, all other assets,
properties, prepaid charges, prepaid expenses, claims, rights and interests of
Seller related to the Business of every kind and nature and description, whether
tangible or intangible, real, personal or mixed.
1.3 EXCLUDED ASSETS. The following items (collectively, the "Excluded
Assets") are not part of the sale and purchase contemplated hereunder, are
excluded from the Assets and shall remain the property of Seller after the
Closing:
(i) The consideration deliverable from Purchaser to Seller
pursuant to this Agreement;
(ii) Seller's certificate of incorporation, non-transferable
franchises, corporate seals, minute books, stock books and other corporate
records having to do with the corporate organization and capitalization of
Seller and all of Seller's income tax records;
(iii) Seller's books of account; provided, however, that
copies of such books of accounts related to the Business shall be provided to
Purchaser at the Closing;
(iv) All shares of the capital stock of Seller and the U.K.
Subsidiary;
(v) Any deferred tax assets of Seller;
(vi) The assets relating to or maintained in connection with
any Employee Benefit Plan, and all rights under such Employee Benefit Plans;
(vii) Except for the Seller Received Cash, the cash of Seller;
and
(viii) The assets set forth on Schedule 1.3.
1.4 ASSUMED LIABILITIES. On the terms and subject to the conditions set
forth in this Agreement, at the Closing, Purchaser shall assume and become
responsible for (i) the Business Contracts listed on Schedule 1.4 attached
hereto (the "Assumed Contracts") (in each case, in no event to include any
obligations of Seller that relate to any breach of any representation, warranty,
covenant or agreement under such leases or contracts that arose on or prior to
Closing) and (ii) the Closing Date Operating Current Liabilities (collectively
with the Assumed Contracts, the "Assumed Liabilities"). At the Closing,
Purchaser and Seller shall execute and deliver an instrument of assumption (the
"Instrument of Assumption") substantially in the form attached as Exhibit C
hereto, pursuant to which Purchaser shall assume and agree to perform and pay
and discharge the Assumed Liabilities in the manner set forth herein.
1.5 LIABILITIES NOT ASSUMED.
(a) Purchaser shall not assume or in any way be liable for the
payment, performance and discharge of any liabilities and/or obligations of
Seller or any of its affiliates, including liabilities and/or obligations
relating to Taxes of Seller or in any way attaching to the Assets, except for
the Assumed Liabilities.
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(b) Without limiting the generality of the foregoing, Purchaser
shall not assume and Seller shall retain and shall punctually pay, perform and
discharge when due, the following liabilities and/or obligations of Seller
(collectively, the "Excluded Liabilities"):
(i) any and all liabilities and/or obligations of any kind or
nature relating to Taxes of Seller and, with respect to the Assets, all Tax
liabilities and/or obligations accrued for, applicable to or arising from any
period ending on or before the Closing Date (including, without limitation, any
liabilities or obligations pursuant to any Tax sharing agreement, Tax
indemnification or similar arrangement);
(ii) any and all liabilities and/or obligations incurred by or
on behalf of Seller or its affiliates arising from the Contemplated
Transactions, including, without limitation, all legal fees, Taxes, costs and
disbursements of Seller or any of its affiliates payable in connection with this
Agreement, and all sales, transfer, use and other similar type Taxes which arise
from the sale of the Assets to Purchaser;
(iii) any and all liabilities and/or obligations arising
pursuant to Environmental Laws or the common law relating to environmental
matters (whether or not technically constituting "liabilities and/or
obligations" of Seller) and arising from or related to: (A) the operation or
ownership of the Assets or the Business on or before the Closing Date or from
any events, conditions or circumstances, including without limitation,
conditions on, in or under the Assets resulting from any Release of a Hazardous
Substance, existing on or before the Closing Date; (B) any property or facility
formerly owned or operated by Seller or any predecessor of Seller; and (C) the
offsite disposal of or arrangement for offsite disposal of any waste materials
by Seller on or before the Closing Date ("Pre-Closing Environmental
Liabilities");
(iv) any and all liabilities and/or obligations (A) relating
to or arising under any "employee benefit plan" (as defined in Section 3(3) of
ERISA) or any other employee benefit plan, program or arrangement at any time
maintained, sponsored or contributed to by Seller or any ERISA Affiliate, or
with respect to which Seller or any ERISA Affiliate has any liability or
potential liability, or (B) pertaining to the employment by, or termination from
employment with, Seller or any ERISA Affiliate, of any individual (including any
Seller Employee);
(v) any and all liabilities and/or obligations with respect to
any indebtedness for borrowed money or capital leases (other than any capital
lease listed on Schedule 1.5 attached hereto) or any guaranties of any
indebtedness for borrowed money;
(vi) any and all liabilities and/or obligations of Seller to
any of Seller's affiliates, including Verso;
(vii) any and all semi-monthly base salary payroll of Seller
prorated for the period from January 16, 2005 to (and including) the Closing
Date (together with reimbursement of employee pre-Closing out-of-pocket expenses
in a manner consistent with past practices, but in no event shall such
reimbursement include any such expenses incurred by any employee of Seller in
connection with the Contemplated Transactions);
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(viii) any and all liabilities and/or obligations of Seller
other than the Assumed Liabilities; and
(ix) any and all liabilities for the infringement or
misappropriation of or conflict with any Intellectual Property.
(c) Seller shall perform, pay and discharge, in the normal course of
business, consistent with past practices, all Excluded Liabilities.
1.6 SELLER EMPLOYEES AND EMPLOYEE BENEFIT PLANS.
(a) Schedule 1.6 lists all individuals who are actively employed by
Seller as of the date hereof. By no later than the Closing, Purchaser shall
offer employment to all of the Seller Employees and the Seller Employees who
accept such offer of employment shall be hereafter referred to as "Transferred
Employees."
(b) Purchaser shall offer employment to the Seller Employees on
commercially reasonable terms and conditions at substantially the same wage
rates in effect for such Seller Employees as of the date hereof, but otherwise
as deemed appropriate by Purchaser, in its sole discretion. This Section 1.6 is
a covenant among the parties hereto and shall not, in any manner, create any
contractual right of employment for any Seller Employee or any other person.
(c) Seller agrees that it shall be responsible for any and all
liabilities and obligations related to, or arising from or in connection with,
any individual's (including all Seller Employees') employment by, or termination
from employment with, Seller, any subsidiary of Seller, any ERISA Affiliate or
any other entity related to Seller, including, without limitation, claims for
health continuation coverage pursuant to COBRA, severance pay, expense
reimbursement and any other benefit provided to any such individual by Seller or
any subsidiary, ERISA Affiliate or other related entity. Seller shall have sole
responsibility for satisfying the continuation coverage requirements of COBRA
for all employees or former employees of Seller (and any dependents or
beneficiaries thereof) who are receiving COBRA continuation coverage as of the
Closing Date or who are entitled to elect such coverage on account of a
qualifying event occurring on or before the Closing Date.
(d) Effective as of the Closing Date, Verso and/or Seller shall
cause all Transferred Employees to become fully vested in their account balances
under the Verso Technologies, Inc. Retirement and Savings Plan. Purchaser shall
establish as soon as practicable a new 401(k) plan for the Transferred
Employees.
(e) Seller and Purchaser hereby agree that any employee of the
Business who (i) as of the Closing Date is receiving or entitled to receive
short-term disability benefits and who subsequently becomes eligible to receive
long-term disability benefits, or (ii) as of the Closing Date is receiving or
entitled to receive long-term disability benefits, shall become eligible (to the
extent not already eligible) or continue to be eligible (to the extent already
eligible), as applicable, to receive long-term disability benefits under
Seller's long-term disability plan(s) unless and until such employee is no
longer disabled and in no event shall Purchaser have an obligation to provide
disability benefits to any such employee.
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(f) Seller shall remain responsible for all claims incurred by
Transferred Employees and any former employee of Seller (and any eligible
dependents and beneficiaries thereof) prior to the Closing (regardless of when
such claims are reported) under any self-insured Employee Benefit Plans. For
purposes of clarity, a claim shall be considered incurred when the service for
which payment is requested is rendered.
(g) Seller and Purchaser agree to follow the Standard Procedure
specified in Revenue Procedure 2004-53, 2004-34 I.R.B. 320, whereby, among other
things, each will be responsible for the reporting duties with respect to its
own payment of wages and compensation to the Transferred Employees in connection
with the operation or activities of the Business.
ARTICLE 2
PURCHASE PRICE; ADJUSTMENT; ALLOCATION
2.1 PURCHASE PRICE
(a) The aggregate purchase price (the "Purchase Price") for the
Assets shall be equal to (x) $4,000,000 (the "Cash Consideration"), plus (y) the
assumption of the Assumed Liabilities.
(b) Subject to the terms and conditions set forth herein, at the
Closing, Purchaser shall deliver to Seller by wire transfer of immediately
available funds to an account designated by Seller, an amount equal to the Cash
Consideration.
2.2 ALLOCATION OF PURCHASE PRICE. Seller and Purchaser shall agree to an
allocation of the Purchase Price among the Assets and the Assumed Liabilities
within thirty (30) calendar days after the Closing Date. The parties hereto
shall each report the federal, state and local income and other tax consequences
of the transactions contemplated by this Agreement in a manner consistent with
such allocation, including but not limited to the preparation and filing of Form
8594 under Section 1060 of the Code (or any successor form or successor
provision of any future tax law) with their respective federal income tax
returns for the taxable year that includes the Closing Date, and no party hereto
will take any position inconsistent with such allocation unless otherwise
required by applicable law.
ARTICLE 3
CLOSING; CLOSING DATE
The closing (the "Closing") of the sale and purchase of the Assets
contemplated hereby shall take place at the New York office of Xxxxxxxx & Xxxxx
LLP at 11:00 a.m., New York City time, on the third Business Day following
satisfaction or waiver of each of the conditions set forth in Articles 7 and 8,
or at such other place or such other time or date as the parties may mutually
agree, provided that all of the conditions to the Closing set forth in Articles
7 and 8 have been satisfied or waived in writing by the party entitled to waive
the same. The date of the Closing is referred to herein as the "Closing Date".
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER AND VERSO
Seller (and Verso with respect to itself in Sections 4.1, 4.3, 4.10,
4.19(b)(vi), 4.22 and 4.29), represents and warrants to Purchaser as follows:
4.1 DUE ORGANIZATION, AUTHORITY AND QUALIFICATION. Each of Seller and
Verso is a corporation duly incorporated and organized and validly existing and
in good standing under the laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
used in connection with the Business and to carry on the Business as now being
conducted by Seller or Verso, as the case may be. Seller is duly qualified or
otherwise authorized as a foreign corporation to transact business and is in
good standing in each jurisdiction set forth on Schedule 4.1 opposite its name
thereon, which are the only jurisdictions in which such qualification or
authorization is required by law in respect of the conduct of the Business or
the ownership of the Assets, except to the extent that the failure to be so
qualified or authorized could not reasonably be expected to have a Material
Adverse Effect.
4.2 SHAREHOLDER; SUBSIDIARIES. Seller is a wholly-owned subsidiary of
Verso. Except for Seller's ownership of the U.K. Subsidiary, Seller does not
own, directly or indirectly, or have any direct or indirect equity participation
in any corporation, partnership, trust, joint venture, limited liability company
or other business association (other than any joint venture agreement from which
no separate legal entity has been formed).
4.3 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. Each of Seller and Verso
has the requisite corporate power and authority to enter into, execute and
deliver this Agreement and each and every agreement and instrument contemplated
hereby to which such Seller or Verso is or will be a party, and to perform fully
such Seller's obligations hereunder and thereunder. The execution and delivery
of this Agreement and the consummation of the Contemplated Transactions have
been duly and validly authorized by Seller and Verso and no other corporate
proceedings or approvals with respect to Seller or Verso are necessary to
authorize this Agreement or the Contemplated Transactions. This Agreement has
been duly executed and delivered by each of Seller and Verso, and each and every
other agreement and instrument to which Seller is or will be a party will be
duly executed and delivered by Seller, and (assuming due execution and delivery
hereof and thereof by the other parties hereto and thereto) this Agreement will
be a valid and binding obligation of Seller and Verso and each such other
agreement and instrument will be a valid and binding obligation of Seller
enforceable against Seller and Verso (as to this Agreement) and against Seller
(as to such other agreements and instruments), in accordance with their
respective terms except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law).
4.4 FINANCIAL STATEMENTS; LIABILITIES.
(a) Attached hereto as Schedule 4.4 is a copy of the following
financial statements for the Business: the unaudited balance sheet and statement
of operations for the Business for each of the fiscal years ended December 31,
2002, December 31, 2003 and
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December 31, 2004 (collectively, the "Financial Statements"). The Financial
Statements are in accordance with the books and records of Seller and the
Business and have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods indicated, except that the Financial Statements may
omit statements of changes in financial position and footnote disclosures
required by GAAP and any costs that are part of shared services performed by
Verso. The Financial Statements fairly present the financial condition and
operating results of the Business as of the dates, and for the periods,
indicated therein.
(b) The Business does not have any material liability or obligation
other than: (i) liabilities and obligations fully and adequately reflected or
reserved against in the Financial Statements; and (ii) liabilities and
obligations incurred after September 30, 2004 in the ordinary course of business
consistent with past practices of the Business.
4.5 INVENTORY; ACCOUNTS RECEIVABLE.
(a) Schedule 4.5(a) attached hereto sets forth a list of all
Inventory as of November 30, 2004 and the reserves related thereto. Except as
set forth on Schedule 4.5(a), the Inventory (net of any reserves) (i) is fit for
the use which is intended, free from any material defects and in a quality and
quantity usable in the ordinary course of business; (ii) contains no material
amounts of items that are obsolete or of below-standard quality; and (iii) is
fully paid (or included in accounts payable as of November 30, 2004) for and is
not subject to any consignment or credit arrangement with a third party.
(b) Schedule 4.5(b) attached hereto sets forth a list of all
Accounts Receivable as of November 30, 2004. All Accounts Receivable represent
sales actually made in the ordinary course of business, and, to the knowledge of
Seller, are collectible net of any reserves as set forth on the face of the
Financial Statements (as herein defined) (rather than in any notes thereto),
which reserves were calculated on a basis consistent with GAAP and past
practices.
4.6 NO MATERIAL ADVERSE CHANGE. Since September 30, 2004 (the "Balance
Sheet Date"), (i) the Business has been conducted in all material respects in
the ordinary course of business consistent with past practice; (ii) there has
been no event, occurrence or change that has had, or is reasonably expected to
have, a Material Adverse Effect on the Condition of the Business, and Seller
does not know of any such event, occurrence or change that is threatened; and
(iii) there has not been any damage, destruction or loss which could have or has
had a Material Adverse Effect on the Condition of the Business, whether or not
covered by insurance.
4.7 TAXES. With respect to the Business and the Assets, Seller has timely
filed all Tax Returns that it was required to file (taking into account
applicable extensions) and all such Tax Returns are correct and complete. Seller
has paid on a timely basis all such Taxes that were shown as due on such Tax
Returns. There is no pending or, to the knowledge of Seller, threatened Tax
audit of any Tax Return involving the Business or the Assets, or with respect to
Seller's income, assets and operations, including the Assets.
4.8 COMPLIANCE WITH LAWS. Except as set forth on Schedule 4.8, Seller is
conducting the Business and owns the Assets in compliance with all applicable
orders, judgments, injunctions, awards, decrees or writs (collectively,
"Orders"), and, to the knowledge
8
of Seller, any applicable law, statute, code, ordinance, regulation or other
requirement (collectively, "Laws"), of any government or political subdivision
thereof, or any agency or instrumentality of any such government or political
subdivision, or any court or arbitrator (collectively, "Governmental Bodies")
having jurisdiction over the Business or the Assets, except where any such
non-compliance would not reasonably be expected to have a Material Adverse
Effect. Seller has not received any written notice alleging any violation of any
Orders or Laws. Seller and its directors, managers, officers, agents, employees
or other authorized persons associated with or acting on behalf of the Business
are in compliance with the provisions of the Foreign Corrupt Practices Act of
1977 to the extent such act is applicable to such person.
4.9 PERMITS. Except as set forth on Schedule 4.9, Seller has all licenses,
permits, exemptions, consents, waivers, authorizations, rights, certificates of
occupancy, franchises, orders or approvals of, and has made all required
registrations with, any Governmental Body that are material to the conduct of
the Business, or the use of any of the Assets (collectively, "Permits"). All
Permits are listed on Schedule 4.9 and are in full force and effect; no material
violations have occurred, or are or have been recorded in respect of any Permit;
and no proceeding is pending or, to the knowledge of Seller, threatened to
revoke or limit any Permit. Except as set forth on Schedule 4.9, no
registration, application, notice, consent, order or other action is required by
virtue of the execution and delivery of this Agreement or the consummation of
the Contemplated Transactions to avoid the loss of any Permit or the violation,
breach or termination of, or any default under, or the creation of any Lien
under the terms of, any applicable Law, or to enable the Business to continue to
be carried on as currently conducted.
4.10 NO BREACH. Neither the execution and delivery of this Agreement by
Seller or Verso, nor the consummation by Seller or Verso of the transactions
contemplated hereby, will violate (a) any provision of the charter or bylaws or
other constitutional document, as the case may be, of Seller or Verso, or (b)
assuming the truth and completeness of the representations and warranties made
by Purchaser in this Agreement, any statute, regulation, rule, judgment, order,
decree, stipulation, injunction, charge or other restriction of any government,
governmental agency or court to which Seller, Verso or any of the Assets is
subject except where such violation will not materially, adversely affect the
Assets when taken as a whole and Seller's or Verso's ability to consummate the
transactions contemplated hereby. Neither the execution and delivery of this
Agreement by Seller or Verso, nor the consummation by Seller or Verso of the
Contemplated Transactions requires Seller or Verso to obtain any consent,
approval or action of, or make any filing with or give any notice to, any
governmental body or any other person (including any party to any of the
Business Contracts), except as set forth in Schedule 4.10 (the "Seller's
Required Consents").
4.11 ENVIRONMENTAL MATTERS. Except as disclosed on Schedule 4.11:
(a) Seller is not, and has not been in violation in any material
respect, during the past three years, of any applicable Environmental Law in
respect of the Business or the Assets. No Environmental Compliance Cost is
necessary in respect of the Assets or the Business.
(b) Seller has all Permits required pursuant to Environmental Laws
that are material to the conduct of the Business, all such Permits are in full
force and effect, no action or
9
proceeding to revoke, limit or modify any of such Permits is pending, and Seller
is in compliance in all material respects with all terms and conditions thereof.
All such Permits are listed on Schedule 4.11(b).
(c) Seller has not received, and to the knowledge of Seller, will
not receive due to the consummation of the Contemplated Transactions, any
Environmental Claim in respect of the Business or the Assets.
(d) Seller has filed all notices required under Environmental Laws
in respect of the Business and the Assets, indicating the past or present
Release, generation, treatment, storage or disposal of Hazardous Substances. All
such notices are listed on Schedule 4.11(d).
(e) Seller has not entered into any written agreement in respect of
the Business or the Assets with any Governmental Body or any other person by
which Seller has assumed responsibility, either directly or as a guarantor or
surety, for the remediation of any condition arising from or relating to a
Release or threatened Release of Hazardous Substances into the Environment.
(f) To the knowledge of Seller, there is not now, and has not been
at any time in the past, a Release or threatened Release of Hazardous Substances
into the Environment in respect of the Business or the Assets for which Seller
may be directly or indirectly responsible.
(g) To the knowledge of Seller, there is not now, and has not been
at any time in the past, on or in any of the real properties owned, leased or
operated by Seller in respect of the Business: (i) any Release, treatment,
recycling, storage or on-site disposal of any Hazardous Substances; (ii) any
underground storage tank, surface impoundment, lagoon, landfill, solid waste
disposal area or other containment facility (past or present) for the temporary
or permanent storage, treatment or disposal of Hazardous Substances; (iii) any
asbestos-containing material; (iv) any polychlorinated biphenyls (PCBs) used in
hydraulic oils, electrical transformers or other equipment owned by Seller; or
(vi) any Hazardous Substances present at such property, excepting such
quantities as are handled in accordance with all applicable manufacturer's
instructions and Environmental Laws and in proper storage containers, and as are
necessary for the operations of the Business.
(h) To the knowledge of Seller, there is no basis for any action,
suit, claim or liability under or pursuant to any Environmental Law, or common
law relating to environmental matters, in connection with the operation of the
Business or the Assets prior to the Closing.
(i) Seller has delivered to Purchaser all environmental audits,
reports and other material environmental documents relating to it, or its
predecessors' past or current properties, facilities or operations which are in
its possession or under its reasonable control.
4.12 CLAIMS AND PROCEEDINGS. There are no outstanding Orders of any
Governmental Body against or involving Seller with respect to the Business or
any of the Assets. Except as set forth on Schedule 4.12, there are no actions,
suits, claims or legal, administrative or arbitration proceedings or
investigations (collectively, "Claims") (whether or not the defense thereof or
liabilities in respect thereof are covered by insurance) pending, or, to the
knowledge of Seller, threatened, against or involving Seller with respect to the
Business or any of the Assets. All
10
notices required to have been given to any insurance company listed as insuring
against any Claim set forth on Schedule 4.12 have been timely and duly given
and, except as set forth on Schedule 4.12, no insurance company has asserted,
orally or in writing, that such Claim is not covered by the applicable policy
relating to such Claim. Except as set forth on Schedule 4.12, there are no
product liability Claims against or involving Seller with respect to the
Business or any of the Assets or any product manufactured, marketed or
distributed at any time by the Business ("Business Products") and no such Claims
have been settled, adjudicated or otherwise disposed of since January 1, 2002.
4.13 CONTRACTS.
(a) Schedule 4.13(a) sets forth all of the Business Contracts,
whether or not in writing, that are material to the Business or by which the
Assets are bound, including, but not limited to (collectively, the "Material
Contracts"):
(i) any contract or agreement for the purchase of goods, or
for the furnishing of services that provides for, or would reasonably be
expected to provide for, remaining payments by any party thereto in excess of
$25,000 during the term of such contract or agreement;
(ii) any contract or agreement with any customer which
contains financing arrangements or any deferred payment provisions;
(iii) any employment, severance, non-competition, consulting
or other contract or agreement with any Seller Employee or any consultant to the
Business;
(iv) any collective bargaining agreement, labor contract or
other written agreement or arrangement with any labor union or other employee
organization of which any of the Seller Employees is a member;
(v) any joint venture or similar type agreement related to the
Business;
(vi) any material sales, distribution or supply agreements
used in or by the Business;
(vii) any contract or agreement relating to the borrowing of
money, or the guaranty of another person's borrowing of money or other
obligation, including, without limitation, all notes, mortgages, indentures and
other obligations, guarantees of performance, agreements and instruments for or
relating to any lending or borrowing, including assumed indebtedness;
(viii) any contract or agreement granting any person a Lien on
all or any part of the Assets;
(ix) any contract or agreement granting to any person a first
refusal, first-offer or similar preferential right to purchase or acquire any of
the Assets;
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(x) any leases, licenses, contracts or agreements under which
Seller uses any tangible personal property or equipment or intangible property
in connection with the Business, including each such lease, contract or
agreement that is required to be classified and accounted for as capital lease
in accordance with GAAP;
(xi) contracts containing covenants which materially restrict
Seller or the Business from engaging in any business or in any geographical area
or containing any prohibition from the disclosure of confidential information in
the possession of Seller or any exclusivity provision with respect to any
business or geographic area; and
(xii) any other contract or agreement, whether or not made in
the ordinary course of business, which involves payments in excess of $25,000.
(b) Seller has delivered to Purchaser true and complete copies of
all of the Material Contracts and License Agreements; provided, however, that,
with respect to copies of any License Agreements that have not been provided to
Purchaser as of the Closing Date, such License Agreements are for commercially
available, off the shelf software purchased or licensed for less than a total
cost of $10,000 in the aggregate, and contain provisions customary in the
industry with respect to the scope of the license and Seller's indemnification
obligations, and any other rights, obligations and liabilities of Seller. All of
the Business Contracts are valid, binding and in full force and effect. Seller
is not in default in any material respect under any Business Contract, and no
condition known to Seller exists that with notice or lapse of time or both would
constitute such a material default thereunder. To the knowledge of Seller, no
other party to any Business Contract is in default thereunder in any material
respect nor does any condition exist that with notice or lapse of time or both
would constitute such a material default thereunder. Other than as set forth on
Schedule 4.13(b), the continuation, validity and effectiveness of each Business
Contract will not be affected by the transfer thereof to Purchaser under this
Agreement and all such Business Contracts are assignable to Purchaser without
the consent or approval of any person or entity which is a party thereto.
4.14 PREPAYMENTS AND DEPOSITS. Schedule 4.14 attached hereto sets
forth all Prepayments and Deposits as of November 30, 2004.
4.15 LEASED REAL PROPERTY. Seller does not own any real property. Seller
has valid leasehold interests in all of the real property which it holds under
the leases described on Schedule 4.15 (collectively, the "Leased Real
Property"), in each case free and clear of all Liens, except for (i) Liens for
Taxes not yet due or delinquent, (ii) Liens identified on Schedule 4.15 and
(iii) imperfections of title, easements, restrictions and encumbrances,
including, without limitation, survey matters, if any, that do not in the
aggregate, materially detract from the value of the property subject thereto or
materially interfere with the manner in which such property is currently being
used in the Business or materially impair the operations of the Business. With
respect to the Leased Real Property: (i) Seller has all easements and rights
necessary to conduct the Business; (ii) to the knowledge of Seller, no portion
thereof is subject to any pending or threatened condemnation proceeding or
proceeding by any public authority; (iii) the buildings, plants and structures,
including, without limitation, heating, ventilation and air conditioning
systems, roof, foundation and floors, are in good operating condition and
repair, subject only to ordinary wear and tear; (iv) there are no leases,
subleases, licenses, concessions or other
12
agreements to which Seller or any of Seller's affiliates is a party, written or
oral, granting to any party or parties the right of use or occupancy of any
portion of any parcel of Leased Real Property; and (v) the Leased Real Property
is supplied with utilities and other services necessary for the operation of
such facilities.
4.16 PRODUCT WARRANTY. Schedule 4.16 sets forth a description of all
express warranties provided by the Business with respect to products sold by it
and includes a copy of the standard terms and conditions of sale for the
Business.
4.17 BANK ACCOUNTS; POWERS. Schedule 4.17 lists each bank, trust company,
savings institution, brokerage firm, mutual fund or other financial institution
with which Seller or any of Seller's affiliates has an account or safe deposit
box maintained solely for the benefit of the Business and the names and
identification of all individuals authorized to draw thereon or to have access
thereto, and lists the names of each person holding powers of attorney or agency
authority from Seller and a summary of the terms thereof, in each case to the
extent used solely in connection with the Business or otherwise in the name of
or on behalf of the Business.
4.18 TANGIBLE PROPERTY. Schedule 4.18 sets forth a list of the Tangible
Property as of November 30, 2004. The Tangible Property is in good operating
condition and repair, subject to continued repair and replacement in accordance
with past practice. During the past three years there has not been any
significant interruption of the operations of Seller due to inadequate
maintenance of the Tangible Property.
4.19 INTELLECTUAL PROPERTY.
(a) Schedule 4.19 attached hereto sets forth a complete and correct
list of all of the following that are owned by Seller or used or held for use by
the Business:
(i) patented or registered Intellectual Property and
applications for registrations of Intellectual Property;
(ii) material unregistered trademarks, material unregistered
service marks, trade names, and Internet domain names;
(iii) material unregistered copyrights;
(iv) Software (other than commercially available off-the-shelf
software purchased or licensed for less than a total cost of $10,000 in the
aggregate);
(v) all agreements relating to the licensing of Intellectual
Property by Seller to a third party or by a third party to Seller, and all other
agreements affecting Seller's ability to use or disclose any Intellectual
Property (collectively, "License Agreements") (unless such agreement has been
set forth on Schedule 4.13(a)); and
(vi) any other material Intellectual Property.
(b) Except as set forth on Schedule 4.19:
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(i) Seller owns all right, title and interest in and to, or
has a valid and enforceable license to use pursuant to a written license
agreement set forth on Schedule 4.13(a) or Schedule 4.19, all of the Business
Intellectual Property including, without limitation, the property set forth on
Schedule 4.19;
(ii) All of the Business Intellectual Property is valid and
enforceable and, to the knowledge of Seller, there is no claim by any third
party contesting the validity, enforceability, use or ownership of any of the
Business Intellectual Property;
(iii) The Business Intellectual Property constitutes all the
Intellectual Property necessary for the operation of the Business as presently
conducted and as presently proposed to be conducted by Seller, and neither Verso
nor any of Verso's affiliates (other than Seller) own any Intellectual Property
used in the Business as currently conducted or as presently proposed to be
conducted;
(iv) The Business Intellectual Property is not subject to any
Liens;
(v) Neither Seller nor the Business has infringed,
misappropriated or otherwise conflicted with, and the operation of the Business
as currently conducted and as currently proposed to be conducted by Seller will
not infringe, misappropriate or otherwise conflict with, any Intellectual
Property of any third party. Seller has not received any notices regarding any
of the foregoing (including, without limitation, any demands or offers to
license any Intellectual Property from any third party);
(vi) Verso and Seller have taken all necessary and desirable
actions to maintain and protect all of the Business Intellectual Property;
(vii) To the knowledge of Seller, no third party has
infringed, misappropriated or otherwise conflicted with any of the Business
Intellectual Property and, to the knowledge of Seller, there are no facts that
indicate a likelihood of any of the foregoing;
(viii) Immediately subsequent to the Closing, the Business
Intellectual Property will be owned by or available for use by Purchaser on
terms and conditions identical to those under which Seller owned or used the
Business Intellectual Property immediately prior to the Closing. No loss or
expiration of any of the Business Intellectual Property is pending, reasonably
foreseeable or, to the knowledge of Seller, threatened, except for patents
expiring at the end of their statutory terms (and not as a result of any act or
omission by Seller, including, without limitation, a failure by Seller to pay
any required maintenance fees);
(ix) To the knowledge of Seller, no Intellectual Property is
owned or used by any competitor or third party which reasonably could be
expected to supersede or make obsolete any product or process of the Business or
to limit or otherwise restrict the operation of the Business as currently
conducted or as currently proposed to be conducted;
(x) None of Seller's agreements with customers, suppliers,
contractors, resellers or consultants or any other party confers upon any party
other than Seller any ownership right with respect to any Intellectual Property
developed in connection with such agreement;
14
(xi) All present employees of, and consultants to, Seller have
entered into agreements regarding the non-disclosure of confidential information
and providing for the assignment to Seller of all Intellectual Property
developed by such employee or consultant in the course of their relationship
with Seller, without any restrictions or obligations whatsoever;
(xii) With respect to all Software owned by the Seller, such
Software was either developed (A) by employees of Seller within the scope of
their employment or (B) by independent contractors who have assigned their
rights to Seller pursuant to written agreements;
(xiii) The Software included in the Business Intellectual
Property (the "Business Software") is not subject to any "copyleft" or other
obligation or condition (including, without limitation, any obligation or
condition under any "open source" license such as the GNU Public License, Lesser
GNU Public License, or Mozilla Public License) that could (A) require, or
condition the use or distribution of such Software, on the disclosure,
licensing, or distribution of any source code for any portion of such Software
or (B) otherwise impose any limitation, restriction, or condition on the right
or ability of Seller to use, license or distribute any Software;
(xiv) Since July 2001, in each agreement in which the Seller
has licensed Software, hardware or networks to third parties, the Seller has not
(A) failed to limit its liability to the amount of the fees paid pursuant to the
agreement or (B) warranted as to the performance or functionality of the
Software other than stating that the Software would perform in accordance with
its documentation and/or specifications;
(xv) (A) No source code for any Business Software has been
delivered, licensed, or made available to any escrow agent or other person who
is not, as of the date of this Agreement, an employee of the Seller, (B) Seller
has no duty or obligation (whether present, contingent, or otherwise) to
deliver, license, or make available the source code for any Business Software to
any escrow agent or other person who is not, as of the date of this Agreement,
an employee of the Seller, and (C) no event has occurred, and no circumstance or
condition exists, that (with or without notice or lapse of time) will, or could
reasonably be expected to, result in the delivery, license, or disclosure of the
source code for any Business Software to any other person who is not, as of the
date of this Agreement, an employee of Seller; and
(xvi) The computer systems, including, without limitation, the
Software, hardware and networks (collectively, "Systems") currently used or
currently proposed by Seller to be used in the operation of the Business are
sufficient for the immediate needs of Seller, as currently contemplated by
Seller, and all Systems, other than Software, used in the operation of the
Business are owned and operated by and are under the control of the Seller and
are not wholly or partly dependent on any facilities which are owned, operated
or controlled by Verso or any third party.
4.20 TITLE TO THE ASSETS; ADEQUACY OF ASSETS. Seller has good title to, or
a valid leasehold interest in, all of the Assets, free and clear of any Liens,
except for Permitted Liens. Upon completion of the Contemplated Transactions,
Purchaser will acquire good title to all of the Assets, free and clear of any
Liens, other than Permitted Liens. The Assets (i) constitute all of the assets
and properties necessary to permit Purchaser to carry on the Business
immediately following the Closing, in all material respects, as presently
conducted by Seller and its affiliates
15
and (ii) constitute all of the material property and assets (tangible and
intangible) used by Seller and Seller's affiliates in the conduct of the
Business as presently conducted by Seller and Seller's affiliates and in the
achievement by the Business of the financial results contained in the Financial
Statements. The representations of this Section 4.20 are cumulative to the
representations in Section 4.19 and in no way limit the representations in
Section 4.19.
4.21 SUPPLIERS AND CUSTOMERS. Schedule 4.21 lists, by dollar volume paid,
for the twelve month period ended September 30, 2004, the top ten (10) suppliers
and customers of Seller, related, directly or indirectly, to the Business, and
any sole-source suppliers of goods or services (other than electricity, gas,
telephone or water) to the Business with respect to which alternative sources of
supply are not readily available on comparable terms and conditions. The
relationships of Seller with such suppliers and customers are good commercial
working relationships and, except as set forth on Schedule 4.21: (i) no person
listed on Schedule 4.21, within the last twelve months, has, to the knowledge of
Seller, threatened to cancel or otherwise terminate, or to the knowledge of
Seller, intends to cancel or otherwise terminate, the relationship of such
person with Seller; and (ii) no such person has, during the last twelve months,
decreased materially or, to the knowledge of Seller, threatened to decrease or
limit materially, or to the knowledge of Seller intends to modify materially its
relationship with Seller or intends to decrease or limit materially its services
or supplies to Seller or its usage or purchase of the services or products of
Seller, as the case may be.
4.22 EMPLOYEE BENEFIT PLANS.
(a) Schedule 4.22 contains a complete and correct list of each
Employee Benefit Plan.
(b) Each Employee Benefit Plan (and each related trust, insurance
contract, or fund) has been maintained, funded and administered in accordance
with the terms of such Employee Benefit Plan and of any applicable collective
bargaining agreement and complies in form and in operation in all material
respects with the applicable requirements of ERISA, the Code, and other
applicable Laws.
(c) Each Employee Benefit Plan that is intended to meet the
requirements of a "qualified plan" under Section 401(a) of the Code has received
a determination from the IRS that such Employee Benefit Plan is so qualified,
and there are no facts or circumstances that could adversely affect the
qualified status of any such Employee Benefit Plan. Each such Employee Benefit
Plan has been timely amended to comply with the provisions of legislation
commonly referred to as "GUST" and "EGTRRA" and has been submitted to the IRS
for a determination letter that takes the GUST amendments into account within
the applicable remedial amendment period.
(d) All contributions (including all employer contributions and
employee salary reduction contributions) that are due have been made within the
time periods prescribed by ERISA and the Code to each Employee Benefit Plan that
is an Employee Pension Benefit Plan and all contributions for any period ending
on or before the Closing Date that are not yet due have been made to each
Employee Pension Benefit Plan or properly accrued. All premiums
16
or other payments for all periods ending on or before the Closing Date have been
paid with respect to each Employee Benefit Plan that is an Employee Welfare
Benefit Plan.
(e) There have been no Prohibited Transactions with respect to any
Employee Benefit Plan or any employee benefit plan (as such term is defined in
Section 3(3) of ERISA) maintained by an ERISA Affiliate. No fiduciary has any
liability for material breach of fiduciary duty or any other material failure to
act or comply in connection with the administration or investment of the assets
of any Employee Benefit Plan. No action, suit, proceeding, hearing,
investigation or other Claim with respect to any Employee Benefit Plan (other
than routine claims for benefits) is pending or threatened.
(f) Neither Verso, Seller nor any ERISA Affiliate maintains,
sponsors, contributes to or has an obligation to contribute to, or has any
liability or potential liability with respect to, any Employee Welfare Benefit
Plan providing health or life insurance or other welfare-type benefits for
current or future retired or terminated employees, officers, directors or
contractors (or any spouse or other dependent thereof) other than in accordance
with COBRA.
(g) Neither Verso, Seller nor any ERISA Affiliate has any liability
or potential liability under Title IV of ERISA, including on account of a
"partial withdrawal" or a "complete withdrawal" (within the meaning of Sections
4203 and 4205 of ERISA, respectively) from any Multiemployer Plan; and neither
Verso, Seller nor any ERISA Affiliate is bound by any contract or agreement or
has any obligation or liability described in Section 4204 of ERISA.
(h) The consummation of the transactions contemplated by this
Agreement will not (i) accelerate the time of the payment or vesting of, or
increase the amount of, compensation due to any Seller Employee or (ii)
reasonably be expected to result in any "excess parachute payment" under Section
280G of the Code.
(i) Neither Verso nor Seller has announced a plan or legally binding
commitment to create any additional employee benefit plans or to amend or modify
any existing Employee Benefit Plan.
(j) Neither Seller nor Verso has any liability, whether absolute or
contingent, including any obligations under any Employee Benefit Plan, with
respect to any misclassification of a person as an independent contractor rather
than as an employee.
4.23 LABOR MATTERS. Seller is not a party to or bound by any union or
collective bargaining agreement involving the Business. Seller is not a party to
any pending arbitration or grievance proceeding or other claim relating to any
labor matter involving the Business nor, to the knowledge of Seller, is any such
action threatened. Within the previous twelve months, Seller has not experienced
any labor disputes, union organization attempts or any work stoppage due to
labor disagreements in connection with the Business, and there is currently no
labor strike, request for representation, slowdown or stoppage actually pending
or, to the knowledge of Seller, threatened against Seller. With respect to all
current and former employees of Seller who are or have been employed in the
Business, solely as to matters related to their employment by Seller, Seller is
in compliance, in all material respects, with all federal, state and municipal
laws respecting employment and employment practices, terms and conditions of
employment, and
17
wages and hours, and is not engaged in any unfair labor practice, and Seller is
not delinquent in the payment of any wages or social security Taxes.
4.24 INSURANCE. Schedule 4.24 sets forth a list of all policies or binders
of fire, liability, product liability, worker's compensation, vehicular and
other insurance held by or on behalf of Seller with respect to the Business or
any of the Assets (the "Business Insurance Policies"). Such policies and binders
are valid and binding in accordance with their terms, are in full force and
effect, and insure against risks and liabilities to an extent and in a manner
customary in the industries in which the Business operates. To the knowledge of
Seller, Seller is not in default with respect to any provision contained in any
such policy or binder. Seller has not failed to give any notice or present any
Claim involving the Business under any such policy or binder in due and timely
fashion. Except for Claims set forth on Schedule 4.24, there are no outstanding
unpaid Claims involving the Business under any such policy or binder, and Seller
has not received any notice of cancellation or non-renewal of any such policy or
binder.
4.25 SELLER EMPLOYEES. Schedule 4.25 sets forth:
(a) the name, title and total compensation of each Seller Employee;
(b) all wage and salary increases, bonuses and increases in any
other direct or indirect compensation received by each Seller Employee since the
Balance Sheet Date; and
(c) any payments or commitments to pay any severance or termination
pay to any Seller Employee.
To the knowledge of Seller, no Seller Employee has indicated that he or she will
refuse to accept Purchaser's offer of employment.
4.26 BUSINESS PRODUCTS. There are no statements, citations or decisions by
any Governmental Body specifically stating that any Business Product is
defective or unsafe or fails to meet any standards promulgated by any such
Governmental Body. There is no (a) fact relating to any Business Product that
may impose upon Seller or Purchaser a duty to recall such Business Product or a
duty to warn customers of a defect in any Business Product, (b) latent or overt
design, manufacturing or other defect in any Business Product or (c) material
liability for warranty claims or returns with respect to any Business Product
that is (i) not fully and adequately reserved against or reflected on the
Financial Statements or (ii) not fully and adequately covered by policies of
insurance or by indemnity, contribution, cost sharing or similar agreements or
arrangements by or with other persons that will be included in the Assets.
4.27 OPERATIONS OF SELLER. Except as set forth on Schedule 4.27, since the
Balance Sheet Date, Seller has not:
(a) waived any material right under any Business Contract;
(b) made any change in its accounting methods or practices or made
any change in depreciation or amortization policies or rates adopted by it with
respect to the Business;
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(c) materially changed any of its business policies with respect to
the Business or the Assets, including, without limitation, advertising,
investment, marketing, pricing, purchasing, production, personnel, sales,
returns, budget or product acquisition policies;
(d) made any acquisition of all or any part of the properties,
capital stock or business of any other person that are included in the Business
and/or the Assets;
(e) terminated or failed to renew, or received any written threat
(that was not subsequently withdrawn) to terminate or fail to renew, any
Business Contract or other agreement that is or was material to the Condition of
the Business;
(f) made any material capital expenditures (or series of related
capital expenditures) in connection with the Business or the Assets outside the
ordinary course of business;
(g) sold, transferred, licensed or made any other disposition of any
of the inventory or other assets of the Business other than in the ordinary
course of business, consistent with past practice;
(h) taken any action, or failed to take any action, that has
resulted or could reasonably be expected to result in the loss, lapse,
expiration or abandonment of any Business Intellectual Property;
(i) engaged in any other material transaction involving the Business
other than in the ordinary course of business;
(j) suffered any losses, whether insured or uninsured and whether or
not in control of Seller, in excess of $50,000 in the aggregate, or waived any
material rights of any value, in each case in respect of the Business or any of
the Assets;
(k) made any changes in compensation of any Seller Employee;
(l) authorized or issued recall notices for any of the Business
Products or initiated any safety investigations; or
(m) received written notice of any litigation, warranty claim or
products liability claim involving the Business.
4.28 RELATED PARTY TRANSACTIONS. Except as set forth on Schedule 4.28,
none of (a) Seller, (b) the officers or directors of Seller or (c) the entities
controlled by or under common control with one or more of the foregoing
(including Verso):
(a) own(s), directly or indirectly, any interest in (excepting less
than 1% stock holdings for investment purposes in securities of publicly held
and traded companies including, without limitation, Verso), or is an officer,
director, employee or consultant of, any person which is, or is engaged in
business as, a competitor, lessor, lessee, supplier, distributor, sales agent or
customer of the Business, excepting any such position or relationship with Verso
(and not the Seller);
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(b) own(s), directly or indirectly, in whole or in part, any
property that is used in the conduct of the Business;
(c) except in the case of Seller, is a party to any of the Real
Estate Leases or Business Contracts; or
(d) has any cause of action or other claim whatsoever against, or
owes any amount to, the Business or Seller with respect to the Business, except
for claims in the ordinary course of business such as for accrued vacation pay,
accrued benefits under Employee Benefit Plans, and similar matters and
agreements existing on the date hereof.
4.29 BROKERS' FEES. No broker has acted on behalf of Seller or Verso in
connection with this Agreement or the Contemplated Transactions, and there are
no brokerage commissions, finder's fees or similar fees or commissions payable
in connection therewith based on any agreement, arrangement, or understanding
with Seller or Verso or any action taken by Seller or Verso.
4.30 SOLVENCY. Immediately after giving effect to the consummation of the
transactions contemplated by this Agreement: (i) Seller will be able to pay its
liabilities as they become due in the usual course of its business; and (ii)
Seller will have assets (calculated at fair market value) that exceed its
liabilities.
4.31 SECURITY INTERESTS. Schedule 4.31 sets forth (i) all of the security
interests granted to Seller (whether or not perfected) by any third-party having
a balance due Seller as of the date hereof (excluding those that have been
written-off prior to January 1, 2004), including without limitation, security
interests in assets of Seller's customers granted to Seller pursuant to Seller's
standard sale and services agreement and (ii) the date and parties of each of
the financing statements that have been filed with respect to the security
interests required to be listed by (i) above ("Financing Statements").
4.32 U.K. ASSETS. Schedule 4.32 sets forth all of the assets (such assets,
the "U.K. Assets") that are owned, held or used by the U.K. Subsidiary and that
are used exclusively in the Business.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller and Verso as follows:
5.1 DUE ORGANIZATION AND AUTHORITY. Purchaser is a corporation duly
incorporated, formed or organized and validly existing (where applicable) in
good standing under the laws of its jurisdiction of incorporation, formation and
has all necessary corporate power and authority to own, lease and operate its
assets, properties and business and to carry on its business as now conducted.
5.2 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. Purchaser has the
requisite corporate power and authority to enter into, execute and deliver this
Agreement and each and
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every other agreement and instrument contemplated hereby to which Purchaser is
or will be a party, and to perform fully Purchaser's obligations hereunder and
thereunder. This Agreement has been duly executed and delivered by Purchaser,
and each and every other agreement and instrument contemplated by this Agreement
to which Purchaser is to be a party will be duly executed and delivered by
Purchaser, and (assuming due execution and delivery hereof and thereof by the
other parties hereto and thereto) this Agreement and each such other agreement
and instrument will be valid and binding obligations of Purchaser, enforceable
against Purchaser in accordance with their respective terms except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
5.3 NO BREACH. None of the execution and delivery by Purchaser of this
Agreement or any other agreement or instrument contemplated hereby, the
consummation of the transactions contemplated hereby or thereby, nor the
performance by Purchaser of this Agreement or any other agreement or instrument
contemplated hereby in accordance with their respective terms and conditions:
(a) violates any provision of the Certificate of Incorporation or
Bylaws of Purchaser;
(b) requires Purchaser to obtain any consent, approval or action of,
or make any filing with or give any notice to, any Governmental Body or any
other person subject except where the failure to obtain such consent, approval
or action, or where the failure to make such filing, or where the failure to
give such notice, will not materially and adversely affect Purchaser's ability
to consummate the transactions contemplated hereby; or
(c) assuming the truth and completeness of Seller's and Verso's
respective representations and warranties contained herein, violates any
statute, regulation, rule, judgment, order, decree, stipulation, injunction,
charge or other restriction of any government, governmental agency or court to
which Purchaser is subject except where such violation will not materially and
adversely affect Purchaser's ability to consummate the transactions contemplated
hereby.
5.4 BROKER'S FEES. No broker has acted on behalf of Purchaser in
connection with this Agreement or the Contemplated Transactions, and there are
no brokerage commissions, finder's fees or similar fees or commissions payable
in connection therewith based on any agreement, arrangement, or understanding
with Purchaser or any action taken by Purchaser for which Seller or Verso could
have any liability.
5.5 FINANCING. Purchaser has sufficient funds readily available to satisfy
its obligation to pay all amounts payable to Seller at Closing pursuant to the
provisions of Section 2.1(b).
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ARTICLE 6
COVENANTS AND AGREEMENTS
Each party hereto shall use its commercially reasonable efforts to
fulfill or obtain the fulfillment of the conditions to the Closing set forth in
Articles 7 and 8, and, in addition, the parties hereto covenant and agree as
follows:
6.1 EXAMINATIONS AND INVESTIGATIONS. Prior to the Closing Date, Seller
agrees that Purchaser and any prospective lender to Purchaser, each shall be
entitled, through their employees and representatives, and at their sole cost
and expense, to make such investigation of the properties, businesses and
operations of the Business, and such examination of the books, records and
financial condition of the Business (including, but not limited to, with respect
to any Phase II environmental audit), as they wish, including without
limitation, Phase I and II environmental assessments. Any such investigation and
examination shall be conducted at reasonable times and under reasonable
circumstances, and Seller and Verso shall cooperate fully therein. Unless waived
in writing by Purchaser, no investigation by or on behalf of Purchaser shall
diminish or obviate any of the representations, warranties, covenants or
agreements of any other party contained in this Agreement.
6.2 PUBLICITY. Verso and Purchaser shall coordinate all publicity relating
to the transaction contemplated by this Agreement, and no party shall issue any
press release, publicity statement or other public notice relating to this
Agreement, or the transaction contemplated by this Agreement, without obtaining
the prior consent of Verso and Purchaser, except to the extent that a particular
action may be required by applicable Law.
6.3 SELLER'S REQUIRED CONSENTS. Seller shall, prior to the Closing, use
its commercially reasonable efforts to obtain or make, at its sole expense, all
Seller's Required Consents and undertake all actions, incur all expenses, costs
and obligations and provide all bonds, guarantees or other financial instruments
required pursuant to the Seller's Required Consents.
6.4 NOTIFICATION OF CERTAIN MATTERS. Each of Seller and Verso shall give
prompt notice to Purchaser, and Purchaser shall give prompt notice to Seller and
Verso, of (i) the occurrence, or failure to occur, of any event that would be
likely to cause any of their respective representations or warranties contained
in this Agreement to be untrue or inaccurate in any material respect at any time
from the date of this Agreement to the Closing Date and (ii) any failure on the
part of either Seller or Verso to comply with or satisfy, in any material
respect, any covenant, condition or agreement to be complied with or satisfied
by it under this Agreement. Notice required to be provided pursuant to this
Section 6.4 shall not effect any rights of Purchaser under Article 11 herein.
6.5 CONTINUED SOLVENCY. After the Closing, Seller will not take any action
which would result in Seller (a) being unable to pay its liabilities as they
become due in the usual course of its business and (b) having liabilities that
exceed its assets (calculated at fair market value). Notwithstanding the
foregoing, Purchaser acknowledges and agrees that following the Closing Seller
may dissolve, in which case, Seller shall provide for sufficient payment for all
liabilities as required by applicable law.
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6.6 CORPORATE NAMES. On the Closing Date, Verso shall cause each of Seller
and the U.K. Subsidiary to change their respective corporate names to new names
that do not incorporate the words "NACT," "NACT Telecommunications, Inc." or
"NACT Limited" and promptly following the Closing Date (but in no event later
than thirty (30) days thereafter), Verso shall cause each of Seller and the U.K.
Subsidiary to take all other action necessary and file all documents or
instruments necessary with any Governmental Body or other person to reflect such
name changes. Any such new name shall not conflict with or otherwise interfere
with Purchaser's ability to use any name of Seller used as of the date hereof
after the Closing and shall not include the words "NACT," "NACT
Telecommunications" or "NACT Limited" or any variation or combination thereof.
Furthermore, Verso and Seller hereby acknowledge that, pursuant to this
Agreement, and without limiting the generality of Section 1.2, as of the Closing
Date it has assigned, transferred and conveyed to Purchaser its entire right,
title and interest in and to the names "NACT," "NACT Telecommunications" and
"NACT Limited" and all other marks included within the Business Intellectual
Property. After the Closing, neither Verso, nor Seller nor any affiliates of
Verso shall, directly or indirectly, make any use of, nor attempt to register in
any jurisdiction, any name or term similar to the names "NACT," "NACT
Telecommunications" or "NACT Limited" or any other xxxx included within the
Business Intellectual Property, including, without limitation, any world wide
web domain name incorporating the words "NACT," "NACT Telecommunications" or
"NACT Limited". Nothing in this Section 6.6 shall limit or otherwise derogate
Purchaser's rights under trademark, unfair competition, or domain name law,
including, without limitation, with respect to any marks acquired by Purchaser
under this Agreement.
6.7 ASSETS OF THE BUSINESS HELD BY VERSO. Verso hereby agrees that if any
assets (other than cash and cash equivalents that are not Seller Received Cash,
enterprise software or back office systems owned or licensed by Verso and used
by Verso in the general infrastructure and administrative functions of Verso in
respect of all or any portion of Verso's business and other Excluded Assets but
including all Intellectual Property) necessary for the conduct of the Business
as it is currently conducted are owned by Verso or any affiliate of Verso (other
than Seller), then prior to Closing Verso shall (or shall cause the applicable
affiliate of Verso to) assign, all right, title and interest in and to such
assets to Seller so that such assets shall be deemed part of the Assets.
6.8 FINANCING STATEMENTS. Effective as of the Closing, Verso hereby
transfers any and all rights in and to the Financing Statements to Purchaser.
Verso hereby further agrees to (i) permit Purchaser to make any and all
amendments and filings necessary in order for Purchaser to be listed as the
secured party on each of the Financing Statements and (ii) take any action
necessary in order for Purchaser to perfect and/or maintain the priority of the
security interests reflected in the Financing Statements.
6.9 U.K. ASSETS. Effective as of the Closing and for no additional
consideration, Seller and/or the U.K. Subsidiary, as applicable, hereby transfer
all right, title and interest in and to the U.K. Assets, free and clear of all
Liens, to NACT Europe Limited, an English private limited company and a
wholly-owned subsidiary of Purchaser ("NACT Acquisition Europe").
6.10 TRANSITION SERVICES. Verso shall assist and cooperate with Purchaser,
for a period of up to ninety (90) days from and after the Closing Date, in
transitioning (i) all
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accounting records and recording services used in connection with the Business
from Verso and Seller to Purchaser and (ii) information technology services from
Verso and Seller to Purchaser used in connection with the Business, including,
without limitation, by (1) maintaining Purchaser's accounts receivable and
accounts payable, (2) maintaining Purchaser's balance sheet as related to asset,
accrual and other liability accounts that are included in the Assets, (3)
maintaining Purchaser's fixed assets and depreciation schedules, (4) posting
journal entries to Purchaser's general ledger, (5) customer invoicing, (6)
providing payroll services to all of the Purchaser's employees and any
employee(s) of NACT Acquisition Europe, including Xxxxxx Consdine, (7) providing
any other service as may be reasonably requested by Purchaser in order to
transfer to Purchaser and maintain Seller's accounting records, (8) forwarding
all e-mails addressed to the Transferred Employees, (9) providing frame relay
line services from Purchaser to Verso's Atlanta call center and (10) providing
Purchaser with access to Seller's WEBEX applications (collectively, the
"Services"). Purchaser shall pay Verso a fee of $15,000 for the first thirty
(30) days following the Closing for the Services to be provided pursuant to this
Section 6.10 and, provided that Purchaser has given Verso at least two weeks
advance notice that Purchaser desires Verso to continue to perform the Services
beyond such thirty day period, Verso shall provide the Services for such
additional periods (but not beyond the date that is 90 days following the
Closing) for a fee of $25,000 for each additional thirty (30) day period. The
fees payable to Verso pursuant to the immediately preceding sentence shall be
paid in advance of each thirty day period for which Services are to be performed
hereunder. In addition to the fees described in the immediately preceding two
sentences, Purchaser will also pay to Verso $150 for each hour that Xxxx X'Xxxx,
in his capacity as an employee of Verso, works in connection with the transition
of the accounting database of the Business to the Purchaser's Great Plains
System; provided that, notwithstanding the foregoing in no event will Xxxx
X'Xxxx spend more than 20 hours on such project without the prior written
consent of Purchaser. Except as expressly set forth in this Section 6.10,
Purchaser shall have no obligation to make any payments to Verso in connection
with Verso providing the Services to Purchaser. Verso shall perform the Services
in a professional and workmanlike manner with at least the same frequency and
standards as the Services were performed during the ninety (90) day period prior
to the Closing Date. To the extent additional transition services (or an
extension of the foregoing Services) are requested by Purchaser, Verso and
Purchaser shall negotiate in good faith to reach a mutually satisfactory
arrangement with respect to the services to be provided and the time period and
cost thereof.
6.11 PROVO LEASE BANK ACCOUNT. Purchaser has created a separate bank
account (the "Provo Lease Bank Account") into which on or before the Closing
Purchaser shall deposit $500,000 (the "Provo Lease Funds"). Purchaser hereby
agrees that it will not use the Provo Lease Funds for any purpose other than to
make payments required by or otherwise pursuant to the Provo Lease on or after
January 1, 2006 as and when such payments are due. Purchaser (i) shall provide
Verso with written notice within 48 hours of each disbursement of Provo Lease
Funds from the Provo Lease Bank Account, which written notice shall specify the
amount of such disbursement and the recipient of such disbursement and (ii)
shall promptly provide Verso with a copy of each monthly bank statement received
by Purchaser for the Provo Lease Bank Account.
6.12 SELLER RECEIVED CASH. Verso hereby represents and warrants to
Purchaser that to its knowledge, as of the date hereof, the Seller Received Cash
is $141,562. Verso hereby agrees
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that at or promptly after Closing Verso or Seller will deliver to Purchaser all
of the Seller Received Cash free and clear of all Liens.
6.13 WEBCONNECT CONSUMER. Verso and Seller acknowledge and agree that,
after the Closing, they shall have no right, title or interest in or to the
WEBCONNECT and WEBCONNECT:CONSUMER trademarks and any trademarks similar
thereto, including any rights in U.S. Trademark Registration No. 2,797,908
(collectively, the "Webconnect Marks"). Verso and Seller shall not use the
Webconnect Marks in any manner after Closing. Purchaser shall deliver all source
code, documentation and other materials that it may have pertaining to
WEBCONNECT:CONSUMER 2.1 to Verso within thirty (30) days of Closing. Verso and
Seller agree to remove any Webconnect Marks from all copies of and documentation
and other materials for the WEBCONNECT:CONSUMER 2.1 software promptly after
receipt of such software.
ARTICLE 7
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF PURCHASERS
The obligation of Purchaser to complete the Closing is subject to
the fulfillment on or prior to the Closing Date of the following conditions, any
one or more of which may be waived in writing by Purchaser:
7.1 REPRESENTATIONS AND COVENANTS. The representations and warranties of
Seller and Verso contained in this Agreement which are qualified by materiality
shall be true and correct in all respects, and those which are not qualified as
to materiality shall be true and correct in all material respects, in each case,
on and as of the Closing Date, except to the extent that such representation or
warranty is made as of a particular date (in which case such representation or
warranty shall be true and correct as of such date). Seller and Verso shall have
performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by Seller
and Verso on or prior to the Closing Date. Seller shall have delivered to
Purchaser a certificate, dated the date of the Closing and signed by an officer
of Seller and Verso, to the foregoing effect.
7.2 SELLER'S REQUIRED CONSENTS. Seller shall have obtained the Seller's
Required Consents listed on Schedule 7.2 hereto (the "Closing Required
Consents") on terms reasonably satisfactory to Purchaser, and Purchaser shall
have been furnished with evidence reasonably satisfactory to it that the Closing
Required Consents have been obtained and remain in full force and effect.
7.3 OPINION OF COUNSEL TO SELLER AND VERSO. Purchaser shall have received
the opinion of Xxxxxx & Xxxxxx LLP, counsel to Seller and Verso, as of the
Closing Date, addressed to Purchaser, in form and substance reasonably
acceptable to Purchaser.
7.4 ADDITIONAL CLOSING DOCUMENTS OF SELLER. Seller shall have executed and
delivered to Purchaser the following documents, each dated as of the Closing
Date:
(a) the Xxxx of Sale;
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(b) the Assignment of Business Intellectual Property;
(c) the Instrument of Assumption; and
(d) such further instruments of sale, transfer, conveyance,
assignment or delivery covering the Assets or any part thereof as Purchaser may
reasonably require to assure the full and effective sale, transfer, conveyance,
assignment or delivery to it of the Assets (including the Permits), free and
clear of all Liens (including, if appropriate, UCC termination statements and
releases of mortgages).
7.5 MATERIAL ADVERSE EFFECT. Since September 30, 2004, there has occurred
no fact, event or circumstance which has, or could reasonably be expected to
have, a Material Adverse Effect.
7.6 NO CLAIMS. No claims shall be pending or, to the knowledge of
Purchaser or knowledge of Seller, threatened, before any Governmental Bodies to
restrain or prohibit, or to obtain damages or a discovery order in respect of,
this Agreement or the consummation of the Contemplated Transactions or which has
had or may have, in the reasonable judgment of Purchaser, a Material Adverse
Effect.
7.7 RELEASE OF LIENS AND GUARANTEES. Seller shall have obtained the
release of all Liens on the Assets and all guarantees made by Seller. At the
Closing, Seller shall provide or arrange to be provided to Purchaser evidence
demonstrating the release of such Liens and guarantees.
7.8 FIRPTA AFFIDAVIT. Purchaser shall have received an affidavit of an
officer of Seller sworn to under penalty of perjury, setting forth Seller's
address and Federal tax identification number and stating that Seller is not a
"foreign person" within the meaning of Section 1445 of the Code.
7.9 NTS LICENSE AGREEMENT. Purchaser and Verso shall have entered into a
license agreement in form and substance substantially as set forth in Exhibit D
attached hereto (the "NTS License Agreement"), and the NTS License Agreement
shall be in full force and effect as of the Closing.
7.10 RECIPROCAL RESELLER AGREEMENT. Purchaser and Verso shall have entered
into a reciprocal reseller agreement in form and substance substantially as set
forth in Exhibit E attached hereto (the "Reseller Agreement"), and the Reseller
Agreement shall be in full force and effect as of the Closing.
7.11 CALL CENTER SERVICES AGREEMENT. Purchaser and Verso shall have
entered into a call center services agreement in form and substance
substantially as set forth in Exhibit F attached hereto (the "Call Center
Services Agreement") and the Call Center Services Agreement shall be in full
force and effect as of the Closing.
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ARTICLE 8
CONDITIONS PRECEDENT TO THE OBLIGATION OF SELLER
The obligation of Seller to complete the Closing is subject, to the
fulfillment on or prior to the Closing Date of the following conditions, any one
or more of which may be waived in writing by Seller:
8.1 REPRESENTATIONS AND COVENANTS. The representations and warranties of
Purchaser contained in this Agreement shall be true and correct in all material
respects on and as of the Closing Date. Purchaser shall have performed and
complied in all material respects with all covenants and agreements required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date. Purchaser shall have delivered to Seller a certificate, dated the date of
the Closing and signed by an officer of Purchaser, to the foregoing effect.
8.2 INSTRUMENT OF ASSUMPTION. Purchaser shall have executed and delivered
to Seller (i) the Instrument of Assumption and (ii) the Instrument of
Assignment, Agreement and Consent relating to the Provo Lease, substantially in
the form attached as Exhibit G, which shall also have been executed and
delivered by the landlord of the Provo Lease and such landlord's lender, each as
identified therein.
8.3 DELIVERY OF THE CASH CONSIDERATION. Purchaser shall have delivered or
tendered delivery of the Cash Consideration to Seller in the manner and as set
forth in Section 2.1(b).
8.4 NTS LICENSE AGREEMENT. Purchaser and Verso shall have entered into the
NTS License Agreement, and the NTS License Agreement shall be in full force and
effect as of the Closing.
8.5 RECIPROCAL RESELLER AGREEMENT. Purchaser and Verso shall have entered
into the Reseller Agreement, and the Reseller Agreement shall be in full force
and effect as of the Closing.
8.6 CALL CENTER SERVICES AGREEMENT. Purchaser and Verso shall have entered
into the Call Center Services Agreement and the Call Center Services Agreement
shall be in full force and effect as of the Closing.
ARTICLE 9
POST-CLOSING COVENANTS AND AGREEMENTS
9.1 FURTHER ASSURANCES. At any time and from time to time after the
Closing, at Purchaser's request and without further consideration, Seller shall
execute and deliver, and/or Verso shall execute and deliver (or shall cause any
of its applicable affiliates to execute and deliver), such further documents,
and perform such further acts, as may be reasonably necessary in order to
effectively transfer and convey the Assets to Purchaser, on the terms herein
contained, and to otherwise comply with the terms of this Agreement and
consummate the Contemplated Transactions.
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9.2 CONSENT OF THIRD PARTIES. Nothing in this Agreement shall be construed
as an attempt or obligation to assign any contract, agreement, permit, license,
guaranty, warranty, franchise or claim included in the Assets which is by its
terms or by law nonassignable without the consent of the other party or parties
thereto, unless such consent shall have been given, or as to which all the
remedies for the enforcement thereof enjoyed by Seller would, as a matter of
law, pass to Purchaser as an incident of the assignments provided for by this
Agreement (any such contract, agreement, permit, license, guaranty, warranty,
franchise or claim, a "Non-Assignable Right"). In order, however, to provide
Purchaser the full realization and value of every Non-Assignable Right, Seller
agrees that on and after the Closing, it will, at the request and under the
direction of Purchaser, in the name of Seller or otherwise as Purchaser shall
specify, take all actions necessary or proper (a) to assure that the rights of
Seller under such Non-Assignable Rights shall be preserved for the benefit of
Purchaser and (b) to facilitate receipt of the consideration to be received by
Seller in and under every such Non-Assignable Rights, which consideration shall
be held for the benefit of, and shall be delivered to, Purchaser. From and after
the Closing, Seller shall use its commercially reasonable efforts (but without
any payment of money by Purchaser or Seller) to obtain the consent of the other
parties to any Non-Assignable Right for the assignment thereof to Purchaser as
Purchaser may request, and upon receipt of such consent, Seller shall take such
other actions pursuant to Section 9.1 hereof to assign such Non-Assignable Right
to Purchaser as Purchaser may request. Nothing in this Section 9.2 shall in any
way diminish (i) Seller's obligations under Section 6.3 or (ii) Purchaser's
obligation to pay, perform and discharge the Assumed Liabilities.
9.3 PROVISION OF DATA. Purchaser shall (i) for a period of three years
following the Closing Date, have, and Seller and Verso hereby grant Purchaser
for such period, reasonable access to those books, records and accounts,
including financial and Tax information, correspondence, production records,
employment records and other records of Seller and Verso to the extent that any
of the foregoing relates to the Business or the Assets or is otherwise needed by
Purchaser (x) in order to comply with its obligations under applicable
securities, Tax, environmental, employment or other laws and regulations or (y)
in order for Purchaser or any of its affiliates to obtain any debt or equity
financing (including, without limitation, if necessary, the conduct of a
financial audit of the Business).
9.4 ACCOUNTS RECEIVABLE PAYMENT AND COLLECTION. If any party hereto (or
any affiliate thereof) at any time receives any funds from any third party that
are properly payable to another party hereto (including, without limitation, any
payments with respect to the Accounts Receivable), the party hereto receiving
such funds shall promptly remit such funds to the party hereto entitled to such
funds. Purchaser hereby agrees that it will use commercially reasonable efforts
to collect the Accounts Receivable included in the Assets in a similar manner to
the reasonable past practices of the Business, and any amounts collected by an
account debtor shall be applied first to the Accounts Receivable unless
otherwise directed by such account debtor.
9.5 CONFIDENTIALITY. During the five year period beginning on the date
hereof, Seller agrees not to divulge, communicate, use to the detriment of
Purchaser or any of its affiliates, for Seller's, Verso's or any of their
respective affiliates' benefit or the benefit of any other person, firm,
corporation, association or other entity, or misuse in any way, in whole or in
part, any proprietary or confidential information, including, without
limitation, trade secrets related to the Business or the Assets, as they may
exist from time to time. Seller and Verso each acknowledge
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that the list of the customers of the Business as it may exist from time to
time, and the Business' proprietary information, including, without limitation,
its trade secrets, are valuable, special and unique assets of the Business and
are "confidential information".
9.6 NON-COMPETITION; NON-SOLICITATION.
(a) Seller and Verso each hereby covenant and agree that on and
after the Closing until the fifth anniversary of the Closing Date, they and
their respective affiliates (including, without limitation, any company or other
entity controlled by Seller or Verso (whether currently existing or hereafter
acquired or formed)) shall not, directly or indirectly, engage (whether as
principal, agent, partner, shareholder, or otherwise, whether alone or in
association with any other person, corporation or other entity) in any
transaction or otherwise involving the sale and/or installation of a TDM Prepaid
Application (the "Restricted Business"). Notwithstanding the foregoing, Verso
and its affiliates shall, to the extent that they make internal use of
Purchaser's TDM Prepaid Application, be permitted to engage in the Restricted
Business.
(b) Seller and Verso each hereby covenant and agree that on and
after the Closing until the fifth anniversary of the Closing Date, they and
their respective affiliates (including, without limitation, any company or other
entity controlled by Seller or Verso (whether currently existing or hereafter
acquired or formed)) shall not, directly or indirectly, (i) solicit or induce,
or attempt to solicit or induce, any Seller Employee who accepts employment with
Purchaser to leave the employ of Purchaser or any of its affiliates for any
reason whatsoever, (ii) without the prior written consent of Purchaser, employ
any Seller Employee who does not accept employment with Purchaser or (iii)
solicit or induce, or attempt to solicit or induce, any customer of the Business
to purchase any goods or products with respect to the Restricted Business, or
otherwise impede or interfere in any way with any customer relationship of any
of the Business, Purchaser or any of their respective affiliates; provided
however that neither Seller nor Verso will be deemed to have violated this
clause merely as a result of publishing a solicitation of general circulation.
(c) Seller and Verso each acknowledge that their covenants contained
in Sections 9.6(a) and 9.6(b) hereof are of a special, unique, unusual and
extraordinary character, which give them peculiar value, the loss of which
cannot be reasonably or adequately compensated in an action at law, and that, in
the event there is a breach thereof by Seller, Verso or any of their respective
affiliates, Purchaser will suffer irreparable harm, the amount of which will be
impossible to ascertain. Accordingly, Purchaser, shall be entitled, if either so
elects, to institute and prosecute proceedings in any court of competent
jurisdiction, either at law or in equity, to obtain damages for any breach or to
enforce specific performance of the provisions or to enjoin Seller, Verso or any
of their respective affiliates from committing any act in breach of any covenant
contained in Sections 9.6(a) and 9.6(b) of this Agreement. If Purchaser is
obliged to resort to the courts for the enforcement of any of the covenants
contained in this Section 9.6, each such covenant shall be extended for a period
of time equal to the period of such breach, if any, which extension shall
commence on the later of (i) the date on which the original (unextended) term of
such covenant is scheduled to terminate or (ii) the date of the final court
order (without further right of appeal) enforcing such covenant.
29
(d) Notwithstanding Section 9.6(a) hereof, nothing contained herein
shall prohibit Seller, Verso or any of their affiliates from owning not in
excess of 2% in the aggregate of the capital stock of any corporation if such
stock is publicly traded and listed on any national or regional stock exchange
or reported on an automated quotation system of a registered securities
association.
(e) If, at the time of enforcement of this Section 9.6, a court
shall hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law.
ARTICLE 10
SURVIVAL OF REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS
All representations, warranties, covenants and agreements in this
Agreement shall survive the execution and delivery hereof and the Closing
hereunder. All representations and warranties contained in this Agreement shall
terminate and expire eighteen months after the Closing Date, except for (i)
those representations and warranties in Sections 4.1, 4.2, 4.3, 4.10, 4.29,
4.30, 5.1, 5.2, 5.3 and 5.4 and the first sentence of Section 4.20 (which
representations and warranties shall survive without any limitation); (ii) those
representations and warranties in Sections 4.7, 4.11 and 4.22 (which
representations and warranties shall survive until 90 days after claims in
respect thereof are barred by the respective applicable statutes of limitation);
and (iii) any representation or warranty breached as a result of fraudulent or
intentional conduct (which representations and warranties shall survive without
any limitation). In the event any claim for indemnification under Sections 11.1
or 11.2, as the case may be, shall have been asserted within the applicable
survival period, the representation, warranty, covenant or agreement that is the
subject of such indemnification claim shall survive until such time as such
claim is finally resolved. No claim may be asserted for breach of any
representation or warranty after the expiration of any applicable time period
referred to above.
ARTICLE 11
INDEMNIFICATION
11.1 OBLIGATION OF SELLER TO INDEMNIFY. Subject to the limitations
contained in Article 10 and this Article 11, Seller and Verso jointly and
severally agree to indemnify, defend and hold harmless Purchaser and its
directors, officers, employees, affiliates, successors and assigns
(collectively, the "Purchaser Indemnitees") from and against all losses,
damages, deficiencies, demands, claims, actions, judgments or causes of action,
assessments, costs, expenses or other liabilities (including, without
limitation, interest, penalties and reasonable fees, expenses and disbursements
of attorneys, experts and consultants) incurred by the indemnified party in any
action or proceeding between the indemnifying party and the indemnified party
(including, without limitation, any action to enforce this Section 11.1) or
between the indemnified party and any third party, or otherwise) ("Losses")
based upon, arising out of or
30
otherwise in respect of: (a) any breach of any representation or warranty of
Seller or Verso contained in this Agreement or in any Documents delivered by or
on behalf of Seller or Verso pursuant to this Agreement; (b) any breach of any
covenant or agreement of Seller or Verso contained in this Agreement or in any
Document delivered by or on behalf of Seller or Verso pursuant to this
Agreement; (c) any violation of or liability arising under any applicable bulk
sales law in connection with the transfer of the Assets; or (d) any Excluded
Liability including, without limitation, any Pre-Closing Environmental Liability
(whether or not technically constituting "liabilities and/or obligations of
Seller" for the purposes of Section 1.5); provided that solely with respect to
Losses arising under clause (a) of this Section 11.1 (other than as a result of
a breach of the representations and warranties contained in Sections 4.1, 4.2,
4.3, 4.7, 4.10, 4.11, 4.29 and 4.30 and the first sentence of Section 4.20),
Seller shall be required to indemnify the Purchaser Indemnitees only to the
extent that the aggregate amount of all Losses arising under clause (a) of this
Section 11.1 exceeds $100,000 (the "Basket Amount"). With respect to Losses
arising under clause (a) of this Section 11.1 (other than as a result of a
breach of the representations and warranties contained in Sections 4.1, 4.2,
4.3, 4.7, 4.10, 4.11, 4.29, 4.30 and the first sentence of Section 4.20), the
Purchaser Indemnitees shall be entitled to recover no more, in the aggregate,
than $2,500,000 (the "Cap Amount"). With respect to any claim of indemnification
related to any breach of Sections 4.4 or 4.5 (the "Financial Statements
Representations"), the amount of any recovery by the Purchaser Indemnitees for
indemnification pursuant to clause (a) of this Section 11.1 as a result of any
breach of any Financial Statements Representation, shall be reduced by any
Balance Sheet Gains (as hereinafter defined). Upon any such claim by a Purchaser
Indemnitee for recovery for any breach of any Financial Statements
Representation, or upon the reasonable request of Verso after a claim has been
made by a Purchaser Indemnitee hereunder for any breach of any Financial
Statements Representation, Purchaser shall deliver to Verso a report identifying
Balance Sheet Gains then known to Purchaser or will represent in writing to
Verso that there are no Balance Sheet Gains then known to Purchaser. For
purposes of this Agreement, the term "Balance Sheet Gains" means any realization
by Purchaser with respect to any current asset of the Business in excess of its
value as reflected on the balance sheet included in the Financial Statements for
the fiscal year ended December 31, 2004 (as adjusted to account for any ordinary
course changes thereto through the Closing Date), to the extent that such
current asset is an Asset hereunder, or any positive realization by Purchaser
with respect to any current liability of the Business reflected on the balance
sheet included in the Financial Statements for the fiscal year ended December
31, 2004 (as adjusted to account for any ordinary course changes thereto through
the Closing Date) (in that the Purchaser is actually responsible for any amount
less than that reflected thereon), to the extent that such current liability is
a Closing Date Operating Current Liability hereunder.
11.2 OBLIGATION OF PURCHASER TO INDEMNIFY. Subject to the limitations
contained in Article 10, Purchaser agrees to indemnify, defend and hold harmless
Seller and Verso and their respective directors, officers, affiliates,
successors and assigns from and against any Losses based upon, arising out of or
otherwise in respect of: (a) any breach of any representation, warranty,
covenant or agreement of Purchaser contained in this Agreement or in any
Documents delivered by or on behalf of Purchaser pursuant to this Agreement; (b)
any Assumed Liability; (c) all Losses arising solely from the operation of the
Business by Purchaser after the Closing; and (d) any Taxes attributable to the
operations of Purchaser after the Closing; provided that, as a point of
clarification, notwithstanding anything contained in this Section 11.2 to the
contrary, in no event will Purchaser have any responsibility for any Excluded
Liabilities. With respect to
31
Losses arising under clause (a) of this Section 11.2 (other than as a result of
a breach of the representations and warranties contained in Sections 5.1, 5.2,
5.3 and 5.4), Seller shall be entitled to recover no more, in the aggregate,
than the Cap Amount.
11.3 NOTICE AND OPPORTUNITY TO DEFEND.
(a) The party making a claim under this Article 11 is referred to as
the "Indemnitee," and the party against whom such claims are asserted under this
Article 11 is referred to as the "Indemnifying Party." All claims by any
Indemnitee under this Article 11 in respect of a third party claim shall be
asserted and resolved as follows: promptly after receipt by an Indemnitee of
notice of any demand, claim or circumstances from any third party which, with
the lapse of time, would or is reasonably likely to give rise to a claim or the
commencement (or threatened commencement) of any action, proceeding or
investigation (an "Asserted Liability") that is reasonably likely to result in a
Loss, the Indemnitee shall give notice thereof (the "Claims Notice") to the
Indemnifying Party even if as of such date the Basket Amount has not been
reached. The Claims Notice shall describe the Asserted Liability in reasonable
detail, and shall indicate the amount (estimated, if necessary and to the extent
feasible) of the Loss that has been or is reasonably likely to be suffered by
the Indemnitee. The failure by the Indemnitee to give any such Claims Notice in
a prompt manner shall not relieve the Indemnifying Party of any indemnification
obligation hereunder, except and solely to the extent that the Indemnifying
Party is materially prejudiced thereby.
(b) Subject to Section 11.3(c), the Indemnifying Party may elect to
defend, at its own expense and by its own counsel (which counsel shall be
reasonably acceptable to the Indemnitee), any Asserted Liability. If the
Indemnifying Party elects to defend such Asserted Liability, it shall promptly
(but in any event within ten days) notify the Indemnitee of its intent to do so,
and the Indemnitee shall cooperate, at the expense of the Indemnifying Party, in
the defense against such Asserted Liability. Notwithstanding the foregoing,
during the interim period, the Indemnitee may take such reasonable actions as it
deems necessary to preserve any and all rights with respect to such claim,
without such actions being construed as a waiver of the Indemnitee's rights to
defense and indemnification pursuant hereto. If the Indemnifying Party elects to
assume the defense, the Indemnifying Party shall keep the Indemnitee informed as
to the status of such matter and shall promptly send copies of all pleadings and
written correspondence to the Indemnitee. If the Indemnifying Party elects not
to defend the Asserted Liability, fails to notify the Indemnitee of its election
as herein provided, assumes the defense but thereafter fails to defend the
matter or contests its obligation to indemnify under this Agreement, the
Indemnitee may pay or defend such Asserted Liability, at the Indemnifying
Party's expense, on such terms as the Indemnitee may deem appropriate. Subject
to the foregoing, neither the Indemnifying Party nor the Indemnitee may settle
any claim over the objection of the other; provided, however, consent to
settlement shall not be unreasonably withheld or delayed. In any event, the
Indemnitee and the Indemnifying Party may participate, at their own expense, in
the defense of such Asserted Liability; provided, however, if the defendants in
any action or proceeding shall include both an Indemnitee and the Indemnifying
Party and such Indemnitee shall have reasonably concluded that counsel selected
by the Indemnifying Party has a conflict of interest, such Indemnitee shall have
the right to select separate counsel to participate in the defense of such
claim, at the expense of the Indemnifying Party. If the Indemnifying Party
chooses to defend any claim, subject to appropriate
32
confidentiality restrictions, the Indemnitee shall make available to the
Indemnifying Party any books, records or other documents within its control that
are necessary or appropriate for such defense.
(c) Notwithstanding anything to the contrary in Section 11.3(b), the
Indemnitee shall have the exclusive right at its option to manage and control
all Remedial Actions with respect to which the Indemnitee has made a claim for
indemnification pursuant to Section 11.1 hereof. The Indemnitee shall keep the
Indemnifying Party fully informed of the progress of such actions. The
Indemnifying Party shall be obligated to indemnify the Indemnitee for all
Environmental Compliance Costs resulting from such actions. The Indemnitee shall
undertake to complete any Remedial Actions for which it seeks indemnification in
a manner in which a prudent business person acting in a commercially reasonable
manner, seeking to mitigate such Environmental Compliance Costs to the extent
reasonably possible, would do so.
11.4 CHARACTERIZATION OF INDEMNITY PAYMENTS. The parties hereto agree, for
Tax purposes only, to treat any Indemnity Payments made pursuant to this Article
11 as an adjustment to the Purchase Price.
11.5 EXCLUSIVITY. From and after the Closing, except in the case of fraud
and except that a party shall be entitled to equitable remedies (other than
rescission) in connection with a breach by the other party of a covenant, the
right of each party hereto to assert indemnification claims and receive
indemnification payments pursuant to this Article 11 shall be the sole and
exclusive right and remedy exercisable by such party with respect to any breach
by such other party hereto of any representation, warranty, covenant or
agreement contained in this Agreement.
11.6 NO CONSEQUENTIAL DAMAGES. Notwithstanding anything to the contrary
contained herein, no Indemnifying Party shall be liable or otherwise responsible
to an Indemnified Party for consequential damages or for diminution in value
that arises out of or relates to this Agreement or the performance or breach
hereof or any liability retained or assumed hereunder.
11.7 NET OF INSURANCE. The amount of any amounts payable to any Purchaser
Indemnitees pursuant to this Article 11 for any Loss will be determined net of
any amounts recovered by such Purchaser Indemnitees under insurance policies
with respect to such Loss.
11.8 RELIANCE ON THE MANAGEMENT GROUP. The Purchaser hereby acknowledges
and agrees that the representations and warranties of the Seller set forth in
Article 4 and the schedules attached hereto with respect to such representations
and warranties are based on information furnished by Xxxx X. Xxxx, Xxxx X.
Xxxxx, Xxxxx X. Xxxxxxxxx or Xxxxxxxx X. Xxxxxx (the "Management Group"). The
Purchaser agrees that (A) it shall not be entitled to: (i) make any claim for
breach of any of representation or warranty of the Seller contained in Article 4
or in any closing certificate delivered pursuant hereto or (ii) attempt to
enforce any indemnification right pursuant to clause (a) of Section 11.1, in
each case, based on a breach of any representation or warranty by the Seller to
the extent such breach was actually known by a member of the Management Group as
of the Closing Date and such member of the Management Group failed to disclose
such breach of the applicable representation or warranty to Verso prior to the
Closing. Notwithstanding anything contained herein to the contrary, the Seller
and Verso hereby
33
acknowledge and agree that nothing contained in this Section 11.8 shall (x)
result in the Purchaser having any liability or obligation with respect to any
Excluded Liabilities or (y) result in any additional liabilities or obligations
being included in the Assumed Liabilities.
ARTICLE 12
MISCELLANEOUS
12.1 CERTAIN DEFINITIONS. As used in this Agreement, the following terms
have the following meanings:
"Accounts Receivable" has the meaning set forth in Section 1.2(ii).
"Additional Operating Current Liabilities" means any and all current
liabilities of the Business incurred by the Seller during the period beginning
January 1, 2005 and ending as of the Closing, and solely of the type included in
the December Operating Current Liabilities as calculated in the same manner and
on the same basis as the December Operating Current Liabilities, but only to the
extent that such current liabilities of the Business are incurred in the
ordinary course of business, consistent with past practices.
"affiliate" (whether or not capitalized) means, with respect to any
person, any other person controlling, controlled by or under common control
with, such person.
"Agreement" has the meaning set forth in the recitals.
"Asserted Liability" has the meaning set forth in Section 11.3(a).
"Assets" has the meaning set forth in Section 1.2.
"Assignment of Intellectual Property" has the meaning set forth in
Section 1.2.
"Assumed Contracts" has the meaning set forth in Section 1.4.
"Assumed Liabilities" has the meaning set forth in Section 1.4.
"Balance Sheet Date" has the meaning set forth in Section 4.6.
"Balance Sheet Gains" has the meaning set forth in Section 11.1.
"Basket Amount" has the meaning set forth in Section 11.1.
"Xxxx of Sale" has the meaning set forth in Section 1.2.
"Business" means the business conducted by Seller, including,
without limitation, providing software and hardware for switching, billing,
provisioning and management solutions for the telecommunications and related
industries.
"Business Contracts" has the meaning set forth in Section 1.2(i).
34
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in the State of New York are authorized or
required by law or executive order to close.
"Business Insurance Policies" has the meaning set forth in Section
4.24.
"Business Intellectual Property" has the meaning set forth in
Section 1.2(x).
"Business Products" has the meaning set forth in Section 4.12.
"Business Software" has the meaning set forth in Section
4.19(b)(xiii).
"Call Center Services Agreement" has the meaning set forth in
Section 7.11.
"Cap Amount" has the meaning set forth in Section 11.1.
"Cash Consideration" has the meaning set forth in Section 2.1(a).
"Claims" has the meaning set forth in Section 4.12.
"Claims Notice" has the meaning set forth in Section 11.3(a).
"Closing" has the meaning set forth in Article 3.
"Closing Date" has the meaning set forth in Article 3.
"Closing Date Operating Current Liabilities" means all Operating
Current Liabilities but only to the extent such Operating Current Liabilities
have not been satisfied on or prior to the Closing or are not included in the
definition of Excluded Liabilities (including, without limitation, the items
described in clause (vii) of the definition of Excluded Liabilities); provided
that, notwithstanding anything contained herein to the contrary, in no event
will the Closing Date Operating Current Liabilities include (i) any amounts
payable for fees or expenses incurred by the Seller in respect to this
Agreement, the agreements contemplated hereby and/or the transactions
contemplated hereby and thereby or otherwise in connection with the Seller's
sale of the Business, including, all amounts payable to Xxxxxx & Xxxxxx LLP or
(ii) any amounts payable to any Affiliate of the Seller (including Verso).
Notwithstanding anything contained herein to the contrary, the Seller hereby
acknowledges and agrees that all of the liabilities and obligations described in
the immediately preceding proviso are "Excluded Liabilities" for all purposes of
this Agreement.
"Closing Required Consents" has the meaning set forth in Section
7.2.
"COBRA" means Part 6 of Subtitle B of Title I of ERISA, Section
4980B of the Code and any similar state law.
"Code" means the Internal Revenue Code of 1986, as amended.
35
"Condition of the Business" means the business, properties, assets
(including the Assets), liabilities (including the Assumed Liabilities) and
condition (financial or otherwise) of the Business.
"Contemplated Transactions" has the meaning set forth in the
recitals.
"December Operating Current Liabilities" means the current
liabilities of the Business as of December 31, 2004 set forth on Schedule 12.1
attached hereto.
"Documents" means documents, contracts, instruments, certificates,
notices, consents, affidavits, letters, telegrams, telexes, statements,
schedules (including Schedules to this Agreement), exhibits (including Exhibits
to this Agreement) and any other papers whatsoever.
"Employee Benefit Plan" means any employee benefit plan (as such
term is defined in Section 3(3) of ERISA) and any other material employee
benefit plan, program or arrangement that is maintained, sponsored or
contributed to by Seller or any ERISA Affiliate for the benefit of any Seller
Employee.
"Employee Pension Benefit Plan" has the meaning set forth in Section
3(2) of ERISA.
"Employee Welfare Benefit Plan" has the meaning set forth in Section
3(1) of ERISA.
"Environment" means navigable waters, waters of the contiguous zone,
ocean waters, natural resources, surface waters, ground water, drinking water
supply, land surface, subsurface strata, air, and plant and animal life on
earth.
"Environmental Claim" means any oral or written notice, request for
information, report, or other information from any private party or Governmental
Body regarding any actual or alleged violation of Environmental Laws, or any
liabilities or potential liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), including any investigatory, remedial or corrective
obligations, arising under Environmental Laws or the common law relating to
environmental matters.
"Environmental Compliance Costs" means any expenditures, costs,
assessments or expenses (including, without limitation, any expenditures, costs,
assessments or expenses in connection with the conduct of any Remedial Action,
as well as reasonable fees, disbursements and expenses of attorneys, experts,
personnel and consultants), necessary to cause the Business (or any portion
thereof) or any of the Assets to be in compliance with any and all requirements,
as in effect at the Closing Date, of Environmental Laws, principles of common
law concerning pollution, protection of the Environment or health and safety, or
Permits issued pursuant to Environmental Laws; provided, however, that
Environmental Compliance Costs do not include expenditures, costs, assessments
or expenses necessary in connection with normal maintenance of such real
property, assets, equipment or facilities or the replacement of equipment in the
normal course of events due to ordinary wear and tear.
36
"Environmental Laws" means all Laws and Orders and all common law
relating to pollution, protection of the Environment, public or worker health
and safety, or the emission, discharge, release or threatened release of
Hazardous Substances into the Environment or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 et seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601
et seq., the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et
seq., the Clean Air Act, 42 U.S.C. Section 7401 et seq., the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Section 121 et seq., the
Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq., the Asbestos
Hazard Emergency Response Act, 15 U.S.C. Section 2601 et seq., the Safe Drinking
Water Act, 42 U.S.C. Section 300f et seq., the Oil Pollution Act of 1990 and
analogous state acts, each as amended and as now, previously, or hereafter in
effect.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" means each person (as defined in Section 3(9) of
ERISA) that together with Seller would be deemed a "single employer" within the
meaning of Section 414 of the Code.
"Excluded Assets" has the meaning set forth in Section 1.3.
"Excluded Liabilities" has the meaning set forth in Section 1.5(b).
"Financial Statements" has the meaning set forth in Section 4.4(a).
"Financing Statements" has the meaning set forth in Section 4.31.
"Financial Statements Representations" has the meaning set forth in
Section 11.1.
"GAAP" means generally accepted accounting principles in the United
States.
"Hazardous Substance" means any toxic waste, pollutant, hazardous
substance, toxic substance, hazardous waste, special waste, petroleum or
petroleum-derived substance or waste, radioactive substance or waste, or any
other substance regulated under or as to which liability or standards of conduct
are imposed by any Environmental Law.
"Indemnitee" has the meaning set forth in Section 11.3(a).
"Indemnifying Party" has the meaning set forth in Section 11.3(a).
"Instrument of Assumption" has the meaning set forth in Section 1.4.
"Intellectual Property" means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto and all patents, patent applications and patent disclosures, together
with all reissuances, continuations, continuations-in-part, revisions,
extensions and reexaminations thereof; (b) all trademarks,
37
service marks, trade dress, logos, trade names and corporate names, together
with all translations, adaptations, derivations and combinations thereof and
including all goodwill associated therewith and all applications, registrations
and renewals in connection therewith; (c) all copyrightable works, all
copyrights and all applications, registrations and renewals in connection
therewith; (d) all mask works and all applications, registrations and renewals
in connection therewith; (e) all trade secrets and confidential business
information (including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques, technical
data, designs, drawings, specifications, network configurations and architecture
protocols, customer and supplier lists, pricing and cost information and
business and marketing plans and proposals); (f) all computer software, software
code (whether in object or source code form), subroutines and user interfaces
(including, without limitation, data and related documentation) (collectively,
"Software"); (g) all other proprietary rights; (h) all copies and tangible
embodiments in any of the foregoing (in whatever form or medium); and (i) all
licenses, sublicenses and other assignments or permissions related to the
property described in (a) - (h).
"Inventory" has the meaning set forth in Section 1.2(vi).
"IRS" means the Internal Revenue Service.
"knowledge of Seller" (whether or not capitalized) means the actual
knowledge of Xxx Xxxxx, Xxxxxx X. Xxxx or Xxxxxx X. Xxxxxxx based solely on
their conscious awareness or a certificate or other document delivered to them
from one or more of the senior officers of Seller.
"Laws" has the meaning set forth in Section 4.8.
"Leased Real Property" has the meaning set forth in Section 4.15.
"License Agreements" has the meaning set forth in Section
4.19(a)(v).
"Lien" means any lien, pledge, mortgage, security interest, claim,
lease, license, charge, conditional sale agreement, title exception, option,
right of first refusal, easement, servitude, transfer restriction or
encumbrance.
"Losses" has the meaning set forth in Section 11.1.
"Management Group" has the meaning set forth in Section 11.8.
"Material Adverse Effect" means a material adverse effect on the
business, results of operation or condition (financial or other) of Seller,
taken as a whole, or the Business, other than any effect (i) occurring as a
result of general economic conditions, or conditions generally affecting persons
in the industries in which Seller participate or (ii) arising from this
Agreement and the transactions contemplated hereby.
"Material Contracts" has the meaning set forth in Section 4.13.
"Multiemployer Plan" has the meaning set forth in Section 3(37) of
ERISA.
38
"NACT Acquisition Europe" has the meaning set forth in Section 6.9.
"Non-Assignable Right" has the meaning set forth in Section 9.2.
"NTS License Agreement" has the meaning set forth in Section 7.9.
"Operating Current Liabilities" means the December Operating Current
Liabilities and the Additional Operating Current Liabilities.
"Orders" has the meaning set forth in Section 4.8.
"Permits" has the meaning set forth in Section 4.8.
"Permitted Liens" mean (a) minor imperfections of title that do not
detract from the value or impair the use of any Asset, (b) liens for Taxes not
yet due or which are being contested in good faith by appropriate action, and
(c) statutory liens of mechanics, materialmen, warehouse men or suppliers and
similar liens arising by operation of law in the ordinary course of business for
sums not yet due or being contested in good faith.
"person" (whether or not capitalized) means any individual,
corporation, partnership, firm, joint venture, limited liability company,
association, joint-stock company, trust, unincorporated organization,
Governmental Body or other entity.
"Pre-Closing Environmental Liabilities" has the meaning set forth in
Section 1.5(b)(iii).
"Prepayments and Deposits" has the meaning set forth in Section
1.2(viii).
"Prohibited Transaction" has the meaning set forth in Section 406 of
ERISA and Section 4975 of the Code.
"property" or "properties" (whether or not capitalized) means real,
personal or mixed property, tangible or intangible.
"Provo Lease" means that certain Lease Agreement, dated December 30,
1999 between Xxxxxxx Holdings, L.L.C. (as successor in interest to
Xxxxxxx-Riverwood Company, L.L.C.) and Seller regarding the Lease of an office
building located at 191 West 0000 Xxxxx Xxxxxx, Xxxxx, Xxxx.
"Provo Lease Bank Account" has the meaning set forth in Section
6.11.
"Provo Lease Funds" has the meaning set forth in Section 6.11.
"Purchase Price" has the meaning set forth in Section 2.1.
"Purchaser Indemnitees" has the meaning set forth in Section 11.1.
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
or through the Environment or into,
39
through or out of any property, including the movement of Hazardous Substances
through or in the air, soil, surface water, ground water or property.
"Remedial Action" means all actions reasonably necessary to comply
with, or discharge any obligation under, Environmental Laws to: (a) clean up,
remove, or treat, Hazardous Substances in the Environment; (b) prevent or
control the Release of Hazardous Substances so that they do not migrate or
endanger or threaten to endanger public health or welfare or the Environment; or
(c) perform remedial studies, investigations, restoration and post-remedial
studies, investigations and monitoring on, about or in any real property.
"Reseller Agreement" has the meaning set forth in Section 7.10.
"Restricted Business" has the meaning set forth in Section 9.6.
"Seller Employee" means (a) each individual listed on Schedule 1.6,
(b) any employee recruited to replace any of the individuals listed on Schedule
1.6 after the entering into of this Agreement but before the Closing, and (c)
any other individual recruited into the Business before the Closing with the
express written approval of Purchaser (unless in the case of any individual
falling within (a), (b) or (c) that individual ceases to be employed by Seller
before the Closing).
"Seller Received Cash" has the meaning set forth in Section
1.2(xii).
"Seller's Required Consents" has the meaning set forth in Section
4.10.
"Services" has the meaning set forth in Section 6.10.
"Systems" has the meaning set forth in Section 4.19(b)(xvi).
"Tangible Property" has the meaning set forth in Section 1.2(vii).
"Tax" means any tax of any kind, including, without limitation, any
duty, contribution, impost, withholding tax, levy, franchise tax, net worth tax,
sales tax, income tax, corporation tax, capital gains tax, use tax, payroll tax,
property tax or charge in the nature of tax, whether domestic or foreign, and
any fine, penalty, surcharge or interest connected therewith.
"Tax Return" means all tax returns, reports, forms, and other such
documents.
"Taxation Authority" means the Internal Revenue Service or such
other authority whatsoever competent to impose and Tax whether in the United
States or elsewhere.
"TDM Prepaid Application" means installations utilizing Class 4
tandem switching systems that incorporate integrated or host-based prepaid
calling applications and not utilizing any internet protocol prepaid
applications.
"Transferred Employees" has the meaning set forth in Section 1.6(a).
'U.K. Assets" has the meaning set forth in Section 4.32.
40
"Webconnect Marks" has the meaning set forth in Section 6.13.
12.2 NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, sent by
facsimile transmission or sent by certified, registered or express mail, postage
prepaid. Any such notice shall be deemed given when so delivered personally or
sent by facsimile transmission or, if mailed, five days after the date of
deposit in the United States mail, as follows:
if to Purchaser, to:
c/o Kinderhook Industries, LLC
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx Xxxxxxxx
Facsimile: (000) 000-0000
and with a copy (which shall not constitute notice) to:
Xxxxxxxx & Xxxxx LLP
Citigroup Center
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: W. Xxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
if to Seller or Verso to:
c/o Verso Technologies, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx & Xxxxxx LLP
2700 International Tower
000 Xxxxxxxxx Xxxxxx XX
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Hussle, Esq.
Facsimile: (000) 000-0000
Any party may by notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
12.3 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
(including the Exhibits and Schedules hereto) and any collateral agreements
executed in connection with
41
the consummation of the Contemplated Transactions contain the entire agreement
among the parties hereto with respect to the transactions contemplated hereby
and supersede all prior agreements, written or oral, with respect thereto. This
Agreement is not intended to, and does not, confer upon any person other than
the parties hereto any rights or remedies hereunder.
12.4 SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
damages would occur in the event that any provision in this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity that may be available.
12.5 WAIVERS AND AMENDMENTS; NON-CONTRACTUAL REMEDIES. This Agreement may
be amended, superseded, canceled, renewed or extended, only by a written
instrument signed by Seller and Purchaser or, in the case of a waiver, only by a
written instrument signed by the party waiving compliance. No delay on the part
of any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of any party of any such
right, power or privilege, nor any single or partial exercise of any such right,
power or privilege, preclude any further exercise thereof or the exercise of any
other such right, power or privilege. The rights and remedies herein provided
are cumulative and are not exclusive of any rights or remedies that any party
may otherwise have at law or in equity.
12.6 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
heirs, permitted assigns and legal representatives. This Agreement is not
assignable except by operation of law, except that Purchaser, after written
notice to Seller, may assign its rights hereunder to any of its affiliates, to
any successor to all or substantially all of its business or assets or to any
bank or other financial institution that may provide financing to Purchaser;
provided, that any such assignment shall not relieve Purchaser of any of its
obligation or liabilities hereunder.
12.7 COUNTERPARTS AND FACSIMILE. This Agreement and any amendment,
supplement, restatement, or termination of any provision of this Agreement, may
be executed by the parties hereto in separate counterparts, each of which when
so executed and delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument. Each counterpart may consist of
a number of copies hereof each signed by less than all, but together signed by
all of the parties hereto. A party's transmission by facsimile of a copy of this
Agreement duly executed by that party shall constitute effective delivery by
that party of an executed copy of this Agreement to the party receiving the
transmission. A party that has delivered this Agreement by facsimile shall
forthwith deliver an originally executed copy to the other party or parties.
12.8 EXHIBITS AND SCHEDULES. The Exhibits and Schedules hereto are a part
of this Agreement as if fully set forth herein. All references herein to
Sections, Exhibits and Schedules shall be deemed references to such parts of
this Agreement, unless the context shall otherwise require.
12.9 HEADINGS. The headings in this Agreement are for reference only, and
shall not affect the interpretation of this Agreement.
42
12.10 USAGE. All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.
All terms defined in this Agreement in their singular or plural forms have
correlative meanings when used herein in their plural or singular forms,
respectively. The words "hereof," "herein," "hereby" and "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. Unless otherwise
expressly provided herein, any statute referred to herein means such statute as
from time to time amended, modified or supplemented.
12.11 INTERPRETATION. The parties hereto acknowledge and agree that (a)
each party hereto and its counsel reviewed and negotiated the terms and
provisions of this Agreement and have contributed to its revision; (b) the rule
of construction to the effect that any ambiguities are resolved against the
drafting party shall not be employed in the interpretation of this Agreement;
and (c) the terms and provisions of this Agreement shall be construed fairly as
to all parties, regardless of which party was generally responsible for the
preparation of this Agreement.
12.12 CURRENCY. All references to currency or dollar amounts in this
Agreement are to lawful currency of the United States of America.
12.13 SEVERABILITY. Any provision of this Agreement which is invalid or
unenforceable shall not affect any other provision and shall be deemed to be
severable.
12.14 FEES; EXPENSES AND CERTAIN TAXES. Except as expressly provided
herein, whether or not the Closing occurs, all fees and expenses incurred in
connection with this Agreement and the transactions contemplated hereby,
including the fees and disbursements of counsel, financial advisors and
accountants shall be paid by the party hereto incurring such fees and expenses.
Seller shall be solely responsible for all sales, transfer, use and other
similar type Taxes that arise from the sale of the Assets to Purchaser.
12.15 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER
BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE ACTIONS OF THE PARTIES HERETO IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
12.16 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY
CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR
ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Asset Purchase
Agreement as of the date first above written.
NACT ACQUISITION, INC.
By: /s/ Xxxxxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxxxxx X. Xxxxxxxx
Title: Vice President
NACT TELECOMMUNICATIONS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
NACT LIMITED
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Director
VERSO TECHNOLOGIES INC.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President and
Chief Financial Officer
