EXHIBIT 10.11
ASSET PURCHASE AGREEMENT
BETWEEN
NEW WEST ACQUISITION CORP.
NEW WEST COMMUNICATIONS, INC.
AND
XXXXX XXXXX
DATED AS OF SEPTEMBER 30, 1996
TABLE OF CONTENTS
PAGE
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ARTICLE I - DEFINITIONS.................................................... 1
1.1 DEFINITIONS................................................. 1
1.2 INTERPRETATION.............................................. 7
ARTICLE II - SALE AND PURCHASE OF ACQUIRED ASSETS; ASSUMPTION OF
ASSUMED OBLIGATIONS......................................... 8
2.1 ACQUIRED ASSETS............................................. 8
2.2 ASSIGNMENT OF CONTRACTS, LEASES AND OTHER ASSETS............ 9
2.3 EXCLUDED ASSETS............................................. 10
2.4 ASSUMED OBLIGATIONS......................................... 11
2.5 NO OTHER LIABILITIES ASSUMED................................ 11
ARTICLE III - PURCHASE PRICE AND PAYMENT................................... 11
3.1 PAYMENT OF PURCHASE PRICE................................... 11
3.2 ALLOCATION OF CONSIDERATION................................. 13
3.3 BULK SALES LAWS............................................. 13
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLING
PARTIES..................................................... 13
4.1 DUE INCORPORATION, ETC...................................... 13
4.2 OWNERSHIP OF SELLER......................................... 14
4.3 DUE AUTHORIZATION........................................... 14
4.4 CONSENTS AND APPROVALS; NO CONFLICTS, ETC................... 14
4.5 FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES............ 15
4.6 NO ADVERSE EFFECTS OR CHANGES............................... 15
4.7 FUTURE RELATIONSHIPS........................................ 17
4.8 TITLE TO PROPERTIES......................................... 18
4.9 CONDITION AND SUFFICIENCY OF ASSETS......................... 18
4.10 REAL PROPERTY............................................... 18
4.11 EQUIPMENT AND VEHICLES...................................... 19
4.12 INVENTORIES................................................. 19
4.13 ACCOUNTS RECEIVABLE......................................... 20
4.14 INTELLECTUAL PROPERTY....................................... 20
4.15 CONTRACTS................................................... 20
4.16 PERMITS..................................................... 22
4.17 INSURANCE................................................... 22
4.18 EMPLOYEE BENEFIT PLANS...................................... 22
4.19 EMPLOYMENT AND LABOR MATTERS................................ 23
4.20 CAPITAL IMPROVEMENTS........................................ 23
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4.21 TAXES....................................................... 23
4.22 NO DEFAULTS OR VIOLATIONS................................... 24
4.23 ENVIRONMENTAL MATTERS....................................... 25
4.24 LITIGATION.................................................. 25
4.25 NO CONFLICT OF INTEREST..................................... 26
4.26 BANK ACCOUNTS............................................... 26
4.27 CLAIMS AGAINST OFFICERS AND DIRECTORS....................... 26
4.28 IMPROPER PAYMENTS........................................... 26
4.29 DUE DILIGENCE MATERIALS..................................... 26
4.30 NO OTHER AGREEMENT.......................................... 26
4.31 CLOSING FINANCIAL STATEMENTS................................ 27
4.32 BROKERS..................................................... 27
4.33 INVESTMENT MATTERS.......................................... 27
4.34 ACCURACY OF STATEMENTS...................................... 27
4.35 NO REPRESENTATIONS OR WARRANTIES RE PROFITABILITY........... 28
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF PURCHASER AND
XXXXXX...................................................... 28
5.1 DUE INCORPORATION/OWNERSHIP................................. 28
5.2 DUE AUTHORIZATION........................................... 28
5.3 CONSENTS AND APPROVALS; NO CONFLICTS, ETC................... 29
5.4 BROKERS..................................................... 29
5.5 CAPITALIZATION.............................................. 29
5.6 VALUATION OF XXXXXX STOCK................................... 30
5.7 ACCURACY OF STATEMENTS...................................... 30
ARTICLE VI - COVENANTS OF SELLING PARTIES.................................. 30
6.1 IMPLEMENTING AGREEMENT...................................... 30
6.2 INTERIM COMPENSATION........................................ 30
6.3 PRESERVATION OF ACQUIRED ASSETS............................. 30
6.4 COMPLIANCE WITH STATE TAX LAWS.............................. 30
6.5 NON-COMPETITION............................................. 31
6.6 USE OF NAME................................................. 33
6.7 TERMINATION OF CERTAIN AGREEMENTS........................... 33
6.8 TAX MATTERS................................................. 33
ARTICLE VII - COVENANTS OF PURCHASER....................................... 34
7.1 TAX MATTERS................................................. 34
ARTICLE VIII - CLOSING..................................................... 34
8.1 CLOSING..................................................... 34
8.2 DELIVERIES BY SELLING PARTIES............................... 34
8.3 DELIVERIES BY PURCHASER..................................... 36
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ARTICLE IX - INDEMNIFICATION............................................... 36
9.1 SURVIVAL.................................................... 36
9.2 INDEMNIFICATION BY SELLING PARTIES.......................... 36
9.3 INDEMNIFICATION BY PURCHASER................................ 37
9.4 CLAIMS...................................................... 38
9.5 THIRD PARTY CLAIMS.......................................... 38
9.6 PAYMENT OF INDEMNIFICATION OBLIGATIONS...................... 39
9.7 EXCLUSIVE REMEDY............................................ 40
9.8 INSURANCE OR THIRD PARTY INDEMNIFICATION.................... 40
ARTICLE X - MISCELLANEOUS.................................................. 40
10.1 EXPENSES.................................................... 40
10.2 AMENDMENT................................................... 40
10.3 NOTICES..................................................... 40
10.4 EFFECT OF INVESTIGATION..................................... 42
10.5 WAIVERS..................................................... 42
10.6 ASSIGNMENT.................................................. 42
10.7 NO THIRD PARTY BENEFICIARIES................................ 42
10.8 PUBLICITY................................................... 42
10.9 FURTHER ASSURANCES.......................................... 42
10.10 SEVERABILITY................................................ 42
10.11 REMEDIES CUMULATIVE......................................... 43
10.12 ENTIRE UNDERSTANDING........................................ 43
10.13 APPLICABLE LAW.............................................. 43
10.14 BINDING ARBITRATION......................................... 43
10.15 COUNTERPARTS................................................ 45
EXHIBITS
Exhibit A Form of Employment and Non-Competition Agreement
Exhibit B Form of Xxxx of Sale
Exhibit C Form of Opinion of Counsel to Seller
Exhibit D Form of Opinion of Counsel to Purchaser
SCHEDULES
Schedule 1.1 Financial Statements
Schedule 2.1(a) Equipment
Schedule 2.1(b) Vehicles
Schedule 2.1(c) Inventories
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Schedule 2.1(d) Accounts Receivable
Schedule 2.1(f) Intellectual Property
Schedule 2.1(h)(i) Cash
Schedule 2.1(h)(ii) Interim Compensation
Schedule 2.2(a) Real Property Leases
Schedule 2.2(b) Personal Property Leases
Schedule 2.2(c) Seller Purchase Orders
Schedule 2.2(d) Customer Purchase Orders
Schedule 2.2(e) Independent Contractor Contracts
Schedule 2.2(f) Other Contracts
Schedule 2.2(g) Permits
Schedule 2.3 Excluded Assets
Schedule 2.4 Certain Current Liabilities
Schedule 3.2 Allocation of Purchase Price
Schedule 4.1 Jurisdictions in which Seller Is Qualified
Schedule 4.4 Required Consents
Schedule 4.5 Certain Changes
Schedule 4.10(i) Sublessees
Schedule 4.17 Insurance
Schedule 4.19 Employment and Labor Matters
Schedule 4.20 Capital Improvements
Schedule 4.26 Bank Accounts
Schedule 5.3 Certain Other Consents and Approvals
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made as of the 30th day of September, 1996, by and
between NEW WEST ACQUISITION CORP., a Delaware corporation ("Purchaser"), NEW
WEST COMMUNICATIONS, INC., a California corporation ("Seller") and XXXXX XXXXX,
the sole shareholder of Seller ("Xxxxx", together with Seller, the "Selling
Parties") and is joined by XXXXXX INTERNATIONAL, INC., a Delaware corporation,
for the limited purpose of joining the representations and warranties contained
in ARTICLE V hereof. Certain capitalized terms used herein are defined in
ARTICLE I.
W I T N E S S E T H:
WHEREAS, Purchaser wishes to purchase from Seller and Seller wishes to
sell to Purchaser all of the Acquired Assets (defined herein), and Purchaser
wishes to assume all of the Assumed Obligations (also defined herein), all upon
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, agreements and warranties herein contained, the parties agree as
follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. The following terms shall have the following meanings for
the purposes of this Agreement:
"Accounts Receivable" shall have the meaning provided in SECTION 2.1(d).
"Acquired Assets" shall have the meaning provided in SECTIONS 2.1 and 2.2.
"Affiliate" shall mean, with respect to any specified Person (i) any other
Person which, directly or indirectly, owns or controls, is under common
ownership or control with, or is owned or controlled by, such specified Person,
(ii) any other Person which is a director, officer or partner or is, directly or
indirectly, the beneficial owner of 10 percent or more of any class of equity
securities, of the specified Person or a Person described in CLAUSE (I) of this
paragraph, (iii) another Person of which the specified Person is a director,
officer or partner or is, directly or indirectly, the beneficial owner of 10
percent or more of any class of equity securities, (iv) another Person in which
the specified Person has a substantial beneficial interest or as to which the
specified Person serves as trustee or in a similar capacity, (v) any relative or
spouse of the specified Person or any of the foregoing Persons, any relative of
such spouse or any spouse of any such relative.
"Agreement" shall mean this Asset Purchase Agreement, including all
exhibits and schedules hereto as it may be amended from time to time in
accordance with its terms.
"Assumed Obligations" shall have the meaning provided in SECTION 2.4.
"Benefit Plans" shall have the meaning provided in SECTION 4.18.
"Bulk Sales Laws" shall mean the Laws of any jurisdiction relating to bulk
sales which are applicable to the sale of the Acquired Assets by Seller
hereunder (other than laws described in Section 6.4).
"Business" shall mean the business and operations of Seller.
"Business Day" shall mean any day of the year other than (i) any Saturday
or Sunday or (ii) any other day on which banks located in Houston, Texas
generally are closed for business.
"Cash" shall mean all cash, certificates of deposits, bank deposits and
other cash equivalents, together with all accrued but unpaid interest thereon.
"Cash Amount" shall have the meaning provided in SECTION 3.1(a).
"Closing" shall mean the consummation of the transactions contemplated
herein in accordance with ARTICLE VIII.
"Closing Date" shall mean the date on which the Closing occurs or is to
occur.
"Closing Financial Statements" shall mean the unaudited Financial
Statements of Seller prepared by Seller immediately prior to closing and
delivered to Purchaser at Closing, which statements shall include accruals for
all expenses, including the Interim Compensation incurred prior to Closing.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended.
"Confidential Information" shall mean all secrets, confidential
information, customer lists, supplier information, and all other data of or
pertaining to Seller with respect to the Business or to its financial affairs or
products that is not and has not become ascertainable or obtainable from public
or published information.
"Consideration Stock" shall have the meaning provided in SECTION 3.1(b).
"Continuing Employee" shall mean any employee of Seller who works at or is
employed in connection with the Business immediately prior to the Closing,
except for those employees who (i) are Excluded Employees, (ii) do not accept
employment with Purchaser, (iii) are not actively at work for Seller on the
Closing Date or (iv) who, at any time within 30 days after the Closing Date,
voluntarily terminate employment with Purchaser or who are terminated by
Purchaser for cause.
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"Contract" shall mean any contract, lease, letter agreement, commitment,
understanding, sales order, purchase order, agreement, indenture, mortgage,
note, bond, right, warrant, instrument, plan, permit or license, whether written
or verbal, which is intended or purports to be binding and enforceable.
"Customer Purchase Orders" shall have the meaning provided in SECTION
2.2(d).
"Employment Agreement" shall mean the Employment and Non-Competition
Agreement between Purchaser and Xxxxx Xxxxx, Seller's president and sole
shareholder, to be dated on or before the Closing Date, substantially in the
form attached hereto as EXHIBIT A.
"Ending Date" shall have the meaning provided in SECTION 6.5(a).
"Environmental Law" shall mean any Law which relates to or otherwise
imposes liability or standards of conduct concerning discharges, emissions,
releases or threatened releases of noises, odors or any pollutants, contaminants
or hazardous or toxic wastes, substances or materials, whether as matter or
energy, into ambient air, water, or land, or otherwise relating to the
manufacture, processing, generation, distribution, use, treatment, storage,
disposal, cleanup, transport or handling of pollutants, contaminants, or
hazardous or toxic wastes, substances or materials, including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, the
Superfund Amendments and Reauthorization Act of 1986, as amended, the Resource
Conservation and Recovery Act of 1976, as amended, the Toxic Substances Control
Act of 1976, as amended, the Federal Water Pollution Control Act Amendments of
1972, the Clean Water Act of 1977, as amended, any so-called "Superfund" or
"Superlien" Law (including those already referenced in this definition), any
similar Laws or regulations of the State of California or county of San Xxxx
Obispo, and any other Law of any Governmental Authority having a similar subject
matter.
"Environmental Permit" shall mean any permit, license, approval, consent
or other authorization required by or pursuant to any applicable Environmental
Law.
"Environmental Warranty" shall mean a warranty contained in SECTION 4.23.
"Equipment" shall have the meaning provided in SECTION 2.1(a).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall mean, with respect to any Person, each
corporation, trade or business that is, along with such Person, part of the
controlled group of corporations, trades or businesses under common control
within the meaning of sections 414(b) or (c) of the Code.
"Escrow Agent" shall mean the escrow agent appointed by the Seller and the
Purchaser pursuant to the Escrow Agreement.
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"Escrow Agreement" shall mean the Escrow Agreement executed in connection
herewith and attached hereto as EXHIBIT B.
"Escrowed Shares" shall have the meaning provided in SECTION 3.1(b).
"Excluded Assets" shall have the meaning provided in SECTION 2.3.
"Excluded Obligations" shall have the meaning provided in SECTION 2.5.
"Financial Statements" shall mean the unaudited financial statements of
Seller with respect to the Business as of December 31, 1995, December 31, 1994
and August 31, 1996 which are set forth on SCHEDULE 1.1 consisting of the
balance sheets at such dates and the related statements of earnings and retained
earnings for the periods then ended.
"GAAP" shall mean U.S. generally accepted accounting principles at the
time in effect.
"Governmental Authority" shall mean the government of the United States or
any foreign country or any state or political subdivision thereof and any
entity, body or authority exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, including
the Pension Benefit Guaranty Corporation and other quasi-governmental entities
established to perform such functions.
"Hazardous Substance" shall mean any material or substance which (i)
constitutes a hazardous substance, toxic substance or pollutant (as such terms
are defined by or pursuant to any Environmental Law) or (ii) is regulated or
controlled as a hazardous substance, toxic substance, pollutant or other
regulated or controlled material, substance or matter pursuant to any
Environmental Law.
"Indemnified Person" shall mean the Person or Persons entitled to, or
claiming a right to, indemnification under ARTICLE IX.
"Indemnifying Person" shall mean the Person or Persons claimed by the
Indemnified Person to be obligated to provide indemnification under ARTICLE IX.
"Information and Records" shall have the meaning provided in SECTION
2.1(e).
"Intellectual Property" shall have the meaning provided in SECTION 2.1(f).
"Interim Compensation" shall have the meaning set forth on SCHEDULE
2.1(H)(II).
"Inventories" shall have the meaning provided in SECTION 2.1(c).
"Latest Balance Sheet" shall mean the unaudited balance sheet of Seller
with respect to the Business dated as of August 31, 1996 set forth on SCHEDULE
1.1.
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"Law" shall mean any law, statute, regulation, ordinance, rule, order,
decree, judgment. consent decree, settlement agreement or governmental
requirement enacted, promulgated, entered into, agreed or imposed by any
Governmental Authority.
"Leased Assets" shall mean all assets subject to any of the Real Property
Leases or Personal Property Leases, or otherwise leased by Seller
"Lien" shall mean any mortgage, lien (except for any lien for taxes not
yet due and payable), charge, restriction, pledge, security interest, option,
lease or sublease, claim, right of any third party, easement, encroachment or
encumbrance.
"Loss" or "Losses" shall mean any and all liabilities, losses, costs,
claims, damages (including consequential damages), penalties and expenses
(including attorneys' fees and expenses and costs of investigation and
litigation). In the event any of the foregoing are indemnifiable hereunder, the
terms "Loss" and "Losses" shall include any and all attorneys' fees and expenses
and costs of investigation and litigation incurred by the Indemnified Person in
enforcing such indemnity.
"Material Adverse Change" shall mean a change (or circumstance involving a
prospective change) in the business, operations, assets, liabilities, results of
operations, cash flows, condition (financial or otherwise) or prospects of
Seller which is materially adverse or constitutes a material change in the
ability of Purchaser to own the Acquired Assets or conduct the Business
following the Closing.
"Material Adverse Effect" shall mean an effect (or circumstance involving
a prospective effect) on the business, operations, assets, liabilities, results
of operations, cash flows, condition (financial or otherwise) or prospects of
the Business which is materially adverse or has a material effect on the ability
of Purchaser to own the Acquired Assets or conduct the Business following the
Closing.
"Other Assets" shall have the meaning provided in SECTION 2.1(K).
"Other Contracts" shall have the meaning provided in SECTION 2.2(e).
"Permits" shall have the meaning provided in SECTION 2.2(f).
"Person" shall mean any individual, corporation, proprietorship, firm,
partnership, limited partnership, trust, association or other entity.
"Personal Property Leases" shall have the meaning provided in SECTION
2.2(b).
"Purchaser" shall have the meaning provided in the PREAMBLE.
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"Purchaser Indemnified Parties" shall mean Purchaser, Xxxxxx and each of
their Affiliates and their respective officers, directors, employees, agents and
representatives, provided that in no event shall Seller be deemed a Purchaser
Indemnified Party.
"Real Property Leases" shall have the meaning provided in SECTION 2.2(a).
"Registration Rights Agreement" shall mean that certain Registration
Rights Agreement by and among Xxxxxx and its shareholders dated as of May 28,
1992, as amended from time to time.
"Related Agreement" shall mean any Contract which is or is to be entered
into at the Closing or otherwise pursuant to this Agreement. The Related
Agreements executed by a specified Person shall be referred to as "such Person's
Related Agreements," "its Related Agreements" or another similar expression.
"Required Consents" shall have the meaning provided in SECTION 4.4.
"Secretary" shall have the meaning provided in SECTION 8.2(I).
"Seller" shall have the meaning provided in the PREAMBLE.
"Seller Indemnified Parties" shall mean Seller, and each of Seller's
Affiliates and their respective officers, directors, employees, agents, and
representatives, provided that in no event shall Purchaser be deemed a Seller
Indemnified Party.
"Seller Purchase Orders" shall have the meaning provided in
SECTION 2.2(c).
"Seller Shares" shall have the meaning provided in SECTION 3.1(b).
"Shareholders Agreement" shall mean that certain Shareholders Agreement by
and among Xxxxxx and its shareholders dated as of May 28, 1992, as amended from
time to time.
"Tax Return" shall mean any report, return or other information required
to be supplied to a Governmental Authority in connection with any Taxes.
"Tax Statute of Limitations Date" shall mean the close of business on the
90th day after the expiration of the applicable statute of limitations with
respect to Taxes, including any extensions thereof (or if such date is not a
Business Day, the next Business Day).
"Taxes" shall mean all taxes, charges, fees, duties (including customs
duties), levies or other assessments, including income, gross receipts, net
proceeds, ad valorem, turnover, real and personal property (tangible and
intangible), sales, use, franchise, excise, value added, stamp, leasing, lease,
user, transfer, fuel, excess profits, occupational, interest equalization,
windfall profits, license, payroll, environmental, capital stock, disability,
severance, employee's income
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withholding, other withholding, unemployment and Social Security taxes, which
are imposed by any Governmental Authority, and such term shall include any
interest, penalties or additions to tax attributable thereto.
"Territory" shall have the meaning provided in SECTION 6.5(a).
"Title and Authorization Warranty" shall mean a representation or warranty
in SECTION 4.1, 4.2, 4.3, 4.4 or 4.8.
"Xxxxxx" shall mean Xxxxxx International, Inc., a Delaware corporation.
"Xxxxxx Stock" shall mean the shares of Class A Common Stock of Xxxxxx,
par value $.01 per share, delivered to Seller in connection with this agreement.
"Vehicles" shall have the meaning provided in SECTION 2.1(b).
1.2 INTERPRETATION. The headings preceding the text of Articles and
Sections included in this Agreement and the headings to Schedules attached to
this Agreement are for convenience only and shall not be deemed part of this
Agreement or be given any effect in interpreting this Agreement. The use of the
masculine, feminine or neuter gender or the singular or plural form of words
herein shall not limit any provision of this Agreement. The use of the terms
"including" or "include" shall in all cases herein mean "including, without
limitation" or "include, without limitation," respectively. Reference to any
Person includes such Person's successors and assigns to the extent such
successors and assigns are permitted by the terms of any applicable agreement,
and reference to a Person in a particular capacity excludes such Person in any
other capacity or individually. Reference to any agreement (including this
Agreement), document or instrument means such agreement, document or instrument
as amended or modified and in effect from time to time in accordance with the
terms thereof and, if applicable, the terms hereof. Reference to any Law means
as amended, modified, codified, replaced or re-enacted, in whole or in part, and
in effect on the date hereof, including rules, regulations, enforcement
procedures and any interpretations promulgated thereunder. Underscored
references to Articles, Sections, clauses, Exhibits or Schedules shall refer to
those portions of this Agreement, and any underscored references to a clause
shall, unless otherwise identified, refer to the appropriate clause within the
same Section in which such reference occurs. The use of the terms "hereunder",
"hereof", "hereto" and words of similar import shall refer to this Agreement as
a whole and not to any particular Article, Section or clause of or Exhibit or
Schedule to this Agreement. Consummation of the transactions contemplated herein
shall not be deemed a waiver of a breach of or inaccuracy in any representation,
warranty or covenant or of any party's rights and remedies with regard thereto.
No specific representation, warranty or covenant contained herein shall limit
the generality or applicability of a more general representation, warranty or
covenant contained herein. A breach of or inaccuracy in any representation,
warranty or covenant shall not be affected by the fact that any more general or
less general representation, warranty or covenant was not also breached or
inaccurate.
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ARTICLE II
SALE AND PURCHASE OF ACQUIRED ASSETS;
ASSUMPTION OF ASSUMED OBLIGATIONS
2.1 ACQUIRED ASSETS. Subject to the terms and conditions of this
Agreement, at the Closing Seller shall sell, assign, transfer and deliver to
Purchaser, and Purchaser shall purchase, acquire and take assignment and
delivery of, all of the assets owned by Seller (wherever located), except for
those assets specifically excluded pursuant to SECTION 2.3 (all of the assets
sold, assigned, transferred and delivered to Purchaser hereunder are referred to
collectively herein as the "Acquired Assets"). The Acquired Assets include all
of Seller's right, title and interest in and to the following:
(a) EQUIPMENT. All machinery, equipment, furniture, tools, spare
parts, supplies, maintenance equipment and supplies, warehouse racks,
computers, office equipment, materials and other items of personal
property of every kind and description (other than the Vehicles and
Inventories, which are separately referenced in SECTIONS 2.1(b) and
2.1(c), respectively), including those items set forth on SCHEDULE 2.1(a)
(the "Equipment");
(b) VEHICLES. All trucks, trailers, automobiles and other vehicles
set forth on SCHEDULE 2.1(b) (the "Vehicles");
(c) INVENTORIES. All inventories wherever located whether or not
reflected on the books of Seller, as of the Closing Date, including all
raw materials, work in process and finished goods inventories, including
those items set forth on SCHEDULE 2.1(c), which schedule does not include
inventory which has been written down or written off;
(d) ACCOUNTS RECEIVABLE. Any and all accounts receivable, trade
receivables, notes receivable and other receivables (the "Accounts
Receivable");
(e) INFORMATION AND RECORDS. All technical information, confidential
information, price lists, marketing information, lists of product number
cross-references relating to the Company's products, sales records,
customer lists and files (including customer credit and collection
information), and other proprietary information (other than the
Intellectual Property, which is separately referenced in SECTION 2.1 (f)),
which are in Seller's care, custody or control or otherwise available to
it (the "Information and Records");
(f) INTELLECTUAL PROPERTY. The name "New West Communications" and
any logos relating to such name and all trade names, trademarks, service
marks, patents, copyrights (including any registrations, applications,
licenses or rights relating to any of the foregoing), technology, trade
secrets, inventions, know-how, designs, computer
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programs, processes, formulas and all other intangible assets, properties
and rights, including those items set forth on SCHEDULE 2.1(f) (the
"Intellectual Property");
(g) OTHER INTANGIBLES. Goodwill, if any, related to or used in
conjunction with the Business;
(h) CASH. All Cash and marketable securities, PROVIDED, HOWEVER,
that Seller shall be entitled to retain, and distribute to Xxxxx (i) the
amount of cash necessary to pay Xxxxx'x personal federal income tax
relating to operations of Seller during 1996 and California state income
tax relating to operations of the Seller during 1996 prior to Closing and
Seller's corporate income tax liability for S Corporations operated in
California, as calculated by the parties immediately prior to Closing
based upon the Closing Financial Statements and set forth on Schedule
2.1(h)(i) and based upon the assumption that payments to Xxxxx by Seller
during the period between July 22, 1996 and Closing shall be deductible
from income as compensation, and (ii) the amount of cash necessary to pay
to Xxxxx the Interim Compensation; and
(i) OTHER ASSETS. All other assets of Seller (except for Excluded
Assets and other than those assets previously described in this SECTION
2.1), including proceeds of insurance policies paid with respect to claims
made prior to the Closing Date, prepaid expenses and lease, utility and
similar deposits of Seller and any and all deposits, prepayments,
guaranties, letters of credit and other security held by Seller in
connection with the Customer Purchase Orders described in SECTION 2.2(d)
and the other Contracts described in SECTION 2.2(e) (the "Other Assets").
2.2 ASSIGNMENT OF CONTRACTS, LEASES AND OTHER ASSETS. Subject to the terms
and conditions of this Agreement, Seller will assign and transfer to Purchaser,
effective as of the Closing Date, all of Seller's right, title and interest in
and to, and Purchaser will take assignment of the following (and all of the
following shall be deemed included in the term "Acquired Assets" as used
herein):
(a) REAL PROPERTY LEASES. All leases of real property set forth on
SCHEDULE 2.2(a) (the "Real Property Leases");
(b) PERSONAL PROPERTY LEASES. All leases of equipment, machinery,
vehicles and other personal property set forth on SCHEDULE 2.2(b) (the
"Personal Property Leases");
(c) SELLER PURCHASE ORDERS. All open purchase orders and other
Contracts, as set forth on SCHEDULE 2.2(c), for the purchase by Seller of
goods, materials and/or services and such other purchase orders or other
Contracts as shall be entered into between the date hereof and the Closing
Date in the ordinary course of business of the Business and in accordance
with the provisions of this Agreement, including SECTION 6.3(b) (the
"Seller Purchase Orders");
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(d) CUSTOMER PURCHASE ORDERS. All open purchase orders and other
Contracts, as set forth on SCHEDULE 2.2(d) for the sale by Seller of goods
and/or services and such other purchase orders and other Contracts for the
sale by Seller of goods and/or services as shall be entered into between
the date hereof and the Closing Date in the ordinary course of business of
the Business and in accordance with the provisions of this Agreement,
including SECTION 6.3(b) (the "Customer Purchase Orders");
(e) INDEPENDENT CONTRACTOR CONTRACTS. All current contracts relating
to the independent contractor sales agents listed on SCHEDULE 2.2(e).
(f) OTHER CONTRACTS. All other open Contracts set forth on SCHEDULE
2.2(f) and such other Contracts as shall be entered into between the date
hereof and the Closing Date and which shall be expressly accepted and
approved in writing by Purchaser prior to the Closing (the "Other
Contracts"); and
(g) LETTER AGREEMENTS. All letter agreements with suppliers and
customers, including letter agreements with Lucent Technologies, Inc. if
any exist as of the Closing Date.
(h) PERMITS. All licenses, certificates, permits, variances, interim
permits, permit applications, approvals, franchises, rights, code
approvals and private product approvals under any Law applicable to the
Business or otherwise required by any Governmental Authority in connection
with the Business, including those set forth on SCHEDULE 2.2(H) (the
"Permits").
Anything in this Agreement to the contrary notwithstanding, this Agreement shall
not constitute an agreement to assign any Contract or Permit or any claim or
right or any benefit or obligation thereunder or resulting therefrom if an
assignment thereof, without the consent of a third party thereto, would
constitute a breach or violation thereof. If such a consent is required or if an
attempted assignment is ineffective, Seller shall cooperate with Purchaser in
any reasonable arrangement requested by Purchaser to provide for Purchaser the
benefits under any such Contracts or Permits.
2.3 EXCLUDED ASSETS. The assets of Seller listed on Schedule 2.3 shall be
retained by Seller and are not being sold or assigned to Purchaser hereunder
(all such assets referred to collectively as the "Excluded Assets"). Excluded
Assets shall include (a) Seller's corporate seal, minute books, charter
documents, corporate stock record books, and such other books and records
relating to the organization, existence or capitalization of Seller; (b) all
insurance policies in effect prior to the Closing Date and proceeds of such
insurance policies paid with respect to any claims made on or before the Closing
Date; (c) all contracts that have terminated or have expired prior to the
Closing Date in the ordinary course of business and as permitted under the terms
hereof; and (d) any assets listed on Schedule 2.3.
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2.4 ASSUMED OBLIGATIONS. At the Closing, Purchaser shall assume, and agree
to pay, perform, fulfill and discharge, the following obligations of Seller (the
"Assumed Obligations"):
(a) the obligations of Seller which are required to be performed,
and which accrue, after the Closing Date under the following Contracts
(but not any liabilities of Seller in respect of a breach of or default
under such Contracts arising prior to the Closing), to the extent such
Contracts, and all rights of Seller thereunder, are effectively assigned
to Purchaser on the Closing Date pursuant to SECTION 2.2: (i) the Real
Property Leases; (ii) the Personal Property Leases; (iii) the Seller
Purchase Orders; (iv) the Customer Purchase Orders; and (v) the Other
Contracts;
(b) the current liabilities of Seller set forth on SCHEDULE 2.4; and
(c) all of Seller's other recorded liabilities set forth on SCHEDULE
2.4, including no more than $350,000.00 of interest-bearing debt.
2.5 NO OTHER LIABILITIES ASSUMED. Anything in this Agreement to the
contrary notwithstanding, except as specifically set forth in SECTION 2.4,
neither Purchaser nor any of its Affiliates shall assume or otherwise be liable
in respect of, or be deemed to have assumed or otherwise be liable in respect
of, any debt, claim, obligation or other liability of Seller or any of its
Affiliates whatsoever (the "Excluded Obligations").
ARTICLE III
PURCHASE PRICE AND PAYMENT
3.1 PAYMENT OF PURCHASE PRICE.
(a) On the Closing Date, in consideration for the Acquired Assets,
Purchaser shall pay to Seller an aggregate amount equal to $4,000,000 (the
"Cash Amount"). The Cash Amount shall be paid to Seller by means of a
certified check or by wire transfer of immediately available funds to a
bank account pursuant to wiring instructions designated by Seller.
(b) Stock Payment.
(i) At the Closing, in consideration for the Acquired Assets,
Purchaser will deliver to Seller 22,222 shares of Xxxxxx Stock (the
"Closing Shares") free and clear of all pledges, liens, transfer and
stamp tax obligations, encumbrances, claims, and other charges
thereof of every kind, subject to the terms and conditions of this
SECTION 3.1(b). The Closing Shares will be evidenced by delivery by
the Purchaser to the Seller of a share certificate.
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(ii) At the Closing, in consideration for the Acquired Assets,
Purchaser will deliver to the Escrow Agent 22,222 shares of Xxxxxx
Stock (the "Escrowed Shares" and together with the Closing Shares,
"Consideration Stock"), free and clear of all pledges, liens,
transfer and stamp tax obligations, encumbrances, claims, and other
charges thereof of every kind, subject to the terms and conditions
of this SECTION 3.1(b) and of the Escrow Agreement. The Escrowed
Shares will be evidenced by delivery by the Purchaser to the Escrow
Agent of a share certificate.
(iii) Seller shall not be entitled to possession of the
Escrowed Shares until the terms of the Escrow Agreement have been
satisfied. Seller acknowledges and agrees that the transfer of the
Closing Shares and, upon release of the Escrowed Shares pursuant to
the Escrow Agreement, the transfer of any Escrowed Shares will be
subject to and restricted by the terms of that certain Stockholders
Agreement dated as of May 28, 1992, as amended from time to time, by
and among Xxxxxx and the stockholders of Xxxxxx (the "Stockholders
Agreement"). Seller further acknowledges and agrees that all Xxxxxx
Stock shall bear an appropriate legend reflecting such restriction
on transfer. At the Closing, Seller shall execute and deliver the
documents necessary to bind Seller under and to make Seller subject
to the terms of the Stockholders Agreement, subject to Seller's and
its counsel's prior review of such Stockholders Agreement.
(iv) Effective as of the Closing Date, Purchaser shall cause
to be executed and Seller shall execute an amendment to the
Registration Rights Agreement dated as of May 28, 1992, as amended
from time to time, by and among Xxxxxx and the Stockholders of
Xxxxxx (the "Registration Rights Agreement"), pursuant to which
amendment Seller shall be made a party to the Registration Rights
Agreement and shall have all of the rights and obligations of a
"Stockholder" (but not of a "Significant Stockholder") under the
Registration Rights Agreement, as each such term is defined therein.
(v) With respect to the delivery of the Consideration Stock
hereunder, Purchaser shall pay all customary fees, costs and
expenses of such issuance, including without limitation all fees and
disbursements of counsel and accountants for the Purchaser.
(c) Deferred Purchase Price. In consideration of the non-competition
covenant contained in SECTION 6.5 of this Agreement, on the date three
months after the Closing Date and quarterly thereafter until the fifth
anniversary of the Closing Date, Purchaser shall pay to Seller the sum of
$25,000.00; PROVIDED, HOWEVER, that such amount shall not be payable in
the event of any breach by any of the Selling Parties of such
non-competition covenant and shall be subject to the rights of set-off
relating to the indemnification obligations of the Selling Parties
contained in ARTICLE IX.
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3.2 ALLOCATION OF CONSIDERATION. The Purchase Price shall be allocated
among the Acquired Assets in accordance with the principles set forth on
SCHEDULE 3.2. Seller and Purchaser shall each make all required filings under
Section 1060 of the Code consistent with such allocation and shall not take any
position inconsistent with such allocation in any other of their respective Tax
Returns. SCHEDULE 3.2 shall also set forth the parties' mutual agreement as to
the value of Xxxxxx stock to be delivered in connection herewith.
3.3 BULK SALES LAWS. The parties hereto waive compliance with the
requirements of the applicable Bulk Sales Laws in connection with the
consummation of the transactions contemplated hereby. Seller agrees to indemnify
Purchaser for any losses sustained by Purchaser as a result of the failure of
the parties to so comply with California Bulk Sales Laws.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLING PARTIES
Seller and Xxxxx hereby jointly and severally represent and warrant to
Purchaser as of the Closing Date as follows:
4.1 DUE INCORPORATION, ETC. Seller is duly organized, validly existing and
in good standing under the laws of California, with all requisite corporate
power and authority to own, lease and operate its properties and to carry on the
Business as it is now being owned, leased, operated and conducted. Seller is
licensed or qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the nature of the properties owned,
leased or operated by it and the businesses transacted by it require such
licensing or qualification, except where failure to be so licensed or qualified
would not have a Material Adverse Effect. Seller shall remain solely responsible
for any liability which might arise from a failure to so license or qualify the
corporation in a state other than California prior to the date hereof. However,
Purchaser shall be responsible to make Purchaser's own determination as to the
necessity of licensing or qualifying Purchaser in any state other than
California after the date hereof and Seller shall have no liability for any
failure to license or qualify Purchaser in a state other than California after
the date hereof. The jurisdictions in which Seller is incorporated and licensed
or qualified to do business as a foreign corporation are set forth on SCHEDULE
4.1. The Business does not involve any direct or indirect subsidiaries of
Seller, either wholly or partially owned, or any direct or indirect economic,
voting or management interest or security held by Seller in or of any Person.
True, accurate and complete copies of the articles of incorporation and bylaws
(or similar organizational instruments), as amended, and all minutes of all
meetings since January 1, 1996 (or written consents in lieu of meetings) of the
Board of Directors (and all committees thereof) and stockholders of Seller
(other than such minutes or consents that the Seller is prohibited from
disclosing under a confidentiality agreement with Xxxxxxx Xxxxxxxx) have been
delivered to Purchaser. All actions taken by the Board of Directors (and all
committees thereof) and stockholders of Seller are reflected in such minutes and
written consents.
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4.2 OWNERSHIP OF SELLER. Xxxxx is the sole owner of capital stock of
Seller and no other person owns or has rights to receive any stock of Seller. No
other person or entity has any rights arising out of prior ownership of capital
stock of Seller, except as follows: the sale of assets of Seller shall cause an
acceleration of the amounts due from Xxxxx to a former shareholder of Seller,
Xxxxxxx Xxxxxxxx. The amounts currently owing to Xxxxxxxx are guaranteed by
Seller, and shall be paid by Xxxxx and/or Seller immediately after the Closing
of this transaction. Purchaser is assuming no liability for any such debt.
4.3 DUE AUTHORIZATION. Seller and Xxxxx each has full power and authority
to enter into this Agreement and its Related Agreements and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance by Seller of this Agreement and its Related Agreements have been
duly and validly approved by Seller's board of directors and by the sole
stockholder of Seller and no other actions or proceedings on the part of Seller
are necessary to authorize this Agreement, the Related Agreements and the
transactions contemplated hereby and thereby. Each of Seller and Xxxxx has duly
and validly executed and delivered this Agreement and has duly and validly
executed and delivered (or prior to or at the Closing will duly and validly
execute and deliver) its Related Agreements. This Agreement constitutes legal,
valid and binding obligations of Xxxxx and Seller and Seller's and Xxxxx'x
Related Agreements upon execution and delivery by Seller or Xxxxx will
constitute legal, valid and binding obligations of Seller and Xxxxx, in each
case, enforceable in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws in effect which affect the enforcement of
creditors' rights generally and by equitable limitations on the availability of
specific remedies.
4.4 CONSENTS AND APPROVALS; NO CONFLICTS, ETC.
(a) Except for the Required Consents set forth on SCHEDULE 4.4, no
consent, authorization or approval of, filing or registration with, or
cooperation from, any Governmental Authority or any other Person not a
party to this Agreement is necessary in connection with the execution,
delivery and performance by Seller and Xxxxx of this Agreement and its
Related Agreements or the consummation of the transactions contemplated
hereby or thereby.
(b) The execution, delivery and performance by Seller and Xxxxx of
this Agreement and its Related Agreements do not and will not (i) violate
any Law applicable to Seller, Xxxxx, any of the Acquired Assets or the
Business; (ii) violate or conflict with, result in a breach or termination
or constitute a default or give any third party any additional right
(including a termination right) under, permit cancellation or result in
the creation of any Lien upon any of the assets or properties of Seller or
Xxxxx under, or result in or constitute a circumstance which, with or
without notice or lapse of time or both, would constitute any of the
foregoing under, any Contract to which Seller or Xxxxx is a party or by
which Seller, Xxxxx or any of their assets or properties are bound; (iii)
permit the acceleration of the maturity of any indebtedness of Seller or
Xxxxx or indebtedness secured by any of their assets or properties other
than as
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referenced in SECTION 4.2, above; (iv) violate or conflict with any
provision of any of the articles of incorporation, bylaws or similar
organizational instruments of Seller; or (v) violate or conflict with any
provision of any agreement between either of the Selling Parties and any
former shareholder of Seller.
4.5 FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES.
(a) Seller has delivered to Purchaser copies of the Financial
Statements. The Financial Statements are in accordance with the books and
records of Seller, do not reflect any transactions which are not bona fide
transactions and do not contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements contained
therein, in light of the circumstances in which they were made, not
misleading.
(b) The Financial Statements make full and adequate disclosure of,
and provision for, all material obligations and liabilities of Seller as
of the date thereof. Seller has no liabilities, debts, claims or
obligations (including "off-balance sheet" liabilities, debts, claims or
obligations), whether accrued, absolute, contingent or otherwise, and
whether due or to become due, other than (i) as set forth on SCHEDULE 4.5
or in the Latest Balance Sheet and (ii) trade payables and accrued
expenses incurred in the ordinary course of business since the date of the
Latest Balance Sheet.
4.6 NO ADVERSE EFFECTS OR CHANGES. Since May 29, 1996, Seller has
conducted the Business in all respects only in the ordinary course and
consistent with past practices. Without limiting the foregoing, since May 29,
1996, Seller has not:
(a) suffered any Material Adverse Effect;
(b) suffered any damage, destruction or Loss to any of its assets or
properties (whether or not covered by insurance);
(c) except for Seller Purchase Orders or Customer Purchase Orders in
the ordinary course of business or distribution to Xxxxx, incurred any
obligation or entered into any Contract which either (i) required a
payment by any party in excess of, or a series of payments which in the
aggregate exceeds $5,000 or provides for the delivery of goods or
performance of services, or any combination thereof, by Seller having a
value in excess of $25,000, or (ii) has a term of or requires the
performance of any obligations by Seller over a period in excess of six
months;
(d) taken any action, or entered into or authorized any Contract or
transaction other than in the ordinary course of business and consistent
with past practice;
15
(e) sold, transferred, conveyed, assigned or otherwise disposed of
any of its assets or properties, except sales of inventory in the ordinary
course of business and consistent with past practice;
(f) waived, released or cancelled any claims against third parties
or debts owing to it, or any rights which have any value;
(g) made any material changes in its accounting systems, policies,
principles or practices;
(h) made any changes in the terms of any of the Assumed Obligations;
(i) entered into, authorized, or permitted any transaction with any
Affiliate of Seller;
(j) made any borrowing, incurred any debt (other than trade payables
in the ordinary course of business and consistent with past practice), or
assumed, guaranteed, endorsed (except for the negotiation or collection of
negotiable instruments in transactions in the ordinary course of business
and consistent with past practice) or otherwise become liable (whether
directly, contingently or otherwise) for the obligations of any other
Person, or made any payment or repayment in respect of any indebtedness
(other than trade payables and accrued expenses in the ordinary course of
business and consistent with past practice);
(k) made any loans, advances or capital contributions to, or
investments in, any other Person;
(l) entered into, adopted, amended or terminated any bonus, profit
sharing, compensation, termination, stock option, stock appreciation
right, restricted stock, performance unit, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreements,
trusts, plans, funds or other arrangements for the benefit or welfare of
any director, officer, consultant or employee, or increased in any manner
the compensation or fringe benefits of any director, officer, consultant
or employee which is not set forth on SCHEDULE 4.19, or paid any benefit
not required by any existing plan and arrangement or entered into any
contract, agreement, commitment or arrangement to do any of the foregoing;
(m) except for capital expenditures contemplated by CLAUSE (N),
acquired, leased or encumbered any assets outside the ordinary course of
business or any assets which are material to Seller;
(n) [Intentionally omitted.]
16
(o) made any Tax election or settled or compromised any federal,
state, local or foreign Tax liability, or waived or extended the statute
of limitations in respect of any such Taxes, to the extent such election,
settlement, compromise, waiver or extension could result in a Lien on any
of the Acquired Assets or could otherwise adversely affect the Business;
(p) paid any amount, performed any obligation or agreed to pay any
amount or perform any obligation, in settlement or compromise of any suits
or claims of liability against Seller, or any of its directors, officers,
employees or agents;
(q) terminated, modified, amended or otherwise altered or changed
any of the material terms or provisions of any Contract, or paid any
amount not required by Law or by any Contract;
(r) except as contemplated by SECTION 2.1(H)(I) or disclosed on
SCHEDULE 4.19, declared any dividend or made any other distribution in
respect of its capital stock; or
(s) except as approved in writing by Purchaser entered into any
sublease affecting any of the Real Property.
4.7 FUTURE RELATIONSHIPS.
(a) To the knowledge of the Selling Parties, (i) there are no facts,
circumstances, or conditions which, individually or in the aggregate would
cause any material customer of Seller to discontinue its relationship with
the Business after the Closing and (ii) there are no facts not disclosed
in the Schedules or in this Agreement, circumstances or conditions that
individually or in the aggregate could reasonably be expected to interfere
with the relationship of Lucent Technologies, Inc. and the Business after
the Closing.
(b) Notwithstanding the foregoing, Seller has disclosed to Purchaser
the highly competitive nature of Seller's business, and has made no
representations with regard to any assurance of continued relationships
with its customers or suppliers. Seller has specifically disclosed to
Purchaser that Seller's previous agreement with AT&T for the resale of
refurbished and surplus 5ESS switch circuit packs has expired as of August
9, 1996, and a new entity, Lucent Technologies, Inc., has assumed
responsibilities previously held by AT&T for the distribution and repair
of refurbished telecommunications equipment. While Seller has already
commenced a profitable relationship with Lucent and is exploring the
potential for an expansion of its product lines from the previous
relationship with AT&T, Seller makes no representations or assurances to
Purchaser with regard to such future relationships. Seller has also
disclosed to Purchaser that Seller is currently negotiating with Nynex for
a form of exclusive vendor agreement for certain of Seller's products, but
Seller will not enter into any such agreement unless Seller has determined
that the pricing schedule for such a
17
contract is advantageous to Seller. Seller has also disclosed to Purchaser
that its approved vendor status with Southwestern Xxxx for spot purchasing
will come up for review on September 30, 1997. While Seller has no reason
to believe that the approved vendor status will not be renewed, no
assurance is made hereunder to that effect.
4.8 TITLE TO PROPERTIES. Seller has good and valid record and marketable
title to and is the lawful owner of the Acquired Assets, free and clear of any
Lien. Seller has the full right to sell, convey, transfer, assign and deliver
the Acquired Assets to Purchaser, and, at and as of the Closing, Seller will
convey the Acquired Assets to Purchaser by deeds, bills of sale, certificates of
title and instruments of assignment and transfer effective to vest in Purchaser,
and Purchaser shall have, good and valid record and marketable title to all of
the Acquired Assets, free and clear of all Liens.
4.9 CONDITION AND SUFFICIENCY OF ASSETS. All of the tangible Acquired
Assets, whether real or personal, owned or leased, have been well maintained and
are in good operating condition and repair (with the exception of normal wear
and tear), and are free from defects other than such minor defects as do not
interfere with the intended use thereof in the conduct of normal operations or
adversely affect the resale value thereof. The Acquired Assets constitute all
the assets, properties and rights which are required for or currently used in
connection with the conduct of the Business as it is presently conducted.
4.10 REAL PROPERTY.
(a) SCHEDULE 2.2(a) sets forth a true, accurate and complete list of
all of the Real Property Leases, and true, accurate, complete and
insurable legal descriptions of all of the land subject to the Real
Property Leases. The land subject to the Real Property Leases constitutes
all of the land used by Seller in the conduct of the Business. Seller has
delivered to Purchaser true, accurate and complete copies of the Real
Property Leases, together with copies of all reports (if any) of any
engineers, environmental consultants or other consultants in its
possession relating to any of the land subject to a Real Property Lease.
(b) The activities carried on in all buildings, plants, facilities,
installations, fixtures and other structures or improvements included as
part of or located on or at the land subject to a Real Property Lease, and
the buildings, plants, facilities, installations, fixtures and other
structures or improvements themselves, are not to the best of Seller's
knowledge in violation of or in conflict with, any applicable zoning,
environmental or health regulations or ordinance or any other similar Law.
(c) All of the Real Property Leases are in full force and effect,
valid and enforceable in accordance with their respective terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws in effect which affect the
enforcement of creditors' rights generally and by equitable
18
limitations on the availability of specific remedies. None of the Real
Property Leases have been amended or modified except as reflected therein
and except that the lease for the premises occupied by Seller has been
modified to reduce the size of the leased premises by 2,500 square feet
and to reduce the rent by $891.00, in each case is as of the Closing Date.
(d) Seller has not received any notice of any, and there exists no,
dispute, claim, event of default or event which constitutes or would
constitute (with notice or lapse of time or both) a default under any Real
Property Lease. All rent and other amounts due and payable with respect to
the Real Property Leases have been paid through the date of this Agreement
and all rent and other amounts due and payable with respect to the Real
Property Leases on or prior to the Closing Date will have been paid prior
to the Closing Date.
(e) All lessors under the Real Property Leases have consented or
prior to Closing will have consented (where such consent is necessary) to
the consummation of the transactions contemplated by this Agreement or the
Related Agreements without requiring modification in the rights or
obligations thereunder. None of the Real Property Leases are expected to
expire or terminate during the year following the Closing Date. There are
no indications that the landlord with respect to any Real Property Lease
would refuse to renew such lease upon expiration of the period thereof
upon substantially the same terms, except for rent increases that would
not be material.
(f) Attached hereto as SCHEDULE 4.10(I) is a list of all sublessees
of the Real Property.
4.11 EQUIPMENT AND VEHICLES. SCHEDULE 2.1(a) sets forth a true, accurate
and complete list of all of the Equipment. SCHEDULE 2.1(b) sets forth a true,
accurate and complete list of all of the Vehicles. The Personal Property Leases
set forth on SCHEDULE 2.2(d) constitute all leases by Seller of any item of
personal property used by Seller, except for those leases of personal property
which have been disclosed to Purchaser and are not being assumed by Purchaser
hereunder. All of the Equipment and all of the other personal property leased by
Seller under the Personal Property Leases is presently utilized by Seller in the
ordinary course of business. Seller has delivered to Purchaser true, accurate
and complete copies of all Personal Property Leases.
4.12 INVENTORIES. SCHEDULE 2.1(c) sets forth a true, accurate and complete
schedule of all Inventories, with an accurate and complete description of each
item and an accounting of the cost of each item and [does not include]
[designates] items that have been written off or written down with the consent
of Purchaser. Each item of the Inventories, except those given a value of zero
in the Financial Statements, is of merchantable quality and is usable in the
ordinary course of business, and none of such items is obsolete or non-saleable,
has been pledged or otherwise given as collateral, or is held by Seller on
assignment or consignment. The Inventories are fairly reflected in the inventory
accounts on the balance sheets included in the Financial Statements, including
all appropriate reserves, and are valued at the lower of cost or market.
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4.13 ACCOUNTS RECEIVABLE. SCHEDULE 2.1(d) sets forth a true, accurate and
complete aging schedule of all Accounts Receivable. Each Account Receivable
represents (a) a sale made in the ordinary course of business and which arose
pursuant to an enforceable written Contract for a bona fide sale of goods or for
services performed, and Seller has performed all of its obligations to produce
the goods or perform the services to which such Account Receivable relates, and
(b) except as adequately reserved against in the balance sheets of Seller
included in the Financial Statements, amounts owed which are not more than 30
days past due and which are not subject to any claim or reduction, counterclaim,
set-off, recoupment or other claim for credit, allowances or adjustments by the
obligor owing such amount. Except as reserved against on such balance sheets,
the Accounts Receivable are collectible in full within 60 days in at least the
amount at which they are carried on the books of Seller.
4.14 INTELLECTUAL PROPERTY.
(a) Seller has no interest in any intellectual property, other than
the use of its corporate name of New West Communications, Inc. While said
corporate name has been approved for use by the California Secretary of
State and Department of Corporations, Seller has not attempted to obtain
any state or federal trademark protection for said name, and makes no
representations with regard to the use of said name, other than as
follows:
(i) Seller has not granted any license or agreed to pay or
receive any royalty in respect of use of its trade name; and
(ii) Seller's use of the trade name "New West Communications"
has not been the subject of any pending or threatened litigation or claim
of infringement to date.
(b) The products and services produced and sold by Seller, any
process, method, part, design or material it employs, and the marketing
and use by Seller of any such product or service do not, to the best of
Seller's knowledge, infringe any Intellectual Property or confidential or
proprietary rights of another Person, and Seller has not received any
notice contesting its right to use any such Intellectual Property.
4.15 CONTRACTS. SCHEDULE 2.2(f) sets forth a true, accurate and complete
list of all current Contracts and arrangements of the following types to which
Seller is a party or by which it is bound, or to which any of the Acquired
Assets is subject, including:
(a) any collective bargaining agreement;
(b) any Contract or arrangement of any kind with any employee,
officer or director of Seller or any of the respective Affiliates of such
individuals, or any Contract or other arrangement of any kind with any
Affiliate of Seller;
20
(c) any Contract or arrangement with a sales representative,
manufacturer's representative, distributor, dealer, broker, sales agency,
advertising agency or other Person engaged in sales, distributing or
promotional activities, or any Contract to act as one of the foregoing on
behalf of any Person;
(d) any Contract or arrangement of any nature which involves the
payment or receipt of cash or other property, an unperformed commitment,
or goods or services, having a value in excess of $5,000, except Seller
Purchase Orders and Customer Purchase Orders in the ordinary course of
business.
(e) any Contract or arrangement pursuant to which Seller has made or
will make loans or advances, or has or will have incurred debts or become
a guarantor or surety or pledged its credit on or otherwise become
responsible with respect to any undertaking of another (except for the
negotiation or collection of negotiable instruments in transactions in the
ordinary course of business);
(f) any indenture, credit agreement, loan agreement, note, mortgage,
security agreement, lease of real property or personal property, loan
commitment or other Contract or arrangement relating to the borrowing of
funds, an extension of credit or financing;
(g) any Contract or arrangement involving a partnership, joint
venture or other cooperative undertaking;
(h) any Contract or arrangement involving any restrictions with
respect to the geographical area of operations or scope or type of
business of Seller;
(i) any power of attorney or agency agreement or arrangement with
any Person pursuant to which such Person is granted the authority to act
for or on behalf of Seller, or Seller is granted the authority to act for
or on behalf of any Person;
(j) any Contract relating to the Computer System;
(k) any Contract for which the full performance thereof may extend
beyond 60 days from the date of this Agreement;
(l) any Contract not made in the ordinary course of business which
is to be performed in whole or in part at or after the date of this
Agreement;
(m) any Contract, whether or not fully performed, relating to any
acquisition or disposition of Seller or any predecessor in interest of
Seller, or any acquisition or disposition of any subsidiary, division,
line of business, or real property; and
(n) any Contract not specified above that is material to Seller.
21
Seller has delivered to Purchaser true, accurate and complete copies of
each document set forth on SCHEDULE 2.2(f) and a written description of each
oral arrangement so listed. All such Contracts and arrangements have been
entered into by Seller in the ordinary course of business. Seller has delivered
to Purchaser true, accurate and complete copies of each form which has been used
in the Business and is in effect with respect to any third party on the date
hereof.
4.16 PERMITS. SCHEDULE 2.2(H) sets forth a true, accurate and complete
list of all Permits held by Seller. All such Permits are in full force and
effect and are transferable to Purchaser without cost or any action on Seller's
or Purchaser's part. Except for the Permits set forth on SCHEDULE 2.2(H), there
are no Permits, whether federal, state, local or foreign, which are necessary
for the lawful operation of the Business.
4.17 INSURANCE.
(a) SCHEDULE 4.17 sets forth a true, accurate and complete list of
all policies of fire, liability, workmen's compensation, title and other
forms of insurance owned, held by or applicable to Seller and its assets,
and Seller has heretofore delivered to Purchaser a true, accurate and
complete copy of all such policies. [To the best of Seller's knowledge,]
all such policies are in full force and effect, all premiums with respect
thereto covering all periods up to and including the Closing Date have
been paid, and no notice of cancellation or termination has been received
with respect to any such policy. Such policies are sufficient for
compliance with (i) all requirements of Law and (ii) all Contracts to
which Seller is a party, and are valid, outstanding and enforceable
policies. Such insurance policies provide types and amounts of insurance
customarily obtained by businesses similar to the Business. Seller has not
been refused any insurance with respect to its assets or operations, and
its coverage has not been limited by any insurance carrier to which it has
applied for any such insurance or with which it has carried insurance,
during the last three years.
(b) SCHEDULE 4.17(b) sets forth a true, accurate and complete list
of all claims which have been made by Seller within the past three years
under any workmen's compensation, general liability, property or other
insurance policy applicable to Seller or any of its properties. There are
no pending or threatened claims under any insurance policy. Such claim
information includes the following information with respect to each
accident, loss, or other event: (i) the identity of the claimant; (ii) the
date of the occurrence; (iii) the status as of the report date and (iv)
the amounts paid or expected to be paid or recovered.
4.18 EMPLOYEE BENEFIT PLANS. Neither Seller nor any ERISA Affiliate of
Seller is a party to nor participates in or has any liability or contingent
liability under any collective bargaining agreement, pension, bonus, profit
sharing, stock option or other agreement or arrangements providing for employee
benefits (other than health insurance), including any "employee welfare benefit
plan", "employee pension benefit plan" as those terms are defined
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under ERISA. Seller has not entered into any severance or similar arrangement in
respect of any present or former employee that will result in any absolute or
contingent obligation of Purchaser to make any payment to any present or former
employee following termination of employment, other than as set forth in the
Employment Agreement attached hereto as Exhibit "A".
4.19 EMPLOYMENT AND LABOR MATTERS. SCHEDULE 4.19 sets forth a true,
accurate and complete list of the names, titles, annual compensation and all
bonuses and similar payments made with respect to each such individual for the
current and preceding fiscal years for and the location of all directors,
officers and employees of Seller who work at or in connection with the Business,
wherever located. To the best of Seller's knowledge, Seller has and currently is
conducting the Business in full compliance with all Laws relating to employment
and employment practices, terms and conditions of employment, wages and hours
and nondiscrimination in employment. Seller's relationship with its employees is
good and there is, and during the past five years there has been, no labor
strike, dispute, slow-down, work stoppage or other labor difficulty actually
pending or threatened against or involving Seller. No grievance or arbitration
proceeding arising out of or under any collective bargaining agreement between
Seller and any employees of the Business is pending and no claim therefor has
been asserted. None of the employees of Seller is covered by any collective
bargaining agreement, no collective bargaining agreement is currently being
negotiated and no attempt is currently being made or during the past three years
has been made to organize any employees of Seller to form or enter a labor union
or similar organization.
4.20 CAPITAL IMPROVEMENTS. SCHEDULE 4.20 sets forth a true, accurate and
complete list of all of the capital improvements or purchases or other capital
expenditures to which Seller has committed or for which it has contracted and
which in any event have not been completed prior to the date hereof and the cost
and expense reasonably estimated to complete such work and purchases.
4.21 TAXES.
(a) All Federal, state, local and foreign income, corporation and
other Tax Returns have been filed for Seller and all other filings in
respect of Taxes have been made for Seller for all periods through and
including the Closing Date as required by applicable Law. All Taxes shown
as due on all such Tax Returns and other filings have been paid. Each such
Tax Return and filing is true, accurate and complete and Seller does not
and will not have any additional liability for Taxes with respect to any
Tax Return or other filing heretofore filed or which was required by Law
to be filed other than as reflected as liabilities on the Financial
Statements. There are no Tax Liens (other than Liens for current Taxes not
yet due and payable) upon the properties or assets of Seller. All Taxes
which Seller is required by Law to withhold or collect, including sales
and use taxes, and amounts required to be withheld for Taxes of employees
and other withholding taxes, have been duly withheld or collected and, to
the extent required, have been paid over to the proper Governmental
Authorities or are held in separate bank
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accounts for such purpose. Notwithstanding the foregoing, Seller has
disclosed to Purchaser that Seller has not filed tax returns in any state
other than California and Colorado (for 1995), and has not paid income or
sales taxes in any such other states. Seller has obtained resale
certificates from purchasers of Seller's products in other states, and has
acted on the assumption that sales and income tax would not be due or
payable in any states other than California. Notwithstanding the
foregoing, Purchaser is not assuming any liabilities for unpaid taxes of
Seller.
(b) Seller is not a "foreign person" as defined in Section
1445(f)(3) of the Code.
(c) None of the Acquired Assets constitutes a joint venture,
partnership or other arrangement or contract which is treated as a
partnership for Federal income tax purposes.
(d) None of the Acquired Assets constitutes tax-exempt bond financed
property or tax-exempt use property within the meaning of Section 168 of
the Code, and none of the Acquired Assets is subject to a lease, safe
harbor lease or other arrangement as a result of which Seller is not
treated as the owner for Federal income tax purposes.
4.22 NO DEFAULTS OR VIOLATIONS.
(a) Seller has not breached any provision of nor is it in default
under the terms of, any current Contract to which it is a party or under
which it has any rights or by which it is bound, and no other party to any
such Contract has breached such Contract or is in default thereunder.
(b) Seller, the Business, each of the Acquired Assets and each of
the Leased Assets is, to the best of Seller's knowledge, in compliance
with, and no violation exists under, any and all Laws applicable to
Seller, the Business, each of the Acquired Assets and each of the Leased
Assets.
(c) No notice from any Governmental Authority has been received by
Seller claiming any violation of any Law (including any building, zoning
or other ordinance) or requiring any work, construction or expenditure, or
asserting any Tax, assessment or penalty.
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4.23 ENVIRONMENTAL MATTERS.
(a) the Business, the Acquired Assets and the Leased Assets are, to
the best of Seller's knowledge, in full compliance with all Environmental
Laws in effect as of the date hereof, and no condition exists or event has
occurred which, with or without notice or the passage of time or both,
would constitute a violation of or give rise to any Lien under any
Environmental Law;
(b) no releases of Hazardous Materials have, to the best of Seller's
knowledge, occurred at or from any property which is now owned or leased
by Seller or which was otherwise owned or used by the Seller;
(c) there are no past, pending, or threatened claims against the
Seller with respect to a violation of any Environmental Law;
(d) there are no leaking underground storage tanks owned by Seller
or located at any facility owned or operated by the Seller;
(e) to the best of Seller's knowledge, no condition has existed or
event has occurred with respect to any property that was at any time owned
or leased, or any direct or indirect subsidiary that was at any time
owned, by Seller, any predecessor to Seller or any Person that is or was
an Affiliate of Seller, which property or subsidiary has been sold,
transferred or disposed or for which any lease has terminated, that in any
case could, with or without notice, passage of time or both, give rise to
any present or future liability of Purchaser pursuant to any Environmental
Law; and
(f) there are no facts, circumstances or conditions that could
reasonably be expected to restrict, under any Environmental Law or
Environmental Permit in effect prior to or at the Closing Date, the
ownership, occupancy, use or transferability of any property owned,
operated or leased by the Seller.
4.24 LITIGATION.
(a) There are no actions, suits, arbitrations, regulatory
proceedings or other litigation, proceedings or governmental
investigations pending or threatened against or affecting Seller or any of
its officers, directors, employees, agents or stockholders thereof in
their capacity as such, or any of the properties or businesses of Seller,
including the Acquired Assets and the Leased Assets, and Seller is not
aware of any facts or circumstances which may give rise to any of the
foregoing. Seller is not subject to any order, judgment, decree,
injunction, stipulation or consent order of or with any court or other
Governmental Authority. Seller has not entered into any agreement to
settle or compromise any proceeding pending or threatened against it which
has involved any obligation other than the payment of money or for which
Seller has any continuing obligation.
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(b) There are no claims, actions, suits, proceedings or
investigations pending or threatened by or against Seller with respect to
this Agreement or the Related Agreements, or in connection with the
transactions contemplated hereby or thereby, and Seller has no reason to
believe there is a valid basis for any such claim, action, suit,
proceeding, or investigation.
4.25 NO CONFLICT OF INTEREST.
(a) neither Seller nor any of its Affiliates (i) has or claims to
have any direct or indirect interest in any tangible or intangible
property used in a business similar to the Business or (ii) has any direct
or indirect interest in any other Person which conducts a business similar
to the Business; and
(b) none of Seller's Affiliates has any Contract or arrangement
with, or does business or is involved in any way with, the Business.
4.26 BANK ACCOUNTS. SCHEDULE 4.26 sets forth a true, accurate and complete
list of the names and locations of each bank or other financial institution at
which Seller has an account (giving the account numbers) or safe deposit box and
the names of all Persons authorized to draw thereon or have access thereto, and
the names of all Persons, if any, now holding powers of attorney or comparable
delegation of authority from Seller and a summary statement thereof.
4.27 CLAIMS AGAINST OFFICERS AND DIRECTORS. There are no pending or
threatened claims against any director, officer, employee or agent of Seller or
any other Person which could give rise to any claim for indemnification against
Seller.
4.28 IMPROPER PAYMENTS. Neither Seller, any of its Affiliates, any of
their respective directors, officers, employees, agents or representatives, nor
any other Person acting on behalf of any of them, has, to the best of Seller's
knowledge, made, paid or received any improper payments that is in any manner
related to the Business, which Seller knows or has reason to believe has been
illegal under federal, state or local law of the United States.
4.29 DUE DILIGENCE MATERIALS. Seller has provided to Purchaser or its
representatives all documents of the character and type requested by Purchaser
and its representatives in connection with their due diligence review of the
Business, and there are no documents in the possession of Seller or any of its
agents or representatives of a similar character or type which have not been so
provided to Purchaser after request therefor.
4.30 NO OTHER AGREEMENT. Neither Seller nor any of its Affiliates has any
Contract or arrangement with respect to the sale or other disposition of the
Business, except as set forth in this Agreement, or the capital stock of Seller.
Except for sales of assets in the ordinary course of business, neither Seller
nor any of its Affiliates has any Contract or arrangement with respect to the
sale or other disposition of any of the Acquired Assets or Leased Assets, except
as set forth in this Agreement.
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4.31 CLOSING FINANCIAL STATEMENTS. Seller has accrued on the Closing
Financial Statements all expenses incurred in connection with the Business prior
to the Closing Date.
4.32 BROKERS. Seller has not used any broker or finder in connection with
the transactions contemplated hereby, and neither Purchaser nor any Affiliate of
Purchaser has or shall have any liability or otherwise suffer or incur any Loss
as a result of or in connection with any brokerage or finder's fee or other
commission of any Person retained by Seller in connection with any of the
transactions contemplated by this Agreement.
4.33 INVESTMENT MATTERS.
(a) Each of the Selling Parties is an "accredited investor," as such
term is defined in Regulation D of the Securities Act;
(b) Each of the Selling Parties is acquiring the Xxxxxx Stock for
his own account and not with a view to or for sale in connection with any
distribution of such interests;
(c) Each of the Selling Parties has knowledge and expertise in
financial and business matters such that he is capable of evaluating the
merits and risks of purchasing the Xxxxxx Stock and has the capacity to
protect his interests in connection with the purchase of the Xxxxxx Stock;
(d) Each of the Selling Parties has consulted with counsel of his
own choosing in connection with the rights and obligations of each of the
Selling Parties under this Agreement, under the documents to be executed
in connection herewith and under the Stockholders Agreement and the
Registration Rights Agreement, which counsel is experienced in
transactions of this nature;
(e) Each of the Selling Parties acknowledges that the Xxxxxx Stock
has not been registered under the Securities Act or under applicable state
securities laws, and, except as otherwise provided in the Registration
Rights Agreement, such Selling Party has no right to require such
registration; and each of the Selling Parties further acknowledges that
the right of such Selling Party to transfer the Xxxxxx Stock may be
further restricted by the Securities Act and applicable state securities
laws; and
(f) Each of the Selling Parties is familiar with the assets,
liabilities, results of operations, business and prospects of Xxxxxx and
has been afforded the opportunity to review and inspect any and all
information, documents or facilities of, or relating to, Xxxxxx for the
purpose of evaluating whether to enter into this Agreement and is
satisfied with such investigation.
4.34 ACCURACY OF STATEMENTS. Neither this Agreement nor any schedule,
exhibit, statement, list, document, certificate or other information furnished
or to be furnished by or on
27
behalf of Seller to Purchaser or any representative or Affiliate of Purchaser in
connection with this Agreement or any of the transactions contemplated hereby
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances in which they are made, not
misleading.
4.35 NO REPRESENTATIONS OR WARRANTIES RE PROFITABILITY. Seller does not
make any representations or warranties with regard to the potential
profitability of a company acquiring the assets of Seller. While Seller has
fully and accurately disclosed information necessary to give a financial history
of Seller's operation of such business for the past two years, Purchaser is
aware that Seller is involved in a highly competitive business, and Purchaser
has made its own determination as to the potential profitability of a company
utilizing the assets of Seller in the future.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND XXXXXX.
Purchaser and Xxxxxx hereby jointly and severally represent and warrant to
Seller, as of the Closing Date, as follows:
5.1 DUE INCORPORATION/OWNERSHIP. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of Delaware,
with all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as they are now being owned, leased,
operated and conducted. Xxxxxx is the sole owner of capital stock of Purchaser,
and no other person owns or has rights to receive any stock of Purchaser. Unless
otherwise agreed by Xxxxx, Purchaser shall remain a direct or indirect 50% owned
subsidiary of Xxxxxx until all of the terms and conditions to be performed by
Purchaser under this Agreement, and the Related Agreements, have been satisfied
in full.
5.2 DUE AUTHORIZATION. Purchaser has full power and authority to enter
into this Agreement and its Related Agreements and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance by Purchaser of this Agreement and its Related Agreements have been
duly and validly approved by the boards of directors of Purchaser and no other
actions or proceedings on the part of Purchaser are necessary to authorize this
Agreement, its Related Agreements and the transactions contemplated hereby and
thereby. Purchaser has duly and validly executed and delivered this Agreement
and has duly and validly executed and delivered (or prior to or at the Closing
will duly and validly execute and deliver) its Related Agreements. This
Agreement constitutes legal, valid and binding obligations of Purchaser and the
Related Agreements, upon execution and delivery by Purchaser will constitute
legal, valid and binding obligations of Purchaser, in each case, enforceable in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy,
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insolvency, moratorium, reorganization or similar laws in effect which affect
the enforcement of creditors' rights generally and by equitable limitations on
the availability of specific remedies.
5.3 CONSENTS AND APPROVALS; NO CONFLICTS, ETC.
(a) Except as set forth on SCHEDULE 5.3, no consent, authorization
or approval of filing or registration with, or cooperation from, any
Governmental Authority or any other Person not a party to this Agreement
is necessary in connection with the execution, delivery and performance by
Purchaser of this Agreement and its Related Agreements and the
consummation of the transactions contemplated hereby and thereby.
(b) The execution, delivery and performance by Purchaser of this
Agreement and its Related Agreements do not and will not (i) violate any
Law applicable to Purchaser or any of its properties or assets; (ii)
violate or conflict with, result in a breach or termination of, constitute
a default or give any third party any additional right (including a
termination right) under, permit cancellation of, result in the creation
of any Lien upon any of the assets or properties of Purchaser under, or
result in or constitute a circumstance which, with or without notice or
lapse of time or both, would constitute any of the foregoing under, any
Contract to which Purchaser is a party or by which Purchaser or any of its
assets or properties are bound; (iii) permit the acceleration of the
maturity of any indebtedness of Purchaser or indebtedness secured by any
of its assets or properties; or (iv) violate or conflict with any
provision of Purchaser's articles of incorporation or bylaws (or similar
organizational instruments).
5.4 BROKERS. Purchaser has not used any broker or finder in connection
with the transactions contemplated hereby, and neither Seller nor any Affiliate
of Seller has or shall have any liability or otherwise suffer or incur any Loss
as a result of or in connection with any brokerage or finder's fee or other
commission of any Person retained by Purchaser in connection with any of the
transactions contemplated by this Agreement.
5.5 CAPITALIZATION.
(a) The total authorized capital stock of the Purchaser consists of
(i) 1,000 shares of common stock, par value $.01 per share, of which 1,000
of such shares are issued and outstanding on the date hereof. All of the
outstanding shares of capital stock of the Purchaser have been duly
authorized and validly issued, are fully paid and non-assessable, were not
issued in violation of the terms of any agreement binding upon the
Purchaser, and no holder of any of the capital stock of the Purchaser has
any rescission rights with respect to such capital stock under any
agreement, under the applicable charter documents of the Purchaser, or
under any applicable federal, state and foreign securities laws, rules and
regulations.
(b) There are no outstanding subscriptions, options, warrants,
convertible securities, calls, commitments, agreements or rights
(contingent or otherwise) of any
29
character to purchase or otherwise acquire from the Purchaser any shares
of, or any securities convertible into, the capital stock of the
Purchaser.
5.6 VALUATION OF XXXXXX STOCK. The parties have set forth their mutual
agreement as to the value of Xxxxxx Stock on SCHEDULE 3.2. Xxxxxx and Purchaser
represent to Seller that the last transfer of Xxxxxx Common Stock made prior to
July 22, 1996, utilized a value of $22.50 per share.
5.7 ACCURACY OF STATEMENTS. No representation or warranty made by
Purchaser in this agreement, or to be furnished in connection with the
transactions herein contemplated contains or will contain any untrue statement
of a material fact, or omits or will omit to state any material facts necessary
to make such representation or warranty, or any such statement not misleading to
a prospective creditor of Purchaser or Xxxxxx, who is seeking full information
with respect to Purchaser's or Xxxxxx' creditworthiness.
ARTICLE VI
COVENANTS OF SELLING PARTIES
Each of the Selling Parties agrees to perform each of the following
covenants:
6.1 IMPLEMENTING AGREEMENT. Subject to the terms and conditions hereof,
each of the Selling Parties shall take all action required of it to fulfill its
obligations under the terms of this Agreement and shall otherwise use its best
efforts to facilitate the consummation of the transactions contemplated hereby.
Except as otherwise expressly permitted hereby, each of the Selling Parties
agrees that it will not take any action which would have the effect of
preventing or impairing such Selling Party's performance of its obligations
under this Agreement.
6.2 INTERIM COMPENSATION. Immediately prior to Closing Seller shall pay to
Xxxxx as compensation the Interim Compensation described on SCHEDULE 2(H)(II).
6.3 PRESERVATION OF ACQUIRED ASSETS. Seller agrees that it will not sell
the Acquired Assets to any Person other than Purchaser (or an Affiliate of
Purchaser) and will not create a Lien over any of the Acquired Assets.
6.4 COMPLIANCE WITH STATE TAX LAWS. Seller and Purchaser shall share
equally in the payment of all taxes due under applicable state tax Laws
governing bulk sales of assets or sales of assets outside the ordinary course of
business, and shall jointly ensure that (a) all required filings have been made
and (b) certification is obtained from the relevant taxing Governmental
Authorities that there is no tax liability to which Purchaser may be subject
under such Laws.
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6.5 NON-COMPETITION.
(a) In exchange for the consideration described in SECTION 3.1(c),
except as set forth below or as Purchaser may otherwise expressly agree in
writing, each of the Selling Parties agrees that, from and after the date
of this Agreement until the later of (x) five years after the Closing Date
or (y) two years after the termination of Xxxxx'x employment with
Purchaser (such date being referred to herein as the "Ending Date"), it
shall not, and shall not permit its Affiliates or any of its or their
respective directors, officers or employees to, directly or indirectly:
(i) engage in, control, invest in, advise, manage, serve as a
director, officer, or employee of, act as a consultant to, receive
any economic benefit from or exert any influence upon, any business
which conducts activities in the Territory (as hereinafter defined)
similar to those conducted by the Business (as now conducted or
hereafter expanded by Purchaser), at any time prior to the Ending
Date;
(ii) solicit, divert or attempt to solicit or divert any party
who is, was, or was solicited to become, a customer or supplier of
the Business (as now conducted or hereafter expanded by Purchaser)
at any time prior to the Ending Date;
(iii) employ, solicit for employment or encourage to leave
their employment, any person who was during the two-year period
prior to such employment, solicitation or encouragement or is an
officer, employee, or independent contractor of the Business (as now
conducted or hereafter expanded by Purchaser);
(iv) avail itself of or invest in any business opportunity
which is related to the activities conducted by the Business (as now
conducted or hereafter expanded by Purchaser), and which came to its
attention prior to the Ending Date,
(v) disturb, or attempt to disturb, any business relationship
between any third party and the Business (as now conducted or
hereafter expanded by Purchaser); or
(vi) make any statement to any third party, including the
press or media, likely to result in adverse publicity for the
Business (as now conducted or hereafter expanded by Purchaser).
For purposes of this SECTION 6.5(a), the term "Business" shall include the
sale, marketing, manufacturing, refurbishment, and distribution of new,
surplus, and refurbished telecommunications components, and the term
"directly or indirectly" shall
31
include acts or omissions as proprietor, partner, joint venturer,
employer, salesman, agent, employee, officer, investor, director, lender
or consultant of or owner of any interest in, any Person and the term
"Territory" shall mean the United States, Canada and all other countries
in which the Business has transacted business prior to the Ending Date.
Seller hereby agrees that the limitation set forth above on its
rights to compete with the Business and Purchaser during the
Non-Competition Term are reasonable and necessary for the protection of
the Business and Purchaser. In this regard, Seller specifically agrees
that such limitation as to the period of time, geographic area and types
and scopes of restriction on his activities are reasonable and necessary
to protect the good will and other business interest of the Business and
Purchaser.
The parties acknowledge that Seller's agreement to enter into a
non-competition covenant has been conditioned upon the corresponding
payment obligations of Purchaser under paragraph 3.1(c) hereof, as well as
Purchaser's covenants under the Employment Agreement. In the event that
Purchaser is in default with respect to payment under paragraph 3.1(c)
hereof or is in material default under the Employment Agreement, and such
default remains uncured for 30 days after written notice from Employee to
Purchaser of such default of the Purchase Agreement, the non-competition
covenants set forth above and in the Employment Agreement shall be deemed
terminated; PROVIDED THAT in no event shall an offset of amounts owed
under Article IX of this Agreement against amounts owed under Section
3.1(c) or a failure to pay such amounts pursuant to Section 6.5(d) be
deemed to be a default hereunder or thereunder.
In the event that the Employee violates any non-competition covenant
set forth above in this Article VI, then, notwithstanding any provision
herein to the contrary, the time period specified above for which the
non-competition covenants are effective shall be extended day for day for
the time period that Employee is in violation of any such covenant.
(b) The parties acknowledge that Xxxxx has been involved in various
investment activities which are not similar to or in competition with
those conducted by the Business, including, but not limited to art
distribution, real estate investments, and prepaid cellular telephone
products. The provision of SECTION 6.5(a) shall not preclude such
non-competitive activities by Xxxxx, provided that such activities do not
interfere with Xxxxx'x obligations under the Employment Agreement.
(c) In the event of actual or threatened breach of the provisions of
this Section by any of the Selling Parties, Purchaser, in addition to any
other remedies available to it for such breach or threatened breach,
including the recovery of damages, shall be entitled to an injunction
restraining such Selling Party from such conduct. If a bond is required to
be posted in order for Purchaser to secure an injunction, the parties
agree that said bond need not exceed the sum of $1,000.
32
(d) In the event any Selling Party engages in any activity
prohibited by this Section, Seller shall forfeit to Purchaser all rights
and amounts then remaining due to Seller under SECTION 3.1(c).
(e) If at any time any of the provisions of this SECTION 6.5 shall
be determined to be invalid or unenforceable by reason of being vague or
unreasonable as to duration, area, scope of activity or otherwise, then
this SECTION 6.5 shall be considered divisible (with the other provisions
to remain in full force and effect) and the invalid or unenforceable
provisions shall become and be deemed to be immediately amended to include
only such time, area, scope of activity and other restrictions, as shall
be determined to be reasonable and enforceable by the court or other body
having jurisdiction over the matter, and the Selling Parties expressly
agree that this Agreement, as so amended, shall be valid and binding as
though any invalid or unenforceable provision had not been included
herein.
(f) The provisions of this SECTION 6.5 shall be in addition to, and
not in limitation of, any other provisions contained in any other
agreement restricting competition by the Selling Parties.
(g) None of the Selling Parties shall, and each of the Selling
Parties shall cause its Affiliates not to, directly or indirectly,
disclose or use for their own benefit or for the benefit of any other
Person, any Confidential Information. Each of the Selling Parties agrees
that upon the request of Purchaser on or after the Closing Date, it will
immediately deliver to Purchaser all papers, books, manuals, lists,
correspondence and documents containing or relating to the Confidential
Information, together with all copies thereof other than such materials as
shall be necessary to permit the Selling Parties to prepare its tax
returns and financial statements.
6.6 USE OF NAME. From and after the Closing Date, each of the Selling
Parties and its Affiliates will not directly or indirectly use in any manner any
trade name, trademark, service xxxx or logo used by the Business or any word or
logo that is similar in sound or appearance and the Selling Parties agree that
they will cause Seller to change its name within 30 days of the Closing.
6.7 TERMINATION OF CERTAIN AGREEMENTS. Effective as of the Closing,
without any cost to Purchaser or the Business, Seller shall, and Seller agrees
that it shall cause its Affiliates to, terminate, rescind, cancel and render
void and of no effect any and all Contracts between the Business on the one hand
and Seller or any of its Affiliates on the other hand; PROVIDED that this
SECTION 6.7 shall not apply to this Agreement or any Related Agreement.
6.8 TAX MATTERS. Seller shall make available to Purchaser such records as
Purchaser may require for the preparation of any Tax Returns or other similar
reports or forms required to be filed by Purchaser and such records as Purchaser
may require for the defense of any audit,
33
examination, administrative appeal or litigation of any such Tax Return or other
similar report or form.
ARTICLE VII
COVENANTS OF PURCHASER
Purchaser agrees to perform each of the following covenants:
7.1 TAX MATTERS. Purchaser shall make available to Seller such records as
Seller may require for the preparation of any Tax Returns or other similar
reports or forms required to be filed by Seller and such records as Seller may
require for the defense of any audit, examination, administrative appeal or
litigation of any such Tax Return or other similar report or form.
ARTICLE VIII
CLOSING
8.1 CLOSING. The Closing shall take place at the offices of Xxxxx and
Xxxxxxxx, 0000 Xxxxxxx, Xxx Xxxx Xxxxxx, Xxxxxxxxxx 00000, at 10:00 a.m. on
September 30, 1996. The Closing, and all transactions to occur at the Closing,
shall be deemed to have taken place at, and shall be effective as of, the close
of business on the Closing Date.
8.2 DELIVERIES BY SELLING PARTIES. At the Closing, in addition to any
other documents or agreements required under this Agreement, Selling Parties
shall deliver to Purchaser the following:
(a) A xxxx of sale in the form set forth in EXHIBIT B;
(b) Originals of, and duly executed assignments of, all of the
following: (i) the Real Property Leases; (ii) the Equipment and Other
Personal Property Leases; (iii) the Seller Purchase Orders; (iv) the
Customer Purchase Orders; and (v) the Other Contracts;
(c) Evidence, in form and substance satisfactory to Purchaser, that
all Required Consents have been obtained;
(d) Estoppel certificates of all landlords under the Real Property
Leases in form and substance satisfactory to Purchaser;
(e) A written statement from each Person holding a Lien upon any of
the Acquired Assets, confirming the repayment of the indebtedness secured
thereby and the
34
release as of the Closing Date of (i) such Lien and (ii) all obligations
under any and all Contracts relating thereto, except to the extent such
Liens relate solely to Assumed Obligations;
(f) The originals and/or duly executed assignments (in form suitable
for filing or recording with the appropriate Governmental Authority, if
applicable) of all of the Permits;
(g) The title for each of the Vehicles, duly endorsed for transfer
by Seller;
(h) Other instruments of transfer reasonably required by Purchaser
to evidence the transfer of the Acquired Assets to Purchaser, including
assignments with respect to any Intellectual Property registered, recorded
or filed with any Governmental Authority, in form suitable for
registration, recordation or filing with such Governmental Authority, in
each case duly executed by Seller;
(i) A certificate of the secretary or equivalent Person (a
"Secretary") of Seller certifying resolutions of the board of directors of
Seller and of the sole stockholder of Seller approving and authorizing the
execution, delivery and performance of this Agreement and its Related
Agreements and the consummation of the transactions contemplated hereby
and thereby (together with an incumbency and signature certificate
regarding the officer(s) signing on behalf of Seller);
(j) The articles of incorporation or similar instruments of Seller
certified by the Secretary of State or equivalent Person of the
jurisdiction of incorporation of Seller, and the bylaws or similar
instruments of Seller, certified by the Secretary of Seller;
(k) A Certificate of Good Standing for Seller from the State of
California;
(l) An opinion, dated the Closing Date, of Xxxxx & Xxxxxxxx, counsel
for Seller, in form and substance satisfactory to Purchaser and to the
effect noted on EXHIBIT C;
(m) a certificate from Seller in form satisfactory to Purchaser
certifying that Seller is not a "foreign person" within the meaning of
section 1445(f)(3) of the Code;
(n) A copy of an amendment of Seller's articles of incorporation to
change Seller's name to a name dissimilar to, and which is not susceptible
to confusion with "New West Communications", together with all filings
required to effectuate such amendment in each state in which Seller is
qualified to do business as a foreign corporation, all of which shall be
certified by the Secretary of Seller and which shall be filed with such
states within five(5) days of Closing;
(o) All Cash and marketable securities included in the Acquired
Assets;
35
(p) The Employment Agreement duly executed by Xxxxx; and
(q) The Closing Financial Statements.
8.3 DELIVERIES BY PURCHASER. At the Closing, in addition to any other
documents or agreements required under this Agreement, Purchaser shall deliver
to Seller the following:
(a) The Cash Amount and certificates representing the Seller Stock;
(b) Consent and signature page authorizing Xxxxx'x accession to the
Stockholders Agreement;
(c) Consent and signature page authorizing Xxxxx'x accession to the
Registration Rights Agreement;
(d) A certificate of Purchaser's secretary certifying resolutions of
the board of directors of Purchaser approving this Agreement and its
Related Agreements and the transactions contemplated hereby (together with
an incumbency and signature certificate regarding the officer(s) signing
on behalf of Purchaser);
(e) The long-form certificate of incorporation or similar
instruments of Purchaser certified by the Secretary of State or equivalent
Person of Purchaser's jurisdiction of incorporation, the bylaws or similar
instruments of Purchaser, certified by Purchaser's Secretary and
authorization from the California Secretary of State that Purchaser may do
business in California as a foreign corporation; and
(f) An opinion, dated the Closing Date, of Mayor, Day, Xxxxxxxx &
Xxxxxx, L.L.P., counsel for Purchaser, in form and substance satisfactory
to Seller and to the effect set forth on EXHIBIT D;
In addition, Purchaser shall deliver to Escrow Agent the Escrowed Shares.
ARTICLE IX
INDEMNIFICATION
9.1 SURVIVAL. The representations and warranties of the parties hereto
contained herein shall survive the Closing for a period of three years, except
that Tax Warranties shall survive until the Tax Statute of Limitations Date and
the Environmental Warranties Title and Authorization Warranties shall survive
forever.
9.2 INDEMNIFICATION BY SELLING PARTIES. The Selling Parties jointly and
severally agree to indemnify each of the Purchaser Indemnified Parties against,
and agrees to hold each of them
36
harmless from, any and all Losses incurred or suffered by them relating to or
arising out of or in connection with any and all Losses suffered, sustained,
incurred or required to be paid by any Purchaser Indemnified Party because of or
that result from or arise out of:
(a) the untruth, inaccuracy or breach of any representation or
warranty, or the failure to fulfill any agreement or covenant, of either
of the Selling Parties contained in this Agreement or in any certificate
or other writing furnished to the Purchaser or Xxxxxx by or on behalf of
either of the Selling Parties in connection herewith;
(b) the Excluded Assets or the Excluded Obligations;
(c) the assertion against any Purchaser Indemnified Party of any
Liability relating to or arising out of the business, operations or assets
of the Seller prior to the Closing Date or the actions or omissions of the
Seller's directors, officers, shareholders, employees or agents prior to
the Closing Date; or
(d) any claim by The Geneva Companies pursuant to any agreement with
Seller or Affiliate of Seller;
; PROVIDED, HOWEVER, that, except for Losses pursuant to (d) above, the initial
$5,000 of Losses incurred or paid by the Purchaser Indemnified Parties for which
the Selling Parties would otherwise be liable to such Purchaser Indemnified
Parties hereunder shall be the liability of such Purchaser Indemnified Parties
and the Selling Parties shall have no liability therefor and PROVIDED, FURTHER
that in no event shall Seller be liable to the Purchaser Indemnified Parties
under this ARTICLE IX for an aggregate amount in excess of $5,500,000.
9.3 INDEMNIFICATION BY PURCHASER. Purchaser agrees to indemnify Seller and
each of its respective Affiliates, officers, directors, employees, agents and
representatives (the "Seller Indemnified Parties") against, and agrees to hold
each of them harmless from, any and all Losses incurred or suffered by them
relating to or arising out of or in connection with any of the following:
(a) any breach of or any inaccuracy in any representation or
warranty made by Purchaser in this Agreement or any Related Agreement or
any document delivered at the Closing; or
(b) any breach of or failure by Purchaser to perform any covenant or
obligation of Purchaser set out or contemplated in this Agreement or any
Related Agreement or any document delivered at the Closing.
(c) the assertion against any Seller Indemnified Party of any
Liability relating to or arising out of the Acquired Assets and Assumed
Obligations after the Closing Date;
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PROVIDED, HOWEVER; that the initial $5,000 of Losses incurred or paid by the
Seller Indemnified Parties for which Purchaser would otherwise be liable
hereunder shall be the liability of such Seller Indemnified Parties and the
Purchaser shall have no liability therefor.
9.4 CLAIMS. (a) The provisions of this section shall be subject to SECTION
9.5. As soon as is reasonably practicable after becoming aware of a claim for
indemnification under this Agreement the Indemnified Person shall promptly give
notice to the Indemnifying Person of such claim and the amount the Indemnified
Person will be entitled to receive hereunder from the Indemnifying Person;
PROVIDED that the failure of the Indemnified Person to give notice shall not
relieve the Indemnifying Person of its obligations under this ARTICLE IX except
to the extent (if any) that the Indemnifying Person shall have been prejudiced
thereby. If the Indemnifying Person does not object in writing to such
indemnification claim within 30 days of receiving notice thereof, the
Indemnified Person shall be entitled to recover promptly from the Indemnifying
Person the amount of such claim (but such recovery shall not limit the amount of
any additional indemnification to which the Indemnified Person may be entitled
pursuant to SECTION 9.2 or 9.3), and no later objection by the Indemnifying
Person shall be permitted. If the Indemnifying Person agrees that it has an
indemnification obligation but objects that it is obligated to pay only a lesser
amount, the Indemnified Person shall nevertheless be entitled to recover
promptly from the Indemnifying Person the lesser amount, without prejudice to
the Indemnified Person's claim for the difference. Any disputes as to any
Indemnification Claim shall be resolved in accordance with Section 10.14 hereof.
9.5 THIRD PARTY CLAIMS.
(a) The Indemnified Person shall give notice as promptly as is
reasonably practicable to the Indemnifying Person of the assertion of any
claim, or the commencement of any suit, action or proceeding, by any
Person not a party hereto in respect of which indemnity may be sought
under this Agreement; PROVIDED that the failure of the Indemnified Person
to give notice shall not relieve the Indemnifying Person of its
obligations under this ARTICLE X except to the extent (if any) that the
Indemnifying Person shall have been prejudiced thereby. The Indemnifying
Person may, at its own expense (a) participate in the defense of any
claim, suit, action or proceeding and (b) upon notice to the Indemnified
Person and the Indemnifying Person's delivering to the Indemnified Person
a written agreement that the Indemnified Person is entitled to
indemnification pursuant to SECTION 3.3, 9.2 or 9.3 for all Losses arising
out of such claim, suit, action or proceeding and that the Indemnifying
Person shall be liable for the entire amount of any Loss, at any time
during the course of any such claim, suit, action or proceeding, assume
the defense thereof, PROVIDED that (i) the Indemnifying Person's counsel
is reasonably satisfactory to the Indemnified Person, and (ii) the
Indemnifying Person shall thereafter consult with the Indemnified Person
upon the Indemnified Person's reasonable request for such consultation
from time to time with respect to such claim, suit, action or proceeding.
If the Indemnifying Person assumes such defense, the Indemnified Person
shall have the right (but not the obligation) to participate in the
defense thereof and to employ counsel, at its own expense, separate from
the counsel
38
employed by the Indemnifying Person. If, however, the Indemnified Person
reasonably determines in its judgment that representation by the
Indemnifying Person's counsel of both the Indemnifying Person and the
Indemnified Person would present such counsel with a conflict of interest,
then such Indemnified Person may employ separate counsel to represent or
defend it in any such claim, action, suit or proceeding and the
Indemnifying Person shall pay the fees and disbursements of such separate
counsel. Whether or not the Indemnifying Person chooses to defend or
prosecute any such claim, suit, action or proceeding, all of the parties
hereto shall cooperate in the defense or prosecution thereof.
(b) Any settlement or compromise made or caused to be made by the
Indemnified Person or the Indemnifying Person, as the case may be, of any
such claim, suit, action or proceeding of the kind referred to in SECTION
9.5(a) shall also be binding upon the Indemnifying Person or the
Indemnified Person, as the case may be, in the same manner as if a final
judgment or decree had been entered by a court of competent jurisdiction
in the amount of such settlement or compromise; PROVIDED that no
obligation, restriction or Loss shall be imposed on the Indemnified Person
as a result of such settlement without its prior written consent. The
Indemnified Person will give the Indemnifying Person at least 30 days'
notice of any proposed settlement or compromise of any claim, suit, action
or proceeding it is defending, during which time the Indemnifying Person
may reject such proposed settlement or compromise; PROVIDED that from and
after such rejection, the Indemnifying Person shall be obligated to assume
the defense of and full and complete liability and responsibility for such
claim, suit, action or proceeding and any and all Losses in connection
therewith in excess of the amount of unindemnifiable Losses which the
Indemnified Person would have been obligated to pay under the proposed
settlement or compromise.
(c) In the event that the Indemnifying Person does not elect to
assume the defense of any claim, suit, action or proceeding, then any
failure of the Indemnified Person to defend or to participate in the
defense of any such claim, suit, action or proceeding or to cause the same
to be done, shall not relieve the Indemnifying Person of its obligations
hereunder.
9.6 PAYMENT OF INDEMNIFICATION OBLIGATIONS. In the event that either of
the Selling Parties or the Purchaser is required to make any payment under
SECTION 9.4 or pursuant to a final determination under SECTION 10.14, such party
shall promptly pay the Purchaser Indemnified Party or the Seller Indemnified
Party, as the case may be, the amount of such indemnity obligation; PROVIDED,
HOWEVER, that in the event that either of the Selling Parties shall be obligated
to pay to Purchaser any amount pursuant to SECTION 9.4 or pursuant to a final
determination under SECTION 10.14, Purchaser may set off the amount of such
indemnity obligation against amounts owed pursuant to SECTION 3.1(c) or may
submit to the Escrow Agent a request to withhold delivery of the amount of
Escrowed Shares the fair market value of which is equal to the amount of such
indemnity obligation. If there should be a dispute as to such amount, such
Selling Party or the Purchaser, as the case may be, shall nevertheless pay when
39
due (or Purchaser may set off) such portion, if any, of the obligation as shall
not be subject to dispute. The difference, if any, between the amount of the
obligation ultimately determined as properly payable under this SECTION 9.6 and
the portion, if any, theretofore paid shall bear interest for the period from
the date the amount was demanded by the Purchaser Indemnified Party or the
Seller Indemnified Party, as the case may be, until payment in full, payable on
demand, at the fluctuating rate per annum which at all times shall be the rate
which is publicly announced from time to time by NationsBank of Texas, N.A. or
its successor as its "prime rate".
9.7 EXCLUSIVE REMEDY. Following the Closing, the indemnification
provisions set forth in this Agreement constitute the sole and exclusive
recourse and remedy for monetary damages (whether through indemnification,
contribution or otherwise) available to the parties hereto with respect to the
breach of any representation, warranty or covenant contained in this Agreement,
but this provision shall not be construed to preclude any rights or remedies
available to the parties under the Employment Agreement.
9.8 INSURANCE OR THIRD PARTY INDEMNIFICATION. Notwithstanding anything to
the contrary herein, an Indemnifying Person shall not be liable for a Loss
arising out of or in connection with any matter described in this ARTICLE IX if
and to the extent such Loss is covered by a policy of insurance or benefits from
a right to indemnification from a Person not party to this Agreement and payment
is made under such policy to the Indemnified Person by the insurer or under such
right to indemnification by such Person, as applicable.
ARTICLE X
MISCELLANEOUS
10.1 EXPENSES. Each party hereto shall bear its own expenses, including
all legal and accounting fees, with respect to the transactions contemplated
hereby. Seller and Purchaser shall share equally in the payment of all sales,
use, stamp, transfer, service, recording, real estate and like taxes or fees, if
any, imposed by any Governmental Authority in connection with the transfer and
assignment of the Acquired Assets. All such expenses, taxes, fees and other
costs payable by Seller or Xxxxx shall be paid by Xxxxx using funds from the
consideration payable by Purchaser hereunder and not from funds in the Seller's
possession immediately prior to Closing.
10.2 AMENDMENT. This Agreement may be amended, modified or supplemented
but only in writing signed by Purchaser and Seller.
10.3 NOTICES. Any notice, request, instruction or other document to be
given hereunder by a party hereto shall be in writing and shall be deemed to
have been given (a) when received if given in person or by courier or a courier
service, (b) on the date of transmission if sent by
40
telex, facsimile or other wire transmission or (c) five Business Days after
being deposited in the mail, certified or registered, postage prepaid:
If to Seller, addressed as follows:
Xxxxx Xxxxx
000 Xxxxxx Xxxx Xxxx
Xxx Xxxx Xxxxxx, Xxxxxxxxxx 00000
Telephone No.: (000)000-0000
with a copy to:
Xxxxx & Xxxxxxxx
0000 Xxxxxxx Xxxxxx
Xxx Xxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxxx, Esq .
Telephone No.: (000)000-0000
Facsimile No.: (000)000-0000
If to Purchaser, addressed as follows:
New West Acquisition Corp.
Xxxxxx International, Inc.
0000 Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to:
Mayor, Day, Xxxxxxxx & Xxxxxx, L.L.P.
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Mayor, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.
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10.4 EFFECT OF INVESTIGATION. Any due diligence review, audit or other
investigation or inquiry undertaken or performed by or on behalf of Purchaser
shall not limit, qualify, modify or amend the representations, warranties or
covenants of, or indemnities by, Seller made or undertaken pursuant to this
Agreement, irrespective of the knowledge and information received (or which
should have been received) therefrom by Purchaser.
10.5 WAIVERS. The failure of a party hereto at any time or times to
require performance of any provision hereof shall in no manner affect its right
at a later time to enforce the same. No waiver by a party of any condition or of
any breach of any term, covenant, representation or warranty contained in this
Agreement shall be effective unless in writing, and no waiver in any one or more
instances shall be deemed to be a further or continuing waiver of any such
condition or breach in other instances or a waiver of any other condition or
breach of any other term, covenant, representation or warranty.
10.6 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns;
PROVIDED that no assignment of any rights or obligations shall be made by Seller
without the written consent of Purchaser or by Purchaser without the written
consent of Seller, except that Purchaser may assign its rights hereunder without
such consent to any Affiliate of Purchaser.
10.7 NO THIRD PARTY BENEFICIARIES. This Agreement is solely for the
benefit of the parties hereto and, to the extent provided herein, their
respective Affiliates, directors, officers, employees, agents and
representatives, and no provision of this Agreement shall be deemed to confer
upon third parties any remedy, claim, liability, reimbursement, cause of action
or other right.
10.8 PUBLICITY. Except as required by Law or the rules of any stock
exchange, no public announcement or other publicity regarding the transactions
referred to herein shall be made by Purchaser or Seller or any of their
respective Affiliates, officers, directors, employees, representatives or
agents, without the prior written agreement of Purchaser and Seller, in any
case, as to form, content, timing and manner of distribution or publication;
PROVIDED that nothing in this SECTION 10.8 shall prevent such parties from
discussing such transactions with those Persons whose approval, agreement or
opinion, as the case may be, is required for consummation of such particular
transaction or transactions.
10.9 FURTHER ASSURANCES. Upon the reasonable request of Purchaser, Seller
will on and after the Closing Date execute and deliver to Purchaser such other
documents, releases, assignments and other instruments as may be required to
effectuate completely the transfer and assignment to Purchaser of, and to vest
fully in Purchaser title to, each of the Acquired Assets, and to otherwise carry
out the purposes of this Agreement.
10.10 SEVERABILITY. If any provision of this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality or enforceability of
the other provisions hereof shall not be
42
affected thereby, and there shall be deemed substituted for the provision at
issue a valid, legal and enforceable provision as similar as possible to the
provision at issue.
10.11 REMEDIES CUMULATIVE. The remedies provided in this Agreement shall
be cumulative and shall not preclude the assertion or exercise of any other
rights or remedies available by law, in equity or otherwise.
10.12 ENTIRE UNDERSTANDING. This Agreement and the Related Agreements set
forth the entire agreement and understanding of the parties hereto in respect to
the transactions contemplated hereby and supersede any and all prior agreements,
arrangements and understandings among the parties relating to the subject matter
hereof.
10.13 APPLICABLE LAW. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of California
without giving effect to the principles of conflicts of law thereof.
10.14 BINDING ARBITRATION.
(a) Subject to the provisions of Section 10.14(b), below, if a
dispute or controversy arises between the parties relating to this Agreement
including any dispute regarding Article IX, the parties agree to use the
following procedures prior to either party pursuing other available remedies:
(i) A meeting will be held promptly between the parties
attended by individuals with decision-making authority to attempt in good
faith to negotiate a resolution of the dispute. If either party intends to
be accompanied at a meeting by an attorney, the other parties will be
given at least three (3) business days' notice of such intention, and
those parties also may be accompanied by an attorney. All negotiations
pursuant to this Section 10.14 are confidential and will be treated as
compromise and settlement negotiations for purposes of the Federal Rules
of Evidence and state rules of evidence.
(ii) If within ten (10) days after such meeting, the parties
have not succeeded in negotiating a resolution of the dispute, they will
jointly appoint a mutually acceptable neutral person not affiliated with
either of the parties (the "Neutral"), seeking assistance in such regard
from the American Arbitration Association ("AAA") if they have been unable
to agree upon such appointment within twenty (20) days from the initial
meeting. The obligation for payment of the fees of the Neutral shall be
shared equally by the parties. In consultation with the Neutral, the
parties will select or devise an alternative dispute resolution procedure
("ADR") by which they will attempt to resolve the dispute, and a time for
the ADR to be held, with the Neutral making the decision as to the
procedure and time (but unless circumstances require otherwise, not later
than sixty (60) days after selection of the Neutral) if the parties have
been unable to agree on any of such matters within twenty (20) days after
initial consultation with the Neutral.
43
Any ADR proceeding will be held in Los Angeles, California, at a location
mutually agreeable to the parties or, if they are unable to agree,
selected by the Neutral. The parties agree to participate in good faith in
the ADR to its conclusion as designated by the Neutral.
(iii) If the parties are not successful in resolving the
dispute as provided in Sections (i) and (ii), above, then the parties
agree that such dispute will be settled by binding arbitration conducted
on a confidential basis pursuant to the AAA Rules for Non- Administered
Arbitration of Business Disputes by a sole arbitrator selected from the
AAA Panels of Neutrals. Any decision or award as a result of any such
arbitration proceeding will include the assessment of costs, expenses and
reasonable attorneys' fees in favor of the prevailing party, which will be
selected in the discretion of the arbitrator. Absent an agreement by the
parties to the contrary, any such arbitration will be conducted at a
location, in Los Angeles, California, selected by the arbitrator. The
parties reserve the right to object to any proposed arbitrator who is
employed by or affiliated with a competing organization or entity. Prior
to issuing the arbitrator's final award of arbitration, the arbitrator
will provide each party with the arbitrator's written tentative award,
which will include the findings of fact as determined by the arbitrator
upon which such tentative award is based. Each party will have ten (10)
business days from the delivery of such tentative award to submit to the
arbitrator a written rebuttal to the findings of fact set forth in the
tentative award, and the arbitrator will promptly forward a copy of each
party's rebuttal, if any, to the other parties. If no party submits such a
rebuttal, the tentative award will be deemed final; if any party submits
such a rebuttal, the arbitrator will promptly review the same and will
deliver a final award, in writing, to each of the parties. An award of
arbitration will be final and binding on the parties and may be confirmed
in any appropriate court with jurisdiction.
(iv) All applicable statutes of limitation and defenses based
upon the passage of time will be tolled while the procedures specified in
this Section 10.14 are pending. The parties will take all such actions, if
any, necessary to effectuate such tolling.
(b) Notwithstanding the foregoing, with respect to each and every
breach or violation or threatened breach or violation by any party hereto, any
other party, Purchaser, in addition to all other remedies available at law or in
equity including specific performance of the provisions hereof, shall be
entitled to enjoin the commencement or continuance thereof and may, without
notice to such other party, apply to any court of competent jurisdiction for
entry of an immediate restrainig order or injunction. Upon the court's
determination of such application for a restraining order or injunction, and
subject to the parties' compliance therewith, further court action will be
stayed pending completion of the procedures outlined in Section 10.14(a), above.
Purchaser may set-off and apply against any and all amounts owing to the Selling
Parties by Purchaser any damages incurred by Purchaser in connection with any
breach or violation of this Agreement, whether such obligations arise on, before
or after the date hereof; provided, however, that Purchaser shall not offset any
such amounts until any rights that any of the Selling
44
Parties has to cure any breach or violation of this Agreement, which rights are
set forth in this Section 10.14, have expired. Purchaser may pursue any of the
remedies described herein concurrently or consecutively in any order as to any
breach or violation, and the pursuit of one of such remedies at any time will
not be deemed an election of remedies or a waiver of the right to pursue any of
the other of such remedies.
10.15 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
45
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
NEW WEST ACQUISITION, CORP.
By: ______________________________
Xxxxx Xxxxxxx
President
NEW WEST COMMUNICATIONS
By: ______________________________
Xxxxx Xxxxx
President
______________________________
Xxxxx Xxxxx
FOR THE LIMITED PURPOSE OF JOINING
IN THE REPRESENTATIONS AND WARRANTIES
SET FORTH IN ARTICLE V:
XXXXXX INTERNATIONAL, INC.
By: _______________________________
Xxxxx Xxxxxxx
President
46
