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EXHIBIT 2.4
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of the 15th day of
June, 2000, by and among o2wireless Solutions, Inc., a Georgia corporation
(together with its successors and assigns, "o2"), Clear Communications Group,
Inc., a Georgia corporation (together with its successors and assigns, the
"Buyer"), Communication Consulting Services, Inc., an Illinois corporation (the
"Company"), and Xxxx X. Xxxxx and Xxxxx X. Xxxxx (collectively, the
"Shareholders" and each individually a "Shareholder").
WITNESSETH:
WHEREAS, the Company is engaged in the business of construction and
installation of telecommunication equipment and related telecommunication
support services;
WHEREAS, the Shareholders own all of the issued and outstanding shares
of the capital stock of the Company (the "Company Stock");
WHEREAS, the Shareholders desire to sell, and the Buyer desires to
purchase, the Company Stock pursuant to this Agreement (the "Acquisition"); and
WHEREAS, it is the intention of the parties hereto that upon
consummation of the purchase and sale of the Company Stock pursuant to this
Agreement, the Buyer shall own all of the issued and outstanding shares of
capital stock of the Company.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto covenant and agree as follows:
ARTICLE I
SALE OF STOCK
1.1 Sale of Stock. Subject to the terms and conditions of this
Agreement, and on the basis of the representations and warranties hereinafter
set forth, at the Closing (as hereinafter defined), the Shareholders shall sell,
assign, transfer and deliver the Company Stock to the Buyer, and the Buyer shall
purchase the Company Stock from the Shareholders.
1.2 Purchase Price. The purchase price for the Company Stock (the
"Purchase Price") will be Two Million Two Hundred Fifty Thousand Dollars (U.S.
$2,250,000). Upon the terms and subject to the conditions of this Agreement, and
in consideration of the sale, assignment, transfer, conveyance and delivery of
the Company Stock, the Buyer will deliver or cause to be delivered the Purchase
Price as follows:
(a) at and following the Closing, the Buyer, as part of
the Purchase Price, shall reimburse the Shareholders, or pay as directed by the
Shareholders, an aggregate amount in cash (but not to exceed Two Million
Twenty-five Thousand Dollars ($2,025,000)) necessary to satisfy all debts and
liabilities of the Company other than those set forth in Schedule 1.2(a)
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including, without limitation, (i) the satisfaction and settlement of all
matters between the Company, the Shareholders, and LCC International, Inc.
and/or its affiliates, and (ii) all amounts owed by the Company to the
Shareholder(s) for any reason whatsoever;
(b) at the Closing, the Buyer shall deposit with E.
Xxxxxx Xxxxxx, Xx., as escrow agent, the sum of Two Hundred Twenty-Five Thousand
Dollars ($225,000) to be held in escrow in accordance with the Escrow Agreement
(as defined in Section 4.17 hereof); and
(c) at the Closing, the Buyer shall pay the balance of
the Purchase Price, if any, to the Shareholders in immediately available funds
in accordance with their respective ownership percentages of the Company.
1.3 Time and Place of Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at 10:00 a.m. on
June 30, 2000, or at such other time as the Parties may mutually agree (the date
on which the Closing actually occurs, the "Closing Date"). The place of the
Closing shall be at the offices of Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx, PLLC, One
Atlantic Center, 0000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx, or
such other location as may be mutually agreed by the Parties.
1.4 Deliveries at Closing.
(a) Deliveries by the Shareholders. At the Closing, the
Shareholders shall deliver to the Buyer:
(i) stock certificates representing all of the
Company Stock, endorsed in blank or accompanied by stock powers executed in
blank; and
(ii) the documents referred to in Sections 5.7,
5.8, 5.9, 5.10, 5.11, 5.12, 5.14, 5.15 and 5.16 hereof.
(b) Deliveries by the Buyer. At the Closing, the Buyer
shall deliver to the Shareholders:
(i) the Purchase Price in accordance with
Section 1.2 hereof; and
(ii) the documents referred to in Sections 6.4,
6.7, 6.8, 6.9, 6.10 and 6.11 hereof.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
As an inducement to the Buyer and o2 to enter into this Agreement and
to consummate the transactions contemplated hereby, and with the knowledge that
the Buyer and o2 shall rely thereon, the Shareholders hereby jointly and
severally represent and warrant to the Buyer and o2, as of the date hereof and
as of the Closing Date (but, for the avoidance of doubt, not as of any date
subsequent to the Closing Date), as set forth below. (Information set forth in
the Schedules
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attached hereto specifically refers to the article and section of this Agreement
to which such information is responsive. To avoid unnecessary redundancy, an
item disclosed in one Schedule need not be disclosed again in another Schedule
if one disclosure satisfactorily and substantially discloses the information
sought in the other).
2.1 Corporate.
(a) Organization. The Company is a corporation duly
organized, validly existing and (where applicable) in good standing under the
laws of the State of Illinois. The Company was incorporated on October 16, 1995,
and has not elected to be taxed as an "S - corporation". No entity has ever
merged with or been consolidated into the Company.
(b) Corporate Power. The Company has all requisite
corporate power and authority to own, operate and lease its properties and to
carry on its business as and where such is now being conducted. The Company is
duly qualified or otherwise authorized as a foreign corporation to transact
business and is in good standing in each jurisdiction in which a failure to be
so qualified would have a Material Adverse Effect (as defined in Section 2.23
hereof).
(c) Subsidiaries. Except as set forth in Schedule 2.1(c),
the Company does not currently own, and has never owned, directly or indirectly,
any capital stock or other equity securities of any corporation or have any
direct or indirect equity or other ownership interest in any entity or business.
(d) Corporate Documents, Etc. Copies of the certificate
or articles of incorporation and bylaws of the Company, including any amendments
thereto, which have been delivered by the Company to the Buyer are true, correct
and complete copies of such instruments as presently in effect. The corporate
minute book and stock records of the Company which have been furnished to the
Buyer for inspection are true, correct and complete in all material respects,
including all transactions and actions with respect to the capital stock of the
Company.
(e) Capitalization and Title to Company Stock. The
authorized capital stock of the Company is as set forth in Schedule 2.1(e). No
shares of such capital stock are issued and outstanding except for shares
identified in Schedule 2.1(e). The shares of capital stock of the Company are
owned of record and beneficially by the Shareholders in the amounts set forth in
Schedule 2.1(e), which sets forth the address of each of the Shareholders.
Except as set forth in Schedule 2.1(e), all shares of capital stock identified
on Schedule 2.1(e) are validly issued, fully paid and nonassessable and the
Shareholders have full power and authority to convey, free and clear of all
liens, encumbrances, equities, restrictions, claims and obligations of every
kind ("Encumbrances"), all such shares of capital stock and, upon delivery of
such shares of capital stock, as provided in Section 1.4, the Buyer will acquire
good and marketable title to the capital stock of the Company, free and clear of
all Encumbrances. Except as set forth on Schedule 2.1(e), there are no (i)
securities convertible into or exchangeable for any of the capital stock or
other securities of the Company, (ii) options, warrants or other rights to
purchase or subscribe to capital stock or other securities of the Company, or
securities which are convertible into or exchangeable for capital stock or other
securities of the Company or (iii) contracts, commitments, agreements,
understandings or arrangements of any kind relating to the issuance,
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sale or transfer of any capital stock or other equity securities of the Company,
any such convertible or exchangeable securities or any such options, warrants or
other rights. Schedule 2.1(e) sets forth, with respect to each issuance of stock
of the Company, the date of issuance, the purchaser(s), and the consideration
received therefor. Except as set forth on Schedule 2.1(e), no person or entity
has, or ever has had, any ownership interest in the assets, properties or
business of the Company. There are no options, contracts, commitments,
agreements, understandings or arrangements of any kind to purchase any ownership
interest in the Company or any of its properties, business or assets.
2.2 Authorization; Validity. The execution and delivery of this
Agreement and the other agreements, instruments and documents contemplated
hereby (such other agreements, instruments and documents sometimes referred to
herein as the "Ancillary Instruments") and the performance of the obligations
set forth herein and therein, have been duly authorized by the Board of
Directors of the Company and the Shareholders, as may be required by applicable
law, and no other or further act on the part of the Company or the Shareholders
is necessary therefor. The Shareholders have unanimously approved the
Acquisition. This Agreement and the Ancillary Instruments have been duly and
validly executed and delivered by the Shareholders and assuming the due
authorization, execution and delivery of this Agreement and the Ancillary
Instruments by the appropriate parties, this Agreement and the Ancillary
Instruments constitute and will constitute the legal, valid and binding
obligations of the Shareholders and the Company, enforceable in accordance with
their respective terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization or other laws affecting creditors' rights generally,
and by general equitable principles. The remedy of specific performance and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
2.3 No Violation. Except as set forth on Schedule 2.3, no consent,
authorization or approval of, or declaration, filing or registration with, any
governmental, administrative or regulatory body, or any consent, authorization
or approval of any other third party, is necessary in order to enable the
Shareholders or the Company to enter into and perform their respective
obligations under this Agreement and the Ancillary Instruments and to consummate
the transactions contemplated hereby and thereby, and neither the execution and
delivery of this Agreement and the Ancillary Instruments nor the consummation of
the transactions contemplated therein will:
(a) be in violation of the articles of incorporation or
bylaws of the Company or constitute a breach of the terms of any evidence of
indebtedness or agreement relating to the Company's business to which the
Company is a party;
(b) cause a default under any mortgage or deed of trust
or other lien, charge or encumbrance to which any asset of the Company or the
Company Stock is subject or under any contract relating to the Company's
business to which the Company is a party, or permit the termination of any such
contract by another person;
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(c) result in the creation or imposition of any security
interest, lien, charge or other encumbrance upon any asset of the Company or the
Company Stock under any agreement or commitment to which the Company is bound;
(d) accelerate, or constitute an event entitling, or
which would, upon notice or lapse of time or both, entitle the holder of any
indebtedness of the Company or a Shareholder to accelerate the maturity of any
such indebtedness;
(e) conflict with or result in the breach of any writ,
injunction or decree of any court or governmental instrumentality binding on the
Company or a Shareholder; or
(f) violate any statute, law or regulation of any
jurisdiction as such statute, law or regulation relates to the properties or
business of the Company.
2.4 Financial Statements. Attached as Schedule 2.4 are copies of
the Company's financial statements for the two fiscal years immediately
preceding the date of this Agreement (the "Company Statements"). The Company
Statements were prepared from the books and records of the Company in a manner
conforming to generally accepted accounting principles ("GAAP") and present the
financial condition of the Company in accordance with GAAP as of the date
thereof.
2.5 Accounts Receivable; Absence of Undisclosed Liabilities.
(a) Accounts Receivable. All accounts receivable of the
Company reflected on the Company Statements, other than as described in Schedule
2.5(a), and those arising since the date of the Company Statements, represent
arm's length sales actually made in the ordinary course of business; are
collectible in the ordinary course of business not later than the 9-month
anniversary of the Closing Date (without regard to reserves); are subject to no
counterclaim or set off; and are not in dispute. Items contained in Schedule
2.5(a) are collectible no later than the first anniversary of the Closing Date.
Schedule 2.5(a) contains an aged schedule of accounts receivable with respect to
the Company included in the Company Statements and as of a date not more than
twenty (20) days prior to the date hereof. Except as set forth on Schedule
2.5(a), the Company is not owed any receivable by any customer of the Company as
a result of any retainage of funds by such customer pursuant to any installation
agreement or other contractual agreement with the Company which has been owed to
the Company for a period of time exceeding 6 months in length (to be calculated
as of the Closing Date). The Company shall have the right to set off against the
purchase price to be paid to LCC for certain Company Stock purchased from LCC,
those invoices identified in Schedule 2.5(a).
(b) Absence of Undisclosed Liabilities. All liabilities,
commitments or obligations of the Company with respect to the Company's business
(whether secured or unsecured and whether accrued, absolute, contingent, direct
or indirect or otherwise and whether due or to become due) are set forth or
adequately reserved against in the Company Statements, except for commercial
liabilities and obligations incurred since the date of the Company Statements in
the ordinary course of business and consistent with past practice and which will
not have a Material Adverse Effect. The total of all liabilities in respect of
accounts payable
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incurred since the date of the Company Statements through the date of this
Agreement, does not exceed $98,293.49. Except as set forth on Schedule 2.5(b)
hereto and to the extent described in the Company Statements, the Shareholders
have no knowledge of any basis for the assertion against the Company of any
liability, and there are no circumstances, conditions, happenings, events or
arrangements, contractual or otherwise, known to the Shareholders which may
likely give rise to liabilities, except commercial liabilities and obligations
incurred in the ordinary course of business and consistent with past practice.
2.6 Title to Properties; Encumbrances.
(a) Merchantable Title. Except as set forth in Schedule
2.6(a), the Company has good and merchantable title to all of its assets,
businesses and properties used or useful in the Company's business and necessary
to permit the Company to carry on the Company's business as presently conducted,
and with respect to real property leased by the Company for use in the Company's
business, good and marketable leasehold estates or lessee's interests,
including, without limitation, all such properties (tangible and intangible)
reflected in the Company Statements (except for inventory disposed of in the
ordinary course of business since the date of such Company Statements) free and
clear of all mortgages, liens (statutory or otherwise), security interests,
claims, pledges, licenses, equities, options, conditional sales contracts,
assessments, levies, easements, covenants, reservations, restrictions,
rights-of-way, exceptions, limitations, mineral rights, charges or Encumbrances
of any nature whatsoever (collectively, "Liens") except, in the case of real
property identified on Schedule 2.1l(a), for Liens for taxes not yet due or
which are being contested in good faith by appropriate proceedings (and which
have been sufficiently accrued or reserved against in the Company Statements),
municipal and zoning ordinances and easements for public utilities, none of
which interfere with the use of the property as currently utilized (the
"Permitted Liens"). None of the assets, business or properties of the Company
used or useful in the Company's business are subject to any restrictions with
respect to the transferability thereof and title thereto will not be affected in
any way by the transactions contemplated hereby other than as disclosed in
Schedule 2.6(a).
(b) Condition. Except as set forth on Schedule 2.6(b),
all property and assets owned or utilized by the Company in the Company's
business are in good operating condition and repair (except such minor defects
as do not interfere with the use thereof in the conduct of the normal operations
of the Company), have been maintained consistent with the standards generally
followed in the industry and were sufficient to carry on the Company's business
as conducted during the preceding twelve (12) months.
2.7 Inventory. All inventory of the Company is reflected on
Schedule 2.7, and all such inventory consists of a quality and quantity useable
and saleable in the ordinary course of business not later than the first
anniversary of the Closing Date (except for immaterial amounts and except as
otherwise indicated on Schedule 2.7) and has a commercial value at least equal
to the value shown on Schedule 2.7, which value has been established in
accordance with GAAP at the lower of cost or market. All inventory of the
Company with respect to the Company's business is located on Real Property (as
hereinafter defined) of the Company.
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2.8 Compliance with Laws.
(a) Compliance. Except as set forth on Schedule 2.8(a),
to the best of Shareholders' knowledge and belief, the Company (including all
of its operations, practices, properties, real or personal, owned or leased,
and assets) is in compliance with all applicable federal, state, local and
foreign laws, ordinances, orders, rules and regulations (collectively, "Laws"),
a violation of which, if uncured, would have a Material Adverse Effect,
including, without limitation, Laws applicable to the offer or sale of
securities, discrimination in employment, the Americans with Disabilities Act,
occupational safety and health, trade practices, competition and pricing,
product warranties, zoning, building and sanitation, employment, retirement and
labor relations, product advertising and the Environmental Laws (as hereinafter
defined). The Company has not at any time owned any Real Property (as
hereinafter defined). Except as set forth in Schedule 2.8(a), neither the
Company, nor to the knowledge of the Shareholders, any landlord of the Company,
has received notice of any violation or alleged violation of, or is subject to
liability (whether accrued, absolute, contingent, direct or indirect) for past
or continuing violation of, any Laws. To the knowledge of the Shareholders
after due inquiry, all reports and returns required to be filed by the Company
with any governmental authority have been filed, and were accurate and complete
when filed. Without limiting the generality of the foregoing:
(i) The operation of the Company's business as
now conducted does not, nor does any condition existing at any of the
facilities in which the Company's business is conducted (collectively, the
"Facilities"), in any manner constitute a breach or violation of any lease or
other agreement governing the use of such Facilities. Neither the Company nor
the Shareholders have received any notice of or otherwise have any knowledge
about any claim or likely potential claim that the operation of the Company's
business as now conducted or any condition existing at the Facilities allegedly
constitutes a nuisance or other tortious interference with the rights of any
person or persons in such a manner as to give rise to or constitute the grounds
for a suit, action, claim or demand by any such person or persons seeking
compensation or damages or seeking to restrain, enjoin or otherwise prohibit
any aspect of the conduct of such businesses or the manner in which they are
now conducted;
(ii) the Company has made all required payments
to its unemployment compensation reserve accounts with the appropriate
governmental departments of the states where it is required to maintain such
accounts, and, to the knowledge of the Shareholders after due inquiry, each of
such accounts has a positive balance;
(iii) the Company, for the past three (3) years,
has not been required to file any reports under the federal Occupational Safety
and Health Act of 1970, as amended, or under all other applicable health and
safety laws and regulations, except for reports, the failure to file which
would not, individually or in the aggregate, have a Material Adverse Effect.
(b) Licenses and Permits. Except as set forth on Schedule
2.8(b), to the best of Shareholders' knowledge and belief, the Company does not
require any licenses, permits, approvals, authorizations, or consents from any
governmental and regulatory authorities for the
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conduct of the Company's business (as presently conducted as proposed to be
conducted), or for the operation of the Facilities. To the best of Shareholders'
knowledge and belief, the Company (including its operations, properties, whether
owned or leased, and assets) (i) is and has been in compliance with all such
permits and licenses, approvals, authorizations and consents applicable to the
conduct of the Company's business in the State of Illinois, and (ii) except for
such items, the failure to obtain which would not, individually or in the
aggregate, have a Material Adverse Effect, is and has been in compliance with
all such permits and licenses, approvals, authorizations and consents applicable
to the conduct of the Company's business outside of the State of Illinois.
(c) Environmental Matters. The applicable Laws relating
to pollution or protection of the environment, including Laws relating to
emissions, discharges, generation, storage, release or threatened release of
pollutants, contaminants, asbestos, lead-based paints, chemicals or industrial,
toxic, hazardous or petroleum or petroleum-based substances or wastes ("Waste")
into the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Waste including, without limitation, the Clean Water
Act, the Clean Air Act, the Resource Conservation and Recovery Act, the Toxic
Substances Control Act and the Comprehensive Environmental Response Compensation
Liability Act ("CERCLA"), as amended, and their state and local counterparts are
herein collectively referred to as the "Environmental Laws." Except as set forth
on Schedule 2.8(c), including, if any, the Phase I environmental reports
attached thereto, to the knowledge of the Shareholders after due inquiry, no
Waste exists on or under the Real Property (as defined in Section 2.11(a)
herein) and neither the Company, nor, to the knowledge of the Shareholders, any
of its predecessors in title, or any other person, has ever used the Real
Property for the processing, handling, manufacture, generation, treatment,
storage, or disposal of any Waste, nor has the Real Property been used as a
landfill or as a dump for garbage, refuse or Waste. Without limiting the
generality of the foregoing provisions of this Section 2.8, the Company is in
material compliance with all limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
the Environmental Laws or contained in any regulations, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder. Except as specifically described in Schedule
2.8(c), there is no civil, criminal or administrative action, suit, demand,
notice or demand letter, claim, hearing, notice of violation, investigation or
proceeding pending, or, to the knowledge of the Shareholders after due inquiry,
threatened, against the Company, or to the knowledge of the Shareholders after
due inquiry, any landlord of the Company, relating in any way to the
Environmental Laws or any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder. Except as set forth in Schedule 2.8(c), there are no past or present
(or, to the best of the knowledge of the Company and the Shareholders) future
events, conditions, circumstances, activities, practices, incidents, actions,
omissions or plans which may interfere with or prevent compliance or continued
compliance with the Environmental Laws or with any regulation, code, plan,
order, decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, or which may give rise to any liability,
including, without limitation, liability under CERCLA or similar state or local
Laws, or otherwise form the basis of any claim, action,
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demand, suit, proceeding, hearing, notice of violation, remediation plan, study
or investigation, based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge, release or threatened release into the environment, of any
Waste.
2.9 Litigation. Except as set forth in Schedule 2.9, there is no
action, suit, arbitration proceeding, investigation or inquiry, pending before
any court, arbitrator or federal, state, foreign, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
or, to the knowledge of the Shareholders, threatened against the Company or its
directors (in their capacity as officers or directors of the Company), business
or assets, nor do the Shareholders know, or have grounds to know, of any
reasonable basis for any such proceedings, investigations or inquiries. Schedule
2.9 also identifies all such actions, suits, proceedings, investigations and
inquiries to which the Company or any of the Company's directors (in their
capacity as officers or directors of the Company) have ever been parties,
wherein either the amount in controversy exceeded $10,000 or the relief sought
or requested required remedial action other than the payment of money. Except as
set forth in Schedule 2.9, neither the Company, its business or assets is
subject to any judgment, order, writ or injunction of any court, arbitrator or
federal, state, foreign, municipal or other governmental department, commission,
board, bureau, agency or instrumentality.
2.10 Contracts and Commitments.
(a) Real Property Leases. Except as set forth in Schedule
2.11(a), the Company does not have any leases of real property which are used or
useful in the Company's business.
(b) Personal Property Leases. Except as set forth in
Schedule 2.10(b), the Company does not have any leases of personal property
which arc used or useful in the Company's business involving consideration or
other expenditure in excess of $1,000 or involving performance over a period of
more than six (6) months.
(c) Purchase Commitments. The Company does not have any
purchase commitments for inventory items or supplies for use in the Company's
business that, together with amounts on hand, constitute in excess of three
months normal usage, or which are at an excessive price.
(d) Sales Commitments. Except as set forth on Schedule
2.10(d), the Company does not have any sales contracts or commitments to
customers with respect to the Company's business which aggregate in excess of
$10,000 to any one customer (or group of affiliated customers). The Company does
not have any sales contracts or commitments with respect to the Company's
business except those made in the ordinary course of business, at arm's length.
(e) Contracts With Certain Persons. Except as set forth
on Schedule 2.10(e), the Company does not have any agreement, understanding,
contract or commitment (written or oral) with any current or former officer,
director, employee, agent, or consultant with respect to
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the Company's business that is not cancelable by the Company on notice of not
longer than thirty (30) days without liability, penalty or premium of any nature
or kind whatsoever.
(f) Power of Attorney. The Company has not given any
power of attorney with respect to the Company's business, which is currently in
effect, to any person, firm or corporation for any purpose whatsoever.
(g) Collective Bargaining Agreements. The Company is not
a party to any collective bargaining agreements with any unions, guilds, shop
committees or other collective bargaining groups.
(h) Loan Agreements. Except as set forth in Schedule
2.10(h), the Company is not obligated under any loan agreement, promissory note,
letter of credit, or other evidence of indebtedness as a signatory, guarantor or
otherwise.
(i) Guarantees. Except as set forth in Schedule 2.10(i),
the Company has not guaranteed the payment or performance of any person, firm or
corporation, agreed to indemnify any person or act as a surety, or otherwise
agreed to be contingently or secondarily liable for the obligations of any
person.
(j) Contracts Subject to Renegotiation. Except as set
forth on Schedule 2.10(j), the Company is not a party to any contract with any
governmental body (with respect to the Company's business) which is subject to
renegotiation.
(k) Burdensome or Restrictive Agreements. The Company is
not a party to or bound by any agreement, deed, lease or other instrument with
respect to the Company's business which is so burdensome as to materially
restrict the operation of the Company's business. Without limiting the
generality of the foregoing, the Company is not a party to or bound by any
agreement requiring the Company to assign any interest in any trade secret or
proprietary information, or with respect to the Company's business, prohibiting
or restricting the Company from competing in any business or geographical area
or soliciting customers or otherwise restricting it from carrying on its
business anywhere in the world.
(l) Other Material Contracts. Except as described in
Schedule 2.10(l) or in any other Schedule, the Company does not have any lease,
contract or commitment of any nature involving consideration or other
expenditure in excess of $10,000, or involving performance over a period of more
than six (6) months, or which is otherwise individually material to the
operations of its business.
(m) No Default. Except as set forth on Schedule 2.10(m),
the Company is not in default under any lease, contract or commitment, nor has
any event or omission occurred which through the passage of time or the giving
of notice, or both, would constitute a material default thereunder or cause the
acceleration of any obligations of the Company thereunder, result in the
creation of any Lien on any of the assets owned, used or occupied by the Company
in connection with the Company's business or give rise to an automatic
termination, or the right of discretionary termination thereof. No third party
is in default under any lease, contract or
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commitment to which the Company is a party, nor has any event or omission
occurred which, through the passage of time or the giving of notice, or both,
would constitute a default thereunder or give rise to an automatic termination,
or the right of discretionary termination, thereof.
2.11 Real Estate.
(a) Real Property. Except as set forth on Schedule
2.11(a), the Company does not now own and has not at any time during the course
of its existence or during the course of the existence of any predecessor to the
Company owned any real property. Schedule 2.11(a) sets forth all real property
used or occupied by the Company in the conduct of the Company's business (the
"Real Property"). Schedule 2.11(a) identifies the leases (oral or written) and
all amendments thereto and extensions thereof, under which the Company now uses
any such Real Property (the "Leases"), as well as any guarantors of tenant's
obligations under such Leases, true and correct copies of which written Leases
(or descriptions of oral Leases or arrangements) the Company has delivered to
the Buyer. Schedule 2.11(a) further identifies any lease under which any
subtenants, tenants, assignees, licensees, concessionaires or other entities,
other than the Company, have a right to occupy all or any portion of the Real
Property, and true and correct copies of all such leases have been delivered by
the Company to the Buyer (or, if an oral arrangement, such arrangements have
been fully described on Schedule 2.11(a)). Except where the absence thereof
would not have a Material Adverse Effect, all of the Real Property has permanent
rights of access to dedicated public highways. The Company and the Shareholders
have no notice or knowledge of any fact or condition existing on the Real
Property which would prohibit or adversely affect the ordinary rights of access
to and from the Real Property, and there is no pending or threatened restriction
or denial, governmental or otherwise, with respect to such ingress and egress.
Except where the absence thereof would not have a Material Adverse Effect, all
of the Real Property is serviced by public utilities.
(b) No Condemnation or Expropriation. Neither the whole
nor any portion of the property or any other assets of the Company used or
useful in the Company's business is currently subject to any governmental decree
or order to be sold or is being condemned, expropriated or otherwise taken by
any public authority with or without payment of compensation therefor, nor to
the knowledge of the Shareholders has any such condemnation, expropriation or
taking been proposed.
(c) Leases. All of the Leases, true and complete copies
of which have been delivered or made available to the Buyer, are in effect and
the Company is not in default under or with respect to any material term of the
Leases, nor has the Company received or sent any notice of any default under or
with respect to any of the same. No other party to any of the Leases is in
material default under or with respect to any of the same.
2.12 Trade Rights.
(a) Schedule 2.12 lists all Trade Rights (as defined
below) of the type described in clauses (i), (ii), (iii) and (iv) and, to the
extent practicable, clause (v) of Section 2.12(e) in which the Company (with
respect to its business) now has any interest, specifying
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whether such Trade Rights are owned, controlled, used or held (under license or
otherwise) by it, and also indicating which of such Trade Rights are registered
or in the process of registration.
(b) All Trade Rights shown as registered in Schedule 2.12
have been properly registered, all pending registrations and applications have
been properly made and filed and all annuity, maintenance, renewal and other
fees relating to registrations or applications are current.
(c) To conduct the Company's businesses as such is
currently being conducted, the Company does not require any Trade Rights that it
does not already have. To the knowledge of the Shareholders, the Company is not
infringing nor has it infringed any Trade Rights of another in the operation of
its business, nor, to the knowledge of the Shareholders, is any other person
infringing the Trade Rights of the Company. Except as set forth on Schedule
2.12, the Company has not granted any license or made any assignment of any
Trade Rights listed on Schedule 2.12, nor does the Company pay any royalties or
other consideration for the right to use any Trade Rights of others. There are
no inquiries, investigations, claims or litigation, challenging or threatening
to challenge the right, title and interest of the Company with respect to its
continued use and right to preclude others from using any of its Trade Rights.
All Trade Rights of the Company are enforceable and in good standing. The
consummation of the transactions contemplated hereby will not alter or impair
any Trade Rights owned or used by the Company.
(d) Except as set forth on Schedule 2.12, the Company has
used commercially prudent efforts to protect the Trade Rights owned or used by
it.
(e) As used herein, the term "Trade Rights" shall mean
and include: (i) all United States, state and foreign trademark rights, business
identifiers, trade dress, service marks, trade names and brand names, including
all claims for infringement, and all registrations thereof and applications
therefor and all goodwill associated with the foregoing accruing from the dates
of first use thereof; (ii) all United States and foreign copyrights, copyright
registrations and copyright applications, including all claims for infringement,
and all other rights associated with the foregoing and the underlying works of
authorship; (iii) all United States and foreign patents and patent applications,
including all claims for infringement and all international proprietary rights
associated therewith; (iv) all contracts or agreements granting any right,
title, license or privilege under the intellectual property rights of any third
party; and (v) all inventions, mask works and mask work registrations, know-how,
discoveries, improvements, designs, trade secrets, shop and royalty rights,
employee and third party covenants and agreements respecting confidentiality,
intellectual property and non-competition (including, without limitation,
agreements executed by potential purchasers of the Company's businesses, or any
part thereof) and all other types of intellectual property.
2.13 Broker's or Finder's Fees. No agent, broker, person or firm
acting on behalf of the Company or the Shareholders is, or will be, entitled to
any commission or broker's or finder's fees from any of the parties hereto, or
from any person controlling, controlled by or under common control with any of
the parties hereto, in connection with any of the transactions contemplated
herein.
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2.14 Employee Benefit Plans.
(a) Disclosure. Schedule 2.14(a) sets forth all pension,
thrift, savings, profit sharing, retirement, incentive bonus or other bonus,
medical, dental, life, accident insurance, benefit, employee welfare,
disability, group insurance, stock purchase, stock option, stock appreciation,
stock bonus, executive or deferred compensation, hospitalization and other
similar fringe or employee benefit plans, programs and arrangements, and any
employment or consulting contracts, "golden parachutes," collective bargaining
agreements, severance agreements or plans, vacation and sick leave plans,
programs, arrangements and policies, including, without limitation, all
"employee benefit plans" (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), all employee manuals and all
written or binding oral statements of policies, practices or understandings
relating to employment, which are provided to, for the benefit of, or relate to,
any persons employed by the Company in the Company's business ("Company
Employees"). The items described in the foregoing sentence are hereinafter
sometimes referred to collectively as "Employee Plans/Agreements," and each
individually as an "Employee Plan/Agreement." True and correct copies of all the
Employee Plans/Agreements, including all amendments thereto, have heretofore
been provided to the Buyer. No Employee Plan/Agreement is a "multi-employer
plan" (as defined in Section 401 of ERISA), and the Company has never
contributed or been obligated to contribute to any such multi-employer plan.
(b) Prohibited Transactions. There have been no
"prohibited transactions" within the meaning of Section 406 or 407 of ERISA or
Section 4975 of the Internal Revenue Code of 1986 (the "Code") for which a
statutory or administrative exemption does not exist with respect to any
Employee Plan/Agreement, and no event or omission has occurred in connection
with which the Company or any of its respective assets or any Employee
Plan/Agreement, directly or indirectly, could be subject to any liability under
ERISA or the Code.
(c) Payments and Compliance. With respect to each
Employee Plan/Agreement, all payments due from the Company to date have been
made and all amounts properly accrued to date as liabilities of the Company
which have not been paid, have been properly recorded on the books of the
Company and to the extent they relate to employees employed by the Company as of
the date thereof, are reflected in the Company Statements in such detail as
required by the format of those Statements.
(d) Post-Retirement Benefits. With respect to each
Employee Plan/Agreement which provides welfare benefits of the type described in
Section 3(1) of ERISA: (i) no such Employee Plan/Agreement provides medical or
death benefits with respect to current or former employees, directors or
consultants of the Company beyond their termination of employment, other than
coverage mandated by Sections 601-608 of ERISA and 4980B(f) of the Code; (ii)
each such Employee Plan/Agreement has been administered in compliance with
Sections 601-608 of ERISA and 4980B(f) of the Code; and (iii) no such Employee
Plan/Agreement has reserves, assets, surpluses or prepaid premiums.
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(e) No Triggering of Obligations. The consummation of the
transactions contemplated by this Agreement will not (i) entitle any current or
former employee of the Company to severance pay, any payment pursuant to any
"golden parachute" or other agreement providing for payment to any employee of
the Company upon a change in control of the Company, unemployment compensation
or any other payment, except as expressly provided in this Agreement, (ii)
accelerate the time of payment or vesting, or increase the amount of
compensation due to any such employee or former employee or (iii) result in any
prohibited transaction described in Section 406 of ERISA or Section 4975 of the
Code for which an exemption is not available.
(f) Future Commitments. The Company does not have any
announced plan or legally binding commitment to create any additional Employee
Plans/Agreements or to amend or modify any existing Employee Plan/Agreement.
2.15 Employment Compensation. Schedule 2.15 contains a true and
correct list of all employees to whom the Company is paying compensation,
including bonuses and incentives for services rendered or otherwise, the annual
salary, average commission, or hourly wage compensation of each such employee,
and any bonus paid to each respective employee relating to services rendered
during the 1999 fiscal year. The Buyer has been provided a copy of all W-2 forms
distributed to each employee of the Company in respect of compensation received
from the Company in the 1999 tax year.
2.16 Labor Matters. To the best of Shareholders' knowledge and
belief, the Company is currently in compliance with all applicable laws, rules
and regulations relating to the employment of labor, including those related to
wages, hours and authorizations, except for such matters of non-compliance as
would not, individually or in the aggregate, have a Material Adverse Effect. To
the best of Shareholders' knowledge and belief, the Company has paid or caused
to be paid all compensation, including bonuses and accrued vacation pay, if any,
due and payable to its employees through the date hereof and will cause such
amounts to be paid through the Closing Date. Except as set forth in Schedule
2.16, within the last five (5) years the Company has not experienced any labor
disputes, union organization attempts or any work stoppage due to labor
disagreements. Except to the extent set forth in Schedule 2.16, (i) there is no
unfair labor practice charge or complaint against the Company pending or
threatened; (ii) there is no labor strike, dispute, request for representation,
slowdown or stoppage actually pending or threatened against or affecting the
Company nor any secondary boycott with respect to products of the Company; (iii)
no question concerning representation has been raised or is threatened
respecting the employees of the Company; and (iv) no grievance which might have
a Material Adverse Effect.
2.17 Tax Matters.
(a) Provision For Taxes. The provision made for taxes on
the Company Statements is sufficient for the payment of all federal, state,
foreign, county, local and other income, ad valorem, excise, profits, franchise,
occupation, property, payroll, sales, use, gross receipts and other taxes (and
any interest and penalties) and assessments, whether or not
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disputed, for which the Company may be liable at the date of such Company
Statements and for all years and periods prior thereto. Since the date of such
Company Statements, the Company has not incurred any taxes other than taxes
incurred in the ordinary course of business consistent in type and amount with
past practices.
(b) Tax Returns Filed. Except as set forth on Schedule
2.17(b), all federal, state, foreign, county, local and other tax returns
required to be filed by or on behalf of the Company as of the date of this
Agreement have been timely filed (or if filed late, all applicable penalties and
interest have been paid) and, when filed, were true and correct in all material
respects, and the taxes shown as due thereon were paid, adequately accrued or
timely contested in good faith. True and complete copies of the tax returns
filed by the Company for the three (3) most recent fiscal years have been
delivered to the Buyer. The Company has duly withheld and paid all taxes which
it is required to withhold and pay relating to salaries and other compensation
heretofore paid or owing to its respective employees, independent contractors or
other third parties.
(c) Tax Audits. The federal and state income tax returns
of the Company have not been audited by the Internal Revenue Service ("IRS") or
any state taxing authorities and the Company has not received from the IRS or
from the tax authorities of any state, county, local or other jurisdiction any
notice of underpayment of taxes or other deficiency which has not been paid nor
any objection to any return or report filed by the Company. There are no
outstanding agreements or waivers extending the statutory period of limitations
applicable to any tax return or report.
(d) C - Corporation Status. The Company has been a
"C-corporation" within the meaning of the Code at all times since its
incorporation.
(e) Other Tax Matters. The Company is not a party to any
tax allocation or sharing agreement. The Company (i) has not been a member of an
affiliated group filing a consolidated federal income tax return (other than a
group the common parent of which was the Company) and (ii) has no liability for
the taxes of any person or entity under Reg. 1.1502-6 (or any similar provision
of state, local, or foreign law), as a transferee or successor, by contract or
otherwise.
2.18 Insurance.
(a) Policies in Effect. Set forth in Schedule 2.18(a) is
a complete and accurate list of all policies of fire, liability, product
liability, workers compensation, health and other forms of insurance presently
in effect with respect to the business and properties of the Company, true and
correct copies of which have heretofore been delivered to the Buyer. All such
policies are valid, outstanding and enforceable policies and provide insurance
coverage for the properties, assets and operations of the Company as set forth
therein; and no such policy (nor any previous policy) provides for or is subject
to any currently enforceable retroactive rate or premium adjustment, loss
sharing arrangement or other actual or contingent liability arising wholly or
partially out of events arising prior to the date hereof. The Company has not
been refused any insurance with respect to any aspect of the operation of its
business nor has its
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coverage been limited by any insurance carrier to which it has applied for
insurance or with which it has carried insurance during the last three years. To
the knowledge of the Shareholders, the Company has duly and timely made all
material claims it has been entitled to make under each policy of insurance. The
Shareholders have no notice or knowledge of any claim by the Company pending
under any such policies as to which coverage has been questioned, denied or
disputed by the underwriters of such policies, and the Shareholders know of no
basis for denial of any claim under any such policy. Except as set forth on
Schedule 2.18(a), the Company has not received any written notice from or on
behalf of any insurance carrier issuing any such policy that insurance rates
therefor will hereafter be substantially increased (except to the extent that
insurance rates may be increased for all similarly situated risks) or that there
will hereafter be a cancellation or termination of such policy or an increase in
a deductible (or an increase in premiums in order to maintain an existing
deductible) or non-renewal of any such policy, and the Shareholders have no
knowledge of any act or omission of the Company which could result in
cancellation of any such policy prior to its scheduled expiration date.
(b) Workers Compensation Coverage.
(i) Current Claims. Set forth separately in
Schedule 2.18(b) is (1) a list of all claims made for work-related injuries or
other work-related claims for which the Company or the Company's insurer has
continuing obligations to any current or former employee of the Company under
any state workers' compensation law or any policy of workers' compensation
insurance, including, without limitation, the obligation to pay temporary or
total disability benefits, medical benefits, periods of open medical treatment
which may require payments of medical benefits in the future, or any other
obligations (the "Workers' Compensation Claims"), and (2) a list of all the
current or former employees of the Company who have or had a Workers'
Compensation Claim, including current or former employees of the Company who
have given notice to the Company of an injury or work-related claim which has
not yet resulted in a Workers' Compensation Claim, including the date of the
accident or occurrence giving rise to such claim, the total payments made to or
on behalf of such current or former employee and, if known, the date on which
any obligations to each such employee terminate.
(ii) Increased Risk or Premium. The Company has
never been denied workers' compensation insurance or been placed in a high-risk
or increased-risk pool or been categorized under a similar rating system
reflecting an above-average incidence of work-related injuries for purposes of
determining the Company's workers' compensation insurance premium.
2.19 Bonds and Other Surety.
(a) Qualification for Bond. Except as set forth in
Schedule 2.19(a), there have been no occasions upon which the Company has been
unable to qualify for any performance bond, payment bond, fidelity bond, bid
bond, bond to discharge lien, federal Xxxxxx Act bond, or other state law bond
patterned after the federal Xxxxxx Act, or other form of surety.
(b) Other Forms of Surety. Except as set forth in
Schedule 2.19(b) the Company has not provided surety in the form of an escrow of
cash funds, bank draft, letter of credit, certified check, pledge of assets, or
in any other form as a substitute for or in addition to
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the surety provided by any performance bond, payment bond, fidelity bond, bid
bond, bond to discharge lien, federal Xxxxxx Act bond, or state law bond
patterned after the federal Xxxxxx Act, or other form of surety issued listing
the Company as principal.
(c) Claims or Notices of Default. Except as set forth in
Schedule 2.19(c), no claims, notices of default or payment on any performance
bond, payment bond, fidelity bond, bid bond, federal Xxxxxx Act bond, or state
law bond patterned after the federal Xxxxxx Act, or other form of surety on
which the Company is the principal have been made or given during the last five
(5) years.
(d) No Current Default. Except as set forth in Schedule
2.19(d), the Company is not currently in default and the Shareholders have no
knowledge of the occurrence of any event which may cause the Company to default
upon any obligation of the Company arising under any construction agreement, or
that would trigger the right of any person or entity to claim payment under any
performance bond, payment bond, fidelity bond, bid bond, federal Xxxxxx Act bond
or state law bond patterned after the federal Xxxxxx Act, or other form of
surety bond listing the Company as principal.
(e) Indemnity of Sureties. Except as set forth in
Schedule 2.19(e), the Company has not entered into any indemnity agreement with
any surety company creating in favor of such surety company any security
interest, including any security interests which have not been filed or
otherwise perfected in accordance with any state law, in cash, accounts
receivable, chattel paper or other property of the Company and the Company has
not paid any claim for indemnity to any surety in respect of any lien claim
losses.
2.20 Liens. Except as set forth in Schedule 2.20, there have been
no liens filed, including liens released by payment, bond to discharge lien, or
otherwise, against the premises of any project on which the Company was the
general contractor by any subcontractor, materialman, supplier or other party in
the past five (5) years, and neither the Company nor the Shareholders have been
provided any notice or been given any other reason to believe, foresee or
otherwise anticipate the filing of any lien by any subcontractor, materialman,
supplier or other party who might file such lien.
2.21 Funds Held In Trust. Except as set forth in Schedule 2.21, the
Company is not holding or in possession of any funds as trustee or in any other
fiduciary capacity for the benefit of any subcontractor, materialman, supplier
or other party pursuant to any state law establishing a trust or fiduciary
relationship between the Company and any such party.
2.22 Current Projects.
(a) Identity; Completion; Profitability. Schedule 2.22(a)
sets forth all installation projects currently being participated in or overseen
by the Company (the "Current Projects"), as well as the projected costs,
expenses and revenues from each respective Current Project and all other
projects completed by the Company within the twelve (12) month period preceding
the date hereof. (No warranty is hereby given by the Shareholders concerning the
accuracy of any such projected costs, expenses and revenues from Current
Projects.)
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(b) On Schedule. Except as set forth in Schedule 2.22(b),
each project currently undertaken by the Company is proceeding without material
deviation from the schedule provided in the installation agreement or purchase
order governing each respective Current Project.
(c) [Intentionally Omitted.]
(d) Evidence of Payment of Subcontractors. Except as set
forth in Schedule 2.22(d), there have not been any mechanics or materialman's
liens filed or asserted against the Company by any subcontractor, materialman or
lower tier subcontractor respecting work which has been performed for the
Company by any subcontractor, materialman or lower tier subcontractor on any
Current Project.
2.23 Absence of Certain Changes. Except as and to the extent set
forth in Schedule 2.23 (or specifically required by the terms of this
Agreement), since the date of the Company Statements there has been no:
(a) Adverse Change. Material adverse change in the
financial condition, assets, liabilities or operations of the Company and, to
the knowledge of the Shareholders, in the business prospects of the Company (a
"Material Adverse Effect");
(b) Damage. Loss, damage or destruction, whether covered
by insurance or not, affecting the business or properties (owned or leased) of
the Company;
(c) Increase in Compensation. Material increase in the
compensation, salaries or wages payable or to become payable to any employee or
agent of the Company (including, without limitation, any increase or change
pursuant to any bonus, pension, profit sharing, retirement or other plan or
commitment), other than changes in the ordinary course of business consistent
with past practices, or any bonus or other employee benefit granted, made or
accrued, except those made in the ordinary course of business consistent with
past practices;
(d) Labor Disputes. Labor dispute or disturbance, other
than routine labor union or individual grievances which are not material to the
business, financial condition or results of operations of the Company or the
Company's business;
(e) Commitments. Material commitment or transaction by
the Company (including, without limitation, any borrowing or capital
expenditure) other than in the ordinary course of business consistent with past
practice;
(f) Dividends. Declaration, setting aside, or payment of
any dividend or any other distribution in respect of capital stock of the
Company; any redemption, purchase or other acquisition by the Company of any of
its capital stock, or any security relating thereto, including any options or
rights to purchase or acquire capital stock of the Company;
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(g) Disposition of Property. Sale, lease or other
transfer or disposition of any properties or assets of the Company used or
useful in the Company's business, except in the ordinary course of business;
(h) Indebtedness. Material indebtedness for borrowed
money incurred, assumed or guaranteed by the Company;
(i) Liens. Mortgage, pledge, Lien or Encumbrance made on
or affecting any of the assets of the Company;
(j) Amendment of Contracts. Entering into, amendment,
extension or termination by the Company of any material contract or lease, or
any waiver of material rights thereunder, other than in the ordinary course of
business;
(k) Payments, Loans and Advances. Any payment, loan or
advance (other than advances to employees in the ordinary course of business for
travel and entertainment in accordance with past practice) to any person;
(l) Credit. Any change in the policies or practices of
the Company with respect to the Company's business and the granting of credit;
(m) Payments to Affiliates. Payment to any Affiliate of
the Company. For purposes of this Agreement, the term "Affiliate" shall mean:
any organization or entity that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
either the Company; the Shareholders, officers and directors of the Company; the
spouse of any such person; any person who would be the heir or descendant of any
such person if he or she were not living; and any entity in which any of the
foregoing has a direct or indirect interest, except through ownership of less
than five percent (5%) of the outstanding shares of any entity whose securities
are listed on a national securities exchange or traded in the national
over-the-counter market;
(n) Status of Employees. Change in status or continuation
of employment of any employee identified in Section 2.15 of this Agreement,
other than changes occurring in the ordinary course of business.
(o) Unusual Events. Other events or conditions not in the
ordinary course of business of the Company which have had a Material Adverse
Effect or which would be prohibited by the terms of Section 4.1(b) hereof, other
than the distribution of the stock of Convergent Communications Systems, Inc. to
the Shareholders.
2.24 Major Customers and Suppliers.
(a) Major Customers. Schedule 2.24(a) contains a list of
the ten (10) largest customers of the Company for each of the two (2) most
recent fiscal years (determined on the basis of the total dollar amount of
revenues realized by the Company) showing the total revenues realized by the
Company with respect to each such customer during each such year. Neither the
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Company nor the Shareholders have received notice, and the Shareholders have no
knowledge of any facts, other than ordinary fluctuations in the business needs
of the Company's customers, reasonably indicating that any of the customers
listed on Schedule 2.24(a) will not continue to be customers of the Company
after the Closing at substantially the same terms as heretofore.
(b) Major Suppliers. Schedule 2.24(b) contains a list of
the ten (10) largest suppliers to the Company for the fiscal period ending
December 31, 1999 (determined on the basis of the total dollar amount of
purchases) showing the total dollar amount of purchases from each such supplier
during such period. Neither the Company nor the Shareholders have received
notice, and the Shareholders have no knowledge of any facts reasonably
indicating, or have any reason to believe, other than as a result of changes or
fluctuations occurring in the ordinary course of business, that any of the
suppliers listed on Schedule 2.24(b) will not continue to be suppliers to the
Company after the Closing and will not continue to supply the Company with
substantially the same quantity and quality of goods as historically supplied at
competitive prices consistent with past pricing practices.
2.25 Product Warranty and Product Liability. Schedule 2.25 contains
a true, correct and complete copy of the Company's standard warranty or
warranties (including standard extended warranties) and, except as stated
therein, there are no warranties, commitments or obligations with respect to the
return, repair or replacement of Products. Schedule 2.25 sets forth (a) the
estimated aggregate annual cost to the Company of performing warranty
obligations for customers of the Company for each of the three (3) preceding
fiscal years and (b) a listing of extended warranty contracts under which the
Company is currently obligated. Except as set forth in Schedule 2.25, the
Company has not made any payment, or to the knowledge of the Shareholders,
incurred any liability or obligation to make any payment on any warranty issued
by the Company, and neither the Company nor the Shareholders have been notified,
whether orally or in writing, of any claim or assertion which may reasonably
result in any liability or obligation to make payment and neither one has become
aware of the reasonable potential for any liability or obligation to make a
payment pursuant to any warranty issued by the Company. As used in this Section
2.25, the term "Products" means any and all products currently or at any time
previously manufactured, distributed or sold by the Company, or by any
predecessor of the Company under any brand name or xxxx under which products are
or have been manufactured, distributed or sold by the Company.
2.26 No Subsidiaries. Except as set forth in Schedule 2.26, the
Company has no subsidiaries.
2.27 Assets Necessary to Business. Except as set forth on Schedule
2.27, the Company presently has, and at the Closing will have, good, valid and
merchantable title to all property and assets, tangible and intangible, and all
leases, licenses and other agreements necessary to permit the Company to carry
on the Company's business as presently conducted.
2.28 Power of Attorney. The Shareholders have not given any power
of attorney with respect to the Company Stock, which is currently in effect, to
any person, firm or corporation for any purpose whatsoever.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND o2
The Buyer and o2 represent and warrant to the Shareholders the
following, as of the date hereof and as of the Closing Date:
3.1 Due Incorporation and Qualification. Each of the Buyer and o2
is a corporation duly organized and validly existing under the laws of its state
of incorporation, and has the corporate power to carry on its business as now
being conducted and to own or lease its properties and assets as now owned,
leased or operated by it. Each of the Buyer and o2 is duly qualified or
otherwise authorized as a foreign corporation to transact business and is in
good standing in each jurisdiction in which a failure to be so qualified would
have a Material Adverse Effect on its business.
3.2 Authorization. Each of the Buyer and o2 has full corporate
power and authority under its articles of incorporation and bylaws, and its
Board of Directors has taken all necessary corporate action to authorize it, to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby (including execution and delivery of other agreements,
instruments and documents contemplated hereby (the "Ancillary Instruments"), and
assuming the due authorization, execution and delivery of this Agreement and the
Ancillary Instruments by the Company and the appropriate parties, this Agreement
and the Ancillary Instruments constitute and will constitute the valid and
binding obligations of the Buyer and o2, enforceable in accordance with its
terms, except that such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and the remedy of specific performance
and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.
3.3 Non-Contravention. Neither the execution and delivery of this
Agreement nor the Ancillary Instruments nor the consummation of the transactions
contemplated hereby does or will violate, conflict with, result in a breach of
any provision of, constitute a default under, result in the termination of or
permit any third party to terminate (with or without notice, lapse of time or
pursuant to any legal or equitable principle) or accelerate the performance
required on the part of the Buyer or o2 by the terms of, or accelerate the
maturity of or require the prepayment of any indebtedness of the Buyer or o2
under, any judgment, order, decree, agreement or instrument to or by which it or
any of its assets is subject or bound.
3.4 Authority of the Buyer and o2. Except as set forth in Schedule
3.4, no consent, authorization or approval of, or declaration, filing or
registration with, any governmental, administrative or regulatory body, is
necessary in connection with the transactions contemplated by this Agreement.
3.5 Litigation. Except as set forth in Schedule 3.5, there are no
material claims, actions, suits, proceedings or investigations pending or, to
the best knowledge of the Buyer or o2, threatened by or against the Buyer or o2,
at law or in equity or before or by any federal, state,
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municipal, foreign or other governmental department, commission, board, agency,
instrumentality or authority.
3.6 Qualified Plan. The Buyer maintains a 401(k) plan for the
benefit of its employees under which all employees of the Company may become
eligible to participate.
3.7 Broker's or Finder's Fees. No agent, broker, person or firm
acting on behalf of the Buyer or o2 is, or will be, entitled to any commission
or broker's or finder's fees from any of the parties hereto, or from any person
controlling, controlled by or under common control with any of the parties
hereto, in connection with any of the transactions contemplated herein.
3.8 Adequate Capitalization. Each of the Buyer and o2 is
adequately capitalized to discharge its financial obligations under this
Agreement and the Ancillary Instruments.
3.9 Options. o2 has the full corporate power and authority under
its Articles of Incorporation and Bylaws, and the officers, Board of Directors,
and stockholders of o2 have taken all necessary corporate actions to authorize
o2 to issue the Options set forth in the Employment Agreements referred to and
defined in Section 4.11 hereof.
ARTICLE IV
COVENANTS
4.1 Conduct of Business.
(a) Between the date hereof and the Closing Date, each
party shall use its best efforts to conduct its business in the ordinary course
and in such a manner so that the representations and warranties contained in
Articles II and III hereof shall continue to be true and correct in all material
respects on and as of the Closing Date.
(b) The Shareholders shall cause the Company to refrain
from:
(i) incurring any liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise), except in the
ordinary course of business;
(ii) permitting any of its assets to be subjected
to any mortgage, pledge, Lien, security interest, Encumbrance, restriction or
charge of any kind, except in the ordinary course of business;
(iii) selling, transferring or otherwise disposing
of any assets, except in the ordinary course of business;
(iv) making any capital expenditure or commitment
therefor, except in the ordinary course of business;
(v) increasing its indebtedness for borrowed
money, except current borrowings in the ordinary course of business, or making
any loan to any person;
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(vi) writing off as uncollectible any accounts
receivable, except write-offs in the ordinary course of business charged to
applicable reserves, none of which individually or in the aggregate shall be
material to the Company, and write-offs taken in connection with transactions
made in conjunction with this Agreement;
(vii) granting any increase in the rate of wages,
salaries, bonuses or other remuneration of any executive employee or other
employees, except in the ordinary course of business and only after prior
written notice to the Buyer;
(viii) canceling or waiving any claims or rights of
substantial value;
(ix) making any change in any method of
accounting or auditing practice;
(x) otherwise conducting the Company's business
or entering into any transaction with respect thereto other than in the usual
and ordinary manner and in the ordinary course; or
(xi) agreeing, whether or not in writing, to do
any of the foregoing.
4.2 Preservation of Business. Each party shall (consistent with
its normal business practices) preserve its business, and maintain its
relationships with its present suppliers and customers.
4.3 Notice of Events. Each party shall promptly notify the other
party of (i) any event, condition or circumstance occurring from the date hereof
through the Closing Date that may reasonably be construed to constitute a
violation or breach of this Agreement, or (ii) any event, occurrence,
transaction or other item which would have been required to have been disclosed
on any Schedule or statement delivered hereunder, had such event, occurrence,
transaction or item existed on the date hereof, other than items arising in the
ordinary course of business which would not render any representation or
warranty of such party materially misleading.
4.4 Examinations and Inspections.
(a) Prior to the Closing Date, the Buyer shall be
entitled, through its employees and representatives, including, without
limitation, the Buyer's accountants, legal counsel, bankers and advisors, to
make such inspection of the assets, properties, business and operations of the
Company, and such examination of the books, records and financial condition of
the Company as the Buyer reasonably desires. Any such inspections and
examinations shall be conducted at reasonable times and under reasonable
circumstances which do not disrupt the business, properties or assets of the
Company and with respect to inspections and examinations involving the property
and assets of third parties, subject to the consent of such third parties and
consistent with their policies. For the purpose of facilitating such review,
examination or inspection, the Company and the Shareholders shall furnish the
representatives of the Buyer with all such information and copies of such
documents concerning the affairs of the Company as
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such representatives may reasonably request and cause their officers, employees,
agents, accountants and attorneys to cooperate with such representatives in
connection with such review and examination.
(b) The Buyer agrees that, with respect to any
information or documents obtained from the Company or the Shareholders
concerning the Company's assets, properties, customers, policies, finances,
costs, sales, revenues, rights, obligations, liabilities, strategies, business
and operations ("Confidential Information"), unless and until the transactions
contemplated by this Agreement shall have been consummated: (a) such
Confidential Information is confidential and/or proprietary to the Company and
is entitled to and shall receive treatment as such by the Buyer (except to the
extent that any such information is readily ascertainable from public or
published information or trade sources), and (b) the Buyer will, and will cause
all of its employees, representatives, agents and advisors who have access to
any Confidential Information to, hold in confidence and not disclose or use
(except in respect of the transactions contemplated by this Agreement) any such
Confidential Information. The Buyer, the Company and the Shareholders shall also
each comply with the restrictions on publicity set forth in Section 9.2 of this
Agreement. If the transactions contemplated by this Agreement are not closed,
all documents and other materials obtained by the Buyer from the Company or the
Shareholders shall be returned.
4.5 Third Party Consents. The Shareholders agree to attempt to
obtain, prior to the Closing Date, such consents and approvals as may be
required from parties to material contracts or other agreements with the Company
in order to prevent the Company from suffering a Material Adverse Effect as a
result of the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby. The Buyer agrees to provide to the
Shareholders such assistance and information as may be required to obtain the
consents and approvals referred to above. Notwithstanding anything in this
Agreement to the contrary, this Agreement shall not constitute an agreement by
the Company to assign, or the Buyer to assume and agree to pay, perform or
otherwise discharge, any material contracts or other agreements if an attempted
assignment or assumption thereof without the consent of a third person would
constitute a breach thereof, unless and until such consent is obtained.
4.6 Properties. The Shareholders shall cause the Company to
maintain all of its properties used in the operation of the Company's business
in customary repair, order and condition, reasonable wear and tear excepted, and
will maintain insurance upon all such properties, in such amounts and of such
kinds as are comparable to that in effect on the date hereof.
4.7 Books and Records. Until the Closing, the Shareholders shall
cause the Company to maintain its books, accounts and records in the usual
manner on a basis consistent with prior years.
4.8 Material Contracts. The Shareholders shall cause the Company
to refrain from amending, modifying or consenting to the termination of, any
material contract or other material
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agreements of the Company or waiving any of the Company's material rights with
respect thereto.
4.9 Vacation Pay and Bonus Accruals. Except as set forth on
Schedule 4.9, no vacation pay or bonus accruals will be payable to employees of
the Company as of the Closing Date.
4.10 Environmental Audits and Other Investigations. The
Shareholders agree that the Buyer may retain, at the sole expense of the Buyer,
a firm engaged in the regular business of environmental engineering to conduct
such environmental audits of the Facilities and operations of the Company, and
the real estate occupied in connection with the Company's business, as the Buyer
in its discretion shall consider necessary or appropriate. Between the date
hereof and the Closing Date, the Buyer, its agents, employees, contractors,
surveyors, and engineers shall have the right to enter and go upon the Real
Property at any time and from time to time for the purpose of inspecting the
Real Property and any and all improvements located thereon.
4.11 Employment Agreement with Shareholders. At the Closing, the
Buyer shall offer to enter into an employment agreement with each Shareholder in
substantially the form set forth in Exhibit A hereto (collectively, the
"Employment Agreement").
4.12 Shareholders Releases. At the Closing, the Shareholders shall
each enter into shareholder release agreements with Company, the Buyer and o2 in
substantially the form set forth in Exhibit B hereto (the "Release Agreement").
4.13 Securities Law Matters. [Intentionally omitted.]
4.14 Attainment of Tax Clearance Certificates. [ Intentionally
omitted.]
4.15 Employment Agreements with Key Employees. At or prior to
Closing, the Shareholders shall attempt to cause the employees of the Company
identified on Schedule 4.15 ("Selected Employees") to duly execute and deliver
employment agreements, in substantially the form attached hereto as Exhibit C,
and to terminate, effective as of the Closing Date, any existing agreement to
which such Selected Employees are party respecting employment with the Company.
4.16 Tax Matters.
(a) Tax Periods Ending on or Before Closing Date. The
Shareholders shall timely prepare or cause to be prepared and file or cause to
be filed all tax returns for the Company for the periods 1999 to the Closing
Date; provided, however, that, for the avoidance of doubt, it is agreed that
liability for the amount of the taxes due with respect to such periods shall
remain with the Company.
(b) Cooperation on Tax Matters. Each of the Buyer, the
Company and the Shareholders shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with the filing of tax
returns pursuant to this Section 4.16 and in connection with
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any audit, litigation or other proceeding with respect to taxes. Such
cooperation shall include the retention and (upon the request of any other
party) the provision of records and information which are reasonably relevant to
any such audit, litigation or other proceeding and making employees available on
a mutually convenient basis to provide additional information and explanation of
any material provided hereunder. The Shareholders agree (i) to retain all books
and records with respect to tax matters pertinent to the Company relating to any
taxable period beginning before the Closing Date until the expiration of the
statute of limitations (and, to the extent notified by the Buyer or the Company,
any extensions thereof) of the respective taxable periods, and to abide by all
record retention agreements entered into with any taxing authority, and (ii) to
give the Buyer and the Company reasonable written notice prior to transferring,
destroying or discarding any such books and records and, if the Buyer or Company
so requests, the Shareholders shall allow the Buyer to take possession of such
books and records. The Buyer and the Shareholders further agree to use their
reasonable best efforts to obtain, upon request, any certificate or other
document from any governmental authority or any other person or entity as may be
necessary to mitigate, reduce or eliminate any tax that could be imposed
(including, without limitation, with respect to the transactions contemplated
hereby).
4.17 Escrow Agreement. At the Closing, the Shareholders shall each
enter into the Escrow Agreement in substantially the form set forth in Exhibit D
hereto (the "Escrow Agreement").
4.18 Options. Certain key employees of the Company, other than the
Shareholders, shall be entitled to an aggregate 25,000 shares of common stock
(prior to any stock split or dividend after the date hereof) under o2's year
2000 Incentive Stock Option Plan, subject to certain vesting and other
requirements. Within thirty (30) days of the Closing Date, the Shareholders
shall notify o2 as to the names of each such employee and the number of option
shares he or she is entitled to under the preceding sentence.
ARTICLE V
CONDITIONS PRECEDENT TO
OBLIGATION OF THE BUYER TO CLOSE
The obligation of the Buyer to complete the Closing is subject to the
fulfillment on or prior to the Closing Date of the following conditions, any of
which may be waived by the Buyer only in writing:
5.1 Completion of Due Diligence Investigation. In the course of
the Buyer's due diligence investigation of the Company, the Buyer shall not have
discovered any fact or development which relates to or involves the Company's
business, ownership or capital stock which would, in the reasonable judgment of
the Buyer, have a Material Adverse Effect or challenge the validity or legality
of this Agreement or the consummation of the transactions contemplated by this
Agreement.
5.2 [Intentionally Omitted.]
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5.3 Consent of DFW Capital Partners, L.P., Wachovia Bank, N.A. and
Fleet National Bank. The Buyer shall have received the consent of each of DFW
Capital Partners, L.P., Wachovia Bank, N.A., First Union National Bank, American
Capital Strategies, Ltd., Stratford Capital Partners, L.P., and Stratford Equity
Partners, L.P. (all of which entities are either owners or are currently
providing financing to the Buyer) to enter into this Agreement and each of the
transactions contemplated by this Agreement.
5.4 Representations and Covenants. The representations and
warranties of the Shareholders contained in this Agreement shall be true and
correct in all material respects on and as of the Closing Date. The Shareholders
shall have performed and complied with all covenants and agreements (including,
without limitation, those contained in Article IV) required by this Agreement to
be performed or complied with by them on or prior to the Closing Date.
5.5 Litigation. No action, suit or proceeding shall have been
instituted before any court or governmental or regulatory body, or instituted or
threatened by any governmental or regulatory body, to restrain or prevent the
carrying out of the transactions contemplated by this Agreement or to seek
damages in connection with such transactions, that has or could reasonably be
expected to have, in the opinion of the attorneys of the Buyer, a Material
Adverse Effect.
5.6 No Material Adverse Change. The Buyer shall be satisfied, in
its reasonable discretion, that since December 31, 1999, there has been no
Material Adverse Effect.
5.7 Good Standing Certificates, Etc. The Shareholders shall have
delivered all such documents or instruments with respect to the Company's
corporate existence and the Buyer's counsel may have reasonably requested prior
to the Closing Date.
5.8 Consents. The Shareholders shall have obtained and delivered
to the Buyer such consents as the Buyer may have reasonably requested that the
Company obtain in accordance with Section 4.5 hereof, except where the failure
to so obtain could not reasonably be expected to have a Material Adverse Effect.
5.9 Employment and Shareholder Release Agreements; Escrow
Agreement. The Buyer shall have received the Employment Agreement and Release
Agreement specified in Sections 4.11 and 4.12, respectively, and the Escrow
Agreement specified in Section 4.17, all in a form mutually satisfactory to the
Buyer and the Shareholders and executed by the parties to be bound thereby.
5.10 Agreements With Key Employees. The Buyer shall have received
an employment agreement, in a form satisfactory to the Buyer and executed by the
parties to be bound thereby, from Xxxx Xxxxxx and Xxxx Xxxxx. The Shareholders
shall use reasonable efforts to obtain employment agreements from each of the
key employees listed on Schedule 4.15 of this Agreement within thirty (30) days
of the Closing Date.
5.11 Release of Liabilities. The Buyer shall have received a
certificate from the Shareholders certifying that all obligations of the
Company, its subsidiaries and affiliates including, without limitation, those
debts or obligations to the Shareholders and/or LCC
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International, Inc. and/or its affiliates pursuant to any contract, agreement,
understanding or otherwise have been extinguished without any consideration from
the Company (save for forgiveness of the accounts receivable owing to the
Company from LCC as described in Section 2.5(a) hereof), and the Company shall
have been fully released therefrom with respect to any future liability thereon
unless agreed to otherwise by the Buyer.
5.12 Resolutions. There shall have been delivered to the Buyer a
copy of the resolutions duly adopted by the Board of Directors of the Company
and by the Shareholders (if required), and certified as accurate by an executive
officer of the Company, as the case may be, as of the Closing Date, authorizing
and approving certain corporate and organizational matters relating to the
Company.
5.13 Governmental Permits and Approvals. All permits and approvals
from any governmental or regulatory body required for the lawful consummation of
the Closing shall have been obtained.
5.14 Shareholders' Certificate. There shall have been delivered to
the Buyer a certificate from the Shareholders, dated the Closing Date,
certifying that the representations and warranties of the Shareholders contained
herein are true and correct on and as of the Closing Date.
5.15 Opinion of Counsel to the Shareholders. The Buyer shall have
received an opinion of counsel to the Company and the Shareholders, dated the
Closing Date, in form and substance reasonably satisfactory to the Buyer,
substantially to the effect set forth in Exhibit E hereto.
5.16 Other Documents. The Shareholders and the Company shall have
delivered all other documents, instruments or writings required to be delivered
to the Buyer at or prior to the Closing pursuant to this Agreement and such
other certificates of authority (including good standing certificates),
documents, instruments or writings as the Buyer may reasonably request.
ARTICLE VI
CONDITIONS PRECEDENT TO
OBLIGATION OF THE SHAREHOLDERS TO CLOSE
The obligation of the Shareholders to complete the Closing is subject
to the fulfillment, on or prior to the Closing Date, of the following
conditions, any of which may be waived by the Shareholders only in writing:
6.1 Completion of Due Diligence Investigation. In the course of
the Shareholders' due diligence investigation of the Buyer, the Shareholders
shall not have discovered any fact or development which relates to or involves
the Buyer's business, ownership or capital stock which would, in the reasonable
judgment of the Shareholders, have a Material Adverse Effect on the Buyer or the
Shareholders or challenge the validity or legality of this Agreement or the
consummation of the transactions contemplated by this Agreement.
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6.2 Litigation. No action, suit or proceeding shall have been
instituted before any court or governmental or regulatory body, or instituted or
threatened by any governmental or regulatory body, to restrain or prevent the
carrying out of the transactions contemplated by this Agreement or to seek
damages in connection with such transactions, that has or could reasonably be
expected to have, in the opinion of the attorneys of the Company, a materially
adverse effect on the assets, properties, business, operations or financial
condition of the Buyer.
6.3 No Material Adverse Change. The Shareholders shall be
satisfied, in their reasonable discretion, that since December 31, 1999, there
has been no material adverse change in the assets or liabilities, or the
business or financial condition of the Buyer's business.
6.4 Consents. The Buyer shall have obtained and delivered to the
Shareholders such consents as the Shareholders may have reasonably requested
that the Buyer obtain, except where the failure to so obtain such consents could
not reasonably be expected to have a Material Adverse Effect on the transactions
contemplated by this Agreement.
6.5 Representations and Warranties. The representations and
warranties of the Buyer and o2 contained in this Agreement shall be true and
correct in all material respects on and as of the Closing Date. Each of the
Buyer and o2 shall have performed and complied with all covenants and agreements
(including, without limitation, those contained in Article IV) required by this
Agreement to be performed or complied with by the Buyer and/or o2, as the case
may be, on or prior to the Closing Date.
6.6 Governmental Permits and Approvals. All permits and approvals
from any governmental or regulatory body required for the lawful consummation of
the Closing shall have been obtained.
6.7 Resolutions. There shall have been delivered to the
Shareholders a copy of the resolutions duly adopted by the Board of Directors of
the Buyer, and certified accurate by an executive officer of the Buyer as of the
Closing Date, authorizing and approving the execution and delivery by the Buyer
of this Agreement and the consummation by the Buyer of the transactions
contemplated hereby.
6.8 Good Standing Certificates, Etc. The Buyer shall have
delivered all such certified resolutions, certificates, documents or instruments
with respect to the Buyer's corporate existence and authority as the
Shareholders' counsel may have reasonably requested prior to the Closing Date.
6.9 Officer's Certificate. There shall have been delivered to the
Shareholders a certificate of the chief executive officer of the Buyer, dated
the Closing Date, certifying that the representations and warranties of the
Buyer contained herein are true and correct on and as of the Closing Date.
6.10 Opinion of Counsel to the Buyer. The Shareholders shall have
received an opinion of counsel to the Buyer and o2, dated the Closing Date, in
form and substance
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reasonably satisfactory to the Shareholders, substantially to the effect set
forth in Exhibit F hereto.
6.11 Other Documents. The Buyer and/or o2 shall have delivered all
other documents, instruments or writings required to be delivered to the
Shareholders at or prior to the Closing pursuant to this Agreement, including,
without limitation, these documents and instruments necessary to grant the
Options as set forth in Section 3.9 hereof, and such other certificates of
authority (including good standing certificates), documents, instruments or
writings as the Shareholders may reasonably request.
6.12 Employment and Shareholder Release Agreements; Escrow
Agreement. The Buyer shall have executed the Employment Agreements specified in
Section 4.11 and the Escrow Agreement specified in Section 4.17, all in a form
mutually satisfactory to the Buyer and the Shareholders and executed by the
parties to be bound thereby.
6.13 Agreements with Key Employees. The Buyer shall have executed
an employment agreement, in a form satisfactory to the Buyer and executed by the
parties to be bound thereby, from each of the key employees listed on Schedule
4.15 of this Agreement who executes such employment agreement.
ARTICLE VII
INDEMNIFICATION
For purposes of this Article VII, it is agreed and understood that the
Buyer shall not obtain recovery, nor shall the Shareholders be liable, more than
one time or under more than one section of this Agreement for the same
underlying claim or breach.
7.1 Survival. The representations and warranties contained in this
Agreement shall survive the Closing only until the expiration of eighteen (18)
months following the Closing (the "Limitations Period"); provided, however, that
the representations and warranties of the Shareholders with respect to any
matters set forth in Sections 2.8 or 2.17 of this Agreement shall survive for
the period of time equal to the statute of limitations applicable to such matter
or matters.
7.2 Indemnification by the Shareholders. The Shareholders shall
indemnify, defend and hold harmless the Buyer, o2, and the Company (which term
shall include, for purposes of this Article VII, their respective successors,
assigns, directors, officers, employees and agents) against any and all losses,
damages, deficiencies, suits, claims, demands, judgments, costs, expenses or
other liabilities ("Losses") resulting from, arising from, or relating to (i)
any breach of a representation or warranty of the Shareholders contained in
Article II of this Agreement (but only if such indemnity is sought during the
Limitations Period), (ii) any failure by the Shareholders to perform or comply
with any covenant, agreement or obligation contained in this Agreement (but only
if such indemnity is sought during the Limitations
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Period), (iii) the conduct of the business of the Company prior to the Closing,
except to the extent such Losses was reflected in the Company Statements (but
only if such indemnity is sought during the Limitations Period), (iv) any of the
matters described in Section 2.5(b) (Absence of Undisclosed Liabilities) or
Section 2.9 (Litigation) hereof regardless of whether such matter(s) are set
forth in Schedule 2.5(b) or Schedule 2.9, and (v) notwithstanding anything
herein to the contrary, any Losses relating to Wireless, Inc. or LCC
International, Inc. and/or its affiliate(s).
7.3 Indemnification by the Buyer. The Buyer and o2 shall indemnify
and hold harmless the Shareholders against any and all Losses resulting from,
arising from, or relating to (i) any breach of a representation or warranty of
the Buyer contained in Article III of this Agreement (but only if such indemnity
is sought during the Limitations Period), and (ii) any failure by the Buyer to
perform or comply with any agreement or obligation contained in this Agreement.
7.4 Limitations of Claims.
(a) No indemnification pursuant to this Article VII shall
be available to any party until the aggregate of all Losses exceeds $50,000.
(b) Anything to the contrary herein notwithstanding,
except for indemnification from the Shareholders pursuant to Section 7.2(iii),
(iv), and/or (v) hereof, the aggregate indemnification to be provided by any
party pursuant to this Article VII shall not exceed the Purchase Price.
(c) The amount of any Loss for which indemnification is
provided under this Article VII shall be net of (i) any amounts recovered or
recoverable by the Indemnified Party pursuant to any indemnification by or
indemnification agreement with any third party, (ii) any insurance proceeds or
other cash receipts or sources of reimbursement available as an offset against
such Loss (and no right of subrogation shall accrue to any third party
indemnitor, insurer or reimburser hereunder), and (iii) an amount equal to any
reduction of income taxes attributable to such Loss. If the amount to be netted
hereunder from any payment required under Sections 7.2 or 7.3 is determined
after payment by the Indemnifying Party of any amount required to be paid to an
Indemnified Party pursuant to this Article VII, the Indemnified Party shall
repay to the Indemnifying Party, promptly after such determination, any amount
that the Indemnifying Party would not have had to pay pursuant to this Article
VII had such determination been made at the time of such payment.
Indemnification payments hereunder shall be treated as adjustments to the
Purchase Price.
(d) Anything to the contrary herein notwithstanding, any
indemnification obligation of the Shareholders pursuant to this Agreement may be
satisfied (but only to the extent of setoff), at the election of the Buyer in
its sole discretion, by set-off of the amount thereof against the amounts held
in escrow under Section 1.2(b).
7.5 Procedures.
(a) A party seeking indemnification pursuant to Sections
7.2 or 7.3 (an "Indemnified Party") shall give prompt notice to the party from
whom such indemnification is sought (the "Indemnifying Party") of the assertion
of any claim or assessment, or the
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commencement of any action, suit, audit or proceeding, by a third party in
respect of which indemnity may be sought hereunder (a "Third Party Claim") and
will give the Indemnifying Party such information with respect thereto as the
Indemnifying Party may reasonably request, but no failure to give such notice
shall relieve the Indemnifying Party of any liability hereunder (except to the
extent the Indemnifying Party has suffered actual prejudice thereby).
Thereafter, the Indemnified Party shall deliver to the Indemnifying Party,
within five (5) business days after the Indemnified Party's receipt thereof,
copies of all notices and documents (including court papers) received by the
Indemnified Party relating to the Third Party Claim. The Indemnifying Party
shall have the right, exercisable by written notice (the "Notice") to the
Indemnified Party within thirty (30) days of receipt of notice from the
Indemnified Party of the commencement or assertion of any Third Party Claim, to
assume the defense of such Third Party Claim, using counsel selected by the
Indemnifying Party and reasonably acceptable to the Indemnified Party. Should
the Indemnifying Party so elect to assume the defense of a Third Party Claim,
the Indemnifying Party shall not be liable to the Indemnified Party for legal
expenses subsequently incurred by the Indemnified Party in connection with the
defense thereof. If the Indemnifying Party shall fail to assume the defense of
the Third Party Claim within such thirty (30) day period, the Indemnified Party
shall have the right to undertake the defense of such Third Party Claim on
behalf of the Indemnifying Party. Regardless of whether the Indemnifying Party
elects to assume the defense of any such Third Party Claim, the Indemnified
Party shall not admit any liability with respect to, or settle, compromise or
discharge such Third Party Claim without the Indemnifying Party's prior written
consent.
(b) The Indemnifying Party or the Indemnified Party, as
the case may be, shall in any event have the right to participate, at its own
expense, in the defense of any Third Party Claim which the other is defending.
(c) The Indemnifying Party, if it shall have assumed the
defense of any Third Party Claim in accordance with the terms hereof, shall have
the right, upon five (5) days prior written notice to the Indemnified Party, to
consent to the entry of judgment with respect to, or otherwise settle such Third
Party Claim provided the Indemnifying Party agrees that as between the
Indemnifying Party and the Indemnified Party, the Indemnifying Party shall be
solely obligated to satisfy and discharge such judgment or settlement unless (i)
the Third Party Claim involves equitable or other non-monetary damages or (ii)
in the reasonable judgment of the Indemnified Party such settlement would have a
continuing material adverse effect on the Indemnified Party's business
(including any material impairment of its relationships with customers and
suppliers), in which case such settlement only may be made with the written
consent of the Indemnified Party, which consent shall not be unreasonably
withheld.
(d) Whether or not the Indemnifying Party chooses to
defend or prosecute any claim involving a third party, all the parties hereto
shall cooperate in the defense or prosecution thereof and shall furnish records,
information and testimony, and attend such conferences, discovery proceedings,
hearings, trials and appeals as may be reasonably requested in connection
therewith. Such cooperation shall include access during normal business hours
afforded to the Indemnifying Party of records and information which are
reasonably relevant to such Third Party Claim, and making employees available on
a mutually convenient basis to provide additional
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information and explanation of any material provided hereunder, and the
Indemnifying Party shall reimburse the Indemnified Party for all its reasonable
out-of-pocket expenses in connection therewith.
ARTICLE VIII
TERMINATION OF AGREEMENT
8.1 Termination. This Agreement may be terminated prior to the
Closing as follows:
(a) at the election of the Shareholders, in the event
that the Buyer shall have materially breached any representation, warranty,
covenant or agreement contained in this Agreement or in any document or other
paper delivered pursuant to this Agreement;
(b) at the election of the Buyer, in the event that the
Shareholders shall have materially breached any representation, warranty,
covenant or agreement contained in this Agreement or in any document or other
paper delivered pursuant to this Agreement;
(c) at the election of the Shareholders or the Buyer, if
any legal proceeding is commenced or threatened by any governmental or
regulatory body or other person seeking to prevent the Closing or consummation
of any transaction contemplated by this Agreement, and either the Shareholders
or the Buyer, as the case may be, reasonably and in good xxxxx xxxxx it
impractical or inadvisable to proceed in view of such legal proceeding or threat
thereof;
(d) by the Shareholders or the Buyer, in the event that
the Closing has not occurred by June 30, 2000; and
(e) at any time on or prior to the Closing Date, by
mutual written consent of the parties hereto.
8.2 Post-Termination Obligations. If this Agreement is terminated
pursuant to Section 8.1, this Agreement shall become void and of no further
force and effect, except for Sections 4.4(b) (Confidential Information), 9.2
(Announcements), 9.4 (Governing Law), 9.6 (Notice), 9.7 (Expenses), 9.8 (Entire
Agreement), and 9.10 (Headings), and none of the parties hereto shall have any
liability in respect of such termination, except that any party shall be liable
for any material and intentional or willful violation of the representations,
warranties, covenants or agreements of such party contained in this Agreement
which violation led to termination hereunder.
ARTICLE IX
MISCELLANEOUS
9.1 Further Action. If, at any time following the Closing, any
further action is determined by the Buyer to be necessary or desirable to carry
out the purposes of this Agreement or to vest in the Buyer all right, title and
interest in and to the Company Stock, Shareholders shall take such action.
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9.2 Announcements. Prior to Closing, none of the parties hereto
shall issue any press release, place any advertisement or make any other public
statement relating to or in connection with this Agreement or the matters
contained herein without obtaining the prior approval of all parties hereto as
to the content and manner of presentation and publication thereof, which
approval shall not be unreasonably withheld or delayed.
9.3 Assignment; Parties in Interest. Except as expressly provided
herein, the rights and obligations of a party hereunder may not be assigned,
transferred or encumbered without the prior written consent of the other
parties. The Buyer may assign its rights and obligations hereunder, subject to a
guaranty from the Buyer of the assignee's performance thereof, to any direct or
indirect subsidiary or other entity controlled by the Buyer, or to any parent
corporation of the Buyer, for purposes of consummating the transactions
contemplated herein. This Agreement shall be binding upon, inure to the benefit
of, and be enforceable by the respective successors and permitted assigns of the
parties hereto. Nothing contained herein shall be deemed to confer upon any
other person or entity any right or remedy under or by reason of this Agreement.
9.4 Law Governing Agreement. This Agreement shall be construed and
interpreted according to the internal laws of the State of Georgia, excluding
any choice of law roles that may direct the application of the laws of another
jurisdiction.
9.5 Amendment and Modification. The parties may amend, modify and
supplement this Agreement in such manner as may be agreed upon in writing among
them.
9.6 Notice. All notices, requests, demands and other
communications hereunder shall be given in writing and shall be: (a) personally
delivered; (b) sent by telecopier, facsimile transmission or other electronic
means of transmitting written documents; or (c) sent to the parties at their
respective addresses indicated herein by registered or certified U.S. mail,
return receipt requested and postage prepaid, or by private overnight mail
courier service. The respective addresses to be used for all such notices,
demands or requests are as follows:
(a) If to the Buyer and/or o2, to:
Clear Communications Group, Inc.
000 Xxxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
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with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx, PLLC
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
(b) If to Company, to:
Communication Consulting Services, Inc.
c/o Clear Communications Group, Inc.
000 Xxxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx, PLLC
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
(c) If to the Shareholders, to:
Xxxx X. Xxxxx
000 Xxxxxx Xxxx Xxxxx
Xxx Xxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Xxxxx X. Xxxxx
00 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
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with a copy to:
Levenfeld Xxxxxxxxxx Xxxxxxxxx Xxxxxxx
Bright Xxxxxxxxx & Xxxxxxxx, LLC
21st Floor, 00 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If personally delivered, such communication shall be deemed delivered
upon actual receipt; if electronically transmitted pursuant to this paragraph,
such communication shall be deemed delivered the next business day after
transmission (and sender shall bear the burden of proof of delivery); if sent by
overnight courier pursuant to this paragraph, such communication shall be deemed
delivered upon receipt; and if sent by U.S. mail pursuant to this paragraph,
such communication shall be deemed delivered as of the date of delivery
indicated on the receipt issued by the relevant postal service, or, if the
addressee fails or refuses to accept delivery, as of the date of such failure or
refusal. Any party to this Agreement may change its address for the purposes of
this Agreement by giving notice thereof in accordance with this Section 9.6.
9.7 Expenses. Regardless of whether or not the
transactions contemplated hereby are consummated, each of the parties shall bear
its own legal expenses and the expenses of its agents in connection with the
transactions contemplated hereby; provided, however, that the Shareholders shall
pay the legal expenses and the expenses of the agents of the Company through the
Closing Date.
9.8 Entire Agreement. This Agreement, including the
Exhibits and Schedules attached hereto (which Exhibits and Schedules are hereby
incorporated herein by reference and made a part hereof) and the Ancillary
Documents, embodies the entire agreement among the parties with respect to the
transactions contemplated hereby, and supersedes all prior agreements and
understandings among the parties with respect thereto including the letter of
intent dated May 12, 2000, and accepted by the Company and the Shareholders on
May 15, 2000.
9.9 Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
9.10 Headings. The table of contents and article and
section headings herein are for convenience of reference only, do not constitute
a part of this Agreement, and shall not be deemed to limit or affect any of the
provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have cause their duly authorized
representatives to execute this Agreement as of the date first above written.
o2wireless Solutions, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: CFO
Clear Communications Group, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: CFO
Communication Consulting Services, Inc.
By: /s/ Xxxx X. Xxxxx
---------------------------------------
Name: Xxxx X. Xxxxx
Title: President
Shareholders:
/s/ Xxxx X. Xxxxx
--------------------------------------------
Xxxx X. Xxxxx
/s/ Xxxxx X. Xxxxx
--------------------------------------------
Xxxxx X. Xxxxx
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