Exhibit 10.1
ASSET PURCHASE AGREEMENT
By and Among
AQUIS WIRELESS COMMUNICATIONS, INC.,
AQUIS COMMUNICATIONS GROUP, INC.
ABC CELLULAR CORPORATION
and
ABC PAGING, INC.
DATED AS OF SEPTEMBER 28, 1999
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made as of this 28th day of
September, 1999, by and among Aquis Wireless Communications, Inc., a Delaware
corporation ("Purchaser"), Aquis Communications Group, Inc., a Delaware
corporation and the sole stockholder of Purchaser ("Group"), ABC Cellular
Corporation, a Florida corporation ("ABC Cellular") and ABC Paging, Inc., a
Florida corporation ("ABC Paging" and, together with ABC Cellular, "Sellers").
R E C I T A L S:
WHEREAS, Sellers currently own and operate a radio paging business and a
cellular telecommunications services business; and
WHEREAS, Purchaser desires to acquire from Sellers, and Sellers desire to
sell to Purchaser, substantially all of the assets and operations of Sellers'
radio paging business as a going concern, together with certain related assets
of Sellers' retail telecommunications business; and
WHEREAS, in connection with its acquisition of such assets and operations,
Purchaser is willing to assume certain obligations and liabilities of Sellers
relating thereto; and
WHEREAS, the parties are entering into this Agreement in order to set
forth certain terms and conditions applicable to such acquisition.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements of the parties hereinafter set forth and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Definitions of Defined Terms.
(a) Capitalized Terms. Capitalized terms used in this Agreement
shall, unless expressly stated otherwise, have the meanings specified in this
Section 1.
(b) Defined Terms.
(i) "Accountants" means PricewaterhouseCoopers, independent
accountants to Purchaser, or such other accounting firm as Purchaser may retain
as its independent auditors from time to time.
(ii) "Accounts Receivable" means monies or other consideration
reflected on the books of Sellers as of the Closing Date that are due and owing
to Sellers and related to the Business.
(iii) "Action" has the meaning set forth in Section 5(o)(i) of
this Agreement.
(iv) "Active Unit" means a paging unit in the hands of a
subscriber of the Business (i.e., a direct customer of Sellers) on the Closing
Date, for which: (a) there are no Accounts Receivable which have been
outstanding in excess of ninety (90) days; (b) at least one
full payment for such unit has been made prior to the Closing Date; and (c) no
oral or written notice of termination has been given to Sellers as of the
Closing Date.
(v) "Agreement" means this Asset Purchase Agreement.
(vi) "Assets" means all properties and assets of Sellers other
than the Excluded Assets.
(vii) "Assignment and Assumption Agreement" has the meaning
set forth in Section 14(a)(i) of this Agreement.
(viii) "Assumed Contracts" means all Contracts of Sellers
being assumed by Purchaser pursuant to this Agreement.
(ix) "Assumed Liabilities" has the meaning set forth in
Section 2(c) of this Agreement.
(x) "Average Gross Revenue" means Sellers' average monthly
gross revenue from paging subscribers, computed in accordance with GAAP on an
accrual basis.
(xi) "Balance Sheet" means Sellers' combined audited balance
sheet at December 31, 1998 of the Business.
(xii) "Balance Sheet Date" means December 31, 1998, the date
of the Balance Sheet.
(xiii) "Billing Software License" means the license of Sellers
to use the billing software used to xxxx accounts in connection with the
Business and all rights related thereto.
(xiv) "Bulk Acts" means bulk transfer laws and/or bulk sales
tax acts (including all notice provisions thereunder) applicable to the
transactions contemplated hereby.
(xv) "Business" means the radio paging business conducted by
Sellers in the Miami, Florida and the surrounding areas, together with all of
the assets in the paging categories reflected on Sellers' Balance Sheet. Sellers
acknowledge that all representations, warranties, covenants and agreements
contained herein shall relate to the Business as heretofore defined.
(xvi) "Closing" means the closing of the transactions
contemplated by this Agreement.
(xvii) "Closing Date" means the date of the Closing.
(xviii) "Contracts" has the meaning set forth in Section 5(dd)
of this Agreement.
(xix) "Customer Deposits" means monies deposited by customers
of the Business and held by Sellers as security in connection with the provision
by Sellers of paging and related services to such customers.
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(xx) "Customer List" means the list of customers of the
Business and related information annexed hereto as Schedule Z(a)(vii).
(xxi) "Deferred Revenue" means revenues billed or received by
Sellers for services not yet provided.
(xxii) "Deposit" means the sum of $100,000 in cash, which
amount is being deposited with the Escrow Agent pursuant to the Deposit Escrow
Agreement upon the execution of this Agreement.
(xxiii) "Deposit Escrow Agreement" means the Deposit Escrow
Agreement, of even date herewith, by and among the Escrow Agent, Sellers and
Purchaser annexed hereto as Exhibit A.
(xxiv) "Dispute Notice" has the meaning set forth in Section
4(a)(iv) of this Agreement.
(xxv) "Equipment" means all paging transmission equipment,
paging units, terminals and related items used in connection with the Business.
(xxvi) "Escrow Agent" means Xxxxxxxx Xxxxx Xxxxxxxx Xxxx &
Ballon LLP.
(xxvii) "Excluded Assets" means those assets of Sellers
specified in Section 2(b) of this Agreement which are not being acquired by
Purchaser pursuant to this Agreement.
(xxviii) "FCC" means the United States Federal Communications
Commission.
(xxix) "FCC Licenses" means radio paging licenses issued to
Sellers by the FCC.
(xxx) "Fill-in Transmitters" has the meaning set forth in
Section 5(q)(i) of this Agreement.
(xxxi) "Final Order" means an order of the FCC approving the
assignment of the FCC Licenses to Purchaser which is no longer subject to
reconsideration, appeal or review, whether judicial or administrative.
(xxxii) "Financial Statements" has the meaning set forth in
Section 5(g)(i) of this Agreement.
(xxxiii) "FINOVA Consent" means the consent of FINOVA Capital
Corporation, Senior leader to Purchaser, to the transactions contemplated by the
Agreement.
(xxxiv) "GAAP" means generally accepted accounting principles.
(xxxv) "Group" means Aquis Communications Group, Inc., a
Delaware corporation and the sole parent of Purchaser.
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(xxxvi) "Hazardous Materials" means any hazardous material,
hazardous substance, regulated substance, pollutant or contaminant, hazardous
waste, or hazardous chemical, as those terms are defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, or
any other comparable "Superfund" or "Superlien" law, the Resource Conservation
and Recovery Act of 1976, as amended, the Hazardous Materials Transportation
Act, any regulations promulgated under the foregoing, or by the U.S.
Environmental Protection Agency or any applicable state or local environmental
agency.
(xxxvii) "Indemnity Escrow Agreement" means the Indemnity
Escrow Agreement, in the form annexed hereto as Exhibit B, to be entered into by
the Escrow Agent, Sellers and Purchaser at the Closing.
(xxxviii) "Intellectual Property" has the meaning set forth in
Section 5(i) of this Agreement.
(xxxix) "Inventory" means the pager products in connection
with a physical inventory performed immediately prior to the Closing.
(xl) "Leases" has the meaning set forth in Section 5(m)(ii) of
this Agreement.
(xli) "License Transfer" has the meaning set forth in Section
5(q)(iii) of this Agreement.
(xlii) "Liens" means, with respect to any Asset, all security
interests, mortgages, pledges, liens, claims, encumbrances and any other rights
of third parties in, to or with respect to such Asset.
(xliii) "Lockboxes" means all accounts into which payments by
customers and resellers of Sellers' paging business are deposited, including,
but not limited to an account at the United States Postal Service maintained
by/or on behalf of Brandsmart, Inc..
(xliv) "Material Contracts" has the meaning set forth in
Section 5(n) of this Agreement.
(xlv) "Personal Property Leases" has the meaning set forth in
Section 5(m)(ii) of this Agreement.
(xlvi) "Petroleum Materials" has the meaning set forth in
Section 5(cc) of this Agreement.
(xlvii) "Premises" has the meaning set forth in Section
5(m)(ii) of this Agreement.
(xlviii) "Purchase Price" has the meaning set forth in Section
4(a) of this Agreement.
(xlix) "Purchaser" means Aquis Wireless Communications, Inc.,
a Delaware corporation.
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(l) "Real Property" has the meaning set forth in Section 5(cc)
of this Agreement.
(li) "Renewal Statement" has the meaning set forth in Section
4(a)(iii) of this Agreement.
(lii) "Retained Liabilities" means all liabilities and
obligations of Sellers of any kind or nature whatsoever, whether known or
unknown, actual or contingent, matured or unmatured, liquidated or unliquidated,
arising from or in connection with occurrences on or prior to the Closing Date
other than the Assumed Liabilities.
(liii) "Sellers" means ABC Cellular Corporation, a Florida
corporation, and ABC Paging, Inc., a Florida corporation.
(liv) "Sellers' Broker Agreement" has the meaning set forth in
Section 15 of this Agreement.
(lv) "Sellers' Knowledge" in a representation or warranty of
Sellers means the actual knowledge of Xxxxx Xxxxx, but does not include, except
as specifically provided elsewhere in this Agreement, constructive knowledge.
Notwithstanding the foregoing, such phrase requires that such individual: (i)
undertake a reasonable examination of his and Sellers' files and the Assets
relating to the Business to ascertain whether such files or Asset examinations
reveal facts relevant to the representation or warranty in question; and (ii)
make a reasonable inquiry of the other employees or agents of Sellers whom he
reasonably believes may have knowledge relating to the facts relevant to such
representation or warranty.
(lvi) "Site Leases" means the seventeen (17) leases listed on
Schedule 5(m) hereto under which either Seller is Lessee for real property on
which Sellers have constructed, own and/or operate paging transmission and
related equipment and one lease listed on Schedule 5(m) hereto under which
Sellers are Lessee for real property on which Sellers have constructed, own
and/or operate paging receiving equipment.
(lvii) "Spare Parts" means spare parts and maintenance manuals
for the Equipment.
(lviii) "Telephone Number Inventory" means the telephone
numbers that have been assigned to or associated with individual paging units
used by Sellers' customers as part of the Business, together with the telephone
numbers available for assignment to or association with individual paging units
as part of the Business and the telephone number, "0 (000) XXXX XXX," all as set
forth on Schedule 5(F) hereto.
(lix) "Trade Name License" has the meaning set forth in
Section 2(a)(x) of this Agreement.
(lx) "Transmitter Facilities" has the meaning set forth in
Section 5(q)(i) of this Agreement.
(lxi) "Trade Names" means all trade names, including, but not
limited to, the names, "ABC," "ABC Wireless Services, Inc.," "ABC Paging", "Page
Now(R)" and "ABC
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Cellular," trademarks, service marks and other identifying names used by Sellers
in connection with the Business, together with all goodwill related thereto, but
specifically excluding the names, "ABC Telephone Systems,(TM)" "ABC
Communications Inc.".
(lxii) "Valid Accounts Receivable" means Accounts Receivable
due with respect to Active Units.
(lxiii) "Year 2000 Compliant" has the meaning set forth in
Section 5(e)(i) of this Agreement.
2. Acquisition of Assets; Assumption of Liabilities.
(a) Sale and Purchase of Assets. In exchange for the consideration
specified in Section 4 of this Agreement, and on the terms, subject to the
conditions and based upon the representations, warranties and agreements of the
parties hereinafter set forth, Purchaser hereby agrees to purchase from Sellers,
and Sellers hereby agree to grant, sell, convey, assign, deliver and set over
unto Purchaser all of the Assets, other than the Excluded Assets. The Assets
shall include, without limitation, the following:
(i) all of Sellers' FCC Licenses and all files relating
thereto including, but not limited to, all correspondence with the FCC, as set
forth on Schedule 2(a)(i);
(ii) all machinery, including, but not limited to, the
machinery listed on Schedule 2(a)(ii);
(iii) all Equipment and Spare Parts, any and all rights of
Sellers under warranties covering such Equipment and Spare Parts, and all
contracts for maintenance or servicing of such Equipment;
(iv) all furniture, fixtures, computers and other office
equipment and supplies located on any Premises, including, without limitation,
the computer hardware listed on Schedule 2(a)(iv) owned by Sellers and used in
the Business which are not Excluded Assets.
(v) The Telephone Number Inventory and office telephone and
other utility services of the Business;
(vi) all Accounts Receivable;
(vii) the Customer Lists, which Sellers represent and warrant
constitute all of the customer information relating to the Business, and all
other books and records relating to the Business, other than information, books
and records relating to the Excluded Assets;
(viii) all the Leases, Site Leases and Personal Property
Leases;
(ix) the Inventory;
(x) all Trade Names other than "ABC#(R)," as to which Sellers
shall grant Purchaser a nonexclusive, royalty-free license, substantially in the
form of Exhibit C hereto (the "Trade Name License") to use such name;
(xi) the Intellectual Property;
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(xii) the Assumed Contracts;
(xiii) the Billing Software License;
(xiv) all goodwill of Sellers relating to the Business;
(xv) all Lockboxes; and
(xvi) all other assets, properties and rights of Sellers used
in or pertaining to the Business, other than the Excluded Assets.
All of the Assets will be acquired by Purchaser free and clear of all
Liens, except as otherwise set forth in this Agreement.
(b) Excluded Assets. Notwithstanding the foregoing, Sellers shall
not sell, and Purchaser shall not acquire from Sellers, any of the Excluded
Assets, consisting of the following:
(i) The corporate seals, certificates of incorporation, minute
books, stock books, tax returns, books of account, and other organizational
documents and records of Sellers;
(ii) Sellers' bank accounts and cash on hand;
(iii) The rights which accrue or will accrue to Sellers under
this Agreement;
(iv) Those Assets of Sellers other than Trade Names which are
used exclusively in connection with Sellers' cellular telephone business; and
(v) all other Assets of Sellers listed on Schedule 2(b) hereto
(collectively, the "Excluded Assets")
(c) Assumption of Certain Liabilities. As part of the consideration
to be paid by Purchaser in exchange for the Assets, at the Closing Purchaser
shall assume the following obligations and liabilities of Sellers (collectively,
"Assumed Liabilities"):
(i) all of Sellers' obligations under the Leases and the Site
Leases;
(ii) all of Sellers' obligations with respect to the Customer
Deposits set forth on Schedule 2(c)(iii) hereto;
(iii) all of Sellers' obligations with respect to the Deferred
Revenue as set forth on Schedule 2(c)(iv) hereto; and
(iv) the postage meter rental agreement, software maintenance
agreement, and other contractual obligations of Sellers, if any, all as set
forth on Schedule 2(c)(v) hereto; and
(v) those liabilities of Sellers listed on Schedule 2(c)
hereto.
Except to the extent expressly assumed by Purchaser hereunder, Purchaser
shall not assume or otherwise be responsible for or bound by any of the Retained
Liabilities including, but
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not limited to, any obligation to retain any employee of the Business or any
obligation or liability arising out of Sellers' employment or termination of any
employee prior to the Closing Date.
3. Closing. The Closing shall take place at the offices of Xxxxxxxx Xxxxx
Xxxxxxxx Xxxx & Ballon LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000-0000, or
such other place as the parties may agree, within ten (10) business days
following the date upon which all of the conditions precedent to the Closing
stated in Sections 7 and 8 of this Agreement have been satisfied in full but no
later than December 31, 1999 unless as of such date the FCC shall not have
approved the transactions contemplated hereby, in which event no later than
March 31, 2000. The purchase and sale of the Assets pursuant to this Agreement
shall for all purposes be deemed effective as of the Closing Date.
4. Purchase Price and Payment/Adjustments.
(a) Purchase Price. The purchase price (the "Purchase Price") to be
paid by Purchaser in exchange for the Assets shall consist of the following:
(i) The sum of $2,750,000 in cash, subject to any required
adjustments as set forth in Section 4(c) hereof, to be paid as follows:
(1) The Deposit ($100,000), by certified or bank
cashier's check payable to the Escrow Agent delivered to the Escrow Agent, or by
wire transfer to an account designated by the Escrow Agent in accordance with
written instructions from the Escrow Agent, upon the execution of this
Agreement, such amount to be held by the Escrow Agent pursuant to the terms and
conditions set forth in the Deposit Escrow Agreement; and
(2) The balance ($2,650,000, subject to adjustment as
provided in paragraph (vi) hereinbelow and Sections 4(c) and 24 hereof)
delivered to Sellers at the Closing by certified or bank check payable to
Sellers or by wire transfer on the Closing Date to an account designated by
Sellers pursuant to Sellers' written instructions (which shall be delivered to
Purchaser no later than two (2) business days prior to Closing), $150,000 of
which shall be deposited with the Escrow Agent pursuant to paragraph (e)
hereinbelow;
(ii) The assumption by Purchaser as of the day after the
Closing Date of the Assumed Liabilities;
(iii) With respect to those of Sellers' paging units in
service which are subject to existing annual paging services contracts with
customers for which no payment has been received for paging services (which, for
purposes hereof, are acknowledged to number approximately 6,600 as of the date
hereof), Purchaser shall pay to Sellers the sum of Thirty-Four Dollars ($34.00)
in cash for each of such contracts which is renewed and paid by the customer as
additional consideration for the purchase of Sellers' paging assets hereunder.
Subject to paragraph (iv) hereof, all amounts payable by Purchaser pursuant to
this paragraph (iii) shall be determined and paid quarterly as follows: on or
before the fifteenth (15th) business day following the last day of each calendar
quarter, Purchaser shall prepare and deliver to Sellers a statement (a "Renewal
Statement") in each case as of the last day of such calendar quarter, listing
each existing annual paging services contract which has been renewed during such
calendar quarter and all information related thereto and setting forth
Purchaser's calculation of all amounts due Sellers
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in respect thereof, together with payment, by check or by wire transfer, of such
amounts; provided, that Purchaser agrees to use its best efforts to secure the
renewal of such annual paging services contracts as and when they expire.
(iv) In the event that Sellers shall disagree with any Renewal
Statement received from Purchaser pursuant to paragraph (iii) hereinabove, they
shall so notify Purchaser in writing (a "Dispute Notice") within fifteen (15)
calendar days following their receipt of such Renewal Statement, in each case
specifying the amounts in dispute and the basis therefor, and the parties shall
endeavor in good faith through mutual discussions to reach an agreement as to
the amounts to be paid in respect of such Renewal Statement. In the event that
the parties are unable to reach such agreement within thirty (30) days following
Purchaser's receipt of a Dispute Notice from Sellers, then the parties shall
submit any matters remaining in dispute to an independent accounting firm
selected by Purchaser and reasonably acceptable to Sellers for review and final
determination, and payment of all additional amounts (if any) determined by such
firm to be due in respect of such Renewal Statement shall be made within five
business days following the date of such final determination.
(v) For purposes of making determinations pursuant to
paragraphs (iii) and (iv) hereinabove, Purchaser agrees to afford Sellers
reasonable access to all books and records of Purchaser relating to annual
paging services contracts assumed by Purchaser at the Closing hereunder and all
renewals thereof.
(vi) In the event that the number of pager products which are
included in Inventory hereunder exceeds 500 units (or $25,000 in value, based
upon Sellers' cost), Purchaser shall purchase the excess units from Sellers at
Sellers' wholesale cost, which amount shall be added to the balance of the
Purchase Price to be paid pursuant to paragraph (i)(2) hereinabove.
(b) Allocation of Purchase Price. It is hereby agreed and
acknowledged that the Purchase Price allocation for each component of the Assets
shall be made on the basis of Sellers' net book value thereof with any excess of
the Purchase Price over such net book value being allocated up to $100,000 to
the Noncompetition, Confidentiality and Nondisclosure Agreement being delivered
by Sellers pursuant to Section 14(a)(vi) hereof and the remainder to
intangibles, as set forth on Schedule 4(b) hereto.
(c) Purchase Price Adjustments.
(i) In the event that, on the Closing Date, the total number
of paging units serviced by Sellers (exclusive of units subject to annual paging
services contracts) shall be less than 38,400 or, subject to Section 7(l)
hereof, the Business shall have annual adjusted earnings before income taxes,
depreciation and amortization for a six month trailing period ending no more
than forty-five (45) days prior to the Closing hereunder, (as annualized based
upon the segment information for the Business plus such pro forma adjustments as
have been agreed to by Sellers and Purchaser ("EBITDA")), of less than $500,000
(the "EBITDA Deficiency"), then the Purchase Price shall be adjusted downward by
an amount equal to the greater of: (x) the difference of 38,400 minus the total
number of paging units serviced by Sellers on the Closing Date multiplied by
Seventy-one Dollars ($71.00), and (y) the amount of the EBITDA Deficiency
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times 5.5, and such amount shall be deducted from the payment due pursuant to
Section 4(a)(i)(2) hereof.
(ii) In the event that the total dollar value of the Deferred
Revenue plus Customer Deposits assumed by Purchaser on the Closing Date
hereunder shall exceed the total dollar value of the Valid Accounts Receivable
of Sellers on the Closing Date by more than 10%, there shall be a
dollar-for-dollar reduction in the Purchase Price and from the payment due
pursuant to Section 4(a)(i)(2) in the amount of such excess over 110% of the
total dollar value of the Deferred Revenue plus Customer Deposits.
(d) Application of Deposit. As set forth in the Deposit Escrow
Agreement, in the event that the transactions contemplated hereby are not
consummated for any reason other than as provided in Section 13 of this
Agreement, then the Deposit shall be paid by the Escrow Agent to Sellers and
retained by Sellers in order to compensate Sellers for their costs and expenses
incurred in negotiating this Agreement. In the event that the transactions
contemplated hereby are closed, the parties agree to direct the Escrow Agent at
Closing to terminate the Deposit Escrow Agreement and deliver the Deposit to
Sellers at Closing, and the full amount of the Deposit shall be credited towards
payment of the cash portion of the Purchase Price.
(e) Indemnity Escrow. At the Closing, the Escrow Agent, Sellers and
Purchaser shall enter into the Indemnity Escrow Agreement, pursuant to which
Sellers shall deposit $150,000 of the balance of the Purchase Price to be paid
pursuant to Section 4(a)(i)(2) hereof in escrow, which amount shall thereafter
be held in escrow by the Escrow Agent following the Closing and applied or
released as and when provided in the Indemnity Escrow Agreement.
5. Representations and Warranties of Sellers.
As an inducement for Purchaser to enter into this Agreement and
perform its obligations hereunder, Sellers hereby jointly and severally
represent and warrant to Purchaser as set forth below. Each of such
representations and warranties are correct and complete as of the date hereof
and shall be correct and complete as of the Closing, with the same effect as if
said representations and warranties had been made on and as of the Closing Date.
(a) Power and Authority. Each Seller has full, lawful power to own
all of its Assets and to carry on the activities of the Business as presently
conducted and to own, hold and operate the properties that it owns and holds.
The execution and delivery of this Agreement and the other agreements,
certificates and documents to be executed and delivered pursuant hereto by each
Seller have been duly and validly authorized by such Seller and no further
corporate action on the part of either Seller is required in connection
therewith, and this Agreement and all of such other agreements, certificates and
documents constitute the valid and binding obligations of Sellers, enforceable
against each Seller in accordance with their respective terms.
(b) Noncontravention. Neither the execution and delivery of this
Agreement by each Seller, nor the performance by such Seller of its obligations
hereunder, nor the consummation of the transactions contemplated hereby will (i)
conflict with or result in a violation or breach of, or default or termination
under, any terms or provisions of such Seller's certificate of incorporation,
by-laws or other organizational documents or any other agreement or instrument
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to which such Seller is a party or by which such Seller, the Business or any of
the Assets is bound, or (ii) result in the imposition of any Lien upon any of
the Assets.
(c) Governmental Approvals. Except for the approval of the FCC no
consent, approval or authorization of or declaration or filing with any
governmental authority is required in connection with the execution or delivery
of this Agreement by Sellers or the consummation by Sellers of the transactions
contemplated hereby.
(d) Formation, Good Standing and Qualifications. Each Seller is a
corporation duly formed, validly existing and in good standing under the laws of
the State of Florida. None of Sellers or the Business is licensed or qualified
to do business in any states other than Florida and neither the character of the
Assets and Sellers' properties nor the nature of the Business would necessitate
such licensing or qualification to do business in any other state. Schedule 5(d)
hereto contains correct and complete copies of the certificate of incorporation
of each Seller, in each case as in full force and effect on the date hereof.
(e) Equipment and Telecommunications Transmission Services.
(i) Schedule 5(e)(i) hereto contains a true and complete list
of all of the Equipment and Spare Parts (and their location) used in or
pertaining to the Business, including all of the terminals, transmitters, link
receivers and antennas used by Sellers to provide paging services in support of
the Business. Sellers have good, valid and marketable title to all of such
Equipment and Spare Parts, free and clear of all Liens (other than liens
reflected in Schedule 5(h)(ii), which shall be released at Closing). To Sellers'
best knowledge, best efforts have been made by Motorola, Inc. to ensure that all
of the Equipment and Spare Parts are Year 2000 compliant. For purposes of this
Agreement, "Year 2000 Compliant" means, with respect to Sellers' information
technology, that the information technology is designed to be used prior to,
during, and after the calendar Year 2000 A.D., and that the information
technology used during each such time period will accurately receive, provide
and process date and time data (including, but not limited to, calculating,
comparing and sequencing from, into and between the twentieth and twenty-first
centuries, including the years 1999 and 2000, and leap-year calculations) and
will not malfunction, cease to function, or provide invalid or incorrect results
as a result of date or time data, to the extent that other information
technology used in combination with such information technology properly
exchanges date and time data with it.
(ii) Schedule 5(e)(ii) hereto contains a list of all of the
telecommunications transmission services provided in support of the Business,
including services to: (A) connect paging terminals to transmitters; (B) connect
transmitters to monitoring locations for the performance of status monitoring,
control and trouble-shooting functions; and (C) program numbers into the paging
terminals and perform remote monitoring, adjustments, and trouble-shooting with
respect to the paging terminals.
(f) Telephone Number Inventory. Schedule 5(f) hereto contains true
and complete list of the Telephone Number Inventory:
(i) All telephone numbers included in the Telephone Number
Inventory have been activated in the paging control terminals included in the
Equipment.
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(g) Financial Statements. Within forty-five (45) days after the date
hereof, Sellers shall cause their independent accountants to prepare and deliver
to Purchaser audited segment financial statements (including notes thereto)of
the Business, including an audited balance sheet and statements of income and
retained earnings, for the fiscal year ended December 31, 1998 and unaudited
interim segment financial statements of the Business for the nine (9) months
ending September 30, 1999. Sellers further agree: (i) in the event that Group is
required to file such information with the Securities and Exchange Commission
(the "Commission") in order to satisfy its reporting and disclosure obligations
under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission thereunder
(the "Exchange Act"), to cause their independent accountants to prepare and
deliver to Purchaser audited segment financial statements (including notes
thereto) of the Business, including audited balance sheets and statements of
income and retained earnings, for the fiscal year(s) ended December 31, 1996
and/or December 31, 1997; or (ii) in the event that the Closing hereunder shall
not occur on or prior to February 22, 2000 and Group is required to file such
information with the Commission under the Exchange Act, to cause their
accountants to prepare and deliver to Purchaser audited segment financial
statements (including notes thereto)of the Business, including an audited
balance sheet and statements of income and retained earnings, for the fiscal
years ending December 31, 1997 and 1999(all of such financial statements which
are delivered to Purchaser pursuant hereto being sometimes referred to herein
collectively as, the "Financial Statements"). The Financial Statements have been
prepared in accordance with GAAP, consistently applied, and fairly and
accurately present the results of operations of the Business for the periods
covered thereby and the financial condition of the Business as of the dates
indicated thereon, and comply with the books and records of the Business. Since
the Balance Sheet Date, the Business has operated in the ordinary course of
business and will, through the Closing Date, continue to operate only in the
ordinary course of business on the same basis as it has heretofore. Since the
Balance Sheet Date, there has been no materially adverse change in the financial
condition of the Business, and neither Seller knows of any such pending change.
(h) Assets.
(i) Except as set forth on Schedule 5(h)(i)hereto, to Sellers'
Knowledge, the physical Assets are in good operating condition, reasonable wear
and tear excepted, and are free from any defects which could have a material
adverse effect on the Assets or the operations of the Business, are in
conformity with the manufacturers' specifications (including the ability to
perform the functions for which they were designed), and are in compliance with
FCC regulations. Except for the Excluded Assets, the Assets constitute all of
the properties, assets and rights that have been used in the conduct of the
Business and which are necessary to the operation of the Business. There are no
assets of either Seller not included in the Assets which are material to the
operation of the Business and the absence of which would have a material adverse
effect on Purchaser's ability to conduct the Business in the same manner that it
has been previously conducted. Except as disclosed on Schedule 5(h)(i), the
Assets are now and will be on the Closing Date located at Sellers' places of
business and will not be removed therefrom unless Sellers shall have received
Purchaser's written consent to such action, which consent is in Purchaser's sole
and absolute discretion.
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(ii) Except as set forth on Schedule 5(h)(ii),Sellers have
good and marketable title to all the Assets, free and clear of any Liens.
(i) Business Names and Business Addresses. Schedule 5(i) sets forth
all Trade Names used by Sellers over the past five (5) years and all of the
business address(es) of Sellers for the past five (5) years. Schedule 5(i) also
sets forth any copyrights, patents, and other intellectual property owned by
Sellers or used by Sellers in connection with the Business (collectively with
the Trade Names, the "Intellectual Property"). Sellers are not aware of any
other party using the Intellectual Property. Sellers have not received any
notice of adverse claims, invalidity or infringement of any rights of others
with respect to the Intellectual Property and none of the Intellectual Property
is the subject of any pending or threatened claim, litigation or lien. To
Sellers' Knowledge, Sellers' use of the Intellectual Property did not and does
not infringe upon, or otherwise violate, the rights of any third party.
(j) Liabilities. Except for leases, contracts and other contractual
obligations not required to be reflected under GAAP, there are no liabilities,
obligations or claims of any nature of or against either of Sellers or the
Business (whether threatened, accrued, contingent, absolute, unliquidated,
asserted or otherwise, whether due or to become due) which were not disclosed or
reflected fully on the Balance Sheet, and there are no such liabilities,
obligations or claims of or against either Seller or the Business, other than
those disclosed or reflected in the Financial Statements.
(k) Taxes.
(i) All taxes, including, without limitation, income,
accumulated earnings, property, sales, use, franchise, added value, employees'
income, withholding and social security taxes, imposed by the United States, or
by any state, municipality, subdivision or instrumentality of the United States
or of any foreign country, or by any other taxing authority, which are due or
payable by either of Sellers or the Business, and all such taxes and any
interest and penalties thereon have been paid in full, and all tax returns and
reports required to be filed in connection therewith have been accurately
prepared and duly and timely filed and all deposits required by law to be made
by either of Sellers or the Business with respect to employees' withholding
taxes have been duly made or will be made as of the required filing date, as
same may be extended.
(ii) Neither Seller has been delinquent in the payment of any
foreign or domestic tax, assessment or governmental charge, fee or deposit and
there is no tax deficiency or claim outstanding, proposed or assessed against
either of Sellers or the Business.
(iii) Except as set forth on Schedule 5(k)(iii) hereto, no
audit has been conducted of any tax returns relating to the Business during the
last ten (10) years.
(iv) After the Closing, Purchaser will incur no liability or
expense by virtue of taxes relating to the Business for the period between the
Balance Sheet Date and the Closing Date.
(l) Inventory. All of Sellers' inventories, including the Inventory,
consist of items of a quality usable, marketable and saleable in the normal
course of the Business.
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(m) Real Property.
(i) Neither Seller owns fee title to any real property.
(ii) Schedule 5(m)(ii) contains a complete and correct list
and description of all of Sellers' Site Leases and other leases (whether oral or
written) with respect to real property (collectively, the "Leases"), including a
description of all buildings, structures, improvements, transmitters, terminals
and other equipment located at each of the premises underlying such Leases
(collectively, the "Premises"), and all licensing arrangements and leases of
personal property relating to the Business ("Personal Property Leases"), to
which either Seller is a party (either as lessor, lessee, licensor or licensee).
Except as set forth on Schedule 5(m) hereto, all of such Leases, Personal
Property Leases, and licensing agreements are valid and in full force and effect
in accordance with their respective terms and there are no existing defaults or
events of default or events which with notice or lapse of time or both would
constitute defaults or which would interfere with the enjoyment by Sellers or
any assignee of the benefits of such instrument or their use and enjoyment of
the real or personal property. Except as set forth on Schedule 5(m)(ii), no
consents are required in order to transfer any of the Leases, Personal Property
Leases or licenses to Purchaser, nor have Sellers received any notice of intent
not to renew from any lessor or licensor thereunder.
(iii) Except as set forth on Schedule 5(m)(iii), to Sellers'
knowledge all activities and operations conducted by Sellers on the Premises,
and all structures, improvements and fixtures installed by Sellers on the
Premises, conform to any and all applicable federal, state and local laws,
ordinances and regulations, including, without limitation, zoning and building
ordinances and health, environmental and safety laws, ordinances and
regulations, and the Premises are zoned for the various purposes for which the
Premises are currently being used.
(iv) Except as set forth on Schedule 5(m)(iv), to Sellers'
Knowledge, there is no condition resulting from the activities of the Business
which would adversely affect or impair the use of any of the Premises for the
purposes for which Sellers are currently using the same or which could result in
the imposition of liability on Purchaser.
(v) To Sellers' Knowledge, there are no existing, pending or
threatened condemnations, or violations of other governmental regulations giving
rise to pending or threatened governmental or administrative actions that will
materially adversely affect or impair the use of any of the Premises for the
purposes for which Sellers are currently using the same.
(n) Material Contracts. Schedule 5(n) contains a list of all
material contracts and documents to which either of Sellers is a party, true and
complete copies of which have been delivered to Purchaser, or in the case of
contracts with subscribers of the Business, made available to Purchaser. All of
such subscribers are parties to written contracts with Sellers; all of such
contracts are substantially in the form of the contract included in Schedule
5(n). Except only as to contracts and documents listed on Schedule 5(n), neither
Seller, with respect to the Business, is a party to any written or oral (i)
contract not made in the ordinary course of business; (ii) employment contract
which is not terminable without cost or other liability to Sellers on notice of
thirty (30) days or less, (iii) contract with any labor union, (iv) bonus,
deferred compensation, pension, profit-sharing, retirement, stock purchase,
hospitalization, insurance or similar plan
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providing employee benefits, (v) lease with respect to any property, real or
personal, whether as lessor or lessee, (vi) continuing contract for the future
purchase of materials, supplies or equipment in excess of the requirements of
the Business now booked or for normal operating inventories, (vii) contract
involving the expenditure of more than one thousand dollars ($1,000), (viii)
contract continuing over a period of more than one year from its date, (ix)
contract interfering with Sellers' exclusive and unrestricted use of any Trade
Names or other Intellectual Property, or other contract, agreement or
understanding, (x) inter-carrier agreement, agreement with a reseller or
agreement with an agent, (xi) interconnection agreement with any local exchange
carrier or interexchange carrier, or (xii) any agreement relating to circuits
used to control the transmitters used in the Business (collectively, "Material
Contracts") and the Business is not subject to any restriction that materially
adversely affects the Assets, or the Business or its financial condition or
prospects. All of the Material Contracts are in full force and effect and, to
Sellers' knowledge, there is no default or circumstance which, with notice
and/or passing of time, would constitute a default existing under any of the
Material Contracts, nor has either of Sellers or the Business received any
notice by any other party thereto of an intent not to renew any Material
Contract.
(o) Compliance With Laws; Litigation.
(i) Except as set forth in Schedule 5(o)(i), to Sellers'
Knowledge, each of Sellers and the Business have complied in all material
respects with all laws, regulations and orders affecting the Business and its
operations (including, without limitation, the rules of the FCC relating to
regulatory fees, universal service fund obligations, telecommunications relay
service, antenna support structure lighting and marking, tower registration,
timely construction of facilities and the provision of service to subsidiaries,
and the timely filing of applications and reports). Neither Seller has received
notice or otherwise been advised that either Seller or the Business is not in
conformity with any such laws. Except as set forth on Schedule 5(o) hereto,
there are no actions, suits or proceedings, either at law or in equity, pending
or, to Sellers' Knowledge, threatened against either Seller or the Business
(collectively, an "Action"). No Action involves the possibility of any judgment
or liability against either Seller or the Business not fully covered by
insurance, which may result in a materially adverse change in the financial
condition of the Business, or which would prevent or hinder the consummation of
the transactions contemplated by this Agreement.
(ii) Except as set forth on Schedule 5(o)(ii), there are no
lawsuits or other private or governmental investigations, inquiries, proceedings
or claims pending or threatened against either Seller or the Business, or any of
their respective properties or the Assets, or which could affect the
consummation of the transactions contemplated hereby; and to Sellers' Knowledge
there is no valid basis for any such lawsuit, proceeding or claim. Except as set
forth on Schedule 5(o)(ii), there are no judgments, decrees or orders binding
upon either Sellers or the Business, the effect of which would be to prohibit
any business practice of the Business, the disposition of the Assets by Sellers,
the conduct of the Business by Sellers or Purchaser or the consummation of the
transactions contemplated hereby. Except as set forth on Schedule 5(o)(ii) there
are no violations, citations, fines, injunctions or penalties heretofore
asserted against or imposed on either Seller, the Business, or any of their
respective properties or Assets, or with respect to the conduct of the Business
under any federal, state or local law or of which either
15
Seller has received notice or which otherwise bind any of the material
properties of Sellers, the Assets or the Business, and none has been threatened.
(iii) Except as set forth in Schedule 5(o)(iii), there exists
no default under any mortgage, indenture, contract or agreement, which default
may result in a materially adverse change in the Assets, or the financial
condition or business or operations of the Business.
(p) Accounts Receivable. All Accounts Receivable arise from bona
fide transactions made in the ordinary course of business and represent services
rendered or Inventory sold in the ordinary course of business. All such Accounts
Receivable are fairly presented, and are the result of arms-length transactions
with third parties. The collectibility of the Accounts Receivable will not be
impaired by any statute of limitations, right of set-off, counterclaim or
defense. Set forth on Schedule 5(p) are computer printouts containing detailed
listings of Accounts Receivable as of the dates specified therein (which shall
be updated through the Closing Date) and which reflect the periods of time that
such accounts have been outstanding as of the dates of such listings.
(q) Licenses; Service Area.
(i) Schedule 5(q)(i) sets forth all of the FCC Licenses held
by Sellers or relating to the Business and copies of all associated pending
license applications, any filings made with the FCC to memorialize the site of
any "fill-in transmitter," as defined and provided for under the rules of the
FCC, but which may not be shown on the FCC Licenses, and any authority provided
under the FCC rules for fill-in transmitters that have not been memorialized by
any filing with the FCC, but which are listed on Schedule 5(q)(i) ("Fill-in
Transmitters"). The FCC Licenses are in full force and effect, are validly held
by Sellers, and are free and clear of Liens, conditions or other restrictions of
any nature as would limit the operation of Sellers' antenna and transmitter
sites covered by the FCC Licenses, including sites for any Fill-in Transmitter,
(all such sites are collectively referred to as the "Transmitter Facilities").
Except for the FCC Licenses, there are no permits, licenses or other
authorizations currently held by Sellers, or required by law to be held by
Sellers, with respect to ownership of the Assets or operation of Business,
except where the failure to hold such a permit, license or other authorization
would not reasonably be expected to materially affect ownership or operation of
the Assets or conduct of the Business. The sites set forth in the FCC Licenses
and any associated sites for Fill-in Transmitters listed therewith in Schedule
5(q)(i) constitute all of the sites necessary for the conduct of the Business
and have been timely constructed and placed into operation with service to
subscribers by Sellers in accordance with the rules of the FCC. There are no
applications, petitions to deny, complaints or proceedings pending before the
FCC or relating to the operations of or the provision of service from the
Transmitter Facilities that could preclude Sellers from entering into this
transaction or consummating the transactions contemplated hereby or that could
affect the validity of the FCC Licenses.
(ii) The service areas in which the Business operates are
described on Schedule 5(q)(ii).
(r) Benefit Plans. Except as disclosed in Schedule 5(r), the
Business does not have any pension, retirement, profit sharing or bonus plan, or
other employee welfare or benefit
16
plan. Neither of Sellers nor the Business participates in, or has any obligation
to contribute to, or any withdrawal liability with respect to, any
"multiemployer plan" as such term is defined in Section 4001 of ERISA and
Sellers have not received notice of the reorganization of any such plan.
(s) Employees. Set forth in Schedule 5(s) is a list of all employees
of Sellers and the compensation of each. Neither Seller is a party to any union
or collective bargaining agreement or other agreements or arrangements of any
kind with any other employee organization or association with respect to any of
its employees. To Sellers' Knowledge, there is no condition or circumstance
which will or may cause the Business to suffer any strike, union representation
contest, labor trouble or work stoppage, and the Business has not suffered any
strike, union representation contest, labor trouble or work stoppage within the
past five (5) years. The consummation of the transactions contemplated hereby
will not result in the imposition on Sellers or Purchaser of any obligations,
including any notice obligations, under the WARN Act.
(t) Insurance. Set forth on Schedule 5(t) is a list of all insurance
policies relating to the Business to which either Seller is a party, including
the expiration dates of said policies. Complete copies of said policies have
been delivered to Purchaser. Such policies provide for coverage which is
adequate and reasonable by industry standards both in scope and in amounts to
insure the Business as presently conducted by Sellers. Prior to the Closing,
Sellers will use their reasonable commercial efforts to continue in full force
and effect after the Closing, at Purchaser's expense, the policies which
Purchaser requests to be kept. Other than as set forth on Schedule 5(t), there
have been no claims asserted under any of such policies, and Sellers have not
received any notice of non-renewal or limitation of coverage with respect to any
of such policies, nor are they aware of any existing circumstance which would
form the basis for nonrenewal of any of such policies or limitation of the
coverage afforded thereunder.
(u) Account Information. Schedule 5(u) contains (i) a current list
of resellers with whom Sellers have contracts or agreements and accounts
receivable of the Business, (ii) a current list of Sellers' service rates for
all resellers and all types of service and accounts, (iii) a list of direct
accounts and resellers which sets forth the number of accounts and resellers by
type and the average monthly billing for each reseller and type of account, and
(iv) a summary of the number and type of accounts on each frequency used by the
Business. Sellers are not aware of any circumstances currently existing which
could result in the loss of any current reseller or direct account of the
Business as a consequence of the transfer of ownership of the Business.
(v) Consents and Approvals. Except as set forth on Schedules
5(m)(ii) and 5(v), no consent, approval or waiver of or by any third party,
except those which have been obtained and which have been delivered to
Purchaser, is necessary in order to permit the transfer and assignment of the
Business and the Assets to Purchaser, free and clear of any Liens or other
restrictions, and the failure by Sellers to secure any consent or waiver will
not result in any adverse affect upon the Assets or upon Purchaser or its
ability to operate the Business following the Closing.
(w) Changes in the Business. Except as set forth on Schedule 5(w),
since the Balance Sheet Date, neither of Sellers or the Business has:
17
(i) Made any material changes in the Business or operations of
the Business or the manner of conducting such Business or operations;
(ii) Suffered any damage, destruction or loss materially
adversely affecting the Assets, the Business or its operations;
(iii) Sold, assigned or transferred any trade secret, customer
list or account or suffered any materially adverse change with respect to any of
the foregoing;
(iv) Suffered any material adverse change in its condition,
financial or otherwise;
(v) Sold, leased, disposed of, mortgaged, pledged or suffered
(without being released or relieved therefrom), any lien or encumbrance or
waived any substantial rights relating to any property or assets, tangible or
intangible, relating to the Business, other than in the ordinary course of
business; or
(vi) Entered into any transaction or material contract or
agreement other than in the ordinary course of business.
(x) Documents Relating to Business. Sellers have furnished, or in
the case of Sellers' subscribers, made available, to Purchaser every material
agreement, instrument, letter, pleading, consent, waiver, notice, note and every
material document of whatever nature relating to the Business and, to Sellers'
Knowledge, there is no other material document or instrument of any kind that
Sellers have failed to furnish that would or might affect the truth, accuracy or
completeness of the representations and warranties contained herein. No
representation or warranty by Sellers in this Agreement, any Exhibit or Schedule
thereto or related agreement contains or will contain any untrue statement of a
material fact nor omits or will omit to state a material fact necessary to make
the statements contained therein, in light of the circumstances under which they
were made, not misleading.
(y) Books and Records. To Sellers' Knowledge, the books and records
of the Business are complete and accurate in all material respects. The
financial books and records of the Business have been maintained consistently in
accordance with sound business practices and are accurate and complete in all
material respects.
(z) Payments.
(i) Except as set forth on Schedule 5(z), to Sellers
knowledge, neither Seller, or any employee, agent, or other person acting on
behalf of Sellers or the Business, has, directly or indirectly, within the past
five (5) years given or agreed to give any gift or similar benefit (other than
legal price concessions to customers in the ordinary course of business) to any
customer, supplier, employee or agent of a customer or supplier, or official or
employee of any governmental agency or instrumentality of any government
(domestic or foreign) or any political party or candidate for office or other
person who is or may be in a position to help or hinder the Business which: (A)
might subject Sellers, Purchaser or the Business to any damage or penalty in any
civil, criminal or governmental litigation or proceeding or, (B)which if not
given in the past, might have had a materially adverse effect on the assets,
business or operations of the Business as
18
reflected in the Financial Statements or (C) if not continued in the future,
might adversely affect the assets, business, operations or prospects of the
Business.
(ii) Neither Seller has obtained, directly or indirectly, any
property as a result of activities, or used any property to conduct activities,
which activities may constitute or result in a violation of any federal, state
or local law, rule or regulation, the penalty for which could be forfeiture of
such property.
(aa) Schedules. Each of the Schedules described in this Agreement is
dated the date of this Agreement (unless the Schedule indicates specifically
that it is prepared as of a different date), identified specifically as a
schedule to a particular Section and is hereby certified by Sellers as being
true and complete. Any information disclosed in any Schedule described in this
Agreement shall be deemed disclosed for purposes of all other such Schedules to
which such information is relevant.
(bb) Active Units. The number of Active Units as of March 31, 1999
was 38,358.
(cc) Environmental Matters. With respect to any real property leased
by Sellers pursuant to a Lease (any such real property is referred to herein as
"Real Property"), to Sellers' Knowledge, there has been no use, generation,
manufacture, production, storage, release, discharge or disposal of any
Hazardous Material (as defined below) on, under or about the Real Property or
transportation by Sellers or their employees, agents or representatives of any
Hazardous Materials to or from the Real Property, except for petroleum-based
solvents and products ("Petroleum Materials") that are used in connection with
the servicing of equipment in the normal course of the Business, which Petroleum
Materials are stored or handled on the Premises in full compliance of all
applicable laws.
(dd) Contracts. Schedule 5(dd), hereto lists (i) all agreements,
arrangements, commitments, contracts, leases, licenses, instruments and other
obligations of Sellers which relate to the Business (collectively, "Contracts");
and (ii) all Assumed Contracts. Except as set forth on each Schedule 5(dd), each
of the Assumed Contracts is valid, binding and enforceable in accordance with
its terms and is in full force and effect, and there are no existing violations
or defaults by either Seller or, to Sellers' Knowledge, any other party thereto
and, to Sellers' Knowledge, no event, act or omission has occurred which (with
or without notice or the passage of time or both) would result in a material
violation or default under any such Assumed Contract. Except as reflected in the
Schedules, all amounts due and payable under each such contract have been paid.
(ee) Billing Software. Sellers are the sole licensees under the
Billing Software License, which is in full force and effect. Sellers have paid
all amounts due under the Billing Software License other than maintenance
payments of $2,000 per month to become due with respect thereto. The computer
hardware set forth in Schedule 2(a)(iv) and the Billing Software License
collectively comprise the billing system utilized by Sellers to perform billing
services. The Billing Software License, as configured and delivered to Purchaser
at the Closing, shall perform and function and be in the same condition as was
the case during the three billing cycles immediately preceding the date hereof.
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6. Representations and Warranties of Purchaser and Group.
As an inducement for Sellers to enter into this Agreement and
perform its obligations hereunder, each of Purchaser and Group represents and
warrants to Sellers as set forth below. Each of such representations and
warranties are correct and complete as of the date hereof and shall be correct
and complete as of the Closing, with the same effect as if said representations
and warranties had been made at and as of the Closing Date:
(a) Organization and Good Standing. Each of Purchaser and Group is a
corporation duly organized, validly existing and in good standing under of the
laws of the State of Delaware.
(b) Forestallments. Neither Purchaser nor Group is a party to or
subject to any contract or agreement or any judgment, order, writ, injunction or
decree of any court or governmental body which will prevent its performance of
its obligations under this Agreement.
(c) Authorization. At Closing, the execution and delivery of this
Agreement and the other agreements, certificates and documents contemplated
hereby or referred to herein shall have been duly authorized by their respective
Boards of Directors as required under the laws of the State of Delaware, and no
other corporate action shall be required for the approval of this Agreement or
such other agreements, certificates and documents to be executed and delivered
by Purchaser or Group, all of which shall be valid and binding upon Purchaser or
Group, to the extent each is a party thereto, in accordance with their
respective terms.
(d) Noncontravention. Neither the execution and delivery of this
Agreement by Purchaser and Group, nor the performance by Purchaser and Group of
their respective obligations hereunder, nor the consummation of the transactions
contemplated hereby will conflict with or result in a violation or breach of, or
default, or termination under, any terms or provisions of either Purchaser's or
Group's corporate charter or bylaws or of any terms or provisions of any other
agreement or instrument to which Purchaser or Group is a party or by which
Purchaser or Group is bound.
(e) Consents and Approvals. Except for the FINOVA Consent, approvals
of the FCC and requisite filings with the Securities and Exchange Commission, no
consent, approval, authorization, waiver, declaration or filing of, by or with
any governmental authority or by any third party is necessary in connection with
the execution or delivery of this Agreement by Purchaser and Group or the
consummation by Purchaser or Group of the transactions contemplated hereby.
(f) FCC Qualification. Purchaser is legally qualified to hold the
FCC Licenses.
7. Conditions Precedent to Purchaser's Obligation to Close.
The obligations of Purchaser to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment, on or prior
to the Closing Date, of each of the following conditions:
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(a) Representations and Warranties. The representations and
warranties made by Sellers contained herein, including the Schedules attached
hereto, shall be true and correct at and as of the time of the Closing, with the
same effect as though such representations and warranties were made at and as of
such time, except in respects not materially adverse to Sellers or the Business,
and each Seller shall deliver to Purchaser a certificate dated the Closing Date
so stating. As used herein, the phrase "in respects not materially adverse to
Sellers" shall mean in respects not materially adverse to the overall financial
condition, business or prospects of the Business.
(b) Performance and Compliance. Sellers, on or before the Closing
Date, shall have performed and complied with all terms, covenants and conditions
required by this Agreement to be performed or complied with by them at or before
the Closing.
(c) Closing Deliveries. Each Seller shall have delivered to
Purchaser all items required to be delivered by it pursuant to Section 14(a) of
this Agreement.
(d) Opinion Letters. Purchaser shall have been furnished with
opinions, dated the Closing Date, of Xxxxx Xxxxx, counsel to Sellers, and of
Shulman, Rogers, Gondal, Pordy & Xxxxx PA, special FCC counsel to Sellers, in
substantially the forms attached hereto as Exhibit "D-1" and Exhibit "D-2"
respectively.
(e) Governmental Action. No order, ruling or regulation (general or
specific) of any governmental authority shall have been issued or promulgated,
and no judicial or administrative action shall have been taken and shall have
not been rescinded, canceled or reversed, which action has the purpose or would
have the effect of prohibiting the transactions herein contemplated or the
effect of interfering with or materially affecting the right or ability of any
party to this Agreement to consummate any of the transactions contemplated
hereby.
(f) Consents and Approvals. All consents, approvals and waivers of
third parties, including those set forth on Schedule 5(v) and any consents,
approvals and waivers required under any contracts, licenses, leases, or other
agreements material to the Business, the FINOVA Consent, and consents, permits
and approvals of all regulatory agencies or other authorities having
jurisdiction over the transactions contemplated by this Agreement, including a
Final Order from the FCC, shall have been procured and delivered to Purchaser,
and all other requirements prescribed by law shall have been satisfied.
(g) Prohibitive Proceedings. No suit, action or other proceeding
shall be pending or directly threatened by any federal or state governmental
agency having jurisdiction or authority over either Seller, the Business,
Purchaser or Group in which it is sought to restrain or prohibit consummation of
the transactions contemplated by this Agreement.
(h) Accountant's Review. Purchaser's Accountants shall have reviewed
the Financial Statements, and Purchaser shall not have been advised by the
Accountants on or prior to thirty (30) days after receipt of Sellers' Financial
Statements that, based upon a review (but not an audit) of the affairs of the
Business for the period from the Balance Sheet Date through the Closing Date,
there has come to their attention facts or circumstances causing them to
reasonably believe that Sellers' representations and warranties relating to the
Assets, the Financial Statements, and the financial condition of the Business
are not materially true and correct as of
21
the Closing Date. Any such advice shall be in writing and shall specify in
detail the particulars as to what facts or circumstances have caused the
Accountants to believe that any such representations or warranties are not
materially true and correct, that any such condition has not been fulfilled.
Sellers shall be given a reasonable opportunity (not to exceed 15 business days
after delivery to it of such advice) to explain or remedy any alleged
misrepresentation or breach of warranty or to produce any such missing books or
records. If the Closing thereafter occurs, it shall be deemed to have occurred
as of the originally scheduled Closing Date. In preparing such advice, the
Accountants may rely upon written statements of Sellers and need not audit the
financial condition of Sellers.
(i) Amounts Payable. All amounts payable by Sellers to the Business
and all amounts payable by the Business to Sellers shall have been reconciled,
netted and paid in full.
(j) Zoning. There shall not have been commenced, threatened or
received any proceeding, or notice thereof, which results or could result in the
citation of either Seller or of the Business for violation of zoning ordinances
in connection with the use of the Sellers' principal offices or requiring the
cessation of such use.
(k) UCC Termination Statements. Purchaser shall have received
originally executed UCC-3 termination statements releasing all Liens with
respect to the Assets and the Business.
(l) EBITDA. The Business shall have annual adjusted EBITDA for a
trailing six month period ending not more than forty-five (45) days immediately
prior to the Closing hereunder, as annualized, based upon the segment
information for the Business plus such pro forma adjustments as have been
mutually agreed to by Purchaser and Sellers, of not less than $500,000;
provided, that if there is an EBITDA Deficiency, then Purchaser shall have the
option, in its discretion, to elect to waive this condition and purchase the
Business and the Transferred Assets for a Purchase Price adjusted as provided in
Section 4(c)(i) of this Agreement.
(m) Board Approval. This Agreement and the transactions contemplated
hereby shall have been approved by Purchaser's Board of Directors, such approval
to be obtained within 60 days of the date of execution of this Agreement.
(n) Minimum Gross Revenue. Sellers' Average Gross Revenue in respect
of the Business for the three-month period ended September 30, 1999 shall be not
less than Sellers' Average Gross Revenue for the three-month period ended March
31, 1999.
(o) FCC Licenses. All of the FCC Licenses shall be in full force and
effect on the Closing Date.
(p) Due Diligence Review. Purchaser, Group and their counsel shall
have completed their due diligence investigations of Sellers' financial
condition and operations, the Business and the Assets, all to their reasonable
satisfaction; provided, that such review shall be completed within sixty (60)
days following the date hereof.
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8. Conditions Precedent to Sellers' Obligation to Close.
The obligations of Sellers to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment on or prior
to the Closing Date of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties made by Purchaser and/or Group contained herein shall be true and
correct at and as of the time of the Closing, with the same effect as though
such representations and warranties were made at and as of such time, except in
respects not materially adverse to Purchaser or Group, and each of Purchaser and
Group shall deliver to Sellers a certificate, dated the Closing Date, so
stating. As used herein, the phrase "in respects not materially adverse to
Purchaser" shall mean in respects not materially adverse to the overall
financial condition, business or prospects of Purchaser or Group.
(b) Performance and Compliance. Purchaser, on or before the Closing,
shall have performed and complied with all terms, covenants and conditions
required by this Agreement to be performed or complied with by it at or before
the Closing.
(c) Closing Deliveries. Purchaser shall have delivered to Sellers
all items required to be delivered by Purchaser pursuant to Section 14(b) of
this Agreement.
(d) Opinion Letter. Sellers shall have been furnished with an
opinion, dated the Closing Date, of Xxxxxxxx Xxxxx Xxxxxxxx Xxxx &Ballon LLP,
counsel to Purchaser, in substantially the form of Exhibit "E" attached hereto.
(e) Governmental Action. No order, ruling or regulation (general or
specific) of any governmental authority shall have been issued or promulgated,
and no judicial or administrative action shall have been taken and shall have
not been rescinded, canceled or reversed, which action has the purpose or would
have the effect of prohibiting the transactions herein contemplated or the
effect of interfering with or materially affecting the right or ability of any
party to this Agreement to consummate any of the transactions contemplated
hereby.
(f) Consents and Approvals. All consents, approvals and waivers of
third parties, including the FINOVA Consent, and consents, permits and approvals
of all regulatory agencies or other authorities having jurisdiction over the
transactions contemplated by this Agreement, including a Final Order from the
FCC, shall have been procured and delivered to Sellers, and all other
requirements prescribed by law shall have been satisfied.
(g) Prohibitive Proceedings. No suit, action or other proceeding
shall be pending or directly threatened by any federal or state governmental
agency having jurisdiction or authority over either Seller, the Business,
Purchaser or Group in which it is sought to restrain or prohibit consummation of
the transactions contemplated by this Agreement.
(h) Minimum Adjusted Purchase Price. The Purchase Price, as adjusted
as provided in this Agreement, shall be not less than $2,350,000.
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9. Access; FCC Approvals.
(a) Access.
(i) Prior to the Closing, Sellers will give to Purchaser and
Purchaser's counsel, the Accountants or other representatives of Purchaser
reasonable access (during normal business hours) to all properties, documents,
contracts, books, records and other data of the Business; provided, however,
that all information received by Purchaser, Purchaser's counsel, the Accountants
or any other such representatives of Purchaser shall be held wholly confidential
by each of them and that, in taking advantage of such access, none of them shall
unduly interfere with the operation of the Business; and, provided further, that
if the transactions contemplated hereby shall not be consummated, all data of
every kind and nature and all copies of documents taken by any of said persons
shall upon request be returned to Sellers and not otherwise used by Purchaser;
except that that information which is publicly available or was previously known
by Purchaser or later acquired from third parties having no obligation of
confidentiality to Sellers need not be held confidential.
(ii) From and after the Closing, Sellers will give Purchaser,
Purchaser's counsel, the Accountants or Purchaser's other representatives
reasonable access (during normal business hours) to all books and records of
Sellers with respect to the period ending on the Closing Date.
(b) FCC Approvals. Promptly upon execution of this Agreement,
Sellers shall commence the proceedings necessary to obtain FCC approval of the
transfer of the FCC Licenses to Purchaser, including filing with the FCC within
thirty (30) days hereof the applications requesting FCC consent to the proposed
assignment of the FCC Licenses to Purchaser. Sellers agree to take all actions
necessary to facilitate the granting of such approval and to keep Purchaser
informed as to the course of such proceedings, and Purchaser agrees to cooperate
with Sellers in providing any information or assistance reasonably required to
expedite such approval proceedings. Each party shall bear its own costs
associated with obtaining FCC approval of the transfer of the FCC Licenses to
Purchaser, including reasonable attorneys' fees, provided, that Purchaser and
Group, on the one hand, and Sellers, on the other hand, agree to share equally
the filing fees required for such approvals.
10. Affirmative Covenants of Sellers.
Except as otherwise consented to by Purchaser in its sole
discretion, Sellers jointly and severally covenant that, throughout the period
commencing on the date hereof and ending on the Closing Date, they will:
(a) Conduct of Business. Conduct the Business only in the ordinary
course, consistent with prior practice;
(b) Maintenance of Property. Maintain and keep the Assets and other
material properties, machinery and equipment of the Business in as good repair
and condition in all material respects as at present, except for depreciation
due to ordinary wear and tear;
24
(c) Insurance. Maintain in full force and effect insurance in
amounts at least as great as, and comparable in scope of coverage to, that
currently maintained by the Business, as described on Schedule 5(t) hereto;
(d) Performance of Obligations. Consistent with past business
practices, perform all material obligations under material contracts, leases and
documents relating to or affecting the material assets, properties and
operations of the Business;
(e) Maintenance and Preservation of Business. Consistent with their
past practices, use their best efforts to maintain and preserve the Assets and
the Business in their current states and conditions;
(f) Compliance with Laws. Comply with and perform all material
obligations and duties imposed upon them by all Federal and state laws and all
rules, regulations and orders imposed by Federal or state governmental
authorities, including, without limitation, all notices and filings with the FCC
and all documents required to be filed in connection with the FCC Licenses and
the operation of the Transmitter Facilities and the Equipment including, without
limitation, all renewal applications in connection with the FCC Licenses, all in
a timely manner and in the ordinary course, as provided by the rules promulgated
by the FCC from time to time; and prior to the timely filing of a renewal
application for any FCC License, cause all Transmitter Facilities and Equipment
covered by such FCC License to be in compliance with the FCC rules pertaining to
human exposure to radio frequency emissions;
(g) Notice of Certain Events. By written notice to Purchaser, notify
Purchaser of the commencement of any litigation against either Seller or the
Business claiming damages in an amount exceeding $5,000 in each instance or of
the existence of adverse business conditions threatening the continued, normal
business operations of the Business;
(h) Licenses. Use their best efforts to assure that all the FCC
Licenses will be in full force and effect on the Closing Date;
(i) Satisfaction of Closing Conditions Use their best efforts to
assure, as soon as is reasonably practicable, the satisfaction of all conditions
to the Closing as specified in Section 7 of this Agreement.
(j) Good Standing. Maintain each of their existences as corporations
validly existing and in good standing under the laws of the State of Florida.
11. Negative Covenants of Sellers.
Sellers jointly and severally covenant that, throughout the period
commencing on the date hereof and ending on the Closing Date, unless Purchaser,
in its sole discretion, shall have otherwise consented in writing, they will
not:
(a) Material Contracts. Enter into or institute any Material
Contract or any material employment contract or other agreement not in the
ordinary course of the Business or, except as required by applicable law or
regulation, renew, amend or modify any such contract or agreement now in
existence.
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(b) Inconsistent Agreements. Enter into any agreement, understanding
or commitment, written or oral, with any other person which is in any material
respect inconsistent with the obligations of Sellers under this Agreement.
12. Affirmative Covenants of Purchaser.
Except as otherwise consented to by Sellers, each of Purchaser and
Group covenants that, throughout the period commencing on the date hereof and
ending on the Closing Date, it will:
(a) Good Standing. Maintain its existence as a corporation validly
existing in good standing under the laws of the state of Delaware;
(b) Satisfaction of Closing Conditions. Use its best efforts to
assure, as soon as is reasonably practicable, the satisfaction of all conditions
to the Closing as specified in Sections 7(h), (m) and 8 of this Agreement;
(c) Compliance with Laws. Comply with and perform all material
obligations and duties imposed upon it by all Federal and state laws and all
rules, regulations and orders imposed by Federal or state governmental
authorities, except in respects not materially adverse to its financial
condition or business.
13. Termination.
(a) Grounds for Termination. Notwithstanding anything in this
Agreement to the contrary, this Agreement may be terminated by written notice of
termination at any time before the Closing Date only as follows:
(i) by mutual consent of Sellers and Purchaser; or
(ii) by the nonbreaching party hereto, if :
(A) the other party shall have:
(1) materially misstated any representation or been in
breach of any warranty contained herein and such misrepresentation or warranty
has not been cured within ten (10) days after receipt of written notice from the
non breaching party, or
(2) been in material breach of any covenant, undertaking
or restriction contained herein and such breach has not been cured within ten
(10) days after receipt of written notice from the nonbreaching party, or
(B) failed to satisfy a condition to Closing applicable to it hereunder
by the Closing Date (or such earlier date as specified herein) and
such failure has not been waived in writing by the nonbreaching
party;
(iii) by either Sellers or Purchaser if the Closing shall not
occur on or prior to December 31, 1999; provided, however, that if a Final Order
from the FCC has not been obtained by December 31, 1999 but the application for
FCC approval is still pending or if approval by the FCC has been obtained but,
such approval shall not yet have become a Final
26
Order, and a Final Order is reasonably likely to be granted by March 31, 2000,
then the time period for FCC approval shall be extended for so long as such
Final Order is reasonably likely, but not beyond March 31, 2000; or
(iv) by Sellers or Purchaser, if the FINOVA Consent has not
been obtained as provided in Section 16 hereof.
(v) by either Sellers or Purchaser if Purchaser shall fail to
obtain approval by its Board of Directors of this Agreement and the transactions
contemplated hereby within thirty (30) days following the date of execution
hereof.
(b) Consequences of Termination. In the event of the termination and
abandonment hereof pursuant to the provisions of this Section 13, Sellers shall
be entitled to retain the Deposit and Purchaser shall instruct the Escrow Agent
to release and pay the full amount thereof to Sellers; provided, however, that
in the event that such termination shall result from: (i) Sellers' material
breach of their obligations hereunder; (ii) Sellers' termination of this
Agreement pursuant to Section 8(h) hereof; (iii) Purchaser's failure to obtain
approval by its Board of Directors of this Agreement and the transactions
contemplated hereby; (iv) Sellers'and Purchaser's failure to obtain a Final
Order from the FCC; or (v) Purchaser's failure to obtain the FINOVA Consent, and
Purchaser is not in material breach of its obligations hereunder with respect to
obtaining the foregoing items, then Purchaser shall instruct the Escrow Agent to
return the full amount of the Deposit to it in accordance with the Deposit
Escrow Agreement. In any such event, this Agreement shall become null and void
and have no further effect (except for Sections 17, 18, 20 and 26(i)), without
any liability on the part of the parties hereto or any of their directors,
officers or stockholders in respect of this Agreement
14. Deliveries at Closing.
(a) Sellers. At the Closing, Sellers shall deliver or cause to be
delivered to Purchaser the following, duly authorized and executed by each
Seller (unless otherwise indicated):
(i) an assignment and assumption agreement substantially in
the form attached hereto as Exhibit "F" ("Assignment and Assumption Agreement");
(ii) an instrument of conveyance or xxxx of sale,
substantially in the form attached hereto as Exhibit "G";
(iii) a certificate of each Seller, as required under Section
7(c) hereof;
(iv) the opinions required under Section 7(d)hereof;
(v) the Deposit Escrow Agreement;
(vi) a Noncompetition, Confidentiality and Nondisclosure
Agreement, substantially in the form of Exhibit "H" hereto;
(vii) all such other endorsements and instruments as Purchaser
may reasonably request for the purpose of (a) vesting in Purchaser good and
valid title to the Assets, free and clear of all Liens and other restrictions
(except those permitted hereunder), (b) transferring the FCC Licenses and the
Leases, and (c) enabling Purchaser to operate the Business.
27
(viii) a copy of the Billing Software on the appropriate
physical medium as agreed to in good faith by Sellers and Purchaser;
(ix) originally executed UCC-3 termination statements
releasing all Liens with respect to the Assets and the Business;
(x) Sellers shall arrange to have all records relating to the
FCC Licenses, including those held by counsel to Sellers, delivered to Purchaser
within seven (7) days following the Closing;
(xi) The Trade Name License;
(xii) good standing certificates of Sellers from the Secretary
of State of Florida, each dated within ten (10) days prior to the Closing Date;
and
(xiii) proof of payment of all amounts due and owing by
Sellers pursuant to paragraph (d) hereinbelow
(b) Purchaser. At the Closing, Purchaser shall deliver or cause to
be delivered to Sellers the following, duly authorized and executed by Purchaser
(unless otherwise indicated):
(i) the Purchase Price;
(ii) the Assignment and Assumption Agreement;
(iii) a certificate of Purchaser, as required under Section
8(a) hereof;
(iv) the Trade Name License;
(v) the Deposit Escrow Agreement; and
(vi) the opinion required under Section 8(d)hereof.
(c) Further Assurances. At any time and from time to time after the
Closing, at the request of any party and without further consideration, the
other party will execute and deliver such other instruments of sale, transfer,
conveyance, assignment and confirmation and take such action as the requesting
party may reasonably deem necessary or desirable in order to more effectively
transfer, convey and assign the properties transferred hereunder and to
effectuate the terms hereof. In addition, Sellers shall use their best efforts
to obtain the prompt transfer of any telecommunications transmissions services
listed on Schedule 5(e)(i) and the Telephone Number Inventory listed on Schedule
5(f) to Purchaser.
(d) Proration. State and local property taxes on the Assets, rents
paid or due under the Leases, regulatory fees paid or due in the ordinary course
in connection with the Business or the Assets (including fees under the
universal service fund and telecommunications relay service), and payments made
or due under the other Contracts assigned to Purchaser hereunder shall be
prorated as of the Closing Date, with Sellers being responsible for all amounts
arising out of occurrences on or prior to the Closing Date and the Purchaser
being responsible for all amounts arising out of occurrences thereafter. To the
extent determinable, such proration shall be made at the Closing, and the
amounts due pursuant to Section 4(a)(i)(1) hereof shall be
28
appropriately adjusted. To the extent not so determinable, the appropriate
amount shall be paid promptly upon demand of the party entitled thereto.
15. Brokers.
Except for Xxxxxxx & Associates, Inc. with whom Sellers have entered
into a separate commission agreement, and which commission shall be paid by
Sellers (the "Sellers Broker Agreement"), Sellers, on the one hand, and
Purchaser, on the other hand, represent and warrant each to the other that they
have not dealt with any broker, sales person or finder in connection with this
transaction. Sellers, on the one hand, and Purchaser on the other hand, each
agree to indemnify, defend and hold the other harmless from and against any
loss, cost, liability or expense suffered or incurred by the other party as a
result of a claim or claims for brokerage commissions, finder's fees or other
similar fees from any party or firm that is based on the act or omission of the
party in breach of the above warranty.
16. Consent of Lender.
Sellers and Purchaser hereby acknowledge and agree that this
Agreement and the transactions contemplated hereunder are subject to and
contingent upon the written consent of FINOVA Capital Corporation (the "FINOVA
Consent"),the senior lender under a credit facility with Purchaser which
Purchaser agrees to make a good faith effort to obtain. Following execution and
delivery of this Agreement by the parties, should Purchaser be unable to obtain
FINOVA Consent for any reason within forty-five (45) days from the date hereof,
this Agreement may be terminated by Sellers or by Purchaser pursuant to the
terms of Section 13 hereof.
17. Expenses.
Except as specifically provided in Section 20 hereof, Purchaser, on
the one hand, and Sellers, on the other hand, shall each pay their respective
counsel, accountants and other expenses incurred in connection with the
negotiation and consummation of the transactions contemplated hereby.
18. Nondisclosure of Confidential Information.
Purchaser, on the one hand, and Sellers, on the other hand, each
agree that if, for any reason whatsoever, the transactions contemplated by this
Agreement shall not be consummated, all information disclosed to the other party
pursuant to Section 9 or otherwise shall remain confidential and each party
shall not use or furnish or divulge the same to any other person, except for
information not deemed confidential as provided in Section (9)(a)(i) hereof.
19. Survival of Representations and Warranties.
(a) Period of Survival. All representations, covenants and
warranties made by Sellers and Purchaser under this Agreement in connection with
the transactions contemplated hereby or in any Exhibit, Schedule, certificate,
list or other instrument delivered pursuant hereto shall survive the Closing for
a period of one (1) year.
29
(b) Reliance. Notwithstanding any right of Purchaser to fully
investigate the affairs of Sellers relating to the Business and notwithstanding
any knowledge of facts determined determinable by Purchaser pursuant to such
investigation or right of investigation, Purchaser has the right to rely fully
upon the representations, warranties, covenants and agreements of Sellers
contained in this Agreement or in any document delivered or to be delivered
pursuant to this Agreement by Sellers or any of Sellers' respective
representatives (including, but not limited to, any accountant or attorney
representing Sellers), in connection with the transactions contemplated by this
Agreement except where Purchaser has actual knowledge as to the material
inaccuracy or incompleteness of any such representation or warranty. Each
warranty, representation, agreement and covenant contained herein is independent
of all warranties, representations, agreements and covenants contained herein or
in any Exhibit, Schedule, certificate, list or other instrument or documents
(whether or not covering identical or related subject matter) and must be
independently and separately complied with and satisfied.
20. Indemnification.
(a) By Sellers and Purchaser. Sellers shall jointly and severally
indemnify and hold Purchaser and Group harmless from and against any and all
damages, losses, costs and expenses (including, but not limited to, reasonable
counsel fees and expenses in connection with the contest of any claim by either
or both of Sellers against Purchaser and/or Group or by any third party against
Purchaser and/or Group or otherwise ) paid or incurred by Purchaser and/or Group
and arising out of (i) any inaccurate representations or breaches of covenant or
warranty made by Sellers in this Agreement in connection with the transactions
contemplated hereby (including, without limitation, withdrawal liability
regarding any employee(s) of Seller) or in any Exhibit, Schedule, certificate,
list or other instrument delivered by Sellers pursuant hereto, (ii) any claims
made against Purchaser and/or Group for any liability that Purchaser did not
assume pursuant to Section 2(c) hereof, including, without limitation, the
Retained Liabilities and any of the claims set forth on Schedule 5(dd), or
withdrawal liability regarding any employee(s) of Sellers, or (iii) Sellers'
failure to comply with the Bulk Acts. Purchaser and Group shall have the right,
in enforcing this Section 20(a), first to obtain reimbursement in satisfaction
of any of Sellers' obligations hereunder from the funds (if any) held in escrow
pursuant to the Indemnity Escrow Agreement, in accordance with the terms of the
Indemnity Escrow Agreement.
Purchaser shall indemnify and hold Sellers harmless from and against
any and all damages, losses, costs and expenses (including reasonable counsel
fees and expenses in connection with the contest of any claim by Purchaser
against either or both of Sellers or by any third party against either or both
of Sellers or otherwise) paid or incurred by Sellers and arising out of any
inaccurate representations or breaches of covenant or warranty made by Purchaser
in this Agreement in connection with the transactions contemplated hereby or in
any Exhibit, Schedule, certificate, list or other instrument delivered by
Purchaser pursuant hereto.
(b) Procedure For Claims. Promptly after receipt by any party
entitled to indemnification pursuant to paragraph (a) hereinabove (the
"Indemnified Party") of notice of the commencement of any action asserting a
claim based upon any cause enumerated herein, the Indemnified Party shall, if it
claims the benefits of indemnification pursuant to Section 20(a) with respect to
such action, notify the party from which such indemnification is sought (the
30
"Indemnifying Party") of the commencement thereof. Upon receipt of such notice,
the Indemnifying Party shall have the option of either assuming the defense of
such action (and the cost thereof) with counsel reasonably satisfactory to both
the Indemnified Party and the Indemnifying Party or participating in the defense
of such action at the sole expense, however, of the Indemnifying Party. In the
event of the Indemnifying Party's assumption of the defense of such action,
counsel selected by the Indemnified Party may, at the election of the
Indemnified Party, participate in any such defense, at the sole expense,
however, of the Indemnified Party. No settlement or compromise to be paid by the
Indemnifying Party shall be entered into without the written consent of the
Indemnified Party, which consent shall not be unreasonably withheld or delayed.
(c) Time Period for Claims. The indemnity provided in Section 20(a)
shall be limited in time, in that no party may assert a claim in respect of such
indemnity at any time after the first anniversary of the Closing Date.
(d) Minimum Claim. Notwithstanding anything herein to the contrary,
no party shall assert a claim for indemnity pursuant to Section 20(a) unless the
aggregate of all such claims by such Indemnified Party against such Indemnifying
Party shall exceed $27,500.00, in which event the Indemnifying Party's
obligation shall apply to all indemnified losses in excess of such amount.
21. Employees.
Purchaser shall have the unlimited right, but not the obligation, to
seek and secure the employment of any employee of Sellers related to the
Business, and Sellers shall reasonably assist Purchaser in such efforts;
provided, however, that Sellers shall not be required to incur any expense
thereby; and provided, further, that Sellers do not warrant or guarantee the
availability to Purchaser of any of their current employees.
22. Accounts Receivable.
Purchaser will use efforts consistent with standard practice to
collect the Accounts Receivable. Ninety (90) days after the Closing Date,
Purchaser shall give Sellers written notice of any Accounts Receivable that
existed as of the Closing Date that remain uncollected at such date. Sellers
shall then have ninety (90) days to collect such uncollected Accounts Receivable
at their own expense. Sellers shall deliver to Purchaser any amounts either of
them receives during such period from such efforts. At the end of such ninety
(90) day period, to the extent that Accounts Receivable remain uncollected,
Purchaser shall have the right to retransfer and re-assign to Sellers the
Accounts Receivable representing such excess (with respect to accounts which are
not billed on a monthly basis, such amount shall be limited to the amount of
such Accounts Receivable which relate to services rendered through the date of
such retransfer) and to collect from Sellers (or the Escrow Agent) the amount of
such excess. After any such transfer to Sellers, any amounts thereafter
collected by Sellers shall be the property of Sellers.
23. Bulk Sales Compliance.
Subject to Section 20(a) hereof, Purchaser hereby waives compliance
by Sellers with the provisions of all Bulk Acts.
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24. Risk of Loss.
From the date hereof through the Closing Date, if any Asset is
destroyed or damaged by fire or any other cause, other than use, wear or loss in
the ordinary course of business and the aggregate amount of such damage exceeds
$5,000.00, or the damage could otherwise adversely affect the operations of the
Business, Sellers shall give written notice to Purchaser as soon as practicable
(but in no event later than five (5) calendar days) after discovery by Sellers
of such damage or destruction. Purchaser shall have the option of (a) having
such Asset delivered to it at the Closing in its destroyed or damaged condition
in which event the Purchase Price shall be reduced by the amount allocated to
such Asset (to the extent of such damage or destruction), as mutually agreed by
the parties, (b) excluding such Asset from this Agreement and the transactions
contemplated hereby, in which event the Purchase Price shall be reduced by the
amount allocated to such Asset, as mutually agreed by the parties, or (c)
replacing or repairing such Asset (any replacement shall be deemed an Asset) at
Sellers' expense; provided, that should Purchaser notify Sellers that it elects
to exclude such Asset from this Agreement and the transactions contemplated
hereby or have such Asset delivered to it at the Closing in its destroyed or
damaged condition, Sellers shall have the right, upon notice to Purchaser, to
repair or replace such Asset at Sellers' expense and have such Asset included in
this Agreement and the transactions contemplated hereby.
25. Notices.
All notices and communications shall be in writing and delivered as
follows (or to such other address as any party may furnish to the other in
writing in accordance with the terms of this Section):
If to Purchaser or Group: Aquis Wireless Communications, Inc.
Aquis Communications Group, Inc.
0000X Xxxxx 00, Xxxxx 000
Xxxxxxxxxx, Xxx Xxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx, President
with a copy to: Xxxxxxxx Xxxxx Xxxxxxxx Xxxx & Ballon LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxx Xxxxxx, Esq.
If to Sellers: ABC Cellular Corporation
ABC Paging, Inc.
00000 X.X. 00xx Xxxxxx
Xxxxx, XX 00000
32
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xx. Xxxxx Xxxxx
with a copy to: Xxxxx Xxxxx & Associates
0000 Xxxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxx Xxxxx, Esq.
Any notices and communications pursuant to this Agreement shall be
sent by hand, by registered or certified first-class mail, postage prepaid, by
facsimile transmission or by such other form of delivery as shall provide the
sender with documentary evidence of delivery, and shall be deemed to be
delivered three (3) days after posting by mail or when received by hand delivery
or when sent by facsimile transmission.
26. Miscellaneous.
(a) Severability. If any term or provision of this Agreement shall
to any extent be invalid or unenforceable, the remainder of this Agreement shall
not be affected thereby, and each term and provision of the Agreement shall be
valid and enforced to the fullest extent permitted by law.
(b) Assignment. Neither Purchaser nor Sellers may assign this
Agreement or any rights hereunder prior to the Closing without the prior written
consent of the other party; provided, however, that Purchaser may assign this
Agreement or any of its rights hereunder to Group or to a wholly-owned
subsidiary of Purchaser or Group, provided that Purchaser remains liable for all
obligations of Purchaser hereunder. After the Closing, the terms, provisions,
covenants and conditions of this Agreement shall bind and benefit the parties
hereto and their respective heirs, successors, personal representatives and
permitted assigns.
(c) Counterparts. This Agreement may be executed in two or more
counterparts, each of which, when so executed and delivered, shall be an
original instrument, but such counterparts, together, shall constitute a single
agreement.
(d) No Waiver. No waiver of any breach or default under this
Agreement shall be considered valid unless in writing and signed by the party
giving such waiver, and no such waiver shall be deemed a waiver of any
contemporaneous or subsequent breach or default of the same or similar nature.
Any party hereto may, at or before the Closing, waive any conditions to its
obligations hereunder which are not fulfilled.
(e) Entire Agreement; Amendments. This Agreement, including the
Exhibits and Schedules referred to herein which are hereby made a part hereof by
reference, contains the entire understanding of the parties hereto with respect
to the subject matter contained herein and may be amended only by a written
instrument executed by the parties hereto or their respective successors or
assigns. There are no restrictions, promises, warranties, covenants or
undertakings other than those expressly set forth herein.
33
(f) Governing Law, Venue. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York without
giving effect to any choice or conflict of law provision or rule (whether of the
State of New York or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of New York; and the parties
irrevocably submit to the jurisdiction of the United States District Court for
the Southern District of New York, over any suit, action or proceeding arising
out of or in any way related to this Agreement. The parties irrevocably waive,
to the fullest extent permitted by law, any objection which either of them may
have to the laying of venue of any such suit, action or proceeding brought in
such court, and any claim that such suit, action or proceeding brought in such
court has been brought in an inconvenient forum. It is the intention of the
parties that any suit, action or proceeding arising out of or in any way related
to this Agreement be brought only in the United States District Court for the
Southern District of New York. In the event there does not exist federal
jurisdiction, then either party may bring any such suit, action or proceeding in
any court having jurisdiction. In the event that either party shall not have
appointed an agent for service of process in Florida, each party agrees that it
may be served with process by registered or certified mail, postage prepaid,
mailed to the addresses set forth in Section 26 hereof.
(g) Headings. Headings are inserted for convenience and do not form
part of the Agreement.
(h) No Solicitation. Sellers hereby agree that prior to the Closing
or termination of this Agreement, neither Seller shall directly nor indirectly
solicit, hold discussions or negotiate with or otherwise cooperate with any
person or entity other than Purchaser and its representatives concerning any
sale of Sellers, the Assets or the Business.
(i) Public Announcements. No party shall issue a press release, make
publicly available any document or make any public announcement concerning this
Agreement, the terms hereof or the transactions contemplated hereby without
obtaining the prior written consent of the other party, which consent shall not
be unreasonably withheld or delayed, except to the extent that such party, or a
publicly held parent company of such party, is required by law or applicable
regulation or under the rules of a stock exchange (or the Nasdaq) on which such
party's or such party's parent company's securities are listed, to issue such a
press release, to make available such a document or to make such a public
statement, in which case such party shall provide prompt prior notice of such
disclosure to the other party.
34
IN WITNESS WHEREOF, Purchaser, Group and Sellers have executed this
Agreement as of the day and year first above written.
AQUIS WIRELESS COMMUNICATIONS, INC.
By: ____________________________________
Xxxx X. Xxxxxxxx
Its: President
AQUIS COMMUNICATIONS GROUP, INC.
By: ____________________________________
Xxxx X. Xxxxxxxx
Its: President
ABC CELLULAR CORPORATION
By: ____________________________________
Xxxxx Xxxxx
Its: Vice President
ABC PAGING, INC.
By: ____________________________________
Xxxxx Xxxxx
Its: Vice President
Schedules
2(a)(i) - Radio Paging Licenses (see Schedule 5(q)(i))
2(a)(ii) - Machinery
2(a)(iv) - Furniture, Fixtures and Computer Equipment
2(a)(vii) - Customer List
2(c)(iii) - Customer Deposits
2(c)(iv) - Deferred Revenues
2(c)(v) - Assumed Contractual Obligations
4(b) - Purchase Price Allocation
5(d) - Certificates of Incorporation and By-Laws
5(e)(i) - Equipment and Spare Parts
5(e)(ii) - Telecommunications Transmission Services
5(f) - Telephone Number Inventory
5(g)(i) - Financial Statements
5(g)(ii) - GAAP Compilation Statements
5(h)(i) - Condition of Assets
5(h)(ii) - Liens Affecting Assets
5(i) - Intellectual Property
5(k)(iii) - Audits
5(m)(ii) - Leases
5(m)(iii) - Nonconforming Uses
5(m)(iv) - Existing Conditions
5(n) - Material Contracts
5(o)(i) - Compliance
5(o)(ii) - Litigation, Etc.
5(o)(iii) - Defaults
5(p) - Accounts Receivable
5(q)(i) - FCC Licenses
5(q)(ii) - Service Area
5(r) - Benefit Plans
5(s) - Employees and Compensation
5(t) - Insurance
5(u) - Account Information
5(v) - Consents and Approvals
5(w) - Changes
5(z) - Payments
5(dd) - Violations
List of Exhibits
"A" - Deposit Escrow Agreement
"B" - Indemnity Escrow Agreement
"C" - Trade Name License
"D-1" - Opinion Letter from Xxxxx Xxxxx & Associates
"D-2" - Opinion Letter from Shulman, Rogers, Gondal, Pordy & Xxxxx, P.A.
"E" - Opinion Letter from Xxxxxxxx Xxxxx Xxxxxxxx Xxxx &Ballon LLP
"F" - Assignment and Assumption Agreement
"G" - Xxxx of Sale
"H" - Noncompetition, Confidentiality and Nondisclosure Agreement
TABLE OF CONTENTS
Page
----
R E C I T A L S:...............................................................1
1. Definitions of Defined Terms................................................1
(a) Capitalized Terms......................................................1
(b) Defined Terms..........................................................1
2. Acquisition of Assets; Assumption of Liabilities............................6
(a) Sale and Purchase of Assets............................................6
(b) Excluded Assets........................................................7
(c) Assumption of Certain Liabilities......................................7
3. Closing.....................................................................8
4. Purchase Price and Payment/Adjustments......................................8
(a) Purchase Price.........................................................8
(b) Allocation of Purchase Price...........................................9
(c) Purchase Price Adjustments.............................................9
(d) Application of Deposit................................................10
(e) Indemnity Escrow......................................................10
5. Representations and Warranties of Sellers..................................10
(a) Power and Authority...................................................10
(b) Noncontravention......................................................10
(c) Governmental Approvals................................................11
(d) Formation, Good Standing and Qualifications...........................11
(e) Equipment and Telecommunications Transmission Services................11
(f) Telephone Number Inventory............................................11
(g) Financial Statements..................................................12
(h) Assets................................................................12
(i) Business Names and Business Addresses.................................13
(j) Liabilities...........................................................13
(k) Taxes.................................................................13
(l) Inventory.............................................................13
(m) Real Property.........................................................14
(n) Material Contracts....................................................14
(o) Compliance With Laws; Litigation......................................15
(p) Accounts Receivable...................................................16
(q) Licenses; Service Area................................................16
(r) Benefit Plans.........................................................16
(s) Employees.............................................................17
(t) Insurance.............................................................17
(u) Account Information...................................................17
(v) Consents and Approvals................................................17
(w) Changes in the Business...............................................17
(x) Documents Relating to Business........................................18
(y) Books and Records.....................................................18
(z) Payments..............................................................18
i
(aa) Schedules.............................................................19
(bb) Active Units..........................................................19
(cc) Environmental Matters.................................................19
(dd) Contracts.............................................................19
(ee) Billing Software......................................................19
6. Representations and Warranties of Purchaser and Group......................20
(a) Organization and Good Standing........................................20
(b) Forestallments........................................................20
(c) Authorization.........................................................20
(d) Noncontravention......................................................20
(e) Consents and Approvals................................................20
(f) FCC Qualification.....................................................20
7. Conditions Precedent to Purchaser's Obligation to Close....................20
(a) Representations and Warranties........................................21
(b) Performance and Compliance............................................21
(c) Closing Deliveries....................................................21
(d) Opinion Letters.......................................................21
(e) Governmental Action...................................................21
(f) Consents and Approvals................................................21
(g) Prohibitive Proceedings...............................................21
(h) Accountant's Review...................................................21
(i) Amounts Payable.......................................................22
(j) Zoning................................................................22
(k) UCC Termination Statements............................................22
(l) EBITDA......................................Error! Bookmark not defined.
(m) Board Approval........................................................22
(n) Minimum Gross Revenue.................................................22
(o) FCC Licenses..........................................................22
(p) Due Diligence Review..................................................22
8. Conditions Precedent to Sellers' Obligation to Close.......................23
(a) Representations and Warranties........................................23
(b) Performance and Compliance............................................23
(c) Closing Deliveries....................................................23
(d) Opinion Letter........................................................23
(e) Governmental Action...................................................23
(f) Consents and Approvals................................................23
(g) Prohibitive Proceedings...............................................23
9. Access; FCC Approvals......................................................24
(a) Access................................................................24
(b) FCC Approvals.........................................................24
10. Affirmative Covenants of Sellers..........................................24
(a) Conduct of Business...................................................24
(b) Maintenance of Property...............................................24
(c) Insurance.............................................................25
(d) Performance of Obligations............................................25
(e) Maintenance and Preservation of Business..............................25
ii
(f) Compliance with Laws..................................................25
(g) Notice of Certain Events..............................................25
(h) Licenses..............................................................25
(i) Satisfaction of Closing Conditions....................................25
(j) Good Standing.........................................................25
11. Negative Covenants of Sellers.............................................25
(a) Material Contracts....................................................25
(b) Inconsistent Agreements...............................................26
12. Affirmative Covenants of Purchaser........................................26
(a) Good Standing.........................................................26
(b) Satisfaction of Closing Conditions....................................26
(c) Compliance with Laws..................................................26
13. Termination...............................................................26
(a) Grounds for Termination...............................................26
(b) Consequences of Termination...........................................27
14. Deliveries at Closing.....................................................27
(a) Sellers...............................................................27
(b) Purchaser.............................................................28
(c) Further Assurances....................................................28
(d) Proration.............................................................28
15. Brokers...................................................................29
16. Consent of Lender.........................................................29
17. Expenses..................................................................29
18. Nondisclosure of Confidential Information.................................29
19. Survival of Representations and Warranties................................29
(a) Period of Survival....................................................29
(b) Reliance..............................................................30
20. Indemnification...........................................................30
(a) By Sellers and Purchaser..............................................30
(b) Procedure For Claims..................................................30
(c) Time Period for Claims................................................31
(d) Minimum Claim.........................................................31
21. Employees.................................................................31
22. Accounts Receivable.......................................................31
23. Bulk Sales Compliance.....................................................31
24. Risk of Loss..............................................................32
iii
25. Notices...................................................................32
26. Miscellaneous.............................................................33
(a) Severability..........................................................33
(b) Assignment............................................................33
(c) Counterparts..........................................................33
(d) No Waiver.............................................................33
(e) Entire Agreement; Amendments..........................................33
(f) Governing Law, Venue..................................................34
(g) Headings..............................................................34
(h) No Solicitation.......................................................34
(i) Public Announcements..................................................34
iv
