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EXHIBIT 2.3
ASSET PURCHASE AGREEMENT
AMONG
CLEAR HOLDINGS, INC.,
CLEAR COMMUNICATIONS GROUP, INC.,
XXXXXXXX TELECOMMUNICATIONS GROUP, INC.,
AND XXXXXX XXXXXXXX
FOR THE PURCHASE AND SALE OF
SUBSTANTIALLY ALL OF THE ASSETS OF
XXXXXXXX TELECOMMUNICATIONS GROUP, INC.
DATED AS OF NOVEMBER 1, 1999
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TABLE OF CONTENTS
ARTICLE I - Sale and Purchase of Assets; Assumption of Liabilities.............................................. 1
1.1 Assets........................................................................................ 1
1.2 Assumption of Liabilities..................................................................... 3
1.3 Excluded Liabilities.......................................................................... 3
1.4 Consent of Third Parties...................................................................... 4
1.5 Purchase Price................................................................................ 4
1.6 Audited 2000 Financial Statements. ........................................................... 5
1.7 Form of Earn-Out.............................................................................. 5
1.8 Time and Place of Closing..................................................................... 6
1.9 Deliveries by the Company..................................................................... 6
1.10 Earn-Out Closing.............................................................................. 7
1.11 Restrictive Legend............................................................................ 8
ARTICLE II - Representations and Warranties of the Company and XxXxxxxx......................................... 8
2.1 Corporate..................................................................................... 8
2.2 Authorization; Validity....................................................................... 8
2.3 No Violation.................................................................................. 9
2.4 Financial Statements.......................................................................... 9
2.5 Absence of Undisclosed Liabilities............................................................ 9
2.6 Title to Assets; Encumbrances................................................................. 10
2.7 Compliance with Laws.......................................................................... 10
2.8 Litigation.................................................................................... 11
2.9 Material Contracts and Commitments............................................................ 11
2.10 Real Estate................................................................................... 11
2.11 Broker's or Finder's Fees..................................................................... 11
2.12 Employee Benefit Plans........................................................................ 12
2.13 Employment Compensation....................................................................... 12
2.14 Labor Matters................................................................................. 12
2.15 Tax Matters................................................................................... 13
2.16 Absence of Certain Changes.................................................................... 14
2.17 Securities Laws Matters....................................................................... 16
ARTICLE III - Representations and Warranties of Clear and Buyer................................................. 16
3.1 Due Incorporation and Qualification........................................................... 16
3.2 Authorization................................................................................. 16
3.3 Non-Contravention............................................................................. 16
3.4 Authority of Clear and Buyer.................................................................. 16
3.5 Broker's or Finder's Fees..................................................................... 16
(i)
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ARTICLE IV - Covenants.......................................................................................... 17
4.1 Conduct of Business........................................................................... 17
4.2 Preservation of Business...................................................................... 18
4.3 Notice of Events.............................................................................. 18
4.4 Examinations and Inspections.................................................................. 18
4.5 Third Party Consents.......................................................................... 19
4.6 Properties.................................................................................... 19
4.7 Books and Records............................................................................. 19
4.8 Material Contracts............................................................................ 19
4.9 Pay in Lieu of Vacation and Bonus Accruals.................................................... 19
4.10 Environmental Audits and Other Investigations................................................. 19
4.11 Shareholders Employment and/or Restrictive Covenant Agreements................................ 20
4.12 Employment Agreements with Key Employees...................................................... 20
4.13 License of Tradenames, Etc.................................................................... 20
ARTICLE V - Conditions Precedent to Obligations of Clear and Buyer to Close..................................... 20
5.1 Completion of Due Diligence Investigation..................................................... 20
5.3 Certain Consents.............................................................................. 21
5.4 Representations and Covenants................................................................. 21
5.5 Litigation.................................................................................... 21
5.6 No Material Adverse Change.................................................................... 21
5.7 Good Standing Certificates, Etc............................................................... 21
5.8 Consent....................................................................................... 21
5.9 Restrictive Covenant Agreements............................................................... 21
5.10 Agreements With Key Employees................................................................. 21
5.11 Release of Liabilities........................................................................ 22
5.12 Governmental Permits and Approvals............................................................ 22
5.13 Certificates.................................................................................. 22
5.14 Opinion of Counsel to the Company............................................................. 22
5.15 Other Documents............................................................................... 22
ARTICLE VI - Indemnification.................................................................................... 22
6.1 Survival...................................................................................... 22
6.2 Indemnification by the Company and XxXxxxxx................................................... 22
6.3 Indemnification by Clear and Buyer............................................................ 23
6.4 Limitations of Claims......................................................................... 23
6.5 Procedures.................................................................................... 24
ARTICLE VII - Termination of Agreement.......................................................................... 25
7.1 Termination................................................................................... 25
7.2 Post-Termination Obligations.................................................................. 26
ARTICLE VIII - Miscellaneous.................................................................................... 26
(ii)
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8.1 Further Action................................................................................ 26
8.2 Announcements................................................................................. 26
8.3 Assignment; Parties in Interest............................................................... 26
8.4 Law Governing Agreement....................................................................... 26
8.5 Amendment and Modification.................................................................... 26
8.6 Notice........................................................................................ 27
8.7 Expenses...................................................................................... 28
8.8 Entire Agreement.............................................................................. 28
8.9 Counterparts.................................................................................. 28
8.10 Headings...................................................................................... 28
Exhibits
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Xxxx of Sale A
Investment Letter B
Officer's Certificate of Buyer C
XxXxxxxx Employment Agreement D
Shareholder's Restrictive Covenants Agreement E
Key Employee Employment Agreement F
Employee Restrictive Covenants Agreement G
Certificate of XxXxxxxx re Warranties H
Officer's Certificate of MTG I
Opinion of Counsel to MTG J
Schedules
(iii)
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of the 1st day of November, 1999
(the "Agreement"), by and among CLEAR HOLDINGS, INC., a Georgia corporation
("Clear"), CLEAR COMMUNICATIONS GROUP, INC., a Georgia corporation and a
wholly-owned subsidiary of Clear ("Buyer"), XXXXXXXX TELECOMMUNICATIONS GROUP,
INC., an Arizona corporation (the "Company"), and Xxxxxx XxXxxxxx, as majority
shareholder of the Company ("XxXxxxxx").
WITNESSETH:
WHEREAS, the Company is engaged in the business of wireless
telecommunications services (the "Business"); and
WHEREAS, the Company desires to sell, and Buyer desires to purchase,
substantially all of the assets of the Company relating to the Business,
together with the assumption by Buyer of certain obligations and liabilities
associated with the Business pursuant to this Agreement (such purchase and
assumption, the "Acquisition");
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto covenant and agree as follows:
ARTICLE I
Sale and Purchase of Assets; Assumption of Liabilities
1.1 Assets. Subject to and upon the terms and conditions set
forth in this Agreement, at the Closing, the Company will sell, transfer,
convey, assign and deliver to the Buyer, and the Buyer will purchase or acquire
from the Company, all right, title and interest of the Company in and to the
properties, assets and rights of every nature, kind and description, tangible
and intangible (including goodwill), whether real, personal or mixed, whether
accrued, contingent or otherwise and whether now existing or hereinafter
acquired, relating to or used or held for use in connection with the Business
as the same may exist on the Closing Date (collectively, the "Assets"),
including without limitation all those items in the following categories that
conform to the definition of the term "Assets":
(a) all machinery, equipment, furniture, furnishings,
automobiles, trucks, vehicles, tools, dies, molds and parts and similar
property (including, but not limited to, any of the foregoing purchased subject
to any conditional sales or title retention agreement in favor of any other
person);
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(b) all inventories of raw materials, work in process,
finished products, goods, spare parts, replacement and component parts, and
office and other supplies (collectively, the "Inventories"), including
Inventories held at any location controlled by the Company and Inventories
previously purchased and in transit to the Company at such locations;
(c) all computer hardware and software, including
programs and databases, whether owned, licensed, leased or internally developed
(including without limitation user manuals and, in the case of software owned
by the Company, both object code and source code versions), printers, modems
and other related equipment;
(d) all rights in and to products sold or leased
(including, but not limited to, products hereafter returned or repossessed and
unpaid sellers' rights of rescission, replevin, reclamation and rights to
stoppage in transit);
(e) all of the rights of the Company under all contracts,
arrangements, licenses, leases and other agreements, including, without
limitation, any right to receive payment for products sold or services
rendered, and to receive goods and services, pursuant to such agreements and to
assert claims and take other rightful actions in respect of breaches, defaults
and other violations of such contracts, arrangements, licenses, leases and
other agreements and otherwise;
(f) all credits, prepaid expenses, deferred charges,
advance payments, security deposits and prepaid items;
(g) all notes and accounts receivable held by the
Company and all notes, bonds and other evidences of indebtedness of and rights
to receive payments from any person held by the Company;
(h) all patents, trademarks, trade names, service marks,
trade secrets and other proprietary property and all rights thereunder or in
respect thereof primarily relating to or used or held for use in connection
with the Business, including, but not limited to, rights to xxx for and
remedies against past, present and future infringements thereof, and rights of
priority and protection of interests therein under the laws of any jurisdiction
worldwide and all tangible emodiments thereof (collectively, the "Intellectual
Property);
(i) all books, records, manuals and other materials (in
any form or medium), including, without limitation, all records and materials
maintained at the headquarters of the Company, advertising matter, catalogues,
price lists, correspondence, mailing lists, lists of customers, distribution
lists, photographs, production data, sales and promotional materials and
records, purchasing materials and records, personnel records, manufacturing and
quality control records and procedures, blueprints, research and development
files, records, data and laboratory
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books, Intellectual Property disclosures, media materials and plates,
accounting records, sales order files and litigation files;
(j) to the extent their transfer is permitted by law,
the Governmental Approvals, including all applications therefor;
(k) all rights to causes of action, lawsuits, judgments,
claims and demands of any nature available to or being pursued by the Company
with respect to the Business or the ownership, use, function or value of any
Asset, whether arising by way of counterclaim or otherwise;
(l) all guarantees, warranties, indemnities and similar
rights in favor of the Company with respect to any Asset; and
(m) all cash and cash equivalents.
Anything to the contrary herein notwithstanding, the Assets
shall not include the items set forth on Schedule 1.1 to this Agreement (the
"Excluded Assets").
Subject to the terms and conditions hereof, at the Closing,
the Assets shall be transferred or otherwise conveyed to the Buyer free and
clear of all liabilities, obligations, liens and encumbrances excepting only
Assumed Liabilities and Liens listed on Schedule 2.6(a).
1.2 Assumption of Liabilities. (a) Subject to the terms and
conditions hereof, at the Closing the Buyer shall assume and agree to pay,
honor and discharge when due any and all liabilities, obligations and
commitments relating exclusively to the Business or the Assets that are (x)
reflected on the April 30 Balance Sheet (as hereinafter defined), including
without limitation the items set forth on Schedule 1.2 to this Agreement, (y)
incurred after the date of the April 30 Balance Sheet in the ordinary course of
business consistent with prior practice and in accordance with the terms of
this Agreement (applied as if the provisions of Section 4.1 hereof had been in
effect from the close of business on the date of the April 30 Balance Sheet
through the Closing Date), or (z) reflected on Schedule 1.2 to this Agreement
(collectively, the "Assumed Liabilities").
(b) At the Closing, the Buyer shall assume the Assumed
Liabilities by executing and delivering to the Company an assumption agreement
in form reasonably satisfactory to the Company (the "Assumption Agreement").
1.3 Excluded Liabilities. Notwithstanding any other provision
hereof or any schedule or exhibit hereto, and regardless of any disclosure to
the Buyer, the Buyer shall not assume (i) any liabilities, obligations or
commitments of the Company relating to or arising out of the operation of the
Business or the ownership of the Assets prior to the Closing other than the
Assumed Liabilities,
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(ii) any liabilities of the Company relating to Excluded Assets, and (iii) the
liabilities listed on Schedule 1.3 to this Agreement (the aggregate of (i),
(ii) and (iii), the "Excluded Liabilities").
1.4 Consent of Third Parties. Notwithstanding anything to the
contrary in this Agreement, this Agreement shall not constitute an agreement to
assign or transfer any Governmental Approval, instrument, contract, lease,
permit or other agreement or arrangement or any claim, right or benefit arising
thereunder or resulting therefrom if an assignment or transfer or an attempt to
make such an assignment or transfer without the consent of a third party would
constitute a breach or violation thereof or affect adversely the rights of the
Buyer thereunder; and any transfer or assignment to the Buyer by the Company of
any interest under any such instrument, contract, lease, permit or other
agreement or arrangement that requires the consent of a third party shall be
made subject to such consent or approval being obtained. In the event any such
consent or approval is not obtained on or prior to the Closing Date, the
Company shall continue to use all reasonable efforts to obtain any such
approval or consent after the Closing Date until such time as such consent or
approval has been obtained, and the Company will cooperate with the Buyer in
any lawful and economically feasible arrangement to provide that the Buyer
shall receive the interest of the Company, as the case may be, in the benefits
under any such instrument, contract, lease or permit or other agreement or
arrangement, including performance by the Company, as the case may be, as
agent, if economically feasible, provided that the Buyer shall undertake to pay
or satisfy the corresponding liabilities for the enjoyment of such benefit to
the extent the Buyer would have been responsible therefore hereunder if such
consent or approval had been obtained. The Company shall pay and discharge, and
shall indemnify and hold the Buyer harmless from and against, any and all
out-of-pocket costs of seeking to obtain or obtaining any such consent or
approval whether before or after the Closing Date. Nothing in this Section
shall be deemed a waiver by the Buyer of its right to have received on or
before the Closing an effective assignment of all of the Assets nor shall this
Section be deemed to constitute an agreement to exclude from the Assets any
assets described under Section 1.1.
1.5 Purchase Price. Upon the terms and subject to the conditions
of this Agreement, and in consideration of the sale, assignment, transfer,
conveyance and delivery of the Assets, Buyer shall (i) assume the Assumed
Liabilities and (ii) pay to the Company the following amounts, not to exceed
$4.5 million in aggregate:
(a) at the Closing, $200,000.00 in cash (the "Closing
Payment"); and
(b) on the Earn-Out Date (as defined below) an amount
(the "Earn-Out"), in the form specified herein, equal to the EBITDA (as defined
below) of the business conducted by Buyer with the Assets after the Closing for
the period ending on the first anniversary of the Closing, as derived from the
Audited 2000 Statements (as defined below), less the sum of: (x) the Closing
Payment, and (y) an amount equal to the Assumed Liabilities less the Xxxxxxxx
Note Amount. "Earn-Out Date"
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shall mean the thirtieth calendar day following final determination of the
Audited 2000 Statements pursuant to Section 1.6 of this Agreement. "EBITDA"
shall mean earnings before deduction for interest, taxes, depreciation and
amortization, and without deduction for any items of "overhead" allocated by
Buyer or Clear to the business conducted with the Assets. (The aggregate of the
Closing Payment and the Earn-Out is collectively referred to as the "Purchase
Price".) "Xxxxxxxx Note Amount" shall mean the amount outstanding, as of the
Closing Date, under that certain Promissory Note, dated October 20, 1999, of
XxXxxxxx Telecommunications Group, Inc. in favor of Xxxxxxx X. Xxxxxxxx.
1.6 Audited 2000 Financial Statements. After the first
anniversary of the Closing, Buyer shall, at Buyer's expense, cause KPMG Peat
Marwick, L.L.P. to prepare and deliver to the Buyer and to the Company an
audited balance sheet and statement of income of the business conducted by
Buyer with the Assets after the Closing for the period ending on the first
anniversary of the Closing (collectively, the "Audited 2000 Statements"), in
accordance with generally accepted accounting principles and applying the
"percentage of completion" method of accounting. Within 30 days after the
delivery of the Audited 2000 Statements, the Company shall notify Buyer in
writing of any objections of the Company to such Audited 2000 Statements,
specifying in reasonable detail any such objections, and if the Company fails
to notify the Buyer in writing of any objections within such period the Company
shall be deemed to have agreed to the Audited 2000 Statements. If the Company
does not so object or if the Company and the Buyer agree on the resolution of
all such objections, the Audited 2000 Statements (with any such changes as may
have been agreed) shall be final and binding. The Company and the Buyer shall
negotiate in good faith to attempt to resolve any such objections, provided
that the Company and the Buyer shall each have the right, at any time, to
unilaterally terminate in writing all discussions with respect to such
objections or changes. Not later than ten business days after either the
Company or the Buyer shall have terminated such discussions, all such disputed
items shall be submitted for resolution to a certified public accounting firm
of national standing designated by the Company and the Buyer (the "Auditor"),
which Auditor shall be independent of and have no ongoing business relationship
with any of the Company, Buyer or their respective affiliates. The Company and
the Buyer shall each (i) cooperate fully with the Auditor and furnish to the
Auditor such work papers and other documents and information as the Auditor may
request, (ii) bear 50% of the fees and expenses of the Auditor incurred in
connection with the dispute resolution procedure pursuant to this Section, and
(iii) be afforded an opportunity to present to the Auditor any material it
deems relevant and to discuss the matters in dispute with the Auditor. The
Company and the Buyer shall use reasonable efforts to cause the report of the
Auditor to be rendered within 15 days of its appointment, and the Auditor's
determination as to the appropriateness and extent of changes (if any) to the
Audited 2000 Statements shall be final and binding.
1.7 Form of Earn-Out. (a) The Earn-Out shall be delivered to
the Company in the form determined pursuant to the following:
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(i) in the event that, prior to the Earn-Out Date,
Clear shall have (x) listed any of its equity securities on a national
securities exchange or NASDAQ and (y) become a reporting company pursuant to
the Securities Exchange Act of 1934 (collectively, a "Going Public Event"), the
Earn-Out shall take the form of such number of the publicly traded equity
securities of Clear (the "Public Stock") as shall be determined by dividing the
dollar amount of the Earn-Out by the average, for the 10 consecutive trading
days ending on the fifth trading day prior to the Earn-Out Date, of the closing
asked price for a share of Public Stock, and rounding up to the nearest whole
share;
(ii) in the event that, prior to the Earn-Out Date,
no Going Public Event shall have occurred, the Earn-Out shall, at the election
of the Company in its sole discretion, take the form of either (x) such number
of the shares of common stock of Clear (the "Common Stock") as shall be
determined by dividing the dollar amount of the Earn-Out by the fair market
value of a single share of Common Stock, as determined by the Board of
Directors of Clear, or (y) an unsecured subordinated promissory note of Clear
in the amount of the Earn-Out, payable in 36 equal monthly installments, with
interest on the principal amount thereof at the Prime Rate (the "Note"). The
"Prime Rate" shall mean a simple interest rate equal to the rate most recently
announced in The Wall Street Journal as the PRIME RATE, which rate shall be
adjusted on July 31 and December 31 of each year the Note remains outstanding.
Anything to the contrary herein notwithstanding, the first $250,000 in amount
of any Earn-Out otherwise payable in Common Stock or Notes pursuant to this
Section 1.7(a)(ii) shall be paid in cash.
(b) For purposes of all Tax Returns (as defined in
Section 2.15(g) of this Agreement), to be filed after the Closing Date by each
of Clear, the Company, XxXxxxxx and Buyer, the Earn-Out shall be deemed to
include interest at the rate of 6.00% per annum.
1.8 Time and Place of Closing. The parties shall use their
reasonable efforts to cause the closing of the transactions contemplated by
this Agreement (the "Closing") to take place at 10:00 a.m. on November 1, 1999,
or at such other time as the parties may mutually agree (the date on which the
Closing actually occurs, the "Closing Date"). The place of the Closing shall be
at the offices of Xxxxx, Xxxxxxxx & Xxxxxxx, LLP, Promenade II, Suite 3100,
1230 Peachtree Street, N.E., Atlanta, Georgia, or such other location as may be
mutually agreed by the Parties.
1.9 Deliveries by the Company.
(a) Deliveries by the Company. At the Closing, the
Company shall deliver to Buyer:
(i) a general instrument of sale, conveyance,
assignment, transfer and delivery, conveying good and marketable title to all
the Assets, in the form of Exhibit A;
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(ii) such specific instruments of sale, conveyance,
assignment, transfer and delivery conveying good and marketable title to such
of the Assets included within such general instrument of sale, conveyance,
assignment, transfer and delivery as Buyer shall request;
(iii) all the Company's contracts, books, records
and other data relating to the Assets and the Company's operations (except the
Company's minute and stock books and all other records which the Company is
required by law to keep in its possession, as to which the Company will furnish
to Buyer, at Buyer's cost, at any time or from time to time after the Closing
Date, copies or transcripts);
(iv) the Investment Letter set forth in Exhibit B
hereto; and
(v) such other certificates and documents as may
be required by the terms of this Agreement or as Buyer or its counsel may
reasonably request.
(b) Deliveries by Buyer. At the Closing, Buyer will
deliver to the Company:
(i) the Closing Payment, by wire transfer of
immediately available funds to an account designated by the Company not later
than three business days prior to the Closing;
(ii) the Assumption Agreement;
(iii) a certificate of an authorized officer of
Buyer in the form of Exhibit C, certifying as to the accuracy of Buyer's
representations and warranties at and as of the Closing and that Buyer has
performed and complied with all of the terms, provisions and conditions to be
performed and complied with by Buyer at or before the Closing; and
(iv) such other certificates and documents as may
be required by the terms of this Agreement or as the Company or its counsel may
reasonably request.
1.10 Earn-Out Closing. On the Earn-Out Date, Buyer and the Company
shall hold a closing (the "Earn-Out Closing") at the location of the Closing,
or such other place as the parties may mutually agree. At the Earn-Out Closing,
Buyer shall deliver to the Company the Earn-Out, and, in the event the Earn-Out
consists of Public Stock, Common Stock or Notes, the Company shall deliver to
Buyer (i) an Investment Letter substantially in the form set forth in Exhibit B
hereto, executed by the Company as of the Earn-Out Date, and (ii) such
shareholders' and other agreements as may then be in force among all of the
existing holders of Common Stock of Clear.
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1.11 Restrictive Legend. The Public Stock, Common Stock and the
Notes, if any, to be issued pursuant to this Agreement shall be "restricted
securities", as defined in Rule 144 under the Securities Act of 1933, as
amended (the "Securities Act") and each certificate representing any such
securities shall bear any legend or legends required by applicable state
securities laws or otherwise, as well as a legend substantially similar to the
following:
"THE SECURITIES EVIDENCED HEREBY WERE ISSUED AND SOLD WITHOUT
REGISTRATION UNDER THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED (THE
"1933 ACT"), OR THE SECURITIES LAWS OF ANY STATE, INCLUDING THE
GEORGIA SECURITIES ACT OF 1973, AS AMENDED, IN RELIANCE UPON CERTAIN
EXEMPTIVE PROVISIONS OF SAID ACTS. SAID SECURITIES CANNOT BE SOLD OR
TRANSFERRED UNLESS, IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
THE ISSUER, ANY SUCH SALE OR TRANSFER WOULD BE: (1) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT OR PURSUANT TO AN
EXEMPTION FROM SUCH REGISTRATION; AND (2) IN A TRANSACTION WHICH IS
EXEMPT UNDER APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH LAWS, OR IN A TRANSACTION
WHICH IS OTHERWISE IN COMPLIANCE WITH SUCH LAWS."
ARTICLE II
Representations and Warranties of the Company and XxXxxxxx
As an inducement to Clear and Buyer to enter into this Agreement and
to consummate the transactions contemplated hereby, and with the knowledge that
Clear and Buyer shall rely thereon, the Company and XxXxxxxx hereby jointly and
severally represent and warrant to Clear and to Buyer, as of the date hereof,
as set forth below.
2.1 Corporate.
(a) Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Arizona. The Company elected to be taxed as an "S - corporation" effective July
20, 1993. No entity has ever merged with or been consolidated into the Company.
(b) Corporate Power. The Company has all requisite
corporate power and authority to own, operate and lease its properties and to
carry on its business as and where such is now being conducted. The Company is
duly qualified or otherwise authorized as a foreign
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corporation to transact business and is in good standing in each jurisdiction
in which a failure to be so qualified would have a material adverse effect on
the financial condition, assets, liabilities, operations or business prospects
of the Company (a "Material Adverse Effect").
(c) Subsidiaries. The Company does not have any
subsidiaries. Except as set forth on Schedule 2.1(c), the Company does not
currently own, and has never owned, directly or indirectly, any capital stock
or other equity securities of or interest in any corporation or other entity or
business.
(d) Corporate Documents, Etc. Copies of the Articles of
Incorporation, bylaws or other charter and organizational documents of the
Company, including any amendments thereto, which have been delivered by the
Company to Buyer are true, correct and complete copies of such instruments as
presently in effect.
2.2 Authorization; Validity. The execution and delivery of this
Agreement and the other agreements, instruments and documents contemplated
hereby (such other agreements, instruments and documents sometimes referred to
herein as the "Ancillary Instruments") and the performance of the obligations
set forth herein and therein, have been duly authorized by the Board of
Directors of the Company and by the holders of all of the common stock or other
equity interests in the Company (collectively, the "Shareholders"), and no
other or further corporate act on the part of the Company or the Shareholders
is necessary therefor. This Agreement has been duly and validly executed and
delivered by the Company and the Shareholders and is, and when executed and
delivered, and the Ancillary Instruments to be executed and delivered by the
Company or the Shareholders pursuant hereto will be, legal, valid and binding
obligations of each such person or entity, enforceable in accordance with their
respective terms, except that such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally and the remedy of specific
performance and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefor may be brought.
2.3 No Violation. Except as set forth on Schedule 2.3, no consent,
authorization or approval of, or declaration, filing or registration with, any
governmental, administrative or regulatory body, or any consent, authorization
or approval of any other third party, is necessary in order to enable the
Company or XxXxxxxx to enter into and perform their obligations under this
Agreement and to consummate the transactions contemplated hereby, and neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will: (a) be in violation of the Articles of
Incorporation or bylaws of the Company; (b) except as set forth on Schedule
2.3(c), cause a default under any mortgage, deed of trust or other lien, charge
or encumbrance to which any of the Assets is subject or constitute a breach of
the terms of any evidence of indebtedness, agreement or contract relating to
the Business to which the Company is a party, or
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permit the termination of any such contract by another person; (c) result in
the creation or imposition of any security interest, lien, charge or other
encumbrance upon any of the Assets under any agreement or commitment to which
the Company is bound; (d) accelerate, or constitute an event entitling, or
which would, upon notice or lapse of time or both, entitle the holder of any
indebtedness of the Company to accelerate the maturity of any such
indebtedness; (e) conflict with or result in the breach of any writ, injunction
or decree of any court or governmental instrumentality binding on the Company;
or (f) violate any statute, law or regulation of any jurisdiction as such
statute, law or regulation relates to the properties or business of the
Company.
2.4 Financial Statements. Attached as Schedule 2.4 are copies of
the unaudited balance sheet, income statement, statement of stockholders'
equity and statement of cash flows of the Company for the twelve-month period
ended December 31, 1998 and the unaudited balance sheet and income statement of
the Company as of September 30, 1999 (together, the "Company Statements"). The
Company Statements (i) were prepared from the books and records of the Company,
(ii) except as set forth in Schedule 2.4, were prepared in a manner
substantially conforming to GAAP, using the accrual method of accounting, and
(iii) fairly present the financial condition of the Company as of the dates
thereof.
2.5 Absence of Undisclosed Liabilities. All liabilities,
commitments or obligations of the Company (whether secured or unsecured and
whether direct or indirect) are set forth or adequately reserved against in the
Company Statements, except for commercial liabilities and obligations incurred
since the date of the Company Statements in the ordinary course of business and
consistent with past practice and which would not reasonably be expected to
have a Material Adverse Effect. Except as set forth on Schedule 2.5 hereto and
to the extent described in the Company Statements, the Shareholders have no
knowledge of any basis for the assertion against the Company of any liability,
and there are no circumstances, conditions, happenings, events or arrangements,
contractual or otherwise, known to the Shareholders which would reasonably be
expected to give rise to liabilities, except commercial liabilities and
obligations incurred in the ordinary course of business and consistent with
past practice.
2.6 Title to Assets; Encumbrances.
(a) Merchantable Title. Except as set forth in Schedule
2.6 (a), the Company has good and merchantable title to all of the Assets,
including, without limitation, all Assets reflected in the Company Statements
(except for inventory disposed of in the ordinary course of business since the
date of such Company Statements) free and clear of all mortgages, liens
(statutory or otherwise), security interests, claims, pledges, licenses,
equities, options, conditional sales contracts, assessments, levies, easements,
covenants, reservations, restrictions, rights-of-way, exceptions, limitations,
mineral rights, charges or Encumbrances of any nature whatsoever (collectively,
"Liens") except for (a) materialmen's, mechanics', worker's, repairmen's,
employees' or other like
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Liens arising against the Company in the ordinary course of business, in each
case which are either not delinquent or are being contested in good faith and
by appropriate actions or proceedings conducted with due diligence and for the
payment of which adequate reserves in accordance with GAAP have been
established with respect thereto, and (b) Liens for property taxes not yet due
("Permitted Liens"). Except as set forth in Schedule 2.6(a), none of the Assets
is subject to any restrictions with respect to the transferability thereof and
title thereto will not be affected in any way by the transactions contemplated
hereby other than as disclosed in Schedule 2.6(a).
(b) Condition. Except as set forth on Schedule 2.6(b),
all of the Assets are in good operating condition and repair (except such minor
defects as do not interfere with the use thereof in the conduct of normal
operations), have been maintained consistent with the standards generally
followed in the industry and were sufficient to carry on the Company's business
as conducted during the preceding twelve (12) months.
2.7 Compliance with Laws.
(a) Compliance. Except as set forth on Schedule 2.7(a),
the Company (including all of its operations, practices, properties, real or
personal, owned or leased, and assets) is in compliance with all applicable
federal, state, local and foreign laws, ordinances, orders, rules and
regulations (collectively, "Laws") the violation of which, if uncured, would
have a Material Adverse Effect.
(b) Licenses and Permits. Except as set forth on Schedule
2.7(b), the Company does not require any licenses, permits, approvals,
authorizations or consents from any governmental and regulatory authorities for
the conduct of its business (as presently conducted), or for the operation of
its facilities. The Company, except for such items, the failure to obtain which
would not, individually or in the aggregate, have a Material Adverse Effect, is
in compliance with all such permits and licenses, approvals, authorizations and
consents applicable to the conduct of the Business.
(c) Environmental Matters. The applicable Laws relating
to pollution or protection of the environment, including Laws relating to
emissions, discharges, generation, storage, release or threatened release of
pollutants, contaminants, asbestos, lead-based paints, chemicals or industrial,
toxic, hazardous or petroleum or petroleum-based substances or wastes ("Waste")
into the environment (including, without limitation, ambient air, surface
water, ground water, land surface or subsurface strata) or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Waste are herein collectively referred to as
the "Environmental Laws." Except as set forth on Schedule 2.7(c), the Company
is in material compliance with all limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in the Environmental Laws or contained in any
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regulations, code, plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder.
2.8 Litigation. Except as set forth in Schedule 2.8, there is no
action, suit, arbitration proceeding, investigation or inquiry, pending before
any court, arbitrator or federal, state, foreign, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
or, to the knowledge of XxXxxxxx, threatened, against the Company.
2.9 Material Contracts and Commitments. Except as described in
Schedule 2.9 (i) the Company is not party to any lease, contract or commitment
of any nature involving consideration or other expenditure in excess of
$10,000, or involving performance over a period of more than one (1) year, or
which is otherwise individually material to the operations of the Business
(each, a "Material Contract"), and (ii) the Company is not in default under any
Material Contract.
2.10 Real Estate. The Company does not own any real property.
Schedule 2.10 sets forth all real property used or occupied by the Company in
the conduct of the Business (the "Real Property").
2.11 Broker's or Finder's Fees. No agent, broker, person or firm
acting on behalf of the Company or XxXxxxxx is, or will be, entitled to any
commission or broker's or finder's fees from any of the parties hereto, or from
any person controlling, controlled by or under common control with any of the
parties hereto, in connection with any of the transactions contemplated herein.
2.12 Employee Benefit Plans. Schedule 2.12 sets forth all pension,
thrift, savings, profit sharing, retirement, incentive bonus or other bonus,
medical, dental, life, accident insurance, benefit, employee welfare,
disability, group insurance, stock purchase, stock option, stock appreciation,
stock bonus, executive or deferred compensation, hospitalization and other
similar fringe or employee benefit plans, programs and arrangements, and any
employment or consulting contracts, "golden parachutes," collective bargaining
agreements, severance agreements or plans, vacation and sick leave plans,
programs, arrangements and policies, including, without limitation, all
"employee benefit plans" (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), all employee manuals and
all written or binding oral statements of policies, practices or understandings
relating to employment, which are provided to, for the benefit of, or relate
to, any persons employed by the Company.
2.13 Employment Compensation. Schedule 2.13 contains a true and
correct list of all employees to whom the Company is paying compensation,
including bonuses and incentives for services rendered or otherwise, the annual
salary, average commission, or hourly wage compensation of each such employee,
and any bonus paid to each respective employee relating to services rendered
during the 1998 fiscal year. Buyer has been provided a copy of all W-2 or
similar foreign forms
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distributed to each employee of the Company in respect of compensation received
from the Company in the 1998 tax year.
2.14 Labor Matters. The Company is currently in compliance with
all applicable laws, rules and regulations relating to the employment of labor,
including those related to wages, hours and authorizations, except for such
matters of non-compliance as would not, individually or in the aggregate, have
a Material Adverse Effect. Except as set forth on Schedule 2.14(a), the Company
has paid or caused to be paid all compensation, including bonuses if any, due
and payable to its employees through the date hereof and will cause such
amounts to be paid through the Closing Date. Schedule 2.14(b) sets forth the
accrued vacation for each employee of the Company. Since its formation, the
Company has not experienced any labor disputes, union organization attempts or
any work stoppage due to labor disagreements. There is no unfair labor practice
charge or complaint against the Company or any Subsidiary pending or, to the
knowledge of the Company, threatened; there is no labor strike, dispute,
request for representation, slowdown or stoppage actually pending or, to the
knowledge of the Company, threatened against or affecting the Company nor any
secondary boycott with respect to products of the Company; no question
concerning representation has been raised or, to the knowledge of the Company,
is threatened respecting the employees of the Company; and no grievance has
been raised or, to the knowledge of the Company, is threatened respecting the
employees of the Company which might have a Material Adverse Effect.
2.15 Tax Matters. (a) The Company has filed all Tax Returns that
it was required to file. All such Tax Returns were correct and complete in all
material respects. All Taxes owed by the Company (whether or not shown on any
Tax Return) have been paid. The Company is not currently the beneficiary of any
extension of time within which to file any Tax Returns. No claim has ever been
made by an authority in a jurisdiction where the Company does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction. There
are no Liens on any of the assets of the Company that arose in connection with
any failure (or alleged failure) to pay any Tax.
(b) Except as set forth on Schedule 2.15(b), the Company
has withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party (other than immaterial amounts).
(c) No Shareholder, director or officer (or employee
responsible for Tax matters) of the Company has any basis to expect any
authority to assess any additional Taxes for any period for which Tax Returns
have been filed. There is no dispute or claim concerning any Tax liability of
the Company either (A) claimed or raised by any authority in writing or (B) as
to which any of the Shareholders and the directors and officers (and employees
responsible for Tax matters) of the Company has knowledge based upon personal
contact with any agent of such authority. Schedule 2.15 lists all federal,
state, local, and foreign income Tax Returns filed with respect to the Company
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for taxable periods ended on or after December 31, 1995, indicates those Tax
Returns that have been audited, and indicates those Tax Returns that currently
are the subject of audit. The Company has delivered to the Buyer correct and
complete copies of all federal income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by the Company since
December 31, 1995.
(d) The Company has not waived any statute of limitations
in respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(e) The unpaid Taxes of the Company (A) did not, as of
September 30, 1999, exceed the reserve for Tax liability (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of the September 30, 1999 balance
sheet (rather than in any notes thereto) and (B) do not exceed that reserve as
adjusted for the passage of time through the Closing Date in accordance with
the past custom and practice of the Company in filing its Tax Returns.
(f) None of the Assumed Liabilities is an obligation to
make a payment that will not be deductible under Code ss.280G. The Company has
disclosed on its federal income Tax Returns all positions taken therein that
could give rise to a substantial understatement of federal income Tax within
the meaning of Code ss.6662. The Company is not a party to any Tax allocation
or sharing agreement. The Company (A) has not been a member of an affiliated
group filing a consolidated federal income Tax Return and (B) has no liability
for the Taxes of any person (other than the Company ) under Reg. ss.1.1502-6
(or any similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(g) For purposes of this Agreement (A) "Tax" or "Taxes"
shall mean all taxes, charges, fees, duties, levies, penalties or other
assessments imposed by any federal, state, local or foreign governmental
authority, including, but not limited to, income, gross receipts, excise,
property, sales, gain, use, license, custom duty, unemployment, capital stock,
transfer, franchise, payroll, withholding, social security, minimum estimated,
and other taxes, and shall include interest, penalties or additions
attributable thereto; (B) "Tax Returns" shall mean any return, declaration,
report, claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof; and (C) "Code" shall mean the Internal Revenue Code of 1986, as
amended .
2.16 Absence of Certain Changes. Except as and to the extent set
forth in Schedule 2.16, since the date of the Company Statements there has been
no:
(a) Material Adverse Effect. Material Adverse Effect;
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(b) Damage. Loss, damage or destruction, whether covered
by insurance or not, affecting the Business;
(c) Increase in Compensation. Increase in the
compensation, salaries or wages payable or to become payable to any employee or
agent of the Company (including, without limitation, any increase or change
pursuant to any bonus, pension, profit sharing, retirement or other plan or
commitment), or any bonus or other employee benefit granted, made or accrued;
(d) Labor Disputes. Labor dispute or disturbance, other
than routine labor union or individual grievances which are not material to the
business, financial condition or results of operations of the Company, or the
Business;
(e) Commitments. Material commitment or transaction
(including, without limitation, any borrowing or capital expenditure) other
than in the ordinary course of business consistent with past practice;
(f) Dividends. Declaration, setting aside, or payment of
any dividend or any other distribution in respect of capital stock of the
Company; any redemption, purchase or other acquisition by the Company of any of
its capital stock, or any security relating thereto, including any options or
rights to purchase or acquire capital stock of the Company;
(g) Disposition of Property. Sale, lease or other
transfer or disposition of any properties or assets used or useful in the
Business, except in the ordinary course of business;
(h) Indebtedness. Material indebtedness for borrowed
money incurred, assumed or guaranteed;
(i) Liens. Mortgage, pledge, or Lien made on or
affecting any of the Assets except for Permitted Liens;
(j) Amendment of Contracts. Entry into, amendment,
extension or termination of any Material Contract, or any waiver of rights
thereunder, other than in the ordinary course of business;
(k) Payments, Loans and Advances. Payment, loan or
advance (other than payments pursuant to legal obligations of the Company and
other than advances to employees in the ordinary course of business for travel
and entertainment in accordance with past practice) to any person;
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(l) Credit. Any change in policies or practices with
respect to the Business and the granting of credit; or
(m) Unusual Events. Other events or conditions not in
the ordinary course of business which have had or could reasonably be expected
to have a Material Adverse Effect or which would be prohibited by the terms of
Section 4.1 hereof.
For purposes of subsections (d), (e) and (h) of this Section
2.16 only, the term "material" shall include items that, individually or in the
aggregate, exceed the sum of $1,500.00.
2.17 Securities Laws Matters. The Company which may receive Public
Stock, Common Stock or Notes pursuant to this Agreement will acquire such
Public Stock, Common Stock or Notes for investment for its own account, not on
behalf of others and not with a view to resell or otherwise distribute such
Public Stock, Common Stock or Notes. The Company acknowledges that the Public
Stock, Common Stock and Notes, at the time of issuance, shall not have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
or under any state securities laws, and may not be sold, transferred or
disposed of by it absent the registration thereof or the availability of an
exemption from registration applicable thereto, and, as a result, the Company
must bear the risk of an investment in the Public Stock, Common Stock or Notes
for an indefinite period of time. The financial condition of the Company is
currently adequate to bear the substantial risk of an investment in the Public
Stock, Common Stock and Notes. The Company has sufficient knowledge and
experience in investment and business matters to understand the economic risk
of such an investment and the risk involved in a commercial enterprise such as
that of Clear. The Company is a bonafide resident of Arizona, and all
communications and information have been directed to it and have been received
in such place of residence. Representatives of the Company have had the
opportunity to ask questions of, and receive answers from, officers of Clear
concerning Clear, the Public Stock, Common Stock and the Notes and to obtain
any additional information which the Company reasonably requested. The Company
shall, at or prior to the Closing, complete and deliver to Buyer an investment
letter substantially in the form attached hereto as Exhibit B.
ARTICLE III
Representations and Warranties of Clear and Buyer
As an inducement to the Company and XxXxxxxx to enter into this
Agreement and to consummate the transactions contemplated hereby, and with the
knowledge that the Company and XxXxxxxx shall rely thereon, the Clear and Buyer
hereby jointly and severally represent and warrant to the Company and XxXxxxxx,
as of the date hereof, as set forth below:
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3.1 Due Incorporation and Qualification. Each of Clear and Buyer
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Georgia, and has the corporate power to carry on its
business as now being conducted and to own or lease its properties and assets
as now owned, leased or operated by it. Each of Clear and Buyer is duly
qualified or otherwise authorized as a foreign corporation to transact business
and is in good standing in each jurisdiction in which a failure to be so
qualified would have a material adverse effect on the business of Clear or
Buyer.
3.2 Authorization. Each of Clear and Buyer has full corporate
power and authority under its articles of incorporation and bylaws, and the
Board of Directors of each of Clear and Buyer has taken all necessary corporate
action to authorize Clear and Buyer, respectively, to execute and deliver this
Agreement and to consummate the transactions contemplated hereby, and assuming
the due authorization, execution and delivery of this Agreement by the Company
and the Shareholders, this Agreement constitutes the valid and binding
obligation of each of Clear and Buyer, enforceable in accordance with its
terms, except that such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and the remedy of specific performance
and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be
brought.
3.3 Non-Contravention. Neither the execution and delivery of this
Agreement or the other agreements contemplated hereby nor the consummation of
the transactions contemplated hereby does or will violate, conflict with,
result in a breach of any provision of, constitute a default under (with or
without notice, lapse of time or pursuant to any legal or equitable principle)
or accelerate the maturity of or require the prepayment of any indebtedness of
either Clear or Buyer under, any judgment, order, decree or material agreement
or instrument to or by which any of Clear or Buyer is subject or bound.
3.4 Authority of Clear and Buyer. No consent, authorization or
approval of, or declaration, filing or registration with, any governmental,
administrative or regulatory body, is necessary in connection with the
transactions contemplated by this Agreement.
3.5 Broker's or Finder's Fees. No agent, broker, person or firm
acting on behalf of Clear or Buyer is, or will be, entitled to any commission
or broker's or finder's fees from any of the parties hereto, or from any person
controlling, controlled by or under common control with any of the parties
hereto, in connection with any of the transactions contemplated herein.
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ARTICLE IV
Covenants
4.1 Conduct of Business.
(a) Between the date hereof and the Closing Date, each
of the parties shall use its best efforts to conduct its business in the
ordinary course and in such a manner so that the representations and warranties
contained in Articles II and III hereof shall continue to be true and correct
in all material respects on and as of the Closing Date.
(b) Between the date hereof and the Closing Date, absent
the prior written consent of the Buyer, the Company shall refrain from:
(i) incurring any material liability or obligation
of any nature (whether accrued, absolute, contingent or
otherwise);
(ii) permitting any of its assets to be subjected
to any mortgage, pledge, Lien, security interest,
encumbrance, restriction or charge of any kind, except in the
ordinary course of business and except for Permitted Liens;
(iii) selling, transferring or otherwise disposing
of any assets, except in the ordinary course of business;
(iv) making any capital expenditure or commitment
therefor;
(v) increasing its indebtedness for borrowed
money, or making any loan to any person;
(vi) writing off as uncollectible any accounts
receivable, except write-offs in the ordinary course of
business charged to applicable reserves, none of which
individually or in the aggregate shall be material to the
Business;
(vii) granting any increase in the rate of wages,
salaries, bonuses or other remuneration of any executive
employee or other employees, except pursuant to a legal
obligation with respect to such increase in existence prior
to January 1, 1999;
(viii) canceling or waiving any claims or rights of
substantial value;
(ix) making any change in any method of accounting
or auditing practice;
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(x) otherwise conducting the Business or entering
into any transaction with respect thereto other than in the
usual and ordinary manner and in the ordinary course; or
(xi) agreeing, whether or not in writing, to do
any of the foregoing.
For purposes of this Section 4.1.(b) only, the term "material" shall
include items that, individually or in the aggregate, exceed the sum of
$1,500.00.
4.2 Preservation of Business. Between the date hereof and the
Closing Date, each party shall (consistent with its normal business practices)
preserve its business, and use its best efforts to maintain its relationships
with its present suppliers and customers.
4.3 Notice of Events. Each of the parties shall promptly notify
the other parties of (i) any event, condition or circumstance occurring from
the date hereof through the Closing Date that may reasonably be construed to
constitute a violation or breach of this Agreement, or (ii) any event,
occurrence, transaction or other item which would have been required to have
been disclosed on any Schedule or statement delivered hereunder, had such
event, occurrence, transaction or item existed on the date hereof.
4.4 Examinations and Inspections.
(a) Between the date hereof and the Closing Date, Buyer
shall be entitled, through its employees and representatives, including,
without limitation, Buyer's accountants, legal counsel, bankers and advisors,
to make such inspection of the assets, properties, business and operations of
the Company, and such examination of the books, records and financial condition
of the Company, as Buyer reasonably desires. Any such inspections and
examinations shall be conducted at reasonable times and under reasonable
circumstances which do not disrupt the business, properties or assets of the
Company and with respect to inspections and examinations involving the property
and assets of third parties, subject to the consent of such third parties and
consistent with their policies. For the purpose of facilitating such review,
examination or inspection, the Company shall furnish the representatives of
Buyer with all such information and copies of such documents concerning the
affairs of the Company as such representatives may reasonably request and cause
their officers, employees, agents, accountants and attorneys to cooperate with
such representatives in connection with such review and examination.
(b) Buyer agrees that, with respect to any information
or documents obtained from the Company concerning its assets, properties,
customers, policies, finances, costs, sales, revenues, rights, obligations,
liabilities, strategies, business and operations ("Confidential Information"),
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unless and until the transactions contemplated by this Agreement shall have
been consummated: (a) such Confidential Information is confidential and/or
proprietary to the Company and is entitled to and shall receive treatment as
such by Buyer (except to the extent that any such information is readily
ascertainable from public or published information or trade sources), and (b)
Buyer will, and will cause all of its employees, representatives, agents and
advisors who have access to any Confidential Information to, hold in confidence
and not disclose or use (except in respect of the transactions contemplated by
this Agreement) any such Confidential Information. Clear, Buyer, the Company
and the Shareholders shall also each comply with the restrictions on publicity
set forth in Section 8.2 of this Agreement. If the transactions contemplated by
this Agreement are not closed, all documents and other materials obtained by
Clear and Buyer from the Company shall be returned.
4.5 Third Party Consents. The Company agrees to use its best
effort to obtain, prior to the Closing Date, such consents and approvals as may
be required from parties to Material Contracts or other agreements with the
Company in order to prevent the Company from suffering a Material Adverse
Effect as a result of the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby. Each of Clear and Buyer
agrees to provide to the Company such assistance and information as may be
required to obtain the consents and approvals referred to above.
4.6 Properties. Between the date hereof and the Closing Date, the
Company shall maintain the Assets in customary repair, order and condition,
reasonable wear and tear excepted, and will maintain insurance upon all such
properties, in such amounts and of such kinds as are comparable to that in
effect on the date hereof.
4.7 Books and Records. Until the Closing, the Company shall
maintain its books, accounts and records in the usual manner on a basis
consistent with prior years.
4.8 Material Contracts. The Company shall refrain from amending,
modifying, or consenting to the termination of, any Material Contract or other
material agreements or waiving any of its material rights with respect thereto.
4.9 Pay in Lieu of Vacation and Bonus Accruals. Except as set
forth on Schedule 4.9, no pay in lieu of vacation or bonus accruals will be
payable to employees of the Company as of the Closing Date.
4.10 Environmental Audits and Other Investigations. The Company
agrees that Buyer may retain, at the sole expense of Buyer, a firm engaged in
the regular business of environmental engineering to conduct such environmental
audits of the facilities and operations of the Company, and the real estate
occupied in connection with the Business, as Buyer in its discretion shall
consider necessary or appropriate. Between the date hereof and the Closing
Date, Buyer, its agents,
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employees, contractors, surveyors, and engineers shall have the right to enter
and go upon the Real Property at any time and from time to time for the purpose
of inspecting the Real Property and any and all improvements located thereon.
4.11 Shareholders Employment and/or Restrictive Covenant
Agreements. At the Closing, XxXxxxxx shall each enter into employment and/or
restrictive covenant agreements with Buyer in substantially the forms set forth
in Exhibits D and E hereto, as applicable to each of them.
4.12 Employment Agreements with Key Employees. At or prior to
Closing, the Company shall use its best efforts to cause the employees of the
Company identified on Schedule 4.12 ("Selected Employees") to duly execute and
deliver employment and restrictive covenant agreements, in substantially the
form attached hereto as Exhibits F and G, respectively, and to terminate,
effective as of the Closing Date, any existing agreement to which such Selected
Employees are party respecting employment with the Company.
4.13 License of Tradenames, Etc. Effective on the Closing Date,
and contingent upon the consummation of the Closing in accordance with the
terms of this Agreement, the Company hereby grants to Buyer an unlimited,
world-wide, fully paid-up exclusive license to use the Intellectual Property
identified as Excluded Assets in Item 9 on Schedule 1.1 to this Agreement (the
"License"). The License shall be in effect for a period of one (1) year after
the Closing Date.
4.13 Securities Law Matters. The Company agrees not to sell,
transfer, convey or otherwise distribute the Public Stock, Common Stock and the
Notes, if any, received pursuant to this Agreement over which the Company has
direct or indirect control without registration under the Securities Act and
applicable federal and state securities laws, except pursuant to an exemption
from registration thereunder acceptable to and approved by legal counsel to
Buyer.
ARTICLE V
Conditions Precedent to
Obligations of Clear and Buyer to Close
The respective obligations of Clear and Buyer to complete the Closing
are subject to the fulfillment on or prior to the Closing Date of the following
conditions, any of which may be waived by Clear and Buyer only in writing:
5.1 Completion of Due Diligence Investigation. In the course of
Buyer's due diligence investigation of the Business, Buyer shall not have
discovered any fact or development which relates to or involves the Company,
Assets or Assumed Liabilities which would, in the reasonable judgment
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of Buyer, have a Material Adverse Effect or that, in the reasonable judgment of
Buyer, would be materially adverse to the interests of Buyer or challenge the
validity or legality of this Agreement or the consummation of the transactions
contemplated by this Agreement.
5.2 No Impairment of Contracts. Buyer shall have reasonably
determined that the contracts and agreements between the Company and its
material customers will, following the conveyance of the Assets, remain in full
force and effect, and that such arrangements are not subject to revocation,
withdrawal, cancellation or termination as a result of the Acquisition.
5.3 Certain Consents. Buyer shall have received the consent of
each of DFW Capital Partners, L.P., Wachovia Bank, N.A., Fleet National Bank
and the holders of a majority in interest of the capital stock of Clear to
enter into this Agreement and each of the transactions contemplated by this
Agreement.
5.4 Representations and Covenants. The representations and
warranties of the Company and XxXxxxxx contained in this Agreement shall be
true and correct in all material respects on and as of the Closing Date. The
Company and XxXxxxxx shall have performed and complied with all covenants and
agreements (including, without limitation, those contained in Article IV)
required by this Agreement to be performed or complied with by them on or prior
to the Closing Date.
5.5 Litigation. No action, suit or proceeding shall have been
instituted before any court or governmental or regulatory body, or instituted
or threatened by any governmental or regulatory body, to restrain or prevent
the carrying out of the transactions contemplated by this Agreement or to seek
damages in connection with such transactions, that has or could reasonably be
expected to have, in the opinion of the attorneys of Buyer, a Material Adverse
Effect.
5.6 No Material Adverse Change. Buyer shall be satisfied, in its
reasonable discretion, that since April 30, 1999 there has been no event or
events constituting a Material Adverse Effect.
5.7 Good Standing Certificates, Etc. The Company shall have
delivered all such certificates, documents or instruments with respect to the
Company's corporate existence and authority as Buyer's counsel may have
reasonably requested prior to the Closing Date.
5.8 Consent. The Shareholders shall have unanimously approved and
adopted this Agreement and the consummation by the Company of the transactions
contemplated hereby.
5.9 Restrictive Covenant Agreements. Buyer shall have received the
employment and/or restrictive covenant agreements specified in Section 4.11, in
a form satisfactory to Buyer and executed by the parties to be bound thereby,
from the Company.
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5.10 Agreements With Key Employees. Buyer shall have received the
employment agreements and restrictive covenant agreements specified in Section
4.13, in a form satisfactory to Buyer and executed by the parties to be bound
thereby, from the Selected Employees.
5.11 Release of Liabilities. All obligations of any of the
Shareholders to the Company for the payment of money pursuant to any contract,
agreement, understanding or otherwise shall have been paid in full.
5.12 Governmental Permits and Approvals. All permits and approvals
from any governmental or regulatory body required for the lawful consummation
of the Closing shall have been obtained.
5.13 Certificates. There shall have been delivered to Buyer: (i) a
certificate of XxXxxxxx in the form of Exhibit H certifying as to the accuracy
of the representations and warranties of the Company and XxXxxxxx at and as of
the Closing and that the Company has performed and complied with all of the
terms, provisions and conditions to be performed and complied with by the
Company at or before the Closing, and (ii) a certificate of the chief executive
officer of the Company in the form of Exhibit I, certifying as to certain
corporate matters, together with all of the attachments referred to therein.
5.14 Opinion of Counsel to the Company. Buyer shall have received
an opinion of counsel to the Company, dated the Closing Date, in form and
substance reasonably satisfactory to Buyer, substantially to the effect set
forth in Exhibit J hereto.
5.15 Other Documents. The Company shall have delivered all other
documents, instruments or writings required to be delivered to Buyer at or
prior to the Closing pursuant to this Agreement and such other certificates of
authority (including good standing certificates), documents, instruments or
writings as Buyer may reasonably request.
ARTICLE VI
Indemnification
6.1 Survival. The representations and warranties contained in this
Agreement shall survive the Closing only until the expiration of fifteen (15)
months after such Closing, provided, however, that the representations and
warranties of the Shareholders with respect to tax matters set forth in Section
2.15 of this Agreement shall survive for the period of time equal to the
statute of limitations applicable to such matter or matters (the "Limitations
Period").
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6.2 Indemnification by the Company and XxXxxxxx. The Company and
XxXxxxxx shall, jointly and severally, indemnify, defend and hold harmless
Clear and Buyer (which terms shall include, for purposes of this Article VI,
Clear and Buyer's respective successors, assigns, directors, officers,
employees and agents) against any and all losses, damages, deficiencies, suits,
claims, demands, judgments, costs, expenses or other liabilities ("Losses")
resulting from, arising from, or relating to (i) any breach of the Company's or
XxXxxxxx'x covenants and agreements contained in this Agreement, (ii) any
breach of a representation or warranty of the Company or XxXxxxxx contained in
Article II of this Agreement, and (iii) the conduct of the Business prior to
the Closing Date.
6.3 Indemnification by Clear and Buyer. Clear and Buyer shall,
jointly and severally, indemnify and hold harmless the Company and XxXxxxxx
against any and all Losses resulting from, arising from, or relating to (i) any
breach of Clear's or Buyer's covenants and agreements contained in this
Agreement, (ii) any breach of a representation or warranty of Buyer contained
in Article III of this Agreement, and (iii) the conduct of its business with
the Assets subsequent to the Closing Date.
6.4 Limitations of Claims. Anything to the contrary herein
notwithstanding:
(a) no claim for indemnification shall be brought after
expiration of the Limitations Period;
(b) no claim for indemnification shall be made until the
aggregate of all claims against the indemnifying party under the terms of this
Agreement shall exceed the sum of $10,000 (whereupon indemnification shall be
due for the entire amount of such claims, without deduction of the above
threshold amount);
(c) the aggregate amount of indemnification to be
provided by any indemnifying party shall in no event exceed the Purchase Price;
(d) the amount of any indemnification owed by XxXxxxxx
and the Company under the terms of this Agreement shall be first satisfied, to
the extent of any positive amount of Earn-Out, by set-off against the Earn-Out,
such set-off to be made (i) first against the portion of the Earn-Out
consisting of Public Stock, Common Stock or Notes (to the extent of any such
amount), (ii) second against the balance of the Earn-Out, and (iii) third
against the Closing Payment. For purposes of this Section, XxXxxxxx and the
Company, on the one hand, and Clear and Buyer, on the other hand, shall be
collectively deemed an "indemnifying party"; and
(e) the indemnification claims of any party shall be in
addition to, and not in lieu of, any other remedy available to such party under
applicable law or otherwise, provided, however, that
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with respect to claims arising under Section 6.2 (ii) and (iii) and Section 6.3
(ii) and (iii) of this Article, such indemnification claims shall (in the
absence of intentional breaches of representations or warranties, fraud or bad
faith) be the sole and exclusive remedy.
6.5 Procedures.
(a) A party seeking indemnification pursuant to Sections
6.2 or 6.3 (an "Indemnified Party") shall give prompt notice to the party from
whom such indemnification is sought (the "Indemnifying Party") of the assertion
of any claim or assessment, or the commencement of any action, suit, audit or
proceeding, by a third party in respect of which indemnity may be sought
hereunder (a "Third Party Claim") and will give the Indemnifying Party such
information with respect thereto as the Indemnifying Party may reasonably
request, but no failure to give such notice shall relieve the Indemnifying
Party of any liability hereunder (except to the extent the Indemnifying Party
has suffered actual prejudice thereby). Thereafter, the Indemnified Party shall
deliver to the Indemnifying Party, within five (5) business days after the
Indemnified Party's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnified Party relating to the
Third Party Claim. The Indemnifying Party shall have the right, exercisable by
written notice (the "Notice") to the Indemnified Party within thirty (30) days
of receipt of notice from the Indemnified Party of the commencement or
assertion of any Third Party Claim, to assume the defense of such Third Party
Claim, using counsel selected by the Indemnifying Party and reasonably
acceptable to the Indemnified Party. Should the Indemnifying Party so elect to
assume the defense of a Third Party Claim, the Indemnifying Party shall not be
liable to the Indemnified Party for legal expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof. If the Indemnifying
Party shall fail to assume the defense of the Third Party Claim within such
thirty (30) day period, the Indemnified Party shall have the right to undertake
the defense of such Third Party Claim on behalf of the Indemnifying Party.
Regardless of whether the Indemnifying Party elects to assume the defense of
any such Third Party Claim, the Indemnified Party shall not admit any liability
with respect to, or settle, compromise or discharge such Third Party Claim
without the Indemnifying Party's prior written consent.
(b) The Indemnifying Party or the Indemnified Party, as
the case may be, shall in any event have the right to participate, at its own
expense, in the defense of any Third Party Claim which the other is defending.
(c) The Indemnifying Party, if it shall have assumed the
defense of any Third Party Claim in accordance with the terms hereof, shall
have the right, upon five (5) days prior written notice to the Indemnified
Party, to consent to the entry of judgment with respect to, or otherwise settle
such Third Party Claim provided the Indemnifying Party agrees that as between
the Indemnifying Party and the Indemnified Party, the Indemnifying Party shall
be solely obligated to satisfy and discharge such judgment or settlement unless
(i) the Third Party Claim involves equitable
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or other non-monetary damages or (ii) in the reasonable judgment of the
Indemnified Party such settlement would have a continuing material adverse
effect on the Indemnified Party's business (including any material impairment
of its relationships with customers and suppliers), in which case such
settlement only may be made with the written consent of the Indemnified Party,
which consent shall not be unreasonably withheld.
(d) Whether or not the Indemnifying Party chooses to
defend or prosecute any claim involving a third party, all the parties hereto
shall cooperate in the defense or prosecution thereof and shall furnish
records, information and testimony, and attend such conferences, discovery
proceedings, hearings, trials and appeals as may be reasonably requested in
connection therewith. Such cooperation shall include access during normal
business hours afforded to the Indemnifying Party of records and information
which are reasonably relevant to such Third Party Claim, and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder, and the Indemnifying Party
shall reimburse the Indemnified Party for all its reasonable out-of-pocket
expenses in connection therewith.
ARTICLE VII
Termination of Agreement
7.1 Termination. This Agreement may be terminated prior to the
Closing as follows:
(a) at the election of the Company, in the event that
Buyer or Clear shall have materially breached any representation, warranty,
covenant or agreement contained in this Agreement or in any document or other
paper delivered pursuant to this Agreement;
(b) at the election of Buyer, in the event that the
Company or XxXxxxxx shall have materially breached any representation,
warranty, covenant or agreement contained in this Agreement or in any document
or other paper delivered pursuant to this Agreement;
(c) at the election of the Company or Buyer, if any
legal proceeding is commenced or threatened by any governmental or regulatory
body or other person seeking to prevent the Closing or consummation of any
transaction contemplated by this Agreement, and either the Company or Buyer, as
the case may be, reasonably and in good xxxxx xxxxx it impractical or
inadvisable to proceed in view of such legal proceeding or threat thereof;
(d) at the election of the Company or Buyer, in the
event that the Closing has not occurred by December 31, 1999; and
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(e) at any time on or prior to the Closing Date, by
mutual written consent of the Company and Buyer.
7.2 Post-Termination Obligations. If this Agreement is terminated
pursuant to Section 7.1, this Agreement shall become void and of no further
force and effect, except for this Section 7.2 and Sections 4.4(b) (Confidential
Information), 8.2 (Announcements), 8.4 (Governing Law), 8.6 (Notice), 8.7
(Expenses), 8.9 (Entire Agreement), and 8.11 (Headings), and none of the
parties hereto shall have any liability in respect of such termination, except
that any party shall be liable for any intentional or willful violation of the
representations, warranties, covenants or agreements of such party contained in
this Agreement.
ARTICLE VIII
Miscellaneous
8.1 Further Action. If, at any time following the Closing, any
further action is determined by Buyer to be necessary or desirable to carry out
the purposes of this Agreement or to vest in Buyer all right, title and
interest in and to the Assets, the Company shall take such action.
8.2 Announcements. Prior to Closing, none of the parties hereto
shall issue any press release, place any advertisement or make any other public
statement relating to or in connection with this Agreement or the matters
contained herein without obtaining the prior approval of all parties hereto as
to the content and manner of presentation and publication thereof, which
approval shall not be unreasonably withheld or delayed.
8.3 Assignment; Parties in Interest. Except as expressly provided
herein, the rights and obligations of a party hereunder may not be assigned,
transferred or encumbered without the prior written consent of the other
parties. Buyer may assign its rights and obligations hereunder, subject to a
guaranty from Buyer of the assignee's performance thereof, to an affiliate of
Buyer, for purposes of consummating the transactions contemplated herein. This
Agreement shall be binding upon, inure to the benefit of, and be enforceable by
the respective successors and permitted assigns of the parties hereto. Nothing
contained herein shall be deemed to confer upon any other person or entity any
right or remedy under or by reason of this Agreement.
8.4 Law Governing Agreement. This Agreement shall be construed
and interpreted according to the internal laws of the State of Georgia,
excluding any choice of law rules that may direct the application of the laws
of another jurisdiction.
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8.5 Amendment and Modification. The parties may amend, modify and
supplement this Agreement in such manner as may be agreed upon in writing among
them.
8.6 Notice. All notices, requests, demands and other
communications hereunder shall be given in writing and shall be: (a) personally
delivered; (b) sent by telecopier, facsimile transmission or other electronic
means of transmitting written documents; or (c) sent to the parties at their
respective addresses indicated herein by registered or certified U.S. mail,
return receipt requested and postage prepaid, or by private overnight mail
courier service. The respective addresses to be used for all such notices,
demands or requests are as follows:
(a) If to Clear or Buyer, to:
Clear Communications Group, Inc.
000 Xxxxxxxxxx Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
with a copy to:
Xxxxx, Xxxxxxxx & Xxxxxxx, LLP
1230 Peachtree Road, X.X.
Xxxxxxxxx XX, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx Xxxxxxx Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
(b) If to the Company or XxXxxxxx, to:
XxXxxxxx Telecommunications Group, Inc.
0000 Xxxx Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx XxXxxxxx
Facsimile:
with a copy to:
Xxxxxxxx, Xxxxxxx & Salmon, P.L.C.
Two North Central Avenue
Suite 1600
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Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxx, Esq.
Facsimile: (000) 000-0000
If personally delivered, such communication shall be deemed delivered
upon actual receipt; if electronically transmitted pursuant to this paragraph,
such communication shall be deemed delivered the next business day after
transmission (and sender shall bear the burden of proof of delivery); if sent
by overnight courier pursuant to this paragraph, such communication shall be
deemed delivered upon receipt; and if sent by U.S. mail pursuant to this
paragraph, such communication shall be deemed delivered as of the date of
delivery indicated on the receipt issued by the relevant postal service, or, if
the addressee fails or refuses to accept delivery, as of the date of such
failure or refusal. Any party to this Agreement may change its address for the
purposes of this Agreement by giving notice thereof in accordance with this
Section 8.6.
8.7 Expenses. Regardless of whether or not the transactions
contemplated hereby are consummated, each of the parties shall bear its own
legal expenses and the expenses of its agents in connection with the
transactions contemplated hereby.
8.8 Entire Agreement. This Agreement, including the Exhibits and
Schedules attached hereto (which Exhibits and Schedules are hereby incorporated
herein by reference and made a part hereof), embodies the entire agreement
among the parties with respect to the transactions contemplated hereby, and
supersedes all prior agreements and understandings among the parties with
respect thereto, provided, however, that in the event this Agreement is
terminated pursuant to Article VII hereof, the obligations of the parties under
Section 12 of that certain Letter of Intent, dated July 19, 1999, shall revive
and be reinstated, such revival to be effective only upon the termination of
this Agreement, as if this Agreement had not been executed.
8.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.10 Headings. The table of contents and article and section
headings herein are for convenience of reference only, do not constitute a part
of this Agreement, and shall not be deemed to limit or affect any of the
provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized representatives to execute this Agreement as of the date first above
written.
CLEAR HOLDINGS, INC.
By:/s/ Xxxxxxx X. Xxxxxxxx, Xx.
--------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx, Xx.
Title: Chief Executive Officer
CLEAR COMMUNICATIONS GROUP, INC.
By:/s/ Xxxxxxx X. Xxxxxxxx, Xx.
--------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx, Xx.
Title: Chief Executive Officer
XXXXXXXX TELECOMMUNICATIONS GROUP, INC.
By:/s/ Xxxxxx XxXxxxxx
--------------------------------------------------
Name: Xxxxxx XxXxxxxx
Title: President and Chief Executive Officer
XXXXXXXX:
/s/ Xxxxxx XxXxxxxx
----------------------------------------------------
Typed Name: Xxxxxx XxXxxxxx
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