Exhibit 2.1
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STOCK PURCHASE AGREEMENT
among:
TERAYON COMMUNICATION SYSTEMS, INC.,
a Delaware corporation;
DIGITAL TRANSMISSION EQUIPMENT,
a California corporation;
THE X.X. XXXXXX COMPANIES, INC.,
a California corporation;
and
XXXXXX X. XXXXXX,
an individual
_________________
Dated as of September 27, 2000
_________________
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TABLE OF CONTENTS
Page
Section 1. Sale and Purchase of Shares; Related Transactions.................. 1
1.1 Sale and Purchase of Shares........................................ 1
1.2 Purchase Price..................................................... 1
1.3 Closing............................................................ 2
Section 2. Representations and Warranties of Digitrans and the Selling
Shareholder........................................................ 3
2.1 Due Organization; No Subsidiaries; Etc............................. 3
2.2 Articles of Incorporation and Bylaws; Records...................... 4
2.3 Capitalization, Etc................................................ 5
2.4 Financial Statements............................................... 6
2.5 Absence of Changes................................................. 6
2.6 Title to Assets.................................................... 8
2.7 Bank Accounts...................................................... 8
2.8 Receivables; Major Customers....................................... 9
2.9 Inventory.......................................................... 9
2.10 Equipment, Etc..................................................... 10
2.11 Real Property...................................................... 10
2.12 Proprietary Assets................................................. 11
2.13 Contracts.......................................................... 12
2.14 Liabilities; Major Suppliers....................................... 14
2.15 Compliance With Legal Requirements................................. 15
2.16 Governmental Authorizations........................................ 16
2.17 Tax Matters........................................................ 17
2.18 Employee and Labor Matters......................................... 18
2.19 Benefit Plans; ERISA............................................... 19
2.20 Environmental Matters.............................................. 21
2.21 Sale of Products; Performance of Services.......................... 23
2.23 Insurance.......................................................... 24
2.24 Related Party Transactions......................................... 25
2.25 Certain Payments, Etc.............................................. 25
i.
TABLE OF CONTENTS
Page
2.26 Proceedings; Orders................................................ 26
2.27 Authority; Binding Nature of Agreements............................ 27
2.28 Non-Contravention; Consents........................................ 27
2.29 Brokers............................................................ 28
2.30 The Selling Shareholder............................................ 28
2.31 Xxxxxx............................................................. 29
2.32 Full Disclosure.................................................... 29
Section 3. Representations and Warranties of the Purchaser.................... 30
3.1 Due Organization; No Subsidiaries; Etc............................. 30
3.2 SEC Filings; Financial Statements.................................. 30
3.3 Authority; Binding Nature of Agreement............................. 31
3.4 Non-Contravention.................................................. 31
3.5 Valid Issuance..................................................... 32
3.6 Brokers............................................................ 32
Section 4. Pre-Closing Covenants of Digitrans, the Selling Shareholder and
Xxxxxx............................................................. 32
4.1 Access and Investigation........................................... 32
4.2 Operation of Business.............................................. 32
4.3 Certain Filings and Consents....................................... 34
4.4 Notification; Updates to Disclosure Schedule....................... 35
4.5 Payment of Indebtedness by Related Parties......................... 36
4.6 No Negotiation..................................................... 36
Section 5. Additional Covenants of the Parties................................ 36
5.1 Employee Retention Program......................................... 36
5.2 Registration Statement............................................. 36
5.3 Disclosures, Press Releases........................................ 36
Section 6. Conditions Precedent to the Purchaser's Obligation to Close........ 37
6.1 Satisfactory Completion of Pre-Acquisition Review.................. 37
6.2 Accuracy of Representations........................................ 37
6.3 Performance of Obligations......................................... 37
ii.
TABLE OF CONTENTS
Page
6.4 Consents and Approvals............................................. 37
6.5 Company Debt....................................................... 38
6.6 Additional Documents............................................... 38
6.7 No Adverse Change.................................................. 38
6.8 No Proceedings..................................................... 38
6.9 No Claim Regarding Stock Ownership or Sale Proceeds................ 39
6.10 No Prohibition..................................................... 39
Section 7. Conditions Precedent to the Selling Shareholder's Obligation to
Close.............................................................. 39
7.1 Accuracy of Representations........................................ 39
7.2 Payment............................................................ 39
7.3 Performance of Covenants........................................... 39
7.4 Additional Documents............................................... 39
7.5 No Adverse Change.................................................. 40
7.6 No Injunction...................................................... 40
7.7 No Proceedings..................................................... 40
7.8 No Prohibition..................................................... 40
Section 8. Termination........................................................ 40
8.1 Termination Events................................................. 40
8.2 Termination Procedures............................................. 40
8.3 Effect of Termination.............................................. 41
8.4 Termination Fees................................................... 41
8.5 Nonexclusivity of Termination Rights............................... 41
Section 9. Indemnification, Etc............................................... 41
9.1 Survival of Representations and Covenants.......................... 41
9.2 Interest........................................................... 42
9.3 Indemnification by Digitrans and the Selling Shareholder........... 42
9.4 Limit.............................................................. 43
9.5 Reduction.......................................................... 43
9.6 Threshold.......................................................... 43
iii.
TABLE OF CONTENTS
Page
9.7 No Contribution.................................................... 44
9.8 Nonexclusivity of Indemnification Remedies......................... 44
9.9 Exercise of Remedies by Indemnitees Other Than the Purchaser....... 45
9.10 Indemnification by the Purchaser................................... 45
9.11 Limit.............................................................. 45
9.12 Reduction.......................................................... 45
9.13 Threshold.......................................................... 46
9.14 Interest........................................................... 46
Section 10. Miscellaneous Provisions........................................... 46
10.1 Joint and Several Liability........................................ 46
10.2 Further Assurances................................................. 46
10.3 Fees and Expenses.................................................. 46
10.4 Attorneys' Fees.................................................... 48
10.5 Notices............................................................ 48
10.6 Publicity.......................................................... 49
10.7 Time of the Essence................................................ 49
10.8 Headings........................................................... 49
10.9 Counterparts....................................................... 50
10.10 Governing Law...................................................... 50
10.11 Successors and Assigns............................................. 50
10.12 Remedies Cumulative; Specific Performance.......................... 50
10.13 Waiver............................................................. 51
10.14 Amendments......................................................... 51
10.15 Severability....................................................... 51
10.16 Parties in Interest................................................ 51
10.17 Entire Agreement................................................... 51
10.18 Construction....................................................... 52
10.19 Consents........................................................... 52
iv.
EXHIBITS
Exhibit A: Certain Definitions
Exhibit B: Indemnification Escrow Agreement
Exhibit C: Form of Key Employee Agreement
Exhibit D: Form of Noncompetition Agreement
Exhibit E: List of Key Employees
Exhibit F: Employee Retention Program
Exhibit G: Form of Opinion of Xxxxxx & Xxxxxx
Exhibit H: Form of Opinion of Xxxxxx Godward LLP
Exhibit I: Form of General Release
Exhibit J: List of General Instrument Agreements to be Assigned to Purchaser
Exhibit K: Transition Services Agreement
v.
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement is entered into as of September 27, 2000 (the
"Effective Date"), by and among: Terayon Communication Systems, Inc., a Delaware
corporation (the "Purchaser"), Digital Transmission Equipment, a California
corporation ("Digitrans"), The X.X. Xxxxxx Companies, Inc., a California
corporation (the "Selling Shareholder") and Xxxxxx X. Xxxxxx, an individual
("Xxxxxx"). The Purchaser, Digitrans, the Selling Shareholder and Xxxxxx are
sometimes hereinafter individually referred to as a "Party" and collectively as
the "Parties". Certain capitalized terms used in this Agreement are defined on
Exhibit A.
Recitals
A. The Selling Shareholder owns 1,000 shares of the common stock, par
value $1,000.00, of Digitrans (the "Shares"), which constitute all of the
outstanding capital stock of Digitrans.
B. The Selling Shareholder wishes to sell the Shares to the Purchaser on
the terms set forth in this Agreement.
C. All references herein to Digitrans shall include the predecessor
operating division of The X.X. Xxxxxx Companies, Inc. formerly known as
Digitrans and now operating as Digital Transmission Equipment.
Agreement
The Purchaser, Digitrans, the Selling Shareholder and Xxxxxx, intending to
be legally bound, agree as follows:
SECTION 1. Sale and Purchase of Shares; Related Transactions
1.1 Sale and Purchase of Shares. At the Closing, the Selling Shareholder
shall sell, assign, transfer and deliver the Shares to the Purchaser, and the
Purchaser shall purchase the Shares from the Selling Shareholder, on the terms
and subject to the conditions set forth in this Agreement. The Selling
Shareholder and the Purchaser adopt this Agreement as a plan of reorganization
under Internal Revenue Code Section 368(a).
1.2 Purchase Price.
(a) The aggregate purchase price payable by the Purchaser for the
Shares shall be $14,206,659 (the "Purchase Price"), payable by delivery of
shares of the common stock, par value $0.001 (the "Common Stock"), of the
Purchaser.
(b) If and only if, the aggregate value of the Acquisition Shares (as
defined in Section 1.3(b)(ii)) is less than the Purchase Price on the date that
the registration statement described in Section 5.2 is declared effective by the
Securities and Exchange Commission (the "Registration Statement Effective
Date"), the Purchaser shall pay the Selling Shareholder additional consideration
(the "Additional Consideration") in an amount equal to the difference between
(i) the Purchase Price and (ii) the aggregate value of the Acquisition Shares
(as defined in Section 1.3(b)(ii)) on the Registration Statement Effective Date.
1.
(c) The Purchaser shall pay the Additional Consideration, if any, by
issuing additional shares of the Common Stock of the Purchaser. The number of
shares of the Common Stock of the Purchaser so issuable shall be calculated
based on the Average Terayon Stock Price on the Registration Statement Effective
Date. The Purchaser shall issue, transfer and deliver the shares representing
the Additional Consideration to the Selling Shareholder within ten (10) business
days after the Registration Statement Effective Date.
1.3 Closing.
(a) The closing of the sale of the Shares to the Purchaser (the
"Closing") shall take place at the offices of the Purchaser at 4:00 p.m.
(California time) on September 27, 2000, provided that each of the conditions
set forth in Sections 6 and 7 has been fulfilled or waived, or at such other
place, date or time as the Purchaser and the Selling Shareholder shall mutually
agree. For purposes of this Agreement, the "Closing Date" shall mean the time
and date as of which the Closing actually takes place.
(b) At the Closing:
(i) Digitrans shall deliver to the Purchaser the stock
certificates representing the Shares, duly endorsed (or accompanied by duly
executed stock powers) and with signatures guaranteed by a commercial bank or by
a member firm of the New York Stock Exchange.
(ii) The Purchaser shall issue to the Selling Shareholder the
Acquisition Shares less the Indemnification Escrow Shares (as defined below).
The "Acquisition Shares" shall mean the number of shares of the Common Stock of
the Purchaser equal to the Purchase Price in value, calculated based on the
Average Terayon Stock Price on the day immediately preceding the Closing Date.
(iii) The Purchaser shall deposit the number of shares of the
Common Stock of the Purchaser equal to ten percent (10%) of the Purchase Price
in value, calculated based on the Average Terayon Stock Price on the day
immediately preceding the Closing Date (the "Indemnification Escrow Shares") in
an escrow account (the "Indemnification Escrow Account") to be established
pursuant to an Indemnification Escrow Agreement in the form of Exhibit B.
(iv) The Purchaser shall deposit the number of shares of the
Common Stock of the Purchaser equal to $2,900,000 in value, calculated based on
the Average Terayon Stock Price on the day immediately preceding the Closing
Date (the "Retention Escrow Shares") in an escrow account (the "Retention Escrow
Account") to be established pursuant to a Retention Escrow Agreement in the form
of Exhibit F.
(v) The Purchaser shall allocate $293,341 for the employee
retention program set forth in Exhibit F.
(vi) Each of the Key Employees identified on Exhibit E shall
execute and deliver to the Purchaser a Key Employee Agreement in the form of
Exhibit C and a Noncompetition Agreement in the form of Exhibit D.
2.
(vii) The Selling Shareholder shall execute and deliver to the
Purchaser and Digitrans a General Release in the form of Exhibit I;
(viii) The Selling Shareholder and the Purchaser shall enter into
a Transition Services Agreement substantially in the form of Exhibit K.
(ix) Digitrans, the Selling Shareholder and Xxxxxx shall
execute and deliver to the Purchaser a certificate (the "Digitrans Closing
Certificate") setting forth that: (A) each of the representations and warranties
made by Digitrans, the Selling Shareholder and Xxxxxx in this Agreement was
accurate in all respects as of the date of this Agreement, (B) except as
expressly set forth in the Digitrans Closing Certificate, each of the
representations and warranties made by Digitrans, the Selling Shareholder and
Xxxxxx in this Agreement is accurate in all respects as of the Closing Date as
if made on the Closing Date, (C) each of the covenants and obligations that
Digitrans, the Selling Shareholder and Xxxxxx are required to have complied with
or performed pursuant to this Agreement at or prior to the Closing has been duly
complied with and performed in all respects, and (D) except as expressly set
forth in the Digitrans Closing Certificate, each of the conditions set forth in
Sections 6.4, 6.7, 6.8 and 6.9 has been satisfied in all respects;
(x) The Purchaser shall execute and deliver to Digitrans a
certificate (the "Purchaser Closing Certificate") setting forth that: (A) each
of the representations and warranties made by the Purchaser in this Agreement
was accurate in all respects as of the date of this Agreement, (B) except as
expressly set forth in the Purchaser Closing Certificate, each of the
representations and warranties made by the Purchaser in this Agreement is
accurate in all respects as of the Closing Date as if made on the Closing Date,
(C) each of the covenants and obligations that the Purchaser is required to have
complied with or performed pursuant to this Agreement at or prior to the Closing
has been duly complied with and performed in all respects, and (D) except as
expressly set forth in the Purchaser Closing Certificate, each of the conditions
set forth in Sections 7.5, 7.6 and 7.7 has been satisfied in all respects; and
(xi) Each officer and director of Digitrans shall resign from
his or her position as a director and/or officer of Digitrans.
SECTION 2. Representations and Warranties of Digitrans and the Selling
Shareholder
Digitrans, the Selling Shareholder and Xxxxxx jointly and severally
represent and warrant, to and for the benefit of the Indemnitees, as follows:
2.1 Due Organization; No Subsidiaries; Etc.
(a) Digitrans is a corporation duly organized, validly existing and
in good standing under the laws of the State of California and has all necessary
power and authority:
(i) to conduct its business in the manner in which its business
is currently being conducted and in the manner in which its business is proposed
to be conducted;
3.
(ii) to own and use its assets in the manner in which its
assets are currently owned and used and in the manner in which its assets are
proposed to be owned and used; and
(iii) to perform its obligations under all Digitrans Contracts.
(b) Except as set forth in Part 2.1 of the Disclosure Schedule,
Digitrans has not conducted any business under or otherwise used, for any
purpose or in any jurisdiction, any fictitious name, assumed name, trade name or
other name, other than the names "Digital Transmission Equipment" or
"Digitrans".
(c) Digitrans is not and has not been required to be qualified,
authorized, registered or licensed to do business as a foreign corporation in
any jurisdiction other than the jurisdictions identified in Part 2.1 of the
Disclosure Schedule, except where the failure to be so qualified, authorized,
registered or licensed has not had and will not have a Material Adverse Effect
on Digitrans. Digitrans is in good standing as a foreign corporation in each of
the jurisdictions identified in Part 2.1 of the Disclosure Schedule.
(d) Part 2.1 of the Disclosure Schedule accurately sets forth (i) the
names of the members of Digitrans' board of directors, (ii) the names of the
members of each committee of Digitrans' board of directors and (iii) the names
and titles of Digitrans' officers.
(e) Neither Digitrans nor its sole shareholder has ever approved, or
commenced any proceeding or made any election contemplating, the dissolution or
liquidation of Digitrans or the winding up or cessation of Digitrans' business
or affairs.
(f) Digitrans has no subsidiaries, and Digitrans has never owned,
beneficially or otherwise, any shares or other securities of, or any direct or
indirect interest of any nature in, any Entity.
2.2 Articles of Incorporation and Bylaws; Records.
(a) Digitrans has delivered to the Purchaser accurate and complete
copies of:
(i) Digitrans' articles of incorporation and bylaws, including
all amendments thereto;
(ii) the stock records of Digitrans; and
(iii) the minutes and other records of the meetings and other
proceedings (including any actions taken by written consent or otherwise without
a meeting) of Digitrans' shareholder, Digitrans' board of directors and all of
the committees of Digitrans' board of directors.
There have been no meetings or other proceedings of Digitrans' shareholder,
Digitrans' board of directors or any of the committees of Digitrans' board of
directors that are not fully reflected in such minutes or other records.
4.
(b) There has not been any violation of any of the provisions of
Digitrans' articles of incorporation or bylaws or of any resolution adopted by
Digitrans' shareholder, Digitrans' board of directors or any committee of
Digitrans' board of directors; and, to the Knowledge of Digitrans, the Selling
Shareholder and Xxxxxx, no event has occurred, and no condition or circumstance
exists, that is reasonably likely to (with or without notice or lapse of time)
constitute or result directly or indirectly in such a violation.
(c) To the Knowledge of Digitrans, the Selling Shareholder and
Xxxxxx, the books of account, stock records, minute books and other records of
Digitrans are accurate, up-to-date and complete, and have been maintained in
accordance with sound and prudent business practices. All of the records of
Digitrans are in the actual possession and direct control of Digitrans.
2.3 Capitalization, Etc.
(a) The authorized capital stock of Digitrans consists of 1,000
shares of common stock having a par value of $1.00 per share, of which 1,000
shares (constituting all of the Shares) have been issued and are outstanding.
The Selling Shareholder owns all of the Shares beneficially and of record.
(b) The Selling Shareholder has, and the Purchaser will acquire at
the Closing, good and valid title to the Shares free and clear of any
Encumbrances. The Selling Shareholder has delivered to the Purchaser an accurate
and complete copy of the stock certificate evidencing the Shares.
(c) All of the Shares have been duly authorized and validly issued,
and are fully paid and nonassessable.
(d) All of the Shares have been issued in full compliance with all
applicable securities laws and, to the Knowledge of Digitrans, the Selling
Shareholder and Xxxxxx, all other applicable Legal Requirements and (ii) all
requirements set forth in applicable Digitrans Contracts.
(e) Except as set forth in Part 2.3 of the Disclosure Schedule, there
is no:
(i) outstanding subscription, option, call, warrant or right
(whether or not currently exercisable) to acquire any shares of the capital
stock or other securities of Digitrans;
(ii) outstanding security, instrument or obligation that is or
may become convertible into or exchangeable for any shares of the capital stock
or other securities of Digitrans;
(iii) Digitrans Contract under which Digitrans is or is
reasonably likely to become obligated to sell or otherwise issue any shares of
its capital stock or any other securities; or
5.
(iv) to the Knowledge of Digitrans, the Selling Shareholder and
Xxxxxx, condition or circumstance that is reasonably likely to directly or
indirectly give rise to or provide a basis for the assertion of a claim by any
Person to the effect that such Person is entitled to acquire or receive any
shares of capital stock or other securities of Digitrans.
(f) Digitrans has never repurchased, redeemed or otherwise reacquired
any shares of capital stock or other securities.
2.4 Financial Statements.
(a) Digitrans has delivered to the Purchaser the following financial
statements and notes (collectively, the "Digitrans Financial Statements"):
(i) the unaudited balance sheet of Digitrans as of December 31,
1999 and 1998, and the related unaudited statements of operations, changes in
stockholders' equity and cash flows of Digitrans for the years then ended,
together with the notes thereto; and
(ii) the unaudited balance sheet of Digitrans as of June 30,
2000 (the "Unaudited Interim Balance Sheet"), and the related unaudited
statements of operations, changes in stockholders' equity and cash flows of
Digitrans for the six (6) months then ended, together with the notes thereto.
(b) All of the Digitrans Financial Statements are accurate and
complete in all respects, and the dollar amount of each line item included in
the Digitrans Financial Statements is accurate in all material respects. The
financial statements and notes referred to in Section 2.4(a)(i) present fairly
the financial position of Digitrans as of the dates thereof and the results of
operations, changes in stockholders' equity and cash flows of Digitrans for the
years then ended. The financial statements and notes referred to in Section
2.4(a)(ii) present fairly the financial position of Digitrans as of the date
thereof and the results of operations, changes in stockholders' equity and cash
flows of Digitrans for the periods covered thereby. The Digitrans Financial
Statements have been prepared in accordance with generally accepted accounting
principles (except for inventory, warranty, bad debt and reserves, which are
valued at $0), applied on a consistent basis throughout the periods covered.
2.5 Absence of Changes. Except as set forth in Part 2.5 of the Disclosure
Schedule, since June 30, 2000:
(a) there has not been any Material Adverse Change in Digitrans'
business, condition, assets, liabilities, operations, financial performance, net
loss or prospects (or in any aspect or portion thereof), and no event has
occurred that is reasonably likely to have a Material Adverse Effect on
Digitrans' business, condition, assets, liabilities, operations, financial
performance, net income or prospects (or on any aspect or portion thereof);
(b) there has not been any loss, damage or destruction to, or any
interruption in the use of, any of Digitrans' assets (whether or not covered by
insurance) that materially and adversely affects the financial condition,
business or prospects of Digitrans;
6.
(c) Digitrans has not (i) declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any shares of capital
stock, or (ii) repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities;
(d) Digitrans has not sold or otherwise issued any shares of capital
stock or any other securities;
(e) Digitrans has not amended its articles of incorporation or bylaws
and has not effected or been a party to any Acquisition Transaction,
reclassification of shares, stock split, reverse stock split or similar
transaction;
(f) Digitrans has not purchased or otherwise acquired any asset from
any other Person, except for supplies acquired by Digitrans in the Ordinary
Course of Business;
(g) Digitrans has not leased or licensed any asset from any other
Person;
(h) Digitrans has not made any capital expenditure exceeding $10,000;
(i) Digitrans has not sold or otherwise transferred, and has not
leased or licensed, any asset to any other Person except for products sold by
Digitrans from its inventory in the Ordinary Course of Business;
(j) Digitrans has not written off as uncollectible, or established
any extraordinary reserve with respect to, any account receivable or other
indebtedness;
(k) Digitrans has not pledged or hypothecated any of its assets or
otherwise permitted any of its assets to become subject to any Encumbrance;
(l) Digitrans has not made any loan or advance to any other Person;
(m) Digitrans has not (i) established or adopted any Employee Benefit
Plan, or (ii) paid any bonus or made any profit-sharing or similar payment to,
or increased the amount of the wages, salary, commissions, fringe benefits or
other compensation or remuneration payable to, any of its directors, officers or
employees;
(n) Digitrans has not entered into, and neither Digitrans nor any of
the assets owned or used by Digitrans has become bound by, any Contract that is
not an Excluded Contract;
(o) no Contract by which Digitrans or any of the assets owned or used
by Digitrans is or was bound, or under which Digitrans has or had any rights or
interest, has been amended or terminated;
(p) Digitrans has not incurred, assumed or otherwise become subject
to any Liability, other than accounts payable (of the type required to be
reflected as current liabilities in the "liabilities" column of a balance sheet
prepared in accordance with GAAP) incurred by Digitrans in the Ordinary Course
of Business;
7.
(q) Digitrans has not discharged any Encumbrance or discharged or
paid any indebtedness or other Liability, except for accounts payable that (i)
are reflected as current liabilities in the "liabilities" column of the
Unaudited Interim Balance Sheet or have been incurred by Digitrans since June
30, 2000 in the Ordinary Course of Business, and (ii) have been discharged or
paid in the Ordinary Course of Business;
(r) Digitrans has not forgiven any debt or otherwise released or
waived any right or claim;
(s) Digitrans has not changed any of its methods of accounting or
accounting practices in any respect;
(t) Digitrans has not entered into any transaction or taken any other
action outside the Ordinary Course of Business; and
(u) None of Digitrans, the Selling Shareholder or Xxxxxx has agreed
or committed (in writing, electronically or verbally), or attempted, to take any
of the actions referred to in clauses "(c)" through "(t)" above.
2.6 Title to Assets.
(a) Digitrans owns, and has good, valid and marketable title to, all
assets purported to be owned by it, including:
(i) all assets reflected on the Unaudited Interim Balance Sheet
(except for inventory sold by Digitrans since June 30, 2000 in the Ordinary
Course of Business);
(ii) all assets acquired by Digitrans since June 30, 2000
(except for inventory sold by Digitrans since June 30, 2000 in the Ordinary
Course of Business);
(iii) all assets referred to in Parts 2.8, 2.9, 2.10 and 2.12 of
the Disclosure Schedule and all of Digitrans' rights under Digitrans Contracts;
and
(iv) all other assets reflected in Digitrans' books and records
as being owned by Digitrans.
Except as set forth in Part 2.6 of the Disclosure Schedule, all of said assets
are owned by Digitrans free and clear of any Encumbrances.
(b) Part 2.6 of the Disclosure Schedule identifies all assets that
are being leased or licensed to Digitrans.
2.7 Bank Accounts. Part 2.7 of the Disclosure Schedule accurately sets
forth, with respect to each account maintained by or for the benefit of
Digitrans at any bank or other financial institution:
(a) the name and location of the institution at which such account is
maintained;
8.
(b) the name in which such account is maintained and the account
number of such account;
(c) a description of such account and the purpose for which such
account is used;
(d) the current balance in such account;
(e) the rate of interest being earned on the funds in such account;
and
(f) the names of all individuals authorized to draw on or make
withdrawals from such account.
There are no safe deposit boxes or similar arrangements maintained by or for the
benefit of Digitrans.
2.8 Receivables; Major Customers.
(a) Part 2.8 of the Disclosure Schedule provides an accurate (meaning
there is no error in any of the items reported therein greater than $2,500) and
complete breakdown and aging of all accounts receivable, notes receivable and
other receivables of Digitrans as of June 30, 2000.
(b) Except as set forth in Part 2.8 of the Disclosure Schedule, all
existing accounts receivable of Digitrans (including those accounts receivable
reflected on the Unaudited Interim Balance Sheet that have not yet been
collected and those accounts receivable that have arisen since June 30, 2000 and
have not yet been collected):
(i) represent valid obligations of customers of Digitrans
arising from bona fide transactions entered into in the Ordinary Course of
Business; and
(ii) are current and, to the Knowledge of Digitrans, the Selling
Shareholder and Xxxxxx, xxxx be collected in full (without any counterclaim or
setoff) on or before August 31, 2000.
(c) Part 2.8 of the Disclosure Schedule accurately identifies, and
provides an accurate and complete breakdown of the revenues received from, each
customer or other Person that accounted for more than $10,000 of the gross
revenues of Digitrans in any of 1998, 1999 or the six (6) months ended June 30,
2000. None of Digitrans, the Selling Shareholder or Xxxxxx has actually received
any notice or other communication (in writing, electronically or verbally), or
has actually received any other information, indicating that any customer or
other Person identified in Part 2.8 of the Disclosure Schedule may cease dealing
with Digitrans or may otherwise reduce the volume of business transacted by such
Person with Digitrans below historical levels.
2.9 Inventory. Part 2.9 of the Disclosure Schedule provides an accurate
(meaning there is no error in any of the items reported therein greater than
$10,000) and complete breakdown of all inventory (including raw materials, work
in process and finished goods) of
9.
Digitrans as of June 30, 2000. All of Digitrans' existing inventory (including
all inventory that is reflected on the Unaudited Interim Balance Sheet and that
has not been disposed of by Digitrans since June 30, 2000):
(a) is of such quality and quantity as to be usable and saleable by
Digitrans in the Ordinary Course of Business;
(b) has been priced at the lower of cost or market value using the
weighted cost "first-in, first-out" method; and
(c) is free of any defect or deficiency.
The inventory levels maintained by Digitrans (i) are not excessive in light of
Digitrans' normal operating requirements, and; (ii) are reasonably adequate for
the conduct of Digitrans' operations in the Ordinary Course of Business.
2.10 Equipment, Etc.
(a) Part 2.10 of the Disclosure Schedule accurately identifies all
equipment, furniture, fixtures, improvements and other tangible assets (other
than inventory, miscellaneous office supplies used in the Ordinary Course of
Business and assets valued at less than $100 each and $2,500 in the aggregate)
owned by Digitrans, and accurately sets forth the date of acquisition, original
cost and book value of each of said assets. Part 2.10 also accurately
identifies all tangible assets leased to Digitrans.
(b) Each asset identified or required to be identified in Part 2.10
of the Disclosure Schedule:
(i) to the Knowledge of Digitrans, the Selling Shareholder and
Xxxxxx, is structurally sound, free of material defects and deficiencies and in
good condition and repair (ordinary wear and tear excepted);
(ii) complies in all respects with, and is being operated and
otherwise used in full compliance with, all applicable Legal Requirements; and
(iii) is adequate for the uses to which it is being put.
The assets identified in Part 2.10 of the Disclosure Schedule are adequate for
the conduct of Digitrans' business in the manner in which such business is
currently being conducted.
2.11 Real Property. Digitrans does not own any real property or any
interest in real property, except for the leaseholds created under the real
property leases identified in Part 2.13 of the Disclosure Schedule. Part 2.11
of the Disclosure Schedule provides an accurate and complete description of the
premises covered by said leases and the facilities located on such premises.
Digitrans enjoys peaceful and undisturbed possession of such premises.
10.
2.12 Proprietary Assets.
(a) Part 2.12(a)(i) of the Disclosure Schedule sets forth, with
respect to each Digitrans Proprietary Asset registered with any Governmental
Body or for which an application has been filed with any Governmental Body, (i)
a brief description of such Proprietary Asset, and (ii) the names of the
jurisdictions covered by the applicable registration or application. Part
2.12(a)(ii) of the Disclosure Schedule identifies and provides a brief
description of all other Digitrans Proprietary Assets owned by Digitrans. Part
2.12(a)(iii) of the Disclosure Schedule identifies and provides a brief
description of each Proprietary Asset licensed to Digitrans by any Person
(except for any Proprietary Asset that is licensed to Digitrans under any third
party software license generally available to the public at a cost of less than
$10,000), and identifies the license agreement under which such Proprietary
Asset is being licensed to Digitrans. Except as set forth in Part 2.12(a)(iv) of
the Disclosure Schedule, Digitrans has good, valid and marketable (subject to
the restrictions in the License Agreements) title to all of the Digitrans
Proprietary Assets identified in Parts 2.12(a)(i) and 2.12(a)(ii) of the
Disclosure Schedule, free and clear of all liens and other Encumbrances, and has
a valid right to use all Proprietary Assets identified in Part 2.12(a)(iii) of
the Disclosure Schedule. Except as set forth in Part 2.12(a)(v) of the
Disclosure Schedule, Digitrans is not obligated to make any payment to any
Person for the use of any Digitrans Proprietary Asset. Except as set forth in
Part 2.12(a)(vi) of the Disclosure Schedule, Digitrans has not developed jointly
with any other Person any Digitrans Proprietary Asset with respect to which such
other Person has any rights.
(b) Digitrans has taken all measures and precautions reasonably
necessary to protect and maintain the confidentiality and secrecy of all
Digitrans Proprietary Assets (except Digitrans Proprietary Assets whose value
would be unimpaired by public disclosure) and otherwise to maintain and protect
the value of all Digitrans Proprietary Assets. Except as set forth in Part
2.12(b) of the Disclosure Schedule, Digitrans has not (other than pursuant to
license agreements identified in Part 2.13 of the Disclosure Schedule) disclosed
or delivered to any Person, or permitted the disclosure or delivery to any
Person of, (i) the source code, or any portion or aspect of the source code, of
any Digitrans Proprietary Asset, or (ii) the object code, or any portion or
aspect of the object code, of any Digitrans Proprietary Asset.
(c) None of the Digitrans Proprietary Assets infringes or conflicts
with any Proprietary Asset owned or used by any other Person. Digitrans is not
infringing, misappropriating or making any unlawful use of, and Digitrans has
not at any time infringed, misappropriated or made any unlawful use of, or
actually received any notice or other communication (in writing, electronically
or verbally) of any actual, alleged, possible or potential infringement,
misappropriation or unlawful use of, any Proprietary Asset owned or used by any
other Person. To the Knowledge of Digitrans, the Selling Shareholder and Xxxxxx,
no other Person is infringing, misappropriating or making any unlawful use of,
and no Proprietary Asset owned or used by any other Person infringes or
conflicts with, any Digitrans Proprietary Asset.
(d) Except as set forth in Part 2.12(d) of the Disclosure Schedule:
(i) each Digitrans Proprietary Asset conforms in all material respects with any
specification, documentation, performance standard, representation or statement
made or provided with respect thereto by or on behalf of Digitrans; and (ii)
there has not been any claim by any customer or
11.
other Person alleging that any Digitrans Proprietary Asset (including each
version thereof that has ever been licensed or otherwise made available by
Digitrans to any Person) does not conform in all material respects with any
specification, documentation, performance standard, representation or statement
made or provided by or on behalf of Digitrans, and, to the Knowledge of
Digitrans, the Selling Shareholder and Xxxxxx, there is no basis for any such
claim. Digitrans has established reasonably adequate reserves on the Unaudited
Interim Balance Sheet to cover all costs associated with any obligations that
Digitrans may have with respect to the correction or repair of programming
errors or other defects in the Digitrans Proprietary Assets.
(e) The Digitrans Proprietary Assets constitute all the Proprietary
Assets necessary to enable Digitrans to conduct its business in the manner in
which such business has been and is being conducted. Except as set forth in Part
2.12(e) of the Disclosure Schedule, (i) Digitrans has not licensed any of the
Digitrans Proprietary Assets to any Person on an exclusive basis, and (ii)
Digitrans has not entered into any covenant not to compete or Contract limiting
its ability to exploit fully any of its Proprietary Assets or to transact
business in any market or geographical area or with any Person.
(f) Except as set forth in Part 2.12(f) of the Disclosure Schedule,
(i) all current and former employees of Digitrans have executed and delivered to
Digitrans an agreement (containing no exceptions to or exclusions from the scope
of its coverage) that is substantially identical to the form of Confidential
Information and Invention Assignment Agreement previously delivered to the
Purchaser, and (ii) all current and former consultants and independent
contractors to Digitrans have executed and delivered to Digitrans an agreement
(containing no exceptions to or exclusions from the scope of its coverage) that
is substantially identical to the form of Consultant Confidential Information
and Invention Assignment Agreement previously delivered to the Purchaser.
(g) None of the Digitrans' products have experienced fatal errors or
incorrect results as a result of the change from the year 1999 to the year 2000.
2.13 Contracts.
(a) Part 2.13 of the Disclosure Schedule identifies:
(i) each Digitrans Contract relating to the employment of, or
the performance of services by, any employee, consultant or independent
contractor;
(ii) each Digitrans Contract relating to the acquisition,
transfer, use, development, sharing or license of any technology or any
Digitrans Proprietary Asset;
(iii) each Digitrans Contract imposing any restriction on
Digitrans' right or ability (A) to compete with any other Person, (B) to acquire
any product or other asset or any services from any other Person, to sell any
product or other asset to or perform any services for any other Person or to
transact business or deal in any other manner with any other Person, or (C)
develop or distribute any technology;
12.
(iv) each Digitrans Contract creating or involving any agency
relationship, distribution arrangement or franchise relationship;
(v) each Digitrans Contract relating to the acquisition,
issuance or transfer of any securities;
(vi) each Digitrans Contract relating to the creation of any
Encumbrance with respect to any asset of Digitrans;
(vii) each Digitrans Contract involving or incorporating any
guaranty, any pledge, any performance or completion bond, any indemnity or any
surety arrangement;
(viii) each Digitrans Contract creating or relating to any
partnership or joint venture or any sharing of revenues, profits, losses, costs
or liabilities;
(ix) each Digitrans Contract relating to the purchase or sale
of any product or other asset by or to, or the performance of any services by or
for, any Related Party (as defined in Section 2.23);
(x) each Digitrans Contract constituting or relating to a
Government Contract or Government Bid;
(xi) any other Digitrans Contract that was entered into
outside the Ordinary Course of Business or was inconsistent with Digitrans' past
practices;
(xii) any other Digitrans Contract that has a term of more than
60 days and that may not be terminated by Digitrans (without penalty) within 60
days after the delivery of a termination notice by Digitrans; and
(xiii) any other Digitrans Contract that contemplates or
involves (A) the payment or delivery of cash or other consideration in an amount
or having a value in excess of $10,000 in the aggregate, or (B) the performance
of services having a value in excess of $10,000 in the aggregate.
(Contracts in the respective categories described in clauses "(i)" through
"(xiii)" above are referred to in this Agreement as "Material Contracts.")
(b) Digitrans has delivered to the Purchaser accurate and complete
copies of all written Contracts identified in Part 2.13 of the Disclosure
Schedule, including all amendments thereto. Part 2.13 of the Disclosure Schedule
provides an accurate description of the terms of each Digitrans Contract that is
not in written form. Each Contract identified in Part 2.13 of the Disclosure
Schedule is valid and in full force and effect, and, to the Knowledge of
Digitrans, the Selling Shareholder and Xxxxxx, is enforceable by Digitrans in
accordance with its terms, subject to (i) laws of general application relating
to bankruptcy, insolvency and the relief of debtors, and (ii) where applicable,
rules of law governing specific performance, injunctive relief and other
equitable remedies.
(c) Except as set forth in Part 2.13 of the Disclosure Schedule:
13.
(i) Digitrans has not violated or breached, or committed any
default under, any material provision of any Digitrans Contract that would have
a Material Adverse Effect on the business, properties, financial condition or
prospects of Digitrans, and, to the Knowledge of Digitrans, the Selling
Shareholder and Xxxxxx, no other Person has violated or breached, or committed
any default under, any Digitrans Contract that would have a Material Adverse
Effect on the business, properties, financial condition or prospects of
Digitrans;
(ii) to the Knowledge of Digitrans, the Selling Shareholder
and Xxxxxx, no event has occurred, and no circumstance or condition exists, that
(with or without notice or lapse of time) will, or could reasonably be expected
to, (A) result in a violation or breach of any of the material provisions of any
Digitrans Contract, (B) give any Person the right to declare a default or
exercise any remedy under any Digitrans Contract, (C) give any Person the right
to accelerate the maturity or performance of any Digitrans Contract, or (D) give
any Person the right to cancel, terminate or modify any Digitrans Contract;
(iii) since June 30, 2000, none of Digitrans, the Selling
Shareholder or Xxxxxx has received any notice or other communication regarding
any actual or possible violation or breach of, or default under, any Digitrans
Contract; and
(iv) Digitrans has not waived any of its material rights under
any Material Contract.
(d) No Person is renegotiating, or has a right pursuant to the
terms of any Digitrans Contract to renegotiate, any amount paid or payable to
Digitrans under any Material Contract or any other material term or provision of
any Material Contract.
(e) The Contracts identified in Part 2.13 of the Disclosure
Schedule collectively constitute all of the Contracts necessary to enable
Digitrans to conduct its business in the manner in which its business is
currently being conducted.
(f) Part 2.13 of the Disclosure Schedule identifies and provides a
brief description of each proposed Contract involving total economic
consideration in excess of $10,000 as to which any bid, offer, award, written
proposal, term sheet or similar document has been submitted or received by
Digitrans since June 30, 2000.
(g) Part 2.13 of the Disclosure Schedule provides an accurate
description and breakdown of Digitrans' backlog under Digitrans Contracts.
2.14 Liabilities; Major Suppliers.
(a) Digitrans has no Liabilities, except for:
(i) liabilities identified as such in the "liabilities" column
of the Unaudited Interim Balance Sheet;
(ii) accounts payable (of the type required to be reflected as
current liabilities in the "liabilities" column of a balance sheet prepared in
accordance with GAAP) incurred by Digitrans in the Ordinary Course of Business
since June 30, 2000;
14.
(iii) those Liabilities that are not required by generally
accepted accounting principals to be included in a balance sheet; and
(iv) Digitrans' obligations under the Contracts listed in Part
2.13 of the Disclosure Schedule and under Excluded Contracts, to the extent that
the existence of such obligations is ascertainable solely by reference to such
Contracts.
(b) Part 2.14 of the Disclosure Schedule:
(i) provides an accurate and complete breakdown and aging of
Digitrans' accounts payable as of June 30, 2000;
(ii) provides an accurate and complete breakdown of all
customer deposits and other deposits held by Digitrans as of the date of this
Agreement; and
(iii) provides an accurate and complete breakdown of Digitrans'
long-term debt as of the date of this Agreement.
(c) Digitrans has not paid, and Digitrans is not and will not become
liable for the payment of, any fees, costs or expenses of the type referred to
in Section 10.3(a).
(d) Part 2.14 of the Disclosure Schedule accurately identifies, and
provides an accurate and complete breakdown of the amounts paid to, each
supplier or other Person that received more than $10,000 from Digitrans in any
of 1998, 1999 or the six (6) months ended June 30, 2000.
2.15 Compliance With Legal Requirements.
(a) Except as set forth in Part 2.15 of the Disclosure Schedule:
(i) Digitrans is in substantial compliance with each Legal
Requirement that is applicable to it or to the conduct of its business or the
ownership or use of any of its assets;
(ii) Digitrans has at all times been in substantial compliance
with each Legal Requirement that is or was applicable to it or to the conduct of
its business or the ownership or use of any of its assets;
(iii) no event has occurred, and no condition or circumstance
exists, that is reasonably likely to (with or without notice or lapse of time)
constitute or result directly or indirectly in a violation by Digitrans of, or a
failure on the part of Digitrans to comply with, any Legal Requirement; and
(iv) Digitrans has not actually received, at any time, any
notice or other communication (in writing, electronically or verbally) from any
Governmental Body or any other Person regarding (i) any actual, alleged,
possible or potential violation of, or failure to comply with, any Legal
Requirement, or (ii) any actual, alleged, possible or potential obligation on
the
15.
part of Digitrans to undertake, or to bear all or any portion of the cost of,
any cleanup or any remedial, corrective or response action of any nature.
(b) Digitrans has delivered to the Purchaser an accurate and
complete copy of each report, study, survey or other document that Digitrans has
in its possession that addresses or otherwise relates to the compliance of
Digitrans with, or the applicability to Digitrans of, any Legal Requirement.
(c) To the Knowledge of Digitrans, the Selling Shareholder and
Xxxxxx, no Governmental Body has proposed any Legal Requirement that, if
adopted, (i) could reasonably be anticipated to have a Material Adverse Effect
on Digitrans' business, condition, assets, liabilities, operations, financial
performance, net loss or prospects or on the ability of Digitrans to comply with
or perform any covenant or obligation under any of the Transactional Agreements,
or (ii) could reasonably be anticipated to have the effect of preventing,
delaying, making illegal or otherwise interfering with any Digitrans, the
Selling Shareholder's or Xxxxxx' obligations in any of the Transactions.
2.16 Governmental Authorizations.
(a) Part 2.16 of the Disclosure Schedule identifies:
(i) each Governmental Authorization that is presently held by
Digitrans; and
(ii) each other Governmental Authorization that, to the
Knowledge of Digitrans, the Selling Shareholder and Xxxxxx, is presently held by
any of Digitrans' employees and is necessary in connection with Digitrans'
business.
Digitrans has delivered to the Purchaser accurate and complete copies of all of
the Governmental Authorizations identified in Part 2.16 of the Disclosure
Schedule, including all renewals thereof and all amendments thereto. Each
Governmental Authorization identified or required to be identified in Part 2.16
of the Disclosure Schedule is valid and in full force and effect.
(b) Except as set forth in Part 2.16 of the Disclosure Schedule:
(i) Digitrans and its employees are and have at all times
been, in full compliance with all of the terms and requirements of each
Governmental Authorization identified or required to be identified in Part 2.16
of the Disclosure Schedule;
(ii) no event has occurred, and no condition or circumstance
exists, that is reasonably likely to (with or without notice or lapse of time)
(A) constitute or result directly or indirectly in a violation of or a failure
to comply with any term or requirement of any Governmental Authorization
identified or required to be identified in Part 2.16 of the Disclosure Schedule,
or (B) result directly or indirectly in the revocation, withdrawal, suspension,
cancellation, termination or modification of any material Governmental
Authorization identified or required to be identified in Part 2.16 of the
Disclosure Schedule;
16.
(iii) None of Digitrans, the Selling Shareholder or Xxxxxx has
ever received, and, to the Knowledge of Digitrans, the Selling Shareholder and
Xxxxxx, no employee of Digitrans or the Selling Shareholder has, within the last
twenty-four (24) months, received, any notice or other communication (in
writing, electronically or verbally) from any Governmental Body or any other
Person regarding (A) any actual, alleged, possible or potential violation of or
failure to comply with any term or requirement of any Governmental
Authorization, or (B) any actual, proposed, possible or potential revocation,
withdrawal, suspension, cancellation, termination or modification of any
Governmental Authorization; and
(iv) all applications required to have been filed for the
renewal of the Governmental Authorizations required to be identified in Part
2.16 of the Disclosure Schedule have been duly filed on a timely basis with the
appropriate Governmental Bodies, and each other notice or filing required to
have been given or made with respect to such Governmental Authorizations has
been duly given or made on a timely basis with the appropriate Governmental
Body.
(c) The Governmental Authorizations identified in Part 2.16 of the
Disclosure Schedule constitute all of the Governmental Authorizations necessary
(i) to enable Digitrans to conduct its business in the manner in which its
business is currently being conducted and in the manner in which its business is
proposed to be conducted, and (ii) to permit Digitrans to own and use its assets
in the manner in which they are currently owned and used and in the manner in
which they are proposed to be owned and used.
2.17 Tax Matters.
(a) Each Tax required to have been paid, or claimed by any
Governmental Body to be payable, by Digitrans (whether pursuant to any Tax
Return or otherwise) has been duly paid in full or on a timely basis. Any Tax
required to have been withheld or collected by Digitrans has been duly withheld
and collected; and (to the extent required) each such Tax has been paid to the
appropriate Governmental Body.
(b) Part 2.17 of the Disclosure Schedule accurately identifies all
Tax Returns required to be filed by or on behalf of Digitrans with any
Governmental Body with respect to any taxable period ending on or before the
Closing Date ("Digitrans Returns"). All Digitrans Returns (i) have been or will
be filed when due or by the extended due date, and (ii) have been, or will be
when filed, accurately and completely prepared in full compliance with all
applicable Legal Requirements. All amounts shown on the Digitrans Returns to be
due on or before the Closing Date, and all amounts otherwise payable in
connection with the Digitrans Returns on or before the Closing Date, have been
or will be paid on or before the Closing Date. Digitrans has delivered to the
Purchaser accurate and complete copies of all Digitrans Returns filed since
December 31, 1995.
(c) The Digitrans Financial Statements fully accrue all actual and
contingent liabilities for Taxes with respect to all periods through the dates
thereof in accordance with GAAP. Digitrans will establish, in the Ordinary
Course of Business, reserves adequate for the payment of all Taxes for the
period from March 31, 2000 through the Closing Date, and
17.
Digitrans will disclose the dollar amount of such reserves to the Purchaser on
or prior to the Closing Date.
(d) Part 2.17 of the Disclosure Schedule accurately identifies each
examination or audit of any Digitrans Return that has been conducted since
December 31, 1995. Digitrans has delivered to the Purchaser accurate and
complete copies of all audit reports and similar documents (to which Digitrans
has access) relating to Digitrans Returns. Except as set forth in Part 2.17 of
the Disclosure Schedule, no extension or waiver of the limitation period
applicable to any of the Digitrans Returns has been granted and no such
extension or waiver has been requested by Digitrans.
(e) Except as set forth in Part 2.17 of the Disclosure Schedule, no
claim or other Proceeding is pending or has been overtly threatened against or
with respect to Digitrans in respect of any Tax. There are no unsatisfied
Liabilities for Taxes (including liabilities for interest, additions to tax and
penalties thereon and related expenses) with respect to any notice of deficiency
or similar document received by Digitrans. Digitrans has not entered into or has
become bound by any agreement or consent pursuant to Section 341(f) of the Code.
Digitrans has not been and will not be required to include any adjustment in
taxable income for any tax period (or portion thereof) pursuant to Section 481
or 263A of the Code or any comparable provision under state or foreign Tax laws
as a result of transactions or events occurring, or accounting methods employed,
prior to the Closing.
(f) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of Digitrans that, individually or collectively, could
give rise directly or indirectly to the payment of any amount that would not be
deductible pursuant to Section 280G or Section 162 of the Code. Digitrans is not
and has ever been, a party to or bound by any tax indemnity agreement, tax
sharing agreement, tax allocation agreement or similar Contract.
2.18 Employee and Labor Matters.
(a) Part 2.18 of the Disclosure Schedule accurately sets forth, with
respect to each employee and consultant of Digitrans (including any employee of
Digitrans who is on a leave of absence or on layoff status):
(i) the name of such employee and consultant and the date as
of which such employee was originally hired by Digitrans or the Selling
Shareholder;
(ii) such employee's title, and a description of such
employee's duties and responsibilities;
(iii) the aggregate dollar amount of the compensation (including
wages, salary, commissions, director's fees, fringe benefits, bonuses, profit-
sharing payments and other payments or benefits of any type) received by such
employee from Digitrans or the Selling Shareholder with respect to services
performed in 1999;
(iv) such employee's annualized compensation as of the date of
this Agreement;
18.
(v) each Current Benefit Plan in which such employee
participates or is eligible to participate; and
(vi) any Governmental Authorization that is held by such
employee and that relates to or is useful in connection with Digitrans'
business.
(b) Part 2.18 of the Disclosure Schedule accurately identifies each
former employee of Digitrans who is receiving or is scheduled to receive (or
whose spouse or other dependent is receiving or is scheduled to receive) any
benefits (from Digitrans) relating to such former employee's employment with
Digitrans or the Selling Shareholder; and Part 2.18 of the Disclosure Schedule
accurately describes such benefits.
(c) Except as set forth in Part 2.18 of the Disclosure Schedule,
Digitrans is not a party to or bound by and has never been a party to or bound
by, any employment agreement or any union contract, collective bargaining
agreement or similar Contract.
(d) The employment of each of Digitrans' employees is terminable by
Digitrans "at will", subject to all Legal Requirements relating to termination
of "at will" employees. Digitrans has delivered to the Purchaser accurate and
complete copies of all employee manuals and handbooks, disclosure materials,
policy statements and other materials relating to the employment of the current
and former employees of Digitrans or the Selling Shareholder.
(e) To the Knowledge of Digitrans, the Selling Shareholder and
Xxxxxx:
(i) None of Digitrans, the Selling Shareholder or Xxxxxx has
ever received written, electronic or verbal notice from any of its employees
that he or she intends to terminate his or her employment with Digitrans (other
than any termination dates, if any, that may be set forth in any employee's
employment agreement, if any);
(ii) no employee of Digitrans is a party to or is bound by any
confidentiality agreement, noncompetition agreement or other Contract (with any
Person) that is reasonably likely to have an adverse effect on (A) the
performance by such employee of any of his duties or responsibilities as an
employee of Digitrans, or (B) Digitrans' business or operations.
(f) To the Knowledge of Digitrans, the Selling Shareholder and
Xxxxxx, none of Digitrans, the Selling Shareholder or Xxxxxx has ever received
written, electronic or verbal notice of any slowdown, work stoppage, labor
dispute or union organizing activity affecting Digitrans or any of their
employees. There is not now pending, and none of Digitrans, the Selling
Shareholder or Xxxxxx has received written, electronic or verbal notice that any
Person has threatened to commence, any such slowdown, work stoppage, labor
dispute or union organizing activity.
2.19 Benefit Plans; ERISA.
(a) Part 2.19 of the Disclosure Schedule identifies and provides an
accurate and complete description of each Current Benefit Plan and each Past
Benefit Plan. Neither
19.
Digitrans nor the Selling Shareholder has ever established, adopted, maintained,
sponsored, contributed to, participated in or incurred any Liability with
respect to any Employee Benefit Plan, except for Digitrans Plans identified in
Part 2.19 of the Disclosure Schedule; and neither Digitrans nor the Selling
Shareholder has, within the twenty-four (24) months preceding the Closing Date,
provided or made available any fringe benefit or other benefit of any nature to
any of its employees, except as set forth in Part 2.19 of the Disclosure
Schedule.
(b) No Digitrans Plan:
(i) provides or provided any benefit guaranteed by the
Pension Benefit Guaranty Corporation;
(ii) is or was a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA; or
(iii) is or was subject to the minimum funding standards of
Section 412 of the Code or Section 302 of ERISA.
There is no Person that (by reason of common control or otherwise) is or has at
any time been treated together with Digitrans as a single employer within the
meaning of Section 414 of the Code.
(c) Digitrans has delivered to the Purchaser, with respect to each
Digitrans Plan:
(i) an accurate and complete copy of such Digitrans Plan and
all amendments thereto (including any amendment that is scheduled to take effect
in the future);
(ii) an accurate and complete copy of each Contract (including
any trust agreement, funding agreement, service provider agreement, insurance
agreement, investment management agreement or recordkeeping agreement) relating
to such Digitrans Plan;
(iii) an accurate and complete copy of any form, report
registration statement or other document that Digitrans has furnished to any
employee of Digitrans or filed with or submitted to any Governmental Body with
respect to such Digitrans Plan;
(iv) an accurate and complete copy of any form, report,
registration statement or other document that Digitrans has furnished to any
employee of Digitrans or filed with or submitted to any Governmental Body with
respect to such Digitrans Plan; and
(v) an accurate and complete copy of any determination letter,
notice or other document that has been issued by, or that has been received by
Digitrans, from any Governmental Body with respect to such Digitrans Plan.
(d) Each Current Benefit Plan is being operated and administered in
full compliance with the provisions thereof, and each Digitrans Plan has at all
times been operated and administered in full compliance with the provisions
thereof. Each contribution or other
20.
payment that is required to have been accrued or made under or with respect to
any Digitrans Plan has been duly accrued and made on a timely basis.
(e) Each Current Benefit Plan complies and is being operated and
administered in full compliance with, and each Digitrans Plan has at all times
complied and been operated and administered in full compliance with, all
applicable reporting, disclosure and other requirements of ERISA and the Code
and all other applicable Legal Requirements. Digitrans has never incurred any
Liability to the Internal Revenue Service or any other Governmental Body with
respect to any Digitrans Plan; and no event has occurred, and no condition or
circumstance exists, that is reasonably likely to (with or without notice or
lapse of time) give rise directly or indirectly to any such Liability.
Digitrans, and no Person that is or was an administrator or fiduciary of any
Digitrans Plan (or that acts or has acted as an agent of any of Digitrans or any
such administrator or fiduciary), has engaged in any transaction or has
otherwise acted or failed to act in a manner that has subjected or is reasonably
likely to subject Digitrans to any Liability for breach of any fiduciary duty or
any other duty. No Digitrans Plan, and no Person that is or was an administrator
or fiduciary of any Digitrans Plan (or that acts or has acted as an agent of any
such administrator or fiduciary):
(i) has engaged in a "prohibited transaction" within the
meaning of Section 406 of ERISA or Section 4975 of the Code;
(ii) has failed to perform any of the responsibilities or
obligations imposed upon fiduciaries under Title I of ERISA; or
(iii) has taken any action that (A) is reasonably likely to
subject such Digitrans Plan or such Person to any Tax, penalty or Liability
relating to any "prohibited transaction," or (B) is reasonably likely to
directly or indirectly give rise to or serve as a basis for the assertion (by
any employee or by any other Person) of any claim under, on behalf of or with
respect to such Digitrans Plan.
(f) No inaccurate or misleading representation, statement or other
communication has been made or directed (in writing, electronically or verbally)
to any current or former employee of Digitrans or the Selling Shareholder (i)
with respect to such employee's participation, eligibility for benefits,
vesting, benefit accrual or coverage under any Digitrans Plan or with respect to
any other matter relating to any Digitrans Plan, or (ii) with respect to any
proposal or intention on the part of any of Digitrans or the Selling Shareholder
to establish or sponsor any Employee Benefit Plan or to provide or make
available any fringe benefit or other benefit of any nature.
(g) Except as set forth in Part 2.19 of the Disclosure Schedule,
neither Digitrans nor the Selling Shareholder has advised any of its employees
(in writing, electronically or verbally) that it intends or expects to establish
or sponsor any Employee Benefit Plan or to provide or make available any fringe
benefit or other benefit of any nature in the future.
2.20 Environmental Matters.
21.
(a) Digitrans is not liable or potentially liable for any response
cost or natural resource damages under Section 107(a) of CERCLA, or under any
other so-called "superfund" or "superlien" law or similar Legal Requirement, at
or with respect to any site.
(b) None of Digitrans, the Selling Shareholder or Xxxxxx has ever
received any notice or other communication (in writing, electronically or
verbally): (i) from any Governmental Body or other Person regarding any actual,
alleged, possible or potential Liability that Digitrans has or is reasonably
likely to have arising from or relating to the presence, generation,
manufacture, production, transportation, importation, use, treatment,
refinement, processing, handling, storage, discharge, release, emission or
disposal of any Hazardous Material; (ii) that any Person has ever commenced or
threatened to commence any contribution action or other Proceeding against
Digitrans in connection with any such actual, alleged, possible or potential
Liability; and (iii) that any event has occurred, or that any condition or
circumstance exists, that is reasonably likely to directly or indirectly give
rise to, or result in Digitrans becoming subject to, any such Liability.
(c) Except as set forth in Part 2.20 of the Disclosure Schedule,
Digitrans has never generated, manufactured, produced, transported, imported,
used, treated, refined, processed, handled, stored, discharged, released or
disposed of any Hazardous Material (whether lawfully or unlawfully) other than
normal dispositions in the Ordinary Course of Business, including, without
limitation, batteries and printer cartridges. Except as set forth in Part 2.20
of the Disclosure Schedule, none of Digitrans, the Selling Shareholder or Xxxxxx
has ever permitted (knowingly or otherwise) any Hazardous Material to be
generated, manufactured, produced, used, treated, refined, processed, handled,
stored, discharged, released or disposed of (whether lawfully or unlawfully):
(i) on or beneath the surface of any real property that is, or
that has at any time been, owned by, leased to, controlled by or used by
Digitrans;
(ii) in or into any surface water, groundwater, soil or air
associated with or adjacent to any such real property; or
(iii) in or into any well, pit, pond, lagoon, impoundment, ditch,
landfill, building, structure, facility, improvement, installation, equipment,
pipe, pipeline, vehicle or storage container that is or was located on or
beneath the surface of any such real property or that is or has at any time been
owned by, leased to, controlled by or used by Digitrans.
(d) All property that is owned by, leased to, controlled by or used
by Digitrans, and all surface water, groundwater, soil and air associated with
or adjacent to such property:
(i) is in clean and healthful condition;
(ii) is free of any Hazardous Material and any harmful chemical
or physical conditions; and
(iii) is free of any environmental contamination of any nature.
22.
(e) Each storage tank or other storage container that is or has been
owned by, leased to, controlled by or used by Digitrans, or that is located on
or beneath the surface of any real property owned by, leased to, controlled by
or used by Digitrans:
(i) is in sound condition; and
(ii) has been demonstrated by accepted testing methodologies to
be free of any corrosion or leaks.
2.21 Sale of Products; Performance of Services.
No product manufactured or sold by Digitrans has been the subject of any
material recall by Digitrans.
(a) Each product manufactured or sold by Digitrans:
(i) conformed and complied in all respects with the terms and
requirements of any applicable warranty or other Contract and with all
applicable Legal Requirements; and
(ii) was free of any design defects, construction defects or
other defects or deficiencies at the time of sale.
All repair services and other services that have been performed by Digitrans
were performed properly and in full conformity with the terms and requirements
of all applicable warranties and other Contracts and with all applicable Legal
Requirements.
(b) To the Knowledge of Digitrans, the Selling Shareholder or Xxxxxx,
Digitrans will not incur or otherwise become subject to any Liability arising
directly or indirectly from any defect existing prior to the Closing Date in a
product manufactured or sold, or in any repair services or other services
performed by, Digitrans on or at any time prior to the Closing Date.
(c) No product manufactured or sold by Digitrans has been the subject
of any recall or other similar action; and no event has occurred, and no
condition or circumstance exists, that is reasonably likely to (with or without
notice or lapse of time) directly or indirectly give rise to or serve as a basis
for any such recall or other similar action relating to any such product.
(d) Except as set forth in Part 2.21 of the Disclosure Schedule, none
of Digitrans, the Selling Shareholder or Xxxxxx has received any written,
electronic or verbal notice that any customer or other Person has ever asserted
or threatened to assert any claim against Digitrans (i) under or based upon any
warranty provided by or on behalf of Digitrans, or (ii) under or based upon any
other warranty relating to any product sold by Digitrans or any services
performed by Digitrans. To the Knowledge of Digitrans, the Selling Shareholder
and Xxxxxx, no event has occurred, and no condition or circumstance exists, that
is reasonably likely to (with or without notice or lapse of time) directly or
indirectly give rise to or serve as a basis for the assertion of any such claim.
23.
(e) Digitrans has in place and has at all times had in place, an
adequate and appropriate quality control system that is at least as
comprehensive and effective as the quality control systems customarily
maintained by Comparable Entities.
2.22 Ability to Conduct Business. Digitrans and the Selling Shareholder
represent and warrant that Digitrans has all the assets of the predecessor
operating division of the Selling Shareholder known as Digitrans and all and
everything necessary to transact business as Digitrans, the predecessor
operating division of the Selling Shareholder, conducted business in the past.
2.23 Insurance.
(a) Part 2.22 of the Disclosure Schedule accurately sets forth, with
respect to each insurance policy maintained by or at the expense of, or for the
direct or indirect benefit of, Digitrans:
(i) the name of the policy and the insurance carrier that
issued such policy and the policy number of such policy;
(ii) the annual premium payable with respect to such policy, and
the cash value (if any) of such policy; and
(iii) a description of any claims pending, and any claims that
have been asserted in the past, with respect to such policy.
Part 2.22 also identifies (1) each pending application for insurance that has
been submitted by or on behalf of Digitrans, and (2) each self-insurance or
risk-sharing arrangement affecting Digitrans or any of its assets. Digitrans has
delivered to the Purchaser accurate and complete copies of all of the insurance
policies identified in Part 2.22 of the Disclosure Schedule (including all
renewals thereof and endorsements thereto) and all of the pending applications
identified in Part 2.22 of the Disclosure Schedule and all of its files and
documents relating to said insurance policies.
(b) Each of the policies identified in Part 2.22 of the Disclosure
Schedule is valid, enforceable and in full force and effect, and has been issued
by an insurance carrier that, to the Knowledge of Digitrans, the Selling
Shareholder and Xxxxxx, is solvent, financially sound and reputable. All of the
information contained in the applications submitted in connection with said
policies was (at the times said applications were submitted) accurate and
complete, and all premiums and other amounts owing with respect to said policies
have been paid in full on a timely basis.
(c) Except as set forth in Part 2.22 of the Disclosure Schedule,
there is no pending claim under or based upon any of the policies identified in
Part 2.22 of the Disclosure Schedule; and no event has occurred, and no
condition or circumstance exists, that is reasonably likely to (with or without
notice or lapse of time) directly or indirectly give rise to or serve as a basis
for any such claim.
(d) None of Digitrans, the Selling Shareholder or Xxxxxx has ever
received:
24.
(i) any notice or other communication (in writing,
electronically or verbally) regarding the actual or possible cancellation or
invalidation of any of the policies identified in Part 2.22 of the Disclosure
Schedule or regarding any actual or possible adjustment in the amount of the
premiums payable with respect to any of said policies;
(ii) any notice or other communication (in writing,
electronically or verbally) regarding any actual or possible refusal of coverage
under, or any actual or possible rejection of any claim under, any of the
policies identified in Part 2.22 of the Disclosure Schedule; or
(iii) any indication that the issuer of any of the policies
identified in Part 2.22 of the Disclosure Schedule may be unwilling or unable to
perform any of its obligations thereunder.
2.24 Related Party Transactions. Except as set forth in Part 2.23 of the
Disclosure Schedule:
(a) no Related Party has, and no Related Party has at any time since
December 31, 1999 had, any direct or indirect interest of any nature in any
asset used in or otherwise relating to the business of Digitrans;
(b) no Related Party is, or has at any time since December 31, 1999
been, indebted to Digitrans;
(c) since December 31, 1999, no Related Party has entered into, or
has had any direct or indirect financial interest in, any Contract, transaction
or business dealing of any nature involving Digitrans;
(d) no Related Party is competing, or has at any time since December
31, 1999 competed, directly or indirectly, with Digitrans in any market served
by Digitrans;
(e) no Related Party has any claim or right against Digitrans; and
(f) no event has occurred, and no condition or circumstance exists,
that is reasonably likely to (with or without notice or lapse of time) directly
or indirectly give rise to or serve as a basis for any claim or right in favor
of any Related Party against Digitrans.
2.25 Certain Payments, Etc. Digitrans, and no officer, employee, agent or
other Person associated with or acting for or on behalf of Digitrans, has at any
time, directly or indirectly:
(a) used any corporate funds (i) to make any unlawful political
contribution or gift or for any other unlawful purpose relating to any political
activity, (ii) to make any unlawful payment to any governmental official or
employee, or (iii) to establish or maintain any unlawful or unrecorded fund or
account of any nature;
(b) made any false or fictitious entry, or failed to make any entry
that should have been made, in any of the books of account or other records of
Digitrans;
25.
(c) made any payoff, influence payment, bribe, rebate, kickback or
unlawful payment to any Person;
(d) performed any favor or given any gift which was not deductible
for federal income tax purposes;
(e) made any payment (whether or not lawful) to any Person, or
provided (whether lawfully or unlawfully) any favor or anything of value
(whether in the form of property or services, or in any other form) to any
Person, for the purpose of obtaining or paying for (i) favorable treatment in
securing business, or (ii) any other special concession; or
(f) agreed, committed, offered or attempted to take any of the
actions described in clauses "(a)" through "(e)" above.
2.26 Proceedings; Orders.
(a) Except as set forth in Part 2.25 of the Disclosure Schedule,
there is no pending Proceeding, and no Person has overtly threatened to commence
any Proceeding:
(i) that involves Digitrans or that otherwise relates to or
might affect Digitrans' business or any of the assets owned or used by Digitrans
(whether or not Digitrans is named as a party thereto); or
(ii) that challenges, or that is reasonably likely to have the
effect of preventing, delaying, making illegal or otherwise interfering with,
any of the Transactions.
Except as set forth in Part 2.25 of the Disclosure Schedule, to the Knowledge of
Digitrans, the Selling Shareholder and Xxxxxx, no event has occurred, and no
claim, dispute or other condition or circumstance exists, that is reasonably
likely to directly or indirectly give rise to or serve as a basis for the
commencement of any such Proceeding.
(b) Except as set forth in Part 2.25 of the Disclosure Schedule, no
Proceeding has ever been commenced by or against Digitrans; and no Proceeding
otherwise involving Digitrans is currently pending or threatened .
(c) Digitrans has delivered to the Purchaser accurate and complete
copies of all pleadings, correspondence and other written materials to which
Digitrans has in its possession that relate to the Proceedings identified in
Part 2.25 of the Disclosure Schedule.
(d) There is no Order to which Digitrans, or any of the assets owned
or used by Digitrans, is subject; and none of the Selling Shareholder is subject
to any Order that relates to Digitrans' business or to any of the assets owned
or used by Digitrans.
(e) To the Knowledge of Digitrans, the Selling Shareholder and
Xxxxxx, no officer or employee of Digitrans is subject to any Order that
prohibits such officer or employee from engaging in or continuing any conduct,
activity or practice relating to Digitrans' business.
26.
(f) There is no proposed Order that, if issued or otherwise put into
effect, (i) is reasonably likely to have an adverse effect on Digitrans'
business, condition, assets, liabilities, operations, financial performance, net
income or prospects (or on any aspect or portion thereof) or on the ability of
Digitrans, the Selling Shareholder or Xxxxxx to comply with or perform any
covenant or obligation under any of the Transactional Agreements, or (ii) is
reasonably likely to have the effect of preventing, delaying, making illegal or
otherwise interfering with any of the Transactions.
2.27 Authority; Binding Nature of Agreements.
(a) Digitrans has the absolute and unrestricted right, power and
authority to enter into and to perform its obligations under this Agreement; and
the execution, delivery and performance by Digitrans of this Agreement have been
duly authorized by all necessary action on the part of Digitrans and its
shareholders, board of directors and officers. This Agreement constitutes the
legal, valid and binding obligation of Digitrans, enforceable against Digitrans
in accordance with its terms, subject to (i) laws of general application
relating to bankruptcy, insolvency and the relief of debtors, and (ii) rules of
law governing specific performance, injunctive relief and other equitable
remedies.
(b) The Selling Shareholder has the absolute and unrestricted right,
power and capacity to enter into and to perform the Selling Shareholder's
obligations under each of the Transactional Agreements to which the Selling
Shareholder is or is reasonably likely to become a party. This Agreement
constitutes the legal, valid and binding obligation of the Selling Shareholder,
enforceable against the Selling Shareholder in accordance with its terms. Upon
the execution of each of the other Transactional Agreements at the Closing, each
of such other Transactional Agreements will constitute the legal, valid and
binding obligation of the Selling Shareholder who is a party thereto, and will
be enforceable against the Selling Shareholder in accordance with its terms,
subject to (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtors, and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
(c) Xxxxxx has the absolute and unrestricted right, power and
capacity to enter into and to perform his obligations under each of the
Transactional Agreements to which he is or may become a party. This Agreement
constitutes the legal, valid and binding obligation of Xxxxxx, enforceable
against Xxxxxx in accordance with its terms. Upon the execution of each of the
other Transactional Agreements at the Closing, each of such other Transactional
Agreements to which Xxxxxx is a party will constitute the legal, valid and
binding obligation of Xxxxxx, and will be enforceable against Xxxxxx in
accordance with its terms, subject to (i) laws of general application relating
to bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
2.28 Non-Contravention; Consents. Except as set forth in Part 2.27 of the
Disclosure Schedule, neither the execution and delivery of any of the
Transactional Agreements, nor the consummation or performance of any of the
Transactions, will directly or indirectly (with or without notice or lapse of
time):
27.
(a) contravene, conflict with or result in a violation of (i) any of
the provisions of Digitrans' articles of incorporation or bylaws, or (ii) any
resolution adopted by Digitrans' shareholders, Digitrans' board of directors or
any committee of Digitrans' board of directors;
(b) contravene, conflict with or result in a violation of, or give
any Governmental Body or other Person the right to challenge any of the
Transactions or to exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which Digitrans or the Selling Shareholder, or any
of the assets owned or used by Digitrans, is subject;
(c) cause any of the assets owned or used by Digitrans to be
reassessed or revalued by any taxing authority or other Governmental Body;
(d) contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by Digitrans or any of its employees or that otherwise relates to
Digitrans' business or to any of the assets owned or used by Digitrans;
(e) contravene, conflict with or result in a violation or breach of,
or result in a default under, any material provision of any Digitrans Contract;
(f) give any Person the right to (i) declare a default or exercise
any remedy under any Digitrans Contract, (ii) accelerate the maturity or
performance of any Digitrans Contract, or (iii) cancel, terminate or modify any
Digitrans Contract; or
(g) result in the imposition or creation of any Encumbrance upon or
with respect to any asset owned or used by Digitrans.
Except as set forth in Part 2.27 of the Disclosure Schedule, neither Digitrans
nor the Selling Shareholder was, is or will be required to make any filing with
or give any notice to, or to obtain any Consent from, any Person in connection
with the execution and delivery of any of the Transactional Agreements or the
consummation or performance of any of the Transactions.
2.29 Brokers. None of Digitrans, the Selling Shareholder nor Xxxxxx has
agreed or become obligated to pay, or has taken any action that is reasonably
likely to result in any Person claiming to be entitled to receive, any brokerage
commission, finder's fee or similar commission or fee in connection with any of
the Transactions.
2.30 The Selling Shareholder.
(a) The Selling Shareholder:
(i) has not, at any time, taken or been the subject of any
action that is reasonably likely to have an adverse effect on the Selling
Shareholder's ability to comply with or perform any of the Selling Shareholder's
covenants or obligations under any of the Transactional Agreements; or
28.
(ii) is not subject to any Order that is reasonably likely to
have an adverse effect on the Selling Shareholder's ability to comply with or
perform any of the Selling Shareholder's covenants or obligations under any of
the Transactional Agreements.
(b) There is no Proceeding pending, and no Person has threatened to
commence any Proceeding, that is reasonably likely to have an adverse effect on
the ability of the Selling Shareholder to comply with or perform any of the
Selling Shareholder's covenants or obligations under any of the Transactional
Agreements. No event has occurred, and no claim, dispute or other condition or
circumstance exists, that is reasonably likely to directly or indirectly give
rise to or serve as a basis for the commencement of any such Proceeding.
2.31 Xxxxxx.
(a) Xxxxxx:
(i) has not, at any time, taken or been the subject of any
action that is reasonably likely to have an adverse effect on his ability to
comply with or perform any of his covenants or obligations under any of the
Transactional Agreements; or
(ii) is not subject to any Order that is reasonably likely to
have an adverse effect on the his ability to comply with or perform any of his
covenants or obligations under any of the Transactional Agreements.
(b) There is no Proceeding pending, and no Person has threatened to
commence any Proceeding, that is reasonably likely to have an adverse effect on
Xxxxxx' ability to comply with or perform any of his covenants or obligations
under any of the Transactional Agreements. No event has occurred, and no claim,
dispute or other condition or circumstance exists, that is reasonably likely to
directly or indirectly give rise to or serve as a basis for the commencement of
any such Proceeding.
2.32 Full Disclosure.
(a) None of the Transactional Agreements (except for the Employment
Agreements and Noncompetition Agreements) contains or will contain any untrue
statement of fact; and none of the Transactional Agreements (except for the
Employment Agreements and Noncompetition Agreements) omits or will omit to state
any fact necessary to make any of the representations, warranties or other
statements or information contained therein not misleading.
(b) To the Knowledge of Digitrans, the Selling Shareholder and
Xxxxxx, except as set forth in Part 2.31 of the Disclosure Schedule, there is no
fact (other than publicly known facts relating exclusively to political or
economic matters of general applicability that will adversely affect all
Comparable Entities) that (i) is reasonably likely to be foreseen to have a
Material Adverse Effect on Digitrans' business, condition, assets, liabilities,
operations, financial performance, net loss or prospects (or on any aspect or
portion thereof) or on the ability of Digitrans, the Selling Shareholder or
Xxxxxx to comply with or perform any covenant or obligation under any of the
Transactional Agreements, or (ii) is reasonably likely to be foreseen have the
effect of preventing, delaying, making illegal or otherwise interfering with any
of the Transactions.
29.
(c) All of the information set forth in the Disclosure Schedule, and
all other information regarding Digitrans and its business, condition, assets,
liabilities, operations, financial performance, net loss and prospects that has
been furnished to the Purchaser or any of its Representatives by or on behalf of
Digitrans or any of Digitrans' Representatives, is accurate and complete in all
respects.
(d) Digitrans and the Selling Shareholder have provided the Purchaser
and the Purchaser's Representatives with full and complete access to all of
Digitrans' records and other documents and data.
SECTION 3. Representations and Warranties of the Purchaser
The Purchaser represents and warrants, to and for the benefit of the Selling
Shareholder, as follows:
3.1 Due Organization; No Subsidiaries; Etc.
(a) The Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has all
necessary power and authority:
(i) to conduct its business in the manner in which its business
is currently being conducted and in the manner in which its business is proposed
to be conducted; and
(ii) to own and use its assets in the manner in which its assets
are currently owned and used and in the manner in which its assets are proposed
to be owned and used.
(b) The Purchaser is duly qualified and is authorized to do business
and is in good standing as a foreign corporation in all jurisdictions in which
the nature of its activities and of its properties (both owned and leased) makes
such qualification necessary, except for those jurisdictions in which failure to
do so would not have a Material Adverse Effect on the Purchaser or its business.
(c) Neither the Purchaser nor any of its subsidiaries has ever
approved, or commenced any proceeding or made any election contemplating, the
dissolution or liquidation of the Purchaser or the winding up of or cessation of
the Purchaser's business or affairs.
3.2 SEC Filings; Financial Statements.
(a) The Purchaser has delivered to Digitrans accurate and complete
copies (excluding copies of exhibits) of each report, registration statement (on
a form other than Form S-8) and definitive proxy statement filed by the
Purchaser with the SEC between August 17, 1998 and the date of this Agreement
(the "Purchaser SEC Documents"). The Purchaser has made all necessary filings
with the SEC as required under the Exchange Act. As of the time it was filed
with the SEC (or, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing): (i) each of the Purchaser SEC
Documents complied in all material respects with the applicable requirements of
the Securities Act or the Exchange
30.
Act (as the case may be); and (ii) none of the Purchaser SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. As of the date of this Agreement, none of the Purchaser's Form 10-K
for the year ended December 31, 1999, as amended on April 28, 2000, Form 10-Q
for the quarter ended June 30, 2000 or Form 8-K filed on July 18, 2000 contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) The consolidated financial statements contained in the Purchaser
SEC Documents: (i) complied as to form in all material respects with the
published rules and regulations of the SEC applicable thereto; (ii) were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods covered, except as may be indicated in
the notes to such financial statements and (in the case of unaudited statements)
as permitted by Form 10-Q of the SEC, and except that unaudited financial
statements may not contain footnotes and are subject to year-end audit
adjustments; and (iii) fairly present the consolidated financial position of the
Purchaser and its subsidiaries as of the respective dates thereof and the
consolidated results of operations of the Purchaser and its subsidiaries for the
periods covered thereby.
3.3 Authority; Binding Nature of Agreement. The Purchaser has the
absolute and unrestricted right, power and authority to enter into and perform
its obligations under this Agreement; and the execution, delivery and
performance by the Purchaser of this Agreement (including the contemplated
issuance of the Common Stock of the Purchaser in accordance with this
Agreement) has been duly authorized by all necessary action on the part of the
Purchaser and its board of directors. No vote of the Purchaser's stockholders
is needed to approve the transactions contemplated by this Agreement. This
Agreement constitutes the legal, valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, subject to (i)
laws of general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
3.4 Non-Contravention. Neither the execution and delivery of any of the
Transactional Agreements, nor the consummation or performance of any of the
Transactions, will directly or indirectly (with or without notice or lapse of
time):
(a) contravene, conflict with or result in a violation of any of the
provisions of Purchaser's certificate of incorporation or bylaws; or
(b) contravene, conflict with or result in a violation of, or give
any Governmental Body or other Person the right to challenge any of the
Transactions or to exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which the Purchaser is subject.
31.
3.5 Valid Issuance. The Common Stock of the Purchaser to be issued
pursuant to this Agreement will, when issued in accordance with the provisions
of this Agreement, be validly issued, fully paid and nonassessable.
3.6 Brokers. The Purchaser has not agreed or become obligated to pay, and
has not taken any action that is reasonably likely to result in any Person
claiming to be entitled to receive, any brokerage commission, finder's fee or
similar commission or fee in connection with any of the Transactions.
SECTION 4. Pre-Closing Covenants of Digitrans, the Selling Shareholder and
Xxxxxx
4.1 Access and Investigation. Digitrans, the Selling Shareholder and
Xxxxxx shall ensure that, at all times during the Pre-Closing Period:
(a) Digitrans and its Representatives provide the Purchaser and its
Representatives with free and complete access, during normal business hours and
upon one (1) business day's notice to Digitrans' Representatives, personnel and
assets (for inspection purposes only) and to all existing books, records, Tax
Returns, work papers and other documents and information relating to Digitrans;
(b) Digitrans and its Representatives provide the Purchaser and its
Representatives with such copies of existing books, records, Tax Returns, work
papers and other documents and information relating to Digitrans as the
Purchaser may request in good faith; and
(c) Digitrans and its Representatives compile and provide the
Purchaser and its Representations with such additional financial, operating and
other data and information regarding Digitrans as the Purchaser may request in
good faith.
4.2 Operation of Business. Digitrans, the Selling Shareholder and Xxxxxx
shall ensure that, during the Pre-Closing Period:
(a) the Selling Shareholder does not directly or indirectly sell or
otherwise transfer, or offer, agree or commit (in writing, electronically or
verbally) to sell or otherwise transfer, any of the Shares or any interest in or
right relating to any of the Shares;
(b) the Selling Shareholder does not permit, or offer, agree or
commit (in writing, electronically or verbally) to permit, any of the Shares to
become subject, directly or indirectly, to any Encumbrance;
(c) Digitrans conducts its operations exclusively in the Ordinary
Course of Business and in the same manner as such operations have been conducted
prior to the date of this Agreement;
(d) Digitrans exercises reasonable efforts to preserve intact its
current business organization, keep available the services of its current
officers and employees and maintain its relations and good will with all
suppliers, customers, landlords, creditors, licensors, licensees, employees and
other Persons having business relationships with Digitrans;
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(e) Digitrans exercises reasonable efforts to keep in full force all
insurance policies identified in Part 2.22 of the Disclosure Schedule;
(f) Digitrans' officers responds to reasonable periodic requests from
the Purchaser concerning operational matters and otherwise report regularly to
the Purchaser concerning the status of Digitrans' business, condition, assets,
liabilities, operations, financial performance and prospects;
(g) Digitrans immediately notifies the Purchaser of any inquiry,
proposal or offer from any Person relating to any Acquisition Transaction;
(h) Digitrans and its officers use their Best Efforts to cause
Digitrans to operate profitably and to minimize its net loss (however, the
Purchaser acknowledges that: (i) Digitrans has, in the few years it has been
operation, not yet shown an operating profit, and (ii) Digitrans' inability to
be operated profitably during the Pre-Closing Period shall not give rise to any
right or remedy in favor of the Purchaser and against Digitrans and/or the
Selling Shareholder under any theory of law or equity under this Agreement);
(i) Digitrans does not declare, accrue, set aside or pay any dividend
or make any other distribution in respect of any shares of capital stock, and
does not repurchase, redeem or otherwise reacquire any shares of capital stock
or other securities;
(j) Digitrans does not sell or otherwise issue any shares of capital
stock or any other securities;
(k) Digitrans does not amend its articles of incorporation or bylaws,
and does not effect or become a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
(l) Digitrans does not form any subsidiary or acquire any equity
interest or other interest in any other Entity;
(m) Digitrans does not make any capital expenditure, except for
capital expenditures that are made in the Ordinary Course of Business and that,
when added to all other capital expenditures made on behalf of Digitrans during
the Pre-Closing Period, do not exceed $10,000 per month;
(n) Digitrans does not enter into or permit any of the assets owned
or used by Digitrans to become bound by any Contract, except for any Excluded
Contract;
(o) Digitrans does not incur, assume or otherwise become subject to
any Liability, except for current liabilities (of the type required to be
reflected in the "liabilities" column of a balance sheet prepared in accordance
with GAAP) incurred in the Ordinary Course of Business;
(p) Digitrans does not establish or adopt any Employee Benefit Plan,
and does not pay any bonus or make any profit-sharing or similar payment to, or
increase the amount of
33.
the wages, salary, commissions, fringe benefits or other compensation or
remuneration payable to, any of its directors, officers or employees;
(q) Digitrans does not change any of its methods of accounting or
accounting practices in any respect;
(r) Digitrans does not make any Tax election;
(s) Digitrans does not commence any Proceeding without the prior
written consent of the Purchaser;
(t) Digitrans does not enter into any transaction or take any other
action of the type referred to in Section 2.5 without the prior written consent
of the Purchaser;
(u) Digitrans does not materially modify the terms and conditions of
the Digitrans Contracts from such terms and conditions as they existed on May
18, 2000, without the prior written consent of the Purchaser;
(v) Digitrans does not enter into any transaction or take any other
action outside the Ordinary Course of Business without the prior written consent
of the Purchaser;
(w) Digitrans does not enter into any transaction or take any other
action that would more likely than not cause or constitute a Breach of any
representation or warranty made by Digitrans or the Selling Shareholder in this
Agreement or in the Closing Certificate; and
(x) Digitrans does not agree, commit or offer (in writing,
electronically or verbally), and does not attempt, to take any of the actions
described in clauses "(i)" through "(w)" of this Section 4.2.
4.3 Certain Filings and Consents. Digitrans and the Selling Shareholder
shall ensure that:
(a) Each filing or notice required to be made or given (pursuant to
any applicable Legal Requirement, Order or Contract, or otherwise) by Digitrans
or the Selling Shareholder in connection with the execution and delivery of this
Agreement and any of the Transactional Agreements or in connection with the
consummation or performance of any of the Transactions (including each of the
filings and notices identified in Part 2.27 of the Disclosure Schedule) is made
or given as soon as possible after the date of this Agreement;
(b) Each Consent required to be obtained (pursuant to any applicable
Legal Requirement, Order or Contract, or otherwise) by Digitrans or the Selling
Shareholder in connection with the execution and delivery this Agreement or any
of the Transactional Agreements or in connection with the consummation or
performance of any of the Transactions (including each of the Consents
identified in Part 2.27 of the Disclosure Schedule) is obtained as soon as
possible after the date of this Agreement and remains in full force and effect
through the Closing Date;
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(c) Digitrans promptly delivers to the Purchaser a copy of each
filing made, each notice given and each Consent obtained by Digitrans or the
Selling Shareholder during the Pre-Closing Period; and
(d) During the Pre-Closing Period, Digitrans and its Representatives
cooperate with the Purchaser and with the Purchaser's Representatives, and
prepare and make available such documents and take such other actions as the
Purchaser may request in good faith, in connection with any filing, notice or
Consent that the Purchaser is required or elects to make, give or obtain.
(e) The Purchaser will exercise its Best Efforts, and promptly
execute and deliver any documents and instruments that may be reasonably
required, to assist Digitrans in obtaining all consents required under this
Agreement.
4.4 Notification; Updates to Disclosure Schedule.
(a) During the Pre-Closing Period, Digitrans and the Selling
Shareholder shall promptly notify the Purchaser in writing of:
(i) the discovery by Digitrans or the Selling Shareholder of
any event, condition, fact or circumstance that occurred or existed on or prior
to the date of this Agreement and that caused or constitutes a Breach of any
representation or warranty made by Digitrans or any of the Selling Shareholder
in this Agreement;
(ii) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause or
constitute a Breach of any representation or warranty made by Digitrans or the
Selling Shareholder in this Agreement if (A) such representation or warranty had
been made as of the time of the occurrence, existence or discovery of such
event, condition, fact or circumstance, or (B) such event, condition, fact or
circumstance had occurred, arisen or existed on or prior to the date of this
Agreement;
(iii) any Breach of any covenant or obligation of Digitrans or
the Selling Shareholder; and
(iv) any event, condition, fact or circumstance that is
reasonably likely to make the timely satisfaction of any of the conditions set
forth in Section 6 or Section 7 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is required to
be disclosed pursuant to Section 4.4(a) requires any change in the Disclosure
Schedule, or if any such event, condition, fact or circumstance would require
such a change assuming the Disclosure Schedule were dated as of the date of the
occurrence, existence or discovery of such event, condition, fact or
circumstance, then Digitrans and the Selling Shareholder shall promptly deliver
to the Purchaser an update to the Disclosure Schedule specifying such change. No
such update shall be deemed to supplement or amend the Disclosure Schedule for
the purpose of determining whether any of the conditions set forth in Section 6
has been satisfied.
35.
4.5 Payment of Indebtedness by Related Parties. Digitrans and the Selling
Shareholder shall cause all indebtedness and other Liabilities of each Related
Party to Digitrans (including any such indebtedness or other Liability
identified in Part 2.23 of the Disclosure Schedule) to be discharged and paid in
full prior to the Closing.
4.6 No Negotiation. Digitrans and the Selling Shareholder shall ensure
that, during the Pre-Closing Period, neither Digitrans, nor the Selling
Shareholder nor any of Digitrans' or the Selling Shareholder's Representatives
directly or indirectly:
(a) Enter into any agreement, understanding or arrangement relating
to any Acquisition Transaction;
(b) participates in any discussions or negotiations with any Person
(other than the Purchaser) relating to any Acquisition Proposal;
(c) provides any non-public information regarding Digitrans or its
business or operations to any Person (other than the Purchaser), except (i) as
required in the Ordinary Course of Business and/or (ii) as required by law or
order of any court, administrative agency or other Governmental Body or any
arbitrator or arbitration panel; or
(d) solicits or encourages the initiation of any inquiry, proposal or
offer from any Person (other than the Purchaser) relating to any Acquisition
Proposal.
SECTION 5. Additional Covenants of the Parties
5.1 Employee Retention Program. The Purchaser and Digitrans shall use
their mutual efforts to establish an employee retention program covering the
employees identified on and incorporating the features identified in Exhibit F.
5.2 Registration Statement. The Purchaser, at its sole expense, shall
prepare a registration statement on Form S-3 under the Securities Act (the
"Registration Statement") with respect to the re-sale by the Selling Shareholder
of the Acquisition Shares; provided that in the event the Purchaser is not
eligible to use Form S-3, the Purchaser shall prepare a registration statement
on Form S-1 or any other appropriate form that is available to the Purchaser for
the registration of the Acquisition Shares. The Purchaser, at its sole expense,
shall file the Registration Statement no more than 30 days following the Closing
Date and shall use its Best Efforts to have the Registration Statement declared
effective as soon as practicable. The Purchaser shall list, at its sole expense,
the Acquisition Shares with Nasdaq as of the Registration Statement Effective
Date. The Purchaser shall maintain the effectiveness of the Registration
Statement until the Selling Shareholder may sell all of the Acquisition Shares
under Rule 144 during any ninety (90) day period.
5.3 Disclosures, Press Releases. At all times, the Parties shall remain
subject to the terms of that certain Non-Disclosure Agreement between the
Purchaser and Digitrans dated as of February 4, 2000, as amended May 10, 2000.
During the Pre-Closing Period, the Purchaser and Seller will keep the terms of
this Agreement and the transactions contemplated hereunder strictly
confidential. Accordingly, during the Pre-Closing Period, except as required by
law, neither Digitrans, the Selling Shareholder nor the Purchaser, without the
prior written consent of the
36.
other, which consent will not be unreasonably withheld or delayed, will make any
press release or any similar public announcement concerning the transactions
contemplated hereby. In addition, during the Pre-Closing Period, other than as
necessary to obtain any consent required to consummate the transactions
contemplated hereunder or as required by law, no written or oral announcement or
private disclosure with respect to the transactions contemplated hereby will be
made to any person unrelated to Digitrans or the Purchaser unless jointly
approved by Digitrans and the Purchaser. If disclosure is required by law, the
disclosing party shall consult in advance with the other party and attempt in
good faith to reflect such other party's concerns in the required disclosure.
SECTION 6. Conditions Precedent to the Purchaser's Obligation to Close
The Purchaser's obligation to purchase the Shares and to take the other
actions required to be taken by the Purchaser at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Purchaser, in whole or in part, in accordance
with Section 10.13):
6.1 Satisfactory Completion of Pre-Acquisition Review. The Purchaser
shall have satisfactorily completed its pre-acquisition investigation and review
of Digitrans' business, condition, assets, liabilities, operations, financial
performance, net loss and prospects (including , without limitation, its review
of all disclosures and documents provided by Digitrans) and shall be satisfied
with the results of that investigation and review. This condition shall be
deemed waived and/or satisfied by the Purchaser if notice of disapproval of any
condition is not received by Digitrans within thirty (30) days from the
Effective Date.
6.2 Accuracy of Representations. Each of the representations and
warranties made by Digitrans, the Selling Shareholder and Xxxxxx in this
Agreement and each of the Transactional Agreements shall have been accurate in
all material respects as of the date of this Agreement, and shall be accurate in
all respects as of the Closing Date as if made on the Closing Date except for
items specifically permitted by this Agreement or consented to in writing by the
Purchaser (without giving effect to any update to the Disclosure Schedule).
6.3 Performance of Obligations. Each of the covenants and obligations
that Digitrans and the Selling Shareholder are required to comply with or to
perform at or prior to the Closing shall have been duly complied with and
performed in all material respects.
6.4 Consents and Approvals. All consents, including each of the Consents
identified in Part 2.27 of the Disclosure Schedule, and approvals required to be
obtained in connection with this Agreement and the transactions contemplated by
this Agreement shall have been obtained and shall be in full force and effect,
other than those consents that, if not obtained and in full force and effect,
would not result in a Material Adverse Effect or would not prevent the
consummation of the transactions contemplated hereunder. Without limiting the
generality of the foregoing, Digitrans shall have obtained the consent of
General Instrument to the assignment to the Purchaser of the agreements set
forth on Exhibit J.
37.
6.5 Company Debt. The Selling Shareholder shall have received payment in
full (inclusive of principal and interest) from Digitrans for any loans made to
Digitrans by the Selling Shareholder.
6.6 Additional Documents. The Purchaser shall have received the following
agreements and documents, each of which shall be in full force and effect either
before the Closing or immediately upon the Closing:
(a) the Key Employee Agreements in the form of Exhibit C, executed by
the individuals identified on Exhibit E;
(b) the Noncompetition Agreements in the form of Exhibit D, executed
by the individuals identified on Exhibit E;
(c) the Retention Agreements in the form of Exhibit F, executed by
each of the Digitrans Executives.
(d) confidential invention and assignment agreements, in form and
content comparable to similar agreements required to be signed by other
employees of the Purchaser, executed by each employee of Digitrans;
(e) legal opinion of the Law Offices of Xxxxxx & Xxxxxx, counsel to
Digitrans, dated as of the Closing Date, in the form of Exhibit G;
(f) the Transition Services Agreement executed by the Selling
Shareholder and the Purchaser in substantially the form of Exhibit K;
(g) a compliance certificate, dated the Closing Date, executed by the
Chairman of the Board of Digitrans certifying that: (1) each of the
representations and warranties set forth in Section 2 is accurate in all
respects as of the Closing Date as if made on the Closing Date and (2) the
conditions set forth in Sections 6.2, 6.3 and 6.4 hereof have been duly
satisfied; and
(h) such other documents as the Purchaser may reasonably request in
good faith for the purpose of (i) evidencing the accuracy of any representation
or warranty made by Digitrans or the Selling Shareholder, (ii) evidencing the
compliance by Digitrans or the Selling Shareholder with, or the performance by
Digitrans or the Selling Shareholder of, any covenant or obligation set forth in
this Agreement, (iii) evidencing the satisfaction of any condition set forth in
this Section 6, or (iv) otherwise facilitating the consummation or performance
of any of the Transactions.
6.7 No Adverse Change. There shall have been no Material Adverse Effect
on Digitrans' business, condition, assets, liabilities, operations, financial
performance, net income or prospects (or in any aspect or portion thereof) since
the date of this Agreement.
6.8 No Proceedings. Since the date of this Agreement, there shall not
have been commenced or threatened against the Purchaser, or against any Person
affiliated with the Purchaser, any Proceeding (a) involving any challenge to, or
seeking damages or other relief in
38.
connection with, any of the Transactions, or (b) that is reasonably likely to
have the effect of preventing, delaying, making illegal or otherwise interfering
with any of the Transactions.
6.9 No Claim Regarding Stock Ownership or Sale Proceeds. No Person shall
have made or threatened any claim asserting that such Person (a) may be the
holder or the beneficial owner of, or may have the right to acquire or to obtain
beneficial ownership of, any capital stock or other securities of Digitrans, or
(b) may be entitled to all or any portion of the Purchase Price.
6.10 No Prohibition. Neither the consummation nor the performance of any
the Transactions will (with or without notice or lapse of time), contravene or
conflict with or result in a violation of, or cause the Purchaser or any Person
affiliated with the Purchaser to suffer any adverse consequence under, (a) any
applicable Legal Requirement or Order, or (b) any Legal Requirement or Order
that has been proposed by or before any Governmental Body.
SECTION 7. Conditions Precedent to the Selling Shareholder's Obligation to
Close
The Selling Shareholder's obligation to sell the Shares and to take
the other actions required to be taken by the Selling Shareholder at the Closing
is subject to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by the Selling Shareholder, in
whole or in part, in accordance with Section 10.14):
7.1 Accuracy of Representations. Each of the representations and
warranties made by the Purchaser in this Agreement shall have been accurate in
all material respects as of the date of this Agreement and shall be accurate in
all material respects as of the Closing Date as if made on the Closing Date.
7.2 Payment. The Purchaser shall have delivered to the Selling
Shareholder a stock certificate representing the Acquisition Shares less the
Indemnification Escrow Shares as provided for in Section 1.3(b)(ii) hereof. The
Purchaser shall have delivered to the Escrow Agent a stock certificate
representing the Indemnification Escrow Shares.
7.3 Performance of Covenants. Each of the covenants and obligations that
the Purchaser is required to comply with or to perform pursuant to this
Agreement at or prior to the Closing shall have been complied with and performed
in all material respects.
7.4 Additional Documents. Digitrans shall have received the following
agreements and documents, each of which shall be in full force and effect either
before the Closing or immediately upon the Closing:
(a) legal opinion of Xxxxxx Godward llp, counsel to the Purchaser,
dated as of the Closing Date, in the form of Exhibit H; and
(b) a compliance certificate, dated the Closing Date, executed by the
Purchaser's Chief Executive Officer or Chief Financial Officer certifying that:
(1) each of the representations and warranties set forth in Section 3 is
accurate in all respects as of the Closing Date as if made on the Closing Date
and (2) the conditions set forth in Sections 7.1 and 7.3 hereof have been duly
satisfied.
39.
7.5 No Adverse Change. There shall have been no Material Adverse Effect
on the Purchaser's business, condition, assets, liabilities, operations,
financial performance, net income or prospects (or in any aspect or portion
thereof) since the date of this Agreement.
7.6 No Injunction. There shall not be in effect any injunction that shall
have been entered by a court of competent jurisdiction since the date of this
Agreement and that prohibits the sale of the Shares by the Selling Shareholder
to the Purchaser or the issuance, transfer or delivery of the Acquisition Shares
or Additional Consideration by the Purchaser to Digitrans.
7.7 No Proceedings. Since the date of this Agreement, there shall not
have been commenced or threatened against Digitrans any Proceeding (a) involving
any challenge to, or seeking damages or other relief in connection with, any of
the Transactions, or (b) that is reasonably likely to have the effect of
preventing, delaying, making illegal or otherwise interfering with any of the
Transactions.
7.8 No Prohibition. Neither the consummation nor the performance of any
of the Transactions will, (with or without notice or lapse of time), contravene
or conflict with or result in a violation of, or cause Digitrans or any Person
affiliated with Digitrans to suffer any adverse consequence under (a) any
applicable Legal Requirement or Order, or (b) any Legal Requirement or Order
that has been proposed by or before any Governmental Body.
SECTION 8. Termination
8.1 Termination Events. This Agreement may be terminated prior to the
Closing:
(a) by the Purchaser if (i) there is a material Breach of any
covenant or obligation of Digitrans or any of the Selling Shareholder, or (ii)
the Purchaser reasonably determines that the timely satisfaction of any
condition set forth in Section 6 has become impossible or impractical (other
than as a result of any failure on the part of the Purchaser comply with or
perform its covenants and obligations under this Agreement);
(b) by Digitrans or the Selling Shareholder if (i) there is a
material Breach of any covenant or obligation of the Purchaser, or (ii) the
Selling Shareholder reasonably determines that the timely satisfaction of any
condition set forth in Section 7 has become impossible or impractical (other
than as a result of any failure on the part of Digitrans or the Selling
Shareholder to comply with or perform any covenant or obligation set forth in
this Agreement);
(c) by the Purchaser on or after November 1, 2000 if any condition
set forth in Section 6 has not been satisfied by November 1, 2000;
(d) by Digitrans or the Selling Shareholder on or after November 1,
2000 if any condition set forth in Section 7 has not been satisfied by the
November 1, 2000; or
(e) by the mutual consent of the Purchaser and Digitrans.
8.2 Termination Procedures. If the Purchaser wishes to terminate this
Agreement pursuant to Section 8.1(a) or Section 8.1(c), the Purchaser shall
deliver to Digitrans and the
40.
Selling Shareholder a written notice stating that the Purchaser is terminating
this Agreement and setting forth a brief description of the basis on which the
Purchaser is terminating this Agreement. If Digitrans or the Selling Shareholder
wishes to terminate this Agreement pursuant to Section 8.1(b) or Section 8.1(d),
Digitrans or the Selling Shareholder, as the case may be, shall deliver to the
Purchaser a written notice stating that Digitrans or the Selling Shareholder, as
the case may be, is terminating this Agreement and setting forth a brief
description of the basis on which Digitrans or the Selling Shareholder, as the
case may be, is terminating this Agreement.
8.3 Effect of Termination. If this Agreement is terminated pursuant to
Section 8.1, all further obligations of the parties under this Agreement shall
terminate; provided, however, that:
(a) no party shall be relieved of any obligation or other Liability
arising from any Breach by such party of any provision of this Agreement;
(b) the parties shall, in all events, remain bound by and continue to
be subject to the provisions set forth in Section 10; and
(c) Digitrans and the Purchaser shall, in all events, remain bound by
and continue to be subject to Section 5.3.
8.4 Termination Fees. If this Agreement is terminated by the Purchaser
for a Breach of the covenants set forth in Section 4.6 and within six (6) months
after the date of such Breach, Digitrans signs an Acquisition Proposal, and an
Acquisition Transaction pursuant to such Acquisition Proposal is consummated in
the six (6) months following the date such Acquisition Proposal is executed,
then Digitrans shall pay to the Purchaser a nonrefundable fee in an amount equal
to ten percent (10%) of the consideration received by Digitrans and/or the
shareholders of Digitrans in the Acquisition Transaction, such payment to be
made within ten (10) days of the consummation of the Acquisition Transaction.
8.5 Nonexclusivity of Termination Rights. The termination rights provided
in Section 8.1 shall not be deemed to be exclusive. Accordingly, the exercise
by any party of its right to terminate this Agreement pursuant to Section 8.1
shall not be deemed to be an election of remedies and shall not be deemed to
prejudice, or to constitute or operate as a waiver of, any other right or remedy
that such party may be entitled to exercise (whether under this Agreement, under
any other Contract, under any statute, rule or other Legal Requirement, at
common law, in equity or otherwise).
SECTION 9. Indemnification, Etc.
9.1 Survival of Representations and Covenants.
No representations or warranties whatever are made by any party except as
specifically set forth in this Agreement, or in an instrument, certificate,
opinion, or other writing provided for in this Agreement. All statements
contained in any of these instruments, certificates, opinions, or other writings
will be considered to be representations and warranties under this Agreement.
For purposes of this Agreement, each statement or other item of information set
forth in the Disclosure Schedule or in any update to the Disclosure Schedule
shall be deemed to be a
41.
representation and warranty made by Digitrans and the Selling Shareholder in
this Agreement. The representations, warranties, indemnities made by the parties
in this Agreement or in instruments, certificates, opinions, or other writings
provided for in the Agreement to be performed or complied with by the respective
parties under it before the Closing Date, will be continuing and will survive
the Closing, but will expire on the first anniversary of the Closing Date
(except for the warranty of Digitrans, the Selling Shareholder and Xxxxxx under
Section 2.28 hereof and the warranty of the Purchaser under Section 3.6 hereof ,
which shall terminate on the Closing Date), unless a specific claim in writing
with respect to these matters has been made, or an action at law or in equity
has been commenced or filed, before that date. Nothing in this paragraph will
affect the obligations and indemnities of the parties with respect to covenants
and agreements contained in this Agreement that are permitted to be performed,
in whole or in part, after the Closing Date.
9.2 Interest. Any party that is required to indemnify any other Person
pursuant to this Section 9 with respect to any Damages shall also be required to
pay such other Person interest on the amount of such Damages (for the period
commencing as of the date on which such other Person first incurred or otherwise
became subject to such Damages and ending on the date on which the applicable
indemnification payment is made by such party) at a floating rate three (3)
percentage points above the rate of interest publicly announced by Bank of
America, N.T. & S.A. from time to time as its prime, base or reference rate.
9.3 Indemnification by Digitrans and the Selling Shareholder.
(A) For one (1) year from the Closing Date, and subject to the terms
and conditions of the Indemnification Escrow Agreement attached hereto as
Exhibit B, the Selling Shareholder shall hold harmless and indemnify each of the
Indemnitees from and against, and shall compensate and reimburse each of the
Indemnitees for, any Damages which are suffered or incurred by any of the
Indemnitees or to which any of the Indemnitees is reasonably likely to otherwise
become subject at any time (regardless of whether or not such Damages relate to
any third party claim) and which arise directly or indirectly from or as a
direct or indirect result of, or are directly or indirectly connected with,
which arise after the Closing Date and which arise from or as a result of, or
are connected with:
(i) any Breach of any representation or warranty made by
Digitrans or the Selling Shareholder in this Agreement (giving effect to any
update to the Disclosure Schedule) or in the Digitrans Closing Certificate;
(ii) any Breach of any representation, warranty, statement,
information or provision contained in the Disclosure Schedule or in any other
document delivered or otherwise made available to the Purchaser or any of its
Representatives by or on behalf of Digitrans or any of Digitrans'
Representatives;
(iii) any Breach of any covenant or obligation of Digitrans or
the Selling Shareholder except to the extent that the Purchaser was advised in
writing by Digitrans or the Selling Shareholder of such Breach prior to the
Closing and the Purchaser waived such Breach pursuant to Section 10.13;
42.
(iv) any Liability to which Digitrans or any of the other
Indemnitees is reasonably likely to become subject and that arises directly or
indirectly from or relates directly or indirectly to (A) any product
manufactured or sold, or any service performed, by or on behalf of Digitrans on
or at any time prior to the Closing Date, (B) the presence of any Hazardous
Material at any site owned, leased, occupied or controlled by Digitrans on or at
any time prior to the Closing Date, or (C) the generation, manufacture,
production, transportation, importation, use, treatment, refinement, processing,
handling, storage, discharge, release or disposal of any Hazardous Material
(whether lawfully or unlawfully) by or on behalf of Digitrans on or at any time
prior to the Closing Date; or
(v) any Proceeding relating directly or indirectly to any
Breach, alleged Breach, Liability or matter of the type referred to in clause
"(i)," "(ii)," "(iii)," "(iv)," or "(v)" above (including any Proceeding
commenced by any Indemnitee for the purpose of enforcing any of its rights under
this Section 9).
(b) The Selling Shareholder acknowledges and agrees that, if there is
any Breach of any representation, warranty or other provision relating to
Digitrans or Digitrans' business, condition, assets, liabilities, operations,
financial performance, net loss or prospects (or any aspect or portion thereof),
or if Digitrans becomes subject to any Liability of the type referred to in
clause "(iv)" of Section 9.3(a), then the Purchaser itself shall be deemed, by
virtue of its ownership of common stock of Digitrans, to have incurred Damages
as a result of such Breach or Liability. Nothing contained in this Section
9.3(b) shall have the effect of (i) limiting the circumstances under which the
Purchaser is reasonably likely to otherwise be deemed to have incurred Damages
for purposes of this Agreement, (ii) limiting the other types of Damages that
the Purchaser is reasonably likely to be deemed to have incurred (whether in
connection with any such Breach or Liability or otherwise), or (iii) limiting
the rights of Digitrans or any of the other Indemnitees under this Section 9.2.
9.4 Limit. Notwithstanding anything in this Agreement to the contrary, the
obligations (including without limitation liabilities) of Digitrans and the
Selling Shareholder in the aggregate under this Agreement shall not exceed the
Purchase Price.
9.5 Reduction. Notwithstanding anything in this Agreement to the
contrary, the Selling Shareholder's obligations under this Article 9 shall be
reduced by an amount equal to any tax benefits actually received by the
Indemnitees in connection with their claimed Damages, taking into account the
income tax treatment of the receipt of those payments. Tax benefits will be
deemed "actually received" for purposes of this paragraph upon Indemnitees'
filing of their Tax Return covering the period during which the Breach occurred
(the "Purchaser Breach Period Tax Return"). Each Indemnitee making a claim under
this Article 9 shall have a continuing obligation and duty to the Selling
Shareholder to deliver a true, accurate and complete copy of the Purchaser
Breach Period Tax Return and any and all amendments, modifications, supplements
and/or modification of the Purchaser Breach Period Tax Return to the Selling
Shareholder within ten (10) days after such amendment, modification, supplement
and/or modification is submitted to the appropriate authority or agency.
43.
9.6 Threshold.
(a) The Selling Shareholder shall not be required to make any
indemnification payment pursuant to Section 9.2 for any Breach of any of its
representations and warranties until such time as the total amount of all
Damages (including the Damages arising from such Breach and all other Damages
arising from any other Breaches of any representations or warranties) that have
been directly suffered or incurred by any one or more of the Indemnitees, or to
which any one or more of the Indemnitees has or have otherwise become subject,
exceeds $100,000 in the aggregate. At such time as the total amount of such
Damages exceeds $100,000 aggregate, the Indemnitees shall be entitled to be
indemnified against the full amount of such Damages (and not merely the portion
of such Damages exceeding $100,000), subject to Sections 9.4 and 9.5 above.
9.7 No Contribution. The Selling Shareholder waives, and acknowledges and
agrees that it shall not have and shall not exercise or assert or attempt to
exercise or assert, any right of contribution or right of indemnity or any other
right or remedy against Digitrans in connection with any indemnification
obligation or any other Liability to which the Selling Shareholder is reasonably
likely to become subject under any of the Transactional Agreements or otherwise
in connection with any of the Transactions. Notwithstanding anything in this
Agreement to the contrary, however, the Selling Shareholder does not waive any
right or remedy it may have against the officers or employees of Digitrans in
connection with any indemnification obligation or any other Liability to which
the Selling Shareholder may become subject under any of the Transactional
Agreements or otherwise in connection with any of the Transactions.
9.8 Nonexclusivity of Indemnification Remedies. The indemnification
remedies and other remedies provided in this Section 9 shall not be deemed to be
exclusive. Accordingly, the exercise by any Person of any of its rights under
this Section 9 shall not be deemed to be an election of remedies and shall not
be deemed to prejudice, or to constitute or operate as a waiver of, any other
right or remedy that such Person may be entitled to exercise (whether under this
Agreement, under any other Contract, under any statute, rule or other Legal
Requirement, at common law, in equity or otherwise).
(a) Defense of Third Party Claims. In the event of the assertion or
commencement by any Person of any claim or Proceeding (whether against
Digitrans, against any other Indemnitee or against any other Person) with
respect to which the Selling Shareholder is reasonably likely to become
obligated to indemnify, hold harmless, compensate or reimburse any Indemnitee
pursuant to this Section 9 and the Purchaser, after full compliance with Section
9.5 above, proceeds with the defense of any such claim or Proceeding:
(i) the Selling Shareholder shall make available to the
Purchaser any documents and materials in the possession or control of the
Selling Shareholder that may be necessary to the defense of such claim or
Proceeding such are not protected by any privilege and the disclosure of such
documents is not prohibited by any Contract);
(ii) the Purchaser shall keep the Selling Shareholder informed of
all material developments and events relating to such claim or Proceedings; and
44.
(iii) the Purchaser shall have the right to settle, adjust or
compromise such claim or Proceeding with the consent of the Selling Shareholder;
provided, however, that the Selling Shareholder shall not unreasonably withhold
such consent.
(b) Limit. Notwithstanding anything in this Agreement to the
contrary, the Selling Shareholder's aggregate liability to the Purchaser and/or
any Person under this Agreement shall be subject to the restrictions and
limitations set forth in Sections 9.4 and 9.5 above.
9.9 Exercise of Remedies by Indemnitees Other Than the Purchaser. No
Indemnitee (other than the Purchaser or any successor thereto or assign thereof)
shall be permitted to assert any indemnification claim or exercise any other
remedy under this Agreement unless the Purchaser (or any successor thereto or
assign thereof) shall have consented to the assertion of such indemnification
claim or the exercise of such other remedy.
9.10 Indemnification by the Purchaser. For one (1) year from the Closing
Date, the Purchaser shall hold harmless and indemnify the Selling Shareholder,
its officers, directors, affiliates, partners, agents, employees,
representatives, attorneys and Xxxxxx and their respective heirs, executors,
administrators, successors and assigns and each of them (collectively, "Xxxxxx
Indemnitees") from and against, and shall compensate and reimburse each of them
for, any Damages which are suffered or incurred by it or to which it is
reasonably likely to otherwise become subject at any time (regardless of whether
or not such Damages relate to any third party claim) and which arise directly or
indirectly from or as a direct or indirect result of, or are directly or
indirectly connected with, which arise after the Closing Date and which arise
from or as a result of, or are connected with:
(i) any Breach of any representation or warranty made by the
Purchaser in this Agreement or in the Purchaser's Closing Certificate;
(ii) any Breach of any representation, warranty, statement,
information or provision contained in any document delivered or otherwise made
available to Digitrans or the Selling Shareholder or any of their
Representatives by or on behalf of the Purchaser or any of the Purchaser's
Representatives;
(iii) any Breach of any covenant or obligation of the Purchaser;
(iv) any Proceeding relating directly or indirectly to any
Breach or alleged Breach or matter of the type referred to in clause "(i),"
"(ii)" or "(iii)" above (including any Proceeding commenced by the Selling
Shareholder for the purpose of enforcing any of its rights under this Section
9); or
(v) the conduct of Digitrans' business by Terayon or any of its
subsidiaries or assigns from and after the Closing.
9.11 Limit. Notwithstanding anything in this Agreement to the contrary, the
obligations (including without limitation liabilities) of the Purchaser in the
aggregate under this Agreement (except for the Purchaser's obligations set forth
in Section 1 of this Agreement) shall not exceed the Purchase Price.
45.
9.12 Reduction. Notwithstanding anything in this Agreement to the contrary,
the Purchaser's obligations under this Article 9 shall be reduced by an amount
equal to any tax benefits actually received by the Selling Shareholder in
connection with its claimed Damages, taking into account the income tax
treatment of the receipt of those payments. Tax benefits will be deemed
"actually received" for purposes of this paragraph upon the Selling
Shareholder's filing of its Tax Return covering the period during which the
Breach occurred (the "Selling Shareholder Breach Period Tax Return"). The
Selling Shareholder making a claim under this Article 9 shall have a continuing
obligation and duty to the Purchaser to deliver a true, accurate and complete
copy of the Selling Shareholder Breach Period Tax Return and any and all
amendments, modifications, supplements and/or modification of the Selling
Shareholder Breach Period Tax Return to the Purchaser within ten (10) days after
such amendment, modification, supplement and/or modification is submitted to the
appropriate authority or agency.
9.13 Threshold. The Purchaser shall not be required to make any
indemnification payment pursuant to Section 9.12 for any Breach of any of its
representations and warranties until such time as the total amount of all
Damages (including the Damages arising from such Breach and all other Damages
arising from any other Breaches of any representations or warranties) that have
been directly suffered or incurred by the Selling Shareholder, or to which the
Selling Shareholder has otherwise become subject, exceeds $100,000 in the
aggregate. At such time as the total amount of such Damages exceeds $100,000
aggregate, the Selling Shareholder shall be entitled to be indemnified against
the full amount of such Damages (and not merely the portion of such Damages
exceeding $100,000), subject to Sections 9.11 and 9.12 above.
9.14 Interest. Any party that is required to indemnify any other Person
pursuant to this Section 9 with respect to any Damages shall also be required to
pay such other Person interest on the amount of such Damages (for the period
commencing as of the date on which such other Person first incurred or otherwise
became subject to such Damages and ending on the date on which the applicable
indemnification payment is made by such party) at a floating rate three (3)
percentage points above the rate of interest publicly announced by Bank of
America, N.T. & S.A. from time to time as its prime, base or reference rate.
SECTION 10. Miscellaneous Provisions
10.1 Joint and Several Liability. Subject to Sections 9.4, 9.5 and 9.6:
(a) The Selling Shareholder agrees that it shall be jointly and
severally liable with Digitrans for the due and timely compliance with and
performance of each of the covenants and obligations of Digitrans set forth in
this Agreement; and
(b) Digitrans agrees that, prior to the Closing, Digitrans shall be
jointly and severally liable with the Selling Shareholder for the due and timely
compliance with and performance of each of the covenants and obligations of the
Selling Shareholder set forth in this Agreement (including the indemnification
obligations of the Selling Shareholder set forth in Section 9).
46.
10.2 Further Assurances. Each party hereto shall execute and/or cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (prior
to, at or after the Closing) for the purpose of carrying out or evidencing any
of the Transactions.
10.3 Fees and Expenses.
(a) Without limiting the generality of anything contained in Section
10.3(b), Digitrans shall bear and pay all fees, costs and expenses (including
all legal fees and expenses payable to counsel for Digitrans and the Selling
Shareholder) that have been incurred or that are in the future incurred by, on
behalf of or for the benefit of Digitrans or the Selling Shareholder
(specifically excluding any fees and expenses incurred by counsel or advisors
retained by the Purchaser or other Persons) in connection with:
(i) the negotiation, preparation and review of any term sheet
or similar document relating to any of the Transactions (excluding the
Employment Agreements and Noncompetition Agreements);
(ii) the investigation and review conducted by the Purchaser and
its Representatives with respect to Digitrans' business (and the furnishing of
information to the Purchaser and its Representatives in connection with such
investigation and review);
(iii) the negotiation, preparation and review of this Agreement
(including the Disclosure Schedule), the other Transactional Agreements and all
certificates, opinions and other instruments and documents delivered or to be
delivered in connection with the Transactions;
(iv) the preparation and submission of any filing or notice
required to be made or given in connection with any of the Transactions, and the
obtaining of any Consent required to be obtained in connection with any of the
Transactions; and
(v) the consummation and performance of the Transactions.
The Selling Shareholder shall not bear or pay, and Digitrans shall not permit
the Selling Shareholder to bear or pay, any such fees, costs or expenses.
(b) Subject to the provisions of Section 9 (including the
indemnification and other obligations of the Selling Shareholder thereunder) and
the provisions of Section 10.3(c), the Purchaser shall bear and pay all fees,
costs and expenses (including all legal fees and expenses payable to Xxxxxx
Godward llp) that have been incurred or that are in the future incurred by or on
behalf of the Purchaser in connection with:
(i) the negotiation, preparation and review of any term sheet or
similar document relating to any of the Transactions;
(ii) the investigation and review conducted by the Purchaser and
its Representatives with respect to Digitrans' business;
47.
(iii) the negotiation, preparation and review of this Agreement,
the other Transactional Agreements and all certificates, opinions and other
instruments and documents delivered or to be delivered in connection with the
Transactions; and
(iv) the consummation and performance of the Transactions.
(c) Notwithstanding anything to the contrary contained in this
Section 10.3, the Purchaser shall bear and pay 100% of all costs and filing fees
incurred or required to be paid in connection with the Registration Statement
(including without limitation, the Registration Statement, prospectus, blue sky
filing, listing of shares) and under the HSR Act in connection with the
Transactions.
10.4 Attorneys' Fees. If any legal action or other legal proceeding
relating to any of the Transactional Agreements or the enforcement of any
provision of any of the Transactional Agreements is brought against any party
hereto, the prevailing party shall be entitled to recover reasonable attorneys'
fees, costs and disbursements (in addition to any other relief to which the
prevailing party may be entitled).
10.5 Notices. Any "Notice" means a written notice or communication required
or permitted under this Agreement. A Notice shall be deemed given, if properly
addressed to the recipient as set forth below, on a certain "Notice Effective
Date", as determined below:
(a) Personal Service: on the date of personally handing the notice to
the recipient;
(b) Facsimile: on the date of fax transmittal, if sent to the fax
number of the party set forth below (which must be proven by presentation of a
fax confirmation receipt generated by the sender's fax machine in the Ordinary
Course of Business showing the date, time, number of pages, and the recipient's
fax number);
(c) Mail: seventy-two (72) hours after mailing, if mailed by first-
class mail, registered or certified, postage prepaid and properly addressed;
(d) Federal Express or other reputable overnight courier: the date of
actual receipt as confirmed by the carrier.
The Parties respective notice addresses (subject to change by either party
upon five (5) days' written notice) are:
if to Digitrans:
Digital Transmission Equipment
00000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
48.
if to the Selling Shareholder:
00000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
With a copy (of notices to either Digitrans or the Selling Shareholder) to:
Xxxxxx & Xxxxxx
0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
if to the Purchaser:
Terayon Communication Systems, Inc.
0000 Xxxxxx Xxxx Xxxx
Xxxxx Xxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy to:
--------------
Xxxxxx Godward llp
Xxx Xxxxxxxx Xxxxx, 00/xx/ Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
10.6 Publicity. Without limiting the generality of anything contained in
Section 5.4, on and at all times after the Closing Date:
(a) no press release or other publicity concerning any of the
Transactions shall be issued or otherwise disseminated by or on behalf of the
Selling Shareholder, and the Selling Shareholder shall continue to keep the
existence and terms of this Agreement and the other Transactional Agreements
strictly confidential; and
(b) the Selling Shareholder shall keep strictly confidential, and
shall not use or disclose to any other Person, any non-public document or other
information in the Selling Shareholder's possession that relates directly or
indirectly to the business of Digitrans, the Purchaser or any affiliate of the
Purchaser.
10.7 Time of the Essence. Time is of the essence of this Agreement.
49.
10.8 Headings. The underlined headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
10.9 Counterparts. This Agreement may be executed in several counterparts,
each of which shall constitute an original and all of which, when taken
together, shall constitute one (1) agreement.
10.10 Governing Law. This Agreement shall be construed in accordance with,
and governed in all respects by, the internal laws of the State of California
(without giving effect to principles of conflicts of laws).
10.11 Successors and Assigns. This Agreement shall be binding upon:
Digitrans and its successors and assigns (if any); the Selling Shareholder and
its successors and assigns; Xxxxxx and his personal representatives, executors,
administrators, estates, heirs, successors and assigns (if any); and the
Purchaser and its successors and assigns (if any). This Agreement shall inure to
the benefit of: Digitrans; the Selling Shareholder; the Purchaser; the other
Indemnitees (subject to Section 9.10); and the respective successors and assigns
(if any) of the foregoing. Following the Closing, the Purchaser may freely
assign any or all of its rights under this Agreement (including its
indemnification rights under Section 9) to any other Person without obtaining
the consent or approval of any other party hereto or of any other Person,
provided that such assignment occurs in connection with the Purchaser's sale of
its capital stock, business or assets of the Purchaser that effectively
constitute all or substantially all of the capital stock or similar securities
of the Purchaser or all or substantially all of the Purchaser's business or
assets as then conducted by the Purchaser, provided further that (a) such
assignment shall not relieve the Purchaser of its duties and obligations under
this Agreement and (b) such other Person to whom the assignment is made is at
least as financially sound as the Purchaser as of the date of such assignment.
10.12 Remedies Cumulative; Specific Performance. Except as otherwise
provided in this Agreement, the rights and remedies of the Parties hereto shall
be cumulative (and not alternative). Each Party's obligation under this
Agreement is unique. The Parties agree, therefore, that:
(a) in the event of any Breach or threatened Breach by any of the
Parties of any covenant, obligation or other provision set forth in this
Agreement, the Parties acknowledge it would be extremely impracticable to
measure the resulting damages; accordingly, the nondefaulting party or parties,
in addition to any other available rights or remedies, shall be entitled (in
addition to any other remedy that may be available to it) to (i) a decree or
order of specific performance or mandamus to enforce the observance and
performance of such covenant, obligation or other provision and the Parties each
expressly waive the defense that a remedy in damages will be adequate, and (ii)
an injunction restraining such Breach or threatened Breach; and
(b) the non-breaching party shall not be required to provide any bond
or other security in connection with any such decree, order or injunction or in
connection with any related action or Proceeding.
50.
Despite any breach or default by any of the Parties of any of their
respective representations, warranties, covenants, or agreements under this
Agreement, if the purchase and sale contemplated hereunder are consummated at
the Closing, each of the Parties waives any rights it may have to rescind this
Agreement, the Transactional Agreements or the transactions consummated by them;
provided, however, that this waiver will not affect any other rights or remedies
available to the Parties under this Agreement or under the law.
10.13 Waiver.
(a) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) Except as otherwise set forth in this Agreement, no Person shall
be deemed to have waived any claim arising out of this Agreement, or any power,
right, privilege or remedy under this Agreement, unless the waiver of such
claim, power, right, privilege or remedy is expressly set forth in a written
instrument duly executed and delivered on behalf of such Person; and any such
waiver shall not be applicable or have any effect except in the specific
instance in which it is given.
10.14 Amendments. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of the Purchaser, Digitrans and the Selling Shareholder.
10.15 Severability. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
10.16 Parties in Interest. Except for the provisions of Section 9 hereof,
nothing in this Agreement, whether express or implied, is intended to confer any
rights or remedies under or by reason of this Agreement on any Person other than
the Parties and their respective successors and assigns (if any). Nothing in
this Agreement is intended to relieve or discharge the obligation or liability
of any third persons to any party to this Agreement. Except as provided in
Section 9, no provision gives any third persons any right of subrogation or
action against any party to this Agreement.
10.17 Entire Agreement. The Transactional Agreements and the exhibits
attached thereto, the Non-disclosure Agreement dated February 4, 2000, as
amended May 10, 2000 and the Convertible Promissory Note dated June 21, 2000 set
forth the entire understanding of the Parties relating to the subject matter
thereof and supersede all prior agreements and understandings among or between
any of the parties relating to the subject matter thereof
51.
(including, without limitation, the letter of intent dated May 18, 2000 between
the Purchaser and The X.X. Xxxxxx Companies, Inc.). All exhibits attached hereto
are incorporated herein by this reference.
10.18 Construction.
(a) For purposes of this Agreement, whenever the context requires: the
singular number shall include the plural, and vice versa; the masculine gender
shall include the feminine and neuter genders; the feminine gender shall include
the masculine and neuter genders; and the neuter gender shall include the
masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including,"
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation."
(d) Except as otherwise indicated, all references in this Agreement to
"Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.
10.19 Consents. All consents required to be obtained by Digitrans, the
Selling Shareholder or Xxxxxx from the Purchaser under this Agreement shall not
be unreasonably withheld or delayed by the Purchaser unless otherwise expressly
indicated in this Agreement.
52.
The parties hereto have caused this Agreement to be executed and delivered
as of the date first set forth above.
"PURCHASER": Terayon Communication Systems, Inc.,
a Delaware corporation
By: /s/ Xxxx Xxxxx
------------------------------------
Xxxx Xxxxx
Chief Executive Officer
"DIGITRANS": Digital Transmission Equipment,
a California corporation
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx
President and Chief Executive Officer
"SELLING SHAREHOLDER":
The X.X. Xxxxxx Companies, Inc.,
a California corporation
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx
Chairman of the Board
"XXXXXX": Xxxxxx X. Xxxxxx,
an individual
/s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Signature Page to Stock Purchase Agreement
Exhibit A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
Acquisition Proposal. "Acquisition Proposal" shall mean any proposal, plan,
agreement, understanding or arrangement contemplating (a) any merger,
consolidation, business combination, share exchange, reorganization,
recapitalization other than (i) the extension of the conversion or payment terms
of outstanding convertible securities or debt of Digitrans or (ii) any other
debt financing, provided such financing does not involve a change of control or
a sale of substantially all of the assets of Digitrans or similar transaction
involving Digitrans or any of its affiliates, (b) any transfer or issuance of
more than 50% of the capital stock of Digitrans or any of its affiliates or
securities convertible into the capital stock of Digitrans or any of its
affiliates (other than upon the exercise or conversion of outstanding options,
warrants or other convertible securities or as contemplated by this Agreement),
(c) any transfer of any asset of Digitrans outside of the Ordinary Course of
Business or (d) any transaction that would be inconsistent with or that is
reasonably likely to have an adverse effect upon the consummation of the
transactions contemplated pursuant to this Agreement.
Acquisition Transaction. "Acquisition Transaction" shall mean any
transaction involving:
(a) the sale or other disposition of all or any portion of Digitrans'
business or assets (other than in the Ordinary Course of Business);
(b) the issuance, sale or other disposition of (i) any capital stock
of Digitrans, (ii) any option, call, warrant or right (whether or not
immediately exercisable) to acquire any capital stock of Digitrans, or (iii) any
security, instrument or obligation that is or is reasonably likely to become
convertible into or exchangeable for any capital stock of Digitrans; or
(c) any merger, consolidation, business combination, share exchange,
reorganization, recapitalization (other than the extension of the conversion or
payment terms of outstanding convertible securities or debt of Digitrans) or
similar transaction involving Digitrans.
Agreement. "Agreement" shall mean the Stock Purchase Agreement to which
this Exhibit A is attached (including the Disclosure Schedule), as it may be
amended from time to time.
Average Terayon Stock Price. "Average Terayon Stock Price" shall mean the
average of the closing sale prices of a share of the Common Stock of the
Purchaser as reported on the Nasdaq National Market for each of the fifteen (15)
consecutive trading days immediately preceding a given date.
Best Efforts. "Best Efforts" shall mean the efforts that a prudent Person
desiring to achieve a particular result would use in order to ensure that such
result is achieved as expeditiously as possible.
A-1.
Breach. There shall be deemed to be a "Breach" of a representation,
warranty, covenant, obligation or other provision if there is or has been (a)
any inaccuracy in or violation of, or any failure to comply with or perform,
such representation, warranty, covenant, obligation or other provision, or (b)
any claim (by any Person) or other circumstance that is inconsistent with such
representation, warranty, covenant, obligation or other provision; and the term
"Breach" shall be deemed to refer to any such inaccuracy, violation, failure,
claim or circumstance.
CERCLA. "CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act.
Closing. "Closing" shall have the meaning specified in Section 1.3(a) of
the Agreement.
Closing Certificate. "Closing Certificate" shall have the meaning specified
in Section 1.3(b)(v) of the Agreement.
Closing Date. "Closing Date" shall have the meaning specified in Section
1.3(a) of the Agreement.
Code. "Code" shall mean the Internal Revenue Code of 1986.
Comparable Entities. "Comparable Entities" shall mean Entities (other than
Digitrans) that are engaged in businesses similar to Digitrans' business.
Consent. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
Contract. "Contract" shall mean any written or oral, agreement, contract,
note, guaranty, indemnity, warranty, deed, assignment, power of attorney,
purchase order, work order, insurance policy, benefit plan, of any nature.
Current Benefit Plan. "Current Benefit Plan" shall mean any Employee
Benefit Plan that is currently in effect and:
(a) that was established or adopted by the Selling Shareholder or
Digitrans or any ERISA Affiliate or is maintained or sponsored by Digitrans;
(b) in which Digitrans participates;
(c) with respect to which Digitrans or any ERISA Affiliate is or is
reasonably likely to be required or permitted to make any contribution; or
(d) with respect to which Digitrans or any ERISA Affiliate is or is
reasonably likely to become subject to any Liability.
Damages. "Damages" shall include any loss, damage, injury, decline in
value, lost opportunity, Liability, claim, demand, settlement, judgment, award,
fine, penalty, Tax, fee (including any legal fee, expert fee, accounting fee or
advisory fee), charge, cost (including any cost of investigation) or expense of
any nature.
A-2.
Digitrans Executives. The "Digitrans Executives" shall mean Xxxxx Xxxxxxx,
Xxxxxxx Xxxx and Xxxxxx Xxxxx.
Digitrans Plan. "Digitrans Plan" shall mean any Current Benefit Plan or
Past Benefit Plan.
Disclosure Schedule. "Disclosure Schedule" shall mean the schedule (dated
as of the date of the Agreement) delivered to the Purchaser on behalf of
Digitrans and the Selling Shareholder, a copy of which is attached to the
Agreement and incorporated in the Agreement by reference.
Digitrans. "Digitrans" shall mean Digital Transmission Equipment, a
California corporation.
Digitrans Contract. "Digitrans Contract" shall mean any Contract:
(a) to which Digitrans is a party;
(b) by which Digitrans or any of its assets is or is reasonably likely
to become bound or under which Digitrans has, or is reasonably likely to become
subject to, any obligation; or
(c) under which Digitrans has or is reasonably likely to acquire any
right or interest.
Digitrans Financial Statements. "Digitrans Financial Statements" shall have
the meaning specified in Section 2.4(a) of the Agreement.
Digitrans Returns. "Digitrans Returns" shall have the meaning specified in
Section 2.17(a) of the Agreement.
Employee Benefit Plan. "Employee Benefit Plan" shall have the meaning
specified in Section 3(3) of ERISA.
Encumbrance. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, equity, trust, equitable
interest, claim, preference, right of possession, lease, tenancy, license,
encroachment, covenant, infringement, interference, Order, proxy, option, right
of first refusal, preemptive right, community property interest, legend, defect,
impediment, exception, reservation, limitation, impairment, imperfection of
title, condition or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
Entity. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, cooperative, foundation, society,
political party, union, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization or
entity.
A-3.
ERISA. "ERISA" shall mean the Employee Retirement Income Security Act of
1974.
ERISA Affiliate. "ERISA Affiliate" shall mean any Person that is, was or
would be treated as a single employer with the Selling Shareholder or Digitrans
under Section 414 of the Code.
Excluded Contract. "Excluded Contract" shall mean any Digitrans Contract
that:
(a) Digitrans has entered into in the Ordinary Course of Business;
(b) is identical in all material respects to one of the Standard Form
Agreements;
(c) has a term of less than 90 days or may be terminated by Digitrans
(without penalty) within 90 days after the delivery of a termination notice by
Digitrans; and
(d) does not contemplate or involve the payment of cash or other
consideration in an amount or having a value in excess of $10,000.
GAAP. "GAAP" shall mean generally accepted accounting principles, applied
on a basis consistent with the basis on which the Digitrans Financial Statements
were prepared.
Governmental Authorization. "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, concession, approval,
consent, ratification, permission, clearance, confirmation, endorsement, waiver,
certification, designation, rating, registration, qualification or authorization
that is, has been or is reasonably likely to in the future be issued, granted,
given or otherwise made available by or under the authority of any Governmental
Body or pursuant to any Legal Requirement; or
(b) right under any Contract with any Governmental Body.
Governmental Body. "Governmental Body" shall mean any:
(a) any county, municipality, district or other jurisdiction of any
nature, in California;
(b) the United States government.
Hazardous Material. "Hazardous Material" shall include:
(a) any petroleum, waste oil, crude oil, asbestos, urea formaldehyde
or polychlorinated biphenyl;
(b) any waste, gas or other substance or material that is explosive or
radioactive;
(c) any "hazardous substance," "pollutant," "contaminant," "hazardous
waste," "regulated substance," "hazardous chemical" or "toxic chemical" as
designated, listed or
A-4.
defined (whether expressly or by reference) in any statute, regulation or other
Legal Requirement (including CERCLA, any other so-called "superfund" or
"superlien" law, the Resource Conservation Recovery Act, the Federal Water
Pollution Control Act, the Toxic Substances Control Act, the Emergency Planning
and Community Right-to-Know Act and the respective regulations promulgated
thereunder);
(d) any other substance or material (regardless of physical form) or
form of energy that is subject to any Legal Requirement which regulates or
establishes standards of conduct in connection with, or which otherwise relates
to, the protection of human health, plant life, animal life, natural resources,
property or the enjoyment of life or property from the presence in the
environment of any solid, liquid, gas, odor, noise or form of energy; and
(e) any compound, mixture, solution, product or other substance or
material that contains any substance or material referred to in clause "(a)",
"(b)", "(c)" or "(d)" above.
Indemnitees. "Indemnitees" shall mean the following Persons:
(a) the Purchaser;
(b) the Purchaser's current and future affiliates (including
Digitrans) ;
(c) the respective Representatives of the Persons referred to in
clauses "(a)" and "(b)" above; and
(d) the respective successors and assigns of the Persons referred to
in clauses "(a)", "(b)" and "(c)" above;
provided, however, that (i) Digitrans shall not be entitled to exercise any
rights as an Indemnitee prior to the Closing, and (ii) the Selling Shareholder
shall not be deemed to be an "Indemnitee".
Knowledge. An individual shall be deemed to have "Knowledge" of a
particular fact or other matter if such:
(a) such individual is actually aware of such fact or other matter; or
(b) a prudent individual could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a
reasonably diligent and reasonably comprehensive investigation concerning the
truth or existence of such fact or other matter.
Digitrans shall be deemed to have "Knowledge" of a particular fact or other
matter if any of the Digitrans' Executives or the Selling Shareholder's
Representatives has Knowledge of such fact or other matter.
Legal Requirement. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, legislation, constitution,
principle of common law, resolution, ordinance, code, edict, decree,
proclamation, treaty, convention, rule, regulation, ruling, directive,
pronouncement, requirement, specification, determination, decision, opinion or
A-5.
interpretation that is, has been or is reasonably likely to in the future be
issued, enacted, adopted, passed, approved, promulgated, made, implemented or
otherwise put into effect by or under the authority of any Governmental Body.
Liability. "Liability" shall mean any debt, obligation, duty or liability
of (including unmatured, unaccrued, contingent, conditional, joint or several
liability), regardless of whether such debt, obligation, duty or liability would
be required to be disclosed on a balance sheet prepared in accordance with
generally accepted accounting principles and regardless of whether such debt,
obligation, duty or liability is immediately due and payable.
Material Adverse Effect. A violation or other matter will be deemed to have
a "Material Adverse Effect" on Digitrans or the Purchaser, as the case may be,
if such violation or other matter (considered together with all other matters
that would constitute exceptions to the representations and warranties set forth
in the Agreement or in the Digitrans Closing Certificate or in the Purchaser
Closing Certificate, as the case may be, but for the presence of "Material
Adverse Effect" or other materiality qualifications, or any similar
qualifications, in such representations and warranties) would either: (a) result
in at least $100,000 in direct economic damages to Digitrans or the Purchaser,
as the case may be, or (b) if in the discretion of Digitrans or the Purchaser,
as the case may be, the amount of damages cannot reasonably be quantified, have
a material adverse effect on Digitrans' or the Purchaser's, as the case may be,
business, condition, assets, liabilities, operations, financial performance or
prospects, provided, that a decrease in the price of the Common Stock of the
Purchaser that is not accompanied by another event which would be deemed to have
a Material Adverse Effect on the Purchaser, shall not be deemed to constitute a
Material Adverse Effect on the Purchaser.
Order. "Order" shall mean any:
(a) order, judgment, injunction, edict, decree, ruling, pronouncement,
determination, decision, opinion, verdict, sentence, subpoena, writ or award
that is, has been or is reasonably likely to in the future be issued, made,
entered, rendered or otherwise put into effect by or under the authority of any
court, administrative agency or other Governmental Body or any arbitrator or
arbitration panel; or
(b) Contract with any Governmental Body that is, has been or is
reasonably likely to in the future be entered into in connection with any
Proceeding.
Ordinary Course of Business. An action taken by or on behalf of Digitrans
shall not be deemed to have been taken in the "Ordinary Course of Business"
unless:
(a) such action is recurring in nature, is consistent with Digitrans'
past practices and is taken in the ordinary course of Digitrans' normal day-to-
day operations;
(b) such action is taken in accordance with sound and prudent business
practices;
(c) such action is not required to be authorized by Digitrans'
shareholders, Digitrans' board of directors or any committee of Digitrans' board
of directors and does not require any other separate or special authorization of
any nature; and
A-6.
(d) such action is similar in nature and magnitude to actions
customarily taken, without any separate or special authorization, in the
ordinary course of the normal day-to-day operations of other Entities that are
engaged in businesses similar to Digitrans' business.
Past Benefit Plan. "Past Benefit Plan" shall mean any Employee Benefit Plan
(other than a Current Benefit Plan):
(a) of which the Selling Shareholder, Digitrans or any ERISA Affiliate
has ever been a "plan sponsor" (as defined in Section 3(16)(B) of ERISA) or that
otherwise has at any time been established, adopted, maintained or sponsored by
any of the Companies or by any ERISA Affiliate;
(b) in which the Selling Shareholder, Digitrans or any ERISA Affiliate
has ever participated;
(c) with respect to which the Selling Shareholder, Digitrans or any
ERISA Affiliate has ever made, or has ever been required or permitted to make,
any contribution; or
(d) with respect to which the Selling Shareholder, Digitrans or any
ERISA Affiliate has ever been subject to any Liability.
Person. "Person" shall mean any individual, Entity or Governmental Body.
Pre-Closing Period. "Pre-Closing Period" shall mean the period commencing
as of the date of the Agreement and ending on the earlier of the Closing Date or
the date this Agreement is terminated by the Purchaser or the Selling
Shareholder pursuant to the terms of this Agreement.
Proceeding. "Proceeding" shall mean any action, suit, litigation,
arbitration, civil, criminal, administrative or appellate proceeding,
prosecution, contest, hearing, audit, that is or has been commenced, brought,
conducted or heard by or before any Governmental Body or any arbitrator or
arbitration panel.
Proprietary Asset. "Proprietary Asset" shall mean any patent, patent
application, trademark (whether registered or unregistered and whether or not
relating to a published work), trademark application, trade name, fictitious
business name, service xxxx (whether registered or unregistered), service xxxx
application, copyright (whether registered or unregistered), copyright
application, maskwork, maskwork application, trade secret, know-how, franchise,
system, computer software, invention, design, blueprint, proprietary product,
technology, proprietary right or other intellectual property right or intangible
asset .
Purchase Price. "Purchase Price" shall have the meaning specified in
Section 1.2 of the Agreement.
Purchaser. "Purchaser" shall mean Terayon Communication Systems, Inc., a
Delaware corporation.
Related Party. Each of the following shall be deemed to be a "Related
Party":
A-7.
(a) the Selling Shareholder;
(b) each individual who is, or who has at any time been, an officer of
Digitrans;
(c) each member of the family of each of the individuals referred to
in clauses "(a)" and "(b)" above; and
(d) any Entity (other than Digitrans) in which any one of the
individuals referred to in clauses "(a)", "(b)" and "(c)" above holds (or in
which more than one of such individuals collectively hold), beneficially or
otherwise, a material voting, proprietary or equity interest.
Representatives. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives. The
Selling Shareholders and all other Related Parties shall be deemed to be
"Representatives" of Digitrans.
Tax. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, estimated tax, gross receipts tax, value-added tax, surtax,
excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax,
property tax, business tax, occupation tax, inventory tax, occupancy tax,
withholding tax or payroll tax), levy, assessment, tariff, impost, imposition,
toll, duty (including any customs duty), deficiency or fee, and any related
charge or amount (including any fine, penalty or interest), that is, has been or
is reasonably likely to in the future (provided that neither the Selling
Shareholder nor Xxxxxx shall be liable for any such future Tax unless liability
for such future Tax relates back to the period prior to the Closing Date) be (a)
imposed, assessed or collected by or under the authority of any Governmental
Body, or (b) payable pursuant to any tax-sharing agreement or similar Contract.
Tax Return. "Tax Return" shall mean any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information that
is, has been or is reasonably likely to in the future be filed with or submitted
to, or required to be filed with or submitted to, any Governmental Body in
connection with the determination, assessment, collection or payment of any Tax
or in connection with the administration, implementation or enforcement of or
compliance with any Legal Requirement relating to any Tax.
Transactional Agreements. "Transactional Agreements" shall mean:
(a) the Agreement;
(b) the Indemnification Escrow Agreement referred to in Section
1.3(b)(iii) of the Agreement;
(c) the Retention Escrow Agreement referred to in Section 1.3(b)(iv)
of the Agreement;
(d) the Key Employee Agreements referred to in Section 1.3(b)(vi) of
the Agreement;
A-8.
(e) the Noncompetition Agreements referred to in Section 1.3(b)(vi) of
the Agreement;
(f) the General Release referred to in Section 1.3(b)(vii) of the
Agreement
(g) the Transition Services Agreement referred to in Section
1.3(b)(viii) of the Agreement;
(h) the Digitrans Closing Certificate referred to in Section
1.3(b)(ix) of the Agreement; and
(i) the Purchaser Closing Certificate referred to in Section 1.3(b)(x)
of the Agreement.
Transactions. "Transactions" shall mean (a) the execution and delivery of
the respective Transactional Agreements, and (b) all of the transactions
contemplated by the respective Transactional Agreements, including:
(i) the sale of the Shares by the Selling Shareholder to the
Purchaser in accordance with the Agreement; and
(ii) the performance by Digitrans, the Selling Shareholder and
the Purchaser of their respective obligations under the Transactional Agreements
and the exercise by Digitrans, the Selling Shareholder and the Purchaser of
their respective rights under the Transactional Agreements.
Unaudited Interim Balance Sheet. "Unaudited Interim Balance Sheet" shall
have the meaning specified in Section 2.4(a)(iii) of the Agreement.
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