EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement"), dated as of July 1,
1999, is made by and among SecurFone America, Inc., a Delaware corporation
("SecurFone"), Montpilier Holdings, Inc., a Nevada corporation
("Montpilier"), IXATA, Inc., a California corporation ("IXATA"), and the
undersigned shareholders of IXATA (each a "Seller" and collectively, the
"Sellers").
RECITALS:
A. The Sellers are the record and beneficial owners of all of
the issued and outstanding capital stock of IXATA.
B. Montpilier is the record and beneficial owner of a
controlling interest in the capital stock of SecurFone.
C. Upon the terms and conditions contained in this Agreement,
Sellers wish to sell to SecurFone, and SecurFone wishes to purchase from
Sellers, all of the issued and outstanding capital stock of the IXATA for
shares of SecurFone's common stock, $0.01 par value per share ("SecurFone
Stock"), in a tax-free exchange pursuant to Section 368 of the Internal
Revenue Code of 1986, as amended, and any regulations or published rulings
promulgated or issued thereunder (the "Code").
THEREFORE, in consideration of the foregoing recitals and the mutual
covenants, warranties, representations and conditions contained in this
Agreement, the parties agree as follows:
1. SALE AND PURCHASE OF SHARES
1.01 SALE AND PURCHASE. Each of the Sellers sells, transfers,
assigns and conveys, free and clear of any and all liens, claims, mortgages,
charges, security interests, encumbrances or similar agreements of any kind
or nature ("Liens"), all of the outstanding shares of IXATA's capital stock,
including in the aggregate 1,292,641 shares of common stock, without par
value (collectively, the "IXATA Stock"), that are owned by each such Seller
to SecurFone, and SecurFone purchases, acquires and accepts from each of the
Sellers all of the IXATA Stock. A listing of the Sellers and the number of
shares of IXATA Stock owned by each Seller is set forth on SCHEDULE 1.01.
1.02 PURCHASE PRICE. SecurFone pays, and the Sellers accept, as the
purchase price for the IXATA Stock, an aggregate of 4.5 million shares of
SecurFone Stock (collectively, the "Purchase Shares"), to be issued to each
Seller in the manner and amounts set forth on SCHEDULE 1.02. Upon issuance,
the Purchase Shares shall represent approximately 37% of the issued and
outstanding shares of SecurFone Stock on a fully-diluted basis.
1.03 TRANSFER TAXES. Each Seller shall pay all stock transfer taxes,
recording fees and other sales, transfer, use, purchase or similar taxes that
are imposed on any party by any governmental authority in any jurisdiction in
connection with the issuance of the Purchase Shares to that Seller.
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2. REPRESENTATIONS AND WARRANTIES OF IXATA AND THE SELLERS
Except as otherwise disclosed to SecurFone in a letter delivered to
it prior to the execution of this Agreement (the "IXATA Disclosure Letter"),
a copy of which is attached as SCHEDULE 2, IXATA and each Seller jointly and
severally represents and warrants to SecurFone as follows (it being
understood that, as among the Sellers, the liability of each Seller shall be
several and not joint):
2.01 ORGANIZATION. IXATA is a corporation duly organized, validly
existing and in good standing under the laws of the State of California and
has all requisite corporate power and corporate authority to own, lease and
operate its properties and to carry on its business as now being conducted or
presently proposed to be conducted. IXATA is duly qualified or licensed and
in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except in those
jurisdictions where the failure to be so qualified could not reasonably be
expected to have individually or in the aggregate a material adverse effect
on the business, assets, liabilities, results of operations, financial
condition or prospects (a "Material Adverse Effect") of IXATA (an "IXATA
Material Adverse Effect"). IXATA has provided SecurFone with a complete and
accurate copy of IXATA's Articles of Incorporation and Bylaws, including all
amendments thereto.
2.02 CAPITALIZATION. The authorized capital stock of IXATA consists
of the following: (i) 20,000,000 shares of common stock ("Common Stock"), and
(ii) 10,000,000 shares of preferred stock ("Preferred Stock"). As of the date
of this Agreement, 1,292,641 shares of Common Stock and zero shares of
Preferred Stock are issued and outstanding. All of the issued and outstanding
shares of IXATA Stock are duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights. Except as set forth in the
preceding sentence, there are no shares of capital stock of IXATA issued or
outstanding or any options, warrants, subscriptions, calls, rights,
convertible securities or other agreements or commitments obligating IXATA to
issue, transfer, sell, redeem, repurchase or otherwise acquire any shares of
its capital stock or securities. The promissory notes issued by IXATA on or
about January 26, 1999 in the aggregate principal amount of $150,000 have
heretofore been fully converted into shares of IXATA Stock without further
liability to IXATA.
2.03 MATERIAL INVESTMENTS. IXATA does not directly or indirectly own
any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar interest in, any
corporation (including but not limited to any subsidiaries of IXATA),
partnership, joint venture or other business association or entity.
2.04 AUTHORITY RELATIVE TO THIS AGREEMENT. IXATA has the corporate
power to enter into this Agreement and to carry out its obligations under
this Agreement. The execution, delivery and performance of this Agreement by
IXATA and the consummation by IXATA of the transactions contemplated hereby
have been duly authorized by IXATA's Board of Directors and shareholders and
no other corporate proceedings on the part of IXATA are necessary to
authorize this Agreement or the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by IXATA and
constitutes a legal, valid and binding agreement of IXATA, enforceable
against IXATA in accordance with its terms, subject, as to the enforcement of
remedies, to general equitable principles and to bankruptcy, insolvency and
similar laws.
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2.05 CONSENTS AND APPROVALS; NO VIOLATIONS. No filing with, and no
permit, authorization, consent or approval of, any court, tribunal or
Governmental Person is necessary for the execution, delivery and performance
of this Agreement by IXATA or of the transactions contemplated by this
Agreement. Neither the execution, delivery and performance of this Agreement
by IXATA nor the consummation by IXATA of the transactions contemplated
hereby, nor compliance by IXATA with any of the provisions hereof, will (i)
conflict with or result in any breach of any provisions of the Articles of
Incorporation or Bylaws of IXATA, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default
under (or give rise to any right of termination, cancellation, vesting,
payment, exercise, acceleration, suspension or revocation), any of the terms,
conditions or provisions of any note, bond, mortgage, deed of trust, security
interest, indenture, lease, license, contract, agreement, insurance policy,
plan or other instrument or obligation to which IXATA is a party or by which
any of its properties or assets may be bound or affected, (iii) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
IXATA or any of its properties or assets, (iv) result in the creation or
imposition of any Lien on any asset of IXATA or (v) cause the suspension,
termination or revocation of any certificates of need, accreditation,
registrations, licenses, permits and other consents or approvals of
Governmental Persons applicable to IXATA, except in the case of clauses (ii),
(iii), (iv) and (v) for violations, breaches, defaults, terminations,
cancellations, accelerations, creations, impositions, suspensions or
revocations which could not reasonably be expected to have individually or in
the aggregate an IXATA Material Adverse Effect. "Governmental Person" means
any governmental, quasi-governmental, judicial, public or statutory
instrumentality, authority, agency, bureau, body or entity of the United
States of America or of any state, county, municipality or other political
subdivision of the United States of America.
2.06 FINANCIAL STATEMENTS. IXATA has provided to SecurFone unaudited
interim financial statements for the quarter ended March 31, 1999 (the "IXATA
Financial Statement Date") and the months ended April 30 and May 31, 1999
(collectively, the "IXATA Financial Statements"). The IXATA Financial
Statements were prepared based upon and are consistent with the books and
records of IXATA (which books and records are correct and complete in all
material respects) and fairly present in all material respects, in conformity
with generally accepted accounting principles ("GAAP") applied on a
consistent basis (except as may be indicated in the notes thereto), the
financial position of IXATA as of the respective dates thereof and the
results of operations and changes in financial position for the periods then
ended (subject to normal year-end adjustments).
2.07 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since January 15, 1999
and except as disclosed in the IXATA Financial Statements, IXATA has in all
material respects conducted its business in the ordinary course consistent
with past practices and there has not occurred: (i) any IXATA Material
Adverse Effect; (ii) any amendments or changes in the Articles of
Incorporation or Bylaws of IXATA; (iii) any sale, transfer, assignment,
disposition or license of, or material pledge of or material encumbrance
upon, property (tangible or intangible) of IXATA with a value in excess of
$50,000; (iv) any material change by IXATA in its accounting methods,
principles or practices except as required by any change in GAAP or as a
result of a change in law; (v) any material revaluation by IXATA of any of
its assets, including, without limitation, writing down the value of
inventory or writing off notes or accounts receivable other than in the
ordinary course of business; (vi) any entry into any IXATA Material Agreement
outside the ordinary course of business; (vii) any
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termination, acceleration, cancellation or modification of any IXATA Material
Agreement; (viii) any imposition of any Lien on any asset of IXATA; (ix) any
capital investment in, any loan to or any acquisition of the securities or
assets of any other person; (x) any creation, incurrence, assumption or
guarantee of any indebtedness (including capitalized lease obligations); (xi)
any delay or postponement of the payment of any accounts payable or other
liabilities; (xii) any sale, issuance or other disposition of any of its
capital stock, or grant of any options, warrants or other rights of any kind
with respect to any of its capital stock; (xiii) any declaration or setting
aside of payment of any dividend or distribution with respect to its capital
stock; (xiv) the making of any loan to, or entry into any transaction with,
any of its directors, officers and employees outside the ordinary course of
business; (xv) adoption of any IXATA Plan; and (xvi) any change in any IXATA
Plan or other employment terms for any of its directors, officers and
employees outside the ordinary course of business.
2.08 LITIGATION. There is no suit, action or proceeding, whether at
law or equity, before or by any federal, state or foreign commission, court,
tribunal, board, agency or instrumentality, or before any arbitrator (each,
an "Action"), pending or, to the knowledge of IXATA and any Seller,
threatened against or affecting IXATA, nor is there any judgment, decree,
injunction, rule or order of any court, tribunal, arbitrator or Governmental
Person outstanding against IXATA.
2.09 ABSENCE OF UNDISCLOSED LIABILITIES. Except for liabilities or
obligations which are accrued or reserved against in the IXATA Financial
Statements (or reflected in the notes thereto) or which were incurred after
the IXATA Financial Statement Date in the ordinary course of business and
consistent with past practices, IXATA does not have any material liabilities
or obligations (whether absolute, accrued, contingent or otherwise).
2.10 NO DEFAULT. IXATA is not in violation or breach of, or default
under (and no event has occurred which with notice or the lapse of time or
both would constitute a violation or breach of, or a default under) any term,
condition or provision of (i) its Articles of Incorporation or Bylaws, (ii)
any note, bond, mortgage, deed of trust, security interest, indenture,
license, agreement, plan, contract, lease, insurance policy, commitment or
other instrument or obligation to which IXATA is a party or by which it or
any of its properties or assets may be bound or affected, (iii) any order,
writ, injunction, decree, statute, rule or regulation applicable to IXATA or
any of its properties or assets, or (iv) any license, permit and other
consent or approval of Governmental Persons applicable to IXATA, except in
the case of clauses (ii), (iii) and (iv) above for breaches, defaults or
violations which could not reasonably be expected to have individually or in
the aggregate an IXATA Material Adverse Effect.
2.11 TAXES.
(a) IXATA has (i) timely filed (or has had timely filed on its
behalf) or will cause to be timely filed all material Tax Returns
required by applicable law to be filed by it for tax years ended prior
to the date of this Agreement and all such Tax Returns and amendments
thereto are or will be complete and accurate in all material respects,
(ii) paid (or has had paid on its behalf) all Taxes due or has properly
accrued or reserved for all such Taxes for such periods and (iii)
accrued for all Taxes for periods commencing after the periods covered
by
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such Tax Returns and ending prior to the date hereof. IXATA is not
currently the beneficiary of any extension of time within which to file
any Tax Return.
(b) There are no Liens for Taxes upon the assets of IXATA,
except Liens for Taxes not yet due or being contested in good faith.
(c) There are no deficiencies or adjustments for Taxes that
have been proposed or assessed by any Tax Authority against IXATA which
remain unpaid. There is no dispute or claim concerning any liability
for Taxes of IXATA and no Audit of any Tax Returns is currently
underway or, to the knowledge of IXATA and any Seller, threatened.
(d) IXATA has no Tax sharing, Tax indemnity, or similar
agreements to which IXATA is a party, is bound by, or has any
obligation or liability for Taxes.
(e) IXATA has not paid, and does not expect to pay, in any
taxable year commencing on or after December 31, 1994, remuneration
that would result in a disallowance of any material amount of tax
deductions under Section 162(m) of the Code. There are no changes in
the tax accounting methods subject to Section 481(a) of the Code which
have an ongoing material effect on IXATA. No "consent" within the
meaning of Section 341(f) of the Code has been filed with respect to
IXATA.
(f) As used in this Agreement, (i) "Audit" means any audit,
assessment of Taxes, other examination by any Tax Authority, proceeding
or appeal of such proceeding relating to Taxes, (ii) "Taxes" means all
Federal, state, local and foreign taxes, and other assessments of a
similar nature (whether imposed directly or through withholding and
whether or not shown on any tax return), including any interest,
additions to tax, or penalties applicable thereto, (iii) "Tax
Authority" means the Internal Revenue Service and any other domestic or
foreign governmental authority responsible for the administration of
any Taxes, and (iv) "Tax Returns" means all Federal, state, local and
foreign tax returns, declarations, statements, reports, schedules,
forms and information returns and any amended Tax Return relating to
Taxes.
2.12 TITLE TO CERTAIN PROPERTIES; ENCUMBRANCES. IXATA holds good and
marketable title to all real and personal property purported to be owned by
it, free and clear of all Liens except for: (i) any Lien for current Taxes
not yet due and payable; and (ii) Liens that could not reasonably be expected
to have individually or in the aggregate an IXATA Material Adverse Effect and
that otherwise do not adversely effect the value or the use by IXATA of the
property that is the subject of such Liens. IXATA has provided SecurFone with
copies of all real property leases to which IXATA is a party and has provided
to SecurFone a list of all real property owned or leased by IXATA except such
leases or property which individually or in the aggregate are immaterial.
Each lease to which IXATA is a party is in full force and effect and no party
thereto is in default of any of its material obligations thereunder. No
consent by or of any party to any such lease is required in order to
consummate the transactions contemplated by this Agreement without causing a
breach or violation of or default or increased charges under such lease.
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2.13 COMPLIANCE WITH APPLICABLE LAW. IXATA is in compliance with all
applicable laws, except where the failure to be in such compliance could not
reasonably be expected to have individually or in the aggregate an IXATA
Material Adverse Effect.
2.14 LABOR MATTERS.
(a) IXATA is not a party to, or bound by, any collective
bargaining agreement, contract or other agreement or understanding with
a labor union or labor organization. There is no unfair labor practice
or labor arbitration proceeding pending or, to the knowledge of IXATA
and any Seller, threatened against IXATA relating to its business,
except for any such proceedings which could not reasonably be expected
to have individually or in the aggregate an IXATA Material Adverse
Effect. To the knowledge of IXATA and any Seller, there are no
organizational efforts with respect to the formation of a collective
bargaining unit presently being made or threatened involving employees
of IXATA, nor does any labor union or organization claim to represent
the employees of IXATA.
(b) There is no labor strike, dispute, slow down, work
stoppage, or lockout actually pending or, to the knowledge of IXATA and
any Seller, threatened against IXATA.
(c) There are no charges or complaints instituted by, or
before, any Governmental Person pending or, to the knowledge of IXATA
and any Seller, threatened against IXATA involving any employment or
labor matter, including, without limitation, any: (i) complaints or
citations under the Occupational Safety and Health Act or any state or
local occupational safety act or regulation since December 31, 1994;
(ii) unfair labor practice charges or complaints with the National
Labor Relations Board; or (iii) other claims, charges, actions or
controversies (including, without limitation, claims of discrimination,
wrongful discharge, or employment-related tort), pending or threatened
involving IXATA and any employee, any former employee, or any labor
union or other organization representing or claiming to represent the
interests of any such employee or former employee. IXATA is and has
been in compliance with all applicable laws regarding employment and
employment practices, terms and conditions of employment and wages and
hours and occupational safety and health programs, and IXATA is not
engaged in any violation of any applicable law related to employment,
including unfair labor practices or acts of employment discrimination,
except in each case where the failure to be in compliance could not
reasonably be expected to have individually or in the aggregate an
IXATA Material Adverse Effect.
2.15 EMPLOYEE BENEFIT PLANS; ERISA.
(a) With respect to each of the bonus, deferred compensation,
incentive compensation, stock purchase, stock option, severance or
termination pay, hospitalization or other medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension,
or retirement plan, program, agreement or arrangement, and each other
employee benefit plan or program of IXATA (collectively, the "IXATA
Plans") in force on or after December 31, 1994, except for
multi-employer plans as defined in Section 3(37)(A) of the Employee
Retirement Income Security Act of 1974, as amended, and any regulations
or published rulings promulgated or issued thereunder ("ERISA"), IXATA
has delivered to SecurFone complete and accurate copies of each of the
following documents: (i) the plan documents of each of the IXATA Plans
(including all amendments thereto); (ii) the annual
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report and actuarial report, if required under ERISA, with respect to
each of the IXATA Plans that is an "employee benefit plan," as that
term is defined in Section 3(3) of ERISA (collectively, the "IXATA
ERISA Plans"), for the last two years; (iii) the most recent Summary
Plan Description, together with each Summary of Material Modifications,
required under ERISA with respect to the IXATA ERISA Plans; (iv) if
IXATA Plans are funded through a trust or any third party funding
vehicle, a copy of the trust or other funding agreement (including all
amendments thereto) and the latest financial statements thereof; and
(v) the most recent determination letter received from the Internal
Revenue Service with respect to each IXATA ERISA Plan intended to
qualify under Section 401(a) of the Code.
(b) No liability under Title IV of ERISA has been incurred by
IXATA or any company that is an affiliate of IXATA under ERISA (an
"IXATA ERISA Affiliate") since the effective date of ERISA that has not
been satisfied in full, and no condition exists that presents a
material risk to IXATA or any IXATA ERISA Affiliate of incurring any
liability under Title IV (other than liability for premiums due to the
Pension Benefit Guarantee Corporation). To the extent this
representation applies to Section 4064, Section 4069 or Section 4204 of
Title IV of ERISA, it is made not only with respect to IXATA ERISA
Plans but also with respect to any employee benefit plan, program,
agreement or arrangement subject to Title IV of ERISA to which IXATA or
any IXATA ERISA Affiliate made, or was required to make, contributions
during the five-year period ending on the date of this Agreement.
(c) With respect to each IXATA ERISA Plan which is subject to
Title IV of ERISA, the present value of accrued benefits under that
plan, based upon the actuarial assumptions used for financial reporting
purposes in the most recent actuarial report prepared by that plan's
actuary with respect to that plan, did not exceed, as of its latest
valuation date, the then current value of the assets of that plan
allocable to those accrued benefits.
(d) No IXATA ERISA Plan or any trust established thereunder
has incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not
waived, as of the last day of the most recent fiscal year of each IXATA
ERISA Plan ended prior to the date of this Agreement, and all
contributions required to be made with respect thereto (whether
pursuant to the terms of any IXATA ERISA Plan or otherwise) on or prior
to the date of this Agreement have been timely made.
(e) No IXATA ERISA Plan is a "multi-employer pension plan," as
defined in Section 3(37)(A) of ERISA, nor has IXATA ever been a party
to any agreement which required it to contribute to a multi-employer
pension plan on behalf of any employee, nor is any IXATA ERISA Plan a
plan described in Section 4063(a) of ERISA.
(f) Each of the IXATA Plans has been operated and administered
in all material respects in accordance with applicable laws, including,
but not limited to, ERISA and the Code except for requirements which
could not reasonably be expected to have individually or in the
aggregate an IXATA Material Adverse Effect.
(g) No amounts payable under IXATA Plans or any other
contract, arrangement or agreement will fail to be deductible for
federal income tax purposes by virtue of Section 280G of the Code.
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(h) No IXATA Plan provides benefits, including without
limitation death or medical benefits (whether or not insured), with
respect to current or former employees of IXATA or any IXATA ERISA
Affiliate beyond those employees' retirement or other termination of
service, other than (i) coverage mandated by applicable law, (ii) death
benefits or retirement benefits under any "employee pension plan," as
that term is defined in Section 3(2) of ERISA, (iii) deferred
compensation benefits accrued as liabilities on the books of IXATA or
any IXATA ERISA Affiliate or (iv) benefits the full cost of which is
borne by those employees or their beneficiaries.
(i) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee or
officer of IXATA or any IXATA ERISA Affiliate to severance pay,
unemployment compensation or any other payment, except as expressly
provided in this Agreement, or (ii) accelerate the time of payment or
vesting, or increase the amount, of any compensation due any employee
or officer.
2.16 INTELLECTUAL PROPERTY. IXATA has provided to SecurFone complete
and accurate copies of all patents, trademarks, service marks, trade names,
copyrights, any applications, grants or licenses for any of the foregoing, or
any other intellectual property (collectively "Intellectual Property") owned
by IXATA (the "IXATA Intellectual Property"), which includes but is not
limited to all commercial rights to IXATA's RFP Express software. IXATA has
the lawful right to own and use all of the IXATA Intellectual Property
currently used in its business, free and clear of any Liens, and to the
knowledge of IXATA and any Seller, no such use infringes upon the lawful
rights of any other person, except as could not reasonably be expected to
have individually or in the aggregate an IXATA Material Adverse Effect. To
the knowledge of IXATA and any Seller, no person is using any of the IXATA
Intellectual Property in a manner which infringes upon the lawful rights of
IXATA, except as could not reasonably be expected to have individually or in
the aggregate in an IXATA Material Adverse Effect.
2.17 INSURANCE. IXATA has provided to SecurFone complete and
accurate copies of all insurance policies maintained by IXATA. The policies
are in full force and effect, all premiums due on IXATA's policies have been
paid, and IXATA has not received any notice of cancellation with respect
thereto. IXATA has no obligation, liability or indebtedness for premiums or
for retroactive premium adjustments for any period through the date hereof
which obligation, liability or indebtedness could reasonably be expected to
have individually or in the aggregate an IXATA Material Adverse Effect. There
are no claims by IXATA under any of IXATA's insurance policies as to which
any insurance IXATA is denying liability or defending under a reservation of
rights clause.
2.18 BROKERS. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission payable by IXATA in
connection with the transactions contemplated by this Agreement based upon
arrangements made by and on behalf of IXATA.
2.19 CUSTOMERS AND SUPPLIERS. Since March 31, 1999, no material
customer or supplier of IXATA has terminated its relationship with, or
materially reduced its purchases from or sales to IXATA. IXATA does not
expect that any such customer or supplier will do so as a result of the
transactions contemplated by this Agreement, except as could not reasonably
be expected to have individually or in the aggregate an IXATA Material
Adverse Effect.
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2.20 GOVERNMENTAL PERMITS. The Governmental Permits obtained by
IXATA have been validly acquired, are in full force and effect and, except as
could not reasonably be expected to have individually or in the aggregate an
IXATA Material Adverse Effect, represent all Governmental Permits necessary
under applicable law for IXATA to carry on its business as now being
conducted and to own, occupy or use its properties and assets. IXATA is in
compliance with all its Governmental Permits, except where the failure to so
comply could not reasonably be expected to have an IXATA Material Adverse
Effect. "Governmental Permit" means any permit, license, franchise,
certificate, authorization, approval or consent obtained from or issued by
any Governmental Person.
2.21 ENVIRONMENTAL MATTERS.
(a) No Hazardous Substances have been or are being generated,
used, processed, treated, stored, released, transported or disposed of
by IXATA, except in material compliance with applicable Environmental
Rules.
(b) To the knowledge of IXATA and any Seller, no Hazardous
Substances are present on or under any real property owned, leased,
occupied or used by IXATA, or in any improvement located thereon, in
quantities or at levels which require reporting or remediation under
any applicable Environmental Rule.
(c) To the knowledge of IXATA and any Seller, no event has
occurred and no condition exists with respect to IXATA or its business,
properties or assets which could reasonably be expected to have
individually or in the aggregate an IXATA Material Adverse Effect under
any applicable Environmental Rule, and IXATA has not received any
notice from any Governmental Person or any other person of its
intention to impose any liability, cost or expense upon IXATA under any
applicable Environmental Rule which could reasonably be expected to
have individually or in the aggregate an IXATA Material Adverse Effect.
(d) As used in this Agreement, "Environmental Rule" means any
governmental rule which relates to Hazardous Substances, pollution or
protection of the environment, natural resources or public health or
safety, including without limitation any governmental rule relating to
the generation, use, processing, treatment, storage, release, transport
or disposal of Hazardous Substances and any common laws of nuisance,
negligence and strict liability relating thereto, together with all
related rules, regulations and orders.
(e) As used in this Agreement, "Hazardous Substance" means any
substance which constitutes, in whole or in part, a pollutant,
contaminant or toxic or hazardous substance or waste under, or the
generation, use, processing, treatment, storage, release, transport or
disposal of which is regulated by, any governmental rule, and
specifically includes without limitation any substance which
constitutes a "hazardous substance" under the Comprehensive
Environmental Response Compensation and Liability Act, 42 U.S.C.
Sections 9601 et seq., or a "hazardous waste" under the Resource
Conservation and Recovery Act, 42 U.S.C. Sections 6901 et seq., or
constitutes asbestos, urea formaldehyde, chlorinated biphenyls
(polychlorinated or monochlorinated) or petroleum products.
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2.22 MATERIAL AGREEMENTS. Each contract, agreement, instrument or
document involving the payment by or to IXATA (whether direct or indirect,
fixed or contingent) of more than $100,000 over the term thereof, each real
property lease to which IXATA is a party, each labor or employment agreement
to which IXATA is a party and each agreement, document, instrument that
creates, evidences or secures any indebtedness of $100,000 or more of IXATA
or pursuant to which IXATA has guaranteed indebtedness or other obligations
of $100,000 or more, and each IXATA ERISA Plan (collectively, the "IXATA
Material Agreements") is in full force and effect and is enforceable in
accordance with its terms. IXATA is in compliance with each IXATA Material
Agreement, except, in each case, for such non-compliance that could not
reasonably be expected to have an IXATA Material Adverse Effect. All other
parties to the IXATA Material Agreements are in substantial compliance with
the terms thereof except, in each case, for such non-compliance that could
not reasonably be expected to have an IXATA Material Adverse Effect. To the
knowledge of IXATA and any Seller, the consummation of the transactions
contemplated by this Agreement will not have a material adverse effect on any
IXATA Material Agreement or the relationship of the parties thereto, except
as could not reasonably be expected to have individually or in the aggregate
an IXATA Material Adverse Effect.
2.23 TRANSACTIONS WITH AFFILIATES.
(a) None of the customers, suppliers, distributors or sales
representatives of IXATA are Affiliates of IXATA;
(b) none of the properties or assets of IXATA are owned or
used by or leased to any Affiliate of IXATA;
(c) no Affiliate of IXATA is a party to any material agreement
with IXATA that is not disclosed in the IXATA Disclosure Letter; and
(d) any agreement between IXATA and any Affiliate of IXATA
contains commercially reasonable terms and conditions.
As used in this Agreement, "Affiliate" means with respect to any
person, any person who directly or indirectly controls or is controlled by,
or is under common control with, such person. As used in this definition, the
term "control" means, with respect to any person, the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such person, whether through ownership of voting securities, by
contract or otherwise.
2.24 YEAR 2000 COMPLIANCE. To the knowledge of IXATA and any Seller,
there are no Year 2000 Problems with respect to any of the computer systems,
hardware, software, equipment or products of IXATA, except as could not
reasonably be expected to have individually or in the aggregate an IXATA
Material Adverse Effect. To the knowledge of IXATA and any Seller, no
supplier or customer of IXATA has a Year 2000 Problem, except as could not
reasonably be expected to have individually or in the aggregate an IXATA
Material Adverse Effect. A "Year 2000 Problem" means a date-handling problem
relating to the year 2000 date change that would cause a computer system,
hardware, software or equipment to fail to correctly perform, process and
handle date-related data for all dates after December 31, 1999.
14
2.25 ABSENCE OF CERTAIN BUSINESS PRACTICES. Since the formation of
IXATA, neither IXATA nor any director, officer, employee, agent or other
individual or entity acting on behalf of IXATA, has, directly or indirectly,
given or agreed to give any gift or similar benefit to any customer,
supplier, government employee or other individual or entity who is or may be
in a position to help or hinder the business of IXATA (or assist IXATA in
connection with any actual or proposed transaction) that might subject IXATA
to any damage or penalty that could reasonably be expected to have
individually or in the aggregate an IXATA Material Adverse Effect.
2.26 NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the
representations and warranties contained in this Agreement, anything
described in or listed in the IXATA Disclosure Letter, or any other document
delivered by IXATA pursuant to this Agreement, neither IXATA nor any other
person makes any representation or warranty to SecurFone, express or implied,
and IXATA hereby disclaims any such representation or warranty, whether by
IXATA or any of its officers, directors, employees, agents, representatives
or any other person of any document or other information. No representations,
warranties or statements of IXATA contained in this Agreement or any other
document delivered by IXATA pursuant to this Agreement contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements in this Agreement and any other document, in light of the
circumstances in which they were made, not misleading.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
Each of the Sellers represents and warrants, severally and not
jointly, to SecurFone as follows:
3.01 AUTHORITY RELATIVE TO THIS AGREEMENT. Seller has the power to
enter into this Agreement and to carry out his, her or its obligations under
this Agreement. If Seller is not an individual, the execution, delivery and
performance of this Agreement by Seller and the consummation by Seller of the
transactions contemplated hereby have been duly authorized by Seller and no
other proceedings on the part of Seller are necessary to authorize this
Agreement or the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Seller and constitutes a legal,
valid and binding agreement of Seller, enforceable against Seller in
accordance with its terms, subject, as to the enforcement of remedies, to
general equitable principles and to bankruptcy, insolvency and similar laws.
3.02 CONSENTS AND APPROVALS; NO VIOLATIONS. No filing with, and no
permit, authorization, consent or approval of, any court, tribunal or
Governmental Person is necessary for the execution, delivery and performance
of this Agreement by Seller of the transactions contemplated by this
Agreement. Neither the execution, delivery and performance of this Agreement
by Seller nor the consummation by Seller of the transactions contemplated
hereby, nor compliance by Seller with any of the provisions hereof, will (i)
conflict with or result in any breach of any provisions of the organizational
documents of Seller, if applicable, (ii) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
under (or give rise to any right of termination, cancellation, vesting,
payment, exercise, acceleration, suspension or revocation), any of the terms,
conditions or provisions of any note, bond, mortgage, deed of trust, security
interest, indenture, lease, license, contract, agreement, insurance policy,
plan or other instrument or obligation to which Seller is a party, (iii)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Seller, (iv) result in the creation or imposition of any Lien
on any asset of IXATA or (v) cause the suspension, termination or revocation
of any certificates of need, accreditation,
15
registrations, licenses, permits and other consents or approvals of
Governmental Persons applicable to Seller, except in the case of clauses
(ii), (iii), (iv) and (v) for violations, breaches, defaults, terminations,
cancellations, accelerations, creations, impositions, suspensions or
revocations which could not reasonably be expected to have individually or in
the aggregate an IXATA Material Adverse Effect.
3.03 OWNERSHIP OF IXATA STOCK.
(a) Seller is the direct record and beneficial owner of the
number of shares of IXATA Stock set forth opposite his, her or its name
on SCHEDULE 1.01 below, free and clear of any and all Liens.
(b) Upon Seller's receipt of the Purchase Shares as provided
for in Section 1.02 above, SecurFone will acquire good and marketable
title to all of Seller's IXATA Stock, free and clear of any and all
Liens other than the restrictions on transfer of the IXATA Stock
imposed by federal and state securities laws.
3.04 INVESTMENT REPRESENTATIONS.
(a) Seller understands that the Purchase Shares have not been,
and will not be, registered under the Securities Act of 1933, as
amended, and any regulations or published rulings promulgated or issued
thereunder (the "Securities Act"), or under any state securities laws,
and are being offered and sold in reliance upon federal and state
exemptions for transactions not involving any public offering.
(b) Seller is acquiring the Purchase Shares solely for his,
her or its own account for investment purposes and not with a view to
their distribution within the meaning of the Securities Act.
(c) Seller is a sophisticated investor with knowledge and
experience in business and financial matters.
(d) Seller has not been offered the Purchase Shares by any
form of general advertising or general solicitation.
(e) Seller is able to bear the economic risk and lack of
liquidity inherent in holding the Purchase Shares.
(f) Seller understands that the certificate(s) representing
the Purchase Shares bear the following legend:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE STATE SECURITIES LAWS, AND ANY TRANSFER HEREOF
IS SUBJECT TO COMPLIANCE WITH ALL APPLICABLE FEDERAL AND STATE
SECURITIES LAWS AND REGULATIONS.
16
4. REPRESENTATIONS AND WARRANTIES OF SECURFONE AND MONTPILIER
Except as otherwise disclosed to IXATA in a letter delivered to it
prior to the execution of this Agreement (the "SecurFone Disclosure Letter"), a
copy of which is attached as SCHEDULE 3, or disclosed in the SEC Reports,
SecurFone and Montpilier jointly and severally represent and warrant to IXATA
and each of the Sellers as follows:
4.01 ORGANIZATION. SecurFone is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and corporate authority to own, lease and operate
its properties and to carry on its business as now being conducted or presently
proposed to be conducted. SecurFone is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except in those jurisdictions where the
failure to be so qualified could not reasonably be expected to have a Material
Adverse Effect on SecurFone and the SecurFone Subsidiaries (a "SecurFone
Material Adverse Effect." SecurFone has provided IXATA with a complete and
accurate copy of SecurFone's Certificate of Incorporation and By-Laws.
4.02 CAPITALIZATION. The authorized capital stock of SecurFone consists
of 100 million shares of SecurFone Stock. As of June 29, 1999 (and without
giving effect to the transaction described herein), (i) 6,091,881 shares of
SecurFone Stock are issued and outstanding, (ii) stock options to acquire
750,900 shares of SecurFone Stock were outstanding, and (iii) warrants to
acquire 500,000 shares of SecurFone Stock were outstanding under all warrant
agreements of SecurFone. SecurFone has no outstanding stock appreciation rights
or stock purchase rights. All of the issued and outstanding shares of SecurFone
Stock are validly issued, fully paid and nonassessable and free of preemptive
rights. Except as set forth above and for certain 12% Debentures convertible
into shares of SecurFone's Stock upon a $8.0 million firm underwritten public
offering, as of the date of this Agreement, there are no shares of capital stock
of SecurFone issued or outstanding or any options, warrants, subscriptions,
calls, rights, convertible securities or other agreements or commitments
obligating SecurFone to issue, transfer, sell, redeem, repurchase or otherwise
acquire any shares of its capital stock or securities.
4.03 SUBSIDIARIES.
(a) Each of the subsidiaries of SecurFone (collectively, the
"SecurFone Subsidiaries"), a list of which is set forth in the
SecurFone Disclosure Letter, is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as
now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power and authority could
not reasonably be expected to have individually or in the aggregate a
Material Adverse Effect on that SecurFone Subsidiary. Each SecurFone
Subsidiary is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except in those jurisdictions
where the failure to be so duly qualified or licensed and in good
standing could not reasonably be expected to have individually or in
the aggregate a Material Adverse Effect on that SecurFone Subsidiary.
17
(b) SecurFone is, directly or indirectly, the record and
beneficial owner of all of the outstanding shares of capital stock of
each of the SecurFone Subsidiaries, there are no proxies with respect
to any such shares, and no equity securities of any SecurFone
Subsidiary are or may become required to be issued by reason of any
options, warrants, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible
into or exchangeable or exercisable for, shares of any capital stock of
any SecurFone Subsidiary, and there are no contracts, commitments,
understandings or arrangements by which SecurFone or any SecurFone
Subsidiary is or may be bound to issue, redeem, purchase or sell
additional shares of capital stock of any SecurFone Subsidiary or
securities convertible into or exchangeable or exercisable for any such
shares. All of the shares of any SecurFone Subsidiary owned by
SecurFone are validly issued, fully paid and nonassessable and are
owned by it free and clear of any Liens, restraint on alienation, or
any other restriction with respect to the transferability or
assignability thereof (other than restrictions on transfer imposed by
federal or state securities laws).
4.04 MATERIAL INVESTMENTS. SecurFone does not directly or indirectly
own any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar interest in, any
corporation (other than an SecurFone Subsidiary), partnership, joint venture
or other business association or entity which is material to SecurFone.
4.05 AUTHORITY RELATIVE TO THIS AGREEMENT. SecurFone has the
corporate power to enter into this Agreement and to carry out its obligations
under this Agreement. The execution, delivery and performance of this
Agreement by SecurFone and the consummation by SecurFone of the transactions
contemplated hereby have been duly authorized by SecurFone's Board of
Directors and no other corporate proceedings on the part of SecurFone are
necessary to authorize this Agreement or the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
SecurFone and constitutes a legal, valid and binding agreement of SecurFone,
enforceable against SecurFone in accordance with its terms, subject, as to
the enforcement of remedies, to general equitable principles and to
bankruptcy, insolvency and similar laws.
4.06 CONSENTS AND APPROVALS; NO VIOLATIONS. No filing with, and no
permit, authorization, consent or approval of, any court, tribunal or
Governmental Person is necessary for the execution, delivery and performance
of this Agreement by SecurFone or of the transactions contemplated by this
Agreement. Neither the execution, delivery and performance of this Agreement
by SecurFone nor the consummation by SecurFone of the transactions
contemplated hereby, nor compliance by SecurFone with any of the provisions
hereof, will (i) conflict with or result in any breach of any provisions of
the Certificate of Incorporation or By-Laws of SecurFone or the Certificate
of Incorporation or By-Laws of any of the SecurFone Subsidiaries, (ii) result
in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default under (or give rise to any right of
termination, cancellation, vesting, payment, exercise, acceleration,
suspension or revocation), any of the terms, conditions or provisions of any
note, bond, mortgage, deed of trust, security interest, indenture, lease,
license, contract, agreement, insurance policy, plan or other instrument or
obligation to which SecurFone or any of the SecurFone Subsidiaries is a party
or by which any of them or any of their properties or assets may be bound or
affected, (iii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to SecurFone, any of the SecurFone Subsidiaries or any
of their properties or assets, (iv) result in the creation or imposition of
any Lien on any asset of SecurFone or any SecurFone Subsidiary or (v) cause
the suspension, termination or revocation of any certificates of need,
accreditation, registrations, licenses, permits
18
and other consents or approvals of Governmental Persons applicable to
SecurFone or any SecurFone Subsidiary, except in the case of clauses (ii),
(iii), (iv) and (v) for violations, breaches, defaults, terminations,
cancellations, accelerations, creations, impositions, suspensions or
revocations which could not reasonably be expected to have individually or in
the aggregate a SecurFone Material Adverse Effect.
4.07 SEC REPORTS AND PRELIMINARY 1998 ANNUAL REPORT.
(a) SecurFone has delivered to IXATA complete and accurate
copies of (i) the Quarterly Reports on Form 10-Q and the Annual Report
on Form 10-K, including any amendments thereto, that it has filed with
the Securities and Exchange Commission ("SEC") for 1998, (ii) the
Current Report on Form 8-K it filed with the SEC on December 23, 1997,
(iii) the Registration Statement on Form S-8 it filed with the SEC on
November 17, 1997 and (iv) the Information Statement on Schedule 14C it
filed with the SEC on July 11, 1997 (collectively, the "SEC Reports").
As of the date it was filed or, if it was amended or supplemented, as
of the date such amendment or supplement was filed, each of the SEC
Reports (i) complied in all material respects with all applicable
requirements of the Securities Exchange Act of 1934, as amended, and
the regulations or published rulings promulgated or issued thereunder
(the "Exchange Act"), and (ii) did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
in such SEC Report or necessary in order to make the statements in such
SEC Report, in light of the circumstances under which they were made,
not misleading. Each of the audited consolidated financial statements
and unaudited consolidated interim financial statements of SecurFone
(including any related notes and schedules) included (or incorporated
by reference) in such SEC Reports were prepared based upon and are
consistent with the books and records of SecurFone and the SecurFone
Subsidiaries (which books and records are correct and complete in all
material respects) and fairly present, in conformity with GAAP applied
on a consistent basis (except as may be indicated in the notes
thereto), the consolidated financial position of SecurFone as of its
date and the consolidated results of operations and changes in
financial position for the period then ended (subject to normal
year-end adjustments in the case of any unaudited interim financial
statements).
(b) The SecurFone Disclosure Letter identifies and describes
the substance of certain filings required by the Exchange Act that
SecurFone has failed to timely file with the SEC (collectively, the
"Late SEC Filings").
(c) SecurFone has provided to IXATA a preliminary draft of its
Annual Report on Form 10-K for the year ended December 31, 1998 (the
"Preliminary SecurFone Annual Report"). The Preliminary SecurFone
Annual Report (i) complies in all material respects with all applicable
requirements of the Securities Act and the Securities Exchange Act, and
(ii) does not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(d) The Preliminary SecurFone Annual Report includes a
preliminary draft of the audited consolidated financial statements and
unaudited consolidated interim financial statements of SecurFone for
the year ended December 31, 1998 (the "Preliminary SecurFone Financial
Statements"). The Preliminary SecurFone Financial Statements were
prepared
19
based upon and are consistent with the books and records of SecurFone
and the SecurFone Subsidiaries (which books and records are correct and
complete in all material respects) and fairly present, in conformity
with GAAP applied on a consistent basis (except as may be indicated in
the notes thereto), the consolidated financial position of SecurFone as
of the date thereof and the consolidated results of operations and
changes in financial position for the period then ended.
4.08 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1998
(the "SecurFone Financial Statement Date"), except as set forth in this
paragraph and the SEC Reports, SecurFone and the SecurFone Subsidiaries have
in all material respects conducted their business in the ordinary course
consistent with past practices and there has not occurred: (i) any SecurFone
Material Adverse Effect; (ii) any amendments or changes in the Certificate of
Incorporation or By-Laws of SecurFone; (iii) any sale, transfer, assignment,
disposition or license of, or material pledge of or material encumbrance
upon, property (tangible or intangible) of SecurFone with a value in excess
of $50,000; (iv) any material change by SecurFone in its accounting methods,
principles or practices except as required by any change in GAAP or as a
result of a change in law; (v) any material revaluation by SecurFone of any
of its assets, including, without limitation, writing down the value of
inventory or writing off notes or accounts receivable other than in the
ordinary course of business; (vi) any entry into any SecurFone Material
Agreement outside the ordinary course of business; (vii) any termination,
acceleration, cancellation or modification of any SecurFone Material
Agreement; (viii) any imposition of any Lien on any asset of SecurFone; (ix)
any capital investment in, any loan to or any acquisition of the securities
or assets of any other person; (x) any creation, incurrence, assumption or
guarantee of any indebtedness (including capitalized lease obligations); (xi)
any delay or postponement of the payment of any accounts payable or other
liabilities; (xii) any sale, issuance or other disposition of any of its
capital stock, or grant of any options, warrants or other rights of any kind
with respect to any of its capital stock; (xiii) any declaration or setting
aside of payment of any dividend or distribution with respect to its capital
stock; (xiv) the making of any loan to, or entry into any transaction with,
any of its directors, officers and employees outside the ordinary course of
business; (xv) adoption of any SecurFone Plan; and (xvi) any change in any
SecurFone Plan or other employment terms for any of its directors, officers
and employees outside the ordinary course of business. Notwithstanding the
foregoing, SecurFone has provided IXATA and Sellers with copies of a certain
Purchase Agreement and First Amendment thereto by and between SecurFone and
Teledata World Services, Inc. (the "Teledata Purchase Agreement"), the
specific terms and conditions of which have yet to be fully disclosed to the
SEC. IXATA and Sellers acknowledge having received and reviewed the Teledata
Purchase Agreement and have had an opportunity to fully review the terms and
conditions thereof and the facts and circumstances surrounding such
transaction.
4.09 LITIGATION. Except for any Actions disclosed in the SEC
Reports, there is no Action pending or, to the knowledge of SecurFone and
Montpilier, threatened against or affecting SecurFone or any of the SecurFone
Subsidiaries, nor is there any judgment, decree, injunction, rule or order of
any court, tribunal, arbitrator or Governmental Person outstanding against
SecurFone or any of the SecurFone Subsidiaries.
4.10 ABSENCE OF UNDISCLOSED LIABILITIES. Except for liabilities or
obligations which are accrued or reserved against in SecurFone's financial
statements (or reflected in the notes thereto) included in the Quarterly
Report on Form 10-Q last filed with the SEC by SecurFone or which were
incurred after the SecurFone Financial Statement Date in the ordinary course
of business and
20
consistent with past practices, SecurFone and the SecurFone Subsidiaries do
not have any material liabilities or obligations (whether absolute, accrued,
contingent or otherwise).
4.11 NO DEFAULT. Neither SecurFone nor any of the SecurFone
Subsidiaries is in violation or breach of, or default under (and no event has
occurred which with notice or the lapse of time or both would constitute a
violation or breach of, or a default under) any term, condition or provision
of (i) its Certificate of Incorporation or By-Laws, (ii) any note, bond,
mortgage, deed of trust, security interest, indenture, license, agreement,
plan, contract, lease, insurance policy, commitment or other instrument or
obligation to which SecurFone or any of the SecurFone Subsidiaries is a party
or by which they or any of their properties or assets may be bound or
affected, (iii) any order, writ, injunction, decree, statute, rule or
regulation applicable to SecurFone or any of the SecurFone Subsidiaries or
any of their properties or assets (other than the failure to timely file the
Late SEC Reports), or (iv) any license, permit and other consent or approval
of Governmental Persons applicable to SecurFone or any of the SecurFone
Subsidiaries, except in the case of clauses (ii), (iii) and (iv) above for
breaches, defaults or violations which could not reasonably be expected to
have individually or in the aggregate a SecurFone Material Adverse Effect.
4.12 TAXES.
(a) SecurFone and each of the SecurFone Subsidiaries has (i)
timely filed (or has had timely filed on its behalf) or will cause to
be timely filed all material Tax Returns required by applicable law to
be filed by any of them for tax years ended prior to the date of this
Agreement and all such Tax Returns and amendments thereto are or will
be complete and accurate in all material respects, (ii) paid (or has
had paid on its behalf) all Taxes due or has properly accrued or
reserved for all such Taxes for such periods and (iii) accrued for all
Taxes for periods commencing after the periods covered by such Tax
Returns and ending prior to the date hereof. Neither SecurFone nor any
SecurFone Subsidiary is currently the beneficiary of any extension of
time within which to file any Tax Return.
(b) There are no Liens for Taxes upon the assets of SecurFone
or any of the SecurFone Subsidiaries, except Liens for Taxes not yet
due or being contested in good faith.
(c) There are no deficiencies or adjustments for Taxes that
have been proposed or assessed by any Tax Authority against SecurFone
or any of the SecurFone Subsidiaries and which remain unpaid. There is
no dispute or claim concerning any liability for Taxes of SecurFone or
any SecurFone Subsidiary, and no Audit of any Tax Returns is currently
underway or, to the knowledge of SecurFone and Montpilier, threatened.
(d) Neither SecurFone nor any SecurFone Subsidiary has any Tax
sharing, Tax indemnity, or similar agreements to which SecurFone or any
of SecurFone Subsidiaries is a party, is bound by, or has any
obligation or liability for Taxes.
(e) SecurFone and SecurFone Subsidiaries have not paid, and do
not expect to pay, in any taxable year commencing on or after December
31, 1994, remuneration that would result in a disallowance of any
material amount of tax deductions under Section 162(m) of the Code.
There are no changes in the tax accounting methods subject to Section
481(a) of the Code which have an ongoing material effect on SecurFone
or any of SecurFone Subsidiaries.
21
No "consent" within the meaning of Section 341(f) of the Code has been
filed with respect to SecurFone or any of SecurFone Subsidiaries.
4.13 TITLE TO CERTAIN PROPERTIES; ENCUMBRANCES. SecurFone and the
SecurFone Subsidiaries hold good and marketable title to all real and
personal property purported to be owned by them, free and clear of all Liens,
except for: (i) any Lien for current Taxes not yet due and payable; and (ii)
Liens that could not reasonably be expected to have individually or in the
aggregate a SecurFone Material Adverse Effect and that otherwise do not
adversely effect the value or the use by SecurFone or SecurFone Subsidiaries,
as the case may be, of the property that is the subject of such Liens.
SecurFone has provided IXATA with copies of all real property leases to which
SecurFone or any SecurFone Subsidiary is a party and has provided to IXATA a
list of all real property owned or leased by SecurFone or any SecurFone
Subsidiary except such leases or property which individually or in the
aggregate are immaterial. Each lease to which SecurFone or any SecurFone
Subsidiary is a party is in full force and effect and no party thereto is in
default of any of its material obligations thereunder. No consent by or of
any party to any such lease is required in order to consummate the
transactions contemplated by this Agreement without causing a breach or
violation of or default or increased charges under such lease.
4.14 COMPLIANCE WITH APPLICABLE LAW. Each of SecurFone and the
SecurFone Subsidiaries is in compliance with all applicable laws (other than
those relating to the timely filing of the Late SEC Reports), except where
the failure to be in such compliance could not reasonably be expected to have
individually or in the aggregate a SecurFone Material Adverse Effect.
4.15 LABOR MATTERS.
(a) Neither SecurFone nor any of the SecurFone Subsidiaries is
a party to, or bound by, any collective bargaining agreement, contract
or other agreement or understanding with a labor union or labor
organization. There is no unfair labor practice or labor arbitration
proceeding pending or, to the knowledge of SecurFone and Montpilier,
threatened against SecurFone or any SecurFone Subsidiary relating to
their business, except for any such proceedings which could not
reasonably be expected to have individually or in the aggregate a
SecurFone Material Adverse Effect. To the knowledge of SecurFone and
Montpilier, there are no organizational efforts with respect to the
formation of a collective bargaining unit presently being made or
threatened involving employees of SecurFone or any SecurFone
Subsidiary, nor does any labor union or organization claim to represent
the employees of SecurFone or any SecurFone Subsidiary.
(b) There is no labor strike, dispute, slow down, work
stoppage, or lockout actually pending or, to the knowledge of SecurFone
and Montpilier, threatened against SecurFone or any SecurFone
Subsidiary.
(c) There are no charges or complaints, instituted by, or
before, any Governmental Person pending or, to the knowledge of
SecurFone and Montpilier, threatened against SecurFone or any SecurFone
Subsidiary involving any employment or labor matter, including, without
limitation, any: (i) complaints or citations under the Occupational
Safety and Health Act or any state or local occupational safety act or
regulation since December 31, 1994; (ii) unfair labor practice charges
or complaints with the National Labor Relations
22
Board; or (iii) other claims, charges, actions or controversies
(including without limitation, claims of discrimination, wrongful
discharge, or employment-related tort); pending or threatened involving
SecurFone or any SecurFone Subsidiary and any employee, any former
employee, or any labor union or other organization representing or
claiming to represent the interests of any such employee or former
employee. SecurFone and each SecurFone Subsidiary is and has been in
compliance with all applicable laws regarding employment and employment
practices, terms and conditions of employment and wages and hours and
occupational safety and health programs, and neither SecurFone nor any
SecurFone Subsidiary is engaged in any violation of any applicable law
related to employment, including unfair labor practices or acts of
employment discrimination, except in each case where the failure to be
in such compliance could not reasonably be expected to have
individually or in the aggregate a SecurFone Material Adverse Effect.
4.16 EMPLOYEE BENEFIT PLANS; ERISA.
(a) With respect to each of the bonus, deferred compensation,
incentive compensation, stock purchase, stock option, severance or
termination pay, hospitalization or other medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension,
or retirement plan or program, and each other employee benefit plan,
program, agreement or arrangement of SecurFone and SecurFone's
Subsidiaries (the "SecurFone Plans") in force on or after December 31,
1994, except for multi-employer plans as defined in Section 3(37)(A) of
ERISA, SecurFone has delivered to IXATA complete and accurate copies of
each of the following documents: (i) the plan documents of each of the
SecurFone Plans (including all amendments thereto); (ii) the annual
report and actuarial report, if required under ERISA, with respect to
each of SecurFone Plans that is an "employee benefit plan," as that
term is defined in Section 3(3) of ERISA (the "SecurFone ERISA Plans"),
for the last two years; (iii) the most recent Summary Plan Description,
together with each Summary of Material Modifications, required under
ERISA with respect to the SecurFone ERISA Plans; (iv) if the SecurFone
Plans are funded through a trust or any third party funding vehicle, a
copy of the trust or other funding agreement (including all amendments
thereto) and the latest financial statements thereof; and (v) the most
recent determination letter received from the Internal Revenue Service
with respect to each SecurFone ERISA Plan intended to qualify under
Section 401(a) of the Code.
(b) No liability under Title IV of ERISA has been incurred by
SecurFone, any SecurFone Subsidiary or any company that is an affiliate
of SecurFone under ERISA (an "SecurFone ERISA Affiliate") since the
effective date of ERISA that has not been satisfied in full, and no
condition exists that presents a material risk to SecurFone, any
SecurFone Subsidiary or any SecurFone ERISA Affiliate of incurring any
liability under Title IV (other than liability for premiums due to the
Pension Benefit Guarantee Corporation). To the extent this
representation applies to Section 4064, Section 4069 or Section 4204 of
Title IV of ERISA, it is made not only with respect to SecurFone ERISA
Plans but also with respect to any employee benefit plan, program,
agreement or arrangement subject to Title IV of ERISA to which
SecurFone, any SecurFone Subsidiary or any SecurFone ERISA Affiliate
made, or was required to make, contributions during the five-year
period ending on the date of this Agreement.
(c) With respect to each SecurFone ERISA Plan which is subject
to Title IV of ERISA, the present value of accrued benefits under that
plan, based upon the actuarial
23
assumptions used for financial reporting purposes in the most recent
actuarial report prepared by that plan's actuary with respect to that
plan, did not exceed, as of its latest valuation date, the then current
value of the assets of that plan allocable to those accrued benefits.
(d) No SecurFone ERISA Plan or any trust established
thereunder has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Code), whether
or not waived, as of the last day of the most recent fiscal year of
each SecurFone ERISA Plan ended prior to the date of this Agreement,
and all contributions required to be made with respect thereto (whether
pursuant to the terms of any SecurFone ERISA Plan or otherwise) on or
prior to the date of this Agreement have been timely made.
(e) No SecurFone ERISA Plan is a "multi-employer pension
plan," as defined in Section 3(37)(A) of ERISA, nor has SecurFone ever
been a party to any agreement which required it to contribute to a
multi-employer pension plan on behalf of any employee, nor is any
SecurFone ERISA Plan a plan described in Section 4063(a) of ERISA.
(f) Each of the SecurFone Plans has been operated and
administered in all material respects in accordance with applicable
laws, including, but not limited to, ERISA and the Code except for
requirements which could not reasonably be expected to have
individually or in the aggregate a SecurFone Material Adverse Effect.
(g) No amounts payable under SecurFone Plans or any other
contract, arrangement or agreement will fail to be deductible for
federal income tax purposes by virtue of Section 280G of the Code.
(h) No SecurFone Plan provides benefits, including without
limitation death or medical benefits (whether or not insured), with
respect to current or former employees of SecurFone, any SecurFone
Subsidiary or any SecurFone ERISA Affiliate beyond those employees'
retirement or other termination of service, other than (i) coverage
mandated by applicable law, (ii) death benefits or retirement benefits
under any "employee pension plan," as that term is defined in Section
3(2) of ERISA, (iii) deferred compensation benefits accrued as
liabilities on the books of SecurFone, any SecurFone Subsidiary or any
SecurFone ERISA Affiliate or (iv) benefits the full cost of which is
borne by those employees or their beneficiaries.
(i) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee or
officer of SecurFone, any SecurFone Subsidiary or any SecurFone ERISA
Affiliate to severance pay, unemployment compensation or any other
payment, except as expressly provided in this Agreement, or (ii)
accelerate the time of payment or vesting, or increase the amount, of
any compensation due any employee or officer.
4.17 INTELLECTUAL PROPERTY. SecurFone and the SecurFone Subsidiaries
have the lawful right to use all Intellectual Property currently used in any
of their businesses, free and clear of any Liens, and to the knowledge of
SecurFone and Montpilier, no such use infringes upon the lawful rights of any
other person, except as could not reasonably be expected to have individually
or in the aggregate a SecurFone Material Adverse Effect. To the knowledge of
SecurFone and Montpilier, no person is using any Intellectual Property in a
manner which infringes upon the lawful rights of
24
SecurFone or any SecurFone Subsidiary, except as could not reasonably be
expected to have individually or in the aggregate in a SecurFone Material
Adverse Effect.
4.18 INSURANCE. SecurFone and each SecurFone Subsidiary has provided
to IXATA complete and accurate copies of all insurance policies maintained by
SecurFone and the SecurFone Subsidiaries. The policies are in full force and
effect, all premiums due on the policies have been paid, and neither
SecurFone nor any SecurFone Subsidiary has received any notice of
cancellation with respect thereto. Neither SecurFone nor any SecurFone
Subsidiary has any obligation, liability or indebtedness for premiums or for
retroactive premium adjustments for any period through the date hereof which
obligation, liability or indebtedness could reasonably be expected to have
individually or in the aggregate a SecurFone Material Adverse Effect. There
are no claims by SecurFone or any SecurFone Subsidiary under any of
SecurFone's insurance policies as to which any insurance SecurFone or any
SecurFone Subsidiary is denying liability or defending under a reservation of
rights clause.
4.19 BROKERS. Except as described in Section 5.03 below, no broker,
finder or investment banker is entitled to any brokerage, finder's or other
fee or commission payable by SecurFone in connection with the transactions
contemplated by this Agreement based upon arrangements made by and on behalf
of SecurFone.
4.20 CUSTOMERS AND SUPPLIERS. No material customer or supplier of
SecurFone or any SecurFone Subsidiary has terminated its relationship with,
or materially reduced its purchases from or sales to, as the case may be,
SecurFone or any SecurFone Subsidiary. SecurFone does not expect that any
such customer or supplier will do so as a result of the transactions
contemplated by this Agreement, except as could not reasonably be expected to
have individually or in the aggregate a SecurFone Material Adverse Effect.
4.21 GOVERNMENTAL PERMITS. The Governmental Permits obtained by
SecurFone or any SecurFone Subsidiary have been validly acquired, are in full
force and effect and, except as could not reasonably be expected to have
individually or in the aggregate a SecurFone Material Adverse Effect,
represent all Governmental Permits necessary under applicable law for
SecurFone or any SecurFone Subsidiary to carry on its business as now being
conducted and to own, occupy or use its properties and assets. SecurFone and
the SecurFone Subsidiaries are in compliance with all their Governmental
Permits, except where the failure to so comply could not reasonably be
expected to have a SecurFone Material Adverse Effect.
4.22 ENVIRONMENTAL MATTERS.
(a) No Hazardous Substances have been or are being generated,
used, processed, treated, stored, released, transported or disposed of
by SecurFone or any SecurFone Subsidiaries, except in material
compliance with applicable Environmental Rules.
(b) To the knowledge of SecurFone and Montpilier, no Hazardous
Substances are present on or under any real property owned, leased,
occupied or used by SecurFone or any SecurFone Subsidiary, or in any
improvement located thereon, in quantities or at levels which require
reporting or remediation under any applicable Environmental Rule.
25
(c) To the knowledge of SecurFone and Montpilier, no event has
occurred and no condition exists with respect to SecurFone or any
SecurFone Subsidiary or their business, properties or assets which
could reasonably be expected to have individually or in the aggregate a
SecurFone Material Adverse Effect under any applicable Environmental
Rule, and neither SecurFone nor any SecurFone Subsidiary has received
any notice from any Governmental Person or any other person of its
intention to impose any liability, cost or expense upon SecurFone under
any applicable Environmental Rule which could reasonably be expected to
have individually or in the aggregate a SecurFone Material Adverse
Effect.
4.23 MATERIAL AGREEMENTS. Each contract, agreement, instrument or
document involving the payment by or to SecurFone or any SecurFone Subsidiary
(whether direct or indirect, fixed or contingent) of more than $100,000 over
the term thereof, each real property lease to which SecurFone is a party,
each labor or employment agreement to which SecurFone is a party and each
agreement, document, instrument that creates, evidences or secures any
indebtedness of $100,000 or more of SecurFone or any SecurFone Subsidiary or
pursuant to which SecurFone or any SecurFone Subsidiary has guaranteed
indebtedness or other obligations of $100,000 or more, and each SecurFone
ERISA Plan (collectively, the "SecurFone Material Agreements"), is in full
force and effect and is enforceable in accordance with its terms. SecurFone
or any SecurFone Subsidiary, as the case may be, is in compliance with each
SecurFone Material Agreement, except, in each case, for such non-compliance
that could not reasonably be expected to have a SecurFone Material Adverse
Effect. All other parties to the SecurFone Material Agreements are in
substantial compliance with the terms thereof except, in each case, for such
non-compliance that could not reasonably be expected to have a SecurFone
Material Adverse Effect. To the knowledge of SecurFone and Montpilier,
SecurFone does not expect that the consummation of the transactions
contemplated by this Agreement will have a material adverse effect on any
SecurFone Material Agreement or the relationship of the parties thereto,
except as could not reasonably be expected to have individually or in the
aggregate a SecurFone Material Adverse Effect.
4.24 TRANSACTIONS WITH AFFILIATES. Except as disclosed in SEC
Reports:
(a) none of the customers, suppliers, distributors or sales
representatives of SecurFone or any SecurFone Subsidiary are Affiliates
of SecurFone;
(b) none of the properties or assets of SecurFone or any
SecurFone Subsidiary are owned or used by or leased to any Affiliate of
SecurFone;
(c) no Affiliate of SecurFone is a party to any agreement with
SecurFone or any SecurFone Subsidiary that is not disclosed in the
SecurFone Disclosure Letter; and
(d) any agreement between SecurFone or any SecurFone
Subsidiary and any Affiliate of SecurFone contains commercially
reasonable terms and conditions.
4.25 YEAR 2000 COMPLIANCE. To the knowledge of SecurFone and
Montpilier, there are no Year 2000 Problems with respect to any of the
computer systems, hardware, software, equipment or products of SecurFone or
any SecurFone Subsidiary, except as could not reasonably be expected to have
individually or in the aggregate a SecurFone Material Adverse Effect. To the
knowledge of SecurFone and Montpilier, no supplier or customer of SecurFone
or any SecurFone Subsidiary has
26
a Year 2000 Problem, except as could not reasonably be expected to have
individually or in the aggregate a SecurFone Material Adverse Effect.
4.26 ABSENCE OF CERTAIN BUSINESS PRACTICES. None of SecurFone, any
SecurFone Subsidiary or any director, officer, employee, agent or other
individual or entity acting on behalf of SecurFone or any SecurFone
Subsidiary, has, directly or indirectly, within the past five years, given or
agreed to give any gift or similar benefit to any customer, supplier,
government employee or other individual or entity who is or may be in a
position to help or hinder the business of SecurFone or any SecurFone
Subsidiary (or assist SecurFone or any SecurFone Subsidiary in connection
with any actual or proposed transaction) that might subject SecurFone or any
SecurFone Subsidiary to any damage or penalty that could reasonably be
expected to have individually or in the aggregate a SecurFone Material
Adverse Effect.
4.27 PURCHASE SHARES. The Purchase Shares, upon receipt by SecurFone
of the IXATA Stock as provided for in Section 1.02 above, will be duly
authorized, validly issued, fully paid and nonassessable. The issuance of the
Purchase Shares will not entitle any holder of SecurFone Stock to preemptive
rights. Upon the issuance of the Purchase Shares in exchange for the IXATA
Stock, Sellers will own approximately 37% of the issued and outstanding
shares of SecurFone Stock on a fully-diluted basis.
4.28 NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the
representations and warranties contained in this Agreement, anything
described in or listed in the SecurFone Disclosure Letter, or any other
document delivered by SecurFone pursuant to this Agreement, neither SecurFone
nor any other person makes any representation or warranty to IXATA or the
Sellers, express or implied, and SecurFone and each SecurFone Subsidiary
hereby disclaims any such representation or warranty, whether by SecurFone or
any SecurFone Subsidiary or any of their respective officers, directors,
employees, agents or representatives or any other person of any document or
other information. No representations, warranties or statements of SecurFone
contained in this Agreement or any other document delivered by SecurFone
pursuant to this Agreement contain any untrue statement of a material fact or
omits to state a material fact necessary to make the statements in this
Agreement and any other document, in light of the circumstances in which they
were made, not misleading.
0X. XXXXXXXXXXXXXXX XXX XXXXXXXXXX XX XXXXXXXXXX
Xxxxxxxxxx represents and warrants to IXATA and Sellers as follows:
4A.01 AUTHORITY RELATIVE TO THIS AGREEMENT. Montpilier has the
corporate power to enter into this Agreement and to carry out its obligations
under this Agreement. The execution, delivery and performance of this
Agreement by Montpilier and the consummation by Montpilier of the
transactions contemplated hereby have been duly authorized by Montpilier's
Board of Directors and shareholders and no other proceedings on the part of
Montpilier are necessary to authorize this Agreement or the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Montpilier and constitutes a legal, valid and binding agreement
of Montpilier, enforceable against Montpilier in accordance with its terms,
subject, as to the enforcement of remedies, to general equitable principles
and to bankruptcy, insolvency and similar laws.
27
4A.02 CONSENTS AND APPROVALS; NO VIOLATIONS. No filing with, and no
permit, authorization, consent or approval of, any court, tribunal or
Governmental Person is necessary for the execution, delivery and performance
of this Agreement by Montpilier of the transactions contemplated by this
Agreement. Neither the execution, delivery and performance of this Agreement
by Montpilier nor the consummation by Montpilier of the transactions
contemplated hereby, nor compliance by Montpilier with any of the provisions
hereof, will (i) conflict with or result in any breach of any provisions of
the organizational documents of Montpilier, if applicable, (ii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default under (or give rise to any right of termination,
cancellation, vesting, payment, exercise, acceleration, suspension or
revocation), any of the terms, conditions or provisions of any note, bond,
mortgage, deed of trust, security interest, indenture, lease, license,
contract, agreement, insurance policy, plan or other instrument or obligation
to which Montpilier is a party, (iii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Montpilier, (iv) result in
the creation or imposition of any Lien on any asset of SecurFone or (v) cause
the suspension, termination or revocation of any certificates of need,
accreditation, registrations, licenses, permits and other consents or
approvals of Governmental Persons applicable to Montpilier, except in the
case of clauses (ii), (iii), (iv) and (v) for violations, breaches, defaults,
terminations, cancellations, accelerations, creations, impositions,
suspensions or revocations which could not reasonably be expected to have
individually or in the aggregate a SecurFone Material Adverse Effect.
5. ADDITIONAL AGREEMENTS
5.01 VOTING AGREEMENT. Concurrently with their execution of this
Agreement, SecurFone, Montpilier and Sellers shall execute and deliver a
Voting Agreement in the form attached hereto as EXHIBIT A (the "Voting
Agreement").
5.02 WORKING CAPITAL LOAN. Following the purchase of the IXATA Stock
and the appointment of IXATA's designees to SecurFone's Board of Directors
pursuant to the Voting Agreement: (i) SecurFone shall provide IXATA with up
to $2 million in funding for working capital to support IXATA's business plan
as approved by SecurFone's Board of Directors; and (ii) the amount, terms and
conditions of such loan shall be determined by SecurFone's Board of Directors.
5.03 ISSUANCE OF OPTIONS TO NEW MANAGEMENT. Following the purchase
of the IXATA Stock and the appointment of IXATA's designees to SecurFone's
Board of Directors pursuant to the Voting Agreement, SecurFone shall grant
such options to new key employees of SecurFone as shall be determined by
SecurFone's Board of Directors, subject to the limitations of SecurFone's
option plan.
5.04 ISSUANCE OF SHARES OR WARRANTS TO BROKER. Upon consummation of
the transactions described in this Agreement, SecurFone shall issue to Global
One Corporation, at SecurFone's option, either (i) 600,000 shares of
SecurFone Stock or (ii) warrants to purchase 600,000 shares of SecurFone
Stock, and shall grant such registration rights with respect to such shares
as SecurFone and such broker may agree.
5.05 LATE SEC FILINGS. SecurFone shall use its best efforts to file
the Late SEC Filings with the SEC, and thereby return to full compliance with
the Exchange Act, within 60 days after the date hereof.
28
5.06 RESTRICTION ON TRANSFER OF PURCHASE SHARES. Each Seller agrees
not to sell, exchange, deliver, assign, pledge, mortgage, hypothecate,
encumber, make a gift of or otherwise transfer or dispose of any of the
Purchase Shares, or any beneficial or other interest therein, whether
voluntarily, involuntarily or by operation of law, other than in compliance
with the provisions of Rule 144 promulgated by the SEC under the Exchange Act.
6. INDEMNIFICATION
6.01 INDEMNIFICATION OF SECURFONE. Subject to the provisions of
Sections 6 and 7 of this Agreement, each Seller shall, severally and not
jointly, indemnify and hold harmless SecurFone and its Affiliates, and their
officers, directors, agents and employees (collectively, the "SecurFone
Indemnitees"), from and against and in respect of any and all loss, damage,
liability, cost and expenses, including reasonable attorneys' fees and
amounts paid in settlement pursuant to Section 6.04(a) below (collectively,
the "SecurFone Indemnified Losses"), suffered or incurred by any one or more
of the SecurFone Indemnitees by reason of or arising out of:
(a) any misrepresentation or breach of any representation,
warranty, covenant or agreement of IXATA or such Seller contained in
this Agreement or the IXATA Disclosure Letter; and
(b) any fees, expenses or other payments incurred or owed by
any such SecurFone Indemnitees to any broker or comparable third party
employed by IXATA or such Seller in connection with the transactions
contemplated by this Agreement.
6.02 INDEMNIFICATION OF THE SELLERS. Subject to the provisions of
Sections 6 and 7 of this Agreement, SecurFone and Montpilier shall jointly
and severally indemnify and hold harmless each of the Sellers and their
Affiliates, and their officers, directors, agents and employees
(collectively, the "Seller Indemnitees"), from and against and in respect of
any and all loss, damage, liability, cost and expense, including reasonable
attorneys' fees and amounts paid in settlement pursuant to Section 6.04(b)
below (collectively, the "Seller Indemnified Losses"), suffered or incurred
by any one or more of the Seller Indemnitees by reason of or arising out of:
(a) any misrepresentation or breach of any representation,
warranty, covenant or agreement of SecurFone or Montpilier contained in
this Agreement or the SecurFone Disclosure Letter;
(b) the failure to timely file the Late SEC Filings with the
SEC; and
(c) except as provided in Section 5.04 above, any fees,
expenses or other payments incurred or owed by any Seller Indemnitees
to any broker or comparable third party employed by SecurFone in
connection with the transactions contemplated by this Agreement.
6.03 INDEMNIFICATION EXCLUSIVE REMEDY. The indemnity provided for in
Sections 6.01 and 6.02 above is exclusive, and no party to this Agreement will
be entitled to any other remedy at law or in equity; provided, however, that
such limitations do not apply to:
(a) any loss to any SecurFone Indemnitee resulting from (i) a
breach of the representations and warranties set forth in Sections
2.04, 2.06 and 3.03 above or (ii) the willful
29
misconduct or fraud by any Seller in connection with the transactions
contemplated by this Agreement; or
(b) any loss to any Seller Indemnitee resulting from (i) a
breach of the representations and warranties set forth in Sections
4.05, 4.07 and 4.27 above or (ii) the willful misconduct or fraud by
SecurFone or Montpilier in connection with the transactions
contemplated by this Agreement.
6.04 PAYMENT.
(a) Within 20 days of written demand on any Seller or Sellers
of a claim for any SecurFone Indemnified Loss, such Seller or Sellers
shall notify the SecurFone Indemnitees of his decision to accept or
dispute such claim and shall pay the amount of any claim ultimately
determined to be owed by him as follows:
(i) If such Seller or Sellers accept(s) the amount of
the SecurFone Indemnified Loss, then such Seller or Sellers
shall immediately reimburse the SecurFone Indemnitees for the
SecurFone Indemnified Loss.
(ii) If one or more Sellers disputes the claim for
any SecurFone Indemnified Loss, then he shall so notify the
SecurFone Indemnitees. If such Seller or Sellers and the
SecurFone Indemnitees are unable to resolve the dispute within
60 days of such notice, the dispute will be resolved in
accordance with the provisions of Section 7.04 below.
(b) Within 20 days of written demand on SecurFone of a claim
of any Seller Indemnified Loss, SecurFone shall notify Seller
Indemnitees of its decision to accept or dispute such claim and shall
pay the amount of any claim ultimately determined to be owed by its as
follows:
(i) If SecurFone and Montpilier accept the amount of
the Seller Indemnified Loss, then SecurFone and Montpilier
shall immediately reimburse the Seller Indemnitees for the
SecurFone Indemnified Loss. The payment of any amount of
Seller Indemnified Loss will be allocated among the Sellers in
the amounts to be determined by reference to their
proportionate ownership of the IXATA Stock described in
SCHEDULE 1.01.
(ii) If SecurFone or Montpilier disputes the claim
for any Seller Indemnified Loss, then SecurFone and Montpilier
shall so notify the Sellers. If SecurFone and the Seller
Indemnitees are unable to resolve the dispute within 60 days
of such notice, the dispute will be resolved in accordance
with the provisions of Section 7.04 below. The payment of any
amount of Seller Indemnified Loss will be allocated among the
Sellers in the amounts to be determined by their proportionate
ownership of the IXATA Stock described in SCHEDULE 1.01.
(c) Notwithstanding anything herein to the contrary, any
Seller may pay for any claim for any SecurFone Indemnified Loss by
transferring an amount of Purchase Shares (collectively, "Indemnifying
Purchase Shares") equal to such Seller's share of such
30
SecurFone Indemnified Loss. For purposes hereof, the value of each
Indemnifying Purchase Share shall be deemed to be equal to the closing
price per share of SecurFone Stock on the OTC Bulletin Board averaged
over the 30 day period immediately preceding the date of written demand
pursuant to Section 6.04(a) or Section 6.04(b), as the case may be.
6.05 DEFENSE OF CLAIMS.
(a) If any Action by a third party arises after the date of
this Agreement for which any party hereto may be liable under the terms
of this Agreement, then the party entitled to indemnification shall
notify the indemnifying party within a reasonable time after such
Action arises and is known to the indemnified party, and shall give the
indemnifying party a reasonable opportunity:
(i) to conduct any proceedings or negotiations in
connection therewith and necessary or appropriate to defend
the indemnified party;
(ii) to take all other required steps or proceedings
to settle or defend any such Action; and
(iii) to employ counsel to contest any such Action in
the name of the indemnified party or otherwise.
The expenses of all proceedings, contests or lawsuits with respect to
such Actions will be borne by the indemnifying party. If the
indemnifying parties wish to assume the defense of such Action, then
the indemnifying party shall give written notice to the indemnified
parties within thirty days after notice from the indemnified parties of
such Action (unless the Action requires a response in less than 30 days
after the notice is given, in which event they shall notify the
indemnified parties as soon as possible but in no event less than ten
days prior to the required response date), and the indemnifying party
shall thereafter assume the defense of any such Action through counsel
reasonably satisfactory to the indemnified parties; provided, that the
indemnified parties may participate in such defense at their own
expense. The defense and settlement of the Action will be controlled by
the indemnifying party; provided that the indemnifying party will use
its best efforts to avoid taking any action that would significantly
prejudice or harm any of the indemnified parties or any of their
businesses, assets or properties.
(b) If the indemnifying parties do not assume the defense of,
or if after assuming the defense the indemnifying parties fail to
defend, any such Action, then the indemnified parties may defend
against such Action in any manner they deem appropriate (provided that
the indemnifying parties may participate in such defense at their own
expense) and the indemnified parties may settle such Action on any
terms they deem appropriate (with the consent of indemnifying parties
on the conditions that (i) such consent not be unreasonably withheld or
delayed, and (ii) if the indemnifying parties do not so consent, then
the indemnifying parties shall immediately (A) assume the defense of
such Action and (B) reimburse the indemnified parties for their
expenses relating to the defense of such Action in accordance with the
next sentence). In addition, the indemnifying parties shall promptly
reimburse the indemnified parties for the amount of all expenses, legal
and otherwise, reasonably and necessarily incurred by the indemnified
parties in connection with
31
the defense against and settlement of such Action. If no settlement of
such Action is made, the indemnifying parties shall satisfy any
judgment rendered with respect to such Action, before the indemnified
parties are required to do so, and pay all expenses, legal or
otherwise, reasonably and necessarily incurred by the indemnified
parties in the defense of such Action.
(c) If a judgment is rendered against any of the indemnified
parties in any Action covered by the indemnification under this
Agreement, or any Lien in respect of such judgment attaches to any of
the assets or properties of any of the indemnified parties, the
indemnifying parties shall immediately upon such entry or attachment
pay such judgment in full or discharge such Lien unless, at the expense
and direction of the indemnifying parties, an appeal is taken under
which the execution of the judgment or satisfaction of the Lien is
stayed. If and when a final judgment is rendered in any such Action,
the indemnifying parties shall immediately pay such judgment or
discharge such Lien before any of the indemnified parties is compelled
to do so.
6.06 LIMITATIONS ON INDEMNIFICATION.
(a) An indemnifying party will not have any liability under
this Section 6 until the aggregate amount of the damages exceeds
$50,000 (the "Basket").
(b) The total liability of an indemnifying party for any
damages or other payments under this Section 6 is limited to $817,650,
and then only for the amount in excess of the Basket.
(c) The limitations on the liability of SecurFone and
Montpilier set forth in Sections 6.06(a) and 6.06(b) above shall not
apply to any loss resulting from (i) a breach of the representations
and warranties set forth in Sections 4.05, 4.07 and 4.27 above or (ii)
the willful misconduct or fraud by SecurFone or Montpilier in
connection with the transactions contemplated by this Agreement.
(d) The limitations on the liability of any Seller set forth
in Sections 6.06(a) and 6.06(b) above shall not apply to any loss
resulting from (i) a breach by such Seller of the representations and
warranties set forth in Sections 2.04, 2.06 and 3.03 above or (ii) the
willful misconduct or fraud by such Seller in connection with the
transactions contemplated by this Agreement.
7. GENERAL PROVISIONS
7.01 SURVIVAL PERIOD. The representations and warranties of the parties
contained in this Agreement will survive any investigation heretofore or
hereafter made by any party, their agents and representatives and the
consummation of the transactions contemplated by this Agreement and will
continue in full force and effect for the period specified below (the "Survival
Period"):
(a) The representations and warranties of the parties
contained in this Agreement will survive until, in the absence of
willful misconduct or fraud, and will be of no further force and effect
after, the expiration of one year from the date of this Agreement;
provided, however, that the representations of IXATA and each Seller in
Sections 2.04 and 2.06 above, the representations of each Seller in
Sections 3.01 and 3.03 above, the representations of SecurFone
32
and Montpilier in Sections 4.05, 4.07 and 4.27 above and the
representations of Montpilier in Section 4A.01 above will survive
indefinitely.
(b) The Survival Period will be extended automatically to
include any time period necessary to resolve, and collect upon, a claim
for indemnification that was made in writing before expiration of the
Survival Period but not resolved prior to its expiration; provided,
further, that any such extension will apply only as to claims asserted
and not so resolved within the Survival Period. Liability for any item
will continue until such claim is finally settled, decided or
adjudicated.
(c) No fact, event, misrepresentation or occurrence that, in
the absence of this Section 7.01, would constitute a breach of any
representations or warranties made by any of the parties under this
Agreement or any other document delivered pursuant to this Agreement
will be deemed to constitute a breach of any party's representation or
warranty if the party claiming the breach has actual knowledge of such
fact, event, misrepresentation or occurrence on the date of this
Agreement.
7.02 NOTICES.
(a) All notices, demands or other communications required or
permitted to be given or made under this Agreement will be in writing
and (i) delivered personally, (ii) sent by pre-paid, first class,
certified or registered mail, return receipt requested, (iii) by
priority overnight national express courier service, or (iv) by
facsimile transmission (followed by a hard copy by U.S. mail or
priority overnight delivery), to the intended recipient at its address
or facsimile number set out below. The addresses and facsimile numbers
of the parties for purposes of this Agreement are:
(i) If to IXATA 0000 Xxxxxxx Xxxxxx, Xxxxxx Xxxxx
xx any Seller: Xxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xx. Xxxx Xxxxxxxx
With a copy to: Xxxx, Forward, Xxxxxx & Scripps LLP
000 X. Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxx X. Xxxxxxxx, Esq.
(ii) If to SecurFone SecurFone America, Inc.
or Montpilier: 0000 Xxxxxx Xxxxxx Xxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Mr. Xxxx Xxxxxxxxx
33
With a copy to: Xxxxxxx Xxxxxxx & Xxxxxx P.L.L.
0000 Xxxx Xxxxx Xxxxxx
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxx 00000
Facsimile: 000-000-0000
Attn: Xxxxxx X. Xxxxxxxxx, Esq.
(b) Any notice, demand or communication will be deemed to have
been duly given (i) on receipt if delivered personally, (ii) three
business days after mailing, (iii) the business day after delivery to a
national overnight courier service, or (iv) if given by confirmed
facsimile, immediately if received by recipient during its normal
business hours on a business day or, if not, at the beginning of
recipient's business on the next business day. In proving receipt it
will be sufficient to show that the envelope containing the
communication was duly addressed, stamped and posted (or that the
envelope was delivered to the national overnight courier service), or
that receipt of a facsimile was confirmed by the recipient.
(c) Any party may change the address or facsimile number to
which notices, demands or other communications to such parties will be
given or made by giving notice thereof to the other parties hereto in
the manner provided above.
7.03 GOVERNING LAW. The validity and effect of this Agreement will
be governed by and construed and enforced in accordance with the laws of the
State of Delaware.
7.04 SUBMISSION TO JURISDICTION. Each of the parties agrees and
consents to the jurisdiction of any state or federal court of competent
jurisdiction in State of California, and waives any objection based on venue
or FORUM NON CONVENIENS with respect to any action instituted, and agrees
that any dispute concerning this Agreement or any of the transactions
described in this Agreement may be heard only in the courts described above.
Each of the parties consents to the service of any process in any such action
by delivery of such process by certified U.S. mail to the addresses of the
parties determined in accordance with Section 7.02 hereof, as well as by any
other means of service permitted by applicable law.
7.05 SUCCESSORS AND ASSIGNS. No party may assign all or any part of
its rights, duties or obligations under or pursuant to this Agreement. Except
as otherwise provided, this Agreement will be binding upon and will inure to
the benefit of the parties hereto and their respective heirs, executors,
legal representatives, successors and permitted assigns.
7.06 PARTIAL INVALIDITY AND SEVERABILITY. All rights and
restrictions contained in this Agreement may be exercised and will be
applicable and binding only to the extent that they do not violate any
applicable laws and are intended to be limited to the extent necessary to
render this Agreement legal, valid and enforceable. If any term or part of
this Agreement is held to be illegal, invalid or unenforceable by a court of
competent jurisdiction, it is the intention of the parties that the remaining
terms or partial terms will constitute their agreement with respect to the
subject matter of this Agreement and all remaining terms or partial terms
will remain in full force and effect. To the extent legally permissible, any
illegal, invalid or unenforceable provision of this Agreement will be
replaced by a valid provision that will implement the commercial purpose of
the illegal, invalid or unenforceable provision.
34
7.07 AMENDMENT AND WAIVER. This Agreement may not be altered or
amended except by an instrument in writing signed by or on behalf of the
party entitled to the benefit of the provision against whom enforcement is
sought. Any term or condition of this Agreement may be waived at any time by
the party that is entitled to the benefit thereof, but only if such waiver is
evidenced by a writing signed by that party. No failure on the part of any
party hereto to exercise, and no delay in exercising any right, power or
remedy created under this Agreement, will operate as a waiver thereof, nor
will any single or partial exercise of any right, power or remedy by any such
party preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. No waiver by any party hereto of any breach of
or default in any term or condition of this Agreement will constitute a
waiver of or assent to any succeeding breach of or default in the same or any
other term or condition hereof.
7.08 HEADINGS. The headings of particular provisions of this
Agreement are inserted for convenience only and are not be construed as a
part of this Agreement or serve as a limitation or expansion on the scope of
any term or provision of this Agreement.
7.09 NUMBER AND GENDER. Where the context requires, the use of the
singular form in this Agreement includes the plural, the use of the plural
shall include the singular, and the use of any gender shall include any and
all genders.
7.10 INTEGRATION. This Agreement, including the IXATA and SecurFone
Disclosure Letters (which are incorporated in this Agreement by reference),
and the Voting Agreement supersede all prior discussions and agreements, and
contain the sole and entire agreement, among any of the parties with respect
to the transactions described in this Agreement.
7.11 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which when taken together will be considered one and the
same agreement and will become effective when counterparts have been signed
by each party hereto and delivered to all the other parties hereto. This
Agreement will become effective when each party has received original or
facsimile counterparts thereof signed by all of the other parties.
7.12 PUBLICITY. No notices to third parties or other publicity,
including press releases, concerning any of the transactions provided for in
this Agreement will be made by any party hereto unless planned and
coordinated jointly among the parties, except to the extent otherwise
required by law. Sellers and IXATA are aware that SecurFone is a public
company that must comply with the disclosure requirements of the federal
securities laws and any applicable stock exchange.
7.13 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement is
intended nor will it be construed to give any person, firm, corporation or
other entity, other than the parties hereto and their respective successors
and permitted assigns, any right, remedy or claim under or in respect of this
Agreement or any provisions hereof.
35
IN WITNESS WHEREOF, this Agreement has been executed by the parties
as of the date first written above.
SECURFONE AMERICA, INC.
By: /S/ XXXX X. XXXXXXXXX
--------------------------------------
Its: Chief Executive Officer
MONTPILIER HOLDINGS, INC.
By: /S/ XXXXXXX X. GRAND
--------------------------------------
Its: President
THE IXATA STOCKHOLDERS:
Xxxxxxxx Family Trust dated August 3, 1989
By: /S/ XXXX XXXXXXXX
--------------------------------------
Xxxx Xxxxxxxx, Trustee
Xxxxxxxx Family Trust dated April 11, 1996
By: /S/ XXXX XXXXX XXXXXXXX
--------------------------------------
Xxxx Xxxxx Xxxxxxxx, Trustee
By: /S/ XXXXXX X. XXXXXXX
--------------------------------------
Xxxxxx X. Xxxxxxx, individually
By: /S/ XXXX XXXXXXX
--------------------------------------
Xxxx Xxxxxxx, individually
By: /S/ XXXX XXXXXXXX
--------------------------------------
Xxxx Xxxxxxxx, individually
By: /S/ XXXXX XXXXXXXXXX
--------------------------------------
Xxxxx Xxxxxxxxxx, individually
36
By: /S/ XXX XXXXXXXX
--------------------------------------
Xxx Xxxxxxxx, individually
3324877 Canada Inc.
By: /S/ XXXX XXXXXXXXX
--------------------------------------
Xxxx Xxxxxxxxx
By: /S/ XXXX VALLINGDHAM
--------------------------------------
Xxxx Vallingdham, individually
By: /S/ XXXX X'XXXXXX
--------------------------------------
Xxxx X'Xxxxxx, individually
By: /S/ XXXXX XXXXXXX
--------------------------------------
Xxxxx Xxxxxxx, individually
By: /S/ XXXXXXX XXXXXXXX
--------------------------------------
Xxxxxxx Xxxxxxxx, individually
37
