EXHIBIT 10.2
EXECUTION COPY
ASSET PURCHASE AGREEMENT
by and among
SATELLINK PAGING LLC
"PURCHASER"
AND
XXXXX COMMUNICATIONS, INC.
"SELLER"
AND
XXXXXXX X. XXXXX
"SHAREHOLDER"
EFFECTIVE AS OF FEBRUARY 1, 1997
EXECUTION COPY
TABLE OF CONTENTS
PAGE
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ARTICLE 1 PURCHASE AND SALE OF ASSETS...................................... 1
1.1 Purchase and Sale of Acquired Assets............................ 1
1.2 Excluded Assets of Seller....................................... 3
1.3 Non-Compete..................................................... 4
1.4 Sub-Lease....................................................... 4
1.5 Letter Agreement................................................ 4
ARTICLE 2 ASSUMPTION OF LIABILITIES........................................ 4
2.1 Assumption of Liabilities of Seller............................. 4
2.2 Excluded Liabilities of Seller.................................. 4
ARTICLE 3 CALCULATION AND PAYMENT OF PURCHASE PRICE........................ 4
3.1 Purchase Price.................................................. 4
3.2 Payment of Purchase Price....................................... 5
3.3 Transfer Expenses............................................... 5
3.4 Allocation of Purchase Price.................................... 5
ARTICLE 4 PROCEDURE FOR CLOSINGS........................................... 5
4.1 Time and Place of Closing....................................... 5
4.2 Condition to Closing............................................ 6
4.3 Transactions at the Closing..................................... 6
4.5 Certain Consents................................................ 8
4.6 Further Assurances.............................................. 9
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER......... 9
5.1 Organization and Qualification.................................. 9
5.2 Authority....................................................... 9
5.3 Financial Statements............................................ 10
5.4 Inventories..................................................... 11
5.5 Accounts Receivable............................................. 11
5.6 Personal Property............................................... 11
5.7 Real Property................................................... 12
5.8 Contracts....................................................... 12
5.9 Intellectual Property........................................... 14
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5.10 Insurance....................................................... 15
5.11 Environmental Matters........................................... 15
5.12 Litigation...................................................... 16
5.13 Absence of Changes.............................................. 16
5.14 Brokers and Finders............................................. 18
5.15 Labor Matters................................................... 18
5.16 Governmental Approval and Consents.............................. 19
5.17 Taxes........................................................... 19
5.18 Employee Benefit Plans.......................................... 20
Code .......................................................... 21
Employee Benefit Plan............................................. 21
ERISA .......................................................... 21
ERISA Affiliate................................................... 21
ERISA Plan........................................................ 21
Governmental Authority............................................ 21
5.19 Compliance with Laws............................................ 21
5.20 Governmental Approval and Consents.............................. 22
5.21 Adequacy of Acquired Assets..................................... 22
5.22 Title to Assets................................................. 22
5.23 Correctness of Representations.................................. 22
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PURCHASER...................... 22
6.1 Organization and Qualification.................................. 23
6.2 Authority....................................................... 23
6.3 Litigation...................................................... 23
6.4 Correctness of Representations.................................. 23
6.5 Brokers and Finders............................................. 23
6.6 Governmental Approval and Consents.............................. 24
ARTICLE 7 COVENANTS........................................................ 24
7.1 Mutual Covenants................................................ 24
7.2 Conditions Precedent............................................ 24
ARTICLE 8 POST CLOSING MATTERS............................................. 24
8.1 Employment of Employees......................................... 24
8.2 Seller's Benefit Plans.......................................... 24
8.3 Maintenance of Books and Records................................ 24
8.4 Payments Received............................................... 25
8.6 Covenant to Pay Debts........................................... 25
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ARTICLE 9 INDEMNIFICATION.................................................. 26
9.1 Definitions..................................................... 26
9.2 Agreement of Indemnitors to Indemnify........................... 26
9.3 Procedures for Indemnification.................................. 27
9.4 Third Party Claims.............................................. 27
9.5 Indemnification Exclusive Remedy................................ 29
9.6 Survival........................................................ 29
9.7 Time Limitations................................................ 29
9.8 Subrogation..................................................... 30
9.9 Purchaser's Right of Set-Off.................................... 30
ARTICLE 10 GENERAL PROVISIONS............................................... 30
10.1 Fees and Expenses............................................... 30
10.2 Notices......................................................... 30
10.3 Assignment; Binding Effect...................................... 32
10.4 No Benefit to Others............................................ 32
10.5 Headings, Gender, Person and Affiliate.......................... 32
10.6 Counterparts.................................................... 33
10.7 Integration of Agreement........................................ 33
10.8 Time of Essence................................................. 33
10.9 Governing Law................................................... 33
10.10 Partial Invalidity.............................................. 33
10.11 Investigation................................................... 33
10.12 Public Announcements............................................ 33
10.13 Arbitration..................................................... 34
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TABLE OF EXHIBITS
Exhibit A Form of Non-Compete Agreement
Exhibit B Form of Sublease Agreement
Exhibit C Form of Letter Agreement
Exhibit D Form of Promissory Note
Exhibit E Seller Opinion
Exhibit F Purchaser Opinion
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SCHEDULES
Schedule 1.2 Excluded Assets
Schedule 3.1 Purchase Price Allocation
Schedule 5.3 Financial Statements
Schedule 5.6.1 Equipment
Schedule 5.6.2 Furniture and Fixtures
Schedule 5.6.3 Leases for Furniture, Fixtures and Equipment
Schedule 5.7 Defects in Real Property
Schedule 5.8.1 Contracts
Schedule 5.8.2 List of Customers and Form of Customer Agreements
Schedule 5.8.3 Commitment for Capital Expenditures
Schedule 5.9 Intellectual Property
Schedule 5.13 Material Adverse Change
Schedule 5.16 Permits
Schedule 5.17.1 Taxes and Assessments Contests
Schedule 5.17.2 Federal and State Tax Disputes
Schedule 5.18.1 Employee Benefit Plans
Schedule 5.18.2 Employee Benefit Plans Compliance With Laws
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CROSS REFERENCES TO DEFINED TERMS
TERM SECTION IN WHICH DEFINED
Accounts Receivable Section 1.1(j)
Acquired Asset(s) Section 1.1
Acquisition Documents Section 5.2
Agreement Preamble
Assumed Liabilities Section 2.1
Books and Records Section 1.1(f)
Business Preamble
CERCLA Section 5.11(c)
Closing Section 4.1
Closing Date Section 4.1
Code Section 5.18(g)
Contract(s) Section 1.1(c)
Deferred Payment Section 3.2(b)
defined benefit plan Section 5.18(e)
Effective Time Section 4.1
Employee Benefit Plan Section 5.18(g)
Equipment Section 1.1(a)
ERISA Section 5.18(g)
ERISA Affiliate Section 5.18(g)
ERISA Plan Section 5.18(g)
Excess Amount Section 3.3
Excluded Assets Section 1.2
Excluded Liabilities Section 2.2
Financial Statements Section 5.3
Furniture and Fixtures Section 1.1(h)
GAAP Section 5.3
Goods Contracts Section 5.8(a)(iii)
Governmental Authority Section 5.18(g)
hazardous Section 5.11(d)
Hazardous Materials Section 5.11(d)
Indemnification Claim Section 9.1(a)
Indemnitees Section 9.1(b)
Indemnitors Section 9.1(c)
Intellectual Property Section 1.1(e)
Inventory Section 1.1(d)
Labor Claims Section 5.15
Letter Agreement Section 1.5
Losses Section 9.1(d)
multiemployer plan Section 5.18(e)
Non-Compete Section 1.3
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obligation to contribute Section 5.18(e)
Office Lease Section 1.2(a)
Permits Section 1.1(g)
Purchaser Preamble
Purchase Price Section 3.1
Purchaser Opinion Section 4.3(b)(v)
RCRA Section 5.11(c)
Real Property Leases Section 5.7(b)
Seller Preamble
Seller Opinion Section 4.3(a) (vii)
Services Contracts Section 5.8(a) (iii)
Shareholder Preamble
Shortfall Section 3.3
Statement Section 3.3
Sublease Agreement Section 1.4
Third Party Claim Section 9.1(e)
toxic Section 5.11(d)
Transfer Expenses Section 3.4
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is effective as of
the 1st day of February, 1997, by and among SATELLINK PAGING LLC, a Georgia
limited liability company ("Purchaser") and XXXXX COMMUNICATIONS, INC., a
Georgia corporation ("Seller") and XXXXXXX X. XXXXX ("Shareholder").
A. Seller is engaged in the business of selling or licensing paging
devices, providing one way paging, ,as a reseller of certain carriers providing
airtime for paging transmissions pursuant to licenses issued by the Federal
Communications Commission, and providing voice mail services to the general
public within certain areas in the state of Georgia under the "Message World"
name (the "Business").
B. Shareholder owns all of the issued and outstanding capital stock
of Seller.
C. Purchaser desires to purchase from Seller all of Seller's
operating assets related to the Business on and subject to the terms and
conditions contained in this Agreement.
D. Seller desires to sell to Purchaser all of Seller's operating
assets related to the Business on and subject to the terms and conditions
contained in this Agreement.
E. Shareholder will directly benefit from Purchaser's purchase of
such assets.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale of Acquired Assets. At the Closing (as
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hereinafter defined), on and subject to the terms and conditions of this
Agreement, Seller shall sell, assign, transfer, convey, and deliver to
Purchaser, and Purchaser shall purchase, acquire, and accept from Seller, all of
the right, title, and interest of Seller in and to (i) the Business, (ii) except
as set forth in Section 1.2(f) hereto the name "Message World" and any other
name or names under which Seller has conducted the Business and all goodwill
associated therewith, and (iii) the following assets, properties, and rights of
Seller, free and clear of all liens, claims, charges, security interests, and
encumbrances of any kind or nature, as the same shall exist at the Closing Date
(as hereinafter defined):
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(a) All equipment and computer software utilized in billing the
customers and the like, wherever located, reflected on the books and records of
Seller (even if carried at no value) and related to the Business, and any and
all assignable warranties of third parties with respect thereto (the
"Equipment");
(b) All of Seller's right, title and interest in that certain Lease
dated November 10, 1994, between Seller and Norwest Equipment Finance related to
the MVP Voice Messaging System (the "MVP Lease"), together with all of Seller's
right, title and interest in the MVP Voice Messaging System and all related
equipment described in the MVP Lease.
(c) All of the contracts, airtime purchase agreements, leases,
warranties, commitments, agreements, arrangements and purchase and sales orders,
whether oral or written, pursuant to which Seller enjoys any right or benefit in
connection with the Business, whether or not reflected upon the books and
records of the Seller, together with the right of Seller to receive income in
respect of such contracts, leases, warranties, commitments, agreements,
arrangements, and purchase and sales orders on and after the Closing Date
(individually, a "Contract" and collectively, the "Contracts");
(d) All stock of pagers and spare or replacement parts therefore,
wherever located, reflected on the books and records of Seller (the
"Inventory"), together with all rights of Seller against suppliers of the
Inventory including, without limitation, Seller's rights under express or
implied warranties with respect to such Inventory and Inventory previously sold
by Seller and Seller's rights to receive refunds or rebates in connection with
its purchase of Inventory;
(e) All trademarks and service marks owned or held by Seller and
related to the Business; all registrations thereof and applications therefor,
both registered and unregistered, foreign and domestic; all computer software
utilized for customer billing (including documentation and related object and,
if applicable, source codes) owned by or belonging to Seller and related to the
Business; and all confidential or proprietary information that are either (i)
owned by Seller and related to the Business, whether or not reflected on the
books and records of Seller, or (ii) as to which Seller has rights as licensee,
constituting all of the intellectual property of Seller used exclusively in the
Business (the "Intellectual Property");
(f) All existing data, data bases, books, records, correspondence,
business plans and projections, records of sales, customer and vendor lists,
files, and papers in the possession of Seller and related to the Business;
including without limitation, all manuals and printed instructions of Seller
relating to the Acquired Assets (as hereinafter defined) and to the operation of
the Business (the "Books and Records");
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(g) All licenses, permits, certificates, and governmental
authorizations of Seller and related to the Business, including pending
applications therefor (the "Permits"); and
(h) All accounts, notes and other receivables of Seller reflected on
the books and records of Seller and related to or arising from the Business (the
"Accounts Receivable").
All of the items described in this SECTION 1.1 to be purchased by
Purchaser and which are not Excluded Assets as defined in SECTION 1.2 are
hereinafter collectively referred to as the "Acquired Assets."
1.2 Excluded Assets of Seller. Seller shall not sell and Purchaser
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shall not purchase or acquire and the Acquired Assets shall not include:
(a) Except as set forth in SECTION 1.4, all of Seller's rights in, to,
and under Seller's office lease, together with all of Seller's right, title, and
interest in the buildings, fixtures and improvements, including construction-in-
progress, and appurtenances thereto, located on the real property subject to
such lease, and any and all assignable warranties of third parties with respect
thereto (the "Office Lease");
(b) All cash and cash equivalents of Seller on hand or on deposit as
of the close of business on the Closing Date.
(c) The assets of any employee benefit plan maintained by or covering
any employees of Seller or to which Seller has made any contribution;
(d) Seller's corporate franchise, stock record books, corporate record
books containing minutes of meetings of directors and stockholders, tax returns
and records, books of account and ledgers, and such other records having to do
with Seller's organization or stock capitalization;
(e) Any rights which accrue or will accrue to Seller under this
Agreement;
(f) Any rights to any of Seller's claims for any federal, state,
local, or foreign tax refund relating to any period ending prior to the Closing
Date;
(g) Any right or claim of Seller to the use of the "Message World"
name in Charlotte, North Carolina; and
(h) Except as set forth on SCHEDULE 1.2, the assets, properties, and
rights not related to the Business, including but not limited to the $.0001 par
value common stock of Preferred Networks, Inc. held in the name of "Xxxxx
Communications,
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Inc.," accounts receivable from employees, deposits and all furniture, fixtures
and equipment.
All of the assets described in this SECTION 1.2 are hereinafter
collectively referred to as the "Excluded Assets."
1.3 Non-Compete. At the Closing Seller and Shareholder shall enter
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into, execute and deliver the Non-Compete Agreement attached as EXHIBIT A hereto
(the "Non-Compete").
1.4 Sublease. At the Closing, Purchaser, Seller and Lessor shall
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enter into, execute and deliver the Sublease Agreement attached as EXHIBIT B
hereto (the "Sublease").
1.5 Letter Agreement. At the Closing, Purchaser, Seller and
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Preferred Technical Services, Inc. shall enter into, execute and deliver the
Letter Agreement attached as EXHIBIT C hereto (the "Letter Agreement").
ARTICLE 2
ASSUMPTION OF LIABILITIES
2.1 Assumption of Liabilities of Seller. Subject to SECTION 2.2
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hereof, as of the Closing Date, Purchaser shall assume responsibility for the
performance and satisfaction of the executory obligations and liabilities of
Seller arising from and after the Effective Time pursuant to the Contracts
assigned pursuant to SECTION 1.1(C), but excluding any obligations or
liabilities arising from or relating to any breach or violation of such
Contracts by Seller or default under such Contracts by Seller. The executory
obligations and liabilities of Seller specifically assume pursuant to this
SECTION 2.1 are hereinafter referred to as the "Assumed Liabilities."
2.2 Excluded Liabilities of Seller. Purchaser shall not assume or
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become liable for any obligations, commitments, or liabilities of Seller,
whether known or unknown, absolute, contingent, or otherwise, and whether or not
related to the Acquired Assets except for the liabilities specifically described
in SECTION 2.1 above (the obligations and liabilities of Seller not assumed by
Purchaser are hereinafter referred to as the "Excluded Liabilities"). Without
limiting the generality of the foregoing, Excluded Liabilities shall include any
liabilities related to or arising out of the Excluded Assets.
ARTICLE 3
CALCULATION AND PAYMENT OF PURCHASE PRICE
3.1 Purchase Price. The aggregate consideration to be paid to
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Seller for the sale, transfer, and conveyance of the Acquired Assets and the
Non-Compete Agreement
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(the "Purchase Price") shall be ONE MILLION FOUR HUNDRED THOUSAND DOLLARS
($1,400,000).
3.2 Payment of Purchase Price.
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(a) Subject to the fulfillment of the conditions set forth herein, on
the Closing Date Purchaser shall pay to Seller ONE MILLION EIGHTY THOUSAND
DOLLARS ($1,080,000) by check or by wire transfer in immediately available funds
to an account designated in writing by Seller; and
(b) Subject to the fulfillment of the conditions set forth herein on
or before the six month anniversary of the Closing Date, on the six month
anniversary of the Closing Date, Purchaser shall pay to Seller THREE HUNDRED
TWENTY THOUSAND DOLLARS ($320,000), plus accrued interest at eight percent (8%)
per annum (the "Deferred Payment"), as evidenced by a promissory note
substantially in the form of EXHIBIT D (the "Promissory Note").
3.3 Transfer Expenses. Seller shall pay any sales and use,
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transfer or recording, documentary, or other taxes or charges levied on the
transfer of the Acquired Assets (the "Transfer Expenses"). All Inventory shall
be claimed as exempt from sales or use tax by Purchaser and Purchaser shall
furnish Seller at the Closing with sales tax exemption certificates.
3.4 Allocation of Purchase Price. The parties hereto agree that
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the Purchase Price will be allocated among the Acquired Assets as set forth on
SCHEDULE 3.4.__The consideration paid for the Non-Compete Agreement and the
Acquired Assets (which shall equal the Purchase Price) shall be allocated among
the Non-Compete and the Acquired Assets in accordance with the provisions
contained in Treasury Regulation Section 1.1060-1T(d). The parties agree to be
bound by such allocation and to report the transaction contemplated herein for
federal income tax purposes in accordance with such allocation. In furtherance
of the foregoing, the parties hereto agree to execute and deliver Internal
Revenue Service Form 8594 reflecting such allocation.
ARTICLE 4
PROCEDURE FOR CLOSINGS
4.1 Time and Place of Closing. The closing for the purchase and
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sale contemplated by this Agreement (the "Closing") shall be held at the offices
of Xxxxxx & Bird, One Atlantic Center, 0000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxx 00000, on February 3, 1997, commencing at 1:00 p.m., Atlanta time, or
at such other time and place as the parties hereto may agree in writing (the
date on which the Closing actually occurs is hereinafter referred to as the
"Closing Date"). Subject to the consummation of the Closing on the Closing
Date, the sale, assignment, transfer, and conveyance to Purchaser
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of the Acquired Assets will be effective as of 12:01 a.m. Eastern Daylight Time
on February 1, 1997 (the "Effective Time").
4.2 Condition to Closing. The parties' obligations hereunder shall
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be conditioned on:
(a) Purchaser's receipt prior to the Closing of Uniform Commercial
Code searches of filings made pursuant to Article 9 thereof in all jurisdictions
where any of the Acquired Assets are located, in form, scope, and substance
reasonably satisfactory to Purchaser and its counsel, which searches shall
reflect the release or termination of liens, claims, security interests, or
encumbrances against any of the Acquired Assets disclosed thereby, and to the
extent any such release or termination is not reflected of record, Purchaser
shall have received evidence satisfactory to it, that all such liens and
encumbrances against the Acquired Assets have been released or terminated prior
to or at the Closing or that the underlying obligations have been paid in full
pursuant to SECTION 8.5.
(b) The approval of the Manager of Purchaser of the transactions
contemplated by this Agreement .
(c) The approval of the Board of Directors and Shareholders of Seller
of the transactions contemplated by this Agreement.
4.3 Transactions at the Closing. At the Closing, each of the
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following items shall be delivered:
(a) Seller shall deliver to Purchaser the following:
(i) such bills of sale, assignments, endorsements, and other good
and sufficient instruments and documents of conveyance and transfer, in form
reasonably satisfactory to Purchaser and its counsel, as shall be necessary and
effective to transfer and assign to, vest in, and purchase all of Seller's
right, title, and interests in and to the Acquired Assets;
(ii) the Non-Compete Agreement;
(iii) the Sublease Agreement;
(iv) the Letter Agreement;
(v) a certificate of incumbency of the Seller executed by a
Secretary or Assistant Secretary thereof listing the officers authorized to
execute this
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Agreement and certifying the authority of each such officer to execute the
agreements, documents, and instruments on behalf of Seller in connection with
the consummation of the transactions contemplated herein;
(vi) a certificate of the Secretary of Seller containing a true and
correct copy of the resolutions duly adopted by the board of directors and
shareholders of Seller approving and authorizing each Acquisition Document (as
hereinafter defined) and the transactions contemplated hereby and thereby
certifying that such resolutions have not been rescinded, revoked, modified, or
otherwise affected and remain in full force and effect;
(vii) the opinion of counsel to Seller in substantially the form of
EXHIBIT E hereto (the "Seller Opinion");
(viii) a true and correct copy of each consent and waiver that is
required for the assignment of the Contracts, Permits, Intellectual Property,
the MVP Lease and other agreements and assets or otherwise required for the
execution, delivery, and performance of this Agreement by Seller, along with a
certificate dated as of the Closing Date, executed by an authorized officer of
Seller to the foregoing effect;
(ix) certificates of existence or certificates of good standing of
Seller, as of a date within ten (10) days prior to the Closing Date, from the
State of Georgia; and
(x) such other certificates, instruments or evidence of the
performance by Seller of all covenants and the satisfaction by Seller of all
conditions required by this Agreement to be performed or satisfied by Seller at
or prior to the Closing Date as Purchaser or its counsel may reasonably require.
The documents and certificates to be delivered hereunder by or on
behalf of Seller on the Closing Date shall be in form and substance reasonably
satisfactory to Purchaser and its counsel.
(b) Subject to the receipt and sufficiency of the items set forth in
SECTION 4.2(A) above, Purchaser shall deliver to or for the account of Seller
the following:
(i) a check or wire transfer in the amount equal to a portion of the
Purchase Price as set forth in SECTION 3.2(A) in immediately available funds to
an account designated in writing by Seller;
(ii) an instrument or instruments of assumption of the Assumed
Liabilities, duly executed by Purchaser, and reasonably satisfactory in form and
substance to Seller and its counsel;
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(iii) a certificate executed by the Manager of Purchaser containing a
true and correct copy of resolutions duly adopted by the Manager of Purchaser
approving and authorizing this Agreement and each of the other Acquisition
Documents (as hereinafter defined) to which Purchaser is a party and each of the
transactions contemplated hereby and thereby certifying that such resolutions
have not been rescinded, revoked, modified, or otherwise affected and remain in
full force and effect;
(iv) a certificate of incumbency of the Manager of Purchaser executed
by the President and attested by the Secretary or Assistant Secretary of the
Manager of Purchaser listing the officers of the Manager authorized to execute
this Agreement and the other Acquisition Documents to which Purchaser is a party
and the instruments of assumption on behalf of Purchaser and certifying the
authority of each such officer to execute the agreements, documents, and
instruments on behalf of Purchaser in connection with the consummation of the
transactions contemplated herein;
(v) the opinion of counsel to Purchaser in substantially the form of
EXHIBIT F hereto (the "Purchaser Opinion");
(vi) certificates of existence or certificates of good standing of
Purchaser, as of a date within ten (10) days prior to the Closing Date, from the
State of Georgia; and
(vii) the Non-Compete Agreement;
(viii) the Sublease Agreement;
(ix) the Letter Agreement;
(x) the Promissory Note; and
(xi) such other certificates, instruments or evidence of the
performance by Purchaser of all covenants and satisfaction by Purchaser of all
of the conditions required by this Agreement to be performed or satisfied by
Purchaser at or before the Closing Date, as Seller or its counsel may reasonably
require.
The documents and certificates to be delivered to Seller hereunder by
or on behalf of the Purchaser on the Closing Date shall be in form and substance
reasonably satisfactory to Seller and its counsel.
4.5 Certain Consents. To the extent that the rights of Seller
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under any agreement, Contract, commitment, lease, Permit, Real Property Lease
(as hereinafter defined), or other Acquired Asset to be assigned to Purchaser by
Seller hereunder may not be assigned without the consent of another person which
has not been obtained prior
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to the Closing Date, and which is materially important to the ownership, use or
disposition by Purchaser of an Acquired Asset, this Agreement shall not
constitute an agreement to assign the same if an attempted assignment would
constitute a breach thereof or be unlawful, and Seller, at its expense, shall
use its best efforts to obtain any such required consent(s) as promptly as
possible. If any such consent shall not be obtained or if any attempted
assignment would be ineffective or would impair Purchaser's rights under the
Acquired Asset in question so that Purchaser would not in effect acquire the
benefit of all such rights, Seller, to the maximum extent permitted by law and
the specific Acquired Asset and at Seller's expense, shall act after the Closing
as Purchaser's agent in order to obtain for Purchaser the benefits thereunder,
and Seller shall cooperate, to the maximum extent permitted by law and the
specific Acquired Assets, with Purchaser in any other reasonable arrangement
designed to provide such benefits to Purchaser, including any sublease,
subcontract or similar arrangement.
4.6 Further Assurances. Seller and Shareholder from time to time
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after the Closing Date, at Purchaser's request, shall execute, acknowledge, and
deliver to Purchaser such other instruments of conveyance and transfer and will
take such other actions and execute and deliver such other documents,
certifications, and further assurances as Purchaser may require in order to vest
more effectively in Purchaser, or to put Purchaser more fully in possession of,
any of the Acquired Assets or to better enable Purchaser to complete, perform,
or discharge any of the Assumed Liabilities. Each of the parties hereto will
cooperate with the other and execute and deliver to the other parties hereto
such other instruments and documents and take such other actions as may be
reasonably requested from time to time by any other party hereto as necessary to
carry out, evidence, and confirm the intended purposes of this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
OF SELLER AND SHAREHOLDER
Seller and Shareholder, jointly and severally, represent and warrant
to Purchaser that:
5.1 Organization and Qualification. Seller is a corporation duly
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organized, validly existing, and in good standing under the laws of the State of
Georgia.
5.2 Authority. Seller and Shareholder have full power and
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authority to enter into this Agreement and the agreements contemplated hereby,
or respectively executed by it in connection herewith (collectively, this
Agreement and such other agreements shall be referred to hereinafter as the
"Acquisition Documents"), and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance by Seller of each of the
Acquisition Documents to which it is a party has been duly and validly
authorized and approved by all necessary action on the part of Seller. Each of
the Acquisition Documents to which Seller and Shareholder is a party is the
legal, valid, and
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binding obligation of Seller and Shareholder, enforceable against Seller and
Shareholder, in accordance with its terms, except as enforceability may be
limited by applicable equitable principles (whether applied in a proceeding at
law or in equity) or by bankruptcy, insolvency, reorganization, moratorium, or
similar laws affecting creditors' rights generally, to the exercise of judicial
discretion in accordance with general equitable principles, and to equitable
defenses that may be applied to the remedy of specific performance. Neither the
execution and delivery by Seller and Shareholder, respectively, of any of the
Acquisition Documents to which it is a party nor the consummation by Seller or
Shareholder of the transactions contemplated thereby will (i) violate the
Articles of Incorporation or Bylaws of Seller and Shareholder, (ii) violate any
provisions of law or any order of any court or any governmental entity to which
Seller or Shareholder is subject, or by which the Acquired Assets, may be bound,
(iii) conflict with, result in a breach of, or constitute a default under any
indenture, mortgage, lease, contract, warranty, agreement, arrangement, purchase
or sale order or other instrument to which Seller is a party or by which it or
any of the Acquired Assets may be bound, or (iv) result in the creation of any
lien, charge, or encumbrance upon any of the Acquired Assets or increase or
adversely affect the obligations of Seller or Purchaser under any of the Assumed
Liabilities.
5.3 Financial Statements. Attached as SCHEDULE 5.3 are true,
---------------------
correct, and complete copies of the unaudited balance sheet and the related
statements of income and cash flows for Seller as at and for the fiscal years
ended December 31, 1993, 1994, 1995 and for the period ending October 30, 1996
(collectively, the "Financial Statements"). The Financial Statements have been
prepared from the books and records of Seller, and present fairly in all
material respects the financial position and results of operation of Seller on a
combined basis as at and for the periods indicated. Seller has not received any
advice or notification from its independent certified public accountants that
Seller has used any improper accounting practice that would have the effect of
not reflecting or incorrectly reflecting in the Financial Statements or the
books and records, any properties, assets, liabilities, revenues, or expenses.
Except for any consulting fees, commissions, or other compensation recorded in
the Financial Statements from Voice Information Systems, Inc., a Georgia
corporation, Preferred Networks, Inc., a Delaware corporation, Paging Services,
Inc., a Georgia corporation, IAX, Ltd., a Georgia corporation, and any and all
proceeds from the sale of certain assets by Seller located in Laurel, Maryland,
the Financial Statements do not contain any items of special or nonrecurring
income, or other income not earned in the ordinary course of business,
individually in excess of $1,000 and in the aggregate in excess of $10,000. The
books, records, and accounts of Seller accurately and fairly reflect, in all
material respects, the transactions and the assets and liabilities of Seller.
Seller has not engaged in any transaction, maintained any bank account, or used
any of the funds of Seller, except for transactions, bank accounts, and funds
which have been and are reflected in the normally maintained books and records
of Seller.
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5.4 Inventories. All Inventory reflected on the Financial
------------
Statements, or acquired since the date thereof: (a) was acquired and has been
maintained in the ordinary course of the Business; (b) is of good and
merchantable quality, consists substantially of a quality, quantity and
condition usable, leasable or salable in the ordinary course of the Business;
(c) is valued at the lesser of cost or net realizable value; and (d) is not
subject to any write-down or write-off. Seller is not under any liability or
obligation with respect to the return of Inventory in the possession of
wholesalers, retailers or other customers. None of the Inventory is held by
Seller on consignment from others.
5.5 Accounts Receivable. All Accounts Receivable of Seller shown
--------------------
on the Financial Statements represent, and the Accounts Receivable of Seller
outstanding on the Closing Date will represent, sales actually made or services
actually performed in the ordinary course of business in bona fide transactions
completed in accordance with the terms and provisions contained in any documents
relating thereto. The Accounts Receivable outstanding on the Closing Date are
subject to no defenses, counterclaims, or rights of setoff other than those
arising in the ordinary course of business.
5.6 Personal Property.
-----------------
(a) SCHEDULE 5.6.1 contains a true and correct list of all Equipment
owned by Seller and included in the Acquired Assets, and SCHEDULE 5.6.2 contains
a true and correct list of all Furniture and Fixtures and all other items of
personal property (excluding items of Furniture and Fixtures and other personal
property having a value of less than $1,000 individually, or $10,000 in the
aggregate), which are owned by Seller and included in the Acquired Assets.
(b) SCHEDULE 5.6.3 contains a list of all leases for Equipment,
Furniture and Fixtures, or other items of personal property (except
miscellaneous leases having an aggregate value, if capitalized, of less than
$10,000) leased by Seller and included in the Acquired Assets. True and correct
copies of each lease listed on SCHEDULE 5.6.3 and any amendments, extensions,
and renewals thereof are attached thereto. Each of the leases described on
SCHEDULE 5.6.3 is in full force and effect and there are no existing defaults or
events of default, real or claimed, or events which with notice or lapse of time
or both would constitute defaults. No rights of Seller under such leases have
been assigned or otherwise transferred as security for any obligation of Seller.
Except as described on SCHEDULE 5.6.3, all such leases are fully assignable
without the consent of any third party.
(c) All of the Equipment is in good operating condition and state of
repair and, except as described on SCHEDULE 5.6.3, no repair or replacement of
any thereof is contemplated or will, within the one (1) year period following
the Closing Date, be required, other than routine maintenance and repairs
consistent with past experience.
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5.7 Real Property.
--------------
(a) Seller does not own any real property.
(b) A true and correct copy of the Office Lease and any amendments,
extensions, and renewals thereof have been delivered to the Purchaser. The
Office Lease is in full force and effect and there is no existing default or
event of default, real or claimed, or event which with notice or lapse of time
or both would constitute a default thereunder by Seller or any other party to
such Office Leases. The Sublease Agreement shall not cause a breach, default, or
event of default thereunder.
(c) Seller has received no written notice from governmental
authorities alleging that the improvements on any property that is subject to
the Office Lease are in violation of any applicable use and occupancy laws, use
restrictions, building ordinances, zoning ordinances and health and safety
ordinances.
(d) Seller has not received any written notice of any pending or
threatened condemnations, planned public improvements, annexation, special
assessments, zoning or subdivision changes, or other adverse claims affecting
any property that is subject to the Office Lease.
(e) To the best of Seller and Shareholder's knowledge and belief,
there is no unrecorded private restrictive covenant on all or any portion of the
property that is subject to the Office Lease which prohibits the current use of
the such property.
(f) To the best of Seller and Shareholder's knowledge and belief, all
Permits required for Seller's occupancy and operation of any property that is
subject to the Office Lease have been obtained and are in full force and effect,
and Seller has received no notices of violations in connection with such items.
(g) Seller does not have in its possession any studies or reports
which indicate any defects in the design or construction of any of the
improvements on the property that is subject to the Office Lease and to Seller's
knowledge, no such defects exist except as set forth on SCHEDULE 5.7.
5.8 Contracts.
---------
(a) SCHEDULE 5.8.1 contains a true and correct list of all Contracts
other than Contracts with customers not otherwise listed on SCHEDULES 5.6.3,
5.7.1 AND 5.9, together with a true and correct copy (and, if oral, a
description) of each such Contract that (i) has a duration of twelve (12) months
or more, (ii) requires or could require any party thereto to pay $10,000 or
more, or (iii) is between either Seller and any officer, stockholder, director,
employee, or affiliate thereof or any other party hereto or any officer,
stockholder, director, employee or affiliate of any such other party, and all
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modifications, amendments, renewals, or extensions thereof. SCHEDULE 5.8.2
contains a true and correct list of all customers who subscribe for paging
services and/or voice mail services of Seller related to the Business as of the
date hereof together with a true and correct copy of each form of agreement
currently in effect with any such customer. Each of the Contracts listed or
described in SCHEDULES 5.8.1 or 5.8.2 was entered into prior to the Closing Date
in the ordinary course of business on terms substantially consistent with such
Seller's practice prior thereto. Except as listed on SCHEDULES 5.6.3, 5.7.1,
5.8.1, 5.8.2 AND 5.9, Seller is not a party to any written or legally binding
oral contract of the following type:
(i) agreement, contract, or commitment with any present or former
employee or consultant or for the employment of any person;
(ii) agreement, contract, or commitment for the future purchase of, or
payment for, supplies or products, or for the performance of services by a third
party which supplies, products or services are used in the conduct of the
Business involving in any one case $10,000 or more;
(iii) agreement, contract or commitment to sell or supply products
related to the Business ("Goods Contracts") or to perform maintenance, services
or similar duties ("Services Contracts") related to the Business involving in
any one case $10,000 or more;
(iv) distribution, dealer, representative, or sales agency agreement,
contract, or commitment relating to the Business;
(v) lease under which Seller is lessor relating to the Acquired Assets
or any property at which the Acquired Assets are located;
(vi) note, debenture, bond, equipment trust agreement, letter of
credit agreement, loan agreement, or other contract or commitment for the
borrowing or lending of money relating to the Business or agreement or
arrangement for a line of credit or guarantee, pledge, or undertaking of the
indebtedness of any other person relating to its business;
(vii) agreement, contract, or commitment for any charitable or
political contribution;
(viii) agreement, contract, or commitment limiting or restraining
Seller from engaging or competing in any manner or in any business, nor, to the
knowledge of Seller is any employee of Seller subject to any such agreement,
contract, or commitment; or
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(ix) material agreement, contract, or commitment relating to its
business not made in the ordinary course of business.
(b) SCHEDULE 5.8.3 contains a true and correct list of all commitments
for capital expenditures related to the Business that have been approved or made
prior to the date of this Agreement in excess of $10,000 by Seller and that
remain outstanding as of the date hereof.
(c) Each of the Contracts is in full force and effect and there exists
no breach or violation of or default under any of such Contracts by Seller or,
to Seller's knowledge, any other party to such Contracts or any event which,
with notice or the lapse of time, or both, will create a breach or violation
thereof or default thereunder by Seller or any other party to such Contracts.
Except as set forth on SCHEDULES 5.8.1 AND 5.8.2, each Contract listed therein
is fully assignable without the consent of any third party.
(d) There exists no actual or threatened termination, cancellation, or
limitation of, or any amendment, modification, or change to any Contract, which
would have an adverse effect on the business or condition, financial or
otherwise, of the Business, including, without limitation, (i) the business
relationship of Seller with any customer, distributor, or related group of
customers or distributors, (ii) the requirements of any customer or related
group of customers of the Business.
(e) Seller has not granted any power of attorney affecting or with
respect to the Business or the Acquired Assets that remains outstanding.
5.9 Intellectual Property. SCHEDULE 5.9 contains a true and
----------------------
correct list of all Intellectual Property owned or used by Seller or any
affiliate of Seller relating to or used or useful in connection with the
Business, containing a brief description of each item of Intellectual Property
and the nature of Seller's interest therein. The Acquired Assets include and,
upon the purchase of those assets, Purchaser will own or have the uncontested
right to use all trademarks and service marks, and confidential or proprietary
information necessary for the conduct of the Business as presently conducted.
No claim is pending or, to the knowledge of Seller threatened, and Seller has
not received notice that the conduct of the Business (including without
limitation, Seller's use of any Intellectual Property) infringes upon or
conflicts with any rights claimed therein by any third party, nor is Seller
aware of any unasserted claim the assertion of which is probable. No use by
Seller of any Intellectual Property licensed to it violates the terms of any
agreement pursuant to which it is licensed. No claim is pending, or to the
knowledge of Seller threatened, which alleges that any Intellectual Property
owned or licensed by Seller for use in the Business or which Seller otherwise
has the right to use is invalid or unenforceable by Seller, nor is Seller aware
of any such claim that is unasserted, but the assertion of which is probable.
With respect to the Business, Seller does not manufacture products which are the
subject of patents, patent applications, copyrights, copyright applications,
trademarks, trademark applications, trade styles, service marks, or trade
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secrets owned by or licensed from third parties. No royalties or fees are
payable by Seller to anyone for use of the Intellectual Property. True, correct,
and complete copies of all agreements pursuant to which Seller has any license
or right to use any Intellectual Property are attached to SCHEDULE 5.9. To the
best of Seller's and Shareholders' knowledge and belief, all such agreements are
in full force and effect and there are no existing defaults or events of
default, real or claimed, or events which with or without notice or lapse of
time or both would constitute defaults under such agreements that would give the
non-defaulting party a right to terminate such agreement or a right to receive
any payment pursuant to such agreement. With respect to the Business, Seller has
not received any notice that any operation or machinery employed by Seller,
violates or infringes upon any claims of any United States or foreign patent or
patent application owned or held by any third party, nor is Seller aware of any
unasserted claim the assertion of which is probable. All Intellectual Property
and registrations, applications, and agreements related thereto are fully
assignable to Purchaser without the consent of any third party.
5.10 Insurance. The tangible Acquired Assets are insured under
----------
various policies of general liability and other forms of insurance, which
policies are in adequate amounts. Seller has not been refused any insurance
with respect to the Business by any insurance carrier to which it has applied
for insurance or with which it has carried insurance during the past five (5)
years. There are no outstanding requirements or recommendations by any current
insurer or underwriter with respect to the Business or the Acquired Assets which
require or recommend changes in the conduct of Business, or require any repairs
or other work to be done with respect to any of the Acquired Assets.
5.11 Environmental Matters.
----------------------
(a) There are no above-ground and underground storage tanks located on
any of the property leased by Seller.
(b) Except as may arise by automatic operation of law, to the best of
Seller and Shareholder's knowledge and belief, no lien has arisen on any of the
property leased by Seller or any facilities or properties used by the Seller for
or in connection with its business under or as a result of any federal, state,
or local law, rule, or regulation relating to environmental protection.
(c) The Seller has not been, and currently is not, a "generator" of
"hazardous waste," as those terms are defined by the Resource Conservation and
Recovery Act as amended, 42 U.S.C. (S) 6901 et seq. and the regulations
------
promulgated thereunder ("RCRA"), for the purposes of obtaining an EPA
identification number under 40 C.F.R. (S)262.12(a) or complying with the
manifest system under Subpart 8 of 40 C.F.R. Part 262, and the Seller has not
(A) been notified that it is potentially liable under or (B) received any
requests for information or other correspondence concerning any site or facility
under, nor has Seller any reason to believe that the Company is considered
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potentially liable under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, 42 U.S.C. (S) 9601 et seq. and the
------
regulations promulgated thereunder ("CERCLA") or any similar state or local law.
(d) To the best of Seller and Shareholder's knowledge and belief,
there has been no disposal, release, burial, or placement of Hazardous Materials
on, in, at, or about any of the property leased by Seller or any facilities or
properties used by the Seller for or in connection with its business that could
subject Purchaser to damages, costs, penalties or expenses, or recovery or
remediation requirements under any federal, state or local law, rule or
regulation. As used in this Agreement, the term "Hazardous Materials" shall
mean any hazardous or toxic substance or waste, asbestos, PCBs, agricultural
chemicals, oil, petroleum, and petroleum products and constituents thereof, or
any other substances, wastes, or chemicals defined as "hazardous" or "toxic"
under RCRA, CERCLA, the Hazardous Materials Transportation Act, 49 U.S.C. (S)
1802, or any applicable state or local law.
5.12 Litigation. There are no material arbitrations, grievances,
-----------
actions, suits, or other proceedings pending or to the knowledge of Seller
threatened against, or adversely affecting the Business or any of the Acquired
Assets purported to be owned or used by Seller, at law or in equity or
admiralty, nor to the Seller's knowledge is there any investigation pending or
threatened, before or by any federal, state, municipal, or other governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, related to the Business. Seller is not in default under or in
violation of any order, writ, injunction, or decree of any federal, state,
municipal court, or other governmental department, commission, board, bureau,
agency, or instrumentality, domestic or foreign, affecting the Business or the
Acquired Assets purported to be owned or used by Seller.
5.13 Absence of Changes. Except as set forth on SCHEDULE 5.13,
-------------------
since January 1, 1997, there has not been any transaction or occurrence in which
Seller has:
(a) suffered any material adverse change in the business, operations,
condition (financial or otherwise), liabilities, assets, or earnings of the
Business nor has there been any event which has had or may reasonably be
expected to have a material adverse effect on any of the foregoing;
(b) incurred any obligations or liabilities of any nature other than
items incurred in the regular and ordinary course of the Business, consistent
with past practice, or increased (or experienced any change in the assumptions
underlying or the methods of calculating) any bad debt, contingency, or other
reserve, other than in the ordinary course of the Business consistent with past
practice;
(c) paid, discharged, or satisfied any claim, lien, encumbrance,
obligation, or liability (whether absolute, accrued, contingent, and whether due
or to
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become due), other than the payment, discharge, or satisfaction in the ordinary
course of the Business consistent with past practice of claims, liens,
encumbrances, obligations, or liabilities of the type reflected or reserved
against in the Financial Statements or which were incurred since January 1,
1997, in the ordinary course of the Business;
(d) permitted, allowed, or suffered any of its properties or assets
(real, personal or mixed, tangible, or intangible) to be subjected to any
mortgage, pledge, lien, encumbrance, restriction, or charge of any kind except
as incurred in the ordinary course of business;
(e) written down or written up the value of any Inventory (including
write-downs by reason of shrinkage or markdowns), determined as collectible any
Accounts Receivable or any portion thereof which were previously considered
uncollectible, or written off as uncollectible any Accounts Receivable or any
portion thereof, except for write-downs, write-ups, and write-offs in the
ordinary course of the Business consistent with past practice, none of which is
material in amount;
(f) canceled any debts or waived any claims or rights in excess of
$3,000.00 individually or $10,000.00 in the aggregate;
(g) disposed of or permitted to lapse any right to the use of any
patent, trademark, assumed name, service xxxx, trade name, copyright, license,
or application therefor or disposed of or disclosed to any person not authorized
to have such information any trade secret, proprietary information, formula,
process, or know-how not previously a matter of public knowledge or existing in
the public domain;
(h) except for the capital expenditure commitments described on
SCHEDULE 5.8.3, made any significant capital expenditure or commitment for
additions to property, plant, equipment, intangible, or capital assets or for
any other purpose, other than for emergency repairs or replacement;
(i) incurred any long term indebtedness;
(j) paid, loaned, distributed, advanced any amounts to, sold,
transferred, leased any properties or assets (real, personal or mixed, tangible
or intangible) to, purchased, leased, licensed, or otherwise acquired any
properties or assets from, or entered into any other agreement or arrangement
with (i) any stockholder, officer, employee, or director of Seller, or (ii) any
person controlling, controlled by, or under common control with Seller except
for routine travel advances to officers and employees of Seller in the ordinary
course of business;
(k) entered into any collective bargaining or labor agreement (oral
and legally binding or written), or experienced any organized slowdown, work
interruption, strike, or work stoppage;
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(l) sold, transferred, or otherwise disposed of any of the Acquired
Assets except in the ordinary course of business;
(m) granted or incurred any obligation for any increase in the
compensation of any officer or employee of Seller (including, without
limitation, any increase pursuant to any bonus, pension, profit-sharing,
retirement, or other plan or commitment) except for raises to employees in the
ordinary course of business;
(n) made any material change in any method of accounting or accounting
principle, practice, or policy;
(o) suffered any casualty loss or damage in excess of $10,000 in the
aggregate (whether or not insured against);
(p) made or agreed to make any charitable contributions or incurred or
agreed to incur any non-business expenses in excess of $10,000 in the
aggregate;
(q) taken any other action neither in the ordinary course of the
Business and consistent with past practice nor provided for in this Agreement;
or
(r) agreed, so as to legally bind Seller whether in writing or
otherwise, to take any of the actions set forth in this SECTION 5.13 and not
otherwise permitted by this Agreement.
5.14 Brokers and Finders. Neither Seller nor Shareholder nor any
--------------------
affiliate of either of them, has incurred any obligation or liability to any
party for any brokerage fees, agent's commissions, or finder's fees in
connection with the transactions contemplated by this Agreement.
5.15 Labor Matters. Seller has not, within the last three (3)
-------------
years, experienced or been threatened with any organized slowdown, work
interruption, strike, or work stoppage by its employees. Seller is not a party
to any collective bargaining agreements. Neither Seller nor any of its
officers, directors, or employees has been charged or threatened with the charge
of any unfair labor practice within the last two (2) years. Seller is in
compliance with all applicable federal, state, local and foreign laws and
regulations concerning the employer-employee relationship and with all
agreements relating to the employment of Seller's employees, including
applicable wage and hour laws, fair employment laws, safety laws, worker
compensation statutes, unemployment laws, and social security laws. There are no
pending or threatened claims, investigations, charges, citations, hearings,
consent decrees, or litigation concerning wages, compensation, bonuses,
commissions, awards, or payroll deductions; equal employment or human rights
violations regarding race, color, religion, sex, national origin, age, handicap,
veteran's status, marital status, disability, or any other recognized class,
status,
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or attribute under any federal, state, local or foreign equal employment
law prohibiting discrimination; representation petitions of unfair labor
practices; grievances or arbitrations pursuant to current or expired collective
bargaining agreements; occupational safety and health; workers' compensation;
wrongful termination, negligent hiring, invasion of privacy or defamation;
immigration or any other claim based on the employment relationship or
termination of the employment relationship (collectively, "Labor Claims").
Seller is not liable for any unpaid wages, bonuses, or commissions (other than
those not yet due) or any tax, penalty, assessment, or forfeiture for failure to
comply with any of the foregoing.
5.16 Governmental Approval and Consents. To the best of Seller and
-----------------------------------
Shareholder's knowledge and belief, Seller has obtained all Permits required for
the lawful operation of the Business as presently conducted. SCHEDULE 5.16
contains a true and correct copy of each such Permit.
5.17 Taxes.
-----
(a) Seller has timely filed all federal and foreign income tax
returns, and all state, county, and local income, franchise, property, sales,
use, unemployment, and other tax returns in each state and jurisdiction where
such returns are required to be filed on or prior to the Closing Date, taking
into account any extensions of the filing deadlines which have been validly
granted to Seller, and such returns are and will be true and correct in all
material respects. Seller has paid all federal, state, county, and local
income, franchise, property, sales, use, and all other taxes and assessments
(including penalties and interest in respect thereof, if any) that have become
or are due with respect to any period ended on or prior to the Closing Date
whether shown as due on such returns or not, or is contesting in good faith such
taxes and assessments, in which event Seller has disclosed the details of such
contests on SCHEDULE 5.17.1.
(b) SCHEDULE 5.17.2 provides a brief description of all pending
federal and state tax disputes in which Seller is alleged to be liable or in
which Seller is claiming a refund, including the nature and amount of the
controversy, the respective positions of the parties as to any amounts claimed
to be due thereunder, and the current status thereof.
(c) All taxes required to be withheld on or prior to the Closing Date
from employees of Seller for income taxes and social security taxes have been
properly withheld and, if required on or prior to the Closing Date, have been
deposited with the appropriate governmental agency.
(d) No claim or investigation is pending or threatened by any state,
local, or other jurisdiction alleging that Seller has a duty to file tax returns
and pay taxes or is otherwise subject to the taxing authority of any
jurisdiction not included in SCHEDULES 5.17.1 or 5.17.2 with respect to any
taxes covered by SECTION 5.17(A) nor has Seller received any notice or
questionnaire from any such jurisdiction which suggests or
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asserts that Seller may have a duty to file such returns and pay such taxes, or
otherwise is subject to the taxing authority of such jurisdiction.
5.18 Employee Benefit Plans.
----------------------
(a) SCHEDULE 5.18.1 hereto lists every Employee Benefit Plan (as
hereinafter defined) of the Seller. True and complete copies of the Employee
Benefit Plans listed on SCHEDULE 5.18.1 hereto have heretofore been furnished to
Purchaser.
(b) Except as disclosed in SCHEDULE 5.18.2 hereto, all of the Employee
Benefit Plans and any related trusts (to the extent applicable) comply with and
have been administered in compliance with (i) the provisions of ERISA (as
hereinafter defined), (ii) all provisions of the Code (as hereinafter defined)
relating to qualification and tax exemption under Code Sections 401(a) and
501(a) or otherwise applicable to secure intended tax consequences, (iii) the
written terms of the Employee Benefit Plan, and (iv) all other applicable laws,
rules, regulations or ordinances, and the Seller has not received any notice
from any Governmental Authority (as hereinafter defined) questioning or
challenging such compliance.
(c) Seller has neither maintained in the past nor currently maintains
an Employee Benefit Plan providing welfare benefits (as defined in ERISA Section
3(1)) to employees after retirement or other separation of service except to the
extent required under Part 6 of Title I of ERISA or Code Section 4980B or their
successors.
(d) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions provided for herein will (i) entitle any
current or former employee or director of the Seller to severance pay,
unemployment compensation or any payment contingent upon a change in control or
ownership of the Seller, (ii) increase or enhance any benefits payable under any
Employee Benefit Plan, or (iii) accelerate the time of payment or vesting, or
increase the amount, of any compensation due to any such employee or former
employee.
(e) Neither the Seller nor its ERISA Affiliates have at any time
sponsored, contributed to, or been obligated under Title I or Title IV of ERISA
to contribute to a "defined benefit plan" (as defined in ERISA Section 3(35)).
On or after September 26, 1980, neither the Seller nor its ERISA Affiliates have
had an "obligation to contribute" (as defined in ERISA Section 4212) to a
"multiemployer plan" (as defined in ERISA Sections 4001(a)(3) and 3(37)(A)).
(f) All liabilities arising out of or related to Employee Benefit
Plans of the Seller are reflected on the Financial Statements in accordance with
GAAP.
(g) When used in this SECTION 5.18, the words and phrases set forth
below shall have the following meanings:
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"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Employee Benefit Plan" means collectively, each pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other incentive plan, any other written or
unwritten employee program, arrangement, agreement or understanding, whether
arrived at through collective bargaining or otherwise, any medical, vision,
dental or other health plan, any life insurance plan, or any other employee
benefit plan or fringe benefit plan, including, without limitation, any
"employee benefit plan," as that term is defined in Section 3(3) of ERISA
currently or previously adopted, maintained by, sponsored in whole or in part
by, or contributed to by the Seller for the benefit of employees, retirees,
dependents, spouses, directors, independent contractors or other beneficiaries
and under which employees, retirees, dependents, spouses, directors, independent
contractors or other beneficiaries are eligible to participate. Employee
Benefit Plans include (but are not limited to) "employee benefit plans" as
defined in Section 3(3) of ERISA and any other plan, fund, policy, program,
practice, custom, understanding or arrangement providing compensation or other
benefits to any current or former officer or employee of the Seller, or any
dependent or beneficiary thereof, maintained by the Seller or under which the
Seller has any obligation or liability, whether or not they are or are intended
to be (i) covered or qualified under the Code, ERISA or any other applicable
law, (ii) written or oral, (iii) funding or unfunded, (iv) actual or contingent,
or (v) generally available to any or all employees (or former employees) of the
Seller (or their beneficiaries or dependents), including, without limitation,
all incentive, bonus, deferred compensation, flexible spending accounts,
cafeteria plans, vacation, holiday, medical, disability, share purchase or other
similar plans, policies, programs, practices or arrangements.
"ERISA" means Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" of any entity means any other entity which, together
with such entity, would be treated as a single employer under Code Section 414.
"ERISA Plan" means any Employee Benefit Plan which is an "employee
pension benefit plan," as that term is defined in Section 3(2) of ERISA, or an
"employee welfare benefit plan" as that term is defined in Section 3(1) of
ERISA.
"Governmental Authority" means any federal, state, county, local,
foreign or other governmental or public agency, instrumentality, commission,
authority, board or body.
5.19 Compliance with Laws. To the best of Seller and Shareholders'
---------------------
knowledge and belief, Seller is now with respect to the Acquired Assets to be
transferred
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at the Closing in compliance with all laws, statutes, ordinances, or regulations
applicable to the Business and the Acquired Assets. Neither Seller nor any of
the Acquired Assets is subject to any judgment, order, writ, injunction, or
decree issued by any court or any governmental or administrative body or agency.
Seller possesses all Permits required for the operation of the Business as
presently conducted. Seller has not at any time during the last five (5) years
(i) made any unlawful contribution to any political candidate, or failed to
disclose fully any contribution in violation of law, or (ii) made any payment to
any federal, state or local governmental, regulatory or administrative officer
or official, or other person charged with similar public or quasi-public duties,
other than payments required or permitted by the laws of the United States or
any jurisdiction thereof.
5.20 Governmental Approval and Consents. Except for consents
-----------------------------------
contemplated by this Agreement, no consent, approval, or authorization of or
declaration, filing, or registration with any governmental or regulatory
authority is required in connection with the execution, delivery, and
performance of this Agreement by Seller or the consummation by Seller of the
transactions contemplated hereby.
5.21 Adequacy of Acquired Assets. The Acquired Assets include all
----------------------------
rights, properties, interests in properties, and assets necessary to permit
Purchaser to carry on the Business as presently conducted by Seller.
5.22 Title to Assets. Seller has good and marketable title to the
----------------
Acquired Assets, free and clear of all liens, claims, charges, encumbrances and
security interests of any kind or nature. All security interests and
encumbrances of record against the Acquired Assets shall be released, terminated
or discharged at the Closing by delivery to the Purchaser at the Closing of
executed discharges, UCC termination or partial release statements signed by the
secured party.
5.23 Correctness of Representations. No representation or warranty
-------------------------------
of Seller in this Agreement or in any Exhibit, certificate, or Schedule attached
hereto or furnished pursuant hereto, contains any untrue statement of material
fact or omits to state any fact necessary in order to make the statements
contained therein not misleading in any material respect, which misstatement or
omission could reasonably be expected to result in the loss of twenty five
thousand dollars ($25,000), and all such statements, representations,
warranties, Exhibits, certificates, and Schedules are true and complete in all
material respects. True copies of all mortgages, indentures, notes, leases,
agreements, plans (except Company Benefit Plans), Contracts, and other
instruments listed on the Schedules delivered or furnished to Purchaser pursuant
to this Agreement have been delivered to Purchaser.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
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Purchaser hereby represents and warrants to Seller as follows:
6.1 Organization and Qualification. Purchaser is a limited
-------------------------------
liability company duly organized, validly existing, and in good standing under
the laws of the State of Georgia and has all corporate power and authority to
conduct its business, to own, lease, or operate its properties in the places
where such business is conducted and such properties are owned, leased, or
operated.
6.2 Authority. Purchaser has full power and authority to enter into
----------
this Agreement and each of the other Acquisition Documents to which it is a
party and consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance by Purchaser of this Agreement and each of
the other Acquisition Documents to which Purchaser is a party have been duly and
validly authorized and approved by all necessary action on the part of
Purchaser. This Agreement and each of the other Acquisition Documents to which
Purchaser is a party are the legal, valid, and binding obligations of Purchaser
enforceable against Purchaser in accordance with their terms, except as
enforceability may be limited by applicable equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
creditors' rights generally, and by the exercise of judicial discretion in
accordance with equitable principles. Neither the execution and delivery by
Purchaser of this Agreement or any of the other Acquisition Documents to which
Purchaser is a party nor the consummation by Purchaser of the transactions
contemplated hereby or thereby will (i) violate Purchaser's Articles of
Incorporation or Bylaws, (ii) violate any provisions of law or any order of any
court or any governmental unit to which Purchaser is subject, or by which its
assets are bound, or (iii) conflict with, result in a breach of, or constitute a
default under any indenture, mortgage, lease, agreement, or other instrument to
which Purchaser is a party or by which its assets or properties are bound.
6.3 Litigation. There is no suit, action, proceeding, claim or
-----------
investigation pending, or, to Purchaser's knowledge, threatened, against
Purchaser which would affect the consummation of the transactions contemplated
hereby.
6.4 Correctness of Representations. No representation or warranty
-------------------------------
of Purchaser in this Agreement or in any Exhibit, certificate, or Schedule
attached hereto or furnished pursuant hereto contains any untrue statement of
material fact or omits to state any fact necessary in order to make the
statements contained therein not misleading in any material respect, and all
such statements, representations, Exhibits, and certificates are true and
complete.
6.5 Brokers and Finders. Except for any fees payable to The
--------------------
Breckenridge Group, Inc., Resurgens Plaza, Suite 2100, 000 X. Xxxxx Xxxxx Xxxx,
Xxxxxxx, Xxxxxxx 00000, with respect to the transactions provided for herein,
which fee shall be paid by Purchaser, neither Purchaser nor any affiliate of
Purchaser has incurred any obligation or
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liability to any party for any brokerage fees, agent's commissions, or finder's
fees in connection with the transactions contemplated by the Acquisition
Documents.
6.6 Governmental Approval and Consents. No consent, approval, or
-----------------------------------
authorization of or declaration, filing, or registration with any governmental
or regulatory authority is required in connection with the execution, delivery,
and performance by Purchaser of this Agreement or the consummation of the
transactions contemplated hereby.
ARTICLE 7
COVENANTS
7.1 Mutual Covenants. Purchaser, on the one hand, and Seller and
-----------------
Shareholder, on the other hand, shall each take all actions contemplated by this
Agreement, and do all things reasonably necessary to effect the consummation of
the transactions contemplated by this Agreement. Except as otherwise provided
in this Agreement, Purchaser and Seller and Shareholder shall each refrain from
knowingly taking or failing to take any action which would render any of the
representations or warranties contained in Articles 5 or 6 of this Agreement in
any material respect inaccurate as of the Closing Date. Each party shall
promptly notify the other party of any action, suit, or proceeding that shall be
instituted or threatened against such party to restrain, prohibit, or otherwise
challenge the legality of any transaction contemplated by this Agreement.
7.2 Conditions Precedent. Seller shall use its best efforts to
---------------------
satisfy the conditions enumerated in Article 8 hereof.
ARTICLE 8
POST CLOSING MATTERS
8.1 Employment of Employees. Purchaser shall have no obligation to
------------------------
employ or to offer employment to any of the employees of Seller. Seller shall be
responsible for the payment of all wages, commissions, severance pay, accrued
but unpaid wages, vacation pay, sick pay, and holiday pay to the employees of
Seller, up to and including the date Seller terminates the employment of such
employees. Seller shall be responsible for the payment of any amounts due to its
employees pursuant to any benefit plans of Seller as a result of the employment
of its employees.
8.2 Seller's Benefit Plans. Purchaser shall assume no
-----------------------
responsibility with regard to any benefit plans of Seller.
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8.3 Maintenance of Books and Records.
---------------------------------
(a) Seller and Purchaser shall preserve until the sixth anniversary of
the Closing Date all Books and Records possessed or to be possessed by such
party relating to any of the assets, liabilities or business of Seller prior to
the Closing Date. Seller shall give Purchaser written notice of any Books and
Records discovered by Seller that were not transferred to Purchaser. After the
Closing Date, where there is a legitimate purpose, such party shall provide the
other parties with access, upon prior reasonable written request specifying the
need therefor, during regular business hours, to (i) the officers and employees
of such party and (ii) the books of account and records of such party, but, in
each case, only to the extent relating to the Business prior to the Closing
Date, and the other parties and their representatives shall have the right to
make copies of such books and records; provided, however, the foregoing right of
access shall not be exercisable in such a manner as to interfere unreasonably
with the normal operations and business of such party; and further, provided, as
to so much of such information as constitutes trade secrets or confidential
business information of such party, the requesting party, its affiliates,
officers, directors and representatives will use due care to not disclose such
information except (i) as required by law, (ii) with the prior written consent
of such party, which consent shall not be unreasonably withheld, or (iii) where
such information becomes available to the public generally, or becomes generally
known to competitors of such party, through sources other than the requesting
party, its affiliates or its officers, directors or representatives. Such
records may nevertheless be destroyed by a party if such party sends to the
other parties written notice of its intent to destroy records, specifying with
particularity the contents of the records to be destroyed. Such records may
then be destroyed after the 30th day after such notice is given unless another
party objects to the destruction in which case the party seeking to destroy the
records shall deliver such records to the objecting party.
(b) Purchaser shall fully cooperate with Seller in the preparation and
filing of all tax filings relating to the period ending prior to the Closing
Date. Purchaser also shall make available to Seller such information as may be
reasonably required by Seller in connection with audits or otherwise for the
proper payment of taxes for which Seller is responsible. Purchaser shall
provide within a reasonable time after the receipt of a written request all
information contained in its files necessary for the preparation by Seller of a
Form W-2 for the calendar year in which the Closing occurs for each Hired
Employee.
8.4 Payments Received. Seller and Purchaser agree that after the
------------------
Effective Time they will hold and will promptly transfer and deliver to the
proper recipient thereof, from time to time as and when received by them, any
cash, checks with appropriate endorsements (using their best efforts not to
convert such checks into cash), or other property that they may receive on or
after the Effective Time which properly belongs to the other party, including
without limitation, any insurance proceeds, and will account to the other for
all such receipts. From and after the Effective Time, Purchaser shall have
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the right and authority to endorse without recourse the name of Seller on any
check or any other evidences of indebtedness received by Purchaser on account of
the Business and the Acquired Assets transferred to Purchaser hereunder.
8.5 Covenant to Pay Debts. Promptly following the Closing Seller
----------------------
will pay in full all indebtedness of Seller to third parties (including, without
limitation, trade payables, accrued taxes, amounts due to employees, bank
indebtedness and all other indebtedness, whether secured or unsecured) owed by
Seller on or as of the Closing Date, and to the extent any of the Acquired
Assets are security for any such indebtedness, obtain the release of all liens,
claims, charges, encumbrances or security interests in such Acquired Assets and
deliver evidence (which shall be in form reasonably satisfactory to Purchaser
and its counsel) of such release or that the underlying obligations have been
paid in full pursuant to SECTION 8.5 to Purchaser at the Closing.
ARTICLE 9
INDEMNIFICATION
9.1 Definitions
-----------
For the purposes of this Article:
(a) "Indemnification Claim" shall mean a claim for indemnification
hereunder.
(b) "Indemnitees" shall mean the Purchaser and its agents,
representatives, employees, officers, directors, shareholders, controlling
persons and affiliates.
(c) "Indemnitors" shall mean Seller and Shareholder.
(d) "Losses" shall mean any and all demands, claims, actions or causes
of action, assessments, losses, diminution in value, damages (including special
and consequential damages), liabilities, costs, and expenses, including without
limitation, interest, penalties, cost of investigation and defense, and
reasonable attorneys' and other professional fees and expenses.
(e) "Third Party Claim" shall mean any claim, suit or proceeding
(including, without limitation, a binding arbitration or an audit by any taxing
authority) that is instituted against an Indemnitee by a person or entity other
than an Indemnitor and which, if prosecuted successfully, would result in a Loss
for which such Indemnitee is entitled to indemnification hereunder.
9.2 Agreement of Indemnitors to Indemnify
-------------------------------------
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Subject to the terms and conditions of this Article, Indemnitors agree
to indemnify, defend, and hold harmless Indemnitees, and each of them, from,
against, for, and in respect of any and all Losses asserted against, or paid,
suffered or incurred by, an Indemnitee and resulting from, based upon, or
arising out of:
(a) the inaccuracy, untruth, or incompleteness of any material
representation or warranty of the Indemnitor contained in or made pursuant to
this Agreement or in any certificate, Schedule, or Exhibit furnished by
Indemnitors in connection herewith;
(b) a breach of or failure to perform any material covenant or
agreement of Indemnitors made in this Agreement;
(c) the failure to comply with the Bulk Sales Act or any comparable
law to the extent such act or law is or may be deemed to be applicable to the
transactions provided for herein; and
(d) any Excluded Liability.
9.3 Procedures for Indemnification.
-------------------------------
(a) An Indemnification Claim shall be made by an Indemnitee by
delivery of a written notice to Indemnitor requesting indemnification and
specifying the basis on which indemnification is sought and the amount of
asserted Losses and, in the case of a Third Party Claim, containing (by
attachment or otherwise) such other information as such Indemnitee shall have
concerning such Third Party Claim.
(b) If the Indemnification Claim involves a Third Party Claim the
procedures set forth in SECTION 9.4 hereof shall be observed by Indemnitee and
Indemnitor.
(c) If the Indemnification Claim involves a matter other than a Third
Party Claim, Indemnitor shall have thirty (30) days to object to such
Indemnification Claim by delivery of a written notice of such objection to such
Indemnitee specifying in reasonable detail the basis for such objection.
Failure to timely so object shall constitute a final and binding acceptance of
the Indemnification Claim by Indemnitor, and the Indemnification Claim shall be
paid in accordance with subsection (d) hereof. If an objection is timely
interposed by Indemnitor and the dispute is not resolved by Indemnitee and
Indemnitor within fifteen (15) days from the date Indemnitee receives such
objection, such dispute shall be resolved by arbitration as provided in SECTION
10.13 of this Agreement.
(d) Upon determination of the amount of an Indemnification Claim,
whether by agreement between Indemnitor and Indemnitee or by an arbitration
award or
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by any other final adjudication, Indemnitor shall pay the amount of such
Indemnification Claim within ten (10) days of the date such amount is
determined.
9.4 Third Party Claims . The obligations and liabilities of the
------------------
parties hereunder with respect to a Third Party Claim shall be subject to the
following terms and conditions:
(a) Indemnitee shall give Indemnitor written notice of a Third Party
Claim promptly after receipt by Indemnitee of notice thereof, and Indemnitor may
undertake the defense, compromise and settlement thereof by representatives of
its own choosing reasonably acceptable to Indemnitee. The failure of Indemnitee
to notify Indemnitor of such claim shall not relieve Indemnitors of any
liability that it may have with respect to such claim except to the extent
Indemnitor demonstrates that the defense of such claim is prejudiced by such
failure. The assumption of the defense, compromise and settlement of any such
Third Party Claim by Indemnitor shall be an acknowledgment of the obligation of
Indemnitor to indemnify Indemnitee with respect to such claim hereunder. If
Indemnitee desires to participate in, but not control, any such defense,
compromise and settlement, it may do so at its sole cost and expense. If,
however, Indemnitor fails or refuses to undertake the defense of such Third
Party Claim within ten (10) days after written notice of such claim has been
given to Indemnitor by Indemnitee, Indemnitee shall have the right to undertake
the defense, compromise and settlement of such claim with counsel of its own
choosing. In the circumstances described in the preceding sentence, Indemnitee
shall, promptly upon its assumption of the defense of such claim, make an
Indemnification Claim as specified in SECTION 9.3 which shall be deemed an
Indemnification Claim that is not a Third Party Claim for the purposes of the
procedures set forth herein.
(b) If, in the reasonable opinion of Indemnitee, any Third Party Claim
or the litigation or resolution thereof involves an issue or matter which could
have a material adverse effect on the business, operations, assets, properties
or prospects of Indemnitee (including, without limitation, the administration of
the tax returns and responsibilities under the tax laws of Indemnitee),
Indemnitee shall have the right to control the defense, compromise and
settlement of such Third Party Claim undertaken by Indemnitor, and the costs and
expenses of Indemnitee in connection therewith shall be included as part of the
indemnification obligations of Indemnitor hereunder. If Indemnitee shall elect
to exercise such right, Indemnitors shall have the right to participate in, but
not control, the defense, compromise and settlement of such Third Party Claim at
its sole cost and expense.
(c) No settlement of a Third Party Claim involving the asserted
liability of Indemnitor under this Article shall be made without the prior
written consent by or on behalf of Indemnitor, which consent shall not be
unreasonably withheld or delayed. Consent shall be presumed in the case of
settlements of $10,000.00 or less where Indemnitor has not responded within five
(5) business days of notice of a proposed
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settlement. If Indemnitor assumes the defense of such a Third Party Claim, (a)
no compromise or settlement thereof may be effected by Indemnitor without
Indemnitee's consent unless (i) there is no finding or admission of any
violation of law or any violation of the rights of any person and no effect on
any other claim that may be made against Indemnitee (ii) the sole relief
provided is monetary damages that are paid in full by Indemnitor and (iii) the
compromise or settlement includes, as an unconditional term thereof, the giving
by the claimant or the plaintiff to Indemnitee of a release, in form and
substance satisfactory to Indemnitee, from all liability in respect of such
Third Party Claim, and (b) Indemnitee shall have no liability with respect to
any compromise or settlement thereof effected without its consent.
(d) In connection with the defense, compromise or settlement of any
Third Party Claim, the parties to this Agreement shall execute such powers of
attorney as may reasonably be necessary or appropriate to permit participation
of counsel selected by any party hereto and, as may reasonably be related to any
such claim or action, shall provide access to the counsel, accountants and other
representatives of each party during normal business hours to all properties,
personnel, books, tax records, contracts, commitments and all other business
records of such other party and will furnish to such other party copies of all
such documents as may reasonably be requested (certified, if requested).
(e) Seller and Shareholder shall not have any liability for
indemnification pursuant to this Section, unless and until, Third Party Claims
exceed $25,000 in the aggregate.
9.5 Indemnification Exclusive Remedy. In the absence of fraud,
---------------------------------
indemnification pursuant to Article 9 shall be the sole and exclusive remedy of
the parties for any breach of any representation, warranty, covenant or
agreement contained in this Agreement.
9.6 Survival . All representations, warranties and agreements
--------
contained in this Agreement or in any certificate delivered pursuant to this
Agreement shall survive the Closings notwithstanding any investigation conducted
with respect thereto or any knowledge acquired as to the accuracy or inaccuracy
of any such representation or warranty.
9.7 Time Limitations. Indemnitor shall have no liability under
----------------
clause (a) of SECTION 9.2 with respect to: (a) the breach of any representation
or warranty, other than those set forth in SECTIONS 5.1, 5.2, 5.11, 5.17, 5.18,
and 5.22 hereof, unless on or before two (2) years after the Closing Date
Indemnitor is given notice asserting an Indemnification Claim with respect
thereto, and (b) the breach of the representations and warranties of Indemnitor
contained in SECTIONS 5.11, 5.17 and 5.18 hereof, unless notice asserting an
Indemnification Claim based thereon is given to Indemnitor prior to the
expiration of the applicable statute of limitations for the assertion of
liability against the
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Purchaser based upon the matters that are the subject of the representations and
warranties contained in such Sections. An Indemnification Claim based upon a
breach of the representations and warranties set forth in SECTIONS 5.1, 5.2 and
5.22 or based upon the failure of Indemnitor to perform the covenants and
agreements to be performed by them hereunder or based upon clause (c) of SECTION
9.2 hereof may be made at any time.
9.8 Subrogation. Upon payment in full of any Indemnification Claim,
-----------
whether such payment is effected by set-off or otherwise, or the payment of any
judgment or settlement with respect to a Third Party Claim, Indemnitor shall be
subrogated to the extent of such payment to the rights of Indemnitee against any
person or entity with respect to the subject matter of such Indemnification
Claim or Third Party Claim.
9.9 Purchaser's Right of Set-Off. Notwithstanding anything to the
-----------------------------
contrary herein contained, Purchaser shall have the right to set-off against and
deduct from the Deferred Payment (a) any amount which any Indemnitor becomes
obligated (whether by agreement between one or more of the Indemnitors and the
Purchaser or by arbitration award) to pay to Purchaser hereunder, and (b) any
other amounts which may be payable by Seller to Purchaser under this Agreement
or by virtue of the transactions provided for herein. Purchaser's right of set-
off shall be superior to any right of Seller to request or direct payment of any
part or all of the Deferred Payment to or for the account of Seller. Prior to
exercising the aforementioned right of set-off, Purchaser shall give Seller five
(5) days written notice of its intent to exercise such right. If within five
(5) days of receiving such notice, Seller objects in writing to Purchaser's
exercise of its right of set-off, then Purchaser shall set aside and hold the
disputed amount free of any obligation to pay over the disputed amount to or at
the direction of Seller, and Purchaser's asserted right of set-off will be
submitted to arbitration pursuant to SECTION 10.13 hereof. Notwithstanding
anything to the contrary in this Agreement, all amounts set aside and held
pending the resolution of arbitration shall remain set aside and held until the
final resolution of such arbitration pursuant to SECTION 10.13 hereof. If at
the time for payment of the Deferred Payment, an Indemnification Claim has been
asserted by Purchaser but the Indemnitors obligation with respect thereto has
not been finally determined or agreed upon, Purchaser may withhold payment of
such portion of the Deferred Payment as shall be sufficient to pay and reimburse
Purchaser for all losses upon which the Indemnification Claim is based and shall
not be required to pay such withheld amount over to Seller until five (5) days
following the final determination or agreement that the Indemnitors are not
obligated to the Indemnitees with respect to such Indemnification Claim or if
obligated the Indemnitors have paid and satisfied such Indemnification Claim in
full.
ARTICLE 10
GENERAL PROVISIONS
10.1 Fees and Expenses. Except as otherwise specifically provided
------------------
in this Agreement, Seller, on the one hand, and Purchaser, on the other hand,
shall pay their
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respective legal, accounting and other fees and expenses in connection with the
transactions contemplated by this Agreement.
10.2 Notices. All notices, request, demands, and other
--------
communications hereunder shall be in writing and shall be delivered (a) in
person or by courier, (b) mailed by first class registered or certified mail, or
(c) delivered by facsimile transmission, as follows:
(a) If to Seller:
Xxxxx Communications, Inc.
0000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxx 00000
Attn: Xx. Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxx X. Xxxxx, Esq.
0000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Xxxxxxx X. Xxxxx
0000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(b) If to Purchaser:
Satellink Paging LLC
0000 Xxxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xx. Xxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
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with a copy (which shall not constitute notice) to:
Xxxxxx & Bird
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: X.X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
or to such other address as the parties hereto may designate in writing to the
other in accordance with this SECTION 10.2. Any party may change the address to
which notices are to be sent by giving written notice of such change of address
to the other parties in the manner above provided for giving notice. If
delivered personally or by courier, the date on which the notice, request,
instruction or document is delivered shall be the date on which such delivery is
made and if delivered by facsimile transmission or mail as aforesaid, the date
on which such notice, request, instruction or document is received shall be the
date of delivery.
10.3 Assignment; Binding Effect. Except as provided in this
---------------------------
SECTION 10.3, prior to the Closing, this Agreement shall not be assignable by
any of the parties hereto without the written consent of the other; provided,
however, that Purchaser may assign all of its rights hereunder to any subsidiary
of Purchaser, but such assignment shall not relieve Purchaser of its obligations
hereunder in the event such assignee shall fail timely to perform any of such
obligations From and after any such assignment, the word "Purchaser" shall
include assignee.
10.4 No Benefit to Others. The representations, warranties,
--------------------
covenants, and agreements contained in this Agreement are for the sole benefit
of the parties hereto and, in the case of Article 9 hereof, Indemnitee and its
heirs, executors, administrators, legal representatives, successors and assigns,
and they shall not be construed as conferring any rights on any other persons.
10.5 Headings, Gender, "Person" and "Affiliate". All section
------------------------------------------
headings contained in this Agreement are for convenience of reference only, do
not form a part of this Agreement and shall not affect in any way the meaning or
interpretation of this Agreement. Words used herein, regardless of the number
and gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine, or
neuter, as the context requires. Any reference to a "person" herein shall
include an individual, firm, corporation, partnership, trust, governmental
authority or body, association, unincorporated organization or any other entity,
and any reference to an "affiliate," whether or not such term is capitalized,
with respect to a person shall mean a person or entity that is controlled by,
under common control with or controls such person.
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10.6 Counterparts. This Agreement may be executed in two (2) or
-------------
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one counterpart has been signed by each party
and delivered to the other party hereto.
10.7 Integration of Agreement. This Agreement supersedes all prior
-------------------------
agreements, oral and written, between the parties hereto with respect to the
subject matter hereof. Neither this Agreement, nor any provision hereof, may be
changed, waived, discharged, supplemented, or terminated orally, but only by an
agreement in writing signed by the party against which the enforcement of such
change, waiver, discharge, or termination is sought.
10.8 Time of Essence. Time is of the essence in this Agreement.
----------------
10.9 Governing Law. This Agreement shall be construed under the laws
--------------
of the State of Georgia.
10.10 Partial Invalidity. Whenever possible, each provision hereof
-------------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any
other provisions of this Agreement, and this Agreement shall be construed as if
such invalid, illegal, or unenforceable provision or provisions had never been
contained herein unless the deletion of such provision or provisions would
result in such a material change as to cause completion of the transactions
contemplated hereby to be unreasonable.
10.11 Investigation. No inspection, preparation, or compilation of
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information or Schedules, or audit of the inventories, properties, financial
condition, or other matters relating to Seller conducted by or on behalf of
Purchaser pursuant to this Agreement shall in any way limit, affect, or impair
the ability of Purchaser to rely upon the representations, warranties,
covenants, and agreements of Seller set forth herein. Any disclosure made on
one Schedule shall not be deemed made on any other Schedule, unless appropriate
cross-referencing is made. The covenants and representations and warranties of
Seller and Purchaser shall survive the Closing and the execution and delivery of
all instruments of conveyance for the periods set forth in SECTION 9.7.
10.12 Public Announcements. Seller and Purchaser will consult with
---------------------
each other before issuing any press releases or otherwise making any public
statements or filings with governmental entities with respect to this Agreement
or the transactions contemplated hereby and shall not issue any press releases
or make any public statements or filings with governmental entities prior to
such consultation and shall modify any
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portion thereof if the other party reasonably objects thereto, unless the same
may be required by applicable law.
10.13 Arbitration. The parties agree that any dispute between or
-----------
among them arising out of or based upon this Agreement, the remaining
Acquisition Documents or the consummation of the transactions provided for
herein shall be submitted to and resolved by arbitration in Atlanta, Georgia in
accordance with the rules and procedures of the American Arbitration
Association, and the decision of the arbiter(s) in such dispute shall be final
and binding on the parties to such arbitration proceeding. Except as the
arbiter(s) may otherwise award or assess the expenses of any such proceeding,
each party shall bear its own costs and expenses, including the expense of its
counsel, in any such arbitration proceeding.
[SIGNATURES ON FOLLOWING PAGE
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed on its behalf by its duly authorized officer, all as of the day and
year first above written.
PURCHASER:
(SEAL) SATELLINK PAGING LLC
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------
Title: President
-----------------------------
SELLER:
(SEAL)
XXXXX COMMUNICATIONS, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------
Title: President
-----------------------------
SHAREHOLDER:
/s/ Xxxxxxx X. Xxxxx
---------------------------------
Xxxxxxx X. Xxxxx
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