Exhibit 2.1
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of
April 25, 2003, is made and entered into by and between Multiband USA, Inc., a
Minnesota Corporation and BROADBAND HOLDINGS, LLC, a South Dakota Corporation
(together and combined, now referred to as "Buyer"), and SUNCOAST AUTOMATION,
INC., an Illinois Corporation and DAUPHIN TECHNOLOGY, INC., an Illinois
Corporation (together and combined, now referred to as "seller") the sole owner
of all of the shares of stock of Seller ("Suncoast").
WHEREAS, Seller is engaged in the business of providing cable
television and high speed internet access to the timeshare industry (the
"Business"); and
WHEREAS, Dauphin is the owner of all of the shares of stock of Seller;
and
WHEREAS, Seller desires to sell and assign to Buyer, and Buyer desires
to purchase and assume from Seller, on the terms and subject to the conditions
set forth in this Agreement, substantially all of the assets and certain
liabilities of Seller that are currently being used by Seller in the conduct of
the Business.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements and the conditions set forth in this
Agreement, Buyers, Seller and Dauphin hereby agree as follows:
ARTICLE I
TRANSFER OF ASSETS; ASSUMPTION OF LIABILITIES
[1.01] Transfer of Assets. On the terms and subject to the conditions
set forth in this Agreement, Seller shall, at the Closing (as defined in Section
3.01 hereof), sell, transfer and assign to Buyers, and Buyers shall purchase and
acquire from Seller, all of Seller's right, title and interest, as of the
Closing Date (as defined in Section 3.01 hereof), in and to all of the assets of
Seller related to, or used in conjunction with, the Business (collectively,
except for the excluded assets set forth in Section 1.02 hereof, the "Assets"),
including, but not limited to:
a. All of the equipment, machinery, vehicles, furniture,
fixtures, furnishings and leasehold improvements owned by Seller and
used by Seller in the operation of the Business;
b. Seller's interest in all real property leases to which
Seller is a party that are used in connection with the Business, all of
which leases are identified under the caption referencing this Section
1.01 b in the Disclosure Schedule;
c. Seller's interest in all personal property leases to
which Seller is a party that are used in connection with the operation
of the Business, all of which leases are identified under the caption
referencing this Section 1.01 c in the Disclosure Schedule;
d. All of Seller's inventories of supplies, raw materials,
parts, finished goods, work-in-process, product labels and packaging
materials used in connection with the Business and Seller's interest in
all orders or contracts for the purchase of supplies, raw materials,
parts, product labels and packaging materials used in connection with
the Business;
e. Seller's interest in all licenses, contracts or
agreements with respect to the Business to which Seller is a party and,
including, without limitation, those identified in Exhibit B as being
assumed by the Buyer;
f. All unfilled or uncompleted customer contracts,
commitments or purchase or sales orders received and accepted by Seller
in connection with the Business in the ordinary course of business;
g. All documents or other tangible materials embodying
technology or intellectual property rights owned by, licensed to or
otherwise controlled by Seller and used in connection with the
Business, whether such properties are located on Seller's business
premises or on the business premises of Seller's
suppliers or customers, including, without limitation all software
programs (including both source and object codes) and related
documentation for software used in the Business;
h. All rights in patents, patent applications, trademarks,
service marks, trade names, corporate names, copyrights, mask works,
trade secrets or other intellectual property rights owned by, licensed
to or otherwise controlled by Seller or used in, developed for use in
or necessary to the conduct of the Business as now conducted or planned
to be conducted and including the rights to institute or maintain any
action or investigation for and to recover damages for any past
infringement thereof or any actions of unfair competition relating
thereto;
i. The name "Suncoast Automation, Inc." or any combination
of words in which the name "Suncoast" or "Automation" appears or any
rights associated with such name or any right to use such name in all
jurisdictions in which Seller either currently uses any such name or
has any right to use any such name;
j. All of Seller's books, records and other documents and
information relating to the Assets or the Business, including, without
limitation, all customer, prospect, dealer and distributor lists, sales
literature, inventory records, purchase orders and invoices, sales
orders and sales order log books, customer information, commission
records, correspondence, employee payroll and personnel records,
product data, material safety data sheets, price lists, product
demonstrations, quotes and bids and all product catalogs and brochures;
k. All accounts or notes receivable (excluding intra-company
accounts) owing to Seller that relate to the Business as shown in
Exhibit C;
l. The current telephone listings of the Business and the
right to use the telephone numbers currently being used at the
principal offices and other offices or facilities of the Business;
m. All permits, licenses and other governmental approvals
held by Seller with respect to the Business, to the extent they are
assignable;
n. All prepaid expenses and deposits made by Seller with
respect to the Business;
o. All cash and cash equivalents of Seller with respect to
the Business;
p. Goodwill (including all goodwill associated with and
symbolized by the name or names identified in subsection (i) above as
used as a trademark or service xxxx and all goodwill associated with
and symbolized by any other trademark or service xxxx, trade name or
corporate name used in the conduct of the Business as now conducted),
all related tangibles and intangibles which Seller uses in the conduct
of the Business and all rights to continue to use the Assets in the
conduct of a going business.
The parties hereto expressly agree that Buyer is not assuming any of
the liabilities, obligations or undertakings relating to the foregoing Assets,
except for those liabilities and obligations specifically assumed by Buyer in
Section 1.03 hereof.
1.02 Excluded Assets. Notwithstanding the terms of Section 1.01,
the following assets shall be retained by Seller and shall not be sold,
transferred or assigned to Buyer in connection with the purchase of the Assets:
(a) All bank accounts of Seller, after all cash on deposit in
such accounts which constitutes an asset of the Business has been
transferred to Buyer at the Closing pursuant to Section 1.01 o; and
(b) All corporate certificates of authority and corporate
minute books and the corporate stock record or register of Seller.
1.03 Assumption of Liabilities. Buyer shall assume, pay, perform in
accordance with their terms or otherwise satisfy, as of the Closing Date:
(a) The liabilities of Seller set forth in Exhibit A hereto;
and
(b) Seller's obligations under the leases, agreements,
contracts, arrangements and licenses described in Exhibit B hereto.
1.04 Excluded Liabilities. Other than as set forth above in Section
1.03, Seller shall retain, and Buyer shall not assume, and nothing contained in
this Agreement shall be construed as an assumption by Buyer of, any liabilities,
obligations or undertakings of Seller of any nature whatsoever, whether accrued,
absolute, fixed or contingent, known or unknown due or to become due,
un-liquidated or otherwise. Seller shall be responsible for all of the
liabilities, obligations and undertakings of Seller not assumed by Buyer
pursuant to Section 1.03 hereof.
ARTICLE II
PURCHASE PRICE
2.01 Amount. The total purchase price (the "Purchase Price") for
the Assets shall be the sum of:
(a) Three Hundred Thousand Dollars ($300,000);
(b) less the value of the liabilities and obligations of
Seller to be assumed by Buyer pursuant to Section 2.03 (a) and
identified on Exhibit A hereto;
(c) less the Highland Payoff Amount as defined in Section
10.01; and
(d) plus the amount of the Accounts Receivable identified on
Exhibit C hereto.
2.02 Manner of Payment. Payment of the Purchase Price may be made
in United States Dollars. Buyer shall pay the Purchase Price for the Assets to
Seller on the Closing Date by wire transfer to Seller's account at _____ Bank,
_____, _____ (account #_____).
2.03 Allocation of Purchase Price. The Buyer and Seller have
allocated the Purchase Price among the Assets as set forth on Exhibit D, which
exhibit shall be updated as of the Closing Date in such a manner as determined
by Buyer subject to Seller's consent (which shall not be unreasonably withheld),
after taking into account any appraisals which may be obtained by Buyer, the
applicable Treasury Regulations and the fair market value of such items. Buyer
shall prepare for filing all Returns (as defined in Section 2.13 (a) that may be
required with respect to the transaction provided for herein pursuant to Section
1060 of the Internal Revenue Code of 1986, as amended (the "Code"), any Treasury
Regulations promulgated thereunder, any other similar provision of the Code and
any other similar, applicable foreign, state or local tax law or regulation.
Seller shall provide information that may be required by Buyer for the purpose
of preparing such Returns, execute and file such Returns as requested by Buyer
and file all other returns and tax information on a basis that is consistent
with such Returns prepared by Buyer.
ARTICLE III
CLOSING
3.01 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of Suncoast Automation
in Oldsmar, Florida at 10:00 a.m. on or before May 1, 2003 or at such other
place and on such other date as is mutually agreeable to Buyer and Seller. The
date on which the Closing occurs is referred to herein as the "Closing Date,"
and the Closing shall be deemed effective as of 2:00 p.m., Chicago time, on the
Closing Date.
3.02 General Procedure. At the Closing, each party shall deliver to
the party entitled to receipt thereof the documents required to be delivered
pursuant to Article VIII hereof and such other documents, instruments and
materials (or complete and accurate copies thereof, where appropriate) as may be
reasonably required in order to effectuate the intent and provisions of this
Agreement, and all such documents, instruments and materials shall be
satisfactory in form and substance to counsel for the receiving party. The
conveyance, transfer, assignment and delivery of the Assets shall be effected by
Seller's execution and delivery to Buyer of a xxxx of sale substantially in the
form attached hereto as Exhibit J (the "Xxxx of Sale) and such other instruments
of conveyance, transfer, assignment and delivery as Buyer shall reasonably
request to cause Seller to transfer, convey, assign and deliver the Assets to
Buyer, and the assignment and assumption of Seller's Liabilities to Buyer shall
be effected by Seller's and Buyer's execution of an assignment and assumption
(the "Assignment and Assumption Agreement").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER AND DAUPHIN
Seller and Dauphin hereby represent and warrant to Buyer that, except
as set forth in the Disclosure Schedule delivered by Seller to Buyer on the date
hereof (the "Disclosure Schedule") (which Disclosure Schedule sets forth the
exceptions to the representations and warranties contained herein.
4.01 Incorporation and Corporate Power. Seller is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Florida and has all requisite corporate power and authority and all
authorizations, licenses, permits and certifications necessary to carry on the
Business as now being conducted and to own, lease and operate the Assets.
Dauphin is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Illinois. Seller is qualified as a
foreign corporation to do business in every jurisdiction in which the nature of
its business or its ownership of property requires it to be qualified and in
which the failure to be so qualified would have a material adverse effect on the
financial or operating condition of the Business.
4.02 Subsidiaries. The Assets do not include any stock, partnership
interest, joint venture interest or any other security or ownership interest
issued by any other corporation, organization or entity.
4.03 Execution, Delivery; Valid and Binding Agreement. The
execution, delivery and performance of this Agreement by Seller and Dauphin and
the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Seller and Dauphin, and no other
proceedings on their part are necessary to authorize the execution, delivery and
performance of this Agreement. This Agreement has been duly executed and
delivered by Seller and Dauphin and, assuming that this Agreement is the valid
and binding agreement of Buyer, constitutes the valid and binding obligation of
Seller and Dauphin, enforceable in accordance with its terms.
4.04 Authority; No Breach. Seller and Dauphin have the requisite
corporate power and authority to execute and deliver this Agreement and to
perform their obligations hereunder. The execution, delivery and performance of
this Agreement by Seller and Dauphin and the consummation of the transactions
contemplated hereby do not conflict with or result in any breach of any of the
provisions of, or constitute a default under, result in a violation of, result
in the creation of a right of termination or acceleration or any lien, security
interest, charge or encumbrance upon any assets of Seller or Dauphin, or require
any authorization, consent, approval, exemption or other action by or notice to
any court or other governmental body, under the provisions of the Articles or
Certificate of Incorporation or Bylaws of Seller or Dauphin or any indenture,
mortgage, lease, loan agreement or other agreement or instrument by which Seller
or Dauphin or the Assets are bound or affected (other than consents required
under Section 8.01(d) hereof, which Seller and Dauphin undertake to obtain prior
to the Closing Date), or any law, statute, rule or regulation or order, judgment
or decree to which Seller or Dauphin or the Assets are subject.
4.05 Governmental Authorities; Consents. Seller and Dauphin are not
required to submit any notice, report or other filing with any governmental
authority in connection with the execution or delivery by it of this Agreement
or the consummation of the transactions contemplated hereby. No consent,
approval or authorization of any governmental or regulatory authority is
required to be obtained by Seller or Dauphin in connection with its execution,
delivery and performance of this Agreement.
4.06 Financial Statements. Seller has delivered to Buyer copies of
(a) the Historical Income Statement as of March 31, 2003 attached hereto as
Exhibit E (the "Income Statement") and (b) the Balance Sheet as of March 31,
2003 attached hereto as Exhibit F (the "Balance Sheet") (the Income Statement
and the Balance Sheet, together, the "Financial Statements"). The Financial
Statements are based upon the information contained in the books and records of
Seller and fairly present the financial condition of the business as of the
dates thereof and results of operations for the periods referred to therein. The
Financial Statements have been prepared in accordance with generally accepted
accounting principles, consistently applied throughout the periods indicated.
4.07 Absence of Undisclosed Liabilities. With respect to the Assets
or the operations of the Business, Seller has no liabilities (whether accrued,
absolute, contingent, un-liquidated or otherwise, whether due or to become due,
whether known or unknown, and regardless of when asserted) arising out of
transactions or events heretofore entered into, or any action or inaction, or
any state of facts existing, with respect to or based upon transactions or
events heretofore occurring, except (i) as reflected in the Balance Sheet, or
(ii) liabilities which have arisen after the date of the Balance Sheet in the
ordinary course of business (none of which is a material uninsured liability for
breach of contract, breach of warranty, tort, infringement, claim or lawsuit).
4.08 No Material Adverse Changes. Since December 31, 2002, the
"Balance Sheet Date" there has been no material adverse change in the assets,
financial condition, operating results, customer, employee or supplier
relations, business condition or prospects of Seller.
4.09 Absence of Certain Developments. Since the Balance Sheet Date,
Seller has not:
(a) borrowed any amount or incurred or become subject to any
liability except (i) current liabilities incurred in the ordinary
course of business and (ii) liabilities under contracts entered into in
the ordinary course of business;
(b) mortgaged, pledged or subjected to any lien, charge or
any other encumbrance, any of the Assets except (i) liens for current
property taxes not yet due and payable, (ii) liens imposed by law and
incurred in the ordinary course of business for obligations not yet due
to carriers, warehousemen, laborers, material-men and the like, or
(iii) liens in respect of pledges or deposits under workers'
compensation laws;
(c) discharged or satisfied any lien or encumbrance or paid
any liability, other than current liabilities paid in the ordinary
course of business;
(d) sold, assigned or transferred (including, without
limitation, transfers to any employees, affiliates or shareholders) any
tangible assets of the Business or canceled any debts or claims, in
each case, except in the ordinary course of business;
(e) sold, assigned or transferred (including, without
limitation, transfers to any employees, affiliates or shareholders) any
patents, trademarks, trade names, copyrights, trade secrets or other
intangible assets used in or held for use in the Business;
(f) disclosed, to any person other than Buyer and authorized
representatives of Buyer, any proprietary confidential information of
the Business or otherwise related to the Assets;
(g) waived any rights of material value or suffered any
extraordinary losses or adverse changes in collection loss experience,
whether or not in the ordinary course of business or consistent with
past practice;
(h) taken any other action or entered into any other
transaction other than in the ordinary course of business and in
accordance with past custom and practice, or entered into any
transaction with any "insider" (as defined in Section 4.21 hereof);
(i) suffered any material theft, damage, destruction or loss
of or to any property or properties owned or used by it in connection
with the Business, whether or not covered by insurance;
(j) made or granted any bonus or any wage, salary or
compensation increase to any officer or employee, or consultant or made
or granted any increase in any employee benefit plan or arrangement, or
amended or terminated any existing employee benefit plan or
arrangement, or adopted any new employee benefit plan or arrangement or
made any commitment or incurred any liability to any labor
organization;
(k) made any single capital expenditure or commitment
therefore in excess of $1,000;
(l) made any loans or advances to, or guarantees for the
benefit of, any persons; or
(m) made any charitable contributions or pledges.
4.10 Title to Properties.
(a) The real property demised by the leases (the "Leases")
described under the caption referencing Real Property Leases in the
Disclosure Schedule constitutes all of the real property used or
occupied by Seller used in connection with the Business (the "Real
Property").
(b) The Leases are in full force and effect, and Seller holds
a valid and existing leasehold interest under each of the Leases for
the term set forth under such caption in the Disclosure Schedule.
Seller
has delivered to Buyer complete and accurate copies of each of the
Leases, and none of the Leases has been modified in any respect, except
to the extent that such modifications are disclosed by the copies
delivered to Buyer. Seller is not in default, and no circumstances
exist which, if un-remedied, would, either with or without notice or
the passage of time or both, result in such default under any of the
Leases; nor, to the best knowledge of Seller, is any other party to any
of the Leases in default.
(c) Seller owns good and marketable title to the Assets,
including each of the tangible properties and tangible assets reflected
on the Balance Sheet or acquired since the date thereof, free and clear
of all liens and encumbrances, some of which are listed on Exhibit G,
except for (i) liens for current taxes not yet due and payable, (ii)
the properties subject to the Leases, (iii) assets disposed of since
the Balance Sheet Date in the ordinary course of business, (iv) liens
imposed by law and incurred in the ordinary course of business for
obligations not yet due to carriers, warehousemen, laborers and
material-men and (v) liens in respect of pledges or deposits under
workers' compensation laws, all of which liens aggregate less than
$1,000.
(d) There are no defects in the Assets or other conditions
relating thereto which, in the aggregate, materially adversely affect
the operation or value of the Assets.
(e) Seller is not in violation of any applicable zoning
ordinance or other law, regulation or requirement relating to the
operation of any properties used in the operation of the Business, and
Seller has not received any notice of any such violation, or the
existence of any condemnation proceeding with respect to any of the
Real Property, except, in each case, with respect to violations the
potential consequences of which do not or will not have a material
adverse effect on Seller.
(f) Seller has no knowledge of improvements made or
contemplated to be made by any public or private authority, the costs
of which are to be assessed as special taxes or charges against any of
the Real Property, and there are no present assessments.
4.11 Accounts Receivable. The accounts receivable of the Business
reflected on Exhibit C are valid receivables, are not subject to valid
counterclaims or setoffs, and are collectible in accordance with their terms,
except to the extent of the bad debt reserve reflected on the Balance Sheet.
4.12 Inventory. Seller's inventory of raw materials, work in
process and finished goods relating to the Business consists of items of a
quality and quantity usable and, with respect to finished goods only, salable at
the Seller's normal profit levels, in each case, in the ordinary course of the
business. Seller's inventory of finished goods generated by the Business is not
slow-moving as determined in accordance with past practices, obsolete or damaged
and is merchantable and fit for its particular use. As of the date of the
Balance Sheet, the values at which such inventory is carried on the Balance
Sheet are in accordance with generally accepted accounting principles and shown
on Exhibit I.
4.13 Tax Matters
(a) Each of Sellers and any subsidiary, any affiliated,
combined or unitary group of which the Company or any subsidiary is or
was a member each, a "Tax Affiliate" and, collectively, (the "Tax
Affiliates"), has: (i) timely filed (or has had timely filed on its
behalf) all returns, declarations, reports, estimates, information
returns, and statements ("Returns") required to be filed or sent by it
in respect of any "Taxes" (as defined in subsection (m) below) or
required to be filed or sent by it by any taxing authority having
jurisdiction; (ii) timely and properly paid (or has had paid on its
behalf) all Taxes shown to be due and payable on such Returns; (iii)
established on the Balance Sheet, in accordance with generally accepted
accounting principles, reserves that are adequate for the payment of
any Taxes not yet due and payable; (iv) complied with all applicable
laws, rules, and regulations relating to the withholding of Taxes and
the payment thereof (including, without limitation, withholding of
Taxes under Sections 1441 and 1442 of the Internal Revenue Code of
1986, as amended (the "Code"), or similar provisions under any foreign
laws), and timely and properly withheld from individual employee wages
and paid over to the proper governmental authorities all amounts
required to be so withheld and paid over under all applicable laws.
(b) There are no liens for Taxes upon any of the Assets,
except liens for Taxes not yet due.
(c) No deficiency for any Taxes has been proposed, asserted
or assessed against Seller or the Tax Affiliates that has not been
resolved and paid in full. No waiver, extension or comparable consent
given by Seller or the Tax Affiliates regarding the application of the
statute of limitations with respect to any Taxes or Returns is
outstanding, nor is any request for any such waiver or consent pending.
There has been no Tax audit or other administrative proceeding or court
proceeding with regard to any Taxes or Returns, nor is any such Tax
audit or other proceeding pending, nor has there been any notice to
Seller by any Taxing authority regarding any such Tax, audit or other
proceeding, or, to the best knowledge of Seller, is any such Tax audit
or other proceeding threatened with regard to any Taxes or Returns.
Seller does not expect the assessment of any additional Taxes on Seller
or the Tax Affiliates and is not aware of any unresolved questions,
claims or disputes concerning the liability for Taxes on Seller or the
Tax Affiliates which would exceed the estimated reserves established on
its books and records.
(d) Neither Seller nor any Tax Affiliate is a party to any
agreement, contract or arrangement that would result, separately or in
the aggregate, in the payment of any "excess parachute payments" within
the meaning of Section 280G of the Code and the consummation of the
transactions contemplated by this Agreement will not be a factor
causing payments to be made by Seller or any Tax Affiliate that are not
deductible (in whole or in part) under Section 280G of the Code.
(e) Neither Seller nor any Tax Affiliate has requested any
extension of time within which to file any Return, which Return has not
since been filed.
(f) No Asset is property that Seller or any Tax Affiliates is
or will be required to treat as being owned by another person under the
provisions of Section 168(f)(8) of the Code (as in effect prior to
amendment by the Tax Reform Act of 1986) or is "tax-exempt use
property" within the meaning of Section 168 of the Code.
(g) Neither Seller nor any Tax Affiliate is required to
include in income any adjustment under Section 481(a) of the Code by
reason of a voluntary change in accounting method initiated by Seller
or any Tax Affiliate as a result of the Tax Reform Act of 1986 and
neither Seller nor any Tax Affiliate has knowledge that the Internal
Revenue Service has proposed any such adjustment or change in
accounting method.
(h) All transactions that could give rise to an
understatement of federal income tax (within the meaning of Section
6661 of the Code as it applied prior to repeal) or an underpayment of
tax (within the meaning of Section 6662 of the Code) were reported in a
manner for which there is substantial authority or were adequately
disclosed (or, with respect to Returns filed before the Closing Date,
will be reported in such a manner or adequately disclosed) on the
Returns required in accordance with Sections 6661(b)(2)(B) and
6662(d)(2)(B) of the Code.
(i) Neither Seller nor any Tax Affiliate has engaged in any
transaction that would result in a deemed election under Section 338(e)
of the Code, and neither Seller nor any Tax Affiliate will engage in
any such transaction within any applicable "consistency period" (as
such term is defined in Section 338 of the Code).
(j) Neither Seller nor any Tax Affiliate has filed any
consent under Section 341(f) of the Code.
(k) Seller and the Tax Affiliates are, and at all times have
been, corporations or associations taxable as corporations for United
States income tax purposes.
(l) All deductions claimed or reported on all Returns of
Seller and any Tax Affiliate on account of royalties or similar fees
payable with respect to any intellectual property of Seller or any
other party are allowable in full.
(m) For purposes of this Agreement, the term "Taxes" means
all taxes, charges, fees, levies, or other assessments, including,
without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, social security, unemployment,
excise, estimated, severance, stamp, occupation, property, or other
taxes, customs duties, fees, assessments, or charges of any kind
whatsoever, including, without limitation, all interest and penalties
thereon, and additions to tax or additional amounts imposed by any
taxing authority, domestic or foreign, upon Seller or any Tax
Affiliate.
4.14 Contracts and Commitments. Exhibit B lists all of the material
agreements, whether oral or written, to which Seller is a party, which are
currently in effect, and which relate to the operation of the Business or the
Assets.
Seller has performed all obligations required to be performed by it in
connection with such contracts or commitments and is not in receipt of any claim
of default under any such contract or commitment. Seller has no present
expectation or intention of not fully performing any material obligation
pursuant to any such contract or commitment; and Seller has no knowledge of any
breach or anticipated breach by any other party to any such contract or
commitment.
Prior to the date of this Agreement, Buyer has been supplied with a true and
correct copy of each such written contract or commitment, and a written
description of each such oral contract or commitment, together with all
amendments, waivers or other changes thereto.
4.15 Intellectual Property Rights. The Seller has no rights in
patents, patent applications, trademarks, service marks, trade names, corporate
names, copyrights mask works, trade secrets, know-how or other intellectual
property rights owned by, licensed to or otherwise controlled by Seller in
connection with the conduct of the Business or used in, developed for use in or
necessary to the conduct of the Business as now conducted or planned to be
conducted. Seller has not received any notice of any infringement,
misappropriation or violation by Seller of any intellectual property rights of
any third parties and Seller has not infringed, misappropriated or otherwise
violated any such intellectual property rights; and no infringement, illicit
copying, misappropriation or violation has occurred or will occur with respect
to products currently being sold by Seller or with respect to the products
currently under development (in their present state of development) or with
respect to the conduct of the Business as now conducted.
4.16 Litigation. There are no actions, suits, proceedings, orders
or investigations pending or, to the best knowledge of Seller, threatened
against Seller, at law or in equity, or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, and there is no reasonable basis known to
Seller for any of the foregoing. Seller has not received any opinion or legal
advice to the effect that Seller is exposed from a legal standpoint to any
liability or disadvantage which may be material to the Assets, financial
condition, operating result, business condition or prospects of the Business or
Seller.
4.17 Warranties. There are no claims outstanding, pending or, to
the best knowledge of Seller, threatened for breach of any warranty relating to
any products of the Business sold by Seller prior to the date hereof. The
reserves for warranty claims on the Balance Sheet, if any, are consistent with
Seller's prior practices and are fully adequate to cover all warranty claims
made or to be made against any products of the Business sold prior to the date
thereof.
4.18 Employees. Seller leases the employees that run the Business
from Gevity, Inc. ("Gevity"). With respect to these employees: (a) to the best
knowledge of Seller, no employee has any plans to terminate his employment; (b)
Seller and, to the best knowledge of Seller, Gevity have complied with all laws
relating to the employment of labor, including provisions thereof relating to
wages, hours, equal opportunity, collective bargaining and the payment of social
security and other taxes; (c) Seller has no material labor relations problem
pending and its labor relations are satisfactory; (d) there are no workers'
compensation claims pending against Seller or, to the best knowledge of Seller,
Gevity, nor is Seller aware of any facts that would give rise to such a claim;
(e) to the best knowledge of Seller, no employee is subject to any secrecy or
non-competition agreement or any other agreement or restriction of any kind that
would impede in any way the ability of such employee to carry out fully all
activities of such employee in furtherance of the Business; and (f) no employee
or former employee has any claim with respect to any intellectual property
rights of Seller
4.19 Employee Benefit Plans. Seller does not maintain or contribute
to any nonqualified deferred compensation or retirement plans, contracts or
arrangements; (ii) Seller does not maintain or contribute to any qualified
defined contribution plans (as defined in Section 3(34) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or Section 414(i)
of the Code; (iii) Seller does not maintain or contribute to any qualified
defined benefit plans (as defined in Section 3(35) of ERISA or Section 414(j) of
the Code); and (iv) Seller does not maintain or contribute to any employee
welfare benefit plans (as defined in Section 3(1) of ERISA).
4.20 Affiliate Transactions. No officer, director or employee of
Seller or any member of the immediate family of any such officer, director or
employee, or any entity in which any of such persons owns any beneficial
interest (other than any publicly-held corporation whose stock is traded on a
national securities exchange or in the over-the-counter market and less than one
percent of the stock of which is beneficially owned by any of such persons)
(collectively "insiders"), has any agreement with Seller (other than normal
employment arrangements) or
any interest in any property, real, personal or mixed, tangible or intangible,
used in or pertaining to the Business of Seller (other than ownership of capital
stock of Seller). None of the insiders has any direct or indirect interest in
any competitor, supplier or customer of Seller or in any person, firm or entity
from whom or to whom Seller leases any property, or in any other person, firm or
entity with whom Seller transacts business of any nature. For purposes of this
Section 4.20, the members of the immediate family of an officer, director or
employee shall consist of the spouse, parents, children, siblings, mothers- and
fathers-in-law, sons- and daughters-in-law, and brothers- and sisters-in-law of
such officer, director or employee.
4.21 Customers and Suppliers. No customer of the Business or
significant supplier of the in inventory or raw materials has indicated that it
will stop or decrease the rate of business done with Seller except for changes
in the ordinary course of Seller's business.
4.22 Compliance with Laws; Permits.
(a) Seller and its officers, directors, agents and employees
and the employees of the Business have complied in all material
respects with all applicable laws, regulations and other requirements,
including, but not limited to, federal, state, local and foreign laws,
ordinances, rules, regulations and other requirements pertaining to
product labeling, consumer products safety, equal employment
opportunity, employee retirement, affirmative action and other hiring
practices, occupational safety and health, workers' compensation,
unemployment and building and zoning codes, which materially affect the
Business, the Assets or the Real Property and to which Seller may be
subject, and no claims have been filed against Seller alleging a
violation of any such laws, regulations or other requirements. Seller
has no knowledge of any action, pending or threatened, to change the
zoning or building ordinances or any other laws, rules, regulations or
ordinances affecting the Assets or the Real Property. Seller is not
relying on any exemption from or deferral of any such applicable law,
regulation or other requirement that would not be available to Buyer
after it acquires the Assets.
(b) Except for standard corporation filings and certificates
of authority to conduct business in foreign jurisdictions, Seller is
not required to have any licenses, permits and certificates, including
environmental certificates, consents or approvals, from federal, state,
local and foreign authorities (including, without limitation, federal
and state agencies regulating occupational health and safety) to
conduct its Business and own and operate the Assets
(c) In connection with the Business, Seller has not made or
agreed to make gifts of money, other property or similar benefits
(other than incidental gifts of articles of nominal value) to any
actual or potential customer, supplier, governmental employee or any
other person in a position to assist or hinder Seller in connection
with any actual or proposed transaction.
(d) In particular, but without limiting the generality of the
foregoing, Seller has not violated and has no liability, and has not
received a notice or charge asserting any violation of or liability
under, the federal Occupational Safety and Health Act of 1970 or any
other federal or state acts (including rules and regulations
thereunder) regulating or otherwise affecting employee health and
safety in connection with the Business.
4.23 Environmental Matters.
(a) As used in this Section 4.23, the following terms
shall have the following meanings:
(1) "Hazardous Materials" means any dangerous, toxic or
hazardous pollutant, contaminant, chemical, waste, material or
substance as defined in or governed by any federal, state or
local law, statute, code, ordinance, regulation, rule or other
requirement relating to such substance or otherwise relating
to the environment or human health or safety, including
without limitation any waste, material, substance, pollutant
or contaminant that might cause any injury to human health or
safety or to the environment or might subject Seller to any
imposition of costs or liability under any Environmental Law.
(2) "Environmental Laws" means all applicable federal,
state, local and foreign laws, rules, regulations, codes,
ordinances, orders, decrees, directives, permits, licenses and
judgments relating to pollution, contamination or protection
of the environment (including, without limitation,
all applicable federal, state, local and foreign laws, rules,
regulations, codes, ordinances, orders, decrees, directives,
permits, licenses and judgments relating to Hazardous
Materials in effect as of the date of this Agreement).
(3) "Release" shall mean the spilling, leaking, disposing,
discharging, emitting, depositing, ejecting, leaching,
escaping or any other release or threatened release, however
defined, whether intentional or unintentional, of any
Hazardous Material.
(b) Seller, with respect to the Business and the Real
Property, is in material compliance with all applicable Environmental
Laws.
(c) No Hazardous Materials have been generated, treated,
contained, handled, located, used, manufactured, processed, buried,
incinerated, deposited, stored, or released on, under or about any part
of the Real Property.
(d) Seller has not received notice alleging in any manner that
Seller is, or might be potentially responsible for, any Release of
Hazardous Materials, or any costs arising under or violation of
Environmental Laws with respect to the Business or the Assets.
(e) No expenditure will be required in order for Buyer to
comply with any Environmental Laws in effect at the time of the Closing
in connection with the operation or continued operation of the Business
or the Real Property in a manner consistent with the current operation
thereof by Seller.
(f) Seller has not obtained any environmental reports or
investigations with respect to the Business and the Assets, including
the Real Property.
(g) No lien has been attached or filed against Seller (with
respect to the Business or the Assets) or the Assets or the Real
Property in favor of any governmental or private entity for (i) any
liability or imposition of costs under or violation of any applicable
Environmental Law; or (ii) any Release of Hazardous Materials.
(h) Seller, on behalf of itself and its successors and
assigns, hereby waives, releases and agrees not to bring any claim,
demand, cause of action or proceeding, including without limitation any
cost recovery action, against Buyer under any Environmental Law in
connection with the Buyer's purchase, ownership or operation of the
Business and the Assets.
4.24 Brokerage. No third party shall be entitled to receive any
brokerage commissions, finder's fees, fees for financial advisory services or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of Seller.
4.25 Disclosure. Neither this Agreement nor any of the Exhibits hereto
nor any of the documents delivered by or on behalf of Seller pursuant to Article
IIX hereof nor the Disclosure Schedule nor any of the financial statements
referred to in Section 4.06 hereof, taken as a whole, contain any untrue
statement of a material fact regarding Seller or the Business or any of the
other matters dealt with in this Article IV relating to Seller or the
transactions contemplated by this Agreement. This Agreement, the Exhibits
hereto, the documents delivered to Buyer by or on behalf of Seller pursuant to
Article IIX hereof, the Disclosure Schedule and the financial statements
referred to in Section 4.06 hereof, taken as a whole, do not omit any material
fact necessary to make the statements contained herein or therein, in light of
the circumstances in which they were made, not misleading, and there is no fact
which has not been disclosed to Buyer of which any officer or director of Seller
is aware which materially affects adversely or could reasonably be anticipated
to materially affect adversely the Assets or the Business, including operating
results, assets, customer relations, employee relations and business prospects.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that:
5.01 Incorporation and Corporate Power. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of South Dakota, with the requisite corporate power and authority to enter into
this Agreement and perform its obligations hereunder.
5.02 Execution, Delivery; Valid and Binding Agreement. The execution,
delivery and performance of this Agreement by Buyer and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
requisite corporate action, and no other corporate proceedings on its part are
necessary to authorize the execution, delivery or performance of this Agreement.
This Agreement has been duly executed and delivered by Buyer and constitutes the
valid and binding obligation of Buyer, enforceable in accordance with its terms.
5.03 No Breach. The execution, delivery and performance of this
Agreement by Buyer and the consummation by Buyer of the transactions
contemplated hereby do not conflict with or result in any breach of any of the
provisions of, constitute a default under, result in a violation of, result in
the creation of a right of termination or acceleration or any lien, security
interest, charge or encumbrance upon any assets of Buyer, or require any
authorization, consent, approval, exemption or other action by or notice to any
court or other governmental body, under the provisions of the Articles of
Incorporation or Bylaws of Buyer or any indenture, mortgage, lease, loan
agreement or other agreement or instrument by which Buyer is bound or affected,
or any law, statute, rule or regulation or order, judgment or decree to which
Buyer is subject.
5.04 Governmental Authorities; Consents. Buyer is not required to
submit any notice, report or other filing with any governmental authority in
connection with the execution or delivery by it of this Agreement or the
consummation of the transactions contemplated hereby. No consent, approval or
authorization of any governmental or regulatory authority or any other party or
person is required to be obtained by Buyer in connection with its execution,
delivery and performance of this Agreement or the transactions contemplated
hereby.
5.05 Brokerage. No third party shall be entitled to receive any
brokerage commissions, finder's fees, fees for financial advisory services or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of Buyer.
ARTICLE VI
COVENANTS OF SELLER
6.01 Conduct of the Business. In connection with the Assets or the
Business, Seller agrees to observe each term set forth in this Section 6.01 and
agrees that, from the date hereof until the Closing Date, unless otherwise
consented to by Buyer in writing:
(a) The Business shall be conducted only in, and Seller shall not
take any action except in, the ordinary course of Seller's business, on
an arm's-length basis and in accordance in all material respects with
all applicable laws, rules and regulations and Seller's past custom and
practice;
(b) Seller shall not, directly or indirectly, do or permit to
occur any of the following insofar as they relate to Business or the
Assets: (i) sell, pledge, dispose of or encumber any of the Assets,
except in the ordinary course of business; (ii) acquire (by merger,
exchange, consolidation, acquisition of stock or assets or otherwise)
any corporation, partnership, joint venture or other business
organization or division or material assets thereof; (iii) incur any
indebtedness for borrowed money or issue any debt securities except the
borrowing of working capital in the ordinary course of business and
consistent with past practice; (iv) permit any accounts payable owed to
trade creditors to remain outstanding more than 60 days; (v)
accelerate, beyond the normal collection cycle, collection of accounts
receivable; or (vi) enter into or propose to enter into, or modify or
propose to modify, any agreement, arrangement or understanding with
respect to any of the matters set forth in this Section 6.01(b);
(c) Seller shall not, directly or indirectly, (i) enter into or
modify any employment, severance or similar agreements or arrangements
with, or grant any bonuses, salary increases, severance or termination
pay to, any officers or directors or consultants; or (ii) take any
action with respect to the grant of any bonuses, salary increases,
severance or termination pay or with respect to any increase of
benefits payable in effect on the date hereof;
(d) Seller shall not adopt or amend any bonus, profit sharing,
compensation, pension, retirement, deferred compensation, employment or
other employee benefit plan, trust, fund or group arrangement for the
benefit or welfare of any employees or affiliates;
(e) Seller shall not cancel or terminate its current insurance
policies covering the Assets and the Business, or cause any of the
coverage thereunder to lapse, unless simultaneously with such
termination, cancellation or lapse, replacement policies providing
coverage equal to or greater than the coverage under the canceled,
terminated or lapsed policies for substantially similar premiums are in
full force and effect;
(f) Seller shall (i) use its best efforts to preserve intact the
organization and goodwill of the Business, keep available the services
of Seller's officers and employees as a group and maintain satisfactory
relationships with suppliers, distributors, customers and others having
business relationships with Seller in connection with the Business;
(ii) confer on a regular and frequent basis with representatives of
Buyer to report operational matters and the general status of ongoing
operations with respect to the Business; (iii) not intentionally take
any action which would render, or which reasonably may be expected to
render, any representation or warranty made by it in this Agreement
untrue at the Closing; (iv) notify Buyer of any emergency or other
change in the normal course of the Business or in the operation of the
properties of the Business and of any governmental or third party
complaints, investigations or hearings (or communications indicating
that the same may be contemplated) if such emergency, change,
complaint, investigation or hearing would be material, individually or
in the aggregate, to the business, operations or financial condition of
Seller or to Seller's or Buyer's ability to consummate the transactions
contemplated by this Agreement; and (v) promptly notify Buyer in
writing if Seller shall discover that any representation or warranty
made by it in this Agreement was when made, or has subsequently become,
untrue in any respect;
(g) Seller shall (i) file any Tax returns, elections or
information statements with respect to any liabilities for Taxes of
Seller or other matters relating to Taxes of Seller which affect the
Assets and pursuant to applicable law must be filed prior to the
Closing Date; (ii) promptly upon filing provide copies of any such Tax
returns, elections or information statements to Buyer; (iii) make any
such Tax elections or other discretionary positions with respect to
Taxes taken by or affecting Seller only upon prior consultation with
and consent of Buyer; and (iv) not amend any Return;
(h) Neither Seller nor any of its Affiliates shall make any
election without respect to Taxes, change an annual accounting period,
adopt or change any accounting method or file any amended return,
report or form, if such election, adoption, change or filing would have
the effect of increasing the Tax liability of the Buyer with respect to
any period ending after the Closing Date; and
(i) Seller shall not perform any act referenced by (or omit to
perform any act which omission is referenced by) the terms of Section
4.09.
6.02 Access to Books and Records. Between the date hereof and the
Closing Date, Seller shall afford to Buyer and its authorized representatives
(the "Buyer's Representatives") full access at all reasonable times and upon
reasonable notice to the offices, properties, books, records, officers,
employees and other items of the Business, and otherwise provide such assistance
as is reasonably requested by Buyer in order that Buyer may have a full
opportunity to make such investigation and evaluation as it shall reasonably
desire to make of the Business and the Assets. In addition, Seller and its
officers and directors shall cooperate fully (including providing introductions
where necessary) with Buyer to enable Buyer to contact such third parties,
including customers, prospective customers, specifying agencies, vendors or
suppliers of the Business, as Buyer deems reasonably necessary to complete its
due diligence.
6.03 Conditions. Seller shall take all commercially reasonable actions
necessary or desirable to cause the conditions set forth in Section 8.01 to be
satisfied and to consummate the transactions contemplated herein as soon as
reasonably possible after the satisfaction thereof (but in any event within
three business days of such date).
6.04 No Negotiations. Seller shall not directly or indirectly, through
any officer, director, agent or otherwise, solicit, initiate or encourage
submission of any proposal or offer from any person or entity (including any of
its or their officers or employees) relating to any liquidation, dissolution,
recapitalization, merger, consolidation or acquisition or purchase of all or a
material portion of the assets of, or any equity interest in, Seller or other
similar transaction or business combination involving Seller or participate in
any negotiations regarding, or furnish to any other person any information with
respect to, or otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other person or entity to
do or seek any of the foregoing. Seller
shall promptly notify Buyer if any such proposal or offer, or any inquiry from
or contact with any person with respect thereto, is made and shall promptly
provide Buyer with such information regarding such proposal, offer, inquiry or
contact as Buyer may request.
6.05 Non-competition Covenant. During the three-year period commencing
on the Closing Date, Seller, and its officers, directors and principal
shareholders shall not directly or indirectly engage in any business activities
that are competitive with the Business prior to the consummation of the
transactions contemplated hereby or the business of Buyer or any of its
subsidiaries. Seller understands that Buyer would not have agreed to purchase
the Assets without having received this non-competition covenant from Seller,
and Seller acknowledges that it has entered into this non-competition covenant
as a material inducement to Buyer to consummate the transactions contemplated
hereby.
ARTICLE VII
COVENANTS OF BUYER
Buyer covenants and agrees with Seller to take all commercially
reasonable actions necessary or desirable to cause the conditions set forth in
Section 8.02 to be satisfied and to consummate the transactions contemplated
herein as soon as reasonably possible after the satisfaction thereof (but in any
event within three business days of such date).
ARTICLE VIII
CONDITIONS TO CLOSING
8.01 Conditions to Buyer's Obligations. The obligation of Buyer to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) The representations and warranties set forth in Article V
hereof shall be true and correct in all material respects at and as of
the Closing Date as though then made and as though the Closing Date had
been substituted for the date of this Agreement throughout such
representations and warranties (without taking into account any
disclosures by Seller of discoveries, events or occurrences arising on
or after the date hereof), except that any such representation or
warranty made as of a specified date (other than the date hereof) shall
only need to have been true on and as of such date;
(b) Seller shall have performed in all material respects all of
the covenants and agreements required to be performed and complied with
by it under this Agreement prior to the Closing;
(c) Seller shall have assigned to Buyer the agreements and permits
specified in Exhibit B;
(d) Seller shall have obtained, or caused to be obtained, each
consent and approval necessary in order that the transactions
contemplated herein not constitute a breach or violation of, or result
in a right of termination or acceleration of, or creation of any
encumbrance on any of the Assets pursuant to the provisions of, any
agreement, arrangement or undertaking of or affecting Seller or any
license, franchise or permit of or affecting Seller, regardless of
whether assigned to Seller pursuant to Section 9.01(c);
(e) Dauphin and it's board of Directors shall have taken all steps
required and or required by law to approve this Agreement and the
transactions contemplated hereby;
(f) There shall not be threatened, instituted or pending any
action or proceeding, before any court or governmental authority or
agency, domestic or foreign, (i) challenging or seeking to make
illegal, or to delay or otherwise directly or indirectly restrain or
prohibit, the consummation of the transactions contemplated hereby or
seeking to obtain material damages in connection with such
transactions, (ii) seeking to prohibit direct or indirect ownership or
operation by Buyer of all or a material portion of the Assets, or to
compel Buyer or any of its subsidiaries to dispose of or to hold
separately all or a material portion of the business or assets of Buyer
and its subsidiaries, as a result of the transactions contemplated
hereby, (iii) seeking to invalidate or render unenforceable any
material provision of this Agreement or any of the other agreements
listed on the attached Exhibit B (collectively, the "Related
Agreements"), or (iv) otherwise relating to and materially adversely
affecting the transactions contemplated hereby;
(g) There shall not be any action taken, or any statute, rule,
regulation, judgment, order or injunction enacted, entered, enforced,
promulgated, issued or deemed applicable to the transactions
contemplated hereby by any federal, state or foreign court, government
or governmental authority or agency, which would reasonably be expected
to result, directly or indirectly, in any of the consequences referred
to in Section 9.01 hereof;
(h) Buyer shall not have discovered any fact or circumstance
existing as of the date of this Agreement which has not been disclosed
to Buyer as of the date of this Agreement regarding the Business or
Assets, which is, individually or in the aggregate with other such
facts and circumstances, materially adverse to the value of the Assets
or the Business, as determined by the Buyer in its reasonable
discretion;
(i) There shall have been no damage, destruction or loss of or to
any of the Assets, whether or not covered by insurance, which, in the
aggregate, has, or would be reasonably likely to have, a material
adverse effect on the Assets or the Business;
(j) Buyer shall have received from counsel for Seller and Dauphin
a written opinion, dated as of the Closing Date, addressed to Buyer and
satisfactory to Buyer's counsel, in form and substance satisfactory to
Buyer;
(k) On the Closing Date, Seller shall have delivered to Buyer all
of the following:
(1) the Xxxx of Sale and such other instruments of conveyance,
transfer, assignment and delivery as Buyer shall have reasonably
requested pursuant to Section 4.02 hereof;
(2) the Assignment and Assumption Agreement;
(3) certificates of the officers of Seller with the best
knowledge of the Company or other persons satisfactory to Buyer,
dated the Closing Date, stating that the conditions precedent set
forth in subsections (a) and (b) above have been satisfied;
(4) copies of the third party and governmental consents and
approvals referred to in subsections (c) and (d) above;
(5) a copy of the text of the resolutions adopted by the board
of directors of Seller and Dauphin authorizing the execution,
delivery and performance of this Agreement and the consummation of
all of the transactions contemplated by this Agreement; along with
a certificate executed on behalf of Seller and Dauphin, by its
corporate secretary certifying to Buyer that such copy is a true,
correct and complete copy of such resolutions, and that such
resolutions were duly adopted and have not been amended or
rescinded;
(6) incumbency certificates executed on behalf of Seller and
Dauphin by its corporate secretary certifying the signature and
office of each officer executing this Agreement ; and
(7) copies of executed agreements; and such other
certificates, documents and instruments as Buyer reasonably
requests related to the transactions contemplated hereby.
8.02 Conditions to Seller's Obligations. The obligations of Seller to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) The representations and warranties set forth in Article V
hereof will be true and correct in all material respects at and as of
the Closing as though then made and as though the Closing Date had been
substituted for the date of this Agreement throughout such
representations and warranties, except that any such representation or
warranty made as of a specified date (other than the date hereof) shall
only need to have been true on and as of such date;
(b) Buyer shall have performed in all material respects all the
covenants and agreements required to be performed by it under this
Agreement prior to the Closing;
(c) There shall not be threatened, instituted or pending
any action or proceeding, before any court or governmental authority or
agency, domestic or foreign, (i) challenging or seeking to make
illegal, or to delay or otherwise directly or indirectly restrain or
prohibit, the consummation of the transactions contemplated hereby or
seeking to obtain material damages in connection with such
transactions, (ii) seeking to invalidate or render unenforceable any
material provision of this Agreement or any of the Related Agreements,
or (iii) otherwise relating to and materially adversely affecting the
transactions contemplated hereby;
(d) There shall not be any action taken, or any statute,
rule, regulation, judgment, order or injunction, enacted, entered,
enforced, promulgated, issued or deemed applicable to the transactions
contemplated hereby by any federal, state or foreign court, government
or governmental authority or agency, which would reasonably be expected
to result, directly or indirectly, in any of the consequences referred
to in Section 9.02 hereof; and
(e) On the Closing Date, Buyer will have delivered to
Seller:
(1) a wire transfer in immediately available funds
representing the Dollar portion of the Purchase Price owed to
Seller less payables,
(2) an executed copy of the Assignment and Assumption
Agreement.
ARTICLE IX
TERMINATION
9.01 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by the mutual consent of Buyer and Seller;
(b) by either Buyer or Seller if there has been a material
misrepresentation, breach of warranty or breach of covenant on the part
of the other in the representations, warranties and covenants set forth
in this Agreement;
(c) by either Buyer or Seller if the transactions
contemplated hereby have not been consummated by May 15, 2003; provided
that, neither Buyer nor Seller will be entitled to terminate this
Agreement pursuant to this Section 9.01 (c) if such party's willful
breach of this Agreement has prevented the consummation of the
transactions contemplated hereby; or
(d) by Buyer if, after the date hereof, there shall have
been a material adverse change in the financial condition or business
of the Business or if, after the date hereof, an event shall have
occurred which, so far as reasonably can be foreseen, would result in
any such change, except to the extent such change is directly caused by
Buyer.
9.02 Effect of Termination. In the event of termination of this
Agreement by either Buyer or Seller as provided in Section 9.01, this Agreement
shall become void and there shall be no liability on the part of either Buyer or
Seller, or their respective stockholders, officers, or directors, except that
Sections 12.01 and 12.02 hereof shall survive indefinitely, and except with
respect to willful breaches of this Agreement prior to the time of such
termination.
ARTICLE X
PURCHASE PRICE ADJUSTMENTS
10.01 Highland Contract. Seller is currently leasing two items of
equipment from Highland Capital Corp. ("Highland"). An identification of the
Highland equipment leases is attached hereto as Exhibit H. The parties agree
that the Purchase Price shall be reduced by the amount necessary to buy out the
Highland leases and place marketable title to the equipment in the name of Buyer
(the "Highland Payoff Amount"). The Highland Contract Amount is
estimated to be $55,746.13 and will be assumed or paid off at buyers option.
ARTICLE XI
SURVIVAL; INDEMNIFICATION
11.01 Survival of Representations and Warranties. Notwithstanding
any investigation made by or on behalf of any of the parties hereto or the
results of any such investigation and notwithstanding the participation of such
party in the Closing, the representations and warranties contained in Article IV
and Article V hereof shall survive the Closing for a period of three years
following the Closing Date.
11.02 Indemnification by Seller and Dauphin. Seller and Dauphin
agree to indemnify in full Buyer and its officers, directors, employees, agents
and stockholders (collectively, the "Buyer Indemnified Parties") and hold them
harmless against any loss, liability, deficiency, damage, expense or cost
(including reasonable legal expenses), whether or not actually incurred or paid
prior to the third anniversary of the Closing Date (collectively, "Losses"),
which Buyer Indemnified Parties may suffer, sustain or become subject to, as a
result of (i) any misrepresentation in any of the representations and warranties
of Seller or Dauphin contained in this Agreement or in any exhibits, schedules,
certificates or other documents delivered or to be delivered by or on behalf of
Seller or Dauphin pursuant to the terms of this Agreement or otherwise
referenced or incorporated in this Agreement (collectively, the "Related
Documents"), (ii) any breach of, or failure to perform, any agreement of Seller
or Dauphin contained in this Agreement or any of the Related Documents, or (iii)
any "Claims" (as defined in Section 11.04(a) hereof) or threatened Claims
against Buyer arising out of the actions or inactions of Seller or Dauphin with
respect to the Assets or the Business prior to the Closing (collectively, "Buyer
Losses").
11.03 Indemnification by Buyer. Buyer agrees to indemnify in full
the Seller, and its officers, directors, employees, agents and stockholders
(collectively, the "Seller Indemnified Parties") and hold them harmless against
any Losses which any of the Seller Indemnified Parties may suffer, sustain or
become subject to as a result of (i) any misrepresentation in any of the
representations and warranties of Buyer contained in this Agreement or in any of
the Related Documents, (ii) any breach of, or failure to perform, any agreement
of Buyer contained in this Agreement or any of the Related Documents, or (iii)
any Claims or threatened Claims against Seller arising out of the actions or
inactions of Buyer with respect to the Assets or the Business after the Closing
(collectively, "Seller Losses").
ARTICLE XII
MISCELLANEOUS
12.01 Press Releases and Announcements. Prior to the Closing Date,
no party hereto shall issue any press release (or make any other public
announcement) related to this Agreement or the transactions contemplated hereby
or make any announcement to the employees, customers or suppliers of Seller
without prior written approval of the other party hereto, except as may be
necessary, in the opinion of counsel to the party seeking to make disclosure, to
comply with the requirements of this Agreement or applicable law. If any such
press release or public announcement is so required, the party making such
disclosure shall consult with the other party prior to making such disclosure,
and the parties shall use all reasonable efforts, acting in good faith, to agree
upon a text for such disclosure which is satisfactory to both parties.
12.02 Expenses. Except as otherwise expressly provided for herein,
Seller, Buyer and Dauphin will pay all of their own expenses (including
attorneys' and accountants' fees, in connection with the negotiation of this
Agreement, the performance of their respective obligations hereunder and the
consummation of the transactions contemplated by this Agreement (whether
consummated or not).
12.03 Further Assurances. Seller and Dauphin agree that, on and
after the Closing Date, it shall take all appropriate action and execute any
documents, instruments or conveyances of any kind which may be reasonably
necessary or advisable to carry out any of the provisions hereof, including,
without limitation, putting Buyer in possession and operating control of the
Assets and transferring all Permits and Environmental Permits to Buyer that are
transferable.
12.04 Cooperation and Exchange of Information. Buyer, Seller and
Dauphin shall provide each other with such cooperation and information as either
of them reasonably may request of the other in filing any Tax return, amended
return or claim for refund, determining a liability for Taxes or a right to a
refund of Taxes or in conducting any audit or proceeding in respect of Taxes.
Such cooperation and information shall include providing copies of
relevant Tax returns or portions thereof, together with accompanying schedules
and related work papers and documents relating to rulings or other
determinations by Taxing authorities. Each party shall make its employees
available on a mutually convenient basis to provide explanation of any documents
or information provided hereunder. The Seller or Dauphin upon written request by
the Buyer, will provide to the Buyer such factual information reasonably
necessary for filing Tax returns, Tax planning and contesting any Tax audit that
the Seller or Dauphin possesses as the Buyer may reasonably request with respect
to the Assets (which information the Seller agrees to maintain and preserve for
so long as it may be needed by the Buyer).
12.05 Amendment and Waiver. This Agreement may not be amended or
waived except in a writing executed by the party against which such amendment or
waiver is sought to be enforced. No course of dealing between or among any
persons having any interest in this Agreement will be deemed effective to modify
or amend any part of this Agreement or any rights or obligations of any person
under or by reason of this Agreement.
12.06 Notices. All notices, demands and other communications to be
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be deemed to have been given when personally delivered or
three business days after being mailed by first class U.S. mail, return receipt
requested, or when receipt is acknowledged, if sent by facsimile, telecopy or
other electronic transmission device. Notices, demands and communications to
Buyer, Seller or Dauphin will, unless another address is specified in writing,
be sent to the address indicated below:
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Notices to Buyer: With a copy to:
BROADBAND HOLDINGS, LLC MPH INVESTMENTS, LLC
000 Xxxx 00/xx/ Xx. Xxxxx 000 Xxxxxx Xxxxxxxxx
Xxxxx Xxxxx, XX 00000 Xxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx Attn: Xxxxxx X. Xxxxxxx
Facsimile No. (000) 000-0000 Facsimile No. (000) 000-0000
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Notices to Buyer: with a copy to:
Xxx Xxxxxx Xxxxxx Xxxx
Vicom, Inc. Vicom, Inc.
0000 Xxxxxxx Xxxxxx Xxxxx 0000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxxxxxxxx 00000 Xxx Xxxx, Xxxxxxxxx 00000
Telecopy: (000) 000-0000: Telecopy: (000) 000-0000
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Notices to Seller: With a copy to:
Dauphin Technology, Inc. Xxxxx and Xxxxxx
000 X. Xxxxxxxxx Xxx. 55 X. Xxxxxx St.
Suite 950 Suite 3390
Palatine, Il. 60074 Xxxxxxx, Xx. 00000
Attn: Xxxxx Xxxxx Attn: Xxx Xxxxxxx
Facsimile No. (847-358-4407) Facsimile No. 000-000-0000
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12.07 Assignment. This Agreement and all of the provisions hereof
will be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, except that neither this Agreement
nor any of the rights, interests or obligations hereunder may be assigned by
either party hereto without the prior written consent of the other party hereto.
12.08 Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
12.09 Complete Agreement. This Agreement and the Related Agreements
and the Exhibits hereto, the Disclosure Schedule and the other documents
referred to herein contain the complete agreement between the parties
and supersede any prior understandings, agreements or representations by or
between the parties, written or oral, which may have related to the subject
matter hereof in any way.
12.10 Counterparts. This Agreement may be executed in one or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
instrument.
12.11 Governing Law. The internal law, without regard to conflicts
of laws principles, of the State of Illinois will govern all questions
concerning the construction, validity and interpretation of this Agreement and
the performance of the obligations imposed by this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
MULTIBAND, INC.
BY:____________________
Name Xxx Xxxxxx
Title:_________________
BROADBAND HOLDINGS, LLC
By: __________________________
Name Xxxxxx X. Xxxxxxx
Title: Manager
SUNCOAST AUTOMATION, INC.
By:___________________________
Name:_________________________
Title:________________________
DAUPHIN TECHNOLOGY, INC.
By:___________________________
Name:_________________________
Title:________________________
