PURCHASE AGREEMENT
by and among
VDC CORPORATION LTD.
as Buyer,
MASATEPE COMMUNICATIONS U.S.A., L.L.C.
as the Target Company,
and
ACTIVATED COMMUNICATIONS LIMITED PARTNERSHIP and XXXX XXXXXXXX
as Sellers
Dated: July 31, 1998
TABLE OF CONTENTS
Page
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1. DEFINITIONS 1
2. SALE AND PURCHASE OF INTERESTS; CLOSING 11
2.1 SALE AND PURCHASE OF INTERESTS 11
2.2 PURCHASE PRICE 11
2.3 CLOSING 15
2.4 CLOSING OBLIGATIONS 15
3. REPRESENTATIONS AND WARRANTIES OF SELLERS 16
3.1 ORGANIZATION AND GOOD STANDING 16
3.2 AUTHORITY; NO CONFLICT 17
3.3 CAPITALIZATION 18
3.4 FINANCIAL DATA 18
3.5 BOOKS AND RECORDS 19
3.6 TITLE TO PROPERTIES; ENCUMBRANCES 19
3.7 CONDITION AND SUFFICIENCY OF ASSETS 19
3.8 ACCOUNTS RECEIVABLE 19
3.9 MASATEPE S.A. LICENSE AUTHORITY 20
3.10 NO UNDISCLOSED LIABILITIES 20
3.11 TAXES 20
3.12 NO MATERIAL ADVERSE CHANGE 20
3.13 EMPLOYEE BENEFITS 20
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS 21
3.15 LEGAL PROCEEDINGS; ORDERS 23
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS 24
3.17 CONTRACTS; NO DEFAULTS 25
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3.18 INSURANCE 27
3.19 ENVIRONMENTAL MATTERS 27
3.20 EMPLOYEES 27
3.21 Intentionally omitted. 27
3.22 INTELLECTUAL PROPERTY 27
3.23 CERTAIN PAYMENTS 28
3.24 DISCLOSURE 28
3.25 RELATIONSHIPS WITH RELATED PERSONS 28
3.26 ALL BUSINESS CONDUCTED BY COMPANY 29
3.27 MAJORITY SHAREHOLDER OF MASATEPE S.A. 29
3.28 FINANCIAL CONDITION OF ACTIVATED 29
4. REPRESENTATIONS AND WARRANTIES OF BUYER 29
4.1 ORGANIZATION AND GOOD STANDING 29
4.2 AUTHORITY; NO CONFLICT 29
4.3 INVESTMENT INTENT 30
4.4 CERTAIN PROCEEDINGS 30
4.5 FINDER'S FEES 30
5. COVENANTS OF SELLERS 31
5.1 OPERATION OF THE BUSINESSES OF THE COMPANY 31
5.2 REQUIRED APPROVALS 31
5.3 AUDIT 31
5.4 NOTIFICATION 31
5.5 BEST EFFORTS 31
5.6 BRIDGE LOANS 32
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5.7 NO TRADING 32
5.8 DEFENSE AND SETTLEMENT OF LITIGATION 32
6. COVENANTS OF BUYER PRIOR TO FCC APPROVAL DATE 33
6.1 APPROVALS OF GOVERNMENTAL BODIES 33
6.2 BEST EFFORTS 33
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE AND TO THE
RELEASE OF THE PURCHASE PRICE FROM ESCROW 33
7.1 ACCURACY OF REPRESENTATIONS 33
7.2 SELLERS' PERFORMANCE 34
7.3 CONSENTS 34
7.4 ADDITIONAL DOCUMENTS 34
7.5 NO PROCEEDINGS 34
7.6 NO CLAIM REGARDING BUSINESS OR MEMBERSHIP INTEREST OWNERSHIP
OR SALE PROCEEDS 34
7.7 NO PROHIBITION 35
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE 35
8.1 ACCURACY OF REPRESENTATIONS 35
8.2 BUYER'S PERFORMANCE 35
8.3 CONSENTS 36
8.4 ADDITIONAL DOCUMENTS 36
8.5 NO INJUNCTION 36
9. TERMINATION 36
9.1 TERMINATION EVENTS 36
9.2 EFFECT OF TERMINATION 37
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10. INDEMNIFICATION; REMEDIES 37
10.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE 37
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS 38
10.3 Intentionally omitted. 39
10.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER 39
10.5 TIME LIMITATIONS 39
10.6 Intentionally omitted. 39
10.7 ESCROW CLAIM 39
10.8 PROCEDURE FOR INDEMNIFICATION--THIRD-PARTY CLAIMS 39
10.9 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS 41
11. GENERAL PROVISIONS 41
11.1 EXPENSES 41
11.2 PUBLIC ANNOUNCEMENTS 41
11.3 CONFIDENTIALITY 41
11.4 NOTICES 42
11.5 JURISDICTION; SERVICE OF PROCESS 43
11.6 FURTHER ASSURANCES 43
11.7 WAIVER 43
11.8 ENTIRE AGREEMENT AND MODIFICATION 44
11.9 DISCLOSURE LETTER 44
11.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS 44
11.11 SEVERABILITY 44
11.12 SECTION HEADINGS, CONSTRUCTION 45
11.13 TIME OF ESSENCE 45
11.14 GOVERNING LAW 45
11.15 COUNTERPARTS 45
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Purchase Agreement
This Purchase Agreement ("Agreement") is dated as of the 31st day of July,
1998 (the "Effective Date"), by and among VDC CORPORATION LTD., a Bermuda
corporation ("Buyer"), MASATEPE COMMUNICATIONS, U.S.A., L.L.C., a Delaware
limited liability company ("Company"), ACTIVATED COMMUNICATIONS LIMITED
PARTNERSHIP, a Texas limited partnership with offices at 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 ("Activated"), and XXXX XXXXXXXX, an individual residing at
000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Xxxxxxxx") (Activated and
Xxxxxxxx shall be collectively referred to herein as "Sellers").
WITNESSETH:
WHEREAS, Sellers own all of the membership interests (the "Interests") of
the Company; and
WHEREAS, Sellers desire to sell, and Buyer desires to purchase, all of the
Interests for the consideration and on the terms set forth in this Agreement.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements set forth in this Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Article 1:
"Applicable Contract"--any Contract (a) under which the Company has or may
acquire any rights, (b) under which the Company has or may become subject to any
obligation or liability, or (c) by which the Company or any of the assets owned
or used by it is or may become bound.
"Balance Sheet"--as defined in Section 3.4.
"Best Efforts"--the efforts that a prudent Person desirous of achieving a
result would use in similar circumstances to ensure that such result is achieved
as expeditiously as possible.
"Breach"--a "Breach" of a representation, warranty, covenant, obligation,
or other provision of this Agreement or any instrument delivered pursuant to
this Agreement will be deemed to have occurred if there is or has been (a) any
inaccuracy in or breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation, or other provision, or (b) any
claim by any Person or other occurrence or circumstance that is or was
inconsistent with such representation, warranty, covenant, obligation, or other
provision, and the term "Breach" means any such inaccuracy, breach, failure,
claim, occurrence, or circumstance.
"Bridge Loan Agreement"--as defined in Section 2.4(d).
"Bridge Note"--as defined in Section 5.6.
"Buyer"--as defined in the first paragraph of this Agreement.
"Closing"--as defined in Section 2.3.
"Closing Date"--the date and time as of which the Closing actually takes
place.
"Company"--as defined in the Recitals of this Agreement.
"Consent"--any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contemplated Transactions"--all of the transactions contemplated by this
Agreement, including:
(a) the purchase and sale of the Interests;
(b) the execution, delivery, and performance of the Xxxxxxxx Note,
Employment Agreements, the Noncompetition Agreement, the Sellers' Release,
the Escrow Agreement, the Bridge Loan Agreement and the Guaranty;
(c) the performance by Buyer and Sellers of their respective covenants
and obligations under this Agreement; and
(d) Buyer's acquisition and ownership of the Interests and exercise of
control over the Company.
"Contract"--any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"Damages"--as defined in Section 10.2.
"Deferred Delivery Date" "- the six month anniversary of the Closing Date.
"Deferred Purchase Shares" "- as defined in Section 2.2(b).
"Disclosure Letter"--the disclosure letter delivered by Sellers to Buyer
concurrently with the execution and delivery of this Agreement.
"Employment Agreements"--as defined in Section 2.4(f).
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"Encumbrance"--any charge, claim (including any claim made in any
Proceeding), community property interest, condition, equitable interest, lien,
option, pledge, security interest, right of first refusal, or restriction of any
kind, including any restriction on use, voting, transfer, receipt of income, or
exercise of any other attribute of ownership.
"Environment"--soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"Environmental, Health, and Safety Liabilities"--any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to:
(a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and
health, and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or
response actions ("Cleanup") required by applicable Environmental Law or
Occupational Safety and Health Law (whether or not such Cleanup has been
required or requested by any Governmental Body or any other Person) and for
any natural resource damages; or
(d) any other compliance, corrective, investigative, or remedial
measures required under Environmental Law or Occupational Safety and Health
Law.
The terms "removal," "remedial," and "response action," include the types
of activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. ss. 9601 et seq., as amended
("CERCLA").
"Environmental Law"--any Legal Requirement that requires or relates to:
(a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances or
materials, violations of discharge limits, or other prohibitions and of the
commencements of activities, such as resource extraction or construction,
that could have significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the Environment;
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(c) reducing the quantities, preventing the release, or minimizing the
hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged, and
used so that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other
potentially harmful substances;
(g) cleaning up pollutants that have been released, preventing the
threat of release, or paying the costs of such cleanup or prevention; or
(h) making responsible parties pay private parties, or groups of them,
for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for
injuries done to public assets.
"ERISA"--the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Escrow Agent"--shall mean Xxxxxxxx Xxxxxxxxx Professional Corporation.
"Escrow Agreement"--as defined in Section 2.4(c).
"Facilities"--any real property, leaseholds, or other interests currently
or formerly owned or operated by the Company and any buildings, plants,
structures, or equipment (including motor vehicles, tank cars, and rolling
stock) currently or formerly owned or operated by the Company.
"FCC "--means the Federal Communications Commission of the United States,
or any successor agency thereof.
"FCC Approval Date"--means the date on which the FCC consents to or
approves each of the FCC Filings, including any settlement arrangements and
accounting rates stated therein.
"FCC Filings"--collectively means the following documents filed or to be
filed by the Company with the FCC: (i) transfer of control application with
respect to the Company's Overseas Common Carrier Section 214 Authority for
consent to transfer control of the Company resulting from the consummation of
the Contemplated Transactions; (ii) the Carrier Service Agreement, dated as of
May 12, 1998, between the Company and D-Comm, Inc.; and (iii) an operating
agreement in form and substance acceptable to Buyer between the Company and
Masatepe S.A. which shall set forth the settlement arrangements and accounting
rates charged thereunder.
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"Governmental Authorization"--any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"Governmental Body"--any:
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity
and any court or other tribunal);
(d) multinational organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority
or power of any nature.
"Xxxxxxxx Note"--means the promissory note dated as of July 31, 1998 made
by Buyer in favor of Xxxxxxxx, the form of which is attached hereto as Exhibit
2.4(b)(iii).
"Guaranty"--as defined in Section 2.4(e).
"Hazardous Activity"--the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release, storage,
transfer, transportation, treatment, or use (including any withdrawal or other
use of groundwater) of Hazardous Materials in, on, under, about, or from the
Facilities or any part thereof into the Environment, and any other act,
business, operation, or thing that increases the danger, or risk of danger, or
poses an unreasonable risk of harm to persons or property on or off the
Facilities, or that may affect the value of the Facilities or the Company.
"Hazardous Materials"--includes any (i) "hazardous substance,"
"pollutants," or "contaminant" (as defined in Sections 101(14) and (33) of
CERCLA or the regulations issued pursuant to Section 102 of CERCLA and found at
40 C.F.R. ss. 302), including any element, compound, mixture, solution, or
substance that is or may be designated pursuant to Section 102 of CERCLA; (ii)
substance that is or may be designated pursuant to Section 311(b)(2)(A) of the
Federal Water Pollution Control Act, as amended (33 U.S.C. xx.xx. 1251,
1321(b)(2)(A)) ("FWPCA"); (iii) hazardous waste having the characteristics
identified under or listed pursuant to Section 3001 of the Resource Conservation
and Recovery Act, as amended (42 U.S.C. xx.xx. 6901, 6921) ("RCRA") or having
characteristics that may subsequently be considered under RCRA to constitute a
hazardous waste; (iv) substance containing petroleum, as that term is defined in
Section 9001(8) of RCRA; (v) toxic pollutant that is or may be listed under
Section 307(a) of FWPCA; (vi) hazardous air pollutant that is or may be listed
under Section 112 of the Clean Air Act, as amended (42 U.S.C. xx.xx. 7401,
7412); (vii) imminently hazardous chemical substance or
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mixture with respect to which action has been or may be taken pursuant to
Section 7 of the Toxic Substances Control Act, as amended (15 U.S.C. xx.xx.
2601, 2606); (viii) source, special nuclear, or byproduct material as defined by
the Atomic Energy Act of 1954, as amended (42 U.S.C. ss. 2011 et seq.); (ix)
asbestos, asbestos-containing material, or urea formaldehyde or material that
contains it; (x) waste oil and other petroleum products; and (xii) any other
toxic materials, contaminants, or hazardous substances or wastes pursuant to any
Environmental Law.
"Indemnified Persons"--as defined in Section 10.2.
"Intellectual Property Assets"--The term "Intellectual Property Assets"
includes:
(i) the Company's name, all fictional business names, trading
names, registered and unregistered trademarks, service marks, and
applications (collectively, "Marks");
(ii) all patents, patent applications, and inventions and
discoveries that may be patentable (collectively, "Patents");
(iii) all copyrights in both published works and unpublished
works (collectively, "Copyrights");
(iv) all rights in mask works (collectively, "Rights in Mask
Works"); and
(v) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process
technology, plans, drawings, and blueprints (collectively, "Trade
Secrets"); owned, used, or licensed by the Company as licensee or
licensor.
"IRC"--the Internal Revenue Code of 1986, as amended, or any successor law,
and regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS"--the United States Internal Revenue Service or any successor agency,
and, to the extent relevant, the United States Department of the Treasury.
"Knowledge"--an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
(a) such individual is actually aware of such fact or other matter; or
(b) a prudent individual could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a
reasonably comprehensive investigation concerning the existence of such
fact or other matter.
A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving, or who has at
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any time served, as a director, officer, member, partner, executor, or trustee
of such Person (or in any similar capacity) has, or at any time had, Knowledge
of such fact or other matter.
"Legal Requirement"--any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"Litigation"--the legal proceeding pending before the U.S. District Court
for the Southern District of New York under the caption Worldstar Communications
vs. Activated Communications, et. al (Civ. No. 98-CV-4093).
"Market Price"--as defined in Section 2.2.
"Masatepe, S.A"--Masatepe, S.A., a Nicaraguan corporation.
"Net Assets"--the total assets of the Company less (a) the Company's total
current liabilities other than the current portion of long-term obligations and
less (b) the Company's deferred income taxes.
"Noncompetition Agreement"--as defined in Section 2.4(a)(iii).
"Occupational Safety and Health Law"--any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards, and any program, whether governmental or private (including
those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
"Order"--any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business"--an action taken by a Person will be deemed
to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of
such Person;
(b) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority) and is not required to be specifically authorized by the
parent company (if any) of such Person; and
(c) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or
by any Person or group of Persons exercising similar authority), in the
ordinary course of the normal day-to-day operations of other Persons that
are in the same line of business as such Person.
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"Organizational Documents"--(a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (e) the certificate of formation and the operating agreement of a
limited liability company; (e) any charter or similar document adopted or filed
in connection with the creation, formation, or organization of a Person; and (f)
any amendment to any of the foregoing.
"Person"--any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"Plaintiff"--means any and all plaintiffs to the Litigation, including,
without limitation, Worldstar Communications Corporation.
"Proceeding"--any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Related Person"--with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material
Interest; and
(d) any Person with respect to which such individual or one or more
members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control
with, such specified Person;
(b) any Person that holds a Material Interest in such specified
Person;
(c) each Person that serves as a director, officer, partner, executor,
or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material
Interest;
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(e) any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause (b) or
(c).
For purposes of this definition, (a) the "Family" of an individual includes
(i) the individual, (ii) the individual's spouse and former spouses, (iii) any
other natural person who is related to the individual or the individual's spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of voting securities or other voting interests representing at least 40% of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least 40% of the outstanding equity securities or
equity interests in a Person.
"Release"--any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"Representative"--with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"Securities Act"--the Securities Act of 1933, as amended, or any successor
law, and regulations and rules issued pursuant to that Act or any successor law.
"Sellers"--as defined in the first paragraph of this Agreement.
"Sellers' Release"--as defined in Section 2.4.
"Interests"--as defined in the Recitals of this Agreement.
"Subsidiary"--with respect to any Person (the "Owner"), any corporation or
other Person of which securities or other interests having the power to elect a
majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries.
"Tax"--any tax (including any income tax, capital gains tax, value-added
tax, sales tax, property tax, gift tax, or estate tax), levy, assessment,
tariff, duty (including any customs duty), deficiency, or other fee, and any
related charge or amount (including any fine, penalty, interest, or addition to
tax), imposed, assessed, or collected by or under the authority of any
Governmental Body or payable pursuant to any tax-sharing agreement or any other
Contract relating to the sharing or payment of any such tax, levy, assessment,
tariff, duty, deficiency, or fee.
"Tax Return"--any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
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Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"Threat of Release"--a substantial likelihood of a Release that may require
action in order to prevent or mitigate damage to the Environment that may result
from such Release.
"Threatened"--a claim, Proceeding, dispute, action, or other matter will be
deemed to have been "Threatened" if any demand or statement has been made
(orally or in writing) or any notice has been given (orally or in writing), or
if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
2. SALE AND PURCHASE OF INTERESTS; CLOSING
2.1 SALE AND PURCHASE OF INTERESTS
Subject to the terms and conditions of this Agreement, at the Closing,
Sellers will sell and transfer the Interests to Buyer, and Buyer will purchase
the Interests from Sellers.
2.2 PURCHASE PRICE
The total purchase price (the "Purchase Price") for all the Interests will
be $1,140,042.84 in cash and stock, plus the Deferred Purchase Shares, if any,
plus the delivery of the Xxxxxxxx Note. The Purchase Price shall be payable to
each of the Sellers in the following manner:
(a) To Activated:
(i) The Buyer shall deposit with the Escrow Agent at the Closing
the sum of $500,000 in immediately available funds (the "Cash Escrow Fund") and,
within ten days following the Closing Date, 78,697 shares of common stock of the
Buyer, $2.00 par value (the "VDC Shares"), both of which shall serve as
non-exclusive sources for payment of any liability of Sellers to Buyer under
this Agreement, which sum shall be held and disbursed in accordance with the
terms of the Escrow Agreement; and
(ii) At the Closing, the Buyer shall deposit with the Escrow Agent
the sum of $89,169 in immediately available funds (the "Accounts Receivable
Escrow Fund") which sum shall be held and disbursed in accordance with the terms
of the Escrow Agreement; and
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(iii) On the Deferred Delivery Date, if the Market Price of one
VDC Share is less than $7.00, as adjusted for any stock splits, extraordinary
dividends, exchanges, recapitalizations or mergers, then, within sixty days
following the Deferred Delivery Date, the Buyer shall issue to Activated that
number of shares of common stock of VDC, par value $2.00 (the "Deferred Purchase
Shares"), calculated in accordance with the following formula:
[$550,873.84 - (78,697 x the Market Price of one VDC Share on the Deferred
Delivery Date)] / the Market Price of one VDC Share on the Deferred Delivery
Date = the number of Deferred Purchase Shares payable by Buyer
For example, if the Market Price of one VDC Share on the Deferred Delivery
Date was $6.00, then the number of Deferred Purchase Shares payable by Buyer
would equal 13,116 [($550,873.84 - $472,182) / $6.00].
If the number of Deferred Purchase Shares calculated in accordance with the
above formula results in a fractional share, one Deferred Purchase Share shall
be payable in lieu of such fractional share.
(iv) Notwithstanding anything to the contrary in this Section 2.2,
in the event that Buyer becomes entitled to receive from escrow all or any
portion of the VDC Shares (the "Returned Shares") on or before the Deferred
Delivery Date by virtue of Sellers' obligation to pay any liability of Sellers
to Buyer under this Agreement, and the market value of one VDC Share is less
than $7.00 on the Deferred Delivery Date (as adjusted for any stock splits,
extraordinary dividends, exchanges, recapitalizations or mergers), then the
Buyer , within sixty days following the Deferred Delivery Date, shall issue to
Sellers the number of Deferred Purchase Shares calculated in accordance with the
following formula:
[(78,697 - number of Returned Shares) x $7.00] - [(78,697 - number of
Returned Shares) x the Market Price of one VDC Share on the Deferred Delivery
Date)] / the Market Price of one VDC Share on the Deferred Delivery Date = the
number of Deferred Purchase Shares payable by Buyer.
For example, if the Market Price of one VDC Share on the Deferred Delivery
Date was $6.00, and the number of Returned Shares was 10,000, then the number of
Deferred Purchase Shares payable by Buyer would equal 11,450 [($480,879 -
$412,182) / $6.00].
If the number of Deferred Purchase Shares calculated in accordance with the
above formula results in a fractional share, one Deferred Purchase Share shall
be payable in lieu of such fractional share.
(v) For the purposes of this Section 2.2, the market price of the
VDC Shares (the "Market Price") shall be calculated as follows:
(A) If the VDC Shares are traded in the over-the-counter
market and not on any national securities exchange nor in the NASDAQ Reporting
System, the market price shall be the average of the mean between the last bid
and ask prices per share, as reported by the National Quotation Bureau, Inc. or
- 11 -
an equivalent generally accepted reporting service, for the consecutive 45
trading days following the Deferred Delivery Date, or if not so reported, the
average of the closing bid and asked prices for a share of VDC common stock for
the consecutive 45 trading days following the Deferred Delivery Date as
furnished to Buyer by any member of the National Association of Securities
Dealers, Inc., selected by Buyer for that purpose.
(B) If the VDC Shares are traded on a national securities
exchange or in the NASDAQ Reporting System, the market price shall be the simple
average of the closing prices at which a VDC Share traded, as quoted on the
NASDAQ Reporting System or its other principal exchange for the consecutive 45
trading days following the Deferred Delivery Date.
(vi) Upon the release of the VDC Shares from escrow in accordance
with the terms of the Escrow Agreement, Activated may cause the VDC Shares which
it is entitled to receive on such date to be registered by Buyer as follows:
(A) After Buyer's domestication from Bermuda into the United
States under the Securities Act of 1933, as amended (the "Act"), Buyer shall
advise Activated by written notice prior to the earlier to occur of (x) the
filing of the first registration statement by Buyer (excluding registration on
Forms X-0, X-0, or any successor forms thereto), covering securities of Buyer to
be offered and sold by Buyer to the public generally or (y) the six month
anniversary of the Closing Date, and shall, upon the request of Activated given
at least three (3) business days prior to the filing of such registration
statement, include in any such registration statement such information as may be
required to permit a public offering of the VDC Shares. Buyer shall supply
prospectuses, qualify the VDC Shares for sale in such states as Buyer qualifies
its securities; provided, however, that Buyer will not be required to maintain
the registration of the VDC Shares for any longer period than it shall require
for its own purposes. Activated shall furnish such information as may be
reasonably requested by Buyer in order to include such VDC Shares in the
registration statement. In the event that any registration pursuant to this
Section 2.2(a)(vi) shall be, in whole or in part, an underwritten public
offering of common stock, the number of VDC Shares to be included in such
underwriting may be reduced (and the registration of such VDC Shares may be
postponed by Buyer for up to 180 days following the completion of any such
underwritten offering) if and to the extent the managing underwriter shall be of
the opinion that such inclusion would adversely affect the marketing of the
securities to be sold by Buyer therein. Notwithstanding the foregoing, Buyer may
withdraw any registration statement referred to in subclause (x) of this Section
2.2(a)(vi)(A) without thereby incurring liability to Activated if Buyer files a
registration statement including the VDC Shares within six months after the
Closing Date.
(B) The following provisions shall also be applicable:
(i) Buyer shall bear the entire cost and expense of any registration
of securities initiated by it under subsection (A) of this Section
2.2(a)(vi) notwithstanding that VDC Shares may be included in any such
registration. If VDC Shares are included in any such registration statement
pursuant to this Section 2.2(a)(vi), Activated shall, however, bear the
fees of its own counsel and any registration fees, transfer taxes or
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underwriting discounts or commissions applicable to the VDC Shares sold by
it pursuant thereto and bear any other costs imposed by applicable federal
or state securities laws, rules or regulations.
(ii) Buyer shall indemnify and hold harmless Activated and each
underwriter, within the meaning of the Act, who may purchase from or sell
for Activated any VDC Shares from and against any and all losses, claims,
damages and liabilities caused by any untrue statement or alleged untrue
statement of a material fact contained in any registration statement under
the Act filed by or at the direction of the Buyer or any prospectus
included therein required to be filed or furnished by reason of this
Section 2.2(a)(vi) or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any such untrue statement or
alleged untrue statement or omission or alleged omission based upon
information furnished or required to be furnished in writing to the Buyer
by Activated or any underwriter expressly for use therein, which
indemnification shall include each person, if any, who controls any such
underwriter within the meaning of such Act; provided, however, that the
Buyer shall not be obliged so to indemnify Activated or any underwriter or
controlling person unless Activated or the underwriter shall at the same
time indemnify the Buyer, its directors, each officer signing the related
registration statement and each person, if any, who controls the Buyer
within the meaning of such Act, from and against any and all losses,
claims, damages and liabilities caused by any untrue statement or alleged
untrue statement of a material fact contained in any registration statement
or any prospectus required to be filed or furnished by reason of this
Section 2.2(a)(vi) or caused by any omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or alleged untrue statement
or omission based upon information furnished in writing to the Buyer by
Activated or any underwriter expressly for use therein.
(iii) Except as set forth herein, Buyer shall have no obligation
whatsoever to (1) assist or cooperate in the offering or disposition of the
VDC Shares; (2) obtain a commitment from an underwriter relative to the
sale of the VDC Shares; (3) include the VDC Shares within an underwritten
offering of Buyer; or (4) indemnify or hold harmless Activated or any
underwriter designated by Activated;
(iii) The VDC Shares shall bear the following restrictive legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF REGISTRATION, OR THE AVAILABILITY OF AN EXEMPTION FROM
REGISTRATION, UNDER THE SECURITIES ACT OF 1933, AS AMENDED, BASED ON
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AN OPINION LETTER OF COUNSEL FOR THE COMPANY OR A NO-ACTION LETTER
FROM THE SECURITIES AND EXCHANGE COMMISSION.
(b) To Xxxxxxxx:
(1) At the Closing, Buyer shall deliver the Xxxxxxxx Note, due and
payable upon the earlier to occur (subject to extension as set forth in the
Xxxxxxxx Note, the "Maturity Date") of (i) the third year anniversary of the
Closing Date or (ii) the effective date of any transaction pursuant to which a
change of control of Buyer results (other than a merger to effectuate a change
in Buyer's jurisdiction of incorporation from Bermuda to the United States) as
set forth in the Xxxxxxxx Note for that number of shares of common stock of
Buyer, par value $2.00 per share, calculated in accordance with the terms of the
Xxxxxxxx Note.
2.3 CLOSING
The purchase and sale (the "Closing") provided for in this Agreement will
occur by telephone, with each of the parties hereto participating in such
Closing, on Friday, August 7, 1998 at 3:00 p.m., or at such other time as the
parties may agree. Subject to the provisions of Article 9, failure to consummate
the purchase and sale provided for in this Agreement on the date and time and at
the place determined pursuant to this Section 2.3 will not result in the
termination of this Agreement and will not relieve any party of any obligation
under this Agreement.
2.4 CLOSING OBLIGATIONS
At the Closing:
(a) Sellers will deliver to Buyer:
(i) this Agreement and the Interests, duly executed and
assigned to Buyer;
(ii) a release in the form of Exhibit 2.4(a)(ii) executed by
Activated, Xxxxxxxxx Capital Partners and each of the
partners thereof (the "Release");
(iii) a noncompetition agreement in the form of Exhibit
2.4(a)(iii), executed by Activated (the "Noncompetition
Agreement");
(iv) a license from the Federal Communications Commission
granting special temporary authorization of the Company
continuing as a licensee under its Overseas Common
Carrier Section 214 License after the change in control
of the Company resulting from the consummation of the
transactions contemplated by this Agreement;
- 14 -
(v) a certificate executed by Sellers representing and
warranting to Buyer that each of Sellers'
representations and warranties in this Agreement was
accurate in all respects as of the date of this
Agreement and is accurate in all respects as of the
Closing Date as if made on the Closing Date (giving
full effect to any supplements to the Disclosure Letter
that were delivered by Sellers to Buyer prior to the
Closing Date in accordance with Section 5.4);
(vi) a legal opinion of Xxxxxxxxxx and Xxxxx, L.L.P. in the
form attached hereto as Exhibit 2.4(a)(vi); and
(vii) a legal opinion of Xxxx Xxxxxx Xxxxxxxx in the form
attached hereto as Exhibit 2.4(a)(vii).
(b) Buyer will deliver to the Escrow Agent:
(i) the sum of $589,169.00 by wire transfer, bank cashier's
or certified check;
(ii) instructions to the Buyer's transfer agent to issue
78,697 shares of common stock of the Buyer, $2.00 par
value (the "VDC Shares") in the name of Activated,
which VDC Shares shall be deposited with the Escrow
Agent within ten days after the Closing Date; and
(iii) the Xxxxxxxx Note.
(c) Buyer and Sellers will enter into an escrow agreement in the
form of Exhibit 2.4(c) (the "Escrow Agreement") with the
Escrow Agent.
(d) Buyer and the Company will enter into a Bridge Loan Agreement
in the form of Exhibit 2.4(d) (the "Bridge Loan Agreement").
(e) Buyer and Activated will enter into a Guaranty in the form of
Exhibit 2.4(e) (the "Guaranty").
(f) Buyer shall enter into employment agreements with each of
Xxxx Xxxxxxxx and Xxxxxxx Xxxxxxx in the forms attached
hereto as Exhibit 2.4(f).
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3. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers jointly and severally (except as expressly indicated otherwise)
represent and warrant to Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING
(a) The Company is a limited liability company duly organized, validly
existing, and in good standing under the laws of the State of
Delaware, with full power and authority to conduct its business as
it is now being conducted, to own, lease or use the properties and
assets that it purports to own, lease or use, and to perform all
its obligations under Applicable Contracts. The Company is duly
qualified to do business as a foreign corporation and is in good
standing under the laws of each state or other jurisdiction in
which either the ownership or use of the properties owned or used
by it, or the nature of the activities conducted by it, requires
such qualification. Part 3.1 of the Disclosure Letter contains a
complete and accurate list of other jurisdictions in which the
Company is authorized to do business, all fictitious names under
which the Company or any of its predecessors have conducted
business, and its capitalization (including the identity of each
member and the membership interest percentage held by each). Except
as set forth in Part 3.1 of the Disclosure Letter, the Company has
not, during the six-year period immediately preceding the date
hereof, changed its name, been the surviving entity of a merger,
consolidation or other reorganization, or acquired all or
substantially all of the assets of any Person.
(b) Sellers have delivered to Buyer complete and accurate copies of the
Organizational Documents of the Company, as currently in effect.
3.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding obligation
of Sellers, enforceable against Sellers in accordance with its
terms. Upon the execution and delivery by Sellers of the Escrow
Agreement, the Employment Agreements, the Sellers' Release, the
Noncompetition Agreement and the Guaranty (collectively, the
"Sellers' Closing Documents"), the Sellers' Closing Documents and
the Bridge Loan Agreement will constitute the legal, valid, and
binding obligations of Sellers, enforceable against Sellers in
accordance with their respective terms. Sellers have the absolute
and unrestricted right, power, authority, and capacity to execute
and deliver this Agreement and the Sellers' Closing Documents and
to perform their obligations under this Agreement and the Sellers'
Closing Documents.
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(b) Except as set forth in Part 3.2 of the Disclosure Letter, neither
the execution and delivery of this Agreement nor the consummation
or performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A)
any provision of the Organizational Documents of the Company,
or (B) any resolution adopted by the board of directors or
the members of the Company;
(ii) contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to exercise
any remedy or obtain any relief under, any Legal Requirement
or any Order to which the Company or any Seller, or any of
the assets owned or used by the Company, may be subject;
(iii) contravene, conflict with, or result in a violation of any of
the terms or requirements of, or give any Governmental Body
the right to revoke, withdraw, suspend, cancel, terminate, or
modify, any Governmental Authorization that is held by the
Company or that otherwise relates to the business of, or any
of the assets owned or used by, the Company;
(iv) cause Buyer or the Company to become subject to, or to become
liable for the payment of, any Tax;
(v) cause any of the assets owned by the Company to be reassessed
or revalued by any taxing authority or other Governmental
Body;
(vi) contravene, conflict with, or result in a violation or breach
of any provision of, or give any Person the right to declare
a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or
modify, any Applicable Contract; or
(vii) result in the imposition or creation of any Encumbrance upon
or with respect to any of the assets owned or used by the
Company.
Except as set forth in Part 3.2 of the Disclosure Letter, neither the
Company nor any Seller is or will be required to give any notice to or
obtain any Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
- 17 -
3.3 CAPITALIZATION
Sellers are and will be on the Closing Date all of the record and
beneficial owners and holders of the Interests, free and clear of all
Encumbrances. No legend or other reference to any purported Encumbrance appears
upon any certificate representing equity securities of the Company. All of the
outstanding Interests have been duly authorized and validly issued and are fully
paid and nonassessable. There are no Contracts relating to the issuance, sale,
or transfer of any Interests or other securities of the Company, including,
without limitation, securities which are convertible into or exchangeable for,
equity securities or other securities of the Company. None of the outstanding
Interests or other securities of the Company was issued in violation of the
Securities Act or any other Legal Requirement. The Company does not own, nor has
any Contract to acquire, any equity securities or other securities of any Person
or any direct or indirect equity or ownership interest in any other business,
other than 49% of the share capital of Masatepe S.A.
3.4 FINANCIAL DATA
Sellers have delivered to Buyer complete and accurate information with
respect to the uses of funds by the Company prior to the Closing Date . The
Company has paid in full all accounts payable owing as of July 31, 1998. In
addition, the Company has prepaid the aggregate amount of $50,873.84 which will
be due owing on or before August 31, 1998 under the Company's existing
agreements with (1) Valucom World Services, Inc. for uplink and downlink
services and (2) IDB Systems, A Division of WorldCom, Inc., for local loops from
WorldCom TOC to a teleport.
3.5 BOOKS AND RECORDS
The books of account, minute books, membership interest record books, and
other records of the Company, all of which have been made available to Buyer,
are complete and correct and have been maintained in accordance with sound
business practices, including the maintenance of an adequate system of internal
controls. The minute books of the Company contain accurate and complete records
of all meetings held of, and corporate action taken by, the members, the Board
of Directors, and committees of the Board of Directors of the Company, and no
meeting of any such members, Board of Directors, or committee has been held for
which minutes have not been prepared and are not contained in such minute books.
At the Closing, all of those books and records will be in the possession of the
Company.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES
Part 3.6 of the Disclosure Letter contains a complete and accurate list of
leaseholds, or other interests therein owned by the Company. The Company owns
(with good and marketable title in the case of real property, subject only to
the matters permitted by the following sentence) all the properties and assets
(whether real, personal, or mixed and whether tangible or intangible) that it
purports to own, including all of the properties and assets reflected in the
Balance Sheet (except for assets held under capitalized leases disclosed or not
- 18 -
required to be disclosed in Part 3.6 of the Disclosure Letter), and all of the
properties and assets purchased or otherwise acquired by the Company since the
date of the Balance Sheet, which subsequently purchased or acquired properties
and assets (other than inventory and short-term investments) are listed in Part
3.6 of the Disclosure Letter. All material properties and assets reflected in
the Balance Sheet are free and clear of all Encumbrances.
3.7 CONDITION AND SUFFICIENCY OF ASSETS
The assets of the Company are in good operating condition and repair, and
are adequate for the uses to which they are being put, and none of such assets
are in need of maintenance or repairs except for ordinary, routine maintenance
and repairs that are not material in nature or cost. The assets of the Company
are sufficient for the continued conduct of the Company' businesses after the
Closing in substantially the same manner as conducted prior to the Closing.
3.8 ACCOUNTS RECEIVABLE
All accounts receivable of the Company that are described in Part 3.8 of
the Disclosure Letter or on the accounting records of the Company as of the
Closing Date (collectively, the "Accounts Receivable") represent or will
represent valid obligations arising from sales actually made or services
actually performed in the Ordinary Course of Business and are equal to or in
excess of $89,169. Unless paid prior to the Closing Date, the Accounts
Receivable are or will be as of the Closing Date current and collectible. Each
of the Accounts Receivable either has been or will be collected in full, without
any setoff, within ninety days after the day on which it first becomes due and
payable. There is no contest, claim, or right of setoff, other than returns in
the Ordinary Course of Business, under any Contract with any obligor of an
Accounts Receivable relating to the amount or validity of such Accounts
Receivable. Part 3.8 of the Disclosure Letter contains a complete and accurate
list of all Accounts Receivable of the Company as of its date.
3.9 MASATEPE S.A. LICENSE AUTHORITY
The Contemplated Transactions shall not result in a violation or
termination of Masatepe S.A.'s contract of services with Empresa Nicaraguense de
Telecomunicaciones ("ENITEL") to supply direct telecommunications service
between Nicaragua and the United States.
3.10 NO UNDISCLOSED LIABILITIES
Except as set forth in Part 3.10 of the Disclosure Letter, the Company has
no liabilities or obligations of any nature (whether known or unknown and
whether absolute, accrued, contingent, or otherwise) except for current
liabilities incurred in the Ordinary Course of Business since the respective
dates thereof. The Company has no liabilities, contingent or otherwise, to the
Sellers or any of Activated's partners.
3.11 TAXES
(a) The charges, accruals, and reserves with respect to Taxes on the
respective books of the Company are adequate (determined in
- 19 -
accordance with GAAP) and are at least equal to that Company's
liability for Taxes. There exists no proposed tax assessment
against the Company. All Taxes that the Company is or was required
by Legal Requirements to withhold or collect have been duly
withheld or collected and, to the extent required, have been paid
to the proper Governmental Body or other Person.
(b) The Company has filed no Tax Returns. There is no tax sharing
agreement that will require any payment by the Company after the
date of this Agreement.
3.12 NO MATERIAL ADVERSE CHANGE
Since July 15, 1998, there has not been any material adverse change in the
business, operations, properties, prospects, assets, or condition of the Company
or Masatepe S.A., and no event has occurred or circumstance exists that may
result in such a material adverse change.
3.13 EMPLOYEE BENEFITS
(a) The Company has no employment arrangements, pension, retirement,
profit sharing and bonus plans, and all deferred compensation,
health, welfare, all severance management, and other similar plans
for the benefit of any employees of the Company, including
employee plans ("Employee Benefit Plan"). Subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), the
Company at present is not, and since its organization, has not
been a sponsor of, party to or obligated to contribute to any
employee benefit plan (as defined inss. 3(3) of ERISA), and has
not been a party to any collective bargaining agreement. The
Company has never been a member of a "controlled group of
corporations" within the meaning of Internal Revenue Code Section
414(b) or (c) is or has ever maintained a defined benefit pension
plan or contributed to a multiemployer plan as defined in Section
3(37) of ERISA.
(b) The Company is not obligated to and does not (directly or
indirectly) provide death benefits or health care coverage to any
former employees or retirees.
(c) The Company has complied with all applicable provisions of the
Immigration Reform and Control Act of 1986.
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3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
(a) Except as set forth in Part 3.14 of the Disclosure Letter:
(i) the Company is, and at all times since its organization, has
been, in full compliance with each Legal Requirement that is
or was applicable to it or to the conduct or operation of its
business or the ownership or use of any of its assets;
(ii) no event has occurred or circumstance exists that (with or
without notice or lapse of time) (A) may constitute or result
in a violation by the Company of, or a failure on the part of
the Company to comply with, any Legal Requirement, or (B) may
give rise to any obligation on the part of the Company to
undertake, or to bear all or any portion of the cost of, any
remedial action of any nature; and
(iii) the Company has not received, at any time since its
organization, any notice or other communication (whether oral
or written) from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible, or potential
violation of, or failure to comply with, any Legal
Requirement, or (B) any actual, alleged, possible, or
potential obligation on the part of the Company to undertake,
or to bear all or any portion of the cost of, any remedial
action of any nature.
(b) Part 3.14 of the Disclosure Letter contains a complete and
accurate list of each Governmental Authorization that is held by
the Company or that otherwise relates to the business of, or to
any of the assets owned or used by, the Company. Each Governmental
Authorization listed or required to be listed in Part 3.14 of the
Disclosure Letter is valid and in full force and effect. Except as
set forth in Part 3.14 of the Disclosure Letter:
(i) the Company is, and at all times since its organization, has
been, in full compliance with all of the terms and
requirements of each Governmental Authorization identified or
required to be identified in Part 3.14 of the Disclosure
Letter;
(ii) no event has occurred or circumstance exists that may (with
or without notice or lapse of time) (A) constitute or result
directly or indirectly in a violation of or a failure to
comply with any term or requirement of any Governmental
Authorization listed or required to be listed in Part 3.14 of
the Disclosure Letter, or (B) result directly or indirectly
in the revocation, withdrawal, suspension, cancellation, or
termination of, or any modification to, any Governmental
- 21 -
Authorization listed or required to be listed in Part 3.14 of
the Disclosure Letter;
(iii) the Company has not received, at any time since its
organization, any notice or other communication (whether oral
or written) from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible, or potential
violation of or failure to comply with any term or
requirement of any Governmental Authorization, or (B) any
actual, proposed, possible, or potential revocation,
withdrawal, suspension, cancellation, termination of, or
modification to any Governmental Authorization; and
(iv) all applications required to have been filed for the renewal
of the Governmental Authorizations listed or required to be
listed in Part 3.14 of the Disclosure Letter have been duly
filed on a timely basis with the appropriate Governmental
Bodies, and all other filings required to have been made with
respect to such Governmental Authorizations have been duly
made on a timely basis with the appropriate Governmental
Bodies.
The Governmental Authorizations listed in Part 3.14 of the Disclosure
Letter collectively constitute all of the Governmental Authorizations necessary
to permit the Company to lawfully conduct and operate their businesses in the
manner they currently conduct and operate such businesses and to permit the
Company to own and use its assets in the manner in which it currently owns and
uses such assets.
3.15 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in Part 3.15 of the Disclosure Letter, there
is no pending Proceeding:
(i) that has been commenced by or against the Company or that
otherwise relates to or may affect the business of, or any of
the assets owned or used by, the Company; or
(ii) that challenges, or that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any
of the Contemplated Transactions.
To the Knowledge of Sellers and the Company, (1) no such Proceeding has been
Threatened, and (2) no event has occurred or circumstance exists that may give
rise to or serve as a basis for the commencement of any such Proceeding. The
Proceedings listed in Part 3.15 of the Disclosure Letter will not have a
material adverse effect on the business, operations, assets, condition, or
prospects of the Company or Masatepe S.A., or result in any change in the
- 22 -
ownership of the Company or Masatepe S.A. The Sellers have delivered to Buyer
all copies of the pleadings relating to the Litigation.
(b) There is no Order to which any of the Company, or any of the
assets owned or used by the Company, is subject.
(c) No Seller is subject to any Order that relates to the business of,
or any of the assets owned or used by, the Company.
(d) No officer, director, agent, or employee of the Company is subject
to any Order that prohibits such officer, director, agent, or
employee from engaging in or continuing any conduct, activity, or
practice relating to the business of the Company.
(e) The Company is, and at all times since its organization, has been,
in full compliance with all of the terms and requirements of each
Order to which it, or any of the assets owned or used by it, is or
has been subject.
(f) No event has occurred or circumstance exists that may constitute
or result in (with or without notice or lapse of time) a violation
of or failure to comply with any term or requirement of any Order
to which the Company, or any of the assets owned or used by the
Company, is subject.
(g) The Company has not received, at any time since its organization,
any notice or other communication (whether oral or written) from
any Governmental Body or any other Person regarding any actual,
alleged, possible, or potential violation of, or failure to comply
with, any term or requirement of any Order to which the Company,
or any of the assets owned or used by the Company, is or has been
subject.
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS
Since the date of its formation, the Company has conducted its business
only in the Ordinary Course of Business and there has not been any:
(a) change in the Company's authorized or issued capital stock; grant
of any option or right to purchase membership interests of the
Company; issuance of any security convertible into such membership
interests; grant of any registration rights; purchase, redemption,
retirement, or other acquisition by the Company of any shares of
any such capital stock; or declaration or payment of any
distribution or payment in respect of membership interests;
(b) amendment to the Organizational Documents of the Company;
(c) payment or increase by the Company of any bonuses, salaries, or
other compensation to any member, director, officer, or (except in
- 23 -
the Ordinary Course of Business) employee or entry into any
employment, severance, or similar Contract with any director,
officer, or employee;
(d) adoption of, or increase in the payments to or benefits under, any
profit-sharing, bonus, deferred compensation, savings, insurance,
pension, retirement, or other employee benefit plan for or with
any employees of the Company;
(e) damage to or destruction or loss of any asset or property of the
Company, whether or not covered by insurance, materially and
adversely affecting the properties, assets, business, financial
condition, or prospects of the Company, taken as a whole;
(f) other than in the Ordinary Course of Business, entry into,
termination of, or receipt of notice of termination of any
contract, license, dealer, sales representative, joint venture,
credit, or similar agreement;
(g) sale (other than sales of telephony minutes in the Ordinary Course
of Business), lease, or other disposition of any asset or property
of the Company or mortgage, pledge, or imposition of any lien or
other encumbrance on any material asset or property of the
Company, including the sale, lease, or other disposition of any of
the Intellectual Property Assets;
(h) cancellation or waiver of any claims or rights with a value to the
Company; or
(i) agreement, whether oral or written, by the Company to do any of
the foregoing.
3.17 CONTRACTS; NO DEFAULTS
(a) Part 3.17(a) of the Disclosure Letter contains a complete and
accurate list, and Sellers have delivered to Buyer true and
complete copies, of:
(i) each Applicable Contract that involves performance of
services or delivery of goods or materials by the Company;
(ii) each Applicable Contract that involves performance of
services or delivery of goods or materials to the Company;
(iii) each Applicable Contract that was not entered into in the
Ordinary Course of Business;
(iv) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other
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Applicable Contract affecting the ownership of, leasing of,
title to, use of, or any leasehold or other interest in, any
real or personal property;
(v) each licensing agreement or other Applicable Contract with
respect to patents, trademarks, copyrights, or other
intellectual property, including agreements with current or
former employees, consultants, or contractors regarding the
appropriation or the nondisclosure of any of the Intellectual
Property Assets;
(vi) each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits,
losses, costs, or liabilities by the Company with any other
Person;
(vii) each Applicable Contract containing covenants that in any
way purport to restrict the business activity of the Company
or any Affiliate of the Company or limit the freedom of the
Company or any Affiliate of the Company to engage in any line
of business or to compete with any Person;
(viii) each Applicable Contract providing for payments to or by
any Person based on sales, purchases, or profits, other than
direct payments for goods;
(ix) each power of attorney that is currently effective and
outstanding;
(x) each Applicable Contract entered into other than in the
Ordinary Course of Business that contains or provides for an
express undertaking by the Company to be responsible for
consequential damages;
(xi) each Applicable Contract for capital expenditures;
(xii) each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended
by the Company other than in the Ordinary Course of Business;
and
(xiii) each amendment, supplement, and modification (whether oral
or written) in respect of any of the foregoing.
Part 3.17(a) of the Disclosure Letter sets forth reasonably complete
details concerning such Contracts not delivered by Sellers to Buyer prior to the
Closing, including details regarding the parties to the Contracts, the amount of
the remaining commitment of the Company under the Contracts, and the Company'
office where details relating to the Contracts are located.
(b) No Seller (and no Related Person of any Seller) has or may acquire
any rights under, and no Seller has or may become subject to any
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obligation or liability under, any Contract that relates to the
business of, or any of the assets owned or used by, the Company.
(c) No officer, director, agent, employee, consultant, or contractor
of the Company is bound by any Contract that purports to limit the
ability of such officer, director, agent, employee, consultant, or
contractor to (A) engage in or continue any conduct, activity, or
practice relating to the business of the Company, or (B) assign to
the Company or to any other Person any rights to any invention,
improvement, or discovery.
(d) Each Contract identified or required to be identified in Part
3.17(a) of the Disclosure Letter is in full force and effect and,
to Sellers' Knowledge, is valid and enforceable against the
Company in accordance with its terms.
(e) The Company is, and at all times since its organization has been,
in full compliance with all applicable terms and requirements of
each Contract under which the Company has or had any obligation or
liability or by which the Company or any of the assets owned or
used by the Company is or was bound.
(f) Each other Person that has or had any obligation or liability
under any Contract under which the Company has or had any rights
is, and at all times since the Company's organization has been, in
full compliance with all applicable terms and requirements of such
Contract
(g) No event has occurred or circumstance exists that (with or without
notice or lapse of time) may contravene, conflict with, or result
in a violation or breach of, or give the Company or other Person
the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Applicable Contract.
(h) The Company has not given to or received from any other Person, at
any time since its organization, any notice or other communication
(whether oral or written) regarding any actual, alleged, possible,
or potential violation or breach of, or default under, any
Contract.
(i) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or
payable to the Company under current or completed Contracts with
any Person and no such Person has made written demand for such
renegotiation.
(j) The Contracts relating to the sale, design, manufacture, or
provision of products or services by the Company have been entered
into in the Ordinary Course of Business and have been entered into
- 26 -
without the commission of any act alone or in concert with any
other Person, or any consideration having been paid or promised,
that is or would be in violation of any Legal Requirement.
3.18 INSURANCE
The Company is not a party to any policies of insurance.
3.19 ENVIRONMENTAL MATTERS
The Company is, and at all times has been, in full compliance with, and has
not been and is not in violation of or liable under, any Environmental Law.
Neither the Company nor any Seller has any basis to expect, nor has any of them
or any other Person for whose conduct they are or may be held to be responsible
received, any actual or Threatened order, notice, or other communication from
any Governmental Body or private citizen acting in the public interest.
3.20 EMPLOYEES
(a) The Company has no employees.
3.21 Intentionally omitted.
3.22 INTELLECTUAL PROPERTY
The Company has no Intellectual Property Assets.
3.23 CERTAIN PAYMENTS
Since its organization, neither the Company nor any director, officer,
agent, or employee of the Company, or any other Person associated with or acting
for or on behalf of the Company, has directly or indirectly (a) made any
contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other
payment to any Person, private or public, regardless of form, whether in money,
property, or services, (i) to obtain favorable treatment in securing business,
(ii) to pay for favorable treatment for business secured, (iii) to obtain
special concessions, or for special concessions already obtained, for or in
respect of the Company or any Affiliate of the Company, or (iv) in violation of
any Legal Requirement; or (b) established or maintained any fund or asset that
has not been recorded in the books and records of the Company.
3.24 DISCLOSURE
(a) No representation or warranty of Sellers in this Agreement and no
statement in the Disclosure Letter omits to state a material fact
necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading.
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(b) No notice given pursuant to Section 5.4 will contain any untrue
statement or omit to state a material fact necessary to make the
statements therein or in this Agreement, in light of the
circumstances in which they were made, not misleading.
(c) There is no fact known to any Seller that has specific application
to any Seller or the Company (other than general economic or
industry conditions) and that materially adversely affects the
assets, business, prospects, financial condition, or results of
operations of the Company that has not been set forth in this
Agreement or the Disclosure Letter.
3.25 RELATIONSHIPS WITH RELATED PERSONS
No Seller or any Related Person of any Seller or of the Company has, or
since the Company's organization, has had, any interest in any property (whether
real, personal, or mixed and whether tangible or intangible), used in or
pertaining to the Company's business. No Seller or any Related Person of Sellers
or of the Company is, or since the Company's organization, has owned (of record
or as a beneficial owner) an equity interest or any other financial or profit
interest in, a Person that has (i) had business dealings or a material financial
interest in any transaction with the Company, or (ii) engaged in competition
with the Company with respect to any line of the products or services of the
Company (a "Competing Business") in any market presently served by the Company
except for less than one percent of the outstanding capital stock of any
Competing Business that is publicly traded on any recognized exchange or in the
over-the-counter market. Other than the Employment Agreement between Buyer and
Xxxxxxxx to be delivered at Closing, no Seller or any Related Person of Sellers
or of the Company is a party to any Contract with, or has any claim or right
against, the Company.
3.26 ALL BUSINESS CONDUCTED BY COMPANY
The business and operations of the Company are conducted exclusively by the
Company and/or Masatepe S.A., and not by any other Person whether or not
affiliated with the Company. All assets, whether tangible or intangible, used by
the Company in its business or operations are owned or leased by the Company or
Masatepe S.A.
3.27 MAJORITY SHAREHOLDER OF MASATEPE S.A.
As the owner of 51% of the capital stock of Masatepe S.A., Xxxxx Xxxxx
Xxxxxx, Xxxx Xxxxxx and their associates (collectively, the "Majority
Shareholder") are entitled to an aggregate of 51% or less of the profits
generated by the business of Masatepe S.A. The Majority Shareholder has no
rights to share in the profits generated by the business of the Company.
3.28 FINANCIAL CONDITION OF ACTIVATED
Activated represents and warrants to Buyer that Activated is the primary
investment vehicle for the Xxxxxxxxx family and that Activated holds liquid
assets in an amount in excess of $50,000,000.
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4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1 ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the Commonwealth of Bermuda.
4.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with
its terms. Upon the execution and delivery by Buyer of the Escrow
Agreement and the Employment Agreements (collectively, the
"Buyer's Closing Documents"), the Buyer's Closing Documents will
constitute the legal, valid, and binding obligations of Buyer,
enforceable against Buyer in accordance with their respective
terms. Buyer has the absolute and unrestricted right, power, and
authority to execute and deliver this Agreement and the Buyer's
Closing Documents and to perform its obligations under this
Agreement and the Buyer's Closing Documents.
(b) Except as set forth in Schedule 4.2, neither the execution and
delivery of this Agreement by Buyer nor the consummation or
performance of any of the Contemplated Transactions by Buyer will
give any Person the right to prevent, delay, or otherwise
interfere with any of the Contemplated Transactions pursuant to:
(i) any provision of Buyer's Organizational Documents;
(ii) any resolution adopted by the board of directors or the
stockholders of Buyer;
iii) any Legal Requirement or Order to which Buyer may be
subject; or
(iv) any Contract to which Buyer is a party or by which Buyer may
be bound.
Except as set forth in Schedule 4.2, Buyer is not and will not be
required to obtain any Consent from any Person in connection with the
execution and delivery of this Agreement or the consummation or
performance of any of the Contemplated Transactions.
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4.3 INVESTMENT INTENT
Buyer is acquiring the Interests for its own account and not with a view to
their distribution within the meaning of Section 2(11) of the Securities Act.
4.4 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been commenced against Buyer and
that challenges, or may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, any of the Contemplated Transactions. To Buyer's
Knowledge, no such Proceeding has been Threatened.
4.5 FINDER'S FEES
Buyer has agreed to pay ING Baring Xxxxxx Xxxx LLC a finder's fee for
arranging the transactions contemplated by this Agreement (the "Finder's Fee").
The Finder's Fee is payable on the FCC Approval Date in the form of warrants to
purchase 4,504 shares of common stock of Buyer, par value $2.00 per share, at an
exercise price of $7.00 per share, expiring on the three year anniversary of the
Closing Date. Buyer has not incurred any liability for brokers' fees, finders'
fees, agents' commissions or other similar form of compensation in connection
with this Agreement and the transactions contemplated hereby for which Sellers
shall have any responsibility.
5. COVENANTS OF SELLERS
5.1 OPERATION OF THE BUSINESSES OF THE COMPANY
(a) After the Closing Date and until this Agreement is terminated,
Buyer shall operate the business of the Company.
5.2 REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement, Sellers will
make all filings required by Legal Requirements to be made by them in order to
consummate the Contemplated Transactions, including, without limitation, all of
the FCC Filings. Between the Closing Date and the FCC Approval Date, Sellers
will (a) cooperate with Buyer with respect to all filings that Buyer elects to
make or is required by Legal Requirements to make in connection with the
Contemplated Transactions, including the FCC Filings, and (b) cooperate with
Buyer in obtaining all consents identified in Schedule 4.2.
5.3 AUDIT
After the Closing Date, Sellers shall cooperate with Buyer, its accountants
and Representatives in furnishing information on the Company and its business
for the purposes of conducting an audit of the Company.
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5.4 NOTIFICATION
Between the Closing Date and the FCC Approval Date, each Seller will
promptly notify Buyer in writing if such Seller becomes aware of any fact or
condition that causes or constitutes a Breach of any of Sellers' representations
and warranties as of the date of this Agreement, or if such Seller or the
Company becomes aware of the occurrence after the date of this Agreement of any
fact or condition that would (except as expressly contemplated by this
Agreement) cause or constitute a Breach of any such representation or warranty
had such representation or warranty been made as of the time of occurrence or
discovery of such fact or condition. Should any such fact or condition require
any change in the Disclosure Letter if the Disclosure Letter were dated the date
of the occurrence or discovery of any such fact or condition, Sellers will
promptly deliver to Buyer a supplement to the Disclosure Letter specifying such
change. During the same period, each Seller will promptly notify Buyer of the
occurrence of any Breach of any covenant of Sellers in this Article 5 or of the
occurrence of any event that may make the satisfaction of the conditions in
Article 7 impossible or unlikely.
5.5 BEST EFFORTS
Between Closing Date and the FCC Approval Date, Sellers will use their Best
Efforts to cause the conditions in Articles 7 and 8 to be satisfied.
5.6 BRIDGE LOANS
Any funding by Buyer of the operations of the Company from the Closing Date
to the FCC Approval Date shall be evidenced by a promissory note in the form
attached hereto as Exhibit 5.6 (the "Bridge Note"). Upon the earlier to occur of
(i) repayment in full by the Company of all of its obligations under the Bridge
Note; (ii) payment in full by Guarantor of all of its obligations under the
Guaranty; or (iii) the FCC Approval Date, all of the obligations underlying the
Bridge Note shall be forgiven by Buyer.
5.7 NO TRADING
Activated agrees on behalf of itself, Xxxxxxxxx Capital Partners and each
of the partners thereof that they will refrain from any and all transactions
directly or indirectly involving the purchase, sale, transfer or other
disposition of or trading in securities of Buyer during the period commencing as
of the tenth day prior to the Deferred Delivery Date and ending fourty-five days
after the Deferred Delivery Date.
5.8 DEFENSE AND SETTLEMENT OF LITIGATION
Sellers covenant and agree that Activated shall continue to conduct the
defense of the Litigation on behalf of the Company and have sole responsibility
to bear all costs and expenses incurred in connection with the defense of such
Proceeding, including, without limitation, all attorneys' fees, until the
Litigation is finally settled or otherwise resolved. After the date of this
- 31 -
Agreement, Sellers agree that in connection with any settlement of the
Litigation, Sellers will obtain a written release from Plaintiff releasing the
Company, Masatepe S.A.,, VDC and each of their respective Representatives from
any and all liability in connection with the Litigation and any other
relationship between the Company and Plaintiff and between Masatepe S.A. and the
Plaintiff prior to the Closing Date. Sellers covenant and agree that Sellers
shall obtain the prior written consent of Buyer before entering into any
settlement of the Litigation involving the transfer of any ownership interest of
the Company to the Plaintiff.
6. COVENANTS OF BUYER PRIOR TO FCC APPROVAL DATE
6.1 APPROVALS OF GOVERNMENTAL BODIES
As promptly as practicable after the date of this Agreement, Buyer will,
and will cause each of its Related Persons to, make all filings required by
Legal Requirements to be made by them to consummate the Contemplated
Transactions. Between the Closing Date and the FCC Approval Date, Buyer will,
and will cause each Related Person to, (i) cooperate with Sellers with respect
to all filings that Sellers are required by Legal Requirements to make in
connection with the Contemplated Transactions, and (ii) cooperate with Sellers
in obtaining all consents identified in Part 3.2 of the Disclosure Letter;
provided that this Agreement will not require Buyer to dispose of or make any
change in any portion of its business or to incur any other burden to obtain a
Governmental Authorization.
6.2 BEST EFFORTS
Except as set forth in the proviso to Section 6.1, between the Closing Date
and the FCC Approval Date, Buyer will use its Best Efforts to cause the
conditions in Articles 7 and 8 to be satisfied.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE AND TO THE RELEASE OF THE
PURCHASE PRICE FROM ESCROW
Buyer's obligation to purchase the Interests and to take the other actions
required to be taken by Buyer at the Closing, and the obligation of the Escrow
Agent to release the Purchase Price from escrow, are subject to the
satisfaction, at or prior to the Closing, or at or prior to the FCC Approval
Date, as the case may be, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS
All of Sellers' representations and warranties in this Agreement
(considered collectively) and each of these representations and warranties
(considered individually) must have been accurate in all material respects as of
the Closing Date, without giving effect to any supplement to the Disclosure
Letter.
- 32 -
7.2 SELLERS' PERFORMANCE
(a) All of the covenants and obligations that Sellers are required to
perform or to comply with pursuant to this Agreement at or prior
to the Closing or at or prior to the FCC Approval Date (considered
collectively) and each of these covenants and obligations
(considered individually) must have been duly performed and
complied with in all material respects.
(b) Each document required to be delivered pursuant to Section 2.4
must have been delivered, and each of the other covenants and
obligations in Sections 5.2 and 5.5 must have been performed and
complied with in all material respects.
7.3 CONSENTS
Each of the Consents identified in Part 3.2 of the Disclosure Letter and
each Consent identified in Schedule 4.2 must have been obtained and must be in
full force and effect.
7.4 ADDITIONAL DOCUMENTS
Sellers must have caused to be delivered to Buyer such documents as Buyer
may reasonably request for the purpose of (i) enabling Sellers' counsel to
provide the opinions referred to in Sections 2.4(a)(vi) and 2.4(a)(vii), (ii)
evidencing the accuracy of any of Sellers' representations and warranties, (iii)
evidencing the performance by each Seller of, or the compliance by each Seller
with, any covenant or obligation required to be performed or complied with by
such Seller, (iv) evidencing the satisfaction of any condition referred to in
this Article 7, or (v) otherwise facilitating the consummation or performance of
any of the Contemplated Transactions.
7.5 NO PROCEEDINGS
Since the date of this Agreement, other than Proceedings commenced or
Threatened by Plaintiff in connection with the Litigation, there must not have
been commenced or Threatened against Buyer, or against any Person affiliated
with Buyer, any Proceeding (a) involving any challenge to, or seeking damages or
other relief in connection with, any of the Contemplated Transactions, or (b)
that may have the effect of preventing, delaying, making illegal, or otherwise
interfering with any of the Contemplated Transactions, in each case arising from
events prior to the Closing.
7.6 NO CLAIM REGARDING BUSINESS OR MEMBERSHIP INTEREST OWNERSHIP OR SALE
PROCEEDS
Other than the claims asserted by Plaintiff in the Litigation, there must
not have been made or Threatened by any Person any claim asserting that such
Person (a) is the holder or the beneficial owner of, or has the right to acquire
or to obtain beneficial ownership of, any stock of, or any other voting, equity,
or ownership interest in, the Company, or (b) is entitled to all or any portion
- 33 -
of the Purchase Price payable for the Interests. In addition, except as
otherwise disclosed in Part 3.15 or Part 7.6 of the Disclosure Letter, there
must not have been made or Threatened by any Person any claim asserting that
such Person is entitled to all or any portion of the proceeds, control or
ownership of the business of the Company or Masatepe, S.A.
7.7 NO PROHIBITION
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), materially contravene, or conflict with, or result in a material
violation of, or cause Buyer or any Person affiliated with Buyer to suffer any
material adverse consequence under, (a) any applicable Legal Requirement or
Order, or (b) any Legal Requirement or Order that has been published,
introduced, or otherwise proposed by or before any Governmental Body and which
is applicable as of the Closing Date.
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligations to sell the Interests and to take the other actions
required to be taken by Sellers at the Closing are subject to the satisfaction,
at or prior to the Closing, or at or prior to the FCC Approval Date, as the case
may be, of each of the following conditions (any of which may be waived by
Sellers, in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS
All of Buyer's representations and warranties in this Agreement
(considered collectively) and each of these representations and warranties
(considered individually) must have been accurate in all material respects as of
the Closing Date and must be accurate in all material respects as of the FCC
Approval Date as if made on the FCC Approval Date.
8.2 BUYER'S PERFORMANCE
(a) All of the covenants and obligations that Buyer is required to
perform or to comply with pursuant to this Agreement at or prior
to the Closing or at or prior to the FCC Approval Date (considered
collectively) and each of these covenants and obligations
(considered individually) must have been performed and complied
with in all material respects.
(b) Buyer must have delivered each of the documents required to be
delivered by Buyer pursuant to Section 2.4 and must have made the
cash payment and delivered the VDC Shares and Xxxxxxxx Note
required to be made and delivered by Buyer pursuant to Sections
2.4(b)(i), 2.4(b)(ii) and 2.4(b)(iii) respectively.
- 34 -
8.3 CONSENTS
Each of the Consents identified in of Part 3.2 of the Disclosure Letter
must have been obtained and must be in full force and effect.
8.4 ADDITIONAL DOCUMENTS
Buyer must have caused to be delivered to Sellers such documents as Sellers
may reasonably request for the purpose of (i) evidencing the accuracy of any
representation or warranty of Buyer, (ii) evidencing the performance by Buyer
of, or the compliance by Buyer with, any covenant or obligation required to be
performed or complied with by Buyer, (iii) evidencing the satisfaction of any
condition referred to in this Article 8, or (iv) otherwise facilitating the
consummation of any of the Contemplated Transactions.
8.5 NO INJUNCTION
There must not be in effect any Legal Requirement or any injunction or
other Order that (a) prohibits the sale of the Interests by Sellers to Buyer,
and (b) has been adopted or issued, or has otherwise become effective, since the
date of this Agreement.
9. TERMINATION
9.1 TERMINATION EVENTS
This Agreement may, by notice given prior to the FCC Approval Date , be
terminated:
(a) by either Buyer or Sellers if a material Breach of any provision
of this Agreement has been committed by the other party and such
Breach has not been waived;
(b) (i) by Buyer if any of the conditions in Article 7 have not been
satisfied as of the Closing Date or the FCC Approval Date, as the
case may be, or if satisfaction of such a condition is or becomes
impossible (other than through the failure of Buyer to comply with
its obligations under this Agreement), and Buyer has not waived
such condition on or before the Closing Date or the FCC Approval
Date, as the case may be; or (ii) by Sellers, if any of the
conditions in Article 8 have not been satisfied as of the Closing
Date or the FCC Approval Date, as the case may be or if
satisfaction of such a condition is or becomes impossible (other
than through the failure of Sellers to comply with their
obligations under this Agreement), and Sellers have not waived
such condition on or before the Closing Date or the FCC Approval
Date, as the case may be;
(c) by mutual consent of Buyer and Sellers; or
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(d) by either Buyer or Sellers if the FCC Approval Date has not
occurred (other than through the failure of any party seeking to
terminate this Agreement to comply fully with its obligations
under this Agreement) on or before October 15, 1998 or such later
date as the parties may agree upon.
9.2 EFFECT OF TERMINATION
Each party's right of termination under Section 9.1 is in addition to any
other rights it may have under this Agreement or otherwise, and the exercise of
a right of termination will not be an election of remedies. If this Agreement is
terminated pursuant to Section 9.1, the Escrow Agent shall release the Purchase
Price to Buyer, the Interests shall be reconveyed to Sellers and all further
obligations of the parties under this Agreement will terminate, except that the
obligations in Sections 10.1, 10.2, 10.4, 10.5, 10.6, 11.1 and 11.3 will
survive; provided, however, that if this Agreement is terminated by a party
because of the Breach of the Agreement by the other party or because one or more
of the conditions to the terminating party's obligations under this Agreement is
not satisfied as a result of the other party's failure to comply with its
obligations under this Agreement, the terminating party's right to pursue all
legal remedies will survive such termination unimpaired.
10. INDEMNIFICATION; REMEDIES
10.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE
All representations and warranties of the Sellers contained in this
Agreement, the Disclosure Letter, the supplements to the Disclosure Letter, the
certificate delivered pursuant to Section 2.4(a)(v), and any other certificate
or document delivered pursuant to this Agreement will survive the Closing
indefinitely. The representations and warranties of the Buyer contained in this
Agreement and any other certificate or document delivered pursuant to this
Agreement will survive the Closing indefinitely. The covenants and obligations
of the parties contained in this Agreement shall survive the Closing
indefinitely. The right to indemnification, payment of Damages or other remedy
based on such representations, warranties, covenants, and obligations will not
be affected by any investigation conducted with respect to, or any Knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation. The waiver of any condition based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations.
- 36 -
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS
Activated will indemnify and hold harmless Buyer, the Company, and their
respective Representatives, stockholders, controlling persons, and affiliates
(collectively, the "Indemnified Persons") for, and will pay to the Indemnified
Persons the amount of, any loss, liability, claim, damage (including incidental
and consequential damages), expense (including costs of investigation and
defense and reasonable attorney fees) or diminution of value, whether or not
involving a third-party claim (collectively, "Damages"), arising, directly or
indirectly, from or in connection with:
(a) any Breach of any representation or warranty made by Sellers in
this Agreement, including, without limitation, those set forth in
Sections 3.4 and 3.8 (without giving effect to any supplement to
the Disclosure Letter), the Disclosure Letter, the supplements to
the Disclosure Letter, or any other certificate or document
delivered by Sellers pursuant to this Agreement;
(b) any Breach of any representation or warranty made by Sellers in
this Agreement as if such representation or warranty were made on
and as of the Closing Date without giving effect to any supplement
to the Disclosure Letter, other than any such Breach that is
disclosed in a supplement to the Disclosure Letter and is
expressly identified in the certificate delivered pursuant to
Section 2.4(a)(v) as having caused the condition specified in
Section 7.1 not to be satisfied;
(c) any Breach by any Seller of any covenant or obligation of such
Seller in this Agreement;
(d) any services provided by the Company prior to the Closing Date and
prior to the FCC Approval Date; or
(e) any matter disclosed in Part 3.15 of the Disclosure Letter;
provided, however, that in addition to any other remedy to which
Buyer is entitled under this Agreement, in the event that the
Litigation listed in Part 3.15 of the Disclosure Letter has a
material adverse effect on the business, operations, assets,
condition or prospects of the Company or Masatepe S.A., or results
in any change in the ownership of the Company or Masatepe S.A.,
Sellers agree that, upon Buyer's written demand, Activated shall
immediately purchase from Buyer all or any part of the Interests
for an amount (the "Repurchase Amount") calculated pursuant to the
following formula:
[(Percentage of Interests to be resold by Buyer to Sellers) divided by
(Percentage of Interests owned by Buyer after a material adverse effect or
change of ownership in the Company described in Section 10.2(e) of this
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Agreement)] multiplied by the aggregate Purchase Price paid to the Sellers
under this Agreement = the Repurchase Amount.
The remedies provided in this Section 10.2 will not be exclusive of or limit any
other remedies that may be available to Buyer or the other Indemnified Persons.
10.3 Intentionally omitted.
10.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER
Buyer will indemnify and hold harmless Sellers, and will pay to Sellers the
amount of any Damages arising, directly or indirectly, from or in connection
with (a) any Breach of any representation or warranty made by Buyer in this
Agreement or in any certificate delivered by Buyer pursuant to this Agreement,
or (b) any Breach by Buyer of any covenant or obligation of Buyer in this
Agreement.
10.5 TIME LIMITATIONS
A claim for indemnification or reimbursement based upon any covenant or
obligation may be made at any time. If the Closing occurs, Buyer will have no
liability (for indemnification or otherwise) with respect to any representation
or warranty, unless on or before July 31, 1999, Sellers notify Buyer of a claim
specifying the factual basis of that claim in reasonable detail to the extent
then known by Sellers. If the FCC Approval Date does not occur, Buyer will have
no liability (for indemnification or otherwise) with respect to any covenant or
obligation hereunder.
10.6 Intentionally omitted.
10.7 ESCROW CLAIM
Upon notice to Sellers specifying in reasonable detail the basis for such
setoff, Buyer may give notice of a Claim under the Escrow Agreement in such
amount to which it may be entitled under this Article 10. Neither the exercise
of nor the failure to give a notice of a Claim under the Escrow Agreement will
constitute an election of remedies or limit Buyer in any manner in the
enforcement of any other remedies that may be available to it.
10.8 PROCEDURE FOR INDEMNIFICATION--THIRD-PARTY CLAIMS
(a) Promptly after receipt by an indemnified party under Section 10.2,
10.4, or (to the extent provided in the last sentence of Section
10.3) Section 10.3 of notice of the commencement of any Proceeding
against it, such indemnified party will, if a claim is to be made
against an indemnifying party under such Section, give notice to
the indemnifying party of the commencement of such claim, but the
failure to notify the indemnifying party will not relieve the
indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying
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party demonstrates that the defense of such action is prejudiced
by the indemnifying party's failure to give such notice.
(b) If any Proceeding referred to in Section 10.8(a) is brought
against an indemnified party and it gives notice to the
indemnifying party of the commencement of such Proceeding, the
indemnifying party will, unless the claim involves Taxes, be
entitled to participate in such Proceeding and, to the extent that
it wishes (unless (i) the indemnifying party is also a party to
such Proceeding and the indemnified party determines in good faith
that joint representation would be inappropriate, or (ii) the
indemnifying party fails to provide reasonable assurance to the
indemnified party of its financial capacity to defend such
Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel
satisfactory to the indemnified party and, after notice from the
indemnifying party to the indemnified party of its election to
assume the defense of such Proceeding, the indemnifying party will
not, as long as it diligently conducts such defense, be liable to
the indemnified party under this Article 10 for any fees of other
counsel or any other expenses with respect to the defense of such
Proceeding, in each case subsequently incurred by the indemnified
party in connection with the defense of such Proceeding, other
than reasonable costs of investigation. If the indemnifying party
assumes the defense of a Proceeding, (i) it will be conclusively
established for purposes of this Agreement that the claims made in
that Proceeding are within the scope of and subject to
indemnification; (ii) no compromise or settlement of such claims
may be effected by the indemnifying party without the indemnified
party's consent unless (A) there is no finding or admission of any
violation of Legal Requirements or any violation of the rights of
any Person and no effect on any other claims that may be made
against the indemnified party, and (B) the sole relief provided is
monetary damages that are paid in full by the indemnifying party;
and (iii) the indemnified party will have no liability with
respect to any compromise or settlement of such claims effected
without its consent. If notice is given to an indemnifying party
of the commencement of any Proceeding and the indemnifying party
does not, within ten days after the indemnified party's notice is
given, give notice to the indemnified party of its election to
assume the defense of such Proceeding, the indemnifying party will
be bound by any determination made in such Proceeding or any
compromise or settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party determines
in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its affiliates other than as
a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the indemnified party may,
by notice to the indemnifying party, assume the exclusive right to
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defend, compromise, or settle such Proceeding, but the
indemnifying party will not be bound by any determination of a
Proceeding so defended or any compromise or settlement effected
without its consent (which may not be unreasonably withheld).
(d) Sellers hereby consent to the nonexclusive jurisdiction of any
court in which a Proceeding is brought against any Indemnified
Person for purposes of any claim that an Indemnified Person may
have under this Agreement with respect to such Proceeding or the
matters alleged therein, and agree that process may be served on
Sellers with respect to such a claim anywhere in the world.
10.9 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS
A claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the party from whom indemnification is
sought.
11. GENERAL PROVISIONS
11.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each party to
this Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of agents, representatives,
counsel, and accountants. In the event of termination of this Agreement, the
obligation of each party to pay its own expenses will be subject to any rights
of such party arising from a breach of this Agreement by another party.
11.2 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with respect to this Agreement
or the Contemplated Transactions will be issued, if at all, at such time and in
such manner as Buyer determines, with the prior consent of Activated, which
consent shall not be unreasonably withheld. Unless consented to by Buyer in
advance or required by Legal Requirements, prior to the Closing, Sellers shall,
and shall cause the Company to, keep this Agreement strictly confidential and
may not make any disclosure of this Agreement to any Person. Sellers and Buyer
will consult with each other concerning the means by which the Company'
employees, customers, and suppliers and others having dealings with the Company
will be informed of the Contemplated Transactions, and Buyer will have the right
to be present for any such communication.
11.3 CONFIDENTIALITY
Between the date of this Agreement and the Closing Date, Buyer and Sellers
will maintain in confidence, and will cause the directors, officers, employees,
agents, and advisors of Buyer and the Company to maintain in confidence, any
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written, oral, or other information obtained in confidence from another party or
the Company in connection with this Agreement or the Contemplated Transactions,
unless (a) such information is already known to such party or to others not
bound by a duty of confidentiality or such information becomes publicly
available through no fault of such party, (b) the use of such information is
necessary or appropriate in making any filing or obtaining any consent or
approval required for the consummation of the Contemplated Transactions, or (c)
the furnishing or use of such information is necessary or appropriate in
connection with legal proceedings.
If the Contemplated Transactions are not consummated, each party will
return or destroy as much of such written information as the other party may
reasonably request. Whether or not the Closing takes place, Sellers waive, and
will upon Buyer's request cause the Company to waive, any cause of action,
right, or claim arising out of the access of Buyer or its representatives to any
trade secrets or other confidential information of the Company except for the
intentional competitive misuse by Buyer of such trade secrets or confidential
information.
11.4 NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Sellers: Activated Communications Limited Partnership
000 Xxxxx Xxxxxx
Xxx Xxxx, XX
with a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxx, Esquire
Facsimile: (000) 000-0000
Xxxx Xxxxxxxx
000 Xxxx 00xx Xxxxxx
Xxxxxxxxx 0X
Xxx Xxxx, XX 00000
with a copy to:
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Xxxxxxxxx Xxxxxx & Xxxx, L.L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Tab Xxxxxxxxx, Esquire
Facsimile: (000) 000-0000
Buyer: VDC Corporation Ltd.
00 Xxxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxx, CEO
Facsimile: (000) 000-0000
with a copy to: Xxxxxxxx Xxxxxxxxx Professional Corporation
Eleven Xxxx Xxxxxx, 00xx Xxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esquire
Facsimile: (000) 000-0000
11.5 JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based on
any right arising out of, this Agreement may be brought against any of the
parties in the courts of the State of Delaware or, if it has or can acquire
jurisdiction, in the United States District Court for the District of Delaware,
and each of the parties consents to the jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives any
objection to venue laid therein. Process in any action or proceeding referred to
in the preceding sentence may be served on any party anywhere in the world.
11.6 FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents, and
(c) to do such other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this Agreement and the
documents referred to in this Agreement.
11.7 WAIVER
The rights and remedies of the parties to this Agreement are cumulative and
not alternative. Neither the failure nor any delay by any party in exercising
any right, power, or privilege under this Agreement or the documents referred to
in this Agreement will operate as a waiver of such right, power, or privilege,
and no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege. To the maximum extent
- 42 -
permitted by applicable law, (a) no claim or right arising out of this Agreement
or the documents referred to in this Agreement can be discharged by one party,
in whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
11.8 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter and constitutes (along with the documents referred
to in this Agreement) a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This Agreement
may not be amended except by a written agreement executed by the party to be
charged with the amendment.
11.9 DISCLOSURE LETTER
(a) The disclosures in the Disclosure Letter, and those in any
Supplement thereto, must relate only to the representations and
warranties in the Section of the Agreement to which they expressly
relate and not to any other representation or warranty in this
Agreement.
(b) In the event of any inconsistency between the statements in the
body of this Agreement and those in the Disclosure Letter (other
than an exception expressly set forth as such in the Disclosure
Letter with respect to a specifically identified representation or
warranty), the statements in the body of this Agreement will
control.
11.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under this Agreement without the
prior consent of the other parties, except that Buyer may assign any of its
rights under this Agreement to any Subsidiary of Buyer. Subject to the preceding
sentence, this Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to give any
Person other than the parties to this Agreement any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and all of its provisions and conditions are for
the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
11.11 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
- 43 -
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
11.12 SECTION HEADINGS, CONSTRUCTION
The headings of Articles and Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
references to "Article" or "Articles" and "Section" or "Sections" refer to the
corresponding Article or Articles and Section or Sections of this Agreement. All
words used in this Agreement will be construed to be of such gender or number as
the circumstances require. Unless otherwise expressly provided, the word
"including" does not limit the preceding words or terms.
11.13 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
11.14 GOVERNING LAW
This Agreement will be governed by the laws of the State of Delaware
without regard to conflict of laws principles.
11.15 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
Buyer:
VDC CORPORATION LTD.
Attest:_______________________ By: /s/ Xxxxxxxxx X. Xxxxx
Name: ---------------------------------------
Xxxxxxxxx X. Xxxxx,
Chief Executive Officer
Sellers:
ACTIVATED COMMUNICATIONS
LIMITED PARTNERSHIP
By: Cellular Dynamics, Inc., its General Partner
Witness:_______________________ By: /s/ Xxxx Xxxxxxxxx
----------------------------------
Xxxx Xxxxxxxxx, its Vice President
Witness:_______________________ /s/ Xxxx Xxxxxxxx
-------------------------------------
Xxxx Xxxxxxxx
Company:
MASATEPE COMMUNICATIONS, U.S.A.,
L.L.C.
By: Activated Communications Limited
Partnership, its Managing Member
By: Cellular Dynamics, Inc., its General
Partner
Witness:_______________________ By: /s/ Xxxx Xxxxxxxxx
----------------------------------
Xxxx Xxxxxxxxx, its Vice President
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