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EXHIBIT 10.02
STOCK PURCHASE AGREEMENT
BY AND AMONG
eSAT, INC.,
AND
INTERWIRELESS, INC.
DATED AS OF APRIL 13, 2000
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TABLE OF CONTENTS
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ARTICLE 1 THE PURCHASE...................................................................1
Section 1.1 The Purchase.........................................................1
Section 1.2 Consideration........................................................1
Section 1.3 Board of Directors; Officers of InterWireless Following the
Purchase...........................................................1
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF INTERWIRELESS...............................2
Section 2.1 Organization; Qualification..........................................2
Section 2.2 Authority Relative to this Agreement.................................2
Section 2.3 Capitalization.......................................................2
Section 2.4 Subsidiaries; Absence of Certain Agreements..........................3
Section 2.5 [Reserved]...........................................................4
Section 2.6 Governmental Consents and Approvals..................................4
Section 2.7 No Violations........................................................4
Section 2.8 Financial Statements.................................................4
Section 2.9 Title to and Condition of Assets and Property........................5
Section 2.10 Litigation...........................................................5
Section 2.11 Absence of Changes...................................................6
Section 2.12 Undisclosed Liabilities; Commitments.................................6
Section 2.13 Environmental Matters................................................6
Section 2.14 Employee Benefit and Retirement Plans................................7
Section 2.15 Labor Matters........................................................7
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Section 2.16 Information for Filings..............................................8
Section 2.17 Taxes................................................................9
Section 2.18 Inventory............................................................9
Section 2.19 Proprietary Rights...................................................9
Section 2.20 Surety Obligations...................................................10
Section 2.21 No Brokers...........................................................10
Section 2.22 Records..............................................................10
Section 2.23 Compliance With Law; Conduct.........................................11
Section 2.24 Insurance............................................................11
Section 2.25 Receivables..........................................................11
Section 2.26 [Reserved]...........................................................11
Section 2.27 Bank Accounts; Powers of Attorney....................................11
Section 2.28 Product and Service Warranties.......................................11
Section 2.29 Transactions with Affiliates.........................................12
Section 2.30 Price and Customer Lists.............................................12
Section 2.31 Corrupt Practices....................................................12
Section 2.32 No Default...........................................................12
Section 2.33 Additional Items Reflected in the InterWireless Disclosure
Schedule...........................................................13
Section 2.34 Copies of Documents; Accuracy of Information Furnished...............13
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF ESAT.........................................13
Section 3.1 Organization; Qualification...........................................14
Section 3.2 Authority Relative to this Agreement..................................14
Section 3.3 Common Stock..........................................................14
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Section 3.4 [Reserved]............................................................14
Section 3.5 Governmental Consents and Approvals...................................14
Section 3.6 No Violations.........................................................14
Section 3.7 Financial Statements; SEC Reports.....................................15
Section 3.8 Litigation............................................................15
Section 3.9 Information of Filings................................................15
Section 3.10 No Brokers...........................................................16
Section 3.11 Copies of Documents; Accuracy of Information Furnished...............16
Section 3.12 Due Diligence of eSat................................................16
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF OWNERS.......................................16
Section 4.1 Title to Shares.......................................................16
Section 4.2 Authority Relative to this Agreement..................................16
Section 4.3 Transfers to InterWireless............................................17
Section 4.4 Certain Transactions or Arrangements..................................17
Section 4.5 Investments in Competitors............................................17
Section 4.6 Representations.......................................................17
Section 4.7 [Reserved]............................................................17
Section 4.8 Copies of Documents; Accuracy of Information Furnished................17
ARTICLE 5 ADDITIONAL AGREEMENTS..........................................................18
Section 5.1 Conduct of Business of InterWireless..................................18
Section 5.2 Issuance of Options...................................................18
Section 5.3 Forbearances by InterWireless.........................................18
Section 5.4 No Solicitation.......................................................19
Section 5.5 Investigation of Business and Properties..............................19
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Section 5.6 Confidentiality.......................................................19
Section 5.7 Public Announcements..................................................20
Section 5.8 Agreement to Consummate...............................................20
Section 5.9 [Reserved]............................................................21
Section 5.10 InterWireless Shareholders' Approval.................................21
Section 5.11 [Reserved]...........................................................21
Section 5.12 Agreement Regarding Brokers..........................................21
Section 5.13 Notice...............................................................21
Section 5.14 Representation, Warranties, and Agreements; Survival.................21
Section 5.15 Indemnification......................................................22
Section 5.16 Resolution of Disputed Claims under Section 5.15.....................23
Section 5.17 Tax Return Filings...................................................24
Section 5.18 Election to Board of Directors.......................................25
Section 5.19 Condition Subsequent.................................................25
ARTICLE 6 CONDITIONS PRECEDENT TO CLOSING AND POST-CLOSING COVENANTS.....................25
Section 6.1 General Conditions....................................................25
Section 6.2 Conditions to Closing in Favor of InterWireless.......................26
Section 6.3 Conditions to Closing in Favor of eSat................................27
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER..............................................28
Section 7.1 Termination...........................................................28
Section 7.2 Effect of Termination.................................................28
Section 7.3 Amendment.............................................................28
Section 7.4 Extension; Waiver.....................................................29
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Section 7.5 Dual Transactions.....................................................29
ARTICLE 8 GENERAL PROVISIONS.............................................................29
Section 8.1 Notices...............................................................29
Section 8.2 Fees and Expenses of the Transaction..................................30
Section 8.3 Interpretation........................................................31
Section 8.4 Counterparts..........................................................31
Section 8.5 Miscellaneous.........................................................31
Section 8.6 Survival..............................................................31
Section 8.7 Mutual Cooperation....................................................31
ARTICLE A - InterWireless Disclosure Schedule.............................................1
ARTICLE B - eSat Disclosure Schedule......................................................2
ARTICLE C - Owners Disclosure Schedule....................................................3
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LIST OF EXHIBITS
Exhibit A Opinion of Counsel for eSat.................................................A-1
Exhibit B Shareholder Acknowledgments.................................................B-1
Exhibit C Opinion of Counsel for InterWireless........................................C-1
Exhibit D Form of Noncompetition Agreement with Owners................................D-1
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT ("Agreement") is made as of April
13, 2000, by and among eSat, Inc., a Nevada corporation, ("eSat"),
InterWireless, Inc., a California corporation ("InterWireless"), and the
shareholders of InterWireless whose names are set forth on the signature page of
this Agreement ("Owners").
RECITALS OF THE PARTIES:
A. The respective Boards of Directors of eSat and InterWireless,
as well as the Owners, have approved the purchase and sale of the outstanding
common stock of InterWireless as provided herein (the "Purchase").
B. eSat, InterWireless and Owners desire to make certain
representations, warranties and agreements in connection with, and to establish
various conditions precedent to, the Purchase.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
ARTICLE 1
THE PURCHASE
Section 1.1 The Purchase. Pursuant to the terms and conditions of this
Agreement, eSat will purchase from the Owners all of the outstanding common
stock of InterWireless (the "InterWireless Common Stock").
Section 1.2 Consideration. The total consideration payable to the Owners
in exchange for the InterWireless Common Stock shall be $400 per share or a
total of $4,000,000. Such consideration shall be paid no later than two business
days following the execution hereof (the "Effective Date").
Section 1.3 Board of Directors; Officers of InterWireless Following the
Purchase. As soon as practicable following the Effective Date, eSat shall elect
the following persons as directors of InterWireless: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ Pennells and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
Following the Effective Date the officers of InterWireless shall remain as
follows: President, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇; Vice President, ▇▇▇▇▇ Pennells; Vice
President, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇; and Secretary, ▇▇▇▇▇ Pennells; and Chief Financial
Officer/Treasurer and Assistant Secretary, ▇▇▇▇ ▇▇▇▇▇▇.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF INTERWIRELESS
Except as expressly set forth in the disclosure schedule delivered to
eSat by InterWireless contemporaneously with the execution hereof (the
"InterWireless Disclosure Schedule"), for itself, and for each of its
Subsidiaries, InterWireless hereby represents and warrants to eSat as follows,
which representations and warranties are made as of the date hereof and as of
the Effective Date and shall survive the Effective Date regardless of what
investigations, if any, eSat shall have made prior hereto. Where any
representation and warranty is qualified as being "to the best knowledge of
InterWireless," or with words of a similar affect, such shall mean the actual
knowledge of ▇▇▇▇▇ Pennells and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
Section 2.1 Organization; Qualification. InterWireless is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California. InterWireless has full corporate power and authority to own
and lease all of the properties and assets it now owns and leases and to carry
on its business as now being conducted. InterWireless is duly qualified as a
foreign corporation and is in good standing to do business in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except where the
failure so to qualify would not have a material adverse effect on the condition
(financial or otherwise), business, assets, liabilities, capitalization,
financial position, operations, results of operations or prospects (a "Material
Adverse Affect") on InterWireless. InterWireless has heretofore delivered to
eSat complete and correct copies of its Articles of Incorporation and Bylaws as
such are currently in effect.
Section 2.2 Authority Relative to this Agreement. InterWireless has full
corporate power and authority to execute, deliver and perform this Agreement
and, subject to stockholder approval, to consummate the transactions
contemplated hereby. The execution and delivery by InterWireless of this
Agreement, and the consummation of the transactions contemplated hereby, have
been duly and validly authorized by the Board of Directors of InterWireless and
no other corporate proceedings on the part of InterWireless are necessary with
respect thereto. This Agreement has been duly and validly executed and delivered
by InterWireless and, subject to shareholder approval, constitutes a legal,
valid and binding obligation of InterWireless, enforceable against it in
accordance with its terms except as may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally and by
general principles of equity.
Section 2.3 Capitalization. The authorized capital stock of
InterWireless consists of 100,000 shares of InterWireless Common Stock, of
which, as of the date hereof, 10,000 shares of InterWireless Common Stock are
validly issued and outstanding, fully paid and nonassessable. As of the date of
this Agreement there are no shares of InterWireless Common Stock held in the
treasury of InterWireless and there are no other shares of the capital stock of
InterWireless. As of the date hereof, except as disclosed in the InterWireless
Disclosure Schedule, there are no
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outstanding options, warrants, rights or other commitments to issue or sell any
shares of capital stock or any securities or obligations convertible into or
exchangeable for, or giving any person any right to acquire from InterWireless,
any shares of its capital stock. No shares of InterWireless' capital stock have
been issued in violation of any preemptive rights or applicable federal or state
securities laws. Except pursuant to the California General Corporation Law,
there are no restrictions, including but not limited to self-imposed
restrictions, on the retained earnings of InterWireless or on the ability of
InterWireless to declare and pay dividends. There are no outstanding obligations
of InterWireless to repurchase, redeem or otherwise acquire any capital stock or
other securities of InterWireless.
Section 2.4 Subsidiaries; Absence of Certain Agreements. The
InterWireless Disclosure Schedule identifies all InterWireless Subsidiaries, and
sets forth a true and complete listing of the authorized, issued and outstanding
capital stock of each Subsidiary and the ownership of the capital stock of each
Subsidiary. Each of such Subsidiaries has full corporate power and authority to
own and lease all of the properties and assets it now owns and leases and to
carry on its business as now being conducted. Each is duly qualified as a
foreign corporation and is in good standing to do business in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes qualification necessary , except where failure to
so quality, would not have a Material Adverse Affect on such Subsidiary. Except
as set forth in the InterWireless Disclosure Schedule, (a) InterWireless has
good and valid title to its equity interests in the Subsidiaries, respectively,
in each case free and clear of all liens, (b) there are no outstanding
subscriptions, warrants or other rights to purchase or otherwise acquire any
equity securities of any Subsidiary, (c) there are no securities of
InterWireless or any of its affiliates convertible into or exchangeable for
equity securities of or voting securities of any Subsidiary, and (d) there are
no obligations of InterWireless or any of its affiliates to issue, deliver or
sell any capital stock, voting securities or securities convertible into or
exchangeable for equity securities of or voting securities of any Subsidiary.
The outstanding equity securities of each Subsidiary are validly issued, fully
paid and non-assessable. As used in this Agreement, "Subsidiary" or
"Subsidiaries," with respect to any corporation, shall mean any other
corporation of which at least a majority of the securities having by their terms
ordinary voting power to elect a majority of the Board of Directors of such
other corporation is at the time directly or indirectly owned or controlled by
such first corporation, or by such first corporation and one or more of its
Subsidiaries.
Except as set forth on the InterWireless Disclosure Schedule,
InterWireless does not own or hold any securities of, or any interest in, any
other person or entity nor is InterWireless subject to any joint venture,
partnership or other arrangement that is created as a partnership for federal
income tax purposes. Except as set forth in the InterWireless Disclosure
Schedule, there are no voting trusts or other agreements by and between or among
InterWireless, or any or all of its shareholders, whether or not InterWireless
is a party thereto, imposing any restrictions upon the transfer or voting of or
otherwise pertaining to the securities of InterWireless (including, but not
limited to the InterWireless Common Stock) or the ownership thereof. Any and all
such restrictions set forth in the InterWireless Disclosure Schedule shall be
duly complied with or effectively waived as of the Effective Date.
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Section 2.5 [Reserved].
Section 2.6 Governmental Consents and Approvals. Except as disclosed on
the InterWireless Disclosure Schedule, the execution, delivery and performance
by InterWireless of this Agreement and the consummation of the transactions
contemplated hereby require no consent, approval, order or authorization of,
action by or in respect of, or registration or filing with, any federal, state,
municipal, foreign or other governmental department, commission, board, bureau,
agency, instrumentality, court, or authority ("Governmental Body"), other than
(a) any applicable filings with and consents and/or approvals of state security
commissions under state securities laws or similar laws and (b) such other
consents, approvals, permits, authorizations, notifications or filings, the
failure of which to obtain or make would have a Material Adverse Affect on
InterWireless or materially adversely affect the ability of InterWireless to
perform its obligations set forth herein or to consummate the transactions
contemplated hereby.
Section 2.7 No Violations. Except as disclosed on the InterWireless
Disclosure Schedule, the execution, delivery and performance of this Agreement
by InterWireless, the consummation by InterWireless of the transactions
contemplated hereby or compliance by InterWireless with any of the provisions
hereof does not and will not (a) conflict with or result in any breach or
violation of any provision of the Articles of Incorporation or Bylaws (or
similar charter documents) of InterWireless, (b) result in a default, or give
rise to any right of termination, cancellation or acceleration or loss of any
material benefit (with or without the giving of notice or lapse of time or
both), or require the consent, approval, waiver or other action by any person
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, trust (constructive or otherwise), agreement, lease (of real
or personal property) or other instrument or obligation to which InterWireless
is a party or by which InterWireless may be bound, (c) result in the creation or
imposition of any claim, lien, pledge, security interest, obligation,
restriction or other encumbrance on any of the property of InterWireless, or (d)
to the best knowledge of InterWireless, violate any judgment, order, writ,
injunction, decree, statute, rule or regulation applicable to InterWireless,
subject to actions required under certain of InterWireless' existing credit
arrangements. Reference to InterWireless in this Section 2.7 includes any of its
Subsidiaries.
Section 2.8 Financial Statements. The consolidated financial statements,
financial statement schedules and notes to such financial statements and
schedules of InterWireless for the year ended December 31, 1999, and the three
months ended March 31, 2000, for InterWireless and separately for each of its
Subsidiaries ("InterWireless Financial Statements"), are, to the best knowledge
of InterWireless, complete and correct and were prepared in accordance with
generally accepted accounting principles applied on a consistent basis except as
noted in the InterWireless Disclosure Schedule, and fairly present the
information purported to be shown therein. All such InterWireless Financial
Statements have been prepared from the books and records of InterWireless, which
accurately and fairly reflect the transactions and dispositions of the assets of
InterWireless, to the best knowledge of InterWireless. To the best knowledge of
InterWireless, InterWireless does not have any liabilities, contingent or
otherwise, whether due
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or to become due, other than as indicated on the latest balance sheet ("Latest
InterWireless Balance Sheet") included in the InterWireless Financial Statements
or as otherwise indicated in this Agreement or the InterWireless Disclosure
Schedule. InterWireless has accrued all employee benefit costs required to be
accrued and such accrual is reflected in the balance sheets included in the
InterWireless Financial Statements.
Section 2.9 Title to and Condition of Assets and Property. All property
used in the business of InterWireless that is listed on the InterWireless
Disclosure Schedule is, or will be at the Effective Date, reflected as assets on
the books and records of InterWireless or is leased by InterWireless. A list of
all such property, real, personal or intangible, has been provided to eSat. At
the Effective Date, none of such property will be owned by any Owner or any
entity (other than InterWireless or a Subsidiary). InterWireless has, or at the
Effective Date will have, good and marketable title to any and all assets
reflected in the InterWireless Financial Statements or InterWireless' other
books and records which are currently, or will be at the Effective Date, owned
and used in the operation of its businesses, and such assets are, or will be at
the Effective Date, free and clear of all liens, claims, charges, security
interests, options, or other title defects or encumbrances, except as set forth
in the InterWireless Disclosure Schedule. The InterWireless Disclosure Schedule
further sets forth a description of all real and personal property currently
leased or otherwise occupied or used but not owned by InterWireless, true,
correct and complete copies of which leases and other agreements, including all
amendments and modifications thereto, have previously been delivered to eSat.
Each of the leases is a valid and binding obligation of InterWireless and
neither InterWireless nor, to the best knowledge of InterWireless, the lessor
thereunder is in default under, and no condition exists that with notice or
lapse of time or both would constitute a default under, any such lease.
InterWireless enjoys peaceful and undisturbed possession of its interests under
all such leases. Except as set forth in the InterWireless Disclosure Schedule,
InterWireless does not own any real property or any interest therein. To the
actual knowledge of InterWireless, all personal property set forth in the
InterWireless Disclosure Schedule is owned by InterWireless and, to the actual
knowledge of InterWireless, except as set forth in the InterWireless Disclosure
Schedule, all property owned or leased by InterWireless and reflected on the
InterWireless Financial Statements or located on the premises of InterWireless,
is in good operating condition and repair, ordinary wear and tear excepted, is
suitable for the use to which it is put by InterWireless, is free from defects
other than minor defects that do not interfere with or detract from the use or
value thereof and is presently usable in the ordinary course of the operation of
the business of InterWireless.
Section 2.10 Litigation. Except as disclosed in the InterWireless
Disclosure Schedule, there is no action, order, claim, suit, proceeding,
litigation, investigation, inquiry, review or notice ("Proceeding") pending or
threatened in writing, or to the best knowledge of InterWireless, threatened
verbally, against, relating to or affecting InterWireless or its Subsidiaries,
or any of their respective properties or assets, or any officer or director of
InterWireless or any of its Subsidiaries relating to, or arising from such
person's activities as an officer or director of InterWireless or any of its
Subsidiaries, at law or in equity, before any Governmental Body nor, to the best
of InterWireless' knowledge, is there any basis for commencing a Proceeding that
could have a Material Adverse Affect on InterWireless or any of
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its Subsidiaries. Neither InterWireless nor its Subsidiaries nor any of their
respective properties or assets is specifically by name subject to any currently
existing order, judgment, writ, decree or injunction. Except as disclosed in the
InterWireless Disclosure Schedule, neither InterWireless nor any of its
Subsidiaries is subject to any currently existing Proceeding by any Governmental
Body.
Section 2.11 Absence of Changes. Since the date of the Latest
InterWireless Balance Sheet, except as disclosed in the InterWireless Disclosure
Schedule, the business of InterWireless has been operated in the ordinary course
consistent with past practice and there has not, to the actual knowledge of
InterWireless, been with regard to InterWireless or any of its Subsidiaries (a)
any material adverse change in the business, operations, properties, condition
(financial or otherwise), prospects, assets or liabilities (contingent or
otherwise, whether due or to become due, known or unknown); (b) any dividend
declared or paid or distribution made on capital stock, or any capital stock
redeemed or repurchased; (c) any incurrence of debt with a maturity greater than
one year; (d) any salary, bonus or compensation increases to any officers,
employees or agents; (e) any pending or, to the best knowledge of InterWireless,
threatened litigation or disputes; or (f) any other change in the nature of, or
the manner of conducting, the business, other than changes that neither have
had, nor reasonably may be expected to have, a Material Adverse Affect on
InterWireless or any of its Subsidiaries.
Section 2.12 Undisclosed Liabilities; Commitments. Except as disclosed
in the InterWireless Disclosure Schedule, to the actual knowledge of
InterWireless, neither InterWireless nor any of its Subsidiaries has any debts,
guaranties, liabilities or obligations, whether accrued, absolute, contingent or
otherwise, and whether due or to become due, and, to the actual knowledge of
InterWireless, there is no basis for the assertion against InterWireless or any
of its Subsidiaries of any such debt, guaranty, liability or obligation, (a)
that were not accrued or reserved against in the InterWireless Financial
Statements; (b) that were incurred after the date of the Latest InterWireless
Balance Sheet, other than in the ordinary course of business; or (c) that in the
aggregate have or can reasonably be expected to have a Material Adverse Affect
on InterWireless or any of its Subsidiaries. InterWireless and any of its
Subsidiaries have in all material respects performed all contracts, agreements
and commitments to which it is a party, and there is not, to the actual
knowledge of InterWireless, under any such contracts, agreements or commitments
any existing default or event of default or event which with notice or lapse of
time or both would constitute a default.
Section 2.13 Environmental Matters. Except as disclosed in the
InterWireless Disclosure Schedule, to the best knowledge of InterWireless,
InterWireless and each of its Subsidiaries have duly complied with, their
respective business, operations, assets, equipment, leaseholds and other
facilities are in compliance with the provisions of all federal, state, local
and applicable foreign environmental, health and safety laws, codes and
ordinances and all rules and regulations promulgated thereunder, governing (a)
air emissions, (b) discharges to surface water or ground water, (c) solid or
liquid waste disposal, (d) the use, storage, generation, handling, transport,
discharge, release, or disposal of toxic or hazardous substances or wastes, or
(e) other environmental, health or safety matters, including, without
limitation, the Comprehensive
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Environmental Response Compensation and Liability Act of 1980, 42 U.S.C.
Sections 601 et seq., as amended, the Resource Conservation and Recovery Act, 42
U.S.C. Sections 6901 et seq., as amended, the Federal Water Pollution Control
Act, 33 U.S.C. Sections 1251 et seq., as amended, the Clean Air Act, 42 U.S.C.
Sections 7401 et seq., as amended, the Occupational Safety and Health Act of
1970, as amended ("OSHA"), the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, and other environmental conservation or protection
laws, as well as similar environmental conservation and protection laws of the
foreign jurisdictions in which InterWireless or any of its Subsidiaries have
operations or facilities. There is no Proceeding pending or threatened in
writing or, to the best knowledge of InterWireless, threatened verbally, against
InterWireless or any of its Subsidiaries relating to the environment nor, to the
best knowledge of InterWireless, is there a basis for an assertion against
InterWireless or any of its Subsidiaries of any Proceeding.
Section 2.14 Employee Benefit and Retirement Plans. The InterWireless
Disclosure Schedule contains a list of all collective bargaining agreements, and
all pension, bonus, profit-sharing, stock option or employee welfare agreements
or arrangements to which InterWireless is a party or by which InterWireless is
bound. All are in full force and effect. Except as set forth in the
InterWireless Disclosure Schedule, during the past five years, InterWireless has
not maintained or contributed to any defined benefit pension plans (as defined
in Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) or any multi-employer plans (as defined in Section 3(37)(A)
of ERISA). Each employee benefit plan (as defined in Section 3(3) of ERISA)
(each, an "Employee Benefit Plan" or "Plan") maintained for employees of
InterWireless to which InterWireless has contributed and any related trust
agreement, annuity contract or any other funding or implementing instrument
complies currently in all material respects, as to form, operation and
administration, with the provisions of ERISA, as amended, and all other
applicable laws, rules and regulations and with the Internal Revenue Code of
1986, as amended (the "Code"), where required in order to be tax-qualified under
Section 401(a) or 403(a) and 501(a) of the Code, and, to the best knowledge of
InterWireless, no event has occurred that will cause disqualification of any
such Plan under said Sections. All necessary governmental approvals for the
Employee Benefit Plans have been obtained; each Employee Benefit Plan that is
subject thereto meets the minimum funding standards of Section 302 of ERISA,
Section 412 of the Code and any other applicable law, and no accumulated funding
deficiency, whether or not waived, exists with respect to any such Plan; each
Employee Benefit Plan that is an employee pension benefit plan (as defined in
Section 3(2)(A) of ERISA) has been duly authorized by the Board of Directors of
InterWireless and a favorable determination as to the qualification under the
Code of each such employee pension benefit plan has been made by the Internal
Revenue Service. References to InterWireless in this Section 2.14 include any of
its Subsidiaries.
Section 2.15 Labor Matters. The InterWireless Disclosure Schedule
contains a list of all employment or consulting agreements, collective
bargaining agreements or other contracts with a labor union or other labor or
employee group, noncompetition agreements and confidentiality agreements binding
on InterWireless or any of its Subsidiaries and any of their respective
employees. To the actual knowledge of InterWireless, there are no efforts
presently
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being made or threatened by or on behalf of any labor union with respect to the
employees of InterWireless. To the actual knowledge of InterWireless,
InterWireless is in compliance with all federal, state or other applicable laws,
domestic or foreign, regarding employment and employment practices, terms and
conditions of employment and wages and hours, and has not and is not engaged in
any unfair labor practice. No unfair labor practice complaint against
InterWireless is pending or, to the actual knowledge of InterWireless is
threatened in writing or verbally, before the National Labor Relations Board or
similar foreign agency. There is no labor strike, dispute, slowdown or stoppage
pending or threatened against or involving InterWireless. No representation
question exists respecting the employees of InterWireless. No employment-related
grievance or internal or informal complaint or liability with respect to the
termination of any employee, consultant or agent exists or, to the actual
knowledge of InterWireless, is threatened. No arbitration proceeding arising out
of or under any collective bargaining agreement is pending and no claim therefor
has been asserted. No collective bargaining agreement is currently being
negotiated by InterWireless, and InterWireless has not experienced any material
labor difficulty. There has not been any adverse change in relations with
employees of InterWireless as a result of any announcement or consummation of
the transactions contemplated by this Agreement. InterWireless has received no
notice that any employee of InterWireless is in violation of any term of any
employment contract, or any other contract or agreement with or any restrictive
covenant or any other common law obligation to a former employer relating to the
right of any such employee to be employed by InterWireless because of the nature
of the business conducted or to be conducted by InterWireless or to the use of
trade secrets or proprietary information of others, and the employment of
InterWireless' employees does not subject InterWireless to liability in
connection with such covenants or agreements. There is neither pending nor, to
the actual knowledge of InterWireless, threatened, nor, to the actual knowledge
of InterWireless, is there any basis for asserting, a material claim against
InterWireless or any of its Subsidiaries, or any of their respective employees,
based on sexual harassment or employment discrimination laws. There is neither
pending nor, to the actual knowledge of InterWireless, threatened Proceedings
with respect to any contract, agreement, covenant or obligation referred to
above nor, to the actual knowledge of InterWireless, is there any material basis
for asserting the foregoing. Except as set forth in the InterWireless Disclosure
Schedule, InterWireless has not entered into any severance or similar
arrangement with any present or former employee that will result in any
obligation, absolute or contingent, of eSat or InterWireless, to make any
payment to any former employee following termination of employment. References
to InterWireless in this Section 2.15 include each of its Subsidiaries.
Section 2.16 Information for Filings. Except for information that is the
subject of any section of this Article 2, which is expressly subject to any
knowledge qualifier that may be contained in any such section, none of the
information supplied or to be supplied by InterWireless for inclusion, or
included, in any documents to be filed with any regulatory authority in
connection with the transactions contemplated hereby will, at the respective
times such documents are filed with any such regulatory authority, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein not misleading.
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Section 2.17 Taxes. For purposes of this Agreement, "Tax or Taxes" shall
mean any federal, state, local, foreign or provincial income, gross receipts,
property, sales, use, license, franchise, employment, payroll, withholding,
alternative or added minimum, transfer or excise tax, or any other governmental
fee or other like assessment or charge, together with any interest or penalties.
All Taxes that are due and payable, other than those presently payable without
penalty or interest, have been timely paid, and InterWireless has timely filed
(and, through the Effective Date, will timely file) all federal, state, foreign
and other tax returns required by law to be filed by it. All such Tax reports or
returns are true, complete and correct in all material respects with regard to
InterWireless for the periods covered thereby. InterWireless is not delinquent
in the payment of any material Tax, there is no Tax deficiency asserted against
InterWireless, and, except as provided above, there is no unpaid assessment,
deficiency or delinquency in the payment of any of the Taxes of InterWireless.
There are no Tax liens upon any properties or assets of InterWireless. No
Internal Revenue Service, state, foreign or local, audit, investigation or
Proceeding against InterWireless is pending or, to the best knowledge of
InterWireless, threatened, and the results of any completed audits are properly
reflected in the InterWireless Financial Statements. InterWireless has not
granted any extension to any taxing authority of the limitation period during
which any Tax liability may be asserted. All monies required for the payment of
taxes not yet due and payable with respect to the operations of InterWireless
through and including the Purchase date have been approved, reserved against and
entered upon the books and InterWireless Financial Statements. All monies
required to be withheld by InterWireless from employees or collected from
customers for income taxes, social security and unemployment insurance taxes and
sales, excise and use taxes, and the portion of any such taxes to be paid by
InterWireless to governmental agencies or set aside in accounts for such purpose
have been approved, reserved against and entered upon the books and
InterWireless Financial Statements. References to InterWireless in this Section
2.17 include each of its Subsidiaries. The InterWireless Disclosure Schedule
contains a list of, and InterWireless has provided eSat with true copies of, the
U.S., state and foreign income tax returns for fiscal years ended December 31,
1999, 1998 and 1997 for InterWireless and each of its Subsidiaries.
Section 2.18 Inventory. No item included in the inventories, materials
or supplies of InterWireless or any of its Subsidiaries is pledged as collateral
or held on consignment from others.
Section 2.19 Proprietary Rights. No item included in the inventories,
materials or supplies of InterWireless or any of its Subsidiaries is pledged as
collateral or held on consignment from others. Except as set forth on the
InterWireless Disclosure Schedule, InterWireless owns or validly licenses the
right to use all technology, proprietary information, know-how, ideas (patented
or unpatented), data, licenses, customer lists, processes, formulas, trade
secrets, telephone numbers, computer software, computer programs, designs,
inventions, trademarks, trademark registrations and applications therefor,
registered and common law copyrights, and registered copyright applications,
trade names (whether or not registered or registerable), service marks, service
▇▇▇▇ registrations and applications therefor (collectively, the "Proprietary
Rights") necessary to conduct the business of InterWireless as the business is
presently being conducted. The InterWireless Disclosure Schedule sets forth a
complete and
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correct list (including, where applicable, registration or application numbers
and dates of filing, renewal and termination) of all Proprietary Rights which
have been protected by a filing or registration with a Governmental Body.
InterWireless shall have, after the Effective Date, the exclusive right to use
the Proprietary Rights as listed in the InterWireless Disclosure Schedule
necessary to continue to conduct the business of InterWireless as the business
is presently being conducted. No consent of any third party will be required for
the use of the Proprietary Rights by InterWireless after the Effective Date. No
claim or opposition has been asserted, or to the best knowledge of
InterWireless, threatened, by any person or entity to the ownership of or
InterWireless' right to use any of the Proprietary Rights or challenging or
questioning the validity or effect of any license or agreement relating thereto,
and, to the best knowledge of InterWireless, there is no basis for any such
claim or assertion. InterWireless has ownership of, or valid licenses to use all
of, the Proprietary Rights. Each of the Proprietary Rights is valid and
subsisting, has not been canceled, abandoned or otherwise terminated. The
Proprietary Rights owned by InterWireless are owned free and clear of all liens,
charges, or encumbrances. Use by InterWireless of the Proprietary Rights will
not, and the conduct of the business as presently conducted does not, infringe
on or violate the rights of any other person or entity. No Proceedings have been
instituted, are pending or are, to the best knowledge of InterWireless,
threatened that challenge or oppose the rights of InterWireless with respect to
any of the Proprietary Rights. InterWireless has not received any notice or
inquiry from any person or entity of any alleged infringement by InterWireless.
InterWireless has not given and is not bound by any agreement of indemnification
in connection with any Proprietary Rights or, except for standard product
warranties, any product or service sold or performed by InterWireless.
InterWireless is not aware of any infringement by others of its Proprietary
Rights. Set forth in the InterWireless Disclosure Schedule is a list of all
confidentiality agreements entered into by InterWireless relating to the
Proprietary Rights and all such contracts are in full force and effect.
References to InterWireless in this Section 2.19 include each of its
Subsidiaries.
Section 2.20 Surety Obligations. Neither InterWireless nor any of its
Subsidiaries is obligated as surety or indemnitor under any surety or similar
bond or other contract issued and none have entered into any agreement to assure
payment, performance or completion of performance of any undertaking or
obligation of any person or entity.
Section 2.21 No Brokers. Except as set forth on the InterWireless
Disclosure Schedule, InterWireless has not employed any broker, agent or finder
or incurred any liability for any brokerage fees, commissions or finders' fees
in connection with the transactions contemplated hereby.
Section 2.22 Records. The respective minute books, books of account,
stock record books and other records of InterWireless, all of which have been or
will be made available to eSat, contain accurate and complete records of all
corporate actions of the shareholders and Board of Directors (and committees
thereof) during the periods of time in which such minute books were maintained.
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Section 2.23 Compliance With Law; Conduct. To the best knowledge of
InterWireless, neither InterWireless nor any of its Subsidiaries has violated or
failed to comply with any statute, law, ordinance, regulation, rule or order of
any foreign, federal, state or local government or agency or any other
Governmental Body, or any judgment, order, writ, injunction or decree of any
court or agency, applicable to its business or operation, except where such
violations or failure to comply would not have a Material Adverse Affect on
InterWireless or any of its Subsidiaries. To the best knowledge of
InterWireless, following the issuance of the FCC licenses set forth on the
InterWireless Disclosure Schedule, InterWireless and its Subsidiaries have all
permits, licenses, authorizations, consents, approvals and franchises from
governmental agencies required to conduct their respective business as now being
conducted.
Section 2.24 Insurance. Contained in the InterWireless Disclosure
Schedule is a complete and accurate description of all insurance maintained with
respect to the assets, properties and business of InterWireless and each of its
Subsidiaries. All of the insurable properties of InterWireless and its
Subsidiaries are insured for InterWireless' benefit under valid and enforceable
policies, and except as disclosed on the InterWireless Disclosure Schedule, are
issued by insurers rated A or better by A.M. Best Company. All premiums and
brokerage commissions owed by InterWireless or its Subsidiaries have been paid
or properly accrued on the InterWireless Financial Statements.
Section 2.25 Receivables. All accounts receivables at March 31, 2000,
and all account receivables since that date have arisen in the ordinary course
of business for products delivered or services rendered. InterWireless is not
aware of any event or condition with respect to a specific customer that causes
it to believe that any such receivable will not be collected in full in due
course without resort to litigation and will not be subject to counter claim or
setoff. The reserves for doubtful accounts reflected on the InterWireless
Financial Statements (if any) have been determined in accordance with generally
accepted accounting principles and past practice consistently applied.
Section 2.26 [Reserved].
Section 2.27 Bank Accounts; Powers of Attorney. The InterWireless
Disclosure Schedule completely and accurately lists the name and address of each
bank, brokerage firm or other financial institution in which InterWireless or
any of its Subsidiaries has an account or possesses a safe deposit box and sets
forth the amount and nature of all cash and cash equivalents contained therein
at March 31, 2000. The InterWireless Disclosure Schedule also lists the names of
all persons authorized to draw thereon, or to have access thereto or to
authorize transactions therein, and the names of all parties, if any, holding
powers of attorney from InterWireless or any of its Subsidiaries with respect
thereto or with respect to any other matter, and the account number of any such
account. Neither InterWireless nor any of its Subsidiaries maintains any
securities or commodity trading account or other brokerage account.
Section 2.28 Product and Service Warranties. Except as disclosed on the
InterWireless Disclosure Schedule, to the best knowledge of InterWireless, there
is no claim against or liability
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of InterWireless or any of its Subsidiaries on account of product or service
warranties or with respect to the manufacture, sale or lease of products or
performance of services, and, to the best knowledge of InterWireless, there is
no basis for any such claim on account of products heretofore manufactured, sold
or leased or services performed.
Section 2.29 Transactions with Affiliates. Except as set forth in the
InterWireless Disclosure Schedule, neither InterWireless nor any of its
Subsidiaries has engaged in any loans, leases, contracts or other transactions
with any director, officer or key employee of InterWireless, or any member of
any such individual's immediate family or any other Affiliate of InterWireless.
As used in this Agreement, "Affiliate" shall mean, with respect to any person or
entity, any other person or entity directly or indirectly controlling,
controlled by, or under direct or indirect common control with, such person or
entity. A person or entity shall be deemed to control another person or entity
if such person or entity possesses, directly or indirectly, the power to direct
or cause the direction of the management and policies of such other person or
entity, whether through the ownership of voting securities, by contract or
otherwise. Except for the loans noted on the InterWireless Disclosure Schedule,
immediately prior to the Effective Date, all advances or loans made by
InterWireless or any of its Subsidiaries to any stockholder, officer, director,
employee, Affiliate or agent of InterWireless or any of its Subsidiaries will
have been repaid in full, with accrued interest to the date of repayment.
Section 2.30 Price and Customer Lists. The InterWireless Disclosure
Schedule sets forth (a) complete and accurate price lists of InterWireless and
each of its Subsidiaries used currently, and (b) a list of InterWireless' and
each of its Subsidiaries' current ten largest customers, as measured by annual
sales volume. To the best knowledge of InterWireless, no material customer
listed in the InterWireless Disclosure Schedule is seeking or presently intends
to seek to terminate its relationship or agreement with InterWireless or that
any such customer will not renew its existing agreement with InterWireless on
the expiration date thereof on terms at least as favorable to InterWireless as
those currently in effect.
Section 2.31 Corrupt Practices. Since the inception of InterWireless, to
the best knowledge of InterWireless, there have been no violations of the
Foreign Corrupt Practices Act or any similar state or federal statute relating
to bribery or similar offenses by InterWireless or any of its agents. To the
best knowledge of InterWireless, neither InterWireless nor any officer,
director, employee or agent of InterWireless (or any person acting on behalf of
any of the foregoing) has since the date of InterWireless' incorporation, given
or agreed to give any gift or similar benefit of more than nominal value to any
customer, supplier, governmental employee or official, or any other person or
entity who is or may be in a position to help or hinder InterWireless or assist
InterWireless in connection with any actual or proposed transaction, which gift
or similar benefit, if not given in the past, would have a Material Adverse
Affect, or which would subject InterWireless to material penalty in any private
or governmental Proceeding. References to InterWireless in this Section 2.31
include each of its Subsidiaries.
Section 2.32 No Default. Neither InterWireless nor any of its
Subsidiaries is in default under, and no condition exists that with notice or
lapse of time or both would constitute a default
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under (a) their respective Articles of Incorporation or Bylaws (or other similar
charter documents); (b) any mortgage, loan, agreement, contract, arrangement,
lease, lease purchase, indenture or other evidences of indebtedness for borrowed
money or other instrument to which InterWireless is now a party or by which
InterWireless or any of its assets is bound; or (c) to the best knowledge of
InterWireless, any judgment, order, writ, injunction, or decree, of any court,
arbitrator, agency, official, authority or other Governmental Body.
Section 2.33 Additional Items Reflected in the InterWireless Disclosure
Schedule. In addition to items and information specifically referred to in
previous sections of this Article 2, the InterWireless Disclosure Schedule
contains a complete and accurate list or brief description of (a) all current or
pending contracts or commitments not previously required to be described in the
InterWireless Disclosure Schedule, written or otherwise, between InterWireless
and any party that involve, in the aggregate, the payment or receipt by
InterWireless of more than $25,000, which cannot be canceled without penalty
upon 30 days' notice, or which otherwise are material to InterWireless; (b) any
compensation, noncompetition, severance, consulting, or confidentiality
agreements between InterWireless and any of its executive officers for the last
two fiscal years and at present not previously required to be described in the
InterWireless Disclosure Schedule; (c) the number and job category of all
current employees of InterWireless, including with respect to key employees,
their names, date of employment, current compensation (including sales
commissions) and date and amount of last increase in compensation; (d) a list of
all leases, contracts or agreements for which consents of any private persons or
public authorities would be required (citing the section(s) thereof requiring
such consents) for the consummation of the transactions contemplated hereby, or
for the preventing of any termination of any material right, privilege, license
or agreement of, or any loss or disadvantage to, InterWireless or eSat upon
consummation of the transactions contemplated hereby; (e) all governmental
licenses and permits relating to the operations of InterWireless and any of its
Subsidiaries; and (f) any arrangements or agreements of InterWireless with its
competitors. References to InterWireless in this Section 2.33 include each of
its Subsidiaries.
Section 2.34 Copies of Documents; Accuracy of Information Furnished.
InterWireless has delivered or made available to eSat complete and accurate
copies of all documents listed on the InterWireless Disclosure Schedule. All of
the exhibits and schedules provided by InterWireless are true, correct and
complete in all material respects and no written representation, warranty or
statement made by InterWireless in or pursuant to this Agreement contains or
will contain any untrue statement of a material fact or omits or will omit to
state any material fact necessary to make such representation, warranty or
statement not misleading to eSat which is seeking complete and accurate
information with respect to InterWireless.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ESAT
Except as set forth in the disclosure schedule delivered to
InterWireless by eSat contemporaneously with the execution hereof (the "eSat
Disclosure Schedule"), eSat hereby
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represents and warrants to InterWireless and the Owners as follows, which
representations and warranties are made as of the date hereof and as of the
Effective Date and shall survive the Effective Date regardless of what
investigations, if any, InterWireless or any of the Owners shall have made prior
hereto:
Section 3.1 Organization; Qualification. ESat is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada. eSat has full corporate power and authority to own and lease all of the
properties and assets it now owns and leases and to carry on its business as now
being conducted. eSat is duly qualified as a foreign corporation and is in good
standing to do business in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure so to qualify would not have a
Material Adverse Affect on eSat.
Section 3.2 Authority Relative to this Agreement. eSat has full
corporate power and authority to execute, deliver and perform this Agreement and
to consummate the transactions contemplated hereby. The execution and delivery
by eSat of this Agreement, and the consummation of the transactions contemplated
hereby, have been duly and validly authorized by the Board of Directors and no
other corporate actions on the part of eSat is necessary with respect thereto.
eSat will take or cause to be taken all corporate action that is necessary to
complete the transactions to be completed by this Agreement. This Agreement has
been duly and validly executed and delivered by eSat and constitutes a legal,
valid and binding obligation of eSat, enforceable against eSat in accordance
with its terms.
Section 3.3 Common Stock. The authorized common stock of eSat consists
of 40,000,000 shares of eSat Common Stock, $0.001 par value per share, of which,
as of April 12, 2000, 19,173,725 shares of eSat Common Stock are validly issued
and outstanding, fully paid and nonassessable.
Section 3.4 [Reserved].
Section 3.5 Governmental Consents and Approvals. Except as set forth on
the eSat Disclosure Schedule, the execution, delivery and performance by eSat of
this Agreement and the consummation of the transactions contemplated hereby by
eSat require no consent, approval, order or authorization of, action by or in
respect of, or registration or filing with, any Governmental Body, court,
agency, or authority, other than (a) any applicable filings with and consents
and/or approvals of the SEC and state securities commissions under state
securities laws and (b) consents, permits, authorizations, notifications or
filings the failure of which to obtain or make would have a Material Adverse
Affect on eSat or have a Material Adverse Affect the ability of eSat to perform
its obligations set forth herein or to consummate the transactions contemplated
hereby.
Section 3.6 No Violations. Except as set forth on the eSat Disclosure
Schedule, the execution, delivery and performance of this Agreement by eSat, the
consummation by eSat of the transactions contemplated hereby or compliance by
eSat with any of the provisions hereof does not and will not (a) conflict with
or result in any breach or violation of any provision of the
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Articles of Incorporation or Bylaws of eSat, (b) result in a default, or give
rise to any right of termination, cancellation or acceleration, or loss of any
material benefit (with or without the giving of notice or lapse of time or
both), or require the consent, approval, waiver or other action of any person,
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, trust (constructive or otherwise) agreement, lease or other
instrument or obligation to which eSat is a party or by which eSat or any of its
Subsidiaries may be bound other than that which has been or will be obtained,
(c) result in the creation or imposition of any claim, lien, pledge, security
interest, obligation, restriction or other encumbrance on any of the property of
eSat, or (d) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to eSat.
Section 3.7 Financial Statements; SEC Reports. Except as set forth on
the eSat Disclosure Schedule, the consolidated financial statements, financial
statement schedules and notes to such financial statements and schedules of eSat
("eSat Financial Statements") contained in eSat's Annual Report on Form 10-K for
the fiscal year ended December 31, 1999, as filed with the SEC ("eSat Form
10-K") are complete and correct and were prepared in accordance with generally
accepted accounting principles applied on a consistent basis except as noted
therein, and fairly present the information purported to be shown therein. All
eSat Financial Statements have been prepared from the books and records of eSat
and its subsidiaries, which accurately and fairly reflect the transactions and
dispositions of the assets of eSat and its subsidiaries. Neither eSat nor any of
its subsidiaries had any material liabilities, contingent or otherwise, whether
due or to become due, known or unknown, other than as indicated on the latest
balance sheets ("Latest eSat Balance Sheet") included in the eSat Financial
Statements. eSat and its subsidiaries have adequately funded all accrued
employee benefit costs and such funding is reflected in the balance sheets
included in the eSat Financial Statements. eSat's Form 10-K and eSat's other
public filings with the SEC are collectively referred to as the "eSat Filings."
Section 3.8 Litigation. Except as disclosed in the eSat Filings or in
the eSat Disclosure Schedule, there is no material Proceeding pending or, to the
knowledge of eSat, threatened against, relating to or affecting eSat, any of its
subsidiaries or any of their respective properties or assets or any officer or
director of eSat or its subsidiaries relating to eSat or its subsidiaries, at
law or in equity, before any Governmental Body nor, to the knowledge of eSat, is
there any basis for asserting the foregoing. Except as disclosed in the eSat
Disclosure Schedule, eSat is not subject to any material Proceeding by any
Governmental Body.
Section 3.9 Information of Filings. None of the information supplied or
to be supplied by eSat for inclusion or included in any documents to be filed
with any regulatory authority in connection with the transactions contemplated
hereby will, at the respective time such documents are filed with such
regulatory authority, be false or misleading with respect to any material fact,
or omit to state any material fact necessary in order to make the statements
therein in light of the circumstances under which they were made, not
misleading.
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Section 3.10 No Brokers. Except for a finder's fee paid to ▇▇▇ ▇▇▇▇▇,
eSat has not employed any broker, agent or finder or incurred any liability for
any brokerage fees, commissions or finders' fees in connection with the
transactions contemplated hereby.
Section 3.11 Copies of Documents; Accuracy of Information Furnished.
eSat has delivered or made available to InterWireless complete and accurate
copies of all documents listed on the eSat Disclosure Schedule. All of the
exhibits and schedules provided by eSat are true, correct and complete in all
material respects and no written representation, warranty or statement made by
eSat in or pursuant to this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
necessary to make such representation, warranty or statement not misleading to
InterWireless or any of the Owners, each of which is seeking complete and
accurate information with respect to eSat and its Subsidiaries.
Section 3.12 Due Diligence of eSat. eSat has not discovered any
information, facts or circumstances in the course of its due diligence with
respect to this Agreement which would lead it to believe that any of the
representations and warranties of InterWireless contained in Article 2 hereof or
the representations and warranties of Owners contained in Article 4 hereof are
inaccurate in any material way.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF OWNERS
Except as set forth in the disclosure schedule delivered to eSat Owners
contemporaneously with the execution hereof (the "Owners Disclosure Schedule"),
Owners hereby represent and warrant to eSat as follows, which representations
and warranties are made as of the date hereof and as of the Effective Date and
shall survive the Effective Date regardless of what investigations, if any, eSat
shall have made thereof prior thereto:
Section 4.1 Title to Shares. Immediately prior to the Effective Date,
collectively, Owners shall be the lawful owners and holders of an aggregate of
10,000 shares of InterWireless Common Stock, and, on the Effective Date, shall
hold all such shares. Each Owner's shares of InterWireless Common Stock are free
and clear of all liens and encumbrances of any kind.
Section 4.2 Authority Relative to this Agreement. This Agreement has
been duly and validly executed and delivered by the Owners and constitutes the
legal, valid and binding obligation of the Owners, enforceable against them in
accordance with its terms, except as enforcement hereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, moratorium or other similar laws
affecting enforcement of creditors' rights generally. The execution, delivery
and performance by the Owners of this Agreement and the consummation of the
transactions contemplated hereby will not violate any provision of any law to
which the Owners are subject nor result in a breach or violation by the Owners
of any of the terms or provisions of, or constitute a default by the Owners
under any note, bond, mortgage, indenture, license, trust (constructive or
other), agreement, lease, or other instrument or obligation to which the Owners
are a party or by which the Owners are bound or by which any of the Owners may
be
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organized. The Owners are not a party to, or subject to, or bound by, any
currently existing order, judgment, injunction, writ or decree of any court or
governmental authority, or any arbitration award that would restrict performance
by the Owners of this Agreement or such other documents or instruments to be
executed or delivered by the Owners in conjunction herewith.
Section 4.3 Transfers to InterWireless. All assets, liabilities and
properties belonging to any of the Owners, any InterWireless Subsidiary, or any
affiliated partnership or limited liability company, that are to be transferred
to InterWireless between the date of this Agreement and the Effective Date are
set forth on the Owners Disclosure Schedule. Except as set forth in the Owners
Disclosure Schedule, such assets and properties will be transferred free and
clear of all liens and encumbrances of whatever kind and nature. The liens and
encumbrances, if any, on such assets or property reflected in the Owner's
Disclosure Schedule are, and at the Effective Date will be, the only liens or
encumbrances relating to such assets or property. The procedures for completing
the transfers are set forth on the Owners Disclosure Schedule.
Section 4.4 Certain Transactions or Arrangements. Except for agreements
and transactions entered into in connection with this Agreement and except as
set forth in the Owners Disclosure Schedule, the Owners are not presently,
directly or indirectly, a party to any transaction with InterWireless, including
without limitation: (a) any contract, agreement, understanding or commitment or
other arrangement providing for the furnishing of services by, rental of real or
personal property from or otherwise requiring payments to the Owners or any
Affiliate of the Owners; (b) any contract, agreement, understanding, commitment
or other arrangement relating to the employment of the Owners by the Company, or
any bonus, deferred compensation, pension, profit sharing, stock option,
employee stock purchase, retirement or other employee benefit plan; or (c) any
loans or advances to or from InterWireless.
Section 4.5 Investments in Competitors. Except as set forth in the
Owners Disclosure Schedule, the Owners do not own, directly or indirectly, any
interest or have any investment in any corporation, business or other person or
entity that is a competitor or potential competitor of, or that otherwise
directly or indirectly does business with, InterWireless or affiliated entities.
Section 4.6 Representations. The Owners have reviewed the
representations, warranties and statements made by InterWireless in this
Agreement and, subject to the knowledge of qualifiers (if any) made by
InterWireless in those representations and warranties, which shall be equally
applicable to the Owners, such representations and warranties do not contain any
untrue statement of a material fact or omit to state any material fact necessary
to make any such representation, warranty or statement not misleading.
Section 4.7 [Reserved].
Section 4.8 Copies of Documents; Accuracy of Information Furnished. The
Owners have delivered or made available to eSat complete and accurate copies of
all documents listed in the Owners Disclosure Schedule. All the exhibits and
schedules provided by the Owners are true, correct and complete in all material
respects and no written representation, warranty or statement made by the Owners
in or pursuant to this Agreement contains or will contain any
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untrue statement of a material fact or omits or will omit to state any material
fact necessary to make such representation, warranty or statement not misleading
to eSat who are seeking complete and accurate information with respect to the
Owners.
ARTICLE 5
ADDITIONAL AGREEMENTS
Section 5.1 Conduct of Business of InterWireless. After the date hereof
and prior to the Effective Date, InterWireless shall conduct its operations
according to its normal course of business to preserve intact its business
organization, use reasonable efforts to keep available the services of their
officers and employees, use reasonable efforts to preserve and maintain
satisfactory relationships and goodwill with licensors, suppliers, dealers,
customers and all others having business relationships with them, pay the
suppliers, vendors and taxing authorities of InterWireless in accordance with
its usual business practices and in a timely fashion and continue to service and
maintain all of its assets in a manner consistent with past practice.
Section 5.2 Issuance of Options. eSat agrees to issue the Owners an
aggregate of 1,000,000 options to purchase eSat common stock to be issued in
connection with the Owners' employment by eSat after the Effective Date.
Section 5.3 Forbearances by InterWireless. Except as contemplated by
this Agreement, neither InterWireless nor any of its Subsidiaries shall, after
the date hereof and prior to the Effective Date, without the prior written
consent of eSat;
(a) issue additional capital stock or any additional securities
or obligations convertible into or exchangeable for, or giving any person any
right to acquire, capital stock;
(b) acquire any shares of its capital stock;
(c) declare or pay any dividend;
(d) issue any stock options, stock appreciation rights, warrants
or any other rights relating to their respective securities;
(e) sell (i) any assets not in the ordinary course of business or
(ii) any assets whether or not in the ordinary course of business for an amount
greater than $25,000 except for invoiced sales of inventory previously disclosed
in writing to eSat;
(f) issue or incur additional debt for borrowed money;
(g) mortgage, pledge or otherwise encumber any of their
respective properties or assets;
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(h) make any investment in third parties or assets of a capital
nature either by purchasing stock, securities or assets, contributing to
capital, transferring property or otherwise making any investment;
(i) make any commitments in excess of $25,000 for capital
expenditures or other commitment or transaction;
(j) increase in any manner, whether by bonus or otherwise, the
compensation of any of their respective officers or employees;
(k) amend their respective Articles of Incorporation or Bylaws
(or similar charter documents) except as may be necessary to facilitate the
consummation of the transactions contemplated by this Agreement;
(l) undertake any action that will cause InterWireless to have
negative working capital, as determined by generally accepted accounting
principles; or
(m) enter into any agreement to do any of the things described in
clauses (a) through (l) above.
Section 5.4 No Solicitation. Through the Effective Date, InterWireless,
its officers and directors and the Owners will not, nor permit any of their
respective officers, employees, agents or representatives (including, without
limitation, investment bankers, attorneys and accountants) to, directly or
indirectly (a) solicit, initiate or encourage submission of proposals or offers
by, or (b) furnish any information with respect to or otherwise cooperate in any
way with, or participate in any discussions or negotiations with, any
corporation, partnership, person or other entity or group ("Person") with
respect to any proposal regarding the acquisition or purchase of all or a
material portion of the assets of, or any equity interest in, InterWireless, or
any business combination with InterWireless. InterWireless and/or the Owners
shall promptly notify eSat if any such proposal or offer, or any inquiry or
contact with any Person with respect thereto, is made and shall, in any such
notice, indicate in reasonable detail the identity of the offeror and the terms
and conditions of any such proposal.
Section 5.5 Investigation of Business and Properties. Each party hereto
may make or cause to be made such investigation of the business and properties
of the other parties and of their financial and legal condition as such party
deems appropriate or advisable to familiarize himself/itself therewith, provided
such investigation shall not unreasonably interfere with the normal operations
of the other parties.
Section 5.6 Confidentiality. Each party agrees with respect to all
technical, commercial and other information that is furnished or disclosed by
the other parties, whether or not stamped "Confidential" or identified as such
in writing following disclosure, including, but not limited to, information
regarding such party's (and its subsidiaries' and affiliates') organization,
personnel, business activities, customers, subscribers, policies, assets,
finances, costs, sales, revenues, technology, rights, obligations, liabilities
and strategies (the
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"Information"), that, unless and until the transactions contemplated hereby
shall have been consummated, (a) such Information is confidential and/or
proprietary to the furnishing/disclosing party and entitled to and shall receive
treatment as such by the receiving party; (b) the receiving party will hold in
confidence and not disclose or use (except in respect of the transactions
contemplated hereby) any such Information, treating such Information with the
same degree of care and confidentiality as it accords its own confidential and
proprietary information; provided, however, that the receiving party shall not
have any restrictive obligation with respect to any Information that (i) is
contained in a printed publication available to the general public, (ii) is or
becomes publicly known through no wrongful act or omission of the receiving
party, (iii) is known by the receiving party without any proprietary
restrictions by the furnishing/disclosing party at the time of receipt of such
Information, (iv) the use of which is necessary or appropriate in making any
filing or obtaining any consent or approval required for consummation of the
Purchase, or (iv) is required to be furnished or used in connection with any
Proceedings; and (c) all such Information furnished to a party by another,
unless otherwise specified in writing, shall remain the property of the
furnishing/disclosing party and, in the event this Agreement is terminated,
shall be returned to it, together with any and all copies made thereof, upon
written request for such return by it (except for documents submitted to a
governmental agency with the consent of the furnishing/disclosing party or upon
subpoena and that cannot be retrieved with reasonable effort), and each party
shall confirm in writing to the others compliance with any such request. Each
party hereto acknowledges that the remedy at law for any breach by a party of
its obligations under this section is inadequate and that the other parties
shall be entitled to equitable remedies, including injunctive relief, in the
event of breach by any other party.
Section 5.7 Public Announcements. eSat and InterWireless shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to the Purchase, this Agreement or transactions
contemplated hereby, shall not issue any such press release or make any such
public statement prior to such consultation, and shall consult with each other
as to form and substance of other public disclosures related thereto; provided
however, that nothing contained herein shall prohibit either party from making
any disclosure that is required by law. None of the Owners shall make any
announcement with respect to the Purchase, this Agreement or transactions
contemplated hereby, without the express written consent of eSat.
Section 5.8 Agreement to Consummate. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use reasonable
efforts to do all things necessary, proper or advisable under applicable laws
and regulations to consummate and make effective, as soon as reasonably
practicable, the transactions contemplated by this Agreement, including, but not
limited to, the obtaining of all consents, authorizations, orders and approvals
of any governmental commission, board or other regulatory body required in
connection therewith and initiating or defending any legal action that is
necessary or appropriate to permit the transactions contemplated hereby to be
consummated. At any time after the Effective Date, if any further action is
necessary, proper or advisable to carry out the purposes of this Agreement,
then, as soon as is reasonably practicable, each party to this Agreement shall
take, or cause its proper officers to take, such action. No party to this
Agreement shall take or cause to be taken any action that
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would cause the representations or warranties expressed herein to be untrue or
incorrect on the Effective Date.
Section 5.9 [Reserved].
Section 5.10 InterWireless Shareholders' Approval. No later than the
Effective Date, InterWireless shall hold a meeting of its shareholders for the
purpose of voting upon the Purchase. In connection with such meeting,
InterWireless shall mail all required notices and other materials to its
shareholders, and the Board of Directors of InterWireless shall recommend
approval of the matters related to the Merger to be voted upon at such
shareholder meeting and shall use its best efforts to obtain such shareholder
approval. In lieu of such meeting, such approval may be in the form of the
unanimous written consent of the shareholders of InterWireless.
Section 5.11 [Reserved].
Section 5.12 Agreement Regarding Brokers. Each party agrees that it or
he will pay or dispute, and indemnify and hold the other parties harmless from,
any claims of brokers or others for finder's or brokerage fees asserted as a
result of representations by such party to such brokers or others, regardless of
whether the existence of such brokers or others are disclosed herein.
Section 5.13 Notice. InterWireless shall promptly give notice to eSat
and the Owners upon becoming aware of the occurrence or failure to occur, or the
impending or threatened occurrence or failure to occur, of any event that would
cause or constitute, any of InterWireless' representations or warranties being
or becoming untrue. eSat will promptly give notice to InterWireless and the
Owners upon becoming aware of the occurrence or failure to occur, of any event
that would cause or constitute, any of eSat's representations or warranties
being or becoming untrue. Owners will promptly give notice to eSat and
InterWireless upon becoming aware of the occurrence or failure to occur, or the
impending or threatened occurrence or failure to occur, of any event that would
cause or constitute, any of the Owners' representations or warranties being or
becoming untrue.
Section 5.14 Representation, Warranties, and Agreements; Survival. The
representations, warranties and indemnities of InterWireless, eSat and Owners,
contained in this Agreement and any related documents, shall survive for a
period of two years from the Effective Date; provided, however, that the
representations and warranties relating to Section 2.19 shall only survive for a
period of one year from the Effective Date, and the representations and
warranties relating to any Claims (as defined below) relating to the subject
matter of Sections 2.13 and 2.17 shall survive for a period of time equal to the
applicable statute of limitations underlying any action brought by a local,
state or federal agency which gives rise to such Claims. At the end of the
survival period of the representations and warranties of InterWireless and
Owners, eSat shall, without further action, be deemed to have fully released
InterWireless and Owners from any and all responsibility with respect to a
breach of such representations and warranties (including any obligation under
the indemnification provisions contained in Section 5.15) unless during such
survival period eSat shall have given InterWireless
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and Owners notice of the nature and reasonable particulars under the then
existing circumstances of any claimed breach by InterWireless and/or Owners. At
the end of the survival period of representations and warranties of eSat, Owners
shall, without further action, be deemed to have fully released eSat from any
and all responsibility with respect to a breach of such representations and
warranties (including any obligation under the indemnification provisions
contained in Section 5.15) unless during such survival period Owners shall have
given eSat notice of the nature and reasonable particulars under the then
existing circumstances of any claimed breach by eSat and the basis therefor. The
obligations, covenants and agreements of InterWireless, Owners and eSat
contained in this Agreement and any related documents shall survive the Closing.
The representations, warranties, obligations, covenants, indemnities and
agreements shall not be affected by, and shall remain in full force and effect
notwithstanding, any investigation at any time made by or on behalf of any party
hereto or any information any party may have with respect thereto.
Section 5.15 Indemnification.
(a) Owners Indemnify eSat. To the extent provided in Sections
5.15(d) and (e), Owners, jointly and severally, shall indemnify and hold eSat
harmless from and against, and promptly reimburse eSat for, any and all loss,
expense, damage, deficiency, liability or obligation, including investigative
and settlement costs and attorneys' fees (collectively, "Claims"), arising out
of or in connection with any breach of representation or warranty of
InterWireless or Owners contained in Article 2 hereof or in any certificate
delivered pursuant hereto, regardless of whether eSat relied upon the truth of
such representation or warranty; provided that in connection with any Claim
pertaining to tax liabilities of InterWireless, eSat shall, prior to asserting
such Claim: (i) notify the Owners promptly upon receipt by eSat and/or
InterWireless of the demand, levy or assertion of claim from the applicable tax
authority which gives rise to the eSat Claim, and (ii) exercise best efforts to
contest such demand, levy or assertion of claim. To the extent provided in
Sections 5.15(d), each Owner, individually, shall indemnify and hold eSat
harmless from and against, and promptly reimburse eSat for any Claim arising our
out of or in connection with any breach of representation or warranty of Owner
contained in Article 4 hereof or in any certificate delivered pursuant hereto,
regardless of whether eSat relied upon the truth of such representation or
warranty or had knowledge of any breach thereof. In computing the amount to be
paid by Owners under this Section 5.15(a), there shall be deducted an amount
equal to any tax benefits actually received by eSat, InterWireless or any of its
Subsidiaries, taking into account the income tax treatment of the receipt of
such indemnity payment.
(b) eSat Indemnifies Owners. eSat shall indemnify and hold each
of the Owners harmless from and against, and promptly reimburse each of the
Owners for, any and all loss, expense, damage, deficiency, liability or
obligation, including investigative and settlement costs and attorneys' fees,
arising out of or in connection with any breach of representation or warranty of
eSat contained in Article 3 hereof or in any certificate delivered pursuant
hereto, regardless of whether any of the Owners relied upon the truth of such
representation or warranty.
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(c) Procedure for Indemnification. Upon receipt by a party
entitled to indemnification hereunder (the "Indemnified Party") of notice of any
situation, event or occurrence that might give rise to a claim for
indemnification of such Indemnified Party against any of another party pursuant
to this Section 5.15, the Indemnified Party shall give prompt written notice
thereof to the other party (an "Indemnifying Party"), indicating with reasonable
specificity the nature and amount of such indemnification. Failure to give any
notice provided under this Section 5.15(c) shall in no way be deemed a
forfeiture of the Indemnified Party's rights to be indemnified under Section
5.15. A claim for indemnity may, at the option of the Indemnified Party, be
asserted as soon as any situation, event, or occurrence has been noticed by the
Indemnified Party, regardless of whether actual harm has been suffered or
out-of-pocket expenses incurred. Disputed claims will be resolved pursuant to
Section 5.16.
(d) Indemnification Threshold. eSat will not be eligible to
obtain any indemnification from the Owners hereunder until the aggregate amount
of all losses, expenses, damages, deficiencies, liabilities and other
obligations arising out of or in connection with any breach of representation or
warranty of InterWireless or Owners exceeds $100,000 in the aggregate and then
only for the amount of such excess; provided, however, that, notwithstanding
this Section 5.15(d), eSat shall be immediately indemnified for: (i) all amounts
in excess of $5,000 sustained in connection with the Aquafauna Biomarine, Inc.
litigation listed in Section 2.10 of the InterWireless Disclosure Schedule; and
(ii) all amounts in excess of $20,000 sustained in connection with the
unlicensed use of software described in Section 2.19 of the InterWireless
Disclosure Schedule.
Section 5.16 Resolution of Disputed Claims under Section 5.15. All
disputed claims for indemnification by eSat under Section 5.15 ("Claims") shall
be resolved in accordance with this Section 5.16. All such Claims shall be
resolved under this Section 5.16 upon written notice of each such Claim given by
eSat to the party or parties from whom identification is sought and to the Los
Angeles office of the American Arbitration Association (the "Arbitration
Notice").
(a) Mutual Agreement or Arbitration. In the event of an
Arbitration Notice, the parties agree to first endeavor in good faith to settle
the Claims described therein by mutual agreement, by means of discussions
between ▇▇▇▇▇ Pennells (or, in his absence or unavailability, another
representative of the Owners selected by a majority in interest of the Owners as
of the Effective Date) and a senior executive of eSat . If the parties cannot
mutually agree on the resolution of such Claims within ten days after the
Arbitration Notice, then the Claims shall be resolved by arbitration by a single
arbitrator in accordance with Title 9, Section 1280 et seq. of the California
Code of Civil Procedure, subject to the further conditions and provisions set
forth in Sections 5.16(b) through (d).
(b) Qualifications for Arbitrator. The neutral arbitrator
selected to hear such Claim shall be a neutral businessperson, accountant,
lawyer or judge (active or retired) who lives or works within Los Angeles or
Orange County, California and is experienced in resolving disputes under
acquisition agreements and who will arbitrate the Claims at a reasonable cost
("Experienced Person").
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(c) Selection of Arbitrator. Such Experienced Person shall be
selected by the parties within 15 days after delivery of an Arbitration Notice.
If the parties are unable to agree on a single arbitrator, each party will pick
an Experienced Person within 20 days of the delivery of the Arbitration Notice.
Within ten days of being selected, those two Experienced Persons shall select a
third Experienced Person, which third Experienced Person shall be the single
arbitrator.
(d) Schedule for Arbitration; Location of Arbitration. Within
five business days after his or her selection, the arbitrator shall schedule an
arbitration hearing in Los Angeles County, California to be held not later than
40 days after the Arbitration Notice (or as soon as reasonably practicable
thereafter). The purpose of the hearing shall be to receive testimony and
evidence from the parties with respect solely to the Claims in dispute and to
determine whether such Claims are valid and the amount thereof, if such is in
dispute. The arbitrator shall exercise his or her best efforts to render a
decision within 15 days after the conclusion of the hearing. Such decision shall
be evidenced by an order and shall be issued in writing and shall specify in
reasonable detail the nature of the Claims and the arbitrator's determination as
to the amount thereof. Any decision of the arbitrator shall be final,
non-appealable, binding and conclusive upon the parties hereto and all of the
parties who have been joined in such matter, and a judgment may be entered upon
such decision in accordance with the laws of any applicable jurisdiction.
(e) Discovery. The provisions of Section 1283.5 of the California
Code of Civil Procedure, which provide for discovery, are expressly incorporated
into this Agreement; provided, however, that the arbitrator shall be empowered
to limit discovery for good cause shown and in the interests of justice in order
to assure that the arbitration of the Claim will proceed within the applicable
time period. In that regard, the parties agree to work together in good faith to
arrive at mutually acceptable procedures, and in the event that the parties are
unable to agree, such issues shall be submitted to the arbitrator for his
determination.
(f) Fees and Costs. Each party shall bear its own costs, fees and
expenses of arbitration, including without limitation attorneys' fees and costs
of transcripts, and each party agrees to pay one-half of the compensation to be
paid to the arbitrator in any such arbitration; provided, however, that the
arbitrator shall have the authority to award costs and expenses to the
prevailing party.
Section 5.17 Tax Return Filings.
(a) Owners' Obligations. Owners shall file, or cause to be filed,
on a timely basis and at their sole cost and expense, all tax returns with
respect to InterWireless and its Subsidiaries for tax periods ending prior to or
on March 15, 2000. The Owners agree that, prior to filing any tax returns for
tax periods ending prior to or on March 15, 2000, they will provide copies of
such returns (and all schedules thereto) to eSat and shall permit eSat
sufficient time to review such returns prior to filing.
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(b) eSat Obligations. eSat and its subsidiaries shall file, or
cause to be filed, on a timely basis and at their sole cost and expense all tax
return with respect to InterWireless and its Subsidiaries for tax periods ending
after March 15, 2000.
Section 5.18 Election to Board of Directors. eSat and the Owners
understand and agree that as long as ▇▇▇▇▇ Pennells and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall
remain employed by eSat, eSat shall cause a sufficient number of shares of
InterWireless common stock to be voted such that ▇▇▇▇▇ Pennells and ▇▇▇▇▇▇▇
▇▇▇▇▇▇ shall be members of InterWireless' Board of Directors.
Section 5.19 Condition Subsequent. All parties hereto agree that, as a
condition to the effectiveness of the transactions contemplated hereby, both of
the following must occur: (a) the Merger (as defined in the Agreement and Plan
of Merger and Reorganization of even date herewith by and between eSat, PN
Acquisition Co., PacificNet Technologies, Inc., and the shareholders thereof)
must be effective according to the laws of the State of Nevada; and (b) the
Purchase must have been fully consummated with the payment of all funds and the
transfer of all stock required thereby. The parties agree not to take any action
that would interfere with the successful satisfaction of these conditions. If
either or both of the above-referenced conditions are not satisfied by April 19,
2000, at 5:00 p.m., then, absent mutual agreement to extend such deadline by all
parties hereto, the transactions contemplated by the Stock Purchase Agreement
and the Merger Agreement shall be rescinded.
ARTICLE 6
CONDITIONS PRECEDENT TO CLOSING AND POST-CLOSING COVENANTS
Section 6.1 General Conditions. Consummation of the Purchase shall be
subject to the fulfillment at the Effective Date of each of the following
conditions.
(a) No Injunction. No court having jurisdiction shall have
issued, to the knowledge of eSat, InterWireless or Owners, an injunction
preventing the consummation of the Purchase that shall not have been stayed or
dissolved at the Effective Date.
(b) Corporate and Other Actions. All actions taken or to be taken
in connection with the transactions contemplated hereby, and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
parties and their counsel, and the parties and their counsel shall have received
all such counterpart originals or certified or other copies of such documents as
the parties or their counsel may reasonably request.
(c) Preparation of InterWireless Budget. eSat and InterWireless
shall agree on an operating budget for InterWireless for the 12 months following
the Effective Date. Such budget shall include an estimate of capital needs for
such time period, and the approximate timing for eSat to fund such capital
needs.
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Section 6.2 Conditions to Closing in Favor of InterWireless.
Consummation of the Purchase shall be subject to the fulfillment, to the
satisfaction of InterWireless, or written waiver, at or before the Effective
Date, of each of the following conditions:
(a) Copies of Resolutions of eSat. eSat shall have furnished
InterWireless with copies of resolutions duly adopted by the Board of Directors
of eSat approving the execution and delivery of this Agreement and consummation
of the transactions contemplated hereby, certified as of the Effective Date by
the Secretary or an Assistant Secretary of eSat.
(b) Opinion of Counsel for eSat. eSat shall have furnished
InterWireless with an opinion dated the Effective Date of ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP,
counsel for eSat, in the form attached hereto as Exhibit A.
(c) Representations and Warranties of eSat. The representations,
warranties and statements of eSat contained in this Agreement, the exhibits
hereto and the eSat Disclosure Schedule, shall be complete and accurate as of
the date of this Agreement and shall also be complete and accurate at and as of
the Effective Date, except for changes contemplated by this Agreement, as if
made on the Effective Date; and eSat shall have performed or complied with all
agreements and covenants required by this Agreement to be performed or complied
with by it at or prior to the Effective Date.
(d) eSat Officers' Certificate. eSat shall have delivered to
InterWireless an Officer's Certificate, dated the Effective Date, to the effect
that (i) such officer is familiar with the provisions of this Agreement and (ii)
the conditions specified in Section 6.1 and in paragraph (c) of this Section 6.2
have been satisfied in all material respects.
(e) Governmental Consents, Authorizations, Etc. All material
consents, authorizations, orders or approvals of, and filings or registrations
with, and any permits, licenses or other authorizations required by, any
applicable Governmental Body that are required for, or in connection with, the
execution and delivery of this Agreement by eSat and the consummation by eSat of
the transactions contemplated hereby shall have been obtained or made.
(f) Legislation. No law or legally binding regulation shall have
been enacted that does or would prohibit, restrict or delay consummation of the
Purchase or any of the conditions to the consummation of the Purchase or that
does or would have a Material Adverse Affect on eSat.
(g) Consents. On or before the Effective Date, eSat shall have
obtained all necessary or required consents to the transactions contemplated by
this Agreement or otherwise necessary.
(h) Employment Agreement. eSat shall have entered into employment
agreements with ▇▇▇▇▇ Pennells and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in form and substance mutually
satisfactory to eSat, ▇▇▇▇▇ Pennells and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
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Section 6.3 Conditions to Closing in Favor of eSat. Consummation of the
Purchase shall be subject to the fulfillment, to the satisfaction of eSat, or
written waiver, at or before the Effective Date of the following conditions:
(a) Inspection of Proprietary Rights. InterWireless shall have
furnished eSat for inspection and review all items described or referenced in
the first sentence of Section 2.19 hereof not furnished during eSat's due
diligence investigation.
(b) Shareholder Acknowledgments. InterWireless shall have
furnished eSat with acknowledgment agreements by all InterWireless shareholders
in the form attached hereto as Exhibit B.
(c) Copies of Resolutions of InterWireless. InterWireless shall
have furnished eSat with copies of resolutions duly adopted by the Board of
Directors and shareholders of InterWireless approving the execution and delivery
of this Agreement, and the consummation of the transactions contemplated hereby,
certified as of the Effective Date by the Secretary or an Assistant Secretary of
InterWireless.
(d) Opinion of Counsel for InterWireless. InterWireless shall
have furnished eSat with an opinion dated the Effective Date of ▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, LLP, counsel for InterWireless, in form attached hereto as Exhibit C.
(e) Representations and Warranties of InterWireless and Owners.
The representations, warranties and statements of InterWireless and Owners
contained in this Agreement, the exhibits hereto, the InterWireless Disclosure
Schedule and the Owners Disclosure Schedule shall be complete and accurate as of
the date of this Agreement and shall also be complete and accurate at and as of
the Effective Date, except for changes contemplated by this Agreement, as if
made at and as of the Effective Date; and InterWireless and Owners shall have
performed or complied with all agreements and covenants required by this
Agreement to be performed or complied with by it at or prior to the Effective
Date.
(f) InterWireless Officers' and Owners Certificates.
InterWireless shall have delivered to eSat an Officer's Certificate, dated the
Effective Date, to the effect that (i) such officer is familiar with the
provisions of this Agreement and (ii) the conditions specified in Section 6.1
have been fully satisfied. The Owners shall have delivered to eSat a
Certificate, dated the Effective Date, to the effect that (i) they are familiar
with the provisions of the Agreement and (ii) the conditions specified in
Section 6.1 and in paragraph (e) of this Section 6.3 have been fully satisfied.
(g) Governmental Consents, Authorizations, Etc. All material
consents, authorizations, orders or approvals of, and filings or registrations
with, and any permits, licenses or other authorizations required by, any
applicable Governmental Body that are required for or in connection with, the
execution and delivery of this Agreement by InterWireless and the consummation
by InterWireless of the transactions contemplated hereby shall have been
obtained or made.
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(h) No Dissenters. No Owner has exercised dissenters' rights
under the CGCL.
(i) Legislation. No law or legally binding regulation shall have
been enacted that does or would prohibit, restrict or delay consummation of the
Purchase or any of the conditions to the consummation of the Purchase or that
does or would have a Material Adverse Affect on InterWireless.
(j) Owners Noncompetition Agreements. Each Owner shall have
entered into a noncompetition agreement with eSat in the form attached as
Exhibit D.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER0
Section 7.1 Termination. This Agreement may be terminated at any
time prior to the Effective Date, whether or not stockholder approval has been
received:
(a) by mutual consent of the Boards of Directors of InterWireless
and eSat;
(b) by InterWireless if any representation or warranty of eSat,
or by eSat if any representation or warranty of InterWireless or Owners,
contained herein shall have been incorrect or breached in any material respect,
as to which notice shall have been given to such party, and shall not have been
cured or otherwise resolved to the reasonable satisfaction of the other party on
or before the Effective Date, or by either InterWireless or eSat if any
condition to the consummation of the Purchase that must be fulfilled to its
satisfaction has (in the good faith judgment of its Board of Directors) become
impractical to be fulfilled;
(c) by either InterWireless or eSat if any permanent injunction
or other order of a court or other competent authority preventing the
consummation of the Purchase shall have become final and non-appealable; or
(d) by InterWireless or eSat if the Purchase has not become
effective by April 19, 2000, unless otherwise agreed by both parties; provided,
however, that no party shall be permitted to terminate hereunder if such party
is in violation of this Agreement.
Section 7.2 Effect of Termination. In the event of the termination of
this Agreement as provided herein, this Agreement shall become wholly void and
have no further force and effect except as hereinafter provided; and there shall
be no liability on the part of InterWireless or eSat (or their respective
officers of directors) except to comply with the confidentiality provisions of
Section 5.6 hereof, and except as otherwise provided herein. Nothing contained
herein shall relieve any party from liability for its breach of this Agreement.
Section 7.3 Amendment. This Agreement and the exhibits and schedules
hereto may be amended by the parties hereto at any time prior to the Effective
Date; provided, however, that
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any amendment must be by an instrument or instruments in writing signed and
delivered on behalf of each of the parties hereto.
Section 7.4 Extension; Waiver. At any time prior to the Effective Date,
any corporate party hereto that is entitled to the benefits hereof, by action
taken by its Board of Directors or a duly authorized officer, may (a) extend the
time for the performance of any of the obligations or other acts of any of the
other parties hereto, (b) in whole or in part, waive any inaccuracy in the
representations and warranties of any of the other parties hereto contained
herein or in any exhibit or schedule hereto or in any document delivered
pursuant hereto, and (c) in whole or in part, waive compliance with any of the
agreements of any of the other parties hereto or conditions contained herein.
Any agreement on the part of any party hereto to any such extension or waiver
shall be valid as set forth in an instrument in writing signed and delivered on
behalf of such party.
Section 7.5 Dual Transactions. Reference is made to that certain
Agreement and Plan of Merger and Reorganization of even date by and between
eSat, PN Acquisition Co. and PacificNet Technologies, Inc. (the "Merger
Agreement"). The parties agree that the two agreements and transactions
contemplated thereunder, including all ancillary agreements, are intended to be
indivisible with neither transaction occurring in the absence of the other.
Therefore, a rescission of the transaction contemplated by the Merger Agreement
shall automatically result in a rescission of the transaction contemplated by
this Agreement, and a rescission of the transaction contemplated by this
Agreement shall automatically result in a rescission of the transaction
contemplated in the Merger Agreement.
ARTICLE 8
GENERAL PROVISIONS
Section 8.1 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if and when delivered personally
or transmitted by telex, telecopy or telegram, mailed by registered or certified
mail (return receipt requested) or sent by a recognized next business day
courier to the persons at the following addresses (or at such other address for
a party as shall be specified by like notice):
If to eSat: eSat, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
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Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to InterWireless: InterWireless, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇. ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. David Pennells
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
9100 Wilshire Boulevard
Seventh Floor - West Tower
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Owners: ▇▇▇▇▇ Pennells
InterWireless, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇. ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. David Pennells
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
InterWireless, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇. ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. David Pennells
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
9100 Wilshire Boulevard
Seventh Floor - West Tower
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Section 8.2 Fees and Expenses of the Transaction. eSat shall bear its
own tax, accounting and legal expenses in negotiating, executing and delivering
this Agreement and any related documents and in preparing for the consummation
of the merger (collectively, "Transaction Expenses"). The individual Owners
shall bear the balance of all Transaction Expenses incurred by InterWireless,
any of its Subsidiaries, or any of the Owners, regardless of whether those
Transaction Expenses are invoiced to InterWireless.
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Section 8.3 Interpretation. The headings contained in this Agreement are
for reference purposes only and shall not affect the meaning or interpretation
of this Agreement. Terms such as "herein," "hereof," "hereinafter" refer to this
Agreement as a whole and not to the particular sentence or paragraph where they
appear, unless the context otherwise requires. Terms used in the plural include
the singular, and vice versa, unless the context otherwise requires.
Section 8.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 8.5 Miscellaneous. This Agreement, including the Exhibits and
Schedules hereto, (a) constitutes the entire agreement and supersedes all other
prior agreements and understandings, both written and oral, among the parties,
or any of them, with respect to the subject matter hereof; (b) is not intended
to and shall not confer upon any other person any rights or remedies hereunder
or otherwise with respect to the subject matter hereof, except for rights that
may expressly arise as a consequence of the Purchase; (c) shall not be assigned
by operation of law or otherwise; (d) has been drafted by all of the parties to
this Agreement and should not be construed against any of the parties hereto;
and (e) shall be governed in all respects, including validity, interpretation
and effect by the substantive laws of the State of California without regard to
conflict of law provisions.
Section 8.6 Survival. No investigation by the parties hereto made
heretofore or hereafter shall affect the representations and warranties of the
parties that are contained herein, and each such representation and warranty
shall survive such investigation for the period set forth in Section 5.14.
Section 8.7 Mutual Cooperation. After the Effective Date, the Owners,
InterWireless and its Subsidiaries and eSat and its subsidiaries shall, and
shall cause their agents and employees to, cooperate with each party as
reasonably requested by such party in connection with the prosecution or defense
of any claims or matters relating to InterWireless and its Subsidiaries. Such
cooperation shall include but is not limited to tax matters involving
InterWireless, its Subsidiaries and the Owners. Cooperation shall include making
books and records available and permitting access to employees, the Owners and
other persons. The requesting party shall reimburse the other party for any
out-of-pocket expenses incurred by it in connection with such request.
[BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement or have caused this Agreement to be executed by their duly authorized
officers.
ESAT, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
INTERWIRELESS, INC.
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President
"OWNERS"
/s/ ▇▇▇▇▇ PENNELLS By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------- -------------------------------------
▇▇▇▇▇ Pennells ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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SCHEDULE A
InterWireless Disclosure Schedule
41
SCHEDULE B
eSat Disclosure Schedule
None
2
42
SCHEDULE C
Owners Disclosure Schedule
3