Exhibit 2.1
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ASSET PURCHASE AGREEMENT
by and among
CLARINET, INC.,
AMERICAN TELECONFERENCING SERVICES, LTD.,
and
CLEARONE COMMUNICATIONS, INC.
July 1, 2004
ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT ("Agreement") is made as of the 1st day of
July, 2004 (the "Effective Date"), by and among CLARINET, INC., a Georgia
corporation ("Purchaser"), AMERICAN TELECONFERENCING SERVICES, LTD., a Missouri
corporation d/b/a Premiere Conferencing ("Purchaser's Parent") and CLEARONE
COMMUNICATIONS, INC., a Utah corporation ("Seller"). Capitalized terms not
otherwise defined shall have the meaning ascribed to such terms in Article IX.
WHEREAS, Seller provides, primarily through its Let's Conference suite
of services, conferencing services consisting of: operator assisted and
reservationless audio conferencing services; video conferencing services;
webconferencing services; webcasting services; audio, video and data streaming
services; and certain other services ancillary to the foregoing services,
directly to end users, resellers and agents under various brand names including
INSTANT ACCESS, WEBCAST, WEBSHOW, WEBCOLLABORATE, WEBPRO and VIDEOPRO all as
described more particularly on page 29 of Seller's product catalog version
Rev.2.0 (collectively, the "Conferencing Business").
WHEREAS, Purchaser wishes to purchase from Seller and Seller is willing
to sell to Purchaser, substantially all of the assets of Seller, used in the
Conferencing Business, all on and subject to the terms and conditions set forth
in this Agreement (the "Acquisition").
NOW, THEREFORE, in consideration of the premises and mutual
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Acquired Assets. Subject to the terms and conditions set forth in
this Agreement, at the Closing, Seller shall sell, convey, assign, transfer and
deliver to Purchaser and Purchaser shall accept, purchase, acquire and take
assignment and delivery of, all right, title and interest in, to and under the
assets owned by Seller and used or held for use in the Conferencing Business
(wherever located and whether real or personal, tangible or intangible)
(collectively, the "Acquired Assets") free and clear of all Encumbrances (except
for Permitted Encumbrances), except for the Excluded Assets. The Acquired Assets
include the following:
(a) all right, title and interest under Contracts, including all
Customer Service Contracts and all Contracts with partners and resellers related
to the Conferencing Business;
(b) all accounts receivable, prepaid expenses, trade
receivables, notes receivable, contingent rights, deposits, advances and other
receivables of Seller relating to the Conferencing Business arising on or before
the Effective Date;
(c) all telecommunications access numbers, including "800"
numbers, used or held for use in connection with the Conferencing Business;
(d) all computer equipment, conferencing and conferencing
related equipment, devices, messaging and messaging related equipment (and all
lease rights associated with any such equipment), including data processing
hardware and related telecommunications equipment, media and tools, and any
equipment subject to an operating lease, in each case that is used or held for
use in connection with the Conferencing Business, including the assets
identified on Schedule 1.1(d);
(e) all co-location and related rights used or held for use in
connection with the Conferencing Business, if any;
(f) all Intellectual Property owned by or licensed to Seller and
used or held for use in connection with the Conferencing Business;
(g) all technical and descriptive materials relating to the
acquisition, design, development, use or maintenance of computer code and
program documentation and materials used or held for use in the Conferencing
Business (the "Documentation");
(h) all Contracts respecting the ownership, license,
acquisition, design, development, distribution, marketing, use or maintenance of
computer program code, related technical or user documentation and databases, in
each case used or held for use in the Conferencing Business;
(i) all data and information, in any medium, including
proprietary and confidential information and trade secrets, such as client,
customer, supplier and vendor lists, catalogs, research material, technical
information, source code and object code used or held for use in connection with
any Acquired Assets, and know-how;
(j) all books, records, files, papers, processes, procedures or
software including all software related to full-service audio conference calling
services, on-demand reservationless audio conference calling services, web data,
video and audio conferencing services and audio and video streaming services,
and all delivery platforms, gateways, "on ramp" connections, access points, and
client satisfaction software, whether in hard copy or computer format, used or
held for use in the Conferencing Business (the assets described in paragraphs
(e) thru (j) of this Section 1.1 are collectively referred to as the "Technology
Assets");
(k) all operational data, creative materials, marketing
information, advertising materials, sales and promotional literature, studies,
reports, sales records, sales agent records, manuals and data, sales and
purchase correspondence, personnel and employment records, billing systems,
engineering information, customer files (including customer credit and
collection information), historical and financial records, quality control data
and any files used or held for use in the Conferencing Business although Seller
may maintain copies of the foregoing which shall remain subject to the
confidentiality obligations contained herein;
(l) all office furniture, fixtures and other equipment primarily
used or held for use in the operation of the Conferencing Business, including
the furniture, fixtures and other equipment set forth on Schedule 1.1(l);
(m) all warranties, indemnities or other rights and causes of
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action relating to the Acquired Assets;
(n) all goodwill related to, arising from or used in connection
with the Conferencing Business, including goodwill relating to the Intellectual
Property;
(o) to the extent transferable, all permits, licenses, consents,
approvals, certificates, variances or other authorizations required in
connection with the operation of the Conferencing Business under any Law or
Contract (the "Permits");
(p) any other personal property of Seller as of the Effective
Date that is not an Excluded Asset and that is used or held for use in the
Conferencing Business;
(q) all corporate names and tradenames and marks and URL domain
rights used or held for use in connection with the Conferencing Business, but
excluding the name and ▇▇▇▇ "ClearOne" and all combinations or derivations
thereof; and
(r) any other asset or Contract listed on Schedule 1.1(r).
1.2 Excluded Assets. The following assets of Seller (collectively, the
"Excluded Assets") shall be retained by Seller, and are not being sold or
assigned to Purchaser hereunder:
(a) all corporate names and tradenames, trademarks or service
marks that are used in connection with any of Seller's businesses other than the
Conferencing Business;
(b) notwithstanding anything to the contrary in Section 1.1,
assets of Seller that are used in the Conferencing Business and are specifically
identified in Schedule 1.2(b);
(c) all taxpayer and other identification numbers and minute
books, stock transfer books, tax returns, corporate seals and all other
documents relating to the organization, maintenance, and existence of Seller as
a corporation;
(d) Seller's rights under this Agreement and the agreements to
be executed by Seller in connection herewith;
(e) all cash and cash equivalents of Seller except as reflected
on the Closing Date Balance Statement;
(f) the name and ▇▇▇▇ "ClearOne" and all combinations or
derivations thereof; and
(g) such other assets of Seller that are only of incidental use
in the Conferencing Business and whose exclusion from the Acquired Assets does
not have a materially negative impact on the ongoing conduct of the Conferencing
Business.
1.3 Assumed Liabilities. As part of the consideration for the Acquired
Assets, subject to Section 1.4, at the Closing, Purchaser shall assume the
following liabilities and obligations of Seller to the extent arising from or
related to the Conferencing Business or the Acquired Assets (the "Assumed
Liabilities"):
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(a) all obligations or liabilities of Seller to be performed on
or after the Effective Date under those Contracts or Permits that are Acquired
Assets, in each case solely to the extent legally assigned to Purchaser (other
than with respect to the Restricted Contracts), provided such obligations under
such Contracts or Permits (including the Restricted Contracts), to the extent
required by GAAP, are reflected on the Closing Date Balance Statement and taken
into account in the determination of the Final Net Working Capital.
Notwithstanding the foregoing, obligations or liabilities arising from or
related to any default, breach or violation of any such Contract or Permit
(including Restricted Contracts) on or prior to the Effective Date, will not
constitute a portion of the Assumed Liabilities. The parties acknowledge that
performance obligations not involving payment obligations under Customer Service
Contracts (including the Restricted Contracts) accruing on or after the
Effective Date will not be taken into account in determining Final Net Working
Capital because such obligations are not required to be recognized under GAAP.
The obligation to perform services pursuant to such Customer Service Contracts
that are part of the Acquired Assets shall be included in the Assumed
Liabilities;
(b) accounts payable and accrued expenses, including accrued
salaries, wages, payroll and insurance withholding and accrued vacation
obligations of or with respect to Hired Employees, that are current liabilities
of Seller arising in the ordinary course of the Conferencing Business,
consistent with past practices, in the amounts set forth on Schedule 1.3(b) but
solely to the extent reflected on the Closing Date Balance Statement and taken
into account in the determination of the Final Net Working Capital;
(c) accrued excise and state taxes in the amounts set forth on
Schedule 1.3(c) but solely to the extent reflected on the Closing Date Balance
Statement and taken into account in the determination of the Final Net Working
Capital;
(d) the liabilities listed on Schedule 1.3(d), but solely to the
extent reflected on the Closing Date Balance Statement and taken into account in
the determination of the Final Net Working Capital; and
(e) the liabilities, if any, for WARN Act obligations assumed
pursuant to Section 5.1(g).
1.4 No Other Liabilities Assumed.
(a) Notwithstanding anything in this Agreement to the contrary,
neither Purchaser nor any of its Affiliates shall assume and in no event shall
be deemed to have assumed, any Liability of Seller or any of its Affiliates
whatsoever (collectively, the "Retained Liabilities"), other than as
specifically set forth in Section 1.3. The liabilities retained by Seller are
herein referred to as the Retained Liabilities. Without limiting the generality
of the foregoing, Purchaser is assuming no obligation for, and shall have no
responsibility with respect to, Taxes (other than sales, real estate (to the
extent assumed under the Sublease) and personal property taxes not yet payable
that shall be pro-rated between Purchaser and Seller as of the Effective Date
and those Taxes referenced in Section 1.3(c)), liabilities under Environmental
Laws or Benefit Plans. Except as expressly provided in Section 1.3 or Section
5.1(g), Purchaser shall not assume any Liabilities with respect to any of
Seller's employees, including any Liabilities for employment compensation,
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benefits or severance under any Benefit Plan.
(b) Notwithstanding any other provision of this Agreement, the
obligations of Seller and Purchaser pursuant to this section shall survive the
Effective Date and the transactions contemplated by this Agreement. To the
extent Purchaser pays or satisfies any Retained Liabilities, Seller shall
reimburse Purchaser promptly upon request, except as otherwise specifically
provided herein.
1.5 Procedures for Assets Not Transferable.
(a) Except as otherwise provided in Section 1.5(b), if there are
any Consents that have not yet been obtained (or otherwise are not in full force
and effect) as of the Closing, with respect to any Permits which comprise a
portion of the Acquired Assets or any other property or right included in the
Assumed Liabilities or the Acquired Assets as to which such Consents were not
obtained (or otherwise are not in full force and effect) (collectively, the
"Restricted Assets"), then notwithstanding Section 1.1, Section 1.3 and Section
3.5, neither this Agreement nor the Assignment and Assumption Agreement nor any
other document related to the consummation of the Acquisition shall constitute a
sale, conveyance, assignment, transfer or delivery or an attempted sale,
conveyance, assignment, transfer or delivery of the Restricted Assets, and
following the Closing, the parties shall use commercially reasonable efforts,
and cooperate with each other, to obtain the Consent relating to each Restricted
Assets as quickly as practicable. Pending the obtaining of such Consents
relating to any Restricted Asset, the parties shall cooperate with each other in
any reasonable and lawful arrangements designed to provide to Purchaser the
benefits of use of the Restricted Asset for its term (or any right or benefit
arising thereunder, including the enforcement for the benefit of Purchaser of
any and all rights of Seller against a third party thereunder). Once a Consent
for the sale, conveyance, assignment, transfer and delivery of a Restricted
Asset is obtained, Seller shall (for no additional consideration hereunder)
promptly convey, assign, transfer and deliver such Restricted Asset to
Purchaser, and Purchaser shall assume the obligations under such Restricted
Asset assigned to Purchaser from and after the date of assignment to Purchaser.
(b) If there are any Consents necessary for the assignment and
transfer of any Contracts (other than the Material Customer Contracts) (the
"Nonmaterial Consents") that have not yet been obtained (or otherwise are not in
full force and effect) as of the Closing (the "Restricted Contracts"), Purchaser
shall accept the assignment of such Restricted Contracts, in which case, as
between Seller and Purchaser, such Restricted Contracts shall, to the maximum
extent practicable and notwithstanding the failure to obtain the applicable
Nonmaterial Consent, be transferred at the Closing pursuant to the Assignment
and Assumption Agreement. Following the Closing, the parties shall use
commercially reasonable efforts, and cooperate with each other, to obtain
Consents relating to the Restricted Contracts as quickly as practicable.
1.6 Waiver of Bulk Sales Laws. Purchaser and Seller hereby waive
compliance with the Bulk Sales Laws, and Seller agrees to indemnify and hold
harmless Purchaser and its Affiliates from and against any claims arising out of
or due to the failure to comply with such Bulk Sales Laws.
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ARTICLE II
PURCHASE PRICE
2.1 Purchase Price. The aggregate purchase price for the Acquired Assets
shall be $21,500,000, plus the assumption of the Assumed Liabilities (the
"Purchase Price"), subject to adjustment as provided in Section 2.4.
2.2 Payment of the Purchase Price. The Purchase Price shall be paid by
Purchaser to Seller at the Closing by: (a) assumption of the Assumed
Liabilities; (b) delivery of the Escrow Amount in readily available funds to the
Escrow Agent as provided in Section 2.3; and (c) delivery to Seller of the
Closing Date Adjusted Purchase Price, less the Escrow Amount.
2.3 Escrow. At Closing, Purchaser shall deposit an amount equal to
$1,300,000 (the "Escrow Amount") with an escrow agent jointly selected by
Purchaser and Seller (the "Escrow Agent"), which amount shall be withheld from
the Purchase Price. The parties acknowledge and agree that $300,000 of the
Escrow Amount shall be used for the purpose of securing the post-Closing
purchase price adjustment set forth in Section 2.4 (the "Working Capital Escrow
Amount") and $1,000,000 of the Escrow Amount shall be used for the purpose of
securing the Seller's indemnification obligations pursuant to Section 7.2 (the
"Indemnity Escrow Amount"). The Escrow Amount shall be administered in
accordance with the provisions of an Escrow Agreement in the form attached
hereto as Exhibit A (the "Escrow Agreement"). The Escrow Amount shall be held as
a trust fund and shall not be subject to any lien, attachment, trustee process
or any other judicial process of any creditor of any party and shall be held and
disbursed solely for the purposes and in accordance with the respective terms
thereof.
2.4 Net Working Capital Purchase Price Adjustments. The Purchase Price
shall be subject to adjustment as follows:
(a) At the Closing, Seller shall deliver to Purchaser a
statement of selected balance sheet items (the "Closing Date Balance Statement")
with respect to the Conferencing Business as of the Effective Date, which items
shall be prepared in accordance with GAAP. The Closing Date Balance Statement
shall be accompanied by: (i) all relevant backup materials and schedules along
with a certificate from Seller's Chairman of the Board and Controller or
Principal Accounting Officer certifying as to the reasonableness of the
estimates, all in detail reasonably acceptable to Purchaser; and (ii) a
statement setting forth the calculation of the Closing Date Net Working Capital.
If the Closing Date Net Working Capital is less than the Net Working Capital
Target Amount, the amount of such deficiency shall be deducted from the Purchase
Price at the Closing. The Purchase Price, as adjusted pursuant to this section
shall be deemed to be the "Closing Date Adjusted Purchase Price."
(b) Within ninety (90) days of the Effective Date, Purchaser
will review the Closing Date Balance Statement and the calculation of the
Closing Date Net Working Capital and if Purchaser disputes the calculation of
Closing Date Net Working Capital, Purchaser shall notify Seller in writing (the
"Dispute Notice") of the amount, nature and basis of such dispute. Seller shall
have twenty (20) Business Days from the receipt of the Dispute Notice to dispute
Purchaser's adjustment to the Closing Date Net Working Capital. If Seller fails
to dispute such adjustment, then the adjustment shall be final and conclusive.
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In the event of a dispute, Purchaser and Seller shall first use their diligent
good faith efforts to resolve such dispute between themselves. If the parties
are unable to resolve the dispute within thirty (30) Business Days after
delivery of the Dispute Notice, then any remaining items in dispute shall be
submitted to an independent nationally recognized accounting firm selected in
writing by Purchaser and Seller or, if Purchaser and Seller fail or refuse to
select a firm within ten (10) calendar days after written request therefor by
Purchaser or Seller, such an independent nationally recognized accounting firm
shall be selected in accordance with the rules of the American Arbitration
Association (the "Chosen Firm"). All determinations pursuant to this section
shall be in writing and shall be delivered to the parties. The determination of
the Chosen Firm as to the resolution of any dispute shall be binding and
conclusive upon all parties. A judgment on the determination made by the Chosen
Firm pursuant to this section may be entered in and enforced by any court having
jurisdiction thereover. The fees and expenses of the Chosen Firm in connection
with the resolution of disputes pursuant to this section shall be shared equally
by Purchaser and Seller; provided, however, that if the Chosen Firm determines
that one party has adopted a position or positions with respect to the
calculation of Closing Date Net Working Capital that is frivolous or clearly
without merit, the Chosen Firm may, in its discretion, assign a greater portion
of any such fees and expenses to such party. The final amount of the Closing
Date Net Working Capital as determined pursuant to this section shall be the
"Final Net Working Capital."
(c) Payments on Account of Adjustments. If the Final Net Working
Capital is less than the Closing Date Net Working Capital, then the Escrow Agent
shall pay the difference to Purchaser from the Working Capital Escrow Amount in
accordance with the terms of the Escrow Agreement. If the amount of the
difference between the Final Working Capital and the Closing Date Net Working
Capital exceeds the Working Capital Escrow Amount, then Seller shall immediately
pay such additional amount in cash to Purchaser.
2.5 Method of Payment. The payments being made from one party to another
under this Agreement are being made by wire transfer of immediately available
federal funds in United States dollars to an account previously designated in
writing by the party to receive such payment.
2.6 Allocation of Purchase Price. Within thirty (30) days from the
Effective Date, the parties shall allocate the Purchase Price among the Acquired
Assets and such allocation shall be attached to this Agreement as Schedule 2.6.
Such allocation is intended to comply with the requirements of Section 1060 of
the Internal Revenue Code of 1986, as amended. Seller and Purchaser shall file
Form 8594 with their respective Tax Returns consistent with such allocation. The
parties shall treat and report the transaction contemplated by this Agreement in
all respects consistently for purposes of any Federal, state or local tax,
including the calculation of gain, loss and basis with reference to the Purchase
Price allocation made pursuant to this Section 2.6. The parties shall not take
any action or position inconsistent with the obligations set forth in this
Agreement. Seller agrees to indemnify and hold Purchaser and its Affiliates
harmless and Purchaser hereby agrees to indemnify and hold Seller harmless, from
and against any and all losses, liabilities and expenses (including additional
income taxes and reasonable fees and disbursements of counsel) that may be
incurred by the indemnified party as a result of the failure of the indemnifying
party so to report the sale and purchase of the Acquired Assets as required by
applicable Laws.
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2.7 Taxes. Seller shall pay all Taxes and fees imposed by Governmental
Authorities and required to be paid in connection with or arising from the sale,
transfer, or assignment of the Acquired Assets.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser that the statements
contained in this Article III are true and correct on the Effective Date except
as set forth in the disclosure schedule accompanying this Agreement (the
"Disclosure Schedule"). The Disclosure Schedule will be arranged in paragraphs
corresponding to the numbered paragraphs contained in this Article III.
3.1 Due Incorporation. Seller is a corporation, duly organized and
validly existing and in good standing under the laws of the State of Utah with
all requisite corporate power and authority to own, lease and operate the
Acquired Assets. Seller is duly authorized to do business and in good standing
in each other jurisdiction in which either the nature of the activities
conducted by it or ownership of the Acquired Assets requires it to be so
qualified and where the failure to so qualify would have a Material Adverse
Effect, each of which jurisdiction is set forth on Schedule 3.1.
3.2 Due Authorization. Seller has full corporate power and authority to
enter into this Agreement and to carry out the transactions contemplated hereby.
The execution, delivery and performance of this Agreement have been duly
authorized by all necessary action by the board of directors of Seller
("Seller's Board of Directors") and no other corporate proceedings or actions
(including any action or proceeding by the Seller's shareholders) are required
to carry out the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Seller and constitutes the legal, valid
and binding obligation of Seller, enforceable in accordance with its terms. The
execution, delivery and performance by Seller of this Agreement and all other
instruments, agreements, certificates and documents contemplated hereby: (a) do
not, and will not, violate or conflict with any provision of the articles of
incorporation, bylaws or other governing documents of Seller; (b) except for the
Restricted Contracts requiring the consent to assign of the counterparty(ies)
thereto for the assignment to be lawful, do not, and will not, violate or
constitute a default under any Law or any Contract to which Seller is a party,
or by which it or any of the Acquired Assets are bound; and (c) will not result
in the creation of any Encumbrance upon the Acquired Assets, or permit the
acceleration of the maturity of any indebtedness secured by the Acquired Assets.
No notice to, filing with, authorization of, exemption by, or Consent of any
Person is required in order for Seller to consummate the transactions
contemplated hereby, except as set forth on Schedule 3.2 or as shall have been
obtained on or prior to the Effective Date.
3.3 Capitalization. The authorized capitalization of Seller consist of
50,000,000 shares of common stock, par value $0.001 per share, of which
11,195,619 shares are issued and outstanding.
3.4 No Adverse Change. Except as set forth in Schedule 3.4, since April
30, 2004, the Conferencing Business has been operated only in the usual, regular
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and ordinary course and manner and there has not been any: (a) material loss or
damage or other material adverse change to any of the Acquired Assets (whether
or not covered by insurance); (b) sale, transfer or disposition of any of the
Acquired Assets; (c) Encumbrance placed on any of the Acquired Assets; (d)
change in the accounting systems, tax elections, policies or practices of Seller
related to the Conferencing Business; (e) Contract, with respect to the
Conferencing Business, entered into by Seller other than in the ordinary course
of business; (f) notice of any actual or threatened labor trouble, strike, walk
out, picketing, boycott or other similar occurrence; (g) cancellation, without
fair consideration, of any liability due with respect to the Conferencing
Business; (h) modification, cancellation or termination of any Material Contract
or Material Customer Contract; or (i) any other event that has had a Material
Adverse Effect on the Conferencing Business.
3.5 Title to and Condition of Assets. Seller has good and valid title to
the Acquired Assets (including the assets reflected in the Financial Schedules).
Seller has delivered to Purchaser original title certificates for each
certificated asset, if any, included within the Acquired Assets. Seller hereby
conveys the Acquired Assets to Purchaser and hereby vests in Purchaser good and
valid title to the Acquired Assets (except for the Restricted Contracts
requiring the consent to assign of the counterparty(ies) thereto for the
assignment to be lawful), free and clear of any Encumbrance (including any
finance or equipment lease), except Permitted Encumbrances. Except for the
Excluded Assets, the Acquired Assets include all material assets used in the
Conferencing Business as it is presently conducted and has heretofore been
conducted. The furniture, fixtures and equipment, including all computer
equipment, conferencing and conferencing related equipment, devices, messaging
and messaging related equipment, that are Acquired Assets are in normal
operating condition, reasonable wear and tear excepted.
3.6 Financial Schedules. A true and correct copy of the Financial
Schedules is set forth on Schedule 3.6(a). The Financial Schedules are true,
complete and correct in all material respects, and except as reflected on
Schedule 3.6(b), have been prepared in accordance with GAAP consistently applied
and properly reflect all of the assets and liabilities of the Conferencing
Business as then in existence and fairly present the financial condition of the
Conferencing Business and the results of operations of the Conferencing Business
as of the dates thereof and the periods then ended. The Financial Schedules have
been prepared in accordance with the books and records of Seller and do not
reflect any transactions that are not bona fide.
3.7 Taxes. All Taxes of Seller, which if not properly determined would
create or impose a lien on any Acquired Asset, have been properly determined in
accordance with applicable rules and regulations and have been timely paid in
full if due and if not due will be timely paid when due. Seller has duly and
timely filed all Tax Returns of every nature required to be filed by it, in
every jurisdiction in which the same may have been so required and has paid all
Taxes disclosed on such returns. Each such Tax Return is true and complete and
Seller does not have and will not have any additional Liability with respect to
such Tax Returns which Liability will create or impose a lien on any Acquired
Asset. All Taxes that Seller is required by law to withhold or collect,
including sales and use taxes and amounts required to be withheld for Taxes of
employees, have been duly withheld or collected and, to the extent required,
have been paid over to the proper Governmental Authorities. No material Tax
Return of Seller is under audit or examination, and no written notice of such an
audit or examination has been received by Seller.
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3.8 Agreements.
(a) Schedule 3.8(a)(i) sets forth an accurate and complete list
of all Contracts relating to the Conferencing Business, including all Customer
Service Contracts, debts, loans, security agreements, equipment and other
leases, and identifies the nature of each Contract. Schedule 3.8(a)(ii)
identifies each Material Customer. Seller has delivered to Purchaser true and
complete copies of each Contract listed on Schedule 3.8(a)(i) and Schedule
3.8(a)(ii) and has executed originals of such Contracts. Each such Contract is
in full force and effect and the legal and binding obligation of Seller,
enforceable in accordance with its terms against Seller and the other party
thereto. No event of default by Seller is in effect with respect to any such
Contract or lease, no event of default by the other party or parties to such
Contract or lease exists and no circumstance exists that, with notice or lapse
of time or both, would constitute an event of default by any party thereto.
(b) Certain Material Customers and Nonmaterial Customers listed
on Schedule 3.8(a) have entered into standard terms and conditions agreements
with Seller (the "Standard Terms"), in substantially the form attached as
Exhibit B. Except with respect to pricing, the Standard Terms entered into by
each Material Customer and Nonmaterial Customer does not contain any additional
material terms or material deviations from Exhibit B.
(c) Schedule 3.8(c) sets forth an accurate and complete list of
all employment, consultant or independent contractor agreements and employee,
consultant or independent contractor non-competition or confidentiality
agreements currently in effect relating to the Conferencing Business. Seller has
delivered to Purchaser a true and complete copy of all agreements listed on
Schedule 3.8(c).
3.9 Permits. Seller holds the Permits described on Schedule 3.9 (each of
which is in full force and effect) and no other Permits are necessary for the
lawful operation of the Conferencing Business by Seller or its ownership of the
Acquired Assets. Seller has not received notice of termination, revocation or
modification of any Permit and is not delinquent in the payment of any Taxes or
fees with respect to Seller's Permits. Seller has delivered true, correct and
complete copies of each Permit to Purchaser.
3.10 Litigation. There are no claims, actions, suits, disputes,
proceedings, inquiries or governmental investigations (each, a "Proceeding")
pending or threatened against or affecting the Conferencing Business or any of
the Acquired Assets or relating to the transactions contemplated by this
Agreement. Seller is not named in any order, judgment, decree, stipulation or
consent of or with any Governmental Authority that affects or may affect the
Conferencing Business, the Acquired Assets or the transactions contemplated by
this Agreement. Schedule 3.10 sets forth and describes all Proceedings relating
to the Conferencing Business in the three (3) years prior to the Effective Date.
3.11 Customers. Except as set forth in Schedule 3.11, to Seller's
Knowledge: (i) since April 30, 2004, no Material Customer has discontinued or
materially limited its purchases from or dealings with Seller; and (ii) Seller
has not received written or oral notice from any such Material Customer
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indicating that such Material Customer intends to terminate or materially reduce
its purchases from or dealings with the Conferencing Business in the future.
Seller has no Contracts with any customer of the Conferencing Business that do
not constitute, or are not set forth in, Customer Service Contracts.
3.12 Accounts Receivable; Deferred Revenue. All of the accounts
receivable pertaining to the Conferencing Business are owned by and in the name
of Seller, and Schedule 3.12 sets forth all accounts receivable of the
Conferencing Business outstanding as of the Effective Date, presented on an aged
basis, and separately identifies the name of each account debtor and the total
amount of each related accounts receivable. All of Seller's accounts receivable
represent bona fide amounts owed for products previously delivered or services
previously rendered and none of Seller's accounts receivable represent a billing
for products not yet delivered or services not yet performed. No portion of any
accounts receivable is subject to any counterclaim, defense or setoff or is
otherwise in dispute. Seller has not accepted any prepayment or other payment
for products to be delivered or services to be performed on or after the
Effective Date. Seller does not have any Deferred Revenue.
3.13 Insurance.
(a) Schedule 3.13(a) sets forth a list of all insurance policies
carried by Seller with respect to the Acquired Assets or the Conferencing
Business, and also sets forth an accurate list of all insurance loss runs and
worker's compensation claims received for the most recently ended three (3)
policy years with respect to the Conferencing Business. Summaries of all
insurance policies carried by Seller with respect to the Acquired Assets or the
Conferencing Business that are presently in effect have been provided to
Purchaser and all such insurance policies have been issued by insurers of
recognized responsibility and currently are, and will remain without
interruption through the Effective Date, in full force and effect.
(b) Except as set forth in Schedule 3.13(b), no insurance
carried by Seller with respect to the Acquired Assets or the Conferencing
Business has been canceled by the insurer during the past five (5) years, and
Seller has never been denied insurance coverage with respect to the Acquired
Assets or the Conferencing Business in any material regard or to any material
degree.
3.14 Intellectual Property.
(a) Schedule 3.14 sets forth a complete and correct list of the
Intellectual Property used or held for use in the Conferencing Business and all
licenses or similar agreements or arrangements with respect to the Intellectual
Property used or held for use in the Conferencing Business to which Seller is a
party either as licensee or licensor. Seller owns and possesses all right, title
and interest in and to, or has a valid, enforceable and transferable license to
use, the Intellectual Property and the Intellectual Property constitutes all
intellectual property rights necessary or desirable for the operation of the
Conferencing Business. No claim by any third party contesting the validity,
enforceability, use or ownership of any of the Intellectual Property has been
made or is currently outstanding or, to Seller's Knowledge, is threatened.
Seller has not received any notices of and is not aware of any facts that
indicate a likelihood of any infringement or misappropriation by, or conflict
with, any Person with respect to the Intellectual Property, including any demand
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or request that Seller license rights from, or make royalty payments to, any
Person. To Seller's Knowledge, Seller has not infringed, misappropriated or
otherwise conflicted with any proprietary rights of any third parties and Seller
is not aware of any infringement, misappropriation or conflict that will occur
as a result of the continued operation of the Conferencing Business or the
Acquired Assets.
(b) Procedures for Protection. Seller has taken all necessary
action to maintain, safeguard and protect all of the Intellectual Property and
the trade secrets related to the Conferencing Business, and Seller has taken all
steps required by applicable Law to protect and secure the trade secrets related
to the Conferencing Business.
(c) Personnel Agreements. All personnel, including employees,
agents, consultants and contractors, who have contributed to or participated in
the conception and development of any Acquired Assets or Intellectual Property
on behalf of Seller either: (i) have been party to a "work-for-hire" arrangement
or agreement with Seller, in accordance with applicable Law, that has accorded
Seller full, effective, exclusive and original ownership of all tangible and
intangible property thereby arising; or (ii) have executed appropriate
instruments of assignment in favor of Seller as assignee that have conveyed to
Seller full, effective and exclusive ownership of all tangible and intangible
property thereby arising.
3.15 Environmental Matters. With respect to the Conferencing Business or
the Premises: (a) Seller has not received any notice of any noncompliance with
any Environmental Law or any Liability or remedial or corrective obligation
thereunder or any investigation or proceeding relating thereto; (b) to Seller's
Knowledge, no asbestos-containing materials, polychlorinated biphenyls, other
Pollutants or underground storage tanks have been shipped from, used at,
disposed of on, or are otherwise located at or under the Premises; (c) to
Seller's Knowledge, no property adjacent to the Premises: (i) has been used for
the disposal, processing or treatment of waste or Pollutants or as a dump site;
or (ii) contains, or has contained, any underground storage tanks; and (d) no
facts, events or circumstances with respect to the past or present operations by
Seller or its Affiliates or predecessors on or at the Premises or, to Seller's
Knowledge, the condition or operation of the Premises prior to Seller's
occupancy thereof, would prevent continued compliance with, or give rise to any
material liability (contingent or otherwise) under any Environmental Law.
3.16 Employment Matters.
(a) Schedule 3.16(a) sets forth: (i) all present employees
(including any leased or temporary employees) and independent contractors of
Seller engaged in the Conferencing Business; (ii) each employee's or independent
contractor's current rate of compensation; and (iii) each such employee's
accrued vacation, if applicable. Schedule 3.16(a) also sets forth any employee
engaged in the Conferencing Business who is absent from work due to a
work-related injury, is receiving workers' compensation or is receiving
disability compensation. Except as set forth in Schedule 3.16(a), there are no
unpaid wages, bonuses or commissions owed to any employees or independent
contractors engaged in the Conferencing Business (other than those not yet due
and that have been accrued in the financial books and records of Seller and
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that, to the extent unpaid as of the Effective Date, will be reflected as
accrued expenses on the Closing Date Balance Statement).
(b) Except as set forth in Schedule 3.16(b), Seller: (i) has not
experienced any organized slowdown, organized work interruption, strike or work
stoppage by employees engaged in the Conferencing Business; (ii) is not party
to, nor obligated by, any oral or written agreement, collective bargaining
agreement or other similar agreement, regarding the rates of pay, working
conditions or other terms of employment of any of the employees of Seller
engaged in the Conferencing Business; or (iii) is not obligated under any
agreement or otherwise obligated to recognize or bargain with any labor
organization or union on behalf of any of the employees engaged in the
Conferencing Business.
(c) Except as set forth in Schedule 3.16(c): (i) neither Seller
nor any of its officers, directors, or employees engaged in the Conferencing
Business has been charged or, to the Seller's Knowledge, threatened with, the
charge of any unfair labor practice, grievance, arbitration, negotiation, suit
or action by any employee of Seller engaged in the Conferencing Business or
representative of Seller's employees engaged in the Conferencing Business and no
complaint or charge is pending against Seller before the National Labor
Relations Board or any state or local agency; and (ii) Seller is in compliance
with all Laws concerning the employer-employee relationship and with all
agreements relating to the employment of its employees engaged in the
Conferencing Business, including applicable wage and hour laws, workers'
compensation laws, occupational safety laws, unemployment laws and social
security laws.
(d) Except as set forth in Schedule 3.16(d): (i) all officers,
employees and agents of Seller engaged in the Conferencing Business are
employees at-will, terminable on two weeks notice or less without penalty; and
(ii) there are no outstanding agreements or arrangements with respect to
severance payments with current or former employees of Seller engaged in the
Conferencing Business.
3.17 Compliance with Laws. Seller has complied with all Laws applicable
to the Conferencing Business, the Premises and the Acquired Assets and no claims
have been filed against Seller alleging a violation of any such Laws. Seller has
not given or agreed to give any money, gift or similar benefit to any actual or
potential customer, supplier, government employee, insider or any other Person
to assist or hinder a seller in connection with any actual or proposed
transaction.
3.18 Employee Benefits. Except as set forth in Schedule 3.18, Seller
does not maintain any Benefit Plans, including a welfare plan within the meaning
of Section 3(1) of ERISA or a pension plan within the meaning of Section 3(2) of
ERISA. None of Seller's Benefit Plans is subject to Title IV of ERISA or
constitutes a multi-employer plan, and all of the Benefit Plans comply in form
and have been administered and operated in accordance with all requirements of
applicable Law. There have been no claims against any of Seller's Benefit Plans
in excess of ten thousand dollars ($10,000) during any twelve (12) month period.
3.19 Adequacy of Technology Assets. Except as set forth in Schedule
3.19, the Acquired Assets include the source code (other than source code for
shrink-wrap software generally commercially publicly available), system
documentation, statements of principles of operation and schematics for all
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Technology Assets, as well as any pertinent commentary or explanation that may
be necessary to render such materials understandable and usable by a trained
computer programmer. The Documentation also includes any programs owned or
licensed by Seller (including compilers), "workbenches," tools and higher level
(or "proprietary") languages used for the development, maintenance and
implementation of the Technology Assets.
3.20 Third-Party Components in Software Programs. Seller has validly and
effectively obtained the right and license to the third-party software contained
in the Technology Assets and Documentation pursuant to the Contracts. The
Technology Assets and Documentation contain no other programming or materials in
which any third party may claim superior, joint or common ownership.
3.21 Third-Party Interests or Marketing Rights in Software Programs.
Except as set forth in Schedule 3.21, Seller has not granted, transferred or
assigned any right or interest in the Technology Assets, the Documentation or
the Intellectual Property to any Person. There are no contracts, agreements,
licenses and other commitments and arrangements in effect with respect to the
marketing, distribution, licensing or promotion of the Technology Assets, the
Documentation or Intellectual Property by any salesperson, distributor,
sublicensor or other remarketer or sales organization.
3.22 Competing Conferencing Business Interests. Other than the
Conferencing Business, the Retained Business and as described on Schedule 3.22,
neither Seller nor any of its Affiliates engages in any business activity
relating to full-service audio conference calling, on-demand reservationless
audio conference calling, web data, video and audio conferencing and audio and
video streaming.
3.23 Transactions with Related Parties. Except as set forth in Schedule
3.23, neither Seller nor any employee, officer, director (or immediate family
member of any of the foregoing) or Affiliate of Seller ("Related Parties") has
any interest in any property (whether real, personal or mixed and whether
tangible or intangible) used in or pertaining to the Conferencing Business. No
Related Party owns, of record or as a beneficial owner, an equity interest or
any other financial or profit interest in any Person that has: (a) had business
dealings or a material financial interest in any transaction with Seller other
than business dealings or transactions disclosed on Schedule 3.23, each of which
has been conducted in the ordinary course of business with Seller at
substantially prevailing market prices and on substantially prevailing market
terms; or (b) engaged in competition with Seller with respect to any line of the
products or services of Seller (a "Competing Business") in any market presently
served by Seller, except for ownership of less than one percent (1%) of the
outstanding capital stock of any Competing Business that is publicly traded on
any recognized exchange or over-the-counter market. Except as set forth on
Schedule 3.23, no Related Party is a party to any Contract with, or has any
claim or right against, Seller.
3.24 Disclosure. Neither this Agreement nor any of the Schedules or
Exhibits hereto contains any untrue statement of a material fact or omits a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which they were made, not misleading.
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3.25 Brokers. Seller has not incurred any Liability for brokerage or
finders' fees or agents' commission or other similar payment in connection with
the Acquisition.
3.26 No Limitation. No investigation or due diligence conducted by, or
knowledge obtained by, Purchaser shall limit, modify or negate any of the
foregoing representations and warranties.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser and Purchaser's Parent jointly and severally represent and
warrant to Seller as of the Effective Date as follows:
4.1 Due Incorporation. Purchaser is a corporation duly organized and
validly existing under the laws of the State of Georgia with full corporate
authority to conduct its business as it is now conducted.
4.2 Due Authorization. Purchaser and Purchaser's Parent have the full
power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Purchaser and Purchaser's Parent have been duly authorized by
all necessary corporate action on the part of Purchaser and Purchaser's Parent.
This Agreement has been duly executed and delivered by Purchaser and Purchaser's
Parent and constitutes the legal, valid and binding obligation of Purchaser and
Purchaser's Parent enforceable in accordance with its terms. No notice to,
filing with, authorization of, exemption by or Consent of any Person is required
in order for Purchaser and Purchaser's Parent to consummate the transactions
contemplated hereby, except as shall have been obtained on or prior to the
Effective Date.
4.3 Brokers. Purchaser has not incurred any Liability for brokerage or
finders' fees or agents' commission or other similar payment in connection with
the Acquisition.
ARTICLE V
COVENANTS
5.1 Employees of the Conferencing Business.
(a) Purchaser shall offer employment commencing on the Effective
Date to all employees of Seller who are engaged in the Conferencing Business
(such employees who accept the terms and conditions of such offer and who are
employed by Purchaser are hereinafter referred to as "Hired Employees"). Seller
agrees to terminate or cause to be terminated the employment of such employees
who agree to become Hired Employees effective as of the Effective Date.
Purchaser's offer of employment to each employee that it is required to offer
employment to hereunder shall contain a salary and benefit package which shall
be substantially comparable to such employee's salary, wage and benefits as of
the Effective Date (excluding Seller's stock option plan). All such employees
shall be offered, and, if they become Hired Employees, given, full credit for
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years of service and fractions thereof with Seller for eligibility, vesting and
benefit determination purposes, under non-severance employee benefit plans
maintained by Purchaser, including but not limited to, vacation, medical, dental
and sick pay plans, 401(k) plans and qualified and non-qualified retirement
plans. Such employees shall be offered, and to the extent they become Hired
Employees, shall receive immediate coverage under medical and dental plans of
Purchaser with no waiting period, no requirement of a physical examination or
evidence of insurability and non exclusion of coverage for pre-existing
conditions; provided that such pre-existing conditions are covered by Seller's
medical and dental plans. Except as otherwise provided in this Section 5.1,
Seller shall remain solely responsible for all employees that are not Hired
Employees and all claims related thereto.
(b) Except for accrued salaries of Hired Employees and the other
Assumed Liabilities under Section 1.3, Seller shall pay or shall cause to be
paid (or arrange for its insurance carriers to pay) all amounts due Hired
Employees, through the Effective Date, including amounts due as wages or salary,
on account of severance, health claims, bonus and other benefits for such
employees through the Effective Date when and as the same become due.
(c) The active participation by all Hired Employees in Benefit
Plans of Seller will cease as of the Effective Date. Purchaser will not assume
or continue, and will have no responsibility or Liability to the Hired Employees
or any other Person under or with respect to, any Benefit Plans of Seller.
(d) Seller shall continue to make or shall cause to be made all
required contributions to any Benefits Plan of Seller on behalf of the employees
of the Conferencing Business through and including the Effective Date and will
fully vest the active employees of the Conferencing Business under any such
Benefits Plan who become Hired Employees as of and following the Effective Date.
Seller shall take or shall cause to be taken all actions as of and following the
Effective Date as may be legally required to so vest such employees.
(e) The provisions of this Agreement are for the benefit of
Purchaser and Seller only and no employee of Seller or any other Person shall
have any rights hereunder. Nothing herein expressed or implied shall confer upon
any employee of Seller, any other employee or legal representatives or
beneficiaries thereof, any rights or remedies, including any right to employment
or continued employment for any specified period or to be covered under or by
any employee benefit plan or arrangement, or shall cause the employment status
of any employee to be other than terminable at will.
(f) Seller will be responsible for making continuation coverage
under Code Section 4980B and Sections 601-608 of ERISA ("COBRA") available to
any Hired Employee and any eligible spouse or dependent who experiences a
"qualifying event," as defined in Code Section 4980B(f)(3), before or as of the
Effective Date. Purchaser will be responsible for making continuation coverage
under COBRA available to any Hired Employee and any eligible spouse or dependent
who experiences a "qualifying event," as defined in Code Section 4980B(f)(3),
after the Effective Date. Purchaser will not pay for, fund or subsidize the
purchase of COBRA continuation coverage by or on behalf of any Hired Employee,
spouse or dependent after the Closing.
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(g) Seller shall indemnify Purchaser against liability for all
costs and liabilities arising out of the termination of any of Seller's
employees who are not Hired Employees, including: (i) administration and payment
of severance benefits, if any, and if provided, out placement assistance; (ii)
except as provided otherwise in Section 1.3, accrued salary, wages, vacation and
benefits, whether or not payable under an employment contract or agreement;
(iii) providing COBRA benefits as required under applicable law; and (iv) any
other related obligations; provided, however, that Purchaser will be responsible
for satisfying any and all obligations arising under the WARN Act solely in
connection with the sale of the Conferencing Business and the termination by
Seller of the employees of the Conferencing Business (and only such employees)
pursuant to the closing of the transaction contemplated by this Agreement.
Seller acknowledges that in connection with and pursuant to the Closing, all
employees of the Conferencing Business will be terminated by Seller, and
Purchaser will be responsible for satisfying any and all obligations to them
under the WARN Act. Purchaser shall also indemnify Seller against liability for
all such costs and liabilities of the type described in clauses (i) through (iv)
of this paragraph with respect to all Hired Employees who are terminated after
the Closing to the extent accrued on the Closing Date Balance Statement or
incurred after the Closing.
5.2 Transition Cooperation; Mail Received After Closing.
(a) Seller agrees to cooperate with Purchaser, at Purchaser's
expense, to facilitate the transfer of all utilities servicing the Conferencing
Business into Purchaser's name, including the transfer of any telephone numbers,
electrical service, water and sewage.
(b) Following the Closing, Purchaser may receive and open all
mail addressed to Seller at the Premises that Purchaser reasonably believes
relates to the Conferencing Business, the Acquired Assets or the Assumed
Liabilities, and, to the extent that such mail and the contents thereof relate
only to the Conferencing Business, the Acquired Assets or the Assumed
Liabilities, deal with the contents thereof at its discretion subject to the
terms herein. From and after the Closing, the parties shall promptly forward or
cause to be forwarded to one another a copy of any mail received by them that
relates both to: (i) the Conferencing Business, the Acquired Assets or the
Assumed Liabilities; and (ii) Seller's other businesses.
(c) Following the Closing, Seller hereby grants to Purchaser the
power, right and authority, coupled with an interest, to receive, endorse, cash,
deposit, and otherwise deal with, in the name of Seller, any checks, drafts,
documents and instruments constituting payment of any notes or accounts
receivable included in the Acquired Assets and that are payable to, payable to
the order of, or endorsed in favor of Seller or any agent of Seller. Seller
agrees promptly to endorse and pay over or cause to be endorsed and paid over to
Purchaser, without deduction or offset, the full amount of any such payment
received by Seller after the Closing in respect of goods sold or services
rendered as part of the Conferencing Business.
5.3 Post-Closing Expenses. Seller is responsible for all expenses (other
than those related to Assumed Liabilities) related to the Conferencing Business
and accruing prior to the Effective Date and Purchaser is responsible for all
Assumed Liabilities. Purchaser will forward invoices for expenses before the
Effective Date and Seller shall pay such invoices directly to the payee. In
order to assure Purchaser of no disruption in services, Purchaser will pay any
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invoices which reflect expenses relating to both the period before and after the
Effective Date, however, Seller shall remain obligated for its portion of such
expenses. Before paying any such invoices, however, Purchaser shall upon receipt
of the same, promptly forward a copy of the invoices to Seller at the address
set forth in Section 11.2. If Seller reasonably and in good faith disputes any
claim for payment alleged to be due in the invoice, then within five (5)
business days of its receipt of the same, it may communicate such dispute in
writing to Purchaser. Purchaser shall be free to pay or not pay all of such
invoice, but to the extent it pays any amount which Seller disputes in writing,
it shall only be entitled to reimbursement from Seller if the alleged underlying
obligation is ultimately determined to have been owing pursuant to the
arbitration provisions of Article X, or if compulsory process is necessary to
fully determine the validity of such underlying obligation, by a court of
appropriate jurisdiction. If Purchaser agrees not to pay any such disputed
portion, Seller shall indemnify Purchaser against liability for the same and any
damages suffered by Purchaser as a consequence thereof should it ultimately be
determined in the manner provided above that the disputed portion was in fact
due and owing. Subject to the foregoing, on or before thirty (30) days after the
Effective Date, Purchaser and Seller will provide each other with a list of all
such pro-rated, pre-paid and post-paid expenses. Purchaser and Seller shall
reimburse each other for any amounts due each other at that time and thereafter
within ten (10) days after receipt of proof of payment of any such expenses.
5.4 Payment of Retained Liabilities. Seller shall pay in full, or make
adequate provision for the payment in full of, all Retained Liabilities and
other Liabilities of Seller under this Agreement. If any such Liabilities are
not so paid or provided for, or if Purchaser reasonably determines that failure
to make any payments will impair Purchaser's use or enjoyment of the Acquired
Assets or conduct of the Conferencing Business as previously conducted by Seller
with the Acquired Assets, Purchaser may, at any time after the Effective Date,
elect to make all such payments directly (but shall have no obligation to do so)
and the full amount of all such payments shall be reimbursed to Purchaser from
the Indemnity Escrow Amount. The foregoing notwithstanding, at least five (5)
business days prior to the making of any such payment, Purchaser shall notify
Seller in writing of its intent to make such payment. If Seller reasonably and
in good faith believes that such payment is not owing, then within five (5)
business days of its receipt of the same, it may communicate the same to
Purchaser in writing. Purchaser shall be free to pay or not pay such Liability,
but to the extent it pays any amount which Seller disputes in writing, it shall
only be entitled to reimbursement from Seller if the alleged underlying
obligation is ultimately determined to have been owing pursuant to the
arbitration provisions of Article X, or if compulsory process is necessary to
fully determine the validity of such underlying obligation, by a court of
appropriate jurisdiction. If Purchaser agrees not to pay any such disputed
portion, Seller shall indemnify Purchaser against liability for the same and any
damages suffered by Purchaser as a consequence thereof, should it ultimately be
determined in the manner provided above that the disputed portion was in fact
due and owing.
5.5 Further Assurances. All deliveries, payments and other transactions
and documents relating to the transactions contemplated herein shall be
interdependent and none shall be effective unless and until all are effective
(except to the extent that the party entitled to the benefit thereof has waived
in writing satisfaction or performance thereof as a condition precedent to
Closing). Each party shall, at the request of any other party from time to time
and at any time, whether on or after the Effective Date, and without further
consideration, execute and deliver such deeds, assignments, transfers,
assumptions, conveyances, powers of attorney, receipts, acknowledgments,
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acceptances and assurances as may be reasonably necessary to procure for the
party so requesting, and its successors and assigns, or for aiding and assisting
in collecting and reducing to possession, any and all of the Acquired Assets, or
for the assumption of the Assumed Liabilities, or to otherwise satisfy and
perform the obligations of the parties hereunder. Without limiting the
generality of the foregoing, Seller shall, upon the request of Purchaser, in a
timely manner on and after the Effective Date execute and deliver to Purchaser
such other documents, releases, assignments and other instruments as may be
reasonably required to effectuate completely the transfer and assignment to
Purchaser of, and to vest fully in Purchaser Seller's rights to, the Acquired
Assets.
5.6 Confidentiality and Announcements. Except as and to the extent
required by Law, without the prior written consent of the other party, neither
Purchaser nor Seller shall, and each will direct its respective representatives
not to make, directly or indirectly, any public comment, statement or
communication with respect to, or otherwise disclose or to permit the disclosure
of, the terms of the transaction contemplated by this Agreement. If either
party, in the opinion of outside legal counsel to such party, is required by Law
or the rules of any exchange or the listing rules of the Nasdaq National Market
or any other applicable market, to make any such disclosure, such party must
first provide the other party the content of the proposed disclosure, the
reasons that such disclosure is required by Law and the time and place that the
disclosure will be made. The parties agree to consult with each other to prepare
a mutually acceptable press release to be issued immediately following the
Effective Date and the Closing.
ARTICLE VI
CLOSING
6.1 Closing. The consummation of the transactions contemplated in this
Agreement (the "Closing") will take place at the offices of ▇▇▇▇▇▇▇, ▇▇▇▇▇ &
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ at 6:00
a.m. Salt Lake City, Utah time, on July 1, 2004 or at such other place and time
as the parties have mutually agreed in writing.
6.2 Conditions to Obligation of Purchaser. The obligations of Purchaser
to purchase the Acquired Assets and assume the Assumed Liabilities at the
Closing are subject to the satisfaction of each of the following conditions,
unless explicitly waived by Purchaser in writing:
(a) (i) Seller shall have performed and satisfied in all
material respects each of its obligations hereunder required to be performed and
satisfied at or prior to the Closing;
(ii) each of the representations and warranties of Seller
and contained herein was true and correct in all material respects as of the
Effective Date and is true and correct in all material respects as of the
Effective Date (disregarding for the purposes of the condition set forth in this
Section 6.2(a)(ii) any "Material Adverse Effect" or other "materiality"
qualifier contained in any such representations or warranties); and
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(iii) Purchaser shall have received a certificate signed
by a duly authorized executive officer of Seller to the foregoing effect.
(b) All required Consents from Governmental Authorities for the
transactions contemplated by this Agreement shall have been obtained in form and
substance reasonably satisfactory to Purchaser and its counsel and shall remain
in full force and effect as of the Effective Date.
(c) All required Consents for the transfer of the Material
Customer Contracts shall have been obtained in form and substance reasonably
satisfactory to Purchaser and its counsel, which Consents shall remain in full
force and effect as of the Effective Date.
(d) No temporary restraining order, preliminary or permanent
injunction, cease and desist order or other order issued by any Governmental
Authority of competent jurisdiction or any other legal restraint or prohibition
preventing any transfer contemplated hereby or the consummation of the Closing,
or imposing damages in respect thereto, shall be in effect, and there shall be
no pending or threatened Proceedings by any Governmental Authority or by any
other Person challenging or in any manner seeking to restrict or prohibit the
sale of the Acquired Assets or the consummation of any other transactions
contemplated hereby.
(e) Since the Effective Date, there shall not have been any
event, occurrence, development or state of circumstances or facts or change
(including any damage, destruction or other casualty loss) affecting the
Acquired Assets or the Conferencing Business that has had or that may be
reasonably expected to have, either alone or together with all such events,
occurrences, developments, states of circumstances or facts or changes, a
Material Adverse Effect.
(f) Purchaser shall have received a certificate from the
Secretary or comparable official of Seller, dated as of the Effective Date,
attesting to Seller's Board of Directors resolutions and authorizing the
execution, delivery and performance of this Agreement and the other agreements
contemplated to be executed, performed and delivered by Seller hereunder, and to
the incumbency of the officer(s) executing this Agreement or any other agreement
contemplated hereby on behalf of Seller.
(g) Purchaser shall have received a counterpart of the Escrow
Agreement, duly executed by Seller.
(h) Purchaser and Purchaser's Parent shall have received an
opinion dated as of the Effective Date and addressed to Purchaser and
Purchaser's Parent from ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇, legal counsel for Seller,
substantially in the form attached hereto as Exhibit C.
(i) Purchaser shall have received a ▇▇▇▇ of Sale, in form
attached hereto as Exhibit D, duly executed by Seller (the "▇▇▇▇ of Sale"), and
such other instruments as may be reasonably requested by Purchaser to transfer
full legal and beneficial ownership of the Acquired Assets to Purchaser, free
and clear of Encumbrances other than Permitted Encumbrances.
(j) Purchaser shall have received a counterpart of the
Assignment and Assumption Agreement, in the form attached hereto as Exhibit E,
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duly executed by Seller, whereby Seller will assign, and Purchaser will assume,
the Assumed Liabilities (the "Assignment and Assumption Agreement").
(k) Purchaser shall have received a counterpart of the Sublease
Agreement in the form attached hereto as Exhibit F, duly executed by Seller and
the owner of the Leased Real Property (the "Sublease Agreement").
(l) Purchaser shall have received a counterpart of the
Transition Services Agreement, in the form attached hereto as Exhibit G, duly
executed by Seller (the "Transition Services Agreement").
(m) Purchaser shall have received executed originals or copies
of each Customer Service Contract or other Contract in Seller's possession.
(n) Purchaser shall have received written estoppel certificates,
Consents, waivers and subordination, nondisturbance and attornment agreements,
in form and substance reasonably satisfactory to Purchaser and its counsel, from
all applicable lessors and mortgagees of the Leased Real Property.
(o) Purchaser shall have received evidence reasonably
satisfactory to Purchaser and its counsel that all mortgages, security
interests, collateral assignments and other Encumbrances (other than Permitted
Encumbrances) on any of the Acquired Assets shall have been released, discharged
and terminated in full and the relevant Acquired Assets or other assigned
collateral shall have been returned to the relevant party.
(p) Seller shall have provided Purchaser with any applicable
clearance certificate or similar document(s) that may be required by any
Governmental Authority in order to relieve Purchaser of any obligation to
withhold any portion of the Purchase Price.
(q) Seller shall deliver possession of the Acquired Assets to
Purchaser where such assets are located as of the Effective Date, which shall be
in Salt Lake City, Utah.
(r) Purchaser shall have received all other documents,
instruments and certificates in connection with the transactions contemplated by
this Agreement as Purchaser may reasonably request in form and substance
reasonably satisfactory to Purchaser and its counsel.
6.3 Conditions to Obligation of Seller. The obligations of Seller to
sell the Acquired Assets at the Closing are subject to the satisfaction of each
of the following conditions, unless explicitly waived in writing by Seller:
(a) (i) Purchaser shall have performed and satisfied in all
material respects each of its obligations hereunder required to be performed and
satisfied by it at or prior to the Closing;
(ii) each of the representations and warranties of
Purchaser contained herein was true and correct in all material respects as of
the Effective Date and is true and correct in all material respects at and as of
the Effective Date; and
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(iii) Seller shall have received a certificate signed by
a duly authorized officer or representative of Purchaser to the foregoing
effect.
(b) All required Consents from Governmental Authorities for the
transactions contemplated by this Agreement shall have been obtained in form and
substance reasonably satisfactory to Seller and its counsel and shall remain in
full force and effect as of the Effective Date.
(c) No temporary restraining order, preliminary or permanent
injunction, cease and desist order or other order issued by any court of
competent jurisdiction or any competent Governmental Authority or any other
legal restraint or prohibition preventing any transfer contemplated hereby or
the consummation of the Closing, or imposing damages in respect thereto, shall
be in effect, and there shall be no pending or threatened actions or Proceedings
by any Governmental Authority (or determinations by any Governmental Authority)
or by any other Person challenging or in any manner seeking to restrict or
prohibit the sale of the Acquired Assets or the consummation of any other
transactions contemplated hereby.
(d) Seller shall have received a certificate from the Secretary
or comparable official of each of Purchaser and Purchaser's Parent, dated as of
the Effective Date, attesting to the resolutions of Purchaser and Purchaser's
Parent authorizing the execution, delivery and performance of this Agreement and
the other agreements contemplated to be executed, performed and delivered by
Purchaser and Purchaser's Parent hereunder, and to the incumbency of the
officer(s) executing this Agreement or any other agreement contemplated hereby
on behalf of Purchaser and Purchaser's Parent.
(e) Seller shall have received a counterpart of the Escrow
Agreement, duly executed by Purchaser.
(f) Seller shall have received a counterpart of the Assignment
and Assumption Agreement, duly executed by Purchaser.
(g) Seller shall have received the a counterpart of Sublease
Agreement, duly executed by Purchaser.
(h) Seller shall have received a counterpart of the Transition
Services Agreement, duly executed by Purchaser.
(i) Purchaser shall have tendered payment of the amounts
described in Section 2.2 to Seller.
(j) Seller shall have received an opinion dated as of the
Effective Date and addressed to Seller from ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, legal
counsel for Purchaser, substantially in the form attached hereto as Exhibit H.
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ARTICLE VII
SURVIVAL AND INDEMNIFICATION
7.1 Survival. The representations and warranties of the parties
contained in this Agreement or in any other certificate, report or other writing
delivered pursuant hereto shall survive until eighteen (18) months after the
Effective Date, unless on or before the termination thereof (or of the period
set forth below applicable to certain representations and warranties), the
complaining party notifies the other party in writing of a claim specifying the
factual basis for that claim in reasonable detail; provided, however, that: (a)
the representations and warranties set forth at Sections 3.1, 3.2, 3.5, 4.1 and
4.2 shall survive and shall not expire; and (b) the representations and
warranties set forth in Sections 3.7, 3.15 and 3.18 shall survive until the
ninetieth (90th) day after expiration of the applicable statutes of limitation.
7.2 Indemnification by Seller.
(a) Seller agrees to indemnify and defend Purchaser and its
Affiliates (the "Purchaser Indemnified Parties") against, and agrees to hold
them harmless from, any Losses incurred or suffered by any of the Purchaser
Indemnified Parties relating to or arising out of any of the following:
(i) any breach of or inaccuracy in any representation or
warranty made by Seller pursuant to this Agreement or any certificate, document,
writing or instrument delivered by Seller pursuant to this Agreement;
(ii) any breach of or failure by Seller to perform any
covenant or obligation (including the covenants contained in Article I and
Article V) of Seller set out in this Agreement;
(iii) any contingent or absolute debt, claim, obligation
or other Liability of Seller other than the Assumed Liabilities;
(iv) any past, present or future claim by, on behalf of
or with respect to, and any obligation or Liability or loss relating to, current
or former employees of Seller arising from or related to their employment with
Seller, including termination of their employment with Seller, any claim for
unfair labor practices or any obligation with respect to any Benefit Plan;
(v) any and all Taxes of Seller (including any Taxes owed
by Seller following any Restatement Actions), but excluding Taxes which are to
be pro-rated hereunder and which Purchaser is required to pay;
(vi) any brokerage or finders' fees or commissions or
similar payments based upon any agreement or understanding made, or alleged to
have been made, by any Person with Seller (or any Person acting on its behalf)
in connection with the Acquisition; or
(vii) any violation of the Bulk Sales Laws.
(b) The Purchaser Indemnified Parties shall be entitled to
indemnification under clauses (a)(i) and (a)(ii) of this Section 7.2 only after
the aggregate amount of such Losses exceeds $50,000, at which point the
Purchaser Indemnified Parties shall be entitled to recover the entire amount of
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such Losses from the first dollar (including the first $50,000). In no event
will the limitation in the immediately preceding sentence apply to the Purchaser
Indemnified Parties' right to indemnity under clauses (a)(iii) through (a)(vii)
of this Section 7.2.
(c) Until eighteen (18) months after the Effective Date (the
"Indemnity Period"), the Purchaser may make a claim against the Indemnity Escrow
Amount for indemnification pursuant to this Section 7.2. Upon the expiration of
the Indemnity Period, the Indemnity Escrow Amount (net of any prior
distributions therefrom) shall be disbursed to Seller or its assigns in
accordance with the Escrow Agreement; provided, however, any amount claimed by
Purchaser pursuant to this Article VII shall not be disbursed pending resolution
of the claim in accordance herewith. If Purchaser becomes aware of a claim that
it intends to make against the Indemnity Escrow Amount, Purchaser shall give
Seller prompt notice, in accordance with Section 11.2, of the claim, specifying
the basis therefore ("Escrow Notice"). Seller shall have fifteen (15) Business
Days from the receipt of the Escrow Notice to dispute the claim or cure the
condition for which such claim has been submitted. If Seller fails to cure the
condition or dispute the claim within such fifteen-day period, the claim made by
Purchaser against the Indemnity Escrow Amount shall conclusively be deemed a
liability of Seller and the amount of such claim may be deducted from the
Indemnity Escrow Amount and distributed to the Purchaser pursuant to the terms
of the Escrow Agreement. If Seller disputes such claim within the ten-day
period, and Seller and Purchaser are unable to reach a settlement of such claim
within fifteen (15) days, such dispute shall be resolved by proceedings in
accordance with Article X hereof.
7.3 Indemnification by Purchaser and Purchaser's Parent. Purchaser and
Purchaser's Parent, joint and severally, agree to indemnify and defend Seller
and its Affiliates (the "Seller Indemnified Parties") against, and agree to hold
them harmless from, any Losses incurred or suffered by any of the Seller
Indemnified Parties relating to or arising out of any of the following:
(a) any breach of or any inaccuracy in any representation or
warranty made by Purchaser pursuant to this Agreement or any certificate,
document, writing or instrument delivered by Purchaser pursuant to this
Agreement;
(b) any breach of or failure by Purchaser to perform any
covenant or obligation of Purchaser set out in this Agreement;
(c) the Assumed Liabilities;
(d) any claim by, or on behalf of or with respect to, and any
obligation or Liability or loss relating to, employees of Purchaser employed in
connection with the Conferencing Business and arising after the Effective Date;
(e) any brokerage or finders' fees or commissions or similar
payments based upon any agreement or understanding made, or alleged to have been
made by any Person with Purchaser (or any person acting on its behalf) in
connection with the Acquisition; or
(f) Taxes which are pro-rated to Purchaser hereunder and which
Purchaser is required to pay.
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7.4 Notice of Claims; Assumption of Defense. The indemnified party shall
give prompt notice to the indemnifying party, in accordance with the terms of
Section 11.2, of the assertion of any claim, or the commencement of any suit,
action or proceeding in respect of which indemnity may be sought hereunder,
specifying with reasonable particularity the basis therefor and giving the
indemnifying party such information with respect thereto as the indemnifying
party may reasonably request (but the giving of such notice shall not be a
condition precedent to indemnification hereunder). The indemnifying party may,
at its own expense: (a) participate in; and (b) upon notice to the indemnified
party and the indemnifying party's written agreement that the indemnified party
is entitled to indemnification pursuant to Section 7.2 or Section 7.3 for Losses
arising out of such claim, suit, action or proceeding, at any time during the
course of any such claim, suit, action or proceeding, assume the defense
thereof; provided, that: (i) the indemnifying party's counsel is reasonably
satisfactory to the indemnified party and (ii) the indemnifying party shall
thereafter consult with the indemnified party upon the indemnified party's
request for such consultation from time to time with respect to such claim,
suit, action or proceeding. If the indemnifying party assumes such defense, the
indemnified party shall have the right (but not the duty) to participate in the
defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by the indemnifying party. Whether or not the indemnifying
party chooses to defend or prosecute any such claim, suit, action or proceeding,
the parties hereto shall cooperate in the defense or prosecution thereof. In the
event that the indemnifying party elects not to assume the defense of any claim,
suit, action or proceeding, such election shall not relieve the indemnifying
party of its obligations hereunder.
7.5 Settlement or Compromise. No party shall settle or compromise any
claim, suit, action or proceeding without the prior written consent of the other
party, which shall not be unreasonably withheld or delayed. Any settlement or
compromise made or caused to be made by the indemnified party or the
indemnifying party, as the case may be, of any such claim, suit, action or
proceeding of the kind referred to in Section 7.4 with the consent of the other
party shall also be binding upon the indemnifying party or the indemnified
party, as the case may be, in the same manner as if a final judgment or decree
had been entered by a court of competent jurisdiction in the amount of such
settlement or compromise.
7.6 Liability Limit. Other than in respect of claims arising out of
fraud, intentional misrepresentation, willful misconduct or criminal conduct (in
which case Purchaser and Seller shall have all remedies available at law or in
equity), Purchaser's and Seller's sole remedy hereunder or at law for any loss
shall be to seek indemnification pursuant to this Article VII and no party
hereunder shall be liable to any other party in connection with any claim for
indemnification pursuant to this Article VII for an amount in excess of the
Closing Date Adjusted Purchase Price.
ARTICLE VIII
NON-COMPETITION AND CONFIDENTIALITY
8.1 Acknowledgments and Agreements of Seller.
(a) Except as: (i) may be required by a Governmental Authority
or applicable Law; (ii) is otherwise expressly permitted by this Agreement;
(iii) may be reasonably necessary to permit Seller to wind up any administrative
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matters pertaining to the Conferencing Business and Seller's employees thereof
(the "Administrative Wind-Up"); or (iv) is otherwise expressly permitted in
writing by Purchaser, Seller and its Affiliates shall not, for a period of five
(5) years beginning on the Effective Date (the "Restricted Period"), in any
manner (including electronically, digitally or otherwise) disclose, communicate,
transmit, transfer, duplicate, copy or use in its business any Confidential
Information, which Seller acknowledges is proprietary to and owned solely by
Purchaser, and which shall include the material terms of this Agreement and of
any other instrument or agreement delivered pursuant to this Agreement;
provided, however, that, the foregoing obligations shall extend beyond the
Restricted Period with respect to any Confidential Information that also at that
time constitutes a "trade secret" under applicable Law as long as such
information continues to remain a trade secret. The parties stipulate that
information that is generally known or available to the public or the
conferencing services industry other than as a result of unauthorized or
unlawful disclosure directly or indirectly by Seller or its Affiliates shall not
be deemed to be a "trade secret" or Confidential Information for purposes of
this Agreement. Seller shall deliver to Purchaser at any time Purchaser may
request, all memoranda, notes, plans, records, reports, computer tapes,
printouts and software data and other documents and data (and copies thereof)
embodying Confidential Information or relating to the Conferencing Business
which Seller may then possess or have under its control, subject to Seller's
right to retain copies of the same as may be provided elsewhere herein, solely
in order to enable it to comply with applicable Law, to provide evidence of
compliance with applicable Law, including maintaining complete and accurate
business records, or with respect to the Administrative Wind-Up.
(b) If, at the time of enforcement of this Section 8.1, a court
shall hold that the duration, scope, or any of the other provisions or
restrictions stated herein are unreasonable and therefore unenforceable, the
parties agree that the court should partially enforce the provision or
restriction to the extent necessary to render the provision or restriction
enforceable under applicable Law.
(c) Seller acknowledges and agrees that a remedy at law for any
breach or threatened breach of the provisions of this Section 8.1 would be
inadequate and, therefore, agrees that Purchaser shall be entitled to seek and
obtain injunctive relief in addition to any other available rights and remedies
in case of any such breach or threatened breach; provided, however, that nothing
contained herein shall be construed as prohibiting Purchaser from pursuing any
other rights and remedies available for any such breach or threatened breach.
8.2 Non-Competition; Non-Solicitation.
(a) In consideration of the Purchase Price and the Assumed
Liabilities, during the Restricted Period, Seller and such of its Affiliates
(for so long as they are Affiliates) who are not natural persons shall not,
directly or indirectly, in any capacity (including as a stockholder, proprietor,
partner, joint venturer, member, consultant, trustee, advisor, agent,
contractor, lender, or otherwise):
(i) own any interest in, manage, control, finance, invest
in, consult with, render services for or, subject to Section 8.2(b), engage in
any Business Combination with any business located anywhere that provides in
North America: (A) operator assisted or reservationless audio conferencing
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services; (B) video conferencing services; (C) webconferencing services; (D)
webcasting services; (E) audio, video and data streaming services; or (F) other
services ancillary to the foregoing services, in each case, directly to end
users, distributors, dealers, manufacturers' representatives, installers,
resellers or agents, with such restriction to include Seller's or its
Affiliates' offering any of the foregoing services in connection with the sale
of any hardware, equipment and devices (as described below) other than routine
installation and maintenance substantially as currently conducted by Seller (any
and all such services being the "Restricted Conferencing Business"); provided,
however, the Restricted Conferencing Business shall not include: (x) the sale,
lease or provision to end users, resellers or agents of audio, visual and web
conferencing hardware, software, firmware, equipment and devices, including
audio, visual and web conferencing management and distribution devices,
microphones, speakers, conference phones, cameras, monitors and use of the
foregoing with related conferencing accessories (as long as such sales, leases
or provisions are not in conjunction or in any way associated with the direct
provision of services by Seller or its Affiliates, including as an application
services solutions or managed services solutions provider, that are comprised
within the Restricted Conferencing Business); or (y) the provision of consulting
or other services other than services which are directly provided by Seller or
its Affiliates which are competitive or directly substitutable for the type of
services comprised within the Restricted Conferencing Business. The provisions
of Section 8.2(a)(i)(x) and Section 8.2(a)(i)(y) are referred to collectively as
the "Retained Business."
(ii) except: (A) with respect to the right of Seller and
its Affiliates to engage in the Retained Business; or (B) on behalf of, and at
the direction of, Purchaser or its Affiliates, solicit, divert, sell or accept
any Restricted Conferencing Business involving any of the customers of Seller's
or Seller's Affiliates' Conferencing Business as of the Effective Date or at any
time during the two (2) year period ending on the Effective Date (collectively,
the "Restricted Customers");
(iii) except with respect to the right of Seller and its
Affiliates to engage in the Retained Business, solicit, induce or attempt to
solicit or induce any Restricted Customer, or any supplier, licensee, partner,
licensor, consultant, franchisee of Purchaser or any of its Affiliates to cease
conducting the Restricted Conferencing Business with Purchaser or any of its
Affiliates, or in any way interfere with the Restricted Conferencing Business
relationship between: (A) any such Restricted Customer; or (B) any supplier,
licensee, partner, licensor, consultant, franchisee, and Purchaser or any of its
Affiliates (including making any negative statements or communications about the
Restricted Conferencing Business of Purchaser or any of its Affiliates);
(iv) solicit, induce or conspire with or attempt to: (A)
solicit, induce, or conspire with any employee, officer, contractor or
consultant (collectively, the "Restricted Persons") of Purchaser or of any of
its Affiliates to sever such Person's affiliation with Purchaser or any of its
Affiliates, or to compete against Purchaser or any of its Affiliates, or (B) in
any way interfere with the relationship between Purchaser or any of its
Affiliates and such Person. Solicitations for employment of a general nature
which are not specifically targeted at a Restricted Person shall not violate the
foregoing prohibitions, nor shall the hiring of any non-managerial Restricted
Person who was not specifically targeted violate the foregoing prohibitions.
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(b) Within the three (3) year period beginning on the Effective
Date (the "Business Combination Restricted Period"), if: (i) Seller engages in a
Business Combination; or (ii) a Transferee Affiliate engages in an Affiliate
Business Combination, as a condition to consummation of the Business Combination
or the Affiliate Business Combination, as the case may be, Seller or the
Transferee Affiliate, as the case may be, will cause each Acquiror to agree in
writing with Seller or the Transferee Affiliate, as the case may be (the
"Acquiror Agreement") to be bound, until the expiration of the Business
Combination Restricted Period, by all restrictions of this Article VIII, subject
to the additional terms and conditions set forth in Schedule 8.2(b), and the
Acquiror Agreement will provide that Purchaser is an express third party
beneficiary of Acquiror's agreement to be bound by Article VIII and Schedule
8.2(b). Notwithstanding anything to the contrary in this Agreement, the
provisions of Article VIII and Schedule 8.2(b) may be disclosed to any
prospective Acquiror as reasonably necessary to facilitate the Acquiror's
agreement to be bound by all restrictions of this Article VIII, subject to the
additional terms and conditions set forth in Schedule 8.2(b).
(c) Notwithstanding anything to the contrary in Sections
8.2(a)(i)-(iv) hereof, Seller and its Affiliates shall not be restricted from
being, and shall be entitled to be a passive owner of not more than five percent
(5%) of the outstanding securities of any class of an entity which is publicly
traded, provided that Seller has no active participation in the business of such
entity or any control over such entity.
(d) The covenants in this Section 8.2 are severable and
separate, and the unenforceability of any specific covenant in this Section 8.2
is not intended by any party hereto to, and shall not, affect the provisions of
any other covenant in this Section 8.2. If any court of competent jurisdiction
shall determine that the scope, time, or territorial restrictions set forth in
this Section 8.2 are unreasonable and thus unenforceable, the parties hereto
acknowledge their mutual intention and agreement that those restrictions be
enforced to the extent necessary for the restrictions to meet the legal
requirements for enforceability as determined by the court.
(e) All of the covenants in this Section 8.2 are intended by
each party hereto to be, and shall be construed as, an agreement independent of
any other provision in this Agreement and the existence of any claim or cause of
action of Seller against Purchaser, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by Purchaser of any
covenant in this Section 8.2. It is specifically agreed that the time periods
specified in Section 8.2(a) and Section 8.2(b), including the Restricted Period
and the Business Combination Restricted Period, shall be computed by excluding
from that computation any time during which Seller is in material violation of
any provision of Section 8.2(a) or Section 8.2(b).
(f) Purchaser and Seller hereby agree that this Section 8.2 is a
material and substantial part of this Agreement, and absent Seller agreeing to
be bound by this Section 8.2, Purchaser would not have consummated the
Acquisition.
(g) Because Seller's services have been and are unique and
because Seller has had access to Confidential Information, the parties hereto
agree that money damages would not necessarily be an adequate remedy for any
breach of this Section 8.2. Because of the difficulty in measuring the economic
losses that may be incurred by Purchaser as a result of any breach by Seller of
the covenants in this Section 8.2 and because of the immediate and irreparable
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damage that could be caused to Purchaser for which it would have no other
adequate remedy, Seller agrees that Purchaser may enforce the provisions of this
Section 8.2 by any equitable or legal means, including seeking an appropriate
injunction or restraining order against Seller if a breach of any of those
provisions occurs. Therefore, in the event of a breach or threatened breach of
this Section 8.2, Purchaser or its successors or assigns may, in addition to
other rights and remedies existing in their favor, apply to any court of
competent jurisdiction for specific performance and/or injunctive or other
relief (temporary and/or permanent), in order to enforce, or prevent any
violations of, the provisions hereof.
(h) In the event of any material breach or threatened material
breach by Seller or any of its Affiliates of the terms of this Article VIII,
Seller shall reimburse Purchaser for its reasonable attorneys' fees, court costs
and other expenses it incurs in successfully enforcing the provisions of this
Article VIII.
ARTICLE IX
CERTAIN DEFINITIONS
9.1 Definitions. The following terms, as used in this Agreement, have
the following meanings:
"AAA" shall have the meaning set forth in Section 10.1.
"Acquired Assets" shall have the meaning set forth in Section 1.1.
"Acquiror" means a Person who consummates: (a) a Business Combination
with Seller; or (b) an Affiliate Business Combination with a Transferee
Affiliate.
"Acquiror Agreement" shall have the meaning set forth in Section 8.2(b).
"Acquisition" shall have the meaning set forth in the preamble.
"Administrative Wind-Up" shall have the meaning set forth in Section
8.1(a).
"Affiliates" of any Person shall mean any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
"Affiliate Business Combination" means a transaction or series of
related transactions involving a Transferee Affiliate and any other Person in
which the Transferee Affiliate sells, conveys, licenses or otherwise disposes
of: (a) all or substantially all of its assets; (b) all or substantially all of
its outstanding capital stock; (c) all or substantially all of the assets of a
subsidiary of the Transferee Affiliate; or (d) all or substantially all of the
capital stock of a subsidiary of Transferee Affiliate.
"Agreement" shall have the meaning set forth in the preamble.
"Arbitration Notice" shall have the meaning set forth in Section 10.1.
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"Arbitration Rules" shall have the meaning set forth in Section 10.1.
"Assignment and Assumption Agreement" shall have the meaning set forth
in Section 6.2(j).
"Assumed Liabilities" shall have the meaning set forth in Section 1.3.
"Benefit Plan" shall mean each "welfare" plan, fund or program (within
the meaning of Section 3(1) of ERISA), each "pension" plan, fund or program
(within the meaning of Section 3(2) of ERISA), and each other employee benefit
plan, fund, program, agreement or arrangement in each case, that is sponsored,
maintained or contributed to or required to be contributed by Seller or any of
its subsidiaries or by any trade or business, whether or not incorporated (an
"ERISA Affiliate"), that together with Seller or any of its subsidiaries would
be deemed a "single employer" within the meaning of Section 4001(b) of ERISA, or
to which Seller or any of its subsidiaries or any ERISA Affiliate is a party,
for the benefit of any employee or former employee of the Conferencing Business.
"▇▇▇▇ of Sale" shall have the meaning set forth in Section 6.2(i).
"Bulk Sales Laws" means the bulk transfer provisions of the Uniform
Commercial Code (or any similar law).
"Business Combination" means a transaction, or series of related
transactions, approved by Seller's Board of Directors, involving Seller and any
other Person in which Seller sells, conveys, licenses or otherwise disposes of:
(a) all or substantially all of its assets; (b) all or substantially all of its
outstanding capital stock; (c) all or substantially all of the assets of a
subsidiary of Seller; or (d) all or substantially all of the capital stock of a
subsidiary of Seller.
"Business Combination Restricted Period" shall have the meaning set
forth in Section 8.2(b).
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in Salt Lake City, Utah are authorized or required by law
to close.
"Chosen Firm" shall have the meaning set forth in Section 2.4(b).
"Closing" shall have the meaning set forth in Section 6.1.
"Closing Date Adjusted Purchase Price" shall have the meaning set forth
in Section 2.4(a).
"Closing Date Balance Statement" shall have the meaning set forth in
Section 2.4(a).
"Closing Date Net Working Capital" shall mean the value of Seller's
short term monetary assets (cash, investments and accounts receivable, net of an
adequate allowance for doubtful accounts) minus the amount of all Assumed
Liabilities, all as determined in accordance with GAAP.
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"COBRA" shall have the meaning set forth in Section 5.1(f).
"Competing Business" shall have the meaning set forth in Section 3.24.
"Conferencing Business" shall have the meaning set forth in the
preamble.
"Confidential Information" shall mean any and all trade secrets under
applicable Law and the other information set forth below concerning the
Conferencing Business. Without limiting the generality of the foregoing, and in
addition to trade secrets as referenced above, Confidential Information consists
of the following but shall not include any such information which is or becomes
publicly known in the conferencing services industry through no wrongful act of
Seller:
(a) information which constitutes proprietary information or
trade secrets of Seller under applicable Law relating to the Conferencing
Business;
(b) information which contains financial statements, financial
projections and budgets, historical and projected sales, capital spending
budgets and plans, business plans, the names and backgrounds of key personnel,
customer lists and customer information (excluding customer information
pertaining to Seller's business which is not exclusively used or held for use in
the Conferencing Business), personnel training and techniques and materials
(excluding information pertaining to such personnel training and techniques and
materials which is not exclusively used or held for use in the Conferencing
Business),
(c) information which confers a competitive advantage with
respect to the Conferencing Business;
(d) information with respect to the Conferencing Business which
would be detrimental to Purchaser if disclosed;
(e) product specifications, discoveries, improvements,
processes, marketing and service methods or techniques, formulae, designs,
styles, specifications, data bases, computer programs (whether in source code or
object code), know-how, strategies, data, current and anticipated customer
requirements, price lists, market studies, business plans, and any other
information, however documented, that is a trade secret of Seller under
applicable law and is used or held for use in the Conferencing Business; and
(f) notes, analyses, compilations, studies, summaries, and other
material prepared by or for Seller used or held for use in the Conferencing
Business, and containing or based upon, in whole or in part, any information
included in the foregoing.
"Consent" means any approval, consent, ratification, waiver or other
authorization.
"Contract" shall mean any Customer Service Contract and any other
contract, lease, lease option, commitment, understanding sales order, purchase
order, license, equipment lease, mortgage, note, bond or other agreement,
whether written or oral, relating to the Conferencing Business, including any
agreements for the purchase of goods, agreements with suppliers, security
agreements, joint venture, partnership or similar agreements, advertising
agreements, franchise agreements and broker or distributorship agreements.
- 31 -
"Customer Service Contract" shall mean any Contract pursuant to which
Seller provides full-service conference calling services, on-demand
reservationless conference calling services, web conferencing services or audio
and video streaming services and/or other ancillary or similar services to any
Person.
"Deferred Revenue" shall mean the amount of all payments due under
invoices issued by Seller as of the Effective Date for services not yet rendered
or goods not delivered as of the Effective Date with respect to the Conferencing
Business.
"Disclosure Schedule" shall have the meaning set forth in the preamble
to Article III.
"Dispute Notice" shall have the meaning set forth in Section 2.4(b).
"Documentation" shall have the meaning set forth in Section 1.1(g).
"Effective Date" shall have the meaning set forth in the preamble.
"Encumbrance" shall mean any encumbrance or restriction of any kind,
including any pledge, security interest, lien, charge, mortgage, hypothecation,
trust deed, easement, lease, finance lease, sublease, claim, right of way,
covenant, option, condition, right of first refusal or restriction, however
imposed.
"Environmental Law" shall mean any federal, state or local law, statute,
ordinance, regulation, rule, order, consent decree, permit, settlement
agreement, judicial or administrative decision, injunction or requirement of any
Governmental Authority which relates to or otherwise imposes liability or
standards of conduct concerning health or safety or discharges, releases or
threatened releases of noises, odors or any Pollutants into ambient air, ground
or surface water or land, or otherwise relating to the manufacture, processing,
generation, distribution, use, treatment, storage, disposal, cleanup, transport
or handling of Pollutants, including the Occupational Health and Safety Act of
1970, the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, the Resource Conservation and Recovery Act of 1976, as
amended, any other so-called "Superfund" or "Superlien" law, the Toxic
Substances Control Act, as amended, the Federal Water Pollution Control Act of
1972, as amended, the Federal Clean Air Act, as amended, the Federal
Insecticide, Fungicide and Rodenticide Act, as amended, or any other similar
Federal, state or local statutes.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Escrow Agent" shall have the meaning set forth in Section 2.3.
"Escrow Agreement" shall have the meaning set forth in Section 2.3.
"Escrow Amount" shall have the meaning set forth in Section 2.3.
"Escrow Notice" shall have the meaning set forth in Section 7.2(c).
"Excluded Assets" shall have the meaning given to it in Section 1.2.
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"Final Net Working Capital" shall have the meaning set forth in Section
2.4(b).
"Financial Schedules" shall mean the unaudited, condensed income
statements and selected balance sheet items for the Conferencing Business as of
and for the twelve (12) months ended December 31, 2003, and the unaudited
condensed income statements and selected balance sheet items for the
Conferencing Business as of and for the twelve (12) months ended May 31, 2004,
copies of which are attached as Schedule 3.6(a).
"GAAP" shall mean United States generally accepted accounting
principles, consistently applied and in accordance with Seller's past practice.
"Governmental Authority" shall mean the government of the United States,
any state or political subdivision thereof, or any foreign government, or any
entity exercising executive, representative, judicial, regulatory or
administrative functions of or pertaining to government.
"Hired Employees" shall have the meaning set forth in Section 5.1(a).
"Indemnity Escrow Amount" shall have the meaning set forth in Section
2.3.
"Indemnity Period" shall have the meaning set forth in Section 7.2(c).
"Intellectual Property" shall mean all of the following owned by or
issued or licensed to or by Seller and used or held for use in connection with
the Conferencing Business: (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof; (b) all trademarks, service marks, trade dress, logos,
trade names, URL domain names and corporate names, together with all
translations, adaptations, derivations, and combinations thereof and including
all goodwill associated therewith, and all applications, registrations, and
renewals in connection therewith; (c) all copyrights and all applications,
registrations and renewals in connection therewith; and (d) all trade secrets
and confidential business information (including ideas, research and
development, know-how, formulas, compositions, technical data, specifications,
pricing and cost information, and business and marketing plans and proposals).
"Law" shall mean any federal, state, local or other law, statute,
ordinance, regulation, rule, policy, guideline, ordinance, bylaw (zoning or
otherwise), order, judgment, consent decree, permit, settlement agreement,
judicial or administrative decision, injunction or requirement of any kind
(including any Environmental Law) applicable to or binding on Purchaser, Seller,
the Conferencing Business, or any of the Acquired Assets.
"Leased Real Property" means all leasehold and similar interests in real
property leased from third parties or otherwise used or held for use in the
Conferencing Business and all of Seller's right, title and interest in and to
all improvements thereon, together with all easements, entitlements, rights of
way, licenses and other interests therein.
"Liability" means any liability or obligation of any kind, character or
description, whether known or unknown, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated, secured or unsecured, joint or several,
due or to become due, vested or unvested, executory, determined, determinable or
- 33 -
otherwise and whether or not the same is required to be accrued or reflected on
financial statements prepared in accordance with GAAP or is disclosed or
required to be disclosed on any Schedule to this Agreement.
"Losses" shall mean all liabilities, equitable remedies, losses, costs,
fines, damages of any nature, judgments, penalties, diminution of value, or
expenses (including reasonable attorneys' fees and costs of litigation).
"Material Adverse Effect" shall means a material adverse effect on, or a
material adverse change in, the operations, affairs, prospects, condition
(financial or otherwise), results of operations, assets, Liabilities, reserves
or any other aspect of the Conferencing Business or the Acquired Assets.
"Material Contract" shall mean with respect to the Conferencing
Business, any Contract, whether oral or written, which: (a) was not entered into
in the ordinary course of business; (b) was entered into in the ordinary course
of business which involved the purchase, sale or lease of goods or materials, or
purchase of services, aggregating, or reasonably likely to aggregate, more than
$10,000 during any calendar year; (c) is a non-disclosure or confidentiality
agreement (other than those entered into in the ordinary course of business with
customers, suppliers and employees); or (d) prohibits Seller or the Conferencing
Business from freely engaging in any business or competing anywhere in the
world.
"Material Customer" shall mean each of the twenty-nine (29) customers of
the Conferencing Business from which Seller recognized revenues in excess of
approximately $100,000 during the twelve months ended April 30, 2004.
"Material Customer Contracts" shall the Customer Service Contracts with
each Material Customer except as set forth on Schedule 3.8(a)(ii).
"Net Working Capital Target Amount" shall mean $1,340,000.
"Nonmaterial Customers" means the customers of the Conferencing Business
other than the Material Customers.
"Permits" shall have the meaning set forth in Section 1.1(o).
"Permitted Encumbrances" shall mean: (a) liens for Taxes, assessments
and governmental charges with respect to the Acquired Assets not yet due and
payable; and (b) applicable zoning regulations and ordinances provided the same
do not prohibit or impair in any material respect use of the Premises as
currently operated and constructed or proposed to be operated and constructed.
"Person" shall mean any individual, corporation, partnership, limited
liability company, association, trust, Governmental Authority or other entity or
organization.
"Pollutant" shall mean any substance presently listed, defined,
designated or classified as a pollutant or contaminant under any Environmental
Law or as hazardous, toxic, radioactive or dangerous under any Environmental
Law. Without limitation, Pollutant includes any toxic substance or waste,
- 34 -
contaminant, hazardous substance or waste, special waste, industrial substance,
lead based paint, petroleum, petroleum products, any derivative or by-product of
petroleum, polychlorinated biphenyl, radon, radioactive material, urea
formaldehyde, asbestos or asbestos containing material.
"Premises" shall mean the offices used by the Conferencing Business,
which are located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and are
marked and cross-hatched on the site plan attached hereto as Exhibit I.
"Proceeding" shall have the meaning set forth in Section 3.10.
"Ptek" shall have the meaning set forth in Section 11.10.
"Purchase Price" shall have the meaning set forth in Section 2.1.
"Purchaser" shall have the meaning set forth in the preamble.
"Purchaser Indemnified Parties" shall have the meaning set forth in
Section 7.2(a).
"Purchaser's Parent" shall have the meaning set forth in the preamble.
"Related Parties" shall have the meaning set forth in Section 3.24.
"Restatement Actions" means any restatement of Seller's financial
statements or amendment to Seller's Tax Returns.
"Retained Liabilities" shall have the meaning set forth in Section 1.4.
"Restricted Assets" shall have the meaning set forth in Section 1.5(a).
"Restricted Period" shall have the meaning set forth in Section 8.1(a).
"Restricted Persons" shall have the meaning set forth in Section
8.2(a)(iv).
"Restricted Conferencing Business" shall have the meaning set forth in
Section 8.2(a)(i).
"Restricted Customers" shall have the meaning set forth in Section
8.2(a)(ii).
"Retained Business" shall have the meaning set forth in Section
8.2(a)(i).
"Seller" shall have the meaning set forth in the preamble.
"Seller's Board of Directors" shall have the meaning set forth in the
Section 3.2.
"Seller Indemnified Parties" shall have the meaning set forth in Section
7.3(a).
"Seller's Knowledge" shall mean the actual knowledge of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇. Deloni Call, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ and such knowledge as
any of them could be expected to discover or otherwise become aware of in the
- 35 -
course of conducting a reasonably comprehensive investigation regarding the
accuracy of any representation or warranty contained in this Agreement.
"Sublease Agreement" shall have the meaning set forth in Section 6.2(k).
"Tax Return" shall mean any report, return or other information required
to be supplied to a Governmental Authority in connection with Taxes.
"Taxes" shall mean all taxes, including, income, gross receipts, net
proceeds, ad valorem, turnover, real and personal property (tangible and
intangible), sales, use, franchise, excise, value added, stamp, leasing, lease,
user, transfer, fuel, excess profits, occupational and interest equalization,
windfall profits, payroll, severance and employees' income withholding and
Social Security taxes imposed by the United States or by any state,
municipality, subdivision or instrumentality of the United States or by any
other tax authority, including all applicable penalties and interest.
"Technology Assets" shall have the meaning set forth in Section 1.1(j).
"Transferee Affiliate" means an Affiliate of Seller to whom Seller or
any other Affiliate of Seller has sold, conveyed, licensed, disposed of or
transferred a significant amount of Seller's assets.
"Transition Services Agreement" shall have the meaning set forth in
Section 6.2(l).
"WARN Act" shall mean the Worker Adjustment and Retraining Notification
Act.
"Working Capital Escrow Amount" shall have the meaning set forth in
Section 2.3.
ARTICLE X
DISPUTE RESOLUTION
10.1 Agreement to Arbitrate. Except as specifically provided elsewhere
in this Agreement, in the event of any dispute, claim, question, or disagreement
arising out of or relating to the Agreement or the breach thereof, the parties
hereby agree that upon notice by either party to the other (the "Arbitration
Notice"), such dispute, claim, question, or disagreement shall be finally
settled by binding arbitration before a single arbitrator in accordance with the
provisions of the Commercial Arbitration Rules (the "Arbitration Rules") of the
American Arbitration Association ("AAA"). The Arbitration Notice delivered
pursuant to this Section 10.1 shall contain a detailed statement of the
claim(s), including a description of the factual contentions which support said
claim(s).
10.2 Selection of Arbitrator. The parties shall, by joint agreement,
select a single arbitrator, but if they do not agree on the selection of an
arbitrator within twenty (20) days after the date that the Arbitration Notice
was received by the non-sending party, then selection shall be made in
accordance with the Arbitration Rules.
- 36 -
10.3 Place of Arbitration. The arbitration shall be held in Salt Lake
City, Utah, or such other place as the parties shall mutually agree.
10.4 Expedited Procedures. The parties agree that any claims that are
submitted to arbitration pursuant to the provisions of this Article X, and which
seek, in the aggregate, damages or payment of Seventy-Five Thousand Dollars
($75,000) or less, shall be resolved through the application of the AAA's
Expedited Procedures for commercial cases.
10.5 Interim Relief. Either party may, without inconsistency with this
Agreement, seek from a court any interim or provisional relief that may be
necessary to protect the rights or property of that party pending the selection
of the arbitrator or pending the arbitrator's determination of the merits of the
controversy.
10.6 Award. The arbitrator shall issue a written decision setting forth
findings of fact and conclusions of law, and, if agreed upon by the parties, the
arbitrator shall issue such written decision within thirty (30) days of the
close of the hearing.
10.7 Enforcement of Arbitrator's Decision. Judgment on the award of the
arbitrator may be entered in any court having jurisdiction over the party
against which enforcement of the award is being sought.
ARTICLE XI
MISCELLANEOUS
11.1 Amendment; Waivers. This Agreement may not be amended, modified or
supplemented unless such amendment is in writing and duly executed by each of
the parties. No approval, consent or waiver will be enforceable unless signed by
the granting party. Failure to insist on strict performance or to exercise a
right when entitled does not prevent a party from doing so later for that breach
or a future one.
11.2 Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given: (a) if
personally delivered, when so delivered; (b) if mailed, five (5) Business Days
after having been sent by first class, registered or certified U.S. mail, return
receipt requested, postage prepaid and addressed to the intended recipient as
set forth below; (c) if given by telecopier, once such notice or other
communication is transmitted to the telecopier number specified below; provided
that: (i) the sending telecopier generates a transmission report showing
successful completion of such transaction; and (ii) such notice or other
communication is promptly thereafter mailed in accordance with the provisions of
clause (b) above, and provided, further, that if such telecopy is sent after
5:00 p.m. local time at the location of the receiving telecopier, or is sent on
a day other than a Business Day, such notice or communication shall be deemed
given as of 9:00 a.m. local time at such location on the next succeeding
Business Day; or (d) if sent through a nationally-recognized overnight delivery
service that guarantees next day delivery, the Business Day following its
delivery to such service in time for next day delivery.
- 37 -
If to Seller, to:
ClearOne Communications, Inc.
Attention: CEO
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Purchaser or Purchaser's Parent, to:
American Teleconferencing Services, Ltd.
d/b/a Premiere Conferencing
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
The Lenox Building
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
L. ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
SVP - Legal and General Counsel
Ptek Holdings, Inc.
The Lenox Building
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇., Esq.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
- 38 -
Any party may change the address to which notices, requests, demands, claims and
other communications hereunder are to be delivered by giving the other parties
notice in the manner herein set forth.
11.3 Counterparts. This Agreement may be executed simultaneously in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.4 Headings. The headings preceding the text of Articles and Sections
of this Agreement are for reference only and shall not be deemed part of this
Agreement.
11.5 Applicable Law; Waiver of Jury Trial. This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Georgia applicable to contracts executed in and performed entirely within
that State. THE PARTIES EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION OR
CAUSE OF ACTION BASED ON, OR ARISING OUT OF, UNDER OR IN CONJUNCTION IN ANY
MANNER WITH TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
11.6 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns; provided, however, that no assignment
shall be made hereof without the prior written consent of the non-assigning
party, except that Purchaser may assign its rights hereunder to any of its
Affiliates without any other party's prior consent, so long as Purchaser remains
liable for the performance of all obligations imposed upon it hereunder.
11.7 Expenses. All fees and expenses incurred in connection with this
Agreement and the transactions contemplated by this Agreement, including all
legal, accounting, financial advisory, consulting and all other fees and
expenses of third parties, shall be paid by the party incurring such expenses,
regardless of whether the Closing occurs.
11.8 No Third Party Beneficiaries. This Agreement is solely for the
benefit of the parties and their respective Affiliates and no provision of this
Agreement shall be deemed to confer upon third parties any remedy, claim,
liability, reimbursement, claim of action or other right in excess of those
existing without reference to this Agreement.
11.9 Specific Performance. Seller recognizes and affirms that in the
event of breach by Seller of any of the provisions of this Agreement, money
damages would be inadequate and Purchaser would have no adequate remedy at law.
Accordingly, Seller agrees that Purchaser shall have the right, in addition to
any other rights and remedies existing in its favor, to enforce its rights and
its obligations under this Agreement not only by an action or actions for
damages, but also by an action or actions for specific performance, injunction
- 39 -
and/or other equitable relief in order to enforce or prevent any violations
(whether anticipatory, continuing or future) of the provisions of this Agreement
without the necessity of proving actual damages.
11.10 Entire Understanding. This Agreement sets forth the entire
agreement and understanding of the parties in respect to the transactions
contemplated hereby and supersedes all prior agreements, arrangements and
understandings relating to the subject matter hereof including that certain
Confidentiality Agreement between Seller and Ptek Holdings, Inc. ("Ptek") and
that certain Letter of Intent between Seller and Ptek, dated April 29, 2004, and
is not intended to confer upon any other person any rights or remedies
hereunder. There have been no representations or statements, oral or written,
that have been relied on by any party hereto, except those expressly set forth
in this Agreement.
11.11 Construction. The parties acknowledge and agree that each of them
have participated in the drafting of this Agreement and that this Agreement has
been reviewed by the respective legal counsel for such parties and that the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be applied to the interpretation
of this Agreement. No inference in favor of, or against, any party shall be
drawn from the fact that one party has drafted any portion of this Agreement.
11.12 Schedules. The parties hereto are exchanging copies of all
Schedules referred to in this Agreement, which Schedules are hereby made a part
hereof and incorporated herein by reference. All such Schedules read as of the
date of the Effective Date or, as to any of the Schedules bearing a particular
date, as of any other date specified therein. The Schedules referred to in this
Agreement and other related instruments or documents may be incorporated herein
and made a part hereof without being attached hereto.
11.13 Severability. Whenever possible each provision and term of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision or term of this Agreement shall be held to
be prohibited by or invalid under such applicable law, or determined to be void
or unenforceable for any reason, then such provision or term shall be
ineffective only to the extent of such prohibition, invalidity or
unenforceability, without invalidating or affecting in any manner whatsoever the
remainder of such provision or term or the remaining provisions or terms of this
Agreement, and the prohibited, invalid or unenforceable provision shall be
modified to the minimum extent necessary to make it permissible, valid and
enforceable, unless the result of any such invalidity or unenforceability shall
be to cause a material failure of consideration to the party seeking to sustain
the validity or enforceability of the subject provision.
11.14 Fax Signatures. The parties agree that signatures transmitted and
received via facsimile shall be treated for all purposes of this Agreement as
original signatures and shall be deemed valid, binding and enforceable by and
against all parties.
11.15 Principles of Construction. In this Agreement and all other
attached exhibits, annexes and schedules to this Agreement, unless otherwise
expressly indicated or required by the context:
(a) reference to and the definition of any document shall be
- 40 -
deemed a reference to such document as it may be amended, supplemented, revised,
or modified, in writing, from time to time but disregarding any amendment,
supplement, replacement or novation made in breach of this Agreement;
(b) references in this Agreement to any document or agreement
shall be deemed to include references to such document or agreement as amended,
varied, supplemented or replaced from time to time in accordance with such
document's or agreement's terms;
(c) defined terms in the singular shall include the plural and
vice versa, and the masculine, feminine or neuter gender shall include all
genders;
(d) the words "including" or "includes" shall be deemed to mean
"including without limitation" and "including but not limited to" (or "includes
without limitation" and "includes but is not limited to") regardless of whether
the words "without limitation" or "but not limited to" actually follow the term;
(e) the words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement or exhibits, annexes and schedules
shall refer to this Agreement and its exhibits, annexes and schedules as a whole
and not to any particular provision hereof or thereof, as the case may be; and
(f) any reference herein to a time of day means the time of day
in Salt Lake City, Utah.
- 41 -
IN WITNESS WHEREOF, the parties have executed and caused this Agreement
to be executed and delivered on the date first above written.
PURCHASER:
CLARINET, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------
Title: CEO
------------------------
PURCHASER'S PARENT:
American Teleconferencing Services, Ltd.
d/b/a Premiere Conferencing
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------
Title: CEO
------------------------
SELLER:
CLEARONE COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------
Title: Chairman
-------------------------