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EXECUTION VERSION
HEALTHCARE COMMUNICATIONS
ASSET PURCHASE AGREEMENT
BY AND AMONG
eLOT, INC.
ADT SERVICES AG
AND
▇▇▇▇▇▇▇▇ CORPORATION
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.............................................................................................1
1.1 Accounts........................................................................................1
1.2 Adjustment......................................................................................2
1.3 Affiliate.......................................................................................2
1.4 Agreement.......................................................................................2
1.5 Assignment and Assumption Agreement.............................................................2
1.6 Assumed Leases..................................................................................2
1.7 Assumed Liabilities.............................................................................2
1.8 Basket..........................................................................................3
1.9 ▇▇▇▇ of Sale....................................................................................3
1.10 Books and Records...............................................................................3
1.11 Buyer...........................................................................................4
1.12 Closing.........................................................................................4
1.13 Closing Date....................................................................................4
1.14 Code............................................................................................4
1.15 Computer Telephony Business.....................................................................4
1.16 Contracts.......................................................................................4
1.17 Contract Net Asset Statement....................................................................5
1.18 Contract Net Assets.............................................................................5
1.19 Customer List...................................................................................5
1.20 DCC.............................................................................................5
1.21 Effective Time..................................................................................5
1.22 eLottery........................................................................................5
1.23 eLottery Business...............................................................................5
1.24 Elpas Shares....................................................................................5
1.25 Employee Benefit Plan...........................................................................5
1.26 Employees.......................................................................................6
1.27 Environmental Law(s)............................................................................6
1.28 Environmental Permits...........................................................................6
1.29 ERISA...........................................................................................7
1.30 ERISA Affiliate.................................................................................7
1.31 Excluded Assets.................................................................................7
1.32 Excluded Intangibles............................................................................7
1.33 Final Net Asset Statement.......................................................................8
1.34 Final Net Assets................................................................................8
1.35 Fixtures and Equipment..........................................................................8
1.36 GAAP............................................................................................8
1.37 Hazardous Substance(s)..........................................................................8
1.38 Healthcare Communications Business..............................................................9
1.39 Healthcare Communications Products..............................................................9
1.40 Holdback Agreement..............................................................................9
1.41 Holdback Amount.................................................................................9
1.42 INFOSTAR/ILS Products...........................................................................9
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1.43 Intangibles.....................................................................................9
1.44 Interim Financial Statements...................................................................10
1.45 Inventory......................................................................................10
1.46 IP Assets......................................................................................11
1.47 Knowledge......................................................................................11
1.48 Law............................................................................................11
1.49 License Agreement..............................................................................11
1.50 Liens..........................................................................................11
1.51 Material Adverse Effect........................................................................12
1.52 Material Contracts.............................................................................12
1.53 Net Assets.....................................................................................12
1.54 Non-IP Assets..................................................................................12
1.55 Permits........................................................................................12
1.56 Permitted Liens................................................................................12
1.57 Person.........................................................................................13
1.58 Premises.......................................................................................13
1.59 Prepaid Assets.................................................................................13
1.60 Purchase Price.................................................................................13
1.61 Purchased Assets...............................................................................13
1.62 Release........................................................................................14
1.63 Required Consents..............................................................................14
1.64 Retained Liabilities...........................................................................14
1.65 Seller.........................................................................................14
1.66 Severed Employees..............................................................................14
1.67 Tax or Taxes...................................................................................14
1.68 Tax Return.....................................................................................15
1.69 Transferred Employees..........................................................................15
1.70 Year-End Financial Statements..................................................................15
ARTICLE II PURCHASE AND SALE; ASSIGNMENT AND ASSUMPTION..........................................................15
2.1 Sale of Purchased Assets.......................................................................15
2.2 Transfer or Sales Taxes........................................................................16
2.3 Allocation of Purchase Price...................................................................16
2.4 Post-Closing Adjustment........................................................................17
2.5 Pro-ration of Property Taxes...................................................................19
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER.............................................................20
3.1 Organization and Good Standing.................................................................20
3.2 Foreign Qualification..........................................................................20
3.3 Authorization; Enforceability..................................................................20
3.4 Conflicts or Violations; Required Consents.....................................................21
3.5 Litigation.....................................................................................21
3.6 Compliance with Law............................................................................21
3.7 Environmental Conditions.......................................................................22
3.8 Permits........................................................................................22
3.9 Taxes..........................................................................................23
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3.10 Title to Purchased Assets......................................................................23
3.11 Books and Records..............................................................................23
3.12 Employment Agreements and Benefits.............................................................24
3.13 Employee Matters...............................................................................24
3.14 Fees and Expenses of Brokers and Others........................................................25
3.15 Insurance......................................................................................26
3.16 Intangibles....................................................................................26
3.17 Inventory......................................................................................27
3.18 Financial Statements...........................................................................28
3.19 Real Properties................................................................................28
3.20 Material Contracts.............................................................................29
3.21 Product Liability and Recalls..................................................................31
3.22 Customers and Suppliers........................................................................32
3.23 Undisclosed Liabilities........................................................................32
3.24 Restrictions on Business Activities............................................................32
3.25 Accounts Receivable............................................................................33
3.26 Ordinary Course of Business....................................................................33
3.27 Disclaimers of Seller..........................................................................33
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER...............................................................34
4.1 Organization...................................................................................34
4.2 Authorization; Enforceability..................................................................34
4.3 No Conflict or Violation; Required Consents....................................................34
4.4 No Litigation..................................................................................35
4.5 Fees and Expenses of Brokers and Others........................................................35
4.6 Financing......................................................................................35
ARTICLE V CERTAIN UNDERSTANDINGS AND AGREEMENTS..................................................................35
5.1 Publicity......................................................................................35
5.2 Employees......................................................................................36
5.3 WARN Act.......................................................................................37
5.4 Benefit Obligations............................................................................38
5.5 Bulk Transfers Laws............................................................................40
5.6 Third Party Consents...........................................................................41
ARTICLE VI CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER......................................................41
6.1 Compliance With Law............................................................................41
6.2 Accuracy of Representations and Warranties.....................................................41
6.3 Proceedings and Instruments Satisfactory.......................................................41
6.4 No Litigation..................................................................................42
6.5 Seller's Performance...........................................................................42
6.6 Deliveries at Closing..........................................................................42
ARTICLE VII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER....................................................42
7.1 Compliance with Law............................................................................42
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7.2 Accuracy of Representations and Warranties.....................................................43
7.3 Proceedings and Instruments Satisfactory.......................................................43
7.4 No Litigation..................................................................................43
7.5 Buyer's Performance............................................................................44
7.6 Deliveries at Closing..........................................................................44
ARTICLE VIII ACTIONS BY SELLER AND BUYER AFTER THE CLOSING.......................................................44
8.1 Seller's Indemnity.............................................................................44
8.2 Buyer's Indemnity..............................................................................46
8.3 Limitations on Indemnification.................................................................47
8.4 Indemnity Amounts to be Computed on After-Tax Basis............................................48
8.5 Litigation Support.............................................................................48
8.6 Post-Closing Cooperation.......................................................................49
8.7 Taxes..........................................................................................49
8.8 Books and Records; Personnel...................................................................49
8.9 Covenant Not to Compete........................................................................51
ARTICLE IX [INTENTIONALLY DELETED]...............................................................................52
ARTICLE X MISCELLANEOUS..........................................................................................52
10.1 Entire Agreement; Amendment....................................................................52
10.2 Expenses.......................................................................................53
10.3 Governing Law; Consent to Jurisdiction.........................................................53
10.4 Assignment.....................................................................................53
10.5 Notices........................................................................................54
10.6 Counterparts; Headings.........................................................................55
10.7 Severability...................................................................................55
10.8 No Reliance....................................................................................55
10.9 Interpretation.................................................................................55
10.10 Specific Performance...........................................................................56
10.11 Further Assurances.............................................................................56
10.12 Waiver of Jury Trial...........................................................................56
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SCHEDULES AND EXHIBITS
SCHEDULE DESCRIPTION
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1.6(a) Assumed Leases for Real Property
1.6(b) Assumed Leases for Equipment
1.16 Contracts
1.26 Employees
1.32 Excluded Intangibles
1.33 Fixtures and Equipment
1.39 Healthcare Communications Products
1.44 Interim Financial Statements
1.58 Premises
1.64 Retained Liabilities
1.70 Year-End Financial Statements
2.3 Allocation of Purchase Price
2.4 Contract Net Asset Statement
3.2 Foreign Qualifications
3.4(a) Conflicts or Violations
3.4(b) Required Consents
3.5 Litigation
3.6 Compliance with Law
3.7 Environmental Conditions
3.9 Taxes
3.12 Employment Agreements and Benefits
3.13(a) Independent Contractors
3.13(b) Employment Matters
3.13(c) Collective Bargaining Arrangements
3.13(d) Employees
3.16 Potential Pending Infringement Actions
3.19 Real Property Leases
3.20 Material Contracts
3.21 Threatened Recalls
3.22 Customers and Suppliers
3.23 Undisclosed Liabilities
3.26 Ordinary Course of Business
4.3 Required Consents
EXHIBIT
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A Assignment and Assumption Agreement
B ▇▇▇▇ of Sale
C Holdback Agreement
D License Agreement
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, made as of July 21, 2000, by and between
eLOT, Inc., a Virginia corporation ("Seller"), ▇▇▇▇▇▇▇▇ Corporation, a Delaware
corporation ("▇▇▇▇▇▇▇▇"), and ADT Services AG, a Switzerland corporation ("ADT"
and, together with ▇▇▇▇▇▇▇▇, the "Buyer"), provides as follows:
RECITALS
WHEREAS, one of the businesses engaged in by Seller is the Healthcare
Communications Business, as defined herein;
WHEREAS, Seller desires to sell certain of its assets and be relieved
of certain of its liabilities that are employed by Seller in operating the
Healthcare Communications Business, and Buyer desires to purchase those assets
and assume those liabilities.
NOW, THEREFORE, in consideration of the Recitals and of the mutual
covenants, conditions and agreements set forth herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree that:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the
meanings specified:
1.1 Accounts.
"Accounts" shall mean all accounts receivable, notes receivable and
associated rights (including, without limitation, amounts due from vendors, all
security deposits, letters of credit and security interests in collateral)
arising from the sale of goods and services of the Healthcare
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Communications Business and outstanding as of the Effective Time, but excluding
the Excluded Assets.
1.2 Adjustment.
"Adjustment" shall have the meaning set forth in Section 2.4.
1.3 Affiliate.
"Affiliate" shall mean, with respect to any Person, any Person or
entity, that directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such Person.
1.4 Agreement.
"Agreement" shall mean this Asset Purchase Agreement, together with the
Exhibits and Schedules attached hereto, as the same may be amended from time to
time in accordance with the terms hereof.
1.5 Assignment and Assumption Agreement.
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement between Seller and Buyer attached hereto as Exhibit A.
1.6 Assumed Leases.
"Assumed Leases" shall mean those leases for all facilities used by the
Healthcare Communications Business and listed on Schedule 1.6(a) hereto and
those equipment leases listed on Schedule 1.6(b) hereto.
1.7 Assumed Liabilities.
"Assumed Liabilities" shall mean the following liabilities and
obligations relating to the Healthcare Communications Business: (i) the Assumed
Leases listed on Schedule 1.6(a) and
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Schedule 1.6(b), (ii) all trade account payables and accrued liabilities related
to the Healthcare Communications Business, (iii) all obligations and liabilities
with respect to all Contracts, (iv) all warranty obligations and liabilities
relating to the Healthcare Communications Business, (v) all obligations of
Seller with respect to the Transferred Employees and Severed Employees set forth
in Sections 5.2, 5.3 and 5.4, (vi) all liabilities and obligations arising prior
to the Effective Time in the ordinary course of the Healthcare Communications
Business consistent with past practice reflected on the Final Net Asset
Statement, other than Retained Liabilities, and (vii) all liabilities and
obligations of the Healthcare Communications Business that arise after the
Effective Time.
1.8 Basket.
"Basket" shall have the meaning assigned to it in Section 8.3(a).
1.9 ▇▇▇▇ of Sale.
"▇▇▇▇ of Sale" shall mean the ▇▇▇▇ of sale attached hereto as Exhibit
B.
1.10 Books and Records.
"Books and Records" shall mean original or true and complete copies of
the Customer List and all the books, records, files, data and information of
Seller relating to the Healthcare Communications Business, including, without
limitation, all customer lists, financial and accounting records (excluding all
Tax Returns other than property Tax Returns), purchase orders and invoices,
sales orders and sales order log books, credit and collection records,
correspondence and miscellaneous records with respect to customers and supply
sources and all other general correspondence, records, books and files relating
to the Healthcare Communications Business; provided, however, that with respect
to the INFOSTAR/ILS Products, "Books and Records" shall include only those
books, records, files, data and information of Seller that are necessary for
Buyer to meet its obligations under the Contracts.
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1.11 Buyer.
"Buyer" shall mean together, ▇▇▇▇▇▇▇▇ Corporation, a Delaware
corporation, and ADT Services AG, a Swiss corporation.
1.12 Closing.
"Closing" shall mean the meeting of the parties held at the offices of
Hunton & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, on the
Closing Date, at 10:00 a.m. Eastern Daylight Time, or such other time and place
as the parties may mutually agree in writing.
1.13 Closing Date.
"Closing Date" shall mean the date of this Agreement, or such other
date as the parties may mutually agree in writing.
1.14 Code.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
any regulations promulgated thereunder, and any predecessor thereto.
1.15 Computer Telephony Business.
"Computer Telephony Business" shall mean the business conducted by the
computer telephony division sold by Seller to a wholly owned subsidiary of
Inter-Tel, Incorporated effective January 1, 2000.
1.16 Contracts.
"Contracts" shall mean those contracts, agreements, blanket and other
purchase orders, sales orders, license agreements, relationships and commitments
and invoices related thereto, to which the Seller on behalf of the Healthcare
Communications Business is a party being specifically listed on Schedule 1.16
hereto.
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1.17 Contract Net Asset Statement.
"Contract Net Asset Statement" shall have the meaning assigned to it in
Section 2.4.
1.18 Contract Net Assets.
"Contract Net Assets" shall mean the value of the Net Assets as of May
31, 2000.
1.19 Customer List.
"Customer List" shall mean the customer list of the Healthcare
Communications Business delivered by Seller to Buyer prior to Closing.
1.20 DCC.
"DCC" shall mean Dialogic Communications Corporation, a Tennessee
corporation.
1.21 Effective Time.
"Effective Time" shall mean 11:59 p.m. Eastern time, on the Closing
Date.
1.22 eLottery.
"eLottery" shall mean eLottery, Inc., a wholly-owned subsidiary of
Seller, and its predecessor entity, Unistar Gaming Corp., and its wholly-owned
subsidiary, UniStar Entertainment, Inc.
1.23 eLottery Business.
"eLottery Business" shall mean the business as conducted by eLottery as
of the date of the Agreement, and as it historically has been conducted or may
be conducted in the future, including all developments and extensions thereof.
1.24 Elpas Shares.
"Elpas Shares" shall mean Seller's equity interest in Elpas
Electro-Optic Systems, Ltd.
1.25 Employee Benefit Plan.
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"Employee Benefit Plan" shall mean an "employee benefit plan" as
defined in Section 3(3) of ERISA and any other plans that provide compensation
or other benefits, whether or not subject to ERISA, to any present or former
Employee or any dependent or beneficiary thereof.
1.26 Employees.
"Employees" shall mean the employees of Seller necessary for the
operation of the Healthcare Communications Business as listed on Schedule 1.26
hereto.
1.27 Environmental Law(s).
"Environmental Law(s)" means all federal, state or local law (including
common law), statute, ordinance, rule, regulation, code, or other requirement
relating to the environment, natural resources, or public or employee health and
safety and includes, but is not limited to, the Comprehensive Environmental
Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et
seq., the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et
seq., the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section
6901 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et seq., the Clean Air
Act, 42 U.S.C. Section 7401 et seq., the Toxic Substance Control Act, 15 U.S.C.
Section 2601 et seq., the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et
seq., and the Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq.,
as such laws have been amended or supplemented, and the regulations promulgated
pursuant thereto, and all analogous state or local statutes.
1.28 Environmental Permits.
"Environmental Permits" means all approvals, authorizations, consents,
permits, licenses, registrations and certificates required by any applicable
Environmental Law.
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1.29 ERISA.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
1.30 ERISA Affiliate.
"ERISA Affiliate" shall mean each entity that is a member of a
controlled group or affiliated service group of which Seller is a member or that
is under common control with Seller (within the meaning of Section 414(b),
414(c), 414(m) or 414(o) of the Code).
1.31 Excluded Assets.
"Excluded Assets" shall mean (i) all cash and cash equivalents, (ii)
the Elpas Shares, (iii) the shares and options to purchase shares of DCC owned
by Seller, (iv) the Excluded Intangibles, (v) rights to Tax refunds, reductions
and credits with respect to all time periods prior to the Closing Date and (vi)
all other assets of Seller not used primarily in connection with the Healthcare
Communications Business and not reflected on the Interim Balance Sheet or the
Final Net Asset Statement.
1.32 Excluded Intangibles.
"Excluded Intangibles" shall mean all inventions, patents and patent
applications, all registered and unregistered trademarks, service marks, trade
dress, logos, trade names and brand names, and any combination of such names,
including all goodwill associated therewith and all applications, registrations
and renewals in connection therewith; all copyrightable works, all copyrights
and all applications, registrations and renewals in connection therewith; all
trade secrets and confidential business information (including ideas, research
and development, know-how, compositions, designs, drawings, specifications,
customer and supplier lists, pricing and cost information and business and
market plans and proposals); all computer software and source
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code (including hard copy and soft copy as well as all data and related
documentation); all financial models; all accounting systems, and all other
intellectual or industrial property solely used in connection with the
INFOSTAR/ILS Products and the design, development, manufacture, marketing, sale,
service and maintenance of INFOSTAR/ILS Products, including without limitation
those listed on Schedule 1.32.
1.33 Final Net Asset Statement.
"Final Net Asset Statement" shall have the meaning assigned to it in
Section 2.4.
1.34 Final Net Assets.
"Final Net Assets" shall have the meaning assigned to it in Section
2.4.
1.35 Fixtures and Equipment.
"Fixtures and Equipment" shall mean all tangible assets (other than
Inventory) owned by Seller, associated with or used in the ordinary course of
the Healthcare Communications Business and located on the Premises, including,
without limitation, those items listed on Schedule 1.33.
1.36 GAAP.
"GAAP" shall mean generally accepted accounting principles as of the
date of this Agreement as applied by Seller in a manner consistent with prior
periods.
1.37 Hazardous Substance(s).
"Hazardous Substance(s)" means, without limitation, any flammable
explosives, radioactive materials, polychlorinated biphenyls, hazardous
materials, hazardous wastes, pollutants, contaminants and hazardous or toxic
substances, as defined in or regulated under any applicable Environmental Laws.
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1.38 Healthcare Communications Business.
"Healthcare Communications Business" shall mean the development,
manufacture, selling and servicing of the Healthcare Communications Products, as
conducted by Seller as of the date of the Agreement, and as it historically has
been conducted (except the sale of telephone and related systems formerly
manufactured by the Computer Telephony Business), excluding the eLottery
Business.
1.39 Healthcare Communications Products.
"Healthcare Communications Products" shall mean all products of the
Healthcare Communications Business including, but not limited to those listed on
Schedule 1.39, including any predecessor and updated versions thereof and
extensions, modifications and developments thereof, including the INFOSTAR/ILS
Products.
1.40 Holdback Agreement.
"Holdback Agreement" shall mean the Holdback Agreement between ▇▇▇▇▇▇▇▇
and Seller attached hereto as Exhibit C .
1.41 Holdback Amount.
"Holdback Amount" shall have the meaning assigned to it in Section
2.1(e).
1.42 INFOSTAR/ILS Products
"INFOSTAR/ILS Products" shall mean the INFOSTAR/ILS (TM) infrared
locating systems products of Seller, and all proprietary parts and components
thereof, except the Excluded Intangibles.
1.43 Intangibles.
"Intangibles" means all United States and foreign patents, patent
applications, licenses, trademarks (whether registered or unregistered), service
marks, trade names, brand names, logos,
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copyrights and any applications therefor, and any other proprietary rights,
including, without limitation, know-how, inventions, discoveries and
improvements, shop rights, processes, methods and formulae, trade secrets,
product drawings, specifications, designs and other technical information owned
by or licensed to Seller relating to the Healthcare Communications Business and
all of the goodwill associated with the foregoing. Intangibles shall
specifically exclude the Excluded Intangibles and all inventions, patents and
patent applications, all registered and unregistered trademarks, service marks,
trade dress, logos, trade names and brand names, and any combination of such
names, including all goodwill associated therewith and all applications,
registrations and renewals in connection therewith; all copyrightable works, all
copyrights and all applications, registrations and renewals in connection
therewith; all trade secrets and confidential business information (including
ideas, research and development, know-how, compositions, designs, drawings,
specifications, customer and supplier lists, pricing and cost information and
business and market plans and proposals); all computer software and source code
(including hard copy and soft copy as well as all data and related
documentation); all financial models; all accounting systems, and all other
intellectual or industrial property used in or otherwise related to the eLottery
Business.
1.44 Interim Financial Statements.
"Interim Financial Statements" shall mean the pro forma (i) balance
sheet of the Healthcare Communications Business as of May 31, 2000 and (ii)
income statement of the Healthcare Communications Business for the three months
ended March 31, 2000, attached hereto as Schedule 1.44.
1.45 Inventory.
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"Inventory" shall mean all of Seller's inventories, including, without
limitation, finished goods, work-in-process, raw materials, supplies and other
materials, of finished goods related to the Healthcare Communications Business.
1.46 IP Assets.
"IP Assets" shall have the meaning assigned to it in Section 2.1(c)
hereof.
1.47 Knowledge.
"Knowledge" as to Seller shall mean the actual knowledge of the Chief
Executive Officer; Chief Financial Officer; Executive Vice Presidents; Senior
Vice President, Law and Administration; Vice President, Operations; Vice
President, Business Development, International and Strategic Alliances; and
Senior Director, Business and Legal Affairs. "Knowledge" as to Buyer shall mean
the actual knowledge of the Vice Presidents of Buyer.
1.48 Law.
"Law" shall mean any federal, state, local or other law or governmental
requirement of any kind, and the rules, regulations and orders promulgated
thereunder.
1.49 License Agreement.
"License Agreement" shall mean the License Agreement to be entered into
as of the Closing Date between ADT and Seller attached hereto as Exhibit D.
1.50 Liens.
"Liens" shall mean all liens, pledges, claims, security interests,
mortgages, assessments, easements, rights of way, covenants, restrictions,
rights of first refusal, defects in title, encroachments and other burdens.
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1.51 Material Adverse Effect.
"Material Adverse Effect" shall mean an effect or series of related
effects that individually or in the aggregate is materially adverse to the
business, results of operations or financial condition of the Healthcare
Communications Business.
1.52 Material Contracts.
"Material Contracts" shall have the meaning assigned to it in Section
3.20 hereof.
1.53 Net Assets.
"Net Assets" shall mean an amount equal to the amount of the Purchased
Assets less the amount of the Assumed Liabilities.
1.54 Non-IP Assets.
"Non-IP Assets" shall have the meaning assigned to it in Section 2.1(c)
hereof.
1.55 Permits.
"Permits" shall mean all governmental approvals, authorizations,
registrations, permits and licenses owned by Seller that (i) are used in the
operation of the Healthcare Communications Business and (ii) are transferable in
accordance with their terms; provided, however, that with respect to the
INFOSTAR/ILS Products, "Permits" shall include only those governmental
approvals, authorizations, negotiations, permits and licenses owned by Seller in
connection with the INFOSTAR/ILS Products that are necessary for Buyer to meet
its obligations under the Contracts.
1.56 Permitted Liens.
"Permitted Liens" shall mean Liens for Taxes not yet due and payable
and encumbrances that individually or in the aggregate would not have a Material
Adverse Effect.
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1.57 Person.
"Person" shall mean any individual, corporation, proprietorship,
partnership, limited liability company, trust or other legal entity.
1.58 Premises.
"Premises" shall mean the real property and improvements leased or
subleased by the Seller and used in the operation of the Healthcare
Communications Business, as described on Schedule 1.58 attached hereto.
1.59 Prepaid Assets.
"Prepaid Assets" shall mean all prepaid expenses and deposits of Seller
used in the operation of the Healthcare Communications Business.
1.60 Purchase Price.
"Purchase Price" shall mean $5,000,000 in cash plus the Holdback
Amount, subject to adjustment pursuant to Section 2.4 hereof.
1.61 Purchased Assets.
"Purchased Assets" shall mean all of the assets used in or necessary to
the operation of the Healthcare Communications Business, including but not
limited to:
(a) the Accounts;
(b) the Assumed Leases;
(c) the Books and Records;
(d) the Contracts;
(e) the Customer List;
(f) the Fixtures and Equipment;
(g) the Intangibles;
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(h) the Inventory;
(i) the Permits; and
(j) the Prepaid Assets,
but shall specifically exclude the Excluded Assets.
1.62 Release.
"Release" means any past or present spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing of a Hazardous Substance into the environment.
1.63 Required Consents.
"Required Consents" shall mean the consents required to be obtained to
permit the transfer of the Purchased Assets and the assignment of the Assumed
Liabilities pursuant to this Agreement as set forth on Schedule 3.4(b) and
Schedule 4.3.
1.64 Retained Liabilities.
"Retained Liabilities" shall mean the liabilities listed on Schedule
1.64.
1.65 Seller.
"Seller" shall mean eLOT, Inc., a Virginia corporation.
1.66 Severed Employees.
"Severed Employees" shall have the meaning assigned to it in Section
5.2.
1.67 Tax or Taxes.
"Tax" or "Taxes" shall mean all federal, state, local, foreign, and
other net income, gross income, gross receipts, sales, use, ad valorem,
transfer, franchise, profits, license, lease, service, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property, windfall
profits, customs, duties, or other taxes, fees, assessments, or charges of any
kind
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whatever imposed by any governmental authority, together with any interest and
any penalties, additions to tax, or additional amounts with respect thereto.
1.68 Tax Return.
"Tax Return" means all returns, declarations, reports, statements and
other documents required to be filed in respect of Taxes.
1.69 Transferred Employees.
"Transferred Employees" shall have the meaning assigned to it in
Section 5.2.
1.70 Year-End Financial Statements.
"Year-End Financial Statements" shall mean the pro forma (i) balance
sheets of the Healthcare Communications Business as of December 31, 1999 and
(ii) income statements of the Healthcare Communications Business for the year
ended December 31, 1999, attached hereto as Schedule 1.70.
ARTICLE II
PURCHASE AND SALE; ASSIGNMENT AND ASSUMPTION
2.1 Sale of Purchased Assets.
(a) At the Closing, Seller shall sell, convey, transfer,
assign and deliver to Buyer the Purchased Assets, free and clear of all liens,
claims, mortgages or encumbrances, except for Permitted Liens. Seller will
execute and deliver the ▇▇▇▇ of Sale and such other documents of transfer and
assignment as may be necessary to consummate the foregoing.
(b) At the Closing, Buyer shall purchase or assume the
Purchased Assets and in full payment therefor, subject to Section 2.1 (e)
hereof, (i) shall assume and agree to discharge all of Seller's obligations
under the Assumed Liabilities and (ii) shall pay Seller by wire transfer in
immediately available funds an amount equal to the Purchase Price. ▇▇▇▇▇▇▇▇
shall pay the
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Seller Five Million Three Hundred Thousand Dollars ($5,300,000) of the Purchase
Price for the Non-IP Assets and ADT shall pay Seven Hundred Thousand Dollars
($700,000) of the Purchase Price for the IP Assets.
(c) The parties acknowledge and agree that on the Closing
Date, subject to the conditions set forth herein, (i) all of the Intangibles and
the goodwill associated therewith (the "IP Assets") shall be conveyed to ADT;
and (ii) all of the Purchased Assets other than Intangibles (the "Non-IP
Assets"), shall be conveyed to ▇▇▇▇▇▇▇▇.
(d) The parties acknowledge and agree that on the Closing
Date, subject to the conditions set forth herein, (i) all of the Assumed
Liabilities related to the Non-IP Assets shall be assumed by ▇▇▇▇▇▇▇▇, and (ii)
all of the Assumed Liabilities related to the IP Assets shall be assumed by ADT.
(e) A portion of the Purchase Price, in the amount of One
Million Dollars ($1,000,000), shall constitute the Holdback Amount and shall be
held by Buyer and paid to Seller pursuant to and in accordance with the terms of
the Holdback Agreement.
2.2 Transfer or Sales Taxes.
Buyer and Seller shall share equally all sales, stamp, recordation,
transfer and similar Taxes arising out of, or related to, the transactions
contemplated by this Agreement.
2.3 Allocation of Purchase Price.
The Purchase Price (as adjusted pursuant to Section 2.4 hereof) and the
Assumed Liabilities (to the extent they constitute part of the amount realized
by Seller for federal income tax purposes) shall be allocated among the
Purchased Assets and the covenant not to compete provided in Section 8.9 hereof
in accordance with Schedule 2.3 hereto. This allocation shall be adjusted
promptly after determination of the Adjustment to the extent necessary to
reflect the
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Adjustment. This allocation (as so adjusted) is intended to comply with the
requirements of Section 1060 of the Code and, unless otherwise required by a
determination within the meaning of Section 1313 of the Code, no party shall
take any position inconsistent with this allocation for income tax purposes,
except that Buyer's cost for the Purchased Assets and Seller's amount realized
may differ from the amount so allocated to the extent necessary to reflect
transaction costs not reflected in the amount allocated hereunder.
2.4 Post-Closing Adjustment.
(a) The Holdback Amount will be adjusted in accordance with
Section 2.4(b) following the Closing to the extent that the Net Assets of the
Healthcare Communications Business as of the Closing Date (the "Final Net
Assets") shown upon the Final Net Asset Statement (as hereinafter defined)
differs from the Net Assets of the Healthcare Communications Business at May 31,
2000 (the "Contract Net Assets") shown upon the statement set forth in Schedule
2.4(a) attached hereto (the "Contract Net Asset Statement"). The Final Net Asset
Statement will be prepared by Buyer from the books of account of the Healthcare
Communications Business as of the Closing Date. The Final Net Asset Statement
shall be prepared in accordance with GAAP, consistent with the practices of
Seller used in the preparation of the Contract Net Asset Statement. Seller will
deliver a statement showing the Final Net Assets (the "Final Net Asset
Statement") to Buyer not later than 60 days after the Closing Date. Buyer will
give representatives of Seller access to the premises of the Healthcare
Communications Business, to its books and records and to the appropriate
personnel of Buyer for purposes of preparing the Final Net Asset Statement.
Unless Buyer notifies Seller in writing that it disagrees with the Final Net
Asset Statement within 45 days after receipt thereof, the Final Net Asset
Statement shall be conclusive and binding on Buyer and Seller. Disputes shall be
limited
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to arithmetical errors or inconsistencies arising from the failure of the Final
Net Asset Statement to be prepared in accordance with GAAP consistent with the
basis of accounting and classification procedures, judgments and estimation
methodologies employed by Seller in preparation of the Contract Net Asset
Statement. If Buyer notifies Seller in writing of its disagreement with the
Final Net Asset Statement within such 45-day period, then Buyer and Seller shall
attempt to resolve their differences with respect thereto within 30 days after
Seller's receipt of Buyer's written notice of disagreement. Any dispute
regarding the Final Net Asset Statement not resolved by Buyer and Seller within
such 30-day period will be resolved by an accounting firm mutually acceptable to
both parties or, in the absence of agreement, by an accounting firm of national
reputation selected by lot after eliminating Seller's and Buyer's principal
outside accountants and one additional firm designated as objectionable by each
of Seller and Buyer. In resolving any disputed item, the accounting firm so
selected may not assign a value to such item greater than the greatest value for
such item claimed by either party or less than the smallest value for such item
claimed by either party. The determination by the accounting firm so selected of
the Final Net Asset Statement and the Final Net Assets (with such modifications
therein, if any, as reflect such determination) shall be conclusive and binding
upon the parties. The fees and disbursements of the accounting firm under this
Section 2.4(a) will be borne by Buyer if the Final Net Assets finally determined
pursuant to this Section 2.4(a) shall be 100% or greater than 100% of the Final
Net Assets reflected on the Final Net Asset Statement originally submitted to
Buyer by Seller pursuant to Section 2.4(a) hereof and will be borne by Seller if
the Net Asset Value finally determined pursuant to this Section 2.4(a) shall be
less than 100% of the Final Net Assets reflected on the Final Net Asset Schedule
originally submitted to Buyer by Seller pursuant to Section 2.4(a) hereof.
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(b) If the Final Net Assets are less than the Contract Net
Assets, then the Holdback Amount shall be reduced by an amount equal to the
amount by which the Final Net Assets are less than the Contract Net Assets, up
to the amount of the Holdback Amount. If the Final Net Assets are greater than
the Contract Net Assets, then Buyer shall pay to Seller an amount equal to the
amount by which the Final Net Assets are greater than Contract Net Assets.
Payment shall be made by the party obligated to make such payment not more than
5 business days following the determination of the Final Net Assets pursuant to
Section 2.4(a) hereof, and the amount of such payment shall bear interest from
the Closing Date to the date of payment at the simple interest rate of six
percent (6%).
2.5 Pro-ration of Property Taxes.
The Final Net Asset Statement is to reflect (i) prepaid property Taxes
as an asset and (ii) accrued property Taxes payable by the person who is the
owner of the property after the Closing Date as a liability. The parties agree
that all property Taxes (including, without limitation, property Taxes payable
by the tenant or lessee under any lease) will be pro-rated as of the Closing
Date and that, notwithstanding any other provision of this Agreement, the
economic burden of any property Tax will be borne by Seller for all periods (or
portions thereof) through the Closing Date ("Pre-Closing Period") and by Buyer
for all periods (or portions thereof) after the Closing Date ("Post-Closing
Period"). Accordingly, notwithstanding any other provision of this Agreement,
(i) if Seller pays a property Tax with respect to a Post-Closing Period, Buyer
will reimburse Seller upon demand for the amount of such property Tax to the
extent it is not reflected as an asset on the Final Net Asset Statement; and
(ii) if Buyer pays a property Tax with respect to a Pre-Closing Period, Seller
will reimburse Buyer upon demand for the amount of such property Tax to the
extent it is not reflected as a liability on the Final Net Asset Statement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that:
3.1 Organization and Good Standing.
Seller is a corporation duly organized, validly existing and in good
standing under laws of the Commonwealth of Virginia and has full corporate power
and authority to enter into and perform its obligations hereunder. Seller has
full corporate power to carry on the Healthcare Communications Business as it is
now being conducted and to own, operate and hold under lease its assets and
properties as, and in the places where, such properties and assets now are
owned, operated or held.
3.2 Foreign Qualification.
Schedule 3.2 attached hereto lists each foreign jurisdiction where
Seller is qualified to do business as a foreign corporation and is in good
standing. There is no jurisdiction where the failure of Seller to qualify to do
business as a foreign corporation would have a Material Adverse Effect.
3.3 Authorization; Enforceability.
The execution, delivery and performance by Seller of this Agreement and
of all of the documents and instruments contemplated hereby to which it is a
party are within the corporate power of Seller and have been duly authorized by
all necessary corporate action of Seller. This Agreement is, and the other
documents and instruments required hereby to which Seller is a party will be,
when executed and delivered by Seller and the parties thereto, the valid and
binding obligations of Seller, enforceable against Seller in accordance with
their respective terms.
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3.4 Conflicts or Violations; Required Consents.
Except as set forth in Schedule 3.4(a) attached hereto, the execution,
delivery and performance of this Agreement by Seller do not violate or conflict
with any provision of the Articles of Incorporation or Bylaws of Seller, as the
case may be, any Law, judgment, order or decree binding on Seller, or any
Contract, Assumed Lease, mortgage, deed of trust, indenture, Permit, license,
franchise, commitment, authorization or concession, or other agreement or
instrument to which Seller is a party or by which it is bound.
Except as set forth on Schedule 3.4(b) hereto, no consent of any
Person, and no notice to, filing or registration with, or authorization, consent
or approval of, any governmental, regulatory or self-regulatory agency is
necessary or is required to be made or obtained by Seller.
3.5 Litigation.
Except as set forth on Schedule 3.5 hereto, there is no litigation,
arbitration proceeding, governmental investigation, citation or action of any
kind pending or, to the Knowledge of Seller, proposed or threatened against
Seller, relating to the Healthcare Communications Business, the Purchased
Assets, the Assumed Liabilities, this Agreement or the transactions contemplated
by this Agreement.
3.6 Compliance with Law.
Except as set forth on Schedule 3.6 hereto, the conduct of the
Healthcare Communications Business, the use of the Purchased Assets and
performance under the Contracts by Seller has not, since January 1, 1999, and
currently does not violate or conflict with any Law that could reasonably be
expected to have a Material Adverse Effect.
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3.7 Environmental Conditions.
(a) Except as disclosed in Schedule 3.7 attached hereto and
made a part hereof, the Seller has obtained all Environmental Permits that are
required for the lawful operation of its business. Seller (i) is in material
compliance with all terms and conditions of its Environmental Permits and with
any applicable Environmental Law, and (ii) has not received written notice of
any material violation by or material claim against the Business under any
Environmental law.
(b) Except as disclosed in Schedule 3.7 hereof, there have
been no Releases, or threatened Releases of any Hazardous Substances by Seller
into, on or under any of the properties owned or operated (or formerly owned or
operated) by Seller in respect of the Healthcare Communications Business, in any
case in such a way as to create any liability that would have a Material Adverse
Effect (including the costs of investigation and remediation) under any
applicable Environmental Law.
(c) Except as disclosed in Schedule 3.7 hereof, to Seller's
Knowledge, Seller has not been identified as a potentially responsible party at
any federal or state National Priority List ("Superfund") site.
(d) Except as disclosed in Schedule 3.7 hereof, no lawsuits or
administrative enforcement or environmental cleanup proceedings are pending with
respect to the condition or operation of the Premises.
3.8 Permits.
The Permits represent all material permits required to operate the
Healthcare Communications Business as currently conducted by Seller that are
transferable in accordance with their terms; provided, however, that Buyer
acknowledges that, with respect to the ILS
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Products, the Permits only include such permits as are necessary to perform the
obligations under certain of the Contracts. The Permits are in full force and
effect, and have been and are being complied with in all material respects.
Seller agrees to use its commercially reasonable efforts to assist Buyer in
effecting the renewal or transfer to Buyer of the Permits.
3.9 Taxes.
(a) Except as otherwise provided in this Agreement, Seller has
paid or will pay when due or finally settled all Taxes relating to the
Healthcare Communications Business or to the Purchased Assets which are or
become due and payable for all periods up to the Closing Date. Seller has
properly filed (in all material respects) on a timely basis, or so will file,
when due, all Tax Returns relating to the Healthcare Communications Business for
all periods up to the Closing Date.
(b) There are no liens for Taxes (other than for current Taxes
not yet due and payable) on the Purchased Assets.
(c) Except as set forth on Schedule 3.9 hereto, no taxing
authority has asserted any claim for the assessment of any such Tax liability.
Seller is not a foreign person for purposes of Section 1445(b)(2) of the Code.
3.10 Title to Purchased Assets.
Seller owns or has a leasehold interest in all of the Purchased Assets
free and clear of all Liens, except Permitted Liens. The Purchased Assets
constitute all personal property and the Intangibles, subject to execution of
the License Agreement, necessary in the operation of the Healthcare
Communications Business as presently conducted.
3.11 Books and Records.
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The Books and Records reflect all material financial and accounting
records, purchase orders and invoices, sales orders and sales order log books
and credit and collection records relating to the Healthcare Communications
Business since January 1, 1998. The Books and Records are complete and correct
in all material respects and have been maintained in accordance with sound
business practices.
3.12 Employment Agreements and Benefits.
Schedule 3.12 hereto is a true and complete list of all existing
agreements relating to the terms and conditions of employment, including
compensation and other benefits of (i) present Employees of Seller and (ii) the
dependents or beneficiaries of any such Persons, including, without limitation,
collective bargaining agreements and the Employee Benefit Plans.
Seller has provided to Buyer copies of its Employee Benefit Plans set
forth on Schedule 3.12.
Each Employee Benefit Plan, if any, which Buyer will assume or from
which assets and benefit liabilities will be transferred to a plan of Buyer has
been administered substantially in accordance with its terms and the
requirements of applicable Law. No action, suit or claim (other than routine
claims for benefits) has been filed with respect to any such Employee Benefit
Plan.
3.13 Employee Matters.
All of the Employees are employed by Seller. The Employees constitute
all employees that are primarily engaged on the date of this Agreement in the
operation of the Healthcare Communications Business.
All of the material independent contractors currently engaged by Seller
in the conduct of the Healthcare Communications Business are set forth on
Schedule 3.13(a) hereto and such
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independent contractors are all of the material independent contractors engaged
in the operation of the Healthcare Communications Business on the date of this
Agreement. To Seller's Knowledge, Seller is in compliance with all applicable
federal and state laws respecting employment, wages and hours with respect to
the Employees, the noncompliance with which could reasonably be expected to have
a Material Adverse Effect. Except as set forth on Schedule 3.13(b) hereto, no
complaints have been filed against Seller with any federal, state, or local
court or agency having jurisdiction over such matters alleging that Seller has
violated any Law governing employment discrimination (of any kind),
labor-management relations, wages and hours, safety and health, immigration,
contracting with government, or any common law dealing with employment. Except
as set forth on Schedule 3.13(b) hereto, no former employee of the Healthcare
Communications Business has filed any suit alleging wrongful termination.
Except as set forth on Schedule 3.13(c) attached hereto, with respect
to the Employees, Seller is not a party to, bound by, or negotiating in respect
of any collective bargaining agreement or any other agreement with any labor
union, association or other employee group, nor is any Employee represented by
any labor union or similar association. Except as set forth on Schedule 3.13(c)
attached hereto, to Seller's Knowledge, there are no formal union organizational
campaigns or representation proceedings underway or formally threatened with
respect to any Employee nor are there any existing or threatened labor strikes,
work stoppages, slowdowns, disputes, grievances, unfair labor practice charges,
labor arbitration proceedings or other disturbances affecting any Employee.
Schedule 3.13(d) hereto contains a true and complete list of the names and
titles and total compensation for the preceding fiscal year for Employees who
have an annual total compensation equal to or greater than $100,000.
3.14 Fees and Expenses of Brokers and Others.
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Seller is not committed to any liability for any brokers' or finders'
fees or any similar fees in connection with the transactions contemplated by
this Agreement, and has not retained any broker or other intermediary to act on
its behalf in connection with the transactions contemplated by this Agreement,
except that Seller has retained ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc. to represent it
in connection with such transactions. Pursuant to a separate agreement with
Seller, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc. will be paid a fee upon the consummation
of the transactions contemplated by this Agreement. Such fee and all other fees
and expenses (including attorneys' and accountants' fees) of Seller in
connection with the transactions contemplated herein shall be the responsibility
of Seller.
3.15 Insurance.
All of the insurable Purchased Assets are insured for the benefit of
Seller or are self-insured by Seller in accordance with Seller's past practices
in the conduct of the Healthcare Communications Business in amounts and against
risks reasonably deemed adequate by Seller. Seller has not been denied insurance
or suffered the cancellation of any insurance with respect to the Healthcare
Communications Business in the past five years.
3.16 Intangibles.
Seller owns exclusively or has the right to use, pursuant to license,
sublicense, agreement or permission, all Intangibles except where the failure to
own exclusively or have the exclusive right to use such Intangible or
Intangibles could not reasonably be expected to have a Material Adverse Effect.
Each item of Intangibles will be owned or available for use by Buyer on
substantially identical terms and conditions immediately subsequent to the
Closing. To Seller's Knowledge, Seller has taken all necessary or appropriate
action to maintain and protect each item of Intangibles material to the conduct
of the Healthcare Communications Business that it owns
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and no owned item of Intangibles has been abandoned except where such
abandonment could not reasonably be expected to have a Material Adverse Effect.
Each item of Intangibles used by Seller pursuant to license or other
authorization of a third party is used with the authorization of such third
party and, to the Knowledge of Seller, every other claimant of such Intangibles
thereto. To Seller's Knowledge and except as set forth in Schedule 3.16: (i)
Seller has not interfered with, infringed upon, misappropriated or otherwise
come into conflict with any intellectual property rights of any third party;
(ii) Seller has not received any pending or unresolved charge, complaint, claim,
demand or notice alleging any such interference, infringement, misappropriation
or violation (including any claim that Seller must license or refrain from using
any intellectual property rights of any third party); and (iii) no third party
currently is interfering with, infringing upon, misappropriating or otherwise
coming into conflict with any Intangibles rights of Seller. To the Knowledge of
Seller, all products manufactured, distributed and sold by Seller in the conduct
of the Healthcare Communications Business as presently conducted do not infringe
any intellectual property rights held or owned by any third party and, to the
Knowledge of Seller, none of the Intangibles held or owned by Seller is being
infringed upon by others or has been the subject of dispute, whether or not
resulting in litigation, except for orders, rulings, decrees, judgments,
stipulations, alleged infringements or disputes set forth in Schedule 3.16
hereto.
3.17 Inventory.
The Inventory constitutes all finished goods used in or related to the
conduct of the Healthcare Communications Business. The Inventory as reflected in
the Interim Financial Statements are carried at an amount not in excess of the
lower of cost or net realizable value.
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3.18 Financial Statements.
(a) The Consolidated Statements of Operations of Seller for
the three months ended March 31, 2000 have previously been delivered to Buyer
and were prepared in accordance with GAAP.
(b) The Consolidated Statements of Operations of Seller for
the years ended December 31, 1999 and 1998 (collectively, the "Audited Financial
Statements") have previously been delivered to Buyer and were prepared in
accordance with GAAP. The Audited Financial Statements present fairly the
financial condition and results of operations of Seller as of the dates, and for
the periods indicated. The Year-End Financial Statements have been derived from
the Audited Financial Statements in accordance with the methodology of the
Report of Independent Public Accountants attached to the Audited Financial
Statements.
3.19 Real Properties.
Schedule 3.19 attached hereto sets forth a complete and correct list of
all leases pursuant to which Seller leases real property as lessee or lessor.
Except as set forth in Schedule 3.19 hereto, Seller has or will have at the
Closing valid leasehold interests in all real properties listed in Schedule 3.19
hereto as leased by it, in each case free and clear of all mortgages, liens,
charges, encumbrances, easements, security interests or title imperfections
other than (i) liens not yet due and delinquent for current taxes, assessments
or governmental charges, and (ii) those which do not, individually or in the
aggregate, materially interfere with the use of the real properties or
materially detract from their value. Seller enjoys peaceful and undisturbed
possession under all real property leases listed in Schedule 3.19 hereto (the
"Real Property Leases"). The lease of real property by Seller or the use
thereof, as presently used by the Healthcare Communications Business, does not
violate any local zoning or similar land use laws
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or governmental regulations where such violation would have a Material Adverse
Effect. Seller is not in violation of or in noncompliance with any covenant,
condition, restriction, order or easement affecting the real property leased by
Seller for the benefit of the Healthcare Communications Business where such
violation or noncompliance would have a Material Adverse Effect. There is no
condemnation or, to the Knowledge of Seller, threatened condemnation affecting
the real property leased by Seller. Seller has delivered or will deliver to
Buyer prior to the Closing complete and correct copies of the Real Property
Leases listed in Schedule 3.19 hereto. Seller does not own any real property.
3.20 Material Contracts.
(a) Schedule 3.20 attached hereto lists all of the Material
Contracts (as hereinafter defined) to which Seller is a party and that relate to
the Healthcare Communications Business. Seller has furnished to Buyer true and
correct copies of all Material Contracts. As used in this Section 3.20,
"Material Contracts" means:
(i) all leases or other agreements under which Seller
is lessee of, or holds or operates, any machinery, equipment, vehicle
or other tangible personal property owned by a third party and used in
the business of the Healthcare Communications Business and which
entails annual payments, in the case of any such lease or agreement, in
excess of $50,000;
(ii) all contracts and agreements to which Seller is
a party relating to the Healthcare Communications Business and which
are:
(A) outstanding contracts with the officers,
employees, agents, consultants, advisors, salesmen,
sales representatives, distributors, sales agents or
dealers of Seller relating to the Healthcare
Communications
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Business other than contracts which by their terms
are cancelable by Seller with notice of not more than
30 days (except as required by any state laws) and
without cancellation penalties or severance payments,
in the case of any such contract, in excess of
$50,000,
(B) collective bargaining agreements of
Seller which relate to the Healthcare Communications
Business, or
(C) pension, profit-sharing, bonus,
severance, retirement, stock option or employee
benefit plans or other similar plans or arrangements
of Seller relating to the Healthcare Communications
Business;
(iii) all mortgages, indentures, security agreements,
pledges, notes, loan agreements or guarantees relating to the
Healthcare Communications Business in excess of $50,000;
(iv) all customer contracts relating to the
Healthcare Communications Business which could be reasonably expected
to result in a loss to Seller in excess of $50,000; and
(v) all uncompleted customer contracts relating to
the Healthcare Communications Business and not priced in a manner
consistent with Seller's past practices.
(b) The Material Contracts are legal, valid and binding
obligations of the Healthcare Communications Business enforceable (except as
enforcement may be limited by equitable principles limiting the right to obtain
specific performance or other equitable remedies or by applicable bankruptcy or
insolvency laws and related decisions affecting creditors' rights
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generally) against Seller; have been negotiated in good faith on an "arms
length" transaction basis; are, to the Knowledge of Seller, enforceable against
the other parties in accordance with their respective terms; are fully
assignable without the consent of any third party except as listed on Schedule
3.4(a); and, Seller has no Knowledge of any default or claimed or purported or
alleged default or state of facts which, with notice or lapse of time or both,
would constitute a default on the part of any party in the performance of any
obligation to be performed or paid by any party under the Material Contracts,
and has not received or given notice of any default or claimed or purported or
alleged default or state of facts which, with notice or lapse of time or both,
would constitute a default on the part of any party in the performance or
payment of any obligations under the Material Contracts. Except as set forth on
Schedule 3.4(a) hereto, all obligations or services required to be performed
under the Material Contracts may be performed by Buyer without any further
consents or assignments. Seller has not made any prior assignment of any
Material Contract or any of its respective rights or obligations thereunder.
3.21 Product Liability and Recalls.
(a) There is no action, suit, claim, inquiry, proceeding or
investigation in any case by or before any court or governmental body pending
or, to the Knowledge of Seller, threatened, against or involving the Healthcare
Communications Business relating to any product alleged to have been designed,
manufactured or sold by the Healthcare Communications Business and alleged to
have been defective or improperly designed or manufactured.
(b) Except as set forth in Schedule 3.21 hereto, there is no
pending, or to the Knowledge of Seller, threatened recall or investigation of
any product sold by Seller in connection with the Healthcare Communications
Business.
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3.22 Customers and Suppliers.
Schedule 3.22 attached hereto contains a list setting forth the 10
largest customers of the Healthcare Communications Business, by dollar amount,
over the 12 months ended June 30, 2000, and the 10 largest suppliers of the
Healthcare Communications Business, by dollar amount, over the 12 months ended
June 30, 2000. All purchase and sale orders and other commitments for purchases
and sales made by Seller in connection with the Healthcare Communications
Business have been made in the ordinary course of business in accordance with
past practices, and no payments have been made to any supplier or customers or
any of their respective representatives other than payments to such suppliers
for the payment of the invoiced price of supplies purchased or goods sold in the
ordinary course of business.
3.23 Undisclosed Liabilities.
Seller has no liabilities or obligations, whether accrued, absolute,
contingent or otherwise, which are material to the Healthcare Communications
Business taken as a whole, except (i) to the extent reflected or reserved for on
the Contract Net Asset Statement, (ii) liabilities or obligations disclosed in
Schedule 3.23 attached hereto and in the other Schedules hereto, or (iii)
liabilities or obligations disclosed in this Agreement.
3.24 Restrictions on Business Activities.
Except for this Agreement, to the Knowledge of Seller, there is no
agreement, judgment, injunction, order or decree binding upon Seller which has
or could reasonably be expected to have the effect of prohibiting or impairing
any business practice of Seller, acquisition of property by Seller, or the
conduct of the Healthcare Communications Business by Seller as currently
conducted.
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3.25 Accounts Receivable.
The Accounts are valid and existing receivables which arose in the
ordinary course of business and are collectible net of the respective reserves
shown on the Interim Financial Statements or on the accounting records of Seller
as of the Closing Date.
3.26 Ordinary Course of Business.
Except as disclosed on Schedule 3.26 or otherwise disclosed to Buyer
herein, Seller has operated the Healthcare Communications Business in the
ordinary course since May 31, 2000 (except as the prosecution of a sale of the
Healthcare Communications Business may have altered Seller's operations).
3.27 Disclaimers of Seller.
Notwithstanding anything contained in this Article III or any other
provision of this Agreement, it is the explicit understanding of each party
hereto that Seller is making no representation or warranty whatsoever, express
or implied, including but not limited to, and Seller expressly disclaims
liability under, any implied warranty of merchantability or fitness for a
particular purpose, beyond representations or warranties expressly given in this
Agreement, and it is understood that Buyer takes the Healthcare Communications
Business as is and where is with all faults or defects. It is understood that
any cost estimates, forecasts, projections or other predictions contained or
referred to in the Schedules hereto or in any other materials that have been or
shall hereafter be provided to Buyer or any of its affiliates, agents or
representatives (including without limitation the confidential descriptive
memorandum prepared by ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc. and any presentation by
management of Seller) are not and shall not be deemed to be representations or
warranties of Seller or any of its Affiliates, agents, employees or
representatives.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that:
4.1 Organization.
▇▇▇▇▇▇▇▇ is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and ADT is a corporation duly
organized, validly existing and in good standing under the laws of Switzerland,
and each has full corporate power and authority to enter into and perform its
obligations hereunder.
4.2 Authorization; Enforceability.
The execution, delivery and performance by Buyer of this Agreement and
of all of the documents and instruments contemplated hereby to which Buyer is a
party are within the corporate power of Buyer and have been duly authorized by
all necessary corporate action of Buyer. This Agreement is, and the other
documents and instruments required hereby to which Buyer is a party will be,
when executed and delivered by Buyer, the valid and binding obligations of
Buyer, enforceable against Buyer in accordance with their respective terms.
4.3 No Conflict or Violation; Required Consents.
The execution, delivery and performance of this Agreement by Buyer does
not and will not violate or conflict with any provision of the Articles of
Incorporation or By-Laws of Buyer, any Law, judgment, order or decree binding on
Buyer or any contract, lease, mortgage, deed of trust, indenture, permit,
license, franchise, commitment, authorization or concession, or other agreement
or instrument applicable to Buyer.
Except as set forth on Schedule 4.3 hereto and except for any filing
requirement necessary under the Securities Exchange Act of 1934, as amended, no
consent of any person, and
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no notice to, filing or registration with, or authorization, consent or approval
of, any governmental, regulatory or self-regulatory agency is necessary or is
required to be made or obtained by Buyer in connection with the consummation of
the transactions contemplated in this Agreement.
4.4 No Litigation.
There is no litigation, arbitration proceeding, governmental
investigation, citation or action of any kind pending or, to the Knowledge of
Buyer, proposed or threatened against Buyer relating to this Agreement or the
transactions contemplated hereby.
4.5 Fees and Expenses of Brokers and Others.
Buyer is not committed to any liability for any brokers' or finders'
fees or any similar fees in connection with the transactions contemplated by
this Agreement, and has not retained any broker or other intermediary to act on
its behalf in connection with the transactions contemplated by this Agreement.
4.6 Financing.
Buyer has sufficient funds available necessary to consummate the
acquisition by Buyer of the Purchased Assets in accordance with the terms of
this Agreement.
ARTICLE V
CERTAIN UNDERSTANDINGS AND AGREEMENTS
5.1 Publicity.
Neither party shall at any time during the consummation of the
transactions contemplated hereby or thereafter, make any public disclosure of
the terms and conditions of any transaction or the fact that discussions for an
acquisition are taking place, except to the extent that such disclosure is
required by law or the rules and regulations of the Securities and Exchange
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Commission and of the Nasdaq Stock Market or has been otherwise agreed to in
writing by the other party. In any event, the parties will work together to
ensure that any disclosure is accurate and in the best interests of both
parties.
5.2 Employees.
(a) Buyer agrees to offer employment commencing as of the
Closing Date to each active Employee of the Healthcare Communications Business
listed on Schedule 1.26 at substantially the same, in the aggregate, salary or
hourly wages and benefits and at the same geographic location as in effect for
such Employee immediately prior to the Effective Time. Those employees who
accept the offered employment with Buyer (the "Transferred Employees") and all
other Employees of the Healthcare Communications Business immediately prior to
the Effective Time (the "Severed Employees") shall terminate their employment
with Seller as of the Effective Time. Buyer shall assume all of Seller's rights
and obligations under all employment agreements in effect immediately prior to
the Effective Time for the Employees. Buyer shall not be obligated to assume any
Employee Benefit Plans of Seller, but shall assume Seller's obligations under
those Employee Benefit Plans to the extent specifically provided in this Section
5.2.
(b) With respect to any Transferred Employee terminated by
Buyer and any Severed Employee, Buyer and Seller agree that Buyer will be
financially responsible to the Seller for the entire cost of the severance
benefits due to such Employee under Seller's severance plans for Employees or
agreements with such Employees that are listed on Schedule 1.16, as in effect
immediately prior to the Effective Time.
(c) With respect to any Transferred Employee, Buyer shall be
solely responsible for determining whether to terminate the employment of such
Transferred Employee
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or offer employment in another capacity. As to any such Transferred Employee
terminated by Buyer after the Effective Time, Buyer shall be solely responsible
for satisfying any requirement to provide notice of termination under any Law,
any requirement to provide benefits or coverage continuation under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"),
any Employee Benefit Plan or program and any requirement with respect to
unemployment compensation benefits. In addition, as to any such Transferred
Employee, Buyer shall be solely responsible for any liability resulting from any
termination and for defending against any claim that any such termination was
wrongful or in violation of any Law.
(d) With respect to any Severed Employee, Buyer shall
indemnify and hold Seller harmless against any liability resulting from any
termination and for defending against any claim that any such termination was
wrongful or in violation of any Law. As to any Severed Employee, Buyer shall
agree to assume any obligation of Seller to offer health care continuation
coverage under COBRA, to such employees, and shall indemnify and hold Seller
harmless against any liability relating to such health care continuation
coverage obligations. As to any Severed Employee, Buyer shall assume any
requirement on Seller's part to provide benefits or coverage continuation under
any Employee Benefit Plan and any requirement with respect to unemployment
compensation benefits, which requirements arise or relate to a period of time on
or after the Closing Date, and shall indemnify and hold Seller harmless against
any such liability.
5.3 WARN Act.
Buyer acknowledges and warrants to Seller that Buyer's actions in
connection with the transactions contemplated by this Agreement will not result
in a "plant closing" or "mass layoff" within the meaning of the Worker
Adjustment and Retraining Notification Act ("WARN Act"), and Buyer shall
indemnify Seller against any expense incurred by Seller, including reasonable
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attorneys' fees, if applicable, in connection with the application of the WARN
Act to Seller as a result of the transactions contemplated by this Agreement;
provided that, prior to the Closing Date, Seller will not temporarily or
permanently close or shut down any "single site of employment" or any "facility"
or any "operating unit," "department" or "service" within a single site of
employment, as such terms are used in the WARN Act, within or constituting part
of the Healthcare Communications Business. Seller represents that the Healthcare
Communications Business has not had, and will not have, any such closures or
shutdowns within the period of ninety (90) days prior to the Closing Date.
5.4 Benefit Obligations.
(a) Buyer and Seller agree that, except as specifically set
forth in this Agreement, Seller shall be solely responsible for all liabilities
or obligations of any kind with respect to the employment by Seller of the
Employees arising prior to the Effective Time, including, but not limited to,
any claims by any Employees related to their employment by Seller or to the
termination of their employment by Seller prior to the Effective Time. Without
limiting the generality of the foregoing sentence, Seller shall be solely
responsible for the following matters related to Seller's employment of the
Employees and the termination of such employment prior to (but not as of or
after) the Effective Time: (i) any required compliance with COBRA; and (ii) all
alleged and actual obligations and claims arising from or relating to any
employment agreement, collective bargaining agreement or Employee Benefit Plans,
any grievances, arbitrations or unfair labor practice charges and relating to
compliance with any applicable state or federal labor or employment law
(including, but not limited to, all laws pertaining to discrimination, workers'
compensation, unemployment compensation, occupational
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safety and health, unfair labor practices, family and medical leave, and wages,
hours or employee benefits).
(b) Buyer and Seller further agree that, except as
specifically set forth in this Agreement, Buyer shall be solely responsible for
all liabilities or obligations of any kind with respect to the Transferred
Employees and the Severed Employees arising as of or after the Effective Time,
including, but not limited, to any claims by any Employees related to their
employment by Seller or to the termination of their employment by Seller as of
the Effective Time, or by Buyer after the Effective Time. Without limiting the
generality of the foregoing sentence, Buyer shall be solely responsible for the
following matters related to the Transferred Employees' or Severed Employees'
employment and the termination of such employment as of or after the Effective
Time: (i) any required compliance with COBRA; and (ii) all alleged and actual
obligations and claims arising from or relating to any employment agreement,
collective bargaining agreement or Employee Benefit Plans, any grievances,
arbitrations or unfair labor practice charges and relating to compliance with
any applicable state or federal labor or employment law (including, but not
limited to, all laws pertaining to discrimination, workers' compensation,
unemployment compensation, occupational safety and health, unfair labor
practices, family and medical leave, and wages, hours or employee benefits).
(c) Buyer shall assume liability as of the Closing Date for
the accrued vacation entitlement and sick pay entitlement of each Transferred
Employee and shall pay each such Employee's wages or salary during their
vacation or sick pay when taken.
(d) For all Transferred Employees, Buyer shall grant past
service credit for eligibility to participate and vesting (but not for benefit
accrual) under Buyer's qualified retirement plan(s) in which its or its
affiliates' similarly situated employees are eligible to
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participate for all service with Seller or any of its Affiliates and shall
permit entry into such plan(s) within thirty days after Closing (to the extent
the eligibility requirements therefor are then satisfied).
(e) If Buyer maintains a Code Section 401(k) Plan, Buyer shall
permit Transferred Employees to roll over into Buyer's Code Section 401(k) plan
any accrued benefit which is an eligible rollover distribution as to such
employees from any Employee Benefit Plan of Seller or any of its Affiliates
("Transferor Plan"), provided that the Transferor Plan is tax exempt under
Section 401(a) of the Code.
(f) For all Transferred Employees, Buyer shall grant past
service credit for eligibility to participate under Buyer's welfare plans and
seniority credit for Buyer's leave programs in which its or its affiliates'
similarly situated employees are eligible to participate for all service since
last day of hire with Seller or any of its Affiliates, shall waive any
preexisting condition limitations or restrictions, evidence or requirement of
insurability and any actively at work requirement for coverage (to the extent
not applicable under the Employee Benefit Plans in which such Transferred
Employees participate immediately prior to Closing) and shall permit entry into
such plans and programs immediately after Closing (to the extent the eligibility
requirements therefor are then satisfied).
5.5 Bulk Transfers Laws.
Buyer hereby waives compliance by Seller with the provisions of any
applicable bulk transfers laws of any U.S. jurisdiction (including any similar
laws relating to any Taxes). Seller shall promptly pay and discharge when due,
or contest or litigate all claims of creditors that are asserted against Buyer
by reason of Seller's non-compliance with such laws and agrees to indemnify and
hold Buyer harmless from and against and shall on demand reimburse Buyer for
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any and all Losses suffered by Buyer by reason of Seller's failure to pay and
discharge any such claims (or Taxes) provided that the foregoing shall not
affect in any way Buyer's obligations with respect to the Assumed Liabilities.
5.6 Third Party Consents.
Seller shall, with the cooperation of Buyer, obtain as soon as
practicable after the Closing any and all consents necessary for the valid and
binding assignment of the Contracts to Buyer. All such consents will be in
writing and in form and substance reasonably satisfactory to Buyer.
ARTICLE VI
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
Each and every obligation of Buyer to be performed on the Closing Date
shall be subject to the satisfaction prior to or at the Closing of the following
express conditions precedent:
6.1 Compliance With Law.
The Permits shall have been obtained so that consummation of the
transactions contemplated by this Agreement will be in compliance with
applicable Laws.
6.2 Accuracy of Representations and Warranties.
The representations and warranties of Seller set forth in this
Agreement shall be true and correct in all material respects as of the Closing
Date as if made as of such time, excepting those representations and warranties
expressly made as of a particular date.
6.3 Proceedings and Instruments Satisfactory.
All proceedings, corporate or other, to be taken by Seller in
connection with the transactions contemplated by this Agreement, and all
documents incident thereto, shall be reasonably satisfactory in form and
substance to Buyer and Buyer's counsel, and Seller shall have made available to
Buyer for examination the originals or true and correct copies of all
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documents that Buyer may reasonably request in connection with the transactions
contemplated by this Agreement.
6.4 No Litigation.
There shall not have been entered any judgment, decree or order of any
governmental authority, administrative agency or court of competent jurisdiction
that prevents consummation of this Agreement.
6.5 Seller's Performance.
All material obligations of Seller to be performed or complied with on
or before the Closing Date, pursuant to the terms of this Agreement, shall have
been duly performed or complied with in all material respects on or before the
Closing Date.
6.6 Deliveries at Closing.
Seller shall have delivered, or caused to have been delivered, to Buyer
the following documents, each properly executed and dated as of the Closing Date
and satisfactory in form and substance to Buyer:
(a) the ▇▇▇▇ of Sale;
(b) the Assignment and Assumption Agreement; and
(c) the License Agreement.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
Each and every obligation of Seller to be performed on the Closing Date
shall be subject to the satisfaction prior to or at the Closing of the following
express conditions precedent:
7.1 Compliance with Law.
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There shall have been obtained any and all permits, approvals and
consents of any governmental body or agency that may be necessary or appropriate
so that consummation of the transactions contemplated by this Agreement will be
in compliance with applicable Laws.
7.2 Accuracy of Representations and Warranties.
The representations and warranties of Buyer set forth in this Agreement
shall be true and correct in all material respects as of the Closing Date as if
made as of such time.
7.3 Proceedings and Instruments Satisfactory.
All proceedings, corporate or other, to be taken by Buyer in connection
with the transactions contemplated by this Agreement, and all documents incident
thereto, shall be reasonably satisfactory in form and substance to Seller and
its counsel, and Buyer shall have made available to Seller for examination the
originals or true and correct copies of all documents that Seller may reasonably
request in connection with the transactions contemplated by this Agreement.
7.4 No Litigation.
There shall not have been entered any judgment, decree or order of any
governmental authority, administrative agency or court of competent jurisdiction
that prevents consummation of this Agreement.
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7.5 Buyer's Performance.
All material obligations of Buyer to be performed or complied with on
or before the Closing Date, pursuant to the terms of this Agreement, shall have
been duly performed or complied with on or before the Closing Date.
7.6 Deliveries at Closing.
In addition to the payment of the Purchase Price, Buyer shall have
delivered, or caused to have been delivered, to Seller the following documents,
each properly executed and dated as of the Closing Date and satisfactory in form
and substance to Seller:
(a) the Assignment and Assumption Agreement; and
(b) the License Agreement
ARTICLE VIII
ACTIONS BY SELLER AND BUYER AFTER THE CLOSING
8.1 Seller's Indemnity.
(a) Upon closing of the transactions contemplated herein,
Seller hereby agrees to indemnify and hold Buyer, its Affiliates, successors and
assigns and their respective representatives ("Buyer's Indemnitees") harmless
from and against, and agrees to defend promptly Buyer's Indemnitees from and
reimburse Buyer's Indemnitees for, any and all losses, damages, costs, expenses,
liabilities, obligations and claims of any kind, including, without limitation,
reasonable attorneys' fees and other legal costs and expenses, (collectively,
the "Losses"), that Buyer's Indemnitees may at any time suffer or incur, or
become subject to, as a result of or in connection with: (i) any breach or
inaccuracy of any of the representations and warranties made by Seller in or
pursuant to this Agreement or any instrument or document executed by Seller in
connection with or as a result of this Agreement; (ii) the Retained
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Liabilities; (iii) the non-fulfillment of any covenant, undertaking, agreement
or other obligation of Seller under this Agreement; or (iv) any noncompliance by
Seller with bulk sales laws or similar laws which may be applicable to the sale
or transfer of the Purchased Assets (hereinafter referred to collectively as
"Claims"); provided, however, that Buyer's Indemnitees shall have the right to
be indemnified, held harmless from, defended or reimbursed under Section 8.1(a)
hereof only if such Claims have actually been incurred and asserted on or before
one year after the Closing Date, except the time limitation with respect to the
representations set forth in Section 3.7 and 3.9 shall be 30 days after
expiration of the applicable statute of limitations with respect to the tax or
environmental matters giving rise to a claim thereunder.
(b) In the event a claim against Buyer's Indemnitees arises
that is covered by the indemnity provisions of Section 8.1(a) hereof, notice
shall be given promptly by Buyer to Seller. Seller shall have the right to
contest and defend by all appropriate legal proceedings any third-party claim
and to control all settlements (unless Buyer agrees to assume the cost of
settlement and to forgo such indemnity) and to select lead counsel to defend any
and all third-party claims at the sole cost and expense of Seller, as the case
may be; provided, however, that Seller may not effect any settlement that could
result in any cost, expense or liability to Buyer's Indemnitees unless Buyer
consents in writing to such settlement, which consent shall not be unreasonably
withheld. Any of Buyer's Indemnitees may select and engage counsel to
participate in any defense, in which event such counsel shall be at the sole
cost and expense of the party selecting and engaging such counsel. In connection
with any such claim, action or proceeding, the parties shall cooperate with each
other and provide each other with access to relevant Books and Records in their
possession.
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8.2 Buyer's Indemnity.
(a) Upon closing of the transactions contemplated herein,
Buyer hereby agrees to indemnify and hold Seller and its Affiliates, successors
and assigns and their respective representatives (collectively, "Seller's
Indemnitees") harmless from and against, and agree to defend promptly Seller's
Indemnitees from and reimburse Seller's Indemnitees for, any and all Losses that
Seller's Indemnitees may at any time suffer or incur, or become subject to, as a
result of or in connection with: (i) any breach or inaccuracy of any of the
representations and warranties made by Buyer in or pursuant to this Agreement or
any instrument or document executed by Buyer in connection with or as a result
of this Agreement; (ii) the Assumed Liabilities; (iii) any claims relating to
Seller's collective bargaining agreements listed on Schedule 3.13(c) arising out
of the transactions contemplated hereby or in connection with Buyer's failure to
assume any collective bargaining agreement listed on Schedule 3.13(c) on or
after the Closing Date, including without limitation any severance obligations
under those agreements and any litigation, arbitration or other proceedings
instituted by the union or union employees in connection with or as a result of
this Agreement or the transactions contemplated hereby; (iv) any claims relating
to Buyer's failure to recognize and bargain with any Seller union; (v) the
non-fulfillment of any covenant, undertaking, agreement or other obligation of
Seller under this Agreement and (vi) claims by third parties against Seller
relating to the operation and ownership by Buyer of the Purchased Assets, the
performance by Buyer under the Contracts and the Assumed Leases and the conduct
of the Buyer in connection with the Healthcare Communications Business from and
after the Closing Date, other than with respect to the Retained Liabilities;
provided, however, that, Seller's Indemnitees shall have no right to be
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indemnified, held harmless from, defended or reimbursed under Section 8.2(a)
hereof unless such Claims have actually been incurred and asserted on or before
one year after the Closing Date.
(b) In the event a claim against Seller's Indemnitees arises
that is covered by the indemnity provisions of Section 8.2(a) hereof, notice
shall be given promptly by Seller to Buyer. Buyer shall have the right to
contest and defend by all appropriate legal proceedings such claim and to
control all settlements (unless Seller agrees to assume the cost of settlement
and to forgo such indemnity) and to select lead counsel to defend any and all
such claims at the sole cost and expense of Buyer; provided, however, that Buyer
may not effect any settlement that could result in any cost, expense or
liability to Seller's Indemnitees unless Seller consents in writing to such
settlement, which consent shall not unreasonably be withheld. In the event
Seller unreasonably withholds its consent to a bona fide offer of settlement,
Seller may continue to pursue the defense of such matter solely at Seller's
cost, and Buyer shall have no further obligation to defend or indemnify Seller
with respect to such matter. Any of Seller's Indemnitees may select and engage
counsel to participate in any defense, in which event such counsel shall be at
the sole cost and expense of the party selecting and engaging such counsel. In
connection with any such claim, action or proceeding, the parties shall
cooperate with each other and provide each other with access to relevant Books
and Records in their possession.
8.3 Limitations on Indemnification.
Seller shall not have any obligation to indemnify Buyer's Indemnitees
in respect of Losses incurred pursuant to Section 8.1(a), and Buyer shall not
have any obligation to indemnify Seller's Indemnitees in respect of Losses
incurred pursuant to Section 8.2(a), in either case unless and until the
aggregate amount of such Losses exceeds $70,000 (the "Basket"), and then only to
the extent such claim or claims in the aggregate exceed $70,000; provided,
however, that the
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maximum amount recoverable by either party and its Affiliates in respect of such
Losses shall not exceed $5,000,000 (the "Indemnity Cap"), and provided, further,
that the Basket and the Indemnity Cap shall not apply to Losses in connection
with (i) Section 8.2(a)(iii), (ii) breaches of Section 3.7 or Section 3.9 or
(iii) a decline in the Final Net Assets attributable to a breach of Section 3.26
hereof. In addition, neither Buyer's Indemnitees nor Seller's Indemnitees shall
have the right to be indemnified under this Article VIII for Claims in
connection with Losses reflected on the Final Net Asset Statement for which
there is a right to an adjustment of the Holdback Amount under Section 2.4
hereof (or for which there would be a right to an adjustment thereunder if total
adjustments were not limited to the Holdback Amount).
8.4 Indemnity Amounts to be Computed on After-Tax Basis.
The amount of any indemnification payable under any of the provisions
of this Article VIII shall be (i) net of any federal or state income tax benefit
realized or the then-present value (based on a discount rate of 6%) of any such
income tax benefit to be realized by the indemnified party by reason of the
facts and circumstances giving rise to the indemnification; (ii) increased by
the amount of any federal or state income tax required to be paid by the
indemnified party on the accrual or receipt of the indemnification payment
(including any amount payable pursuant to this clause (ii)); and (iii) reduced
by any insurance recoveries offsetting the amount of the loss. For purposes of
the preceding sentence, the amount of any state income tax benefit or cost shall
take into account the federal income tax effect of such benefit or cost.
8.5 Litigation Support.
In the event and for so long as Buyer or Seller actively is contesting
or defending against any action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand in connection with (a) any transaction
contemplated under this Agreement, or (b) the Healthcare
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Communications Business, the other parties will cooperate with it and its
counsel in the contest or defense, make available its personnel and provide such
testimony and access to its books and records as shall be necessary in
connection with the contest or defense, all at the sole cost and expense of the
contesting or defending party.
8.6 Post-Closing Cooperation.
Following the Closing Date, each party will cooperate in good faith
with the other and will take all appropriate action and execute and deliver any
document, instrument or conveyance of any kind which may be reasonably necessary
or advisable to carry out any of the transactions contemplated hereby.
8.7 Taxes.
To the extent relevant to the Purchased Assets and the Healthcare
Communications Business, the parties hereto agree that until December 31, 2005:
(i) Seller shall provide Buyer and Buyer shall provide Seller with such
assistance as may reasonably be required in connection with the preparation of
any Tax Return and the conduct of any audit or other examination by any taxing
authority or in connection with judicial or administrative proceedings relating
to any liability for Taxes; (ii) Seller shall retain and provide Buyer and Buyer
shall retain and provide Seller with all records or other information that may
be relevant to the preparation of any Tax Returns, or the conduct of any audit
examination or other tax proceeding; and (iii) Seller and Buyer, as appropriate,
shall retain all relevant documents, including prior years' Tax Returns,
supporting work schedules and other records or information that may be relevant
to such Tax Returns and shall not destroy or otherwise dispose of any such
records without at least 30 days prior written notice to Buyer or Seller, as
appropriate.
8.8 Books and Records; Personnel.
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For a period of five years from the Closing Date:
(a) Buyer shall not dispose of or destroy any of the Books and
Records without first offering to turn over possession thereof to Seller by
written notice to Seller at least 30 days prior to the proposed date of such
disposition or destruction.
(b) Buyer shall allow Seller and its agents access to all
Books and Records upon five business days' advance written notice during normal
working hours at Buyer's principal place of Healthcare Communications Business
or at any location where any Books and Records are stored, and Seller shall have
the right, at its own expense, to make copies of any Books and Records;
provided, however, that any such access or copying shall be had or done in such
a manner so as not to interfere with the normal conduct of Buyer's Healthcare
Communications Business.
(c) Buyer shall make available to Seller upon written request
(i) copies of any Books and Records, (ii) Buyer's personnel to assist Seller in
locating and obtaining any Books and Records, and (iii) any of Buyer's personnel
whose assistance or participation is reasonably required by Seller or any of its
affiliates in anticipation of, or preparation for, existing or future
litigation, Tax Returns or other matters in which Seller or any of its
affiliates is involved. Seller shall reimburse Buyer for the reasonable salary
and out-of-pocket expenses incurred in performing the covenants contained in
this Section 8.7.
(d) Seller will (i) provide Buyer reasonable access to the
Books and Records for the period prior to January 1, 1997 upon five business
days' advance written notice during normal working hours at Seller's principal
place of business or at any location where any such Books and Records are
stored; provided, however, that any such access shall be had or done in such a
manner so as not to interfere with the normal conduct of Seller's business and
(ii) at least
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30 days prior to the destruction of any Books and Records relating to the
Healthcare Communication Business, offer such Books and Records by written
notice to Buyer. Buyer shall reimburse Seller for the reasonable salary and
out-of-pocket expenses incurred in performing the services for Buyer described
in this Section 8.8.
8.9 Covenant Not to Compete.
(a) Seller agrees that, as part of the consideration for the payment by
Buyer of the Purchase Price, for a period of five (5) years immediately
following the Closing Date, neither Seller nor any of its divisions or
subsidiaries will, directly or indirectly, operate, perform, have any interest
in or otherwise be engaged in or concerned with a business which develops,
manufactures, prepares, sells, installs or distributes products or performs
services in competition with the Healthcare Communications Business; provided,
however, that nothing in this Section 8.9 shall prevent Seller from engaging in
development, manufacture, preparation, sale, installation or distribution with
respect to the INFOSTAR/ILS Products or other businesses relating to the
Excluded Intangibles. For these purposes, ownership of securities of a company
whose securities are publicly traded under a recognized securities exchange not
in excess of 10% of any class of such securities shall not be considered to be
competition with Buyer.
(b) Further, Seller agrees that for a period of five (5) years
following the Closing Date neither Seller nor any of its related or affiliated
entities will induce any of Seller's employees hired by Buyer on the Closing
Date to terminate his or her relationship with Buyer and to work in a business
that competes with the Healthcare Communications Business.
(c) Seller acknowledges that the restrictions on its activities under
Sections 8.9(a) and (b) hereof are necessary for the reasonable protection of
Buyer and constitute a material
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inducement to Buyer's entering into and performing this Agreement. Seller
further acknowledges, stipulates and agrees that a breach of any of such
obligations and agreements will result in irreparable harm and continuing damage
to Buyer for which there will be no adequate remedy at law and further agrees
that in the event of any breach of said obligations and agreements, Buyer and
its successors and assigns will be entitled to injunctive relief and to such
other relief as is proper under the circumstances.
ARTICLE IX
[INTENTIONALLY DELETED]
ARTICLE X
MISCELLANEOUS
10.1 Entire Agreement; Amendment.
This Agreement and the documents to be delivered pursuant hereto
constitute the entire agreement between the parties pertaining to the subject
matter hereof, and supersede all prior and contemporaneous agreements,
understandings, negotiations and discussions of the parties, whether oral or
written, and there are no warranties, representations or other agreements
between the parties in connection with the subject matter hereof. No amendment,
supplement, modification, waiver or termination of this Agreement shall be
binding unless executed in writing by the party to be bound thereby. No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision of this Agreement, whether or not similar, nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided. The representations and warranties of each party hereto contained in
this Agreement and the documents delivered pursuant hereto shall constitute all
representations and warranties of each party hereto and shall be deemed to be
material and to have been relied upon by the other party notwithstanding any
investigation heretofore or hereafter made by the other party.
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10.2 Expenses.
Each of the parties hereto shall pay the fees and expenses of their
respective counsel, accountants, agents, representatives and other experts and
the other expenses incident to the negotiation and preparation of this Agreement
and consummation of the transactions contemplated hereby.
10.3 Governing Law; Consent to Jurisdiction.
This Agreement shall be construed and interpreted according to the laws
of the Commonwealth of Virginia, without regard to the conflict of law
principles or rules thereof. Each of the parties hereto, in respect of itself
and its properties, agrees to be subject to (and hereby irrevocably submits to)
the nonexclusive jurisdiction of any United States federal or Virginia state
court sitting in Richmond, Virginia, in respect of any suit, action or
proceeding arising out of or relating to this Agreement or the transactions
contemplated herein, and irrevocably agrees that all claims in respect of any
such suit, action or proceeding may be heard and determined in any such court.
Each of the parties hereto irrevocably waives, to the fullest extent it may
effectively do so under applicable Law, any objection to the laying of the venue
of any such suit, action or proceeding brought in any such court and any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum. Either party hereto may make service on the
other party by sending or delivering a copy of the process to the party to be
served at the address and in the manner provided for the giving of notices in
Section 10.5 hereof. Nothing in this Section 10.3, however, shall affect the
right of any party to bring any action or proceeding arising out of or relating
to this Agreement in any other court or to serve legal process in any other
manner permitted by Law or in equity.
10.4 Assignment.
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This Agreement and each party's respective rights hereunder may not be
assigned by either party without the prior written consent of the other party.
All agreements entered into pursuant to this Agreement shall be assignable in
accordance with their respective terms. Notwithstanding the foregoing, Buyer may
assign its rights and obligations under this Agreement in whole or in part to
any Affiliate that is an entity under common control with Buyer without the
consent of Seller.
10.5 Notices.
All communications, notices and disclosures required or permitted by
this Agreement shall be in writing and shall be deemed to have been given when
received (a) personally or by messenger, (b) by overnight delivery service to an
officer of the other party, or (c) by United States mail, certified or
registered mail, postage prepaid, return receipt requested, in all cases
addressed to the Person for whom it is intended at his address set forth below,
unless and until either of such parties notifies the other in writing of a
change of address:
If to Seller: eLOT, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Senior Vice President
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Hunton & ▇▇▇▇▇▇▇▇
Riverfront Plaza, East Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer: ▇▇▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, US Assistant Controller
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Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
10.6 Counterparts; Headings.
This Agreement may be executed in several counterparts, each of which
shall be deemed an original, but such counterparts shall together constitute but
one and the same Agreement. The Table of Contents and Article and Section
headings in this Agreement are inserted for convenience of reference only and
shall not constitute a part hereof.
10.7 Severability.
If any provision, clause or part of this Agreement, or the application
thereof under certain circumstances, is held invalid, the remainder of this
Agreement, or the application of such provision, clause or part under other
circumstances, shall not be affected thereby.
10.8 No Reliance.
No third party is entitled to rely on any of the representations,
warranties and agreements contained in this Agreement. Buyer and Seller assume
no liability to any third party because of any reliance on the representations,
warranties and agreements of Buyer and Seller contained in this Agreement.
10.9 Interpretation.
Unless the context requires otherwise, all words used in this Agreement
in the singular number shall extend to and include the plural, all words in the
plural number shall extend to and include the singular and all words in any
gender shall extend to and include all genders. All
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references to contracts, agreements, leases or other understandings or
arrangements shall refer to oral as well as written matters. The specificity of
any representation or warranty contained herein shall not be deemed to limit the
generality of any other representation or warranty contained herein.
10.10 Specific Performance.
Buyer and Seller hereby agree that irreparable damage would occur in
the event any of the provisions of this Agreement were not performed in
accordance with the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof, in addition to any other remedy at law
or equity.
10.11 Further Assurances.
Each party agrees that it will execute and deliver, or cause to be
executed and delivered, on or after the date of this Agreement, all such other
instruments and will take all reasonable actions as may be necessary to transfer
and convey the Purchased Assets to Buyer, on the terms herein contained, and to
consummate the transactions herein contained to effectuate the provisions and
purposes hereof.
10.12 Waiver of Jury Trial.
SELLER AND BUYER HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each party has caused this Purchase
Agreement to be duly executed in its name by its duly authorized
officer as of the day and year first above written.
SELLER: eLOT, Inc.
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President, Law and
Administration
BUYER: ▇▇▇▇▇▇▇▇ CORPORATION
By: __________________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
ADT SERVICES AG
By: __________________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
[Exhibits and Schedules Omitted]
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