ASSET PURCHASE AGREEMENT
----------------------------------------------------
By and Among
DONNELLEY ENTERPRISE SOLUTIONS INCORPORATED,
▇▇▇▇▇ & CO., INC.,
WINSTAR COMMUNICATIONS, INC.
and
WINSTAR LANSYSTEMS ACQUISITION, LLC
Dated as of July 31, 1998
----------------------------------------------------
TABLE OF CONTENTS
Page
ARTICLE I--DEFINITIONS...........................................................................................1
SECTION 1.1 Certain Defined Terms.................................................................1
ARTICLE II--PURCHASE AND SALE....................................................................................10
SECTION 2.1 Purchase and Sale of Acquired Assets; Excluded Assets.................................10
(a) Purchase and Sale of Acquired Assets.........................................10
(b) Excluded Assets..............................................................12
SECTION 2.2 Assumed Liabilities; Excluded Liabilities.............................................13
(a) Liabilities Assumed by Purchaser.............................................13
(b) Excluded Liabilities.........................................................13
SECTION 2.3 Purchase Price........................................................................14
(a) Purchase Price...............................................................14
(b) Allocation of Purchase Price.................................................15
(c) Adjustments..................................................................15
SECTION 2.4 Closing...............................................................................16
SECTION 2.5 Closing Deliveries by Seller..........................................................16
SECTION 2.6 Closing Deliveries by Purchaser.......................................................17
SECTION 2.7 Escrow................................................................................17
ARTICLE III--REPRESENTATIONS AND WARRANTIES OF SELLER AND ▇▇▇▇▇..................................................17
SECTION 3.1 Organization; Authority, Etc..........................................................18
SECTION 3.2 No Conflicts; No Violation............................................................18
SECTION 3.3 Financial Information, Books and Records and Operating Data...........................19
SECTION 3.4 No Undisclosed Liabilities............................................................20
SECTION 3.5 Receivables...........................................................................20
SECTION 3.6 Conduct in the Ordinary Course; Absence of Certain Changes, Events and
Conditions............................................................................21
SECTION 3.7 Litigation............................................................................24
SECTION 3.8 Certain Interests.....................................................................24
SECTION 3.9 Compliance with Laws..................................................................24
SECTION 3.10 Brokers....................................................................................25
SECTION 3.11 Material Contracts.........................................................................25
SECTION 3.12 Intellectual Property......................................................................27
SECTION 3.13 Real Property..............................................................................27
SECTION 3.14 Tangible Personal Property.................................................................28
SECTION 3.15 Acquired Assets............................................................................28
SECTION 3.16 Customers..................................................................................28
SECTION 3.17 Suppliers..................................................................................29
SECTION 3.18 Employment and Employee Benefit Matters....................................................29
SECTION 3.19 Taxes......................................................................................29
SECTION 3.20 Insurance..................................................................................30
SECTION 3.21 Permits, Licenses, Certifications, Etc.....................................................30
SECTION 3.22 Full Disclosure............................................................................30
SECTION 3.23 No Other Representations or Warranties.....................................................30
SECTION 3.24 No Knowledge of Breach of Parent or Purchaser Representations..............................31
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ARTICLE IV--REPRESENTATIONS AND WARRANTIES OF PURCHASER AND PARENT...............................................31
SECTION 4.1 Organization; Authority, Etc..........................................................31
SECTION 4.2 No Conflicts; No Violation............................................................32
SECTION 4.3 Brokers...............................................................................33
SECTION 4.4 Financial Capacity....................................................................33
SECTION 4.5 Litigation............................................................................33
SECTION 4.6 No Other Representations or Warranties................................................33
SECTION 4.7 No Knowledge of Breach of Seller Representations......................................33
ARTICLE V--ADDITIONAL AGREEMENTS.................................................................................33
SECTION 5.1 Conduct of Business of the Division Prior to the Closing..............................33
SECTION 5.2 Access to Information.................................................................34
SECTION 5.3 Confidentiality.......................................................................35
SECTION 5.4 Regulatory and Other Authorizations; Notices and Consents.............................35
SECTION 5.5 Notice of Developments................................................................36
SECTION 5.6 Hiring of Employees...................................................................37
SECTION 5.7 No Shopping...........................................................................37
SECTION 5.8 Further Assurances....................................................................38
SECTION 5.9 Non-Competition.......................................................................39
SECTION 5.10 Shared Support and Personnel...............................................................40
SECTION 5.11 Liabilities to be Paid at Closing..........................................................41
SECTION 5.12 Other Information..........................................................................41
SECTION 5.13 Certain Lease Expenses.....................................................................41
SECTION 5.14 HSR Filing Fees............................................................................42
ARTICLE VI--CONDITIONS TO CLOSING................................................................................42
SECTION 6.1 Conditions to Obligations of Seller...................................................42
(a) Purchaser's Deliveries.......................................................42
(b) Antitrust Matters............................................................42
SECTION 6.2 Conditions to Obligations of Parent and Purchaser.....................................42
(a) Consents and Approvals.......................................................42
(b) Seller's Deliveries..........................................................42
(c) Antitrust Matters............................................................42
ARTICLE VII--INDEMNIFICATION.....................................................................................43
SECTION 7.1 Indemnification and Reimbursement.....................................................43
ARTICLE VIII--TERMINATION AND WAIVER.............................................................................46
SECTION 8.1 Termination...........................................................................46
ARTICLE IX--GENERAL PROVISIONS...................................................................................47
SECTION 9.1 Miscellaneous.........................................................................47
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SCHEDULES
2.1(a)(i) Leased Real Property
2.1(a)(vii) Assigned Contracts
2.1(a)(viii) General, financial and personnel records, computer software
programs and databases
2.1(a)(xii) All Other Assets, except
2.1(a)(xiii) Permits, except
2.1(b)(i) Excluded Contracts
2.1(b)(vi) Other Excluded Assets
3.2 No Conflicts; No Violation
3.3 Financial Information, Books and Records and Operating Data
3.4 No Undisclosed Liabilities
3.5 Receivables
3.6 Conduct in the Ordinary Course; Absence of Certain Changes,
Events and Conditions
3.7 Litigation
3.9 Compliance with Laws
3.11(a) Material Contracts
3.11(b) Material Contracts valid and binding and in full force and
effect, except
3.11(c) Customer Contracts constituting Backlog
3.12 Intellectual Property
3.13 Real Property
3.14 Tangible Personal Property
3.15(a) Acquired Assets--good and marketable title to Acquired Assets
3.15(b) Acquired Assets--constitute all properties, assets and rights
necessary to conduct business of Division
3.15(c) Acquired Assets-- Purchaser will retain Seller's interest in
the Acquired Assets without incurring any penalty
3.16 Customers
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3.17 Suppliers
3.18 Employment and Employee Benefit Matters
3.20 Insurance
3.21 Permits, Licenses, Certifications, Etc.
5.10 Shared Support and Personnel
6.2(a) Required Vendor Consents
EXHIBITS
A -- Escrow Agreement
B -- ▇▇▇▇ of Sale
C -- Assignment and Assumption Agreement
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of July 31, 1998, by and
among DONNELLEY ENTERPRISE SOLUTIONS INCORPORATED, a Delaware corporation
("Seller"), ▇▇▇▇▇ & CO., INC., a Delaware corporation ("▇▇▇▇▇"), WINSTAR
COMMUNICATIONS, INC., a Delaware corporation ("Parent"), and WINSTAR LANSYSTEMS
ACQUISITION, LLC, a Delaware limited liability company ("Purchaser").
W I T N E S S E T H:
WHEREAS, the LANSystems division of Seller (the "Division") is
engaged in the business of the management of electronic information and
provision of other information technology services, including systems
integration, consulting and software development; and
WHEREAS, Seller desires to sell to Purchaser and Purchaser
desires to purchase from Seller the assets of the Division, upon the terms and
subject to the conditions set forth herein; and
WHEREAS, ▇▇▇▇▇ is the owner of all of the outstanding capital
stock of Seller; and
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, Seller and Purchaser
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"Acquired Assets" has the meaning specified in Section 2.1 (a).
"Acquisition Transaction" has the meaning specified in Section 5.7.
"Action" means any claim, action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority.
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"Affiliate" means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, such specified Person.
"Affiliated Party Transaction" has the meaning specified in Section 3.6(i).
"Agreement" or "this Agreement" means this Asset Purchase Agreement, dated
as of July 31, 1998, among Seller, ▇▇▇▇▇, Parent and Purchaser (including all of
the Exhibits and Schedules hereto), and all amendments hereto made in accordance
with the provisions of Section 9.1(e).
"Assigned Contracts" has the meaning specified in Section 2.1(a)(vii).
"Assignment and Assumption Agreement" has the meaning specified in Section
2.5(b).
"Assumed Liabilities" has the meaning specified in Section 2.2(a).
"Backlog" means, as of the date in question, the value to Seller of the
portion of Customer Contracts outstanding on such date which has not been
completed by Seller. For purposes of determining the amount of Backlog, such
value shall be determined in accordance with GAAP and, with respect to any
portion thereof derived from Customer Contracts on a time and materials basis,
shall be based on Seller's good faith judgment as to the amount of time
necessary to complete such Customer Contracts.
"Backlog Deficiency" means an amount equal to the difference, if positive,
between (a) $7.8 million and (b) the Backlog, as of the Closing Date, of
Customer Contracts in effect on the Transfer Date for which Purchaser receives
the economic benefit. For purposes of this Agreement, "economic benefit" means
the receipt by Purchaser of payment within 45 days after the due date for all
work performed by it after the Closing Date and timely billed or the receipt of
consent of the customer to the assignment of the Customer Contract to Purchaser.
Purchaser shall be deemed to have received the economic benefit of a Customer
Contract if it receives the economic benefit of such Customer Contract for a
period of sixty (60) days after the Closing Date or such shorter period until
the scheduled expiration or termination of such Customer Contract or the
termination of such Customer Contract by the customer because of the failure of
performance by Purchaser.
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"▇▇▇▇ of Sale" has the meaning specified in Section 2.5(a).
"▇▇▇▇▇" has the meaning specified in the head paragraph of this Agreement.
"Business Day" means any day that is not a Saturday, Sunday or other day on
which banks are required or authorized by law to be closed in The City of New
York.
"Claim Notice" has the meaning specified in Section 7.1(d).
"Closing" has the meaning specified in Section 2.4.
"Closing Date" has the meaning specified in Section 2.4.
"Code" means the Internal Revenue Code of 1986, as the same may be amended
from time to time.
"control" (including the terms "controlling", "controlled by" and "under
common control with"), with respect to the relationship between or among two or
more Persons, means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or otherwise, including, without limitation,
the ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"Customer Contracts" means the Assigned Contracts pursuant to which the
Division provides the services of the Division relating to the management of
electronic information and the provision of other information technology
services and products, including systems integration, consulting and software
development.
"Customer Information" means the names, identities, addresses, books,
records, files, data, contracts, correspondence and all other information
regarding the customers of the Division.
"Damages" has the meaning specified in Section 7.1(c).
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"Division" has the meaning specified in the first recital clause.
"dollars" and "$" means the lawful currency of the United States of
America.
"Employee Plan" means any plan, contract, commitment, program, policy,
arrangement, understanding or practice providing benefits to any employee,
former employee, director or agent of Seller employed in the business of the
Division (whether or not the person maintains, contributes to, or is bound by
any such plan, contract, commitment, program, policy, arrangement, understanding
or practice), including, without limitation, (a) any "employee benefit plan"
(within the meaning of Section 3(3) of ERISA), (b) any profit-sharing, deferred
compensation, bonus, stock option, stock purchase, pension, retainer,
consulting, retirement, severance, welfare or incentive plan, contract,
commitment, program, policy, arrangement, understanding or practice, (c) any
plan, contract, commitment, program, policy, arrangement, understanding or
practice providing for "fringe benefits" or perquisites, including, without
limitation, benefits relating to automobiles, clubs, vacation, child care,
parenting, sabbatical or sick leave and medical, dental, hospitalization, life
insurance and other types of insurance, (d) any pension plan, and (e) any
Multiemployer Plan (as defined in ERISA).
"Encumbrance(s)" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement with a creditor or
restriction of any kind, including, without limitation, any restriction on the
use, voting, transfer, receipt of income or other exercise of any attributes of
ownership.
"ERISA" means the Employee Retirement Income Security Act of 1974 and the
related regulations, in each case as amended as of the date hereof and as the
same may be amended or modified from time to time. References to titles,
subtitles, sections, paragraphs or other provisions of ERISA and the related
regulations also refer to successor provisions.
"Escrow Agent" means The Bank of New York.
"Escrow Agreement" means the escrow agreement to be entered into on the
Closing Date by and between Seller, Purchaser and Escrow Agent substantially in
the form attached hereto as Exhibit A.
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"Escrow Amount" means the sum of $3,000,000 deposited with the Escrow Agent
pursuant to Section 2.3(a) hereof and the Escrow Agreement, as such sum may be
increased or decreased in accordance with the terms of the Escrow Agreement.
"Excluded Assets" has the meaning specified in Section 2.1(b).
"Excluded Contracts" has the meaning specified in Section 2.1(b)(i).
"Excluded Liabilities" has the meaning specified in Section 2.2(b).
"Excluded Trademarks" has the meaning specified in the proviso of clause
(c) of the definition of Intellectual Property.
"Factored Receivables" means the Receivables factored to an Affiliate of
Seller.
"Financial Statements" has the meaning specified in Section 3.3(a).
"GAAP" means United States generally accepted accounting principles and
practices as in effect from time to time and applied consistently throughout the
periods involved.
"Governmental Authority" means any United States federal, state or local or
any foreign government, governmental, regulatory or administrative authority,
agency or commission or any court, tribunal (mediation, alternative dispute
resolution or otherwise) or judicial or arbitral body.
"Governmental Order" means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended.
"Indebtedness" means, with respect to any Person, (a) all indebtedness of
such Person, whether or not contingent, for borrowed money or for the deferred
purchase price of property or services, except trade accounts payable and
accrued liabilities that arise in the ordinary course o business, (b) all
5
obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments, (c) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (d) all obligations of such Person as lessee under
leases that have been or should be, in accordance with GAAP, recorded as capital
leases, (e) all obligations, contingent or otherwise, of such Person under
letters of credit, guaranties or similar facilities or agreements, (f) all
obligations of such Person to purchase, redeem, retire, defease or otherwise
acquire for value any capital stock of such Person or any warrants, rights or
options to acquire such capital stock, and (g) all indebtedness referred to in
clauses (a) through (e) above secured by any Encumbrance on property (including,
without limitation, accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Indebtedness.
"Indemnified Party" has the meaning specified in Section 7.1(d).
"Indemnifying Party" has the meaning specified in Section 7.1(d).
"Independent Accountant" has the meaning specified in Section 2.3(c)(iii).
"Independent Appraiser" has the meaning set forth in Section 2.3(b).
"Intellectual Property" means (a) inventions, whether or not patentable,
(b) national (including the United States) and multinational statutory invention
registrations, patents, patent registrations and patent applications and all
rights therein provided by international treaties or conventions and all
improvements to the inventions disclosed in each such registration, patent or
application, (c) trademarks, service marks, trade dress, logos, trade names,
brand names and corporate names, whether or not registered, including all common
law rights, and registrations and applications for registration thereof, and the
goodwill of the Division relating thereto; provided, however, that the name
"Donnelley Enterprise Solutions Incorporated" or any variations, combinations,
derivation or modifications hereof shall not be Intellectual Property which is
an Acquired Asset (the "Excluded Trademarks"), (d) copyrights (registered or
otherwise) and registrations and applications for registration thereof, (e)
computer software, including, without limitation, source codes, operating
systems and specifications, data, databases, files, documentation and other
materials related thereto, (f) trade secrets and confidential, technical and
6
business information, (g) whether or not confidential, technology (including
know-how), manufacturing and production processes and techniques, research and
development information, financial, marketing and business data, pricing and
cost information, business and marketing plans and customer and supplier lists
and information, (h) copies and tangible embodiments of all the foregoing, (i)
all rights to obtain and rights to apply for patents, and to register trademarks
and copyrights, and (j) all rights to ▇▇▇ or recover and retain damages and
costs and attorneys' fees for present and past infringement of any of the
foregoing, in each case used primarily in, or relating to, the operation of the
business of the Division.
"Interim Balance Sheet" has the meaning specified in Section 3.3(a).
"Interim Financial Statements" has the meaning specified in Section 3.3(a).
"Inventories" means all inventory, merchandise, finished goods,
work-in-process, raw materials, packaging, supplies and similar personal
property owned by Seller related exclusively to the business of the Division and
maintained, held or stored by or for Seller as of a particular date and any
prepaid deposits for any of the same at such date.
"IRS" means the Internal Revenue Service of the United States or any
successor agency.
"Knowing Breaches" has the meaning specified in Section 7.1(e).
"Law" means any federal, state, local or foreign statute, law, ordinance,
regulation, rule, code, order, other requirement or rule of law.
"Leased Real Property" has the meaning set forth in Section 2.1(a)(i).
"Liabilities" means any and all debts (including all Indebtedness),
liabilities and obligations, whether accrued or fixed, absolute or contingent,
matured or unmatured or determined or determinable, including, without
limitation, those arising under any Law, Action or Governmental Order and those
arising under any contract, agreement, arrangement, commitment or undertaking.
"Material Adverse Effect" means any circumstance, change in, or effect on,
the Division, the Acquired Assets or Seller that, individually or together with
7
any other circumstances, changes in, or effects on, the Division, the Acquired
Assets or Seller: (a) is, or is reasonably likely to be, materially adverse to
the business, results of operations, business or financial prospects, condition
(financial or otherwise), employee relationships or customer or supplier
relationships of the Division or its operations, the Acquired Assets or
Liabilities taken as a whole, or (b) is reasonably likely to materially
adversely affect either the ability of Purchaser to operate or conduct the
business of the Division in the manner in which it is currently operated or
conducted by Seller or the ability of a party hereto to consummate any of the
transactions contemplated hereby.
"Material Contracts" has the meaning specified in Section 3.11(a).
"Material Vendor Contracts" has the meaning specified in Section
3.11(a)(i).
"1997 Financial Statements" has the meaning specified in Section 3.3(a).
"Parent" has the meaning specified in the head paragraph of this Agreement.
"Permits" has the meaning specified in Section 2.1(a)(xiii).
"Permitted Encumbrances" means (a) liens for current taxes not yet due and
payable or being contested in good faith by appropriate proceedings and (b) such
imperfections or exceptions to title, if any, as do not, and could not
reasonably be expected to, individually or in the aggregate, materially diminish
the value of any material Acquired Asset, materially interfere with the
alienability, financeability, ownership, use, occupancy or operation of any such
property, or materially impair or interfere with the operations of the business
of the Division.
"Person" means any individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity, as well as any syndicate or
group that would be deemed to be a "person" under Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended.
"Purchase Price" has the meaning specified in Section 2.3(a).
"Purchaser" has the meaning specified in the head paragraph of this
Agreement.
8
"Receivables" means any and all accounts receivable, notes and other
amounts receivable by Seller or Affiliates from third parties, billed or
unbilled, whether or not factored, including, without limitation, customers,
arising exclusively from the conduct of the business of the Division before the
Closing Date.
"Receivables Transfer Report" has the meaning specified in Section 3.5(b).
"Seller" has the meaning specified in the head paragraph of this Agreement.
"Seller's Transaction Costs" shall mean costs and expenses paid or accrued
to third parties by Seller in connection with the transactions contemplated by
this Agreement.
"Shared Support" has the meaning specified in Section 5.10(a).
"Tangible Personal Property" has the meaning specified in Section
2.1(a)(ii).
"Tax" or "Taxes" means federal, state, local or foreign (A) any and all
taxes, fees, levies, duties, tariffs, imposts, and other charges of any kind
(together with any and all interest, penalties, additions to and additional
amounts imposed with respect thereto) imposed by any government or taxing
authority, including, without limitation: taxes or other charges on or with
respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
disability, workers' compensation, unemployment compensation, natural resources,
occupation or net worth; taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value added, alternative minimum or
gains taxes or other tax of any kind whatsoever; license, registration and
documentation fees, and customs duties, tariffs, and similar charges and (B)
liability of Seller for the payment of any amounts of the type described in
clause (A) as a result of any express or implied obligation to indemnify or
otherwise assume or succeed to the liability of any other person.
"Tax Returns" means returns, declarations, reports, claims for refund,
information returns or other documents (including any related or supporting
schedules, statements or information) filed or required to be filed in
connection with the determination, assessment or collection of Taxes of any
party or the administration of any laws, regulations or administrative
requirements relating to any Taxes.
9
"Threshold" has the meaning specified in Section 7.1(e).
"Transaction Documents" means this Agreement, the Escrow Agreement and the
other agreements, certificates, documents and instruments executed and delivered
by a party in connection with the transactions contemplated hereby.
"Transfer Date" means August 1, 1998.
"Transition Period" has the meaning specified in Section 5.10(a).
ARTICLE II
PURCHASE AND SALE
SECTION 2.1 Purchase and Sale of Acquired Assets; Excluded Assets.
(a) Purchase and Sale of Acquired Assets. Except as otherwise provided in
Section 2.1(b), pursuant to the terms and subject to the conditions set forth in
this Agreement, at the Closing, Seller shall sell, assign, transfer, convey and
deliver to Purchaser and Purchaser shall purchase and accept from Seller, all of
Seller's (or in the case of Factored Receivables, any Affiliate of Seller)
right, title and interest in, to and under the properties, tangible and
intangible assets, goodwill, privileges, claims, contracts and business of
Seller constituting the Division, as it shall exist on the Transfer Date,
subject to changes in the ordinary course of business between the Transfer Date
and the Closing Date, but excluding the Excluded Assets (all of the foregoing
being referred to collectively as the "Acquired Assets"), including, but not
limited to, the following:
(i) the real property leased by Seller as tenant for the exclusive use
of the Division set forth on Schedule 2.1(a)(i), together with, to the
extent leased by Seller, all buildings and other structures, facilities or
improvements currently or hereafter located thereon and used by the
Division, all fixtures, systems, equipment and items of personal property
of Seller attached or appurtenant thereto, and all easements, licenses,
rights and appurtenances relating to the foregoing (collectively, the
"Leased Real Property");
(ii) all items of tangible personal property, or distinct groups of
10
equipment, supplies, furniture, fixtures, personalty, vehicles and other
tangible personal property used in the business of the Division or owned or
leased by Seller for the use of the Division, other than Inventories
(collectively, the "Tangible Personal Property");
(iii) all Inventories;
(iv) all Receivables and all cash generated from Receivables or
otherwise from the operation of the business of the Division collected
between the Transfer Date and the Closing Date in excess of cash applied to
the payment of Assumed Liabilities;
(v) all Customer Information;
(vi) all Intellectual Property, including without limitation all
rights to the "LANSystems" name and all derivations thereof and all
telephone and telecopier numbers and "Website" (URL) and IP and e-mail
addresses used primarily by the Division;
(vii) all contracts pertaining to the business of the Division,
including but not limited to those contracts which are listed and described
on Schedule 2.1(a)(vii) (the "Assigned Contracts"), but not including the
Excluded Contracts, and all deposits received with respect to the Assigned
Contracts;
(viii) all general, financial and personnel records, computer software
programs and databases (including source codes), correspondence and other
files, operating data, records and documents (A) set forth on Schedule
2.1(a)(viii) or (B) which relate to, or are used in, the business of the
Division, in either case in whatever form (including electronic media) and
wherever located on the Closing Date;
(ix) all claims, warranty rights, causes of action, choses in action,
rights of recovery and rights of set-off of Seller of any kind pertaining
to or arising out of the business of the Division on or after the Transfer
Date;
(x) all rights to goods and services and all other economic benefits
arising out of prepayments, payments in advance and deposits by Seller to
11
the extent related to the operations of the Division, including, but not
limited to, prepaid rents, service contracts and the costs of producing and
developing continuing marketing and advertising programs, but excluding any
prepaid taxes;
(xi) the goodwill incident to the business of the Division;
(xii) other than as set forth in Schedule 2.1(a)(xii), all other
assets of Seller used exclusively in the business of the Division, not
included within the categories described above, whether or not included or
reflected in the Financial Statements or on the books and records of
Seller; and
(xiii) all licenses, permits or franchises issued by any federal,
state, municipal or governmental authority which relate exclusively to the
Facilities, the Leased Real Property or the business of the Division on the
Closing Date, to the extent transferable (the "Permits"), except for those
licenses, permits or franchises listed on Schedule 2.1(a)(xiii).
(b) Excluded Assets. Notwithstanding anything to the contrary contained in
Section 2.1(a), it is expressly understood and agreed that all of Seller's
right, title and interest as of the Transfer Date in and to the following
properties and assets (the "Excluded Assets") are specifically excepted from the
Acquired Assets to be transferred to Purchaser pursuant to Section 2.1(a):
(i) Seller's right, title and interest in the contracts identified on
Schedule 2.1(b)(i) (the "Excluded Contracts");
(ii) all cash and cash equivalents or similar types of investments,
such as certificates of deposit, Treasury bills and other marketable
securities, except as provided in Section 2.1(a)(iv);
(iii) the Excluded Trademarks;
(iv) all owned real property of Seller, including all buildings,
structures and other improvements situated thereon;
(v) all insurance policies of Seller and all rights of Seller of every
12
nature and description under or arising out of such insurance policies; and
(vi) the other assets listed on Schedule 2.1(b)(vi).
SECTION 2.2 Assumed Liabilities; Excluded Liabilities.
(a) Liabilities Assumed by Purchaser. Purchaser shall undertake, assume,
perform and otherwise pay, satisfy and discharge, only the following Liabilities
and obligations of Seller (collectively, the "Assumed Liabilities"):
(i) all debts, obligations and liabilities of Seller which arise on
account of Purchaser's operation of the Division and the use of the
Acquired Assets;
(ii) all obligations and liabilities under the Permits transferred to
Purchaser to the extent relating to periods on and after the Transfer Date;
(iii) trade accounts invoiced not more than 30 days prior to the
Transfer Date; and
(iv) Liabilities and obligations arising under the Assigned Contracts on
and after the Transfer Date, but with respect to each such Assigned
Contract, only if the obligations thereunder directly relate to, or have
arisen out of, the business of the Division after the Transfer Date.
(b) Excluded Liabilities. Except for the Assumed Liabilities, Purchaser
shall not assume or otherwise become liable for any Liabilities or obligations
of Seller, whether or not arising out of the operation of the business of the
Division (collectively, the "Excluded Liabilities"), all of which shall be
retained by Seller. The Excluded Liabilities shall include, without limitation:
(i) any Indebtedness of Seller;
(ii) any Liability of Seller for any Taxes, including any sales or
other Taxes arising in connection with the consummation of the transactions
contemplated hereby;
13
(iii) any Liability of Seller for Seller's Transaction Costs;
(iv) any Liability of Seller resulting from, arising out of, relating
to, in the nature of, or caused by, any breach of warranty, product
liability, breach of contract, or tort arising or resulting from actions
taken prior to the Closing Date, including without limitation (A)
Liabilities or obligations arising with respect to work performed under the
Assigned Contracts prior to the Transfer Date, (B) Liabilities arising in
connection with Seller's employment or termination of employment of any
employee prior to the Closing Date (including, without limitation,
severance payments, bonuses, deferred compensation or commissions due to
employees) and (C) any Liabilities or obligations arising under the
Excluded Assets or in connection with the termination thereof or any
dispute thereunder;
(v) any Liability of Seller under or pursuant to any Employee Plan or
otherwise (including without limitation any bonuses and accrued but unpaid
vacation and severance obligations) to employees of Seller and expenses
reimbursable to employees;
(vi) any Liability of Seller resulting from, arising out of, relating to,
in the nature of, or caused by any infringement or violation of Law;
(vii) any obligations of Seller pursuant to any Affiliated Party
Transaction; and
(viii) any obligation of Seller to indemnify any Person by reason of the
fact such Person was a director, officer, employee or agent of Seller or
was serving at the request of Seller as a director, officer, employee or
agent of another Person (whether such indemnification is pursuant to any
statute, charter, bylaw, agreement or otherwise).
SECTION 2.3 Purchase Price.
(a) Purchase Price. In consideration for the Acquired Assets, and subject
to the terms and conditions of this Agreement, Purchaser shall on the Closing
Date (i) assume the Assumed Liabilities as provided in Section 2.1(a), (ii)
transfer to the Escrow Agent the Escrow Amount by wire transfer in immediately
available federal funds, and (iii) transfer to Seller $20,000,000 by wire
transfer in immediately available federal funds to an account designated in
14
writing by Seller to Purchaser at least two Business Days prior to the Closing
Date (the sum of items (ii) and (iii) being, collectively, the "Purchase
Price").
(b) Allocation of Purchase Price. Purchaser and Seller agree that the
Purchase Price payable by Purchaser for the Acquired Assets and the
non-competition agreement set forth in Section 5.9 of this Agreement shall be
allocated as required by Section 1060 of the Code and the Treasury regulations
promulgated thereunder. Such allocation shall be prepared by Purchaser and shall
be submitted to Seller within ninety (90) days after the Closing Date. Seller
shall have thirty (30) days after receipt of Purchaser's allocation to object
thereto by written notice to Purchaser. The parties shall negotiate in good
faith to resolve any objections made by Seller as promptly as reasonably
practicable. If the parties are unable to resolve any objection made by Seller,
Seller and Purchaser shall select an independent appraiser (the "Independent
Appraiser") that is mutually acceptable to both parties to resolve such dispute.
The decision of the Independent Appraiser shall be final and binding on both
parties and the costs and expenses of the Independent Appraiser shall be borne
equally by such parties. All Tax Returns and reports filed by Purchaser and
Seller with respect to the transactions contemplated by this Agreement shall be
consistent with the allocation determined in accordance herewith.
(c) Adjustments.
(i) As promptly as practicable after the Closing Date, the parties
shall make such adjustments to the Purchase Price as are necessary to
reflect the operation of the business of the Division for the account of
Purchaser during the period between the Transfer Date and the Closing Date,
and shall make such payments to one another as are reflective of such
adjustments.
(ii) In addition to the adjustments provided for in Section 2.3(c)(i),
the Purchase Price shall be reduced by (A) an amount equal to 50% of the
Backlog Deficiency, if any, and (B) an amount equal to 50% of the
difference, if any, between $4,181,000 and the Factored Receivables as of
the Transfer Date.
(iii) As promptly as reasonably practicable after all the information
required for an adjustment pursuant to this Section 2.3(c) is available,
Purchaser shall prepare a calculation of such adjustment and shall submit
such calculation to Seller. Seller shall have thirty (30) days after
receipt of Purchaser's calculation to object thereto by written notice to
15
Purchaser. The parties shall negotiate in good faith to resolve any
objection made by Seller as promptly as reasonably practicable. If the
parties are unable to resolve any objection made by Seller, Seller and
Purchaser shall select an independent firm of nationally recognized
accountants (the "Independent Accountant") that is mutually acceptable to
both parties to resolve such dispute. The decision of the Independent
Accountant shall be final and binding on both parties and the costs and
expenses of the Independent Accountant shall be borne equally by such
parties.
SECTION 2.4 Closing. Upon the terms and subject to all of the conditions of
this Agreement, the sale and purchase of the Acquired Assets contemplated by
this Agreement shall take place at a closing (the "Closing") to be held at the
offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
at 10:00 a.m. on the date which is three (3) Business Days after the
satisfaction of the conditions set forth in Section 6.2 hereof, or at such other
place or at such other time or on such other date as Purchaser and Seller may
mutually agree upon in writing (the day on which the Closing takes place being
the "Closing Date"). Notwithstanding the time of closing on the Closing Date,
the parties agree that the Division shall be operated for the account of
Purchaser commencing as of the opening of business on the Transfer Date.
SECTION 2.5 Closing Deliveries by Seller. At or before the Closing, Seller
shall deliver or cause to be delivered to Purchaser:
(a) an original counterpart, duly executed by Seller, of a ▇▇▇▇ of sale
("▇▇▇▇ of Sale"), substantially in the form of Exhibit B, and sufficient to
transfer to Purchaser valid and marketable title to all the Tangible Personal
Property included in the Acquired Assets, free and clear of all Encumbrances;
(b) an original counterpart, duly executed by Seller, of an agreement in
the form attached as Exhibit C hereto ("Assignment and Assumption Agreement") by
which Seller transfers to Purchaser all of Seller's rights and interests to and
under the Assigned Contracts, the Intellectual Property, governmental licenses
or Permits and any other property or interests included in the Acquired Assets
and not transferred under the ▇▇▇▇ of Sale, free and clear of all Encumbrances,
and Purchaser assumes the Assumed Liabilities;
(c) an original counterpart, duly executed by Seller, of the Escrow
Agreement;
16
and
(d) all other Transaction Documents required to be executed and delivered
by Seller hereunder.
SECTION 2.6 Closing Deliveries by Purchaser. At the Closing, Purchaser
shall deliver or cause to be delivered to Seller:
(a) the portions of the Purchase Price to be delivered at Closing to Seller
and the Escrow Agent pursuant to Section 2.3(a);
(b) an original counterpart, duly executed by Purchaser, of the Assignment
and Assumption Agreement;
(c) an original counterpart, duly executed by Purchaser, of the Escrow
Agreement; and
(d) all other Transaction Documents required to be executed and delivered
by Purchaser hereunder.
SECTION 2.7 Escrow. Concurrently with the Closing, Seller and Purchaser
shall enter into the Escrow Agreement with the Escrow Agent. In accordance with
the terms hereof and of the Escrow Agreement, Purchaser shall deposit the Escrow
Amount with the Escrow Agent, to be managed and paid out by the Escrow Agent in
accordance with the Escrow Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND ▇▇▇▇▇
As an inducement to Purchaser to enter into this Agreement, Seller and
▇▇▇▇▇ hereby, jointly and severally, represent and warrant to Purchaser and
Parent as follows:
17
SECTION 3.1 Organization; Authority, Etc.
(a) Seller (i) is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, (ii) has all the
requisite corporate power and authority to own, lease and operate its properties
and assets and to carry on the business of the Division as now being conducted
and (iii) has all necessary corporate power and authority to enter into this
Agreement and the Transaction Documents and to perform its obligations as
contemplated hereunder and thereunder. All action necessary to be taken by
Seller to authorize the execution, delivery and performance of this Agreement
and all other Transaction Documents delivered and to be delivered by it in
connection herewith has been duly and validly taken. This Agreement constitutes
the valid and binding obligation of Seller, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors rights generally or by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
(b) ▇▇▇▇▇ (i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, (ii) has all the requisite
corporate power and authority to own, lease and operate its properties and
assets and to carry on its business as now being conducted and (iii) has all
necessary corporate power and authority to enter into this Agreement and the
Transaction Documents and to perform its obligations as contemplated hereunder
and thereunder. All action necessary to be taken by ▇▇▇▇▇ to authorize the
execution, delivery and performance of this Agreement and all other Transaction
Documents delivered and to be delivered by it in connection herewith has been
duly and validly taken. This Agreement constitutes the valid and binding
obligation of ▇▇▇▇▇, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors rights
generally or by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
SECTION 3.2 No Conflicts; No Violation. Except as set forth on Schedule
3.2, the execution, delivery and performance of this Agreement and the
Transaction Documents by Seller and ▇▇▇▇▇ and the consummation of the
transactions contemplated hereby and thereby do not and will not (i) violate or
result in any default under any provision of their respective Certificates of
Incorporation or By-Laws, (ii) violate or result in any default under or give
18
rise to any right of termination, revocation or modification of any indenture,
license or other agreement to which either of them is a party or (iii) violate
or result in any default under any law, regulation, order, writ, judgment or
decree applicable to either of them or to the Division or any of the Acquired
Assets or by which the ability of either of them to consummate the transactions
to be consummated by it hereunder would be adversely affected as a consequence
of such violation or default (except in the case of clauses (ii) and (iii), for
such violations, defaults, terminations, revocations or modifications, as the
case may be, which would not have a Material Adverse Effect). Except as
described on Schedule 3.2, the execution and delivery of this Agreement and the
Transaction Documents by Seller and ▇▇▇▇▇ do not and will not, and the
performance of this Agreement and the Transaction Documents and the consummation
of the transactions contemplated hereby and thereby by them will not, require
any consent, approval, authorization or other action by, or filing with or
notification to, any Governmental Authority or other third party (except for
such consents, approvals, authorizations, actions, filings or notifications, the
absence of which or the result of which, as the case may be, would not have a
Material Adverse Effect). Each of Seller and ▇▇▇▇▇ is not in violation of any
term of its Certificate of Incorporation or By-Laws or the provisions of any
mortgage, indenture, contract, agreement, instrument, judgment, decree, order,
statute, rule or regulation or writ or decree of any court, governmental agency
or instrumentality to which it or the Division or any of the Acquired Assets is
subject, a violation of which would have a material adverse effect on its
ability to perform its obligations under this Agreement or the Transaction
Documents.
SECTION 3.3 Financial Information, Books and Records and Operating Data.
(a) Attached hereto as Schedule 3.3 are true and complete copies of (i) the
balance sheet of the Division as at December 31, 1997, and the statement of
income of the Division for the fiscal year then ended (collectively referred to
herein as the "1997 Financial Statements"), each as included in the financial
statements of Seller as at and ended on December 31, 1997 as Seller's financial
statements were audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, and certified by the Chief
Financial Officer of Seller as being true and complete in all material respects;
and (ii) the unaudited balance sheet of the Division as at June 30, 1998 (the
"Interim Balance Sheet"), and the related unaudited statement of income of the
Division for the six-month period then ended and for each of the one-month
periods included therein (collectively referred to herein as the "Interim
Financial Statements" and, together with the 1997 Financial Statements, the
"Financial Statements"). The Financial Statements (i) were prepared in
accordance with the books of account and other financial records of the
Division, (ii) present fairly the financial condition and results of operations
of the Division as of the respective dates thereof and for the periods covered
19
thereby, (iii) have been prepared in accordance with GAAP applied on a basis
consistent with the past practices of the Division, (iv) include all adjustments
(consisting only of normal recurring accruals) that are necessary for a fair
presentation of the financial condition of the Division and the results of
operations of the Division as of the dates thereof or for the periods covered
thereby; provided, however, that the Interim Financial Statements are subject to
normal year-end adjustments and lack complete footnotes and other presentation
items in conformity with GAAP.
(b) The books of account and other financial records of the Division (i)
reflect all material items of income and expense and all material assets and
Liabilities of the Division, (ii) are in all material respects complete and
correct and do not contain or reflect any material inaccuracies or discrepancies
and (iii) have been maintained in accordance with good business and accounting
practices in all material respects.
SECTION 3.4 No Undisclosed Liabilities. The Division has no Liabilities
other than Liabilities (i) reflected or reserved against on the Interim Balance
Sheet, (ii) disclosed in Schedule 3.4 hereof, or (iii) incurred after the date
of the Interim Balance Sheet, in the ordinary course of the business of the
Division, which are of a nature and in amounts consistent with the past
practices of the Division and which in the aggregate do not and are not
reasonably likely to have a Material Adverse Effect. Reserves are reflected on
the Interim Balance Sheet in amounts which are reasonable and that have been
established on a basis consistent with the past practices of the Division and in
accordance with GAAP.
SECTION 3.5 Receivables.
(a) Schedule 3.5 hereof sets forth, in all material respects, an aged list
of the Receivables of the Division as of June 30, 1998, showing separately those
Receivables that, as of such date, had been due and outstanding (a) 30 days or
less, (b) 31 to 60 days, (c) 61 to 90 days, and (d) more than 90 days. Except to
the extent, if any, reserved for on the Interim Balance Sheet, as adjusted for
operations and transactions through the Closing Date consistent with past
practice and custom of the Division or as set forth in Schedule 3.5, all
Receivables reflected on the Interim Balance Sheet arose from, and the
Receivables existing on the Closing Date will have arisen from, the sale of
services or Inventory to Persons not affiliated with Seller in the ordinary
course of the business of the Division consistent with past practice and, except
as generally reserved against on the Interim Balance Sheet, as adjusted for
operations and transactions through the Closing Date consistent with past
20
practice and custom of the Division, constitute or will constitute, as the case
may be, only valid, undisputed and collectible claims of the Division not
subject to valid claims of set-off or other defenses or counterclaims other than
normal cash discounts accrued in the ordinary course of the business of the
Division consistent with past practice.
(b) On or before August 17, 1998, Seller shall deliver to Purchaser a list
of receivables (the "Receivables Transfer Report") presented in the same manner
as Schedule 3.5, of the Receivables of the Division as of July 31, 1998. Except
to the extent, if any, reserved for in such list, all Receivables reflected
thereon shall have arisen from the sale of services or Inventory to Persons not
affiliated with Seller in the ordinary course of business of the Division
consistent with past practice and will constitute only valid, undisputed and
collectible claims of the Division not subject to valid claims of set-off or
other defenses or counterclaims other than normal cash discounts accrued in the
ordinary course of the business of the Division consistent with past practice.
(c) The aggregate amount of Factored Receivables at May 31, 1998 was
approximately $4,181,000 and no additional Factored Receivables have been
created since that date. No later than the date on which the conditions set
forth in Section 6.2 are satisfied, Seller shall provide Purchaser with an
itemized list of Factored Receivables outstanding at each of May 31, 1998, June
30, 1998 and July 31, 1998.
SECTION 3.6 Conduct in the Ordinary Course; Absence of Certain Changes,
Events and Conditions. Since June 30, 1998, or as disclosed in Schedule 3.6, the
business of the Division has been conducted in all material respects in the
ordinary course and consistent with past practice. As amplification and not
limitation of the foregoing, except as so disclosed in Schedule 3.6, since June
30, 1998, Seller has not:
(a) permitted or allowed any material assets or properties (whether
tangible or intangible) of the Division to become subjected to any Encumbrance
other than any Permitted Encumbrance;
(b) incurred any obligation or Liability, with respect to the Division,
absolute, accrued, contingent or otherwise, whether due or to become due, other
than current Liabilities for trade obligations and corporate overhead expenses
21
incurred in the ordinary course of the business of the Division consistent with
past practice;
(c) discharged or otherwise obtained the release of any material
Encumbrance or paid or otherwise discharged any material Liability of the
Division, other than current Liabilities incurred and discharged in the ordinary
course of the business of the Division consistent with past practice;
(d) failed to pay any creditor of the Division any material amount owed to
such creditor upon the later of when such amount became due or within the
applicable grace period except for such amounts being contested in good faith as
disclosed on Schedule 3.6;
(e) made any material changes in the customary methods of operations of the
Division, including, without limitation, practices and policies relating to
purchasing, Inventories, marketing, selling, pricing or payments and collections
of accounts payable and Receivables of the Division;
(f) made any capital expenditure or commitment for any capital expenditure
for the Division in excess of $10,000 individually or $50,000 in the aggregate;
(g) entered into any agreements or commitments relating to the Division
involving exchanges of goods and services having a value in excess of $10,000
individually or $50,000 in the aggregate;
(h) sold, transferred, leased, subleased, licensed or otherwise disposed of
any properties or assets of the Division, real, personal or mixed (including,
without limitation, leasehold interests and intangible assets), other than the
sales of services and Inventories in the ordinary course of the business of the
Division;
(i) entered into any agreement, arrangement or transaction with any of its
directors, officers, employees or stockholders or with any relative of such
Person or any Affiliate of any of them (each an "Affiliated Party Transaction");
(j) granted any material increase, or announced any material increase, in
the wages, salaries, compensation, bonuses, incentives, pension or other
22
benefits payable by Seller to any of the employees of the Division, including,
without limitation, any increase or change pursuant to any Employee Plan;
(k) written down or written up (or failed to write down or write up if a
write down or write up was required by GAAP) the value of any Inventories or
Receivables or revalued any material assets of the Division;
(l) made any change in any method of accounting or accounting practice or
policy used by Seller with respect to the business of the Division, other than
such changes required by GAAP;
(m) failed to maintain any material portion of the Acquired Assets
(including maintaining the value or benefits to Seller of any intangible
property) in accordance with good business practice and, if applicable, in good
operating condition and repair;
(n) allowed any Permit that was issued or relates to the business of the
Division or any Acquired Asset to lapse or terminate or failed to renew any such
Permit or any insurance policy covering such business or any of the Acquired
Assets;
(o) amended, modified or consented to the termination of any Material
Contract or the rights of Seller thereunder or received any notice of breach (or
alleged breach) or termination of any Material Contract;
(p) transferred or granted any rights in or to any Intellectual Property or
permitted to lapse or go abandoned any material Intellectual Property (or any
registration or grant thereof or any application relating thereto) to which, or
under which, Seller has any right, title, interest or license;
(q) made any material express or deemed election or settled or compromised
any material liability, with respect to Taxes of the Division;
(r) suffered any casualty loss or damage with respect to any of the
Acquired Assets, whether or not such loss or damage shall have been covered by
insurance;
23
(s) suffered any Material Adverse Effect; or
(t) agreed, whether in writing or otherwise, to take any of the actions
specified in this Section 3.6 or granted any options to purchase, rights of
first refusal, rights of first offer or any other similar rights or commitments
with respect to any of the actions specified in this Section 3.6, except as
expressly contemplated by this Agreement.
SECTION 3.7 Litigation. Except as disclosed in Schedule 3.7, there are no
Actions by any Person pending before any Governmental Authority or, to Seller's
knowledge, threatened to be brought by or before any Governmental Authority
relating to the Acquired Assets or which could hinder, prevent or materially
delay the consummation of the transactions contemplated by this Agreement.
Seller is not subject to any Governmental Order relating to or affecting the
Acquired Assets or the Division, nor to Seller's knowledge, is any such
Governmental Order threatened to be imposed by any Governmental Authority.
SECTION 3.8 Certain Interests. Neither Seller nor any officer or director
of Seller employed in the business of the Division, nor any relative or spouse
(or relative of such spouse) of any such Person, nor any Affiliate of any of the
foregoing, is a party to any Affiliated Party Transaction or (i) has any direct
or indirect financial interest in any competitor, supplier or customer of the
Division; (ii) owns, directly or indirectly, in whole or in part, or has any
other interest in any tangible or intangible property which Seller uses or has
used in the conduct of the business of the Division; or (iii) has outstanding
any Indebtedness to Seller other than advances for expenses made in the ordinary
course of business consistent with past practices, not exceeding $25,000 in the
aggregate.
SECTION 3.9 Compliance with Laws.
(a) Seller has conducted and continues to conduct the business of the
Division in accordance with all Laws and Governmental Orders applicable to
Seller, any of the Acquired Assets or the Division, and Seller is not in
violation of any such Law or Governmental Order, including those relating to
protection of the environment and employee health and safety, except where the
failure to conduct the business of the Division in accordance with, or where the
violation of, such Laws and Governmental Orders would not have a Material
Adverse Effect. Notwithstanding the foregoing, there is no existing practice,
action or activity of Seller relating to the Division and no existing condition
24
of the Acquired Assets or the Division which may (i) violate or prevent
compliance with, any health or occupational safety, environmental or other
similar applicable Law, except where such violation or non-compliance would not
have a Material Adverse Effect or (ii) give rise to any criminal or material
civil liability.
(b) Schedule 3.9 sets forth a brief description of each Governmental Order
applicable to Seller or any of the Acquired Assets or the business of the
Division, and no such Governmental Order has or has had or is reasonably likely
to have a Material Adverse Effect.
SECTION 3.10 Brokers. With the exception of fees and expenses payable to
▇▇▇▇▇▇▇ ▇▇▇▇▇ Securities Inc., which shall be Seller's and ▇▇▇▇▇'▇ sole
responsibility, no broker, finder or investment banker is entitled to any
brokerage, finder's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Seller or any employee, officer, director or Affiliate of Seller.
SECTION 3.11 Material Contracts.
(a) Schedule 3.11(a) lists each of the following contracts and agreements
(including, without limitation, oral and informal arrangements) to which Seller
is a party with respect to the Division or the Acquired Assets are otherwise
subject (such contracts and agreements being "Material Contracts"), true and
complete copies of each of which have been heretofore provided to Purchaser,
except as set forth in Schedule 3.11(a):
(i) each contract and agreement with a manufacturer, vendor or
supplier of software, hardware, Inventory, spare parts, other materials or
personal property or services to the Division, including any of the
foregoing relating to market development funds ("Material Vendor
Contracts");
(ii) each Customer Contract and each contract and agreement for the
sale of Inventory or other tangible or intangible personal property to any
customer;
(iii) all broker, distributor, dealer, manufacturer's representative,
franchise, agency, sales promotion, market research, marketing, consulting
and advertising contracts and agreements;
25
(iv) all management contracts and contracts with independent
contractors or consultants (or similar arrangements);
(v) all contracts and agreements relating to the Division giving rise
to Liabilities or obligations of Seller exceeding $10,000;
(vi) all contracts and agreements with any Governmental Authority;
(vii) all contracts and agreements that limit or purport to limit the
ability of Seller to compete in any line of business or with any Person or
in any geographic area or during any period of time;
(viii) all contracts and agreements evidencing Affiliated Party
Transactions;
(ix) all contracts and agreements with or relating to employees,
including employment contracts and Employee Plans;
(x) all leases and other contracts and agreements relating to real
estate and equipment or other Tangible Personal Property;
(xi) all licenses, contracts and other agreements relating to
Intellectual Property and technical certifications;
(xii) all contracts and agreements for the provision of temporary
professional manpower or employment services, including those with
independent contractors, subcontractors and employment agencies; and
(xiii) all other contracts and agreements, whether or not made in the
ordinary course of the business of the Division, which are material to
Seller or the conduct of the business of the Division or the absence of
which could have a Material Adverse Effect;
26
(b) Except as disclosed in Schedule 3.11(b), each Material Contract: (i) is
valid and binding on Seller and, to Seller's knowledge, on the other respective
parties thereto and is in full force and effect and (ii) upon consummation of
the transactions contemplated by this Agreement, shall continue in full force
and effect without penalty or other adverse consequence. Seller is not, and to
Seller's knowledge no other party thereto is, in material breach of, or material
default under, any Material Contract. Neither party to a Material Contract has
given notice to the other of termination of such contract or asserted or
threatened to assert any claims with respect to any such contract. No other
party to a Material Contract has prepaid any amount for work which has not been
performed.
(c) As of July 29, 1998, the Division had a Backlog of approximately $10.4
million. Schedule 3.11(c) sets forth a true and complete listing of the Customer
Contracts constituting the Backlog as of such date and sets forth each Customer
Contract by customer, customer order number and the amount of such Backlog
relating thereto.
SECTION 3.12 Intellectual Property. The Intellectual Property described in
Schedule 3.12 constitutes all the Intellectual Property (both owned and
licensed) used or held or intended to be used by Seller in the conduct of the
business of the Division and there are no other items of Intellectual Property
that are material to the Division or its business. Seller has clear record title
to or a presumably valid or subsisting license to use all such Intellectual
Property, has not granted a license to use such Intellectual Property to any
third party, does not know of any third party that may be infringing on such
Intellectual Property, has not had asserted against it any claim for
infringement of any trademark, service ▇▇▇▇, or trade name of another Person,
and is not infringing any trademark, service ▇▇▇▇ or trade name of another
Person.
SECTION 3.13 Real Property. Schedule 3.13 lists: (i) the street address of
each parcel of Leased Real Property, (ii) the identity of the lessor, lessee
(including each subleasor and sublessee) and current occupant (if different from
lessee) of each such parcel of Leased Real Property, (iii) the term (referencing
applicable renewal periods) and rental payment terms of the leases (and any
subleases) pertaining to each such parcel of Leased Real Property, (iv) the
current use of each such parcel of Leased Real Property and (v) all other
locations where employees of the Division are based or the business of the
Division is conducted.
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SECTION 3.14 Tangible Personal Property. Schedule 3.14 lists all material
items of Tangible Personal Property.
SECTION 3.15 Acquired Assets.
(a) Seller owns, leases or has the legal right to use all the Acquired
Assets, including, without limitation, the Leased Real Property, the
Intellectual Property and the Tangible Personal Property used in the conduct of
the business of the Division and, with respect to contract rights, is a party to
and enjoys the right to the benefits of all contracts, agreements and other
arrangements used by Seller in or relating to the conduct of the business of the
Division. Except as set forth on Schedule 3.15(a), Seller has good and
marketable title to or, in the case of leased or subleased Acquired Assets,
valid and subsisting leasehold interests in, all the Acquired Assets, free and
clear of all Encumbrances, except for Permitted Encumbrances.
(b) Except as set forth in Schedule 3.15(b), the Acquired Assets constitute
all the properties, assets and rights forming a part of, used, held, and all
such properties, assets and rights constitute all of the same which are
necessary to conduct the business of the Division in the manner conducted by
Seller immediately prior to the date hereof. Seller has caused the Acquired
Assets to be maintained, including maintaining the value or benefits to Seller
of any intangible property, in accordance with good business practice and, if
applicable, in good operating condition and repair, ordinary wear and tear
excepted.
(c) Except as set forth in Schedule 3.15(c), following the consummation of
the transactions contemplated by this Agreement, Purchaser will own, pursuant to
good and marketable title, or lease, under valid and subsisting leases, or
otherwise retain Seller's respective interest in the Acquired Assets without
incurring any penalty or other adverse consequence, including, without
limitation, any increase in rentals, royalties, or licenses or other fees
imposed as a result of, or arising from, the consummation of the transactions
contemplated by this Agreement. Immediately following the Transfer Date,
Purchaser shall have access to all documents, books, records, agreements and
financial data of any sort used by Seller in the conduct of the business of the
Division.
SECTION 3.16 Customers. Listed in Schedule 3.16 are the names and addresses
of all the customers of the Division that purchased services from Seller with an
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aggregate value of $10,000 or more since June 30, 1995 and the amount during
such period for which each such customer was invoiced. Seller has not received
any actual notice or has any reason to believe that any customer of the listed
in Schedule 3.16 that purchased services from Seller with an aggregate value of
$10,000 or more during the six-month period ended June 30, 1998, has ceased, or
will cease, to use the services of the Division, or has substantially reduced,
or will substantially reduce, the use of such services.
SECTION 3.17 Suppliers. Listed in Schedule 3.17 are the names and addresses
of the twenty (20) largest suppliers from which Seller ordered hardware,
software, supplies, merchandise, temporary employees, subcontracting services,
and other goods or services for use in the business of the Division during the
six-month period ended June 30, 1998 and the amount for which each such supplier
invoiced Seller during such period. Seller has not received any actual notice or
has any valid reason to believe that any such supplier will not, after the
Closing, continue to sell such goods or services to Purchaser on terms and
conditions substantially similar to those currently provided to Seller, subject
only to general and customary price increases.
SECTION 3.18 Employment and Employee Benefit Matters. Schedule 3.18
contains a correct and complete list of all collective bargaining, employment,
labor and similar agreements, Employee Plans and employee manuals whether
written or oral, to which Seller is a party or by which it is bound and relate
to employees of the Division. True and correct copies of all such agreements and
other documents have been supplied to Purchaser. Seller has complied with its
obligations related to, and is not in default under, any written or oral
employment agreements, collective bargaining agreements, Employee Plans or any
written personnel policies to which it is a party or by which it is bound.
Seller is in compliance with all applicable Laws respecting employees,
employment practices, Employee Plans, terms and conditions of employment and
wages and hours, and is not engaged in any unfair labor practices. Schedule 3.18
also sets forth the names, position and compensation rate and technical
certifications of each employee of the Division. Except as described on Schedule
3.18, Seller has no Liabilities with respect to the employees of the Division or
any Employee Plan to which such employees are subject.
SECTION 3.19 Taxes. All Taxes payable by Seller and by any other person,
firm or corporation which will or may be liabilities of Seller, for all periods
ending on or before June 30, 1998, have been paid in full, or have been fully
and specifically reserved against on the Interim Balance Sheet. Seller has
timely filed all federal, state, local and foreign Tax Returns required to have
29
been filed by it to the date hereof. There are no Actions now threatened or
pending against Seller in respect of Taxes, governmental charges or assessments.
SECTION 3.20 Insurance.
(a) Schedule 3.20 sets forth a list of each material insurance policy
(including policies providing property, casualty, liability, errors and
omissions, workers' compensation, and bond and surety arrangements) under which
Seller is or has been an insured, a named insured or otherwise the principal
beneficiary of coverage at any time since January 1, 1997, in each case with
respect to the Division or the Acquired Assets.
(b) With respect to each such insurance policy, the policy is in full force
and effect and legal, valid, binding and enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors rights generally or by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
SECTION 3.21 Permits, Licenses, Certifications, Etc. Schedule 3.21 sets
forth all of the material Permits used, held, or desirable or necessary in
connection with the conduct of the business of the Division. No material Permit
which had been obtained, used or held by the Seller has been revoked in the last
year. True and complete copies of all material Permits have been furnished to
Purchaser.
SECTION 3.22 Full Disclosure. No representation or warranty of Seller in
this Agreement, nor any statement or certificate furnished or to be furnished to
Purchaser pursuant to this Agreement, or in connection with the transactions
contemplated by this Agreement, contains or will contain any untrue statement of
a material fact, or omits or will omit to state a material fact necessary to
make the statements contained herein or therein not misleading.
SECTION 3.23 No Other Representations or Warranties. Except for the
representations and warranties contained in this Agreement and the other
Transaction Documents, neither Seller nor any other Person makes any other
express or implied representation or warranty on behalf of Seller.
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SECTION 3.24 No Knowledge of Breach of Parent or Purchaser Representations.
Seller is not aware that either Parent or Purchaser is in breach of any of its
representations or warranties contained in this Agreement or any other
Transaction Documents.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PURCHASER AND PARENT
As an inducement to Seller to enter into this Agreement, Purchaser and
Parent hereby, jointly and severally, represent and warrant to Seller and ▇▇▇▇▇
as follows:
SECTION 4.1 Organization; Authority, Etc.
(a) Parent (i) is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, (ii) has all the
requisite corporate power and authority to own, lease and operate its properties
and assets and to carry on its business as now being conducted and (iii) has all
necessary corporate power and authority to enter into this Agreement and the
Transaction Documents to which it is a party and to perform its obligations as
contemplated hereunder and thereunder. All action necessary to be taken by
Parent to authorize the execution, delivery and performance of this Agreement
and all other Transaction Documents delivered and to be delivered by Parent in
connection herewith has been duly and validly taken. This Agreement constitutes
the valid and binding obligation of Parent, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors rights generally or by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
(b) Purchaser (i) is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware, (ii) has
all the requisite corporate power and authority to own, lease and operate its
properties and assets and to carry on its business as now being conducted and
(iii) has all necessary power and authority to enter into this Agreement and the
Transaction Documents to which it is a party and to perform its obligations as
contemplated hereunder and thereunder. All action necessary to be taken by
Purchaser to authorize the execution, delivery and performance of this
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Agreement and all other Transaction Documents delivered and to be delivered by
Purchaser in connection herewith has been duly and validly taken. This Agreement
constitutes the valid and binding obligation of Purchaser, enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors rights generally or by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
SECTION 4.2 No Conflicts; No Violation. The execution, delivery and
performance of this Agreement and the Transaction Documents by each of Parent
and Purchaser and the consummation of the transactions contemplated hereby and
thereby do not and will not (i) violate or result in any default under any
provision of their respective Certificates of Incorporation, By-Laws,
Certificate of Formation or other constituent documents, (ii) violate or result
in any default under or give rise to any right of termination, revocation or
modification of any indenture, license or other agreement to which Parent or
Purchaser is a party or (iii) violate or result in any default under any law,
regulation, order, writ, judgment or decree applicable to Parent or Purchaser or
by which the ability of Parent or Purchaser to consummate the transactions to be
consummated hereunder would be adversely affected as a consequence of such
violation or default (except in the case of clauses (ii) and (iii), for such
violations, defaults, terminations, revocations or modifications, as the case
may be, which would not have a material adverse effect on either Parent or
Purchaser or materially delay the ability of Parent or Purchaser to consummate
the transactions contemplated hereunder). The execution and delivery of this
Agreement and the Transaction Documents by each of Parent and Purchaser does
not, and the performance of this Agreement and the Transaction Documents and the
consummation of the transactions contemplated hereby and thereby by each of
Parent and Purchaser will not, require any consent, approval, authorization or
other action by, or filing with or notification to, any Governmental Authority
or other third party (except for such consents, approvals, authorizations,
actions, filings or notifications, the absence of which, or the result of which,
as the case may be, would not have a material adverse effect on either Parent or
Purchaser or materially delay the ability of Parent or Purchaser to consummate
the transactions contemplated hereunder). Each of Parent and Purchaser is not in
violation of any term of its Certificate of Incorporation, By-Laws, Certificate
of Formation or other constituent documents or the provisions of any mortgage,
indenture, contract, agreement, instrument, judgment, decree, order, statute,
rule or regulation or writ or decree of any court, governmental agency or
instrumentality to which it is subject, a violation of which would have a
material adverse effect on its ability to perform its obligations under this
Agreement or the Transaction Documents.
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SECTION 4.3 Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other similar fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent or Purchaser or any employee, officer, director or
Affiliate of Parent or Purchaser.
SECTION 4.4 Financial Capacity. Parent or Purchaser has sufficient funds
available to consummate the transactions described in this Agreement and to fund
all disbursements of the Division on the Closing Date.
SECTION 4.5 Litigation. There is no material Action pending or, to the
knowledge of Parent or Purchaser, threatened in any jurisdiction which seeks to
restrain or enjoin the consummation of the transactions contemplated by this
Agreement.
SECTION 4.6 No Other Representations or Warranties. Except for the
representations and warranties contained in this Agreement and the other
Transaction Documents, none of Parent, Purchaser or any other Person makes any
other express or implied representation or warranty on behalf of Parent or
Purchaser.
SECTION 4.7 No Knowledge of Breach of Seller Representations. Neither
Parent nor Purchaser is aware that Seller is in breach of any of its
representations or warranties contained in this Agreement or any other
agreements contemplated hereby.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 Conduct of Business of the Division Prior to the Closing.
Seller covenants and agrees that, between the Transfer Date and the Closing
Date, Purchaser shall have effective control of the business of the Division
without restriction except those reasonably required to protect ▇▇▇▇▇ and, in
connection therewith, Seller shall conduct the business of the Division in the
ordinary course consistent with Seller's prior practices. Seller shall use its
reasonable efforts to (A) preserve intact the Division and its business
organization, (B) keep available to Purchaser the services of the executives and
employees of the Division (it being understood that Purchaser and Parent assumes
the risk associated with such personnel changes), (C) continue in full force and
effect without material modification, except as agreed to by Purchaser, all
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all existing policies or binders of insurance currently maintained in respect of
the Division, (D) preserve Seller's current relationships with its customers,
suppliers and other Persons of the Division with which it has significant
business relationships; (E) exercise, but only after notice to Purchaser, any
rights of renewal pursuant to the terms of any Material Contract which by its
terms would otherwise expire; and (F) not engage in any practice, take any
action, fail to take any action or enter into any transaction which could cause
any representation or warranty of Seller in this Agreement to be untrue or
result in a breach of any covenant made by Seller herein. SELLER MAKES NO
WARRANTY, EXPRESS OR IMPLIED, AS TO THE PROBABLE SUCCESS OR PROFITABILITY OF THE
OWNERSHIP, USE OR OPERATION OF THE BUSINESS OF THE DIVISION AND THE ACQUIRED
ASSETS BY PURCHASER OR PARENT AFTER THE CLOSING, EXCEPT FOR THE REPRESENTATIONS
WITH RESPECT TO THE MATERIAL CONTRACTS CONTAINED IN SECTION 3.11(a).
SECTION 5.2 Access to Information.
(a) From the date hereof until the Closing, upon reasonable notice, Seller
shall cause Seller and Seller's officers, directors, employees, agents,
representatives, accountants and counsel to: (i) afford the officers, employees
and authorized agents, accountants, counsel and representatives of Purchaser
reasonable access, during normal business hours, to the offices, properties,
plants, other facilities, books and records of Seller as they relate to the
Division and to those officers, directors, employees, agents, accountants and
counsel of Seller who have knowledge relating to the Division or its business,
and (ii) furnish to the officers, employees and authorized agents, accountants,
counsel and representatives of Purchaser such additional financial and operating
data and other information regarding the assets, properties and goodwill of the
Division (or legible copies thereof) as Purchaser may from time to time
reasonably request.
(b) In order to facilitate the resolution of any claims made by or against
Parent, Purchaser, Seller or ▇▇▇▇▇ with respect to the Division after the
Closing Date or for any other reasonable purpose, for a period of seven years
following the Closing, each party shall (i) retain the books and records which
relate to the Division or the Acquired Assets in their possession for the period
of time set forth in the record retention policies of each party as of the date
hereof or for such longer period as may be required by law or any applicable
court order; provided, however, that the parties shall retain books and records
relating to Taxes or Tax Returns until a date that is no earlier than six months
34
after the expiration of the applicable statute of limitations with respect to
such Taxes or Tax Returns and (ii) upon reasonable notice, afford the officers,
employees and authorized agents and representatives of Parent, Purchaser, Seller
or ▇▇▇▇▇, as the case may be, reasonable access (including the right to make
photocopies), during normal business hours, to such books and records.
SECTION 5.3 Confidentiality. Each party hereto agrees, and shall cause its
respective agents, representatives, Affiliates, employees, officers and
directors to, treat and hold as confidential (and not disclose or provide access
to any Person) all non-public information of the other parties hereto, including
without limitation, information relating to trade secrets, processes, patent and
trademark applications, product development, price, customer and supplier lists,
pricing and marketing plans, policies and strategies, details of client and
consultant contracts, operations methods, product development techniques,
business acquisition plans, new personnel acquisition plans and all other
confidential information with respect to the other parties hereto and their
respective businesses and operations. In the event that such party or any such
agent, representative, Affiliate, employee, officer or director becomes legally
compelled to disclose any such information, such party shall provide the other
with prompt written notice of such requirement so that such other party may seek
a protective order or other remedy or waive compliance with this Section 5.3. In
the event that such protective order or other remedy is not obtained, or such
other party waives compliance with this Section 5.3, the disclosing party shall
furnish only that portion of such confidential information which is legally
required to be provided and shall exercise its reasonable efforts to obtain
assurances that confidential treatment will be accorded such information. Each
party hereto agrees and acknowledges that remedies at law for any breach of its
obligations under this Section 5.3 are inadequate and that in addition thereto
the other parties hereto shall be entitled to seek equitable relief, including
injunction and specific performance, in the event of any such breach.
Notwithstanding any other provision of this Section 5.3, the obligations of
Purchaser and its agents, representatives, Affiliates, employees, officers and
directors under this Section 5.3, with respect to information regarding the
Division, shall terminate upon the Closing.
SECTION 5.4 Regulatory and Other Authorizations; Notices and Consents.
(a) Each party hereto shall use its reasonable efforts to obtain any
authorizations, consents, orders and approvals of all Governmental Authorities
and officials that may be or become necessary for its or their execution and
delivery of, and the performance of its or their respective obligations pursuant
to, this Agreement and will cooperate fully with the other parties hereto
35
in promptly seeking to obtain all such authorizations, consents, orders and
approvals.
(b) Seller shall promptly give such notices to third parties and use its
best efforts to obtain such third party consents and, with respect to the Leased
Real Property, estoppel certificates as Purchaser may, in its reasonable
discretion, deem necessary or desirable in connection with the transactions
contemplated by this Agreement.
(c) Seller knows of no reason why all the consents, approvals and
authorizations necessary for the consummation of the transactions contemplated
hereby will not be obtained or received.
(d) Seller further agrees that, in the event that any consent, approval,
authorization or assignment necessary or desirable to preserve for the business
of the Division or Purchaser any right or benefit under any lease, license,
contract, commitment or other agreement or arrangement included in the Acquired
Assets is not obtained or received prior to the Closing, Seller will, subsequent
to the Closing, cooperate fully with Purchaser in attempting to obtain such
consent, approval or authorization as promptly thereafter as practicable. Upon
receipt by Parent, Purchaser or Seller following the Closing Date of the consent
of a third party to any such contract or agreement that is by its terms or at
law non-assignable without such consent, such contract or agreement shall,
without any further action on the part of Parent, Purchaser or Seller, be deemed
to have been assigned by Seller to Purchaser and assumed by Purchaser as of the
date of such consent. If such consent, approval, authorization or assignment
cannot be obtained, Seller shall, to the extent reasonably possible and to the
extent it would not cause any material obligation on Seller, keep such contracts
or agreements in effect and provide Purchaser with the rights and benefits of
the affected lease, license, contract, commitment or other agreement or
arrangement for the term of such lease, license, contract or other agreement or
arrangement as if such consent, approval, authorization or assignment has been
obtained and, if Seller provides such rights and benefits, Purchaser shall be
responsible for the obligations and burdens of Seller thereunder to the extent
contemplated herein.
SECTION 5.5 Notice of Developments. Prior to the Closing, each party to
this Agreement shall promptly notify the other parties to this Agreement in
writing of any of the following matters which come to such party's attention:
(i) all events, circumstances, facts and occurrences, including the commencement
or threat of any Action, which are reasonably likely to result in a breach of a
36
representation or warranty or covenant of such party in this Agreement or which
has the effect of making any representation or warranty of such party in this
Agreement untrue or incorrect, and (ii) all other material developments
affecting the Acquired Assets, Liabilities, business, financial condition,
operations, results of operations, customer or supplier relations or employee
relations, or the business or financial condition of the Division or any other
event which is reasonably likely to prohibit or materially delay the
consummation of the transactions contemplated hereby. Seller shall update the
Schedules to this Agreement up to and through the Closing Date by delivering a
revised Schedule to Purchaser promptly after the occurrence of an event or the
discovery of a fact which causes such Schedule to be inaccurate or incomplete;
provided however, that delivery of a revised Schedule as provided above shall
not cure any breach of this Agreement which resulted from the inaccuracy of any
representation or warranty of Seller made herein.
SECTION 5.6 Hiring of Employees. Purchaser shall be permitted to interview
all employees of Seller engaged in the business of the Division and discuss
with, and offer employment to, any of such employees. It is understood and
agreed, however, that Purchaser shall not be obligated to offer employment to
any of Seller's employees.
SECTION 5.7 No Shopping.
(a) From and after the date hereof until the termination of this Agreement,
without the express written consent of Purchaser, neither Seller nor ▇▇▇▇▇
shall, directly or indirectly, (i) solicit, initiate discussions or engage in
negotiations with any Person (whether or not such negotiations are initiated by
Seller), other than Purchaser, relating to the possible acquisition, whether by
way of merger, reorganization, purchase of capital stock, purchase of assets,
management agreement or otherwise (any such acquisition being referred to in
this Section 5.7 as an "Acquisition Transaction"), of any interest in Seller
related to the Division or any Acquired Asset (other than Inventory or obsolete,
damaged or worn assets sold or otherwise disposed of in the ordinary course of
the business of the Division and consistent with past practice), (ii) provide
information with respect to Seller related to the Division or any Acquired Asset
to any Person, other than Purchaser, in connection with a possible Acquisition
Transaction or (iii) enter into a transaction with any Person, other than
Purchaser, concerning a possible Acquisition Transaction. Prior to the
termination of this Agreement, if Seller receives an unsolicited offer or
proposal relating to a possible Acquisition Transaction, Seller shall
immediately notify Purchaser and provide information to Purchaser as to the
identity of the party making any such offer or proposal and the specific terms
37
of such offer or proposal (including, without limitation, the proposed price and
financing therefor).
(b) The parties hereto recognize and acknowledge that a breach by Seller of
this Section 5.7 will cause irreparable and material loss and damage to
Purchaser as to which it will not have an adequate remedy at law or in damages.
Accordingly, each party acknowledges and agrees that the issuance of an
injunction or other equitable remedy is an appropriate remedy for any such
breach.
SECTION 5.8 Further Assurances.
(a) Seller from time to time after the Closing, at Purchaser's request,
will execute, acknowledge and deliver to Purchaser such other instruments of
conveyance and transfer and will take such other actions and execute and deliver
such other documents, certifications and further assurances as Purchaser may
reasonably require in order to vest more effectively in Purchaser, or to put
Purchaser more fully in possession of, any of the Acquired Assets, or to better
enable Purchaser to complete, perform or discharge any of the Assumed
Liabilities.
(b) Subject to the terms and conditions of this Agreement, each of the
parties hereto agrees to use its best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable Laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, including, without limitation,
using its best efforts:
(i) to obtain any licenses, permits, consents, approvals,
authorizations, qualifications and orders of federal, state, local and
foreign governmental authorities as are required in connection with the
consummation of the transactions contemplated hereby and by the Transaction
Documents;
(ii) to effect all necessary registrations and filings;
(iii) to defend any lawsuits or other legal proceedings, whether
judicial or administrative, whether brought derivatively or on behalf of
third parties (including, without limitation, governmental agencies or
officials), challenging this Agreement or the Transaction Documents or the
consummation of the transactions contemplated hereby or thereby; and
38
(iv) subject to appropriate confidentiality protections, to furnish to
each other such information and assistance and to consult with respect to
the terms of any registration, filing, application or undertaking as
reasonably may be requested in connection with the foregoing.
SECTION 5.9 Non-Competition. Seller and ▇▇▇▇▇ agree that neither they nor
any of their Affiliates under their control will, for a period of eighteen (18)
months from the Closing Date (three (3) years from the Closing Date with respect
to clause (v)), directly or indirectly, (i) engage in the business of reselling
hardware as a separate business entity; (ii) provide local area network
implementation other than through Purchaser or another local area network
provider as part of a contractual relationship encompassing other services;
(iii) provide communications services that compete with the communications
services provided by Purchaser or its Affiliates; (iv) provide services that
compete with Parent's current broadband capabilities; (v) hire or solicit for
employment any employee of Purchaser or its Affiliates; or (vi) interfere with,
disrupt or attempt to disrupt the relationship between Purchaser and any of its
lessors, lessees, licensors, licensees, customers or suppliers. For the
avoidance of doubt, and not by way of limitation, it is contemplated that ▇▇▇▇▇,
Seller and their Affiliates will engage in (a) applications development related
to the Internet; (ii) consulting related to Internet, intranet and extranet
applications; (iii) document management application and workflow management
processes; (iv) database management; (v) document creation or document
repurposing services; and (vi) other services that may emerge in furtherance of
the strategy of ▇▇▇▇▇ and its Affiliates of empowering information except as
otherwise prohibited by the first sentence of this Section 5.9. In the event
that ▇▇▇▇▇, Seller or any of their controlled Affiliates are asked by their
clients to provide any of the services then prohibited by the first sentence of
this Section 5.9, ▇▇▇▇▇ and Seller agree that they will, and will cause their
controlled Affiliates to, make reasonable efforts to recommend the Purchaser as
the provider of those services. Seller and ▇▇▇▇▇ acknowledge and agree that a
substantial and legally sufficient portion of Purchase Price is attributable to
the non-competition provisions of this Section 5.9 and Seller and ▇▇▇▇▇
expressly waive any right to assert inadequacy of consideration as a defense to
enforcement of the non-competition provision of this Section 5.9 should such
enforcement ever become necessary. Seller and ▇▇▇▇▇ acknowledge that a remedy at
law for any breach or attempted breach of this Section 5.9 will be inadequate
and further agrees that any breach of this Section 5.9 will result in
irreparable harm to the business of the Division; and Seller and ▇▇▇▇▇ covenant
and agree not to oppose any demand for specific performance and injunctive and
other equitable relief in case of any such breach or attempted breach. Whenever
possible, each provision of this Section 5.9 shall be interpreted in such manner
39
as to be effective and valid under applicable law but if any provision of this
Section 5.9 shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Section 5.9. If any provision of this Section 5.9 shall, for any reason,
be judged by any court of competent jurisdiction to be invalid or unenforceable,
such judgment shall not affect, impair or invalidate the remainder of this
Section 5.9 but shall be confined in its operation to the provision of this
Section 5.9 directly involved in the controversy in which such judgment shall
have been rendered. In the event that the provisions of this Section 5.9 should
ever be deemed to exceed the time or geographic limitations permitted by the
applicable laws, then such provision shall be reformed to the maximum time or
geographic limitations permitted by applicable law.
SECTION 5.10 Shared Support and Personnel.
(a) The parties acknowledge that certain administrative and support
services and the use of certain computer and other equipment, databases and
other facilities (the "Shared Support") is shared by the Division with other
operations of Seller. During the period from the Transfer Date to the date of
February 28, 1999, or the six month anniversary of the Closing Date (the
"Transition Period"), without cost to Purchaser, Seller shall provide all such
Shared Support relating to the operation of the business of the Division by
Purchaser after the Transfer Date in the same manner as such Shared Support was
provided by Seller during the period prior to the Transfer Date, including
without limitation the effectuation of the matters specified in Schedule 5.10.
(b) During the Transition Period, Seller will use reasonable efforts to
continue to employ the person presently holding the positions of Controller of
the Division and the persons acting as E-mail administrator, procurement
supervisor, payroll manager and accounts payable manager in the Chicago office
of the Division to assist Purchaser in matters within their respective
responsibilities and the other matters referred to in Section 5.10(a).
(c) The parties agree to negotiate in good faith to resolve any disputes,
disagreements, questions or queries with respect to the sharing of any of
Seller's assets or services provided for herein, including the determination of
whether or not an asset is an Acquired Asset.
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SECTION 5.11 Liabilities to be Paid at Closing. On or before the Closing
Date, Seller shall pay or otherwise satisfy (except to the extent a good faith
dispute exists) (a) all liabilities and obligations of Seller to and with
respect to its employees for all periods prior to the Transfer Date, (b) all
trade payables invoiced more than 30 days prior to the Transfer Date, and (c)
all liabilities and obligations of Seller arising under the leases for the
Leased Real Property for all periods prior to the Transfer Date. On or before
August 31, 1998, Seller will provide Purchaser with a list of all matters as to
which disputes exist.
SECTION 5.12 Other Information. If, in order to properly prepare documents
required to be filed with governmental authorities or its financial statements,
or for another legitimate purpose, it is necessary that a party be furnished
with additional information and such information is in the possession of the
other party, such other party shall furnish such information, if it is
reasonably available, in a timely manner to the party requiring such
information, at the cost and expense of the party being furnished such
information.
SECTION 5.13 Certain Lease Expenses.
(a) Seller shall be responsible for, and shall reimburse Purchaser with
respect to, all costs incurred in connection with obtaining the consent of any
landlord of Leased Real Property to the assignment of the lease therefor to
Purchaser including any increases in the rent or other charges payable under
such lease for the period during which Purchaser shall be the tenant thereunder.
If any such costs or increases are allocable to the period of Purchaser's
tenancy, Seller shall pay such costs or increases directly to the landlord at
the time such consent is obtained and shall obtain from the landlord a release
of Purchaser with respect thereto.
(b) If Seller is unable to obtain the consent of a landlord to the
assignment to Purchaser of a lease for Leased Real Property, Seller shall
reimburse Purchaser for the aggregate rent payable by Purchaser for the same or
other premises of comparable size and character which is in excess of the rent
payable under the original lease for the remaining term of the original lease,
such payment to be made at the time Purchaser executes the lease for the same or
other premises.
41
(c) The provisions of this Section 5.13 shall not be subject to the
limitations regarding indemnification set forth in Article VII of this
Agreement.
SECTION 5.14 HSR Filing Fees. Purchaser and Seller shall share equally the fee
for filing the Pre-Merger Notification under the HSR Act.
ARTICLE VI
CONDITIONS TO CLOSING
SECTION 6.1 Conditions to Obligations of Seller. The obligation of Seller
to consummate the transactions contemplated by this Agreement shall be subject
to the fulfillment, at or prior to the Closing Date, of each of the following
conditions:
(a) Purchaser's Deliveries. Purchaser shall have delivered to Seller at the
Closing the items specified in Section 2.6 hereof; and
(b) Antitrust Matters. Any filings required to be made by Purchaser under
the HSR Act shall have been made and the specified waiting period thereunder
shall have expired.
SECTION 6.2 Conditions to Obligations of Parent and Purchaser. The
obligations of Parent and Purchaser to consummate the transactions contemplated
by this Agreement shall be subject to the fulfillment, at or prior to the
Closing, of each of the following conditions:
(a) Consents and Approvals. Purchaser shall have received, each in form and
substance satisfactory to Purchaser, in its reasonable good faith determination,
consents to the assignment to Purchaser of the contracts listed in Schedule
6.2(a) or receipt by Purchaser from the vendors or partners party to such
contracts of other contracts or instruments providing the same benefits to
Purchaser; provided, however, that the failure to obtain such consents of, or
the benefits under such contracts or instruments due to the failure to retain
employees or personnel shall not be a condition to Purchaser's obligations to
close under this Section 6.2(a).
(b) Seller's Deliveries. Seller shall have delivered to Purchaser at the
Closing the items specified in Section 2.5 hereof; and
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(c) Antitrust Matters. Any filings required to be made by Seller under the
HSR Act shall have been made and the specified waiting periods thereunder shall
have expired.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1 Indemnification and Reimbursement.
(a) Seller and ▇▇▇▇▇, jointly and severally, shall indemnify, defend and
hold harmless Purchaser from and against, and shall reimburse Purchaser for, any
Damages (as hereinafter defined) which may be sustained, suffered or incurred by
Purchaser, whether as a result of third-party claims or otherwise, and which
arise from or in connection with or are attributable to (i) the breach of any of
representations, warranties or covenants of Seller contained in this Agreement,
(ii) the ownership and operation of the Acquired Assets before the Transfer
Date, (iii) any Excluded Liability, (iv) Taxes for which Purchaser or any
Affiliate of Purchaser may become liable with respect to income earned but not
received by Purchaser or any Affiliate of Purchaser with respect to the Factored
Receivables or (v) all Receivables as set forth in the Receivables Transfer
Report, net of reserves and allowances as set forth in the Interim Balance
Sheet, are not collected within 45 days after their due date or within 45 days
after the Closing Date, whichever is later. This indemnity shall survive the
Closing for a period of eighteen months after the Closing Date except that with
respect to claims arising as a result of a breach or alleged breach of the
representations and warranties in Section 3.15, it shall survive without
limitation as to time and that with respect to claims arising as a result of a
breach or alleged breach of the representations and warranties in Section 3.19
or pursuant to the preceding clause (iv), it shall survive until three months
after the expiration of the statute of limitations with respect to each Tax at
issue. Any claim for indemnity asserted within the relevant period shall survive
until resolved. The indemnity provided in this Section 7.1(a) shall be the sole
and exclusive remedy of Purchaser and Parent against Seller and ▇▇▇▇▇ except in
the case of fraud. It being understood that any adjustments to the Purchase
Price pursuant to Section 2.3(c) shall not be limited by this Section 7.1(a).
(b) Purchaser and Parent, jointly and severally, shall indemnify, defend
and hold harmless Seller from and against, and shall reimburse Seller for, any
Damages which may be sustained, suffered or incurred by Seller, whether as a
result of third-party claims or otherwise, and which arise from or in connection
with or are attributable to (i) the breach of any of the representations,
43
warranties and covenants of Purchaser contained in this Agreement, (ii) the
ownership and operation of the Acquired Assets on and after the Transfer Date or
(iii) any Assumed Liability. This indemnity shall survive the Closing for a
period of eighteen months after the Closing Date. Any claim for indemnity
asserted within the relevant period shall survive until resolved. The indemnity
provided in this Section 7.1(b) shall be the sole and exclusive remedy of Seller
and ▇▇▇▇▇ and against Purchaser and Parent except in the case of fraud.
(c) As used herein, the term "Damages" means the dollar amount of any loss,
damage, expense or liability, including, without limitation, reasonable
attorneys' fees and disbursements incurred by an Indemnified Party in any action
or proceeding between the indemnified party and the indemnifying party or
between the Indemnified Party and a third party, which is determined to have
been sustained, suffered or incurred by a party and to have arisen from or in
connection with an event or state of facts which is subject to indemnification
under this Agreement. The amount of Damages shall be the amount finally
determined by a court of competent jurisdiction (after the exhausting of all
appeals) or the amount agreed to upon settlement in accordance with the terms of
this Agreement, if a third-party claim, or by the parties, if a direct claim of
one party against another.
(d) Any party seeking indemnification hereunder (an "Indemnified Party")
shall, with reasonable promptness, notify in writing the party required to make
such indemnification payment (the "Indemnifying Party") of such claim,
identifying the basis for such claim and the amount or the estimated amount
thereof to the extent then determinable, which estimate shall not be conclusive
of the final amount of such claim (the "Claim Notice"); provided, however, that
any failure to give such Claim Notice will not be deemed a waiver of any rights
of the Indemnified Party except to the extent the rights of the Indemnifying
Party are actually prejudiced by such failure. If such claim is a third party
claim, the Indemnifying Party, upon request of the Indemnified Party, shall
retain counsel (who shall be reasonably acceptable to the Indemnified Party) to
represent the Indemnified Party and shall pay the reasonable fees and expenses
of such counsel with regard thereto; provided, however, that any Indemnified
Party is hereby authorized, prior to the date on which it receives written
notice from the Indemnifying Party designating such counsel, to retain counsel,
whose reasonable fees and expenses shall be at the expense of the Indemnifying
Party, to file any motion, answer or other pleading and take such other action
which it reasonably shall deem necessary to protect its interests or those of
the Indemnifying Party until the date on which the Indemnified Party receives
such notice from the Indemnified Party. After the Indemnifying Party shall
retain such counsel, the Indemnified Party shall have the right to retain its
44
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) the
named parties of any such proceeding (including any impleaded parties) included
both the Indemnifying Party and the Indemnified Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. If requested by the Indemnifying Party, the
Indemnified Party agrees to cooperate with the Indemnifying Party and its
counsel in contesting any claim or demand which the Indemnifying Party defends.
A claim or demand may not be settled by any party without the prior written
consent of the other party (which consent will not be unreasonably withheld)
unless, as part of such settlement, the Indemnified Party shall receive a full
and unconditional release reasonably satisfactory to it. Notwithstanding the
foregoing, the Indemnifying Party may settle any third-party claim without the
prior written consent of the Indemnified Party if such claim is exclusively for
monetary damages. To the extent that a claim with respect to a Receivable under
Section 7.1(a)(v), Purchaser shall assign such Receivable to Seller without
recourse upon its receipt of the indemnification payment. If Seller thereafter
collects all or any part of such Receivable, 50% of the amount collected shall
be added back to the amounts available for indemnification payments to Purchaser
pursuant to Section 7.1(e).
(e) No Indemnifying Party shall be required to indemnify an Indemnified
Party pursuant to this Article 7 unless the aggregate of all amounts for which
indemnity would otherwise be due against it exceeds $100,000 (the "Threshold"),
in which event such indemnification shall apply to all Damages suffered by the
Indemnified Party including the first $100,000 thereof, and does not exceed
$3,000,000 or in the case of fraud and breaches of warranties and
representations which, at the time made, Seller or ▇▇▇▇▇ knew or should have
known were untrue ("Knowing Breaches") does not exceed the Purchase Price.
Except for claims for indemnification which may be made subsequent to the
eighteen month period beginning on the Closing Date pursuant to Section 7.1(a)
and for claims based on fraud and Knowing Breaches, all claims for Damages by
Seller or Parent shall be satisfied solely from amounts in the Escrow Account.
45
ARTICLE VIII
TERMINATION AND WAIVER
SECTION 8.1 Termination.
(a) This Agreement may be terminated at any time prior to the Closing as
follows:
(i) by mutual written consent of Seller, ▇▇▇▇▇, Parent and Purchaser;
(ii) by Seller, (A) if Parent or Purchaser shall have failed to
perform any of its covenants or agreements contained in this Agreement,
which failure, if subject to cure, has not been cured within 10 Business
Days after Seller has given notice to Parent and Purchaser of its intention
to terminate or (B) if the conditions to the obligations of Seller to
consummate the transactions contemplated by this Agreement shall not have
occurred by forty-five (45) days after Premerger Notifications have been
filed under the HSR Act.
(iii) by Purchaser, (A) if Seller or ▇▇▇▇▇ shall have failed to
perform any of its covenants in this Agreement, which failure, if subject
to cure, has not been cured within 10 Business Days after Purchaser has
given notice to Seller and ▇▇▇▇▇ of its intention to terminate or (B) if
the conditions to the obligations of Purchaser to consummate the
transactions contemplated by this Agreement shall not have occurred by
forty-five days after Premerger Notifications have been filed under the HSR
Act.
(b) In the event of termination by Seller or Purchaser, or both, pursuant
hereto, written notice thereof shall forthwith be given to the other party and
all further obligations of the parties under this Agreement shall terminate, no
party shall have any right under this Agreement against any other party except
as set forth in this Article VIII, and each party shall bear its own costs and
expenses. In such event:
(i) If this Agreement is terminated by Seller pursuant to Section
8.1(a)(ii)(A) or by Purchaser pursuant to Section 8.1(a)(iii)(A), the
terminating party's right to pursue all legal and equitable remedies for
46
breach of contract or otherwise, including, without limitation, Damages relating
thereto, shall survive such termination unimpaired; and
(ii) Nothing herein shall preclude any party, upon a breach hereof by
another party, from pursuing all equitable remedies, including specific
performance, it being acknowledged and agreed by the parties that the
transactions contemplated hereby are of a special, unique and extraordinary
character and that any breach will cause irreparable injury to the
non-breaching party for which money damages will not provide a wholly
adequate remedy.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Miscellaneous.
(a) Except as otherwise provided herein, all costs and expenses, including,
without limitation, fees and disbursements of representatives, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
(b) All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been duly given or made as of
the date delivered if delivered personally or by nationally recognized overnight
courier or by telecopy to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice, except that
notices of changes of address shall be effective upon receipt):
If to Seller:
Donnelley Enterprise Solutions Incorporated
c/▇ ▇▇▇▇▇ & Co., Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
with a copies to:
47
▇▇▇▇▇ & Co., Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
- and -
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇., Esq.
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
If to Parent and Purchaser:
WinStar LANSystems Acquisition Corp.
c/o WinStar Communications, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ -- ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ Mollen & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) No party shall make any public announcements in respect of this
Agreement or the transactions contemplated herein without the consent of the
other, which consent shall not unreasonably withheld or delayed, except that a
party may make any public announcement it deems necessary to comply with its
legal obligations (including disclosure by means of filings with the Securities
and Exchange Commission and other Governmental Authorities), and will use
reasonable efforts to provide a copy of such public announcement to Seller prior
to the public dissemination thereof.
(d) Purchaser may assign its rights under this Agreement, or any portion
thereof, to any wholly-owned direct subsidiary (including a non-corporate
subsidiary) of WinStar Communications, Inc. or any successor to WinStar
Communications, Inc., provided that such assignee shall assume in writing the
rights and obligations so assigned and such assignment shall not relieve
Purchaser of its obligations hereunder to the extent not fulfilled by such
assignee. Seller shall not assign any of its rights under this Agreement without
the prior written consent of Purchaser.
48
(e) This Agreement may not be amended or modified except by an instrument
in writing signed by Seller, ▇▇▇▇▇, Parent and Purchaser, which instrument shall
thereupon be binding upon all the parties.
(f) Any party may (i) extend the time for the performance of any of the
obligations or other acts of any other party, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only if
set forth in an instrument in writing signed by the party to be bound thereby.
(g) If any provision of this Agreement is determined to be invalid, illegal
or incapable of being enforced by a court or regulatory agency of competent
jurisdiction, the other provisions of this Agreement shall not be affected and
shall remain in full force and effect and the parties shall negotiate in good
faith revisions to this Agreement so as to effect the original intent of the
parties pursuant to the provision so affected.
(h) This Agreement, together with the Schedules and Exhibits hereto
constitute the entire agreement, and supersede all prior agreements and
undertakings, both written and oral, among the parties, with respect to the
subject matter hereof and thereof and, except as otherwise expressly provided
herein, are not intended to confer upon any other person any rights or remedies
hereunder.
(i) This Agreement shall inure to the benefit of and be binding upon the
successors, distributees and assigns of the parties.
(j) This Agreement shall be governed by, and construed in accordance with,
the law of the State of New York, without regard to principles of conflicts of
law. EACH PARTY HEREBY IRREVOCABLY CONSENTS AND SUBMITS TO THE JURISDICTION OF
ANY NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN THE STATE OF NEW
YORK, COUNTY OF NEW YORK OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND
ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY REGISTERED MAIL ADDRESSED TO
SUCH PARTY AT ITS ADDRESS SPECIFIED IN SECTION 10.1(b). EACH PARTY FURTHER
49
WAIVES ANY OBJECTION TO VENUE IN NEW YORK AND ANY OBJECTION TO AN ACTION OR
PROCEEDING IN SUCH STATE AND COUNTY ON THE BASIS OF FORUM NON CONVENIENS. EACH
PARTY ALSO WAIVES ANY RIGHT TO TRIAL BY JURY.
(k) This Agreement may be executed in one or more counterparts, and by the
different parties in separate counterparts, each of which when executed shall be
deemed to be an original but all of which when taken together shall constitute
one and the same agreement.
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(l) No provision of this Agreement or any other instrument or other
document delivered in connection with the transactions contemplated hereby will
be interpreted in favor of, or against, any of the parties by reason of the
extent to which such party or its counsel participated in the drafting hereof or
by reason of the extent to which any such provision is inconsistent with any
prior draft hereof or thereof.
IN WITNESS WHEREOF, each of Seller and Purchaser has caused this Agreement
to be executed by its respective officers thereunto duly authorized, in each
case, as of the date first written above.
DONNELLEY ENTERPRISE SOLUTIONS
INCORPORATED
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:Chairman
▇▇▇▇▇ & CO., INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:Chairman
WINSTAR COMMUNICATIONS, INC.
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
By:________________________________
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title:Vice President
WINSTAR LANSYSTEMS ACQUISITION, LLC
By: WINSTAR WIRELESS, INC., Member
/s/ ▇. ▇. ▇▇▇▇▇▇
By:________________________________
Name: ▇.▇. ▇▇▇▇▇▇
Title:Vice President
51