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ASSET PURCHASE AGREEMENT
dated as of the 10th day of March, 1999
by and among
THE ALLIANCE GROUP, INC.
(Parent)
and
ALLIANCE ACQUISITION XI CORP.
(Newco)
and
ELECTRICAL AND INSTRUMENT SALES CORP.
d/b/a EIS COMMUNICATIONS
(Company)
and
ELECTRONIC INFORMATION SYSTEMS, L.L.C.
(LLC)
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TABLE OF CONTENTS
1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. PURCHASE AND SALE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 The Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Acquired Assets. . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Assumption of Liabilities. . . . . . . . . . . . . . . . . . . . . 7
2.5 Transfer of Aquired Assets and Assumption of Assumed
Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3. INSTRUMENTS OF TRANSFER. . . . . . . . . . . . . . . . . . . . . . . . . . 7
4. PURCHASE PRICE; ALLOCATION . . . . . . . . . . . . . . . . . . . . . . . . 8
4.1 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 Payment of Purchase Price. . . . . . . . . . . . . . . . . . . . . 8
4.3 Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . 8
4.4 Calculation of the Incremental Payment . . . . . . . . . . . . . . 8
5. CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF COMPANY . . . . . 9
6.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.3 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 9
6.4 Title to Acquired Assets; Condition of Acquired Assets. . . . . . 10
6.5 Real Property - Owned. . . . . . . . . . . . . . . . . . . . . . . 10
6.6 Real and Personal Property - Leased. . . . . . . . . . . . . . . . 10
6.7 Existing Contracts . . . . . . . . . . . . . . . . . . . . . . . . 10
6.8 Governmental Licenses. . . . . . . . . . . . . . . . . . . . . . . 10
6.9 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . 10
6.10 No Violation of Existing Agreements. . . . . . . . . . . . . . . . 11
6.11 Litigation and Legal Proceedings . . . . . . . . . . . . . . . . . 11
6.12 Environmental Compliance.. . . . . . . . . . . . . . . . . . . . . 11
6.13 Employee Benefits and Employees. . . . . . . . . . . . . . . . . . 12
6.14 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.15 Customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.16 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.17 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.18 Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . 13
6.19 Pricing of Services. . . . . . . . . . . . . . . . . . . . . . . . 13
6.20 Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . . . 13
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6.21 Accounts Receivable and Bad Debts. . . . . . . . . . . . . . . . . 13
6.22 Certain Business Relationships with Company. . . . . . . . . . . . 13
6.23 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.24 Absence of Changes. . . . . . . . . . . . . . . . . . . . . . . . 14
6.25 Prohibited Activities. . . . . . . . . . . . . . . . . . . . . . . 15
7. [INTENTIONALLY OMITTED]. . . . . . . . . . . . . . . . . . . . . . . . . . 15
8. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF PARENT
AND NEWCO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.3 Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.4 Transactions in Capital Stock. . . . . . . . . . . . . . . . . . . 16
8.5 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.6 Liabilities and Obligations. . . . . . . . . . . . . . . . . . . . 16
8.7 Conformity with Law; Litigation. . . . . . . . . . . . . . . . . . 17
8.8 No Violations. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.9 Parent Securities. . . . . . . . . . . . . . . . . . . . . . . . . 17
8.10 Business; Real Property; Agreements. . . . . . . . . . . . . . . . 17
9. OTHER COVENANTS PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . 17
9.1 Access and Cooperation; Due Diligence; Audits. . . . . . . . . . . 17
9.2 Conduct of Business Pending Closing. . . . . . . . . . . . . . . . 18
9.3 Prohibited Activities by the Company . . . . . . . . . . . . . . . 19
9.4 Exclusivity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.5 Notification of Certain Matters. . . . . . . . . . . . . . . . . . 20
9.6 Amendment of Schedules . . . . . . . . . . . . . . . . . . . . . . 21
9.7 Further Assurance. . . . . . . . . . . . . . . . . . . . . . . . . 21
9.8 Other Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.9 Vehicles Agreement . . . . . . . . . . . . . . . . . . . . . . . . 21
9.10 Transition Agreement . . . . . . . . . . . . . . . . . . . . . . . 22
9.11 Sales Agency Agreement . . . . . . . . . . . . . . . . . . . . . . 22
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPANY . . . . . . . . . . . . . . 22
10.1 Representations and Warranties; Performance of
Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.2 No Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.3 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . 22
10.4 Good Standing Certificates . . . . . . . . . . . . . . . . . . . . 22
10.5 No Material Adverse Effect . . . . . . . . . . . . . . . . . . . . 22
10.6 Secretary's Certificates . . . . . . . . . . . . . . . . . . . . . 23
10.7 Employment Agreements. . . . . . . . . . . . . . . . . . . . . . . 23
10.8 Closing of the IPO or the Private Placement. . . . . . . . . . . . 23
11. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND
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NEWCO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.1 Representations and Warranties; Performance of Obligations . . . . 23
11.2 No Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.3 Secretary's Certificate. . . . . . . . . . . . . . . . . . . . . . 23
11.4 No Material Adverse Effect . . . . . . . . . . . . . . . . . . . . 23
11.5 Termination of Related Party Agreements. . . . . . . . . . . . . . 24
11.6 Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . 24
11.7 Due Diligence. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.8 Good Standing Certificates . . . . . . . . . . . . . . . . . . . . 24
11.9 FIRPTA Certificate . . . . . . . . . . . . . . . . . . . . . . . . 24
11.10 Closing of the IPO or Private Placement. . . . . . . . . . . . . . 24
11.11 Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . 25
11.12 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 25
11.13 Operation of Business. . . . . . . . . . . . . . . . . . . . . . . 25
12. CASUALTY LOSSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
13. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
13.1 General Indemnification by Company . . . . . . . . . . . . . . . . 25
13.2 Indemnification by Parent. . . . . . . . . . . . . . . . . . . . . 25
13.3 Third Person Claims. . . . . . . . . . . . . . . . . . . . . . . . 26
13.4 Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . 27
13.5 Limitations on Indemnification . . . . . . . . . . . . . . . . . . 27
14. TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 27
14.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
14.2 Liabilities in Event of Termination. . . . . . . . . . . . . . . . 28
15. NONCOMPETITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
15.1 Prohibited Activities. . . . . . . . . . . . . . . . . . . . . . . 28
15.2 Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
15.3 Reasonable Restraint . . . . . . . . . . . . . . . . . . . . . . . 29
15.4 Severability; Reformation. . . . . . . . . . . . . . . . . . . . . 29
15.5 Independent Covenant . . . . . . . . . . . . . . . . . . . . . . . 29
15.6 Materiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
16. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. . . . . . . . . . . . . . . . . 30
16.1 Company and Stockholders . . . . . . . . . . . . . . . . . . . . . 30
16.2 Parent and Newco . . . . . . . . . . . . . . . . . . . . . . . . . 30
16.3 Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
16.4 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
17. TRANSFER RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
18. INVESTMENT REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . 32
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18.1 Compliance With Law. . . . . . . . . . . . . . . . . . . . . . . . 32
18.2 Economic Risk; Sophistication. . . . . . . . . . . . . . . . . . . 32
19. REGISTRATION RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
19.1 PiggyBack Registration Rights. . . . . . . . . . . . . . . . . . . 33
19.2 Demand Registration Rights . . . . . . . . . . . . . . . . . . . . 33
19.3 Registration Procedures. . . . . . . . . . . . . . . . . . . . . . 34
19.4 Other Registration Matters . . . . . . . . . . . . . . . . . . . . 36
19.5 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . 37
19.6 Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
19.7 Undertaking to File Reports and Cooperate in Rule 144
Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
20. GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
20.1 Cooperation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
20.2 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . 41
20.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 41
20.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
20.5 Brokers and Agents . . . . . . . . . . . . . . . . . . . . . . . . 41
20.6 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
20.7 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 43
20.8 Exercise of Rights and Remedies. . . . . . . . . . . . . . . . . . 43
20.9 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
20.10 Reformation and Severability . . . . . . . . . . . . . . . . . . . 43
20.11 Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . . . . 43
20.12 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
20.13 Public Statements. . . . . . . . . . . . . . . . . . . . . . . . . 44
20.14 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . 44
20.15 Collection Procedures. . . . . . . . . . . . . . . . . . . . . . . 44
20.16 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made as of the 10th
day of March, 1999, by and among THE ALLIANCE GROUP, INC., an Oklahoma
corporation ("Parent"), ALLIANCE ACQUISITION XI CORP., an Oklahoma corporation
("Newco"), and ELECTRICAL AND INSTRUMENT SALES CORP. d/b/a EIS COMMUNICATIONS,
an Oklahoma corporation (the "Company") and Electronic Information Systems,
L.L.C. (the "LLC").
RECITALS
WHEREAS, Newco is a corporation duly organized and existing
under the laws of the State of Oklahoma, having been incorporated on
March 9, 1999, solely for the purpose of completing the transaction
set forth herein, and Newco is a wholly-owned subsidiary of Parent, a
corporation organized and existing under the laws of the State of
Oklahoma; and
WHEREAS, Company is and has been engaged in the interconnect and
paging business (the "Business") and owns certain equipment, inventory
and other personal property used in the Business.
WHEREAS, Company desires to sell to Newco, and Newco desires to
purchase from Company (or LLC, if Company has transferred the
specified assets to LLC as permitted herein), Company's equipment,
inventory, accounts receivable and certain other assets which are
presently owned by Company and associated with the ownership and
operation of the Business (the "Sale").
NOW, THEREFORE, in consideration of the premises and of the
mutual representations, warranties, covenants and agreements herein
contained, the parties hereto hereby agree as follows:
1. DEFINITIONS
Unless the context otherwise requires, capitalized terms used in this
Agreement or in any schedule or annex attached hereto and not otherwise defined
shall have the following meanings for all purposes of this Agreement.
"Acquired Assets" has the meaning set forth in Section 2.2.
"Adverse Effect" has the meaning set forth in Section 6.1.
"Affiliates" means a Person who directly or indirectly through one or
more intermediaries controls, is controlled by, or is under common control with,
the Company.
"Agreement" has the meaning set forth in the first paragraph of this
Agreement.
"Annex" means each Annex attached hereto that represents a document
relevant to the transactions contemplated in this Agreement.
"Assumed Liabilities" has the meaning set forth in Section 2.4.
"Authorizations" has the meaning set forth in Section 6.8.
"Balance Sheet Date" has the meaning set forth in Section 6.3.
"Cash Payment' has the meaning set forth in Section 4.1.
"Charter Documents" means the Certificate of Incorporation,
Articles of Incorporation, Articles of Organization or other instrument
pursuant to which any corporation, partnership or other business entity that
is a signatory to this Agreement was formed or organized in accordance with
applicable law.
"Closing" has the meaning set forth in Section 5.
"Closing Date" has the meaning set forth in Section 5.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the first paragraph of this
Agreement.
"Company Financial Statements" has the meaning set forth in
Section 6.3.
"Company Stock" means the Company's $1.00 par value common stock.
"December Balance Sheet" has the meaning set forth in Section 6.3.
"Demand Registration" has the meaning set forth in Section 19.2.
"Effective Time" means the time as of which the Merger becomes
effective, which shall, in any case, occur on the Closing Date.
"Environmental Laws" has the meaning set forth in Section 6.12.
"Expiration Date" means (i) except as set forth in (iii) below, the
24th monthly anniversary of the Closing Date when used in connection with a
breach of any representation, warranty, covenant or agreement set forth in
Sections 6 or 8 of this Agreement, (ii) the 36th monthly anniversary of the
Closing Date when used in connection with the failure to observe the terms of
Section 15 and (iii) the date on which suit for the enforcement of any claims
for Taxes, claims under Environmental Laws or claims under any other covenant
or agreement set forth in this Agreement and not specified in (i) or (ii)
above becomes barred by the applicable statute of limitation.
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"Founding Companies" has the meaning set forth in Section 9.1(ii).
"Founding Stockholders" has the meaning set forth in Section 19.2.
"Governmental Authorities" has the meaning set forth in
Section 2.2(b).
"Hazardous Substance" has the meaning set forth in Section 6.12.
"Incremental Payment" has the meaning set forth in Section 4.1.
"Indemnified Party" has the meaning set forth in Section 13.3.
"Indemnifying Party" has the meaning set forth in Section 13.3.
"IPO" means the Parent's initial public offering of Parent Stock.
"IRS" or "Internal Revenue Service" means the Internal Revenue Service
of the Department of the Treasury.
"Leases" means all real and personal property leased by Company and
used, useful or held for use in connection with Company=s Business.
"Liens" has the meaning set forth in Section 2.1.
"LLC" has the meaning set forth in the first paragraph of this
Agreement.
"Net Current Assets" has the meaning set forth in Section 4.4.
"Newco" has the meaning set forth in the first paragraph of this
Agreement.
"Parent" has the meaning set forth in the first paragraph of this
Agreement.
"Parent Charter Documents" has the meaning set forth in Section 8.1.
"Parent Documents" has the meaning set forth in Section 8.8.
"Parent Stock" means Parent's $.01 par value common stock.
"Permitted Liens" has the meaning set forth in Section 2.1.
"Person" means an individual, a corporation, a partnership, an
association, a limited liability company, a joint stock company, a trust or
other unincorporated organization.
"Private Placement" means the Parent's private placement of Parent
Stock.
"Prohibited Activities" has the meaning set forth in Paragraph 6.25.
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"Purchase Price" has the meaning set forth in Section 4.1.
"Registerable Securities" means the shares of Parent Stock
registerable pursuant to Section 19.
"Restricted Securities" has the meaning set forth in introductory
paragraph to Section 18.
"Sale" has the meaning set forth in the third recital of this
Agreement.
"Schedule" means each Schedule attached hereto, which shall
reference the relevant sections of this Agreement, on which parties hereto
disclose information as part of their respective representations, warranties,
covenants and agreements.
"SEC" means the United States Securities and Exchange Commission.
"Stock Payment" has the meaning set forth in Section 4.1.
"Stockholders" has the meaning set forth in Section 15.1.
"Subsidiaries" means, with respect to any Person, any corporation or
other organization, whether incorporated or unincorporated, of which (i) such
Person or any other Subsidiary of such Person is a general partner (excluding
partnerships, the general partnership interests of which held by such Person or
any Subsidiary of such Person do not have a majority of the voting interest in
such partnership) or (ii) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
Board of Directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such Person, by any one or more of its Subsidiaries or by such Person and one
or more of its Subsidiaries.
"Tax" or "Taxes" have the meaning set forth in Section 6.14.
"Territory" has the meaning set forth in Section 15.1(i).
"Third Person" has the meaning set forth in Section 13.3.
"Transfer" has the meaning set forth in Section 2.5.
"1933 Act" means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
2. PURCHASE AND SALE
2.1 THE SALE. Subject to the terms and conditions set forth in this
Agreement, Company agrees to sell, convey, assign, transfer and deliver to
Newco, and Newco agrees to purchase from Company at Closing, all of Company's
right, title and interest in and to the Acquired
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Assets, free and clear of all debts, liabilities, obligations and taxes other
than Assumed Liabilities, and free and clear of all security interests,
liens, pledges, charges, rights of third parties and encumbrances of every
kind (collectively, "Liens"), other than Permitted Liens. As used herein,
the term "Permitted Liens" means (i) any Lien for taxes and assessments not
yet past due or otherwise being contested in good faith and for which
appropriate reserves have been established, (ii) any Lien arising out of
deposits made to secure leases or other obligations of a like nature arising
in the ordinary course of business, (iii) any Lien affecting real property
that does not materially interfere with the use by Company of the property
subject thereto or affected thereby, (iv) as to leaseholds, interest of the
lessors thereof and Liens affecting the interests of such lessors and (v) any
Lien set forth on Schedule 2.1 attached hereto.
2.2 ACQUIRED ASSETS. The assets to be conveyed to Newco shall
include all of Company's right, title and interest of whatever description which
relate in any way to the ownership, use or operation of the Business, as owned,
acquired or obtained by Company from the date hereof through the date of Closing
(collectively, the "Acquired Assets"). The Acquired Assets shall include, but
not be limited to, all of the rights, interests and benefits of Company in:
(a) All operating agreements, interconnection agreements,
transit agreements, resale agreements, other agreements with
telecommunication companies, leases, Authorizations to the extent such
Authorizations may be transferred under applicable law, instruments,
commitments, guarantees, consents and revenue sharing agreements; all
easements, appurtenances, rights-of-way and construction permits, if any,
related to the Acquired Assets; all right, title and interest, if any, in and
to all streets, roads and public places, open or proposed; all agreements
between Company and any suppliers, telecommunication equipment or service
companies and customers, and all other similar rights and agreements,
including all applications therefor, which in any way may relate to or
concern the operation by Company of the Business.
(b) Originals or copies of all of Company's files of
correspondence, lists, records and reports concerning (i) customers,
prospective customers of the Business and customer service records related to
the Acquired Assets and (ii) all dealings with any federal, state, county,
municipal or foreign government agency, authority, utility instrumentality,
including without limitation, any agency, court, tribunal, department,
bureau, commission or board of competent jurisdiction ("Governmental
Authorities") with respect to the Acquired Assets.
(c) All of Company's right, title and interest in and to
machinery, equipment, motor vehicles, office equipment, computers and related
software, furniture and fixtures, supplies, inventory, spare parts and other
physical assets, if any, used in or relating to the Acquired Assets, and all
modifications, additions, restorations or replacements of the whole or any
part thereof.
(d) All of Company's right, title and interest in and to
agreements and contracts for: (i) paging, long-distance and local telephone
customers; (ii) Internet services including, without limitation, Company's
registered addresses; (iii) PIC and CIC codes, tariffs and certifications, to
the extent transferrable; (iv) agency agreements; and (v) sale and service of
telephone equipment.
(e) All of Company's right, title and interest to
engineering records, files, data,
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drawings, blueprints, schematics, maps, reports, lists and plans and
processes intended for use in connection with the Acquired Assets provided
that Company may retain a copy thereof.
(f) All of the following, along with all related income,
royalties, damages and payments, if any, due or payable as of the Closing
Date or thereafter: inventions, trademarks, service marks, trade dress,
trade names, logos and registrations and applications for a registration
thereof together with all of the goodwill associated therewith, copyrights
and copyrightable works and registrations and applications for the
registration thereof, computer software, data, data bases, documentation
thereof, trade secrets and other confidential information, other intellectual
property rights and intangible embodiments thereof (in whatever form or
medium); all data and records, wherever located, including books and records,
customer lists, call records, usage schedules, advertising materials, credit
information and correspondence, manuals, contract rights (including, without
limitation, letters of authority and other customer subscription/acquisition
contracts), together with all books, records, drawings and other indicia,
however evidenced.
(g) All electrical, mechanical, plumbing and other building
systems, security and surveillance systems and wiring and cable installations
owned by Company and located on the property leased by Company.
(h) All deposits, prepayments and prepaid expenses.
(i) All claims, causes of action, choses in action, rights
of recovery and rights of set-off of any kind.
(j) The right to receive and retain mail, accounts
receivable payments and other communications.
(k) The right to ▇▇▇▇ and receive payment for products
shipped or delivered and/or services performed but unbilled or unpaid as of the
Closing.
(l) The advertising, marketing and promotional materials and
all other related printing or written materials.
(m) All notes receivable, accounts receivable and related
records for such receivables (including customer receivables for customers to be
acquired by Newco).
(n) All 800 and 888 telephone numbers of Company.
(o) All goodwill associated with the Acquired Assets.
(p) Any assets of the type described above which are
acquired after the date hereof but prior to the Closing.
2.3 EXCLUDED ASSETS. The properties and assets described in
Schedule 2.3 shall not be included in the Acquired Assets, shall be retained by
Company and shall not be sold, assigned or transferred to Newco (the "Excluded
Assets").
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2.4 ASSUMPTION OF LIABILITIES. At Closing, Newco shall assume and
perform and discharge the following to the extent not previously performed or
discharged as of the Closing: (i) Company's obligations after the Closing under
the contracts being assigned to Newco, and all other obligations of Company
related to the Business entered into during the period from the date hereof to
the Closing by Company in the ordinary course of its business in accordance with
the provisions of Sections 9.2 and 9.3 below that were identified to and
consented in writing by Newco; and (ii) all accounts payable, notes payable and
other indebtedness reflected on the December Balance Sheet related to the
Business (collectively, the "Assumed Liabilities"). Newco shall not be liable
for any (i) liabilities, debts or obligations arising from Company's pending
litigation with NationsBank, N.A., as set forth on Schedule 2.4 or (ii) any
other liabilities, debts, contracts or agreements, including without limitation,
any liabilities or obligations related to the Excluded Assets or other
obligations of Company of any nature whatsoever other than the Assumed
Liabilities.
2.5 TRANSFER OF ACQUIRED ASSETS AND ASSUMPTION OF ASSUMED
LIABILITIES. Newco and Parent acknowledge and agree that Company may
transfer and assign the Acquired Assets to LLC, and LLC may assume the
Assumed Liabilites of Company, on or before March 31, 1999 (the "Transfer").
Company and LLC agree that, upon consummation of the Transfer, (i) LLC will
become liable for all obligations, covenants and agreements of Company, and
responsible for the accuracy of the representations and warranties of
Company, under this Agreement. Consummation of the Transfer will not release
Company from its duty to perform its obligations or fulfill its agreements
and covenants, or to ensure the accuracy of its representations or
warranties, under this Agreement. However, if an obligation, agreement or
convenant of Company can only be performed by LLC following the Transfer, the
text of this Agreement shall be deemed modified to so reflect, and Company's
obligation, agreement or covenant will be automatically converted into an
obligation to ensure that LLC performs the specific obligation, agreement or
covenant. If the Transfer is consummated, LLC shall make the same
representations and warranties as Company, but such representations and
warranties will deemed modified to the extent necessary to reflect that it is
a limited liability company and not a corporation.
3. INSTRUMENTS OF TRANSFER
At the Closing, Company will deliver to Newco (i) one or more Bills of
Sale in substantially the form attached hereto as Annex I ("▇▇▇▇ of Sale"), (ii)
all such other good and sufficient instruments of sale, transfer and conveyance,
including, without limitation, assignments of leases in such form and including
such matters as Newco shall reasonably request and as shall be reasonably
acceptable to Company, as shall be effective to vest in Newco all of Company's
right and title to, and interest in, the Acquired Assets; and (iii) all
contracts and commitments, instruments, books and records and other data
included in the Acquired Assets.
4. PURCHASE PRICE; ALLOCATION
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4.1 PURCHASE PRICE. The total purchase price for the Acquired
Assets shall be (i) $900,000 in cash (the "Cash Payment"), (ii) up to $150,000
in cash for net current assets, (iii) $50,000 in cash or $100,000 in stock for
paging services, and (iv) $500,000 of Alliance common stock (the "Stock
Payment") (collectively the "Purchase Price"). Notwithstanding the foregoing,
the Cash Payment shall be increased by (i) the amount of Net Current Assets,
provided that the increase will not exceed $150,000, plus (ii) $150,000 if the
Company's gross revenues from the Business exceed $2,350,000 for the 12 months
ended May 31, 1999 (collectively, the "Incremental Payment").
4.2 PAYMENT OF PURCHASE PRICE. The Cash Payment shall be payable by
wire transfer of immediately available funds to Company at Closing. The Stock
Payment shall be issued to Company at Closing. The Incremental Payment, if any,
will be paid by wire transfer of immediately available funds to Company on the
one month anniversary of the Closing.
4.3 ALLOCATION OF PURCHASE PRICE. Attached hereto as Annex II is
the allocation of the Purchase Price in accordance with the respective fair
market value of the Acquired Assets being purchased and as provided for under
Section 1060 of the Code. Newco and Company each agree to file their income tax
returns and their other tax returns and IRS Form 8594 reflecting the allocation
as determined in this Section 4.3 unless otherwise required by applicable legal
requirements.
4.4 CALCULATION OF THE INCREMENTAL PAYMENT. For purposes of
calculating the Incremental Payment, the term "Net Current Assets" shall mean
the current assets of the Company minus the current liabilities of the
Company as exist on the Closing Date. Company and Newco shall, in good
faith, mutually agree as to the amount of current assets and current
liabilities existing on the Closing Date. For purposes of calculating the
current assets, accounts receivable shall include only accounts receivable
aged less than 60 days, and then this amount will be multiplied by the
Company's historic realization rate for accounts receivable aged less than 60
days based on the period from January 1, 1997 to January 1, 1999. Newco may
consider any actions taken outside of the ordinary course of business,
including, but not limited to, the depletion of inventory levels or the
incurrance of long term debt, in calculating and, if applicable, reducing the
Incremental Payment.
5. CLOSING
Subject to the terms and conditions hereof, the closing (the
"Closing") shall take place at the offices of McAfee & ▇▇▇▇ A Professional
Corporation, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, on May 31, 1999, or such other date as the parties hereto may
designate (the "Closing Date"). At Closing, each party shall deliver or
cause to be delivered to the other party the instruments of transfer
referenced in Section 3 of this Agreement and the other deliveries required
by Section 10 (for Company) and Section 11 (for Newco) of this Agreement, and
Newco shall deliver to Company the Cash Payment and the Stock Payment as
required pursuant to Section 4.
6. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF COMPANY
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Company represents, warrants, covenants and agrees (i) that all of
the following representations and warranties in this Section 6 are materially
true at the date of this Agreement and, subject to Section 9.6, shall be
materially true at the Closing Date and (ii) that all of the covenants and
agreements in this Section 6 shall be materially complied with or performed
at and as of the Closing Date.
6.1 DUE ORGANIZATION. Company is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, and is duly authorized and qualified to do business and is in
good standing under the laws of each jurisdiction where such qualification is
required except (i) as set forth on Schedule 6.1 or (ii) where the failure to
be so authorized or qualified would not have an adverse effect on the
business, operations, affairs, prospects, properties, assets or condition
(financial or otherwise) of Company taken as a whole (as used herein with
respect to Company, or with respect to any other Person, an "Adverse Effect").
6.2 AUTHORIZATION. Company has all requisite corporate power and
authority to enter into this Agreement and to perform its obligations
hereunder. The execution and delivery by Company of this Agreement and its
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action of Company. This Agreement has
been duly executed and delivered by Company, and approved by all the
stockholders of Company, and is a valid and binding obligation of Company,
enforceable against Company in accordance with its terms.
6.3 FINANCIAL STATEMENTS. Attached hereto as Schedule 6.3 are
copies of the following financial statements of Company (the "Company Financial
Statements"): Company's audited Balance Sheet as of December 31, 1997 and its
audited Balance Sheet as of December 31, 1998 ("December Balance Sheet"), and
audited Statements of Income, Retained Earnings and Cash Flows, and any related
notes thereto, for the years ended December 31, 1997 and 1998 (December 31, 1998
being hereinafter referred to as the "Balance Sheet Date"). The audited Company
Financial Statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated (except as noted thereon or on Schedule 6.3). Except as set forth on
Schedule 6.3, the Balance Sheets referred to in this Section 6.3 present fairly
the financial position of Company as of the dates indicated thereon, and the
Statements of Income, Retained Earnings and Cash Flows referred to in this
Section 6.3 present fairly the results of operations for the periods indicated
thereon in accordance with generally accepted accounting principles. Company
Financial Statements at and for the years ended December 31, 1997 and 1998 have
been examined and reported on by Deloitte and Touche, LLP.
6.4 TITLE TO ACQUIRED ASSETS; CONDITION OF ACQUIRED ASSETS. Company
has, and will convey to Newco at Closing, good and marketable title to the
Acquired Assets, free and clear of all Liens other than Permitted Liens. All
Liens in effect on the date hereof which are to be discharged at Closing, other
than those to be discharged by Newco, are listed on Schedule 6.4 hereto. The
tangible property included among the Acquired Assets is in good working order
and repair, reasonable wear and tear excepted, and is technically sufficient and
capable for use in the Business. Except as disclosed on Schedule 6.22, no
officer, director, stockholder or employee of Company or
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any other Person other than the Company owns, leases or has any right in any
property, license or other assets related to the Acquired Assets.
6.5 REAL PROPERTY - OWNED. Company owns no real property and the
real property leased by Company related to the Business has never been owned by
Company.
6.6 REAL AND PERSONAL PROPERTY - LEASED. Company shall retain all
of its rights and obligations under all leased real and personal property.
6.7 EXISTING CONTRACTS. Schedule 6.7 sets forth all contracts,
commitments and agreements included as Acquired Assets in effect on the date
hereof (the "Existing Contracts"). Except as disclosed on Schedule 6.22, no
officer, director or employee of Company or any Person (other than Company)
controlling, controlled by or affiliated with or family member of any such
officer, director or employee has any contractual relationship relating to
the ownership or use of the Acquired Assets. Company has heretofore
delivered to Newco true and correct copies of the Existing Contracts. Except
as disclosed on Schedule 6.7, Company has no knowledge of any breach or
anticipated breach by the other parties to any Existing Contracts. The
Existing Contracts are in full force and effect and Company is in compliance
with its obligations under such Existing Contracts. Except for the Existing
Contracts, Company has not entered into any other contract, commitment or
agreement relating to the ownership or use of the Acquired Assets, including,
but not limited to, right-of-way, rights of entry, licenses, easements,
leases, or guaranty agreements. There are no claims by third parties that
Company is required to enter into other agreements to enable it to continue
to own or use the Acquired Assets.
6.8 GOVERNMENTAL LICENSES. Except as set forth on Schedule 6.8,
Company holds all licenses, consents, permits, approvals, tariffs and
authorizations of Governmental Authorities which are required in connection
with the ownership of the Acquired Assets and operation of the Business
(collectively referred to as the "Authorizations"). All Authorizations are
in full force and effect. Company has complied with the terms of the
Authorizations which it holds and there are no pending modifications,
amendments or revocations of the Authorizations which would adversely affect
the ownership of the Acquired Assets or the operation of the Business. All
fees due and payable from Company to Governmental Authorities pursuant to the
Authorizations have been timely filed and are accurate and complete. True
and correct copies of the Authorizations, and all amendments thereto to the
date hereof, have been delivered by Company to Newco.
6.9 COMPLIANCE WITH LAWS. Company is currently complying with and
has so complied with, and is not in default under or in violation of, and
neither the Business nor any of the Acquired Assets nor the operation or
maintenance thereof, contravenes any statute, law (including environmental or
employment laws), ordinance, decree, order, rule or regulation of any
Governmental Authority applicable to the Acquired Assets or the Business.
6.10 NO VIOLATION OF EXISTING AGREEMENTS. Subject to the consents
for the Existing Contracts identified in Schedule 6.10, the execution, delivery
and performance of this Agreement by Company and Company's transfer of the
Acquired Assets to Newco (i) will not violate any provisions of any law, (ii)
will not, with or without the giving of notice or the passage of time, or both,
conflict with or result in any breach of any of the terms or conditions of, or
constitute a
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default under any Existing Contracts, and (iii) will not result in the
creation of any Lien upon the Acquired Assets or the Business other than
Permitted Liens.
6.11 LITIGATION AND LEGAL PROCEEDINGS. Except as set forth on
Schedule 6.11, there is no outstanding judgment against Company or any
director, officer or stockholder of Company affecting the Business or the
Acquired Assets or which questions the validity of any action taken or to be
taken by Company pursuant to or in connection with the provisions of this
Agreement and there is no litigation, proceeding or investigation pending,
or, to Company's knowledge, threatened, against Company or any director,
officer or stockholder of Company affecting the Business or the Acquired
Assets or which questions the validity of any action taken or to be taken by
Company pursuant to or in connection with the provisions of this Agreement.
Except as set forth on Schedule 6.11, there are no proceedings pending to
which Company or any director, officer or stockholder of Company is a party
or, to Company's knowledge, threatened, nor has Company received written
notice of any demands by any Governmental Authority, utility or other party,
to terminate, modify or adversely change the terms and conditions of
Company's rights with respect to the Authorizations or Existing Contracts.
6.12 ENVIRONMENTAL COMPLIANCE. (i) Except as set forth on Schedule
6.12 hereto, (w) Company has not generated, used, transported, treated, stored,
released or disposed of, or suffered or permitted anyone else to generate, use,
transport, treat, store, release or dispose of any Hazardous Substance (as
hereinafter defined) with respect to the Acquired Assets or the Business in
violation of any Environmental Laws (as hereinafter defined); (x) there has not
been any generation, use, transportation, treatment, storage, release or
disposal of any Hazardous Substance in connection with Company ownership or use
of the Acquired Assets, the conduct of the Business or on, in or under any
property or facility used, owned or leased by Company or any adjacent properties
or facilities, which has created or might reasonably be expected to create any
liability under any Environmental Laws or which would require reporting to or
notification of any governmental entity; (y) no friable asbestos or
polychlorinated biphenyl, and no underground storage tank, is contained in or
located on or under any property or facility owned, used or leased by Company;
and (z) any Hazardous Substance handled or dealt with in any way with respect to
the Acquired Assets or the Business by Company, or during Company's ownership or
use of the Acquired Assets or the Business, has been and is being handled or
dealt with in compliance with all Environmental Laws.
(ii) For purposes of this Agreement, the term "Hazardous
Substance" shall mean any substance which, as of the date of this Agreement,
is listed as hazardous or toxic in the regulations implementing the
Comprehensive Environmental Response Compensation and Liability Act of 1980,
as amended ("CERCLA"), the Response Compensation and Liability Act ("RCLA"),
the Resource Conservation and Recovery Act of 1976, as amended ("RCRA"), or
listed as a hazardous substance under any applicable state environmental
laws, or any substance which has been determined by regulation, ruling or
otherwise by any agency or court to be a hazardous or toxic substance
regulated under federal or state law, and shall include petroleum and
petroleum products.
(iii) For purposes of this Agreement, the term "Environmental
Laws" shall mean CERCLA, RCRA, RCLA and any applicable statutes, regulations,
rules, ordinances, codes, licenses, permits, orders, approvals, plans,
authorizations, concessions, franchises and similar items
-11-
of all Governmental Authorities and all applicable judicial, administrative
and regulatory decrees, judgments and orders, any of which relate to the
protection of human health or the environment from the effects of Hazardous
Substances, including but not limited to, those pertaining to reporting,
licensing, permitting, investigating and remediating emissions, discharges,
releases or threatened releases of Hazardous Substances into the air, surface
water, groundwater or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances.
6.13 EMPLOYEE BENEFITS AND EMPLOYEES. Newco shall have no obligation
to any employee of Company for any reason.
6.14 TAX MATTERS. Except as set forth on Schedule 6.14 attached
hereto, (i) Company has timely filed all Tax (as defined below) returns and
statements which it is required to file; (ii) all such returns are complete and
accurate and disclose all Taxes required to be paid for the periods covered
thereby; (iii) Company has not waived any statute of limitations in respect of
Taxes or agreed to an extension of time with respect to a Tax assessment or
deficiency; (iv) no assessment of any additional Taxes for periods for which
returns have been filed has been asserted and no basis exists therefor; (v) to
Company's knowledge, there are no unresolved questions or claims raised by any
Taxing authority concerning the Tax liability of Company, and (vi) all Taxes
which Company is required by law to withhold or to collect for payment have been
duly withheld or collected and have been paid. Company has paid all Taxes due
prior to the date hereof and will pay when due (or contest in good faith by
appropriate proceedings) all Taxes which may become due on or before the Closing
Date. For purposes of this Section 6.14, the term "Tax" or "Taxes" means all
taxes, charges, fees, levies, imposts and other assessments including all
income, sales, use, goods and services, value added, capital, capital gains,
alternative net worth, transfer, profits, withholding, payroll, employer health,
excise, real property and personal property taxes, and any other taxes, customs
duties, stamp duties, fees, assessments or similar charges in the nature of a
tax, together with any interest, fines and penalties imposed by any Governmental
Authority, and whether disputed or not.
6.15 CUSTOMERS. Company shall, by electronic transfer, deliver to
Newco a schedule of all relevant customer records on Company's computer storage
records.
6.16 INSURANCE. Prior to Closing, Company shall maintain policies of
title, liability, fire, worker's compensation and other forms of insurance
(including bonds) which insure against risks and liabilities to an extent and in
a customary industry manner and which are adequate to provide coverage against
risks of a nature to which Company would normally be exposed in the operation of
the Business. All such insurance policies and binders are in full force and
effect at the date of Closing. Company has complied in all material respects
with each of such insurance policies and binders and has not failed to give any
notice or present any claim thereunder in a due and timely manner.
6.17 BROKERS. Company has not engaged any agent, broker or other
person acting pursuant to the express or implied authority of Company which is
or may be entitled to a commission or broker or finder's fee in connection with
the transactions contemplated by this Agreement or otherwise with respect to the
sale of the Acquired Assets or the Business.
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6.18 UNDISCLOSED LIABILITIES. Company has no liabilities or
obligations of any nature, whether absolute, accrued, contingent or
otherwise, which are not reflected or reserved against the December Balance
Sheet except for liabilities and obligations that have arisen in the ordinary
and usual course of business and consistent with past practice (none of which
results from, arises out of, relates to, is in the nature of, or caused by
any breach of contract, breach of warranty, tort, infringement or violation
of law) and except for liabilities and obligations directly related to the
transactions contemplated hereby.
6.19 PRICING OF SERVICES. Schedule 6.19 sets forth a description of
all rate plans currently offered to customers of the Business.
6.20 PROPRIETARY RIGHTS. Company lawfully possesses, and the
Acquired Assets will include, all intellectual property rights that are
necessary to the conduct of the Business.
6.21 ACCOUNTS RECEIVABLE AND BAD DEBTS. All notes and accounts
receivable of Company which are Acquired Assets and shown on the December
Balance Sheet or thereafter acquired were or (to the extent not heretofore
collected) are valid and genuine, were acquired in the ordinary course of
business and are subject to no asserted counterclaims, defenses or setoffs.
Schedule 6.21 attached hereto sets forth a true, complete and accurate list, as
of the end of the most recent normal billing cycle of the Business, listing the
total amounts of customer receivables and the aging of such customer receivables
based on the following Schedule: 0-30 days, 31-60 days, 61-90 days and over 90
days, from the date thereof.
6.22 CERTAIN BUSINESS RELATIONSHIPS WITH COMPANY. Except as set
forth in Schedule 6.22 attached hereto, none of the officers or directors of the
Company and its Affiliates or family members have been involved in any business
arrangement or relationship with Company within the past 12 months.
6.23 DISCLOSURE. No provision of this Agreement relating to
Company, the Business or the Acquired Assets or any other document, Schedule,
Annex or other information furnished by Company to Newco in connection with
the execution, delivery and performance of this Agreement, or the
consummation of the transactions contemplated hereby, contains or will
contain any untrue statement of a material fact or omits or will omit to
state a material fact required to be stated in order to make the statement,
in light of the circumstances in which it is made, not misleading. In
connection with the preparation of this Agreement and the documents,
descriptions, opinions, certificates, Annexes, Schedules or written material
prepared by Company and appended hereto or delivered or to be delivered
hereunder, Company agrees it will disclose to Newco any fact known to Company
which Company knows or believes would affect Newco's decision to proceed with
the execution of this Agreement. All Schedules attached hereto are accurate
and complete as of the date hereof. There is no fact now known to Company
relating to the Business or Acquired Assets which in Company's reasonable
opinion adversely affects the condition of the Acquired Assets, the status of
the Authorizations or the ownership, operation, financial condition or
prospects of the Business which has not been disclosed to Newco or set forth
in the Exhibits or Schedules attached hereto.
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6.24 ABSENCE OF CHANGES. Since the Balance Sheet Date, except as
set forth on Schedule 6.24, there has not been:
(i) any adverse change in the financial condition, assets,
liabilities (contingent or otherwise), income or
business of Company, taken as a whole;
(ii) any damage, destruction or loss (whether or not covered
by insurance) adversely affecting the properties or
business of Company;
(iii) any change in the authorized capital of Company or its
outstanding securities or any change in its ownership
interests or any grant of any options, warrants, calls,
conversion rights or commitments;
(iv) any declaration or payment of any dividend or
distribution in respect of the capital stock or any
direct or indirect redemption, purchase or other
acquisition of any of the capital stock of Company;
(v) any increase in the compensation, bonus, sales
commissions or fee arrangement payable or to become
payable by Company to any of its officers, directors,
stockholders, employees, consultants or agents, except
for ordinary and customary bonuses and salary increases
for employees in accordance with past practice;
(vi) any work interruptions, labor grievances or labor claims
filed, or any other similar labor event or condition of
any character, adversely affecting the business of
Company;
(vii) any sale or transfer, or any agreement to sell or
transfer, any assets, property or rights of Company to
any person outside the ordinary course of business of
Company, with the exception of the Transfer;
(viii) any cancellation, or agreement to cancel, any
indebtedness or other obligation owing to Company
outside the ordinary course of business of Company;
(ix) any plan, agreement or arrangement granting any
preferential right to purchase or acquire any interest
in any of the assets, property or rights of Company or
requiring consent of any party to the transfer and
assignment of any such assets, property or rights;
(x) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, right
or asset outside of the ordinary course of Company's
business;
(xi) any waiver of any rights or claims of Company;
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(xii) any breach, amendment or termination of any contract,
agreement, license, permit or other right to which
Company is a party;
(xiii) any transaction by Company outside the ordinary course of
its business;
(xiv) any cancellation or termination of a contract with a
customer or client prior to the scheduled termination
date; or
(xv) any other distribution of property or assets by Company
outside the ordinary course of Company=s business.
6.25 PROHIBITED ACTIVITIES. Except as set forth on Schedule 6.25,
Company has not, between the Balance Sheet Date and the date of this Agreement,
taken any of the actions set forth in Section 9.3 ("Prohibited Activities").
7. [INTENTIONALLY OMITTED]
8. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF PARENT AND
NEWCO
Parent and Newco, jointly and severally, represent, warrant, covenant
and agree (i) that all of the following representations and warranties in this
Section 8 are materially true at the date of this Agreement and, subject to
Section 9.6, shall be materially true at the Closing Date and (ii) that all of
the covenants and agreements in this Section 8 shall be materially complied with
or performed at and as of the Closing Date.
8.1 DUE ORGANIZATION. Parent and Newco are each corporations duly
organized, validly existing and in good standing under the laws of the State
of Oklahoma, and are duly authorized and qualified to do business under all
applicable laws, regulations, ordinances and orders of public authorities to
carry on their respective business in the places and in the manner as now
conducted, except where the failure to be so authorized or qualified would
not have an Adverse Effect. True, complete and correct copies of the Charter
Documents and By-laws, each as amended, of Parent and Newco (the "Parent
Charter Documents") are all attached hereto as Schedule 8.1.
8.2 AUTHORIZATION. Parent and Newco each has all requisite
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement by Parent
and Newco and their consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action of Parent and Newco.
This Agreement has been duly executed and delivered by Parent and Newco and is a
valid and binding obligation of Parent and Newco, enforceable against each of
them in accordance with its terms.
8.3 CAPITAL STOCK. The authorized capital stock of Parent and Newco
is as set forth in Schedule 8.3. All of the issued and outstanding shares of
the capital stock of Parent and Newco
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(i) have been duly authorized and validly issued, (ii) are fully paid and
nonassessable, (iii) are owned of record and beneficially by the persons set
forth on Schedule 8.3 and Parent, respectively, and (iv) were offered,
issued, sold and delivered by Parent and Newco in compliance with all
applicable state and Federal laws concerning the offer, issuance, sale and
delivery of securities. Further, none of such shares was issued in violation
of the preemptive rights of any past or present stockholder of Parent or
Newco.
8.4 TRANSACTIONS IN CAPITAL STOCK. Except as set forth on Schedule
8.4, (i) no option, warrant, call, conversion right or commitment of any kind
exists which obligates Parent or Newco to issue any of its authorized but
unissued capital stock and (ii) neither Parent nor Newco has any obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any of its
equity securities or any interests therein or to pay any dividend or make any
distribution in respect thereof. Schedule 8.4 also includes complete and
accurate copies of all stock option or stock purchase plans, including a list,
accurate as of the date hereof, of all outstanding options, warrants or other
rights to acquire shares of capital stock of Parent.
8.5 SUBSIDIARIES. Newco has no Subsidiaries. Parent has no
Subsidiaries except for Newco and each of the other companies identified on
Schedule 8.5. Except as set forth in the preceding sentence, neither Parent
nor Newco presently owns, of record or beneficially, or controls, directly or
indirectly, any capital stock, securities convertible into capital stock or
any other equity interest in a Person nor is Parent or Newco, directly or
indirectly, a participant in any joint venture, partnership or other
non-corporation entity.
8.6 LIABILITIES AND OBLIGATIONS. Parent and Newco have no
liabilities, contingent or otherwise, except as set forth in or contemplated by
this Agreement or agreements similar to this Agreement with the Founding
Companies and except for fees incurred in connection with the transactions
contemplated hereby and thereby.
8.7 CONFORMITY WITH LAW; LITIGATION. Neither Parent nor Newco is in
violation of any law or regulation or any order of any court or Federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over either of them which would have a
Adverse Effect; and there are no claims, actions, suits or proceedings, pending
or, to the knowledge of Parent or Newco, threatened, against or affecting Parent
or Newco, at law or in equity, or before or by any Federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over either of them and no notice of any
claim, action, suit or proceeding, whether pending or threatened, has been
received. Parent and Newco have no operations.
8.8 NO VIOLATIONS. Neither Parent nor Newco is in violation of any
Parent Charter Document. None of Parent, Newco, or, to the knowledge of Parent
and Newco, any other party thereto, is in default under any lease, instrument,
agreement, license or permit to which Parent or Newco is a party or by which
Parent or Newco, or any of their respective properties, are bound (collectively,
the "Parent Documents"); and (i) the rights and benefits of Parent and Newco
under the Parent Documents will not be adversely affected by the transactions
contemplated hereby and (ii) the execution of this Agreement and the performance
of the obligations hereunder and the consummation of the transactions
contemplated hereby will not result in any violation or breach or
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constitute a default under any of the terms or provisions of the Parent
Documents or the Parent Charter Documents. Except as set forth on Schedule
8.8, none of the Parent Documents requires notice to, or the consent or
approval of, any governmental agency or other third party with respect to any
of the transactions contemplated hereby in order to remain in full force and
effect, and consummation of the transactions contemplated hereby will not
give rise to any right to termination, cancellation or acceleration or loss
of any right or benefit.
8.9 PARENT SECURITIES. The shares of Parent Stock deliverable to
Company pursuant to this Agreement will have been duly authorized prior to the
Closing and, upon consummation of the Sale in accordance with this Agreement,
will be validly issued, fully paid and nonassessable.
8.10 BUSINESS; REAL PROPERTY; AGREEMENTS. Parent was formed in
September 1998. Neither Parent nor Newco has conducted any business since
the date of its inception, except raising capital and in connection with this
Agreement and similar agreements with the Founding Companies. Except as
disclosed on Schedule 8.10, neither Parent nor Newco owns or has at any time
owned any real property or any personal property or is a party to any other
agreement.
9. OTHER COVENANTS PRIOR TO CLOSING
9.1 ACCESS AND COOPERATION; DUE DILIGENCE; AUDITS.
(i) Between the date of this Agreement and the Closing Date,
Company will afford to the officers and authorized
representatives of Parent access to all of Company's
sites, properties, books and records and will furnish
Parent with such additional financial and operating data
and other information as to the business and properties
of Company as Parent may from time to time reasonably
request. Company will cooperate with Parent, its
representatives, auditors and counsel in the preparation
of any documents or other material that may be required
in connection with any documents or materials required
by this Agreement. Parent and Newco will treat all
information obtained in connection with the negotiation
and performance of this Agreement as confidential in
accordance with the provisions of Section 16.
(ii) Between the date of this Agreement and the Closing,
Parent will afford to the officers and authorized
representatives of Company access to all of the sites,
properties, books and records of Parent, Newco and the
other companies listed on Schedule 9.1(ii) ("Founding
Companies") and will furnish Company with such
additional financial and operating data and other
information as to the business and properties of Parent,
Newco and the Founding Companies as Company may from
time to time reasonably request. Parent and Newco will
cooperate with Company, representatives, auditors and
counsel in the preparation of any documents or other
material which may be required in connection with any
documents or materials required by this Agreement.
Company will cause all information obtained in
connection with the negotiation and performance of this
Agreement to be treated as confidential in accordance
with the provisions of Section 16.
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9.2 CONDUCT OF BUSINESS PENDING CLOSING. Unless otherwise
approved in writing by Parent, between the date of this Agreement and the
Closing Date, Company will:
(i) carry on its business in substantially the same manner
as it has heretofore and not introduce any material new
method of management, operation or accounting;
(ii) maintain its properties and facilities, including those
held under lease, in as good of working order and
condition as at present, ordinary wear and tear
excepted;
(iii) perform in all material respects all of its obligations
under agreements relating to or affecting its respective
assets, properties or rights;
(iv) keep in full force and effect in all material respects
the present insurance policies or other comparable
insurance coverage;
(v) use its reasonable best efforts to maintain and preserve
its business organization intact, retain its respective
present key employees and maintain its respective
relationships with suppliers, customers and others
having business relations with it;
(vi) maintain material compliance with all material permits,
laws, rules and regulations, consent orders, and all
other orders of applicable courts, regulatory agencies
and similar Governmental Authorities;
(vii) maintain present debt instruments and Leases and not
enter into new or amended debt instruments or Leases; and
(viii) maintain or reduce present salaries and commission levels
for all officers, directors, employees and agents
except for ordinary and customary bonus and salary
increases for employees in accordance with past
practices.
9.3 PROHIBITED ACTIVITIES BY THE COMPANY. Except for the Transfer,
etween the date of this Agreement and the Closing Date, Company will not,
without prior written consent of Parent:
(i) make any change in its Charter Documents, Bylaws or
Operating Agreements;
(ii) issue any securities, options, warrants, calls,
conversion rights or commitments relating to its
securities of any kind;
(iii) declare or pay any dividend, or make any distribution in
respect of Company Stock whether now or hereafter
outstanding, or purchase, redeem or otherwise acquire or
retire for value any shares of Company Stock;
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(iv) enter into any contract or commitment or incur or agree
to incur any liability or make any capital expenditures,
except if it is in the normal course of business
(consistent with past practice), in connection with the
transactions contemplated by this Agreement, or involves
an amount not in excess of $5,000;
(v) create, assume or permit to exist any Lien upon any
asset or property whether now owned or hereafter
acquired, except (x) with respect to purchase money
Liens incurred in connection with the acquisition of
equipment with an aggregate cost not in excess of $5,000
as necessary or desirable for the conduct of its
business and (y) (1) Liens for Taxes either not yet due
or being contested in good faith and by appropriate
proceedings (and for which contested Taxes adequate
reserves have been established and are being maintained)
or (2) materialmen's, mechanic's, worker's, repairmen's,
employee's or other like Liens arising in the ordinary
course of business, or (3) Liens set forth on
appropriate schedules hereto;
(vi) sell, assign, lease or otherwise transfer or dispose of
any property or equipment except in the normal course of
business;
(vii) negotiate for the acquisition of any business or the
start-up of any new business;
(viii) merge or consolidate or agree to merge or consolidate
with or into any other corporation;
(ix) waive any material right or claim; provided that it may
negotiate and adjust bills in the course of good faith
disputes with customers in a manner consistent with past
practice;
(x) commit a material breach or amend or terminate any
material agreement, permit, license or other right; or
(xi) enter into any other transaction outside the ordinary
course of its business or prohibited hereunder.
9.4 EXCLUSIVITY. Neither Company, nor any agent, officer, director,
trustee or any representative of Company will, during the period commencing on
the date of this Agreement and ending with the earlier to occur of the Closing
Date or the termination of this Agreement in accordance with its terms,
directly/or indirectly:
(i) solicit or initiate the submission of proposals or
offers from any person for,
(ii) participate in any discussions pertaining to, or
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(iii) furnish any information to any person other than Parent
or its authorized agents relating to,
any acquisition or purchase of all or a material amount of the assets of, or any
equity interest in, Company, or merger, consolidation or business combination of
Company.
9.5 NOTIFICATION OF CERTAIN MATTERS. Company shall give prompt
notice to Parent of (i) the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which would likely cause any representation or
warranty of Company contained herein to be untrue or inaccurate in any respect
at or prior to the Closing Date and (ii) any failure of Company to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by such Person hereunder as of such date. Parent and Newco shall give prompt
notice to the Company of (i) the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which would likely cause any representation or
warranty of Parent or Newco contained herein to be untrue or inaccurate in any
respect at or prior to the Closing Date and (ii) any failure of Parent or Newco
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder as of such date. The delivery of any notice
pursuant to this Section 9.5 shall not be deemed to (i) modify the
representations or warranties hereunder of the party delivering such notice,
which modification may only be made pursuant to Section 9.6, (ii) modify the
conditions set forth in Sections 10 and 11 or (iii) limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
9.6 AMENDMENT OF SCHEDULES. Each party hereto agrees that, with
respect to the representations and warranties of such party contained in this
Agreement, such party shall have the continuing obligation until 11:59 p.m.
March 31, 1999 to supplement or amend promptly the Schedules with respect to
any matter hereafter arising or discovered which, if existing or known at the
date of this Agreement, would have been required to be set forth or described
in the Schedules. Notwithstanding the foregoing sentence, no amendment or
supplement to a Schedule prepared by Company or Parent that constitutes or
reflects an event or occurrence that would have an Adverse Effect may be made
unless the parties not making the amendment or supplement consent to such
amendment or supplement. For all purposes of this Agreement, including,
without limitation, for purposes of determining whether the conditions set
forth in Sections 10.1 and 11.1 have been fulfilled, the Schedules shall be
deemed to be the Schedules as amended or supplemented pursuant to this
Section 9.6. Except as otherwise specified in Section 16.3, no party to this
Agreement shall be liable to any other party if this Agreement shall be
terminated pursuant to the provisions of Section 14.1(iv). Neither the entry
by Parent into any other agreement, such as this Agreement, after the date
hereof for the acquisition of one or more companies nor the performance by
Parent of its obligations thereunder shall be deemed to require the amendment
to or a supplementation of any Schedule hereto.
9.7 FURTHER ASSURANCE. The parties hereto agree to execute and
deliver, or cause to be executed and delivered, such further instruments or
documents or take such other action as may be reasonably necessary or convenient
to carry out the transactions contemplated by this Agreement.
9.8 OTHER MATTERS. Each of Parent and Newco acknowledges that one
of Company's primary businesses after the Sale will be cellular/PCS service
provided through its ▇▇▇▇▇▇▇▇▇▇▇▇
-▇▇-
▇▇▇▇ ("▇▇▇") full service agency agreement. Each of Parent and Newco agrees
to take appropriate steps after the Closing to alter Parent's agreement (or
if held by a Subsidiary, the Subsidiary's agreement) with SWB from a full
service agent to a business agent. Each of Parent, Newco and Company further
agrees to execute a mutually agreeable contract whereby (i) Parent and Newco
will utilize Company's wireless division, Advance Wireless, as its primary
PCS provider in the Tulsa market, as defined in Schedule 9.8, and (ii)
Company and its Affiliates will utilize Parent and Newco as its primary
interconnect equipment and service provider, provided in each case that the
services or equipment to be provided are at least equal to (from a quality
and price perspective) those provided by a competitor. Each of Parent, Newco
and Company acknowledge that the proposed agreement is subject to approval by
SWB and that no party to this Agreement will discuss the proposed agreement
with SWB or any other party until after the Closing.
9.9 VEHICLES AGREEMENT. Parent and Newco hereby grant Company a
right of first refusal to purchase any and all automobiles, vehicles, and
trucks, (the "Vehicles") that are a part of the Acquired Assets in the event
Parent or Newco offer such Vehicles for sale. The right of first refusal will
be exercisable at each Vehicles' fair market value.
9.10 TRANSITION AGREEMENT. Company hereby agrees to continue to
operate the Business on behalf of Newco and Parent for a minimum of 60 days
following the Closing Date on a basis consistent with past practice, which
will include but not limited to maintanence of the Acquired Assets,
warehousing, purchasing, accounting and other administrative support. Newco
may, at its option, continue to utilize the services of Company pursuant to
this Section 9.10 for additional 30-day periods, which periods will not
extend beyond December 31, 1999. Newco will pay Company $20,000 plus direct
out-of-pocket expenses for the initial 60-day term and $10,000 plus direct
out-of-pocket expenses for each 30-day extension.
9.11 SALES AGENCY AGREEMENT. Parent agrees to extend a Sales Agency
Agreement to Company which allows Company to sell Parent's telecom products,
primarily through its retail establishments, and receive a commission which will
be defined in the Sales Agency Agreement.
10. CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPANY
The obligations of Company with respect to actions to be taken on the
Closing Date are subject to the satisfaction or waiver on or prior to the
Closing Date of all of the following conditions.
10.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS.
All representations and warranties of Parent and Newco contained in this
Agreement shall be true and correct as of the Closing Date with the same effect
as though such representations and warranties had been made on and as of such
date; all of the terms, covenants and conditions of this Agreement to be
complied with or performed by Parent and Newco on or before the Closing Date
shall have been duly complied with or performed; and a certificate to the
foregoing effect dated the Closing Date, and signed by the President or any Vice
President of Parent and of Newco shall have been delivered to Company.
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10.2 NO LITIGATION. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or threatened to
restrain or prohibit the Sale and no governmental agency or body shall have
taken any other action or made any request of Company as a result of which the
management of Company deems it inadvisable to proceed with the transactions
hereunder.
10.3 CONSENTS AND APPROVALS. All necessary consents of and filings
with any governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made.
10.4 GOOD STANDING CERTIFICATES. Parent and Newco each shall have
delivered to Company a certificate, dated as of a date no later than ten days
prior to the Closing Date, duly issued by the Oklahoma Secretary of State,
showing that each of Parent and Newco is in good standing and authorized to do
business and that all state franchise and/or income tax returns and taxes for
Parent and Newco, respectively, for all periods prior to the Closing Date have
been filed and paid to the extent required.
10.5 NO MATERIAL ADVERSE EFFECT. No event or circumstance shall have
occurred with respect to Parent or Newco that would constitute a material
Adverse Effect.
10.6 SECRETARY'S CERTIFICATES. Company shall have received a
certificate or certificates, dated the Closing Date and signed by the
Secretary of Parent and of Newco, certifying the completeness and accuracy of
the attached copies of Parent's and Newco's respective Charter Documents
(including amendments thereto), Bylaws (including amendments thereto), and
resolutions of the boards of directors and, if required, the stockholders of
Parent and Newco approving Parent's and Newco's entering into this Agreement
and the consummation of the transactions contemplated hereby.
10.7 EMPLOYMENT AGREEMENTS. Each of the persons listed in Schedule
10.7 shall have been afforded an opportunity to enter into an employment or
consulting agreement, reasonably acceptable to both parties and substantially in
the form of Annex III and Annex IV.
10.8 CLOSING OF THE IPO OR THE PRIVATE PLACEMENT. Parent shall have
received at least $15,000,000 in gross proceeds from Parent's IPO or Private
Placement.
11. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND NEWCO
The obligations of Parent and Newco with respect to actions to be
taken on the Closing Date are subject to the satisfaction or waiver on or
prior to the Closing Date of all of the following conditions.
11.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
the representations and warranties of Company contained in this Agreement shall
be true and correct as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date; all of the
terms, covenants and conditions of this Agreement to be
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complied with or performed by Company on or before the Closing Date shall
have been duly complied with or performed; and Company shall have delivered
to Parent a certificate dated the Closing Date and signed by them to such
effect.
11.2 NO LITIGATION. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or threatened to
restrain or prohibit the Sale and no governmental agency or body shall have
taken any other action or made any request of Parent as a result of which the
management of Parent deems it inadvisable to proceed with the transactions
hereunder.
11.3 SECRETARY'S CERTIFICATE. Parent shall have received a
certificate, dated the Closing Date and signed by the Secretary of the Company,
certifying the completeness and accuracy of the attached copies of Company's
Charter Documents (including amendments thereto), Bylaws (including amendments
thereto), and resolutions of the board of directors and stockholders approving
Company's entering into this Agreement and the consummation of the transactions
contemplated hereby.
11.4 NO MATERIAL ADVERSE EFFECT. No event or circumstance shall have
occurred with respect to Company which would constitute a material Adverse
Effect, and Company shall not have suffered any material loss or damages to any
of its properties or assets, whether or not covered by insurance, which change,
loss or damage materially affects or impairs the ability of Company to conduct
its business.
11.5 TERMINATION OF RELATED PARTY AGREEMENTS. Except as set forth on
Schedule 11.5, all existing agreements between Company and its stockholders
shall have been canceled effective prior to or as of the Closing Date.
11.6 THIRD PARTY CONSENTS. Company shall have delivered to Newco
such instruments, consents and approvals of third parties (the form and
substance of which shall be reasonably satisfactory to Newco) as are
necessary to assign to Newco without modification thereof, as of the Closing,
the Acquired Assets and the Assumed Liabilities and Newco shall have obtained
all Authorizations necessary for the consummation of the transactions
contemplated by this Agreement. Prior to the Closing Date, each applicable
governmental authority shall have granted its necessary consent to the
assignment of the Authorizations to Newco and each such consent shall have
become final and non-appealable and all applicable waiting periods shall have
expired. Anything herein contrary notwithstanding, Newco shall have the
right (in its sole discretion) to waive the requirement set forth in the
preceding sentence by delivery to Company of a written notice to such effect.
11.7 DUE DILIGENCE. Newco and its agents and representative shall
have conducted a satisfactory legal, tax, accounting, engineering, regulatory
and business due diligence review of the Acquired Assets and the Business, the
results of which shall be satisfactory to the Newco. Without limiting the
generality of the foregoing, Newco shall be satisfied that the Acquired Assets
constitute all assets, licenses and property necessary to the operation of the
Business as contemplated to be conducted by Newco, and that the customer lists
and customer composition previously provided to Newco by Company is
substantially similar to such information found by Newco pursuant to its
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subsequent due diligence review.
11.8 GOOD STANDING CERTIFICATES. The Company shall have
delivered to Parent a certificate, dated as of a date no earlier than ten
days prior to the Closing Date, duly issued by the appropriate governmental
authority in Company's and state of incorporation and, unless waived by
Parent, in each state in which Company is authorized to do business, showing
Company is in good standing and authorized to do business and that all state
franchise and/or income Tax returns and Taxes for Company for all periods
prior to the Closing have been filed and paid.
11.9 FIRPTA CERTIFICATE. If required, Company shall have delivered
to Parent a certificate to the effect that it is not a foreign person under
Section 1.1445-2(b) of the Treasury regulations.
11.10 CLOSING OF THE IPO OR PRIVATE PLACEMENT. Parent shall have
received at least $15,000,000 in gross proceeds from Parent's IPO or Private
Placement.
11.11 EMPLOYMENT AGREEMENT. Each of the persons listed on Schedule
10.7 shall have executed an employment or consulting agreement, reasonably
acceptable to both parties and substantially in the form of Annex III or Annex
IV.
11.12 FINANCIAL STATEMENTS. Company shall have provided Parent
audited Balance Sheets as of December 31, 1997 and 1998 and audited
Statements of Income, Retained Earnings and Cash Flows for each of the years
in the two-year period ended December 31, 1998.
11.13 OPERATION OF BUSINESS. Company shall have continued to operate
the Business and market the services of the Business in the normal course of
business and in accordance with past practice.
12. CASUALTY LOSSES
In the event that there shall have been suffered between the date
hereof and the Closing any casualty loss relating to the Acquired Assets that
becomes known to Company, Company will promptly notify Newco of such event.
Company shall, at its option, (i) repair, rebuild or replace the portion of
the Acquired Assets damaged, destroyed or lost prior to the Closing Date, or
(ii) assign to Newco at Closing all claims to insurance proceeds or other
rights of Company against third parties arising from such casualty loss (the
"Claims"); PROVIDED, HOWEVER that if such insurance proceeds are or will not
be sufficient in Newco's reasonable judgment to cover the entire casualty
loss, then the Company shall pay the difference at Closing. To the extent
any Claim is not assignable, such claim may be pursued by Newco, for its own
account and benefit, in the name of Company.
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13. INDEMNIFICATION
Company, Parent and Newco each make the following covenants that are
applicable to them, respectively:
13.1 GENERAL INDEMNIFICATION BY COMPANY. Company covenants and
agrees that it will indemnify, defend, protect and hold harmless Parent and
Newco at all times, from and after the Closing Date until the Expiration Date,
from and against all claims, damages, actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically, but
without limitation, reasonable attorneys' fees and expenses of investigation)
incurred by Parent or Newco as a result of or arising from any breach of any
representation, warranty, covenant or agreement on the part of Company under
this Agreement.
13.2 INDEMNIFICATION BY PARENT. Parent covenants and agrees that it
will indemnify, defend, protect and hold harmless Company at all times from and
after the Closing Date until the Expiration Date, from and against all claims,
damages, actions, suits, proceedings, demands, assessments, adjustments, costs
and expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) incurred by Company as a result
of or arising from any breach of any representation, warranty, covenant or
agreement on the part of Parent or Newco under this Agreement.
13.3 THIRD PERSON CLAIMS. Promptly after any party hereto
(hereinafter the "Indemnified Party") has received notice of or has knowledge of
any claim by a person not a party to this Agreement ("Third Person"), or the
commencement of any action or proceeding by a Third Person, the Indemnified
Party shall, as a condition precedent to a claim with respect thereto being made
against any party obligated to provide indemnification pursuant to Section 13.1
or 13.2 (hereinafter the "Indemnifying Party"), give the Indemnifying Party
written notice of such claim or the commencement of such action or proceeding.
Such notice shall state the nature and the basis of such claim and a reasonable
estimate of the amount thereof. The Indemnifying Party shall have the right to
defend and settle, at its own expense and by its own counsel, any such matter so
long as the Indemnifying Party pursues the same diligently and in good faith;
provided that the Indemnifying Party shall not settle any criminal proceeding
without the written consent of the Indemnified Party. If the Indemnifying Party
undertakes to defend or settle, it shall promptly notify the Indemnified Party
of its intention to do so, and the Indemnified Party shall cooperate with the
Indemnifying Party and its counsel in the defense thereof and in any settlement
thereof. Such cooperation shall include, but shall not be limited to,
furnishing the Indemnifying Party with any books, records or information
reasonably requested by the Indemnifying Party that are in the Indemnified
Party's possession or control. All Indemnified Parties shall use the same
counsel, which shall be the counsel selected by Indemnifying Party; provided
that if counsel to the Indemnifying Party shall have a conflict of interest that
prevents counsel for the Indemnifying Party from representing the Indemnified
Party, the Indemnified Party shall have the right to participate in such matter
through counsel of its own choosing and the Indemnifying Party shall be
responsible for the reasonable expenses of such counsel. After th Indemnifying
Party has notified the Indemnified Party of its intention to undertake to defend
or settle any such asserted liability, and for so long as the Indemnifying Party
diligently pursues such defense, the Indemnifying Party shall not be liable for
any additional legal expenses incurred by the Indemnified Party in connection
with any defense or
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settlement of such asserted liability, except to the extent such
participation is requested by the Indemnifying Party, in which event the
Indemnified Party shall be reimbursed by the Indemnifying Party for
reasonable additional legal expenses and out-of-pocket expenses. If the
Indemnifying Party desires to accept a final and complete settlement of any
such Third Person claim and the Indemnified Party refuses to consent to such
settlement, then the Indemnifying Party's liability under this Section 13.3
with respect to such Third Person claim shall be limited to the amount so
offered in settlement by such Third Person. Upon agreement as to such
settlement between such Third Person and the Indemnifying Party, the
Indemnifying Party shall, in exchange for a complete release from the
Indemnified Party, promptly pay to the Indemnified Party the amount agreed to
in such settlement and the Indemnified Party shall, from that moment on, bear
full responsibility for any additional costs of defense which it subsequently
incurs with respect to such claim and all additional costs of settlement or
judgment. If the Indemnifying Party does not undertake to defend such matter
to which the Indemnified Party is entitled to indemnification hereunder or
fails diligently to pursue such defense, the Indemnified Party may undertake
such defense through counsel of its choice, at the cost and expense of the
Indemnifying Party, and the Indemnified Party may settle such matter upon
consent of the Indemnifying Party, which consent will not be unreasonably
withheld, and the Indemnifying Party shall reimburse the Indemnified Party
for the amount paid in such settlement and any other liabilities or expenses
incurred by the Indemnified Party in connection therewith. All settlements
hereunder shall effect a complete release of the Indemnified Party, unless
the Indemnified Party otherwise agrees in writing. Anything in this Agreement
to the contrary notwithstanding, any amounts owing from an Indemnifying Party
to an Indemnified Party under the provisions of this Section 13 shall be
reduced to the extent to which the Indemnified Party, or any other claimant,
actually receives any proceeds of any insurance policy that are paid with
respect to the matter or occurrence that gave rise to the ThirdPerson claim.
Submission to insurance of any insurable claim otherwise giving rise to
indemnification under this Section 13 shall be a condition precedent to
seeking indemnification under this Section.
13.4 EXCLUSIVE REMEDY. The indemnification provided for in this
Section 13 shall be the exclusive remedy in any action seeking damages or any
other form of monetary relief brought by any party to this Agreement against
another party; provided that nothing herein shall be construed to limit the
right of a party, in a proper case, to seek injunctive relief for a breach of
this Agreement.
13.5 LIMITATIONS ON INDEMNIFICATION. No person shall be entitled to
indemnification under this Section 13 if and to the extent that such person's
claim for indemnification is directly or indirectly related to a breach by such
person of any representation, warranty, covenant or agreement set forth in this
Agreement.
14. TERMINATION OF AGREEMENT
14.1 TERMINATION. This Agreement may be terminated at any time prior
to the Closing Date solely:
(i) by mutual consent of the boards of directors of Parent
and Company;
(ii) by Company (acting through its board of directors), on
the one hand, or by
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Parent (acting through its board of directors), on
the other hand, if the transactions contemplated by
this Agreement to take place at the Closing shall
not have been consummated by May 31, 1999 unless the
failure of such transactions to be consummated is
due to the willful failure of the party seeking to
terminate this Agreement to perform any of its
obligations under this Agreement to the extent required
to be performed by it prior to or on the Closing Date;
(iii) by Company, on the one hand, or by Parent, on the other
hand, if a material breach or default shall be made by
the other party in the observance or in the due and
timely performance of any of the material covenants,
agreements or conditions contained herein, and the
curing of such default shall not have been made on or
before the Closing Date; or
(iv) by Company, on the one hand, or by Parent, on the other
hand, if either such party or parties declines to
consent to an amendment or supplement to a Schedule
proposed by the other party or parties pursuant to
Section 9.6 because such proposed amendment constitutes
or reflects an event or occurrence that would have a
material Adverse Effect on the party or parties
proposing the same.
14.2 LIABILITIES IN EVENT OF TERMINATION. Except as provided in
Section 9.6, the termination of this Agreement will in no way limit any
obligation or liability of any party based on or arising from a breach or
default by such party with respect to any of its representations, warranties,
covenants or agreements contained in this Agreement.
15. NONCOMPETITION
15.1 PROHIBITED ACTIVITIES. With the exception of the ability of
Company to engage in the sale of PCS services, the Company and each stockholder
of the Company (a "Stockholder") (other than any Stockholder subject to an
employment agreement listed in Schedule 10.7, each of which is expressly
excepted from the obligations imposed by this Section 15) will not, for a period
of three years following the Closing Date, for any reason whatsoever, directly
or indirectly, for himself or on behalf of or in conjunction with any other
Person:
(i) engage, as an officer, director, stockholder, owner,
partner, joint venturer, or in a managerial capacity,
whether as an employee, independent contractor,
consultant or advisor, or as a sales representative, in
the sale or marketing of telecommunication services or
interconnect services within the state of Oklahoma (the
"Territory"), except that Company may sell telecom
equipment pursuant to the Sales Agency Agreement set
forth in Section 9.11 of this Agreement;
(ii) call upon any person within the Territory who is an
employee of Parent (including the Subsidiaries thereof)
in a sales representative or managerial capacity for the
purpose or with the intent of enticing such employee
away
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from or out of the employ of Parent (including the
Subsidiaries thereof);
(iii) call upon any Person which is or which has been, within
one year prior to the Closing Date, a customer of Parent
(including the Subsidiaries thereof) for the purpose of
soliciting or selling products or services in direct
competition with Parent (or its Subsidiaries);
(iv) call upon any prospective acquisition candidate, on
Company's or any Stockholder's own behalf or on behalf
of any competitor of Parent (including the Subsidiaries
thereof) in the long-distance telephone or interconnect
business, which candidate, to the knowledge of Company
or such Stockholder after due inquiry, was called upon
by Parent (including the Subsidiaries thereof) or for
which, to the knowledge of Company or such Stockholder
after due inquiry, Parent (or any Subsidiary thereof)
made an acquisition analysis for the purpose of
acquiring such entity; or
(v) disclose existing or prospective customers of Company to
any Person for any reason or purpose whatsoever except
to the extent that the Company has in the past disclosed
such information to the public for valid business
reasons.
Notwithstanding the above, the foregoing covenants shall not be deemed
to prohibit Company or any Stockholder from acquiring as an investment after the
date of this Agreement not more than five percent of the capital stock of a
competing business whose stock is traded on a national securities exchange or
the National Association of Securities Dealers= Automated Quotation System.
15.2 DAMAGES. Because of the difficulty of measuring economic losses
to Parent as a result of a breach of the foregoing covenants, and because of the
immediate and irreparable damage that could be caused to Parent for which it
would have no other adequate remedy, Company and each Stockholder agrees that
the foregoing covenants may be enforced by Parent, in the event of breach by
Company or such Stockholder, by injunction and restraining order.
15.3 REASONABLE RESTRAINT. It is agreed by the parties hereto that
the foregoing covenants in this Section 15 impose a reasonable restraint on
Company and the Stockholders in light of the activities and business of Parent
(including the Subsidiaries thereof) on the date of the execution of this
Agreement and the reasonably foreseeable plans of Parent.
15.4 SEVERABILITY; REFORMATION. The covenants in this Section 15 are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent the court
deems reasonable, and the Agreement shall thereupon be automatically reformed.
15.5 INDEPENDENT COVENANT. All of the covenants in this Section 15
shall be construed
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as an agreement independent of any other provision in this Agreement and the
existence of any claim or cause of action of Company or any Stockholder
against Parent (including the Subsidiaries thereof), whether predicated on
this Agreement or otherwise, shall not constitute a defense to the
enforcement by Parent of such covenants. It is specifically agreed that the
period of three years stated at the beginning of this Section 15, during
which the agreements and covenants of Company and each Stockholder made in
this Section 15 shall be effective, shall be computed by excluding from such
computation any time during which Company or such Stockholder is in violation
of any provision of this Section 15. The covenants contained in Section 15
shall not be affected by any breach of any other provision hereof by any
party hereto and shall become nugatory if the transactions contemplated by
this Agreement are not consummated.
15.6 MATERIALITY. Company and Stockholders hereby agree that the
covenants set forth in this Section 15 are a material and substantial part of
the transactions contemplated by this Agreement.
16. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
16.1 COMPANY AND STOCKHOLDERS. Company and Stockholders recognize
and acknowledge that they had in the past, currently have, and in the future
may have, access to certain confidential information of Company, the Founding
Companies and/or Parent, such as operational policies, and pricing and cost
policies that are valuable, special and unique assets of Company, the
Founding Companies and/or Parent. Company and Stockholders agree that they
will not disclose such confidential information to any Person for any purpose
or reason whatsoever, except (i) to authorized representatives of Parent;
(ii) following the Closing, such information may be disclosed by Company and
Stockholders as is required in the course of performing their duties for
Parent or Newco; and (iii) to counsel and other advisers; provided that such
advisers (other than counsel) agree to the confidentiality provisions of this
Section 16.1, unless (x) such information becomes known to the public
generally through no fault of Company or Stockholders, (y) disclosure is
required by law or the order of any governmental authority under color of
law; provided, that prior to disclosing any information pursuant to this
clause (y), Company or Stockholders, if possible, shall give immediate prior
written notice thereof to Parent and provide Parent with the opportunity to
contest such disclosure, or (z) the disclosing party reasonably believes that
such disclosure is required in connection with the defense of a lawsuit
against the disclosing party. In the event of a breach or threatened breach
by Company or any Stockholder of the provisions of this Section 16.1, Parent
shall be entitled to an injunction (without the posting of bond or proof of
actual damages) restraining Company or Stockholders from disclosing, in whole
or in part, such confidential information. Nothing herein shall be construed
as prohibiting Parent from pursuing any other available remedy for such
breach or threatened breach, including the recovery of damages. In the event
the transactions contemplated by this Agreement are not consummated, (1) the
above mentioned restrictions on Company or Stockholders' ability to
disseminate confidential information with respect to Company shall become
nugatory and (2) Company and Stockholders (including representatives,
advisors and legal counsel) shall within ten business days of the Parent=s
request, deliver all copies of the confidential information of Parent in its
or his possession in any form whatsoever (including, but not limited to, any
reports, memoranda or other material prepared by Company or Stockholders or
their representatives, advisors or legal counsel).
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16.2 PARENT AND NEWCO. Parent and Newco recognize and acknowledge
that they had in the past and currently have and in the future may have,
prior to the Closing, access to certain confidential information of Company,
such as operational policies and pricing and cost policies that are valuable,
special and unique assets of Company. Parent and Newco agree that, prior to
the Closing, or if the transactions contemplated by this Agreement are not
consummated, they will not disclose such confidential information to any
person for any purpose or reason whatsoever, except (i) to authorized
representatives of Company and (ii) to counsel and other advisers, provided
that such advisers (other than counsel) agree to the confidentiality
provisions of this Section 16.2, unless (x) such information becomes known to
the public generally through no fault of Parent or Newco; (y) disclosure is
required by law or the order of any governmental authority under color of
law, provided that, prior to disclosing any information pursuant to this
clause (y); Parent and Newco shall, if possible, give immediate prior written
notice thereof to Company and Stockholders and provide Company and
Stockholders with the opportunity to contest such disclosure; or (z) the
disclosing party reasonably believes that such disclosure is required in
connection with the defense of a lawsuit against the disclosing party. In
the event of a breach or threatened breach by Parent or Newco of the
provisions of this Section 16.2, Company and Stockholders shall be entitled
to an injunction (without the posting of bond or proof of actual damages)
restraining Parent and Newco from disclosing, in whole or in part, such
confidential information. Nothing herein shall be construed as prohibiting
Company and Stockholders from pursuing any other available remedy for such
breach or threatened breach, including the recovery of damages. In the event
the transactions contemplated by this Agreement are not consummated, Parent
and Newco (including their representatives, advisors and legal counsel) shall
within ten business days after Company=s request, deliver all copies of the
confidential information of Company in their possession in any form
whatsoever (including, but not limited to, any reports, memoranda, or other
materials prepared by Parent or Newco or their representatives, advisors or
legal counsel at the direction of Parent or Newco).
16.3 DAMAGES. Because of the difficulty of measuring economic losses
as a result of the breach of the foregoing covenants in Section 16.1 and 16.2
and because of the immediate and irreparable damage that would be caused for
which no other adequate remedy exists, the parties hereto agree that, in the
event of a breach by any of them of the foregoing covenants, the covenant may be
enforced against the other parties by injunction and restraining order.
16.4 SURVIVAL. The obligations of the parties under this Section 16
shall survive the termination of this Agreement for a period of three years from
the Closing Date or the termination of this Agreement pursuant to Section 14.
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17. TRANSFER RESTRICTIONS
Except for transfers to Stockholders who agree to be bound by the
restrictions set forth in this Section 17 (or trusts for the benefit of
Stockholders, the trustees of which so agree), for a period of one year from the
consummation of the IPO (unless the IPO shall not be consummated by May 31,
1999), except pursuant to Section 19, the Company shall not sell, assign,
exchange, transfer, encumber, pledge, distribute, appoint or otherwise dispose
of any Parent Stock received by the Company in the Sale. The Parent Stock
delivered to the Company pursuant to Section 4 of this Agreement will bear a
legend substantially in the form set forth below and containing such other
information as Parent may deem necessary or appropriate:
EXCEPT AS OTHERWISE PERMITTED BY THE ISSUER, THIS SECURITY MAY NOT BE SOLD,
ASSIGNED, EXCHANGED, TRANSFERRED, ENCUMBERED, PLEDGED, DISTRIBUTED, APPOINTED OR
OTHERWISE DISPOSED OF, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO
ANY ATTEMPTED SALE, ASSIGNMENT, EXCHANGE, TRANSFER, ENCUMBRANCE, PLEDGE,
DISTRIBUTION, APPOINTMENT OR OTHER DISPOSITION PRIOR TO THE FIRST ANNIVERSARY OF
THE CONSUMMATION OF ISSUER'S INITIAL UNDERWRITTEN PUBLIC OFFERING ("IPO"). UPON
THE WRITTEN REQUEST OF THE HOLDER OF THIS CERTIFICATE, THE ISSUER AGREES TO
REMOVE THIS RESTRICTIVE LEGEND (AND ANY STOP ORDER PLACED WITH THE TRANSFER
AGENT) AFTER THE DATE SPECIFIED ABOVE OR AFTER -, IF THE IPO HAS NOT BEEN
CONSUMMATED BY THAT DATE.
18. INVESTMENT REPRESENTATIONS
Company acknowledges that the Parent Stock to be delivered to Company
pursuant to this Agreement (the "Restricted Securities") has not been and will
not be registered under the 1933 Act and therefore may not be resold without
compliance with the requirements of the 1933 Act and applicable state securities
laws. All of the Restricted Securities are being acquired by Company solely for
its own account, for investment purposes only and not with a view to, or in
connection with, a distribution thereof.
18.1 COMPLIANCE WITH LAW. Company represents, warrants, covenants
and agrees that none of the Restricted Securities will be offered, sold,
assigned, exchanged, transferred, encumbered, distributed, appointed or
otherwise disposed of except after full compliance with all of the applicable
provisions of the 1933 Act and the rules and regulations of the SEC
thereunder and the provisions of applicable state securities laws and
regulations. All of the Restricted Securities shall bear the following
legend in addition to the legend required under Section 17 of this Agreement:
THE SHARES REPRESENTED BY THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY APPLICABLE STATE
SECURITIES LAWS (COLLECTIVELY, THE "ACTS") AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED UNLESS AND UNTIL (A) THE SHARES
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REPRESENTED BY THIS SECURITY SHALL HAVE BEEN REGISTERED UNDER THE ACTS OR (B)
THE HOLDER OF THE SHARES REPRESENTED BY THIS SECURITY PROVIDES THE ISSUER
WITH (X) AN UNQUALIFIED WRITTEN OPINION OF LEGAL COUNSEL, WHICH COUNSEL AND
OPINION (IN FORM AND SUBSTANCE) SHALL BE REASONABLY SATISFACTORY TO THE
ISSUER, TO THE EFFECT THAT THE PROPOSED DISPOSITION OF THE SHARES REPRESENTED
BY THIS SECURITY MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE ACTS OR (Y)
SUCH OTHER EVIDENCE AS MAY BE REASONABLY SATISFACTORY TO THE ISSUER THAT THE
PROPOSED DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE ACTS.
18.2 ECONOMIC RISK; SOPHISTICATION. Company is able to bear the
economic risk of an investment in the Restricted Securities and can afford to
sustain a total loss of such investment and has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the proposed investment in Parent. Company has had an adequate
opportunity to ask questions and receive answers from the officers of Parent
concerning any and all matters relating to the transactions described herein
including, without limitation, the background and experience of the current and
proposed officers and directors of Parent, the plans for the operations of the
business of Parent and any plans for additional acquisitions and the like.
Company has asked any and all questions in the nature described in the preceding
sentence and all questions have been answered to its satisfaction.
19. REGISTRATION RIGHTS
19.1 PIGGYBACK REGISTRATION RIGHTS. At any time following the date
of consummation of the IPO, whenever Parent proposes to register any Parent
Stock for its own or the account of others under the 1933 Act for a public
offering, other than (i) any shelf registration of shares to be used as
consideration for acquisitions of additional businesses by Parent and (ii)
registrations relating to employee benefit plans, Parent shall give Company
prompt written notice of its intent to do so. Upon the written request of
Company given within 15 business days after receipt of such notice, Parent
shall cause to be included in such registration all Registerable Securities
(including any shares of Parent Stock issued as a dividend or other
distribution with respect to, or in exchange for, or in replacement of such
Registerable Securities) which Company requests; provided, however, if Parent
is advised in writing in good faith by any managing underwriter of an
underwritten offering of the securities being offered pursuant to any
registration statement under this Section 19.1 that the number of shares to
be sold by Persons other than Parent is greater than the number of such
shares which can be offered without adversely affecting the offering, Parent
may reduce pro rata the number of shares offered for the accounts of such
Persons (based upon the number of shares held by such Person) to a number
deemed satisfactory by such managing underwriter.
19.2 DEMAND REGISTRATION RIGHTS. At any time after the date of
consummation of the IPO, the holders ("Founding Stockholders") of a majority
of the shares of Parent Stock (i) representing Registerable Securities owned
by Company or its permitted transferees or (ii) acquired by other
stockholders of Parent on or prior to the closing of the IPO in connection
with the acquisition of their companies by Parent pursuant to an agreement
similar to this Agreement,
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which shares have not been previously registered or sold and which shares are
not entitled to be sold under Rule 144(k) (or any similar or successor
provision) promulgated under the 1933 Act, may request in writing that Parent
file a registration statement under the 1933 Act covering the registration of
the shares of Parent Stock issued to and held by the Founding Stockholders or
their permitted transferees (including any stock issued as a dividend or
other distribution with respect to, or in exchange for, or in replacement of
such Parent Stock) (a "Demand Registration"). Within ten days of the receipt
of such request, Parent shall give written notice of such request to all
other Founding Stockholders and shall, as soon as practicable but in no event
later than 45 days after notice from the Founding Stockholders requesting
such registration, file and use its best efforts to cause to become effective
a registration statement covering all such shares. Parent shall be obligated
to effect only one Demand Registration for all Founding Stockholders;
provided, however, that Parent shall not be deemed to have satisfied its
obligation under this Section 19.2 unless and until a Demand Registration
covering all shares of Parent Stock requested to be registered has been filed
and becomes effective under the 1933 Act and has remained current and
effective for not less than 90 days (or such shorter period as is required to
complete the distribution and sale of all shares registered thereunder).
Notwithstanding the foregoing paragraph, following such a demand, a
majority of the disinterested directors of Parent (i.e. directors who have not
demanded or elected to sell shares in any such public offering) may defer the
filing of the registration statement for a 30 day period.
If, at the time of any request for a Demand Registration, Parent has
formulated plans to file within 60 days after such request a registration
statement covering the sale of any of its securities in a public offering under
the 1933 Act, no registration of the Parent Stock shall be initiated under this
Section 19.2 until 90 days after the effective date of such registration
statement unless Parent is no longer proceeding diligently to secure the
effectiveness of such registration statement, provided that Parent shall provide
the Founding Stockholders the right to participate in such public offering
pursuant to, and subject to, Section 19.1.
19.3 REGISTRATION PROCEDURES. All expenses incurred in connection
with the registrations under this Section 19 (including all registration,
filing, qualification, legal, printing and accounting fees, but excluding
underwriting commissions and discounts), shall be borne by Parent. In
connection with registrations under Sections 19.1 and 19.2, Parent will, as
expeditiously as practicable:
(i) Prepare and file with the SEC a registration statement
with respect to such Parent Stock and use its best
efforts to cause such registration statement to become
and remain effective, provided that Parent may
discontinue any registration of its securities that is
being effected pursuant to Section 19.1 at any time
prior to the effective date of the registration
statement relating thereto.
(ii) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to such
registration statement and the prospectus used in
connection therewith as may be necessary (x) to keep
such registration statement effective for a period as
may be requested by the
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stockholders holding a majority of the Parent Stock
covered thereby not exceeding 90 days and (y) to
comply with the provisions of the 1933 Act with
respect to the disposition of all securities covered by
such registration statement during such period in
accordance with the intended methods of disposition
by the seller or sellers thereof set forth in such
registration statement; provided, that before
filing a registration statement or prospectus relating
to the sale of Parent Stock, or any amendments or
supplements thereto, Parent will furnish to counsel of
each holder of Parent Stock covered by such registration
statement or prospectus, copies of all documents
proposed to be filed, which documents will be subject to
the review of such counsel, and Parent will give
reasonable consideration in good faith to any comments
of such counsel.
(iii) Furnish to each holder of Parent Stock covered by the
registration statement and to each underwriter, if any,
of such Parent Stock, such number of copies of a
preliminary prospectus and prospectus for delivery in
conformity with the requirements of the 1933 Act, and
such other documents, as such Person may reasonably
request, in order to facilitate the public sale or other
disposition of the Parent Stock.
(iv) Use its best efforts to register or qualify the Parent
Stock covered by such registration statement under such
other securities or blue sky laws of such jurisdictions
as each seller shall reasonably request, and do any and
all other acts and things which may be reasonably
necessary or advisable to enable such seller to
consummate the disposition of the Parent Stock owned by
such seller in such jurisdictions, except that Parent
shall not for any such purpose be required (x) to
qualify to do business as a foreign corporation in any
jurisdiction where, but for the requirements of this
Section 19.3(iv), it is not then so qualified, (y) to
subject itself to taxation in any such jurisdiction, or
(z) to take any action which would subject it to general
or unlimited service of process in any such jurisdiction
where it is not then so subject.
(v) Use its best efforts to cause the Parent Stock covered
by such registration statement to be registered with or
approved by such other governmental agencies or
authorities as may be necessary to enable the seller or
sellers thereof to consummate the disposition of such
Parent Stock.
(vi) Immediately notify each seller of Parent Stock covered
by such registration statement, at any time when a
prospectus relating thereto is required to be delivered
under the 1933 Act within the appropriate period
mentioned in Section 19.3(ii), if Parent becomes aware
that the prospectus included in such registration
statement, as then in effect, includes an untrue
statement of a material fact or omits to state any
material fact required to be stated therein or necessary
to make the statements therein not misleading in the
light of the circumstances then existing, and, at the
request of any such seller, deliver a reasonable number
of copies of an amended or supplemental prospectus as
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may be necessary so that, as thereafter delivered to
the Parents of such Parent Stock, each prospectus shall
not include an untrue statement of a material fact or
omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading in the light of the circumstances then
existing.
(vii) Otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC and make
generally available to its security holders, in each
case as soon as practicable, but not later than 45
calendar days after the close of the period covered
thereby (90 calendar days in case the period covered
corresponds to a fiscal year of the Parent), an earnings
statement of Parent which will satisfy the provisions of
Section 11 (a) of the 1933 Act.
(viii) Use its best efforts in cooperation with the
underwriters to list such Parent Stock on each
securities exchange as they may reasonably designate.
(ix) In the event the offering is an underwritten offering,
use its best efforts to obtain a "cold comfort" letter
from the independent public accountants for Parent in
customary form and covering such matters of the type
customarily covered by such letters.
(x) Execute and deliver all instruments and documents
(including in an underwritten offering an underwriting
agreement in customary form) and take such other actions
and obtain such certificates and opinions as the
stockholders holding a majority of the shares of Parent
Stock covered by the Registration Statement may
reasonably request in order to effect an underwritten
public offering of such Parent Stock.
(xi) Make available for inspection by the seller of such
Parent Stock covered by such registration statement, by
any underwriter participating in any disposition to be
effected pursuant to such registration statement and by
any attorney, accountant or other agent retained by any
such seller or any such underwriter, all pertinent
financial and other records, pertinent corporate
documents and properties of Parent, and cause all of
Parent's officers, directors and employees to supply all
information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection
with such registration statement.
(xii) Obtain for delivery to the underwriter or agent an
opinion or opinions from counsel for Parent in customary
form and in form and scope reasonably satisfactory to
such underwriter or agent and its counsel.
19.4 OTHER REGISTRATION MATTERS.
(i) Each stockholder holding shares of Parent Stock covered
by a registration statement referred to in this Section
19 will, upon receipt of any notice from
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Parent of the happening of any event of the kind
described in Section 19.3(vi), forthwith discontinue
disposition of the Parent Stock pursuant to the
registration statement covering such Parent Stock
until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by
Section 19.3(vi).
(ii) If a registration pursuant to Section 19.1 or 19.2
involves an underwritten offering, each of the
stockholders agrees, whether or not his shares of Parent
Stock are included in such registration, not to effect
any public sale or distribution, including any sale
pursuant to Rule 144 under the 1933 Act, of any Parent
Stock, or of any security convertible into or
exchangeable or exercisable for any Parent Stock (other
than as part of such underwritten offering), without the
consent of the managing underwriter, during a period
commencing eight calendar days before and ending 180
calendar days (or such lesser number as the managing
underwriter shall designate) after the effective date of
such registration.
19.5 INDEMNIFICATION.
(i) In the event of any registration of any securities of
Parent under the 1933 Act pursuant to Section 19.1 or
19.2, Parent will, and it hereby agrees to, indemnify
and hold harmless, to the extent permitted by law, each
seller of any Parent Stock covered by such registration
statement, each Affiliate of such seller and their
respective directors, officers, employees and agents or
general and limited partners (and directors, officers,
employees and agents thereof) each other Person who
participates as an underwriter in the offering or sale
of such securities and each other Person, if any, who
controls such seller or any such underwriter within the
meaning of the 1933 Act, as follows:
(x) against any and all loss, liability, claim,
damage or expense whatsoever arising out of or
based upon an untrue statement or alleged untrue
statement of a material fact contained in any
registration statement (or any amendment or
supplement thereto), including all documents
incorporated therein by reference, or the
omission or alleged omission therefrom of a
material fact required to be stated therein or
necessary to make the statements therein not
misleading, or arising out of an untrue
statement or alleged untrue statement of a
material fact contained in any preliminary
prospectus or prospectus (or any amendment or
supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary
in order to make the statements therein not
misleading;
(y) against any and all loss, liability, claim,
damage and expense whatsoever to the extent of
the aggregate amount paid in settlement of any
litigation, or investigation or proceeding by
any governmental
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agency or body, commenced or threatened, or of
any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue
statement or omission, if such settlement is
effected with the written consent of Parent; and
(z) against any and all expense reasonably incurred
by them in connection with investigating,
preparing or defending against any litigation,
or investigation or proceeding by any
governmental agency or body, commenced or
threatened, or any claim whatsoever based upon
any such untrue statement or omission, or any
such alleged untrue statement or mission to the
extent that any such expense is not paid under
subsection (x) or (y) above;
Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of such seller or any
such director, officer, employee, agent, general or limited
partner, investment advisor or agent, underwriter or controlling
Person and shall survive the transfer of such securities by such
seller.
(ii) Parent may require, as a condition to including any
Parent Stock in any registration statement filed in
accordance with Section 19.1 or 19.2, that Parent shall
have received an undertaking reasonably satisfactory to
it from the prospective seller of such Parent Stock or
any underwriter, to indemnify and hold harmless (in the
same manner and to the same extent as set forth in
Section 19.5(i)) Parent with respect to any statement or
alleged statement in or omission or alleged omission
from such registration statement, any preliminary, final
or summary prospectus contained therein, or any
amendment or supplement, if such statement or alleged
statement or omission or alleged omission was made in
reliance upon and in conformity with written information
furnished to Parent by or on behalf of such seller or
underwriter specifically stating that it is for use in
the preparation of such registration statement,
preliminary, final or summary prospectus or amendment or
supplement. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on
behalf of Parent or any such director, officer or
controlling Person and shall survive the transfer of
such securities by such seller. In that event, the
obligations of the Parent and such sellers pursuant to
this Section 19.5 are to be several and not joint;
provided, however, that, with respect to each claim
pursuant to this Section 19.5, Parent shall be liable
for the full amount of such claim, and each such
seller's liability under this Section 19.5 shall be
limited to an amount equal to the net proceeds (after
deducting the underwriting discount and expenses)
received by such seller from the sale of Parent Stock
held by such seller pursuant to this Agreement.
(iii) Promptly after receipt by an indemnified party hereunder
of written notice of the commencement of any action or
proceeding involving a claim referred to in this Section
19.5, such indemnified party will, if a claim in respect
thereof
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is to be made against an indemnifying party,
give written notice to such indemnifying party of the
commencement of such action; provided, however, that the
failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party
of its obligations under this Section 19.5, except to
the extent (not including any such notice of an
underwriter) that the indemnifying party is materially
prejudiced by such failure to give notice. In case any
such action is brought against an indemnified party,
unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim
(in which case the indemnifying party shall not be
liable for the fees and expenses of more than one firm
of counsel selected by holders of a majority of the
shares of Parent Stock included in the offering or more
than one firm of counsel for the underwriters in
connection with any one action or separate but similar
or related actions), the indemnifying party will be
entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party
similarly notified, to the extent that it may wish with
counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to
such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be
liable to such indemnified party for any legal or other
expenses subsequently incurred by such indemnifying
party in connection with the defense thereof, provided
that the indemnifying party will not agree to any
settlement without the prior consent of the indemnified
party (which consent shall not be unreasonably withheld)
unless such settlement requires no more than a moneary
payment for which the indemnifying party agrees to
indemnify the indemnified party and includes a full,
unconditional and complete release of the indemnified
party; provided, however, that the indemnified party
shall be entitled to take control of the defense of any
claim as to which, in the reasonable judgment of the
indemnifying party's counsel, representation of both the
indemnifying party and the indemnified party would be
inappropriate under the applicable standards of
professional conduct due to actual or potential
differing interests between them. In the event that the
indemnifying party does not assume the defense of a
claim pursuant to this Section 19.5(iii), the
indemnified party will have the right to defend such
claim by all appropriate proceedings, and will have
control of such defense and proceedings, and the
indemnified party shall have the right to agree to any
settlement without the prior consent of the indemnifying
party. Each indemnified party shall, and shall cause its
legal counsel to, provide reasonable cooperation to the
indemnifying party and its legal counsel in connection
with its assuming the defense of any claim, including
the furnishing of the indemnifying party with all papers
served in such proceeding. In the event that an
indemnifying party assumes the defense of an action
under this Section 19.5(iii), then such indemnifying
party shall, subject to the provisions of this Section
19.5, indemnify and hold harmless the indemnified party
from any and all losses, claims, damages or liabilities
by reason of such settlement or judgment.
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(iv) Parent and each seller of Parent Stock shall provide for
the foregoing indemnity (with appropriate modifications)
in any underwriting agreement with respect to any
required registration or other qualification of
securities under any federal or state law or regulation
of any governmental authority.
19.6 CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances under which the indemnity contemplated by Section
19.5 is for any reason not available or insufficient for any reason to hold
harmless an indemnified party in respect of any losses, claims, damages or
liabilities referred to therein, the parties required to indemnify by the terms
thereof shall contribute to the aggregate losses, liabilities, claims, damages
and expenses of the nature contemplated by such indemnity agreement incurred by
Parent, any seller of Parent Stock and one or more of the underwriters, except
to the extent that contribution is not permitted under Section 11 (f) of the
1933 Act. In determining the amounts which the respective parties shall
contribute, there shall be considered the relative benefits received by each
party from the offering of the Parent Stock by taking into account the portion
of the proceeds of the offering realized by each, and the relative fault of each
party by taking into account the parties' relative knowledge and access to
information concerning the matter with respect to which the claim was asserted,
the opportunity to correct and prevent any statement or omission and any other
equitable considerations appropriate under the circumstances. Parent and each
Person selling securities agree with each other that no seller of Parent Stock
shall be required to contribute any amount in excess of the amount such seller
would have been required to pay to an indemnified party if the indemnity under
Section 19.5(ii) were available. Parent and each such seller agree with each
other and the underwriters of the Parent Stock, if requested by such
underwriters, that it would not be equitable if the amount of such contribution
were determined by pro rata or per capita allocation (even if the underwriters
were treated as one entity for such purpose) or for the underwriters' portion of
such contribution to exceed the percentage that the underwriting discount bears
to the initial public offering price of the ParentStock. For purposes of this
Section 19.6, each Person, if any, who controls an underwriter within the
meaning of Section 15 of the 1933 Act shall have the same rights to contribution
as such underwriter, and each director and each officer of Parent who signed the
registration statement, and each Person, if any, who controls Parent or a seller
of Parent Stock within the meaning of Section 15 of the 1933 Act shall have the
same rights to contribution as Parent or a seller of Parent Stock, as the case
may be.
19.7 UNDERTAKING TO FILE REPORTS AND COOPERATE IN RULE 144
TRANSACTIONS. After Parent completes its initial underwritten public
offering and for as long thereafter as any stockholder shall continue to hold
any Restricted Securities, Parent shall use reasonable efforts to file, on a
timely basis, all annual, quarterly and other reports required to be filed by
it under Sections 13 and 15(d) of the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC thereunder, as amended from
time to time.
20. GENERAL
20.1 COOPERATION. Company, Parent and Newco shall deliver or cause
to be delivered to the other on the Closing Date and at such other times and
places as shall be reasonably agreed to, such additional instruments as any of
the others may reasonably request for the purpose of carrying
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out this Agreement. Company will cooperate and use its reasonable efforts to
have its officers, directors and employees cooperate with Parent on and after
the Closing Date in furnishing information, evidence, testimony and other
assistance in connection with any Tax Return filing obligations, actions,
proceedings, arrangements or disputes of any nature with respect to matters
pertaining to all periods prior to the Closing Date.
20.2 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the
parties hereunder may not be assigned (except by operation of law or as
permitted by Section 17), but if assigned by operation of law, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto, the
successors of Parent, Newco and Company.
20.3 ENTIRE AGREEMENT. This Agreement (including the Schedules and
Annexes) and the documents delivered pursuant hereto constitute the entire
agreement and understanding among Company, Newco and Parent and supersede any
prior agreement and understanding relating to the subject matter of this
Agreement. This Agreement, upon execution and delivery, constitutes a valid and
binding agreement of the parties hereto enforceable in accordance with its terms
and may be modified or amended only by a written instrument executed by Company,
Newco and Parent, acting through their respective officers or representatives,
duly authorized by their respective Boards of Directors. Any disclosure made on
any Schedule delivered pursuant hereto shall be deemed to have been disclosed
for purposes of any other Schedule required hereby; provided that Company shall
make a good faith effort to cross reference disclosures, as necessary or
advisable, between related Schedules.
20.4 COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
20.5 BROKERS AND AGENTS. Except as disclosed on Schedule 20.5, each
party represents and warrants that it employed no broker or agent in connection
with this transaction and agrees to indemnify the other parties hereto against
all loss, cost, damage or expense arising out of claims for fees or commission
of brokers employed or alleged to have been employed by such indemnifying party.
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20.6 NOTICES. All notices of communication required or permitted
hereunder shall be in writing, addressed to the party to be notified, and may be
given by (i) depositing the same in United States mail, postage prepaid and
registered or certified with return receipt requested, (ii) by telecopying the
same if receipt thereof is confirmed or (iii) by delivering the same in person
to an officer or agent of such party.
(x) If to Parent or Newco, addressed to them at:
The Alliance Group, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
McAfee & ▇▇▇▇ A Professional Corporation
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(y) If to the Company, addressed to it at:
EIS Communications
▇▇▇▇ ▇. ▇▇▇▇ ▇. ▇▇▇.
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Attn:
Telecopy No.:
or to such other address or counsel as any party hereto shall specify pursuant
to this Section 20.6 from time to time.
20.7 GOVERNING LAW. This Agreement Shall be construed in accordance
with the laws of the State of Oklahoma.
20.8 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided
herein, no delay
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of or omission in the exercise of any right, power or remedy accruing to any
party as a result of any breach or default by any other party under this
Agreement shall impair any such right, power or remedy, nor shall it be
construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
20.9 TIME. Time is of the essence with respect to this Agreement.
20.10 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
practicable, be modified in such manner as to be valid, legal and enforceable
but so as to most nearly retain the intent of the parties, and if such
modification is not possible, such provision shall be severed from this
Agreement; and in either case the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
20.11 REMEDIES CUMULATIVE. Except as otherwise provided in Section
13.4, no right, remedy or election given by any term of this Agreement shall be
deemed exclusive but each shall be cumulative with all other rights, remedies
and elections available at law or in equity.
20.12 CAPTIONS. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
20.13 PUBLIC STATEMENTS. The parties hereto shall consult with each
other and no party shall issue any public announcement or statement with respect
to the transactions contemplated hereby without the consent of the other
parties, unless the party desiring to make such announcement or statement, after
seeking such consent from the other parties, obtains advice from legal counsel
that a public announcement or statement is required by applicable law.
20.14 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived only with
the written consent of Parent, Newco and Company. Any amendment or waiver
effected in accordance with this Section 20.14 be binding upon each of the
parties hereto.
20.15 COLLECTION PROCEDURES. From and after the Closing, Newco shall
have the right and authority, at its expense, to collect for its account all
items to which it is entitled as provided in this Agreement and to endorse with
the name of the Company any checks or drafts received on account of any such
items.
20.16 ARBITRATION. Any claim, controversy or dispute arising out of
or relating to this Agreement, except as set forth herein, shall be settled by
arbitration in Oklahoma City, Oklahoma, in accordance with the rules for
arbitration of the American Arbitration Association. Any arbitration shall be
undertaken pursuant to the Federal Arbitration Act, where possible, and the
decision of the arbitrators shall be final, binding, and enforceable in any
court of competent jurisdiction. In any dispute in which a party seeks in
excess of $50,000 in damages, three arbitrators shall be employed. Otherwise, a
single arbitrator shall be employed. All costs relating to the arbitration
shall be borne equally by the parties, other than their own attorneys' and
experts'
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fees. The parties will bear their own attorneys' and experts' fees. The
arbitrators will not award punitive, consequential or indirect damages, but
may award prevailing parties attorneys fees up to $10,000. Each party hereby
waives the right to such damages and agrees to receive only those actual
damages directly resulting from the claim asserted. In resolving all
disputes between the parties, the arbitrators will apply the laws of the
State of Oklahoma. Except as needed for presentation in lieu of a live
appearance, depositions will not be taken. The parties will be entitled to
conduct document discovery by requesting production of documents. The
arbitrators will resolve any discovery disputes by such prehearing
conferences as may be needed. Either party may be entitled to pursue such
remedies for emergency or preliminary injunctive relief in any court of
competent jurisdiction, provided that each party agrees that it will consent
to the stay of such judicial proceedings on the merits of both this Agreement
and the related transactions pending arbitration of all underlying claims
between the parties immediately following the issuance of any such emergency
or injunctive relief.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
THE ALLIANCE GROUP, INC.
BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
NAME: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
TITLE: President/Chief Executive Officer
ALLIANCE ACQUISITION IV CORP.
BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
NAME: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
TITLE: Chief Executive Officer
ELECTRICAL AND INSTRUMENT SALES
CORP. d/b/a EIS COMMUNICATIONS
BY: ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
NAME: ▇▇▇▇ ▇. ▇▇▇▇▇▇
TITLE: President/Chief Executive Officer
ELECTRONIC INFORMATION SYSTEMS,
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L.L.C.
BY: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
NAME: ▇▇▇▇ ▇. ▇▇▇▇▇▇
TITLE: President
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