ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made as of this 11th
day of February, 2002 (the "Effective Date"), between Nx Networks Inc., a
Delaware corporation, a debtor and debtor-in-possession ("Seller"), with a
principal place of business at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇▇▇.▇▇▇ Inc., a Maryland corporation or its Permitted
Designee (as defined in Section 12(d)) ("Buyer"), with offices at ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. Seller and Buyer are sometimes referred
to as the "Parties."
RECITALS
WHEREAS, Seller is a provider of voice and data telecommunications
solutions to carriers, internet service providers and wireless telephony
service providers (collectively, the "Business"); and
WHEREAS, on November 1st, 2001, Seller filed a voluntary chapter 11
petition commencing a case in the United States Bankruptcy Court for the
Eastern District of Virginia (the "Bankruptcy Court"), Case Nos. 01-14223-RGM
(the "Chapter 11 Case"); and
WHEREAS, Buyer desires to purchase certain of the assets of Seller
related to or used by Seller in connection with the Business and to assume
selected executory contracts of Seller (the "Acquired Assets") (as more
particularly defined in Section 1) related to the Business on an expedited
basis, and Seller desires to sell, assign and transfer to Buyer the Acquired
Assets on an expedited basis, as more particularly described herein and in
accordance with Sections 105, 363 and 365 of the United States Bankruptcy Code
(the "Bankruptcy Code"); and
WHEREAS, the Seller has continued to operate the business since filing
for bankruptcy (the "Post Petition Period") as Debtor and Debtor-in-
Possession; and
WHEREAS, the Parties agree that time is of the essence in connection with
the sale of the Acquired Assets, and Buyer has stated that a rapid
consummation of the sale of the Acquired Assets is essential; and
WHEREAS, the Acquired Assets will be sold pursuant to an order of the
Bankruptcy Court approving such sale under Sections 105, 363 and 365 of the
Bankruptcy Code (the "Sale Order" defined in Section 6(c)(ii)(B) herein).
NOW, THEREFORE, for and in consideration of the foregoing and their
mutual covenants and agreements set forth below, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Parties, intending to be legally bound, hereby agree as follows:
1. SALE OF ASSETS
(a) Acquired Assets. At the Closing (as defined in Section 3(a)),
pursuant to Sections 105, 363, and 365 of the Bankruptcy Code and on the terms
and subject to the conditions precedent of this Agreement, Seller will sell,
assign and transfer to Buyer, and Buyer will purchase, all of Seller's right,
title and interest in and to the Acquired Assets. The Acquired Assets include
all of the following personal property of Company whether presently existing
or hereafter created, written, produced or acquired but shall not include the
Excluded Assets defined in Section 1. (a) (viii) below:
(i) all accounts receivable, operating bank accounts with
positive balance, chattel paper, contract rights (including, without
limitation, sales contracts, service contracts, maintenance agreements,
royalty agreements, license agreements and distribution agreements),
documents, instruments, money, cash on hand, deposit accounts, trade deposits,
court deposits and bonds, and general intangibles, including, without
limitation, returns, repossessions, books and records relating thereto, and
equipment containing said books and records, all investment property,
including securities and securities entitlements. Operating accounts shall
include but not be limited to those listed in Schedule 1(a) (i) attached.
(ii) all product technology including hardware designs and all
software, computer source codes and other computer programs (collectively, the
"Products", which includes but is not limited to those products listed in
Schedule 1(a) (ii) attached, which is the table of contents of the Sellers
Price List), and all common law and statutory copyrights and copyright
registrations, applications for registration, now existing or hereafter
arising, United States of America and foreign, obtained or to be obtained on
or in connection with the Products, or any parts thereof of any underlying or
component elements of the Products together with the right to copyright and
all rights to renew or extend such copyrights and the right to ▇▇▇ and/or
collect in its own name and/or the name of the Seller for past, present and
future infringements of copyright;
(iii) all goods, including, without limitation, equipment and
inventory, including all rights to inventory held by third parties (including,
without limitation, all export inventory);
(iv) all guarantees and other security therefor;
(v) all trademarks, service marks, trade names, internet web site
domain names, and service names and the goodwill associated therewith;
(vi) (a) all patents and patent applications filed in the United
States Patent and Trademark office or any similar office or any foreign
jurisdiction, including but not limited to the Patents listed in Schedule 1(a)
(vi) attached, and interests under patent license agreement, including,
without limitation the inventions and improvements described and claimed
therein, (b) licenses pertaining to any patent where Seller is licensor or
licensee, (c) all income, royalties, damages, payments, accounts and accounts
receivable now or hereafter due and/or payable under and with respect thereto,
including, without limitation, damages and payments for past, present or
future infringements thereof, (d) the right (but not the obligation) to ▇▇▇
and/or collect for past, present and future infringements thereof, (e) all
rights corresponding thereto throughout the world in all jurisdictions in
which such patents have been issued or applied for and (f) the reissues,
divisions, continuations, renewals, extensions and continuations-in-part with
any of the foregoing (all of the foregoing patents and applications and
interests under patent license agreements, together with the items described
in clauses (a) through (f) in this paragraph are sometimes herein individually
and collectively referred to as the "Patents"); and
(vii) all of the Sellers right title and interest in the real
property lease of the Company offices at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ first dated 25th March 1999, as amended 21st August
2001, and as amended 1st November 2001.
(viii) except as set forth herein, all products and proceeds,
including, without limitation, insurance proceeds or law suit proceedings of
any of the foregoing (together, the Sellers right, title and interest in the
foregoing items are the "Assets").
(ix) The Acquired Assets do not include any avoidance actions,
the pending adversary action against ▇▇▇▇▇▇▇▇▇ and the Clerk of the United
States District Court.
(b) Non-Assumption of Liabilities. Except for performance of
obligations arising under customer contracts purchased hereunder from and
after the Closing Date, each which shall be individually assumed by Buyer at
the Buyers sole discretion, the Buyer will not assume or have any
responsibility with respect to any liability of Seller for Seller's customers.
The Buyer will not assume any liability of the Seller other than liabilities
related to any assumed contracts. The Buyer will not assume any liability with
regard to lawsuits against the Seller, attorneys fees of the Seller, trade
payables, real property leases or cure amounts thereon, court costs, employee
health plan costs, 401K obligations, insurance obligations, consultant fees,
employee termination costs (including vacation accrual, redundancy, medical
costs and any other payments to or on behalf of employees), taxes or any other
accrued, actual or contingent expenses of the Seller of any kind, up to the
Closing Date, with the exception of the following specific items.
(i) The Buyer will assume liability for the real property lease
of the Company offices at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ first dated 25th March 1999, amended 21st August 2001, and amended 1st
November 2001, to the extent the liability occurs after closing.
(ii) The Buyer will assume liability for all unpaid trade
payables of the Company incurred during the Post Petition Period in the normal
course of business at the Herndon, Virginia location (but specifically not any
liabilities or expenses arising from operations at the Westborough,
Massachusetts location or any other locations of the Seller including lease
obligations) and consistent with the disbursements described in section 2(b)
below.
2. PURCHASE PRICE
(a) Security Deposit. Within three (3) days of the Effective Date,
Buyer shall deliver or cause to be delivered by wire transfer or by a
certified or cashier's check, the amount of fifty Thousand and 00/00 United
States Dollars (US $50,000.00) (the "Security Deposit") into the care of
▇▇▇▇▇▇▇ Berlin Shereff ▇▇▇▇▇▇▇▇, LLP as escrow agent (the "Escrow Agent")
pursuant to the terms and conditions of this Section 2(a) and of an escrow
agreement substantially in the form attached hereto as Exhibit A (the "Escrow
Agreement") to be executed by Buyer, Seller and the Escrow Agent. At the
Closing, the Security Deposit, together with any interest thereon, shall be
credited against the Purchase Price (as defined below.) If this Agreement is
terminated prior to Closing, the Security Deposit shall be distributed in
accordance with Section 11(b).
(b) Purchase Price. The purchase price for the Acquired Assets
shall consist of the following parts disbursed as described below or by
mutually agreed equivalent means:
(i) At the Closing, Buyer shall deliver to Seller by wire
transfer in immediately available funds to an account designated in writing by
Seller to Buyer prior to the Closing, the amount of ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇/▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ DOLLARS (US $500,000.00), less the Security
Deposit and any accrued interest thereon;
(ii) One (1) day prior to the Closing, Buyer and Seller shall
deliver to the Escrow Agent a Mutual Consent Notice (as defined in the Escrow
Agreement), instructing the Escrow Agent to wire on the Closing Date the
amount of the Security Deposit, plus any interest accrued thereon, to the
account of Seller as designated in the Mutual Consent Notice.
(iii) At Closing (as defined below), Seller shall wire
transfer from the operating bank account to an account of its designation an
amount equal to one third of the difference between cash on hand and the
unpaid trade payables accrued in the normal course of business during the Post
Petition Period (such trade payables to include the payment of post-petition
compensation owed to employees). One (1) day prior to the Closing, Seller
shall deliver to Buyer; (a) a statement of cash (and cash equivalents) on hand
in all accounts; (b) an itemized good faith estimate of all unpaid trade
payables accrued in the normal course of business during the Post Petition
Period; (c) a determination of the amount to be transferred hereunder.
(iv) For a period of one (1) year from the Closing Date the
Seller shall be paid one third of the net cash amount collected by Buyer from
trade receivables recorded by Seller prior to Closing, provided that such
receivables are due for product shipped and services performed prior to
Closing. Additionally, if not shipped and invoiced prior to Closing, the
Seller shall be paid one third of the net cash amount collected by Buyer on
the shipment of product shown in the Gemini/Navy sales orders: SO13752,
SO13885 and SO14020A, provided that shipment and invoicing to the customer is
completed on or before March 31st 2002. Seller agrees to use best efforts to
ship and invoice the Gemini/Navy sales orders at the earliest date practicable
if not completed prior to Closing. Such sums shall be wire transferred within
five (5) working days of known, confirmed receipt by Buyer to an account
designated in writing by Seller.
(v) For a period of five (5) years from the Closing Date the
Seller shall be paid one third of the net cash amount collected by Buyer on
the DEC/Cabletron Lawsuit which Openroute Networks Incorporated, (now merged
into Nx Networks, Inc.) filed in April 1998 against Digital Equipment
Corporation for breach of a Source Code Licensing Agreement, net of the
contingency payment made to the attorneys previously approved by the
Bankruptcy Court. Such sums shall be wire transferred within five (5) working
days of confirmed receipt by Buyer to an account designated in writing by
Seller. Nothing in this Agreement is intended to affect the payment rights of
the Debtor's counsel Brown, Rudnick, Freed & Gemser, P.C. in the DEC/Cabletron
Lawsuit previously approved by the Bankruptcy Court.
(c) The Seller agrees to allocate the purchase price as reasonably
determined by the Buyer at its discretion and agrees to file all Federal and
state income tax returns and all other forms and returns, including Internal
Revenue Service Form 8594, in accordance with such determination.
3. CLOSING
(a) The closing of the transactions contemplated by this Agreement
(the "Closing") will take place at the offices of Swidler, Berlin, Shereff,
Friedman, LLP ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ or at such
other place, or pursuant to such other means, as may be mutually agreed by the
Parties. The Closing shall take place (i) within one business day after the
conditions set forth in Sections 8 and 9 have been satisfied or
waived or (ii) at such other time as fixed by agreement among the Parties (the
"Closing Date"). Time is of the essence in connection with this Agreement,
and Buyer shall have the right to terminate this Agreement in accordance with
Section 11(a)(ii)(B) if the Closing has not occurred on or before March 15th,
2002.
(b) At the Closing, Seller shall deliver to Buyer (i) possession of
all tangible assets comprising the Acquired Assets (including cash and cash
equivalents), (ii) a ▇▇▇▇ of Sale substantially in the form attached hereto as
Exhibit B duly executed by Seller, and (iii) an Assignment and Assumption
Agreement in respect of all intangible assets including the customer contracts
to be assumed and assigned and Lawsuits owned by the Seller, substantially in
the form attached hereto as Exhibit C duly executed by Seller. In addition,
for the period from the Closing through and including ninety (90) days from
Closing, Seller shall execute and deliver, without further consideration, such
further instruments of transfer and take such other commercially reasonable
action as Buyer may require to transfer to Buyer, or perfect the transfer to
Buyer of, any of the Acquired Assets.
(c) At the Closing, Buyer shall deliver to Seller (i) the Purchase Price
in accordance with Section 2(b), and (ii) the ▇▇▇▇ of Sale and the Assignment
and Assumption Agreement, duly executed by Buyer.
4. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents, warrants and covenants to Buyer as follows:
(a) Authorization. Nx Networks Inc. is a corporations duly
organized, validly existing and in good standing under the laws of the State
of Delaware. The execution and delivery by Seller of this Agreement to Buyer
and the sale contemplated hereby has been duly and validly authorized by any
and all necessary action on the part of Seller, and Seller shall deliver to
Buyer, at or prior to the execution hereof, copies, certified by Seller's
Secretary, of a resolution of its Board of Directors at which such authority
was granted. Subject to Bankruptcy Court approval, this Agreement and the
documents executed pursuant to this Agreement (collectively the "Definitive
Documents") to which it is a party have been duly and validly executed by
Seller and, assuming due authorization by the Bankruptcy Court, execution and
delivery by the Seller of the Definitive Documents to which it is a party,
such Definitive Documents will constitute legal, valid and binding obligations
of Seller, enforceable against Seller in accordance with their terms, upon the
entry of the Sale Order (as defined in Section 6(c)(ii)(B)); provided,
however, if Seller breaches this Agreement subsequent to approval of this
Agreement by the Bankruptcy Court and the entry of the Sale Order, Buyer's
damages are an administrative priority claim under Sections 503(b) and 507(a)
of the Bankruptcy Code.
(b) No Conflict. Except for (i) orders, approvals or authorizations
of the Bankruptcy Court and (ii) for consents, orders, approvals,
authorizations, or registrations, which, if not obtained, would not,
individually or in the aggregate, have a material adverse effect on the
Business, Seller has full power, right and authority to sell and transfer the
Acquired Assets to Buyer and the execution, delivery and performance of this
Agreement by Seller and compliance by Seller with the terms hereof will not
(x) conflict with any provision of the organizational documents of Seller; (y)
result in a default (or give rise to any termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any
agreement to which Seller is a party or by which it is bound, except for such
defaults (or rights of termination, cancellation or acceleration) as to
requisite waivers or consents have been obtained; or (z) violate any statute,
law, rule, regulation, order, writ, injunction or decree of any governmental
authority or create a lien, encumbrance, security interest or claim upon any
of the assets of Seller.
(c) Title. Seller has, and at the Closing Buyer will obtain, good
and marketable title to the Acquired Assets, free and clear of all liens,
claims, interests, encumbrances and security interests of any kind or nature
whatsoever. Seller has not licensed or otherwise granted any person or entity
any right or interest in any of the Acquired Assets. With the exception of
4(d) below, no person or entity currently maintains any claim, and, no person
or entity has a valid basis for claiming that the operation of the Business or
the use of the Acquired Assets infringes, violates or has violated any
licensing agreement, patent, non-competition, confidentiality or trademark
right or copyright or other rights of any other person or entity.
(d) Litigation. Except as set forth on Schedule 4(d), there is no
claim, judgment, litigation or proceeding in existence or pending at present,
or to the knowledge of Seller threatened, against or relating to the Acquired
Assets or the Business which may affect or encumber the Acquired Assets; no
replevins, attachments, executions or tax assessments or liens are in force
against Seller or the Acquired Assets; and Seller does not know, or have
reasonable grounds to know, of any basis for any such action.
(e) Broker. If any broker, investment bank or other agent has been
engaged by Seller in connection with the transaction contemplated by this
Agreement no brokerage fees or other success or engagement fees will be
payable from the operational account(s) of the business or be subsequently
paid by Buyer to any party as the result of the consummation of such
transaction.
(f) Compliance With Law. To Seller's knowledge, Seller has filed
with the appropriate governmental authorities all material applications,
notifications and other documents and has been issued and is in compliance
with all material requirements for all laws, regulations, permits,
certificates, licenses, approvals and other authorizations required to operate
the Business, except where the failure to do so would not have a material
adverse effect on the Business. Seller is in material compliance with each
(and has not received any claim or notice that the Business is not in
compliance with or that it is in violation of any) law to which the Business
is subject (including all record keeping and reporting requirements thereof);
and, to the Seller's knowledge, no prior actions of the Seller in violation of
any law or regulation will result in liability to the Buyer as a result of the
transactions contemplated by this Agreement.
(g) Business Information. In connection with this transaction, the
Seller has made or will make available to the Buyer all books, records,
correspondence, customer lists, and technical and financial information
requested by the Buyer and relating to the Acquired Assets, including any
lawsuits, as of the date of this Agreement (the "Business Information"). The
Business Information is accurate in all material respects.
(h) Customer Disputes. Seller is not aware of any litigation or
material dispute with any customer.
(i) Key Supplier Disputes. Other than SMTC Manufacturing Corporation of
North Carolina, Inc., Seller is not aware of any dispute with any key
supplier.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents, warrants and covenants to Seller as follows:
(a) Buyer is a Maryland corporation duly organized, validly existing
and in good standing under the laws of the state of Maryland and has the power
and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted. Buyer is duly qualified to do business, and is in good standing,
in each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities make such qualification appropriate,
except where the failure to be so qualified would not individually or in the
aggregate have a material adverse effect on Buyer's ability to complete the
transactions contemplated by this Agreement. The execution and delivery of
this Agreement to Seller and the transactions contemplated hereby have been
duly authorized by Buyer's Board of Directors, and Buyer shall deliver to
Seller, at or prior to the execution hereof, copies, certified by Buyer's
Secretary, of the minutes of the meeting of its Board of Directors at which
such authority was granted.
(b) Buyer has taken all action required by the laws of the State of
Maryland or any other applicable law to authorize the transactions
contemplated herein.
(c) There are no pending or, to the knowledge of Buyer, threatened
actions or proceedings before any court or administrative agency or other
authority which might or will materially or adversely affect Buyer's ability
or right to perform all Buyer's obligations hereunder.
(d) This Agreement constitutes the legal, valid, and binding agreement
of Buyer, enforceable in accordance with its terms. The consummation of the
transactions contemplated hereby will not conflict with or result in a breach
of any provision of, or constitute a default under, any contract, agreement,
instrument, regulation, law, or order of any court, administrative agency or
federal, state, or local authority to which Buyer is a party, by which it is
bound, or to which it may be subject for which Buyer has not obtained a waiver
or the consent of the affected party. The execution, delivery, and
performance of this Agreement by Buyer will not (i) conflict with or result in
a breach or violation of any term or provision of Buyer's Certificate of
Incorporation or Bylaws, nor shall its execution, delivery, or performance
conflict with or result in a breach of any of the terms, conditions, or any
provision of, or constitute a default (or give rise to any right of
termination, cancellation, acceleration, vesting, payment exercise, suspension
or revocation) under, any indenture, mortgage, contract, agreement, or other
instrument to which Buyer is a party, or by which it or its properties are or
may be bound or affected, (ii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Buyer or the Buyer's properties
or assets, except for violations, breaches, defaults, terminations,
cancellations, accelerations, creations, impositions, suspensions or
revocations that would not individually or in the aggregate have a material
adverse effect on the Buyer's ability to complete the transactions
contemplated by this Agreement, or (iii) constitute an event that would permit
any party to terminate any agreement or accelerate the maturity of any
indebtedness or other obligation of Buyer.
(e) Buyer has sufficient cash and/or available credit facilities and/or
commitments to pay the Purchase Price and to make all other necessary payments
of fees and expenses in connection with the transactions contemplated by this
Agreement and the Definitive Documents.
6. COVENANTS
(a) Access and Investigation. Between the date hereof and the
Closing, Seller grants to Buyer and to its duly authorized representatives
including, but not limited to, its employees, accountants and counsel
reasonable access to (i) all information concerning the Acquired Assets and or
the Business as Buyer may reasonably request and (ii) reasonable access,
during normal business hours, to the Acquired Assets and to present key
management employees of the Business who have significant information
regarding the Acquired Assets and Business, and releases all such employees
from any obligations of confidentiality or non-disclosure with regard to
disclosures made by such employees to the Buyer for the purpose of evaluating
the transactions contemplated by this Agreement.
(b) Notice of Sale. Seller will mail notice of the sale, which
notice will comply and be served in accordance with the Bankruptcy Code, the
Federal Rules of Bankruptcy Procedure, any applicable local bankruptcy rules,
and any applicable order of the Bankruptcy Court, to parties who assert any
interest, lien, encumbrance or claim in or against the Acquired Assets.
(c) Bankruptcy Court Approvals.
(i) Seller confirms that its negotiation of this Agreement
with Buyer is critical to its obtaining the highest and best price for its
assets, and that without Buyer's commitment of substantial time and expense to
the process, Seller would have to employ a less orderly process for the sale
of its assets and therefore risk attracting lower prices. Seller acknowledges
that Buyer would not have invested the time and incurred the expense of
negotiating and documenting the transaction if it were not entitled to a break
up fee as described below. Notwithstanding anything in this Agreement to the
contrary, if Buyer is not the successful bidder for the Acquired Assets
because a bid or bids higher and better than the Purchase Price is approved by
the Bankruptcy Court, Buyer shall be entitled to a break-up fee of Fifty
Thousand and 00/00 United States Dollars (US $50,000.00) (the "Break-up
Fee"), provided this Agreement has not been terminated by Seller under Section
11(a)(v) at that time. The Break-Up fee shall be payable to Buyer at the
closing of the sale of the Acquired Assets to such alternate bidder.
(ii) Seller has filed and served a motion pursuant to
Bankruptcy Code Sections 105, 363, and 365, as applicable.:
(A) seeking entry of an order (on an expedited basis)
substantially in the form attached hereto as Exhibit D (the "Procedures
Order"), approving among other things the payment of the Break-Up Fee as an
administrative priority claim under Bankruptcy Code Sections 503(b) and
507(a), approving procedures for the sale of the Acquired Assets (including an
overbid amount of US $100,000.00 over the Purchase Price, an incremental bid
amount of US $50,000.00 and matching bid provisions), and setting dates for
the auction sale of the Acquired Assets no later than March 7th, 2002 (the
"Auction Hearing Date"), and the hearing on the sale of the Acquired Assets no
later than March 7th, 2002 (the "Sale Hearing Date"); and
(B) seeking entry of an order substantially in the form
attached hereto as Exhibit E (the "Sale Order"), which, among other things,
(i) authorizes Seller to sell, transfer and assign the Acquired Assets to
Buyer pursuant to this Agreement and Bankruptcy Code Sections 105, 363 and
365, as applicable, free and clear of liens, claims, interests, encumbrances
and security interests of any nature or kind, (ii) determines that Buyer is a
good faith purchaser under Section 363(m) of the Bankruptcy Code and that the
Buyer has acted in good faith, is a bona fide purchaser for value, the
Purchase Price is fair and reasonable, and the sale of the Acquired Assets is
free and clear of all liens, claims, interests, and encumbrances; (iii)
provides that the Customer Contracts and Lawsuits owned by Seller are assigned
to Buyer pursuant to 11 U.S.C. Section 365, that Buyer assumes no liability
for claims or cure amounts under the customer contracts prior to the date of
Closing or for any Lawsuit claims against the Seller; (iv) is in all respects
in a form reasonably acceptable to counsel for Buyer; (v) provides that the
ten (10) day periods provided for in Federal Rules of Bankruptcy Procedure
6004(g) and 6006(d) are waived.
(d) Books and Records. After the Closing, Buyer shall allow Seller
and any of its then current directors, officers, employees, plan
administrator, counsel, representatives, accountants and auditors
(collectively, the "Seller's Representatives") reasonable access to all
business records and files of the Seller or the Business that are transferred
solely to Buyer in connection herewith, which are reasonably required by such
Seller's Representatives in order to complete the Chapter 11 Case or for tax
or other valid business purposes, during regular business hours and upon
reasonable notice to Buyer. The Seller's Representatives shall have the right
to make copies of any such records and files; provided, however, that any such
access or copying shall be had or done in such a manner so as not to
unreasonably interfere with the normal conduct of Buyer's business or
operations.
(e) Additional Matters. Subject to the terms and conditions herein,
except as provided by the Bankruptcy Code, the Bankruptcy Rules or any other
orders entered or approvals or authorizations granted by the Bankruptcy Court
in the Chapter 11 Case, each of the parties hereto agrees to use all
commercially reasonable efforts to take, or cause to be taken, all action and
to do, or cause to be done, all things necessary, proper or advisable,
including under applicable laws and regulations, to consummate and make
effective the transactions contemplated by this Agreement, including using all
commercially reasonable efforts to obtain all necessary waivers, consents and
approvals required under this Agreement.
(f) Preservation of Acquired Assets. Seller will take all prudent
actions, at Seller's cost, to safeguard, preserve and maintain the integrity
of the Acquired Assets pending Closing.
(g) Seller's Good Faith Cooperation. Seller shall reasonably
cooperate in good faith to assist Buyer in preserving and protecting the
Acquired Assets and the Business during the ninety (90) day transition period
following the Closing, consistent with the obligations of both parties set
forth herein.
(h) Collection of Accounts Receivable after the Closing. Seller
shall be responsible for all costs attributable to the provision of services
to Customers prior to the Closing Date, and Buyer shall be responsible for all
costs attributable to the provision of services to Customers from and after
the Closing Date. As defined in Section 2 (b) (iv) above, Seller shall be
entitled to a portion of Customer revenues for services provided to Customers
prior to the Closing Date, and Buyer shall be entitled to all Customer revenue
for services provided to Customers from and after the Closing Date. From and
after the Closing Date, Buyer and Seller shall use their best efforts to
assist each other in connection with the collection and proper allocation of
accounts receivable from Customers. The Parties shall hold the funds
collected on account of any accounts receivable that are owed to the other
party in trust. Buyer and Seller each agree to remit to the other any
payments which it receives and to which the other is entitled within five (5)
business days. Further, each party shall have the right to inspect the books
and records of the other party with regard to the collection of accounts
receivable related to the Customers.
(i) Trade Payables. Buyer shall be responsible for preparing a
reconciled account of the actual cost of all unpaid trade liabilities accrued
in the normal course of business during the Post Petition Period which are to
be assumed by Seller as defined in Section 2 (b) (iii) above. Buyer shall
provide such a reconciled account to Seller within forty five days (45 days)
of the Closing Date. Buyer and Seller each agree to remit to the other any
payment which is due to the other within five (5) business days of such
reconciled account becoming available.
(j) Material Changes. From the date hereof through the earlier of
the Closing Date or the termination of this Agreement, the Seller agrees that
it will continue business only in the ordinary course subject to Bankruptcy
Court approval and will report to Buyer any indications of actual or potential
material adverse factors in its business. Seller will not without the written
consent of the Buyer;
(i) Make any capital expenditure above $20,000 per item
(ii) Pay any dividends
(iii) Other than the sale of excess computers and test
equipment, sell any assets or enter into any transactions outside the normal
course of business
(iv) Incur any new liabilities to banks, stockholders or other
individuals
(v) Make new loans to stockholders or employees
(vi) Change any management personnel
(vii) Make or alter any employee contracts, alter compensation
or pay bonuses to any employees, officers or directors
(viii) Recapitalize, reorganize or do anything that would
adversely affect the interests of the Buyer.
(k) Employees. Subsequent to Closing, Buyer shall have the right but
not the obligation to hire (immediately or any time later) any employee or ex-
employee of the Seller under the normal employment terms and conditions of the
Buyer.
(l) Real Property Leases. From the date hereof through the
earlier of the Closing Date or the termination of this Agreement, the Seller
agrees any lease payments or lease cure amounts paid by Seller from operating
account(s) for locations other than for the Company offices at ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, shall be deducted directly from the
amount due to Seller under Section 2 (b) (iii) at Closing.
7. CONFIDENTIALITY
(a) The Seller possesses and will possess following the Closing
confidential and proprietary business information relating to the Acquired
Assets and the Business (the "Proprietary Information"). The Seller agrees
that it will maintain the confidentiality of all Proprietary Information and
will not use, or disclose to any other party, for any purpose whatsoever, any
Proprietary Information relating to the Acquired Assets or the Business.
Further Seller acknowledges the critical importance of maintaining the
Proprietary Information as confidential and agrees that because any award of
monetary damages would be inadequate for any breach of this covenant and would
cause prior irreparable harm to Buyer, that in any event of the breach or
threatened breach of this covenant Buyer will be entitled to equitable relief,
including injunctive relief and specific performance. Such remedy shall not
be the exclusive remedy for any breach of this covenant but will be in
addition to all other remedies available at law or equity.
(b) The Buyer agrees that prior to the Closing and, in the event that
the Buyer is not the successful bidder, after the termination of this
Agreement, it will not disclose confidential information with respect to the
Seller, the Acquired Assets or the Business, for any purpose or reason
whatsoever (except to authorized representatives of the Buyer and to counsel
and other advisers, provided that such advisors (other than counsel) agree to
the confidentiality provisions of this Section 7(b)), unless (i) such
information becomes known to the public generally through no fault of the
Buyer, (ii) disclosure is required by law or the order of any governmental or
regulatory authority under color of law, or (iii) the Buyer reasonably
believes that such disclosure is required in connection with the defense of a
lawsuit or for certification or state licensure purposes; provided, that prior
to disclosing any information pursuant to clauses (ii) or (iii) above, the
Buyer shall, if possible, give prior written notice thereof to the Seller, its
successors or assigns, and provide the Seller, its successors or assigns with
the opportunity to contest such disclosure. Further Buyer acknowledges the
critical importance of maintaining the Proprietary Information as confidential
and agrees that because any award of monetary damages would be inadequate for
any breach of this covenant and would cause prior irreparable harm to Seller,
that in any event of the breach or threatened breach of this covenant Seller
will be entitled to equitable relief, including injunctive relief and specific
performance. Such remedy shall not be the exclusive remedy for any breach of
this covenant but will be in addition to all other remedies available at law
or equity.
8. CONDITIONS TO BUYER'S OBLIGATION
The obligation of Buyer to consummate the transactions to be performed by
it in connection with the Closing is subject to satisfaction of all of the
following conditions (all or any of which may be waived, in whole or in part,
by the Buyer):
(a) The Procedures Order has been entered by the Bankruptcy Court and is
no longer subject to stay, modification, or appeal and has become a final
order.
(b) The Sale Order, in all respects in a form reasonably acceptable to
counsel for Buyer, has been entered by the Bankruptcy Court and either (i) is
no longer subject to stay, modification, or appeal and has become a final
order; or (ii) provides that the ten (10) day periods provided for in Federal
Rules of Bankruptcy Procedure 6004(g) and 6006(d) are waived.
(c) Seller's representations and warranties contained in the Agreement
are true and correct in all material respects as of the Closing Date as though
such representations and warranties were made at such time.
(d) Seller has, in all material respects, performed or complied with, as
the case may be, all obligations, covenants and conditions required by this
Agreement to be performed or complied with by it on or before the Closing
Date.
(e) Seller has executed and delivered the ▇▇▇▇ of Sale, the Assignment
and all other necessary documents.
(f) A duly authorized officer of the Seller has executed and delivered to
Buyer a certificate dated as of the Closing Date certifying as to (c) and (d)
above.
(g) There is no injunction or order of any court or government authority
of competent jurisdiction prohibiting the transactions contemplated by this
Agreement.
(h) Upon consummation of the transactions contemplated by this Agreement,
Buyer will have obtained good title in and to the Acquired Assets.
9. CONDITIONS TO SELLER'S OBLIGATIONS
The obligation of Seller to consummate the transactions to be performed
by it in connection with the Closing is subject to satisfaction of the
following conditions (all or any of which may be waived, in whole or in part,
by Seller):
(a) The Sale Order has been entered by the Bankruptcy Court;
(b) Buyer's representations and warranties contained in the Agreement
are true and correct in all material respects as of the Closing Date as though
such representations and warranties were made at such time;
(c) Buyer has, in all material respects, performed or complied with,
as the case may be, all obligations, covenants and conditions required by this
Agreement to have been performed or complied with in all material respects on
or before the Closing Date;
(d) The Chief Financial Officer or another duly authorized officer of
Buyer has executed and delivered to Seller a certificate dated as of the
Closing Date certifying as to (b) and (c) above; and
(e) There is no injunction or order of any court or government
authority of competent jurisdiction prohibiting the sale.
10. Survival of Representations and Warranties.
The representations and warranties of the parties hereto included or
provided for herein, shall not survive the Closing and there shall be no
liability in respect thereof, whether such liability has accrued prior to the
Closing or after the Closing, on the part of either Party.
11. TERMINATION
(a) At any time before the consummation and completion of the
Closing, this Agreement may be terminated (i) by mutual written agreement of
the Parties; (ii) by Buyer if (A) the Procedures Order has not been entered by
February 12th, 2002, the Auction Hearing Date has not occurred on or before
March 7th, 2002, and the Sale Order has not been entered on or before March
7th, 2002; (B) Closing has not occurred on or before March 15th, 2002; and (C)
any other condition set forth in Section 8 has become incapable of fulfillment
or has not been satisfied on or before March 15th, 2002; (iii) by Seller or
Buyer if a bid or bids for the Acquired Assets by a purchaser other than Buyer
higher and better than the Purchase Price is approved by the Bankruptcy Court
and this agreement does not represent the next best bid.; (iv) by Buyer in the
event of any material breach by Seller of any of Seller's agreements,
representations or warranties contained herein and the failure of Seller to
cure such breach within seven (7) calendar days after receipt of written
notice from a Buyer requesting such breach to be cured; or (v) by Seller in
the event of any material breach by Buyer of any of its agreements,
representations or warranties contained herein and the failure of Buyer to
cure such breach within seven (7) days after receipt of notice from Seller
requesting such breach to be cured.
(b) Effect of Termination. If the Agreement is terminated pursuant to
clause (i) of paragraph (a), all obligations of the Parties shall terminate
without liability of any party to the other, and the Security Deposit (and any
interest thereon) shall be returned to Buyer. If the Agreement is terminated
pursuant to clauses (ii) or (iv) of paragraph (a), such termination is without
prejudice to any other rights Buyer may have with respect to any breach of any
representation, warranty or covenant by Seller, and Buyer shall be entitled to
the immediate return of the Security Deposit (and any interest thereon). If
the Agreement is terminated pursuant to clause (v) of paragraph (a), provided
Seller is not in material breach of any of its agreements, representations or
warranties contained herein, Seller shall be entitled to retain the Security
Deposit as liquidated damages and as the Seller's sole and exclusive remedy
for a breach by Buyer hereunder. If the Agreement is terminated pursuant to
clause (iii) of paragraph (a), Buyer shall be entitled to the Break-Up Fee and
return of the Security Deposit (with interest) and Buyer shall have no further
liability whatsoever. Notwithstanding anything to the contrary in this Section
11(b), the provisions of Section 7(a) and 7(b) shall remain in full force.
THE TERMS AND CONDITIONS OF THIS AGREEMENT ARE SUBJECT TO THE APPROVAL OF
THE BANKRUPTCY COURT AND MAY BE TERMINATED BY BUYER WITHOUT PENALTY IF THIS
AGREEMENT IS NOT APPROVED IN ITS ENTIRETY BY THE COURT WITHOUT MODIFICATION OR
CONTINGENCY.
12. MISCELLANEOUS PROVISIONS
(a) Press Releases and Public Announcements. No party shall issue
any press release or make any public announcement relating to the subject
matter of this Agreement without the prior written approval of the other
party; provided, however, that any party may make any public disclosure it
believes in good faith is required by applicable law as determined by a
written opinion of counsel or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing party will use
commercially reasonable efforts to advise the other party prior to making the
disclosure). In addition, the Parties shall jointly prepare a letter to be
sent to Customers subsequent to the Effective Date to explain Buyer's purchase
of the Acquired Assets and the transition of such contracts.
(b) No Third-Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any person other than the Parties and their
respective successors and permitted assigns.
(c) Entire Agreement. This Agreement and all other documents
referred to herein constitute the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, to the extent they have related in any
way to the subject matter hereof.
(d) Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns, including, in the case of the Seller, a
Chapter 11 trustee in the event such a trustee is appointed, or a Chapter 7
trustee in the event the Chapter 11 Case is converted. No party may assign
either this Agreement or any of its rights, interests, or obligations
hereunder without the prior written approval of the other party; provided,
however, that Buyer may with at least five (5) days' prior written notice to
Seller (i) assign any or all of its rights and interests hereunder to a wholly
owned subsidiary (a "Permitted Designee") and (ii) designate its wholly owned
subsidiary to perform its obligations hereunder (in any or all of which cases
the party hereto nonetheless shall remain responsible for the performance of
all of its obligations hereunder); and provided, however, that the Seller may
assign any of its rights hereunder to any entity after the Closing.
(e) Counterparts; Facsimile Signatures. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an
original but all of which together will constitute one and the same
instrument. Any signature page delivered by facsimile or telecopy shall be
binding to the same extent as an original signature page, with regard to any
agreement subject to the terms hereof or any amendment thereto. Any party who
delivers such a signature page agrees to later deliver an original counterpart
to any party who requests it.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, demands, requests, consents, approvals or
other communications required or permitted to be given with respect to this
Agreement shall be in writing and shall be delivered (charges prepaid,
receipt confirmed or return receipt requested (if available)) by hand, by
internationally and nationally recognized air courier service or by facsimile,
addressed as set forth below or to such other address as such party shall have
specified most recently by written notice. Notice shall be deemed given and
effective (i) if delivered by hand or by internationally or nationally
recognized air courier service, when delivered at the address specified in
this Section 12(g) (or in accordance with the latest unrevoked written
direction from such party) or (ii) if given by facsimile when such facsimile
is transmitted to the facsimile number specified in this Section 12(g) (or in
accordance with the latest unrevoked written direction from such party),
provided, that, appropriate confirmation is received and that any such
facsimile is promptly followed by delivery of written notice delivered by hand
or by internationally or nationally recognized air courier service.
If to the Seller: Copy to:
Nx Networks, Inc. ▇▇▇▇▇▇▇ Berlin Shereff ▇▇▇▇▇▇▇▇, LLP
13595 Dulles technology Drive ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Washington, DC 2000702-4859
Attention: ▇▇▇▇ ▇▇▇▇▇, CEO Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Buyer: Copy to:
▇▇▇▇▇▇▇.▇▇▇ Inc., ▇▇▇▇▇▇▇ & ▇▇▇▇▇ Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇, CEO Attention: ▇▇▇ ▇▇▇▇▇▇▇ Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(h) Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the Commonwealth of Virginia without
giving effect to any choice or conflict of law provision or rule (whether of
Virginia or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the Commonwealth of Virginia
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller. No waiver by any party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Expenses. Except with respect to the Seller's payment of the
Break Up Fee as provided for in Section 6(c)(i), each of the Buyer and the
Seller will bear its own costs and expenses (including legal fees and
expenses) incurred in connection with the Agreement and the transactions
contemplated hereby.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to refer to all rules
and regulations promulgated thereunder, unless the context requires otherwise.
The word "including" shall mean including without limitation.
(m) Incorporation of Exhibits and Schedules. The exhibits and
schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
(n) Exhibits. Any exhibit A through E not attached hereto at time of
signing shall be mutually agreed by the parties prior to Closing.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Parties hereto have executed this Asset Purchase
Agreement as of the date first above written.
"SELLER":
Nx Networks, Inc., a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: CEO
"BUYER":
▇▇▇▇▇▇▇.▇▇▇ Inc., a Maryland corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: President/CEO
SCHEDULES
---------
Schedule 1(a) (i) Operating Bank Accounts:
------------------------------------------
First Union: 2000009212596
First Union: 2000013781068
Schedule 1(a) (ii) Products:
----------------------------
Secure Gateway Routers
3000 Series
Voice Gateways
2200 Series
2201
2210
2214
TSC100
Data Networking Solutions
2510 Series
GT/GTX Series
GT & 3000 Specs
CNX/GTAM
Schedule 1(a) (vi) Patents:
--------------------------
Patent No: 4782485
Patent No: 5018136
Patent No: 5444707
Schedule 4(d) Litigation:
-------------------------
Cabletron Systems Inc., and Enterasys Networks, Inc. v Nx Networks, Inc.,
Openroute Systems Inc., and Aetherworks Corp: Filed ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇: #00-CV-11105.
List of Exhibits
----------------
Exhibit A Escrow Agreement
Exhibit B ▇▇▇▇ of Sale
Exhibit C Assignment
Exhibit D Procedures Order
Exhibit E Sale Order
FORM OF ESCROW AGREEMENT
------------------------
EXHIBIT A: TO ASSET PURCHASE AGREEMENT
--------------------------------------
ESCROW AGREEMENT
----------------
THIS ESCROW AGREEMENT (this "Escrow Agreement"), dated as of February
___, 2002 (the "Effective Date"), is made and entered into by and among
▇▇▇▇▇▇▇.▇▇▇ Inc., a Maryland corporation (the "Buyer"), Nx Networks Inc., a
Delaware corporation, a debtor and debtor-in-possession, or its Permitted
Designee (the "Seller"), and ▇▇▇▇▇▇▇ Berlin Shereff ▇▇▇▇▇▇▇▇, LLP (the "Escrow
Agent").
WHEREAS, the Buyer and the Seller are parties to that certain Asset
Purchase Agreement of even date herewith (the "Asset Purchase Agreement") by
and between the Buyer, or its Permitted Designee, and Seller;
WHEREAS, pursuant to Section 2 of the Asset Purchase Agreement, the Buyer
has agreed to deposit in escrow a Security Deposit payable to the Seller at
the closing of the transactions contemplated by the Asset Purchase Agreement;
and
WHEREAS, it is a condition to the obligations of the Buyer under the
Asset Purchase Agreement that the parties hereto execute and deliver this
Escrow Agreement as of the date hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth below and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto, intending to be legally bound, hereby agree as follows:
1. Definitions. All capitalized terms used but not otherwise defined
herein shall have the meanings set forth in the Asset Purchase Agreement.
2. Appointment and Agreement of Escrow Agent. The Buyer and the Seller
hereby appoint ▇▇▇▇▇▇▇ Berlin Shereff ▇▇▇▇▇▇▇▇, LLP, as, and ▇▇▇▇▇▇▇ Berlin
Shereff ▇▇▇▇▇▇▇▇, LLP hereby agrees to perform the duties of, the Escrow Agent
under this Escrow Agreement. This Escrow Agreement shall be administered, and
the Escrow Amount (as defined in Section 3 below) shall be held by the Escrow
Agent.
3. Deposit of Funds. As of the Effective Date, the Buyer shall have
delivered or caused to be delivered to the Escrow Agent the Security Deposit
of Fifty Thousand and 00/00 United States Dollars ($50,000.00), which
constitutes, together with any interest accrued thereon, a portion of the
Purchase Price, payable pursuant to the Asset Purchase Agreement, by wire
transfer of immediately available funds, when required by and in accordance
with Section 2 of the Asset Purchase Agreement. Such amount (less any funds
disbursed in accordance with the terms of this Escrow Agreement) is herein
referred to as the "Escrow Amount." The Escrow Amount shall be held by the
Escrow Agent in an interest-bearing bank account (the "Escrow Account"), in
accordance with the terms and conditions hereinafter set forth.
4. Disbursement of Escrow Amount. At any time and from time to time
after the Escrow Amount, or any portion thereof, has been deposited hereunder,
if the Escrow Agent receives a notice from the Buyer and the Seller, which
notice has been executed and delivered by each of the Buyer and the Seller and
is substantially in the form attached hereto as Exhibit A (the "Mutual Consent
Notice"), directing that all or any portion of the Escrow Amount shall be
distributed, then the Escrow Agent shall, within two (2) business days after
the receipt of such Mutual Consent Notice (or such later period as directed in
the Mutual Consent Notice), transfer from the Escrow Account as directed in
such Mutual Consent Notice, in immediately available funds, the amount or
amounts specified therein to the person or entity identified therein.
5. Termination. This Escrow Agreement shall automatically terminate on the
date on which the remainder of the Escrow Amount being held in the Escrow
Account has been distributed pursuant to Section 4 hereof.
6. The Escrow Agent.
(a) Obligations.
(i) The obligations of the Escrow Agent are those specifically
provided in this Escrow Agreement. The Escrow Agent shall have no liability
under, and no duty to inquire into, the terms and provisions of any other
agreement between the Buyer and the Seller. The Escrow Agent is acting
hereunder as an accommodation to the Buyer and the Seller. The Escrow Agent's
duties hereunder are purely ministerial in nature, and it shall not incur any
liability in connection with the performance of such duties, except for
willful misconduct or gross negligence. The Escrow Agent may consult with
counsel of its choice.
(ii) The Escrow Agent shall not have any responsibility for the
genuineness or validity of any document or other item deposited with it or of
any signature thereon or for the identity, authority or right of any person
executing or depositing the same and shall not have any liability for acting
in accordance with any written instructions or certificates given to it
hereunder signed by the proper parties.
(b) Resignation and Removal. The Escrow Agent may resign and be
discharged from its duties hereunder at any time by giving at least fifteen
(15) days prior written notice of such resignation to the Buyer and the Seller
and specifying a date upon which such resignation shall take effect; provided
that the Escrow Agent shall continue to serve until its successor accepts the
Escrow Amount. Upon receipt of such notice, a successor escrow agent shall be
appointed by the Buyer and the Seller to become the Escrow Agent hereunder on
the resignation date specified in such notice. If an instrument of acceptance
by a successor escrow agent shall not have been delivered to the Escrow Agent
within thirty (30) days after the giving of such notice of resignation, the
resigning Escrow Agent may petition any court of competent jurisdiction for
the appointment of a successor escrow agent. The Buyer and the Seller, acting
jointly, may at any time substitute a new escrow agent by giving ten (10) days
written notice thereof to the Escrow Agent and paying all Escrow Expenses
(defined below) of the Escrow Agent.
(c) Indemnification. The Buyer and the Seller shall jointly and
severally hold the Escrow Agent harmless from and against and indemnify the
Escrow Agent for any loss, liability, expense, (however no fees as escrow
agent shall be included as expenses), claim or demand arising out of or in
connection with the performance of its obligations in accordance with the
provisions of this Escrow Agreement, except for any of the foregoing arising
out of the gross negligence or willful misconduct of the Escrow Agent and
except for Escrow Expenses. The foregoing indemnities in this Section 6(c)
shall survive the resignation or substitution of the Escrow Agent and the
termination of this Escrow Agreement. The Escrow Agent may not offset this
indemnity against the Escrow Amount.
7. Miscellaneous.
(a) Governing Law. This Escrow Agreement shall be governed by and
construed in accordance with the laws of the District of Columbia exclusive of
the conflict of law principles thereof.
(b) Amendment. This Escrow Agreement may not be amended, modified or
supplemented except upon the execution and delivery of a written agreement
executed by the Buyer, the Escrow Agent, and the Seller.
(c) No Assignment. Neither this Escrow Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any party
hereto without the prior written consent of the other parties hereto.
(d) Waiver; Liability. Any of the terms or conditions of this Escrow
Agreement that may be lawfully waived may be waived in writing at any time by
each party who is entitled to the benefits thereof. Any waiver of any of the
provisions of this Escrow Agreement by any party hereto shall be binding only
if set forth in an instrument in writing signed on behalf of such party. No
failure to enforce any provision of this Escrow Agreement shall be deemed to
or shall constitute a waiver of such provision and no waiver of any of the
provisions of this Escrow Agreement shall be deemed to or shall constitute a
waiver of any other provision hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given by personal
delivery, via reputable overnight courier or by mail (registered or certified
mail, postage prepaid, return receipt requested) to the respective parties as
follows:
If to the Buyer:
▇▇▇▇▇▇▇.▇▇▇ Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇, CEO
Tel.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇ Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇, Esq.
Tel.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Seller:
Nx Networks Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇, CEO
Tel.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇ Berlin Shereff ▇▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, Esq.
Tel.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Escrow Agent:
▇▇▇▇▇▇▇ Berlin Shereff ▇▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
Tel No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other representative or at such other address of a party as such
party hereto may furnish to the other parties in writing. Notices will be
deemed to have been given hereunder when delivered personally or sent via
facsimile, five (5) days after deposit in the U.S. mail and one (1) day after
deposit with a reputable overnight courier service.
(f) Complete Agreement. This Escrow Agreement and the Exhibit
hereto, the Asset Purchase Agreement, and the other certificates, documents
and writings referred to herein, delivered pursuant hereto or executed and
delivered concurrent with the execution and delivery hereof, contain the
entire understanding of the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof. This Escrow
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
(g) Counterparts. This Escrow Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and each of which shall be deemed an original.
(h) Headings. The headings contained in this Escrow Agreement are
for reference only and shall not affect in any way the meaning or
interpretation of this Escrow Agreement.
(i) Severability. Any provision of this Escrow Agreement which is
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction or rendering that or any other provision of this Escrow
Agreement invalid, illegal or unenforceable in any other jurisdiction.
(j) Third Parties. Except as specifically set forth or referred to
herein, nothing herein expressed or implied is intended or shall be construed
to confer upon or give to any person or entity, other than the parties hereto
and their permitted successors or assigns, any rights or remedies under or by
reason of this Escrow Agreement.
(k) No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Escrow Agreement. In the
event an ambiguity or question of intent or interpretation arises, this Escrow
Agreement shall be construed as if drafted jointly by the parties hereto, and
no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any of the provisions of this Escrow
Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as of the day and year first above written.
"SELLER":
NX NETWORKS INC.,
a Delaware corporation
By:
-------------------------------
Name:
Title:
"BUYER":
▇▇▇▇▇▇▇.▇▇▇ INC.,
a Maryland corporation,
By:
-----------------------------
Name:
Title:
"ESCROW AGENT":
▇▇▇▇▇▇▇ BERLIN SHEREFF ▇▇▇▇▇▇▇▇, LLP
By:
----------------------------
Name:
Title:
