STOCK PURCHASE AGREEMENT by and between GOIP GLOBAL, INC., ICS GROUP HOLDINGS INC., SOLELY FOR THE PURPOSE OF ARTICLE 8 AND ARTICLE 10, HC2 HOLDINGS INC. and PTGI INTERNATIONAL CARRIER SERVICES INC. DATED AS OF OCTOBER 2, 2020
Execution Version
by and between
GOIP GLOBAL, INC.,
ICS GROUP HOLDINGS INC.,
SOLELY FOR THE PURPOSE OF ARTICLE 8 AND ARTICLE 10,
HC2
HOLDINGS INC.
and
PTGI INTERNATIONAL CARRIER SERVICES INC.
DATED AS OF OCTOBER 2, 2020
..
TABLE OF CONTENTS
Page
ARTICLE
1 Purchase and sale
|
1
|
|
1.1
|
Purchase
and Sale
|
1
|
1.2
|
Purchase
Price
|
1
|
ARTICLE
2 Closing
|
1
|
|
2.1
|
Closing
|
1
|
2.2
|
Shareholder
Closing Deliverables
|
2
|
2.3
|
Company
Closing Deliverables
|
2
|
2.4
|
Buyer
Closing Deliverables
|
3
|
2.5
|
Manner
of Payment
|
4
|
2.6
|
Withholding
|
4
|
ARTICLE
3 Payment Adjustments
|
4
|
|
3.1
|
Definitions
|
4
|
3.2
|
Net
Estimated Adjustment Amount
|
6
|
3.3
|
Post-Closing
Adjustment
|
6
|
ARTICLE
4 Representations and warranties of the shareholder
|
9
|
|
4.1
|
Organization
|
10
|
4.2
|
Authority
and Enforceability
|
10
|
4.3
|
Title
to Shares
|
10
|
4.4
|
No
Conflict
|
10
|
4.5
|
Legal
Proceedings
|
11
|
4.6
|
United
States Person
|
11
|
4.7
|
Pre-Closing
Reorganization
|
11
|
ARTICLE
5 Representations and warranties of the company
|
11
|
|
5.1
|
Organization
and Qualification of the Company
|
11
|
5.2
|
Authority;
Board Approval
|
11
|
5.3
|
No
Conflicts; Consents
|
12
|
5.4
|
Capitalization
|
12
|
5.5
|
Subsidiaries;
Joint Ventures
|
12
|
5.6
|
Legal
Proceedings; Governmental Orders
|
13
|
5.7
|
Permits
|
14
|
5.8
|
Transactions
with Related Persons
|
15
|
5.9
|
Brokers
|
15
|
i
ARTICLE
6 Representations and warranties of buyer
|
15
|
|
6.1
|
Organization
and Authority of Buyer
|
15
|
6.2
|
No
Conflicts; Consents
|
16
|
6.3
|
Investment
Purpose
|
16
|
6.4
|
Legal
Proceedings
|
16
|
6.5
|
Brokers
|
16
|
ARTICLE
7 Covenants
|
16
|
|
7.1
|
Conduct
of Business Prior to the Closing
|
16
|
7.2
|
Access
to Information
|
17
|
7.3
|
No
Solicitation of Other Bids
|
19
|
7.4
|
Notice
of Certain Events
|
20
|
7.5
|
Confidentiality
|
20
|
7.6
|
Non-competition;
Non-solicitation
|
21
|
7.7
|
Approvals
and Consents
|
22
|
7.8
|
Release
|
23
|
7.9
|
Closing
Conditions
|
24
|
7.1
|
Publicity;
Transaction Disclosure
|
24
|
7.11
|
Benefit
Plans
|
25
|
7.12
|
Litigation
Support
|
25
|
7.13
|
280G
|
25
|
7.14
|
Company
Covenants
|
26
|
7.15
|
Customer
and other Business Relationships
|
26
|
7.16
|
Insurance;
Risk of Loss
|
26
|
7.17
|
Internal
Control over Financial Reporting
|
26
|
7.18
|
Financial
Reporting Cooperation
|
27
|
7.19
|
Further
Assurances
|
27
|
ARTICLE
8 Tax matters
|
27
|
|
8.1
|
Tax
Covenants
|
27
|
8.2
|
Termination
of Existing Tax Sharing Agreements
|
29
|
8.3
|
Tax
Indemnification
|
29
|
8.4
|
Straddle
Period
|
29
|
8.5
|
Contests
|
30
|
8.6
|
Cooperation
and Exchange of Information
|
30
|
8.7
|
Tax
Treatment of Indemnification Payments
|
30
|
8.8
|
Survival
|
30
|
8.9
|
Overlap
|
30
|
ARTICLE
9 Conditions to closing
|
31
|
|
9.1
|
Conditions
to Obligations of All Parties
|
31
|
9.2
|
Conditions
to Obligations of Buyer
|
31
|
9.3
|
Conditions
to Obligations of the Company and the Shareholder
|
32
|
ii
ARTICLE
10 Indemnification
|
33
|
|
10.1
|
Survival
|
33
|
10.2
|
Indemnification
By The Shareholder
|
33
|
10.3
|
Indemnification
By Buyer
|
34
|
10.4
|
Certain
Limitations
|
35
|
10.5
|
Indemnification
Procedures
|
35
|
10.6
|
Manner
of Payments
|
38
|
10.7
|
No
Circular Recovery
|
38
|
10.8
|
Materiality
|
38
|
10.9
|
Tax
Treatment of Indemnification Payments
|
39
|
10.1
|
Exclusive
Remedies
|
39
|
10.11
|
No
Contribution
|
39
|
10.12
|
Separate
Bases for Claim
|
39
|
ARTICLE
11 Termination
|
39
|
|
11.1
|
Termination
|
39
|
11.2
|
Effect
of Termination
|
40
|
ARTICLE
12 Miscellaneous
|
40
|
|
12.1
|
Expenses
|
40
|
12.2
|
Notices
|
41
|
12.3
|
Construction
|
41
|
12.4
|
Severability
|
43
|
12.5
|
Entire
Agreement
|
43
|
12.6
|
[Reserved]
|
43
|
12.7
|
Successors
and Assigns
|
43
|
12.8
|
No
Third-Party Beneficiaries
|
43
|
12.9
|
Amendment
and Modification; Waiver
|
43
|
12.1
|
Governing
Law
|
44
|
12.11
|
Forum
Selection; Consent to Jurisdiction; Waiver of Jury
Trial
|
44
|
12.12
|
Specific
Performance
|
45
|
12.13
|
Counterparts;
Effectiveness
|
45
|
iii
This
STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of
October 2, 2020 entered into by and between GoIP Global, Inc., a
Colorado corporation (“Buyer”), ICS Group
Holdings Inc., a Delaware corporation (the “Shareholder”), solely for
the purpose of Article
8 and Article
10, HC2
Holdings Inc., a Delaware corporation (“Parent”), and PTGI
International Carrier Services Inc., a Delaware corporation (the
“Company”). Annex A hereto contains
definitions of certain initially capitalized terms used in this
Agreement.
RECITALS
WHEREAS, the
Shareholder owns all of the issued and outstanding shares of
capital stock of the Company, consisting of 100 shares of common
stock (the “Shares”); and
WHEREAS, the
Shareholder wishes to sell to Buyer, and Buyer wishes to purchase
from the Shareholder, the Shares, on the terms and subject to the
conditions set forth herein;
NOW,
THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
AGREEMENT
ARTICLE
1
1.1 Purchase and
Sale. On the terms and subject to the
conditions of this Agreement, at the Closing, the Shareholder shall
sell, transfer and deliver the Shares to Buyer, and Buyer shall
purchase the Shares from the Shareholder, free and clear of all
Encumbrances.
1.2 Purchase
Price. The purchase
price for the Shares and for the covenants and agreements of the
Shareholder hereunder shall be one million dollars
($1,000,000) (the “Base Purchase Price”),
subject to the adjustments as hereinafter provided (as so adjusted,
the “Purchase
Price”).
Closing
2.1 Closing. The consummation
of the sale of the Shares pursuant to Article 1 (the
“Closing”) shall be held
virtually (via the exchange of executed documents and other
deliverables by PDF or other means of electronic delivery) rather
than in-person, as promptly as practicable following, but in no
event later than, three (3) Business Days after the date on which
the last of the conditions set forth in Article 9 (other than those
conditions that by their terms are to be satisfied at the Closing,
but subject to the satisfaction or waiver of such conditions at the
Closing) to be satisfied or waived is so satisfied or waived, or by
such other means and/or at such other place, time and date as Buyer
and the Shareholder may agree. All documents delivered and actions
taken at the Closing shall be deemed to have been delivered or
taken simultaneously, and no such delivery or action shall be
considered effective or complete unless or until all other such
deliveries or actions are completed or waived in writing by the
party against whom such waiver is sought to be enforced. The date
on which the Closing is actually held is referred to herein as the
“Closing
Date.” Subject to the provisions of Article 11, the
failure to consummate the Closing on the date and time determined
pursuant to this Section 2.1 shall not result in the termination of
this Agreement and shall not relieve any party to this Agreement of
any obligation under this Agreement. The Closing shall be deemed to
be effective at 11:59 p.m. Eastern Standard Time on the Closing
Date (the “Effective
Time”) for all purposes, except as may otherwise be
expressly provided herein.
-1-
2.2 Shareholder
Closing Deliverables. At or prior to
the Closing, the Shareholder shall deliver to Buyer:
(a) the stock
certificate(s) evidencing all of the Shares, free and clear of all
Encumbrances, duly endorsed in blank or accompanied by stock powers
or other instruments of transfer duly executed in blank and with
all required stock transfer tax stamps affixed;
(b) a certificate
pursuant to Treasury Regulations Section 1.1445-2(b) certifying
that the Shareholder is not a foreign person within the meaning of
Section 1445 of the Code; and
(c) such other
documents or instruments as Buyer reasonably requests and are
reasonably necessary to consummate the Transactions.
2.3 Company Closing
Deliverables. At or prior to
the Closing (or by such other date, if any, as indicated in the
applicable subsection below), the Company shall deliver to Buyer
the following:
(a) resignations of the
directors and officers of the Company, except as Buyer may
otherwise specify;
(b) a certificate,
dated the Closing Date and signed by a duly authorized officer of
Company, that each of the conditions set forth in Section 9.2(a) and
Section 9.2(b)
and Section 9.2(d)
have been satisfied;
(c) a certificate of
the Secretary or an Assistant Secretary (or equivalent officer) of
the Company certifying (i) that attached thereto are true and
complete copies of all resolutions adopted by the board of
directors of the Company authorizing the execution, delivery and
performance of this Agreement and the Transaction Documents and the
consummation of the Transactions, (ii) that all such
resolutions are in full force and effect and are all the
resolutions adopted in connection with the Transactions, and
(iii) the names and signatures of the officers of the Company
authorized to sign this Agreement and the Transaction
Documents;
(d) the certificate of
incorporation (or other equivalent Governing Document) and all
amendments thereto of each Group Company, duly certified as of a
recent date by the secretary of state or similar Governmental
Authority of the jurisdiction under the Laws in which such Group
Company is organized;
(e) a good standing
certificate (or its equivalent) of each Group Company as of a
recent date from the secretary of state or similar Governmental
Authority of the jurisdiction under the Laws in which such Group
Company is organized;
(f) a certificate,
dated the Closing Date and signed by a duly authorized officer of
the Shareholder and the Group Companies, stating that the Related
Party Transactions and Relationships have been terminated and no
Group Company has any residual Liability with respect
thereto;
-2-
(g) to the extent there
exist any Encumbrances (1) on the equity securities of any Group
Company (including the Shares) or (2) on the properties and assets
of any Group Company (other than Permitted Encumbrances) as of the
Closing (the “Group
Company Encumbrances”), fully executed documentation
required in connection with the release of any such Group Company
Encumbrances, in form and substance reasonably satisfactory to
Buyer providing for the discharge in full of all such Group Company
Encumbrances;
(h) a transition
services agreement, in form reasonably acceptable to Buyer and the
Shareholder and covering the services set forth on Exhibit A, duly executed by the
Shareholder, Parent, Buyer and the Company (the “Transition Services
Agreement”);
(i) such certificates
and documents as may be necessary or appropriate to change the
authorized signatories on all bank accounts and safe deposit boxes
maintained by or in the name of the Company;
(j) the original minute
and stock books of each Group Company to the extent such books
exist;
(k) evidence reasonably
satisfactory to Buyer that all of the Company’s interest
(whether by ownership of equity securities, by Contract or
otherwise) in any Excluded Entity has been transferred to the
Shareholder or an Affiliate thereof or otherwise terminated in full
as a result of the dissolution of such Excluded Entity (i) in a
manner that does not result in any Tax Liabilities or any other
adverse Tax consequences for a Post-Closing Tax Period of any Group
Company and (ii) which terminates in full all of the Group
Companies’ Liabilities arising out of or relating to any
Excluded Entity, in each case, as determined by Buyer in good faith
(the “Pre-Closing
Reorganization”); and
(l) such other
documents or instruments as Buyer reasonably requests and are
reasonably necessary to consummate the Transactions.
2.4 Buyer Closing
Deliverables. At the Closing,
Buyer shall deliver to the Shareholder the following:
(a) the Transition
Services Agreement duly executed by Buyer;
(b) a certificate,
dated the Closing Date and signed by a duly authorized officer of
Buyer, that each of the conditions set forth in Section 9.3(a) and
Section 9.3(b)
have been satisfied;
(c) a certificate of
the Secretary or an Assistant Secretary (or equivalent officer) of
Buyer certifying (i) that attached thereto are true and
complete copies of all resolutions adopted by the board of
directors of Buyer authorizing the execution, delivery and
performance of this Agreement and the Transaction Documents and the
consummation of the Transactions, (ii) that all such
resolutions are in full force and effect and are all the
resolutions adopted in connection with the Transactions, and
(iii) the names and signatures of the officers of Buyer
authorized to sign this Agreement and the Transaction
Documents;
-3-
(d) the certificate of
incorporation (or other equivalent Governing Document) and all
amendments thereto of Buyer, duly certified as of a recent date by
the secretary of state or similar Governmental Authority of the
jurisdiction under the Laws in which Buyer is
organized;
(e) the Closing
Purchase Price in the manner provided in Section 2.5; and
(f) such other
documents or instruments as the Shareholder reasonably requests and
are reasonably necessary to consummate the
Transactions.
2.5 Manner of
Payment. The Closing
Purchase Price shall be paid to the Shareholder at Closing by wire
transfer of immediately available funds to an account designated by
the Shareholder at least three (3) Business Days prior to the
Closing.
2.6 Withholding. Buyer shall be
entitled to deduct and withhold from the consideration or other
amounts otherwise payable pursuant to this Agreement to any Person
such amounts as they are required to deduct and withhold with
respect to such payment under the Code, or any provision of state,
local or foreign law. To the extent that amounts are so withheld by
Buyer, such withheld amounts shall be (a) paid to the appropriate
Tax authority and (b) treated for all purposes of this Agreement as
having been paid to the appropriate recipient in respect of which
such deduction and withholding was made by Buyer.
Payment
Adjustments
(a) “Accounting Principles”
means GAAP and, to the extent not inconsistent with GAAP, using the
same accounting methods, practices, principles, policies and
procedures, with consistent classifications, judgments and
valuation and estimation methodologies that were used in the
preparation of the Company’s financial statements for the
most recent fiscal year end.
(b) “Closing Company Net
Equity” means the Company Net Equity as of the
Effective Time as determined in accordance with Section 3.3
hereof.
(c) “Closing Company Transaction
Expenses” means Company Transaction Expenses that
remain unpaid as of immediately prior to the Closing (but inclusive
of all amounts that will or may become due at or following the
Closing wholly or partially by reason of the
Transactions).
(d) “Company Net Equity”
means, as of any date of determination, (i) the sum of the Group
Companies’ cash, accounts receivable, net, and all other
assets (other than PPE), less (ii) the sum of the Group
Companies’ accounts payable and other accrued expenses, net,
and liabilities, as would be shown on a consolidated balance sheet
of the Group Companies prepared in accordance with the Accounting
Principles; provided that such calculation
shall (w) exclude all intercompany receivables owed by one Group
Company to another and all payables owed by one Group Company to
another, (x) exclude equipment, (y) include accrued employee
bonuses as a liability (provided further that, if the calculation
of Company Net Equity would otherwise be less than negative Three
Hundred Seventy-Five Thousand Dollars (-$375,000), the accrued
bonuses payable to employees, shall be reduced on a
dollar-for-dollar basis to the extent necessary and available to
cause Company Net Equity to equal negative Three Hundred
Seventy-Five Thousand Dollars (-$375,000)), it being understood
that neither Buyer nor any Group Company shall be liable for (and
to the extent there is any Action in connection therewith, the
Shareholder shall indemnify Buyer for) such accrued bonuses that
are reduced pursuant to this clause (y) and therefore not paid to
the applicable employee(s), and (z) shall otherwise be performed in
accordance with the terms of Exhibit B attached
hereto.
-4-
(e) “Company Net Equity Collar
Range” means any amount that is both (i) greater than
or equal to the Lower Target Company Net Equity and (ii) less than
or equal to the Upper Target Company Net Equity.
(f) “Company Transaction
Expenses” means the aggregate amount of (a) all fees
and expenses incurred by any Group Company prior to Closing, or
arising out of any contract or commitment entered into by a Group
Company prior to the Closing (other than this Agreement or any
other Transaction Document), in connection with the negotiation,
preparation, execution and performance of this Agreement and the
Transaction Documents, and the Transactions, including all legal,
financial advisory, accounting, consulting and other fees and
expenses and any broker’s or finder’s fees, (b) all
amounts (plus any associated withholding Taxes or any Taxes
required to be paid by any Group Company with respect thereto)
payable by the Company, whether immediately or in the future, under
any “change of control,” retention, termination,
compensation, severance or other similar arrangements by reason of
(either alone or in conjunction with any other event, such as
termination or continuation of employment) the consummation of the
Transactions or any Transaction Document (including such amounts
payable to any employee of any Group Company at the election of
such employee pursuant to any such arrangements but excluding any
amounts payable with respect to the termination of employee by a
Group Company following the Closing); provided that any such amounts
shall not be deemed to be a Company Transaction Expense to the
extent included as a liability in the calculation of the Company
Net Equity.
(g) “Excess Transaction Expense Reduction
Amount” means (i) the Closing Company Transaction
Expenses, if the Closing Company Net Equity is lower than negative
five hundred thousand dollars (-$500,000) or (ii) $0, if the
Closing Company Net Equity is equal to or greater than negative
five hundred thousand dollars (-$500,000).
(h) “Lower Target Company Net
Equity” means negative Two Hundred Fifty Thousand
Dollars (-$250,000).
(i) “Upper Target Company Net
Equity” means Zero Dollars ($0).
(a) At least five (5)
Business Days prior to the Closing Date, the Company shall prepare
and deliver to Buyer a written statement (the form and substance of
which shall be subject to Buyer’s approval, which approval
shall not to be unreasonably withheld) (the “Estimated Closing
Statement”) that includes a good-faith estimate of the
Company Net Equity as of the Closing Date (the “Estimated Closing Net
Equity”) and a good faith estimate of the Closing
Company Transaction Expenses (the “Estimated Closing Company Transaction
Expenses”), and the calculation of the Closing
Purchase Price, in each case, with reasonable supporting
detail.
(i) (x) if the
Estimated Closing Net Equity is less than the Lower Target Company
Net Equity, then minus the amount, if any, by
which the Estimated Closing Net Equity is less than the Lower
Target Company Net Equity (the “Estimated Closing Net Equity
Deficit”) or (y) if the Estimated Closing Net Equity
exceeds the Upper Target Company Net Equity, then plus the amount, if any, by
which the Estimated Closing Net Equity exceeds the Upper Target
Company Net Equity (any such amount, the “Estimated Closing Net Equity
Surplus”) (it being understood that if the Estimated
Closing Net Equity falls within the Company Net Equity Collar
Range, then the adjustment pursuant to this clause (i) shall be
$0);
-5-
(ii) minus (x) the Estimated Closing
Company Transaction Expenses, if the Estimated Closing Net Equity
is lower than negative five hundred thousand dollars (-$500,000) or
(y) $0, if the Estimated Closing Net Equity is equal to or greater
than negative five hundred thousand dollars (-$500,000) (the
“Estimated Excess
Transaction Expense Reduction Amount”).
(a) On the
120th day
following the Closing Date, Buyer shall prepare, or cause to be
prepared, and deliver to the Shareholder within 10 days thereafter
a written statement (the “Closing Statement”) that
shall include a calculation of (i) the Company Net Equity as of the
Closing Date (which calculation shall (A) exclude the amount of any
account receivable outstanding as of the Effective Time but which
has not been paid as of the 120th day following the
Closing Date (the “Ineligible Accounts
Receivable”) and (B) include the amount of any
accounts receivable to the extent payments are actually received by
the Group Companies after the Effective Time with respect to such
accounts receivable, even if any such payment would not be properly
included, in accordance with the Accounting Principles, as part of
the Group Companies’ cash or accounts receivable in existence
at the Effective Time), (ii) Closing Company Transaction Expenses
and (iii) the Net Adjustment Amount, each with reasonable
supporting detail.
(b) During the 30
day period following
Buyer’s delivery of the Closing Statement to the Shareholder
(the “Review
Period”), Buyer shall provide the Shareholder and its
Representatives reasonable access to the relevant books and records
of the Group Companies for the purpose of facilitating the
Shareholder’s review of the Closing Statement. The Closing
Statement shall become final and binding on the last day of the
Review Period, unless on or before the last day of the Review
Period, the Shareholder delivers to Buyer a written notice of
disagreement (a “Notice of Disagreement”),
which shall set forth in reasonable detail (i) the items or amounts
with which the Shareholder disagrees and the basis for such
disagreement (which disagreement shall be limited to mathematical
errors, the asserted failure of such calculation of the Closing
Statement to be made in accordance with the terms of this
Article 3 or a
determination as to whether any other relevant requirements have
been satisfied) and (ii) the Shareholder’s proposed
adjustments to the Closing Statement. The Shareholder shall be
deemed to have agreed with all items and amounts in the Closing
Statement not specifically referenced in a Notice of Disagreement
provided to Buyer on or before the last day of the Review
Period.
(c) During the 30
day period following delivery of a Notice of Disagreement by the
Shareholder to Buyer (the “Resolution Period”), such
parties in good faith shall seek to resolve in writing any
differences that they may have with respect to the computation of
the amounts as specified therein. Any disputed items resolved in
writing between the Shareholder and Buyer within the Resolution
Period shall be final and binding on the parties for all purposes
hereunder. If the Shareholder and Buyer have not resolved all such
differences by the end of the Resolution Period, the Shareholder
and Buyer shall submit, in writing, such differences to the New
York City office of the Accounting Expert. The “Accounting Expert” shall
be PricewaterhouseCoopers LLP, or, in the event that it is not
available or is not a Neutral Accounting Firm, a Neutral Accounting
Firm selected by mutual agreement of Buyer and the Shareholder;
provided, however, that (i)
if, within fifteen (15) days after the end of the Resolution
Period, such parties are unable to agree on a Neutral Accounting
Firm to act as the Accounting Expert, then each party shall select
a Neutral Accounting Firm and such firms together shall select the
Neutral Accounting Firm to act as the Accounting Expert, and (ii)
if any party does not select a Neutral Accounting Firm within ten
(10) days of written demand therefor by the other party, then the
Neutral Accounting Firm selected by the other party shall act as
the Accounting Expert. A “Neutral Accounting Firm”
means an independent accounting firm of nationally recognized
standing that is not at the time it is to be engaged hereunder
rendering services to any party hereto, or any Affiliate of any
party hereto, and has not done so within the two year period prior
thereto.
-6-
(d) The parties shall
arrange for the Accounting Expert to agree in its engagement letter
to act in accordance with this Section 3.3(d). The parties
shall make readily available to the Accounting Expert all relevant
books and records within such party’s control reasonably
requested by the Accounting Expert. Each party shall present a
brief to the Accounting Expert (which brief shall also be
concurrently provided to the other party) within 20 days of the
appointment of the Accounting Expert detailing such party’s
views as to the correct nature and amount of each item remaining in
dispute from the Notice of Disagreement (and for the avoidance of
doubt, no party may introduce a dispute to the Accounting Expert
that was not originally set forth on the Notice of Disagreement).
Within 10 days of receipt of the brief, the receiving party may
present a responsive brief to the Accounting Expert (which
responsive brief shall also be concurrently provided to the other
party). Each party may make an oral presentation to the Accounting
Expert (in which case, such presenting party shall notify the other
party of such presentation, and the other party shall have the
right to be present (and speak) at such presentation), within 45
days of the appointment of the Accounting Expert. The Accounting
Expert shall have the opportunity to present written questions to
either party, a copy of which shall be provided to the other party.
There shall be no ex parte communications between any party (or its
Representatives), on the one hand, and the Accounting Expert, on
the other hand, relating to any disputed matter and unless
requested by the Accounting Expert in writing, no party may present
any additional information or arguments to the Accounting Expert,
either orally or in writing. The Accounting Expert shall consider
only those items and amounts in the Shareholder’s and
Buyer’s respective calculations that are identified as being
items and amounts to which the Shareholder and Buyer have been
unable to agree, and shall act as an expert only (and thus not as
an arbitrator). In resolving any disputed item, the Accounting
Expert may not assign a value to any item greater than the greatest
value for such item claimed by either Buyer or the Shareholder, or
less than the smallest value for such item claimed by either Buyer
or the Shareholder. The Accounting Expert shall make a written
determination within 60 days of its appointment as to each such
disputed item, which determination shall be final and binding on
the parties for all purposes hereunder absent manifest mathematical
error or manifest disregard for the provisions of this Article 3 (and, in the event of
such manifest error or disregard, the written determination shall
be referred back to the Accounting Expert to correct the same).
Notwithstanding the foregoing, the Accounting Expert shall have no
authority to resolve any dispute regarding the interpretation of
any provision of this Agreement or whether Buyer, Company or
Shareholder has breached any covenant contained herein, it being
understood and agreed that any such dispute shall be resolved
solely as provided in Section 10.10. All fees and
expenses of the Accounting Expert in resolving the dispute shall be
allocated between the Shareholder, on the one hand, and Buyer, on
the other hand, such that the amount paid by the Shareholder bears
the same proportion that the aggregate dollar amount unsuccessfully
disputed by the Shareholder bears to the total dollar amount of the
disputed items that were submitted for resolution to the Accounting
Expert, and Buyer shall pay the balance. For purposes of
illustration only, if the Closing Company Net Equity is disputed to
be $1,000 by the Shareholder and $900 by Buyer, and the Closing
Company Net Equity is determined by the Accounting Expert to be
$940, then the Shareholder would bear 60% of the fees and expenses
of the Accounting Expert because the amount disputed was $100 and
the amount unsuccessfully disputed by the Shareholder was
$60.
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(i) (x) if the Closing
Net Equity is less than the Lower Target Company Net Equity, then
minus the amount,
if any, by which the Closing Net Equity is less than the Lower
Target Company Net Equity or (y) if the Closing Net Equity exceeds
the Upper Target Company Net Equity, then plus the amount, if any, by
which the Closing Net Equity exceeds the Upper Target Company Net
Equity (it being understood that if the Closing Net Equity falls
within the Company Net Equity Collar Range, then the adjustment
pursuant to this clause (i) shall be $0);
(ii) minus the Estimated Closing Net
Equity Surplus or plus the absolute value of the Estimated Closing
Net Equity Deficit, as applicable;
(iii) minus the amount, if any, by
which the Excess Transaction Expense Reduction Amount exceeds the
Estimated Excess Transaction Expense Reduction Amount or
plus the amount, if
any, by which the Estimated Excess Transaction Expense Reduction
Amount exceeds the Excess Transaction Expense Reduction
Amount.
(f) If the Net
Adjustment Amount is positive, Buyer shall promptly (and in no
event later than five (5) Business Days following the final
determination of the Net Adjustment Amount) pay such Net Adjustment
Amount to the Shareholder, by wire transfer of immediately
available funds to an account designated in writing by the
Shareholder.
(g) If the Net
Adjustment Amount is negative (in which case the
“Net Adjustment
Amount” shall be deemed to be equal to the absolute
value of such amount), the Shareholder shall promptly (and in no
event later than five (5) Business Days following the final
determination of the Net Adjustment Amount) pay the lesser of (i)
such Net Adjustment Amount, and (ii) the Base Purchase Price, to
Buyer, by wire transfer of immediately available funds to an
account designated in writing by Buyer.
(h) The Purchase Price
shall automatically be deemed increased by any Net Adjustment
Amount payment made by Buyer to Shareholder and shall automatically
be deemed reduced by any Net Adjustment Amount payment made by
Shareholder to Buyer.
(i) Notwithstanding
anything to the contrary set forth herein, and for the avoidance of
doubt, the parties hereby acknowledge and agree that no adjustments
otherwise required to be made to the Base Purchase Price or the
Purchase Price pursuant to this Article 3 shall reduce the
Purchase Price to an amount which is less than $500,000.00, except
in the event of fraud or intentional misrepresentation in
connection with the preparation of the Estimated Closing
Statement.
(j) Any payment
received by the Group Companies or the Buyer with respect to an
Ineligible Accounts Receivable during the one year period following
the Closing Date shall be immediately remitted by the Buyer or the
applicable Group Company to the Shareholder.
(k) Following the
Effective Time, the Buyer shall, or shall cause the Group Companies
to, use commercially reasonable means consistent with the credit
and collection practices used by the Group Companies prior to the
Effective Time, to promptly collect all of the Group Companies
accounts receivable outstanding as of the Effective Time and the
Buyer shall not agree, or permit any Group Company to agree, to
compromise or adjust in any manner any such account receivable
without the prior written consent of the Shareholder.
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(l) Following the
Effective Time, all payments received by a Group Company from any
customer shall be applied to the oldest outstanding account
receivable of such customer (but only to the extent that such
account receivable is not then subject to an unresolved
dispute).
ARTICLE
4
The
Shareholder hereby represents and warrants to Buyer that the
statements contained in this Article 4 are true and correct
on the date hereof and shall be true and correct on the Closing
Date as if made thereon:
4.1 Organization. The Shareholder
(i) is a corporation duly organized, validly existing and in
good standing under the laws of the state of Delaware and
(ii) has all necessary corporate power and corporate authority
to carry on its business, and to own or use the properties and
assets that it purports to own or use.
4.2 Authority and
Enforceability. The Shareholder
has all requisite power and authority, and has taken all action
necessary, to execute and deliver this Agreement and each
Transaction Document and to perform its obligations hereunder and
thereunder. This Agreement has been, and each Transaction Document
will be prior to the Closing, duly authorized, executed and
delivered by the Shareholder, and this Agreement constitutes, and
each Transaction Document when so executed and delivered will
constitute, the legal, valid and binding obligations of the
Shareholder, enforceable against the Shareholder in accordance with
their terms, except as enforceability may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of
creditors’ rights generally.
(a) The Shareholder is
the record and beneficial owner of, and has good and valid title
to, the Shares, free and clear of all Encumbrances. The Shareholder
is not a party to any option, warrant, right, contract, call, put
or other agreement or commitment providing for the disposition or
acquisition of any of the Shares (other than this Agreement). The
Shareholder does not have any other debt or ownership interest in
any Group Company.
(b) Other than this
Agreement, the Shares are not subject to any voting trust agreement
or other Contract restricting or otherwise relating to the voting,
dividend rights or other disposition of the Shares.
4.4 No Conflict. The execution and
delivery by the Shareholder of this Agreement and each Transaction
Document, and the performance by it of any actions contemplated
hereunder or thereunder, does not and will not, directly or
indirectly (with or without notice or lapse of time):
(a) Conflict with or
violate any provision of the Governing Documents of the
Shareholder;
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(b) Require notice,
consent or approval under, conflict with, violate, result in a
breach of, result in the acceleration of obligations, loss of a
benefit or increase in Liabilities or fees under, create in any
Person the right to terminate, cancel or modify, or cause a default
under or give rise to any rights or penalties under (i) any
provision of Law relating to the Shareholder, (ii) any
provision of any Governmental Order to which the Shareholder or any
of its properties are subject, (iii) any provision of any
Contract to which the Shareholder or its properties are bound, or
(iv) any other restriction of any kind or character to which
the Shareholder or its properties are subject; or
(c) Require a
registration, filing, application, notice, consent, approval,
order, qualification or waiver with, to or from any Governmental
Authority except (i) the filing of the FCC Applications and the
receipt of the FCC Consent, and (ii) the filing of the PUC
Applications and the receipt of the PUC Consents.
4.5 Legal
Proceedings. There are no
Actions pending or, to the Shareholder’s knowledge,
threatened against or by the Shareholder or any of its Affiliates
or Related Persons that challenge or seek to prevent, enjoin or
otherwise delay the Transactions.
4.6 United States
Person. The Shareholder
is a United States Person (as defined in Section 7701(a)(3) of
the Code).
4.7 Pre-Closing
Reorganization. The Pre-Closing
Reorganization will not qualify as a tax-free reorganization under
Code Section 368 or a tax-free spin off under Code Section 355 for
U.S. federal income tax purpose and Shareholder agrees to treat it
and to cause the Group Companies to treat it as a taxable
transaction for U.S. federal, state and local income tax
purposes.
Representations
and warranties of the company
The
Company hereby represents and warrants to Buyer that the statements
contained in this Article
5 are true and correct on the date hereof and shall be true
and correct on the Closing Date as if made thereon:
5.1 Organization and Qualification of the
Company. The Company is a
corporation duly organized, validly existing and in good standing
under the Laws of the State of Delaware and has full corporate
power and authority to own, operate or lease the properties and
assets now owned, operated or leased by it and to carry on its
business as it has been and is currently conducted. Go2Tel is a
corporation duly organized, validly existing and in good standing
under the Laws of the State of Florida and has full corporate power
and authority to own, operate or lease the properties and assets
now owned, operated or leased by it and to carry on its business as
it has been and is currently conducted. Section 5.1 of the Disclosure
Schedule sets forth each jurisdiction in which each Group Company
is licensed or qualified to do business, and each Group Company is
duly licensed or qualified to do business and is in good standing
in each jurisdiction in which the properties owned or leased by it
or the operation of its business as currently conducted makes such
licensing or qualification necessary, except where the failure to
be so qualified would not have a Material Adverse
Effect.
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5.2 Authority;
Board Approval. The Company has
full corporate power and authority to enter into and perform its
obligations under this Agreement and the Transaction Documents to
which it is a party and to consummate the Transactions. The
execution, delivery and performance by the Company of this
Agreement and the Transaction Documents and the consummation by the
Company of the Transactions have been duly authorized by all
requisite corporate action on the part of the Company and no other
corporate proceedings on the part of the Company are necessary to
authorize the execution, delivery and performance of this Agreement
or to consummate the Transactions. This Agreement has been duly
executed and delivered by the Company, and (assuming due
authorization, execution and delivery by each other party) this
Agreement constitutes a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its
terms, except as enforceability may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of
creditors’ rights generally. When each Transaction Document
to which the Company is or will be a party has been duly executed
and delivered by the Company (assuming due authorization, execution
and delivery by each other party thereto), such Transaction
Document will constitute a legal and binding obligation of the
Company enforceable against it in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors’ rights
generally.
5.3 No Conflicts;
Consents. The execution and
delivery by the Company of this Agreement and each Transaction
Document, and the performance by it of any actions contemplated
hereunder or thereunder, does not and will not, directly or
indirectly (with or without notice or lapse of time), conflict with
or violate any provision of the Governing Documents of any
Group Company.
(a) The authorized
capital stock of the Company consists of 10,000 Shares, of which
100 Shares are issued and outstanding as of the close of business
on the date of this Agreement.
(b) All of the Shares
are owned beneficially and of record by the Shareholder, free, and
clear of all Encumbrances. The Shares represent 100% of the
outstanding ownership interests in the Company. All of the Shares
have been duly authorized, are validly issued, fully paid, and
non-assessable and have been offered, issued and transferred
without violation of any preemptive right or other right to
purchase and were issued and/or transferred in compliance with all
applicable Laws, the Governing Documents of the Company and the
Contracts to which the Company is a party or otherwise bound. Other
than the Shares, there are no other equity or other ownership
interests in the Company or outstanding securities convertible or
exchangeable into ownership interests of the Company, including any
other options, warrants, purchase rights, preemptive rights,
subscription rights, conversion rights, exchange rights, calls,
puts, rights of first refusal, right of first offer, anti-dilution
protections, obligations, commitments, plans or other Contracts or
similar rights that could require the Company to issue, sell or
otherwise cause to become outstanding or to acquire, repurchase or
redeem (or establish a sinking fund with respect to redemption)
ownership interests in the Company or require the Company to make
any payments based on the price or value of the Shares or dividends
paid thereon. No holder of Indebtedness of the Company has any
right to vote or to convert or exchange such Indebtedness for
ownership interests of the Company. There are no outstanding or
authorized equity appreciation, contingent value, phantom equity,
profit participation, or similar rights with respect to the
Company. There are no voting trusts, proxies, or other Contracts
with respect to the voting of the ownership interests of the
Company. Upon consummation of the Transactions, Buyer will be the
sole owner, beneficially and of record, of 100% of the issued and
outstanding equity interests of the Company, free and clear of any
Encumbrances.
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(c) The Company has
delivered to Buyer copies of the Governing Documents of the Company
and all minute books of the Company.
5.5 Subsidiaries; Joint
Ventures. Section 5.5(a) of the
Disclosure Schedule sets forth for each Subsidiary of the Company,
(i) the authorized capital stock or other ownership interests of
such Subsidiary, and (ii) the number of issued, allotted and
outstanding shares of capital stock or other ownership interests of
each class of its capital, the names of the record and beneficial
holders thereof and the number of shares or other ownership
interests held by each such holder. All of the issued, allotted and
outstanding shares of capital stock or other ownership interests of
each Subsidiary of the Company have been duly authorized, are
validly issued and allotted, fully paid, and non-assessable and
have been offered, issued, allotted and transferred without
violation of any preemptive rights or other right to purchase and
were issued and/or transferred in compliance with all applicable
Laws, the Governing Documents of the Subsidiary and the Contracts
to which the Subsidiary is a party or otherwise bound. There are no
other capital stock or other ownership interests in any of the
Company’s Subsidiaries or outstanding securities convertible
or exchangeable into capital stock or other ownership interests of
such Subsidiaries, including any options, warrants, purchase
rights, preemptive rights, subscription rights, conversion rights,
exchange rights, calls, puts, rights of first refusal, rights of
first offer, anti-dilution protections, obligations, commitments,
plans or other Contracts or similar rights that could require the
Company or any of its Subsidiaries to issue, sell or otherwise
cause to become outstanding or to acquire, repurchase or redeem (or
establish a sinking fund with respect to redemption) capital stock
or any other ownership interests in any such Subsidiary or require
the Company or any of its Subsidiaries to make any payments based
on the price or value of any securities or instruments set forth on
Section 5.5(a) of
the Disclosure Schedule or dividends paid thereon. No holder of
Indebtedness of the Company or any of its Subsidiaries has any
right to vote or to convert or exchange such Indebtedness for
capital stock or other ownership interests of any of the
Company’s Subsidiaries. There are no outstanding or
authorized equity appreciation, contingent value, phantom equity,
profit participation, or similar rights with respect to any of the
Company’s Subsidiaries. There are no voting trusts, proxies,
or other Contracts with respect to the voting of the capital stock
or other ownership interests of the Company’s Subsidiaries.
Upon consummation of the transactions contemplated hereby, Company
will be the sole owner, beneficially and of record, directly or
indirectly, of 100% of the issued and outstanding capital stock or
other ownership interests of the Company’s Subsidiaries, free
and clear of any Encumbrances. Except as set forth on Section 5.5(a) of the
Disclosure Schedule, the Company does not have any direct or
indirect Subsidiaries and does not own directly or indirectly any
capital stock or other equity interest in any other
Person.
(a) Section 5.6(a) of the
Disclosure Schedule identifies and provides a summary of the status
and material claims involved in each Action that is currently or in
the past five years was pending, or, to the Company’s
Knowledge, is currently threatened, against or by any Group Company
(or any of its Representatives with respect to their business
activities on behalf of any Group Company) affecting any of its
properties or assets. Except as set forth in such Section 5.6(a) of the
Disclosure Schedule, the Group Companies have insurance that will
cover all Losses that may be incurred by any Group Company in
connection with each such pending Action.
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(b) There are no
Actions pending or, to the Company’s Knowledge, threatened
against or by any Group Company that challenges or seeks to
prevent, enjoin or otherwise delay the Transactions. No event has
occurred or circumstances exist that may give rise to, or serve as
a basis for, any such Action.
(c) There are no, nor
in the past five (5) years have there been any, outstanding
Governmental Orders and no unsatisfied judgments, penalties or
awards against or affecting any Group Company (or any of its
Representatives with respect to their business activities on behalf
of the Group Companies) or any of its properties or assets. No
event has occurred or circumstances exist that may constitute or
result in (with or without notice or lapse of time) a violation of
any such Governmental Order.
(a) The Group Companies
(i) hold, and are in compliance in all material respects with
the terms of, all Permits that are necessary to enable the Group
Companies to conduct their business, including all licenses or
authorizations issued by the FCC and all certificates of public
convenience and necessity or similar instruments issued by any
State PUC and all material franchises, ordinances and other
agreements granting access to public rights of way
(“Communications
Authorizations”), all of which are listed on
Section 5.7(a) of
the Disclosure Schedule, (ii) have not received any notice of
the institution of any Action to revoke any such Permits or
alleging that any Group Company fails to hold such Permits,
(iii) have not received any notice that any loss or expiration
of any Permit is pending, other than expiration in accordance with
the terms thereof, and (iv) have no Knowledge of any
threatened or reasonably foreseeable loss or expiration of any
Permit, other than expiration in accordance with the terms thereof.
The Permits are valid and in full force and effect and the
Communications Authorizations are not subject to any conditions or
requirements that are not generally imposed by the FCC or
applicable State PUC upon holders of such Communications
Authorizations. None of the Permits will be terminated or impaired
or become terminable as a result of the Transactions. Subject to
obtaining the required consents set forth in Section 7.7(d), all
Communications Authorizations will not be adversely affected by,
and will remain valid and in full force and effect immediately
following, the consummation of the Transactions. Each
Communications Authorization and all proceeds thereof are free and
clear of all Encumbrances and no other Person has any right, title
or interest in or with respect to any Communications
Authorization.
(b) Without limiting
the foregoing clause (a), and except as set forth in Schedule 5.7(b), during the
last five years, each Group Company has timely submitted, as
applicable, all required regulatory reports, forms, notices, and
certifications required by applicable Communications Laws,
including, without limitation (i) FCC Forms 499-A and 499-Q, the
annual telecommunications reporting worksheets, (ii) the annual
customer proprietary network information compliance certification,
(iii) FCC Form 477 for local telephone competition and broadband
reporting and (iv) annual report filings required by any relevant
State PUC. No Group Company has incurred, or if incurred has fully
discharged, any fine, charge, forfeiture, penalty, or other
liability, nor have they made a voluntary contribution to the U.S.
treasury resulting from the violation of any Communications Laws.
Each Group Company has paid in full all required contributions,
Taxes and fees (including, without limitation, universal service
contributions to any applicable Governmental Authorities), required
by any Communications Law to have been paid prior to the date
hereof applicable to the business of the Group
Companies.
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5.8 Transactions
with Related Persons. Except as set
forth in Section
5.8 of the Disclosure Schedule (the items so disclosed, the
“Related Party
Transactions and Relationships”), neither the
Shareholder nor any Affiliate thereof, nor, to the Knowledge of the
Shareholder, any of their respective Representatives:
(a) owns or has an
interest in, directly or indirectly, any property, asset or right
used by any Group Company;
(b) owes any money to
or is owed any money by any Group Company (other than accrued
compensation in the case of employees of the Group
Companies);
(c) provides goods or
services to any Group Company (other than the employees of the
Group Companies);
(d) is a party to a
Contract, or is involved in any business arrangement or other
relationship, with any Group Company (whether written or
oral);
(e) has pledged any
assets, posted any letters of credit or guaranteed any obligations
on behalf of any Group Company (nor has any Group Company pledged
any assets, posted any letters of credit or guaranteed any
obligations on behalf of any such Person); or
(f) has any claim or
cause of action against any Group Company.
5.9 Brokers. Except as set
forth in Section
5.9 of the Disclosure Schedule, no broker, finder or
investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the Transactions or any
other transactions, whether past, present or future, based upon
arrangements made by or on behalf of any Group Company or the
Shareholder.
Representations
and warranties of buyer
Buyer
hereby represents and warrants to the Company and the Shareholder
that the statements contained in this Article 6 are true and correct
on the date hereof and shall be true and correct on the Closing
Date as if made thereon.
6.1 Organization and Authority of
Buyer. At the time of
the execution of this Agreement by Buyer, Buyer is a corporation
duly organized, validly existing and in good standing under the
Laws of the State of Colorado, and, as of immediately prior to the
Effective Time, Buyer will be a corporation duly organized, validly
existing and in good standing under the Laws of the State of
Delaware. Buyer has full corporate power and authority to enter
into this Agreement and the other Transaction Documents to which
Buyer is a party, to carry out its obligations hereunder and
thereunder and to consummate the Transactions. The execution and
delivery by Buyer of this Agreement and any other Transaction
Document to which Buyer is a party, the performance by Buyer of its
obligations hereunder and thereunder and the consummation by Buyer
of the Transactions have been duly authorized by all requisite
corporate action on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer, and (assuming due authorization,
execution and delivery by the Shareholder and the Company) this
Agreement constitutes a legal, valid and binding obligation of
Buyer enforceable against Buyer in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency
or similar laws affecting the enforcement of creditors’
rights generally. When each other Transaction Document to which
Buyer is or will be a party has been duly executed and delivered by
Buyer (assuming due authorization, execution and delivery by each
other party thereto), such Transaction Document will constitute a
legal and binding obligation of Buyer enforceable against it in
accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency or similar laws affecting the enforcement
of creditors’ rights generally.
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6.2 No
Conflicts; Consents. The execution and
delivery by Buyer of this Agreement and each Transaction Document,
and the performance by it of any actions contemplated hereunder or
thereunder, does not and will not, directly or indirectly (with or
without notice or lapse of time) conflict with or violate any
provision of the Governing Documents of Buyer.
6.3 Investment
Purpose. Buyer will
acquire the Shares solely for its own account for investment
purposes and not with a view to, or for offer or sale in connection
with, any distribution thereof.
6.4 Legal
Proceedings. There are no
Actions pending or, to Buyer’s knowledge, threatened against
or by Buyer or any Affiliate of Buyer that challenge or seek to
prevent, enjoin or otherwise delay the Transactions.
6.5 Brokers. Except for such
amounts as Buyer shall pay, no broker, finder or investment banker
is entitled to any brokerage, finder’s or other fee or
commission in connection with the Transactions or any other
Transaction Document based upon arrangements made by or on behalf
of Buyer.
Covenants
7.1 Conduct of Business Prior to the
Closing. From the date
hereof until the Closing, except as otherwise provided in this
Agreement, required to complete the Pre-Closing Reorganization or
consented to in writing by Buyer (which consent shall not be
unreasonably withheld or delayed), each Group Company shall
(a) conduct the business of the Group Companies in the
Ordinary Course of Business; and (b) use its reasonable best
efforts to maintain and preserve intact the current organization,
business and franchise of the Group Companies and to preserve the
rights, franchises, goodwill and relationships of its employees,
customers, lenders, suppliers, regulators and others having
business relationships with the Group Companies. Without limiting
the foregoing, from the date hereof until the Closing Date, each
Group Company shall:
(a) preserve and
maintain all of its Permits;
(b) pay its debts,
Taxes and other obligations when due;
(c) not accelerate any
receivables or delay paying any payables;
(d) not cancel or waive
rights of substantial value;
(e) maintain the
properties and assets owned, operated or used by it in the same
condition as they were on the date of this Agreement, subject to
reasonable wear and tear;
(f) continue in full
force and effect without modification all insurance policies,
except as required by applicable Law;
(g) defend and protect
its properties and assets from infringement or
usurpation;
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(h) perform all of its
obligations under all Contracts relating to or affecting its
properties, assets or business;
(i) maintain its books
and records in accordance with past practice;
(j) comply in all
material respects with all applicable Laws; and
(k) not (i) make,
change or revoke any Tax election, (ii) consent to any extension or
waiver of the limitations period applicable to any claim or
assessment with respect to Taxes (iii) file any amended income tax
or any other material Tax Return, (iv) settle or compromise any
material Tax claim or assessment by any Governmental Authority,
(v) enter into a closing agreement with a taxing authority or
(vi) surrender any right to claim a refund of a material amount of
Taxes.
Without
in any way limiting any party’s rights or obligations under
this Agreement, the parties understand and agree that (i) nothing
contained in this Agreement shall give Buyer, directly or
indirectly, the right to control or direct the business operations
of the Group Companies prior to the Closing and (ii) prior to the
Closing, the Company shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision over
the operations of the Business.
(a) From the date
hereof until the Closing, each Group Company shall (a) afford Buyer
and its Representatives full and free access to and the right to
inspect all of the properties, assets, premises, books and records,
Contracts and other documents and data related to any Group
Company; (b) furnish Buyer and its Representatives with such
financial, operating and other data and information related to any
Group Company as Buyer or any of its Representatives may reasonably
request (including for Buyer to make a determination as to whether
the conditions to Closing have been satisfied); and (c) instruct
the Representatives of the Group Companies to cooperate with Buyer
in its investigation of the Company. Any investigation pursuant to
this Section 7.2
shall be conducted during normal business hours and in such manner
as not to interfere unreasonably with the conduct of the Group
Companies’ business.
(b) For a period of 7
years after the Closing Date, the Shareholder and its
Representatives shall have reasonable access to all of the books
and records of each Group Company with respect to the pre-Closing
period, to the extent that such access may reasonably be required
in connection with the preparation of the Shareholder’s
financial reports or Tax Returns or any Tax audits or for any other
legitimate and reasonable purpose (it being understood that any
Action by or on behalf of Shareholder Indemnitees against Buyer or
any of its Affiliates or any of their respective Affiliates with
respect to this Agreement or any Transaction Document, does not
constitute legitimate or reasonable purpose). Such access shall be
afforded by Buyer upon receipt of reasonable advance notice and
during normal business hours. Notwithstanding the
foregoing, neither Buyer nor Group Company shall be required to
provide access or to disclose any information to the Shareholder or
any of its Representatives if doing so would reasonably be expected
to (x) waive any legal privilege or (y) be in violation of
applicable Contract or law to which Buyer or a Group Company is a
party or to which it is subject; provided that, in each case,
Buyer and the applicable Group Companies shall use their
commercially reasonable efforts to make any such disclosure in a
manner that does not waive any legal privilege or violate
applicable Contract or law, including entering into a joint-defense
agreement.
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(c) The Shareholder
shall provide, or cause to be provided, to Buyer and its
Representatives, copies of historical financial statements and
other financial information regarding the Group Companies (and if
required, the Excluded Entities), in each case, to the extent
required in connection with Buyer’s compliance with the rules
and requirement of the Securities Exchange Commission or otherwise
in connection with Buyer’s financial reporting and disclosure
obligations under federal and state securities laws or the rules or
regulations promulgated thereunder. All such financial statements
and information shall be provided within the timeframe required
under applicable securities laws and the rules and regulations
promulgated thereunder.
(d) Following the
Closing, Buyer shall provide Shareholder and its Representatives,
within the timeframe required under applicable securities laws and
the rules and regulations promulgated thereunder, with financial
statements and other financial information regarding the Group
Companies, in each case, to the extent required in connection with
compliance by the Shareholder and its Affiliates with the rules and
requirement of the Securities Exchange Commission or otherwise in
connection with their respective financial reporting and disclosure
obligations under federal and state securities laws or the rules or
regulations promulgated thereunder, including without limitation
the following:
(i) Not later than 9
Business Days following the end of each calendar month which occurs
during the period from the Closing Date through the last day of the
first fiscal quarter of the Shareholder ending after the Closing
Date, Buyer shall provide Shareholder with the consolidated trial
balances for the Group Companies and certify
OneStream;
(ii) Not later than 9
Business Days following the end of the first fiscal quarter of the
Shareholder ending after the Closing Date, Buyer shall provide
Shareholder with a year-to-date statement of cash flows for the
Group Companies and all roll-forward support for such statement of
cash flows;
(iii) Not later than 9
Business Days following the end of the first fiscal quarter of the
Shareholder ending after the Closing Date, Buyer shall provide
Shareholder with a balance sheet of the Group Companies as of the
Closing Date and an income statement for the Group Companies
covering the period from the last day of the fiscal quarter of the
Group Companies preceding the Closing Date to the Closing
Date;
(iv) Not later than 12
Business Days following the end of the first fiscal quarter of the
Shareholder ending after the Closing Date, Buyer shall provide
Shareholder with all required information or other items listed on
the quarter-end checklist provided by the Parent’s accounting
team to the Group Companies’ accounting team;
(v) Not later than 14
Business Days following the end of the first fiscal quarter of the
Shareholder ending after the Closing Date, Buyer shall provide
Shareholder with all quarterly analytics regarding the Group
Companies as may be requested by the Parent’s accounting
team; and
(vi) Not later than 15
Business Days following the end of the first fiscal quarter of the
Shareholder ending after the Closing Date, Buyer shall provide
Shareholder with the M3 Executive Summary File providing support
for results of operations, Adjusted EBITDA, and all requested KPIs
necessary to support the Parent’s SEC filing & management
reporting needs with respect to the Group Companies.
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7.3 No
Solicitation of Other Bids.
(a) Each Group
Company and each Shareholder shall not, and shall not authorize or
permit any of its Affiliates or any of its or their Representatives
to, directly or indirectly, (i) encourage, solicit, initiate,
facilitate or continue inquiries regarding an Acquisition Proposal;
(ii) enter into discussions or negotiations with, or provide
any information to, any Person concerning a possible Acquisition
Proposal; or (iii) enter into any agreements or other
instruments (whether or not binding) regarding an Acquisition
Proposal. Each Group Company and each Shareholder shall immediately
cease and cause to be terminated, and shall cause its Affiliates
and all of its and their Representatives to immediately cease and
cause to be terminated, all existing discussions or negotiations
with any Persons conducted heretofore with respect to, or that
could lead to, an Acquisition Proposal. For purposes hereof,
“Acquisition
Proposal” shall mean any inquiry, proposal or offer
from any Person (other than Buyer or any of its Affiliates)
concerning (A) a merger, consolidation, liquidation,
recapitalization, share exchange or other business combination
transaction involving any Group Company; (B) the issuance or
acquisition of shares of capital stock or other equity securities
of any Group Company; or (C) the sale, lease, exchange or
other disposition of any significant portion of any Group
Company’s properties or assets.
(b) In addition to the
other obligations under this Section 7.3, each Group Company
and Shareholder shall promptly (and in any event within three (3)
Business Days after receipt thereof by a Group Company, its
Affiliates, any Shareholder or their Representatives) advise Buyer
orally and in writing of any Acquisition Proposal, any request for
information with respect to any Acquisition Proposal, or any
inquiry with respect to or which could reasonably be expected to
result in an Acquisition Proposal, and the material terms and
conditions of such request, Acquisition Proposal or
inquiry.
(c) Each Group Company
and each Shareholder agrees that the rights and remedies for
noncompliance with this Section 7.3 shall include
having such provision specifically enforced by any court having
equity jurisdiction, it being acknowledged and agreed that any such
breach or threatened breach shall cause irreparable injury to Buyer
and that money damages would not provide an adequate remedy to
Buyer.
(a) From the date
hereof until the Closing, the Company shall promptly notify Buyer
in writing of:
(i) any fact,
circumstance, event or action the existence, occurrence or taking
of which (A) has had, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect,
(B) has resulted in, or could reasonably be expected to result
in, any representation or warranty made by the Company or the
Shareholder hereunder not being true and correct or (C) has
resulted in, or could reasonably be expected to result in, the
failure of any of the conditions set forth in Section 9.2 to be
satisfied;
(ii) any notice or other
communication from any Person alleging that the consent of such
Person is or may be required in connection with the
Transactions;
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(iii) any notice or other
communication from any Governmental Authority in connection with
the Transactions; and
(iv) any Actions
commenced or, to Company’s Knowledge, threatened against,
relating to or involving or otherwise affecting the Company that,
if pending on the date of this Agreement, would have been required
to have been disclosed pursuant to Section 5.6 or that relates to
the consummation of the Transactions.
(b) Buyer’s
receipt of information pursuant to this Section 7.4 shall not operate
as a waiver or otherwise affect any representation, warranty or
agreement given or made by the Company or the Shareholder in this
Agreement (including Section 10.2 and Section 11.1(b)) and shall not
be deemed to amend or supplement the Disclosure
Schedule.
7.5 Confidentiality.
From and after the Closing, the Shareholder shall, and shall cause
its Affiliates to, hold, and shall use its reasonable best efforts
to cause its or their respective Representatives to hold, in
confidence any and all information, whether written or oral,
concerning the Group Companies (“Confidential
Information”), except to the extent that the
Shareholder can show that such information (a) is generally
available to and known by the public through no fault of the
Shareholder, any of its Affiliates or their respective
Representatives; or (b) is lawfully acquired by the
Shareholder, any of its Affiliates or their respective
Representatives from and after the Closing from sources which are
not prohibited from disclosing such information by a legal,
contractual or fiduciary obligation. If Shareholder or any of its
Affiliates or their respective Representatives are compelled to
disclose any information by judicial or administrative process or
by other requirements of Law, Shareholder shall promptly notify
Buyer in writing and shall disclose only that portion of such
information which the Shareholder is advised by its counsel in
writing is legally required to be disclosed, provided that the Shareholder shall use
reasonable best efforts to obtain an appropriate protective order
or other reasonable assurance that confidential treatment will be
accorded such information.
(a) For a period of two
(2) years following the Closing, the Shareholder agrees that it
shall not, directly or indirectly through any Person, entity or
contractual arrangement:
(i) engage in the
Business anywhere in the world (the “Restricted Territory”),
it being acknowledged by the Shareholder that the Group Companies
engage in the Business throughout the Restricted Territory;
or
(ii) solicit, offer
employment to or hire any individual that is an employee or
consultant of a Group Company as of the Closing Date or otherwise
induce or attempt to induce (whether for their own account or for
the account of any other Person) any individual that is an employee
or consultant of a Group Company as of the Closing Date to leave
the employ of such Group Company; provided, however, that nothing in this
Section 7.6(a)(ii)
shall prohibit any such party from: (i) using general solicitations
(including through search firms) not targeted at employees of the
Group Companies, or employing any person who responds to such
solicitation; (ii) hiring, employing or discussing employment with
any person who contacts such party independently without any
solicitations by such party or (iii) soliciting any person who has
left the employment of the Group Companies at least six (6) months
prior to such party soliciting such person; or
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(iii) knowingly induce
or attempt to induce any
customer, supplier, licensee or other business relation of
a Group Company to cease participating in
the Business as conducted by such Group Company.
(b) The Shareholder
acknowledges that if it breaches any obligation under this
Section 7.6, Buyer
will suffer immediate and irreparable harm and damage for which
money alone cannot fully compensate, and the Shareholder therefore
agrees that upon such breach or threatened breach, Buyer shall be
entitled to seek a temporary restraining order, preliminary
injunction, permanent injunction or other injunctive relief,
without posting any bond or other security, barring the other party
from violating any such provision. This Section 7.6(b) shall not be
construed as an election of any remedy, or as a waiver of any right
available to Buyer under this Agreement or the Law, including the
right to seek damages for a breach.
(c) If a court of
competent jurisdiction determines that the character, duration or
geographical scope of the provisions of this Section 7.6 are unreasonable,
it is the intention and the agreement of the parties that these
provisions shall be construed by the court in such a manner as to
impose only those restrictions on the Shareholder’s conduct
that are reasonable in light of the circumstances and as are
necessary to assure to Buyer the benefits of this Agreement. If, in
any judicial proceeding, a court shall refuse to enforce all of the
separate covenants of this Section 7.6 because taken
together they are more extensive than necessary to assure to Buyer
the intended benefits of this Agreement, it is expressly understood
and agreed by the parties that the provisions hereof that, if
eliminated, would permit the remaining separate provisions to be
enforced in such proceeding, shall be deemed eliminated, for the
purposes of such proceeding, from this Agreement.
(a) From the date
hereof until the Closings, Buyer, the Company and the Shareholder
shall (i) use their respective reasonable best efforts to file,
make or obtain, as applicable, all registrations, filings,
applications, notices, consents, approvals, orders, qualifications
and waivers listed on Section 7.7 of the Disclosure
Schedule and (ii) shall make any payments required to accomplish
the foregoing. For the avoidance of doubt, the cost of such filings
and obtaining such consents shall be borne 100% by
Buyer.
(b) Each of the Parties
shall use their respective reasonable best efforts to:
(i) respond to any
inquiries by any Governmental Authority regarding antitrust or
other matters with respect to the Transactions or any agreement or
document contemplated hereby;
(ii) avoid the
imposition of any order or the taking of any action that would
restrain, alter or enjoin the Transactions or any agreement or
document contemplated hereby; and
(iii) in the event any
Governmental Order adversely affecting the ability of the parties
to consummate the Transactions or any agreement or document
contemplated hereby has been issued, to have such Governmental
Order vacated or lifted.
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(c) If any consent,
approval or authorization necessary to preserve any right or
benefit under any Contract to which the Company is a party is not
obtained prior to the Closing, the Shareholder shall, at
Buyer’s sole expense, subsequent to the Closing, cooperate
with Buyer and the Company in attempting to obtain such consent,
approval or authorization as promptly thereafter as practicable. If
such consent, approval or authorization cannot be obtained, the
Shareholder shall use its commercially reasonable efforts to
provide the Company with the rights and benefits of the affected
Contract for the term thereof, and, if the Shareholder provides
such rights and benefits, the Company shall assume all obligations
and burdens thereunder.
(d) Each of the Parties
shall use all reasonable best efforts to (i) file or cause to be
filed with the FCC all required applications seeking consent to the
transfer of control of all applicable Communications Authorizations
from Seller to Buyer (the “FCC Applications”) not
later than ten (10) Business Days following the date hereof; (ii)
file or cause to be filed with the State PUCs all appropriate
applications seeking consent to the transfer of control of the
applicable Communications Authorizations from Seller to Buyer (the
“State PUC
Applications”) not later ten (10) Business Days
following the date hereof; and (iii) make such filings with any
applicable Governmental Authorities as are necessary to obtain any
required consents to the transfer of control of other
Communications Authorizations. Each Party shall furnish to the
other Party all necessary information concerning such Party and its
Affiliates as may be reasonably required for inclusion in the (i)
FCC Applications, (ii) State PUC Applications, (iii) any other
filings to be made in connection with the Transactions or (iv) to
determine compliance with Law. The Parties shall supply promptly
any additional information and documentary material that may be
requested by the FCC, the State PUCs, and any other applicable
Governmental Authority. Each Party shall work together in good
faith and use its reasonable best efforts to expeditiously
prosecute all such applications and filings to a favorable
conclusion.
(e) All analyses,
appearances, meetings, discussions, presentations, memoranda,
briefs, filings, arguments, and proposals made by or on behalf of a
party before any Governmental Authority or the staff or regulators
of any Governmental Authority, in connection with the transactions
contemplated hereunder (but, for the avoidance of doubt, not
including any interactions between or the Company with Governmental
Authorities in the ordinary course of business, any disclosure
which is not permitted by Law or any disclosure containing
confidential information) shall be disclosed to the other party in
advance of any filing, submission or attendance, it being the
intent that the parties will consult and cooperate with one
another, and consider in good faith the views of one another, in
connection with any such analyses, appearances, meetings,
discussions, presentations, memoranda, briefs, filings, arguments,
and proposals. Each party shall give notice to the other party with
respect to any meeting, discussion, appearance or contact with any
Governmental Authority or the staff or regulators of any
Governmental Authority, with such notice being sufficient to
provide the other party with the opportunity to attend and
participate in such meeting, discussion, appearance or
contact.
(f) Notwithstanding the
foregoing, nothing in this Section 7.7 shall require, or
be construed to require, Buyer or any of its Affiliates to agree to
(i) sell, hold, divest, discontinue or limit, before or after
the Closing Date, any assets, businesses or interests of Buyer, the
Company or any of their respective Affiliates, (ii) any
conditions relating to, or changes or restrictions in, the
operations of any such assets, businesses or interests which, in
either case, could reasonably be expected to result in a Material
Adverse Effect or materially and adversely impact the economic or
business benefits to Buyer of the Transactions, (iii) any
material modification or waiver of the terms and conditions of this
Agreement, or (iv) threaten to, commence, prosecute or defend
any Action.
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(g) As of the Closing,
the Shareholder hereby waives all rights of first refusal, co-sale
rights, drag-along rights, consent rights and other similar rights
that the Shareholder may have, as well as any restrictions on the
transfer of the Shares, in each case under the Company’s
organizational documents or otherwise with respect to the
transactions contemplated hereby.
(a) The Shareholder, on
behalf of itself and its Affiliates which it controls, and their
respective successors and assigns (collectively, the
“Releasors”), hereby
knowingly and voluntarily releases and forever discharges,
effective as of the Closing Date, Buyer and each Group Company, and
each of their respective past, present and/or future Affiliates and
Representatives (collectively, the “Released Parties”), from
any and all Actions, claims, suits, controversies, causes of
action, cross-claims, counter claims, demands, debts, compensatory
damages, liquidated damages, punitive or exemplary damages, other
damages, claims for costs and attorneys’ fees, or liabilities
of any nature whatsoever in law and in equity, whether known or
unknown, liquidated or contingent, which the Shareholder or any
other Releasor ever had, now have or may have relating to, arising
out of or in any way connected with the dealings of the Group
Companies, on the one hand, and the Shareholder and the other
Releasors, on the other hand, or any circumstance, agreement,
action, omission, event or matter occurring or existing between the
Group Companies on the one hand and the Shareholder and the other
Releasors on the other hand, in each case, prior to the Closing
Date (collectively, the “Released Claims”);
provided,
however, that the
Released Claims shall not include any of the terms, conditions or
other provisions or obligations under this Agreement or the
Transaction Documents.
(b) The Shareholder
acknowledges that the Laws of many states provide substantially the
following:
“A GENERAL
RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING
THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY
AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”
The
Shareholder acknowledges that such provisions are designed to
protect a party from waiving claims which he does not know exist or
may exist. Nonetheless, the Shareholder agrees that, effective as
of the Closing Date, the Shareholder and the other Releasors shall
be deemed to waive any such provision.
(c) The Shareholder
further agrees that it shall not, and shall not permit any
Affiliates which it controls to, (i) institute a lawsuit or other
legal proceeding based upon, arising out of, or relating to any of
the Released Claims, (ii) participate, assist, or cooperate in any
such proceeding, or (iii) encourage, assist and/or solicit any
third party to institute any such proceeding.
7.9 Closing
Conditions. From the date
hereof until the Closing, each of Buyer and the Shareholder shall,
and Shareholder shall cause the Company to, use reasonable best
efforts to take such actions as are necessary to expeditiously
satisfy the closing conditions set forth in Article 9.
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7.10 Publicity;
Transaction Disclosure.
(a) Any public
announcement, press release or similar publicity with respect to
this Agreement or the Transactions will be issued, if at all, at
such time and in such manner as approved in writing by the other
party (such approval not to be unreasonably withheld, conditioned
or delayed); provided, that if such
announcement is required by Law, a party may make any such
announcement, release or similar publicity without the consent of
the other party, provided that the disclosing party shall use
commercially reasonable efforts to provide, to the extent
practicable and legally permitted, the other party a reasonable
opportunity to review and comment on the content of such
announcements in advance (it being understood that the other party
shall not have any right to prevent the disclosing party from
making such announcements).
(b) None of (i) the
Group Companies, the Shareholder or any of their respective
Affiliates or any of their respective Representatives shall (except
with the prior written consent of Buyer or as permitted by this
Agreement) and (ii) Buyer or any of its Affiliates or
Representative shall (except with the prior written consent of the
Shareholder or as permitted by this Agreement) disclose to any
Person: (A) the fact that any confidential information of the
Group Companies has been disclosed to Buyer or its Representatives,
or that any confidential information of Buyer has been disclosed to
the Group Companies or the Shareholder or (B) any information
about the transactions contemplated hereby, including the status of
such discussions or negotiations, the execution of any documents
(including this Agreement) or any of the terms of the transactions
contemplated hereby or the related documents (including this
Agreement); provided that the foregoing
obligation of the Group Companies, the Shareholder or Buyer (or any
of their respective Affiliates or Representatives) shall not
prohibit disclosure of any such information (1) if required by
applicable Law; (2) as required in order to fulfill such
party’s obligations under this Agreement; (3) to a financial,
legal or accounting advisor for the purpose of advising in
connection with the transactions contemplated by this Agreement and
the other Transaction Documents (provided, that such advisor is
made aware of and directed to comply with the provisions of this
Section 7.10); (4)
to the extent that the information has been made public by, or with
the prior consent of, Buyer (with respect to disclosures by the
Group Companies, the Shareholder or their respective Affiliates or
Representatives) or the Shareholder (with respect to disclosures by
Buyer or its Affiliates or Representatives); or (5) in connection
with any Action with respect to this Agreement or any other
Transaction Documents; and provided, further, that in the event any
of the Group Companies, the Shareholder or Buyer is required by Law
to disclose any such information, such Person shall promptly notify
Buyer (with respect to disclosures by the Group Companies or the
Shareholder) or the Shareholder (with respect to disclosures by
Buyer) in writing to the extent permitted by Law, which
notification shall include the nature of the legal requirement and
the extent of the required disclosure, and such Person shall
reasonably cooperate with Buyer or the Shareholder, as applicable
(at such Person’s expense) to preserve the confidentiality of
such information consistent with applicable Law.
7.11 Benefit
Plans.
Effective as of the Effective Time or before, the Company shall
terminate or cause to be terminated each employee benefit plan of
the Company designated on Section 7.11 of the Disclosure
Schedule, unless Buyer provides written notice to the Company that
such employee benefit plan shall not be terminated.
-23-
7.12 Litigation
Support. Following the
Closing, in the event and for so long as Buyer or the Group
Companies are actively contesting or defending against any Action
in connection with any fact, situation, circumstance, action,
failure to act, or transaction on or prior to the Closing Date
involving any Group Company, the Shareholder will cooperate with it
and its counsel in the contest or defense and provide such
testimony and access to the Shareholder’s books and records
as shall be necessary in connection with the contest or defense,
all at the sole cost and expense of Buyer and the Group Companies
(unless Buyer is entitled to indemnification therefor
hereunder).
7.13 280G. Promptly
following the execution of this Agreement, the Company shall submit
to the Shareholder for approval (in a manner reasonably
satisfactory to Buyer), by such number of holders of the
Shareholder as is required by the terms of Section 280G(b)(5)(B) of
the Code, any payments and/or benefits that may separately or in
the aggregate, constitute “parachute payments” pursuant
to Section 280G of the Code (“Section 280G Payments”)
(which determination shall be made by the Company and shall be
subject to review and approval by Buyer, such approval not to be
unreasonably withheld, conditioned or delayed), such that such
payments and benefits shall not be deemed to be Section 280G
Payments, and prior to the Closing, the Company shall deliver to
Buyer notification and documentation reasonably satisfactory to
Buyer that (a) a vote of the holders of the capital stock of the
Company was solicited in conformance with Section 280G and the
regulations promulgated thereunder and the requisite Shareholder
approval was obtained with respect to any payments and/or benefits
that were subject to the Shareholder vote (the “280G Shareholder
Approval”), or (b) that the 280G Shareholder Approval
was not obtained and as a consequence, that such payments and/or
benefits shall not be made or provided to the extent they would
cause any amounts to constitute Section 280G Payments, pursuant to
the waivers of those payments and/or benefits which were executed
by the affected individuals prior to the vote of the holders of
Company’s capital stock pursuant to this Section 7.13.
7.14 Company
Covenants. The Shareholder
shall cause each Group Company to comply with each of its covenants
and agreements set forth herein.
7.15 Customer and other Business
Relationships. After the
Closing, the Shareholder will, and will cause its Affiliates to,
refer to Buyer all inquiries relating to the Group
Companies.
7.16 Insurance; Risk of
Loss. The Shareholder
will, and will cause each of its Affiliates to, keep insurance
policies currently maintained in respect of the Business and
current or former employees of the Group Companies, as the case may
be, or suitable replacements therefor, in full force and effect
through the close of business on the Closing Date. For any claim
that may be asserted against any Group Company after the Closing
Date arising out of events, incidents, conduct or circumstances
that occurred and/or existed prior to the Closing Date (such
claims, “Post-Closing Claims”):
(i) the Shareholder shall ensure that the Group Companies have
access to coverage under each of the insurance policies set forth
in Section 7.16 of
the Disclosure Schedule (the “Specified Policies”) in
each case subject to the terms and conditions thereof; and (ii)
with respect to Specified Policies designated as
“Claims-Made” and “Occurrence-Reported,”
the Shareholder shall secure tail coverage and/or ensure that the
Group Companies have access, either directly or through the
Shareholder or its Affiliates to coverage under renewals of such
Specified Policies or equivalent coverage. After the Closing Date,
the Group Companies may seek coverage for any Post-Closing Claim
from the applicable insurer under any Specified Policy or, where
applicable, any tail or renewal policy or equivalent of such
Specified Policy, and the Shareholder shall cooperate with the
Group Companies in connection with the tendering of such claims
(including by providing access to employees and third party claims
adjustors); provided, however, that (i) the Group
Companies shall reimburse the Shareholder for all of its
out-of-pocket costs and expenses in connection with such
cooperation; and (ii) the Group Companies shall notify the
Shareholder of all such coverage claims made. Shareholder shall not
release, commute, buy-back, or otherwise eliminate the coverage
available under any Specified Policy without first providing
written notice to the Group Companies.
-24-
7.17 Internal
Control over Financial Reporting. Without limiting
any other provisions of this Agreement, prior to the Closing, the
Company shall use its commercially reasonable efforts to coordinate
with Buyer and to provide the internal resources required to
establish: (a) a system of “internal controls over financial
reporting” (as defined in Rules 13a-15(f) and 15d-15(f) under
the Exchange Act) sufficient to provide reasonable assurances: (i)
that transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP; (ii) that
transactions are executed only in accordance with the authorization
of management; and (iii) regarding prevention or timely detection
of the unauthorized acquisition, use or disposition of the
properties or assets of the Group Company, and (b) a system of
“disclosure controls and procedures” (as defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act) sufficient to
ensure that all material information concerning the Group Companies
is made known on a timely basis to the individuals responsible for
the preparation of the Company’s financial statements;
provided that the
Company shall not be required to incur any out of pocket expenses
(other than nominal expenses) in connection with such efforts.
Prior to the Closing, the Company shall reasonably cooperate with
Buyer with respect to integration planning in respect of accounting
and financial reporting functions.
7.18 Financial Reporting
Cooperation. During the period
between the signing of this Agreement and the earlier of the
Closing or termination of this Agreement, the Company shall provide
(and cause its Subsidiaries to provide) such reasonable and
customary cooperation (and to use commercially reasonable efforts
to cause its and their respective managers, officers, directors,
employees, accountants, legal counsel, agents, other advisors and
authorized representatives to provide such reasonable and customary
cooperation) in connection with Buyer’s and its
Affiliates’ reporting obligations under the Securities Act
and the Exchange Act.
7.19 Further
Assurances. Each of the
parties shall, and shall cause their respective Affiliates to,
execute and deliver such additional documents, instruments,
conveyances and assurances and take such further actions as may be
reasonably required to carry out the provisions hereof and give
effect to the Transactions.
Tax
matters
(a) Without the
prior written consent of Buyer (which consent shall not be
unreasonably withheld, conditioned or delayed), the Shareholder
(and, prior to the Closing, the Group Companies, their respective
Affiliates and their respective Representatives) shall not, to the
extent it may adversely affect any Group Company following the
Effective Time, make, change or rescind any Tax election, amend any
Tax Return or take any position on any Tax Return, take any action,
omit to take any action or enter into any other transaction that
would have the effect of increasing the Tax liability or reducing
any Tax asset of Buyer or any Group Company in respect of any
taxable period ending after the Closing Date and, with respect to
any taxable period beginning before and ending after the Closing
Date, the portion of such taxable period beginning on and including
the Closing Date (“Post-Closing Tax
Period”). Parent and Shareholder each agree that Buyer
is to have no liability for any Tax resulting from any action of
Parent, Shareholder, any Group Company (on or prior to the Closing
Date), its Affiliates or any of their respective Representatives
(excluding any liability with respect to any Virginia BPOL taxes
owed by a Group Company for which neither Parent nor Shareholder
shall have any indemnification obligation hereunder), and agrees to
indemnify and hold harmless Buyer (and, after the Closing Date, the
Group Companies) against any such Tax liability. Following the
Effective Time, except for the indemnification provided in the
immediately preceding sentence, neither Parent nor Shareholder, nor
any of their respective Affiliates (other than the Group Companies)
or Representatives, shall have any liability or obligation with
respect to any Tax liability of a Group Company.
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(b) All transfer,
documentary, sales, use, stamp, registration, value added and other
such Taxes and fees (including any penalties and interest) incurred
in connection with this Agreement and the other Transaction
Documents (including any real property transfer Tax and any other
similar Tax) shall be borne 100% by Buyer. The Buyer shall, at
its own expense, timely file any Tax Return or other document with
respect to such Taxes or fees (and Shareholder shall cooperate with
respect thereto as necessary).
(c) Shareholder shall
prepare, or cause to be prepared, all income Tax Returns required
to be filed by the Group Companies on a consolidated basis after
the Closing Date with respect to a “taxable period”
ending on or before the Closing Date and, Buyer shall prepare all
other Tax returns required to be filed by the Group Companies after
the Closing Date.
(d) Any Tax Return
required to be filed by the Group Companies after the Closing Date
with respect to a “taxable period” ending on or before
the Closing Date and with respect to any taxable period beginning
before and ending after the Closing Date the portion of such
taxable period ending on and including the Closing Date
(“Pre-Closing Tax Period”), shall be prepared in a
manner consistent with past practice (unless otherwise required by
Law) and without a change of any election or any accounting method
(unless otherwise required by Law). All Tax Returns prepared by
Buyer for Pre-Closing Tax Periods shall be submitted by Buyer to
the Shareholder (together with schedules, statements and, to the
extent requested by the Shareholder, supporting documentation) at
least forty-five (45) days prior to the due date (including
extensions) of such Tax Return. If the Shareholder objects to any
item on any such Tax Return, it shall, within ten (10) days after
delivery of such Tax Return, notify Buyer in writing that it so
objects, specifying with particularity any such item and stating
the specific factual or legal basis for any such objection. If a
notice of objection shall be duly delivered, Buyer and the
Shareholder shall negotiate in good faith and use their reasonable
best efforts to resolve such items. If Buyer and the Shareholder
are unable to reach such agreement within ten (10) days after
receipt by Buyer of such notice, the disputed items shall be
resolved by a nationally recognized accounting firm selected by
Buyer and reasonably acceptable to the Shareholder (the
“Accounting
Referee”) and any determination by the Accounting
Referee shall be final. The Accounting Referee shall resolve any
disputed items within twenty (20) days of having the item referred
to it pursuant to such procedures as it may require. If the
Accounting Referee is unable to resolve any disputed items before
the due date for such Tax Return, the Tax Return shall be filed as
prepared by Buyer and then amended to reflect the Accounting
Referee’s resolution. The costs, fees and expenses of the
Accounting Referee shall be by Buyer, on the one hand, and the
Shareholder, on the other hand, in such amount(s) as shall be
determined by the Accounting Referee based on the proportion that
the aggregate amount of disputed items submitted to the Accounting
Referee that is unsuccessfully disputed by Buyer, on the one hand,
or the Shareholder, on the other hand, as determined by the
Accounting Referee, bears to the total amount of such disputed
items so referred to the Accounting Referee for resolution. The
preparation and filing of any Tax Return of the Group Companies
that does not relate to a Pre-Closing Tax Period shall be
exclusively within the control of Buyer.
8.2 Termination of Existing Tax Sharing
Agreements. Any and all
existing Tax sharing agreements (whether written or not) binding
upon any Group Company shall be terminated as of the Closing Date.
After such date neither any Group Company, Parent, the Shareholder
nor any of the Shareholder’s Affiliates and their respective
Representatives shall have any further rights or liabilities
thereunder.
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8.3 Tax
Indemnification. Except to the
extent treated as a liability in the calculation of the Closing
Company Net Cash, the Shareholder and Parent shall jointly and
severally indemnify the Group Companies, Buyer, and each Buyer
Indemnitee and hold them harmless from and against (a) any
Loss attributable to any breach or violation of, or failure to
fully perform, any covenant, agreement, undertaking or obligation
in this Article 8;
(b) all Taxes of the Group Companies or relating to the
business of the Group Companies for all Pre-Closing Tax Periods
(excluding any liability with respect to any Virginia BPOL taxes
owed by a Group Company for which neither Parent nor Shareholder
shall have any indemnification obligation hereunder); (d) all
Taxes of any member of an affiliated, consolidated, combined or
unitary group of which any Group Company (or any predecessor of any
Group Company) is or was a member on or prior to the Closing Date
by reason of a liability under Treasury Regulation
Section 1.1502-6 or any comparable provisions of foreign,
state or local Law (excluding any liability with respect to any
Virginia BPOL taxes owed by a Group Company for which neither
Parent nor Shareholder shall have any indemnification obligation
hereunder); and (e) any and all Taxes of any person imposed on
any Group Company arising under the principles of transferee or
successor liability or by contract, relating to an event or
transaction occurring before the Closing Date (excluding any
liability with respect to any Virginia BPOL taxes owed by a Group
Company for which neither Parent nor Shareholder shall have any
indemnification obligation hereunder). In each of the above cases,
together with any out-of-pocket fees and expenses (including
reasonable attorneys’ and accountants’ fees) incurred
in connection therewith. The Shareholder shall reimburse Buyer for
any Taxes of any Group Company that are the undisputed
responsibility of the Shareholder pursuant to this Section 8.3 within ten (10)
Business Days after payment of such Taxes by Buyer or any Group
Company.
8.4 Straddle
Period. In the case of
Taxes that are payable with respect to a taxable period that begins
before and ends after the Closing Date (each such period, a
“Straddle
Period”), the portion of any such Taxes that are
treated as Taxes of the Group Companies for any Pre-Closing Tax
Period shall be:
(a) In the case of
Taxes based upon, or related to, income or receipts, deemed equal
to the amount which would be payable if the taxable year ended with
the Closing Date;
(b) In the case of
other Taxes, deemed to be the amount of such Taxes for the entire
period multiplied by a fraction the numerator of which is the
number of days in the period ending on the Closing Date and the
denominator of which is the number of days in the entire period;
and
(c) Any Taxes of any of
the Group Companies arising from the Pre-Closing
Reorganization.
8.5 Contests. Buyer agrees to
give written notice to the Shareholder of the receipt of any
written notice by any Group Company, Buyer or any of Buyer’s
Affiliates which involves the assertion of any claim, or the
commencement of any Action, in respect of which an indemnity may be
sought by Buyer pursuant to this Article 8 (a
“Tax
Claim”); provided, that failure to
comply with this provision shall not affect Buyer’s right to
indemnification hereunder. Shareholder shall control the contest or
resolution of any Tax Claim; provided, however, that Shareholder shall
obtain the prior written consent of the Buyer (which consent shall
not be unreasonably withheld or delayed) before entering into any
settlement of a claim which may adversely affect the Buyer or any
Group Company or ceasing to defend such claim; and, provided further, that the Buyer shall
be entitled to participate in the defense of such claim and to
employ counsel of its choice for such purpose, the fees and
expenses of which separate counsel shall be borne solely by the
Buyer.
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8.6 Cooperation
and Exchange of Information. The Shareholder
and Buyer shall provide each other with such cooperation and
information as either of them reasonably may request of the other
in filing any Tax Return pursuant to this Article 8 or in connection with
any audit or other proceeding in respect of Taxes of the Group
Companies. Such cooperation and information shall include providing
copies of relevant Tax Returns or portions thereof, together with
accompanying schedules, related work papers and documents relating
to rulings or other determinations by tax authorities. Each
Shareholder and Buyer shall retain all Tax Returns, schedules and
work papers, records and other documents in its possession relating
to Tax matters of the Group Companies for any taxable period
beginning before the Closing Date until the expiration of the
statute of limitations of the taxable periods to which such Tax
Returns and other documents relate, without regard to extensions
except to the extent notified by the other party in writing of such
extensions for the respective Tax periods. Prior to transferring,
destroying or discarding any Tax Returns, schedules and work
papers, records and other documents in its possession relating to
Tax matters of the Group Companies for any taxable period beginning
before the Closing Date, the Shareholder or Buyer (as the case may
be) shall provide the other party with reasonable written notice
and offer the other party the opportunity to take custody of such
materials.
8.7 Tax Treatment of Indemnification
Payments. Any
indemnification payments pursuant to this Article 8 shall be treated as
an adjustment to the Purchase Price by the parties for Tax
purposes, unless otherwise required by Law.
8.8 Survival. Notwithstanding
anything in this Agreement to the contrary, the provisions of this
Article 8 shall
survive for the full period of all applicable statutes of
limitations (giving effect to any waiver, mitigation or extension
thereof) plus 60 days.
8.9 Overlap. To the extent
that any obligation or responsibility pursuant to Article 10 may overlap with an
obligation or responsibility pursuant to this Article 8, the provisions of
this Article 8
shall govern.
Conditions
to closing
9.1 Conditions to Obligations of All
Parties. The obligations
of each party to consummate the Transactions shall be subject to
the fulfillment or mutual waiver of the Parties, at or prior to the
Closing, of each of the following conditions:
(a) The FCC Consent and
State PUC Consents shall have been obtained, and with respect to
the FCC Consent, such consent shall have become a Final
Order.
(b) No Governmental
Authority shall have enacted, issued, promulgated, enforced or
entered any Governmental Order which is in effect and has the
effect of making the Transactions illegal, otherwise restraining or
prohibiting consummation of such Transactions or causing any of the
Transactions to be rescinded following completion
thereof.
(c) No Action shall
have been commenced against Buyer, the Shareholder or any Group
Company, which would prevent the Closing. No injunction or
restraining order shall have been issued by any Governmental
Authority, and be in effect, which restrains or prohibits the
Transactions.
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9.2 Conditions
to Obligations of Buyer. The obligations
of Buyer to consummate the Transactions shall be subject to the
fulfillment or Buyer’s waiver, at or prior to the Closing, of
each of the following conditions:
(a) Other than the
representations and warranties contained in Article 4, Section 5.1, Section 5.2, Section 5.3, Section 5.4, Section 5.5 and Section 5.9, the
representations and warranties of the Shareholder and the Company
contained in this Agreement, the other Transaction Documents and
any certificate or other writing delivered pursuant hereto shall be
true and correct in all respects on and as of the date hereof and
on and as of the Closing Date with the same effect as though made
at and as of such date (except those representations and warranties
that address matters only as of a specified date, the accuracy of
which shall be determined as of that specified date in all
respects), except to the extent that the facts, events and
circumstances that cause such representations and warranties to not
be true and correct as of such date(s) have not had and would not
reasonably be expected to have a Material Adverse Effect (provided
that qualifications as to materiality, Material Adverse Effect or
other similar qualifications contained in such representations and
warranties shall not be given effect). The representations and
warranties of contained in Article 4, Section 5.1, Section 5.2, Section 5.3, Section 5.4, Section 5.5 and Section 5.9 shall be true and
correct in all material respects on and as of the date hereof and
on and as of the Closing Date with the same effect as though made
at and as of such date (except those representations and warranties
that address matters only as of a specified date, the accuracy of
which shall be determined as of that specified date in all
respects) (provided that qualifications as to materiality, Material
Adverse Effect or other similar qualifications contained in such
representations and warranties shall not be given
effect).
(b) The Company and the
Shareholder shall have duly performed and complied in all material
respects with all agreements, covenants and conditions required by
this Agreement and each of the other Transaction Documents to be
performed or complied with by it prior to or on the Closing
Date.
(c) [Reserved].
(d) From the date of
this Agreement, there shall not have occurred any Material Adverse
Effect, nor shall any event or events have occurred that,
individually or in the aggregate, with or without the lapse of
time, could reasonably be expected to result in a Material Adverse
Effect.
(e) [Reserved].
(f) The Company shall
have delivered an Estimated Closing Statement pursuant to
Section 3.1(a) in
form reasonably approved by Buyer.
(g) The Company and the
Shareholder shall have delivered each of the closing deliverables
set forth in Sections
2.2 and 2.3.
(h) The form and
substance of all certificates, instruments, opinions and other
documents delivered to Buyer under this Agreement shall be
satisfactory in all reasonable respects to Buyer and its
counsel.
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(i) The Pre-Closing
Reorganization shall have been completed.
(j) Saudi Telecom shall
not have terminated, canceled, discontinued, materially reduced, or
materially changed the terms (whether related to payment, price,
quantity of business or otherwise) of, or otherwise adversely
modified in any material respect, its business with the Group
Companies, or notified the Group Companies or the Shareholder of
its intent to do any of the foregoing.
(k) The sum of (i) the
Estimated Closing Company Transaction Expenses and (ii) the amount,
if any, by which the Target Company Net Equity exceeds the
Estimated Closing Net Equity, shall not exceed five hundred
thousand dollars ($500,000).
9.3 Conditions to Obligations of the
Company and the Shareholder. The obligations
of the Company and the Shareholder to consummate the Transactions
shall be subject to the fulfillment or the Shareholder’s
waiver, at or prior to the Closing, of each of the following
conditions:
(a) Other than the
representations and warranties of Buyer contained in Section 6.1, Section 6.2 and Section 6.5, the
representations and warranties of Buyer contained in this
Agreement, the other Transaction Documents and any certificate or
other writing delivered pursuant hereto shall be true and correct
in all respects on and as of the date hereof and on and as of the
Closing Date with the same effect as though made at and as of such
date (except those representations and warranties that address
matters only as of a specified date, the accuracy of which shall be
determined as of that specified date in all respects), except to
the extent that the facts, events and circumstances that cause such
representations and warranties to not be true and correct as of
such date(s) have not had and would not reasonably be expected to
have a material adverse effect on the ability of Buyer to
consummate the Transactions on a timely basis (provided that
qualifications as to materiality, Material Adverse Effect or other
similar qualifications contained in such representations and
warranties shall not be given effect). The representations and
warranties of Buyer contained in Section 6.1, Section 6.2 and Section 6.5 shall be true and
correct in all material respects on and as of the date hereof and
on and as of the Closing Date with the same effect as though made
at and as of such date, except those representations and warranties
that address matters only as of a specified date, the accuracy of
which shall be determined as of that specified date in all respects
(provided that qualifications as to materiality, Material Adverse
Effect or other similar qualifications contained in such
representations and warranties shall not be given
effect).
(b) Buyer shall have
duly performed and complied in all material respects with all
agreements, covenants and conditions required by this Agreement and
each of the other Transaction Documents to be performed or complied
with by it prior to or on the Closing Date.
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ARTICLE
10
10.1 Survival. Subject to the
limitations and other provisions of this Agreement, the
representations and warranties contained herein shall survive the
Closing and shall remain in full force and effect until the first
anniversary of the Closing Date (the “General Survival
Period”); provided, that (a) the
representations and warranties in Article 4 (other than
Section 4.3),
Section 5.1,
Section 5.2,
Section 5.3,
Section 5.4,
Section 5.5,
Section 5.9,
Section 6.1,
Section 6.2 and
Section 6.5 shall
survive for the full period of all applicable statutes of
limitations (giving effect to any waiver, mitigation or extension
thereof) plus 60 days,
(b) the representations and warranties in Section 4.3 shall survive
indefinitely (the representations and warranties identified in the
foregoing clauses (a) and (b), the “Fundamental
Representations”) and (c) and any representation in
the case of fraud, intentional misrepresentation or intentional
breach shall survive indefinitely. Each covenant and agreement of
the parties contained herein which is to be performed prior to the
Closing Date (other than any covenants or agreements contained in
Article 8 which are
subject to Article
8) and any statement contained in the certificates and
instruments delivered pursuant to Section 2.2(a), 2.2(b), 2.3(b), 2.3(c), 2.3(f), 2.4(b) or 2.4(c) shall survive the
Closing for a period of six (6) months following the Closing Date.
Each covenant and agreement of the parties contained herein which
is to be performed on or after the Closing Date (other than any
covenants or agreements contained in Article 8 which are subject to
Article 8) shall
survive the Closing indefinitely or for the period explicitly
specified therein. Notwithstanding the foregoing, any claims
asserted in good faith with reasonable specificity (to the extent
known at such time) and in writing by notice from the non-breaching
party to the breaching party prior to the expiration date of the
applicable survival period shall not thereafter be barred by the
expiration of the relevant representation or warranty and such
claims shall survive until finally resolved. For the avoidance of
doubt, the references in this Section 10.1 to the “statutes
of limitations” shall refer to the statute of limitations
applicable to the particular matter that gave rise to a breach of
the representation or warranty in question, and not to the statute
of limitations applicable to a breach of this
Agreement.
10.2 Indemnification By The
Shareholder. Subject to the
other terms and conditions of this Article 10, the Shareholder and
Parent shall jointly and severally indemnify and defend each of
Buyer and its Affiliates (including after the Closing, the Group
Companies) and their respective Representatives (collectively, the
“Buyer
Indemnitees”) against, and shall hold each of them
harmless from and against, and shall pay and reimburse each of them
for, any and all Losses that is or may be incurred or sustained by,
or imposed upon, the Buyer Indemnitees based upon, arising out of,
with respect to, relating to or by reason of:
(a) A material
inaccuracy in or material breach of any representation or warranty
of the Shareholder or the Company contained in this Agreement or in
any certificate or instrument delivered by or on behalf of the
Shareholder or the Company pursuant to Section 2.2(a), 2.2(b), 2.3(b), 2.3(c) or 2.3(f), as of the date such
representation or warranty was made or as if such representation or
warranty was made on and as of the Closing Date (except for
representations and warranties that expressly relate to a specified
date, the inaccuracy in or breach of which will be determined with
reference to such specified date);
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(b) a breach or
non-fulfillment of any covenant, agreement or obligation to be
performed by the Shareholder or any Group Company pursuant to this
Agreement (other than any breach or violation of, or failure to
fully perform, any covenant, agreement, undertaking or obligation
in Article 8, it
being understood that the sole remedy for any such breach,
violation or failure shall be pursuant to Article 8);
(c) a claim or right
asserted or held by any person who is or at any time was an
officer, director, employee or agent of any Group Company (against
any Group Company, Buyer, or any Affiliate of a Group Company or
Buyer) involving a right or entitlement or an alleged right or
entitlement to indemnification, reimbursement of expenses or any
other relief or remedy (under the Governing Documents, under any
indemnification agreement or similar Contract, under any applicable
Laws or otherwise) with respect to any act or omission on the part
of such person or any event or other circumstance that arose,
occurred or existed at or prior to the Closing;
(d) the Pre-Closing
Reorganization; or
(e) any Excluded
Entity.
10.3 Indemnification By
Buyer. Subject to the
other terms and conditions of this Article 10, Buyer shall
indemnify and defend the Shareholder, its Affiliates and their
respective Representatives (collectively, the “Shareholder
Indemnitees”) against, and shall hold each of them
harmless from and against, and shall pay and reimburse each of them
for, any and all Losses incurred or sustained by, or imposed upon,
the Shareholder Indemnitees based upon, arising out of, with
respect to, relating to or by reason of:
(a) a material
inaccuracy in or material breach of any of the representations or
warranties of Buyer contained in this Agreement or in any
certificate or instrument delivered by or on behalf of Buyer
pursuant to Section
2.4(b) and Section
2.4(c), as of the date such representation or warranty was
made or as if such representation or warranty was made on and as of
the Closing Date (except for representations and warranties that
expressly relate to a specified date, the inaccuracy in or breach
of which will be determined with reference to such specified date);
or
(b) a breach or
non-fulfillment of any covenant, agreement or obligation to be
performed by Buyer pursuant to this Agreement (other than
Article 8, it being
understood that the sole remedy for any such breach thereof shall
be pursuant to Article
8).
10.4 Certain
Limitations. The
indemnification provided for in Section 10.2 and Section 10.3 shall be subject
to the following limitations:
(a) The Shareholder
and Parent shall not be liable to the Buyer Indemnitees for
indemnification under Section 10.2(a) until the
aggregate amount of all Losses in respect of indemnification under
Section 10.2(a)
exceeds $25,000 (the “Basket”), in which event
the Shareholder and Parent shall be liable for all Losses in
respect of indemnification under Section 10.2(a) in excess of
the Basket. Notwithstanding anything to the contrary set forth
herein, in no event shall the Shareholder or Parent have liability pursuant to
Article 8 and/or
Article 10 in an
aggregate amount greater than the Purchase Price as finally
determined pursuant to this Agreement (the “Cap”), except in the case
of fraud.
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(b) Buyer shall not be
liable to the Shareholder Indemnitees for indemnification under
Section
10.3(a) until
the aggregate amount of all Losses in respect of indemnification
under Section
10.3(a) exceeds
the Basket, in which event Buyer shall be liable for all Losses in
respect of indemnification under Section 10.3(a) in excess of
the Basket but not exceeding the Cap. Buyer shall not have
liability pursuant to Article 10 in an aggregate
amount greater than the Purchase Price as finally determined
pursuant to this Agreement, except in the case of
fraud.
(c) Notwithstanding the
foregoing, the Basket shall not apply to any indemnification claims
based upon, arising out of, with respect to, relating to or by
reason of any claims based on fraud, intentional misrepresentation
or intentional breach or any claim with respect to
Taxes.
10.5 Indemnification
Procedures. The party making
a claim under this Article
10 is referred to as the “Indemnified Person”, and
the party against whom such claims are asserted under this
Article 10 is
referred to as the “Indemnifying
Person”.
(a) Third Party
Claims.
(i) Notice. If any Indemnified
Person receives notice of the assertion or commencement of any
Action made or brought by any Person who is not a party or an
Affiliate of a party or a Representative of the foregoing (a
“Third Party
Claim”) against such Indemnified Person with respect
to which the Indemnifying Person is obligated to provide
indemnification under this Agreement, the Indemnified Person shall
give the Indemnifying Person reasonably prompt written notice
thereof, but in any event not later than thirty (30) days after
receipt of such notice of such Third Party Claim. The failure to
give such prompt written notice shall not, however, relieve the
Indemnifying Person of its indemnification obligations, except and
only to the extent that the Indemnifying Person forfeits rights or
defenses by reason of such failure. Such notice by the Indemnified
Person shall describe the Third Party Claim in reasonable detail,
shall include copies of all material written evidence thereof and
shall indicate the estimated amount, if reasonably practicable, of
the Loss that has been or may be sustained by the Indemnified
Person.
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(ii) Right to Defend. Upon receipt
of the notice, the Indemnifying Person will have the right to
defend the Indemnified Person against the Third Party Claim with
counsel reasonably satisfactory to the Indemnified Person,
provided, that
(i) within thirty (30) days after the Indemnified Person has
given notice of the Third Party Claim the Indemnifying Person
acknowledges in writing to the Indemnified Person its unqualified
obligation to indemnify the Indemnified Person as provided
hereunder; provided, further, that, if after the Indemnifying
Person acknowledges its unqualified obligation to indemnify the
Indemnified Person and assumed the defense of such Third Party
Claim, (A) new allegations or claims are asserted as part of such
Third Party Claim, or (B) the original Third Party Claim is
otherwise amended in a manner that materially increases the
indemnification obligations of the Indemnifying Person under such
Third Party Claim (including by reason of new facts having been
discovered or being alleged), then, in each such case, the
Indemnifying Person shall either (I) notify the Indemnified
Person of such changes to the original Third Party Claim, within
fifteen (15) days of such changes, and turn over the defense of the
Third Party Claim to the Indemnified Person, in which case the
Indemnifying Person shall be deemed not to have acknowledged its
obligation to indemnify the Indemnified Person (except to the
extent all or any portion of the original Third Party Claim has
already been determined, compromised or settled), or
(I) continue to defend such Third Party Claim, in which case
the Indemnifying Person shall be deemed to have acknowledged its
obligation to indemnify the Indemnified Person with respect to such
Third Party Claim as so changed, (ii) the Indemnifying Person
provides the Indemnified Person with evidence reasonably acceptable
to the Indemnified Person that the Indemnifying Person will have
the financial resources to defend against the Third Party Claim and
fulfill its indemnification obligations hereunder, (iii) the
Third Party Claim involves only money damages, and does not seek
statutory, enhanced or treble damages or an injunction or other
equitable relief, (iv) the Third Party Claim has a reasonable
likelihood of resulting in indemnifiable Losses that would result
in the Cap being exceeded or does not have a reasonable likelihood
of resulting in indemnifiable Losses that would result in the
Basket being exceeded; or (v) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not, in the good
faith judgment of the Indemnified Person, likely to establish a
precedential custom or practice adverse to the continuing business
interests or the reputation of the Indemnified Person or have a
material adverse effect on the Indemnified Person, (vi) the
Third Party Claim does not involve a supplier, customer,
distributor, licensor, licensee, lessor or insurer of the Company
or any Affiliate thereof or a Governmental Authority, (vii) the
Third Party Claim does not involve a class action lawsuit and
(viii) the Indemnifying Person conducts the defense of the
Third Party Claim actively and diligently. The Indemnifying Person
will keep the Indemnified Person apprised of all material
developments, including settlement offers, with respect to the
Third Party Claim and permit the Indemnified Person to participate
in the defense of the Third Party Claim with counsel selected by it
subject to the Indemnifying Person’s right to control the
defense thereof. The fees and disbursements of such counsel shall
be at the expense of the Indemnified Person, provided, that if in the
reasonable opinion of counsel to the Indemnified Person,
(A) there are legal defenses available to an Indemnified
Person that are different from or additional to those available to
the Indemnifying Person; or (B) there exists a conflict of
interest between the Indemnifying Person and the Indemnified Person
that cannot be waived, the Indemnifying Person shall be liable for
the reasonable fees and expenses of counsel to the Indemnified
Person in each jurisdiction for which the Indemnified Person
determines counsel is required. If the Indemnifying Person elects
not to or is not entitled to defend such Third Party Claim, fails
to promptly notify the Indemnified Person in writing of its
election to defend as provided in this Agreement, or fails to
diligently prosecute the defense of such Third Party Claim, the
Indemnified Person may, subject to Section 10.5(c), pay,
compromise, defend such Third Party Claim and seek indemnification
for any and all Losses based upon, arising from or relating to such
Third Party Claim. The Shareholder, Parent and Buyer shall cooperate with
each other in all reasonable respects in connection with the
defense of any Third Party Claim.
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(iii) Cooperation. With respect to
any Third Party Claim, both the Indemnified Person and the
Indemnifying Person, as the case may be, shall keep the other
Person fully informed of the status of such Third Party Claim and
any related Actions at all stages thereof where such Person is not
represented by its own counsel. The parties agree to provide
reasonable access to the other parties to such documents and
information as may be reasonably requested in connection with the
defense, negotiation or settlement of any such Third Party Claim;
provided, however, that the parties shall cooperate in such a
manner as to preserve in full (to the extent possible) the
confidentiality of all Confidential Information and the
attorney-client and work-product privileges of the other party. In
connection therewith, each party agrees that: (i) it will use
commercially reasonable efforts, in respect of any Third Party
Claim in which it has assumed or participated in the defense, to
avoid production of Confidential Information (consistent with
applicable Law and rules of procedure); and (ii) all
communications between any party and counsel responsible for or
participating in the defense of any Third Party Claim shall, to the
extent possible, be made so as to preserve any applicable
attorney-client or work-product privilege.
(iv) Settlement. The Indemnifying
Person shall not enter into settlement or compromise of any Third
Party Claim or permit a default or consent to entry of any judgment
or admit any liability with respect thereto, if it is not defending
such Third Party Claim. If the Indemnifying Person is defending
such Third Party Claim, it shall not enter into settlement or
compromise of any Third Party Claim or permit a default or consent
to entry of any judgment or admit any liability with respect
thereto without the prior written consent of the Indemnified Person
unless such settlement, compromise or judgment (A) does not involve
liability or the creation of a financial or other obligation on the
part of the Indemnified Person, does not involve any finding or
admission of any violation of Law or any violation of the rights of
any Person or the admission of wrongdoing and would not have any
adverse effect on other claims that may have been made against the
Indemnified Person, (B) does not involve any relief other than
monetary damages that are paid in full by the Indemnifying Person,
and (C) provides, for the complete, final and unconditional release
of each Indemnified Person and its Affiliates from all liabilities
and obligations in connection with such Third Party Claim and would
not otherwise adversely affect the Indemnified Person.
(b) Direct Claims. Any Action by an
Indemnified Person on account of a Loss which does not result from
a Third Party Claim (a “Direct Claim”) shall be
asserted by the Indemnified Person giving the Indemnifying Person
reasonably prompt written notice thereof, but in any event not
later than thirty (30) days after the Indemnified Person becomes
aware of such Direct Claim. The failure to give such prompt written
notice shall not, however, relieve the Indemnifying Person of its
indemnification obligations, except and only to the extent that the
Indemnifying Person forfeits rights or defenses by reason of such
failure. Such notice by the Indemnified Person shall describe the
Direct Claim in reasonable detail, shall include copies of all
material written evidence thereof and shall indicate the estimated
amount, if reasonably practicable, of the Loss that has been or may
be sustained by the Indemnified Person. The Indemnifying Person
shall have thirty (30) days after its receipt of such notice to
respond in writing to such Direct Claim. The Indemnified Person
shall allow the Indemnifying Person and its professional advisors
to investigate the matter or circumstance alleged to give rise to
the Direct Claim, and whether and to what extent any amount is
payable in respect of the Direct Claim and the Indemnified Person
shall assist the Indemnifying Person’s investigation by
giving such information and assistance (including access to the
Company’s premises and personnel and the right to examine and
copy any accounts, documents or records) as the Indemnifying Person
or any of its professional advisors may reasonably request. If the
Indemnifying Person does not so respond within such thirty (30) day
period, the Indemnifying Person shall be deemed to have rejected
such claim, in which case the Indemnified Person shall be free to
pursue such remedies as may be available to the Indemnified Person
on the terms and subject to the provisions of this
Agreement.
-35-
(c) Tax Claims. Notwithstanding any
other provision of this Agreement, the control of any claim,
assertion, event or proceeding in respect of Taxes of the Company
(including, but not limited to, any such claim in respect of any
breach or violation of or failure to fully perform any covenant,
agreement, undertaking or obligation in Article 8) shall be
governed exclusively by Article 8 hereof.
(a) All indemnification
owing by Buyer to any Shareholder Indemnitee hereunder, as finally
determined pursuant to this Article 10, shall be effected,
no later than five (5) Business Days after the final determination
thereof, by wire transfer of immediately available funds from Buyer
(or its designee) to an account designated in writing by such
Shareholder Indemnitee within five (5) Business Days after the
final determination thereof.
(b) All indemnification
owing by the Shareholder and/or Parent to any Buyer Indemnitee
hereunder, as finally determined pursuant to this Article 10, shall be effected,
no later than five (5) Business Days after the final determination
thereof, by wire transfer of immediately available funds from the
Shareholder, Parent (or their respective designee) to an account
designated in writing by such Buyer Indemnitee within five (5)
Business Days after the final determination thereof.
(a) . The Shareholder
may not seek indemnification under the Governing Documents for any
Group Company for any matter for which it has an indemnification
obligation hereunder.
10.8 Materiality. For purposes of
calculating the amount of Losses incurred by a party seeking
indemnification hereunder arising out of or resulting from any
breach of a representation, warranty covenant or agreement
contained herein, and for purposes of determining whether such a
breach has occurred, the representations, warranties, covenants and
agreements contained herein shall be deemed to have been made
without any qualifications as to “materiality”,
“Material Adverse Effect” or other similar
qualifications.
10.9 Tax Treatment of Indemnification
Payments. All cash
indemnification payments made under this Agreement shall be treated
for Tax purposes by the parties as an adjustment to the Purchase
Price, unless otherwise required by Law.
10.10 Exclusive
Remedies. Subject to
Section 12.12, the
parties acknowledge and agree that their sole and exclusive remedy
with respect to any and all claims (other than claims arising from
fraud, intentional misrepresentation, criminal activity or willful
misconduct on the part of a party in connection with the
Transactions) for any breach of any representation, warranty,
covenant, agreement or obligation set forth herein shall be
pursuant to the indemnification provisions set forth in
Article 8 and this
Article 10. Nothing
in this Section
10.10 shall limit any Person’s right to seek and
obtain any equitable relief to which any Person shall be entitled
or to seek any remedy on account of any party’s fraud,
intentional misrepresentation, criminal activity or willful
misconduct.
10.11 No
Contribution. Anything to the
contrary herein notwithstanding, the Shareholder shall not have any
right to seek any indemnification or contribution from or remedy
against any Group Company whether arising prior to or after the
Closing Date in respect of any breach of any representation or
warranty by a Group Company or the failure of a Group Company to
comply with any covenant or agreement to be performed by such Group
Company on or prior to the Closing Date and the Shareholder hereby
waive any such claim they may have against each Group Company with
respect thereto whether at law, in equity or
otherwise.
-36-
10.12 Separate
Bases for Claim. If any party
hereto has breached any representation, warranty or covenant or
agreement contained herein in any respect, the fact that there
exists another representation, warranty or covenant relating to the
same subject matter (regardless of the relative levels of
specificity) which such party has not breached shall not detract
from or mitigate the fact that such party is in breach of the first
representation, warranty, covenant or agreement.
Termination
(a) by the mutual
written consent of the Shareholder and Buyer;
(b) by Buyer by written
notice to the Shareholder if:
(i) Buyer is not then
in material breach of any provision of this Agreement and there has
been a breach, inaccuracy in or failure to perform any
representation, warranty, covenant or agreement made by a
Shareholder or the Company in this Agreement that would give rise
to the failure of any of the conditions specified in Article 9 and such breach,
inaccuracy or failure has not been cured within ten (10) days of
the Shareholder’s receipt of written notice of such breach
from Buyer; or
(ii) any of the
conditions set forth in Section 9.1 or Section 9.2 shall not have
been, or if it becomes apparent that any of such conditions will
not be, fulfilled by February 28, 2021 (the “Outside Date”) unless
such failure shall be due to the failure of Buyer to perform or
comply with any of the covenants or agreements hereof to be
performed or complied with by it prior to the Closing;
(c) by the Shareholder
by written notice to Buyer if:
(i) neither the
Shareholder nor any Group Company is then in material breach of any
provision of this Agreement and there has been a breach, inaccuracy
in or failure to perform any representation, warranty, covenant or
agreement made by Buyer in this Agreement that would give rise to
the failure of any of the conditions specified in Article 9 and such breach,
inaccuracy or failure has not been cured within ten (10) days of
Buyer’s receipt of written notice of such breach from the
Shareholder; or
(ii) any of the
conditions set forth in Section 9.1 or Section 9.3 shall not have
been, or if it becomes apparent that any of such conditions will
not be, fulfilled by the Outside Date, unless such failure shall be
due to the failure of the Shareholder or any Group Company to
perform or comply with any of the covenants or agreements hereof to
be performed or complied with by it prior to the Closing;
or
(d) by Buyer or the
Shareholder in the event that (i) there shall be any Law that
makes consummation of the Transactions illegal or otherwise
prohibited or (ii) any Governmental Authority shall have
issued a Governmental Order restraining or enjoining the
Transactions, and such Governmental Order shall have become final
and non-appealable.
-37-
11.2 Effect
of Termination. In the event of
the termination of this Agreement in accordance with this
Article 11,
this Agreement shall forthwith become void and there shall be no
liability on the part of any party except:
(a) for this
Article 11 and
Section 7.10 and
Article 12, which
provisions shall survive the termination of this Agreement;
and
(b) that nothing herein
shall relieve any party from liability for any breach of any
provision hereof.
Miscellaneous
12.1 Expenses. Except as
otherwise expressly provided herein, all costs and expenses,
including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with
this Agreement and the Transactions shall be paid by the party
incurring such costs and expenses, whether or not the Closing shall
have occurred; provided that all filing and
other similar fees payable in connection with any filings or
submissions in connection with the FCC Applications and State PUC
Applications shall be borne 100% by Buyer.
12.2 Notices. All notices,
requests, consents, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to
have been given (a) when delivered by hand (with written
confirmation of receipt); (b) when received by the addressee
if sent by a nationally recognized overnight courier (receipt
requested); (c) on the date sent by facsimile or e-mail of a
PDF document (with confirmation of transmission) if sent during
normal business hours of the recipient, and on the next Business
Day if sent after normal business hours of the recipient or
(d) on the third (3rd) day after the date
mailed, by certified or registered mail, return receipt requested,
postage prepaid. Such communications must be sent to the respective
parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with
this Section
12.2):
If to
the Shareholder or the Company (prior to the Closing):
|
HC2
Holdings, Inc.
000
Xxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, XX 00000
Attention:
Xxxxxxx Xxxx, Chief Financial Officer
Facsimile:
None
Email:
xxxxx@xx0.xxx
|
with a
copy (which shall not constitute notice) to:
|
Xxxxxx
& Xxxxxxx, PC
Xxx
Xxxxxxxxxx Xxxxxx
Xxxxxxxxxxx,
XX 00000
Attention:
Xxxxxxx X. Xxxx, Esquire
Facsimile:
(000) 000-0000
Email:
xxxxx@xxxxxxxxx.xxx
|
-38-
If to
Buyer:
|
c/o
Korr Acquisitions Group, Inc.
0000
Xxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx,
Xxx Xxxx 00000
Attention:
Xxxxxxx OrrFacsimile: None
Email:
xx@xxxxxx.xxx
|
with a
copy (which shall not constitute notice) to:
|
Xxxxxxxx
Xxxxxx Xxxxxxx & Hampton, LLP
00
Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxxx Xxxxxxxx, Esq. Xxxxxxx X. Xxxxx, Esq.
Facsimile:
(000) 000-0000
Email:
xxxxxxxxxx@xxxxxxxxxxxxxx.xxx xxxxxx@xxxxxxxxxxxxxx.xxx
|
-39-
12.3 Construction. Unless the
express context otherwise requires: (a) the words
“hereof”, “herein”, and
“hereunder” and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; (b) the terms defined
in the singular have a comparable meaning when used in the plural,
and vice versa; (c) the terms “Dollars” and
“$” mean United States Dollars; (d) references herein
to a specific Article, Section, clause, Schedule or Exhibit shall
refer, respectively, to the Articles, Sections and clauses of, and
Schedules and Exhibits to, this Agreement; (e) wherever the word
“include,” “includes,” or
“including” is used in this Agreement, it shall be
deemed to be followed by the words “without
limitation”; (f) any reference to the masculine, feminine or
neuter gender shall include each other gender; (g) when reference
is made herein to “the business of” a Person, such
reference shall be deemed to include the business of all direct and
indirect Subsidiaries of such Person, (h) all accounting and
financial terms shall be deemed to have the meanings assigned
thereto under GAAP unless expressly stated otherwise, (i) when this
Agreement states that the Company has “made available,”
“delivered” or “provided” (or terms of
similar import) a particular document or other item, it shall mean
that the Company has made a true, correct and complete copy of such
document or item (together with all amendments, supplements or
other modifications thereto or waivers thereof) available for
viewing by Buyer and its representatives (and properly labeled,
including both as to its location within the index to the
electronic dataroom for “Project Relay” run by Dropbox
(the “Dataroom”) and the
description of the file containing such document or information) in
the Dataroom, as such materials were posted to the Dataroom at
least three (3) Business Days prior to the date hereof and not
removed on or prior to the date hereof, and, if any such document
or information has not been continuously available to each of
Buyer’s representatives who have access to the Dataroom since
the initial date such representatives were granted access, a
notification that such document or information was added to the
Dataroom has been sent to each representative of Buyer who has
access to the Dataroom prior to the fifth (5th) Business Day
preceding the Closing Date, (j) any reference to any applicable Law
in this Agreement refers to such applicable Law as in effect at the
date of this Agreement and the Closing Date, (k) in the computation
of periods of time from a specified date to a later specified date,
the word “from” means “from and including”
and the words “to” and “until” each mean
“to but excluding” and if the last day of any such
period is not a Business Day, such period will end on the next
Business Day, (l) when calculating the period of time
“within” which or “following” which any act
or event is required or permitted to be done, notice given or steps
taken, the date which is the reference date in calculating such
period is to be excluded from the calculation and if the last day
of any such period is not a Business Day, such period will end on
the next Business Day, (m) the provision of a table of contents and
the insertion of headings are for convenience of reference only and
shall not affect or be utilized in construing or interpreting this
Agreement, (n) references to “day” means calendar days
unless Business Days are expressly specified, (o) references to any
Person includes such Person’s predecessors, successors and
assigns to the extent, in the case of successors and assigns, such
successors and assigns are permitted by the terms of any applicable
agreement, and reference to a Person in a particular capacity
excludes such Person in any other capacity or individually, (p)
references to a party means a party to this Agreement, (q)
references to a document, instrument, or agreement also refers to
all addenda, exhibits, or schedules thereto, (r) a reference to a
“copy” or “copies” of any document,
instrument, or agreement means a copy or copies that are complete
and correct; and (s) a reference to a list, or any like compilation
(whether in the Schedules to this Agreement or elsewhere), means
that the item referred to is complete and correct. All Exhibits and
Schedules annexed hereto or referred to herein are incorporated in
and made a part of this Agreement as if set forth in full herein.
The parties agree that they have been represented by counsel during
the negotiation and execution of this Agreement and, therefore,
waive the application of any applicable Law or rule of construction
providing that ambiguities in an agreement or other document will
be construed against the party or parties drafting such agreement
or document. Unless expressly provided otherwise, any approval or
consent required to be given by a party in this Agreement shall be
given or withheld by such party in its sole discretion. The fact
that any representation and warranty may be more specific than any
other representation and warranty shall not be construed so as to
limit or restrict the scope, applicability or meaning of any other
representation and warranty contained herein.
-40-
12.4 Severability.
If any term or provision of this Agreement is invalid, illegal or
unenforceable in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other term or provision of
this Agreement or invalidate or render unenforceable such term or
provision in any other jurisdiction. Upon such determination that
any term or other provision is invalid, illegal or unenforceable,
the parties shall negotiate in good faith to modify this Agreement
so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the
Transactions be consummated as originally contemplated to the
greatest extent possible.
12.5 Entire
Agreement. This Agreement
and the Transaction Documents contain the entire understanding of
the parties with respect to the subject matter hereof and thereof
and supersede all prior and contemporaneous oral or written
agreements, negotiations, understandings, statements or proposals
with respect to the subject matter hereof and thereof. In the event
of any inconsistency between the statements in the body of this
Agreement and those in the other Transaction Documents and
Disclosure Schedule (other than an exception expressly set forth as
such in the Disclosure Schedule), the statements in the body of
this Agreement will control.
12.7 Successors and
Assigns. This Agreement
shall be binding upon and shall inure to the benefit of the parties
and their respective successors and permitted assigns. No party may
assign its rights or delegate any of its obligations hereunder
without the prior written consent of the other parties, which
consent shall not be unreasonably withheld or delayed; provided, that Buyer shall be
entitled to assign or delegate this Agreement or all or any part of
its rights or obligations hereunder (a) to any one or more
Affiliates of Buyer, provided further that such assignment shall
not relieve Buyer of any of its obligations hereunder, (b) in
connection with the sale of all or any substantial portion of the
assets of Buyer or (c) for collateral security purposes to any
lender providing financing to Buyer. No assignment or delegation
shall relieve the assigning party of any of its obligations
hereunder.
12.8 No Third-Party
Beneficiaries. Except as
provided in Section
8.3 and Article
10, this Agreement is for the sole benefit of the parties
and their respective successors and permitted assigns and nothing
herein, express or implied, is intended to or shall confer upon any
other Person or entity any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this
Agreement.
12.9 Amendment and Modification;
Waiver. This Agreement
may only be amended, modified or supplemented by an agreement in
writing signed by each party. No waiver by any party of any of the
provisions hereof shall be effective unless explicitly set forth in
writing and signed by the party so waiving. No waiver by any party
shall operate or be construed as a waiver in respect of any
failure, breach or default not expressly identified by such written
waiver, whether of a similar or different character, and whether
occurring before or after that waiver. No failure to exercise, or
delay in exercising, any right, remedy, power or privilege arising
from this Agreement shall operate or be construed as a waiver
thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power
or privilege.
-41-
12.10 Governing
Law. This Agreement
and the Transaction Documents shall be governed by and construed in
accordance with the internal Laws of the State of New York without
reference to such state’s or any other jurisdiction’s
principles of conflicts of law.
(a) Any Action against
Buyer, the Group Companies, or the Shareholder arising out of, or
with respect to, this Agreement or any Governmental Order entered
by any court in respect thereof shall be brought exclusively in the
state or federal courts located in the State of New York (the
“Designated
Courts”), and such parties accept the exclusive
jurisdiction of the Designated Courts for the purpose of any such
Action. Each of Buyer, the Company, the Shareholder agrees that
service of any process, summons, notice or document by U.S.
registered mail addressed to such party in accordance with the
addresses set forth in Section 12.2 shall be
effective service of process for any Action brought against such
party in any such court. Buyer hereby designates the individual
listed in Section 12.2 to whom
notice may be given on behalf of Buyer as its true and lawful agent
upon whom may be served any lawful process in any Action instituted
by or on behalf of the Company (before the Closing) or the
Shareholder. The Shareholder and the Company (before the Closing)
hereby designate the Person listed in Section 12.2 to whom
notice may be given on behalf of Buyer as their true and lawful
agent upon whom may be served any lawful process in any Action
instituted by or on behalf of Buyer.
(b) In addition, each
of Buyer, the Company and the Shareholder hereby irrevocably
waives, to the fullest extent permitted by Law, any objection which
it may now or hereafter have to the laying of venue of any Action
arising out of or relating to this Agreement in any Designated
Court or any Governmental Order entered by any of the Designated
Courts and hereby further irrevocably waives any claim that any
Action brought in the Designated Courts has been brought in an
inconvenient forum.
(c) EACH OF BUYER, THE
COMPANY AND THE SHAREHOLDER ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY THAT MAY ARISE OUT OF, OR WITH RESPECT TO, THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES,
AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH
PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT
OR ATTORNEY OR ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER,
(III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY AND (IV) EACH PARTY
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS OF THIS SECTION 12.11. ANY PARTY
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
-42-
12.12 Specific
Performance. The parties agree
that irreparable damage would occur if any provision of this
Agreement were not performed in accordance with the terms hereof
and that the parties shall be entitled to specific performance of
the terms hereof, in addition to any other remedy to which they are
entitled at law or in equity.
12.13 Counterparts;
Effectiveness. This Agreement
may be executed in several counterparts (including counterparts by
email, facsimile, portable document format (pdf) or any electronic
signature complying with the U.S. federal ESIGN Act of 2000
(including DocuSign)), each of which shall be deemed an original
and all of which shall together constitute one and the same
instrument. This Agreement shall become effective when each party
shall have received a counterpart hereof signed by all of the other
parties. Until and unless each party has received a counterpart
hereof signed by the other Parties, this Agreement shall have no
effect and no party shall have any right or obligation hereunder
(whether by virtue of any other oral or written agreement or other
communication).
[SIGNATURE
PAGE FOLLOWS]
-43-
IN
WITNESS WHEREOF, each party has duly executed and delivered this
Agreement as of the date first above written.
|
“BUYER”
By:
Name:
Title:
|
|
“COMPANY”
By:
Name:
Title:
|
|
“SHAREHOLDER”
By:
Name:
Title:
|
|
Solely
for the purpose of Article 8 and Article 10
“PARENT”
By:
Name:
Title:
|
-44-
ANNEX A
DEFINITIONS
In this
Annex, and in the Agreement and the other Appendices and Schedules
thereto, unless the context otherwise requires, the following terms
shall have the meanings assigned below and the terms listed in the
chart below shall have the meanings assigned to them in the Section
set forth opposite to such term (unless otherwise specified,
section references in this Annex are to Sections of this
Agreement):
Term:
|
Section:
|
Accounting
Expert
|
3.3(c)
|
Accounting
Referee
|
8.1(d)
|
Acquisition
Proposal
|
7.3(a)
|
Agreement
|
Preamble
|
Base
Purchase
Price
|
1.2
|
Basket
|
10.4(a)
|
Buyer
|
Preamble
|
Buyer
Indemnitees
|
10.2
|
Cap
|
10.4(a)
|
Closing
|
2.1
|
Closing
Date
|
2.1
|
Closing
Statement
|
3.3(a)
|
Company
|
Preamble
|
Direct
Claim
|
10.5(b)
|
Estimated
Closing Company Transaction Expenses
|
3.2(a)
|
General
Survival
Period
|
10.1
|
Indemnified
Person
|
10.5
|
Indemnifying
Person
|
10.5
|
Net
Adjustment
Amount
|
3.3(e),
3.3(g)
|
Net
Estimated Adjustment
Amount
|
3.2(b)
|
Neutral
Accounting
Firm
|
3.3(c)
|
Notice
of
Disagreement
|
3.3(b)
|
Post-Closing
Tax
Period
|
8.1(a)
|
Purchase
Price
|
1.2
|
Real
Property
|
7.2
|
Resolution
Period
|
3.3(c)
|
Restricted
Territory
|
7.6(a)(i)
|
Review
Period
|
3.3(b)
|
Shareholder
Indemnitees
|
10.3
|
Shareholder
|
Preamble
|
Shares
|
Recitals
|
Tax
Claim
|
8.5
|
Third
Party
Claim
|
10.5(a)(i)
|
-45-
“Action” means any
governmental, judicial, administrative or adversarial proceeding
(public or private), any action, complaint, claim, lawsuit, legal
proceeding, whistleblower complaint, litigation, arbitration or
mediation, any hearing, investigation (internal or otherwise),
audit, probe or inquiry by any Governmental Authority or any other
dispute, including any adversarial proceeding arising out of this
Agreement.
“Affiliate” means, with
respect to any Person, any other Person who, directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. The
term “control” (including, with correlative meanings,
the terms “under common control with” and
“controlled by”), as used in the preceding sentence,
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by
contract or otherwise.
“Business” means the
wholesaling long-distance voice business conducted by the Group
Companies as of the date of this Agreement.
“Business Day” means
any day except Saturday, Sunday or any other day on which
commercial banks located in the State of New York are authorized or
required by Law to be closed for business.
“Closing Purchase Price”
shall mean (i) the Base Purchase Price plus (ii) the Net Estimated
Adjustment Amount.
“Code” means the
Internal Revenue Code of 1986, as amended.
“Communications
Authorizations” has the meaning set forth in
Section
5.7(a).
“Communications Laws”
means (i) the Communications Act, (ii) the rules, regulations,
published orders, policies and decisions promulgated by, and other
applicable requirements of, the FCC and interpretations thereof by
federal courts of competent jurisdiction, (iii) the state statutes
governing the communications industry, the rules, orders,
regulations and other applicable requirements of any State PUCs and
(iv) any other rules, regulations, published orders, policies and
decisions promulgated by the telecommunications regulatory agencies
of the U.S., states and territories and interpretations thereof by
courts of competent jurisdiction, in each case, with jurisdiction
over any of the services offered by any Group Company.
“Contracts” means
all contracts, purchase orders, leases, deeds, mortgages, licenses,
instruments, notes, undertakings, indentures, joint ventures and
all other agreements, commitments and arrangements, whether written
or oral.
“Disclosure Schedule”
means that certain document identified as the Disclosure Schedule,
dated as of the date hereof (as the same may be modified from time
to time in accordance with the terms hereof), delivered by the
Company and the Shareholder to Buyer in connection with this
Agreement. Each Section in the Disclosure Schedule shall be deemed
to qualify only (i) the corresponding Section of this Agreement,
(ii) any other Section of this Agreement to which such disclosure
makes express reference or (iii) any other Section of this
Agreement to the extent the relevance of the information disclosed
in such Section in the Disclosure Schedule to such other Section is
readily apparent on its face. Notwithstanding anything to the
contrary contained herein, no disclosure in the Disclosure Schedule
shall be deemed adequate to disclose an exception to a
representation or warranty made by any party unless the disclosure
identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail. Without limiting
the generality of the foregoing, the mere listing (or inclusion of
a copy) of a document or other item in the Disclosure Schedule
shall not be deemed adequate to disclose an exception to a
representation or warranty made herein (unless the representation
or warranty has to do with the existence of the document or other
item itself).
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“Encumbrance” means
any charge, claim, community property interest, pledge, condition,
equitable interest, lien (statutory or other), option, security
interest, mortgage, easement, encroachment, right of way, right of
first refusal, or restriction of any kind, including any
restriction on use, voting, transfer, receipt of income or exercise
of any other attribute of ownership. For purposes of this
Agreement, a Person will be deemed to own a property or asset
subject to an Encumbrance if it holds such property or asset
subject to the interest of a vendor or a lessor under any
conditional sale agreement, capital lease, or other title retention
agreement (or any financing lease having substantially the same
economic effect as any of the foregoing) relating to such property
or asset.
“Excluded Entities” means,
collectively, PTGI International Carrier Services Ltd., a private
limited company organized in the United Kingdom, PTGI-ICS OPSRO
S.R.L., a limited liability company organized in Romania, and any
other Subsidiaries of the Company other than Go2Tel.
“FCC” means the Federal
Communications Commission.
“FCC Applications” has the
meaning set forth in Section 7.7(d).
“FCC Consent” shall mean
the consent of the FCC to the FCC Applications contemplated in
Section
7.7(d).
“Final Order” shall mean
thirty-one (31) days have elapsed from the date of public notice of
the FCC Consent and (1) no request for stay has been filed, and no
action with respect thereto is pending, no such stay is in effect,
and, if any deadline for filing any such request is designated by
statute or regulation, it has passed, (2) no appeal, petition for
rehearing or reconsideration or application for review of the
action is pending before the FCC and the time for filing any such
action has passed, (3) no reconsideration on the FCC’s own
motion is pending or in effect and the time for such
reconsideration has passed and (4) no appeal or petition for review
to a court, or request for stay by a court, of the FCC’s
action is pending or in effect, and, if any deadline for filing any
such appeal or request is designated by statute or rule, such
deadline has passed.
“GAAP” means United
States generally accepted accounting principles in effect from time
to time.
“Go2Tel” means Xx0Xxx.xxx,
Inc., a Florida corporation and a wholly owned Subsidiary of the
Company.
“Governing Documents”
means with respect to any Person: (a) if a corporation, the
articles or certificate of incorporation and the bylaws; (b) if a
general partnership, the partnership agreement and any statement of
partnership; (c) if a limited partnership, the limited partnership
agreement and the certificate of limited partnership; (d) if a
limited liability company, the articles of organization and
operating agreement; (e) if a trust, the instrument governing the
trust, (f) if another type of Person, any other charter or similar
document adopted or filed in connection with the creation,
formation or organization of the Person; (g) all
equityholders’ agreements, voting agreements, voting trust
agreements, joint venture agreements, registration rights
agreements or other agreements or documents relating to the
organization, management or operation of any Person or relating to
the rights, duties and obligations of the equityholders of any
Person; and (h) any amendment or supplement to any of the
foregoing.
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“Governmental
Authority” means any federal, state, local or
foreign government or political subdivision thereof, or any agency
or instrumentality of such government or political subdivision, or
any self-regulated organization or other non-governmental
regulatory authority or quasi-governmental authority (to the extent
that the rules, regulations or orders of such organization or
authority have the force of Law), or any arbitrator, court or
tribunal of competent jurisdiction.
“Governmental
Order” means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by
or with any Governmental Authority.
“Group Companies” means,
collectively, the Company and each of its Subsidiaries (other than
the Excluded Entities).
“Indebtedness” means the
following obligations: (a) all indebtedness or other obligations of
the Group Companies for borrowed money, whether current, short-term
or long-term, secured or unsecured, including all overdrafts and
negative cash balances; (b) all indebtedness of the Group Companies
for the deferred purchase price for purchases of property or
services with respect to which any Group Company is liable,
contingently or otherwise, as obligor or otherwise (whether
earn-outs, indemnity payments, non-compete payments, consulting
payments, retention bonuses, severance payments or other similar
payments, or otherwise; in each case whether contingent or not and
valued at the maximum amount thereof) except any trade payable
incurred in the Ordinary Course of Business that is treated (in its
entirety) as a current account payable under GAAP; (c) all lease
obligations of the Group Companies under leases that have been or
should be capitalized in accordance with GAAP; (d) the aggregate
face amount of all outstanding letters of credit issued on behalf
of the Group Companies; (e) all obligations of the Group Companies
arising under acceptance facilities; (f) all guaranties,
endorsements and other contingent obligations of the Group
Companies to purchase, to provide funds for payment, to supply
funds to invest in any other Person, or otherwise to assure a
creditor against loss; (g) all obligations of the Group Companies
under any interest rate protection, foreign currency exchange, or
other interest or exchange rate swap or hedging agreement or
arrangement, or other derivative product; (h) all obligations
secured by an Encumbrance upon any assets or properties of the
Group Companies; (i) all outstanding or held checks, money orders
or similar instruments of the Group Companies as of the Closing;
(j) all Liabilities of the Group Companies pursuant to any phantom
equity plan or Liabilities with respect stock appreciation or
similar rights or arising from non-qualified deferred compensation
arrangements, plans or policies or other forms of deferred
compensation arrangements; (k) any other Liabilities, contingent or
otherwise, that, in accordance with GAAP, should be classified upon
the balance sheet of the Group Companies as indebtedness; (l) all
“withdrawal liability” of any Group Company to a
“multiemployer plan” as such terms are defined under
ERISA, (m) all indebtedness referred to in clauses (a) through (l)
above of any Person other than a Group Company that is guaranteed
by any Group Company; (n) declared but unpaid distributions; and
(o) accrued and unpaid interest on, and prepayment premiums,
penalties or similar contractual charges arising as a result of the
discharge of, any such foregoing obligation.
-48-
“Knowledge of the
Company,” “Knowledge of the
Shareholder,” “Company’s
Knowledge” or “Shareholder’s
Knowledge” or any other similar knowledge
qualification, means the knowledge of Xxxxx Xxxxxx. Any such person
shall be deemed to have “knowledge” of a particular
fact or other matter if such person is actually aware of such fact
or other matter.
“Law” means (a) any
federal, state, local, municipal, foreign, international,
multinational or other administrative law, constitution, common law
principle, ordinance, code, statute, judgment, injunction, decree,
order, rule, statute or governmental regulation, or “fair
price,” “moratorium,” “control share
acquisition” or other similar anti-takeover statute or
regulation, (b) any binding judicial or administrative
interpretation of any of the foregoing, (c) the terms and
conditions of any agreement relating to any Group Company with a
Governmental Authority, (d) the terms and conditions of any
certification relating to any Group Company to any Governmental
Authority, (e) any governmental requirements or restrictions
of any kind, or any rule, regulation or order promulgated
thereunder, (f) any rules, regulations, orders, decrees,
consents, or judgments of any regulatory agency, stock exchange or
similar self-regulatory organization, court or other Person, or
(g) any applicable requirements associated with any
Permits.
“Liability” means, with
respect to any Person, any liability or obligation of such Person
of any kind, character or description, whether known or unknown,
absolute or contingent, secured or unsecured, joint or several, due
or to become due, vested or unvested, executory, determined,
determinable or otherwise and whether or not the same is required
to be accrued on the financial statements of such
Person.
“Losses” mean any
and all claims, damages, decline in value, judgements, Liabilities,
losses (including, without limitation, punitive, exemplary,
consequential or indirect damages and liabilities of any kind),
lost profits, penalties, settlement payments, arbitration awards,
taxes and costs and expenses (including, without limitation,
reasonable attorneys’, consultants’ and experts’
fees and expenses and other costs of defending, investigating or
settling claims or enforcing rights to indemnification hereunder)
and the cost of pursuing any insurance providers in each case
whether or not arising out of Third Party Claims; provided, however, that
“Losses” shall not include punitive or exemplary
damages, except in the case of fraud or to the extent actually
awarded to a Governmental Authority or other third
party.
“Material Adverse
Effect” means any development, event, occurrence,
fact, condition or change that is, or could reasonably be expected
to become, individually or in the aggregate, materially adverse to
(a) the business, results of operations, condition (financial
or otherwise), assets or prospects of the Group Companies, taken as
a whole, or (b) the ability of the Shareholder or the Company
to consummate the Transactions on a timely basis; provided, however, that “Material Adverse
Effect” shall not include any event, occurrence, fact,
condition or change, directly or indirectly, arising out of or
attributable to: (i) general economic or political conditions;
(ii) conditions generally affecting the industries in which
the Group Companies operate; (iii) any changes in financial or
securities markets in general; (iv) acts of war (whether or
not declared), armed hostilities or terrorism, or the escalation or
worsening thereof; (v) earthquakes, hurricanes, pandemic, other
natural disasters; (vi) public announcement of this Agreement
(including the loss of suppliers or customers to the extent
resulting therefrom), (vii) actions of the Group Companies or the
Shareholder taken as expressly required by this Agreement, or that
are taken at the written request of Buyer, (viii) changes in
applicable Laws, GAAP or in the interpretation or enforcement
thereof, or (ix) any failure (in and of itself) by the Group
Companies to meet any projections or forecasts of earnings, claims
paid or loss reserves (provided that this clause (ix) shall not
prevent a determination that any change, condition, event,
occurrence, state of facts, effect or development underlying such
failure to meet projections or forecasts has resulted in a Material
Adverse Effect, to the extent such change or effect is not
otherwise excluded from this definition of Material Adverse
Effect); provided
further,
however, that any
event, occurrence, fact, condition or change referred to in clauses
(i), (ii), (iii), (iv), (v) or (viii) immediately above shall
be taken into account in determining whether a Material Adverse
Effect has occurred or could reasonably be expected to occur to the
extent that such event, occurrence, fact, condition or change has a
disproportionate effect on the Group Companies compared to other
participants in the industries in which the Group Companies
operate.
-49-
“Ordinary Course of
Business” of a Person means an action taken by such
Person if that action (a) is consistent in nature, scope and
magnitude with the past practices of such Person and is taken in
the ordinary course of the normal, day-to-day operations of such
Person; (b) does not require authorization by the board of
directors or shareholders of such Person (or by any Person or group
of Persons exercising similar authority) and does not require any
other separate or special authorization of any nature; and (c) is
similar in nature, scope and magnitude to actions customarily
taken, without any separate or special authorization, in the
ordinary course of the normal, day-to-day operations of other
Persons that are in the same line of business as such Person. No
violation of Law or Contracts shall be deemed in the Ordinary
Course of Business.
“Permits” means all
permits, certificates, licenses, approvals, governmental
notifications, franchises, certificates, approvals, exemptions,
classifications, registrations and other similar authorizations
(and applications therefor) from Governmental
Authorities.
“Permitted Encumbrances”
means (a) liens for Taxes not yet due and payable or being
contested in good faith by appropriate procedures and for which
there are adequate accruals or reserves on the Group
Companies’ balance sheet as of August 31, 2020;
(b) mechanics, carriers’, workmen’s,
repairmen’s or other like liens arising or incurred in the
Ordinary Course of Business and that are not delinquent and which
are not, individually or in the aggregate, material to the business
of the Group Companies; and (c) easements, rights of way,
zoning ordinances and other similar encumbrances affecting real
property which are not, individually or in the aggregate, material
to the business of the Group Companies.
“Person” means an
individual, corporation, partnership, joint venture, limited
liability company, Governmental Authority, unincorporated
organization, trust, association or other entity.
“Related Person” means
with respect to an entity, (i) any Affiliate of such entity, (ii)
each Person that serves as a director, officer, partner, member,
manager, executor, or trustee (or in a similar capacity) of such
entity, and (iii) any Person with respect to which such entity
serves as a general partner or a trustee (or in a similar
capacity).
“Representative” means,
with respect to any Person, any and all directors, officers,
employees, consultants, financial advisors, counsel, accountants
and other agents of such Person.
“State PUCs” means any
state public service commission, public utilities commission or
similar state agency responsible for regulating the communications
industry within a particular state and with jurisdiction over any
of the services offered by any Group Company .
“State PUC Applications”
has the meaning set forth in Section 7.7(d).
“State PUC Consents” shall
mean the consent of any State PUCs to the State PUC Applications
contemplated in Section
7.7(d).
-50-
“Subsidiary” means, with
respect to any Person, any other Person of which (a) the
accounts of which would be consolidated with and into those of the
applicable Person in such Person’s consolidated financial
statements if such statements were prepared in accordance with GAAP
as of such date, (b) if a corporation, a majority of the total
voting power of shares of capital stock entitled (without regard to
the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more
of the other Subsidiaries of that Person or a combination thereof,
or (c) if a limited liability company, partnership,
association or other business entity (other than a corporation), a
majority of membership, partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more other Subsidiaries of
that Person or a combination thereof and, for this purpose, a
Person or Persons owns a majority ownership interest in such a
business entity (other than a corporation) if such Person or
Persons shall be allocated a majority of such business
entity’s gains or losses or shall be or control any managing
director or general partner of such business entity (other than a
corporation).
“Tax Return” means
any return, declaration, report, claim for refund, information
return or statement or other document relating to Taxes, including
any schedule or attachment thereto, and including any amendment
thereof.
“Taxes” means all
federal, state, local, foreign and other income, gross receipts,
sales, use, production, ad valorem, transfer, franchise,
registration, profits, license, lease, service, service use,
withholding, payroll, employment, unemployment, estimated, excise,
severance, environmental, stamp, occupation, premium, property
(real or personal), real property gains, windfall profits, customs,
duties or other taxes, fees, assessments or charges of any kind
whatsoever, together with any interest, additions or penalties with
respect thereto and any interest in respect of such additions or
penalties.
“Transaction Documents”
means, with respect to a party, all agreements, certificates and
other instruments to be delivered by such party in connection with
this Agreement.
“Transactions” means the
transactions contemplated by this Agreement and the Transaction
Documents.
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