<PAGE>
Exhibit 2.3
EXECUTION COPY
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ASSET PURCHASE AGREEMENT
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EMS TECHNOLOGIES CANADA, LTD.,
AS VENDOR
EMS TECHNOLOGIES, INC.,
AS EMS GUARANTOR
- AND -
ADVANTECH SATELLITE NETWORKS INC.
AS PURCHASER
ADVANTECH ADVANCED MICROWAVE TECHNOLOGIES INC.
AS AMT
GUARANTOR
DECEMBER 22, 2005
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TABLE OF CONTENTS
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Article 1
DEFINITIONS....................................................
1
1.1 Certain Defined
Terms......................................... 1
1.2 List of Exhibits
and Schedules................................ 14
1.3 Knowledge of
Vendor........................................... 14
1.4 Entire
Agreement..............................................
15
1.5 Time of
Essence............................................... 15
Article 2 PURCHASE AND SALE OF PURCHASED
ASSETS.......................... 15
2.1 Action by Vendor
and Purchaser................................ 15
2.2 Place of
Closing.............................................. 17
2.3 No Assumption of
Excluded Liabilities or Purchase of Excluded
Assets........................................................
17
2.4 Assignment of
Restricted Rights............................... 20
2.5 Product Warranty
Obligations.................................. 22
2.6 Bulk Sales
Legislation........................................ 22
2.7 Access to
Purchased Assets/Reassignment of Rights............. 22
Article 3 PURCHASE
PRICE................................................. 23
3.1 Purchase
Price................................................ 23
3.2 Satisfaction of
Purchase Price and Closing Adjustment......... 23
3.3 Determination of
Closing Working Capital...................... 23
3.4 Adjustment of
Closing Date Payment............................ 26
3.5 Allocation of
Purchase Price.................................. 26
3.6 Further
Assurances............................................ 26
3.7
Withholding...................................................
26
Article 4 REPRESENTATIONS AND WARRANTIES OF
VENDOR....................... 27
4.1 Organization and
Good Standing................................ 27
4.2 Authorization
and Validity.................................... 27
4.3 Subsidiaries or
Affiliates.................................... 28
4.4 No
Conflict...................................................
28
4.5
Consents......................................................
28
4.6 Regulatory
Approvals.......................................... 29
4.7 Financial
Statements.......................................... 29
4.8 Absence of
Undisclosed Liabilities............................ 29
4.9 Absence of
Certain Changes or Events.......................... 29
4.10
Non-Arm's
Length Transactions................................. 30
4.11
Absence of
Guarantees......................................... 30
4.12
Major
Suppliers and Customers.................................
31
4.13
Tax
Matters...................................................
31
4.14
Title to
and Condition of Purchased Assets; Sufficiency of
Purchased Assets..............................................
32
4.15
Material
Contracts............................................ 32
4.16
Equipment
Contracts........................................... 33
4.17
Collectibility of Accounts Receivable.........................
33
4.18
Owned Real
Property........................................... 33
4.19
Leased
Real Property..........................................
33
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4.20
Books and
Records............................................. 34
4.21
No
Restrictive Agreements.....................................
34
4.22
Full Force
and Effect and Breach.............................. 34
4.23
Litigation....................................................
34
4.24
Compliance
with Laws.......................................... 35
4.25
Employees
and Consultants..................................... 35
4.26
Pension
and Employee Benefit Matters.......................... 37
4.27
Product
and Inventory Status.................................. 43
4.28
Intellectual Property Rights..................................
44
4.29
Brokers
and Finders........................................... 48
4.30
Governmental Permits and Environmental Matters................
48
4.31
Insurance.....................................................
49
4.32
Solvency;
No Bankruptcy or Insolvency Proceedings............. 49
4.33
Full
Disclosure...............................................
49
4.34
Vendor's
Disclosure Letter / Exhibits and Schedules........... 49
4.35
Data
Processing...............................................
50
4.36
GST/QST
Registrations......................................... 50
4.37
Interpretation and Survival of Representations and
Warranties....................................................
50
Article 5 REPRESENTATIONS AND WARRANTIES OF
PURCHASER.................... 50
5.1 Incorporation
and Authority of Purchaser...................... 50
5.2 No
Conflict...................................................
51
5.3 Consents and
Approvals........................................ 51
5.4 Brokers and
Finders........................................... 51
5.5 Investment
Canada............................................. 51
5.6 GST/QST
Registration.......................................... 51
5.7
Financing.....................................................
51
Article 6 SURVIVAL OF COVENANTS, REPRESENTATIONS AND
WARRANTIES.......... 52
6.1 Survival of
Covenants, Representations and Warranties......... 52
Article 7 ADDITIONAL COVENANTS AND
AGREEMENTS............................ 53
7.1 Conduct of
Purchased Business and Other Matters Prior to
Closing.......................................................
53
7.2 Books and
Records............................................. 54
7.3 Inspection and
Information Rights............................. 54
7.4 Regulatory and
Other Authorizations; Consents................. 55
7.5 Vendor Sales
Warranties....................................... 55
7.6 EMS Name/Domain
Name.......................................... 55
7.7
Employment....................................................
55
7.8 Employee
Plans................................................ 57
7.9 Preservation of
Records....................................... 59
7.10
Purchaser's Option if Damage, Etc.............................
59
7.11
Accounts
Receivable Buy Back.................................. 60
7.12
Post
Closing Receipts.........................................
61
7.13
Purchaser's Performance on Certain Contracts / Credit
Support.......................................................
61
7.14
Vendor
Credit Support and Foreign Exchange....................
61
7.15
Further
Actions............................................... 62
7.16
No
Shop.......................................................
62
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7.17
Tax
Matters...................................................
62
7.18
Notice of
Untrue Representation or Warranty................... 63
Article 8 CONDITIONS PRECEDENT TO THE
CLOSING............................ 63
8.1 Conditions to
Obligations of Vendor........................... 63
8.2 Conditions to
Obligations of Purchaser........................ 65
Article 9
INDEMNIFICATION................................................
67
9.1 Indemnification
by the Vendor................................. 67
9.2 Indemnification
by the Purchaser.............................. 68
9.3 Threshold and
Limitations..................................... 68
9.4 Notice of
Claim............................................... 69
9.5 Direct
Claims.................................................
70
9.6 Third Party
Claims............................................ 70
9.7 Settlement of
Third Party Claims.............................. 70
9.8
Co-operation..................................................
71
9.9
Exclusivity...................................................
71
9.10
Currency
Indemnity............................................ 71
Article 10 TERMINATION, AMENDMENT AND
WAIVER............................. 71
10.1
Termination...................................................
71
10.2
Effect of
Termination......................................... 72
10.3
Waiver........................................................
72
Article 11 DISPUTE
RESOLUTION............................................ 73
11.1
Submission
Of Claims To Arbitration........................... 73
11.2
Fees and
Costs................................................ 73
Article 12 EMS
GUARANTOR.................................................
73
12.1
Representations and Warranties................................
73
12.2
Guarantee.....................................................
74
Article 13 AMT
GUARANTOR.................................................
74
13.1
Representations and Warranties................................
74
13.2
Guarantee.....................................................
74
Article 14 POST-SIGNING
COVENANTS........................................ 75
14.1
Employees
Non-Competition Agreements.......................... 75
14.2
Invention
Assignment and Confidentiality Agreements........... 75
14.3
Finder's
Fees Satisfied....................................... 75
Article 15 GENERAL
PROVISIONS............................................ 75
15.1
Expenses......................................................
75
15.2
Notices.......................................................
75
15.3
Public
Announcements..........................................
76
15.4
Headings......................................................
77
15.5
Severability..................................................
77
15.6
Entire
Agreement..............................................
77
15.7
Assignment....................................................
77
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15.8
No
Third-Party Beneficiaries..................................
77
15.9
Amendment;
Waiver............................................. 77
15.10
Governing Law;
Jurisdiction and Venue......................... 78
15.11
Language......................................................
78
15.12
Counterparts..................................................
78
15.13
Restriction on
Disclosure of Agreement Terms.................. 78
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THIS ASSET PURCHASE AGREEMENT made as of the 22 day of December,
2005.
BETWEEN:
EMS TECHNOLOGIES, INC., a legal person duly constituted under
the
laws of Georgia, having its head office at 660 Engineering
Drive,
Norcross, Georgia, U.S.A., 30092;
(hereinafter referred to as the "EMS GUARANTOR")
AND:
EMS TECHNOLOGIES CANADA, LTD., a legal person duly constituted
under
the laws of Canada, having its head office at 1725 Woodward
Avenue,
Ottawa, Ontario, K2C 0P9;
(hereinafter referred to as "EMS CANADA" or the "VENDOR")
AND:
ADVANTECH SATELLITE NETWORKS INC., a legal person duly
constituted
under the laws of Canada, having its head office at 657 Orly
Avenue,
Dorval, Quebec, H9P 1G1;
(hereinafter referred to as the "PURCHASER")
AND:
ADVANTECH ADVANCED MICROWAVE TECHNOLOGIES INC., a legal person
duly
constituted under the laws of Canada, having its head office at
657
Orly Avenue, Dorval, Quebec, H9P 1G1;
(hereinafter referred to as the "AMT GUARANTOR")
RECITALS:
Vendor desires to sell and assign to Purchaser, and Purchaser
desires to
purchase and acquire from Vendor, substantially all of the assets,
property and
enterprise and certain liabilities of and relating to the Business
on the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the facts recited above and the
mutual
agreements set forth herein, the parties hereby agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 CERTAIN DEFINED
TERMS
As used in this Agreement, the following terms will have the
following meanings:
"ACCOUNTS RECEIVABLE" means all accounts receivable, "unbilled
receivables",
bills receivable, trade accounts, book debts, insurance claims and
any other
evidences of indebtedness of and rights to receive payment arising
out of or in
connection with the Business, and the full benefit of all security
for such
accounts or rights to payment, in each case that would be
characterized as
accounts receivable in accordance with U.S. GAAP.
Asset Purchase Agreement
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S-2
"AFFILIATE" means, with respect to any specified person, any other
person that
directly or indirectly controls, is controlled by, or is under
common control
with, such specified person.
"AGREEMENT" means this Asset Purchase Agreement including all
Schedules and
Exhibits to this Asset Purchase Agreement and all amendments made
in writing by
the parties hereto, and "herein" and similar expressions mean and
refer to this
Agreement and not to any particular Article, Section, Subsection,
Schedule or
Exhibit.
"ALTERNATIVE TRANSACTION" has the meaning ascribed thereto in
Section 7.16.
"ANCILLARY AGREEMENTS" means, collectively, the Purchase Price
Note, the Bill of
Sale, the Vendor Non-Competition and Non-Solicitation Agreement,
the Patent
Assignment, the EMS License Agreement, the SATCOM Agreement, the
Copyright
Assignment and the Trademark Assignment (as such terms are defined
herein).
"ASSIGNED CONTRACTS" means all of Vendor's rights under all Vendor
Contracts
(including Material Contracts) other than the Excluded
Contracts.
"ASSUMED LIABILITIES" has the meaning ascribed thereto in
Subsection 2.1.1(b).
"BENCHMARK" means CDN $9,167,000.
"BILL OF SALE" means the Bill of Sale, Assignment and Assumption
Agreement to be
executed and delivered by Vendor at the Closing.
"BOOKS AND RECORDS" means all books and records and, with the
consent of the
Vendor's bank, all bank accounts of the Vendor relating to the
Business or the
Purchased Assets (including, through or of subsidiaries, joint
ventures, limited
partnerships and other interests), including financial, corporate
(including,
for subsidiaries, joint ventures, limited partnerships and other
interests),
operations and sales books, records, books of account, sales and
purchase
records, lists of suppliers and customers, formulae, business
reports, plans and
projections, marketing and sales information, pricing, marketing
plans, business
plans, financial and business projections, personnel records (other
than medical
records) pertaining to Employees who accept employment with
Purchaser and other
files and records pertaining to the Purchased Assets and all other
documents,
surveys, plans, files, records, assessments, correspondence, and
other data and
information, financial or otherwise including all data, information
and
databases stored on computer-related or other electronic media.
"BUSINESS" means the business carried on by EMS Satellite Networks,
an operating
division of the Vendor, which includes the development,
manufacture, marketing,
sales, distribution, licensing, and support of the Vendor
Products.
"BUSINESS DAY" means a day other than a Saturday, Sunday or other
days that are
statutory holidays in any of the Provinces of Quebec and Ontario or
the State of
Georgia, U.S.A.
"CASH ON HAND" means the general ledger balance of cash on hand as
determined in
accordance with U.S. GAAP to the extent only relating to the
Business.
"CLAIM" means claims, demands, complaints, grievances, actions,
suits, causes of
action, orders, charges, indictments, prosecutions, information,
reassessments
or other similar processes or proceedings.
"CLOSING" means the completion of the sale to and purchase by the
Purchaser of
the Purchased Assets under this Agreement.
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S-3
"CLOSING DATE" means, the earlier of (i) two Business Days
following the
satisfaction of the closing conditions identified in Section 8.1
and Section
8.2; (ii) the Termination Date; or, (iii) such other date as the
Vendor and the
Purchaser may mutually determine in writing.
"CLOSING WORKING CAPITAL" has the meaning ascribed thereto in
Subsection 3.3.2.
"CLOSING WORKING CAPITAL STATEMENT" has the meaning ascribed
thereto in
Subsection 3.3.1.
"CODE" has the meaning ascribed thereto in Section 3.5.
"COLLECTIVE AGREEMENTS" means collective agreements and related
documents
including benefit agreements, letters of understanding, letters of
intent and
other written communications (including arbitration awards)
relating to the
Employees by which the Vendor is bound or which impose any legally
enforceable
obligations upon the Vendor or set out the understanding of the
parties or an
interpretation with respect to the meaning of any provisions of
such collective
agreements.
"CONSULTANT" has the meaning ascribed to it in Subsection
4.25.1.
"CONTINGENT OBLIGATION" means any direct or indirect Liability,
contingent or
otherwise, of the Vendor incurred in connection with the Business
with respect
to: (i) any indebtedness, lease, dividend, letter of credit or
other obligation
of any other person, including any such obligation directly or
indirectly
guaranteed, endorsed, co-made or discounted or sold with recourse
by the Vendor,
or in respect of which the Vendor is otherwise directly or
indirectly liable;
(ii) any obligations with respect to undrawn letters of credit,
corporate credit
cards or merchant services issued for the account of the Vendor;
and (iii) all
obligations arising under any interest rate, currency or commodity
swap
agreement, interest rate cap agreement, interest rate collar
agreement, or other
agreement or arrangement designed to protect the Vendor against
fluctuation in
interest rates, currency exchange rates or commodity prices.
"CONTRACTS" means contracts, licenses, leases, agreements,
obligations,
promises, undertakings, understandings, arrangements, documents,
commitments,
entitlements or engagements of the Business or relating to the
Purchased Assets,
in each case to the extent only enforceable against the Vendor, to
which the
Vendor is a party or by which the Vendor is bound or under which
the Vendor has,
or will have, any Liability or contingent Liability (in each case,
whether
written or oral, express or implied) and includes quotations,
submissions,
responses to requests for proposals, orders or tenders which remain
open for
acceptance and warranties and guarantees of the Business.
"CONTROL" (including the terms "CONTROLLED BY" and "UNDER COMMON
CONTROL WITH")
means the possession, directly or indirectly, of the power to
direct or cause
the direction of the management policies of a person, whether
through the
ownership of stock, as an officer, director, trustee or executor,
by contract or
otherwise.
"COPYRIGHT ASSIGNMENT" has the meaning ascribed thereto in
Subsection 8.2.6.
"CREDIT SUPPORT" has the meaning set out in Section 7.14;
"DATA PROCESSING SYSTEM" means the computer equipment and
associated peripheral
devices and the related operating and application systems and other
software
owned, leased or licensed by the Vendor for the Business.
"DIVISION DATE" means November 28, 2005.
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"DOCUMENTATION" means, collectively, programmers' and developers'
notes or logs,
source code annotations, user guides, manuals, instructions,
software and
hardware architecture designs, conceptual designs, sketches,
algorithms, flow
charts, specifications generated internally or externally,
mock-ups,
breadboards, block diagrams, prototypes, data sheets, components,
test results,
layouts, any know-how, and any other designs, plans, schematics,
drawings,
documentation, materials, supplier lists, software source code and
object code,
net lists, photographs, development tools, blueprints, media,
memoranda and
records that are primarily related to or otherwise necessary for
the use and
exploitation of any Vendor Technology Assets in connection with the
Business,
whether in tangible or intangible form, whether owned by Vendor or
held by
Vendor under any licenses or sublicenses (or similar grants of
rights).
"EFFECTIVE DATE" means the date hereof.
"EMPLOYEES" means those employees of the Business listed in Section
4.25 of the
Vendor's Disclosure Schedule, who constitute all of the active and
disabled
employees of the Business, including employees on lay-off with
recall rights
under Collective Agreements applicable to such employees, as of the
Effective
Date; and (a) subject to the Purchaser's prior permission, any
other employees
who become employees of the Business during a period of one (1)
month following
the Effective Date, and (b) after such period any other employees
who become
employees of the Business shall be treated as "Employees" only if
employed after
consultation between Vendor and Purchaser.
"EMPLOYEES NON-COMPETITION AGREEMENTS" has the meaning ascribed
thereto in
Section 14.1.
"EMS LICENSE AGREEMENT" has the meaning ascribed thereto in
Subsection 8.2.10.
"EMS LITIGATION" means the Claims relating to the Business listed
and described
in Section 4.23 of the Vendor's Disclosure Letter.
"ENCUMBRANCE" means any pledge, hypothec, lien, collateral
assignment, security
interest, deed of trust, mortgage, title retention, conditional
sale, collateral
assignment, contractual restriction on the transfer of any tangible
asset, or
other security arrangement, or any charge, adverse claim of title
or any other
encumbrance of any kind whatsoever.
"ENVIRONMENTAL DAMAGE" means any Liability (including Liability
for
investigatory costs, cleanup costs, governmental response costs,
natural
resources damages, property damages, personal injuries or
penalties) arising out
of, based on or relating to (i) the presence, discharge, emission
or release
into the environment of any Hazardous Substance or (ii) facts or
circumstances
forming the basis of any violation of any Environmental Law.
"ENVIRONMENTAL LAWS" means all Canadian or other federal,
provincial, state,
local and foreign laws and regulations relating to pollution, the
protection of
human health or the environment (including ambient air, surface
water, ground
water, land surface or subsurface strata), including laws and
regulations
relating to emissions, discharges, releases or threatened releases
of Hazardous
Substances, or otherwise relating to the manufacture, processing,
distribution,
use, treatment, storage, disposal, transport or handling of
Hazardous
Substances, or relating to occupational health and safety.
"EQUIPMENT CONTRACTS" means motor vehicle leases, equipment leases,
leases of
computer hardware and computer systems, conditional sales
contracts, title
retention agreements and other similar contracts relating to the
Business.
"ETA" means the Excise Tax Act (Canada) as amended from time to
time, including
regulations thereunder.
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"EXCLUDED ASSETS" has the meaning ascribed thereto in Subsection
2.3.1.
"EXCLUDED CONTRACTS" means those Vendor Contracts listed on Exhibit
B hereto.
"EXCLUDED LIABILITIES" has the meaning ascribed thereto in
Subsection 2.3.2.
"EXPERT" has the meaning ascribed thereto in Subsection 3.3.3.
"FACILITIES" has the meaning ascribed thereto in Section 4.30.
"FORMER EMPLOYEES" means, as at the Closing Date, the former
employees of the
Business, including retirees, and, if applicable, surviving spouses
of such
employees, who terminated employment with the Vendor on or after
April 11, 2004
and who immediately prior to the Closing Date continued to have
rights under the
Pension Plans or the SatNet Pension Plans.
"GOODWILL" means the goodwill of the Business or relating to the
Purchased
Assets, and information and documents relevant thereto including
lists of
customer and suppliers, credit information, telephone and facsimile
numbers,
research materials, research and development files, but does not
include any
rights of the Purchaser in or to the name "EMS" or "EMS
Technologies" or any
word or expression similar thereto or containing any such phrase,
or any
variation thereof, except as set forth in Section 7.6 and in the
EMS License
Agreement.
"GOVERNMENTAL AUTHORITY" means any Canadian, U.S. or foreign,
federal, state,
provincial, municipal or local court regulatory authority, central
bank, bureau,
official, minister, agency, quasi governmental authority, crown
corporation,
commission, board, tribunal, licensing body, court, judicial body,
arbitral body
or other, rule or regulation-making entity.
"GOVERNMENTAL PERMITS" means all municipal, state, local, federal
and other
governmental franchises, permits, licenses, agreements, waivers
and
authorizations from, issued or granted by, any jurisdiction.
"HAZARDOUS SUBSTANCES" means, except as may be contained in
electronic
equipment, (i) chemicals, materials and substances when they are
located in or
transiting through a jurisdiction that are defined or listed in
Environmental
Laws of that jurisdiction or otherwise classified pursuant to any
applicable
Environmental Laws of that jurisdiction as "hazardous substances",
"hazardous
materials", "residual hazardous materials", "hazardous wastes",
"extremely
hazardous wastes", "restricted hazardous wastes", "toxic
pollutants",
"contaminants", "dangerous substances", "dangerous goods",
"deleterious
substances", "special waste" or any other formulation intended to
define, list
or classify substances by reason of deleterious properties such as
ignitability,
reactivity, radioactivity, carcinogenicity or reproductive toxicity
(but not
corrosiveness), (ii) any contaminant or pollutant or any substance
that when
released to the environment causes or is likely to cause, material
harm,
material adverse impact or material degradation to the environment
or material
risk to human health, (iii) petroleum and petroleum products,
radioactive
materials, asbestos in any form that is or could become friable,
transformers or
other equipment that contains polychlorinated biphenyls, and radon
gas, and (iv)
any other chemical, material or substance exposure of persons to
which is
regulated by any Governmental Authority.
"INCLUDING" or "INCLUDES" means, unless otherwise indicated,
"including (or
includes) without limitation".
"INDEBTEDNESS" means (i) all indebtedness for borrowed money or the
deferred
purchase price of property or services, including reimbursement and
other
obligations with respect to surety bonds
<PAGE>
S-6
and letters of credit, (ii) all obligations evidenced by notes,
bonds,
debentures or similar instruments, (iii) all capital lease
obligations, and (iv)
all Contingent Obligations.
"INSOLVENCY ACTION" means, with respect to a person, any or all of
the
following: (i) the voluntary or involuntary filing, with respect to
such person,
of a petition for relief, or any other effort to seek relief, under
any
Insolvency Proceeding; (ii) such person or any of its assets
otherwise becoming
the subject of an Insolvency Proceeding; (iii) the formal or
informal
dissolution, liquidation or winding up of such person, or any
efforts to
initiate or carry out such dissolution, liquidation or winding up;
(iv) the
appointment of (or efforts or attempts to appoint) a receiver,
liquidator,
sequestrator, trustee, custodian or other similar officer with
respect to such
person or any part of its assets or properties; or (v) any
composition of the
indebtedness of such person or any assignment for the benefit of
such person's
creditors.
"INSOLVENCY PROCEEDING" means any or all of the following actions,
events or
proceedings: (i) any voluntary or involuntary case, contested
matter or other
proceeding under any bankruptcy, insolvency or analogous laws,
including the
Companies Creditors' Arrangement Act (Canada) and the Bankruptcy
and Insolvency
Act (Canada) and any successor law or laws thereto; (ii) any case,
action or
other proceeding under any bankruptcy, insolvency, debt
reorganization or
similar law (whether now or hereafter in effect) of any country,
province,
state, or other jurisdiction including the Companies Creditors'
Arrangement Act
(Canada) and the Bankruptcy and Insolvency Act (Canada).
"INTANGIBLE ASSETS" means, collectively, all intangible assets,
properties and
rights of the Vendor used in or necessary for the conduct of the
Business,
including the following assets and properties and all rights
therein (whether or
not protectable under any Intellectual Property Rights): all
software (in both
source code and object code form), Vendor Technology Assets,
technology, works
of authorship, manuals, logbooks, notebooks, user's guides,
programmers' notes,
documentation, manufacturing rights, know-how, trade secrets,
vendor, supplier,
customer and prospect lists and all associated information, sales
proposals,
sales and marketing materials, product literature, and training
materials (for
both training of customers and of personnel) and web-site
content.
"INTELLECTUAL PROPERTY RIGHTS" means, collectively, all
intellectual property
rights enforceable anywhere in the world, including patents,
patent
applications, patent rights, trademarks, trademark registrations
and
applications therefore, trade dress rights, trade names, service
marks, service
mark registrations and applications therefor, copyrights,
copyright
registrations and applications therefor, mask work rights, mask
work
registrations and applications therefore, franchises, licenses,
inventions,
trade secrets, know-how, customer lists, supplier lists,
proprietary processes
and formulae, software source code and object code, algorithms, net
lists,
architectures, structures, screen displays, photographs, images,
layouts,
development tools, designs, blueprints, specifications, technical
drawings (or
similar information in electronic format) and all documentation and
media
constituting, describing or relating to the foregoing, including
manuals,
programmers' notes, memoranda and records.
"ITA" means the Income Tax Act (Canada), as amended from time to
time, including
regulations thereunder.
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S-7
"INVENTORIES" means items that are held by the Vendor relating to
the Business,
for sale, license, rental, lease or other distribution in the
ordinary course of
business, or are being produced for sale, or are to be consumed,
directly or
indirectly, in the production of goods or services to be available
for sale, of
every kind and nature and wheresoever situated in connection with
the Business,
including inventories of raw materials, work-in-progress, finished
goods and
by-products, operating supplies and packaging materials.
"KEY EMPLOYEES" means the following employees of the Business :
Peter Garland,
Stephane Germain, Bill Hafner, Janis Landovskis, Donald Osborne and
Walter
Reichert.
"LATEST BALANCE SHEET" has the meaning ascribed thereto in Section
4.7.
"LEASED ASSETS" means (i) all personal/movable property assets,
wherever
located, that are leased to Vendor in connection with the Business
by any third
party under any Vendor Contract, and (ii) all rights of Vendor to
any such
third-party assets under any Vendor Contract pursuant to which such
assets are
leased.
"LEASED REAL PROPERTY" means (i) all real/ immovable property,
wherever located,
that is leased to Vendor in connection with the Business by any
third party
under any Vendor Contract, and (ii) all rights of Vendor to any
such leased real
property under any Vendor Contract pursuant to which such real/
immovable
property is leased.
"LETTER OF INTENT" means that certain letter agreement dated as of
July 18, 2005
between EMS Canada and Purchaser, as amended by letters dated
August 29, 2005,
October 20, 2005, November 30, 2005, December 7, 2005 and December
12, 2005,
concerning the purchase and sale of substantially all of the
assets, property
and undertaking of and relating to the Business and pursuant to
which this
Agreement has been prepared.
"LIABILITIES" (or when used with reference to a single item
described below,
"LIABILITY") means debts, liabilities and obligations (whether
pecuniary or not,
including obligations to perform or forbear from performing acts or
services),
fines or penalties, whether accrued or fixed, absolute or
contingent, matured or
unmatured, determined or determinable, known or unknown, including
those arising
under any law (under law or equity and under any theory of
liability), action or
governmental order, liabilities for Taxes and those arising under
any Contract,
agreement, arrangement, commitment or undertaking of any kind
whatsoever
(whether written or oral, express or implied), including those
arising under any
Vendor Contract.
"LOSSES" means, in respect of any matter, all losses, damages,
liabilities,
deficiencies, costs and expenses (including all legal and other
professional
fees and disbursements, interest, penalties and amounts paid in
settlement)
arising directly as a consequence of such matter less, in all
cases, any
insurance benefits received or receivable directly in respect
thereof.
"LTD EMPLOYEES" means Non-Unionized Employees who are receiving
long term
disability payments.
"MASS MARKET SOFTWARE" means pre-packaged mass market software
readily available
at retail.
"MATERIAL ADVERSE EFFECT" has the meaning ascribed thereto in
Section 4.1.
"MATERIAL CONTRACTS" shall mean (a) all Contracts under which, as
of and from
the Closing Date, the Business would be required to perform
services, deliver
products or make payments with a value of more than Twenty-Five
Thousand Dollars
($25,000) within any twelve month period under each such Contract
(or group of
related Contracts) or be required to fulfill any other obligation
at a cost in
excess of Twenty-Five Thousand Dollars ($25,000) within any
<PAGE>
S-8
twelve-month period; (b) all continuing Contracts for the purchase
of materials,
supplies, equipment or services which requires payment under that
Contract of
more than Twenty-Five Thousand Dollars ($25,000) as of and from the
Closing
Date, except for purchases of inventories or services in the
ordinary course of
the business that do not exceed one year in length and are on terms
and
conditions not more onerous than those usual and customary to the
industry
relating to the Business; (c) Equipment Contracts involving the
payment of more
than Ten Thousand Dollars ($10,000) in any twelve month period; (d)
Real Estate
Leases; (e) any material non-competition, non-solicitation or
similar Contract
relating to the Business under which the Vendor is obligor (other
than
confidentiality agreements entered into in the ordinary course of
business
containing non-solicitation of employees covenants); (f) all
Contracts with
customers of the Business pursuant to which the Vendor is required
to deliver
goods or render services having a value in excess of Twenty-Five
Thousand
Dollars ($25,000) after Closing; (g) all Contracts pursuant to
which
intellectual property is licensed to or by the Vendor in connection
with the
Business (other than licenses for Mass Market Software and licenses
with
customers of the Business); and (h) all Contracts in the nature of
distribution,
development, reseller, OEM, manufacturing or partnership to which
the Vendor is
a party and which relate to, and are material to, the Business.
"NON-UNIONIZED EMPLOYEES" has the meaning ascribed thereto in
Subsection 7.7.3.
"OTHER AGREEMENTS" has the meaning ascribed thereto in Section
1.4.
"OWNED REAL PROPERTY" means real/immovable property used in or
reasonably
required for the Business, owned or purported to be owned by the
Vendor, other
than Leased Real Property, in which the Vendor has an interest,
including all
improvements.
"PATENT ASSIGNMENT" has the meaning ascribed thereto in Subsection
8.2.6.
"PENSION PLANS" means the following pension plans of the Vendor:
(1) EMS
Technologies Canada, Ltd. Pension Plan for Employees Represented by
C.A.W. Local
188; (2) EMS Technologies Canada, Ltd. Pension Plan for Employees
Represented by
C.E.P. Local 508; (3) EMS Technologies Canada, Ltd. Pension Plan
for Quebec
Non-Represented Employees; and (4) EMS Technologies Canada, Ltd.
Pension Plan
for Employees Represented by the Space Systems Engineers and
Scientists
Association.
"PENSION REGULATOR" means each Governmental Authority with
jurisdiction over the
applicable Pension Plan or SatNet Pension Plan.
"PERMITTED ENCUMBRANCES" means:
(a)
servitudes, easements,
restrictions, rights of way and other similar
rights in real/immoveable property or any interest therein,
provided
the same are not of such nature as to materially adversely affect
the
use of the property subject thereto;
(b)
undetermined or
inchoate liens, charges and privileges incidental to
current construction or current operations for amounts which are
not
due or delinquent;
(c)
statutory liens,
charges, adverse claims, security interests or
encumbrances of any nature whatsoever claimed or held by any
governmental authority that have not at the time been filed or
registered against the title to the asset or served upon the
Vendor
pursuant to law and that relate to obligations not due or
delinquent;
<PAGE>
S-9
(d)
assignments of
insurance provided to landlords (or their mortgagees)
pursuant to the terms of any lease, and liens or rights reserved
in
any lease for rent or for compliance with the terms of such
lease;
(e)
security given in the
ordinary course of the Business to any public
utility, municipality or government or to any statutory or
public
authority in connection with the operations of the Business,
other
than security for borrowed money or other contractual obligations
of
the Vendor; and
(f)
the Permitted
Encumbrances described in Section 4.14 of the Vendor's
Disclosure Letter.
"PERSON" includes any individual, partnership, firm, corporation,
association,
trust, unincorporated organization or other entity and any
Governmental
Authority.
"PREPAID EXPENSES" means the unused portion of amounts prepaid by
or on behalf
of the Vendor relating to the Business or the Purchased Assets
including Taxes,
assessments, rates and charges, utilities, rents, tenant
allowances, insurance
and deposits with any Person including with any supplier, public
utility or any
Governmental Authority, but excluding amounts paid in respect of
the Vendor
Employee Benefit Plans.
"PRIME RATE" means the annual variable rate of interest quoted from
time to time
by Royal Bank of Canada as the "prime rate" of interest charged by
such bank as
a reference rate for calculating interest on U.S. dollar loans made
by such bank
in Canada.
"PRO FORMA WORKING CAPITAL STATEMENT" has the meaning ascribed
therein in
Subsection 3.3.1.
"PUBLIC SOFTWARE" has the meaning ascribed thereto in Subsection
4.28.13.
"PURCHASED ASSETS" means all right, title and interest of the
Vendor in and to
the following assets of the Business (but in any event excluding
the Excluded
Assets):
(a)
all Tangible
Assets;
(b)
all Intangible
Assets;
(c)
all the
Documentation;
(d)
all Accounts
Receivable and the benefit of all security (including
cash deposits), guarantees and other collateral held by the
Vendor
relating to the Business;
(e)
all Prepaid
Expenses;
(f)
all Books and
Records;
(g)
all Real Property;
(h)
all Warranty
Rights;
(i)
any and all copies in
a tangible medium and any and all other tangible
embodiments of the Vendor Technology Assets;
<PAGE>
S-10
(j)
all Vendor IP Rights
in and to the Vendor Technology Assets and the
Documentation, including all patents, rights in patent
applications
and invention rights listed in the Patent Assignment, and all
marks
and copyrights listed respectively in the Trademark Assignment and
the
Copyright Assignment;
(k)
all Assigned
Contracts;
(l)
all Governmental
Permits, or the portion thereof, held by Vendor or
necessary for the use or operation of any of the Purchased Assets
and
the Business, to the extent legally transferable by Vendor;
(m)
all claims, rights to
refunds, choses in action, causes of action,
rights of recovery or rights to damages, rights of set-off and
other
rights of recoupment relating to the Business (excluding any of
the
foregoing related to, (i) any Excluded Asset, (ii) the payment
of
Taxes, or (iii) the EMS Litigation) that are associated with or
related to the Business or any of the Purchased Assets;
(n)
all Goodwill; and
(o)
the Data Processing
System.
"PURCHASE PRICE" has the meaning ascribed thereto in Section
3.1.
"PURCHASE PRICE NOTE" has the meaning ascribed thereto in
Subsection 8.1.8.
"QSTA" means An Act respecting the Quebec Sales Tax, as amended
from time to
time, including regulations thereunder.
"QTA" means the Taxation Act (Quebec) as amended from time to time,
including
regulations thereunder.
"REAL PROPERTY" means Owned Real Property and Leased Real
Property.
"REAL PROPERTY LEASES" means all leases or other similar Contracts
under which a
Leased Real Property is leased to Vendor as of the Closing
Date.
"REFUNDABLE DEFICIT" means the greater of:
(a)
the sum of the
solvency deficiencies of all of the SatNet Pension
Plans; and
(b)
the sum of the going
concern deficiencies of all of the SatNet Pension
Plans;
in either case, net of any contributions required by the Pension
Regulator to
effect the split and transfer of the Pension Plans contemplated in
Subsection
4.26.5, as of the Division Date and adjusted as of the Closing Date
using the
same actuarial methods and assumptions as those used by the actuary
for the
Vendor for the SatNet Pension Plans.
"REPLACEMENT PLANS" has the meaning ascribed thereto in Section
7.8.
"RESEARCH AND DEVELOPMENT TAX RECEIVABLES" means the research and
development
tax refunds that the Vendor is entitled to receive under applicable
laws in
respect of any period ending on or prior to the Closing Date.
"RESOLD ACCOUNTS RECEIVABLE" has the meaning ascribed thereto in
Subsection
7.11.1.
<PAGE>
S-11
"RESTRICTED RIGHTS" means any Contract or Governmental Permit which
by its terms
requires consent or approval of the other party or parties thereto
or the issuer
for completion of the transactions contemplated by this Agreement
or in respect
of which the completion of the transactions contemplated by this
Agreement will
increase the obligations or decrease the rights or entitlements of
the Vendor or
the Purchaser relating to the Business or any Purchased Asset under
such
Contract or Governmental Permit.
"REVIEW PERIOD" has the meaning ascribed thereto in Subsection
3.3.3.
"RUSSIAN CONTRACT" means the contract between Vendor and
Morszviasputnik
presented to Morszviasputnik for acceptance but not yet accepted as
of the date
hereof with respect to the sale of a hub and upgrade thereto;
"SATCOM AGREEMENT" has the meaning ascribed thereto in Subsection
8.1.10.
"SATNET EMPLOYEES" means the active and disabled employees of the
Business,
including employees on lay-off with recall rights under Collective
Agreements
applicable to such employees, as at the Division Date.
"SATNET FORMER EMPLOYEES" means, as at the Division Date, the
former employees
of the Business, including retirees, and, if applicable, surviving
spouses of
such employees, who terminated employment with the Vendor on or
after April 11,
2004 and who immediately prior to the Division Date continued to
have rights
under the Pension Plans.
"SATNET PENSION PLANS" has the meaning ascribed thereto in
Subsection 4.26.5.
"SATNET TRUSTS" has the meaning ascribed thereto in Subsection
4.26.5.
"SOLVENT" shall mean, with respect to any person on a particular
date, that on
such date (a) the fair value of the property of such person is
greater than the
total amount of liabilities, including contingent liabilities, of
such person;
(b) the present fair saleable value of the assets of such person is
not less
than the amount that will be required to pay the probable Liability
of such
person on its debts as they become absolute and matured; (c) such
person does
not intend to, and does not believe that it will, incur debts or
liabilities
beyond such person's ability to pay as such debts and liabilities
mature; and
(d) such person is not engaged in a business or transaction, and is
not about to
engage in a business or transaction, for which such person's
property would
constitute an unreasonably small capital. The amount of contingent
liabilities
(such as litigation and guarantees) at any time shall be computed
as the amount
that, in light of all the facts and circumstances existing at the
time,
represents the amount that can reasonably be expected to become an
actual or
matured liability and, for Pension Plan liabilities, as the amount
calculated in
accordance with the requirements of the Quebec Supplemental Pension
Plans Act
and its regulations.
"STATUTORY PLANS" means statutory benefit plans relating to the
Business which
the Vendor is required to participate in or comply with, including
the Canada
and Quebec Pension Plans and plans administered pursuant to
applicable health
tax, workplace safety insurance and employment insurance
legislation.
"SUBSIDIARIES" means collectively all the subsidiaries body
corporate of Vendor
as listed in Section 4.3 of the Vendor's Disclosure Letter.
<PAGE>
S-12
"TANGIBLE ASSETS" means, collectively, all tangible
moveable/personal property
assets of Vendor primarily used in, or necessary for the conduct of
the
Business, wherever located, including the following assets and
properties and
all rights therein: (i) all Inventories, capital assets and other
tangible
assets, properties and equipment, including all satellite dishes,
Out Door
Units, microwave equipment, mainframe computers, workstations,
servers, personal
computers, hardware, telecommunications equipment, GPS Time
references,
switches, routers, IP Encapsulators and all related software; (ii)
all service
tools, diagnostic and test equipment, components, and spare parts;
(iii) all
furniture, documentation, marketing materials, other equipment and
tangible
personal property; and (iv) all media and all hardware or other
systems on which
any copy of software is resident and all related user manuals and
other tangible
items associated therewith; and for greater certainty, the Tangible
Assets
include those listed on Exhibit A.
"TAX" or "TAXES" means Canadian, U.S., federal, provincial, state
and local and
foreign taxes of any kind whatsoever (whether payable directly or
by
withholding), including alternative or add on minimum income,
gains, employment,
license, documentary, stamp, occupation, recording, transfer,
sales, use,
excise, franchise, ad valorem, property, property transfer,
inventory, value
added, withholding and payroll taxes (including all taxes or other
payments
required to be withheld by an employer and paid over to any
Governmental
Authority), or other similar governmental charges, fees, customs,
duties, levies
or assessments, together with any estimated tax, interest, fines
and penalties
or additions to tax and interest on such fines, penalties and
additions to tax
and including any obligation to indemnify or otherwise assume or
succeed to the
Tax liability of any other person.
"TERMINATION DATE" means February 28, 2006 or such other date as
the Vendor and
the Purchaser may mutually determine.
"TIME OF CLOSING" means 12:01 a.m. on the Closing Date.
"TRADEMARK ASSIGNMENT" has the meaning ascribed thereto in
Subsection 8.2.6.
"TRANSFERRED EMPLOYEES" has the meaning ascribed thereto in
Subsection 7.7.3.
"U.S. GAAP" means United States generally accepted accounting
principles and
practices as in effect from time to time and applied consistently
throughout the
periods involved.
"UNION" means an organization of Employees formed for purposes that
include the
regulation of relations between Employees and the Vendor and
includes a
provincial, territorial, national or international union, a
certified council of
unions, a designated or certified employee bargaining agency, and
any
organization which has been declared a union pursuant to applicable
labour
relations legislation.
"UNION PLANS" means Vendor Employee Benefit Plans to which the
Vendor is
required to contribute pursuant to a Collective Agreement and which
are not
maintained or administered by the Vendor or its Affiliates.
"VENDOR CONTRACTS" means all agreements, Contracts, arrangements,
commitments,
mortgages, indentures, leases, franchises, instruments, notes,
bonds,
indemnities, guarantees, loan agreements, credit agreements, deeds,
assignments,
powers of attorney, certificates, purchase orders, work orders,
insurance
policies, Vendor Employee Benefit Plans, covenants, assurances or
undertakings
of any nature relating to the Business to which Vendor is or may be
bound,
subject or affected or under which Vendor is or may become liable
or obligated
or pursuant to which Vendor has agreed to take any action or that
relate to,
affect, bind or relate to an
<PAGE>
S-13
Encumbrance on or with respect to, any of the Purchased Assets
including the
Equipment Contracts and the Vendor Leases.
"VENDOR EMPLOYEE BENEFIT PLANS" has the meaning ascribed thereto in
Subsection
4.26.1.
"VENDOR GROUP" has the meaning ascribed thereto in Section
7.14.
"VENDOR IP RIGHTS" has the meaning ascribed thereto in Subsection
4.28.1.
"VENDOR LEASES" means all leases and lease agreements pursuant to
which any
Leased Assets or Leased Real Property are leased to Vendor.
"VENDOR LICENSED IP RIGHTS" has the meaning ascribed thereto in
Subsection
4.28.1.
"VENDOR NON-COMPETITION AND NON-SOLICITATION AGREEMENT" has the
meaning ascribed
thereto in Subsection 8.2.11.
"VENDOR OWNED IP RIGHTS" has the meaning ascribed thereto in
Subsection 4.28.1.
"VENDOR PRODUCTS" means the products (whether being sold or in
development) and
services of the EMS Satellite Networks division of Vendor.
"VENDOR SALES WARRANTIES" has the meaning ascribed thereto in
Subsection 4.27.1.
"VENDOR SOURCE CODE" has the meaning ascribed thereto in Subsection
4.28.9.
"VENDOR TECHNOLOGY ASSETS" means, collectively, conceptual designs,
sketches,
flow charts, specifications generated internally, mock-ups,
breadboards,
prototypes, data sheets, components, test results, all computer
software
(including software programs, objects, modules, routines,
algorithms and any
other software code) in both source code and object code form,
copyrightable
works, inventions (whether or not patentable), trade secrets
(including Vendor's
customer lists for the Business), know-how, processes, designs,
techniques,
databases and compilations of data, descriptions, flow charts and
other work
product to design, plan, develop or test any of the foregoing
confidential
business information (including Vendor's customer list in respect
of the
Business), including any of the above related to software programs
and updates,
upgrades, new versions and new releases of such software programs
currently
under development by or for Vendor, and other proprietary
information and
technologies owned by Vendor or held by Vendor under any licenses
or sublicenses
(or similar grants of rights) in each case solely to the extent the
same is
primarily used in or necessary to conduct the Business.
"VENDOR'S DISCLOSURE LETTER " means Vendor's Disclosure Letter
dated as of the
Effective Date which is being delivered by Vendor to Purchaser
concurrently with
the execution of this Agreement.
"VENDOR'S FINANCIAL STATEMENTS" has the meaning ascribed thereto in
Section 4.7.
"WARRANTY RIGHTS" means the full benefit of all warranties,
warranty rights,
guarantees, indemnities, undertakings and similar covenants
(implied, express or
otherwise, legal or conventional) against manufacturers or sellers
which apply
to any of the Purchased Assets.
<PAGE>
S-14
1.2 LIST OF EXHIBITS
AND SCHEDULES
The Exhibits and Schedules to this Agreement, as listed below, are
an integral
part of this Agreement:
<TABLE>
<CAPTION>
EXHIBIT/ SCHEDULE
DESCRIPTION
-----------------
-----------
<S>
<C>
Exhibit A
Tangible Assets
Exhibit B
Excluded Assets and Contracts
Exhibit C
Pro Forma Working Capital Statement
Schedule 4.26.5(a)(iv) Agreed Amount (Pension
Plans)
Schedule 4.27.3
Inventories
Schedule 8.1.8
Purchase Price Note
Schedule 8.1.9
Purchaser Consents
Schedule 8.1.10
SATCOM Agreement Term Sheet
Schedule 8.2.7
Vendor Consents
Schedule 8.2.10
EMS License Agreement
Schedule 8.2.11
Vendor Non-Competition and Non-Solicitation Agreement
</TABLE>
1.3 KNOWLEDGE OF
VENDOR
Where any representation or warranty contained in this Agreement is
expressly
qualified by reference to the knowledge of the Vendor or words to
similar
effect, it shall be deemed to refer solely to the actual knowledge
of the
following individuals, in all cases after such individuals have
reviewed their
files and made due and reasonable enquiry:
Alfred G. Hansen
Don
T. Scartz
Gary
B. Shell
Timothy C. Reis
Donald Osborne
Peter Garland
Walter Reichert
Stephane Germain
Janis Landovskis
Steve Rady
William Jacobs
<PAGE>
S-15
1.4 ENTIRE
AGREEMENT
This Agreement together with the Ancillary Agreements, any other
written
agreements, instruments or certificates to be entered into pursuant
to this
Agreement, and the confidentiality agreement dated June 15, 2005
between Vendor,
EMS Guarantor and AMT Guarantor, (the "OTHER AGREEMENTS")
constitute the entire
agreement between the parties pertaining to the subject matter of
this Agreement
and the Other Agreements and supersede all prior correspondence,
agreements,
negotiations, discussions and understandings, written or oral.
Except as
specifically set out in this Agreement or the Other Agreements,
there are no
representations, warranties, conditions or other agreements or
acknowledgements,
whether direct or collateral, express or implied, written or oral,
statutory or
otherwise, that form part of or affect this Agreement or the Other
Agreements or
which induced any party to enter into this Agreement or the Other
Agreements.
For greater certainty, except as expressly set forth herein and in
the Schedules
hereto and the Other Agreements, the Vendor makes no representation
or warranty
relating to the maintenance, repair, condition, design,
workmanship, performance
or marketability of any Purchased Asset, including merchantability,
suitability,
fitness for a particular purpose, quality or absence of defects
therein, latent
or patent.
No reliance is placed on any representation, warranty, opinion,
advice or
assertion of fact made either prior to, concurrently with, or after
entering
into, this Agreement or any Other Agreement, or any amendment or
supplement
thereto, by any party to this Agreement or any Other Agreement or
its
representatives, to any other party or its representatives, except
to the extent
the representation, warranty, opinion, advice or assertion of fact
has been
reduced to writing and included as a term in this Agreement or that
Other
Agreement, and none of the parties to this Agreement or any Other
Agreement has
been induced to enter into this Agreement or any Other Agreement or
any
amendment or supplement by reason of any such representation,
warranty, opinion,
advice or assertion of fact.
1.5 TIME OF
ESSENCE
Time shall be of the essence of this Agreement and the mere lapse
of time shall
have the effects contemplated herein and by law.
ARTICLE 2
PURCHASE AND SALE OF PURCHASED ASSETS
2.1 ACTION BY VENDOR
AND PURCHASER
Upon and subject to the terms and conditions of this Agreement, at
the Closing
Date:
2.1.1 Purchase and Sale of Purchased Assets and Assumed
Liabilities
(a) PURCHASED ASSETS.
Vendor shall sell, assign, transfer, convey and
deliver to Purchaser or cause to be sold, assigned,
transferred,
conveyed and delivered to Purchaser and Purchaser shall
purchase
and acquire from Vendor, at the Closing, for the consideration
specified below in Article 3, the Purchased Assets of the
Vendor
existing as of the Closing (excluding, for greater certainty,
the
Excluded Assets) free and clear of all Encumbrances other than
the Permitted Encumbrances.
<PAGE>
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(b) ASSUMED
LIABILITIES. Purchaser shall, effective upon the
consummation of the Closing on the Closing Date, assume, pay,
perform and discharge when due all of the following obligations
and liabilities of the Vendor relating to the Business or the
Purchased Assets, (for greater certainty, excluding the
Excluded
Liabilities), existing, accrued or accruing (whether direct,
indirect or contingent) as at or after the Time of Closing (the
"ASSUMED LIABILITIES"):
(i) all liabilities
and obligations under or relating to the
Assigned Contracts comprising part of the Purchased Assets,
including those under or relating to the Material Contracts
(including the obligation to make capital contributions
under the Infinium (India) joint venture and shareholders
agreement), except that if any such liabilities and
obligations are related to the payment of money for goods
and services rendered prior to Closing the Purchaser shall
be liable only to the extent that such liabilities and
obligations are reflected on the Closing Working Capital
Statement;
(ii) all licences, liabilities and obligations which are to be
performed following the Closing under or relating to the
Governmental Permits comprising part of the Purchased Assets
and which are referenced in Section 4.30 of the Vendor's
Disclosure Letter;
(iii) only to the extent they are included in the Closing
Working
Capital Statement, all trade and other accounts payable and
other existing or accrued liabilities arising in respect of,
or in the ordinary course of the Business, including trade
payables owing by the Business to Affiliates of the Vendor
or to any other division of the Vendor, wages, unpaid,
accrued or accumulated vacation, capital lease payments, if
any, and liabilities in respect of Permitted Encumbrances;
(iv) all liabilities and obligations under or relating to the
Permitted Encumbrances (other than the Permitted
Encumbrances identified in Part 2 of Section 4.14 of the
Vendor's Disclosure Letter which are to be performed
following the Closing);
(v) all product
warranty or other similar Liabilities for
products delivered and sold by the Business;
(vi) only to the extent they are included in the Closing
Working
Capital Statement, all Liabilities for customer advance
payments existing on Closing;
(vii) all Liabilities arising out of or resulting from any
breach
or violation by Purchaser of Environmental Laws by or in
respect of the Business or the Purchased Assets after
Closing whether known or unknown except to the extent the
same constitutes a breach of
<PAGE>
S-17
the representation and warranty of the Vendor set forth in
Section 4.30 hereof;
(viii) subject to Subsection 3.3.1(b), all liabilities and
obligations in respect of the SatNet Pension Plans and the
SatNet Trusts that the Purchaser has assumed pursuant to
Subsection 7.8.2 hereof; and
(ix) all liabilities and obligations that the Purchaser has
assumed, or for which the Purchaser is expressly
responsible, under this Agreement.
2.1.2 PAYMENT OF PURCHASE PRICE. The Purchaser shall pay the
Purchase Price
as provided in Article 3.
2.1.3 TRANSFER AND DELIVERY OF PURCHASED ASSETS. The Vendor shall
execute
and deliver to the Purchaser all such bills of sale,
assignments,
instruments of transfer, deeds, assurances, consents, notices
and
other documents as shall be necessary or desirable to
effectively
transfer to the Purchaser the Purchased Assets; the Vendor
shall
deliver up to the Purchaser possession of the Purchased Assets,
free
and clear of all Encumbrances (other than Permitted Encumbrances)
so
that the Purchaser may effect such registrations, recordings,
notices,
and filings with public authorities as may required in connection
with
the transfer of ownership to the Purchaser of the Purchased
Assets.
2.1.4 OTHER DOCUMENTS. The Vendor and Purchaser shall deliver such
other
documents as may be necessary or desirable to complete the
transactions provided for in this Agreement.
2.2 PLACE OF
CLOSING
2.2.1 Subject to the terms and conditions of this Agreement, the
sale and
purchase of the Purchased Assets contemplated hereby will take
place
at a closing at the offices of Osler Hoskin & Harcourt, LLP,
Suite
2100, 1000 de la Gauchetiere West, Montreal, Quebec at 10:00
a.m.,
Eastern Daylight Time, on the Closing Date or at such other place
(or
by such other means, including a remote Closing wherein the
relevant
documents are delivered by means of facsimile, mail or courier)
as
Vendor and Purchaser may mutually agree.
2.3 NO ASSUMPTION OF
EXCLUDED LIABILITIES OR PURCHASE OF EXCLUDED ASSETS
2.3.1 EXCLUDED ASSETS. The Purchased Assets shall exclude the
following
assets and properties owned by the Vendor (collectively the
"EXCLUDED
ASSETS"), all of which will be retained by Vendor and will not
be
sold, assigned, transferred or conveyed to Purchaser:
(a) all liabilities
and obligations owing by any other division of
the Vendor or of any of its Affiliates to the Business
existing,
accrued or accruing due at the Closing for borrowed money,
except
as may be reflected on the Pro Forma Working Capital Statement;
<PAGE>
S-18
(b) all income and
corporate capital tax instalments paid by the
Vendor and the right to receive any tax credit or any refund of
income, corporate capital or other taxes paid by the Vendor
including any Research and Development Tax Receivables, any
investment tax credits or any manufacturing and processing
profits tax reduction or refund, in each case only to the
extent
accrued as of the Closing Date;
(c) subject to Section
7.6 and the EMS License Agreement, all rights
of the Vendor to use the names "EMS", "EMSSATNET" and "EMS
TECHNOLOGIES", or any word or expression similar thereto or
containing such phrases, or any variations thereof (including
all
logos, trade or brand names, business names, trade marks, trade
mark registrations and applications, service mark registrations
and applications and copyrights containing or in respect of
such
words or phrases);
(d) subject to
Subsection 7.1.3, insurance policies of the Vendor
relating to the Business and the Purchased Assets and all
rights
in connection therewith, including any rights to outstanding
claims thereunder or refunds of insurance premiums;
(e) all rights of the
Vendor to any refunds of workers' compensation
payments accruing prior to Closing;
(f) all constating
documents, minute books and shareholder records of
the Vendor;
(g) all rights of the
Vendor under this Agreement, the Ancillary
Agreements and the Other Agreements;
(h) all Vendor
Employee Benefit Plans and all assets thereof, other
than the SatNet Pension Plans and the SatNet Trusts which are
to
be transferred pursuant to Subsection 7.8.2;
(i) subject to the
covenants set forth in Section 7.6, all Internet
domain names and Internet and world-wide web URL's or
addresses;
(j) all claims, choses
in action, causes of action, rights of
recovery or rights to damages, rights of set-off and other
rights
of recoupment, related to any EMS Litigation;
(k) all Cash on Hand;
and
(l) the excluded
assets and the Excluded Contracts listed on Exhibit
B.
2.3.2 EXCLUDED LIABILITIES. Except for the Assumed Liabilities,
Purchaser
shall not assume, pay, perform or discharge or otherwise have
any
obligation, responsibility or liability whatsoever for, any and all
of
the Liabilities of Vendor, including those relating to the Business
or
the Purchased Assets, and Vendor shall retain, and shall be
solely
responsible and liable for paying, performing and
<PAGE>
S-19
discharging when due, all of such Liabilities of Vendor
(collectively,
the "EXCLUDED LIABILITIES"), including:
(a) any and all
Liabilities for any Taxes that are now or hereafter
due and payable by Vendor (including those related to the
Business), and any and all Liabilities arising from any failure
by Vendor to file a tax return or to withhold Taxes;
(b) subject to Section
7.14, any and all liabilities and obligations
under all Credit Support issued to secure or ensure performance
by the Vendor of its obligations or liabilities under any
Contract comprising part of the Purchased Assets;
(c) all Liabilities
with respect to any Environmental Damage or the
violation of any Environmental Law relating to Vendor or any of
its businesses (including the Business) or any of its assets
(including the Purchased Assets) to the extent such
Environmental
Damage or violation of such Environmental Law is based upon (i)
facts, events or circumstances that occurred prior to the
Closing
Date or (ii) any acts or omissions of Vendor or any invitee,
customer, guest, employee, contractor, consultant or agent of
Vendor regardless of when such acts or omissions began or
occurred;
(d) except to the
extent reflected on the Closing Working Capital
Statement, any and all Liabilities of Vendor to Employees
related
to any acts or omissions of Vendor, or arising from any facts,
events or circumstances relating to Vendor or the Business that
accrue prior to or on the Closing Date, including any Liability
of Vendor to any Employee for severance pay accrued or payable
prior to Closing;
(e)
any and all
Liabilities of Vendor to Employees not expressly
assumed by the Purchaser hereunder;
(f) any Liability of
Vendor to indemnify any person by reason of the
fact that such person was a director, officer, employee or
agent
of Vendor or prior to Closing was serving at the request of
Vendor as a partner, trustee, director, officer, employee or
agent of another entity;
(g) any and all
Liabilities arising from the termination by Vendor
prior to Closing of, or relating to, the employment or services
of any current or future employees, consultants or contractors
of
Vendor, except as contemplated by Sections 7.7 and 7.8;
(h) any and all
Liabilities arising from any Claim brought against
Vendor arising from any duties or obligations under any Vendor
Employee Benefit Plans relating to any period prior to Closing
to
the extent not reflected in the Closing Working Capital
Statement;
(i) any and all
Liabilities arising from or based on any fraudulent,
unlawful or criminal conduct of Vendor, or any of its officers,
directors, shareholders,
<PAGE>
S-20
employees, contractors or agents, including Liabilities based
upon theories of strict liability, product liability or fraud
prior to Closing;
(j) any and all
Liabilities relating to or arising from or out of any
or all of the Excluded Assets, and any and all obligations and
Liabilities of Vendor arising under or related to any of the
Excluded Contracts;
(k) other than in
connection with the Vendor Sales Warranties given
to customers of the Business, any and all Liabilities under any
misrepresentation or other Claims relating to any products or
services previously sold, licensed or provided by Vendor prior
to
the Closing;
(l) any and all
Liabilities of Vendor to Vendor's or EMS Guarantor's
shareholders, including any Liabilities to dissenting
shareholders pursuant to appraisal rights or similar rights
under
any applicable law or under any articles of incorporation,
bylaws
or other charter documents of Vendor or EMS Guarantor (in each
case, as amended to date) with respect to the transactions
contemplated by this Agreement;
(m) any and all
Liabilities (including any amounts payable as
principal, accrued interest and penalty interest) related to
the
EMS Litigation;
(n) any and all
Liabilities owing to a lender of the Vendor,
including any bank overdrafts or bank indebtedness;
(o) any and all
Liabilities owing to the EMS Guarantor or other
Affiliates of the Vendor for cash advances or long term debt;
(p) all Indebtedness
of the Vendor, except those that arise under the
Assigned Contracts or that are reflected in the Closing Working
Capital Statement;
(q) subject to
Subsection 3.3.1(b), any deficit under any Vendor
Employee Benefit Plans, other than the SatNet Pension Plans and
SatNet Trusts which are to be transferred pursuant to
Subsection
7.8.2;
(r) any and all
Liabilities for Vendor's costs and expenses incurred
in connection with this Agreement and the transactions
contemplated hereby, including fees and disbursements of
counsel,
financial advisors and accountants; and
(s) any and all
Liabilities incurred by Vendor for any finder's or
broker's fee or commission in connection with the transactions
contemplated by this Agreement.
2.4 ASSIGNMENT OF
RESTRICTED RIGHTS
Nothing in this Agreement shall be construed as an assignment of,
or an attempt
to assign to the Purchaser, any Restricted Right without first
obtaining either
such approval or consent or a waiver or a modification with respect
to such
Restricted Right, in each case acceptable to the Purchaser.
<PAGE>
S-21
The Vendor shall diligently attempt to obtain (and the Purchaser
shall
diligently cooperate with the Vendor), on or before the Closing and
thereafter
as required, the consents and waivers referred to in the preceding
paragraph and
to resolve the impediments to the sale, assignment, transfer,
delivery or
sublease referred to in the preceding paragraph and to obtain any
other consents
and waivers necessary to convey to the Purchaser all of the
Purchased Assets
provided that in no event (except as otherwise specified in this
Section 2.4)
shall the Vendor be required to incur any financial cost or burden
(other than
incidental costs) to obtain such consents or waivers or resolve
such
impediments, provided that in no event shall the Vendor be
obligated to make any
payment to any other party in order to obtain such consents,
approvals, waivers
or modifications.
If at Closing there are any Restricted Rights identified in
Subsection 8.1.9 or
Subsection 8.2.7 in respect of which necessary consents, approvals,
waivers or
modifications have not been obtained, then the Vendor and/or the
Purchaser, as
the case may be, may waive the closing condition under Subsection
8.1.9 or
Subsection 8.2.7 with respect to such Restricted Rights, complete
the Closing
and elect to have the parties continue their efforts to obtain any
necessary
consents, approvals, waivers or modifications with respect to such
Restricted
Rights.
The Vendor shall have no liability to the Purchaser if any of the
consents and
waivers referred to in the first paragraph of this Section 2.4 are
not obtained
by the Closing. If the Purchaser waives the condition in Subsection
8.2.7 and
the Closing occurs, to the extent that the consents and waivers
referred to in
the first paragraph of this Section 2.4 are not obtained by the
Vendor by
Closing, or until the impediments to the sale, assignment,
transfer, delivery or
sublease referred to therein are resolved, the Purchaser shall, for
and on
behalf of the Vendor, perform and satisfy all obligations and
liabilities of the
Vendor under or in respect of each of the Restricted Rights
referred to in the
first paragraph of this Section 2.4 and the Vendor shall, after the
Closing Date
and solely at the cost of the Vendor (except costs referred to in
Subsection
2.4.2 which result from the failure of the Vendor to obtain
consents for the
transfer or assignment of such Restricted Rights, which shall be at
the cost of
both the Vendor and the Purchaser on an equal basis):
2.4.1 apply for and use all reasonable efforts to obtain all
consents,
approvals, waivers or modifications reasonably acceptable to
the
Purchaser; nothing in this Section 2.4 shall require the Purchaser
or
the Vendor to make any payment to any other party in order to
obtain
such consents, approvals, waivers or modifications;
2.4.2 enforce any rights of the Vendor arising from such Restricted
Right
against the issuer thereof or the other party or parties
thereto;
2.4.3 at no time use any such Restricted Right for its own purposes
or
assign or provide the benefit of such Restricted Right to any
other
party;
2.4.4 pay over to the Purchaser, all monies collected by or paid to
the
Vendor in respect of such Restricted Rights; and
2.4.5 take all such actions and do, or cause to be done, all such
things at
the request of the Purchaser as shall reasonably be necessary in
order
that the value and benefits of the applicable Restricted Rights
shall
be preserved and enure to the benefit of the Purchaser.
<PAGE>
S-22
If following Closing any necessary approvals, consents, waivers or
modifications
for any Restricted Right have been obtained on terms reasonably
acceptable to
the Purchaser, the Vendor shall promptly assign, transfer, convey
and deliver
any such underlying Contract or Governmental Permit to the
Purchaser, and the
Purchaser shall assume the obligations under such Contract or
Governmental
Permit from and after the date of assignment to the Purchaser
pursuant to an
assignment and assumption agreement having terms substantially
similar to the
assignment and assumption agreement for other Contracts and/or
Governmental
Permits, as applicable, delivered pursuant to this Agreement.
2.5 PRODUCT WARRANTY
OBLIGATIONS
2.5.1 Without in any way limiting the provisions of Section 11.1,
the
Purchaser shall not assume, and the Vendor shall be solely
responsible
for and shall indemnify and hold harmless the Purchaser from
and
against any and all Losses arising out of or resulting from any
product liability claims, Liabilities and obligations (but in
any
event, excluding the Vendor Sales Warranties) respecting
products
and/or services delivered and sold by the Vendor in connection
with
the Business up to Closing, whether such Losses arise before or
after
the Closing and whether known or unknown as of the Closing.
2.5.2 Notwithstanding anything contained herein to the contrary,
but
subject to Section 7.5, the Purchaser shall satisfy or perform
any
Vendor Sales Warranties, product warranty or similar
obligations
respecting products and/or services delivered and sold by the
Vendor
in connection with the Business prior to Closing.
2.5.3 The Vendor shall not be responsible for, and the Purchaser
shall be
solely responsible for and shall indemnify and hold harmless
the
Vendor from and against any and all Losses arising out of or
resulting
from any product liability, product warranty and other claims
and
obligations respecting products or services of the Business
(including
solely finished goods that comprised Inventory at Closing),
delivered
or sold by the Purchaser in connection with the Business after
the
opening of business on the Closing (including work performed or
products produced following Closing to complete unfinished
Inventory).
2.6 BULK SALES
LEGISLATION
The parties hereby waive compliance with any applicable bulk sales
legislation;
provided however that the Vendor shall indemnify and save harmless
the Purchaser
from and against all Losses suffered or incurred by the Purchaser
as a result of
such non compliance except to the extent such Losses arise from the
Purchaser's
failure to satisfy or discharge any Assumed Liabilities or other
liabilities or
obligations assumed by it hereunder.
2.7 ACCESS TO
PURCHASED ASSETS/REASSIGNMENT OF RIGHTS
Following Closing, the Purchaser shall permit the Vendor reasonable
access to
the books and records and Employees of the Business for the
purposes of
satisfying its obligations, and/or enforcing or defending its
rights, under or
pursuant to, or in respect of, the Excluded Assets or the Excluded
Liabilities
and shall, if requested by the Vendor, use all reasonable efforts
to make
available to the Vendor those employees of the Purchaser whose
assistance,
testimony or
<PAGE>
S-23
presence is considered to be required by the Vendor, acting
reasonably, to
assist the Vendor in evaluating, defending or prosecuting any claim
or demand
relating to any Excluded Liability.
If any Claim is asserted against the Vendor in connection with any
Excluded
Liability, the Purchaser shall, at the request of the Vendor,
cooperate in any
reasonable and lawful arrangement with the Vendor which assists the
Vendor in
its defence of such Claim (including reassigning to the Vendor the
applicable
Contract or rights thereunder, if any) provided that such
arrangement does not
materially adversely affect the Purchaser's right or ability to
realize the
benefits from any of the Purchased Assets. The Vendor shall pay to
the Purchaser
the reasonable costs incurred by the Purchaser in complying with
any such
request.
ARTICLE 3
PURCHASE PRICE
3.1 PURCHASE PRICE
In consideration of the purchase of the Purchased Assets, the
Purchaser shall
assume the Assumed Liabilities and pay to the Vendor the amount of
Eight Million
Eight Hundred Twenty-Seven Thousand United States Dollars
(US$8,827,000),
exclusive of all applicable sales and transfer taxes, subject to
adjustment as
provided in Section 3.4 herein (the "PURCHASE PRICE").
3.2 SATISFACTION OF
PURCHASE PRICE AND CLOSING ADJUSTMENT
3.2.1 The Purchaser shall satisfy the Purchase Price:
(a) by payment, by
wire transfer to such account as the Vendor may
direct, to the Vendor at the Closing of Six Million Four
Hundred
Two Thousand United States Dollars (US$6,402,000);
(b) by application of
the deposit in the amount of US$100,000 paid by
Purchaser to Vendor on October 21, 2005; and
(c) by delivery of the
Purchase Price Note.
3.3 DETERMINATION OF
CLOSING WORKING CAPITAL
3.3.1 Closing Working Capital Statement
(a) As soon as
practical after Closing but no later than sixty (60)
days following the Closing Date, the Vendor shall deliver to
the
Purchaser an unaudited statement of working capital (the
"CLOSING
WORKING CAPITAL STATEMENT") of the Business as at the opening
of
business on the Closing Date, prepared using the same line
items
and in accordance with U.S. GAAP applied on a basis consistent
with those used in the preparation of the Pro Forma Working
Capital Statement annexed as Exhibit C hereto (the "PRO FORMA
WORKING CAPITAL STATEMENT"). For greater certainty, the Closing
Working Capital Statement shall be prepared as follows: (i) by
using accounting methods, policies, practices, procedures and
classification and estimation methodologies identical to those
used in preparation of the Pro Forma Working Capital Statement,
(ii) there shall be no changes to any reserve or
<PAGE>
S-24
provision for (or estimates therein) or in respect of any
customer program or Assigned Contracts (including any
"ESTIMATES
AT COMPLETION" and estimated costs of and times to completion
for
individual contracts) from the amounts reflected in the Pro
Forma
Working Capital Statement, except changes that are required to
reflect changes in facts or events occurring on or after
October
1, 2005 and on or before the Closing Date, if any (any such
changes shall be effected in a manner consistent with the
principles used in the preparation of the Pro Forma Working
Capital Statement), (iii) by providing full and adequate
provision for all Liabilities of the Business as of its date as
required by U.S. GAAP and on a basis consistent with those of
prior years, (iv) all reserves reflected therein shall be
reasonably adequate and shall be prepared in good faith on a
consistent basis, (v) by reflecting as an asset an amount of
Cash
on Hand equal to CDN$870,000, notwithstanding that Cash on Hand
is an Excluded Asset, and (vi) by reflecting all customer
deposits, prepayments and advances of the Business as of the
Closing Date. For the purpose of preparing the Closing Working
Capital Statement, the Purchaser agrees to grant the Vendor's
authorized representatives reasonable access to relevant
records,
facilities and personnel of the Purchaser.
(b) Vendor undertakes
to pay Purchaser on Closing Date or, if not yet
known on Closing Date, promptly upon determination of the
Refundable Deficit, an amount equal to (i) 50% of the first
CDN$100,000 of the Refundable Deficit and (ii) 100% of the
amount
of the Refundable Deficit in excess of CDN$100,000. In each
case,
any amount paid by Vendor pursuant to the foregoing shall be
deemed to be a reduction of the Purchase Price.
3.3.2 CLOSING WORKING CAPITAL CALCULATION. At the time of delivery
of the
Closing Working Capital Statement, the Vendor shall also deliver
to
the Purchaser, a written statement setting forth the amount by
which
the Closing Working Capital is greater than or less than the
Benchmark.
"CLOSING WORKING CAPITAL" is defined herein as the amount by which
the
aggregate book value as at the Closing Date of the assets referred
to
in the Pro Forma Working Capital Statement exceeds the aggregate
book
value as at the Closing Date of the liabilities referred to in the
Pro
Forma Working Capital Statement, all as set forth on the
Closing
Working Capital Statement; provided that there shall be no
amounts,
reserves or provisions for items representing Excluded Assets
or
Excluded Liabilities, provided further that, notwithstanding
anything
contained herein to the contrary, there shall be included in
the
Closing Working Capital the amount of CDN$870,000 representing
a
deemed amount of Cash on Hand.
<PAGE>
S-25
3.3.3 APPROVAL OF CLOSING WORKING CAPITAL STATEMENT. The Purchaser
shall
have a period (the "REVIEW PERIOD") of thirty days from the date
it
receives the Closing Working Capital Statement in which to review
the
same. For the purpose of such review, the Vendor shall permit
the
Purchaser and its authorized representatives to examine all
accounting
documentation used or prepared by the Vendor in preparing the
Closing
Working Capital Statement. If no objection in writing to the
Closing
Working Capital Statement is given to the Vendor by the
Purchaser
within the Review Period, the Closing Working Capital Statement
shall
be deemed to have been approved as of the last day of such
Review
Period.
3.3.4 PURCHASE PRICE NOTE ADJUSTMENT. Upon the Purchaser's receipt
of any
payment (including prepayment, advance or deposit) on the
Russian
Contract, then (i) the Purchaser shall, within five (5) Business
Days
of such receipt, remit to Vendor the lesser of such payment and
the
amount then outstanding under the Purchase Price Note, and (ii)
the
principal amount of the Purchase Price Note shall be reduced by
such
amount so that each of the instalments under the Purchase Price
Note
are equally reduced, provided that the aggregate amount of payments
to
be remitted to the Vendor hereunder shall not exceed
US$800,000.
If
the Purchaser objects to any item of the Closing Working
Capital
Statement within the Review Period by giving notice to the Vendor
setting
out
in reasonable detail the nature of such objection and the
related
amount(s) in dispute, the parties agree to attempt to resolve the
matters
in
dispute within thirty days from the date the Purchaser gives such
notice
to
the Vendor. Without limitation, the Purchaser shall not be
precluded
from
raising objections that are otherwise appropriate under the
terms
hereof solely because under U.S. GAAP the amount involved would not
be
considered material. If all matters in dispute are resolved by the
parties,
the
Closing Working Capital Statement shall be modified to the
extent
required to give effect to such resolution and shall be deemed to
have been
approved as of the date of such resolution.
If
the parties cannot resolve all matters in dispute within such
thirty day
period, all unresolved matters shall be submitted to a
nationally
recognized accounting firm acceptable to both parties (the
"EXPERT") for
resolution, and the Expert shall be given access to all materials
and
information reasonably requested by it for such purpose. The rules
and
procedures to be followed in such proceeding shall be determined by
the
Expert in its discretion. The Expert's determination of all such
matters
shall be final and binding on both parties and shall not be subject
to
appeal by either party, absent manifest error. The fees and
expenses of the
Expert shall be borne by the parties in the manner determined by
the Expert
based on the relative success of each party in respect of such
disputes.
The
Closing Working Capital shall be modified to the extent required
to
give
effect to the Expert's determination and shall be deemed to have
been
approved as of the date of such determination.
<PAGE>
S-26
3.4 ADJUSTMENT OF
CLOSING DATE PAYMENT
Within two (2) Business Days after the Review Period:
3.4.1 if the Closing Working Capital exceeds the Benchmark, the
Purchaser
shall pay the Vendor an amount equal to such excess, together
with
interest thereon at an annual rate equal to the Prime Rate as
adjusted
from time to time plus 2% from and including the Closing Date to
but
excluding the date of payment; and
3.4.2 if the Closing Working Capital is less than the Benchmark,
the Vendor
shall pay the Purchaser an amount equal to such deficit, together
with
interest thereon at the Prime Rate as adjusted from time to time
plus
2% from and including the Closing Date to but excluding the date
of
payment;
provided that if the Purchaser has objected to any part of the
Closing
Working Capital Statement, no payment shall be made in respect of
the
amount in dispute until two Business Days after the same has been
finally
resolved by the parties or pursuant to Section 3.3.
3.5 ALLOCATION OF
PURCHASE PRICE
The Purchase Price shall be allocated in a mutually satisfactory
way between
Vendor and Purchaser before the Closing Date, provided that if the
Purchase
Price shall be adjusted pursuant to Section 3.4, the amount of
adjustment
required shall, if such amount cannot be reasonably allocated to a
particular
asset, be allocated on a pro rata basis among the various
categories of assets
of the Purchased Assets. Each of the Vendor and the Purchaser shall
report the
purchase and sale of the Purchased Assets in any Tax Returns in
accordance with
such allocation agreed between Vendor and Purchaser. If required,
Purchaser and
Vendor shall agree upon a schedule allocating the Purchase Price to
the
Purchased Assets in accordance with Section 1060 of the United
States Internal
Revenue Code of 1986, as amended (the "CODE"), which allocation
shall be binding
on Vendor. Purchaser, Vendor and their respective Affiliates shall
report, act
and file Tax returns (including Internal Revenue Service Form 8594)
in all
respects and for all purposes consistent with such allocation
prepared by
Purchaser.
3.6 FURTHER
ASSURANCES
In case at any time after the Closing Date any further action is
necessary or
desirable to carry out the purposes of this Agreement, each of the
parties will
take such further action (including the execution and delivery of
such further
instruments and documents) as the party reasonably may request, all
at the sole
cost and expense of the requesting party. Vendor will sign and
deliver any and
all instruments and documents necessary or appropriate to fully
effect and
perfect the transfer to Purchaser of any and all of the Purchased
Assets,
including the registration of copyrights and/or trademarks in any
of the
Purchased Assets.
3.7 WITHHOLDING
Purchaser shall be permitted to deduct and withhold from the
Purchase Price (and
from any other payments to be made hereunder) such amounts as
Purchaser and
Vendor shall mutually determine to be required to be deducted and
withheld. Any
such withheld amounts shall be treated as delivered to the Vendor
hereunder.
<PAGE>
S-27
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF VENDOR
The Vendor hereby represents and warrants to Purchaser that, except
as expressly
set forth in the Vendor's Disclosure Letter, each of the
statements,
representations and warranties contained in this Article 4 are true
and correct
as of the date of this Agreement. Vendor's Disclosure Letter shall
be arranged
in sections corresponding to the numbered and lettered sections
contained in
this Article 4, and the disclosures in any section of Vendor's
Disclosure Letter
shall qualify only (a) the corresponding section in this Article 4
and (b) other
sections in this Article 4 to the extent that it is reasonably
apparent from a
reading of the disclosure that such disclosure also qualifies or
applies to such
other section.
4.1 ORGANIZATION AND
GOOD STANDING
The Vendor is a corporation duly organized, validly existing and in
good
standing under the laws of Canada. The Vendor has the corporate
power and
authority to own, operate and lease its properties and to carry on
the Business
as now conducted and as proposed to be conducted through the
Closing, and is
qualified to transact business as a foreign corporation in each
jurisdiction in
which its failure to be so qualified could reasonably be expected
to have a
Material Adverse Effect.
As used in this Agreement, the term "MATERIAL ADVERSE EFFECT" when
used with
reference to Vendor or the Business, means any event, change or
effect that is
(or could reasonably be expected to be) materially adverse to the
financial
condition, properties, assets, liabilities, business, operations or
results of
operations of the Business but excluding changes, events or effects
affecting
the "satellite network" industry as a whole or resulting from
general economic
and market conditions. The copies of the articles of incorporation
and the
bylaws of the Vendor, each as amended to date, which have been
delivered to
Purchaser, are complete and correct, and the Vendor is not in
default under or
in violation of any provision of its articles of incorporation or
bylaws.
4.2 AUTHORIZATION AND
VALIDITY
The Vendor has all necessary right, corporate power, legal capacity
and
authority to enter into, execute and deliver this Agreement and to
consummate
the sale to Purchaser of the Purchased Assets contemplated hereby
and the other
transactions contemplated by this Agreement and the Ancillary
Agreements. This
Agreement has been, and at the Closing the Ancillary Agreements
will be, duly
executed and delivered by the Vendor and (assuming due
authorization, execution
and delivery by Purchaser) this Agreement constitutes, and, upon
Vendor's
execution of each of the Ancillary Agreements, each of the
Ancillary Agreements
will constitute, a legal, valid and binding obligation of the
Vendor in
accordance with their terms. The execution, delivery and
performance by the
Vendor of this Agreement and each of the Ancillary Agreements have
been duly and
validly approved and authorized by all necessary corporate action
on the part of
the Vendor. The shareholders of the Vendor are not and will not be
entitled to
any dissenting stockholders' appraisal rights, dissent rights, or
similar rights
under any applicable law or under any articles of incorporation,
bylaws or other
charter documents (in each case as amended to date) with respect to
the
transactions contemplated by this Agreement.
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4.3 SUBSIDIARIES OR
AFFILIATES
4.3.1 Section 4.3 of the Vendor's Disclosure Letter sets forth a
complete
and correct list of all Subsidiaries of Vendor in respect of
the
Business. Vendor does not have any interest in any shares or
other
ownership interest in any other corporation, partnership,
limited
partnership, limited liability company, association or joint
venture
in respect of the Business. Except as otherwise indicated in
Section
4.3 of the Vendor's Disclosure Letter, Vendor is the sole
registered
and beneficial owner of all of the issued and outstanding shares
in
the capital stock of each such Subsidiaries, free and clear of
all
Encumbrances.
4.3.2 Except as disclosed in Section 4.3 of the Vendor's Disclosure
Letter,
each of the Subsidiaries is a corporation duly organized and
validly
existing and in good standing under the laws governing it, has
all
requisite power and authority to own, lease and operate its
property
and to carry on its business as now being conducted, and is
duly
qualified and in good standing to carry on its business in each
jurisdiction indicated in Section 4.3 of the Vendor's
Disclosure
Letter.
4.3.3 Except as disclosed in Section 4.3 of the Vendor's Disclosure
Letter,
the only locations where the Subsidiaries carry on or have carried
on
their operations with respect to the Business and the only names
under
which the Subsidiaries carry on or have carried on their
operations
with respect to the Business are as indicated in Section 4.3 of
the
Vendor's Disclosure Letter. The officers and directors of each of
the
Subsidiaries are also listed in Section 4.3 of the Vendor's
Disclosure
Letter.
4.4 NO CONFLICT
Except for the Restricted Rights, the execution, delivery and
performance of
this Agreement and the Ancillary Agreements by the Vendor does not
and will not
(a) breach, violate or conflict with the articles of incorporation
or bylaws,
each as amended to date, of the Vendor, (b) conflict with or
violate any law,
rule, regulation, order, writ, judgment, injunction, decree,
determination or
award applicable to the Vendor or to any of the Purchased Assets
(other than
applicable bulk sales laws), (c) result in any breach or violation
of, or
constitute a default (or event which with the giving of notice or
lapse of time,
or both, would become a breach, violation or default) under, or
give to others
any rights of termination, amendment, acceleration or cancellation
of, any
Governmental Permit or any of the Vendor Contracts, or (d) result
in the
creation of any Encumbrance on any of the Purchased Assets.
4.5 CONSENTS
The execution and delivery of this Agreement and the Ancillary
Agreements by the
Vendor do not, and the performance of this Agreement and the
Ancillary
Agreements by the Vendor will not, require any consent, approval,
authorization
or other action by, or filing with or notification to, any court or
governmental
or regulatory authority with respect of the Vendor. Section 4.5 of
Vendor's
Disclosure Letter sets forth a true and complete list of each and
every Material
Contract or Governmental Permit with respect to which the consent
or approval of
any third party or governmental authority is required in order for
the Vendor to
assign or transfer to the Purchaser any rights or obligations under
such
Material Contract or Governmental Permit. The Vendor has made all
of the
Assigned Contracts available to the Purchaser for the latter's
review.
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4.6 REGULATORY
APPROVALS
No approval, order, consent of or filing with any Governmental
Authority is
required other than consents to the assignment of any Governmental
Permits on
the part of the Vendor, in connection with the execution, delivery
and
performance of this Agreement or any other documents and agreements
to be
delivered under this Agreement or the performance of the Vendor's
obligations
under this Agreement or any Ancillary Agreement.
4.7 FINANCIAL
STATEMENTS
The unaudited balance sheet of the Business at December 31, 2004
and the related
unaudited statement of income, shareholders' equity and cash flows
of the
Business for the fiscal years ended December 31, 2004, the
unaudited balance
sheet of the Business as of October 1, 2005 (the latter balance
sheet being
hereinafter referred to as the "LATEST BALANCE SHEET"), and the
related
unaudited statements of income, shareholders' equity and cash flows
of the
Business for the nine-month period ended October 1, 2005, including
in all cases
the related schedules and notes (collectively, the "VENDOR'S
FINANCIAL
STATEMENTS"), have been prepared on a division and not stand-alone
basis, in
accordance with U.S. GAAP and on a basis consistent with those of
prior years,
are in accordance with the Books and Records of Vendor (which Books
and Records
are complete and correct) and fairly present the consolidated
financial position
and results of operations of Vendor as of said dates and for each
of the periods
indicated. Copies of the Latest Balance Sheet and the Vendor's
Financial
Statements have been delivered to Purchaser and are attached as
Section 4.7 of
the Vendor's Disclosure Letter. All reserves established by Vendor
and reflected
in the Latest Balance Sheet were prepared in good faith on a
consistent basis.
During the period from October 1, 2005 to the Effective Date, there
has been no
Material Adverse Effect change to the business, operations,
financial condition
or prospects of the Business or the Purchased Assets.
4.8 ABSENCE OF
UNDISCLOSED LIABILITIES
Except as disclosed in Sections 4.3 and 4.28 of the Vendor's
Disclosure Letter,
Vendor has no debt, monetary Liability or other monetary obligation
relating to
the Business (and there is no basis for the assertion of any such
debt,
Liability or obligation) in excess of $50,000, of any nature,
whether accrued,
absolute, contingent or otherwise, and whether due or to become
due, or arising
out of any transactions entered into at or prior to the Effective
Date, or any
action or inaction at or prior to the Effective Date or any state
of facts
existing at or prior to the Effective Date, except for (i)
Liabilities reflected
on the Latest Balance Sheet, and (ii) current Liabilities which
have arisen
after the Latest Balance Sheet Date in the ordinary course of
business,
consistent with Vendor's past practices.
4.9 ABSENCE OF CERTAIN
CHANGES OR EVENTS
Except as described in Section 4.9 of Vendor's Disclosure Schedule,
since
October 1, 2005, Vendor has operated the Business in the ordinary
course
consistent with Vendor's past custom and practices, and since such
date Vendor
has not, in respect of the Business,
4.9.
