ASSET PURCHASE AGREEMENT
THIS
ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into
by and among CALAMP DATACOM, INC., a Delaware corporation
("Purchaser"),
CALAMP CORP., a Delaware corporation ("Parent"), AIRIQ U.S., INC.,
a Delaware
corporation ("Seller"), and AIRIQ INC., a Canadian corporation
("Shareholder"), with reference to the following facts:
A.
Purchaser
and its affiliated companies design, manufacture and
market wireless equipment used in the reception of television
programming
transmitted from satellites and wireless terrestrial transmission
sites, two-
way transceivers used for wireless high-speed Internet (broadband)
service,
cellular and GPS modules for embedding into Machine-to-Machine
applications,
and equipment used for mobile resource management, telemetry and
asset
tracking applications, private wireless networks, public safety
communications and critical infrastructure and process control
applications.
B.
Seller is
engaged in the business of designing, manufacturing,
distributing and selling asset tracking products and services for a
variety
of applications and markets (the "Seller Activities").
C.
One
component of the Seller Activities is the provision of an
aftermarket vehicular product and related location services to the
industry
offering sub-prime vehicle credit (often referred to as
Buy-here-pay-here
business) in the United States and Canada (the "Business").
D.
Seller is
an indirect, wholly-owned subsidiary of Shareholder.
E.
Seller
desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, substantially all of the assets of Seller
used in the
Business, and in connection with such purchase, assume certain
liabilities,
in each case upon the terms and conditions hereinafter set
forth.
NOW,
THEREFORE, in consideration of the mutual representations,
warranties and covenants herein contained and for other good and
valuable
consideration, the sufficiency of which is hereby acknowledged, the
parties
agree as follows:
ARTICLE I
TERMS OF SALE
1.1 Sale
of Assets. Upon the
terms and conditions hereinafter set
forth, Seller shall sell, assign, convey, transfer and deliver to
Purchaser
at the Closing (as defined herein), substantially all of the assets
of Seller
used in the Business, as set forth in Section 1.1 of the disclosure
letter
and schedules thereto delivered by Seller and Shareholder to
Purchaser (the
"Seller and Shareholder Disclosure Letter") (the "Purchased
Assets"), free
and clear of any and all Liens and Encumbrances except for the
Permitted
Liens. As used in this
Agreement, "Liens and Encumbrances" shall mean any
lien, claim, charge, security interest, mortgage, pledge,
hypothecation,
easement, conditional sale, or other title retention agreement,
defect in
title, covenant, or other encumbrance or restriction of any kind.
As used in
this Agreement, "Permitted Liens" shall mean (a) Liens and
Encumbrances for
taxes if such taxes are not yet due and payable, and (b)
mechanics',
construction, carriers', workers', repairers', storers' or other
similar
liens (inchoate or otherwise) which individually or in the
aggregate are not
material, arising or incurred in the ordinary course of business
consistent
with past practice which have not been filed, recorded or
registered in
accordance with applicable law or of which notice has not been
given to the
Seller. With the
exception of the Excluded Assets (defined below), the
Purchased Assets shall include all of the assets of Seller of every
kind,
character and description, whether tangible, intangible, personal
or mixed,
and wherever located, that are owned by Seller and used in the
Business,
including, but not limited to, the Lake Forest, California facility
lease,
the listed accounts receivable, the listed inventory, customer
pre-payments
and deposits, customer contracts, AirIQ Vehicle Recovery Patents
(US Patent
#6,025,774 and US Patent #6,249,217), production and test equipment
(tools,
fixtures, test software and equipment), Seller's goodwill,
equipment,
machinery, tooling, fixtures, office furniture, supplies,
materials, backlog,
Contracts (as defined herein), purchase and sales orders, prepaid
expenses,
security deposits, customer lists, books and business records,
hardware,
software, product catalogues, photographs (digital and otherwise),
artwork,
permits, licenses, consents and other forms of governmental
approval, to the
extent transferable, domain names, website software, telephone
numbers, and
Intellectual Property (as defined herein).
1.2
Excluded Assets.
Section 1.2 of the Seller and Shareholder
Disclosure Letter contains an accurate and complete list of all
assets and
property that are used in the Business by Seller which are excluded
from the
definition of Purchased Assets (collectively, the "Excluded
Assets").
1.3
Purchase of Assets.
Purchaser agrees to purchase the Purchased
Assets from Seller upon the terms, conditions and provisions
hereinafter set
forth and in reliance upon the covenants, agreements,
representations,
warranties and indemnities of Seller hereinafter set forth.
1.4 No
Liabilities or Obligations to be Assumed. Except for those
liabilities and obligations set forth in Section 1.4 of the Seller
and
Shareholder Disclosure Letter, including the obligations for
future
performance under any contract or agreement comprising part of the
Purchased
Assets as set forth thereon (the "Contracts")(collectively, the
"Assumed
Liabilities"), the parties hereto acknowledge and agree that
Purchaser is not
assuming, paying or discharging and shall not be liable for any
debts,
obligations, responsibilities or liabilities of Seller or any
claim, action
or suit relating thereto (whether now existing or hereafter
arising), known
or unknown, contingent or absolute, relating to or arising from any
period
prior to the Closing and Seller shall remain fully and completely
liable for
all such liabilities.
By way of example only and not in limitation of the
foregoing, Purchaser is not assuming, paying or discharging and
Purchaser
shall not be liable for: (a) any of Seller's short or long-term
debt; (b) any
of Seller's non-accrued employee benefits, employment or
successor
liabilities related to Seller's employees or other personnel; (c)
any of
Seller's pension, profit-sharing or other qualified or unqualified
plan
liabilities, whether such plans presently exist or were previously
funded;
(d) any of Seller's tax liabilities of any kind or nature
whatsoever (except
for pro-rated personal property taxes as provided in Section 4.9);
(e) any
liability or responsibility for defaults accruing prior to the
Closing under
any contracts or agreements; (f) any liability or responsibility
for
regulatory, tax or other reports, filings, approvals or actions
related to
the operations of the Business prior to the Closing (including
interest and
penalties thereon); (g) any liability or responsibility to make
tax, benefit,
funding or other payments (including interest and penalties
thereon) that
accrued prior to the Closing; (h) with the exception of the Lake
Forest
facilities lease and the co-location facility lease, any
liabilities of
Seller relating to or arising from any real property leases; (i)
any
liability or responsibility for salaries, bonuses or commissions
relating to
sales shipped and invoiced prior to the Closing; and (j) any
liabilities of
Seller of any other kind or description whether accrued, absolute,
contingent
or otherwise, relating to or arising from any period prior to the
Closing, in
each case, except for the Assumed Liabilities.
1.5
Conveyance of Purchased Assets. At the Closing, subject to
obtaining any required third party consents identified in Section
2.10 of the
Seller and Shareholder Disclosure Letter and completing the
customer data
migration pursuant to Section 4.17, Seller shall convey the
Purchased Assets
to Purchaser by that certain Bill of Sale, the form of which is
attached
hereto as Exhibit A.
1.6
Purchase Price. As
full payment for the transfer and delivery of
the Purchased Assets to Purchaser, Purchaser shall deliver the
following
consideration (the "Purchase Price") to Seller:
(a) At the Closing,
Purchaser shall deliver, by electronic
transfer in immediately available funds to an account designated by
Seller,
the sum of SEVENTEEN MILLION ONE HUNDRED THOUSAND DOLLARS
($17,100,000) (the
"Initial Payment").
(b) At the Closing,
Purchaser shall deposit the amount of ONE
MILLION NINE HUNDRED THOUSAND DOLLARS ($1,900,000) (the "Escrow
Funds"), by
electronic transfer in immediately available funds, to an escrow
account
("Escrow Account") maintained in the custody of a mutually
acceptable escrow
agent (the "Escrow Agent"). The costs and expenses associated
with the
establishment and maintenance of the Escrow Account shall be borne
by
Purchaser. The Escrow
Funds will be released from the Escrow Account as
follows:
(1) The Escrow Funds
will be held in the Escrow Account to
satisfy any indemnifiable claims by Purchaser against Seller
pursuant to
Section 8.1, for a period of twelve (12) months after the Closing
Date (the
"Escrow Period"), in accordance with the terms of the Escrow
Agreement in the
form attached as Exhibit B (the "Escrow Agreement").
1.7
Allocation of Purchase Price. The Purchase Price shall be
allocated among the Purchased Assets according to the methodology
to be
mutually agreed among the parties and set forth in Section 1.7 of
the Seller
and Shareholder Disclosure Letter (the "Allocation Method").
Each of the
Seller and the Purchaser shall allocate the Purchase Price among
the
Purchased Assets pursuant to Section 1060 of the Internal Revenue
Code of
1986, as amended, in accordance with the fair market values of the
Purchased
Assets as determined in accordance with the Allocation Method.
Each of the
Seller and the Purchaser shall file I.R.S. Form 8594 in a timely
manner. The
Purchaser and the Seller shall follow the Allocation Method set out
in
Section 1.7 of the Seller and Shareholder Disclosure Letter in
determining
and reporting their liabilities for any taxes and, without
limitation, shall
file their respective returns prepared in accordance with such
allocations.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
AND SHAREHOLDER
Seller and
Shareholder hereby, jointly and severally, represent and
warrant to Purchaser, and its successors and assigns, subject to
the specific
exceptions in the Seller and Shareholder Disclosure Letter as
follows:
2.1
Organization. Seller
is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware and is
duly authorized to carry on the business presently conducted by it.
Seller
is duly authorized, qualified and licensed under all applicable
law,
regulations, rules and orders of public authorities to carry on its
business
in the State of California. With the exception of the State of
California,
Seller is not required to be authorized, qualified or licensed to
do business
in any other jurisdiction where the failure to be so qualified
would have a
Material Adverse Effect on Seller's present business or operations.
As used
in this Agreement, "Material Adverse Effect" shall mean any change,
event or
effect that is or is reasonably likely, individually or in the
aggregate, to
become materially adverse to the business, operations, financial
condition or
results of operation of the Business; provided that none of the
following
shall constitute a "Material Adverse Effect" and none of the
following shall
be taken into account in determining whether a "Material Adverse
Effect" has
occurred or is reasonably likely to occur: (a) an adverse change,
event,
effect, occurrence, state of facts or developments affecting the
industry in
which the Business is conducted or the U.S. economy as a whole, and
not
specifically relating to Seller; (b) any adverse change, event,
effect,
occurrence, state of facts or developments arising from or relating
to acts
of terrorism or war; (c) any effect relating to compliance with the
terms of,
or the taking of any action permitted or required by, this
Agreement, or from
the announcement or pendency thereof; or (d) any adverse change,
event, or
effect related to or arising from the analog wireless network
and/or the
Aeris services.
2.2 Title
to Common Shares.
AirIQ U.S. Holdings, Inc., a wholly-owned
subsidiary of Shareholder, owns all of the issued and outstanding
capital
stock of Seller. As of
the Closing, there exists no options, warrants,
purchase rights, subscription rights, conversion rights, exchange
rights or
other contracts or commitments which could require Seller to sell,
issue or
otherwise cause to become outstanding any stock or other interest
in Seller.
2.3
Authority and Enforceability.
(a) Seller has the requisite corporate power, legal capacity
and
authority to sell and transfer the Purchased Assets as contemplated
herein,
free and clear of any statutory, contractual or other limitation,
and to
enter into and perform its obligations under this Agreement.
This Agreement
constitutes a valid and legally binding obligation of Seller,
enforceable
against it in accordance with the terms hereof, except as such may
be limited
by bankruptcy, insolvency, reorganization or other laws affecting
creditors'
rights or by general equitable principles. Seller has taken all necessary
corporate action on its part as may be required under applicable
law and
under its Certificate of Incorporation and Bylaws to authorize the
execution,
delivery and performance of this Agreement.
(b) Shareholder has the legal capacity to enter into and
perform
its obligations under this Agreement. This Agreement constitutes a valid
and
legally binding obligation of Shareholder, enforceable against it
in
accordance with the terms hereof, except as such may be limited
by
bankruptcy, insolvency, reorganization or other laws affecting
creditors'
rights or by general equitable principles.
2.4
Financial Statements.
The unaudited balance sheets and income
statements of Seller for the year ended December 31, 2006
(collectively, the
"Financial Statements"), copies of which have been previously
provided to
Purchaser, and the statements of revenue for January and February
2007 set
forth in Section 2.4 of the Seller and Shareholder Disclosure
Letter, are
true and correct in all material respects and have been prepared
in
accordance with the books and records of Seller. The Financial Statements
have been prepared in accordance with Canadian Generally Accepted
Accounting
Principles consistently applied by Seller throughout the periods
indicated,
except that the Financial Statements do not contain customary
notes. The
statements of revenue for January and February 2007 shall report
revenue on a
Canadian GAAP basis.
The balance sheets contained in the Financial
Statements fairly present the financial position of Seller in all
material
respects as of their respective dates and set forth in full and
reflect all
liabilities of Seller as of such dates. The income statements included
in
the Financial Statements fairly present the results of the
operations of
Seller in all material respects for the periods indicated and
covered
thereby. The inventory
valuations in the Financial Statements are based upon
pricing the inventories at the lower of cost or market in
accordance with the
established practices of Seller. The shareholders' equity of Seller
as of
such dates was as set forth in the Financial Statements.
Seller and
Shareholder do not have any knowledge of any material liability
that is not
reflected or reserved against in the Financial Statements.
2.5
Absence of Change.
Except as disclosed in Section 2.5 of the
Seller and Shareholder Disclosure Letter, since December 31, 2006,
there has
not been: (a) any Material Adverse Effect; (b) any material damage,
natural
or otherwise, to any of the Purchased Assets being purchased
hereunder; (c)
any confiscation of any of the Purchased Assets by any government
or any
agency thereof; (d) any lockout, strike, labor trouble, state of
emergency,
war, act of God or other event which affected or will affect the
Business or
Purchased Assets; (e) any material sales of goods or services or
other
transactions of Seller, other than those occurring in the ordinary
course of
business; (f) any material change in the manner of conducting the
Business
and operations of Seller; (g) any material change in the manner in
which
Seller pays its accounts payable and no payment of any accounts
payable, nor
any failure to pay any accounts payable, other than in the ordinary
course of
Business; (h) any financial or other commitments or obligations
incurred by
Seller, except such as may be incidental to carrying on the
ordinary course
of Business; (i) any borrowing by Seller of any funds and no
endorsing or
guaranteeing payment by Seller of any loan or obligation,
contractual or
otherwise, of any other individual, firm, corporation or other
entity, and
except as set forth in the Financial Statements, there are no
such
borrowings, endorsements or guarantees by Seller presently
outstanding; (j)
any material loans or advances by Seller to any individual, firm,
corporation
or other entity at any time; (k) any capital additions or
improvements in
excess of FIFTY THOUSAND DOLLARS ($50,000) in the aggregate to the
properties
of Seller, and no contracts or purchase orders therefore; (l) any
sale,
retirement, abandonment or other disposition of any of the
Purchased Assets
or other property of Seller, except the disposition or replacement
of minor
equipment in the ordinary course of business with an individual
fair market
value of less than TEN THOUSAND DOLLARS ($10,000); (m) any
outstanding
obligation by Seller either for money borrowed or otherwise, other
than as
set forth in the Financial Statements, except trade accounts
payable and
other current expenses and taxes incurred and accrued on Seller's
books and
arising in the ordinary course of business, none of which
obligations are in
default or arrears of payment; (n) any dividend or mandatory
redemptions on
Seller's capital stock and no money or other property set apart for
payment
or for making any other distributions to or for the account of
any
shareholder of Seller; (o) any acquisition or contract to acquire
in any
manner, directly or indirectly, any of the outstanding capital
stock of
Seller or any other corporation; (p) any payment of or any
obligation to pay
any amounts either in cash or other property to any person for
cancellation
of any outstanding options, warrants or agreements to acquire
shares of
Seller's capital stock; (q) change in the capital structure or
Certificate of
Incorporation or Bylaws of Seller; (r) any material change in the
accounting
methods or practices followed by Seller in connection with the
Business and
operations of Seller; and (s) any written notice of any violation
or any
written notice of a threatened violation of applicable law as to
the Business
or operations of Seller; provided, however, that Seller shall not
be deemed
to have breached this representation unless the failure to disclose
the
information requested hereunder gives rise to a Material Adverse
Effect.
2.6
Employee Matters.
Section 2.6 of the Seller and Shareholder
Disclosure Letter sets forth an accurate and complete list of the
names of
all persons employed by Seller in connection with the Business as
of the
Closing (the "Designated Employees"), along with such persons'
titles, job
description if not immediately apparent from such title, salary or
hourly
rate, and length of employment. Seller has complied in all
material respects
with all applicable laws, rules and regulations of governmental
agencies or
authorities relating to the employment of labor in connection with
the
operation of its Business, including, but without limitation, ERISA
and the
regulations and published interpretations thereunder, the
requirements of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"),
applicable local, state and federal civil rights laws, and those
relating to
hours, collective bargaining, labor unions and labor relations,
unemployment
insurance, worker's compensation, equal employment opportunity, and
the
payment and withholding of taxes, including income and social
security taxes.
Further, Seller has complied in all material respects with any
applicable
state or federal laws relating to the termination of its Business
and
reduction of its staff, including, without limitation, the WARN Act
and any
state or local equivalents thereof. There has been no violation of
the
reporting and disclosure requirements imposed under ERISA, COBRA or
the
Internal Revenue Code for which any penalty has been or may be
imposed.
Seller has not agreed to recognize any union or other collective
bargaining
unit, nor has any union or other collective bargaining unit been
certified as
representing any of its employees and Seller has not experienced
any strikes,
work stoppages, significant grievance procedures or claims of
unfair labor
practices nor, to Seller's or Shareholder's Knowledge, have there
been any
overt threats to file any such significant grievance proceedings
under unfair
labor practices. As of
the Closing Date, Seller has terminated all of the
Designated Employees in full compliance with all applicable federal
and state
laws. Purchaser shall
offer employment to all of such employees in
accordance with Section 4.15. On or before the Closing Date,
Seller shall
satisfy in full or make adequate provisions for full satisfaction
of all
obligations to or on account of the Designated Employees arising
out of or in
connection with their employment (and termination of their
employment)
including, without limitation, the payment of withholding taxes,
salaries,
bonuses, health and welfare contributions or benefits, pension or
profit
sharing plans or benefits, workers' compensation insurance, and
accrued
vacation, and, if applicable, sick leave, and any options,
warrants, purchase
rights, subscription rights, conversion rights, exchange rights or
other
contracts or commitments which could require Seller to sell, issue
or
otherwise cause to become outstanding any stock or other interest
in Seller.
2.7
Sales Representatives,
Dealers and Distributors. Section 2.7 of
the Seller and Shareholder Disclosure Letter sets forth a complete
list of
those Contracts with any person under which such other person is a
sales
agent, representative, dealer or distributor of any of the services
or
products of Seller.
True and correct copies of all agreements listed in
Section 2.7 of the Seller and Shareholder Disclosure Letter have
been made
available to Purchaser.
2.8
Pending Claims. Except
as set forth in Section 2.8 of the Seller
and Shareholder Disclosure Letter, there are no pending or, to the
Knowledge
(as defined herein) of Seller and Shareholder, threatened claims of
any kind,
or actions, lawsuits, proceedings or disputes ("Actions") against
or
affecting the Purchased Assets, the Business or operations of
Seller, or
Seller's ability to enter into this Agreement and consummate the
transactions
contemplated hereby.
There are no unpaid judgments of any kind against
Seller; there are no contracts of Seller subject to renegotiation
or
unilateral adjustment; Seller has not been charged with or, to the
Knowledge
of Seller and Shareholder, threatened with a charge or violation
nor, to the
Knowledge of Seller and Shareholder, is Seller under investigation
with
respect to any alleged violation of any agreement or any provision
of any
federal, state or local law or administrative ruling or regulation
relating
to any aspect of the Business or Seller's operations. There are no Actions
by Seller or Shareholder currently pending or which Seller or
Shareholder
intends to initiate regarding the Purchased Assets, the Business
or
operations of Seller, or Seller's ability to enter into this
Agreement and
consummate the transactions contemplated hereby.
2.9 Title
to the Purchased Assets; Condition and Sufficiency of the
Purchased Assets.
Seller is the sole and exclusive owner of and has good and
marketable title to or has sufficient right to use, consistent with
the
operation of the Business as currently conducted, all of the
Purchased
Assets, free and clear of all Liens and Encumbrances other than the
Permitted
Liens. The Purchased
Assets constitute all of the machines, equipment,
tooling, fixtures, furniture, computer software, intellectual
property
assets, office furnishings and other tangible and intangible
personal
property which are owned by Seller and utilized in connection with
the
Business. The
Purchased Assets are in good operating condition and repair,
and are adequate for the uses to which they are being put.
The Purchased
Assets are regularly maintained, subject to normal wear and tear.
Except as
disclosed in Section 2.9 of the Seller and Shareholder Disclosure
Letter, all
tangible Purchased Assets will be located at the Lake Forest
facility at
Closing and Purchaser will have complete and unrestricted ownership
of,
access to, and use of those Purchased Assets at Closing.
2.10
Contracts. Set forth
in Section 2.10 of the Seller and
Shareholder Disclosure Letter is a complete list of the Material
Contracts.
As used in this Agreement, "Material Contract" shall mean a
Contract (i)
providing for payment or receipt of TWENTY-FIVE THOUSAND DOLLARS
($25,000) or
more over the life of the contract, by which Seller is bound with
respect to
the Business or the Purchased Assets or (ii) to which Seller is a
party that
is reasonably necessary for Purchaser to continue the Business and
operations
of Seller in substantially the same manner as was carried on
immediately
prior to the Closing, but in each case, excluding any contract with
a
customer listed in Section 2.12 of the Seller and Shareholder
Disclosure
Letter. Each Material
Contract is in full force and effect and Seller is not
in breach or default thereunder in any material respect and, to the
Knowledge
of Seller and Shareholder, each non-material Contract is in full
force and
effect and Seller is not in breach or default thereunder.
To the Knowledge
of Seller and Shareholder, no other party to any such Contract is
in breach
or default thereunder in any material respect. Those Material Contracts that
by their terms either are not assignable, or require the consent of
a third
party to be assigned to Purchaser are identified as such in Section
2.10 of
the Seller and Shareholder Disclosure Letter. Seller and Shareholder hereby
agree to use all commercially reasonable efforts to obtain required
consents
with respect to the Material Contracts.
2.11
Leases. Except as may
be set forth in Section 2.11 of the Seller
and Shareholder Disclosure Letter, Seller does not lease any real
or personal
property used or useful in the Business. All leases listed in Section
2.11
of the Seller and Shareholder Disclosure Letter and constituting
assigned
Contracts are valid and in full force, and there does not exist any
default
or event that with notice or lapse of time, or both, would
constitute a
default or event of acceleration under any of these leases.
2.12
Customers. Section
2.12 of the Seller and Shareholder Disclosure
Letter contains a correct and current list, in all material
respects, of all
customers of Seller as of the Closing Date.
2.13 No
Breach or Violation.
Subject to obtaining any required third
party consents identified on Section 2.10 of the Seller and
Shareholder
Disclosure Letter, the consummation of the transactions
contemplated by this
Agreement will not result in or constitute any of the following:
(a) an event
that, with notice or lapse of time or both, would be a material
default,
breach or violation of any of the Certificate of Incorporation,
Bylaws or
organizational documents of Seller, or of any lease, license,
promissory
note, conditional sales contract, commitment, indenture, mortgage,
deed of
trust or other agreement, instrument or arrangement to which Seller
is a
party or by which it or its property is bound, except where such
default,
breach or violation would not have a Material Adverse Effect on
Purchaser's
ability to continue and support the Business following the Closing
in the
manner contemplated hereby; (b) except as would not have a Material
Adverse
Effect: (i) an event that would permit any party to terminate,
cancel,
accelerate, modify or require any notice under any Material
Contract with
Seller or to accelerate or modify the maturity of any Assumed
Liabilities;
(ii) violate any applicable federal, state, municipal,
administrative or
other law, statute, rule, regulation, ordinance or other
applicable
restriction promulgated by a governmental authority; or (iii) the
creation or
imposition of any Liens and Encumbrances on any of the Purchased
Assets.
2.14
Interest in Customers, Suppliers and Competitors. Neither
Shareholder nor Seller has any direct or indirect interest (other
than a
passive investment in less than five percent (5%) of the
outstanding voting
securities of a company that is required to file reports pursuant
to Section
13 or 15(d) of the Securities Exchange Act of 1934, as amended, or
similar
regulations under Canadian securities laws) in any competitor,
supplier or
customer of Seller or in any person from whom or to whom any of
them leases
any real or personal property, or in any other person with whom
Seller is
doing Business.
2.15 Corporate
Documents. Seller has
made available to Purchaser for
its examination: (a) copies of the Certificate of Incorporation,
Bylaws and
other organizational documents of Seller; and (b) copies of the
stock
certificate ledger and the stock certificate(s) representing all
the issued
and outstanding shares of capital stock of Seller.
2.16
Compliance. All
Business and operations of Seller are being
conducted in conformity with all applicable rules, ordinances and
other laws
pertaining thereto where such failure to operate in conformity with
all
applicable rules, ordinances and other laws pertaining thereto
would have a
material adverse effect on the Business. Seller has not received any
notice
and has no knowledge or reasonable grounds to believe that Seller
is not in
compliance in all material respects with all federal, state and
local laws
relating to the Business or operations of Seller or its properties.
Seller
and its operations and properties are presently in compliance with
all
applicable Occupational Safety and Health Administration ("OSHA")
rules,
regulations and laws.
Seller has not received any notice of, and does not
know, or have reason to know of any potential occupational safety
and health
problem in connection with the operations or properties of Seller
where such
problem would have an adverse effect on the Business.
2.17
Intellectual Property.
Section 2.17 of the Seller and Shareholder
Disclosure Letter contains a list of all identified patents,
trademarks,
copyrights, trade names, service marks, licenses, source code, and
computer
software to be transferred to Purchaser hereunder, whether
registered or
unregistered (the "Intellectual Property"). In addition, Purchaser shall
obtain certain rights to Seller's intellectual property pursuant to
the
perpetual, royalty-free, non-exclusive license to use and modify
the host
system software in connection with the Business, fixed location
industrial
monitoring and control applications, and fixed or mobile public
safety
applications (the "Host System Software License"), substantially in
the form
attached hereto as Exhibit D; the perpetual, royalty-free,
non-exclusive
license to use certain of Seller's trademarks and royalty-free,
non-exclusive
right to use the GPR-1 device and firmware, including full
documentation of
the protocol for communicating with the device (but excluding
any
intellectual property related to the design of the device or its
operating
software), in each case, solely in connection with the Business and
in
accordance with the terms of the Product Supply and Data Services
Agreement
substantially in the form attached hereto as Exhibit E (the
intellectual
property covered by such licenses, the "Shared Intellectual
Property"). The
Intellectual Property and the Shared Intellectual Property
together
constitute all of the rights owned or for which Seller has the
right to
convey to patent, copyright, trademark, trade secret or other
intellectual
property protection for any of the same and for any other
proprietary
information and materials included with the Purchased Assets that
are related
to the Business. All of the
Intellectual Property is owned by Seller or
Seller has the right to use such Intellectual Property and, to the
extent set
forth in Section 2.17 of the Seller and Shareholder Disclosure
Letter, has
been duly registered or filed with the appropriate governmental
office.
Except as set forth in Section 2.17 of the Seller and Shareholder
Disclosure
Letter: (a) Seller does not use any of the Intellectual Property
without the
consent of any rightful owner; (b) there are no attachments or
other Liens
and Encumbrances, other than Permitted Liens on any of the
Intellectual
Property; (c) except as set forth in the Contracts, Seller does not
pay any
licensing fee, royalty or other payment to any other person or
entity with
respect to any Intellectual Property or use thereof; (d) Seller's
right to
use and transfer any and all of the Intellectual Property is
perpetual and
unrestricted; (e) to the Knowledge of Seller and Shareholder, there
are no
claims or demands of any other person, firm or corporation
pertaining to any
of the Intellectual Property; (f) there are no proceedings which
have been
instituted or are pending, or to the Knowledge of Seller and
Shareholder,
threatened which challenge any right of Seller with respect to
the
Intellectual Property; and (g) to the Knowledge of Seller and
Shareholder, no
intellectual property used in the Business infringes on the
intellectual
property rights of others or is being infringed on by others or is
subject to
any outstanding order, decree, judgment or stipulation.
Seller has not at
any time been charged with any infringement of any adversely held
patent,
trademark, trade name or copyright. Seller agrees to promptly execute
any
and all assignments and other documents necessary for the transfer
of the
Intellectual Property to Purchaser.
2.18 Tax
Returns and Audits.
Except as would not have a Material
Adverse Effect, Seller has duly and timely filed with the
appropriate
governmental agencies all tax returns and tax reports due and
required to be
filed by Seller, including, but not limited to, all tax returns,
filings and
reports due or required to be filed by Seller, including all
federal, state
and local profits, income, sales, use, occupation, property,
excise, social
security, withholding, unemployment insurance, health licenses and
other
taxes, and Seller has paid or provided for the payment of all such
taxes and
payments, including all such taxes and payments due or required to
be paid by
Seller, through the Closing. Seller has no written notice of
any pending
audit pertaining to, or claims for, taxes, or assessments asserted
against
Seller by any taxing authority in respect of any period to date.
No
agreement for the extension of the time for the assessment of any
amount of
tax has been entered into by or on behalf of Seller. Except as would not
have a Material Adverse Effect, with respect to Seller's own
employees,
Seller has withheld from amounts paid to such employees and, to the
extent
due, has paid, or will pay as due, to the appropriate governmental
agencies,
all taxes or other amounts required to be withheld, including, but
not
limited to, social security, federal withholding, state withholding
and local
withholding taxes.
2.19
Liabilities to Customers. To the Knowledge of Seller and
Shareholder, Seller does
not have any liability or potential liability
to any current or past customer arising from a breach of a customer
contract.
2.20
Environmental Matters.
To the Knowledge of Seller and
Shareholder, after due inquiry: (a) the property and assets of
Seller and the
operations conducted thereon by Seller and the use, maintenance or
operation
of such property and assets, do not violate any applicable federal,
state or
local environmental law, regulation or ordinance (each hereinafter
an
"Environmental Law"), including by way of illustration and not by
way of
limitation, the Clean Air Act, the Federal Water Pollution Control
Act of
1972, the Resource Conservation and Recovery Act of 1976, the
Comprehensive
Environmental Response Compensation and Liability Act of 1980, and
the Toxic
Substances Control Act (including any amendments or extension
thereof, and
rules, regulations, standards or guidelines pursuant to any
Environmental
Law), and are not subject to any existing, pending or
threatened
investigation, inquiry or proceeding by any governmental authority
or to any
remedial obligations under any Environmental Law; (b) except for
materials
used in the ordinary course of the Business in full compliance with
all
Environmental Laws, no toxic or hazardous or noxious substance,
material or
waste which is regulated by any local, state or United States
government or
agency thereof ("Hazardous Substance") has been generated, disposed
of or
otherwise released by Seller or by others in connection with the
properties
used by or operations of Seller; (c) no notice of any violation of
any
Environmental Law has been received by Seller concerning the
properties used
by or operations of Seller and there are no existing or pending
requirements
of any governmental authority relating to environmental matters
requiring any
remedial action or other work, repairs, construction or capital
expenditures
with respect to such properties or operations of Seller; (d) Seller
does not
have any contingent liability in connection with the release of any
Hazardous
Substance into the environment or in connection with any violation
or non-
compliance with any Environmental Law; and (e) Seller's products
offered for
sale, as of the Closing Date, are compliant with the Restriction of
Hazardous
Substances Directive (RoHS) 2002/95/EC.
2.21
Employee Benefit Matters.
(a) Except as set
forth in Section 2.21 of the Seller and
Shareholder Disclosure Letter, Seller does not have any pension,
profit
sharing, retirement, fringe benefit, deferred compensation, stock
purchase,
stock option, incentive, bonus, vacation, severance,
disability,
hospitalization, medical insurance, life insurance or any other
type of
employee benefit plan, program or arrangement within the meaning of
Section
3(3) of the Employee Retirement Income Security Act of 1974, as
amended
("ERISA"), including without limitation any defined benefit plan
("Defined
Benefit Plan") within the meaning of Se
