<PAGE> 1
Exhibit 10.1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
by and among:
WAVEPHORE NETWORKS, INC.,
a Delaware corporation,
WAVO CORPORATION,
an Indiana corporation,
and
CIDERA, INC.,
a Delaware corporation
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Dated as of September 11, 2000
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TABLE OF CONTENTS
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1. Sale of Assets; Related Transactions .......................................... 1
1.1 Sale of Assets ....................................................... 1
1.2 Purchase Price ....................................................... 2
1.3 Sales Taxes .......................................................... 5
1.4 Allocation ........................................................... 5
1.5 Closing .............................................................. 5
2. Representations and Warranties of the Seller .................................. 6
2.1 Due Organization; No Subsidiaries; Etc ............................... 6
2.2 Articles of Incorporation and Bylaws; Records ........................ 6
2.3 Authority; Binding Nature Of Agreements .............................. 7
2.4 Financial Statements ................................................. 7
2.5 Absence Of Changes ................................................... 7
2.6 Title To Assets ...................................................... 8
2.7 Intentionally Omitted ................................................ 8
2.8 Receivables .......................................................... 8
2.9 Customers; Distributors .............................................. 9
2.10 Inventory ............................................................ 9
2.11 Equipment, Etc ....................................................... 9
2.12 Real Property ........................................................ 9
2.13 Proprietary Assets ................................................... 10
2.14 Contracts ............................................................ 11
2.15 Liabilities .......................................................... 12
2.16 Compliance with Legal Requirements ................................... 12
2.17 Governmental Authorizations .......................................... 12
2.18 Tax Matters .......................................................... 13
2.19 Employee And Labor Matters ........................................... 13
2.20 Environmental Matters ................................................ 13
2.21 Sale of Products ..................................................... 13
2.22 Performance Of Services .............................................. 13
2.23 Insurance ............................................................ 14
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2.24 Related Party Transactions ........................................... 14
2.25 Proceedings; Orders .................................................. 15
2.26 Non-Contravention; Consents .......................................... 15
2.27 Brokers .............................................................. 16
2.28 Investment Representations ........................................... 16
2.29 Full Disclosure ...................................................... 17
2.30 Disclosure Schedule .................................................. 17
2.31 Access ............................................................... 17
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER ............................... 17
3.1 Authority; Binding Nature Of Agreements .............................. 17
3.2 Brokers .............................................................. 18
3.3 Proceedings .......................................................... 18
3.4 Full Disclosure ...................................................... 18
3.5 Valid Issuance ....................................................... 18
3.6 Capitalization ....................................................... 18
3.7 HSR Filing ........................................................... 18
4. PRE-CLOSING COVENANTS OF THE SELLERS .......................................... 18
4.1 Access And Investigation ............................................. 18
4.2 Operation Of Business ................................................ 19
4.3 Filings and Consents ................................................. 20
4.4 Notification; Updates to Disclosure Schedule ......................... 20
4.5 No Negotiation ....................................................... 21
4.6 Best Efforts ......................................................... 21
4.7 Confidentiality ...................................................... 21
4.8 Wireless Business Audit .............................................. 22
4.9 Communications with Sellers Customers ................................ 22
4.10 Nonsolicitation of Purchaser's Employees ............................. 22
4.11 Negotiation of Services Agreement and OEM Agreement With Purchaser ... 22
5. PRE-CLOSING COVENANTS OF THE PURCHASER ........................................ 22
5.1 Best Efforts ......................................................... 22
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5.2 Employment Offers .................................................... 22
5.3 Negotiation of Services Agreement and OEM Agreement With Sellers ..... 22
5.4 Contact With Customers ............................................... 22
6. CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATION TO CLOSE ................... 22
6.1 Accuracy Of Representations .......................................... 23
6.2 Performance Of Obligations ........................................... 23
6.3 Consents ............................................................. 23
6.4 No Material Adverse Change ........................................... 23
6.5 Opinion Letter ....................................................... 23
6.6 No Proceedings ....................................................... 23
6.7 No Prohibition ....................................................... 23
6.8 Employees ............................................................ 23
6.9 Customers ............................................................ 23
6.10 Services Agreement and OEM Agreement ................................. 24
7. CONDITIONS PRECEDENT TO THE SELLERS' OBLIGATION TO CLOSE ..................... 24
7.1 Accuracy Of Representations .......................................... 24
7.2 Registration Rights .................................................. 24
7.3 Purchaser's Performance .............................................. 24
7.4 Services Agreement and OEM Agreement ................................. 24
8. TERMINATION ................................................................... 24
8.1 Termination Events ................................................... 24
8.2 Termination Procedures ............................................... 25
8.3 Effect Of Termination ................................................ 25
8.4 Nonexclusivity Of Termination Rights ................................. 25
9. INDEMNIFICATION, ETC .......................................................... 25
9.1 Survival Of Representations And Covenants ............................ 25
9.2 Indemnification By The Sellers ....................................... 27
9.3 Indemnification By Purchaser ......................................... 28
9.4 Nonexclusivity Of Indemnification Remedies ........................... 28
9.5 Defense Of Third Party Claims ........................................ 28
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10. CERTAIN POST-CLOSING COVENANTS; MISCELLANEOUS ................................. 30
10.1 Further Actions; Right of First Refusal .............................. 30
10.2 Publicity ............................................................ 31
10.3 Further Assurances ................................................... 31
10.4 Fees and Expenses .................................................... 32
10.5 Attorneys' Fees ...................................................... 32
10.6 Notices .............................................................. 32
10.7 Time Of The Essence .................................................. 33
10.8 Headings ............................................................. 33
10.9 Counterparts ......................................................... 33
10.10 Governing Law; Venue ................................................. 33
10.11 Successors And Assigns; Parties In Interest .......................... 34
10.12 Remedies Cumulative; Specific Performance ............................ 34
10.13 Waiver ............................................................... 34
10.14 Amendments ........................................................... 35
10.15 Severability ......................................................... 35
10.16 Entire Agreement ..................................................... 35
10.17 Knowledge ............................................................ 35
10.18 Construction ......................................................... 35
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is entered
into as of September 11, 2000, by and among WAVEPHORE NETWORKS, INC., a Delaware
corporation ("WPN"), WAVO CORPORATION, an Indiana corporation and the parent of
WPN ("WAVO"), and CIDERA, INC., a Delaware corporation (the "PURCHASER"). For
the purposes of this Agreement, WPN and WAVO are sometimes referred to
collectively as the "SELLERS" or individually as a "SELLER," even though, to
WAVO's and WPN's knowledge, all of the Assets (as defined below) being
transferred hereunder are the assets and operations of WPN (and not of WAVO).
RECITALS
WHEREAS, the Sellers wish to sell and the Purchaser wishes to purchase
the Assets (as defined below to include all operations) of the Sellers Related
to the Wireless Business on the terms set forth in this Agreement.
WHEREAS, capitalized terms used in this Agreement and not otherwise
defined in this Agreement shall have the meanings ascribed to them in EXHIBIT A
to this Agreement.
AGREEMENT
NOW, THEREFORE, the parties to this Agreement, intending to be legally
bound, agree as follows:
1. SALE OF ASSETS; RELATED TRANSACTIONS.
1.1 SALE OF ASSETS. The Sellers shall cause to be sold, assigned,
transferred, conveyed and delivered to the Purchaser, at the Closing (as defined
below), good and valid title to the Assets, free of any Encumbrances, on the
terms and subject to the conditions set forth in this Agreement. For purposes of
this Agreement, "ASSETS" shall mean and include all of the properties, rights,
interests and other tangible and intangible assets of the Sellers Related to the
Wireless Business (wherever located and whether or not required to be reflected
on a balance sheet prepared in accordance with generally accepted accounting
principles), including any assets Related to the Wireless Business and acquired
by either Seller during the Pre-Closing Period; provided, however, that the
Assets shall not include any Excluded Assets. Without limiting the generality of
the foregoing, the Assets shall include:
(1) all accounts receivable, notes receivable
and other receivables of the Sellers Related to the Wireless Business
(including all accounts receivable Related to the Wireless Business
identified in PART 2.8 of the Disclosure Schedule);
(2) all inventories and work-in-progress of the
Sellers Related to the Wireless Business (including the inventory
described in PART 2.10 of the Disclosure Schedule);
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(3) all Dish Strings and FM Strings identified
in PART 2.11 of the Disclosure Schedule, uplinks, other equipment,
machinery, real property, improvements, materials, prototypes, tools,
supplies, vehicles, furniture, fixtures, and other tangible assets of
the Sellers Related to the Wireless Business (including the tangible
assets Related to the Wireless Business identified in PART 2.11 of the
Disclosure Schedule and the real property and leases identified in PART
2.12 of the Disclosure Statement);
(4) all Proprietary Assets and goodwill of the
Sellers Related to the Wireless Business (including all licenses and
other intangible assets related to uplinks, and the Proprietary Assets
Related to the Wireless Business identified in PART 2.13 of the
Disclosure Schedule);
(5) all rights of the Sellers under the
Contracts Related to the Wireless Business (including the Contracts
identified in PART 2.14 of the Disclosure Schedule, which Contracts
include all customer Contracts, leases, roof rights, tower rights and
related rights);
(6) all Governmental Authorizations held by the
Sellers Related to the Wireless Business (including the Governmental
Authorizations identified in PART 2.17 of the Disclosure Schedule);
(7) all claims (including claims for past
infringement of Proprietary Assets) and causes of action of the Sellers
related to the Wireless Business against other Persons (regardless of
whether or not such claims and causes of action have been asserted by a
Seller), and all rights of indemnity, warranty rights, rights of
contribution, rights to refunds, rights of reimbursement and other
rights of recovery possessed by the Sellers Related to the Wireless
Business (regardless of whether such rights are currently exercisable);
(8) all advertising and promotional materials
Related to the Wireless Business possessed by the Sellers; and
(9) all books, records, files and data of the
Sellers Related to the Wireless Business.
1.2 PURCHASE PRICE.
(a) As consideration for the sale of the Assets to the Purchaser:
(i) at the Closing, the Purchaser shall pay to WPN,
$11,500,000 in cash (the "CLOSING DATE CASH") by wire transfer in
immediately available funds;
(ii) at the Closing, the Purchaser shall deposit the sum
of $500,000 (the "ESCROW FUND" and together with the Closing Date Cash,
the "CASH CONSIDERATION") in an escrow account (the "ESCROW ACCOUNT")
to be established as of the Closing Date (as defined below) pursuant to
an Escrow Agreement (as defined below) among WPN, the Purchaser, and
U.S. Trust Corporation (or another escrow agent
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reasonably acceptable to the parties) (the "ESCROW AGENT"), in
substantially the form of EXHIBIT B (the "ESCROW AGREEMENT"). Subject
to the terms of the Escrow Agreement, such Escrow Fund shall be held in
the Escrow Account for 60 days after the Closing Date, after which it
shall be delivered and paid to WPN, less any amount used for any
adjustment(s) to Cash Consideration described in Section 1.2(b)(i) and
(ii). The terms of the use and distribution of the Escrow Fund are
described more fully in the Escrow Agreement;
(iii) at the Closing, the Purchaser shall issue to WPN
285,731 shares of common stock of the Purchaser (the "PURCHASER COMMON
STOCK") subject to adjustment as described in Section 1.2(b); and
(iv) at the Closing, the Purchaser shall assume the
Assumed Liabilities by delivering to the Sellers an Assumption
Agreement in substantially the form of EXHIBIT C (the "ASSUMPTION
AGREEMENT").
All consideration paid by the Purchaser under this Agreement shall be paid to or
in the name of WPN.
(b) The consideration described in Section 1.2(a) is subject to
adjustment as follows:
(i) FIRST ADJUSTMENT TO CASH CONSIDERATION. To the extent
that the historical net book value of the Transferred Tangible Assets of the
Wireless Business is less than $4,000,000 (as determined by the Closing Date
Audit as defined in Section 10.1), then the Cash Consideration shall be reduced,
dollar-for-dollar, for every dollar that Transferred Tangible Assets is less
than $4,000,000. Any such reduction shall be paid solely from the Escrow Fund.
Although the Purchaser may only seek such Cash Consideration reduction from the
Escrow Fund if Transferred Tangible Assets of the Wireless Business are less
than $4,000,000, the foregoing sentence shall not limit the Purchaser from
seeking indemnification from the Sellers for the breach of any representation or
warranty in the Transactional Agreements.
(ii) SECOND ADJUSTMENT TO CASH CONSIDERATION. In addition
to any adjustment to the Cash Consideration described in Section 1.2(b)(i), to
the extent that the historical net book value of the Assumed Liabilities of the
Wireless Business (as determined by the Closing Date Audit) are greater than
$490,000, then the Cash Consideration shall be reduced, dollar-for-dollar, for
every dollar that such Assumed Liabilities are greater than $490,000. Any such
reduction may be paid from the Escrow Fund or from the Closing Date Cash at the
option of the Purchaser.
(iii) ADJUSTMENT TO PURCHASER COMMON STOCK. The parties
hereto acknowledge that the Purchaser has been negotiating the sale of its
Series D Preferred Stock. The parties agree that if (1) the Purchaser closes its
sale of Series D Preferred Stock within 90 days of the date of this Agreement,
and (2) such stock is sold for less than $8.7495 per share, then WPN shall be
entitled to an aggregate number of shares of Common Stock of the Purchaser
(including the 285,731 shares described above) equal to $2,500,000 divided by
the price at which the Series D Preferred Stock is actually sold. By way of
illustration, if the Series D Preferred
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Stock is sold for $8.50, then WPN shall be entitled to an aggregate of 294,118
shares of Purchaser Common Stock (or an additional 8,387 shares due to such
adjustment).
(c) For purposes of this Agreement "ASSUMED LIABILITIES" shall
mean only the following liabilities of the Sellers:
(i) all liabilities of the Sellers related to the
Wireless Business and listed on EXHIBIT G that arose from bona fide
transactions, entered into with Persons who (at the time of such
transaction) were not Related Parties to either Seller, in the Ordinary
Course of Business and that remain unpaid as of the Closing Date. (On
the date of this Agreement, EXHIBIT G attached hereto will contain
those types or categories of liabilities to be assumed by the
Purchaser, and the amounts of such Assumed Liabilities as of the date
of this Agreement. The amounts described on EXHIBIT G shall be updated
at the time of the Closing to reflect the actual Assumed Liabilities
that the Purchaser will be assuming at the Closing); and
(ii) the obligations of the Sellers under the operating
and capital leases identified on EXHIBIT D to the Agreement, but only
to the extent such obligations (A) arise after the Closing Date; (B) do
not arise from or relate to any Breach by a Seller of any provision of
any of such Contracts, (C) do not arise from or relate to any event,
circumstance or condition occurring or existing on or prior to the
Closing Date that, with notice or lapse of time, would constitute or
result in a Breach of any of such Contracts, and (D) are ascertainable
(in nature and amount) solely by reference to the express terms of such
Contracts;
provided, however, that notwithstanding the foregoing, and notwithstanding
anything to the contrary contained in this Agreement, the "ASSUMED LIABILITIES"
shall not include, and the Purchaser shall not be required to assume or to
perform or discharge:
(1) any Liability of any other Person, except of
a Seller;
(2) any Liability of a Seller arising out of or
relating to the execution, delivery or performance of any of
the Transactional Agreements;
(3) any Liability of a Seller for any fees,
costs or expenses of the type referred to in Section 10.4 of
this Agreement;
(4) any Liability of a Seller arising from or
relating to any action taken by a Seller, or any failure on
the part of a Seller to take any action, at any time after the
Closing Date;
(5) any Liability of a Seller arising from or
relating to (x) any services performed by a Seller prior to
the Closing for any customer, or (y) any claim or Proceeding
against a Seller;
(6) any Liability under any Contract, if the
Sellers shall not have obtained, prior to the Closing Date,
any Consent required to be obtained from any Person
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with respect to the assignment or delegation to the Purchaser
of any rights or obligations under such Contract;
(7) any Liability that arises or exists by
virtue of any Breach of (x) any representation or warranty
made by a Seller in any of the Transactional Agreements, or
(y) any covenant or obligation of a Seller contained in any of
the Transactional Agreements; or
(8) any other Liability that is not referred to
specifically in clause "(i)" or "(ii)" of this sentence.
1.3 SALES TAXES. The Purchaser and WPN shall each bear and pay 50%
of any sales taxes, use taxes, transfer taxes, documentary charges, recording
fees or similar taxes, charges, fees or expenses that may become payable in
connection with the sale of the Assets to the Purchaser or in connection with
any of the other Transactions. For the avoidance of doubt, notwithstanding
anything to the contrary in the foregoing sentence, the Purchaser shall not
assume any Tax obligation of the Sellers for Taxes incurred prior to the Closing
Date other than that those set forth on EXHIBIT G.
1.4 ALLOCATION. The consideration referred to in Sections
1.2(a)(i) and 1.2(a)(ii) is to be allocated as mutually agreed by the Purchaser
and WPN. The Purchaser shall submit to WPN a proposed allocation (the "PROPOSED
ALLOCATION") within 30 days of the date hereof. If WPN does not notify the
Purchaser within 15 days of receipt of the Proposed Allocation of any
disagreement with the Proposed Allocation then the Proposed Allocation shall
become the final allocation (the "ALLOCATION"). If WPN notifies the Purchaser
within such 15 day period (the "ALLOCATION NOTICE") of WPN's disagreement with
the Proposed Allocation, then WPN and the Purchaser shall in good faith attempt
to resolve their disagreement. If such disagreement is not resolved within 30
days from the delivery of the Allocation Notice then such disagreement shall be
resolved by an independent accounting firm jointly selected by the accountant
for the Purchaser and the accountants for the Sellers. In the event the
allocation is determined after delivery of the Allocation Notice either by
discussions between WPN and the Purchaser or by the accounting firm selected in
the manner herein provided then such allocation shall be the Allocation. The
parties agree that except as otherwise required by law (i) the Allocation shall
be binding on the Purchaser and the Sellers for all federal, state and local tax
purposes and (ii) the Purchaser and the Sellers shall file with their respective
federal income tax returns consistent IRS Forms 8594-Asset Acquisition
Statements Under Section 1060, including any required amendments thereto which
shall reflect the allocations set forth in the Allocation. The parties
acknowledge that such Allocation will be reasonable. The Purchaser and WPN shall
each bear and pay 50% of the costs of any accounting firm retained to resolve
any disputes pursuant to this Section 1.4.
1.5 CLOSING.
(a) The closing of the sale of the Assets to the
Purchaser (the "CLOSING") shall take place at the offices of Cooley Godward LLP
in Reston, Virginia, at 10:00 a.m. on the date that all of the closing
conditions set forth herein are either satisfied or waived, or such other time
and place as the Purchaser and WPN agree to in writing. Such Closing may be
conducted by the
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exchange of facsimile signature pages. For purposes of this Agreement, "CLOSING
DATE" shall mean the time and date as of which the Closing actually takes place.
(b) At the Closing:
(i) the Sellers shall execute and deliver to the
Purchaser such bills of sale, endorsements, assignments and other
documents as may (in the reasonable judgment of the Purchaser or its
counsel) be necessary or appropriate to assign, convey, transfer and
deliver to the Purchaser good and valid title to the Assets free of any
Encumbrances; provided, however, the foregoing requirement that such
Assets be free of any Encumbrances shall not limit the Purchaser's
obligations to assume the Assumed Liabilities;
(ii) the Purchaser shall pay to the Sellers the
Closing Date Cash and issue a stock certificate in the name of WPN for
the Purchaser Common Stock contemplated by Section 1.2(a)(i) and (iii);
(iii) the parties hereto shall execute and deliver
the Escrow Agreement in the form attached hereto (subject to changes
required by the Escrow Agent), and the Purchaser shall deposit the sum
contemplated by Section 1.2(a)(ii) in the Escrow Account;
(iv) the Purchaser shall execute and deliver to
the Sellers the Assumption Agreement;
(v) the Purchaser and the Sellers shall execute,
and deliver to each other, the Services Agreement (described in Section
6.10);
(vi) the Sellers and the Purchaser shall execute,
and deliver to each other, a Noncompetition Agreement in the form of
EXHIBIT E; and
(vii) each party hereto shall execute and deliver
to the other a certificate (each, a "CLOSING CERTIFICATE") setting
forth its representations and warranties that (A) each of the
representations and warranties made by it in this Agreement was
accurate in all respects as of the date of this Agreement, (B) except
as expressly set forth in the Closing Certificate, each of the
representations and warranties made by it in this Agreement is accurate
in all respects as of the Closing Date as if made on the Closing Date,
(C) each of the covenants and obligations that it is required to have
complied with or performed pursuant to this Agreement at or prior to
the Closing has been duly complied with and performed in all respects,
and (D) with regard to the Sellers' Closing Certificates, except as
expressly set forth in each such Closing Certificate, each of the
conditions set forth in Sections 6.3 and 6.4 has been satisfied in all
respects.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
Each of the Sellers represents and warrants, to and for the
benefit of the Indemnitees, as follows:
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2.1 DUE ORGANIZATION; NO SUBSIDIARIES; ETC. Each Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the state set forth on PART 2.1 of the Disclosure Schedule. (Whenever a
Seller is required to schedule any item on the Disclosure Schedule, such item
shall identify the Seller to which such disclosure applies). Each Seller is not
required to be qualified, authorized, registered or licensed to do business as a
foreign corporation in any jurisdiction other than the jurisdictions listed in
PART 2.1 of the Disclosure Schedule. Each Seller is in good standing as a
foreign corporation in each of the jurisdictions listed in PART 2.1 of the
Disclosure Schedule. Except as set forth in PART 2.1 of the Disclosure Schedule,
each Seller does not have any subsidiaries, and does not own, beneficially or
otherwise, any shares or other securities of, or any direct or indirect interest
of any nature in, any other Entity.
2.2 ARTICLES OF INCORPORATION AND BYLAWS; RECORDS. Each Seller has
delivered to (or made available for inspection by) the Purchaser accurate and
complete copies of: (i) the certificate or articles of incorporation and bylaws
of such Seller, including all amendments thereto; and (ii) the minutes and other
records of the meetings and other proceedings (including any actions taken by
written consent or otherwise without a meeting) of the shareholders of such
Seller, the board of directors of such Seller and all committees of the board of
directors of such Seller, since January 1, 1996, related to the Wireless
Business. There have been no meetings or other proceedings of the board of
directors, any committee of the board of directors, or to the Sellers'
knowledge, the shareholders of such Seller related to the Wireless Business that
are not fully reflected in such minutes or other records. The books of account,
stock records, minute books and other records of such Seller related to the
Wireless Business are accurate, up-to-date and complete, and have been
maintained in accordance with sound and prudent business practices.
2.3 AUTHORITY; BINDING NATURE OF AGREEMENTS. Each Seller has the
corporate right, power and authority to enter into and to perform its
obligations under each of the Transactional Agreements to which it is or may
become a party; and the execution, delivery and performance by such Seller of
the Transactional Agreements to which it is or may become a party have been duly
authorized by all necessary action on the part of such Seller and its
shareholders, board of directors and officers. No approval of WAVO's
stockholders is required for the consummation of this transaction. This
Agreement constitutes the legal, valid and binding obligation of such Seller,
enforceable against such Seller in accordance with its terms. Upon the execution
of each of the other Transactional Agreements at the Closing, each of such other
Transactional Agreements to which such Seller is a party will constitute the
legal, valid and binding obligation of such Seller and will be enforceable
against such Seller in accordance with its terms, except to the extent that
enforceability may be limited by bankruptcy, insolvency, moratorium or similar
laws now or hereinafter in effect affecting creditors' rights generally.
2.4 FINANCIAL STATEMENTS. The Sellers have delivered to the
Purchaser the following financial statements which are attached hereto as
EXHIBIT I (collectively, the "FINANCIAL STATEMENTS"): (a) WAVO's audited balance
sheets as of December 31, 1997, December 31, 1998 and December 31, 1999, and its
related statements of income and retained earnings and cash flows for the years
then ended, together with the notes thereto and the reports of Ernst & Young LLP
(for the December 31, 1997 and December 31, 1998 Financial Statements) and
Deloitte &
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Touche LLP (for the December 31, 1999 Financial Statements) with respect
thereto; and (b) the Wireless Business's balance sheet as of June 30, 2000 (the
"UNAUDITED INTERIM BALANCE SHEET"), and the related statements of income of the
Wireless Business and retained earnings of WAVO for the six months then ended.
The Financial Statements are accurate and complete in all respects, have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods covered (except that the financial
statements referred to in clause "(b)" of this Section 2.4 do not have notes)
and present fairly the financial position of WAVO and the Wireless Business (as
applicable) as of the respective dates thereof and the results of operations and
cash flows of WAVO and the Wireless Business (as applicable) for the periods
covered thereby.
2.5 ABSENCE OF CHANGES. Except as set forth in PART 2.5 of the
Disclosure Schedule, since June 30, 2000:
(a) there has not been any material adverse change in,
and, to the Sellers' knowledge, no event has occurred that might have a
material adverse effect on, the business, condition, assets,
liabilities, operations, financial performance, net income or prospects
of the Wireless Business;
(b) there has not been any loss, damage or destruction
to, or any interruption in the use of, any of the Assets (whether or
not covered by insurance);
(c) neither Seller has sold or otherwise transferred, or
leased or licensed, any asset Related to the Wireless Business to any
other Person;
(d) neither Seller has purchased, leased, licensed or
otherwise acquired any asset Related to the Wireless Business from any
other Person;
(e) neither Seller has made any capital expenditure
related to the Wireless Business;
(f) neither Seller has written off as uncollectible, or
established any extraordinary reserve with respect to, any account
receivable or other indebtedness related to the Wireless Business;
(g) neither Seller has entered into any transaction or
taken any other action related to the Wireless Business outside the
Ordinary Course of Business;
(h) neither Seller has (1) issued options to any of the
Wireless Business employees, or (2) increased the salary or other
compensation or benefits of any of its employees other than in the
ordinary course of business of such Seller consistent with past
practices.
(i) neither Seller has agreed, committed or offered (in
writing or otherwise) to take any of the actions referred to in clauses
"(c)" through "(h)" above.
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2.6 TITLE TO ASSETS. Each Seller owns, and has good and valid
title to, all of the all assets purported to be owned by it and Related to the
Wireless Business, including: all assets reflected on the Unaudited Interim
Balance Sheet; all assets acquired by such Seller Related to the Wireless
Business since June 30, 2000; all rights of such Seller under Contracts Related
to the Wireless Business; and all other assets Related to the Wireless Business
reflected in the books and records of such Seller as being owned by such Seller.
Except as set forth in PART 2.6 of the Disclosure Schedule, all of said assets
are owned by such Seller free and clear of any Encumbrances. PART 2.6 of the
Disclosure Schedule identifies all of the assets Related to the Wireless
Business that are being leased or licensed to such Seller. The Assets will
collectively constitute, as of the Closing Date, all of the properties, rights,
interests and other tangible and intangible assets necessary to enable the
Wireless Business to conduct its business in the manner in which such business
is currently being conducted and in the manner in which such business is
proposed to be conducted.
2.7 INTENTIONALLY OMITTED.
2.8 RECEIVABLES. PART 2.8 of the Disclosure Schedule provides an
accurate and complete breakdown and aging of all accounts receivable, notes
receivable and other receivables of the Sellers related to the Wireless Business
as of June 30, 2000. Except as set forth in PART 2.8 of the Disclosure Schedule,
all existing accounts receivable of the Sellers related to the Wireless Business
(i) represent valid obligations of customers of the Sellers arising from bona
fide transactions entered into in the Ordinary Course of Business; and (ii) are
current and will be collectable consistent with historical collections by the
Wireless Business. Since June 30, 2000, each Seller has conducted its
collections of accounts receivable in the Ordinary Course of Business. As of
July 31, 2000, the gross accounts receivable balance of the Sellers was
$1,840,000.
2.9 CUSTOMERS; DISTRIBUTORS. PART 2.9 of the Disclosure Schedule
accurately identifies, and provides an accurate and complete breakdown of the
revenues received from, each customer of the Sellers related to the Wireless
Business since January 1, 1998 (the "WIRELESS BUSINESS CUSTOMERS"), and for the
revenues for the six month period ended on June 30, 2000, provides a breakdown
of such revenue by customer, showing (a) nonrecurring Internet/WINDs revenue,
(b) recurring Internet/WINDs revenue, (c) hardware sales revenue, (d) monthly
recurring wireless services revenue (including hardware rentals revenue) and (e)
nonrecurring wireless revenue. Except as set forth in PART 2.9 of the Disclosure
Schedule, neither Seller has received any notice or other communication (in
writing or otherwise) indicating that any Wireless Business Customer may cease
utilizing the Wireless Business's services or may otherwise reduce the aggregate
revenue volume of business transacted by such Person with such Seller (related
to the Wireless Business) below 90% of historical levels. PART 2.9 of the
Disclosure Schedule also (i) states each customer of the Sellers that has
contracted to use WAVO's Internet Business service and (ii) sets forth the
agreed upon and expected future conversions to WAVO's Internet Business service.
2.10 INVENTORY. PART 2.10 of the Disclosure Schedule provides an
accurate and complete breakdown of all inventory (including raw materials, work
in process and finished goods) of the Sellers Related to the Wireless Business
as of June 30, 2000. All of the Sellers'
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existing inventory: (a) is, in the Sellers' reasonable business judgment, of
such quality and quantity as to be usable and saleable by the Sellers in the
Ordinary Course of Business; (b) has been priced at the lower of weighted
average cost or market value method; and (c) is free of any material defect or
deficiency.
2.11 EQUIPMENT, ETC.
(a) PART 2.11 of the Disclosure Schedule accurately
identifies all equipment, materials, prototypes, tools, supplies, vehicles,
furniture, fixtures, improvements and other tangible assets owned by the Sellers
and Related to the Wireless Business (including 2,539 Dish Strings and 573 FM
Strings), and accurately sets forth (i) the date of acquisition, (ii) original
cost, (iii) location of each of said assets, and (iv) with regard to the Dish
Strings and FM Strings, the Sellers' customer(s) (THE "CUSTOMER(S)") that each
Dish String or FM String serves, and the customer(s)' customer(s) that such Dish
String or FM String serves.
(b) PART 2.11 of the Disclosure Schedule sets forth the
book value of groups of said assets according to the assets' "Department."
(c) Each asset identified or required to be identified in
PART 2.11 of the Disclosure Schedule: (i) is structurally sound, free of defects
and deficiencies and in good condition and repair (ordinary wear and tear
excepted); (ii) complies in all respects with, and is being operated and
otherwise used in full compliance with, all material applicable Legal
Requirements; and (iii) is adequate and appropriate for the uses to which it is
being put.
(d) Except as set forth in PART 2.11 of the Disclosure
Schedule, all of the aforementioned 2,539 Dish Strings and 573 FM Strings are
revenue producing.
(e) PART 2.11 of the Disclosure Schedule sets forth all
of the Dish Strings and FM Strings for which the Sellers have roof rights and
the period for which they have roof rights. The Sellers have provided the
Purchaser documentation evidencing all of the aforementioned roof rights. For
those Dish Strings or FM Strings for which Sellers do not have roof rights
described on PART 2.11 of the Disclosure Schedule, the Sellers have provided
Purchaser with contact information (including name, address and phone number)
for an agent of the customer or customer's customer that such Dish String or FM
String serves, knowledgeable with regard to the location and use of the Dish
String or FM String. To Sellers' knowledge, after the consummation of the
Transactions, the Purchaser will have full access to service said Dish Strings
and FM Strings without trespassing on the property of any other Person. Neither
Seller has received any communications from any Person requesting (i) the
removal of any of the aforementioned Dish Strings or FM Strings, or (ii) the
payment of fees (other than those already paid) to maintain a Dish String or FM
String in its current location.
2.12 REAL PROPERTY. Neither Seller owns any real property or any
interest in real property Related to the Wireless Business, except as identified
in PART 2.12 of the Disclosure Schedule. PART 2.12 of the Disclosure Schedule
provides an accurate and complete description of the premises owned or covered
by leases and the facilities located on such premises. The Sellers enjoy
peaceful and undisturbed possession of such premises.
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2.13 PROPRIETARY ASSETS.
(a) PART 2.13(a)(1) of the Disclosure Schedule identifies
and provides a brief description of all Proprietary Assets owned by the Sellers
Related to the Wireless Business (the "OWNED PROPRIETARY ASSETS"). PART
2.13(a)(2) of the Disclosure Schedule identifies and provides a brief
description of each Proprietary Asset that is owned by any other Person and that
is licensed to or used by the Sellers and Related to the Wireless Business
(except for any Proprietary Asset that is licensed to either of the Sellers
under any third party software license that (1) is generally available to the
public, and (2) imposes no future monetary obligation on such Seller other than
maintenance fees in amounts consistent with maintenance fees charged by such
third party licensor to other licensees of such third party software) and
identifies the license agreement or other agreement under which such Proprietary
Asset is being licensed to or used by the Sellers (the "LICENSED PROPRIETARY
ASSETS" and together with the Owned Proprietary Assets, the "WIRELESS BUSINESS
PROPRIETARY ASSETS"). The Sellers have good and valid title to all of the Owned
Proprietary Assets, free of any Encumbrances, and have a valid right to use, and
to license others to use, all Licensed Proprietary Assets. Except as set forth
in PART 2.13(a)(3) of the Disclosure Schedule, the Sellers are not obligated to
make any payment to any Person for the use or other exploitation of any Wireless
Business Proprietary Asset. Except as set forth in PART 2.13(a)(4) of the
Disclosure Schedule, the Sellers are free to use, modify, copy, distribute,
sell, license or otherwise exploit each of the Wireless Business Proprietary
Assets on an exclusive basis (other than Wireless Business Proprietary Assets
consisting of software licensed to the Sellers under third party licenses
generally available to the public, with respect to which the Sellers' rights are
not exclusive).
(b) The Sellers have taken all reasonable measures and
precautions necessary to protect and maintain the confidentiality and secrecy of
all Wireless Business Proprietary Assets (except Wireless Business Proprietary
Assets whose value would be unimpaired by public disclosure) and otherwise to
maintain and protect the value of all Wireless Business Proprietary Assets.
Neither Seller has disclosed or delivered or permitted to be disclosed or
delivered to any Person (other than Representatives of the Sellers) the source
code, or any portion or aspect of the source code, of any Wireless Business
Proprietary Asset. No Person (other than the Sellers and their Representatives)
has access to the source code, or any portion or aspect of the source code, of
any Wireless Business Proprietary Asset. No Person other than the Sellers has
any rights with respect to, the source code, or any portion or aspect of the
source code, of any Wireless Business Proprietary Asset.
(c) All patents, trademarks, service marks and copyrights
that are registered with any Governmental Body and held by a Seller and Related
to the Wireless Business are valid and subsisting. To the Sellers' knowledge
after due inquiry, none of the Wireless Business Proprietary Assets infringes or
conflicts with any Proprietary Asset owned or used by any other Person. Neither
Seller is infringing, misappropriating or making any unlawful use of, and
neither Seller has at any time infringed, misappropriated or made any unlawful
use of, or received any notice or other communication of any actual, alleged,
possible or potential infringement, misappropriation or unlawful use of, any
Proprietary Asset owned or used by any other Person. To the best of the Sellers'
knowledge, no other Person is infringing,
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misappropriating or making any unlawful use of, and no Proprietary Asset owned
or used by any other Person infringes or conflicts with, any Wireless Business
Proprietary Asset.
(d) Neither Seller has entered into any covenant not to
compete or Contract limiting its ability to exploit fully any of the Wireless
Business Proprietary Assets or to transact business related to the Wireless
Business in any market or geographical area or with any Person.
(e) Except as set forth in PART 2.13(e) of the Disclosure
Schedule, neither Seller has entered into or is bound by any Contract under
which any Person has the right to distribute or license any Wireless Business
Proprietary Asset. Neither Seller has disclosed or delivered to any Person
(other than Representatives of such Seller), or permitted the disclosure or
delivery to any Person (other than Representatives of such Seller), of the
source code, or any portion or aspect of the source code, or any proprietary
information or algorithm contained in any source code, of any Wireless Business
Proprietary Asset. No event has occurred, and no circumstance or condition
exists, that (with or without notice or lapse of time) will, or could reasonably
be expected to, result in the disclosure or delivery to any Person (other than
the Representatives of the Sellers) of the source code, or any portion or aspect
of the source code, or any proprietary information or algorithm contained in any
source code, of any Proprietary Asset.
(f) The Proprietary Assets constitute all the Proprietary
Assets necessary to enable the Sellers to conduct the business of the Wireless
Business in the manner in which such business has been and is being conducted
and in the manner in which such business is proposed to be conducted.
2.14 CONTRACTS.
(a) PART 2.14 of the Disclosure Schedule identifies and
provides an accurate and complete description of each Contract Related to the
Wireless Business (other than Contracts listed on EXHIBIT H), except for any
Immaterial Contract (each, a "WIRELESS BUSINESS CONTRACT"). The Sellers have
delivered to the Purchaser accurate and complete copies of all Wireless Business
Contracts identified in PART 2.14 of the Disclosure Schedule, including all
amendments thereto. Each such Contract is valid and in full force and effect.
(b) Except as set forth in PART 2.14 of the Disclosure
Schedule: (i) neither the Sellers, nor to the Sellers' knowledge any other
Person has violated or breached, or declared or committed any default under, any
Wireless Business Contract; (ii) neither Seller has received any notice or other
communication (in writing or otherwise) regarding any actual, alleged, possible
or potential violation or breach of, or default under, any Wireless Business
Contract; and (iii) neither Seller has waived rights under any Wireless Business
Contract valued in the aggregate at $50,000.
(c) Except as set forth in PART 2.14 of the Disclosure
Schedule, each Wireless Business Contract may be assigned to the Purchaser
without the consent of any Person other than a Seller.
(d) Except as set forth in PART 2.14 of the Disclosure
Schedule, neither Seller has ever guaranteed or otherwise agreed to cause,
insure or become liable for, and neither Seller
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has ever pledged any of the Assets to secure, the performance or payment of any
obligation or other Liability of any other Person.
(e) The performance of the Wireless Business Contracts
has not resulted in any violation of or failure to comply with any Legal
Requirement.
(f) No Person is renegotiating, or has the right to
renegotiate, any amount paid or payable to a Seller under any Wireless Business
Contract or any other term or provision of any Wireless Business Contract.
(g) PART 2.14(g) of the Disclosure Schedule sets forth a
list of all of the Wireless Business's customers' names, the Wireless Business's
average monthly revenue received from such Customer, the Contract commencement
date with such customer, the Contract termination date with such customer,
whether the Contract is automatically renewable and the length of any such
renewal period, and whether the Contract requires the consent of the customer
for the assignment thereof.
(h) PART 2.14(h) of the Disclosure Schedule sets forth a
list of all leased equipment and real property of the Sellers Related to the
Wireless Business, the applicable landlord or vendor, the location of said
property or asset, the monthly payment thereon, and the term of the applicable
lease.
2.15 LIABILITIES.
(a) Except as set forth in PART 2.15 of the Disclosure
Schedule, neither Seller has Liabilities related to the Wireless Business,
except for: (i) liabilities identified as such in the "liabilities" columns of
the Unaudited Interim Balance Sheet; (ii) accounts payable (of the type required
to be reflected as current liabilities in the "liabilities" column of a balance
sheet prepared in accordance with GAAP) incurred by a Seller in bona fide
transactions with non-Related Parties entered into in the Ordinary Course of
Business since June 30, 2000; and (iii) obligations under the Wireless Business
Contracts listed in PART 2.14 of the Disclosure Schedule, to the extent that the
existence of such obligations is ascertainable solely by reference to such
Wireless Business Contracts.
(b) Neither Seller has, at any time, (i) made a general
assignment for the benefit of creditors, (ii) filed, or had filed against it,
any bankruptcy petition or similar filing, (iii) suffered the attachment or
other judicial seizure of all or a substantial portion of its assets, (iv)
admitted in writing its inability to pay its debts as they become due, (v) been
convicted of, or pleaded guilty or no contest to, any felony, or (vi) taken or
been the subject of any action that may have a material adverse effect on its
ability to comply with or perform any of its covenants or obligations under any
of the Transactional Agreements.
2.16 COMPLIANCE WITH LEGAL REQUIREMENTS. Except as set forth in
PART 2.16 of the Disclosure Schedule: (a) each Seller is in material compliance
with each Legal Requirement that is applicable to the Wireless Business or to
the conduct of its business or the ownership or use of any of the Assets; (b)
each Seller has at all times (during any applicable statute of limitations) been
in material compliance with each Legal Requirement that is or was applicable to
the
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Wireless Business or to the conduct of its business or the ownership or use of
any of the Assets; and (c) neither Seller has received, at any time, any notice
or other communication (in writing or otherwise) from any Governmental Body or
any other Person regarding any actual, alleged, possible or potential violation
of, or failure to comply with, any Legal Requirement.
2.17 GOVERNMENTAL AUTHORIZATIONS. PART 2.17 of the Disclosure
Schedule identifies each material Governmental Authorization that is held by the
Sellers Related to the Wireless Business. The Sellers have delivered to the
Purchaser accurate and complete copies of all of the Governmental Authorizations
identified in PART 2.17 of the Disclosure Schedule, including all renewals
thereof and all amendments thereto. Each Governmental Authorization identified
or required to be identified in PART 2.17 of the Disclosure Schedule is valid
and in full force and effect. Except as set forth in PART 2.17 of the Disclosure
Schedule: (i) each Seller is and has at all times been in full compliance with
all of the terms and requirements of each Governmental Authorization identified
or required to be identified in PART 2.17 of the Disclosure Schedule; (ii)
neither Seller has ever received any notice or other communication (in writing
or otherwise) from any Governmental Body or any other Person regarding (A) any
actual, alleged, possible or potential violation of or failure to comply with
any term or requirement of any Governmental Authorization, or (B) any actual,
proposed, possible or potential revocation, withdrawal, suspension,
cancellation, termination or modification of any Governmental Authorization; and
(iii) all applications required to have been filed for the renewal of the
Governmental Authorizations required to be identified in PART 2.17 of the
Disclosure Schedule have been duly filed on a timely basis with the appropriate
Governmental Bodies, and each other notice or filing required to have been given
or made with respect to such Governmental Authorizations has been duly given or
made on a timely basis with the appropriate Governmental Body.
2.18 TAX MATTERS. Except as set forth on EXHIBIT G or PART 2.18 of
the Disclosure Schedule or for which adequate reserves have been set aside
(which reserves are described in the Financial Statements), each Tax related to
the Wireless Business or the Assets required to have been paid, or claimed by
any Governmental Body to be payable, by a Seller has been duly paid in full on a
timely basis. Any Tax related to the Wireless Business or the Assets required to
have been withheld or collected by a Seller has been duly withheld and
collected; and (to the extent required) each such Tax has been paid to the
appropriate Governmental Body.
2.19 EMPLOYEE AND LABOR MATTERS. To the best of the Sellers'
knowledge none of the Key Employees (i) intends to terminate his or her
employment; or (ii) is bound by any confidentiality agreement, noncompetition
agreement or other Contract (with any Person) that may have an adverse effect on
(A) the performance by such employee of any of his or her duties or
responsibilities as an employee of a Seller or as an employee of the Purchaser,
or (B) the business of a Seller or the Purchaser. Neither Seller has entered
into any Contract with any Wireless Business employee that requires a Seller to
pay severance to any such employee upon the termination of such employee. The
Sellers have described, in detail, all of their past practices regarding their
termination of employees.
2.20 ENVIRONMENTAL MATTERS. Neither Seller is in material violation
of any Legal Requirement relating to the environment. No material expenditures
are or will be required in order to comply with any such Legal Requirement. No
Hazardous Materials are used or have
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been used, stored, or disposed of by a Seller or, to the Sellers' knowledge, by
any other Person on any property owned, leased or used by a Seller.
2.21 SALE OF PRODUCTS. Each product related to the Wireless
Business that has been sold by a Seller to any Person: (i) conformed and
complied in all respects with the terms and requirements of any applicable
warranty or other Contract and with all applicable Legal Requirements; and (ii)
was free of any design defects, construction defects or other defects or
deficiencies at the time of sale.
2.22 PERFORMANCE OF SERVICES. All services that have been performed
on behalf of a Seller related to the Wireless Business were performed properly
and in conformity with the terms and requirements of all applicable warranties
and other Contracts and with all applicable Legal Requirements. Excluding the
Dish Strings and FM Strings referenced in Section 2.11, the Wireless Business
has installed or delivered to its customers over 12,000 Dish Strings and over
3,800 FM Strings, which Dish Strings and FM Strings are authorized by the
Sellers to receive data.
2.23 INSURANCE.
(a) PART 2.23 of the Disclosure Schedule accurately sets
forth, with respect to each insurance policy maintained by or at the expense of,
or for the direct or indirect benefit of, a Seller and related to the Assets:
(i) the name of the insurance carrier that issued such policy and the policy
number of such policy; (ii) whether such policy is a "claims made" or an
"occurrences" policy; (iii) a description of the coverage provided by such
policy and the material terms and provisions of such policy (including all
applicable coverage limits, deductible amounts and co-insurance arrangements and
any non-customary exclusions from coverage); (iv) the annual premium payable
with respect to such policy, and the cash value (if any) of such policy; and (v)
a description of any claims pending, and any claims that have been asserted in
the past, with respect to such policy or any predecessor insurance policy and
related to the Assets or the Wireless Business. The Sellers have delivered to
the Purchaser accurate and complete copies of all of the insurance policies
identified in PART 2.23 of the Disclosure Schedule (including all renewals
thereof and endorsements thereto). Each of the policies identified in PART 2.23
of the Disclosure Schedule is valid, enforceable and in full force and effect,
and has been issued by an insurance carrier that, to the best of the knowledge
of the Sellers, is solvent, financially sound and reputable. All of the
information contained in the applications submitted in connection with said
policies was (at the times said applications were submitted) materially accurate
and complete, and all premiums and other amounts owing with respect to said
policies have been paid in full on a timely basis.
(b) PART 2.23 of the Disclosure Schedule identifies each
insurance claim made by a Seller since December 31, 1999 relating to the
Wireless Business. To the Sellers' knowledge, no event has occurred, and no
condition or circumstance exists, that might (with or without notice or lapse of
time) directly or indirectly give rise to or serve as a basis for any such
insurance claim with regard to the Assets. To the Sellers' knowledge after due
inquiry, neither Seller has received: (i) any notice or other communication (in
writing or otherwise) regarding the actual or possible cancellation or
invalidation of any of the policies identified in PART 2.23 of the
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Disclosure Schedule or regarding any actual or possible adjustment in the amount
of the premiums payable with respect to any of said policies; (ii) any notice or
other communication (in writing or otherwise) regarding any actual or possible
refusal of coverage under, or any actual or possible rejection of any claim
under, any of the policies identified in PART 2.23 of the Disclosure Schedule;
or (iii) any indication that the issuer of any of the policies identified in
PART 2.23 of the Disclosure Schedule may be unwilling or unable to perform any
of its obligations thereunder.
2.24 RELATED PARTY TRANSACTIONS. Except as disclosed in WAVO's most
recent annual filing with the SEC or set forth in PART 2.24 of the Disclosure
Schedule: (a) no Related Party has any direct or indirect interest of any nature
in any of the Assets; (b) no Related Party is, or has at any time since December
31, 1999 been, indebted to a Seller; (c) since December 31, 1999, no Related
Party has entered into, or has had any direct or indirect financial interest in,
any Wireless Business Contract, transaction or business dealing of any nature
involving a Seller related to the Wireless Business; and (d) no Related Party is
competing, or has at any time since December 31, 1999 competed, directly or
indirectly, with the Wireless Business.
2.25 PROCEEDINGS; ORDERS. Except as set forth in PART 2.25 of the
Disclosure Schedule, there is no pending Proceeding related to the Wireless
Business or the Assets, and no Person has threatened (either overtly or in
writing) to commence any Proceeding: (i) that involves the Wireless Business or
that otherwise relates to or might affect the business of a Seller related to
the Wireless Business or any of the Assets (whether or not a Seller is named as
a party thereto); or (ii) that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, any of the
Transactions. Except as set forth in PART 2.25 of the Disclosure Schedule, to
the Sellers' knowledge, no event has occurred, and no claim, dispute or other
condition or circumstance exists, that might directly or indirectly give rise to
or serve as a basis for the commencement of any such Proceeding. The Sellers
have delivered to the Purchaser accurate and complete copies of all pleadings,
correspondence and other written materials (to which a Seller has access) that
relate to any Proceedings identified in PART 2.25 of the Disclosure Schedule.
There is no Order to which the Wireless Business or any of the Assets is
subject. To the best of the Sellers' knowledge, none of the Key Employees is
subject to any Order that may prohibit such employee from engaging in or
continuing any conduct, activity or practice relating to the business of the
Sellers.
2.26 NON-CONTRAVENTION; CONSENTS. Except as set forth in PART 2.26
of the Disclosure Schedule, neither the execution and delivery of any of the
Transactional Agreements, nor the consummation or performance of any of the
Transactions, will directly or indirectly (with or without notice or lapse of
time):
(a) contravene, conflict with or result in a violation
of, or give any Governmental Body or other Person the right to
challenge any of the Transactions or to exercise any remedy or obtain
any relief under, any Legal Requirement or any Order to which a Seller,
or any of the Assets, is subject;
(b) contravene, conflict with or result in a violation of
any of the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend,
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cancel, terminate or modify, any Governmental Authorization that is to
be included in the Assets;
(c) either (1) contravene, conflict with or result in a
violation or breach of, or result in a default under, any provision of
any Wireless Business customer Contract, roof right Contract or
transponder Contract or (2) contravene, conflict with or result in a
material violation or breach of, or result in a material default under,
any provision of any Wireless Business Contract other than those
described in Section 2.26(c)(1); or
(d) result in the imposition or creation of any
Encumbrance upon or with respect to any of the Assets.
Except as set forth in PART 2.26 of the Disclosure Schedule, neither Seller is
nor will be required to make any filing with or give any notice to, or to obtain
any Consent from, any Person in connection with the execution and delivery of
any of the Transactional Agreements or the consummation or performance of any of
the Transactions.
2.27 BROKERS. Neither Seller has agreed or become obligated to pay,
or has taken any action that might result in any Person claiming to be entitled
to receive, any brokerage commission, finder's fee or similar commission or fee
in connection with any of the Transactions.
2.28 INVESTMENT REPRESENTATIONS. The Sellers understand that the
Purchaser Common Stock has not been registered under the Securities Act of 1933,
as amended (the "SECURITIES ACT"). The Sellers also understand that the
Purchaser Common Stock is being offered and sold pursuant to an exemption from
registration contained in the Securities Act based in part upon the Sellers'
representations contained in the Agreement. Each Seller hereby represents and
warrants as follows:
(a) WPN has substantial experience in evaluating and
investing in private placement transactions of securities so that it is capable
of evaluating the merits and risks of its investment in the Purchaser and has
the capacity to protect its own interests. WPN must bear the economic risk of
this investment indefinitely unless the Purchaser Common Stock is registered
pursuant to the Securities Act, or an exemption from registration is available.
WPN understands that there is no assurance that any exemption from registration
under the Securities Act will be available and that, even if available, such
exemption may not allow it to transfer all or any portion of the Purchaser
Common Stock under the circumstances, in the amounts or at the times it might
propose.
(b) WPN is acquiring the Purchaser Common Stock for its
own account for investment only, and not with a view towards their distribution.
(c) WPN, by reason of its, or of its management's,
business or financial experience, has the capacity to protect its own interests
in connection with the Transactions. Further, WPN is aware of no publication of
any advertisement in connection with the Transactions.
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(d) WPN is an accredited investor within the meaning of
Regulation D under the Securities Act.
(e) WPN has received and read financial statements and
other information regarding the Purchaser and has had an opportunity to discuss
the Purchaser's business, management and financial affairs with directors,
officers and management of the Purchaser and has had the opportunity to review
the Purchaser's operations. WPN has also had the opportunity to ask questions of
and receive answers from, the Purchaser and its management regarding the terms
and conditions of this investment.
(f) WPN acknowledges and agrees that the Purchaser Common
Stock must be held indefinitely unless it is subsequently registered under the
Securities Act or an exemption from such registration is available. WPN has been
advised or is aware of the provisions of Rule 144 promulgated under the
Securities Act as in effect from time to time, which permits limited resale of
shares purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things: the availability of certain current
public information about the Purchaser, the resale occurring following the
required holding period under Rule 144 and the number of shares being sold
during any three-month period not exceeding specified limitations.
(g) The office or offices of WPN in which its investment
decision was made is located at the address or addresses of WPN set forth in
this Agreement.
2.29 FULL DISCLOSURE. No representation or warranty by the Sellers
contained in the Transactional Agreements contains any untrue statement of fact
nor omits to state any fact necessary to make any of the Sellers'
representations, warranties or other statements or information contained therein
not misleading. All of the information set forth in the Disclosure Schedule, and
all other information regarding the Sellers and their business, condition,
assets, liabilities, operations, financial performance, net income and prospects
that has been furnished to the Purchaser or any of the Purchaser's
Representatives by or on behalf of the Sellers or by any Representative of the
Sellers, is accurate and complete in all material respects.
2.30 DISCLOSURE SCHEDULE. Inclusion in the Disclosure Schedule of
any disclosure shall not be construed as relevant to any determination of
materiality. Any matters disclosed on one Part of the Disclosure Schedule shall
be disclosed for purposes of that Part only except for (a) cross references from
one Part to another Part or (b) items on one Part which reasonably can be
construed as responsive to items to be disclosed on another Part.
2.31 ACCESS. The Purchaser has been provided with access, as
requested by the Purchaser, to officers and employees of the Sellers and to such
of the Sellers' books, documents, contracts and records as have been provided to
the Purchaser in response to the Purchaser's requests.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser represents and warrants, to and for the benefit of the
Sellers, as follows:
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3.1 AUTHORITY; BINDING NATURE OF AGREEMENTS. The Purchaser has the
absolute and unrestricted right, power and authority to enter into and perform
its obligations under this Agreement, and the execution and delivery of this
Agreement by the Purchaser have been duly authorized by all necessary action on
the part of the Purchaser and its board of directors. The Purchaser has the
absolute and unrestricted right, power and authority to enter into and perform
its obligations under the Escrow Agreement and the Assumption Agreement, and the
execution, delivery and performance of the Escrow Agreement and the Assumption
Agreement by the Purchaser have been duly authorized by all necessary action on
the part of the Purchaser and its board of directors. This Agreement constitutes
the legal, valid and binding obligation of the Purchaser, enforceable against it
in accordance with its terms. Upon the execution and delivery of the Escrow
Agreement and the Assumption Agreement at the Closing, the Escrow Agreement and
the Assumption Agreement will constitute the legal, valid and binding
obligations of the Purchaser, enforceable against the Purchaser in accordance
with their terms. Aside from the consent of the Purchaser's board of directors
and of certain of its investors (which have been obtained as of the date of this
Agreement), the Purchaser is not required to obtain the consent of any other
Person to consummate the Transactions.
3.2 BROKERS. The Purchaser has not become obligated to pay, and
has not taken any action that might result in any Person claiming to be entitled
to receive, any brokerage commission, finder's fee or similar commission or fee
in connection with any of the Transactions.
3.3 PROCEEDINGS. There is no pending Proceeding and no Person has
threatened (either overtly or in writing) to commence any Proceeding: (i) that
challenges, or that may have the effect of preventing, delaying, making illegal
or otherwise interfering with, any of the Transactions. To the Purchaser's
knowledge, no event has occurred, and no claim, dispute or other condition or
circumstance exists, that might directly or indirectly give rise to or serve as
a basis for the commencement of any such Proceeding.
3.4 FULL DISCLOSURE. No representation or warranty by the
Purchaser contained in the Transactional Agreements contains any untrue
statement of fact nor omits to state any fact necessary to make any of the
Purchaser's representations, warranties or other statements or information
contained therein not misleading.
3.5 VALID ISSUANCE. The Purchaser Common Stock has been duly
authorized and, when issued in accordance with this Agreement, will be validly
issued, fully paid and nonassessable shares of Common Stock of the Purchaser
with no personal liability attaching to the ownership thereof and will be free
and clear of all liens, charges, restrictions, claims and encumbrances imposed
by or through the Purchaser.
3.6 CAPITALIZATION. The authorized capital stock of the Purchaser
consists of (i) 34,000,000 shares of Preferred Stock, $.01 par value (the
"PREFERRED STOCK"), of which 7,500,000 shares have been designated Series A
Convertible Preferred Stock, 9,887,404 shares have been designated Series B
Convertible Preferred Stock, 4,114,521 shares have been designated Series C
Convertible Preferred Stock and 11,429,225 shares have been designated as Series
D Convertible Preferred Stock, and (ii) 100,000,000 shares of Common Stock.
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Immediately prior to the Closing, 7,324,577 shares of Common Stock, 7,299,831
shares of Series A Convertible Preferred Stock, 9,887,403 shares of Series B
Convertible Preferred Stock, 4,114,521 shares of Series C Convertible Preferred
Stock, and 7,548,961 shares of Series D Convertible Preferred Stock will be
validly issued and outstanding, fully paid and nonassessable with no personal
liability attaching to the ownership thereof. Except as set forth in PART 3.6 of
the Disclosure Schedule, (i) no person owns of record or is known to the
Purchaser to own beneficially any share of Common Stock, Preferred Stock or
other capital stock of the Purchaser, (ii) no subscription, warrant, option,
convertible security, or other right (contingent or other) to purchase or
otherwise acquire equity securities of the Purchaser is authorized or
outstanding and (iii) there is no commitment by the Purchaser to issue shares,
subscriptions, warrants, options, convertible securities, or other such rights
or to distribute to holders of any of its equity securities any evidence of
indebtedness or asset.
3.7 HSR FILING. The Purchaser has performed the valuation required
by Rule 801.10(b) and Rule 801.10(c)(3) of the regulations adopted by the
Federal Trade Commission under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, and based upon such valuation, the value of the Assets is less than $15
million.
4. PRE-CLOSING COVENANTS OF THE SELLERS.
4.1 ACCESS AND INVESTIGATION. The Sellers shall ensure that, at
all times during the Pre-Closing Period: (a) the Sellers and their
Representatives provide the Purchaser and its Representatives with reasonable
access to the Sellers' Representatives, personnel and assets Related to the
Wireless Business and to all existing books, records, Tax Returns, work papers
and other documents and information relating to the Wireless Business and its
business; (b) the Sellers and their Representatives provide the Purchaser and
its Representatives with such copies of existing books, records, Tax Returns,
work papers and other documents and information relating to the Wireless
Business and its business as the Purchaser may reasonably request in good faith;
(c) the Sellers and the Representatives use their Best Efforts to assist the
Purchaser in obtaining information related to the location of and customer
contact information for the Dish Strings and FM Strings referenced in Section
2.11 (if WPN has not already provided such information on the date of the
Agreement) and Section 2.22, and (d) the Sellers and their Representatives will
compile and provide the Purchaser and its Representatives with such additional
financial, operating and other data and information relating to the Wireless
Business and its business as the Purchaser may reasonably request in good faith.
4.2 OPERATION OF BUSINESS. The Sellers shall ensure that, during
the Pre-Closing Period:
(a) the Sellers conduct their operations related to the
Wireless Business exclusively in the Ordinary Course of Business and in
the same manner as such operations have been conducted prior to the
date of this Agreement;
(b) the Sellers (i) preserve intact its current business
organization, (ii) keep available the services of its current officers
and employees, (iii) maintain its relations and good will with all
suppliers, customers, landlords, creditors, licensors, licensees,
employees, independent contractors and other Persons having business
relationships with
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the Wireless Business, and (iv) promptly repair, restore or replace any
Assets that are destroyed or damaged;
(c) the Sellers keep in full force all insurance policies
identified in PART 2.23 of the Disclosure Schedule;
(d) the officers of the Sellers are reasonably responsive
to any good faith inquiry by the Purchaser concerning the status of the
Wireless Business's business, condition, assets, liabilities,
operations, financial performance and prospects;
(e) the Purchaser is notified immediately of any inquiry,
proposal or offer from any Person relating to any Acquisition
Transaction;
(f) the Sellers and their officers use their Best Efforts
to cause the Sellers to operate the Wireless Business profitably and to
maximize its revenues and net income;
(g) the Sellers do not declare, accrue, set aside or pay
any dividend or make any other distribution in respect of any shares of
capital stock or other securities;
(h) the Sellers do not effect or become a party to any
Acquisition Transaction;
(i) the Sellers do not make any capital expenditure,
except for capital expenditures to non-Related Parties that are made in
the Ordinary Course of Business related to the Wireless Business and
that, when added to all other capital expenditures made on behalf of
the Sellers during the Pre-Closing Period, do not exceed $25,000 in the
aggregate;
(j) the Sellers do not enter into or permit any of the
Assets to become bound by any Contract;
(k) the Sellers do not incur or assume any Liability,
except for current liabilities (of the type required to be reflected in
the "liabilities" column of a balance sheet prepared in accordance with
GAAP) incurred in the Ordinary Course of Business;
(l) the Sellers do not establish or adopt any Employee
Benefit Plan, or pay any bonus or make any profit-sharing or similar
payment to, or increase the amount of the wages, salary, commissions,
options, vacation time, fees, fringe benefits or other compensation or
remuneration payable to, any of its directors, officers, employees or
independent contractors;
(m) the Sellers do not change any of its methods of
accounting or accounting practices in any respect;
(n) the Sellers do not commence or settle any Proceeding;
(o) the Sellers do not enter into any transaction or take
any other action of the type referred to in Section 2.5;
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(p) the Sellers do not enter into any transaction or take
any other action that might cause or constitute a Breach of any
representation or warranty made by a Seller in this Agreement or in the
Closing Certificate;
(q) the Sellers do not enter into any Related Party
transaction, or increase the Wireless Business's obligations, payments
or liabilities to any non-Wireless Business part(s) of a Seller; and
(r) the Sellers do not agree, commit or offer (in writing
or otherwise) to take any of the actions described in clauses "(g)"
through "(q)" of this Section 4.2.
4.3 FILINGS AND CONSENTS. The Sellers shall ensure that all
filings, notices and Consents required to be made, given and obtained (other
than those required to be obtained by the Purchaser) in order to consummate the
Transactions are made, given and obtained on a timely basis. During the
Pre-Closing Period, the Sellers and their respective Representatives will
cooperate with the Purchaser and with the Purchaser's Representatives, and
prepare and make available such documents and take such other actions as the
Purchaser requests in good faith, in connection with any filing, notice or
Consent required to be obtained by the Sellers hereunder.
4.4 NOTIFICATION; UPDATES TO DISCLOSURE SCHEDULE. During the
Pre-Closing Period, the Sellers shall promptly notify the Purchaser in writing
of: (a) the discovery by a Seller of any event, condition, fact or circumstance
that occurred or existed on or prior to the date of this Agreement and that
caused or constitutes a Breach of any representation or warranty made by a
Seller in this Agreement; (b) any event, condition, fact or circumstance that
occurs, arises or exists after the date of this Agreement and that would cause
or constitute a Breach of any representation or warranty made by a Seller in
this Agreement if (i) such representation or warranty had been made as of the
time of the occurrence, existence or discovery of such event, condition, fact or
circumstance, or (ii) such event, condition, fact or circumstance had occurred,
arisen or existed on or prior to the date of this Agreement; (c) any Breach of
any covenant or obligation of a Seller; and (d) any event, condition, fact or
circumstance that may make the timely satisfaction of any of the conditions set
forth in Section 6 or Section 7 impossible or unlikely. If any event, condition,
fact or circumstance that is required to be disclosed pursuant to this Section
4.4 requires any change in the Disclosure Schedule, or if any such event,
condition, fact or circumstance would require such a change assuming the
Disclosure Schedule were dated as of the date of the occurrence, existence or
discovery of such event, condition, fact or circumstance, then the Sellers shall
promptly deliver to the Purchaser an update to the Disclosure Schedule
specifying such change. No such update shall be deemed to supplement or amend
the Disclosure Schedule for the purpose of (i) determining the accuracy of any
representation or warranty made by a Seller in this Agreement or in the Closing
Certificate, or (ii) determining whether any of the conditions set forth in
Section 6 has been satisfied.
4.5 NO NEGOTIATION. During the Pre-Closing Period, neither Seller
will:
(a) enter into any agreement, understanding or
arrangement relating to any Acquisition Proposal (as defined below);
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(b) consider, or engage in any discussions or
negotiations relating to, any Acquisition Proposal;
(c) solicit or encourage the submission of any
Acquisition Proposal; or
(d) permit any representative or affiliate of a Seller to
do any of the foregoing.
The term "ACQUISITION PROPOSAL," as used in this section, refers to any
proposal, plan, agreement, understanding or arrangement contemplating (i) any
merger, consolidation, reorganization, recapitalization or similar transaction
involving the Wireless Business, (ii) any transfer or issuance of any capital
stock or other securities of a Seller or any of its affiliates if such transfer
would inhibit a Seller's ability to consummate the acquisition of the Wireless
Business contemplated by this Agreement, (iii) any transfer of any assets of the
Wireless Business (other than in the ordinary course or the transfer of a
Seller's assets to Purchaser as contemplated by this letter), or (iv) any
transaction that may be inconsistent with or that may have an adverse effect
upon any of the transactions contemplated by this Agreement.
4.6 BEST EFFORTS. During the Pre-Closing Period, the Sellers shall
use their Best Efforts to cause the conditions set forth in Section 6 to be
satisfied on a timely basis.
4.7 CONFIDENTIALITY. Each of the Purchaser and the Sellers shall
ensure that, during the Pre-Closing Period: (a) neither it nor any of its
Representatives issue or disseminate any press release or other publicity or
otherwise make any disclosure of any nature (to any of its suppliers, customers,
landlords, creditors or employees, or to any other Person) regarding any of the
Transactions or the existence or terms of this Agreement, except (1) to the
extent that the it is required by law to make any such disclosure; (2) that it
may disclose the foregoing to potential investors who sign appropriate
confidentiality agreements; and (3) to those of its Representatives that it
requests to be involved in the review and performance of the Transactions; and
(b) if it is required by law to make any such disclosure, it advises the other
parties to the extent possible, at least two business days before making such
disclosure, of the nature and content of the intended disclosure.
4.8 WIRELESS BUSINESS AUDIT. During the Pre-Closing Period, the
Sellers and their Representatives shall permit, and use their Best Efforts to
assist Deloitte & Touche LLP (or another accounting firm selected by the
Purchaser) to prepare audited financial statements for the Wireless Business as
of and for the periods ended December 31, 1997, December 31, 1998, December 31,
1999, and an audited balance sheet for the Wireless Business as of the Closing
Date. The fees and expenses of the auditors for the foregoing shall be paid by
the Purchaser.
4.9 COMMUNICATIONS WITH SELLERS CUSTOMERS. During the Pre-Closing
Period, the Sellers and their Representatives shall use their Best Efforts to
ensure that the Wireless Business's customers remain customers of the Purchaser
following the Transactions. Without limiting the generality of the foregoing,
the parties hereto agree to the following:
(a) During the Pre-Closing Period, a designated
representative of the Sellers (the "SELLER REPRESENTATIVE") and a designated
representative of the Purchaser (the "PURCHASER REPRESENTATIVE") shall have a
telephone conference at least one time per week (each, a
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"TRANSITION CONFERENCE") during which the Seller Representative shall inform the
Purchaser Representative of the status of any material discussions, proposals,
solicitations, potential contracts, or any other communications between a Seller
(or any representative of a Seller) and any Wireless Business customer. During
each such Transition Conference, the Purchaser Representative shall have the
right to require that the Sellers cease any communications with specified
Wireless Business customers if the Purchaser reasonably believes that such
continued communications will adversely affect the Wireless Business.
(b) During the Pre-Closing Period, the Sellers will
provide to the Purchaser Representative, pursuant to this Section 4.9(b), copies
of any proposed Contracts with a Wireless Business customer that transition
delivery of such customer's content from the Wireless Business to the Internet
Business prior to (i) providing or agreeing to provide any such proposed
Contract to such customer, or (ii) informing such customer that it will provide
such customer with its Internet Business's services. Instead, prior to doing any
of the foregoing, such Seller shall inform such customer that it needs to ensure
that it has the capabilities to fully serve such customer through the Internet
Business. Such Seller shall then inform the Purchaser Representative of such
potential Contract in writing. The Purchaser Representative shall have two
business days from its receipt of such notification to approve or object to the
Sellers' agreement to the terms of such proposed Contract. The Purchaser may
object to such Contract if it reasonably believes that such potential Contract
will adversely effect the Wireless Business. If the Purchaser so objects, (A)
such Seller shall inform such customer that it does not, at that time, have the
ability to enter into an agreement with such customer and (B) the Purchaser and
the Seller shall negotiate in good faith to determine a manner in which such
Seller can contract with such customer without adversely effecting the Wireless
Business.
4.10 NONSOLICITATION OF PURCHASER'S EMPLOYEES. Each Seller agrees
that, during the Pre-Closing Period, it shall not, and it shall not permit any
of its Representatives to directly or indirectly, personally or through others,
encourage, induce, attempt to induce, solicit or attempt to solicit (on a
Seller's own behalf or on behalf of any other Person) any employee of the
Purchaser to leave his or her employment with the Purchaser or any of the
Purchaser's subsidiaries.
4.11 NEGOTIATION OF SERVICES AGREEMENT AND OEM AGREEMENT WITH
PURCHASER. Each Seller agrees that, during the Pre-Closing Period, it shall use
its Best Efforts to negotiate and finalize a Services Agreement and an OEM
Agreement with the Purchaser consistent with the terms of the term sheets
attached as EXHIBIT J.
5. PRE-CLOSING COVENANTS OF THE PURCHASER.
5.1 BEST EFFORTS. During the Pre-Closing Period, the Purchaser
shall use its Best Efforts to cause the conditions set forth in Section 7 to be
satisfied.
5.2 EMPLOYMENT OFFERS. During the Pre-Closing Period, the
Purchaser shall use reasonable corporate efforts to enter into employment
agreements with the Key Employees on terms reasonably satisfactory to the
Purchaser. The Purchaser agrees that, during the Pre-Closing Period, it shall
not, and it shall not permit any of its Representatives to directly or
indirectly, personally or through others, encourage, induce, attempt to induce,
solicit or attempt
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to solicit (on the Purchaser's own behalf or on behalf of any other Person) any
Internet Business Employee of WAVO to leave his or her employment with WAVO or
any of its subsidiaries.
5.3 NEGOTIATION OF SERVICES AGREEMENT AND OEM AGREEMENT WITH
SELLERS. The Purchaser agrees that, during the Pre-Closing Period, it shall use
its Best Efforts to negotiate and finalize a Services Agreement and an OEM
Agreement with the Sellers consistent with the terms of the term sheets attached
as EXHIBIT J.
5.4 CONTACT WITH CUSTOMERS. During the Pre-Closing Period, the
Purchaser and its Representatives shall not (a) communicate with any Key
Customers without providing a Sellers with prior notice that the Purchaser or
such Representative will be communicating with such Key Customer, and (b)
communicate with any other customer of the Wireless Business without providing a
Representative of a Seller the opportunity to be present (in person or by
telephonic conference) at the time of such communication.
6. CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATION TO CLOSE.
The Purchaser's obligation to purchase the Assets and to take the other
actions required to be taken by the Purchaser at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Purchaser, in whole or in part, in writing):
6.1 ACCURACY OF REPRESENTATIONS. All of the representations and
warranties made by a Seller in this Agreement (considered collectively), and
each of said representations and warranties (considered individually), shall
have been accurate in all material respects as of the date of this Agreement,
and shall be accurate in all material respects as of the Closing Date as if made
at the Closing Date, without giving effect to any update to the Disclosure
Schedule.
6.2 PERFORMANCE OF OBLIGATIONS.
(a) Each of the documents referred to in Sections
1.5(b)(i), 1.5(b)(iii), 1.5(b)(v) and 1.5(b)(iv) shall have been executed by
each of the parties thereto and delivered to the Purchaser.
(b) All of the covenants and obligations that the Sellers
are required to comply with or to perform at or prior to the Closing (considered
collectively), and each of said covenants and obligations (considered
individually), shall have been duly complied with and performed in all material
respects.
6.3 CONSENTS. Each of the Consents identified in PART 2.26 of the
Disclosure Schedule shall have been obtained and shall be in full force and
effect.
6.4 NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in the business, condition, assets, liabilities, operations,
financial performance, or net income of the Sellers since the date of this
Agreement, and no event shall have occurred and no condition or circumstance
shall exist that reasonably could be expected to give rise to any such material
adverse change.
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6.5 OPINION LETTER. Purchaser shall have received opinion letters
from counsel to the Sellers, dated the Closing Date, in the forms of EXHIBIT F.
6.6 NO PROCEEDINGS. Since the date of this Agreement, there shall
not have been commenced or threatened against the Purchaser, or against any
Person affiliated with the Purchaser, any Proceeding (a) involving any material
challenge to, or seeking material damages or other material relief in connection
with, any of the Transactions, or (b) that may have the effect of preventing,
delaying, making illegal or otherwise interfering with any of the Transactions.
6.7 NO PROHIBITION. Neither the consummation nor the performance
of any the Transactions will, directly or indirectly (with or without notice or
lapse of time), contravene or conflict with or result in a violation of, or
cause the Purchaser or any Person affiliated with the Purchaser to suffer any
adverse consequence under, any applicable Legal Requirement or Order.
6.8 EMPLOYEES. Five of the seven Key Employees shall have accepted
employment with the Purchaser on terms reasonably satisfactory with the
Purchaser.
6.9 CUSTOMERS. The Purchaser shall have received, in a form
reasonably satisfactory to the Purchaser, confirmation from the Wireless
Business's Key Customers stating that such Key Customers, in the aggregate, do
not intend to reduce their use of the Wireless Business's services to less than
90% of historical levels.
6.10 SERVICES AGREEMENT AND OEM AGREEMENT. The Purchaser and the
Sellers shall have entered into a Services Agreement and an OEM Agreement
reflecting the terms of the term sheets attached hereto as EXHIBIT J.
7. CONDITIONS PRECEDENT TO THE SELLERS' OBLIGATION TO CLOSE.
The Sellers' obligation to sell the Assets and to take the other
actions required to be taken by the Sellers at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Sellers, in whole or in part, in writing):
7.1 ACCURACY OF REPRESENTATIONS. All of the representations and
warranties made by the Purchaser in this Agreement (considered collectively),
and each of said representations and warranties (considered individually), shall
have been accurate in all material respects as of the date of this Agreement and
shall be accurate in all material respects as of the Closing Date as if made at
the Closing Date.
7.2 REGISTRATION RIGHTS. The Purchaser shall have granted
piggy-back registration rights to WPN related to the Purchaser Common Stock (the
"REGISTRABLE SECURITIES"), which piggyback registration rights shall be pari
passu to those held by the holders of Restricted Stock, Warrant Shares and
Founders' Stock (each, as defined in the Registration Rights Agreement among the
Company and certain stockholders, dated June 14, 1998, as amended). The
agreement granting such rights shall provide that the inclusion of any
Registrable Securities in any underwritten public offering shall be subject to
cutback by the underwriter(s) pro rata with
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such holders of Restricted Stock, Warrant Shares and Founders' Stock based upon
the number of registrable securities held by each such Person). For the
avoidance of doubt, WPN shall not be granted any demand registration rights.
7.3 PURCHASER'S PERFORMANCE.
(a) The Purchaser shall have executed and delivered the
Escrow Agreement in the form attached hereto (subject to modifications required
by the Escrow Agent), the Noncompetition Agreement, and the Assumption Agreement
and shall have made the payment contemplated by Section 1.5(b)(ii) and the
deposit contemplated by Section 1.5(b)(iii).
(b) All of the other covenants and obligations that the
Purchaser is required to comply with or to perform pursuant to this Agreement at
or prior to the Closing (considered collectively), and each of said covenants
and obligations (considered individually), shall have been complied with and
performed in all material respects.
7.4 SERVICES AGREEMENT AND OEM AGREEMENT. The Purchaser and the
Sellers shall have entered into a Services Agreement and an OEM Agreement
reflecting the terms of the term sheets attached hereto as EXHIBIT J.
8. TERMINATION.
8.1 TERMINATION EVENTS. This Agreement may be terminated prior to
the Closing:
(a) by the Purchaser if there is a material Breach of any
covenant or obligation of a Seller and such Breach shall not have been
cured within ten days after the delivery of notice thereof to such
Seller;
(b) by the Sellers if there is a material Breach of any
covenant or obligation of the Purchaser and such Breach shall not have
been cured within ten days after the delivery of notice thereof to the
Purchaser;
(c) by the Purchaser if the Closing has not taken place
by the first to occur of (1) 40 days from the date of this Agreement or
(2) October 15, 2000 (other than as a result of any failure on the part
of the Purchaser to comply with or perform its covenants and
obligations under this Agreement);
(d) by WPN if the Closing has not taken place by the
first to occur of (1) 40 days from the date of this Agreement or (2)
October 15, 2000 (other than as a result of any failure on the part of
the Sellers to comply with or perform any covenant or obligation set
forth in this Agreement); or
(e) by the mutual written consent of the Purchaser and
the Sellers.
8.2 TERMINATION PROCEDURES. If the Purchaser wishes to terminate
this Agreement pursuant to Section 8.1(a) or Section 8.1(c), the Purchaser shall
deliver to the Sellers a written notice stating that the Purchaser is
terminating this Agreement and setting forth a brief
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description of the basis on which the Purchaser is terminating this Agreement.
If the Sellers wish to terminate this Agreement pursuant to Section 8.1(b) or
Section 8.1(d), the Sellers shall deliver to the Purchaser a written notice
stating that the Sellers are terminating this Agreement and setting forth a
brief description of the basis on which the Sellers are terminating this
Agreement.
8.3 EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 8.1, all further obligations of the parties under this
Agreement shall terminate; provided, however, that: (a) no party shall be
relieved of any obligation or other Liability arising from any Breach by such
party of any provision of this Agreement; (b) the parties shall, in all events,
remain bound by and continue to be subject to the provisions set forth in
Section 10; and (c) the Sellers and the Purchaser shall, in all events, remain
bound by and continue to be subject to Section 4.7.
8.4 NONEXCLUSIVITY OF TERMINATION RIGHTS. The termination rights
provided in Section 8.1 shall not be deemed to be exclusive. Accordingly, the
exercise by any party of its right to terminate this Agreement pursuant to
Section 8.1 shall not be deemed to be an election of remedies and shall not be
deemed to prejudice, or to constitute or operate as a waiver of, any other right
or remedy that such party may be entitled to exercise (whether under this
Agreement, under any other Contract, under any statute, rule or other Legal
Requirement, at common law, in equity or otherwise).
9. INDEMNIFICATION, ETC.
9.1 SURVIVAL OF REPRESENTATIONS AND COVENANTS.
(a) The representations, warranties, covenants and
obligations of each party to this Agreement shall survive (without limitation):
(i) the Closing and the sale of the Assets to the Purchaser; (ii) any sale or
other disposition of any or all of the Assets by the Purchaser; and (iii) the
dissolution of any party to this Agreement. Except as set forth in Section
9.1(c), all of said representations, warranties, covenants and obligations shall
remain in full force and effect and shall survive for an unlimited period of
time.
(b) The representations, warranties, covenants and
obligations of the Sellers, and the rights and remedies that may be exercised by
the Indemnitees, shall not be limited or otherwise affected by or as a result of
any information furnished to, or any investigation made by or any knowledge of,
any of the Indemnitees or any of their Representatives.
(c) Subject to Section 9.1(d), the representations and
warranties set forth in Sections 2 and 3 (other than the representations and
warranties set forth in Section 2.18) shall expire on the 12 month anniversary
of the Closing Date and the representations and warranties set forth in Section
2.18 shall expire on the two year anniversary of the Closing Date; provided,
however, that if a Claim Notice (as defined below) relating to any
representation or warranty set forth in any of said Sections is given to the
Sellers on or prior to the 12 month anniversary of the Closing Date, then,
notwithstanding anything to the contrary contained in this Section 9.1(c), such
representation or warranty shall not so expire, but rather shall remain in full
force and effect until such time as each and every claim (including any
indemnification claim asserted by any Indemnitee under Section 9.2) that is
based directly or indirectly upon, or that relates directly or
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<PAGE> 34
indirectly to, any Breach or alleged Breach of such representation or warranty
has been fully and finally resolved, either by means of a written settlement
agreement executed on behalf of the Sellers and the Purchaser or by means of a
final, non-appealable judgment issued by a court of competent jurisdiction.
(d) Notwithstanding anything to the contrary contained in
Section 9.1(c) (and without limiting the generality of anything contained in
Section 9.1(a)), if a Seller had knowledge, on or prior to the Closing Date, of
any circumstance that constitutes or that has given rise or could be expected to
give rise, directly or indirectly, to any Breach of any representation or
warranty set forth in Section 2, then such representation or warranty shall not
expire, but rather shall remain in full force and effect until three years after
the Closing Date.
(e) For purposes of this Agreement, a "CLAIM NOTICE"
relating to a particular representation or warranty shall be deemed to have been
given if any Indemnitee, acting in good faith, delivers to the Sellers a written
notice stating that such Indemnitee believes that there is or has been a
possible Breach of such representation or warranty and containing (i) a brief
description of the circumstances supporting such Indemnitee's belief that there
is or has been such a possible Breach, and (ii) a non-binding, preliminary
estimate of the aggregate dollar amount of the actual and potential Damages that
have arisen and may arise as a direct or indirect result of such possible
Breach.
(f) For purposes of this Agreement, each statement or
other item of information set forth in the Disclosure Schedule or in any update
to the Disclosure Schedule shall be deemed to be a representation and warranty
made by the Sellers in this Agreement.
9.2 INDEMNIFICATION BY THE SELLERS. The Sellers shall hold
harmless and indemnify each of the Indemnitees from and against, and shall
compensate and reimburse each of the Indemnitees for, any Damages that are
directly or indirectly suffered or incurred by any of the Indemnitees or to
which any of the Indemnitees may otherwise become subject at any time
(regardless of whether or not such Damages relate to any third-party claim) and
that arise directly or indirectly from or as a direct or indirect result of, or
are directly or indirectly connected with:
(a) any Breach of any of the representations or
warranties made by the Sellers in this Agreement (without giving effect to any
update to the Disclosure Schedule) or in the Closing Certificate or any of the
other Transactional Agreements; provided that if such Breach is disclosed on an
update to the Disclosure Schedule, then such Breach must constitute a material
Breach to require indemnification hereunder;
(b) any Breach of any covenant or obligation of the
Sellers contained in any of the Transactional Agreements;
(c) any Liability of the Sellers or of any Related Party,
other than the Assumed Liabilities;
(d) any Liability (other than the Assumed Liabilities) to
which the Purchaser or any of the other Indemnitees may become subject and that
arises directly or indirectly from or
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relates directly or indirectly to (A) any product produced or sold or any
services performed by or on behalf of the Sellers prior to the Closing Date and
relating to the Wireless Business, (B) the presence of any Hazardous Material at
any site owned, leased, occupied or controlled by a Seller on or at any time
prior to the Closing Date, (C) the generation, manufacture, production,
transportation, importation, use, treatment, refinement, processing, handling,
storage, discharge, release or disposal of any Hazardous Material (whether
lawfully or unlawfully) by or on behalf of a Seller, or (D) any failure to
comply with any bulk transfer law or similar Legal Requirement in connection
with any of the Transactions;
(e) any Liability caused by limitations on the
Purchaser's full access to service the Dish Strings and FM Strings referenced in
Section 2.11 without trespassing on the property of any other Person after the
consummation of the Transactions; or
(f) any Proceeding relating directly or indirectly to any
Breach, alleged Breach, Liability or matter of the type referred to in clause
"(a)," "(b)," "(c)," "(d)," or "(e)" above (including any Proceeding commenced
by any Indemnitee for the purpose of enforcing any of its rights under this
Section 9).
Notwithstanding anything to the contrary in this Agreement, the Sellers'
indemnity obligations hereunder shall not exceed the value of the consideration
received by the Sellers under the Agreement.
9.3 INDEMNIFICATION BY PURCHASER. The Purchaser shall hold
harmless and indemnify the Sellers from and against, and shall compensate and
reimburse the Sellers for, any Damages that are directly or indirectly suffered
or incurred by the Sellers or to which the Sellers may otherwise become subject
at any time (regardless of whether or not such Damages relate to any third-party
claim) and that arise directly or indirectly from or as a direct or indirect
result of, or are directly or indirectly connected with:
(a) any failure on the part of the Purchaser to perform
and discharge the Assumed Liabilities on a timely basis;
(b) any Breach of any representation, warranty, covenant
or obligation made by the Purchaser in this Agreement or in the Closing
Certificate or any of the Transaction Documents;
(c) any Proceeding relating directly or indirectly to any
failure, Breach, alleged Breach, Liability or matter of the type referred to in
clause "(a)" or "(b)" above (including any Proceeding commenced by a Seller for
the purpose of enforcing its rights under this Section 9.3); or
(d) any severance obligations of the Sellers directly
related to the termination of any employees of the Sellers as of the Closing
Date (other than the Internet Business Employees) who (1) spent a majority of
their business time conducting the Wireless Business's business and (2) are not
offered employment by the Purchaser, provided that such terminations (x) are
conducted by the Seller and are consistent with the Sellers' past practices as
described by the Sellers to the Purchaser or (y) are conducted by the Purchaser.
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Notwithstanding anything to the contrary in this Agreement, the Purchaser's
indemnity obligations hereunder shall not exceed the value of the consideration
received by the Purchaser under the Agreement.
9.4 NONEXCLUSIVITY OF INDEMNIFICATION REMEDIES. The
indemnification remedies and other remedies provided in this Section 9 shall not
be deemed to be exclusive. Accordingly, the exercise by any Person of any of its
rights under this Section 9 shall not be deemed to be an election of remedies
and shall not be deemed to prejudice, or to constitute or operate as a waiver
of, any other right or remedy that such Person may be entitled to exercise
(whether under this Agreement, under any other Contract, under any statute, rule
or other Legal Requirement, at common law, in equity or otherwise).
9.5 DEFENSE OF THIRD PARTY CLAIMS. In the event of the assertion
or commencement by any Person of any claim or Proceeding with respect to which
any Person (the "indemnifying party") may become obligated to indemnify, hold
harmless, compensate or reimburse any Person entitled to indemnification,
compensation or reimbursement hereunder (the "indemnified party") pursuant to
this Section 9, the indemnified party shall (a) notify the indemnifying party
thereof as promptly as practicable after becoming aware of the claim or
Proceeding (it being understood that no delay on the part of the indemnified
party in so notifying the indemnifying party shall relieve the indemnifying
party from any obligation hereunder unless, and then solely to the extent that,
the indemnifying party is prejudiced thereby), and (b) have the right, at its
election, to designate the indemnifying party to assume the defense of such
claim or Proceeding at the sole expense of the indemnifying party. If the
indemnified party so elects to designate the indemnifying party to assume the
defense of any such claim or Proceeding:
(a) the indemnifying party shall proceed to defend such
claim or Proceeding in a diligent manner with counsel reasonably
satisfactory to the indemnified party;
(b) the indemnified party shall make available to the
indemnifying party any documents and materials in the possession of the
indemnified party that may be necessary to the defense of such claim or
Proceeding;
(c) the indemnifying party shall keep the indemnified
party informed of all material developments and events relating to such
claim or Proceeding;
(d) the indemnified party shall have the right to
participate in (but not control) the defense of such claim or
Proceeding at its own expense using counsel of its choice;
(e) the indemnifying party shall not settle, adjust or
compromise such claim or Proceeding without the prior written consent
of the indemnified party (which consent shall not be unreasonably
withheld); and
(f) the indemnified party may (if the indemnifying party
breaches in any material respect any of the provisions of this Section
9.5) assume the defense of such claim or Proceeding.
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If the indemnified party does not elect to designate the indemnifying party to
assume the defense of any such claim or Proceeding (or if, after initially
designating the indemnifying party to assume such defense, the indemnified party
elects to assume such defense in accordance with paragraph "(f)" above), the
indemnified party may proceed with the defense of such claim or Proceeding on
its own. If the indemnified party so proceeds with the defense of any such claim
or Proceeding on its own:
(i) all reasonable expenses relating to the
defense of such claim or Proceeding (to the extent indemnifiable,
reimbursable or payable under this Section 4) shall be borne and paid
exclusively by the indemnifying party;
(ii) the indemnifying party shall make available
to the indemnified party any documents and materials in the possession
or control of the indemnifying party that may be necessary to the
defense of such claim or Proceeding;
(iii) the indemnified party shall keep the
indemnifying party informed of all material developments and events
relating to such claim or Proceeding;
(iv) the indemnifying party shall have the right
to participate in (but not control) the defense of such claim or
Proceeding at its own expense using counsel of its choice; and
(v) the indemnified party shall have the right
to settle, adjust or compromise such claim or Proceeding with the
consent of the indemnifying party; provided, however, that the
indemnifying party shall not unreasonably withhold such consent.
10. CERTAIN POST-CLOSING COVENANTS; MISCELLANEOUS.
10.1 FURTHER ACTIONS; RIGHT OF FIRST REFUSAL.
(a) CLOSING DATE AUDIT. From and after the Closing Date,
the Sellers and their Representatives shall permit, and use their Best Efforts
to assist Deloitte & Touche LLP (or another accounting firm selected by the
Purchaser) to prepare audited financial statements for the Wireless Business as
of and for the periods ended December 31, 1997, December 31, 1998, December 31,
1999, and an audited balance sheet for the Wireless Business as of the Closing
Date. The fees and expenses of the auditors for the foregoing shall be paid by
the Purchaser. Such audit of the balance sheet as of the Closing Date shall
hereinafter be referred to as the "CLOSING DATE AUDIT".
(b) ASSIGNMENT OF PATENTS. The Sellers agree that if any
patents owned by a Seller or any of its subsidiaries are necessary for the
operation of the Wireless Business and are more closely related to the business
of the Wireless Business than of any of the Sellers' businesses, the Sellers
shall execute (or cause to be executed) and deliver such documents and take such
other actions as the Purchaser may reasonably request, for the purpose of
transferring any such patents to the Purchaser, and the Purchaser shall then
grant a license to the Sellers to use and exploit the related technology to the
full extent needed for the Sellers to operate their
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business related to such technology. The Sellers agree that if any patents owned
by a Seller or any of its subsidiaries are necessary for the operation of the
Wireless Business and are more closely related to the business of a Seller than
the business of the Wireless Business, the Sellers shall execute (or cause to be
executed) and deliver such documents and take such other actions as the
Purchaser may reasonably request, for the purpose of granting a license to use
and exploit the related technology to the Purchaser to the full extent needed
for the Purchaser to operate its business.
(c) GENERAL COOPERATION. From and after the Closing Date,
the Sellers shall cooperate with the Purchaser and the Purchaser's affiliates
and Representatives, and shall execute and deliver such documents and take such
other actions as the Purchaser may reasonably request, for the purpose of
evidencing the Transactions and putting the Purchaser in possession and control
of all of the Assets. Without limiting the generality of the foregoing, from and
after the Closing Date, the Sellers shall (i) assist the Purchaser in obtaining
any consent not obtained prior to the Closing Date (following any waiver by the
Purchaser of a closing condition requiring the Sellers to obtain such consent)
and (ii) promptly remit to the Purchaser any funds that are received by a Seller
and that are included in, or that represent payment of receivables included in,
the Assets. Each Seller: (A) hereby irrevocably authorizes the Purchaser, at all
times on and after the Closing Date, to endorse in the name of such Seller any
check or other instrument that is made payable to such Seller and that
represents funds included in, or that represents the payment of any receivable
included in, the Assets; and (B) hereby irrevocably nominates, constitutes and
appoints the Purchaser as the true and lawful attorney-in-fact of such Seller
(with full power of substitution) effective as of the Closing Date, and hereby
authorizes the Purchaser, in the name of and on behalf of such Seller, to
execute, deliver, acknowledge, certify, file and record any document, to
institute and prosecute any Proceeding and to take any other action (on or at
any time after the Closing Date) that the Purchaser may deem appropriate for the
purpose of (1) collecting, asserting, enforcing or perfecting any claim, right
or interest of any kind that is included in or relates to any of the Assets, (2)
defending or compromising any claim or Proceeding relating to any of the Assets,
or (3) otherwise carrying out or facilitating any of the Transactions. The power
of attorney referred to in the preceding sentence is and shall be coupled with
an interest and shall be irrevocable, and shall survive the dissolution or
insolvency of a Seller.
(d) PURCHASER RIGHT OF FIRST REFUSAL.
(i) If WPN proposes to Transfer any shares of
Purchaser Common Stock, then WPN shall promptly give written notice (the
"NOTICE") to the Purchaser at least 30 days prior to the closing of such
Transfer. The Notice shall describe in reasonable detail the proposed Transfer
including, without limitation, the number of shares of Purchaser Common Stock to
be transferred, the nature of such Transfer, the consideration to be paid, and
the name and address of each prospective purchaser or transferee.
(ii) The Purchaser shall then have the right,
exercisable upon written notice to WPN (the "PURCHASER NOTICE") within 15 days
after the receipt of the Notice, to purchase all or any portion of the Purchaser
Common Stock subject to the Notice on the same terms and conditions as set forth
therein. If the Purchaser exercises such rights, it shall effect the
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purchase of the Purchaser Common Stock, including payment of the purchase price,
not more than 10 days after delivery of the Purchaser Notice, and at such time
WPN shall deliver to the Purchaser the certificate(s) representing the Purchaser
Common Stock to be purchased by the Purchaser, each certificate to be properly
endorsed for transfer.
(iii) If the Purchaser does not purchase all of
the Purchaser Common Stock covered by the Notice, then WPN may, not later than
60 days following delivery to the Purchaser of the Notice, enter into an
agreement providing for the closing of the Transfer of the Purchaser Common
Stock not purchased by the Purchaser to such prospective purchaser or transferee
on terms and conditions not more favorable to the transferor than those
described in the Notice. Any proposed Transfer on terms and conditions more
favorable than those described in the Notice, as well as any subsequent proposed
Transfer of any of the Purchaser Common Stock by WPN, shall again be subject to
the first refusal of the Purchaser and shall require compliance by WPN with the
procedures described in this Section 10(c).
(iv) In the event that WPN should Transfer any of
the Purchaser Common Stock in contravention of the rights described in this
Section 10(c), such transfer shall be considered void.
(v) Each certificate representing shares of
Purchaser Common Stock shall be endorsed with the following legend: "THE SALE,
PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN RIGHT OF FIRST
REFUSAL BY AND BETWEEN WPN CORPORATION AND CIDERA, INC." The parties agree that
the Purchaser may instruct its transfer agent to impose transfer restrictions on
the shares represented by certificates bearing the legend referred to in the
previous sentence to enforce the provisions of this Section 10(c), and the
Purchaser agrees to promptly do so.
(vi) The foregoing right of first refusal shall
terminate 180 days after the Purchaser's initial public offering under the
Securities Act of 1933, as amended (the "RIGHTS TERMINATION DATE"). Following
the Rights Termination Date, WPN shall be permitted to Transfer the Purchaser
Common Stock, provided that any such transfer shall be of at least 10,000
shares.
10.2 PUBLICITY. Each of the Purchaser and the Sellers shall ensure
that, after the Closing Date: (a) neither it nor any of its Representatives
issue or disseminate any press release or other publicity or otherwise make any
disclosure of any nature (to any other Person) regarding any of the Transactions
or the existence or terms of this Agreement without the prior written consent of
the other party (which consent shall not be unreasonably withheld), except (1)
to the extent that the it is required by law to make any such disclosure; (2)
that it may disclose the foregoing to potential investors who sign appropriate
confidentiality agreements; and (3) to its Representatives; and (b) if it is
required by law to make any such disclosure, it advises the other parties to the
extent possible, at least two business days before making such disclosure, of
the nature and content of the intended disclosure.
10.3 FURTHER ASSURANCES. Each party hereto shall execute and/or
cause to be delivered to each other party hereto such instruments and other
documents, and shall take such
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other actions, as such other party may reasonably request (prior to, at or after
the Closing) for the purpose of carrying out or evidencing any of the
Transactions.
10.4 FEES AND EXPENSES. Each party hereto shall bear and pay all of
its own fees, costs and expenses that have been incurred or that are in the
future incurred by, on behalf of, or for the benefit of it in connection with
negotiation of, due diligence for, consummation of, and performance of the
Transactions.
10.5 ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to any of the Transactional Agreements or the enforcement of any
provision of any of the Transactional Agreements is brought against any party to
this Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees, costs and disbursements (in addition to any other relief to
which the prevailing party may be entitled).
10.6 NOTICES. Any notice or other communication required or
permitted to be delivered to any party under this Agreement shall be in writing
and shall be deemed properly delivered, given and received when delivered (by
hand, by registered mail, by courier or express delivery service or by
facsimile) to the address or facsimile telephone number set forth beneath the
name of such party below (or to such other address or facsimile telephone number
as such party shall have specified in a written notice given to the other
parties hereto):
if to a Seller:
c/o WAVO Corporation
3131 E. Camelback Road, Suite 320
Phoenix, AZ 85016
Attention: Chief Financial Officer
and General Counsel
Facsimile: (602) 952-5517
with a copy to:
Steven D. Pidgeon
Snell & Wilmer
One Arizona Center
Phoenix, AZ 85004
Facsimile: (602) 382-6070
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if to the Purchaser:
Cidera, Inc.
8037 Laurel Lakes Court
Laurel, MD 20707
Attention: Chief Financial Officer
Facsimile: (301) 598-0837
with a copy to:
Michael R. Lincoln
Cooley Godward
One Freedom Square
Reston Town Center
11951 Freedom Drive
Reston, VA 20190-5601
Facsimile: (703) 456-8100
10.7 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
10.8 HEADINGS. The headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
10.9 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
10.10 GOVERNING LAW; VENUE.
(a) This Agreement shall be construed in accordance with,
and governed in all respects by, the internal laws of the State of Arizona
(without giving effect to principles of conflicts of laws).
(b) Any legal action or other legal proceeding relating
to this Agreement or the enforcement of any provision of this Agreement may be
brought or otherwise commenced in any state or federal court located in Salt
Lake County, Utah. Each party to this Agreement:
(i) expressly and irrevocably consents and
submits to the jurisdiction of each state and federal court located in Salt Lake
County, Utah (and each appellate court located in the State of Utah) in
connection with any such legal proceeding;
(ii) agrees that each state and federal court
located in Salt Lake County, Utah shall be deemed to be a convenient forum; and
(iii) agrees not to assert (by way of motion, as a
defense or otherwise), in any such legal proceeding commenced in any state or
federal court located in Salt Lake County, Utah, any claim that such party is
not subject personally to the jurisdiction of such court, that such legal
proceeding has been brought in an inconvenient forum, that the
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venue of such proceeding is improper or that this Agreement or the
subject matter of this Agreement may not be enforced in or by such
court.
(c) Each party hereto agrees that, if any Proceeding is
commenced against any Indemnitee or a Seller by any Person in or before any
court or other tribunal anywhere in the world, then such Indemnitee or Seller
may proceed against such party hereto in or before such court or other tribunal
with respect to any indemnification claim or other claim arising directly or
indirectly from or relating directly or indirectly to such Proceeding or any of
the matters alleged therein or any of the circumstances giving rise thereto.
10.11 SUCCESSORS AND ASSIGNS; PARTIES IN INTEREST.
(a) This Agreement shall be binding upon: the Sellers and
their successors and assigns (if any) and the Purchaser and its successors and
assigns (if any). This Agreement shall inure to the benefit of: the Sellers; the
Purchaser; the other Indemnitees; and the respective successors and assigns (if
any) of the foregoing.
(b) Except for the provisions of Section 9 hereof, none
of the provisions of this Agreement is intended to provide any rights or
remedies to any Person other than the parties to this Agreement and their
respective successors and assigns (if any). Without limiting the generality of
the foregoing, (i) no employee of a Seller shall have any rights under this
Agreement or under any of the other Transactional Agreements, and (ii) no
creditor of a Seller shall have any rights under this Agreement or any of the
other Transactional Agreements.
10.12 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE.
(a) The rights and remedies of the parties hereto shall
be cumulative (and not alternative).
(b) Each Seller agrees that: (i) in the event of any
Breach or threatened Breach by such Seller of any covenant, obligation or other
provision set forth in this Agreement, the Purchaser shall be entitled (in
addition to any other remedy that may be available to it) to (A) a decree or
order of specific performance or mandamus to enforce the observance and
performance of such covenant, obligation or other provision, and (B) an
injunction restraining such Breach or threatened Breach; and (ii) neither the
Purchaser nor any other Indemnitee shall be required to provide any bond or
other security in connection with any such decree, order or injunction or in
connection with any related action or Proceeding.
(c) The Purchaser agrees that: (i) in the event of any
Breach or threatened Breach by the Purchaser of any covenant, obligation or
other provision set forth in this Agreement, the Sellers shall be entitled (in
addition to any other remedy that may be available to it) to (A) a decree or
order of specific performance or mandamus to enforce the observance and
performance of such covenant, obligation or other provision, and (B) an
injunction restraining such Breach or threatened Breach; and (ii) the Sellers
shall be required to provide any bond or other security in connection with any
such decree, order or injunction or in connection with any related action or
Proceeding.
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(d) Notwithstanding anything to the contrary herein, the
parties hereto agree that each party would be unduly damaged by the rescission
of the Transactions after the Closing Date. Accordingly, each party agrees that
its remedies for any Breach or Breaches hereunder shall not include the right of
rescission.
10.13 WAIVER.
(a) No failure on the part of any Person to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part
of any Person in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or remedy;
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy.
(b) No Person shall be deemed to have waived any claim
arising out of this Agreement, or any power, right, privilege or remedy under
this Agreement, unless the waiver of such claim, power, right, privilege or
remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such Person; and any such waiver shall not be applicable
or have any effect except in the specific instance in which it is given.
10.14 AMENDMENTS. This Agreement may not be amended, modified,
altered or supplemented other than by means of a written instrument duly
executed and delivered on behalf of the Purchaser and the Sellers.
10.15 SEVERABILITY. In the event that any provision of this
Agreement, or the application of any such provision to any Person or set of
circumstances, shall be determined to be invalid, unlawful, void or
unenforceable to any extent, the remainder of this Agreement, and the
application of such provision to Persons or circumstances other than those as to
which it is determined to be invalid, unlawful, void or unenforceable, shall not
be impaired or otherwise affected and shall continue to be valid and enforceable
to the fullest extent permitted by law.
10.16 ENTIRE AGREEMENT. The Transactional Agreements set forth the
entire understanding of the parties relating to the subject matter thereof and
supersede all prior agreements and understandings among or between any of the
parties relating to the subject matter thereof.
10.17 KNOWLEDGE. For purposes of this Agreement, a Person shall be
deemed to have "knowledge" of a particular fact or other matter if any
Representative of such Person has knowledge of such fact or other matter.
10.18 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
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(b) The parties hereto agree that any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party shall not be applied in the construction or interpretation of
this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "SECTIONS" and "EXHIBITS" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
[Signatures on following page]
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The parties to this Agreement have caused this Agreement to be executed
and delivered as of September 11, 2000.
CIDERA, INC.,
a Delaware corporation
By: /s/ Thom F. Degnan
-------------------------------
Name: Thom F. Degnan
-----------------------------
Title: Senior Vice President,
Business Development
----------------------------
WAVEPHORE NETWORKS, INC.,
a Delaware corporation
By: /s/ Kenneth D. Swenson
-------------------------------
Name: Kenneth D. Swenson
-----------------------------
Title: Treasurer
----------------------------
WAVO CORPORATION,
an Indiana corporation
By: /s/ Kenneth D. Swenson
-------------------------------
Name: Kenneth D. Swenson
-----------------------------
Title: Executive Vice President and
Chief Financial Officer
----------------------------
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EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction involving: (a) the sale or other disposition of all or any material
portion of the business or assets of a Seller (other than in the Ordinary Course
of Business); or (b) any merger, consolidation, business combination, share
exchange, reorganization or similar transaction involving a Seller.
AGREEMENT. "Agreement" shall mean the Asset Purchase Agreement to which
this Exhibit A is attached (including the Disclosure Schedule), as it may be
amended from time to time.
BEST EFFORTS. "Best Efforts" shall mean the efforts that a prudent
Person desiring to achieve a particular result would use in order to ensure that
such result is achieved as expeditiously as possible.
BREACH. There shall be deemed to be a "Breach" of a representation,
warranty, covenant, obligation or other provision if there is or has been any
inaccuracy in or breach (including any inadvertent or innocent breach) of, or
any failure (including any inadvertent failure) to comply with or perform, such
representation, warranty, covenant, obligation or other provision; and the term
"Breach" shall be deemed to refer to any such inaccuracy, breach, failure, claim
or circumstance.
CERCLA. "CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act.
CODE. "Code" shall mean the Internal Revenue Code of 1986, as amended.
COMPARABLE ENTITIES. "Comparable Entities" shall mean Entities (other
than a Seller) that are engaged in businesses similar to the business of the
Sellers.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" shall mean any written, oral, implied or other
agreement, contract, lease, understanding, arrangement, instrument, note,
guaranty, indemnity, representation, warranty, deed, assignment, power of
attorney, certificate, purchase order, work order, insurance policy, benefit
plan, commitment, covenant, assurance or undertaking of any nature.
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DAMAGES. "Damages" shall include any loss, damage, injury, decline in
value, lost opportunity, Liability, claim, demand, settlement, judgment, award,
fine, penalty, Tax, fee (including any legal fee, expert fee, accounting fee or
advisory fee), charge, cost (including any cost of investigation) or expense of
any nature.
DISCLOSURE SCHEDULE. "Disclosure Schedule" shall mean the schedule
(dated as of the date of the Agreement) delivered to the Purchaser on behalf of
the Sellers pursuant to Section 2 and to the Sellers on behalf of the Purchaser
under Section 3, a copy of which is attached to the Agreement and incorporated
in the Agreement by reference.
DISH STRING. "Dish String" shall mean a satellite dish, an intelligent
data receiver or receivers, and any associated equipment and cabling.
EMPLOYEE BENEFIT PLAN. "Employee Benefit Plan" shall have the meaning
specified in Section 3(3) of ERISA.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, equity, trust, equitable
interest, claim, preference, right of possession, lease, tenancy, license,
encroachment, covenant, infringement, interference, Order, proxy, option, right
of first refusal, preemptive right, community property interest, legend, defect,
impediment, exception, reservation, limitation, impairment, imperfection of
title, condition or restriction of any nature (including any restriction on the
transfer of any asset, any restriction on the receipt of any income derived from
any asset, any restriction on the use of any asset and any restriction on the
possession, exercise or transfer of any other attribute of ownership of any
asset).
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, cooperative, foundation, society,
political party, union, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization or
entity.
ERISA. "ERISA" shall mean the Employee Retirement Income Security Act
of 1974.
EXCLUDED ASSETS. "Excluded Assets" shall mean the assets identified on
EXHIBIT H (to the extent owned by a Seller on the Closing Date).
FM STRING. "FM String" shall mean an FM antenna, an intelligent data
receiver or receivers, and associated equipment and cabling.
GAAP. "GAAP" shall mean generally accepted accounting principles.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean
any: (a) permit, license, certificate, franchise, concession, approval, consent,
ratification, permission, clearance, confirmation, endorsement, waiver,
certification, designation, rating, registration, qualification or authorization
issued, granted, given or otherwise made available by or under the authority of
any Governmental Body or pursuant to any Legal Requirement; or (b) right under
any Contract with any Governmental Body.
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GOVERNMENTAL BODY. "Governmental Body" shall mean any: (a) nation,
principality, state, commonwealth, province, territory, county, municipality,
district or other jurisdiction of any nature; (b) federal, state, local,
municipal, foreign or other government; (c) governmental or quasi-governmental
authority of any nature (including any governmental division, subdivision,
department, agency, bureau, branch, office, commission, council, board,
instrumentality, officer, official, representative, organization, unit, body or
Entity and any court or other tribunal); (d) multi-national organization or
body; or (e) individual, Entity or body exercising, or entitled to exercise, any
executive, legislative, judicial, administrative, regulatory, police, military
or taxing authority or power of any nature.
HAZARDOUS MATERIAL. "Hazardous Material" shall include: (a) any
petroleum, waste oil, crude oil, asbestos, urea formaldehyde or polychlorinated
biphenyl; (b) any waste, gas or other substance or material that is explosive or
radioactive; (c) any "hazardous substance," "pollutant," "contaminant,"
"hazardous waste," "regulated substance," "hazardous chemical" or "toxic
chemical" as designated, listed or defined (whether expressly or by reference)
in any statute, regulation or other Legal Requirement (including CERCLA and any
other so-called "superfund" or "superlien" law and the respective regulations
promulgated thereunder); (d) any other substance or material (regardless of
physical form) or form of energy that is subject to any Legal Requirement which
regulates or establishes standards of conduct in connection with, or which
otherwise relates to, the protection of human health, plant life, animal life,
natural resources, property or the enjoyment of life or property from the
presence in the environment of any solid, liquid, gas, odor, noise or form of
energy; and (e) any compound, mixture, solution, product or other substance or
material that contains any substance or material referred to in clause "(a)",
"(b)", "(c)" or "(d)" above.
IMMATERIAL CONTRACT. "Immaterial Contract" shall mean any Seller
Contract that does not contemplate or involve the payment of cash or other
consideration in an amount or having a value in excess of $15,000.
INDEMNITEES. "Indemnitees" shall mean the following Persons: (a) the
Purchaser; (b) the Purchaser's current and future affiliates; (c) the respective
Representatives of the Persons referred to in clauses "(a)" and "(b)" above; and
(d) the respective successors and assigns of the Persons referred to in clauses
"(a)", "(b)" and "(c)" above.
INTERNET BUSINESS. "Internet Business" is the business of the Sellers
related to the internet delivery of any content to or for its customers (or its
customers' customers). For the avoidance of doubt, the Internet Business shall
exclude any business related to the Wireless Business.
INTERNET BUSINESS EMPLOYEES. "Internet Business Employees" shall mean
the following employees of the Sellers: Nina Amey, Roland Bernabe, Becky Boyd,
Doug Fuhrman, Mike Griggs, David Hansen, Jacqueline Howard, Herb Lloyd, Jim
McClain, Jason Moore, Donald Richardson, Scott Smith, Bryon Strong, Jonathan
Tang, and Glenn Wentworth.
KEY CUSTOMERS. "Key Customers" shall mean NEWSEDGE Corporation, Reuters
America, Inc., Reuters NewMedia, Inc., S&P Comstock, Inc., McGraw-Hill
International (UK)
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Ltd. - Standard & Poor's Comstock Division, PR Newswire Association, Inc., AEI
Rediffusion Music, Ltd. and AEI Music Network, Inc.
KEY EMPLOYEES. "Key Employees" shall mean Patrick Brown, Hugh
Summerhays, Mitch Rasmussen, Clint Bauer, Brad Jackson, Joe Uberty and David
Frymire.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, legislation, constitution,
principle of common law, resolution, ordinance, code, edict, decree,
proclamation, treaty, convention, rule, regulation, ruling, directive,
pronouncement, requirement, specification, determination, decision, opinion or
interpretation issued, enacted, adopted, passed, approved, promulgated, made,
implemented or otherwise put into effect by or under the authority of any
Governmental Body.
LIABILITY. "Liability" shall mean any debt, obligation, duty or
liability of any nature (including any unknown, undisclosed, unmatured,
unaccrued, unasserted, contingent, indirect, conditional, implied, vicarious,
derivative, joint, several or secondary liability), regardless of whether such
debt, obligation, duty or liability would be required to be disclosed on a
balance sheet prepared in accordance with generally accepted accounting
principles and regardless of whether such debt, obligation, duty or liability is
immediately due and payable.
ORDER. "Order" shall mean any: (a) order, judgment, injunction, edict,
decree, ruling, pronouncement, determination, decision, opinion, verdict,
sentence, subpoena, writ or award issued, made, entered, rendered or otherwise
put into effect by or under the authority of any court, administrative agency or
other Governmental Body or any arbitrator or arbitration panel; or (b) Contract
with any Governmental Body entered into in connection with any Proceeding.
ORDINARY COURSE OF BUSINESS. An action taken by or on behalf of a
Person shall not be deemed to have been taken in the "Ordinary Course of
Business" unless:
(a) such action is recurring in nature, is
consistent with the past practices of such Person and is taken in the
ordinary course of the normal day-to-day operations of such Person;
(b) such action is taken in accordance with
sound and prudent business practices;
(c) such action is not required to be authorized
by the shareholders of such Person, the board of directors of such
Person or any committee of the board of directors of such Person and
does not require any other separate or special authorization of any
nature; and
(d) such action is similar in nature and
magnitude to actions customarily taken, without any separate or special
authorization, in the ordinary course of the normal day-to-day
operations of Comparable Entities.
PERSON. "Person" shall mean any individual, Entity or Governmental
Body.
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PRE-CLOSING PERIOD. "Pre-Closing Period" shall mean the period from the
date of the Agreement through the Closing Date.
PROCEEDING. "Proceeding" shall mean any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding and any informal proceeding), prosecution,
contest, hearing, inquiry, inquest, audit, examination or investigation
commenced, brought, conducted or heard by or before, or otherwise involving, any
Governmental Body or any arbitrator or arbitration panel.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any patent, patent
application, trademark (whether registered or unregistered and whether or not
relating to a published work), trademark application, trade name, fictitious
business name, service mark (whether registered or unregistered), service mark
application, copyright (whether registered or unregistered), copyright
application, maskwork, maskwork application, trade secret, know-how, customer
list, franchise, system, computer software, invention, design, blueprint,
engineering drawing, proprietary product, technology, process, proprietary right
or other intellectual property right or intangible asset used in the operation
of the Wireless Business.
RELATED TO THE WIRELESS BUSINESS. An asset (tangible or intangible),
contract, or operation shall be deemed "Related to the Wireless Business" if it
is currently used in the operation of the Wireless Business (whether or not
necessary to the operation of the Wireless Business); provided, however, that no
Excluded Asset shall be deemed "Related to the Wireless Business."
RELATED PARTY. Each of the following shall be deemed to be a "Related
Party": (a) each individual who is, or who has at any time been, an officer of a
Seller; (b) each member of the family of each of the individuals referred to in
clause "(a)" above; and (c) any Entity (other than such Person) in which any one
of the individuals referred to in clauses "(a)" and "(b)" above holds or held
(or in which more than one of such individuals collectively hold or held),
beneficially or otherwise, a controlling interest or a material voting,
proprietary or equity interest.
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
TAX. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, estimated tax, gross receipts tax, value-added tax, surtax,
excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax,
property tax, business tax, occupation tax, inventory tax, occupancy tax,
withholding tax or payroll tax), levy, assessment, tariff, impost, imposition,
toll, duty (including any customs duty), deficiency or fee, and any related
charge or amount (including any fine, penalty or interest), that is, has been or
may in the future be (a) imposed, assessed or collected by or under the
authority of any Governmental Body, or (b) payable pursuant to any tax-sharing
agreement or similar Contract.
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate
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or other document or information that is, has been or may in the future be filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
TRANSACTIONAL AGREEMENTS. "Transactional Agreements" shall mean: (a)
the Agreement; (b) the Escrow Agreement; (c) the Assumption Agreement; (d) the
Noncompetition Agreement referred to in Section 1.5(b)(v) of the Agreement; and
(e) the Closing Certificate.
TRANSACTIONS. "Transactions" shall mean (a) the execution and delivery
of the respective Transactional Agreements, and (b) all of the transactions
contemplated by the respective Transactional Agreements, including: (i) the sale
of the Assets by the Sellers to the Purchaser in accordance with the Agreement;
(ii) the assumption of the Assumed Liabilities by the Purchaser pursuant to the
Assumption Agreement; and (iii) the performance by the Sellers and the Purchaser
of their respective obligations under the Transactional Agreements, and the
exercise by the Sellers and the Purchaser of their respective rights under the
Transactional Agreements.
TRANSFER. For purposes of this Agreement, the term "Transfer" shall
include any sale, assignment, encumbrance, hypothecation, pledge, conveyance in
trust, gift, transfer by bequest, devise or descent, transfer by dividend or
distribution, or other transfer or disposition of any kind, including, but not
limited to, transfers to receivers, levying creditors, trustees or receivers in
bankruptcy proceedings or general assignees for the benefit of creditors,
whether voluntary or by operation of law, directly or indirectly, of any of the
Purchaser Common Stock.
TRANSFERRED TANGIBLE ASSETS. "Transferred Tangible Assets" of a Person
shall mean such Person's (a) gross accounts receivable less allowances for
uncollectables plus (b) inventory plus (c) prepaid expenses plus (d) other
current assets plus (e) gross property and equipment less accumulated
depreciation and amortization plus (f) other assets.
WIRELESS BUSINESS. "Wireless Business" shall mean the portion of the
Sellers' business relating to the satellite and FM delivery of data.
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