Exhibit
10.3(e)


 


ASSET PURCHASE AND SALE
AGREEMENT


 


 


dated as of


 


October 29, 2003,


 


 


among


 


 


EXPANETS, INC.,


 


 


NORTHWESTERN CORPORATION,


 


 


NORTHWESTERN GROWTH
CORPORATION,


 


 


NORTHWESTERN CAPITAL
CORPORATION,


 


 


and


 


 


AVAYA,
INC.


 

















 


Table of Contents


 


	
  ARTICLE I

  	
   

  
	
   

  	
   

  
	
  Defined Terms

  	
   

  
	
   

  	
   

  
	
  Section 1.01.  Definitions

  	
   

  
	
   

  	
   

  
	
  ARTICLE II

  	
   

  
	
   

  	
   

  
	
  The Transaction

  	
   

  
	
   

  	
   

  
	
  Section 2.01.  Purchase and Sale of the Purchased Assets

  	
   

  
	
  Section 2.02.  Excluded Assets

  	
   

  
	
  Section 2.03.  Assumption of Assumed Liabilities

  	
   

  
	
  Section 2.04.  Excluded Liabilities

  	
   

  
	
  Section 2.05.  Employees

  	
   

  
	
  Section 2.06.  Benefit Plans

  	
   

  
	
   

  	
   

  
	
  ARTICLE III

  	
   

  
	
   

  	
   

  
	
  Consideration; Adjustments

  	
   

  
	
   

  	
   

  
	
  Section 3.01.  Consideration.

  	
   

  
	
  Section 3.02.  Calculation of the Initial Cash Payment Amount

  	
   

  
	
  Section 3.03.  Post-Closing Adjustment to Purchase Price

  	
   

  
	
  Section 3.04.  Allocation of Purchase Price for Tax Purposes

  	
   

  
	
   

  	
   

  
	
  ARTICLE IV

  	
   

  
	
   

  	
   

  
	
  The Closing;
  Conditions of Closing

  	
   

  
	
   

  	
   

  
	
  Section 4.01.  The Closing

  	
   

  
	
  Section 4.02.  Conditions Precedent to the Obligations of the Shareholders and
  the Company

  	
   

  
	
  Section 4.03.  Conditions Precedent to the Obligations of the Purchaser

  	
   

  
	
  Section 4.04.  Efforts to Close

  	
   

  
	
   

  	
   

  
	
  ARTICLE V

  	
   

  
	
   

  	
   

  
	
  Representations
  and Warranties of the Company

  	
   

  
	
   

  	
   

  
	
  Section 5.01.  Existence and Power

  	
   

  
	
  Section 5.02.  Authorization; Binding Effect

  	
   

  
	
  Section 5.03.  Contravention

  	
   

  
	
  Section 5.04.  Consents

  	
   

  



 


i

















 


	
  Section 5.05.  Capitalization

  	
   

  
	
  Section 5.06.  Subsidiaries and Other Securities

  	
   

  
	
  Section 5.07.  Financial Information

  	
   

  
	
  Section 5.08.  Taxes

  	
   

  
	
  Section 5.09.  Litigation

  	
   

  
	
  Section 5.10.  Permits; Compliance with Laws

  	
   

  
	
  Section 5.11.  Absence of Certain Changes or Events

  	
   

  
	
  Section 5.12.  Assets

  	
   

  
	
  Section 5.13.  Real Property and Leaseholds

  	
   

  
	
  Section 5.14.  Equipment, Fixtures and Inventory

  	
   

  
	
  Section 5.15.  Material Contracts

  	
   

  
	
  Section 5.16.  Intellectual Property

  	
   

  
	
  Section 5.17.  Insurance

  	
   

  
	
  Section 5.18.  Books and Records; Company Names; Bank Accounts; Officers and
  Directors

  	
   

  
	
  Section 5.19.  Customers and Suppliers

  	
   

  
	
  Section 5.20.  Environmental Matters

  	
   

  
	
  Section 5.21.  Employees;  ERISA

  	
   

  
	
  Section 5.22.  Certain Business Relationships with the Company or its
  Subsidiaries

  	
   

  
	
  Section 5.23.  Warranties

  	
   

  
	
  Section 5.24.  Brokers, Finders

  	
   

  
	
  Section 5.25.  Solvency of the Company

  	
   

  
	
  Section 5.26.  Misstatements

  	
   

  
	
  Section 5.27.  Full Disclosure

  	
   

  
	
   

  	
   

  
	
  ARTICLE VI

  	
   

  
	
   

  	
   

  
	
  Representations
  and Warranties of the Shareholders

  	
   

  
	
   

  	
   

  
	
  Section 6.01.  Existence and Power

  	
   

  
	
  Section 6.02.  Authorization; Binding Effect

  	
   

  
	
  Section 6.03.  Contravention

  	
   

  
	
  Section 6.04.  Consents

  	
   

  
	
  Section
  6.05.  Litigation

  	
   

  
	
  Section 6.06.  Title to Securities

  	
   

  
	
   

  	
   

  
	
  ARTICLE VII

  	
   

  
	
   

  	
   

  
	
  Representations
  and Warranties of the Purchaser

  	
   

  
	
   

  	
   

  
	
  Section 7.01.  Existence and Power

  	
   

  
	
  Section 7.02.  Authorization; Binding Effect

  	
   

  
	
  Section 7.03.  Contravention

  	
   

  
	
  Section 7.04.  Consents

  	
   

  
	
  Section 7.05.  Litigation

  	
   

  
	
  Section 7.06.  Financing

  	
   

  
	
  Section 7.07.  No Other Representations or Warranties

  	
   

  



 


ii

















 


	
  ARTICLE VIII

  	
   

  
	
   

  	
   

  
	
  Pre-Closing
  Covenants of the Shareholders, the Company and the Purchaser

  	
   

  
	
   

  	
   

  
	
  Section 8.01.  Conduct of Business Pending Closing

  	
   

  
	
  Section 8.02.  Access to Information; Cooperation

  	
   

  
	
  Section 8.03.  Disclosure Schedules

  	
   

  
	
  Section 8.04.  Reporting Requirements

  	
   

  
	
  Section 8.05.  Resignations

  	
   

  
	
  Section 8.06.  Certain Agreements

  	
   

  
	
   

  	
   

  
	
  ARTICLE IX

  	
   

  
	
   

  	
   

  
	
  Covenants
  of the Shareholders, the Company and the Purchaser

  	
   

  
	
   

  	
   

  
	
  Section 9.01.  Public Announcements; Confidentiality

  	
   

  
	
  Section 9.02.  Certain Tax Disclosures

  	
   

  
	
  Section 9.03.  Non-Competition

  	
   

  
	
  Section 9.04.  Reserved

  	
   

  
	
  Section 9.05.  Release

  	
   

  
	
  Section 9.06.  Use of Proceeds

  	
   

  
	
  Section 9.07.  Certain Leases

  	
   

  
	
  Section 9.08.  Bankruptcy Proceedings

  	
   

  
	
  Section 9.09.  Financial Statements

  	
   

  
	
   

  	
   

  
	
  ARTICLE X

  	
   

  
	
   

  	
   

  
	
  Termination

  	
   

  
	
   

  	
   

  
	
  Section 10.01.  Termination

  	
   

  
	
  Section 10.02.  Effect of Termination

  	
   

  
	
  Section 10.03.  Fees and Expenses

  	
   

  
	
   

  	
   

  
	
  ARTICLE XI

  	
   

  
	
   

  	
   

  
	
  Indemnification

  	
   

  
	
   

  	
   

  
	
  Section 11.01.  Indemnification

  	
   

  
	
  Section 11.02.  Notice and Opportunity to Defend

  	
   

  
	
  Section 11.03.  Survival of Indemnification

  	
   

  
	
  Section 11.04.  Threshold; Limitation on Liability

  	
   

  
	
  Section 11.05.  Fraud Exception

  	
   

  
	
  Section 11.06.  Set-Off

  	
   

  
	
  Section 11.07.  Escrow

  	
   

  
	
   

  	
   

  
	
  ARTICLE XII

  	
   

  



 


iii

















 


	
  Miscellaneous

  	
   

  
	
   

  	
   

  
	
  Section 12.01.  Notices

  	
   

  
	
  Section 12.02.  Counterparts

  	
   

  
	
  Section 12.03.  Amendment of Agreement

  	
   

  
	
  Section 12.04.  Successors and Assigns; Assignability

  	
   

  
	
  Section 12.05.  Governing Law

  	
   

  
	
  Section 12.06.  Integration

  	
   

  
	
  Section 12.07.  Severability

  	
   

  
	
  Section 12.08.  Further Assurances

  	
   

  
	
  Section 12.09.  No Third-Party Rights

  	
   

  
	
  Section 12.10.  Enforcement

  	
   

  
	
  Section 12.11.  Submission to Jurisdiction;

  	
   

  
	
  Section 12.12.  Waiver of Jury Trial

  	
   

  
	
  Section 12.13.  No Waiver; Remedies

  	
   

  
	
  Section 12.14.  Ambiguities

  	
   

  
	
  Section 12.15.  Incorporation of Schedules and Exhibits

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedules

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 2.01(a)(i)

  	
  Company Real Property

  	
   

  
	
  Schedule 2.01(a)(ii)

  	
  Company Leaseholds

  	
   

  
	
  Schedule 2.01(b)(i)

  	
  Equipment

  	
   

  
	
  Schedule 2.01(b)(ii)

  	
  Fixtures

  	
   

  
	
  Schedule 2.01(b)(iii)

  	
  Inventory

  	
   

  
	
  Schedule 2.01(c)

  	
  Assigned Agreements

  	
   

  
	
  Schedule 2.01(f)

  	
  Securities

  	
   

  
	
  Schedule 2.01(g)

  	
  Intellectual Property

  	
   

  
	
  Schedule 2.01(h)

  	
  Benefit Plans

  	
   

  
	
  Schedule 2.03(a)(iv)

  	
  Capitalized Leases

  	
   

  
	
  Schedule 2.05(a)

  	
  Employment Offer Persons

  	
   

  
	
  Schedule 2.05(c)

  	
  Certain Other Employees

  	
   

  
	
  Schedule 3.04

  	
  Allocation of Purchase Price

  	
   

  
	
  Schedule 4.02(i)

  	
  Certain Collateral

  	
   

  
	
  Schedule 4.03(i)(i)

  	
  Employment Agreement Persons

  	
   

  
	
  Schedule 4.03(i)(ii)

  	
  Non-Competition Agreement
  Persons

  	
   

  
	
  Schedule 5.04

  	
  Company Consents

  	
   

  
	
  Schedule 5.05(a)

  	
  Capitalization

  	
   

  
	
  Schedule 5.05(b)

  	
  Rights, Options and Warrants

  	
   

  
	
  Schedule 5.05(c)

  	
  Shareholder Agreements

  	
   

  
	
  Schedule 5.06(a)

  	
  Subsidiaries

  	
   

  
	
  Schedule 5.07(a)

  	
  Balance Sheets

  	
   

  
	
  Schedule 5.07(b)

  	
  Other Financial Statements

  	
   

  
	
  Schedule 5.07(e)

  	
  Guarantees

  	
   

  
	
  Schedule 5.07(f)

  	
  Certain Accounts Payable and
  Accounts Receivable

  	
   

  
	
  Schedule 5.07(g)

  	
  Certain Accounting Changes

  	
   

  
	
  Schedule 5.07(h)

  	
  Non-Recurring Items

  	
   

  



 


iv

















 


	
  Schedule 5.08(c)

  	
  Audits

  	
   

  
	
  Schedule 5.08(f)

  	
  Tax Liens

  	
   

  
	
  Schedule 5.09

  	
  Litigation

  	
   

  
	
  Schedule 5.10(a)

  	
  Required Permits

  	
   

  
	
  Schedule 5.10(c)

  	
  Certain Permit Notices

  	
   

  
	
  Schedule 5.11

  	
  Absence of Certain Changes or
  Events

  	
   

  
	
  Schedule 5.13(b)

  	
  Certain Real Property Liens

  	
   

  
	
  Schedule 5.13(d)

  	
  Condemnation or Eminent Domain

  	
   

  
	
  Schedule 5.13(e)

  	
  Company Leases

  	
   

  
	
  Schedule 5.15(a)

  	
  Material Contracts

  	
   

  
	
  Schedule 5.15(d)

  	
  Liens

  	
   

  
	
  Schedule 5.15(e)

  	
  Debt

  	
   

  
	
  Schedule 5.15(f)

  	
  Certain Maintenance Contracts

  	
   

  
	
  Schedule 5.16(d)

  	
  Certain Intellectual Property
  Matters

  	
   

  
	
  Schedule 5.17

  	
  Insurance

  	
   

  
	
  Schedule 5.18(a)

  	
  Certain Books and Records

  	
   

  
	
  Schedule 5.18(b)

  	
  Chief Executive Office

  	
   

  
	
  Schedule 5.18(c)

  	
  Bank Accounts

  	
   

  
	
  Schedule 5.18(d)

  	
  Officers and Directors

  	
   

  
	
  Schedule 5.19(a)

  	
  Customers

  	
   

  
	
  Schedule 5.19(b)

  	
  Suppliers

  	
   

  
	
  Schedule 5.20

  	
  Environmental Matters

  	
   

  
	
  Schedule 5.21(a)

  	
  Employees

  	
   

  
	
  Schedule 5.21(b)

  	
  Employment Agreements

  	
   

  
	
  Schedule 5.21(c)

  	
  Employee Benefit Plans

  	
   

  
	
  Schedule 5.21(e)

  	
  Certain Labor Matters

  	
   

  
	
  Schedule 5.21(g)

  	
  Transaction Entitlements

  	
   

  
	
  Schedule 5.22(a)

  	
  Certain Transactions

  	
   

  
	
  Schedule 5.22(b)

  	
  Related Party Transactions

  	
   

  
	
  Schedule 5.22(c)

  	
  Transactions with the
  Shareholders

  	
   

  
	
  Schedule 5.23

  	
  Warranties

  	
   

  
	
  Schedule 6.04

  	
  Seller Consents

  	
   

  
	
  Schedule 8.06(c)

  	
  Vendor Deposits

  	
   

  
	
  Schedule 9.07

  	
  Certain Leases

  	
   

  
	
  Schedule 11.07(c)

  	
  Specified Liabilities

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibits

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit 3.01

  	
  Form of Purchaser Note

  	
   

  



 


v

















 


ASSET PURCHASE AND SALE
AGREEMENT (this “Agreement”), dated as of October 29, 2003 among (a)
EXPANETS, INC., a Delaware corporation (the “Company”), (b) NORTHWESTERN
CORPORATION (the “Parent”), (c) NORTHWESTERN GROWTH CORPORATION (“NGC”),
(d) NORTHWESTERN CAPITAL CORPORATION (“NCC”, and collectively with the
Parent and NGC, each a “Shareholder”, and collectively, the “Shareholders”),
and (e) AVAYA INC., a Delaware corporation (the “Purchaser”).


 


RECITALS


 


A.  The Parent owns all of the outstanding
capital stock of NGC.


 


B.  NGC owns all of the outstanding (i) shares
of Series B, Series C, Series F and Series G preferred stock of the Company,
and (ii) capital stock of NCC.


 


C.  NCC owns all of the outstanding shares of
Class B common stock of the Company.


 


D.  Collectively, NGC and NCC control
approximately 99% of the voting rights allocated to all classes of equity of
the Company.


 


E.  The Company owns the Purchased Assets (as
defined below).


 


F.  On the terms and subject to the conditions
set forth in this Agreement, the Purchaser desires to acquire from the Company,
and the Company wishes to sell to the Purchaser, the Purchased Assets, as set
forth herein.


 


AGREEMENT


 


In consideration of the
premises and the mutual covenants and the agreements herein set forth, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, hereby
agree as follows:


 


ARTICLE I


 


Defined Terms


 


Section 1.01.  Definitions.  As used in this Agreement, the following
terms have the meanings stated:


 


“2001 Audited Financial Statements” means the audited consolidated
balance sheet, statement of operations, statements of changes in shareholders’
equity and statements of cash flows of the Company and its Subsidiaries as of,
and for the 12-month period ending, December 31, 2001, in the forms attached
hereto as Schedule 5.07(a) and 5.07(b) hereof.


 


“Accounts Receivable” has the meaning stated in Section 2.01(d).


 


“Action” means an action, suit, litigation, arbitration,
investigation, complaint, contest, hearing or other proceeding, whether civil,
criminal, administrative, investigative


 

















 


or appellate, in law or
equity before any arbitrator or Governmental Body, and any settlement or
compromise of any of the foregoing.


 


“Additional Assumed Liabilities” has the meaning stated in Section
2.04(c).


 


“Affiliate” of a Person means any other Person that directly or
indirectly through one or more intermediaries controls, is controlled by or is
under common control with, the Person or any of its Subsidiaries.  The term “control” means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by Contract or otherwise.


 


“Alternative Transaction” means any transaction involving the sale
of all or substantially all of the Purchased Assets by the Company and the
assumption of all or substantially all of the Assumed Liabilities by the
purchaser, in substantially the same manner as the Transactions, but does not
include the Transactions.


 


“Assets” has the meaning stated in Section 5.12(c).


 


“Assigned Agreements” has the meaning stated in Section 2.01(c).


 


“Assignment and Assumption Agreement” has the meaning stated in
Section 4.03(d)(ii).


 


“Assumed Liabilities” has the meaning stated in Section 2.03.


 


“Assumption Agreement” has the meaning stated in Section 4.02(e).


 


“Avaya” means Avaya Inc.


 


“Avaya Credit Agreement” means the Credit and Security Agreement,
dated as of March 31, 2001, between the Company and Avaya, as amended up
through the date of this Agreement.


 


“Avaya Debt” means all Debt, including without limitation, letters
of credit, and other amounts, including, without limitation, principal,
interest, fees, costs, indemnification payments and any other amounts,
outstanding (whether or not then due or owing) under the Avaya Credit Agreement
as of the Closing Date.


 


“Benefit Plan” means any employee pension benefit plan covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code, and any bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option, stock
purchase, restricted stock, stock appreciation rights, phantom stock,
retirement, supplemental retirement, vacation, severance, termination,
disability, death benefit, hospitalization, retiree medical or other plan,
program, insurance, arrangement, agreement, commitment or understanding


 


2

















 


(whether or not legally
binding) providing benefits to any current or former employee, officer,
director or shareholder of the Company or any of its Subsidiaries, including
any such plan or program maintained outside the United States.


 


“Bill of Sale” has the meaning stated in Section 4.03(d)(i).


 


“Board” means the Board of Directors of the Company.


 


“Business” means the business and operations of the Company and its
Subsidiaries as conducted by the Company and its Subsidiaries on the date of
this Agreement and as proposed to be conducted by the Company and its
Subsidiaries as of the date of this Agreement.


 


“Business Day” means any day that is not a Saturday, Sunday or a day
on which banks are required or authorized by Law to be closed in New York.


 


“Capitalized Lease” means any lease that in accordance with GAAP is
capitalized and appears on the balance sheet of the lessee.


 


“Capitalized Lease Amount” means the aggregate dollar amount of all
Capitalized Leases of the Company and its Subsidiaries as of the Closing Date.


 


“Cash Amount” means an amount equal to $112,500,000, minus the
aggregate dollar amount of the Additional Assumed Liabilities, if any.


 


“Cash Proceeds” means an aggregate amount equal to the sum of (a)
the Cash Purchase Price, plus (b) the aggregate amount of cash payments made by
the Purchaser to the Company under the Purchaser Note (including for this
purpose any amounts that would have been paid by the Purchaser to the Company
under the Purchaser Note but are set-off against by the Purchaser pursuant to
Section 11.06 of this Agreement), plus (c) the aggregate amount of Non-Compete
Payments made by the Purchaser to the Company pursuant to Section 9.03(e) of
this Agreement (including for this purpose any Non-Compete Payments that would
have been paid by the Purchaser to the Company under Section 9.03 (e) of this
Agreement but are set-off against by the Purchaser pursuant to Section 11.06 of
this Agreement).


 


“Cash Purchase Price” means an amount equal to (a) the Cash Amount,
minus (b) the Final Company Debt Amount (as finally determined pursuant to
Section 3.03), minus (c) the excess, if any, of Required Net Current Assets,
over Final Net Current Assets (as finally determined pursuant to Section 3.03).


 


“Claims” has the meaning stated in Section 9.05.


 


“Closing” has the meaning stated in Section 4.01.


 


“Closing Balance Sheet” has the meaning stated in Section 3.03(a).


 


3

















 


“Closing Date” has the meaning stated in Section 4.01.


 


“Code” means the Internal Revenue Code of 1986, as amended, and the
related regulations and published interpretations thereunder.


 


“Common Stock” means the Class A, Class B and Class C common stock
of the Company.


 


“Company” means Expanets, Inc., a Delaware corporation.


 


“Company Debt Amount” means the sum of (a) the Capitalized Lease
Amount, plus (b) the Avaya Debt, plus (c) the Congress Debt.


 


“Company Indemnified Person” means the Company, the Shareholders and
each of their respective shareholders, partners, members, managers, directors,
officers, employees, agents and Affiliates.


 


“Company Lease” has the meaning stated in Section 5.13(e).


 


“Company Leaseholds” has the meaning stated in Section 5.13(a).


 


“Company Outside Date” means December 15, 2003.


 


“Company Parties” means the Company’s Subsidiaries, Affiliates,
directors, officers, employees or agents or any investment banker, financial
advisor, attorney, accountant, representative, or any other Person acting on
behalf of the Company or any of its Subsidiaries.


 


“Company Real Property” has the meaning stated in Section 5.13(a).


 


“Company Required Consents” means the Consents set forth on Schedule
5.04 and Schedule 6.04, in each case, that are marked with an
asterisk.


 


“Company’s Accountants” means Deloitte & Touche LLP.


 


“Competing Business” means any business one or more of whose
products or services, including, without limitation, products or services in
the planning or development stage during the Non-Compete Period, compete,
directly or indirectly, in whole or in part, with one or more of the products
or services, including, without limitation, products or services in the
planning or development stage during the Non-Compete Period, produced, provided
or engaged in by the Company or any of its Subsidiaries at any time during the
Non-Compete Period.


 


“Competing Transaction” means any transaction or series of
transactions including, without limitation, an Alternative Transaction
involving a sale or other


 


4

















 


Transfer of securities or
assets, or merger or other combination, whereby at the conclusion of such
transaction or transactions the Parent either directly or indirectly does not
own (a) at least 75% of the outstanding economic and voting interests of the
Company (on a fully-diluted basis) and (b) at least 75% of the assets of the
Company and its Subsidiaries, taken as a whole, as constituted on the date of
this Agreement, other than the Transactions.


 


“Confidential Information” means all information, data, “know-how”,
documents, reports, agreements, interpretations, plans, studies, forecasts and
records (whether in oral or written form, electronically stored or otherwise)
containing or otherwise reflecting information concerning the Purchaser, the
Company, any of their respective Subsidiaries or Affiliates, the Business, the
Assets or the Transactions, including, without limitation, “know-how”, trade
secrets and information not available to the public generally, but does not
include (a) information that is not related to the Purchaser, the Business, the
Purchased Assets or the Assumed Liabilities, (b) information which is or
becomes generally available to the public other than as a result of a
disclosure by the Shareholders or the Company in violation of this Agreement,
and (c) information that was or becomes available to the Shareholders or the
Company on a non-confidential basis from a Person other than the Purchaser or any
other Person who is not otherwise bound by any obligation not to transmit or
disclose the information to the Shareholders or the Company.


 


“Confidentiality Agreement” means the existing confidentiality
agreement, if any, among the Parent, the Company and the Purchaser.


 


“Congress” means Congress Financial Corporation (Western).


 


“Congress Credit Agreement” means the Credit Agreement, dated as of
June 13, 2003, between the Company and Congress, as amended as of the date of
this Agreement.


 


“Congress Debt” means all Debt, including without limitation,
letters of credit, and other amounts, including, without limitation, principal,
interest, fees, costs, indemnification payments and any other amounts,
outstanding (whether or not then due or owing) under the Congress Credit
Agreement as of the Closing Date; provided, however, that for purposes of
calculating Cash Purchase Price and Estimated Cash Purchase Price, letters of
credit up to $7,325,000 shall not be included in the definition of Company Debt
Amount.


 


“Consents” means any approval, consent, authorization or order of,
notice to or registration or filing with, or any other action by, any
Governmental Body or other Person.


 


“Contract” means any agreement, contract, license, lease,
instrument, document, note, bond, mortgage, indenture, guarantee, purchase
order, letter of credit, undertaking, obligation, commitment, or other legally
binding commitment or obligation, whether or not written, each as amended or
modified from time to time.


 


5

















 


“Controlled Group” for any Person at any date means all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Person, are treated
as a single employer under Sections 414(b), 414(c), 414(m) or 414(o) of the
Code.


 


“Credit Agreements” means the Avaya Credit Agreement and the
Congress Credit Agreement.


 


“Current Assets” of the Company and its Subsidiaries at any date
means all assets of the Company and its Subsidiaries that would properly be
classified in accordance with GAAP as current assets as of such date, which for
purposes of the Sale Documents (a) shall not include any payment received after
June 30, 2003 on or in respect of any employee or shareholder notes owed to the
Company or any of its Subsidiaries, but (b) shall include the Company’s or its
Subsidiaries’ cash deposits (but not letters of credit) with vendors to secure
future performance to the extent that such cash deposits are not otherwise
included in Current Assets as of such date, after deducting adequate reserves
in each case where a reserve is proper, determined as of such date.


 


“Current Property” means all sites, facilities, locations, Real
Property and Leaseholds presently owned, leased, used or operated by the
Company or any of its Subsidiaries.


 


“Debt” of a Person at any date means, without duplication (a) all
obligations of the Person (i) for borrowed money, (ii) evidenced by bonds,
debentures, notes or other similar instruments, (iii) under conditional sale,
title retention, installment payment or other similar agreements or
arrangements creating an obligation with respect to the payment of the deferred
purchase price of property or services, (iv) as lessee under Capitalized
Leases, (v) under letters of credit or Guarantees issued for the account of the
Person and (vi) arising under acceptance facilities, (b) all obligations of the
type referred to in clause (a) above of others Guaranteed by the Person, (c)
all obligations of the type referred to in clause (a) above of others secured
by a Lien on any asset of the Person whether or not such obligation is assumed
or Guaranteed by the Person, (d) interest rate, currency and total return
swaps, hedges and similar arrangements, and (e) the aggregate Unfunded Vested
Liabilities under each Benefit Plan of the Person.


 


“Deed” has the meaning stated in Section 4.03(d)(iv).


 


“Dollars” and “$” refer to United States dollars and other
lawful currency of the United States of America from time to time in effect.


 


“Effective Time” means the time when the Company actually receives
the Initial Cash Payment Amount.


 


“Environmental Claims” means any complaint, summons, citation,
notice, directive, order, Action, notice of violation, judicial or
administrative proceeding,


 


6

















 


judgment, letter or other
communication from any Governmental Body, or any third party involving
violations of Environmental Laws or Releases of Hazardous Materials from (a)
any assets, properties or businesses of the Company, any of its Subsidiaries or
any predecessors in interest, (b) from adjoining properties or businesses, or
(c) from or onto any facilities which received Hazardous Materials generated by
the Company, any of its Subsidiaries or any predecessors in interest.


 


“Environmental Laws” means all federal, state, local and foreign
Laws relating to pollution, human health, safety or protection of the
environment and all similar Laws.


 


“Environmental Liabilities” means any monetary obligations, losses,
liabilities (including strict liability), damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable out-of-pocket fees, disbursements and expenses of counsel, out-of-pocket
expert and consulting fees and out-of-pocket costs for environmental site
assessments, remedial investigation and feasibility studies), fines, penalties,
sanctions and interest incurred as a result of any Environmental Claim filed by
any Governmental Body or any third party which relate to any violations of
Environmental Laws, Remedial Actions, Releases or threatened Releases of
Hazardous Materials from or onto (a) any property presently or formerly owned
by the Company or any of its Subsidiaries or a predecessor in interest, or (b)
any facility which received Hazardous Materials generated by the Company or any
of its Subsidiaries or a predecessor in interest.


 


“Environmental Reports” means all written reports, studies,
analyses, tests or monitoring in the possession of or initiated by the Company
or any of its Subsidiaries pertaining to Hazardous Materials in, on, beneath or
adjacent to any Relevant Property, or regarding the Company’s or any of its
Subsidiaries’ compliance with applicable Environmental Laws.


 


“Equipment” means all tangible personal property of a Person,
including, without limitation, all equipment and machinery in all of its forms,
wherever located, now or hereafter existing.


 


“Equity Securities” of a Person means (a) shares of capital stock,
limited liability company membership interests, joint venture interests,
partnership interests or other equity securities, stock or shares of any kind
of such Person, (b) securities directly or indirectly convertible into or
exercisable or exchangeable for any of the securities referred to in (a) above,
(c) rights, warrants, options, calls, subscriptions or commitments of any kind
or character relating to, or entitling any Person directly or indirectly to
purchase or otherwise acquire, any of the securities or rights referred to in
(a) or (b) above, and (d) equity equivalents, interests in the ownership or
earnings of, or equity appreciation, phantom stock or other similar rights of,
or with respect to, such Person.


 


“ERISA” means the Employee Retirement Income Security Act of 1974,
as amended, and the related regulations and published interpretations.


 


7

















 


“Escrow Agent” means  JPMorgan Chase Bank, a New York
corporation, or such other Person as may be mutually acceptable to the
Shareholders, the Company and the Purchaser.


 


“Escrow Agreement” has the meaning stated in Section 4.03(d)(v).


 


“Escrow Amount” has the meaning stated in Section 11.07(c).


 


“Estimated Balance Sheet” has the meaning stated in Section 3.02(a).


 


“Estimated Cash Purchase Price” means an amount equal to (a) the
Cash Amount, minus (b) the Estimated Company Debt Amount, minus (c) the excess,
if any, of Required Net Current Assets, over Estimated Net Current Assets.


 


“Estimated Company Debt Amount” has the meaning stated in Section
3.02(a).


 


“Estimated Net Current Assets” has the meaning stated in Section
3.02(a).


 


“Excluded Assets” has the meaning stated in Section 2.02.


 


“Excluded Liabilities” has the meaning stated in Section 2.04(a).


 


“Expense Amount” has the meaning stated in Section 10.03(c).


 


“Extended Term” has the meaning stated in Section 9.03(e).


 


“Extinguished Liability” has the meaning stated in Section 11.07(c).


 


“Fees and Expenses” has the meaning stated in Section 10.03(a).


 


“Final Closing Balance Sheet” has the meaning stated in Section
3.03(c).


 


“Final Company Debt Amount” has the meaning stated in Section
3.03(c).


 


“Final Net Current Assets” has the meaning stated in Section
3.03(c).


 


“Fixtures” means, to the extent not covered by the definition of
Equipment, all fixtures appurtenant to Real Property or Leaseholds in all of
their forms, wherever located.


 


“Fundamental Representations” means the representations and
warranties set forth in Sections 5.01, 5.02, 5.03, 5.04, 5.05(a), 5.07, 5.12,
5.15(d) and (e), 6.01, 6.02, 6.03 and 6.04.


 


“Fundamental Representation Indemnification” means the
indemnification under Section 11.01(a)(i) with respect to the Fundamental
Representations.


 


8

















 


“GAAP” means (a) with respect to the 2001 Audited Financial
Statements, generally accepted accounting principles in the United States and
(b) other than with respect to the 2001 Audited Financial Statements, generally
accepted accounting principles in the United States as applied by the Company
in the preparation of the 2001 Audited Financial Statements, except as
otherwise specifically set forth on Schedule 5.07(g); provided, however,
to the extent the 2001 Audited Financial Statements were not prepared in
accordance with generally accepted accounting principles in the United States,
“GAAP” means generally accepted accounting principles in the United States.


 


“General Escrow Amount” has the meaning stated in Section 11.07(c).


 


“Governmental Body” means any government or any agency, bureau,
commission, court, whether supranational, national, federal, state, regional,
provincial, local, domestic or foreign.


 


“Guarantee” means any guarantee, assurance of performance, standby
letter of credit, or other obligation by which any Person agrees to pay,
perform or be responsible for, in whole or in part, the obligations or
Liabilities of any other Person, whether or not contingent upon any other event
or circumstance.


 


“Hazardous Materials” means, without regard to amount and/or
concentration (a) any element, compound, or chemical that is defined, listed or
otherwise classified as a contaminant, pollutant, toxic pollutant, toxic or
hazardous substances, extremely hazardous substance or chemical, hazardous waste,
medical waste, biohazardous or infectious waste, special waste, or solid waste
under Environmental Laws, (b) petroleum, petroleum-based or petroleum-derived
products, (c) polychlorinated biphenyls, (d) any substance exhibiting a
hazardous waste characteristic including but not limited to corrosivity,
ignitibility, toxicity or reactivity as well as any radioactive or explosive
materials, and (e) any raw materials, building components, including but not
limited to asbestos-containing materials and manufactured products containing
Hazardous Materials.


 


“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the related regulations and published interpretations.


 


“Indemnification Notice” has the meaning stated in Section 11.02(a).


 


“Indemnitee” has the meaning stated in Section 11.02(a).


 


“Indemnitor” has the meaning stated in Section 11.02(a).


 


“Indemnity Payment” has the meaning stated in Section 11.07.


 


“Independent Accounting Firm” means PriceWaterhouseCoopers, LLP.


 


9

















 


“Initial Cash Payment Amount” means an amount equal to (a) the
Estimated Cash Purchase Price, minus (b) the Escrow Amount.


 


“Intellectual Property” means all copyrights, uncopyrighted works,
trademarks, trademark rights, trademark registrations, patents, including,
without limitation, all reissues, divisions, continuations and extensions
thereof, patent rights, unpatented inventions, service marks, logos, trade
names, trade name rights, corporate names, computer software licenses, data,
software, permits, trade secrets, know-how, protected models, designs, methods,
concepts, plans, specifications, schematics, formulas, inventions, technology,
processes and intellectual property rights and other proprietary rights,
whether or not subject to statutory registration, together with applications
and licenses for, and the goodwill of the Business relating to, any of the
foregoing.


 


“Intellectual Property Assignment Agreement” has the meaning stated
in Section 4.03(d)(iii).


 


“Inventory” means all finished products, work in process, raw
materials, goods in transit, goods at customer sites and other inventory or
goods held for sale of a Person in all of its forms, wherever located, now or
hereafter existing.


 


“Knowledge of the Company” means the knowledge, after reasonable
inquiry and review of such person’s own files and inquiry of those other
officers and employees of the Company who would reasonably be expected to have
knowledge of the specific matter at issue, of any of Marty Snella, Christopher
Younger, Lonnie Clark, Regina Vegliante, Tim Atkinson, and the Company’s and
its Subsidiaries’ directors and executive officers, Regional Presidents and the
Company’s Director of Human Resources.


 


“Law” means each applicable treaty, statute, law, rule, regulation
or order by any Governmental Body and each judgment, injunction, order, writ,
decree or award of any Governmental Body.


 


“Leaseholds” means all real property interests as lessee, together
with all tenements, hereditaments, easements, rights of way, privileges and
appurtenances to those interests and improvements and Fixtures on or to those
interests.


 


“Liability” of any Person means any Debt, liability, commitment, or
obligation of any kind or character, whether or not arising under any Guarantee
or other Contract, whether or not secured by any Lien, and whether or not
accrued, fixed, absolute, contingent, matured, unmatured, liquidated,
unliquidated, due or to become due.


 


“Lien” means any security interest, lien (statutory or otherwise),
claim, pledge, mortgage, deed of trust, hypothecation, charge, easement,
deposit arrangement, preference, priority, license, lease, conveyance of any
right, option, right of first refusal or offer, conditional sales or other
title retention agreement, restriction, covenant, condition or encumbrance of
any kind, including, without limitation, any restriction on


 


10

















 


use, voting, transfer,
receipt of income or exercise of any other attribute of ownership, and the
filing of or agreement to give any financing statement under the uniform
commercial code or comparable law of any jurisdiction to evidence any of the
foregoing.


 


“Losses” means any and all liabilities, obligations, losses,
damages, costs, expenses, claims, penalties, Actions, judgments, diminution in
value, disbursements of any kind or nature whatsoever, interest, fines, cleanup
costs, settlements, costs of preparation and investigation, costs incurred in
enforcing any of the Sale Documents and reasonable attorneys’ fees and
expenses, including without limitation, any Taxes arising out of or resulting
from any payment under Article XI hereof.


 


“Maintenance Fee Agreement” means the Maintenance Fee Agreement,
dated as of March 31, 2000, between the Company and Avaya (as successor to
Lucent Technologies Inc.), as amended by Amendment No. 1 effective as of March
31, 2001.


 


“Material Adverse Effect” means (a) a material adverse effect upon
any of (i) the Business, management, employees, results, operations, the
Assets, the liabilities, condition (financial or otherwise), or prospects of
the Company and its Subsidiaries taken as a whole, or (ii) the legality,
validity or enforceability of the Sale Documents, or (b) the impairment,
hindrance or adverse effect in any material respect upon the ability of the
Company, any of its Subsidiaries or the Shareholders to perform any of their
obligations under the Sale Documents.


 


“Material Contract” has the meaning stated in Section 5.15(a).


 


“Net Current Assets” means an amount equal to the aggregate dollar
amount of (a) the Current Assets of the Company and its Subsidiaries included
in the Purchased Assets as of the Closing Date, minus (b) the Total
Liabilities of the Company and its Subsidiaries as of the Closing Date.


 


“Newly-Hired Employees” means any employee of the Company as of the
Closing Date who becomes an employee of the Purchaser as of the Closing Date.


 


“Newly-Hired Employees’ Liabilities” has the meaning stated in
Section 2.05(b).


 


“Non-Compete Payments” has the meaning stated in Section 9.03(e).


 


“Non-Compete Period” means the three-year period beginning on the
Closing Date.


 


“Other Employees” has the meaning stated in Section 2.05(c).


 


“Other Employees’ Liabilities” has the meaning stated in Section
2.05(c).


 


“Other Leases” has the meaning stated in Section 9.07.


 


11

















 


“PBGC” means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.


 


“Permit” means any permit, license, approval, consent, permission,
notice, franchise, confirmation, endorsement, waiver, certification,
registration, qualification, clearance, variance or other authorization issued,
granted or given by or under the authority of any Governmental Body or pursuant
to any federal, state, local or foreign Law.


 


“Permitted Liens” means (a) Liens for Taxes incurred in the ordinary
course of business consistent with past practice, if a specific reserve shall
have been made therefor on the Closing Balance Sheet (as finally agreed upon
pursuant to Section 3.03), (b) statutory Liens of landlords, Liens of carriers,
warehouse persons, mechanics and material persons and other Liens imposed by
Law incurred in the ordinary course of business consistent with past practice,
if a specific reserve shall have been made therefor on the Final Closing
Balance Sheet, (c) purchase money Liens incurred in the ordinary course of
business, consistent with past practice, provided that such Liens (i) do not exceed
the value of the Equipment or Inventory so acquired and (ii) were not incurred
in violation of any representation, warranty, covenant or agreement contained
in the Sale Documents, (d) easements, rights-of-way, restrictions and other
similar covenants or encumbrances which, in the aggregate, do not materially
interfere with the normal and ordinary operation of the Business, and (e) Liens
securing the Company Debt Amount.


 


“Person” means any individual, corporation, partnership, limited
liability company, association, joint venture, trust or any other entity or
organization, including, without limitation, any Governmental Body.


 


“Personnel” means all former and current employees, agents,
consultants and independent contractors of the Company and its Subsidiaries who
have contributed to or participated in the conception or development of any of
the Required Intellectual Property.


 


“Post-Closing Extinguished Liability Amount” has the meaning stated
in Section 11.07(e).


 


“Pre-Closing Extinguished Liability Amount” has the meaning stated
in Section 11.07(c).


 


“Preferred Stock” means the Series A, Series B, Series C, Series D,
Series E, Series F and Series G preferred stock of the Company.


 


“Prohibited Transaction” means any transaction described in Section
406 of ERISA or Section 4975 of the Code, for which an exemption does not
apply.


 


12

















 


“Purchase Price” means the sum of (a) the Cash Purchase Price, plus
(b) the aggregate principal amount of the Purchaser Note, plus (c) the sum of
all of the Non-Compete Payments.


 


“Purchased Assets” has the meaning stated in Section 2.01.


 


“Purchaser” has the meaning stated in the heading of this Agreement,
and its successors and permitted assigns.


 


“Purchaser Indemnified Person” means the Purchaser and its
Affiliates and each of their respective shareholders, partners, members,
managers, directors, officers, employees, agents and Affiliates.


 


“Purchaser Note” has the meaning stated in Section 3.01.


 


“Purchaser Outside Date” means December 15, 2003.


 


“Purchaser Required Consents” means the Consents set forth on Schedule
7.04.


 


“Purchaser’s Accountants” means PricewaterhouseCoopers LLC.


 


“Real Property” means all real property interests, other than as
lessee, together with all tenements, hereditaments, easements, rights of way,
privileges and appurtenances to those interests and improvements and fixtures
on or to those interests.


 


“Release” means any spilling, leaking, pumping, emitting, emptying,
discharging, injecting, escaping, leaching, migrating, dumping, or disposing of
Hazardous Materials (including the abandonment or discarding of barrels,
containers or other closed receptacles containing Hazardous Materials) into the
environment.


 


“Relevant Property” means all sites, facilities, locations, Real
Property and Leaseholds (a) presently or formerly owned, leased, used or
operated by the Company or any of its Subsidiaries (whether or not such
properties are currently owned, leased, used or operated by the Company or any
of its Subsidiaries), (b) at which any Hazardous Material has been transported,
disposed, treated, stored or released by or on behalf of the Company or any of
its Subsidiaries, or (c) that are directly adjacent to any sites, facilities,
locations, Real Property or Leaseholds presently or formerly owned, leased,
used or operated by the Company or any of its Subsidiaries.


 


“Remedial Action” means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate or in any other way
address Hazardous Materials in the indoor or outdoor environment, (b) prevent
or minimize a Release or threatened Release of Hazardous Materials so they do
not migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform pre-remedial studies and
investigations and post-remedial operation and maintenance activities, or (d)
any other actions authorized by Environmental Laws.


 


13

















 


“Reportable Event” means any event stated in Section 4043 of ERISA
for which reporting has not been waived by the Department of Labor.


 


“Required Intellectual Property” has the meaning stated in Section
5.16(a).


 


“Required Leases” has the meaning stated in Section 9.07.


 


“Required Net Current Assets” means (a) $51,000,000.00, minus (b)
the Vendor Deposit Reduction Amount as of the Closing Date.


 


“Required Permits “ has the meaning stated in Section 5.10(a).


 


“Restricted Payment” means (a) any dividend or other distribution of
any kind on or in respect of any Equity Securities, and (b) any payments in
cash or otherwise, on account of the purchase, redemption, retirement or
acquisition of (i) any Equity Securities, or (ii) any option, warrant or other
right to acquire any Equity Securities.


 


“Sale Documents” means this Agreement, the Purchaser Note, the
Transitional Services Agreement, each other document, agreement and instrument
to be executed and delivered by any of the Shareholders, the Company, any of
the Company’s Subsidiaries or the Purchaser pursuant to Article IV of this
Agreement, and all other documents and instruments by which the Purchased
Assets are transferred by the Company to the Purchaser and the Confidentiality
Agreement and the Escrow Agreement.


 


“Schedule Updates” has the meaning stated in Section 8.03(a).


 


“Securities” means (a) Equity Securities, (b) notes, bonds,
debentures, certificates of deposit and all other evidences of indebtedness or
Debt, (c) securities directly or indirectly convertible into or exercisable or
exchangeable for any of the securities referred to in (b) above, (d) rights,
warrants, options, calls, subscriptions or commitments of any kind or character
relating to, or entitling any Person to purchase or otherwise acquire, any of
the securities or rights referred to in (b) or (c) above, and (d) all other
securities of any type.


 


“Securities Act” means the Securities Act of 1933, as amended, and
the related regulations and published interpretations.


 


“Solvent” means, with respect to the Company, that as of the date of
determination (a) the sum of the Company’s Debt (including contingent
liabilities, but excluding Liabilities to the Shareholders and their
Affiliates) does not exceed all of the Company’s property, at a fair valuation,
(b) the present fair saleable value of the property of the Company is not less
than the amount that will be required to pay the probable Liabilities of the
Company’s then existing Debts (excluding Liabilities to the Shareholders and
their Affiliates) as they become absolute, and matured, and (c) the Company
does not intend to incur, or believe (nor should it reasonably believe) that it


 


14

















 


will incur, Debt beyond
its ability to pay such Debt as it becomes due.  For purposes of this definition, the amount of any contingent
liability at any time shall be computed as the amount that, in light of all of
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability
(irrespective of whether such contingent liabilities meet the criteria for
accrual under Statement of Financial Accounting Standard No. 5).


 


“Specified Liability Amount” has the meaning stated in Section
11.07(c).


 


“Specified Liability Escrow Amount” has the meaning stated in
Section 11.07(c).


 


“Subsidiary” of any Person means any Person (a) of which such first
Person (either alone or through or together with any other Subsidiary) owns,
directly or indirectly, more than 50% of the Equity Securities of such other
Person, the holders of which are generally entitled to vote for the election of
the board of directors, general partner, the manager or other governing body
of, or otherwise control the business and affairs of, such other Person, or (b)
the operations of which are consolidated with such first Person, pursuant to
GAAP, for financial reporting purposes. 
Unless the context otherwise requires, references to one or more
Subsidiaries are references to Subsidiaries of the Company.


 


“Subsidiary Assets” has the meaning stated in Section 5.12(b).


 


“Target Date” means the date which is five Business Days after
October 29, 2003, and if such date is not a Business Day, the next succeeding
Business Day after such date.


 


“Tax” or “Taxes” means all taxes, charges, fees, levies,
duties, imposts, deposits, withholdings, restrictions, fines, interests,
penalties, additions to tax or other tax, assessment or charge of any kind,
including, without limitation, income, excise, personal property, real
property, withholding, sales, use, gross receipts, value added, franchise,
profits, capital, premium, occupational, production, severance, ad valorem,
occupancy, stamp, transfer, employment, payroll, unemployment insurance, social
security, disability, workers compensation, custom duties, license recording,
documentation and registration fees imposed by any Governmental Body, and all
interest and penalties thereon and additions thereto.


 


“Tax Indemnification” means the indemnification under Section
11.01(a)(iv).


 


“Tax Return” means any federal, state, local or foreign return,
report, claim for refund, declaration, statement or other form relating to
Taxes, including, without limitation, any schedule thereto or amendment
thereof.


 


“Termination Fee” has the meaning stated in Section 10.03(d).


 


“Third Party Claim” has the meaning stated in Section 11.02(b).


 


15

















 


“Threshold Amount” means an amount equal to $1,000,000.


 


“Total Liabilities” means an amount equal to the aggregate dollar
amount of all Liabilities of the Company and its Subsidiaries as of the Closing
Date included in Assumed Liabilities, but not including the Company Debt
Amount.


 


“Transactions” means the transactions contemplated by, or described
in, the Sale Documents, including, without limitation, the sale, transfer,
assignment, conveyance and delivery of the Purchased Assets by the Company to
the Purchaser.


 


“Transfer” means a direct or indirect offer, transfer, sale,
assignment, pledge, conveyance, hypothecation, license, sublicense or other
disposition of all or any interest.


 


“Transitional Services Agreement” has the meaning stated in Section
4.03(d).


 


“Unfunded Vested Liabilities” of a Person means, with respect to any
Benefit Plan at any time, the excess, if any, of (a) the present value of all
vested nonforfeitable benefits under the Benefit Plan, over (b) the fair market
value of all Benefit Plan assets allocable to those benefits, all determined as
of the then most recent valuation date for the Benefit Plan, but only to the
extent that the excess represents a potential liability of the Person or any
member of its Controlled Group to the PBGC or the Benefit Plan under Title IV
of ERISA.


 


“Vendor Deposit Reduction Amount” has the meaning stated in Section
8.06(c).


 


“Vendor Deposits” has the meaning stated in Section 8.06(c).


 


“WARN Act” means the Workers Adjustment and Retraining Notification
Act, 29 U.S.C. §2101, et. seq.


 


ARTICLE II


 


The Transaction


 


Section 2.01.  Purchase
and Sale of the Purchased Assets.  Upon
the terms and subject to the conditions of this Agreement, at the Closing, for
the consideration payable by the Purchaser to the Company in accordance with
Article III, the Company will, and the Shareholders, jointly and severally,
will cause the Company and its Subsidiaries to, sell, transfer, assign, convey
and deliver to the Purchaser, and the Purchaser will purchase, accept and
acquire from the Company and all of its Subsidiaries, all of the Company’s and
its Subsidiaries’ right, title and interest in, to and under all of the
Purchased Assets, free and clear of Liens, except for Permitted Liens.


 


The term “Purchased
Assets” means all the business, goodwill, operations as a going concern,
assets, properties, interests and rights owned, leased, licensed or used by, or
relating to or arising out of the business or operations of, the Company and
all of its Subsidiaries, of every kind and character, real, personal and mixed,
tangible and intangible, and wherever situated as of


 


16

















 


the Effective Time, including, without limitation, the following, but
excluding only the Excluded Assets:


 


(a)  all (i) Real Property and (ii)
Leaseholds in which the Company or one of its Subsidiaries has an interest,
including, without limitation, those set forth on Schedule 2.01(a)(i)
and Schedule 2.01(a)(ii), respectively;


 


(b)  all (i) Equipment, (ii)
Fixtures and (iii) Inventory in which the Company or one of its Subsidiaries
has an interest or which relates to, is used in the business or operations of,
or arises out of the business or operations of, the Company or its
Subsidiaries, whether owned, rented or leased by, or on loan to the Company or
one of its Subsidiaries, including, without limitation, those set forth on Schedule
2.01(b)(i), Schedule 2.01(b)(ii) and Schedule 2.01(b)(iii),
respectively;


 


(c)  all right, title and interest
of the Company and its Subsidiaries now or hereafter existing, in, to and under
any Contracts, including, without limitation, all Material Contracts and those
Contracts set forth on Schedule 2.01(c) (collectively, the “Assigned
Agreements”), as each of the Assigned Agreements may have been amended or
otherwise modified prior to the date of this Agreement;


 


(d)  the accounts receivable of the
Company and its Subsidiaries, including, without limitation, (i) invoiced
accounts receivable, (ii) accrued but uninvoiced accounts receivable, and (iii)
all other rights to payment for goods or services sold, delivered or performed,
in each case other than any accounts receivable from the Shareholders or any
Affiliate of the Shareholders (collectively, the “Accounts Receivable”);


 


(e)  all security deposits, refunds,
deposits and prepaid expenses of the Company and its Subsidiaries and all
vendor rebate accounts and prospective rebates, whether soft dollar or hard
dollar;


 


(f)  all Securities in which the
Company or one of its Subsidiaries has an interest, including, without
limitation, the Securities set forth on Schedule 2.01(f), but not
including any Equity Securities which represent an interest in any of the
Company’s Subsidiaries;


 


(g)  all Intellectual Property in
which the Company or one of its Subsidiaries has an interest, including,
without limitation, the Intellectual Property set forth on Schedule 2.01(g)
 and the Company’s and its
Subsidiaries’ names and all trade names (and associated marks, logos and
styles) used at any time by the Company or any of its Subsidiaries;


 


(h)  all right, title and interest
of the Company and its Subsidiaries in, to and under, and all assets of, the
Benefit Plans set forth on Schedule 2.01(h);


 


(i)  all other rights, assets and
goodwill of the Company and its Subsidiaries, including, without limitation,
all (i) buildings, (ii) tangible and intangible personal


 


17

















 


property, (iii) Permits,
(iv) the right to carry on the Business, (v) books of account, general,
financial and accounting records, files, invoices and customer’s and supplier’s
lists, and (vi) causes of action, claims and demands of whatever nature arising
from or in connection with the business and operation of the Company and its
Subsidiaries; and


 


(j)  all proceeds and products of
any and all of the foregoing Purchased Assets.


 


Section 2.02.  Excluded
Assets.  The Company and its
Subsidiaries will retain (and the Purchased Assets will not include) the
following (collectively, the “Excluded Assets”):


 


(a)  all of the Company’s rights
under the Sale Documents;


 


(b)  the Purchase Price payable to
the Company pursuant to Article III;


 


(c)  the articles of incorporation,
minute books, and stock books of the Company and its Subsidiaries;


 


(d)  all Tax-related assets of the
Shareholders, the Company and their respective Subsidiaries ; and


 


(e)  all Equity Securities which represent
an interest in any Subsidiary of the Company.


 


Section 2.03.  Assumption
of the Assumed Liabilities.  Upon
the terms and subject to the conditions of this Agreement, at the Closing, the
Purchaser will execute and deliver to the Company the Assumption Agreement,
pursuant to which the Purchaser will, effective as of the Effective Time,
assume only the Assumed Liabilities.


 


The term “Assumed
Liabilities” means:


 


(a)  the (i) accounts payable of the
Company and its Subsidiaries arising out of the purchase of goods and services
by the Company in the ordinary course of business, but only to the extent such
Liabilities are specifically and expressly set forth on the Closing Balance
Sheet (subject to adjustment pursuant to Section 3.03), (ii) accrued Liabilities
of the Company and its Subsidiaries for employee compensation, including
Liabilities for accrued and unpaid employee bonuses for 2003, but excluding
unpaid employee bonuses (whether or not accrued) arising out of or relating to
any period prior to January 1, 2003, lease payments and other Liabilities of
the Company and its Subsidiaries arising in the ordinary course of business,
but only to the extent such Liabilities are specifically and expressly set
forth on the Closing Balance Sheet (subject to adjustment pursuant to Section
3.03), (iii) payments relating to the agreement by the Company to reimburse
employees of Lucent that became employees of the Company in connection with the
GEM acquisition for pension benefits that such employees forfeited in connection
with such transaction, but only with respect to Newly-Hired Employees, and only
to the extent such Liabilities are specifically and expressly set forth on the
Closing Balance Sheet (subject to adjustment pursuant to Section 3.03), (iv)
the Liabilities assumed by the


 


18

















 


Purchaser under Section
2.05(c), and (v) obligations of the Company and its Subsidiaries under the
Assigned Agreements arising after the Effective Time, in each case, excluding
Liabilities not paid in the ordinary course of business consistent with past
practice;


 


(b)  the Company’s obligations (i)
for the Avaya Debt and the Congress Debt, and (ii) under the Capitalized Leases
set forth on Schedule 2.03(b), in an amount not to exceed the
Capitalized Lease Amount used for purposes of calculating the Final Company
Debt Amount in Section 3.03 hereof; and


 


(c)  the Additional Assumed
Liabilities, if any, elected to be assumed by the Purchaser pursuant to Section
2.04(c) below,


 


in each case, only if and to the
extent the same have not been paid or discharged prior to the Closing Date.


 


Section 2.04.  Excluded
Liabilities.


 


(a)  Purchaser Not Assuming Excluded
Liabilities.  Notwithstanding any
provision of the Sale Documents to the contrary, the Purchaser will not accept,
acquire, assume or become liable to pay, perform or discharge, the Excluded
Liabilities.


 


The term “Excluded
Liabilities” means any of the following Liabilities:


 


(i)  any Liability owed to either of
the Shareholders or any of their Affiliates or any other inter-company Debt,
Liabilities or other obligations, including, without limitation, any accrued or
declared dividends, distributions or other obligations;


 


(ii)  any Liability with respect to
any Debt of the Company or any of its Subsidiaries, except as expressly
provided in Section 2.03(b) above;


 


(iii)  any Liability of the Company
or any of its Subsidiaries arising out of, based upon, relating to or otherwise
attributable to any Action (A) that is pending, threatened or completed on or
prior to the Effective Time, or (B) that arises out of or is based upon any
act, omission, event, condition or circumstance (actual or alleged) taking
place or existing prior to the Effective Time, including, without limitation,
(aa) the Settlement Agreement and General Release dated as of March 1, 2003,
between the Company and Joel A. Schleicher, (bb) the settlement with respect to
the termination of Jim Walker’s employment with the Company, (cc) any
securities law Actions or class action lawsuits, (dd) litigation involving the
Company’s and its Subsidiaries’ trade creditors, and (ee) discrimination and
sexual harassment claims;


 


(iv)  any Liability related to or
arising out of any obligation to repurchase, redeem or otherwise acquire any Common
Stock or other Securities of the Company, any of its Subsidiaries or any other
Person, whether arising out of a “put” option, right of rescission or
otherwise, or to pay any dividends or make any distributions in respect of the
Common Stock or other Equity Securities of the Company;


 


19

















 


(v)  any Tax Liability of the
Shareholders, the Company, their Subsidiaries or any of their Affiliates, or
Liabilities due to the failure (or alleged failure) of any Shareholder, the
Company, their Subsidiaries or any of their Affiliates to timely and fully pay
such Taxes;


 


(vi)  any Liability (A) which arises
out of, relates to or results from any income, sales, use or other Tax or any
expense arising from or associated with the conveyance and transfer to the
Purchaser of the Purchased Assets, or (B) with respect to Taxes related to the
operation of the Business by the Company and its Subsidiaries or ownership by
the Company or its Subsidiaries of their assets, or otherwise relates to any
period of time prior to the Closing Date, including without limitation, any
Liability relating to or resulting from, any state sales Tax audit of the
Company and its Subsidiaries;


 


(vii)  any Liability of the Company,
any of its Subsidiaries, the Shareholders or any of their Affiliates arising
out of or in connection with any generation, use, storage, transportation,
disposal, cleanup or release of any Hazardous Materials or violation of
Environmental Laws which occurred or exists on or prior to the Effective Time,
regardless of whether it was discovered or was capable of discovery on or prior
to the Effective Time;


 


(viii)  any Liability which arises
out of, relates to, or is otherwise attributable to any of the Excluded Assets,
or arises out of or results from any income, sales, use or other Tax or any
expense arising from the distribution to, or ownership by, the Company, any of
its Subsidiaries or the Shareholders of any of the Excluded Assets or
associated with the realization of the benefits of any of the Excluded Assets;


 


(ix)  any Liability (A) of the
Company or any of its Subsidiaries which is inconsistent with any
representation or warranty of the Company, any of its Subsidiaries or either of
the Shareholders contained in the Sale Documents or which was incurred in
violation of any covenant, agreement or condition contained in the Sale
Documents, or (B) for breach or violation of any Law on or prior to the
Effective Time;


 


(x)  any Liability of the Company
incurred on or after the Effective Time;


 


(xi)  any Liability (A) for breach
or non performance of any Contract on or prior to the Effective Time,
including, without limitation, the Assigned Agreements, (B) under any Contract
which is not set forth on Schedule 2.01(c), (C) under any Contract which
the Purchaser shall not have received a correct and complete copy of prior to
the date of this Agreement, except for the Company’s maintenance Contracts that
are substantially similar to the standard form of agreement provided to the Purchaser
prior to the date of this Agreement, (D) except as may expressly be agreed to
by the Purchaser in writing, under any Contract (I) with any Shareholder or any
Affiliate of the Company or any Shareholder, or (II) relating to any foreign
exchange or similar transactions, (E) relating to the disgorgement, refund or
reimbursement of any payments under the Maintenance Fee Agreement, including,
without limitation, any such Liabilities arising out of the audit


 


20

















 


of the payments due under
the Maintenance Fee Agreement, or (F) with respect to leases for unoccupied
facilities;


 


(xii)  any Liability (A) under or in
connection with any Benefit Plan, (B) arising out of or by reason of a complete
or partial withdrawal from a multi-employer pension plan within the meaning of
ERISA or termination or withdrawal from any other Benefit Plan, as of a date
prior to or as of the Effective Time by any Shareholder, the Company or any
other Person who is part of a Controlled Group with the Company, (C) that
constitutes an Unfunded Vested Liability, (D) that constitutes the Other
Employees’ Liabilities, (E) for stay bonuses, change of control payments or
other similar items, including, without limitation, any retention payments to
Chris Younger or Marty Snella, or (F) for unpaid employee bonuses (whether or
not accrued) arising out of or relating to any period prior to January 1, 2003;


 


(xiii)  any Liability relating to
the employees of the Company or any of its Subsidiaries or the employment or
termination of any employee, including, without limitation, any Liability
relating to compensation, salary, bonus, vacation, benefits, severance,
pensions, unemployment insurance and related Taxes accruing, arising, or based
on or relating to facts, issues or circumstances occurring, prior to the
Effective Time, other than for Newly-Hired Employees’ Liabilities and the
Liabilities assumed by the Purchaser under Section 2.05(c);


 


(xiv)  any Liability in respect of
any claim, regardless of when made or asserted, which arises from, out of or is
based upon the negligence, strict liability of, or any express or implied
representation, warranty, agreement or guarantee made by, the Company or any of
its Subsidiaries, or alleged to have been made, or which is imposed or asserted
to be imposed by operation of law, in connection with any product sold, shipped
or manufactured by or on behalf of the Company or any of its Subsidiaries, or
any service provided or sold by or on behalf of the Company or any of its
Subsidiaries, including, without limitation, any claim relating to the repair
or replacement of any such product and any claim seeking recovery for property
damage, consequential damage, lost revenue or income or personal injury, except
to the extent included in accounts payable or accrued liabilities as set forth
on the Closing Balance Sheet (subject to adjustment pursuant to Section 3.03);


 


(xv)  any Liability arising out of,
relating to, or for any rebate, refund, return of product sold, or Inventory
consignment, except to the extent included in accounts payable or accrued
liabilities as set forth on the Closing Balance Sheet (subject to adjustment
pursuant to Section 3.03); and


 


(xvi)  any other Liability not
expressly included in the Assumed Liabilities.


 


(b)  Company and Shareholders to Perform
Excluded Liabilities.  The Purchaser
will acquire the Purchased Assets free and clear of all Liabilities except for
the Assumed Liabilities.  The
Shareholders and the Company, jointly and severally, will remain responsible
for and will, subject to any defenses, claims, set-offs or other rights or
mutual agreements the Company or the


 


21

















 


Shareholders may have, duly and timely pay, perform and discharge in full
all Excluded Liabilities; provided, however, that neither (i) the
exercise by the Shareholders and/or the Company of any or all such defenses,
claims, set-offs or other rights or agreements, nor (ii) the failure of the
Shareholders and the Company to fully satisfy any or all of the Excluded
Liabilities, shall in any way impose any Liability on the Purchaser, its
Subsidiaries or Affiliates.


 


(c)  Additional Assumed Liabilities.  Notwithstanding the provisions of Sections
2.04(a) and (b) above, on the date which is at least one Business Day prior to
the Closing Date, the Purchaser may, but shall not be obligated to, without the
consent of the Company or the Shareholders, elect in writing to (i) assume any
Excluded Liabilities relating to, owed to, or in respect of, current or former
employees of the Company and its Subsidiaries (such assumed liabilities being
the “Additional Assumed Liabilities”), and (ii) reduce the Cash Amount,
and consequently the Purchase Price, dollar-for-dollar by the aggregate dollar
amount of the Additional Assumed Liabilities assumed by the Purchaser.  In such an event, the Additional Assumed
Liabilities shall (x) be considered to be “Assumed Liabilities”, and (y) not be
considered to be “Excluded Liabilities”. 
Nothing in this Section 2.04(c) shall confer any rights or remedies
under or by reason of this Agreement or any other Sale Document on any Person,
and no third party shall have any right to enforce any provision of this
Section 2.04(c).


 


Section 2.05.  Employees.


 


(a)  Employment Offers.  The Purchaser will make employment offers to
substantially all of the employees of the Company listed on Schedule 2.05(a)
hereto.  Except as listed on Schedule
2.05(a), such employment offers will be offers of at will employment at
substantially the same compensation for each employee as such employee receives
as of the date of this Agreement.  The
Purchaser may, in its sole discretion, modify or amend any employment offer or
any employment terms or benefits at any time after the Closing Date for any
reason.


 


(b)  Newly-Hired Employees.  With respect to all Newly-Hired Employees,
the Purchaser will be responsible for, and shall pay, all liabilities and
obligations to the Newly-Hired Employees, but only to the extent that such
liabilities and obligations either (i) relate to the period after the Effective
Time, or (ii) represent accrued salaries and wages from the date of the last
regular payroll date of the Company prior to the Closing Date through the
Closing Date and, as such, are specifically, accurately and fully reserved for
and included in Current Liabilities on the Closing Balance Sheet (as deemed
final under Article III) (such liabilities and obligations being the “Newly-Hired
Employees’ Liabilities”).  Except
(A) for the Newly-Hired Employees’ Liabilities, (B) for the Purchaser’s
liabilities and obligations expressly set forth in Section 2.06 below with
respect to the Benefit Plans referred to therein, or (C) for accrued salaries
and wages referred to in clause (ii) above that are specifically, accurately
and fully reserved for and included in Current Liabilities on the Closing
Balance Sheet (as deemed final under Article III), the Company will be
responsible for, and shall duly and timely pay, perform and discharge, all
liabilities and obligations to the Newly-Hired Employees, including, without
limitation, all bonus or similar payments accrued (or that should be accrued)
with respect to the portion of the Company’s fiscal year completed prior to the
Closing Date under the Company’s bonus plans and employment policies in effect
as of the date hereof, which accrued bonuses shall be set aside and paid to the
Newly-Hired Employees entitled thereto on the Closing Date.


 


22

















 


(c)  Other Employees.  The Purchaser will not assume or become
responsible for any Liability (the “Other Employees’ Liabilities”) to
any current or former employees of the Company and its Subsidiaries other than
the Newly-Hired Employees (all such employees being the “Other Employees”),
except that the Purchaser shall assume and be responsible for severance payable
to the Other Employees (except for the Other Employees set forth on Schedule
2.05(c) to this Agreement) due to such Other Employees’ termination of
employment with the Company on the Closing Date in connection with the
consummation of the Transactions.  The
Company will be responsible for, and shall duly and timely pay, perform and
discharge, all liabilities and obligations to the Other Employees.


 


(d)  No Rights of Officers or Employees.  The parties hereto expressly acknowledge and
agree that the matters and agreements set forth in Section 2.05 and Section
2.06  of
this Agreement are strictly agreements among the Shareholders, the Company and
the Purchaser and no present or former officer or employee of the Company or
any of its Subsidiaries has any rights (directly, as a third party beneficiary
or otherwise) under Section 2.05 and Section 2.06  and shall not have any right
to enforce any of the agreements set forth in such Sections.


 


(e)  COBRA.  The Parent or a member of its Controlled Group shall provide
continuation coverage mandated by Part 6 of Title I of ERISA or Section 49080B
of the Code or state Laws for Other Employees who are not Newly-Hired Employees,
including for all “M&A Qualified Beneficiaries”  and neither the Purchaser nor any member of its Controlled Group
shall have any responsibility or obligation to provide such coverage, unless
required pursuant to applicable Law.


 


(f)  WARN.  In the event that the termination of Other Employees who are not
Newly-Hired Employees results in an event that is subject to the WARN Act, the
Purchaser shall provide payment to the Parent or a member of the Controlled
Group, as applicable, for any resulting wage and/or benefits liabilities under
the WARN Act relating to such termination(s). 
Purchaser shall bear no responsibility for any other liabilities or
responsibilities under the WARN Act with respect to such termination(s) other
than that stated above.


 


Section 2.06.  Benefit
Plans.  As of the Effective Time,
the Purchaser will have in effect Benefit Plans providing benefits to the
Newly-Hired Employees which are consistent (taken as a whole) with the benefits
provided to employees of similarly situated companies operating in the same
business and in the same geographic location as the Company.  Each Newly-Hired Employee participating in
the Company’s Benefit Plans as of the Effective Time will become a participant
in the Purchaser’s Benefit Plans as of the Effective Time with credit for
service with the Company for participation, eligibility purposes and vesting,
but not for accrual of benefits. The Purchaser may, in its sole discretion,
modify or amend any such Benefit Plan or the terms or benefits provided
thereunder at any time after the Closing.


 


23

















 


ARTICLE III


 


Consideration;
Adjustments


 


Section 3.01.  Consideration.  Upon the terms and subject to the conditions
set forth in this Agreement, at the Closing, as payment in full of the Purchase
Price for the purchase of the Purchased Assets,  which Purchase Price shall
be subject to adjustment after the Closing Date as provided in this Article
III, the Purchaser will:


 


(a)  pay, or cause to be paid, to
the Company, by wire transfer of immediately available funds, an amount in cash
equal to the Initial Cash Payment Amount;


 


(b)  issue to the Company a
promissory note, in the aggregate principal amount of $27,500,000, in
substantially the form of, and having the terms set forth on, Exhibit 3.01
attached hereto (the “Purchaser Note”);


 


(c)  pay, or cause to be paid, to
the Escrow Agent, by wire transfer of immediately available funds, an amount in
cash equal to the Escrow Amount; and


 


(d)  assume the Assumed Liabilities.


 


Section 3.02.  Calculation
of the Initial Cash Payment Amount.


 


(a)  Preparation of Estimated Balance Sheet.  On or prior to the date which is two
Business Days prior to the Closing Date, the Purchaser, after consulting with
the Company, shall prepare and deliver to the Company a detailed balance sheet
(the “Estimated Balance Sheet”) which reasonably estimates the financial
position of the Company and its Subsidiaries as of the Closing Date in
conformity with GAAP and sets forth a detailed calculation of the Purchaser’s
estimate of (i) the Company Debt Amount as of the Closing Date (the “Estimated
Company Debt Amount”), and (ii) the Net Current Assets as of the Closing
Date (the “Estimated Net Current Assets”).


 


(b)  Calculation of Initial Cash Payment
Amount.   Simultaneously with the
delivery of the Estimated Balance Sheet to the Company, the Purchaser shall
prepare and deliver to the Company a statement setting forth the calculation of
the Estimated Cash Purchase Price and the Initial Cash Payment Amount using the
Estimated Company Debt Amount and the Estimated Net Current Assets shown on the
Estimated Balance Sheet and the Escrow Amount.


 


Section 3.03.  Post-Closing
Adjustment to Cash Purchase Price.


 


(a)  Preparation of Closing Balance Sheet.  As promptly as practicable, but in any event
within 90 calendar days following the Closing Date, the Purchaser will deliver
to the Company a balance sheet (the “Closing Balance Sheet”), certified
by the Purchaser as fairly presenting the financial position of the Company and
its Subsidiaries on the Closing Date in conformity with GAAP and setting forth
a calculation of the Company Debt Amount and the Net Current Assets as of the
Closing Date.  Subject to Section
3.03(c), the Closing Balance Sheet and the calculation of Company Debt Amount
and Net Current Assets delivered by the Purchaser to the Company will be deemed
to be and will be final, binding and conclusive on the parties hereto.


 


24

















 


(b)  Calculation of Cash Purchase Price.  Simultaneously with the delivery of the
Closing Balance Sheet to the Company, the Purchaser shall prepare and deliver
to the Company a written statement (the “Purchase Price Statement”)
setting forth the calculation of the Cash Purchase Price using the Company Debt
Amount and the Net Current Assets shown on the Closing Balance Sheet.


 


(c)  Right to Review and Dispute.


 


(i)  During the 30 calendar day period following
the Company’s receipt of the Closing Balance Sheet and the Purchase Price
Statement, the Company will be permitted to review the working papers of the
Purchaser relating to the preparation of the Closing Balance Sheet and the
Purchase Price Statement and the calculation of Company Debt Amount and Net
Current Assets and the Cash Purchase Price shown on the Purchase Price
Statement.


 


(ii)  The Company may dispute the preparation of
the Closing Balance Sheet, the Purchase Price Statement and/or the
determination of Company Debt Amount and Net Current Assets and the Cash
Purchase Price set forth thereon; provided, however, that the
Company must notify the Purchaser in writing of each disputed item, specifying
the amount thereof in dispute and setting forth, in reasonable detail, the
basis for such dispute, within 30 calendar days of the Purchaser’s delivery of
the Closing Balance Sheet and the Purchase Price Statement to the Company.  In the event written notice of such a
dispute is received by the Purchaser in a timely manner, such a dispute will be
resolved in accordance with the provisions of Section 3.03(d) below.


 


(iii)  The Closing Balance Sheet, the Purchase
Price Statement and the calculation of Company Debt Amount, Net Current Assets
and the Cash Purchase Price will be deemed final for the purposes of this
Article III upon the earliest to occur of (A) the failure of the Company to
notify the Purchaser of a dispute in accordance with this Agreement within 30
calendar days of the Purchaser’s delivery of the Closing Balance Sheet and the
Purchase Price Statement to the Company, (B) the resolution of all disputes in
writing by the Company and the Purchaser, (C) the resolution of all disputes
pursuant to Section 3.03(d) by the Purchaser’s Accountants and the Company’s
Accountants, and (D) the resolution of all disputes pursuant to Section 3.03(d)
by the Independent Accounting Firm.  The
Closing Balance Sheet, the Company Debt Amount and Net Current Assets, as
deemed final pursuant to this Section 3.03(c)(iii), are referred to herein as
the “Final Closing Balance Sheet”, the “Final Company Debt Amount”
and the “Final Net Current Assets”, respectively.


 


(d)  Resolution of Disputes Under This Section
3.03.  In the event that written
notice of a dispute is received by the Purchaser under Section 3.03(c) in a
timely manner, the Purchaser and the Company shall attempt in good faith to
resolve their dispute for a period of 15 calendar days.  In the event that the Purchaser and the
Company are unable to resolve such dispute within such period, the Purchaser’s
Accountants and the Company’s Accountants will attempt to reconcile their
differences, and any resolution by them as to any disputed amounts will be
final, binding and conclusive on the parties hereto.  If the Purchaser’s Accountants and the Company’s Accountants are
unable to reach a resolution with such effect within 30 calendar days after
receipt of such written notice of dispute under Section 3.03(c), the
Purchaser’s Accountants and


 


25

















 


the Company’s Accountants will submit the items (together with their
respective positions thereon and reasons therefor) remaining in dispute for
resolution to the Independent Accounting Firm. 
The Independent Accounting Firm will be instructed to determine the
appropriate amount of each disputed item in accordance with GAAP and render a
report to the Purchaser and the Company within 20 calendar days after such
submission; provided, however, that in no case may such
determination of any such disputed item be outside the range established by the
respective positions of the Purchaser’s Accountants and the Company’s
Accountants.  The report of the
Independent Accounting Firm as to the disputed items will be conclusive as to
each disputed item and will be final and binding on the parties hereto.  The fees and expenses of the Independent
Accounting Firm for such determination shall be paid by the parties based upon
the degree to which the Independent Accounting Firm accept the respective
positions of the parties.  For example,
if it is Purchaser’s position that the adjustment owed is $300, the Company’s
position that the adjustment owed is $100 and the Independent Accounting Firm’s
finding that the adjustment owed is $150, then Purchaser shall pay 75% (300-150
/ 300-100) of the Independent Accounting Firm’s fees and expenses and the
Company shall pay 25% (150-100 / 300-100) of the Independent Accounting Firm’s
fees and expenses.  Other than the
expense of retaining the Independent Accounting Firm, the expense of preparing
the Closing Balance Sheet and the Purchase Price Statement shall be borne by
the Purchaser and the expense of the Company’s review shall be borne by the
Company and the Shareholders.


 


(e)  Adjustment of Cash Purchase Price and
Payment of Adjustment Amount.  In
the event that the Cash Purchase Price set forth in the Purchase Price
Statement (as finally determined in accordance with this Article III) is (i)
less than the Estimated Cash Purchase Price, the Purchaser shall have the right
to withdraw an amount in cash equal to the shortfall from the Escrow Amount
pursuant to the provisions of Section 11.07 hereof, and if the amount of such
shortfall exceeds the Escrow Amount, then the Company and the Shareholders,
jointly and severally agree promptly to pay to the Purchaser the amount of such
excess, in cash in immediately available funds, and (ii) greater than the
Estimated Cash Purchase Price, the Company shall have the right to withdraw an
amount in cash equal to the amount of such excess from the Escrow Amount, and
if the amount of such excess exceeds the Escrow Amount, then the Purchaser
agrees promptly to pay to the Company the amount of such excess, in cash in
immediately available funds; provided, however, that in no event
shall the Cash Purchase Price exceed the Cash Amount, and in no event shall the
sum of (aa) the amount of such withdrawal by the Company from the Escrow
Amount, plus (bb) Purchaser’s payment of any such excess set forth in clause
(ii) above, plus (cc) the Initial Cash Payment Amount, exceed an amount equal
to the Cash Amount minus the Company Debt Amount.


 


Section 3.04.  Allocation
of Purchase Price for Tax Purposes. 
On or before the Closing Date, the Company and the Purchaser will agree
upon an allocation of the Purchase Price covering the Purchased Assets for
federal, state and local Tax purposes. 
Upon reaching such agreement, such allocation will be set forth on Schedule
3.04 hereto.  The Company and its
Subsidiaries and the Purchaser will implement, report and accept the allocation
set forth on Schedule 3.04 for federal, state and local Tax purposes.  The parties agree that such allocations will
not in any way limit their respective rights and obligations under the Sale
Documents in respect of representations, warranties, covenants and agreements
and the breach thereof or damages therefor.


 


26

















 


ARTICLE IV


 


The Closing; Conditions
to Closing


 


Section 4.01.  The
Closing.


 


(a)  Time and Place of Closing.  The consummation of the
Transactions (the “Closing”), will take place at the offices of Sidley
Austin Brown & Wood LLP, 787 Seventh Avenue, New York, New York 10019, at
10:00 a.m. (New York City time), on the Target Date, or at such other location
or time as the parties may agree in writing; provided, however,
that if any of the conditions to Closing contained in the Sale Documents
(except for conditions which can only be satisfied at Closing) are not
satisfied or effectively waived as of the Target Date or such other agreed-upon
date, the Closing shall take place on the second Business Day after the date on
which all of the conditions to Closing contained in the Sale Documents (except
for conditions which can only be satisfied at Closing) are satisfied or
effectively waived (the date of the Closing being hereinafter referred to as
the “Closing Date”).


 


(b)  Effective Time and Risk of Loss.  The sale, transfer, assignment, conveyance
and delivery of the Purchased Assets and the assumption of the Assumed
Liabilities described in the Sale Documents will be effective as of the
Effective Time.  Until the Effective
Time, any loss of or damage to any of the Purchased Assets from fire, casualty
or any other occurrence will be the sole responsibility of the Company.


 


Section 4.02.  Conditions
Precedent to the Obligations of the Shareholders and the Company. The obligations
of the Shareholders and the Company to consummate the Transactions  under
the Sale Documents are expressly subject to the fulfillment of each of the
following conditions, unless waived by the Company and the Parent in writing,
at or before the Closing:


 


(a)  Representations and
Warranties; Performance of Agreements. 
(i)  All of the representations
and warranties of the Purchaser set forth in the Sale Documents that are
qualified as to materiality shall be true and correct in all respects and all of
the representations and warranties of the Purchaser set forth in the Sale
Documents that are not qualified as to materiality shall be true and correct in
all material respects, in each case, on and as of the Closing Date with the
same force and effect as though made on and as of the Closing Date.  (ii) 
The Purchaser shall have performed and complied in all material respects
with all of its covenants and other obligations set forth in the Sale Documents
required to be performed or complied with by the Purchaser at or before the
Closing.  (iii)  The Company shall have received a
certificate of the president or a vice president  of the Purchaser as to the
fulfillment of the conditions set forth in clauses (i) and (ii) above, which
certificate shall have the effect of a representation and warranty of the
Purchaser as to the matters set forth therein.


 


(b)  Purchaser Required Consents.  The Company shall have received copies of
all of the Purchaser Required Consents, and all such Purchaser Required
Consents shall be in


 


27

















 


form and substance
reasonably satisfactory to the Company and shall be in full force and effect as
of the Closing Date.  In addition, the
applicable waiting period required under the HSR Act and all similar Laws with
respect to the Transactions shall have expired or have been terminated early.


 


(c)  No Actions.  There shall be no (i) Action by any
Governmental Body or by any other Person (A) challenging or seeking to restrain
or prohibit the Transactions or (B) seeking to obtain from any Shareholder, the
Company or any of their Affiliates in connection with the Transactions any
damages that are material in relation to any Shareholder, the Company, their
Affiliates or the Purchase Price, or (ii) Law in effect that has had or could
reasonably be expected to have any of the consequences referred to in clause
(i) above.


 


(d)  Consideration.  The Company shall have received (i) the
Initial Cash Payment Amount by wire transfer of immediately available funds,
and (ii) the Purchaser Note, in each case,  in accordance with the provisions of
Section 3.01 hereof.  The Purchaser
shall have delivered the Escrow Amount to the Escrow Agent by wire transfer of
immediately available funds in accordance with the provisions of Section 3.01
hereof.


 


(e)  Ancillary Agreements.  The Company shall have received the
following, each dated the Closing Date and in full force and effect as of the
Closing Date, in form and substance satisfactory to the Company and its
counsel:


 


(i)  the Assumption Agreement, duly
executed by the Purchaser, in the form previously agreed to by the
Shareholders, the Company and the Purchaser (the “Assumption Agreement”);
and


 


(ii)  the Escrow Agreement, duly
executed by the Purchaser; and


 


(iii)  the Transitional Services
Agreement, duly executed by the Purchaser.


 


(f)  Secretary’s Certificate.  The Company shall have received a
certificate of the secretary of the Purchaser with respect to (i) the
certificate of incorporation of the Purchaser, (ii) the bylaws  of
the Purchaser, (iii) the resolutions of the board of directors of the Purchaser
approving each Sale Document to which the Purchaser is a party and the other
documents to be delivered by the Purchaser under the Sale Documents and the
performance of the obligations of the Purchaser thereunder and (iv) the names
and true signatures of the officers of the Purchaser authorized to sign each
Sale Document to which it is a party and the other documents to be delivered by
it under the Sale Documents.


 


(g)  Good Standing Certificate.  The Company shall have received a
certificate of the Secretary of State of the jurisdiction in which the
Purchaser is organized, dated as of a recent date, as to the good standing of
the Purchaser.


 


28

















 


(h)  Opinion of Counsel.  If reasonably requested by the Company, the
Company shall have received an opinion of Sidley Austin Brown & Wood LLP,
counsel for the Purchaser, in the form agreed to by the Shareholders, the
Company and the Purchaser.


 


(i)  Certain Collateral.  The Company shall have received evidence
reasonably satisfactory to the Company that the Purchaser has replaced any
performance bonds, letters of credit or deposits, or provided substitute
collateral in connection therewith, for any performance bonds, letters of
credit or deposits reflected on Schedule 4.02(i).


 


Section 4.03.  Conditions
Precedent to the Obligations of the Purchaser.  The obligations of the Purchaser to consummate the Transactions
under the Sale Documents are expressly subject to the fulfillment of each of
the following conditions, unless waived by the Purchaser in writing, at or
before the Closing:


 


(a)  Representations and
Warranties; Performance of Agreements. 
(i)  All of the representations
and warranties of the Company and the Shareholders set forth in the Sale
Documents that are qualified as to materiality shall be true and correct in all
respects and all of the representations and warranties of the Company and the
Shareholders set forth in the Sale Documents that are not qualified as to
materiality shall be true and correct in all material respects, in each case,
on and as of the Closing Date with the same force and effect as though made on
and as of the Closing Date.  (ii)  The Shareholders and the Company shall have
performed and complied in all material respects with all of their covenants and
other obligations contained in the Sale Documents required to be performed or
complied with by them at or before the Closing.  (iii)  The Purchaser shall
have received a certificate of the president or a vice president of each
Shareholder and the Company as to the fulfillment of the conditions set forth
in clauses (i) and (ii) above, which certificate shall have the effect of a
representation and warranty of the Company and the Shareholders as to the
matters set forth therein.


 


(b)  Company Required Consents.  The Purchaser shall have received copies of
all of the (i) Company Required Consents and (ii) the Required Permits and all
such Company Required Consents and Required Permits shall be in form and
substance reasonably satisfactory to the Purchaser and shall be in full force
and effect as of the Closing Date.  All
of the Required Leases shall have been assigned to the Purchaser.  In addition, the applicable waiting period
required under the HSR Act and all similar Laws with respect to the
Transactions shall have expired or have been terminated early; provided,
however, that if the applicable waiting period necessary to comply with
the HSA Act and all similar Laws with respect to the Transactions exceeds 30
days from the date of this Agreement, the Company shall have the right to
terminate this Agreement.


 


(c)  No Actions.  There shall be no (i) Action by any
Governmental Body or by any other Person (A) challenging or seeking to restrain
or prohibit the Transactions, or (B) seeking to obtain from the Purchaser or
any of its Affiliates in connection with the Transactions any damages that are
material in relation to the Purchaser or any of its Affiliates, or (ii) Law in
effect that has had or could reasonably be expected to have any of the
consequences referred to in clause (i) above.


 


29

















 


(d)  Ancillary Agreements.  The Purchaser shall have received the following,
each dated the Closing Date and in full force and effect as of the Closing
Date, in each case, in the form agreed to by the Shareholders, the Company and
the Purchaser:


 


(i)  one or more Bills of Sale, duly
executed by the Company and its Subsidiaries, as applicable (each, a “Bill
of Sale”);


 


(ii)  one or more Assignment and
Assumption Agreements, duly executed by the Company and its Subsidiaries, as
applicable (each, an “Assignment and Assumption Agreement”);


 


(iii)  one or more Intellectual
Property Assignment Agreements, duly executed by the Company and its
Subsidiaries, as applicable (each, an “Intellectual Property Assignment
Agreement”);


 


(iv)  one or more Special Warranty
or Bargain and Sale Deeds, duly executed by the Company and its Subsidiaries,
as applicable (each, a “Deed”);


 


(v)  an Escrow Agreement, duly
executed by each of the Shareholders, the Company and the Escrow Agent (the “Escrow
Agreement”);


 


(vi)  a Transitional Services
Agreement, duly executed by the Parent (the “Transitional Services Agreement”);


 


(vii)  all other instruments of
transfer, duly executed by the Company and its Subsidiaries, as applicable, as
shall be necessary or appropriate to vest in the Purchaser good title to the
Purchased Assets and to permit the Purchaser to conduct the Business without
interruption;


 


(viii)  checks or drafts payable to
the order of the Purchaser, or some other method of delivering to the Purchaser
the benefit of, or credit for, all funds of the Company on deposit with banks,
financial institutions or other Persons, subject to the rights of Congress
pursuant to the Congress Credit Agreement; and


 


(ix)  such affidavits as reasonably
required by the Purchaser’s title insurance company in connection with the
Company Real Property.


 


(e)  Shareholder Approval.  The holders of the requisite number of each
class of the Company’s Securities shall have approved the Sale Documents and
the Transactions.


 


(f)  Secretary’s Certificate.  The Purchaser shall have received a
certificate of the secretary, manager or general partner, as the case may be,
of the Company, each of its Subsidiaries and each of the Shareholders with
respect to (i) the articles of incorporation, certificate of formation or
certificate of limited partnership, as the case may be, of the Company, its
Subsidiaries and each of the Shareholders, (ii) the bylaws, operating


 


30

















 


agreement or limited
partnership agreement, as the case may be, of the Company, each of its
Subsidiaries and each of the Shareholders, (iii) the resolutions of the board
of directors and shareholders, managers, members and partners, as the case may
be, of the Company and each of the Shareholders approving each Sale Document to
which the Company or any Shareholder is a party and the other documents to be
delivered by them under the Sale Documents and the performance of the
obligations of the Company or the Shareholders thereunder, and (iv) the names
and true signatures of the officers, managers, members or partners, as the case
may be, of the Company and each Shareholder authorized to sign each Sale
Document to which they are parties and the other documents to be delivered by
them under the Sale Documents.


 


(g)  Good Standing Certificate.  The Purchaser shall have received a certificate
of the Secretary of State of the jurisdiction in which the Company, each of its
Subsidiaries and each Shareholder is organized, dated as of a recent date, as
to the good standing of the Company, each of its Subsidiaries and each
Shareholder, and as to the charter documents of the Company, each of its
Subsidiaries and each Shareholder on file in the office of the Secretary of
State.


 


(h)  Opinion of Counsel.  If reasonably requested by the Purchaser,
the Purchaser shall have received an opinion of (i) Paul, Hastings, Janofsky
& Walker LLP, counsel for the Shareholders, and (ii) Leonard, Street and
Deinard Professional Association, counsel for the Company, in each case, in the
form agreed to by the Shareholders, the Company and the Purchaser.


 


(i)  Employment and
Non-Competition Agreements. 
(i)  Substantially all of the
Persons set forth on Schedule 4.03(i)(i) shall have entered into written
employment agreements with the Purchaser in form and substance reasonably
satisfactory to the Purchaser and such agreements shall be in full force and
effect on the Closing Date.  In
addition, substantially all of the Persons set forth on Schedule 4.03(i)(ii)
shall have entered into non-competition, non-raiding and confidentiality
agreements with the Purchaser in form and substance reasonably satisfactory to
the Purchaser and such agreements shall be in full force and effect as of the
Closing Date, unless the Parent and Purchaser agree, with or without the
consent of the Person who entered into such employment or non-competition,
non-raiding and confidentiality agreement with the Purchaser, to terminate such
agreement prior to the Closing Date.


 


(j)  Resignations.  The officers (and the members of the board
of directors) of each of the Company’s Subsidiaries designated by the Purchaser
pursuant to Section 8.05 hereof shall have resigned from the Company’s
Subsidiaries and the board of directors of each of the Company’s Subsidiaries.


 


(k)  [Intentionally Omitted]


 


(l)  FIRPTA.  The Purchaser shall have received from the
Company a certificate executed by the Company that, as of the Closing Date, the
Company is not a “foreign


 


31

















 


person” within the
meaning of Section 1445 of the Code, in form and substance acceptable to counsel
for the Purchaser.


 


(m)  Material Adverse Effect.  Since June 30, 2003, no fact, circumstance,
event or change shall have occurred, or be reasonably likely to occur, which
has had, or could reasonably be expected to have, a Material Adverse Effect.


 


(n)  Order.  The Delaware Bankruptcy Court shall have
entered the Parent Order in the Parent’s bankruptcy proceedings, and with
respect to each Filing Entity, the bankruptcy court in which such Filing
Entity’s bankruptcy or similar proceedings are filed shall have entered the
Filing Entity Order, and each of the Parent Order, the Filing Entity Order or
Filing Entity Orders (if more than one Filing Entity exists); provided, however,
that if the Parent Order and the Filing Entity Orders shall not have been entered
within 30 days of the date of this Agreement, the Company shall have the right
to terminate this Agreement.


 


Section 4.04.  Efforts
to Close.


 


(a)  Purchaser’s Efforts.  The Purchaser will use its commercially
reasonable best efforts to cause (i) the conditions to Closing set forth in
Section 4.02 which are within the Purchaser’s control to be satisfied on or
prior to the Target Date, and (ii) the Transactions to be consummated on the
Target Date.  The Purchaser will obtain
the Purchaser Required Consents at its expense.


 


(b)  Shareholders’ and the Company’s Efforts.  Each of the Shareholders, jointly and
severally, will, and will cause each of the Company and its Subsidiaries to,
the Company will, and the Company will cause each of its Subsidiaries to, use
its respective commercially reasonable best efforts to cause (i) the conditions
to Closing set forth in Section 4.03 which are within such parties’ control to
be satisfied on or prior to the Target Date, and (ii) the Transactions to be
consummated on the Target Date.  In
addition, each of the Shareholders and the Company, jointly and severally, will
obtain all Company Required Consents at the sole cost and expense of the
Shareholders.


 


ARTICLE V


 


Representations and Warranties of the Company


 


The Company hereby represents and warrants to the Purchaser as of the date
hereof and as of the Closing Date as follows:


 


Section 5.01.  Existence
and Power.  Each of the Company and
its Subsidiaries (a) is a corporation, limited liability company or limited partnership,
as the case may be, duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) is duly qualified under
the laws of, or is licensed to do business as a foreign company in good
standing in, each jurisdiction in which such qualification or license is
required to own, lease or license the Assets or to operate or carry on the
Business, except where the failure to be so qualified or licensed, individually
or in the aggregate, would not reasonably be expected to have


 


32

















 


a Material Adverse Effect, and (c) has all necessary corporate, limited
liability company or partnership, as the case may be, power and authority
required to own, lease or license the Assets, to operate and carry on the
Business and to execute and deliver each of the Sale Documents, to consummate
the Transactions and to perform their obligations under the Sale
Documents.  The Company has previously
delivered to the Purchaser correct and complete copies of the certificates of
incorporation, certificates of formation, certificates of limited partnership,
by-laws, operating agreements, partnership agreements and other organizational
documents, as the case may be, of each of the Company and its Subsidiaries.


 


Section 5.02.  Authorization;
Binding Effect.  The execution and
delivery by each of the Company and its Subsidiaries of each of the Sale
Documents to which they are parties, the performance by each of the Company and
its Subsidiaries of their respective obligations under such Sale Documents and
the consummation of the Transactions by each of the Company and its
Subsidiaries has been duly authorized by all necessary corporate, limited
liability company or partnership, as the case may be, action on the part of
each of the Company and its Subsidiaries. 
Each of the Sale Documents to which each of the Company and its
Subsidiaries is or may become a party is, or, when executed and delivered in
accordance with this Agreement will be, legal, valid and binding obligations of
each of the Company and its Subsidiaries, enforceable against each of the
Company and its Subsidiaries in accordance with its terms, except that such
enforcement (a) may be limited by bankruptcy, insolvency, moratorium or similar
laws affecting creditors’ rights generally and (b) is subject to the
availability of equitable remedies, as determined in the discretion of the
court before which such a proceeding may be brought.


 


Section 5.03.  Contravention.  Neither the execution, delivery and
performance of the Sale Documents by each of the Company and it Subsidiaries
nor the consummation of the Transactions by each of the Company and its
Subsidiaries will (with or without notice or lapse of time or both) (a) violate
or breach any provision of the Company’s or any of their Subsidiaries’
certificate of incorporation, by-laws, certificate of formation, operating
agreement, certificate of limited partnership, partnership agreement or other
similar organizational documents, (b) assuming the receipt of all of the
Company Required Consents prior to the Closing, violate or breach any material
Law by which the Company, any of their Subsidiaries, the Business or any of the
Assets may be bound or affected, (c) assuming the receipt of all of the Company
Required Consents prior to the Closing, breach or result in a default under,
result in the acceleration of, or give rise to a change in the terms of or a
right of termination, cancellation, modification or acceleration or require any
notice under, any Material Contract, (d) result in or require the creation or
imposition of any Lien on any of the Assets, or (e) otherwise result in a
Material Adverse Effect.


 


Section 5.04.  Consents.  Except for the Consents set forth on Schedule
5.04 and any Consents required under the HSR Act, no material Consents are
required or advisable on behalf of the Company or any of its Subsidiaries in
connection with (a) the due execution and delivery by each of the Company and
its Subsidiaries of the Sale Documents and the performance of each of the
Company’s and its Subsidiaries’ obligations thereunder, (b) the consummation of
the Transactions by each of the Company and its Subsidiaries, (c) the exercise
by the Purchaser of its rights and remedies under the Sale Documents, and (d)
the (i) conduct of the Business and (ii) ownership or use of the Assets, by the
Purchaser and its Subsidiaries immediately following the


 


33

















 


Closing Date.  As of the Closing
Date, all of the Company Required Consents will have been obtained and will be
in full force and effect.


 


Section 5.05.  Capitalization.


 


(a)  Authorized, Issued and Outstanding Shares.  Schedule 5.05(a) sets forth a correct
and complete list and description of the authorized, issued and outstanding
capital stock of the Company as of the date of this Agreement and as of the
Closing Date.  All of the issued and
outstanding shares of Common Stock and Preferred Stock have been duly authorized,
validly issued and are fully paid and non-assessable.  Schedule 5.05(a) sets forth a correct and complete list of
(i) the number of issued and outstanding shares of each class of the Company’s
Equity Securities, and (ii) the number of each class of Equity Securities of
the Company owned or held by each such owner. 
Except as set forth on Schedule 5.05(a), there are no Equity
Securities of the Company (i) authorized, issued or outstanding, (ii) held in
the Company’s treasury or held by any of the Company’s Subsidiaries, or (iii)
reserved for issuance.


 


(b)  Rights, Options, Warrants, Etc.  Except as set forth on Schedule 5.05(b),
there are no (i) Securities of the Company or any of its Subsidiaries, (ii)
statutory or contractual preemptive rights, subscriptions, conversion rights,
rights of first refusal or other similar rights, or (C) Contracts, commitments
or understandings of any character, in each case, that obligate the Company or
any of its Subsidiaries contingently or otherwise, to (A) issue, sell or
Transfer, any Securities of the Company or any of its Subsidiaries, (B)
purchase, redeem, retire, defease or otherwise acquire any Securities of the
Company or any of its Subsidiaries, or (C) that give any Person the right to
receive any benefits or rights substantially similar to any enjoyed by or
accruing to holders of any Securities of the Company or any of its
Subsidiaries, and no authorization for any of the foregoing has been given.


 


(c)  No Other Agreements.  Except as set forth on Schedule 5.05(c),
there are no voting trusts, stockholder agreements, investor rights agreements,
proxies or any other Contracts or understandings in effect with respect to the
voting or Transfer of any Securities of the Company or any of its Subsidiaries
or with respect to the management or governance of the Company or any of its
Subsidiaries.


 


Section 5.06.  Subsidiaries
and Other Securities.


 


(a)  Subsidiaries.  Schedule 5.06(a) sets forth a correct
and complete list of each Subsidiary of the Company, showing for each
Subsidiary (i) such Subsidiary’s name and the address of its principal place of
business, (ii) the jurisdiction of its organization and all jurisdictions in
which it is qualified to do business, (iii) the number of Equity Securities of
each class (A) authorized and (B) issued and outstanding, (iv) the percentage
of the outstanding Equity Securities owned directly or indirectly by the
Company, and (v) the names of the record and beneficial holders of each class
of outstanding Equity Securities and the number of such Equity Securities held
by each such holder.


 


(b)  Subsidiary Securities.  All outstanding Equity Securities of each
Subsidiary of the Company have been duly authorized, validly issued and are
fully paid and non-assessable and


 


34

















 


are free of any preemptive rights and, except as set forth on Schedule
5.06(a), are owned, directly or indirectly, beneficially and of record by
the Company free and clear of all Liens, except for Permitted Liens, and any
options, warrants and other rights.  None of the Company’s Subsidiaries’ has violated the
Securities Act or any applicable Law in connection with the offer, sale or
issuance of any of their Securities. 
Except as set forth on Schedule 5.06(a), there are no Equity
Securities of any of the Company’s Subsidiaries (i) authorized, issued or
outstanding, (ii) held in any such Subsidiary’s treasury, or (iii) reserved for
issuance.


 


(c)  Other Securities.  Except for the Securities set forth on Schedule
5.06(a), neither the Company nor any of its Subsidiaries owns (beneficially
or of record), holds or has any interest in, any Securities.


 


Section 5.07.  Financial
Information.


 


(a)  Balance Sheets.  The audited consolidated balance sheets of
the Company and its Subsidiaries dated as of December 31, 2001 and December 31,
2000 (including the footnotes thereto) and the unaudited consolidated balance
sheet of the Company and its Subsidiaries dated  as of December 31, 2002 and
June 30, 2003, copies of which are attached hereto as Schedule 5.07(a),
were prepared in accordance with GAAP and fairly present the financial position
of the Company and its Subsidiaries as of their respective dates.  Except as and to the extent set forth on the
face of such balance sheets (as opposed to the notes thereto), as of the
respective dates thereof, neither the Company nor any Subsidiary had any
Liability.  Since June 30, 2003, neither
the Company nor any Subsidiary has incurred, assumed, or otherwise become
liable for any Liability, except for accounts payable and accrued liabilities
incurred in the ordinary course of business, all of which will be fully set
forth as Liabilities on the Final Closing Balance Sheet.


 


(b)  Other Financial Statements.  The audited consolidated statements of
operations, statements of changes in shareholder’s equity and statements of
cash flows of the Company and its Subsidiaries for the 12-month periods ended
on December 31, 2001 and December 31, 2000 (including the footnotes thereto)
and the unaudited consolidated statement of operations, statement of changes in
shareholder’s equity and statement of cash flows of the Company and its
Subsidiaries for the twelve-month period ended December 31, 2002 and the
six-month period ended  June 30, 2003, copies of which are
attached hereto as Schedule 5.07(b), were prepared in accordance with
GAAP (except with respect to the unaudited statements, for the absence of
footnotes and subject to normal recurring year end adjustments in accordance
with GAAP which were not and will not be material in amount) and fairly present
the results of operations, changes in shareholder’s equity and cash flows of
the Company and its Subsidiaries for such periods.


 


(c)  Interim Financial Statements.  The monthly and quarterly unaudited
consolidated and consolidating balance sheets, statements of operations,
statements of changes in shareholder’s equity and statements of cash flows
(both summary and detailed) of the Company and its Subsidiaries heretofore
provided to the Purchaser or its representatives were, and those to be provided
to the Purchaser pursuant to Section 8.04 will be, prepared in accordance with
GAAP (except for (i) the monthly statements, and (ii) the absence of footnotes
and subject to normal recurring year end adjustments in accordance with GAAP
which were not and will not be material in amount) and fairly present the
information purported to be set forth therein on a basis


 


35

















 


consistent with the preparation of the other financial statements referred
to in clauses (a) and (b) above.


 


(d)  [Reserved]


 


(e)  No Guarantees.  Except as set forth on Schedule 5.07(e),
none of the Liabilities shown on any of the balance sheets referred to in this
Section 5.07 were Guaranteed by any Person other than the Company or a
Subsidiary, and none of the Liabilities incurred or assumed by the Company or a
Subsidiary after June 30, 2003 and before the Closing Date will have been
Guaranteed by any Person other than the Company or a Subsidiary.


 


(f)  Accounts Payable and Accounts Receivable.  (i) 
Except as set forth on Schedule 5.07(f), all of the accounts
payable of the Company and its Subsidiaries, whether reflected in the balance
sheets referred to in Section 5.07(a), on the Closing Balance Sheet or
otherwise on the books of the Company and its Subsidiaries on the Closing Date,
(A) were (or will have been as of the Closing Date) incurred in the ordinary
course of the Company’s business consistent with past practice, (B) arose or
will arise from the purchase of goods or services on customary trade terms in
the ordinary course of business, (C) accurately reflect all amounts owed by the
Company and its Subsidiaries with respect to trade accounts due and other
payables as of the respective dates thereof or the Closing Date, as the case
may be, and (D) are not secured by any Lien, except for Permitted Liens.  The charges, accruals and reserves on the
books of the Company and its Subsidiaries in respect of the accounts payable
were calculated in a manner consistent with GAAP and are adequate.  Since June 30, 2003, neither the Company nor
any of its Subsidiaries has paid any of its accounts payable after the date on
which the Company or such Subsidiary would have paid such account payable in
the ordinary course of the Company’s business consistent with past practice.


 


(ii)  Except as set forth on Schedule 5.07(f),
all Accounts Receivable of the Company and its Subsidiaries, whether reflected
in the balance sheets referred to in Section 5.07(a) or otherwise on the books
of the Company and its Subsidiaries on the Closing Date, (A) have arisen (or
will have arisen as of the Closing Date) from bona fide transactions in the
ordinary course of business of the Company and its Subsidiaries consistent with
past practice, (B) arose or will arise from the sale of goods or services on
customary trade terms in the ordinary course of business, and (C) are and will
be, as of the Closing Date, current and collectible and will be collected in
full within 90 calendar days after the Closing Date net of any reserves
specifically set forth on the Closing Balance Sheet (which reserves will be
adequate and calculated consistent with past practice).  Since December 31, 2002, neither the Company
nor any of its Subsidiaries has collected any of its accounts receivable prior
to the earlier of (i) the date on which such Account Receivable is due in
accordance with its terms, and (ii) the date on which the Company or such
Subsidiary would have collected such Account Receivable in the ordinary course
of the Company’s business consistent with past practice.  The entries for discounts, allowances and
returns on the statements of operations included in the financial statements
referred to in Section 5.07(b) are adequate to reflect in full the respective
amounts of the discounts, allowances, credits, rebates, provisions for returns,
and incentive programs relating to sales or deliveries of Inventory or services
recognized during the respective periods covered by such statements (whether
such amounts arose out of Inventory or services sold, delivery or performed
prior or


 


36

















 


subsequent to such periods), and all such discounts, allowances, credits,
rebates, and provisions for returns as of the date of any balance sheet
included in the financial statements referred to in Section 5.07(b) and as of
the Closing Date will be classified on such balance sheets, on the Estimated
Closing Balance Sheet and the Final Closing Balance Sheet Working Capital
Schedule as an offset to gross Accounts Receivable as shown thereon.


 


(g)  Accounting Changes.  Except as set forth on Schedule 5.07(g),
since the date of the 2001 Audited Financial Statements, neither the Company
nor any of its Subsidiaries has (i) in the preparation of any internal
financial statements or any of the audited or unaudited financial statements
referred to in this Section 5.07, applied any accounting principles or
methodologies other than GAAP, (ii) changed any accounting methods or
principles used in recording transactions on their books or in preparing their
financial statements, or (iii) modified its general ledger or internal
financial records by changing, adding or deleting any classifications in which
transactions are recorded or by allocating similar transactions to different
classifications therein.


 


(h)  Non-Recurring Items.  Schedule 5.07(h) sets forth a
complete and correct list of (i) all releases from any or reversals of any
reserve account made for accounting or financial reporting purposes and
recognized in or otherwise affecting the statement of operations for the six
months ended June 30, 2003 included in the financial statements referred to in
Section 5.07(a) and (b), and (ii) all other extraordinary, non-recurring, or
non-operating items (including any write-up or revaluation of, or gain
recognized upon the sale of, any asset other than sale of Inventory in the
ordinary course of business, and any reversal of or credit corresponding to any
charge or expense recognized in a previous accounting period) recognized in or
otherwise affecting such statement of operations.


 


Section 5.08.  Taxes.


 


(a)  Filing of Tax Returns and Payment of
Taxes.  Each of the Company and its
Subsidiaries have timely filed all Tax Returns that are required to be filed by
them and have timely paid all Taxes due and owing by them (whether or not such
Taxes are required to be shown on a Tax Return) or has made adequate provision
for the payment of all Taxes which are due and payable.  All such Tax Returns were correct and complete
in all respects when filed.  The Company
has delivered to the Purchaser correct and complete copies of the Company’s and
its Subsidiaries’ United States federal income Tax Returns for the last three
complete fiscal years prior to the date of this Agreement.  The charges, accruals and reserves on the
books of the Company and each of its Subsidiaries in respect of Taxes were
calculated in the ordinary course of the Company’s and its Subsidiaries’
businesses consistent with past practice in accordance with GAAP and F.A.S.B.
and are accurate and adequate.  The
Company has established a Tax reserve or account payable in an amount
sufficient for all accrued and unpaid federal, state, local and foreign Taxes
of the Company and its Subsidiaries, whether or not disputed, including any
penalties, interest and related charges and fees in connection therewith, for
all complete fiscal periods of the Company.


 


(b)  Withholding Taxes.  All Taxes that the Company or any of its
Subsidiaries are required to withhold or collect have been withheld or
collected and, to the extent required, have been paid over to the proper
Governmental Body on a timely basis. 
Proper amounts have been


 


37

















 


withheld by each of the Company and its Subsidiaries from their employees
for all periods in compliance with Tax withholding provisions of applicable
federal, state, local, domestic and foreign Laws.


 


(c)  Audits.  Schedule 5.08(c) sets forth a correct and complete list of
all audits of the Company and its Subsidiaries by any Taxing authority in the
past three years.  Except as set forth
on Schedule 5.08(c), no such audit is in progress.  Except for adjustments disclosed to the
Purchaser related to the 1998 and 1999 taxable years, there were no material
adjustments to the Company’s Tax Returns as a result of any such audit.  All deficiencies proposed as a result of
such examinations or audits have been paid, settled or fully reserved for on
the Final Closing Balance Sheet. 
Neither the Company nor any of its Subsidiaries has received any notice
of any pending or threatened audit by the Internal Revenue Service or any
state, local or foreign Taxing authority related to the Company’s Tax Returns
or Tax liability for any period and no claim for special assessment or
collection of Taxes has been asserted against the Company or any of its
Subsidiaries.


 


(d)  Waivers.  Except for waivers for the 1998 and 1999 taxable years previously
disclosed to the Purchaser, the Company has not entered into any agreements for
any waiver or for the extension of any statute of limitations governing the
time of assessment or collection of any federal, state or local Taxes or the
filing of any Tax Return.


 


(e)  Claims by Certain Jurisdictions.  No claim has been made by any Taxing
authority in a jurisdiction where neither the Company nor any of its
Subsidiaries files any Tax Returns that the Company or one of its Subsidiaries
is or may be subject to taxation in that jurisdiction.


 


(f)  Tax Liens.  Except as set forth on Schedule 5.08(f), no Tax Liens,
other than Permitted Liens, have been filed with respect to any Taxes of the
Company, any of its Subsidiaries or any of their Affiliates.


 


Section 5.09.  Litigation.  Except as set forth on Schedule 5.09,
there is no Action pending, or to the Knowledge of the Company, threatened (a)
against the Company or any of its Subsidiaries, or (b) that questions the
validity of any of the Sale Documents or that involves or relates to any of the
Transactions, or (c) affecting any of the Assets or the Business, or (d) that
could reasonably be expected to materially adversely affect the Purchaser’s and
its Subsidiaries’ ability to conduct the Business after the Closing or the
ownership or use by the Purchaser and its Subsidiaries of the Assets after the
Closing.  Except for the matters listed
on Schedule 5.09 that are marked with an asterisk, none of the matters
disclosed on Schedule 5.09 has had or could reasonably be expected to
have a Material Adverse Effect.


 


Section 5.10.  Permits;
Compliance with Laws.


 


(a)  Permits.  Schedule 5.10(a) sets forth a correct and complete list
and description of all material Permits necessary to entitle or permit the
Company and each of its Subsidiaries to use its corporate name, to own, lease,
operate and use the Assets, and to carry on and conduct the Business  at
full capacity  (such Permits being the “Required Permits”).  The Company and each of its Subsidiaries, as
the case may be, owns, holds or possesses all Required Permits and all


 


38

















 


such Required Permits are validly held and are in full force and effect and
to the Knowledge of the Company, all Required Permits were validly issued.  To the Knowledge of the Company, no Required
Permit will be subject to suspension, modification, limitation, revocation,
cancellation or non-renewal as a result of the consummation of the
Transactions.  To the Knowledge of the
Company, no fact, issue or circumstance exists which could reasonably be
expected to cause any of the Required Permits not to be renewed in the ordinary
course of the Company’s business.


 


(b)  Compliance with Laws.  The Company, its Subsidiaries, their
operations, the Business and the Assets are and at all times have been in
compliance with each Required Permit and each Law applicable to the Company,
its Subsidiaries, their operations, the Business or the Assets.  Neither the Company nor any of its
Subsidiaries, nor any director, officer or employee of the Company or any of
its Subsidiaries acting on behalf of the Company or one of its Subsidiaries,
has at any time made any bribes, kickback payments or other illegal payments.


 


(c)  Certain Notices.  Except as set forth on Schedule 5.10(c),
neither the Company nor any of its Subsidiaries has received any written notice
(a) concerning the revocation, suspension, modification, limitation,
cancellation or non-renewal of any Required Permit, or (b) of a violation of or
default with respect to, any Required Permit or Law applicable to the Company,
its Subsidiaries, their operations, the Business or the Assets.


 


Section 5.11.  Absence
of Certain Changes or Events.  Since
June 30, 2003, except as specifically set forth on Schedule 5.11 hereto,
(a) there has not occurred any event, fact, circumstance or change that has had
or which could reasonably be expected to have, a Material Adverse Effect, (b)
the Company and each of its Subsidiaries has conducted its business only in the
ordinary course consistent with past practice, and (c) neither the Company nor
any of its Subsidiaries:


 


(i)  has (A) Transferred any of the
Assets, except for Inventory in the ordinary course of business consistent with
past practice or obsolete Inventory, (B) caused or permitted any of the Assets
to become subject to any Liens, other than Permitted Liens, (C) purchased or
acquired any Securities or otherwise made or acquired any investment in any
Person, or (D) incorporated or formed any Subsidiary, or merged or consolidated
with or into, or entered into any business combination with any Person;


 


(ii)  has (A) issued any notes,
bonds or other Debt Securities, incurred any Debt or Guaranteed any obligation
of any Person, (B) waived, released, canceled, settled, written off or
compromised any material Debt, obligation, claim or other right owed to the
Company or any of its Subsidiaries, or (C) made any loan or advance to any
Person;


 


(iii)  has (A) entered into any
Contract or transaction with any of its Affiliates, or (B) made or declared any
Restricted Payment;


 


(iv)  has  (A) paid or agreed to pay
any bonus, extra compensation, pension or severance pay, (B) increased the
benefits payable under the Company’s or its Subsidiaries’ Benefit Plans, or (C)
otherwise increased the wage, salary or compensation (of any nature) or
benefits to any of its directors, officers or employees;


 


39

















 


(v)  has made (A) any single capital
expenditure in excess of $250,000, or (B) aggregate capital expenditures in
excess of $500,000;


 


(vi)  has (A) disclosed any
confidential Required Intellectual Property or other confidential proprietary
information of the Company or its Subsidiaries to any Person (other than to the
Purchaser), or (B) Transferred or permitted to lapse any Required Intellectual
Property;


 


(vii)  has (A) written down or
written up (or failed to write down or write up in accordance with GAAP) the
value of any Inventory or accounts receivable, (B) revalued any of the Assets,
or (C) increased or changed any assumptions underlying, or methods of
calculating, any bad debt, contingency or other reserves;


 


(viii)  has (A) made any material
change in its customary methods of operation, including, without limitation,
practices and policies relating to purchasing, inventories, marketing, selling
and pricing, or (B) entered into any other material transaction other than in
the ordinary course of business consistent with past practice;


 


(ix)  has suffered any material
damage, destruction or casualty loss (whether or not covered by insurance) or
any material operating or other loss or any taking of any of the Assets, by
condemnation or eminent domain;


 


(x)  has allowed any Required Permit
to lapse or terminate or failed to renew any Required Permit that is scheduled
to terminate or expire within 60 calendar days after the Closing Date; or


 


(xi)  has entered into, or authorized,
any Contract to do any of the foregoing.


 


Section 5.12.  Assets.


 


(a)  Purchased Assets; Transfer of Title to
Purchased Assets.  The Company has
good title to or leasehold interest in all of the Purchased Assets, free and
clear of all Liens, except for Permitted Liens.  Assuming the receipt of all of the Company Required Consents
prior to the Closing, the Company has good right, full power and lawful
authority to sell, bargain, convey, transfer, deliver and assign to Purchaser
all its right, title and interest in, to and under each of the Purchased
Assets.  Assuming the receipt of all of
the Company Required Consents prior to the Closing, upon delivery to the
Purchaser at the Closing by the Company of the agreements, documents and
instruments set forth in Section 4.03(d) and upon the Company’s receipt of the
Initial Cash Payment Amount in accordance with Article III of this Agreement,
good title to the Purchased Assets will pass to the Purchaser, free and clear
of any Liens, except for Permitted Liens.


 


(b)  Subsidiary Assets; No Adverse Impact on
Subsidiary Assets.  The Company’s
Subsidiaries have good title to or leasehold interest in and have the legal and
valid right to use all of the properties and assets, tangible or intangible,
including, without limitation, all Real


 


40

















 


Property, Leaseholds, Equipment, Fixtures, Inventory, Contract rights,
Intellectual Property and personal property (such properties and assets being
the “Subsidiary Assets”), which, when taken together with the Purchased Assets,
constitute all of the properties and assets used in or necessary for the
conduct of the Business free and clear of all Liens, except for Permitted
Liens.  Assuming the receipt of all of
the Company Required Consents prior to the Closing, each of the Company’s
Subsidiaries has good right, full power and lawful authority to sell, bargain,
convey, transfer, deliver and assign to Purchaser all its right, title and
interest in, to and under each of the Subsidiary Assets.  Assuming the receipt of all of the Company
Required Consents prior to the Closing, upon delivery to the Purchaser at the
Closing by the Company’s Subsidiaries of the agreements, documents and
instruments set forth in Section 4.03(d) and upon the Company’s receipt of the
Initial Cash Payment Amount in accordance with Article III of this Agreement,
good title to the Subsidiary Assets will pass to the Purchaser, free and clear
of any Liens, except for Permitted Liens.


 


(c)  Sufficiency and Condition of the Assets.  The Purchased Assets and the Subsidiary
Assets (together, the “Assets”) comprise all of the properties and
assets reflected in the financial statements referred to in Section 5.07,
except for (i) the Excluded Assets, and (ii) Inventory sold or otherwise
disposed of since the respective dates thereof in the ordinary course of
business consistent with past practice. 
The Assets include all of the assets, properties, rights and interests
used or useful in the conduct of the business and operations of the Company and
its Subsidiaries, and no assets, properties, rights or interests, other than
the Assets, are required for the Company and its Subsidiaries to conduct their
business and operations as currently conducted or as proposed to be conducted.  The Assets (i) are in good condition and
repair, except for ordinary wear and tear, and (ii) are suitable and adequate
for the uses for which they are used and to carry on the Business.


 


Section 5.13.  Real
Property and Leaseholds.


 


(a)  Schedules.  Schedule 2.01(a)(i) sets forth a correct and complete list,
legal description and location, including, without limitation, street addresses
and tax map designations of all Real Property (all such Real Property being the
“Company Real Property”) and Schedule 2.01(a)(ii) sets forth a
correct and complete list, including location, street address, name and contact
information of the lessor, rents (and paid through dates), security deposits
and additional rent, of all Leaseholds (all such Leaseholds being the “Company
Leaseholds”), respectively, in which the Company or any of its Subsidiaries
has an interest.


 


(b)  Title to Real Property; Leasehold
Interests.  The Company or one of
its Subsidiaries, as the case may be, has good title in fee simple to all of
the Company Real Property, free and clear of all Liens, except for Permitted
Liens.  Except as set forth on Schedule
2.01(a)(i), none of the Company Real Property is subject to any lease,
sublease or other similar Contract or arrangement.  The Company or one of its Subsidiaries, as the case may be, has
good leasehold interest to all of the Company Leaseholds.  Except as set forth on Schedule
2.01(a)(ii), each of the Company Leaseholds is the subject of a written
lease agreement, and there are no oral terms inconsistent with the written
terms thereof.  Except as set forth on Schedule
5.13(b), no work has been performed on, or materials supplied to, any of
the Company Real Property or Company


 


41

















 


Leaseholds within the applicable statutory period which would give rise to
any mechanic’s or materialmen’s Liens.


 


(c)  No Restrictions.  The Company or one of its Subsidiaries, as
the case may be, enjoys peaceful and undisturbed possession of the Company Real
Property and the Company Leaseholds.  No
instrument of record, easement, license, use restriction, grant or applicable
zoning, building or urban redevelopment Law or other impediment of any kind
prohibits or materially limits, impairs or interferes with, the use, operation,
maintenance of, or access to, or affects the value of, the Company Real
Property or Company Leaseholds or any item of personal property related to the
Company Real Property or the Company Leaseholds.   Except as set forth on Schedule 2.01(a)(i) or Schedule
2.01(a)(ii), there are no recorded easements or encroachments by
improvements on adjoining premises with respect to any of the Company Real
Property or Company Leaseholds that could reasonably be expected to materially
affect the ability of the Company and its Subsidiaries to conduct the Business.


 


(d)  Condemnation and Eminent Domain.  Except as set forth on Schedule 5.13(d),
there is no pending or, to the Knowledge of the Company, threatened
condemnation or eminent domain proceeding with respect to any of the Company
Real Property or Company Leaseholds.


 


(e)  Company Leaseholds.  Except as set forth on Schedule 5.13(e):


 


(i)  the Company has delivered
correct, and complete copies of each lease evidencing a Company Leasehold
described on Schedule 2.01(a)(ii), together with all amendments,
modifications, assignments, assumptions and subleases thereof (each a “Company
Lease”);


 


(ii)  all Company Required Consents
shall be delivered with respect to all Required Leases;


 


(iii)  each Company Lease is valid
and in full force and effect on the date hereof; except as set forth on Schedule
5.13(e), the Company or one of its Subsidiaries is currently in occupancy
of the premises demised under each Company Lease and all obligations required
to have been performed by the tenant under each Company Lease have been
performed by the Company or one of its Subsidiaries, including payment of any
rent due and payable on or prior to the date hereof;


 


(iv)  no event or condition exists
that constitutes or, with the giving of notice or passage of time or both,
would constitute a default or breach of any Company Lease by the Company or one
of its Subsidiaries, or, to the Knowledge of the Company, any other party
thereto, and no notice of default has been received or issued by any Company or
Subsidiary with respect to any such the Company Lease that has not been waived
or cured;


 


(v)  there are no mortgages, deeds
of trusts, security deeds or other encumbrances or any other Liens on any
Company Leasehold that have been granted by the Company or


 


42

















 


one of its Subsidiaries,
as a result of a breach by any of the Company or one of its Subsidiaries of any
contractual obligation, or otherwise; and


 


(vi)  to the Knowledge of the
Company, except as set forth on Schedule 5.13(e), the current use of the
Company Leasehold or its Subsidiaries is in compliance with the uses permitted
under the applicable Company Lease.


 


(f)  Company Real Property.  Other than this Agreement, neither the
Company nor any of its Subsidiaries is a party to any Contract for the sale or
other disposition of any portion of the Company Real Property.  The Company has not received written
notification of any violation of any applicable Law relating to any Company
Real Property, including, without limitation, any Law regarding the generation,
storage, migration, disposal or existence of any hazardous waste on any Company
Real Property.


 


(g)  Casualty.  (i)  If all or any part of
the Company Real Property or the Company Leaseholds (excluding Inventory) is
damaged or destroyed by fire or other casualty occurring following the date
hereof and prior to the Closing Date and such fire or other casualty is fully
insured by the Company’s casualty insurance policies, neither party shall have
the right to terminate this Agreement and the parties shall nonetheless
consummate the Transactions in accordance with the Sale Documents, without any
abatement of the Purchase Price or any liability or obligation on the part of
the Company by reason of said destruction or damage other than an assignment to
Purchaser of all the Company’s rights to make a claim for and to retain any
casualty insurance proceeds received under such casualty insurance policies in
effect with respect to such damaged Company Real Property or Company Leasehold
(excluding Inventory) and Purchaser shall receive a credit from the Cash
Purchase Price due at Closing for the amount of the deductible on such casualty
insurance policy.


 


(ii)  If all or any part of the Company Real
Property or the Company Leaseholds (excluding Inventory) is damaged or
destroyed by fire or other casualty occurring following the date hereof and
prior to the Closing Date and such fire or other casualty is not fully insured
by the Company’s casualty insurance policies, neither party shall have the
right to terminate this Agreement and the parties shall nonetheless consummate
the Transactions in accordance with the Sale Documents, without any abatement
of the Purchase Price or any liability or obligation on the part of the Company
by reason of said destruction or damage other than either (i) restoring and/or
rebuilding or replacing such damaged property to substantially the same
condition as it existed prior to the occurrence of such fire or other casualty
or (ii) providing Purchaser with a credit from the Cash Purchase Price due at
Closing in an amount equal to the estimated cost of such repair or restoration.


 


Section 5.14.  Equipment,
Fixtures and Inventory.


 


(a)  Schedules and Possession.  Schedule 2.01(b)(i), Schedule
2.01(b)(ii) and Schedule 2.01(b)(iii) set forth a correct and
complete list and description of all Equipment, Fixtures and Inventory,
respectively, in which the Company or one of its Subsidiaries has an interest,
and the Company or one of its Subsidiaries has exclusive possession and control
of all such Equipment, Fixtures and Inventory.


 


43

















 


(b)  Inventory.  All Inventory classified as such in the consolidated balance
sheet of the Company and its Subsidiaries dated as of June 30, 2003, and all
additions to Inventory since June 30, 2003, consist of items of a quantity and
quality which are usable or saleable in the ordinary course of the business of
the Company or one of its Subsidiaries consistent with GAAP and are carried on
the financial records of the Company at the lower of cost or market value,
except for obsolete or slow moving Inventory, which has been written off or
written down to net realizable value. 
The charges, accruals and reserves on the consolidated balance sheet of
the Company and its Subsidiaries dated as of June 30, 2003 and on the books of
the Company in respect of obsolete and slow moving Inventory are, and such
charges, accruals and reserves on the Closing Balance Sheet will be, adequate
and calculated consistent with GAAP. 
Neither the Company nor any of its Subsidiaries is under any obligation
nor do they have any liability with respect to accepting returns of items of
Inventory in the possession of their customers.


 


Section 5.15.  Material
Contracts.


 


(a)  Schedule of Material Contracts.  Schedule 5.15(a) sets forth a correct
and complete list and description of all of the Material Contracts.


 


The term “Material
Contracts” means all of the following Contracts to which the Company or any
of its Subsidiaries is a party or by which they or any of their properties,
assets or rights, including, without limitation, the Business and the Assets,
are or may be bound or subject:


 


(i)  deposit agreements, indentures,
mortgages, pledge agreements, security agreements, deeds of trust, conditional
sale agreements or other Contracts granting a Lien on any of the Assets  to
any Person;


 


(ii)  credit agreements, guarantees,
indentures, loan agreements, purchase agreements, bonds, Capitalized Leases,
bonds, debentures, notes, foreign exchange or other hedging arrangements,
interest rate swaps, investments and other evidences of Debt providing for or
relating to Debt in respect of which the Company or any of its Subsidiaries is
in any manner directly or contingently obligated or liable;


 


(iii)  Contracts under which the
Company or any of its Subsidiaries has, directly or indirectly, purchased or
acquired any Securities or otherwise made any advance, loan, extension of
credit or capital contribution to, or other investment in, any Person, and all
joint venture, partnership and limited liability company Contracts;


 


(iv)  Contracts under which the
Company or any of its Subsidiaries (A) is lessee of, or holds or operates, any
Equipment, vehicle or other tangible personal property, or (B) has a Leasehold
interest or (C) is the lessor or sublessor of Real Property;


 


(v)  Contracts (A) for the sale or
for the purchase or other acquisition by the Company or any Subsidiary of, or
the sale or other Transfer by the Company or any Subsidiary of, any tangible or
intangible property or assets, or any services, (I) under


 


44

















 


which the Company and its
Subsidiaries are obligated to pay or entitled to receive, in the aggregate,
more than $250,000 in cash or the fair market value of other consideration,
assuming the exercise of all options or extensions under any such Contract, or
(II) except for maintenance Contracts entered into in the ordinary course of
the Company’s and its Subsidiaries’ business consistent with past practice,
which by their terms, assuming the exercise of all options and extensions
thereunder, have a term of greater than one year from the date they were
entered into, (B) granting any Person any right of first refusal, right of
first offer, buy-sell or economically preferential right or other similar
rights, to purchase any of the Assets, and (C) with respect to any warranty
program of the Company or its Subsidiaries;


 


(vi)  Contracts relating in whole or
in part to the Required Intellectual Property or providing for any license,
sublicense, assignment, or other Transfer of any of the Required Intellectual
Property (whether as licensor, licensee, sublicensor, sublicensee, assignor,
assignee, Transferor, Transferee, or otherwise);


 


(vii)  Contracts which (A) require
the Company or any of its Subsidiaries to deal on an exclusive basis with any
Person, (B) restrict or purport to restrict the Company or any of its
Subsidiaries from doing any kind of business or from doing business with any
Person or in any geographic area or from competing with any Person, (C) require
the Company or any of its Subsidiaries to maintain the confidentiality of any
matter, except for maintenance and/or sales Contracts entered into in the
ordinary course of the Company’s and its Subsidiaries’ business consistent with
past practice, and (D) require the Company or any of its Subsidiaries to
indemnify any Person, except for maintenance Contracts entered into in the
ordinary course of the Company’s and its Subsidiaries’ business consistent with
past practice;


 


(viii)  (A) employment, retainer,
severance, separation, non-competition, non-solicitation and consulting
Contracts with current and former employees officers, directors, consultants
and independent contractors, and Contracts with any labor union or other
collective bargaining group, (B) Contracts setting forth the terms of or
otherwise relating to Benefit Plans, (C) sales agency, dealer, distribution,
brokerage or franchise Contracts, (D) Contracts with any shareholder, member,
manager, director, officer or other Affiliate of the Company or any of its
Subsidiaries, (E) shareholders’ agreements, investor rights agreements,
registration rights agreements, voting agreements and other similar agreements
relating to the Company’s or any of its Subsidiary’s Equity Securities, and (F)
proxies, voting trusts, or powers of attorney to act on behalf of the Company
or any of its Subsidiaries;


 


(ix)  to the extent not covered
above, Contracts with suppliers of goods and services to distribute or resell
products, or receive commissions for acting as a sales agent for such supplier,
under which the Company or any of its Subsidiaries has, in the prior 24 months,
made purchases in excess of $250,000 or received commissions in excess of
$250,000, including, without limitation, Contracts with Cisco, Siemens and NEC
America;


 


45

















 


(x)  maintenance Contracts; provided,
however, that Schedule 5.15 will only include a standard form of
such maintenance Contracts and a list of substantially all of the parties who
have executed such maintenance Contracts in substantially the form of such
standard form agreement;


 


(xi)  Contracts not made in the
ordinary course of business consistent with past practice.


 


(b)  Copies of Material Contracts.  The Company has provided to the Purchaser
correct and complete copies of all written Material Contracts, except for the
maintenance Contracts referred to in clause (a)(x) above, for which the Company
has provided a standard form of Contract.


 


(c)  Enforceability.  (i) 
Each of the Material Contracts (A) has been duly authorized, executed
and delivered by the Company or one of its Subsidiaries, and to the Knowledge
of the Company, the other parties thereto, and is in full force and effect and
(B) constitutes the legal, valid and binding obligation of the Company or one
of its Subsidiaries, and to the Knowledge of the Company, the other parties
thereto, enforceable against the Company or one of its Subsidiaries, and to the
Knowledge of the Company, the other parties thereto in accordance with the
terms of each such Material Contract, except that such enforcement (x) may be
limited by bankruptcy, insolvency, moratorium or similar laws affecting
creditors’ rights generally and (y) is subject to the availability of equitable
remedies, as determined in the discretion of the court before which such a
proceeding may be brought; provided, however, that with respect
to the maintenance Contracts referred to in clause (a)(x) above, this
representation and warranty shall be true and correct with respect to all
maintenance Contracts which individually, or in the aggregate involve payments
of $100,000 during any 12-month period.


 


(ii)  There exists no breach or default (or event
which with or without the lapse of time or the giving of notice, or both would
constitute a breach or default) under the Material Contracts by the Company or
one of its Subsidiaries, or to the Knowledge of the Company, the other parties
thereto, and neither the Company nor any of its Subsidiaries nor any other
party to any Material Contract has given or received any written notice of
breach or default thereunder; provided, however, that with
respect to the maintenance Contracts referred to in clause (a)(x) above, this
representation and warranty shall be true and correct with respect to all
maintenance Contracts which individually or in the aggregate involve payments
of $100,000 during any 12-month period. 
Neither the Company nor any of its Subsidiaries has given or received
any notice that any party to any Material Contract intends to terminate or
materially amend or modify any Material Contract; provided, however,
that with respect to the maintenance Contracts referred to in clause (a)(x)
above, this representation and warranty shall be true and correct with respect
to all maintenance Contracts which individually or in the aggregate involve
payments of $100,000 during any 12-month period.


 


(iii)  The consummation of the Transactions will
not cause (A) any of the Material Contracts to cease to be in full force and
effect, (B) the material breach of any terms or conditions of any Material
Contract, (C) the forfeiture or impairment of any material rights under any
Material Contract or (D) any material penalty or other material adverse
consequence under


 


46

















 


any Material Contract; provided, however, that with respect
to the maintenance Contracts referred to in clause (a)(x) above, this
representation and warranty shall be true and correct with respect to all
maintenance Contracts which individually or in the aggregate involve payments
of $100,000 during any 12-month period.


 


(d)  Liens.  Schedule 5.15(d) 
sets forth a correct and complete list and description of all of the
Liens affecting or attaching to the Assets.


 


(e)  Debt.  Schedule 5.15(e) sets forth a correct and complete list
and description of the Debt outstanding or which may be outstanding under each
of the Material Contracts described in Section 5.15(a)(ii).


 


(f)  Certain Contracts.  (i) The maintenance Contracts entered into
since August 1, 2003 have a weighted average life of not less than 33 months,
(ii) since August 1, 2003, all maintenance Contracts were entered into in the
ordinary course of business consistent with past practice, (iii) except as set
forth on Schedule 5.15(f), since August 1, 2003, neither the Company nor
any of its Subsidiaries has entered into any maintenance Contracts, providing
for special incentives, rebates or excessive up-front payments or other
non-ordinary course incentives, and (iv) except as set forth on Schedule
5.15(f), neither the Company nor any of its Subsidiaries offered any member
of their sales force any special incentives, commissions or other similar items
to sell maintenance Contracts.


 


Section 5.16.  Intellectual
Property.


 


(a)  Ownership or Right to Use.  Schedule 2.01(f) sets forth a correct
and complete list and description of (i) all Intellectual Property (whether or
not owned by the Company or any of its Subsidiaries) used by the Company or any
of its Subsidiaries or which is necessary to conduct the Business, (ii) all
Intellectual Property which has been developed by or arisen out of the conduct
of the Business, and (iii) all other Intellectual Property (whether or not
currently used in the Business) in which the Company or any of its Subsidiaries
has an interest, whether as owner, licensee, licensor, sublicnesee, sublicensor
or otherwise (the Intellectual Property referred to in clauses (i) and (ii)
being the “Required Intellectual Property”), in each case (except where
the Company or a Subsidiary is a licensee or sublicensee), including, without
limitation, a correct and complete list of all jurisdictions in which all
trademarks, copyrights and patents (whether owned or licensed) are registered,
issued or applied for and all registration, grant and application numbers.  The Company or one of its Subsidiaries owns
or has the legal and valid right to use, all Required Intellectual Property,
free and clear of all Liens, except for Permitted Liens.  All Required Intellectual Property is valid,
enforceable and in good standing.


 


(b)  No Infringement.  Neither the ownership or use of the Required
Intellectual Property nor the operation of the Business has infringed,
misappropriated or conflicted with in any material respect and does not
infringe, misappropriate or conflict with in any material respect any
Intellectual Property of any other Person. 
To the Knowledge of the Company, no unauthorized Person is using or
engaging in any unauthorized use of any of the Required Intellectual Property.


 


47

















 


(c)  Loss of Rights.  There have been no claims made within the
five years immediately preceding the Closing Date (whether currently pending or
resolved) against the Company or any of its Subsidiaries asserting the
invalidity, misuse or unenforceability of any Required Intellectual Property
and, to the Knowledge of the Company, there are no grounds for any of the
foregoing.  To the Knowledge of the
Company, at no time during the conception or reduction of any of the Required
Intellectual Property to practice was any developer, inventor or other
contributor to such Required Intellectual Property subject to any employment
agreement or invention assignment or non-disclosure agreement or other
obligation with any third party that could reasonably be expected to materially
and adversely affect the Company’s or its Subsidiary’s rights in the Required Intellectual
Property.


 


(d)  Confidentiality of Intellectual Property.  (i) 
The Required Intellectual Property has been maintained in
confidence in accordance with protection procedures customarily used in the
industry of the Company and its Subsidiaries to protect rights of like
importance and, to the extent that any portion of the Required Intellectual
Property would otherwise qualify as a “trade secret”, which would be necessary
to preserve its status as trade secrets under applicable Laws. The Company and
its Subsidiaries have taken all reasonably necessary actions to maintain and
protect the Required Intellectual Property.


 


(ii)  Except as set forth on Schedule 5.16(d),
all Personnel have executed and delivered to the Company or one of its
Subsidiaries (A) a proprietary information agreement restricting such Person’s
right to disclose proprietary information of the Company and its Subsidiaries,
and (B) appropriate instruments of assignment in favor of the Company or one of
its Subsidiaries as assignee that have conveyed to the Company or one of its
Subsidiaries exclusive ownership of all Intellectual Property conceived or
developed by such Personnel while they were employed or otherwise working for
the Company or one of its Subsidiaries.


 


Section 5.17.  Insurance.


 


(a)  Insurance.  The Company, its Subsidiaries, all of the Assets and the Business
are covered by valid and currently effective insurance policies or binders of
insurance, including, without limitation, general liability insurance, property
insurance, workers’ compensation insurance and business interruption insurance,
issued in favor of the Company or one of its Subsidiaries, in each case, in
such types and amounts and covering such risks as are consistent with customary
practices and standards of companies engaged in business and operations
substantially similar to those of the Company and its Subsidiaries.  Neither the Company nor any of its
Subsidiaries is in material default or breach with respect to its obligations
under any insurance policy maintained by any of them, and all premiums
thereunder will be timely paid in full for all periods up to and through the
Effective Time.   Neither the Company
nor any of its Subsidiaries has received any notice of cancellation or
non-renewal of any such policy or arrangement. 
There is no claim pending against the Company or any of its Subsidiaries
under any of such policies or arrangements as to which coverage has been denied
or disputed by the underwriters of such policies or arrangements.  Schedule 5.17 sets forth a correct
and complete list and description of all such policies of insurance, including
(i) the name of the insurer and the names of the principal insured and each
named insured, (ii) the period of coverage, (iii) the type and amount of coverage,
and (iv) a list of the material claims paid out under such policies during


 


48

















 


the past three years and claims that are pending.  Schedule 5.17 sets forth a correct and complete list of
all risks against which the Company or any of its Subsidiaries is insured under
a program of self insurance.


 


(b)  Bonding.  The Company and its Subsidiaries have as of the date of this
Agreement, and will have, as of the Closing Date, posted all necessary employee
malfeasance, performance or liability bonds in connection with the operation of
the Business, and neither the Company nor any of its Subsidiaries has, nor will
they have as of the Closing Date, any Liability under any such bonds.


 


Section 5.18.  Books
and Records; Company Names; Bank Accounts; Officers and Directors.


 


(a)  Books and Records.  Except as set forth on Schedule 5.18(a),
the books and records and other financial records of the Company and each of
its Subsidiaries are in all material respects accurate, correct and complete,
have been maintained in accordance with good business practices, including the
maintenance of an adequate system of financial controls, accurately reflect the
transactions and other information purported to be contained therein, and are
reflected accurately in all material respects in the financial statements
referred to in Section 5.07.  Correct
and complete copies of all such books and records of the Company and each of
its Subsidiaries will have been provided to, or made available to, the
Purchaser or its representatives prior to the Due Diligence Termination
Date.  The minute books of the Company
and each of its Subsidiaries, copies of which will have been delivered to the
Purchaser or its representatives prior to the Due Diligence Termination Date,
contain materially accurate records of all meetings and accurately reflect all
corporate action of the shareholders and the board of directors (including
committees) of the Company and each of its Subsidiaries, as the case may be.  The stock books and ledgers of the Company
and its Subsidiaries, copies of which will have been delivered to the Purchaser
or the Purchaser’s representatives, correctly record all transfers and
issuances of all Securities of the Company and each of its Subsidiaries.


 


(b)  Company Names; Chief Executive Office.  Neither the Company nor any of its
Subsidiaries has operated or conducted any business under any name other than
the name ascribed to the Company in this Agreement and for each Subsidiary on Schedule
5.05(a).  The location of the chief
executive office and chief place of business of the Company and its
Subsidiaries is set forth on Schedule 5.18(b).


 


(c)  Bank Accounts.  Schedule 5.18(c) sets forth a correct
and complete list and description of (i) all bank and savings accounts,
certificates of deposit and safe deposit boxes of the Company’s Subsidiaries
and (ii) all corporate borrowing, depository and transfer resolutions and those
Persons entitled to act thereunder.


 


(d)  Officers and Directors.  Schedule 5.18(d) sets forth a correct
and complete list of all officers and directors of the Company’s Subsidiaries.


 


49

















 


Section 5.19.  Customers
and Suppliers.


 


(a)  Customers.  (i)  Schedule 5.19(a)
sets forth a correct and complete list and description, including, without
limitation, the names and addresses, of the twenty  most significant customers
(by revenue to the Company and its Subsidiaries) of the Company and its
Subsidiaries for the twelve-month period ended December 31, 2002 and for the
six-month period ended on June 30, 2003, and the amount for which each such
customer was invoiced during such period. 
To the Knowledge of the Company, each such customer intends to use the
products, equipment, goods and services sold to it as an end user, and none of
such customers intends to act as a distributor or reseller thereof.


 


(ii)  Except as set forth on Schedule 5.19(a),
since June 30, 2003, there has not been (A) any material adverse change in the
business relationship of the Company or any of its Subsidiaries with any
customer set forth on Schedule 5.19(a), including, without limitation,
any such customer ceasing to purchase or use the products, equipment, goods or
services of the Company or its Subsidiaries or  reducing the purchase
or use of such products, equipment, goods or services, or (B) any material
change in any term (including credit terms) of the purchase Contracts, purchase
orders or related arrangements with any such customer.  Since December 31, 2002, neither the Company
nor any of its Subsidiaries has received any notice from any customer set forth
on Schedule 5.19(a) that such customer intends to take any of the
actions set forth in clauses (A) or (B) above.


 


(iii)  Since June 30, 2003, neither the Company nor
its Subsidiaries has shipped or sold to any customer any products, equipment,
goods or services (A) to the Knowledge of the Company, in excess of the amount
thereof that such customer is reasonably expected to use during its ordinary
course of business, (B) on terms that include any volume discount, right of
return, rights to rebate, or consignment, or (C) to the Knowledge of the
Company, on terms that provided such customer with an incentive to take
delivery of or pay for such products, equipment, goods or services prior to the
date that such customer would otherwise have taken delivery of or paid for the
same.


 


(b)  Suppliers.  Schedule 5.19(b) (i) sets forth a correct and complete
list and description, including, without limitation, the names and addresses,
of the twenty most significant vendors and suppliers (by amounts billed to the
Company and its Subsidiaries) of the Company and its Subsidiaries for the
twelve-month period ended December 31, 2002 and for the six-month period ended
June 30, 2003.


 


(ii)  Since June 30, 2003, there has not been (A)
any material adverse change in the business relationship of the Company or any
of its Subsidiaries with any supplier of goods, supplies, Inventory or
merchandise or (B) any material change in any term (including credit terms) of
the supply Contracts or related arrangements with any such supplier.  Since June 30, 2003, neither the Company nor
any of its Subsidiaries has received any notice from any vendor or supplier set
forth on Schedule 5.19(b) that such supplier intends to take any of the
actions set forth in clauses (A) or (B) above.


 


50

















 


Section 5.20.  Environmental
Matters.  Except as set forth in Schedule
5.20 or with respect to any Recognized Environmental Condition contained in
a report obtained by Purchaser prior to the Closing Date:


 


(a)  The operations of the Company
and its Subsidiaries are in full compliance with Environmental Laws;


 


(b)  The Company and/or its
Subsidiaries have obtained and are in compliance with all necessary Permits
that are required under Environmental Laws to operate the facilities, Assets
and Business of the Company and it Subsidiaries;


 


(c)  There has been no Release at
any of the Relevant Properties owned or operated by the Company, its
Subsidiaries or a predecessor in interest, or to the Knowledge of the Company,
at any Relevant Property which received Hazardous Materials generated by the
Company or its Subsidiaries or any predecessor in interest which is reasonably
likely to result in Environmental Liabilities;


 


(d)  No Environmental Claims have
been asserted against the Company, its Subsidiaries or, to the Knowledge of the
Company, any predecessor in interest, nor to the Knowledge of the Company are
any Environmental Claims threatened or pending against the Company, any of its
Subsidiaries or any predecessor in interest which is reasonably likely to
result in Environmental Liabilities;


 


(e)  To the Knowledge of the
Company, no Environmental Claims have been asserted against any Relevant
Properties that may have received Hazardous Materials generated by the Company,
any of its Subsidiaries or any predecessor in interest which is reasonably
likely to result in Environmental Liabilities that have an Material Adverse
Effect;


 


(f)   The Company has delivered to
Purchaser correct and complete copies of (A) all Environmental Reports, or
correspondence regarding any Environmental Liabilities of the Seller at any of
the Relevant Properties which are in possession of the Shareholders, Company,
its Subsidiaries or their agents or (B) any Recognized Environmental Conditions
(as defined by the American Society of Testing and Materials (“ASTM”) E
1527-00(Standard Practice for ESA Phase I Environmental Site Assessment
Process)) at any of the Current Properties which are in possession of the
Shareholders, Company, its Subsidiaries or their agents;


 


(g)  To the Knowledge of the
Company, no environmental Liens have been filed against any Real Property owned
by the Company or any of its Subsidiaries; and


 


(h)  To the Knowledge of the
Company, Schedule 5.20 sets forth a correct and complete list and
description of all instances where any Relevant Property of the Company, any of
its Subsidiaries or any predecessor in interest are not in compliance with
Environmental Laws or give rise to Environmental Liabilities.


 


51

















 


Section 5.21.  Employees;
ERISA.


 


(a)  Schedule of Employees.  Schedule 5.21(a) sets forth a correct
and complete list and description of all of the employees of, and consultants
and independent contractors to, the Company and its Subsidiaries and each
employee’s place of employment, compensation, bonuses, deferred or contingent
compensation, pension, accrued vacation, accrued sick pay, severance, “golden
parachute” and other like benefits and term of employment, in effect as of the
date of this Agreement.  Since December
31, 2002, none of the employees listed on Schedule 5.21(a) has spent
less than 75% of his active business hours on matters involving the Business;
and since December 31, 2002 there has been no officer or employee of, or
consultant or independent contractor to, the Company, any of its Subsidiaries,
any Shareholder, or any of their Affiliates, other than those listed on Schedule
5.21(a), who has spent more than 25% of his active business hours on
matters involving the Business.


 


(b)  Employment Agreements.  Except as set forth on Schedule 5.21(b),
neither the Company nor any of its Subsidiaries has entered into and is not bound
by any (i) employment, consulting or severance Contract with any of its
directors, officers or employees, or (ii) collective bargaining agreements with
its employees.  None of the Company’s or
its Subsidiaries’ employees is subject to any non-compete, non-disclosure,
confidentiality, employment, consulting or similar agreements relating to,
affecting or in conflict with the Company’s and its Subsidiaries’ conduct of
the Business.  Except as set forth on Schedule
5.21(b), the Company and its Subsidiaries have entered into normal and
customary non-competition and non-solicitation agreements with all former
officers and other members of management of the Company and its
Subsidiaries.  Correct and complete
copies of all agreements set forth on Schedule 5.21(b) and a copy of each
normal and customary non-competition and non-solicitation agreement have been
delivered to Purchaser or its representatives prior to the date of this
Agreement.


 


(c)  Plans.  Schedule 5.21(c) sets forth a correct and complete list of
all Benefit Plans of the Company and its Subsidiaries correct and complete
copies of which and all summary plan descriptions, summaries of material
modifications, most recent Form 5500 (and schedules) and actuarial reports of
which have been delivered to the Purchaser or its representatives prior to the
date of this Agreement.


 


(d)  Plan Qualifications.  Each of the Company’s Benefit Plans which is
an “employee pension benefit plan” (as defined in Section 3(2) of ERISA) and
intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service that the Plan is
qualified and that its related trust has been determined to be exempt from
taxation under Section 501(a) of the Code. 
To the Knowledge of the Company, no events or circumstances have
occurred (other than changes for which the remedial amendment period under
Section 401(b) of the Code has not expired) since the date of such letters that
will materially adversely affect the qualification or exemption of such
Plan.  Except as set forth on Schedule
5.21(d), no Benefit Plan sponsored by the Company is under audit, nor, to
the Knowledge of the Company, is any such audit pending.  Schedule 5.21(d) lists each employee pension
benefit plan covered under Title IV of ERISA that is maintained, contributed to
or required to be contributed to by a member of the Company’s Controlled Group
and each


 


52

















 


“multiemployer plan” as defined under Section 3(37) of ERISA that covers
employees of the Company.


 


(e)  Labor Relations. 
(i)  Except as
specifically set forth on Schedule 5.21(e), none of the Company’s or its
Subsidiaries’ employees currently are covered by a unit which has been
certified by the National Labor Relations Board as a unit for purposes of
collective bargaining, nor are they represented by any labor union or
organization.  To the Knowledge of the
Company, no labor union or organization currently is engaged in any efforts to
organize or represent any of the Company’s or its Subsidiaries’ employees.  The Company and each Subsidiary are in
substantial compliance with all Laws respecting employment, employment
practices, labor, terms and conditions of employment and wages and hours, in
each case, with respect to employees.


 


(ii)  There is no unfair labor practice complaint
against the Company or any of its Subsidiaries pending before any Governmental
Body or other Person.  There is no labor
strike, dispute, slowdown or stoppage at any Company or Subsidiary location and
no such strike, dispute, slowdown or stoppage has ever occurred.  The Company and its Subsidiaries have timely
prepared and filed all appropriate forms (including Immigration and
Naturalization Service Form I-9) required by any relevant Governmental Body.


 


(iii)  To the Knowledge of the Company, no
executive or key employee of the Company or any of its Subsidiaries nor any
group of employees of the Company or its Subsidiaries has any plans to
terminate their employment with the Company or its Subsidiary, as the case may
be.


 


(f)  Compliance with Benefit Laws.  Neither a Reportable Event nor a Prohibited
Transaction has occurred or is continuing with respect to any Plan of the
Company or any of its Subsidiaries.  No
notice of intent to terminate a Benefit Plan subject to Title IV of ERISA has
been filed nor except as listed on Schedule 5.21 has any Benefit Plan been
terminated.  To the Knowledge of the
Company, no circumstances exist which constitute grounds under Section 4042 of
ERISA entitling the PBGC to institute proceedings to terminate, or appoint a
trustee to administrate, a Benefit Plan, nor has the PBGC instituted any such
proceedings.  None of the Shareholders,
the Company, any of the Company’s Subsidiaries or other members of a Controlled
Group with the Company or any Shareholder has completely or partially withdrawn
under Section 4201 or 4204 of ERISA from a multi-employer pension plan (or is
liable for any complete or partial withdrawal which occurred prior to or as of
the Closing Date).  Each of the Company,
its Subsidiaries and the other members of a Controlled Group has met its
minimum funding requirements under ERISA with respect to all of their Plans and
none of them has an Unfunded Vested Liability. 
None of the Company, its Subsidiaries or other members of a Controlled
Group has incurred any liability to the PBGC under ERISA, other than liability
for premiums which have been paid.  None
of the Company, its Subsidiaries or any of member of their Controlled Group has
used the services of workers provided by contract labor suppliers, temporary
employees, “leased employees” (as that term is defined in Section 414(n) of the
Code), or persons who have provided services as independent contractors, to an
extent that could reasonably be expected to result in the disqualification of
any Benefit Plan under applicable Law, or the imposition of penalties or excise
Taxes with respect to any Benefit Plan by the Internal Revenue Service, the
U.S. Department of Labor, the PBGC or any other Governmental Body.


 


53

















 


Other than claims for benefits under the claims procedures of any Benefit
Plans, there are no pending or, to the Knowledge of the Company, threatened in
writing, actions, claims or proceedings against the Company, a Subsidiary or
any member of their Controlled Group or any Benefit Plan or its assets with
respect to such plan.  Correct and
complete copies of any agreement entered into with the PBGC, U.S. Department of
Labor or Internal Revenue Service have been delivered to the Purchaser or its
representatives prior to the date of this Agreement.  All contributions required to be made, and claims to be paid,
under the terms of any Benefit Plan maintained or contributed by the Company or
any Subsidiary have been timely made or reserves therefor on the balance sheet
of the Company have been established, which reserves are adequate in all
material respects.  None of the Parent’s
or Company’s purpose for engaging in the transactions contemplated by this
Agreement is for the evasion of liability under Section 4069 of ERISA.


 


(g)  Absence of Transaction Entitlements.  Except as set forth on Schedule 5.21(g),
the consummation of the Transactions will not (i) entitle any current or former
director, officer or employee of the Company or any of its Subsidiaries or any
group of such Persons to any payment from the Company or any of its
Subsidiaries, (ii) increase the amount of compensation due to any such
director, officer or employee, (iii) accelerate the time of vesting of any
compensation, stock incentive or other benefit of any such directors, officer
or employee or (iv) result in any “parachute payment” under Section 280G of the
Code, whether or not such payment is considered to be reasonable compensation
for services rendered.


 


(h)  No Post-Retirement Benefits.  Except with respect to the Benefit Plans set
forth on Schedule 5.21(c), neither the Company nor any of its
Subsidiaries has any liability with respect to an obligation to provide
benefits, including death or medical benefits (whether or not insured) with
respect to any Person beyond their retirement or other termination of service
with the Company or one of its Subsidiaries other than (i) coverage mandated by
Part 6 of Title I of ERISA or Section 4980B of the Code or state Laws, (ii)
retirement or death benefits under any employee pension plan, (iii) disability
benefits under any employee welfare plan that have been fully provided for by
insurance or otherwise, (iv) deferred compensation benefits accrued as
liabilities on the books of the Company, or (v) benefits in the nature of
severance pay.  The obligations set
forth on Schedule 5.21(c) have been accrued for in the financial
statements attached hereto as Schedule 5.07(a) and Schedule 5.07(b)
in accordance with past practice.


 


(i)  Workers’ Compensation.  There are no liabilities to any of the
Company’s employees relating to workers’ compensation benefits that are not
fully insured against by third-party insurance carriers.


 


(j)  WARN Act.  Except as set forth on Schedule 5.21(j), neither the
Company nor any of its Subsidiaries has laid off or involuntarily dismissed
(other than for cause) any employees within the six months immediately prior to
the Closing Date.  Neither the Company
nor any of its Subsidiaries, has, within the 90 days immediately prior to the
Closing Date, taken any action or actions which would, independently of the
Transactions, result in a plant closing or mass layoff within the meaning of
the WARN Act.


 


54

















 


Section 5.22.  Certain
Business Relationships with the Company or its Subsidiaries.


 


(a)  Certain Transactions or Arrangements.  Except as set forth on Schedule 5.22(a),
no partner, shareholder, member, manager, officer, director, employee or other
Affiliate of any Shareholder, the Company or any of its Subsidiaries, nor any
spouse, former spouse, parent, sibling or child of any such Person or Affiliate
thereof, (i) is, or has been during the 12-month period immediately preceding
the date of this Agreement, involved in any business arrangement, relationship
or transaction with the Company or any of its Subsidiaries, other than an
employment relationship, (ii) is, or has been during the 12-month period
immediately preceding the date of this Agreement, a party to Contract with the
Company or any of its Subsidiaries, or (iii) will after the Closing have any
interest in any of the Assets.


 


(b)  No Other Related Party Transactions.  Except as set forth on Schedule 5.22(b),
no partner, shareholder, member, manager, officer, director, employee or other
Affiliate of any Shareholder, the Company or any of its Subsidiaries, nor any
spouse, former spouse, parent, sibling or child of any such Person or Affiliate
thereof, owns, holds or possesses, directly or indirectly, any material
financial or other interest in, or is a partner, shareholder, member, manager,
officer, director, employee or other Affiliate of (i) any Person that is a
supplier, vendor, customer, lessor, lessee, or competitor of the Company, any
of its Subsidiaries or the Business, or (ii) any other business which engages
in any transactions or other business relationships with the Company or any of
its Subsidiaries.


 


(c)  Transactions with the Shareholders and
Their Affiliates.  Schedule
5.22(c) sets forth a correct and complete list and description of all
transactions between, among, involving or relating to any Shareholder or any of
their Affiliates (other than the Company) on the one hand, and the Company or
any of its Subsidiaries, on the other hand, including, without limitation, any
Guarantees, credit support or other similar transactions, and all transactions
entered into by the Company or any of its Subsidiaries that provided a benefit
to either of the Shareholders or any of their Affiliates (other than the
Company).


 


Section 5.23.  Warranties.  Schedule 5.23 sets forth a correct
and complete list and description of all oral and written warranty programs
offered by the Company or any of is Subsidiaries.  The Company has delivered to the Purchaser correct and complete
copies or descriptions of each such warranty program.  No material claim for breach of any express or implied warranty
with respect to any of the Company’s or its Subsidiaries’ products or services
has been made or, or to the Knowledge of the Company, is threatened.  Neither the Company nor any of its
Subsidiaries is contemplating the recall of any products sold by them and there
are no material defects in any such products. 
The charges, accruals and reserves on the books of the Company and its
Subsidiaries in respect of any and all warranties given by the Company and its
Subsidiaries were calculated in a manner consistent with GAAP and are adequate.


 


Section 5.24.  Brokers,
Finders.  Except for Bear, Stearns
& Co. Incorporated, the fees and expenses of which will be paid entirely by
the Shareholders, neither the Shareholders, the Company nor any of their
Subsidiaries has retained any broker or finder in connection with the
Transactions, and is not obligated and has not agreed to pay any brokerage or
finder’s commission, fee or similar compensation.


 


55

















 


Section 5.25.  Solvency
of the Company.  As of the date of
this Agreement, and as of the Effective Time, before and after giving effect to
the Transactions, the Company is, and will be, Solvent.


 


Section 5.26.  Misstatements.


 


(a)  No Material Misstatements or Omissions.  No information, certificate, schedule or
report furnished or to be furnished (as of the date furnished) by any
Shareholder, the Company or any of its Subsidiaries (or by their employees,
representatives, counsel, accountants or other professionals) to the Purchaser
or to its representatives in connection with (i) the Transactions, (ii) the
preparation or negotiation of any Sale Document or (iii) the satisfaction of
any conditions set forth in any Sale Document and no representation or warranty
contained in the Sale Documents, contains or will contain, as the case may be,
any material misstatement of fact or omitted or will omit, as the case may be,
to state a material fact or any fact necessary to make the statement contained
therein not materially misleading; provided, however, that this
Section 5.26(a) shall not apply to any projections or forward-looking financial
data covered by Section 5.26(b) hereof.


 


(b)  Projections.  All projections and forward-looking
financial data provided to the Purchaser or its representatives by or on behalf
of the Company or any of its Subsidiaries (or by their employees, representatives,
counsel, accountants or other professionals) were prepared in good faith and
are based on underlying assumptions which the Shareholders and the Company
reasonably believe provide a reasonable basis for the projections contained
therein.  Such projections have been
prepared on the basis of the assumptions set forth therein, which the
Shareholders and the Company reasonably believe are fair and reasonable.


 


Section 5.27.  Full
Disclosure.  There are no facts
pertaining to the Company, its Subsidiaries, the Assets or the Business which
could reasonably be expected to have a Material Adverse Effect and which have
not been disclosed in this Agreement. 
There is no information which would materially contradict or is
inconsistent in any material respect with any representation or warranty of the
Shareholders or the Company contained in the Sale Documents.


 


ARTICLE VI


 


Representations and Warranties of the Shareholders


 


The Shareholders, jointly
and severally, hereby represent and warrant to the Purchaser as of the date
hereof and as of the Closing Date as follows:


 


Section 6.01.  Existence
and Power.  Each Shareholder (a) is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and (b) has all necessary
corporate power and authority to execute and deliver each of the Sale Documents
and to consummate the Transactions and to perform its obligations under the
Sale Documents.


 


56

















 


Section 6.02.  Authorization;
Binding Effect.  The execution and
delivery by each Shareholder of each of the Sale Documents to which any
Shareholder is a party, the performance by the Shareholders of their
obligations under such Sale Documents and the consummation of the Transactions
by the Shareholders has been duly authorized by all necessary corporate action
on the part of the Shareholders.  Each
of the Sale Documents to which any Shareholder is or may become a party is, or,
when executed and delivered in accordance with this Agreement will be, legal,
valid and binding obligations of the Shareholders enforceable against the
Shareholders in accordance with its terms, except that such enforcement (a) may
be limited by bankruptcy, insolvency, moratorium or similar laws affecting
creditors’ rights generally and (b) is subject to the availability of equitable
remedies, as determined in the discretion of the court before which such a
proceeding may be brought.


 


Section 6.03.  Contravention.  Neither the execution, delivery and
performance of the Sale Documents by each Shareholder nor the consummation of
the Transactions by the Shareholders will (with or without notice or lapse of
time or both) (a) violate or breach any provision of any Shareholder’s
organizational or governing documents, (b) assuming the receipt of all of the
Company Required Consents prior to the Closing, violate or breach any material
Law by which any Shareholder or any of their material assets or properties may
be bound or affected, or (c) assuming the receipt of all of the Company
Required Consents prior to the Closing, breach or result in a default under,
result in the acceleration of, or give rise to a change in the terms of or a
right of termination, cancellation, modification or acceleration or require any
notice under, any material Contract to which any Shareholder is a party or by
which any Shareholder or any of their material assets or properties, may be
bound or affected.


 


Section 6.04.  Consents.  Except for the Consents set forth on Schedule
6.04 and any Consents required under the HSR Act, no material Consents are
required or advisable on behalf of the Shareholders in connection with (a) the
due execution and delivery by the Shareholders of the Sale Documents and the
performance of the Shareholders’ obligations thereunder, (b) the consummation
of the Transactions by the Shareholders, (c) the exercise by the Purchaser of
its rights and remedies under the Sale Documents, and (d) the (i) conduct of
the Business and (ii) ownership or use of the Assets, by the Purchaser and its
Subsidiaries immediately following the Closing Date.  As of the Closing Date, all of the Company Required Consents will
have been obtained and will be in full force and effect.


 


Section 6.05.  Litigation.  There is no Action against any Shareholder
or, to the Knowledge of the Company, any other Person (not including the
Purchaser), that involves any of the Transactions that, individually or in the
aggregate, if determined adversely to any Shareholder, could reasonably be expected
to have a Material Adverse Effect.


 


Section 6.06.  Title
to Securities.  The Parent is the
sole record, legal and beneficial owner of 100% of the outstanding shares of
capital stock of NGC.  The Parent’s
right, title and interest in such capital stock of NGC is free and clear of all
Liens, voting trusts, voting Contracts and restrictions of any nature
whatsoever.  Except as set forth on
Schedule 6.06, NGC is the sole record, legal and beneficial owner of (i) 100% of
the outstanding shares of Series B, Series C, Series F and Series G preferred
stock of the Company, and (ii) 100% of the outstanding capital


 


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stock of NCC.  NCC is the sole
record, legal and beneficial owner of all of the outstanding shares of Class B
common stock of the Company, of which 3% of such Class B common stock is
subject to a warrant in favor of a third party.  NGC’s and NCC’s respective rights, title and interest in such
capital stock of the Company, and NGC’s right, title and interest in the
capital stock of NCC, are each free and clear of all Liens, voting trusts,
voting Contracts and restrictions of any nature whatsoever other than as set
forth above.  Such shares of Preferred
Stock and Common Stock are all the Securities of any kind, debt or equity, of
the Company owned by NGC and NCC other than intercompany loans payable by the
Company to any of the Shareholders.


 


ARTICLE VII


 


Representations and Warranties of the Purchaser


 


The Purchaser represents
and warrants to the Shareholders and the Company as of the date hereof and as
of the Closing Date as follows:


 


Section 7.01.  Existence
and Power.  The Purchaser (a) is a
corporation, validly existing and in good standing under the laws of the
jurisdiction of its organization, and (b) has all necessary corporate power to
execute and deliver each of the Sale Documents and to consummate the
Transactions and to perform its obligations under the Sale Documents.


 


Section 7.02.  Authorization;
Binding Effect.  The execution and
delivery by the Purchaser of each of the Sale Documents to which the Purchaser
is a party, the performance by the Purchaser of its obligations under such Sale
Documents and the consummation of the Transactions by the Purchaser has been
duly authorized by all necessary corporate action on the part of the
Purchaser.  Each of the Sale Documents
to which the Purchaser is or may become a party is, or, when executed and
delivered in accordance with this Agreement will be, legal, valid and binding
obligations of the Purchaser enforceable against the Purchaser in accordance
with its terms, except that such enforcement (a) may be limited by bankruptcy,
insolvency, moratorium or similar laws affecting creditors’ rights generally
and (b) is subject to the availability of equitable remedies, as determined in
the discretion of the court before which such a proceeding may be brought.


 


Section 7.03.  Contravention.  Neither the execution, delivery and
performance of the Sale Documents by the Purchaser nor the consummation of the
Transactions by the Purchaser will (with or without notice or lapse of time or
both) (a) violate or breach any provision of the Purchaser’s organizational or
governing documents, (b) assuming the receipt of all of the Purchaser Required
Consents prior to the Closing, violate or breach any material Law by which the
Purchaser or any of its material assets or properties, may be bound or
affected, or (c) assuming the receipt of all of the Purchaser Required Consents
prior to the Closing, conflict with, breach or result in a default under, any
material Contract to which the Purchaser is a party or by which the Purchaser
or any of its material assets or properties, may be bound or affected.


 


Section 7.04.  Consents.  No material Consents are required on behalf
of the Purchaser in connection with (a) the due execution and delivery by the
Purchaser of the Sale Documents and the performance of the Purchaser’s
obligations thereunder, and (b) the consummation of the


 


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Transactions by the Purchaser.  As
of the Closing Date, all of the Purchaser Required Consents will have been
obtained and will be in full force and effect.


 


Section 7.05.  Litigation.  There is no Action against the Purchaser or,
to the Purchaser’s knowledge, any other Person (not including the Company or
the Shareholders), that involves any of the Transactions that, individually or
in the aggregate, if determined adversely to the Purchaser, could reasonably be
expected to materially and adversely affect the ability of the Purchaser to
perform its obligations under the Sale Documents or to consummate the
Transactions.


 


Section 7.06.  Financing.  As of the date of this Agreement, and as of
the Closing Date, the Purchaser has, or has readily available pursuant to binding
commitments, funds in an amount sufficient to enable the Purchaser to pay the
Cash Purchase Price.


 


Section 7.07.  No
Other Representations or Warranties. 
The Purchaser acknowledges that neither the Company, any of the
Shareholders nor any of their Affiliates is making any representation or
warranty,  express or implied, about or
with respect to the Company, its Subsidiaries, the Assets, the Business or the
Shareholders, except for the representations and warranties set forth in the
Sale Documents and in the exhibits, annexes and schedules thereto, and in any
certificates delivered thereunder.


 


ARTICLE VIII


 


Pre-Closing Covenants of the Shareholders, the Company and the Purchaser


 


Section 8.01.  Conduct
of Business Pending Closing.  Each
of the Shareholders and the Company, jointly and severally, agree that, from
the date of this Agreement through the earlier to occur of (x) the Closing
Date, and (y) the date on which this Agreement is terminated in accordance with
the provisions of Section 10.01 hereof, the Company will, the Shareholders will
cause the Company and its Subsidiaries to, and the Company will cause its
Subsidiaries to:


 


(a)  Conduct of Business.  Conduct the business of the Company and its
Subsidiaries in a manner consistent with the past practices of the Company and
its Subsidiaries and neither the Company nor any of its Subsidiaries will
engage in any transactions out of the ordinary course of business consistent
with past practice.


 


(b)  Payment of Obligations.  Subject to Section 8.01(g) hereof, cause the
Company and its Subsidiaries to promptly and timely pay and discharge in the
ordinary course of the Company’s business consistent with past practice, all
Taxes and other material obligations assessed, levied or imposed upon, or
required to be withheld by, or otherwise owing by, the Company, its
Subsidiaries or with respect to the Assets or the Business and shall not incur,
assume, guarantee or otherwise become liable for any additional Debt, except
for Capitalized Leases and Debt under the Congress Credit Agreement.


 


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(c)  Material Contracts.  Perform and observe all of the material
terms and provisions of each Material Contract to be performed or observed by
it, enforce each Material Contract in accordance with its terms and not enter
into or terminate any Material Contracts or make any material amendments or
modifications to any Material Contracts. 
Notwithstanding the foregoing, (i) from the date of this Agreement
through the Closing Date, the maintenance Contracts entered into by the Company
and its Subsidiaries shall have a weighted average life of not less than 33
months, (ii) all maintenance Contracts shall be entered into in the ordinary
course of business consistent with past practice, (iii) neither the Company nor
any of its Subsidiaries shall enter into any maintenance Contracts, providing
for special incentives, rebates or excessive up-front payments or other
non-ordinary course incentives, and (iv) without the prior written consent of
the Purchaser (which consent shall not be unreasonably withheld or delayed)
neither the Company nor any of its Subsidiaries shall offer any member of their
sales force any special incentives, commissions or other similar items to sell
maintenance Contracts.  In addition,
neither the Company nor any of its Subsidiaries shall amend or modify any terms
or provisions of their organizational or governing documents.


 


(d)  Representations and
Warranties; Conditions.  Not engage
in any practice, take any action, fail to take any action or enter into any
transaction that could reasonably be expected to (i) cause any of the
representations and warranties of the Shareholders or the Company contained in
the Sale Documents, including, without limitation, those contained in Section
5.11 hereof, to be untrue, inaccurate or incorrect in any material respect at
any time, or (ii) result in any of the conditions set forth in Section 4.03 not
being satisfied on or prior to the Purchaser Outside Date.


 


(e)  Sale of Assets; Liens.  Not (i) Transfer any of the Assets, except
Inventory sold or disposed of in the ordinary course of business consistent
with past practice, (ii) dispose of, or trade in, any of the Equipment or
Fixtures, or (iii) create, incur, assume, or suffer to exist any Lien upon or
with respect to any of the Assets, except for Permitted Liens.


 


(f)  Compensation.  Not increase the aggregate amount of
compensation or benefits of the directors, officers or employees of the Company
or any of its Subsidiaries, including, without limitation, base salaries and
bonuses of all types, whether paid or accrued.


 


(g)  Restricted Payments;
Affiliate Transactions; Securities. 
Not (i) declare or make any Restricted Payment, (ii) issue, sell or
grant any Securities of the Company or any of its Subsidiaries; provided,
however, that during the period from the date of this Agreement up to
the Closing Date, the Company may issue additional Equity Securities
representing not more than 25% of the outstanding Equity Securities of the
Company in the aggregate, (iii) sell, acquire, redeem, repurchase or amend the
terms of any Securities of the Company or any of its Subsidiaries, except in
each case, in connection with the termination of the Company’s stock option
plan, (iv) loan or advance any funds, or any goods or property to, any
Shareholder or any of their Affiliates, (v) make any payments or otherwise
Transfer any consideration to any Shareholder or any of their Affiliates,


 


60

















 


whether on account of any
Liability or otherwise, or permit any Shareholder or any of their Affiliates
to, (vi) engage in any transaction with any Shareholder or any of their
Affiliates, (vii) engage in any transaction for the benefit of either of the
Shareholders or any of their Affiliates (other than the Company), or (viii)
purchase or acquire any Securities of any Person; provided, however,
that notwithstanding the foregoing, from the date of this Agreement through the
Closing Date, the Company may make an aggregate of $2,000,000 of payments to
the Shareholders.


 


Section 8.02.  Access
to Information; Cooperation.


 


(a)  Access to Information.  (i) 
Each Shareholder and the Company, jointly and severally, understand and
acknowledge that the Purchaser has not completed its examination of the
Company, its Subsidiaries, the Assets and the Business and therefore requires
continuous reasonable access to the Company, its Subsidiaries, the Assets and
the Business, from the date of this Agreement through the earlier to occur of
(x) the Closing Date and (y) the date on which this Agreement is terminated in
accordance with the provisions of Section 10.01 hereof.


 


(ii)  Each Shareholder and the Company, jointly
and severally, agree that during the period from the date of this Agreement
through the earlier to occur of (x) the Closing Date and (y) the date on which
this Agreement is terminated in accordance with the provisions of Section 10.01
hereof, the Company will, the Shareholders will (only with respect to
information relating to the Company and its Subsidiaries), the Parent will
cause NGC and NCC (only with respect to information relating to the Company and
its Subsidiaries) to, NGC and NCC will cause the Company and its Subsidiaries
to, the Company will cause its Subsidiaries to, and the Company and each of the
Shareholders will cause their respective Affiliates, directors, officers,
employees, accountants, counsel, consultants, investment bankers and other
representatives to:


 


(A)  upon reasonable notice to the Company, give the Purchaser and its
authorized representatives, including, without limitation, investors, lenders,
environmental consultants and advisors, and respective authorized employees,
accountants, counsel and other representatives of any of the foregoing (I)
during normal business hours, reasonable access to all plants, offices,
personnel (including the Persons responsible for the preparation of Tax
Returns), warehouses, facilities, properties, books, Contracts, commitments and
records (including accountant’s work papers) of or relating to the Company and
its Subsidiaries, including, without limitation, the Assets and the Business,
and (II) such financial and operating data and other information with respect
to the Business and the Assets as any of them may from time to time reasonably
request; and


 


(B)  permit the Purchaser and its
authorized representatives, including, without limitation, investors, lenders,
environmental consultants and advisors, and respective authorized employees,
accountants, counsel and other representatives of any of the foregoing to make
such inspections thereof as any of them may reasonably request, including,
without limitation, the real estate and facility audit that is currently in
progress and an Environmental Site Assessment of the Current Properties and
environmental compliance audits.


 


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(b)  Cooperation. Each Shareholder and the
Company, jointly and severally, agree that during the period from the date of
this Agreement through the earlier to occur of (x) the Closing Date and (y) the
date on which this Agreement is terminated in accordance with the provisions of
Section 10.01 hereof, the Company will, the Shareholders will, the Parent will
cause NGC to, NGC will cause the Company and its Subsidiaries to, the Company
will cause its Subsidiaries to, and the Company and each Shareholder will cause
their respective Affiliates, directors, officers, employees, accountants,
counsel, consultants, investment bankers and other representatives to cooperate
with the Purchaser and its representatives in carrying out the Transactions.


 


Section 8.03.  Disclosure
Schedules.


 


(a)  Updating of Disclosure Schedules.  Each Shareholder and the Company, jointly
and severally, agree that during the period from the date of this Agreement
through the earlier to occur of (x) the Closing Date and (y) the date on which
this Agreement is terminated in accordance with the provisions of Section 10.01
hereof, the Company will promptly notify the Purchaser of (i) any and all
information, facts, events, circumstances, issues or other matters that existed
as of the date of this Agreement that should have been set forth or described
in the schedules to this Agreement required or provided for under Articles V or
VI of this Agreement as of the date of this Agreement by delivery of
appropriate updates to the Schedules attached to this Agreement setting forth
such information, facts, events, circumstances, issues or other matters, and
(ii) any and all information, facts, events, circumstances, issues or other
matters arising after the date of this Agreement which, if existing on the date
of this Agreement, would have been required to be set forth or described in the
schedules to this Agreement required or provided for under Articles V and VI
hereof, in each case, by delivery of appropriate updates to the Schedules
attached to this Agreement setting forth such information, facts, events,
circumstances, issues or other matters, in each case, no later than two
Business Days prior to the scheduled Closing Date (any such updates to the
Schedules being referred to herein as “Schedule Updates”).


 


(b)  Effect of Schedule Updates.  Notwithstanding anything to the contrary set
forth herein, no delivery of the Schedule Updates by the Company shall limit,
restrict, or otherwise affect the schedules previously delivered under this
Agreement, nor shall such delivery of the Schedule Updates affect the rights of
the Purchaser or the obligations or liability of the Company or the Shareholders
hereunder with respect to the schedules previously delivered under this
Agreement.


 


Section 8.04.  Reporting
Requirements.  Each Shareholder and
the Company, jointly and severally, agree that during the period from the date
of this Agreement through the earlier to occur of (x) the Closing Date and (y)
the date on which this Agreement is terminated in accordance with the
provisions of Section 10.01 hereof, the Company will prepare and promptly (and
in any event not later than 15  Business Days following the end of the
month to which a statement relates) deliver to the Purchaser monthly financial
statements for the Company and its Subsidiaries, on a consolidated basis, as
well as detailed back-up schedule therefor. 
These monthly financial statements will be prepared in accordance with
GAAP and in a manner consistent with the basis of presentation used in the
financial statements referred to in Section 5.07.


 


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Section 8.05.  Resignations.  On the Closing Date, the Company and the
Shareholders shall cause to be delivered to the Purchaser duly signed
resignations, effective as of the Effective Time, of all of the directors and
officers of each of the Company’s Subsidiaries set forth on a list delivered to
the Company prior to the Closing Date, and shall take such other actions as are
necessary to accomplish the foregoing.


 


Section 8.06.  Certain
Agreements.


 


(a)  Agreement.  The Shareholders, the Company and the Purchaser agree to accept
the form, terms and provisions of the Assumption Agreement, the Escrow
Agreement, the Transitional Services Agreement, the Bills of Sale, the
Assignment and Assumption Agreement, the Intellectual Property Assignment
Agreement, the legal opinions and the Deeds as provided to them with such
changes as they shall mutually agree upon.


 


(b)  Transitional Services Agreement.  The Parent agrees that it will enter into
the Transitional Services Agreement with the Purchaser, pursuant to which the
Parent will agree to provide the Purchaser with certain insurance and tax
services and such other services as may mutually be agreed by the Purchaser and
the Parent.


 


(c)  Vendor Deposits.  The Purchaser agrees, during the period from
the date of this Agreement, through the Closing Date, to use its reasonable
best efforts to reduce or eliminate the Vendor Deposits, and for every dollar
of Vendor Deposits for which the Purchaser receives reasonably satisfactory
evidence that such Vendor Deposits will be reduced or eliminated by the
Purchaser during such period, the Required Net Current Asset Amount shall be
reduced by an amount (such amount being the “Vendor Deposit Reduction Amount”)
equal to the product of (i) 80%, multiplied by (ii) the aggregate dollar amount
of Vendor Deposits reduced or eliminated by the Purchaser during such
period.  For purposes of this Agreement
the term “Vendor Deposit” means the letters of credit set forth on Schedule
8.06(c).


 


ARTICLE IX


 


Covenants of the Shareholders, the Company and the
Purchaser


 


Section 9.01.  Public
Announcements; Confidentiality.


 


(a)  Public Announcements.  The Shareholders, the Company and the
Purchaser agree that except as required by applicable Laws or a listing
agreement with a national securities exchange, without the prior written
consent of the other parties hereto, the Parent will not, NGC will not, the
Company will not, the Parent will cause NGC not to, NGC will cause the Company
and the Company Parties not to, the Company will cause its Subsidiaries not to,
nor will the Purchaser or any manager, member, partner, shareholder, director,
officer, employee or other agent or representative of the Purchaser, make (i)
any press release or any similar public announcement concerning the
Transactions, or (ii) any general communication to any of the Shareholders’,
the Company’s or any of its Subsidiaries’ employees, customers, suppliers,
lenders, creditors, distributors or others having business or financial
relationships with the


 


63

















 


Shareholders, the Company or any of its Subsidiaries, or any other public
statement, pertaining to the Sale Documents or the Transactions.


 


(b)  Confidentiality.  The Shareholders, the Company and the
Purchaser agree that the Confidentiality Agreement shall survive the execution
and delivery of this Agreement and remain in full force and effect; provided,
however, that such Confidentiality Agreement shall terminate and be of
no further force or effect as of the Effective Time; and provided, further,
however, that notwithstanding any provision of the Confidentiality
Agreement to the contrary, until the termination of this Agreement pursuant to
the provisions of Section 10.01:


 


(i)  the Purchaser shall have the
right to meet with and interview the customers, clients, suppliers and vendors
of the Company and its Subsidiaries so long as (A) the Purchaser provides the
Company with prior notice of any such meeting relating to the Transactions or
the Company and offers a representative of the Company the opportunity to
participate in such meeting, and (B) in the event of an unsolicited call from a
customer, client, supplier or vendor, the Purchaser may discuss the Transaction
and the Company with such Person so long as promptly after such calls the
Purchaser promptly informs the Company of the substance of such calls; and


 


(ii)  the Purchaser shall be
entitled to meet with, and make any necessary disclosures to, any Governmental
Body in order to obtain any Consents or Permits necessary to (A) consummate the
Transactions or (B) allow the Company and its Subsidiaries to operate the
Business immediately following the Closing without interruption.


 


Section 9.02.  Certain
Tax Disclosures.  Notwithstanding
anything to the contrary set forth in the Sale Documents the obligations of
confidentiality contained herein or in any other agreement to which the parties
hereto are parties, as they relate to the Transactions, shall not apply to the
tax structure or tax treatment of the Transactions, and each party hereto (and
any employee, representative, or agent of any party hereto) may disclose to any
and all Persons, without limitation of any kind, the tax structure and tax
treatment of the Transactions and all materials of any kind (including, without
limitation, opinions or other tax analyses) that are provided to such Persons
relating to such tax treatment or tax structure; provided, that such disclosure
may not be made until the earliest of (x) the date of the public announcement
of discussions relating to the Transactions, (y) the date of the public announcement
of the Transactions, and (z) the date of the execution of this Agreement.  The preceding sentence is intended to cause
the Transactions to be treated as not having been offered under conditions of
confidentiality for purposes of Section 1.6011-4(b)(3) (or any successor
provision)  of the Treasury Regulations
promulgated under Section 6011 of the Code, and shall be construed in a manner
consistent with such purpose.


 


Section 9.03.  Non-Competition.


 


(a)  Acknowledgment.  In order to induce the Purchaser to purchase
the Purchased Assets and assume the Assumed Liabilities as provided in the Sale
Documents and to consummate the Transactions and in consideration of the
payments made or to be made by the Purchaser to the


 


64

















 


Company under the Sale Documents and to protect the goodwill of the
Business, each of the Company and the Shareholders (i) agrees to be bound by
the terms and provisions of this Section, (ii) agrees, represents and warrants
that the Company and the Shareholders have read and given careful consideration
to all of the terms and provisions of this Section, and agrees that the terms
and provisions of this Section are reasonable with respect to the subject
matter thereof and necessary for the reasonable and proper protection of the
Confidential Information, legitimate business interests and goodwill of the
Purchaser, its Subsidiaries, the Business and the Assets, and (iii)
acknowledges that the Purchaser agreed to enter into the Sale Documents in
reliance on the representations, agreements and covenants of the Company and
the Shareholders to abide by and be bound by the terms and provisions of this
Section.


 


(b)  Confidential Information.  Except as may be required by applicable Law
or required by any legal proceeding, each of the Company and the Shareholders,
jointly and severally, agrees during the Non-Compete Period, not to, and agrees
to cause its Affiliates, directors, officers, employees or agents or any
investment banker, financial advisor, attorney, accountant, representative, and
any other Person acting on behalf of the Company or the Shareholders not to,
directly or indirectly, disclose, reveal, divulge, publish or otherwise make
known any of the Confidential Information to any Person for any reason or
purpose whatsoever, or use any of the Confidential Information for any reason
or purpose whatsoever at any time from and after the Effective Time.  In addition, and subject to the foregoing,
each of the Company and the Shareholders, jointly and severally, agrees during
the Non-Compete Period, to treat the Confidential Information as confidential
at all times.  Each of the Company and
the Shareholders, jointly and severally, agrees to be fully responsible for any
breach of this Section by any of its Affiliates, directors, officers, employees
or agents or any investment banker, financial advisor, attorney, accountant,
representative, or any other Person acting on behalf of such the Company or the
Shareholders.


 


(c)  Restrictive Covenant.  Each of the Company and the Shareholders,
jointly and severally, agrees that during the Non-Compete Period, neither the
Company nor any Shareholder, nor any Affiliate thereof will, except in
connection with the discharge of any Excluded Liabilities, engage, or hold any
direct or indirect financial interest in any Person that engages, or assist any
Person in engaging, either directly or indirectly, individually, or as a
director, officer, employee, shareholder, manager, member, partner, owner,
trustee, agent, consultant, independent contractor, investor, lender or
principal, or in any other capacity, in any Competing Business in any city,
county, state, country or other territory or jurisdiction anywhere in North
America; provided, however, that the passive ownership by the
Company or any Shareholder of not more than 3.0% of any class of equity
securities of any corporation that engages in a Competing Business, if such
equity securities are listed on a national securities exchange or have been
registered under Section 12(g) of the Securities Exchange Act of 1934, as
amended, will not be deemed to be a breach of this Section.


 


(d)  Non-Solicitation.  Each of the Company and the Shareholders,
jointly and severally, agrees that during the Non-Compete Period, neither the
Company nor any Shareholder, nor any Affiliate thereof will, in any manner,
directly or indirectly:


 


65

















 


(i)  solicit, induce or attempt to
induce, or assist others to solicit, hire, induce or attempt to induce, any
employee, contractor, consultant or agent of the Purchaser or any of its
Subsidiaries to either (A) leave his or her employment, consulting or other
position or business relationship with the Purchaser or any of its
Subsidiaries, or (B) breach his or her employment, consulting or other
agreement with the Purchaser or any of its Subsidiaries; provided, however,
that the foregoing provision shall not prohibit the Company or the Shareholders
from hiring any such employee, contractor, consultant or agent (x) through
general advertising that is not targeted directly at the Purchaser or any of
its Subsidiaries, or (y) whose employment or business relationship with the
Purchaser or any of its Subsidiaries is terminated by the Purchaser or any of
its Subsidiaries, as the case may be; or


 


(ii)  solicit, induce or attempt to
induce or assist others to solicit, induce or attempt to induce, any customer,
supplier, vendor, contractor or client associated with the Purchaser’s or its
Subsidiaries’ businesses to terminate its, his or her business relationship or
association with the Purchaser or any of its Subsidiaries, or make any
disparaging, derogatory or detrimental comments about the Purchaser, any of its
Subsidiaries, any of their employees, directors, officers or Affiliates, any
customer or client or other Person having a business relationship with the
Purchaser or any of the Purchaser’s Subsidiaries.


 


(e)  Non-Compete Payments.  (i) 
As partial consideration for the agreements and covenants of the
Shareholders and the Company set forth in this Section 9.03, upon the terms and
subject to the conditions of this Agreement, if the term of the Maintenance Fee
Agreement is extended beyond March 31, 2005 (the portion of the extended term
beginning on April 1, 2005 through the newly-extended termination date of the
Maintenance Fee Agreement being the “Extended Term”), then the Purchaser
shall make payments to the Company as follows. 
During the Extended Term, within 30 days after a payment received by the
Purchaser from Avaya under the Maintenance Fee Agreement with respect to
services provided by the Purchaser during the Extended Term becomes
non-refundable and non-disgorgeable by the Purchaser, the Purchaser shall pay
to the Company (each such payment being a “Non-Compete Payment”), by
wire transfer of immediately available funds, an amount equal to 20% of each
such payment that is actually received by the Purchaser.  For the avoidance of doubt, no Non-Compete
Payments shall be made in respect of any payments received by the Purchaser for
services or maintenance provided outside of the Extended Term, even if such
payments are actually received by the Purchaser during the Extended Term.


 


(ii)  If for any reason, the Purchaser is required
to set-off, refund, reimburse or disgorge to Avaya any payment for which the
Purchaser has made a Non-Compete Payment, the Shareholders and the Company
shall immediately refund to the Purchaser the Non-Compete Payment made in
respect of such set-off, refunded, reimbursed or disgorged payment.  Alternatively, the Purchaser shall have the
right to set off such Non-Compete Payment against any other Non-Compete Payment
that may be due hereunder, or against any other payment that may be due under
any of the Sale Documents, including, without limitation, the Purchaser Note.


 


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(iii)   During the Extended Term and for a period
of six months thereafter, upon reasonable notice to the Purchaser, the
Purchaser shall permit the Company and its representatives reasonable access to
the Purchaser’s books and records relating to the Non-Compete Payments and the
Maintenance Fee Agreement, for the purpose of confirming the Purchaser’s
calculations of the Non-Compete Payments hereunder.


 


(f)  Enforcement.  Notwithstanding any other provision of the
Sale Documents, if, at the time of enforcement of any provision of this
Section, a court should hold that the duration or scope restrictions stated
herein are unreasonable or unenforceable under circumstances then existing, the
parties agree that the maximum duration or scope permitted by applicable Law
under such circumstances will be substituted for the stated duration or
scope.  Whenever possible, each
provision of this Section will be interpreted in such manner as to be effective
and valid under applicable law.  If the
provisions of this Section are held unenforceable to any extent in any
jurisdiction, such holding shall not impair the enforceability of this Section
in any other jurisdiction.


 


(g)  Name Change.  Immediately following the Closing, and at all
times thereafter, the Company, its Subsidiaries and the Shareholders will cease
using any corporate names or tradenames that include “Expanets” (or any
substantially similar names). 
Immediately following the Closing, the Shareholders will change the
corporate name of the Company and each of its Subsidiaries to names that do not
include “Expanets” (or any substantially similar names).


 


Section 9.04. [Reserved]


 


Section 9.05.  Release.  Each Shareholder, on behalf of itself and
its Subsidiaries and Affiliates, hereby agrees, effective upon the Closing and
without the need of any further notice or action, that (a) the Purchaser and
its Subsidiaries and Affiliates are hereby released and forever discharged from
any and all Liabilities, obligations, claims, demands, proceedings, Actions,
Contracts, agreements, Debt and Guarantees whatsoever, whether known or
unknown, suspected or unsuspected, both in law and in equity, that any
Shareholder, or any of their Subsidiaries or Affiliates now have, have ever had
or may hereafter have arising contemporaneously with or prior to the Closing
Date or on account of or arising out of any Debt or Liability owed by the
Company or any of its Subsidiaries to any of the Shareholders or any of their
Subsidiaries or any of their Affiliates (collectively, “Claims”), and
(b) any and all Liens, if any, which any Shareholder or any of its Subsidiaries
or Affiliates may have on the assets of the Purchaser or any of its
Subsidiaries and Affiliates in respect of the Claims are hereby automatically
and irrevocably released; provided, however, that,
notwithstanding the foregoing, this release does not cover, and the
Shareholders shall not be deemed to release the Purchaser from, any and all
Claims the Shareholders may have or be entitled to, under any of the Sale
Documents.  Each Shareholder, on behalf
of itself and its Subsidiaries and Affiliates, hereby represents and warrants
to the Purchaser that neither the Shareholders nor any of their Subsidiaries or
Affiliates has Transferred or purported to Transfer to any Person all or any
portion of any Claim released by the Shareholders and their Subsidiaries and
Affiliates herein.  This Section 9.05
shall not prohibit or in any way restrict the Shareholders’ rights and ability
to make a Claim or demand for payment directly against the Company or its
Subsidiaries of the amounts or claims owed by the Company or its Subsidiaries
to the Shareholders.


 


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Section 9.06.  Use
of Proceeds.  The Company and the
Shareholders, jointly and severally, hereby agree that the Parent will cause
NGC to, NGC will cause the Company to, and the Company will use the proceeds
from the Transactions to, subject to any defenses, claims, set-offs or other
rights or mutual agreements the Company and the Shareholders may have, repay
the Company’s creditors in accordance with applicable Laws and the terms of any
agreements the Company may have with such creditors.


 


Section 9.07.  Certain
Leases.  The Shareholders and the
Company will cause the leases set forth on Schedule 9.07 that are marked
with an asterisk (each such lease being a “Required Lease”) to be
assigned (including all security deposits in connection with such leases) to
the Purchaser at the Closing.  With
respect to all other leases (such other lease being the “Other Leases”)
set forth on Schedule 9.07 (other than the Required Leases), the
Shareholders and the Company will use their respective reasonable best efforts
to cause such Other Leases to be assigned (including all security deposits in
connection with such leases) to the Purchaser at the Closing; provided, however,
that the failure of the Shareholders and the Company to cause all of the Other
Leases to be assigned to the Purchaser shall not be considered to be a breach
of this Agreement.  In any event, the
Company will cause all of the Other Leases to be assigned to the Purchaser
within 60 days following the Closing.


 


Section 9.08.  Bankruptcy
Proceedings.


 


(a)  [Intentionally Omitted]


 


(b)  Additional Orders.  In the event of a bankruptcy or similar
proceeding with respect to NCC or NGC (either such entity being the “Filing
Entity”), the Shareholders and the Company, jointly and severally, agree (i) to
file as promptly as practicable a motion in form and substance reasonably
satisfactory to the Purchaser with the bankruptcy court in which such
bankruptcy or similar proceeding is filed, seeking an order in form and
substance reasonably satisfactory to the Purchaser, providing for the approval
of all of such Filing Entity’s obligations under this Agreement and the
authorization of such Filing Entity to perform all of its obligations under
this Agreement as promptly as practicable, (ii) to use their commercially
reasonable best efforts to cause as promptly as practicable a hearing on such
motion to be held as promptly as practicable and (iii) to use their
commercially reasonable best efforts to cause as promptly as practicable such
bankruptcy court to approve such Filing Entity’s obligations under this
Agreement as promptly as practicable, but in no event later than the earlier to
occur of (x) the date which is twenty days after the date of such bankruptcy
filing, and (y) the date which is three Business Days prior to the Closing Date
(such earlier date being the “Filing Entity Order Date”).


 


(c)  Parent Order.  The Shareholders and the Company, jointly
and severally, agree that they shall (i) file with the Delaware Bankruptcy
Court in connection with the Parent’s bankruptcy proceedings a motion (the
“Parent Motion”), in form and substance reasonably satisfactory to the
Purchaser, seeking an order (the “Parent Order”) in form and substance
reasonably satisfactory to the Purchaser, providing for the approval of all of
the Parent’s obligations under the Sale Documents and the authorization of the
Parent to perform all of its obligations under the Sale Documents, (ii) use
their commercially reasonable best efforts to


 


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cause a hearing on the Parent Motion to be held as promptly as practicable
on or prior to the Closing Date and (iii) use their commercially reasonable
best efforts to cause the Delaware Bankruptcy Court to approve the Parent
Motion and enter the Parent Order as promptly as practicable on or prior to the
Closing Date.


 


(d)  Subsequent Filing Entity Order.  The Shareholders and the Company, jointly
and severally, agree that they shall with respect to each Filing Entity (i)
file with the bankruptcy court in which each such Filing Entity’s bankruptcy or
similar proceedings are filed a motion (the “Filing Entity Motion”), in form
and substance reasonably satisfactory to the Purchaser, seeking an order (the
“Filing Entity Order”) in form and substance reasonably satisfactory to the
Purchaser, providing for the approval of all of such Filing Entity’s
obligations under the Sale Documents and the authorization of such Filing
Entity to perform all of its obligations under the Sale Documents, (ii) use
their commercially reasonable best efforts to cause a hearing on the Filing
Entity Motion to be held as promptly as practicable on or prior to the Closing
Date and (iii) use their commercially reasonable best efforts to cause such
bankruptcy court to approve the Filing Entity Motion and enter the Filing
Entity Order as promptly as practicable on or prior to the Closing Date.


 


Section 9.09. Financial Statements.   After the date hereof, the Company and the
Parent will (a) request Deloitte & Touche LLP to prepare and deliver for
the benefit of Purchaser all material financial statements required by
Purchaser to satisfy its obligations under Rule 3.05 of Regulations S-X with
respect to filings to be made by it with the Securities and Exchange
Commission, including, without limitation, (i) audited consolidated balance
sheets of the Company and its Subsidiaries as of December 31, 2002, 2001 and
2000 and (ii) audited consolidated statements of operations, statements of
changes in shareholders’ equity and statements of cash flows of the Company and
its Subsidiaries for the twelve-month periods ended December 31, 2002, 2001 and
2000, and (b) deliver an unaudited consolidated balance sheet of the Company
and its Subsidiaries as at September 30, 2003 and an unaudited consolidated
statement of operations, statement of changes in shareholders’ equity and
statement of cash flows for the period ended September 30, 2003.  The Company, the Shareholders and the Parent
shall use commercially reasonable efforts to have delivered to Purchaser an
unqualified opinion of Deloitte & Touche LLP with respect to the foregoing
audited financial statements.  The
Company will engage Deloitte & Touche LLP to commence the foregoing audit
within five days of the execution of this Agreement and will request Deloitte
& Touche LLP to proceed diligently with such audit.  Each of the Company, the Shareholders and
the Parent will make its representatives and representatives of Deloitte &
Touche LLP available to Purchaser and its representatives to answer questions
with respect to such financial statements; provided, that all reasonable costs,
expenses and fees of Deloitte & Touche LLP in connection with such audit
shall be for Purchaser’s account.


 


ARTICLE X


 


Termination and Expenses


 


Section 10.01.  Termination.  The obligations of the parties under the
Sale Documents to consummate the Transactions may be terminated at any time
prior to the Closing:


 


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(a)  by the mutual consent of the
Company and the Purchaser;


 


(b)  by the Company, if (i) the
Closing shall not have occurred on or prior to the Company Outside Date, unless
such failure to consummate the Transactions is the result of a material breach
of any Sale Document by the Company or the Shareholders, or (ii) the Purchaser
shall have breached in any material respect any of its representations,
warranties, covenants or other agreements contained in the Sale Documents,
which breach (A) would give rise to the failure of a condition set forth in
Section 4.02, and (B) cannot be or has not been cured by the earlier to occur
of (x) the date which is 30 days after the giving of written notice by the
Company to the Purchaser specifying such breach, and (y) the Company Outside
Date; provided, however, that if the Purchaser shall have breached
the representation and warranty in Section 7.06, or the covenants and
agreements set forth in Sections 3.01(a), (b) or (c), the Purchaser shall not
be entitled to any cure right;


 


(c)  by the Purchaser, if (i) the
Closing shall not have occurred on or prior to the Purchaser Outside Date,
unless such failure to consummate the Transactions is the result of a material
breach of any Sale Document by the Purchaser, or (ii) the Company or any
Shareholder shall have breached in any material respect any of its representations,
warranties, covenants or other agreements contained in the Sale Documents,
which breach (A) would give rise to the failure of a condition set forth in
Section 4.03, and (B) cannot be or has not been cured by the earlier to occur
of (x) the date which is 30 days after the giving of written notice by the
Purchaser to the Company specifying such breach, and (y) the Purchaser Outside
Date;


 


(d)  by the Purchaser if (i) any Law
shall have been enacted, adopted, issued or promulgated which, prohibits the
Transactions, or (ii) any Governmental Body shall have issued an order, decree
or ruling or taken any other action, which permanently restrains, enjoins or
otherwise prohibits the Transactions, and such order, decree, ruling or other
action shall have become final and non-appealable; or


 


(e) by the Purchaser, if the conditions set forth in Section 4.03(n) is not
satisfied prior to the Purchaser Outside Date ;


 


(f)  by the Purchaser, if with
respect to each Filing Entity, the bankruptcy court in which such Filing
Entity’s bankruptcy or similar proceedings are filed shall not have approved
such Filing Entity’s obligations under this Agreement and the other Sale
Documents on or prior to the Filing Entity Order Date, or (iii) by the
Purchaser, if any of the Shareholders or the Company shall (A) reject any of
the Sale Documents in connection with a bankruptcy or similar proceeding with
respect to any of the Shareholders, the Company or any of their Subsidiaries,
(B) convert such proceeding into a Chapter 7 proceeding or other liquidation
proceeding, or (C) file a Plan of Reorganization that excludes, prohibits or
does not provide for the consummation of the Transactions.


 


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Any such termination
shall be in writing delivered to the other parties hereto in accordance with
the provisions of Section 12.01 hereof.


 


Section 10.02.  Effect
of Termination.  In the event of a
termination of this Agreement under Section 10.01, this Agreement will become
void and of no further force or effect, except for the provisions of (a)
Section 9.01 relating to public disclosures, (b) Section 10.03 relating to the
payment of fees and expenses, and (c) this Section 10.02.  Except as provided in Section 10.03(e),
notwithstanding any provision of the Sale Documents to the contrary, neither
the termination of this Agreement, nor anything contained in this Section
10.02, will be deemed to release any party from any liability due to, or
prevent the other party from exercising their rights and remedies under the
Sale Documents with respect to, (i) the breach or inaccuracy of any
representation or warranty of such party set forth in the Sale Documents, or
(ii) the breach by any such party of the covenants or agreements of such party
in the Sale Documents, in each case, prior to the date of such termination.


 


Section 10.03.  Fees
and Expenses.


 


(a)  Payment of Fees and Expenses.  Subject to clauses (b), (c) and (d) below,
each of the parties hereto will be responsible for and pay its own, and prior
to the Effective Time, the Shareholders, jointly and severally, will pay or
reimburse the Company and each of its Subsidiaries for, legal, accounting,
engineering, environmental, survey and title charges and other fees and
expenses, including, without limitation, reasonable attorneys’ and accountants’
fees and expenses and the fees and expenses of financial consultants,
investment bankers, lenders and environmental consultants, incurred in
connection with the Transactions, including, without limitation, the due
diligence review, and the negotiation, preparation and execution of the Sale
Documents (collectively, all such fees and expenses being the “Fees and
Expenses”).  Without limiting the
generality of the foregoing, prior to the Closing, the Company shall obtain
final invoices from its accountants, attorneys, investment bankers, financial
advisors and other similar professionals reflecting all Fees and Expenses
payable by the Company and its Subsidiaries in connection with the
Transactions.  Prior to the Closing, the
Company shall have paid in full all such Fees and Expenses and delivered to the
Purchaser invoices from each such accountant, attorney, investment banker,
financial advisor and other professional marked “paid in full”.  The Shareholders agree that any Fees and
Expenses not paid by the Company and its Subsidiaries prior to the Closing
shall be the sole responsibility of, and shall be timely paid by, the
Shareholders.


 


(b)  Transaction Fees and Taxes.  The Company will be responsible for and will
duly and timely pay  any and all (i) filing fees, including,
without limitation, HSR Act filing fees, recording charges, registration costs
and expenses, and (ii) Taxes, including, without limitation, stock transfer
Taxes, sales and use Taxes and real property gains and transfer Taxes, in each
case, directly or indirectly attributable to the Transactions.  Except as otherwise required by applicable
Law, the Company will be responsible for filing any Tax Returns and complying
with any procedures required in connection with all Taxes resulting from such
Transfer.


 


(c)  Expense Reimbursement.  On the date of the Shareholders’ execution
of this Agreement, the Parent shall cause NGC to, and NGC will cause the
Company to, and the


 


71

















 


Company shall, pay to the Purchaser (to an account designated by the
Purchaser) by wire transfer of immediately available funds, an amount equal to
$250,000 (which amount, when added to the $250,000 previously paid by the
Company to the Purchaser pursuant to the Letter of Intent, shall be the “Expense
Amount”) as reimbursement for the Purchaser’s Fees and Expenses incurred
and to be incurred in connection with the Transactions.


 


(d)  Termination Fee.  In the event that either (i) this Agreement
is terminated pursuant to Section 10.01(e) or (f), or (ii) both (A) this
Agreement is terminated pursuant to Section 10.01(c) or the Transactions are
not consummated on or prior to the Purchaser Outside Date for any reason other
than as a result of a material breach of this Agreement by the Purchaser, and
(B) within twelve months after the date of termination of this Agreement, NGC,
NCC or the Company shall consummate any Competing Transaction (whether such
Competing Transaction was proposed, contemplated or announced before or after
the date of termination of this Agreement), then in the case of (i) or (ii)
above, in addition to the Expense Amount payable to the Purchaser pursuant to
Section 10.01(c) above, the Shareholders and the Company, jointly and
severally, shall pay to the Purchaser on the first business day after the
termination of this Agreement, an amount in cash equal to $4,000,000 by wire
transfer of immediately available funds (the payment made to the Purchaser
under (x) or (y) above being the “Termination Fee”).  Notwithstanding anything to the contrary
contained in this Agreement, Purchaser shall not be entitled to receive the
Termination Fee more than one time.


 


(e)  Acknowledgement.  The parties acknowledge and agree that the
payment of the Expense Amount and Termination Fee shall constitute the sole
remedy to which the Purchaser shall be entitled in the circumstance set forth
in Section 10.03(d).


 


ARTICLE XI


 


Indemnification


 


Section 11.01.  Indemnification.


 


(a)  Indemnification by the Shareholders and
the Company.  Each of the
Shareholders and the Company, jointly and severally, will indemnify and defend
the Purchaser Indemnified Persons against and hold each Purchaser Indemnified
Person harmless from any and all Losses that the Purchaser Indemnified Persons
may incur,suffer, sustain or become subject to arising out of, relating to,
based upon, in connection with or due to:


 


(i)  any inaccuracy or breach of any
of the representations and warranties (other than the representations and
warranties set forth in Section 5.08 and 5.20 which are covered separately in
clauses (iv) and (iii) below, respectively) of the Shareholders or the Company
contained in any Sale Document or in any certificate delivered thereunder;


 


(ii)  the nonfulfillment or breach
of any covenant, undertaking, agreement or other obligation (other than the
covenants and agreements set forth in Section 10.03(b) which


 


72

















 


are covered separately in
clause (iv) below) of the Shareholders or the Company contained in any Sale
Document or in any certificate delivered thereunder;


 


(iii)  (A) any inaccuracy or breach
of any of the representations and warranties set forth in Section 5.20 of this
Agreement or in any certificate delivered thereunder, (B) any of the
information, facts, events, circumstances, issues or other matters set forth on
Schedule 5.20 of this Agreement, whether or not referred to as
presenting an actual, alleged or contingent liability or violation of Environmental
Law, or (C) any Recognized Environmental Condition identified in any
Environmental Site Assessment conducted by the Purchaser;


 


(iv)  (A) any inaccuracy or breach
of any of the representations and warranties set forth in Section 5.08 of this
Agreement or in any certificate delivered thereunder, (B) any nonfulfillment of
any covenant, undertaking, agreement or other obligation of the Shareholders or
the Company contained in Section 10.03(b), or (C) any Taxes related to (I) the
operation of the Business by the Company and its Subsidiaries prior to the
Closing, (II) the ownership by the Company and its Subsidiaries of the Assets
prior to the Closing, or (III) any distributions, dividends or other payments
from the Company or any of its Subsidiaries to any Shareholder, or (IV) the
transfer of the Purchased Assets to the Purchaser;


 


(v)  the Excluded Assets;


 


(vi)  the Excluded Liabilities,
except for the Liabilities referred to in Section 2.04(a)(ix) which are covered
by clause (i) and (ii) above, including, without limitation, the Company’s or
any Shareholder’s failure to pay or discharge the Excluded Liabilities as and
when they become due, and including any claim, Action, allegation or threat by
any third party that, if upheld or granted, would result in any Purchaser
Indemnified Person having any Liability in respect of any Excluded Liability;
and


 


(vii)  the Transfer or Transfers by
the Company or any of its Subsidiaries prior to the Effective Time, of any
businesses, operations, assets or properties, including, without limitation,
Liabilities related to representations, warranties, covenants, agreements and
indemnities given by the Shareholders, the Company or any of their Subsidiaries
in connection with any such Transfer, or any broker’s, finder’s or similar fees
payable in connection with any such Transfers.


 


(b)  Indemnification by the Purchaser.  The Purchaser will indemnify and defend the
Company Indemnified Persons against and hold each Company Indemnified Person
harmless from any and all Losses that the Company Indemnified Persons may
incur, suffer, sustain or become subject to arising out of, relating to, based
upon, in connection with or due to:


 


(i)  any inaccuracy or breach of any
of the representations and warranties of the Purchaser contained in any Sale
Document or in any certificate delivered thereunder; or


 


73

















 


(ii)  the nonfulfillment or breach
of any covenant, undertaking, agreement or other obligation of the Purchaser
contained in any Sale Document or in any certificate delivered thereunder.


 


(c)  Right to Assign and Delegate.  The parties hereto agree that the Purchaser
shall have the right to assign its rights to indemnification, and delegate its
obligations, under this Section 11.01 to any Person that acquires the Purchased
Assets or the Business from the Purchaser, or substantially all of the assets
of the Purchaser or the Equity Securities of the Purchaser, whether by sale,
merger, consolidation or otherwise, in each case, so long as either (i) such
Person has a net worth at least equal to the net worth of the Purchaser as of
the time of such assignment, or (ii) the Purchaser remains liable for its
obligations under this Agreement.


 


Section 11.02.  Notice
and Opportunity to Defend.


 


(a)  Delivery of Indemnification Notice.  (i) 
If there occurs an event which a party hereto asserts is an
indemnifiable event pursuant to Section 11.01 hereof, the party seeking
indemnification (the “Indemnitee”) will promptly notify the party
obligated to provide indemnification hereunder (the “Indemnitor”) in
writing (such written notice being an “Indemnification Notice”).  Such Indemnification Notice shall specify
(A) the nature of the claim or Loss, (B) the facts, circumstances, issues and
events with respect to such claim or Loss in reasonable detail, and (C) the
amount of such claim or Loss, if determined. 
Delay or failure to deliver an Indemnification Notice to the Indemnitor
will only relieve the Indemnitor of its indemnification obligations hereunder
to the extent, if at all, that the Indemnitor is actually prejudiced by reason
of such delay or failure.


 


(ii)  The Indemnitor will have a period of 10
calendar days following the Indemnitor’s receipt of the Indemnification Notice
(such period to be 20  calendar days if the event specified in
the Indemnification Notice involves a claim or a Loss by a Person other than a
Purchaser Indemnified Person or a Company Indemnified Person (a “Third Party
Claim”)), in which to either (A) accept responsibility for such claim, Loss
or Third Party Claim or (B) deny or dispute responsibility for such claim, Loss
or Third Party Claim (which dispute may be as to the validity of such claim or
Loss, the amount thereof or both).


 


(b)  Third Party Claims.  (i) 
Subject to the provisions of clause (iii)(B) below, if the Indemnitor
accepts responsibility for a Third Party Claim in writing within such 20
calendar day period, the Indemnitor will be obligated to defend, compromise or
settle such Third Party Claim and, subject to the terms, conditions and
limitations set forth in this Article, the Indemnitor will be liable for the
Losses in connection with such Third Party Claim, including, without
limitation, the fees and expenses of counsel incurred by the Indemnitor in
defending, compromising or settling such Third Party Claim; provided, however,
that in such an event, the Indemnitee will have the right to participate in the
defense of such Third Party Claim and employ counsel, at the Indemnitee’s
expense, separate from the counsel employed by the Indemnitor, it being
understood that the Indemnitor will control such defense.


 


(ii)  If (A) the Indemnitor fails to accept
responsibility for such Third Party Claim within such 20 calendar day period or
the Indemnitor does not respond within such 20 calendar day


 


74

















 


period, or (B) either (x) the Indemnitee is advised by counsel that in
connection with such Third Party Claim there may be one or more legal defenses
available to the Indemnitee that are not available to the Indemnitor or
conflict with or are different from those available to the Indemnitor, (y) the
Third Party Claim seeks an order, injunction or other relief other than money
damages against the Indemnitee, or (z) the Indemnitor does not promptly provide
the Indemnitee with its financial statements or other information demonstrating
the Indemnitor’s ability to discharge its obligations under this Article XI in
full, then in any such case, the Indemnitor will not be entitled to assume the
defense of such Third Party Claim and the Indemnitee shall have the right to
undertake the defense, compromise or settlement of such Third Party Claim and,
subject to the terms, conditions and limitations set forth in this Article, the
Indemnitor will be liable for the Losses in connection with such Third Party
Claim, including, without limitation, the fees and expenses of counsel incurred
by the Indemnitee in defending, compromising or settling such Third Party
Claim; provided, however, that in such an event, the Indemnitor
will have the right to participate in the defense of such matter and employ
counsel, at the Indemnitor’s expense (provided, that such expenses shall not
count towards any limitations on the Indemnitor’s obligations hereunder), separate
from the counsel employed by the Indemnitee, it being understood that the
Indemnitee will control such defense.


 


(iii)  The Indemnitor will not be liable for any
settlement of any Action effected without the Indemnitor’s written consent
(which consent shall not be unreasonably withheld or delayed), but if settled
with the Indemnitor’s written consent or if there be a final judgment for the
plaintiff in any such Action, the Indemnitor agrees, subject to the terms,
conditions and limitations set forth in this Article, to indemnify and hold
harmless the Indemnitee from and against any Loss by reason of such settlement
or judgment.


 


(c)  Non-Third Party Claims.  (i) 
If the Indemnitor accepts responsibility for a claim or Loss which does
not involve a Third Party Claim in writing within such 10 calendar day period,
or the Indemnitor does not respond within such 10 calendar day period, such
claim or Loss specified by the Indemnitee in the Indemnification Notice will
conclusively be deemed a liability of the Indemnitor under Section 11.01 and
the Indemnitor will pay the amount of such liability to the Indemnitee on
demand.


 


(ii)  If the Indemnitor has timely disputed its
liability with respect to such claim or Loss within such 10 calendar day
period, the Indemnitor and the Indemnitee will proceed in good faith to
negotiate a resolution of such dispute and, if not resolved through
negotiations, such dispute will be resolved by litigation in an appropriate
court of competent jurisdiction.


 


(d)  Contribution.  If the indemnification provided for in this
Article XI is prohibited under applicable Laws to an Indemnitee (other than by
reason of the exceptions, limitations and conditions set forth in this Article)
then the Indemnitor, in lieu of indemnifying the Indemnitee, will contribute to
the amount paid or payable by the Indemnitee as a result of the Losses in such
proportion as is appropriate to reflect the relative fault of the Indemnitor,
on the one hand, and of the Indemnitee, on the other, in connection with the
events or circumstances which resulted in the Losses as well as any other
relevant equitable considerations.  The
relative fault of the Indemnitor, on the one hand, and of the Indemnitee, on
the other, will be determined by


 


75

















 


reference to, among other things, such Persons’ relative intent, knowledge,
access to information and opportunity to correct or prevent the events or
circumstances resulting in the Losses.


 


Section 11.03.  Survival
of Indemnification.  The
representations, warranties, covenants and agreements of the parties contained
in the Sale Documents or in any document delivered pursuant thereto and the
rights to indemnification under this Agreement with respect thereto will
survive the Closing Date and any investigation at any time made by or on behalf
of the Purchaser or any other party; provided, however, that the
representations and warranties set forth in the Sale Documents and the
indemnification under Section 11.01(a) and (b) shall expire on the second
anniversary of the Closing Date, unless prior to such date, an Indemnification
Notice or other notice of the inaccuracy or breach thereof has been given; provided,
however, that:


 


(a)  Fundamental Indemnification.  The (i) Fundamental Representations and the
Fundamental Representation Indemnification and (ii) the rights to
indemnification under Section 11.01(a)(ii), (v), (vi) and (vii), will survive
the Closing for a period ending on the fifth anniversary of the Closing Date,
and will be effective with respect to any inaccuracy therein, breach thereof or
claims made thereunder, notice of which has been given within such period; and


 


(b)  Tax Indemnification.  The representations and warranties set forth
in Section 5.08, the covenants and agreements set forth in Section 10.03(b),
and the Tax Indemnification will survive the Closing for a period ending six
months after the termination of the statute of limitations (or any extension
thereof) on any Law applicable to the matters covered therein, and will be
effective with respect to any inaccuracy therein, breach thereof or claims made
thereunder, notice of which has been given within such period.


 


Section 11.04.  Threshold;
Limitation on Liability; Release of Company.


 


(a)  Threshold.  No Purchaser Indemnified Person or Company Indemnified Person
will be entitled to indemnification for any Losses under Section 11.01(a)(i) or
11.01(b)(i), unless and until the aggregate amount of Losses suffered,
sustained, or incurred by all of the Purchaser Indemnified Persons or the
Company Indemnified Persons, as the case may be, due to the inaccuracy or
breach of any representations or warranties or in any certificate delivered
thereunder, exceeds the Threshold Amount, calculated on a cumulative basis and
not per item basis , and then such party will be entitled to recover such
Losses from the first dollar of such Losses and not merely the excess of such
Losses above the Threshold Amount; provided, however, that with
respect to indemnification pursuant to the Fundamental Representation
Indemnification, the Tax Indemnification and indemnification under Section
11.01(a)(ii), (v), (vi) and (vii), the Purchaser Indemnified Persons shall be
entitled to recover any such Losses from the first dollar of such Losses
without any threshold, basket or deductible of any kind, and any such payments
shall count towards the Threshold Amount.


 


(b)  Limitations on Liability of the
Shareholders and the Company.  The
aggregate liability of the Shareholders and the Company for indemnification
under Section 11.01(a) of this Agreement shall not exceed an aggregate amount
equal to the Cash Proceeds.


 


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(c)  Limitations on Liability of the Purchaser.  The aggregate liability of the Purchaser for
indemnification under Section 11.01(b) of this Agreement shall not exceed an
aggregate amount equal to 10% of the Cash Proceeds.


 


(d)  Release of the Company.  Notwithstanding any provision of this
Agreement to the contrary, except for the provisions of Section 11.05 below
which shall apply to this Section 11.04(d), effective from and after the first
anniversary of the Closing Date, the Company shall have no further obligation
to indemnify the Purchaser under this Article XI, except with respect to any Losses
or claims made for which the Purchaser or any Purchaser Indemnified Person
shall have given the Company notice on or prior to such first anniversary; provided,
however, that such release of the Company shall not in any way
eliminate, restrict, affect or impair the Purchaser’s and the Purchaser
Indemnified Person’s rights to (i) be indemnified by the Shareholders under
this Article XI for Losses related to inaccuracies or breaches of
representations, warranties, covenants and agreements of the Company set forth
in the Sale Documents to the extent and during the period that the Company or
the Shareholders were obligated to indemnify the Purchaser or the Purchaser
Indemnified Persons, (ii) be indemnified for each type of Claim by the
Shareholders under this Article XI during the relevant entire periods for each
type of Claim provided in Section 11.03 above, and (iii) claim against and
withdraw amounts from the Escrow Amount as provided in Section 11.07(d) below.


 


Section 11.05.  Fraud
Exception.


 


(a)  Purchaser Indemnified Persons.  Notwithstanding any provision contained in
Article XI to the contrary, in the event any Loss or failure to discover a fact
or condition by a Purchaser Indemnified Person, is due to, arises from, or is
in connection with, fraud, intentional misrepresentation, grossly negligent
misrepresentation or willful misconduct by any Shareholder, the Company, any of
their Subsidiaries or any Person acting or purporting to act on their behalf,
such Purchaser Indemnified Person will be entitled to recover any such Losses
from the Shareholders and the Company, jointly and severally, without regard to
any of the time limitations, dollar thresholds or dollar limitations set forth
above, and will be entitled to recover the full amount of such Losses from the
first dollar of any such Loss, together with any punitive, exemplary and other
damages that may be assessed by any court of competent jurisdiction.


 


(b)  Company Indemnified Persons.  Notwithstanding any provision contained in
Article XI to the contrary, in the event any Loss or failure to discover a fact
or condition by a Company Indemnified Person, is due to, arises from, or is in
connection with, fraud, intentional misrepresentation, grossly negligent
misrepresentation or willful misconduct by the Purchaser, any of its
Subsidiaries or any Person acting or purporting to act on their behalf, such
Company Indemnified Person will be entitled to recover any such Losses from the
Purchaser without regard to any of the time limitations, dollar thresholds or
dollar limitations set forth above, and will be entitled to recover the full
amount of such Losses from the first dollar of any such Loss, together with any
punitive, exemplary and other damages that may be assessed by any court of
competent jurisdiction.


 


77

















 


Section 11.06.  Set-Off.  Each of the parties hereto expressly
acknowledges and agrees that in the event that a Purchaser Indemnified Person
is entitled to indemnification under Section 11.01(a), the Purchaser will be
entitled to set-off the amount of such Losses incurred by such Purchaser
Indemnified Person against and retain such amount from any obligations or
payments due to any Shareholder or the Company under any Sale Document,
including, without limitation, under the Purchaser Note.


 


Section 11.07.  Escrow.


 


(a)  Escrow Agreement.  On or prior to the Closing Date, the
Purchaser, the Shareholders and the Company will enter into the Escrow
Agreement with the Escrow Agent.


 


(b)  Escrow Deposit.  In order to secure the obligations of the
Shareholders and the Company to (i) pay to the Purchaser any amount under
Section 3.03(e) hereof, and (ii) indemnify the Purchaser Indemnified Persons
under Section 11.01(a) hereof, on the Closing Date, the Purchaser will deposit
the Escrow Amount with the Escrow Agent, to be held by the Escrow Agent in
accordance with the Escrow Agreement. 
Such Escrow Amount will be deposited into an account to be managed and
paid out by the Escrow Agent in accordance with the terms of the Escrow
Agreement.


 


(c)  Escrow Amount.  (i) 
The term “Escrow Amount” means an amount in cash equal to the sum
of (A) $7,500,000.00 (the “General Escrow Amount”), plus (B) the
Specified Liability Escrow Amount (as defined below).


 


(ii)  The “Specified Liability Escrow Amount”
means (i) as of the date of this Agreement, an amount equal to the sum of all
of the Liabilities set forth on Schedule 11.07(c) hereof, which the
parties agree is $19,024,000.00 (such amount being the “Specified Liability
Amount”), and (ii) as of the Closing Date, an amount equal to (A) the
Specified Liability Amount, minus (B) the Pre-Closing Extinguished Liability
Amount (as defined below).


 


(iii)  The “Pre-Closing Extinguished Liability
Amount” means, with respect to all of the Liabilities set forth on Schedule
11.07(c) for which the Company shall have received (and delivered to the
Purchaser) a full, unconditional and irrevocable release of the Company, its
Subsidiaries, the Purchaser and their respective successors and assigns in form
and substance reasonably satisfactory to the Purchaser prior to the Closing
Date (each such Liability being an “Extinguished Liability”), the
aggregate amount of such Extinguished Liabilities as set forth on Schedule
11.07(c); provided, however, that in no event shall the
Pre-Closing Extinguished Liability Amount exceed the Specified Liability Escrow
Amount.


 


(d)  Right to Withdraw.  In the event that either (i) (A) the
Purchaser is entitled to any amount under Section 3.03(e) hereof, or (ii) a
Purchaser Indemnified Person is entitled to indemnification pursuant to Section
11.01(a), then the Purchaser, or such Purchaser Indemnified Person, as the case
may be, will have the right to withdraw such amounts from the balance of the
Escrow Amount pursuant to the Escrow Agreement, or (ii) the Company is entitled
to any amount under Section 3.03(e) hereof, then the Company will have the
right to withdraw such amount from the balance of the Escrow Amount pursuant to
the Escrow Agreement.  In such an


 


78

















 


event, the Purchaser or the Company, as the case may be, will instruct the
Escrow Agent in writing pursuant to the terms of the Escrow Agreement to pay
the Purchaser, such Purchaser Indemnified Person or the Company, as the case
may be, from the Escrow Amount the amount that is due the Purchaser, such
Purchaser Indemnified Person or the Company, as the case may be.


 


(e)  Release of Escrow.


 


(i)  Post-Closing Extinguished Liabilities.  After the Closing Date, in the event that
the Company shall receive (and deliver to the Purchaser) a full, unconditional
and irrevocable release of the Company, its Subsidiaries, the Purchaser and
their respective successors and assigns in form and substance reasonably
satisfactory to the Purchaser in respect of an Extinguished Liability (except
for Liabilities that are included within the definition of Pre-Closing
Extinguished Liability Amount), then (A) the Escrow Amount shall be reduced by
the amount of such Extinguished Liability as set forth on Schedule 11.07(c),
and (B) the Escrow Agent will pay to the Company from the Escrow Amount, an
aggregate amount equal to the amount of such Extinguished Liability as set
forth on Schedule 11.07(c) (the sum of all such amounts being the “Post-Closing
Extinguished Liability Amount”); provided, however, that in
no event shall the sum of the Pre-Closing Extinguished Liability Amount, plus
the Post-Closing Extinguished Liability Amount exceed the Specified Liability
Escrow Amount, and provided, further, however, that in no
event shall the Escrow Amount held by the Escrow Agent be reduced below the
General Escrow Amount, except to the extent funds in the Escrow Account have
theretofore been used to satisfy Losses or claims under Section 11.01(a).


 


(ii)  Second Anniversary.  On the second anniversary of the Closing
Date, the Escrow Agent will pay to the Company an aggregate amount equal to the
excess, if any, of (i) the amount held by the Escrow Agent in the escrow
account on the second anniversary of the Closing Date, over (ii) the aggregate
dollar amount of all claims made (but not paid as of the second anniversary of
the Closing Date) by the Purchaser or the Purchaser Indemnified Persons under
Section 3.03(c) or Section 11.01(a); provided, however, that such
payment or release shall not limit or affect the rights of the Purchaser or any
other Purchaser Indemnified Persons under this Article XI or otherwise.


 


ARTICLE XII


 


Miscellaneous


 


Section 12.01.  Notices.  All notices, requests, demands and other
communications to any party or given under any Sale Document will be in writing
and delivered personally, by overnight delivery or courier, by registered mail
or by telecopier (with confirmation received) to the parties at the address or
telecopy number specified for such parties on the signature pages hereto (or at
such other address or telecopy number as may be specified by a party in writing
given at least five Business Days prior thereto).  All notices, requests, demands and other communications will be
deemed delivered when actually received.


 


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Section 12.02.  Counterparts.  This Agreement may be executed
simultaneously in one or more counterparts, and by different parties hereto in
separate counterparts, each of which when executed will be deemed an original,
but all of which taken together will constitute one and the same instrument.


 


Section 12.03.  Amendment
of Agreement.  This Agreement may
not be amended, modified or waived except by an instrument in writing signed on
behalf of each of the parties hereto.


 


Section 12.04.  Successors
and Assigns; Assignability.  This
Agreement will be binding upon and inures to the benefit of and is enforceable
by the respective successors and permitted assigns of the parties hereto.  This Agreement may not be assigned by any
party hereto without the prior written consent of all other parties hereto,
except for the assignment of all or any part of the rights and obligations of
the Purchaser under this Agreement, which may be freely assigned by the
Purchaser to an Affiliate of the Purchaser either prior to or after the Closing
Date, in any case, so long as either (i) such Affiliate has a net worth at
least equal to the net worth of the Purchaser as of the time of such
assignment, or (ii) the Purchaser remains liable for its obligations under this
Agreement.  Any assignment or attempted
assignment in contravention of this Section will be void ab  initio
and will not relieve the assigning party of any obligation under this
Agreement.


 


Section 12.05.  Governing
Law.  This Agreement will be
governed by, and construed in accordance with, the laws of the state of New
York applicable to contracts executed in and to be performed entirely within
that state, without reference to conflicts of laws provisions.


 


Section 12.06.  Integration.  The Sale Documents contain and constitute
the entire agreement of the parties with respect to the subject matter hereof
and supersedes all prior negotiations, agreements and understandings, whether
written or oral, of the parties hereto.


 


Section 12.07.  Severability.  If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
Law, or public policy, all other conditions and provisions of this Agreement
will nevertheless remain in full force and effect.  Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto will
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent possible.


 


Section 12.08.  Further
Assurances.  Promptly upon the
reasonable request by the Purchaser, the parties hereto (with the expenses paid
by the party responsible as provided in this Agreement) shall (a) correct any
defect or error that may be discovered in any Sale Document or in the
execution, delivery, acknowledgment or recordation of any Sale Document and (b)
execute, acknowledge, deliver, record, file and register, any and all such
further acts, deeds, conveyances, pledge agreements, mortgages, deeds of trust,
trust deeds, assignments, estoppel certificates, financing statements and
continuations, notices of assignment, transfers, certificates, assurances and
other instruments, in each case, as such requesting party may require from time
to time.


 


80

















 


Section 12.09.  No
Third-Party Rights.  This Agreement
is not intended, and will not be construed, to create any rights in any parties
other than the Shareholders, the Company, and the Purchaser, and no Person may
assert any rights as third-party beneficiary hereunder, including, without
limitation, the directors, officers and employees of the Company or any of its
Subsidiaries, except (a) that any rights, obligations or remedies of the
Purchaser hereunder may be exercised by an Affiliate of the Purchaser in
accordance with Section 12.04 and (b) as provided in Article XI, except that
the directors, officers and employees of the Company and its Subsidiaries are
not parties to this Agreement, are not third-party beneficiaries of this
Agreement or any other Sale Document and are not entitled to enforce any of the
provisions of this Agreement or the other Sale Documents.


 


Section 12.10.  Enforcement.


 


(a)  Shareholders and the Company.  Each of the Company and the Shareholders
hereby acknowledges and agrees that the provisions of this Agreement are of a
special and unique nature, the loss of which cannot be accurately compensated
for in damages by an action at law, and that the breach or threatened breach of
the provisions of this Agreement would cause the Purchaser irreparable harm and
that money damages would not be an adequate remedy for any breach or threatened
breach of the provisions of this Agreement by the Company or the
Shareholders.  Therefore, the parties
hereto agree that the Purchaser shall be entitled to equitable relief, including,
without limitation, an injunction or injunctions (without the requirement of
posting a bond or other security or any similar requirement or proving actual
damages) to prevent breaches or threatened breaches of this Agreement,
including, without limitation, the provisions of Section 9.03 hereof, by the
Company or the Shareholders and to specifically enforce the terms and
provisions of this Agreement, including, without limitation, Section 9.03
hereof, this being in addition to any other remedy to which the Purchaser is or
may be entitled at law or in equity.


 


(b)  Purchaser.  The parties hereto agree that the Company and the Shareholders
shall be entitled to equitable relief, including, without limitation, an
injunction or injunctions (without the requirement of posting a bond or other
security or any similar requirement or proving actual damages) to prevent
breaches or threatened breaches of this Agreement by the Purchaser and to
specifically enforce the terms and provisions of this Agreement, this being in
addition to any other remedy to which the Company and the Shareholders are or
may be entitled at law or in equity.


 


Section 12.11.  Submission
to Jurisdiction.  Each of the
Shareholders, the Company, and the Purchaser hereby (a) agrees that any Action
with respect to any Sale Document may be brought in the courts of the State of
New York or of the United States of America for the Southern District of New
York, (b) accepts for itself and in respect of its property, generally and
unconditionally, the non-exclusive jurisdiction of such courts, (c) irrevocably
waives any objection, including, without limitation, any objection to the
laying of venue or based on the grounds of forum  non  conveniens,
which it may now or hereafter have to the bringing of any Action in those
jurisdictions, and (d) irrevocably consents to the service of process of any of
the courts referred to above in any Action by the mailing of copies of the
process to the parties


 


81

















 


hereto as provided in Section 12.01. 
Service effected as provided in this manner will become effective ten
calendar days after the mailing of the process.


 


Section 12.12.  Waiver
of Jury Trial.  EACH OF THE PARENT,  THE
COMPANY, AND THE PURCHASER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION TO ENFORCE OR DEFEND ANY RIGHT UNDER ANY SALE DOCUMENT OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR TO BE DELIVERED IN CONNECTION
WITH ANY SALE DOCUMENT AND AGREES THAT ANY ACTION WILL BE TRIED BEFORE A COURT
AND NOT BEFORE A JURY.


 


Section 12.13.  No
Waiver; Remedies.  No failure or
delay by any party in exercising any right, power or privilege under this
Agreement will operate as a waiver of the right, power or privilege.  A single or partial exercise of any right,
power or privilege will not preclude any other or further exercise of the
right, power or privilege or the exercise of any other right, power or
privilege.  The rights and remedies
provided in the Sale Documents will be cumulative and not exclusive of any
rights or remedies provided by law.


 


Section 12.14.  Ambiguities.  This Agreement was negotiated between legal
counsel for the parties and any ambiguity in this Agreement shall not be
construed against the party who drafted this Agreement.


 


Section 12.15.  Incorporation
of Schedules and Exhibits.  The
Schedules and Exhibits hereto are incorporated into this Agreement and will be
deemed a part hereof as if set forth herein in full.  References to “this Agreement” and the words “herein”, “hereof”
and words of similar import refer to this Agreement (including the Schedules
and Exhibits) as an entirety.  In the
event of any conflict between the provisions of this Agreement and any Schedule
or Exhibit, the provisions of this Agreement will control.  Capitalized terms used in the Schedules have
the meanings assigned to them in this Agreement.  The Section references referred to in the Schedules are to
Sections of this Agreement, unless otherwise expressly indicated.  The term “including”, as used herein, shall
be deemed to be followed by the words “without limitation”.


 


82

















 


In witness whereof, the
parties have executed and delivered this Agreement as of the date first written
above.


 


 


COMPANY:


 


	
  Address for Notices:

  	
  EXPANETS, INC.

  
	
  9780 Mt. Pyramid Court, Suite
  400

  	
   

  
	
  Englewood, Colorado 80112

  	
   

  
	
  Attention:  Christopher J. Younger

  	
   

  
	
  Telephone No.: 303-300-6111

  	
  By

  	
   

  
	
  Facsimile No.: 303-300-6125

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


With a copy to:


Leonard, Street and
Deinard Professional Association


150 South Fifth Street,
Suite 2300


Minneapolis, Minnesota
55402


Attention:  Michael G. Taylor, Esq.


Telephone No.:  612-335-1589


Facsimile No.:
612-335-1657


 


83

















 


SHAREHOLDERS:


 


	
  Address for Notices:

  	
  NORTHWESTERN CORPORATION

  
	
  125 South Dakota Avenue, Suite
  1100

  	
   

  
	
  Sioux Falls, South Dakota 57104

  	
   

  
	
  Attention: Eric Jacobsen

  	
   

  
	
  Telephone No.:  605-978-2908

  	
  By:

  	
   

  
	
  Facsimile No.:  605-978-2963

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


With a copy to:


Paul, Hastings, Janofsky
& Walker LLP


75 East 55th Street


New York, New York 10022


Attention:  Marie Censoplano, Esq.


Telephone No.:  212-318-6000


Facsimile No.:
212-319-4090


 


	
  Address for Notices:

  	
  NORTHWESTERN GROWTH CORPORATION

  
	
  125 South Dakota Avenue, Suite
  1100

  	
   

  
	
  Sioux Falls, South Dakota 57104

  	
   

  
	
  Attention: Eric Jacobsen

  	
   

  
	
  Telephone No.:  605-978-2908

  	
  By:

  	
   

  
	
  Facsimile No.: 605-978-2963

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


With a copy to:


Paul, Hastings, Janofsky
& Walker LLP


75 East 55th Street


New York, New York 10022


Attention:  Marie Censoplano, Esq.


Telephone No.:  212-318-6000


Facsimile No.:
212-319-4090


 


84

















 


	
  Address for Notices:

  	
  NORTHWESTERN CAPITAL
  CORPORATION

  
	
  125 South Dakota Avenue, Suite
  1100

  	
   

  
	
  Sioux Falls, South Dakota 57104

  	
   

  
	
  Attention: Eric Jacobsen

  	
   

  
	
  Telephone No.:  605-978-2908

  	
  By:

  	
   

  
	
  Facsimile No.: 605-978-2963

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


With a copy to:


Paul, Hastings, Janofsky
& Walker LLP


75 East 55th Street


New York, New York 10022


Attention:  Marie Censoplano, Esq.


Telephone No.:  212-318-6000


Facsimile No.:
212-319-4090


 


85

















 


PURCHASER:


 


	
  Address for Notices:

  	
  AVAYA INC.

  
	
  c/o Avaya Inc.

  	
   

  
	
  211 Mount Airy Road

  	
   

  
	
  Basking Ridge, New Jersey 07920

  	
   

  
	
  Attention:  Justin Choi, Vice President

  	
  By:

  	
   

  
	
  Telephone:  908 953-6000

  	
  Name:

  	
  Garry McGuire

  
	
  Facsimile:    908 953-4912

  	
  Title:

  	
  Chief Financial Officer

  
				



 


With copies to:


 


Sidley Austin Brown & Wood llp


787 Seventh Avenue


New York, New York  10019


Attention:  Irving Rotter


Telephone:  212 839-5300


 


Facsimile :   212 839-5599


 


86