Exhibit 99.1
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of July 16, 2004
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between Measurement Specialties, Inc., a New Jersey corporation (the "Buyer"),
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and Encoder Devices, LLC, an Illinois limited liability company (the "Seller").
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W I T N E S S E T H:
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WHEREAS, the Seller is in the business of designing and manufacturing
rotational sensors (known as encoders) for a variety of industries (the
"Business"); and
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WHEREAS, the Buyer wishes to purchase or acquire from the Seller and the
Seller wishes to sell, assign and transfer to the Buyer, substantially all of
the assets held in connection with, necessary for, or material to the Business,
for the purchase price and upon the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants, representations
and warranties made herein, and of the mutual benefits to be derived hereby, the
parties hereto agree as follows:
DEFINITIONS
The terms defined below, whenever used in the Agreement (including in
the Schedules), shall have the respective meanings indicated below for all
purposes of the Agreement. All references herein to a Section, Article or
Schedule are to a Section, Article or Schedule of or to the Agreement, unless
otherwise indicated.
Accounts Payable: shall mean those accounts payable of the Seller set
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forth on Schedule 2.4.1.
Accounts Receivable: shall mean all present and future rights to the
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payment of money for goods sold or leased or for services rendered by any Person
whether in the form of accounts receivable, contract rights, chattel paper,
instruments, notes, bills, acceptances, general intangibles and other forms of
obligations relating to such rights.
Affiliate: of a Person shall mean a Person that directly or indirectly
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through one or more intermediaries, controls, is controlled by, or is under
common control with, the first Person. "Control" (including the terms
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
policies of a person, whether through the ownership of voting securities, by
contract or credit arrangement, as trustee or executor, or otherwise.
Agreement: shall mean this Asset Purchase Agreement, including the
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Schedules hereto.
Applicable Law: shall mean all applicable provisions of all (i)
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constitutions, treaties, statutes, laws (including the common law), rules,
regulations, ordinances, codes or orders of any Governmental Authority, (ii)
Governmental Approvals and (iii) orders, decisions, injunctions, judgments,
awards and decrees of or agreements with any Governmental Authority.
Assets: shall have the meaning provided in Section 1.1.
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Assignment of Contracts: shall have the meaning provided in Section 5.2.
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Assumed Contracts: shall mean those Contracts listed on Schedule 1.
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Assumed Liabilities: shall have the meaning provided in Section 2.4.
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Balance Sheet Date: shall have the meaning provided in Section 3.1.4.
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Xxxx of Sale: shall have the meaning provided in Section 5.2.
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Business: shall have the meaning provided in the first WHEREAS clause of
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the Agreement.
Buyer: shall have the meaning provided in the first paragraph of the
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Agreement.
Buyer Indemnitees: shall have the meaning provided in Section 8.1(a).
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Closing: shall have the meaning provided in Section 2.1.
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Closing Date: shall have the meaning provided in Section 2.1
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Code: shall mean the Internal Revenue Code of 1986, as amended.
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Collateral Documents: shall mean the Assignment of Contracts and the Xxxx
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of Sale.
Consent: shall mean any consent, approval, authorization, waiver, permit,
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grant, franchise, concession, agreement, license, exemption or order of
registration, certificate, declaration or filing with, or report or notice to,
any Person, including but not limited to any Governmental Authority.
Contract: shall mean all agreements and contracts related to the Business,
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whether oral or written.
Environment: shall mean air, land, surface soil, subsurface soil, sediment,
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surface water and groundwater.
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Environmental Conditions: shall mean any environmental contamination or
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pollution or threatened contamination or pollution of, or the Release or
threatened Release of Hazardous Substances into, the Environment.
Environmental Laws: shall mean all federal, regional, state, county or
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local laws, statutes, ordinances, decisional law, rules, regulations, codes,
orders, decrees, directives and judgments relating to public health or safety,
pollution, damage to or protection of the Environment, Environmental Conditions,
Releases or threatened Releases of Hazardous Substances into the Environment or
the use, manufacture, processing, distribution, treatment, storage, generation,
disposal, transport or handling of Hazardous Substances, whether existing in the
past or present or hereafter enacted, rendered, adopted or promulgated.
Environmental Laws shall include, but are not limited to, the following laws,
and the regulations promulgated thereunder, as the same may be amended from time
to time: the Comprehensive Environmental Response Compensation and Liability Act
(42 U.S.C. 9601 et seq.) ("CERCLA"); the Resource Conservation and Recovery Act
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(42 U.S.C. 6901 et seq.) ("RCRA"); the Clean Air Act (42 U.S.C. 7401 et seq.);
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the Clean Water Act (33 U.S.C. 1251 et seq.); and the Occupational Safety and
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Health Act (29 U.S.C. 651 et seq.) ("OSHA").
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EPA: shall mean the United States Environmental Protection Agency.
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ERISA: shall mean the Employee Retirement Income Security Act of 1974, as
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amended.
Employees: shall have the meaning provided in 3.1.16.
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Excluded Assets: shall have the meaning provided in Section 1.1.
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Excluded Liabilities: shall have the meaning provided in Section 2.4.
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Financial Statements: shall have the meaning provided in Section 3.1.4.
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GAAP: shall mean generally accepted accounting principles as in effect in
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the United States.
Governmental Approval: shall mean any Consent of, with or to any
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Governmental Authority.
Governmental Authority: shall mean any nation or government, any state or
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other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including, without limitation, any government authority, agency,
department, board, commission or instrumentality of the United States, any State
of the United States or any political subdivision, thereof, and any tribunal or
arbitrator(s) of competent jurisdiction, and any self-regulatory organization.
Hazardous Substances: shall mean any substance, material or waste that:
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(i) is or contains asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum or
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petroleum-derived substances or wastes, radon gas or related materials, (ii)
requires investigation, monitoring, removal or remediation under any
Environmental Law, (iii) is defined, listed or identified under any
Environmental Law, or (iv) is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous, or (v)
is regulated by any Governmental Authority or Environmental Law.
Indemnified Party: shall have the meaning provided in Section 8.1(c).
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Indemnifying Party: shall have the meaning provided in Section 8.1(c).
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Intellectual Property: shall mean any and all United States and foreign:
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(a) patents (including design patents, industrial designs and utility models)
and patent applications (including docketed patent disclosures awaiting filing,
reissues, divisions, continuations, continuations-in-part and extensions),
patent disclosures awaiting filing determination, inventions and improvements
thereto; (b) trademarks, service marks, trade names, trade dress, logos,
business and product names, slogans, and registrations and applications for
registration thereof; (c) copyrights (including software) and registrations
thereof; (d) inventions, processes, designs, formulae, trade secrets, know-how,
industrial models, confidential and technical information, manufacturing,
engineering and technical drawings, product specifications and confidential
business information; (e) mask work and other rights and registrations thereof;
(f) software; (g) intellectual property rights similar to any of the foregoing;
(h) copies and tangible embodiments thereof (in whatever form or medium,
including electronic media) used in the Business.
Intellectual Property Assets: shall have the meaning provided in
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3.1.13(a).
IRS: shall mean the Internal Revenue Service.
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Knowledge: shall mean actual knowledge.
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Lease. shall mean the lease agreement dated May 1, 2003 between Xxxxxxx
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Xxxxxxx, as lessee, and Xxxxxx Xxxxxxxx, as lessor, for the property commonly
known as 00000 Xxxxxxxxxx Xx. X., Xxxx 0 & 0, Xxxxxxxxxx, XX.
Lien: shall mean any mortgage, pledge, hypothecation, right of others,
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claim, security interest, encumbrance, lease, sublease, license, occupancy
agreement, adverse claim or interest, easement, covenant, encroachment, burden,
title defect, title retention agreement, voting, trust agreement, interest,
equity, option, lien, right of first refusal, charge or other restrictions or
limitations of any nature whatsoever, including but not limited to such as may
arise under any Contracts.
Losses: shall have the meaning provided in Section 8.1(a).
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Multiemployer Plans: shall have meaning provided in Section 3.1.16(a).
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Owner(s): shall mean individually, each of Xxxxxxx Xxxxxxx, Xxxxxxx
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Xxxxxxx, Xxxxxxx Xxxxxxx, R&B Investments, LLC, an Illinois limited liability
company (whose sole members are Xxxxx Xxxxxxxx, Xxxxx Xxxxxx and Xxxxx X.
Xxxxxxx), Xxxxx Xxxxxxxx, Xxxxx Xxxxxx and Xxxxx X. Xxxxxxx (collectively, the
"Owners").
Person: shall mean any natural person, firm, partnership, association,
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corporation, company, limited liability company, trust, business trust,
Governmental Authority or other entity.
Plans: shall have the meaning provided in Section 3.1.16(a).
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Purchase Price: shall have the meaning provided in Section 2.2.
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Related Persons: shall have the meaning provided in Section 3.1.16(a).
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Real Property: shall mean any and all real property, together with all
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buildings, structures, fixtures and improvements, listed on Schedule 3.1.10.
Release: shall mean any intentional or unintentional releasing, disposing,
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discharging, injecting, spilling, leaking, leaching, pumping, dumping, emitting,
escaping, emptying, seeping, dispersal, migration, transporting, placing or the
like.
Seller: shall have the meaning provided in the first paragraph of the
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Agreement.
Tax: shall mean any federal, state, provincial, local, foreign or other
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income, alternative, minimum, accumulated earnings, personal holding company,
franchise, capital stock, net worth, capital, profits, windfall profits, gross
receipts, value added, sales, use, goods and services, excise, customs duties,
transfer, conveyance, mortgage registration, stamp, documentary, recording,
premium, severance, environmental (including taxes under Section 59A of the
Code), real property, personal property, ad valorem, intangibles, rent,
occupancy, license, occupational, employment, unemployment insurance, social
security, disability, workers' compensation, payroll, health care, withholding,
estimated or other similar tax, duty or other governmental charge or assessment
or deficiencies thereof (including all interest and penalties thereon and
additions thereto whether disputed or not).
Transfer Taxes: shall have the meaning provided in Section 9.5.
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ARTICLE I SALE AND PURCHASE OF THE ASSETS
1.1 Assets.
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Subject to the terms, conditions and qualifications set forth herein and
for the consideration set forth in Section 2 hereof, Seller agrees to convey,
transfer, assign and deliver at the Closing to Buyer all the assets, properties,
business and goodwill of Seller of every kind and description, real, personal
and mixed, tangible and intangible, used, useful or held for use by Seller in
connection
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with the Business (including, without limitation, all goodwill, assignable
permits, claims, deposits, prepaid items, sales data, business and accounting
records, customer lists, equipment, machinery, inventory, placements in process,
Intellectual Property, Accounts Receivable, and other rights and privileges)
(the foregoing items collectively referred to hereinafter as the "Assets") all
as the same shall exist as of the Closing, except (a) the minute books and
record books of Seller, (b) cash on hand and in bank accounts maintained by or
on behalf of Seller, and (c) income tax records of Seller (collectively, the
"Excluded Assets"). The Assets transferred pursuant to this Agreement shall be
sold and conveyed to Buyer free and clear of all Liens except for the Assumed
Liabilities.
ARTICLE II THE CLOSING
2.1 Place and Date.
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The closing of the sale and purchase of the Assets (the "Closing") shall
take place on the date of execution hereof (the "Closing Date") at the offices
of XxXxxxxx and English, LLP, 000 Xxxxxxxx Xx, Xxxxxx, XX or at such other place
(or by such other means) as the parties may agree.
2.2 Purchase Price. In consideration of the sale, assignment,
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conveyance and delivery by Seller of the Assets to Buyer, Buyer shall pay to
Seller $4,400,000 (the "Purchase Price") payable as follows:
(a) On the Closing Date, Buyer shall pay Seller $4,000,000 (the "Cash
Purchase Price") by wire transfer of immediately available funds;
(b) $400,000 (the "Deferred Purchase Price") payable by wire transfer
of immediately available funds on the twelve (12) month anniversary of the
Closing Date, subject to adjustment as set forth in Buyer's right of offset as
provided in Section 8.3.
2.3 Allocation of Purchase Price.
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2.3.1. The Purchase Price shall be allocated among the Assets in
accordance with section 1060 of the Code, in accordance with an allocation
schedule to be prepared by the Buyer and reasonably acceptable to Seller.
2.3.2. The parties will each report the federal, state and local and
other Tax consequences of the purchase and sale contemplated hereby (including
the filing of Internal Revenue Service Form 8594) in a manner consistent with
such allocation schedule.
2.4 Assumption of Liabilities.
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Buyer hereby agrees to purchase the Assets only and not the Business
as a going concern.
2.4.1. Assumption of Assumed Contracts. Subject to the terms and
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conditions
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set forth herein, at the Closing, the Buyer shall assume the following
obligations and pay the following liabilities of the Seller (collectively the
"Assumed Liabilities"):
(a) All obligations under the Assumed Contracts arising on or
after the Closing date;
(b) All obligations under the Lease arising on or after the
Closing date; and
(c) the Accounts Payable.
2.4.2. No Other Assumption of Liabilities. Other than with respect to
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the Assumed Liabilities, Buyer does not assume, agree to pay, perform or
discharge or otherwise have any responsibility for any liability or obligation
of the Seller or the Business, fixed or contingent, and whether arising or to be
performed prior to, on or after the Closing Date ("Excluded Liabilities").
Without limiting the generality of the foregoing, Buyer shall in no event assume
or be responsible for:
(a) any liabilities of Seller (other than the Accounts Payable)
which, in accordance with GAAP, would be reflected on a balance sheet of Seller
as of the Closing;
(b) any income, sales, Transfer Tax or other Tax of Seller
arising out of, or resulting from, the sale of the Business hereunder, or any
transaction of Seller subsequent to the Closing;
(c) any attorneys', accountants', or finder's fees or other
expenses of Seller incurred in connection with this Agreement, any transactions
hereunder or the dissolution and liquidation of Seller;
(d) any liabilities or obligations resulting from any lawsuit or
other proceeding relating to the Business arising out of transactions occurring
prior to the Closing; and
(e) any liabilities arising out of, or resulting from, any
non-compliance with, or violation of, Environmental Laws prior to the Closing.
ARTICLE III REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Seller.
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Seller represents, warrants and covenants to Buyer as follows:
3.1.1. Authorization, etc. The Seller has the power and authority to
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execute and deliver the Agreement and each of the Collateral Documents to which
it is a party, to perform fully its obligations thereunder, and to consummate
the transactions contemplated thereby. The execution and delivery by the Seller
of the Agreement and the Collateral Documents to which it
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is a party, and the consummation of the transactions contemplated thereby, have
been duly authorized by all requisite action of the Seller. The Seller has duly
executed and delivered the Agreement and each of the Collateral Documents to
which it is a party. The Agreement is a legal, valid and binding obligation of
the Seller, enforceable against it in accordance with their respective terms.
3.1.2. Status. The Seller is an Illinois limited liability company
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duly organized, validly existing and in good standing under the laws of the
jurisdiction of its formation with full power and authority to carry on its
business and to own or lease and to operate its properties as and in the places
where such business is conducted and such properties are owned, leased or
operated.
3.1.3. No Conflicts, etc. The execution, delivery and performance by
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the Seller of the Agreement and each of the Collateral Documents to which it is
a party, and the consummation of the transactions contemplated thereby, do not
and will not conflict with or result in a violation of or a default under (with
or without the giving of notice or the lapse of time or both) (i) to Seller's
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Knowledge any Applicable Law applicable to the Seller, the Business or the
Assets, (ii) the certificate of formation or operating agreement of the Seller
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or (iii) except as set forth in Schedule 3.1.3, any Contract or other contract,
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agreement or other instrument to which the Seller thereof is a party or by which
the Seller or any of its properties or assets, including but not limited to the
Assets, may be bound or affected. Except as specified in Schedule 3.1.3, no
Governmental Approval or other Consent is required to be obtained or made by the
Seller in connection with the execution and delivery of the Agreement and the
Collateral Documents or the consummation of the transactions contemplated
thereby.
3.1.4. Financial Statements.
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(a) Seller has furnished to Buyer an unaudited balance sheet,
statements of income and retained earnings and a statement of cash flows
(collectively, the "Financial Statements") reflecting the results of operations
of the Business as of May 31, 2004 (the "Balance Sheet Date"). Such Financial
Statements are true and correct and present fairly the results of operations of
the Business for the respective period stated and to the Seller's knowledge have
been prepared in accordance with GAAP.
(b) Except as fully reflected or reserved against in the
Financial Statements, to the Knowledge of Seller there are no liabilities or
obligations of any kind or nature, whether absolute or contingent, and whether
or not of a nature required to be reflected on a balance sheet in accordance
with GAAP, against, relating to or affecting the Business or any of the Assets,
other than liabilities or obligations (i) incurred in the ordinary course of
business consistent with past practice and the provisions of this Agreement or
(ii) which are specifically disclosed herein or in a Schedule hereto.
3.1.5. Absence of Changes. Except as set forth in Schedule 3.1.5,
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since the Balance Sheet Date, the Seller has conducted the Business only in the
ordinary course consistent with prior practice.
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3.1.6. Compliance with Laws; Governmental Approvals and Consents.
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(a) Except as disclosed in Schedule 3.1.6(a), the Seller has
complied in all material respects with all Applicable Laws applicable to the
Business or the Assets, and the Seller has not received any written notice
alleging any such conflict, violation, breach or default.
(b) Schedule 3.1.6(b) sets forth all Governmental Approvals and
other Consents necessary for, or otherwise material to, the conduct of the
Business. Except as set forth in Schedule 3.1.6(b), all such Governmental
Approvals and Consents have been duly obtained and are in full force and effect,
and the Seller is in compliance with each of such Governmental Approvals and
Consents held by it with respect to the Assets and the Business.
3.1.7. Assets.
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(a) Except as disclosed in Schedule 3.1.7(a), the Seller has good
title to all the Assets free and clear of any and all Liens. The Assets to be
sold, conveyed, transferred, assigned, and delivered to Buyer at Closing
constitute all of the assets that are presently, or during the past eighteen
(18) months have been used, useful or held for use in the conduct of the
Business and necessary for the operation of the Business as currently conducted.
(b) Condition and Sufficiency of Assets. The fixed assets, and
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equipment of the Seller are in operating condition and repair, and are adequate
for the uses to which they are being put, and none of such equipment is in need
of maintenance or repairs except for ordinary, routine maintenance and repairs
that are not material in nature or cost. The Assets constitute all of the assets
used by Seller in the conduct of the Business (other than the Excluded Assets)
and to Seller's knowledge are all of the assets necessary for Buyer to continue
the operation of the Business in a manner consistent with the operation of the
Business by Seller during the twelve months prior to the date hereof.
(c) Accounts Receivable. All Accounts Receivable of the Seller
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that are reflected on the Financial Statements or on the accounting records of
the Seller as of the Closing Date represent or will represent valid obligations
arising from sales actually made or services actually performed in the ordinary
course of business. Unless paid prior to the Closing Date, the Accounts
Receivable are or will be as of the Closing Date current and to Seller's
knowledge are collectible net of the respective reserves shown on the Financial
Statements or on the accounting records of the Seller as of the Closing Date
(which reserves are adequate and calculated consistent with past practice). To
the Knowledge of the Seller there is no contest, claim, or right of set-off,
other than returns in the ordinary course of business, under any Contract with
any obligor of any Accounts Receivable relating to the amount or validity of
such Accounts Receivable. Schedule 3.1.7(c) contains a complete and accurate
list of all Accounts Receivable as of July 7, 2004, which list sets forth the
aging of such Accounts Receivable.
(d) Inventory. All inventory of the Seller, whether or not
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reflected in the Financial Statements, consists of a quality and quantity usable
and salable in the ordinary course
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of business, except for obsolete items and items of below-standard quality, all
of which have been written off or written down to net realizable value in the
Financial Statements or on the accounting records of the Seller as of the
Closing Date, as the case may be, all in accordance with customary practice of
the Seller. All inventories not written off have been priced at the lower of
cost or market value. The quantities of each item of inventory (whether raw
materials, work-in-process, or finished goods) are not excessive, but are
reasonable in the present circumstances of the Seller and in accordance with
customary practice of the Seller.
3.1.8. Contracts.
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(a) The Seller has delivered to the Buyer complete and correct
copies of all Assumed Contracts, together with all amendments thereto.
(b) All Assumed Contracts are in full force and effect and
enforceable against each party thereto. There does not exist under any Assumed
Contract any event of default or event or condition that, after notice or lapse
of time or both, would constitute a violation, breach or event of default
thereunder on the part of the Seller or, to the best knowledge of the Seller,
any other party thereto. Except as set forth in Schedule 3.1.8(b), no consent of
any third party is required under any Assumed Contract as a result of or in
connection with, and the enforceability of any Assumed Contract will not be
affected in any manner by, the execution, delivery and performance of the
Agreement or any of the Collateral Documents or the consummation of the
transactions contemplated thereby.
3.1.9. Litigation. Except as set forth on Schedule 3.1.9, there is no
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action, claim, suit, or proceeding pending, or to the Seller's Knowledge,
threatened, against or relating to the Assets, the Seller or the Business or
against or relating to the transactions contemplated by this Agreement or any of
the Collateral Documents.
3.1.10. Real Property. The Seller owns no real property. Schedule
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3.1.10 is a complete list of all land, warehouses, office buildings, stores and
other buildings and real property rented, leased, used, occupied or otherwise
possessed by Seller. As to each property rented or leased, by Seller, Schedule
3.1.10 lists the location of the property; the name and address of the lessor;
the expiration date of such lease; and the monthly rent payable under the lease.
Each such property rented or leased is held under a valid and enforceable lease,
binding upon each of the parties thereto, and each such lease is in full force
and effect in accordance with its terms and neither Seller nor (to Seller's
Knowledge) the other party to such lease is in default thereunder.
3.1.11. Brokers, Finders, etc. All negotiations relating to the
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Agreement, the Collateral Documents, and the transactions contemplated thereby,
have been carried on without the participation of any Person acting on behalf of
the Seller or its Owners in such manner as to give rise to any valid claim
against the Buyer for any brokerage or finder's commission, fee or similar
compensation, or for any bonus payable to any officer, director, employee, agent
or sales representative of or consultant to the Seller or its Owners upon
consummation of the transactions contemplated hereby or thereby.
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3.1.12. Disclosure.
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No representation or warranty by Seller contained in this Agreement,
and no certificate, schedule, list, report, instrument, or other document
furnished to Buyer pursuant hereto or in connection with the transactions
contemplated hereby, contains any untrue statement of material fact, or omits to
state a material fact necessary in order to make the statements and information
contained therein not misleading.
3.1.13. Intellectual Property.
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(a) Title. Schedule 3.1.13 contains a complete and correct list
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of all Intellectual Property that is owned by Seller or used in, held for use in
connection with, or necessary for the conduct of, or otherwise material to the
Business (the "Intellectual Property Assets"). Except as set forth on Schedule
3.1.13, Seller owns or has the right to use, pursuant to a license, sublicense,
agreement or permission, all of the Intellectual Property Assets, free from any
Liens and free from any requirement of any past, present or future royalty
payments, license fees, charges or other payments, or conditions or restrictions
whatsoever. The Intellectual Property Assets comprise all of the Intellectual
Property necessary to conduct and operate the Business as now being conducted by
Seller.
(b) Transfer. Immediately after the Closing, the Buyer will own
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or otherwise have the right to use all the Intellectual Property Assets, free
from any Liens and on the same terms and conditions as in effect prior to the
Closing.
(c) No Infringement. To the Knowledge of Seller the conduct of
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the Business does not infringe or otherwise conflict with any rights of any
Person in respect of any Intellectual Property. To the Knowledge of Seller none
of the Intellectual Property Assets is being infringed or otherwise used or
available for use, by any other Person.
(d) No Intellectual Property Litigation. No claim or demand of
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any Person has been made nor is there any proceeding that is pending, or to the
Knowledge of Seller, threatened, nor is there a reasonable basis therefor, that
(i) challenges the rights of Seller in respect of any Intellectual Property
Assets, (ii) asserts that Seller is infringing or otherwise in conflict with, or
is, required to pay any royalty, license fee, charge or other amount, with
regard to, any Intellectual Property, or (iii) claims that any default exists
under any agreement or arrangement concerning any Intellectual Property Assets.
None of the Intellectual Property Assets is subject to any outstanding order,
ruling, decree, judgment or stipulation by or with any court, arbitrator, or
administrative agency, or has been the subject of any litigation, whether or not
resolved in favor of Seller.
(e) Use of Name and Xxxx. There are, and immediately after the
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Closing will be, no contractual restriction or limitations pursuant to any
orders, decisions, injunctions, judgments, awards or decrees of any Governmental
Authority on the Buyer's right to use the names and marks currently used by
Seller in the conduct of the Business.
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3.1.14. Environmental Matters.
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(a) Compliance with Environmental Laws. To the Knowledge of
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Seller, the Seller's Business is, and at all times has been, in compliance with
all Consents and Environmental Laws applicable to the Business, the Assets, or
the Real Property.
(b) Transport or Disposal of Hazardous Substances. Seller has not
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used, stored, transported for storage, treatment or disposal, by contract,
agreement or otherwise, or arranged for the transportation, storage, treatment
or disposal, of any Hazardous Substances at or to any location including,
without limitation, any location used for the treatment, storage or disposal of
Hazardous Substances.
3.1.15. Employees, Labor Matters.
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Seller is not a party to or bound by any collective bargaining agreement
and there are no labor unions or other organizations representing, purporting to
represent or, to Seller's Knowledge, attempting to represent any employees
employed in the operation of the Business. There has not occurred or, to
Seller's Knowledge, been threatened any material strike, slowdown, picketing,
work stoppage, concerted refusal to work overtime or other similar labor
activity with respect to any employees employed in the operation of the
Business. There are no labor disputes currently subject to any grievance
procedure, arbitration or litigation and there is no representation petition
pending or, to Seller's Knowledge, threatened with respect to any employees
employed in the operation of the Business.
3.1.16. Employee Benefit Plans and Related Matters.
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(a) Employee Benefit Plans. Seller has no "employee benefit
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plan," as such term is defined in section 3(3) of the ERISA, whether or not
subject to ERISA, and no bonus, incentive or deferred compensation, severance,
termination or other separation benefits, retention, change of control, interest
option, interest appreciation, interest purchase, phantom stock or other
equity-based, fringe benefits or payroll practice, performance or other employee
or retiree benefit or compensation plan, program, arrangement, agreement, policy
or understanding, whether written or unwritten, that provides or may provide
benefits or compensation in respect of any employee or former employee employed
or formerly employed in the operation of the Business or the beneficiaries or
dependents of any such employee or former employee (such employees, former
employees, beneficiaries and dependents collectively, the "Employees") or under
which any Employee is or may become eligible to participate or derive a benefit
and that is or has been maintained, contributed to, or required to be
contributed to, or established, by Seller or any Affiliate of Seller or any
other trade or business, whether or not incorporated, which, together with
Seller is or would have been at any date of determination treated as a single
employer under Section 414 of the Code or within the meaning of section 4001 of
ERISA (such other trades and business collectively, the "Related Persons"), or
to which Seller or any Related Person contributes or is or has been obligated or
required to contribute or with respect to which Seller or the Business may have
any liability or obligation (collectively, the "Plans"). The Seller
12
is not a party to any Multiemployer Plan.
3.1.17. Tax Returns and Payments. All of the tax returns and reports
------------------------
of the Seller or respecting the operations of the Seller required by law to be
filed on or before the Closing Date have been duly and timely filed and all
Taxes shown as due thereon have been paid. There are in effect no waivers of any
applicable statute of limitations related to such returns. No liability for any
Tax will be imposed upon the Assets, the Seller, or the Seller's assets, with
respect to any period before the Closing Date for which there is not an adequate
reserve reflected in the Financial Statements. The Seller is not subject to any
open audit in respect of its Taxes, no deficiency assessment or proposed
adjustment for Taxes is pending, and the Seller has no Knowledge of any
liability, whether or not proposed, for any Tax with respect to any period
through the Closing Date to be imposed upon any of its properties or assets for
which there is not an adequate reserve reflected in the Financial Statements.
3.1.18. No Material Adverse Change. Since the Balance Sheet Date,
--------------------------
there has not been any material adverse change in the business, operations,
properties, assets, liabilities, or condition of the Seller, and to the
Knowledge of the Owners, no event has occurred that may result in such a
material adverse change.
3.1.19. Relationships with Related Persons. No Owner or any Related
----------------------------------
Person of the Owners or of the Seller has, or since the formation of the Seller
has had, any interest in any property (whether real, personal, or mixed and
whether tangible or intangible), used in or pertaining to the Seller's Business.
No Owner or any Related Person of the Owners or of the Seller is, or since the
formation of the Seller has owned (of record or as a beneficial owner) an equity
interest or any other financial or profit interest in, a Person that has (i) had
business dealings or a material financial interest in any transaction with the
Seller other than business dealings or transactions conducted in the ordinary
course of business with the Seller at substantially prevailing market prices and
on substantially prevailing market terms, or (ii) engaged in competition with
the Seller with respect to any line of the products or services of the Seller (a
"Competing Business") in any market presently served by the Seller (except for
------------------
the ownership of less than one percent of the outstanding capital stock of any
Competing Business that is publicly traded on any recognized exchange or in the
over-the-counter market). Except as set forth in Schedule 3.1.19, no Owner or
any Related Person of the Owners or of the Seller is a party to any Contract
with, or has any claim or right against, the Seller.
3.1.20. Supplies and Equipment; Customers and Suppliers.
-----------------------------------------------
(a) With respect to the last twelve (12) months, the Seller has
been able to obtain, in a timely manner and at market prices, any and all
materials, supplies, equipment, and services used in its Business and the Seller
does not have any reason to believe that it will be unable to continue to obtain
such materials, supplies, equipment, and services in a manner consistent with
past practices. No customer or supplier of the Seller has, with in the previous
twelve (12) months, cancelled or threatened to cancel or otherwise modify its
relationship with the Seller.
13
(b) With respect to the last twelve (12) months, Schedule
3.1.20(b) lists (i) the ten largest (by dollar volume) customers of the Seller
during each such period (showing the volume in dollars for each such period) and
(ii) the ten largest (by dollar volume) suppliers of the Seller during each such
period (showing the volume in dollars for each such period). Since the Balance
Sheet Date, no customer or supplier listed in Schedule 3.1.20(b) has notified
the Seller, orally or in writing, of a likely decrease in the volume of
purchases from or sales to the Seller, or a decrease in the price that any such
customer is willing to pay for products or services of the Seller, or an
increase in the price that any such supplier will charge for products or
services sold to the Seller, or of the bankruptcy or liquidation of any such
customer or supplier.
3.1.21. Product Defects; Product Warranties.
-----------------------------------
To the Knowledge of Seller, Seller has no monetary liability or expense,
and will not have any monetary liability or expense following the Closing, on
account of defective products or services sold, provided or performed by or on
behalf of Seller prior to the Closing, including monetary liabilities or
expenses on account of product warranties.
3.2 Representations and Warranties of the Buyer.
-------------------------------------------
The Buyer represents and warrants to the Seller as follows:
3.2.1. Authorization, etc. The Buyer has the power and authority to
------------------
execute and deliver the Agreement and each of the Collateral Documents to which
it is a party, to perform fully its obligations thereunder, and to consummate
the transactions contemplated thereby. The execution and delivery by the Buyer
of the Agreement and the Collateral Documents to which it is a party, and the
consummation of the transactions contemplated thereby, have been duly authorized
by all requisite action of the Buyer. The Buyer has duly executed and delivered
the Agreement and each of the Collateral Documents to which it is a party. The
Agreement is a legal, valid and binding obligation of the Buyer, enforceable
against it in accordance with their respective terms.
3.2.2. Status. The Buyer is a corporation duly organized, validly
------
existing and in good standing under the laws of the jurisdiction of its
formation with full power and authority to carry on its business and to own or
lease and to operate its properties as and in the places where such business is
conducted and such properties are owned, leased or operated.
3.2.3. No Conflicts, etc. The execution, delivery and performance by
-----------------
the Buyer of the Agreement and each of the Collateral Documents to which it is a
party, and the consummation of the transactions contemplated thereby, do not and
will not conflict with or result in a violation of or a default under (with or
without the giving of notice or the lapse of time or both) (i) any Applicable
-
Law applicable to the Buyer, or (ii) the certificate of incorporation or by-laws
--
of the Buyer. Except as specified in Schedule 3.2.3, no Governmental Approval or
other Consent is required to be obtained or made by the Buyer in connection with
the execution and delivery of the Agreement and the Collateral Documents or the
consummation of the transactions contemplated thereby.
14
3.2.4. Disclosure. No representation or warranty by Buyer contained in
----------
this Agreement, and no certificate, schedule, list, report, instrument, or other
document furnished to Seller pursuant hereto or in connection with the
transactions contemplated hereby, contains any untrue statement of material
fact, or omits to state a material fact necessary in order to make the
statements and information contained therein not misleading.
ARTICLE IV COVENANTS OF SELLER PRIOR TO CLOSING DATE
4.1 Access and Investigation. Between the date of this Agreement
------------------------
and the Closing Date, the Seller will, (a ) furnish Buyer with copies of all
such contracts, books and records, and other existing documents and data as
Buyer may reasonably request, and (b) furnish Buyer with such additional
financial, operating, and other data and information as Buyer may reasonably
request.
4.2 Operation of the Business of Seller. Between the date of this
-----------------------------------
Agreement and the Closing Date, the Seller will:
(a) conduct the business the Seller only in the ordinary course of
business, consistent with past practice;
(b) use their best efforts to preserve intact the current business
organization of the Seller, keep available the services of the current officers,
employees, and agents of the Seller, and maintain the relations and goodwill
with suppliers, customers, landlords, creditors, employees, agents, and others
having business relationships with the Seller;
(c) confer with Buyer concerning operational matters of a material
nature; and
(d) otherwise report periodically to Buyer concerning the status of
the business, operations, and finances of the Seller.
Notification. Between the date of this Agreement and the Closing Date,
------------
Seller will promptly notify Buyer in writing if the Seller becomes aware of any
fact or condition that causes or constitutes a breach of any of the Seller's
representations and warranties as of the date of this Agreement, or if the
Seller becomes aware of the occurrence after the date of this Agreement of any
fact or condition that would (except as expressly contemplated by this
Agreement) cause or constitute a breach of any such representation or warranty
had such representation or warranty been made as of the time of occurrence or
discovery of such fact or condition. Should any such fact or condition require
any change in the Disclosure Schedule if the Disclosure Schedule were dated the
date of the occurrence or discovery of any such fact or condition, the Seller
will promptly deliver to Buyer a supplement to the Disclosure Schedule
specifying such change. During the same period, Seller will promptly notify
Buyer of the occurrence of any event that may make the satisfaction of the
conditions in Article VII impossible or unlikely.
15
4.3 No Negotiation. Until the earlier of (i) the date on which this
--------------
Agreement is terminated pursuant to Section 10.1, or (ii) the Closing Date, the
Seller will not, and will cause the Seller not to, directly or indirectly
solicit, initiate, or encourage any inquiries or proposals from, discuss or
negotiate with, provide any non-public information to, or consider the merits of
any unsolicited inquiries or proposals from, any Person (other than Buyer)
relating to any transaction involving the sale of the Business or Assets (other
than in the ordinary course of business) of the Seller, or similar transaction
involving the Seller.
ARTICLE V OBLIGATIONS OF SELLER AT CLOSING
At the Closing Seller will deliver to Buyer the following:
5.1 Consents. Copies of (i) all Governmental Approvals required to be
-------- -
obtained by the Seller in connection with the execution and delivery of the
Agreement and the Collateral Documents and the consummation of the transactions
contemplated thereby and (ii) all Consents (including, without limitation, all
--
Consents required under any Assumed Contract) necessary to be obtained in order
to consummate the sale and transfer of the Assets pursuant to the Agreement and
the consummation of the other transactions contemplated thereby and by the
Collateral Documents.
5.2 Transfer Documents. All documents, certificates and agreements
-------------------
necessary to transfer to the Buyer good and marketable title to the Assets, free
and clear of any and all Liens thereon, including without limitation, a xxxx of
sale, assignment and general conveyance, in form and substance reasonably
satisfactory to the Buyer, dated the Closing Date, with respect to the Assets
(the "Xxxx of Sale") and an assignment of each of the Assumed Contracts (the
"Assignment of Contracts").
5.3 Name Change. Evidence satisfactory to the Buyer that the Seller
------------
has provided the necessary documentation to change its name in the jurisdiction
where it is formed and each jurisdiction in which it is admitted to do business
as a foreign limited liability company.
5.4 Resolutions. Copies of the resolutions necessary to authorize the
-----------
execution, delivery and performance of this Agreement and the Collateral
Documents by Seller and an incumbency certificate executed by the Manager of
Seller certifying the identity and signature of the officers executing any
documents required or related to this Agreement.
ARTICLE VI OBLIGATIONS OF BUYER AT CLOSING
At the Closing Buyer will deliver to Seller the following:
6.1 Cash Purchase Price. The Cash Purchase Price in accordance with
---------------------
Section 2.2.
16
ARTICLE VII CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Assets and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
7.1 Accuracy of Representations. All of the Seller's representations
------------------------------
and warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been
accurate in all material respects as of the date of this Agreement, and must be
accurate in all material respects as of the Closing Date as if made on the
Closing Date, without giving effect to any supplement to the Disclosure
Schedule.
7.2 Performance. All of the covenants and obligations that the Seller
-----------
is required to perform or to comply with pursuant to this Agreement at or prior
to the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been duly performed and
complied with in all material respects. Each Collateral Document required to be
delivered must have been delivered by the Seller.
7.3 Consents. Each of the Consents identified in Section 5.1 must have
--------
been obtained and must be in full force and effect.
7.4 No Proceedings. Since the date of this Agreement, there must not
---------------
have been commenced or threatened against Buyer, or against any Person
affiliated with Buyer, any proceeding:
(a) involving any challenge to, or seeking damages or other relief in
connection with, the contemplated transaction; or
(b) that, if successful, would have the effect of preventing,
delaying, making illegal, or otherwise interfering with the contemplated
transaction.
7.5 No Claim Regarding Assets. There must not have been made or
----------------------------
threatened by any Person any claim asserting that such Person:
(a) is the holder or the beneficial owner of, or has the right to
acquire or to obtain beneficial ownership of, any of the Assets; or
7.6 (b) is entitled to all or any portion of the Purchase Price payable
for the Assets.
ARTICLE VIII INDEMNIFICATION
8.1 Indemnification.
---------------
(a) By the Seller. The Seller covenants and agrees to defend,
---------------
indemnify and hold harmless the Buyer, its officers, directors, employees,
agents, advisers and
17
representatives (collectively, the "Buyer Indemnitees") from and against, and
-----------------
pay or reimburse the Buyer Indemnitees for, any and all claims, liabilities,
obligations, losses, fines, costs, royalties, proceedings, deficiencies or
damages (whether absolute, accrued, conditional or otherwise and whether or not
resulting from third party claims), including out-of-pocket expenses and
reasonable attorneys' and accountants' fees incurred in the investigation or
defense of any of the same or in asserting any of their respective rights
hereunder (collectively, "Losses"), resulting from or arising
------
out of:
(i) any inaccuracy of any representation or warranty made by the
Seller herein or under any Collateral Document or in
connection herewith or therewith;
(ii) any failure of the Seller to perform any covenant or
agreement hereunder or under any Collateral Document or
fulfill any other obligation in respect hereof or Collateral
Document;
(iii) any and all Taxes of the Seller and all Affiliates thereof;
(iv) any claim with respect to or relating to events occurring
prior to the Closing Date; and
(v) any claim with respect to or arising out of Excluded Assets
or Excluded Liabilities.
(b) By the Buyer. The Buyer covenants and agrees to defend, indemnify
------------
and hold harmless the Seller and its officers, directors, employees, agents,
advisers and representatives (collectively, the "Seller Indemnitees") from and
------------------
against any and all Losses resulting from or arising out of:
(i) any inaccuracy of any representation or warranty made by the
Buyer herein or under any Collateral Document or in
connection herewith or therewith;
(ii) any failure of the Buyer to perform any covenant or
agreement made or contained in the Agreement or any
Collateral Document or fulfill any other obligation in
respect thereof;
(iii) the Buyer's assumption of the Assumed Liabilities following
the Closing Date; or
(iv) the Buyer's ownership, operation or use of the Assets
following the Closing Date.
(c) Indemnification Procedures. In the case of any claim asserted by a
--------------------------
third party against a party entitled to indemnification under the Agreement (the
"Indemnified Party"), notice shall be given by the Indemnified Party to the
-----------------
18
party required to provide indemnification (the "Indemnifying Party") promptly
------------------
after such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and the Indemnified Party shall permit the Indemnifying
Party (at the expense of such Indemnifying Party) to assume the defense of any
claim or any litigation resulting therefrom, provided that (i) the counsel for
-------- -
the Indemnifying Party who shall conduct the defense of such claim or litigation
shall be reasonably satisfactory to the Indemnified Party, (ii) the Indemnified
--
Party may participate in such defense at such Indemnified Party's expenses, and
(iii) the omission by any Indemnified Party to give notice as provided herein
---
shall not relieve the Indemnifying Party of its indemnification obligation under
the Agreement. Except with the prior written consent of the Indemnified Party,
no Indemnifying Party, in the defense of any such claim or litigation, shall
consent to entry of any judgment or enter into any settlement that provides for
injunctive or other nonmonetary relief affecting the Indemnified Party or that
does not include as an unconditional term thereof the giving by each claimant or
plaintiff to such Indemnified Party of a release from all liability with respect
to such claim or litigation. In the event that the Indemnified Party shall in
good faith determine that the conduct of the defense of any claim subject to
indemnification hereunder or any proposed settlement of any such claim by the
Indemnifying Party might be expected to affect adversely the Indemnified Party,
the Indemnified Party shall have the right at all times to take over and assume
control over the defense, settlement, negotiations or litigation relating to any
such claim at the sole cost of the Indemnifying Party, provided that if the
--------
Indemnified Party does so take over and assume control, the Indemnified Party
shall not settle such claim or litigation without the written consent of the
Indemnifying Party, such consent not to be unreasonably withheld. In the event
that the Indemnifying Party does not accept the defense of any matter as above
provided, the Indemnified Party shall have the full right to defend against any
such claim or demand and shall be entitled to settle or agree to pay in full
such claim or demand. In any event, the Indemnifying Party and the Indemnified
Party shall cooperate in the defense of any claim or litigation subject to this
Section 8.1 and the records of each shall be available to the other with respect
to such defense.
8.2 Survival of Representations and Warranties, etc.; Limitations on
-------------------------------------------------------------------
Liability.
---------
(a) The representations and warranties contained in the Agreement shall
survive the execution and delivery of the Agreement, any examination by or on
behalf of the parties hereto and the completion of the transactions contemplated
herein, for a period of twelve (12) months following the Closing Date. No
Indemnifying Party shall be obligated to provide indemnification to the
Indemnified Party unless the Indemnifying Party shall have received written
notice thereof within the applicable time period for survival set forth in this
Section 8.2. If an Indemnified Party provides proper notice of a claim within
the applicable time period set forth herein, liability for such claim will
continue until such claim is resolved.
(b)(i) In the absence of fraud, the aggregate amount of all Losses for
which the Buyer Indemnitees shall be entitled to indemnification pursuant to
Section 8.1(a)(i) of this Agreement shall not exceed $400,000.
(ii) Notwithstanding anything to the contrary in this Agreement, in the
absence of fraud, the Seller shall not be required to indemnify or hold harmless
the Buyer Indemnitees with
19
respect to any claim for indemnification pursuant to Section 8.1(a)(i) of this
Agreement, unless and until the Buyer Indemnitees' aggregate Losses in respect
of all such claims exceed $25,000 after which the Seller shall be liable for all
such Losses without deduction.
8.3 Set-Off. Upon notice to Seller specifying in reasonable detail the
--------
basis for such set-off, Buyer may set off the amount of any Losses against the
Deferred Purchase Price. Neither the exercise of nor the failure to exercise
such right of set-off subject to Section 8.4 below or to give notice of a Loss
will constitute an election of remedies or limit Buyer in any manner in the
enforcement of any other remedies that may be available to it.
8.4 Holdback Dispute Resolution. Buyer shall maintain the Deferred
-----------------------------
Purchase Price amount in an interest bearing bank account. In the event a
dispute arises between Buyer and Seller regarding distribution of the Deferred
Purchase Price, and the dispute cannot be resolved by negotiation between the
parties, no disbursement of the Deferred Purchase Price shall be made to either
Buyer or Seller except pursuant to the final, non-appealable order of a court of
competent jurisdiction.
ARTICLE IX POST-CLOSING COVENANTS
9.1 Noncompetition. As an inducement for the Buyer to enter into this
--------------
Agreement and as additional consideration for the consideration paid to the
Seller, the Seller and Owners jointly and severally agree that:
(a) For a period of three (3) years after the Closing:
(i) Neither Seller nor the Owners will, or permit their
Affiliates to, directly or indirectly, engage or invest in,
own, manage, operate, finance, control, or participate in
the ownership, management, operation, financing, or control
of, be employed by, associated with, or in any manner
connected with, extend credit, or render services or advice
to, any business whose products or activities compete in
whole or in part with the products or activities of the
piezo electric, peizo resistive and electromagnetic sensor
industry, including the Business, anywhere within the United
States provided, that the Sellers or Owners may purchase or
--------
otherwise acquire up to (but not more than) one percent of
any class of securities of any enterprise (without otherwise
participating in the activities of such enterprise) if such
securities are listed on any national or regional securities
exchange or have been registered under Section 12(g) of the
Securities Exchange Act of 1934. The Sellers and Owners
agree that this covenant is reasonable with respect to its
duration, geographical area, and scope.
(ii) Neither the Seller nor Owners will, or permit their
Affiliates to, directly or indirectly, either for itself,
themselves or any other
20
Person, (A) induce or attempt to induce any employee to
leave the employ of the Buyer or it subsidiaries, (B)
employ, or otherwise engage as an employee, independent
contractor, or otherwise, any employee of Buyer or its
subsidiaries or (C) induce or attempt to induce any
customer, supplier, licensee, or business relation of the
Business to cease doing business with the Buyer or its
subsidiaries, or in any way interfere with the relationship
between any such customer, supplier, licensee, or business
relation and or with Buyer or its subsidiaries.
(iii) Neither the Seller nor Owners will, or permit their
Affiliates to, directly or indirectly, either for itself,
themselves or any other Person, solicit the business of any
Person known to the Seller or Owners to be a customer of the
Business, whether or not the Seller or Owners had personal
contact with such Person for any business whose products or
activities compete in whole or in part with the products or
activities of the piezo electric, peizo resistive and
electromagnetic sensor industry, including the Business.
(iv) Neither the Seller nor Owners will, or will permit any of
their Affiliates to, at any time during or after the
foregoing period, disparage the Buyer or the Business, or
any of their members, Owners, directors, officers,
employees, or agents.
(v) The parties hereto acknowledge that: (i) the obligations of
Seller and each Owner pursuant to this Section 9.1 are
individual obligations and to the extent that a breach by
Seller or an individual Owner occurs, such breach shall not
be deemed a breach by any other party; (ii) Xxxxx Xxxxxxxx
and Xxxxx Xxxxxxx shall not be subject to the obligations of
this Section 9.1; and (iii) notwithstanding anything
contained herein to the contrary, the liability of Seller or
an Owner for a breach of this Section 9.1 shall not be
limited by the terms of Section 8.2(b).
(vi) In the event that an Owner's employment with Seller is
terminated by Seller without Cause, then such Owner shall
not be subject to the obligations of Section 9.1 after such
termination. This exception shall not apply to an Owner
whose employment with Seller is terminated by Seller for
Cause or voluntarily by such Owner. As used in this
Agreement, "Cause" means (i) an Owner's gross misconduct;
(ii) an Owner's disregard of lawful instructions of the
Seller's President or management concerning matters relating
to an Owner's position with Seller; (iii) an Owner's neglect
of duties or failure to act, which, in each case, could
reasonably be expected to have a material adverse effect on
the
21
business and affairs of Seller; (iv) an Owner's commission
of an act constituting common law fraud, or a felony, or
criminal act against Seller or any affiliate thereof or any
of the assets of any of them; (v) an Owner's material
dishonesty in connection with an Owner's responsibilities as
an employee of Seller; (vi) an Owner's conviction of, or
plea of nolo contendere to, a felony or a crime involving
moral turpitude; or (vii) an Owner's material breach of this
Agreement.
9.2 Remedies. If the Seller or any Owner breaches the covenants set
---------
forth in Section 9.1, the Buyer will be entitled to the following remedies:
(a) damages from such Seller or Owner;
(b) in addition to its right to damages, to obtain injunctive or
other equitable relief to restrain any breach or threatened
breach or otherwise to specifically enforce the provisions of
Section 9.1, it being agreed that money damages alone would be
inadequate to compensate the Buyer and would be an inadequate
remedy for such breach; and
(c) the rights and remedies provided herein are cumulative and not
alternative.
9.3 Further Assurances. Following the Closing Date, the Seller shall,
-------------------
and shall cause each of its Affiliates to, from time to time, execute and
deliver such additional instruments, documents, conveyances or assurances and
take such other actions as shall be necessary, or otherwise reasonably requested
by the Buyer, to confirm and assure the rights and obligations provided for in
the Agreement and in the Collateral Documents and render effective the
consummation of the transactions contemplated thereby.
9.4 Use of Name. After the Closing, neither Seller nor any Owner shall
-----------
do business or use the name "Encoder Devices, LLC" or any confusingly similar
name.
9.5 Liability for Transfer Taxes. The Seller and Owners, jointly and
------------------------------
severally, covenant and agree to make full and timely payment of, and to
indemnify and hold harmless Buyer against, all sales (including, without
limitation, bulk sales), use, value added, documentary, stamp, gross receipts,
registration, transfer, conveyance, excise, recording, license and other similar
Taxes and fees ("Transfer Taxes"), arising out of or in connection with or
---------------
attributable to the transactions effected pursuant to the Agreement and the
Collateral Documents. The Seller shall prepare and timely file all tax returns
required to be filed in respect of Transfer Taxes (including, without
limitation, all notices required to be given with respect to bulk sales taxes),
provided that the Buyer shall be permitted to prepare any such tax returns that
--------
are the primary responsibility of the Buyer under applicable law.
22
ARTICLE X TERMINATION
10.1 Termination Events.
-------------------
This Agreement may, by notice given prior to or at the Closing, be
terminated:
(a) by either Buyer or Seller if a material breach of any provision of
this Agreement has been committed by the other party which breach is not
remedied within ten (10) days following notice thereof and such breach has not
been waived;
(b) by Buyer if any of the conditions in Article VII has not been
satisfied as of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such condition on or
before the Closing Date; or
(c) by mutual consent of Buyer and Seller ; or
(d) by either Buyer or the Seller if the Closing has not occurred
(other than through the failure of any Party seeking to terminate this Agreement
to comply fully with its obligations under this Agreement) on or before July 16,
2004 or such later date as the parties may agree upon.
ARTICLE XI MISCELLANEOUS
11.1 Expenses.
--------
Except as provided in Section 9.5, the Seller, on the one hand, and the
Buyer, on the other hand, shall bear their respective expenses, costs and fees
(including attorneys', auditors' and financing commitment fees) in connection
with the transaction contemplated hereby, including the preparation, execution
and delivery of the Agreement and compliance herewith.
11.2 Severability.
------------
If any provision of the Agreement, including any phrase, sentence, clause,
Section or subsection is inoperative or unenforceable for any reason, such
circumstances shall not have the effect of rendering the provision in question
inoperative or unenforceable in any other case or circumstance, or of rendering
any other provision or provisions herein contained invalid, inoperative, or
unenforceable to any extent whatsoever. If any of the covenants set forth in
Section 9.1 are held to be unreasonable, arbitrary, or against public policy,
such covenants will be considered divisible with respect to scope, time, and
geographic area, and in such lesser scope, time and geographic area, will be
effective, binding and enforceable against the Sellers and Owners.
23
11.3 Notices.
-------
All notices, requests, demands, waivers and other communication required or
permitted to be given under the Agreement shall be in writing and shall be
deemed to have been duly given if (a) delivered personally, (b) mailed by
-
first-class, registered or certified mail, return receipt requested, postage
prepaid, or (c) sent by reputable, nationally recognized next-day or overnight
-
mail or delivery or (d) sent by telecopy or telegram.
-
(i) if to the Buyer to,
Measurement Specialties, Inc.
000 Xxxxx 00 Xxxx
Xxxxx 000
Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxx Xxxxxxx
Tel: (000) 000-0000:
with a copy to:
XxXxxxxx & English LLP
Four Gateway Center
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Tel: 000-000-0000
Fax: 000-000-0000
(ii) if to the Seller,
Encoder Devices, LLC
00000 X. Xxxxxxxxxx Xx. Xxxxx, Xxxxx Xxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
with a copy to:
Encoder Devices, LLC
0000 Xxxx Xxxx
Xxxxxx, XX 00000
24
Attn: Messrs. Xxxxx Xxxxxxxx and Xxxxx Xxxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
And an additional copy to:
Xxx X. Xxxxxxxx
Xxxxxxxx & Valley
00 X. XxXxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 000000
Tel: 000-000-0000
Fax: 000-000-0000
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
All such notices, requests, demands, waivers and other communications shall
be deemed to have been received (w) if by personal delivery on the date of such
-
delivery, (x) if by certified or registered mail, on the seventh day after the
-
mailing thereof, (y) if by next-day or overnight mail or delivery, on the day
-
delivered, (z) if by telecopy or telegram, on the next day following the day on
-
which such telecopy or telegram was sent, provided that a copy is also sent by
certified or registered mail.
11.4 Headings.
--------
The headings contained in the Agreement are for purposes of convenience
only and shall not affect the meaning or interpretation of the Agreement.
11.5 Entire Agreement.
-----------------
The Agreement (including the Schedules hereto) the Collateral Documents
(when executed and delivered) constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof.
11.6 Counterparts.
------------
The Agreement may be executed in several counterparts, each of which shall
be deemed an original and all of which shall together constitute one and the
same instrument.
11.7 Governing Law, etc.
---------------------
The Agreement shall be governed in all respects, including as to validity,
under the laws
25
of the State of New York without giving effect to the conflict of laws rules
thereof. The Buyer and the Seller and Owners hereby irrevocably submit to the
jurisdiction of the courts of the State of Illinois and the Federal courts of
the United States of America located in the State of Illinois, solely in respect
of the interpretation and enforcement of the provisions of the Agreement and of
the documents referred to in the Agreement, and hereby waive, and agree not to
assert, as a defense in any action, suit or proceeding for the interpretation or
enforcement hereof or of any such document, that is not subject thereto or that
such action, suit or proceeding may not be brought or is not maintainable in
said courts or that the venue thereof may not be appropriate or that the
Agreement or any of such document may not be enforced in or by said courts, and
the parties hereto irrevocably agree that all claims with respect to such action
or proceeding shall be heard and determined in such Illinois State or Federal
court. The Buyer, Seller and Owners hereby consent to and grant any such court
jurisdiction over the person of such parties and over the subject matter of any
such dispute and agree that mailing of process or other papers in connection
with any such action or proceeding in the manner provided in Section 11.3, or in
such other manner as may be permitted by law, shall be valid and sufficient
service thereof.
11.8 Binding Effect.
---------------
The Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, successors and permitted assigns.
11.9 Assignment.
----------
The Agreement shall be freely assignable or transferable by the Buyer to,
and shall inure to the benefit of, and be binding upon any other entity that
shall succeed to the business presently being operated by the Buyer. This
Agreement shall not be assignable by the Seller without the prior written
consent of the Buyer.
11.10 No Third Party Beneficiaries.
-------------------------------
Except as provided in Section 8.2 with respect to indemnification of
Indemnified Parties hereunder, nothing in the Agreement shall confer any rights
upon any person or entity other than the parties hereto and their respective
heirs, successors and permitted assigns.
11.11 Amendment; Waivers, etc.
--------------------------
No amendment, modification or discharge of the Agreement, and no waiver
hereunder, shall be valid or binding unless set forth in writing and duly
executed by the party against whom enforcement of the amendment, modification,
discharge or waiver is sought. Any such waiver shall constitute a waiver only
with respect to the specific matter described in such writing and shall in no
way impair the rights of the party granting such waiver in any other respect or
at any other time. Neither the waiver by any of the parties hereto of a breach
of or a default under any of the provisions of the Agreement, nor the failure by
any of the parties, on one or more occasions, to enforce any of the provisions
of the Agreement or to exercise any right or privilege hereunder, shall be
construed as a waiver of any other breach or default of a similar nature, or as
26
a waiver of any of such provisions, rights or privileges hereunder. The rights
and remedies herein provided are cumulative and are not exclusive of any rights
or remedies that any party may otherwise have at law or in equity. The
representations and warranties of the Seller shall not be affected or deemed
waived by reason of any investigation made by or on behalf of the Buyer
(including but not limited to by any of its advisors, consultants or
representatives) or by reason of the fact that the Buyer or any of such
advisors, consultants or representatives knew or should have known that any such
representation or warranty is or might be inaccurate.
[Signature Page Follows]
27
IN WITNESS WHEREOF, the parties have duly executed the Agreement as of the
date first above written.
MEASUREMENT SPECIALTIES, INC.
By:______________________________
Name:
Title:
ENCODER DEVICES, LLC
By:______________________________
Name:
Title:
The undersigned Owners, execute this Agreement for purposes of the obligations
of such Owners set forth in Article IX hereof:
OWNERS:
_________________________________
Xxxxxxx Xxxxxxx
_________________________________
Xxxxxxx Xxxxxxx
_________________________________
Xxxxxxx Xxxxxxx
R&B INVESTMENTS, LLC
By:____________________________
Name:
Title:
_________________________________
Xxxxx Xxxxxxxx
_________________________________
Xxxxx X. Xxxxxxx
_________________________________
Xxxxx Xxxxxx
28
