ASSET PURCHASE AGREEMENT
by and among
DATRON/TRANSCO, INC.,
DATRON SYSTEMS INCORPORATED
and
NURAD TECHNOLOGIES, INC.
Dated: As of November 3, 2000
TABLE OF CONTENTS
ARTICLE I
Purchase and Sale of Assets 1
Purchase and Sale 1
1.2 Assets to be Transferred 1
(a) Tangible Assets 1
(b) Intangible Assets 2
(c) Inventory 2
(d) Contracts 2
(e) Contract Bids 2
(f) Government Licenses, Permits and
Authorizations 2
1.3 Consideration to be Paid by Buyer 2
(a) Purchase Price for the Assets 2
(b) Payment of Purchase Price 3
(c) Refund of Deposit 3
(d) Purchase Price Adjustment 3
1.4 Manner of Payments 3
1.5 Allocation of Purchase Price 3
1.6 Assumption of Liabilities 3
1.7 Excluded Assets 4
1.8 Use of Name "Transco" and "Transco
Communications Inc." 4
1.9 The Closing 4
1.10 Bulk Sales Laws 4
ARTICLE II
Disclosure and Technical Assistance 4
2.1 Provision of Information 4
2.2 Technical Assistance 5
2.3 Employees 5
ARTICLE III
Representations and Warranties 6
3.1 Representations and Warranties of Seller 6
Corporate Standing and Authority;
Binding
Agreement 6
(b) Absence of Conflicting Agreements or
Required Consents 6
Product Line Information 6
(d) Inventories 6
(e) Non-Infringement of Patents,
Trademarks and Other Intellectual
Property 7
(f) Operations and Use of Properties 7
(g) Licenses, Permits and Authorizations 7
(h) Product Labeling, Product Liability
and Product Warranty 7
(i) Validity and Existence of Agreements 8
(j) Litigation 8
(k) Suppliers and Tooling 8
(l) Title to Assets 9
(m) Product Design and Drawings; Absence
of
Defects 9
(n) Customer Relations 9
(o) Delivery Schedules 9
(p) Employment and Non-Competition
Agreements 9
(q) WARN Act 9
(r) Government Contracts 9
(s) Tax Matters 10
(t) Condition of Assets 10
(u) Non Competition Agreements 10
(v) Absence of Collective Bargaining
Agreements 11
Full Disclosure 11
(x) Definition of "To Seller's
Knowledge" 11
3.2 Representations and Warranties of Parent;
Binding
Authority 11
(a) Corporate Standing; Authority and
Due Authorization 11
(b) Litigation 11
(c) Full Disclosure 11
3.3 Representations and Warranties of Buyer;
Binding Authority 12
(a) Corporate Standing; Authority and
Due Authorization 12
(b) Litigation 12
(c) Security Clearances 12
(d) Financing 12
(e) Full Disclosure 12
ARTICLE IV Certain Covenants of Seller 13
4.1 Negative Covenants of Seller Prior to
Closing 13
4.2 Affirmative Covenants of Seller Prior to
Closing 13
4.3 Exclusivity 14
4.4 Consents 14
4.5 Unassigned Contracts 14
4.6 Delivery of Assets 15
4.7 WARN 15
4.8 Solicitation of Seller's Employees by
Buyer 15
4.9 Delivery of Quotation Database 15
4.10 MFA Contract 15
4.11 Tooling at Subcontractors 15
ARTICLE V
Closing 16
5.1 Conditions to Seller's Obligation to
Close 16
(a) Representations and Warranties 16
(b) No Litigation 16
(c) Covenants 16
5.2 Conditions to Buyer's Obligation to Close 16
(a) Representations, Warranties and
Covenants 16
(b) No Litigation 16
(c) Backlog 16
(d) Updated Exhibits 16
(e) Covenants 16
5.3 Conditions to Each Party's Obligations to
Effect the Transactions Contemplated
Hereby 17
(a) No Order, Decree or Injunction 17
(b) CFIUS Approval 17
(c) Approval of Comerica Bank 17
5.4 Best Efforts to Satisfy Conditions 17
5.5 Waiver of Conditions 17
5.6 Termination of Agreement 17
5.7 Procedure Upon Termination 18
ARTICLE VI Post Closing Covenants 18
6.1 Cooperation 18
6.2 Record Retention 19
6.3 Further Assurances 19
6.4 Product Liability Insurance 19
6.5 Cooperation in Certain Claims 19
6.6 Expenses 19
6.7 Quotes and Requests for Information 20
6.8 Sales Commissions 20
ARTICLE VII Non-Competition Agreement 20
7.1 Non-Competition 21
ARTICLE VIII Indemnification 22
8.1 Survival of Representations, Warranties and
Covenants 22
8.2 Indemnification by Seller and Parent 22
8.3 Indemnification by Buyer 22
8.4 Claims 23
8.5 Limitations on Indemnification 24
(a) Dollar Limitations 24
(b) Product Warranty Limitations 24
(c) Time Limitations 24
(d) Calculation of Losses 24
(e) Cap on Indemnification 24
ARTICLE IX Miscellaneous 25
9.1 Execution in Counterparts 25
9.2 Confidentiality 25
9.3 Notices 25
9.4 Severability 28
9.5 Titles and Headings 28
9.6 Successors and Assigns; No Third Party
Beneficiaries 28
9.7 Incorporation of Exhibits 28
9.8 Entire Agreement; Waivers and Amendments 28
9.9 Announcements 28
9.10 Governing Law; Jurisdiction 29
9.11 References 29
ASSET PURCHASE AGREEMENT
THIS AGREEMENT made as of November 3, 2000 is by
and among DATRON/TRANSCO, INC., a California corporation
("Seller"), DATRON SYSTEMS INCORPORATED, a Delaware
corporation ("Parent") and NURAD TECHNOLOGIES, INC., a
Delaware corporation ("Buyer").
RECITALS
A. Seller is engaged in the business of
developing, manufacturing and marketing radomes,
antennas and microwave components including all products
presently or previously developed, manufactured or
marketed under the "Transco Products" or "Transco
Communications Inc." name currently owned by the Seller
and not otherwise excluded under this Agreement (the
"Product Line") , and owns certain rights associated
with the Product Line, including, but not limited to,
design, data rights, the right to make, use and sell
proprietary know-how in the assembly, testing and
manufacture of the Product Line and the good-will
associated with the Product Line (the "Seller's
Rights").
B. Buyer desires to acquire and Seller
desires to sell to Buyer, the Seller's Rights, inventory
and equipment described in this Agreement and used
primarily in the Product Line on the terms and
conditions set forth herein.
NOW, THEREFORE, to effect such transaction and in
consideration of the mutual covenants, representations,
warranties and agreements hereinafter set forth, and
intending to be legally bound hereby, the parties hereto
agree as follows:
TERMS OF AGREEMENT
ARTICLE I
Purchase and Sale of Assets
1.1 Purchase and Sale. Subject to the terms
and conditions of this Agreement, at the Closing, as
hereinafter defined, Seller shall sell and Buyer shall
purchase the Assets, as hereinafter defined and Buyer
shall pay to Seller the consideration specified in
Section 1.3.
1.2 Assets to be Transferred. The following
is an identification of the assets to be transferred to
Buyer at Closing (the "Assets"):
(a) Tangible Assets. All specified
machinery, production equipment, test equipment and
tooling of Seller (the "Tangible Assets") used in
connection with the Product Line (all of which are
described in Exhibit 1.2(a) hereto). Tangible Assets
shall also include copies of Seller's books and records
pertaining solely to the Assets, but not Seller's minute
books and stockholder and stock transfer records, nor
Seller's books and records pertaining to any other
assets or operations of Seller.
(b) Intangible Assets. All the
intangible assets of Seller used in connection with the
Product Line, including without limitation goodwill, all
patents, patent applications, copyrights, copyright
applications, trademarks, trade names (including the
"Transco" or "Transco Communications, Inc." names),
service marks, trademark and service xxxx applications,
trade dress, logos and other proprietary designs,
computer programs and software for testing of product
included in the Assets, engineering drawings, design
data that currently exists, all available computer
information and files related to the Product Line, know-
how, trade secrets, and Seller's customer lists, in each
instance used in connection with the Product Line and
all of which are described in Exhibit 1.2(b) hereto, and
the covenant of Seller and Parent contained in Section
7.1 (collectively, the "Intangible Assets").
(c) Inventory. The inventory of Seller
specifically related to the Product Line as of the date
of Closing, including, but not limited to, supplies, raw
materials and work in progress, which will include all
products known as product code 1 or 3 on Seller's
computer inventory system (the "Inventory").
(d) Contracts. All of the right, title
and interest of Seller in, to and under those contracts
and purchase and sales commitments and orders to which
Seller is a party or by which Seller or the properties
of Seller is or may be bound which relate to the Product
Line, including, without limitation, contracts and
orders providing for the purchase, receipt, sale or
distribution of goods, products or services by Seller,
all items prepaid by Seller, deposits made by Seller
with respect to those contracts (but excluding all
contracts of employment and contracts relating to
employees) and all distribution agreements, all of which
are identified in Exhibit 1.2(d) hereto (the
"Contracts").
(e) Contract Bids. All pending
contract bids and quotations of Seller related to the
Product Line made in the ordinary course of Seller's
business, a complete list of which is included in
Exhibit 1.2(e) hereto.
(f) Government Licenses, Permits
and Authorizations. To the extent assignable, all
governmental licenses, permits and authorizations, if
any, related to the Product Line, a complete list of
which is set forth in Exhibit 1.2 (f) hereto.
1.3 Consideration to be Paid by Buyer.
(a) Purchase Price for the Assets. As
consideration for the purchase of the Assets, Buyer
shall pay to Seller $4,000,000 (the "Purchase Price").
(b) Payment of Purchase Price. The
Purchase Price shall be paid in cash as follows: (i)
$200,000 upon the execution of this Agreement as an
xxxxxxx money deposit (the "Deposit"); and (ii) the
remainder at Closing.
Refund of Deposit. The Deposit is
non-refundable except in the event that: (i) there is a
material breach of this Agreement by Seller; or (ii)
Comerica Bank fails to give its consent and release its
interest in the Assets; or (iii) the amount of backlog
shall be less than required by Section 5.2(c) of this
Agreement.
Purchase Price Adjustment. In the
event that Seller makes shipments of product in excess
of the amount set forth in Section 4.1(e) of this
Agreement, the Purchase Price shall be reduced dollar
for dollar.
1.4 Manner of Payments. All payments
required hereunder shall be made by wire transfer.
1.5 Allocation of Purchase Price. At the
time of Closing, the parties will agree to an allocation
of the Purchase Price among the Assets for federal
income tax purposes. Buyer and Seller agree that each
will report the federal, state and local income and
other tax consequences of the purchase and sale
contemplated hereby in a manner consistent with such
allocation and that neither Buyer nor Seller shall take
any position inconsistent with such allocation in any
federal or state tax return, any proceeding before any
taxing authority or otherwise.
1.6 Assumption of Liabilities. Except as
hereinafter provided, Buyer is not assuming any
liabilities of Seller and Buyer shall not be obligated
to pay for any obligations or liabilities of Seller
unless such obligation or liability is listed in Exhibit
1.6 hereto or any other Exhibit referred to in this
Section 1.6. (the "Assumed Liabilities"):
(a) Seller's obligations and liabilities
for purchase orders and commitments for raw materials
and components for the Product Line inventory all of
which are set forth in Exhibit 1.6(a) hereto, other than
obligations and liabilities which were performed prior
to Closing.
(b) Seller's obligations and liabilities
to subcontractors for work performed and to be performed
in connection with the Product Line, all of which are
set forth in Exhibit 1.6(b) hereto, other than
obligations and liabilities which were performed prior
to Closing.
(c) Seller's obligations and liabilities
with respect to Seller's customer and sales orders for
the Product Line, all of which are set forth in Exhibit
1.6(c) hereto.
(d) Seller's obligations and liabilities
which accrue after the Closing pursuant to any
Contracts.
1.7 Excluded Assets. Expressly excluded from
the purchase and sale contemplated hereby and from the
definition of the term "Assets" are Seller's contract
with Naval Inventory Control Point, purchase order
number N00383-99-C-F010, generically known as the
multiple filter assembly program (the "MFA Contract"),
Seller's cash and cash equivalents, accounts receivable
(whether or not any of the foregoing is related to the
Product Line), Seller's inventory other than the
Inventory and tangible and intangible assets of Seller
used in connection with Seller's business, other than
the Product Line, including, without limitation,
Seller's facilities, and the contracts, tangible assets
and intangible assets not identified on any of Exhibits
1.2(a), 1.2(b), 1.2(d), 1.2(e) or 1.2(f) hereto.
1.8 Use of Name "Transco" and "Transco
Communications Inc.". Buyer acknowledges and agrees
that (a) the "Transco" name is proprietary to Seller,
and (b) Buyer is acquiring as part of the Assets,
Seller's rights to use the names "Transco" and "Transco
Communications, Inc." in connection with the sale and
marketing of the Product Line, subject only to the right
that Seller has granted K&L Microwave, Inc. to use the
name "Transco" exclusively in connection with switch
products. Seller shall change its corporate name to one
that does not include the word "Transco" or any word
confusingly similar thereto and cease using the word
"Transco" in any manner not later than December 31,
2001.
1.9 The Closing. The closing (the "Closing")
hereunder shall take place at the offices of Seller on
the later of 10 a.m., PST, on November 14, 2000 or on
the business day on which all conditions have been
satisfied or are capable of being satisfied (the
"Closing Date"). In the event that the Closing is
delayed beyond November 14, 2000 as a result of Buyer's
failure to obtain CFIUS clearance, the parties to this
Agreement shall negotiate in good faith and agree to
amend the terms set forth in Article IV of this
Agreement to modify the restrictions placed upon
Seller's operation of the business of the Product Line
to take account of the extension of the Closing Date.
1.10 Bulk Sales Laws. Seller and Buyer
hereby waive compliance with the provisions of any
applicable bulk sales law.
ARTICLE II
Disclosure and Technical Assistance
2.1 Provision of Information. Subject to
Section 4.6 of this Agreement, Seller shall use its best
efforts to deliver to Buyer all drawings, diagrams and
documents in the possession of Seller included in the
Intangible Assets, including without limitation,
engineering drawings, existing Product Line production
drawings, plans and procedural instructions,
manufacturing instructions, test specifications and
bills of material within 15 days of the Closing Date,
but in no event shall such delivery be made later than
30 days after the Closing Date. Seller shall use its
best effort to disclose to Buyer non-documentary know-
how necessary for Buyer to manufacture the Product Line.
Between the Closing Date and the date of delivery by
Seller of the items set forth in this Section 2.1,
Seller shall cooperate fully with Buyer and provide
Buyer with all information requested by Buyer regarding
these items.
2.2 Technical Assistance. Subsequent to the
Closing Date, Buyer may request that Seller provide it
with technical assistance and support in developing,
manufacturing and marketing the Product Line ("Technical
Assistance"), and Seller shall provide such assistance
in accordance with this Section 2.2. In Buyer's sole
judgment and discretion, the Technical Assistance shall
be provided at the facilities of Buyer in Baltimore,
Maryland and/or at the facilities of Seller in Simi
Valley, California and shall be provided by the
Technical Personnel (as hereinafter defined), subject to
the provisions of Section 2.3.
2.3 Employees. Buyer does not undertake and
shall have no obligation to hire any of Seller's
employees. Except as otherwise provided in this Section
2.3, any costs relating to the employment or separation
from employment of any employee of Seller shall be the
sole obligation of Seller. Seller agrees to make
available its employees that have the requisite skill
and experience to successfully transition the operation
of the Product Line to Buyer (the "Technical Personnel")
to set up the production equipment that is used to
manufacture the Product Line and to engage in production
and training activities in Baltimore, Maryland. After
the Closing Buyer shall be entitled to 90 person days of
Technical Assistance at Seller's sole cost and expense.
Throughout the 90 person days, Seller shall pay the
salaries of the Technical Personnel.
If Buyer requires Technical Assistance in addition
to 90 person days but not exceeding 180 person days (the
"Additional Technical Assistance"), Buyer agrees to
reimburse Seller for all reasonable coach class travel
to and from Baltimore, Maryland by the Technical
Personnel in connection with the Additional Technical
Assistance, and for all reasonable subsistence costs of
the Technical Personnel while in Baltimore, Maryland in
connection with the Additional Technical Assistance,
including rental cars for commuting purposes and
reasonable lodging and meal costs incurred by the
Technical Personnel (the "Travel and Subsistence Costs")
but Seller shall pay the salaries of the Technical
Personnel without reimbursement by Buyer.
In the event that Buyer requires more than 180
person days of Technical Assistance, Buyer shall pay
Seller at a rate of $1,390 per person per day for
engineering and $953 per day for manufacturing. In
addition, Buyer shall reimburse Seller for all Travel
and Subsistence Costs.
All expenses due from Buyer to Seller pursuant to
this Section 2.3 shall be reimbursed by Buyer within
seven (7) days of Seller's invoice therefor. Buyer
shall not be entitled to set off, offset, reduce or
otherwise withhold any payment due to the Seller
hereunder on account of any other claim under this
Agreement or otherwise.
At all times that Technical Personnel are providing
Technical Assistance to Buyer, no employee shall be
away from Seller's Simi Valley, California facility for
more than 5 business days. Additionally, before
returning to Buyer's facility in Baltimore, Maryland, a
member of the Technical Personnel shall have worked at
Seller's Simi Valley, California facility for at least 5
business days.
ARTICLE III
Representations and Warranties
3.1 Representations and Warranties of Seller.
Seller represents and warrants to Buyer that:
Corporate Standing and Authority;
Binding Agreement. Seller is a corporation duly
organized, validly existing and in good standing under
the laws of the State of California. Seller has full
corporate power to own all of its properties and assets
and to conduct its business as it is now being
conducted. The execution of this Agreement and
consummation of the transactions contemplated herein
will not violate any provision of Seller's Articles of
Incorporation or By-laws and Seller has obtained all
necessary authorization and approval from its Board of
Directors for the execution of this Agreement and, at
the Closing Date, the consummation of the transactions
contemplated hereby. This Agreement is a legal, valid
and binding agreement of Seller enforceable in
accordance with its terms, subject to the effects of
bankruptcy, insolvency, moratorium, reorganization or
other similar laws affecting creditors' rights generally
and the application of equitable principles or the
availability of equitable remedies in any proceeding,
whether at law or in equity.
(b) Absence of Conflicting Agreements or
Required Consents. Except (i) for any lien arising in
connection with the failure to comply with applicable
bulk sales law, (ii) for consents required under certain
loan agreements between Seller and its lending
institutions, and (iii) as described in Exhibit 3.1(b)
hereto, the execution, delivery and performance of this
Agreement by Seller does not and will not: (x) conflict
with or violate any law, rule, regulation, order,
judgment or decree applicable to Seller or by which it
is bound or affected, or (y) result in any breach of or
constitute a default under any note, bond, mortgage,
indenture, lease, license, franchise or other instrument
or obligation to which Seller is a party.
(c) Product Line Information. Seller
has furnished or will furnish Buyer with the following
information with respect to the Product Line, all of
which is set forth in Exhibit 3.1(c): (i) detailed
financial information with respect to the costs of
production; (ii) a list of outstanding customer orders
(backlog) as and at the Closing; and (iii) a statement
of warranty activity for the last two fiscal years on
all elements of the Product Line.
(d) Inventories. The Inventory: (i)
complies in all material respects with all applicable
federal laws and regulations and with all applicable
laws and regulations of each of the states of the United
States into which any product would be shipped directly
by Seller; and (ii) to Seller's Knowledge, does not
consist of any damaged items. The Inventory has been or
will be acquired in the ordinary course of business of
Seller in accordance with its normal inventory
practices. The Inventory includes all one time purchase
items of component parts that are used in the
manufacture of the Product Line.
(e) Non-Infringement of Patents,
Trademarks and Other Intellectual Property. Exhibit
1.2(b) contains a complete list of all of the patents,
patent applications, copyrights, copyright applications,
trademarks, trade names and service marks, trademark and
service xxxx applications, trade dress, logos,
proprietary designs and names owned by Seller (including
the "Transco" and "Transco Communications, Inc." names)
which are used by Seller in connection with the Product
Line (the "Intellectual Property"). Except as set forth
in Exhibit 1.2(b) hereto, Seller is the sole owner of
the Intellectual Property, free and clear of any lien,
encumbrance or rights of others. The Intellectual
Property does not infringe on or violate the rights of
any person or entity. Seller is not aware of any claim
of infringement or violation of the rights of others
with respect to the Intellectual Property nor of any
infringement by others of Seller's rights in the
Intellectual Property. Except as disclosed on Exhibit
1.2(b) hereto, Seller has not licensed or permitted any
other person or entity to use or exploit any
Intellectual Property currently or at any time in the
future. Except as set forth in Exhibit 1.2(b), Seller
has never been involved in any controversy with another
person or entity involving the use or exploitation of
any Intellectual Property. Exhibit 1.2(b) hereto
contains a listing of all registrations in any
governmental office or registry with respect to any
Intellectual Property.
To Seller's Knowledge there is no patent, patent
application, copyright, copyright application,
trademark, trademark application or other intellectual
property right which might be the basis for an
infringement claim in regard to the Product Line.
(f) Operations and Use of Properties.
Seller's operations with respect to the Product Line are
in conformity with all applicable laws or orders or
other governmental or administrative laws, ordinances,
regulations or orders, except for such failures to
conform that would not have a material adverse effect on
the operations of the business of the Product Line. The
Assets (except for unassigned Contracts, Licenses and
the "Transco" and "Transco Communications, Inc." names)
to be transferred to Buyer hereunder are sufficient for
the conduct of the business of the Product Line as it
currently is conducted, except for the items set forth
on Exhibit 3.1(f) which will not be transferred to
Buyer.
(g) Licenses, Permits and
Authorizations. Seller, in its name, has all licenses,
permits, approvals and other governmental authorizations
necessary to carry on the business of the Product Line
as it is now being conducted in the United States, and
to Seller's Knowledge, all other countries in which
Seller markets the Product Line, all of which are listed
in Exhibit 3.1(g) hereto (collectively, the "Licenses"),
except for those Licenses which, if not obtained, would
not have a material adverse effect on the operation of
the business of the Product Line. Seller has not
breached any provision of, is not in default under the
terms of, is not engaged in any activity that would
cause revocation or suspension of, any License, and no
action or proceeding looking to or contemplating the
revocation or suspension of any License is pending or
threatened.
(h) Product Labeling, Product Liability
and Product Warranty. Seller is in compliance in all
material respects with all federal and state laws and
regulations relating to product labeling, product safety
and public health and safety with respect to the Product
Line. Except as described in Exhibit 3.1(h) hereto,
Seller has not received any notice of any claim that any
product now or heretofore offered for sale or sold by it
or distributed by it in connection with the Product Line
is injurious to the health and safety of any person or
is not in conformity with its specifications or not
suitable for any purpose or application for which it is
offered for sale, sold or distributed. Exhibit 3.1(h)
hereto describes the warranties given by Seller with
respect to the Product Line and sets forth a description
of all Product Liability Claims, as hereinafter defined,
asserted against Seller with respect to the Product Line
during the last 5 years. Except as set forth in Exhibit
3.1(h), in regards to the Product Line, there are no
outstanding returns of product from customers of Seller
or issues relating to products delivered by Seller that
could give rise to product returns. In regards to the
Product Line, all products sold by Seller have been
released in conformance with Seller's own certification
of conformity. During the past 5 years, none of the
products or product parts in the Product Line have been
subject to any recall or similar action whether by
governmental order or voluntary action.
(i) Validity and Existence of
Agreements. Except as set forth in Exhibit 3.1(i)
hereto, there are no material agreements, contracts,
arrangements, understandings or other agreements whether
written or oral with respect to the Product Line other
than the Contracts. Seller has delivered or made
available to Buyer a true and complete copy of each
written Contract. Seller has delivered or made
available to Buyer a fair and accurate summary of each
oral Contract listed in Exhibit 1.2(d) hereto. Each of
the Contracts is a valid and binding obligation of
Seller and, to Seller's Knowledge, the other parties
thereto in accordance with its respective terms, and
except as set forth in Exhibit 3.1(i), Seller has
performed and complied in all material respects with all
the provisions of such Contracts required to be
performed or completed prior to the date of this
Agreement, and to Seller's Knowledge no party is in
default or would be in default with the lapse of time or
notice under the terms of, any of the Contracts. Except
as set forth in Exhibit 1.2(d) hereto, the execution of
this Agreement and the consummation of any of the
transactions contemplated hereby will not violate any
provision of any of the Contracts and will not result in
or create a right of termination, cancellation or
adverse modification of any of the Contracts. With
respect to the Product Line, Seller has not delivered
any products under any contracts which provide for
retrospective customer price negotiation. Seller has
received no payments with respect to the Contracts in
advance of the work performed.
(j) Litigation. Except as disclosed in
Exhibit 3.1(j) hereto, there are no (i) claims, suits,
actions, citations, administrative or arbitration or
other proceedings or governmental investigations pending
or, to Seller's Knowledge, threatened against Seller or
to which Seller is a party relative to the Product Line
or the transactions contemplated by this Agreement or
(ii) judgments, orders, writs, injunctions or decrees of
any court or administrative agency relating to the
Assets or the Product Line.
(k) Suppliers and Tooling. Except as
set forth in Exhibit 3.1(k) hereto, there are no sole
source suppliers for any of Seller's purchased parts or
sub-assemblies in respect of current sales or projected
sales by Seller in connection with the Product Line.
Exhibit 3.1(k) hereto also sets forth with respect to
the Product Line, a list of all tooling and castings
owned by Seller which are used in the manufacture of the
Product Line, as well as where the tooling is located
and whether there is any restriction on Seller taking
possession of or relocating same.
(l) Title to Assets. Except as
described in Exhibit 3.1(l) hereto, Seller has good and
marketable title to all of the Assets and shall at the
Closing deliver to Buyer good and marketable legal title
to the Assets free and clear of all title defects,
liabilities, obligations, liens, mortgages, security
interests, encumbrances, claims or similar adverse
interests of any kind or character.
(m) Product Design and Drawings; Absence
of Defects. Seller has sufficient documentation and
other know-how to support the manufacture of the Product
Line. Except as disclosed in Exhibit 3.1(m) hereto,
Seller is not aware of any design defect which would (i)
adversely affect the performance or safety of any
product in the Product Line which Seller has delivered
to a customer during the last 3 years or (ii) cause the
costs of manufacturing of any product in the Product
Line to exceed the levels detailed in Exhibit 3.1(c)
hereto. Except as detailed in Exhibit 3.1(m) hereto, to
Seller's Knowledge, there are no component part
obsolescence issues relating to the design of the
products included in the Product Line that have been
sold by Seller during the last four years.
(n) Customer Relations. With respect to
the Product Line, since December 31, 1998 no customer of
Seller accounting for more than 5% of Seller's Product
Line sales during any fiscal year since 1998 has
terminated or communicated to Seller the intention or
threat to terminate its relationship with Seller, or the
intention to substantially reduce the quantity of
products or services it purchases from Seller, or its
dissatisfaction with the products or services sold by
Seller. Except for any warranty claims which are
described in Exhibit 3.1(n) hereto, no amounts of money
are or will become repayable to any of Seller's
customers under any of the Contracts relating to
performance of those Contracts prior to the Closing.
(o) Delivery Schedules. Except as set
forth in Exhibit 3.1(o), Seller and its customers are in
agreement with respect to all delivery schedules under
Seller's Contracts with its customers, and there are no
material delivery delays or other non-compliance by
Seller with the terms of those Contracts that could give
rise to penalties or cancellation of any of such
Contracts.
(p) Employment and Non-Competition
Agreements. Buyer shall not be required to compensate
Seller or any employee of Seller for any non-competition
or employment agreements entered into between Seller and
its employees.
(q) WARN Act. The transactions
contemplated by this Agreement will not constitute a
"plant closing" or a "mass layoff" within the meaning of
those terms under the Worker Adjustment Retraining and
Notification Act ("WARN"), 29 U.S.C. 2101 et. seq;
Additionally, Seller is not subject to any state
legislation similar to WARN, nor will any such similar
state legislation be violated as a result of the
transactions contemplated by this Agreement.
(r) Government Contracts. In connection
with the Product Line:
(i) Seller and its employees hold
such security clearances (if any) as are required to
perform government contracts of the type performed prior
to the date of this Agreement by the Seller.
(ii) Seller has not breached or
violated any law, certification, representation, clause
or provision included in any government contract, except
where such breach or violation would not have a material
adverse effect on the operation of the business of the
Product Line, and neither the United States Government
nor any prime contractor has notified the Seller in
writing that the Seller has breached or violated any
law, certification, representation, clause or provision
included in any government contract which would have a
material adverse effect on the operation of the business
of the Product Line. Neither the Seller nor, to the
Seller's Knowledge, any employee has made any improper
payment or inducement to any official of the United
States Government.
(iii) The pricing cost
accounting, estimating and procurement systems relating
to the government contracts have been properly disclosed
to the United States government, and are in full
compliance with all laws, regulations, and procedures,
including but not limited to the Federal Acquisition
Regulation and the Defense Acquisition Regulation,
except where non compliance would not have a material
adverse effect on the operation of the business of the
Product Line. Seller has provided Buyer with all
correspondence between Seller and the United States
government pricing authorities since September 1, 1998.
(iv) Neither the Seller nor, to the
Seller's Knowledge, any employee of the Seller is (or
has been at any time since January 1, 1994) suspended or
debarred from doing business with the United States
Government or has been declared nonresponsible or
ineligible for United States Government contracting.
(v) No money currently due to the
Seller under any government contract related to the
Product Line has been withheld or set off or has been
subject to attempts to withhold or set off.
(s) Tax Matters. There is no due and
unpaid tax obligation of Seller which constitutes, or
may in the future constitute, a lien on the Assets, and,
if any such lien exists or arises, it will be promptly
discharged by Seller.
(t) Condition of Assets. The Assets
are in good repair and working condition, normal wear
and tear excepted, are suited for the uses intended, and
are in conformity with all applicable laws, ordinances,
rules and regulations.
(u) Non Competition Agreements. Seller
is not a party to any non-compete agreements with
respect to the Product Line.
(v) Absence of Collective Bargaining
Agreements. No employee at Seller's Simi Valley,
California facility or at any other facility of Seller
at which the Product Line is manufactured, is a party to
a collective bargaining agreement.
(w) Full Disclosure. To Seller's
Knowledge, no representation or warranty of Seller in
this Agreement or the Exhibits hereto, nor any written
statement or certificate executed by Seller and
furnished or to be furnished to Buyer pursuant to this
Agreement contains as of the date of this Agreement any
untrue statement of a material fact or omits or will
omit to state a material fact necessary to make the
statements contained herein or therein not misleading.
(x) Definition of "To Seller's
Knowledge". "To Seller's Knowledge" or other references
herein to Seller's knowledge or awareness, shall mean
the actual knowledge of Xxxxxx Xxxxxxxx, Xx. Xxx-Xxxxx
Xxx, Xxxxx Xxxxxxx, Xxxx XxXxxxx, Xxxx Xxxxxx, Xxxxx
Xxxxx, Xxxx Xxxxx and Xxxxx XxXxxxxxx.
3.2 Representations and Warranties of Parent;
Binding Authority. Parent represents and warrants to
Seller that:
(a) Corporate Standing; Authority and
Due Authorization. Parent is a corporation duly
organized, validly existing and in good standing under
the laws of the State of Delaware, and has full
corporate power and authority to carry on its current
business operations and consummate the transactions
contemplated by this Agreement. The execution of this
Agreement and consummation of the transactions
contemplated herein will not violate any provision of
Parent's Certificate of Incorporation or By-Laws or any
law, regulation or ordinance or any provision of any
contract, instrument, order, award, judgment or decree
to which Parent is a party or by which Parent is bound.
This Agreement is a legal, valid and binding agreement
of Parent enforceable against Parent in accordance with
its terms, subject to the laws of bankruptcy, insolvency
and moratorium and other laws or equitable principles
generally affecting creditors' rights. Parent has
obtained all necessary authorization and approval of its
Board of Directors for the execution of this Agreement
and the consummation of the transactions contemplated
hereby. Except for the consent of Comerica Bank, no
consent, authorization, order or approval of any person,
governmental authority or any court is required in
connection with the execution and delivery by Parent of
this Agreement or the consummation by Parent of the
transactions contemplated hereby.
(b) Litigation. There is no litigation
pending or, to the knowledge of Parent, threatened
against Parent which seeks to prevent, or if successful
would prevent, Parent from consummating the transactions
contemplated by this Agreement.
(c) Full Disclosure. No representation
or warranty of Parent in this Agreement or the Exhibits
hereto, nor any written statement or certificate
executed by Parent and furnished or to be furnished to
Buyer pursuant to this Agreement or in connection with
the transactions contemplated hereby, contains as of the
date of this Agreement any untrue statement of a
material fact or omits or will omit to state a material
fact necessary to make the statements contained herein
or therein not misleading.
3.3 Representations and Warranties of Buyer;
Binding Authority. Buyer represents and warrants to
Seller that:
(a) Corporate Standing; Authority and
Due Authorization. Buyer is a corporation duly
organized, validly existing and in good standing under
the laws of the State of Delaware, and has full
corporate power and authority to carry on its current
business operations and consummate the transactions
contemplated by this Agreement. The execution of this
Agreement and consummation of the transactions
contemplated herein will not violate any provision of
Buyer's Certificate of Incorporation or By-Laws or any
law, regulation or ordinance or any provision of any
contract, instrument, order, award, judgment or decree
to which Buyer is a party or by which Buyer is bound.
This Agreement is a legal, valid and binding agreement
of Buyer enforceable against Buyer in accordance with
its terms, subject to the laws of bankruptcy, insolvency
and moratorium and other laws or equitable principles
generally affecting creditors' rights. Buyer has
obtained all necessary authorization and approval by the
Board of Directors of Cobham plc for the execution of
this Agreement and the consummation of the transactions
contemplated hereby. No consent, authorization, order
or approval of any person, governmental authority or any
court is required in connection with the execution and
delivery by Buyer of this Agreement or the consummation
by Buyer of the transactions contemplated hereby.
(b) Litigation. There is no litigation
pending or, to the knowledge of Buyer, threatened
against Buyer which seeks to prevent, or if successful
would prevent, Buyer from consummating the purchase
contemplated by this Agreement.
Security Clearances. Buyer and its
employees have US Government security clearances at the
"Secret" level.
Financing. Buyer has access to the
cash and at Closing will have the cash available to pay
the Purchase Price.
(e) Full Disclosure. No representation
or warranty of Buyer in this Agreement or the Exhibits
hereto, nor any written statement or certificate
executed by Buyer and furnished or to be furnished to
Seller or Parent pursuant to this Agreement or in
connection with the transactions contemplated hereby,
contains as of the date of this Agreement any untrue
statement of a material fact or omits or will omit to
state a material fact necessary to make the statements
contained herein or therein not misleading.
ARTICLE IV
Certain Covenants of Seller
4.1 Negative Covenants of Seller Prior to
Closing. Between the date hereof and the date of the
Closing, Seller will not do any of the following with
respect to the Product Line without Buyer's prior
written consent:
Enter into any contract or
commitment, provided that the Seller may accept purchase
orders with respect to proposals that are outstanding on
the date of this Agreement;
Make any quotes with respect to
additional sales of product, provided that Seller may
issue quotations under which the price and other terms
and conditions are no lower than those quoted by Seller
prior to the date of this Agreement, so long as: (i)
Seller is notified of and has the opportunity to comment
upon such quotes prior to their issuance (Buyer agrees
that an authorized contract representative of Buyer will
be available at Seller's facility in Simi Valley,
California during the period between the date of this
Agreement and Closing); and (ii) the quote is by its
terms assignable to Buyer upon Closing;
Create, assume or incur any
encumbrance on any of the Assets;
Sell, assign, lease, exchange or
otherwise transfer or dispose of any of the Assets;
(e) Make shipments of product from the
period beginning October 1, 2000 through Closing with an
aggregate invoice price in excess of $540,000;
(f) Merge or consolidate with or into
any other entity or enter into any agreements relating
thereto;
(g) Take any action or agree, in writing
or otherwise, to take any of the foregoing actions or
any action which would make any representation or
warranty in Section 3.1 hereof materially untrue or
incorrect; and
(h) Agree or make any commitment to take
any actions prohibited by this Section 4.1.
4.2 Affirmative Covenants of Seller Prior to
Closing. Between the date hereof and the Closing Date,
Seller will:
(a) Make available to Buyer and its
counsel, accountants and other representatives for
examination all corporate and financial books and
records of Seller relating to the Product Line, Seller's
customers and all other matters reasonably considered by
Buyer to be relevant to the business and affairs of
Seller with respect to the Product Line (such
examinations to take place during normal business hours
in a manner so as not to interfere with Seller's normal
business operations);
(b) Maintain Seller's books of account,
records and files relating to the Product Line
substantially in the same manner as they are maintained
as of the date of this Agreement;
(c) Maintain the Assets in customary
repair, order and condition, normal wear and tear and
packing and shipping in connection with the transaction
contemplated herein excepted;
(d) Maintain and enforce existing
policies of insurance relating to the Product Line or
substitute policies providing reasonably comparable
insurance coverage in amounts not less than those in
effect on the date of this Agreement;
(e) Pay obligations, in a timely manner,
under all contracts, agreements, leases, commitments,
understandings, franchises, licenses or similar
arrangements with respect to the Product Line as and
when they become due;
(f) Retain and deliver to Buyer copies
of all requests for quotes which Seller receives after
this Agreement is executed as set forth in Section 4.1;
(g) Take all required corporate action
to effectuate the transactions contemplated by this
Agreement; and
(h) Accept all deliveries of materials
used to manufacture the Product Line in the ordinary
course of business in accordance with existing delivery
schedules.
4.3 Exclusivity. Unless and until this
Agreement is terminated pursuant to Section 5.6, Seller
agrees to deal exclusively with Buyer with respect to
the subject matter of this Agreement and to refrain from
any discussions with any other persons expressing an
interest in acquiring the Assets.
4.4 Consents. The parties hereto will use
their best efforts to obtain consents (including any
required consents to the assignment of contracts listed
in Exhibit 3.1(b) hereto) of all persons and
governmental authorities necessary to the consummation
of the sale of the Assets and the other transactions
contemplated by this Agreement.
4.5 Unassigned Contracts. If, with respect
to any Contract, a required consent or novation is not
obtained (such Contract is hereinafter referred to as an
"Unassigned Contract"), Seller shall keep in effect such
contract and shall subcontract with Buyer to perform
Seller's obligations under such Unassigned Contract.
Seller shall pay Buyer 100% of the consideration due
Seller under such Unassigned Contract. Nothing in this
Agreement shall be construed as an attempt to assign any
agreement or other instrument that is by its terms non-
assignable without the consent of the other party. Any
and all amounts paid to Seller relating to Buyer's
performance under any Unassigned Contract shall be
promptly remitted to Buyer. In the event an Unassigned
Contract cannot be subcontracted to Buyer after Seller
has used its best efforts to obtain a novation or
consent to the subcontracting of such contract, Buyer
shall provide Seller, at no cost, with all items
included in the Assets that are required for Seller to
continue performance under such Unassigned Contract and
shall reimburse Seller for all expenses and costs
incurred in complying with such Unassigned Contract, not
to exceed the contract price of such Unassigned
Contract. Seller shall, immediately upon Buyer's
request, return such items.
4.6 Delivery of Assets. The Assets shall be
delivered to Buyer's facility in Baltimore, Maryland in
substantially the same condition as existed on the
Closing Date. Seller shall assemble, pack and prepare
the Assets for shipment, in a careful and professional
manner in accordance with procedures agreed to with
Buyer, and Seller shall bear all costs incurred in this
process. Buyer shall pay all costs incurred in shipping
the Assets from Seller's facilities in Simi Valley,
California to Buyer's facilities in Baltimore, Maryland.
Buyer's representatives shall be entitled to oversee the
packaging and loading of the Assets. The risk of loss
with respect to the Assets shall pass to Buyer upon
Seller's delivery of the Assets to the shipping company
at Seller's facility.
4.7 WARN. Notwithstanding Section 3.1(q)
hereof, Seller shall be responsible for all obligations,
if any, under WARN, applicable regulations thereunder,
and any state legislation similar to WARN with respect
to any employment terminations prior to or on the
Closing Date and shall indemnify the Buyer, in
accordance with the provisions of Article VIII herein,
in the event that the Buyer is held liable for any
failure by the Seller to comply with its obligations
under WARN, any such similar state legislation, or this
Section 4.7.
4.8 Solicitation of Seller's Employees by
Buyer. Neither Seller nor Buyer shall solicit employees
of the other for offers of employment.
4.9 Delivery of Quotation Database. Seller
shall provide Buyer with an electronic copy of its
quotation database in a format which Buyer is able to
access on Buyer's computers. Buyer shall keep
information not relating to the Product Line
confidential.
4.10 MFA Contract. Exhibits 1.2(a), 1.2(b)
and 3.1(k) will indicate which items set forth thereon
are used in connection with the MFA Contract (the "MFA
Items"). The MFA Items will become property of the Buyer
at the Closing Date but, notwithstanding any other
provision of this Agreement, shall remain at Seller's
Facility in Simi Valley, California until Seller
completes performance of the MFA Contract. During the
period that Seller is in possession of the MFA Items, it
will maintain the MFA Items in accordance with Seller's
normal practices prior to the Closing Date. Within 10
days after the completion of the MFA Contract, the MFA
Items will be packaged and shipped to Buyer's facility
in Baltimore, Maryland as provided in Section 4.6 of
this Agreement.
4.11 Tooling at Subcontractors. At the
request of Buyer, Seller will use its reasonable effort
to have any person in possession of toolings, castings
or jigs that are a part of the Assets deliver such
toolings, castings or jigs to Buyer or a designee of
Buyer.
ARTICLE V
Closing
5.1 Conditions to Seller's Obligation to
Close. The obligations of Seller to Close shall be
subject to satisfaction of the following conditions:
(a) Representations and Warranties. The
representations and warranties of Buyer set forth in
Section 3.3 hereof shall be true and correct in all
material respects as of the date of this Agreement and
as of the Closing as though those representations and
warranties have been made at and as of that time, and
Seller shall have received at the Closing a certificate
signed by a duly authorized officer of Buyer to that
effect.
(b) No Litigation. There shall not have
been instituted or threatened on or before the Closing
any action or proceeding to restrict or prohibit the
transactions contemplated by this Agreement.
(c) Covenants. Buyer shall have
performed all covenants required to be performed by
Buyer under this Agreement.
5.2 Conditions to Buyer's Obligation to
Close. The obligations of Buyer to Close shall be
subject to satisfaction of the following conditions:
(a) Representations, Warranties and
Covenants. The representations and warranties of Seller
and Parent set forth in Sections 3.1 and 3.2 hereof
shall be true and correct in all material respects as of
the date of this Agreement and as of the Closing Date as
though those representations and warranties had been
made at and as of that time and Buyer shall have
received at the Closing certificates to that effect
signed by a duly authorized officer of Seller and
Parent.
(b) No Litigation. There shall not have
been instituted or threatened any action or proceeding
to restrict or prohibit the transactions contemplated by
this Agreement.
(c) Backlog. Seller shall provide Buyer
with a customer order backlog current as of the Closing
Date, which shall show an amount of backlog of not less
than $2,300,000.
Updated Exhibits. Seller shall
provide Buyer with versions of Exhibits 1.2(d), 1.2(e),
1.6(a), 1.6(b) and 1.6(c) updated to show information as
of the Closing Date.
Covenants. Seller shall have
performed all covenants required to be performed by
Seller under this Agreement.
5.3 Conditions to Each Party's Obligations to
Effect the Transactions Contemplated Hereby. The
respective obligations of each party to effect the
transactions contemplated hereby shall be subject to the
fulfillment at or prior to the Closing Date of the
following condition:
(a) No Order, Decree or Injunction.
Neither Seller nor Buyer shall be subject to any order,
decree or injunction of a court of competent
jurisdiction or governmental agency and no statute, rule
or regulation shall be enacted or issued which (i)
prevents any of the transactions contemplated by this
Agreement or (ii) would impose any limitation on the
ability of Buyer to effectively exercise full rights of
ownership of the Assets.
(b) CFIUS Approval. Buyer shall have
obtained, at its own expense, a written notice from the
Committee on Foreign Investment in the United States
pursuant to their authority under the Exon-Xxxxxx
Amendment to the Defense Production Act that there are
no issues of national security arising from the proposed
purchase and sale of the Assets under this Agreement
sufficient to warrant investigation under Section 721 of
the Defense Production Act.
(c) Approval of Comerica Bank. Comerica
Bank (the "Bank") shall have approved the consummation
of the transactions contemplated by this Agreement and
shall release the Assets from any security interest the
Bank has in the Assets.
5.4 Best Efforts to Satisfy Conditions. Each
party shall use its best efforts to secure promptly the
satisfaction of the conditions to Closing.
5.5 Waiver of Conditions. Seller and Buyer
may, at their respective options, waive any conditions
to their respective obligations to Closing.
5.6 Termination of Agreement. This Agreement
may be terminated at any time prior to the Closing:
(a) by written agreement of all of the
parties hereto;
(b) by Buyer, if there has been a
material violation or breach by Seller of any of its
respective covenants, agreements, representations or
warranties contained in this Agreement which has not
been waived by Buyer in writing or if there has been any
event or occurrence which has rendered the satisfaction
of a condition to the obligations of Buyer impossible
and such condition has not been waived by Buyer in
writing;
(c) by Seller, if there has been a
material violation or breach by Buyer of any of its
covenants, agreements, representations or warranties
contained in this Agreement which has not been waived by
Seller in writing or if there has been any event or
occurrence which has rendered the satisfaction of a
condition to the obligations of Seller impossible and
such condition has not been waived by Seller in writing;
and
(d) by any party hereto if the Closing
shall not have occurred on or before February 13, 2001.
5.7 Procedure Upon Termination. In the event
of termination by Buyer or by Seller pursuant to Section
5.6 hereof, written notice thereof shall forthwith be
given to the other party and the transactions
contemplated by this Agreement shall be terminated
without further action by the parties hereto. If the
transactions contemplated by this Agreement are
terminated as provided herein:
(a) Each party, if requested, will
redeliver all documents, work papers and other material
of any other party relating to the transactions
contemplated hereby, whether so obtained before or after
the execution hereof, to the party furnishing the same;
(b) All confidential information
received by any party hereto with respect to the
business of any other party shall not be used or
disclosed to another person to the detriment of any
other party consistent with the provisions of Section
9.2 hereof; and
(c) No party hereto and none of their
respective directors, officers, stockholders, partners,
affiliates or controlling persons shall have any
liability or further obligation to any other party to
this Agreement.
ARTICLE VI
Post Closing Covenants
The parties covenant to take the following actions
after the Closing Date:
6.1 Cooperation. For a period of three (3)
years from and after the Closing Date, each party agrees
to furnish or cause to be furnished to the other party,
its counsel and accountants, upon reasonable request
during normal business hours, after not less than three
(3) business days prior written notice, such information
and assistance relating to such party or its business
(including, without limitation, the cooperation of
officers and employees and reasonable access to books,
records and other data and the right to make copies and
extracts therefrom) as is reasonably necessary to: (a)
facilitate the preparation for or the prosecution,
defense or disposition of any suit, action, litigation
or administrative, arbitration or other proceeding or
investigation relating to this Agreement or the Product
Line (other than one by or on behalf of one party to
this Agreement against the other party hereto);
(b) prepare and file any tax return or election relating
to such party and any audit by any taxing authority of
any returns relating to such party; (c) prepare and
file any other documents required by governmental or
regulatory bodies; and (d) formulate and manage product
recall related initiatives by Buyer or Seller relating
to the Product Line. The party requesting such
information and assistance shall reimburse the other
party for all reasonable out-of-pocket costs and
expenses incurred by such party in providing such
information and assistance.
6.2 Record Retention. Buyer shall preserve
and keep the books and records of Seller that Buyer
obtains pursuant to the transactions contemplated
hereby, and Seller shall preserve and keep any such
books and records they may retain with respect to
Assets, for a period of five (5) years after the
Closing, or for any longer period: (a) as may be
required by any federal, state or other governmental
body or agency or any contract or agreement; (b) as may
be reasonably necessary in respect of the prosecution or
defense of any suit, action, litigation or
administrative, arbitration or other proceeding or
investigation that is then pending; (c) that is
equivalent to the period established by any applicable
statute of limitations (or any extension or waiver
thereof) with respect to matters pertaining to taxes; or
(d) so that Buyer or Seller may formulate and manage
product recall related initiatives. Such records shall
be made available to Seller or Buyer, as the case may
be, in accordance with Section 6.1.
6.3 Further Assurances. Each party shall
cooperate with the other, and execute and deliver, or
cause to be executed and delivered, all such other
instruments, including, without limitation, instruments
of conveyance, assignment and transfer, and take all
such other actions as may reasonably be requested by the
other party hereto from time to time, consistent with
the terms of this Agreement, in order to effectuate the
provisions and purposes of this Agreement. Seller will
transfer to Buyer any License which is by its terms
transferable without consent or consideration, and shall
use its reasonable efforts, at Buyer's request and
expense, to assist Buyer in procuring Licenses in
Buyer's name.
6.4 Product Liability Insurance. Seller
agrees to purchase and provide evidence to Buyer at
Closing that it has purchased and fully paid for product
liability insurance through the Closing Date with
respect to products manufactured in connection with the
Product Line and sold by Seller, with such policy terms
and conditions comparable to those of Seller's current
products liability policy.
6.5 Cooperation in Certain Claims. If Buyer
reasonably believes Buyer has suffered damage arising
from the labeling with respect to the Product Line and
if Seller is able to assert a claim with respect thereto
against any person which claim cannot legally be
asserted by Buyer, Seller agrees to cooperate with
Buyer, at Buyer's expense, to pursue such claim to
completion if such does not interfere with Seller's
business or customer relations. Any recovery in such
action will be the property of Buyer.
6.6 Expenses. Buyer and Seller shall each
bear the respective fees, commissions and other expenses
incurred by them in connection with the negotiation and
preparation of this Agreement and in preparing to
consummate the transactions contemplated hereby,
including, without limitation, the fees and expenses of
their respective counsel. Seller shall be responsible
for the payment of all taxes (except any sales or use
taxes or similar taxes), in connection with the transfer
of the Assets from Seller to Buyer pursuant to this
Agreement. Buyer shall be responsible for payment of
all costs incurred in connection with CFIUS approval.
6.7 Quotes and Requests for Information.
Seller shall refer to Buyer, within 4 business days of
receipt, all requests for quotes and all other inquiries
that Seller receives with respect to the Product Line
after the Closing Date. This covenant shall terminate 4
years after the Closing Date.
6.8 Sales Commissions. The sales commissions
set forth in column 4 in the table below shall become
payable by Buyer to Seller 30 days after Seller's
receipt, on or before March 31, 2001, of binding,
irrevocable customer orders from the potential customers
listed in column 1 in the table below which orders
satisfy all minimum amount criteria set forth in column
3 in the table below for the programs listed in column 2
in the table set forth below:
Column 1 Column 2 Column 3 Column 4
Potential Product/Program Minimum Commission
Customer Amount
Boeing F-18 Filter (5 2000 - $120,000
F3992 year) $99,000
2001 -
$99,000
2002 -
$111,000
2003 -
$115,000
2004 -
$120,000
Warner Xxxxxxx Radomes, $600,000 $120,000
H1071 Antennas,
Forward Up and
Down Plus
Repair
Northrop Aft Antenna $300,000 $60,000
H3539 Cluster for ALQ
135
Northrop Fwd Antenna $250,000 $60,000
H3539 Cluster for ALQ
135
ARTICLE VII
Non-Competition Agreement
7.1 Non-Competition.
(a) The parties recognize that the value
of the Product Line is dependent upon the particular
method in which Seller has conducted the business and
the contacts of Seller with its customers and that Buyer
is entering into this transaction with a view toward
that value. Accordingly, Seller and Parent agree that,
for a period of four years following the Closing Date,
they shall not:
(1) Have any interest (financial or
otherwise) in, or accept employment from, or serve in
any capacity (such as owner, investor, principal, agent,
consultant, partner or otherwise) with, any person or
entity (other than Buyer) which is engaged in the
business of: (A) developing or selling the Product Line;
(B) developing or selling products that compete with the
products in the Product Line; or (C) repairing or
overhauling products contained in the Product Line, or
Sell the Product Line to, or solicit purchases of the
Product Line by, customers who were customers of Seller
at the time of the Closing or during the four-year
period prior thereto.
Seller acknowledges that in
connection with the Product Line, the identity of the
customers of Seller, the engineering drawings and know-
how of Seller and the pricing policies, sales and
marketing strategies, employee training practices and
other operating practices of Seller relating solely to
the Product Line are confidential and valuable
proprietary information of Seller ("Proprietary
Information"). In furtherance thereof, Seller will not
disclose the Proprietary Information to any person or
entity, except as provided by law, unless permitted in
writing to do so by Buyer, except that Seller may make
disclosure of such information as required to defend
itself in or prosecute on behalf of itself litigation or
arbitration proceedings, but only if Seller has given
Buyer notice of its intention to make disclosure of such
information as soon as practicable prior to such
disclosure. Seller will transfer to Buyer at the
Closing and will not retain, any of its copies,
documents, manuals, summaries, memos, notes, computer
programs, disks, and database information in any form
containing any of the above described Proprietary
Information; provided, however, Seller may retain one
copy of the foregoing for archival purposes, to perform
warranty work on the Product Line and as may be needed
in the event of any product recall affecting the Product
Line.
Seller recognizes that its failure
to comply with the provisions of this Section 7.1 shall
cause irreparable harm to Buyer and that money damages
alone would be insufficient to compensate Buyer. Seller
therefore agrees that any court having jurisdiction may
enter a preliminary or permanent restraining order or
injunction against Seller in the event of actual or
threatened breach of any of the provisions of this
Section 7.1. Any such relief shall not preclude Buyer
from seeking any other relief at law or equity with
respect to any such claim.
(4) If any provision of this Section 7.1 is deemed to
be in violation of law or unenforceable for any reason,
the remainder of this Section 7.1 shall remain in full
force and effect and shall continue to be binding upon
Seller, and the parties agree that the court shall
substitute a reasonable, judicially enforceable
limitation in place of the unenforceable provision in
order to serve the intent of the parties as expressed
herein and the reasonable business needs and
expectations of Buyer in purchasing the Assets.
ARTICLE VIII
Indemnification
8.1 Survival of Representations, Warranties
and Covenants. Each of the representations, warranties
and covenants made by Seller and Buyer in this Agreement
(including without limitation the certificates delivered
in accordance with Sections 5.1 (a) and 5.2 (a) hereof,
insofar as such certificates relate to such
representations and warranties) shall survive the
Closing for a period of four (4) years after the Closing
Date, on which date they shall terminate. The covenants
contained in Articles VI, VII, VIII and IX shall survive
after the Closing Date and shall not be subject to any
limitation period under this Agreement unless otherwise
specified therein. Notwithstanding anything in this
Agreement to the contrary, no action for indemnification
or otherwise with respect to breach of any
representation, warranty or covenant under this
Agreement may be brought, and no litigation or
arbitration with respect thereto commenced, and the
party making such representation, warranty or covenant
shall have no obligation with respect thereto, unless
written notice thereof shall have been delivered to the
party against whom a claim is sought to be made on or
before the expiration of the survival period with
respect to that representation, warranty or covenant, if
any, specified above.
8.2 Indemnification by Seller and Parent.
Subject to Section 8.1, Seller and Parent hereby jointly
and severally indemnify and agree to hold harmless Buyer
from any and all liabilities, losses, claims, damages,
costs and expenses (including without limitation court
costs and reasonable attorneys', consultants' and
accountants' fees and other expenses and costs of
litigation) (collectively, "Losses") arising out of or
resulting from: (a) any breach or inaccuracy of any
representation or warranty by Seller or Parent to Buyer
contained in this Agreement; (b) any breach or violation
of any covenant or agreement by Seller or Parent
contained in this Agreement; (c) any product liability
claims with respect to any products sold by Seller
before the Closing ("Product Liability Claims"),
provided, however, any claims arising from warranty,
replacement or repair work done by Buyer after Closing
shall be the responsibility of Buyer; (d) any liability
or obligation incurred by Buyer as a result of the
failure of the parties hereto to comply with applicable
bulk sales or bulk transfer laws except that Seller and
Parent shall have no indemnification obligation with
respect to any Assumed Liabilities; (e) Product Warranty
Claims (as hereinafter defined) for products sold and
shipped by Seller prior to the date of Closing,
provided, however, any claims arising from warranty,
replacement or repair work done by Buyer after Closing
shall be the responsibility of Buyer; and (f) a
violation or non-compliance by Seller with any law
regarding the environment or environmental protection
prior to the Closing Date. For purposes of this
Agreement, "Product Warranty Claims" shall mean the
costs and expenses incurred under the warranties such
party has extended for products sold by it which costs
and expenses shall include manufacturing and engineering
labor, materials and appropriate overhead but not
including general and administrative costs.
8.3 Indemnification by Buyer. Subject to
Section 8.1, Buyer hereby indemnifies and agrees to hold
harmless Seller from any and all Losses arising out of
or resulting from: (a) any breach or inaccuracy of any
representation or warranty by Buyer to Seller contained
in this Agreement; (b) any breach or violation of any
covenant or agreement by Buyer contained in this
Agreement; (c) any product liability claims with respect
to any products sold by Buyer after the Closing or
arising from warranty, replacement or repair work done
by Buyer after Closing; (d) the Assumed Liabilities; and
(e) any and all liabilities and obligations of Buyer
related to Buyer's operations of the Product Line
arising after the Closing, including without limitation,
Product Warranty Claims for products sold and shipped by
Buyer after the Closing.
8.4 Claims.
(a) Any party seeking indemnification
(the "Indemnified Party") shall give the party from whom
indemnification is requested (the "Indemnifying Party")
written notice as promptly as practicable after the
Indemnified Party has received notice or knowledge of
the matter that has given or could give rise to a right
of indemnification under this Agreement. Such notice
shall state the amount of Losses, if known, and the
method of computation thereof, all with reasonable
particularity and shall contain a reference to the
provisions of this Agreement in respect of which such
right of indemnification is claimed.
(b) With respect to any Losses arising
from any third party claim (a "Third Party Claim"), the
Indemnified Party shall give the Indemnifying Party
written notice as promptly as practicable after
receiving notice of any Third Party Claim. The failure
of the Indemnified Party to notify the Indemnifying
Party in a timely manner of the claim to which the
indemnification set forth in this Section relates shall
not relieve the Indemnifying Party of its obligations
hereunder except to the extent that the Indemnifying
Party is materially prejudiced thereby. The
Indemnifying Party shall have the right, upon notice to
the Indemnified Party within thirty (30) days after the
receipt of any such notice, to assume and control the
defense of such Third Party Claim at its expense and
through counsel of its choice; in such case, the
Indemnified Party shall be permitted, at its option, to
participate in the defense of any such Third Party Claim
with counsel of its own choosing and at its own expense.
If the Indemnifying Party does not elect to assume and
control the defense of such Third Party Claim, then the
Indemnified Party may, at its option, elect to assume
and control such defense at the expense of the
Indemnifying Party and through counsel of the
Indemnified Party's choice. If the Indemnifying Party
exercises its right to undertake the defense of any such
Third Party Claim as provided above, the Indemnified
Party shall cooperate with the Indemnifying Party and
make available to the Indemnifying Party all pertinent
records, materials and information in its possession or
under its control as is reasonably requested by the
Indemnifying Party. Similarly, if the Indemnified Party
is, directly or indirectly, conducting the defense of
any Third Party Claim, the Indemnifying Party shall
cooperate with the Indemnified Party and make available
to it all such records, materials and information in the
Indemnifying Party's possession or under its control
relating thereto as is reasonably requested by the
Indemnified Party. No Third Party Claim may be settled
by the Indemnifying Party or the Indemnified Party
without the written consent, not to be unreasonably
withheld, of the other party; provided, however, that if
such settlement involves the payment of money only and
the Indemnified Party is totally indemnified for such
payment and the Indemnified Party refuses to consent
thereto, the Indemnifying Party shall cease to be
obligated with respect to such Third Party Claim.
(c) Exclusivity. The indemnification
obligations of the parties contained herein are intended
to be the exclusive remedy of such parties for all
claims arising under or in connection with this
Agreement and the transactions contemplated hereby.
8.5 Limitations on Indemnification.
(a) Dollar Limitations. Notwithstanding
anything contained in Section 8.2 to the contrary,
Seller and Parent shall be required to indemnify and
hold harmless Buyer under this Article VIII only if the
aggregate amount of such Losses suffered or incurred by
Buyer for all such matters, with the exception of Losses
suffered or incurred by Buyer relating to Product
Warranty Claims as discussed below, exceed $20,000, but
in the event that $20,000 amount is exceeded Buyer shall
be entitled to indemnification with respect to all
Losses incurred. Notwithstanding the provisions of
Section 8.2 hereof, Buyer is entitled to immediate and
full indemnification for any and all Losses arising from
the failure to comply with the bulk sales laws.
Product Warranty Limitations.
Notwithstanding Sections 8.2 or 8.5(a), Seller and
Parent shall only be required to indemnify Buyer with
respect to Losses relating to Product Warranty Claims to
the extent such Losses exceed $20,000. Losses with
respect to Product Warranty Claims shall not be
considered in determining whether the $20,000 threshold
set forth in Section 8.5(a) shall have been exceeded.
In connection with Product Warranty Claims, Buyer shall
use its best efforts to mitigate the costs incurred in
connection with effectively remedying customer
complaints. If Buyer has incurred or reasonably
anticipates incurring Losses in excess of $40,000 with
respect to any specific contract or order for which
Seller is required to indemnify Buyer (a "Large Warranty
Claim"), Buyer shall notify Seller of such Large
Warranty Claim. Within 10 days of such notice, Seller
may request that Buyer provide Seller with all
information that Seller shall reasonably request with
respect to the Large Warranty Claim. Seller shall have
10 days after receipt of such information to notify
Buyer that Seller wishes to assume control of the Large
Warranty Claim at Seller's sole cost and expense. Buyer
agrees that it will allow Seller to have reasonable
access to the drawings, plans and other technical data
with respect to the Large Warranty Claim in the event
that Seller assumes control of such claim.
(c) Time Limitations. Notwithstanding
anything contained in this Article VIII, no claim for
indemnification under this Article VIII will be
effective if not made within four (4) years after the
Closing Date.
(d) Calculation of Losses. Losses shall
be calculated according to generally accepted accounting
principles, consistently applied. The parties shall
make no adjustments for taxes and insurance coverage in
determining the amount of Losses for purposes of this
Article VIII.
(e) Cap on Indemnification.
Notwithstanding anything contained in Article VIII to
the contrary, Seller shall not be required to indemnify
and hold harmless Buyer under this Article VIII for any
Losses in excess of $4,000,000.
ARTICLE IX
Miscellaneous
9.1 Execution in Counterparts. This
Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same
instrument, and shall become a binding agreement when
one or more counterparts have been signed by and
delivered to each party.
9.2 Confidentiality. If the transaction
contemplated hereby is not completed, at all times after
the Closing, all parties will keep confidential all
information obtained by them from any other party to
this Agreement, except such information which:
(a) Prior to October 1, 2000 was already
in the possession of such party or, with respect to
Buyer, is independently developed after such date by any
of Buyer's employees without direct or indirect access
to the confidential information;
(b) Is generally available to the
public, other than as a result of improper disclosure by
such party; or
(c) Is made available to such party on a
non-confidential basis from a source other than another
party to this Agreement, so long as such source shall
have lawfully obtained such information.
Buyer further agrees that such
information will be disclosed only to those of its
employees and representatives of its advisors who need
to know such information for the purposes of evaluating
and implementing the transactions contemplated hereby.
Notwithstanding the foregoing provisions of this
paragraph, the obligation to maintain the
confidentiality of such information will not apply to
the extent that disclosure of such information is
required in connection with governmental or other
applicable filings relating to the transactions
hereunder, provided that, in such case, unless Seller
otherwise agrees, Buyer will, if possible, request
confidentiality in respect of such governmental or other
filings.
9.3 Notices. All notices, consents, demands,
requests, waivers, appeals and other communications
required or permitted under this Agreement shall be in
writing and shall be deemed to have been duly given:
(a) when received by facsimile or similar device, if
subsequently confirmed by a writing sent within twenty-
four (24) hours after the giving of such notice; (b)
upon receipt if delivered personally; or (c) on the date
of receipt, if sent by Federal Express or other national
overnight delivery service; and in any case, addressed
as follows:
If to Seller:
Datron/Transco, Inc.
000 Xxxx Xxx Xxxxxxx Xxxxxx
Xxxx Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx XxXxxxx, President
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy via same means to:
Xxxxxx Xxxxxx White & XxXxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to Parent:
Datron Systems Incorporated
0000 Xxxxxxxxxx Xxxxx
Xxxxx, XX 00000
Attn: Xxxxx X. Derby, President & CEO
Telephone No.: [to be completed]
Facsimile No.: [to be completed]
with a copy via same means to:
Xxxxxx Xxxxxx White & XxXxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to Buyer:
Nurad Technologies, Inc.
0000 Xxxxxxx Xxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, CEO
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
and
Atlantic Microwave Corp.
00 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, CEO
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
and
Xxxxxxx Ltd.
Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxxxxx XX0 0XX
ENGLAND
Attn: Xx. Xxxx X. Xxxx
Telephone No.: 000 00 00 000 00000
Facsimile No.: 011 44 16 284 78450
with a copy via same means to:
Xxxxxxx Xxxxxxxxxxx & Mugel, LLP
800 Fleet Bank Building
00 Xxxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxx X. Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Each party shall give prompt written notice to the other
parties of any change of address. No change in any of
such addresses shall be effective insofar as such
notices, consents, demands, requests, waivers, appeals
and other communications are concerned, unless notice of
such change shall have been given to the other party
hereto as provided in this Section 9.3.
9.4 Severability. The terms and provisions
of this Agreement shall be deemed to be severable, and
if any provision hereof shall be held invalid or
unenforceable by a court of competent jurisdiction or as
a result of future legislative action, such holding or
action shall be strictly construed and shall not affect
the validity or effect of any other provision hereof,
and the parties shall use all reasonable efforts to
amend this Agreement in order to effect the parties'
original intent with respect to such provision, to the
extent practicable.
9.5 Titles and Headings. The titles and
headings to the Articles, Sections and Table of Contents
contained in this Agreement are inserted for convenience
of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this
Agreement.
9.6 Successors and Assigns; No Third Party
Beneficiaries. This Agreement shall be binding upon and
shall inure to the benefit of the executors, guardians,
administrators, heirs, legatees, successors and assigns
of the parties hereto; provided, however, that no party
hereto shall assign or delegate any of the obligations
created under this Agreement without the prior written
consent of the other parties hereto. No person not a
party hereto shall derive any rights hereunder or be
construed to be a third party beneficiary hereof.
9.7 Incorporation of Exhibits. The Exhibits
attached hereto are incorporated into this Agreement and
shall be deemed a part hereof as if set forth herein in
full.
9.8 Entire Agreement; Waivers and Amendments.
This Agreement and the Exhibits attached hereto set
forth the entire agreement among the parties hereto with
respect to the purchase and sale of the Assets and any
related transactions, and no representations or
warranties have been made in connection with this
Agreement or the subject matter hereof other than those
expressly set forth herein or in the Exhibits,
certificates and other documents delivered in accordance
herewith. This Agreement supersedes all prior
negotiations, discussions, communications,
representations, agreements and understandings, whether
oral or written, relating to the subject matter of this
Agreement. Seller, on the one hand, and Buyer, on the
other hand, may by written notice to the other:
(a) extend the time for the performance of any of the
obligations or other actions of the other; (b) waive any
inaccuracies in the representations or warranties of the
other contained in this Agreement; (c) waive compliance
with any of the covenants of the other contained in this
Agreement; (d) waive performance of any other
obligations of the other created under this Agreement;
or (e) waive fulfillment of any of the conditions to its
own obligations under this Agreement. The waiver by any
party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver
of any subsequent breach, whether or not similar. This
Agreement may be amended, modified or supplemented only
by a written instrument executed by the parties hereto.
9.9 Announcements. No press releases,
announcements, or other disclosure related to this
Agreement or the transactions contemplated herein will
be issued or made to the press, employees, customers,
suppliers or any other person without the joint approval
of Buyer and Seller which timely approval shall not be
unreasonably withheld, except for any public disclosure
which either Buyer or Seller in good faith and on advice
of their counsel believes is required by law, the rules
and regulations of the Securities and Exchange
Commission or the rules and regulations of any stock
exchange (including the London Stock Exchange) or
NASDAQ.
9.10 Governing Law; Jurisdiction. This
Agreement shall be governed by and construed in
accordance with the laws of the State of New York,
without regard to its conflicts of law provisions. The
parties agree that any legal action relating to this
Agreement shall be brought in the courts of the States
of New York, California or any United States District
Court sitting in either of the State of New York or the
State of California.
9.11 References. All references to Section or
Article numbers refer to Section or Article numbers in
this Agreement unless otherwise specifically indicated.
The words "hereby," "hereof," "hereunder" and words of
similar import, refer to this Agreement as a whole and
not to any particular Sections or subdivisions thereof.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed as of the date first
written above.
Buyer: NURAD TECHNOLOGIES, INC.
By: XXXXX X. XXXXXX
Name: Xxxxx X. Xxxxxx
Title: Chief Executive Officer
Seller: DATRON/TRANSCO, INC.
By: XXXX XXXXXXX
Name: Xxxx XxXxxxx
Title: President
Parent: DATRON SYSTEMS INCORPORATED
By: XXXXX X. DERBY
Name: Xxxxx X. Derby
Title: Chairman of the Board of Directors,
President and CEO
