Exhibit 10.1
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ASSET PURCHASE AGREEMENT
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BY AND BETWEEN
XXXXX SYSTEMS, INC.
(AS THE "SELLER)
AND
OLIVOTTO GLASS TECHNOLOGIES S.P.A.
(AS THE "BUYER")
MAY 17, 2007
ARTICLE I. ASSETS TO BE PURCHASED.........................................................1
Section 1.1. Description of Assets.......................................................1
Section 1.2. Non-Assignment of Certain Property..........................................2
ARTICLE II. ASSUMPTION OF LIABILITIES AND OBLIGATIONS......................................3
ARTICLE III. PURCHASE PRICE.................................................................3
Section 3.1. Purchase Price..............................................................3
Section 3.2. Deposit.....................................................................4
Section 3.3. Closing Payment.............................................................4
Section 3.4. Calculation of Estimated Closing Date Net Asset Value.......................4
Section 3.5. Allocation of Purchase Price................................................6
Section 3.6. Consignment of Certain Items................................................6
ARTICLE IV. CLOSING........................................................................6
ARTICLE V. REPRESENTATIONS AND WARRANTIES.................................................6
Section 5.1. Representations and Warranties of Buyer.....................................6
Section 5.2. Representations and Warranties of Seller....................................8
Section 5.3. Effect of Disclosures on Schedules.........................................17
Section 5.4. Disclaimer of Other Warranties.............................................17
Section 5.5. Closing Date Effect........................................................17
ARTICLE VI. COVENANTS.....................................................................17
Section 6.1. Covenant Against Disclosure................................................17
Section 6.2. Covenant Against Competition...............................................17
Section 6.3. Injunctive Relief..........................................................17
Section 6.4. Access to Records..........................................................17
Section 6.5. Transition of Customers....................................................18
Section 6.6. Operate Business in the Ordinary Course....................................18
Section 6.7. Certain Negative Covenants.................................................18
Section 6.8. Update Disclosure..........................................................18
Section 6.9. Severability...............................................................18
Section 6.10. Further Assurances........................................................19
Section 6.11. Announcements.............................................................19
Section 6.12. Employees of Seller.......................................................19
ARTICLE VII. CLOSING DELIVERIES............................................................19
Section 7.1. Deliveries by Seller.......................................................19
Section 7.2. Deliveries by Buyer........................................................20
ARTICLE VIII. CONDITIONS PRECEDENT TO CLOSING...............................................21
Section 8.1. Conditions to Obligation of Each Party to Effect the Transaction...........21
Section 8.2. Additional Conditions to Obligations of Buyer..............................21
Section 8.3. Additional Conditions to Obligations of Seller.............................22
ARTICLE IX. TERMINATION, AMENDMENT AND WAIVER..............................................22
Section 9.1. Termination................................................................22
Section 9.2. Effect of Termination......................................................23
Section 9.3. Waiver.....................................................................23
ARTICLE X. INDEMNIFICATION...............................................................23
Section 10.1. Survival of Representations, Warranties and Agreements....................23
Section 10.2. Indemnification...........................................................24
Section 10.3. Limitations on Indemnification............................................25
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Section 10.4. Procedure for Indemnification with Respect to Third-Party Claims..........26
Section 10.5. Procedure for Indemnification with Respect to Non-Third-Party Claims......27
Section 10.6. Cooperation in the Defense of Claims......................................27
ARTICLE XI. MISCELLANEOUS PROVISIONS......................................................27
Section 11.1. Notices...................................................................27
Section 11.2. Entire Agreement..........................................................28
Section 11.3. Binding Effect; Assignment................................................28
Section 11.4. Captions..................................................................28
Section 11.5. Expenses of Transaction...................................................28
Section 11.6. Waiver; Consent...........................................................28
Section 11.7. No Third Party Beneficiaries..............................................29
Section 11.8. Counterparts..............................................................29
Section 11.9. Remedies of Buyer.........................................................29
Section 11.10. Bulk Sales Laws..........................................................29
Section 11.11. Governing Law; Consent to Jurisdiction...................................29
Section 11.12. Exhibits and Schedules...................................................30
Section 11.13. Knowledge................................................................30
TABLE OF DEFINED TERMS
Term Section
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Accounts Payable........................................................................2.1(a)
Accrued Liabilities.....................................................................2.1(b)
Actual Closing Date Net Asset Value.....................................................3.4(b)
Adjusted Carrying Value.................................................................3.4(a)
Adjustment Report.......................................................................3.4(b)
Allocation Certificate.....................................................................3.5
Arbiter.................................................................................3.4(d)
Assignments and Assumptions.............................................................7.1(b)
Assumed Liabilities..........................................................................2
Business...............................................................Introductory Paragraphs
Business Day............................................................................3.4(a)
Buyer..................................................................Introductory Paragraphs
Certificate of Assumed Liabilities......................................................7.1(f)
Closing......................................................................................4
Closing Date.................................................................................4
Closing Payment............................................................................3.3
Code...............................................................................5.2(n)(iii)
Consigned Items............................................................................3.6
Contest Notice............................................................................10.5
Contracts...............................................................................1.1(f)
Contracts Liabilities...................................................................2.1(c)
Damages................................................................................10.2(a)
Deposit....................................................................................3.2
Employee Benefit Plans...............................................................5.2(n)(i)
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Employee Severance Payments.............................................................5.2(t)
Encumbrances...............................................................................1.1
Environmental Laws..................................................................5.2(l)(ii)
Environmental Permits..............................................................5.2(l)(iii)
ERISA................................................................................5.2(n)(i)
Escrow Agent...............................................................................3.2
Escrow Agreement...........................................................................3.2
Estimated Closing Date Net Asset Value..................................................3.4(a)
Excluded Liabilities.........................................................................2
Execution Date.........................................................Introductory Paragraphs
Financial Statements....................................................................5.2(e)
GAAP....................................................................................3.4(a)
Governmental Authority..................................................................5.1(c)
Hazardous Material..................................................................5.2(l)(ii)
Indemnifiable Claim....................................................................10.2(a)
Indemnification Notice....................................................................10.4
Indemnified Party......................................................................10.3(d)
Indemnifying Party.....................................................................10.3(d)
Inventory...............................................................................1.1(g)
Knowledge................................................................................11.13
Lease...................................................................................7.1(i)
Losing Party............................................................................3.4(e)
Material Adverse Effect.................................................................5.2(a)
Miscellaneous Assets....................................................................1.1(i)
Non-Third Party Claim Indemnification Notice..............................................10.5
Objection Notice........................................................................3.4(c)
Permits.................................................................................1.1(c)
Personal Property.......................................................................1.1(a)
Preliminary Statement...................................................................3.4(a)
Prevailing Party........................................................................3.4(e)
Property...................................................................................1.1
Personal Property.......................................................................1.1(b)
Personal Property Leases................................................................1.1(e)
Premises................................................................................7.1(h)
Proprietary Rights......................................................................1.1(d)
Purchase Price.............................................................................3.1
Real Property..............................................................................1.1
Receivables.............................................................................1.1(b)
Seller.................................................................Introductory Paragraphs
Severance Contribution.....................................................................3.1
Warranty Liabilities....................................................................2.1(d)
SCHEDULES
Schedule 1.1(a) - Personal Property
Schedule 1.1(b) - Receivables
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Schedule 1.1(c) - Permits
Schedule 1.1(d) - Proprietary Rights
Schedule 1.1(e) - Personal Property Leases
Schedule 1.1(f) - Contracts
Schedule 1.1(g) - Inventory
Schedule 1.1(h) - Miscellaneous Assets
Schedule 1.1(l) - Excluded Assets
Schedule 1.1(m) - Real Property
Schedule 2.1(a) - Accounts Payable
Schedule 2.1(b) - Accrued Liabilities
Schedule 3.4(a) - Adjusted Carrying Value
Schedule 5.2(b) - Authorization
Schedule 5.2(c) - Conflicts
Schedule 5.2(f) - Changes
Schedule 5.2(g) - Liabilities
Schedule 5.2(h) - Taxes
Schedule 5.2(i) - Liens
Schedule 5.2(j) - Insurance
Schedule 5.2(k) - Litigation
Schedule 5.2(l) - Compliance with Laws
Schedule 5.2(n) - Employee Benefit Plans
Schedule 5.2(o) - Labor Matters
Schedule 5.2(p) - Encumbrances
Schedule 5.2(q) - Contracts and Commitments
Schedule 5.2(r) - Receivables
Schedule 5.2(s) - Non-GAAP Inventory
Schedule 5.2(t) - Employees
EXHIBITS
Exhibit A...Escrow Agreement
Exhibit B...Xxxx of Sale
Exhibit C...Assignments and Assumptions
Exhibit D...Assignment of Proprietary Rights
Exhibit E...Certificate of Assumed Liabilities
Exhibit F...Lease
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT dated May 17, 2007 (the "Execution Date"), is by and
between OLIVOTTO GLASS TECHNOLOGIES S.P.A., an Italian corporation ("Buyer"),
and XXXXX SYSTEMS, INC., a South Dakota corporation ("Seller").
W I T N E S S E T H:
WHEREAS, Seller, INTER ALIA, designs, develops, manufactures and
markets a broad range of manufacturing equipment for the electronic display and
consumer glass industries (the "Business"); and
WHEREAS, Buyer desires to purchase, and Seller desires to sell,
certain of Seller's operating assets relating to the Business, upon the terms
and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein contained, Buyer and Seller hereby agree as follows:
ARTICLE I. ASSETS TO BE PURCHASED
SECTION 1.1. DESCRIPTION OF ASSETS. Upon the terms and subject to
the conditions set forth in this Agreement, Seller hereby agrees to convey,
sell, transfer, assign and deliver to Buyer, and Buyer hereby agrees to purchase
from Seller, on the Closing Date (as defined below), free and clear of all
liens, security interests, claims, pledges, charges, encumbrances, equities,
rights of use, levies, taxes, imposts and restrictions (the "Encumbrances"), all
right, title and interest of Seller in and to the assets, properties and rights
(contractual or otherwise) of Seller that are used in connection with the
Business set forth below:
(a) All machinery, equipment, tooling, parts, furniture, supplies,
and other tangible personal property used in conducting the Business
listed on Schedule 1.1(a) (the "Personal Property");
(b) All accounts receivable relating to or arising out of the
operation of the Business listed on Schedule 1.1(b) (the "Receivables");
(c) All franchises, licenses, permits, consents, authorizations,
approvals and certificates of any Governmental Authority (as hereinafter
defined) used in conducting the Business listed on Schedule l.l(c) (the
"Permits");
(d) Subject to clause (xi) of the final paragraph of this Section
1.1, all patents, inventions, trade secrets, processes, proprietary
rights, proprietary knowledge, know-how, design archives, computer
software, URLs, web sites including content and coding, trademarks, names,
service marks, trade names, copyrights, symbols, logos, franchises and
permits owned by Seller and used in conducting the Business and all
applications therefor, registrations thereof and licenses, sublicenses or
agreements in respect thereof, that Seller owns or has the right to use or
to which Seller is a party and all filings, registrations or issuances of
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any of the foregoing with or by any federal, state, local or foreign
Governmental Authority and all related goodwill as set forth on Schedule
1.1(d) (collectively, the "Proprietary Rights");
(e) All leases of equipment or other tangible personal property used
in conducting the Business listed on Schedule 1.1(e) (the "Personal
Property Leases");
(f) All contracts, agreements, contract rights, license agreements,
third party guaranties, indemnifications, arrangements, and
understandings, whether oral or written, to which Seller is a party which
relate to the License Agreements listed on Schedule 1.1(f) (the
"Contracts");
(g) All inventories of materials, work-in-process, finished goods
and supplies listed on Schedule 1.1(g) (the "Inventory");
(h) All security deposits, prepaid expenses and other miscellaneous
assets of the Business listed on Schedule 1.1(h) (the "Miscellaneous
Assets");
(i) All books of account, customer lists, client lists, files,
papers, records and telephone numbers used in conducting the Business;
(j) All rights of Seller in, to and under express or implied
warranties from suppliers of the Business with respect to the Property (as
hereinafter defined); and
(k) All goodwill relating to the Business.
All of the assets, properties and rights (contractual and otherwise)
being conveyed, sold, transferred, assigned and delivered to Buyer pursuant to
subsections (a) through (k) of this Section 1.1 are hereinafter collectively
referred to as the "Property."
Notwithstanding the foregoing, there shall be excluded from the
Property the following assets and properties of Seller related to or used in
connection with the Business: (i) all cash and cash equivalents; (ii) all tax
refunds of any kind paid or payable to Seller; (iii) all assets listed on
Schedule 1.1(l), (iv) the PT Kedaung accounts receivable, the gearless tablewear
shear and the show machine; (v) the real property of Seller identified on
Schedule 1.1(m) (the "Real Property"); (vi) all corporate minute books, stock
records, tax returns, checkbooks, books of original entry and bank statements
and supporting materials of Seller for all periods, all of which shall be
subject to Buyer's right to inspect and copy; (vii) all insurance policies;
(viii) all claims, causes of and choses in action of any sort that Seller may
have, including, without limitation, under any of Seller's insurance policies,
against any of the officers, directors and/or shareholders of Seller and/or the
parents, spouses and lineal descendants of any such persons; (ix) rights of
set-off, counterclaim and/or recoupment respecting any liabilities or
obligations of Seller not included within the Assumed Liabilities (as
hereinafter defined); and (x) the Closing Payment (as hereinafter defined); and
(xi) all rights in and to the name "Xxxxx" for all uses other than in connection
with the products manufactured in the Business on the Closing Date.
SECTION 1.2. NON-ASSIGNMENT OF CERTAIN PROPERTY. To the extent that
the assignment hereunder of any of the Permits, Personal Property Leases or
Contracts would require the consent of any other party (or in the event that any
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of the same shall be nonassignable), neither this Agreement nor any action taken
pursuant to its provisions shall constitute an assignment or an agreement to
assign if such assignment or attempted assignment would constitute a breach
thereof or result in the loss or diminution thereof; provided, however, that in
each such case, Seller shall use its best efforts to obtain the consents of any
such other party to an assignment to Buyer. If such consent is not obtained,
subject to the provisions of Section 7.1(b), Seller shall cooperate with Buyer
in any reasonable arrangement designed to provide for Buyer the full benefits of
any such Permit, Personal Property Lease or Contract including, without
limitation, enforcement, for the account and benefit of Buyer, of any and all
rights of Seller against any other person with respect to any such Permit,
Personal Property Lease or Contract.
ARTICLE II. ASSUMPTION OF LIABILITIES AND OBLIGATIONS
Buyer hereby agrees, on the terms and conditions contained herein to
assume the following liabilities and obligations of Seller:
(a) All liabilities with respect to the accounts payable of the
Business listed on Schedule 2.1(a) (the "Accounts Payable");
(b) All liabilities with respect to the accrued liabilities of the
Business listed on Schedule 2.1(b) (the "Accrued Liabilities");
(c) All liabilities with respect to post-Closing obligations arising
under the Contracts (the "Contracts Liabilities");
(d) All liabilities with respect to post-Closing obligations arising
under the Seller's warranty policies with respect to items sold by Seller
prior to the Closing Date to customers other than PT Kedaung and
Xxxxx-Illinois do Brasil (Cisper); and
(e) All liabilities with respect to post-Closing obligations arising
under the Personal Property Leases.
All of the liabilities being assumed by Buyer pursuant to
subsections (a) through (e) of this Section 2.1 are hereinafter referred to as
the "Assumed Liabilities."
Notwithstanding the foregoing, Buyer is not assuming any liability
for any Excluded Liability (as hereinafter defined) and it is understood and
agreed that, as between Seller and Buyer, Seller shall remain solely responsible
for the payment, discharge and satisfaction of all Excluded Liabilities. As used
herein, "Excluded Liabilities" means all liabilities of Seller and the Business
of any kind, liquidated or contingent, asserted or unasserted, known or unknown,
other than the Assumed Liabilities, including but not limited to, all
liabilities to PT Kedaung or Xxxxx-Illinois do Brasil (Cisper) arising out of
transactions between Seller and such party which occurred prior to the Closing
Date.
ARTICLE III. PURCHASE PRICE
SECTION 3.1. PURCHASE PRICE. Upon the terms and subject to the
conditions set forth in this Agreement, in consideration for the Property and in
full payment therefor (the "Purchase Price"):
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(i) Buyer is assuming the Assumed Liabilities;
(ii) Buyer is making the Closing Payment reflected in the
Preliminary Statement (as hereinafter defined), which is subject to
adjustment as provided in Sections 3.4 and 3.5; and
(iii) Buyer is making a payment to Seller with respect to a
portion of the Employee Severance Payment (as hereinafter defined)
in the amount of $117,637.15 (the "Severance Contribution").
Buyer is paying the cash portion of the Purchase Price as provided
below.
SECTION 3.2. DEPOSIT. Concurrently herewith Buyer is delivering by
wire transfer of immediately available funds the sum of $500,000 (the "Deposit")
to Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Wolosky LLP (the "Escrow Agent") to be
held in escrow and disbursed in accordance with the provisions of the escrow
agreement in the form of Exhibit A hereto (the "Escrow Agreement") executed and
delivered by Buyer, Seller and the Escrow Agent concurrently herewith.
SECTION 3.3. CLOSING PAYMENT. On the Closing Date, Buyer shall pay
the Closing Payment to Seller by wire transfer of immediately available funds to
an account designated by Seller not later than two (2) Business Days prior to
the Closing Date. As used herein, the "Closing Payment" means the difference
between (a) the Estimated Closing Date Net Asset Value (as hereinafter defined)
and (b) the Deposit.
SECTION 3.4. CALCULATION OF ESTIMATED CLOSING DATE NET ASSET VALUE.
(a) Not later than three (3) Business Days prior to the Closing
Date, Seller and Buyer shall execute a certificate (the "Preliminary
Statement") setting forth the Estimated Closing Date Net Asset Value. As
used herein, the "Estimated Closing Date Net Asset Value" means the good
faith estimate of the positive difference as of the Closing Date between
(i) the aggregate carrying value of the Property as reflected on the books
and records of Seller determined in accordance with United States
generally accepted accounting principles consistently applied ("GAAP"),
adjusted consistent with the methodology set forth on Schedule 3.4(a)
hereto (the "Adjusted Carrying Value") and (ii) the aggregate amount of
the Assumed Liabilities as reflected on the books and records of Seller
determined in accordance with GAAP. As used herein, "Business Day" means
any day that is not a Saturday, Sunday or legal holiday on which
federally-chartered banks are required or authorized to be closed.
(b) As soon as reasonably practical after the Closing, but in no
event more than forty five (45) calendar days thereafter, Seller shall
prepare and deliver to Buyer a schedule (the "Adjustment Report") showing
the computation of the Actual Closing Date Net Asset Value (as hereinafter
defined). As used herein, "Actual Closing Date Net Asset Value" means the
positive difference as of the Closing Date between (i) the Adjusted
Carrying Value of the Property and (ii) the aggregate amount of the
Assumed Liabilities as reflected on the books and records of Seller
determined in accordance with GAAP.
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(c) Within thirty (30) calendar days after receipt of the Adjustment
Report, Buyer may, by written notice to Seller, object thereto. If Buyer
shall not object thereto in writing within such thirty (30) calendar day
period, the calculations on the Adjustment Report shall become final and
shall not be subject to further review, challenge or adjustment absent
fraud or manifest error. Buyer may in good faith object to the Adjustment
Report within such thirty (30) calendar day period by delivering a written
notice of its objection (the "Objection Notice") to Seller: (i) setting
forth the items being disputed and the reasons therefor, and (ii)
specifying Buyer's calculation of the figures on the Adjustment Report. In
connection with the preparation of the Objection Notice (and any
subsequent submissions to the Arbiter (as defined below)), each party
shall grant the other party and its accountants and other representatives'
reasonable access to all of the books and records of such party. Any delay
in granting access to all such books and records shall correspondingly
extend such thirty (30) calendar day period for delivery of the Objection
Notice.
(d) For thirty (30) calendar days after delivery of the Objection
Notice, Buyer and Seller shall attempt to resolve all disputes between
them regarding the Adjustment Report. If Buyer and Seller cannot resolve
all such disputes within such thirty (30) day period, the matters in
dispute shall be determined by an accounting firm selected by them to
resolve the remaining objections (the "Arbiter"). If Buyer and Seller are
unable to jointly select an accounting firm, they will select a
nationally-recognized accounting firm by lot after excluding their
respective regular outside accounting firms. Any advance retainer and any
periodic payments to the Arbiter shall be advanced equally by Buyer and
Seller. Promptly, but not later than forty-five (45) days after the
acceptance of its appointment, the Arbiter shall determine (based solely
on presentations by Buyer and Seller to the Arbiter and not by independent
review) only those items in dispute and shall render a report as to its
resolution of such items and the resulting calculation of the Adjustment
Report. For purposes of the Arbiter's determination, the amounts to be
included shall be the amounts from the Adjustment Report as to items that
are not in dispute, and the amounts determined by the Arbiter, as to items
that are submitted for resolution by the Arbiter. In resolving any
disputed item, the Arbiter must select the amount of the disputed item
proffered by Buyer or the amount of the disputed item proffered by Seller
(and cannot substitute the Arbiter's own judgment) based upon the position
the Arbiter determines to be closest to the correct amount. Buyer and
Seller shall cooperate with the Arbiter in making its determination and
such determination shall be conclusive and binding upon Buyer and Seller.
(e) The fees and expenses of the Arbiter shall be paid by the party
(the "Losing Party") whose calculation of Actual Closing Date Net Asset
Value is further from the Actual Closing Date Net Asset Value as
determined by the Arbiter. If the other party (the "Prevailing Party") has
advanced or provided a portion of the Arbiter's fees and costs as provided
above in Section 3.2(d), the Losing Party shall reimburse the Prevailing
Party for such fees and costs within ten (10) Business Days after the
Arbiter's final decision.
(f) Within five (5) Business Days after the determination of the
Actual Closing Date Net Asset Value:
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(i) If the Actual Closing Date Net Asset Value is greater than
the Estimated Closing Date Net Asset Value, then Buyer shall pay to
Seller the amount by which the Actual Closing Date Net Asset Value
exceeds the Estimated Closing Date Net Asset Value.
(ii) If the Estimated Closing Date Net Asset Value is greater
than the Actual Closing Date Net Asset Value, then Seller shall pay
to Buyer the amount by which the Estimated Closing Date Net Asset
Value exceeds the Actual Closing Date Net Asset Value.
SECTION 3.5. ALLOCATION OF PURCHASE PRICE. The aggregate purchase
price of the Property shall be allocated for purposes of this Agreement and for
federal, state and local tax purposes as set forth on an allocation certificate
("Allocation Certificate") to be agreed upon by Seller and Buyer at such time as
they execute the Preliminary Statement. The allocation shall reflect the
respective book value of the assets sold to liabilities assumed by the Buyer,
and shall be adjusted if necessary, in accordance with Section 3.2 hereof. Buyer
and Seller shall file all federal, state, local and foreign tax returns,
including Internal Revenue Form 8594, in accordance with the allocation set
forth in such Allocation Certificate.
SECTION 3.6. CONSIGNMENT OF CERTAIN ITEMS. For a period of eighteen
(18) months following the Closing Date the gearless tablewear shear and the show
machine (the "Consigned Items") shall be held on consignment by Buyer. If Buyer
receives any offers to purchase any of the Consigned Items from a third party
during such eighteen-month period Buyer shall promptly notify Seller and if
Seller accepts such offered terms the proceeds of such sale shall be shared
equally between Seller and Buyer. If the Consigned Items have not been so sold
by the end of such eighteen-month period Buyer shall deliver possession of the
Consigned Items to Seller.
ARTICLE IV. CLOSING
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at 10:00 a.m. at the offices of Xxxxxx Xxxxxxxx
Frome Xxxxxxxxxx & Wolosky LLP, Park Avenue Tower, 00 Xxxx 00xx Xxxxxx, Xxx
Xxxx, Xxx Xxxx, xx the later of: (i) the day on which all of the conditions
precedent set forth in Article VIII have been satisfied or waived, or (ii) June
1, 2007. Such time and date are herein referred to as the "Closing Date."
Subject to the provisions of Article IX hereof, failure to consummate such
transactions on the date and the time determined pursuant to this Article IV
shall not result in the termination of this Agreement and shall not relieve any
party of any obligation under this Agreement.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
SECTION 5.1. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer
represents and warrants to Seller that:
(a) CORPORATE EXISTENCE. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of Italy.
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(b) AUTHORIZATION; VALIDITY. Buyer has all requisite power and
authority to enter into this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. All
necessary action has been taken by Buyer with respect to the execution,
delivery and performance by it of this Agreement and the consummation of
the transactions contemplated hereby. Assuming the due execution and
delivery of this Agreement by Seller, this Agreement is a legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization
and moratorium laws and other laws of general application affecting the
enforcement of creditors' rights generally, and the fact that equitable
remedies or relief (including, but not limited to, the remedy of specific
performance) are subject to the discretion of the court from which such
relief may be sought.
(c) LITIGATION. There is no claim, litigation, action, suit,
proceeding, investigation or inquiry, administrative or judicial, pending
or, to the knowledge of Buyer, threatened against Buyer, at law or in
equity, before any foreign, federal, state or local agency, authority,
board, bureau, court, instrumentality or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative
powers (each, a "Governmental Authority"), that might have an adverse
effect on Buyer's ability to perform any of its obligations under this
Agreement or to consummate the transactions contemplated hereby.
(d) NO BREACH OF STATUTE OR CONTRACT. Neither the execution and
delivery of this Agreement by Buyer, nor the consummation by Buyer of the
transactions contemplated hereby, nor compliance by Buyer with any of the
provisions hereof, will violate or cause a default under any statute
(domestic or foreign), judgment, order, writ, decree, rule or regulation
of any Governmental Authority applicable to Buyer or any of its material
properties; breach or conflict with any of the terms, provisions or
conditions of the organization documents of Buyer; or violate, conflict
with or breach any agreement, contract, mortgage, instrument, indenture or
license to which Buyer is party or by which Buyer is or may be bound, or
constitute a default (in and of itself or with the giving of notice,
passage of time or both) thereunder, or result in the creation or
imposition of any Encumbrance upon, or give to any other party or parties,
any claim, interest or right, including rights of termination or
cancellation in, or with respect to any of Buyer's properties.
(e) BROKERS. Buyer has not entered into any agreement, arrangement
or understanding with any party as to which Seller may have any liability
for a finder's fee, brokerage commission, advisory fee or other similar
payment.
(f) SUFFICIENT FUNDS. Buyer has sufficient funds available to it,
without requiring the prior consent, approval or other discretionary
action of any third party, to make the payments required under Article
III, to pay all fees and expenses to be paid by Buyer in connection with
the transactions contemplated by this Agreement and to satisfy any other
payment obligations that may arise in connection with the transactions
contemplated by this Agreement.
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(g) CLOSING DATE EFFECT. All of the representations and warranties
of Buyer are true and correct as of the Execution Date and shall be true
and correct on and as of the Closing Date with the same force and effect
as if such representations and warranties were made by Buyer on the
Closing Date.
SECTION 5.2. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller
represents and warrants to Buyer that:
(a) CORPORATE EXISTENCE. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of South
Dakota and has the corporate power to own, operate or lease the Property
and to carry on the Business as now being conducted. Complete and correct
copies of the Articles of Incorporation of Seller and all amendments
thereto, certified by the Secretary of State of the State of South Dakota,
and of the By-Laws of Seller, and all amendments thereto, previously have
been delivered to Buyer. Seller is duly qualified to do business as a
foreign corporation, and is in good standing in each jurisdiction where
the character of the properties owned, leased or operated by it or the
nature of its activities makes such qualification necessary, except where
the failure to be so duly qualified and in good standing would not
reasonably be expected to have a Material Adverse Effect. For the purposes
of this Agreement, "Material Adverse Effect" means any effect or change
that would be materially adverse to the Business or Property of Seller on
one hand or Buyer on the other hand, or on the ability of either party to
consummate timely the transactions contemplated hereby.
(b) AUTHORIZATION; VALIDITY. Seller has all requisite corporate
power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated
hereby without the approval of any third party, except as listed on
Schedule 5.2(b). All necessary corporate action has been taken by Seller
with respect to the execution, delivery and performance by Seller of this
Agreement and the consummation by Seller of the transactions contemplated
hereby. Assuming the due execution and delivery of this Agreement by
Buyer, this Agreement is a legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization and moratorium laws and
other laws of general application affecting the enforcement of creditors'
rights generally, and the fact that equitable remedies or relief
(including, but not limited to, the remedy of specific performance) are
subject to the discretion of the court from which such relief may be
sought.
(c) NO BREACH OF STATUTE OR CONTRACT. Except as set forth on
Schedule 5.2(c), neither the execution and delivery of this Agreement nor
the consummation by Seller of the transactions contemplated hereby, nor
compliance by Seller with any of the provisions hereof will violate or
cause a default under any statute (domestic or foreign), judgment, order,
writ, decree, rule or regulation of any Governmental Authority applicable
to Seller or any of its properties; breach or conflict with any of the
terms, provisions or conditions of the Articles of Incorporation or
By-Laws of Seller; or violate, conflict with or breach any agreement,
contract, mortgage, instrument, indenture or license to which Seller is a
party or by which Seller is or may be bound with respect to the Property
8
or the Business, or constitute a default (in and of itself or with the
giving of notice, passage of time or both) thereunder, or result in the
creation or imposition of any Encumbrance upon, or give to any other party
or parties any claim, interest or right, including rights of termination
or cancellation in, or with respect to, the Property.
(d) SUBSIDIARIES. Seller has no subsidiaries or equity investments
in any other corporation, association, partnership, joint venture or other
entity that carries on the Business.
(e) FINANCIAL STATEMENTS. The following financial statements of
Seller (collectively, the "Financial Statements"), which have been
furnished previously to Buyer by Seller, have been prepared from and are
in accordance with the books and records of Seller in conformity with GAAP
applied on a consistent basis throughout the periods involved, and fairly
present the financial condition of Seller as at the dates stated and the
results of operations of Seller for the periods then ended: balance sheet
of Seller at December 31, 2005 and the income statement for the year then
ended, including footnotes (audited); balance sheet of Seller at December
31, 2006 and income statement for the period then ended, including
footnotes (audited); balance sheet of Seller at March 31, 2007 and income
statement for the period then ended (unaudited).
(f) ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth on
Schedule 5.2(f), since December 31, 2006 there has not been with respect
to the Business:
(i) Any material adverse change in its operations (as now
conducted or as presently proposed to be conducted), assets,
properties or rights, prospects or condition (financial or
otherwise);
(ii) Other than in the ordinary and usual course of business,
any material increase in amounts payable by Seller to or for the
benefit of or committed to be paid by Seller to or for the benefit
of any officer, consultant, agent or employee of Seller engaged in
the Business, in any capacity, or in any benefits granted under any
bonus, stock option, profit sharing, pension, retirement, deferred
compensation, insurance, or other direct or indirect benefit plan
with respect to any such person;
(iii) Any material transaction entered into or carried out
other than in the ordinary and usual course of its business
including, without limitation, any transaction resulting in the
incurrence of liabilities or obligations;
(iv) Any material change made in the methods of doing business
or in the accounting principles or practices or the method of
application of such principles or practices;
(v) Any Encumbrance imposed or agreed to be imposed on or with
respect to the Property that will not be discharged prior to the
Closing;
(vi) Any modification, waiver, change, amendment, release,
rescission or termination of, or accord and satisfaction with
respect to any term, condition or provision of any Contract, other
9
than any satisfaction by performance in accordance with the terms
thereof in the ordinary and usual course of its business; or
(vii) Any damage, destruction or similar loss, whether or not
covered by insurance, adversely affecting the Business.
(g) LIABILITIES. Except as set forth on Schedule 5.2(g), Seller has
no liability or obligation of any nature (whether liquidated,
unliquidated, accrued, absolute, contingent or otherwise and whether due
or to become due) in respect of the Business except:
(i) those set forth or reflected in the Financial Statements
that have not been paid or discharged since the date thereof;
(ii) those arising under agreements or other commitments
listed on any Schedule hereto including, but not limited to, the
Permits, Personal Property Leases and Contracts;
(iii) current liabilities arising in the ordinary and usual
course of the Business subsequent to December 31, 2006 that are
accurately reflected on its books and records in a manner consistent
with past practice; and
(iv) ordinary course warranty and product liability
obligations and liabilities for product returns and allowances.
(h) TAXES. Except as set forth on Schedule 5.2(h):
(i) Seller has duly filed all federal, state, local and
foreign tax returns and tax reports required to be filed by it. All
such returns and reports are true, correct and complete in all
material respects, none of such returns and reports has been
amended, and all taxes, assessments, fees and other governmental
charges due with respect to the periods covered by such returns and
reports have been fully paid;
(ii) Schedule 5.2(h) sets forth the dates and results of any
and all audits of federal, state, local and foreign tax returns of
Seller performed by federal, state, local or foreign taxing
authorities. No waivers of any applicable statutes of limitations
are outstanding. All deficiencies proposed as a result of any audits
have been paid or settled. There is no pending or to Seller's
Knowledge threatened federal, state, local or foreign tax audit of
Seller and no agreement with any federal, state, local or foreign
tax authority that may affect the subsequent tax liabilities of
Seller;
(iii) Seller has no liabilities for taxes other than those
that are not yet due and payable, and no federal, state, local or
foreign tax authority is now asserting or threatening to assert any
deficiency or assessment for additional taxes with respect to
Seller.
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(i) REGISTERED PROPRIETARY RIGHTS. Schedule 1.1(d) sets forth all
issued patents; registered URLs; registrations and applications for
trademarks, service marks, and trade names; registrations and applications
for copyrights; and all licenses, sublicenses or agreements in respect
thereof that Seller owns or has the right to use or to which Seller is a
party except for the off the shelf software licenses. Except as set forth
on Schedule 5.2(i), Seller is the owner of all right, title and interest
or otherwise has valid license rights in and to all Proprietary Rights
free and clear of all Encumbrances whatsoever. To the Knowledge of Seller,
the Business as conducted immediately prior to the Closing, and the sale
by Seller and ownership by Buyer of any of the Property is not and will
not be in contravention of any patent, trademark, copyright or other
proprietary right of any third party.
Except as listed on Schedule 5.2(i), none of the Proprietary Rights
has been hypothecated, sold, assigned or licensed by Seller to any other
person, corporation, firm or other legal entity; or to the Knowledge of
Seller, infringes upon or violates the rights of any person, firm,
corporation, or other legal entity. Except as listed on Schedule 5.2(i),
and except in the ordinary course pursuant to Article 2 of the Uniform
Commercial Code, to the Knowledge of Seller, Seller has not given any
indemnification against patent, trademark or copyright infringement as to
any equipment, materials, products, services or supplies that Seller uses,
license or sells; there is not pending or to the Knowledge of Seller,
threatened any claim to sell, engage in or employ any such product,
process, method or operation.
(j) INSURANCE. Schedule 5.2(j) lists all policies of property,
casualty, liability and other forms of insurance currently owned or held
by Seller relating to the Business and all such policies are currently in
full force and effect. Since January 1, 2005, Seller has not received any
notice from any insurer thereunder with respect to the cancellation of any
such insurance, other than notice of cancellation for non-payment, which
non-payment has been cured. All premiums due and payable on such policies
have been paid or are being financed by the applicable insurer.
(k) LITIGATION. Except as set forth on Schedule 5.2(k), there are no
claims, actions, suits or proceedings pending or, to the Knowledge of
Seller, threatened against or affecting Seller or any officer or director
of Seller in connection with the Business or the Property, before any
federal, state, local or foreign court or Governmental Authority. Seller
is not subject to or in default with respect to any judgment, order, writ,
injunction or decree that is binding upon Seller with respect to the
Business.
(l) COMPLIANCE WITH LAWS. Except as listed on Schedule 5.2(l),
(i) Seller is in compliance in all material respects with all
laws, ordinances, regulations and orders applicable to the Business
and the Property and has no notice or knowledge of any violations,
whether actual, claimed or alleged, thereof. The foregoing
representation shall not apply to Environmental Laws (as hereinafter
defined).
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(ii) Seller has complied and is compliance in all material
respects with all federal, state and local laws, ordinances, rules
and regulations and other provisions having the force or effect of
law pertaining to pollution or protection of the environmental
matters including, without limitation, all those relating to the
presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing
processing, discharge, release, threatened release, control or
cleanup of any solid waste disposal, toxic substances, hazardous
substances, hazardous materials, hazardous waste, toxic chemicals,
pollutants, contaminants (collectively, "Hazardous Material") and
air, water, ground or subsurface pollution and to the storage, use,
handling, transportation, discharge, and disposal (including spills
and leaks) of gaseous, liquid, semi-solid or solid materials
(collectively, "Environmental Laws"). There has been no on site
disposal or discharge by Seller of Hazardous Material, chemicals,
oil or solid wastes on the Real Property.
(iii) Seller has not received a summons, citation, order,
letter or other oral or written communication from any federal,
state or local Governmental Authority regarding actual or alleged
violation by Seller of Environmental Laws or a permit issued to
Seller pursuant to Environmental Laws (the "Environmental Permits")
relating to the Real Property, nor has Seller received any notice of
an administrative investigation, or a civil or criminal action,
suit, summon, citation, complaint, claim, notice of violation,
demand, judgment, order or hearing based on any Environmental
Permit, or any Environmental Law relating to the Real Property from
any Governmental Authority under any of the Environmental Laws.
(iv) To the Knowledge of Seller, neither Seller nor the Real
Property, in whole or in part, is the subject of any order or
directive of any federal, state or local Governmental Authority
relating to asbestos-containing material.
(v) To the Knowledge of Seller, there are no underground
storage tanks (either regulated or unregulated), incinerators, or
waste treatment, storage or disposal units, landfills, disposal
areas or surface impoundments on, under or within the Real Property.
(vi) Schedule 1.1(c) lists all franchises, licenses, permits,
consents, authorizations, approvals and certificates of any
Governmental Authority used in conducting the Business. Each of the
Permits is currently valid and in full force and effect and the
Permits constitute all franchises, licenses, permits, consents,
authorizations, approvals, and certificates of any Governmental
Authority necessary to the conduct of the Business. Seller is not in
violation of any of the Permits. There is no pending or, to the
Knowledge of Seller, threatened proceeding that could result in the
revocation or cancellation of, or inability of Seller to renew, any
Permit.
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(m) BROKERS. Seller has not entered into any agreement, arrangement
or understanding with any party as to which Buyer may have any liability
for a finder's fee, brokerage commission, advisory fee or other similar
payment.
(n) EMPLOYEE BENEFIT PLANS.
(i) Set forth on Schedule 5.2(n) is a true, accurate and
complete list of all pension, retirement, profit-sharing, deferred
compensation, bonus, stock option or other incentive plan, or other
employee benefit program, arrangement, agreement or understanding,
or medical, vision, dental or other health plan, or life insurance
or disability plan, or any other employee benefit plan as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), (whether or not any such employee benefit
plans are otherwise exempt from the provisions of ERISA, whether or
not legally binding), adopted, established, maintained or
contributed to by Seller or under which it would otherwise be a
party or have liability and under which employees or former
employees (whether or not retired employees) of Seller (or their
beneficiaries) are eligible to participate or derive a benefit
(collectively, the "Employee Benefit Plans"). There shall be
included within the meaning of Seller, for this purpose and for the
purpose of the representations in this Section 5.2(n), all
"affiliates," whether or not incorporated, within the meaning of
Section 407(d)(7) of ERISA.
(ii) Full payment has been made of all amounts that Seller is
required, under applicable law or under any Employee Benefit Plan or
any agreement relating to any Employee Benefit Plan to which it is a
party, to have paid as contributions to or benefits under any
Employee Benefit Plan as of the last day of the most recent fiscal
year of such Employee Benefit Plan ended prior to the Execution
Date.
(iii) Seller has performed all obligations required to be
performed by it under the Employee Benefit Plans. Seller has not
engaged in any transaction with respect to the Employee Benefit
Plans that would subject it or Buyer to a tax, penalty or liability
for a prohibited transaction under Sections 406, 407 or 502(i) of
ERISA or Section 4975 of the Internal Revenue Code of 1986 as
amended (the "Code"), nor have Seller's directors, officers,
employees or agents, to the extent they or any of them are
fiduciaries under Title I of ERISA. Excepting only changes necessary
to preserve an Employee Benefit Plan's tax-qualified or exempt
status under the Code or to otherwise comply with applicable
provisions of ERISA and the Code (and in each case effective only as
of the date necessary to do so), Seller will not, and has no plan or
commitment, whether formal or informal, written or oral, and whether
or not legally binding, to modify or change any Employee Benefit
Plan in any material manner prior to the Closing. Seller and any
"administrator(s)" (as described in Section 3(16)(A) of ERISA) of
the Employee Benefit Plans have complied in all material respects
with the applicable requirements of ERISA, the Code and all other
statutes, orders, rules or regulations, specifically including,
without limitation, material compliance with all reporting and
disclosure requirements of Part 1 of Title 1 of ERISA and of the
13
Code in a timely and accurate manner, and no penalties have been or
will be imposed, nor is Seller or any administrator liable for any
penalties imposed, under ERISA, the Code or otherwise with respect
to the Employee Benefit Plans or any related trusts. Seller is not
delinquent in the payment of any federal, state or local taxes with
respect to the Employee Benefit Plans. There is no pending
litigation, arbitration, or disputed claim, settlement adjudication
or proceeding with respect to the Employee Benefit Plans, and
neither Seller nor any administrator is aware of any threatened
litigation, arbitration or disputed claim, adjudication proceeding,
or any governmental or other proceeding, or investigation with
respect to the Employee Benefit Plans or with respect to any
fiduciary or administrator thereof (in their capacities as such), or
any party-in-interest thereto (with respect to their relationship as
such). There is no multiemployer plan to which Seller has been a
party or has been required to make any contributions at any time.
(iv) Seller has delivered or caused to be delivered to Buyer
true and complete copies of the following, if and to the extent
applicable to the Business (A) all Employee Benefit Plans and any
related trust agreements, custodial agreements, investment
management agreements, insurance contracts or policies, and
administrative service contracts, all as in effect, together with
all amendments thereto that will become effective at a later date;
(B) the latest Summary Plan Description and any modifications
thereto for each Employee Benefit Plan requiring same under ERISA;
(C) the latest Internal Revenue Service determination letter
obtained with respect to any such Employee Benefit Plan qualified
under Section 401 or 501 of the Code; (D) the Summary Annual Report
for the current and prior fiscal years for each Employee Benefit
Plan requiring same under ERISA; (E) each Form 5500 and/or Form 990
series filing (including required schedules and financial
statements) for the current and prior fiscal years for each Employee
Benefit Plan required to file such form; and (F) the most recent
actuarial evaluation, analysis or other report issued with respect
to any Employee Benefit Plan. From the date of the most recent
actuarial evaluation to the Closing, for each defined benefit plan,
there has been no increase in the unfunded actuarial liability under
any such defined benefit plan, assuming the years of the same
actuarial assumptions as used in the most recent applicable
actuarial evaluation. Neither Seller nor any officer, employee
representative or agent thereof, has made any written or oral
representations or statements to any current or former employees,
dependents, participants or beneficiaries or other persons which are
inconsistent in any material manner with the provisions of these
documents.
(v) With respect to any of Seller's employee welfare plans (as
defined in Section 3(1) of ERISA and including those Employee
Benefits Plans that qualify as such) that are "group health plans"
under Section 162(k) or Section 4980B of the Code and Section 607(1)
of ERISA and related regulations (relating to the benefit
continuation rights imposed by COBRA), there has been timely
compliance in all material respects with all requirements imposed
thereunder, as and when applicable to such plans, so that Seller has
no (and will not incur any) loss, assessment, penalty, loss of
14
federal income tax deduction or other sanction, arising on account
of or in respect of any failure to comply with any COBRA benefit
continuation requirement, that is capable of being assessed or
asserted directly or indirectly against Seller or against Buyer or
any of its subsidiaries or other member of Buyer's corporate control
group, with respect to any such plan.
(o) LABOR MATTERS. Seller has not received any notice from any labor
union or group that it represents or intends to represent Seller's
employees. Seller has complied in all material respects with all
applicable laws affecting employment and employment practices, terms and
conditions of employment and wages and hours. Seller has not received any
notice of and there is no complaint alleging unfair labor practices
against Seller pending, or to the Knowledge of Seller, threatened before
the National Labor Relations Board or any other charges or complaints
pending, or to the Knowledge of Seller, threatened before the Equal
Employment Opportunity Commission, any state or local Human Rights
Commission or any other state or local agency against Seller in respect of
labor or employment matters. Except as set forth on Schedule 5.2(o), no
labor strike, material dispute, slowdown or stoppage has occurred with
respect to Seller's employees and there is no labor strike, material
dispute, slowdown or stoppage pending or to Seller's Knowledge threatened
with respect to Seller's employees. Schedule 5.2(o) sets forth all pending
grievances or arbitration proceedings against Seller relating to labor and
employee matters.
(p) TITLE TO PROPERTY. (a) Seller has good and marketable title to
all Property owned by it and valid leasehold interests in all Property
leased by it in the operation of the Business, free and clear of all
Encumbrances, except as listed on Schedule 5.2(p) hereto, and excluding
(i) liens for taxes, fees, levies, imposts, duties or governmental charges
of any kind that are not yet delinquent or are being contested in good
faith by appropriate proceedings that suspend the collection thereof; or
(ii) liens for mechanics, materialmen, laborers, employees, suppliers or
others that are not yet delinquent or are being contested in good faith by
appropriate proceedings. All of such owned or leased Property is listed on
Schedule 5.2(p) hereto. Seller is not in violation of any covenant,
condition, restriction, easement, agreement, order or regulation of any
Governmental Authority having jurisdiction over any such Property that
affects such Property or the use thereof.
Except as listed on Schedule 5.2(p), no financing statement under
the Uniform Commercial Code or similar law naming Seller as debtor has
been filed in any jurisdiction in respect of the Property, and Seller is
not a party to or bound under any agreement or legal obligation
authorizing any party to file any such financing statement.
Schedule 1.1(a) contains a complete and accurate list of all
machinery, equipment, tooling, parts, furniture, supplies and other
tangible personal property owned or used by Seller in the conduct of the
Business.
(q) CONTRACTS AND COMMITMENTS. Schedules 1.1(e) and 1.1(f) list all
Personal Property Leases and Contracts. Each of the Personal Property
Leases and the Contracts is valid and binding, in full force and effect
and enforceable in accordance with its respective provisions. Except as
15
set forth on Schedule 5.2(q), Seller has not assigned, mortgaged, pledged,
encumbered, or otherwise hypothecated any of its right, title or interest
under the Personal Property Leases or the Contracts. Except as set forth
on Schedule 5.2(q), neither Seller nor, to the Knowledge of Seller, any
other party thereto is in material violation of, in default in respect of,
nor, to Knowledge of Seller, has there occurred an event or condition
which, with the passage of time or giving of notice (or both), would
constitute a material violation or a default of any Personal Property
Lease or Contract. No notice has been received by Seller claiming any such
default by Seller or indicating the desire or intention of any other party
thereto to amend, modify, rescind or terminate any Personal Property Lease
or Contract.
(r) ACCOUNTS RECEIVABLE. All Receivables included in the Property
are subsisting; arose in the ordinary and usual course of the Business;
and are not and will not be subject to any Encumbrance. Since January 1,
2007, except as set forth on Schedule 5.2(r), no customers of Seller in
respect of the Business have notified Seller, orally or in writing, that
they intend to return any products, or assert any right to a discount,
allowance or chargeback with respect to any products.
(s) INVENTORY. Except as set forth on Schedule 5.2(s), inventory
reflected on the Financial Statements as of the date thereof was
determined in accordance with GAAP consistently applied, stated, on an
aggregate basis, at the lower of cost (based on the last-in, first-out
method) or market value and consists solely of merchandise usable or
salable in the ordinary course of business at not less than gross cost.
The inventory conforms to customary trade standards for marketable goods.
(t) OFFICERS, EMPLOYEES AND COMPENSATION. Schedule 5.2(t) lists each
salaried employee of Seller employed by or engaged in connection with the
Business during the period January 1, 2005 through the Execution Date.
Schedule 5.2(t) also lists and describes as of December 31, 2006, the base
salary, fringe benefits and perquisites of each such employee of Seller
whose total current base salary exceeds or exceeded in any of the last two
years $25,000 annually and the severance amount payable by Seller to each
employee of Seller employed in the Business upon the termination of such
employee's employment by Seller immediately prior to the Closing pursuant
to Section 6.12 (the "Employee Severance Payments"). Except as disclosed
on Schedule 5.2(t), there are no other forms of compensation paid by
Seller to any such employee. There has been no material increase since
December 31, 2006 in the rate of compensation or other benefits paid to
any such employee. No shareholder or director or any person related to
such person by blood or marriage holds any position or office with or has
any material financial interest, direct or indirect, in any supplier,
customer or account of, or other outside business that has had or will
have material transactions with Seller. Seller has no agreements or
understandings with any officer, employee or representative of Seller
employed or engaged in the Business that would influence any such person
not to become associated with Buyer from and after the Execution Date or
from serving Buyer in a capacity similar to the capacity currently held.
(u) BOOKS OF ACCOUNT; RECORDS. The general ledgers, books of account
and other records of Seller in respect of the Business are complete and
correct in all material respects, have been maintained in accordance with
16
good business practices and the matters contained therein are
appropriately and accurately reflected in the Financial Statements.
SECTION 5.3. EFFECT OF DISCLOSURES ON SCHEDULES. Information
disclosed by Seller on any Schedule to this Agreement shall be deemed to be
disclosed on any other Schedule to this Agreement as to which such information
would be reasonably applicable.
SECTION 5.4. DISCLAIMER OF OTHER WARRANTIES. Except for the
representations and warranties set forth in this Agreement and in the documents
and instruments delivered in accordance with the terms of this Agreement,
Seller, nor any person acting on its behalf, makes any representation or
warranty relating to Seller, the Business or the Property. Seller hereby
disclaims any implied warranty with respect to it, the Business and the
Property, including, without limitation, any implied warranty of merchantability
or fitness for a particular purpose.
SECTION 5.5. CLOSING DATE EFFECT. All of the representations and
warranties of Seller are true and correct as of the date hereof and shall be
true and correct on and as of the Closing Date with the same force and effect as
if such representations and warranties were made by Buyer to Seller on the
Closing Date.
ARTICLE VI. COVENANTS
SECTION 6.1. COVENANT AGAINST DISCLOSURE. Other than to Seller's
officers, directors, accountants, legal advisors or other such advisors, Seller
shall not (a) disclose to any person, association, firm, corporation or other
entity (other than Buyer or those designated in writing by Buyer) in any manner,
directly or indirectly, any confidential information or data relevant to the
Business, whether of a technical or commercial nature, or (b) use, or permit or
assist, by acquiescence or otherwise, any person, association, firm, corporation
or other entity (other than Buyer or those designated in writing by Buyer) to
use, in any manner, directly or indirectly, any such information or data,
excepting only use of such data or information as is at the time generally known
to the public and that did not become generally known through any breach by
Seller of any provision of this Section 6.1 and data and information that is
disclosed pursuant to applicable law or to enforce the provisions of this
Agreement. The foregoing provision shall not limit or prevent disclosure by
Seller's parent corporation in order to comply with applicable provisions of the
Federal securities laws.
SECTION 6.2. COVENANT AGAINST COMPETITION. For a period of three
years after the Closing Date Seller shall not, directly or indirectly, engage in
any business activity that competes with the Business.
SECTION 6.3. INJUNCTIVE RELIEF. Seller acknowledges and agrees that
Buyer's remedy at law for any breach of any of Seller's obligations under
Section 6.1 or 6.2 hereof would be inadequate, and agrees and consents that
temporary and permanent injunctive relief may be granted in a proceeding that
may be brought to enforce any provision of Section 6.1 or 6.2 without the
necessity of proof of actual damage.
SECTION 6.4. ACCESS TO RECORDS. For a period of five years after the
Execution Date (i) Seller shall preserve those of Seller's books and records
17
relating to the Business as are not delivered to Buyer hereunder and shall make
available to Buyer for inspection and copying such books and records as
reasonably required by Buyer for all purposes reasonably related to this
Agreement or any of the documents and instruments delivered in accordance with
its terms; and (ii) Buyer shall preserve those of Seller's books and records as
are delivered to Buyer hereunder and shall make available to Seller for
inspection and copying such books and records as reasonably required by them for
all purposes reasonably related to this Agreement or any of the documents and
instruments delivered in accordance with its terms.
SECTION 6.5. TRANSITION OF CUSTOMERS. Seller shall use its
reasonable commercial efforts to insure the smooth transfer from Seller to Buyer
of all of Seller's present customers who, prior to the Execution Date, purchased
the products of the Business. Seller shall not be required to make any
expenditures in furtherance of the foregoing undertaking.
SECTION 6.6. OPERATE BUSINESS IN THE ORDINARY COURSE. Between the
date hereof and the Closing Date, Seller shall operate its Business only in the
ordinary course consistent with past practices.
SECTION 6.7. CERTAIN NEGATIVE COVENANTS. Except as specifically
contemplated by this Agreement, until the Closing Date, Seller shall not without
Buyer's prior written consent:
(a) make any capital expenditure;
(b) liquidate, sell, dispose of, or encumber any Property, other
than the sale of spare parts on normal terms and conditions in the
ordinary and usual course of the Business; or
(c) enter into any negotiations with any third party in
contemplation of agreements to sell any Property to or to perform any
service for such third party;
SECTION 6.8. UPDATE DISCLOSURE. From and after the Execution Date
until the Closing Date, Seller and Buyer shall update each other on a regular
basis by written notice to the other party to reflect any matters that have
occurred from and after the Execution Date, that if existed on the Execution
Date, would have been required to be described under this Agreement. After the
execution of this Agreement but prior to the Closing, Seller shall (i) provide
Buyer with the individual customer names related to the Receivables disclosed on
Schedule 1.1(b) hereof (as updated pursuant to Section 7.1(g)), (ii) conduct a
physical count of the Inventory listed on Schedule 1.1(g) hereof (as updated
pursuant to Section 7.1(g)) and provide the results of such count, including
individual part numbers, to Buyer and (iii) provide Buyer with the individual
customer names related to the customer deposits disclosed on Schedule 2.1(b)
hereof (as updated pursuant to Section 7.1(g)).
SECTION 6.9. SEVERABILITY. With respect to any provision of this
Article VI finally determined by a court of competent jurisdiction to be
unenforceable, such court shall have jurisdiction to reform such provision so
that it is enforceable to the maximum extent permitted by law, and the parties
shall abide by such court's determination. In the event that any provision of
this Article VI cannot be reformed, such provision shall be deemed to be severed
from this Agreement, but every other provision of Article VI of this Agreement
shall remain in full force and effect.
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SECTION 6.10. FURTHER ASSURANCES. On and after the Execution Date,
Seller shall prepare, execute and deliver, at Seller's expense, such further
instruments of conveyance, sale, assignment or transfer, and shall take or cause
to be taken such other or further action as Buyer's counsel shall reasonably
request at any time or from time to time in order to perfect, confirm or
evidence in Buyer title to all or any part of the Property or to consummate, in
any other manner, the terms and conditions of this Agreement. On and after the
Execution Date, Buyer shall prepare, execute and deliver, at Buyer's expense,
such further instruments, and shall take or cause to be taken such other or
further action as Seller's counsel shall reasonably request at any time or from
time to time in order to confirm or evidence Buyer's assumption of the Assumed
Liabilities or to consummate, in any other manner, the terms and conditions of
this Agreement.
SECTION 6.11. ANNOUNCEMENTS. Except as required by law, neither
party to this Agreement shall issue any press releases or make any public
announcements with respect to this Agreement or the transactions contemplated
hereby without the written consent of the other party hereto, which consent
shall not be unreasonably withheld or delayed. Prior to issuing any press
release or making any public announcements, the disclosing party shall give the
other party a copy of the text of their proposed disclosure and a reasonable
opportunity to comment on it. Subject to the obligations of Seller's parent
company under applicable securities laws, Buyer and Seller shall jointly agree
on the press release or other public announcement with respect to the
transactions contemplated by this Agreement which will be disseminated promptly
following the execution and delivery hereof.
SECTION 6.12. EMPLOYEES OF SELLER. Seller shall retain and
discharge when due all liabilities and obligations to its employees, including
but not limited to, liabilities and obligations with respect to wages, salary,
termination pay, severance pay, sick pay, vacation pay, unemployment benefits,
pension or welfare benefits to which such employees are entitled by virtue of
their employment by Seller or termination of their employment by Seller.
Immediately prior to Closing, Seller shall terminate the employment of all of
its employees. Immediately after the Closing, Seller shall apply the Severance
Contribution received from Buyer pursuant to Section 3.1 above to discharge, in
part, the Employee Severance Payments and Seller shall be solely responsible for
the payment of the balance of the Employee Severance Payments to its former
employees.
ARTICLE VII. CLOSING DELIVERIES
SECTION 7.1. DELIVERIES BY SELLER. Seller shall deliver to Buyer
at Closing the following:
(a) An executed counterpart of the General Conveyance, Assignment
and Xxxx of Sale conveying, selling, transferring and assigning to Buyer
title to all of the Property, free and clear of all Encumbrances, in the
form of Exhibit B hereto.
(b) Executed counterparts of Assignments and Assumptions of the
Permits, the Personal Property Leases and the Contracts which include the
written consents of all parties (in particular the consents of Emhart
Glass S.A. and The Eldrid Company, Inc.) necessary in order to duly
transfer all of Seller's rights thereunder to Buyer, in the form of
Exhibit C hereto (the "Assignments and Assumptions").
19
(c) An executed counterpart of the Assignment of the Proprietary
Rights conveying, transferring and assigning to Buyer, all of Seller's
right, title and interest in and to the Proprietary Rights, free and clear
of all Encumbrances, in the form of Exhibit D hereto.
(d) Resolutions of the Board of Directors and sole shareholder of
Seller adopted at meetings or by consent authorizing the execution and
delivery of this Agreement by Seller and the performance of its
obligations hereunder, certified by the Secretary of Seller.
(e) A certificate of the Secretary of State of South Dakota dated as
of a recent date as to the good standing of Seller in such state.
(f) An executed counterpart of the Certificate of Assumed
Liabilities in the form of Exhibit E hereto (the "Certificate of Assumed
Liabilities").
(g) Updated versions of Schedules 1.1(a), 1.1(b), 1.1(c), 1.1(d),
1.1(e), 1.1(f), 1.1(g), 1.1(h), 2.1(a), 2.2(b), 2.2(c) and 2.2(d)
reflecting the information required to be set forth therein as of the
Business Day immediately prior to the Closing Date.
(h) A certificate of the Secretary of State of Indiana dated as of
the a recent date as to the good standing of The LGL Group, Inc. in such
state.
(i) An executed counterpart of the Lease in favor of Buyer with
respect to the Real Property in the form of Exhibit F hereto (the "Lease")
which will have a term of up to six months from Closing; provide for no
payment by Buyer to Seller other than a pro rata share of real estate
taxes and insurance costs based upon portion occupied; and will permit
Seller to market and show premises to potential purchasers during the
term.
(j) Such other separate bills of sale, assignments or documents of
transfer that Buyer may reasonably deem necessary or appropriate in order
to perfect, confirm or evidence title to all or any part of the Property.
SECTION 7.2. DELIVERIES BY BUYER. Buyer shall deliver to Seller at
Closing the following:
(a) Payment of the Closing Payment.
(b) Executed counterparts of the Assignments and Assumptions.
(c) Resolutions of the Board of Directors of Buyer authorizing the
execution and delivery of this Agreement by Buyer and the performance of
its obligations hereunder, certified by the Secretary of Buyer.
(d) An executed counterpart of the Certificate of Assumed
Liabilities.
(e) An executed counterpart of the Lease.
20
(f) Such other separate instruments of assumption that Seller may
reasonably deem necessary or appropriate in order to confirm or evidence
Buyer's assumption of the Assumed Liabilities.
ARTICLE VIII. CONDITIONS PRECEDENT TO CLOSING
SECTION 8.1. CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE
TRANSACTION. The respective obligations of Seller and Buyer, as applicable, to
effect the transactions contemplated herein shall be subject to the satisfaction
at or prior to the Closing Date of the following conditions:
(a) NO ORDER. No federal or state governmental or regulatory
authority or other agency or commission, or federal or state court of
competent jurisdiction, shall have enacted, issued, promulgated, enforced
or entered any statute, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent)
that has the effect of restricting in any material respect, preventing or
prohibiting consummation of the transactions contemplated by this
Agreement.
(b) NO CHALLENGE. There shall not be a pending action, proceeding or
investigation before any court or administrative agency or by a government
agency (i) challenging or seeking damages in connection with the
transactions contemplated by this Agreement or (ii) seeking to restrain,
prohibit or limit the exercise of full rights of ownership or operation by
Buyer of all or any portion of the Business or Property, that in either
case would reasonably be expected to have a Material Adverse Effect.
SECTION 8.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF BUYER. The
obligations of Buyer to effect the transactions contemplated by this Agreement
are also subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Seller in this Agreement that are qualified as to
materiality shall be true and correct, and those not so qualified shall be
true and correct in all material respects, without giving effect to any
update or notice to Buyer, as of the Execution Date and (except to the
extent such representations and warranties speak as of a certain date or
period and except as permitted or contemplated by this Agreement) as of
the Closing Date as though made on and as of the Closing Date.
(b) AGREEMENTS AND COVENANTS. Seller shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to Closing Date.
(c) NO MATERIAL ADVERSE EFFECT. Since the Execution Date, there
shall not have been any change in the financial condition, results of
operations Business or Property, taken as a whole, which either
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.
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(d) OFFICER'S CERTIFICATE. Buyer shall have received a certificate
of the Chief Executive Officer of Seller with respect to the conditions
set forth in Sections 8.2(a), (b) and (c).
(e) AUDITED 2006 FINANCIAL STATEMENTS. Buyer shall have received a
copy of the audited balance sheet of Seller at December 31, 2006 and
Seller's income statement for the period then ended, together with the
audit report of Seller's auditors with respect to such financial
statements.
SECTION 8.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF Seller. The
obligations of Seller to effect the transactions contemplated by this Agreement
are also subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Buyer in this Agreement that are qualified as to materiality
shall be true and correct, and those not so qualified shall be true and
correct in all material respects, without giving effect to any update or
notice to Seller, as of the Execution Date and (except to the extent such
representations and warranties speak as of a certain date or period and
except as permitted or contemplated by this Agreement) as of the Closing
Date as though made on and as of the Closing Date.
(b) AGREEMENTS AND COVENANTS. Buyer shall have performed or complied
in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to
Closing Date.
(c) OFFICER'S CERTIFICATE. Seller shall have received a certificate
of the Chief Executive Officer of Buyer with respect to the conditions set
forth in Sections 8.3(a) and (b).
ARTICLE IX. TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1. TERMINATION. This Agreement may be terminated as
provided below:
(a) by mutual written consent of Buyer and Seller;
(b) Buyer may terminate this Agreement by giving written notice to
Seller at any time prior to the Closing if Seller is in material breach of
any representation, warranty, or covenant contained in this Agreement
provided that: (i) Buyer has notified Seller of the breach, (ii) the
breach has continued without cure for a period of thirty (30) days after
Buyer notified Seller, or by its nature, the breach cannot be cured prior
to the Closing Date and (iii) Buyer is not in breach of any
representation, warranty, or covenant contained in this Agreement.
(c) Seller may terminate this Agreement by giving written notice to
Buyer at any time prior to the Closing if Buyer is in material breach of
any representation, warranty, or covenant contained in this Agreement
provided that: (i) Seller has notified Buyer of the breach, (ii) the
22
breach has continued without cure for a period of thirty (30) days after
Seller notified Buyer, or by its nature, the breach cannot be cured prior
to the Closing Date and (iii) Seller is not in breach of any
representation, warranty, or covenant contained in this Agreement.
(d) by either Buyer or Seller if any permanent injunction preventing
the consummation of the purchase and sale has become final and
nonappealable;
(e) by either Buyer or Seller if the Closing has not occurred (other
than through the failure of any party seeking to terminate this Agreement
to comply in all material respects with its obligations under this
Agreement) on or before June 8, 2007;
(f) by Buyer if any of the conditions in Sections 8.1 and 8.2
applicable to it have 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
(g) by Seller, if any of the conditions in Article Sections 8.1 and
8.3 applicable to it have not be satisfied as of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other than
through the failure of Seller to comply with its obligations under this
Agreement) and Seller has not waived such condition on or before the
Closing Date.
SECTION 9.2. EFFECT OF TERMINATION. In the event of the termination
of this Agreement pursuant to Section 9.1, this Agreement shall forthwith become
void and, subject to the provisions of the Escrow Agreement with respect to the
Deposit, all rights and obligations of any party shall cease except that nothing
herein shall relieve any party from liability for any breach of this Agreement
or any representation, warranty, covenant or agreement contained in this
Agreement or shall restrict either party's rights in the case thereof.
SECTION 9.3. WAIVER. At any time prior to the Closing Date, the
parties may (i) extend the time for the performance of any of the obligations or
other acts of the other party, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party, but such
extension, waiver or failure to insist on strict compliance with an obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.
ARTICLE X. INDEMNIFICATION
SECTION 10.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS.
Subject to the limitations set forth in this Article X and
notwithstanding any investigation conducted at any time with regard thereto by
or on behalf of Buyer or Seller, all representations, warranties, covenants and
agreements of Buyer and Seller in this Agreement shall survive the Closing. All
statements contained in any Schedule or Exhibit hereto shall be deemed
23
representations and warranties of Buyer or Seller, as the case may be, set forth
in this Agreement for the purposes of this Article.
SECTION 10.2. INDEMNIFICATION.
(a) Subject to the limitations set forth in this Article X, Seller
shall indemnify and hold harmless Buyer from and against any and all
losses, liabilities, damages, demands, claims, suits, actions, judgments
or causes of action, assessments, costs and expenses including, without
limitation, interest, penalties, reasonable attorneys' fees, any and all
reasonable expenses incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever,
and any and all amounts paid in settlement of any claim or litigation
(collectively, "Damages"), asserted against, resulting to, imposed upon,
or incurred or suffered by Buyer, directly or indirectly, as a result of
or arising from the following (individually an "Indemnifiable Claim" and
collectively "Indemnifiable Claims" when used in the context of Buyer as
the Indemnified Party (as hereinafter defined)):
(i) Any inaccuracy in or breach of any of the representations,
warranties or agreements made in this Agreement by Seller or the
non-performance of any covenant or obligation to be performed by
Seller;
(ii) Any Excluded Liability or other liability imposed upon
Buyer as transferee of the Business or the Property, including
without limitation, any such liability as may be imposed upon Buyer
under applicable bulk sales and other similar laws, or otherwise
relating to the conduct of the Business prior to the Closing Date,
except to the extent such liability has been assumed by Buyer
pursuant to Article II hereof;
(iii) Seller's failure to comply with the bulk transfer laws
of any state or its misapplication of the proceeds of the Purchase
Price of the Property in fraud of its creditors.
(b) Subject to the limitations set forth in this Article X, Buyer
shall indemnify and hold harmless Seller from and against any and all
Damages asserted against, resulting to, imposed upon, or incurred or
suffered by Seller, directly or indirectly, as a result of or arising from
the following:
(i) Any inaccuracy in or breach of any of the representations,
warranties or agreements made by Buyer in this Agreement or the
non-performance of any covenant or obligation to be performed by
Buyer;
(ii) Any liability imposed upon Seller as a result of Buyer's
conduct of the Business after the Closing Date; or
(iii) The nonperformance or nonpayment by Buyer of any of the
Assumed Liabilities.
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(c) For purposes of this Article X, all Damages shall be computed
net of any insurance coverage with respect thereto that reduces the
Damages that would otherwise be sustained; provided, however, that in all
cases, the timing of the receipt or realization of insurance proceeds
shall be taken into account in determining the amount of reduction of
Damages.
(d) Notwithstanding anything to the contrary contained in this
Agreement, in no event shall any party hereto have any liability hereunder
to any other party hereto for consequential, indirect or incidental
damages of any kind or nature or lost profits.
(e) If Buyer has Knowledge at or before the Closing of any breach or
non-fulfillment of a representation, warranty, covenant or agreement
herein by Seller, and Buyer nevertheless proceeds to consummate the
transaction contemplated hereby, then without further act on the part of
any party hereto, Buyer shall be deemed to have waived its rights to such
indemnification with respect to such breach or non-fulfillment (but not
without respect to any other breach or non-fulfillment).
SECTION 10.3. LIMITATIONS ON INDEMNIFICATION. Rights to
indemnification hereunder are subject to the following limitations:
(a) As to Seller and Buyer, the obligation of indemnity provided
herein with respect to the representations and warranties made by them
herein shall survive the Closing Date and shall continue for a period
equal to 18 months following the Closing Date at which time such
representations and warranties shall expire and become null and void,
except as to any matters with respect to which a bona fide written claim
shall have been made before such date, in which event survival shall
continue (but only with respect to, and to the extent of, such claim).
(b) An Indemnified Party shall be entitled to indemnification
hereunder with respect to a breach by the Indemnifying Party of any
representation or warranty only to the extent that the amount of all
Damages suffered by the Indemnified Party as a result of the breach by the
Indemnifying Party of one or more representations and warranties exceeds
in the aggregate $50,000, whereupon all amounts in excess of an aggregate
of $50,000 shall be subject to indemnification. In no event shall Buyer be
entitled to indemnification hereunder with respect to one or more breaches
by the Seller of its representations or warranties in an aggregate amount
that exceeds the Purchase Price.
(c) As to Seller and Buyer, the obligation to indemnify provided
herein with respect to any matter other than a representation and warranty
made by them herein shall survive the Closing Date until the expiration of
the applicable statute of limitations.
(d) If, prior to the termination of any obligation to indemnify as
provided for herein, written notice of a claimed breach is given by the
party seeking indemnification including in detail the basis therefor (the
"Indemnified Party") to the party from whom indemnification is sought (the
"Indemnifying Party") or a suit or action based upon a claimed breach is
commenced against the Indemnified Party, the Indemnified Party shall not
be precluded from pursuing such claimed breach or suit or action, or from
25
recovering from the Indemnifying Party (whether through the courts or
otherwise) on the claim, suit or action, by reason of the termination
otherwise provided for above.
(e) The right of any party hereto to commence or assert an action,
suit, claim or proceeding for Damages in respect of the breach of a
representation or warranty contained herein shall terminate at the same
time that the obligation of indemnification provided herein with respect
to such breach shall terminate.
(f) Notwithstanding anything contained in this Agreement to the
contrary, the parties hereto acknowledge and agree that, except as
hereinafter provided, the indemnification set forth in this Article X,
subject to the limitations contained in this Article X, shall be the sole
and exclusive remedy of the Indemnified Party for any breach, default,
inaccuracy or failure of any of the representations and warranties of the
Indemnifying Party contained in this Agreement and in any document and
instrument delivered in connection herewith, whether based upon contract,
tort or upon any other theory of law. The preceding sentence shall not
affect the availability to Buyer of equitable remedies in respect of this
Agreement and the transactions contemplated hereby, including, without
limitation, the remedies of injunction and specific performance, or
remedies in respect of fraud by Seller that may hereafter be alleged by
Buyer.
(g) Notwithstanding anything else contained in this Agreement to the
contrary, the sum of $250,000, constituting the portion of the Deposit
remaining after the partial release contemplated by Section 3(a) of the
Escrow Agreement shall be the sole source for reimbursement to Buyer with
respect to any Receivables that are not collected in full by Buyer within
90 days after the Closing Date.
SECTION 10.4. PROCEDURE FOR INDEMNIFICATION WITH RESPECT TO
THIRD-PARTY CLAIMS.
The Indemnified Party shall give the Indemnifying Party prompt
written notice of any third party claim, demand, assessment, suit or proceeding
to which the indemnity set forth in Section 10.2 applies, which notice to be
effective must describe such claim in reasonable detail (the "Indemnification
Notice"). Notwithstanding the foregoing, the Indemnified Party shall not have
any obligation to give any notice of any assertion of liability by a third party
unless such assertion is in writing and the rights of the Indemnified Party to
be indemnified hereunder in respect of any third party claim shall not be
adversely affected by its failure to give notice pursuant to the foregoing
unless and, if so, only to the extent that, the Indemnifying Party is materially
prejudiced thereby. The Indemnifying Party shall have the right to control the
defense or settlement of any such action subject to the provisions set forth
below, but the Indemnified Party may, at its election, participate in the
defense of any action or proceeding at its sole cost and expense. Should the
Indemnifying Party fail timely to defend any such action (except for failure
resulting from the Indemnified Party's failure to timely give the
Indemnification Notice), then, in addition to any other remedy, the Indemnified
Party may settle or defend such action or proceeding through counsel of its own
choosing and may recover from the Indemnifying Party the amount of such
settlement, demand, or any judgment or decree and all of its costs and expenses,
including reasonable fees and disbursements of counsel.
26
SECTION 10.5. PROCEDURE FOR INDEMNIFICATION WITH RESPECT TO
NON-THIRD-PARTY CLAIMS. In the event that the Indemnified Party asserts the
existence of an Indemnifiable Claim (but excluding claims resulting from the
assertion of liability by third parties), it shall give prompt written notice to
the Indemnifying Party specifying in reasonable detail and to the extent known
to it the nature and amount of the claim asserted (the "Non-Third Party Claim
Indemnification Notice"). If the Indemnifying Party, within 30 days (or such
greater time as may be necessary for the Indemnifying Party to investigate such
Indemnifiable Claim not to exceed 60 days), after receiving the Non-Third Party
Claim Indemnification Notice from the Indemnified Party, shall not give written
notice to the Indemnified Party announcing its intent to contest such assertion
of the Indemnified Party (the "Contest Notice"), such assertion shall be deemed
accepted and the amount of claim shall be deemed a valid Indemnifiable Claim.
During the time period set forth in the preceding sentence, the Indemnified
Party shall cooperate fully with the Indemnifying Party in respect of such
Indemnifiable Claim. In the event, however, that the Indemnifying Party contests
the assertion of a claim by giving a Contest Notice to the Indemnified Party
within said period, then if the parties hereto, acting in good faith, cannot
reach agreement with respect to such claim within 10 days after such notice,
such parties may seek any remedy available thereto at law or in equity.
SECTION 10.6. COOPERATION IN THE DEFENSE OF CLAIMS. In the event
that an Indemnifiable Claim is asserted, the Indemnifying Party and the
Indemnified Party shall each cooperate in all reasonable respects with the
other. Such cooperation shall include making available on reasonable notice
during normal business hours at the cost of the Indemnifying Party such business
records as relate to the Business and the transactions contemplated by this
Agreement and suitable personnel with knowledge of the foregoing.
ARTICLE XI. MISCELLANEOUS PROVISIONS
SECTION 11.1. NOTICES. All notices and other communications required
or permitted under this Agreement shall be deemed to have been duly given and
made if in writing and if served either by personal delivery to the party for
whom intended (which shall include delivery by Federal Express or similar
responsible overnight service) when received or if sent by facsimile
transmission, with a copy by personal delivery, Federal Express or similar
responsible overnight service) on the same day, when transmitted and receipt is
confirmed by telephone, bearing the address shown in this Agreement for, or such
other address as may be designated in writing hereafter by, such party:
If to Seller: c/o The LGL Group, Inc.
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
with a copy to: Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP
Park Avenue Tower
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
27
If to Buyer: Olivotto Glass Technologies SpA
Xxxxx Xxxxxx 00
00000 Xxxxxxxxx (XX)
Xxxxx
Attention: Xxxxxx Xxxxxx, President
Facsimile No.: 011 39011 9343500
with a copy to: Xxxxxxxxx Xxxxxxx Xxxx & Xxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx
00000-0000
Attention: Xxxxxxx X. XxXxxxx, Esq.
Facsimile No.: (000) 000-0000
SECTION 11.2. ENTIRE AGREEMENT. This Agreement and Schedules hereto,
and the documents referred to herein embody the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof,
and supersede all prior and contemporaneous agreements and understandings, oral
or written, relative to said subject matter.
SECTION 11.3. BINDING EFFECT; ASSIGNMENT. This Agreement and the
various rights and obligations arising hereunder shall inure to the benefit of
and be binding upon Buyer and Seller and their respective successors and
permitted assigns. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be transferred or assigned (by operation of law or
otherwise) by any of the parties hereto without the prior written consent of the
other parties. Any transfer or assignment of any of the rights, interests or
obligations hereunder in violation of the terms hereof shall be void and of no
force or effect. Notwithstanding the foregoing, Buyer shall be permitted to
assign all of its rights to acquire the Property and to delegate its obligations
to assume the Assumed Liabilities arising under this Agreement to any entity
which is wholly-owned by Buyer or Olivotto Industries, S.p.A. ("Buyer's
Assignee") prior to the Closing. Any such assignment shall not release Buyer or
Olivotto Industries, S.p.A from its liabilities and obligations hereunder.
SECTION 11.4. CAPTIONS. The Article and Section headings of this
Agreement are inserted for convenience only and shall not constitute a part of
this Agreement in construing or interpreting any provision hereof.
SECTION 11.5. EXPENSES OF TRANSACTION. Buyer and Seller shall each
pay its own costs and expenses incurred by it in connection with this Agreement
and the transactions contemplated hereby. The liability for sales, real estate
transfer and/or documentary taxes, if any, (but not income or similar type
taxes) in connection with the sale and delivery of the Property shall be the
responsibility of Seller.
SECTION 11.6. WAIVER; CONSENT. This Agreement may not be changed,
amended, terminated, augmented, rescinded or discharged (other than by
performance), in whole or in part, except by a writing executed by each of the
28
parties hereto, and no waiver of any of the provisions or conditions of this
Agreement or any of the rights of a party hereto shall be effective or binding
unless such waiver shall be in writing and signed by the party claimed to have
given or consented thereto. Except to the extent that a party hereto may have
otherwise agreed to in writing, no waiver by that party of any condition of this
Agreement or breach by any other party of any of its obligations,
representations or warranties hereunder shall be deemed to be a waiver of any
other condition or subsequent or prior breach of the same or any other
obligation or representation or warranty by such other party, nor shall any
forbearance by the first party to seek a remedy for any noncompliance or breach
by such other party be deemed to be a waiver by the first party of its rights
and remedies with respect to such noncompliance or breach.
SECTION 11.7. NO THIRD PARTY BENEFICIARIES. Nothing herein,
expressed or implied, is intended or shall be construed to confer upon or give
to any person, firm, corporation or legal entity, other than the parties hereto,
any rights, remedies or other benefits under or by reason of this Agreement.
SECTION 11.8. COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
SECTION 11.9. REMEDIES OF BUYER. The Property is unique and not
readily available. Accordingly, Seller acknowledges that, in addition to all
other remedies to which Buyer is entitled, Buyer shall have the right to enforce
the terms of this Agreement by a decree of specific performance, provided Buyer
is not in material default hereunder.
SECTION 11.10. BULK SALES LAWS. Buyer hereby waives compliance with
any and all applicable bulk sales and other similar laws.
SECTION 11.11. GOVERNING LAW; CONSENT TO JURISDICTION.
(a) This Agreement, and all other agreements and related documents
executed and delivered pursuant hereto including, without limitation, the Escrow
Agreement, shall be governed by and construed in accordance with the domestic
laws of the State of New York without giving effect to any choice or conflict of
law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.
(b) Each of the parties hereto hereby irrevocably submits to the
exclusive jurisdiction of any New York state court, or the United States
District Court, Southern District of New York, in each case sitting in the
County of New York over any action or proceeding arising out of or relating to
this Agreement and the transactions contemplated hereby and by the other
agreements and related documents executed and delivered pursuant hereto,
including, without limitation, the Escrow Agreement, and each of the parties
hereto hereby irrevocably agrees that all claims in respect of such action or
proceeding shall be heard and determined in such New York state or Federal
court. Each of the parties hereto hereby irrevocably waives, to the fullest
extent legally possible, the defense of an inconvenient forum to the maintenance
of such action or proceeding.
29
SECTION 11.12. EXHIBITS AND SCHEDULES. Each reference in this
Agreement to an Exhibit or Schedule shall mean an Exhibit or Schedule annexed to
this Agreement and shall be incorporated into this Agreement by such reference.
SECTION 11.13. KNOWLEDGE. All references herein to the "Knowledge"
of Seller or words of similar import shall mean the actual knowledge of Xxxxx
Xxxxxxxx and Xxxxx Xxxxxxxx. All references herein to the "Knowledge" of Buyer
or words of similar import shall mean the actual knowledge of Xxxxxx Xxxxxx.
[SIGNATURE PAGE FOLLOWS]
30
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
BUYER:
OLIVOTTO GLASS TECHNOLOGIES S.P.A.
By: /s/ Xxxxxx Xxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxx
Title: President
SELLER:
XXXXX SYSTEMS, INC.
By: /s/ Xxxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Chief Executive Officer
The liabilities and obligations of each of Buyer and Buyer's Assignee
under and pursuant to the foregoing Agreement are hereby unconditionally
guaranteed by the undersigned. This is a guaranty of payment and performance and
not of collection.
OLIVOTTO INDUSTRIES, SPA
By: /s/ Xxxxxx Xxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxx
Title: President
The liabilities and obligations of Seller under and pursuant to the
foregoing Agreement are hereby unconditionally guaranteed by the undersigned.
This is a guaranty of payment and performance and not of collection.
THE LGL GROUP, INC.
By: /s/ Xxxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Chief Executive Officer
