AGREEMENT AND PLAN OF REORGANIZATION
AMONG
XXXXX INDUSTRIES, INC.,
XXXXX ACQUISITION CORP.,
PHOTOMETRICS, LTD.
AND
CERTAIN OF THE STOCKHOLDERS OF PHOTOMETRICS, LTD.
DATED MARCH 27, 1998
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (this "Agreement") is entered
into on March 27, 1998, by and among XXXXX INDUSTRIES, INC., a Delaware
corporation ("Parent"), XXXXX ACQUISITION CORP., a Delaware corporation (the
"Buyer"), PHOTOMETRICS, LTD., a Delaware corporation (the "Company"), and
certain of the stockholders of the Company (listed in Exhibit A1 attached hereto
and collectively referred to as the "Stockholders"). The Parent, the Buyer, the
Company and the Stockholders are collectively referred to herein as the
"Parties."
RECITALS
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A. The Company is engaged in the assembly, distribution and sale of
certain analytical and scientific laboratory instruments;
B. A majority of the issued and outstanding shares of capital stock of the
Company are owned, beneficially and of record, by the Stockholders and certain
Company stock options are also issued and outstanding;
C. The Board of Directors of the Company has authorized and approved the
execution, delivery and performance of this Agreement according to its terms;
D. The Parent, the Buyer, the Stockholders and the Company deem it
advisable and in their best interests that the Buyer shall merge with the
Company, with the Company being the surviving corporation thereof;
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows:
1. DEFINITIONS
"AAA" has the meaning set forth in Section 9(p) below.
"Affiliated Group" means any affiliated group within the meaning of Code
Sec. 1504(a) (or any similar group defined under a similar provision of state,
local, or foreign law).
"Agreement" has the meaning set forth in the preface above.
"Applicable Rate" means the corporate base rate of interest announced from
time to time by NationsBank.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, occurrence, event, incident, action, failure to
act, or transaction that forms or could reasonably be expected to form the basis
for any specified consequence.
"Business" means the business conducted or proposed or planned to be
conducted by the Company and the Company Subsidiaries on a consolidated basis on
and as of the Closing Date, including, without limitation, the assembly,
distribution and sale of certain analytical and scientific laboratory
instruments.
"Buyer" has the meaning set forth in the preface above.
"Cash" means cash and cash equivalents (including marketable securities and
short term investments) calculated in accordance with GAAP applied on a basis
consistent with the preparation of the Financial Statements, inclusive of
deposits-in-transit and after deduction for outstanding checks.
"Certificate" means a stock certificate representing Photometrics Shares.
"Closing" has the meaning set forth in (S) 2(i) below.
"Closing Date" has the meaning set forth in (S) 2(i) below.
"Company" has the meaning set forth in the preface above.
"Company Benefit Plan" has the meaning set forth in (S) 3(w)(i) below.
"Company ERISA Affiliate" has the meaning set forth in (S) 3(w)(ii) below.
"Company Information" shall mean Confidential Information and Trade
Secrets.
"Company Qualified Plan" has the meaning set forth in (S) 3(w)(vii) below.
"Company Subsidiary" means Photometrics GMBH or Photometrics Ltd.,
International, all of the issued and outstanding shares of capital stock of
which are owned by the Company; and "Company Subsidiaries" means both of the
aforementioned subsidiaries.
"Company Subsidiary Shares" means all of the issued and outstanding shares
of capital stock of any Company Subsidiary.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means: (a) confidential data and confidential
information relating to the business of the Company (which does not rise to the
status of a Trade Secret) which is or has been disclosed to the Stockholders or
of which the Sellers became aware as a consequence of or through their
relationship with the Company and which has value to the
Company and is not generally known to its competitors. Confidential Information
shall not include any data or information that (a) has been voluntarily
disclosed to the public by the Company, (b) has been independently developed and
disclosed to the public by others, (c) otherwise enters the public domain
through lawful means, (d) was already known by Recipient prior to such
disclosure or was lawfully and rightfully disclosed to the Stockholders by
another Person without violating any confidentiality agreement with the Company,
or (e) that is required to be disclosed by law or order.
"Controlled Group of Corporations" has the meaning set forth in Code Sec.
1563.
"DGCL" means the Delaware General Corporation Law.
"Disclosure Schedule" has the meaning set forth in (S) 3 below.
"Effective Date" has the meaning set forth in (S) 2(a) below.
"Effective Time" has the meaning set forth in (S) 2(a) below.
"Employment Law" has the meaning set forth in (S) 3(v) below.
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended and as in effect on the Closing Date, together with
all other laws in effect on the Closing Date (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local and foreign governments (and all agencies
thereof) concerning pollution or protection of the environment, natural
resources, public health and safety, or employee health and safety, including
laws relating to omissions, discharges, releases, or threatened releases of
Hazardous Substances in air, surface water, ground water, or lands or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of Hazardous Substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agreement" means the Escrow Agreement dated the Closing Date in
substantially the form attached hereto as Exhibit 8(b)(iv) to be entered into
among the Parties and the Bank of New York, as escrow agent ("Escrow Agent"),
for purposes of holding the Escrow Fund.
"Escrow Fund" means an amount equal to: $3,000,000 plus 200% of the amount
of the Purchase Price allocable to any Photometrics Shares for which dissenter's
rights are or may be exercised under the DGCL, to be held in respect of
indemnification obligations of the Stockholders under (S) 8(b)(i)(B) hereof,
under (S) 8(b)(i)(C) hereof and under (S) 8(b)(iv) hereof.
"Extremely Hazardous Substance" has the meaning set forth in Sec. 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"Fiduciary" has the meaning set forth in ERISA Sec. 3(21).
"Financial Statements" has the meaning set forth in (S) 3(g)(i) below.
"GAAP" means United States generally accepted accounting principles as in
effect as of the date hereof.
"Hazardous Substances" means pollutants, contaminants, petroleum, asbestos
or chemical, industrial, hazardous or toxic material or wastes.
"Indemnified Party" has the meaning set forth in (S) 8(d)(i)(A) below.
"Indemnifying Party" has the meaning set forth in (S) 8(d)(i)(A) below.
"Intellectual Property" means with respect to the Business:
(a) all inventions (whether patentable or unpatentable and whether or
not reduced to practice), all rights to research and development, all
innovations, all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and re-
examinations thereof;
(b) all trademarks, service marks, trade dress, logos, trade names and
corporate names, together with all translations, adaptations, derivations,
and combinations thereof and including all goodwill associated therewith,
and all applications, registrations, and renewals in connection therewith;
(c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith;
(d) all mask works and all applications, registrations, and renewals
in connection therewith;
(e) all trade secrets and confidential business information (including
ideas, research and development, know-how, formulae, compositions,
manufacturing and production processes and techniques, technical data,
designs, drawings, specifications, customer and supplier lists, pricing and
cost information, and business and marketing plans and proposals but
excluding any such information received from Advanced Microscopy
Techniques);
(f) all computer software (including data and related documentation);
(g) all other proprietary rights relative to any of the foregoing; and
(h) all copies and tangible embodiments thereof (in whatever form or
medium).
"Interim Financial Statements" has the meaning set forth in (S) 3(g)(i)
below.
"IRS" has the meaning set forth in (S) 3(w)(vi) below.
"Knowledge" means, with respect to the Company, actual knowledge of the
directors and executive management employees of the Company, after due inquiry
with respect to the relevant matter; and, with respect to the Stockholders,
actual knowledge of any of the individual Stockholders, after due inquiry with
respect to the relevant matter.
"Leased Real Property" means the real property, fixtures and improvements
(inclusive of warranties, guaranties, permits and licenses in connection
therewith) which, with respect to the Company, is located at 0000 Xxxx Xxxxxxxxx
Xxxxx, Xxxxxx, Xxxxxxx 00000, and with respect to Photometrics GMBH, one of the
Company Subsidiaries, is located at Sollner Xxxxxxx 00, Xxxxxx, Xxxxxxx D-81479.
"Liability" or "Liabilities" means any direct or indirect indebtedness,
liability, claim, loss, damage, deficiency, obligation or responsibility, fixed
or unfixed, xxxxxx or inchoate, liquidated or unliquidated, secured or
unsecured, accrued, absolute, contingent or otherwise.
"Losses" means all economic losses, liabilities, obligations, amounts paid
in settlement, costs and expenses, including court costs, and reasonable
attorneys' fees and expenses, incurred in connection with any action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand,
injunction, judgment, order, decree, or ruling.
"Merger" has the meaning set forth in (S) 2(b) below.
"Material Contracts" has the meaning set forth in (S) 3(o) below.
"Multiemployer Plan" has the meaning set forth in ERISA Sec. 3(37).
"Optionholders" has the meaning set forth in (S) 2(h)(i) below.
"Option Withholding Amount" the amount of any and all withholding
obligations which the Company is obligated to pay or has paid to federal and
state taxing authorities as a result of the cashless exercise of any Company
Stock Options held by the Optionholders on or prior to the Closing Date.
"Ordinary Course of Business" means the ordinary course of business of the
Company consistent with past custom and practice (including with respect to
quantity and frequency) and
not inconsistent with the standards, practices and principles reflected in the
Company Financial Statements.
"Parent" has the meaning set forth in the preface above.
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an unincorporated organization,
a limited liability company, or a governmental entity (or any department,
agency, or political subdivision thereof).
"Photometrics Common Stock" means all of the issued and outstanding shares
of Class A Common Stock, with par value $.001 per share, of the Company and
Class B Common Stock, with par value $.001 per share, of the Company.
"Photometrics Options" or "Options" means all of the currently outstanding
options issued under the Photometrics Option Plans.
"Photometrics Option Plans" means the 1992 Amended and Restated Stock
Option Plan, as amended; the Directors and Non-employees Stock Option Plan; and
the Long-term Incentive Plan each adopted by the Board of Directors of the
Company and approved by the stockholders of the Company to the extent required
by applicable law.
"Photometrics Preferred Shares" or "Preferred Shares" means all of the
issued and outstanding shares of Series B Preferred Stock, with par value $.001
per share, of the Company and Series C Preferred Stock, with par value $.001 per
share, of the Company.
"Photometrics Shares" or the "Stock" means all of the issued and
outstanding capital stock of the Company, which consists of the Photometrics
Common Stock and the Photometrics Preferred Shares.
"Process Agent" has the meaning set forth in (S) 9(o) below.
"Product Warranty Claims" means claims of the Company customers and/or
users made during the twelve (12) month period following Closing in the Ordinary
Course of Business with respect to products sold by the Company on and prior to
the Closing Date which (i) are based solely on the Company's written product
warranties disclosed to the Buyer, and (ii) are only for the repair or
replacement or reimbursement remedies expressed in such written product
warranties.
"Prohibited Transaction" has the meaning set forth in ERISA Sec. 406 and
Code Sec. 4975.
"Purchase Price" has the meaning set forth in (S) 2(c)(i) below.
"Reportable Event" has the meaning set forth in ERISA Sec. 4043.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Interest" means any mortgage, claim, easement, restriction,
pledge, lien, encumbrance, charge, or other security interest, other than (a)
mechanic's, materialmen's, and similar liens incurred in the Ordinary Course of
Business, (b) liens for Taxes not yet due and payable or for Taxes that the
taxpayer is contesting in good faith through appropriate governmental or
judicial proceedings, (c) purchase money liens and liens securing rental
payments under capital lease arrangements, (d) other immaterial liens arising in
the Ordinary Course of Business and not incurred in connection with the
borrowing of money, and (e) liens arising as a result of any act or omission of
the Buyer.
"Stockholder Expenses" shall mean all expenses incurred, paid or accrued by
the Company or the Stockholders prior to, on or subsequent to the Closing Date
which relate to the transactions contemplated by this Agreement including, but
not limited to, legal fees and costs of Xxxxx & Xxxxxx, accounting and financial
services fees and expenses of Deloitte & Touche LLP, and the fees and expenses
of Broadview Associates described in Section 3(d) of the Disclosure Schedule.
"Stockholders" has the meaning set forth in the preface above.
"Stockholders Committee" means a committee consisting of Xxxx Xxxxxxxx,
Xxxxxxx Xxxxxx and Xxxxxxx Xxxxxxxx which has been appointed by the Board of
Directors of the Company and which will be ratified by the Stockholders for the
purpose of administering the Purchase Price as set forth in (S) 2(d)(ii).
"Surviving Corporation" has the meaning set forth in (S) 2(b) below.
"Tax" and "Taxes" means all taxes, charges, fees, levies or other
assessments imposed by any federal, state, local or foreign taxing authority,
whether disputed or not, including without limitation, income, capital,
estimated, excise, property, sales, transfer, withholding, employment, payroll,
and franchise taxes and such terms shall include any interest, penalties or
additions attributable to or imposed on or with respect to such assessments and
any expenses incurred in connection with the settlement of any tax liability.
As used in this Agreement, the term "Taxes" includes all foreign, federal, state
and local income, franchise, property, sales, use, excise, payroll or other
taxes, including, without limitation, penalties, interest and other additions to
tax, and obligations for withholding taxes from payments due or made to any
other Person.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Trade Secrets" means business or technical information of the Company,
including but not limited to a formula, pattern, program, device, compilation of
information, method, technique, or process that: (i) derives independent actual
or potential commercial value from not being generally known or readily
ascertainable through independent development or reverse engineering by persons
who can obtain economic value from its disclosure or use; and (ii) is the
subject of efforts that are reasonable under the circumstances to maintain its
secrecy. Trade Secrets shall specifically include, without limitation,
information relating to the design, manufacture, application, know-how, research
and development relating to the Company's present, past or prospective products
and/or computer programs.
2. THE MERGER.
(a) Effective Date. Subject to the terms and conditions of this
Agreement, the Merger shall become effective upon the filing with the
Delaware Secretary of State of a duly executed Certificate of Merger and
officers' certificates and/or other documents as required by the DGCL, or
at such time thereafter as is provided by mutual agreement in the
Certificate of Merger (the "Effective Time"). The date on which the
Effective Time occurs as specified in the Plan of Merger shall be referred
to herein as the "Effective Date."
(b) Effect of the Merger. Subject to the terms and conditions of this
Agreement and the Certificate of Merger, at the Effective Time, the Buyer
shall be merged with and into the Company (the "Merger") and the Company
shall be the surviving corporation (the "Surviving Corporation") in the
Merger. The Certificate of Incorporation of the Company and Bylaws of the
Buyer, respectively, as in effect immediately prior to the Effective Time,
shall be the Certificate of Incorporation and Bylaws of the Surviving
Corporation; provided, however, that the Articles of Incorporation shall be
amended and restated in the form of Exhibit 2(b) hereof. The officers and
directors of the Buyer immediately prior to the Effective Time shall be the
officers and directors of the Surviving Corporation, in each case, until
their respective successors are duly elected and qualified. The corporate
name of the Surviving Corporation shall be Photometrics, Ltd.
(c) Conversion of Photometrics Shares. At the Effective Time, by
virtue of the Merger and without any action on the part of the Company, the
Buyer or the holder of any Photometrics Shares:
(i) all of the Photometrics Shares issued and outstanding prior
to the Effective Time shall be converted into the right to receive an
amount of cash equal to Thirty Seven Million Dollars ($37,000,000)
(the "Purchase Price");
(ii) each share of capital stock of the Company that is held in
the treasury of the Company, if any, shall be cancelled and retired
and cease to exist and no consideration shall be issued in exchange
therefor; and
(iii) each issued and outstanding share of capital stock of
Buyer shall be converted into and become the fully paid and non-
assessable share of common stock of the Surviving Corporation.
(d) Payment of Purchase Price. The Purchase Price shall be paid as
follows:
(i) Three Million Dollars ($3,000,000) plus 200% of the amount of
the Purchase Price allocable to any Photometrics shares for which
dissenter's rights are or may be exercised under the DGCL prior to the
Closing Date shall be paid to the Escrow Agent on the Closing Date
pursuant to the Escrow Agreement to be held and disbursed as provided
in the Agreement and in the Escrow Agreement;
(ii) One Million Three Hundred Thousand Dollars ($1,300,000)
shall be paid to the Stockholders Committee, which shall be used by
the Stockholders Committee to satisfy Stockholder Expenses. Three days
prior to the Closing Date, the Company will deliver a preliminary
accounting setting forth in reasonable detail the Stockholder Expenses
expected as of the Closing Date. Said accounting shall be based on
actual and pro forma expenses, costs, reimbursements, taxes and the
like. Statements for all Stockholder Expenses accrued through the
Closing shall be presented at the Closing. The Stockholders shall pay
all Stockholder Expenses, whenever incurred or accrued, without regard
to whether the amount set forth in this paragraph (ii) is sufficient
for that purpose.
(iii) The balance of the Cash Payment shall be paid to the
holders of Photometrics shares in accordance with the written
instructions of the Stockholder Committee.
(e) Dissenters' Rights. From and after the Effective Date, the
holders of Certificates formerly representing any of the Photometrics
Shares, or any other owners of Photometrics Shares who do not hold
Certificates, shall cease to have any rights with respect thereto other
than any dissenters' rights they have perfected pursuant to Chapter 262 of
the DGCL.
(f) Surrender of Certificates.
(i) The Buyer and the Company hereby appoint the Stockholders
Committee as exchange agent for the purpose of exchanging Certificates
formerly representing the Photometrics Shares, and at and after the
Effective Date, the Buyer shall deliver the Purchase Price required to
be delivered to holders of the Photometrics Shares pursuant to (S)
2(d)(i) of this Agreement in accordance with the written direction of
the Stockholders Committee. As soon as practicable after the
Effective Date, each holder of the Photometrics Shares converted
pursuant to (S) 2(c), upon surrender to the Stockholders Committee of
one or more Certificates
for cancellation, will be entitled to receive cash determined in
accordance with (S) 2(c)(i).
(ii) Any cash to be paid pursuant to (S) 2(d)(ii), if held at the
direction of the Stockholders Committee for payment or delivery to the
holders of unsurrendered Certificates formerly representing
Photometrics Shares and unclaimed at the end of one year from the
Effective Date, shall (together with any interest earned thereon) at
such time be paid or redelivered at the direction of the Stockholders
Committee to the Buyer, and after such time any holder of a
Certificate who has not surrendered such Certificate to the
Stockholders Committee shall, subject to applicable law, look as a
general creditor only to the Buyer for payment or delivery of such
cash, as the case may be.
(g) No Further Transfers of Photometrics Shares. At the Effective
Date, the stock transfer books of Company shall be closed and no transfer
of Photometrics Shares theretofore outstanding shall thereafter be made.
(h) Treatment of Stock Options.
(i) On the Effective Date, Options to purchase shares of
Photometrics Common Stock issued pursuant to the Photometrics Option
Plans that are outstanding shall terminate without any further action.
The Company agrees to provide the notice to holders of Options
("Optionholders") as required pursuant to the Photometrics Option
Plans describing each Optionholder's right to a cashless exercise of
his/her Options and that should said holder fail to so exercise the
Options they shall expire.
(ii) The Company shall otherwise amend the Photometrics Option
Plans and obtain any required shareholder approval of such
Photometrics Option Plan amendments and shall amend, as necessary, any
and all Option agreements (including obtaining any required
participant consents) prior to the Effective Date to make them
consistent with this (S) 2(h).
(i) The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Powell,
Goldstein, Xxxxxx & Xxxxxx LLP, 000 Xxxxxxxxx Xxxxxx XX, Xxxxx 0000,
Xxxxxxx, Xxxxxxx, on March 31, 1998, or such other date as the parties may
mutually determine (the "Closing Date").
(j) Deliveries at the Closing. (i) At the Closing, the Stockholders
will deliver to the Buyer the various certificates, instruments, and
documents referred to in (S) 5(a) below; (ii) the Buyer will deliver to the
Stockholders the various certificates, instruments, and documents referred
to in (S) 5(b) below; (iii) the Company and the Stockholders will execute,
acknowledge (if appropriate), and deliver to the Buyer (A) such
certificates and instruments of sale, transfer, conveyance, and assignment
as the Buyer and its counsel may reasonably request; (B) a Non-Competition
Agreement between the Company, the Buyer and those Persons listed in
Exhibit 2(j)(iii)(B)(1) hereto in substantially the form attached hereto as
Exhibit 2(j)(iii)(B)(2), and (C) the Escrow Agreement, (iv) the Buyer will
execute, acknowledge (if appropriate), and deliver to the Stockholders and
Company such certificates as the Company's counsel reasonably may request;
and (v) the Buyer will deliver to the Stockholders the Purchase Price in
accordance with (S) 2(d) above.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE STOCKHOLDERS.
The Company and the Stockholders, jointly but not severally, represent and
warrant to the Buyer and the Parent that the statements contained in this (S) 3
are correct and complete, except as specified to the contrary in the disclosure
schedule prepared by the Company accompanying this Agreement and initialed by
the Company and the Buyer (the "Disclosure Schedule") and will be correct and
complete as of the Closing Date. The Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this (S) 3.
(a) Organization of the Company; Investment Intent.
(i) The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of
its incorporation and has full corporate power and authority to carry
on its business as it is now being conducted, to own or hold under
lease the assets which it owns or holds under lease and to perform all
its obligations under the agreements and instruments to which it is a
party or by which it is bound. The Company is qualified to do
business as a foreign corporation in each jurisdiction in which the
conduct of its business requires such qualification, which
jurisdictions are set forth in (S) 3(a)(i) of the Disclosure Schedule.
The capital stock of the Company is, and, as of the Closing Date, all
of the outstanding Photometrics Shares will be, held of record and
beneficially by the Stockholders as described in (S) 3(a)(i) of the
Disclosure Schedule.
(ii) The Company has provided the Buyer with a list of the type
of entity and jurisdiction of organization, and the number of
outstanding shares for each Company Subsidiary. Except for the
Company Subsidiaries, the Company does not own directly or indirectly
any equity security or equivalent interest in any corporation,
partnership, joint venture, business trust or other legal entity. Each
of the Company Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its incorporation and has full corporate power and authority to carry
on its business as it is now being conducted, to own or hold under
lease the assets which it owns or holds under lease and to perform all
its obligations under the agreements and instruments to which it is a
party or by which it is bound. Each of the Company Subsidiaries is
duly qualified to do business as a foreign corporation or otherwise
and is in good standing under the laws of each country, state or other
jurisdiction in which the
ownership or leasing of the properties owned by it or the nature of
the activities conducted by it requires such qualification. The sole
jurisdiction in which Photometrics GMBH is qualified to do business is
the Republic of Germany. Photometrics, Ltd., International is
qualified to do business in the United States Virgin Islands.
(b) Authorization of Transaction. The Company and the Stockholders
have full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and the other documents
contemplated hereby and to perform their obligations hereunder, including,
without limitation, consummation of the Merger. Without limiting the
generality of the foregoing, the board of directors of the Company has and,
as of the Closing Date, the Stockholders of the Company will have duly
authorized the execution, delivery and performance of this Agreement. This
Agreement constitutes and, when delivered, the other documents contemplated
hereby will constitute the valid and legally binding obligations of the
Company and the Stockholders, enforceable in accordance with their
respective terms and conditions. Neither the Company nor the Stockholders
need to give any further notice to, make any further filing with, or obtain
any further authorization, consent, or approval of any governmental agency
in order for the Parties to consummate the transactions contemplated by
this Agreement including without limitation, the Merger.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Company, any Company
Subsidiary or the Stockholders are subject, (ii) violate any provision of
the charter or bylaws of the Company or of any Company Subsidiary, or (iii)
conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to which the
Company, any Company Subsidiary or the Stockholders are a party or by which
they are bound or to which any of the Company's assets or the assets of any
Company Subsidiary is subject (or result in the imposition of any Security
Interest upon any of such assets) other than, in each case, any of the
foregoing resulting from the failure to obtain necessary consents to
assignments required under the terms of any such agreement, contract,
lease, license, instrument or other arrangement listed in (S) 3(c) of the
Disclosure Schedule.
(d) Brokers' Fees. Except for the Company's obligation to Broadview
Associates, the extent of which is briefly and accurately set forth in (S)
3(d) of the Disclosure Schedule, neither the Company nor any of the
Stockholders has any Liability or obligation to pay any fees or commissions
to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
(e) Title to and Condition of Assets. The assets of the Company and
the Company Subsidiaries constitute all of the property and assets used or
necessary to conduct the Business as presently conducted. To the Knowledge
of the Company and the Stockholders, each such asset is free from any known
material defects, has been maintained in accordance with normal industry
practice, is in good operating condition and repair (subject to normal wear
and tear), and is suitable for the purpose for which it is presently used.
The Company and the Company Subsidiaries have good title to all of the
assets owned by them, and a valid leasehold interest in all the assets
leased by the Company or any of the Company Subsidiaries, free and clear of
any Security Interests.
(f) Capital Structure of the Company and the Company Subsidiary.
(i) The authorized capital stock of the Company consists of a
total of 7,802,707 shares of capital stock, with $.001 par value per
share, consisting of (A) 4,717,000 shares of Class A Common Stock, (B)
283,000 shares of Class B Common Stock, (C) 1,027,707 shares of Series
B Preferred Stock and (D) 1,775,000 shares of Series C Preferred
Stock.
(ii) 1,151,384 shares of Class A Common Stock are currently
issued and outstanding, 272,704 shares of Class B Common Stock are
currently issued and outstanding, 1,027,707 shares of Series B
Preferred Stock are currently issued and outstanding, and 1,768,291
shares of Series C Preferred Stock are currently issued and
outstanding.
(iii) 822,697 shares of Class A Common Stock were reserved for
issuance upon the exercise of the Photometrics Options all of which
have been granted pursuant to the Photometrics Option Plans, and
2,795,998 shares of Class A Common Stock were reserved for issuance in
connection with the right to convert the Class B Preferred and Class C
Preferred Stock, respectively.
(iv) The authorized shares of Photometrics GMBH consists of DM
50,000. The authorized capital stock of Photometrics, Ltd.,
International consists of 1,000 shares, all of which are issued and
outstanding. The Company is the sole, beneficial and record owner of
all of the Company Subsidiary Shares. The Company Subsidiary Shares
are duly authorized and validly issued and are fully paid and
nonassessable. No options, warrants, conversion or other rights,
agreements, commitments, arrangements or understandings of any kind
obligating the Company or any Company Subsidiary, contingently or
otherwise, to issue or sell any shares of common stock or securities
convertible into or exchangeable for any Photometrics Shares or
Company Subsidiary Shares or any other securities, are outstanding,
and no authorization therefor has been given. All issuances, sales and
repurchases of equity interests by the Company and the Company
Subsidiaries have been effected in substantial compliance with all
applicable laws.
(v) As of the Closing Date there will be no Photometrics Options
outstanding and all currently issued and outstanding Photometrics
Options will have been exercised or terminated.
(vi) The Option Withholding Amount shall not be in excess of
$17,000.
(vii) As of the Closing Date, the Stockholders will own 91.3% of
the Photometrics Shares on a fully diluted basis.
(viii) Except as disclosed in this (S) 3(f), no other equity
securities of the Company or any Company Subsidiary have been issued
or are outstanding. As of the date of this Agreement and as of the
Closing there are no and there will be no other outstanding (A)
options, agreements, calls or commitments of any character which would
obligate the Company or any Company Subsidiary to issue, sell, pledge,
assign or otherwise encumber or dispose of, or to purchase, redeem or
otherwise acquire, any Photometrics Stock, any of the authorized but
unissued capital stock of the Company, any shares of the Company
Subsidiaries or any authorized but unissued capital stock of any
Company Subsidiary, or (B) warrants or options relating to, rights to
acquire, or debt or equity securities convertible into, shares of
Photometrics Common Stock, Photometrics Preferred Stock, Company
Subsidiary Shares or other equity securities.
(ix) As of the date of this Agreement, and as of the Closing,
neither the Company nor the Company Subsidiary, has or will have any
bonds, debentures, notes or other indebtedness the holders of which
have the right to vote (or which are convertible into or exercisable
for securities having the right to vote) with the Stockholders (or any
Company Subsidiary) on any matter or to approve the transactions
contemplated hereby.
(x) As of the date of this Agreement, all outstanding shares of
Photometrics Common Stock and Photometrics Preferred Stock have been
duly authorized and validly issued and are fully paid and
nonassessable. Furthermore, any shares of Photometrics Common Stock or
Photometrics Preferred Stock issued upon the exercise of any Options
between the date of this Agreement and the date of the Closing will
have been duly authorized and validly issued and will be fully paid
and nonassessable.
(xi) All Options were granted under the Photometrics Option
Plans, and all shares issued upon exercise of said Options have been
duly authorized and validly issued and are fully paid and
nonassessable, in compliance with all applicable laws. Furthermore,
any new Photometrics Shares issued upon the exercise of options
granted under the Photometrics Option
Plans after the date of this Agreement will be at the date of the
Closing duly authorized and validly issued and fully paid and
nonassessable.
(xii) All issued and outstanding Photometrics Shares and Company
Subsidiary Shares have been issued in compliance with all state and
federal securities laws and laws applicable thereto.
(xiii) As of the Closing Date, there will be no accrued and
unpaid dividends on the Photometrics Shares. No Photometrics Shares
are entitled to receive dividends, other than the following:
(A) each share of Series B Preferred Stock accrues from day
to day, from the day such share is issued, a dividend at a rate
of $.18 per share; and
(B) each share of Series C Preferred Stock accrues from day
to day, from the day such share is issued, a dividend at rate of
$.24 per share.
(xiv) As of the date of this Agreement and as of the date of the
Closing the Company has not and will not have received any notice by
the holders of the Photometrics Preferred Stock requesting redemption
pursuant to the Amended Certificate of Incorporation of the Company.
(xv) As of the date of the Closing, all outstanding shares of
Photometrics Preferred Stock shall be converted into Photometrics
Common Stock and no shares of Photometrics Preferred Stock shall
remain outstanding.
(xvi) As of the date of this Agreement and as of the date of the
Closing, the Class B Common Stock has and will have no voting rights.
(g) Financial Statements.
(i) (S) 3(g) of the Disclosure Schedule contains true, correct
and complete copies of balance sheets, statements of income, changes
in stockholders' equity and cash flow of the Company and the Company
Subsidiaries as of and for the fiscal years ending December 31, 1995,
1996 and 1997 audited by the Company's accountants (the "Financial
Statements"); and unaudited balance sheets, statements of income
changes in stockholders' equity and cash flow of the Company and the
Company Subsidiaries the two (2) months ended February 28, 1998 (the
"Interim Financial Statements").
(ii) Each of the Financial Statements is true, correct, complete
and consistent with the books and records of the Company and the
Company
Subsidiaries. Each of the Financial Statements has been prepared in
accordance with GAAP and, to the extent in compliance with GAAP, on a
consistent basis throughout the periods covered thereby and presents
fairly the financial condition and results of operations and cash
flows of the Company and the Company Subsidiaries at the dates and for
the periods specified, subject, in the case of Interim Financial
Statements, to the absence of notes and the absence of normal
recurring year-end adjustments and procedures (none of which require
material adjustment or are inconsistent with past practice).
(iii) Neither the Company nor any of the Company Subsidiaries
has any debt, liability or obligation of any nature, whether accrued,
absolute, contingent or otherwise, and whether due or to become due,
that is not reflected or reserved against in the Interim Financial
Statements, except as set forth in (S) 3(g) of the Disclosure
Schedule. Accounts payable reflected in the Financial Statements have
arisen from bona fide transactions. All debts, liabilities and
obligations of the Company and the Company Subsidiaries incurred after
the date of the Interim Financial Statements were incurred in the
Ordinary Course of Business, arose from bona fide transactions, and
are usual and normal in amount both individually and in the aggregate.
Neither the Company nor any Company Subsidiary is directly or
indirectly liable to or obligated to provide funds in respect of or to
guaranty or assume any obligation of any person except to the extent
reflected and fully reserved against in the Financial Statements.
Except as set forth in the Financial Statements, all liabilities of
the Company and the Company Subsidiaries can be prepaid without
penalty at any time.
(iv) The loans, notes and accounts receivable reflected in the
Financial Statements and all such loans, notes and accounts receivable
arising after the applicable dates of the Financial Statements arose,
and have arisen, from bona fide transactions, and the bad debt
reserves established in connection with such loans, notes, and
accounts receivable are in accordance with GAAP applied on a
consistent basis.
(h) Subsequent Events. Since February 28, 1998, there has not been
any material adverse change in the business, financial condition,
operations, results of operations or prospects of the Company or of any
Company Subsidiary. Without limiting the generality of the foregoing, since
that date, except as permitted by this Agreement or with the written
consent of the Buyer, neither the Company nor any Company Subsidiary has:
(i) sold, leased, transferred, or assigned any of its assets,
tangible or intangible outside the Ordinary Course of Business;
(ii) entered into any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) other
than Ordinary Course of Business sales and purchase orders;
(iii) accelerated, terminated, modified, or canceled any
agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) involving more than
$50,000 to which the Company is a party or by which it is bound (and
to the Knowledge of the Company and the Stockholders no other party
has done so as a result of any default by the Company);
(iv) imposed or permitted any Security Interest upon any of its
assets, tangible or intangible;
(v) made any capital expenditure (or series of related capital
expenditures) either involving more than $50,000 (when aggregated with
all such capital expenditures of the Company and the Company
Subsidiaries) or outside the Ordinary Course of Business;
(vi) made any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other Person;
(vii) issued any note, bond, or other debt security or created,
incurred, assumed, or guaranteed any indebtedness for borrowed money
or capitalized lease obligation;
(viii) delayed or postponed the payment of accounts payable or
other Liabilities outside of the Ordinary Course of Business;
(ix) canceled, compromised, waived, or released any material
right or claim (or series of related rights and claims) outside the
Ordinary Course of Business;
(x) granted any license or sublicense of any rights under or with
respect to any Intellectual Property outside of the Ordinary Course of
Business;
(xi) changed or authorized any change in the charter or bylaws of
the Company or of any Company Subsidiary;
(xii) experienced any material damage, destruction, or loss to
its property not covered by insurance;
(xiii) made any loan to, or entered into any other transaction
with, any of its stockholders, directors, officers, and employees;
(xiv) amended, modified or terminated any Company Benefit Plan
or adopted any arrangement that, if adopted, would constitute a
Company Benefit Plan (except as explicitly contemplated hereunder);
(xv) granted any increase in the base compensation of any of its
directors, officers, and employees;
(xvi) adopted, amended, modified or terminated any bonus,
profit-sharing, incentive, option, severance, or other plan, contract,
or commitment for the benefit of any of its directors, officers,
employees or consultants (or taken any such action with respect to any
other employee benefit plan);
(xvii) made any other change in employment terms for any of its
directors, officers, key employees and consultants and, to the
Knowledge of the Company, no officer, key employee or consultant has
left or intends to leave the Company and no director, officer, key
employee or consultant intends to engage in Competing Activities as
defined in the Noncompetition Agreement;
(xviii) made or pledged to make any charitable or other capital
contribution;
(xix) suffered or experienced any other occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary
Course of Business which could reasonably be expected to cause or
result in Losses;
(xx) declared or paid any dividend or other distribution, whether
in cash or other property (except for any regular dividend paid in
stock on the Company's preferred stock);
(xxi) violated any covenant contained in (S) 6 hereof; or
(xxii) entered into any commitment to do any of the foregoing.
(i) Undisclosed Liabilities. Except as explicitly set forth herein
or as set forth in the Disclosure Schedule, neither the Company nor any
Company Subsidiary has any Liability (and there is no Basis for any present
or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand against the Company or any Company Subsidiary
giving rise to any Liability), except for (i) Liabilities set forth in the
Financial Statements and (ii) Liabilities which have arisen or first been
asserted after the date of the Financial Statements in the Ordinary Course
of Business (none of which items in subparagraphs (i) and (ii) results
from, arises out of, or was caused by any (i) breach of contract, (ii)
breach of warranty claims which are not Product Warranty Claims, (iii)
tort, (iv) infringement, or (v) violation of law other than failure to
comply with any bulk sales law). As of the Closing Date the Company will
have no obligations or Liabilities for post-retirement benefits, if any,
for employees of the Company who have retired prior to the Closing Date.
(j) Legal Compliance. The Company and each Company Subsidiary have
complied with all applicable laws (including rules, regulations,
codes, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all
agencies thereof), the failure to comply with which could reasonably be
expected to result in Losses the costs of which will exceed $30,000 in the
aggregate, and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced against the
Company or any Company Subsidiary alleging any failure so to comply.
(k) Tax Matters. Except as set forth on Schedule 3(k):
(i) The Company and each Company Subsidiary has filed all Tax
Returns that they were required to file and were due. All such Tax
Returns were correct and complete in all material respects. All Taxes
owed by the Company and each Company Subsidiary (whether or not shown
on any Tax Return) have been paid. The Company and each Company
Subsidiary currently is not the beneficiary of any extension of time
within which to file any Tax Return. No claim is presently being made
by an authority in a jurisdiction where the Company or any Company
Subsidiary does not file Tax Returns that such Company or Company
Subsidiary is or may be subject to taxation by that jurisdiction.
There are no Security Interests on any of the assets of any of the
Company or any Company Subsidiary that arose in connection with any
failure (or alleged failure) to pay any Tax. Neither the Company nor
any Company Subsidiary has been a member of an Affiliated Group that
has filed a "consolidated return" within the meaning of Code Sec.
1501, or has filed a combined or consolidated return with another
corporation with any other taxing authority.
(ii) The Company and each Company Subsidiary has made all
withholdings of Taxes required to be made in connection with amounts
paid or owing to any employee, independent contractor, creditor,
shareholder, or other third party and such withholdings have either
been paid to the appropriate governmental agency or set aside in
appropriate accounts for such purpose.
(iii) Neither the Company nor any Company Subsidiary has
received any notice or other indication that any authority is
considering assessing any additional Taxes for any period for which
Tax Returns have been filed. There is no dispute or claim concerning
any Tax Liability of the Company or any Company Subsidiary either (A)
claimed or raised by any authority in writing or (B) as to which the
Company or any Company Subsidiary or any Shareholder has knowledge
based upon personal contact with any agent or representative of such
authority. (S) 3(k) of the Disclosure Schedule lists all federal,
state, local, and foreign income Tax returns filed with respect to the
Company and each Company Subsidiary for taxable periods ended on or
after January 1, 1994, indicates those Tax Returns that have been
audited, and indicates those Tax Returns that currently are the
subject of audit. The Company has delivered to the Buyer correct and
complete copies of all federal and foreign income Tax Returns,
examination reports, and statements of deficiencies assessed against
or agreed to by the Company and each Company Subsidiary since
January 1, 1998.
(iv) Neither the Company nor any Company Subsidiary has waived
any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency.
(v) Neither the Company nor any Company Subsidiary has made any
payments, is obligated to make any payments, or is a party to any
agreement that under certain circumstances could obligate it to make
any payments that will not be deductible under Code Sec. 280G.
Neither the Company nor any Company Subsidiary is a party to any Tax
allocation or sharing agreement. Neither the Company nor any Company
Subsidiary (A) has been a member of an Affiliated Group filing a
consolidated federal income Tax Return (other than a group the common
parent of which was the Company) or (B) has any Liability for the
Taxes of any Person (other than the Company and each Company
Subsidiary) under Treas. Reg. (S) 1.1502-6 (or any similar provision
of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
(l) Leased Real Property.
(i) Neither the Company nor any Company Subsidiary owns or has
ever owned any real property.
(ii) (S) 3(l)(ii) of the Disclosure Schedule lists and describes
briefly all real property leased to the Company and each Company
Subsidiary. The Company has delivered to the Buyer correct and
complete copies of the leases listed in (S) 3(l)(ii) of the Disclosure
Schedule (as amended to date). With respect to each lease listed in
(S) 3(l)(ii) of the Disclosure Schedule:
(A) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect in accordance with its
terms.
(B) neither the Company nor any Company Subsidiary is, and
to the Knowledge of the Company and the Stockholders no party to
the lease or sublease is, in breach or default, and no event has
occurred and is continuing which, with notice or lapse of time,
would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(C) to the Knowledge of the Company and the Stockholders,
there are no disputes, oral agreements, or forbearance programs
in effect as to the lease that would have a Material Adverse
Effect;
(D) neither the Company nor any Company Subsidiary has
assigned, transferred, conveyed, mortgaged, deeded in trust, or
encumbered any interest in the leasehold; and
(E) all facilities leased thereunder have received all
approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof and
have been operated and maintained in all material respects in
accordance with applicable laws, rules, and regulations.
(m) Intellectual Property.
(i) The Company and the Company Subsidiaries own or have the
right to use pursuant to license, sublicense, agreement, or permission
of all Intellectual Property used in the operation of their respective
businesses as presently conducted. Each item of Intellectual Property
will be owned or available for use by the Buyer on identical terms and
conditions immediately subsequent to the Closing, subject to obtaining
required consents under any contracts identified in (S) 3(m)(i) of the
Disclosure Schedule.
(ii) To the Knowledge of the Company and the Stockholders, except
as set forth in (S) 3(m)(ii) of the Disclosure Schedule, neither the
Company nor any Company Subsidiary has interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of third parties, and neither the Company
nor any Company Subsidiary has received any charge, complaint, claim,
demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that the Company
or any Company Subsidiary must license or refrain from using any
Intellectual Property rights of any third party). No third party has
interfered with, infringed upon, misappropriated, or otherwise come
into conflict with any Intellectual Property rights of the Company or
any Company Subsidiary.
(iii) (S) 3(m)(iii) of the Company Disclosure Schedule
identifies each patent or registration which has been issued or
transferred to or used by the Company and each Company Subsidiary with
respect to any of their respective Intellectual Property, identifies
each pending patent application for registration which the Company and
each Company Subsidiary has made with respect to any of their
respective Intellectual Property, and identifies each patent or
trademark which the Company and each Company Subsidiary has granted to
any third party with respect to any of their respective Intellectual
Property. The Company has delivered to the Buyer correct and complete
copies of all such patents, registrations, applications, licenses,
agreements, and permissions (as amended to date) and has made
available to the Buyer correct and complete copies of all other
written documentation evidencing ownership and prosecution (if
applicable) of each such item. (S) 3(m)(iii) of the Disclosure
Schedule also identifies each trade
name or unregistered trademark used by the Company or any Company
Subsidiary in connection with the Business. With respect to each item
of Intellectual Property required to be identified in (S) 3(m)(iii) of
the Disclosure Schedule:
(A) the Company or the Company Subsidiary possesses all
right, title, and interest in and to the item, free and clear of
any Security Interest, license, or other restriction;
(B) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge nor is any of the
foregoing threatened;
(C) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the
Knowledge of the Company and the Stockholders threatened, which
challenges the legality, validity, enforceability, use, or
ownership of the item; and
(D) neither the Company nor any Company Subsidiary has
agreed to indemnify any Person for or against any interference,
infringement, misappropriation, or other conflict with respect to
the item.
(iv) (S) 3(m)(iv) of the Disclosure Schedule identifies each item
of Intellectual Property that any third party owns and that the
Company or any Company Subsidiary uses pursuant to license,
sublicense, agreement, or permission. The Company has delivered to
the Buyer correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date). With
respect to each item of Intellectual Property required to be
identified in (S) 3(m)(iv) of the Disclosure Schedule:
(A) the license, sublicense, agreement, or permission
covering the item is legal, valid, binding, enforceable, and in
full force and effect, subject to the qualifications that
enforcement of the rights and remedies created thereby is subject
to (a) bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting the rights and
remedies of creditors and (b) general principals of equity
(regardless of whether such enforcement is considered in a
proceeding in equity or at law);
(B) the license, sublicense, agreement, or permission will
continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of
the transactions contemplated hereby subject to obtaining any
required consents under the contracts identified on (S) 3(m)(iv)
of the Disclosure Schedule;
(C) neither the Company nor any Company Subsidiary nor, to
the Knowledge of the Company and the Stockholders, any other
party to the
license, sublicense, agreement, or permission, is in breach or
default, and no event has occurred which with notice of lapse of
time would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(D) neither the Company nor any Company Subsidiary has, and
to the Knowledge of the Company and the Stockholders no other
party to the license, sublicense, agreement, or permission has,
repudiated any provision thereof;
(E) to the Knowledge of the Company and the Stockholders,
with respect to each sublicense, the representations and
warranties set forth in subsections (A) through (D) above are
true and correct with respect to the underlying license;
(F) the underlying item of Intellectual Property is not
subject to any outstanding injunction, judgment, order, decree,
ruling, or charge;
(G) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand is pending or, to the
Knowledge of the Company and the Stockholders, threatened, which
challenges the legality, validity, or enforceability of the
underlying item of Intellectual Property; and
(H) neither the Company nor any Company Subsidiary has
granted any sublicense or similar right with respect to the
license, sublicense, agreement, or permission.
(n) Inventory. The inventory of the Company and the Company
Subsidiaries consists of raw materials and supplies, manufactured and
purchased parts, goods in process and finished goods, all of which is
merchantable and fit for the purpose for which it was procured or
manufactured, and none of which is slow-moving, in accordance with GAAP
(except for parts and components on hand for servicing products already
sold), obsolete, damaged or defective, subject to the reserve for inventory
write-down set forth in the Interim Financial Statements.
(o) Contracts. (S) 3(o) of the Company Disclosure Schedule lists the
following contracts and other agreements, written or oral, to which the
Company or any Company Subsidiary is a party:
(i) any agreement (or group of related agreements) for the lease
of personal property to or from any Person providing for lease
payments in excess of $15,000 per annum;
(ii) except for sales of inventory in the Ordinary Course of
Business, any agreement (or group of related agreements) for the
purchase or sale of raw
materials, commodities, supplies, products, or other personal
property, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than one year,
or which to the Knowledge of the Company and the Stockholders, will
result in Losses to the Company or the Company Subsidiaries, or which
involves amounts or consideration, in excess of $50,000;
(iii) any agreement concerning the formation of a partnership or
joint venture;
(iv) any agreement (or group of related agreements) under which
it has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, under which it
has imposed a Security Interest on any of its assets, tangible or
intangible;
(v) any agreement imposing on the Company or any Company
Subsidiary a material obligation of confidentiality or noncompetition
to a third party;
(vi) any agreement involving the Stockholders to which the
Company or any Company Subsidiary is a party;
(vii) any profit-sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors,
officers, employees and consultants;
(viii) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $50,000 or providing severance benefits;
(ix) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, employees and consultants;
(x) any agreement under which the consequences of a default or
termination would require the payment of $50,000 or more; or
(xi) any other agreement (or group of related agreements) not of
a type referenced in Subsections (i) through (x) above, the
performance of which involves consideration in excess of $50,000.
Except as set forth on (S) 3(o) of the Disclosure Schedule, all such
agreements (the "Material Contracts") are valid, subsisting, in full force
and effect and binding upon the parties thereto in accordance with their
terms, subject to the qualifications that enforcement of the rights and
remedies created thereby is subject to (i) bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
the rights and remedies of creditors and (ii) general principles of equity
(regardless of
whether such enforcement is considered in a proceeding in equity or at
law), and the Company and the Company Subsidiaries have satisfied in full
or provided for all of their respective liabilities and obligations
thereunder requiring performance prior to the date hereof in all respects,
and neither the Company nor any Company Subsidiary is in default under any
of them, nor does any condition exist that with notice or lapse of time or
both would constitute such a default. To the Knowledge of the Company and
the Stockholders, no other party to any such Material Contract is in
default thereunder, nor does any condition exist that with notice or lapse
of time or both would constitute such a default. Subject to obtaining any
applicable consents, all of the Company's rights and the rights of each
Company Subsidiary under such Material Contracts will be transferable to a
third party upon consummation of the transactions contemplated by this
Agreement.
(p) Notes and Accounts Receivable. The notes and accounts receivable
of the Company and the Company Subsidiaries are at least in the amounts
reflected in the Financial Statements and all such notes and accounts
receivable are reflected properly on their respective books and records,
are valid receivables and, with respect to such items reflected on the
Interim Financial Statements, are subject to no setoffs on counterclaims,
are current and collectible in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts set forth on
the Interim Financial Statements. The Company has delivered to the Buyer a
complete and accurate schedule of the accounts receivable (including notes
receivable) of the Company and of the Company Subsidiaries as of February
28, 1998, together with an accurate aging of such accounts receivable or
any Company Subsidiary.
(q) Powers of Attorney. Except as set forth on (S) 3(q) of the
Disclosure Schedule, there are no outstanding powers of attorney executed
on behalf of the Company or any Company Subsidiary.
(r) Insurance. The Company has provided the Buyer with each
insurance policy (including policies providing property, casualty,
liability, and workers' compensation coverage and bond and surety
arrangements) to which the Company or any Company Subsidiary has been a
party, a named insured, or otherwise the beneficiary of coverage at any
time within the past seven (7) years.
Except as described on Schedule 3(r), with respect to each such insurance
policy: (A) all policy premiums due to date have been paid in full, and to
the Knowledge of the Company, the policy is legal, valid, binding,
enforceable, and in full force and effect with respect to the periods for
which it purports to provide coverage subject to applicable bankruptcy,
insolvency, fraudulent conveyance or transfer, reorganization, arrangement
or moratorium or other similar laws from time to time affecting creditor's
rights generally; (B) the Company and each Company Subsidiary or, to the
Knowledge of the Company, any other party to the policy is not in breach or
default (including with respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of
time, would constitute such a breach or default, or permit termination,
modification, or acceleration, under the policy; and (C) no party to the
policy has repudiated
any provision thereof. Section 3(r) of the Disclosure Schedule describes
any self-insurance arrangements affecting the Company or any Company
Subsidiary.
(s) Litigation. Except as set forth in (S) 3(s) of the Disclosure
Schedule, neither the Company, nor any of the Company Subsidiaries nor any
of the Stockholders (i) is subject to any outstanding injunction, judgment,
order, decree, ruling, or charge or (ii) is a party to or, to the Knowledge
of the Company and the Stockholders, is threatened to be made a party to
any action, suit, proceeding, hearing, or investigation of, in, or before
any court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator related to the
Company or the performance of the Stockholders under this Agreement.
(t) Product Warranty. Each product manufactured, sold, leased, or
delivered by the Company or any Company Subsidiary has been in conformity
with written commitments and express and implied warranties of the Company.
Neither the Company nor any Company Subsidiary has any Liability (and there
is no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against it which could
reasonably be expected to give rise to any Liability) for replacement or
repair thereof or other damages in connection therewith, subject only to
any reserve for Product Warranty Claims set forth in the Interim Financial
Statements. No product manufactured, sold, leased, or delivered by the
Company or any Company Subsidiary is subject to any contractual guaranty,
warranty, or other indemnity of the Company beyond the applicable standard
terms and conditions of sale or lease. Section 3(t) of the Disclosure
Schedule includes copies of the standard terms and conditions of sale or
lease for the Company and the Company Subsidiaries (containing applicable
guaranty, warranty, and indemnity provisions).
(u) Product Liability. There are no existing or, to the Knowledge of
the Company and the Stockholders, threatened claims against the Company or
any Company Subsidiary arising out of any injury to individuals or property
as a result of the ownership, possession, or use of any product
manufactured, sold, leased, or delivered by the Company or any Company
Subsidiary which could result in Liability to the Company, any Company
Subsidiary or any of their respective assets.
(v) Employees and Labor Matters. To the Knowledge of the Company, no
executive, key employee, or group of employees of the Company or any
Company Subsidiary has any plans to terminate employment with the Company
or any Company Subsidiary, neither the Company nor any Company Subsidiary
is a party to or bound by any collective bargaining agreement, nor has the
Company or any Company Subsidiary experienced any strikes, grievances, or
claims of unfair labor practice, and the Company and the Stockholders have
no Knowledge of any organizational effort presently being made or
threatened by or on behalf of any labor union with respect to the employees
of the Company or the employees of any Company Subsidiary. During the
period preceding the date hereof, there has not been, and there is not
presently pending or existing, any strike, slowdown, picketing, work
stoppage, labor
arbitration or proceeding in respect of the grievance of any employee, an
application or complaint filed by an employee or union with the National
Labor Relations Board or any comparable state or local agency,
organizational activity or other labor dispute against or affecting the
Company or any Company Subsidiary or their premises, or to the Knowledge of
the Company and the Stockholders, threatened, and no application for
certification of a collective bargaining agent is pending, or to the
Knowledge of the Company and the Stockholders threatened. To the Knowledge
of the Company and the Stockholders, no facts or circumstances exist which
could provide the basis for any work stoppage or other labor dispute. There
is no lockout of any employees by the Company or any Company Subsidiary,
nor is any such action contemplated by them. The Company and the Company
Subsidiaries have complied in all respects with all laws, rules and
regulations relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes, occupational
safety and health and plant closing ("Employment Laws"). Neither the
Company nor any Company Subsidiary is liable for the payment of taxes,
fines, penalties or other amounts, however designated, for failure to
comply with any of the foregoing Employment Laws.
(w) Employee Benefits.
(i) Definition of Benefit Plans. For purposes of this (S) 3(w),
the term "Company Benefit Plan" means any plan, program, arrangement,
fund, policy, practice or contract which, through which or under which
the Company or any Company ERISA Affiliate (as hereinafter defined)
provides benefits or compensation to or on behalf of employees or
former employees or directors or former directors of the Company or
any Company ERISA Affiliate, whether formal or informal, whether or
not written, including but not limited to the following:
(A) Arrangements -- any bonus, incentive compensation,
equity compensation, deferred compensation, commission, severance
pay, golden parachute or other compensation plan or rabbi trust;
(B) ERISA Plans -- any "employee benefit plan" (as defined
in (S) 3(3) of ERISA) including, but not limited to, any
Multiemployer Plan, defined benefit plan, profit sharing plan,
money purchase pension plan, 401(k) plan, savings or thrift plan,
or any plan, fund, program, arrangement or practice providing for
medical (including post-retirement medical), hospitalization,
accident, sickness, disability, or life insurance benefits; and
(C) Other Employee Fringe Benefits -- any stock purchase,
vacation, scholarship, day care, prepaid legal services,
dependent care or other fringe benefits plans, programs,
arrangements, contracts or practices.
(ii) Company ERISA Affiliate. For purposes of this (S) 3(w), the
term "Company ERISA Affiliate" means each trade or business (whether
or not incorporated) which together with the Company is treated as a
single employer under (S) 414(b), (c), (m) or (o) of the Code.
(iii) Identification of Benefits Plans. Except as disclosed in
(S) 3(w)(iii) of the Disclosure Schedule, and except for Company
Benefit Plans which have been terminated and with respect to which
neither the Company nor any Company ERISA Affiliate has any financial,
administrative or other liability, obligation or responsibility, the
Company and the Company ERISA Affiliates do not maintain, nor have
they at any time established or maintained, nor have they at any time
been obligated to make, or otherwise made, contributions to or under
or otherwise participated in any Company Benefit Plan.
(iv) Compliance With All Statutes, Orders and Rules. Except as
disclosed in (S) 3(w)(iv) of the Disclosure Schedule, the Company and
each Company ERISA Affiliate is in compliance with the requirements
prescribed by and all statutes, orders and governmental rules and
regulations applicable to the Company Benefit Plans and all reports
and disclosures relating to the Company Benefit Plans required to be
filed with or furnished to any governmental entity, participants or
beneficiaries prior to the Closing Date have been or will be filed or
furnished in a timely manner and in accordance with applicable laws.
(v) MEPPA Liability/Post-Retirement Medical Benefits. Except as
disclosed in (S) 3(w)(v) of the Disclosure Schedule, neither the
Company nor any Company ERISA Affiliate maintains, or has at any time
established or maintained, or has at any time been obligated to make,
or made, contributions to or under any Multiemployer Plan. Except as
disclosed in (S) 3(w)(v) of the Company Disclosure Schedule, the
Company and each Company ERISA Affiliate do not maintain nor have they
at any time established or maintained, nor have they at any time been
obligated to make, or made, contributions to or under any plan which
provides post-retirement medical or health or death benefits with
respect any person.
(vi) Documentation. Except as disclosed in (S) 3(w)(vi) of the
Disclosure Schedule, the Company has made available to the Buyer a
true and complete copy of the following documents, if applicable, with
respect to each Company Benefit Plan identified in (S) 3(w)(iii) of
the Disclosure Schedule: (A) all documents, including any insurance
contracts and trust agreements, setting forth the terms of the Company
Benefit Plan, or if there are no such documents evidencing the Company
Benefit Plan, a full description of the Company Benefit Plan, (B) the
ERISA summary plan description and any other summary of plan
provisions provided to participants or beneficiaries for each such
Company Benefit Plan, (C) the annual reports filed for the most recent
three plan years and most recent financial statements or periodic
accounting or related plan assets with
respect to each Company Benefit Plan, (D) each favorable determination
letter, opinion or ruling from the Internal Revenue Service ("IRS")
for each Company Benefit Plan, the assets of which are held in trust,
to the effect that such trust is exempt from federal income tax,
including any outstanding request for a determination letter and (E)
each opinion or ruling from the Department of Labor or the PBGC with
respect to such Company Benefit Plans.
(vii) Qualified Status. Except as disclosed in (S) 3(w)(vii) of
the Disclosure Schedule, each Company Benefit Plan that is funded
through a trust or insurance contract has at all times satisfied in
all material respects, by its terms and in its operation, all
applicable requirements for an exemption from federal income taxation
under (S) 501(a) of the Code. Except as disclosed in (S) 3(w)(vii) of
the Disclosure Schedule, neither the Company, nor any Company
Subsidiary, nor any Company ERISA Affiliate maintains or previously
maintained a Company Benefit Plan which meets or was intended to meet
the requirements of (S) 401(a) of the Code (collectively, "Company
Qualified Plans"). Each determination letter issued by the IRS to the
effect that a Company Qualified Plan qualifies under (S) 401(a) of the
Code and that the related trust is exempt from taxation under (S)
501(a) of the Code remains in effect and has not been revoked. Each
Company Qualified Plan currently complies in form with the
requirements under (S) 401(a) of the Code, other than changes required
by statutes, regulations and rulings for which amendments are not yet
required. Each Company Qualified Plan has been administered according
to its terms (except for those terms which are inconsistent with the
changes required by statutes, regulations, and rulings for which
changes are not yet required to be made, in which case the Company
Qualified Plan has been administered in accordance with the provisions
of those statutes, regulations and rulings) and in accordance with the
requirements of (S) 401(a) of the Code. Each Company Qualified Plan
containing a cash or deferred arrangement under (S) 401(k) of the Code
or pursuant to which matching or employee contributions are
permissible has been tested for compliance with, and has satisfied the
requirements of, (S)(S) 401(k)(3) and 401(m)(2) of the Code for each
plan year ending prior to the Closing Date.
(viii) Legal Actions. Except as disclosed in (S) 3(w)(viii) of
the Disclosure Schedule, there are no actions, audits, suits or claims
known to the Company which are pending or threatened against any
Company Benefit Plan, any Fiduciary of any of the Company Benefit
Plans with respect to the Company Benefit Plans or against the assets
of any of the Company Benefit Plans, except claims for benefits made
in the ordinary course of the operation of such plans.
(ix) Funding. Except as disclosed in (S) 3(w)(ix) of the
Disclosure Schedule, the Company and each Company ERISA Affiliate has
made full and timely payment of all amounts required to be contributed
under the terms of each Company Benefit Plan and applicable law or
required to be paid as expenses under such Company Benefit Plan and no
excise taxes are assessable as a result of
any nondeductible or other contributions made or not made to a Company
Benefit Plan. The assets of all Company Benefit Plans which are
required under applicable laws to be held in trust are in fact held in
trust, and the assets of each such Company Benefit Plan equal or
exceed the liabilities of each such plan. The liabilities of each
other plan are properly and accurately reported on the financial
statements and records of the Company in accordance with GAAP. The
assets of each Company Benefit Plan are reported at their fair market
value on the books and records of each plan.
(x) Liabilities. Except as disclosed in (S) 3(w)(x) of the
Disclosure Schedule, neither the Company nor any Company ERISA
Affiliate is subject to any material liability, tax or penalty
whatsoever to any person whomsoever as a result of the Company's or
any Company ERISA Affiliate's engaging in a Prohibited Transaction
under ERISA or the Code, and the Company has no Knowledge of any
circumstances which reasonably might result in any such material
liability, tax or penalty as a result or a breach of Fiduciary duty
under ERISA.
(xi) Excess Parachute Payments. Except as disclosed in (S)
3(w)(xi) of the Disclosure Schedule, no payment required to be made to
any employee associated with the Company as a result of the
transactions contemplated hereby under any contract or otherwise will,
if made, constitute a "parachute payment" within the meaning of (S)
280G of the Code (determined without regard to subsection
(b)(2)(A)(ii) thereof).
(xii) COBRA and HIPAA. Except as disclosed in (S) 3(w)(xii) of
the Disclosure Schedule, the Company and each Company ERISA Affiliate
have complied with the continuation coverage requirements of (S) 1001
of the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, and ERISA (S)(S) 601 through 608 and with the portability,
access and renewability provisions of Subtitle K, Chapter 100 of the
Code and . (S) 701 et. seq. of ERISA.
(xiii) No Acceleration of Liability Under Benefit Plans. Except
as disclosed in (S) 3(w)(xiii) of the Disclosure Schedule, the
consummation of the transactions contemplated hereby will not
accelerate or increase any liability under any Company Benefit Plan
because of an acceleration or increase of any of the rights or
benefits to which employees of the Company or any Company ERISA
Affiliate may be entitled thereunder.
(xiv) Defined Benefit Plans/Money Purchase Plans. Neither the
Company nor any Company ERISA Affiliate maintains or contributes or
has maintained or contributed to an "employee benefit pension plan"
within the meaning of (S) 3(2) of ERISA that is or was subject to
Title IV of ERISA.
(x) Guaranties. Neither the Company nor any Company Subsidiary is a
guarantor or otherwise liable for any Liability or obligation (including
indebtedness) of any other Person.
(y) Environment, Health, and Safety.
(i) The Company and the Company Subsidiaries have complied with
all Environmental, Health, and Safety Laws, the failure to comply with
which could result in Losses in an amount in excess of $10,000
individually or in the aggregate, and no action, suit, proceeding,
hearing, charge, complaint, claim, demand, or notice, and no
investigation has been filed or commenced against the Company or any
Company Subsidiary alleging such failure.
(ii) Except as set forth in (S) 3(y) of the Disclosure Schedule,
neither the Company nor any Company Subsidiary has any Liability (and
neither the Company nor any Company Subsidiary has handled, used,
stored, recycled or disposed of any substance, arranged for the
disposal of any substance, exposed any employee or other individual to
any substance or condition, or owned or operated any property or
facility in any manner that could reasonably be expected to form the
basis for any present or future action, suit, proceeding, hearing,
investigations, charge, complaint, claim or demand giving rise to any
Liability) for damage or remediation to any site, location, body of
water (surface or subsurface), for any illness of or personal injury
to any employee or other individual, or for any reason under any
Environmental, Health, and Safety Laws.
(iii) All properties and equipment used in the Business are free
of any amounts of Hazardous Substances, the presence of which could
result in Losses except for Losses which would not have a Material
Adverse Effect.
(iv) There are no in service or out of service underground
storage tanks located in or on the Leased Real Property.
(z) Certain Business Relationships With the Company. None of the
Stockholders or their relatives has been dinvolved directly or indirectly
in any business arrangement or relationship with the Company or any Company
Subsidiary, other than in their capacity as a stockholder, officer or
director, within the past 36 months, and no Stockholder owns any asset,
tangible or intangible, which is used in the Business.
(aa) Books and Records. The books of account, minute books, stock
record books and other records of the Company and the Company Subsidiaries,
all of which have been made available to the Buyer, are complete and
correct and have been maintained in accordance with sound business
practices, including, but not limited to, the maintenance of an adequate
system of internal controls. On the
Closing Date, all of those books and records will be in the possession of
the Company and will be delivered to the Buyer.
(bb) Absence of Sensitive Payments. Neither the Company nor any
Company Subsidiary has made or maintained (i) any contributions, payments
or gifts of its funds or property to any governmental official, employee or
agent where either the payment or the purpose of such contribution, payment
or gift was or is illegal under the laws of the United States or any state
thereof, or any other jurisdiction (foreign or domestic); or (ii) any
contribution, or reimbursement of any political gift or contribution made
by any other person, to candidates for public office, whether federal,
state, local or foreign, where such contributions by the Company or the
Company Subsidiary were or would be a violation of applicable law.
(cc) At Will Employees. Except as set forth in (S) 3(cc) of the
Disclosure Schedule, all employees of the Company and the Company
Subsidiaries are "at will" employees.
(dd) Disclosure. The representations and warranties contained in
this (S) 3 (including the Disclosure Schedule as amended and supplemented
prior to the Closing) do not and, as of the Closing Date, will not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statement and information contained in this
(S) 3 not misleading in the context in which given.
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Parent and the Buyer,
jointly and severally, represent and warrant to the Company and the Stockholders
that the statements contained in this (S) 4 are correct and complete, and will
be correct and complete as of Closing Date.
(a) Organization of the Buyer. Each of the Parent and the Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and is duly qualified as a
foreign corporation to do business in every jurisdiction where such
qualification is required.
(b) Authorization of Transaction. Each of the Parent and the Buyer
has full power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes and, when
delivered, each document delivered by the Parent and the Buyer pursuant
hereto will constitute the valid and legally binding obligation of the
Parent and the Buyer, respectively, enforceable in accordance with their
respective terms and conditions. The Parent and the Buyer need not give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any governmental agencies in order for the Parties to
consummate the transactions contemplated by this Agreement.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in (S) 2 above) will
(i) violate any constitution, state, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency governing banking and trust matters, or
court to which the Parent or the Buyer is subject, or any provision of its
charter or bylaws or (ii) conflict with, result in a breach of, constitute
a default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other
arrangement to which the Parent or the Buyer is a party or by which it is
bound or to which any of its assets are subject.
(d) Broker's Fees. Neither the Parent nor the Buyer has any
Liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this
Agreement.
(e) Termination of Relationship. The Parent and the Buyer have
terminated their relationship with First Scientific Devices Equity Trust
with respect to any transaction relating to the Company, and the
Stockholders will have no further obligation, for payment of fees or
otherwise, to such trust.
(f) Xxxx-Xxxxx-Xxxxxx Act. A new premerger notification and report
form under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, is not required to be filed in connection with the transactions
contemplated by this Agreement.
(g) Disclosure. The representations and warranties contained in this
(S) 4 do not contain any untrue statements of a material fact or omit to
state any material fact necessary in order to make the statements contained
in this (S) 4 or therein not misleading in the context in which given.
5. CONDITIONS TO OBLIGATION TO CLOSE.
(a) Conditions to Obligation of the Parent and the Buyer. The
obligation of the Parent and the Buyer to consummate the transactions to be
performed by them in connection with the Closing is subject to satisfaction
of the following conditions:
(i) the representations and warranties set forth in (S) 3 above
shall be true and correct in all material respects at and as of the
Closing Date, except the representations and warranties made only as
of a specific date, which shall remain true and correct as of such
date;
(ii) as of the Closing Date any remaining unexercised Options
shall have terminated;
(iii) the Company's Board of Directors shall have duly called a
special meeting of stockholders or obtained a written consent of
stockholders to ensure such vote has been obtained in compliance with
applicable law prior to the Closing Date, the stockholders of the
Company entitled to vote shall have duly approved this Agreement by
the requisite vote and no stockholder of the Company shall have
exercised any appraisal rights under applicable law with respect to
the transaction contemplated by the Merger.
(iv) the Company and the Stockholders shall have performed and
complied with all of their covenants hereunder in all material
respects through the Closing;
(v) the Company shall have procured all of the third party
consents specified on Exhibit 5(a)(v) hereto;
(vi) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (C) affect adversely the right of the Buyer to own
the Photometrics Shares or to operate the Business (and no such
injunction, judgment, order, decree, ruling, or charge shall be in
effect);
(vii) the Company and the Stockholders shall have delivered to
the Buyer a certificate to the effect that each of the conditions
specified above in (S) 5(a)(i)-(vi) is satisfied in all respects;
(viii) the Buyer, the Company and those Persons listed in
Exhibit 2(k)(iii)(B)(1) shall have entered into Noncompetition
Agreements in substantially the form attached hereto as Exhibit
2(k)(iii)(B)(2) and the same shall be in full force and effect;
(ix) the Escrow Agreement shall have been executed and delivered
in substantially the form attached hereto as Exhibit 8(b)(iv) by each
of Parties and Escrow Agent;
(x) the Buyer shall have received from counsel to the Company and
the Stockholders an opinion in form and substance as set forth in
Exhibit 5(a)(x) attached hereto, addressed to the Buyer, and dated as
of the Closing Date;
(xi) all actions to be taken by the Company and the Stockholders
in connection with consummation of the transactions contemplated
hereby and all certificates, opinions, assignments, assumptions,
instruments, and other documents required to effect the transactions
contemplated hereby shall have been delivered and shall be reasonably
satisfactory in form and substance to the Buyer;
(xii) all items contemplated to be delivered following the
execution hereof shall have been timely delivered in form and
substance satisfactory to the Buyer;
(xiii) the spouse of each Stockholder shall have executed and
delivered to Buyer a consent in the form of Exhibit 5(a)(xiii);
(xiv) the provisions of (S)(S)3(h)(vii) and 3(h)(xx) shall have
been complied with through the Closing Date; and
(xv) after the date hereof, no breach or inaccuracy of any
representation or warranty or covenant of the Company or the
Stockholders shall have become known to the Buyer.
The Parent and the Buyer may waive any condition specified in this (S) 5(a) if
it executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Company and the Stockholders.
The obligations of the Company and the Stockholders to consummate the
transactions to be performed by them in connection with the Closing are
subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in (S) 4 above
shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Buyer shall have paid the Purchase Price in accordance
with (S) 2(c) hereof and the Parent and the Buyer shall have otherwise
performed and complied with all of its covenants hereunder in all
material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect);
(iv) the Parent and the Buyer shall have delivered to the Company
a certificate to the effect that each of the conditions specified
above in (S) 5(b)(i)-(iii) is satisfied in all respects;
(v) the Company shall have received from counsel to the Parent
and the Buyer an opinion in form and substance as set forth in Exhibit
5(b)(v) attached hereto, addressed to the Company, and dated as of the
Closing Date;
(vi) all actions to be taken by the Parent and the Buyer in
connection with consummation of the transactions contemplated hereby
and all certificates, opinions, assumptions, instruments, and other
documents required to effect the transactions contemplated hereby will
be reasonably satisfactory in form and substance to the Company;
(vii) the Stockholders entitled to vote shall have duly approved
this Agreement by the requisite vote and the Company's Board of
Directors shall have duly called a special meeting of stockholders to
ensure such vote has been obtained in compliance with applicable law
prior to the Closing Date; and
(viii) the Parent and the Buyer shall have delivered to the
Company and the Stockholders a policy commitment issued by a
nationally recognized insurance company (or an affiliate thereof)
covering such matters as may be agreed to between the Parent, the
Buyer, the Company and the Stockholders; provided, however, that this
condition shall not have been satisfied if any portion of the premiums
associated with such policy commitment and the underlying policy will
be borne by the Company or any of the Stockholders.
The Company and the Stockholders may waive any condition specified in this
(S) 5(b) by executing a writing so stating at or prior to the Closing.
6. PRE-CLOSING COVENANTS OF THE PARTIES.
(a) Access and Investigation. Between the date hereof and the
Closing Date, the Company and the Stockholders will, and will cause their
representatives to:
(i) afford the Buyer and its representatives (collectively,
"Buyer's Advisors") reasonable access to each of the Company's and the
Company Subsidiaries' personnel, properties (including for purposes of
environmental testing), contracts, books and records, and other
documents and data so as to not unreasonably interfere with the
conduct of the Business;
(ii) furnish the Buyer with copies of all such contracts, books
and records, and other existing documents and data as the Buyer may
reasonably request; and
(iii) furnish the Buyer and Buyer's Advisors with such
additional financial, operating and other data and information as the
Buyer may reasonably request.
(b) Operation of the Businesses of the Company. Between the date
hereof and the Closing Date, the Company and the Stockholders will, and the
Company will cause its representatives and each Company Subsidiary and its
respective representatives to:
(i) conduct the business of the Company and each Company
Subsidiary only in the Ordinary Course of Business or otherwise with
the written consent of the Buyer; provided that there shall be no
transactions between the Stockholders and the Company or any Company
Subsidiary without the prior written consent of the Buyer;
(ii) use their best efforts to preserve intact the current
business organization of the Company and the Company Subsidiaries,
keep available the services of the current officers, employees, and
agents of the Company and each Company Subsidiary, and maintain the
relations and good will with suppliers, customers, landlords,
creditors, employees, agents, and others having business relationships
with the Company or any Company Subsidiary; and
(iii) confer with the Buyer concerning operational matters of a
material nature and the status of business operations and finances.
(c) Negative Covenant. Except as otherwise expressly permitted by
this Agreement, between the date of this Agreement and the Closing Date,
the Company and the Stockholders will not, and the Company will cause each
Company Subsidiary not to, without the prior consent of the Buyer, take any
affirmative action, or fail to take any reasonable action within their or
its control, which would cause or result in an inaccuracy or breach of any
of the representations, warranties or covenants of the Company and the
Stockholders set forth in this Agreement, including, without limitation,
any action specified in (S) 3(h) of this Agreement. Without limiting the
generality of the foregoing, the Company agrees that it shall not, and
shall cause each of the Company Subsidiaries not to, take any of the
following actions without the prior written consent of the Buyer,
(i) Neither the Company nor the Company Subsidiary shall amend
its Amended Certificate of Incorporation or Certificate or Articles of
Incorporation or Association, as the case may be, or Bylaws; make any
change in their respective authorized, issued or outstanding capital
stock or any other equity security; issue,
sell, pledge, assign or otherwise encumber or dispose of, or purchase,
redeem or otherwise acquire, any of their shares of capital stock or
other equity securities or enter into any agreement, call or
commitment of any character so to do; grant or issue any stock option
or warrant relating to, right to acquire, or security convertible
into, shares of their capital stock or other equity security;
purchase, redeem, retire or otherwise acquire any shares of, or any
security convertible into, capital stock or other equity security of
their respective companies, or agree to do any of the foregoing except
with respect to the exercise of stock options currently outstanding
prior to the date of this Agreement.
(ii) Neither the Company nor any Company Subsidiary shall
propose, declare, set aside or pay any dividend or other distribution
in respect of any of their capital stock (including, without
limitation, any stock dividend or distribution) except for a regular
quarterly stock dividend on the Photometrics Preferred Shares.
(iii) Neither the Company nor any Company Subsidiary shall incur
any long-term indebtedness for borrowed money or guarantee any such
long-term indebtedness or issue or sell any long-term debt securities
or warrants or rights to acquire any long-term debt securities of such
party or guarantee any long-term debt securities of others other than
in replacement for existing or maturing debt.
(iv) The Company shall not make any distribution outside of the
Ordinary Course of Business.
(v) Neither the Company nor any Company Subsidiary shall commit
to any new capital expenditure in excess of $20,000.
(vi) Nothing in the transaction contemplated hereby shall cause
the conversion of Class B Common Stock of the Company into shares of
Class A Common Stock of the Company. Furthermore, the Class B Common
Stock shall have no rights to receive dividends.
(d) Required Approvals. As promptly as practicable after the date of
this Agreement, the Company and the Stockholders will, and the Company will
cause the Company Subsidiaries to, make all required filings and obtain all
consents, including obtaining the requisite approval of its shareholders or
debtholders and the consents contemplated by (S) 7(e) hereof, required to
be made or obtained by them in order to consummate the transactions
contemplated hereby. Between the date of this Agreement and the Closing
Date, the Company and the Stockholders will, and the Company will cause the
Company Subsidiaries to, cooperate with the Parent and the Buyer at the
Parent's and the Buyer's expense with respect to all filings or consents
that the Parent or the Buyer elects to make or is required to make in
connection with the transactions contemplated hereby.
(e) Approval by the Company's Stockholders. The Company shall cause
the transaction contemplated hereby, including without limitation the
Merger, and the Agreement to be submitted promptly for approval of its
Stockholders at a special meeting to be called and held in accordance with
applicable state and federal laws. The Company shall use all commercially
reasonable efforts to cause such meeting of its stockholders to take place
not later than March 30, 1998. The Board of Directors of the Company shall
at all times prior to and during such meeting of the Company stockholders
recommend that the transactions contemplated hereby be adopted and approved
by the Company stockholders and, subject to such matters, use its
commercially reasonable efforts to cause such adoption and approval. The
stockholders shall also vote to ratify the appointment of the Stockholders
Committee for purposes of administering the Purchase Price and resolving
any Claims under the Agreement. Except with the prior written approval of
the Buyer, neither the Company nor any member of its Board of Directors
shall, at the Company's stockholders' meeting, submit any other matters for
approval of its stockholders. Immediately following the meeting, the
Company shall notify Buyer of any stockholders who have, or who have the
right to, exercise dissenter's rights under the DGCL.
(f) Amendment of Photometrics Option Plans. Prior to the Closing all
outstanding Options that have not been exercised shall be exercised or
terminated. The Company shall amend the Photometrics Option Plans and
obtain any required stockholder approval of such Option Plan amendments and
shall amend, as necessary, any and all option agreements (including
obtaining any required participant consents) at least three (3) days prior
to the Closing to make such Option Plans consistent with this (S) 6(f).
(g) Conversion of Photometrics Preferred Stock. The holders of the
Photometrics Preferred Stock shall have converted to Class A Common Stock
pursuant to their right to convert granted in the Company's Amended
Certificate of Incorporation effective as of the date of the Closing.
(h) No Merger or Solicitation.
(i) The Company shall not, nor shall it permit any Company
Subsidiary, or authorize or permit any of its officers, directors or
employees or any investment banker, financial advisor, attorney,
accountant or other representative or agent retained by it or any
Company Subsidiary, to, directly or indirectly, solicit, initiate, or
encourage (including by way of furnishing nonpublic information), or
take any other action to facilitate, any inquiries or the making of
any proposal which constitutes, or may reasonably be expected to lead
to, any Takeover Proposal (as defined below), or agree to or endorse
any Takeover Proposal, or participate in any discussions or
negotiations, or provide third parties with any nonpublic information,
relating to any such inquiry or proposal. Without limiting the
foregoing, it is understood that any violation of the restrictions set
forth in the preceding sentence by any Stockholder, any director or
executive
officer of the Company or any Company Subsidiary, or any investment
banker, attorney or other advisor or representative of the Company or
any Company Subsidiary, whether or not such Person is purporting to
act on behalf of the Company or any Company Subsidiary or otherwise,
shall be deemed to be a breach of this (S) 6(h) by the Company. For
purposes of this Agreement, "Takeover Proposal" means any written
inquiry, proposal or offer from any person relating to any direct or
indirect acquisition or purchase of a substantial amount of the assets
of the Company or any Company Subsidiary, other than the transactions
contemplated by this Agreement, or of 10% or more of any class of
equity securities of the Company or any Company Subsidiary or any
tender offer or exchange offer that if consummated would result in any
Person beneficially owning 10% or more of any class of equity
securities of the Company or any Company Subsidiary, or any merger,
consolidation, business combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction
involving the Company or any Company Subsidiary other than the
transactions contemplated by this Agreement.
(ii) Neither the Board of Directors of the Company nor any
committee thereof shall (i) withdraw or modify, or propose to withdraw
or modify, in a manner adverse to the Buyer, the approval or
recommendation by such Board of Directors or any such committee of
this Agreement or the transactions contemplated hereby, (ii) approve
or recommend, or propose to approve or recommend, any Takeover
Proposal, or (iii) enter into any agreement with respect to any
Takeover Proposal.
(iii) In addition to the obligation of the Company set forth in
paragraph (ii) above, the Company promptly shall advise the Parent and
the Buyer orally and in writing of any request for information or of
any Takeover Proposal, or any inquiry with respect to or which could
lead to any Takeover Proposal, the material terms and conditions of
such request, Takeover Proposal or inquiry and the identity of the
Person making any such request, Takeover Proposal or inquiry.
(i) Notification. Between the date hereof and the Closing Date, the
Company and the Stockholders will promptly notify the Parent and the Buyer
in writing if the Company becomes or the Stockholders become aware of any
fact or condition that causes or constitutes a material breach of any of
the representations and warranties of the Company and the Stockholders as
of the date of this Agreement, or if the Company or the Stockholders become
aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement)
cause or constitute a material breach of any such representation or
warranty had such representation or warranty been made as of the time of
occurrence or discovery of such fact or condition.
(j) Best Efforts. Between the date of this Agreement and the Closing
Date, each of (i) the Company and the Stockholders and (ii) the Parent and
the Buyer will use their respective best efforts to cause the conditions in
(S) 5 to be satisfied.
(k) Retirement Plan. Prior to the Closing Date, the Company shall
terminate its tax-qualified retirement plan (the "Qualified Plan")
effective as of the day before Closing Date.
(l) Confidentiality Agreements. Each Party agrees to terminate, and
to cause its representatives to terminate, any and all confidentiality
agreements between the Company and any of its representatives and Parent,
Buyer, or any Affiliate of Parent or Buyer, effective as of the Closing
Date.
(m) Fees of Outside Professionals. In connection with the
obligations of the Company under (S) 2(d) to deliver a preliminary
accounting of the Stockholder Expenses, the Stockholders and the Company
shall use their best efforts to cause all relevant outside service
providers to provide a final invoice reflecting all of their fees and
expenses related to this Agreement, the transactions contemplated thereby
and any incidental activities associated therewith to be submitted to the
Buyer on or prior to the Closing Date.
7. POST-CLOSING COVENANTS. The Parties agree as follows with respect to
the period following the Closing.
(a) General. In case at any time after the Closing any further
action is necessary to carry out the purposes of this Agreement, each of
the Stockholders, the Company, the Parent and the Buyer will take such
further action (including the execution and delivery of such further
instruments and documents) as any other Party reasonably may request, at
the sole cost and expense of the requesting Party (unless the requesting
Party is entitled to indemnification therefor hereunder). The Company and
the Stockholders acknowledge and agree that from and after the Closing the
Buyer will have the right but not the obligation to possession of all
documents, books, records (including copies of Tax records), agreements,
and financial data of any sort relating to the Company and the Company
Subsidiaries; provided, however, that the Company, the Company Subsidiaries
and the Stockholders shall have the right to obtain access to such
documents, books, records (including copies of Tax records), agreements,
and financial data and make photocopies thereof for a proper purpose, such
as in connection with the preparation of their tax returns.
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand in connection
with (i) any transaction contemplated under this Agreement or (ii) any
fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or
prior to the Closing Date involving the Company or the Stockholders,
each of the other Parties will reasonably cooperate with the contesting or
defending Party and his or its counsel in the contest or defense, make
available his or its personnel, and provide such testimony and access to
his or its books and records as shall be necessary in connection with the
contest or defense, all at the sole cost and expense of the contesting or
defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under (S) 8 below).
(c) Transition. The Company will use its best efforts not to take
any action that is designed or intended to have the effect of discouraging
any lessor, licensor, customer, supplier, or other business associate of
the Company and any Company Subsidiary from maintaining the same business
relationships with the Buyer after the Closing as it maintained with the
Company and any Company Subsidiary prior to the Closing.
(d) Company Information. All Company Information and all physical
embodiments thereof learned, received or developed by any Stockholder are
confidential to and are and will remain the sole and exclusive property of
the Surviving Corporation and each Stockholder hereby expressly assigns any
and all of his right, title and interest in and to the Company Information
to the Surviving Corporation. Each Stockholder will hold such Company
Information in trust and strictest confidence, and will not use, reproduce,
distribute, disclose or otherwise disseminate the Company Information or
any physical embodiments thereof and may in no event take any action
causing or fail to take the action necessary in order to prevent, any
Company Information known by such Stockholder to lose its character or
cease to qualify as Company Information. Upon request by the Buyer, each
Stockholder will promptly deliver to Surviving Corporation or Parent, as
directed, all property belonging to the Company, including, without
limitation, all Company Information (and all embodiments thereof) then in
such Stockholder's custody, control or possession. The covenants of
confidentiality set forth herein will apply on and after the date hereof to
any Company Information disclosed to or learned by such Stockholder prior
to the date hereof and will continue and be maintained by each Stockholder
(a) with respect to Confidential Information for a period of three (3)
years and (b) with respect to the Trade Secrets, so long as such remain
Trade Secrets.
(e) Contracts Requiring Consent to Change of Control.
Notwithstanding anything in this Agreement, neither this Agreement nor any
document or instrument delivered pursuant hereto shall constitute an
assignment of any claim, contract, agreement, license, lease, commitment,
sales order or purchase order or any claim or right or any benefit arising
thereunder or resulting therefrom if an attempted assignment thereof
without the consent of any other Person would constitute a breach thereof
or in any way adversely affect the rights to be assigned. Until such
consent is obtained, or if an attempted assignment thereunder would be
ineffective or would affect the rights of the Company or any affiliate
thereunder so that the Buyer would not in fact receive all such rights, the
Company and the Buyer will cooperate with each other to provide for the
Buyer the benefits of, and to permit the Buyer to assume all liabilities
under, any such claim, contract, agreement, license, lease, commitment,
sales order or purchase order, including enforcement at the request and
expense of the Buyer for the benefit of the Buyer of any and all rights of
the Company or any affiliate against a third party thereto arising out of
the breach or cancellation thereof by such third party; and any transfer or
assignment to the Buyer by the Company or any affiliate of any property or
property rights or any contract or agreement which shall require the
consent or approval of any third party shall be made subject to such
consent or approval being obtained.
(f) Tax Matters. The Buyer and the Stockholders will cooperate with
and provide each other with such information and access to books and
records as either of them may reasonably require of the other or its or
their affiliates in connection with the filing of any Company Tax Return,
including Tax Returns relating to the application of the successor employer
rules for payroll Tax purposes contained in Code (S)(S) 3121(a)(1) and
3306(b)(1), the determination of a liability for Taxes or a right to a
refund for Taxes, or the preparation for litigation or investigation of any
claim for Taxes or a right to a refund for Taxes, or the preparation for
cooperation and information shall include all relevant Company Tax Returns,
and other documents and records, or portions thereof relating to or
necessary in connection with the preparation of records, or portions
thereof relating to or necessary in connection with the preparation of such
Tax Returns or other determination of Tax liability. Each Party shall
retain all Tax Returns, schedules, workpapers, and all other materials,
records or documents until the expiration of the statute of limitations for
the taxable years to which such Tax Returns and other documents relate.
(g) Fees of Outside Professionals. The Stockholders Committee shall
pay all Stockholder Expenses within three (3) days of the Closing Date, and
in the event any such expenses have been paid by the Company, the
Stockholders shall reimburse the Company for such amount. The Stockholders
agree that they shall be jointly and severally responsible for all fees and
expenses incurred by the Stockholders arising in connection with this
Agreement or the transactions contemplated hereby for outside service
professionals that are submitted to the Parent, the Buyer or any other
Person, after the Closing Date.
(h) Insurance. For a period of twelve months from the Closing,
Parent will maintain products liability coverage, through insurance or
otherwise, such that the Stockholders will not be adversely affected by any
change in the existing coverage of the Company.
8. REMEDIES UNDER THIS AGREEMENT.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Company and the Stockholders
contained in (S)(S) 3(g)-(j) and 3(1)-(dd) of this Agreement and of the
Buyer contained in (S) 4(d)-(e) of this Agreement shall survive the Closing
and continue in full force and effect for a period of one (1) year
thereafter; and all of the other representations, warranties, covenants,
indemnities, and other agreements of the Buyer,
the Company and the Stockholders contained in this Agreement shall survive
the Closing and shall continue in full force and effect forever thereafter
subject to expiration by operation of any statutes of limitations. No
action, claim, or proceeding may be brought by any Party hereto against any
other Party resulting from, arising out of, or caused by a breach of a
representation or warranty contained herein, or the failure to perform any
covenant or other obligations hereunder, except pursuant to (S)(S) 8(b),
8(c) and 8(d) below and after the time such representation, warranty or
covenant ceases to survive pursuant to the preceding sentence, unless
written notice of such claim setting forth with specificity the basis for
such claim is delivered to the applicable Party prior to such time pursuant
to (S) 8(d) below. The Parties each acknowledge and agree that the sole and
exclusive remedy for breaches of representations, warranties and covenants
in this Agreement shall be limited to those remedies set forth in (S)(S)
8(b), 8(c), 8(d), 9(n) and 9(q) herein.
(b) Indemnification Provisions for Benefit of the Parent and the
Buyer.
(i) In the event the Company or any of the Stockholders breach
(or in the event any third party alleges facts that, if true, would
mean the Company or any of the Stockholders have breached) any of its
representations, warranties, and covenants contained in this
Agreement, and, if there is an applicable survival period pursuant to
(S) 8(a) above, provided that the Parent or the Buyer makes a written
claim for indemnification setting forth the basis for such claim
against the Company or the Stockholders pursuant to (S) 8(d) below
within such survival period, then each of the Stockholders, jointly
but not severally, agree to indemnify the Parent and the Buyer,
subject to the limitations set forth herein, from and against the
entirety of any Losses the Parent or the Buyer may suffer through and
after the date of the claim for indemnification (including any Losses
the Parent or the Buyer may suffer after the end of any applicable
survival period) resulting from, arising out of, or caused by the
breach (or the alleged breach); provided, however, that
(A) the Stockholders shall not have any obligation to
indemnify, and shall have no Liability to, the Buyer from
and against any Losses resulting from, arising out of, or
caused by the breach (or alleged breach) of any
representation, warranty, or covenant of the Company or the
Stockholders contained in (S)(S) 3(a)-(f) which exceed in
the aggregate the Purchase Price;
(B) the Stockholders shall not have any obligation to
indemnify, and shall have no Liability to, the Buyer from
and against any Losses resulting from, arising out of, or
caused by the breach (or alleged breach) of any
representation, warranty or covenant of the Company or the
Stockholders contained in (S)(S) 3(g)-(j) and 3(l)-(dd)
hereof which exceed, in the aggregate One Million Dollars
($1,000,000);
(C) the Stockholders shall not have any obligation to
indemnify, and shall have no Liability to, the Buyer from
and against any Losses resulting from, arising out of, or
caused by the breach (or alleged breach) of any
representation, warranty or covenant of the Company or the
Stockholders contained in (S) 3(k) hereof which exceed, in
the aggregate Two Million Dollars ($2,000,000); and
(D) Notwithstanding anything to the contrary contained
herein, the Stockholders, jointly but not severally, will
indemnify the Company for the amount of any tax liability
resulting from the sales tax audit currently in process, but
only to the extent Losses in respect of such audit exceed
$80,000.
(E) the Stockholders shall have no indemnification
obligation under this (S) 8(b)(i) (including all
subparagraphs hereof) other than with respect to
(S)(S) 3(a)-(f) or (S) 7(g) breaches (or alleged breaches)
until the Buyer has suffered Losses by reason thereof in
excess of One Hundred Fifty Thousand Dollars ($150,000) and
then only to the extent of the excess. Such amount shall not
reduce the aggregate cap or ceiling on the liability of the
Stockholders with respect to any indemnity for Losses
hereunder.
(ii) Notwithstanding anything to the contrary contained in the
Article 8, the Stockholders, jointly, but not severally, will
indemnify, defend and hold harmless the Buyer from and against any
Losses as a result of claims based on or arising from any liabilities
or obligations of the Company or the Stockholders; provided, however,
that any indemnification obligations under this paragraph (ii) shall
not exceed an amount equal to the Purchase Price less the Stockholder
Expenses.
(iii) Notwithstanding anything to the contrary herein contained,
the Stockholders Committee and each of the Stockholders, jointly but
not severally, will indemnify, defend and hold harmless the Buyer, its
affiliates and their officers, directors, employees and trustees, and
other similarly situated Persons, from and against any Losses arising
from or in connection with any action of the Stockholders Committee,
or failure to act on the part of the Stockholders Committee, in
connection with this Agreement or the Escrow Agreement or otherwise.
(iv) Notwithstanding anything to the contrary contained herein,
the Stockholders, jointly but not severally, will indemnify the
Company for any amounts owed to any stockholder of the Company who
exercises dissenter's rights
under the DGCL, including, without limitation, any costs, fees or
expenses associated therewith.
(v) Notwithstanding anything to the contrary contained herein, no
Stockholder shall be liable to indemnify the Buyer or the Parent under
this (S) 8(b) for any amount in excess of the portion of the Purchase
Price such Stockholder is entitled to receive under this Agreement.
(c) Indemnification Provisions for Benefit of the Stockholders.
(i) In the event the Parent or the Buyer breaches (or in the
event any third party alleges facts that, if true, would mean the
Parent or the Buyer has breached) any of their representations,
warranties, and covenants contained in this Agreement, and, if there
is an applicable survival period pursuant to (S) 8(a) above, provided
that a written claim for indemnification setting forth with
specificity the basis for such claim against or the Parent or the
Buyer pursuant to (S) 8(d) below is made within such survival period,
then the Parent and the Buyer agree to indemnify the Stockholders from
and against the entirety of any Losses (up to but not in excess of the
Purchase Price) the Stockholders may suffer through and after the date
of the claim for indemnification (including any Losses the Company or
the Stockholders may suffer after the end of any applicable survival
period) resulting from, arising out of, or caused by the breach (or
the alleged breach).
(ii) Notwithstanding anything to the contrary herein contained,
for one (1) year after the Closing Date, (i) the Buyer will indemnify,
defend and hold harmless the Stockholders from and against any Losses
as a result of claims based on or arising from any Liabilities or the
operation of the Business after the Closing Date and (ii) such
indemnification shall not be limited in amount or subject to any
deductible or cap.
(d) Method of Asserting Claims.
(i) With respect to any third-party claim (in addition to any
rights or obligations under the Escrow Agreement):
(A) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter ("Third Party
Claim") which may give rise to a claim for indemnification
against any other Party (the "Indemnifying Party") under (S) 8(b)
or (c), then the Indemnified Party shall promptly notify each
Indemnifying Party thereof in writing; provided, however, that
(subject to the applicable survival period set forth in (S) 8(a)
above) no delay on the part of the Indemnified Party in notifying
any Indemnifying Party shall relieve the Indemnifying Party from
any obligation hereunder unless
(and then solely to the extent) the Indemnifying Party thereby is
prejudiced.
(B) The Indemnifying Party shall have fifteen (15) days
after receipt of notice from the Indemnified Party of a Third
Party Claim ("Notice Period") to notify the Indemnified Party in
writing (1) whether or not the Indemnifying Party disputes such
Third Party Claim specifying in reasonable detail the basis for
such dispute, and (2) notwithstanding any such dispute, whether
or not it desires, at its sole cost and expense, to defend the
Indemnified Party against such Third Party Claim in accordance
with the provisions hereof.
(C) If the Indemnifying Party disputes the Third Party Claim
or the amount thereof (whether or not the Indemnifying Party
elects to defend the Indemnified Party against such
Indemnification Claim), such dispute shall be resolved by
arbitration in accordance with (S) 8(e) hereof. Pending the
resolution of any such dispute, the Third Party Claim shall not
be settled without the prior written consent of the Indemnified
Party, such consent not to be unreasonably withheld.
(D) If the Indemnifying Party notified the Indemnified Party
within the Notice Period that the Indemnifying Party will defend
the Indemnified Party against the Third Party Claim, then except
as hereinafter provided, the Indemnifying Party will have the
right to defend the Indemnified Party against the Third Party
Claim with counsel of its choice reasonably satisfactory to the
Indemnified Party so long as the Indemnifying Party (1)
diligently conducts the defense of such Third Party Claim, and
(2) shall not enter into a settlement, or entry of a final
judgment or final award with respect to, any such Third Party
Claim without the consent of the Indemnified Party unless such
settlement, judgment or award requires no more than a monetary
payment for which the Indemnified Party is fully indemnified and
does not involve any other matters binding upon the Indemnified
Party.
(E) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with (S)
8(d)(i)(D) above, (1) the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the
defense of the Third Party Claim, unless the named parties of any
proceeding relating to such Third Party Claim (including any
impleaded parties) include both the Indemnifying Party and the
Indemnified Party and representation of both parties by the same
counsel would be inappropriate due to actual or potential
differing interests between them, in which event the Indemnifying
Party shall not be entitled to direct the defense of such action
and the fees and expenses of the Indemnified Party shall be at
the expense of the Indemnifying Party,
and (2) the Indemnified Party will not consent to the entry of
any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably).
(F) If the Indemnifying Party elects not to defend the
Indemnified Party against the Third Party Claim, whether by
giving the Indemnified Party timely notice as provided above or
otherwise, then the amount of any such Third Party Claim, or if
the same is defended by the Indemnifying Party or the Indemnified
Party, then that portion thereof as to which such defense is
unsuccessful or the amount of such settlement, final judgment
or final award described in (S) 8(d)(i)(D), in each case, shall
be conclusively deemed to be a liability of the Indemnifying
Party hereunder, unless the Indemnifying Party shall have
disputed its liability to the Indemnified Party as provided in
(S) 8(d)(i)(B), in which event such dispute shall be resolved as
provided in (S) 8(e) hereof.
(ii) If the Indemnification Claim involves a matter other than a
Third Party Claim, the Indemnified Party shall promptly send a notice
of the Indemnification Claim to the Indemnifying Party. Indemnifying
Party shall have fifteen (15) days after receipt from the Indemnified
Party of notice of the Indemnification Claim to dispute the
Indemnification Claim in writing specifying in reasonable detail the
basis for such objection. Failure to timely so dispute the
Indemnification Claim shall constitute acceptance of the claim for
indemnification by the Indemnifying Party. If notice of the dispute
is timely made by the Indemnifying Party and the dispute is not
resolved within twenty (20) days from the date the Indemnifying Party
received notice of the dispute, such dispute shall be resolved in
accordance with (S) 9(q). Claims accepted by an Indemnifying Party,
resolved by arbitration or resolved by mutual agreement shall be paid
as and when due, subject to the limitations set forth in this (S) 8,
and, with respect to claims under the Pledge and Escrow Agreement, in
accordance with the procedures set forth therein.
(e) Determination of Losses. The Parties shall take into account the
time cost of money (using the Applicable Rate, net of the tax cost arising
with respect to the payment of such interest, as the interest rate) in
determining Losses for purposes of this (S) 8. All payments under this (S)
8 shall be deemed adjustments to the Purchase Price.
9. MISCELLANEOUS.
(a) Press Releases and Public Announcements. Neither the Buyer, the
Company nor the Stockholders shall issue any press release or make any
public announcement relating to the subject matter of this
Agreement without the prior written approval of the other parties hereto.
Notwithstanding the foregoing, the Buyer, upon prior notice to the Company,
may make any public disclosure it believes in good faith is required or
permitted by applicable law or any listing or trading agreement concerning
its publicly-traded securities.
(b) No Third-Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(c) Entire Agreement. This Agreement constitutes the entire
agreement between the Parties and supersedes any prior understandings,
agreements, or representations by or between the Parties, written or oral,
to the extent they related in any way to the subject matter hereof.
(d) Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement
or any of its rights, interests, or obligations hereunder without the prior
written approval of the other Parties; provided, however, that the Buyer
may (i) assign any or all of its rights and interests hereunder to one or
more of its affiliates and (ii) designate one or more of its affiliates to
perform its obligations hereunder (in any or all of which cases the Buyer
nonetheless shall remain responsible for the performance of all of its
obligations hereunder).
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument. A facsimile copy of a
signature shall be deemed an original and any person may rely upon a
facsimile copy of a signature in determining the validity of the actions
taken by the parties to this Agreement.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and
then two business days after) it is sent by registered or certified mail,
return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to the Company or the Stockholders:
Photometrics, Ltd. Copy to: Xxxxx & Xxxxxx L.L.P.
0000 X. Xxxxxxxxx Xxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000 Xxxxxxx, Xxxxxxx 00000-0000
(000)000-0000 (000) 000-0000
Attn: Xxxx Xxxxxxxx Attn: Xxxxx Xxxxxxxx, Esq.
Copy to:
Xxxxxxx Xxxxxx
Columbine Liquidating Trust
0000 Xxxxx Xxxxxx #000
Xxxxxxxxx, Xxxxxxxx 00000
If to the Buyer: Copy to:
Xxxxxxx X. Key Xxxxxxx X. Xxxxx, Esq.
Xxxxx Industries, Inc. Xxxxx Industries, Inc.
000 Xxx Xxxxxx Xxxx 000 Xxx Xxxxxx Xxxx
Xxxxxx, Xxxxxxx 00000 Xxxxxx, Xxxxxxx 00000
(000) 000-0000 (000) 000-0000
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other Party notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule (whether
of the State of Arizona or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
Delaware.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
each of the Buyer, the Company and the Stockholders. No waiver by any Party
of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or
enforceability of the offending term or provision in any other situation or
in any other jurisdiction.
(k) Expenses. Except as otherwise may be required under (S) 9(q)
hereof: (i) the Buyer and each of the Stockholders will bear its (his) own
costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby,
and (ii) the Stockholders shall bear all such expenses incurred by their
affiliates.
(l) Construction. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
The word "including" shall mean including without limitation. The Parties
intend that with respect to each representation, warranty, and covenant
contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in
breach of the first representation, warranty, or covenant.
(m) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
(n) Specific Performance. Each of the Parties acknowledges and
agrees that the other Party would be damaged irreparably in the event any
of the provisions of this Agreement are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, each of the
Parties agrees that the other Party shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in
any action instituted in any court of the United States or any state
thereof having, in accordance with the terms of this Agreement,
jurisdiction over the Parties and the matter, in addition to any other
remedy to which it may be entitled, at law or in equity, and the obligation
of the Parties to arbitrate disputes as provided in paragraph (p) below
shall not be applicable to any action for injunction or other equitable
remedies.
(o) Submission to Jurisdiction. Subject to (S) 9(q) hereof, each of
the Parties submits to the jurisdiction of any state or federal court
sitting in Arizona in any action or proceeding arising out of or relating
to this Agreement and agrees that all claims in respect of the action or
proceeding may be heard and determined in any such court. Each Party also
agrees not to bring any action or proceeding arising out of or relating to
this Agreement in any other court. Each of the Parties waives any defense
of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety, or other security that might be
required of any other Party with respect thereto. Each Party appoints The
Xxxxxxxx-Xxxx
Corporation System, Inc. (the "Process Agent") as his or its agent to
receive on is or its behalf service of copies of the summons and complaint
and any other process that might be served in the action or proceeding. Any
Party may make service on any other Party by sending or delivering a copy
of the process to the Party to be served at the address and in the manner
provided for the giving of notices in (S) 9(h) above. Each Party agrees
that a final judgment in any action or proceeding so brought shall be
conclusive and may be enforced by suit on the judgment or in any other
manner provided by law or in equity.
(p) Arbitration.
(i) Except as expressly provided elsewhere in this Agreement, any
controversy or claim arising out of or relating to this Agreement or
the relationship, rights, duties and obligations of the parties
hereto, or the breach hereof, shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association (the "AAA") as such rules may be modified
herein or as otherwise agreed by the parties in such controversy. The
forum for arbitration shall be Phoenix, Arizona and the governing law
for such arbitration shall be the laws of the State of Arizona.
(ii) Following thirty (30) days' notice by any Party of intention
to invoke arbitration, any dispute arising under this Agreement and
not mutually reserved within such thirty (30) day period shall be
determined by a single arbitrator upon which the parties agree, or, if
the parties cannot agree on a single arbitrator within five (5)
business days following such thirty (30) day period, then by a board
of three (3) arbitrators, which arbitrator(s) shall be selected for
each such controversy so arising hereunder. If it is necessary to
proceed with a board of three (3) arbitrators in order to resolve any
controversy arising hereunder, then either Party to the arbitration
proceeding may apply to the AAA for the appointment of arbitrators to
be selected by the parties to the arbitration from a list of ten (10)
qualified potential arbitrators supplied by AAA, which shall include a
resume of qualifications, background and experience. Each arbitrator
must have had at least five (5) years experience in the area of the
issue proposed for arbitration. For a period of fifteen (15) days
after the AAA list is delivered to a Party, such Party shall have the
right to strike three names from the list of arbitrators and the AAA
shall pick three arbitrators from the names not stricken, who shall be
the arbitrators hereunder. Any Party who is unable or unwilling to so
strike a name timely shall forfeit his right to participate in the
selection process. If a selected arbitrator is unable or unwilling to
act, or if for any other reason an appointment of the requisite number
of arbitrators cannot be made from the list submitted to the parties
by the AAA, then the AAA may be requested to submit another list of
potential arbitrators and the same procedures shall apply. If the
arbitrators are not appointed from the second list submitted by AAA,
then any Party, on behalf of all the parties, may request such
appointment by the United States District Judge for the Federal
District. In the event of any subsequent withdrawal, by death,
incapacity or resignation, of an arbitrator, the AAA may be
requested to supply a list of three qualified arbitrators and each
Party shall have the right to strike one name from the list and the
arbitrator not stricken shall be the replacement arbitrator; if, for
any reason, more than one arbitrators name remains on the list, then
the replacement arbitrator shall be chosen by AAA.
(iii) The arbitrator or arbitrators shall be guided, but not
bound, by the Federal Rules of Evidence and by the discovery rules of
the Federal Rules of Civil Procedure. Any discovery shall be limited
to information directly relevant to the controversy or claim in
arbitration. The arbitrators shall determine the matters submitted to
it pursuant to the provisions of this Agreement tend render a decision
thereon no later than thirty (30) days after such board (or single
arbitrator, as the case may be) has been appointed.
(iv) The action of the sole arbitrator, or of a majority of the
members of the board of arbitrators, as the case may be, shall govern
and their decisions in writing shall be final and binding on the
parties hereto. Each Party shall be responsible for the payment of
its own expenses in connection with the arbitration (including costs
and expenses of its officers, employees, agents and attorneys). All
arbitration fees and expenses shall be shared equally by the parties,
pending the arbitrator's final assessment and allocation of such fees
and expenses. The arbitrators' decision may be enforced in the United
States District Court for the District of Arizona in Phoenix.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the
date first above written.
THE PARENT
Xxxxx Industries, Inc.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
THE BUYER
Xxxxx Acquisition Corp.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
THE COMPANY
Photometrics, Ltd.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Xxxx Xxxxxxxx, Xxxxxxx Xxxxxxxx and Xxxxxxx
Xxxxxx, and each of them, his true and lawful attorneys-in-fact and agents, each
with full power of substitution and resubstitution, for him and in his name,
place and xxxxx, in any and all capacities, to sign any and all amendments, to
this Agreement, to file the same, with exhibits thereto and other documents in
connection therewith, with any requisite governmental authority, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that each of said attorneys-in-fact and agents or
their substitute or substitutes may lawfully do or cause to be done by virtue
hereof.
Each of the undersigned Stockholders have executed this Agreement on the
date first above written.
STOCKHOLDERS
----------------------------------------
Xxxxxxx X. Xxxxxx
Arizona Growth Partners
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
----------------------------------------
Xxxx X. Xxxxxxxx
Columbine Trust
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Xxxxx Venture Partners, L.P.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
--------------------------------------
Xxxxxxx X. Xxxxx
--------------------------------------
Xxxxx Xxxxxxxxxxx
--------------------------------------
Xxxxxx X. Xxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxxx
--------------------------------------
Xxxx X. Xxxxxxx
--------------------------------------
Xxxxxxx Xxxxxx
