Exhibit 2.1
ASSET PURCHASE AGREEMENT
dated September 30, 1999
BY AND AMONG
TOP SOURCE AUTOMOTIVE, INC.
TOP SOURCE TECHNOLOGIES, INC.
and
ONKYO AMERICA, INC.
This ASSET PURCHASE AGREEMENT has been entered into as of September 30,
1999 by and among ONKYO AMERICA, INC., an Indiana corporation ("Purchaser"), TOP
SOURCE TECHNOLOGIES, INC., a Delaware corporation ("Parent"), and TOP SOURCE
AUTOMOTIVE, INC., a Florida corporation ("Seller").
ARTICLE I.
RECITALS
1. Seller engages in the business of the design, assembly and sale of
overhead mounted speaker systems installed in vehicles on an original equipment
manufacturer and after-market basis (the "OHSS") and operates an innovative
sound laboratory and assembly facility in Troy, Michigan from which it assembles
the OHSS and creates and assembles custom designs for other sound systems (the
OHSS business and such other designs being sometimes collectively referred to
hereafter as the "Business").
2. Of the 1,000 authorized, issued and outstanding common shares of
Seller, Parent owns of record and beneficially 801 shares; NCT Audio Products,
Inc., and/or its parent Noise Cancellation Technologies, Inc. (together, "NCT"),
collectively own of record and, to the best of the knowledge of Parent and
Seller, beneficially, 150 shares; and Purchaser owns of record and beneficially
49 shares.
3. Purchaser desires to purchase the Business and substantially all of
the assets of Seller (and certain patent rights related to the Business owned by
Parent), and Parent and Seller desire to sell the Business and such assets to
Purchaser, in each case upon the terms and subject to the conditions set forth
in this Agreement.
In consideration of the foregoing and of the respective
representations, warranties, covenants, and agreements herein contained, and
intending to be legally bound, the parties hereto agree as follows:
ARTICLE II.
DEFINITIONS
As used in this Agreement, the following terms have the meanings
indicated below:
"Accounts Receivable" means all accounts and notes receivable, rights
to refunds, and deposits and prepaid items or credits, of Seller, excluding
inter-company items receivable from Parent and other affiliates of Seller.
"Acquired Assets" means (i) the Accounts Receivable, Assigned
Contracts, Equipment and Machinery, Files and Records, Intangible Assets,
Intellectual Property, Inventory, Licenses and Permits (to the extent
transferable by Seller), Leased Real Property, and all other assets of Seller
(excluding inter-company items and cash) as of the Closing Date (including all
such items shown or reflected in the August 31, 1999 Balance Sheet of Seller,
with additions thereto, net of dispositions in the ordinary course of business,
since the Balance Sheet date), of every kind, nature, character, and
description, whether real, personal or mixed, whether accrued, contingent or
other, and wherever situated, and whether or not reflected in any financial
statement of Seller, and (ii) the Parent Intellectual Property.
"Agreement Balance Sheet" has the meaning specified in Section 6.06.
"Assigned Contracts" means the Real Property Leases, Purchase Orders,
Sales Orders, those Equipment and Machinery leases and agreements specified in
Schedule 6.12, and those Other Contracts specifically designated as Assigned
Contracts on Schedule 6.22.
"Assumed Liabilities" has the meaning specified in Section 3.02.
"Balance Sheet Date" means the date of the Agreement Balance Sheet.
"Bank" shall mean LaSalle Bank National Association, Indianapolis,
Indiana, in its capacity as senior lender to Purchaser.
"Business" has the meaning specified in the Recitals hereto.
"Business Day" means any day other than Saturday, Sunday, and any other
day on which there is no trading on the floor of the New York Stock Exchange.
"Cash Purchase Price" has the meaning specified in Section 4.01(a)(i).
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liabilities Act of 1980, as amended.
"Claim" has the meaning specified in Section 11.01.
"Closing" has the meaning specified in Article V.
"Closing Date" has the meaning specified in Article V.
"COBRA" means Title X of the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended.
"Code" means the Internal Revenue Code of 1986, as amended.
"Computer Software" means all computer source codes, programs, data
files, and other software (including both applications software and operating
software), including all machine readable code, printed listings of code,
documentation, and related property and information relating to the Business,
including licenses and other rights to use Computer Software of third parties.
"Counsel for Purchaser" shall mean Ice Xxxxxx Xxxxxxx & Xxxx.
"Counsel for Seller" shall mean Xxxxxxx Xxxxxx, P.A..
"Employee Plans" has the meaning specified in Section 6.17(c).
"Environmental Claims" means all accusations, allegations,
investigations, warnings, notice letters, notices of violations, Liens, orders,
claims, demands, suits or administrative or judicial actions for any injunctive
relief, fines, penalties, or any damage, including without limitation
personal injury, property damage (including any depreciation of property
values), lost use of property, natural resource damages, or environmental
response costs arising out of Environmental Conditions or under Environmental
Requirements.
"Environmental Conditions" means the state of the environment,
including natural resources (e.g., flora and fauna), soil, surface water, ground
water, any present or potential drinking water supply, subsurface strata or
ambient air, relating to or arising out of the use, handling, storage,
treatment, recycling, generation, transportation, spilling, leaking, pumping,
pouring, injecting, emptying, discharging, emitting, escaping, leaching,
dumping, disposal, release, or threatened release of Hazardous Materials,
whether or not yet discovered which could or does result in Environmental
Claims. With respect to Environmental Claims by third parties, Environmental
Conditions also include the exposure of persons to Hazardous Materials at the
work place or the exposure of persons or property to Hazardous Materials
migrating or otherwise emanating from, to, or located at, under, or on the Real
Property and/or Leased Real Property.
"Environmental Expenses" means any liability (including strict
liability), loss, cost, penalty, fine, punitive damages, encumbrance, or expense
relating to any Environmental Claim or Environmental Conditions, or incurred in
compliance with any Environmental Requirements, including without limitation the
costs of investigation, cleanup, remedial, monitoring, corrective, or other
responsive action, compliance costs, settlement costs, lost property value, and
related legal and consulting fees and expenses.
"Environmental Requirements" means all present and future laws, rules,
regulations, ordinances, codes, policies, guidance documents, approvals, plans,
authorizations, licenses, permits issued by all government agencies,
departments, commissions, boards, bureaus, or instrumentalities of the United
States, all states and political subdivisions thereof, and any foreign
government body, and all judicial, administrative, and regulatory decrees,
judgments, and orders relating to human health, pollution, or protection of the
environment (including ambient air, surface water, ground water, land surface,
or surface strata), including (i) laws relating to emissions, discharges,
releases, or threatened releases of Hazardous Materials, and (ii) laws relating
to the identification, generation, manufacture, processing, distribution, use,
treatment, storage, disposal, recovery, transport, or other handling of
Hazardous Materials, (iii) CERCLA, the Toxic Substances Control Act, as amended;
the Hazardous Materials Transportation Act, as amended, RCRA, the Clean Water
Act, as amended, the Safe Drinking Water Act, as amended; the Clean Air Act, as
amended, the Atomic Energy Act of 1954, as amended, and the Occupational Safety
and Health Act, as amended; and (iv) all analogous laws promulgated or issued by
any federal, state, or other governmental authority or foreign governmental
body.
"Equipment and Machinery" means (i) all personal property owned by the
Seller, including without limitation the equipment, machinery, furniture,
fixtures and improvements, computer hardware, tooling, spare parts, supplies,
and vehicles owned or leased by Seller (including all leases of such property),
(ii) any rights of Seller to warranties applicable to the foregoing (to the
extent assignable), and licenses received from manufacturers and sellers of any
such item, and (iii) any related claims, credits, and rights of recovery with
respect thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.
"Escrow Agent" shall mean a mutually agreeable entity or other person
who agrees to act as Escrow Agent under the Escrow Agreement.
"Escrow Agreement" shall mean the Escrow Agreement to be executed and
delivered among Purchaser, Seller, Parent and the Escrow Agent on or before
October 31, 1999, substantially in the form set forth as Exhibit 2.01 hereto.
"Escrow Property" shall mean the $500,000 cash to be paid by Purchaser
to the Escrow Agent upon maturity of the Note.
"Files and Records" means all files and records of Seller relating to
the Business, whether in hard copy or magnetic or other format including
customer and supplier lists and records; equipment maintenance records;
equipment warranty information; plant plans, specifications and drawings; sales
and advertising material; computer software; technical and research analyses;
engineering, sales, marketing and other studies, data and plans; bid
information; quality assurance records; and records relating to those employees
who may become employed by Purchaser following the Closing.
"Hazardous Materials" means (i) any substance that is or becomes
defined as a "hazardous substance", "hazardous waste", "hazardous materials",
pollutant, or contaminant under any Environmental Requirements, including
CERCLA, XXXX, RCRA, and any analogous federal, state, local or foreign law; (ii)
petroleum (including crude oil and any fraction thereof); and (iii) any natural
or synthetic gas (whether in liquid or gaseous state).
"Intangible Assets" means all intangible personal property rights of
Seller, including all rights on the part of Seller to proceeds of any insurance
policies and all claims on the part of Seller for recoupment, reimbursement, and
coverage under any insurance policies; all rights of Seller in and to all
telephone, facsimile, email, and telex (if any) numbers and telephone and other
directory listings utilized in connection with the Business; and all industry,
vendor and other certifications and endorsements utilized in connection with the
Business, including without limitation the Seller's Certification No. 98-112
regarding ISO 9001/QS-9000 compliance.
"Indemnified Party" has the meaning specified in Section 11.03(a).
"Indemnifying Party" has the meaning specified in Section 11.03(a).
"Intellectual Property" means all United States and foreign patents and
patent applications (whether utility, design, or plant product), registered and
unregistered trademarks, service marks, trade names including the names "Top
Source Automotive, Inc.," "Top Source Automotive" and "Top Source," logos,
brands, business identifiers, private labels, trade dress (including all
goodwill and reputation symbolized by any of the foregoing), rights of
publicity, processes, industrial designs, inventions, registered and
unregistered copyrights and copyright applications, product formulas, know-how,
trade secrets, and Computer Software, and all rights with respect to the
foregoing, and all other proprietary rights that Seller owns, licenses, or
possesses the right to use with respect to the Acquired Assets or in the conduct
of the Business.
"Inventory" means all the finished goods, raw materials, work in
progress, repair and replacement parts, and supplies owned by Seller (including
goods in transit, consigned inventory, inventory sold on approval and rental
inventory) and all rights of Seller to warranties received from its suppliers
with respect to the foregoing (to the extent assignable), and related claims,
credits, and rights of recovery with respect thereto.
"Leased Real Property" has the meaning specified in Section 6.11.
"Licenses and Permits" means all governmental licenses, permits,
franchises, authorizations, and approvals that are held by Seller and relate to
the conduct of the Business.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien
(statutory or other), option, easement, right-of-way, charge, or conditional
sale agreement.
"Material Contracts" means all contracts and other arrangements,
whether oral or written, to which Seller is a party as to which the breach,
non-performance, failure to renew, or cancellation could have a Material Adverse
Effect on the Business, financial condition, assets, or operations of Seller.
"Material Adverse Effect," when used with respect to Seller or
Purchaser, means a material adverse effect on the assets, operations, business,
prospects, or financial condition of Seller or Purchaser, as the case may be.
"Mortgage" means the second mortgage in the form attached as
Exhibit 4.01(c).
"NationsCredit" means Banc of America Commercial Finance
Corporation, Commercial Funding Division, f/k/a NationsCredit
Commercial Corporation.
"NationsCredit Debt" means all indebtedness and obligations of Seller
under or in respect of the Loan and Security Agreement dated July 1, 1997
between Seller and NationsCredit.
"Note" means the Non-Transferable Secured Subordinated Promissory Note
defined by Section 4.01(a).
"Other Contracts" means all leases for Equipment and Machinery or other
personal property (whether Seller is lessor or lessee), indentures, loan
agreements, security agreements, partnership and/or joint venture agreements,
license agreements, service contracts, employment and consulting agreements,
suretyship contracts, reimbursement agreements, distribution agreements, and all
other contracts, commitments, and agreements to which Seller is a party, but
excluding Purchase Orders and Sales Orders.
"Parent Intellectual Property" means all United States and foreign
patents and patent applications (whether utility, design, or plant product),
registered and unregistered trademarks, service marks, trade names, logos,
brands, business identifiers, private labels, trade dress (including all
goodwill and reputation symbolized by any of the foregoing), rights of
publicity, processes, industrial designs, inventions, registered and
unregistered copyrights and copyright applications, product formulas, know-how,
trade secrets, and Computer Software, and all rights with respect to the
foregoing, and all other proprietary rights that Parent owns, licenses, or
possesses the right to use, with respect to the Acquired Assets or in the
conduct by the Seller of the Business.
"Person" means any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust, or
unincorporated organization, or any governmental agency, officer, department,
commission, board, bureau, or instrumentality thereof.
"Personnel" means the officers, employees and/or agents of Seller
including leased employees.
"Policies" and "Policy" have the meanings specified in Section 6.21.
"Preferred Shares" means the 100 shares of Series A Convertible
Redeemable Nonvoting Preferred Shares of Purchaser which may be issued in
the name of Parent.
"Purchase Orders" means all of Seller's outstanding purchase orders,
contracts, or other commitments to suppliers of goods and services for
materials, supplies, services, or other items used in the Business.
"Purchase Price" has the meaning specified in Section 4.01.
"Purchaser" has the meaning specified in the first paragraph hereof,
except that the designated Purchaser may assign its rights and obligations
hereunder to a wholly-owned subsidiary of the designated Purchaser on or before
the Closing Date, in which event Purchaser shall be deemed to refer (unless the
context otherwise requires) to the Purchaser and the subsidiary, jointly and
severally.
"Repurchased Shares" means the 49 shares of common stock of Seller
owned by Purchaser.
"RCRA" means the Resource Conservation and Recovery Act, as amended.
"Real Property Leases" has the meaning specified in Section 6.11.
"XXXX" means the Superfund Amendments and Reauthorization Act, as
amended.
"Sales Orders" means all Seller's sales orders, contracts, or other
commitments to purchasers of goods and services provided by Seller.
"Second Note" means a $1,000,000 note in the form attached as
Exhibit 4.01(B).
"Seller" has the meaning specified in the first paragraph hereof.
"Shareholders" has the meaning specified in Section 6.26.
"Taxes" means all federal, state, local, or foreign taxes (including
excise taxes, occupancy taxes, employment taxes, unemployment taxes, ad valorem
taxes, custom duties, transfer taxes, and fees), levies, imposts, fees,
impositions, assessments, or other governmental charges of any nature imposed
upon a Person including all taxes or governmental charges imposed upon any of
the personal properties, real properties, tangible or intangible assets, income,
receipts, payrolls, transactions, stock transfers, capital stock, net worth or
franchises of a Person (including all sales, use, withholding or other taxes
which a Person is required to collect and/or pay over to any government), and
all related additions to tax, penalties or interest thereon.
"Tax Returns" means any return, report, information return, or other
document (including any related or supporting information) filed or required to
be filed with any governmental agency, department, commission, board, bureau, or
instrumentality in connection with the determination, assessment, collection, or
administration of any Taxes.
ARTICLE III.
PURCHASE OF ACQUIRED ASSETS,
ASSUMPTION OF ASSUMED LIABILITIES,
AND ISSUANCE OF PREFERRED STOCK
Section 3.01. Purchase of Assets. Subject to the terms and conditions
herein set forth, on the Closing Date, Seller (and Parent as to Parent
Intellectual Property) shall sell, convey, transfer, assign, and deliver to
Purchaser, and Purchaser shall purchase, acquire, and accept from Seller and
Parent, all of the respective rights, titles, and interests of Seller and Parent
in and to the Acquired Assets. The sales, conveyances, transfers, assignments,
and deliveries by Seller and Parent of the Acquired Assets, as herein provided,
shall be effected on the Closing Date, free and clear of all Liens (except
immaterial statutory liens), by appropriate deeds, bills of sale, endorsements,
assignments, and other instruments of transfer and conveyance reasonably
satisfactory in form and substance to Purchaser.
Section 3.02. Assumption of Specified Liabilities. Subject to the terms
and conditions herein set forth, from and after the Closing, Purchaser shall
assume and Purchaser shall pay, perform, and discharge, when due, only the
following liabilities and obligations of Seller:
(a) trade payables of Seller (other than any inter-company
payables to Parent or its other affiliates) reflected on the
Balance Sheet or incurred after the Balance Sheet Date in the
ordinary course of business consistent with past custom and
practice (including quantity, frequency and payment and other
terms of trade) ("Trade Payables")
(b) Seller's obligations arising after the Closing Date under the
Assigned Contracts
Purchaser shall not assume, pay, perform, or discharge any other liabilities or
obligations, of Parent or Seller, including without limitation:
(a) Seller's NationsCredit Debt
(b) Seller's liabilities, contingent or otherwise, to NCT
(c) Seller's obligations to Personnel or to any organization that
provides Personnel to Seller
(d) Seller's obligations to commissioned representatives of Seller
The liabilities and obligations to be assumed by Purchaser pursuant
to the foregoing provisions of this Section 3.02 are referred to herein as the
"Assumed Liabilities." Without limiting or otherwise affecting the foregoing
provisions of this Section 3.02, and except as otherwise provided in this
Agreement, all liabilities and obligations in respect of the conduct of the
Business after the Closing or the ownership of the Acquired Assets after the
Closing shall be the responsibility of, and shall be paid and discharged by,
Purchaser.
Section 3.03. Subsequent Documentation . At any time and from time to
time after the Closing Date, Parent and Seller shall, upon the request of
Purchaser, and Purchaser shall, upon the request of Seller or Parent, promptly
execute, acknowledge, and deliver, or cause to be executed, acknowledged, and
delivered, such further instruments and other documents, and perform or cause to
be performed such further acts, as may be reasonably required to evidence or
effectuate the sale, conveyance, transfer, assignment, and delivery hereunder of
the Acquired Assets, the assumption by Purchaser of the Assumed Liabilities, the
performance by the parties of any of their other respective obligations under
this Agreement, and to carry out the purposes and intent of this Agreement.
Section 3.05. Assignment of Contracts. To the extent that the
assignment of all or any portion of any of the Assigned Contracts shall require
the consent of any other party thereto, the execution of this Agreement shall
not constitute an agreement to assign the same if an attempted assignment would
constitute a breach thereof. Prior to the Closing or as soon thereafter as
reasonably practicable, Seller shall use its best efforts to obtain the consent
of each such other party to the assignment thereof to Purchaser; provided, that
no modification of any such Assigned Contract shall be made without Purchaser's
prior written consent.
ARTICLE IV
PURCHASE PRICE
Section 4.01. Purchase Price. In addition to assuming the Assumed
Liabilities, Purchaser shall:
(a) (i) pay Seller, as the purchase price for the Acquired Assets of Seller,
$2,500,000 ("Cash Purchase Price"), and (ii) issue and deliver to Seller
its Non-Transferable Secured Subordinated Promissory Note (subordinated to
Purchaser's indebtedness to the Bank) in the principal amount of $6,500,000
in the form attached hereto as Exhibit 4.01(a) (the "Note") and (iii)
deliver to Seller a Security Agreement that grants Seller a security
interest (junior only to a security interest in the same and other
collateral that Purchaser has granted to the Bank) in the Accounts
Receivable to be acquired at Closing from Seller and future accounts
receivable generated by the Business, in the form attached hereto as
Exhibit 4.01(b) (the "Security Agreement"); and (iv) issue and deliver to
Seller a Mortgage in the form attached as Exhibit 4.01(c).
(b) issue or transfer to Parent, as the purchase price for the Parent
Intellectual Property and in consideration of Parent's agreement to vote
its shares of Seller's common stock favorably on the question of approval
of Seller's sale of the Acquired Assets to Purchaser, (i) all of
Purchaser's right, title and interest in 49 shares of common stock of
Seller presently owned by Purchaser (the "Repurchased Shares"), for which
Parent shall pay to Purchaser $500,000, and (ii) the Second Note which may
be paid in cash or through the issuance of Preferred Shares. In the event
Purchaser elects to issue Preferred Shares, Purchaser shall issue in the
name of the Parent certificate(s) for the Preferred Shares. The Preferred
Shares shall have the terms, conditions, rights and privileges set forth in
the form of Certificate of Amendment of Articles of Incorporation of
Purchaser attached as Exhibit 4.01(d), which Amendment shall be filed by
Purchaser with the Indiana Secretary of State under the Indiana Business
Corporation Law prior to issuance.
The Cash Purchase Price, the Note, the Second Note, the Security Agreement, the
Mortgage, the Repurchased Shares, and the Assumed Liabilities are collectively
referred to as the "Purchase Price."
Section 4.02 . Manner of Payment of Purchase Price.
(a) Purchaser shall transmit by wire transfer to Seller's account
the sum of $2,500,000 in immediately available funds in
accordance with wire transfer instructions to be provided to
Purchaser by Seller.
(b) Parent shall pay Purchaser $500,000.
(c) Purchaser shall deliver to Seller an instrument of assumption
of liabilities with respect to the Assumed Liabilities in the
form attached hereto as Exhibit 4.02(c).
(d) Purchaser shall deliver to Parent the certificate issued to
Purchaser by Seller dated July 15, 1999, representing the
Repurchased Shares, duly endorsed for transfer to Seller or
accompanied by stock powers duly endorsed, and hereby waives
any and all claims of Purchaser to dividends or distributions
in respect of the Repurchased Shares.
(e) Purchaser shall deliver to Seller the Note and Security Agreement.
(f) Purchaser shall deliver to Parent the Second Note and
Mortgage attached as Exhibits 4.01(b) and Exhibit 4.01(c).
Section 4.03. Fair Consideration. The parties acknowledge and agree
that the consideration provided for in this Article IV. represents fair
consideration and reasonable equivalent value for the sale and transfer of the
Acquired Assets and the transactions, covenants, and agreements set forth in
this Agreement, which consideration was agreed upon as the result of
arm's-length good-faith negotiations between the parties and their respective
representatives.
ARTICLE V.
CLOSING
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Ice Xxxxxx Xxxxxxx & Xxxx,
Indianapolis, Indiana, at 9:00 p.m. Eastern Standard Time, on September 30,
1999, or at such other place and time, or on such other date, as may be mutually
agreed to by the parties (the "Closing Date").
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
OF SELLER AND PARENT
As a material inducement to Purchaser to enter into this Agreement and
to consummate the transactions contemplated hereby, Seller and Parent hereby
jointly and severally represent and warrant to Purchaser as follows:
Section 6.01 . Organization . Each of Seller and Parent is a
corporation duly organized, validly existing, and in good standing under the
laws of the state of its incorporation and has all requisite corporate power and
authority to own and lease its properties and assets and to conduct its business
as now conducted.
Section 6.02 . Qualifications to Do Business. Schedule 6.02 sets forth
each jurisdiction in which Seller is qualified to do business as a foreign
corporation. Neither the nature of the business carried on by Seller, nor the
properties owned or leased by Seller, requires Seller to be qualified to do
business as a foreign corporation in any other jurisdiction, except in any case
where a failure so to qualify would not have a Material Adverse Effect on the
Seller.
Section 6.03 . Authorization and Validity of Agreement. Each of Seller
and Parent has all requisite corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the performance of Seller's and Parent's obligations
hereunder have been duly authorized by all necessary actions on the part of
Seller and Parent (including approval by the vote or consent of holders of a
legally-sufficient percentage of the outstanding shares of capital stock of
Seller in accordance with Florida law and the Articles of Incorporation and
Bylaws of Seller), and no other corporate proceedings on the part of Seller or
Parent are necessary to authorize the execution, delivery, and performance. The
tangible book value of the Acquired Assets (as they are reflected on the
Parent's consolidated financial statements in accordance with GAAP) is less than
the tangible book value of the assets associated with another business segment
of the Parent that Parent is retaining, and, for that reason and other reasons,
the Acquired Assets do not constitute "substantially all" of Parent's assets as
that term is construed under the Delaware General Corporation Law. This
Agreement has been duly executed and delivered by Seller and Parent and
constitutes their valid and binding obligation, enforceable against each of them
in accordance with its terms.
Section 6.04. No Conflict or Violation. The execution, delivery, and
performance of this Agreement by Seller and Parent do not and shall not: (a)
violate or conflict with any provision of the articles or certificate of
incorporation, bylaws, or other governing document of Seller or Parent, (b)
violate any provision of law or any order, judgment, or decree of any court or
other governmental or regulatory authority applicable to Seller, Parent or the
Business; (c) except as set forth on Schedule 6.04 hereto, violate or result in
a breach of or constitute (with due notice or lapse of time or both) a default
under any contract, lease, loan agreement, mortgage, security agreement,
indenture, or other agreement or instrument to which either of Seller or Parent
is a party or by which it is bound or to which any of its properties or assets
is subject which would prevent Seller from transferring any of the Acquired
Assets in the manner and as contemplated by and in accordance with the terms and
provisions of this Agreement or which would have a Material Adverse Effect on
the Business; or (d) result in the imposition of any Liens or restrictions on
the Business or any of the Acquired Assets.
Section 6.05. Consents and Approvals. Schedule 6.05 sets forth a list
of each consent, waiver, authorization, or approval of any governmental or
regulatory authority, or (if failure to obtain would have a Material Adverse
Effect) of any other Person, and each declaration to or filing or registration
with any governmental or regulatory authority required in connection with the
execution and delivery of this Agreement by Seller or the performance by Seller
of its obligations hereunder.
Section . 6.06 Financial Statements. Attached hereto as Schedule 6.06
are true and complete copies of (a) the balance sheets of Seller as of September
30, 1998 and 1997, and the related statements of operations for each of the
three years in the period ended September 30, 1998, together with the notes
thereto and the audit report thereon of Xxxxxx Xxxxxxxx LLP, certified public
accountants, and (b) the unaudited balance sheet of Seller as of August 31, 1999
and the unaudited comparative statements of earnings for the month and
eleven-month periods ended August 31, 1999 and 1998. The term "Agreement Balance
Sheet" means the balance sheet as of August 31, 1999 referred to above. All
financial statements described by this Section 6.06 have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods covered thereby and present fairly the financial position
of Seller as of the respective dates thereof and the results of Seller's
operations and cash flows for the periods then ended.
Section 6.07. Absence of Certain Changes or Events. Except as set forth on
Schedule 6.07, since the Balance Sheet Date, Seller has operated its Business in
the ordinary course consistent with past practice and there has not been any:
(a) material adverse change in the assets, operations, business, prospects or
financial condition of Seller;
(b) (i) except for normal periodic increases consistent with past practice,
increase in the compensation payable or to become payable to any Personnel
engaged in the Business whose total compensation for services rendered to
Seller is at an annual rate of more than $25,000, (ii) bonus, incentive
compensation, service award or other like benefit granted, made, or
accrued, contingently or otherwise, for or to the credit of any Personnel
engaged in the Business, (iii) employee welfare, pension, retirement,
profit-sharing, or similar payment or arrangement made or agreed to by
Seller for any Personnel engaged in the Business other than in the ordinary
course of business, or (iv) new employment agreement with any Personnel
engaged in the Business to which Seller is a party;
(c) addition to or modification of the Employee Plans, arrangements, or
practices described in Schedule 6.17 or Section 6.20 other than (i) the
extension of coverage to other employees of Seller who became eligible
after the Balance Sheet Date, or (ii) changes required by law;
(d) sale, assignment, or transfer outside of the ordinary course
of any business of any of the assets of Seller material to the
Business singly or in the aggregate;
(e) cancellation of any indebtedness or waiver of any rights
having a value of $25,000 or greater to Seller in the
Business, whether or not in the ordinary course of business;
(f) execution and delivery, amendment, cancellation, or
termination of any contract, license, or other instrument
material to the Business;
(g) capital expenditure or the execution of any lease or any
incurring of liability therefor in connection with the
Business involving payments in excess of $25,000 in the
aggregate;
(h) failure to repay any material obligation, except where such
failure would not have a Material Adverse Effect on the
Seller;
(i) failure to operate the Business in the ordinary course or to
preserve the Business intact, to keep available to Purchaser
the services of the Personnel and to preserve for Purchaser
the goodwill of Seller's suppliers, customers, and others
having business relations with it, except where such failure
would not have a Material Adverse Effect on the Seller;
(j) change in accounting methods or practices;
(k) revaluation by Seller of any of the Acquired Assets, including
without limitation writing off notes or Accounts Receivable in
excess of $25,000 in the aggregate;
(l) damage, destruction, or loss (whether or not covered by
insurance) adversely affecting the Acquired Assets or the
Business;
(m) mortgage, pledge, or other encumbrance, except for immaterial
statutory liens of any of the Acquired Assets;
(n) declaration, setting aside, or payment of dividends or
distributions in respect of any outstanding securities of
Seller, any redemption, purchase, or other acquisition of any
of Seller's outstanding securities, or any other payments,
including the payment of any amounts due on obligations of
Seller to its shareholders or directors;
(o) issuance or commitment to issue any shares or other equity
securities of Seller or obligations or securities convertible
into or exchangeable for shares or other equity securities of
Seller;
(p) indebtedness incurred for borrowed money or any commitment to
borrow money by Seller, or any loans (other than loans to
Parent) made or agreed to be made by Seller, or any guarantee,
assumption, endorsement of, or other assumption of an
obligation by Seller with respect to any liabilities or
obligations of any other Person;
(q) incurrence of any liability involving $25,000 or more
(excluding liability under Purchase Orders), or any increase
or change in any assumptions underlying or methods of
calculating any bad debt, contingency, or other reserves of
Seller;
(r) issuance of any Purchase Order, or group of related Purchase
Orders, for an aggregate amount in excess of $100,000;
(s) any payment, discharge, satisfaction, or compromise of any
liabilities or contingent liabilities other than the payment,
discharge, or satisfaction (i) in the ordinary course of
business and consistent with past practice of liabilities
reflected or reserved against in the Agreement Balance Sheet
or incurred in the ordinary course of business and consistent
with past practice since the Balance Sheet Date, and (ii) of
other liabilities or contingent liabilities involving $25,000
or less singly and $100,000 or less in the aggregate;
(t) agreement by Seller to do any of the foregoing; or
(u) other event or condition of any character which in any one
case or in the aggregate has had, or any event or condition
known to Seller which Seller reasonably expects will, in any
one case or in the aggregate, have a Material Adverse Effect
on the Seller.
Section 6.08. Tax Matters. Seller has timely filed all Tax Returns
required to have been filed with any federal, state, local, or foreign taxing
authority and has paid all Taxes shown to be due and payable on the Tax Returns.
Seller has set up reserves or accruals on the Agreement Balance Sheet which are
adequate for the payment of all Taxes for all periods through the Closing Date.
No taxing authority has asserted any claim against Seller for the assessment of
any additional tax liability or initiated any action or proceeding which could
result in such an assertion. Seller has made all withholding of Taxes required
to be made under all applicable federal, state, local, and foreign laws and
regulations with respect to compensation paid to employees, and the amounts
withheld have been properly paid over to the appropriate authorities. The
federal Tax Returns of Seller have been audited for or through the respective
periods set forth on Schedule 6.08 hereof, and there have been no waivers or
extensions by Seller of statutes of limitations with respect to Taxes.
Section 6.09. Absence of Undisclosed Liabilities. Except as set forth
on Schedule 6.09, Seller has no material indebtedness or liability which is not
shown on the Agreement Balance Sheet or provided for thereon, other than
liabilities incurred or accrued in the ordinary course of business since the
Balance Sheet Date.
Section 6.10. Real Property. Seller does not own any real property.
Section 6.11. Leased Real Property. Schedule 6.11 sets forth a list of
all real property in which Seller has a leasehold interest (each a "Real
Property Lease" and collectively the "Real Property Leases" and the property
covered by those Real Property Leases being referred to herein as the "Leased
Real Property"). Seller has made true and complete copies of all Real Property
Leases available to Purchaser. Except as set forth on Schedule 6.11, Seller is
not in material breach of or material default under any Real Property Lease and
no party to any Real Property Lease has given Seller written notice of or made a
claim with respect to any breach or default thereunder. Except as set forth on
Schedule 6.11, none of the Leased Real Property is subject to any sublease or
grant to any Person of any right to the use, occupancy, or enjoyment of the
property or any portion thereof. Except as set forth on Schedule 6.11, the
Leased Real Property is not subject to any Liens (other than the lien, if any,
of current property taxes and assessments not in default). The Leased Real
Property is not subject to any use restrictions, exceptions, reservations, or
limitations which in any material respect interfere with or impair the present
and continued use thereof in the ordinary course of the Business. There are no
pending or, to the knowledge of Seller, threatened condemnation proceedings
relating to any of the Leased Real Property.
Section 6.12. Equipment and Machinery.
(a) Schedule 6.12 sets forth a list of, or otherwise describes, all material
Equipment and Machinery held for or used in the Business. Except as set
forth in Schedule 6.12, Seller has good title, free and clear of all
material Liens (other than the Lien, if any, of current property taxes and
assessments not in default) to the Equipment and Machinery listed, except
for any Equipment and Machinery which has been sold or disposed of in the
ordinary course of business since the Balance Sheet Date. Seller holds good
and transferable leasehold interests in all Equipment and Machinery leased
by it, in each case under valid and enforceable leases which are listed on
Schedule 6.12.
(b) The Equipment and Machinery are in good operating condition and repair
(except for ordinary wear and tear), are sufficient for the operation of
the Business as presently conducted, and are in conformity in all material
respects with all applicable laws, ordinances, orders, regulations, and
other requirements (including applicable zoning, environmental, motor
vehicle safety, occupational safety and health laws and regulations)
relating thereto currently in effect, except where the failure to conform
would not have a Material Adverse Effect on the Seller.
Section 6.13. Accounts Receivable and Inventories.
(a) The Accounts Receivable reflected in the Agreement Balance Sheet, and all
Accounts Receivable arising since the Balance Sheet Date, represent or
shall represent bona fide claims against debtors for sales, services
performed, or other charges arising in the ordinary course of business, and
are not subject to dispute or counterclaim. To the best of the knowledge of
Seller, all Accounts Receivable, net of reserves for doubtful accounts, are
collectible in the ordinary course of business (without the necessity of
legal proceedings).
(b) Except for repair parts mandated to be held for Daimler-Chrysler and
inventory purchased pursuant to agreement with Kenwood Corporation, all
Inventory reflected on the Agreement Balance Sheet or acquired after the
Balance Sheet Date and prior to the Closing Date, consists or shall consist
of a quality and quantity usable and saleable in the ordinary course of
business. All Inventory had or shall have a commercial value at least equal
to the value shown on the Agreement Balance Sheet and is or shall be valued
in accordance with generally accepted accounting principles at the lower of
cost or market. All Inventory (other than Inventory in transit in the
ordinary course of business) is located at the Leased Real Property.
Section 6.14 . Intellectual Property. All Intellectual Property
material to the Business is listed on Schedule 6.14. Except for the Parent
Intellectual Property or as set forth on Schedule 6.14, all Intellectual
Property material to the Business is owned by Seller, free and clear of all
Liens (except for NationsCredit), and is not known by Seller to be the subject
of any challenge. Seller is not aware of any facts that would invalidate or
render any Intellectual Property unenforceable. Except as disclosed on Schedule
6.14, (a) there are no licenses now outstanding or other rights granted to third
parties under any Intellectual Property, and (b) neither Seller nor Parent is a
party to any agreement or understanding with respect to any Intellectual
Property. Except as described on Schedule 6.14, to the best of Seller's
knowledge, there are no material unresolved claims made, and there has not been
communicated to Seller the threat of any such claim, that any of the
Intellectual Property or activities of Seller in connection with the
Intellectual Property constitutes unfair competition or is in violation or
infringement of any patent, trademark, trade name, service xxxx, trade dress,
right of publicity, copyright, or registration therefor, of any other Person.
Section 6.15. Compliance with Law. Except as set forth on Schedule
6.15, Seller and its Business are in compliance with all applicable federal,
state, local, and foreign laws, ordinances, orders, rules, and regulations
including those applicable to discrimination in employment, occupational safety
and health, trade practices, competition and pricing, product warranties,
zoning, building, sanitation, employment, retirement, labor relations, product
advertising, and Environmental Requirements, other than, in any such case, any
failure to be in compliance that does not or shall not have a Material Adverse
Effect on the Seller. Seller is not in default with respect to any order, writ,
judgment, award, injunction, or decree of any court or governmental or
regulatory authority or arbitrator applicable to it or the Business, its
Personnel, or any of the Acquired Assets, or is aware that any factual
circumstances are likely to result in such default.
Section 6.16. Litigation. Except as set forth on Schedule 6.16, (a) to
the best of the knowledge of Seller, there are no claims, actions, suits,
proceedings, arbitral actions, or investigations pending or threatened against
Seller, the Business, or the Acquired Assets before or by any court or
governmental body which, if adversely determined, could have a Material Adverse
Effect on the Seller or could adversely affect the ability of Seller to
consummate the transactions contemplated by this Agreement; and (b) there are no
unsatisfied judgments against Seller, the Business, the Acquired Assets, or
Seller's activities.
Section 6.17. Employee Benefit Plans.
(a) Welfare Benefit Plans. Since October 31, 1997 the Seller and its affiliates
have not maintained or administered within the three-year period before the
Closing Date any "employee welfare benefit plan" (as defined in ERISA
Section 3): (i)to which Seller contributes or is (or since October 31, 1997
had been) obligated to contribute, or (ii) under which Seller has (or since
October 31, 1997 had) any liability, with respect to Seller's current or
former employees or any individuals providing services to Seller
(collectively the "Welfare Benefit Plans" and individually a "Welfare
Benefit Plan").
(b) Pension Benefit Plans. The Seller and its affiliates have not maintained or
administered since October 31, 1997 any "employee pension benefit plan" (as
defined in ERISA Section 3): (i) to which Seller contributes or is (or
since October 31, 1997 had been) legally obligated to contribute, or (ii)
under which Seller has (or since October 31, 1997 had) any liability with
respect to Seller's current or former employees or independent contractors
(collectively the "Pension Benefit Plans" and individually a "Pension
Benefit Plan").
(c) Employee Plans. Schedule 6.17(c) contains a list of each employee benefit
plan, program, arrangement, agreement, policy, or commitment whether
insured or uninsured, funded or unfunded, that is not a Welfare Benefit
Plan or a Pension Benefit Plan, relating to deferred compensation, bonuses,
or compensation in addition to regular pay or wages, stock options,
employee stock purchases, severance, unemployment, flexible benefits,
disability, vacation, sickness, leave of absence, fringe benefits, employee
awards, educational assistance or reimbursement, equity participation
(including but not limited to stock appreciation and phantom stock plans),
restricted stock, employee discounts, excess benefits, rabbi, secular or
vesting trust, child or dependent care, long-term and nursing home care,
and profit sharing: (i) which is sponsored, maintained, or administered by
Seller or any affiliate; (ii) to which Seller contributes, or is legally
obligated to contribute, or (iii) under which Seller has any liability with
respect to Seller's current or former employees or any individuals
providing services to Seller or any affiliate (collectively, the "Employee
Plans" and individually an "Employee Plan").
(d) Liabilities. Except as set forth in Schedule 6.17(d), there are no
liabilities of Seller or any affiliate, contingent or otherwise, accrued or
unaccrued, asserted or unasserted, with respect to any Employee Plan.
(e) Litigation. Except as set forth in Schedule 6.17(e), there is no action,
lawsuit, claim for benefits, proceeding, investigation, audit, or
arbitration pending or to the knowledge of Seller threatened as of the
Closing Date, involving any Employee Plan.
(f) Funding Instruments. All trust agreements, custodial agreements, investment
management agreements, insurance or annuity contracts (or any other funding
instruments) and any other contract or agreement relating to any Employee
Plan are legally valid and binding and in full force and effect.
(g) Affiliated Service Group. Seller is not a member of an affiliated service
group within the meaning of Code Section 414(m).
(h) Leased Employees. Except as set forth in Schedule 6.17(h), Seller does not
have any leased employees within the meaning of Code Section 414(n).
(i) Code Section 414(o) Employees. Neither Seller nor any affiliate has any
employees or individuals providing services to Seller or any affiliate
within the meaning of the regulations under Code Section 414(o).
Section 6.18. Environmental Compliance.
(a) The Leased Real Property and all operations and activities
conducted thereon (including the Business) are, and at all
times during possession thereof by Seller, have been, and to
the best knowledge of Seller at all times prior to Seller's
possession thereof were, in material compliance with all
applicable Environmental Requirements.
(b) To the knowledge of Seller, no Hazardous Material has ever
been generated, manufactured, refined, used, transported,
treated, stored, handled, disposed, transferred, produced, or
processed at or on the Leased Real Property;
(c) To the knowledge of Seller, there are no existing or potential
Environmental Claims relating to the Leased Real Property; and
Seller has not received any notification or knowledge of
alleged, actual, or potential responsibility for any disposal,
release, or threatened release at any location of any
Hazardous Material generated at or transported from the Leased
Real Property by or on behalf of Seller.
(d) To the knowledge of Seller, no underground storage tank or
other underground storage receptacle (or associated equipment
or piping) for Hazardous Materials is currently located on the
Leased Real Property, and there have been no releases of any
Hazardous Materials from any such underground storage tank or
related piping at any time prior to the Closing; and there
have been no releases (i.e., any past or present releasing,
spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, disposing, or
dumping) of Hazardous Materials at, on, to, or from the Leased
Real Property.
(e) To the knowledge of Seller, there are no PCBs or friable
asbestos located at or on the Leased Real Property.
(f) No lien or other encumbrance has been imposed on the Leased
Real Property by any federal, state, local or foreign
governmental agency or authority due to either the presence of
any Hazardous Material on or off the Real Property or Leased
Real Property or a violation of any Environmental Requirement.
(g) Seller has not received any notices issued pursuant to the
citizen's suit provision of any Environmental Requirement
relating to the Real Property or Leased Real Property or any
facility or operations thereon.
(h) Seller has not received any request for information, notice,
demand, letter, administrative inquiry, or formal or informal
complaint, or claim with respect to any Environmental
Conditions or violation of any Environmental Requirement
relating to the Real Property or Leased Real Property or any
facility or operations thereon.
Section 6.19 . Licenses and Permits. Seller has obtained all Licenses
and Permits necessary for the conduct of the Business and all Licenses and
Permits are in full force and effect, except where failure to obtain such
Licenses and Permits would not have a Material Adverse Effect. The consummation
of the transactions contemplated hereby shall not interrupt or give any
governmental authority or body the right to terminate or interrupt the
continuation of any of the Licenses and Permits or the conduct of the Business.
Seller is in compliance with all material terms, conditions, and requirements of
all Licenses and Permits, except where noncompliance would not have a Material
Adverse Effect, and no proceeding is pending or, to the knowledge of Seller,
threatened relating to the revocation or limitation of any of the Licenses or
Permits.
Section . Personnel; Labor.
(a) Schedule 6.20(a) sets forth the (i) names, titles (if any), and current
annual rate of compensation (including bonuses) as of the Closing Date of
all Personnel not subject to a collective bargaining agreement earning in
excess of $10,000 per annum, (ii) the approximate number of Seller's
employees, and (ii) all collective bargaining agreements and relationships
to which Seller is a party, identifying the parties thereto, the expiration
dates and the status thereof.
(b) Except as and to the extent set forth in Schedule 6.20(b), (i) Seller is in
compliance with all federal, state, and local laws respecting employment
and employment practices, terms, and conditions of employment and wages and
hours, and is not engaged in any unfair labor practice, except where
noncompliance would not have a Material Adverse Effect; (ii) there is no
charge or complaint of unlawful employment practice or unfair dismissal of
which Seller has received notice pending or threatened against Seller in
any court or before any federal, state, or local agency (and Seller does
not believe that there exists any reasonable basis therefor); (iii) there
is no unfair labor practice charge or complaint of which Seller has
received notice pending or threatened against Seller before the National
Labor Relations Board (and Seller does not believe that there exists any
reasonable basis therefor); (iv) there is no labor strike, dispute,
slowdown, or stoppage actually pending or, to the knowledge of Seller,
threatened against or involving Seller; (v) no attempt to organize any
group or all of the employees of Seller has been made or proposed; (vi) no
grievance or arbitration which might have a Material Adverse Effect on the
Seller or the Business is pending and, to the knowledge of the Seller, no
claim therefor exists; (vii) no private agreement restricts Seller from
relocating, closing, or terminating any of its operations or facilities;
and (viii) Seller has not experienced any work stoppage or other labor
difficulty or committed any unfair labor practice.
Section 6.21. Insurance. Schedule 6.21 lists all policies of title,
liability, fire, casualty, business interruption, workers' compensation, and
other forms of insurance collectively "Policies" and individually a "Policy")
insuring the properties, assets, or operations of Seller, setting forth the
carrier, policy number, expiration dates, premiums, description of type of
coverage, and coverage amounts. Seller has made copies of all such policies
available to Purchaser. Except as set forth in Schedule 6.21, each of the
Policies is in the amount and insures against the risks usually and customarily
carried by a Person engaged in the Business, is in full force and effect, and
Seller is not in default under any provisions of any Policy nor has Seller
received notice of cancellation of any Policy. There is no claim by Seller
pending under any Policy as to which coverage has been questioned, denied, or
disputed by the underwriters of any Policy, and Seller knows of no basis for
denial of any claim under any such policy. Seller has not received any written
notice from or on behalf of any insurance carrier issuing any Policy that
insurance rates therefor shall hereafter be substantially increased (except to
the extent that insurance rates may be increased for all similarly situated
risks) or that there shall hereafter be a cancellation or an increase in a
deductible (or an increase in premiums in order to maintain an existing
deductible) or non-renewal of any Policy. The Policies are sufficient in all
material respects for compliance by Seller with all requirements of law and with
the requirements of all Assigned Contracts.
Section 6.22. Contracts and Commitments. Schedule 6.22 lists as of the date of
this Agreement (and excluding this Agreement itself) all:
(a) employment, consulting, bonus, profit-sharing, percentage
compensation, deferred compensation, pension, welfare,
retirement, stock purchase or stock option plans and
agreements and commitments with the directors or Personnel of
Seller, excluding agreements and commitments terminable by
Seller on not more than 30 days' notice without liability or
penalty, and plans disclosed in Schedule 6.17(c);
(b) notes, mortgages, contracts, agreements, and commitments for
the repayment or borrowing of money by Seller in excess of
$25,000 in any one case, or for a line of credit including
borrowings by Seller in the form of guarantees of,
indemnification for, or agreements to acquire any obligations
of others, and all security or pledge agreements related
thereto;
(c) contracts, agreements, and commitments relating to any joint
venture, partnership, strategic alliance, or sharing of
profits or losses with any Person;
(d) contracts, agreements, and commitments containing covenants
purporting to limit the freedom of Seller or any Personnel to
compete in any business or in any geographic area;
(e) contracts, agreements, and commitments requiring payments or
distributions to any Shareholder, director, or Personnel of
Seller, or any relative or affiliate of any such Person;
(f) material contracts, agreements, licenses and commitments
relating to Computer Software;
(g) contracts, agreements, and commitments not disclosed on any
other Schedule to this Agreement and which involve or may
involve the payment or receipt by Seller (whether in payment
of a debt, as a result of a guarantee or indemnification, for
goods or services, or otherwise) of more than $25,000 per year
or $50,000 over the initial term thereof, or are otherwise
material to the Business; and
(h) contracts, agreements and commitments not made in the
ordinary course of business; and
identifies whether those plans, notes, mortgages, contracts,
agreements, licenses and commitments are Assigned Contracts. Seller has
made true and complete copies of all the foregoing plans, notes,
mortgages, contracts, agreements, and commitments available to
Purchaser.
Except as set forth in Schedule 6.22, there are no material
transactions relating to the Business presently pending or planned or initiated
or completed since the Balance Sheet Date between Seller and any Shareholder,
director, or Personnel of Seller, or any relative or affiliate of any such
Person, including any contract, agreement, or other arrangement (i) providing
for the furnishing of material services by Seller, (ii) providing for the rental
of material real or personal property by Seller, or (iii) otherwise requiring
material payments from Seller (other than for services as officers or directors
of Seller) to any such Person or corporation, partnership, trust, or other
entity in which any such Person has a substantial interest as a shareholder,
officer, director, trustee, or partner.
All of the plans, notes, mortgages, contracts, agreements, and
commitments identified in Schedule 6.22 are in full force and effect. Except as
set forth in Schedule 6.22, neither Seller, nor, to the knowledge of Seller, any
other party thereto, has breached any material provision of, or is in material
default under, the terms of, nor does any condition exist which, with notice or
lapse of time, or both, would cause Seller or, to the knowledge of Seller, any
other party to be in default under, any contract, agreement, or commitment.
Section 6.23. Customers and Suppliers. Schedule 6.23 sets forth a list
of (a) all Seller's customers whose purchases exceeded five percent of Seller's
total revenue during its last full fiscal year, showing the dollar volume of
sales to each such customer for such fiscal year, and (b) Seller's ten largest
suppliers by dollar volume and the dollar volume of purchases or leases by
Seller from each such supplier for such fiscal year. Except as set forth on
Schedule 6.23, to the knowledge of Seller, no customer or supplier listed has,
or intends to, terminate or change significantly its relationship with Seller.
Section 6.24. Absence of Certain Business Practices. Except as set
forth on Schedule 6.24, within the three years immediately preceding the date of
this Agreement, neither Seller nor any Personnel, or any other Person acting on
behalf of Seller has given or agreed to give, directly or indirectly, any gift
or similar benefit to any customer, supplier, governmental employee, or other
Person who is or may be in a position to help or hinder the Business (or assist
Seller in connection with any actual or proposed transaction relating to the
Business or the Acquired Assets), which might subject Seller to any damage or
penalty in any civil, criminal, or governmental litigation or proceeding and
which, if not continued in the future, may have a Material Adverse Effect on the
Seller .
Section 6.25. Severance Arrangements. Except as set forth in Schedule
6.25, Seller has not entered into any severance or similar arrangement in
respect of any present or former Personnel that shall result in any obligation
(absolute or contingent) of Seller or Purchaser to make any payment to any
present or former Personnel following termination of employment, including the
termination of employment effected by the transactions contemplated by this
Agreement. The consummation of the transaction contemplated by this Agreement
will not trigger any severance or similar arrangement of Seller payable by
Purchaser after the Closing.
Section 6.26. Shareholders. The issued and outstanding shares of Seller
are owned of record and beneficially by the Persons set forth on Schedule 6.26
("Shareholders"), and no other Person has any equity interest in, or right,
contingent or other, to acquire any equity interest in Seller.
Section 6.27. Year 2000 Compliance.
(a) Seller has conducted an initial review of whether Seller's systems,
processes, products, equipment and services (including its management
reporting and accounting software modules and its Chrysler-related systems)
are "Year 2000 Ready." Interim results of such review are set forth on
Schedule 6.27. "Year 2000 Ready" means that the systems, processes,
products, equipment and services of Seller (including any software embedded
in any products) ("Services"), will correctly identify, recognize and
process four-digit year dates, and the Services will: (1) continue to
function properly with regard to dates before, during and after the
transition to year 2000 including, but not limited to, the ability to roll
dates from December 31, 1999 to January 1, 2000 and beyond with no errors
or system interruptions; (2) accurately perform calculations and
comparisons on dates that span centuries; (3); accept and properly process
dates that could span more than 100 years (e.g., calculating a person's age
from their birth date and the current date); (4) properly sort and sequence
dates that span centuries; (5) understand that the year 2000 starts on a
Saturday; (6) recognize that February 29, 2000 is a valid date and that the
Year 2000 has 366 days; (7) prohibit use of date fields for any purpose
other than to store valid dates; (8) preclude the use of 12/31/99 or any
other valid date to indicate something other than a date (e.g., 12/31/99 in
a date field means "do not ever cancel"); and (9) comply with and conform
to the specifications of American National Standard ANSI X3.30-1997,
Representation of Date for Information Interchange.
(b) Seller has contracted all critical suppliers regarding their Year 2000
Readiness. To the best knowledge of the Seller, the Year 2000 Readiness of
such critical suppliers is as set forth on Schedule 6.27.
(c) Each of Purchaser and Seller has made no express or implied warranties to
any third party regarding the Year 2000 Readiness of themselves, or any of
their Services, except as set forth on Schedule 6.27.
Section 6.28. Investment Representations and Restrictions on Transfer.
(a) Parent and Seller have been advised and understand that the issuance by
Purchaser of the Preferred shares and the Note have not been registered
under the Securities Act of 1933, as amended ("Act") or the securities laws
of any state, in reliance upon Section 4(2) of the Act and Rule 506
thereunder, on the grounds that no distribution or public offering of those
securities is to be effected, and that in this connection, Purchaser is
relying in part on the representations of Parent and Seller set forth in
this Section 6.28;
(b) Parent and Seller have been further advised and understands that no public
market now exists for any of the securities issued by Purchaser and that a
public market may never exist for the securities;
(c) Parent and Seller are purchasing the Preferred Shares and the Note,
respectively, for investment purposes, for their own accounts and not with
a view to, or for sale in connection with, any distribution thereof in
violation of Federal or state securities laws;
(d) By reason of their business and financial experience, Parent and Seller
each has the capacity to protect its own interest in connection with the
transactions contemplated hereunder, including its investment in the
Preferred Shares and Note, respectively;
(e) Parent and Seller are each aware of Purchaser's business affairs and
financial condition and have each acquired sufficient information about
Purchaser to reach an informed and knowledgeable decision to acquire the
Preferred Shares and Note, respectively;
(f) Parent and Seller are each an "accredited investor" as such term is defined
in Rule 501 of Regulation D under the Act; and
(g) Parent and Seller each understands that any resale or other transfer by it
of the Preferred Shares and Note will be subject to restrictions under the
Act and applicable state securities laws, and that the certificates
representing the Preferred Shares, the Note, and any securities issuable
upon conversion of the Preferred Shares, shall bear a legend evidencing
such restriction on transfer. The legend on the Preferred Shares shall be
substantially in the following form:"The shares represented by this
certificate have been acquired for investment and have not been registered
under the Securities Act of 1933 (the "Act") or the securities laws of any
state. The shares may not be transferred by sale, assignment, pledge or
otherwise unless (i) a registration statement for the shares under the Act
and other applicable securities laws is in effect or (ii) the corporation
has received an opinion of counsel, which opinion is reasonably
satisfactory to the corporation, to the effect that such registration is
not required under the Act and other applicable securities laws."
Section 6.29. No Other Agreements to Sell Assets. Neither the
Parent nor Seller has any obligation, absolute or contingent, to
any other Person to sell any of the Acquired Assets or any of the
securities of Seller, or to effect any merger, consolidation, or
other reorganization of Seller, or to enter into any agreement with
respect thereto.
Section 6.30. Due Diligence. With respect to all representations
and warranties which are qualified "to the knowledge of Seller,"
"to the best knowledge of Seller," "known to Seller," or words of
similar import, Seller has made reasonable investigation of the
subject matter of the representation or warranty including, where
appropriate, the holding of conferences with appropriate Personnel
and/or the examination of appropriate documents.
Section 6.31. Broker's and Finder's Fees. No broker, finder, or
Person is entitled to any commission or finder's fee in connection
with this Agreement or the transactions contemplated by this
Agreement.
Section 6.32 All Material Information. To Seller's knowledge,
Seller has not withheld from Purchaser any material facts relating
to the Acquired Assets, the Business, the operations of Seller, or
the financial or other condition of Seller. No representation or
warranty made herein by Seller and no statement contained in any
certificate or other instrument furnished or to be furnished to
Purchaser by Seller in connection with the transactions
contemplated by this Agreement contains or will contain an untrue
statement of a material fact or omits to state any material fact
necessary in order to make any representation, warranty, or other
statement of Seller not misleading.
ARTICLE VII.
REPRESENTATIONSANDWARRANTIESOFPURCHASER
Purchaser hereby represents and warrants to Parent and Seller as
follows:
Section 7.01. Organization.
(a) Organization and Qualification. Purchaser and each of its
subsidiaries is a corporation duly organized, validly
existing, and in good standing under the laws of the
jurisdiction of its incorporation. Purchaser and each of its
subsidiaries is duly authorized to conduct business and is in
good standing under the laws of each jurisdiction where such
qualification is required, except where a lack of such
qualification would not have a material adverse effect on the
financial condition of Purchaser and its subsidiaries taken as
a whole.
(b) Capitalization of Purchaser. There are 10,000 authorized common
shares of Purchaser.
There are 5,900 Common Shares outstanding immediately prior to the execution of
this Agreement. All of the issued and outstanding Common Shares have been duly
authorized, are validly issued, fully paid, and non-assessable. There are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require Purchaser to issue, sell, or otherwise cause to become
outstanding any shares of its capital stock, except as disclosed on Schedule
7.01(b). There are no outstanding or authorized stock appreciation, phantom
stock, profit participation, or similar rights with respect to Purchaser. If
Purchaser chooses to pay the note with Preferred Shares rather than cash at the
time Purchaser issues Preferred Shares to Parent in payment of the Second Note,
there shall be 9,000 Common Shares authorized, 5,900 Shares issued and
outstanding and 1,000 Preferred Shares authorized with no Preferred Shares
issued and outstanding.
Section 7.02. Authorization and Validity of Agreement. Purchaser has
all requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution and delivery of this Agreement
and the performance of the obligations of Purchaser hereunder have been duly
authorized by all necessary corporate action by the board of directors and
shareholders of Purchaser, and no other corporate proceedings on the part of
Purchaser are necessary to authorize the execution, delivery or performance.
This Agreement has been duly executed by Purchaser and constitutes a valid and
binding obligation, enforceable against Purchaser in accordance with its terms.
Section 7.03. No Conflict or Violation. The execution, delivery, and
performance of this Agreement by Purchaser does not and shall not: (a) violate
or conflict with any provision of the articles or certificate of incorporation,
bylaws, or other governing document of Purchaser, (b) violate any provision of
law or any order, judgment, or decree of any court or other governmental or
regulatory authority applicable to Purchaser; (c) violate or result in a breach
of or constitute (with due notice or lapse of time or both) a default under any
contract, lease, loan agreement, mortgage, security agreement, indenture, or
other agreement or instrument to which Purchaser is a party or by which it is
bound or to which any of its properties or assets is subject which would prevent
Purchaser from consummating the transactions contemplated by this Agreement in
accordance with the terms and provisions of this Agreement or which would have a
Material Adverse Effect on Purchaser; or (d) result in the imposition of any
Liens or restrictions on the assets of Purchaser.
Section 7.04. Consents and Approvals. No consent, waiver,
authorization, or approval of any governmental or regulatory authority, or of
any other Person, or (subject to the accuracy of Parent's and Seller's
representations and warranties set forth in Section 6.28) declaration to or
filing or registration with any governmental or regulatory authority, other than
those consents, waivers, and approvals that have already been obtained, are
required in connection with the execution and delivery of this Agreement by
Purchaser or the performance by Purchaser of its obligations hereunder.
Section 7.05. Financial Statements. Attached hereto as Schedule 7.05
are true and complete copies of (a) the balance sheets of Purchaser as of
December 31, 1998 and 1997 and the related statements of operations,
shareholders' equity and cash flows for each of the two years for the period
ended December 31, 1998 together with the notes thereto and the audit report
thereon of Deloitte & Touche LLP, certified public accountants, and (b) the
unaudited balance sheet of Purchaser as of June 30, 1999 and the unaudited
comparative statements of earnings for the six-month periods ended June 30, 1999
and 1998. The term "Purchaser Balance Sheet" means the balance sheet as of June
30, 1999 referred to above. All financial statements described by this Section
7.05 have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods covered thereby and
present fairly the financial position of Purchaser as of the respective dates
thereof and the results of Purchaser's operations and cash flows for the periods
then ended.
Section 7.06. Absence of Certain Changes or Events. Except as set forth
on Schedule 7.06, since June 30, 1999, Purchaser has operated its business in
the ordinary course consistent with past practice and there has not been any:
(a) material adverse change in the assets, operations, business, prospects or
financial condition of Purchaser;
(b) (i) except for normal periodic increases in the ordinary course of business
consistent with past practice, increase in the compensation payable or to
become payable to any Personnel engaged in Purchaser's business whose total
compensation for services rendered to Purchaser is at an annual rate of
more than $100,000, (ii) bonus, incentive compensation, service award or
other like benefit granted, made, or accrued, contingently or otherwise,
for or to the credit of any Personnel engaged in Purchaser's business,
(iii) employee welfare, pension, retirement, profit-sharing, or similar
payment or arrangement made or agreed to by Purchaser for any Personnel
engaged in Purchaser's business other than in the ordinary course of
business, or (iv) new employment agreement with any Personnel engaged in
the Purchaser's business to which Purchaser is a party;
(c) sale, assignment, or transfer outside of the ordinary course of any
business of any of the assets of Purchaser material to Purchaser's business
singly or in the aggregate;
(d) cancellation of any indebtedness or waiver of any rights having a value of
$25,000 or greater to Purchaser in Purchaser's business, whether or not in
the ordinary course of business;
(e) execution and delivery, amendment, cancellation, or termination of any
contract, license, or other instrument material to Purchaser's business;
(f) capital expenditure or the execution of any lease or any incurring of
liability therefor in connection with the Purchaser's business involving
payments in excess of $25,000 in the aggregate;
(g) failure to repay any material obligation, except where such failure would
not have a Material Adverse Effect on the Purchaser;
(h) failure to operate Purchaser's business in the ordinary course or to
preserve Purchaser's business intact;
(i) change in accounting methods or practices;
(j) revaluation by Purchaser of any assets;
(k) damage, destruction, or loss (whether or not covered by insurance)
adversely affecting the business of Purchaser;
(l) mortgage, pledge, or other encumbrance of any of Purchaser's assets;
(m) declaration, setting aside, or payment of dividends or distributions in
respect of any outstanding securities of Purchaser, any redemption,
purchase, or other acquisition of any of Purchaser's outstanding
securities, or any other payments, including the payment of any amounts due
on obligations of Purchaser to its shareholders or directors;
(n) issuance or commitment to issue any shares or other equity securities of
Purchaser or obligations or securities convertible into or exchangeable for
shares or other equity securities of Purchaser;
(o) indebtedness incurred for borrowed money or any commitment to borrow money
by Purchaser, or any loans (other than loans to a subsidiary) made or
agreed to be made by Purchaser, or any guarantee, assumption, endorsement
of, or other assumption of an obligation by Purchaser with respect to any
liabilities or obligations of any other Person;
(p) incurrence of any liability involving $25,000 or more (excluding liability
under Purchase Orders), or any increase or change in any assumptions
underlying or methods of calculating any bad debt, contingency, or other
reserves of Purchaser;
(q) issuance of any Purchase Order, or group of related Purchase Orders, for an
aggregate amount in excess of $100,000;
(r) any payment, discharge, satisfaction, or compromise of any liabilities or
contingent liabilities other than the payment, discharge, or satisfaction
(i) in the ordinary course of business and consistent with past practice of
liabilities reflected or reserved against in the Purchaser Balance Sheet or
incurred in the ordinary course of business and consistent with past
practice since the June 30, 1999, and (ii) of other liabilities or
contingent liabilities involving $25,000 or less singly and $100,000 or
less in the aggregate;
(s) agreement by Purchaser to do any of the foregoing; or
(t) other event or condition of any character which in any one case or in the
aggregate has had, or any event or condition known to Purchaser which
Purchaser reasonably expects will, in any one case or in the aggregate,
have a Material Adverse Effect on the Purchaser.
Section 7.07. Absence of Undisclosed Liabilities. Except as set forth
on Schedule 7.07, Purchaser has no material indebtedness or liability which is
not shown on the Purchaser Balance Sheet or provided for thereon, other than
liabilities incurred or accrued in the ordinary course of business since June
30, 1999.
Section 7.08. Compliance with Law. Except as set forth on Schedule
7.08, Purchaser and its business are in compliance with all applicable federal,
state, local, and foreign laws, ordinances, orders, rules, and regulations
including those applicable to discrimination in employment, occupational safety
and health, trade practices, competition and pricing, product warranties,
zoning, building, sanitation, employment, retirement, labor relations, product
advertising, and Environmental Requirements, other than, in any such case, any
failure to be in compliance that does not or shall not have a Material Adverse
Effect on the business, financial or future prospects of Purchaser. Purchaser is
not in default with respect to any order, writ, judgment, award, injunction, or
decree of any court or governmental or regulatory authority or arbitrator
applicable to it or its business, its Personnel, or is aware that any factual
circumstances are likely to result in such default.
Section 7.09. Litigation. Except as set forth on Schedule 7.09 (a)
there are no claims, actions, suits, proceedings, arbitral actions, or
investigations pending or, to the knowledge of Purchaser, threatened against
Purchaser, its business, before or by any court or governmental body which, if
adversely determined, could have a Material Adverse Effect on Purchaser or could
adversely affect the ability of Purchaser to consummate the transactions
contemplated by this Agreement; and (b) there are no unsatisfied judgments
against Purchaser, or its business.
Section 7.10. Related Party Transactions. Except as set forth in
Schedule 7.10, there are no material transactions relating to Purchaser's
business presently pending or planned, or initiated or completed since June 30,
1999, between Purchaser and any officer, director or affiliate of Purchaser, any
relative of any such Person, including any contract, agreement, or other
arrangement (i) providing for the furnishing of material services by or to
Purchaser, (ii) providing for the rental of material real or personal property
by or to Purchaser, or (iii) otherwise requiring material payments from or to
Purchaser (other than for services as officers or directors of Purchaser) to any
such Person or corporation, partnership, trust, or other entity in which any
such Person has a substantial interest as a shareholder, officer, director,
trustee, or partner.
Section 7.11. Shareholders. The issued and outstanding shares of
capital stock of Purchaser are owned of record and beneficially by the
shareholders set forth on Schedule 7.11, and no other Person has any equity
interest in, or right, contingent or other, to acquire any equity interest in
Purchaser or any subsidiary.
Section 7.12. Year 2000 Compliance.
(a) Purchaser has conducted an initial review of whether Purchaser's systems,
processes, products, equipment and services are "Year 2000 Ready." Interim
results of such review are set forth on Schedule 7.12. Year 2000 Ready
means that the systems, processes, products, equipment and services of
Purchaser (including any software embedded in any products) ("Services"),
will correctly identify, recognize and process four-digit year dates, and
the Services will: (1) continue to function properly with regard to dates
before, during and after the transition to year 2000 including, but not
limited to, the ability to roll dates from December 31, 1999 to January 1,
2000 and beyond with no errors or system interruptions; (2) accurately
perform calculations and comparisons on dates that span centuries; (3);
accept and properly process dates that could span more than 100 years
(e.g., calculating a person's age from their birth date and the current
date); (4) properly sort and sequence dates that span centuries; (5)
understand that the year 2000 starts on a Saturday; (6) recognize that
February 29, 2000 is a valid date and that the Year 2000 has 366 days; (7)
prohibit use of date fields for any purpose other than to store valid
dates; (8) preclude the use of 12/31/99 or any other valid date to indicate
something other than a date (e.g., 12/31/99 in a date field means "do not
ever cancel"); and (9) comply with and conform to the specifications of
American National Standard ANSIX3.30-19865, Representation for Calendar
Date and Ordinal Date for Information Interchange.
(b) Purchaser has contacted its critical customers suppliers regarding their
Year 2000 Readiness. To the best knowledge of the Purchaser, the Year 2000
Readiness of such critical customers and suppliers is as set forth on
Schedule 7.12 .
(c) Purchaser has made no express or implied warranties to any third party
regarding the Year 2000 Readiness of themselves, or any of their Services,
except as set forth on Schedule 7.12.
Section 7.13. Due Diligence. With respect to all representations and
warranties which are qualified "to the knowledge of Purchaser," "to the best
knowledge of Purchaser," "known to Purchaser," or words of similar import,
Purchaser has made reasonable investigation of the subject matter of the
representation or warranty including, where appropriate, the holding of
conferences with appropriate Personnel and/or the examination of appropriate
documents.
Section 7.14. All Material Information. To the best of Purchaser's
knowledge, Purchaser has not withheld from Parent any material facts relating to
Purchaser's business, the operations of Purchaser, or the financial or other
condition of Purchaser, and no representation or warranty made herein by
Purchaser and no statement contained in any certificate or other instrument
furnished or to be furnished to Parent by Purchaser in connection with the
transactions contemplated by this Agreement contains or will contain an untrue
statement of a material fact or omits to state any material fact necessary in
order to make any representation, warranty, or other statement of Purchaser not
misleading.
Section 7.15. Broker's and Finder's Fees; No Indiana Tax. To the best
of the knowledge of Purchaser, no broker, finder, or other Person claiming
through Purchaser is entitled to any commission or finder's fee in connection
with this Agreement or the transactions contemplated by this Agreement, and no
tax or fee under Indiana law shall be assessed to Seller or Parent by reason of
the Closing of the transactions contemplated by the Agreement having occurred in
Indiana.
ARTICLE VIII.
TAXES
Section 8.01. Taxes. Seller shall pay all state and local sales,
transfer, excise, value-added, or other similar taxes (including without
limitation, all state and local taxes in connection with the transfer of the
Real Property) and any deficiency, interest, or penalty asserted with respect
thereto, and all recording and filing fees that may be imposed by reason of the
sale, transfer, assignment, or delivery by Seller of the Acquired Assets. Seller
shall be responsible for the preparation and filing of all required Tax Returns
and shall be liable for the payment of any and all Taxes relating to all periods
through the Closing Date (including all Taxes resulting from the sale and
transfer by Seller of Acquired Assets hereunder).
Section 8.02 . Cooperation on Tax Matters. Seller shall furnish or
cause to be furnished to Purchaser, as promptly as practicable, whether before
or after the Closing Date, such information and assistance relating to the
Business as is reasonably necessary for the preparation and filing by Purchaser
of any Tax Return, claim for refund, or other required or optional filings
relating to tax matters, for the preparation by Purchaser for, and proof of
facts during, any tax audit, for the preparation by Purchaser for any tax
protest, for the prosecution or defense by Purchaser of any suit or other
proceeding relating to tax matters, or for the answer by Purchaser to any
governmental or regulatory inquiry relating to tax matters.
Purchaser shall retain possession of all Files and Records transferred
to Purchaser hereunder and coming into existence after the Closing Date which
relate to the Business before the Closing Date, for a period not to exceed five
years from the Closing Date. In addition, from and after the Closing Date, upon
reasonable notice and during normal business hours, Purchaser shall provide
access to Seller and its attorneys, accountants, and other representatives, at
Seller's expense, to such Files and Records as Seller may reasonably deem
necessary to properly prepare for, file, prove, answer, prosecute, and/or defend
any such return, filing, audit, protest, claim, suit, inquiry, or other
proceeding.
Section 8.03 . Allocation of Purchase Price. Seller and Purchaser agree
that the Purchase Price shall be allocated among the Acquired Assets in
accordance with Schedule 8.03 and shall cooperate in the timely filing of
Internal Revenue Service Form 8594 (or other appropriate forms), which shall be
prepared in accordance with the allocation pursuant to Section 1060 of the Code,
and any forms or documents required to be filed with respect to such matters
with state or local taxing authorities.
ARTICLE IX.
COVENANTS
Section 9.01. Participation Right in Future Securities Offerings. If
Preferred Shares is issued to Parent, for so long as Parent continues to hold
all of the Preferred Shares (or, if earlier, the date of the closing of any
Qualified Public Offering, as that term is defined in Exhibit 3.03A hereto),
Purchaser shall offer to Parent the non-assignable non-transferable right to
participate, on the same terms and conditions, in any offer for new value that
Parent may make of any shares of its capital stock (or any securities
convertible into or exchangeable for capital stock), excluding (a) any stock
options issued to employees, officers and directors or securities to be issued
upon exercise thereof, (b) securities to be issued upon stock dividends, stock
splits and the like for which an adjustment to the conversion ratio is required
to be made under the terms of the Preferred Shares, (c) securities to be issued
upon conversion of the Preferred Shares, (d) securities to be offered pursuant
to the Qualified Public Offering, and (e) securities to be issued in payment of
part or all of the purchase price of businesses or property hereafter purchased
by Purchaser (an "Offering"). The participation right granted pursuant to this
Section 9.01 shall relate to such number or amount of securities included in the
Offering as shall enable Parent to maintain its rights to convert its Preferred
Shares into the same fully-diluted percentage of Common Shares of Purchaser as
the Parent possessed immediately prior to the Offering. For purposes of the
preceding sentence, the Parent's fully-diluted percentage of Common Shares
immediately prior to the Offering shall mean the percentage that would result
assuming issuance by all parties of all unissued shares then reserved by the
Purchaser for grant or issuance under options and warrants, or upon conversion
of outstanding convertible securities.
Section 9.02. Right of First Refusal. If Preferred Shares is issued to
Parent, for so long as Parent continues to hold the Preferred Shares (or, if
earlier, the date of any Qualified Public Offering), Parent shall not sell,
assign, transfer, assign, pledge, hypothecate, mortgage, encumber, or otherwise
dispose of all or any of its shares of Preferred Shares, except to a third party
(the "Proposed Transferee") pursuant to a bona fide offer (the "Offer") to
purchase all (but not less than all) of the Preferred Shares (the "Offered
Shares") after having granted the holders of common stock of Purchaser a right
of first refusal to purchase the Offered Shares pursuant to the terms of this
Section 9.02. In the event of an Offer, the Parent shall submit an offer to sell
the Offered Shares to the common shareholders of Purchaser (at their addresses
of record on the books of the Purchaser) on terms and conditions, including
price, that are no less favorable than those on which the Parent proposes to
sell the Offered Shares to the Proposed Transferee. The Parent shall deliver to
the common shareholders a copy of the Offer, which shall disclose the identity
of the Proposed Transferee, the terms and conditions, including price, of the
proposed sale, and any other material facts relating to the proposed sale. The
offer to the common shareholders shall further state that each of the common
shareholders have the right (transferable among themselves) to purchase that
number of the Offered Shares as shall be equal to the number of shares of common
stock then owned by such shareholder of record divided by the aggregate number
of common shares then outstanding. If the Parent receives a written acceptance
of the terms of the Offer as to all the Offered Shares from one or more of the
common shareholders within 30 days of transmittal of the offer to the common
shareholders , then the Preferred Shares shall be deemed to be the subject of a
binding purchase and sale agreement as of the time of Parent's receipt of the
last of the written acceptances, and the closing of such purchase(s) and sale(s)
shall take place at the principal offices of the Purchaser within 30 days
following the date of delivery to the Parent of the last of the acceptances. If
the common shareholders do not agree to purchase all of the Offered Shares, then
the Parent may sell all (but not less than all) of the Offered Shares to the
Proposed Transferee, within 30 days of the lapse or waiver of the rights of the
common shareholders to purchase the Offered Shares, for a price and upon other
terms and conditions not more favorable to the Proposed Transferee than those
specified in the Offer, provided that the Proposed Transferee shall first
execute and deliver to the Purchaser an agreement to continue to be subject to
the terms of this Section 9.02 as to any future transfer of the Preferred Shares
by the Proposed Transferee. If the Offered Shares are not sold to the Proposed
Transferee within such 30-day period, then such Offered Shares shall continue to
be subject to this Section 9.02 as to any other proposed transfer.
Section 9.03. Underwriting Arrangements. If Preferred Shares is issued
to Parent, in connection with any Qualified Public Offering, Parent (and any
permitted transferee of its Preferred Shares under Section 9.02) shall enter
into a written agreement with the managing underwriter in such form and
containing such provisions as are customary in the securities business for such
an agreement between underwriters and companies of Purchaser's size and
investment stature, including without limitation an agreement that Parent shall
not sell or dispose of the common shares that Parent would receive upon
conversion of the Preferred Shares on the date of closing of the Qualified
Public Offering for a specified period following such closing date (but not
longer than the period that is applicable to the Purchaser's controlling common
shareholder, officers and directors).
Section 9.04. Miscellaneous . At any time, and from time to time:
(a) Parent and Seller shall execute such consents and other instruments and
make such filings as may be necessary or appropriate in order to allow
Purchaser or any affiliate of Purchaser to change its name to, or to
utilize the name "Top Source Automotive, Inc." (or any substantially
similar name) from and after the Closing Date, and to transfer the Acquired
Assets, operate the Business, or otherwise implement the terms of this
Agreement.
(b) After the Closing, Parent and Seller shall not directly or indirectly use,
for their own benefit or otherwise, or disclose to any other Person, any
information relating to the Acquired Assets or the Business, except to the
extent that such information (i) is or becomes generally available to the
trade or the public other than as a result of a disclosure by Parent or
Seller or their representatives, (ii) is required to be disclosed by law or
order of a court or governmental body or stock exchange requirements, (iii)
as necessary in connection with tax matters or (iv) as may be necessary or
appropriate to communicate to Parent or Seller's agents, employees,
officers, directors, or counsel to effectuate the terms of this Agreement.
ARTICLE X.
SURVIVAL
Solely for the purposes of the indemnification provided by Article XI.
hereof, all representations and warranties contained in this Agreement shall
survive the execution, delivery, and performance hereof, notwithstanding any
investigation conducted at any time with respect thereto, for the longer of (a)
one year after the Closing Date or (b) in the case of the representations and
warranties made in any of Sections 6.08, 6.16, 6.18, 6.19, and 7.15, a period
ending 60 days after the expiration of the statutory period of limitations
(without any extensions) applicable to any matter subject to the representations
and warranties contained in those Sections, except that the representations and
warranties made in each of Sections 6.01, 6.03, 6.04, and 6.28 shall survive
indefinitely.
ARTICLE XI.
INDEMNIFICATION
Section 11.01. Indemnification by Parent and Seller. Parent and Seller
shall, jointly and severally, indemnify and hold harmless Purchaser and its
successors and their respective shareholders, officers, directors, and agents
from and against any and all damages, losses, obligations, liabilities, claims,
encumbrances, penalties, costs, and expenses, including reasonable attorneys'
fees (and costs and reasonable attorneys' fees in respect of any suit to enforce
this provision) (each a "Claim"), arising from or relating to (a) any
misrepresentation, breach of warranty, or nonfulfillment of any of the covenants
or agreements of Seller or Parent in this Agreement or in any document,
certificate, or affidavit delivered by Parent or Seller pursuant to the
provisions of this Agreement; (b) any liability, obligation, or commitment of
any nature (absolute, accrued, contingent, or other) of Seller or Parent or
relating to the Acquired Assets or the operation of the Business arising out of
transactions entered into or events occurring prior to the Closing and not
expressly assumed by Purchaser pursuant to this Agreement; (c) any Environmental
Expenses, any Environmental Claims, any Environmental Conditions, or any
material violation of Environmental Requirements relating to any time on or
before the Closing Date; and (d) any and all actions, suits, investigations,
proceedings, demands, assessments, audits, and judgments arising out of any of
the foregoing.
In addition, Parent and Seller shall jointly and severally, indemnify
and hold Purchaser and Purchaser's lenders, if any, harmless from and against
any loss, claim, expense, damage, or liability (including reasonable attorneys'
fees and expenses) to which Purchaser and/or the Acquired Assets may become
subject insofar as such loss, claim, damage, or liability (or actions in respect
thereof) arises out of or is based upon a breach or alleged breach of, or
failure to comply with any provision of, or to give any notice or make any
filing pursuant to, any bulk sales law or similar statute. Purchaser understands
that no notices or filings are being made in respect of the Acquired Assets
under any such law or statute.
Section 11.02. Indemnification by Purchaser. Subject to the provisions
of Section 11.04, Purchaser shall indemnify and hold harmless each of Parent and
Seller and its successors and their respective shareholders, officers,
directors, and agents from and against any and all Claims resulting from or
relating to (a) any misrepresentation, breach of warranty, or nonfulfillment of
any of the covenants or agreements of Purchaser in this Agreement, and (b) any
and all suits, actions, investigations, proceedings, demands, assessments,
audits, and judgments arising out of any of the foregoing.
Section 11.03 . Procedure.
(a) Promptly (and in any event within 15 days after the service of any citation
or summons) after acquiring knowledge of any Claim for which one of the
parties hereto (the "Indemnified Party") may seek indemnification against
another party (the "Indemnifying Party") pursuant to this Article XI., the
Indemnified Party shall give written notice thereof to the Indemnifying
Party. Failure to provide notice shall not relieve the Indemnifying Party
of its obligations under this Article XI. except to the extent that the
Indemnifying Party demonstrates actual damage caused by that failure. The
Indemnifying Party shall have the right to assume the defense of any Claim
with counsel reasonably acceptable to the Indemnified Party upon delivery
of notice to that effect to the Indemnified Party. If the Indemnifying
Party, after written notice from the Indemnified Party, fails to take
timely action to defend the action resulting from the Claim, the
Indemnified Party shall have the right to defend the action resulting from
the Claim by counsel of its own choosing, but at the cost and expense of
the Indemnifying Party. The Indemnified Party shall have the right to
settle or compromise any Claim against it, and, as the case may be, recover
from the Indemnifying Party any amount paid in settlement or compromise
thereof, if it has given written notice thereof to the Indemnifying Party
and the Indemnifying Party has failed to take timely action to defend the
same. The Indemnifying Party shall have the right to settle or compromise
any claim against the Indemnified Party without the consent of the
Indemnified Party provided that the terms of the settlement or compromise
provide for the unconditional release of the Indemnified Party and require
the payment of monetary damages only.
(b) Upon its receipt of any amount paid by the Indemnifying Party pursuant to
this Article XI., the Indemnified Party shall deliver to the Indemnifying
Party such documents as it may reasonably request assigning to the
Indemnifying Party any and all rights, to the extent indemnified, that the
Indemnified Party may have against third parties with respect to the Claim
for which indemnification is being received.
Section 11.04. Limitations on Indemnification. No Indemnified Party
shall be entitled to receive an indemnification payment with respect to any
Claim or Claims specified in this Article XI. unless the Claim, or the aggregate
amount of all Claims made by the Indemnified Party hereunder, equals or exceeds
$50,000.
Section 11.05. Claims Against Escrow. Purchaser may, but shall not be
obligated to, direct that the Escrow Agent pay to the Purchaser, from time to
time, any amount that may be payable by Parent or Seller to Purchaser under this
Article XI. from the Escrow Property, and Parent and Seller shall, promptly upon
being requested to do so by Purchaser, join in any written direction to the
Escrow Agent under Section 4 of the Escrow Agreement that Purchaser may prepare
for this purpose. The rights of Purchaser to made claims against the Escrow
Property for satisfaction of part or all of any Claims that it may have against
the Seller and Parent under this Article XI. are supplementary to, and not a
limitation upon, its rights and remedies to proceed directly against Parent and
Seller in respect of such Claims, provided, that any Claim satisfied in part or
in whole by a distribution to the Purchaser of Escrow Property shall to that
extent reduce the Claim of Purchaser against Parent and Seller.
ARTICLE [Reserved]
ARTICLE [Reserved]
ARTICLE [Reserved]
ARTICLE XV.
MISCELLANEOUS
Section 15.01 . Public Announcements. No party shall make any press
release or public announcement concerning this transaction prior to or after the
Closing Date, except as expressly permitted by the other party, except that
either party may make any press release or public announcement if and to the
extent required by securities law or stock exchange requirement or other
applicable law or legal compulsion, provided that such party who proposes to
make such legally-required disclosure provide the other party with notice as
promptly as practicable of the circumstances that it believes creates a duty to
make such disclosure and an opportunity to review such disclosure and comment
thereon.
Section 15.02. Expenses. Except as otherwise provided herein, each of
the parties hereto shall pay its own expenses in connection with this Agreement
and the transactions contemplated hereby including without limitation, any legal
and accounting fees, whether or not the transactions contemplated hereby are
consummated.
Section 15.03. Notices. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given (a) on the date of service if served personally on the
party to whom notice is to be given, (b) on the day of transmission if sent via
facsimile transmission to the facsimile number given below, provided that
telephonic confirmation of receipt is obtained from the designated person for
the recipient promptly after completion of transmission, (c) on the day after
delivery to a nationally recognized overnight courier service or the Express
Mail service maintained by the United States Postal Service, or (d) on the fifth
(5th) day after mailing, if mailed to the party to whom notice is to be given,
by first class mail, registered or certified, postage prepaid, and addressed as
follows:
If to Seller or Parent, to:
Top Source Technologies, Inc.
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000-0000
Attention: Xx. Xxxxxxx X. Xxxxxx, President
With a copy to:
Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx, P.A.
0000 Xxxx Xxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
which copy shall not constitute notice for the purposes of this
Agreement.
If to Purchaser, to:
Onkyo America, Inc.
0000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxxx Xxxxxxxxx, President
With a copy to:
Xxxx X. Xxxxxxxxxx
Ice Xxxxxx Xxxxxxx & Xxxx
Xxx Xxxxxxxx Xxxxxx
Xxx 00000
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
which copy shall not constitute notice for the purposes of this
Agreement.
Any party may change its address for the purpose of this Section 15.03
by giving the other parties written notice of its new address in the manner set
forth above.
Section 15.04. Headings. The article, section, and paragraph headings
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
Section 15.05 . Construction.
(a) The parties have participated jointly in the negotiation and
drafting of this Agreement, and, in the event of an ambiguity
or a question of intent or a need for interpretation arises,
this Agreement shall be construed as if drafted jointly by the
parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship
of any of the provisions of this Agreement.
(b) Except as otherwise specifically provided in this Agreement
(such as by "sole," "absolute discretion," "complete
discretion", or words of similar import), if any provision of
this Agreement requires or provides for the consent, waiver,
or approval of a party, such consent, waiver, and/or approval
shall not be unreasonably withheld.
i. The parties intend that each representation, warranty, and covenant herein
shall have independent significance. If any party has breached any
representation, warranty, or 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, as the case may be.
ii. Words of any gender used in this Agreement shall be held and construed to
include any other gender; words in the singular shall be held to include
the plural; and words in the plural shall be held to include the singular;
unless and only to the extent the context indicates otherwise.
iii. 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.
iv. The word "including" means "including, without limitation."
v. The terms "to the knowledge of Seller," "known to Seller," or words of
similar import mean the actual knowledge of the executive officers of
Parent or Seller, or any of them.
vi. The terms "to the knowledge of Purchaser," "known to Purchaser," or words
of similar import mean the actual knowledge of Purchaser's executive
officers, or any of them.
Section 15.06. Severability. If any provision of this Agreement is
declared by any court or other governmental body to be null, void, or
unenforceable, this Agreement shall be construed so that the provision at issue
shall survive to the extent it is not so declared and that all of the other
provisions of this Agreement shall remain in full force and effect.
Section 15.07. Entire Agreement. This Agreement contains the entire
understanding among the parties hereto with respect to the transactions
contemplated hereby and supersedes and replaces all prior and contemporaneous
agreements and understandings, oral or written, with regard to those
transactions. All exhibits and schedules hereto are expressly made a part of
this Agreement as fully as though completely set forth herein.
Section 15.08. Amendments; Waivers. This Agreement may be amended or
modified, and any of the terms, covenants, representations, warranties, or
conditions hereof may be waived, only by a written instrument executed by the
parties hereto, or in the case of a waiver, by the party waiving compliance. Any
waiver by any party of any condition, or of the breach of any provision, term,
covenant, representation, or warranty contained in this Agreement, in any one or
more instances, shall not be deemed to be or construed as a further or
continuing waiver of any condition or of the breach of any other provision,
term, covenant, representation, or warranty of this Agreement.
Section 15.09. Parties in Interest. Nothing in this Agreement is
intended to confer any rights or remedies under or by reason of this Agreement
on any Person other than Seller and Purchaser and their respective successors
and permitted assigns.
Section 15.10. Successors and Assigns. No party hereto shall assign or
delegate this Agreement or any rights or obligations hereunder without the prior
written consent of the other parties hereto, and any attempted assignment or
delegation without prior written consent shall be void and of no force or
effect; provided, however, Purchaser may, without consent but upon notice given
to Seller at least five days prior to the Closing Date, assign all its rights
and delegate its obligations hereunder to a subsidiary of Purchaser or to a
corporation under direct or indirect common control with Purchaser, in which
event (a) the subsidiary may issue and deliver the Note and the Security
Agreement to Parent at Closing if Purchaser guaranties its subsidiary's
obligations thereunder, and (b) the subsidiary shall be entitled to rely upon
the representations and warranties of Parent and Seller hereunder to the same
extent as it were the named Purchaser hereunder. This Agreement shall inure to
the benefit of and shall be binding upon the successors and permitted assigns of
the parties hereto.
Section 15.11. Governing Law; Jurisdiction. This Agreement shall be
construed and enforced in accordance with, and governed by, the laws of the
State of Indiana (without giving effect to the principles of conflicts of laws
thereof), except to the extent that the laws of any jurisdiction in which
Acquired Assets are situated may be applicable hereto. The parties hereto
irrevocably agree and consent to the non-exclusive jurisdiction of the courts of
the State of Indiana and the federal courts of the United States, sitting in
Indianapolis, Indiana, for the adjudication of any matters arising under or in
connection with this Agreement.
Section 15.12. Counterparts. This Agreement is executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
together constitute the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed, or caused to be
executed by their duly authorized representatives, this Agreement as of the date
first above written.
"SELLER"
TOP SOURCE AUTOMOTIVE, INC.
By:
Its:
"PARENT"
TOP SOURCE TECHNOLOGIES, INC.
By:
Its:
"PURCHASER"
ONKYO AMERICA, INC.
By:
Its:
Exhibit 2.01
FORM OF ESCROW AGREEMENT
This ESCROW AGREEMENT, dated , 1999 by and between Onkyo America, Inc.,
an Indiana corporation ("Purchaser"); Top Source Technologies, Inc., a Delaware
corporation, and Top Source Automotive, a Florida corporation (collectively, the
"Seller"); and , a national banking association ("Escrow Agent");
Recitals
1. Seller and Purchaser have entered into that certain Asset Purchase
Agreement, dated , 1999 ("Agreement) and under the provisions
thereof Purchaser is required to pay certain amounts to
Escrow Agent to be held and disbursed as hereinafter provided.
2. Escrow Agent desires to serve as the agent for the escrow required
by the Agreement.
3. The parties desire to enter into this Escrow Agreement evidencing
the arrangements concerning the Escrowed Funds and the rights and obligations of
the parties with respect thereto.
Agreement
For and in consideration of the fees provided for in this Escrow
Agreement to be paid to the Escrow Agent, the receipt and sufficiency of which
are hereby acknowledged, and the mutual agreements set forth herein, the parties
hereby agree as follows:
Section 1. Deposit. The Purchaser has caused to be delivered to the
Escrow Agent the sum of $500,000 (which, together with interest earned thereon
and less charges and costs of the Escrow Agent, shall be referred to herein as
the "Escrowed Funds") to be held pursuant to the terms and conditions of this
Escrow Agreement.
Section 2. Duties of Escrow Agent. The Escrow Agent acknowledges the
receipt of the Escrowed Funds and shall hold said Escrowed Funds in accordance
with the terms and conditions of this Escrow Agreement. The Escrow Agent shall
invest the Escrowed Funds in five or more deposits issued by the Escrow Agent
and other insured depository institutions that are fully insured by the Federal
Deposit Insurance Corporation for an initial maturity of ______ months. The
Escrow Agent shall not be responsible for the sufficiency or accuracy of the
form, execution, validity, or genuineness of documents or securities deposited
hereunder, or of any endorsement thereon, or for any description therein, nor
shall the Escrow Agent be responsible or liable in any respect on account of the
identity, authority, or rights of the persons executing or delivering or
purporting to execute or deliver any such document, security, or endorsement.
Section 3. Delivery of Escrowed Funds.
Unless (and to the extent that) the Escrow Agent has received written
notice from the Purchaser that a disagreement within the meaning of Section 8
exists between the Purchaser and the Seller, as to the Seller's right to obtain
all or part of the Escrowed Funds, the Escrow Agent shall deliver to Seller the
Escrowed Funds (or such lesser amount as Seller may specify), on the tenth
(10th) business day following the Seller's presentation on or after October ___,
2000, to the Escrow Agent of (i) a written request for delivery of the Escrowed
Funds indicating to whom delivery should be made, and (ii) proof of its having
given, on or after October ___, 2000, written notice to Purchaser of its intent
to obtain delivery of the Escrowed Funds together with the facts supporting its
claim that it is entitled to the delivery of the Escrowed Funds or such lesser
amount and describing the basis on which such claim is made.
Section 4. Delivery Upon Mutual Demand. Upon mutual demand,
in writing, of both the Seller and the Purchaser at any time, the Escrowed
Funds shall be delivered by the Escrow Agent as the parties direct.
Section 5. Escrow Agent and Duty. The Escrow Agent shall not be
responsible for any act or omission on its part so long as the Escrow Agent acts
in good faith and its acts or omissions are free of reckless indifference to the
consequences thereof to Seller and Buyer. The Escrow Agent may rely upon any
notice, certificate, affidavit, release letter or other paper or document which
the Escrow Agent believes to be genuine and the Escrow Agent shall not be liable
when the Escrow Agent relies on such genuineness in good faith.
Section 6. Escrow Agent Fees.
(a) The Purchaser and the Seller shall each be liable for one-half
(1/2) payment of all reasonable costs and expenses incurred by the
Escrow Agent in the event of litigation arising out of this Escrow
Agreement so long as the Escrow Agent is not found to be in breach of
its duties under this Escrow Agreement.
(b) In addition to any other remedies which may be provided by law, if
the Escrow Agent's costs and expenses are not promptly paid, the Escrow
Agent shall have the right to withhold from the Escrowed Funds until
such time as its costs and expenses have been paid.
Section 7. Resignation of Escrow Agent. The Escrow Agent may resign at
any time by giving written notice to the Seller and the Purchaser, transmitted
by (i) facsimile transmission to the facsimile number given below, provided that
personal telephonic confirmation of receipt is obtained by the sender from the
recipient promptly after completion of transmission, (ii) a nationally
recognized overnight courier service, or (iii) the Express Mail service
maintained by the United States Postal Service, and addressed as follows:
If to Seller, to:
Top Source Technologies, Inc.
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000-0000
Attention: Xx. Xxxxxxx X. Xxxxxx, President
Tel. No. 000-000-0000
Fax No. 000-000-0000
With a copy to:
Xxxxxxx X. Xxxxxx
Xxxxxxx Xxxxxx, P.A.
0000 Xxxx Xxxxx Xxxxx Xxxxxxxxx
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Tel. No. 000-000-0000
Fax No. 000-000-0000
which copy shall not constitute notice for the purposes of this
Agreement.
If to Purchaser, to:
Onkyo America, Inc.
0000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxxx Xxxxxxxxx
Tel. No. 000-000-0000
Fax. No. 000-000-0000
With a copy to:
Xxxx X. Xxxxxxxxxx
Xxx Xxxxxxxx Xxxxxx
Xxx 00000
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Tel. No. 000-000-0000
Fax. No. 000-000-0000
which copy shall not constitute notice for the purposes of this
Agreement.
Any party may change its address for the purpose of this Section 7. by
giving the other parties written notice of its new address in the manner set
forth above.
In the event of the resignation of the Escrow Agent, the successor
escrow agent shall be chosen by the Seller and shall be a corporation having
capital, surplus and undivided profits in excess of Fifty Million Dollars
($50,000,000) and duly qualified to serve as an escrow agent under the laws of
the United States of America or Indiana law, located in Indianapolis, Indiana.
The Escrow Agent who has resigned shall as soon as practicable deliver to the
successor escrow agent the Escrowed Funds and a current account of the affairs
of the Escrowed Funds. Any successor escrow agent shall have the rights, powers,
title and discretion of the original escrow agent hereunder and shall be charged
with all the duties and obligations of the original escrow agent hereunder.
Section 8. Disagreements Over Release of Escrowed Funds. If there is
any disagreement between the Purchaser and the Seller or among them and any
other person, resulting in adverse claims and demands being made in connection
with, or for, all or any portion of the Escrowed Funds, the Escrow Agent shall
refuse to comply with the claims or demands as long as such disagreement shall
continue, but only to the extent of the portion of the Escrowed Funds in
dispute, and in so refusing the Escrow Agent shall make no delivery or other
disposition of the disputed portion of the Escrowed Funds, and in so doing the
Escrow Agent shall not be or become liable in any way to any person for its
failure or refusal to comply with such conflicting or adverse demands; the
Escrow Agent shall deliver the undisputed portion of the Escrowed Funds as
otherwise provided herein. The Escrow Agent shall be entitled to continue so to
refrain from acting and so refuse to act in respect to the disputed portion of
the Escrowed Funds until the Escrow Agent receives authorization as follows:
(a) authorization executed by the Seller and the Purchaser;
(b) a certified or file-stamped copy of a court order resolving the
disagreement or directing a specific distribution of all or any portion
of the Escrowed Funds; or
(c) a ruling pursuant to arbitration resolving the disagreement or
directing a specific distribution of all or any portion of the Escrowed
Funds.
Upon receipt of any such document, the Escrow Agent shall promptly act
according to its terms, thereby being relieved from any duty, responsibility or
liability arising from the adverse claims and demands or from the terms of this
Escrow Agreement with respect to that portion of the Escrowed Funds covered by
the terms of such document.
Section 9. Discharge of Escrow Agent.
(a) The delivery of any portion of the Escrowed Funds in accordance
herewith, shall wholly discharge the Escrow Agent from all
responsibility hereunder only with respect to that portion so delivered
and shall terminate this Escrow Agreement only as it applies to such
portion.
(b) The delivery of all the items of the Escrowed Funds, in accordance
herewith, shall terminate this Escrow Agreement and wholly discharge
the Escrow Agent from all responsibility hereunder.
Section 10. Other Agreements. The Escrow Agent shall be deemed
to have no notice of, and shall not be controlled, limited or bound
by any of the provisions contained in the Agreement, or in any other agreement,
contract, or document by or among the Seller and the Purchaser and any other
person, except as such provision is specifically contained herein.
Section 11. Headings. The article, section and
paragraph headings in this agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.
Section 12. Construction.
(a) The parties have participated jointly in the negotiation and
drafting of his Agreement, and, in the event of an ambiguity or a
question of intent or a need for interpretation arises, this Agreement
shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any of the provisions of this
Agreement.
(b) Except as otherwise specifically provided in this Agreement (such
as by "sole," "absolute discretion," "complete discretion", or words of
similar import), if any provision of this Agreement requires or
provides for the consent, waiver, or approval of a party, such consent,
waiver, and/or approval shall not be unreasonably withheld.
Words of any gender used in this Agreement shall be held and construed
to include any other gender; words in the singular shall be held to include the
plural; and words in the plural shall be held to include the singular; unless
and only to the extent the context indicates otherwise. 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" means "including, without limitation."
Section 13. Severability. If any provision of this Agreement is
declared by any court or other governmental body to be null, void, or
unenforceable, this Agreement shall be construed so that the provision at issue
shall survive to the extent it is not so declared and that all of the other
provisions of this Agreement shall remain in full force and effect.
Section 14. Entire Agreement. This Agreement and the Asset Purchase
Agreement contains the entire understanding among the parties hereto with
respect to the transactions contemplated hereby and supersedes and replaces all
prior and contemporaneous agreements and understandings, oral or written, with
regard to those transactions. All exhibits and schedules hereto are expressly
made a part of this Agreement as fully as though completely set forth herein.
Section 15. Amendments; Waivers. This Agreement may be
amended or modified, and any of the terms, covenants, representations,
warranties, or conditions hereof may be waived, only by a written instrument
executed by the parties hereto, or in the case of a waiver, by the party
waiving compliance. Any waiver by any party of any condition, or of the breach
of any provision, term, covenant, representation, or warranty contained in this
Agreement, in any one or more instances, shall not be deemed to be or
construed as a further or continuing waiver of any condition or of the
breach of any other provision, term, covenant, representation, or warranty of
this Agreement.
Section 16. Parties in Interest. Nothing in this Agreement is intended
to confer any rights or remedies under or by reason of this Agreement on any
Person other than Seller and Purchaser and their respective successors and
permitted assigns.
Section 17. Successors and Assigns. No party hereto shall assign or
delegate this Agreement or any rights or obligations hereunder without the prior
written consent of the other parties hereto, and any attempted assignment or
delegation without prior written consent shall be void and of no force or
effect; provided, however, Purchaser may, without consent but upon notice given
to Seller assign all its rights and delegate its obligations hereunder to a
subsidiary of Purchaser or to a corporation under direct or indirect common
control with Purchaser. This Agreement shall inure to the benefit of and shall
be binding upon the successors and permitted assigns of the parties hereto.
Section 18. Governing Law; Jurisdiction. This Agreement shall be
construed and enforced in accordance with, and governed by, the laws of the
State of Indiana (without giving effect to the principles of conflicts of laws
thereof). The parties hereto irrevocably agree and consent to the non-exclusive
jurisdiction of the courts of the State of Indiana and the federal courts of the
United States, sitting in Indianapolis, Indiana for the adjudication of any
matters arising under or in connection with this Agreement.
Section 19. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which shall together constitute the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed, or caused to be
executed by their duly authorized representatives,
this Agreement as of the date first above written.
"SELLER"
By:
Its:
"PURCHASER"
By:
Its:
"ESCROW AGENT"
By:
Its:
Exhibit 4.01(E)
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
ONKYO AMERICA, INC.
Onkyo America, Inc. (hereinafter called the "Corporation"), organized and
existing under and by virtue of the Indiana Business Corporation Law (the
"IBCL"), does hereby certify as follows:
1. Amendment of Article III of Articles of Incorporation. By unanimous
written consent of the Board of Directors of the Corporation a resolution was
duly adopted, setting forth an amendment to the Articles of Incorporation of the
Corporation and declaring said amendment to be advisable. The shareholders of
the Corporation duly approved said proposed amendment by unanimous written
consent in accordance with the IBCL. The resolution setting forth the amendment
is as follows:
RESOLVED: That Article III of the Articles of Incorporation of the
Corporation be and hereby is deleted in its entirety and the following
Article III is inserted in lieu thereof: Shares
Section 3.1. Number. The total number of shares that the Corporation
is authorized to issue is Ten Thousand (10,000) shares, which shall have no par
value.
Section 3.2. Classes. There shall be two (2) classes of shares of the
Corporation. One class shall be designated as "Common Shares" and shall consist
of Nine Thousand (9,000) of the authorized shares, and the other class shall be
designated as "Preferred Shares" and shall consist of One Thousand (1,000) of
the authorized shares.
Section 3.3. Relative Rights, Preferences, Limitations and
Restrictions of Shares.
(a) Common Shares. Except to the extent expressly granted to the Preferred
Shares, the Common Shares shall have all of the rights accorded to shares
under the Indiana Business Corporation Law (the "IBCL"), including but not
limited to voting rights and all rights to distribution of the net assets
of the Corporation upon dissolution.
(b) Preferred Shares. The Preferred Shares shall have such preferences,
limitations, restrictions and relative voting and other rights as may be
determined, in whole or in part, by the Board of Directors before the
issuance of any shares thereof, by amendment of these Articles of
Incorporation in the manner provided in the IBCL. The Board of Directors
may create one or more series of Preferred Shares and may determine, in
whole or in part, the preferences, limitations, restrictions and relative
voting and other rights of any such series before the issuance of shares of
that series, by amendment of these Articles of Incorporation in the manner
provided in the IBCL.
2. Adoption of First Addendum to Articles of Incorporation. By
unanimous written consent of the Board of Directors of the Corporation a
resolution was duly adopted, setting forth an amendment to the Articles of
Incorporation of the Corporation in the form of a First Addendum thereto, and
declaring said amendment to be advisable. The resolution setting forth the
amendment is as follows:
RESOLVED, that pursuant to Article III of the Articles of
Incorporation, as amended, of the Corporation, the Board of Directors hereby
approves and adopts an amendment to the Articles of Incorporation to create a
new series of Preferred Shares of the Corporation, which new series of Preferred
Shares shall have the designation and the preferences, limitations, restrictions
and relative voting and other rights that are specified in the following First
Addendum to the Articles of Incorporation of the Corporation:
1 Designation. The Board of Directors hereby authorizes the
creation of a new series of Preferred Shares of the
Corporation, which shall be designated the "Series A
Convertible Redeemable Nonvoting Preferred Shares" (being
referred to herein as the "Series A Preferred Shares"). The
Series A Preferred Shares shall have the following
preferences, limitations, restrictions and relative voting and
other rights:
2. Dividends.
(a) Dividends. The holders of the then outstanding Series A Preferred Shares
shall be entitled to receive, out of funds legally available therefor,
cumulative annual dividends when and as they may be declared from time to
time by the Board of Directors of the Corporation at an annual rate per
share equal to five percent (5.0%) of the original purchase price of
$10,000 that is deemed to have been paid for each of the 100 shares of the
Series A Preferred Shares (which amount shall be subject to adjustment
whenever there shall occur a stock split, combination, reclassification or
other similar event involving the Series A Preferred Shares). The Board of
Directors shall declare and cause to be paid such dividends if and to the
extent that there are legally available funds therefor. Such dividends
shall be deemed to accrue on the Series A Preferred Shares on each
anniversary date of initial issuance thereof and be cumulative, whether or
not earned or declared and whether or not there are profits, surplus or
other funds of the Corporation legally available for the payment of
dividends. If such cumulative dividends in respect of any prior or current
annual dividend period shall not have been declared and paid or if there
shall not have been a sum sufficient for the payment thereof set apart, the
deficiency shall first be fully paid before any dividend or other
distribution shall be paid or declared and set apart with respect to any
class of the Corporation's capital stock, now or hereafter outstanding.
Upon conversion or redemption of the Series A Preferred Shares under
Section 5 hereof, all accumulated and unpaid dividends on the Series A
Preferred Shares, whether or not declared, since the date of issue up to
and including the date of conversion thereof (including a pro-rata portion
of dividends for the period if any elapsed since the most recent
anniversary date of initial issuance) shall be declared and paid; provided,
however, that if funds therefor are not legally available upon conversion,
then the Corporation shall issue additional common shares on the date of
conversion thereof, valued at the price to public in the Qualified Public
Offering that causes the conversion to occur.
(b) Restriction on Common Shares Dividends. During such time as any Series A
Preferred Shares remain outstanding the Corporation shall not pay or
declare any dividends or make any other distributions on the Common Shares
unless all annual dividends on the Series A Preferred Shares that have been
deemed to have accrued on the Preferred Shares shall have first been
declared and paid in full; provided nothing herein shall prohibit the
Corporation from purchasing Common Shares from employees or consultants at
the original purchase price thereof pursuant to vesting agreements approved
by the Board of Directors.
3. Liquidation, Dissolution or Winding Up.
In the event of any liquidation, dissolution, merger (where a
change of control occurs), consolidation, sale of all or
substantially all assets (which for purposes hereof shall be
deemed to mean, notwithstanding any statute, rule or case law
to the contrary, the sale of more than 50% of the tangible or
intangible assets of the Corporation) or winding up of the
Corporation, whether voluntary or involuntary, the holders of
Series A Preferred Shares shall be entitled to be promptly
paid out of the assets of the Corporation available for
distribution to holders of the Corporation's capital stock of
all classes (and before any payments are made to holders of
capital stock of any other class), whether such assets are
capital, surplus, or capital earnings, an amount equal to
$10,000 per share of Series A Preferred Shares (which amount
shall be subject to equitable adjustment whenever there shall
occur a stock split, combination, reclassification or other
similar event involving the Series A Preferred Shares) plus
all accrued and unpaid dividends thereon, whether or not
earned or declared, since the date of issue up to and
including the date full payment shall be tendered to the
holders of the Series A Preferred Shares with respect to such
liquidation, dissolution or winding up (collectively, the
"Liquidation Amount"). If the assets of the Corporation
available for distribution to its shareholders shall be
insufficient to pay the holders of Series A Preferred Shares
the full amount of the Liquidation Amount to which they shall
be entitled, the holders of Series A Preferred Shares shall
share ratably in any distribution of assets according to the
amounts which would be payable with respect to the Series A
Preferred Shares held by them upon such distribution if all
amounts payable on or with respect to said shares were paid in
full.
After the payment of the Liquidation Amount shall have
been made in full to the holders of the Series A Preferred
Shares or funds necessary for such payment shall have been set
aside by the Corporation in trust for the account of holders
of the Series A Preferred Shares so as to be available for
such payments, the remaining assets of the Corporation legally
available for distribution to its shareholders shall be
distributed among the holders of other classes of capital
stock of the Corporation (the "Junior Stock") to the exclusion
of the holders of the Series A Preferred Shares.
4.Nonvoting Stock. Except as otherwise required by the Indiana
Business Corporation Law, holders of Series A Preferred Shares
shall not be entitled to vote on any matters submitted to a
vote of security holders of the Corporation; provided,
however, that the Series A Preferred Shares shall nevertheless
have the voting rights afforded nonvoting shares under Indiana
Code 23-1-38-4, as in effect on the date of issue of the
Series A Preferred Shares.
5.Mandatory Conversion of Series A Preferred Shares. The
holders of the Series A Preferred Shares shall have the
following rights and obligations with respect to the
conversion of the Series A Preferred Shares into Common
Shares:
(a) General. Subject to, and effective upon, the closing of a Qualified Public
Offering, all outstanding Series A Preferred Shares shall automatically
convert into Common Shares on the basis set forth in this Section 5. For
purposes hereof, the term "Qualified Public Offering" shall mean an
underwritten public offering pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "Act"),
covering the offer and sale of Common Shares for the account of the
Corporation in which the aggregate proceeds to the Corporation, net of any
underwriting discounts and commissions, equal at least $10,000,000 and in
which the price per share of Common Shares is such that the equity
valuation of the Corporation immediately prior to such public offering is
at least $25,000,000. Holders of shares subject to conversion shall deliver
to the Corporation at its principal office (or such other office or agency
as the Corporation may designate by notice in writing) during its usual
business hours, the certificate or certificates for Series A Preferred
Shares being converted, and the Corporation shall on the date of closing of
the Qualified Public Offering issue and deliver to such holders
certificates for the number of Common Shares to which such holders are
entitled. Until such time as holders of Series A Preferred Shares shall
surrender those certificates therefor as provided above, such certificates
shall be deemed to represent the Common Shares to which the holders shall
be entitled upon the surrender thereof. The number of Common Shares to
which a holder of Series A Preferred Shares shall be entitled upon
conversion shall be equal to the product obtained by multiplying the
Applicable Conversion Rate (determined as provided by Section 5(b)) by the
number of Series A Preferred Shares being converted by each holder thereof.
(b) Applicable Conversion Rate. The conversion rate in effect at any time (the
"Applicable Conversion Rate") shall be the quotient obtained by dividing
$1,000,000 by the Applicable Conversion Value, calculated as provided in
Section 5(c), and by further dividing that sum by the number of
then-outstanding Series A Preferred Shares.
(c) Applicable Conversion Value. The Applicable Conversion Value shall be
$6,610.77 subject to the terms hereof and further adjustment as provided in
this Section.
(d) Adjustment to Applicable Conversion Value. Upon the happening of an
Extraordinary Common Shares Event (as hereinafter defined), the Applicable
Conversion Value for the Series A Preferred Shares shall, simultaneously
with the happening of such Extraordinary Common Shares Event, be adjusted
by multiplying the then effective Applicable Conversion Value with respect
to the Series A Preferred Shares by a fraction, the numerator of which
shall be the number of Common Shares outstanding immediately prior to such
Extraordinary Common Shares Event and the denominator of which shall be the
number of Common Shares outstanding immediately after such Extraordinary
Common Shares Event, and the product so obtained shall thereafter be the
Applicable Conversion Value. The Applicable Conversion Value for the Series
A Preferred Shares shall be readjusted in the same manner upon the
happening of any successive Extraordinary Common Shares Event or Events.
"Extraordinary Common Shares Event" shall mean (i) the issue of additional
Common Shares as a dividend or other distribution on outstanding Common
Shares or on any class or series of Preferred Shares, unless made pro rata
to holders of Series A Preferred Shares, (ii) a subdivision of outstanding
Common Shares into a greater number of Common Shares, or (iii) a
combination of outstanding Common Shares into a smaller number of Common
Shares.
(e) Capital Reorganization or Reclassification. If the Common Shares issuable
upon the conversion of the Series A Preferred Shares shall be changed into
the same or different number of shares of any class or classes of stock,
whether by capital reorganization, reclassification or otherwise (other
than a subdivision or combination of shares or stock dividend or
distribution provided for elsewhere in this Section 5 or by a
Reorganization), then and in each such event, the holder of each share of
Series A Preferred Shares shall have the right thereafter to convert such
share into the kind and amount of shares of stock and other securities and
property receivable upon such capital reorganization, reclassification or
other change by holders of the number of Common Shares into which such
Series A Preferred Shares might have been converted immediately prior to
such capital reorganization, reclassification or other change.
(f) Capital Reorganization, Merger or Sale of Assets. If at any time or from
time to time there shall be a capital reorganization of the Common Shares
(other than a subdivision, combination, reclassification or exchange of
shares provided for elsewhere in this Section 5) or a merger or
consolidation of the Corporation with or into another corporation, or the
sale of all or substantially all of the Corporation's properties and assets
to any other person or entity (which for purposes hereof shall be deemed to
mean, notwithstanding any statute, rule or case law to the contrary, the
sale of more than 50% of the tangible or intangible assets of the
Corporation), or the sale of a majority of the voting securities of the
Corporation in one transaction or a series of related transactions (any of
which events is herein referred to as a "Reorganization"), then as a part
of such Reorganization, provision shall be made so that the holders of the
Series A Preferred Shares shall thereafter be entitled to receive upon
conversion of the Series A Preferred Shares, the number of shares of stock
or other securities or property of the Corporation, or of the successor
corporation resulting from such Reorganization, to which such holder would
have been entitled if such holder had converted its Series A Preferred
Shares immediately prior to such Reorganization. In any such case,
appropriate adjustment shall be made in the application of the provisions
of this Section 5 with respect to the rights of the holders of the Series A
Preferred Shares after the Reorganization, to the end that the provisions
of this Section 5 (including adjustment of the Applicable Conversion Value
then in effect and the number of shares issuable upon conversion of the
Series A Preferred Shares) shall be applicable after that event in as
nearly equivalent a manner as may be practicable.
(g) Certificate as to Adjustments; Notice by Corporation. In each case of
an adjustment or readjustment of the Applicable Conversion Rate, the
Corporation at its expense will furnish each holder of Preferred
Shares with a certificate, executed by the president and chief
financial officer (or in the absence of a person designated as the
chief financial officer, by the treasurer) showing such adjustment or
readjustment, and stating in detail the facts upon which such
adjustment or readjustment is based.
(h) Cash in Lieu of Fractional Shares. In the event of conversion of the
Series A Preferred Shares, the Corporation shall not be issue a
fractional interest in a Common Share or scrip in lieu thereof, but
instead shall pay to the holder of the Series A Preferred Shares which
were converted a cash adjustment in respect of fractional shares in an
amount equal to the same fraction of the market price per share of the
Common Shares (as determined in a reasonable manner prescribed by the
Board of Directors) at the close of business on the Conversion Date.
The determination as to whether or not any fractional share interest
has been created upon any conversion of Series A Preferred Shares
shall be based upon the total number of Series A Preferred Shares
being converted at any one time by any holder thereof, not upon each
share of Series A Preferred Shares being converted.
(i) Reservation of Common Shares. The Corporation shall at all times
reserve and keep available out of its authorized but unissued Common
Shares, solely for the purpose of effecting the conversion of the the
Series A Preferred Shares, such number of its Common Shares as shall
from time to time be sufficient to effect the conversion of all
outstanding Series A Preferred Shares, and if at any time the number
of authorized but unissued Common Shares shall not be sufficient to
effect the conversion of all then outstanding Series A Preferred
Shares, the Corporation shall take such corporate action as may be
necessary to increase its authorized but unissued Common Shares to
such number of shares as shall be sufficient for such purpose.
6. No Reissuance of Preferred Shares. No Series A
Preferred Shares acquired by the Corporation by
reason of redemption, purchase, conversion or
otherwise shall be reissued, and all such shares
shall be canceled, retired and eliminated from the
shares which the Corporation shall be authorized to
issue. The Corporation may from time to time take
such appropriate corporate action as may be necessary
to reduce the authorized number of Series A Preferred
Shares accordingly.
7. Redemption
(a) General. At any time after October 1, 2002 (or
earlier in the event of the consummation of an event
of the type described by Section 7(b) hereeof or the
first sentence of Section 3 hereof), at the election
of either (i) the holders of a majority of the then
outstanding Series A Preferred Shares, the
Corporation, or (ii) the Corporation, the Corporation
shall, to the extent it may do so under applicable
law, redeem all (but not less than all) of the Series
A Preferred Shares on or after the 30th day following
receipt by the Corporation of notice of election by
the holders of a majority of the shares thereof, or
receipt by the holders thereof of notice of election
by the Corporation, as the case may be. In the event
that all the Series A Preferred Shares cannot be
redeemed because of a prohibition under applicable
law, (i) the Corporation shall redeem pro rata from
such holders of Series A Preferred Shares as many
Preferred Shares as it may legally redeem, and (ii)
any Series A Preferred Shares that are scheduled for
redemption that are not redeemed shall be redeemed as
soon as such prohibition no longer exists and the
Redemption Price (as defined below) will bear
interest at the annual rate of 8% from the date that
payment of the Redemption Price would otherwise have
been made. The redemption price for each share of
Series A Preferred Shares redeemed pursuant to this
Section 7(a) (the "Redemption Price") shall be equal
to the quotient that is obtained by dividing:
(i) the product obtained by multiplying (A) the product
of multiplying 4.3 by the Corporation's average,
annualized net income before interest, taxes,
depreciation and amortization (which, for the
purposes of this Section, shall include Top Source
Automotive, Inc.'s net income before interest, taxes,
depreciation and amortization for the September 1999)
("EBITDA") for the period beginning on September 1,
1999, and ending on the last day of the month
preceding the month during which notice of election
to redeem is given by the electing party, by (B) the
fully-diluted percentage of Common Shares that the
Series A Preferred Shares represent at the time of
the giving of the notice of the redemption election
(where the "fully-diluted percentage" shall be
calculated by dividing the number of Common Shares
that would then be issuable upon conversion of the
Series A Preferred Shares by the number of Common
Shares that would then be outstanding assuming
issuance by the Corporation of all other unissued
Common Shares then reserved by the Corporation for
grant or issuance under options and warrants, or upon
conversion of other outstanding convertible
securities issued by the Corporation), by
(ii) the number of Series A Preferred Shares being redeemed by
the election.
(b) Related Party Transactions. In the event that the Corporation enters
into any agreement (or a series of transactions designed to avoid the
$1,000,000 limit set forth below) with a Related Party (as defined
below) that involves the payment by the Corporation of an amount to
that Related Party in excess of One Million Dollars ($1,000,000), in
cash or tangible or intangible property, the holder of the Preferred
Shares at the time that transaction is entered into shall have the
right to redeem its Shares at the Redemption Price. The Corporation
shall give notice of any such agreement to the Parent within 14 days
of the entry into any such agreement, and the Parent shall have 14
days after the receipt of that notice to notify the Corporation if the
Parent intends to exercise its redemption right. The Corporation must
redeem the Preferred Shares within 30 days at the Redemption Price,
using the last full month prior to the date on which the agreement
with the Related Party was entered into for the purposes of the EBITDA
calculation described in Section 7(a)(i). For the purposes of this
Section 7(b), "Related Party" shall mean any officer, director,
shareholder or consultant of the Corporation other than registered
investment advisers. The foregoing redemption privilege shall not
apply to transactions in the normal course of business with
shareholders of the Corporation which were record owners as of
September 30, 1999, or transactions with the Corporations wholly-owned
subsidiaries.
(c) Surrender of Certificates. Each holder of Series A Preferred Shares to
be redeemed under this Section 7 shall surrender the certificate or
certificates representing such shares to the Corporation at its
principal office at a date and time to be specified in the notice of
election to redeem (but not earlier than a business day which is at
least 30 days after the date of the recipient's receipt of notice of
election to redeem) (the "Redemption Date"), and thereupon the
Redemption Price for such shares as set forth in this Section 7 shall
be paid to the order of the person whose name appears on such
certificate or certificates. Irrespective of whether the certificates
therefor shall have been surrendered, all Series A Preferred Shares
that are the subject of a notice shall be deemed to have been redeemed
and shall be canceled effective as of the Redemption Date, unless the
Corporation shall default in the payment of the applicable Redemption
Price.
8. Notices of Record Date. In the event of
(a) any taking by the Corporation of a record of the
holders of any class of securities for the purpose of
determining the holders thereof who are entitled to
receive any dividend or other distribution, or any
right to subscribe for, purchase or otherwise acquire
any shares of stock of any class or any other
securities or property, or to receive any other
right, or
(b) any capital reorganization of the Corporation, any
reclassification or recapitalization of the capital
stock of the Corporation, any merger of the
Corporation, or any transfer of all or substantially
all of the assets of the Corporation to any other
corporation, or any other entity or person, or
(c) any voluntary or involuntary dissolution,
liquidation or winding up of the Corporation, then
and in each such event the Corporation shall mail or
cause to be mailed to each holder of Series A
Preferred Shares a notice specifying (i) the date on
which any such record is to be taken for the purpose
of any event referred to in (a) above, (ii) the date
on which any such event referred to in clause (b) is
expected to become effective and (iii) the time, if
any, that is to be fixed, as to when the holders of
record of Common Shares (or other securities) shall
be entitled to exchange their Common Shares (or other
securities) for securities or other property
deliverable upon any event referred to in clauses (b)
and (c). Such notice shall be mailed at least ten
(10) days prior to the date specified in such notice
on which such action is to be taken.
Exhibit 4.02(b)ASSUMPTION OF LIABILITIES
In order to induce Onkyo America, Inc., an Indiana corporation
("Purchaser") to assume each of the obligations and liabilities of Top Source
Automotive, Inc., a Florida corporation ("Seller") that are expressly assumed by
that certain Asset Purchase Agreement dated ______, 1999 by and among Top Source
Technologies, Inc., Purchaser and Seller (collectively "Assumed Liabilities"),
Seller hereby represents and warrants to Purchaser that no default exists in the
performance by Seller of any of the terms, covenants, provisions, or agreements
required to be made, kept, or performed by Seller under or pursuant to any of
the Assumed Liabilities prior to the date hereof, and there is no event which
with the giving of notice or lapse of time will constitute a default by Seller
under or pursuant to any of the Assumed Liabilities.
In consideration of the foregoing representations and warranties of
Seller and other valuable consideration, Purchaser hereby assumes and agrees to
make all payments, and to perform and keep all promises, covenants, conditions,
and agreements to be made, kept, and performed by Seller after the date hereof
under or pursuant to the Assumed Liabilities.
IN WITNESS WHEREOF, the parties hereto have executed, or caused to be
executed by their duly authorized representatives, this Agreement as of the date
first above written.
"SELLER"
TOP SOURCE AUTOMOTIVE, INC.
By:
Its:
"PURCHASER"
ONKYO AMERICA, INC.
By:
Its:
OFFICER'S CERTIFICATE
Onkyo America, Inc.
The undersigned, being the duly qualified and acting Executive Vice
President-Finance of Onkyo America, Inc., an Indiana corporation (the
"Corporation"), hereby certifies to Ice Xxxxxx Xxxxxxx & Xxxx as follows, and
intends that they rely on such certifications in connection with their opinion
(the "Opinion") to be delivered to Top Source Automotive, Inc. and Top Source
Technologies, Inc. (collectively, the "Sellers"), pursuant to the terms of the
Asset Purchase Agreement dated as of September 30, 1999 (the "Agreement"), by
and among the Corporation and the Sellers, and all other agreements and
documents contemplated therein (collectively with the Agreement, the
"Transaction Documents"):
1. The copy of the Articles of Incorporation of the Corporation,
attached hereto as Exhibit A, is a true and accurate copy of such Articles as
currently in force and effect as of the date hereof.
2. The copy of the Bylaws of the Corporation, attached hereto as
Exhibit B, is a true and accurate copy of such Bylaws as currently in force and
effect as of the date hereof.
3. The copy of the resolutions of the Corporation's Board of Directors,
attached hereto as Exhibit C, is a true and accurate copy of the resolutions
duly adopted by unanimous written consent by the Board of Directors on September
30, 1999. These resolutions are currently in full force and effect as set forth,
and have not been amended, altered or superseded.
4. The execution and delivery by the Corporation of the Transaction
Documents and the performance of its obligations under the Agreement have been
duly authorized by all requisite corporate action by the Corporation.
5. The execution and delivery by the Corporation of the Agreement does
not, and the performance by the Corporation of the transactions contemplated
thereby will not (a) conflict with or violate any provision of its Articles of
Incorporation or Bylaws or (b) conflict with or violate (i) any judgment, order,
writ, injunction or decree binding on the Corporation, or (ii) any law, rule,
regulation or ordinance of the State of Indiana applicable to the Corporation.
6. Except as disclosed in Schedule 7.09(a) to the Agreement, there is
no action, proceeding or investigation before or by any court, governmental
agency or other body or official pending or overtly threatened in writing
against the Corporation questioning the validity of any action by the
Corporation in connection with the execution, delivery and performance of each
of the Loan Documents, or that would have a material adverse effect on the
property or the financial conditions or operations of the Corporation.
7. The Preferred Stock has been duly reserved for issuance. Neither the
issuance, the sale nor the delivery of the Preferred Stock as contemplated by
the Agreement is subject to any preemptive right of stockholders of the
Corporation, or is subject to any contractual right of first refusal or other
right in favor of any person.
IN WITNESS WHEREOF, this Certificate has been executed as of the 30th
day of September, 1999.
By:
Xxxxxxx X. Pillow
Executive Vice President-Finance of
Onkyo America, Inc.
UNANIMOUS WRITTEN CONSENT OF
THE BOARD OF DIRECTORS OF
ONKYO AMERICA, INC.
TO ACTION WITHOUT A MEETING
The undersigned, being all of the members of the Board of Directors
(the "Directors") of Onkyo America, Inc. (the "Company"), an Indiana
corporation, hereby consent that the following action may be, and the same
hereby is, taken without the necessity of a meeting of the Board of Directors of
the Company. The resolutions, as set forth below, are hereby adopted:
RESOLVED, that the Directors deem it is desirable and in the
best interest of the Company to purchase substantially all of the
assets of Top Source Automotive, Inc., a Florida corporation (the
"Seller") which engages in the design, assembly and sale of overhead
mounted speaker systems, pursuant to an Asset Purchase Agreement (the
"Agreement") among Seller, Top Source Technologies, Inc., a Delaware
corporation ("Parent"), and the Company, to pay the purchase price in
part with one or more promissory notes payable to the Seller or Parent
(the "Notes"), and to grant to the Seller security interests in and
liens on the Company's real and personal property to secure one or more
of the Notes.
RESOLVED FURTHER, that the President, the Vice President, the
Treasurer and the Secretary (the "Authorized Officers") or any other
officer of the Company designated in writing by any Authorized Officer,
or any of them acting singly, shall be and they hereby are, authorized,
empowered and directed to approve, execute and deliver on behalf of the
Company the Agreement and the Notes substantially in the forms
presented to the Directors in connection with these resolutions, with
such changes thereto as shall be approved by any Authorized Officer and
upon such other terms and conditions as any Authorized Officer of the
Company deems reasonable, necessary, appropriate or expedient and in
the best interest of the Company.
RESOLVED FURTHER, that the Authorized Officers, or any other
officer of the Company designated in writing by any Authorized Officer,
or any of them acting singly, shall be and they hereby are, authorized,
empowered and directed to take any and all actions and to execute and
deliver any and all agreements, instruments and documents which such
officer or officers deem necessary or desirable in connection with the
effecting of the transactions referenced in the preceding Resolutions,
the doing of any such action or the execution and delivery of any such
agreement, instrument or document to constitute conclusive evidence of
the approval of such act or execution and delivery by the Directors.
RESOLVED FURTHER, that all acts and deeds heretofore done by
any of the officers of the Company for and on behalf of the Company in
entering into, executing, acknowledging or attesting any agreement,
document or instrument or in carrying out the terms and intentions of
these resolutions are hereby ratified and confirmed.
RESOLVED FURTHER, that this Consent be in lieu of a meeting of
the Directors of the Company, and shall be filed in the minute book of
the Company in place of any minutes of such meeting.
This consent may be executed in one or more counterparts which, when
signed by all of the Directors, shall constitute their unanimous consent.
Dated this day of _______________, 1999.
Xxxxxxx Xxxxxxxxx
Xxxxxxx X. Pillow
(SECOND) REAL ESTATE MORTGAGE AND (THIRD) FIXTURE FILING
THIS INDENTURE WITNESSETH, That ONKYO AMERICA, INC., an Indiana
corporation ("Mortgagor") MORTGAGES AND WARRANTS to TOP SOURCE AUTOMOTIVE, INC.,
a Florida corporation ("Mortgagee") the real estate in Xxxxxxxxxxx County,
Indiana, more particularly described in Exhibit A attached hereto, and
incorporated herein, together with all rights, privileges, interests, easements,
hereditaments, appurtenances, and improvements now or hereafter belonging,
appertaining, attached to, or used in connection therewith (the "Real Estate");
together, also, with any and all of the right, title and interest of
Mortgagor in and to any and all fixtures, fittings, apparatus, equipment, and
machinery attached to the Real Estate, including, but not limited to, any
elevators, air conditioning and heating equipment, and all replacements thereof,
now or at any time hereafter affixed or attached to said Real Estate, all of
which Mortgagor hereby declares and agrees shall be and remain and constitute a
portion of the security for the mortgage indebtedness and a part of the realty
covered by and subject to the lien of this Mortgage, all of the above described
property in this paragraph being hereafter called the "Fixtures" (the Real
Estate and the Fixtures are hereinafter collectively called the "Mortgaged
Premises").
This mortgage ("Mortgage") is given to secure the performance of the
provisions hereof and the payment of a certain Non-Transferable Secured
Subordinated Promissory Note ("Note") dated September 30, 1999, in the principal
amount of Six Million Five Hundred Thousand and 00/100 Dollars ($6,500,000.00)
with interest and a final maturity as therein provided. Said principal and
interest are payable as provided in the Note.
Mortgagor covenants and agrees with Mortgagee that:
1. PAYMENT OF INDEBTEDNESS. Mortgagor shall pay when due all indebtedness
secured by this Mortgage, on the dates and in the amounts, respectively, as
provided in the Note or in this Mortgage, without relief from valuation and
appraisement laws, and with attorneys' fees. Mortgagor shall have the prepayment
privileges as are provided in the Note.
2. LIENS AND TAXES. Prior to any delinquency, Mortgagor will pay and discharge,
or provide for the payment and discharge of, as the same shall become due and
payable, all taxes, assessments, levies and all other charges of the United
States of America, and of any state or political subdivision thereof, which may
be levied, assessed or imposed on the Mortgaged Property; and it will not suffer
or permit (or if suffered or permitted, it will, within sixty (60) days
thereafter, cause to be released and discharged) any mechanics', materialmen's,
laborers', or statutory lien; provided, however, that Mortgagor shall not be
required to pay or cause to be paid any such tax, assessment, levy, charge or
lien so long as Mortgagor shall in good faith contest the validity or amount
thereof and shall make provision for the possible payment thereof as reasonably
required by Mortgagee, and Mortgagor shall promptly notify Mortgagee of the
levy, assessment or imposition of any such tax, assessment, levy or charge or
the filing of any such lien and shall take further steps as may be reasonably
required by Mortgagee, including but not limited to the making of a deposit or
posting of a bond or indemnity, in order to prevent the Mortgaged Property, or
any part thereof, from being subject to the possibility of loss, forfeiture or
sale.
3. REPAIR OF MORTGAGED PREMISES; INSURANCE. Mortgagor shall keep the Mortgaged
Premises in good repair and shall not commit waste thereon. Mortgagor shall
procure and maintain in effect at all times adequate insurance against loss,
damage to, or destruction of the Mortgaged Premises because of fire, windstorm
and such other hazards and in such amounts, as required under the terms of the
First Mortgage (as hereinafter defined). Mortgagor shall deliver a certificate
evidencing the existence of all such insurance coverages to Mortgagee within ten
(10) days after the date hereof. Mortgagor shall promptly furnish to Mortgagee
all renewal notices and all receipts of paid premiums. At least thirty (30) days
prior to the expiration date of any such policy, Mortgagor shall deliver to
Mortgagee a renewal certificate in form satisfactory to Mortgagee.
4. ADVANCEMENTS TO PROTECT SECURITY. Mortgagee, at its option, upon fifteen (15)
days prior written notice to Mortgage, may advance and pay all sums necessary to
protect and preserve the security intended to be given by this Mortgage, unless
Mortgagor has paid such amounts within the 15-day period following such notice.
All sums so advanced and paid by Mortgagee shall become a part of the
indebtedness secured hereby and shall bear interest from the date or dates of
payment at the rate of interest as provided in the Note. Such sums may include,
but are not limited to, insurance premiums, taxes, assessments and liens (other
than the liens of the First Mortgage and the Credit Agreement, as that term is
hereinafter defined) which may be or become prior and senior to this Mortgage as
a lien on the Mortgaged Premises, or any part thereof, and all costs, expenses
and attorneys' fees incurred by Mortgagee in respect of any and all legal or
equitable proceedings which relate to this Mortgage or to the Mortgaged
Premises.
5. DEFAULT BY MORTGAGOR; REMEDIES OF MORTGAGEE. Upon default by Mortgagor in any
payment provided for herein or in the Note, or in the performance of any
covenant or agreement of Mortgagor hereunder, and the continuation of such
default for a period of ten (10) days after written notice of default served by
Mortgagee upon Mortgagor, or if Mortgagor shall be adjudged bankrupt, or if a
proceeding shall be commenced for the appointment of a trustee or receiver for
Mortgagor or for any part of the Mortgaged Premises and such proceeding shall
remain undismissed or unstayed and in effect for a period of thirty (30) days
(each such occurrence being an "Event of Default"), then and in any such event,
the entire indebtedness secured hereby shall become immediately due and payable
at the option of Mortgagee, without further notice, and this Mortgage may be
foreclosed accordingly. Upon any Event of Default, Mortgagee shall have all the
rights and remedies permitted under the Uniform Commercial Code under the laws
of the State of Indiana ("UCC") with respect to the security interest in the
Fixtures granted hereunder and all rights and remedies authorized under this
Mortgage, and other laws.
6. NON-WAIVER; REMEDIES CUMULATIVE. No delay by Mortgagee in the exercise of any
of its rights hereunder shall preclude the exercise thereof so long as Mortgagor
is in default hereunder, and no failure of Mortgagee to exercise any of its
rights hereunder shall preclude the exercise thereof in the event of a
subsequent default by Mortgagor hereunder. Mortgagee may enforce any one or more
of its rights or remedies hereunder successively or concurrently.
7. EXTENSIONS; REDUCTIONS; RENEWALS; CONTINUED LIABILITY OF MORTGAGOR.
Mortgagee, at its option, may extend the time for the payment of the
indebtedness, or reduce the payments thereon, or accept a renewal note or notes
therefor, without consent of any junior lien holder, and without the consent of
Mortgagor if Mortgagor has then parted with title to the Mortgaged Premises. No
such extension, reduction or renewal shall affect the priority of this Mortgage
or impair the security hereof in any manner whatsoever. This Mortgage shall
secure any notes or other evidence of indebtedness given in substitution for the
Note.
8. DUE ON SALE. If all or any part of the Mortgaged Premises, or any interest
therein, is sold, transferred, assigned or otherwise disposed of, or further
encumbered by a mortgage or otherwise (other than the First Mortgage and the
Credit Agreement, and any extensions or replacements thereof), without
Mortgagee's prior written consent, Mortgagee, at its option, may declare all
sums secured by this Mortgage immediately due and payable. Any contract of sale
of any kind including, without limitation, land contract, conditional sales
contract, installment sales contract, lease with option to purchase (whether
such option is oral or contained within such lease or in any other document) or
any other transfer of interest in the Mortgaged Premises shall be deemed a
transfer requiring prior written consent of Mortgagee. If Mortgagee exercises
the option to accelerate payment of the indebtedness, all such indebtedness
shall become due and payable upon the earlier of (i) closing of the sale or (ii)
within thirty (30) days after the mailing of a notice from Mortgagee to
Mortgagor setting forth the total sums due. In the event of the failure of
Mortgagor to pay such sums prior to expiration of such thirty (30) day period,
Mortgagee may, without further notice or demand, invoke any remedy permitted
hereunder for default.
9. FIXTURE FILING. This Mortgage shall constitute a security agreement under
Article 9 of the UCC with respect to the Fixtures covered by this Mortgage.
Mortgagor and Mortgagee agree, to the extent permitted by law, that: (i) all of
the goods described within the definition of the word "Fixtures" herein are, or
are to become, fixtures on the Real Estate; (ii) this instrument, upon recording
in the real estate records of the proper office, shall constitute a "fixture
filing" within the meaning of Sections 9-313 and 9-402 of the UCC; (iii) the
addresses of the Mortgagor and Mortgagee, as "Debtor" and "Secured Party,"
respectively, are as set forth in the notice provision in this Mortgage; and
(iv) a carbon, photographic, or other reproduction of this instrument, or of any
financing statement relating hereto, shall be sufficient for filing purposes.
10. SECOND MORTGAGE; THIRD FIXTURE FILING. The lien of this Mortgage on the Real
Estate and the Fixtures is subordinate to that certain Mortgage from Mortgagor
to Home Federal Savings Bank dated February 26, 1998 and filed as Instrument
Number 98-2904 in the Xxxxxxxxxxx County Recorder's Office ("First Mortgage").
The lien of this Mortgage on the Fixtures is further subordinate to that certain
Credit Agreement from Mortgagor to LaSalle Bank National Association dated as of
September 24, 1999, as amended, a financing statement for which is filed in the
Xxxxxxxxxxx County Recorder's Office ("Credit Agreement"). 11. NOTICE. Any
notice to be given to either party under this Mortgage shall be deemed
effectively given if it is in a written instrument mailed by United States
certified mail, postage prepaid, return receipt requested, or sent by recognized
overnight courier, to each of the parties at the following address for each, or
at such other address as either party may furnish the other in writing: 12. If
to Mortgagee:
Top Source Automotive, Inc.
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000-0000
Attention: President
If to Mortgagor: Onkyo America, Inc.
0000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Pillow
Any such notice shall be deemed given within three (3) business days after
deposit with the United States Postal Service and the next business day after
deposit with a recognized overnight courier.
1. MISCELLANEOUS. All rights and obligations hereunder shall extend to and be
binding upon the several heirs, representatives, successors and assigns of the
parties to this Mortgage. When applicable, use of the singular form of any word
also shall mean or apply to the plural and masculine form shall mean and apply
to the feminine or the neuter. The titles of the several paragraphs of this
Mortgage are for convenience only and do not define, limit or construe the
contents of such paragraphs. 2.
IN WITNESS WHEREOF, the Mortgagor has executed this Mortgage, this day
of September, 1999.
ONKYO AMERICA, INC.,
an Indiana corporation
By:
Title:
STATE OF _____________ )
) SS:
COUNTY OF ___________ )
Before me, a Notary Public in and for said County and State, personally
appeared ____________________________, the _____________________ of Onkyo
America, Inc., an Indiana corporation, who acknowledged the execution of the
foregoing Mortgage for and on behalf of said corporation.
Witness my hand and Notarial Seal this _____ day of __________________,
1999.
(signature)
(printed name)Notary Public
My Commission Expires: County of Residence:
----------------------- --------------------------
This instrument was prepared by Xxxxxx X. Xxxx, XX, Ice Xxxxxx Xxxxxxx and Xxxx,
Xxx Xxxxxxxx Xxxxxx, Xxx 00000, Xxxxxxxxxxxx, Xxxxxxx 00000. Telephone: (317)
000-0000.
EXHIBITS 13.06A AND 13.06B
FORMS OF EMPLOYMENT AND NON-COMPETITION AGREEMENTS
NON-DISCLOSURE, NON-COMPETITION
AND NON-SOLICITATION AGREEMENT
This Non-disclosure, Non-competition and Non-solicitation Agreement
(the "Agreement") is entered into this 30th day of September, 1999, by and
between Top Source Technologies, Inc., a Delaware corporation ("TST"), Top
Source Automotive, Inc., a Florida corporation ("TSA") (collectively referred to
herein as the "Seller"), and Onkyo America, Inc., an Indiana corporation
("Onkyo").
Preliminary Statement:
Pursuant to the terms of an Asset Purchase Agreement being entered into
by and among Onkyo and the Seller concurrently herewith (the "Asset Purchase
Agreement"), Onkyo has agreed to purchase substantially all of the assets,
properties and interests in assets and properties of the Seller (including
goodwill) relating to Seller's business of design, assembly and sale of overhead
speaker systems installed in vehicles on an original equipment manufacturer and
after-market basis (the "Business"). In order to induce Onkyo to acquire the
Business and enter into the Asset Purchase Agreement and as an essential element
thereof, the Seller has agreed to enter into an agreement with Onkyo restricting
their respective rights to disclose information relating to Onkyo (including
information formerly owned by the Seller and acquired by Onkyo pursuant to the
Asset Purchase Agreement), compete with the Business, and solicit former
customers and employees of the Business.
Terms and Conditions:
In consideration of Onkyo's execution and delivery of the Asset
Purchase Agreement and its purchase of the Business from Seller, and for good
and valuable other consideration, the receipt and sufficiency of which are
acknowledged, Onkyo, on the one hand, and the Seller (jointly and severally), on
the other hand, hereby agree as follows:
1. Secrecy and Confidential Information
(a) Confidential Information. "Confidential Information" shall mean all
information, whether or not originally created by Onkyo or Seller, which (1) is
used in the Business that is being acquired by Onkyo or used in Onkyo's other
businesses and is proprietary to, about, or created by the Business or Onkyo;
and (2) is not generally known by any persons unrelated to the Business or
Onkyo. Confidential Information includes, but is not limited to, the following
types of information (whether or not reduced to writing or designated as
confidential):
(i) Information regarding any of Onkyo's customers and
clients, and their representatives, potential customers or leads, the
identity of any contracts (contents and parties) to which Onkyo is or
was a party or is or was bound, data provided by Onkyo, and the type,
quantity and specifications of products and services being sold,
purchased, leased, licensed or received by Onkyo;
(ii) Information received by Onkyo from third parties (such as
vendors) under an obligation of confidentiality, restricted disclosure
or restricted use;
(iii) Any of Onkyo's internal personnel and financial
information (including the revenue, costs or profits associated with
any of Onkyo's products); vendor and supplier names, payroll
information, purchasing and internal cost information, internal service
and operational manuals and other information of Onkyo; and the manner
and methods of conducting Onkyo's business;
(iv) Information with respect to Onkyo's products, services,
facilities and methods, systems, trade secrets and other intellectual
property;
(v) Work product related to work or projects performed
for Onkyo or its customers;
(vi) Marketing and developmental plans, price and cost data,
price and fee amounts, pricing and billing policies, quoting
procedures, marketing techniques, methods of obtaining business,
forecasts, forecast assumptions and volumes, future plans and potential
strategies; and
(vii) All Confidential Information of the Business which
constituted an asset of the Seller's and became an asset of Onkyo as a
result of the transaction described in the Asset Purchase Agreement.
(b) Ownership of Confidential Information. The Seller hereby
acknowledges and agrees that all Confidential Information, whether developed
before or after the asset acquisition, is now and shall remain the exclusive
property of Onkyo, whether or not prepared in whole or in part by Onkyo or its
employees. The Seller shall, upon the execution of this Agreement, promptly
deliver to Onkyo all documents, tapes, disks, or other storage media and any
other materials, and all copies thereof in whatever form, in the possession of
Seller pertaining to the Confidential Information; provided, however, that
Seller may make (at Seller's expense) and keep one copy of each of such items.
(c) Non-Disclosure and Non-Use of Confidential Information. In
furtherance of this Agreement and in order to assure adequate protection of
Onkyo against the wrongful use or disclosure of Confidential Information, the
Seller agrees that it will hold all Confidential Information in strict
confidence and solely for the benefit of Onkyo, and that, except with the prior
written consent of the Board of Directors of Onkyo (the "Board"), it will not
directly or indirectly disclose or use or authorize any third party to disclose
or use any Confidential Information. The Seller's obligations set forth in this
Section 1(c), and Onkyo's rights and remedies with respect thereto, whether
legal or equitable, shall remain in full force and effect for the five (5) year
period immediately following the Closing Date, as that term is defined in the
Asset Purchase Agreement (the "Restricted Period").
2. Non-Competition. During the Restricted Period, the Seller shall not,
directly or indirectly engage in any activity or business that is substantially
similar to or competitive with that of the Business in (i) any county of any
state of the United States of America, (ii) any the state of Michigan and any
other state in which the Business within one year of the Closing Date has made
sales to DaimlerChrysler, (iii) any other state of the United States of America,
(iv) province of Canada, or (v) geographic area where Seller was or is engaged
in the Business at any time within 12 months before the Closing Date, nor shall
the Seller, without the express written consent of the Board, directly or
indirectly engage in, own, manage, operate, join, control, lend money or other
assistance to, or participate in or be connected with, as an officer, director,
employee, partner, shareholder, consultant, manager, agent, or otherwise, any
individual, corporation, partnership, firm, other company, business
organization, or entity that is engaged in any activity or business that is
substantially similar to or competitive with that of the Business in any (i)
county of any state of the United States of America, (ii) the state of Michigan
and any other state in which the Business within one year of the Closing Date
has made sales to DaimlerChrysler, (iii) other state of the United States of
America, (iv) province of Canada, or (v) geographic area where Seller was or is
engaged in the Business at any time within 12 months before the Closing Date.
For purposes of this Agreement, the phrase "engaged in the Business" shall be
deemed to include, but shall not be limited to, manufacturing replacement parts
or selling replacement parts to a manufacturer, distributor or other customer.
The Business shall also be deemed to have been "engaged in the Business" in any
area where the Business does not make direct sales to end-users, but where
distributors to whom the Business does make direct sales make sales of its
replacement parts to their direct customers.
3. Non-Solicitation.
(a) During the Restricted Period, the Seller shall not, on its own
behalf or on behalf of another individual or company or in any other capacity:
(i) in violation of Section 2 of this Agreement, call upon,
solicit, contact or service DaimlerChrysler, Kenwood, Clarion, or any
other customer or potential customer of the Business that the Business
called upon, solicited, contacted or serviced within 12 months prior to
the acquisition of its assets by Onkyo; or
(ii) solicit for employment, endeavor to entice away from
Onkyo, or otherwise interfere with Onkyo's relationship with any person
who is or becomes employed by or otherwise engaged to perform services
for Onkyo in relation to the Business (including any leased employees
utilized by Onkyo), or any vendors or suppliers of Onkyo.
4. Reasonableness of Terms. The Seller acknowledges that the terms,
covenants and restrictions contained in Section 1 through Section 3 above,
including the duration, scope and territory thereof are, under the
circumstances, fair and reasonable in all respects and necessary to safeguard
the goodwill and proprietary interests of Onkyo in the Business being acquired.
In the event that a court of competent jurisdiction makes a final determination
that any term or provision is overly broad or unreasonable, Onkyo and the Seller
agree that such restriction shall be enforceable on such modified terms as may
be deemed reasonable and enforceable by a court of competent jurisdiction. Such
modified restriction shall, as closely as possible, approximate the intention of
the parties with respect to the invalid or unenforceable term, as evidenced by
the remaining valid and enforceable terms and conditions of this Agreement.
5. Remedies. The Seller recognizes that the disclosure of Confidential
Information or any other breach of this Agreement may cause irreparable injury
to Onkyo, inadequately compensable in money damages. Accordingly, in addition to
any other legal or equitable remedies that may be available to Onkyo, the Seller
agrees that Onkyo may seek and obtain injunctive relief against the breach or
threatened breach of any of the Seller's obligations hereunder and that the
prevailing party shall be entitled to recover from the other party its
reasonable attorneys' fees and costs of any action to enforce this Agreement.
6. Governing Law. Indiana law shall govern the validity, performance,
enforcement, interpretation and any other aspect of this Agreement,
notwithstanding any state's choice of law provisions to the contrary. The
parties intend the provisions of this Agreement to supplement, but not displace,
their respective rights and responsibilities under Indiana's Trade Secrets Act,
IC ss. 24-2-3-1 et seq., as amended.
7. Notice. All notices required or desired to be given under this
Agreement shall be in writing and shall be deemed to have been duly given (i) on
the date of service if served personally on the party to whom notice is to be
given, (ii) on the date of receipt by the party to whom notice is to be given if
transmitted to such party by telefax, provided a copy is mailed as set forth
below on the date of transmission, or (iii) on the third day after mailing if
mailed to the party to whom notice is to be given by registered or certified
mail, return receipt requested, postage prepaid, to the addresses set forth in
the Asset Purchase Agreement. Any party may, by giving written notice to the
other parties, change the address to which notice shall then be sent.
8. Miscellaneous. This Agreement is a complete and total integration of
the understanding of the parties, and supersedes all prior or contemporaneous
negotiations, commitments, agreements, writings and discussions with respect to
the subject matter of this Agreement, provided, however, that this Agreement
shall not supersede the terms of the Asset Purchase Agreement. This Agreement
shall be binding upon and inure to the benefit of the parties hereto, and any
successors or assigns thereof, and may not be modified, amended, or waived in
any manner except by an instrument in writing signed by all parties hereto. The
waiver by any party of compliance by any other party with any provision of this
Agreement shall not operate or be construed as a waiver of any other provision
of this Agreement (whether or not similar), or a continuing waiver or a waiver
of any subsequent breach by a party of a provision of this Agreement.
Performance by any party of any act not required of it under the terms and
conditions of this Agreement shall not constitute a waiver of the limitations on
its obligations under this Agreement, and no performance shall estop that party
from asserting those limitations as to any further or future performance of its
obligations. This Agreement shall be deemed to have been drafted jointly by the
parties and in the event of any ambiguity in this Agreement, the same shall not
be construed against either party. This Agreement may be executed in one or more
counterparts, each of which for all purposes shall be deemed to be an original
but all of which together shall constitute one and the same Agreement. Only one
counterpart signed by the party against which enforceability is sought needs to
be produced to evidence the existence of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
"ONKYO"
ONKYO AMERICA, INC.
By:
Its:
"SELLER"
TOP SOURCE TECHNOLOGIES, INC. TOP SOURCE AUTOMOTIVE, INC.
By: By: _______________________________
Its: Its: _______________________________
EXHIBIT 12.05B OPINION OF COUNSEL FOR PURCHASER
September 30, 1999
Top Source Automotive, Inc.
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000-0000
Top Source Technologies, Inc.
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000-0000
Re: Asset Purchase Agreement dated as of September 30, 1999 among
Onkyo America, Inc., Top Source Technologies, Inc. and
Top Source Automotive, Inc.
Ladies and Gentlemen:
We have acted as counsel to Onkyo America, Inc., an Indiana corporation
("Onkyo"), in connection with the transactions contemplated by that certain
Asset Purchase Agreement of even date herewith (the "Agreement") among Top
Source Technologies, Inc., a Delaware corporation ("TST"), Top Source
Automotive, Inc., a Florida corporation ("TSA") (collectively referred to herein
as "Top Source") and Onkyo. This opinion letter is provided to you at the
request of Onkyo. Capitalized terms used in this opinion letter that are not
specifically defined herein have the meanings ascribed in the Agreement.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of the following documents: (a) the Agreement ; (b)
Articles of Incorporation of Onkyo as certified by the Secretary of State for
the State of Indiana on September 21, 1999 to be a true and complete copy of the
Articles of Incorporation, as amended; (c) Bylaws of Onkyo as certified by the
secretary of Onkyo as of September 30, 1999 to be a true and complete copy of
the Bylaws of Onkyo; (d) Certificate of Existence issued by the Indiana
Secretary of State for Onkyo, dated September 21, 1999 ; (e) resolutions of the
board of directors of Onkyo, certified by the Executive Vice President-Finance
of Onkyo as of September 30, 1999; and (f) Certificate of the Executive Vice
President-Finance of Onkyo of even date herewith as to certain factual matters
(the "Officer's Certificate").
In rendering our opinion, we also have examined such certificates of
public officials, organizational documents and records and other certificates
and instruments as we have deemed necessary for the purposes of the opinion
herein expressed and, with your permission, have relied upon and assumed the
accuracy of such certificates, documents, records and instruments. We have made
such examination of the laws of the State of Indiana as we deemed relevant for
purposes of this opinion, but we have not made a review of, and express no
opinion concerning, the laws of any jurisdiction other than the State of Indiana
and the laws of the United States of general application to transactions in the
State of Indiana.
We have relied upon and assumed the truth and accuracy of the
representations made in the Agreement, and have not made any independent
investigation or verification of any factual matters stated or represented
therein. Whenever our opinion or confirmation herein with respect to the
existence or absence of facts is indicated to be based upon our knowledge or
belief, it is intended to signify that, during the course of our representation
of Onkyo no information has come to the attention of the attorneys who
participated in the representation which would give us actual knowledge of the
existence or absence of such facts. Except to the extent expressly set forth
herein, we have not undertaken any independent investigation to determine the
existence or absence of such facts or circumstances or the assumed facts set
forth herein, we accept no responsibility to make any such investigation, and no
inference as to our knowledge of the existence or absence of such facts or
circumstances or of our having made any independent review thereof should be
drawn from our representation of Onkyo.
We have further assumed with your permission:
(a) The genuineness of all signatures, the legal capacity and
competency of natural persons executing the Agreement, whether
on behalf of themselves or other persons or entities, the
authenticity of all documents submitted to us as originals,
the conformity to original documents of all documents
submitted to us as certified, conformed or photostatic copies,
and the authenticity of the originals of such copies;
(b) The documents that have been or will be executed and delivered
in consummation of the transactions contemplated by the
Agreement are or will be identical in all material and
relevant respects with the copies of the documents we have
examined and on which this opinion is based;
(c) Each of TST and TSA (i) has been organized, is validly
existing, and is in good standing under its jurisdiction of
incorporation, and (ii) has full power and authority to enter
into, execute, deliver, receive and perform the Agreement;
(d) The entry into, execution, delivery, receipt, and performance
of the Agreement by Top Source has been duly authorized by all
requisite action on the part of Top Source;
(e) The Agreement has been or will be duly entered into, executed,
received and delivered by Top Source, and upon such execution
and delivery constitute the legal, valid and binding
obligations of Top Source, so that all of such instruments
have mutuality of binding effect;
(f) The provisions of the Agreement which are expressly stated to
be governed by the laws of any state other than the State of
Indiana constitute the valid, legal, binding and enforceable
obligations of the parties thereto in accordance with the
terms thereof under the laws of such other state, and insofar
as the laws of such other state may be applicable to any
matters opined upon herein, such laws are identical to the
laws of Indiana applied by us herein;
(g) Each party to the Agreement will at all times exercise its
rights and remedies under the Agreement in good faith and in a
manner which is commercially reasonable, and full and adequate
consideration has been given for the undertakings of Onkyo
under the Agreement;
(h) The execution and delivery of the Agreement by all parties
thereto will be free of intentional or unintentional mistake,
misrepresentation, concealment, fraud, undue influence, duress
or criminal activity;
(i) The Agreement has been appropriately completed, executed and
delivered in the form submitted to us for review, with all
appropriate schedules and exhibits attached and all blanks
appropriately completed; and
(j) All terms and conditions of, or relating to, the transactions
described in the Agreement are correctly and completely
contained in the Agreement, and the Agreement has not been
amended or modified by oral or written agreement or by conduct
of the parties thereto.
Based on the foregoing, and subject to the assumptions, qualifications,
exceptions and limitations set forth herein, we are of the opinion that:
1. Onkyo is a corporation duly incorporated and validly existing
under the laws of the State of Indiana.
2. Onkyo has the corporate power and corporate authority under
Indiana law to own and operate its property and carry on its
business as now conducted, to execute and deliver the
Agreement, and to perform its obligations under the Agreement.
3. The execution and delivery of the Agreement by Onkyo and the
performance of its obligations under the Agreement have been
duly authorized by all requisite corporate action of Onkyo.
4. The Agreement constitutes the legal, valid and binding
obligation of Onkyo and is enforceable against Onkyo in
accordance with its terms.
5. The execution and delivery by Onkyo of the Agreement does not,
and the performance by Onkyo of the transactions contemplated
thereby will not (a) conflict with or violate any provision of
its Articles of Incorporation or Bylaws or (b) to our
knowledge, conflict with or violate (i) any judgment, order,
writ, injunction or decree binding on Onkyo, or (ii) any law,
rule, regulation or ordinance of the State of Indiana
applicable to Onkyo.
6. The Preferred Stock has been duly reserved for issuance and,
when issued in accordance with the provisions of the Articles
of Incorporation, will be validly issued, fully paid and
nonassessable. Neither the issuance, the sale nor the delivery
of the Preferred Stock as contemplated by the Agreement is
subject to any preemptive right of stockholders of Onkyo, or,
to the best of our knowledge, subject to any contractual right
of first refusal or other right in favor of any person.
As a matter of fact and not as a legal opinion, we hereby confirm to
you that, to the best of our knowledge, based solely upon the Officers'
Certificate, there is no action, proceeding, or investigation before or by any
court, governmental agency, or other body or official pending or overtly
threatened in writing against Onkyo questioning the validity of any action by
Onkyo in connection with the execution, delivery and performance of the
Agreement or that would have a material adverse effect on the property or the
financial condition or operations of Onkyo.
We further confirm to you, as a matter of fact and not as a legal
opinion, that to the best of our knowledge, based solely upon the Officers'
Certificate, the sole record shareholders (and sole persons who hold of record
options or other rights to acquire securities) of Onkyo are as set forth in
Schedule 6.26 of the Agreement.
Each of the opinions set forth above is limited by its terms and
subject to the assumptions herein above stated and is further subject to the
following qualifications, exceptions and limitations.
A. The legality, validity and enforceability of the
Agreement and the opinion expressed in paragraph 4 above may be:
(i) limited or otherwise affected by bankruptcy, insolvency,
reorganization, liquidation, readjustment of debt, receivership,
moratorium, fraudulent conveyance, equitable subordination, equity of
redemption, recharacterization or other similar legal principles now or
hereafter in effect governing or affecting the rights and remedies of
debtors and creditors generally, or general principles of equity,
regardless of whether considered in a proceeding at law or in equity;
(ii) limited or otherwise affected by applicable laws or
judicial decisions of the State of Indiana which may render certain of
the rights, remedies, waivers, and appointments as attorney-in-fact
contained therein unenforceable or ineffective, but the inclusion of
which do not render the Agreement invalid as a whole or make the
remedies generally afforded thereunder inadequate for the practical
realization of the principal benefits intended to be provided thereby;
and/or
(iii) subject to the effect of the concepts of good faith and
fair dealing, materiality and reasonableness.
Notwithstanding the foregoing and without limiting the generality of the
foregoing exceptions, we express no opinion with respect to (a) the availability
of the remedies of specific performance or injunctive relief, (b) the
availability of ex parte remedies and other self-help or non-judicial relief,
(c) set-off rights, or (iv) the legality, validity, binding effect, or
enforceability of provisions that provide for an event of default predicated
solely upon commencement of bankruptcy, reorganization or similar proceedings
with respect to Onkyo.
B. We wish to advise you that under Indiana law, contractual indemnification and
hold harmless provisions seeking to cover the indemnified party's own
negligence, strict liability or other acts or omissions may not be enforceable
to the extent the contract does not clearly and unequivocally specify that the
indemnity or exculpation covers claims, losses, expenses or other liabilities
arising or alleged to arise, in whole or in part, from the negligence, strict
liability or other acts or omissions of the indemnified party. At least one
Indiana case, Xxxxxx Leasing Co. x. Xxxxxxxx, 437 N.E.2d 500 (Ind. App. 1982),
states that indemnification clauses generally are strictly construed and that
the terms must be set forth clearly and unequivocally. Another Indiana case,
Xxxxxx v. American Health Fitness Center, 694 N.E.2d 757 (Ind. App. 1998),
states that exculpatory clauses must both specifically and explicitly refer to
the negligence of the party seeking release from liability. Further,
indemnification or exculpation as against certain claims, losses, expenses or
other liabilities arising as the result of the indemnified party's violation of
federal or state statutes, or the indemnified party's own tort liability when
performing a public or quasi-public duty, or other acts or omissions, may be
considered contrary to public policy and therefore invalid and/or unenforceable.
Our opinion set forth in paragraph 4 above, is limited by and subject to the
Xxxxxx Leasing and Xxxxxx decisions and these principles.
B. We have not considered and do not express an opinion with respect to (i) any
federal or state (including Indiana) tax laws, (ii) any federal or state
(including Indiana) securities laws and regulations, or (iii) any federal or
state (including Indiana) antitrust laws and regulations.
C. We express no opinion as to the applicability to the transactions
contemplated by the Agreement of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy
Code or IC 32-2-7 relating to fraudulent transfers or obligations.
D. We express no opinion and make no statements concerning or with respect to
any statutes, ordinances, administrative decisions, rules and regulations of
counties, towns, municipalities and special political subdivisions.
E. The opinions expressed herein are matters of professional judgment regarding
the issues addressed, are no guarantee of result with respect to the transaction
or the future performance of Onkyo and are effective only as of the date hereof.
No expansion of our opinions may be or should be made by implication or
otherwise. We express no opinion other than as herein expressly set forth. We do
not undertake to advise you of any future changes in law or fact that may affect
the opinions set forth herein.
F. This letter is furnished to you solely in connection with the transactions
contemplated by the Agreement and may not be relied upon by you for any other
purpose or by any party other than you or your successors and/or assigns. The
use or reliance upon this opinion letter by any other person or entity without
our prior written consent is strictly prohibited.
Very truly yours,
EXHIBITS 10.2A
SENIOR SECURED NOTE AND SECURITY AGREEMENT
THE ISSUANCE OF THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAW OF ANY STATE. THIS NOTE IS NOT
ASSIGNABLE OR TRANSFERRABLE AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF WITHOUT THE PRIOR WRITTEN CONSENT OF
MAKER, AND WITHOUT THE PRESENTATION TO MAKER OF AN OPINION OF COUNSEL OR OTHER
EVIDENCE SATISFACTORY TO MAKER OF EVIDENCE THAT SUCH DISPOSITION IS EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND LAWS.
NON-TRANSFERABLE SECURED
SUBORDINATED PROMISSORY NOTE
$6,500,000 Indianapolis, Indiana
September 30, 1999
FOR VALUE RECEIVED, the undersigned, Onkyo America, Inc., an Indiana
corporation having its principal office at 0000 Xxxxxx Xxxxx, Xxxxxxxx, XX 00000
(the "Maker"), promises to pay to Top Source Automotive, Inc., a Florida
corporation, having its principal office at 0000 Xxxxxxx Xxxxx, Xxxxx 000, Xxxx
Xxxxx, Xxxxxxx 00000-0000 (the "Holder"), the principal sum of Six Million Five
Hundred Thousand Dollars ($6,500,000), together with interest thereon from
September 30, 1999 ("Effective Date") at the rate of interest and in the manner
set forth herein. The Maker agrees to make payments of principal and interest,
in lawful money of the United States at the time of payment, to be paid on the
dates and in the manner provided in this Non-Transferable Secured Subordinated
Promissory Note (the "Note").
Interest shall accrue on the unpaid balance existing from time to time
hereunder at a rate of nine percent (9%) per annum for a period of thirty (30)
days after the Effective Date and shall accrue at a rate of fifteen percent
(15%) per annum thereafter.
The principal amount plus accrued interest shall be due in full in two
installments on November 1, 1999. The amount of the first installment shall be
Six Million Dollars ($6,000,000) (the "First Installment"). The amount of the
second installment shall be Five Hundred Thousand Dollars ($500,000) (the
"Second Installment"). The First Installment and all interest due thereon shall
be fully paid to the Holder before any payment is applied to the Second
Installment. After the First Installment and all interest due thereon has been
paid to the Holder, the Second Installment and all interest due thereon shall be
paid as Escrow Property to the Escrow Agent, as those terms are defined in that
certain Asset Purchase Agreement, dated September 30, 1999, by and among the
Maker, the Holder, and Top Source Technologies, Inc.
The Maker may prepay the Note in full or in part at any time without
penalty.
The Maker hereby waives demand, presentment, protest, notice of protest
and notice of dishonor. No delay or omission on the part of the Holder in the
exercise of any right or remedy shall operate as a waiver thereof, and no single
or partial exercise by Holder of any right or remedy shall preclude any other or
further exercise thereof of any other right or remedy. The Note and the rights
hereunder shall not be assignable or transferable, by sale, pledge,
hypothecation, operation of law or otherwise, by the Holder without the prior
written consent of the Maker.
Subject to the subordination provisions herein, the Holder may pursue
all remedies available at law or in equity to collect the sums payable to the
Holder hereunder, upon the occurrence of the following Events of Default
("Events of Default"): (i) the Note is not paid in full on or before November 1,
1999; (ii) institution by the Maker of proceedings seeking relief as a debtor,
including, without limitation, a case under the United States Bankruptcy Code,
11 U.S.C. ss. 101 et seq.; (iii) institution by any person against the Maker of
any proceedings in bankruptcy, including, without limitation, a case under the
United States Bankruptcy Code, 11 U.S.C. ss. 101 et seq., if such proceedings
are not dismissed within a period of ninety (90) days after institution; (iv)
making an assignment for the benefit of creditors other than the Bank, as such
term is defined below, without the prior written consent of Holder; (v)
appointment of a receiver or like officer to take possession of the Maker's
assets or the attachment or judicial seizure of all or any substantial part of
the Maker's assets; (vi) admission by the Maker in writing of the inability to
pay its debts as they mature; or (vii) liquidation, dissolution, partition,
termination of the corporate existence or revocation of the charter of the
Maker.
The obligations of the Maker hereunder are secured (i) pursuant to a
certain Security Agreement of even date herewith by a security interest in
certain Accounts Receivable (as that term is defined in such Security Agreement)
subordinate only to a senior security interest granted by the Maker to LaSalle
Bank National Association, located at 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000 (the "Bank"), and (ii) by a second mortgage in the Maker's real
estate and fixtures subordinate to the first mortgage lien held by the Home
Federal Savings Bank, Columbus, Indiana.
In the event the Holder brings an action in a court of competent
jurisdiction against Maker to enforce collection of any principal or interest
due under this Note, the Holder shall also be entitled to collect its costs of
collection, including reasonable attorney's fees and expenses.
The rights of the Holder of the Note to receive payments of the sums
due hereunder are subject and subordinate, to the extent and in the manner
herein set forth, to the payment in full of all obligations of the Maker to the
Bank, or its successors or assigns, whether now existing or hereinafter arising,
which subordination the Holder, by its acceptance of the Note, shall be deemed
to have accepted. The Bank is, and is intended to be, a third party beneficiary
with respect to the subordination provisions contained herein, and same may not
be waived or amended without the written consent thereto of the Bank.
After the occurrence of a Bank Default (as hereinafter defined)
relating to any of the current or future indebtedness or other obligations of
the Maker to the Bank (the"Bank Obligations"), the Maker shall not pay to the
Holder, and the Holder shall not take or receive from the Maker or from any
other source, payment of any sums due from the Maker to the Holder due under the
Note until the earlier of (i) the written waiver of such Bank Default by the
Bank , (ii) the cure of such Bank Default by the Maker, or (iii) the payment in
full of the Bank Obligations. No sums shall be paid hereunder by the Maker to
the Holder, and the Holder shall not make or receive payment of any such sums,
if and to the extent that the payment thereof would constitute or result in the
occurrence of a Bank Default with respect to any of the Bank Obligations. In the
event of acceleration of any of the Bank Obligations pursuant to the terms of
any documents relating thereto, or in the event of the commencement of any
enforcement, foreclosure or collection proceedings by the Bank against the Maker
with respect to any of the Bank Obligations or with respect to any collateral
securing the Bank Obligations, or in the event of any distribution of the assets
of any kind or character, dissolution, winding-up, liquidation, or
reorganization of the Maker (whether in bankruptcy, insolvency, or receivership
proceedings or upon an assignment for the benefit of creditors or otherwise),
the Holder shall not be entitled to receive any sums due under the Note from the
Maker unless and until the Bank has been paid in full with respect to all of the
Bank Obligations.
Any payments received by the Holder with respect to the indebtedness
evidenced by the Note in violation of the subordination provisions contained
herein shall be deemed to have been received by the Holder in trust for the Bank
and shall be promptly remitted by the Holder to the Bank in the form received
and with any necessary endorsements thereon or thereto. Except as otherwise
provided herein, the Maker may pay to the Holder, and the Holder may take and
receive from the Maker, all or any portion of the indebtedness evidenced by the
Note at such time or times as shall be provided herein for the payment thereof.
The Holder hereby waives any rights that it may have to require a marshaling of
assets of the Maker in connection with the payment of the Bank Obligations or
the realization by the Bank on any of the collateral securing the same. For
purposes of the foregoing subordination provisions of the Note, a "Bank Default"
means the occurrence of a default or other event or circumstance that is not
cured or abated within any applicable grace or cure period and that would permit
the Bank, under the terms of any of the documents or agreements applicable to
any of the Bank Obligations, to (i) accelerate all or any portion of the Bank
Obligations, (ii) take any action with respect to realizing upon any collateral
securing any of the Bank Obligations for the purpose of applying such collateral
or proceeds therefrom against any of the Bank Obligations, or (iii) institute
enforcement or collection proceedings against the Maker with respect to all or
any portion of the Bank Obligations.
The Note shall be governed by and construed in accordance with the laws
of the State of Indiana with respect to any and all actions related to the Note
or the enforcement of the Note without regard to conflict of law principles. In
the event that a provision of the Note is deemed prohibited by or held invalid
under applicable law, it shall be ineffective to the extent of the prohibition
or invalidity, but such prohibition or invalidity shall not invalidate the
remainder of such provisions or the remaining provisions of the Note. Wherever
in the Note reference is made to the Maker or the Holder, such reference shall
be deemed to include, as applicable, a reference to their respective successors
and assigns. The provisions of the Note shall be binding upon and shall inure to
the benefit of such successors and assigns.
Executed and delivered at Indianapolis, Indiana on September 30, 1999.
ONKYO AMERICA, INC.
By:
Xxxxxxx X. Pillow
Executive Vice President - Finance
EXHIBITS 10.2b
SENIOR SECURED NOTE AND SECURITY AGREEMENT
THE ISSUANCE OF THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAW OF ANY STATE. THIS NOTE IS NOT
ASSIGNABLE OR TRANSFERRABLE AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF WITHOUT THE PRIOR WRITTEN CONSENT OF
MAKER, AND WITHOUT THE PRESENTATION TO MAKER OF AN OPINION OF COUNSEL OR OTHER
EVIDENCE SATISFACTORY TO MAKER OF EVIDENCE THAT SUCH DISPOSITION IS EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND LAWS.
NON-TRANSFERABLE
UNSECURED PROMISSORY NOTE
$1,000,000 Indianapolis, Indiana
September 30, 1999
FOR VALUE RECEIVED, the undersigned, Onkyo America, Inc., an Indiana
corporation having its principal office at 0000 Xxxxxx Xxxxx, Xxxxxxxx, XX 00000
(the "Maker"), promises to pay to Top Source Technologies, Inc., a Delaware
corporation, having its principal office at 0000 Xxxxxxx Xxxxx, Xxxxx 000, Xxxx
Xxxxx, Xxxxxxx 00000-0000 (the "Holder"), the principal sum of One Million
Dollars ($1,000,000), together with interest thereon from September 30, 1999
("Effective Date") at the rate of interest and in the manner set forth herein.
The Maker agrees to make payments of principal and interest, in lawful money of
the United States at the time of payment, to be paid on the dates and in the
manner provided in this Non-Transferable Unsecured Promissory Note (the "Note").
Interest shall accrue on the unpaid balance existing from time to time
hereunder at a rate of fifteen percent (15%) per annum for a period beginning
thirty (30) days after the Effective Date.
The principal amount plus accrued interest shall be due in full in a
single installment on November 1, 1999.
The Maker may prepay the Note in full or in part or at any time. The
Note shall be deemed canceled, null and void upon the Maker's issuance of the
Preferred Stock, as that term is defined in that certain Asset Purchase
Agreement, dated September 30, 1999, by and among the Maker, the Holder, and Top
Source Automotive, Inc.
The Maker hereby waives demand, presentment, protest, notice of protest
and notice of dishonor. No delay or omission on the part of the Holder in the
exercise of any right or remedy shall operate as a waiver thereof, and no single
or partial exercise by Holder of any right or remedy shall preclude any other or
further exercise thereof of any other right or remedy. The Note and the rights
hereunder shall not be assignable or transferable, by sale, pledge,
hypothecation, operation of law or otherwise, by the Holder without the prior
written consent of the Maker.
The Holder may pursue all additional remedies available at law or in
equity, upon the occurrence of the following Events of Default ("Events of
Default"): (i) the Note is not paid in full on or before November 1, 1999; (ii)
institution by the Maker of proceedings seeking relief as a debtor, including,
without limitation, a case under the United States Bankruptcy Code, 11 U.S.C.
ss. 101 et seq.; (iii) institution by any person against the Maker of any
proceedings in bankruptcy, including, without limitation, a case under the
United States Bankruptcy Code, 11 U.S.C. ss. 101 et seq., if such proceedings
are not dismissed within a period of ninety (90) days after institution; (iv)
making an assignment for the benefit of creditors other than the Bank, as such
term is defined below, without the prior written consent of Holder; (v)
appointment of a receiver or like officer to take possession of the Maker's
assets or the attachment or judicial seizure of all or any substantial part of
the Maker's assets; (vi) admission by the Maker in writing of the inability to
pay its debts as they mature; or (vii) liquidation, dissolution, partition,
termination of the corporate existence or revocation of the charter of the
Maker.
In the event the Holder brings an action in a court of competent
jurisdiction against Maker to enforce collection of any principal or interest
due under this Note, the Holder shall also be entitled to collect its costs of
collection, including reasonable attorney's fees and expenses.
The rights of the Holder of the Note to receive payments of the sums
due hereunder are subject and subordinate, to the extent and in the manner
herein set forth, to the payment in full of all obligations of the Maker to the
Bank, or its successors or assigns, whether now existing or hereinafter arising,
which subordination the Holder, by its acceptance of the Note, shall be deemed
to have accepted. The Bank is, and is intended to be, a third party beneficiary
with respect to the subordination provisions contained herein, and same may not
be waived or amended without the written consent thereto of the Bank.
After the occurrence of a Bank Default (as hereinafter defined)
relating to any of the current or future indebtedness or other obligations of
the Maker to the Bank (the"Bank Obligations"), the Maker shall not pay to the
Holder, and the Holder shall not take or receive from the Maker or from any
other source, payment of any sums due from the Maker to the Holder due under the
Note until the earlier of (i) the written waiver of such Bank Default by the
Bank , (ii) the cure of such Bank Default by the Maker, or (iii) the payment in
full of the Bank Obligations. No sums shall be paid hereunder by the Maker to
the Holder, and the Holder shall not make or receive payment of any such sums,
if and to the extent that the payment thereof would constitute or result in the
occurrence of a Bank Default with respect to any of the Bank Obligations. In the
event of acceleration of any of the Bank Obligations pursuant to the terms of
any documents relating thereto, or in the event of the commencement of any
enforcement, foreclosure or collection proceedings by the Bank against the Maker
with respect to any of the Bank Obligations or with respect to any collateral
securing the Bank Obligations, or in the event of any distribution of the assets
of any kind or character, dissolution, winding-up, liquidation, or
reorganization of the Maker (whether in bankruptcy, insolvency, or receivership
proceedings or upon an assignment for the benefit of creditors or otherwise),
the Holder shall not be entitled to receive any sums due under the Note from the
Maker unless and until the Bank has been paid in full with respect to all of the
Bank Obligations.
Any payments received by the Holder with respect to the indebtedness
evidenced by the Note in violation of the subordination provisions contained
herein shall be deemed to have been received by the Holder in trust for the Bank
and shall be promptly remitted by the Holder to the Bank in the form received
and with any necessary endorsements thereon or thereto. Except as otherwise
provided herein, the Maker may pay to the Holder, and the Holder may take and
receive from the Maker, all or any portion of the indebtedness evidenced by the
Note at such time or times as shall be provided herein for the payment thereof.
For purposes of the foregoing subordination provisions of the Note, a "Bank
Default" means the occurrence of a default or other event or circumstance that
is not cured or abated within any applicable grace or cure period and that would
permit the Bank, under the terms of any of the documents or agreements
applicable to any of the Bank Obligations, to (i) accelerate all or any portion
of the Bank Obligations, (ii) take any action with respect to realizing upon any
collateral securing any of the Bank Obligations for the purpose of applying such
collateral or proceeds therefrom against any of the Bank Obligations, or (iii)
institute enforcement or collection proceedings against the Maker with respect
to all or any portion of the Bank Obligations.
The Note shall be governed by and construed in accordance with the laws
of the State of Indiana with respect to any and all actions related to the Note
or the enforcement of the Note without regard to conflict of law principles. In
the event that a provision of the Note is deemed prohibited by or held invalid
under applicable law, it shall be ineffective to the extent of the prohibition
or invalidity, but such prohibition or invalidity shall not invalidate the
remainder of such provisions or the remaining provisions of the Note. Wherever
in the Note reference is made to the Maker or the Holder, such reference shall
be deemed to include, as applicable, a reference to their respective successors
and assigns. The provisions of the Note shall be binding upon and shall inure to
the benefit of such successors and assigns.
Executed and delivered at Indianapolis, Indiana on September 30, 1999.
ONKYO AMERICA, INC.
By:
Xxxxxxx X. Pillow
Executive Vice President - Finance
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Security Agreement") is made and entered into
effective as of September 30, 1999, by and between Top Source Automotive, Inc.,
a Florida corporation ("Secured Party"), having its principal office at 0000
Xxxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000-0000 and Onkyo America,
Inc., an Indiana corporation ("Debtor"), having its principal office address at
0000 Xxxxxx Xxxxx, Xxxxxxxx, XX 00000.
RECITALS:
WHEREAS, Secured Party has extended certain credit to Debtor, which is to be
repaid with interest in accordance with the terms of that certain
Non-Transferable Secured Subordinated Promissory Note (the "Note") of even date
herewith executed by Debtor in favor of Secured Party;
WHEREAS, Secured Party extended such credit to Debtor on the condition that
repayment is secured by, among other things, a security interest in favor of
Secured Party in the Collateral (as such term is defined below) of Debtor;
WHEREAS, in order to induce Secured Party to extend the credit to Debtor
referred to above, and to secure the Obligations (as such term is defined below)
of Debtor under the Note, Debtor enters into this Security Agreement providing
for, among other things, a security interest in favor of Secured Party in the
Collateral;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the parties hereby agree as follows:
Section 1. Incorporation by Reference. The Preamble and Recitals set forth
above, including each and every recital contained therein, and any and all
definitions referred to elsewhere in this Security Agreement, are incorporated
into and made a part of this Security Agreement as though fully set forth
herein.
Section 2. References to Debtor and Definitions. All
capitalized terms not otherwise defined herein shall have the meanings set
forth below:
"Accounts Receivable" shall have the meaning ascribed to it in that certain
Asset Purchase Agreement between the Secured Party and Debtor dated as of
September 30, 1999.
"Collateral" means all of Debtor's right, title and/or interest in and to any
and all Accounts Receivable in which a security interest is granted hereunder,
together with any and all Proceeds, products, and rents thereof or therefrom.
"Event of Default" or "Default" shall include the occurrence of any of the
following:
(a) Any Event of Default under the Note;
(b) Any representation, warranty, or statement made or furnished to
Secured Party by or on behalf of Debtor in connection with this
Security Agreement shall be untrue or misleading in any material
respect as of the date when made or furnished, or any covenant of
Debtor under this Security Agreement shall be breached; or
(d) The dissolution or termination of existence of Debtor; or the
insolvency or business failure of Debtor, or the admission by Debtor in
writing of any inability to pay Debtor's debts as they become due; or
the appointment of a receiver or trustee for all or any part of the
property of Debtor, or an assignment by Debtor of all of a substantial
portion of its assets for the benefit of Debtor's creditors; or the
commencement of any proceeding under any insolvency laws by a guarantor
or surety for Debtor for any part of the Obligations or the
commencement of any such proceeding against any such guarantor or
surety if such proceeding is not dismissed within a period of ninety
(90) days after commencement.
"Uniform Commercial Code" and "applicable Uniform Commercial Code," shall mean
the Indiana Uniform Commercial Code, except in the case of remedies of Secured
Party, in which case it shall include the Uniform Commercial Code under which
such remedies arise or which governs the exercise of such remedies.
Section 3. Grant of Security Interest. As security for the payment of the
indebtedness of Debtor to Secured Party evidenced by the Note and for the
payment and/or performance of all other obligations of Debtor under the Note or
this Security Agreement (collectively, the "Obligations"), Debtor hereby grants,
pledges and assigns to Secured Party, and creates in favor of Secured Party, a
security interest subordinate only to the Bank (as such term is defined below),
in all of Debtor's right, title and interest in and to the Collateral.
Section 4. Representations, Warranties and Covenants of Debtor.
Debtor represents, warrants and covenants that:
1.
(a) Debtor's Title. Debtor is, as to all Collateral, the owner of said
Collateral, subject only to a security interest granted by Debtor to LaSalle
Bank National Association, located at 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000 (the "Bank"), but otherwise free from any lien, security
interest, or encumbrance, and Debtor shall defend the Collateral and proceeds
and products thereof against any and all claims and demands adverse to the
interests of Secured Party made by any party other than the Bank.
(b) Filing of Financing Statements and Preservation of Perfected Security
Interests. Debtor hereby authorizes Secured Party, to file in such office or
offices as Secured Party deems necessary or desirable such financing and
continuation statements and amendments thereof or supplements thereto, and such
other documents as Secured Party may from time to time require to perfect,
preserve and protect the security interest granted herein. Debtor shall
immediately notify Secured Party in writing of any change of address from that
shown in this Security Agreement and shall also, upon demand, furnish to Secured
Party such further information and shall execute and deliver to Secured Party
such financing statements and other documents and shall pay any and all filing
fees and costs with respect thereto and shall do all such acts as Secured Party
may at any time or from time to time reasonably request to establish and
maintain perfected security interests in the Collateral.
(c) Taxes and Assessments. Debtor shall promptly pay, as they become due and
payable, any taxes and assessments imposed upon the Collateral.
(d) Authority of Signer to Execute Security Agreement. The undersigned
representative of Debtor warrants that he or she has the authority to enter into
and bind Debtor to the terms of this Security Agreement.
Section 5. Remedies Upon Default. Upon the occurrence of any Event of Default
and at any time thereafter Secured Party may, at its option, declare Debtor's
entire outstanding Obligations immediately due and payable without demand or
notice, and Secured Party may reduce such Obligations to judgment, and in
addition may seek judicial foreclosure of its security interest in the
Collateral or, if applicable, assert its secured position with respect to the
Collateral in any bankruptcy, receivership, or similar proceeding with respect
to Debtor or Debtor's assets; provided, however, Secured Party shall not be
entitled to realize any benefit from the Collateral or the disposition thereof
unless and until all obligations of Debtor to the Bank have been paid in full.
Secured Party shall have no other remedies.
Section 6. Governing Law. The laws of the State of Indiana shall
govern the validity, performance, enforcement, and any other aspect of this
Security Agreement, notwithstanding Indiana's choice of law principles
to the contrary.
Section 7. Assignment. Except as otherwise provided herein, Secured
Party may not assign or transfer this Security Agreement and any or all rights
or obligations hereunder without prior written consent of Debtor and the
Bank.
Section 8. Benefit. Except as provided herein, the rights and privileges of the
parties under this Security Agreement shall inure to the benefit of their
successors and assigns. All promises, covenants and agreements contained in this
Security Agreement shall be binding upon the personal representatives, heirs,
successors and assigns of the parties.
Section 9. Notices. Any notice contemplated herein or required or permitted to
be given hereunder shall be in writing and shall be deemed to be given when
delivered personally or sent by registered or certified mail, postage prepaid,
return receipt requested to the other party at the addresses set forth in the
preamble of this Security Agreement, or to such other address as such other
party may have last specified by written notice to the other.
Section 10. Severability. If a court of competent jurisdiction makes a final
determination that any provision of this Security Agreement (or any portion
thereof) is invalid, illegal or unenforceable for any reason whatsoever: (i) the
validity, legality and enforceability of the remaining provisions of this
Security Agreement shall not in any way be affected or impaired thereby; and
(ii) to the fullest extent possible, the provisions of this Security Agreement
shall be construed so as to give effect to the intent manifested by the
provision held invalid, illegal or unenforceable.
Section 11. Non-Waiver. The failure of Secured Party to insist upon strict
performance of any provision hereof shall not constitute a waiver of, or
estoppel against asserting, the right to require such performance in the future,
nor shall it be a waiver or estoppel with respect to later breach of a similar
nature or otherwise.
Section 12. Entire Agreement. The terms and conditions of this Security
Agreement set forth the entire understanding and agreement between the parties
hereto, and supersede all other communications, negotiations and prior oral or
written statements regarding the subject matter hereof. No change, modification,
rescission, discharge, abandonment or waiver of the terms of this Security
Agreement shall be binding upon Secured Party unless made in writing and signed
on its behalf by an authorized representative of Secured Party.
Section 13. Miscellaneous. The headings and subheadings herein are for the
convenience of the parties only, and shall not affect the construction or
interpretation of any of the provisions of this Security Agreement. This
Security Agreement may be executed in one or more counterparts, each of which
shall for all purposes be deemed to be an original but all of which together
shall constitute one and the same Security Agreement. Only one such counterpart
signed by the party against whom enforceability is sought needs to be produced
to evidence the existence of this Security Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be executed by their respective duly authorized representatives
effective as of the date first written above.
"DEBTOR"
ONKYO AMERICA, INC.
By:
Xxxxxxx X. Pillow
Executive Vice President - Finance
"SECURED PARTY"
TOP SOURCE AUTOMOTIVE, INC.
By:
Its:_____________________________________
