EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
MCB ACQUISITION SUBSIDIARY, INC.,
XXXXX INDUSTRIES, INC.,
MEDIA CYBERNETICS, L.P.
AND
MEDIA CYBERNETICS, INC.
Dated as of June 7, 2001
TABLE OF CONTENTS
Page
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1. DEFINITIONS......................................................................................... 1
2. PURCHASE AND SALE OF THE ACQUIRED ASSETS AND ASSUMPTION OF ASSUMED LIABILITIES...................... 11
(a) Calculation of Estimated Net Working Capital of the Company................................ 11
(b) Purchase and Sale of Acquired Assets; Assumption of Liabilities............................ 11
(c) Consideration.............................................................................. 12
(d) [Intentionally Deleted].................................................................... 12
(e) Payment of Closing Consideration........................................................... 12
(f) The Closing................................................................................ 13
(g) Deliveries at the Closing.................................................................. 13
(h) Minimum Net Working Capital Adjustment..................................................... 13
(i) Allocation of Asset Purchase Consideration................................................. 14
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE GENERAL PARTNER............................... 14
(a) Organization of the Company................................................................ 15
(b) Authorization of Transaction............................................................... 15
(c) Noncontravention........................................................................... 15
(d) Brokers' Fees.............................................................................. 16
(e) Title to Acquired Assets................................................................... 16
(f) Financial Statements....................................................................... 16
(g) Events Subsequent to December 31, 2000..................................................... 17
(h) Undisclosed Liabilities.................................................................... 19
(i) Legal Compliance........................................................................... 19
(j) Tax Matters................................................................................ 20
(k) Real Property.............................................................................. 21
(l) Intellectual Property...................................................................... 21
(m) Software................................................................................... 24
(n) No Infringement............................................................................ 26
(o) Tangible Assets............................................................................ 27
(p) Inventory.................................................................................. 27
(q) Contracts.................................................................................. 27
(r) Notes and Accounts Receivable.............................................................. 29
(s) Powers of Attorney......................................................................... 29
(t) Insurance.................................................................................. 29
(u) Litigation................................................................................. 29
(v) Product Warranty........................................................................... 30
(w) Product Liability.......................................................................... 30
(x) Employees.................................................................................. 30
(y) Employee Benefits.......................................................................... 31
(z) Guaranties................................................................................. 32
(aa) Environment, Health, and Safety............................................................ 32
(bb) Certain Business Relationships with the Company............................................ 33
(cc) Disclosure................................................................................. 33
4. REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE BUYER.......................................... 33
(a) Organization of the Parent and the Buyer................................................... 33
(b) Authorization of Transaction............................................................... 33
(c) Noncontravention........................................................................... 33
(d) Broker's Fees.............................................................................. 33
(e) Disclosure................................................................................. 34
(f) Financial Ability.......................................................................... 34
5. CONDITIONS TO OBLIGATION TO CLOSE................................................................... 34
(a) Conditions to Obligation of Parent and Buyer............................................... 34
(b) Conditions to Obligation of the Company and the General Partner............................ 36
6. PRE-CLOSING COVENANTS............................................................................... 37
(a) Access and Investigation................................................................... 37
(b) Operation of the Business of the Company................................................... 37
(c) Negative Covenant.......................................................................... 38
(d) No Merger or Solicitation.................................................................. 40
(e) Satisfaction of Obligations to Creditors................................................... 40
(f) Assignment of Company Assets Held by the General Partner................................... 40
7. POST-CLOSING COVENANTS.............................................................................. 41
(a) General.................................................................................... 41
(b) Litigation Support......................................................................... 41
(c) Transition................................................................................. 41
(d) Confidentiality............................................................................ 41
(e) Tax Matters................................................................................ 42
(f) Assignment of Interests in Acquired Assets................................................. 42
(g) Use of Company Name........................................................................ 43
(h) Employee Matters........................................................................... 43
(i) Transition Incentive Bonus Program......................................................... 44
(j) Domain Name Transfer....................................................................... 44
(k) Insurance Coverage......................................................................... 45
8. REMEDIES FOR BREACHES OF THIS AGREEMENT............................................................. 45
(a) Survival of Representations and Warranties................................................. 45
(b) Indemnification Provisions for Benefit of the Parent and the Buyer......................... 46
(c) Indemnification Provisions for Benefit of the Company...................................... 48
(d) Matters Involving Third Parties............................................................ 48
(e) Determination of Adverse Consequences...................................................... 49
(f) Post-Closing............................................................................... 49
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9. MISCELLANEOUS....................................................................................... 50
(a) Press Releases and Public Announcements.................................................... 50
(b) Waiver of Bulk Sales Law................................................................... 50
(c) No Third-Party Beneficiaries............................................................... 50
(d) Entire Agreement........................................................................... 50
(e) Succession and Assignment.................................................................. 50
(f) Counterparts............................................................................... 50
(g) Headings................................................................................... 50
(h) Notices.................................................................................... 51
(i) Governing Law.............................................................................. 51
(j) Amendments and Waivers..................................................................... 52
(k) Severability............................................................................... 52
(l) Expenses................................................................................... 52
(m) Construction............................................................................... 52
(n) Incorporation of Exhibits and Schedules.................................................... 52
(o) Specific Performance....................................................................... 52
(p) Submission to Jurisdiction................................................................. 52
(q) Arbitration................................................................................ 53
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is dated as of June 7,
2001, by and among MCB ACQUISITION SUBSIDIARY, INC., a Delaware corporation
("Buyer"), XXXXX INDUSTRIES, INC., a Delaware corporation and parent of Buyer
("Parent"), MEDIA CYBERNETICS, L.P., a Delaware limited partnership (the
"Company"), and MEDIA CYBERNETICS, INC., a Delaware corporation and general
partner of the Company (the "General Partner"). The Buyer, the Parent, the
Company, and the General Partner are referred to collectively herein as the
"Parties".
The Company designs, sells, and licenses software used in the analysis of
microscopic images.
This Agreement contemplates a transaction in which the Company shall sell,
transfer, assign, and deliver to the Buyer substantially all of the assets owned
or used by, and certain of the liabilities of, the Company, and the Buyer shall
purchase and accept such assets, and assume such liabilities, and in connection
therewith, the Company will receive consideration in the form of cash.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows:
1. Definitions.
"Acquired Assets" means all right, title, and interest in and to all of the
assets of the Company used or usable in the conduct of the Business as of the
Closing Date (except for those assets described below as Excluded Assets),
including, without limitation, all of the Company's right, title and interest in
and to:
(a) all leases with respect to the Leased Real Property, and all
improvements, fixtures, and fittings thereon, and easements, rights-of-way,
and other appurtenants with respect thereto (such as appurtenant rights in
and to public streets);
(b) all tangible personal property (such as machinery, equipment,
inventories of raw materials and supplies, manufactured and purchased
parts, goods in process and finished goods, furniture, and automobiles;
(c) all Intellectual Property, goodwill associated therewith, licenses
and sublicenses granted and obtained with respect thereto, and rights
thereunder, remedies against infringements thereof, and rights to
protection of interests therein under the laws of all jurisdictions;
(d) all assets and property, tangible or intangible, used in the
conduct of the Business, and which are owned by the General Partner, or
licensed by the General Partner to the Company;
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(e) all agreements (including but not limited to employment
agreements, confidentiality agreements, and noncompetition agreements),
contracts, leases (other than the real property leases), personal property
leases, subleases, and rights thereunder (the "Assumed Contracts");
(f) any current asset of the Company relating to the operation of the
Company prior to the Closing Date, including but not limited to Cash (but
excluding Cash in the Company's payroll account as of the Closing Date
necessary to satisfy the Company's payroll obligations to its employees up
to and through the Closing Date), accounts receivables, inventories,
prepaid expenses, and other current assets;
(g) all claims, deposits, prepayments, refunds, causes of action,
choses in action, rights of recovery, rights of set off, and rights of
recoupment;
(h) to the extent transferable, all franchises, approvals, permits,
licenses, orders, registrations, certificates, variances, and similar
rights obtained from governments and governmental agencies;
(i) all books, records, ledgers, files, documents, correspondence,
lists, plats, architectural plans, drawings, and specifications, creative
materials, advertising and promotional materials, studies, reports, and
other printed or written materials relating to the Business, except those
excluded below as Excluded Assets; and
(j) all goodwill and similar intangible property of the Company.
PROVIDED, HOWEVER, that notwithstanding the foregoing, the Acquired Assets shall
not include (the following shall be referred to as the "Excluded Assets"):
(i) except as provided in Section 7(h)(iii) below, any rights or
interests in and with respect to any Company Plan;
(ii) (A) any rights and interests in and to that certain
contribution agreement by and among the Company and certain of its
Partners, and any other agreement, written or oral, by and between the
Company and any of its Partners, (B) any rights or interests in any
indentures, mortgages, lines of credit, instruments, security
interests, guaranties, or other similar arrangements constituting
Indebtedness, and rights thereunder, of the Company, and (C) any
rights or interests in any oral or written consulting or other
arrangement or agreement of any kind between the Company and the
General Partner, Xxxxxxx X. Xxxxxx, the Xxxxxxx X. Xxxxxx 1994 Trust,
Xxx Xxxxxxx, Step-L Ventures, or any of their Affiliates (the
"Excluded Contracts");
(iii) the corporate charter, qualifications to conduct business as
a foreign corporation, arrangements with registered agents relating to
foreign qualifications, taxpayer and other identification numbers,
seals, minute books, stock transfer books, blank stock certificates,
original Tax Returns and other
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documents relating to the organization, maintenance, and existence of
the Company as a limited partnership;
(iv) any and all of the rights of the Company under this Agreement
or any other agreement, document, certificate, or instrument executed
in connection herewith; or
(v) any right, title, or interest in and to the Company's payroll
account.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, penalties, fines, costs, amounts paid in
settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and fees,
including court costs and reasonable attorneys' fees and expenses.
"Affiliate" is used to indicate a relationship to a specified person, firm,
corporation, partnership, limited liability company, association or entity, and
means any person, firm, corporation, partnership, limited liability company,
association or entity that, directly or indirectly or through one or more
intermediaries, controls, is controlled by or is under common control with such
person, firm, corporation, partnership, limited liability company, association
or entity.
"Affiliated Group" means any affiliated group within the meaning of Code
Section 1504(a) (or any similar group defined under a similar provision of
state, local, or foreign law).
"Allocation" has the meaning set forth in Section 2(i) below.
"Applicable Rate" means the corporate base rate of interest announced from
time to time by Bank One, NA.
"Arbitrator" has the meaning set forth in Section 2(h)(iii) below.
"Asset Purchase Consideration" has the meaning set forth in Section 2(c)
below.
"Assumed Liabilities" means (except to the extent such liabilities are
expressly excluded as Excluded Liabilities described below):
(a) those current Liabilities of the Company which are reflected as
current liabilities on the Financial Statements, as follows: accounts
payable; accrued benefits; accrued liabilities; deferred income; and
deferred rent expense;
(b) Liabilities of the Company for Product Warranty Claims;
(c) Liabilities of the Company as tenant arising under the leases for
the Leased Real Property;
(d) all Liabilities of the Company arising under the Assumed
Contracts;
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(e) those Liabilities of the Company arising on or prior to the
Closing Date with respect to the employee profit-sharing arrangement of the
Company (a copy of which is attached hereto as Exhibit I) to the extent
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such Liabilities have been accrued on the Closing Date Balance Sheet; and
(f) other than the Excluded Liabilities, any other Liability of the
Company arising by law or by contract or otherwise, on or prior to June 30,
2001, or thereafter, whether absolute, contingent or otherwise, known or
unknown, accrued or unaccrued, asserted or unasserted, or otherwise.
PROVIDED, HOWEVER, that notwithstanding the foregoing, the Assumed Liabilities
shall not include (the following shall be referred to herein as the "Excluded
Liabilities"):
(A) those current Liabilities of the Company which are reflected
as current liabilities on the Financial Statements, as
follows: current portion of partner loan; and capital lease
obligation, current portion;
(B) any Liabilities of the General Partner;
(C) Liabilities arising under the Excluded Contracts;
(D) any Liabilities of the Company for Indebtedness of any kind;
(E) except as provided in Section 7(h)(iii) below, Liabilities
of the Company with respect to any of the Company Plans;
(F) Liabilities of the Company arising under or with respect to
any Equity Rights of the Company, Liabilities arising from
any preemptive or similar rights on the part of any holder
of any equity securities of the Company, and Liabilities
arising from any options, warrants, conversion or other
rights, agreements, commitments, arrangements or
understandings of any kind obligating the Company,
contingently or otherwise, to issue or sell any equity
securities or any securities convertible into or
exchangeable for any such equity securities;
(G) Liabilities of the Company arising under this Agreement (or
under any side agreement between the Company and/or any
Partner on the one hand and the Buyer and/or Parent on the
other hand entered into on or after the date of this
Agreement) for failure to perform its obligations hereunder;
(H) Liabilities arising as a result of the failure of the
Company to be in good standing under the laws of its
jurisdiction of organization;
(I) Liabilities arising as a result of the failure of the
Company to comply with the partnership, or other laws,
rules, or regulations of
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any federal, state, local or foreign government relating to
the existence of the Company as an entity;
(J) Liabilities of the Company to its Partners arising by law,
pursuant to the charter documents (including but not limited
to the certificate of limited partnership and the agreement
of limited partnership) of the Company, or as a result of
the consummation of the transactions contemplated by this
Agreement;
(K) Liabilities of the Company or the Partners arising as a
result of the failure to pay any federal or state income
Taxes;
(L) Liabilities of the Company arising as a result of claims
based on or arising from any injunction, judgment, order,
decree, ruling, or charge filed against the Company as a
result of any suit, proceeding, hearing, or investigation
of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator against the
Company commenced on or prior to the Closing Date;
(M) Except for those Liabilities of the Company arising on or
prior to the Closing Date with respect to the employee
profit-sharing arrangement of the Company (a copy of which
is attached hereto as Exhibit I) to the extent such
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Liabilities have been accrued on the Closing Date Balance
Sheet, Liabilities of the Company arising under entitlements
due to any employees, whether by contractual obligation or
normal business expectation, or pursuant to any stock
appreciation or phantom stock plan or program, including but
not limited to those Liabilities of the Company to its
employees arising under that certain Transition Incentive
Bonus Program of the Company, a copy of which is attached
hereto as Section 1(a) of the Company Disclosure Schedule
(the "Transition Incentive Bonus Program"); and
(N) Liabilities of the Company for costs and expenses incurred
in connection with this Agreement and the transactions
contemplated hereby, including but not limited to the costs
and expenses of Updata Capital, Inc.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, occurrence, event, incident, action, failure to
act, or transaction that forms or could reasonably be expected to form the basis
for any specified consequence.
"Business" means the business conducted by the Company prior to and as of
the Closing Date.
"Buyer" has the meaning set forth in the preface above.
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"Buyer's Advisors" has the meaning set forth in Section 6(a)(i) below.
"Cash" means cash and cash equivalents (including marketable securities and
short term investments) calculated in accordance with GAAP applied on a basis
consistent with the preparation of the Financial Statements, inclusive of
deposits-in-transit and after deduction for outstanding checks.
"Closing" has the meaning set forth in Section 2(f) below.
"Closing Consideration" has the meaning set forth in Section 2(c).
"Closing Date" has the meaning set forth in Section 2(f) below.
"Closing Date Balance Sheet" has the meaning set forth in Section 2(h)(ii)
below.
"COBRA" has the meaning set forth in Section 3(y)(vi) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preface above.
"Company Disclosure Schedule" has the meaning set forth in Section 3 below.
"Company Plans" has the meaning set forth in Section 3(y) below.
"Confidential Information" means: (a) confidential data and confidential
information relating to the business of any Party (the "Protected Party") which
is or has been disclosed to another Party (the "Recipient") or of which the
Recipient became aware as a consequence of or through its relationship with the
Protected Party and is not generally known to its competitors; and (b)
information of the Protected Party, without regard to form, including, but not
limited to, Intellectual Property, Software, technical or nontechnical data,
algorithms, formulas, patents, compilations, programs, devices, methods,
techniques, drawings, processes, financial data, financial plans, product or
service plans or lists of customers or suppliers which is not commonly known or
available to the public. Notwithstanding anything to the contrary contained
herein, Confidential Information shall not include any data or information that
(v) has been voluntarily disclosed to the public by the Protected Party, (w) has
been independently developed and disclosed to the public by others, (x)
otherwise enters the public domain through lawful means, (y) was already known
by Recipient prior to such disclosure through no wrongful act or omission of, or
violation of the terms hereof by, Recipient (as evidenced by written
documentation) or was lawfully and rightfully disclosed to Recipient by another
Person, or (z) is required to be disclosed by law or order without the
availability of applicable protective orders or treatment.
"Employee Benefit Plan" means any (i) nonqualified deferred compensation or
retirement plan or arrangement, including any Employee Pension Benefit Plan (as
defined in ERISA Section 3(2)), (ii) qualified defined contribution retirement
plan or arrangement, including any Employee Pension Benefit Plan, (iii)
qualified defined benefit retirement plan or arrangement, including any Employee
Pension Benefit Plan (including any Multiemployer Plan), (iv) employee welfare
benefit plan, including any Employee Welfare Benefit Plan (as defined in
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ERISA Section 3(1)), (v) fringe benefit plan or program, and (vi) each
employment, severance, salary continuation or other contract, incentive plan,
insurance plan arrangement, bonus plan and any equity plan or arrangement
without regard to whether such plan, arrangement, program or contract exists
under US or any similar non-US law, rule or regulation.
"Employees" has the meaning set forth in Section 7(h)(i) below.
"Employment Agreement" has the meaning set forth in Section 5(a)(vii)
below.
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other US and non-US laws
(including rules, regulations, state law rulings, codes, plans, permits,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local and foreign governments (which foreign governments shall
include, but not be limited to, Germany, The Netherlands, the European Union,
and Singapore) (and all agencies thereof) concerning pollution or protection of
the environment, natural resources, public health and safety, or employee health
and safety, including, but not limited to, laws relating to emissions,
discharges, releases, or threatened releases of Hazardous Substances in ambient
air, surface water, drinking water, wetlands, ground water, or lands or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, recycling, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes.
"Equity Rights" means any and all plans permitting the issuance of the
partnership interests of the Company, options to acquire partnership interests
of the Company; and/or other rights to acquire partnership interests of the
Company that are valued in whole or in part by reference to the partnership
interests of the Company or that may be settled in partnership interests of the
Company.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means SunTrust Bank, N.A.
"Escrow Agreement" means the Escrow Agreement dated as of the Closing Date,
entered into among the Parent, the Buyer, the Company, the General Partner, and
the Escrow Agent with respect to the indemnification obligations of the Company
and the General Partner under Section 8 of this Agreement, the form of which is
set forth as Exhibit B.
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"Estimated Adjustment Schedule" has the meaning set forth in Section 2(a)
below.
"Estimated Net Working Capital" has the meaning set forth in Section 2(a)
below.
"Extremely Hazardous Substance" has the meaning set forth in Section 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended, and
any counterpart or similar non-US law.
"Fiduciary" has the meaning set forth in ERISA Section 3(21).
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"Final Adjustment Schedule" has the meaning set forth in Section 2(h)(ii)
below.
"Financial Statements" has the meaning set forth in Section 3(f) below.
"First Escrow Period" has the meaning set forth in Section 8(b)(v) below.
"Foreign Plans" has the meaning set forth in Section 3(y)(ii) below.
"Four-Digit Dates" has the meaning set forth in Section 3(m)(iv) below.
"GAAP" means United States generally accepted accounting principles as in
effect as of the date hereof.
"General Partner" has the meaning set forth in the preface above.
"Hazardous Substance" means any substance regulated under or defined by
Environmental, Health, and Safety Laws, including, but not limited to, any
pollutant, contaminant, hazardous substance, hazardous constituent, hazardous
waste, special waste, solid waste, industrial waste, petroleum derived substance
or waste, or toxic substance.
"Indebtedness" means (i) all indebtedness for borrowed money or for the
deferred purchase price of property or services (including, without limitation,
reimbursement and all other obligations with respect to surety bonds, letters of
credit and bankers' acceptances, whether or not matured), including the current
portion of such indebtedness, (ii) all obligations evidenced by notes, bonds,
debentures or similar instruments, and (iii) all capital lease obligations.
"Indemnified Party" has the meaning set forth in Section 8(d) below.
"Indemnifying Party" has the meaning set forth in Section 8(d) below.
"Intellectual Property" means, with respect to the Business:
(a) all inventions (whether patentable or unpatentable and whether or
not reduced to practice), all improvements thereto, and all US and non-US
patents, patent applications, and patent disclosures, together with all
reissuances, continuations, divisionals, continuations-in-part, revisions,
extensions, and reexaminations thereof;
(b) all US and non-US trademarks, service marks, trade dress, logos,
trade names and corporate names, together with all translations,
adaptations, derivations, and combinations thereof and including all
goodwill associated therewith, and all applications, registrations, and
renewals in connection therewith;
(c) all copyrightable works, all US and non-US copyrights, and all
applications, registrations, and renewals in connection therewith;
(d) all mask works and all applications, registrations, and renewals
in connection therewith;
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(e) all trade secrets and confidential business information
(including without limitation ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing
plans and proposals);
(f) all other proprietary rights;
(g) all Owned Software and all Licensed Software;
(h) all right, title, and interest in and to the name "Media
Cybernetics"; and
(i) all right, title, and interest in and to the world wide web
internet domain names "xxx.xxxxxxxxxxxx.xxx", "xxx.xxxxxxxxx-xxxx.xxx",
"xxx.xxxxxxx.xxx", "xxx.xxxxxxx.xxx", "xxx.xxxxx-xxxx.xxx",
"xxx.xxxxxxxxxxxxxxxx.xxx", "xxx.xxxxx-xxx.xxx", and each other world wide
web internet domain name owned by the Company, and each other world wide
web internet domain name used in the Business.
(j) with respect to each of the foregoing, all copies and tangible
embodiments thereof (in whatever form or medium).
"Knowledge" means, with respect to the Company, or the General Partner, the
knowledge of Xxxx Xxxxxx, Xxxxxxx X. Xxxxxx, Xxxxx Xxxxxxx, Xxxx Xxxxxxx, Xxxx
Xxxxxxx, Xxxx Xxxxxx, Xxxxx Xxxxxxxx, or Xxxxx Xxxxxx.
"Leased Real Property" has the meaning set forth in Section 3(k) below.
"Liability" means any liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due),
obligation or commitment, including any liability for Taxes.
"Licensed Software" has the meaning set forth in Section 3(m)(i) below.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"Net Working Capital" means the excess of total current assets, including
without limitation cash, accounts receivable, net inventories (calculated in a
first-in, first-out basis), prepaid expenses, and other current assets, in each
case to the extent such are Acquired Assets, less total current liabilities,
including without limitation accounts payable, accrued benefits (including but
not limited to accrued employee bonus payments and accrued profit sharing
payments), accrued liabilities, and deferred rent expense (but excluding
liabilities for accrued interest, deferred employee compensation, accrued Tax
liability, deferred income, and any Indebtedness) to the extent such are Assumed
Liabilities, in each case determined in accordance with GAAP, and to the extent
consistent with GAAP, applied on a basis consistent with the preparation of the
Financial Statements. All accounting entries will be made regardless of their
amount and all detected errors and omissions will be corrected regardless of
their materiality.
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"Noncompetition and Assignment of Inventions Agreement" has the meaning set
forth in Section 5(a)(v) below.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Owned Software" has the meaning set forth in Section 3(m)(i) below.
"Partners" means the General Partner, and each of the limited partners of
the Company.
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an unincorporated organization,
or a governmental entity (or any department, agency, or political subdivision
thereof).
"Process Agent" has the meaning set forth in Section 9(p) below.
"Product Warranty Claims" means claims of the customers of the Company
and/or users made at any time with respect to products sold, manufactured,
leased or delivered by the Company.
"Prohibited Transaction" has the meaning set forth in Section 3(y)(vii)(B)
below.
"Purchase Price Adjustment" has the meaning set forth in Section 2(h)(i)
below.
"Second Escrow Period" has the meaning set forth in Section 8(b)(v) below.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
conditional sale or title retention agreement, hypothecation, collateral
assignment, security interest, easement or other encumbrance of any kind or
nature whatsoever, other than (a) mechanic's, materialmen's, and similar liens
incurred in the Ordinary Course of Business not yet due and payable, (b) liens
for Taxes not yet due and payable or for Taxes that the taxpayer is contesting
in good faith through appropriate proceedings, and (c) purchase money liens and
liens securing rental payments under capital lease arrangements.
"Software" has the meaning set forth in Section 3(m)(i) below.
"Subsidiary" means any corporation, limited partnership, limited liability
company, or other entity with respect to which a specified Person (or a
Subsidiary thereof) owns a majority of the common stock, units or other equity
interests or has the power to vote or direct the voting of sufficient securities
to elect a majority of the directors or general partners, as the case may be.
"Takeover Proposal" means any written inquiry, proposal or offer from any
Person relating to (A) any direct or indirect acquisition or purchase of (i) the
assets of the Company outside of the Ordinary Course of Business (other than the
transactions contemplated by this Agreement), or (ii) any securities of the
Company, or (B) any merger, consolidation, business
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combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company.
"Tax" means any federal, state, local, or foreign (including, but not
limited to, Germany, The Netherlands, the European Union, and Singapore) income,
built-in gains (within the meaning of Code Section 1374 or any comparable
foreign, state or local provisions), gross receipts, excess net passive income
(within the meaning of Code Section 1375 or any comparable foreign, state or
local provisions), license, payroll, employment, excise, severance, stamp,
occupation, premium, supplementary taxes, windfall profits, environmental
(including taxes under Code Section 59A), customs duties, capital stock (or
other equity security), franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
retailer's occupation taxes and other taxes commonly understood to be sales or
use taxes, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto (including without limitation any
additions to tax or additional amounts with respect thereto), whether disputed
or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 8(d)(i) below.
"Undisclosed Liabilities" has the meaning set forth in Section 3(h) below.
"US Plans" has the meaning set forth in Section 3(y)(ii) below.
2. Purchase and Sale of the Acquired Assets and Assumption of Assumed
Liabilities.
(a) Calculation of Estimated Net Working Capital of the Company. The
Company has calculated the estimated Net Working Capital of the Company as
of the commencement of business on May 31, 2001 (the "Estimated Net Working
Capital"), and has presented such calculation to the Parent and the Buyer
(such calculation of the Estimated Net Working Capital, as provided to the
Parent and the Buyer, shall be referred to herein as the "Estimated
Adjustment Schedule"), a copy of which Estimated Adjustment Schedule is
attached hereto as Exhibit J.
---------
(b) Purchase and Sale of Acquired Assets; Assumption of Liabilities.
(i) The Buyer agrees to purchase from the Company, and the
Company agrees to sell, transfer, convey, assign and deliver to the
Buyer, all of the Acquired Assets effective as of the close of
business on June 30, 2001, for the consideration specified in Section
2(c) below.
(ii) On and subject to the terms and conditions of this
Agreement, the Buyer agrees to assume and become responsible for the
Assumed Liabilities effective as of the close of business on June 30,
2001, for the consideration
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specified in Section 2(c) below. The Buyer shall pay and
discharge when due, or contest in good faith, all of those
Liabilities which are Assumed Liabilities. The Buyer will not
assume or have any responsibility, however, with respect to any
Liability or obligation of the Company or the General Partner
which is an Excluded Liability.
(iii) In the event of any claim against the Buyer with
respect to any of the Assumed Liabilities, without limiting
Buyer's remedies or defenses, the Buyer shall have, and the
Company hereby assigns to the Buyer, to the extent it may
lawfully do so, any defense, counterclaim, or right of setoff
which would have been available to the Company if such claim had
been asserted against the Company.
(iv) The assumption by the Buyer of the Assumed
Liabilities, and the transfer thereof by the Company, shall in
no way expand the rights or remedies of any third party against
the Buyer or its officers, directors, employees, stockholders,
and advisors as compared to the rights and remedies which such
third party would have had against the Company had the Buyer not
assumed such Assumed Liabilities. The Company shall pay and
discharge when due, or contest in good faith, all of those
Liabilities which are Excluded Liabilities.
(c) Consideration. At Closing, in consideration for the
sale, transfer, conveyance, assignment, and delivery of the Acquired
Assets by the Company to the Buyer and the assumption by the Buyer of
the Assumed Liabilities from the Company, the Company shall be entitled
to receive, in the manner described in Section 2(e) below, Seventeen
Million Three Hundred Seventy Five Thousand Dollars ($17,375,000.00)
(the "Closing Consideration"), subject to those post-Closing adjustments
as provided in Section 2(h) below (the net amount is referred to as the
"Asset Purchase Consideration").
(d) [Intentionally Deleted] Payment of Closing
Consideration. At the Closing, the Closing Consideration shall be paid
as follows:
(i) that amount, if any, of the Closing Consideration
necessary to be paid to applicable lenders and other creditors
of the Company to pay off Indebtedness or obtain clear title to
the Acquired Assets, shall be paid to such lenders and other
creditors in accordance with the payoff letters provided by such
creditors;
(ii) Three Million Three Hundred Thousand Dollars
($3,300,000.00) of the Closing Consideration shall be paid to
the Escrow Agent, to be held and disbursed as provided in
Section 8 below and the Escrow Agreement; and
(iii) the balance of the Closing Consideration shall be
paid to a bank or other account designated in writing to the
Buyer by the Company at least two business days prior to the
Closing Date by wire transfer of immediately available federal
funds, which amount shall be paid to the Company.
-12-
(f) The Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the
offices of Powell, Goldstein, Xxxxxx & Xxxxxx LLP, 0000 Xxxxxxxxxxxx
Xxxxxx, X.X., Xxxxx 000 Xxxxx, Xxxxxxxxxx, X.X. 00000-0000, at 10:00
a.m., on Monday July 2, 2001, or such other date and time, or in such
other manner, as the Parties may agree (the "Closing Date").
(g) Deliveries at the Closing. At the Closing, (i) the
Company and the General Partner will deliver to the Parent and the Buyer
the various certificates, instruments, and documents referred to in
Section 5(a) below; (ii) the Parent and the Buyer will deliver to the
Company the various certificates, instruments, and documents referred to
in Section 5(b) below; (iii) the Company and the General Partner will
execute, acknowledge (if appropriate), and deliver to the Parent and the
Buyer such documents as the Parent, the Buyer, and their counsel may
reasonably request; (iv) the Buyer will execute, acknowledge (if
appropriate), and deliver to the Company such documents as the Company
and its counsel reasonably may request; and (v) the Buyer will deliver
to the Company, and others specified in Section 2(e), the Closing
Consideration.
(h) Minimum Net Working Capital Adjustment.
(i) The Closing Consideration shall be (i) reduced on
a dollar-for-dollar basis to the extent that the Net Working
Capital of the Company as of the close of business on June 30,
2001, is less than $900,000, or (ii) increased on a
dollar-for-dollar basis to the extent that the Net Working
Capital of the Company as of the close of business on June 30,
2001, is greater than $900,000. Any decrease or increase in the
Closing Consideration pursuant to this Section 2(h) shall be
referred to as a "Purchase Price Adjustment".
(ii) No later than forty five (45) days after the
Closing Date, the Parent shall deliver to the Company (i) a
balance sheet and a statement of operations of the Company for
the period ended as of the close of business on June 30, 2001
(the "Closing Date Balance Sheet"), and (ii) a separate
statement calculating Net Working Capital of the Company as of
the close of business on June 30, 2001, based on the Closing
Date Balance Sheet, showing any calculations with respect to any
necessary Purchase Price Adjustment, including any necessary
adjustments to the Estimated Adjustment Schedule (the "Final
Adjustment Schedule"). The Company shall have the right to
examine and make copies of the work papers and such other
documents that are generated or reviewed by the Parent in
connection with the preparation of the Closing Date Balance
Sheet and the Final Adjustment Schedule.
(iii) The Company shall, within forty-five (45) days
following its receipt of the Closing Date Balance Sheet and the
Final Adjustment Schedule, accept or reject the Purchase Price
Adjustment submitted by the Parent. If the Company disagrees
with such calculation, it shall give written notice to the
Parent of such disagreement and any reason therefor within such
forty-five (45) day period. Should the Company fail to notify
the Parent of a disagreement within such forty-five (45) day
period, the Company shall be deemed to agree with the
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Parent's calculation. Any disagreement with respect to the
determination of any Purchase Price Adjustment shall be referred
to the Washington, D.C. office of Ernst & Young LLP (the
"Arbitrator"). The Arbitrator shall act as an arbitrator and
shall issue its report as to the Net Working Capital as of the
close of business on June 30, 2001, and the determination of the
Purchase Price Adjustment reflected in the Final Adjustment
Schedule within sixty (60) days after such dispute is referred
to the Arbitrator. The Company on the one hand, and the Parent
on the other hand, shall bear all costs and expenses incurred by
it in connection with such arbitration, except that the fees and
expenses of the Arbitrator hereunder shall be borne by the
Company and the Parent in such proportion as the Arbitrator
shall determine based on the relative merit of the position of
the parties. This provision for arbitration shall be
specifically enforceable by the Parties and the decision of the
Arbitrator in accordance with the provisions hereof shall be
final and binding with respect to the matters so arbitrated and
there shall be no right of appeal therefrom.
(iv) If, based on the Final Adjustment Schedule as
finally determined pursuant to this Section 2(h), (i) the Net
Working Capital of the Company as of the close of business on
June 30, 2001, is less than the Estimated Net Working Capital,
the Company (or in the event the Company does not have adequate
financial resources, the General Partner) shall pay to the Buyer
an amount equal to such deficit, or (ii) the Net Working Capital
of the Company as of the close of business on June 30, 2001, is
greater than the Estimated Net Working Capital, the Buyer shall
pay to the Company an amount equal to such excess. Final amounts
due hereunder shall be paid no later than five (5) business days
following the Company's agreement with the Parent's calculation
of the Purchase Price Adjustment, or in the event of a
disagreement, following the resolution of such disagreement by
written agreement of the Parent and the Company, or the
determination of the Arbitrator pursuant to Section 2(h)(iii)
above.
(i) Allocation of Asset Purchase Consideration. The Asset
Purchase Consideration and the Assumed Liabilities shall be allocated to
the Acquired Assets as set forth on Exhibit A attached hereto (the
---------
"Allocation"). The Parties shall report the sale and purchase of the
Acquired Assets on all tax returns and tax forms (including, without
limitation, Form 8594 of the Internal Revenue Service) in a manner
consistent with such Allocation and shall not, in connection with the
filing of such returns or forms, make any Allocation of the Asset
Purchase Consideration and the Assumed Liabilities which is inconsistent
with the Allocation. The Parties agree to consult with one another with
respect to any tax audit, controversy or litigation relating to the
Allocation.
3. Representations and Warranties of the Company and the General
Partner.
The Company and the General Partner, jointly and severally, represent
and warrant to the Parent and the Buyer that the statements contained in this
Section 3 are true, correct and complete as of the date hereof, except as
specified to the contrary in the corresponding paragraph
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of the disclosure schedule prepared by the Company accompanying this Agreement
and initialed by the Company and the Buyer (the "Company Disclosure Schedule").
The Company Disclosure Schedule will be arranged in paragraphs corresponding to
the lettered and numbered paragraphs contained in this Section 3.
(a) Organization of the Company. The Company is a limited
partnership duly organized, validly existing, and in good standing
under the laws of the State of Delaware and is duly qualified to
conduct business in Maryland and every other jurisdiction where such
qualification is required, which jurisdictions are set forth on
Section 3(a) of the Company Disclosure Schedule. The Partners listed
on Section 3(a) of the Company Disclosure Schedule are the sole record
and beneficial owners of the partnership interests of the Company. The
Company does not have any Subsidiaries.
(b) Authorization of Transaction. The Company and the General
Partner have full power and authority (including, with respect to the
Company, full partnership power and authority, and with respect to the
General Partner, full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. The
General Partner has the full power and authority to authorize, and the
General Partner has duly authorized, the execution, delivery and
performance of this Agreement by the Company. This Agreement
constitutes the valid and legally binding obligation of the Company
and the General Partner, and (assuming the due authorization and valid
execution and delivery hereof by the Buyer and the Parent) is
enforceable against the Company and the General Partner in accordance
with its terms, subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights and remedies generally, and subject, as to
enforceability, to the effect of general principles of equity
(regardless of whether enforcement is considered in a proceeding at
law or in equity). Neither the Company nor the General Partner need to
give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any United States, Germany, The Netherlands,
European Union, Singapore, or other governmental agency in order for
the Parties to consummate the transactions contemplated by this
Agreement.
(c) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which
the Company or the Partners are subject or any provision of the
certificate of limited partnership or the agreement of limited
partnership of the Company, or (ii) except as otherwise set forth on
Section 3(c) of the Company Disclosure Schedule, conflict with, result
in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which the Company or the
Partners are a party or by which the Company or the Partners are bound
or to which any of the assets of the Company are subject (or result in
the imposition of any Security Interest upon any of the Acquired
Assets or the Assumed Liabilities).
-15-
(d) Brokers' Fees. Neither the Company nor any of the
Partners has incurred any Liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement, except the fees and
expenses of Updata Capital, Inc., which shall be paid by the Company (or
in the event the Company does not have adequate financial resources, the
General Partner).
(e) Title to Acquired Assets. The Company has good title to
all of the Acquired Assets free and clear of any Security Interest, or
in the case of Acquired Assets which are leased by the Company, the
Company has a valid leasehold interest in such Acquired Assets, free and
clear of any Security Interest. The General Partner has conveyed,
assigned, and delivered to the Company any asset used by the Company in
the Business which constitutes an Acquired Asset, and any liability of
the Company which constitutes an Assumed Liability, which prior to the
Closing was owned by the General Partner, or licensed by the General
Partner to the Company. The Company has the right to convey, and upon
the transfer of the Acquired Assets to the Buyer, the Company will have
conveyed, good title and interest in and to the Acquired Assets, free
and clear of all Security Interests.
(f) Financial Statements. Attached hereto as Section 3(f) of
the Company Disclosure Schedule are unaudited consolidated balance
sheets and related consolidated statements of income and retained
earnings, comprehensive income and cash flow of the Company for the
period ending as of December 31, 2000, audited consolidated balance
sheets and related consolidated statements of income and retained
earnings, comprehensive income and cash flow of the Company for the
period ending as of December 31, 1999, and unaudited interim
consolidated balance sheets and related consolidated statements of
income and retained earnings, comprehensive income and cash flow of the
Company through March 31, 2001 (the "Financial Statements").
(i) Each of the Financial Statements is true, correct,
complete and consistent with the books and records of the
Company. Each of the Financial Statements has been prepared in
accordance with GAAP, and presents fairly the financial
condition and results of operations and cash flows of the
Company at the dates and for the periods specified, subject, in
the case of unaudited financial statements, to the absence of
notes and the absence of normal recurring year-end adjustments
and procedures (none of which require material adjustment or are
inconsistent with past practice).
(ii) Accounts payable reflected in the Financial
Statements have arisen from bona fide transactions. All debts,
liabilities and obligations of the Company incurred after the
date of the Financial Statements were incurred in the Ordinary
Course of Business, arose from bona fide transactions, and are
usual and normal in amount both individually and in the
aggregate. The Company is not directly or indirectly liable to
or obligated to provide funds in respect of or to guaranty or
assume any obligation of any person except to the extent
reflected and fully reserved against in the Financial
Statements. Except as set forth in the Financial Statements, all
liabilities of the Company can be prepaid without penalty at any
time.
-16-
(iii) The loans, notes and accounts receivable reflected
in the Financial Statements and all such loans, notes and
accounts receivable arising after the applicable dates of the
Financial Statements arose, and have arisen, from bona fide
transactions, and the bad debt reserves established in
connection with such loans, notes, and accounts receivable are
in conformity with GAAP.
(g) Events Subsequent to December 31, 2000. Since December
31, 2000, except with respect to changes in the general economic
condition of the industry in which the Company conducts its Business,
there has not been any material adverse change in the business,
financial condition, operations, or results of operations of the
Company. Without limiting the generality of the foregoing, except as set
forth on Section 3(g) of the Company Disclosure Schedule, since that
date, the Company:
(i) has not sold, leased, transferred, or assigned any
of its assets, tangible or intangible, except for sales of
inventory in the Ordinary Course of Business;
(ii) has not entered into any agreement, contract,
lease, or license (or series of related agreements, contracts,
leases, and licenses) involving more than $15,000 and outside
the Ordinary Course of Business;
(iii) has not, and to the Knowledge of the Company no
party has, accelerated, terminated, modified, or canceled any
agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) involving more than
$15,000 to which the Company is a party or by which it is bound;
(iv) has not imposed or permitted any Security Interest
upon any of its assets, tangible or intangible;
(v) has not made any distribution (including but not
limited to any distribution to any Partner) or any capital
expenditure (or series of related capital expenditures) either
involving more than $15,000 or outside the Ordinary Course of
Business, and with respect to the period from February 22, 2001,
through the date hereof, has not made any distribution or any
capital expenditure (or series of related capital expenditures)
either involving more than $50,000 or outside the Ordinary
Course of Business, except with the prior written consent of the
Parent or the Buyer;
(vi) has not made any capital investment in, any loan
to, or any acquisition of the securities of, any other Person,
and has not made any acquisition of the assets of any other
Person outside of the Ordinary Course of Business;
(vii) has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any
Indebtedness, and with respect to the period from February 22,
2001, through the date hereof, has not issued any note, bond, or
other debt security or created, incurred, assumed, or guaranteed
any Indebtedness, except with the prior written consent of the
Parent or the Buyer;
-17-
(viii) has not delayed or postponed the payment of accounts
payable or other Liabilities outside of the Ordinary Course of
Business;
(ix) has not canceled, compromised, waived, or released any
right or claim (or series of related rights and claims) outside the
Ordinary Course of Business;
(x) except in the Ordinary Course of Business to customers of
the Company, has not granted any license or sublicense of any rights
under or with respect to any Intellectual Property;
(xi) has not changed or authorized any change in its
certificate of limited partnership, agreement of limited partnership
or similar charter documents;
(xii) has not experienced any material damage, destruction, or
loss (whether or not covered by insurance) to its property;
(xiii) has not made any loan to, or entered into any other
transaction with, any of its partners, officers, and employees;
(xiv) has not entered into any employment contract or collective
bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement, and with respect to the period
from February 22, 2001, through the date hereof, has not entered into
any employment contract or collective bargaining agreement, written or
oral, or modified the terms of any existing such contract or
agreement, except with the prior written consent of the Parent or the
Buyer;
(xv) has not granted any increase in the compensation of any of
its partners, officers, and employees, and with respect to the period
from February 22, 2001, through the date hereof, has not granted any
increase in the compensation of any of its partners, officers, and
employees, except with the prior written consent of the Parent or the
Buyer;
(xvi) has not, except as required to comply with applicable law,
adopted, amended, modified or terminated any bonus, profit-sharing
incentive, severance, or other plan, contract, or commitment for the
benefit of any of its partners, officers, and employees (or taken any
such action with respect to any other Employee Benefit Plan), to the
extent such amendment, modification or termination had the effect of
enhancing any benefits thereunder or increasing the cost thereof to
the Company, and with respect to the period from February 22, 2001,
through the date hereof, has not adopted, amended, modified or
terminated any bonus, profit-sharing incentive, severance, or other
plan, contract, or commitment for the benefit of any of its partners,
officers, and employees (or taken any such action with respect to any
other Employee Benefit Plan), except with the prior written consent of
the Parent or the Buyer;
-18-
(xvii) has not made any other change in employment terms for any
of its partners, officers, and employees;
(xviii) has not made or pledged to make any charitable or other
capital contribution;
(xix) has not suffered or experienced any other occurrence,
event, incident, action, failure to act, or transaction outside the
Ordinary Course of Business;
(xx) has not declared or paid any dividend or other
distribution, whether in cash or other property, and with respect to
the period from February 22, 2001, through the date hereof, has not
declared or paid any dividend or other distribution, whether in cash
or other property, except with the prior written consent of the Parent
or the Buyer; and
(xxi) has not entered into a commitment to do any of the
foregoing.
(h) Undisclosed Liabilities. The Company does not have any Liability
(and there is no Basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand against the
Company giving rise to any Liability), except for (i) Liabilities set forth
on the face of the Financial Statements, (ii) Liabilities which have arisen
after the date of the Financial Statements in the Ordinary Course of
Business (none of which results from, arises out of, or was caused by any
breach of contract, breach of warranty claims, product liability, tort,
infringement, or violation of law), (iii) Liabilities which will arise from
and after the date hereof in the Ordinary Course of Business under the
Assumed Contracts, (iv) the Excluded Liabilities, and (v) Liabilities which
are disclosed on Section 3(h) of the Company Disclosure Schedule
("Undisclosed Liabilities").
(i) Legal Compliance. The Company has complied with all applicable
laws (including rules, regulations, codes, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and
foreign (including but not limited to Germany, The Netherlands, the
European Union, and Singapore) governments (and all agencies thereof),
which the failure to comply with which, individually or in the aggregate,
will result in Adverse Consequences the costs of which will exceed $15,000,
and no action, suit, proceeding, hearing, investigation, charge, complaint,
claim, demand, or notice has been filed or commenced against the Company
alleging any failure so to comply. The Company has duly filed all reports
and returns required to be filed by it with governmental authorities and
obtained all governmental permits and licenses and other governmental
consents which are required in connection with the businesses and
operations of the Company; all of such permits, licenses and consents are
in full force and effect, and no proceedings for the suspension or
cancellation of any of them are pending or threatened, except where any of
the above would not have a material adverse effect on the Acquired Assets,
the Assumed Liabilities, the Business or the Company. Notwithstanding the
foregoing, the representations under Section 3(i) are not made with respect
to any Taxes, labor matters, Company Plans or Environmental Laws and that
the
-19-
representations and warranties with respect to compliance regarding
Taxes, labor matters, Company Plans and Environmental Laws are made
only in Sections 3(j), 3(x), 3(y), and 3(aa), respectively.
(j) Tax Matters.
(i) The Company has filed all Tax Returns that it was
required to file. All such Tax Returns were true, correct and
complete in all material respects. All Taxes owed by the Company
and with respect to the Business, the Partners (whether or not
shown on any Tax Return) have been paid. The Company is not the
beneficiary of any extension of time within which to file any Tax
Return. No claim has ever been made by an authority in a
jurisdiction where the Company does not file Tax Returns that the
Company is or may be subject to taxation by that jurisdiction.
There are no Security Interests on any of the assets of the
Company that arose in connection with any failure (or alleged
failure) to pay any Tax. The Company has not been a member of an
Affiliated Group that has filed a "consolidated return" within
the meaning of Code Section 1501, or has filed a combined or
consolidated return with another entity with any other taxing
authority.
(ii) The Company has made all withholdings of Taxes
required to be made in connection with amounts paid or owing to
any employee, independent contractor, creditor, shareholder, or
other third party and such withholdings have either been paid to
the appropriate governmental agency or set aside in appropriate
accounts for such purpose.
(iii) The Company is not currently under audit with respect
to Taxes by any authority, and has not received any notice or
other indication that any authority is considering assessing any
additional Taxes for any period for which Tax Returns have been
filed. There is no dispute or claim concerning any Tax Liability
of the Company either (A) claimed or raised by any authority in
writing or (B) as to which the Company has Knowledge based upon
personal contact with any agent or representative of such
authority. Section 3(j) of the Company Disclosure Schedule lists
all federal, state, local, and foreign (including but not limited
to Germany, The Netherlands, the European Union, and Singapore)
income Tax returns filed with respect to the Company for taxable
periods ended on or after December 31, 1997, indicates those Tax
Returns that have been audited, and indicates those Tax Returns
that currently are the subject of audit. The Company has
delivered to the Buyer true, correct and complete copies of all
federal, state, and foreign income Tax Returns, examination
reports, and statements of deficiencies assessed against or
agreed to by the Company since December 31, 1997.
(iv) The Company has not waived any statute of limitations
in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
-20-
(v) The Company has not made any payments, is not obligated to
make any payments, and is not a party to any agreement that could
obligate it to make any payments that will not be deductible under
Code Section 280G. The Company is not a party to any Tax allocation or
sharing agreement. The Company (A) has not been a member of an
Affiliated Group filing a consolidated federal income Tax Return or
(B) has no Liability for the Taxes of any Person (other than the
Company) under Treas. Reg. Section 1.1502-6 (or any similar provision
of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
(k) Real Property. The Company does not own any real property.
Section 3(k) of the Company Disclosure Schedule lists and describes briefly
all real property leased to the Company (the "Leased Real Property"). The
Company has delivered to the Buyer true, correct and complete copies of the
leases for the Leased Real Property (as amended to date). With respect to
each lease for Leased Real Property:
(i) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(ii) the Company is not, and to the Knowledge of the Company, no
party to the lease or sublease is, in breach or default, and no event
has occurred which, with notice or lapse of time, would constitute a
breach or default or permit termination, modification, or acceleration
thereunder;
(iii) the Company has not, and to the Knowledge of the Company,
no party to the lease or sublease has, repudiated any provision
thereof;
(iv) there are no disputes, oral agreements, or forbearance
programs in effect as to the lease;
(v) the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
leasehold; or
(vi) all facilities leased thereunder have received all
approvals of governmental authorities (including licenses and permits)
required in connection with the operation thereof and have been
operated and maintained in all material respects in accordance with
applicable laws, rules, and regulations.
(l) Intellectual Property.
(i) The Company owns, or has the right to use pursuant to
written license, sublicense, agreement, or permission, all of the
Intellectual Property necessary or used in the operation of the
Business as presently conducted or as proposed to be conducted, and is
not a party to any unwritten or implied licenses. The Partners and
each officer, employee, or independent contractor of the Company has
heretofore transferred to the Company all right, title and interest of
such person in and to any Intellectual Property used or necessary for
the operation
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of the Business as presently conducted or as proposed to be conducted.
Each item of Intellectual Property included among the Acquired Assets
or owned or used by the Company or the Partners immediately prior to
the Closing hereunder will be owned or available for use by the Buyer
on identical terms and conditions immediately subsequent to the
Closing hereunder. Except with respect to those Liabilities arising
under those licenses, sublicenses, agreements, or permissions for
Intellectual Property to which the Company is a party and which
Intellectual Property is owned by a third party, as set forth on
Section 3(l)(iv) of the Company Disclosure Schedule, the Company has
no Liability to any Person with respect to the Intellectual Property,
or with respect to the license, distribution, use, creation,
development, design, implementation, or adaptation of the Intellectual
Property to the Business.
(ii) Neither the Company nor with respect to the Business, the
Partners, have interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of
third parties, and neither the Company nor, with respect to the
Business, the Partners, have ever received any charge, complaint,
claim, demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that the Company
or, with respect to the Business, the Partners, must license or
refrain from using any Intellectual Property rights of any third
party). To the Knowledge of the Company, no third party has interfered
with, infringed upon, misappropriated, or otherwise come into conflict
with any Intellectual Property rights of the Company.
(iii) Section 3(l)(iii) of the Company Disclosure Schedule
identifies each patent or registration which has been issued or
transferred to the Company or the Partners with respect to any of the
Intellectual Property, identifies each pending patent application or
registration which the Company or the Partners has made with respect
to any of the Intellectual Property, and identifies each license,
agreement, or other permission which the Company or the Partners has
granted to any third party with respect to any of the Intellectual
Property. The Company has delivered to the Buyer true, correct and
complete copies of all such patent, trademark and copyright
registrations, applications, licenses, agreements, and permissions (as
amended to date) and has made available to the Buyer true, correct and
complete copies of all other written documentation evidencing
ownership and prosecution (if applicable) of each such item. Section
3(l)(iii) of the Company Disclosure Schedule also identifies each
trade name or unregistered trademark used by the Company in connection
with the Business. With respect to each item of Intellectual Property
required to be identified in Section 3(l)(iii) of the Company
Disclosure Schedule:
(A) the Company possesses all right, title, and interest in
and to the item, free and clear of any Security Interest,
license, or other restriction;
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(B) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(C) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the
Knowledge of the Company, threatened, which challenges the
legality, validity, enforceability, use, or ownership of the
item; and
(D) except in the Ordinary Course of Business with respect
to customers of the Company pursuant to those agreements set
forth on the Company Disclosure Schedule, neither the Company
nor, with respect to the Business, the Partners have ever agreed
to indemnify any Person for or against any interference,
infringement, misappropriation, or other conflict with respect to
the item.
(iv) Section 3(l)(iv) of the Company Disclosure Schedule
identifies each item of Intellectual Property that any third party
owns and that the Company uses or distributes pursuant to license,
sublicense, agreement, or permission (but specifically excluding any
off-the-shelf computer program that is validly and properly licensed
under a shrink-wrap license). The Company has delivered to the Buyer
true, correct and complete copies of all such licenses, sublicenses,
agreements, and permissions (as amended to date). With respect to each
item of Intellectual Property that any third party owns and that the
Company uses pursuant to license, sublicense, agreement, or permission
(specifically including, but not limited to, any off-the-shelf
computer program that is validly and properly licensed under a
shrink-wrap license):
(A) the license, sublicense, agreement, or permission
covering the item is legal, valid, binding, enforceable, and in
full force and effect;
(B) the license, sublicense, agreement, or permission will
continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of
the transactions contemplated hereby;
(C) neither the Company nor, to the Knowledge of the
Company, any other party to the license, sublicense, agreement,
or permission, is in breach or default thereunder, and no event
has occurred which with notice of lapse of time would constitute
a breach or default or permit termination, modification, or
acceleration thereunder;
(D) the Company has not, and to the Knowledge of the
Company, no other party to the license, sublicense, agreement, or
permission has, repudiated any provision thereof;
-23-
(E) with respect to each sublicense, the representations
and warranties set forth in subsections (A) through (D) above are
true and correct with respect to the underlying license;
(F) the underlying item of Intellectual Property is not
subject to any outstanding injunction, judgment, order, decree,
ruling, or charge;
(G) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand is pending or, to the
Knowledge of the Company, threatened, which challenges the
legality, validity, or enforceability of the underlying item of
Intellectual Property; and
(H) the Company has not granted any sublicense or similar
right with respect to the license, sublicense, agreement, or
permission.
(m) Software.
(i) Section 3(m)(i) of the Company Disclosure Schedule sets
forth under the caption "Owned Software" a true, correct and complete
list of all computer programs (source code or object code) which were
developed for or on behalf of, or have been purchased by, the Company
and which are currently used internally by the Company or which have
been distributed by the Company and all computer programs under
development by the Company but not currently distributed
(collectively, the "Owned Software"), and Section 3(m)(i) of the
Company Disclosure Schedule sets forth under the caption "Licensed
Software" a true, correct and complete list of all computer programs
(source code or object code) licensed to the Company by another person
which are currently used internally by the Company or which have been
distributed by the Company, whether as integrated or bundled with any
Owned Software or as a separate stand-alone product (specifically
excluding any off-the-shelf computer program that is validly and
properly licensed under a shrink-wrap license) (collectively, the
"Licensed Software" and, together with the Owned Software, the
"Software").
(ii) The Company has good, marketable and exclusive title to, and
the valid and enforceable power and unqualified right to sell,
license, lease, transfer, use, create derivative works of, or
otherwise exploit, all versions and releases of the Owned Software and
all copyrights thereof, free and clear of all Security Interests. The
Company is in actual possession of the source code and object code for
each computer program included in the Owned Software, and the Company
is in possession of all other documentation, including without
limitation all related engineering specifications, program flow
charts, installation and user manuals, and know-how necessary for the
effective use of the Software as currently used in, or in development
in, the Company's business or as offered or represented to the
Company's customers or potential customers. The Company is in actual
possession of the object code and user manuals for each computer
program included in the Licensed Software. The Software constitutes
all of the computer programs necessary to conduct the Business as now
conducted, and includes all of
-24-
the computer programs licensed or offered for license to the Company's
customers and potential customers or otherwise under development, or
used in the development, marketing, licensing, sale or support of the
products and the services presently offered by the Company. Except
pursuant to licenses or sublicenses granted by the Company to its
customers in the Ordinary Course of Business, no person other than the
Company has any right or interest of any kind or nature in or with
respect to the Owned Software or any portion thereof or any rights to
sell, license, lease, transfer, use or otherwise exploit the Owned
Software or any portion thereof. Except with respect to those
Liabilities arising under those licenses, sublicenses, agreements, or
permissions for Licensed Software to which the Company is a party, as
set forth on Section 3(m)(i) of the Company Disclosure Schedule, the
Company has no Liability to any Person with respect to the Software,
or with respect to the license, distribution, use, creation,
development, design, implementation, or adaptation of the Software to
the Business.
(iii) Section 3(m)(iii) of the Company Disclosure Schedule sets
forth a true, correct and complete list, by computer program, of (A)
all persons other than the Company and its current and former
employees that have been provided with the source code or have a right
to be provided with the source code (including any such right that may
arise after the occurrence of any specified event or circumstance,
either with or without the giving of notice or passage of time or
both) for any of the Owned Software, and (B) all source code escrow
agreements relating to any of the Owned Software (setting forth as to
any such escrow agreement the source code subject thereto and the
names of the escrow agent and all other persons who are actual or
potential beneficiaries of such escrow agreement), and identifies with
specificity all agreements and arrangements pursuant to which the
execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby would entitle any
third party or parties to receive possession of the source code for
any of the Owned Software or any related technical documentation.
Except as set forth on Section 3(m)(iii) of the Company Disclosure
Schedule, no Person (other than the Company and its current and former
employees) is in possession of, or has or has had access to, any
source code for any computer program included in the Owned Software.
(iv) Except as set forth on Section 3(m)(iv) of the Company
Disclosure Schedule, there are no defects in any computer program
included in the Software, which Software is (i) currently used
internally by the Company, (ii) currently being distributed by the
Company, or (iii) under development by the Company but not currently
distributed, that could reasonably be expected to adversely affect, in
any material way, the functioning thereof in accordance with any
published specifications therefor or in accordance with any warranties
given with respect thereto. Without limiting the generality of the
foregoing, all of the Software has the following properties and
capabilities: (A) the capability to correctly recognize and accurately
process dates expressed as a four-digit number (or the binary
equivalent or other machine-readable iteration thereof) (collectively,
"Four-Digit
-25-
Dates"); (B) the capability to accurately execute calculations using
Four-Digit Dates; (C) the functionality (both on-line and batch),
including entry, inquiry, maintenance and update, to support
processing involving Four-Digit Dates; (D) the capability to generate
interfaces and reports that support processing involving Four-Digit
Dates; (E) the capability to provide correct results in forward and
backward data calculations spanning century boundaries, including the
conversion of pre-2000 dates currently stored as two-digit dates; and
(F) the capability to correctly recognize leap years, including the
year 2000, and to properly process date calculations involving or
spanning leap years. Each computer program included in the Software is
in machine readable form and contains all current revisions. Section
3(m)(iv) of the Company Disclosure Schedule sets forth a true, correct
and complete list of current claims of defects by customers of the
Company under warranties or support and maintenance agreements.
Section 3(m)(iv) of the Company Disclosure Schedule sets forth a true,
correct and complete list of and brief description of the status of,
any current developments or efforts with respect to the Owned
Software, including without limitation, the development of new
computer programs or enhancements or revisions to existing computer
programs included in the Owned Software and software fixes in progress
for any person to whom or which the Company has sold, licensed,
leased, transferred, or otherwise furnished Software or related
products or services.
(v) Except as set forth on the Company Disclosure Schedule,
none of the sale, license, lease, transfer, use, reproduction,
distribution, modification or other exploitation by the Company of any
version or release of any computer program included in the Software
obligates or will obligate the Company to pay any royalty, fee, or
other compensation to any other person.
(vi) Except as set forth on Section 3(m)(vi), the Company does
not market, nor has the Company marketed, and the Company has not
supported or is obligated to support, any Licensed Software
independent of the Owned Software.
(vii) Except as specified in Section 3(m)(vii) of the Company
Disclosure Schedule: (A) no agreement, license or other arrangement
pertaining to any of the Software (including, without limitation, any
development, distribution, marketing, use or maintenance agreement,
license or arrangement) to which the Company is a party will terminate
or become terminable by any party thereto as a result of the
execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby; and (B) all
licenses covering Licensed Software are of perpetual duration (subject
to provisions allowing the Company to terminate and provisions
allowing the respective licensors to terminate in the event of a
breach by the Company).
(n) No Infringement. Neither the existence nor the sale, license,
lease, transfer, use, reproduction, distribution, modification or other
exploitation by the Company or any of its successors or assigns of any
Intellectual Property (and, to the Knowledge of the Company, the Licensed
Software), as such Intellectual Property, as the case may be, is or was, or
is currently contemplated to be sold, licensed, leased,
-26-
transferred, used or otherwise exploited by such persons, does, did or will
(A) infringe on any patent, trademark, copyright or other intellectual
property right of any other third party, (B) constitute a misuse or
misappropriation of any trade secret, know-how, process, proprietary
information or other right of any other person or a violation of any
relevant agreement governing the license of the Licensed Software to the
Company, or (C) entitle any other person to any interest therein, or right
to compensation from the Company or any of its successors or assigns, by
reason thereof. The Company has not received any complaint, assertion,
threat or allegation or otherwise has notice of any lawsuit, claim, demand,
proceeding, or investigation involving matters of the type contemplated by
the immediately preceding sentence or has Knowledge of any facts or
circumstances that could reasonably be expected to give rise to any such
lawsuit, claim, demand, proceeding or investigation. Except with respect to
Intellectual Property which is licensed by the Company from third parties,
there are no restrictions on the ability of the Company or any of its
successors or assigns to sell, license, lease, transfer, use, reproduce,
distribute, modify or otherwise exploit any Intellectual Property.
(o) Tangible Assets. The Company owns or leases all of the tangible
assets which are Acquired Assets, including but not limited to all such
buildings, machinery, equipment, and other tangible assets, used in the
conduct of the Business as presently conducted. Each such Acquired Asset is
free from any known material defects, has been maintained in accordance
with normal industry practice, is in good operating condition and repair
(subject to normal wear and tear), and is suitable for the purposes for
which it presently is used. The Acquired Assets constitute all of the
tangible assets used in the conduct of the Business as presently conducted.
(p) Inventory. The inventory of the Company consists of raw materials
and supplies, manufactured and purchased parts, goods in process, and
finished goods, all of which is merchantable and fit for the purpose for
which it was procured or manufactured, subject to any reserves therefor in
the Financial Statements and none of which is slow moving (except for parts
and components on hand for servicing products already sold), obsolete,
damaged, or defective in excess of any reserves therefor on the Financial
Statements.
(q) Contracts. Section 3(q) of the Company Disclosure Schedule lists
the following contracts and other agreements, written or oral, to which the
Company is a party:
(i) any agreement (or group of related agreements) for the lease
of personal property to or from any Person providing for lease
payments in excess of $15,000 per annum;
(ii) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of services,
the performance of which will extend over a period of more than one
year, or which to the Knowledge of the Company will result in a loss
to the Company, or which involves consideration, in excess of $15,000;
-27-
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which
the Company has created, incurred, assumed, or guaranteed any
Indebtedness, under which the Company has imposed a Security Interest
on any of its respective assets, tangible or intangible;
(v) any agreement concerning confidentiality or
noncompetition;
(vi) any agreement pursuant to which the Company licenses other
persons to use any of the Software or has agreed to support, maintain,
upgrade, enhance, modify, port, or consult with respect to any of the
Software, or pursuant to which other persons license the Company to
use the Licensed Software;
(vii) any agreement by which the Company has agreed to design,
develop, author or create any new custom, or customized software for
any third party;
(viii) any agreement involving the Partners to which the Company
is a party;
(ix) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of the Company's current or former
partners, officers, and employees;
(x) any agreement (A) for the employment of any individual on
a full-time, part-time, consulting, or other basis providing annual
compensation in excess of $15,000 or (B) providing severance benefits;
(xi) any agreement under which the Company has advanced or
loaned any amount to any of its partners, officers, and employees; or
(xii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $15,000.
The Company has delivered to the Buyer a true, correct and complete copy of
each written agreement listed in Section 3(q) of the Company Disclosure
Schedule (as amended to date) and a written summary setting forth the terms
and conditions of each oral agreement referred to in Section 3(q) of the
Company Disclosure Schedule. With respect to each such agreement: (A)
assuming the due authorization, valid execution and delivery thereof by the
other Persons thereto, the agreement is legal, valid, binding, enforceable,
and in full force and effect, subject to applicable bankruptcy, insolvency,
fraudulent conveyance or transfer, reorganization, arrangement, moratorium
or other similar laws from time to time affecting creditor's rights
generally; (B) to the Knowledge of the Company, and except as set forth on
Section 3(c) of the Company Disclosure Schedule, the agreement will
continue to be legal, valid, binding, enforceable, and in full force and
effect on identical terms following the consummation of the transactions
-28-
contemplated hereby, subject to applicable bankruptcy, insolvency,
fraudulent conveyance or transfer, reorganization, arrangement, moratorium
or other similar laws from time to time affecting creditor's rights
generally; (C) the Company is not, and to the Knowledge of the Company, no
other party is, in material breach or default, and no event has occurred
which with notice or lapse of time would constitute a material breach or
default, or permit termination, modification, or acceleration, under the
agreements; (D) no party has repudiated any provision of the agreement; and
(E) such agreement does not prohibit or require consent in the event of a
change of control of the Company. With respect to each customer order
listed in Section 3(q) of the Company Disclosure Schedule, the Company does
not have any Knowledge of any basis for cancellation thereof.
(r) Notes and Accounts Receivable. The notes and accounts receivable
of the Company included among the Acquired Assets are reflected properly on
the books and records of the Company and are valid receivables subject to
no setoffs or counterclaims; and all of such notes and accounts receivable
will be collectable when due, subject only to the reserve for bad debts set
forth on the face of the Financial Statements dated as of March 31, 2001.
(s) Powers of Attorney. Except as set forth on Section 3(s) of the
Company Disclosure Schedule, there are no outstanding powers of attorney
executed on behalf of the Company.
(t) Insurance. Section 3(t) of the Company Disclosure Schedule sets
forth the following information with respect to each insurance policy
(including policies providing property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) to which the
Company has been a party, a named insured, or otherwise the beneficiary of
coverage at any time within the past three (3) years:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and
the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the coverage
was on a claims made, occurrence, or other basis) and amount
(including a description of how deductibles and ceilings are
calculated and operate) of coverage; and
(v) a description of any retroactive premium adjustments or
other loss-sharing arrangements.
With respect to each such insurance policy: (A) all policy premiums due to
date have been paid in full, and to the Knowledge of the Company, the
policy is legal, valid, binding, enforceable, and in full force and effect
with respect to the periods for which it purports to provide coverage
subject to applicable bankruptcy, insolvency, fraudulent
-29-
conveyance or transfer, reorganization, arrangement or moratorium or other
similar laws from time to time affecting creditor's rights generally; (B)
the Company is not and, to the Knowledge of the Company, no other party to
the policy, is in breach or default (including with respect to the payment
of premiums or the giving of notices), and no event has occurred which,
with notice or the lapse of time, would constitute such a breach or
default, or permit termination, modification, or acceleration, under the
policy; and (C) no party to the policy has repudiated any provision
thereof. Section 3(t) of the Company Disclosure Schedule describes any
self-insurance arrangements affecting the Company.
(u) Litigation. The Company (i) is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge and (ii) is not a
party nor, to the Knowledge of the Company, is threatened to be made a
party to any action, suit, proceeding, hearing, or investigation of, in, or
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator.
(v) Product Warranty. Each product manufactured, sold, leased, or
delivered by the Company or service provided by the Company has been in
conformity with all of their applicable contractual commitments and express
and implied warranties, and the Company does not have any Liability with
respect to such products manufactured, sold, leased, or delivered (and
there is no Basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against it
giving rise to any Liability), except for Product Warranty Claims for which
adequate reserves are set forth on the Financial Statements. Except as
otherwise may be provided by applicable law, no product manufactured, sold,
leased, or delivered by the Company is subject to any guaranty, warranty,
or other indemnity beyond the applicable standard terms and conditions of
sale or lease. Section 3(v) of the Company Disclosure Schedule includes
copies of the standard terms and conditions of sale or lease for the
Company (containing applicable guaranty, warranty, and indemnity
provisions).
(w) Product Liability. There are no existing or, to the Knowledge of
the Company, threatened, claims against the Company arising out of any
injury to individuals or property as a result of the ownership, possession,
or use of any product manufactured, sold, leased, or delivered by the
Company which could result in Liability to the Company, and the Company
does not have any Knowledge of a Basis for any such claim.
(x) Employees. Section 3(x) of the Company Disclosure Schedule sets
forth (A) the name, and (B) the current annual salary (or hourly wage),
including any bonus or commitment to pay any other amount or benefit in
connection with a termination of employment, if applicable, of all present
employees, consultants, and independent contractors employed by the
Company. To the Knowledge of the Company, no executive, key employee, or
group of employees has any plans to terminate employment with the Company.
The Company is not a party to or bound by any collective bargaining
agreement, nor has the Company experienced any strikes, grievances, claims
of unfair labor practice. The Company does not have any Knowledge of any
organizational effort presently being made or threatened by or on behalf of
any labor union with respect to its employees. There is no claim
outstanding or, to the Knowledge of the Company,
-30-
threatened, or any Basis for a claim respecting employment of any past or
present employee of the Company including, without limitation, claims of
personal injury (unless fully covered by worker's compensation, liability
or indemnity insurance) discrimination, wage, hours or similar laws or
regulations. There are no written employment or similar agreements for a
fixed term between any employee of the Company and the Company; each
employee of the Company is an at-will employee.
(y) Employee Benefits.
(i) No other corporation, trade, business, or other entity,
would, together with the Company, constitute a single employer within
the meaning of Code Section 414.
(ii) Section 3(y) of the Company Disclosure Schedule contains a
true and complete list of all of the Employee Benefit Plans which are
presently in effect at any time within the preceding three (3) years,
or which have previously been in effect for the benefit of current or
former employees, officers, partners or consultants of the Company
(the "Company Plans"). All Company Plans established or maintained
outside of the United States primarily for the benefit of persons
substantially all of whom are nonresident aliens are referred to
herein as "Foreign Plans" and all other Company Plans are referred to
herein as "US Plans".
(iii) Each US Plan has been established, maintained, funded, and
administered in all material respects in accordance with its terms and
any applicable provisions of law, and is in compliance in all material
respects with the applicable provisions of United States law. The
Company does not have any Foreign Plans.
(iv) No actions, suits or claims (other than routine claims for
benefits in the ordinary course) are pending or, to the Knowledge of
the Company, threatened, with respect to any Company Plan and no event
or condition exists or may be reasonably expected to occur which would
result in the Company having any liability in respect of any Company
Plan not reflected on the Financial Statements.
(v) The Company has no past, present or future obligation or
liability to contribute to any multiemployer plan as defined in ERISA
Section 3(37).
(vi) With respect to the Company Plans which provide group
health benefits to employees of the Company and are subject to the
requirements of Code Section 4980B and Part 6, Subtitle B of Title I
of ERISA ("COBRA"), such group health plan has been administered in
every material respect in accordance with its governing documents and
COBRA and with the group health plan requirements of Subtitle K,
Chapter 100 of the Code and ERISA Sections 701 et. seq.
(vii) With respect to employee benefit matters generally:
-31-
(A) neither the Company nor any person, firm or corporation
which is or has been under common control of the Company within
the meaning of Section 4001(b) of ERISA, maintains or contributes
to or has ever maintained or contributed to any Employee Benefit
Plan subject to Title IV of ERISA or Code Section 412;
(B) the consummation of the transactions contemplated
hereby will not accelerate or increase any Liability under any of
the Company Plans because of an acceleration or increase of any
of the rights or benefits to which Company Plan participants or
beneficiaries may be entitled thereunder; and
(C) the Company does not have any obligation to any retired
or former employee or any current employee of the Company upon
retirement or termination of employment under any Company Plans,
other than such obligations imposed by COBRA.
(z) Guaranties. The Company is not a guarantor or otherwise liable
for any Liability or obligation (including Indebtedness) of any other
Person.
(aa) Environment, Health, and Safety.
(i) The Company has complied with all Environmental, Health,
and Safety Laws, the failure to comply with which could result in
Adverse Consequences in an amount in excess of $15,000 individually or
in the aggregate, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against the Company alleging such failure.
(ii) The Company does not have any Liability (and the Company
has not handled, used, stored, treated, recycled or disposed of any
Hazardous Substance, arranged for the disposal of any Hazardous
Substance, exposed any employee or other individual to any Hazardous
Substance or condition, or owned or operated any property or facility
in any manner that could form the Basis for any present or future
action, suit, proceeding, hearing, investigations, charge, complaint,
claim or demand giving rise to any Liability) for penalties,
investigations of or damage to any site, location, body of water
(surface or subsurface), or other natural resources, for any illness
of or personal injury to any employee or other individual, or for any
reason under any Environmental, Health, and Safety Laws.
(iii) All properties and equipment used in the Business are and
in the past have been free of any amounts of asbestos, PCB's,
methylene chloride, trichlorethylene, 1,2-trans-dichloroethylene,
dioxins, dibenzofurans, and Extremely Hazardous Substances, the
presence of which could result in Adverse Consequences.
-32-
(bb) Certain Business Relationships with the Company. Except as
set forth on Section 3(bb) of the Company Disclosure Schedule, none of
the Partners or their current or former spouses, children, parents,
grandparents, cousins, or other relatives, has been involved directly
or indirectly in any business arrangement or relationship with the
Company within the past thirty-six (36) months, and no Partner owns
any Acquired Asset or any other asset, tangible or intangible, which
is used in the Business.
(cc) Disclosure. The representations and warranties contained in
this Section 3 (including the Company Disclosure Schedule) do not
contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statement and information
contained in this Section 3 not misleading. In connection with the
Buyer's investigation of the Acquired Assets and the Business, the
Buyer has received from the Company and the General Partner certain
estimates, projections and other forecasts, plans and budgets for the
Business. The Company and the General Partner make no representation
or warranty with respect to any estimates, projections, forecasts,
plans or budgets referred to in this Section 3(cc).
4. Representations and Warranties of the Parent and the Buyer.
Parent and Buyer, jointly and severally, represent and warrant to the
Company that the statements contained in this Section 4 are true, correct and
complete as of the date hereof, and will be true, correct and complete as of the
Closing Date.
(a) Organization of the Parent and the Buyer. Each of the Parent and
the Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation and is
duly qualified as a foreign corporation to do business in every
jurisdiction where such qualification is required.
(b) Authorization of Transaction. Each of Parent and Buyer has full
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of Parent and Buyer, enforceable in accordance
with its terms and conditions. Parent and Buyer need not give any notice
to, make any filing with, or obtain any authorization, consent, or approval
of any government or governmental agencies in order for the Parties to
consummate the transactions contemplated by this Agreement.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
will violate any constitution, state, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Parent or Buyer is
subject, or any provision of any of their articles or certificate of
incorporation or bylaws, as the case may be.
(d) Broker's Fees. Neither Parent nor Buyer has incurred any
Liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this
Agreement for which the Company or the Partners could become liable or
obligated.
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(e) Disclosure. To the Knowledge of Parent and Buyer, the
representations and warranties contained in this Section 4 do not contain
any untrue statements of a material fact or omit to state any material fact
necessary in order to make the statements contained in this Section 4 not
misleading.
(f) Financial Ability. At the Closing on the Closing Date, the Buyer
shall have the funds necessary to purchase the Acquired Assets and
consummate the transactions contemplated hereby.
5. Conditions to Obligation to Close.
(a) Conditions to Obligation of Parent and Buyer. The obligation of
Parent and Buyer to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:
(i) the Company and the General Partner shall have performed
and complied with all of their covenants under Section 6 hereof in all
material respects through the date hereof;
(ii) the Company shall have procured all of the third party
consents specified on Exhibit C hereto;
---------
(iii) no action, suit, or proceeding shall be pending as of the
date hereof or, to the Knowledge of the Company, threatened as of the
date hereof, before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign (including but not
limited to Germany, The Netherlands, the European Union, and
Singapore) jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge
would (A) prevent consummation of any of the transactions contemplated
by this Agreement, or (B) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation (and no such
injunction, judgment, order, decree, ruling, or charge shall be in
effect);
(iv) the Company and the General Partner shall have delivered to
the Parent and the Buyer a certificate, executed by the Company and
the General Partner, to the effect that the conditions specified above
in Section 5(a)(i)-5(a)(iii) have been satisfied in all respects as of
the date hereof;
(v) each of the Company, the General Partner, Xxxxxxx X.
Xxxxxx, the Xxxxxxx X. Xxxxxx 1994 Trust, Xxx Xxxxxxx, Step-L
Ventures, and Xxxx Xxxxxx shall have each entered into a
Noncompetition and Assignment of Inventions Agreement with a term
equal to two (2) years, and each of Xxxxx Xxxxxxx, Xxxx Xxxxxxx, Xxxx
Xxxxxxx, and Xxxx Xxxxxx shall have each entered into a Noncompetition
and Assignment of Inventions Agreement with a term equal to eighteen
(18) months (each a "Noncompetition and Assignment of Inventions
Agreement"), in form and substance as set forth in Exhibit D attached
---------
hereto, and the same shall be in full force and effect;
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(vi) each of the Company, the General Partner, Xxxxxxx X.
Xxxxxx, the Xxxxxxx X. Xxxxxx 1994 Trust, Xxx Xxxxxxx, Step-L
Ventures, Xxxx Xxxxxx, Xxxxx Xxxxxxx, Xxxx Xxxxxxx, Xxxx Xxxxxxx, and
Xxxx Xxxxxx shall have executed and delivered to the Parent and the
Buyer a release agreement (each, a "Release Agreement") in form and
substance as set forth on Exhibit E hereto;
---------
(vii) each of Xxxx Xxxxxx, Xxxxx Xxxxxxx, Xxxx Xxxxxxx, Xxxx
Xxxxxxx, and Xxxx Xxxxxx shall have entered into an Employment
Agreement with the Buyer (each, an "Employment Agreement") in form and
substance as set forth on Exhibit F hereto, and the same shall be in
---------
full force and effect;
(viii) each of the Company, the General Partner, the Parent, the
Buyer, and the Escrow Agent shall have entered into the Escrow
Agreement;
(ix) the General Partner shall have caused the Company and the
General Partner to prepare and deliver to Buyer all documents and
instruments necessary to amend the Certificate of Limited Partnership
of the Company, and the Articles of Incorporation of the General
Partner, or such other similar governing documents, to change their
respective names to a name which does not contain the words "Media
Cybernetics" or any substantially similar words;
(x) The Company shall have satisfied all obligations owed to
its creditors necessary to permit the Buyer to obtain clear title to
the Acquired Assets or, in the alternative, shall have obtained payoff
letters from such creditors, in form and substance satisfactory to the
Parent and the Buyer, which contain payoff information with respect to
the satisfaction of such obligations, and provided such payoff letters
to the Buyer;
(xi) the Company and the General Partner shall have executed
and delivered to the Buyer such instruments and documents as may be
requested by Buyer or Parent in order to complete the transfer of the
Acquired Assets and the Assumed Liabilities to the Buyer, including
without limitation, a xxxx of sale and assignment and assumption
agreement, a copyright assignment, a trademark assignment, and a
patent assignment, each in form and substance satisfactory to the
Parent and the Buyer;
(xii) the Parent and the Buyer shall have received from counsel
to the Company and the General Partner opinions with respect to the
Company, the General Partner, and the transactions contemplated hereby
in form and substance as set forth in Exhibit G attached hereto,
---------
addressed to the Parent and the Buyer, and dated as of the Closing
Date;
(xiii) each of the Buyer and the Company shall have received the
consent and estoppel of 0000 Xxxxxxx Xxxxxx, L.L.C., in form and
substance satisfactory to the Parent and the Buyer, with respect to
the Leased Real Property located at 0000 Xxxxxxx Xxxxxx, Xxxxxx
Xxxxxx, Xxxxxxxx;
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(xiv) the General Partner shall have conveyed, assigned,
and delivered to the Company any asset used by the Company in
the Business which constitutes an Acquired Asset, and any
liability of the Company which constitutes an Assumed Liability,
owned by the General Partner, or licensed by the General Partner
to the Company;
(xv) the Company shall have delivered to Parent and
Buyer a certificate of the Secretary of the General Partner of
the Company as to the incumbency of its officers, a copy of a
certificates evidencing the good standing of the Company in each
of Delaware, Maryland, and California, each dated no more than
fifteen (15) days prior to the date hereof, a copy of the
certificate of limited partnership and the agreement of limited
partnership of the Company, and a copy of the resolutions
adopted by the General Partner of the Company with respect to
the transactions contemplated by this Agreement; and
(xvi) the Company and the General Partner shall have
executed and delivered a funds flow and settlement statement
reflecting the transactions contemplated by this Agreement.
Either the Parent or the Buyer may waive any condition specified in
this Section 5(a) if it executes a writing so stating at or prior to the
Closing.
(b) Conditions to Obligation of the Company and the General
Partner. The obligation of the Company and the General Partner to
consummate the transactions to be performed by them in connection with
the Closing is subject to satisfaction of the following conditions:
(i) Parent and Buyer shall have performed and complied
with all of their covenants under Section 6 hereof in all
material respects through the date hereof;
(ii) no action, suit, or proceeding shall be pending as
of the date hereof or, to the knowledge of the Parent or the
Buyer, threatened as of the date hereof, before any court or
quasi-judicial or administrative agency of any federal, state,
local, or foreign (including but not limited to Germany, The
Netherlands, the European Union, and Singapore) jurisdiction or
before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this
Agreement or (B) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation (and no
such injunction, judgment, order, decree, ruling, or charge
shall be in effect);
(iii) the Parent and the Buyer shall have delivered to
the Company a certificate to the effect that the conditions
specified above in Section 5(b)(i)-5(b)(ii) have been satisfied
in all respects as of the date hereof;
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(iv) the Company shall have received from counsel to
the Parent and the Buyer an opinion in form and substance as set
forth in Exhibit H attached hereto, addressed to the Company,
---------
and dated as of the Closing Date; and
(v) each of the Parent and the Buyer shall have
delivered to the Company a certificate of the Secretary of the
Parent and the Buyer, respectively, as to the incumbency of each
of their officers, a copy of the certificates evidencing the
incorporation and good standing of the Parent and the Buyer, a
copy of the certificate of incorporation and bylaws of the
Parent and the Buyer, respectively, and a copy of the
resolutions adopted by the board of directors of the Parent and
the Buyer, respectively, with respect to the transactions
contemplated by this Agreement.
The Company may waive any condition specified in this Section 5(b) if
it executes a writing so stating at or prior to the Closing.
6. Pre-Closing Covenants.
The Parties agree as follows with respect to the period prior to the
Closing:
(a) Access and Investigation. Between the date hereof and
the Closing Date, the Company and the General Partner will, and will
cause their representatives to:
(i) afford the Buyer and its representatives
(collectively, "Buyer's Advisors") reasonable access to the
Company and its personnel, properties (including for purposes of
environmental testing), contracts, books and records, and other
documents and data so as to not unreasonably interfere with the
conduct of the Business;
(ii) furnish the Buyer with copies of all such
contracts, books and records, and other existing documents and
data as the Buyer may reasonably request; and
(iii) furnish the Buyer and Buyer's Advisors with such
additional financial, operating and other data and information
as the Buyer may reasonably request.
(b) Operation of the Business of the Company. Between the
date hereof and the Closing Date, the Company and the General Partner
will, and the Company will cause its representatives to:
(i) conduct the Business only in the Ordinary Course
of Business, or otherwise with the written consent of the Buyer;
(ii) use their commercially reasonable efforts to
preserve intact the current business organization of the
Company, keep available the services of the current officers,
employees, and agents of the Company, maintain the relations
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and good will with suppliers, customers, landlords, creditors,
employees, agents, and others having business relationships with
the Company, and maintain such amount of working capital
necessary for the Company to conduct the Business in the
Ordinary Course of Business; and
(iii) confer with the Buyer concerning operational
matters of a material nature and, as reasonably requested by the
Parent or the Buyer, the status, of business operations and
finances.
(c) Negative Covenant. Except as otherwise expressly
permitted by this Agreement, between the date of this Agreement and the
Closing Date, the Company and the General Partner will not, without the
prior consent of the Buyer, take any affirmative action, or fail to take
any reasonable action within their or its control, which would cause or
result in an inaccuracy or breach as of the date hereof of any of the
representations and warranties of the Company set forth in this
Agreement as of the date hereof, or which would cause or result in a
breach of any covenants of the Company and the General Partner set forth
in this Agreement, including, without limitation, any action specified
in Section 3(g) of this Agreement.
(i) Without limiting the generality of the foregoing,
the Company and the General Partner agree that, between the date
of this Agreement and the Closing Date, the Company shall not,
and the General Partner shall cause the Company not to, take any
of the following actions without the prior written consent of
the Buyer or the Parent:
(A) amend the certificate of limited partnership
or agreement of limited partnership of the Company,
except such amendments filed, or to be filed, and
actions taken, or to be taken, in connection with the
change of name of the Company as contemplated by this
Agreement; except with respect to employees of the
Company in the Ordinary Course of Business, make any
change in their authorized, issued or outstanding
partnership interests or any other equity security of
the Company; except with respect to employees of the
Company in the Ordinary Course of Business, issue, sell,
pledge, assign or otherwise encumber or dispose of, or
purchase, redeem or otherwise acquire, any of the
partnership interests or other equity securities of the
Company or enter into any agreement, call or commitment
of any character so to do; grant or issue any option or
warrant relating to, right to acquire, or security
convertible into, partnership interests or other equity
security of the Company; except with respect to
employees of the Company in the Ordinary Course of
Business, purchase, redeem, retire or otherwise acquire
any shares of, or any security convertible into,
partnership interests or other equity security of the
Company, or agree to do any of the foregoing set forth
in this Section 6(c)(i)(A);
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(B) acquire, directly or indirectly,
substantially all of the assets of, or a controlling
equity interest in, any corporation or other entity, or
enter into any commitment to do the same;
(C) enter into any agreement, commitment or
similar transaction with the Partners;
(D) enter into any employment contract or
collective bargaining agreement, written or oral, or
modify the terms of any existing such contract or
agreement, except in the Ordinary Course of Business;
(E) grant any increase in the base compensation
of any of their partners, officers, and employees,
except in the Ordinary Course of Business;
(F) adopt, amend, modify, or terminate any
bonus, profit-sharing, incentive, severance, or other
plan, contract, or commitment for the benefit of any of
their partners, officers, and employees (or take any
such action with respect to any other Company Plan); and
(G) make any other change in employment terms
for any of their partners, officers, and employees,
except in the Ordinary Course of Business.
(ii) Without limiting the generality of the foregoing,
the Company and the General Partner agree that, between the date
hereof and the Closing Date, the Company shall not, and the
General Partner shall cause the Company not to, take any of the
following actions without the prior written consent of the Buyer
or the Parent:
(A) Except with respect to a dividend or other
distribution which shall not exceed that amount of net
income (as defined in accordance with GAAP) of the
Company from June 1, 2001, through the close of business
on June 30, 2001, propose, declare, set aside or pay any
dividend or other distribution in respect of any of its
partnership interests (including, without limitation,
any sort of dividend or distribution, or any payment of
Indebtedness of the Company owed to the Partners);
(B) incur any Indebtedness, other than normal,
Ordinary Course of Business trade payables and accruals;
(C) enter into any agreement (or group of
related agreements) outside of the Ordinary Course of
Business, or which by its (or their) terms contemplate
performance over more than one (1) year, or which
involve the payment of more than $50,000; and
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(D) commit to or expend funds for any capital
expenditure in excess of $50,000.
(d) No Merger or Solicitation.
(i) The Company shall not, nor authorize or permit any
of its officers, partners or employees or any investment banker,
financial advisor, attorney, accountant or other representative
or agent retained by them, to, directly or indirectly, solicit,
initiate, or encourage (including by way of furnishing nonpublic
information), or take any other action to facilitate, any
inquiries or the making of any proposal which constitutes, or
may reasonably be expected to lead to, any Takeover Proposal, or
agree to or endorse any Takeover Proposal, or participate in any
discussions or negotiations, or provide third parties with any
nonpublic information, relating to any such inquiry or proposal.
Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding
sentence by the Partners, any executive officer of the Company,
or any investment banker, attorney or other advisor or
representative of the Company, whether or not such Person is
purporting to act on behalf of the Company or otherwise, shall
be deemed to be a breach of this Section 6(d) by the Company and
the General Partner.
(ii) Neither the General Partner of the Company nor any
committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to the Buyer, the
approval or recommendation by the General Partner or any such
committee of this Agreement or the transactions contemplated
hereby, (ii) approve or recommend, or propose to approve or
recommend, any Takeover Proposal, or (iii) enter into any
agreement with respect to any Takeover Proposal.
(iii) In addition to the obligation of the Company set
forth in paragraph (ii) above, the Company promptly shall advise
the Parent and the Buyer orally and in writing of any request
for information or of any Takeover Proposal, or any inquiry with
respect to or which could lead to any Takeover Proposal, the
material terms and conditions of such request, Takeover Proposal
or inquiry and the identity of the Person making any such
request, Takeover Proposal or inquiry.
(e) Satisfaction of Obligations to Creditors. At or prior to
the Closing Date, the Company shall satisfy any and all obligations of
the Company owed to its creditors necessary to permit Buyer to obtain
clear title to the Acquired Assets, and evidence of the same shall be
delivered by the Company to the Parent and the Buyer.
(f) Assignment of Company Assets Held by the General
Partner. Prior to the Closing, the General Partner shall convey, assign,
and deliver to the Company any asset used by the Company in the Business
which constitutes an Acquired Asset, and any liability of the Company
which constitutes an Assumed Liability, which prior to the Closing was
owned by the General Partner, or licensed by the General Partner to the
Company.
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7. Post-Closing Covenants.
The Parties agree as follows with respect to the period following the
Closing:
(a) General. In case at any time after the Closing any further
action is necessary to carry out the purposes of this Agreement, the Company,
the General Partner, the Parent, and the Buyer will take such further action
(including the execution and delivery of such further instruments and documents)
as any other Party reasonably may request, at the sole cost and expense of the
requesting Party (unless the requesting Party is entitled to indemnification
therefor hereunder). The Company and the General Partner acknowledge and agree
that from and after the Closing, except as specifically set forth in this
Agreement, the Buyer will have the right to possession of all documents, books,
records (including Tax records), agreements, and financial data of any sort
relating to the Acquired Assets and the Assumed Liabilities; provided, however,
that the General Partner shall have the right to obtain access to such
documents, books, records (including Tax records), agreements, and financial
data to the extent related to the period prior to the Closing and make
photocopies thereof for a proper purpose, such as in connection with the
preparation of its Tax Returns.
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Business, the Buyer, the Company or the
General Partner, each of the other Parties will reasonably cooperate with the
contesting or defending Party and his or its counsel in the contest or defense,
make available his or its personnel, and provide such testimony and access to
his or its books and records as shall be reasonably necessary in connection with
the contest or defense, all at the sole cost and expense of the contesting or
defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under Section 8 below).
(c) Transition. The Company and the General Partner will use its
commercially reasonable efforts not to take any action that is designed or
intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of the Company from maintaining the same
business relationships with the Parent and the Buyer after the Closing as it
maintained with the Company prior to the Closing.
(d) Confidentiality. The Company and the General Partner will, and
will cause the Partners to, treat and hold as confidential all of the
Confidential Information, refrain from using any of the Confidential Information
and deliver promptly to the Buyer or destroy, at the request and option of the
Buyer, all tangible embodiments (and all copies) of the Confidential Information
which are in his, her, or its possession. In the event that the Company or any
Partner is requested or required (by oral question or request for information or
documents in any legal proceeding, interrogatory, subpoena, civil investigative
demand, or similar process) to disclose any Confidential Information,
-41-
the Company or the General Partner will notify the Buyer promptly of the request
or requirement so that the Buyer may seek an appropriate protective order or
waive compliance with the provisions of this Section 7(d). If, in the absence of
a protective order or the receipt of a waiver hereunder, the Company or such
Partner is, on the advice of counsel, compelled to disclose any Confidential
Information to any tribunal or else stand liable for contempt, the Company or
such Partner may disclose the Confidential Information to the tribunal;
provided, however, that the Company or the General Partner shall, and shall
cause the Partners to, use its commercially reasonable efforts to obtain, at the
reasonable request of the Buyer and at the Buyer's sole expense, an order or
other assurance that confidential treatment will be accorded to such portion of
the Confidential Information required to be disclosed as the Buyer shall
designate.
(e) Tax Matters. With respect to the transactions contemplated by this
Agreement, Parent, Buyer, the Company, and the General Partner will provide each
other with such cooperation and information as either of them may reasonably
require of the other in connection with the filing of any Tax Return, including
Tax Returns relating to the application of the successor employer rules for
payroll Tax purposes contained in Code Sections 3121(a)(1) and 3306(b)(1), the
determination of a liability for Taxes or a right to a refund for Taxes, or the
preparation for litigation or investigation of any claim for Taxes or a right to
a refund for Taxes. Such cooperation shall include, but not be limited to, the
provision of information including all relevant Tax Returns, and other documents
and records, or portions thereof relating to or necessary in connection with the
preparation of records, or portions thereof relating to or necessary in
connection with the preparation of such Tax Returns or other determination of
Tax Liability. Each Party shall retain all Tax Returns, schedules, workpapers,
and all other materials, records or documents until the expiration of the
statute of limitations for the taxable years to which such Tax Returns and other
documents relate. Any information obtained under this provision shall be kept
confidential by the Parties, except as may be necessary in connection with the
filing of such Tax Returns.
The Parties agree that the Buyer shall pay the sales Tax and the transfer
Tax on the transfer of the Acquired Assets, and the Parent and the Buyer shall
indemnify, defend and hold the Company and the General Partner harmless with
respect to such Taxes. Each Party shall file, or cooperate with the other
Parties in filing, all necessary documentation and Tax Returns with respect to
such sales Taxes and transfer Taxes with respect to the Acquired Assets.
(f) Assignment of Interests in Acquired Assets. Nothing in this Agreement
shall be deemed to constitute or require an assignment or an attempt to assign
any of the Acquired Assets if the attempted assignment without the consent of a
third party would adversely affect in any way the rights of either the Company
or Buyer. If any such consent shall not have been obtained at or prior to the
Closing, or the attempted transfer or assignment of any of the Acquired Assets
would have an adverse effect on Buyer or the Company, the Company will cooperate
with Buyer in any reasonable arrangement designed to provide for Buyer the
rights and benefits of such Acquired Assets, including, enforcing for the
benefit of Buyer any or all rights of the Company under any agreements
-42-
against any other party arising out of the breach or cancellation by such other
party, while permitting Buyer the possession and use of such Acquired Assets for
Buyer's account as if such Acquired Assets had been so transferred, assigned and
delivered, or otherwise. Pending the obtaining of such consents, approvals or
novations, Buyer will continue performance of any remaining unfulfilled
obligations of the Company under any of the agreements in the same manner as
though the same were subcontracted to Buyer on the same terms and conditions as
contained in the agreements. Notwithstanding the foregoing, the Company shall
not be required to commence any litigation or offer or grant any accommodation
(financial or otherwise) to any Person or incur any obligation therefor in order
to obtain a consent.
(g) Use of Company Name. The Company and the General Partner acknowledge
and agree that all of their rights, and all of the rights of the Partners, in
and to, and ownership of, the name of the Company and any names related or
substantially similar thereto shall be transferred hereunder to the Buyer. From
and after the Closing, the Company and the Partners shall be prohibited from
using such names, except as necessary to effect the change of its corporate name
or to evidence that such change has occurred. No later than three (3) days
following the Closing Date, the Company and the General Partner shall have filed
all documents with the appropriate governmental authorities in the State of
Delaware, and such other states as the Company is so qualified and registered,
to change the name of the Company to a name which does not contain the words
"Media Cybernetics" or any other substantially similar words.
(h) Employee Matters.
(i) On the Closing Date, except with respect to those employees which
are parties to the Employment Agreements, the Parent shall cause the Buyer
to offer employment in a similar position with similar base compensation to
each employee of the Company, who on the Closing Date is actively at work
(the "Employees"). Buyer agrees to give each Employee credit for all
service credited by the Company under all employee benefit plans, programs,
policies and arrangements of Buyer in which such Employees become
participants for purposes of eligibility, vesting and benefit accrual.
Buyer further agrees that from the Closing Date through the remainder of
the Parent's current fiscal year to provide such Employees the opportunity
to participate in that certain employee profit sharing arrangement of the
Company (a copy of which is attached hereto as Exhibit I). Except as
---------
otherwise set forth in the Employment Agreements, each of the Employees
shall be offered employment pursuant to this Section 7(h) on an at-will
basis.
(ii) The Company shall be responsible for those actions which are
necessary and desirable to be taken from and after the Closing to terminate
the Company Plans.
(iii) Notwithstanding anything contained in this Section 7(h), neither
Parent nor Buyer is assuming any Liability or obligation under any Company
Plan, and the Company will retain all Liability under each such Company
Plan;
-43-
provided, however, that Buyer shall assume the Liability for vacation
and sick leave accruals on the books of the Company in favor of the
Employees as of the Closing Date and shall credit Employees with such
vacation and sick leave accruals under Buyer's leave policies as are
in effect from time to time.
(iv) Neither the Company nor any Affiliate of the Company shall
continue to maintain a group health plan, within the meaning of Code
Section 5000(b)(1) following the Closing. The Company and its
Affiliates shall have taken the steps reasonably necessary to effect a
termination of each of their group health plans and each third-party
contract thereunder, all effective as of the Closing Date. From and
after the Closing, Buyer shall be responsible for any obligations with
respect to group health continuation coverage under COBRA for (i)
former employees of the Company and their eligible dependents based on
coverage under the Buyer's group health plans, which persons have
elected participation in health continuation coverage under COBRA and
whose COBRA health continuation coverage period has not expired as of
the Closing Date, or are eligible to elect participation in health
continuation coverage under COBRA under the Company's group health
plan as of the Closing Date, and (ii) Employees offered employment by
the Buyer on the Closing Date pursuant to Section 7(h)(i) above and
who voluntarily decline such offer of employment, and resign their
employment with the Company effective as of the Closing Date, and
their eligible dependents.
(i) Transition Incentive Bonus Program. Following the Closing, the
Company and the General Partner covenant and agree, jointly and severally, that
it shall satisfy all obligations to the employees of the Company arising under
the Transition Incentive Bonus Program. The Buyer agrees to reasonably cooperate
with the Company and the General Partner to provide the Company and the General
Partner such information which is necessary for the Company and the General
Partner to satisfy each of their obligations arising under the Transition
Incentive Bonus Program.
(j) Domain Name Transfer.
At Closing, the Company shall promptly discontinue all use of the
world wide web internet domain names "xxx.xxxxxxxxxxxx.xxx",
"xxx.xxxxxxxxx-xxxx.xxx", "xxx.xxxxxxx.xxx", "xxx.xxxxxxx.xxx", and each other
world wide web internet domain name owned by the Company, and each other world
wide web internet domain name used in the Business. As soon as practicable
following the Closing, but in no event later than thirty (30) days after the
Closing, the Company shall take any and all actions as required to effectuate
and record such transfer in the records of any and all pertinent domain name
registries, so that the Buyer becomes recognized by such registry as the
exclusive owner of each such Internet domain name. In any event the Company
shall promptly execute and file any forms required by any and all pertinent
domain name registries to ensure the full transfer of the exclusive right to the
domain names "xxx.xxxxxxxxxxxx.xxx", "xxx.xxxxxxxxx-xxxx.xxx",
"xxx.xxxxxxx.xxx", "xxx.xxxxxxx.xxx", "xxx.xxxxx-xxxx.xxx",
"xxx.xxxxxxxxxxxxxxxx.xxx", "xxx.xxxxx-xxx.xxx", and each other world wide web
internet domain name owned by
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the Company, and each other world wide web internet domain name used in the
Business, to the Buyer, and shall cooperate with the Buyer as it reasonably
requests to ensure the full effectiveness of such transfer.
(k) Insurance Coverage.
As soon as is practicable following the Closing, unless otherwise
unfeasible to obtain, the Company shall arrange to provide completed operations
insurance coverage with respect to each of its general liability, commercial
general liability, electronic errors & omissions, executive protection, products
liability, and employment practices, policies, which insurance coverage, (i)
shall be in effect from the Closing Date for a period of at least two (2) years
following the Closing (except with respect to the electronic errors & omissions
insurance policy, which shall be in effect indefinitely), (ii) shall provide
amounts of coverage and deductibles which are no less favorable than as
contained in each such respective policy which was maintained by the Company
prior to Closing, and (iii) shall name the Parent and the Buyer as additional
named insureds. The Company and the General Partner shall be responsible for
fifty percent (50%), and the Parent and the Buyer shall be responsible for fifty
percent (50%), of the premiums and other Liabilities incurred in connection with
the maintenance of such completed operations insurance policies.
8. Remedies for Breaches of this Agreement.
(a) Survival of Representations and Warranties. All of the representations
and warranties of the Company and the General Partner contained in Sections
3(f)-3(cc), except Sections 3(j) and 3(y), of this Agreement and all of the
representations and warranties of the Parent and the Buyer contained in Sections
4(d)-4(e) of this Agreement, shall survive the Closing and continue in full
force and effect for a period of one (1) year thereafter; all of the
representations and warranties of the Company and the General Partner contained
in Sections 3(a)-3(e), Section 3(j), and Section 3(y) of this Agreement, and all
of the representations and warranties of the Parent and the Buyer contained in
Sections 4(a)-4(c) of this Agreement, shall survive the Closing and continue in
full force and effect for a period of two (2) years thereafter; and all of the
covenants, indemnities, and other agreements of the Parent, the Buyer, the
Company, and the General Partner contained in this Agreement shall survive the
Closing and continue in full force and effect forever thereafter, subject to any
applicable statutes of limitations. No action, claim, or proceeding may be
brought by any Party hereto against any other Party resulting from, arising out
of, or caused by a breach of a representation or warranty contained herein, or
the failure to perform any covenant or other obligations hereunder, after the
time such representation, warranty or covenant ceases to survive pursuant to the
preceding sentence, unless written notice of such claim setting forth with
specificity the basis for such claim is delivered to the applicable Party prior
to such time.
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(b) Indemnification Provisions for Benefit of the Parent and the Buyer.
(i) In the event the Company or the General Partner breaches (or in the
event any third party alleges facts that, if true, would mean the Company or
the General Partner has breached) any of its representations, warranties,
and covenants contained in this Agreement, and, if there is an applicable
survival period pursuant to Section 8(a) above, provided that either the
Parent or the Buyer makes a written claim for indemnification setting forth
the basis for such claim against the Company or the General Partner pursuant
to Section 9(h) below within such survival period, then the Company and the
General Partner, jointly and severally, agree to defend, indemnify and hold
harmless the Parent and the Buyer, subject to the limitations set forth
herein, from and against the entirety of any Adverse Consequences the Parent
or the Buyer may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Parent or the Buyer
may suffer after the end of any applicable survival period) resulting from,
arising out of, or caused by the breach; provided, however, that:
(A) Neither the Company nor the General Partner shall have any
obligation to indemnify the Parent or the Buyer from and against any
Adverse Consequences resulting from, arising out of, or caused by the
breach of any representation or warranty contained in Sections 3(f)-(cc)
of the Agreement, except Section 3(j), and Section 3(y), which exceed in
the aggregate Three Million Three Hundred Thousand Dollars
($3,300,000.00); and
(B) Neither the Company nor the General Partner shall have any
obligation to indemnify the Parent or the Buyer from and against any
Adverse Consequences resulting from, arising out of, or caused by the
breach of any representation or warranty contained in Sections
3(a)-3(e), Section 3(j), and Section 3(y), of this Agreement, or caused
by the breach of any covenants, indemnities, and other agreements
contained in this Agreement, which exceeds the Asset Purchase
Consideration;
(C) Neither the Company nor the General Partner shall have any
obligation to indemnify the Parent or the Buyer from and against any
Adverse Consequences resulting from, arising out of, or caused by the
breach of any representation or warranty contained in Section 3 of this
Agreement, or caused by the breach of any covenants, indemnities, and
other agreements contained in this Agreement, which, inclusive of all
amounts paid in accordance with Section 8(b)(i)(A) and 8(b)(i)(B) above,
exceeds the Asset Purchase Consideration, and
(D) Neither the Company nor the General Partner shall have any such
indemnification obligation with respect to such breaches contained in
Sections 3(f)-(cc) of the Agreement, except Section 3(j), and Section
3(y), until the Parent or the Buyer has suffered Adverse Consequences by
reason thereof in excess of Two Hundred Thousand
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Dollars ($200,000.00). No such restriction shall be applicable to
the representations and warranties as contained in Sections
3(a)-3(e), Section 3(j), and Section 3(y) of the Agreement, or
applicable to any covenants, indemnities, and other agreements
contained in this Agreement.
(ii) Notwithstanding anything to the contrary herein contained in
Section 8(b)(i) above, (x) the Company and the General Partner, jointly
and severally, will indemnify, defend and hold harmless Parent and the
Buyer from and against any Adverse Consequences as a result of any
claims based on or arising from (A) any Liability of the Company which
is an Excluded Liability, or (B) any of the Excluded Assets, and (y)
such indemnification shall not be limited in time or amount or subject
to any deductible or cap.
(iii) Notwithstanding anything to the contrary herein contained in
Section 8(b)(i) above, (x) the Company and the General Partner, jointly
and severally, will indemnify, defend and hold harmless Parent and the
Buyer from and against any Adverse Consequences as a result of the
failure of the Company to make any appropriate Tax filing in any
jurisdiction or the failure of the Company to pay any Tax, and (y) such
indemnification shall not be limited in time or amount or subject to any
deductible or cap.
(iv) For the purposes of this Section 8, in computing the
individual or aggregate amounts of claims, the amount of each claim
shall be deemed to be an amount net of any insurance proceeds
recoverable by Buyer, the Parent or any Affiliate of Buyer or Parent
with respect thereto.
(v) As security for the indemnification obligations of the Company
and the General Partner under this Agreement, the Parent, Buyer, the
Company, and the General Partner shall enter into the Escrow Agreement
as of the Closing Date with respect to the indemnification obligations
arising under the representations, warranties, and covenants contained
in this Agreement, which shall be funded with Three Million Three
Hundred Thousand Dollars ($3,300,000.00) of the Closing Consideration
otherwise payable to the Company. The amounts held in the Escrow
Agreement shall be held for a period of one (1) year (the "First Escrow
Period"), provided that One Million Six Hundred Fifty Thousand Dollars
($1,650,000.00) (plus any pending claims under this Section 8) shall be
retained in escrow for an additional one (1) year period following the
First Escrow Period (the "Second Escrow Period") to secure the
obligations of the Company and the General Partner under the
indemnification obligations arising under this Agreement. Amounts held
under the Escrow Agreement shall be a nonexclusive source of
indemnification for any representations, warranties, or covenants under
this Agreement, and shall not otherwise limit the liability of the
Company and the General Partner with respect to indemnification under
this Agreement; provided, however, that, subject to the provisions
contained in the remainder of this Section 8(b)(v), with respect to
claims for indemnification asserted against the Company or the General
Partner by the Parent or the Buyer prior to the second (2/nd/)
anniversary of the Closing Date, Parent and Buyer shall seek to recover
such
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claims for indemnification first from that amount held pursuant to the
Escrow Agreement. To the extent that the aggregate of all claims for
indemnification asserted against the Company and the General Partner
exceed Three Million Three Hundred Thousand Dollars ($3,300,000.00),
Parent and Buyer shall seek first to recover such claims for
indemnification which may be satisfied pursuant to the Escrow
Agreement, based upon the amount of funds remaining in the Escrow
Agreement (but excluding funds which are remaining in the Escrow
Agreement that are otherwise subject to other outstanding claims for
indemnification), provided that in so doing neither Parent nor Buyer
shall be required to take any action which may prejudice its rights
arising under law or in equity with respect to such claim for
indemnification.
(c) Indemnification Provisions for Benefit of the Company. In the
event Parent or Buyer breaches (or in the event any third party alleges
facts that, if true, would mean Parent or Buyer has breached) any of their
representations, warranties, and covenants contained in this Agreement,
and, if there is an applicable survival period pursuant to Section 8(a)
above, provided that the Company or the General Partner make a written
claim for indemnification setting forth with specificity the basis for such
claim against Parent or the Buyer pursuant to Section 9(h) below within
such survival period, then Parent and the Buyer, jointly and severally,
agree to defend, indemnify and hold harmless the Company and the General
Partner from and against the entirety of any Adverse Consequences (up to
but not in excess of the Asset Purchase Consideration) the Company or the
General Partner may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Company or the
General Partner may suffer after the end of any applicable survival period)
resulting from, arising out of, or caused by the breach (or the alleged
breach). Notwithstanding anything to the contrary herein contained in
Section 8(c), (x) Parent and the Buyer, jointly and severally, will
indemnify, defend and hold harmless the Company and the General Partner
from and against any Adverse Consequences as a result of any claims based
on or arising from (A) any Liability of the Company which is an Assumed
Liability, or (B) any of the Acquired Assets, and (y) such indemnification
shall not be limited in time or amount or subject to any deductible or cap.
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may
give rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 8, then the Indemnified Party
shall promptly notify each Indemnifying Party thereof in writing;
provided, however, that no delay on the part of the Indemnified Party
in notifying any Indemnifying Party shall relieve the Indemnifying
Party from any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its
choice reasonably satisfactory to the Indemnified Party so long as (A)
the Indemnifying
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Party notifies the Indemnified Party in writing within fifteen (15)
days after the Indemnified Party has given notice of the Third Party
Claim that the Indemnifying Party will indemnify the Indemnified Party
from and against the entirety of any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim, (B) the
Indemnifying Party provides the Indemnified Party with evidence
reasonably acceptable to the Indemnified Party that the Indemnifying
Party will have the financial resources to defend against the Third
Party Claim and fulfill its indemnification obligations, if any,
hereunder, (C) the Third Party Claim involves only money damages and
does not seek an injunction or other equitable relief, (D) settlement
of, or an adverse judgment with respect to, the Third Party Claim is
not, in the reasonable judgment of the Indemnified Party, likely to
establish a precedential custom or practice materially adverse to the
continuing business interest of the Indemnified Party, and (E) the
Indemnifying Party conducts the defense of the Third Party Claim
actively and diligently.
(iii) So long as the Indemnifying Party is conducting the defense
of the Third Party Claim in accordance with Section 8(d)(ii) above,
(A) the Indemnified Party may retain separate co-counsel at its sole
cost and expense and participate in the defense of the Third Party
Claim, (B) the Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party
Claim without the prior written consent of the Indemnifying Party
(which consent shall not be unreasonably withheld).
(iv) In the event any of the conditions in 8(d)(ii) above is or
becomes unsatisfied, however, (A) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner it may
deem appropriate (provided that the Indemnified Party obtain consent
from, any Indemnifying Party in connection therewith, which consent
shall not be unreasonably withheld), (B) the Indemnifying Party will
reimburse the Indemnified Party promptly and periodically for the
costs of defending against the Third Party Claim (including reasonable
attorneys' fees and expenses), and (C) the Indemnifying Party will
remain responsible for any Adverse Consequences the Indemnified Party
may suffer resulting, arising out of, relating to, in the nature of,
or caused by the Third Party Claim to the fullest extent provided in
this Section 8.
(e) Determination of Adverse Consequences. The Parties shall take
into account the time cost of money (using the Applicable Rate as the
discount rate) in determining Adverse Consequences for purposes of this
Section 8. All indemnification payments under this Section 8 shall be
deemed adjustments to the Asset Purchase Consideration.
(f) Post-Closing. Following the Closing, the sole and exclusive
remedy of the Company and the General Partner, on the one hand, and Parent
and the Buyer on the other hand, with respect to any breach or threatened
breach of a representation, warranty, covenant, or other agreement
contained herein or with respect to any event, circumstance
-49-
or condition occurring on or before the Closing shall be limited to the
enforcement of the indemnification obligations set forth in Section 8; provided,
however, that nothing provided in this Section 8(f) shall limit the right of any
Party to seek any equitable remedy available to enforce his or its rights
hereunder in accordance with Section 9(o).
9. Miscellaneous.
(a) Press Releases and Public Announcements. Neither the Company nor the
General Partner shall, and the Company and the General Partner shall cause the
Partners not to, issue any press release or make any public announcement
relating to the subject matter of this Agreement without the prior written
approval of the Parent. Parent, upon prior notice to the Company, may make any
public disclosure it believes in good faith is required or permitted by
applicable law or any listing or trading agreement concerning its
publicly-traded securities.
(b) Waiver of Bulk Sales Law. The Parties hereto acknowledge and agree that
no filings with respect to any bulk sales or similar laws have been made, nor
are they intended to be made, nor are such filings a condition precedent to the
Closing.
(c) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
(e) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of each other Party; provided, however, that either the Parent or the Buyer may
(i) assign any or all of its rights and interests hereunder to one or more of
its affiliates and (ii) designate one or more of its affiliates to perform its
obligations hereunder (in any or all of which cases the assigning Party
nonetheless shall remain responsible for the performance of all of its
obligations hereunder).
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
-50-
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and
then two business days after) it is sent by registered or certified mail,
return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to the Buyer: Copy to:
N. Will Xxxxxxx Xxxxxx X. XxXxxxx
MCB Acquisition Subsidiary, Inc. Powell, Goldstein, Xxxxxx &
c/x Xxxxx Industries, Inc. Xxxxxx LLP
000 Xxx Xxxxxx Xxxx 000 Xxxxxxxxx Xxxxxx, XX,
Xxxxxx, Xxxxxxx 00000 16/th/ Floor
Facsimile: (000) 000-0000 Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
If to the Company or the General Partner: Copy to:
Xxxxxxx X. Xxxxxx 1994 Trust Xxxxxx X. Xxxx
0000 Xxxxxxxxxxx Xxx., X.X., Xxxxx 000 Xxxxxxx & Xxxxxx
Xxxxxxxxxx, XX 00000 00 Xxxx Xxxxxx Xxxxx
Facsimile: (000) 000-0000 Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
If to the Parent: Copy to:
N. Will Xxxxxxx Xxxxxxx X. Xxxxx, Esq.
Xxxxx Industries, Inc. Xxxxx Industries, Inc.
000 Xxx Xxxxxx Xxxx 000 Xxx Xxxxxx Xxxx
Xxxxxx, Xxxxxxx 00000 Xxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth
above using any other means (including personal delivery, expedited
courier, messenger service, telecopy, telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim, or other communication
shall be deemed to have been duly given unless and until it actually is
received by the intended recipient. Any Party may change the address to
which notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other Party notice in the
manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule (whether
of the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
Delaware.
-51-
(j) Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by each of the
Parties. No waiver by any Party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
(k) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Expenses. Parent and Buyer will bear their own costs and expenses
(including but not limited to financial, advisory, accounting, legal, and
environmental fees and expenses) incurred in connection with this Agreement and
the transactions contemplated hereby. The Company and the General Partner each
shall bear (i) its own costs and expenses (including but not limited to
financial, advisory, accounting, legal, and environmental fees and expenses, and
the fees and expenses of Updata Capital, Inc.) and (ii) the costs and expenses
(including but not limited to financial, advisory, accounting, legal, and
environmental fees and expenses, and the fees and expenses of Updata Capital,
Inc.) of the Partners incurred in connection with this Agreement and the
transactions contemplated hereby.
(m) Construction. Any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation. Items set forth in the
Company Disclosure Schedule shall be deemed an exception only to the
representations and warranties for which they are identified and any other
representations or warranties to which the Company Disclosure Schedule with
respect to representations and warranties contain in appropriate
cross-reference.
(n) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(o) Specific Performance. Each of the Parties acknowledges and agrees that
the other Party would be damaged irreparably in the event any of the provisions
of this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the Parties agrees that the other
Party shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof having, in accordance with the terms of this
Agreement, jurisdiction over the Parties and the matter, in addition to any
other remedy to which it may be entitled, at law or in equity.
(p) Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in the State of Maryland in
any action or proceeding
-52-
arising out of or relating to this Agreement and agrees that all claims in
respect of the action or proceeding may be heard and determined in any such
court. Each Party also agrees not to bring any action or proceeding arising out
of or relating to this Agreement in any other court. Each of the Parties waives
any defense of inconvenient forum to the maintenance of any action or proceeding
so brought and waives any bond, surety, or other security that might be required
of any other Party with respect thereto. Parent, Buyer, the Company, and the
General Partner appoint The Xxxxxxxx-Xxxx Corporation System, Inc. (the "Process
Agent") as their agent to receive on is or its behalf service of copies of the
summons and complaint and any other process that might be served in the action
or proceeding. Any Party may make service on any other Party by sending or
delivering a copy of the process (i) to the Party to be served at the address
and in the manner provided for the giving of notices in Section 9(h) above or
(ii) to the Party to be served in care of the Process Agent at the address and
in the manner provided for the giving of notices in Section 9(h) above. Each
Party agrees that a final judgment in any action or proceeding so brought shall
be conclusive and may be enforced by suit on the judgment or in any other manner
provided by law or in equity.
(q) Arbitration. Except as otherwise set forth in this Agreement, all
disputes arising out of or under this Agreement shall be settled by arbitration
in a location in Washington, D.C., mutually acceptable to the Parties before a
single arbitrator pursuant to the rules of the American Arbitration Association.
Arbitration may be commenced at any time by any of the Parties by giving written
notice to each other than such dispute has been referred to arbitration under
this Section 9(q). The arbitrator shall be selected by the joint agreement of
the Parties, but if they do not so agree within twenty (20) days after the date
of receipt of the notice referred to above, the selection shall be made pursuant
to the rules from the panels of arbitrators maintained by the American
Arbitration Association. Any award rendered by the arbitrator shall be
conclusive and binding upon the Parties hereto; provided, however, that any such
award shall be accompanied by a written opinion of the arbitrator giving the
reason for the award. This provision for arbitration shall be specifically
enforceable by the Parties and the decision of the arbitrator in accordance
herewith shall be final and binding and there shall be no right of appeal
therefrom. The arbitrator shall assess, as part of his award to the prevailing
Party, all or such part as the arbitrator deems proper of the arbitration
expenses of the prevailing Party (including reasonable attorneys' fees) and of
the arbitrator against the Party that is unsuccessful in such claim, defense or
objection.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
BUYER:
MCB Acquisition Subsidiary, Inc.
By:_____________________________________________
Name:___________________________________________
Title:__________________________________________
PARENT:
Xxxxx Industries, Inc.
By:_____________________________________________
Name:___________________________________________
Title:__________________________________________
THE COMPANY:
Media Cybernetics, L.P.
By: Media Cybernetics, Inc., its General Partner
By:_____________________________________________
Name:___________________________________________
Title:__________________________________________
GENERAL PARTNER:
Media Cybernetics, Inc.
By:_____________________________________________
Name:___________________________________________
Title:__________________________________________
