ASSET PURCHASE AGREEMENT By and Between PENSAR ELECTRONIC SOLUTIONS, LLC, all Members of Pensar Electronic Solutions, LLC and LABARGE ACQUISITION COMPANY, INC. dated as of December 22, 2008
EXHIBIT 2.1
Final: 12/22/08
Final: 12/22/08
By and Between
PENSAR ELECTRONIC SOLUTIONS, LLC,
all Members of Pensar Electronic Solutions, LLC
and
XXXXXXX ACQUISITION COMPANY, INC.
dated as of December 22, 2008
| LIST OF EXHIBITS | ||
A:
|
Bond Escrow Agreement | |
B:
|
Escrow Agreement | |
C:
|
INTENTIONALLY OMITTED | |
D:
|
Purchase Price Allocation | |
E:
|
INTENTIONALLY OMITTED | |
F:
|
INTENTIONALLY OMITTED | |
G:
|
General Xxxx of Sale | |
H:
|
Assignment and Assumption Agreement | |
I:
|
Warranty Deed | |
J:
|
Material Agreement Consents | |
K:
|
Employment Agreements | |
L:
|
Assignment of Trademarks | |
M:
|
Domain Name Assignment | |
| LIST OF AGREEMENT SCHEDULES | ||
1
|
Estimated Purchase Price; Closing Payment | |
2.01(o)
|
Assigned Benefit Plans | |
LIST OF DISCLOSURE SCHEDULES
|
||
10.02:
|
Authorization of Agreement | |
10.03:
|
Financial Statements | |
10.04:
|
Business Changes | |
10.05:
|
Real Property | |
10.06:
|
Equipment | |
10.07:
|
Title to Assets; Sufficiency | |
10.09:
|
Inventory | |
10.10(a):
|
Material Contracts | |
10.10(b):
|
Default of Material Contracts | |
10.11:
|
Litigation and Proceedings | |
10.12:
|
Compliance with Environmental and Safety Laws | |
10.14:
|
Taxes | |
10.15(a):
|
Employee Pension Benefit Plans | |
10.15(b):
|
Employee Welfare Benefit Plans | |
10.15(c):
|
Fringe Benefit Plans | |
10.15(d):
|
Seller Benefit Plans | |
10.15(i):
|
Leased Employees | |
10.16:
|
Labor Matters | |
10.17:
|
Intellectual Property | |
10.18:
|
Compliance with Legal Requirements | |
10.19:
|
Major Customers and Suppliers | |
10.20:
|
Undisclosed Liabilities | |
10.22:
|
Related Party Transactions | |
10.23:
|
Insurance | |
i
10.24:
|
Officers and Directors; Bank Accounts | |
10.26
|
Noncontravention (consents) | |
12.05
|
Inventory List |
ii
THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is made and entered into effective as
of December 22, 2008 by and between PENSAR ELECTRONIC SOLUTIONS, LLC, a Wisconsin limited liability
company (“Seller”), all members of Seller (each, a “Member” and collectively, the
“Members”), and XXXXXXX ACQUISITION COMPANY, INC., a Missouri corporation
(“Buyer”).
RECITALS
A. Seller is engaged in the business of designing, engineering, manufacturing and selling a
broad array of complex, fully-finished and tested printed circuit boards and other electrical and
electro-mechanical assemblies (including prototypes) for original equipment manufacturers in
various markets of the electronic manufacturing services industry, including medical devices,
industrial products and transportation products, as more fully described in that certain
Confidential Descriptive Memorandum, dated July 2008, prepared by Xxxxxxx Xxxxx & Company, L.L.C.
(such business being referred to herein as the “Business”).
B. Subject to the terms and conditions of this Agreement, (1) Seller desires to sell to Buyer,
and Buyer desires to purchase and acquire from Seller and its Affiliates, the Purchased Assets and
the Business (as defined below), and (2) Buyer agrees to assume, and Seller has agreed to assign,
Seller’s rights and obligations under the Assumed Liabilities (as defined below).
AGREEMENTS
In consideration of the recitals and the mutual agreements which follow, the parties agree as
follows:
1. Defined Terms; Construction.
1.01 Defined Terms. The following terms used in this Agreement shall have the meanings set
forth below:
“Accounting Firm” has the meaning given in Section 6.02(b) below.
“Affiliates” means (a) with respect to a particular individual: (i) each
other member
of such individual’s Family; (ii) any person that is directly or indirectly controlled by any one
or more members of such individual’s Family; and (iii) any person with respect to which such
individual or one or more members of such individual’s Family serves as a director, officer,
partner, executor or trustee (or in a similar capacity); and (b) with respect to an entity: (i)
any person or entity that directly or indirectly controls, is directly or indirectly controlled by
or is directly or indirectly
under common control with such specified entity; (ii) each person that serves as a director,
officer, partner, executor or trustee of such specified entity (or in a similar capacity); and
(iii) any person or entity with respect to which such specified entity serves
as a general partner
or a trustee (or in a similar capacity). For purposes of this definition, the “Family” of
an individual includes (i) the individual, (ii) the individual’s spouse and children, and (iii) any
other natural person who is related by blood to the individual and/or who resides with such
individual. For the avoidance of doubt, the Members shall be deemed Affiliates of Seller.
“Agreement” has the meaning given in the Preamble above.
“Applicable Rate” means the lowest applicable federal short-term interest rate in
effect as of the Closing Date, as published by the United States Internal Revenue Service.
“Arbitration Panel” has the meaning given in Section 15.04 below.
“Assigned Benefit Plans” has the meaning given in Section 2.01(o).
“Assignment and Assumption Agreement” has the meaning given in Section 9.01(b)
below.
“Assignment of Trademarks” has the meaning given in Section 9.01(l) below.
“Assumed Liabilities” has the meaning given in Section 4.01 below.
“Basket” has the meaning given in Section 14.02(b) below.
“Bond Escrow Agent” means JPMorgan Chase Bank, National Association, who shall
administer the Bond Escrow Fund pursuant to the Bond Escrow Agreement.
“Bond Escrow Agreement” means the escrow agreement dated as of the Closing Date by
and
among the Bond Escrow Agent and Seller as set forth on Exhibit A, pursuant to which the
Bond Escrow Fund shall be held and distributed.
“Bond Escrow Fund” means a sum of money equal to (i) the principal amount of
all
outstanding Industrial Bonds as the Closing Date, plus (ii) all accrued and unpaid interest thereon
as of the Closing Date, plus (iii) 45 days worth of interest on all outstanding Industrial Bonds as
of the Closing Date, measured from the first day after the Closing Date, all of which shall be
administered pursuant to the Bond Escrow Agreement, which as of December 22, 2008 is $3,030,273.23.
“Business” has the meaning given in the Recitals above.
“Business Day” means any day other than a Saturday or Sunday or any other day on
which
the Federal courts situated in the State of Wisconsin are authorized or required by Legal
Requirement to close.
“Buyer” has the meaning given in the Preamble above.
“Buyer Indemnified Parties” has the meaning given in Section 14.01 below.
“Buyer’s Damages” has the meaning given in Section 14.01 below.
“Cash” shall mean all cash and cash equivalent items of Seller (but specifically
excluding any cash or cash equivalents held by Seller in trust or any other fiduciary capacity),
including checking account balances, bank account balances and certificates of deposit, net of any
outstanding checks and similar obligations of Seller, each as determined in accordance with GAAP
and consistently applied by Seller.
“CERCLA” means the Comprehensive Environmental Response, Compensation, and
Liability
Act, 42 U.S.C. § 9601 et seq., as amended, as in effect on the date of this Agreement and, as of
Closing, as in effect on the Closing Date.
“Closing” has the meaning given in Section 8 below.
“Closing Date” has the meaning given in Section 8 below.
“Closing Indebtedness” means Indebtedness on the Closing Date.
“Closing Payment” has the meaning given in Section 5.02 below.
“Closing Statement” shall have the meaning given in Section 6.01(a) below.
“Closing Working Capital” shall mean Working Capital on the Closing Date.
“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended.
“Code” means the Internal Revenue Code of 1986, as amended.
“Contracts” means all contracts of Seller or its Affiliates relating to the
Business,
including without limitation: (a) contracts, agreements, leases, and intellectual property licenses
Business; (b) all sales orders and purchase orders relating to the sale of products to customers of
the Business; (c) that portion of any unfilled purchase orders, unfilled purchase contracts,
quotations or bids for raw materials and supplies ordered for the Business; and (d) all other
license agreements, distribution agreements, sales representative agreements, service agreements,
supply agreements, technical service agreements and other agreements or undertakings (whether
written or oral) to which
Seller or its Affiliates is a party; provided, however, that notwithstanding the foregoing,
“Contracts” specifically excludes, at Buyer’s option, any contract, lease, license,
purchase order, quotation/bid or other agreement, in whatever form, that is not materially
beneficial to the Business on a net basis as of the Closing Date, if the same has not been fully
identified in the Disclosure Schedules.
“Deed” has the meaning given in Section 12.07 below.
“Deficit” has the meaning given in Section 6.01(b) below.
“Disclosure Schedule” has the meaning given in Section 10 below.
“Dispute” has the meaning given in Section 15.01 below.
“Dispute Notice” means a notice delivered by Buyer in which Buyer (a) disputes
the
calculation of specific line items included in the Closing Statement or the calculation of Closing
Working Capital and (b) provides the basis of such dispute in reasonable detail.
“Dollars” or “$” shall mean United States Dollars.
“Domain Name Assignment” has the meaning given in Section 9.01(m) below.
“Domain Names” means all intranet and internet domain names (including all
associated
email server identifiers) used by the Business, including without limitation xxx.xxxxxx.xxx.
“Earnout Amount” has the meaning given in Section 7.01 below.
“EBITDA” has the meaning given in Section 7.03 below.
“EBITDA Statement” has the meaning given in Section 7.02(a) below.
“Employees” has the meaning given in Section 12.06(a) below.
“Employment Agreements” has the meaning given in Section 9.01(j) below.
“Encumbrance” means any mortgage, security interest, title retention agreement,
option
to purchase, right of first refusal, lien, easement, restriction, claim and other encumbrance,
whether arising by agreement, Uniform Commercial Code or other filing, operation of law or
otherwise.
“Environment” means surface water, groundwater, soil, subsurface strata and ambient
air.
“Environmental and Safety Law” means any Legal Requirement in effect as of the
Closing
Date, relating to (a) Releases or threatened Releases of Hazardous Substances into the Environment,
(b) pollution or protection of the Environment, (c) the manufacture, handling, transport, use,
treatment, storage, or disposal of Hazardous
Substances, other than relating to useful products or
materials manufactured, distributed or sold by Seller or (d) public or worker health and safety.
“Environmental Permits” means Permits relating to the Environment which are
required
under, or are issued by, a Governmental Authority pursuant to Environmental and Safety Laws.
“Equity Interests” means (a) any capital stock, share, partnership or
membership
interest, unit of participation, equity or equity-linked securities, convertible debt securities or
other similar interest (however designated) in any person and (b) any option, warrant, purchase
right, conversion right, exchange rights, subscription, preemptive right or other agreements or
commitments providing for the issuance, disposition or acquisition of any securities of any kind or
other contractual obligation which would entitle any person to acquire any interest described in
clause (a) of this definition in such person or otherwise entitle any person to share in the
equity, profit, earnings, losses or gains of such person (including stock appreciation, phantom
stock, profit participation or other similar rights).
“ERISA” has the meaning given in Section 10.15(a) below.
“Escrow Agent” means U.S. Bank National Association, who shall administer the
Indemnification Escrow Portion and the Purchase Price Adjustment Escrow Portion of the Escrow Fund
pursuant to the Escrow Agreement.
“Escrow Agreement” means the escrow agreement dated as of the Closing Date by and
among the Escrow Agent, Buyer and Seller as set forth on Exhibit B pursuant to which the
Escrow Fund shall be held and distributed.
“Escrow Fund” means a total of $5,000,000, consisting of the “Indemnification
Escrow
Portion” (in the amount of $4,500,000) and the “Purchase Price Adjustment Escrow Portion” (in the
amount of $500,000), each of which shall be administered pursuant to the Escrow Agreement.
“Estimated Closing Working Capital” means the estimated Working Capital of Seller
as
of the Closing Date mutually agreed upon by the parties and set forth on the attached Schedule
1, as calculated using the accounts mutually agreed upon by the parties set forth in such
Schedule 1.
“Estimated Indebtedness” means the estimated Indebtedness of Seller as of the
Closing
Date as mutually agreed upon by the parties and as set forth on the attached Schedule 1.
“Estimated Purchase Price” has the meaning given in Section 5.02 below.
“Excluded Liabilities” has the meaning given in Section 4.02 below.
“Fringe Benefit Plans” has the meaning given in Section 10.15(c) below.
“GAAP” means generally accepted accounting principles of the United States,
consistently applied.
“Governmental Authority” means any foreign or United States federal, state or local
government agency, division, subdivision thereof or any regulatory body, agency, authority or
commission entitled to exercise any administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power, any court or tribunal (or any department, bureau or
division thereof).
“Hazardous Substances” means all hazardous substances, as that term is defined in
CERCLA, and any other individual or class of pollutants, contaminants, toxins, chemicals,
substances, wastes or materials in their solid, liquid or gaseous phase, regulated under any
Environmental and Safety Law.
“Indebtedness” shall mean without duplication all term debt or liabilities,
including
without limitation, (a) all obligations of Seller for borrowed money, (b) all obligations of Seller
evidenced by bonds, debentures, notes or similar instruments, or upon which interest payments are
made, (c) any costs, fees, expenses or other obligations incurred by Seller in connection with the
transactions contemplated herein on behalf of Seller, any member of Seller or any other person, (d)
any obligations for the deferred purchase price of properties or services with respect to which a
person is liable, contingently or otherwise, including deferred compensation owed to employees of
Seller, (e) any commitment assuring a creditor against loss (including guarantees and contingent
reimbursement obligations with respect to letters of credit), (f) any obligations under capital
leases, (g) unfunded and underfunded liabilities under any Pension Plans, Welfare Plans or Fringe
Benefit Plans, and (h) all interest (including all interest that Seller will incur after the
Closing in respect of the Industrial Bonds pending the redemption of the same), penalties and other
amounts that are or may become payable with respect to the foregoing, and (i) accrued and unpaid
bonuses to any member of Seller. Notwithstanding the foregoing, deferred income taxes shall be
specifically excluded from the term “Indebtedness” for purposes of this Agreement. In addition,
for the avoidance of doubt, Indebtedness shall not include any liabilities used in the
calculation of Working Capital such as trade account payables.
“Indemnification Escrow Portion” has the meaning given in the Escrow Agreement.
“Indemnified Party” has the meaning given in Section 14.04(a) below.
“Indemnifying Party” has the meaning given in Section 14.04(a) below.
“Industrial Bonds” means the $3,000,000 original principal amount City of Appleton,
Wisconsin Adjustable Rate Industrial Development Revenue Bonds, Series 2003.
“Industrial Bonds Supporting Agreements” means that certain (i) Bond Purchase
Agreement dated December 3, 2003, (ii) Remarketing Agreement dated as of December 1, 2003, (iii)
Loan Agreement dated as of December 1, 2003, (iv) Promissory Note dated December 4, 2003, (v) Trust
Indenture dated as of December 1, 2003, (vi) Reimbursement Agreement dated as of December 1, 2003,
(vii) Pledge and Security Agreement dated as of December 3, 2003, (viii) Letter of Credit dated
December 4, 2003, and (ix) the other agreements and instruments relating to the Industrial Bonds,
all of the foregoing as amended from time to time, and entered into by and between Seller and
various parties that concern, inter alia, the issuance and repayment of the Industrial Bonds.
“Insurance Policies” has the meaning given in Section 10.23 below.
“Intellectual Property” means (i) all inventions (whether patentable or
unpatentable
and whether or not reduced to practice), all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof, (ii) all trademarks,
service marks, trade dress, logos, domain names, 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,
(iii) all copyrightable works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (iv) all trade secrets and confidential business information (including
ideas, research and development, know-how, formulas, compositions, business processes and
techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing
and cost information, and business and marketing plans and proposals), (v) all other proprietary
rights, (vi) all copies and tangible embodiments thereof (in whatever form or medium), (vii) all
rights relating to any and all of Seller’s marketing, sales and textual materials, (viii) all
future royalty payments and other compensation payable with respect to any and all of the
foregoing, and (ix) the names “Pensar”, the Trademarks and the Domain Names.
“Interim Balance Sheet” has the meaning given in Section 10.03 below.
“Interim Balance Sheet Date” has the meaning given in Section 10.03 below.
“Inventory” has the meaning given in Section 2.01(a) below.
“Inventory List” has the meaning given in Section 12.05 below.
“JAMS” has the meaning given in Section 15.04 below.
“Leased Real Property” means the real property leased by Seller or its Affiliates
respecting the Business, including (i) the real property leased by Seller located at 00000 X.
Xxxxxx Xxx., Xxxxx 000, Xxxxx Xxxxxx, XX 00000, pursuant to a lease dated May 15, 2002 between Xxx
X. Xxx and SMTC Corporation, and (ii) the real property leased by Seller located at 0000 Xxxxxxxxx
Xxxxx, Xxxxxxx, XX, Xxxxx 000X, pursuant to a lease dated January 24, 2005 between Xxx Xxxxx,
Limited Partner of Casco Run Offices and Seller.
“Legal Requirement” means any foreign government or any United States federal,
state
or local law, statute, ordinance, code, rule, regulation or governmental order, or any similar
provision having the force or effect of law, which is in effect as of the Closing Date.
“Machinery and Equipment” has the meaning given in Section 2.01(b) below.
“Material Adverse Effect” means any change in, or effect on, the Business, or the
operations, assets, or financial condition of Seller, taken as a whole, which, when considered
either individually or in the aggregate, is, or is reasonably likely to be, materially adverse to
the Business, or to the operations, assets, or financial condition of Seller, taken as a whole,
other than changes or effects arising out of or resulting from any of the following: (a) changes
in general industry, legal, regulatory, political, economic or business conditions or changes in
GAAP (so long as such changes do not have a materially disproportionate effect on the Business or
Seller); (b) the negotiation, execution, announcement or performance of this Agreement or the
contemplated transactions, including the impact thereof on relationships, contractual or otherwise,
with customers, suppliers, licensors, distributors, partners or employees; (c) acts of war,
sabotage or terrorism, or any escalation or worsening of any such acts of war, sabotage or
terrorism threatened or underway as of the date of this Agreement (so long as such events do not
have a materially disproportionate effect on the Business or Seller); (d) earthquakes, hurricanes
or other natural disasters (so long as such events do not have a materially disproportionate effect
on the Business or Seller); or (e) changes in the conditions in the U.S. or global economy or
capital or financial markets generally, including changes in interest or exchange rates (so long as
such changes do not have a materially disproportionate effect on the Business or Seller); or (f)
any adverse change in or effect on the Business of Seller that is cured by Seller before the
Closing Date.
“Material Contracts” has the meaning given in Section 10.10(a) below.
“Non-Assignable Assets” has the meaning given in Section 2.02 below.
“Noncompetition Agreements” has the meaning given in Section 9.01(n) below.
“Opening Balance Sheet” has the meaning given in Section 7.03(a) below.
“Ordinary Course of Business” means the ordinary course of business consistent with
past customs and practices of Seller to the extent the same are not in violation of any Legal
Requirement.
“Owned Real Property” means the real property commonly known as 0000 Xxxx Xxxxxx
Xxxxx, Xxxxxxxx, Xxxxxxxxx, and consisting of +/- 8.892 acres, more particularly described in the
Title Commitment (the “Land”), (2) all surface and subsurface minerals and water rights;
(3) all buildings, structures, parking facilities and other improvements located on or in the Land,
including without limitation a certain +/- 60,100 sq. ft. main building (the
“Improvements”); (4) all right, title and interest of Seller to all public and xxxxxxx
xxxxxxx, xxxxx, xxxxxxx, alleys and passageways, opened or proposed, adjacent to or abutting the
Land; (5) all personal property and chattels located in or on, or used in connection with the
operation or maintenance of, the Land and Improvements, (the “Personalty”); (6) all tax
rebates/refunds not due and payable prior to Closing, and all permits, licenses, government
approvals, guarantees and warranties respecting or concerning the Land, Improvements or Personalty;
and (7) all the estates, rights, privileges, easements, and appurtenances belonging or in any way
appertaining to the Land and the Improvements, either in law or in equity, in possession or in
expectancy.
“Pension Plans” has the meaning given in Section 10.15(a) below.
“Period” has the meaning given in Section 7.01 below.
“Permits” means all licenses, approvals, permits and authorizations (and any
applications for the foregoing) issued by a Governmental Authority and held by Seller, excluding
all Environmental Permits.
“Permitted Encumbrances” means each and all of the following: (a) statutory
liens for
current Taxes, special assessments or other governmental charges not yet due and payable or the
amount or validity of which is being contested in good faith; (b) mechanics’, materialmen’s,
carriers’, workers’, repairers’ and similar statutory liens arising or incurred in the Ordinary
Course of Business; (c) zoning, entitlement, building and other land use regulations imposed by
Governmental Authorities having jurisdiction over any Real Property which are not violated in any
material respect by current use and operation of the Real Property; (d) covenants, conditions,
restrictions, easements, encumbrances and other similar matters of record affecting current
occupancy or use of the Real Property and which are not violated in any material respect by the
current use and operation of the Real Property; (e) such other Encumbrances that do not secure
obligations for borrowed money, or attach to Equity Interests, and do not materially detract from
the value of, or interfere with the present or future use of, the property subject thereto and
affected thereby; (f) notices or restrictions recorded with regard to the presence of any Hazardous
Substance on or off of the Real Property as required or permitted by any Governmental Authorities;
and (g) restrictions on the transfer of securities arising under any Legal Requirement; provided,
however, that the
matters described in subsections (b) and (e) above shall only constitute Permitted
Encumbrances if they are individually disclosed as such in the Disclosure Schedules.
“Physical Inventory” has the meaning given in Section 12.05 below.
“Price Allocation” has the meaning given in Section 5.03 below.
“Purchase Price” has the meaning given in Section 5.01 below.
“Purchase Price Adjustment Escrow Portion” has the meaning given in the Escrow
Agreement.
“Purchased Assets” has the meaning given in Section 2 below.
“Qualifying Offer” has the meaning given in Section 12.06(a) below.
“Real Property” has the meaning given in Section 10.05 below.
“Receivables” has the meaning given in Section 2.01(e) below.
“Related Parties” has the meaning given in Section 10.22 below.
“Release” has the meaning given in 42 U.S.C. § 9601.
“Representation” has the meaning given in Section 16.07(c) below.
“Sample Pro Forma Closing Statement” has the meaning given in Section 6.01(a)
below.
“Seller” has the meaning given in the Preamble above.
“Seller Benefit Plan” or “Seller Benefit Plans” has the meaning
given in
Section 10.15(e) below.
“Seller Indemnified Parties” has the meaning given in Section 14.03 below.
“Seller’s Damages” has the meaning given in Section 14.03 below.
“Specific Representation” has the meaning given in Section 16.07(c) below.
“Target Working Capital” means the sum of $8,232,643.00.
“Tax” or “Taxes” means taxes and similar charges, fees, duties or
other
assessments, including income tax, excise tax, property tax, sales tax, use tax, franchise tax,
withholding tax, social security and unemployment taxes, corporation tax,
corporation profits tax, advance corporation tax, capital gains tax, capital acquisitions tax,
dividend withholding tax, residential property tax, wealth tax, value added tax, customs and other
import and export duties, excise duties, stamp duty, capital duty imposed by any Governmental
Authority and any interest, penalties or additions relating to such taxes, charges, fees, levies or
other assessments.
“Third Party Claim” has the meaning given in Section 14.04(b) below.
“Trademarks” means all trademarks of Seller or the Business, including “PENSAR
P”.
“Transferred Employees” has the meaning given in Section 12.06(a) below.
“VEBA” has the meaning given in Section 10.15(g) below.
“Unsold Inventory” has the meaning given in Section 12.05(b) below.
“Welfare Plans” has the meaning given in Section 10.15(b) below.
“Working Capital” shall mean the current assets of Seller less the current
liabilities of Seller, calculated utilizing the historical methodologies used by Seller in its
September 30, 2008 balance sheet and the accounts set forth on Schedule 1. For the
avoidance of doubt, the definition and calculation of Working Capital excludes any Indebtedness
that is a direct deduction from the Purchase Price on the Closing Date.
1.02 Other Terms. In the event other terms are defined elsewhere in the text of this
Agreement, unless otherwise indicated, such terms shall have the meaning indicated throughout this
Agreement.
2. Purchase and Sale.
2.01 Purchase and Sale of Assets. Subject to the terms and conditions of this Agreement
(including Section 3 below pertaining to Excluded Assets), Seller and its Affiliates agree to sell,
assign, grant, convey, transfer and deliver to Buyer, and Buyer agrees to purchase and accept from
Seller and its Affiliates, all of the right, title and interest of Seller and its Affiliates in and
to all real, personal (including tangible and intangible) and contingent assets, and all other
properties, rights and benefits of any kind or nature whatsoever, that are used in the Business
and/or necessary for the operation of the Business, regardless of whether the
same are owned, leased or merely used (collectively, the “Purchased Assets”), including
without limitation the following:
(a) all inventory, including, raw materials, work in process, finished goods, service parts
and supplies (collectively, the “Inventory”);
(b) all equipment, machinery, parts, tools, dies, patterns, molds, fixtures, generators, air
compressors, pumps, conveyor systems, vacuum systems, racking/shelving, pallet jacks, forklifts,
office furniture including tables, desks, chairs and file cabinets, computers and related hardware,
routers and other network equipment, communication equipment including telephones and fax machines,
automobiles and trucks, trailers, reefers and all other tangible personal property (collectively,
the “Machinery and Equipment”);
(c) all leasehold interests in personal property;
(d) all interests in real property, including the Owned Real Property and Seller’s
leasehold
interests in the Leased Real Property;
(e) all of the accounts receivable and notes receivable of the Business to the extent included
in the final Closing Working Capital (collectively, the “Receivables”);
(f) all Contracts of Seller;
(g) all goodwill
(h) all Intellectual Property, including all agreements and covenants intended to protect and
preserve the Intellectual Property, and all claims and causes of action (including all claims for
infringement) to protect and preserve the Intellectual Property;
(i) the Permits and Environmental Permits, to the extent transferable;
(j) all documents, files, and other materials, regardless of form (e.g., written
documentation, magnetic media and optical media), and wherever located, that in any way relate to
or concern (i) accounting and financial information, including operating ledgers, asset ledgers,
inventory records, budgets, customer credit information and supplier lists; (ii) engineering and
technical data, including product specification sheets; (iii) Intellectual Property, including all
trademark and service xxxx application and registration files, all patent application and
maintenance files, and all computer readable copies of web sites and information stored thereon;
(iv) sales and marketing information, including sales brochures, customer lists and product
samples; (v) customer lists, customer records, account histories and related information; and (vi)
correspondence, books and notes relating to the foregoing;
(k) all rights in connection with prepaid expenses with respect to the assets being sold
hereunder to the extent included in final Closing Working Capital, except for any prepaid expenses
relating to Insurance Policies;
(l) any files and records relating to the Transferred Employees, to the extent the transfer of
such files and records is not prohibited by Legal
Requirements; provided Seller may retain a copy
of any such files and records transferred to Buyer pursuant to this Section 2.01(l);
(m) all computer software whether in object code or source code, electronic data processing
systems, processing techniques, formulae, algorithms, flow charts, and all documentation related
thereto, whether in digital or hard copy format;
(n) exclusive of any Cash legally owned by Seller, the Company’s right, title and interest
in
and to any accounts or “lock boxes” with banks and other financial institutions;
(o) those employee benefit plans, and any trusts, insurance arrangements, cash or other assets
held pursuant to, or set aside to fund the obligations of Seller under, any such employee benefit
plans, listed on the attached Schedule 2.01(o) (the “Assigned Benefit Plans”);
(p) All: (i) equity interests in any company, limited partnership or limited liability
company, as well as equity interests in any association, partnership or joint venture having a
positive net book value after taking into account contingent liabilities; (ii) causes of action,
choses in action, judgments, claims, warranty rights, set-off rights, guarantees, indemnities, and
demands; (iii) rights associated with any liability to be assumed by Buyer under this Agreement;
(iv) confidentiality agreements, restrictive covenants and other obligations of present and former
employees of the Company and the Business; (v) business opportunities, and (vi) security deposits
and rebates.
2.02 Non-Assignable Assets(a) . (a) In those cases where any of the Contracts
constituting Purchased Assets are not by their terms assignable or which require the consent of a
third party in connection with the transactions contemplated by this Agreement and an appropriate
waiver or consent has not been obtained prior to the Closing Date, Seller shall immediately after
the Closing Date use its best efforts (including, in the case of all Contracts not having customers
of the Business as parties thereto, the payment of money), and Buyer shall cooperate in all
reasonable respects with Seller, to obtain all such consents and waivers and to resolve all
associated issues relating to assignments and transfers necessary to convey any such owned
Contracts to Buyer and/or give Buyer the right to any leased Purchased Assets pursuant to the terms
of any such leases covering such leased Purchased Assets.
(b) Anything contained herein to the contrary notwithstanding, this Agreement shall not
constitute an agreement to assign any of the Purchased Assets if any actual or attempted assignment
or transfer thereof without the consent of any party
thereto other than Seller would constitute a breach thereof or otherwise not be permitted
under applicable Legal Requirements (the “Non-Assignable Assets”). If any such
Non-Assignable Assets are not able to be assigned or transferred notwithstanding Seller’s best
efforts as required above, Seller shall provide or cause to be provided to Buyer the benefits of
any such Non-Assignable Assets, and (i) Seller shall (to the extent Buyer has assumed in writing at
Seller’s request all duties and responsibilities thereunder) [a] promptly pay or cause to be paid
to Buyer all monies received by Seller with respect to
any such Non-Assignable Asset, and [b]
enforce, at the written request and at the sole expense of Seller, any rights of Seller arising
with respect thereto (including, without limitation, the right to terminate in accordance with the
terms thereof upon the advice of Buyer), and (ii) provided that Buyer receives the benefit of any
such Non-Assignable Assets, Buyer shall perform and discharge on behalf of Seller all of Seller’s
liabilities, obligations or commitments, if any, thereunder relating to the period following the
Closing Date, in accordance with the provisions thereof other than those arising by reason of a
breach or nonperformance by Seller with respect to such Non-Assignable Assets.
3. Assets Excluded From Sale. The parties hereto acknowledge and agree that the following
assets of Seller are excluded from the transactions contemplated by this Agreement, shall not be
transferred to Buyer, and shall be retained by Seller (collectively, the “Excluded
Assets”):
3.01 Certain Corporate Records. Seller’s minute books, equity ledger and income tax
records.
3.02 Insurance Policies. All Insurance Policies, and all rights of Seller of every nature
and description under or arising out of such Insurance Policies including any refunds or claims for
refunds under such policies (but only to the extent the same are not listed as an asset or included
as income in the Financial Statements).
3.03 Certain Employee Benefit Plans. Excepting the Assigned Benefit Plans, all employee
benefit plans and all agreements related to employment or separation that are applicable to the
Employees, and any trusts, insurance arrangements or other assets held pursuant to, or set aside to
fund the obligations of Seller under, any such employee benefit plans.
3.04 Income Tax Refunds. All claims, rights and interest in and to any refunds of federal,
state or local franchise, Taxes in respect of income (but not other Taxes, including sales/use
Taxes) for all taxable periods ending prior to, on or after the Closing Date that have been paid by
Seller (and not reimbursed by Buyer) or are the responsibility of Seller hereunder, except to the
extent included in the Closing Working Capital.
3.05 Rights Under This Agreement. Seller’s rights under this Agreement and the other
agreements and instruments executed and delivered by Seller in connection with this Agreement and
the transactions contemplated hereby and thereby.
3.06 Cash. All Cash legally owned by Seller as of the Closing Date, except to the extent
the same is included as an asset in the Working Capital.
3.07 Third Party Causes of Action. All claims and causes of action of Seller against any
third party or Governmental Authority that does not concern, relate to or arise out of any of the
Purchased Assets, except as otherwise expressly stated in this Agreement.
3.08 Other. Any assets that Buyer determines, in its sole discretion within 60 days after
the Closing Date, are not necessary or useful to the profitable operation of the Business, though
such determination shall have no effect on the Purchase Price.
4. Assumption of Liabilities; Excluded Liabilities.
4.01 Assumed Liabilities. Subject to the terms and conditions of this Agreement, on the
Closing Date, Buyer shall assume and agree to pay, perform and discharge as and when due, each of
the following liabilities and obligations of Seller (collectively, the “Assumed
Liabilities”):
(a) trade accounts payable incurred in the ordinary course of business and accrued wage and
payroll liabilities incurred in the ordinary course of business to the extent the same are
reflected in the Closing Working Capital;
(b) all liabilities and obligations of Seller arising after the Closing Date under the
Contracts (to the extent the same do not constitute Non-Assignable Assets), except for liabilities
and obligations to the extent they arise out of Seller’s default, breach or failure to perform such
Contract prior to the Closing Date; and
(c) all contractual warranty obligations of the Business with respect to products or services
provided or sold by Seller and the Business prior to the Closing.
4.02 Excluded Liabilities. The parties hereto acknowledge and agree that all liabilities and obligations of Seller
otherwise associated with the pre-Closing operations of the Business or the pre-Closing condition
of the Purchased Assets which are not expressly identified as Assumed Liabilities pursuant to
Section 4.01 above, including without limitation any violation of Legal Requirements, union
matters, employee severance, employee medical and disability payments, judgments, product
liability, broker fees or commissions, customer rebates, interest, Taxes (including uncollected or
un-remitted Taxes respecting sales or use) or penalties shall be excluded from the transactions
contemplated by this Agreement, shall not be assumed by Buyer, and shall be retained, performed,
paid and discharged in accordance with the terms thereof by Seller (collectively, the “Excluded
Liabilities”). Buyer shall forward to Seller for payment all bills, invoices and claims
received for goods or services rendered to Seller for periods prior to the Closing Date which do
not constitute Assumed Liabilities, and Buyer shall provide Seller with access to any Records in
Buyer’s possession or control reasonably necessary for Seller to analyze and pay the same. Seller
and the Members, jointly and severally, hereby agree to reimburse, indemnify and hold Buyer
harmless from any and all claims, liabilities, obligations, costs or expenses (including without
limitation reasonable attorneys fees, court costs and other expenses of litigation) arising out of
or relating to any Excluded Liabilities, regardless of the Basket.
5. Determination of Purchase Price.
5.01 Purchase Price. Upon the terms and conditions set forth in this Agreement, in
consideration of the sale, assignment and delivery of the Purchased Assets to Buyer, and subject to
adjustment in accordance with Section 6 below, Buyer will pay to Seller an aggregate amount equal
to $45,000,000, (i)(a) minus the amount, if any, by which the Target Working Capital
exceeds the Closing Working Capital or (i)(b) plus the amount, if any, by which the Closing
Working Capital exceeds the Target Working Capital; and (ii) minus the amount of the
Closing Indebtedness, and (iii) minus the amounts of the Prorations and Other Deductions
set forth on Schedule 1 attached hereto, to the extent not included in the definition of
Indebtedness (the “Purchase Price”).
5.02 Estimated Purchase Price and Components; Payment of Estimated Indebtedness. At or
prior to the Closing Date, Buyer and Seller shall make a good faith estimate of the Purchase Price
(excluding the Earnout Amount) and all components thereof, including the Estimated Working Capital
and Indebtedness (the “Estimated Purchase Price”), which shall be set forth in a written
summary showing in reasonable detail the calculation thereof and the same shall be attached hereto
as Schedule 1. At Closing, Buyer shall pay, by wire transfer of immediately available
funds to the account designated by Seller, an amount equal to the Estimated Purchase Price (i)
minus the Escrow Fund; (ii) minus the Bond Escrow Fund; and (iii) minus the
amounts of the Prorations and Other Deductions
set forth on Schedule 1 attached hereto, to the extent not included in the definition of
Indebtedness (the “Closing Payment”). Upon the terms and subject to the conditions of this
Agreement, on the Closing Date, (a) Seller shall deliver all necessary irrevocable instructions and
notice(s) to the appropriate indenture trustee under the Industrial Bonds Supporting Agreements to
redeem the Industrial Bonds from the holders thereof, and (b) Buyer shall pay or otherwise
discharge (or make arrangements to pay or otherwise discharge) all Indebtedness reflected in the
Estimated Purchase Price in accordance with applicable payoff statements and other creditor
instructions furnished by Seller, excepting only that portion of the Indebtedness that concerns the
Industrial Bonds and the letter or credit issued by JPMorgan Chase Bank, N.A. relating thereto
(which Industrial Bonds shall be redeemed pursuant to the irrevocable notice referenced above
through a draw on such letter of credit, which draw shall be reimbursed by the Bond Escrow Agent
from the Bond Escrow Fund to the appropriate parties in accordance with the terms of the Bond
Escrow Agreement). Simultaneously with the Closing, Seller shall obtain releases of all
Encumbrances (other than Permitted Encumbrances) on the Purchased Assets, or conditional releases
of Encumbrances that are conditioned upon Buyer paying all Indebtedness associated with such
Encumbrances, in a form reasonably acceptable to Buyer.
5.03 Allocation of Purchase Price. The parties agree that the Purchase Price (including
the Assumed Liabilities to the extent required by applicable Legal Requirements) shall be allocated
among the assets of Seller in a manner consistent with the allocation set forth on Exhibit
D attached hereto (the “Price Allocation”). Buyer and Seller shall report, act and
file tax returns (including, but not limited to Internal Revenue Service Form 8594, which shall be
amended to allocate any change in the Purchase Price resulting from payment of any portion of the
Earnout Amount or the other provisions of
this Agreement) in all respects and for all purposes
consistent with such allocation prepared by Buyer. Seller shall timely and properly prepare,
execute, file and deliver all such documents, forms and other information as Buyer may reasonably
request to prepare such allocation. Neither Buyer nor Seller shall take any position (whether in
audits, tax returns or otherwise) that is inconsistent with such allocation unless required to do
so by applicable Legal Requirements.
6. Closing Working Capital; Adjustment and Allocation.
6.01 Determination of Purchase Price.
(a) Preparation of Closing Statement. Within sixty (60) days after the Closing
Date,
Buyer shall prepare and provide to Seller a written statement setting forth in reasonable detail
Buyer’s determination of the final Purchase Price and all components thereof as of the Closing Date
(the “Closing Statement”). The Closing
Working Capital component of the Purchase Price shall be prepared utilizing the accounts set
forth in Schedule 1. The calculation of Closing Working Capital and the Closing Statement
shall not reflect any changes or deviations from the methods, policies, accounts and underlying
assumptions used in the calculation of the Estimated Working Capital as set forth on Schedule
1, as it is the parties’ intent to measure changes in Estimated Closing Working Capital and
Closing Working Capital on a consistent basis.
(b) Payment of Adjustment. If the actual Purchase Price, as finally determined
hereunder, exceeds the Estimated Purchase Price, then Buyer shall pay to Seller the difference
between the two amounts. If the actual Purchase Price, as finally determined hereunder, is less
than the Estimated Purchase Price (a “Deficit”), then Seller shall pay to Buyer the
difference between the two amounts. Any payment required to be made pursuant to this Section
6.01(b) shall be made within ten (10) days after Seller’s acceptance of the Closing Statement or,
if applicable, within ten (10) days after receipt of a determination and resolution of any dispute
over the Closing Statement as provided in Section 6.02 below; provided, that any such amount shall
be funded first, in the event of a Deficit, from the Purchase Price Adjustment Escrow Portion of
the Escrow Fund (with any remaining amount of such Purchase Price Adjustment Escrow Portion being
released to Seller), and second (if at all) directly from Seller or Buyer, as applicable. Any such
amount payable pursuant to this Section 6.01(b) shall be paid (i) together with interest (not
compounded) thereon at the Applicable Rate from and including the Closing Date through the date
immediately preceding the date of payment and (ii) by wire transfer of immediately available funds
(in U.S. Dollars) to an account or accounts designated in writing by the party entitled to receive
such payment (or by such other means as are mutually agreeable to the parties).
6.02 Disputes Concerning Adjustment of the Closing Statement.
(a) Buyer shall permit Seller and its independent public accountant to review (at Seller’s
request and expense) all accounting records and all work papers and computations used in the
preparation of the Closing Statement. If Seller does not give a Dispute Notice to Buyer within
thirty (30) days after receiving the Closing
Statement, Seller shall be deemed to have agreed with
the Closing Statement presented by Buyer, and the Closing Statement presented by Buyer shall be
final and binding on Seller and Buyer.
(b) If Seller delivers a Dispute Notice within the thirty (30) day period described in
Section
6.02(a) above, then Buyer and Seller shall negotiate in good faith to resolve the items in dispute.
If after twenty (20) days from the date a Dispute Notice is given hereunder Buyer and Seller
cannot agree on the resolution of all of the disputed items, the items still in dispute shall be
referred to the Chicago, IL office of Xxxxx Xxxxxxxx LLP or another accounting firm mutually
acceptable to both Buyer and Seller (the “Accounting Firm”). When acting pursuant to this
Section 6.02 the Accounting Firm shall determine, using any applicable principles and provisions
set forth in this Agreement, whether Buyer’s calculation of the Purchase Price and any component
thereof requires adjustment. The decision of the Accounting Firm as to the issues in dispute
shall be non-appealable, conclusive and binding upon Buyer and Seller for purposes of this
Agreement. The fees and expenses of the Accounting Firm pertaining to the dispute resolution
hereunder shall be shared equally by Buyer on the one hand and Seller on the other hand.
6.03 Adjustment. If any payment is made by Seller to Buyer in respect of any claim for any
breach of this Agreement or pursuant to any indemnity under this Agreement, the payment shall be
made by way of adjustment of the Purchase Price paid by Buyer for the Purchased Assets and the
Purchase Price shall be deemed to have been reduced by the amount of such payment.
7. Earnout Amount.
7.01 Earnout Amount. As additional Purchase Price, Seller shall be entitled to earn up to
$4,450,000 after the Closing Date pursuant to the terms and conditions of this Section 7 (the
“Earnout Amount”). The Earnout Amount shall be paid to Seller if Buyer’s EBITDA (as
defined below) exceeds target EBITDA for each of the periods set forth below (each, a
“Period”) respectively. Seller shall be entitled to earn the Earnout Amount under the
following conditions:
(a) for the Period commencing on December 29, 2008 and ending on June 28, 2009, the
Earnout
Amount shall be $2,225,000 if Buyer’s EBITDA for such Period is at least $3,900,000; and
(b) for the Period commencing on December 29, 2008 and ending on June 27, 2010, the
Earnout
Amount shall be an additional $2,225,000 if Buyer’s EBITDA for such Period is at least $15,500,000.
7.02 Calculation of EBITDA.
(a) Preparation of EBITDA Statement; Disputes Related Thereto. Within ninety (90)
days after the end of each Period Buyer shall prepare, or cause to be prepared, and shall provide
to Seller a written statement setting forth in reasonable detail Buyer’s determination of Buyer’s
EBITDA for such Period (each, an
“EBITDA Statement”). Buyer shall provide Seller and its
representatives access to all relevant data, information and records, together with all appropriate
personnel of Buyer, for its review of the EBITDA Statement, including reasonable access to any work
papers used by Buyer in the preparation of the EBITDA Statement. If Seller does not give a notice
of dispute within forty-five (45) days of receiving the EBITDA Statement, Seller
shall be deemed to have irrevocably accepted the EBITDA Statement presented by Buyer and the
same shall be final and binding on Seller and Buyer for all purposes. If Seller delivers a notice
of dispute within the forty-five (45) day period described in the foregoing sentence, then Buyer
and Seller shall negotiate in good faith to resolve such dispute. If, after thirty (30) days from
the date Seller provides a notice of dispute, Buyer and Seller cannot agree on a resolution, the
parties shall instruct the Accounting Firm to calculate the EBITDA for such Period, and the
Accounting Firm shall calculate the EBITDA within thirty (30) days after receiving such
instruction. The decision of the Accounting Firm as to the issues in dispute shall be
non-appealable, conclusive and binding upon Buyer and Seller for purposes of this Agreement. The
fees and expenses of the Accounting Firm in making such calculation shall be borne one-half by
Seller and one-half by Buyer.
7.03 Elements Included in EBITDA Calculation. “EBITDA” means the amount of Buyer’s
net income in respect of the Business for each respective Period before all federal, state, local
and foreign franchise, excise and income taxes, interest, depreciation and amortization, calculated
in accordance with GAAP, applied consistently, and provided further that the following principles
shall be applied in calculating EBITDA:
(a) EBITDA for all Periods shall be calculated based upon an opening balance sheet of Seller
dated as of December 29, 2008 (the “Opening Balance Sheet”). The Opening Balance Sheet
shall be prepared by Buyer utilizing the Closing Statement as a starting point, but (i) Buyer shall
adjust the same to bring it into compliance with GAAP and Buyer’s standard accounting principles,
procedures, methods and practices, including without limitation Buyer’s cost accounting methods for
raw materials and work in process (which, inter alia, will require the elimination of any “Purchase
Price Variance” accounts utilized in the Closing Statement from the Opening Balance Sheet); and
(ii) the Opening Balance Sheet shall take into consideration the results of operations of the
Business between the Closing Date and December 28, 2008. Buyer will provide Seller with a copy of
the Opening Balance Sheet within ninety (90) days of the Closing Date.
(i) Buyer shall permit Seller and its independent public
accountant to review (at Seller’s
request and expense) the Opening Balance Sheet. If Seller does not give a Dispute Notice to Buyer
within thirty (30) days after receiving the Opening Balance Sheet, Seller shall be deemed to have
agreed with the Opening Balance Sheet presented by Buyer, and the same shall be final and binding
on Seller and Buyer for purposes of calculating EBITDA and the Earnout Amount.
(ii) If Seller delivers a Dispute Notice within the thirty
(30) day period described in
subsection (i) above, then Buyer and Seller shall
negotiate in good faith to resolve the items in
dispute. If after twenty (20) days from the date a Dispute Notice is given hereunder Buyer and
Seller cannot agree on the resolution of all of the disputed items, the items still in dispute
shall be resolved in accordance with Section 15 of this Agreement, except that the only issue to be
resolved thereunder shall
be whether the Opening Balance Sheet is in compliance with GAAP and Buyer’s standard
accounting principles, procedures, methods and practices, and no other issue or matter.
(b) The following costs, charges and expenses shall be excluded from EBITDA:
(i) Intercompany charges constituting general and administrative
overhead or interest
allocation charges between Buyer and any of its Affiliates that have not been approved by Seller in
writing; and
(ii) Except as otherwise may be required in adhering to the
requirements set forth in
subsection (a) hereof, income, gains or losses resulting from any change in accounting principles,
procedures, methods or practices subsequent to the date hereof, including income, gains or losses
representing the cumulative effect on prior periods of any such changes.
(c) The following shall be added to EBITDA (without duplication) to the extent they are
included as expenses therein:
(i) all expenses which are expensed, whether immediately or after
having been capitalized by
Buyer, in connection with any acquisition indebtedness and any refinancing of such indebtedness and
interest expense incurred on acquisition indebtedness;
(ii) the amount by which the EBITDA has been reduced as a result
of the making of any loan by
Buyer to any of Buyer’s Affiliates or otherwise required by Buyer’s Affiliates, or any guaranty or
indemnity given by Buyer for the obligations of third parties, except to the extent such guarantees
or indemnities were given in the ordinary course of the Business;
(iii) any expense of Buyer for which Seller has made a payment to
Buyer after demand therefor
pursuant to Section 14 of this Agreement, whether such payment is made directly, from the Escrow
Fund or otherwise;
(iv) severance costs for employees of the Business terminated by
Buyer after the Closing, but
only to the extent such costs exceed the amount of wages, salaries and benefits saved by the
Business as a result of such terminations during a Period; and
(v) costs associated with the integration of the Business into
Buyer, but only to the extent
the same are in excess of the those Selling, General & Administrative costs included in Seller’s
projections/forecasts for the Business that were provided to Buyer prior to the Closing.
7.04 Covenants of Buyer. Buyer covenants as follows with respect to the Business
until after June 27, 2010:
(a) Buyer shall cause to be maintained in effect levels of property damage, liability,
business interruption, and other insurance substantially consistent with the levels maintained by
Seller before the Closing, to the extent the same are reasonable and appropriate;
(b) All agreements and/or transactions between Buyer, on one hand, and its affiliates, on the
other hand, that result in a charge or expense, or income or revenue, to Buyer shall be
substantially on an arms-length basis except as otherwise agreed in writing by Seller; and
(c) Buyer and its affiliates will not include in the EBITDA calculation as set forth in
Section 7.02 above any Earnout Amounts accrued, payable or paid pursuant to this Section 7 and will
treat all such Earnout Amounts as part of the Purchase Price.
7.05 Acknowledgement of Seller and Members. Seller and the Members hereby acknowledge
and agree that, notwithstanding anything contained in this Section 7 to the contrary, after the
Closing Buyer shall only be required and obligated to exercise ordinary and typical business
judgment in operating the Business, using the same degree of care that it uses to operate its other
businesses and affiliates. Without limiting the generality of the foregoing, Seller and the
Members hereby acknowledge and agree that Buyer shall not be required or obligated to operate the
Business after the Closing in a manner or fashion designed or intended to maximize the Earnout
Amount.
8. Closing. The closing of the transactions contemplated by this Agreement (the
“Closing”) shall take place on the date hereof at the offices of Seller in Appleton,
Wisconsin at 8:00 a.m.; provided, however, that the Closing may be conducted by facsimile, e-mail
or other electronic communication. The date on which the Closing occurs is referred to herein as
the “Closing Date.” The Closing will be deemed effective as of 12:01 a.m. (Central
Standard Time) on the Closing Date.
9. Closing Deliveries.
9.01 Deliveries by Seller at or Prior to Closing. Seller shall have delivered or
caused to be delivered to Buyer the following items at or prior to the Closing, in form and
substance reasonably acceptable to Buyer and its counsel and executed (as applicable) by Seller:
(a) a general xxxx of sale in substantially the form of Exhibit G, duly executed by
an
executive officer of Seller;
(b) an assignment and assumption agreement in substantially the form of Exhibit H
(the
“Assignment and Assumption Agreement”), duly executed by an executive officer of Seller;
(c) a Certificate of Status for Seller, issued by the Wisconsin Department of Financial
Institutions and dated within ten (10) days of the Closing Date;
(d) a general warranty deed (subject to the Permitted Encumbrances) reflecting the transfer of
the Owned Real Property, in substantially the form of Exhibit I (the “Deed”);
(e) releases of Encumbrances for all Indebtedness (or a commitment by the applicable lender to
release upon receipt of amounts due, as stated in any applicable payoff statement or instruction);
(f) releases of all other Encumbrances, other than Permitted Encumbrances;
(g) the consent to the consummation of the transactions contemplated by this Agreement, to the
extent required by the other parties, to those Material Contracts listed on Exhibit J;
(h) the Escrow Agreement in the form attached hereto as Exhibit B, executed by an
executive officer of Seller;
(i) the Bond Escrow Agreement in the form attached hereto as Exhibit A, executed by
an
executive officer of Seller and the escrow agent thereunder;
(j) employment agreements, in a form acceptable to Buyer in its sole discretion, with each
employee identified on Exhibit K (collectively, the “Employment Agreements”);
(k) an affidavit that meets the requirement of Code Section 1445 and the Foreign
Investment in
Real Property Tax Act of 1980;
(l) an assignment of trademarks in the form of Exhibit L hereto, duly executed by
an
executive officer of Seller (the “Assignment of Trademarks”);
(m) an assignment of domain names in substantially the form of Exhibit M attached
hereto (the “Domain Name Assignment”) duly executed by an executive officer of Seller;
(n) an amendment to the Articles of Organization, duly executed by an officer of Seller,
changing the name of Seller to a name different from “Pensar Electronic Solutions” and not
confusingly similar to, “Pensar,” to be filed by Buyer with the Wisconsin Department of Financial
Institutions;
(o) a certificate of an authorized Manager of Seller, certifying that attached thereto are
true and complete copies of (i) the Articles of Organization and Operating Agreement, as amended
through and in effect on the Closing Date, and (ii) resolutions of the Members of Seller
authorizing the execution, delivery and
performance of this Agreement and consummation of the
transactions contemplated hereby, and (iii) certifying as to the incumbency of the officer of
Seller executing this Agreement on behalf of Seller;
(p) assignment(s) respecting the Assigned Benefit Plans, including the signatures of all
insurers underwriting the same on such assignment;
(q) the Title Policy;
(r) such other documents, instruments and agreements as are reasonably requested by Buyer or
its counsel (provided that no opinion of counsel shall be required).
9.02 Deliveries by Buyer At or Prior to Closing. Buyer shall have delivered or caused
to be delivered the following items at or prior to the Closing in a form and substance reasonably
acceptable to Seller and its counsel and executed (as applicable) by Buyer and/or its affiliated
parties:
(a) the Closing Payment, in accordance with the wire transfer instructions received from
Seller;
(b) the Escrow Fund, by wire transfer to U.S. Bank, N.A. in accordance with the Escrow
Agreement;
(c) the Bond Fund, by wire transfer to JPMorgan Chase Bank, N.A. in accordance with the terms
of its payoff letter dated effective December 22, 2008;
(d) a certificate of the Secretary of Buyer, certifying that attached thereto are true and
complete copies of (i) the Articles of Incorporation and By-laws of Buyer, as amended through and
in effect on the Closing Date, and (ii) resolutions of the Board of Directors of Buyer authorizing
the execution, delivery and performance of this Agreement and consummation of the transactions
contemplated hereby, and (iii) certifying as to the incumbency of the officer of Buyer executing
this Agreement on behalf of Buyer;
(e) a Certificate of Good Standing (or comparable document) for Buyer issued by the State of
Missouri and dated within ten (10) days of the Closing Date;
(f) the Escrow Agreement, duly executed by an executive officer of Buyer;
(g) the Employment Agreements, duly executed by an executive officer of Buyer;
(h) the Assignment and Assumption Agreement, duly executed by an executive officer of Buyer;
(i) the Assignment of Trademark, duly executed by an officer of Buyer; and
(j) the Domain Name Assignment, duly executed by an officer of Buyer;
(k) such other documents, instruments and agreements as are reasonably requested by Seller or
its counsel (provided that no opinion of counsel shall be required).
10. Representations and Warranties of Seller. Subject to the exceptions expressly
stated in the schedule delivered by Seller concurrently herewith and identified as the
“Disclosure Schedule,” Seller and the Members, jointly and severally, hereby represent and
warrant to Buyer as follows:
10.01 Organization. Seller is a limited liability company validly existing under the
laws of the State of Wisconsin. Seller has all limited liability company power and limited
liability company authority to own, operate and lease its properties and carry on the Business as
now conducted. Seller is duly licensed and qualified to do business in and is in good standing
under the laws of each state or other jurisdiction where failure to do so would result in a
Material Adverse Effect.
10.02 Authorization of Agreement. All persons who are equity interest holders of
Seller, and all persons holding any present or contingent right to become equity interest holders
of Seller, are signatories to this Agreement. Seller has all necessary limited liability company
power and limited liability company authority, and each of the Members have all requisite
authority, to execute and deliver this Agreement and the other agreements which are to be executed
pursuant to the terms hereof, and to consummate the transactions provided for hereby and thereby.
The execution and delivery of this Agreement and any such other agreements which are to be executed
by Seller and/or the Members and the performance by it and them of the obligations to be performed
hereunder and thereunder, have been duly authorized by all necessary action on the part of Seller
and each of the Members. The execution and delivery of this Agreement and each other agreement to
be executed by Seller and each of the Members pursuant hereto, and except as set forth in
Section 10.02 of the Disclosure Schedule, the consummation of the transactions contemplated
hereby and thereby, do not and will not conflict with or result in a breach of, or constitute a
default under, (a) Seller’s Articles of Organization or Operating Agreement, (b) any order,
judgment or decree to which Seller or any Member is a party or by which Seller, any Member or their
respective assets are bound or affected, or (c) any Legal Requirement by which Seller, any Member
or their assets are bound or affected. This Agreement is, and each other agreement and document to
be executed by Seller or the Members pursuant hereto will be, when so executed, a valid and binding
obligation of Seller and the Members, enforceable in accordance with their terms.
10.03 Financial Statements. (a) Seller has delivered to Buyer copies of the following
“Financial Statements” (herein so called), which were prepared in the
ordinary course by
Seller, and which were prepared from the books and records of Seller in accordance with GAAP
consistently applied and maintained throughout the periods indicated (except as otherwise disclosed
in Section 10.03 of the Disclosure Schedule and except in the case of unaudited financial
statements solely in respect of the lack of footnote disclosure and subject to normal year-end
adjustments): (i) audited balance sheets of Seller as of December 31, 2007 and December 31, 2006
and statements of income for each of the years then ended; (ii) an unaudited balance sheet of
Seller as of September 30, 2008 (the “Interim Balance Sheet”) and related unaudited
statement of income for the nine (9) month period ending on such date (such date being referred to
herein as the “Interim Balance Sheet Date”); and (iii) an unaudited balance sheet of Seller
as of October 26, 2008, and a related unaudited statement of income for the period beginning on
January 1, 2008 and ending on such date. The Financial Statements are accurate, complete and
consistent with the books and records of Seller, and fairly present the financial condition of
Seller as of their respective dates and the results of its operations for the periods covered
thereby.
(b) Neither Seller nor the Members not, to Seller’s knowledge, Seller’s independent
accountants, have identified or been made aware of (i) any fraud, whether or not material, that
involves Seller’s management or other employees who have a role in the preparation of financial
statements or the internal controls utilized by Seller, or (ii) any claim or allegation regarding
the foregoing.
10.04 Business Changes. Except as otherwise disclosed in Section 10.04 of the
Disclosure Schedule, since January 1, 2008, Seller has operated in all material respects in the
Ordinary Course of Business and there has not been any Material Adverse Effect or, to Seller’s
knowledge, any fact, event or circumstances which would reasonably be expected to have or cause a
Material Adverse Effect. Except as otherwise disclosed in Section 10.04 of the Disclosure
Schedule and except for actions taken and/or changes made at the request of, or authorized by,
Buyer, or otherwise taken or made pursuant to this Agreement, since the Interim Balance Sheet Date
there has not been with respect to Seller:
(a) any (i) material damage, destruction or loss (whether or not covered by insurance) or
(ii) material transaction outside the Ordinary Course of Business;
(b) any sale, lease, transfer, assignment, abandonment or other disposition of any material
asset of Seller outside the Ordinary Course of Business;
(c) any material deviation from the Ordinary Course of Business, including without limitation,
inventory buying practices or accounts receivable collection practices, in contemplation of the
transactions described in this Agreement;
(d) any material change or modification of Seller’s accounting methods or practices;
(e) any declaration or payment of any dividend or distribution to any member of Seller or
other holders of equity or other similar ownership or participation interests, including equity
interest splits, equity interest dividends and profit distributions, or any purchase or redemption
of any membership interests, stock, notes or other debt or equity or other similar ownership or
participation interests;
(f) other than in the Ordinary Course of Business, (i) any bonus or any wage, salary or
compensation increase to any of its directors or managers or any of its officers, employees, sales
representatives or consultants who earns or has earned more than $50,000 annually in aggregate
compensation from Seller, or (ii) any increase in any employee benefit plan or arrangement, or
amended or terminated any existing employee benefit plan or arrangement or adopted any new employee
benefit plan or arrangement;
(g) any loans or advances to, or guarantees for the benefit of, any person (other than
advances to employees for travel and business expenses incurred in the Ordinary Course of Business
which do not exceed $10,000 in the aggregate);
(h) any institution or settlement of claims or lawsuits for an amount involving in excess of
$100,000 in the aggregate or involving equitable or injunctive relief; or
(i) any commitment or agreement to do any of the foregoing.
10.05 Real Property. Section 10.05 of the Disclosure Schedule sets forth a
list and description of all real property owned or occupied by Seller (collectively, the “Real
Property”). Except as set forth in Section 10.05 of the Disclosure Schedule, there are
no Material Contracts relating to or affecting the Real Property to which Seller is a party or by
which the Real Property is otherwise bound or affected. There are no material structural or
nonstructural defects (including inadequacy for normal use of mechanical systems and fixtures) in
any of the buildings or their systems or fixtures (including the HVAC system, plumbing system,
electrical system, sprinkler system and sewer and water systems), ordinary wear and tear excepted,
situated on the Real Property and such building systems, fixtures, and improvements, owned, leased
or used by Seller, taken as a whole, are in all material respects, in good condition and working
order (reasonable wear and tear excepted) have been reasonably maintained and used, and are in
compliance with all applicable Legal Requirements. Other than capital expenditures reserved or
accrued for on the Interim Balance Sheet or on the Closing Statement, Seller has no knowledge of
material capital expenditures with respect to any parcel of the Real Property (excluding only
normal repair made consistently with past practice) that would, at this time, be necessary to
conduct the Business as presently conducted at such parcels nor are any such expenditures planned
by Seller. Neither the whole or any portion of the Real Property has been condemned, requisitioned
or otherwise taken by any public authority, and to Seller’s knowledge, no such condemnation,
requisition or taking is threatened or contemplated. No public improvements have been commenced
and to Seller’s knowledge there are no public improvements planned which would result in special
assessments against or otherwise materially and adversely affect any of the Real
Property. No portion of the Owned Real Property is within an identified flood plan or other
designated flood hazard area as established under any Legal Requirement or otherwise by any
Governmental Authority. The Owned Real Property has direct legal access to, abuts and is served by
a publicly dedicated and maintained road, which road does and shall provide a valid means of
ingress and egress thereto and therefrom, without additional expense. All utilities, including
water, gas, telephone, electricity, sanitary and storm sewers are currently available to the Owned
Real Property at normal and customary rates, and are adequate to serve such property for Seller’s
current use thereof. Seller is not a “Foreign Person” as defined in Code Section 1445. With
respect to each parcel of the Leased Real Property, Seller holds a valid leasehold interest and
there is no material default by Seller, or, to Seller’s knowledge, any other party under such Real
Property lease
10.06 Equipment. Except as set forth on Section 10.06 of the Disclosure
Schedules, to Seller’s knowledge, no material maintenance outside the Ordinary Course of Business
is needed with respect to the machinery, equipment (including computer systems), furniture and
fixtures (except to the extent constituting part of the Real Property) currently used by Seller to
operate the Business. All such items are in good condition and repair (reasonable wear and tear
excepted) and are usable in the Ordinary Course of Business, and, to Seller’s knowledge, there are
no latent defects with respect thereto.
10.07 Title to Assets; Sufficiency. Except as set forth in Section 10.07 of
the Disclosure Schedule, Seller has good title, or is otherwise legally entitled to use, all of the
Purchased Assets, free and clear of all Encumbrances, except for Permitted Encumbrances and except
for those Encumbrances which will be released prior to or at the Closing. The Purchased Assets
constitute all of the tangible and intangible properties, rights, benefits and other assets
necessary or appropriate to operate the Business in the ordinary course as conducted by Seller
prior to the Closing, and after the Closing Buyer will be in possession of all such assets and will
be able to operate the Business on a stand-alone basis.
10.08 Accounts Receivable. All accounts receivable reflected on the Interim Balance
Sheet and those existing as of the Closing Date and reflected in the Estimated Working Capital
represent valid claims for bonafide, arms-length sales of goods and services actually made by
Seller in the Ordinary Course of Business, are good and collectible within one hundred and twenty
(120) days of the Closing Date, and are not subject to valid defenses, set-offs or counterclaims,
subject to applicable reserves reflected in the Interim Balance Sheet and the Estimated Working
Capital.
10.09 Inventory. Except as set forth in Section 10.09 of the Disclosure
Schedules, Seller’s inventory reflected in the Estimated Working Capital is of a quality and
quantity usable and saleable in the Ordinary Course of Business (and in any event within six (6)
months after the Closing Date). Subject to the applicable reserves reflected in the Interim
Balance Sheet and the Estimated Working Capital, Seller has no (i) off-specification or obsolete
inventory, (ii) finished goods inventory for which there have been no sales in the last ninety (90)
days, (iii) finished goods inventory that is custom
made for a customer or group of similar customers, and such customer(s) has/have indicated,
either expressly or impliedly, that it/they will not be purchasing any more of such custom
inventory. All inventory of the Business is located solely at the Real Property. As of the
Closing, the Business will have on hand inventories in amounts consistent with the Business’ past
practices and at levels sufficient for Buyer to continue to operate in the Ordinary Course of
Business after the Closing.
10.10 Contracts.
(a) Section 10.10(a) of the Disclosure Schedule lists the following contracts,
agreements, leases, licenses or arrangements to which Seller is a party or by which its assets,
properties or Business are bound (collectively, the “Material Contracts”): (i) agreements
not to compete with any person in any business or geographic territory, or restricting a person’s
ability to solicit any other person’s customers, employees or business relationships;
(ii) agreements relating to Seller’s or its employee’s use, protection, disclosure or nondisclosure
of confidential information of any third party; (iii) leases of real property, and leases of
personal property involving annual expenditures greater than $5,000; (iv) except for purchase
orders or sale orders for the purchase of materials or supplies or for the sale of products entered
into in the Ordinary Course of Business that have a term of 6 months or less or that do not require
consent to assign to Buyer, agreements involving payment or other expenditure by any party of more
than $25,000 per year; (v) agreements providing for the disposition of any material asset, other
than in the Ordinary Course of Business; (vi) material consulting agreements not cancelable on less
than twelve (12) months notice; (vii) agreements with sales representatives, dealers or
distributors; (viii) partnership or joint venture agreements; (ix) agreements relating to the
license of intellectual property to and from third parties (other than software licenses for
software which is commercially available “over the counter”); (x) collective bargaining agreements;
(xi) any employment agreement or other agreement or arrangement between Seller and its officers,
managers or affiliates (including any member of Seller or any of their relatives or affiliates);
(xii) any indenture, mortgage, promissory note, loan agreement, guaranty or other agreement or
commitment for the borrowing of money or evidencing an Encumbrance; (xiii) any agreement with any
customer or supplier described in Section 10.19 of the Disclosure Schedule; and (xiv) any
other contract, agreement, lease, license or arrangement which is material to Seller or necessary
or materially beneficial in the profitable operation of the Business.
(b) Each Material Contract is in full force and effect. Except as set forth in
Section 10.10(b) of the Disclosure Schedule, Seller is not in default under any Material
Contract, and to Seller’s knowledge, no other party to any Material Contract is in default
thereunder in any respect.
10.11 Litigation and Proceedings. Except as set forth in Section 10.11 of the
Disclosure Schedule, (a) there is no material suit, action or legal, administrative, arbitration or
other similar proceeding pending or, to Seller’s knowledge, threatened against Seller with respect
to the Business, and (b) no material suit, action or legal, administrative, arbitration or other
similar proceeding was filed or, to Seller’s knowledge, threatened against Seller since January 1,
2007. Seller has not received notice within the
past twelve (12) months of any material claim arising out of (or alleged to be arising out of)
any injury to persons or property as a result of the ownership, possession, or use of any product
manufactured, sold, or delivered by the Business. To Seller’s knowledge, no product manufactured,
sold or delivered by the Business, or any part or component thereof, is or within the past
twelve (12) months has been the subject of any product recall in connection with any actual or
alleged product defect.
10.12 Compliance with Environmental and Safety Laws. Except as set forth in Section 10.12 of
the Disclosure Schedule:
(a) The Environmental Permits are in full force and effect and constitute all permits,
licenses, approvals and consents relating to Environmental and Safety Laws or Hazardous Substances
required of Seller for the conduct of the Business and the use of the Real Property (as presently
conducted and used by Seller), and all such Environmental Permits are set forth in
Section 10.12 of the Disclosure Schedule.
(b) Seller has filed all reports, returns and other filings required to be filed with respect
to the Real Property and the Business under Environmental and Safety Laws and the Environmental
Permits. Seller has furnished to Buyer true, correct and complete copies of all environmental
audits, reports, assessments and all other material environmental, health or safety documents
relating to Seller, its assets and properties and the past or current operations of the Business,
in each case which are in its possession or under its reasonable control.
(c) Seller and its properties and assets (including the Real Property) have been and are being
operated by Seller in accordance with all Environmental and Safety Laws and Environmental Permits.
(d) Seller has not received any notice that it or any of its properties and assets (including
the Real Property) is not in material compliance with Environmental and Safety Laws and
Environmental Permits and no proceeding for the suspension, revocation or cancellation of any
Environmental Permit is pending or threatened.
(e) Except as described in Section 10.12 of the Disclosure Schedule, there are no
actions pending or any actions, claims or investigations threatened against Seller, which in any
case asserts or alleges (i) Seller or it properties or assets (including the Real Property)
violated or is in violation of any Environmental and Safety Law or Environmental Permit;
(ii) Seller is required to clean up or take remedial or other responsive action due to the
disposal, discharge or other release of any Hazardous Substance on the Real Property; or
(iii) Seller is required to contribute to the cost of any past, present or future cleanup or
remedial or other response action which arises out of or is related to the disposal, discharge or
other release of any Hazardous Substance by Seller.
(f) Except as disclosed in Section 10.12 of the Disclosure Schedule, with respect
to
the period during which Seller owned, or during the period in
which Seller occupied, the Real Property, there has been no material Release or threatened
Release of any Hazardous Substance from the Real Property in violation of Environmental and Safety
Laws.
10.13 Permits. Seller possesses all Permits necessary to conduct the Business as
currently conducted, and such Permits are in full force and effect. No proceeding is pending or,
to Seller’s knowledge, threatened regarding the revocation or material limitation of any such
Permit. Seller has no knowledge of any reason why any material permit would not be renewed by
applicable Governmental Authorities.
10.14 Taxes. Except as set forth in Section 10.14 of the Disclosure Schedule:
(a) All Tax returns that were required to be filed with respect to Seller have been accurately
prepared and timely filed. All such Tax Returns are true, correct, and complete in all material
respects and such Tax Returns were prepared in substantial compliance with all applicable Legal
Requirements. Seller has at all times complied with applicable Legal Requirements pertaining to
Taxes, including, without limitation, all applicable Legal Requirements relating to record
retention.
(b) Seller has timely paid all Taxes that have become due or payable (without regard to
whether or not such Taxes are shown on any Tax Return) and has established in the most recent
financial statements an adequate reserve for all Taxes (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) that have accrued but are
not yet due or payable.
(c) No claim has been made by any taxing authority in any jurisdiction where Seller does not
file Tax Returns that Seller is or may be subject to Tax by that jurisdiction. No extensions or
waivers of statutes of limitations with respect to any Tax Returns have been given by or requested
from Seller.
(d) No foreign, federal, state or local Tax audits or administrative or judicial Tax
proceedings are pending or being conducted with respect to Seller. All deficiencies asserted or
assessments made against Seller as a result of any examinations by any Taxing authority have been
fully paid. No issue has been raised in any such examination, audit, or other proceeding, which by
application of the same or similar principles, reasonably could be expected to result in a proposed
deficiency in Taxes of Seller.
(e) There are no liens for Taxes (other than for current Taxes not yet due and payable) upon
the assets of Seller.
(f) Seller is not a party to or bound by any closing agreement, offer in compromise, or other
agreement with any Taxing authority that could affect Taxes for which Seller or Buyer may be
liable.
(g) Seller has not been a member of an affiliated group of corporations, within the meaning of
Section 1504 of the Code, or a member of a combined, consolidated or unitary group for state, local
or foreign Tax purposes.
(h) Seller is not a party to any plan or other Contract that has resulted or would result,
separately or in the aggregate, in connection with this Agreement, in the payment of any “excess
parachute payments” within the meaning of Section 280G of the Code.
(i) Seller has withheld and paid all Taxes required to have been withheld and paid in
connection with any amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party.
(j) Seller will not be required to include any item of income in, or exclude any item of
deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing
Date as a result of any (i) change in method of accounting for a taxable period ending on or prior
to the Closing Date, (ii) “closing agreement” as described in Code Section 7121 (or any
corresponding or similar provision of any Legal Requirement) executed on or prior to the Closing
Date, or (iii) installment sale or open transaction disposition made on or prior to the Closing
Date.
10.15 Employee Benefit Plans.
(a) Section 10.15(a) of the Disclosure Schedule lists all “employee pension
benefit
plans,” as such term is defined in section 3(2) of the Employee Retirement Income Security Act of
1974, as amended (“ERISA”) without regard to any exemptions from any requirements
thereunder issued by the United States Department of Labor in regulations or otherwise, maintained,
sponsored or contributed to by Seller (the “Pension Plans”). The term “Pension Plan” shall
also include any terminated “employee pension benefit plan” previously maintained, sponsored or
contributed to by Seller.
(b) Section 10.15(b) of the Disclosure Schedule lists all “employee welfare
benefit
plans,” as defined in ERISA section 3(1) without regard to any exemptions from any requirements
thereunder issued by the United States Department of Labor in regulations or otherwise, maintained,
sponsored or contributed to by Seller (the “Welfare Plans”). The term “Welfare Plans”
shall also include any terminated employee welfare benefit plan previously maintained, sponsored or
contributed to by Seller.
(c) Section 10.15(c) of the Disclosure Schedule lists all plans, agreements or
programs maintained, sponsored or contributed to by Seller to provide fringe or other benefits to
employees of the Business (other than Pension Plans and Welfare Plans) including, but not limited
to, vacation, holiday, sick leave, disability, equity compensation, retirement, stock bonus,
savings, thrift, bonus, stock appreciation, deferred compensation, severance, employment,
consulting, medical, hospitalization, welfare, life insurance and other insurance plans, group
insurance or other benefit plans, agreements or programs (the “Fringe Benefit Plans”).
(d) Section 10.15(d) of the Disclosure Schedule lists each other material plan,
program, policy, contract or arrangement maintained, sponsored or contributed to by Seller which
(i) has not already been listed in Section 10.15(a), (b) or (c) of the Disclosure Schedule
and (ii) provides for bonuses, pensions, deferred pay, stock or equity related awards, severance
pay, salary continuation or similar benefits, hospitalization, medical, dental or disability
benefits, life insurance or other employee benefits, or compensation to or for any current or
former employees, agents, or independent contractors or any beneficiaries or dependents of any such
person, whether or not insured or funded.
(e) Each such Pension Plan, Welfare Plan, Fringe Benefit Plan and each plan, program, policy,
contract or arrangement listed in Section 10.15(d) of the Disclosure Schedule (hereinafter
referred to collectively as “Seller Benefit Plans” or individually as a “Seller Benefit
Plan”). In addition, (i) each Seller Benefit Plan complies in all material respects, in form
and operation, with all applicable Legal Requirements, and any contract or labor, works council or
collective bargaining agreement, and has been administered in all material respects in accordance
with its terms and all applicable Legal Requirements; (ii) all contributions, premiums and other
payments due from Seller to (or under) any Seller Benefit Plan through the date of this Agreement
and as of the Closing have been fully paid or, to the extent not required to be paid on or before
such date, have been accrued on Seller’s financial statements and fully provided for in accordance
with applicable funding principles and requirements and will continue to be accrued in Seller’s
financial statements and so paid or provided for until the Closing Date; (iii) Seller has no
liability (including any withdrawal liability) with respect to [a] any employee pension benefit
plan covered by Title IV of ERISA or Section 412 of the Code, except as has been satisfied in full
prior to the Closing Date or [b] any Multiemployer Plan (as defined in Section 4001 of ERISA);
(iv) all Seller Benefit Plans may be terminated or modified by Seller in its discretion without
penalty or premium; (v) no reportable event with respect to Seller’s Benefit Plans under ERISA has
occurred during the last two (2) years; (vi) no termination or partial termination of any Seller
Benefit Plan or participation in any Seller Benefit Plan has occurred within the last five (5)
years; and (vii) no Seller Benefit Plan provides benefits to any retirees or other former employees
of Seller, except to the extent required by COBRA; (viii) to Seller’s knowledge, no fiduciary has
liability with respect to Seller Benefit Plan under ERISA; (ix) all reports, documents, notices and
information required by any applicable Legal Requirement with respect to each Seller Benefit Plan
have been timely filed and distributed; (x) no long term liability must be reported on Seller’s
balance sheet with respect to a Seller Benefit Plan; (xi) there does not exist any pending or, to
Seller’s knowledge, threatened claims (other than routine claims for benefits), suits, actions,
disputes, audits or investigations with respect to any Seller Benefit Plan; (xii) the consummation
of the transactions contemplated by this Agreement will not, in and of itself, accelerate the time
of the payment of or vesting of, or increase the amount of compensation or benefits under any
Seller Benefit Plan and (xiii) to Seller’s knowledge, there is nothing that would materially
increase Seller’s future costs under and Seller Benefit Plan from its current costs under such
Plan.
(f) With respect to each Pension Plan that is not intended to be a nonqualified deferred
compensation plan, a favorable determination letter has been
issued by the Internal Revenue Service after January 1, 2002 and takes into account the series
of legislation commonly referred to as “GUST” (or, if the Plan is documented on a prototype, such
prototype is currently approved by the Internal Revenue Service and takes “GUST” into account) and
since the date of such determination letter there are no circumstances that are likely to adversely
affect the qualification of such Plan under Section 401(a) of the Code. Each Pension Plan
intended to meet the requirements of Section 401(a) of the Code has been amended in good faith to
comply with any provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 that
are instituted voluntarily by the end of the plan year in which such changed provision is
effective. In addition, Seller has not received any correspondence or written or verbal notice
from the Internal Revenue Service; the U.S. Department of the Treasury; the Employee Benefits
Security Administration; any participant in, or beneficiary of, a Seller Benefit Plan; or any agent
representing any of the foregoing that brings into question Seller’s compliance referred to in this
Section.
(g) With respect to each voluntary employees’ beneficiary association
(“VEBA”) under a
Welfare Plan, each such VEBA has received a determination letter from the Internal Revenue Service
that it is exempt under Section 501(c)(9) of the Code.
(h) No tax liabilities have arisen and are currently unpaid in relation to a violation of any
Seller Benefit Plan of Section 409A of the Code, nor is any tax liability expected to arise in
connection with any payment as a result of the transaction contemplated in this Agreement.
(i) Except for temporary clerical or security personnel and except as set forth on Section
10.15(i) of the Disclosure Schedule, none of Seller’s employees is a “leased employee” within
the meaning of Section 414(n) of the Code.
(j) With respect to each Seller Benefit Plan, Seller has heretofore delivered to the Buyer
complete and correct copies of the following documents, where applicable: (i) the current Plan
document or, if there is no Plan document, a written description of the Plan ; (ii) the three most
recent annual reports (Form 5500), together with schedules, as required, filed with the Internal
Revenue Service or Department of Labor, as applicable; (iii) for each Pension Plan that is a non
qualified deferred compensation plan, a copy of all filings with the Department of Labor; (iv) the
most recent determination letter issued by the Internal Revenue Service; (v) the most recent
summary plan description and all modifications; (vi) any trust, insurance, or annuity contracts
maintained in connection with each Seller Benefit Plan; (vii) the three most recent audited
financial statements; (viii) the attorney responses to the auditor’s requests for disclosure of
claims given in connection with the three most recent financial audits; (ix) the three most recent
summary annual reports; and (x) the three (3) most recent Forms 990.
10.16 Labor Matters. Section 10.16 of the Disclosure Schedule lists all
employees of Seller, together with their respective base salaries, bonuses and positions. Seller
is not a party to or bound by any union collective bargaining agreements or other
similar labor contracts. Seller is not a party to any pending arbitration or grievance
proceeding or other claim relating to any such labor contract nor, to Seller’s knowledge, is any
such action threatened. Within the last five (5) years, Seller has not experienced any union
organization attempts or any work stoppage due to labor disagreements, and there is currently no
labor strike, dispute, request for representation, slow down or stoppage actually pending, or to
Seller’s knowledge, threatened against or affecting Seller. Seller has no notice or knowledge of
any material employment discrimination, worker safety or unfair labor practice or other
employment-related investigation against Seller by a Governmental Authority. Seller has no
liability under the federal Worker Adjustment and Retraining Notification Act (or any similar Legal
Requirement), or the Immigration Reform and Control Act of 1986.
10.17 Intellectual Property. Section 10.17 of the Disclosure Schedule
contains a true and complete list of all Intellectual Property relating to the Business and all
pending applications and applications to be filed therefor owned by Seller, and also indicating
which of such intellectual property rights are registered. Except as set forth in
Section 1017 of the Disclosure Schedule, all intellectual property shown as registered in
Section 10.17 of the Disclosure Schedule has been properly registered, all pending
registrations and applications have been properly made and filed and all annuity, maintenance,
renewal and other fees relating to registrations or applications are current. Except as set forth
in Section 10.17 of the Disclosure Schedule, (a) Seller owns or otherwise has the right to
use all intellectual property rights which are material to the conduct of the Business, as it is
currently being conducted and (b) Seller is not infringing any intellectual property rights of any
third party in the operation of the Business, nor, to Seller’s knowledge, is any other person
infringing the intellectual property listed on Section 10.17 of the Disclosure Schedule.
Seller has not received any notice of, and Seller has no knowledge of, any material threat that
might diminish or destroy any material trade secret utilized by Seller in the conduct of the
Business. Except as set forth in Section 10.17 of the Disclosure Schedule, the computer
software, computer firmware, computer hardware (whether general purpose or special purpose), and
other similar or related items of automated, computerized and/or software system(s) that are used
or relied on by Seller in the conduct of the Business is sufficient in all material respects for
the current needs of the Business and has not suffered a material outage or other failure in the
past twelve (12) months.
10.18 Compliance with Legal Requirements. Seller is in compliance with, and has at
all times complied with, all applicable Legal Requirements except where the failure to do so cannot
reasonably be expected to result in a Material Adverse Effect. Except as set forth in
Section 10.18 of the Disclosure Schedule, within the last two (2) years no written notice
from any Governmental Authority has been served upon Seller claiming any material violation or
alleged material violation of any Legal Requirement.
10.19 Major Customers and Suppliers. Section 10.19 of the Disclosure Schedule
sets forth a list of the ten largest customers of the Business for each of the fiscal years ended
December 31, 2007 and December 31, 2006 (determined on the basis of the total dollar amount of net
sales) and for the eleven (11) months ended November 30, 2008 showing the dollar amount of sales to
each such customer during each such time
periods. Section 10.19 of the Disclosure Schedule also sets forth a list of the ten
largest suppliers of the Business in terms of dollar volume of purchases from such suppliers during
such time periods. Seller has not received notice (either in writing or by a specific and express
oral assertion) that any of the customers or suppliers listed or required to be listed on such
Schedule may or will terminate or materially and adversely alter its relationship with Seller or
the Business after Closing.
10.20 Undisclosed Liabilities. Seller does not have any material liabilities that
would be required to be reflected on a balance sheet prepared in accordance with GAAP (including
any footnotes thereto), except for (a) liabilities set forth on the Interim Balance Sheet,
including the notes thereto, (b) liabilities reflected in the Closing Statement, (c) liabilities
disclosed in Section 10.20 of the Disclosure Schedule, and (d) liabilities arising in the
Ordinary Course of Business and in accordance with GAAP under contracts, agreements or arrangements
to which Seller is a party.
10.21 Brokerage. Other than fees due to Xxxxxxx Xxxxx & Company, L.L.C., which shall
be the responsibility of Seller, no broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission in connection with this Agreement or the
transactions contemplated hereby or thereby based upon any agreements, written, oral or otherwise
made by or on behalf of Seller.
10.22 Related Parties Transactions. Except as set forth in Section 10.22 of
the Disclosure Schedule, (i) Seller has not entered into and is not bound by any material
agreements, contracts, arrangements or other business relationships with any of Seller’s present
and former directors, managers, officers, members, unitholders, partners or their respective
relatives or affiliates (the “Related Parties”) other than normal employment arrangements
and Seller Benefit Plans, (ii) Seller is not owed, nor does it owe, any material amount from or to
the Related Parties (excluding employee compensation and other ordinary incidents of employment)
and (iii) none of the Related Parties has any interest in any property, real or personal or mixed,
tangible or intangible, used in or pertaining to the Business or Seller.
10.23 Insurance. Section 10.23 of the Disclosure Schedule contains a true and
complete list of all property, liability, crime and fidelity insurance policies to which Seller is
a party or which provides coverage to or for the benefit of or with respect to Seller or any
director or employee of Seller in his or her capacity as such, other than as included in Seller
Benefit Plans (the “Insurance Policies”), indicating in each case the type of coverage, the
insurer, the expiration date of each policy and the amount of coverage. Seller has delivered to
Buyer declaration sheets reflecting such Insurance Policies. Each Insurance Policy is in full
force and effect and shall remain in full force and effect in accordance with its terms immediately
following the Closing. Seller is not in material default with respect to its obligations under any
of the Insurance Policies, and has given timely notice to the insurer of all material claims that
may be insured thereby.
10.24 Officers and Directors; Bank Accounts. Section 10.24 of the Disclosure
Schedule sets forth all officers and managers of Seller, and all of the bank
accounts, safe deposit boxes and lock boxes of Seller (indicating each authorized signatory
with respect thereto).
10.25 Disclosure. No representation or warranty by Seller in this Agreement, nor any
statement, document, certificate or schedule furnished or to be furnished in connection with the
transactions contemplated by this Agreement, contains or will contain any untrue statement of fact
or omits or will omit a fact necessary to make the statements contained therein not misleading.
Seller are not aware of any other fact or matter which if disclosed might reasonably affect the
willingness of a purchaser to purchase the Purchased Assets or operate the Business as currently
conducted.
10.26 Non-Contravention. Except as set forth in Section 10.26 of the
Disclosure Schedule, neither the execution and the delivery of this Agreement, nor the consummation
of the transactions contemplated hereby, will (i) violate any Legal Requirement or private
agreement to which Seller or any Member is subject or any provision of the organizational or
operating documents of Seller, or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in either 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 Seller or the Business is a party or by which either of them are
bound or to which any of the Purchased Assets is subject, or (iii) result in the creation or
imposition of any Encumbrance upon any of the Purchased Assets. Except as set forth in Section
10.26 of the Disclosure Schedule, neither the Seller nor any Member is required to give any
notice to, make any filing with, or obtain any authorization, consent, or approval from, any person
or Governmental Authority in order for the parties to lawfully consummate the transactions
contemplated by this Agreement without risk of defeasement. The agreements listed under nos.
1(e)(iii), (iv), (v), (vi), (vii), (viii) and ix) of Section 10.26 of the Disclosure
Schedule only concern customers of the Business who have not purchased any products from the
Business since January 1, 2008.
10.27 ActiveSense Trademark. No revenues for any product sold under or utilizing the
“ActiveSense” trademark are reflected on the Financial Statements.
11. Representations and Warranties of Buyer. Buyer represents and warrants to Seller
as follows:
11.01 Corporate Organization. Buyer is a corporation validly existing under the laws
of Missouri. Buyer has all corporate power and corporate authority to own, operate and lease its
properties and carry on its business as now conducted. Buyer is duly licensed and qualified to do
business in and is in good standing under the laws of each jurisdiction where failure to do so
would adversely affect the business of Buyer.
11.02 Authorization of Agreement. Buyer has all necessary corporate power and
corporate authority to execute and deliver this Agreement and the other agreements which are to be
executed by Buyer pursuant to the terms hereof, and to consummate the transactions provided for
hereby and thereby and the execution and delivery of this Agreement and any such other agreements
which are to be executed by
Buyer and the performance by it of the obligations to be performed hereunder and thereunder
have been duly authorized by all necessary action on the part of Buyer. The execution and delivery
of this Agreement and each other agreement to be executed by Buyer pursuant hereto, and the
consummation of the transactions contemplated hereby and thereby, do not and will not conflict with
or result in a breach of, or constitute a default under, (a) Buyer’s Certificate of Incorporation
or by-laws, (b) any order, judgment or decree or any agreement or instrument to which Buyer is a
party or by which Buyer or its assets are bound or affected, or (c) to Buyer’s knowledge, any Legal
Requirement by which Buyer or its assets are bound or affected, which will adversely affect or
restrict Buyer’s ability to consummate the transactions contemplated hereby. This Agreement is,
and each other agreement and document to be executed by Buyer pursuant hereto will be when so
executed, a valid and binding obligation of Buyer enforceable in accordance with their terms,
except that enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar Legal Requirements affecting creditors rights generally and by general equitable
principles.
11.03 Litigation. There is no action, suit or proceeding or investigation or claim
pending or, to the Buyer’s knowledge, threatened against Buyer which will adversely affect or
restrict Buyer’s ability to consummate the transactions contemplated hereby.
11.04 No Brokers or Finders. Neither Buyer nor any of its directors, officers,
employees, shareholders or agents have retained, employed or used any broker or finder in
connection with the transactions provided for in this Agreement.
11.05 Solvency. At and immediately after Closing, after giving effect to any changes
in Buyer’s assets and liabilities as a result of the transactions contemplated by this Agreement:
(a) the value of Buyer’s assets at fair valuation, on a collective basis, would exceed its
liabilities (including, without limitation, contingent liabilities); (b) Buyer would be able to pay
its debts as they become due; and (c) the capital or assets remaining in Buyer after Closing would
not be unreasonably small in relation to its business or any contemplated or undertaken
transaction.
12. Mutual Covenants and Agreements.
12.01 Further Assurances. In addition to obligations elsewhere in this Agreement,
each party will use its reasonable best efforts to ensure that all conditions to the other party’s
obligations to consummate the transactions contemplated by this Agreement have been satisfied
(insofar as such matters are within such party’s control) and to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable
Legal Requirements to consummate and make effective the transactions contemplated by this Agreement
in a manner consistent with applicable Legal Requirements.
12.02 Post-Closing Access to Information. After the Closing and for a period of six
(6) years thereafter, upon reasonable notice, Buyer will reasonably cooperate with Seller and will
give or cause to be given to Seller and its representatives
reasonable access to the records of Seller (including the right to make copies or extracts
thereof) relating to Seller and the Business for periods prior to the Closing Date (including those
records relating to properties, books, contracts, financial statements, tax returns), at Seller’s
sole cost and expense, as is reasonably requested for the preparation or filing of any tax return,
filing or report, any financial statement or report for any Governmental Authority, or any response
or other required submission to any Governmental Authority. Any such access will be provided and
all such inspections will be conducted at reasonable times and in such a manner as not to interfere
unreasonably with the operations of the Business. In addition, after the Closing, any access and
information provided by Buyer to Seller or any of its representatives pursuant to this
Section 12.02 or otherwise pursuant to this Agreement may be conditioned upon the execution and
delivery by Seller or such representative of a confidentiality or nondisclosure agreement covering
the same in form and substance reasonably satisfactory to Buyer.
12.03 Litigation Assistance. Following the Closing and for a period of six (6) years
thereafter, from time to time upon Seller’s written request, Buyer shall reasonably cooperate with
and assist Seller (to the extent not subject to Buyer’s indemnity rights hereunder, at Seller’s
expense) in defending any claim or lawsuit relating to Seller’s operation of the Business prior to
the Closing. Except to the extent Buyer has indemnity rights under Section 14 below, Seller shall
reimburse Buyer for reasonable out-of-pocket expenses actually paid by Buyer with respect to its
employees in connection with providing the cooperation and assistance requested under this
Section 12.03.
12.04 Accounts Receivable.
(a) Buyer agrees to the following with respect to the collection of the pre-Closing accounts
receivable of Seller: (i) Buyer shall use commercially reasonable efforts to collect any such
accounts receivable and will follow credit collection practices substantially similar to Seller’s
historical practices at Closing (but in no event shall Buyer be required to institute litigation or
turn over delinquent accounts to any third party collection agency), and (ii) any payments received
from a customer shall be applied to the accounts receivable as directed by the customer (and if any
payments are not so directed to a specific account receivable by the customer, Buyer will contact
such customer and solicit its written instruction as to which outstanding account receivable the
payment received should be applied to).
(b) All pre-Closing accounts receivable of Seller (including, without limitation, any
pre-Closing accounts receivable owed by Enhanced Vehicle Applications, Inc. and Pentair, Inc.,
regardless of whether the same are being carried by Seller as accounts receivable on its books and
records, including the Financial Statements) that remain uncollected by the Buyer one hundred and
twenty (120) days after Closing shall be shall re-assigned by Buyer to Seller, and Seller and the
Members, jointly and severally, shall promptly reimburse Buyer for the book value thereof without
offset or deduction in respect of the Basket.
(c) If any pre-Closing accounts receivable of Seller are re-assigned to Seller and Buyer
subsequently receives a payment from a customer directing Buyer to apply it to such receivable(s),
Buyer shall promptly forward such payments to Seller (and if Buyer subsequently receives a payment
from any customer that is not so directed to a specific account receivable, Buyer will contact such
customer and solicit its written instruction as to which outstanding account receivable the payment
received should be applied to).
12.05 Inventory.
(a) No more than ten (10) days prior to the Closing, a complete, physical counting of all
inventories of Seller (the “Physical Inventory”) shall be conducted by Seller at Seller’s
sole cost and expense, and such Physical Inventory may be observed by Buyer or its representative
in Buyer’s sole discretion. During such Physical Inventory, Seller shall affix a tag to each
box/container holding items that comprise the inventories, and each such tag shall identify with
specificity the type of items in each box/container and as to each type, the number thereof. In
addition, each such tag shall identify, as to each type, the book value thereof, exclusive of any
sums assigned thereto in any “Purchase Price Variance” accounts. Upon completion of the Physical
Inventory, Seller shall prepare (i) a list of each tag corresponding to each box/container,
including the corresponding information noted above (type of item, number for each type of item,
and the book value of each item), and (ii) an estimate, on a net basis, of Seller’s receipt and
sale of any inventories since the date of the Physical Inventory through the Business Day
immediately prior to the Closing, (iii) a list of all inventories in transit through the Business
Day immediately prior to the Closing, and (iv) an estimate of Seller’s capitalized inventory costs
through the Business Day immediately prior to the Closing, and deliver such lists and estimates to
Buyer (collectively, the “Inventory List”). Section 12.05 of the Disclosure
Schedule sets forth the Inventory List and the aggregate book value of all items identified on the
Inventory List shall be reflected in the Estimated Working Capital.
(b) Any inventories of Seller reflected on the Inventory List that remain unused or unsold by
the Business as of December 31, 2009 (“Unsold Inventory”) shall be promptly re-assigned by
Buyer to Seller. Upon such re-assignment, the aggregate net book value thereof, plus the
aggregate net book value of items sold on or prior to December 31, 2009 below their individual net
book value less the individual selling prices collected on such items on or prior to
December 31, 2009, shall be promptly paid by Seller and the Members, jointly and severally, to
Buyer, subject to the Basket. Seller may thereafter dispose of the Unsold Inventory in any manner,
notwithstanding any non-compete or non-solicitation provision to the contrary in this Agreement,
but in selling or transferring any such Unsold Inventory Seller may not use or mention the name
“Pensar”. In the event that Buyer intends to purchase any Inventory of the type comprising the
Unsold Inventory within two (2) years of its re-assignment to Seller, Buyer shall provide notice to
Seller of such intention. Seller shall thereafter have, for a period of ten (10) days from the
date of receipt of such notice, the exclusive right and option to sell any of the Unsold Inventory
back to Buyer at the same book value price as set forth in this section. In the event Seller
decides not to sell any such Unsold
Inventory to Buyer, Seller shall promptly notify Buyer, and Buyer shall then be permitted
purchase any such Inventory from any third party.
12.06 Employees.
(a) Offer of Employment. At Closing, Buyer shall make a Qualifying Offer to employ
each employee of Seller (excluding any employee on leave for any reason and any retiree) who is an
employee of the Business and who is listed on Section 10.16 of the Disclosure Schedule (the
“Employees”). For purposes of this Agreement, an offer of employment with Buyer shall be a
“Qualifying Offer” if it provides for essentially the same base compensation and vacation
benefits. Employees who accept offers of employment (including Qualifying Offers of employment)
shall be referred to as “Transferred Employees” and shall become employees of Buyer as of
the Closing Date.
(b) Prior Service Credits. Transferred Employees shall receive credit for their prior
service with Seller (including service with any predecessor company) under any benefit plans
maintained by Buyer that Buyer determines in its sole discretion to offer to such Transferred
Employees, including, without limitation, any vacation, severance, short-term disability and life
insurance plans. With respect to any welfare benefit plans maintained by Buyer for the benefit of
Transferred Employees on and after the Closing Date, Buyer shall (i) cause there to be waived any
eligibility requirements or pre-existing condition limitations, and (ii) give effect, in
determining any deductible and maximum out-of-pocket limitations, amounts paid by such Transferred
Employees with respect to benefit plans maintained by the Seller.
(c) Status of Employees. It is understood and agreed that (i) Buyer’s offers
of
employment as set forth in this Section 12.06 shall not constitute any commitment on the part of
Buyer to a post-Closing employment relationship of any fixed term or duration or upon any terms or
conditions other than those that Buyer may establish pursuant to individual offers of employment;
and (ii) employment offered by Buyer is “at will” and may be terminated by Buyer or by a
Transferred Employee at any time for any reason (subject to any written commitments to the contrary
made by Buyer or an employee and Legal Requirements).
(d) Assigned Benefit Plans. Seller shall keep the Assigned Benefit Plans in full
force and effect after the Closing, if for any reason the same cannot be fully assigned and
transferred to Buyer effective as of the Closing, until such time as the same have been fully
assigned and transferred to Buyer.
12.07 Transfer of Interest in Real Property.
(a) At the Closing Seller shall transfer good and marketable title to the Owned Real Property
to Buyer by general warrant deed (the “Deed”), free of all Encumbrances except Permitted
Encumbrances.
(b) At least ten (10) days prior to Closing Seller shall provide Buyer with a current
survey
of the Owned Real Property (the “Survey”). The surveyor
taking the Survey shall certify that (i) the Survey was made on the ground and the map/plat
provided is based upon the field notes of the surveyor, (ii) the Survey shows the location of all
observable improvements, the dimensions of all buildings and the distance therefrom from the
nearest facing property line, (iii) the Survey shows all recorded easements and right-of-ways
affecting the Owned Real Property, and all recorded easements and observable evidence of easements
on the ground, (iv) all utility services respecting the Owned Real Property either enter it through
adjoining public streets or the Survey shows the point of entry and location of any utilities which
pass through or are located on adjoining private land, (v) except as may be shown on the Survey,
the Improvements do not violate any recorded restrictive covenants, and (vi) all boundary line and
easement encroachments are listed and shown on the Survey.
(c) At least ten (10) days prior to Closing, Seller shall cause Chicago Title Company (the
“Title Company”) to issue and deliver a title insurance commitment (the
“Commitment”) pursuant to which the Title Company shall agree to issue to Buyer a policy of
title insurance (the “Title Policy”) for an owner on the ALTA Standard Form B policy form
(except that the standard exceptions relating to survey matters, rights of parties in possession,
mechanic’s liens, easements or claims of easements not of record, and taxes and assessments not
shown by the public records, shall be eliminated), in the amount of $3.5 million, insuring fee
simple title to the Owned Real Property in Buyer, subject only to the Permitted Exceptions. The
Title Policy shall include such endorsements as Buyer shall reasonably require, all of which shall
be in form and substance satisfactory to Buyer. Seller shall execute, acknowledge and deliver to
the Title Company, on or before the Closing Date, such affidavits and other documents, instruments
and other information as the Title Company shall reasonably require as a condition to issuance of
the Title Policy in the form herein provided.
(d) If the Survey or the Commitment, as initially issued or as re-dated to the Closing Date,
discloses any defects in title or Encumbrances other than the Permitted Exceptions, Seller will
upon Buyer’s written request use commercially reasonable efforts to discharge the same both before
and after the Closing.
(e) To the extent not included in the Closing Working Capital, the following shall be prorated
between Buyer and Seller as of the Closing Date on a daily basis with respect to the Owned Real
Property: utilities, telephone, electricity, water, sewer and gas, and Taxes (including general
real property Taxes and special assessments).
(f) The cost of the Title Commitment and the Title Policy (including all endorsements) shall
be paid by Seller, and the cost of the Survey shall be paid by Buyer (but not to exceed the cost of
the Title Policy). All fees of the Title Company, all recording fees and all Wisconsin transfer
taxes in connection with the transfer of the Owned Real Property shall be at paid 50% by Buyer and
50% by Seller.
12.08 Members’ Restrictive Covenants . The Members (each a “Restricted Party”
and collectively the “Restricted Parties”), for a period (the “Restriction Period”)
beginning on the Closing Date and ending on the fifth (5) anniversary of the
Closing Date (it being understood that, with respect to a breach of this Section 12.08 by a
Restricted Party, the Restriction Period for such Restricted Party shall be extended for the
duration of such breach), acknowledges, covenants and agrees as follows:
(a) Noncompetition. Each Restricted Party, by reason of their/his intimate
involvement in the operations and management of the Seller and the Business, has acquired knowledge
and expertise relating to the Business. No Restricted Party shall, without the prior written
consent of Buyer, directly or indirectly (whether as sole proprietor, member of a partnership,
joint venturer, investor, equity interest holder, lender, employee, associate, consultant, manager,
director, member, service provider, advisor, licensor, licensee, executive or agent of any person,
or otherwise, and whether through an affiliate or relative) engage in the Business or otherwise
engage or invest in, own, manage, operate, control or participate in the ownership, management,
operation or control of, be employed, associated or in any manner connected with or render services
or advice to, any person or business (other than Buyer or pursuant to an Employment Agreement with
Buyer) whose products, services or activities compete, in whole or in part, with Buyer, Buyer’s
Affiliates or the Business in the United States and/or Canada. Nothing in this Section 12.08 shall
prohibit a Restricted Party from investing in the securities of any corporation having securities
listed on a national securities exchange, provided that (a) such investment does not exceed
one percent (1.00%) of any class of securities of any such corporation and (b) such investment (to
the extent the issuer of the subject investment security permitted by proviso (a) engages in a
business which competes with the Business, Buyer or its Affiliates) represents a passive investment
and such Restricted Party does not, in any way, either directly or indirectly, manage or exercise
control of any such issuer, guarantee any of its financial obligations, or otherwise take any part
in its business (other than exercising rights as a security holder under applicable statutory
corporate law).
(b) Covenant Not to Solicit; Non-Interference. Each Restricted Party covenants and
agrees that they/he shall not, whether for their/his own account or for the account of any other
person, directly or indirectly (through an Affiliate or otherwise) (a) at any time solicit, induce,
attempt to solicit, employ or otherwise engage (each, a “Solicitation”), as an employee,
independent representative, independent consultant or otherwise, any person (i) who at the time of
such Solicitation is or (ii) who during the twelve (12) month period prior to such Solicitation was
an employee, consultant and/or independent sales representative of Buyer, its Affiliates or the
Business, or in any manner induce or attempt to induce any such employee or independent sales
representative (or any consultant) to terminate such person’s employment with, consultancy with,
and/or independent representation of Buyer, its Affiliates or the Business as the case may be (it
being understood that a general newspaper advertisement not targeted at any such persons shall not
be a violation hereof), (b) solicit orders from or seek or propose to do business with any customer
of Buyer, its Affiliates or the Business (including those who were customers of the Business within
18 months before the Closing), or (c) at any time otherwise interfere with a business relationship
of Buyer or its Affiliates to the detriment thereof.
(c) Confidentiality. Other than pursuant to an Employment Agreement for the benefit
of Buyer, no Restricted Party shall in any way utilize, disclose, copy, reproduce or retain any
confidential information of the Seller or relating to the Business (including the confidential
information of customers, vendors, suppliers, and other persons having a relationship with the
Business), including all business or trade secrets, proprietary information, price lists, methods,
formulas, know-how, customer lists, manufacturing processes, product costs, product specifications,
marketing plans, research and development and financial information.
(d) Remedy for Certain Breaches. Each Restricted Party acknowledges and agrees that
the restrictions on their/his activities under the provisions of this Section 12.08 are required
for the reasonable protection of Buyer, its Affiliates and the Business in connection with the
execution of and Closing under this Agreement. Each Restricted Party further acknowledges and
agrees that a breach or threatened breach of any of those obligations will result in irreparable
harm to Buyer, its Affiliates and the Business for which there would be no adequate remedy at law,
and therefore, each Restricted Party irrevocably and unconditionally agrees that in addition to any
other remedies which Buyer may have under this Agreement or otherwise, all of which remedies shall
be cumulative, Buyer shall be entitled to apply to any court of competent jurisdiction for ex parte
preliminary and permanent injunctive relief and other equitable relief (without the necessity of
posting bond or other security, or proving irreparable harm or actual damage) restraining each of
the Restricted Parties or any Affiliate of a Restricted Party (or other person associated with such
Restricted Party), as the case may be, from doing or continuing to do or perform any acts
constituting such breach or threatened breach, and each Restricted Party agrees that the existence
of any claim or cause of action by any Restricted Party against Buyer (or its Affiliates or any
other person) whether predicated on this Agreement or not, shall not constitute a defense (or give
rise to a right of offset) to the enforcement by Buyer of the provisions of this Agreement. If the
final judgment of a court of competent jurisdiction declares that any term or provision of this
Section 12.08 is invalid or unenforceable, the Parties hereto agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce the scope, duration,
or area of the term or provision, to delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the time within which
the judgment may be appealed.
(e) Nature of Restrictions. Each Restricted Party has carefully considered the nature
and extent of the restrictions upon them/him and their/his affiliates and the rights and remedies
conferred upon Buyer under this Agreement, and hereby irrevocably acknowledges, agrees and warrants
that the same are reasonable in duration and territory, are designed to eliminate competition which
otherwise would be unfair to Buyer, do not stifle the inherent skill and experience of the
Restricted Party, would not operate as a bar to Restricted Party’s sole means of support, are fully
required to protect the legitimate interests of Buyer, and do not confer a benefit upon Buyer
disproportionate to the detriment to the Restricted Party.
13. Tax Matters. The following provisions shall govern the allocation of
responsibility as between Buyer and Seller for certain Tax matters following the Closing Date:
13.01 Cooperation on Tax Matters. Buyer and Seller shall cooperate fully, as and to
the extent reasonably requested by the other party, in connection with any audit, litigation or
other proceeding or reporting with respect to Taxes. Such cooperation shall include the retention
and (upon any other party’s request) the provision of records and information which are reasonably
relevant to any such audit, litigation or other proceeding or reporting and making employees
available on a mutually convenient basis to provide additional information and explanation of any
material provided hereunder. Seller agrees, and following the Closing, Buyer agrees to cause
Seller (i) to retain all books and records with respect to Tax matters pertinent to Seller relating
to any taxable period beginning before the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by Buyer or Seller, any extensions thereof) of the
respective taxable periods, and to abide by all record retention agreements entered into with any
taxing authority, and (ii) to give any other party reasonable written notice prior to transferring,
destroying or discarding any such books and records and, if the other party so requests, Seller
shall allow Buyer to take possession of such books and records. Buyer and Seller further agree,
upon request, to use their commercially reasonable efforts to obtain any certificate or other
document from any Governmental Authority or any other person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to
the transactions contemplated by this Agreement).
13.02 Certain Taxes and Fees. All transfer, documentary, sales, use, stamp,
registration and other such Taxes, and all conveyance fees, recording charges and other fees and
charges (including any penalties and interest) incurred in connection with consummation of the
transactions contemplated by this Agreement shall be paid by Buyer when due, provided that the cost
for such Taxes, fees and charges shall be shared equally by the parties.
14. Indemnification.
14.01 Indemnification by Seller and Members. Regardless of any pre-closing
investigation, examination or knowledge of Buyer, its Affiliates or their respective agents, and
further notwithstanding the Closing, but subject to the limitations set forth in this Agreement,
Seller and the Members, jointly and severally, agree to indemnify, defend and hold Buyer and its
Affiliates, and their respective directors, officers, employees, shareholders, managers, members,
agents and representatives (collectively, “Buyer Indemnified Parties”) harmless from and
against any damages, liabilities, losses, costs or deficiencies, including, but not limited to,
reasonable attorneys’ fees and other costs and expenses incident to proceedings or investigations,
or the defense or settlement of any claim (collectively, “Buyer’s Damages”) arising out of,
resulting from or relating to: (a) any inaccuracy in or breach of the representations and
warranties of Seller and the Members set forth in Section 10 of this Agreement; (b) any failure of
Seller or the Members to duly perform or observe any covenant or agreement to be
performed or observed by them pursuant to this Agreement or any agreement to be executed by
Seller or the Members pursuant to this Agreement; (c) any pre-Closing tax liabilities of Seller
(except to the extent the same is reflected in the calculation of the Purchase Price); (d) Seller’s
and Member’s obligations for Excluded Liabilities under Section 4.02, (e) Seller’s and Members’
obligations for certain pre-Closing accounts receivable under Section 12.04(b), (f) Seller’s and
Members’ obligations for Unsold Inventory under Section 12.05(b), (g) Seller’s and Members’
obligations for certain COBRA liabilities and obligations under Section 16.15, and (h) Seller’s and
Members’ obligations for certain liabilities and obligations relating to the Setback Requirements
under Section 16.17 .
(b) The indemnification obligations of Seller and the Members under Section 14.01(a) shall
be
limited in aggregate to the Indemnification Escrow Portion of the Escrow Fund, and the
indemnification obligations of Seller and the Members under Sections 14.01(b) through (h) shall be
limited to the Purchase Price. Buyer shall be required to seek reimbursement of all
indemnification obligations of Seller and the Members under Section 14.01(a) solely from the Escrow
Fund. Buyer may, but shall not be required to, seek reimbursement of all indemnification
obligations of Seller and the Members under Section 14.01(b) through (h) from the Escrow Fund.
(c) Notwithstanding anything to the contrary contained in this Agreement, with respect to
Sections 12.08 and 16.16, each Member shall be liable only for his or her failure to duly perform
or observe any covenant or agreement to be performed or observed pursuant to this Agreement that
occurs after the Closing Date and shall not be liable for any such breaches by the other Members.
14.02 Limitations on Seller’s and Members’ Indemnification Obligations.
(a) (i) The representations and warranties set forth in Section 10.01 (Organization),
Section 10.02 (Authorization) and the first sentence of Section 10.07 (Title) shall survive the
Closing indefinitely, (ii) the representations and warranties set forth in Section 10.14 (Taxes)
shall survive the Closing for the applicable statute of limitations, including any periods of
waiver or extension thereof, plus sixty (60) days and (iii) the representations and warranties set
forth in Section 10.12 (Compliance with Environmental and Safety Laws) and Section 10.15 (Employee
Benefit Plans) shall survive the Closing for a period of three (3) years. All other
representations and warranties of Seller and the Members in Section 10 of this Agreement shall
survive the Closing for a period of eighteen (18) months. Seller’s and the Members’ obligation to
indemnify Buyer with respect to a claim for a breach of a representation and warranty shall extend
(with respect to such claim) beyond the applicable survival period only if Buyer asserts such claim
by notice in writing to Seller prior to the expiration of such survival period.
(b) No monies shall be payable by Seller and the Members for their indemnification obligations
under Section 14.01(a) and 12.05(b) hereof unless and
until the aggregate amount of Buyer’s Damages exceed Three Hundred and Fifty Thousand Dollars
($350,000) (the “Basket”). At such time that the aggregate amount of
Buyer’s Damages
exceeds the Basket, Seller and the Members shall be liable to the Buyer Indemnified Parties only
for such amount of Buyer’s Damages which exceed the Basket; provided, however, that the foregoing
limitations set forth in this Section 14.02(b) shall not apply to claims based upon a breach of
Section 10.01 (Organization), Section 10.02 (Authorization) and the first sentence of Section 10.07
(Title), and any amounts claimed by or paid to Buyer pursuant to this Section 14 in connection with
breaches of Section 10.01 (Organization), Section 10.02 (Authorization), the first sentence of
Section 10.07 (Title) shall not be counted toward the basket.
(c) Buyer shall not be entitled to indemnification under this Agreement:
(i) in connection with any claim for indemnification hereunder
with respect to which Buyer has
a claim, right of indemnification or right of set-off against any third party, unless Buyer assigns
such claim, right of indemnification or right of set-off against such third party to Seller;
(ii) with respect to any claim for indemnification hereunder,
unless Buyer has given Seller
written notice of such claim, setting forth in reasonable detail the facts and circumstances
pertaining thereto prior to the expiration of any applicable survival period hereunder;
(iii) to the extent of any net insurance proceeds actually
received by Buyer in connection
with the facts giving rise to such indemnification, as determined pursuant to Section 14.02(d)
below; and
(iv) to the extent Buyer’s Damages are reserved for, or
otherwise taken into account, in the
Closing Statement or Working Capital Adjustment.
(d) The amount of any indemnity provided in this Agreement shall be computed net of any
insurance proceeds actually received by a Buyer Indemnified Party in connection with or as a result
of any claim giving rise to an indemnification claim hereunder, and Buyer’s reasonable costs and
expenses incurred in obtaining such insurance proceeds (including reasonable attorneys’ fees). If
the indemnity amount is paid prior to Buyer Indemnified Party’s actual receipt of insurance
proceeds related thereto, and a Buyer Indemnified Party subsequently receives such insurance
proceeds, then Buyer Indemnified Party shall promptly pay to Seller the amount of insurance
proceeds subsequently received (net of all related costs, expenses and other Buyer’s Damages), but
not more, in the aggregate, than the indemnity amount paid by Seller or the Members. Seller’s and
the Members’ obligation to pay an indemnification claim pursuant to this Agreement in any instance
in which insurance is reasonably available to cover the events and circumstances giving rise to the
indemnification claim is subject to Buyer’s Indemnified Parties first filing a claim under the
applicable insurance policy(ies).
(e) Except as set forth in this Section 14 and as otherwise expressly provided in this
Agreement, or except in the case of fraud, fraudulent
misrepresentation or tortuous conduct, after
the Closing Seller and the Members shall have no obligation or liability to Buyer Indemnified
Parties and Buyer Indemnified Parties shall have no claim or recourse against Seller arising out of
or in connection with this Agreement and/or the transactions contemplated by this Agreement, it
being understood and agreed by the parties that the remedies provided for in this Agreement shall
be the sole and exclusive remedies for any such claim for any such matters. However, nothing
contained in this Subsection shall be construed as relieving Seller or Member’s liability to third
parties under applicable product liability, environmental, antitrust or any other laws, regulations
or court orders/decisions, or of contribution and/or indemnity liability to Buyer and its
Affiliates relative to such third party liability under any such laws, regulations or court
orders/decisions.
(f) Except as expressly provided in this Agreement or in the case of fraud or fraudulent
misrepresentation, Seller shall not have any liability under any provision of this Agreement for,
and Buyer’s Damages shall not include, any consequential (including diminution in value of the
Business or lost profits), exemplary or punitive damages, other than such damages that concern or
arise out of a Third Party Claim.
14.03 Indemnification by Buyer.
(a) Notwithstanding the Closing, but subject to the limitations set forth in this Agreement,
Buyer agrees to indemnify, defend and hold Seller and the Members (collectively, “Seller
Indemnified Parties”) harmless from and against any damages, liabilities, losses, costs or
deficiencies, including, but not limited to, reasonable attorneys’ fees and other costs and
expenses incident to proceedings or investigations, or the defense or settlement of any claim
(collectively, “Seller’s Damages”) arising out of, resulting from or relating to any of the
following: (a) any inaccuracy in or breach of the representations or warranties of Buyer set forth
in this Agreement; (b) any failure to duly perform or observe any term, provision or covenant to be
performed or observed by Buyer pursuant to this Agreement or any agreement to be executed by Buyer
pursuant to the terms of this Agreement; (c) the Assumed Liabilities; and (d) except for
liabilities for which Buyer is expressly entitled to indemnification hereunder or that is related
to any representation and warranty of Seller or the Buyer hereunder, any and all liabilities
relating to the operation of the Business or Buyer’s use of the Purchased Assets after the Closing
Date; provided, however, that Buyer’s indemnification obligations under this Section 14.03
hereunder shall not exceed the Purchase Price (including any amounts paid by Buyer with respect to
the Purchase Price at Closing or otherwise). The Buyer shall not have any liability under any
provision of this Agreement for, and Seller’s Damages shall not include, any consequential
(including diminution in value or lost profits), exemplary or punitive damages (other than such
damages recoverable from or assessed against Seller with respect to or in connection with a Third
Party Claim).
(b) Except as expressly provided in this Agreement or in the case of fraud or fraudulent
misrepresentation, after the Closing, Buyer shall have no
obligation or liability to Seller or the Members and Seller Indemnified Parties shall have no
claim or recourse against Buyer arising out of or in connection with this Agreement
and/or the
transactions contemplated by this Agreement, it being understood and agreed by the parties that the
remedies provided for in this Agreement shall be the sole and exclusive remedies for any such claim
for any such matters.
14.04 Procedure.
(a) Following the discovery of any facts or conditions which could reasonably be expected to
give rise to either Buyer’s Damages or Seller’s Damages, the party seeking indemnification under
this Agreement (the “Indemnified Party”) shall, within thirty (30) days thereafter, provide
written notice to the party from whom indemnification is sought (the “Indemnifying Party”),
specifying the factual basis of the claim in reasonable detail to the extent then known by the
party seeking indemnification; provided that the failure to give such notice in such time period
shall not relieve the Indemnifying Party of its obligations except to the extent it can show
prejudice from such failure.
(b) If any Indemnified Party receives notice of any matter involving a third party which, if
sustained, could give rise to a claim for indemnification hereunder (a “Third Party
Claim”), the Indemnified Party shall within the time specified in Section 14.04(a) above,
provide written notice to the Indemnifying Party of such matter setting forth with reasonable
specificity the facts and circumstances as to which such party has received notice; provided,
however, that the Indemnified Party shall in any event give written notice to the Indemnifying
Party within such period of time as shall be reasonably necessary to allow the Indemnifying Party
to respond to any pleading or other document for which a timely response is required; provided
further, however, that no delay on the part of the Indemnified Party in notifying the Indemnifying
Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to
the extent) the Indemnifying Party is thereby prejudiced.
(c) Within ninety (90) days after the notice described in Section 14.04(b) above is
received
from the Indemnified Party, or such shorter period as is required to avoid prejudice in any claim,
suit or proceeding, the Indemnifying Party shall have the right to assume and thereafter conduct
the defense of the Third Party Claim with counsel of its choice reasonably satisfactory to the
Indemnified Party; provided, however, that the Indemnifying Party must conduct the defense of the
Third Party Claim actively and diligently thereafter in order to preserve its rights in this
regard; provided further, however, that the Indemnifying Party may 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 Indemnified Party (which consent shall not be unreasonably withheld or
delayed) unless the judgment or proposed settlement involves only the payment of money damages,
resolves the claim entirely, does not impose an injunction or other equitable relief upon the
Indemnified Party and for which the Indemnifying Party would be fully indemnified by the
Indemnifying Party hereunder (regardless of any limitations set forth herein). The Indemnified
Party, at its option and expense, shall have
the right to participate in any defense undertaken by the Indemnifying Party with legal
counsel of its own selection.
(d) Unless and until the Indemnifying Party assumes the defense of the Third Party Claim as
provided in Section 14.04(c) above, the Indemnified Party may defend against the Third Party Claim
in any manner it reasonably deems appropriate.
(e) In no event shall the Indemnified Party 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 or delayed).
(f) The Indemnified Party and the Indemnifying Party may agree in writing, at any time, as to
the existence and amount of a Third Party Claim, and, upon the execution of such agreement, such
Third Party Claim shall be deemed established as an indemnified claim hereunder.
(g) The Indemnified Party shall provide all information and assistance reasonably requested by
the Indemnifying Party in order to evaluate any Third Party Claim and affect any defense,
compromise or settlement thereof.
14.05 Risk Allocation. The representations, warranties, covenants and agreements made in
this Agreement, together with the indemnification provisions in this Agreement, are intended among
other things to allocate the economic cost and the risks inherent in the transactions contemplated
by this Agreement among the parties and, accordingly, an Indemnified Party shall be entitled to the
indemnification or other remedies provided in this Agreement by reason of any breach of any such
representation, warranty, covenant or agreement by another party notwithstanding whether any
employee, representative or agent of the party seeking to enforce a remedy knew or had reason to
know of such breach and regardless of any investigation by such party.
15. Dispute Resolution.
15.01 Dispute. As used in this Agreement, “Dispute” shall mean any dispute or
disagreement between Buyer and Seller concerning the interpretation of this Agreement, the validity
of this Agreement, any breach or alleged breach by any party under this Agreement or any other
matter relating in any way to this Agreement; provided, that “Dispute” shall not
include any dispute relating to (a) the Closing Statement, the amount of Working Capital or the
Purchase Price, which is to be resolved in accordance with Section 6 hereof, or (b) the EBITDA
Statement or the calculation of EBITDA, which shall be resolved in accordance with Section 7 hereof
(except that (i) any dispute, disagreement or claim by Seller to the effect that Buyer has not
operated the Business in good faith or used reasonable business judgment during any Period which
the Earnout Amount may be earned, and/or (ii) any dispute over the Opening Balance Sheet, shall be
considered a Dispute hereunder), and (c) any action by Buyer to enforce any of its rights, benefits
or remedies under Section 12.08 and 16.16 of this Agreement.
15.02 Process. If a Dispute arises, the parties to the Dispute shall follow the procedures specified in
Sections 15.03 and 15.04 of this Agreement.
15.03 Negotiations. The parties shall promptly attempt to resolve any Dispute by
negotiations between Buyer and Seller. Either Buyer or Seller may give the other Party written
notice of any Dispute not resolved in the normal course of business (“Dispute Notice”).
Buyer and Seller shall meet at a mutually acceptable time and place within ten (10) calendar days
after delivery of the Dispute Notice, and thereafter as often as they reasonably deem necessary, to
exchange relevant information and to attempt to resolve the Dispute. If the Dispute has not been
resolved by these persons within thirty (30) calendar days of delivery of the Dispute Notice, or if
the parties fail to meet within such ten (10) calendar days, either Buyer or Seller may initiate
arbitration as provided in Section 15.04 of this Agreement. If a negotiator intends to be
accompanied at a meeting by legal counsel, the other negotiator shall be given at least three (3)
Business Days’ notice of such intention and may also be accompanied by legal counsel. The Dispute
Notice and related procedures hereunder shall not preclude a party from making a claim for
indemnification hereunder.
15.04 Arbitration. If the representatives of the parties are unable to resolve the dispute
through negotiations as set forth above or the parties fail to meet as specified above, then the
dispute shall be resolved by final and binding arbitration in accordance with the Comprehensive
Arbitration Rules and Procedures of J.A.M.S./Endispute (“JAMS”), as the same may be
modified by the terms of this Agreement. After the expiration of periods specified in
Section 15.03 above, the demanding party may initiate arbitration by a tripartite panel by making a
written demand for arbitration on the other party and simultaneously filing copies of the demand,
together with the required fees, with the office of JAMS located at 000 Xxxxx Xxxxxxxxx Xxxxx,
Xxxxx 0000, Xxxxxxx, XX 00000, or such other place where such office shall have been relocated
after the date of this Agreement. JAMS will send the parties a list ten arbitrator candidates.
Each arbitrator shall be an attorney or certified public accountant having industry or merger and
acquisition experience. Within seven (7) days, the parties may strike three names and rank the
remaining candidates in order of preference. The three with the highest Composite rankings will be
selected (the three arbitrators being collectively referred to herein as the “Arbitration
Panel”). If this process fails for any reason, including without limitation, the arbitrators
failing to come to an agreement, JAMS shall designate the arbitrators. The Arbitration Panel shall
cause a hearing to be held within sixty (60) calendar days after the date the third arbitrator is
selected and shall render an award within thirty (30) days from the commencement date of the
hearing based on the unanimous or majority decision of the arbitrators.
The place of arbitration shall be in Chicago, Illinois. The Parties expressly covenant and
agree to be bound by the decision of the Arbitration Panel and accept any such decision as the
final determination of the matter in dispute. The
Arbitration Panel shall apply Wisconsin law. Any decision, award or judgment rendered by the
Arbitration Panel may be entered in any court having competent jurisdiction. The expenses and fees
of the Arbitration Panel shall be borne as set forth in the award of the Arbitration Panel. Each
Party shall bear its own legal fees and expenses.
15.05 Action by the Members’ Representative. The Members’ Representative shall take any
and all actions which the Members’ Representative believes
are necessary or appropriate under this
Section 15 for and on behalf of the Members, as fully as if the Members were acting on their own
behalf. Each Member agrees that any party to a Dispute shall be entitled to rely on any decision,
act, consent or instruction of the Members’ Representative on behalf of the Members for purposes of
all matters under this Section 15 and that each such decision, act, consent or instruction shall be
binding on each Member and such Member’s successors, heirs and representatives as fully as if such
person had so decided, acted, consented or instructed.
16. Miscellaneous.
16.01 Further Assurances. Upon request, from time to time, each party agrees that it shall
(or direct its employees to, if applicable) execute and deliver all documents, make all rightful
oaths, testify in any proceedings and do all other acts which may be necessary or desirable in the
reasonable opinion of the other party to consummate the transactions contemplated hereby.
16.02 Governing Law; Jurisdiction. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Missouri (i.e., without giving effect to
any choice or conflict of law provision or rule (whether of the State of Missouri or any other
jurisdiction) that would cause the application of the laws of any jurisdiction other than the State
of Missouri). Each of the Parties hereby (a) irrevocably submits to the exclusive jurisdiction of
any state or federal court sitting in the State of Wisconsin or the Eastern District of the State
of Missouri in any action, suit or proceeding arising out of or relating to this Agreement and
agrees that all claims in respect of the action or proceeding may be heard and determined in any
such court, (b) waives, and agrees not to assert in any such suit, action or proceeding, any claim
that [i] it is not personally subject to the jurisdiction of such court or of any other court to
which proceedings in such court may be appealed, [ii] such suit, action or proceeding is brought in
an inconvenient forum or [iii] the venue of such suit, action or proceeding is improper,
(c) expressly waives any requirement for the posting of a bond by the party bringing such suit,
action or proceeding and (d) consents to process being served in any such suit, action or
proceeding by mailing, certified mail, return receipt requested, a copy thereof to such party at
the address in effect for notices hereunder, and agrees that such services shall constitute good
and sufficient service of process and notice thereof. Nothing in this Section 16.02 shall affect
or limit any right to serve process in any other manner permitted by applicable Legal Requirements.
16.03 Entire Agreement. This Agreement all agreements referenced herein constitute the
entire agreement between the parties with respect to the subject matter hereof and there are no
agreements, representations or warranties which are not set forth herein. All prior negotiations,
agreements and understandings with respect to such subject matter are superseded hereby.
16.04 Public Announcement. Except as required by applicable Legal Requirement, no public
announcement of the transactions contemplated hereby shall be made (by way of press release,
disclosure to the trade or otherwise), except with the mutual agreement of the parties; provided,
however, that either party may make a public
announcement of the proposed transaction, if, in the
written opinion of counsel, such announcement is required to comply with any Legal Requirement and
such party shall, to the extent practicable, consult with the other party with respect to such
announcements and give reasonable prior written notice of its intent to issue such announcement.
16.05 Notices. Any notice to be given hereunder shall be deemed given and sufficient if in
writing and (a) delivered by hand or by reputable overnight courier, (b) delivered by registered or
certified mail, or (c) sent by facsimile transmission, in the case of Seller or the Members, to:
Pensar Electronic Solutions, LLC
0000 Xxxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Facsimile No. 000-000-0000
Attn: Xxxxx X. Steel
0000 Xxxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Facsimile No. 000-000-0000
Attn: Xxxxx X. Steel
with a copy (which shall not constitute notice) to:
Xxxxxxxx Xxxxxxx Van Deuren s.c.
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxxxx, Esq.
Facsimile No. 414-298-8097
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxxxx, Esq.
Facsimile No. 414-298-8097
and, in the case of Buyer, to:
XxXxxxx Acquisition Company, Inc.
0000 Xxxxxxx Xxxx
Xx. Xxxxx, XX 00000-0000
Facsimile No. 000-000-0000
Attn: Xxxxxx Xxxxxxxxxx
0000 Xxxxxxx Xxxx
Xx. Xxxxx, XX 00000-0000
Facsimile No. 000-000-0000
Attn: Xxxxxx Xxxxxxxxxx
with a copy (which shall not constitute notice) to:
Xxxxxxxxx Xxxxxxxx LLP
Xxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
Facsimile No. 000-000-0000
Xxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
Facsimile No. 000-000-0000
or to such other address as Buyer or Seller may designate by notice in writing to the other party.
16.06 Incorporation of Terms. The introductory language and recitals set forth above, and
the Exhibits and Schedules identified herein, are incorporated into this Agreement by reference and
made a part hereof.
16.07 Construction. In this Agreement (except where the context otherwise requires):
(a) any reference to a Recital, Section, Exhibit or Schedule is to the relevant Recital,
Section, Exhibit or Schedule of or to this Agreement and any reference to a sub-section or
paragraph is to the relevant sub-section or paragraph of the Section, Exhibit or Schedule in which
it appears;
(b) summaries of, or references to, actual documents attached to the Disclosure Schedule are
qualified in their entirety by such attached documents;
(c) the inclusion of any matter on any Schedule attached hereto shall not constitute an
admission as to its materiality as it relates to any provision of this Agreement;
(d) the Section headings are included for convenience only and shall not modify or affect the
construction or interpretation of this Agreement;
(e) all references to accounting terms, including “GAAP,” shall mean the then current
common
usage of such terms in the United States;
(f) if this Agreement refers to matters with Seller’s “knowledge,” “known
to Seller,” of which
Seller “knows” or similar references, such references is limited to the knowledge of Xxxxx X.
Xxxxx, Xxxx Xxxxx Xxxxxxxx, Xxxxx X. Xxxxxxxxx, Xxxxxx X. XxXxxx, Xxxx Xxxxxx and/or Xxxxxxx
Xxxxxxx which is either (i) such person’s actual knowledge or (ii) information which such person
would be likely to know given such person’s position, or discover after a reasonable investigation
of the applicable matter.
(g) if this Agreement refers to matters within Buyer’s “knowledge,” such
reference is limited
to the actual knowledge of Xxxxxx Xxxxxxxxxx;
(h) references to “Dollars” or “$” shall mean United States Dollars;
(i) the term “including” shall be deemed to be immediately followed by the term
“but not
limited to”;
(j) the words “hereof,” “herein” and “hereunder” and words of
similar import shall be deemed
to refer to this Agreement as a whole and not any particular provision of this Agreement;
(k) references to a “party” or “parties” shall mean Buyer, Seller or either
of them as the
context requires;
(l) terms defined in the singular shall have a comparable meaning when used in the plural and
vice versa;
(m) the language used in this Agreement shall be deemed to be the language chosen by the
parties hereto to express their mutual intent, and if an ambiguity or question of intent or
interpretation arises, this Agreement will be construed as if drafted jointly by the parties hereto
and no presumption or burden of proof will arise favoring or disfavoring any person by virtue of
the authorship of any of the provisions of this Agreement; and
(n) if a document or matter is listed in any Section of the Disclosure Schedule, such listing
shall suffice, without specific repetition or cross reference, as a response or disclosure in
connection with any Section of this Agreement if the applicability of such disclosure to such other
Section or Sections is reasonably apparent.
16.08 Severability. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or otherwise affecting the validity or enforceability of any of
the terms or provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.
16.09 Amendment. This Agreement may not be amended or modified except by an instrument in
writing signed by or on behalf of each of the parties hereto.
16.10 Assignment; Binding Effect. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by a party without the prior written consent of all of the parties to this Agreement.
Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted assigns.
16.11 Benefit. Notwithstanding anything contained in this Agreement to the contrary,
nothing in this Agreement, express or implied, is intended to confer on any person other than the
parties hereto or their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
16.12 Bulk Transfer Laws. The parties hereby mutually waive compliance with the provisions
of any so called bulk transfer law, but Seller shall be solely liable for any third party claim,
cause of action, obligation or other liability arising out of such waiver of compliance.
16.13 Facsimile Signature; Counterparts. This Agreement may be executed by facsimile,
e-mail or other electronic means, and in counterparts, all of which shall be considered originals
and one and the same agreement, and shall become effective when such counterparts have been signed
by each party and delivered, including by facsimile, to the other party.
16.14 Member’s Representative.
(a) Each of the Members hereby irrevocably appoints the person designated from time to time
under this Section 16.14 as its true and lawful attorney-in-fact, to act as its representative
(each, a “Members’ Representative”) under this Agreement and, as such, to act as such
Member’s agent (with full power of substitution) to take any action on such Member’s behalf with
respect to all matters relating to this Agreement and the transactions contemplated hereby.
Xxxxx X. Steel is hereby appointed and hereby accepts his appointment as the initial Members’
Representative (the “Members’ Representative”). Each Member acknowledges that the
appointment of the Members’ Representative herein is coupled with an interest and may not be
revoked. The initial Members’ Representative accepts his appointment and authorization to act as
attorney-in-fact and agent of the Members.
(b) The initial Members’ Representative will serve as the Members’ Representative
until the
earlier of his resignation or removal (with or without cause) by the Members holding a majority of
the membership interests of Seller as of the date hereof (which majority may include the membership
interests of the then-current Members’ Representative) (a “Majority of the Members”). Upon
the resignation or removal of the initial Members’ Representative, a Majority of the Members will
select a new Members’ Representative who may resign or be removed or replaced (with or without cause)
by a Majority of the Members. Each time a new Members’ Representative is appointed pursuant to
this Agreement, such representative will accept such position in writing.
(c) A Majority of the Members will notify Buyer promptly in writing of each change of the
Members’ Representative. Until Buyer receives the foregoing written notice, Buyer will be entitled
to assume that the person acting as the Members’ Representative is still the duly authorized
Members’ Representative. Buyer will be entitled to rely upon as being binding upon each Member any
agreement, document, certificate or other instrument reasonably believed by Buyer to have been
executed by the Members’ Representative, and Buyer will not be liable to any Member for any action
taken or omitted to be taken in such reliance, or otherwise in reliance upon the instructions or
directions given, or actions taken, by the Members’ Representative that are contemplated or
permitted to be given or taken thereby by the terms of this Agreement.
(d) In furtherance of the appointment of the Members’ Representative herein made, each
Member,
fully and without restriction: (i) agrees to be bound by all notices received and agreements and
determinations made by and documents executed and delivered by the Members’ Representative under
this Agreement, and (ii) authorizes the Members’ Representative to [a] deliver to Buyer all
certificates and documents to be delivered to Buyer by the Members pursuant to this Agreement,
together with any certificates and documents executed by the Members and deposited with the
Members’ Representative for such purpose, [b] dispute or refrain from disputing any claim made by
Buyer under this Agreement, [c] negotiate and compromise any dispute which may arise under this
Agreement, [d] pay any amounts due Buyer under this Agreement, [e] exercise or refrain from
exercising any remedies available to the Members under this Agreement, [f] sign any releases or
other documents with respect to
any such dispute or remedy, [g] waive any condition contained in
this Agreement, [h] give such instructions and do such other things and refrain from doing such
other things as the Members’ Representative, in his sole discretion, deems necessary or appropriate
to carry out the provisions of this Agreement, [i] receive all amounts payable by Buyer to the
Members hereunder on behalf of the Members and, subject to clauses [j], [k] and [l] below, pay to
each Member each Member’s Pro Rata Share of such amounts, [j] pay out of funds coming into the
hands of the Members’ Representative from Buyer, all fees and expenses of the Members incurred in
connection with the transactions contemplated by this Agreement, including, without limitation, the
fees and expenses of counsel, accountants, brokers and other professional advisors retained by or
on behalf of the Members, or any of them, in connection with such transactions, [k] retain such
counsel, accountants and other professional advisors as the Members’ Representative reasonably
deems necessary to assist him in the performance of his duties hereunder and pay the fees, costs
and expenses thereof out of the funds coming into the hands of the Members’ Representative, and
[l] retain out of funds coming into the hands of the Members’ Representative from Buyer such
amounts as the Members’ Representative, in his sole discretion, deems appropriate to be held as
reserves for expected or potential future expenses or liabilities of the Members hereunder and pay
such amounts to such
parties as he deems appropriate. Payments made by the Members’ Representative under
clauses [d], [j] and [k] above shall be considered to be paid by the Members based on their
respective Pro Rata Shares.
(e) The Members, jointly and severally, agree to indemnify the Members’ Representative and
to
hold him harmless against any and all loss, liability or expense incurred without bad faith on the
part of the Members’ Representative and arising out of or in connection with his duties as the
Members’ Representative, including the reasonable costs and expenses incurred by the Members’
Representative in defending against any claim or liability in connection herewith.
16.15 COBRA Liability. Buyer shall permit all COBRA eligible persons of Seller as of the Closing Date to remain
participants under the Assigned Benefit Plans if they so chose after the Closing. Seller shall be
solely responsible and liable for all notices to such persons required under applicable Legal
Requirements, and the consequences for any failure to give such notices. Seller shall reimburse,
indemnify and hold Buyer harmless from any and all claims, liabilities, obligations, costs or
expenses (including without limitation reasonable attorneys fees, court costs and other expenses of
litigation) arising out of or relating to any such COBRA eligible person (including any employee of
Pensar who does not become a Transferred Employee or the dependants of any such employee) remaining
in any Assigned Benefit Plan after the Closing Date, including without limitation the costs or
expenses of Buyer resulting from any such person being refused stop-loss coverage under Buyer’s own
employee benefit plans should Buyer desire to terminate any of the Assigned Benefit Plans and
enroll Seller’s former employees into Buyer’s employee benefit plans, and the Basket shall not be
applicable to such indemnification.
16.16 Confidentiality
(a) All information about the Business or Buyer and its Affiliates, to the extent the same is
not generally known to the public, and regardless of whether it was furnished before or after the
date hereof and the manner in which it was furnished, is referred to generally in this Section as
“Confidential Information.”
(b) Seller and the Members covenant to Buyer and its Affiliates to keep all Confidential
Information confidential and not to disclose or reveal any Confidential Information to any person
or entity. Seller and the Members will be responsible to Buyer for any breach of the terms
hereunder by either themselves or any of their representatives, such as attorneys, accountants,
bankers, brokers, lenders or tax professionals. In the event that Seller or the Members are
requested pursuant to, or required by, applicable law or regulation or by legal process to disclose
any Confidential Information, such party agrees that it will provide Buyer with prompt notice of
such request(s) to enable Buyer to seek a protective order or other appropriate remedy and/or waive
compliance with the terms of this Section. Seller and the Members hereby agree to indemnify,
reimburse and hold harmless Buyer and its Affiliates in respect of any and all claims, losses,
costs, liabilities and expenses, including attorneys’ fees and other expenses of litigation, directly or indirectly resulting from or arising out of the breach or
enforcement of this Section 16.16. Without prejudice to any rights and remedies otherwise
available at law or in equity, Buyer and its Affiliates parties shall be entitled to seek
injunctive and other equitable relief, in additional to legal remedies, if any Party or such
Party’s Representatives materially breach any of the provisions of this Section 16.16, without the
necessity of proving irreparable harm or posting any bond.
(c) If counsel for Seller or the Members reasonably believe it is necessary to retain some or
all of the Confidential Information in order to discharge such counsel’s professional
responsibilities, such counsel shall provide Buyer with a written certification agreeing to
(i) promptly return such Confidential Information once it is no longer required to discharge such
counsel’s professional responsibility, (ii) be bound indefinitely by the confidentiality and other
restrictive covenants of this subsection (c) to the same degree as such counsel’s client until such
time as all Confidential Information is returned (or destroyed if such act is certified by counsel
at the time of destruction and a copy of such certification is delivered to Buyer), and (iii) not
disclose or substantively discuss any Confidential Information with such counsel’s clients.
16.17 Covenant to Correct Set Back Violations and Indemnity . Seller and the Members
hereby acknowledge and agree that the Improvements respecting the Owned Real Property may be in
violation of certain zoning or other land use laws, regulations and/or ordinances that concern
building set back or similar requirements (the “Setback Requirements”) of the State of
Wisconsin and/or its political subdivisions, including the City of Appleton, Wisconsin and such
body’s Zoning Board and Planning Department. Seller and the Members hereby covenant and agree to
use their best efforts (including the payment of money and the institution of litigation, if
necessary or expeditious) to either (a) obtain an unconditional and irrevocable waiver of the
Setback Requirements from the appropriate body politic and/or division thereof, or (b) bring the
Improvements into compliance with the Setback Requirements by whatever appropriate means that do
not interfere with Buyer’s operation of the Business, including by
instituting proceedings to combine the existing Lots 10, 11, 12, and part of 13 of the Northwest Industrial Park Plat No.2
into one lot by the creation of a Certified Survey Map. Buyer shall cooperate with Seller and the
Member’s efforts to achieve the foregoing and where necessary permit Seller and the Members to
utilize Buyer’s name to file applications, initiate proceedings, etc. Notwithstanding anything to
the contrary in this Agreement, including the Basket, Seller and the Members, jointly and
severally, hereby agree to reimburse, indemnify and hold Buyer harmless from any and all claims,
liabilities, obligations, costs or expenses (including without limitation reasonable attorneys
fees, court costs and other expenses of litigation) arising out of or relating to (i) any breach of
Seller’s and Member’s obligations under this Section, and (ii) Seller’s failure to obtain a waiver
of the Setback Requirements and/or failure to bring the Improvements into compliance with the
Setback Requirements, including any costs or expenses incurred by Buyer in connection with any
physical modification or other remedial action respecting the Improvements that Buyer may be
required or advised to take by the City of Appleton, Wisconsin and/or such body’s Zoning Board and
Planning Department in respect of the Setback Requirements.
16.18 Third Party Beneficiaries. Buyer, Seller and Members acknowledge and agree that
there are no third party beneficiaries to this Agreement or any agreement executed among the
parties in connection with this Agreement, and none are intended.
[Signature pages to follow]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the
day, month and year first above written.
| SELLER: | ||||||
| PENSAR ELECTRONIC SOLUTIONS, LLC | ||||||
| BY | /s/XXXXX X. STEEL
|
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| Title: Managing Member | ||||||
| BUYER: | ||||||
| XXXXXXX ACQUISITION COMPANY, INC. | ||||||
| BY: | /s/XXXXXX X. XXXXXXXXXX
|
|||||
| Print Name: Xxxxxx X. Xxxxxxxxxx | ||||||
| Title: | ||||||
MEMBERS:
/s/ Xxxxx X. Steel
|
/s/ Xxxx Xxxxx
|
|||||
/s/ Xxxxxxx X. Xxxxxxx
|
/s/ Xxxxxx X. XxXxxx | |||||
Xxxxxxx X. Xxxxxxx
|
Xxxxxx X. XxXxxx | |||||
/s/ Xxxx Xxxxx Xxxxxxxx
|
/s/ Xxxxxxx X. Xxxxxxx | |||||
Xxxx Xxxxx Xxxxxxxx
|
Xxxxxxx X. Xxxxxxx | |||||
/s/ Xxxxx X. Xxxxxxxxx |
||||||
Xxxxx X. Xxxxxxxxx |
||||||
/s/ Xxxxx X. Mass |
||||||
Xxxxx X. Mass |
||||||
/s/ Xxxx X. Xxxxx |
||||||
Xxxx X. Xxxxx |
