Exhibit 5.1
ASSET PURCHASE AGREEMENT
AMONG
SENSITECH INC.
COX ACQUISITION CORP.
AND
XXX TECHNOLOGIES, INC.
December 12, 2003
ASSET PURCHASE AGREEMENT
This Agreement is entered into as of December 12, 2003, by and among
Sensitech Inc. a Delaware corporation (the "Parent"), Cox Acquisition Corp., a
Delaware corporation and wholly owned subsidiary of the Parent (the "Buyer") and
Xxx Technologies, Inc., a North Carolina corporation (the "Seller"). The Parent,
the Buyer and the Seller are referred to collectively herein as the "Parties."
WITNESSETH
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WHEREAS, the Seller is engaged in the business of developing and
manufacturing equipment for monitoring, recording and managing the temperature
of goods in the supply chain (such business, other than the portion of such
business relating to Vitsab, the "Business"); and
WHEREAS, the Seller desires to sell, transfer and assign to the Buyer, and
the Buyer desires to purchase and acquire from the Seller, substantially all of
the assets of the Seller in return for cash and the assumption of certain
specified liabilities.
AGREEMENT
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NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties, intending to become legally bound,
agree as follows:
ARTICLE I
DEFINITIONS
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For the purposes of this Agreement, the following words and phrases, when
used herein, shall have the meanings specified or referred to below:
"Acquired Assets" means all of the Seller's right, title, and interest in
and to all of the properties, assets, rights, privileges and business of the
Seller, tangible and intangible, associated with the Purchased Products and
related services, as they exist at the Effective Time, including all of
Seller's:
(a) Purchased Receivables and all records related thereto, as well as
all other accounts, notes, trade and receivables, and any Cash received by the
Seller after the Effective Time with respect to or on account of an Acquired
Asset;
(b) Purchased Inventory;
(c) Office and other equipment which is on the Essential Equipment
List;
(d) Customer lists and records; customer contracts; agreements or
arrangements related to distribution, resale, depot, sales and sales agents;
books, ledgers, files, documents, and correspondence; plats; drawings and
specifications; creative materials, advertising and promotional materials;
studies, reports, and other printed or written materials in printed or
electronic format, including (to the extent permitted by applicable law) all
personnel records of Transferred Employees;
(e) Claims, deposits, prepayments (including prepaid expenses),
refunds, causes of action, chooses in action, rights of recovery, rights of set
off, and rights of recoupment (excluding any such item relating to the payment
of Taxes) relating to the Acquired Assets;
(f) Intellectual Property, all goodwill associated therewith, licenses
and sublicenses granted and obtained with respect thereto, and rights
thereunder, remedies against infringements thereof, and rights to protection of
interests therein under the laws of all jurisdictions;
(g) Franchises, approvals, permits, licenses, orders, registrations,
certificates, variances, and similar rights obtained from governments and
governmental agencies;
(h) All guarantees, warranties, indemnities and similar rights in
favor of Seller with respect to the Acquired Assets;
(i) All stock or other beneficial or ownership interests in any
Subsidiary of the Seller, including without limitation any joint venture or
distributorship which is a Subsidiary, but excluding any Subsidiary which the
Buyer elects not to purchase pursuant to this Agreement;
(j) Insurance proceeds and the benefits of any insurance policies
relating to Product Claims described in paragraph (b) of the definition of
Assumed Liabilities;
(k) Leasehold interests in personal property if the lease is expressly
assumed by the Buyer; and
(m) All goodwill associated with the Business in connection with the
Acquired Assets, together with the right to represent to third parties that
Parent and Buyer are the successors to the Business associated with the Acquired
Assets;
provided, however, that the Acquired Assets shall not include any of the
following:
(i) any right, title or interest in and to real property or any leases
thereto;
(ii) any Production Equipment, except Production Equipment which is on
the Essential Equipment List;
(iii) qualifications to conduct business as a foreign corporation,
arrangements with registered agents relating to foreign qualifications,
taxpayer and other identification numbers, seals, corporate minute books,
and other documents relating to the organization, maintenance, and
existence of the Seller;
(iv) any Cash (other than Cash received by the Seller after the
Effective Time with respect to or on account of an Acquired Asset);
(v) any right, title, interest in or to those certain oil field
operation, production or sublease properties now or previously owned by
Seller;
(vi) any right, title or interest in and to an Employee Benefit Plan
and any liabilities associated thereto;
(vii) any right, title or interest in and to any asset associated with
Vitsab(R), except as set forth in the Vitsab Agreement;
(viii) any of the rights of the Seller under this Agreement (or under
any other agreement between the Seller on the one hand and the Parent or
the Buyer on the other hand entered into on or after the date of this
Agreement); or
(ix) any office equipment, machines, tools, fixtures, furniture and
computers, except such items as are on the Essential Equipment List.
"Actual Sum" has the meaning set forth in Section 2.06 below.
"Actual Value" and "Actual Values" has the meaning set forth in Section
2.06 below.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"Aggregate Annual Revenues" means, as to any customer which is a Top 50
Customer, the aggregate worldwide revenues, determined in accordance with GAAP,
to the Seller (including any Subsidiary of the Seller) from such customer during
the 12 months ended October 31, 2003.
"Agreement" means this agreement among the Parties, as the same may be
amended from time to time.
"Alternate Transaction" has the meaning set forth in Section 5.09 below.
"Assumed Liabilities" means:
(a) The Purchased Payables as of the Effective Time; and
(b) All documented obligations under customer contracts relating to
the sale of Purchased Products or under any other contract, the rights to which
are an Acquired Asset, including without limitation any warranty or product
liability claims and documented commitments for fees, rebates, refunds,
concessions, allowances, service commitments and other expenses or payments
associated with the Purchased Products shipped or committed to be shipped prior
to the Effective Time, which to the extent there is Seller's Knowledge shall be
identified in reasonable detail on the Disclosure Schedule, such claims and
commitments to be hereinafter referred to as "Product Claims;" provided,
however, that Assumed Liabilities shall not include any Product Claims of which
there is Seller's Knowledge but which are not disclosed on the Disclosure
Schedule;
provided, further, that the Assumed Liabilities shall not include any of the
following (collectively, the "Excluded Liabilities"):
(i) any liability of the Seller under this Agreement, any Related
Agreements, or the Non-Disclosure Agreement (or under any other agreement
between the Seller on the one hand and the Parent or the Buyer on the other
hand) entered into on or after the date of this Agreement;
(ii) any liability (including without limitation liabilities for
Taxes) shown, or required by GAAP to be shown, as a liability on the Form
10-Q Balance Sheet, other than those listed in (a) and (b) above;
(iii) any liability for principal, interest or penalties on any debt,
equipment or similar financing;
(iv) any liability on any lease of real or personal property, license
agreement or other agreement which is not expressly assumed by the Buyer;
(v) any liability arising under laws or regulations which is not
expressly assumed by the Buyer;
(vi) any liability which arises from any violation or alleged
violation of laws or regulations of any governmental authority, including
without limitation employment laws, Environmental and Safety Requirements,
pension or welfare benefit laws, export laws and business practices
regulations;
(vii) any liability to employees, for wages, accrued vacation or other
benefits or pursuant to any employment, retirement, termination or similar
agreement, whether or not such liability is shown as an accrued expense on
the consolidated balance sheet of the Seller;
(viii) any liability related to Vitsab or the present or former oil
field and lease portions of the business of the Seller;
(ix) any liability to any director, officer, shareholder, or holder of
options, warrants, or other equity interest, of the Seller;
(x) any liabilities related to professional services, including
without limitation those to financial, legal, audit or tax advisers;
(xi) any liabilities to the National Institutes of Health; and
(xii) any other obligation of the Seller not described in (a) or (b)
of this definition.
"Assumption Agreement" means that certain Assignment and Assumption
Agreement, by and between the Seller and the Parent, dated as of the Closing
Date, attached hereto as Exhibit A.
"Xxxx of Sale" means that certain Xxxx of Sale, by and between the Seller,
the Parent and the Buyer, dated as of the Closing Date, attached hereto as
Exhibit B.
"Board" means a party's board of directors.
"Break-Up Fee" has the meaning set forth in Section 5.09 below.
"Business" has the meaning set forth in the second paragraph of this
Agreement.
"Buyer" has the meaning set forth in the preface above.
"Cash" means cash and cash equivalents (including marketable securities and
short term investments) calculated in accordance with GAAP applied on a basis
consistent with the preparation of the Financial Statements.
"Xxxxxx Employment Agreement" means that certain proposed Employment
Agreement by and between the Parent and Xxxxx X. Xxxxxx, dated as of the Closing
Date, attached hereto as Exhibit C.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"Claim Notice" has the meaning set forth in Section 7.02 below.
"Closing" has the meaning set forth in Section 2.04 below.
"Closing Date" has the meaning set forth in Section 2.04 below.
"Closing Date Estimated Sum Schedule" has the meaning set forth in Section
2.06(a).
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
"Cox Consulting Agreement" means that certain Consulting Agreement by and
between the Parent and Xx. Xxxxx X. Xxx, dated as of the Closing Date, attached
hereto as Exhibit D.
"Disclosure Schedule" has the meaning set forth in Article III below.
"Dispute Period" has the meaning set forth in Section 7.02 below.
"Effective Time" means 12:01 a.m.., Eastern Standard Time, on the Closing
Date.
"Employee Benefits" has the meaning set forth in Section 10.16(b) below.
"Environmental Affiliates" of any Person means, with respect to any
particular matter, all other Persons whose liabilities or obligations with
respect to that particular matter have been assumed by, or are otherwise deemed
by law to be those of, such first Person.
"Environmental and Safety Requirements" means all federal, state, local and
foreign statutes, regulations, ordinances and similar provisions having the
force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety and pollution or protection of the
environment, including all such standards of conduct and bases of obligations
relating to the presence, use, production, generation, handling, transport,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any hazardous
materials, substances or wastes, chemical substances or mixtures, pesticides,
pollutants, contaminants, toxic chemicals, petroleum products or by-products,
asbestos, polychlorinated biphenyls (or PCBs), noise or radiation.
"Environmental Claim" has the meaning set forth in Section 7.08.
"Environmental Lien" means any Lien, whether recorded or unrecorded, in
favor of any governmental entity or any department, agency or political
subdivision thereof relating to any liability of the Company or any Seller or
any Environmental Affiliate of the Company or any Seller arising under any
Environmental and Safety Requirement.
"Essential Equipment List" means the list compiled by the Parent and
delivered to the Seller no less than five (5) days prior to the Closing Date, of
those items of production, office and other equipment which are necessary, in
the reasonable judgment of the Parent, to be sold to the Buyer to permit
transfer and full enjoyment by the Parent or the Buyer of the other assets being
purchased pursuant to this Agreement; provided, however, that the Buyer shall
permit the Seller to use without charge, for the duration of the Seller's
performance under the Manufacturing Agreement, any items of equipment on the
Essential Equipment List which are necessary for the Seller to perform its
obligations under the Manufacturing Agreement.
"Estimated Sum" has the meaning set forth in Section 2.06 below.
"Exchange Act" means the Securities Exchange Act of 1934, as amended and
the rules and regulations promulgated thereunder.
"Excluded Liabilities" has the meaning set forth in the definition of
Assumed Liabilities.
"Financial Statements" has the meaning set forth in Section 3.07 below.
"Xxxxxxxx Consulting Agreement" means that certain Consulting Agreement by
and between the Parent and Xxxxx X. Xxxxxxxx, dated as of the Closing Date,
attached hereto as Exhibit E.
"Form 10-K" means that certain Annual Report on Form 10-K, filed by the
Seller with the SEC on July 28, 2003, for the fiscal year ended April 30, 2003.
"Form 10-Q" means that certain Quarterly Report on Form 10-Q, filed by the
Seller with the SEC on September 11, 2003, for the fiscal quarter ended July 31,
2003.
"Form 10-Q Balance Sheet" has the meaning set forth in Section 3.06.
"GAAP" means generally accepted accounting principles as in effect from
time to time.
"Indemnified Party" and "Indemnified Parties" have the meaning set forth in
Section 7.02 below.
"Indemnifying Party" has the meaning set forth in Section 7.02 below.
"Indemnity Amount" has the meaning set forth in Section 7.02 below
"Indemnity Notice" has the meaning set forth in Section 7.02 below.
"Indemnity Period" has the meaning set forth in Section 7.01 below.
"Independent Accountant" has the meaning set forth in Section 2.07 below.
"Insurance Policy" has the meaning set forth in Section 3.19 below.
"Intellectual Property" means, with respect to the Purchased Products,
(a) 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;
(b) All trademarks, service marks, trade dress, logos, trade 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, including without
limitation those certain trademarks associated with the Purchased Products, as
defined below; provided, as to the corporate web site of the Seller, the Seller
will make appropriate modifications as contemplated by Section 8.02 to direct
visitors who are interested in the Purchased Products to the web site of the
Parent;
(c) All copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith;
(d) All mask works and all applications, registrations, and renewals
in connection therewith;
(e) All trade secrets and confidential business information (including
ideas, research and development, know-how, formulas, compositions, manufacturing
and production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals);
(f) All computer software (including data and related documentation);
(g) All other proprietary rights;
(h) All rights of the Seller with respect to the Purchased Products
and arising under non-disclosure, confidentiality, non-competition or similar
agreements with employees, consultants and other third parties, or pursuant to
so-called shop rights or other common law rights, assigning the information
described in subparagraphs (a) through (g) or granting other rights to the
Seller with respect to the Purchased Products; and
(i) All copies and tangible embodiments thereof (in whatever form or
medium).
"Jens" means Xxxx Xxxx and his associated companies and business entities,
including without limitation Xxxx Holding ApS, Sandved International ApS and
Check-It Company.
"Lost Customer" means any Top 50 Customer which has, on or after this
Agreement has been publicly announced and on or prior to the Lost Customer
Measurement Date, indicated in writing or orally to an employee or independent
contractor of the Seller whose duties include sales, marketing or finance, or to
an officer or supervisory level employee of the Seller, that the Top 50 Customer
in question will not transition all or substantially all of its business with
the Seller to the Parent or the Buyer or words of similar effect. However, any
Top 50 Customer which prior to the Closing retracts its written or oral
indication that it will not transition its business to the Parent or the Buyer
will not be considered a Lost Customer.
"Lost Customer Measurement Date" means the date which is the earliest of
(a) six weeks following the mailing of the Proxy Statement to the shareholders
of the Seller, (b) the beginning of the period after the Required Seller
Shareholder Vote during which the Seller grants permission to the Parent to the
effect that the Parent may contact all of the Top 50 Customers, or (c) the
Closing Date.
"Manufacturing Agreement" means that certain Manufacturing Services
Agreement by and between the Seller, the Parent and the Buyer, dated as of the
Closing Date, attached hereto as Exhibit F.
"Material Adverse Effect" means an event, occurrence or change in
circumstances that has had or would reasonably be expected to have a material
adverse effect on the business, financial condition, operations, results of
operations, or future prospects of the Seller, taken as a whole. The loss of
employees of the Seller after October 31, 2003 shall not be deemed to constitute
a Material Adverse Effect. The loss of customers of the Seller prior to November
1, 2003 shall not be deemed to constitute a Material Adverse Effect. The loss of
any or all customers other than Top 50 Customers on or after the date this
Agreement is publicly announced shall not be deemed to constitute a Material
Adverse Effect. The existence of Lost Customers on or after the date this
Agreement is publicly announced and prior to the Lost Customer Measurement Date
shall not constitute a Material Adverse Effect unless the Aggregate Annual
Revenues associated with the Lost Customers equals or exceeds $2,500,000.
"Most Recent Fiscal Year End" has the meaning set forth in Section 3.06
below.
"Net Revenues" means the net revenues from operations relating to the
Acquired Assets, determined in accordance with GAAP, during the immediately
preceding four fiscal quarters of the Seller.
"Non-Disclosure Agreement" means the Confidentiality Agreement, dated
November 14, 2003, between the Parent and the Seller, attached hereto as Exhibit
G.
"Non-Purchased Receivables" has the meaning set forth in the definition of
Purchased Receivables.
"Non-Transferred Employees" has the meaning set forth in Section 10.16.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to price,
quantity and frequency).
"Parent" has the meaning set forth in the preface above.
"Party" or "Parties" has the meaning set forth in the preface above.
"Person" means an individual, partnership, corporation, limited liability
company, association, joint stock company, trust, estate, joint venture,
unincorporated organization, or governmental entity (or any department, agency,
or political subdivision thereof).
"Product Claims" has the meaning set forth in the definition of Assumed
Liabilities.
"Production Equipment" means any equipment, which Seller owns or has a
right, title or interest in, which is used to manufacture or process the
Purchased Products.
"Proxy Statement" has the meaning set forth in Section 5.03.
"Purchased Inventory" means inventories of finished goods, work in process
and raw materials, related to the Purchased Products.
"Purchased Payables" means, with the exception of Excluded Liabilities, the
accounts payable and accrued expenses related to the Purchased Products, as
shown in accordance with GAAP on the consolidated balance sheet of the Seller.
"Purchased Products" means the strip chart and datalogger temperature
recording and monitoring products of the Seller, whether or not used for
in-transit purposes and whether or not used in connection with food, including
without limitation the "Chart Reader," "Cox," "Cox1," "Cox3," "CoxBlue," "Cox
Digital Pulp Probe," "Cox MiniTemp FS," "Cox TempTester IR," "Cobra,"
"DataSource," "DS Pro," "IR-Temp," "IR Laser," "SmartProbe," "TempList,"
"ThermalPro," "Tracer," "Tracer Software," "RealTimeAlert" and "WP Probe"
products; provided, however, that Purchased Products shall not include the
Vitsab(R) product line.
"Purchased Receivables" means accounts receivable related to the Purchased
Products, other than those accounts receivable, all or any portion of which from
the same customer is in excess of 75 days past due (or has not been paid within
105 days from shipment date, if less than 75 days past due), or (ii) those
accounts receivable designated by the Buyer and reasonably agreed to by the
Seller, from a list of accounts receivable that are, in the opinion of the Buyer
following reasonable procedures and good faith written advice from Ernst & Young
LLP as of a date no earlier than October 31, 2003, a copy of which written
advice is shared with the Seller, otherwise doubtful of being collected (the
accounts receivable described in and (ii), the "Non-Purchased Receivables").
"Related Agreement" means any agreement, certificate or instrument executed
and delivered by a Party at the Closing or otherwise in connection with the
consummation of the transaction contemplated by this Agreement.
"Xxxx Consulting Agreement" means that certain Consulting Agreement by and
between the Parent and Xxxx X. Xxxx, dated as of the Closing Date, attached
hereto as Exhibit H.
"Release" shall have the meaning set forth in CERCLA.
"Required Seller Shareholder Vote" has the meaning set forth in Section
5.03 below.
"Resolution Period" has the meaning set forth in Section 7.02 below.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder. "Security Interest" means any
mortgage, pledge, lien, lis pendens, charge, attachment, easement, covenant,
restriction or other encumbrance of any nature.
"Seller" has the meaning set forth in the preface above.
"Seller's Knowledge" means the actual knowledge that one or more of Xx.
Xxxxx X. Xxx, Xxxx X. Xxxx, Xxxxx X. Xxxxxxxx, Xxxx X. Xxxxxxx or Xxxxx X.
Xxxxxx has.
"Seller Shareholder Meeting" has the meaning set forth in Section 5.03
below.
"Subsidiary" means any corporation, association, partnership, trust, joint
venture, limited liability company or similar entity with respect to which a
specified Person (or a Subsidiary thereof) owns or has the right to acquire any
of the capital stock or beneficial or ownership interests or has the power to
vote or direct the voting of sufficient securities to elect a majority of the
directors or managers.
"Target Sum" has the meaning set forth in Section 2.06 below.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code ss.59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Technology Investors" means Technology Investors, LLC, a North Carolina
limited liability company.
"Third Party Claim" has the meaning set forth in Section 7.02 below.
"Top 50 Customer" means each person or entity, including without limitation
distributors and other resellers, which purchased Purchased Products or related
services from the Seller (including any Subsidiary of the Seller) during the 12
months ended October 31, 2003 and as to which the aggregate of such purchases by
the person or entity in question ranks no less than 50th on a list of the
largest aggregate purchases by all such persons or entities making such
purchases during the period in question. For these purposes, the parties agree
that Wal-Mart is not a Top 50 Customer.
"Transferred Employees" has the meaning set forth in Section 10.16.
"Transferred Employee Offer" means the form of Employment Offer, attached
as Exhibit I, to be offered by Parent to each of the Transferred Employees as of
the Effective Date.
"Vitsab" means any and all of the Vitsab(R) products and operations owned
by the Seller and following the Effective Time, any and all substantially
similar products, improvements, new versions and derivatives thereof, as well as
any processes, products, programs, works of authorship, or techniques, whether
or not patentable or registrable under copyright or trademark statutes, and any
other intellectual property rights related to any of the foregoing.
"Vitsab Agreement" means that certain Agreement by and between the Seller,
the Parent and the Buyer, dated as of the Closing, attached hereto as Exhibit J.
ARTICLE II
PURCHASE AND SALE
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2.01 Purchase and Sale of Assets. On and subject to the terms and
conditions of this Agreement, at the Closing, but effective as of the Effective
Time, the Buyer agrees to purchase from the Seller, and the Seller agrees to
sell, transfer, convey, assign and deliver to the Buyer, all of the Acquired
Assets, free and clear of all Security Interests, for the consideration
specified below in this Article II.
2.02 Assumption of Liabilities. On and subject to the terms and conditions
of this Agreement, at the Closing, but effective as of the Effective Time, the
Buyer agrees to assume and become responsible for payment and/or performance of
all of the Assumed Liabilities. Neither the Buyer nor the Parent will assume or
have any responsibility whatsoever with respect to any other obligation or
liability of the Seller not explicitly included within the definition of Assumed
Liabilities.
2.03 The Purchase Price. The purchase price ("Purchase Price") shall be an
aggregate of $10,532,000, subject to adjustment as provided in this Section
2.03, Section 2.06, the last sentence of Section 6.01 and Section 9.01(d) below,
and shall be paid in the following manner:
(a) $9,990,000 in cash (subject to adjustment per Section 2.06(a)),
payable to Seller on the Closing Date, by wire transfer or delivery of other
immediately available funds;
(b) $250,000 in cash, payable to the Seller on the date which is six
(6) months following the Closing Date, subject to the provisions of Article VII;
(c) an additional amount equal to 50% of the original cost to the
Seller of the items of equipment on the Essential Equipment List, payable in
cash at the closing; and
(d) the assumption of the Purchased Payables, assumed to be $292,000.
The Purchase Price shall be reduced by the dollar amount, if any, by which
the Aggregate Annual Revenues attributable to Lost Customers exceed $1,700,000.
For purposes of the Closing, the Parent will rely on the certificate of the
Seller referred to in Section 6.01(f), but the Aggregate Annual Revenues
attributable to Lost Customers will be subject to review and determination in
accordance with the procedures set forth in Sections 2.06(b), (c) and (d).
2.04 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at 10:00 a.m. Eastern Standard Time,
at the offices of Day, Xxxxx & Xxxxxx LLP in Boston, Massachusetts, on the day
which is the second business day following the Required Seller Shareholder Vote
or such other date as the Parties may mutually determine (the "Closing Date").
2.05 Allocation. The Purchase Price shall be allocated among the Acquired
Assets in accordance with their relative fair market values and pursuant to the
Code, in each case by the mutual agreement in good faith by the Buyer, the
Parent and the Seller, such agreement to be reached within 30 days following
final determination of the Actual Values pursuant to Section 2.06. The parties
shall report consistently with such allocation on all income tax returns and
other statements filed with any governmental body, agency, official or
authority. The Buyer, the Parent and the Seller shall furnish each other with a
copy of the information it proposes to submit to the Internal Revenue Services
at least 30 days prior to the due date for filing such material, and the parties
shall furnish information consistent therewith to the Internal Revenue Service
in connection with the filing of their federal income tax returns for the
respective fiscal year ending on or after the Closing Date.
2.06 Adjustments of Purchase Price. The Purchase Price specified in Section
2.03 above assumes that the sum of Purchased Receivables and (ii) Purchased
Inventory, less the sum of (iii) Purchased Payables and (iv) Product Claims in
excess of $50,000, equals $1,754,000 (the "Target Sum"). Any payment made by
either party, pursuant to this Section 2.06 shall be made in immediately
available funds.
(a) Three business days prior to the Closing Date, the Seller, the
Parent and the Buyer shall, in good faith and in accordance with GAAP, estimate
the Purchased Receivables, the Purchased Inventory, the Purchased Payables and
the Product Claims in excess of $50,000 as of the Effective Time, and (ii)
prepare a schedule reflecting the same in reasonable detail (the "Closing Date
Estimated Sum Schedule") . In the event that the sum of such estimated Purchased
Receivables and Purchased Inventory less the sum of such estimated Purchased
Payables and such Product Claims in excess of $50,000 (the "Estimated Sum"), as
shown on the Closing Date Estimated Sum Schedule, is greater or less than the
Target Sum, then the portion of the Purchase Price deliverable at the Closing
pursuant to Section 2.03(a) shall be increased or reduced dollar-for-dollar to
the extent which the Estimated Sum is greater than or less than the Target Sum.
For purposes of making such estimate of Purchased Inventory, during such three
business day period, the Buyer shall be permitted to take a physical count of
the Purchased Inventory, which process shall be observed by representatives of
the Buyer's accountants and one or more representatives of the Seller. The
results of such count shall be made available to the Seller.
(b) Immediately following the Closing, the Buyer shall complete, if
required, the process of taking a physical count of the Purchased Inventory, as
contemplated by Section 2.06(a), which completion shall be observed by
representatives of the Buyer's accountants and one or more representatives of
the Seller. The results of such completed inventory count shall be made
available to the Seller. Within 60 days after the Closing Date (or earlier if
reasonably possible), the Parent and the Buyer shall, in good faith and in
accordance with GAAP, calculate the actual Purchased Receivables, Purchased
Inventory, Purchased Payables and Product Claims in excess of $50,000 as of the
Effective Time (each, an "Actual Value," together, the "Actual Values") and
shall submit a schedule showing in reasonable detail the Actual Values and the
Actual Sum (as defined below) to Seller for approval. If the parties cannot
agree on such Actual Values or Actual Sum within ten (10) business days of their
submission to Seller, the disagreement shall be resolved pursuant to Section
2.06(d) below. (The sum of the actual Purchased Receivables and the actual
Purchased Inventory less the sum of the actual Purchased Payables and the
Product Claims in excess of $50,000 is referred to as the "Actual Sum").
Notwithstanding the foregoing requirements that Purchased Inventory be valued in
accordance with GAAP, it is agreed that certain units of returned Purchased
Products which are included in the Purchased Inventory as of the Effective Time
may be valued at their reusable xxxx of materials costs (but not in excess of
$2.70 per unit); provided, that the Seller agrees to use its reasonable efforts
to eliminate such units of returned Purchased Products from Purchased Inventory
prior to the Effective Time; and provided, further, that the aggregate increment
to the value of Purchased Inventory caused by this valuation methodology will
not exceed $25,000 as of the Effective Time. (c) Thirty (30) days after
submission of the Actual Values and the Actual Sum (or, if there is a
disagreement with respect to any Actual Value or the Actual Sum, ten (10)
business days after such disagreement is finally resolved pursuant to Section
2.06(d) below), the Seller shall pay to Buyer the entire amount, if any, by
which the Estimated Sum used at Closing exceeds the Actual Sum, or (ii) the
Buyer or the Parent shall pay to Seller the entire amount, if any, by which the
Estimated Sum used at Closing is less than the Actual Sum. (d) Disagreements
with respect to any Actual Value or the Actual Sum not resolved within ten (10)
business days of the submission of the same to Seller shall be submitted to a
mutually acceptable accountant or accounting firm who or which has not performed
services for the Buyer, the Parent or the Seller within the five years preceding
the Closing Date (the "Independent Accountant") for resolution whose
determination shall be conclusive and binding on the parties hereto. The Buyer,
the Parent and the Seller shall use their best efforts to cause Independent
Accountant to render its decision within thirty (30) days after the parties'
submission of the dispute. In the event that Independent Accountant is unwilling
or unable to serve in such capacity, the parties will select a mutually
acceptable replacement. The fees and disbursements of Independent Accountant or
any replacement thereto for the services set forth in this Section 2.07(e) shall
be shared equally between the parties hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
--------------------------------------------
The Seller represents and warrants to the Parent and the Buyer that the
statements contained in this Article III are correct and complete as of the date
of this Agreement, except as set forth in the disclosure schedule accompanying
this Agreement and initialed by the Parties (the "Disclosure Schedule"), and
that such statements will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article III), except as set forth on the
Disclosure Schedule as the same may be amended on or prior to the Closing Date.
All information disclosed in the Disclosure Schedule regardless of where it
appears shall be deemed disclosed for purposes of all representations and
warranties in this Article III and for other purposes of this Agreement.
3.01 Organization of the Seller. The Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its formation.
3.02 Authorization of Transaction. The Seller has full right, power,
authority and capacity to execute and deliver this Agreement and the Related
Agreements to which it is or may become party and to perform its obligations
hereunder and thereunder. This Agreement and the Related Agreements to which the
Seller is or may become a party constitute (or will constitute when executed or
delivered) the valid and legally binding obligations of the Seller, enforceable
in accordance with their respective terms.
3.03 Noncontravention. Neither the execution and the delivery of this
Agreement and the Related Agreements, nor the consummation of the transactions
contemplated hereby and thereby (including the assignments and assumptions
referred to in Article II above), will (a) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which the Seller
is subject or any provision of the Seller's Articles of Incorporation, charter
or bylaws of the Seller, or (b) conflict with, result in a breach of, constitute
a default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, license, instrument, or other arrangement to which Seller
is a party or by which it is bound relating to the Acquired Assets or the
Assumed Liabilities, or to which any of the Acquired Assets is subject, other
than as cured or paid. The Seller does not need to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
3.04 Title to Assets. Except as set forth in Section 3.04 of the Disclosure
Schedule, the Seller has good and marketable title to or a valid leasehold
interest in the Acquired Assets.
3.05 Subsidiaries. Except as set forth in Section 3.05 of the Disclosure
Schedule, the Seller has no Subsidiaries and does not own, directly or
indirectly, any of the capital stock or beneficial or ownership interests of any
corporation, association, partnership, trust, joint venture, limited liability
company or similar entity. To the extent applicable, the representations and
warranties in this Article III, other than this Section 3.05, shall also be
deemed to have been made on behalf of the Subsidiaries, substituting the term
"Subsidiaries" for the term "the Seller."
3.06 Financial Statements. Seller has previously delivered to the Parent
and Buyer true and complete copies of the following financial statements
(collectively the "Financial Statements"): the unaudited balance sheet and
statements of income, retained earnings, and cash flows of the Seller, as filed
by Seller in the Form 10-Q; and (ii) audited balance sheets and statements of
income, retained earnings, changes in equity, and cash flows of the Seller as
filed by Seller in the Form 10-K (the last date of the fiscal year covered by
such Form 10-K, the "Most Recent Fiscal Year End"). The Financial Statements
(including the notes thereto) have been prepared in accordance with GAAP applied
on a consistent basis throughout the periods covered thereby except as disclosed
in the notes to such financial statements, present fairly the financial
condition of the Seller as of such dates and the results of operations of the
Seller for such periods, subject, in the case of the Form 10-Q, to year end
adjustments. The aggregate revenues of the Seller for the six month period
ending October 31, 2003, computed in accordance with GAAP, were no less than
$4,900,000. The unaudited balance sheet contained in the Form 10-Q is herein
referred to as the "Form 10-Q Balance Sheet."
3.07 Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, there has not been any change in the business, financial
condition, operations, results of operations, or future prospects of the Seller
that constitutes a Material Adverse Effect. Without limiting the generality of
the foregoing, since that date and to the extent that any of the following
individually or when aggregated with other such items of the same or any other
category below constitutes a Material Adverse Effect:
(a) No party (including the Seller) has accelerated, terminated,
modified, or canceled any agreement, contract or license (or series of related
agreements, contracts and licenses) relating to the Acquired Assets or the
Assumed Liabilities and involving more than $25,000 to which the Seller is a
party or by which it is bound;
(b) The Seller has not canceled, compromised, waived, or released any
material right or claim (or series of related material rights and claims)
relating to the Acquired Assets or the Assumed Liabilities;
(c) The Seller has not experienced any material damage, destruction,
or loss (whether or not covered by insurance) to the Acquired Assets;
(d) The Seller has not issued or agreed to issue any substantial
customer refunds, allowances or rebates relating to the Purchased Products;
(e) The Seller has not sold, leased, licensed, furnished, transferred
or assigned any Purchased Products or guaranteed any distribution, sales agency
or any reseller rights, or created any Security Interest or other encumbrance,
as to the Purchased Products, except for sales in the Ordinary Course of
Business; and
(f) The Seller has not entered into any agreement committing the
Seller to do any of the foregoing.
3.08 Undisclosed Liabilities. To the Seller's Knowledge, the Seller does
not have any liability included within the Assumed Liabilities (and there is no
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against it giving rise to any
such liability), except for liabilities expressly set forth in the Form 10-Q
Balance Sheet , and (ii) liabilities which have arisen after the Most Recent
Fiscal Year End in the Ordinary Course of Business (none of which results from,
arises out of, relates to, is in the nature of, or was caused by any material
breach of contract, breach of warranty, tort, infringement, or violation of
law). To the Seller's Knowledge, there are no Purchased Payables or Product
Claims other than those identified in reasonable detail on the Disclosure
Schedule.
3.09 Legal Compliance. The Seller has complied in all material respects
with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (and all agencies thereof). The
Seller has not received any notice from any such governmental authority of any
such violation or alleged violation, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against it alleging any failure so to comply.
3.10 Tax Matters. The Seller has filed in accordance with applicable law
all Tax Returns that it was required to file. All such Tax Returns were correct
and complete in all material respects. All Taxes owed by the Seller (whether or
not shown on any Tax Return) have been paid or accrued and disclosed to the
Parent if material. The Seller is not currently the beneficiary of any extension
of time within which to file any Tax Return. No claim has been made in the five
year period ending on the Closing Date by an authority in a jurisdiction where
the Seller does not file Tax Returns that it is or may be subject to taxation by
that jurisdiction. There are no Security Interests on any of the assets of the
Seller that arose in connection with any failure (or alleged failure) to pay any
Tax.
3.11 Intellectual Property.
(a) To the Seller's Knowledge, the Seller has the sole and exclusive
right to use the names "Chart Reader," "CHR Recorder," "Cox," "Cox1," "Cox3,"
"CoxBlue," "Cox Digital Pulp Probe," "Cox MiniTemp FS," "Cox TempTester IR,"
"Cobra," "DataSource," "Xxxxxxx Recorder," "DFR Logger," "DS Pro," "IR-Temp,"
"IR Laser," "PC Transit Logger," "PC Transit Software," "SmartProbe,"
"TempList," "ThermalPro," "Tracer," "Tracer Software," "RealTimeAlert,"
"Teletemp Recorder" and "WP Probe" as used in the Business, to the extent that
any party may, under applicable law, obtain exclusive rights to any such names.
(b) To the Seller's Knowledge, the Seller owns or has the right to use
pursuant to license, sublicense, agreement, or permission all Intellectual
Property necessary for the operation of its businesses as presently conducted.
To the Seller's Knowledge, each item of Intellectual Property owned or used by
the Seller immediately prior to the Closing hereunder will be owned or available
for use by the Buyer on identical terms and conditions immediately subsequent to
the Closing hereunder.
(c) To the Seller's Knowledge, the Seller has not interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of third parties, and none of the Seller's
directors and officers (and employees with responsibility for Intellectual
Property matters) have ever received any charge, complaint, claim, demand, or
notice alleging any such interference, infringement, misappropriation, or
violation (including any claim that the Seller must license or refrain from
using any Intellectual Property rights of any third party). To the Seller's
Knowledge, no third party has interfered with, infringed upon, misappropriated,
or otherwise come into conflict with any Intellectual Property rights of the
Seller.
(d) Section 3.11(d) of the Disclosure Schedule identifies each patent,
trademark registration or copyright registration which has been issued to the
Seller with respect to any of its Intellectual Property, identifies each pending
patent application or application for trademark registration which the Seller
has made with respect to any of its Intellectual Property, identifies each
license, agreement, or other permission which the Seller has granted to any
third party with respect to any of its Intellectual Property (together with any
exceptions) and identifies each website owned by the Seller or used in
connection with the Business. The Seller has delivered to the Buyer correct and
complete copies of all such patents, registrations, applications, licenses,
agreements, and permissions (as amended to date). Section 3.11(d) of the
Disclosure Schedule also identifies each trade name or unregistered trademark
used by the Seller in connection with the Business. With respect to each item of
Intellectual Property required to be identified in Section 3.11(d) of the
Disclosure Schedule:
(i) To the Seller's Knowledge, the Seller possesses all right, title,
and interest in and to the item, free and clear of any Security Interest,
license, or other restriction;
(ii) To the Seller's Knowledge, the item is not subject to any
outstanding injunction, judgment, order, decree, ruling, or charge;
(iii) The Seller has not been served with notice of any action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand is
pending, and, to the Seller's Knowledge, no such action, suit, proceeding,
hearing, charge, complaint, claim or demand is threatened, which challenges
the legality, validity, enforceability, use, or ownership of the item; and
(iv) The Seller has not agreed to indemnify any Person for or against
any interference, infringement, misappropriation, or other conflict with
respect to the item.
(e) Section 3.11(e) of the Disclosure Schedule identifies each item of
Intellectual Property that the Seller uses in relation to the Acquired Assets,
pursuant to license, sublicense, agreement, or permission. The Seller has
delivered to the Parent and the Buyer correct and complete copies of all such
licenses, sublicenses, agreements, and permissions (as amended to date). With
respect to each item of Intellectual Property required to be identified in
Section 3.11 (e) of the Disclosure Schedule, to the Seller's Knowledge;
(i) The license, sublicense, agreement, or permission covering the
item is legal, valid, binding, enforceable, and in full force and effect;
(ii) The license, sublicense, agreement, or permission will continue
to be legal, valid, binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby (including the assignments and assumptions referred to in Article II
above);
(iii) No party to the license, sublicense, agreement, or permission is
in breach or default, and no event has occurred which with notice or lapse
of time would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(iv) No party to the license, sublicense, agreement, or permission has
repudiated any provision thereof;
(v) With respect to each sublicense, the representations and
warranties set forth in subsections through (iv) above are true and correct
with respect to the underlying license;
(vi) The underlying item of Intellectual Property is not subject to
any outstanding injunction, judgment, order, decree, ruling, or charge;
(vii) No action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or is threatened which challenges
the legality, validity, or enforceability of the underlying item of
Intellectual Property; and
(viii) The Seller has not granted any sublicense or similar right with
respect to the license, sublicense, agreement, or permission.
(f) None of the Seller, the Buyer or the Parent will interfere with,
infringe upon, misappropriate, or otherwise come into conflict with, any
Intellectual Property rights of third parties as a result of the continued use,
license or sales of the Purchased Products in a manner consistent with the
operation of the Business prior to the Closing Date.
3.12 Inventory. The Purchased Inventory consists of raw materials and
supplies, manufactured and purchased parts, goods in process, and finished
goods, all of which are carried in the Financial Statements, in accordance with
GAAP (except as provided in the last sentence of Section 2.06(b)). The Seller
holds no inventory on a consignment basis.
3.13 Contracts. Section 3.13 of the Disclosure Schedule lists all written
contracts, agreements and other written arrangements, in connection with the
Purchased Products, to which the Seller is a party. The Seller has no material
oral contracts, or material written contracts which have not been signed by all
parties thereto, of the type listed in this Section 3.13. The Seller has
delivered to the Parent and the Buyer a correct and complete copy of each
written agreement listed in Section 3.13 of the Disclosure Schedule (as amended
to date). With respect to each such agreement, to the Seller's Knowledge: the
agreement is legal, valid, binding, enforceable, and in full force and effect;
(ii) the agreement will continue to be legal, valid, binding, enforceable, and
in full force and effect on identical terms following the consummation of the
transactions contemplated hereby (including the assignments and assumptions
referred to in Article II above); (iii) neither the Seller nor any other party
is in breach or default, and no event has occurred which with notice or lapse of
time would constitute a breach or default, or permit termination, modification,
or acceleration, under the agreement; (iv) no party has repudiated any provision
of the agreement; (v) no such agreement requires the Seller to supply or
purchase goods, services or materials for periods longer than one year or in any
guaranteed minimum amount; (vi) no such agreement contains any material penalty
or restocking or similar charges to the Seller in the event of its termination;
(vii) no such agreement may not be cancelled by the Seller on less than 90 days
notice; and (viii) no such agreement grants exclusive territorial distribution
or similar marketing rights to a third party for periods greater than one year.
Section 3.13 of the Disclosure Schedules lists all of the material agreements
with respect to which consent is a prerequisite to assignment.
3.14 Accounts Receivable. All Purchased Receivables are reflected properly
on its books and records, in accordance with GAAP, and are valid receivables
subject to no setoffs or counterclaims except normal and customary trade
discounts and any reserves for doubtful accounts recorded in the Financial
Statements.
3.15 Litigation. Section 3.15 of the Disclosure Schedule sets forth each
instance in which the Seller, in connection with the Acquired Assets or Assumed
Liabilities, (a) is subject to any outstanding injunction, judgment, order,
decree, ruling, or charge, or (b) is a party or, to the Seller's Knowledge, is
threatened to be made a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator in any matters relating to the Acquired Assets or the Assumed
Liabilities.
3.16 Product Warranty. To the Seller's Knowledge, each Purchased Product
manufactured, sold, or delivered by the Seller has been in conformity in all
material respects with all applicable contractual commitments and all express
and implied warranties; to the Seller's Knowledge, the Seller has no material
liability or liabilities (determined individually or on an aggregate basis), and
there is no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against it giving rise to any
material liability or liabilities, determined as aforesaid, for replacement or
repair thereof or other damages in connection therewith; and no Purchased
Product manufactured, sold, or delivered by the Seller is subject to any
guaranty, warranty, or other indemnity beyond the applicable standard terms and
conditions of sale or lease. Section 3.16 of the Disclosure Schedule includes
copies of the standard terms and conditions of sale for the Seller (containing
applicable guaranty, warranty, and indemnity provisions) relating to the
Purchased Products.
3.17 Product Liability. To the Seller's Knowledge, the Seller has no
liability (and there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any liability) arising out of any injury to
individuals or property as a result of the ownership, possession, or use of any
Purchased Product manufactured, sold, or delivered by the Seller.
3.18 Customers, Resellers and Suppliers. In connection with the Purchased
Products, Schedule 3.18 hereto sets forth a correct and complete list of the
revenues from (but not the names of) each of the Top 50 Customers for the 12
months ended October 31, 2003. There are no outstanding disputes with any
customers, distributors, resellers, depots, sales agents or suppliers of the
Seller's businesses, other than disputes which would not have, individually or
in the aggregate, a Material Adverse Effect. To the Seller's Knowledge, (a)
since the Most Recent Fiscal Year End, no supplier of the Seller's business has
refused to do business with the Seller or has stated its intention not to
continue to do business or to change its relationship or arrangements with
respect to the Seller's business, whether as a result of the transactions
contemplated hereby or otherwise, other than such refusals, statements of
intention, or changes which would not have, individually or in the aggregate, a
Material Adverse Effect; and (b) from November 1, 2003 to the date of this
Agreement, no customer of the Seller has refused to do business with the Seller
or has stated its intention not to continue to do business or to change its
relationship or arrangements with respect to the Seller's business, other than
such refusals, statements of intention, or changes which would not have,
individually or in the aggregate, a Material Adverse Effect. Since the Most
Recent Fiscal Year End, no substantial customer refunds or rebates have been
agreed to by Seller. True and correct copies of all agreements with customers,
distributors, resellers, depots and sales agents have been delivered by the
Seller to Day, Xxxxx & Xxxxxx LLP, attorneys for the Buyer. The certificate of
the Seller referred to in Section 6.01(f) will, when delivered to the Parent and
the Buyer at the Closing, accurately and completely disclose the Aggregate
Annual Revenues attributable to Lost Customers.
3.19 Insurance. The Seller has provided Buyer with copies of each insurance
policy (including policies providing property, casualty, liability) covering the
Acquired Assets, to which the Seller has been a party, a named insured, or
otherwise the beneficiary of coverage at any time within the past 18 months
(each, an "Insurance Policy"). With respect to each such Insurance Policy: the
Insurance Policy is or was legal, valid, binding, enforceable, and in full force
and effect for the periods indicated in such policies; (ii) with respect to each
Insurance Policy in effect on the Closing Date, will continue to be legal,
valid, binding, enforceable, and in full force and effect on identical terms for
at least seven (7) days (or such shorter period as the Buyer requires to procure
replacement coverages) following the Closing Date; provided, that the Seller
will continue such insurance coverage with respect to loss of production
equipment necessary to perform under the Manufacturing Agreement for the term of
the Manufacturing Agreement; (iii) the Seller is not in breach or default
(including with respect to the payment of premiums or the giving of notices),
and no event has occurred which, with notice or the lapse of time, would
constitute such a breach or default, or permit termination, modification, or
acceleration, under the policy; and (iv) no party to the Insurance Policy has
repudiated any provision thereof.
3.20 Environmental Matters. Except as set forth on the Disclosure Schedule:
(a) The Seller has complied with and is currently in compliance with
all Environmental and Safety Requirements, and has not received any oral or
written notice, report or information regarding any liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise) or any corrective,
investigatory or remedial obligations arising under Environmental and Safety
Requirements which relate to the Seller, to any other Person for whose conduct
the Seller is or may be held to be responsible or to any properties or
facilities now or previously owned by Seller.
(b) Without limiting the generality of the foregoing, the Seller has
obtained and complied with, and is currently in compliance with, all permits,
licenses and other authorizations that may be required pursuant to any
Environmental and Safety Requirements for the occupancy of their respective
properties or facilities or the operation of their respective businesses. A list
of all such permits, licenses and other authorizations which are material to the
Company or to any of its Subsidiaries is set forth on the Disclosure Schedule.
(c) Neither this Agreement or any of the Related Agreements nor the
consummation of the transactions contemplated hereby and thereby shall impose
any obligations on the Seller or otherwise for site investigation or cleanup, or
notification to or consent of any government agencies or third parties under any
Environmental and Safety Requirements (including, without limitation, any so
called "transaction-triggered" or "responsible property transfer" laws and
regulations).
(d) None of the following exists at any property or facility now or
previously owned, occupied or operated by the Seller: underground storage
tanks or surface impoundments; (ii) asbestos-containing material in any form or
condition; (iii) materials or equipment containing polychlorinated biphenyls; or
(iv) landfills.
(e) The Seller has not treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled or Released any substance
(including, without limitation, any hazardous substance) or owned, occupied or
operated any facility or property, so as to give rise to liabilities of the
Seller for response costs, natural resource damages or attorneys' fees pursuant
to CERCLA or any other Environmental and Safety Requirements.
(f) Without limiting the generality of the foregoing, no facts, events
or conditions relating to the past or present properties, facilities or
operations of the Seller shall prevent, hinder or limit continued compliance
with Environmental and Safety Requirements, give rise to any corrective,
investigatory or remedial obligations pursuant to Environmental and Safety
Requirements or give rise to any other liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise) pursuant to Environmental and Safety
Requirements, including; without limitation, those liabilities relating to
onsite or offsite Releases or threatened Releases of hazardous materials,
substances or wastes, personal injury, property damage or natural resources
damage.
(g) The Seller has not, either expressly or by operation of law,
assumed or undertaken any liability or corrective investigatory or remedial
obligation of any other Person relating to any Environmental and Safety
Requirements.
(h) No Environmental Lien has attached to any property or facility
owned, leased or operated by the Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE BUYER
----------------------------------------------------------
The Parent and the Buyer represent and warrant to the Seller that the
statements contained in this Article IV are correct and complete as of the date
of this Agreement, and that such statements will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Article IV) except as
may be set forth in any supplemental disclosure delivered by the Parent to the
Seller on or prior to the Closing Date.
4.01 Organization of the Parent and the Buyer. The Parent is a corporation
duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. The Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation.
4.02 Authorization of Transaction. Each of the Parent and the Buyer has
full right, power and authority (including full corporate power and authority)
to execute and deliver this Agreement and the Related Agreements to which it is
or may become a party and to perform its obligations hereunder and thereunder.
This Agreement and the Related Agreements to which the Parent or the Buyer is or
may become a party constitute (or will constitute when executed and delivered)
the valid and legally binding obligations of the Parent and the Buyer,
enforceable in accordance with their respective terms.
Noncontravention. Neither the execution and the delivery of this Agreement and
the Related Agreements, nor the consummation of the transactions contemplated
hereby or thereby (including the assignments and assumptions referred to in
Article II above), will (a) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Parent or the Buyer is
subject or any provision of its charter or bylaws or (b) conflict with, result
in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license, instrument, or
other arrangement to which the Parent or the Buyer is a party or by which either
of them is bound or to which any of their assets are subject, except that the
consent of the Parent's lender is required. Neither the Parent nor the Buyer
needs to give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order for the
Parties to consummate the transactions contemplated by this Agreement (including
the assignments and assumptions referred to in Article II above).
4.03
ARTICLE V
PRE-CLOSING COVENANTS
---------------------
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing Date.
5.01 General. Each of the Parties will use all reasonable efforts to take
all action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
Article VI below).
5.02 Notices and Consents. The Seller will give any notices to third
parties, and the Seller will use all reasonable efforts (exclusive of payment)
to obtain any third party consents that the Parent reasonably may request in
connection with the matters referred to in Section 3.03 above. Each of the
Parties will give any notices to, make any and further filings with, and use all
reasonable efforts to obtain any authorizations, consents, and approvals of
governments and governmental agencies in connection with the matters referred to
in Section 3.03 and Section 4.03 above.
5.03 Preparation of Proxy Statement; Shareholder Meeting.
(a) As promptly as reasonably practicable following the date
of this Agreement, Seller shall prepare and file with the SEC proxy materials
reasonably acceptable to the Seller and the Parent which shall constitute the
"Proxy Statement." The Proxy Statement shall comply as to all form and all
material respects with the applicable provisions of the Securities Act and
Exchange Act. The Seller shall, as promptly as practicable after receipt
thereof, provide the Parent and the Buyer with copies of any written comments
and advise the Parent and the Buyer of any oral comments, with respect to the
Proxy Statement received from the SEC. Notwithstanding any other provision
herein to the contrary, no amendment or supplement (including incorporation by
reference) to the Proxy Statement shall be made without the approval of the
Parent and the Buyer, which approval shall not be unreasonably withheld or
delayed. Seller will use reasonable best efforts to cause the Proxy Statement to
be mailed to Seller's shareholders, and shall furnish all information concerning
the Seller as may be reasonably requested in connection with any such action.
The Seller will advise the Buyer and the Parent, promptly after it receives
notice thereof, of any request by the SEC for amendment of the Proxy Statement.
If at any time prior to the Closing Date, any information relating to the
Seller, should be discovered by the Seller which should be set forth in an
amendment or supplement to the Proxy Statement so that it would not include any
misstatement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, Seller shall promptly notify the Buyer and the Parent,
and, to the extent required by law, rules or regulations, an appropriate
amendment or supplement describing such information shall be promptly filed with
the SEC and disseminated to the shareholders of the Seller.
(b) The Seller shall duly take all lawful action to call,
give notice of, convene and hold a meeting of its shareholders on a date as soon
as reasonably practicable (the "Seller Shareholder Meeting") and shall take all
lawful action to solicit the shareholder vote required under applicable law
("Required Seller Shareholder Vote") with respect to a proposal to approve this
Agreement and the Related Agreements and to approve the sale of the Acquired
Assets as contemplated by this Agreement and the sale or other disposition of
Vitsab.
5.04 Operation of Business. The Seller will not engage in any practice,
take any action, or enter into any transaction outside the Ordinary Course of
Business. Without limiting the generality of the foregoing, the Seller will not,
other than in the Ordinary Course of Business, (a) sell any of the Acquired
Assets or sell or license Purchased Products or grant any distribution, sales
agency or reseller rights as to the Purchased Products; (b) create any Security
Interest with respect to, or otherwise encumber, any Purchased Product; (c)
incur any additional Assumed Liabilities; (d) modify, amend or terminate any
Insurance Policy without the prior written consent of the Parent; or (e)
otherwise engage in any practice, take any action, or enter into any transaction
of the sort described in Section 3.07 above.
5.05 Preservation of Business. The Seller will use commercially reasonable
efforts to keep its business and properties relating to the Acquired Assets
substantially intact, including its present operations, physical facilities,
working conditions, and relationships with licensers, suppliers and customers.
5.06 Full Access; Planning for Transition. The Seller will permit
representatives of the Parent and the Buyer to have full access at all
reasonable times, with reasonable notice and in a manner so as not to interfere
with the normal business operations of the Seller, to all premises, properties,
personnel, books, records (including Tax records), contracts, and documents of
or pertaining to the Acquired Assets, but (until the Closing) not including
specific customer names or other confidential customer information. After the
proposed transaction contemplated by this Agreement is publicly announced by the
Seller, the Seller and the Parent will work together, consistent with the
prohibition on revealing customer names, to develop a mutually agreeable,
Seller-driven contact plan to optimize the post-Closing transition of the
customers and distributors of the Seller to comparable business relationships
with the Parent. To the extent and as soon as is feasible, and with the
permission of the customers in question, the Seller will permit the Parent to
contact from time to time prior to the Closing Date any customer of the Seller
which has given an indication that causes the Seller to believe that it has
become or is likely to become a Lost Customer. The Seller will have the right to
be present, either in person or by telephone, during all contact the Parent has
with any such Lost Customer. The Parent and the Buyer will not have any
discussions, either directly or indirectly, with Jens prior to the Closing
without the prior written consent of the Seller. If the Seller so consents to
such discussions, any participation in such discussions by the Parent's European
distributor will be conditioned upon the written agreement by the Parent, the
Buyer and such European distributor not to acquire an equity interest in, or
assets of, Jens or to enter into any type of letter of understanding or other
executed document with Jens, in each case for a period of one year from the date
of such agreement of the Parent, the Buyer and such European distributor (or if
the Closing occurs, until the Closing Date).
5.07 Notice of Developments. Each Party will give prompt written notice to
the other Party of any material adverse development causing a breach of any of
its own representations and warranties in Article III and Article IV above. No
disclosure by any Party pursuant to this Section 5.07, however, shall be deemed
to amend or supplement the Disclosure Schedule or to prevent or cure any breach
of any representation or warranty that was inaccurate as of the date it was made
or to prevent or cure any breach of covenant.
5.08 Exclusivity. The Seller will not (a) solicit, initiate, or encourage
the submission of any proposal or offer from any Person relating to the
acquisition of any partnership interest, or any substantial portion of the
assets, of Seller (including any acquisition structured as a merger,
consolidation, or share exchange) or (b) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
Person to do or seek any of the foregoing. The Seller will notify the Buyer
immediately if any Person makes any proposal, offer, inquiry, or contact with
respect to any of the foregoing. Notwithstanding the foregoing, nothing
contained in this Section 5.08 shall prevent the Seller's Board from furnishing
information to or entering into discussions or negotiations with any unsolicited
Person, if and only to the extent that the Seller's Board shall have determined
in good faith, after receiving written advice from outside counsel, that such
action would, under applicable law, be consistent with the exercise of the
Board's fiduciary duties.
5.09 Break-Up Fee.
(a) In the event that either of the following occur, then
the Seller shall pay to the Parent a fee of $350,000 (the "Break-Up Fee"):
(i) The Seller materially breaches any provision of this
Agreement and the Buyer and the Parent do not subsequently consummate
the transactions contemplated hereby within 90 days following the date
of this Agreement; or
(ii) The Seller terminates this Agreement, for any reason
other than a material breach of any provision of this Agreement by the
Buyer or the Parent (including without limitation the failure to occur,
within 90 days following the date of this Agreement, of any of the
conditions specified in Section 6.02 requiring performance by the
Parent or the Buyer), and within twelve (12) months from the date of
termination of this Agreement, the Seller consummates an alternative
transaction involving the sale, direct or indirect (by means of merger,
exchange or similar transaction or series of related transactions), of
all or substantially all of its assets other than sales of its products
in the Ordinary Course of Business (an "Alternate Transaction").
(b) In the event that either the Buyer or the Parent
terminates this Agreement or takes such actions so as to prevent the
consummation of the transactions contemplated by this Agreement and the Related
Agreements, for any reason other than a material breach of any provision of this
Agreement by the Seller (including without limitation the failure to occur,
within 90 days following the date of this Agreement, of any of the conditions
specified in Section 6.01 and requiring performance by the Seller), then the
Parent shall pay the Seller an amount equal to the Break-Up Fee described in
Section 5.09(a) above.
(c) The Break-up Fee will become due in immediately available
funds upon the earlier to occur of the closing of an Alternative
Transaction, or (ii) the 45th day following the material breach triggering the
obligation to pay the Break-Up Fee.
ARTICLE VI
CONDITIONS TO OBLIGATION TO CLOSE
---------------------------------
6.01 Conditions to Obligation of the Parent and the Buyer. The obligation
of the Parent and the Buyer to consummate the transactions to be performed by it
in connection with the Closing is subject to satisfaction of the following
conditions:
(a) The representations and warranties set forth in Article III above
(taken collectively and individually) shall be true and correct in all material
respects at and as of the date of the Agreement, and such representation and
warranties (taken collectively and individually) shall be true and correct in
all material respects at and as of the Closing Date, without giving any effect
to any amendment to the Disclosure Schedule delivered by the Seller to the Buyer
after the date of this Agreement;
(b) The Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing Date;
(c) The Seller shall have procured all of the third party consents
specified in Section 5.02 above;
(d) No action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would prevent
consummation of any of the transactions contemplated by this Agreement, (ii)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, or (iii) affect adversely the right of the Parent or the
Buyer to own the Acquired Assets, or to operate the former businesses of the
Seller (and no such injunction, judgment, order, decree, ruling, or charge shall
be in effect);
(e) The Seller shall have obtained the Required Seller Shareholder
Vote specified in Section 5.03 above;
(f) Xxxx X. Xxxx and Xxxxx X. Xxxxxxxx, in their capacities as
Co-Chief Executive Officers of the Seller, Xx. Xxxxx X. Xxx, in his capacity as
Chairman and Chief Technology Officer of the Seller, Xxxx X. Xxxxxxx, in his
capacity as Chief Financial Officer of the Seller, and Xxxxx X. Xxxxxx, in his
capacity as President of the Cox Recorders Division shall have delivered to the
Parent and the Buyer a certificate in form and substance as set forth in Exhibit
K attached hereto to the effect that each of the conditions specified above in
Sections 6.02(a) through (e) is satisfied in all respects and covering in
reasonable detail the amount, if any, of Aggregate Annual Revenues attributable
to Lost Customers;
(g) The Seller's Secretary shall have executed and delivered to the
Parent and the Buyer a certificate in form and substance as set forth in Exhibit
L attached hereto regarding the Seller's authorizing resolutions and incumbency
of officers;
(h) The Seller shall have executed and delivered to the Parent and the
Buyer a certificate in form and substance as set forth in Exhibit M attached
hereto to the effect that Net Revenues, calculated in good faith, as of the
Effective Time, are at least $8,000,000;
(i) The Seller shall have executed and delivered the Xxxx of Sale, and
all additional transfer documents required to validly assign to the Parent or
the Buyer, in recordable form, all of the Acquired Assets;
(j) The Seller shall have executed and delivered the Assumption, and
all additional transfer documents required for the Parent and Buyer to validly
assume the Assumed Liabilities;
(k) The Seller shall have delivered to the Parent and the Buyer
releases of any Security Interests identified in Section 3.04 of the Disclosure
Schedule (including, but not limited to the Security Interests of Technology
Investors), together with termination statements, discharges and the like in
recordable form, or agreements from such secured parties in form acceptable to
the Parent and the Buyer to provide such releases, termination statements,
discharges and the like upon receipt of the payments specified in such
agreements;
(l) The Seller shall have received all other authorizations, consents,
and approvals of governments and governmental agencies referred to in Section
3.03 above;
(m) Xx. Xxxxx X. Xxx shall have entered into the Cox Consulting
Agreement;
(n) Messrs. Xxxxx X. Xxxxxxxx and Xxxx X. Xxxx shall have entered into
the Xxxxxxxx Consulting Agreement and the Xxxx Consulting Agreement,
respectively;
(o) The Seller shall have executed and delivered the Manufacturing
Agreement;
(p) The Seller shall have executed and delivered the Vitsab Agreement;
(q) The Parent and the Buyer shall have received from counsel to the
Seller an opinion in form and substance as set forth in Exhibit N attached
hereto, addressed to the Parent and the Buyer, and dated as of the Closing Date;
and
(r) All actions to be taken by the Seller in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be satisfactory in form and substance to the Buyer.
The Buyer may waive any condition specified in this Section 6.01 if it executes
a writing so stating at or prior to the Closing; provided, however, that if
Seller is unable to satisfy the condition set forth in Section 6.01(h) above,
the Buyer may so waive such condition, in which case the portion of the Purchase
Price deliverable at the Closing pursuant to Section 2.03(a) shall be reduced
dollar-for-dollar to the extent which the Net Revenues, calculated by the Seller
in good faith, as of the Effective Time, are less than $8,000,000.
6.02 Conditions to Obligation of the Seller. The obligation of the Seller
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(a) The representations and warranties set forth in Article IV above
(taken collectively and individually) shall be true and correct in all material
respects at and as of the date of this Agreement, and such representations and
warranties (taken collectively and individually) shall be true and correct in
all material respects at and as of the Closing, without giving any effect to any
supplemental disclosure delivered by the Parent to the Seller after the date of
this Agreement;
(b) The Parent and the Buyer shall have performed and complied with
all of its covenants hereunder in all material respects through the Closing;
(c) No action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would prevent
consummation of any of the transactions contemplated by this Agreement or (ii)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect);
(d) The CEO of the Buyer, in his capacity as CEO of the Buyer, and the
CEO of the Parent, in his capacity of CEO of the Parent, shall have delivered to
the Seller a certificate in form and substance as set forth in Exhibit O
attached hereto to the effect that each of the conditions specified above in
Sections 6.02(a) through (c) is satisfied in all respects;
(e) The Buyer's Secretary and the Parent's Secretary shall have
executed and delivered to the Seller certificates in form and substance as set
forth in Exhibits P1 and P2 attached hereto regarding the Buyer's and the
Parent's charter, by-laws, authorizing resolutions, and incumbency of officers;
(f) The Parent and the Buyer shall have received all other
authorizations, consents, and approvals of governments and governmental agencies
referred to in Section 4.03 above;
(g) The Seller shall have obtained the Required Seller Shareholder
Vote specified in Section 5.03 above;
(h) The Buyer shall have executed and delivered the Assumption
Agreement, and all additional documents required for the Parent and Buyer to
validly assume the Assumed Liabilities;
(i) The Parent shall have entered into the Cox Consulting Agreement;
(j) The Parent shall have entered into the Xxxx Consulting Agreement
and Xxxxxxxx Consulting Agreement;
(k) The Parent shall have offered employment to Xxxxx X. Xxxxxx and,
if Xx. Xxxxxx so accepted, the Parent shall have entered into the Xxxxxx
Employment Agreement;
(l) The Parent shall have offered employment to each Transferred
Employee and, for each Transferred Employee who so accepts, the Parent shall
have entered into the Transferred Employee Offer;
(m) The Seller shall have received from counsel to the Parent and
Buyer an opinion in form and substance as set forth in Exhibit Q attached
hereto, addressed to the Seller, and dated as of the Closing Date; and
(n) All actions to be taken by the Buyer and the Parent in connection
with consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be satisfactory in form and substance to the Seller.
The Seller may waive any condition specified in this Section 6.02 if it executes
a writing so stating at or prior to the Closing.
ARTICLE VII
INDEMNIFICATION
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7.01 Survival of Representations and Warranties. All of the representations
and warranties contained in this Agreement shall survive the Closing and
continue in full force and effect for a period of six months thereafter and for
such longer period as is necessary to resolve any claims which have been
asserted in writing during such six month period (the "Indemnity Period").
7.02 Indemnification.
(a) The Seller (the "Indemnifying Party") shall indemnify the Buyer
and the Parent and their respective officers, directors, shareholders,
employees, agents and affiliates (each, an "Indemnified Party" together, the
"Indemnified Parties") and hold each of them harmless from and against any
Adverse Consequence suffered, incurred or sustained by any of them or to which
any of them becomes subject, resulting from, arising out of or relating to any
inaccuracy in or breach of, or any alleged inaccuracy in or alleged breach of,
any representation or warranty or failure to perform any covenant or agreement
to be performed on or before the Effective Time on the part of the Seller
contained in this Agreement; (ii) any intentional tort, including without
limitation, fraud (including fraud in the inducement), willful misconduct or bad
faith by the Seller in connection with this Agreement, or any transactions
contemplated hereby or thereby; and (iii) any and all actions, suits,
proceedings, demands, judgments, costs and legal and reasonable other expenses
incident to any of the matters referred to in clauses and (ii) of this Section
7.02(a). Once it is determined there is such an indemnifiable event, the amount
of the Adverse Consequence shall be determined without giving effect to any
materiality qualification or any other materiality, dollar limit or similar
qualification contained in the representation, warranty, covenant or agreement.
(b) All claims for indemnification by an Indemnified Party seeking
indemnity under this Agreement will be asserted and resolved as follows:
(i) In the event any claim or demand, in respect of which an
Indemnified Party might seek indemnity under this Agreement, is asserted
against or sought to be collected from such Indemnified Party by a Person
other than a party to this Agreement (a "Third Party Claim"), the
Indemnified Party shall deliver a notice (a "Claim Notice") with reasonable
promptness to the Indemnifying Party, which Claim Notice shall provide
reasonable detail relating to such Third Party Claim, including the amount
of Adverse Consequences claimed, to the extent known. If the Indemnified
Party fails to provide the Claim Notice with reasonable promptness after
the Indemnified Party receives notice of such Third Party Claim, but in no
case later than the termination of the Indemnity Period, the Indemnifying
Party shall not be obligated to indemnify the Indemnified Party with
respect to such Third Party Claim only to the extent that the Indemnifying
Party demonstrates that its ability to defend such Third Party Claim has
been irreparably prejudiced by such failure of the Indemnified Party. The
Indemnifying Party shall notify the Indemnified Party as soon as
practicable within the Dispute Period (as defined below) whether the
Indemnifying Party disputes its liability to the Indemnified Party, and
whether the Indemnifying Party desires, at its sole cost and expense, to
defend the Indemnified Party against such Third Party Claim. The "Dispute
Period" means the period ending thirty (30) days following receipt by an
Indemnifying Party of either a Claim Notice or an Indemnity Notice (as
hereinafter defined).
(ii) If the Indemnifying Party notifies the Indemnified Party within
the Dispute Period that the Indemnifying Party desires to defend the
Indemnified Party with respect to the Third Party Claim pursuant to this
Section 7.02, then the Indemnifying Party shall have the right to defend,
with counsel reasonably satisfactory to the Indemnified Party, at the sole
cost and expense of the Indemnifying Party, such Third Party Claim by all
appropriate proceedings, which proceedings must be vigorously and
diligently prosecuted by the Indemnifying Party to a final conclusion or
may be settled at the discretion of the Indemnifying Party; provided,
however, that the Indemnifying Party shall not be permitted to effect any
settlement without the written consent (which shall not be unreasonably
withheld) of the Indemnified Party unless (A) the sole relief provided in
connection with such settlement is monetary damages that are paid in full
by the Indemnifying Party, (B) such settlement involves no finding or
admission of any wrongdoing, violation or breach by any Indemnified Party
of any right of any other Person or any applicable laws, contracts or
governmental permits, and (C) such settlement has no effect on any other
claims that may be made against or liabilities of any Indemnified Party.
The Indemnifying Party shall have full control of such defense and
proceedings, including any compromise or settlement thereof (except as
provided in the preceding sentence); provided, however, that the
Indemnified Party may, at its sole cost and expense, at any time prior to
the Indemnifying Party's delivery of the notice referred to in the first
sentence of this clause (ii), file any motion, answer or other pleadings or
take any other action that the Indemnified Party reasonably believes to be
necessary or appropriate to protect its interests; and provided, further,
that if requested by the Indemnifying Party, the Indemnified Party shall,
at the sole cost and expense of the Indemnifying Party, provide reasonable
cooperation to the Indemnifying Party in contesting any Third Party Claim
that the Indemnifying Party elects to contest. The Indemnified Party may
participate in, but not control, any defense or settlement of any Third
Party Claim controlled by the Indemnifying Party pursuant to this clause
(ii) and, except as provided in the first sentence of this clause (ii) and
the preceding sentence, the Indemnified Party will bear its own costs and
expenses with respect to such participation. Notwithstanding the foregoing,
the Indemnified Party may take over the control of the defense or
settlement of a Third Party Claim at any time if it irrevocably waives its
right to indemnity with respect to such Third Party Claim.
(iii) If the Indemnifying Party fails to notify the Indemnified Party
within the Dispute Period that the Indemnifying Party desires to defend the
Third Party Claim pursuant to clause (ii) above or if the Indemnifying
Party gives such notice but fails to prosecute vigorously and diligently or
settle the Third Party Claim (in each case in accordance with clause (ii)
above), or if the Indemnifying Party fails to give any notice whatsoever
within the Dispute Period, then the Indemnified Party will have the right
to defend, at the sole cost and expense of the Indemnifying Party, the
Third Party Claim by all appropriate proceedings, which proceedings will be
prosecuted by the Indemnified Party in a reasonable manner and in good
faith or will be settled at the discretion of the Indemnified Party (with
the consent of the Indemnifying Party, which consent will not be
unreasonably withheld). Subject to the immediately preceding sentence, the
Indemnified Party will have full control of such defense and proceedings,
including any compromise or settlement thereof; provided, however, that if
requested by the Indemnified Party, the Indemnifying Party will, at the
sole cost and expense of the Indemnifying Party, provide reasonable
cooperation to the Indemnified Party and its counsel in contesting any
Third Party Claim which the Indemnified Party is contesting. The
Indemnifying Party may participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this clause
(iii), and the Indemnifying Party will bear its own costs and expenses with
respect to such participation.
(iv) If the Indemnifying Party notifies the Indemnified Party that it
does not dispute its liability to the Indemnified Party with respect to a
Third Party Claim or fails to notify the Indemnified Party within the
Dispute Period whether the Indemnifying Party disputes its liability to the
Indemnified Party with respect to such Third Party Claim, the Adverse
Consequences in the amount specified in the Claim Notice will be
conclusively deemed a liability of the Indemnifying Party, and the
Indemnifying Party shall pay the amount of such Adverse Consequences to the
Indemnified Party, pursuant to Section 7.02(c) below. If the Indemnifying
Party has timely disputed its liability with respect to such claim, the
Indemnifying Party and Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through
negotiations within the Resolution Period (as defined below), such dispute
shall be resolved by litigation in a court of competent jurisdiction. The
"Resolution Period" means the period ending 30 days following expiration of
the Dispute Period.
(v) In the event any Indemnified Party should have a claim under this
Agreement against any Indemnifying Party that does not involve a Third
Party Claim, the Indemnified Party shall deliver a notice (an "Indemnity
Notice") with reasonable promptness to the Indemnifying Party, which
Indemnity Notice shall provide reasonable detail relating to such claim,
including the amount of Adverse Consequences claimed, to the extent known.
If the Indemnified Party fails to provide the Indemnity Notice with
reasonable promptness, but in no case later than the termination of the
Indemnity Period, the Indemnifying Party shall not be obligated to
indemnify the Indemnified Party with respect to such claim only to the
extent that an Indemnifying Party demonstrates that it has been irreparably
prejudiced by such failure of the Indemnified Party. If the Indemnifying
Party notifies the Indemnified Party that it does not dispute the claim
described in such Indemnity Notice or fails to notify the Indemnified Party
within the Dispute Period whether the Indemnifying Party disputes the claim
described in such Indemnity Notice, the Adverse Consequences in the amount
specified in the Indemnity Notice will be conclusively deemed a liability
of the Indemnifying Party, and the Indemnifying Party shall pay the amount
of such Loss to the Indemnified Party, pursuant to Section 7.02(c) below.
If the Indemnifying Party has timely disputed its liability with respect to
such claim, the Indemnifying Party and the Indemnified Party will proceed
in good faith to negotiate a resolution of such dispute, and if not
resolved through negotiations within the Resolution Period, such dispute
shall be resolved by litigation in a court of competent jurisdiction.
(c) Notwithstanding anything to the contrary in this Section 7.02, the
Indemnifying Party's obligation to indemnify an Indemnified Party from and
against any Adverse Consequences resulting from any claim identified in a Third
Party Notice or an Indemnity Notice shall be subject to the following
limitations:
(i) the Indemnifying Party shall be liable to the Indemnified Party
only to the extent that Adverse Consequences identified in the Third Party
Notice or the Indemnity Notice, or in any prior Third Party Notice or
Indemnity Notice, as the case may be, are in excess, in the aggregate, of
twenty five thousand dollars ($25,000) (at which point the Indemnifying
Party will be obligated to indemnify the Indemnified Party from and against
all such Adverse Consequences relating back to the first dollar); and
(ii) the aggregate amount of all payments made by the Indemnifying
Party to the Indemnified Party in satisfaction of claims for
indemnification covered by Claim Notices or Indemnity Notices first
presented to the Indemnifying Party during the Indemnity Period shall not
exceed, in the aggregate, $250,000 (the "Indemnity Amount"); and
(iii) claims for indemnification allowed with respect to the Indemnity
Period shall be set-off against any remaining amounts held by the Parent in
accordance with Section 2.03(b).
7.03 Effect of Resolution of Claims. Any indemnity liability satisfied by
the Indemnifying Party out of the Indemnity Amount, pursuant to Section 7.02
above, will be treated for tax purposes as an adjustment to the Purchase Price.
7.04 Exclusivity of Indemnification Provisions. The foregoing
indemnification provisions are the exclusive remedy available to the Parent or
the Buyer for breaches of representations or warranties contained in this
Agreement, except in the case of fraud or a willful breach by the Seller of any
representations or warranties under this Agreement.
7.05 Right of Set-off. In the event of any failure of the Seller to pay
amounts to the Parent or the Buyer which are due pursuant to Section 2.06(c) of
this Agreement or pursuant to the Vitsab Agreement or the Manufacturing
Agreement, the Parent or the Buyer, as the case may be, may, following no less
than 10 days written notice to the Seller and without precluding the pursuit of
any other applicable remedy, elect to set-off the amount of such failure against
the remaining amount otherwise payable pursuant to Section 2.03(b) of this
Agreement.
7.06 Resolution of Claims. Subject to the foregoing provisions of this
Article VII, the Indemnified Party shall notify the Indemnifying Party of any
claims for indemnification. If the Indemnifying Party does not object by written
notice to the Indemnifying Party within 10 days of receipt of the notice of the
claim, the claim shall be deemed allowed for purposes of this Article VII. If
the Indemnifying Party objects to the allowance of the claim within such 10 day
period, such claim shall be resolved by binding arbitration in Charlotte, North
Carolina by a single arbitrator pursuant to the then-current Commercial
Arbitration rules of the American Arbitration Association, and judgment on the
arbitration award may be entered in any court of competent jurisdiction. Except
to the extent that the arbitrator determines otherwise, the parties to the
dispute shall share equally the arbitrator's fees and any administrative fees,
but shall otherwise bear their own expenses. Notwithstanding the foregoing, the
following procedural rules shall apply to the arbitration. The arbitrator shall
be familiar with contracts of the type represented by this Agreement. The
arbitrator shall limit discovery to those items that in the judgment of the
arbitrator are essential to the determination of the matters in dispute. Except
for any stenographer and the arbitrator, attendance at the arbitration shall be
limited to the parties and their counsel and witnesses. Except as necessary for
purposes of an action to enforce, modify or vacate the arbitration award, all
documents and other information submitted to the arbitrator, including any
transcript of the proceedings and the arbitrator's award, shall be confidential
and shall not be disclosed to anyone other than the parties and their counsel
and financial advisors.
7.07 Termination of Indemnification. If, at the end of the Indemnity Period
(a) the Indemnified Parties have not submitted any claims of indemnification
pursuant to this Article VII; or (b) all claims of indemnification submitted by
the Indemnified Parties have been satisfied pursuant to this Article VII, then
the Parent shall promptly deliver the remaining portion (if any) of the amount
withheld pursuant to Section 2.03(b) to the Seller by wire transfer or other
immediately available funds.
7.08 Special Provisions for Environmental Matters. The parties hereto
further agree as follows:
(a) Environmental Claims. The Seller shall indemnify the Indemnified
Parties and hold each of them harmless from and against any Adverse Consequence
(including costs of cleanup, containment, or other remediation) suffered,
incurred or sustained by any of them or to which any of them becomes subject,
resulting from, arising out of or relating to any Environmental Claim. For
purposes of this Agreement, an "Environmental Claim" shall include any of the
following:
(i) any liability or corrective investigatory or remedial obligation
relating to any Environmental and Safety Requirements arising out of or
relating to:
(A) (1) the ownership, operation, or condition at any time on or
prior to the Closing Date of the any property or facility owned,
leased or operated by the Seller (whether real, personal, or mixed and
whether tangible or intangible) in which Sellers has or had an
interest, or any hazardous materials, substances or wastes, chemical
substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or by-products, asbestos,
polychlorinated biphenyls (or PCBs), noise or radiation or other
contaminants that were present on any property or facility owned,
leased or operated by the Seller at any time on or prior to the
Closing Date;
(B) any hazardous materials, substances or wastes, chemical
substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or by-products, asbestos,
polychlorinated biphenyls (or PCBs), noise or radiation or other
contaminants, wherever located, that were, or were allegedly,
generated, transported, stored, treated, Released, or otherwise
handled by the Seller by any other Person for whose conduct Seller is
or may be held responsible at any time on or prior to the Closing
Date, or any activities that were, or were allegedly, conducted by the
Seller or by any other Person for whose conduct the Seller is or may
be held responsible; or
(ii) any bodily injury (including illness, disability, and death, and
regardless of when any such bodily injury occurred, was incurred, or
manifested itself), personal injury, property damage (including trespass,
nuisance, wrongful eviction, and deprivation of the use of real property),
or other damage of or to any Person, including any employee or former
employee of the Seller or any other Person for whose conduct the Seller is
or may be held responsible, in any way arising from or allegedly arising
from any activity conducted or allegedly conducted with respect to any
property or facility owned, leased or operated by the Seller (whether real,
personal, or mixed and whether tangible or intangible) in which Sellers has
or had an interest prior to the Closing Date, or from any hazardous
materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products
or by-products, asbestos, polychlorinated biphenyls (or PCBs), noise or
radiation or other contaminants that were (A) present or suspected to be
present on or before the Closing Date on or at any property or facility
owned, leased or operated by the Seller (whether real, personal, or mixed
and whether tangible or intangible) in which Sellers has or had an interest
(or present or suspected to be present on any other property, if such
materials or contaminants emanated or allegedly emanated from any of the
Seller's properties or facilities and was present or suspected to be
present on such properties or facilities or prior to the Closing Date) or
(B) Released or allegedly Released by the Seller or any other Person for
whose conduct the Seller is or may be held responsible, at any time on or
prior to the Closing Date.
A claim for indemnification by any of the Indemnified Parties in connection with
an Environmental Claim shall be treated for all purposes as any other Third
Party Claim, and shall, without limiting the foregoing, comply with the
procedures and be subject to the same Indemnity Period and aggregate Indemnity
Amount set forth in this Article VII.
(b) Full Release. For good and valuable consideration, the receipt of which
is hereby acknowledged, the Seller hereby on its behalf, and on behalf of any
successors, predecessors, subsidiaries, affiliates, agents, principals,
attorneys and assigns, hereby releases and forever discharges the Indemnified
Parties together with each of their successors, predecessors, heirs, executors,
administrators, agents, attorneys and assigns, from any and all claims, demands,
damages, actions, causes of action or suits of any kind or nature whatsoever or
matters related in any way to any and all claims, demands, damages, actions,
causes of action or suits of any kind or nature whatsoever or matter related in
any way to Environmental and Safety Requirements from the beginning of the world
to the date hereof, known and unknown. The Seller will provide written
confirmation of the provisions of this Section 7.08(b), in the form attached as
Exhibit R, at the Closing.
ARTICLE VIII
POST-CLOSING COVENANTS
----------------------
The Parties agree as follows with respect to the period following the
Closing.
8.01 Further Assurances; Access by the Parent and the Seller to Systems and
Records; Integration of Customer Databases. In case at any time after the
Closing any further action is necessary or desirable to effectively transfer and
assign to, and vest in, the Parent or the Buyer each of the Acquired Assets, the
Seller will take such further action without further consideration (including
the execution and delivery of such further instruments and documents) as the
Buyer reasonably may request. Such action will include without limitation the
referral to the Parent of all inquiries from customers or prospective customers
for any of the Purchased Products. After the Closing, the Seller will, and will
cause its professional advisors and agents to, cooperate with the Parent and the
Buyer to permit the Buyer to enjoy the Seller's rating and benefits under the
workers' compensation laws of applicable jurisdictions, to the extent permitted
by such laws, and (ii) file on a timely basis all reports required to be filed
with any government or governmental agency. Following the Closing, the Parent
will provide to the Seller reasonable access to the accounting, sales, business
and, to the extent permitted by applicable law, personnel data and records of
the Seller in the possession of the Parent or its agents to the extent requested
to enable the Seller to account for pre-Closing activities of the Seller and to
wind down the Business, and the Seller may retain copies, in electronic or hard
copy form, of any such records which do not constitute proprietary or trade
secret information in relation to the Business. Following the Closing, the
Seller will provide to the Parent reasonable access to the computer systems and
accounting, sales, business and, to the extent permitted by applicable law,
personnel records of the Seller in the possession of the Seller or its agents to
the extent requested to enable the Parent to manage and account for the Acquired
Assets and Business, and the Parent may make copies, in electronic or hard copy
form, of any such data and records to the extent that they relate to the
Business. Following the Closing, the Parent and the Seller will take reasonable
steps to permit the Parent to integrate the customer database of the Seller for
Purchased Products with the customer database of the Parent.
8.02 Announcements; Web Site Modifications. Any announcements by the Seller
or the Parent of the execution of this Agreement or the consummation of the
transactions contemplated hereby will be subject to the reasonable, advance
approval of the Seller and the Parent. The Seller and the Parent will cooperate
in modifying the Seller's web site as contemplated by subparagraph (b) of the
definition of Intellectual Property above. The expense of such modification will
be borne by the Seller. Following such modification, which shall be effective on
the Closing Date, visitors to such web site who have an interest in Purchased
Products will be directed by an appropriate announcement, reasonably acceptable
to the Seller and the Parent, and linked to the web site of the Parent.
8.03 Use of Seller's Facilities. For a period of up to four months after
the Closing (but no later than June 1, 2004 unless the Parent makes suitable
arrangements at its expense with the Seller's landlord), the Seller will allow
the Transferred Employees to operate out of Seller's facilities and use its
telephones, computers, and all necessary office equipment; provided, however,
that Seller shall not collect any rent or any share of overhead administrative
or other expenses from the Transferred Employees, the Parent or the Buyer.
8.04 Use of Names. The Seller acknowledges and agrees that as a result of
the consummation of the transaction contemplated hereby, the Buyer is acquiring
all of Seller's rights to use the names "Chart Reader," "CHR Recorder," "Cox,"
"Cox1," "Cox3," "CoxBlue," "Cox Digital Pulp Probe," "Cox MiniTemp FS," "Cox
TempTester IR," "Cobra," "DataSource," "Xxxxxxx Recorder," "DFR Logger," "DS
Pro," "IR-Temp," "IR Laser," "PC Transit Logger," "PC Transit Software,"
"SmartProbe," "TempList," "ThermalPro," "Tracer," "Tracer Software,"
"RealTimeAlert," "Teletemp Recorder" and "WP Probe" domestically and
internationally, for which the Seller acknowledges that it will have received
full and adequate consideration pursuant to this Agreement, and that the Seller
will not use, or grant to any third party the right to use, such names or any
similar names subsequent to the Closing; provided, that the Seller may continue
to use the name Xxx Technologies, Inc. as its corporate name.
8.05 Covenant Not to Compete. For a period of five years from and after the
Closing Date, the Seller will not, directly or indirectly, (a) engage or invest
in, own, manage, operate, finance, control, or participate in the ownership,
management, operation, financing or control of, be employed by, associated with,
or in any manner be connected with, or lend its name or credit to, or render
services or advice to, in any business whose products or activities compete in
whole or in part with the Purchased Products or related activities of the Seller
conducted on the Closing Date in any geographic area in which the Seller
conducts that business as of the Closing Date; (b) solicit, employ, or otherwise
engage as an employee, independent contractor, or otherwise, whether directly or
for the benefit of any other person or entity, any employee of the Parent or the
Buyer; or (c) interfere with the Parent's or the Buyer's relationship with any
person, including any employee, contractor, supplier or customer, or otherwise
disparage the Parent or the Buyer or any of their respective officers,
directors, employees or agents; provided, however, that no owner of less than 1%
of the outstanding stock of any publicly traded corporation shall be deemed to
engage solely by reason thereof in any of its businesses; provided, further,
that the restrictions in this Section 8.05 shall not apply to Vitsab. If the
final judgment of a court of competent jurisdiction declares that any term or
provision of this Section 8.05 is invalid or unenforceable, the Parties 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. 8.06
Confidentiality. Until the Closing, the Parent and Buyer shall keep confidential
all nonpublic information concerning the Seller furnished by the Seller to the
Parent or the Buyer in connection with the transactions contemplated hereby,
unless compelled to disclose such information by judicial or administrative
process or by other requirements of law. Whether or not the Closing is held
hereunder, the Parent and Buyer shall continue to maintain such confidence. The
Seller shall keep confidential all non-public information concerning the Parent
furnished by the Parent to the Seller in connection with the transactions
contemplated hereby, unless compelled to disclose such information by judicial
or administrative process or by other requirements of law, including without
limitations the Securities Act, the Exchange Act, and the rules and regulations
promulgated by the SEC thereunder. Whether or not the Closing is held hereunder,
the Seller shall continue to maintain such confidence. In addition, if the
Closing occurs, the Seller shall keep confidential, shall not disclose to third
parties and shall not use in any manner which may injure or cause loss or may be
calculated to injure or cause loss, directly or indirectly, to the Parent or the
Buyer, all non-public information concerning the organization, business,
finances or assets of the Seller unless compelled to disclose such information
by judicial or administrative process or by other requirements of law, including
without limitations the Securities Act, the Exchange Act, and the rules and
regulations promulgated by the SEC thereunder.
8.06 Vitsab Sales Representative. To the extent and for the duration (but
in no event longer than one year) that the Seller's sales representative for the
Vitsab product line is employed by the Parent after the Closing Date, the Parent
will permit such sales representative to spend up to one-half (1/2) day per week
on Vitsab-related activities without charge-back for the salary of such sales
representative associated with such time spent. The Parent shall not, however,
be responsible for funding or reimbursing any Vitsab-related travel or other
expenses or any incentive or similar payments related to Vitsab activities.
ARTICLE IX
TERMINATION
-----------
9.01 Termination of Agreement. Subject to Section 5.09, this Agreement may
be terminated as follows:
(a) The Parent, the Buyer and the Seller may terminate this Agreement
by mutual written consent at any time prior to the Closing;
(b) The Parent and the Buyer may terminate this Agreement by giving
written notice to the Seller at any time prior to the Closing in the event the
Seller has breached any representation, warranty, or covenant contained in this
Agreement in any material respect, the Parent has notified the Seller of the
breach, and the breach has continued without cure for a period of 15 days after
the notice of breach, or (ii) if the Closing shall not have occurred on or
before the 90th day from the date of this Agreement, by reason of the failure of
any condition precedent under Section 6.01 hereof (unless the failure results
primarily from the Parent or the Buyer itself breaching any representation,
warranty, or covenant contained in this Agreement);
(c) The Parent and the Buyer may terminate this Agreement if, at any
time after the date of this Agreement and prior to the Closing, the amount of
Aggregate Annual Revenues attributable to Lost Customers exceeds $2,500,000.
(d) The Seller may terminate this Agreement by giving written notice
to the Buyer at any time prior to the Closing in the event the Parent or the
Buyer has breached any representation, warranty, or covenant contained in this
Agreement in any material respect, the Seller has notified the Parent of the
breach, and the breach has continued without cure for a period of 15 days after
the notice of breach or (ii) if the Closing shall not have occurred on or before
the 90th day from the date of this Agreement, by reason of the failure of any
condition precedent under Section 6.02 hereof (unless the failure results
primarily from the Seller's breaching any representation, warranty, or covenant
contained in this Agreement); and
(e) The Seller may terminate this Agreement at any time prior to the
Closing if an action, suit or proceeding of the type described in Sections
6.01(d) or 6.02 (c) shall be filed and be pending. If the Seller, and the Parent
and the Buyer, agree jointly to defend such an action, suit or proceeding, the
Parent shall bear the reasonable costs, including attorneys fees, of such
defense (but not any monetary damages awarded against the Seller or any of its
shareholders or other investors) unless and until the action, suit or proceeding
is settled, dismissed or decided by final, nonappealable decision; provided,
that if the Closing shall occur following such a settlement, dismissal or final,
nonappealable decision, one-half of such defense costs shall be paid by the
Seller as a credit to the Purchase Price. No settlement of any such action, suit
or proceeding shall be made without the written consent of both the Seller and
the Parent, which consent shall not be unreasonably withheld.
9.02 Effect of Termination. In the event of termination of this Agreement
and abandonment of the transactions contemplated hereby by the Seller, the
Parent or the Buyer, pursuant to this Article IX, written notice will be given
to the other parties and this Agreement will terminate (other than Sections
5.09, 8.06, 10.01 and this Section 9.02) and the transactions contemplated
hereby will be abandoned, without further action by any of the parties hereto.
If this Agreement is terminated as provided herein:
(a) Upon request therefor, each of the parties hereto will redeliver
all documents, work papers and other material of the other party relating to the
transactions contemplated hereby, whether obtained before or after the execution
of this Agreement, to the party furnishing the same;
(b) No party will have any further liability for a breach of any
representation, warranty, agreement, covenant or the provision of this Agreement
(except as provided in Sections 5.09, 8.06, 10.01 and this Section 9.02), unless
such breach was due to a willful or bad faith action or omission of such party
or any representative, agent, employee or independent contractor thereof; and
(c) All filings, applications and other submissions made pursuant to
the terms of this Agreement will, to the extent practicable, be withdrawn from
the agency or other person to which made.
ARTICLE X
MISCELLANEOUS
-------------
10.01 Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of the
other Party; provided, however, that any Party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing Party will use its reasonable efforts to advise the other Party prior
to making the disclosure).
10.02 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
10.03 Entire Agreement. This Agreement, the Related Agreements and the
Non-Disclosure Agreement constitute the entire agreement between the Parties and
supersede any prior understandings, agreements, or representations by or between
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
10.04 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Parties; provided, however, that the Buyer may assign any or all of
its rights and interests hereunder to one or more of its affiliates.
10.05 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
10.06 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.07 Notices. All notices, consents, requests, waivers, demands, claims,
and other communications hereunder must be in writing. Any notice, consent,
request, waiver, demand, claim, or other communication hereunder shall be deemed
duly given if it is delivered by hand or if (and then two business days after)
it is sent by registered or certified mail, return receipt requested, postage
prepaid, and addressed to the intended recipient as set forth below; provided,
that in either case a copy is mailed by registered mail, return receipt
requested, to the appropriate addresses set forth below:
If to the Seller: Xxx Technologies, Inc.
00 XxXxxxxxxxx Xxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attn: Xxxx X. Xxxx and Xxxxx X. Xxxxxxxx,
Co-chief Executive Officers
Fax: 000-000-0000
with a copy to: Xxxxxx X. Xxxxxx
Xxxxxx, Xxxxxxx & Xxxxxx, LLP
0000 Xxxxxxxx Xxxx
Xxxxx 0000
Xxxxxxxxx, XX 00000
Fax: 000-000-0000
If to the Parent or the Buyer: Sensitech Inc.
000 Xxxxxxxx Xxxxxx.
Xxxxx 000X
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx
Fax: (000) 000-0000
with a copy to: Xxxxxx X. Xxxxx
Day, Xxxxx & Xxxxxx LLP
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
fax, ordinary mail, or electronic mail), with a copy to the appropriate
addresses set forth below delivered by the same means, but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
10.08 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without regard to
conflicts of laws principles.
10.09 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Parent, the Buyer and the Seller. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of Warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
10.10 Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
10.11 Expenses. Each of the Parent, the Buyer and the Seller will bear its
own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.
10.12 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties, and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of any
of the provisions of this Agreement. In the event of any inconsistency between
the statements contained in this Agreement and those contained in the Disclosure
Schedule, the statements contained in this Agreement will control. The Parties
intend that each representation, warranty, and covenant contained herein shall
have independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant. With
regard to all dates and time periods set forth in this Agreement, time is of the
essence.
10.13 Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement and the Disclosure Schedule are incorporated herein
by reference and made a part hereof.
10.14 Specific Performance. Each of the Parties acknowledges and agrees
that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, notwithstanding Article VII or any
other provision herein, each of the Parties agrees that the other Party shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court of the United States or
any state thereof
10.15 Bulk Transfer Laws. The Parent and the Buyer acknowledge that the
Seller will not comply with the provisions of any bulk transfer laws of any
jurisdiction in connection with the transactions contemplated by this Agreement,
and the Buyer waives any recourse it may have against the Seller as a result of
failure to comply with such laws.
10.16 Employee Matters.
(a) Transferred Employees.
(i) Offer of Employment. Subject to and in accordance with the
provisions of this Section 10.16, the Parent will make offers of
employment to those certain employees of the Seller identified in
Schedule 10.16(a), in each case contingent on consummation of the
transactions contemplated by this Agreement and the recommendation of
the Seller at the Closing. If the Seller makes no such recommendation
about any one or more such employee(s), the parties hereto acknowledge
and agree that the Parent shall not be obligated to hire such
employee(s). Subject to the provisions of this Section 10.16, the
Parent's offers to such employees shall be substantially in the form
set forth in Exhibit I. Upon Closing, the Buyer shall hire such
employees to whom it has made an offer in accordance with this Section
10.16 and who accept such offer in the manner and within the time
frame reasonably established by the Parent. Each such employee who is
employed by the Seller at the Effective Time and who actually
transfers to employment with the Parent at or after the Effective Time
as a result of an offer of employment made by the Parent is hereafter
referred to as a "Transferred Employee." All other Employees are
hereinafter referred to as "Non-Transferred Employees."
(ii) Transition. The employment by the Seller of the Transferred
Employees shall end at the Effective Time, and the employment of the
Transferred Employees by the Parent shall commence no earlier than at
12:01 a.m. on the day after the Effective Time. The terms of
employment with the Parent shall be as mutually agreed to between each
Transferred Employee and the Parent, subject to the provisions of this
Section 10.16. Between the date of this Agreement and the Effective
Time, the Seller will provide each Transferred Employee with the same
level of compensation, or higher, as that currently provided by the
Seller. Neither the Parent nor the Buyer shall have any obligation
with respect to payments of vacation pay, sick pay, health or similar
benefits, commissions, bonuses (deferred or otherwise), termination
pay, severance pay, redundancy payments, payments with respect to
employee benefit plans, stock or stock options or any other payments
in the nature of fringe benefits (collectively, "Employee Benefits")
due to any Transferred Employee or Non-Transferred Employee that was
earned, whether accrued or unaccrued, on or prior to the Effective
Time. The Seller will be fully responsible for all amounts payable to
any employee, including (without limitation) all Employee Benefits,
wages or other compensation, earned, whether accrued or unaccrued, by
Transferred Employees and Non-Transferred Employees on or prior to the
Effective Time.
(iii) Retention of Prospective Transferred Employees Prior to
Closing. The Seller agrees to use its best efforts to retain the
prospective Transferred Employees as employees of the Business until
the Effective Time, and to assist the Parent in securing the
employment after the Effective Time of such prospective Transferred
Employees. The Seller shall not transfer any prospective Transferred
Employee to employment with the Seller outside of the Business prior
to the Closing or without the consent of the Parent. The Seller shall
notify the Parent promptly if, notwithstanding the foregoing, any
prospective Transferred Employee terminates employment with the Seller
after the date of this Agreement but prior to the Closing.
(b) Compensation and Benefits of Transferred Employees. Coverage for
Transferred Employees under the Parent's compensation and Employee Benefit Plans
and other programs shall commence no earlier than 12:01 a.m. on the day after
the Effective Time. The Parent shall not assume any of the Seller's employee
benefit plans.
(c) Other Employees of the Business. The Seller acknowledges that the
Non-Transferred Employees shall not be employees of the Parent or the Buyer
after the Closing.
(d) No Right to Continued Employment or Benefits. No provision in this
Agreement shall create any third party beneficiary or other right in any Person
(including any beneficiary or dependent thereof) for any reason, including,
without limitation, in respect of continued, resumed or new employment with the
Seller, the Buyer or the Parent or in respect of any benefits that may be
provided, directly or indirectly, under any plan or arrangement maintained by
the Seller, the Buyer or any Affiliate of the Seller or the Buyer. Except as
otherwise expressly provided in this Agreement, neither the Parent nor the Buyer
is under any obligation to hire any employee of the Seller, provide any employee
with any particular benefits, or make any payments or provide any benefits to
those employees of the Seller whom the Parent and the Buyer choose not to
employ.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the
date first above written.
SELLER: XXX TECHNOLOGIES, INC.
BY: _____________________________________________
Xxxx X. Xxxx
Co-Chief Executive Officer
BY: _____________________________________________
Xxxxx X. Xxxxxxxx
Co-Chief Executive Officer
PARENT: SENSITECH INC.
BY: _____________________________________________
Xxxx X. Xxxxxxx
Chairman of the Board &
Chief Executive Officer
BUYER: COX ACQUISITION CORP.
BY: _____________________________________________
Xxxx X. Xxxxxxx
Chairman of the Board &
Chief Executive Officer
LIST OF EXHIBITS
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Assumption Agreement Exhibit A
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Xxxx of Sale Exhibit B
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Xxxxxx Employment Agreement Exhibit C
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Cox Consulting Agreement Exhibit D
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Xxxxxxxx Consulting Agreement Exhibit E
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Manufacturing Agreement Exhibit F
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Non-Disclosure Agreement Exhibit G
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Xxxx Consulting Agreement Exhibit H
------------------------------------------------------------------------------------- -----------------------
Transferred Employee Offer Exhibit I
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Vitsab Agreement Exhibit J
------------------------------------------------------------------------------------- -----------------------
Certificate of the Seller's Co-CEOs, Chairman and Chief Technology Officer, Chief Exhibit K
Financial Officer and President of Cox Recorders Division pursuant to Section
6.01(f)
------------------------------------------------------------------------------------- -----------------------
Seller's Secretary's certificate pursuant to Section 6.01(g) Exhibit L
------------------------------------------------------------------------------------- -----------------------
Seller's certificate pursuant to Section 6.01(h) Exhibit M
------------------------------------------------------------------------------------- -----------------------
Seller's counsel's opinion pursuant to Section 6.01(q) Exhibit N
------------------------------------------------------------------------------------- -----------------------
Buyer's certificate pursuant to Section 6.02(d) Exhibit O
------------------------------------------------------------------------------------- -----------------------
Buyer's Secretary's and Parent's Secretary's certificates pursuant to Section Exhibits P1 & P2
6.02(e)
------------------------------------------------------------------------------------- -----------------------
Parent's and Buyer's counsel's opinion pursuant to Section 6.02(m) Exhibit Q
------------------------------------------------------------------------------------- -----------------------
Seller's confirmation pursuant to Section 7.08(b) Exhibit R
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