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EXHIBIT 10.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "AGREEMENT") dated as of
March 12, 1998 by and among XXXX LIFE SCIENCES INC., an Ohio corporation
("KLSI"), and TECHNOLOGY/SCIENTIFIC SERVICES, INC., an Ohio corporation
("TSSI") (KLSI and TSSI are hereinafter collectively referred to as the
"COMPANIES"), on the one hand, and WYLE LABORATORIES, INC., a Delaware
corporation ("WYLE"), on the other hand.
WHEREAS, XXXX INTERNATIONAL CORP., an Ohio corporation
("XXXX"), owns all of the issued and outstanding capital stock of the Companies
(collectively, the "COMPANIES' SHARES");
WHEREAS, the Board of Directors Wyle has determined that it is
in the best interests of Wyle to effectuate the recapitalization of the Old
Wyle Shares (as defined below) for (i) shares of Series C Preferred Stock (as
defined below) and (ii) shares of Special Common Stock (as defined below).
WHEREAS, the Boards of Directors of the Companies have each
determined that it is in the best interests of the Companies and their
respective shareholders for (i) the Companies to merge (the "MERGER") with and
into Wyle, (ii) upon such Merger the Companies' Shares to be converted into
shares of Series A-1 Preferred Stock (as defined below) shares of Series B
Preferred Stock (as defined below), and if certain conditions are met, shares
of Series D Preferred Stock (as defined below) upon the terms and subject to
the conditions set forth herein, and for Wyle and the Companies to obtain from
Xxxx a Covenant Not to Compete (as defined below);
WHEREAS, the Board of Directors of Wyle has determined that,
following the recapitalization, it is in the best interests of Wyle and its
stockholders for Wyle to engage in the Merger, upon the terms and subject to
the conditions set forth herein;
WHEREAS, the Board of Directors of Xxxx has approved of the
terms and conditions of this Agreement;
WHEREAS, the Boards of Directors of the Companies have
approved of the terms and conditions of the Merger set forth herein; and
WHEREAS, the Board of Directors of Wyle has approved of the
terms and conditions of the recapitalization of the capital stock of Wyle and
the Merger set forth herein.
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NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants and agreements contained herein, the parties hereto agree
as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 Defined Terms. As used herein, the terms below shall
have the following meanings. Any of such terms, unless the context otherwise
requires, may be used in the singular or plural, depending upon the reference.
"Acquisition Proposal" shall mean any offer or proposal for,
or any indication of interest in, a merger or other business combination
involving KLSI or TSSI or the acquisition of more than 10% of the outstanding
voting securities in, or a substantial portion of the assets of, any of Xxxx,
KLSI or TSSI, other than the transactions contemplated by this Agreement.
"Affiliate" shall have the meaning set forth in Rule 405 under
the 1933 Act and the rules and regulations thereunder.
"Applicable Law" shall mean, with respect to any Person, any
domestic or foreign, federal, state or local statute, law, ordinance, rule,
administrative interpretation, regulation, order, writ, injunction, directive,
judgment, decree or other requirement of any Governmental Authority applicable
to such Person or any of its Affiliates or Plan Affiliates or any of their
respective properties, assets, officers, directors, employees, consultants or
agents (in connection with such officer's, director's, employee's consultant's
or agent's activities on behalf of such Person or any of its Affiliates or Plan
Affiliates). The foregoing notwithstanding, "Applicable Laws" shall not
include any Environmental Laws.
"Bid" shall mean any quotation, bid or proposal made by the
subject entity that if accepted or awarded would lead to a contract with the
U.S. Government or any other person for the design, manufacture and sale of
products or the provision of service by the subject entity.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations thereunder.
"Companies' Assets" shall mean all of the Companies'
businesses, personal and real properties, assets and rights of any kind
whatsoever (tangible or intangible), including without limitation, those assets
described in Section 4.18 of the Companies' Disclosure Statement (as defined
below).
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"Companies' Facilities" shall mean all plants, offices,
manufacturing facilities, stores, warehouses, improvements, administration
buildings, and real property and related facilities which are identified or
listed on Section 4.19 of the Companies' Disclosure Schedule.
"Companies' Leased Real Properties" shall mean all leased real
properties described in Companies' Leases.
"Companies' Leasehold Improvements" shall mean all leasehold
improvements situated in or on the Companies' Leased Real Properties and owned
by the Companies.
"Companies' Leases" shall mean all of the existing leases
pursuant to which either of the Companies leases any real property.
"Companies' Leased Real Properties" shall mean all leased real
properties described in the Companies' Leases.
"Companies' Owned Real Property" shall mean all real property
owned in fee by either of the Companies, including without limitation all
rights, easements and privileges appertaining or relating thereto, all
buildings, fixtures, and improvements located thereon and all Companies'
Facilities thereon, if any.
"Companies' Real Properties" shall mean both the Companies'
Owned Real Properties and the Companies' Leased Real Properties.
"Contract" shall mean any agreement, contract, note, loan,
evidence of indebtedness, purchase order, letter of credit, franchise
agreement, undertaking, covenant not to compete, employment agreement, license,
instrument, obligation or commitment to which the subject entity is a party or
is bound, whether oral or written, but excludes all the Companies' Leases or
Wyle Leases, as the case may be, and all "employee benefit plans" and Xxxx
Benefit Arrangements or Wyle Benefit Arrangements, as the case may be.
"Delaware Secretary" shall mean the Secretary of State of the
State of Delaware.
"Environmental Permits" shall mean all licenses, permits,
approvals, authorizations, consents or orders of, or filings with, any
Governmental Authority, whether federal, state or local, required for the
operation of the business of the subject entity under Environmental Laws.
"Governmental Authority" shall mean any foreign, domestic,
federal, territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory organization,
commission, tribunal or organization or any regulatory, administrative or other
agency, or any political or other subdivision, department or branch of any of
the foregoing.
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"Government Contract" shall mean any prime contract,
subcontract, teaming agreement or arrangement, joint venture, basic ordering
agreement, letter contract, purchase order, delivery order, Bid, change order,
or other contractual commitment of any kind between the subject entity and (i)
the U.S. Government, (ii) any prime contractor of the U.S. Government, or (iii)
any subcontractor with respect to any contract described in clauses (i) or
(ii).
"Government-Furnished Item" shall mean any personal property,
equipment or fixture loaned, bailed or otherwise furnished to the subject
entity by or on behalf of the U.S. Government that is or should be in the
possession of the subject entity and is subject to any remaining U. S.
Government rights.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
"Interim Balance Sheet" shall mean the interim balance sheet
of the subject entity, which (i) with respect to the Companies, shall mean the
Companies' balance sheet dated December 31, 1997, and (ii) with respect to
Xxxx, shall mean Xxxx'x balance sheet dated December 31, 1997.
"Interim Financial Statement" shall mean the Interim Balance
Sheet of the subject entity and the statement of operations and cash flows of
the subject entity for the period since the date of the Year-End Financial
Statement and ending on the date of the Interim Balance Sheet, which shall be
prepared in accordance with generally accepted accounting principles,
consistently applied, but will not contain footnotes or cash flow statement and
are subject to normal year-end adjustment.
"Xxxx Financial Statements" shall mean the Year-End Financial
Statements for the years ending March 31, 1995, 1996 and 1997 of Xxxx and the
Interim Financial Statements of Xxxx dated December 31, 1997, and the Year-End
Financial Statements of the Companies for the year ending March 31, 1997 and
the Interim Financial Statements dated December 31, 1997, of the Companies.
"Lien" means, with respect to any Companies' Assets or Wyle
Assets, as the case may be, any mortgage, deed of trust, lien, pledge, charge,
security interest or encumbrance of any kind in respect to such assets.
"Material Adverse Effect" shall mean a consequence that is
materially adverse as to the business or financial condition of the subject
entity.
"Ohio Secretary" shall mean the Secretary of State of the
State of Ohio.
"Permits" shall mean all licenses, permits, franchises,
approvals, authorizations, consents or order of, or filings with, any
governmental authority, whether foreign, federal, state
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or local, or any other person, owned or held by the subject entity for the
respective operation of the subject entity's business. The foregoing
notwithstanding, "Permits" shall not include any Environmental Permits.
"Person" shall mean an individual, a corporation, a limited
liability company, a partnership, an association, a trust or any other entity
or organization, including a Governmental Authority or political subdivision or
any agency or instrumentality thereof.
"Plan Affiliate" shall mean any other Person which, together
with such Person, would be treated as a single employer under Section 414 of
the Code.
"Quarterdeck" shall mean Quarterdeck Investment Partners,
Inc., a Delaware corporation.
"Subsidiary" shall mean any corporation, partnership, limited
liability company, joint venture or other legal entity of which a subject
entity (either alone or through or together with any other subsidiary) owns,
directly or indirectly, fifty percent (50%) or more of the stock or other
equity interests, the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation
or other legal entity.
"Tax" shall mean and include all Federal, state, local and
foreign income, franchise, alternative or add-on minimum tax, gross receipts,
transfer, withholding on amounts paid to or by the subject entity, payroll,
employment, license, property, sales, use, excise, escheat and other taxes,
tariffs or governmental charges of any nature whatsoever, together with any
interest, penalty or addition to tax attributable to such taxes.
"U.S. Government" shall mean the United States Government,
including any agencies, commissions, branches, instrumentalities and
departments thereof.
"Wyle Assets" shall mean all of Wyle's business, personal and
real properties, assets and rights of any kind whatsoever (tangible or
intangible), including without limitation, those assets described in Section
5.17 of the Wyle Disclosure Schedule.
"Wyle Facilities" shall mean all plants, offices,
manufacturing facilities, stores, warehouses, improvements, administration
buildings, and real property and related facilities which are identified or
listed on Section 5.18 of the Wyle Disclosure Schedule.
"Wyle Financial Statements" shall mean Year-End Financial
Statement and the Interim Financial Statement of Wyle.
"Wyle Leased Real Properties" shall mean all leased real
properties described in the Wyle Leases.
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"Wyle Leasehold Improvements" shall mean all leasehold
improvements situated in or on the Wyle Leased Real Properties and owned by
Wyle.
"Wyle Leases" shall mean all of the existing leases pursuant
to which Wyle leases any real property.
"Wyle Owned Real Properties" shall mean all real properties
owned in fee by Wyle, including all rights, easements and privileges
appertaining or relating thereto, all buildings, fixtures, and improvements
located thereon and all Wyle Facilities thereon, if any.
"Wyle Real Properties" shall mean both Wyle Owned Real
Properties and Wyle Leased Real Properties.
"Year-End Financial Statement" shall mean the balance sheet
dated March 31, in the case of Xxxx, and December 28, in the case of Wyle, and
the related statements of operations, changes in owner's equity and cash flows
for the year end on such date, and shall mean, with respect to the Companies,
the balance sheet dated December 31, 1997 and the related statements of
operations.
When reference is made in this Agreement to a Section, such
reference shall be to a Section of this Agreement unless otherwise indicated.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to followed by the words "without limitation."
Reference herein to the Companies shall mean and refer to either or both of the
Companies, unless the context clearly indicates otherwise.
SECTION 1.2 Other Defined Terms. The following terms shall have the
meanings defined for such terms in the Sections set forth below:
Term Section
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1933 Act 4.3
1934 Act 4.3
Actions 4.23
Additional Agreements 6.6
AECA 4.16(h)
Agreement Preamble
Agreement Regarding Employee Benefits 6.6(f)
Closing 2.2
Closing Date 2.2
Companies Preamble
Companies' Disclosure Schedule 4
Companies' Licensed Rights 4.26(a)
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Companies' Proprietary Rights 4.26(a)
Companies' Shares Preamble
Covenant Not to Compete 6.6(c)
Delaware Certificate of Merger 2.1(b)
Delaware Law 2.1(a)
EAA 4.16(h)
Effective Time 2.1(b)
employee benefit plan 4.9(a)
Employment Agreements 6.6(b)
Environmental Conditions 4.11(g)
Environmental Laws 4.11(b)
ERISA 4.9
Exchanged Wyle Shares 5.6(b)
Government Bid 4.16(a)
Hazardous Substance 4.11(a)(ii)
HSR Authority 9.2(d)
Investment Representation Letter 6.6(e)
KLSI Preamble
Xxxx Preamble
Xxxx Employee Plans 4.9(a)
Loan Agreement 4.20(d)
Merger Consideration 2.3(d)
multiemployer plans 4.9(b)
Ohio Certificate of Merger 2.1(b)
Ohio Law 2.1(b)
Old Wyle Shares 5.6(a)
Release 4.11(a)(i)
Restated Certificate 3.1
SEC 4.29(a)
Series A Designations 3.1
Series A-1 Preferred Stock 2.3(a)
Series B Designations 3.1
Series B Preferred Stock 2.3(a)
Series C Designations 3.1
Series C Preferred Stock 3.1
Series D Designations 3.1
Series D Preferred Stock 2.3(a)
Stockholders Agreement 6.6(a)
Surviving Corporation 2.1(a)
Transaction Expenses 12.3
Transitional Services Agreement 6.6(d)
Truth in Negotiations Act 4.12
TSSI Preamble
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UNITA 4.16(h)
Wyle Preamble
Wyle Disclosure Schedule 5
Wyle Employee Plans 5.9(a)
Wyle Environmental Conditions 5.10(f)
Wyle Licensed Rights 5.25(a)
Wyle Proprietary Rights 5.25(a)
ARTICLE 2
THE MERGER
SECTION 2.1 The Merger.
(a) On the terms and subject to the conditions set forth herein
and in accordance with the General Corporation Law of the State of Delaware
(the "DELAWARE LAW"), at the Effective Time (as defined in Section 2.1(b)), the
Companies shall be merged with and into Wyle in accordance with Delaware law,
whereupon the separate existence of the Companies (except as may be continued
by operation of law) shall cease, and Wyle shall be the surviving corporation.
The term "SURVIVING CORPORATION" appearing in this Agreement denotes Wyle after
the Effective Time (as defined below).
(b) On the Closing Date, Wyle and the Companies will to, properly
execute and file (i) a certificate of merger (the "DELAWARE CERTIFICATE OF
MERGER") in substantially the form attached hereto as Exhibit 2.1(b)(i) with
the Delaware Secretary and make all other filings required by Delaware Law in
connection with the Merger and (ii) the certificate of merger (the "OHIO
CERTIFICATE OF MERGER") in substantially the form of Exhibit 2.1(b)(ii) with
the Ohio Secretary pursuant to its General Corporation Law ("OHIO LAW") as well
as any additional documents or filings required by the Applicable Law in the
State of Ohio in connection with the Merger. The Merger shall become effective
at such time as specified in the Delaware Certificate of Merger and the Ohio
Certificate of Merger (the "EFFECTIVE TIME").
(c) From and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, powers and franchises and be subject
to all of the restrictions, disabilities and duties of Wyle and the Companies,
all as provided under Delaware Law.
SECTION 2.2 Closing. Subject to satisfaction or waiver of
Sections 9.1, 9.2 and 9.3 hereof, the closing of the transactions contemplated
by this Agreement (the "CLOSING") will take place at the offices of Sanders,
Barnet, Xxxxxxx, Xxxxxx & Mosk, A Professional Corporation, 0000 Xxxxxx xx xxx
Xxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, at 10:00 a.m. local time on a
date to be specified by the parties hereto, which shall be no later than the
third (3rd) business day after satisfaction or waiver of all conditions to the
Closing (the "CLOSING
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DATE"), unless another date or place is agreed to in writing by the parties
hereto; provided, however, that in no event shall the Closing Date be later
than March 31, 1998.
SECTION 2.3 Conversion of the Companies' Capital Stock. All
issued and outstanding shares of the Companies' capital stock will be converted
at the Effective Time as follows:
(a) Each share of Common Stock of KLSI outstanding
immediately prior to the Effective Time shall be converted into the
right to receive Two Thousand Seven Hundred Forty-Four and 7058/10000
Dollars ($2,744.7058) (as adjusted pursuant to Section 2.3(c)), four
thousand four hundred seventy and 5882/10000 (4,470.5882) shares of
Series A-1 Preferred Stock (the "SERIES A-1 PREFERRED STOCK"), eleven
and 341176/1000000 (11.341176) shares of Series B Senior Redeemable
Preferred Stock (the "SERIES B PREFERRED STOCK"), and that number, if
any, of shares of Series D Preferred Stock (the "SERIES D PREFERRED
STOCK") pursuant to Section 2.3(c).
(b) Each share of Common Stock of TSSI outstanding
immediately prior to the Effective Time shall be converted into the
right to receive Two Thousand Seven Hundred Forty-Four and 7058/10000
Dollars ($2,744.7058), four thousand four hundred seventy and
5882/10000(4,470.5882) shares of Series A-1 Preferred Stock, eleven
and 341176/1000000 (11.341176) shares of Series B Preferred Stock, and
that number, if any, of shares of Series D Preferred Stock pursuant to
Section 2.3(c).
(c) Notwithstanding Sections 2.3(a) and 2.3(b), to the
extent that the Companies' working capital debt under the Loan
Agreement (as defined below) exceeds Four Million Dollars
($4,000,000), the aggregate amount of cash consideration paid with
respect to the Companies' Shares (i.e., $2,333,000) shall be reduced,
dollar for dollar, which reduction shall proportionately reduce the
per-share consideration paid with respect to each such share;
provided, further, that to the extent such aggregate amount of cash
consideration is reduced, shares of Series D Preferred Stock having an
aggregate liquidation value equal to such amount shall be issued as
additional merger consideration, to be issued ratably with respect to
each share of KLSI and TSSI; provided, further, that to the extent
such working capital debt is less than Four Million Dollars
($4,000,000) then the aggregate amount of cash consideration paid with
respect to the Companies' Shares shall be increased, dollar for
dollar, which increase shall proportionately increase the per-share
consideration paid with respect to each share.
(d) The three million eight hundred thousand (3,800,000)
shares of Series A-1 Preferred Stock, nine thousand six hundred
thousand (9,640) shares of Series B Preferred Stock and any shares of
Series D Preferred Stock to be issued to Xxxx pursuant to Section
2.3(c) at the Effective Time and the Two Million Three Hundred
Thirty-Three Thousand Dollars ($2,333,000), as adjusted under Section
2.3(c), to be paid to Xxxx at the Effective Time shall be the "MERGER
CONSIDERATION."
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(e) The Merger Consideration shall be issued to Xxxx in
exchange for the Companies Shares and the Covenant Not to Compete.
The parties shall agree to allocate the Merger Consideration between
the Companies' Shares and the Covenant Not to Compete, as well as the
assets acquired. The allocation of the Merger Consideration as agreed
to by the parties is hereto set forth in the attached Exhibit 2.3(e).
The parties shall agree to utilize the allocation for financial
statements and, where appropriate, tax or other government reporting
purposes, and not to take contrary positions.
(f) Each share of capital stock of KLSI held by KLSI as
treasury stock immediately prior to the Effective Time shall be
canceled and retired and no payment or conversion to Series A-1
Preferred Stock, Series B Preferred Stock or Series D Preferred Stock
shall be made with respect to any such share.
(g) Each share of capital stock of TSSI held by TSSI as
treasury stock immediately prior to the Effective Time shall be
canceled and retired and no payment or conversion to Series A-1
Preferred Stock, Series B Preferred Stock or Series D Preferred Stock
shall be made with respect to any such share.
SECTION 2.4 Addresses of Surviving Corporation. The principal
address of the Surviving Corporation shall be 000 Xxxxxxxx Xxxxxx, Xx Xxxxxxx,
Xxxxxxxxxx 00000. The address of the Surviving Corporation's registered
office in the State of Delaware is 00 Xxxxxxxxxx Xxxxxx, Xxxxx X-000, in the
City of Dover, County of Kent.
SECTION 2.5 Consent to Service of Process. The Surviving
Corporation shall consent to be sued and served with process in the State of
Ohio and shall irrevocably appoint the Ohio Secretary as its agent to accept
service of process in the State of Ohio to enforce against it any obligation of
the Companies or to enforce the rights of a dissenting shareholder of the
Companies.
SECTION 2.6 Qualification to Transact Business. The Surviving
Corporation will transact business in Ohio as a foreign corporation and C T
Corporation System shall serve as the Surviving Corporation's statutory agent
upon whom service of process, notice or demand may be served against the
Surviving Corporation in the State of Ohio.
ARTICLE 3
THE SURVIVING CORPORATION
SECTION 3.1 Certificate of Incorporation. The Restated
Certificate of Incorporation in substantially the form attached hereto as
Exhibit 3.1A (the "RESTATED CERTIFICATE") (including the Certificate of
Designations of Series A-1 Preferred Stock in substantially the form attached
hereto as Exhibit 3.1B (the "SERIES A DESIGNATIONS"), the
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Certificate of Amendment of Certificate of Designations of Series B Senior
Redeemable Preferred Stock in substantially the form attached hereto as Exhibit
3.1C (the "SERIES B DESIGNATIONS"), the Certificate of Designations of Series C
Preferred Stock (the "SERIES C PREFERRED STOCK") in substantially the form
attached hereto as Exhibit 3.1D (the "SERIES C DESIGNATIONS"), and the
Certificate of Designations of Series D Preferred Stock in substantially the
form attached hereto as Exhibit 3.1E (the "SERIES D DESIGNATIONS")) shall be
the certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law.
SECTION 3.2 Bylaws. The Restated Bylaws of Wyle, in the form
attached hereto as Exhibit 3.2, at the Effective Time shall be the bylaws of
the Surviving Corporation until amended in accordance with applicable law.
SECTION 3.3 Directors and Officers. From and after the Effective
Time, until successors are duly elected or appointed in accordance with
applicable law, the directors of the Surviving Corporation shall be those
persons named on Schedule 3.3A hereto and the officers of the Surviving
Corporation shall be those persons named, holding the office or offices set
forth opposite his name on Schedule 3.3B hereto.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF THE COMPANIES
The Companies jointly and severally represent and warrant to
Wyle that the statements contained in this Article Four are true, correct and
complete as of the date of this Agreement and will be true, correct and
complete on and 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 Four), except as set forth in the disclosure schedule delivered by the
Companies to Wyle on the date hereof and initialed by the parties hereto (the
"COMPANIES' DISCLOSURE SCHEDULE").
SECTION 4.1 Corporate Existence and Power. Each of the Companies
and Xxxx is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Ohio, and has all corporate powers
required to carry on its business as now conducted. Each of the Companies is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where the character of the property owned or leased by it
or the nature of its activities makes such qualification necessary, except for
those jurisdictions where the failure to be so qualified or in good standing
would not, individually or in the aggregate, have a Material Adverse Effect.
Copies of each of the Companies' articles of incorporation and bylaws and all
amendments thereto heretofore delivered to Wyle are accurate and complete as of
the date hereof and as of the Closing Date.
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SECTION 4.2 Corporate Authorization. Each of the Companies has
all requisite corporate power and authority, and has taken all corporate action
necessary, to own, lease and operate the Companies' Assets, to conduct the
business of the Companies, as the case may be, as such business is presently
being conducted, to execute and deliver this Agreement and the other agreements
contemplated hereby to which the Companies are or will become a party or by
which the Companies are or may be bound, to consummate the transactions
contemplated hereby and to perform Companies' obligations hereunder. The
execution and delivery of this Agreement and such other agreements by each of
the Companies and the consummation by each of the Companies of the transactions
contemplated hereby have been duly approved by the Boards of Directors and the
shareholders of each of the Companies. No other corporate proceedings on the
part of Xxxx or the Companies are necessary to authorize this Agreement or such
other agreements and the transactions contemplated hereby and thereby. This
Agreement is, and each of such other agreements will be, duly executed and
delivered by each of the Companies and this Agreement is, and each such other
agreements, when duly executed and delivered by each of the Companies, will be
a legal, valid and binding obligation of each of the Companies enforceable
against each of them in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium, arrangement or other
similar laws or equitable principles relating to or limiting creditors' rights
generally.
SECTION 4.3 Governmental Authorization. The execution, delivery
and performance by each of the Companies of this Agreement, the consummation of
the Merger by each of the Companies and the conduct of the business of the
Companies as such conduct will, as a matter of law or regulation, be affected
by the consummation of the Merger, will not require by or with respect to each
of the Companies, any action by or in respect of, or filing with, any
Governmental Authority other than (i) the filing of the Delaware Certificate of
Merger in accordance with Delaware Law; (ii) the filing of the Ohio Certificate
of Merger in accordance with the Ohio Law; (iii) compliance with any applicable
requirements of the HSR Act; (iv) compliance with the applicable requirements
of the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the "1933 ACT"); (v) compliance with the applicable
requirements of the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder (the "1934 ACT"); (vi) compliance with
any applicable foreign or state securities or Blue Sky laws; and (vii) such
governmental approvals as may be required by NASA and the U.S. Air Force to the
novation or assignment of certain contracts of the Companies.
SECTION 4.4 Non-Contravention. The execution, delivery and
performance by each of the Companies of this Agreement and the consummation by
the Companies and Xxxx of the transactions contemplated hereby do not and will
not (i) contravene or conflict with the articles of incorporation or bylaws of
the Companies or Xxxx, as the case may be, (ii) assuming compliance with the
matters referred to in Section 4.3 above, contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to either of the
Companies or their businesses as presently conducted, which violation would be
likely to have a Material Adverse Effect, (iii) constitute a default under or
give rise to a right of termination, cancellation or acceleration of any right
or
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obligation of the Companies or to a loss of any benefit to which either of the
Companies is entitled under any provision of any agreement, contract or other
instrument binding upon the Companies or any license, franchise, permit or
other similar authorization held by either of the Companies, which default,
termination, cancellation, acceleration or loss of benefit would be likely to
have a Material Adverse Effect or (iv) result in the creation or imposition of
any Lien on the Companies or the Companies' Shares which creation or imposition
would be likely to have a Material Adverse Effect.
SECTION 4.5 Capitalization. The entire authorized capital stock
of the KLSI consists of seven hundred fifty (750) shares of common stock, no
par value, all of which are issued and outstanding. The entire authorized
capital stock of TSSI consists of one hundred (100) shares of common stock, no
par value, all of which are issued and outstanding. All of the issued and
outstanding shares of the Companies have been duly authorized and validly
issued and are fully paid and nonassessable and are beneficially owned and held
of record by Xxxx free and clear of all Liens. There are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
the Companies to issue, sell, or otherwise cause to become outstanding any of
their capital stock. There are no outstanding obligations of the Companies to
repurchase, redeem or otherwise acquire any debt or equity securities of Xxxx
or the Companies.
SECTION 4.6 No Subsidiaries. The Companies have no Subsidiaries.
SECTION 4.7 Absence of Certain Changes. To the best of the
Companies' knowledge, since December 31, 1997, each of the Companies has
conducted its business in the ordinary course consistent with past practice
and, except as set forth in Section 4.7 of the Companies' Disclosure Schedule
or contemplated by this Agreement, there has not been:
(a) any event, occurrence or development which has had or
is likely to have a Material Adverse Effect;
(b) any declaration, setting aside or payment of any
dividend or other distribution with respect to any of the Companies'
Shares, or any repurchase, redemption or other acquisition by the
Companies of any of the Companies' Shares or other securities of, or
other ownership interests in, the Companies;
(c) any incurrence, assumption or guarantee by the Companies
of any indebtedness for borrowed money;
(d) any creation or assumption by the Companies of any Lien
on any of the Companies' Assets other than in the ordinary course of
business consistent with past practices;
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(e) any making of any loan, advance or capital contributions
to or investment in any Person;
(f) any damage, destruction or other casualty loss (whether
or not covered by insurance) affecting the business or assets of the
Companies which, individually or in the aggregate, has had or is
likely to have a Material Adverse Effect;
(g) any transaction or commitment made, or any contract or
agreement entered into, by each of the Companies relating to its
assets or business (including the acquisition or disposition of any
assets) or any relinquishment by each of the Companies of any contract
or other right, other than transactions and commitments in the
ordinary course of business consistent with past practices;
(h) any (i) grant of any severance or termination pay to
any director or officer of the Companies, (ii) execution and/or
delivery of any employment, deferred compensation or other similar
agreement (or any amendment to any existing agreement) with any
director, or officer of the Companies, (iii) increase in benefits
payable under any existing severance or termination pay policies or
employment agreements with any director or officer of the Companies or
(iv) increase in compensation, bonus or other benefits payable to any
of the directors or officers of the Companies; or
(i) any labor dispute, other than routine individual
grievances, which are likely to have a Material Adverse Effect, or,
to the best of the Companies' knowledge, any activity or proceeding
by a labor union or representative thereof to organize any employees
of the Companies, which employees were not subject to a collective
bargaining agreement as of December 31, 1997, or any lockouts,
strikes, slowdowns, work stoppages or threats thereof by or
with respect to such employees which activity, proceeding or action
has had or is likely to have a Material Adverse Effect.
SECTION 4.8 Taxes. Each of Xxxx and the Companies has timely
filed (i) all tax returns and reports required to be filed by it or (ii)
requests for extensions to file such returns or reports, which requests have
been granted and have not expired, except to the extent that any such failure
to file or to have extensions granted that remain in effect individually or in
the aggregate would not have a Material Adverse Effect. Each of Xxxx and the
Companies has timely paid all Taxes shown as due on such returns, and the Xxxx
Financial Statements reflect, in accordance with generally accepted accounting
principles (applied to the Xxxx Financial Statements taken as a whole), an
adequate reserve for all Taxes payable by each of Xxxx and the Companies for
all taxable periods and portions thereof accrued through the date of the Xxxx
Financial Statements. No deficiencies for any Taxes have been proposed,
asserted or assessed against Xxxx or the Companies that are not adequately
reserved for, except for deficiencies that individually or in the aggregate
would not have a Material Adverse Effect, and as of the date of this Agreement
no requests for waivers of the time to assess any such Taxes have been granted
and are outstanding or are pending. Neither of the Companies is a party to any
tax allocation or sharing agreement.
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Neither of the Companies has any liability for the Taxes of any Person under
Treasury Regulation Section 1.1502-6 (or any similar provision of state, local
or foreign law) as a transferee or successor, by contract or otherwise.
SECTION 4.9 ERISA.
(a) Section 4.9(a) of the Companies' Disclosure Schedule lists
each "EMPLOYEE BENEFIT PLAN," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA") of Xxxx and/or the Companies,
and each employment, severance or other similar contract, arrangement or policy
and each plan or arrangement (written or oral) providing for insurance coverage
(including any self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits, retirement
benefits or for deferred compensation, profit-sharing, bonuses, stock options,
stock appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits which (i) is entered into, maintained,
administered or contributed to, as the case may be, by Xxxx, the Companies or
any Plan Affiliate and (ii) covers any employee or former employee of Xxxx, the
Companies or any Plan Affiliate or under which Xxxx, the Companies, or any Plan
Affiliate has any liability; provided, however, that the term "employee benefit
plan" shall not include the Xxxx International Retirement Savings Plan (a
401(k) plan). Except for that Savings Plan, the plans referred to in the
preceding sentence are referred to collectively herein as the "XXXX EMPLOYEE
PLANS." True and complete copies of each of such employee benefit plans (and,
if applicable, related trust agreements) and all amendments thereto and written
interpretations thereof have been delivered to Wyle together with (x) the most
recent annual reports (Form 5500 including, if applicable, Schedule B thereto)
prepared in connection with any such plan and (y) the most recent actuarial
valuation report prepared in connection with any Xxxx Employee Plan.
(b) Except as set forth in Section 4.9(b) of the Companies
Disclosure Schedule, no Xxxx Employee Plan (i) is maintained in connection with
any trust described in Section 501(c)(9) of the Code or (ii) is subject to
Title IV of ERISA. If a "complete withdrawal" by Xxxx, the Companies and the
Plan Affiliates were to occur as of the Closing Date with respect to all
"MULTIEMPLOYER PLANS" as defined in Section 3(37) of ERISA, neither Xxxx, the
Companies nor any Plan Affiliate would incur any "withdrawal liability" within
the meaning of Section 4201 of ERISA, under Title IV of ERISA, except as would
not have a Material Adverse Effect. Except as would not have a Material
Adverse Effect, no "prohibited transaction," as defined in Section 406 of ERISA
or Section 4975 of the Code, has occurred with respect to any Xxxx Employee
Plan or any other employee benefit plan or arrangement maintained by Xxxx or
any Plan Affiliate which is covered by Title I of ERISA.
(c) Each Xxxx Employee Plan which is intended to be qualified
under Section 401(a) of the Code is so qualified and has been so qualified
during the period from its adoption to date, and each trust forming a part
thereof is exempt from tax pursuant to Section 501(a) of the Code. Each of the
Companies has delivered to Wyle copies of the most recent Internal Revenue
Service determination letters with respect to each such Plan. Each Xxxx
Employee Plan has been
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maintained in compliance with its terms and with all applicable legal
requirements, except where the failure to comply would not have a Material
Adverse Effect.
(d) There is no contract, agreement, plan or arrangement covering
any employee or former employee the Companies or any Plan Affiliate that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible pursuant to the terms of Sections 162(a)(1) or 280G of
the Code nor would any Person become entitled to severance termination
allowance or similar payments as a result of the transactions contemplated by
this Agreement.
(e) The Companies do not have any current or projected liability
in respect of post-employment or post-retirement health, medical or life
insurance benefits for retired or former employees of the Companies and/or
their Affiliates, except as required by applicable law. No condition exists
that would prevent the Companies from amending or terminating any Xxxx Employee
Plan providing health or medical benefits in respect of any active employee of
the Companies except where liability to amend or terminate any such plan or
arrangement would not have a Material Adverse Effect or result in an aggregate
liability in excess of One Hundred Thousand Dollars ($100,000).
(f) Except as set forth on Section 4.9(f) of the Companies'
Disclosure Schedule, there has been no amendment to, written interpretation or
announcement (whether or not written) by Xxxx, the Companies or any Plan
Affiliate relating to, or change in employee participation or coverage under,
any Xxxx Employee Plan which would increase materially the expense of
maintaining such Xxxx Employee Plan above the level of the expense incurred in
respect thereof for the fiscal year ended on March 31, 1997.
(g) Neither of the Companies has any knowledge of any material
actions, suits or claims pending or threatened, against the assets of any Xxxx
Employee Plan, other than routine claims for benefits.
(h) Each of Xxxx and the Companies has made full and timely
payment of all amounts required to be contributed under the terms of any
employee benefit plan and applicable law or required to be paid as expenses
under such plan, and shall continue to do so through the Closing Date.
SECTION 4.10 No Finders' Fees. Except for the fees payable to
Quarterdeck in connection with the consummation of the Merger, there is no
investment banker, broker, finder or other intermediary which has been retained
by or is authorized to act on behalf of the Companies who might be entitled to
any fee or commission from Xxxx, the Companies, the Surviving Corporation or
any of its Affiliates upon consummation of the transactions contemplated by
this Agreement.
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SECTION 4.11 Compliance With Environmental Laws.
(a) The following terms, when used in Sections 4.11 and 5.10, shall
have the following meanings. Any of these terms may, unless the context
otherwise requires, be used in the singular or the plural depending on the
reference.
(i) "RELEASE" shall mean and include any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping, migrating within the environment or
disposing into the environment or the workplace of any Hazardous
Substance, and otherwise as defined in any Environmental Law.
(ii) "HAZARDOUS SUBSTANCE" shall mean any quantity of asbestos
in any form, urea formaldehyde, PCB's, radon gas, crude oil or any
fraction thereof, all forms of natural gas, petroleum products or
by-products, any radioactive substance, any toxic, infectious,
reactive, corrosive, ignitible or flammable chemical or chemical
compound and any other hazardous substance, material or waste
(as defined in or for purposes of any Environmental Law), whether
solid, liquid or gas.
(b) To the best of the Companies' knowledge, each of the
Companies' Real Properties is maintained in compliance with all federal, state
or local laws, statutes, ordinances, regulations, rules, judgments, orders,
notice requirements, agency guidelines or restrictions and licenses, which (i)
regulate or relate to the protection or clean-up of the environment; the use,
treatment, storage, transportation, handling, disposal or Release of Hazardous
Substances, the preservation or protection of waterways, groundwater, drinking
water, air, wildlife, plants or other natural resources; or the health and
safety of persons or property, including protection of the health and safety of
employees; or (ii) impose liability with respect to any of the foregoing,
including the Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.),
Resource Conservation & Recovery Act (42 U.S.C. Section 6901 et seq.), Safe
Drinking Water Act (21 U.S.C. Section 349, 42 U.S.C. Sections 201, 300f),
Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.), Clean Air Act
(42 U.S.C. Section 7401 et seq.), Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Section 9601 et seq.), California
Heath & Safety Code (Section 25100 et seq., Section 39000 et seq.), and
California Water Code (Section 13000 et seq.), or any other similar Federal,
state or local law of similar effect, each as amended (all of the above,
collectively, are referred to herein as the "ENVIRONMENTAL LAWS").
(c) To the best of the Companies' knowledge, each of the
Companies has all Environmental Permits required under any Environmental Law or
the provisions thereof and each of the Companies' Real Properties is in
compliance with all such Environmental Permits.
(d) To the best of the Companies' knowledge, neither Xxxx nor
the Companies has received any notice at any time that it is or was claimed to
be in violation of or in non-compliance with the conditions of any
Environmental Permit required under any Environmental Law or the provisions of
any Environmental Law that have not been corrected.
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(e) To the best of the Companies' knowledge, there is not now
pending or threatened any Action against the Companies under any Environmental
Law or otherwise with respect to any Release or mishandling of any Hazardous
Substance.
(f) To the best of the Companies' knowledge, there are no consent
decrees, judgments, judicial or administrative orders or agreements with, or
Liens by, any governmental authority or quasi-governmental entity relating to
any Environmental Law which regulate, obligate, bind or in any way affect the
Companies, the Companies' Assets, the Companies' business or any Companies'
Real Properties.
(g) To the best of the Companies' knowledge, there are no present
or past Environmental Conditions in any way relating to the Companies or the
Companies' Real Properties. "ENVIRONMENTAL CONDITIONS" means the introduction
into the environment of any pollution, including any contaminant, irritant or
pollutant or other Hazardous Substance (whether or not upon the Companies' Real
Properties and whether or not such pollution constituted at the time thereof a
violation of any Environmental Law as a result of any release of any kind
whatsoever of any Hazardous Substance) as a result of which either of the
Companies has or may become liable to any person or by reason of which any of
the Companies' Real Properties or any of the Companies' Assets may suffer or be
subjected to any Lien.
(h) To the best of the Companies' knowledge, true, complete and
correct copies of the written reports, and all parts thereof, including any
drafts of such reports if such drafts are in the possession or control of Xxxx
or the Companies, of all environmental audits or assessments which have been
conducted at any of the Companies' Real Properties, including previous or past
operations at each of the Companies' Real Properties, within the past five (5)
years, either by Xxxx, the Companies or any attorney, environmental consultant
or engineer engaged for such purpose, have been delivered to Wyle and a list of
all such reports, audits and assessments and any other similar reports, audit
or assessment of which the Companies has knowledge is included on the
Companies' Disclosure Schedule.
(i) Neither of the Companies has made and has been required to
make any filing under the New Jersey Industrial Site Recovery Act, the
Environmental Cleanup Responsibility Act, or any other state law of similar
effect.
SECTION 4.12 Bids. To the best of the Companies' knowledge, other
than those set forth in Section 4.12 of the Companies' Disclosure Schedule,
each of the Companies has not submitted any Bid relating to its business which
is currently outstanding and which, if accepted or awarded, would result in a
Government Contract where the volume of purchases of materials, supplies,
goods, services, equipment or other assets from the Companies under any such
resulting Government Contract could be reasonably expected to exceed Two
Hundred Fifty Thousand Dollars ($250,000). Section 4.12 of the Companies'
Disclosure Schedule identifies each such Bid by number and the party to which
such Bid was made and the proposed price. All cost or pricing data submitted
or certified in connection with each of such Bids are current, accurate and
complete
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in accordance with the Truth in Negotiations Act, as amended, and the rules and
regulations thereunder (collectively, the "TRUTH IN NEGOTIATIONS ACT").
SECTION 4.13 Government-Furnished Property or Equipment. To the
best of the Companies' knowledge, all Government-Furnished Items of the
Companies are in a good state of maintenance and repair (except for ordinary
wear and tear and such conditions resulting solely from delay in repossession
by the Government), have been regularly and appropriately maintained and
repaired in accordance with all contractual, legal and regulatory requirements
and shall be in the possession of the Companies on the Closing Date. Each of
the Companies has complied in all material respects with all of its obligations
relating to its Government-Furnished Items, and upon the return thereof to the
U.S. Government in the condition thereof on the date hereof, would have no
liability to the U.S. Government with respect thereto. To the best of the
Companies' knowledge, Wyle will incur no liability to the U.S. Government as a
result of the Companies' failure to keep records, maintain or possess property
furnished to the Companies by or on behalf of the U.S. Government.
SECTION 4.14 Backlog.
(a) Section 4.14(a) of the Companies' Disclosure Schedule sets
forth, with respect to each Contract to which either of KLSI or TSSI is a party
having unfilled backlog as of December 31, 1997 in excess of Five Hundred
Thousand Dollars ($500,000) the backlog of the Companies thereunder as of the
date hereof including the customer name, dollar amount of backlog, backlog that
is unfunded by the U.S. Government and any unexercised subsisting and exercised
options.
(b) Except as set forth in said Section 4.14(b) of the Companies'
Disclosure Schedule, (i) all of the Contracts constituting the backlog of each
of the Companies (A) were entered into in the ordinary course of business, (B)
would be capable of performance in accordance with the terms and conditions of
each such Contract by KLSI or TSSI, as the case may be, and (C) are the subject
of valid and binding written agreements enforceable in accordance with their
respective terms, and (ii) neither of the Companies has received any notice
that any of such Contracts will be canceled or materially reduced.
SECTION 4.15 Clearances. Section 4.15 of the Companies'
Disclosure Schedule sets forth all facility and personnel security clearances
held by the Companies and, to the best of the Companies' knowledge, all
personnel security clearances held by each of the Companies' officers,
directors, employees, consultants and agents (to the extent such agent or
consultant is material to the performance of any Contract of KLSI or TSSI).
The Companies represent that no other security clearances are necessary to
allow the Surviving Corporation following the Merger to conduct the business of
the Companies as presently conducted, and that, except as disclosed in said
Section of the Companies' Disclosure Schedule, neither of the Companies has any
knowledge of any proposed or threatened termination of any personnel or
facility security clearance (whether or not such clearance is collateral or
special access, and whether or not such clearance is listed in said Section
4.15).
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SECTION 4.16 Government Contracts.
(a) Except as set forth in Section 4.16 of the Companies'
Disclosure Schedule, with respect to each and every Government Contract or Bid
(which, if accepted, would result in a Government Contract (a "GOVERNMENT
BID")) to which KLSI or TSSI is a party: (i) each of the Companies has
complied with all material terms and conditions of such Government Contract or
Government Bid, including all clauses, provisions and requirements incorporated
expressly, by reference or by operation of law therein; (ii) the Companies has
complied with all requirements of all applicable laws or agreements pertaining
to such Government Contract or Government Bid; (iii) all statements,
representations, warranties and certifications executed, acknowledged or set
forth in or pertaining to such Government Contract or Government Bid were
complete and correct as of their effective date and neither contained any
untrue statement of any material fact nor omitted to state a material fact
necessary in order to make the statements contained therein not misleading, and
each of the Companies has complied in all material respects with all such
statements, representations, certifications and warranties; (iv) neither the
U.S. Government nor any prime contractor, subcontractor or other Person has
notified the Companies, either in writing or orally, that any of the Companies
has breached or violated any Applicable Law, certification, representation,
clause, provision or requirement pertaining to such Government Contract or
Government Bid; (v) no termination for convenience, termination for default,
cure notice or show cause is currently in effect pertaining to such Government
Contract or Government Bid; (vi) no cost incurred by the Companies pertaining
to such Government Contract or Government Bid has been formally questioned or
challenged, is the subject of any investigation or has been disallowed by the
U.S. Government; (vii) no money due to the Companies pertaining to such
Government Contract or Government Bid has been withheld or set off, nor has any
claim been made to withhold or set off any such amounts and KLSI or TSSI, as
the case may be, is entitled to all payments received with respect thereto;
(viii) there is no claim, default or claim of default or basis therefor, or
event which, with the passage of time, could reasonably be expected to result
in a claim or default or give rise to any right of termination, cancellation,
acceleration or amendment or other claim by any party; and (ix) there has been
no omission by the Companies which may reasonably be expected to result in, and
there has been no occurrence which may reasonably be expected to result, in
product liability (whether covered by insurance or not) on the part of the
Companies, with respect to products designed, manufactured, assembled,
repaired, maintained, delivered or installed or services rendered by the
Companies prior to or on the Closing Date, except where such act or omission
would not have a Material Adverse Effect on the Companies.
(b) Neither of the Companies nor any of their respective
directors, officers, employees, consultants or agents is (or during the last
six (6) years has been) under administrative, civil or criminal investigation,
indictment or information by any Government Authority, or any audit or
investigation by any of the Companies with respect to any alleged irregularity,
misstatement or omission arising under or relating to any Government Contract
or Government Bid. During the last six (6) years, none of the Companies has
conducted or initiated any internal investigation or made a voluntary
disclosure to the U.S. Government, with respect to any alleged irregularity,
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misstatement or omission arising under or relating to a Government Contract or
Government Bid. To the best of the Companies' knowledge, there exists no
irregularity, misstatement or omission arising under or relating to any
Government Contract or Government Bid that has led, or could be expected to
lead, to any of the consequences set forth in clauses (i) or (ii) of the
immediately preceding sentence or to any other damage, penalty assessment,
recoupment of payment or disallowance of cost. Each of Xxxx and the Companies,
as applicable, has all permits required under or with respect to all Government
Contracts, except such permits the failure of which to obtain would not have a
Material Adverse Effect on the Companies.
(c) To the best of the Companies' knowledge, there exist (i) no
outstanding claims against Xxxx or the Companies, either by the U.S. Government
or by any prime contractor, subcontractor, vendor or other third party, arising
under or relating to any Government Contract or Government Bid; (ii) no
disputes between any of Xxxx or the Companies and the U.S. Government under the
Contract Disputes Act or any other Federal statute or between Xxxx or the
Companies and any prime contractor, subcontractor or vendor arising under or
relating to any Government Contract or Government Bid; (iii) no outstanding or
anticipated final decisions from a contracting officer; and (vi) no warranty
claims or obligations. Each of the Companies has no interest in any pending
claim, any claim under consideration, any pending request for equitable
adjustment or any request for equitable adjustment under consideration against
the U.S. Government or any prime contractor, subcontractor or vendor arising
under or relating to any Government Contract or Government Bid. Section
4.16(c) of the Companies' Disclosure Schedule lists each Government Contract
which is currently under audit (other than routine audits conducted in the
ordinary course of business) by the U.S. Government or any other Person that is
a party to such Government Contract.
(d) Except as set forth in Section 4.16(d) of the Companies'
Disclosure Schedule, since January 1, 1990, neither Xxxx nor the Companies has
been debarred or suspended from participation in the award of contracts with
the United States Department of Defense or any other Governmental Authority,
nor has Xxxx or the Companies been found non-responsible offerors within the
meaning of Federal Acquisition Regulation Subpart 9.1. To the best of the
Companies' knowledge, there exist no facts or circumstances that would warrant
the institution of suspension or debarment proceedings or the finding of
non-responsibility on the part of the Companies, or any director or officer of
the Companies.
(e) Xxxx'x and the Companies' cost accounting system and the
associated entries reflected in the Xxxx Financial Statements with respect to
the Government Contracts are in compliance in all material respects with all
Applicable Laws. Each of the Companies' accounting practices are consistent
with each of their respective accounting disclosure statements.
(f) All tests or inspections conducted on supplies or services
provided by the Companies to the U.S. Government pursuant to any Government
Contract or to any other Person pursuant to a Government Contract or as a part
of the delivery to the U.S. Government or to any other Person pursuant to a
Government Contract of any article designed, engineered or
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manufactured in the Companies' businesses were complete and correct in all
material respects as of the date so provided. The Companies have provided all
test or inspection results to the U.S. Government or to any other Person
pursuant to a Government Contract as required by Applicable Law and the terms
of the applicable Government Contracts.
(g) All cost or pricing data submitted in connection with
Government Contracts or Government Bids were current, accurate and complete
when submitted and none of the Government Contracts is in, or was awarded in,
violation of any "truth-in-negotiations" or "defective pricing" laws, rules or
regulation to which they are subject, including the Truth in Negotiations Act
and the False Claims Act.
(h) The Companies are and have been in full compliance with the
Export Administration Act (the "EAA"), as amended, and its regulations, and the
United States Arms Export Control Act (the "AECA"), as amended, and its
regulations, which provide generally that no commodities or technical data,
including any hardware, software, or other technical data (or direct products
thereof) shall be disclosed, exported or re-exported, directly or indirectly,
without first obtaining all prior approvals from the U.S. Department of
Commerce as required by the EAA and its regulations, or the U.S. Department of
State as required by AECA and its regulations. The Companies are and have been
in full compliance with the United States Foreign Assets Control Regulations,
as amended, which provide generally that companies under the jurisdiction of
the United States may not engage in any dealings or transactions, directly or
indirectly, with foreign countries embargoed by the United States, or foreign
nationals and companies identified by the United States as representing the
interests of such embargoed countries, which currently include Iran, Iraq,
Libya, North Korea, Cuba, Sudan, certain areas of the former Federal Republic
of Yugoslavia, and the National Union for the Total Independence of Angola (the
"UNITA"), as well as other countries so designated from time to time by the
U.S. government. Such dealings and transactions include any transfers,
withdrawals, or exportations of any property, or evidences of indebtedness or
evidences of ownership of property by any person subject to the jurisdiction of
the United States. The Companies are now and have been in full compliance with
the foreign boycott provisions of the EAA and its regulations which provide
generally that the Companies and their employees and agents shall not comply
with, further or support any unsanctioned foreign boycott, including without
limitation the supply of any prohibited customers, as proscribed by the EAA and
its regulations.
SECTION 4.17 Payments. To the best of the Companies' knowledge,
each of Xxxx and the Companies has not, directly or indirectly, given, paid or
delivered any fee, commission or other sum of money or item of property or
consideration, however characterized, to any finder, agent, government official
or other party, in the United States or any other country, which is in any
manner related to the business or the Companies' Assets of the Companies, which
is, or may be with the passage of time or discovery, illegal under any federal,
state or local laws of the United States (including the U.S. Foreign Corrupt
Practices Act) or any other country having jurisdiction; and to the best of the
Companies' knowledge, neither Xxxx nor the Companies has
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participated, directly or indirectly, in any kickbacks or boycotts or other
similar practices affecting any of its actual or potential customers of Xxxx'x
or the Companies' business.
SECTION 4.18 Companies' Assets. Except as described in Section
4.18 of the Companies' Disclosure Schedule, the Companies' Assets constitute
all of the tangible and intangible property used in the operation of the
businesses of the Companies as the same are currently conducted and no other
tangible or intangible property other than the Companies' Assets is used in
connection with the operation of such businesses. Except as described in
Section 4.18 of the Companies' Disclosure Schedule, the Companies have good and
marketable title to all of the Companies' Assets, free and clear of all Liens,
encumbrances, charges, security interests or options of any kind whatsoever.
Each of the Companies has a valid leasehold interest in each leased property
included within the Companies' Assets. Except as set forth in Section 4.18 of
the Companies' Disclosure Schedule, to the best of the Companies' knowledge,
all of the machinery, equipment, tooling and other tangible personal property
included within the Companies' Assets is in good operating condition and
repair, reasonable wear and tear excepted. Each of the Companies has
maintained the machinery, equipment, tooling and other tangible personal
property included within the Companies' Assets in a manner consistent with
industry standards and consistent with other similar machinery, equipment,
tooling and tangible personal property utilized by each of the Companies that
is included within the Companies' Assets.
SECTION 4.19 Companies' Real Properties.
(a) Section 4.19(a) of the Companies' Disclosure Schedule contains
a complete and accurate list of all Companies' Real Properties and a list of
all of the Companies' Leases pursuant to which each of the Companies leases
Companies' Real Properties. Each of the Companies has delivered to Wyle true,
complete and correct copies of all of the Companies' Leases. The Companies'
Owned Real Properties include all rights, easements and privileges required by
Applicable Law for the use of the Companies' Facilities located thereof, except
for such rights, easements and privileges, the absence of which would not be
likely to result in a Material Adverse Effect. There are no pending or, to the
best of the Companies' knowledge, threatened condemnation proceedings with
respect to any of the Companies' Real Properties. Except for the items listed
in said Section 4.19(a) of the Companies' Disclosure Schedule, there are no
leases, subleases, licenses, occupancy agreements, options, rights, concessions
or other agreements or arrangements, written or oral, granting to any person
the right to purchase, use or occupy any of the Companies' Owned Real
Properties, or any portion thereof or interest in any Companies' Owned Real
Properties, which materially interfere with the operation of any of the
Companies' businesses. The Companies enjoy undisturbed possession of all the
Companies' Leased Real Properties. Each of the Companies' Leases includes all
rights, easements and privileges required by Applicable Law for the operations
of the Companies being conducted on the Companies' Leased Real Properties
subject to such Companies' Lease, except for such rights, easements and
privileges, the absence of which would not be likely to result in a Material
Adverse Effect.
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(b) All Companies' Facilities have received all required approvals
of governmental authorities (including Permits and a certificate of occupancy
or other similar certificate permitting lawful occupancy of the Companies'
Facilities) required in connection with the operation thereof, except such
approvals as to which the failure to receive would not result in a Material
Adverse Effect, and have been operated and maintained in accordance with
Applicable Laws.
(c) All Companies' Facilities are supplied with utilities
(including water, sewage, disposal, electricity, gas and telephone) and other
services in such quantities as are necessary for the operation of such
Companies' Facilities as currently operated.
(d) Neither of the Companies has received any notice of any
special assessment relating to any Companies' Real Properties and there is no
pending or, to the best of the Companies' knowledge, threatened, special
assessment.
(e) The Companies' Leases are valid, binding and enforceable in
accordance with their terms and are in full force and effect; no event of
default has occurred which (whether with or without notice, lapse of time or
both or the happening or occurrence of any other event) would constitute a
default thereunder on the part of any of the Companies or the landlord or
lessor thereunder; and to the best of the Companies' knowledge, under any of
the Companies' Leases, neither of the Companies has any knowledge of the
occurrence of any event of default which (whether with or without notice, lapse
of time or both or the happening or occurrence of any other event) would
constitute a default thereunder by any other party.
SECTION 4.20 Contracts and Commitments.
(a) Section 4.20 of the Companies' Disclosure Schedule sets forth
an accurate and complete list of all material written Contracts, and, to the
best of the Companies' knowledge, an accurate summary of all material oral
Contracts, of each of the Companies, including the following:
(i) Contracts not made in the ordinary course of the
Companies' businesses;
(ii) All Government Contracts under which any of the
Companies is the prime contractor and all other Government Contracts
to which any of the Companies is a party;
(iii) Any Contract with any foreign governmental authority;
(iv) Employment contracts and severance agreement with
persons employed by the Companies, including Contracts (A) to employ
or terminate officers or other personnel and other contracts with
present or former officers or other personnel of the Companies or (B)
that will result in the payment by, or the creation of any commitment
or obligation (absolute or contingent) to pay on behalf of the
Companies any severance, termination, "golden parachute," or other
similar payments to any present or former personnel
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following termination of employment or otherwise as a result of the
consummation of the transactions contemplated by this Agreement;
(v) Labor or union contracts;
(vi) Distribution, franchise, license, sales, commission,
consulting agency or advertising contracts;
(vii) Options with respect to any property used in
connection with the Companies's business, real or personal, whether
the Companies shall be the grantor or grantee thereunder;
(viii) Contracts involving expenditures or liabilities,
actual or potential, in excess of Two Hundred Fifty Thousand Dollars
($250,000);
(ix) Contracts or commitments relating to commission
arrangements with others;
(x) Promissory notes, loans, agreements, indentures,
evidences of indebtedness, letters of credit, guarantees, or other
instruments relating to an obligation to pay money, whether the
Companies shall be the borrower, lender or guarantor thereunder or
whereby any Assets are pledged;
(xi) Contracts containing covenants limiting the freedom
of the Companies to engage in any line of business that is competitive
with or relates to the business of the Companies;
(xii) Leases of personal property not cancelable (without
liability) within thirty (30) calendar days and involving payments in
excess of Fifty Thousand Dollars ($50,000); and
(xiii) All teaming or similar agreements or arrangements
that pertain to any Government Contract listed in said Section 4.20 of
the Companies' Disclosure Schedule and to which any of the Companies
is a party which involve payments in excess of Fifty Thousand Dollars
($50,000).
Each of the Companies has made available to Wyle true, correct and complete
copies of all of the Contracts listed in said Section 4.20 of the Companies'
Disclosure Schedule, including all amendments and supplements thereto.
(b) Except with regard to Government Contracts which are
specifically addressed in Section 4.16 hereof, all of the Contracts listed in
said Section 4.20 of the Companies' Disclosure Schedule are valid and in full
force and effect. Each of the Companies has duly performed all of its
obligations under the Contracts listed in said Section 4.20 of the Companies'
Disclosure
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Schedule and, to the best of the Companies' knowledge, all other contracts to
which either of the Companies is a party or by which each or the Companies'
Assets are bound, to the extent those obligations to perform have accrued, and
no violation of, or default or breach under any Contracts by the Companies or,
to the best of the Companies' knowledge, any other party has occurred and
neither of the Companies nor, to the best of the Companies' knowledge, any
other party has repudiated any provisions thereof, except where such violation,
default, breach or repudiation would not have a Material Adverse Effect.
(c) Except with regard to Government Contracts which are
specifically addressed in Section 4.16 hereof, neither of the Companies has
committed any act, and there has been no omission by the Companies, which may
be expected to result in, and there has been no occurrence relating to any of
the Companies' products or services which may be expected to result in product
liability or liability for breach of warranty (whether covered by insurance or
not) on the part of the Companies, with respect to products designed,
manufactured, assembled, repaired, maintained, delivered or installed or
services rendered by the Companies prior to or on the Closing Date, except
where such act, omission or occurrence would not have a Material Adverse
Effect.
(d) Notwithstanding anything herein to the contrary, each of the
Companies and Xxxx, to the extent it is a party thereto, has complied fully
with the terms, conditions and provisions of that certain Loan and Security
Agreement dated March 16, 1995, by and among Xxxx and the Companies, on the one
hand, and TransAmerica Business Credit Corporation, on the other hand,
including all amendments or supplements thereto (collectively, the "LOAN
AGREEMENT").
SECTION 4.21 Permits, Consents and Approvals. Except with regard
to Government Contracts, which are specifically addressed in Section 4.16
hereof and Environmental Laws which are specifically addressed in Section 4.11
hereof, to the best of the Companies' knowledge, each of the Companies has all
Permits required to conduct its business, except such Permits the failure of
which to obtain would not have a Material Adverse Effect. All such Permits of
the Companies are valid and in full force and effect, except such Permits the
failure of which to be valid and in full force and effect would not have a
Material Adverse Effect. All such Permits are listed in Section 4.21 of the
Companies' Disclosure Schedule. All such Permits shall remain in full force
and effecting following the Merger. Other than in connection with or in
compliance with the provisions of the HSR Act, and to maintain the Government
Contracts in full force and effect following the Effective Time, no notice to,
declaration, filing or registration with, or Permit from, any domestic or
foreign governmental or regulatory body or authority, or any other person or
entity, is required to be made or obtained by the Companies in connection with
the execution, delivery or performance of this Agreement and the consummation
of the transactions contemplated hereby.
SECTION 4.22 Financial Statements. The Companies have heretofore
delivered to Wyle the Xxxx Financial Statements. The Xxxx Financial Statements
(a) are in accordance with the books and records of the Companies, (b) have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods covered thereby, and
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(c) fairly and accurately present in accordance with such principles the
financial position of the Companies as of the respective dates thereof and the
results of operations and changes in cash flows for the periods then ended
(subject, in the case of the Interim Financial Statements of the Companies,
which include only a balance sheet and income statement, do not have footnotes,
and are subject to normal year-end adjustments). At the respective dates of
the Xxxx Financial Statements, there were no material liabilities of the
Companies' which, in accordance with generally accepted accounting principles,
should have been shown or reflected in the Xxxx Financial Statements or the
notes thereto, which are not shown or reflected in the Xxxx Financial
Statements or the notes thereto. All of the liabilities of the Companies set
forth in the Xxxx Financial Statements have been incurred in the ordinary
course of the Companies' business and relate thereto.
SECTION 4.23 Litigation. There is no action, order, writ,
injunction, judgment or decree outstanding or any claim, suit, litigation,
proceeding, labor dispute, arbitral action, governmental audit or investigation
(collectively, "ACTIONS") pending or, to the best of the Companies' knowledge,
threatened (a) against or affecting Xxxx, the Companies or any of the
Companies' Assets, (b) that seeks to delay, limit or enjoin the transactions
contemplated by this Agreement, (c) that involves any risk of criminal
liability, or (d) in which either Xxxx or the Companies is a plaintiff,
including any derivative suits brought by or on behalf of Xxxx or the
Companies. Neither Xxxx nor the Companies is in default with respect to or
subject to any judgment, order, writ, injunction or decree of any court or
governmental agency, and there are no unsatisfied judgments against Xxxx, the
Companies, their business or the Companies' Assets.
SECTION 4.24 Labor Matters. Neither of the Companies is a party
to any collective bargaining agreement with respect to its employees with any
labor organization, union, group or association and there are no employee
unions (nor any other similar labor or employee organizations) under local
statutes, custom or practice. In the last five (5) years, neither of the
Companies has experienced any attempt by organized labor or its representatives
to make the Companies conform to demands of organized labor relating to its
employees or to enter into a binding agreement with organized labor that would
cover such employees. There is no labor strike or labor disturbance pending
or, to the best of the Companies' knowledge, threatened against the Companies
nor is any grievance currently being asserted, and in the last five (5) years
each of the Companies has not experienced a work stoppage or other material
labor difficulty. Each of the Companies is in compliance in all material
respects with all applicable laws respecting employment practices, employee
documentation, wages, hours and working conditions and is not and has not
engaged in any unfair labor practice. There is no unfair labor practice or
employment discrimination claim or harassment charge or complaint against the
Companies pending before the National Labor Relations Board or any other
domestic or foreign Governmental Agency.
SECTION 4.25 Compliance with Law. Except with regard to
Environmental Laws which are specifically addressed in Section 4.11 hereof and
the Government Contracts which are specifically addressed in Section 4.16
hereof, to the best of the Companies' knowledge, neither of the Companies has
violated and is in compliance in all material respects with all laws, statutes,
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ordinances, regulations, rules and orders of any foreign, federal, state or
local government and any other governmental department or agency, and any
judgment, decision, decree or order of any court or governmental, agency,
department or authority, except where the violation or failure to comply,
individually or in the aggregate, would not have a Material Adverse Effect.
Except with regard to Environmental Laws which are specifically addressed in
Section 4.11 hereof and Government Contracts which are specifically addressed
in Section 4.16 hereof, each of the Companies is in conformity with all energy,
public utility, zoning, building and health codes, regulations and ordinances,
federal Occupational Safety & Health Act and all other foreign, federal, state,
and local governmental and regulatory requirements applicable to the Companies,
except where the failure to comply, individually or in the aggregate, would not
have a Material Adverse Effect. Neither of the Companies has received any
written or oral notice to the effect that, or otherwise been advised that, it
is not in compliance with any such statutes, regulations, rules, judgments,
decrees, orders, ordinances or other laws except for notices of non-compliance
which, individually or in the aggregate, would not have a Material Adverse
Effect.
SECTION 4.26 Proprietary Rights.
(a) Section 4.26 of the Companies' Disclosure Schedule lists all
of the Companies' domestic or foreign federal, state and foreign registrations
of trademarks, service marks, trade names and corporate names, and all pending
applications for any such registrations, and all of the Companies' patents and
registered copyrights and all pending applications for patents and copyrights,
all unregistered trademarks, service marks and the trade names owned by the
Companies (collectively, the "COMPANIES' PROPRIETARY RIGHTS") and all
trademarks, service marks, trade names, copyrights, patents and trade secrets
which are licensed to the Companies (collectively, the "COMPANIES' LICENSED
RIGHTS"). Section 4.26 of the Companies' Disclosure Schedule also sets forth:
(i) for each patent and registered design, the number, country and subject
matter, (ii) for each patent application and registered design application, the
application number, country, date of filing and subject matter, (iii) for each
trademark or service xxxx for which application for registration has been made,
the application serial number or registration number, country, the class of
goods or services for which the xxxx is used, and (iv) for each copyright for
which application for registration has been made, the copyright number,
country, and date of filing. True and correct copies of all patents, trademark
registrations, service xxxx registrations, and copyright registrations, and all
pending applications for patents, trademarks, service marks, and copyrights
owned by or on behalf of the Companies have been delivered to Wyle.
(b) To the best of the Companies' knowledge, no Person has a right
to receive a royalty or similar payment from the Companies in respect of use by
the Companies of the Companies' Proprietary Rights or the Companies' Licensed
Rights. Each of the Companies has no licenses granted, sold or otherwise
transferred by or to it nor other agreements to which it is a party, relating
in whole or in part to any of the Companies' Proprietary Rights.
(c) The Companies, individually or collectively, as the case may
be, own or have the right to exploit and use each of the Companies' Proprietary
Rights and Companies' Licensed
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Rights. All of the patents, registered designs and registered copyrights and
trademark and service xxxx registrations listed in said Section 4.26 of the
Companies' Disclosure Schedule have been duly issued and are subsisting. All
of the pending patent, copyright, trademark and service xxxx applications
listed in said Section 4.26 of the Companies' Disclosure Schedule have been
duly filed. The Companies' exploitation or use of the Companies' Proprietary
Rights or Companies' Licensed Rights does not infringe upon or otherwise
violate the rights of any Person, and no proceedings have been instituted or,
to the best of the Companies' knowledge, threatened against or notices received
by the Companies that are presently outstanding alleging that the Companies'
exploitation or use of the Companies' Proprietary Rights infringes upon or
otherwise violates any rights of any Person. To the best of the Companies'
knowledge, no Person is infringing upon any of the Companies' Proprietary
Rights or Companies' Licensed Rights in a manner which has a Material Adverse
Effect. All of the Companies' Proprietary Rights are valid and enforceable
rights of the Companies and will not cease to be valid and in full force and
effect by reason of the execution, delivery and performance of this Agreement
or the consummation of the transactions contemplated by this Agreement.
SECTION 4.27 Insurance. Section 4.27 of the Companies' Disclosure
Schedule contains a complete and accurate list of all policies or binders of
fire, liability, title, worker's compensation, product liability and other
forms of insurance (showing as to each policy or binder the carrier and policy
number) maintained by the Companies. Neither of the Companies is in default
under any of such policies or binders. All policies and binders provide
sufficient coverage for the risks insured against, are in full force and effect
on the date hereof and shall be kept in full force and effect through the
Closing Date.
SECTION 4.28 Accounts Receivable. Except for contract withholds
and other unbilled receivables (which are addressed below), the accounts
receivable reflected in the Interim Balance Sheets of the Companies, and all
accounts receivable arising since the date of such Interim Balance Sheets,
represent bona fide claims of the Companies against debtors for sales, services
performed or other charges arising on or before the date hereof, and all the
goods delivered and services performed which gave rise to said accounts were
delivered or performed in accordance with the applicable orders, Contracts or
customer requirements. The reserves on accounts receivable as set forth on the
applicable Interim Balance Sheets of the Companies and, in the case of accounts
receivable arising since the date of such Interim Balance Sheet of the
Companies, represent a commercially reasonable reserve on accounts receivable
in respect of the Companies, taken as a whole. The contract withholds and
other unbilled receivables reflected in the Interim Balance Sheets of the
Companies fairly and accurately present the amount of such withholds and
unbilled receivables, and all contract withholds and other unbilled receivables
reflected on such Interim Balance Sheets or arising since the date of such
Interim Balance Sheets are subject to the completion (by KLSI or TSSI prior to
the Effective Time and by Surviving Corporation after the Effective Time) of
the Contracts to which such contract withholds and other unbilled receivables
relate in accordance with their respective terms.
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SECTION 4.29 Prospectuses; Proxy Statements; SEC Reports. There
has been previously furnished to Wyle a true and complete copy of the
following:
(a) each final prospectus and definitive proxy statement
filed by Xxxx with the United States' Securities and Exchange
Commission ("SEC") since December 31, 1994 and all amendments or
supplements thereto; and
(b) each Form or report filed by Xxxx with the SEC on or
after December 31, 1994.
SECTION 4.30 Disclosure. Neither this Agreement nor any written
instrument, list, exhibit, schedule or certificate furnished or to be furnished
to Wyle pursuant hereto by the Companies contains or will contain any untrue
statement of a material fact.
SECTION 4.31 "Knowledge." When the phrase "to the Companies'
knowledge" or "to the best of the Companies' knowledge" (or any variation of
the foregoing) is used in this Article Four, such qualification shall refer to
anything within the actual knowledge of any one or more of any of the
following: Xxxxxx X. Xxxxx, Xxxxxxx Xxxx Xxxxxx, Xxxxxx X. Xxxxxx, M.D., Xxxx
Xxxxxxxxxxx and Xxxxxx X. Xxxxxxxx, Xx.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
OF WYLE
Wyle represents and warrants to the Companies that the statements
contained in this Article Five are true, correct and complete as of the date of
this Agreement and 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 Five) except as set forth in the Wyle
Disclosure schedule delivered by Wyle to the Companies on the date hereof and
initialed by the parties hereto (the "WYLE DISCLOSURE SCHEDULE").
SECTION 5.1 Corporate Existence and Power. Wyle is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all corporate powers required to carry on its
business as now conducted. Wyle is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary, except for those jurisdictions where the failure to be
so qualified or in good standing would not, individually or in the aggregate,
have or be likely to have a Material Adverse Effect.
SECTION 5.2 Corporate Authorization. The execution, delivery and
performance by Wyle of this Agreement and the consummation by Wyle of the
transactions contemplated
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hereby are within the corporate powers of Wyle and have been duly authorized by
all necessary corporate action. This Agreement is a legal, valid and binding
obligation of Wyle, enforceable in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium, arrangement or
other similar laws or equitable principles relating to or limiting creditors'
rights generally. Copies of Wyle's articles or incorporation and bylaws and
all amendments thereto heretofore delivered to the Companies are accurate and
complete as of the day hereof and on the Closing Date.
SECTION 5.3 Governmental Authorization. The execution, delivery
and performance by Wyle of this Agreement and the consummation by Wyle of the
transactions contemplated by this Agreement require by or with respect to Wyle
or any of its Subsidiaries no action by or in respect of, or filing with, any
Governmental Authority other than (i) the filing of the Delaware Certificate of
Merger in accordance with Delaware Law, (ii) the filing of the Ohio Certificate
of Merger in accordance with the General Corporate Law of the State of Ohio,
(iii) compliance with any applicable requirements of the HSR Act, (iv)
compliance with any applicable requirements of the 1933 Act, and (v) compliance
with any applicable foreign or state securities or Blue Sky laws.
SECTION 5.4 Non-Contravention. The execution, delivery and
performance by Wyle of this Agreement and the consummation by Wyle of the
transactions contemplated hereby do not and will not (i) contravene or conflict
with the certificate of incorporation or bylaws of Wyle, (ii) assuming
compliance with the matters referred to in Section 5.3 above, contravene or
conflict with or constitute a violation of any provision of any law,
regulation, judgment, injunction, order or decree binding upon, or applicable
to, Wyle or any of its businesses as presently conducted, which violation would
be likely to have a Material Adverse Effect, (iii) constitute a default under
or give rise to a right of termination, cancellation or acceleration of any
right or obligation of Wyle or to a loss of any benefit to which Wyle is
entitled under any provision of any agreement, contract or other instrument
binding upon Wyle or any license, franchise, permit or other similar
authorization held by Wyle, which default, termination, cancellation,
acceleration or loss of benefit would be likely to have a Material Adverse
Effect or (iv) result in the creation or imposition of any Lien on any asset of
Wyle which creation or imposition would be likely to have a Material Adverse
Effect.
SECTION 5.5 Finders' Fees. Except for Quarterdeck's fees, there
is no investment banker, broker, finder or other intermediary who might be
entitled to any fee or commission from Wyle or any of its Affiliates upon
consummation of the transactions contemplated by this Agreement.
SECTION 5.6 Capitalization of Wyle. From the date hereof and
until the Effective Time, the capital stock of Wyle shall be as follows:
(a) The entire authorized capital stock of Wyle consists
of two hundred fifty thousand (250,000) shares of Common Stock, $.01
par value, of which there are one
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hundred twenty-five thousand seven hundred seventy-six (125,776) shares issued
and outstanding (the issued and outstanding shares of Common Stock of Wyle
immediately prior to the Wyle recapitalization are herein referred to as the
"OLD WYLE SHARES"), one hundred ten thousand seven hundred twenty-five
(110,725) shares of Series A Senior Cumulative Redeemable Preferred Stock, $.01
par value, none of which are issued and outstanding, and thirty thousand
(30,000) shares of Series B Junior Redeemable Preferred Stock, $.01 par value,
of which there are fifteen thousand seven hundred twenty-five (15,725) shares
issued and outstanding.
(b) Immediately after the Wyle recapitalization, the entire
authorized and outstanding capital stock of Wyle shall consist of thirty
thousand (30,000) shares of Series B Preferred Stock, $.01 par value, of which
fifteen thousand seven hundred twenty-five (15,725) shares shall be issued and
outstanding, five million one hundred thousand (5,100,000) shares of Series C
Preferred Stock, $.01 par value, all of which shall be issued and outstanding,
one million one hundred thousand (1,100,000) shares of Special Common Stock,
$.01 par value, all of which shall be issued and outstanding (the then issued
and outstanding shares of Series C Preferred Stock and Special Common Stock of
Wyle are referred to herein as the "EXCHANGED WYLE SHARES"), three million
eight hundred thousand (3,800,000) shares of Series A-1 Preferred Stock, $.01
par value, none of which shall be issued and outstanding, one million four
hundred thousand (1,400,000) shares of Series D Preferred Stock, $.01 par
value, none of which shall be issued and outstanding and twenty-three million
six hundred thousand (23,600,000) shares of Common Stock of the Surviving
Corporation, $.01 par value, none of which shall be issued and outstanding.
(c) The Old Wyle Shares have been duly authorized and validly
issued and are fully paid and nonassessable and are held of record by the
stockholders set forth in Section 5.6(c) of the Wyle Disclosure Schedule.
(d) The Exchanged Wyle Shares, when issued in accordance with the
Wyle recapitalization, shall be duly authorized and validly issued and are
fully paid and nonassessable.
(e) The shares of Series A-1 Preferred Stock, when issued as set
forth in Section 2.3 hereof, shall be duly authorized and validly issued and
fully paid and nonassessable.
(f) There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require Wyle to issue, sell, or
otherwise cause to become outstanding any of its capital stock, except for the
issuance of shares and options contemplated herein and as set forth in said
Section 5.6(f) of the Wyle Disclosure Schedule. There are no outstanding
obligations of Wyle to repurchase, redeem or otherwise acquire any debt or
equity securities of Wyle, except as set forth in Section 5.6(f) of the Wyle
Disclosure Schedule.
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SECTION 5.7 Absence of Certain Changes. Since December 28, 1997,
Wyle has conducted its business in the ordinary course consistent with past
practice and, except as set forth in Section 5.7 of the Wyle Disclosure
Schedule or contemplated by this Agreement, there has not been:
(a) any event, occurrence or development which has had or
is likely to have a Material Adverse Effect;
(b) any declaration, setting aside or payment of any
dividend or other distribution with respect to any Wyle Shares, or any
repurchase, redemption or other acquisition by Wyle of any Wyle Shares
or other securities of, or other ownership interests in, Wyle;
(c) any incurrence, assumption or guarantee by Wyle of
any indebtedness for borrowed money;
(d) any creation or assumption by Wyle of any Lien on any
Wyle Assets other than in the ordinary course of business consistent
with past practices;
(e) any making of any loan, advance or capital
contributions to or investment in any Person;
(f) any damage, destruction or other casualty loss
(whether or not covered by insurance) affecting the business or assets
of Wyle which, individually or in the aggregate, has had or is likely
to have a Material Adverse Effect;
(g) any transaction or commitment made, or any contract
or agreement entered into, by Wyle relating to its assets or business
(including the acquisition or disposition of any assets) or any
relinquishment by Wyle of any contract or other right, other than
transactions and commitments in the ordinary course of business
consistent with past practices;
(h) any (i) grant of any severance or termination pay to
any director or officer of Wyle, (ii) execution and/or delivery of any
employment, deferred compensation or other similar agreement (or any
amendment to any existing agreement) with any director, or officer of
Wyle, (iii) increase in benefits payable under any existing severance
or termination pay policies or employment agreements with any director
or officer of Wyle or (iv) increase in compensation, bonus or other
benefits payable to any of the directors or officers of Wyle; or
(i) any labor dispute, other than routine individual
grievances, which are likely to have a Material Adverse Effect, or, to
the knowledge of Wyle, any activity or
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proceeding by a labor union or representative thereof to organize any
employees of Wyle, which employees were not subject to a collective
bargaining agreement at December 28, 1997, or any lockouts, strikes,
slowdowns, work stoppages or threats thereof by or with respect to
such employees which activity, proceeding or action has had or is
likely to have a Material Adverse Effect.
SECTION 5.8 Taxes. Wyle has timely filed (i) all tax returns and
reports required to be filed by it or (ii) requests for extensions to file such
returns or reports, which requests have been granted and have not expired,
except to the extent that any such failure to file or to have extensions
granted that remain in effect individually or in the aggregate would not have a
Material Adverse Effect. Wyle has timely paid all Taxes shown as due on such
returns, and the Wyle Financial Statements reflect, in accordance with
generally accepted accounting principles (applied to the Wyle Financial
Statements taken as a whole), an adequate reserve for all Taxes payable by Wyle
for all taxable periods and portions thereof accrued through the date of the
Wyle Financial Statements. No deficiencies for any Taxes have been proposed,
asserted or assessed against Wyle that are not adequately reserved for, except
for deficiencies that individually or in the aggregate would not have a
Material Adverse Effect, and as of the date of this Agreement no requests for
waivers of the time to assess any such Taxes have been granted and are
outstanding or are pending. Wyle is not party to any tax allocation or sharing
agreement.
SECTION 5.9 ERISA.
(a) Section 5.9(a) of the Wyle Disclosure Schedule lists each
employee benefit plan (as defined in Section 4.9(a) hereof), and each
employment, severance or other similar contract, arrangement or policy and each
plan or arrangement (written or oral) providing for insurance coverage
(including any self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits, retirement
benefits or for deferred compensation, profit-sharing, bonuses, stock options,
stock appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits which (i) is enter into, maintained,
administered or contributed to, as the case may be, by Wyle or any Plan
Affiliate and (ii) covers any employee or former employee of Wyle or any Plan
Affiliate or under which Wyle or any Plan Affiliate has any liability;
provided, however, that the term "employee benefit plan" shall not include the
401(k) plan of Wyle. Except for the 401(k) plan of Wyle, the plans are
referred to collectively herein as the "WYLE EMPLOYEE PLANS." True and
complete copies of each of such employee benefit plans (and, if applicable,
related trust agreements) and all amendments thereto and written
interpretations thereof have been delivered to the Companies together with (x)
the most recent annual reports (Form 5500 including, if applicable, Schedule B
thereto) prepared in connection with any such plan and (y) the most recent
actuarial valuation report prepared in connection with any such plan.
(b) No Wyle Employee Plan (i) is maintained in connection with any
trust described in Section 501(c)(9) of the Code or (ii) is subject to Title IV
of ERISA. If a "complete withdrawal" by Wyle and the Plan Affiliates were to
occur as of the Closing Date with respect to
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all "multiemployer plans" as defined in Section 3(37) of ERISA, neither Wyle
nor any Plan Affiliate would incur any "withdrawal liability" within the
meaning of Section 4201 of ERISA, under Title IV of ERISA, except as would not
have a Material Adverse Effect. Except as would not have a Material Adverse
Effect, no "prohibited transaction," as defined in Section 406 of ERISA or
Section 4975 of the Code, has occurred with respect to any Employee Plan or any
other employee benefit plan or arrangement maintained by Wyle or any Plan
Affiliate which is covered by Title I of ERISA.
(c) Each Wyle Employee Plan which is intended to be qualified
under Section 401(a) of the Code is so qualified and has been so qualified
during the period from its adoption to date, and each trust forming a part
thereof is exempt from tax pursuant to Section 501(a) of the Code. Wyle has
delivered to each the Companies copies of the most recent Internal Revenue
Service determination letters with respect to each such Plan. Each Wyle
Employee Plan has been maintained in compliance with its terms and with all
applicable legal requirements, except where the failure to comply would not
have a Material Adverse Effect.
(d) There is no contract, agreement, plan or arrangement covering
any employee or former employee of Wyle or any Plan Affiliate that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible pursuant to the terms of Sections 162(a)(1) or 280G of
the Code nor would any Person become entitled to severance termination
allowance or similar payments as a result of the transactions contemplated by
this Agreement.
(e) Wyle does not have any current or projected liability in
respect of post-employment or post-retirement health, medical or life insurance
benefits for retired or former employees of Wyle and/or its Affiliates, except
as required by applicable law. No condition exists that would prevent Wyle
from amending or terminating any Wyle Employee Plan providing health or medical
benefits in respect of any active employee of Wyle except where liability to
amend or terminate any such plan or arrangement would not have a Material
Adverse Effect.
(f) There has been no amendment to, written interpretation or
announcement (whether or not written) by Wyle or any Plan Affiliate relating
to, or change in employee participation or coverage under, any Wyle Employee
Plan which would increase materially the expense of maintaining such Wyle
Employee Plan above the level of the expense incurred in respect thereof for
the fiscal year ended on December 28, 1997.
(g) Wyle does not have any knowledge of any material actions,
suits or claims pending or threatened, against the assets of any Wyle Employee
Plan, other than routine claims for benefits.
(h) Wyle has made full and timely payment of all amounts required
to be contributed under the terms of any employee benefit plan and applicable
law or required to be paid as expenses under such plan, and shall continue to
do so through the Closing Date.
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SECTION 5.10 Compliance With Environmental Laws.
(a) To the best of Wyle's knowledge, each of the Wyle Real
Properties is maintained in compliance with the Environmental Laws.
(b) To the best of Wyle's knowledge, Wyle has all Environmental
Permits required under any Environmental Law or the provisions thereof and each
of the Wyle Real Properties is in compliance with all such Environmental
Permits.
(c) To the best of Wyle's knowledge, Wyle has not received any
notice at any time that it is or was claimed to be in violation of or in
non-compliance with the conditions of any Wyle Environmental Permit required
under any Environmental Law or the provisions of any Environmental Law that
have not been corrected.
(d) To the best of Wyle's knowledge, there is not now pending or
threatened any Action against Wyle under any Environmental Law or otherwise
with respect to any Release or mishandling of any Hazardous Substance.
(e) To the best of Wyle's knowledge, there are no consent decrees,
judgments, judicial or administrative orders or agreements with, or Wyle Liens
by, any governmental authority or quasi-governmental entity relating to any
Environmental Law which regulate, obligate, bind or in any way affect Wyle, the
Wyle Assets, Wyle's business or any Wyle Real Properties.
(f) To the best of Wyle's knowledge, there are no present or past
Wyle Environmental Conditions in any way relating to Wyle or the Wyle Real
Properties. "WYLE ENVIRONMENTAL CONDITIONS" means the introduction into the
environment of any pollution, including any contaminant, irritant or pollutant
or other Hazardous Substance (whether or not upon the Wyle Real Properties and
whether or not such pollution constituted at the time thereof a violation of
any Environmental Law as a result of any release of any kind whatsoever of any
Hazardous Substance) as a result of which Wyle has or may become liable to any
person or by reason of which any of the Wyle Real Properties or any of the Wyle
Assets may suffer or be subjected to any lien.
(g) To the best of Wyle's knowledge, true, complete and correct
copies of the written reports, and all parts thereof, including any drafts of
such reports if such drafts are in the possession or control of Wyle, of all
environmental audits or assessments which have been conducted at any of the
Wyle Real Properties, including previous or past operations at each of the Wyle
Real Properties, within the past three (3) years, either Wyle or any attorney,
environmental consultant or engineer engaged for such purpose, have been
delivered to the Companies a list of all such reports, audits and assessments
and any other similar reports, audit or assessment of which Wyle has knowledge
is included on the Wyle Disclosure Schedule.
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(h) Wyle has not made and has not been required to make any filing
under the New Jersey Industrial Site Recovery Act, the Environmental Cleanup
Responsibility Act, or any other state law of similar effect.
SECTION 5.11 Bids. To the best of Wyle's knowledge, other than
those set forth in Section 5.11 of the Wyle Disclosure Schedule, Wyle has not
submitted any Bid relating to Wyle business which is currently outstanding and
which, if accepted or awarded, would result in a Government Contract where the
volume of purchases of materials, supplies, goods, services, equipment or other
assets from Wyle under any such resulting Government Contract could be
reasonably expected to exceed Two Hundred Fifty Thousand Dollars ($250,000).
Section 5.11 of the Wyle Disclosure Schedule identifies each such Bid by number
and the party to which such Bid was made and the proposed price. All cost or
pricing data submitted or certified in connection with each of such Bids are
current, accurate and complete in accordance with the Truth in Negotiations
Act.
SECTION 5.12 Government-Furnished Property or Equipment. To the
best of Wyle's knowledge, all Government-Furnished Items of Wyle are in a good
state of maintenance and repair (except for ordinary wear and tear and such
conditions resulting solely from delay in repossession by the Government), have
been regularly and appropriately maintained and repaired in accordance with all
contractual, legal and regulatory requirements and shall be in the possession
of Wyle on the Closing Date. Wyle has complied in all material respects with
all of its obligations relating to the Government-Furnished Items of Wyle, and
upon the return thereof to the U.S. Government in the condition thereof on the
date hereof, would have no liability to the U.S. Government with respect
thereto. To the best of Wyle's knowledge, the Companies will incur no
liability to the U.S. Government as a result of Wyle's failure to keep records,
maintain or possess property furnished to Wyle by or on behalf of the U.S.
Government.
SECTION 5.13 Backlog.
(a) Section 5.13 of the Wyle Disclosure Schedule sets forth, with
respect to each Contract of Wyle having unfilled backlog as of December 28,
1997 in excess of Five Hundred Thousand Dollars ($500,000) the backlog of Wyle
thereunder as of the date hereof including the customer name, dollar amount of
backlog, backlog that is unfunded by the U.S. Government and any unexercised
subsisting and exercised options.
(b) Except as set forth in Section 5.13(b) of the Wyle Disclosure
Schedule, (i) all of the Contracts of Wyle constituting the backlog of Wyle (A)
were entered into in the ordinary course of business, (B) would be capable of
performance in accordance with the terms and conditions of each such Contract
by Wyle and (C) are the subject of valid and binding written agreements
enforceable in accordance with their respective terms, and (ii) Wyle has not
received any notice that any of such Contracts will be canceled or materially
reduced.
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SECTION 5.14 Clearances. Section 5.14 of the Wyle Disclosure
Schedule sets forth all facility and personnel security clearances held by Wyle
and, to the best of Wyle's knowledge, all personnel security clearances held by
Wyle's officers, directors, employees, consultants and agents (to the extent
such agent or consultant is material to the performance of any Contract). Wyle
represents that these security clearances are sufficient to allow the Surviving
Corporation following the Merger to conduct the business of Wyle as presently
conducted, and that, except as disclosed in said Section of the Wyle Disclosure
Schedule, Wyle has no knowledge of any proposed or threatened termination of
any personnel or facility security clearance (whether or not such clearance is
collateral or special access, and whether or not such clearance is listed in
said Section 5.14).
SECTION 5.15 Government Contracts.
(a) Except as set forth in Section 5.15(a) of the Wyle Disclosure
Schedule, with respect to each and every Government Contract or Government Bid
to which Wyle is a party: (i) Wyle has complied with all material terms and
conditions of such Government Contract or Government Bid, including all
clauses, provisions and requirements incorporated expressly, by reference or by
operation of law therein; (ii) Wyle has complied with all requirements of all
applicable laws or agreements pertaining to such Government Contract or
Government Bid; (iii) all statements, representations, warranties and
certifications executed, acknowledged or set forth in or pertaining to such
Government Contract or Government Bid were complete and correct as of their
effective date and neither contained any untrue statement of any material fact
nor omitted to state a material fact necessary in order to make the statements
contained therein not misleading, and Wyle has complied in all material
respects with all such statements, representations, certifications and
warranties; (iv) neither the U.S. Government nor any prime contractor,
subcontractor or other Person has notified Wyle, either in writing or orally,
that Wyle has breached or violated any Applicable Law, certification,
representation, clause, provision or requirement pertaining to such Government
Contract or Wyle Government Bid; (v) no termination for convenience,
termination for default, cure notice or show cause is currently in effect
pertaining to such Government Contract or Government Bid; (vi) no cost incurred
by Wyle pertaining to such Government Contract or Government Bid has been
formally questioned or challenged, is the subject of any investigation or has
been disallowed by the U.S. Government; (vii) no money due to Wyle pertaining
to such Government Contract or Government Bid has been withheld or set off, nor
has any claim been made to withhold or set off any such amounts and Wyle is
entitled to all payments received with respect thereto; (viii) there is no
claim, default or claim of default or basis therefor, or event which, with the
passage of time, could reasonably be expected to result in a claim or default
or give rise to any right of termination, cancellation, acceleration or
amendment or other claim by any party; and (ix) there has been no omission by
Wyle which may reasonably be expected to result in, and there has been no
occurrence which may reasonably be expected to result, in product liability
(whether covered by insurance or not) on the part of Wyle, with respect to
products designed, manufactured, assembled, repaired, maintained, delivered or
installed or services rendered by Wyle prior to or on the Closing Date, except
where such act or omission would not have a Material Adverse Effect on Wyle.
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(b) Neither Wyle nor any of its respective directors, officers,
employees, consultants or agents is (or during the last three (3) years has
been) under administrative, civil or criminal investigation, indictment or
information by any Government Authority, or any audit or investigation by Wyle
with respect to any alleged irregularity, misstatement or omission arising
under or relating to any Government Contract or Government Bid. During the
last three (3) years, Wyle has not conducted or initiated any internal
investigation or made a voluntary disclosure to the U.S. Government, with
respect to any alleged irregularity, misstatement or omission arising under or
relating to a Government Contract or Government Bid. To the best of Wyle's
knowledge, there exists no irregularity, misstatement or omission arising under
or relating to any Government Contract or Government Bid that has led, or could
be expected to lead, to any of the consequences set forth in clauses (i) or
(ii) of the immediately preceding sentence or to any other damage, penalty
assessment, recoupment of payment or disallowance of cost. Wyle has all
permits required under or with respect to all Government Contracts, except such
permits the failure of which to obtain would not have a Material Adverse
Effect.
(c) To the best of Wyle's knowledge, there exist (i) no
outstanding claims against Wyle, either by the U.S. Government or by any prime
contractor, subcontractor, vendor or other third party, arising under or
relating to any Government Contract or Government Bid; (ii) no disputes between
Wyle and the U.S. Government under the Contract Disputes Act or any other
Federal statute or between Wyle and any prime contractor, subcontractor or
vendor arising under or relating to any Government Contract or Government Bid;
(iii) no outstanding or anticipated final decisions from a contracting officer;
and (iv) no warranty claims or obligations. Wyle has no interest in any
pending claim, any claim under consideration, any pending request for equitable
adjustment or any request for equitable adjustment under consideration against
the U.S. Government or any prime contractor, subcontractor or vendor arising
under or relating to any Government Contract or Government Bid. Section
5.15(c) of the Wyle Disclosure Schedule lists each Government Contract which is
currently under audit (other than routine audits conducted in the ordinary
course of business) by the U.S. Government or any other Person that is a party
to such Government Contract.
(d) Except as set forth in Section 5.15(d) of the Wyle Disclosure
Schedule, since December 22, 1994, Wyle has not been debarred or suspended from
participation in the award of contracts with the United States Department of
Defense or any other Governmental Authority, nor has Wyle been found
non-offerors within the meaning of Federal Acquisition Regulation Subpart 9.1.
To the best of Wyle's knowledge, there exist no facts or circumstances that
would warrant the institution of suspension or debarment proceedings or the
finding of non-responsibility on the part of Wyle, or any director or officer
of Wyle.
(e) Wyle's cost accounting system and the associated entries
reflected in the Wyle Financial Statements with respect to the Government
Contracts are in compliance in all material respects with all Applicable Laws.
Wyle's accounting practices are consistent with its accounting disclosure
statements.
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(f) All tests or inspections on supplies or services provided by
Wyle to the U.S. Government pursuant to any Government Contract or to any other
Person pursuant to a Government Contract or as a part of the delivery to the
U.S. Government or to any other Person pursuant to a Government Contract of any
article designed, engineered or manufactured in Wyle's business were complete
and correct in all material respects as of the date so provided. Wyle has
provided all test or inspection results to the U.S. Government or to any other
Person pursuant to a Government Contract as required by Applicable Law and the
terms of the applicable Government Contracts.
(g) All cost or pricing data submitted in connection with
Government Contracts or Government Bids were current, accurate and complete
when submitted and none of the Government Contracts is in, or was awarded in,
violation of any "truth-in-negotiations" or "defective pricing" laws, rules or
regulation to which they are subject, including the Truth in Negotiations Act
and the False Claims Act.
(h) Wyle is now and has been in full compliance with the EAA, as
amended, and its regulations, and the AECA, as amended, and its regulations,
which provide generally that no commodities or technical data, including any
hardware, software, or other technical data (or direct products thereof) shall
be disclosed, exported or re-exported, directly or indirectly, without first
obtaining all prior approvals from the U.S. Department of Commerce as required
by the EAA and its regulations, or the U.S. Department of State as required by
AECA and its regulations. Wyle is and has been in full compliance with the
United States Foreign Assets Control Regulations, as amended, which provide
generally that companies under the jurisdiction of the United States may not
engage in any dealings or transactions, directly or indirectly, with foreign
countries embargoed by the United States, or foreign nationals and companies
identified by the United States as representing the interests of such embargoed
countries, which currently include Iran, Iraq, Libya, North Korea, Cuba, Sudan,
certain areas of the former Federal Republic of Yugoslavia, and the UNITA, as
well as other countries so designated from time to time by the U.S. government.
Such dealings and transactions include any transfers, withdrawals, or
exportations of any property, or evidences of indebtedness or evidences of
ownership of property by any person subject to the jurisdiction of the United
States. Wyle is now and has been in full compliance with the foreign boycott
provisions of the EAA and its regulations which provide generally that Wyle and
its employees and agents shall not comply with, further or support any
unsanctioned foreign boycott, including without limitation the supply of any
prohibited customers, as proscribed by the EAA and its regulations
SECTION 5.16 Payments. To the best of Wyle's knowledge, Wyle has
not, directly or indirectly, given, paid or delivered any fee, commission or
other sum of money or item of property or consideration, however characterized,
to any finder, agent, government official or other party, in the United States
or any other country, which is in any manner related to the business or the
Wyle Assets, which is, or may be with the passage of time or discovery, illegal
under any federal, state or local laws of the United States (including the U.S.
Foreign Corrupt
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Practices Act) or any other country having jurisdiction; and to the best of
Wyle's knowledge, Wyle has not participated, directly or indirectly, in any
kickbacks or boycotts or other similar practices affecting any of its actual or
potential customers of Wyle's business.
SECTION 5.17 Wyle Assets. The Wyle Assets described in Section
5.17 of the Wyle Disclosure Schedule constitute all of the tangible and
intangible property used in the operation of the business of Wyle as the same
are currently conducted and no other tangible or intangible property other than
the Wyle Assets is used in connection with the operation of Wyle's business.
Except as described in Section 5.17 of the Wyle Disclosure Schedule, Wyle has
good and marketable title to all of the Wyle Assets, free and clear of all
liens, encumbrances, charges, security interests or options of any kind
whatsoever. Wyle has a valid leasehold interest in each leased property
included within the Wyle Assets. Except as set forth in Section 5.17 of the
Wyle Disclosure Schedule, to the best of Wyle's knowledge, all of the
machinery, equipment, tooling and other tangible personal property included
within the Wyle Assets is in good operating condition and repair, reasonable
wear and tear excepted. Wyle has maintained the machinery, equipment, tooling
and other tangible personal property included within the Wyle Assets in a
manner consistent with industry standards and consistent with other similar
machinery, equipment, tooling and tangible personal property utilized by Wyle
that is included within the Wyle Assets.
SECTION 5.18 Wyle Real Properties.
(a) Section 5.18(a) of the Wyle Disclosure Schedule contains a
complete and accurate list of all Wyle Real Properties and a list of all of the
Wyle Leases pursuant to which Wyle leases Wyle Real Properties. Wyle has
delivered to each of the Companies true, complete and correct copies of all of
the Wyle Leases. The Wyle Owned Real Properties include all rights, easements
and privileges required by Applicable Law for the use of the Wyle Facilities
located thereon, except for such rights, easements and privileges, the absence
of which would not be likely to result in a Material Adverse Effect. There are
no pending or, to the best of Wyle's knowledge, threatened condemnation
proceedings with respect to any of the Wyle Real Properties. Except for the
items listed in Section 5.18(a) of the Wyle Disclosure Schedule, there are no
leases, subleases, licenses, occupancy agreements, options, rights, concessions
or other agreements or arrangements, written or oral, granting to any person
the right to purchase, use or occupy any of the Wyle Owned Real Properties, or
any portion thereof or interest in any Wyle Owned Real Properties, which
materially interfere with the operation of any of Wyle's business. Wyle enjoys
undisturbed possession of all the Wyle Leased Real Properties. Each of the
Wyle Leases includes all rights, easements and privileges required by
Applicable Law for the operations of Wyle being conducted on the Wyle Leased
Real Properties subject to such Wyle Leases, except for such rights, easements
and privileges, the absence of which would not be likely to result in a
Material Adverse Effect.
(b) All Wyle Facilities have received all required approvals of
governmental authorities (including Permits and a certificate of occupancy or
other similar certificate permitting lawful occupancy of the Wyle Facilities)
required in connection with the operation thereof, except such
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approvals as to which the failure to receive would not result in a Material
Adverse Effect, and have been operated and maintained in accordance with
Applicable Laws.
(c) All Wyle Facilities are supplied with utilities (including
water, sewage, disposal, electricity, gas and telephone) and other services in
such quantities as are necessary for the operation of such Wyle Facilities as
currently operated.
(d) Wyle has not received notice of any special assessment
relating to any Wyle Real Properties and there is no pending or, to the best of
Wyle's knowledge, threatened, special assessment.
(e) The Wyle Leases are valid, binding and enforceable in
accordance with their terms and are in full force and effect; no event of
default has occurred which (whether with or without notice, lapse of time or
both or the happening or occurrence of any other event) would constitute a
default thereunder on the part of Wyle or the landlord or lessor thereunder;
and to the best of Wyle's knowledge, under any of the Wyle Leases, Wyle has no
knowledge of the occurrence of any event of default which (whether with or
without notice, lapse of time or both or the happening or occurrence of any
other event) would constitute a default thereunder by any other party.
SECTION 5.19 Contracts and Commitments.
(a) Section 5.19(a) of the Wyle Disclosure Schedule sets forth an
accurate and complete list of all material written Contracts of Wyle, and, to
the best of Wyle's knowledge, an accurate and summary of all material oral
Contracts of Wyle, including the following:
(i) Contracts not made in the ordinary course of Wyle's
business;
(ii) All Government Contracts under which Wyle is
the prime contractor and all other Government Contracts to which Wyle
is a party;
(iii) Any Contract with any foreign governmental authority;
(iv) Employment contracts and severance agreement with
persons employed by Wyle, including Contracts (A) to employ or
terminate officers or other personnel and other contracts with present
or former officers or other personnel of Wyle or (B) that will result
in the payment by, or the creation of any commitment or obligation
(absolute or contingent) to pay on behalf of Wyle any severance,
termination, "golden parachute," or other similar payments to any
present or former personnel following termination of employment or
otherwise as a result of the consummation of the transactions
contemplated by this Agreement;
(v) Labor or union contracts;
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(vi) Distribution, franchise, license, sales, commission,
consulting agency or advertising contracts;
(vii) Options with respect to any property used in
connection with Wyle's business, real or personal, whether Wyle shall
be the grantor or grantee thereunder;
(viii) Contracts involving expenditures or liabilities,
actual or potential, in excess of Two Hundred Fifty Thousand Dollars
($250,000);
(ix) Contracts or commitments relating to commission
arrangements with others;
(x) Promissory notes, loans, agreements, indentures,
evidences of indebtedness, letters of credit, guarantees, or other
instruments relating to an obligation to pay money, whether Wyle shall
be the borrower, lender or guarantor thereunder or whereby any Wyle
Assets are pledged;
(xi) Contracts containing covenants limiting the freedom of
Wyle to engage in any line of business which is competitive with or
relates to the business of Wyle;
(xii) Leases of personal property not cancelable (without
liability) within thirty (30) calendar days and involving payments in
excess of Fifty Thousand Dollars ($50,000); and
(xiii) All teaming or similar agreements or arrangements that
pertain to any Government Contract listed in Section 5.19(a) of the
Wyle Disclosure Schedule and to which Wyle is a party which involve
payments in excess of Two Hundred Fifty Thousand Dollars ($250,000).
Wyle has made available to the Companies true, correct and complete copies of
all of the Contracts listed in Section 5.19(a) of the Wyle Disclosure Schedule,
including all amendments and supplements thereto.
(b) Except with regard to Government Contracts which are
specifically addressed in Section 5.15 hereof, all of the Contracts of Wyle
listed in Section 5.19 of the Wyle Disclosure Schedule are valid and in full
force and effect. Wyle has duly performed all of its obligations under the
Contracts of Wyle listed in Section 5.19 of the Wyle Disclosure Schedule and,
to the best of Wyle's knowledge, all other contracts to which Wyle is a party
or by which it or the Wyle Assets are bound, to the extent those obligations to
perform have accrued, and no violation of, or default or breach under any
Contracts by Wyle or, to the best of Wyle's knowledge, any other party has
occurred and neither Wyle nor, to the best of Wyle's knowledge, any other party
has repudiated any provisions thereof, except where such violation, default,
breach or repudiation would not have a Material Adverse Effect.
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(c) Except with regard to Government Contracts which are
specifically addressed in Section 5.15 hereof, Wyle has not committed any act,
and there has been no omission by Wyle, which may be expected to result in, and
there has been no occurrence relating to Wyle's products or services that may
be expected to result in product liability or liability for breach of warranty
(whether covered by insurance or not) on the part of Wyle, with respect to
products designed, manufactured, assembled, repaired, maintained, delivered or
installed or services rendered by Wyle prior to or on the Closing Date, except
where such act, omission or occurrence would not have a Material Adverse
Effect.
SECTION 5.20 Permits, Consents and Approvals. Except with regard
to Government Contracts, which are specifically addressed in Section 5.15
hereof and Environmental Laws which are specifically addressed in Section 5.10
hereof, to the best of Wyle's knowledge, Wyle has all Permits required to
conduct its business, except such Permits the failure of which to obtain would
not have a Material Adverse Effect. All such Permits are valid and in full
force and effect, except such Permits the failure of which to be valid and in
full force and effect would not have a Material Adverse Effect. All such
Permits are listed in Section 5.20 of the Wyle Disclosure Schedule. All such
Permits shall remain in full force and effecting following the Merger. Other
than in connection with or in compliance with the provisions of the HSR Act,
the consents needed to assign the collective bargaining agreements and to
maintain the Government Contracts in full force and effect following the
Effective Time, no notice to, declaration, filing or registration with, or
Permit from, any domestic or foreign governmental or regulatory body or
authority, or any other person or entity, is required to be made or obtained by
Wyle in connection with the execution, delivery or performance of this
Agreement and the consummation of the transactions contemplated hereby.
SECTION 5.21 Financial Statements. Wyle has heretofore delivered
to the Companies the Wyle Financial Statements. The Wyle Financial Statements
(a) are in accordance with the books and records of Wyle, (b) have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods covered thereby, and (c) fairly and
accurately present the financial position of Wyle as of the respective dates
thereof and the results of operations and changes in cash flows for the periods
then ended (subject, in the case of the Interim Financial Statements of Wyle,
which include only the balance sheet and income statement without footnotes,
and are subject to normal year-end adjustments). At the respective dates of
the Wyle Financial Statements, there were no material liabilities of Wyle
which, in accordance with generally accepted accounting principles, should have
been shown or reflected in the Wyle Financial Statements or the notes thereto,
which are not shown or reflected in the Wyle Financial Statements or the notes
thereto. All of the liabilities set forth in the Wyle Financial Statements
have been incurred in the ordinary course of Wyle's business and relate
thereto.
SECTION 5.22 Litigation. There is no Action pending or, to the
best of Wyle's knowledge, threatened (a) against or affecting Wyle or any of
the Wyle Assets, (b) seeking to delay, limit or enjoin the transactions
contemplated by this Agreement, (c) that involve the risk
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of criminal liability, or (d) in which Wyle is a plaintiff, including any
derivative suits brought by or on behalf of Wyle. Wyle is not in default with
respect to or subject to any judgment, order, writ, injunction or decree of any
court or governmental agency, and there are no unsatisfied judgments against
Wyle, its business or the Wyle Assets.
SECTION 5.23 Labor Matters. Wyle is not a party to any collective
bargaining agreement with respect to its employees with any labor organization,
union, group or association and there are no employee unions (nor any other
similar labor or employee organizations) under local statutes, custom or
practice. In the last three (3) years, Wyle has not experienced any attempt by
organized labor or its representatives to make Wyle conform to demands of
organized labor relating to its employees or to enter into a binding agreement
with organized labor that would cover such employees. There is no labor strike
or labor disturbance pending or, to the best of Wyle's knowledge, threatened
against Wyle nor is any grievance currently being asserted, and in the last
three (3) years Wyle has not experienced a work stoppage or other material
labor difficulty. Wyle is in compliance in all material respects with all
applicable laws respecting employment practices, employee documentation, wages,
hours and working conditions and is not and has not engaged in any unfair labor
practice. There is no unfair labor practice or employment discrimination claim
or harassment charge or complaint against Wyle pending before the National
Labor Relations Board or any other domestic or foreign Governmental Agency.
SECTION 5.24 Compliance with Law. Except with regard to
Environmental Laws which are specifically addressed in Section 5.10 hereof and
the Government Contracts which are specifically addressed in Section 5.15
hereof, to the best of Wyle's knowledge, Wyle has not violated and is in
compliance in all material respects with all laws, statutes, ordinances,
regulations, rules and orders of any foreign, federal, state or local
government and any other governmental department or agency, and any judgment,
decision, decree or order of any court or governmental, agency, department or
authority, except where the violation or failure to comply, individually or in
the aggregate, would not have a Material Adverse Effect. Except with regard to
Environmental Laws which are specifically addressed in Section 5.10 hereof and
Government Contracts which are specifically addressed in Section 5.15 hereof,
Wyle is in conformity with all energy, public utility, zoning, building and
health codes, regulations and ordinances, federal Occupational Safety & Health
Act and all other foreign, federal, state, and local governmental and
regulatory requirements applicable to Wyle, except where the failure to comply,
individually or in the aggregate, would not have a Material Adverse Effect.
Wyle has not received any written or oral notice to the effect that, or
otherwise been advised that, Wyle is not in compliance with any such statutes,
regulations, rules, judgments, decrees, orders, ordinances or other laws except
for notices of non-compliance which, individually or in the aggregate, would
not have a Material Adverse Effect.
SECTION 5.25 Proprietary Rights.
(a) Section 5.25 of the Wyle Disclosure Schedule lists all of
Wyle's domestic or foreign federal, state and foreign registrations of
trademarks, service marks, trade names and corporate
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names, and all pending applications for any such registrations, and all of
Wyle's patents and registered copyrights and all pending applications for
patents and copyrights, all unregistered trademarks, service marks and the
trade names owned by Wyle (collectively, the "WYLE PROPRIETARY RIGHTS") and all
trademarks, service marks, trade names, copyrights, patents and trade secrets
which are licensed to Wyle (collectively, the "WYLE LICENSED RIGHTS"). Section
5.25 of the Wyle Disclosure Schedule also sets forth: (i) for each patent and
registered design, the number, country and subject matter, (ii) for each patent
application and registered design application, the application number, country,
date of filing and subject matter, (iii) for each trademark or service xxxx for
which application for registration has been made, the application serial number
or registration number, country, the class of goods or services for which the
xxxx is used, and (iv) for each copyright for which application for
registration has been made, the copyright number, country, and date of filing.
True and correct copies of all patents, trademark registrations, service xxxx
registrations, and copyright registrations, and all pending applications for
patents, trademarks, service marks, and copyrights owned by or on behalf of
Wyle have been delivered to each of the Companies.
(b) To the best of Wyle's knowledge, no Person has a right to
receive a royalty or similar payment from Wyle in respect of use by Wyle of the
Wyle Proprietary Rights or the Wyle Licensed Rights. Wyle has no licenses
granted, sold or otherwise transferred by or to it nor other agreements to
which it is a party, relating in whole or in part to any of the Wyle
Proprietary Rights.
(c) Wyle owns or has the right to exploit and use each of the Wyle
Proprietary Rights and Wyle Licensed Rights. All of the patents, registered
designs and registered copyrights and trademark and service xxxx registrations
listed in said Section 5.25 of the Wyle Disclosure Schedule have been duly
issued and are subsisting. All of the pending patent, copyright, trademark and
service xxxx applications listed in said Section 5.25 of the Wyle Disclosure
Schedule have been duly filed. Wyle's exploitation or use of the Wyle
Proprietary Rights or Wyle Licensed Rights does not infringe upon or otherwise
violate the rights of any Person, and no proceedings have been instituted or,
to the best of Wyle's knowledge, threatened against or notices received by
Wyle's that are presently outstanding alleging that Wyle's exploitation or use
of the Wyle Proprietary Rights infringes upon or otherwise violates any rights
of any Person. To the best of Wyle's knowledge, no Person is infringing upon
any of the Wyle Proprietary Rights or Wyle Licensed Rights in a manner which
has a Material Adverse Effect. All of the Wyle Proprietary Rights are valid
and enforceable rights of Wyle and will not cease to be valid and in full force
and effect by reason of the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated by this
Agreement.
SECTION 5.26 Insurance. Section 5.26 of the Wyle Disclosure
Schedule contains a complete and accurate list of all policies or binders of
fire, liability, title, worker's compensation, product liability and other
forms of insurance (showing as to each policy or binder the carrier and policy
number) maintained by Wyle. Wyle is not in default under any of such policies
or binders. All policies and binders provide sufficient coverage for the risks
insured
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against, are in full force and effect on the date hereof and shall be kept in
full force and effect through the Closing Date.
SECTION 5.27 Accounts Receivable. Except for contract withholds
and other unbilled receivables (which are addressed below), the accounts
receivable reflected in the Interim Balance Sheet of Wyle, and all accounts
receivable arising since the date of such Interim Balance Sheet, represent bona
fide claims of Wyle against debtors for sales, services performed or other
charges arising on or before the date hereof, and all the goods delivered and
services performed which gave rise to said accounts were delivered or performed
in accordance with the applicable orders, Contracts or customer requirements.
The reserves on accounts receivable as set forth on the Interim Balance Sheet
of Wyle and, in the case of accounts receivable arising since the date of such
Interim Balance Sheet, represent a commercially a reasonable reserve on
accounts receivable in respect of Wyle. The contract withholds and other
unbilled receivables reflected in the Interim Balance Sheet of Wyle fairly and
accurately present the amount of such withholds and unbilled receivables, and
all contract withholds and other unbilled receivables reflected on the Wyle
Interim Balance Sheet or arising since the date of the Interim Balance Sheet of
Wyle are subject to the completion (by Wyle prior to the Effective Time and by
Surviving Corporation after the Effective Time) of the Contracts to which such
contract withholds and other unbilled receivables relate in accordance with
their respective terms.
SECTION 5.28 Disclosure. Neither this Agreement nor any written
instrument, list, exhibit, schedule or certificate furnished or to be furnished
to the Companies pursuant hereto by Wyle contains or will contain any untrue
statement of a material fact.
SECTION 5.29 "Knowledge." When the phrase "to Wyle's knowledge"
or "to the best of Wyle's knowledge" (or any variation of the foregoing) is
used in this Article Five, such qualification shall refer to anything within
the actual knowledge of any one or more of any of the following: Xxxxxx X.
Xxxxx, L. Xxxxx Xxxxx and F. Xxxxxxx Xxxx.
ARTICLE 6
COVENANTS OF THE COMPANIES
Each of the Companies jointly and severally agrees, and, with
respect to an obligation of Xxxx set forth in this Article 6, will cause Xxxx
to perform such that:
SECTION 6.1 Conduct of the Companies. From the date hereof until
the Effective Time, except as contemplated by this Agreement, each of the
Companies shall conduct its business in the ordinary course consistent with
past practices and shall use its best efforts to preserve intact its business
organizations and relationships with third parties and to keep available the
services of its present directors, officers and employees to the end that the
Companies' goodwill and ongoing businesses shall not be impaired in any
material respect. Without limiting the generality of the foregoing, from the
date hereof until the Effective Time without Wyle's prior written consent:
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(a) Neither of Companies will adopt or propose any change in its
articles of incorporation or bylaws, except as provided in the Ohio Certificate
of Merger;
(b) Neither of the Companies will merge or consolidate with any
other Person or acquire a material amount of assets of any other Person;
(c) Neither of the Companies will sell, lease, license or
otherwise dispose of any assets or property material to the business of the
Companies, except in the ordinary course of business consistent with past
practices;
(d) Neither of the Companies will take or agree or commit to take
any action that it could make any representation and warranty of the Companies
hereunder inaccurate in any material respect at the Effective Time;
(e) Neither of the Companies will declare, set aside, make or pay
any dividend or other distribution, payable in cash, stock, property or
otherwise, with respect to any of its capital stock, or subdivide, re-classify,
recapitalize, split, combine or exchange any of its shares of capital stock;
(f) Neither of the Companies will incur any indebtedness for
borrowed money or make any loans or advances, except in the ordinary course of
business pursuant to the Loan Agreement;
(g) Neither of the Companies will increase the compensation
payable or to become payable to any of the directors, officers or employees of
the Companies, or grant any severance or termination pay to, or enter into any
employment or severance agreement with any director, officer or employee of the
Companies, or establish, adopt, enter into or amend in any material respect or
take action to accelerate any rights or benefits under any collective
bargaining agreement or any employee benefit plan, agreement or policy;
(h) Neither of the Companies will take any action, other than
actions in the ordinary course of business and consistent with past practices,
with respect to accounting policies or procedures (including tax accounting
policies and procedures);
(i) Neither of the Companies will mortgage or otherwise encumber
or subject to any Lien any of its properties or assets, except for Liens in
connection with loans or advances permitted by clause (f) above;
(j) Neither of the Companies will acquire any securities or, or
make any investment in, any Subsidiary; and
(k) Neither of the Companies will agree or commit to do any of the
foregoing.
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SECTION 6.2 Avoidance of Breach. Neither the Companies nor Xxxx
will take or agree or commit to take any action that it reasonably expects
would make any representation and warranty of the Companies or with respect to
Xxxx, including any representation or warranty made by the Companies with
respect to Xxxx, hereunder inaccurate in any material respect at the Effective
Time.
SECTION 6.3 Access to Information. From the date hereof until
the Effective Time, subject to the restrictions contained in agreements with
third parties (if Xxxx and the Companies have used their reasonable efforts to
obtain the consent of such third party), prohibitions required by law or
privileged communications, the disclosure of which would result in a loss of
such privilege, Xxxx and the Companies will give Wyle, its attorneys, financial
advisors, auditors and other authorized representatives full access within
normal working hours, to the offices, properties, books and records of Xxxx and
the Companies, will furnish to Wyle such financial and operating data and other
information as such Persons may reasonably request (including examination of
contract profitability, DCAA status, employee benefits, agreements, pending and
threatened litigation, obligations and items comprising each of the balance
sheets included in the Xxxx Financial Statements) and will instruct Xxxx'x and
the Companies' employees, attorneys and financial advisors to cooperate with
Wyle in its investigation of the business of Xxxx and the Companies'; provided,
however, that no investigation pursuant to this Section shall affect any
representation or warranty given by Xxxx or the Companies to Wyle hereunder.
SECTION 6.4 Other Offers. Except as may be required by Delaware
General Corporation Law, from the date hereof until the termination of this
Agreement, none of Xxxx, the Companies, or their respective officers or
directors will, directly or indirectly, take any action to solicit, initiate,
encourage any Acquisition Proposal or engage in negotiations concerning an
Acquisition Proposal with, or disclose any non-public information relating to
Xxxx or the Companies or afford access to the properties, books or records of
Xxxx or the Companies to, any Person that may be considering making, or has
made, an Acquisition Proposal. Each of Xxxx and the Companies will promptly
notify Wyle after receipt of any Acquisition Proposal or any indication that
any Person is considering making an Acquisition Proposal or any request for
non-public information relating to Xxxx or the Companies or for access to the
properties, books or records of Xxxx or the Companies by any Person that may be
considering making, or has made, an Acquisition Proposal and will keep Wyle
fully informed of the status and details of any such Acquisition Proposal,
indication or request.
SECTION 6.5 Notices of Certain Events. Each of the Companies
shall promptly notify Wyle of:
(i) any written notice or other written communication to
Xxxx, the Companies or any employee, director or officer thereof from
any Person alleging that the consent of such Person is or may be
required in connection with the transactions contemplated by this
Agreement;
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(ii) any written notice or other written communication to
Xxxx, the Companies or any employee, director or officer thereof from
any Governmental Authority in connection with the transactions
contemplated by this Agreement; and
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the knowledge of Xxxx and the Companies,
threatened against Xxxx relating to or involving or otherwise
affecting the Companies.
SECTION 6.6 Additional Agreements. At the Closing, each of the
Companies shall deliver or cause to be delivered to Wyle the following
additional agreements (the "ADDITIONAL AGREEMENTS"):
(a) the Amended and Restated Stockholders Agreement duly executed
by and on behalf of Xxxx in substantially the form attached hereto as Exhibit
6.6(a) (the "STOCKHOLDERS AGREEMENT");
(b) each of the Employment Agreements duly executed by each of the
existing President and Chief Financial Officer of KLSI in substantially the
form attached hereto as Exhibit 6.6(b) (the "EMPLOYMENT AGREEMENTS");
(c) the Covenant Not to Compete in favor of Wyle duly executed by
and on behalf of Xxxx in substantially the form attached hereto as Exhibit
6.6(c) (the "COVENANT NOT TO COMPETE");
(d) the Transitional Services Agreement duly executed by and on
behalf of Xxxx in substantially the form attached hereto as Exhibit 6.6(d) (the
"TRANSITIONAL SERVICES AGREEMENT"), provided that such agreement when executed
shall be reasonably acceptable in form and substance to Wyle;
(e) the Investment Representation Letter duly executed by and on
behalf of Xxxx in substantially the form attached hereto as Exhibit 6.6(e) (the
"INVESTMENT REPRESENTATION LETTER"); and
(f) the Agreement Regarding Employee Benefits duly executed by and
on behalf of Xxxx in substantially the form attached hereto as Exhibit 6.6(e)
(the "AGREEMENT REGARDING EMPLOYEE BENEFITS"), provided that such agreement
when executed shall be reasonably acceptable in form and substance to Wyle.
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ARTICLE 7
COVENANTS OF WYLE
Wyle agrees that:
SECTION 7.1 Conduct of Wyle. From the date hereof until the
Effective Time, except as contemplated by this Agreement, Wyle shall conduct
its business in the ordinary course consistent with past practices and shall
use its best efforts to preserve intact its business organizations and
relationships with third parties and to keep available the services of its
present directors, officers and employees to the end that Wyle's goodwill and
ongoing businesses shall not be impaired in any material respect. Without
limiting the generality of the foregoing, from the date hereof until the
Effective Time without the Companies' prior written consent:
(a) Wyle will not adopt or propose any change in its certificate
of incorporation or bylaws, except as contemplated in this Agreement;
(b) Wyle will not merge or consolidate with any other Person or
acquire a material amount of assets of any other Person;
(c) Wyle will not sell, lease, license or otherwise dispose of any
assets or property material to the business of Wyle, except in the ordinary
course of business consistent with past practices;
(d) Wyle will not take or agree or commit to take any action that
it could make any representation and warranty of the Companies hereunder
inaccurate in any material respect at the Effective Time;
(e) Wyle will not declare, set aside, make or pay any dividend or
other distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock, or subdivide, re-classify, recapitalize, split,
combine or exchange any of its shares of capital stock, except as contemplated
in this Agreement;
(f) Wyle will not incur any indebtedness for borrowed money or
make any loans or advances, except in the ordinary course of business and as
disclosed in Section 5.7 of the Wyle Disclosure Schedule;
(g) Wyle will not increase the compensation payable or to become
payable to any of the directors, officers or employees of Wyle, or grant any
severance or termination pay to, or enter into any employment or severance
agreement with any director, officer or employee of Wyle, or establish, adopt,
enter into or amend in any material respect or take action to accelerate any
rights or benefits under any collective bargaining agreement or any employee
benefit plan, agreement or policy;
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(h) Wyle will not take any action, other than actions in the
ordinary course of business and consistent with past practices, with respect to
accounting policies or procedures (including tax accounting policies and
procedures);
(i) Wyle will not mortgage or otherwise encumber or subject to any
Lien any of its properties or assets, except for Liens in connection with loans
or advances permitted by clause (f) above;
(j) Wyle will not acquire any securities or, or make any
investment in, any Subsidiary; and
(k) Wyle will not agree or commit to do any of the foregoing.
SECTION 7.2 Avoidance of Breach. Wyle will not to take or agree
or commit to take any action that it reasonably expects would make any
representation and warranty of Wyle hereunder inaccurate in any material
respect at the Effective Time.
SECTION 7.3 Access to Information. From the date hereof until
the Effective Time, subject to the restrictions contained in agreements with
third parties (if Wyle has used reasonable efforts to obtain the consent of
such third party), prohibitions required by law or privileged communications,
the disclosure of which would result in a loss of such privilege, Wyle will
give the Companies, their attorneys, financial advisors, auditors and other
authorized representatives full access within normal working hours, to the
offices, properties, books and records of Wyle, will furnish to the Companies
such financial and operating data and other information as such Persons may
reasonably request (including examination of contract profitability, DCAA
status, employee benefits, agreements, pending and threatened litigation,
obligations and items comprising each of the balance sheets included in the
Wyle Financial Statements) and will instruct Wyle's employees, attorneys and
financial advisors to cooperate with the Companies in their investigation of
the business of Wyle; provided, however, that no investigation pursuant to this
Section shall affect any representation or warranty given by Wyle to the
Companies hereunder.
SECTION 7.4 Notices of Certain Events. Wyle shall promptly
notify the Companies of:
(i) any written notice or other written communication to
Wyle from any Person alleging that the consent of such Person is or
may be required in connection with the transactions contemplated by
this Agreement;
(ii) any written notice or other written communication to
Wyle from any Governmental Authority in connection with the
transactions contemplated by this Agreement; and
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(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the knowledge of Wyle threatened, against
Wyle relating to or involving or otherwise affecting Wyle which relate
to the consummation of the transactions contemplated by this
Agreement.
SECTION 7.5 Additional Agreements. At the Closing, Wyle shall
deliver or cause to be delivered to Xxxx the following Additional Agreements:
(a) the Stockholders Agreement duly executed by and on
behalf of Wyle and eighty percent (80%) of the holders of the issued
and outstanding capital stock of Wyle;
(b) copies of each of the Employment Agreements duly
executed by and on behalf of Wyle in favor of each of the existing
President and Chief Financial Officer of KLSI, respectively;
(c) the Transitional Services Agreement duly executed by
and on behalf of Wyle, provided that such agreement when executed
shall be reasonably acceptable in form and substance to Xxxx; and
(d) the Agreement Regarding Employee Benefits duly
executed by and behalf of Wyle, provided that such agreement when
executed shall be reasonably acceptable in form and substance to Xxxx.
ARTICLE 8
COVENANTS OF THE PARTIES
The parties hereto agree and, with respect to the stockholders
of Wyle, Wyle will cause such stockholders to perform such obligation, such
that:
SECTION 8.1 Best Efforts. Subject to the terms and conditions of
this Agreement, each party will use its best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable under Applicable Laws to (a) ensure that all Government Contracts
shall remain in full force and effect following the consummation of the Merger
and/or (b) consummate the transactions contemplated by this Agreement.
SECTION 8.2 Certain Filings. The Companies and Wyle shall
cooperate with each other in determining whether any action by or in respect
of, or filing or submission under the HSR Act is required, in determining
whether any action by or in respect of, or filing with, any Governmental
Authority is required, or any actions, consents, approvals or waivers are
required to be obtained from parties to any material contracts, in connection
with the consummation of the
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transactions contemplated by this Agreement and in seeking any such actions,
consents, approvals or waivers or making any such filings, furnishing
information required in connection therewith and seeking timely to obtain any
such actions, consents, approvals or waivers.
SECTION 8.3 Public Announcements. Wyle, Xxxx and the Companies
will consult with each other before issuing any press release or making any
public announcement with respect to this Agreement and the transactions
contemplated hereby and, except as may be required by Applicable Law, will not
issue any such press release or make any such public announcement prior to such
consultation.
SECTION 8.4 Further Assurances. From and after the Effective
Time, the officers and directors of the Surviving Corporation will be
authorized to execute and deliver, in the name and on behalf of the Companies,
any deeds, bills of sale, assignments or assurances and to take and do, in the
name and on behalf of the Companies, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets of the Companies acquired or to be acquired by the Surviving Corporation
as a result of, or in connection with, the Merger.
SECTION 8.5 Conveyance Taxes. Wyle, Xxxx and the Companies shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications, or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
Taxes which become payable in connection with the transactions contemplated
hereunder that are required or permitted to be filed on or before the Effective
Time.
SECTION 8.6 Notification of Certain Matters. Each of Xxxx and
the Companies shall give prompt written notice to Wyle, and Wyle shall give
prompt written notice to Xxxx, of (a) the occurrence, or non-occurrence, of any
event the occurrence, or non-occurrence, of which would be likely to cause (i)
any representation or warranty contained in this Agreement to be untrue or
inaccurate or (ii) any covenant, condition or agreement contained in this
Agreement not to be complied with or satisfied and (b) any failure of Xxxx,
the Companies or Wyle, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 8.6 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 8.7 Stock Option. The parties hereto agree to cause the
Surviving Corporation, promptly following the Effective Time, to issue options
to purchase up to an aggregate of six hundred ten thousand three hundred ten
(610,310) shares of its Common Stock to those individuals listed on Schedule
8.7 attached hereto and, concurrently with the issuance of such options, an
option to Xxxx to purchase up to three hundred seventy-four thousand sixty
(374,060) shares of its Common Stock. The options to be issued to the
individuals shall be evidenced by option agreements substantially in form of
Exhibit 8.7A attached hereto, and the
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option to be issued to Xxxx shall be evidenced by an option agreement
substantially in form of Exhibit 8.7B attached hereto, such issuance to be
provided for in the Stockholders Agreement.
ARTICLE 9
CONDITIONS TO THE MERGER
SECTION 9.1 Conditions to the Obligations of All Parties. The
obligations of Xxxx, the Companies and Wyle to consummate the Merger are
subject to the satisfaction prior to the Closing of the following conditions:
(a) Any applicable waiting period under the HSR Act
(including any extensions thereof) relating to the Merger shall have
expired or shall have been terminated;
(b) No provision of any applicable law or regulation and
no judgment, injunction, order or decree shall prohibit the
consummation of the Merger, provided that a party may terminate this
Agreement for the reasons set forth herein if such party has used all
reasonable efforts to remove such judgment, injunction order or
decree;
(c) All actions by or in respect of or filings with any
Governmental Authority and all other consents required to permit the
consummation of the Merger shall have been made or obtained;
(d) Wyle shall have completed a recapitalization of its
capital stock and the capital stock of Wyle shall be as set forth in
Section 5.6(b) hereof;
(e) All applicable registration requirements of the 1933
Act, the 1934 Act or any applicable federal and state securities or
Blue Sky laws shall have been satisfied or exemptions from such
registration requirements have been obtained; and
(f) The parties hereto, at the expense of Wyle but with
reasonable assistance from Xxxx, shall have arranged for the release
of Xxxx as a guarantor under the terms of the Loan Agreement.
SECTION 9.2 Conditions to the Obligations of Wyle. The
obligations of Wyle to consummate the Merger are subject to the satisfaction of
the following further conditions:
(a) Each of the Companies shall have performed in all
material respects all of its obligations hereunder required to be
performed by it at or prior to the Closing, the representations and
warranties of each of the Companies contained in this Agreement and in
any officer's certificate delivered by it pursuant hereto shall be
true in all material respects at and (except to the extent that such
representations and warranties speak only as of an earlier date) as of
the Closing as if made at and as of such time and Wyle shall
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have received a certificate signed by the President or Chairman of the
Board of Directors of each the Companies to the foregoing effect;
(b) No court, arbitrator or governmental body, agency or
official shall have issued any order, and there shall not be any
statute, rule or regulation, restraining or prohibiting the
consummation of the Merger or the effective operation of the business
of the Companies, after the Effective Time, and no proceeding (i)
challenging this Agreement or the transactions contemplated hereby or
seeking to prohibit, alter, prevent or materially delay the Merger;
and (ii) seeking to restrain or prohibit Wyle's ownership or operation
(or that of its respective subsidiaries or Affiliates) of all or any
material portion of the business or assets of the Companies, or of
Wyle and its subsidiaries, or to compel Wyle or any of its
subsidiaries or Affiliates to dispose of or hold separate all or any
material portion of the business or assets of the Companies;
(c) There shall be no action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to the Merger, by any court
or Governmental Authority other than any applicable the waiting period
provisions of the HSR Act (including any extensions thereof), in
effect at the Closing that is likely, directly or indirectly, to
result in any of the consequences referred to in clauses (i) through
(ii) of paragraph (b) above;
(d) Wyle shall not have received any communication from
the Department of Justice or Federal Trade Commission (each, an "HSR
AUTHORITY") (which communication shall be confirmed to the other
parties by the HSR Authority) that causes such party reasonably to
believe that any HSR Authority has authorized the institution of
litigation challenging, impairing or diminishing the benefits with
respect to any of the transactions contemplated by this Agreement;
(e) Each of the Companies shall have delivered to Wyle at
the Closing a certificate of the good standing of the Companies from
the Ohio Secretary and each state in which each of the Companies is
qualified to do business, in each case dated as of a reasonably recent
date, a certified copy of resolutions adopted by the Boards of
Directors of the Companies authorizing the Agreement and the
transactions contemplated hereby and a certified copy of resolution
adopted by the shareholders of the Companies approving this Agreement
and the transactions contemplated hereby, including the terms and
conditions of the plan of merger contained herein;
(f) Wyle shall have received or be satisfied that it,
Xxxx or the Companies will receive all consents and approvals
contemplated by the Companies' Disclosure Schedule and related to
Section 4 above or otherwise material in connection with the
consummation of the Merger or to enable the Surviving Corporation to
continue to carry on the business of the Companies as presently
conducted in all material respects;
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(g) Each of the Companies shall have executed the
Delaware Certificate of Merger and the Ohio Certificate of Merger (and
any other documents required to be filed in connection with the
Merger) and all necessary arrangements shall have been made for the
filing of the Delaware Certificate of Merger with the Delaware
Secretary in accordance with Delaware Law and for the filing of the
Ohio Certificate of Merger with the Ohio Secretary in accordance with
Ohio law.
(h) There shall be no options, warrants or other rights
to acquire any debt or equity securities of the Companies which are
then outstanding or exercisable;
(i) Wyle shall have received from Xxxx the Stockholders
Agreement duly executed by and on behalf of Xxxx;
(j) Wyle shall have received from KLSI the Employment
Agreements duly executed by each of the existing President and Chief
Financial Officer of KLSI, respectively;
(k) Wyle shall have received from Xxxx the Covenant Not
to Compete duly executed by and on behalf of Xxxx;
(l) Wyle shall have received from Xxxx the Transitional
Services Agreement, reasonably acceptable in form and substance to
Wyle and duly executed by and on behalf of Xxxx;
(m) Wyle shall have received from Xxxx the Agreement
Regarding Employee Benefits, reasonably acceptable in form and
substance Wyle and duly executed by and on behalf of Xxxx;
(n) The total debt under the Loan Agreement shall not
exceed Six Million Three Hundred Thirty-Three Thousand Dollars
($6,333,000);
(o) Wyle shall have received from Xxxx the Investment
Representation Letter duly executed by and on behalf of Xxxx; and
(p) Wyle shall have received from Xxxx the stock
certificates evidencing Xxxx'x ownership of the Companies' Shares free
and clear of all Liens.
SECTION 9.3 Conditions to the Obligations of the Companies. The
obligations of each of the Companies to consummate the Merger are subject to
the satisfaction of the following further conditions:
(a) Wyle shall have performed in all material respects
all of its respective obligations hereunder required to be performed
by it at or prior to the Closing, the
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representations and warranties of Wyle contained in this Agreement and
any officer's certificate delivered by Wyle pursuant hereto shall be
true in all material respects at and as of the Closing as if made at
and as of such time (except to the extent that such representations
and warranties speak only as of an earlier date) and each of the
Companies shall have received a certificate signed by the President or
Chairman of the Board of Directors of Wyle to the foregoing effect;
(b) No court, arbitrator or governmental body, agency or
official shall have issued any order, and there shall not be any
statute, rule or regulation, restraining or prohibiting the
consummation of the Merger or the effective operation of the business
of the Companies or Wyle, after the Effective Time, and no proceeding
(i) challenging this Agreement or the transactions contemplated hereby
or seeking to prohibit, alter, prevent or materially delay the Merger;
or (ii) seeking to restrain or prohibit Wyle's ownership or operation
(or that of its respective subsidiaries or Affiliates) of all or any
material portion of the business or assets of the Companies, or of
Wyle and its subsidiaries, or to compel Wyle or any of its
subsidiaries or Affiliates to dispose of or hold separate all or any
material portion of the business or assets of the Companies; or (iii)
seeking to restrain or prohibit Xxxx'x prospective ownership of Series
A-1 Preferred Stock, Series B Preferred Stock and Series D Preferred
Stock;
(c) There shall be no action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to the Merger, by any court
or Governmental Authority other than any applicable the waiting period
provisions of the HSR Act (including any extensions thereof), in
effect at the Closing that is likely, directly or indirectly, to
result in any of the consequences referred to in clauses (i) through
(iii) of paragraph (b) above;
(d) Wyle shall not have received any communication from
the HSR Authority (which communication shall be confirmed to the other
parties by the HSR Authority) that causes such party reasonably to
believe that any HSR Authority has authorized the institution of
litigation challenging, impairing or diminishing the benefits with
respect to any of the transactions contemplated by this Agreement;
(e) Wyle shall have delivered to Companies at the Closing
(i) a certificate of the good standing of Wyle from the Delaware
Secretary dated as of a reasonably recent date, (ii) a certified copy
of resolutions adopted by its Board of Directors authorizing the
Agreement and the transactions contemplated thereby and (iii) a
certified copy of resolutions adopted by its stockholders approving
this Agreement and the transactions contemplated hereby (including
without limitation the terms and conditions of the plan of merger
contained herein);
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(f) The Companies shall have received or be satisfied
that Wyle will receive all consents and approvals contemplated by the
Wyle Disclosure Schedule and related to Section 5 above or otherwise
material in connection with the consummation of the Merger.
(g) Wyle shall have executed the Delaware Certificate of
Merger and the Ohio Certificate of Merger (and any other documents
required to be filed in connection with the Merger) and, prior to the
Closing, all necessary arrangements shall have been made for the
filing of the Delaware Certificate of Merger with the Delaware
Secretary in accordance with Delaware Law and for the filing of the
Ohio Certificate of Merger with the Ohio Secretary in accordance with
Ohio Law;
(h) Xxxx shall have received from Wyle a certified copy
of the Restated Certificate, the Series A Designations, the Series B
Designations and the Series D Designations;
(i) There shall be no options, warrants or other rights
to acquire any debt or equity securities of Wyle which are then
outstanding or exercisable except as set forth in Section 5.6(f) of
the Wyle Disclosure Schedule;
(j) Xxxx shall have received from Wyle the Stockholders
Agreement duly executed by and on behalf of Wyle and eighty percent
(80%) of the holders of the issued and outstanding capital stock of
Wyle;
(k) KLSI shall have received from Wyle the Employment
Agreements duly executed by and on behalf of Wyle in favor of each of
the existing President and Chief Financial Officer of KLSI,
respectively;
(l) Xxxx shall have received from Wyle the Transitional
Services Agreement, reasonably acceptable in forma and substance to
Xxxx and duly executed by and on behalf of Wyle; and
(m) Xxxx shall have received from Wyle the Agreement
Regarding Employee Benefits reasonably acceptable in form and
substance to Xxxx and duly executed by and on behalf of Wyle.
ARTICLE 10
TERMINATION
SECTION 10.1 Termination. This Agreement may be terminated and
the Merger may be abandoned by the Boards of Directors of Wyle and the
Companies, respectively, at any time prior to filing of the Delaware
Certificate of Merger and the Ohio Certificate of Merger
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(notwithstanding any approval of this Agreement by the shareholders of Xxxx, or
the Companies or by the stockholders of Wyle) as provided hereunder as follows:
(a) by mutual written consent of the Companies and Wyle;
(b) by either the Companies or Wyle, if the Merger has
not been consummated by March 31, 1998, provided, however, that the
right to terminate under this Section 10.1(b) shall not be available
to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the
Merger to occur on or before such date;
(c) by either the Companies or Wyle, if there shall be
any law or regulation that makes consummation of the Merger illegal or
otherwise prohibited or if any judgment, injunction, order or decree
enjoining Wyle, the Companies or Xxxx from consummating the Merger is
entered and such judgment, injunction, order or decree shall become
final and non-appealable;
(d) by Wyle, if any representation or warranty made by
the Companies (including representations and warranties made by
Companies with respect to Xxxx) in this Agreement shall not be true
and correct in all material respects when made, or the Companies shall
have failed to observe or perform in any material respect any of its
agreements or obligations under this Agreement; and
(e) by the Companies, if any representation or warranty
made by Wyle in this Agreement shall not be true and correct in all
material respects when made, or Wyle shall have failed to observe or
perform in any material respect any of its agreements or such
obligation under this Agreement.
The party desiring to terminate this Agreement pursuant to clauses (b), (c),
(d), or (e) shall give written notice of such termination to the other party or
parties in accordance with Section 12.1.
SECTION 10.2 Effect of Termination. If this Agreement is
terminated pursuant to Section 10.1, this Agreement shall become void and of no
effect with no liability on the part of any party hereto, except for liability
for Transaction Expenses (as defined below) as set forth in Section 12.3
hereof.
ARTICLE 11
SURVIVAL
This Agreement and the representations, warranties and
covenants of the Companies set forth herein, including any representation,
warranty or covenant made by the Companies with respect to Xxxx, or in any
exhibit or schedule hereto or in other certificate or document delivered
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pursuant hereto, shall not survive the Closing and subsequent to the Closing
shall be of no further force or effect. Notwithstanding any other Section or
Article hereof, Xxxx makes no representation, warranty, covenant or agreement
in this Agreement, is not a party hereto, and no reference herein to Xxxx shall
be interpreted to bind Xxxx to this Agreement. This Agreement and the
representations, warranties and covenants of Wyle set forth herein or in any
exhibit or schedule hereto or in other certificate or document delivered
pursuant hereto, shall not survive the Closing and subsequent to Closing shall
be of no further force or effect.
ARTICLE 12
MISCELLANEOUS
SECTION 12.1 Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including telecopy
or similar writing) and shall be given,
if to Wyle to:
Wyle Laboratories, Inc.
000 Xxxxxxxx Xxxxxx
Xx Xxxxxxx, Xxxxxxxxxx 00000
Attention: F. Xxxxxxx Xxxx
Telecopy: (000) 000-0000
with a copy to:
Sanders, Barnet, Xxxxxxx, Xxxxxx & Mosk
A Professional Corporation
1901 Avenue of the Stars, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Telecopy: (000) 000-0000
if to Companies and/or Xxxx to:
Xxxx Life Sciences, Inc. and
Technology/Scientific Services, Inc.
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxx Xxxxxx
Telecopy: (000) 000-0000
and
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Xxxx International Corporation
0000 Xxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxx Xxxxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxxx, Xxxxxxxx & Xxxxxxx, L.L.P.
0000 Xxxxxxxxx Xxxxxx, X.X.
Suite 3100, Promenade II
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx Xxxxxx, Esq.
Telecopy: (000) 000-0000
or such other address or telecopy number as such party may hereafter specify
for the purpose by notice to the other parties hereto. Each such notice,
request or other communication shall be effective (i) if given by telecopy,
when such telecopy is transmitted to the telecopy number specified in this
Section and the appropriate telecopy confirmation is received or (ii) if given
by any other means, when delivered at the address specified in this Section.
SECTION 12.2
(a) Amendments; No Waivers. Prior to the filing of the Delaware
Certificate of Merger and the Ohio Certificate of Merger, any provision of this
Agreement may be amended or waived by the respective Boards of Directors of
Wyle and the Companies (notwithstanding approval of the Merger by their
respective stockholders) if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by the Companies and Wyle or
in the case of a waiver, by the party against whom the waiver is to be
effective; provided, however, that, upon the approval of this Agreement by Xxxx
as the sole shareholder of KLSI or TSSI or by the stockholders of Wyle, the
Boards of Directors of TSSI, KLSI and Wyle shall not be authorized to amend
this Agreement to do any of the following:
(A) alter or change the Merger Consideration;
(B) alter or change any terms of the Restated Certificate; and
(C) alter or change any other terms and conditions of the
Agreement if any of the alteration or changes, alone or in the
aggregate, would adversely affect the holders of any class or series
of shares of TSSI, KLSI or Wyle.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The
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rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
SECTION 12.3 Fees and Expenses. The Surviving Corporation shall
pay for the reasonable Transaction Expenses of the parties hereto related to the
Merger or the transactions contemplated herein. "TRANSACTION EXPENSES" include
all costs of due diligence investigations, negotiation, execution and closing of
the Merger and the transactions contemplated herein, including legal, accounting
and investment advisory fees and expenses related to the Merger, including any
fees payable to Quarterdeck following the consummation of the Merger as set
forth in Section 12.3 of the Companies' Disclosure Schedule. Notwithstanding the
foregoing, each party hereto shall bear its Transaction Expenses if this
Agreement is terminated pursuant to Section 10.1(a), 10(b) (subject to the
proviso therein) or Section 10.1(c) hereof. If this Agreement is terminated by
a party hereto pursuant to Section 10.1(b), Section 10.1(d) or Section 10.1(e)
hereof as a result of another party hereto having breached any of its material
agreements, obligations or representations under this Agreement, the terminating
party shall be entitled as its sole remedy hereunder to recover its reasonable
out-of-pocket Transaction Expenses from the party that breached.
SECTION 12.4 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto except that Wyle may
transfer such rights and obligations or assign the same, in whole or from time
to time in part, to one or more of its wholly-owned subsidiaries (whether
direct or indirect) but any such transfer or assignment will not relieve Wyle
of its obligations hereunder.
SECTION 12.5 Governing Law. This Agreement shall be governed and
construed in accordance with the domestic laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule (whether of
the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
SECTION 12.6 Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective duly authorized officers as
of the day and year first above written.
XXXX LIFE SCIENCES INC.
By:/s/ Xxxxxxx Xxxx Xxxxxx
-------------------------------------------
Name: Xxxxxxx Xxxx Xxxxxx
-----------------------------------------
Title: Chairman and Chief Executive Officer
----------------------------------------
TECHNOLOGY/SCIENTIFIC SERVICES CORPORATION
By:/s/ Xxxxxxx Xxxx Xxxxxx
-------------------------------------------
Name: Xxxxxxx Xxxx Xxxxxx
-----------------------------------------
Title: Chairman and Chief Executive Officer
----------------------------------------
WYLE LABORATORIES, INC.
By: /s/ F. Xxxxxxx Xxxx
-------------------------------------------
Name: F. Xxxxxxx Xxxx
-----------------------------------------
Title: Chairman of the Board
----------------------------------------
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