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EXHIBIT 99.1
ASSET PURCHASE AGREEMENT
between
CINCINNATI MICROWAVE, INC.
and
BEL-TRONICS U.S.A., INC.
Dated as of December 3, 1996
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TABLE OF CONTENTS
INTRODUCTORY PARAGRAPH
PREAMBLE
ARTICLE I
DEFINITIONS
1.1. Definitions..........................................................1
1.2. Interpretation.......................................................8
ARTICLE II
TRANSFER OF THE ASSETS
2.1. Transfer............................................................10
2.1.1. Excluded Assets.....................................................11
2.2. Shares and Delivery.................................................11
2.2.1 Shares..............................................................11
2.2.2. Issuance of Shares..................................................11
2.2.3. Share Ratio.........................................................11
2.2.4. Re-Evaluation of Share Ratio........................................12
2.2.5. Dissenting Shares...................................................12
2.2.5.1. Cash Retained.......................................................12
2.2.5.2. Escrow..............................................................12
2.2.5.3. Impact of Dissent...................................................12
2.2.5.4. Procedures..........................................................13
2.2.5.5. Buyer's Approval Required...........................................13
2.2.5.6. Definition..........................................................13
2.2.6. Apportionments......................................................13
2.2.6.1. Real Estate.........................................................13
2.2.6.2. Contest.............................................................14
2.2.6.3. Third Party Funds...................................................14
2.2.6.4. Utilities...........................................................14
2.2.6.5. Costs...............................................................14
2.2.6.6. Exemptions..........................................................14
2.2.7. Additional Consideration............................................15
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2.3. Assumed Liabilities of Seller.......................................15
2.3.2. Excluded Liabilities................................................15
2.3.2.7. Product Failures....................................................16
2.3.2.8. Environmental Claims; Environmental
Health & Safety Claims...........................................17
.3.2.9. Excluded Assets.....................................................17
2.3.2.10. Employee Plans......................................................17
2.3.2.11. Golden Parachutes...................................................17
2.3.2.11. Taxes...............................................................17
2.3.2.12 Infringement........................................................17
2.3.2.13 Suits...............................................................17
2.4. Closing.............................................................18
2.5. Tax Matters.........................................................18
2.6. Procedures for Excluded Assets......................................18
2.6.1. Excluded Assets.....................................................18
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of Seller............................19
3.1.1. Corporate Existence.................................................19
3.1.2. Authorization.......................................................19
3.1.3. No Violation........................................................19
3.1.4. Litigation..........................................................19
3.1.5. Governmental Authorizations; Compliance with Laws...................20
3.1.6. Income Tax Matters..................................................20
3.1.6.1 Tax Returns.........................................................20
3.1.6.2 FIRPTA..............................................................20
3.1.7. Knowledge...........................................................20
3.1.8. Brokers; Finders....................................................20
3.1.9. Actions of Officers and Directors; Unauthorized Acts of
Officers or Directors of Affiliates of Seller.......................21
3.1.9.1 Officers and Directors..............................................21
3.1.9.2 Actions by Affiliates...............................................21
3.1.10. Permits.............................................................21
3.1.11. Seller SEC Reports and Financial Statements.........................21
3.1.12.1 Seller SEC Reports..................................................21
3.1.12.2 Seller Financial Statements.........................................22
3.1.12.3 No Other Liabilities................................................22
3.1.13. No Adverse Change...................................................22
3.1.14. Title to and Condition of Properties................................23
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3.1.15. Real Property Leases................................................23
3.1.16. Equipment...........................................................23
3.1.17. Intellectual Property...............................................24
3.1.18. Contracts...........................................................24
3.1.19. Employee Benefit Plans..............................................26
3.1.20. No Defaults or Violations...........................................27
3.1.21. Certain Environmental Matters.......................................27
3.1.22. Litigation..........................................................29
3.1.23. Taxes...............................................................29
3.1.24. Condition of Assets.................................................30
3.1.25. Inventory...........................................................30
3.1.26. Insurance Policies..................................................30
3.1.27. Accounts Receivable.................................................31
3.1.28. Capital Improvements................................................31
3.1.29. Assets Sufficient for Conduct of Business...........................31
3.1.30. Accuracy of Statements..............................................31
3.1.31. No Other Agreement..................................................31
3.2. Representations and Warranties of Buyer and Buyer's Parent..........31
3.2.1. Corporate Existence.................................................31
3.2.2. Authorization.......................................................32
3.2.3. No Violation........................................................32
3.2.4. Litigation..........................................................32
3.2.5. Governmental Authorizations; Compliance with Laws...................33
3.2.6. Income Tax Matters..................................................33
3.2.6.1. Tax Returns.........................................................33
3.2.7. Knowledge...........................................................33
3.2.8. Brokers; Finders....................................................33
3.2.9. Actions of Officers and Directors; Unauthorized Acts of Officers or
Directors of Affiliates of Buyer and Buyer's Parent.................33
3.2.9.1. Officers and Directors..............................................33
3.2.9.2. Actions by Affiliates...............................................34
3.2.10. Permits.............................................................34
3.2.11. Buyer and Buyer's Parent Financial Statements.......................34
3.2.11.1. Buyer and Buyer's Parent Financial Statements.......................34
3.2.11.2. No Other Liabilities................................................35
3.2.12. No Adverse Changes..................................................35
3.2.13. Title to and Condition of Properties................................35
3.2.14. Real Property Leases................................................36
3.2.15. Equipment...........................................................36
3.2.16. Intellectual Property...............................................36
3.2.17. Contracts...........................................................37
3.2.18. Employee Benefit Plans..............................................38
3.2.19. No Defaults or Violations...........................................40
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3.2.20. Certain Environmental Matters.......................................40
3.2.21. Litigation..........................................................42
3.2.22. Taxes...............................................................42
3.2.23. Condition of Assets.................................................43
3.2.24. Inventory...........................................................43
3.2.25. Insurance Policies..................................................43
3.2.26. Accounts Receivable.................................................44
3.2.27. Capital Improvements................................................44
3.2.28. Assets Sufficient for Conduct of Business...........................44
3.2.29. Accuracy of Statements..............................................44
3.2.30. No Other Agreements.................................................44
3.2.31. Shares..............................................................44
ARTICLE IV
CERTAIN COVENANTS
4.1. Access and Information; Confidentiality.............................45
4.2.1. Conduct of Business of Seller.......................................45
4.2.2. Conduct of Business of Buyer........................................45
4.3. Regulatory Filings..................................................46
4.4. Noncompetition Agreement; Nondisclosure.............................46
4.4.1. Noncompetition Agreement............................................46
4.4.2. Confidential Information Seller's Obligations.......................46
4.4.2.2. Confidential Information Buyer's Obligations........................47
4.5. Assignment of Contracts and Governmental Authorizations.............47
4.6. Change of Corporate Name............................................48
4.7. Intellectual Property Assignments and Acknowledgment................48
4.7.1. Assignments.........................................................48
4.7.2. Non-Use By Seller...................................................49
4.8. Limited Power of Attorney...........................................49
4.8.1. Appointment.........................................................49
4.8.2. Authorization.......................................................49
4.8.3. Irrevocability......................................................49
4.9. Maintenance of Insurance Policies; Seller's Obligations.............49
4.9.1. Maintenance of Insurance Policies: Buyer's Obligations..............49
4.10. Certain Receipts and Certificates...................................50
4.11. Sale/Lease of Facilities............................................50
4.12.1. Employees of Seller.................................................50
4.12.2. Pre-Closing Employment Obligations..................................50
4.13. Personnel Records...................................................50
4.14. WARN Act............................................................50
4.15. Exclusive License...................................................51
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4.16. Manufacturing Contract..............................................51
4.17. No Shop.............................................................51
4.17.1. Acquisition Proposal................................................51
4.17.2. Notice..............................................................52
4.17.3. Termination Fee.....................................................52
4.17.3.1. Alternative Transaction.............................................52
4.17.3.2. Seller's Liability..................................................52
4.18. Proxy Statement/Prospectus; Registration Statement..................52
4.19. Stockholders Meeting................................................53
4.20. Legal Conditions to Transaction.....................................53
4.21. Non-Competition Agreements..........................................53
ARTICLE V
ADDITIONAL REPRESENTATIONS AND WARRANTIES
AND ADDITIONAL COVENANTS AND AGREEMENTS
RELATING TO THE REAL PROPERTY
5.1. Title Insurance.....................................................55
5.1.1. Title Commitment....................................................55
5.1.2. Exceptions..........................................................55
ARTICLE VI
CONDITIONS PRECEDENT
6.1. Conditions to Obligation of Buyer...................................56
6.1.1. Representations; Performance........................................56
6.1.2. Opinion of Counsel..................................................56
6.1.3. Certain Approvals...................................................56
6.1.4. No Proceeding or Litigation.........................................56
6.1.5. No Material Adverse Change..........................................56
6.1.6. Purchased Assets and Documents Delivered............................57
6.1.7. Title Insurance.....................................................57
6.1.8. Environmental Audit.................................................57
6.1.9. "C" Reorganization..................................................58
6.1.10. Fairness Opinion....................................................58
6.1.11. Tax Opinion.........................................................58
6.1.12. Securities Laws.....................................................58
6.1.13. Stockholder Approval................................................58
6.1.14. Financial Partner...................................................58
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6.1.15. Extraordinary Gain..................................................59
6.1.16. Exclusive License...................................................59
6.1.17. Manufacturing Contract..............................................59
6.1.18. Termination of Securities Litigation................................59
6.1.19. Dissenting Shares...................................................59
6.1.20. Working Capital.....................................................59
6.1.21. Re-Evaluation Notice................................................59
6.2. Conditions to Obligation of Seller..................................59
6.2.1. Representations; Performance........................................59
6.2.2. Opinions of Counsel.................................................60
6.2.3. Certain Approvals...................................................60
6.2.4. No Proceeding or Litigation.........................................60
6.2.5. Consideration and Documents Delivered...............................60
6.2.6. "C" Reorganization..................................................60
6.2.7. Stockholder Approval................................................60
6.2.8. Financial Partner...................................................60
6.2.9. Exclusive License...................................................61
6.2.10. Manufacturing Contract..............................................61
6.2.11. Fairness Opinion....................................................61
6.2.12. Tax Opinion.........................................................61
6.2.13. Termination of Securities Litigation................................61
6.2.14. Dissenting Shares...................................................61
6.2.15. Working Capital.....................................................61
6.2.16. Re-Evaluation Notice................................................62
6.2.17. Securities Laws.....................................................62
6.2.18. Extraordinary Gain..................................................62
ARTICLE VII
OBLIGATIONS IF CLOSING OCCURS
7.1. Non-Survival of Representations and Warranties......................63
ARTICLE VIII
MISCELLANEOUS
8.1. Termination.........................................................64
8.2. Default by Buyer....................................................64
8.3. Default by Seller...................................................64
8.4. Bulk Sales Law......................................................64
8.5. Expenses............................................................64
8.6. Public Announcements................................................65
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8.7. Assignment; Successors..............................................65
8.8. Amendment and Modification; Waivers.................................65
8.9. Notices.............................................................65
8.10. Further Assurances; Records.........................................66
8.11. Sales and Transfer Taxes............................................66
8.12. Tax and Financial Cooperation.......................................66
8.13. Entire Agreement; Counterparts; Governing Law.......................67
8.14. Schedules...........................................................67
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated as of December 3, 1996 among
Cincinnati Microwave, Inc., an Ohio corporation ("Seller" or the "Company"), and
BEL-Tronics U.S.A., Inc., a Georgia corporation ("Buyer").
P R E A M B L E
Seller desires to sell, and Buyer desires to purchase, substantially
all of the assets of Seller on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of the covenants
made herein and of the mutual benefits to be derived herefrom, the parties
hereto, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The following words and terms as used in this
Agreement shall have the following meanings:
"Acquisition Proposal": the meaning specified in Section 4.17.1.
"Affiliate": with reference to a specified Person, any Person that
directly or indirectly through one or more intermediaries controls or is
controlled by or is under common control with the specified Person. For purposes
of this definition, (i) "control" (including, with correlative meaning, the
terms "controlled by" and "under common control with"), as used with respect to
any Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract or otherwise.
"Agreement": this Agreement, all Schedules hereto, and all amendments
made hereto and thereto by written agreement among the parties.
"Assets": the Purchased Assets and the Excluded Assets.
"Assumed Liabilities": the meaning specified in Section 2.2.7.
"Assumption Agreement": the meaning specified in Section 2.3.
"BEL-Canada": BEL-Tronics Limited, an Ontario, Canada corporation.
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"Benefit Plans": the meaning specified in Section 2.3.2.10.
"Xxxx of Sale": the meaning specified in Section 2.1.
"Business": the operations conducted by Seller using the Assets as such
operations have been conducted since December 31, 1995.
"Business Day": a day other than a Saturday, Sunday or day on which
commercial banks in New York City are generally closed for business.
"Buyer": the meaning specified in the introductory paragraph.
"Buyer's Parent": BEL-Tronics Limited, a Georgia corporation.
"Closing" and "Closing Date": the meanings specified in Section 2.4.
"Code": the Internal Revenue Code of 1986, as amended.
"Company": the meaning specified in the introductory paragraph.
"Confidential Information": the meaning specified in Section 4.4.2.
"Confidentiality Agreement": the meaning specified in Section 4.1.
"Consideration": the meaning specified in Section 2.2.1.
"Copyright Assignment": the meaning specified in Section 4.7.1.
"Consent": the meaning specified in Section 3.2.3.
"Contract Assignment": the meaning specified in Section 4.7.
"Contracts": the meaning specified in Section 2.1.
"Deed": the meaning specified in Section 5.1.1.
"Dissenting Shares": the meaning specified in Section 2.2.5.
"Environment": means soil, land surface or subsurface strata, surface
waters (including navigable waters and ocean waters), groundwaters, drinking
water supply, stream sediments, ambient air (including indoor air), plant and
animal life, and any other environmental medium or natural resource.
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"Environmental Claim": means any accusation, allegation, notice of
violation, action, claim, Environmental Lien, demand, abatement or other Order
or directive (conditional or otherwise) by any Governmental Authority or any
other Person for personal injury (including sickness, disease or death),
tangible or intangible property damage, damage to the environment, nuisance,
pollution, contamination or other adverse effects on the environment, or for
fines, penalties or restrictions resulting from or based upon (i) the existence,
or the continuation of the existence, of a Release (including, without
limitation, sudden or non-sudden accidental or non-accidental Releases) of, or
exposure to, any Hazardous Material, odor or audible noise in, into or onto the
environment (including, without limitation, the indoor or outdoor air, soil,
surface water or groundwater) at, in, by, from or related to any property owned,
operated or leased by the Seller, or any activities or operations hereof; (ii)
the generation, transportation, storage, treatment or disposal of Hazardous
Materials in connection with any property owned, operated or leased by the
Seller or its operations or facilities, or (iii) the violation, or alleged
violation, of any Environmental Law, Order or Environmental Permit of or from
any Governmental Authority relating to environmental matters connected with any
property owned, leased or operated by the Seller.
"Environmental Health, and Safety Liabilities": means any cost, damage,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and relating to: (a) any
environmental, health, or safety matter or condition (including on-site or
off-site contamination, occupational safety and health, and regulation of
chemical substances or products); (b) fines, penalties, judgments, awards,
settlements, legal or administrative proceedings, damages, losses, claims,
demands and response, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law; (c) financial
responsibility under Environmental Law or Occupational Safety and Health Law for
cleanup costs or corrective action, including cleanup, removal, containment, or
other remediation or response actions ("Cleanup") required by applicable
Environmental Law or Occupational Safety and Health Law (whether or not such
Cleanup has been required or requested by any Governmental Authority or any
other Person) and for any natural resource damages; or (d) any other compliance,
corrective, or remedial measures required under Environmental Law or
Occupational Safety and Health Law. The terms "removal," "remedial" and
"response action" will include the types of activities covered by the United
States Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. Section 9601 et seq., as amended ("CERCLA").
"Environmental Law": means any federal, state, local, or foreign law
(including common law), statute, code, ordinance, rule, regulation or other
requirement relating to the environment, natural resources, or public or
employee health and safety and includes, but is not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
42 U.S.C. Section 9601 et seq., the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801 et seq., the Resource Conservation and Recovery Act
("RCRA"), 42 U.S.C. Section 6901 et seq., the Clean Water Act, 33 U.S.C. Section
1251 et seq., the Clean Air Act, 33 U.S.C. Section 2601 et seq., the Toxic
Substance Control Act, 15 U.S.C. Section 2601 et seq., the Federal Insecticide,
Fungicide, and Rodenticide Act, 7
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U.S.C. Section 136 et seq., the Oil Pollution Act of 1990, 33 U.S.C. Section
2701 et seq., and the Occupational Safety and Health Act, 29 U.S.C. Section 651
et seq., as such laws have been or will be amended or supplemented, and the
regulations promulgated pursuant thereto, and all analogous state or local
statutes, including but not limited to any environmental property transfer laws.
"Environmental Lien": means any lien in favor of any Governmental
Authority arising under Environmental Laws.
"Environmental Permit": means any permit, approval, authorization,
license, variance, registration, or permission required under any applicable
Environmental Law or Order.
"Exchange Act": means the Securities Exchange Act of 1934.
"Excluded Assets": the meaning specified in Section 2.1.1.
"Excluded Liabilities": the meaning specified in Section 2.3.2.
"Exclusive License": the meaning specified in Section 4.15.
"ERISA": the meaning specified in Section 3.2.18.
"Financial Partner": source(s) of equity and debt who, subsequent to
the date of this Agreement, extend credit or make a debt or equity investment or
some combination thereof, to or in Buyer's Parent.
"Foothill": the meaning specified in Section 4.11.
"GAAP": the meaning specified in Section 1.2(f).
"Governmental Authority": any:
(a) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other
government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official or entity and
any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled or purporting to exercise,
any administrative, executive, judicial, legislative, police, regulatory or
taxing authority or power of any nature.
"Governmental Authorizations": the meaning specified in Section 3.1.5.
"Hazardous Activity": means the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer,
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transportation, treatment, or use (including any withdrawal or other use of
groundwater) of Hazardous Materials in, on, under, about, or from the Real
Property or any part thereof into the Environment, and any other act, business,
operation, or thing that increases the danger or risk of danger, or poses an
unreasonable risk of harm to persons or property on or off the Real Property, or
that may affect the value of the Real Property or the Purchased Assets.
"Hazardous Materials": means any substance that is now or will
foreseeably be listed, defined, designated, or classified as, or otherwise
determined to be, hazardous, radioactive, or toxic or a pollutant or a
contaminant under or pursuant to any Environmental Law, including any admixture
or solution thereof, and specifically including petroleum and all derivatives
thereof or synthetic substitutes therefor and asbestos or asbestos-containing
materials.
"HSR Act": means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, or any successor law, and regulations and rules issued
pursuant to that Act or any successor law.
"Income Tax" or "Income Taxes": means all federal, state or local
income taxes (inclusive of any and all interest and penalties thereon) imposed
on Seller with respect to the assets or operations of Seller and which are based
in whole or in part upon income, but does not include any Taxes.
"Intercompany Contracts": means all tax-sharing agreements between
Seller and any of its Affiliates and all contracts, licenses and agreements
between Seller and one or more of its Affiliates not in the ordinary course of
business.
"Intercompany Receivables": the entire amount (including principal and
accrued interest) of indebtedness owed by any Affiliates of Seller to Seller,
except indebtedness owed for goods sold or services performed in the ordinary
course of business.
"Interim Parent Balance Sheet": the meaning specified in Section
3.2.11.1.
"Knowledge": with respect to an individual making a representation to
his or her "knowledge," those facts and circumstances personally known by such
individual; and with respect to an entity making a representation to its
"knowledge," those facts and circumstances personally known by any executive
officer of such entity.
"Legal Requirement": means any federal, state, local, municipal,
foreign, international, multinational or other constitution, law, ordinance,
principle of common law, regulation, statute or treaty.
"Liabilities": Liabilities that are assumed by Buyer pursuant to this
Agreement and Excluded Liabilities.
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"Manufacturing Contract": the meaning specified in Section 4.16.
"Material Adverse Effect": with respect to Seller, a material adverse
change in the business or financial condition of Seller or the Purchased Assets
or the Assumed Liabilities.
"Noncompetition Agreement": the meaning specified in Section 4.4.1.
"Occupational Safety and Health Law": means any Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program, whether governmental or
private (such as those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working conditions.
"Order": means any order, injunction, judgment , decree, ruling,
assessment or arbitration award.
"Parent Balance Sheet": the meaning specified in Section 3.2.11.1.
"Patent Assignment": the meaning specified in Section 4.7.1.
"Person": an individual, firm, partnership, association, unincorporated
organization, trust, corporation, or any other entity, including, without
limitation, a government or any department, agency or instrumentality thereof.
"Proceeding": means any action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal, administrative,
investigative or informal) commenced, brought, conducted or heard by or before,
or otherwise involving any Governmental Authority or arbitrator.
"Proprietary Rights": means all of the following proprietary rights
owned by, issued to or licensed to Seller which are used in Seller's Business,
along with all income, royalties, damages and payments due or payable at Closing
or thereafter (including, without limitation, damages and payments for past or
future infringements or misappropriations thereof), the right to xxx and recover
for past infringements or misappropriations thereof and any and all
corresponding rights that, now or hereafter, may be secured throughout the
world: patents, patent applications, patent disclosures and inventions (whether
or not patentable and whether or not reduced to practice) and any reissues,
continuations, continuations-in-part, revisions, extensions or reexaminations
thereof; trademarks, service marks, trade dress, logos, trade names and
corporate names together with all goodwill associated therewith (including
without limitation, the use of the current corporate name and trade names and
all translations, adaptations, derivations and combinations of the foregoing);
copyrights and copyrightable works; mask works; and all registrations,
applications and renewals for any of the foregoing; trade secrets and
confidential information
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(including, without limitation, ideas, formulae, compositions, know-how,
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals, technical
data, financial, business and marketing plans, and customer and supplier lists
and related information); computer software (including, without limitation,
data, data bases, systems and related documentation); other proprietary rights;
and all copies and tangible embodiments of the foregoing (in whatever form or
medium), in each case including, without limitation, the items set forth on
Schedule 3.1.17 attached hereto and incorporated herein by reference.
"Purchased Assets": the meaning specified in Section 2.1.
"Real Property": means all land, buildings and other improvements which
comprise the facility owned by Seller and located in Cincinnati, Ohio.
"Real Property Leases": the meaning specified in Section 3.1.15.
"Re-Evaluation Notice": the meaning specified in Section 2.2.4.
"Release": means any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping, or other releasing into the
Environment.
"SEC": means the U.S. Securities and Exchange Commission.
"Securities Litigation": the meaning specified in Section 2.3.2.4.
"Seller": the meaning specified in the introductory paragraph.
"Seller Balance Sheet": the meaning specified in Section 3.1.12.2.
"Seller Financial Statements": the meaning specified in Section
3.1.12.2.
"Seller SEC Reports": the meaning specified in Section 3.1.12.1.
"Seller's Shareholders:" means Persons entitled to receive Shares in
connection with this transaction (alternatively to Seller) as determined by
Seller in accordance with law.
"Shares": The shares of newly issued common stock in Buyer's Parent to
be issued pursuant to Section 2.2, below.
"Stockholder Meeting": the meaning specified in Section 4.19.1.
"Superior Proposal": the meaning specified in Section 4.17.1.
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"Survey": the meaning specified in Section 5.1.1.
"Tax" or "Taxes": federal, state, municipal, local or foreign taxes,
assessments, additions to tax, deficiencies, duties, fees and other governmental
charges or impositions of each and every kind, whether measured by properties,
assets, wages, payroll, withholding, purchases, value added, payments, sales,
use, business, capital stock or surplus income arising from or in connection
with the business of Seller or its properties or assets prior to the Closing
Date (inclusive of any and all interest or penalties thereon), but does not
include any Income Taxes.
"Threatened": a claim, Proceeding, dispute, action, or other matter
will be deemed to have been "Threatened" if any demand or statement has been
made (orally or in writing) or any notice has been given (orally or in writing),
or if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute, action
or other matter is likely to be asserted, commenced, taken or otherwise pursued
in the future.
"Title Commitment": the meaning specified in Section 5.1.1.
"Trademark Assignment": the meaning specified in Section 4.7.1.
"WARN": the meaning specified in Section 4.14.
1.2 Interpretation. The following provisions shall govern the
interpretation of this Agreement:
(a) "Herein" and "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular Article,
Section, subsection or Schedule.
(b) Headings or captions are for convenience of reference only
and shall not affect the construction or interpretation of this
Agreement.
(c) Words importing the singular number only shall include the
plural and vice versa and words importing the masculine gender shall
include the feminine and neuter genders and vice versa and words
importing individuals shall include Persons and vice versa.
(d) The calculation of time within which or following which
any act is to be done or step is to be taken pursuant to this Agreement
excludes the date which is the reference day in calculating such
period.
(e) Performance on holidays is not required hereunder.
Whenever anything is required to be done or any action is required to
be taken hereunder on or by a day which
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is not a Business Day, then such thing may be validly done and such
action may be validly taken on or by the next succeeding day that is a
Business Day.
(f) Accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles as employed in the United States of America
("GAAP"). Wherever in this Agreement reference is made to a calculation
to be made in accordance with GAAP, such reference shall be deemed to
be to the GAAP from time to time applicable as at the date on which
such calculation is made or required to be made in accordance with
GAAP.
(g) As used in this Agreement reference to dollar amounts,
unless otherwise specifically indicated, shall mean the lawful money of
the United States of America.
(h) The term "including" means including without limiting the
generality of any description preceding such term, and, for purposes of
this Agreement, the parties hereto agree that the rule of ejusdem
generis shall not be applicable to limit a general statement, which is
followed by or referable to an enumeration of specific matters, to
matters similar to the matters specifically mentioned.
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ARTICLE II
TRANSFER OF THE ASSETS
2.1 Transfer. Subject to the terms and conditions of this Agreement, at
the Closing Seller shall sell, transfer, convey, assign and deliver to Buyer,
and Buyer shall purchase from Seller, all of the Business, assets, properties,
goodwill and rights of Seller as a going concern of every nature, kind and
description, tangible and intangible, wheresoever located and whether or not
carried or reflected on the books and records of Seller (hereinafter sometimes
collectively called the "Purchased Assets"), including, without limitation: (i)
all of Seller's right, title and interest in and to Seller's corporate name and
all variations thereof; (ii) cash-on-hand and cash in the bank accounts of
Seller, inclusive of cash equivalents, as of the Closing Date, together with the
bank account records of Seller; (iii) all of Seller's right, title and interest
in and to all contracts, licenses, or agreements to which Seller is a party or
shall become a party to prior to the Closing Date (other than this Agreement and
the agreements executed pursuant hereto or contemplated hereby), including,
without limitation all supply and customer contracts, work and purchase orders,
employment and consultancy contracts, equipment, capital and real property
leases and loan agreements; but excluding Intercompany Contracts (collectively,
the "Contracts"), and all of Seller's Governmental Authorizations; (iv) all of
Seller's right, title and interest in and to any real estate, including the Real
Property; (v) all accounts receivable, checks, negotiable instruments and
chattel paper, payable to or (with respect to bearer instruments) in the
possession of Seller; (vi) all inventory and supplies; (vii) all furniture,
fixtures, equipment and machinery; (viii) all leasehold interests and
improvements thereon; (ix) all of Seller's right, title and interest in and to
the Proprietary Rights; (x) all books and records, files and operating data
relating to the Purchased Assets or the Assumed Liabilities, other than those
which constitute Excluded Assets; (xi) with respect to each insurance policy on
which Seller is an insured and which is an "occurrence" policy as opposed to a
"claims made" policy, all rights of Seller, including the right to receive any
amounts recovered or recoverable from the insurer after the Closing Date, with
respect to any loss resulting from an occurrence which took place on or prior to
the Closing Date, and with respect to each insurance policy on which Seller is
an insured party and which is a "claims made" policy as opposed to an
"occurrence" policy, all rights of Seller, including the right to receive any
amounts recovered or recoverable from the insurer after the Closing Date, with
respect to any loss resulting from a claim made on or prior to the Closing Date;
(xii) all claims, causes of actions, and suits which Seller has or may have
against third parties in connection with the Purchased Assets or the Assumed
Liabilities; and (xiii) the business and operations of Seller as a going
concern; and excluding only the assets excluded in Section 2.1.1. Seller shall
convey to Buyer all of Seller's right, title and interest in and to the
Purchased Assets, subject to all liabilities, obligations, liens and
encumbrances related thereto, excepting only the Excluded Liabilities, which
conveyance shall be made pursuant to a xxxx of sale, substantially in the form
of Schedule 2.1 attached hereto and incorporated herein by reference (the "Xxxx
of Sale") and the other instruments of conveyance to be delivered pursuant to
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this Agreement. Insofar as any implied warranties of merchantability or fitness
are concerned, the Purchased Assets are sold "AS IS, WHERE IS."
2.1.1. Excluded Assets. Notwithstanding the foregoing and without
limitation, the Purchased Assets shall not include any of the following
("Excluded Assets"):
(a) The assets listed in Schedule 2.1.1(a);
(b) The corporate seals, certificates of incorporation, minute books,
stock books, tax returns, books of account or other records having to do with
the corporate organization of Seller;
(c) Any rights of Seller under this Agreement;
(d) Any cash and intercompany or intracompany payable and receivable
balances between Seller, or any of its subsidiaries, and Seller's Affiliates or
between Seller's Affiliates, or any insurance policy coverages and other
services furnished to or for the benefit of Seller Affiliates by Seller or any
of its subsidiaries;
2.2. Shares and Delivery
2.2.1 Shares. The consideration to be delivered by Buyer in exchange
for the Purchased Assets, in addition to the Assumed Liabilities, shall be the
Shares, to be issued to Seller or Seller's Shareholders at Closing, as Seller
may direct. The number of Shares to be issued shall be determined as provided
below.
2.2.2 Issuance of Shares. At the Closing, Buyer will deliver to Seller
certificates representing its Shares, or at Seller's option upon notice to
Buyer, reasonably prior to the Closing, Seller may deliver to Buyer a list of
Seller's Shareholders to be used for purposes of Closing and request that
certificates for its Shares be respectively issued in the names of Seller's
Shareholders. At Closing, Seller shall certify such list (with any adjustments
necessary for accuracy) to be correct and complete. At Seller's request, for
purposes of the foregoing, Buyer and Seller shall cooperate in issuing or
delivering certificates for Shares to Persons who were not the owners of shares
of common stock on the record date for Seller's Stockholder Meeting, provided
that the responsibility for seeing that Seller's Shareholders receive their
Shares correctly shall always rest exclusively with Seller, and provided
further, that in no event shall Buyer or Buyer's Parent be responsible for
providing any more shares in Buyer's Parent than the aggregate number called for
by Section 2.2.3., below.
2.2.3 Share Ratio. Seller (or, alternatively, all of Seller's
Shareholders in the aggregate) shall receive such a number of shares of common
stock in Buyer's Parent as shall be necessary such that, immediately after the
Closing, the total number of issued and outstanding shares of common stock in
Buyer's Parent owned by Persons other than Seller (or, alternatively, all of
Seller's Shareholders in the aggregate) and other than the Financial Partner, is
150% of the number of such shares owned by Seller (or, alternatively, all of
Seller's Shareholders in the
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aggregate). The percentage (the "Share Ratio") obtained by comparing the number
of the Shares so received by Seller (or, alternatively, all of Seller's
Shareholders in the aggregate) to the total of such Shares received plus the
shares owned by Persons other than Seller (or, alternatively all of Seller's
Shareholders in the aggregate) and other than the Financial Partner, and
converting the result to a percentage, shall be 40%. For such purposes,
BEL-Canada shall be included in the term "Financial Partner" with respect to any
securities, options or purchase rights that it may have acquired subsequent to
the date of this Agreement in connection with Buyer's closing with a Financial
Partner, e.g., because of BEL-Canada's providing credit enhancement for a
Financial Partner's investment. This Section 2.2.3 shall be subject to Sections
2.2.4 and 2.2.5, below.
2.2.4 Re-Evaluation of Share Ratio. The Share Ratio has been initially
determined by negotiation between the parties taking into account a state of
affairs based, among other things, on their understanding of the current
financial condition and financial trends of both parties, as of this date, and
on the assumption, among others, that all conditions to Closing in favor of
either party will be satisfied as written. If prior to the Closing, in the
absolute discretion of either party, information has come into the possession of
such party that discloses a material fact or condition indicating that such
state of affairs did not exist, or no longer exists, such party may provide the
other party with written notice thereof prior to the Closing ("Re-Evaluation
Notice"). The Re-Evaluation Notice shall specify the material fact or condition
which such party believes indicates that such state of affairs did not or does
not exist, the anticipated effect and how such party proposes to change the
Share Ratio. If the other party disagrees with the proposed change, it shall
have twenty (20) calendar days (but not beyond the Closing Date) from its
receipt of the Re-Evaluation Notice to notify the party that gave the
Re-Evaluation Notice in writing of such disagreement, the nature thereof and the
proposed change, or such change shall be final and binding. If a party gives
such written notice of disagreement, both parties shall have twenty (20)
calendar days from the other party's receipt of such notice of disagreement (but
not beyond the Closing Date) to resolve the dispute through negotiation. If they
are unable to resolve the dispute within such period, then this Agreement shall
be subject to termination by the parties as provided in Sections 8.1(b) and
8.1(c), below, respectively.
2.2.5 Dissenting Shares. In the event there shall be any Dissenting
Shares, cash shall be retained, adjustments made, and procedures followed as
provided in this Section:
2.2.5.1. Cash Retained. Seller shall retain such amount of
cash as it may deem to be reasonably required to cover payment to the holders of
Dissenting Shares on account of their demand under the Ohio General Corporation
Law and the expenses of Seller in connection therewith.
2.2.5.2 Escrow. At Closing, the cash so retained shall be
placed in escrow approved by Seller and Buyer and shall be used by Seller for
the payment of amounts in connection therewith. At the time of closing, Seller
shall transfer to Buyer its interest in such escrowed funds remaining, if any,
after all distributions from the escrow.
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2.2.5.3 Impact of Dissent. For purposes of determining the
Share Ratio, the parties have assumed that not more than 10% of Seller's issued
and outstanding shares will constitute Dissenting Shares. If the number of
Dissenting Shares is greater, the Share Ratio shall be subject to a downwards
adjustment as contemplated in Section 2.2.4, above. The parties have also
assumed that an "upwards adjustment" will not be necessary if fewer shares are
Dissenting Shares. In the event that any holders of Dissenting Shares should not
become entitled to the payment of the fair cash value of their shares of Seller
pursuant to their demand therefor, then upon ascertainment of such fact, and if
no payment has been made to such holders, and if a downwards adjustment had been
made to the Share Ratio because of Dissenting Shares, at Seller's request, Buyer
will issue to Seller for handling consistent with Section 2.2.2, above, a number
of additional Shares representing the impact of the dissents by such holders on
the Share Ratio. For such purposes, Seller and Buyer shall memorialize the
impact of dissents in writing at the time of such adjustment. No additional
shares will be issued except to correct for a downwards adjustment directly and
exclusively attributable to Dissenting Shares.
2.2.5.4. Procedures. Seller shall promptly advise Buyer of
each demand under the Ohio General Corporation Law and of the amount which the
holder of the Dissenting Shares in question claims as the fair cash value of the
shares covered by such demand, and Seller shall (1) if directed by Buyer,
request such shareholder to deliver his certificates representing such shares
for endorsement thereon of a legend to the effect that demand for the fair cash
value of such shares has been made, and (2) as directed by Buyer, inform such
shareholder in writing either that, subject to the consummation of this
Agreement, payment will be made of the amount demanded or, if payment of such
amount is refused, that Seller will pay such amount as Buyer may have specified
to Seller in such direction; provided that in no event may Buyer direct payment
of an amount which is greater than the proportionate amount of the aggregate
funds placed in escrow which the number of such Dissenting Shares being valued
bears to the total number of Dissenting Shares with respect to which funds are
escrowed.
2.2.5.5 Buyer's Approval Required. Without the prior written
approval of Buyer, Seller shall make no settlement or agreement with any
shareholder as to the fair cash value of shares of Seller as to which a demand
has been made under the Ohio General Corporation Law or permit a value of any
such shares asserted by a shareholder to become final without adjudication
thereof in proceedings conducted in good faith by Seller in consultation with
Buyer.
2.2.5.6 Definition. "Dissenting Share" or "Dissenting Shares"
as used herein means the share or shares of Seller in respect of which the
holders thereof have demanded payment of the fair cash value thereof under the
Ohio General Corporation Law in connection with this transaction and in respect
of which at the time of closing such demand has not been effectively withdrawn.
2.2.6 Apportionments.
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2.2.6.1 Real Estate. Real estate transfer taxes and sales or
use taxes, if any, imposed by law shall be borne and paid by Buyer.
Real property taxes, utility charges, rents, income from leases,
easements, licenses, permits, agreements, and privileges, if any, and
any other revenues and expenses pertaining to the Real Property, shall
be apportioned between the parties as of the date of Closing,
regardless of the date assessed, paid or payable. Any special taxes or
assessments levied, due and unpaid on the Real Property prior to
Closing shall be paid by Seller. In respect to any payments made by or
to either party, whether before or after Closing, appropriate
remittances shall be made promptly to assure that such items are
apportioned as of the date of Closing. Buyer shall not be obligated to
pay Seller's income and capital gain taxes, if any, allocable to the
sale. To the extent that it is necessary to pay applicable income
and/or capital gains taxes before deeds can be recorded, Seller will
promptly pay such taxes. This Section shall not apply if the Real
Property has been disposed of by Closing as permitted by Section 4.11
below.
2.2.6.2 Contest. Buyer shall have the right to contest any
property tax (including school tax, county tax and other property tax),
assessment, levy or payment with respect to the Real Property; and Seller
assigns to Buyer any claims which may be found to exist for abatement, refund,
reimbursement or return of any taxes paid by Seller with respect to the Real
Property regardless of the tax period to which any such assessments, claims or
payments may have related; and Buyer may retain any abatement, refund, credit or
other benefit received without need to account to Seller therefore. This Section
shall not apply if the Real Property has been disposed of by Closing as
permitted by Section 4.11 below.
2.2.6.3 Third Party Funds. Unless by Closing the Real Property
has been disposed of as permitted by Section 4.11, below, if Seller at Closing
is in possession of funds received from a third party and intended to cover the
cost of work to be performed or materials to be acquired pertaining to the Real
Property pursuant to a contract or agreement to be assigned at Closing, Seller
shall pay to Buyer any portion of said funds as are attributable to work that
has not been completed or materials that have not been acquired on the date of
Closing.
2.2.6.4 Utilities. Unless by Closing the Real Property has
been disposed of as permitted by Section 4.11, below, at Closing Buyer shall
sign, and deliver to Seller for mailing, a joint letter in the form attached
hereto as Schedule 2.2.6.4, requesting all persons as identified in said letter
providing electric, gas, water, telephone or other utility services to the Real
Property or any part thereof, to transfer such services and billing therefor to
Buyer, effective at Closing, and to issue a final xxxx to Seller for such
utility service. Buyer shall refund to Seller any payments previously made by
Seller for utility services furnished or to be furnished after Closing.
2.2.6.5 Costs. All recording costs and filing fees required to
be paid with respect to documents under this Agreement, and the cost of a
survey, if one is required, shall be the sole responsibility of Buyer.
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2.2.6.6 Exemptions. Each party hereto shall be entitled to
avail itself of any exemption from the payment of any taxes or fees which it may
enjoy.
2.2.7. Additional Consideration. At the Closing, as additional
consideration, Buyer shall assume and agree to pay, perform and discharge in a
timely fashion all of the debts, liabilities and obligations of Seller of any
kind (whether accrued, fixed or contingent) arising out of the Business or
operations of Seller on or before the Closing Date or related to or associated
with the Purchased Assets, including without limitation: (i) all liabilities and
obligations of Seller under the loan documents listed on Schedule 2.2.7,
attached hereto and incorporated herein by reference (including, without
limitation, any additional interest, penalties, taxes, costs or expenses arising
out of any loss of the tax-exempt status of such loans for any reason); (ii) all
liabilities and obligations of Seller under Contracts, including all capital and
real property leases; (iii) guaranties, warranties, bonds or other assurances
provided by Seller or any of its Affiliates with respect to any of the Assumed
Liabilities; (iv) Taxes which relate to the ownership or operation of the
Purchased Assets, arising after the Closing Date; (v) any liability (except for
prior violations of Legal Requirements) arising from the health care
continuation coverage ("COBRA") requirements under Section 4980B of the Internal
Revenue Code of 1986, as amended (the "Code") or any predecessor section of the
Code or of Part VI of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and (vi) product liability claims caused solely by Seller's
workmanship in performing warranty service work, and obligations to repair
products no longer covered by a warranty arising from Seller's policies to such
effect; and (vii) any other obligations and liabilities related to the ownership
or operation of the Purchased Assets after the Closing Date (collectively, the
"Assumed Liabilities"), excepting only the Excluded Liabilities.
2.3. Assumed Liabilities of Seller. Buyer hereby undertakes, assumes
and agrees, subject to the limitations contained herein, to perform, pay or
discharge all of the Assumed Liabilities, pursuant to an assumption agreement
which Buyer shall execute and deliver to Seller at the Closing (the "Assumption
Agreement"), which Assumption Agreement shall be substantially in the form of
Schedule 2.3 attached hereto.
The assumption of the Assumed Liabilities by Buyer hereunder
shall not enlarge any rights of third parties under contracts or arrangements
with Buyer or Seller or any of their respective affiliates.
2.3.2 Excluded Liabilities. Notwithstanding anything to the contrary
contained above or elsewhere in this Agreement, the debts, liabilities and
obligations assumed by Buyer hereunder shall not include any of the following,
without regard to whether they arose before or after the date thereof (the
"Excluded Liabilities"):
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2.3.2.1 All debts, obligations and liabilities of Seller to
its Affiliates, including without limitation, accounts payable and accrued
expenses, other than those arising out of goods sold or services performed in
the ordinary course of business;
2.3.2.2 All liabilities and obligations of Seller under this
Agreement and any agreement executed pursuant hereto or contemplated
hereby;
2.3.2.3 All legal, accounting, brokerage, finder's fees,
investment bankers' fees, if any, taxes or other expenses incurred by
Seller in connection with this Agreement or the consummation of the
transactions contemplated hereby, but any that are "Assumed
Liabilities" shall not be classified as Excluded Liabilities, and
provided that any such transactional costs that are beyond the scope of
those authorized on Schedule 2.1.1(a) shall nevertheless be classified
as Excluded Liabilities.
2.3.2.4 Debts, liabilities or obligations of Seller of any
nature to any past or present shareholder, warrantholder or
optionholder of Seller, in such person's capacity as a shareholder,
warrantholder or optionholder, past or present. Buyer acknowledges that
Seller has advised Buyer that four shareholder lawsuits were filed
against Seller in October and November, 1995; that on January 9, 1996,
these lawsuits were consolidated, and, on February 23, 1996, the
plaintiffs filed an Amended Complaint asserting claims, allegedly on
behalf of all purchasers of Seller's common shares on the open market
between July 12, 1995 and October 13, 1995, and who suffered damages,
and on behalf of all persons who purchases Seller's common shares from
the defendants pursuant or traceable to an August 24, 1995 and October
13, 1995, and who suffered damage as a result; that, pursuant to
certain contractual obligations, Seller has agreed to indemnify its
directors and officers under certain circumstances against claims
arising from the lawsuit; that Seller may be obligated to indemnify
certain of its directors and officers for the costs they may incur as a
result of the lawsuit; and that in addition, pursuant to certain
contractual obligations, Seller may be obligated to indemnify the
underwriter defendants against claims and expenses arising from the
above litigation. Such litigation is sometimes referred to herein
collectively as the "Securities Litigation". The Securities Litigation
is further identified on Schedule 2.3.2.4 hereto. Any provision hereof
to the contrary notwithstanding, Buyer does not assume, and shall not
have, any liability to any of the plaintiffs in said litigation, to any
of Seller's officers and directors related to any indemnification of
them by Seller with respect to such litigation, or to the underwriter
defendants in such litigation related to any indemnification of them by
Seller or otherwise, and, without limitation, such litigation and
indemnification obligations of Seller shall be included in the Excluded
Liabilities.
2.3.2.5. Income Taxes and any amounts owing under any tax
sharing agreement between Seller and any of its Affiliates;
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2.3.2.6. Any obligation, claim, loss or liability to a third
party which represents a breach of warranty or of a representation by Seller
made herein, regardless of whether or not the time to make a claim under any
such warranty has expired or the Closing has occurred.
2.3.2.7. Product Failures. Product liability or similar claims
for injury to person or property (except that Buyer shall assume product
liability claims caused solely by Seller's workmanship in performing warranty
service work), regardless of when made or asserted, which in any way arise out
of the design, manufacture, use, service, repair or sale of products sold or
delivered prior to Closing; specifically, and without limiting the generality of
the foregoing, Buyer expressly does not assume or agree to pay or be responsible
for product liability or similar claims, whether foreseeable or unforeseeable,
based on successor liability doctrines conceptualized under such rubrics as the
"product line", "continuity of enterprise" or "de facto merger" doctrines;
2.3.2.8. Environmental Claims; Environmental Health and Safety
Claims. Any Environmental Claims, whether or not such Environmental Claims
relate in any way to the Purchased Assets, based on conditions existing at or
prior to the Closing, and any Environmental, Health and Safety Liabilities;
2.3.2.9 Excluded Assets. Any liability or obligation in
respect of the Excluded Assets;
2.3.2.10. Employee Plans. Any liability with respect to any
employee plan maintained or contributed to at any time by Seller for the benefit
of employees employed by Seller in connection with its business ("Benefit
Plan"), including without limitation (A) all liabilities, if any, under any
"employee pension benefit plan," as such term is defined in Section 3(2) of
ERISA, or any "employee welfare benefit plan," as such term is defined in
Section 3(l) of ERISA and any control group liability under ERISA imposed on
Seller with respect to any member of the control group of which it is a member,
except liability imposed with respect to any Benefit Plans which is an Assumed
Liability of Buyer hereunder; (B) any liability of any kind of description
whatsoever for any withdrawal or partial withdrawal liability, (C) any tax,
penalty or liability arising under Title I or Title IV of ERISA or Chapter 43 of
the Code and (D) any unfunded pension liability under ERISA; provided, that the
COBRA benefits referred to in Section 2.2.7(v) shall constitute Assumed
Liabilities.
For purposes of this subsection and this Agreement, "Benefit Plan"
shall mean any employee benefit plan within the meaning of Section 3(3) of
ERISA;
2.3.2.11 Golden Parachutes. Any liability whatsoever for any
golden parachute payments under Section 280G of the Code.
2.3.2.12 Taxes. Any Taxes for periods prior to the Closing.
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2.3.2.13 Infringement. Any suits, actions or claims alleging
infringement, prior to the Closing, of patents, trademarks or trade names held
by others and any losses, costs or damages based upon or arising out of such
suits, actions or claims; or
2.3.2.14 Suits. Any other suits, actions or claims against
Seller, whether or not filed against or known to Seller, and any losses, costs
or damages based upon or arising out of such suits, actions or claims.
Seller agrees to satisfy all debts, liabilities and
obligations with respect to all liabilities set forth in this Section 2.3.2, not
elsewhere expressly assumed by Buyer in this Agreement, whether known at Closing
or thereafter determined, as and when due and Seller shall indemnify and hold
Buyer harmless therefor, as set forth herein.
2.4. Closing. The closing of the sale and purchase of the Purchased
Assets (the "Closing") will take place at the offices of Seller at 10:00 o'clock
a.m. Cincinnati, Ohio time, within ten (10) days after the satisfaction of the
last of the conditions to the Closing to be satisfied as provided herein, as to
which date, TIME SHALL BE OF THE ESSENCE, or at such other place, time and date
as the parties may agree upon in writing (the "Closing Date").
2.5. Tax Matters. Seller and Buyer agree to file all income tax returns
or reports, including, without limitation, IRS form 8594 (if required), for
their respective taxable years in which the Closing occurs consistently with the
assumptions of this Agreement regarding tax-free treatment of this transaction,
and agree not to take any position inconsistent therewith before any
governmental agency charged with the collection of any Tax or Income Tax or in
any judicial proceeding.
2.6. Procedures for Excluded Assets
2.6.1. Excluded Assets. If, by the time that dissolution of
Seller is required pursuant to the Plan of Reorganization, assets remain from
the Excluded Assets or the proceeds thereof that are not required to cover the
interim obligations and liabilities of Seller pursuant to the provisions to such
effect continued on Schedule 2.2.1(a), then such assets or proceeds shall
forthwith be conveyed or paid to Buyer.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of Seller. Seller hereby represents
and warrants to Buyer as follows:
3.1.1. Corporate Existence. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Ohio and has full corporate power and authority to own or lease its
properties and to carry on its business as now conducted. Seller's capital
structure is completely and accurately depicted on Schedule 3.1.1 hereof
including, without limitation, all options, warrants and rights. Seller has
delivered to Buyer true and complete copies of the charter and bylaws of Seller
as amended to date. Seller is duly qualified to do business and (where the
concept of "good standing" is applicable) in good standing as a foreign
corporation in the States set forth on Schedule 3.1.1. Seller does not presently
own, directly or indirectly, any shares of capital stock of or other equity
interest in any corporation, partnership or other entity, except as set forth on
Schedule 3.1.1. hereto.
3.1.2. Authorization. Seller has full corporate power and
authority to enter into and perform its obligations under this Agreement and to
consummate the transactions contemplated herein. By Closing, the execution,
delivery and performance of this Agreement by Seller will have been duly
authorized by all requisite corporate action. This Agreement is the legal, valid
and binding obligation of Seller enforceable in accordance with its terms,
except as enforceability may be limited by equitable principles or by
bankruptcy, fraudulent conveyance or insolvency laws affecting creditors' rights
generally.
3.1.3. No Violation. The execution and delivery of this
Agreement by Seller and the consummation of the transactions contemplated herein
do not and will not violate or result in a default under (i) the charter or
bylaws of Seller, or (ii) to the best of Seller's knowledge, and subject to the
receipt of any necessary Consents, (A) any Governmental Authorization, or (B)
any judgment, order, decree, law, rule or regulation applicable to Seller,
except for violations or defaults which would not prevent the consummation of
the transactions contemplated by this Agreement or would not have a Material
Adverse Effect. Except as set forth on Schedule 3.1.3, no consent, approval,
authorization, order, filing, registration or qualification of or with any
governmental authority ("Consent") is required to be obtained by Seller in
connection with the execution and delivery of this Agreement by Seller or the
consummation of the transactions contemplated herein.
3.1.4. Litigation. Except as set forth on Schedule 3.1.4, to
the best of Seller's knowledge, no action, suit, proceeding or investigation is
pending against Seller, and Seller has not received written notice of any
threatened action, suit, proceeding or investigation against Seller, which could
reasonably be expected, either individually or in the aggregate, to result in
any liability on the part of Seller which would have a Material Adverse Effect.
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3.1.5. Governmental Authorizations; Compliance with Laws. To
the best of Seller's knowledge, except as set forth on Schedule 3.1.5, Seller
has not received written notice that it is in violation of or is in default
under: (a) any governmental licenses, franchises, permits, approvals and other
governmental authorizations, other than those the absence of which would not
have a Material Adverse Effect, which are necessary to entitle Seller to own or
lease, operate and use its assets and properties and to conduct its business as
now conducted (the "Governmental Authorizations"); (b) any judgment, order or
decree of any court or administrative agency applicable to it; or (c) any law,
rule or regulation applicable to it; which could reasonably be expected to
result in any liability on the part of Seller which would have a Material
Adverse Effect.
3.1.6. Income Tax Matters.
3.1.6.1 Tax Returns. Seller has filed or will file all tax
returns required to be filed for any period ending on or before the
Closing Date, or if applicable, any period that includes the Closing
Date, and has paid or will pay or cause to be paid all Income Taxes due
to any taxing authority with respect to all such periods, except as
contested in good faith. Except as set forth on Schedule 3.1.6.1,
Seller has not received written notice that the Internal Revenue
Service or any other taxing authority has asserted against Seller any
deficiency or claim for additional Income Taxes in connection
therewith. Except as set forth on Schedule 3.1.6.1, Seller has not
granted or been granted any waiver of any statute of limitations with
respect to, or any extension of a period for the assessment or filing
of, any Income Tax.
3.1.6.2 FIRPTA. Seller is not a foreign person within the
meaning of Section 1445(f)(3) of the Code.
3.1.7. Knowledge. Except as disclosed herein (including the Schedules
hereto) or in the Seller SEC Reports, no Officer or Director of Seller has
knowledge of any agreement to which Seller is a party or by which any of the
Purchased Assets are bound, any other obligation of Seller, or any other
condition, event or state of facts relating to the Business of Seller that
materially adversely affects the value of the Business, the operations of
Seller, the Purchased Assets or the Assumed Liabilities, other than agreements,
obligations, conditions, events or states of facts known to the public or to the
management of Seller (other than the Officers and Directors) or applicable
generally to the economy or to the industry in which Seller does business.
3.1.8. Brokers; Finders. Seller has not retained any broker or finder
in connection with the transactions contemplated herein so as to give rise to
any valid claim against Buyer for any brokerage or finder's commission, fee or
similar compensation, except for an investment bankers' fee payable to Xxxxx &
Company Incorporated that is described on Schedule 3.1.8 attached hereto and
incorporated herein by reference. Seller shall indemnify, hold harmless and
defend Buyer from and against any and all claims by Xxxxx & Company
Incorporated.
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3.1.9. Actions of Officers and Directors; Unauthorized Acts of Officers
or Directors of Affiliates of Seller.
3.1.9.1 Officers and Directors. Schedule 3.1.9.1 hereto sets
forth a list of all Persons who, according to the minute books of Seller, have
been at any time within the last twelve months officers and directors of Seller
(the "Officers and Directors"). To the best of Seller's knowledge, the minute
book contains minutes of all of the meetings of the Board of Directors and
Shareholders which have taken place within the last year and all of the
resolutions of the Board of Directors and Shareholders which have been adopted
by unanimous written consent within the last year. Except as set forth on
Schedule 3.1.9.1; and except for (i) the negotiation on behalf of Seller of the
transactions contemplated by this Agreement and the execution, delivery and/or
filing of any documents required to be executed, delivered and/or filed by
Seller pursuant to this Agreement or any Schedule or Schedules hereto, (ii) the
preparation, execution and/or filing of any federal, state or local tax returns
or reports on behalf of Seller, (iii) certain Board of Director resolutions
adopted from the date hereof through the Closing Date, copies of which either
have been or will be delivered to Buyer on or before the Closing Date, or (iv)
the taking of any actions and execution, delivery and/or filing of any documents
of a ministerial nature, such as Certificates of Change of Registered Agent in
the States of incorporation and foreign authorization of Seller, the Officers
and Directors have not taken any material actions or executed, delivered and/or
filed any agreements, documents, instruments or certificates on behalf of
Seller, other than in the ordinary course of business.
3.1.10 Actions by Affiliates. To the best of Seller's knowledge, no
action has been taken by any officer or director of any Affiliate of Seller
purporting to act as an officer or director of Seller.
3.1.11. Permits. Seller holds all of the permits described on Schedule
3.1.11, and no other licenses, certificates, permits, franchises and rights,
federal, state, local, and foreign, are currently necessary for the lawful
operation of the Business, except for those the absence of which would not have
a Material Adverse Effect on the business of the Business.
3.1.12. Seller SEC Reports and Financial Statements.
3.1.12.1 Seller SEC Reports. Seller has filed and made
available to Buyer all forms, reports and documents required to be filed by
Seller with the SEC since December 29, 1995, including Seller's Form 10-K for
1995 (collectively, the "Seller SEC Reports"). The SEC Reports will include,
without limitation, any proxy solicitation by Seller with respect to this
transaction, upon issuance of such solicitation. The Seller SEC Reports (i) at
the time filed, complied in all material respects with the applicable
requirements of the Securities Act and the Exchange Act, as the case may be, and
(ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated in such Seller SEC Reports or necessary in order to make
the statements in such Seller SEC
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Reports, in the light of the circumstances under which they were made, not
misleading. Seller has provided Buyer with true and complete copies of the
Seller SEC Reports.
3.1.12.2 Seller Financial Statements. Each of the consolidated
financial statements including, in each case, any related notes contained in the
Seller SEC Reports, including any Seller SEC Reports filed after the date of
this Agreement until the closing (collectively, the "Seller Financial
Statements") and the Seller Balance Sheet complied as to form in all material
respects with the applicable published rules and regulations of the SEC with
respect thereto, was prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the period involved (except
as may be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) and fairly presented
the consolidated financial position of Seller and its Subsidiaries as at the
respective dates and the consolidated results of its operations and cash flows
for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount, and to the
adjustments and write-downs set forth on Schedule 3.1.12.2 hereto. The unaudited
balance sheet of Seller as of October 27, 1996 is referred to herein as the
"Seller Balance Sheet." Seller has provided Buyer with true and complete copies
of the Seller Financial Statements.
3.1.12.3. No Other Liabilities. Except as set forth in the
Seller Balance Sheet or on Schedule 3.1.12.3 hereto, there are no liabilities,
debts, claims or obligations, whether accrued, absolute, contingent or
otherwise, whether due or to become due, including, without limitation any which
may be incurred or arise after the Closing based on a fact or condition existing
at or prior to the Closing, which could materially and adversely affect any of
the Purchased Assets or the rights of Seller therein or thereto.
3.1.13. No Adverse Change. Except as listed on Schedule 3.1.13, since
October 27, 1996, there has not been (i) any Material Adverse Change in the
financial condition, financial statements, business, properties, assets, or
results of operations of the Business, (ii) any material loss or damage (whether
or not covered by insurance) to any of the Purchased Assets, which materially
affects or impairs the ability of Seller to conduct the business of the
Business, or any other event or condition of any character which has materially
and adversely affected the business or operation of the Business, (iii) any
mortgage or pledge of any of the Purchased Assets, (iv) any indebtedness
incurred by Seller relating to, or taking as security any interest whatsoever
in, the Purchased Assets, (v) any contract or other transaction entered into by
Seller relating to, or otherwise affecting in any way, the Business or the
operation thereof, other than in the ordinary course of business, (vi) any sale
or transfer of the Purchased Assets, except items of the inventory which have
been sold in the ordinary course of business, or any cancellation of any debts
owed to or claims of Seller, except in the ordinary course of business, (vii)
any changes in the terms of any instruments, accounts, notes, contracts, or
other instruments identified in the exhibits and schedules hereto, except as
consented to in writing by Buyer, (viii) any changes in the accounting systems,
policies or practices of Seller, (ix) any waiver by Seller of any rights
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which have any value, or (x) any transactions with any of Seller's Affiliates.
Since October 27, 1996, the Business of Seller has been conducted in all
respects only in the ordinary course and there has not been any material change
in the affairs of the Business which has not been fully disclosed in writing to
Buyer.
3.1.14. Title to and Condition of Properties. Seller has good and
marketable title to, is the lawful owner of, and has the full right to sell,
convey, transfer, assign and deliver the Purchased Assets free and clear of any
mortgage, lien, pledge, security interest, option, lease (or sublease),
conditional sales agreement, title retention agreement, charge, claim,
encumbrance, easement or encroachment, except as disclosed on Schedule 3.1.14
hereto. At and as of the Closing, Seller will convey the Purchased Assets to
Buyer by xxxxx, xxxx of sale, certificates of title and instruments of
assignment and transfer effective to vest in Buyer, and Buyer will have, good
and valid record and marketable title to all of the Purchased Assets, free and
clear of all encumbrances other than those described in this Section.
3.1.15. Real Property Leases. Schedule 3.1.15 hereto lists all leases
(the "Real Property Leases") pursuant to which Seller holds any real property
used in connection with the business and operation of the Business and includes
complete and accurate legal descriptions of such leased real property. Except as
disclosed on Schedule 3.1.15, the buildings, facilities, installations, fixtures
and other structures or improvements located on or at the real property subject
to the Real Property Leases have been well-maintained and are in good operating
condition and repair (with the exception of normal wear and tear), free, to the
knowledge of Seller, from defects other than such minor defects as do not
interfere with the continued use therefor in the conduct of normal operations.
The activities carried on in such buildings, plants, facilities, installations,
fixtures and other structures or improvements, and the buildings, plants,
facilities, installations, fixtures and other structures or improvements
themselves, are not in violation of or in conflict with any applicable zoning,
environmental or health regulation or ordinance or any other similar law,
statute, regulation or ordinance. Except as disclosed on Schedule 3.7 hereto, no
asbestos, asbestos-containing materials, PCB compounds or other pollutants,
contaminants or hazardous or toxic wastes, substances or materials have been
used in the construction or repair of, or any alterations or additions to, any
real property leased pursuant to any of the Real Property Leases. Seller has
delivered to Buyer true, correct and complete copies of all Real Property
Leases.
3.1.16. Equipment. Schedule 3.1.16 hereto sets forth a complete and
accurate list of all of Seller's equipment other than items acquired by Seller
in the ordinary course of business from the date hereof through the Closing Date
(and Seller will identify in writing to the Buyer, prior to the Closing, each
item so acquired which has a market value or book value of $1,000 or more). The
personal property leases listed in Schedule 3.1.16 hereto include all leases by
Seller of any item of personal property used in connection with the business and
operation of the Business, except for those leases which are not being assumed
by Buyer hereunder. Except as disclosed in Schedule 3.1.16 hereto, all of the
equipment and all of the personal property leased by Seller under the personal
property leases is currently utilized by Seller in the ordinary course of the
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business and operation of the Business and is in good operating condition and
repair (with the exception of normal wear and tear), free, to the knowledge of
Seller, from defects other than such minor defects as do not interfere with the
continued use thereof in the conduct of normal operations. Seller has delivered
to Buyer true, correct and complete copies of all personal property leases.
3.1.17. Intellectual Property. Schedule 3.1.17 is an accurate and
complete list of all of the Proprietary Rights. All of the Proprietary Rights
for Intellectual Property is owned by Seller free and clear of all encumbrances
or has been duly licensed for use by Seller except as set forth in Schedule
3.1.17. Except as set forth on Schedule 3.1.17, none of the Intellectual
Property has been or is the subject of any pending adverse claim, or to the
knowledge of Seller, any threatened litigation or claim of infringement. Except
as set forth on Schedule 3.1.17, no license or royalty agreement to which Seller
is a party is in default or the subject of any notice of termination given, nor
does Seller have reason to anticipate any such default or notice or that the
transactions herein contemplated will result in termination or in any reduction
hereafter (except by reason of reduced sales volume) in royalties payable under
any such agreement. The products Seller manufactures at or which are produced by
or in connection with the operation of the Business, or which the Business
sells, do not, and any process, method, part, design or material it employs, or
the marketing and use by the Business of any such product or any service does
not, infringe any trademark, trade name, copyright or patent of another, and
Seller has not received any notice contesting its right to use any trademark,
trade name, product, process, design, computer program or written work now used
by it in connection with the Business or the operation thereof, except as set
forth on Schedule 3.1.17. Except as otherwise set forth on Schedule 3.1.17,
Seller has not granted any license in respect of any Intellectual Property. In
the reasonable opinion of Seller it owns or possesses adequate rights in and to
all Intellectual Property necessary to conduct the business of the Business as
presently conducted.
3.1.18. Contracts. Schedule 3.1.18 is a list of Contracts, as provided
below relating to the business and operation of the Business, except Contracts,
listed in other Schedules hereto. Seller has delivered to Buyer true and correct
copies of each listed document and a written description of each oral
arrangement so listed. Schedule 3.1.19 and such other Schedules, include all the
contracts, agreements and instruments of the following types to which Seller is
a party or by which it is bound relating to the Business or the operation
thereof, or to which any of the Purchased Assets is subject:
3.1.18.1 any labor union contract;
3.1.18.2 any pension, retirement, deferred compensation,
profit sharing, incentive compensation, bonus, stock purchase, stock
option, welfare, hospitalization or insurance plan or arrangement or
any vacation pay or severance pay or any other employee benefit
arrangement for its officers, employees, consultants or agents whether
pursuant to a written contract or pursuant to custom or informal
understanding, together
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with the most recent annual report completed with respect to each such
plan or arrangement;
3.1.18.3 all agreements, understandings and arrangements of
any kind with any executive, director, or stockholder of Seller,
relating to present or future compensation or other benefits available
to such person or otherwise;
3.1.18.4 any Contract, purchase order or other arrangement of
any kind with any person or entity affiliated with or controlled by (or
with power to control) any officer, director, employee or stockholder;
3.1.18.5 any Contract or agreement with a broker, sales
agency, advertising agency or other person engaged in sales,
distributing or promotional activities;
3.1.18.6 a summary schedule of any Contract, purchase order,
sales order or other arrangement of any nature which involves an
unperformed commitment in excess of $10,000;
3.1.18.7 any commitment or arrangement pursuant to which
Seller has made or will make loans or advances, or has or will have
incurred debts or become a guarantor or surety or pledged its credit on
or otherwise become responsible with respect to any undertaking of
another (except for the negotiation or collection of negotiable
instruments in transactions in the ordinary course of business);
3.1.18.8 any indentures, credit agreements, loan agreements,
notes, mortgages, security agreements, leases of real property or
material leases of personal property and agreements for financing;
3.1.18.9 any commitment or arrangement involving a
partnership, joint venture or other cooperative undertaking, or
involving any restrictions of the geographical area of operations or
scope or type of business of the Seller;
3.1.18.10 all agreements with sales representatives,
distributors and dealers;
3.1.18.11 any power of attorney or agency agreement or
arrangement with any party pursuant to which such party is granted the
authority to act for or on behalf of the Seller;
3.1.18.12 any property, casualty and other forms of insurance;
3.1.18.13 agreements under which the requirements for
performance extend beyond 60 days from the date of this Agreement or
the Closing Date, whichever is earlier;
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3.1.18.14 all other Contracts not made in the ordinary course
of business which are to be performed at or after the date of this
Agreement;
3.1.18.15 all other material Contracts.
3.1.19. Employee Benefit Plans. No person participates in any "employee
welfare benefit plan" or "employee pension benefit plan" (as those terms are
respectively defined in Sections 3(1) and 3(2) of ERISA), nor may any person
reasonably expect to participate in any such plan, in either case, on account of
his or her employment with Seller, other than through those plans listed on
Schedule 3.1.19. Seller also does not maintain any retirement or deferred
compensation plan, savings, incentive, stock option or stock purchase plan,
unemployment compensation plan, vacation pay, severance pay, bonus or benefit
arrangement, insurance or hospitalization program or any other fringe benefit
arrangements (referred to collectively hereinafter as "fringe benefit
arrangements") for any employee, consultant or agent of Seller, whether pursuant
to contract, arrangement, custom or informal understanding, which does not
constitute an "employee benefit plan" (as defined in Section 3(3) of ERISA),
except as listed on Schedule 3.1.19. During the sixty-consecutive month period
ending on the Closing Date, Seller has not maintained any employee welfare
benefit plans or employee pension benefit plans except for plans listed on
Schedule 3.1.19. Except as set forth in Schedule 3.1.19, there have been no
amendments to any of the employee pension benefit plans, employee welfare
benefit plans or fringe benefit arrangements listed on Schedule 3.1.19 since
December 31, 1995. All employee pension benefit plans, employee welfare benefit
plans and fringe benefit arrangements listed on Schedule 3.1.19 comply in form
and in operation in all material respects with all applicable requirements of
law and regulation. All employee pension benefit plans maintained by Seller
comply in form and in operation with all applicable requirements of Sections
401(a) and 401(k) of the Code. No accumulated funding deficiency, whether or not
waived, exists with respect to any such plan; no event has acquired or
circumstance exists that may result in an accumulated funding deficiency as of
the last day of the current plan year of any such plan. There have been no
"prohibited transactions" (as described in Section 406 of ERISA or Section 4975
of the Code) with respect to any employee pension benefit plan or employee
welfare benefit plan maintained by Seller as to which Seller has been a party. A
true and correct copy of the annual report (as described in Section 103 of
ERISA) most recently filed for each plan listed in Schedule 3.1.19 has been
supplied to Buyer by Seller, and there have been no material changes in the
financial condition in the respective plans from that stated in the annual
reports supplied.
No person currently participates in any multiemployer plan (as defined
in Section 3(37) of ERISA), and no person may reasonably expect to participate
in such a plan, in either case, on account of his or her employment with Seller,
nor does Seller have any liability or contingent liability to any multiemployer
plan. Without limitation, each "employee pension benefit plan" and each
"employee welfare benefit plan" that provides benefits for employees or former
employees of Seller is maintained by Seller and not by any Affiliate of Seller.
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A true and correct copy of each of the plans and arrangements listed on
Schedule 3.1.19 as in effect on the date hereof and each trust agreement
relating to each such plan and arrangement, has been supplied to Buyer. In the
case of any plan or arrangement which is not in written form, Buyer has been
supplied with an accurate description of such plan or arrangement as in effect
on the Closing Date. Seller has provided to Buyer a description of any liability
or contingent liability which may be incurred by Seller if any plan or
arrangement listed on Schedule 3.1.19 were terminated or if Seller was to cease
its participation therein.
All accrued obligations of Seller, whether arising by operation of law,
by contract or by past custom, for compensation, including bonuses, to its
officers, directors, employees, consultants or agents, for taxes and other
obligations to any Governmental Authority payable by Seller in connection with
such compensation, and for payments with respect to any plan or arrangement
listed on Schedule 3.1.19 have been paid, or adequately and properly accrued
for, by Seller, as appropriate, and are fully reflected in the Financial
Statements.
There are no unsecured loans outstanding to any employees of Seller
under any of the plans or arrangements listed on Schedule 3.1.19.
3.1.20. No Defaults or Violations. Except as set forth on Schedule
3.1.20, (a) Seller has not materially breached any provision of, nor is it in
material default under the terms of, any lease, contract, commitment, agreement,
indenture, mortgage, lien, instrument, plan or license to which it is a party or
under which it has any rights or by which it is bound and which relates to the
business or operation of the Business, and to the knowledge of Seller no other
party to any such lease, contract, commitment or agreement is in default
thereunder in any material respect, and (b) Seller is not in any material
violation or default of, or with respect to, any law, governmental regulation or
rule or order of any Governmental Authority that is applicable in any way to the
business or operation of the Business. Except as set forth in Schedule 3.1.20
none of the properties owned by Seller and included in the Purchased Assets, or
the occupancy or operation thereof, is in material violation of any law,
building, zoning or other ordinance, code or regulation applicable to it, or is
subject to any law, ordinance, code, regulation or order requiring any change,
assessment or penalty, which would adversely affect the business of Seller or
operation of the Business, and no notice from any Governmental Authority has
been served upon Seller claiming any violation of any such law, ordinance, code
or regulation or requiring any work or construction or asserting any assessment
or penalty which would have a material adverse effect on the business or
operation of the Business. Seller is in material compliance with, and no
violation exists under, any law, rule, regulation or permit applicable to the
Business and the operation thereof, whether federal, state, local or foreign.
3.1.21. Certain Environmental Matters. Except as disclosed on Schedule
3.1.21:
3.1.21.1. Seller is, and at all times prior to the date hereof
has been, in compliance in all material respects, and has not been and is not in
violation of or liable under, any Environmental Law. Seller has no basis to
expect, nor has it or any other Person for whose conduct it is or may be held to
be responsible received, any actual or Threatened order, notice or
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other communication from (i) any Governmental Authority or private citizen
acting in the public interest, or (ii) the current or prior owner or operator of
the Real Property, of any actual or potential violation or failure to comply
with any Environmental Law, or of any actual or Threatened obligation to
undertake or bear the cost of any Environmental, Health, and Safety Liabilities
with respect to the Real Property or any other properties or assets (whether
real, personal, or mixed) in which Seller has had an interest, or with respect
to any property or the Real Property at or to which Hazardous Materials were
generated, manufactured, refined, transferred, imported, used or processed by
Seller, or any other Person for whose conduct it is or may be held responsible
or from which Hazardous Materials have been transported, treated, stored,
handled, transferred, disposed, recycled, or received.
3.1.21.2 The Real Property does not contain any wetlands, as
defined in the Clean Water Act and regulations promulgated thereunder, 33 C.F.R.
Section 328.3, or similar state or local laws, or other especially sensitive or
protected areas or species of flora or fauna.
3.1.21.3 There are no pending or, to the Knowledge of Seller,
Threatened claims, encumbrances, or other restrictions of any nature, resulting
from any Environmental, Health and Safety Liabilities or arising under or
pursuant to any Environmental Law, with respect to or affecting the Real
Property or any other properties and assets (whether real, personal, or mixed)
in which the Seller has or had an interest.
3.1.21.4 Seller has no basis to expect, nor has it or any
other Person for whose conduct it is or may be held responsible, received, any
Order, notice, communication, inquiry, warning, citation, summons, directive, or
any other indication that relates to Hazardous Activity, Hazardous Materials, or
any alleged, actual, or potential violation or failure to comply with any
Environmental Law, or of any alleged, actual, or potential obligation to
undertake or bear the cost of any Environmental, Health, and Safety Liabilities
with respect to the Real Property or any other properties or assets (whether
real, personal or mixed) in which Seller had an interest, or with respect to any
property or facility to which Hazardous Materials were generated, manufactured,
refined, transferred, imported, used, or processed by the Seller, or any other
Person for whose conduct it is or may be held responsible, have been
transported, treated, stored, handled, transferred, disposed, recycled or
received.
3.1.21.5 Seller or any other Person for whose conduct it is or
may be held responsible, has no Environmental, Health, and Safety Liabilities
with respect to the Real Property, or, with respect to any other properties and
assets (whether real, personal or mixed) in which Seller (or any predecessor),
has or had an interest, or at any property geologically or hydrologically
adjoining the Real Property or any such other property or assets. Without
limitation, (1) Seller has, and at all relevant times had, all necessary
Environmental Permits and operates, and at all relevant times operated, its
Business in accordance therewith, (2) there are no Environmental Liens affecting
the Real Property, the Purchased Assets or Seller's Business, and (3) to the
knowledge of Seller, there are no past or present actions or conditions that
could form
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the basis of an Environmental Claim against the Real Property, the Purchased
Assets, Seller, or anyone for whose actions Seller may be liable.
3.1.21.6 There are no Hazardous Materials present on or in the
Environment at the Real Property or at any geologically or hydrologically
adjoining property, including any Hazardous Materials contained in barrels,
above or underground storage tanks, landfills, land deposits, dumps, equipment
(whether moveable or fixed) or other contains, either temporary or permanent and
deposited or located in land, water, sumps, or any other part of the Real
Property or such adjoining property, or incorporated into any structure therein
or thereon. Seller, any other Person for whose conduct it is or may be held
responsible, or any other Person, has not permitted or conducted, or is aware
of, any Hazardous Activity conducted with respect to the Real Property or any
other properties or assets (whether real, personal or mixed) in which Seller has
or had an interest, except in full compliance with all applicable Environmental
Laws.
Section 3.1.21.7 There has been no Release or, to the
Knowledge of Sellers, Threat of Release, of any Hazardous Materials at or from
the Real Property or at any other locations where any Hazardous Materials were
generated, manufactured, refined, transferred, produced, imported, used, or
processed from or by the Real Property, or from or by any other properties and
assets (whether real, personal or mixed) in which Seller has or had an interest,
or any geologically or hydrologically adjoining property, whether by Seller, or
any other Person.
Section 3.1.21.8 Seller has delivered to Buyer true and
complete copies and results of any reports, studies, analyses, tests or
monitoring possessed or initiated by Seller pertaining to Hazardous Materials or
Hazardous Activities in, on, or under the Facilities, or concerning compliance
by Seller, or any other Person for whose conduct it is or may be held
responsible, with Environmental Laws.
3.1.22. Litigation. Except as disclosed in Schedule 3.1.22, there are
no actions, suits, labor disputes or other litigation, proceedings or
governmental investigations pending or, to the knowledge of Seller, threatened
against or affecting Seller, or any officers, directors, employees or the
stockholders thereof in their capacity as such, or any of the properties or
businesses thereof, or relating to the transactions contemplated by this
Agreement. Except as disclosed herein or in an Schedule hereto, Seller is not
subject to any order, judgment, decree, stipulation, or consent of or with any
court, governmental body or agency which has, or in the reasonable judgment of
Seller may have, a Material Adverse Effect on the financial condition or the
results or operation of the Business.
3.1.23. Taxes. All taxes of Seller, including, without limitation,
income, gross receipts, net proceeds, ad valorem, turnover, real and personal
property (tangible and intangible), sales, use, franchise, excise, value added,
stamp, leasing, lease, user, transfer, fuel, excess profits, occupational and
interest equalization, windfall profits, severance and employees' income
withholding and Social Security taxes imposed by the United States or any
foreign
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country or by any state, municipality, subdivision or instrumentality of the
United States or of any foreign country or by any other tax authority, including
all applicable penalties and interest, have been properly determined in
accordance with applicable rules and regulations and have been paid in full on
time. Seller has duly and timely filed all Tax Returns of every nature required
to be filed by it, in every jurisdiction in which the same may have been so
required, and has paid all Taxes disclosed on such returns. All Taxes of which
notice has been received or of which payment is due have been paid or shall be
paid by Seller in due course and in a timely manner. Except as set forth on
Schedule 3.1.23, Seller's income tax returns have never been audited and Seller
does not have outstanding waivers of the statute of limitations for any Taxes
for any taxable year. All deposits required by law to be made by Seller with
respect to employees' withholding taxes have been made. There are no tax liens
on any assets of Seller, except liens for Taxes not yet due. Seller has not
filed a consent under Section 341(f)(1) of the Code, relating to collapsible
corporations, and none of the assets of Seller is subject to such a consent.
There are no claims pending against Seller for past due Taxes and Seller does
not know of any such threatened claim or the basis for any such claim. There are
not now any matters under discussion with any federal, state, local or other
authority with respect to any additional Taxes or assessments relating to
Seller. Buyer will not be liable for any of Seller's taxes as a result of the
consummation of the transactions contemplated by this Agreement.
Except as disclosed on Schedule 3.1.23, none of the properties of
Seller is subject to a lease or other arrangement pursuant to which Seller is
not entitled to depreciation allowances under the Code.
Seller is not a foreign person within the meaning of Section 1445(f)(3)
of the Code for purposes of withholding tax on disposition of United States real
property interests.
3.1.24. Condition of Assets. Except as disclosed on Schedule 3.1.24,
all of the Purchased Assets, whether real or personal, owned or leased, have
been well maintained and are in normal operating condition (with the exception
of normal wear and tear), free, to the knowledge of Seller, from defects other
than such minor defects as do not interfere with the continued use therefor in
the conduct of normal operations.
3.1.25. Inventory. Except as shown on Schedule 3.1.25, each item of
Seller's inventory is merchantable and usable in the ordinary operations of the
Business, none of such items is obsolete and nonsalable, none of such items
subsequent to December 31, 1995, has been stolen or otherwise unlawfully or
improperly removed or diverted, and none of such items has been pledged or
otherwise given as collateral or is held by Seller on assignment or consignment.
Seller's inventory is fairly reflected in the inventory accounts on the audited
balance sheet included in the Financial Statements and are valued at the lower
of cost or market.
3.1.26. Insurance Policies. Seller currently has paid up insurance,
including, but not limited to, employee health and accident insurance, and
environmental, property, general liability, product liability and worker's
compensation insurance, as described on Schedule 3.1.26. Schedule 3.1.26
contains a list of each insurance policy currently providing coverage for the
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assets of Seller or its business relating to the Business and a copy of each
such policy has been delivered to Buyer. To the best of Seller's knowledge, no
written notice of termination of any such policy has been received by Seller or
its Affiliates.
3.1.27. Accounts Receivable. All accounts receivable of Seller have
arisen out of bona fide transactions in the ordinary course of business, and
each such account receivable constitutes a valid and binding obligation of the
obligor, maker, comaker, guarantor, endorser or debtor thereof or thereunder
and, except as set forth on Schedule 3.1.27 hereto is collectible in full within
60 days in at least the amount at which they are carried on the books of Seller.
3.1.28. Capital Improvements. Schedule 3.1.28 describes all of the
capital improvement or purchases or other capital expenditures (as determined in
accordance with GAAP) relating to the Business which Seller has committed to or
contracted for which have not been completed prior to the date hereof and the
cost and expense reasonably estimated to complete such work and purchases.
Seller hereby covenants and promises that it will not, without obtaining the
prior written consent of Buyer in each and every case, contract for or commit to
any such work or purchases after the date hereof.
3.1.29. Assets Sufficient for Conduct of Business. The Purchased Assets
and Assumed Liabilities constitute all of the assets and properties required for
the operation of the Business, as it will be operated at the Closing as
previously disclosed in writing by Seller to Buyer, in all material respects.
3.1.30. Accuracy of Statements. Neither this Agreement nor any
statement, list, certificate or other information furnished or to be furnished
by or on behalf of Seller to Buyer in connection with this Agreement or any of
the transactions contemplated hereby contains or will contain any untrue
statement of a material fact regarding Seller, the Purchased Assets or the
business or operation of the Business or omits or will omit to state a material
fact necessary to make the statements regarding Seller, the Purchased Assets or
the business or operation of the Business contained herein or therein, in light
of the circumstances in which they are made, not misleading.
3.1.31. No Other Agreement. Other than for sales of assets in the
ordinary course of business, neither Seller nor any of its Affiliates has any
contract, agreement, arrangement or understanding with respect to the sale or
other disposition of any assets (including the Purchased Assets) or capital
stock of Seller except as set forth in this Agreement (including the Schedules
hereto).
3.2. Representations and Warranties of Buyer. Buyer hereby represents
and warrants to Seller as follows:
3.2.1. Corporate Existence. Buyer and Buyer's Parent is each a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Georgia and has
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full corporate power and authority to own or lease its properties and to carry
on its business as now conducted. The capital structures of Buyer and Buyer's
Parent, respectively, as such capital structures exist as of the date of this
Agreement, are completely and accurately depicted on Schedule 3.2.1. hereto,
including, without limitation, all options, warrants and rights, provided that
each such capital structure is subject to change between the date hereof and the
Closing Date, as deemed necessary or desirable by Buyer or Buyer's Parent, as
appropriate, in connection with this transaction, and, provided further that no
such change may affect Seller's rights under Section 2.2, above. Buyer will
deliver to Seller true and complete copies of the charter and bylaws of Buyer
and Buyer's Parent as amended to date. Buyer and Buyer's Parent is each duly
qualified to do business and (where the concept of "good standing" is
applicable) in good standing as a foreign corporation in the States set forth on
Schedule 3.2.1. Buyer and Buyer's Parent does not presently own, directly or
indirectly, any shares of capital stock of or other equity interest in any
corporation, partnership or other entity, except as set forth on Schedule 3.2.1
hereto.
3.2.2. Authorization. Buyer and Buyer's Parent each has full
corporate power and authority to enter into and perform its obligations under
this Agreement and to consummate the transactions contemplated herein. The
execution, delivery and performance of this Agreement by Buyer has been duly
authorized by all requisite corporate action. By Closing, the execution,
delivery and performance of this Agreement by Buyer's Parent will have been duly
authorized by all requisite corporate action. This Agreement is the legal, valid
and binding obligation of Buyer enforceable in accordance with its terms, except
as enforceability may be limited by equitable principles or by bankruptcy,
fraudulent conveyance or insolvency laws affecting creditors' rights generally.
3.2.3. No Violation. The execution and delivery of this
Agreement by Buyer and the consummation of the transactions contemplated herein
do not and will not violate or result in a default under (i) the charter or
bylaws of Buyer, or (ii) to the best of Buyer's knowledge, and subject to the
receipt of any necessary Consents, (A) any Governmental Authorization, or (B)
any judgment, order, decree, law, rule or regulation applicable to Buyer, except
for violations or defaults which would not prevent the consummation of the
transactions contemplated by this Agreement or have a material adverse effect
representing a material adverse change in the business or financial condition of
Buyer or Buyer's Parent. Except as set forth on Schedule 3.2.3, no consent,
approval, authorization, order, filing, registration or qualification of or with
any governmental authority is required to be obtained by Buyer or Buyer's Parent
in connection with the execution and delivery of this Agreement by Buyer or the
consummation of the transactions contemplated herein.
3.2.4. Litigation. Except as set forth on Schedule 3.2.4, to the best
of Buyer's knowledge, no action, suit, proceeding or investigation is pending
against Buyer or Buyer's Parent, and neither Buyer nor Buyer's Parent has
received written notice of any threatened action, suit, proceeding or
investigation against Buyer or Buyer's Parent, which could reasonably
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be expected, either individually or in the aggregate, to result in any liability
on the part of Buyer or Buyer's Parent which would have a material adverse
effect representing a material adverse change in the business or financial
condition of Buyer or Buyer's Parent.
3.2.5. Governmental Authorizations; Compliance with Laws. To the best
of Buyer's knowledge, except as set forth on Schedule 3.2.5, neither Buyer nor
Buyer's Parent has received written notice that either of them is in violation
of or is in default under: (a) any governmental licenses, franchises, permits,
approvals and other governmental authorizations, other than those the absence of
which would not have a Material Adverse Effect, which are necessary to entitle
Buyer or Buyer's Parent to own or lease, operate and use its assets and
properties and to conduct its business as now conducted; (b) any judgment, order
or decree of any court or administrative agency applicable to either of them; or
(c) any law, rule or regulation applicable to it; which could reasonably be
expected to result in any liability on the part of Buyer or Buyer's Parent which
would have a material adverse effect representing a material adverse change in
the business or financial condition of Buyer or Buyer's Parent.
3.2.6. Income Tax Matters.
3.2.6.1 Tax Returns. Buyer and Buyer's Parent respectively has
filed or will file all tax returns required to be filed for any period ending on
or before the Closing Date, or if applicable, any period that includes the
Closing Date, and has paid or will pay or cause to be paid all Income Taxes due
to any taxing authority with respect to all such periods, except as contested in
good faith. Except as set forth on Schedule 3.2.6.1, neither Buyer nor Buyer's
Parent has received written notice that the Internal Revenue Service or any
other taxing authority has asserted against Buyer or Buyer's Parent any
deficiency or claim for additional Income Taxes in connection therewith. Except
as set forth on Schedule 3.2.6.1, neither Buyer nor Buyer's Parent has granted
or been granted any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment or filing of, any Income Tax.
3.2.7. Knowledge. No officer or director of Buyer has knowledge of any
agreement to which Buyer or Buyer's Parent is a party or by which any of their
respective assets are bound, any other obligation of Buyer or Buyer's Parent, or
any other condition, event or state of facts relating to the business of Buyer
or Buyer's Parent that materially adversely affects the value of such business,
the operations of Buyer or Buyer's Parent or their respective assets, other than
agreements, obligations, conditions, events or states of facts known to the
public or to the management of Buyer and Buyer's Parent or applicable generally
to the economy or to the industry in which Buyer and Buyer's Parent respectively
does business.
3.2.8 Brokers; Finders. Buyer has not retained any broker or finder in
connection with the transactions contemplated herein so as to give rise to any
valid claim against Seller for any brokerage or finder's commission, fee or
similar compensation.
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3.2.9. Actions of Officers and Directors; Unauthorized Acts of Officers
or Directors of Affiliates of Buyer and Buyer's Parent.
3.2.9.1 Officers and Directors. Schedule 3.1.9.1 hereto sets forth a
list of all Persons who, according to the minute books of Buyer and Buyer's
Parent, have been at any time within the last twelve months officers and
directors of Buyer and Buyer's Parent. To the best of Buyer's knowledge, the
minute book contains minutes of all of the meetings of the Board of Directors
and Shareholders which have taken place within the last year and all of the
resolutions of the Board of Directors and Shareholders which have been adopted
by unanimous written consent within the last year. Except as set forth on
Schedule 3.2.9.1; and except for (i) the negotiation on behalf of Buyer and
Buyer's Parent of the transactions contemplated by this Agreement and the
execution, delivery and/or filing of any documents required to be executed,
delivered and/or filed by Buyer and Buyer's Parent pursuant to this Agreement or
any Schedule or Schedules hereto, (ii) the preparation, execution and/or filing
of any federal, state or local tax returns or reports on behalf of Buyer and
Buyer's Parent, (iii) certain Board of Director resolutions adopted from the
date hereof, through the Closing Date, copies of which either have been or will
be delivered to Buyer on or before the Closing Date, or (iv) the taking of any
actions and execution, delivery and/or filing of any documents of a ministerial
nature, such as Certificates of Change of Registered Agent in the States of
incorporation and foreign authorization of Buyer and Buyer's Parent, the
Officers and Directors have not taken any material actions or executed,
delivered and/or filed any agreements, documents, instruments or certificates on
behalf of Buyer and Buyer's Parent, other than in the ordinary course of
business.
3.2.9.2 Actions by Affiliates. To the best of Buyer's
knowledge, no action has been taken by any officer or director of any Affiliate
of Buyer and Buyer's Parent purporting to act as an officer or director of Buyer
and Buyer's Parent.
3.2.10. Permits. Buyer and Buyer's Parent respectively holds all of the
permits described on Schedule 3.2.10, and no other licenses, certificates,
permits, franchises and rights, federal, state, local, and foreign, are
currently necessary for the lawful operation of the business of Buyer or Buyer's
Parent, respectively, except for those the absence of which would not have a
Material Adverse Effect on the business of the Business.
3.2.11. Buyer and Buyer's Parent Financial Statements.
3.2.11.1. Buyer and Buyer's Parent Financial Statements. Buyer
has delivered to Seller: (a) audited consolidated balance sheets (each, a
"Parent Balance Sheet") of Buyer's Parent as at December 31 in each of the years
1992 through 1995, and the related audited consolidated statements of income,
changes in stockholders' equity, and cash flow for each of the fiscal years then
ended, and (b) an unaudited consolidated balance sheet of Buyer's Parent as at
September 30, 1996 (the "Interim Parent Balance Sheet") and the related
unaudited consolidated statements of income, changes in stockholders' equity,
and cash flow for the 9 months then ended, including in each case the notes
thereto. Such financial statements and notes fairly present the financial
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condition and the results of operations, changes in stockholders' equity, and
cash flow of Buyer's Parent as at the respective dates of and for the periods
referred to in such financial statements, all in accordance with GAAP, subject,
in the case of interim financial statements, to normal recurring year-end
adjustments (the effect of which will not, individually or in the aggregate, be
materially adverse) and the absence of notes (that, if presented, would not
differ materially from those included in the Interim Parent Balance Sheet as of
September 30, 1996); the financial statements referred to in this Section 3.2.35
reflect the consistent application of such accounting principles throughout the
periods involved, except as disclosed in the notes to such financial statements.
No financial statements of any Person other than Buyer, and the entities shown
as consolidated therein, is required by GAAP to be included in the consolidated
financial statements of Buyer's Parent.
3.2.11.2. No Other Liabilities. Except as set forth in the
Parent Balance Sheet, there are no liabilities, debts, claims or obligations,
whether accrued, absolute, contingent or otherwise, whether due or to become
due, including, without limitation any which may be incurred or arise after the
Closing based on a fact or condition existing at or prior to the Closing, which
could materially and adversely affect any of the assets of the business of
Buyer's Parent or the rights of Buyer's Parent therein or thereto.
3.2.12. No Adverse Change. Except as listed on Schedule 3.2.12, since
September 30, 1996, there has not been (i) any material adverse change in the
financial condition, financial statements, business, properties, assets, or
results of operations of the business of Buyer's Parent, (ii) any material loss
or damage (whether or not covered by insurance) to any of the assets of Buyer's
Parent, which materially affects or impairs the ability of Buyer's Parent to
conduct the business of its business, or any other event or condition of any
character which has materially and adversely affected the business or operation
of such business, (iii) any mortgage or pledge of any of the assets of Buyer's
Parent, (iv) any indebtedness incurred by Buyer's Parent relating to, or taking
as security any interest whatsoever in, the assets of Buyer's Parent, (v) any
contract or other transaction entered into by Buyer's Parent relating to, or
otherwise affecting in any way, its business or the operation thereof, other
than in the ordinary course of business, (vi) any sale or transfer of the assets
of Buyer's Parent, except items of the inventory which have been sold in the
ordinary course of business, or any cancellation of any debts or claims of
Buyer's Parent, except in the ordinary course of business, (vii) any changes in
the terms of any instruments, accounts, notes, contracts, or other instruments
identified in the exhibits and schedules hereto, except as consented to in
writing by Seller, (viii) any changes in the accounting systems, policies or
practices of Buyer's Parent, (ix) any waiver by Buyer's Parent of any rights
which have any value, or (x) any transactions with any of Buyer's Parent's
Affiliates. Since September 30, 1996, the business of the business of Buyer's
Parent has been conducted in all respects only in the ordinary course and there
has not been any material change in the affairs of such business which has not
been fully disclosed in writing to Seller.
3.2.13. Title to and Condition of Properties. Buyer's Parent has good
and marketable title to, is the lawful owner of, and has the full right to sell,
convey, transfer, assign and deliver
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the assets that comprise its business free and clear of any mortgage, lien,
pledge, security interest, option, lease (or sublease), conditional sales
agreement, title retention agreement, charge, claim, encumbrance, easement or
encroachment, except as disclosed on Schedule 3.2.13 hereto.
3.2.14. Real Property Leases. Schedule 3.2.14 hereto lists all leases
pursuant to which Buyer's Parent holds any real property used in connection with
the business and operation of its business and includes complete and accurate
legal descriptions of such leased real property. Except as disclosed on Schedule
3.2.14, the buildings, facilities, installations, fixtures and other structures
or improvements located on or at the real property subject to such leases have
been well-maintained and are in good operating condition and repair (with the
exception of normal wear and tear), free, to the knowledge of Buyer, from
defects other than such minor defects as do not interfere with the continued use
therefor in the conduct of normal operations. The activities carried on in such
buildings, plants, facilities, installations, fixtures and other structures or
improvements, and the buildings, plants, facilities, installations, fixtures and
other structures or improvements themselves, are not in violation of or in
conflict with any applicable zoning, environmental or health regulation or
ordinance or any other similar law, statute, regulation or ordinance. Except as
disclosed on Schedule 3.7 hereto, no asbestos, asbestos-containing materials,
PCB compounds or other pollutants, contaminants or hazardous or toxic wastes,
substances or materials have been used in the construction or repair of, or any
alterations or additions to, any real property leased pursuant to any of such
leases. Buyer has delivered to Seller true, correct and complete copies of all
such leases.
3.2.15. Equipment. Schedule 3.2.15 hereto sets forth a complete and
accurate list of all of Buyer's Parent's equipment other than items acquired by
Buyer's Parent in the ordinary course of business from the date hereof through
the Closing Date (and Buyer will identify in writing to the Seller, prior to the
Closing, each item so acquired which has a market value or book value of $1,000
or more). The personal property leases listed in Schedule 3.2.15 hereto include
all leases by Buyer's Parent of any item of personal property used in connection
with the business and operation of its business, except for those leases which
are not being assumed by Seller hereunder. Except as disclosed in Schedule
3.2.15 hereto, all of the equipment and all of the personal property leased by
Buyer's Parent under the personal property leases is currently utilized by
Buyer's Parent in the ordinary course of the business and operation of its
business and is in good operating condition and repair (with the exception of
normal wear and tear), free, to the knowledge of Buyer, from defects other than
such minor defects as do not interfere with the continued use thereof in the
conduct of normal operations. Buyer has delivered to Seller true, correct and
complete copies of all personal property leases.
3.2.16. Intellectual Property. Schedule 3.2.16 is an accurate and
complete list of all of the proprietary rights of Buyer's Parent. All of the
proprietary rights comprising intellectual property is owned by Buyer's Parent
free and clear of all encumbrances or has been duly licensed for use by Buyer
and Buyer's Parent except as set forth in Schedule 3.2.16. Except as set forth
on Schedule 3.2.16, none of such intellectual property has been or is the
subject of any pending adverse claim, or to the knowledge of Buyer or Buyer's
Parent, any threatened litigation or claim
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of infringement. Except as set forth on Schedule 3.2.16, no license or royalty
agreement to which Buyer or Buyer's Parent is a party is in default or the
subject of any notice of termination given, nor does Buyer or Buyer's Parent
have reason to anticipate any such default or notice or that the transactions
herein contemplated will result in termination or in any reduction hereafter
(except by reason of reduced sales volume) in royalties payable under any such
agreement. The products Buyer's Parent manufactures at or which are produced by
or in connection with the operation of its business, or which its business
sells, do not, and any process, method, part, design or material it employs, or
the marketing and use by such business of any such product or any service does
not, infringe any trademark, trade name, copyright or patent of another, and
Buyer's Parent has not received any notice contesting its right to use any
trademark, trade name, product, process, design, computer program or written
work now used by it in connection with its business or the operation thereof,
except as set forth on Schedule 3.2.16. Except as otherwise set forth on
Schedule 3.2.16, Buyer's Parent has not granted any license in respect of any
intellectual property. In the reasonable opinion of Buyer, Buyer's Parent owns
or possesses adequate rights in and to all intellectual property necessary to
conduct the business of its business as presently conducted.
3.2.17. Contracts. Schedule 3.2.17 is a list of contracts, as provided
below relating to the business and operation of the business of Buyer and
Buyer's Parent, respectively, except contracts listed in other Schedules hereto.
Buyer has delivered to Seller true and correct copies of each listed document
and a written description of each oral arrangement so listed. Schedule 3.2.17
and such other Schedules, include all the contracts, agreements and instruments
of the following types to which Buyer or Buyer's Parent, respectively, is a
party or by which it is bound relating to its business or the operation thereof,
or to which any of its assets is subject:
3.2.17.1 any labor union contract;
3.2.17.2 any pension, retirement, deferred compensation,
profit sharing, incentive compensation, bonus, stock purchase, stock
option, welfare, hospitalization or insurance plan or arrangement or
any vacation pay or severance pay or any other employee benefit
arrangement for its officers, employees, consultants or agents whether
pursuant to a written contract or pursuant to custom or informal
understanding, together with the most recent annual report completed
with respect to each such plan or arrangement;
3.2.17.3 all agreements, understandings and arrangements of
any kind with any executive, director, or stockholder of Buyer or
Buyer's Parent, relating to present or future compensation or other
benefits available to such person or otherwise;
3.2.17.4 any contract, purchase order or other arrangement of
any kind with any person or entity affiliated with or controlled by (or
with power to control) any officer, director, employee or stockholder;
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3.2.17.5 any contract or agreement with a broker, sales
agency, advertising agency or other person engaged in sales,
distributing or promotional activities;
3.2.17.6 a summary schedule of any contract, purchase order,
sales order or other arrangement of any nature which involves an
unperformed commitment in excess of $10,000;
3.2.17.7 any commitment or arrangement pursuant to which Buyer
or Buyer's Parent has made or will make loans or advances, or has or
will have incurred debts or become a guarantor or surety or pledged its
credit on or otherwise become responsible with respect to any
undertaking of another (except for the negotiation or collection of
negotiable instruments in transactions in the ordinary course of
business);
3.2.17.8 any indentures, credit agreements, loan agreements,
notes, mortgages, security agreements, leases of real property or
material leases of personal property and agreements for financing;
3.2.17.9 any commitment or arrangement involving a
partnership, joint venture or other cooperative undertaking, or
involving any restrictions of the geographical area of operations or
scope or type of business of Buyer or Buyer's Parent;
3.2.17.10 all agreements with sales representatives,
distributors and dealers;
3.2.17.11 any power of attorney or agency agreement or
arrangement with any party pursuant to which such party is granted the
authority to act for or on behalf of Buyer's Parent;
3.2.17.12 any property, casualty and other forms of insurance;
3.2.17.13 agreements under which the requirements for
performance extend beyond 60 days from the date of this Agreement or
the Closing Date, whichever is earlier;
3.2.17.14 all other contracts not made in the ordinary course
of business which are to be performed at or after the date of this
Agreement;
3.2.17.15 all other material contracts.
3.2.18. Employee Benefit Plans. No person participates in any "employee
welfare benefit plan" or "employee pension benefit plan" (as those terms are
respectively defined in Sections 3(1) and 3(2) of ERISA), nor may any person
reasonably expect to participate in any such plan, in either case, on account of
his or her employment with Buyer or Buyer's Parent, other than either a
"multiemployer plan" (as defined in Section 3(37) of ERISA), or those plans
listed on Schedule 3.2.18. Neither Buyer nor Buyer's Parent maintains any
retirement or
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deferred compensation plan, savings, incentive, stock option or stock purchase
plan, unemployment compensation plan, vacation pay, severance pay, bonus or
benefit arrangement, insurance or hospitalization program or any other fringe
benefit arrangements (referred to collectively hereinafter as "fringe benefit
arrangements") for any employee, consultant or agent of Buyer or Buyer's Parent,
respectively, whether pursuant to contract, arrangement, custom or informal
understanding, which does not constitute an "employee benefit plan" (as defined
in Section 3(3) of ERISA), except as listed on Schedule 3.2.18. During the
sixty-consecutive month period ending on the Closing Date, neither Buyer nor
Buyer's Parent has maintained any employee welfare benefit plans or employee
pension benefit plans except for plans listed on Schedule 3.2.18. There have
been no amendments to any of the employee pension benefit plans, employee
welfare benefit plans or fringe benefit arrangements listed on Schedule 3.2.18
since December 31, 1995. All employee pension benefit plans, employee welfare
benefit plans and fringe benefit arrangements listed on Schedule 3.2.18 comply
in form and in operation in all material respects with all applicable
requirements of law and regulation. All employee pension benefit plans
maintained by Buyer or Buyer's Parent comply in form and in operation with all
applicable requirements of Sections 401(a) and 401(k) of the Code. No
accumulated funding deficiency, whether or not waived, exists with respect to
any such plan; no event has occurred or circumstance exists that may result in
an accumulated funding deficiency as of the last day of the current plan year of
any such plan. There have been no "prohibited transactions" (as described in
Section 406 of ERISA or Section 4975 of the Code) with respect to any employee
pension benefit plan or employee welfare benefit plan maintained by Buyer's
Parent as to which Buyer's Parent has been a party. A true and correct copy of
the annual report (as described in Section 103 of ERISA) most recently filed for
each plan listed in Schedule 3.2.18 has been supplied to Seller by Buyer, and
there have been no material changes in the financial condition in the respective
plans from that stated in the annual reports supplied.
No person currently participates in any multiemployer plan, and no
person may reasonably expect to participate in such a plan, in either case, on
account of his or her employment with Buyer or Buyer's Parent, nor does Buyer or
Buyer's Parent have any liability or contingent liability to any multiemployer
plan. Without limitation, each "employee pension benefit plan," as such term is
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and each "employee welfare benefit plan," as defined in
Section 3(1) of ERISA, that provides benefits for employees or former employees
of Buyer and Buyer's Parent is maintained by Buyer and Buyer's Parent and not by
any Affiliate of Buyer and Buyer's Parent (collectively, the "Benefit Plans").
A true and correct copy of each of the plans and arrangements listed on
Schedule 3.2.18 as in effect on the date hereof and each trust agreement
relating to each such plan and arrangement, has been supplied to Seller. In the
case of any plan or arrangement which is not in written form, Seller has been
supplied with an accurate description of such plan or arrangement as in effect
on the Closing Date. Buyer has provided to Seller a description of any liability
or contingent liability which may be incurred by Buyer or Buyer's Parent if any
plan or arrangement
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listed on Schedule 3.2.18 were terminated or if Buyer or Buyer's Parent was to
cease its participation therein.
All accrued obligations of Buyer or Buyer's Parent, whether arising by
operation of law, by contract or by past custom, for compensation, including
bonuses, to its officers, directors, employees, consultants or agents, for taxes
and other obligations to any Governmental Authority payable by Buyer or Buyer's
Parent in connection with such compensation, and for payments with respect to
any plan or arrangement listed on Schedule 3.2.18 have been paid, or actuarially
adequate accruals for such obligations have been and are being made by Buyer or
Buyer's Parent, as appropriate, and, in the case of Buyer's Parent, are fully
reflected in the Financial Statements.
There are no unsecured loans outstanding to any employees of Buyer or
Buyer's Parent under any of the plans or arrangements listed on Schedule 3.2.18.
3.2.19. No Defaults or Violations. Except as set forth on Schedule
3.2.19, (a) neither Buyer nor Buyer's Parent has materially breached any
provision of, nor is either of them in material default under the terms of, any
lease, contract, commitment, agreement, indenture, mortgage, lien, instrument,
plan or license to which it is a party or under which it has any rights or by
which it is bound and which relates to the business or operation of its
business, and to the knowledge of Buyer no other party to any such lease,
contract, commitment or agreement is in default thereunder in any material
respect, and (b) neither Buyer nor Buyer's Parent is in any material violation
or default of, or with respect to, any law, governmental regulation or rule or
order of any Governmental Authority that is applicable in any way to the
business or operation of its business. Except as set forth in Schedule 3.2.19
none of the properties owned by Buyer or Buyer's Parent and included in its
assets, or the occupancy or operation thereof, is in material violation of any
law, building, zoning or other ordinance, code or regulation applicable to it,
or is subject to any law, ordinance, code, regulation or order requiring any
change, assessment or penalty, which would adversely affect the business of
Buyer or Buyer's Parent respectively or operation of its business, and no notice
from any Governmental Authority has been served upon Buyer or Buyer's Parent
claiming any violation of any such law, ordinance, code or regulation or
requiring any work or construction or asserting any assessment or penalty which
would have a material adverse effect on the business or operation of the
Business. Buyer and Buyer's Parent each is in material compliance with, and no
violation exists under, any law, rule, regulation or permit applicable to its
business and the operation thereof, whether federal, state, local or foreign.
3.2.20. Certain Environmental Matters. Except as disclosed on Schedule
3.2.20:
3.2.20.1. Buyer and Buyer's Parent each is, and at all times
prior to the date hereof has been, in compliance in all material respects with,
and has not been and is not in violation of or liable under, any Environmental
Law. Buyer and Buyer's Parent has no basis to expect, nor has it or any other
Person for whose conduct it is or may be held to be responsible received, any
actual or Threatened order, notice or other communication from (i) any
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Governmental Authority or private citizen acting in the public interest, or (ii)
the current or prior owner or operator of any real property owned or occupied by
it, of any actual or potential violation or failure to comply with any
Environmental Law, or of any actual or Threatened obligation to undertake or
bear the cost of any Environmental, Health, and Safety Liabilities with respect
to any such real property or any other properties or assets (whether real,
personal, or mixed) in which Buyer or Buyer's Parent has had an interest, or
with respect to any property or any such real property at or to which Hazardous
Materials were generated, manufactured, refined, transferred, imported, used or
processed by Buyer and Buyer's Parent, or any other Person for whose conduct it
is or may be held responsible or from which Hazardous Materials have been
transported, treated, stored, handled, transferred, disposed, recycled, or
received.
3.2.20.2 Any real property owned or occupied by Buyer or
Buyer's Parent does not contain any wetlands, as defined in the Clean Water Act
and regulations promulgated thereunder, 33 C.F.R. Section 328.3, or similar
state or local laws, or other especially sensitive or protected areas or species
of flora or fauna.
3.2.20.3 There are no pending or, to the Knowledge of Buyer,
Threatened claims, encumbrances, or other restrictions of any nature, resulting
from any Environmental, Health and Safety Liabilities or arising under or
pursuant to any Environmental Law, with respect to or affecting any real
property owned or occupied by Buyer or Buyer's Parent or any other properties
and assets (whether real, personal, or mixed) in which the Buyer or Buyer's
Parent has or had an interest.
3.2.20.4 Neither Buyer nor Buyer's Parent has no basis to
expect, nor has it or any other Person for whose conduct it is or may be held
responsible, received, any Order, notice, communication, inquiry, warning,
citation, summons, directive, or any other indication that relates to Hazardous
Activity, Hazardous Materials, or any alleged, actual, or potential violation or
failure to comply with any Environmental Law, or of any alleged, actual, or
potential obligation to undertake or bear the cost of any Environmental, Health,
and Safety Liabilities with respect to any real property owned or occupied by
Buyer or Buyer's Parent, or any other properties or assets (whether real,
personal or mixed) in which Buyer or Buyer's Parent had an interest, or with
respect to any property or facility to which Hazardous Materials were generated,
manufactured, refined, transferred, imported, used, or processed by the Buyer
and Buyer's Parent, or any other Person for whose conduct it is or may be held
responsible, have been transported, treated, stored, handled, transferred,
disposed, recycled or received.
3.2.20.5 Neither Buyer nor Buyer's Parent nor any other Person
for whose conduct either of them is or may be held responsible, has any
Environmental, Health, and Safety Liabilities with respect to any real property
owned or occupied by Buyer or Buyer's Parent, or, with respect to any other
properties and assets (whether real, personal or mixed) in which Buyer or
Buyer's Parent (or any predecessor), has or had an interest, or at any property
geologically or hydrologically adjoining such real property or any such other
property or assets. Without limitation, (1) Buyer and Buyer's Parent,
respectively, has, and at all relevant times had, all
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necessary Environmental Permits and operates, and at all relevant times
operated, its respective business in accordance therewith, (2) there are no
Environmental Liens affecting the assets of Buyer or Buyer's Parent or the
business of Buyer or Buyer's Parent, and (3) to the knowledge of Buyer or
Buyer's Parent, there are no past or present actions or conditions that could
form the basis of an Environmental Claim against the assets of Buyer or Buyer's
Parent, or anyone for whose actions Buyer or Buyer's Parent may be liable.
3.2.20.6 There are no Hazardous Materials present on or in the
Environment at any real property owned or occupied by Buyer or Buyer's Parent or
at any geologically or hydrologically adjoining property, including any
Hazardous Materials contained in barrels, above or underground storage tanks,
landfills, land deposits, dumps, equipment (whether moveable or fixed) or other
contains, either temporary or permanent and deposited or located in land, water,
sumps, or any other part of the facilities there or such adjoining property, or
incorporated into any structure therein or thereon. Neither Buyer nor Buyer's
Parent, nor any other Person for whose conduct it is or may be held responsible,
or any other Person, has not permitted or conducted, or is aware of, any
Hazardous Activity conducted with respect to such real property or any other
properties or assets (whether real, personal or mixed) in which Buyer or Buyer's
Parent has or had an interest, except in full compliance with all applicable
Environmental Laws.
Section 3.2.20.7 There has been no Release or, to the
Knowledge of Buyer, Threat of Release, of any Hazardous Materials at or from any
real property owned or occupied by Buyer or Buyer's Parent or at any other
locations where any Hazardous Materials were generated, manufactured, refined,
transferred, produced, imported, used, or processed from or by such real
property, or from or by any other properties and assets (whether real, personal
or mixed) in which Buyer or Buyer's Parent has or had an interest, or any
geologically or hydrologically adjoining property, whether by Buyer or Buyer's
Parent, or any other Person.
Section 3.2.20.8 Buyer has delivered to Seller true and
complete copies and results of any reports, studies, analyses, tests or
monitoring possessed or initiated by Buyer or Buyer's Parent pertaining to
Hazardous Materials or Hazardous Activities in, on, or under any Facilities
owned or occupied by Buyer or Buyer's Parent, or concerning compliance by Buyer
and Buyer's Parent, or any other Person for whose conduct it is or may be held
responsible, with Environmental Laws.
3.2.21 Litigation. Except as disclosed in Schedule 3.2.21,
there are no actions, suits, labor disputes or other litigation, proceedings or
governmental investigations pending or, to the knowledge of Buyer, threatened
against or affecting Buyer or Buyer's Parent, or any officers, directors,
employees or the stockholders thereof in their capacity as such, or any of the
properties or businesses thereof, or relating to the transactions contemplated
by this Agreement. Except as disclosed herein or in an Schedule hereto, neither
Buyer nor Buyer's Parent is subject to any order, judgment, decree, stipulation,
or consent of or with any court, governmental body or agency which has, or in
the reasonable judgment of Buyer may have, a Material Adverse Effect on the
financial condition or the results or operation of the Business.
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3.2.22. Taxes. All taxes, including, without limitation,
income, gross receipts, net proceeds, ad valorem, turnover, real and personal
property (tangible and intangible), sales, use, franchise, excise, value added,
stamp, leasing, lease, user, transfer, fuel, excess profits, occupational and
interest equalization, windfall profits, severance and employees' income
withholding and Social Security taxes imposed by the United States or any
foreign country or by any state, municipality, subdivision or instrumentality of
the United States or of any foreign country or by any other tax authority,
including all applicable penalties and interest, have been properly determined
in accordance with applicable rules and regulations and have been paid in full
on time. Buyer and Buyer's Parent each has duly and timely filed all Tax Returns
of every nature required to be filed by it, in every jurisdiction in which the
same may have been so required, and has paid all Taxes disclosed on such
returns. All Taxes of which notice has been received or which shall accrue on or
prior to the Closing Date have been paid or shall be paid by Buyer or Buyer's
Parent in due course and in a timely manner. Except as set forth on Schedule
3.2.22, Buyer and Buyer's Parent's income tax returns have never been audited
and Buyer and Buyer's Parent does not have outstanding waivers of the statute of
limitations for any Taxes for any taxable year. All deposits required by law to
be made by Buyer and Buyer's Parent with respect to employees' withholding taxes
have been made. There are no tax liens on any assets of Buyer or Buyer's Parent,
except liens for Taxes not yet due. Buyer and Buyer's Parent has not filed a
consent under Section 341(f)(1) of the Code, relating to collapsible
corporations, and none of the assets of Buyer and Buyer's Parent is subject to
such a consent. There are no claims pending against Buyer or Buyer's Parent for
past due Taxes and Buyer does not know of any such threatened claim or the basis
for any such claim. There are not now any matters under discussion with any
federal, state, local or other authority with respect to any additional Taxes or
assessments relating to Buyer or Buyer's Parent. Seller will not be liable for
any of Buyer or Buyer's Parent's taxes as a result of the consummation of the
transactions contemplated by this Agreement.
Except as disclosed on Schedule 3.2.22, none of the properties of Buyer
or Buyer's Parent is subject to a lease or other arrangement pursuant to which
Buyer or Buyer's Parent is not entitled to depreciation allowances under the
Code.
3.2.23. Condition of Assets. Except as disclosed on Schedule 3.2.23,
all of the assets of Buyer or Buyer's Parent, whether real or personal, owned or
leased, have been well maintained and are in normal operating condition (with
the exception of normal wear and tear), free, to the knowledge of Buyer, from
defects other than such minor defects as do not interfere with the continued use
therefor in the conduct of normal operations.
3.2.24. Inventory. Except as shown on Schedule 3.2.24, each item of the
inventory of Buyer or Buyer's Parent, respectively, is merchantable and usable
in the ordinary operations of its business, none of such items is obsolete and
nonsalable, none of such items subsequent to December 31, 1995, has been stolen
or otherwise unlawfully or improperly removed or diverted, and none of such
items has been pledged or otherwise given as collateral or is held by Buyer or
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Buyer's Parent on assignment or consignment. Such inventory is fairly reflected
in the inventory accounts on the audited balance sheet included in the Financial
Statements and are valued at the lower of cost or market.
3.2.25. Insurance Policies. Buyer and Buyer's Parent currently has paid
up insurance, including, but not limited to, employee health and accident
insurance, and environmental, property, general liability, product liability and
worker's compensation insurance, as described on Schedule 3.2.25. Schedule
3.2.25 contains a list of each insurance policy currently providing coverage for
the assets of Buyer and Buyer's Parent or its business relating to the Business
and a copy of each such policy has been delivered to Seller. To the best of
Buyer's knowledge, no written notice of termination of any such policy has been
received by Buyer or Buyer's Parent or its Affiliates.
3.2.26 Accounts Receivable. All accounts receivable of Buyer and
Buyer's Parent have arisen out of bona fide transactions in the ordinary course
of business, and each such account receivable constitutes a valid and binding
obligation of the obligor, maker, comaker, guarantor, endorser or debtor thereof
or thereunder except as set forth on Schedule 3.2.26 hereto is collectible in
full within 60 days in at least the amount at which they are carried on the
books of Buyer and Buyer's Parent.
3.2.27. Capital Improvements. Schedule 3.2.27 describes all of the
capital improvement or purchases or other capital expenditures (as determined in
accordance with GAAP) relating to its business which Buyer or Buyer's Parent
respectively has committed to or contracted for which have not been completed
prior to the date hereof and the cost and expense reasonably estimated to
complete such work and purchases. Buyer hereby covenants and promises that
neither the Buyer nor Buyer's Parent will, without obtaining the prior written
consent of Seller in each and every case, contract for or commit to any such
work or purchases before the Closing.
3.2.28. Assets Sufficient for Conduct of Business. Together with the
Manufacturing Contract and the Exclusive License, the assets of the business of
Buyer and Buyer's Parent, respectively, constitute all of the assets and
properties required for the operation of such business as it is presently
operated by Buyer and Buyer's Parent respectively in all material respects.
3.2.29. Accuracy of Statements. Neither this Agreement nor any
statement, list, certificate or other information furnished or to be furnished
by or on behalf of Buyer and Buyer's Parent to Seller in connection with this
Agreement or any of the transactions contemplated hereby contains or will
contain any untrue statement of a material fact regarding Buyer or Buyer's
Parent, their respective assets or the business or operation of such business or
omits or will omit to state a material fact necessary to make the statements
regarding Buyer or Buyer's Parent, such assets or the business or operation of
such business contained herein or therein, in light of the circumstances in
which they are made, not misleading.
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3.2.30. No Other Agreement. Other than for sales of assets in the
ordinary course of business, neither Buyer nor Buyer's Parent nor any of the
Affiliates of either has any contract, agreement, arrangement or understanding
with respect to the sale or other disposition of any assets or capital stock of
Buyer or Buyer's Parent except as set forth in this Agreement.
3.2.31. Shares. As of Closing, the Shares will have been duly
authorized and when issued will be validly issued and fully paid and
nonassessable.
ARTICLE IV
CERTAIN COVENANTS
4.1. Access and Information; Confidentiality. From the date hereof
until the Closing Date, Seller will give to Buyer and its representatives (upon
reasonable advance notice and during normal business hours) reasonable access to
its properties, books, records, contracts and commitments and will furnish all
such information and documents relating to its properties and business as Buyer
may reasonably request, and Buyer will furnish to Seller and its representatives
all such information and documents relating to Buyer or Buyer's Parent as Seller
may reasonably request. Each of the parties will treat, and will cause its
representatives to treat, all information that is received under this Section
4.1, if not in the public domain, or if its disclosure is not required by law,
as confidential.
4.2.1. Conduct of Business of Seller. Except as otherwise contemplated
by the terms of this Agreement, from the date hereof until the Closing, Seller
will: (a) conduct its business only in the ordinary course and in substantially
the same manner disclosed on Schedule 4.2.1.; (b) maintain and keep its
properties and equipment in good repair, working order and condition, except for
ordinary wear and tear; (c) keep in full force and effect, to the extent
commercially reasonable, insurance comparable in amount and scope of coverage to
that now maintained; (d) perform in all material respects all of its obligations
under all material Contracts; (e) use reasonable efforts consistent with its
normal business practices to maintain and preserve its business organization,
retain its present employees and maintain its relationships with suppliers and
customers, and Buyer agrees not to cause Seller to terminate any of its
employees prior to the Closing Date, except for any terminations that are
consistent with its normal business practices; (f) maintain its books of account
and records in the usual and regular manner; (g) comply in all material respects
with all laws and regulations applicable to it and to the conduct of its
business; (h) not make any distribution, dividend or advance to any Affiliate,
or repurchase or redeem any shares of its capital stock, or make any capital
contribution to or purchase the securities of a subsidiary, or otherwise
voluntarily change its capital structure, without the prior written consent of
Buyer, (i) use reasonable efforts to maintain and protect Seller's material
Proprietary Rights; and (j) not make any change in any Benefit Plan except as
contemplated herein or as previously disclosed in writing to Buyer, or, except
in a manner consistent with past practice, make any change in any compensation
to officers, directors or employees, or, without the prior written consent of
Buyer, adopt any new Benefit Plan.
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4.2.2. Conduct of Business of Buyer. Except as otherwise contemplated
by the terms of this Agreement, from the date hereof until the Closing, Buyer
and Buyer's Parent will: (a) conduct its business only in the ordinary course
and in substantially the same manner as heretofore; (b) maintain and keep its
properties and equipment in good repair, working order and condition, except for
ordinary wear and tear; (c) keep in full force and effect, to the extent
commercially reasonable, insurance comparable in amount and scope of coverage to
that now maintained; (d) perform in all material respects all of its obligations
under all material contracts; (e) use reasonable efforts consistent with its
normal business practices to maintain and preserve its business organization,
retain its present employees and maintain its relationships with suppliers and
customers; (f) maintain its books of account and records in the usual and
regular manner; (g) comply in all material respects with all laws and
regulations applicable to it and to the conduct of its business; (h) change its
capital structure only as deemed necessary or desirable by it in connection with
this transaction; (i) use reasonable efforts to maintain and protect the
material proprietary rights of Buyer and Buyer's Parent; and (j) not make any
change in any Benefit Plan except as contemplated herein or as previously
disclosed in writing to Seller, or, except in a manner consistent with past
practice, make any change in any compensation to officers, directors or
employees, or, without the prior written consent of Seller, adopt any new
Benefit Plan.
4.3. Regulatory Filings. Within ten business days after the date
hereof, Seller and Buyer will make or cause to be made such filings as may be
required by the HSR Act with respect to the consummation of the transactions
contemplated by this Agreement. Thereafter, Seller and Buyer will file or cause
to be filed as promptly as practicable with the United States Federal Trade
Commission ("FTC") and the United States Department of Justice ("DOJ") any
supplemental information which may be required pursuant to the HSR Act. Without
limiting the generality or effect of the foregoing, each of the parties hereto
will use reasonable efforts to comply as expeditiously as possible with all
lawful requests of governmental authorities for additional information and
documents pursuant to the HSR Act. Notwithstanding the foregoing, Buyer shall
not be obligated to contest any action or decision taken by the FTC or the DOJ
or any other governmental or administrative agency, authority or court
challenging the consummation of the transactions contemplated hereby and nothing
contained in this Agreement shall require Buyer to agree to hold separate or to
divest any of the Assets or any of the assets, properties or business of Buyer
or any of Buyer's Affiliates or otherwise agree to the imposition of any
material restriction on the business or the operations of Buyer or any of
Buyer's Affiliates.
4.4 Noncompetition Agreement; Nondisclosure.
4.4.1 Noncompetition Agreement. Seller shall enter into a
Noncompetition Agreement in favor of Buyer (the "Noncompetition Agreement"),
substantially in the form of Schedule 4.4.1 hereto, pursuant to which Seller
agrees that during a period of four (4) years from the Closing Date it will not,
without Buyer's prior written consent, directly or indirectly own, have an
interest in (other than as a less than 5% equity owner of any Person traded on
any national, international or regional stock exchange or in the
over-the-counter market), operate,
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join, control, or participate in, or be connected with as an officer, employee,
partner, consultant or otherwise with, any business similar to the Business
presently conducted by Seller, and it will not in any such manner directly or
indirectly compete with, or become interested in any competitor of the Business
anywhere within the Continental United States.
4.4.2 Confidential Information; Seller's Obligations. Seller
acknowledges that included in the Purchased Assets are certain Proprietary
Rights that Seller has used exclusively in the Business and that have commercial
value in the Business and accordingly have been treated by Seller as
confidential. All such information (collectively, the "Confidential
Information") shall be kept confidential by Seller as provided below; provided,
however, that the term "Confidential Information" shall not include any
information which shall have been made public by Seller or its Affiliates prior
to the date hereof or which shall be made public by Buyer or its Affiliates at
any time after the Closing Date. Seller agrees that on and after the Closing
Date, it and its Affiliates will keep in strictest confidence and trust all
Confidential Information and neither Seller nor any of its Affiliates will,
without Buyer's prior written consent, use or disclose any Confidential
Information, except to the extent (i) necessary to comply with any legal
requirements in connection with Seller's ownership or operation of the Purchased
Assets on or prior to the Closing Date, such as the filing of income tax returns
or reports or (ii) Seller or any of its Affiliates becomes legally compelled
(e.g., by oral questions, interrogatories, request for information or documents,
subpoena, civil investigative demand or similar process) to disclose any of the
Confidential Information, in which case, Seller or its Affiliate, as the case
may be, will provide Buyer with prompt written notice so that Buyer may seek a
protective order or other appropriate remedy and/or waive compliance with the
provisions of this Section 4.5. If such protective order or other remedy is not
obtained or Buyer waives compliance with the provisions of this Section 4.5,
Seller or its Affiliate, as the case may be, will furnish only that portion of
the Confidential Information which is legally required.
4.4.2.2. Confidential Information; Buyer's Obligations. Buyer
acknowledges that included in the Purchased Assets are certain Proprietary
Rights that Seller has used exclusively in the Business and that have commercial
value in the Business and accordingly have been treated by Seller as
confidential. All such information (collectively, the "Confidential
Information") shall be kept confidential by Buyer as provided below; provided,
however, that the term "Confidential Information" shall not include any
information which shall have been made public by Seller or its Affiliates prior
to the date hereof. Buyer agrees that until the Closing Date, (and thereafter,
if the Closing does not occur) it and its Affiliates will keep in strictest
confidence and trust all Confidential Information and neither Buyer nor any of
its Affiliates will, without Seller's prior written consent, use or disclose any
Confidential Information, except to the extent (i) necessary to comply with any
legal requirements (ii) Buyer or any of its Affiliates becomes legally compelled
(e.g., by oral questions, interrogatories, request for information or documents,
subpoena, civil investigative demand or similar process) to disclose any of the
Confidential Information, in which case, Buyer or its Affiliate, as the case may
be, will provide Buyer with prompt written notice so that Seller may seek a
protective order or other appropriate remedy and/or waive compliance with the
provisions of this Section 4.4.2.2. If such protective order or
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other remedy is not obtained or Seller waives compliance with the provisions of
this Section 4.4.2.2., Buyer or its Affiliate, as the case may be, will furnish
only that portion of the Confidential Information which is legally required. The
preceding restrictions on Buyer shall have no effect after the Closing.
4.5. Assignment of Contracts and Governmental Authorizations. Seller
shall assign to Buyer all of its right, title and interest in and to the
Contracts and Governmental Authorizations, by instrument substantially in the
form of Schedule 4.5 attached hereto. Notwithstanding the foregoing, no Contract
or any of the Governmental Authorizations shall be deemed to be assigned to
Buyer to the extent that such assignment is prohibited by law or by a valid and
enforceable prohibition to such an assignment contained in such Contract or any
of the Governmental Authorizations until the necessary waiver or consent
(whether express or by acquiescence) to such assignment has been obtained or
such provision has been rendered ineffective or unenforceable by law, action of
the parties or otherwise, whether before or after the Closing Date. In any
event, however, Seller shall at the request and the expense and under the
direction of Buyer, in the name of Seller or otherwise, take such action as
shall in the reasonable opinion of Buyer be necessary or proper (a) in order
that the rights and obligations of Seller under such Contracts or Governmental
Authorizations are preserved for the benefit of Buyer and (b) to facilitate the
collection of monies due and payable and to become due and payable to Seller in
respect of such Contracts or Governmental Authorizations, and Seller shall hold
all such monies in trust for the benefit of and shall promptly pay such amounts
to Buyer, less all charges properly allocable thereto incurred by Seller but
which would have been incurred by Buyer if consent to assignment of such
Contracts or Governmental Authorizations had been obtained on or prior to the
Closing Date. For purposes of Section 2.2.4, above, the parties assume that all
necessary consents and waivers can be obtained by Closing.
4.6. Change of Corporate Name. On the Closing Date or as soon as
practicable thereafter, Seller shall change its corporate name to a new name
which does not include the term "Cincinnati Microwave" or the acronym or
abbreviation ("CNMW") or any variations, translations or combinations thereof or
similar names and otherwise is not likely to be confused with its present name
so as to make Seller's present name available to Buyer. From and after the
Closing, Seller shall not use the term "Cincinnati Microwave" or the acronym or
abbreviation ("CNMW") or any variations, translations or combinations thereof or
similar names in connection with any business.
4.7. Intellectual Property Assignments and Acknowledgment.
4.7.1 Assignments. Seller shall execute any and all assignment
documents necessary to properly assign to Buyer all of its right, title and
interest in and to the Proprietary Rights, including, without limitation, (a) a
trademark assignment (the "Trademark Assignment"), substantially in the form of
Schedule 4.7.1(a) attached hereto, for all of the trademarks, trade names,
service marks, trade dress, logos, trade names and corporate names along with
the goodwill associated therewith (and all registrations, renewals and
applications therefor, if any),
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owned and used by Seller in connection with its operation of its business and
the Purchased Assets, including, without limitation, those trademarks described
in Schedule 4.7.1(a) attached hereto, (b) a patent assignment (the "Patent
Assignment") substantially in the form of Schedule 4.7.1(b) hereto, for all of
the patents, patent disclosures and inventions (and all applications therefor,
if any) owned or used by Seller in connection with its operation of its business
and the Purchased Assets, and (c) a copyright assignment (the "Copyright
Assignment"), substantially in the form of Schedule 4.7.1(c) hereto, for the
copyrights (and all registrations and applications therefor, if any) owned or
used by Seller in connection with its operation of its business or included the
Purchased Assets.
4.7.2 Non-Use by Seller. Seller acknowledges that upon the
transfer of the Purchased Assets, Seller and its Affiliates will have
relinquished all right, title and interest in and to the Proprietary Rights,
inclusive of any and all trademarks, patents or copyrights, whether or not
registered in the name of Seller as of the Closing Date, including, without
limitation, those set forth in Schedule 4.7.2 hereto. Seller further
acknowledges that from and after the Closing Date it shall not, and it shall
cause its Affiliates not to, use any of the Proprietary Rights.
4.8. Limited Power of Attorney.
4.8.1 Appointment. Seller, as of the Closing Date, hereby
irrevocably constitutes and appoints Buyer and each officer and director thereof
as its true and lawful attorney, in its name, place and stead, (i) to endorse
and cash and/or deposit in an account of Buyer any and all checks of third
parties and (ii) to make any necessary filings with the United States Patent and
Trademark Office, the United States Copyright Office or any other similar
domestic or foreign agency or office in connection with the transfer or
assignment of any trademarks, patents or copyrights. Notwithstanding anything
contained herein to the contrary, the within and foregoing power of attorney is
effective and conditioned upon the consummation of the purchase of the Purchased
Assets by Buyer and the consummation of the other transactions contemplated by
this Agreement.
4.8.2 Authorization. With the power of attorney hereinabove
granted by Seller to Buyer (and/or any officer or director thereof) Seller
authorizes said attorney to take any further action which said attorney shall
consider necessary or convenient in connection with any of the foregoing, hereby
giving said attorney full power and authority to do and perform each and every
act and thing whatsoever requisite and necessary to be done in and about the
foregoing as fully as said Seller might or could do if personally present, and
hereby ratifying and confirming all that said attorney shall lawfully do or
cause to be done by virtue hereof.
4.8.3 Irrevocability. The foregoing power of attorney is a
special power of attorney coupled with an interest and is irrevocable.
4.9. Maintenance of Insurance Policies; Seller's Obligation. Seller
agrees that from and after the date hereof and until Closing it shall maintain
in full force and effect the "occurrence"
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insurance policies set forth in Schedule 4.9.1 hereof to the extent necessary to
ensure that Buyer receives the benefit of any insurance proceeds recoverable
under such policies in connection with any occurrence that takes place prior to
the Closing Date. At Buyer's option, such policies shall if assignable, be
assigned to Buyer at Closing, so that Buyer may, if it desires, continue such
coverage for its own benefit if Buyer desires. Buyer shall have no obligation to
Seller with respect to such coverage.
4.9.1. Maintenance of Insurance Policies; Buyer's Obligation.
Buyer agrees that from and after the date hereof and until Closing it shall
maintain in full force and effect the insurance policies set forth in Schedule
4.9.2 hereof. Buyer shall have no further obligation under this Section after
Closing.
4.10. Certain Receipts and Certificates. In connection with the
transfer of the Purchased Assets to Buyer, Seller shall provide Buyer with
either (i) receipts issued by the state revenue authorities in states where any
of the Purchased Assets are located indicating that all sales and use taxes
(and, to the extent that Buyer may have any liability or obligation with respect
to Seller's state income taxes, all state income taxes) relating to such
transfer for which Seller is liable (including interest and penalties) have been
paid, or (ii) certificates issued by the appropriate state revenue authorities
certifying that no such taxes (or interest or penalties) relating to such
transfer are due.
4.11 Sale/Lease of Facilities. Pending Closing, Seller may, subject to
the requirement of the Plan of Reorganization, dispose of its Real Property, for
a fair consideration, provided that Seller takes any such action only after
consultation with Buyer. The proceeds of any such sale shall be applied to the
reduction of Seller's indebtedness to Foothill Capital Corporation ("Foothill")
unless used by Buyer as additional working capital with the consent of both
Foothill and Buyer. Seller may also, pending Closing, lease a facility suitable
for the Business as Buyer contemplates operating it after the Closing; provided
that no such lease shall constitute a Real Property Lease that is to be assigned
to Buyer pursuant hereto unless Seller obtains Buyer's consent to such lease
prior to the execution thereof.
4.12.1. Employees of Seller. Buyer will have the right, but not the
obligation, to offer employment to such employees of Seller as Buyer may elect,
on terms and conditions determined by Buyer in its discretion.
4.12.2. Pre-Closing Employment Obligations. All obligations of Seller
under or in connection with the employment of its employees arising in respect
of any period prior to the Closing Date shall be performed and discharged by
Seller.
4.13. Personnel Records. Unless prohibited by law, Seller shall make
available to Buyer all personnel records, including, but not limited to, names,
Social Security numbers, dates of hire by Seller or any subsidiary of Seller,
dates of birth, number of hours worked each calendar year, and salary histories,
for all Seller's employees.
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4.14. WARN Act. It is the intent of the parties that Seller will be
responsible for, and that Buyer will not be responsible for, any amounts
required by law or policies of general application, including, but not limited
to, the Worker Adjustment and Retraining Notification Act ("WARN") and any
similar state laws that are applicable to Seller, to be paid as a result of
termination or layoff of any employees of Seller ("Seller Employees"). Seller
agrees to promptly give the notices, and diligently follow the procedures,
prescribed by WARN and any similar state laws.
4.15. Exclusive License. Buyer agrees that Buyer's Parent, in
consultation with Seller, will proceed promptly to initiate negotiations with a
view towards obtaining, as soon as practicable, an exclusive license (the
"Exclusive License") from BEL-Canada of its proprietary rights with respect to
radar detector technology, which will adequately serve the purpose of allowing
Buyer's Parent, or Buyer as a sub-licensee, to make, use and sell in the United
States (and in such larger area, if any, as may be negotiated) radar detectors
employing such technology.
4.16. Manufacturing Contract. Buyer agrees that Buyer's Parent, in
consultation with Seller, will proceed promptly to initiate negotiations with a
view towards obtaining, as soon as practicable, an exclusive manufacturing
agreement (the "Manufacturing Contract") with BEL-Canada which will adequately
serve the purpose of supplying Buyer's Parent, or Buyer as its assignee or
distributor, with its requirements in the United States (and in such larger
area, if any, as may be negotiated) for radar detectors.
4.17. No Shop.
4.17.1. Acquisition Proposal. Seller will not, directly or
indirectly, through any officer, director, employee, representative or agent of
such party or any of its subsidiaries, (i) solicit, initiate, or encourage any
inquiries or proposals that constitute, or could reasonably be expected to lead
to, a proposal or offer for a merger, consolidation, business combination, sale
of substantial assets, sale of shares of capital stock (including without
limitation by way of a tender offer) or similar transactions involving such
party or any of its subsidiaries, other than the transactions contemplated by
this Agreement (any of the foregoing inquiries or proposals being referred to in
this Agreement as an "Acquisition Proposal"), (ii) engage in negotiations or
discussions concerning, or provide any non-public information to any person or
entity relating to, any Acquisition Proposal, or (iii) agree to, approve or
recommend any Acquisition Proposal; provided, however, that nothing contained in
this Agreement will prevent Seller or its Board of Directors from furnishing
nonpublic information to, or entering into discussions or negotiations with, any
person or entity in connection with an unsolicited bona fide written Acquisition
Proposal by such person or entity or recommending an unsolicited bona fide
written Acquisition Proposal to the stockholders of such party, if and only to
the extent that (1) the Board of Directors of such party believes in good faith
(after consultation with its financial advisor) that such Acquisition Proposal
would, if consummated, result in a transaction more favorable to such party's
stockholders from a financial point of view than the transaction contemplated by
this Agreement (any such more favorable Acquisition Proposal being referred to
in this Agreement as
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a "Superior Proposal") and the Board of Directors of such party determines in
good faith after consultation with outside legal counsel that such action is
necessary for such party to comply with its fiduciary duties to stockholders
under applicable law and (2) prior to furnishing such non-public information to,
or entering into discussions or negotiations with, such person or entity, such
Board of Directors receives from such person or entity an executed
confidentiality agreement with terms no less favorable to such party than those
contained in this Agreement.
4.17.2 Notice. Seller will notify the other party immediately (and no
later than 24 hours) after receipt by Seller (or its advisors) of any
Acquisition Proposal or any request for nonpublic information in connection with
an Acquisition Proposal or for access to the properties, books or records of
such party by any person or entity that informs such party that it is
considering making, or has made, an Acquisition Proposal. Such notice to the
other party will be made orally and in writing and will indicate in reasonable
detail the identity of the offeror and the terms and conditions of such
proposal, inquiry or contact.
4.17.3. Termination Fee.
4.17.3.1. Alternative Transaction. As used in this Agreement,
"Alternative Transaction" means either (i) a transaction pursuant to which any
person (or group of persons) other than Buyer or its respective affiliates (a
"Third Party"), acquires more than 10% of the outstanding shares of Seller's
common stock pursuant to a tender offer or exchange offer or otherwise, (ii) a
merger or other business combination involving Seller pursuant to which any
Third Party acquires more than 10% of the outstanding equity securities of
Seller or the entity surviving such merger or business combination, (iii) any
other transaction pursuant to which any Third Party acquires control of assets
(including for this purpose the entity surviving any merger or business
combination including Seller) of Seller having a fair market value (as
determined by the Board of Directors of Buyer in good faith) equal to more than
10% of the fair market value of all the assets of Seller, immediately prior to
such transaction, or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing. "Alternative Transaction" does not, however, refer to any such
transaction, unless Seller's Board of Directors has either approved or
recommended the transaction or refrained from taking any position on the
transaction.
4.17.3.2. Seller's Liability. Seller will pay Buyer a
termination fee of $500,000, plus Buyer's out-of-pocket costs (including without
limitation, reasonable professional fees incurred in connection with this
transaction) upon the termination of this Agreement by Buyer pursuant to Section
8.1(b) as a result of the failure to receive the requisite vote for approval of
this Agreement and this transaction by the stockholders of Seller at Seller's
Stockholders' Meeting if, at the time of such failure, there will have been
announced an Alternative Transaction which will not have been absolutely and
unconditionally withdrawn and abandoned.
4.18. Proxy Statement/Prospectus; Registration Statement.
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4.18.1. As promptly as practical after the execution of this
Agreement, the Buyer and Seller will cooperate as necessary and appropriate to
prepare and file with the SEC a registration statement on Form S-4
("Registration Statement") including a combined Proxy Statement/Prospectus
("Proxy Statement/Prospectus" or "Proxy Statement") thereunder for the purpose
of registering with the SEC under the Securities Act of 1933 the offer and
issuance of the Shares by Buyer and providing a Proxy Statement/Prospectus for
soliciting the votes of Seller's shareholders for the approval of the sale of
Seller's assets hereunder (in exchange for the Shares) in compliance with the
SEC's proxy regulations under the Exchange Act. Buyer and Seller will use all
reasonable efforts to cause the Registration Statement to become effective as
soon after such filing as practical. The Proxy Statement will include the
recommendation of the Board of Directors of Seller in favor of this Agreement
and this transaction; provided that the Board of Directors of such party may
withdraw such recommendation if such Board of Directors believes in good faith
that a Superior Proposal has been made and will have determined in good faith,
after consultation with its outside legal counsel, that the withdrawal of such
recommendation is necessary for such Board of Directors to comply with its
fiduciary duties under applicable law.
4.18.2. Buyer and Seller will make all necessary filings with
respect to this transaction under the Securities Act and the Exchange Act and
the rules and regulations thereunder.
4.18.3. Buyer represents that Buyer's Parent intends to use
reasonable efforts such that the Shares to be issued in this transaction will
after the Closing be approved for quotation on the Nasdaq National Market.
4.19. Stockholders Meetings.
4.19.1. Seller and Buyer each will call a meeting of its
respective stockholders (each, a "Stockholder Meeting") to be held as promptly
as practicable, for the purpose of voting upon this Agreement and related
matters. Subject to Sections 4.17 and 4.18, Seller and Buyer will through its
Board of Directors recommend to its respective stockholders approval of such
matters and will coordinate and cooperate with respect to the timing of such
meetings and will use its best efforts to hold such meetings as soon as
practicable after the date hereof. Subject to Section 4.18, each party will use
all reasonable efforts to solicit from stockholders of such party proxies (or,
in the case of Buyer, consents) in favor of such matters.
4.20. Legal Conditions to Transaction. Subject to Section 4.17. each of
Buyer and Seller will take all reasonable actions necessary to comply promptly
with all legal requirements which may be imposed on itself with respect to this
transaction (which actions will include, without limitation, furnishing all
information required under the HSR Act and in connection with approvals of or
filings with any other Governmental Authority) and will promptly cooperate with
and furnish information to each other in connection with any such requirements
imposed upon any of them in connection with this transaction. Each of Buyer and
Seller will take all reasonable
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actions necessary to obtain (and will cooperate with each other in obtaining)
any consent, authorization, order or approval of, or any exemption by, any
Governmental Authority or other public third party, required to be obtained or
made by Buyer or Seller in connection with this transaction or the taking of any
action contemplated thereby or by this Agreement.
4.21. Non-Competition Agreements. At Buyer's request, Seller shall use
reasonable efforts through the Closing Date to obtain non-competition agreements
similar to that set forth on Schedule 4.21 from such officers, directors and
employees of Seller as Buyer may have designated at least ten (10) days prior to
the Closing, provided, that a restriction as to other types of modems than those
now being sold or under development by Seller shall not be required of any of
Seller's executive officers.
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ARTICLE V
ADDITIONAL REPRESENTATIONS AND WARRANTIES
AND ADDITIONAL COVENANTS AND AGREEMENTS
RELATING TO THE REAL PROPERTY
5.1. Title Insurance.
5.1.1 Title Commitment. Unless the Real Property is disposed
of prior to Closing pursuant to Section 4.11, above, Buyer shall, at its
expense, order promptly and obtain a written commitment (the "Title Commitment")
for owner's title insurance on Standard ALTA Extended Coverage Policy and at
Buyer's option a survey issued by a licensed surveyor or an update of the most
recent existing survey (the "Survey"). Seller shall give and Buyer shall accept
such title as the title insurer will be willing to approve and insure at
standard rates subject to Section 5.1.2 below. The Title Commitment and policy
shall be issued by Chicago Title Insurance Company. The policy issued in
connection with the Title Commitment shall insure that Buyer will be vested with
good, insurable at standard rates, fee simple title to the Real Property,
subject only to Section 5.1.2 below. Such fee simple title to the Real Property
shall be transferred by Seller to Buyer pursuant to a warranty deed (the
"Deed"), which Deed shall be substantially in the form of Schedule 5.2 attached
hereto.
5.1.2 Exceptions. Buyer shall not have the right to object to,
and agrees to, take title subject to covenants, easements, restrictions,
reservations and agreements of record that do not and will not adversely affect
the operation of the business presently conducted by Seller with respect to the
Purchased Assets on the Real Property.
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ARTICLE VI
CONDITIONS PRECEDENT
6.1. Conditions to Obligation of Buyer. The obligation of Buyer under
this Agreement to acquire the Purchased Assets is subject to the fulfillment, at
or prior to the Closing, of each of the following conditions, each of which may
be waived in whole or in part by Buyer in its sole discretion, provided the
failure of any condition to be satisfied is not the result of Buyer's breach or
default hereunder:
6.1.1. Representations; Performance. The representations and warranties
of Seller contained herein shall be true in all material respects on and as of
the date hereof and shall be true in all material respects on and as of the
Closing Date with the same effect as though made on and as of the Closing Date,
except as modified by transactions permitted by this Agreement. Seller shall
have duly performed and complied in all material respects with all agreements
and conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing. Seller shall have delivered to Buyer a certificate,
dated the Closing Date, to the effect set forth above in this Section 6.1.1.
6.1.2. Opinion of Counsel. Buyer shall have received a favorable
opinion, addressed to Buyer and dated the Closing Date, of Messrs. Frost &
Xxxxxx, counsel to Seller, substantially in the form of Schedule 6.1.2 hereto.
6.1.3. Certain Approvals. All Consents required to be obtained by
Seller to consummate the transactions contemplated herein shall have been
obtained, other than any Consents where the failure to obtain such Consents,
either in any case or in the aggregate, would not have a Material Adverse
Effect. Without limitation, the waiting period applicable to the consummation of
this transaction under the HSR Act will have expired or been terminated if a
filing is made under the HSR Act.
6.1.4. No Proceeding or Litigation. No claim, action, suit,
arbitration, investigation or other formal proceeding shall be pending or
threatened on or before the Closing which (i) seeks to (A) enjoin, restrain or
prohibit the transactions contemplated herein, (B) impose limitations on the
ability of Buyer to exercise full rights of ownership of the Assets or (C)
require the divesture by Buyer or its Affiliates or any of the Assets or any
other assets of Buyer or its Affiliates by reason of this Agreement, or (ii)
could have a material adverse effect on the Assets or the use thereof or the
transactions contemplated herein.
6.1.5. No Material Adverse Change. Except as disclosed in writing prior
to the date of this Agreement by Seller to Buyer or on Schedule 4.2.1, there
shall have been no material adverse change in the business or financial
condition of Seller, the Purchased Assets or the Assumed Liabilities. Without
limitation, the commencement by Seller of a voluntary case, or the commencement
of an involuntary case against Seller that remains undismissed for a period of
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days or until May 31, 1997 (whichever date occurs first) , under the Bankruptcy
Code shall be conclusively deemed to be such a material adverse change.
6.1.6. Purchased Assets and Documents Delivered. Buyer shall have
received at the Closing the following documents required to be delivered to
Buyer by the Seller at the Closing as provided herein:
6.1.6.1 the Xxxx of Sale;
6.1.6.2 the Noncompetition Agreements;
6.1.6.3 the Contract Assignment;
6.1.6.4 the Trademark Assignment;
6.1.6.5 the Patent Assignment;
6.1.6.6 the Copyright Assignment;
6.1.6.7 the Deed; and
6.1.6.8 all other documents and items required to be
delivered by Seller validly to transfer title to the Purchased Assets to Buyer
and to otherwise consummate the transactions contemplated hereby, including
without limitation, an assignment of Seller's bank accounts to Buyer, provided
that Buyer shall be obligated to promptly change the taxpayer identification
number on such accounts from that of Seller to that of Buyer, such change to be
effective as of the Closing of the transactions contemplated hereby.
6.1.7. Title Insurance. Buyer shall have received (unless the
Real Property has been disposed of prior to Closing pursuant to Section 4.11,
above) with respect to the Real Property a Title Commitment for owner's title
insurance in form and substance reasonably satisfactory to Buyer and its
lenders, with only such encumbrances or limitations on title to the Real
Property as are set forth in Section 6.2 hereof. Notwithstanding anything
contained herein to the contrary, this condition shall be deemed to have been
satisfied if Buyer shall have received a Title Commitment for owner's title
insurance which meets the requirements of Section 6.2 hereof.
6.1.8. Environmental Audit. Buyer shall have received a report
of an environmental consulting firm with respect to the Real Property,
reflecting such levels of investigation and examination as Buyer may desire, and
the contents of such report shall be reasonably satisfactory to Buyer and the
Financial Partner. Buyer agrees to proceed promptly with obtaining such report.
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6.1.9 "C" Reorganization. Buyer, Buyer's Parent, Seller, and
any other necessary parties shall have entered into a Plan of Reorganization for
a triangular "C" reorganization that is consistent with this Agreement, that
contemplates tax-free treatment to the parties to the reorganization, and whose
terms and conditions are otherwise satisfactory to Buyer in its complete
discretion (the "Plan of Reorganization").
6.1.10 Fairness Opinion. The financial advisor of Seller,
Xxxxx & Co., Inc. has delivered to the Board of Directors of Seller, with a copy
to Buyer, an opinion dated at or prior to the date of Seller's Proxy Statement
to the effect that this transaction is fair from a financial point of view to
the stockholders of Seller.
6.1.11 Tax Opinion. Buyer will have received a written opinion
from Messrs. Frost and Xxxxxx to the effect that this transaction will be
treated for Federal income tax purposes as a tax-free reorganization within the
meaning of Section 368(a) of the Code.
6.1.12 Securities Laws. Buyer and Buyer's Parent will have
received all state securities or "Blue Sky" permits and other federal and state
authorizations necessary for the issuance of shares of common stock of Buyer's
Parent pursuant to this transaction. Without limitation, a registration
statement filed by Buyer's Parent with respect to the Shares (the "Registration
Statement") on Form S-4 or other appropriate form will have become effective
under the Securities Act and will not be the subject of any stop order or
proceedings seeking a stop order.
6.1.13 Stockholder Approval. This Agreement and the
transaction contemplated hereby will have been approved and adopted by the
affirmative vote of the holders of at least two-thirds of the outstanding shares
of Seller's common stock and by the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Buyer's common stock.
6.1.14. Financial Partner. The Financial Partner shall have
indicated in writing, by January 10, 1997, that it will make extensions of
credit, or debt or equity investments, or some combination thereof, to or in
Buyer's Parent, amounting to at least $20 million in the aggregate; such
commitment is funded by the Closing Date; and in consequence of such
transactions, however, the ratio of the common stock in Buyer's Parent that the
Financial Partner owns when compared to the total number of shares of common
stock in Buyer's Parent owned by the Financial Partner and all other owners of
shares of common stock in Buyer's Parent, is not greater than an equivalent
ratio of 20/100. For such purposes (1) shares of common stock in Buyer's Parent
that the Financial Partner or another Person could acquire by the conversion of
a security or exercise of an option or another purchase right such as a warrant,
shall be considered to be issued and outstanding and owned by the Financial
Partner, and (2) BEL-Canada shall be included in the term "Financial Partner"
with respect to any shares of common stock, securities, options or purchase
rights that it may have acquired subsequent to the date of this Agreement in
connection with Buyer's closing with a Financial Partner, e.g., because of
BEL-Canada's providing credit enhancement for a Financial Partner's investment.
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6.1.15. Extraordinary Gain. Buyer's Parent will have booked an
extraordinary gain in the amount of approximately $6 million from the settlement
of litigation.
6.1.16. Exclusive License. The Exclusive License, in form and
substance reasonably satisfactory to Seller and Buyer, shall have been prepared,
executed and delivered by the parties thereto.
6.1.17. Manufacturing Contract. The Manufacturing Contract, in
form and substance reasonably satisfactory to Seller and Buyer, shall have been
prepared, executed and delivered by the parties thereto.
6.1.18. Termination of Securities Litigation. The Securities
Litigation shall have been finally terminated, appropriate releases obtained,
and all other necessary or desirable steps taken in connection therewith, as
determined by Buyer in its sole discretion.
6.1.19. Dissenting Shares. Not more than 10% of Seller's
issued and outstanding shares constitute Dissenting Shares.
6.1.20. Working Capital. Seller shall have received access to
new working capital from Foothill evidenced by an increase in the permitted
indebtedness of Seller to Foothill under Seller's existing revolving debt to
Foothill, by Foothill's permitting Seller to use the proceeds of a sale of the
Real Property as working capital, or some combination, provided that such
arrangements do not allow the total permitted indebtedness of Seller to Foothill
(term debt, revolving debt, and other) to exceed an amount determined in
accordance with Schedule 6.1.20 hereto.
6.1.21. Re-Evaluation Notice. There is no unresolved
disagreement with respect to a Re-Evaluation Notice.
6.2. Conditions to Obligation of Seller. The obligation of Seller under
this Agreement to sell the Purchased Assets is subject to the fulfillment, at or
prior to the Closing, of each of the following conditions, each of which may be
waived in whole or in part by Seller in its sole discretion:
6.2.1. Representations; Performance. The representations and
warranties of Buyer contained herein hereof shall be true in all material
respects on and as of the date hereof and shall be true in all material respects
on and as of the Closing Date with the same effect as though made on and as of
the Closing Date, except as modified by transactions permitted by this
Agreement. Buyer shall have duly performed and complied in all material respects
with all agreements and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing. Buyer shall have delivered to
Seller a certificate of Buyer, dated the Closing Date, to the effect set forth
above in this Section 6.2.1.
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6.2.2. Opinions of Counsel. Seller shall have received a
favorable opinion, addressed to it and dated the Closing Date, of Messrs.
Chamberlain, Hrdlicka, White, Xxxxxxxx & Xxxxxx, counsel for Buyer,
substantially in the form of Schedule 6.2.2 hereto.
6.2.3. Certain Approvals. All Consents required to be obtained
by Buyer and its shareholders to consummate the transactions contemplated herein
shall have been obtained. Without limitation, the waiting period applicable to
the consummation of this transaction under the HSR Act will have expired or been
terminated if a filing is made under the HSR Act.
6.2.4. No Proceeding or Litigation. No injunction or order of
any court or administrative agency of competent jurisdiction shall be in effect
and no actions by any public or governmental authority seeking any such
injunction or order shall be pending as of the Closing Date that restrains or
prohibits the purchase and sale of the Purchased Assets or any other action to
be taken in connection herewith.
6.2.5. Consideration and Documents Delivered. Buyer shall have
delivered the Shares to the Seller's Shareholders as provided in this Agreement,
and Seller shall have received the following documents required to be delivered
to Seller at the Closing as provided herein:
6.2.4.1 Assumption Agreement;
6.2.4.2 Noncompetition Agreement;
6.2.4.3 and other documents and items required to be delivered
by Buyer validly to effect the assumption of the Assumed Liabilities and to
otherwise consummate the transactions contemplated hereby.
6.2.6 "C" Reorganization. Buyer, Buyer's Parent, Seller, and
any other necessary parties shall have entered into the Plan of Reorganization
for a triangular "C" reorganization that is consistent with this Agreement, that
contemplates tax-free treatment to the parties to the reorganization, and whose
terms and conditions are otherwise satisfactory to Seller in its complete
discretion.
6.2.7 Stockholder Approval. This Agreement and the transaction
contemplated hereby will have been approved and adopted by the affirmative vote
of the holders of at least two-thirds of the outstanding shares of Seller's
common stock and by the affirmative vote of the holders of at least two-thirds
of the outstanding shares of Buyer's common stock.
6.2.8. Financial Partner. The Financial Partner shall have
indicated in writing, by January 10, 1997, that it will make extensions of
credit, or debt or equity investments, or some combination thereof, to or in
Buyer's Parent, amounting to at least $20 million in the aggregate; such
commitment is funded by the Closing Date; and in consequence of such
transactions, however, the ratio of the common stock in Buyer's Parent that the
Financial Partner owns, when
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compared to the total number of shares of common stock in Buyer's Parent owned
by the Financial Partner and all other owners of shares of common stock in
Buyer's Parent, is not greater than an equivalent ratio of 20/100. For such
purposes (1) shares of common stock in Buyer's Parent that the Financial Partner
or another person could acquire by the conversion of a security or exercise of
an option or another purchase right such as a warrant, shall be considered to be
issued and outstanding and owed by the Financial Partner, and (2) BEL-Canada
shall be included in the term "Financial Partner" with respect to any shares of
common stock, securities, options or purchase rights that it may have acquired
subsequent to the date of this Agreement in connection with Buyer's closing with
a Financial Partner, e.g., because of BEL-Canada's providing credit enhancement
for a Financial Partner's investment.
6.2.9. Exclusive License: The Exclusive License, in form and substance
reasonably satisfactory to Seller and Buyer, shall have been prepared, executed
and delivered by the parties thereto.
6.2.10 Manufacturing Contract. The Manufacturing Contract, in form and
substance reasonably satisfactory to Seller and Buyer, shall have been prepared,
executed and delivered by the parties thereto.
6.2.11. Fairness Opinion. The financial advisor of Seller, Xxxxx & Co.,
Inc. has delivered to the Board of Directors of Seller, with a copy to Buyer, an
opinion dated at or prior to the date of Seller's Proxy Statement to the effect
that this transaction is fair from a financial point of view to the stockholders
of Seller.
6.2.12. Tax Opinion. Seller will have received a written opinion from
Messrs. Frost and Xxxxxx to the effect that this transaction will be treated for
Federal income tax purposes as a tax-free reorganization within the meaning of
Section 368(a) of the Code.
6.2.13. Termination of Securities Litigation. The Securities Litigation
shall have been finally terminated, appropriate releases obtained, and all other
necessary or desirable steps taken in connection therewith, as determined by
Seller in its sole discretion.
6.2.14. Dissenting Shares. Not more than 10% of Seller's issued and
outstanding shares constitute Dissenting Shares.
6.2.15. Working Capital. Seller shall have received access to new
working capital from Foothill evidenced by an increase in the permitted
indebtedness of Seller to Foothill under Seller's existing revolving debt to
Foothill, by Foothill's permitting Seller to use the proceeds of a sale of the
Real Property as working capital, or some combination, provided that such
arrangements do not allow the total permitted indebtedness of Seller to Foothill
(term debt, revolving debt, and other) to exceed an amount determined in
accordance with Schedule 6.1.20 hereto.
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6.2.16. Re-Evaluation Notice. There is no unresolved disagreement with
respect to a Re-Evaluation Notice.
6.2.17. Securities Laws. Buyer and Buyer's Parent will have received
all state securities or "Blue Sky" permits and other federal and state
authorizations necessary for the issuance of shares of common stock of Buyer's
Parent pursuant to this transaction. Without limitation, the Registration
Statement will have become effective under the Securities Act and will not be
the subject of any stop order or proceedings seeking a stop order.
6.2.18. Extraordinary Gain. Buyer's Parent will have booked an
extraordinary gain in the amount of approximately $6 million from the settlement
of litigation.
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ARTICLE VII
OBLIGATIONS IF CLOSING OCCURS
7.1. Non-Survival of Representations and Warranties.
None of the representations and warranties in this Agreement, or any
claim that may have arisen thereunder prior to Closing, shall survive Closing if
Closing occurs.
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ARTICLE VIII
MISCELLANEOUS
8.1. Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual written consent of Buyer and Seller; or
(b) by Buyer by written notice to Seller if any of the conditions set
forth in Section 6.1 hereof shall not have been fulfilled on or prior to the
Closing Date, or shall have become incapable of fulfillment, and shall not have
been waived by Buyer; or
(c) by Seller by written notice to Buyer if any of the conditions set
forth in Section 6.2 hereof shall not have been fulfilled on or prior to the
Closing Date, or shall have become incapable of fulfillment, and shall not have
been waived by Seller; or
(d) by Seller or Buyer if the Closing has not occurred on or before May
31, 1997, provided that such terminating party is not in material breach of its
obligations under this Agreement.
If this Agreement is terminated in accordance with the foregoing
provisions, all further obligations of the parties hereunder shall terminate,
except that the obligations contained in the last sentence of Section 4.1 shall
survive.
8.2. Default by Buyer. In the event that (a) this Agreement is
terminated by Seller pursuant to Section 8.1(c) or (d) by reason of the failure
of Buyer, for reasons reasonably within its control, to satisfy one or more of
the conditions set forth in Section 6.2 and (b) all of the conditions set forth
in Section 6.1 have been satisfied, then Buyer shall be liable to Seller for all
loss, damage or expense incurred by Seller as a result of Buyer's default.
8.3. Default by Seller. In the event that (a) this Agreement is
terminated by Buyer pursuant to Section 8.1(b) or (d) by reason of the failure
of Seller to satisfy, for reasons reasonably within its control, one or more of
the conditions set forth in Section 6.1 and (b) all of the conditions set forth
in Section 6.2 have been satisfied, then Seller shall be liable to Buyer for all
loss, damage or expense incurred by Buyer as a result of Seller's default.
8.4. Bulk Sales Law. Buyer hereby waives compliance by Seller with the
provisions of any applicable bulk sales law, registration of bills of sale law,
or other law for the protection of creditors.
8.5. Expenses. Except as otherwise provided herein, Seller shall assume
and bear all expenses, costs and fees incurred or assumed by Seller in the
preparation and execution of this
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Agreement and compliance herewith, and Buyer shall assume and bear all expenses,
costs and fees incurred or assumed by Buyer in the preparation and the execution
of this Agreement and compliance herewith, in each case whether or not the
purchase and sale provided for herein shall be consummated.
8.6. Public Announcements. Except as may otherwise be required by law,
Buyer shall not, directly or indirectly, make or cause to be made any public
announcement or issue any notice in any form with respect to this Agreement or
the transactions contemplated herein without the prior written consent of Seller
and Seller shall not, directly or indirectly, make or cause to be made any
public announcement or issue any notice in any form with respect to this
Agreement or the transactions contemplated herein without the prior written
consent of Buyer, such consent (in either case) not to be unreasonably withheld
or delayed. If Closing does not occur, each party shall refrain from wrongful
disparagement of the other, its business and products.
8.7. Assignment; Successors. This Agreement shall not be assigned by
any party without the prior written consent of the other party, except that
following the Closing, Buyer may assign(including assignment by merger) its
rights hereunder to any person, provided that, except in the case of a merger,
any such assignee agrees in writing to be bound by the terms hereof and no such
assignment shall, without Seller's consent, relieve Buyer of its obligations
hereunder. This Agreement is intended for the exclusive benefit of the parties
hereto and their respective heirs, successors and permitted assigns, and shall
not create any rights in or be enforceable by any other Person, whomsoever, it
being the intention of the parties that no one shall be deemed to be a third
party beneficiary of this Agreement. This Agreement shall inure to the benefit
of, and be binding on and enforceable against, the successors and permitted
assigns of the respective parties.
8.8. Amendment and Modification; Waivers. This Agreement or any term
hereof may be changed, waived, discharged or terminated only by an agreement in
writing signed by the party against which such change, waiver, discharge or
termination is sought to be enforced. No waiver by a party of any condition or
of any breach of any term, covenant, representation or warranty contained herein
shall be effective unless in writing, and no waiver in any one or more instances
shall be deemed to be a further or continuing waiver of any such condition or
breach in any other instances or a waiver of any other condition or breach of
any other term, covenant, representation or warranty.
8.9. Notices. All notices, consents, requests, instructions, approvals
and other communications provided for herein and all legal process in regard
shall be validly given, made or served, if in writing and delivered personally
or sent by telecopier, telex or registered or certified mail, postage prepaid,
(or by fax, if promptly confirmed by registered or certified mail) if to Seller,
at the following address:
Cincinnati Microwave, Inc.
Xxx Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxx 00000
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Attn: President and Chief Executive Officer
Fax: (000) 000-0000
to Buyer, at the following address:
BEL-Tronics U.S.A., Inc.
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxx 00000
Attn: President and Chief Executive Officer
Fax: (000) 000-0000
or, in each case, at such other address as may be specified in writing, but no
such change shall be deemed to have been given until it is actually received by
the parties sought to be charged with its contents. All notices and other
communications given hereunder shall be effective upon delivery if delivered
personally or sent by telecopier or telex and if delivered by mail shall be
effective three business days after deposit in the United States mail.
8.10. Further Assurances; Records. Each of Seller and Buyer shall
cooperate and take such actions, and execute all such further instruments and
documents, at or subsequent to the Closing, as either may reasonably request in
order to convey title to the Purchased Assets to Buyer, effect the assumption by
Buyer of the Assumed Liabilities and to otherwise effectuate the terms and
purposes of this Agreement. Each party shall provide the other party or parties
with access to all relevant documents and other information pertaining to the
Purchased Assets which are needed by such other party or parties for the
purposes of preparing tax returns or responding to an audit by any governmental
agency or for any other reasonable purpose. Such access will be during normal
business hours and not subject to time limitations, except as provided below.
Buyer represents that, for a period extending three (3) years after the Closing
Date, it does not intend to destroy or otherwise dispose of any records with
respect to the Purchased Assets, relating to the period prior to Buyer's
acquisition of the Purchased Assets.
8.11. Sales and Transfer Taxes. Buyer shall be responsible for and pay
all applicable sales, transfer, documentary, use, filing and other taxes and
fees that may become due and payable as a result of the sale, transfer and
delivery of the Purchased Assets, whether levied on Buyer or Seller (other than
Income Taxes imposed by any applicable jurisdiction on Seller).
8.12. Tax and Financial Cooperation. (a) After the Closing, Seller and
Buyer agree to cooperate with each other in connection with any official tax
inquiry, tax audit, tax determination or tax-related proceeding affecting tax
liability of Seller or in connection with a determination of any tax liability
or treatment to make available to each other party within a reasonable amount of
time, at no cost to such party, or its employees and officers, together with
documents, correspondence, reports, books and records of Seller and other
materials bearing on such tax inquiry, audit, examination, proceeding or
determination of tax liability or treatment, provided that each party shall be
reimbursed for any out-of-pocket expenses it incurs in assisting another party
hereunder. Buyer shall, within sixty days (60) of the Closing Date, provide
Seller with
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financial statements which set forth the Purchased Assets and Assumed
Liabilities as of the Closing Date and a profit and loss statement through such
date, which financial statements shall be prepared in a manner consistent with
the financial statements of Seller for past periods, to assist Seller in the
preparation of any required sales tax documentation and its Income Tax returns
for the 1996 fiscal year.
8.13. Entire Agreement; Counterparts; Governing Law. This Agreement,
together with the Schedules, constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, and all of
which, together, shall constitute one and the same instrument. This Agreement
shall be governed in all respects, including validity, interpretation and
effect, by the laws of the State of Georgia (other than the law governing
conflict-of-law questions).
8.14. Schedules. The parties hereto expressly agree that, in the event
that all of the Schedules to this Agreement have not been finalized at the time
that this Agreement is executed, Seller and Buyer shall use its respective best
efforts to negotiate in good faith the terms and conditions of such Schedules,
and, in the case of Schedules serving the purpose of disclosure, within fifteen
(15) business days of the date of this Agreement, but in any event by December
31, 1996. If, notwithstanding the good-faith best efforts of the parties hereto,
an agreement as to the terms and conditions of the Schedules is not reached by
the parties hereto on or before the Closing Date, either party shall have the
right to terminate this Agreement without any liability to any other party
hereto, provided that, nothing contained in this Section 8.14 shall relieve any
party of any liability to any other party for its failure to negotiate in good
faith.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
SELLER:
CINCINNATI MICROWAVE, INC.
By: /s/ X. XXXXXXXX
---------------------------------------
Name: X. Xxxxxxxx
Title: President and CEO
(Signatures continued on next page)
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Buyer:
BEL-TRONICS U.S.A., INC.
By: /s/ XXXX XXXX
--------------------------------------
Name:
Title:
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SCHEDULES
Schedules to Asset Purchase Agreement, dated as of December 3, 1996
(the "Agreement"), among Cincinnati Microwave, Inc., an Ohio corporation (the
"Seller" or the "Company") and BEL-Tronics U.S.A., Inc., a Georgia corporation
(the "Buyer").
These are the Schedules referred to in the Agreement. The section
numbers set forth in the Schedules refer to the corresponding section numbers in
the Agreement. Notwithstanding anything to the contrary contained in the
Agreement, the inclusion of any item on a Schedule shall not constitute an
admission that a violation, right of termination, default, liability or other
obligation of any kind exists with respect to such item, but rather is intended
only to qualify certain representations and warranties contained in the
Agreement and to set forth other information required by the Agreement. Certain
matters set forth herein are included solely for informational purposes and are
not required to be disclosed pursuant to the Agreement. The disclosure of any
matter shall not be deemed to constitute an acknowledgment that such matter is
required to be disclosed in connection with the representations and warranties
made by any party in the Agreement or is material. All descriptions of documents
contained in the Schedules are qualified in their entirety by reference to the
documents so described. Capitalized terms used herein without definition shall
have the meanings ascribed to them in the Agreement.
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ASSET PURCHASE AGREEMENT
BETWEEN
CINCINNATI MICROWAVE, INC.
AND
BEL-TRONICS U.S.A., INC.
LIST OF SCHEDULES
SCHEDULE DESCRIPTION
-------- -----------
2.1 Xxxx of Sale
2.1.1(a) Excluded Assets
2.2.6.4 Utility Service Letter
2.2.7 Loan Documents
2.3 Assumption Agreement
2.3.2.4 Securities Litigation
3.1.1 Seller's Capital Structure, States where Seller is Qualified
to do Business, and Ownership of Other Entities
3.1.3 Consents Required
3.1.4 Litigation
3.1.5 Compliance Exceptions
3.1.6.1 Income Tax Exceptions
3.1.8 Brokers
3.1.9.1 Seller's Officers and Directors
3.1.11 Permits and Licenses
3.1.12.2 Adjustments and Write-Downs
3.1.12.3 Other Liabilities
3.1.13 Material Adverse Changes
3.1.14 Liens and Security Interests
3.1.15 Real Property Leases
3.1.16 Equipment
3.1.17 Proprietary Rights for Intellectual Property
3.1.18 Material Contracts
3.1.19 Employee Benefit Plans
3.1.20 Defaults or Violations
3.1.21 Certain Environmental Matters
3.1.22 Litigation
3.1.23 Tax Exceptions
3.1.24 Condition of Assets
3.1.25 Inventory Exceptions
3.1.26 Insurance Policies
3.1.27 Accounts Receivable
3.1.28 Capital Improvements
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SCHEDULE DESCRIPTION
-------- -----------
3.2.1 Buyer's Capital Structure, States where Buyer is Qualified
to do Business, and Ownership of Other Entities
3.2.3 Consents Required
3.2.4 Litigation
3.2.5 Compliance Exceptions
3.2.6.1 Income Tax Exceptions
3.2.9.1 Buyer's Officers and Directors
3.2.10 Permits and Licenses
3.2.12 Material Adverse Changes
3.2.13 Liens and Security Interests
3.2.14 Real Property Leases
3.2.15 Equipment
3.2.16 Proprietary Rights in Intellectual Property
3.2.17 Material Contracts
3.2.18 Employee Benefit Plans
3.2.19 Defaults or Violations
3.2.20 Certain Environmental Matters
3.2.21 Litigation
3.2.22 Tax Exceptions
3.2.23 Condition of Assets
3.2.24 Inventory Exceptions
3.2.25 Insurance Policies
3.2.26 Accounts Receivable
3.2.27 Capital Improvements
4.2.1 Seller's Conduct of Business
4.4.1 Noncompetition Agreement
4.5 Assignment of Contracts and Government Authorizations
4.7.1(a) Trademark Assignment
4.7.1(b) Patent Assignment
4.7.1(c) Copyright Assignment
4.7.2 Proprietary Rights Relinquished
4.9.1 Seller's Insurance Policies Maintained
4.9.2 Buyer's Insurance Policies Maintained
4.21 Noncompetition Agreement
6.1.2 Opinion of Seller's Counsel
6.1.20 Working Capital Schedule
6.22 Opinion of Buyer's Counsel
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