ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT, dated as of June 26, 1997, between
FATS, Inc., a Delaware corporation ("Buyer"), and SBS Technologies, Inc., a New
Mexico corporation ("Seller").
WHEREAS, Seller is, among other things, engaged through its
Interactive Computer-Assisted Training ICAT ("ICAT") division in the business
of small arms simulation and training systems; and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, on a going concern basis, substantially all of the
assets, properties, goodwill, and business of ICAT, all on the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, it is hereby agreed between Seller and
Buyer as follows:
ARTICLE I
DEFINITIONS
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1.1. DEFINITIONS. In this Agreement, the following terms have the
meanings specified or referred to in this SECTION 1.1 and shall be equally
applicable to both the singular and plural forms. Any agreement referred to
below shall mean such agreement as amended, supplemented and modified from
time to time to the extent permitted by the applicable provisions thereof and
by this Agreement.
"AFFILIATE" means, with respect to any Person, any other Person
which directly or indirectly controls, is controlled by or is under common
control with such Person, including without limitation any officer or
director of such Person.
"AGREED ACCOUNTING PRINCIPLES" means generally accepted accounting
principles consistently applied, PROVIDED that, with respect to any matter as
to which there is more than one generally accepted accounting principle,
Agreed Accounting Principles means the generally accepted accounting
principles applied in the preparation of the financial statements included in
SCHEDULE 5.3; PROVIDED FURTHER that, notwithstanding the foregoing,
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Agreed Accounting Principles shall include the accounting policies and be
subject to the exceptions described in SCHEDULE 1.1.
"ASSUMED LIABILITIES" has the meaning specified in SECTION 2.3.
"BALANCE SHEET" means the unaudited balance sheet of ICAT as of
April 30, 1997 included in SCHEDULE 5.3.
"BALANCE SHEET DATE" means April 30, 1997.
"BUSINESS" has the meaning specified in SECTION 2.1.
"BUYER" has the meaning specified in the first paragraph of this
Agreement.
"BUYER ANCILLARY AGREEMENTS" means all agreements, instruments and
documents being or to be executed and delivered by Buyer under this Agreement
or in connection herewith.
"BUYER GROUP MEMBER" means Buyer and its Affiliates and their
respective successors and assigns, including without limitation any employees
or agents of Buyer acting within the scope of his or her employment or agency.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601 ET SEQ., any
amendments thereto, any successor statutes, and any regulations promulgated
thereunder.
"CLAIM NOTICE" has the meaning specified in SECTION 10.3.
"CLOSING" means the closing of the transfer of the Purchased Assets
from Seller to Buyer.
"CLOSING DATE" has the meaning specified in SECTION 4.1.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIALITY AGREEMENT" means the Confidentiality Agreement
dated April 1997 between Buyer and Seller.
"CONTAMINANT" means any waste, pollutant, hazardous or toxic
substance or waste, petroleum, petroleum-based substance or waste, special
waste, or any constituent of any such substance or waste.
"COPYRIGHTS" means United States and foreign copyrights, whether
registered or unregistered, and pending applications to register the same.
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"COURT ORDER" means any judgment, order, award or decree of any
foreign, federal, state, local or other court or tribunal and any award in
any arbitration proceeding.
"ENCUMBRANCE" means any lien, claim, charge, security interest,
mortgage, pledge, easement, conditional sale or other title retention
agreement, defect in title, covenant or other restrictions of any kind.
"ENVIRONMENTAL LAW" means all Requirements of Laws derived from or
relating to all federal, state and local laws or regulations relating to or
addressing the environment, health or safety, including but not limited to
CERCLA, OSHA and RCRA and any state equivalent thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"EXCLUDED ASSETS" has the meaning specified in SECTION 2.2.
"EXPENSES" means any and all expenses incurred in connection with
investigating, defending or asserting any claim, action, suit or proceeding
incident to any matter indemnified against hereunder (including, without
limitation, court filing fees, court costs, arbitration fees or costs,
witness fees, and reasonable fees and disbursements of legal counsel,
investigators, expert witnesses, consultants, accountants and other
professionals).
"GOVERNMENTAL BODY" means any foreign, federal, state, local or
other governmental authority or regulatory body.
"GOVERNMENTAL PERMITS" has the meaning specified in SECTION 5.8.
"ICAT" has the meaning specified in the first recital to this
Agreement.
"ICAT PROPERTY" means any personal property, equipment, unit, or
other asset owned, leased or operated by Seller and used in the Business.
"INSTRUMENT OF ASSIGNMENT" means the Instrument of Assignment in the
form of EXHIBIT A.
"INSTRUMENT OF ASSUMPTION" means the Instrument of Assumption in the
form of EXHIBIT B.
"INTELLECTUAL PROPERTY" means Copyrights, Patent Rights, Trademarks
and Trade Secrets.
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"IRS" means the Internal Revenue Service.
"LOSSES" means any and all losses, costs, obligations, liabilities,
settlement payments, awards, judgments, fines, penalties, damages, expenses,
deficiencies or other charges.
"OSHA" means the Occupational Safety and Health Act, 29 U.S.C.
Section 651 ET SEQ., any amendment thereto, any successor statute, and any
regulations promulgated thereunder.
"OWNED SOFTWARE" has the meaning specified in SECTION 5.11(E).
"PATENT RIGHTS" means United States and foreign patents, patent
applications, continuations, continuations-in-part, reissues, patent
disclosures, inventions (whether or not patentable) or improvements thereto.
"PERSON" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization or Governmental Body.
"PURCHASE PRICE" has the meaning specified in SECTION 3.1.
"PURCHASED ASSETS" has the meaning specified in SECTION 2.1.
"RCRA" means the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 ET SEQ., and any successor statute, and any regulations
promulgated thereunder.
"RELEASE" means release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of
a Contaminant into the indoor or outdoor environment or into or out of any
ICAT Property, including the movement of Contaminants through or in the air,
soil, surface water, groundwater or ICAT Property.
"REQUIREMENTS OF LAWS" means any foreign, federal, state and local
laws, statutes, regulations, rules, codes or ordinances enacted, adopted,
issued or promulgated by any Governmental Body (including, without
limitation, those pertaining to electrical, building, zoning, environmental
and occupational safety and health requirements) or common law.
"SELLER" has the meaning specified in the first paragraph of this
Agreement.
"SELLER AGREEMENTS" has the meaning specified in SECTION 5.16.
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"SELLER ANCILLARY AGREEMENTS" means all agreements, instruments and
documents being or to be executed and delivered by Seller under this
Agreement or in connection herewith.
"SELLER GROUP MEMBER" means Seller and its Affiliates and their
respective successors and assigns, including without limitation any employees
or agents of Buyer acting within the scope of his or her employment or
agency.
"SOFTWARE" means computer software programs and software systems,
including, without limitation, all databases, compilations, tool sets,
compilers, higher level or "proprietary" languages, related documentation and
materials, whether in source code, object code or human readable form.
"TAX" means any federal, state, local or foreign net income,
alternative or add-on minimum, gross income, gross receipts, property, sales,
use, transfer, gains, license, excise, employment, payroll, withholding or
minimum tax, or any other tax custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or
any penalty, addition to tax or additional amount imposed by any Governmental
Body.
"TAX RETURN" means any return, report or similar statement required
to be filed with respect to any Taxes (including any attached schedules),
including, without limitation, any information return, claim for refund,
amended return and declaration of estimated Tax.
"TRADEMARKS" means United States, state and foreign trademarks,
service marks, logos, trade dress and trade names, whether registered or
unregistered, and pending applications to register the foregoing.
"TRADE SECRETS" means confidential ideas, trade secrets, know-how,
concepts, methods, processes, formulae, reports, data, customer lists,
mailing lists, business plans, or other proprietary information.
ARTICLE II
PURCHASE AND SALE
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2.1. PURCHASED ASSETS. Upon the terms and subject to the conditions
of this Agreement, on the Closing Date, Seller shall sell, transfer, assign,
convey and deliver to Buyer, and Buyer shall purchase from Seller, on a going
concern basis, free and clear of all Encumbrances substantially all of the
business and operations of Seller related to ICAT (such business and operations
being herein called the "BUSINESS") and substantially all of the assets and
properties of Seller of every kind and description, wherever located,
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personal tangible or intangible, used primarily in connection with the
Business as the same shall exist on the Closing Date (herein collectively
called the "PURCHASED ASSETS"), including, without limitation, all right,
title and interest of Seller in, to and under:
(a) all of the assets noted as "assumed" by Buyer on SCHEDULE 5.3 on
the Balance Sheet, except those disposed of or converted into cash after
the Balance Sheet Date in the ordinary course of business prior to the
Closing Date, and except the billed accounts receivable as of the Closing
Date;
(b) all raw materials, supplies, work-in-process and other materials
included in the inventory of ICAT as of June 24, 1997 as listed on SCHEDULE
2.1(B);
(c) the machinery, equipment, vehicles, furniture and other personal
property of ICAT listed or referred to in SCHEDULE 5.9 and all software
loaded on computers listed in SCHEDULE 5.9 (without warranty as to any
Encumbrances as to such software);
(d) the personal property leases listed in SCHEDULE 5.10;
(e) the Copyrights, Patent Rights and Trademarks (and all goodwill
associated therewith), and the agreements, contracts, licenses,
sublicenses, assignments and indemnities, listed in SCHEDULE 5.11
(excluding Collaboration Agreement with Thomson Training & Simulation
Limited and agreement with American Laser Games);
(f) the contracts and agreements marked as "assumed" and listed or
described in SCHEDULE 5.15;
(g) all Trade Secrets and other proprietary or confidential
information used in or relating to the Business;
(h) the Software and other assets listed in SCHEDULE 5.11;
(i) all of Seller's rights, claims or causes of action against third
parties relating to the assets, properties, business or operations of ICAT
arising out of transactions occurring prior to the Closing Date, with the
specific exclusion of (i) billed accounts receivable as of the Closing
Date, and (ii) any and all claims of Seller against Virtual Systems Group,
Inc.; and
(j) all books and records (including all data and other information
stored on discs, tapes or other media) of Seller relating to the assets,
properties, business and operations of ICAT.
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2.2. EXCLUDED ASSETS. Notwithstanding the provisions of SECTION
2.1, the Purchased Assets shall not include the following (herein referred to
as the "EXCLUDED ASSETS"):
(a) all cash, bank deposits, cash equivalents, and billed
accounts receivable as of the Closing Date of Seller;
(b) Seller's rights, claims or causes of action against third parties
relating to the assets, properties, business or operations of ICAT which
may arise in connection with the discharge by Seller of the Excluded
Liabilities;
(c) all contracts or policies of insurance;
(d) Seller's employee benefit agreements, plans or arrangements listed
in SCHEDULE 5.13(B) or otherwise maintained by Seller on behalf of persons
employed by Seller.
(e) all refunds of any Tax which Seller is due pursuant to SECTION
7.2(C).
(f) Seller's real property interests, including any leasehold or
option interests.
(g) Any rights allocated to Seller regarding the WTET Program in
accordance with Section 6.6 INFRA.
(h) All agreements identified on Schedule 2.2(H)(1) (the "Forefront
Agreements") with Forefront Graphics Corporation ("Forefront") except that
(i) Seller shall use its best efforts to cause Forefront to amend the
Forefront Agreements to agree to assignment to and assumption by Buyer of
the Forefront Agreements and to incorporate 30-day termination provisions
in each of the Forefront Agreements in form attached hereto as SCHEDULE
2.2(H)(2) (the "Amendment"); (ii) Buyer shall pay to Forefront all amounts
due to Forefront, if any, under the Forefront Agreements in connection with
any applicable unexpired sales quotes listed on SCHEDULE 2.3(D); (iii) in
the event Forefront executes the Amendment within thirty (30) days hereof,
(A), Buyer shall IPSO FACTO assume the amended Forefront Agreements, and
(B) Buyer agrees to discuss in good faith possible additional relationships
with Forefront in connection with Buyer's business in Canada; and (iv) in
the event Forefront fails to execute the Amendment within thirty (30) days
hereof, Buyer shall subcontract to Seller at a cost in accordance with the
Forefront Agreements all warranty obligations of Buyer which are Assumed
Liabilities under Seller Agreements for which Forefront has a
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contractual obligation to provide such warranty work, and Seller shall
cause Forefront to do such warranty work.
(i) the contracts and agreements marked as "not assumed" and listed
or described in SCHEDULE 5.15.
2.3. ASSUMED LIABILITIES. On the Closing Date, Buyer shall assume
and agree to discharge the following obligations and liabilities of Seller:
(a) all of Seller's warranty obligations to customers, whenever
arising, under those contracts and agreements listed in SCHEDULE 5.15 and
identified as Schedule of all Product Warranty Obligations Assumed by
Buyer;
(b) all liabilities and obligations of Seller to be paid or performed
after the Closing Date under the Seller Agreements listed in SCHEDULE 5.15
and marked as "assumed";
(c) all obligations identified on SCHEDULE 5.5;
(d) all valid unexpired sales quotes as of the Closing Date, as
listed on Schedule 2.3(D).
All of the foregoing liabilities and obligations to be assumed by Buyer
hereunder (excluding any Excluded Liabilities) are referred to herein as the
"ASSUMED LIABILITIES."
2.4. EXCLUDED LIABILITIES. Buyer shall not assume or be obligated to
pay, perform or otherwise discharge any liability or obligation of Seller,
direct or indirect, known or unknown, absolute or contingent, not expressly
assumed by Buyer pursuant to the Instrument of Assumption (all such liabilities
and obligations not being assumed being herein called the "EXCLUDED
LIABILITIES") and, notwithstanding anything to the contrary in SECTION 2.3, none
of the following shall be Assumed Liabilities for purposes of this Agreement:
(a) any liabilities in respect of Taxes for which Seller is liable
pursuant to SECTION 7.2;
(b) any intercompany payables and other liabilities or
obligations of ICAT to Seller or any of its Affiliates;
(c) any costs and expenses incurred by Seller incident to its
negotiation and preparation of this Agreement and its performance and
compliance with the agreements and conditions contained herein;
(d) any liabilities or obligations in respect of any Excluded Assets;
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(e) any liabilities in respect of the claims or proceedings
described in SCHEDULE 5.17;
(f) accrued liabilities of any kind (except for warranty obligations
on Seller Agreements listed on Schedule 5.15 and marked as "assumed")
required to be reflected on the Balance Sheet prepared in accordance with
the Agreed Accounting Principles which were not reflected thereon as a
dollar amount;
(g) any liabilities and obligations related to, associated with or
arising out of (i) the occupancy, operation, use or control of any of
Seller's or ICAT's Property on or prior to the Closing Date or (ii) the
operation of the Business on or prior to the Closing Date, in each case
incurred or imposed by any Environmental Law, including, without
limitation, any Release of any Contaminant on, at or from (1) the ICAT
Property, (including, without limitation, all facilities, improvements,
structures and equipment thereon, surface water thereon or adjacent thereto
and soil or groundwater thereunder, or any conditions whatsoever on, under
or in the vicinity of such real property) or (2) any real property or
facility owned by a third Person to which Contaminants generated by the
Business were sent prior to the Closing Date;
(h) any product liability or claims for injury to person or property,
regardless of when made or asserted, relating to products manufactured,
distributed or sold by ICAT or services performed by ICAT prior to the
Closing Date.
(i) any obligations of Seller to its employees, including without
limitation any expenses of Seller's employees, incurred prior to the
Closing Date.
ARTICLE III
PURCHASE PRICE
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3.1. PURCHASE PRICE. The purchase price for the Purchased Assets
(the "PURCHASE PRICE") shall be equal to two million dollars (U.S.
$2,000,000.00).
3.2. ALLOCATION OF PURCHASE PRICE. Within 30 days following the
Closing Date, Buyer and Seller shall agree to a schedule (the "ALLOCATION
SCHEDULE") allocating the Purchase Price among the Purchased Assets. The
Allocation Schedule shall be reasonable and shall be prepared in accordance with
Section 1060 of the Code and the regulations thereunder. Buyer and Seller each
agrees to file Internal Revenue Service Form 8594, and all federal,
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state, local and foreign Tax Returns, in accordance with the Allocation
Schedule. Buyer and Seller each agrees to provide the other promptly with
any other information required to complete Form 8594.
ARTICLE IV
CLOSING
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4.1. CLOSING DATE. The Closing shall be consummated on or before
11:00 A.M., on June 30, 1997 (or such later date as may be mutually agreed upon
by Buyer and Seller) after the conditions set forth in ARTICLES IX and X have
been satisfied, at the offices of Kemp, Smith, Xxxxxx & Xxxxxxx, 000 Xxxxxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxxxxxx, Xxx Xxxxxx, or at such other place as shall be
mutually agreed upon by Buyer and Seller. The time and date on which the
Closing is actually held are sometimes referred to herein as the "CLOSING DATE."
4.2. PAYMENT ON THE CLOSING DATE. Subject to fulfillment or waiver
of the conditions set forth in ARTICLE IX, at Closing Buyer shall pay Seller an
amount equal to the Purchase Price by wire transfer of immediately available
funds to the account in the United States specified by Seller in writing to
Buyer at least two business days prior to the Closing.
4.3. BUYER'S ADDITIONAL DELIVERIES. Subject to fulfillment or waiver
of the conditions set forth in ARTICLE IX, at Closing Buyer shall deliver to
Seller all the following:
(a) Copies of Buyer's Certificate of Incorporation certified as of a
recent date by the Secretary of State of the State of Delaware;
(b) Certificate of good standing of Buyer issued as of a recent date
by the Secretary of State of the State of Delaware;
(c) Certificate of the secretary or an assistant secretary of Buyer,
dated the Closing Date, in form and substance reasonably satisfactory to
Seller, as to (i) no amendments to the Certificate of Incorporation of
Buyer since a specified date; (ii) the by-laws of Buyer; (iii) the
resolutions of the Board of Directors of Buyer authorizing the execution
and performance of this Agreement and the transactions contemplated hereby;
and (iv) incumbency and signatures of the officers of Buyer executing this
Agreement and any Buyer Ancillary Agreement;
(d) The Instrument of Assumption duly executed by Buyer, contained in
EXHIBIT B;
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(e) The certificate contemplated by SECTION 9.1, duly executed by the
President, Treasurer, or any Vice President of Buyer;
(f) Certificates (or other evidence) that Buyer is duly licensed to
purchase, own and sell Class 1 and Class 2 firearms; and
(g) Opinion of counsel to Buyer substantially in the form contained
in EXHIBIT C;
4.4. SELLER'S DELIVERIES. Subject to fulfillment or waiver of the
conditions set forth in ARTICLE IX, at Closing Seller shall deliver to Buyer all
the following:
(a) Copies of the Certificate of Incorporation of Seller certified as
of a recent date by the State Corporation Commission of the State of New
Mexico;
(b) Certificate of good standing of Seller issued as of a recent date
by the State Corporation Commission of the State of New Mexico;
(c) Certificate of the secretary or an assistant secretary of Seller,
dated the Closing Date, in form and substance reasonably satisfactory to
Buyer, as to (i) no amendments to the Certificate of Incorporation of
Seller since a specified date; (ii) the by-laws of Seller; (iii) the
resolutions of the Board of Directors of Seller authorizing the execution
and performance of this Agreement and the transactions contemplated hereby;
and (iv) incumbency and signatures of the officers of Seller executing this
Agreement and any Seller Ancillary Agreement;
(d) Opinion of counsel to Seller substantially in the form contained
in EXHIBIT D;
(e) The Instrument of Assignment duly executed by Seller, contained
in EXHIBIT A;
(f) Certificates of title or origin (or like documents) with respect
to any vehicles or other equipment included in the Purchased Assets for
which a certificate of title or origin is required in order to transfer
title;
(g) All consents, waivers or approvals obtained by Seller with
respect to the Purchased Assets or the consummation of the transactions
contemplated by this Agreement;
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(h) The certificates contemplated by SECTION 8.1, duly executed by the
authorized officer of Seller;
(i) Such other bills of sale, assignments and other instruments of
transfer or conveyance as Buyer may reasonably request or as may be
otherwise necessary to evidence and effect the sale, assignment, transfer,
conveyance and delivery of the Purchased Assets to Buyer.
In addition to the above deliveries, Seller shall take all steps and
actions as Buyer may reasonably request or as may otherwise be necessary to put
Buyer in actual possession or control of the Purchased Assets.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
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As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller represents and warrants
to Buyer and agrees as follows:
5.1. ORGANIZATION OF SELLER. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of New Mexico.
Seller is duly qualified to transact business as a foreign corporation and is in
good standing in each of the jurisdictions listed in SCHEDULE 5.1, which
jurisdictions are the only ones in which the ownership or leasing of the
Purchased Assets or the conduct of the Business requires such qualification. No
other jurisdiction has demanded, requested or otherwise indicated to Seller that
Seller is required so to qualify on account of the ownership or leasing of the
Purchased Assets or the conduct of the Business. Seller has full power and
authority to own or lease and to operate and use the Purchased Assets and to
carry on the Business as now conducted.
True and complete copies of the certificate or articles of
incorporation and all amendments thereto and of the By-laws, as amended to date,
of Seller have been delivered to Buyer.
5.2. AUTHORITY OF SELLER. Seller has full power and authority to
execute, deliver and perform this Agreement and all of the Seller Ancillary
Agreements. The execution, delivery and performance of this Agreement and the
Seller Ancillary Agreements by Seller have been duly authorized and approved by
Seller's board of directors and do not require any further authorization or
consent of Seller or its stockholders. This Agreement has been duly authorized,
executed and delivered by Seller and is the legal, valid and binding obligation
of Seller enforceable in accordance with its terms, and each of the Seller
Ancillary Agreements has been duly authorized by Seller and upon
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execution and delivery by Seller will be a legal, valid and binding
obligation of Seller enforceable in accordance with its terms.
Except as set forth in SCHEDULE 5.16, neither the execution and
delivery of this Agreement or any of the Seller Ancillary Agreements or the
consummation of any of the transactions contemplated hereby or thereby nor
compliance with or fulfillment of the terms, conditions and provisions hereof or
thereof will conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event creating
rights of acceleration, termination or cancellation or a loss of rights under,
or result in the creation or imposition of any Encumbrance upon any of the
Purchased Assets, under (1) the charter or By-laws of Seller, (2) any Seller
Agreement, (3) any other material note, instrument, agreement, mortgage, lease,
license, franchise, permit or other authorization, right, restriction or
obligation to which Seller is a party or any of the Purchased Assets is subject
or by which Seller is bound, (4) any Court Order to which Seller is a party or
any of the Purchased Assets is subject or by which Seller is bound, or (5) to
the actual knowledge of Seller, any Requirements of Laws affecting Seller or the
Purchased Assets.
5.3. FINANCIAL STATEMENTS. (a) SCHEDULE 5.3 contains (i) the
unaudited balance sheet of ICAT as of June 30, 1996, and the statements of
income for the years ended June 30, 1994, June 30, 1995, and June 30, 1996, and
(ii) the unaudited balance sheet of ICAT as of April 30, 1997 and the related
statement of income for the ten (10) months then ended. Except as set forth
therein, such balance sheets and statements of income have been prepared in
conformity with generally accepted accounting principles consistently applied,
and to the actual knowledge of Seller, such balance sheets and related
statements of income present fairly the financial position and results of
operations of ICAT as of their respective dates and for the respective periods
covered thereby.
(b) Seller agrees to cooperate with Buyer to provide such additional
existing documentation or verification of Seller's financial statements as is
reasonably requested by Buyer.
5.4. OPERATIONS SINCE BALANCE SHEET DATE. (a) Except as set forth
in SCHEDULE 5.4(A), since the Balance Sheet Date, there has been:
(i) no material adverse change in the Purchased Assets, the Business
or the operations, liabilities, profits, prospects or condition (financial
or otherwise) of ICAT, and no fact or condition exists or is contemplated
or threatened which might reasonably be expected to cause such a change in
the future; and
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(ii) no damage, destruction, loss or claim, whether or not covered by
insurance, or condemnation or other taking adversely affecting any of the
Purchased Assets or the Business.
(b) Except as set forth in SCHEDULE 5.4(B), since the Balance Sheet Date,
Seller has conducted the Business only in the ordinary course and in conformity
with past practice. Without limiting the generality of the foregoing, since the
Balance Sheet Date, except as set forth in such Schedule, Seller has not, in
respect of the Business:
(i) sold, leased (as lessor), transferred or otherwise disposed of
(including any transfers from ICAT to Seller or any of its Affiliates), or
mortgaged or pledged, or imposed or suffered to be imposed any Encumbrance
on, any of the assets reflected on the Balance Sheet or any assets acquired
by ICAT after the Balance Sheet Date, except for inventory and minor
amounts of personal property sold or otherwise disposed of for fair value
in the ordinary course of the Business consistent with past practice and
except for Permitted Encumbrances;
(ii) cancelled any debts owed to or claims held by ICAT (including
the settlement of any claims or litigation) other than in the ordinary
course of the Business consistent with past practice;
(iii) created, incurred or assumed, or agreed to create, incur or
assume, any indebtedness for borrowed money in respect of ICAT (other than
money borrowed or advances from Seller or any of its Affiliates in the
ordinary course of the Business consistent with past practice) or entered
into, as lessee, any capitalized lease obligations (as defined in Statement
of Financial Accounting Standards No. 13);
(iv) accelerated billing of any notes or accounts receivable
generated by the Business that would have otherwise been billed in the
ordinary course of the Business consistent with past practice on or after
the Closing Date;
(v) delayed or accelerated payment of any account payable or other
liability of the Business beyond or in advance of its due date or the date
when such liability would have been paid in the ordinary course of the
Business consistent with past practice;
(vi) allowed the levels of raw materials, supplies, work-in-process
or other materials included in the inventory of ICAT to vary in any
material respect from the levels customarily maintained in the Business;
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(vii) made, or agreed to make, any payment of cash or distribution of
assets to Seller or any of its Affiliates (other than cash realized upon
collection of receivables in the ordinary course of the Business); or
(viii) other than as set forth in SCHEDULE 5.4(B), instituted any
increase in any compensation payable to any employee of Seller with respect
to the Business or in any profit-sharing, bonus, incentive, deferred
compensation, insurance, pension, retirement, medical, hospital,
disability, welfare or other benefits made available to employees of Seller
with respect to the Business; or
(ix) made any change in the accounting principles and practices used
by Seller from those applied in the preparation of the Balance Sheet and
the related statements of income and cash flow for the period then ended.
5.5. NO UNDISCLOSED LIABILITIES. Except as set forth in SCHEDULE
5.5, Seller, to its actual knowledge, is not subject, with respect to the
Business, to any liability (including, without limitation, unasserted claims,
whether known or unknown), whether absolute, contingent, accrued or otherwise,
which is not shown or which is in excess of amounts shown or reserved for in the
Balance Sheet, other than liabilities of the same nature as those set forth in
the Balance Sheet and the notes thereto and reasonably incurred in the ordinary
course of the Business after the Balance Sheet Date.
5.6. TAXES. Except as set forth in SCHEDULE 5.6, (i) Seller has, in
respect of the Business and the Purchased Assets, filed all Tax Returns which
are required to be filed and have paid all Taxes which have become due pursuant
to such Tax Returns or pursuant to any assessment which has become payable;
(ii) all such Tax Returns are complete and accurate and disclose all Taxes
required to be paid in respect of the Business and the Purchased Assets; (iii)
there is no action, suit, investigation, audit, claim or assessment pending or
proposed or threatened with respect to Taxes of the Business or the Purchased
Assets and, to Seller's actual knowledge, no basis exists therefor; (iv) Seller
has not waived or been requested to waive any statute of limitations in respect
of Taxes associated with the Business or the Purchased Assets; (v) all monies
required to be withheld by Seller from employees for income Taxes and social
security and other payroll Taxes in connection with the Business have been
collected or withheld, and either paid to the respective taxing authorities, set
aside in accounts for such purpose, or accrued, reserved against and entered
upon the books of the Business; and (vi) following the Closing Date, pursuant to
any agreement or arrangement entered into by Seller on or prior to the Closing
Date, Buyer will not be obligated to make a payment to an individual that would
be a "parachute payment" to a "disqualified individual" as those terms are
defined in Section 280G of the
15
Code, without regard to whether such payment is reasonable compensation for
personal services performed or to be performed in the future.
5.7. AVAILABILITY OF ASSETS. (a) Except as set forth in SCHEDULE 5.7
and except for the Excluded Assets, the Purchased Assets constitute
substantially all the assets used in the Business (including, but not limited
to, all books, records, computers and computer programs and data processing
systems, but specifically excepting computers, software, and business
information systems used generally by Seller in its other business activities
which are also used to support the Business), and are in good condition (subject
to normal wear and tear).
(b) EXCEPT AS EXPRESSLY CONTAINED IN THIS AGREEMENT, SELLER HEREBY
DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND WITH RESPECT TO TANGIBLE PROPERTY
CONSTITUTING ANY OF THE PURCHASED ASSETS (THE "TANGIBLE PURCHASED ASSETS"),
INCLUDING WITHOUT LIMITATION ANY WARRANTIES, EXPRESS OR IMPLIED, OF FITNESS FOR
A PARTICULAR PURPOSE OR MERCHANTABILITY , AND EXCEPT AS EXPRESSLY CONTAINED IN
THIS AGREEMENT, BUYER HEREBY ACKNOWLEDGES THAT BUYER IS PURCHASING THE TANGIBLE
PURCHASED ASSETS "AS IS, WHERE IS," WITH ALL FAULTS, AND WITHOUT ANY WARRANTIES,
WHETHER EXPRESS OR IMPLIED, OF ANY KIND.
(c) SCHEDULE 5.7 sets forth a description of all material services
provided by Seller or any Affiliate of Seller with respect to the Business
utilizing either (i) assets not included in the Purchased Assets or (ii)
employees not listed in SCHEDULE 5.13(F) and the manner in which the costs of
providing such services have been allocated to the Business.
5.8. GOVERNMENTAL PERMITS. Seller owns, holds or possesses all
licenses, franchises, permits, privileges, immunities, approvals and other
authorizations from any Governmental Body which are necessary to entitle it to
own or lease, operate and use the Purchased Assets and to carry on and conduct
the Business substantially as currently conducted (herein collectively called
the "GOVERNMENTAL PERMITS"). SCHEDULE 5.8 sets forth a list and brief
description of each Governmental Permit, except for such incidental licenses,
permits and other authorizations which would be readily obtainable by any
qualified applicant without undue burden in the event of any lapse, termination,
cancellation or forfeiture thereof. Complete and correct copies of all of the
Governmental Permits have heretofore been made available to Buyer by Seller.
5.9. PERSONAL PROPERTY. SCHEDULE 5.9 contains a detailed list as of
April 30, 1997 of all machinery, equipment, vehicles, furniture and other
personal property owned by Seller having an original cost of $1,000.00 or more
and used in or relating to the Business.
16
5.10. PERSONAL PROPERTY LEASES. SCHEDULE 5.10 contains a brief
description of each lease or other agreement or right, whether written or oral
(including in each case the annual rental, the expiration date thereof and a
brief description of the property covered), under which Seller is lessee of, or
holds or operates, any machinery, equipment, vehicle or other tangible personal
property owned by a third Person and used in or relating to the Business.
5.11. INTELLECTUAL PROPERTY AND SOFTWARE. (a) SCHEDULE 5.11
contains a list and description (showing in each case any product, device,
process, service, business or publication covered thereby, the registered or
other owner, expiration date and number, if any) of all Copyrights, Patents and
Trademarks (including all assumed or fictitious names under which Seller is
conducting the Business or has within the previous five years conducted the
Business) owned by, licensed to or used by Seller in connection with the conduct
of the Business.
(b) SCHEDULE 5.11 also contains a list and description (showing in
each case any owner, licensor or licensee) of all Software owned by, licensed
to, or used by Seller in the conduct of the Business (excluding commercial off
the shelf Software licensed to Seller that is available in consumer retail
stores and subject to "shrink-wrap" license agreements).
(c) Except as disclosed in SCHEDULE 5.11, Seller either: (i) owns
the entire right, title and interest in and to the Intellectual Property and
Software included in the Purchased Assets, free and clear of any Encumbrance; or
(ii) has the perpetual, paid-up, royalty-free right to use the same.
(d) Except as set forth in SCHEDULE 5.11, to Seller's actual
knowledge, no infringement of any Intellectual Property Right of any other
Person has occurred or results in any way from the operations of the Business,
no claim of any infringement of any Intellectual Property Right of any other
Person has been made or asserted in respect of the operations of the Business
and Seller has not had notice of, or knowledge of any basis for, a claim against
Seller that the operations, activities, products, software, equipment, machinery
or processes of the Business infringe any Intellectual Property Right of any
other Person.
(e) Except as disclosed in SCHEDULE 5.11: (i) the Software included
in the Purchased Assets is not subject to any transfer, assignment, site,
equipment, or other operational limitations; (ii) Seller has maintained and
protected the Software included in the Purchased Assets that it owns (the "OWNED
SOFTWARE") (including, without limitation, all source code and system
specifications) with appropriate proprietary notices (including, without
limitation, the notice of copyright in accordance with the requirements of 17
U.S.C. Section 401), confidentiality and non-disclosure agreements and such
other
17
measures as are standard in the industry to protect the proprietary, trade
secret or confidential information contained therein; (iii) Seller has copies of
all releases or separate versions of the Owned Software; (iv) to the actual
knowledge of Seller, Seller has complete and exclusive right, title and interest
in and to the Owned Software purchased from third parties; (v) Seller has
complete and exclusive right, title and interest in and to the Owned Software
developed through its own efforts and for its own account without the aid or use
of any consultants, agents, independent contractors or Persons (other than
Persons that are employees of Seller); (vi) to the actual knowledge of Seller,
the Owned Software does not infringe any Intellectual Property Right of any
other Person; (vii) any Owned Software includes the source code, system
documentation, statements of principles of operation and schematics, as well as
any pertinent commentary, explanation, program (including compilers),
workbenches, tools, and higher level (or "proprietary") language used for the
development, maintenance, implementation and use thereof and (viii) there are no
agreements or arrangements in effect with respect to the marketing,
distribution, licensing or promotion of the Owned Software by any other Person,
except as shown on SCHEDULE 5.16.
(f) Except as disclosed in SCHEDULE 5.11, all employees, agents,
consultants or contractors who have contributed to or participated in the
creation or development of any copyrightable, patentable or trade secret
material on behalf of Seller either: (i) is a party to a "work-for-hire"
agreement under which Seller is deemed to be the original owner/author of all
property rights therein; or (ii) has executed an assignment or an agreement to
assign in favor of Seller (or such predecessor in interest, as applicable) of
all right, title and interest in such material.
(g) Seller has made available to Buyer all technical drawings,
specifications, and code regarding all ICAT Products purchased hereunder.
(h) SCHEDULE 5.11 identifies all video disks and film used in the
Business.
5.12. INVENTORIES. The inventories of ICAT (including raw materials,
supplies, work-in-process, finished goods and other materials) (i) are in good,
merchantable and useable condition, (ii) are reflected in the Balance Sheet and
will be reflected in the Balance Sheet at the average cost in accordance with
generally accepted accounting principles and (iii) are, in the case of finished
goods, of a quality and quantity saleable in the ordinary course of business
and, in the case of all other inventories are of a quality and quantity useable
in the ordinary course of business. The inventory obsolescence policies of ICAT
are appropriate for the nature of the products sold and the marketing methods
used by ICAT, the reserve for inventory obsolescence contained in the Balance
Sheet fairly reflects the amount of obsolete inventory as of the Balance
18
Sheet Date, and the reserve for inventory obsolescence contained in Balance
Sheet fairly reflects the amount of obsolete inventory as of the Balance
Sheet Date.
5.13. EMPLOYEES AND RELATED AGREEMENTS; ERISA. (a) Except as
described in SCHEDULE 5.13(A), Seller is not, with respect to the Business, a
party to or bound by any oral or written:
(i) employee collective bargaining agreement, employment agreement
(other than employment agreements terminable by Seller without premium or
penalty on notice of 30 days or less under which the only monetary
obligation of Seller is to make current wage or salary payments and provide
current fringe benefits), consulting, advisory or service agreement,
deferred compensation agreement, confidentiality agreement or covenant not
to compete;
(ii) contract or agreement with any officer, director or employee
(other than employment agreements disclosed in response to clause (i) or
excluded from the scope of clause (i)), agent, or attorney-in-fact of
Seller; or
(iii) stock option, stock purchase, bonus or other incentive plan or
agreement.
(b) There is no pending or, to the actual knowledge of Seller, threatened
claim which alleges any violation of ERISA or any other law (i) by or on behalf
of any of Seller's ERISA Benefit Plans or (ii) by any employee of Seller or any
plan participant or beneficiary against any such plan.
(c) SCHEDULE 5.13(F) contains: (i) a list of all employees or
commissioned salespersons of ICAT as of May 30, 1997 whose then current annual
compensation was in excess of $10,000; (ii) the then current annual compensation
of, and a description of the fringe benefits (other than those generally
available to employees of Seller) provided by Seller to any such employees or
salespersons; (iii) a list of all present or former employees or commission
salespersons of ICAT paid in excess of $5,000 in calendar year 1996 who have
terminated or given notice of their intention to terminate their relationship
with Seller or ICAT since June 1, 1996; (iv) a list of any increase, effective
after December 31, 1996, in the rate of compensation of any employees or
commission salespersons if such increase exceeds ten percent (10%) of the
previous annual salary of such employee or commission salesperson; and (v) a
list of all substantial changes in job assignments of, or arrangements with, or
promotions or appointments of, any employees or commission salespersons whose
compensation as of December 31, 1996 was in excess of $25,000 per annum.
19
(d) Except as set forth in SCHEDULE 5.13(G), (i) to the actual knowledge
of Seller, ICAT is not involved in any transaction or other situation with any
employee, officer, director or Affiliate of Seller which may be generally
characterized as a "conflict of interest", including, but not limited to, direct
or indirect interests in the business of competitors, suppliers or customers of
ICAT, and (ii) there are no situations with respect to the Business which
involved or involves (A) the use of any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
political activity, (B) the making of any direct or indirect unlawful payments
to government officials or others from corporate funds or the establishment or
maintenance of any unlawful or unrecorded funds, (C) the violation of any of the
provisions of The Foreign Corrupt Practices Act of 1977, or any rules or
regulations promulgated thereunder, (D) the receipt of any illegal discounts or
rebates or any other violation of the antitrust laws or (E) any investigation by
the Securities and Exchange Commission or any other federal, foreign, state or
local government agency or authority.
5.14. EMPLOYEE RELATIONS. Except as set forth in SCHEDULE 5.14,
Seller to its actual knowledge has complied in respect of the Business with all
applicable laws, rules and regulations which relate to prices, wages, hours,
discrimination in employment and collective bargaining and to the operation of
the Business and is not liable for any arrears of wages or any taxes or
penalties for failure to comply with any of the foregoing. Seller believes that
its relations with the employees of ICAT are satisfactory. Seller is not a
party to, and ICAT is not affected by or threatened with, to the actual
knowledge of Seller, any dispute or controversy with a union or with respect to
unionization or collective bargaining involving the employees of ICAT. Neither
Seller nor ICAT is materially affected by any dispute or controversy with a
union or with respect to unionization or collective bargaining involving any
supplier or customer of ICAT. SCHEDULE 5.14 sets forth a description of any
union organizing or election activities involving any non-union employees of
ICAT which have occurred since January 1, 1996 or, to the knowledge of Seller,
are impending as of the date hereof.
5.15. CONTRACTS. Except as set forth in SCHEDULE 5.15 or any other
Schedule hereto, Seller is not, with respect to the Business, a party to or
bound by:
(i) any purchase contracts to or from any third party;
(ii) any contract for the purchase, licensing or development of
software to be used by ICAT;
20
(iii) any consignment, distributor, dealer, manufacturers
representative, sales agency, advertising representative or advertising or
public relations contract;
(iv) any agreement which provides for, or relates to, the incurrence
by Seller of debt secured by any of the Purchased Assets for borrowed money
(including, without limitation, any interest rate or foreign currency swap,
cap, collar, hedge or insurance agreements, or options or forwards on such
agreements, or other similar agreements for the purpose of managing the
interest rate and/or foreign exchange risk associated with its financing);
(v) any contract not made in the ordinary course of the Business; or
(vi) any other contract, agreement, commitment, understanding or
instrument which is material to ICAT or the Business.
Seller will use its reasonable best efforts to assist in causing the contract
with Ontario Ministry of the Solicitor General and Correctional Services to be
assigned to Buyer.
5.16. STATUS OF CONTRACTS. Except as set forth in SCHEDULE 5.16 or
in any other Schedule hereto, each of the leases, contracts and other agreements
listed in SCHEDULE 5.15 (collectively, the "SELLER AGREEMENTS") constitutes a
valid and binding obligation of the parties thereto and is in full force and
effect and (except as set forth in SCHEDULES 5.4(A) AND 5.4 (B), and except for
those Seller Agreements which by their terms will expire prior to the Closing
Date or are otherwise terminated prior to the Closing Date in accordance with
the provisions hereof) may be transferred to Buyer pursuant to this Agreement
and will continue in full force and effect thereafter, in each case without
breaching the terms thereof or resulting in the forfeiture or impairment of any
rights thereunder and without the consent, approval or act of, or the making of
any filing with, any other party. Seller has fulfilled and performed its
obligations under each of the Seller Agreements, and Seller is not in, or, to
the actual knowledge of Seller, alleged to be in, breach or default under, nor
(except as set forth in SCHEDULE 5.16) is there or, to the actual knowledge of
Seller, is there alleged to be any basis for termination of, any of the Seller
Agreements and no other party to any of the Seller Agreements has breached or
defaulted thereunder, and no event has occurred and no condition or state of
facts exists which, with the passage of time or the giving of notice or both,
would constitute such a default or breach by Seller or by any such other party.
Seller is not currently renegotiating any of the Seller Agreements or paying
liquidated damages in lieu of performance thereunder. Complete and correct
copies of each of the Seller Agreements have heretofore been made available to
Buyer by Seller.
21
5.17. NO VIOLATION, LITIGATION OR REGULATORY ACTION. Except as set
forth in SCHEDULE 5.17:
(i) the Purchased Assets and their uses comply with all applicable
Requirements of Laws and Court Orders;
(ii) Seller has complied with all Requirements of Laws and Court
Orders which are applicable to the Purchased Assets or the Business;
(iii) there are no lawsuits, claims, suits, proceedings or
investigations pending or, to the actual knowledge of Seller, threatened
against or affecting Seller in respect of the Purchased Assets or the
Business nor, to the actual knowledge of Seller, is there any basis for any
of the same, and there are no lawsuits, suits or proceedings pending in
which Seller is the plaintiff or claimant and which relate to the Purchased
Assets or the Business;
(iv) there is no action, suit or proceeding pending or, to the actual
knowledge of Seller, threatened which questions the legality or propriety
of the transactions contemplated by this Agreement; and
(v) to the actual knowledge of Seller, no legislative or regulatory
proposal has been adopted or is pending which could adversely affect the
Business.
5.18. ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE 5.18:
(i) to the actual knowledge of Seller, the operations of the
Business comply with all applicable Environmental Laws; and
(ii) to the actual knowledge of Seller, Seller has, in respect of
the Business, obtained all environmental, health and safety Governmental
Permits necessary for its operation, and all such Governmental Permits are
in good standing and Seller is in compliance with all terms and conditions
of such permits.
5.19. CUSTOMERS AND SUPPLIERS. Set forth in SCHEDULE 5.19 hereto
is (i) a list of names and addresses of the significant customers and
suppliers of Seller in respect of the Business and the type of supplies
purchased from each such supplier, and (ii) copies of the forms of purchase
order for inventory and other supplies and sales contracts for finished goods
used by Seller in respect of the Business. Except as set forth in SCHEDULE
5.19, to the actual knowledge of Seller, there exists no actual or threatened
termination, cancellation or limitation of, the business relationship of
Seller with any customer or group of customers whose purchases individually
or in the aggregate are material to the
22
operations of the Business, or with any supplier or group of suppliers whose
sales individually or in the aggregate are material to the operations of the
Business.
5.20. WARRANTIES. SCHEDULE 5.20 sets forth (i) a specimen copy of
the form of written warranties covering products and services sold by ICAT
which have not yet expired; and (ii) a summary of the warranty expense
incurred by ICAT during each of its last three fiscal years.
5.21. NO FINDER. Neither Seller nor any Person acting on its
behalf has paid or become obligated to pay any fee or commission to any
broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement.
5.23. FINANCIAL PROJECTIONS. Seller has made available to Buyer
certain financial projections with respect to the Business, which projections
were prepared for internal use only. Seller makes no representation or
warranty regarding the accuracy of such projections or as to whether such
projections will be achieved or otherwise.
5.24. NO UNDISCLOSED WARRANTY OBLIGATIONS. Except as set forth in
SCHEDULE 5.24 hereto, there are not, to Seller's actual knowledge, any
claims or assertions by any customer of Seller that any defects, repairs, or
other work which is or is alleged to be covered by Seller's warranty
agreements(s) are outstanding, pending, or unperformed.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, Buyer hereby represents and
warrants to Seller and agrees as follows:
6.1. ORGANIZATION OF BUYER. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full corporate power and authority to own or lease and to operate and
use its properties and assets and to carry on its business as now conducted.
6.2. AUTHORITY OF BUYER. Buyer has full power and authority to
execute, deliver and perform this Agreement and all of the Buyer Ancillary
Agreements. The execution, delivery and performance of this Agreement and the
Buyer Ancillary Agreements by Buyer have been duly authorized and approved by
Buyer's board of directors and do not require any further
23
authorization or consent of Buyer or its stockholders. This Agreement has
been duly authorized, executed and delivered by Buyer and is the legal, valid
and binding agreement of Buyer enforceable in accordance with its terms, and
each of the Buyer Ancillary Agreements has been duly authorized by Buyer and
upon execution and delivery by Buyer will be a legal, valid and binding
obligation of Buyer enforceable in accordance with its terms.
Neither the execution and delivery of this Agreement or any of the Buyer
Ancillary Agreements or the consummation of any of the transactions
contemplated hereby or thereby nor compliance with or fulfillment of the
terms, conditions and provisions hereof or thereof will:
(i) conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event
creating rights of acceleration, termination or cancellation or a loss of
rights under (1) the Certificate of Incorporation or By-laws of Buyer, (2)
any material note, instrument, agreement, mortgage, lease, license,
franchise, permit or other authorization, right, restriction or obligation
to which Buyer is a party or any of its properties is subject or by which
Buyer is bound, (3) any Court Order to which Buyer is a party or by which
it is bound or (4) any Requirements of Laws affecting Buyer; or
(ii) require the approval, consent, authorization or act of, or the
making by Buyer of any declaration, filing or registration with, any Person
(except as provided under federal or state securities laws and
regulations); or, if such consent, approval, authorization, or act is
required, it has been obtained by Buyer.
6.3. NO FINDER. Neither Buyer nor any Person acting on its behalf
has paid or become obligated to pay any fee or commission to any broker, finder
or intermediary for or on account of the transactions contemplated by this
Agreement.
6.4. NO INSOLVENCY. Buyer is not currently insolvent, nor shall the
consummation of the transactions contemplated by this Agreement by Buyer render
Buyer insolvent or unable to meet its financial obligations as they come due.
6.5. FIREARMS PERMITS. Buyer owns all firearms licenses and permits
sufficient to acquire from Seller Class 1 and Class 2 firearms as portions of
the Purchased Assets. Buyer has delivered, or shall deliver at Closing, to
Seller a copy of such license(s) and permit(s), which shall be effective as of
the Closing Date.
6.6. WTET PROGRAM.
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a. Seller is a party to a certain Weapons Team Engagement
Commercialization Agreement, Number N0014-96-2-5000, with the Office of Naval
Research (the "WTET Agreement"), which Buyer has reviewed. Buyer and Seller
agree to cooperate and use their best efforts in seeking novation of the WTET
Agreement. Buyer agrees, until novation of the WTET Agreement is effective, to
perform by subcontract with Seller on terms mutually agreeable to Seller and
Buyer, certain work under the WTET Agreement. Between the date hereof and
novation, Buyer agrees to defend, indemnify, and hold Seller harmless from all
liability arising on or after the Closing Date in connection with the WTET
Agreement, unless caused by Seller prior to novation.
b. Any and all payments under the WTET Agreement made after the
date hereof shall be payable to Buyer.
ARTICLE VII
ADDITIONAL AGREEMENTS
---------------------
7.1. COVENANT NOT TO COMPETE OR SOLICIT BUSINESS. (a) In furtherance
of the sale of the Purchased Assets and the Business to Buyer hereunder by
virtue of the transactions contemplated hereby and more effectively to protect
the value and goodwill of the Purchased Assets and the Business so sold, Seller
covenants and agrees that, for a period ending on the fifth (5th) anniversary of
the Closing Date, neither Seller nor any of its Affiliates will:
(i) directly or indirectly (whether as principal, agent,
independent contractor, partner or otherwise) own, manage, operate,
control, participate in, perform services for, or otherwise carry on,
a business similar to or competitive with the Business of ICAT
anywhere throughout the world (it being understood by the parties
hereto that the Business of ICAT is worldwide in nature, and that such
business may be engaged in effectively from any location throughout
the world); or
(ii) induce or attempt to persuade any employee, agent or
customer of Buyer to terminate such employment, agency or business
relationship in order to enter into any such relationship on behalf of
any other business organization in competition with the Business;
PROVIDED, HOWEVER, that nothing set forth in this SECTION 7.1 shall prohibit
Seller or its Affiliates from owning not in excess of 5% in the aggregate of any
class of capital stock of any corporation if such stock is publicly traded and
listed on any national or regional stock exchange or on the NASDAQ market
system.
25
(b) Except as specifically set forth in Schedules 5.11 and 5.13(G),
Seller covenants and agrees that neither it nor any of its Affiliates will
divulge or make use of any trade secrets or other confidential information of
the Business other than to disclose such secrets and information to Buyer or its
Affiliates.
(c) In the event Seller or any Affiliate of Seller violates any of its
obligations under this SECTION 7.1, Buyer may proceed against it in law or in
equity for such damages or other relief as a court may deem appropriate.
Seller acknowledges that a violation of this SECTION 7.1 may cause Buyer
irreparable harm which may not be adequately compensated for by money
damages. Seller therefore agrees that in the event of any actual or
threatened violation of this SECTION 7.1, Buyer shall be entitled, in
addition to other remedies that it may have, to a temporary restraining order
and to preliminary and final injunctive relief against Seller or such
Affiliate of Seller to prevent any violations of this SECTION 7.1, without
the necessity of posting a bond. The prevailing party in any action
commenced under this SECTION 7.1 shall also be entitled to receive reasonable
attorneys' fees and court costs. It is the intent and understanding of each
party hereto that if, in any action before any court or agency legally
empowered to enforce this SECTION 7.1, any term, restriction, covenant or
promise in this SECTION 7.1 is found to be unreasonable and for that reason
unenforceable, then such term, restriction, covenant or promise shall be
deemed modified to the extent necessary to make it enforceable by such court
or agency.
7.2. TAXES. (a) Seller shall be liable for and shall pay all Taxes
(whether assessed or unassessed) applicable to the Business and the Purchased
Assets attributable to periods (or portions thereof) ending prior to the Closing
Date. Buyer shall be liable for and shall pay all Taxes (whether assessed or
unassessed) applicable to the Business and the Purchased Assets attributable to
periods (or portions thereof) beginning on or after the Closing Date. For
purposes of this paragraph (a), any period beginning before and ending after the
Closing Date shall be treated as two partial periods, one ending immediately
prior to the Closing Date and the other beginning on the Closing Date except
that Taxes (such as property Taxes) imposed on a periodic basis shall be
allocated on a daily basis.
(b) Notwithstanding SECTION 7.2(a), any sales Tax, use Tax, real property
transfer or gains Tax, documentary stamp Tax or similar Tax attributable to the
sale or transfer of the Purchased Assets shall be paid by Seller. Upon the
request of Seller, Buyer agrees to timely sign and deliver such certificates or
forms as may be necessary or appropriate to establish an exemption from (or
otherwise reduce), or make a report with respect to, such Taxes.
26
7.3. DISCHARGE OF ICAT'S LIABILITIES. (a) Seller covenants and
agrees that it will pay and discharge, and hold Buyer harmless from, each and
every liability and obligation of Seller in respect of the Business or the
Purchased Assets arising from events occurring prior to the Closing Date,
excepting only the Assumed Liabilities, it being understood and agreed that
Buyer is assuming no liabilities or obligations of Seller other than such
Assumed Liabilities.
(b) Buyer covenants and agrees that it will pay and discharge, and
hold Seller harmless from, each and every liability and obligation of Buyer
in respect of the Purchased Assets and Buyer's operation of ICAT arising from
events occurring on or after the Closing Date, and in respect of the Assumed
Liabilities. The parties understand and agree that Seller is assuming no
liabilities or obligations with respect to the Assumed Liabilities and with
respect to the Purchased Assets and Buyer's operation of ICAT arising on or
after the Closing Date.
7.4. EMPLOYEES AND EMPLOYEE BENEFIT PLANS. (a) Buyer shall offer
relocation packages and employment agreements to those key ICAT personnel
and/or consultants listed on SCHEDULE 7.4 hereto, under such terms and
conditions as shall be mutually agreed-upon between Buyer and such personnel.
Except as specifically set forth in such terms and conditions as are
mutually agreed-upon between Buyer and such personnel, Buyer shall be under
no obligation to employ or otherwise engage any such personnel following
Closing. Notwithstanding the foregoing, Seller shall use its best efforts to
encourage all such personnel to accept employment or engagement with Buyer,
if offered.
(b) Seller shall make available on an as-needed basis, for up to sixty
(60) days following the Closing Date, two consultants (Xxxxxxxxxx Xxxx and
Xxxxx Xxxx) to provide consulting services to Buyer in connection with the
Business of ICAT. Buyer shall be entitled to such consulting services at no
cost to Buyer, except that Buyer shall reimburse Seller for any reasonable
travel or other out-of-pocket expenses incurred in connection therewith.
7.5. ONGOING CONSULTING SERVICES. Seller shall make available Xx.
Xxxxxx Xxxxx on a part-time basis during normal business hours for a period
of two (2) months following Closing as a consultant, to provide consulting
services to Buyer in connection with the Business of ICAT. Buyer shall be
entitled to such consulting services at no cost to Buyer, except that Buyer
shall reimburse Seller or Xx. Xxxxx (as applicable) for any reasonable travel
or other out-of-pocket expenses incurred in connection therewith.
7.6. RECEIPT OF PAYMENTS AFTER THE CLOSING DATE. (a) Buyer
agrees that upon receipt of any payment that is attributable to notes or
accounts receivable of the Business existing immediately prior to the Closing
27
Date, Buyer shall immediately notify Seller of the same and shall promptly
forward such payment to Seller. This section shall not apply to any payments
received pursuant to the WTET Program, which is addressed separately and
solely in accordance with the provisions of Section 6.6, SUPRA.
(b) Seller agrees that upon receipt of any payment that is
attributable to notes or accounts receivable of the Business generated
following the Closing Date, Seller shall immediately notify Buyer of the same
and shall promptly forward such payment to Buyer. This section shall not
apply to any payments received pursuant to the WTET Program, which is
addressed separately and solely in accordance with the provisions of Section
6.6, SUPRA.
7.7. USE OF ICAT NAME BY SELLER. Seller agrees promptly after the
Closing Date to discontinue its use of the name "ICAT", or any variation
thereof.
7.8. TRANSITION PERIOD. (a) Buyer shall have the right to use at
no charge for up to sixty (60) days after the Closing Date the leased real
property space currently occupied by the Business. Buyer agrees to indemnify
and hold Seller harmless from all claims, demands, and liabilities (including
attorneys' fees) arising from any such use, except normal and customary rent,
utilities, and other ordinary operating expenses.
(b) If any of the key employees listed in Schedule 7.4 do not accept
employment with Buyer, Seller at the written request of Buyer shall make an
offer to such employee(s) of continuing temporary employment as a consultant
to Buyer, with salary to be paid by Buyer at such employee's current salary
level (together with applicable payroll taxes and current employee benefits)
during such period of temporary employment.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
--------------------------------------------
The obligations of Buyer under this Agreement shall, at the option of
Buyer, be subject to the satisfaction, on or prior to the Closing Date, of the
following conditions:
8.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND WARRANTIES.
There shall have been no material breach by Seller in the performance of any
of its covenants and agreements herein; each of the representations and
warranties of Seller contained or referred to herein shall be true and
correct in all material respects on the Closing Date as though made on the
Closing Date, except for changes therein specifically permitted by this
Agreement or resulting from any transaction expressly consented to in writing
28
by Buyer; and there shall have been delivered to Buyer a certificate to such
effect, dated the Closing Date, signed on behalf of Seller by the President
or any Vice President of Seller.
8.2. NO RESTRAINT OR LITIGATION. No action, suit, investigation or
proceeding shall have been instituted or threatened to restrain or prohibit
or otherwise challenge the legality or validity of the transactions
contemplated hereby.
8.3. NECESSARY GOVERNMENTAL APPROVALS. The parties shall have
received all approvals and actions of or by all Governmental Bodies (except
from the U.S. Navy with respect to the WTET program, which Buyer and Seller
shall use their best efforts to novate the GSA contract, and contracts with
customers which prohibit or limit assignability) which are necessary to
consummate the transactions contemplated hereby, which are either specified
in SCHEDULE 5.16 or otherwise required to be obtained prior to the Closing by
applicable Requirements of Laws or which are necessary to prevent a material
adverse change in the Purchased Assets, the Business or the operations,
liabilities, profits, prospects or condition (financial or otherwise) of the
Business.
8.4. NECESSARY CONSENTS. Seller shall have received consents, in
form and substance reasonably satisfactory to Buyer, to the transactions
contemplated hereby from the other parties to all contracts, leases,
agreements and permits (except from the U.S. Navy with respect to the WTET
program, and from GSA, both of which Buyer and Seller shall use their best
efforts to novate, and except with respect to contracts with customers which
prohibit or limit assignability) to which Seller is a party or by which
Seller or any of the Purchased Assets is affected and which are specified in
SCHEDULE 5.16 or are otherwise necessary to prevent a material adverse change
in the Purchased Assets, the Business or in the operations, liabilities,
profits, prospects or condition (financial or otherwise) of the Business.
8.5 SETTLEMENT OF CLAIMS OR ACTIONS INVOLVING BUYER.
(a) Seller shall have executed a mutual release and settlement
agreement, in the form set forth at SCHEDULE 8.5, forever irrevocably and
unconditionally releasing and discharging Buyer, together with its
predecessors, successors, assigns, agents, partners, employees,
representatives, agents, attorneys, parents, subsidiaries, and affiliates,
from any and all claims, liabilities, actions, demands, damages, debts,
suits, liens, obligations, losses, or expenses (all of the foregoing
collectively referred to as the "Claims") related to or pertaining to the
following matters: (i) the matter of FIREARMS TRAINING SYSTEMS, INC. VS.
STATE OF CALIFORNIA DEPARTMENT OF GENERAL SERVICES, Case No. 95-CS-02580, or
any matter related thereto; and (ii) any other pending matters
29
or disputes between Buyer and Seller or ICAT, including without limitation
any Claims of antitrust, restraint of trade, or unfair competition.
(b) Such release shall not relieve Buyer of any obligations contained in
this Agreement or any other agreement pertaining to this transaction.
(c) Seller shall have withdrawn, discontinued, and abandoned, and shall
have agreed to refrain from ever again pursuing, prosecuting, or repeating,
any and all allegations, complaints, or contentions made to any third party
which accuse Buyer, or any of its agents, employees, or affiliates, of
antitrust, restraint of trade, or unfair competition in connection with any
matters occurring prior to the date of Closing.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
---------------------------------------------
The obligations of Seller under this Agreement shall, at the option
of Seller, be subject to the satisfaction, on or prior to the Closing Date,
of the following conditions:
9.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND WARRANTIES.
There shall have been no material breach by Buyer in the performance of any
of its covenants and agreements herein; each of the representations and
warranties of Buyer contained or referred to in this Agreement shall be true
and correct on the Closing Date as though made on the Closing Date, except
for changes therein specifically permitted by this Agreement or resulting
from any transaction expressly consented to in writing by Seller and there
shall have been delivered to Seller a certificate to such effect, dated the
Closing Date and signed on behalf of Buyer by the President or any Vice
President of Buyer.
9.2. NO RESTRAINT OR LITIGATION. No action, suit or proceeding by
any Governmental Body shall have been instituted or threatened to restrain,
prohibit or otherwise challenge the legality or validity of the transactions
contemplated hereby.
9.3. NECESSARY GOVERNMENTAL APPROVALS. The parties shall have
received all approvals and actions of or by all Governmental Bodies necessary
to consummate the transactions contemplated hereby, which are required to be
obtained prior to the Closing by applicable Requirements of Laws.
9.4 SETTLEMENT OF CLAIMS OR ACTIONS INVOLVING BUYER.
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(a) Buyer shall have executed a mutual release and settlement agreement,
in the form set forth at SCHEDULE 8.5, forever irrevocably and
unconditionally releasing and discharging Seller, together with its
predecessors, successors, assigns, agents, partners, employees,
representatives, agents, attorneys, parents, subsidiaries, and affiliates,
from any and all claims, liabilities, actions, demands, damages, debts,
suits, liens, obligations, losses, or expenses (all of the foregoing
collectively referred to as the "Claims") related to or pertaining to the
following matters: (i) the matter of FIREARMS TRAINING SYSTEMS, INC. VS.
STATE OF CALIFORNIA DEPARTMENT OF GENERAL SERVICES, Case No. 95-CS-02580, or
any matter related thereto; and (ii) any other pending matters or disputes
between Buyer and Seller or ICAT, including without limitation any Claims of
antitrust, restraint of trade, or unfair competition.
(b) Such release shall not relieve Seller of any obligations contained
in this Agreement or any other agreement pertaining to this transaction.
(c) Buyer shall have withdrawn, discontinued, and abandoned, and shall
have agreed to refrain from ever again pursuing, prosecuting, or repeating,
any and all allegations, complaints, or contentions made to any third party
which accuse Seller, or any of its agents, employees, or affiliates, of
antitrust, restraint of trade, or unfair competition in connection with any
matters occurring prior to the date of Closing.
ARTICLE X
INDEMNIFICATION
---------------
10.1. INDEMNIFICATION BY SELLER. (a) Seller agrees to indemnify and
hold harmless each Buyer Group Member from and against any and all Losses and
Expense incurred by such Buyer Group Member in connection with or arising from:
(i) any breach by Seller of any of its covenants in this Agreement
or in any Seller Ancillary Agreement;
(ii) any failure of Seller to perform any of its obligations in this
Agreement or in any Seller Ancillary Agreement;
(iii) any breach of any warranty or the inaccuracy of any
representation of Seller contained or referred to in this Agreement or any
certificate delivered by or on behalf of Seller pursuant hereto; or
(iv) the failure of Seller to perform any Excluded Liability.
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(b) The indemnification provided for in this SECTION 10.1 shall terminate
one (1) year after the Closing Date (and no claims shall be made by any Buyer
Group Member under this SECTION 10.1 thereafter), except that the
indemnification by Seller shall continue as to:
(i) the representations and warranties set forth in SECTION 5.6 and
the covenants of Seller set forth in SECTIONS 2.4, 5.2, 6.6, 7.2, 7.3,
7.6, 7.7, 11.2, and 11.13, which shall terminate five (5) years after the
Closing Date ;
(ii) the covenants of Seller set forth in SECTION 11.6, which shall
terminate six (6) years after the Closing Date;
(iii) the covenant set forth in SECTION 7.1, as to which the
indemnification provided for in this SECTION 10.1 shall terminate one year
after the expiration of the noncompetition period provided for therein; and
(iv) any Loss or Expense of which any Buyer Group Member has
notified Seller in accordance with the requirements of SECTION 10.3 on or
prior to the date such indemnification would otherwise terminate in
accordance with this SECTION 10.1, as to which the obligation of Seller
shall continue until the liability of Seller shall have been determined
pursuant to this ARTICLE X, and Seller shall have reimbursed all Buyer
Group Members for the full amount of such Loss and Expense in accordance
with this ARTICLE X.
10.2. INDEMNIFICATION BY BUYER. (a) Buyer agrees to indemnify and
hold harmless each Seller Group Member from and against any and all Loss and
Expense incurred by such Seller Group Member in connection with or arising from:
(i) any breach by Buyer of any of its covenants or agreements in this
Agreement or in any Buyer Ancillary Agreement;
(ii) any failure by Buyer to perform any of its obligations in this
Agreement or in any Buyer Ancillary Agreement;
(iii) any breach of any warranty or the inaccuracy of any
representation of Buyer contained or referred to in this Agreement or in
any certificate delivered by or on behalf of Buyer pursuant hereto; or
(iv) the failure of Buyer to perform any of the Assumed Liabilities.
(b) The indemnification provided for in this SECTION 10.2 shall terminate
one (1) year after the Closing Date (and no claims shall be made by Seller under
32
this SECTION 10.2 thereafter), except that the indemnification by Buyer shall
continue as to:
(i) the covenants of Buyer set forth in SECTIONS 2.3, 6.2, 6.6, 7.2,
7.3, 7.6, 11.2, and 11.13, which shall terminate five (5) years after the
Closing Date;
(ii) the covenants of Buyer set forth in SECTION 11.6, which shall
terminate six (6) years after the Closing Date; and
(iii) any Loss or Expense of which Seller has notified Buyer in
accordance with the requirements of SECTION 10.3 on or prior to the date
such indemnification would otherwise terminate in accordance with this
SECTION 10.2, as to which the obligation of Buyer shall continue until the
liability of Buyer shall have been determined pursuant to this ARTICLE X,
and Buyer shall have reimbursed all Seller Group Members for the full
amount of such Loss and Expense in accordance with this ARTICLE X.
10.3. NOTICE OF CLAIMS. Any Buyer Group Member or Seller Group
Member (the "INDEMNIFIED PARTY") seeking indemnification hereunder shall give to
the party obligated to provide indemnification to such Indemnified Party (the
"INDEMNITOR") a notice (a "CLAIM NOTICE") describing in reasonable detail the
facts giving rise to any claim for indemnification hereunder and shall include
in such Claim Notice (if then known) the amount or the method of computation of
the amount of such claim, and a reference to the provision of this Agreement or
any other agreement, document or instrument executed hereunder or in connection
herewith upon which such claim is based; PROVIDED, that a Claim Notice in
respect of any action at law or suit in equity by or against a third Person as
to which indemnification will be sought shall be given promptly after the action
or suit is commenced; PROVIDED FURTHER that failure to give such notice shall
not relieve the Indemnitor of its obligations hereunder except to the extent it
shall have been prejudiced by such failure.
10.4. THIRD PERSON CLAIMS. (a) Subject to SECTION 10.4(b), the
Indemnified Party shall have the right to conduct and control, through counsel
of its choosing, the defense, compromise or settlement of any third Person
claim, action or suit against such Indemnified Party as to which indemnification
will be sought by any Indemnified Party from any Indemnitor hereunder, and in
any such case the Indemnitor shall cooperate in connection therewith and shall
furnish such records, information and testimony and attend such conferences,
discovery proceedings, hearings, trials and appeals as may be reasonably
requested by the Indemnified Party in connection therewith; PROVIDED, that the
Indemnitor may participate, through counsel chosen by it and at its own expense,
in the defense of any such claim, action or suit as to which the Indemnified
Party has so elected to conduct and control the defense thereof;
33
and PROVIDED, FURTHER, that the Indemnified Party shall not, without the
written consent of the Indemnitor (which written consent shall not be
unreasonably withheld), pay, compromise or settle any such claim, action or
suit, except that no such consent shall be required if, following a written
request from the Indemnified Party, the Indemnitor shall fail, within 14 days
after the making of such request, to acknowledge and agree in writing that,
if such claim, action or suit shall be adversely determined, such Indemnitor
has an obligation to provide indemnification hereunder to such Indemnified
Party. Notwithstanding the foregoing, the Indemnified Party shall have the
right to pay, settle or compromise any such claim, action or suit without
such consent, PROVIDED that in such event the Indemnified Party shall waive
any right to indemnity therefor hereunder unless such consent is unreasonably
withheld.
(b) If any third Person claim, action or suit against any Indemnified
Party is solely for money damages or, where Seller is the Indemnitor, will
have no continuing effect in any material respect on the Business or the
Purchased Assets, then the Indemnitor shall have the right to conduct and
control, through counsel of its choosing, the defense, compromise or
settlement of any such third Person claim, action or suit against such
Indemnified Party as to which indemnification will be sought by any
Indemnified Party from any Indemnitor hereunder if the Indemnitor has
acknowledged and agreed in writing that, if the same is adversely determined,
the Indemnitor has an obligation to provide indemnification to the
Indemnified Party in respect thereof, and in any such case the Indemnified
Party shall cooperate in connection therewith and shall furnish such records,
information and testimony and attend such conferences, discovery proceedings,
hearings, trials and appeals as may be reasonably requested by the Indemnitor
in connection therewith; PROVIDED, that the Indemnified Party may
participate, through counsel chosen by it and at its own expense, in the
defense of any such claim, action or suit as to which the Indemnitor has so
elected to conduct and control the defense thereof. Notwithstanding the
foregoing, the Indemnified Party shall have the right to pay, settle or
compromise any such claim, action or suit, PROVIDED that in such event the
Indemnified Party shall waive any right to indemnity therefor hereunder
unless the Indemnified Party shall have sought the consent of the Indemnitor
to such payment, settlement or compromise and such consent was unreasonably
withheld, in which event no claim for indemnity therefor hereunder shall be
waived.
ARTICLE XI
GENERAL PROVISIONS
------------------
11.1. SURVIVAL OF OBLIGATIONS. All representations, warranties,
covenants and obligations contained in this Agreement shall survive the
consummation of the transactions contemplated by this Agreement to the extent
provided in ARTICLE X.
34
11.2. CONFIDENTIAL NATURE OF INFORMATION. Each party agrees that it
will treat in confidence all documents, materials and other information which
it shall have obtained regarding the other party during the course of the
negotiations leading to the consummation of the transactions contemplated
hereby (whether obtained before or after the date of this Agreement), the
investigation provided for herein and the preparation of this Agreement and
other related documents, and, in the event the transactions contemplated
hereby shall not be consummated, each party will return to the other party
all copies of nonpublic documents and materials which have been furnished in
connection therewith. Such documents, materials and information shall not be
communicated to any third Person (other than, in the case of Buyer, to its
counsel, accountants, financial advisors or lenders, and in the case of
Seller, to its counsel, accountants or financial advisors). No other party
shall use any confidential information in any manner whatsoever except solely
for the purpose of evaluating the proposed purchase and sale of the Purchased
Assets; PROVIDED, HOWEVER, that after the Closing Buyer may use or disclose
any confidential information included in the Purchased Assets or otherwise
reasonably related to the Business or the Purchased Assets, but Buyer may not
use or disclose any information not reasonably related to the Business. The
obligation of each party to treat such documents, materials and other
information in confidence shall not apply to any information which (i) is or
becomes available to such party from a source other than such party, (ii) is
or becomes available to the public other than as a result of disclosure by
such party or its agents, (iii) is required to be disclosed under applicable
law or judicial process, but only to the extent it must be disclosed, or (iv)
such party reasonably deems necessary to disclose to obtain any of the
consents or approvals contemplated hereby.
11.3. NO PUBLIC ANNOUNCEMENT. Neither Buyer nor Seller shall,
without the approval of the other, make any press release or other public
announcement concerning the transactions contemplated by this Agreement,
except as and to the extent that any such party shall be so obligated by law
or the rules of any stock exchange, in which case the other party shall be
advised and the parties shall use their best efforts to cause a mutually
agreeable release or announcement to be issued; PROVIDED that the foregoing
shall not preclude communications or disclosures necessary to implement the
provisions of this Agreement or to comply with accounting and Securities and
Exchange Commission disclosure obligations.
11.4. NOTICES. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or
delivered when delivered personally or when sent by registered or certified
mail or by private courier addressed as follows:
35
If to Buyer, to:
FATS, Inc.
0000 XxXxxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Vice President
with a copy to:
Xxxxx X. Xxxxxx, Esq.
SIDLEY & AUSTIN
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to Seller, to:
SBS Technologies, Inc.
0000 Xxxxxxxxx Xxxxxxxxx, X.X.
AFC Xxxxxxxx 0, Xxxxx 000
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx X. Xxxxx, Vice President - Finance and
Administration
with a copy to:
Xxxx X. Xxxxxxx, Esq.
Xxxxx X. Xxxxxx, Esq.
KEMP, SMITH, XXXXXX & XXXXXXX, P.C.
000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxxxxxx, Xxx Xxxxxx 00000-0000
or to such other address as such party may indicate by a notice delivered to the
other party hereto.
11.5. SUCCESSORS AND ASSIGNS. (a) The rights of either party under
this Agreement shall not be assignable by such party hereto prior to the Closing
without the written consent of the other, except that the rights of Buyer
hereunder may be assigned prior to the Closing, without the consent of Seller,
to FATS, Inc. or any corporation all of the outstanding capital stock of which
is owned or controlled by Seller, PROVIDED that (i) the assignee shall assume in
writing all of Buyer's obligations to Seller hereunder, (ii) Buyer shall not be
released from any of its obligations hereunder by reason of such assignment and
(iii) Seller's obligations under this Agreement shall be subject to the delivery
by such assignee, on or prior to the Closing Date, of a certificate signed on
its behalf containing representations and warranties similar to those
36
made by Buyer in ARTICLE VI and an opinion of Buyer's counsel with respect to
the assignee which is similar to the opinion with respect to Buyer set forth
in EXHIBIT E. Following the Closing, either party may assign any of its
rights hereunder, but no such assignment shall relieve it of its obligations
hereunder.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and permitted assigns. The successors
and permitted assigns hereunder shall include without limitation any
permitted assignee as well as the successors in interest to such permitted
assignee (whether by merger, liquidation (including successive mergers or
liquidations) or otherwise). Nothing in this Agreement, expressed or
implied, is intended or shall be construed to confer upon any Person other
than the parties and successors and assigns permitted by this SECTION 11.5
any right, remedy or claim under or by reason of this Agreement.
11.6. ACCESS TO RECORDS AFTER CLOSING. For a period of six years
after the Closing Date, Seller and its representatives shall have reasonable
access to all of the books and records of ICAT transferred to Buyer hereunder
to the extent that such access may reasonably be required by Seller in
connection with matters relating to or affected by the operations of ICAT
prior to the Closing Date. Such access shall be afforded by Buyer upon
receipt of reasonable advance notice and during normal business hours.
Seller shall be solely responsible for any costs or expenses incurred by it
pursuant to this SECTION 11.6. If Buyer shall desire to dispose of any of
such books and records prior to the expiration of such six-year period, Buyer
shall, prior to such disposition, give Seller a reasonable opportunity, at
Seller's expense, to segregate and remove such books and records as Seller
may select.
For a period of six years after the Closing Date, Buyer and its
representatives shall have reasonable access to all of the books and records
relating to the Business which Seller or any of its Affiliates may retain
after the Closing Date. Such access shall be afforded by Seller and its
Affiliates upon receipt of reasonable advance notice and during normal
business hours. Buyer shall be solely responsible for any costs and expenses
incurred by it pursuant to this SECTION 11.6. If Seller or any of its
Affiliates shall desire to dispose of any of such books and records prior to
the expiration of such six-year period, Seller shall, prior to such
disposition, give Buyer a reasonable opportunity, at Buyer's expense, to
segregate and remove such books and records as Buyer may select.
11.7. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the
Exhibits and Schedules referred to herein and the documents delivered
pursuant hereto contain the entire understanding of the parties hereto with
regard to the subject matter contained herein or therein, and supersede all
prior agreements, understandings or letters of intent between or among any of
the parties hereto,
37
including without limitation the Confidentiality Agreement. This Agreement
shall not be amended, modified or supplemented except by a written instrument
signed by an authorized representative of each of the parties hereto.
11.8. INTERPRETATION. Article titles and headings to sections herein
are inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement. The Schedules
and Exhibits referred to herein shall be construed with and as an integral part
of this Agreement to the same extent as if they were set forth verbatim herein.
11.9. WAIVERS. Any term or provision of this Agreement may be
waived, or the time for its performance may be extended, by the party or parties
entitled to the benefit thereof. Any such waiver shall be validly and
sufficiently authorized for the purposes of this Agreement if, as to any party,
it is authorized in writing by an authorized representative of such party. The
failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
11.10. EXPENSES. Each party hereto will pay its own costs and
expenses incident to its negotiation and preparation of this Agreement and to
its performance and compliance with all agreements and conditions contained
herein on its part to be performed or complied with, including the fees,
expenses and disbursements of its counsel and accountants.
11.11. PARTIAL INVALIDITY. Wherever possible, each provision hereof
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such provision shall be ineffective to the extent, but only to the
extent, of such invalidity, illegality or unenforceability without invalidating
the remainder of such invalid, illegal or unenforceable provision or provisions
or any other provisions hereof, unless such a construction would be
unreasonable.
11.12. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which shall be considered an original
instrument, but all of which shall be considered one and the same agreement, and
shall become binding when one or more counterparts have been signed by each of
the parties hereto and delivered to each of Seller and Buyer.
38
11.13. FURTHER ASSURANCES. (a) On the Closing Date Seller shall (i)
deliver to Buyer such other bills of sale, deeds, endorsements, assignments and
other good and sufficient instruments of conveyance and transfer, in form
reasonably satisfactory to Buyer and its counsel, as Buyer may reasonably
request or as may be otherwise reasonably necessary to vest in Buyer all the
right, title and interest of Seller in, to or under any or all of the Purchased
Assets, and (ii) take all steps as may be reasonably necessary to put Buyer in
actual possession and control of all the Purchased Assets. From time to time
following the Closing, Seller shall execute and deliver, or cause to be executed
and delivered, to Buyer such other instruments of conveyance and transfer as
Buyer may reasonably request or as may be otherwise necessary to more
effectively convey and transfer to, and vest in, Buyer and put Buyer in
possession of, any part of the Purchased Assets, and, in the case of licenses,
certificates, approvals, authorizations, agreements, contracts, leases,
easements and other commitments included in the Purchased Assets (i) which
cannot be transferred or assigned effectively without the consent of third
parties which consent has not been obtained prior to the Closing, to cooperate
with Buyer at its request in endeavoring to obtain such consent promptly, and if
any such consent is unobtainable, to use its best efforts to secure to Buyer the
benefits thereof in some other manner, or (ii) which are otherwise not
transferable or assignable, to use its best efforts jointly with Buyer to secure
to Buyer the benefits thereof in some other manner (including the exercise of
the rights of Seller thereunder). Notwithstanding anything in this Agreement to
the contrary, this Agreement shall not constitute an agreement to assign any
license, certificate, approval, authorization, agreement, contract, lease,
easement or other commitment included in the Purchased Assets if an attempted
assignment thereof without the consent of a third party thereto would constitute
a breach thereof.
(b) On the Closing Date and at any time thereafter, Buyer shall
deliver all documents, instruments, certificates and take all steps as may be
reasonably requested by Seller to fully consummate the transactions contemplated
by this Agreement. In addition, Buyer shall make available after Closing to
Seller, at Seller's expense, employees of Buyer as reasonably requested by
Seller for litigation support relating to Seller's operation of the Business.
11.14. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws (as opposed to the conflicts of
law provisions) of the State of New Mexico.
11.15. SUBMISSION TO JURISDICTION. Seller and Buyer hereby
irrevocably agree that any suit, action or proceeding arising out of or related
to this Agreement or any of the transactions contemplated hereby or thereby
shall be determined and settled by arbitration to be held in Bernalillo County,
New
39
Mexico in accordance with the commercial arbitration rules then effective of
the American Arbitration Association. Any award rendered therein shall be final
and binding on each and all of the parties, and judgment may be entered thereon
in any court of competent jurisdiction.
11.16. TIME OF THE ESSENCE. Time shall be of the essence with
respect to each term and condition of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed the day and year first above written.
FATS, INC.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------
Xxxxx X. Xxxxxxxx
Vice President
(Corporate Seal)
ATTEST:
/s/ Xxxxxxx X. Xxxxx
-------------------------
SBS TECHNOLOGIES, INC.
By: /s/ Xxxxx X. Xxxxx
---------------------------
Xxxxx X. Xxxxx,
Vice President - Finance and Administration
40
