ASSET PURCHASE AGREEMENT
among
MICROFRAME, INC.
as the Buyer
and
LEEMAH DATACOM SECURITY CORPORATION
as the Seller
and
LEEMAH CORPORATION
as the Parent
Dated as of February 25, 1999
TABLE OF CONTENTS
1. Sale and Purchase of Assets
1.1 Sale and Purchase
1.2 Excluded Assets
1.3 Consents
2. Non-Assumption of Liabilities
2.1 Non-Assumption
3. Purchase Price, Payment, Etc.
3.1 Purchase Price
3.2 Promissory Note
3.3 Transfer Taxes
3.4 Allocation of Purchase Price
4. Time and Place of Closing
5. Representations and Warranties of the Seller and the Parent
5.1 Organization
5.2 Capitalization
5.3 Authorization; Validity of Agreement
5.4 No Violations; Consents and Approvals
5.5 Sales Reports
5.6 No Material Adverse Change
5.7 No Undisclosed Liabilities
5.8 Litigation; Compliance with Law; Licenses and Permits
5.9 Accounts, Intellectual Property; Computer Software
5.10 Title to Acquired Assets
5.11 Material Contracts
5.12 Taxes
5.13 Environmental Matters
5.14 No Brokers
5.15 Assets Utilized in the Business
5.16 Labor Matters
5.17 Year 2000
5.18 No Misstatements or Omissions
5.19 Absence of Sensitive Payments
6. Representations and Warranties of the Buyer
6.1 Organization
6.2 Authorization; Validity of Agreement
6.3 No Violations; Consents and Approvals
6.4 No Brokers
7. Other Agreements of the Parties
7.1 Public Statements
7.2 Other Actions
7.3 Cooperation on Taxes
7.4 Employees
7.5 Consents; Releases
7.6 Bulk Sales
7.7 Inventory Pricing
7.8 Access to the Seller's Retained Books and Records
7.9 Action relating to Accounts
7.10 Indemnification of Brokers
7.11 Office Space License
8. Conditions Precedent to the Closing
8.1 Conditions Precedent to the Buyer's Obligations to Close
8.2 Conditions Precedent to the Seller' Obligations to Close
9. Termination
10. Survival of Representations and Warranties; Rights and Obligations
Subsequent to Closing
10.1 Survival of Representations and Warranties of the Seller and
the Parent
10.2 Survival of Representations and Warranties of the Buyer
10.3 Collection of Assets
10.4 Letters to Customers
11. Indemnification
11.1 Indemnification by the Seller and the Parent
11.2 Indemnification by the Buyer
11.3 Indemnification Procedures
11.4 Right to Set-Off
12. Miscellaneous
12.1 Transaction Fees and Expenses
12.2 Notices
12.3 Amendment
12.4 Waiver
12.5 Governing Law
12.6 Jurisdiction
12.7 Remedies
12.8 Severability
12.9 Further Assurances
12.10 Assignment
12.11 Binding Effect
12.12 No Third Party Beneficiaries
12.13 Entire Agreement
12.14 Headings
12.15 Counterparts
Schedules
Schedule 1.1(a) Machinery, Hardware and Software
Schedule 1.1(f) Trade Names
Schedule 1.2 Excluded Assets
Schedule 2.1 Assumed Liabilities
Schedule 5.4(b) Governmental Approvals
Schedule 5.4(c) Consents and Approvals
Schedule 5.6 Material Adverse Changes
Schedule 5.8(c) Licenses and Permits
Schedule 5.10(a) Liens
Schedule 5.11(a) Material Contracts
Schedule 5.11(b) Defaults or Events of Default
Schedule 5.12(a) Taxes
Schedule 7.4(a) Employees
Schedule 7.7 Inventory Pricing
Schedule 8.1(f) Form of Xxxx of Sale
Exhibits
Exhibit 3.2 Form of Promissory Note
Exhibit 8.1(e) Form of Xxxx of Sale
Exhibit 8.1(f) Form of Noncompetition Agreement
Exhibit 8.1(h) Form of Assignment of Patents, Trademarks and Tradenames
ASSET PURCHASE AGREEMENT
Dated as of February 25, 1999
The parties to this Asset Purchase Agreement (this
"Agreement") are MicroFrame, Inc., a New Jersey corporation, (the "Buyer"),
LeeMAH Corporation, a California corporation (the "Parent") and LeeMAH Datacom
Security Corporation, a California corporation and wholly-owned subsidiary of
the Parent (the "Seller").
RECITALS
A. The Seller is in the business of software development relating to,
and the manufacturer of products in connection with, network security and access
(collectively, the "Business").
B. The Buyer desires to purchase from the Seller, and the Seller
desires to sell to the Buyer, certain of the Seller's assets and properties
relating to the Business (involving, among other things, less than half of the
inventory and equipment of Seller) along with the assumption of certain
liabilities by the Buyer, in consideration for the payment by the Buyer to the
Seller of the sum of $1,000,000.
AGREEMENT
It is agreed as follows:
1. Sale and Purchase of Assets.
1.1 Sale and Purchase. Upon the terms and subject to the conditions
contained in this Agreement, at the Closing (as defined in Section 4), the
Seller shall sell, assign, transfer and deliver to the Buyer, and the Buyer
shall purchase and accept from the Seller, all of the assets and rights of every
nature, kind and description, tangible and intangible, wherever located, that
are owned, used or held for use by the Seller in or for the Business, as the
same shall exist on the Closing Date (as defined in Section 4) (collectively,
the "Acquired Assets"), free and clear of any and all liens, charges, claims,
pledges, security interests or other encumbrances ("Liens") including, without
limitation, the following:
(a) machinery, hardware and software (including source code
related thereto or used in connection therewith), including without limitation,
all engineering and production
tools, development tools, fixtures, jigs and test beds set forth on Schedule
1.1(a), all of which are taken AS IS, WHERE IS, WITHOUT ANY WARRANTIES,
INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR
PURPOSE;
(b) interests owned by the Seller in any patent, copyright,
trademark, trade name, brand name, service xxxx, service name, assumed name,
logo, symbol, trade dress, design or representation or expression of any
thereof, or registration or application for registration thereof, or any other
invention, trade secret, market study, process required for or incident to the
Business, business opportunity, technical information, know-how, processes,
proprietary right or intellectual property, technologies, methods, designs,
drawings, software (including documentation and source code listings), processes
and other confidential or proprietary properties or information (collectively,
the "Intellectual Property");
(c) all accounts and customer lists which are held, owned or
standing in the name of the Seller, including without limitation, all sales,
administration, tracking and accounting systems, accounts and lists, and
customer support, prospect and account tracking information (the "Accounts");
(d) any contracts, agreements, options, commitments,
understandings, covenants, licenses and other instruments (collectively, the
"Contracts") pertaining to the Business (including the Material Contracts as
listed on Schedule 5.11);
(e) other books, records, files, contracts, plans, notebooks,
brochures and handbooks, production and sales data catalogs, and other data of
the Seller relating to the Acquired Assets, whether or not in tangible form or
in the form of intangible computer storage media such as optical disks, magnetic
disks, tapes and all similar storage media;
(f) the names set forth on Schedule 1.1(f) and all variations
thereof and all similar names and the goodwill associated therewith, together
with all trademarks, service marks and trade names and patents of the Seller
related to the Business, if any; and
(g) all goodwill associated with any of the foregoing.
1.2 Excluded Assets. The only assets of the Seller that the Buyer is
not acquiring hereby (the "Excluded Assets") are:
(a) cash and cash equivalents;
(b) accounts receivable prior to the Closing Date;
(c) all products carrying, and all intellectual property and
other rights relating to products carrying, the "Bandwagon" tradename;
(d) the consideration to be delivered to the Seller pursuant
to this Agreement for the Acquired Assets to be sold to the Buyer hereunder and
the rights of the Seller hereunder;
(e) the certificate of incorporation, corporate seals, minute
books, stock books, Tax Returns (as defined in Section 5.12(c)) and supporting
data prepared expressly in connection therewith, and other records prepared
directly in connection with the corporate organization and capitalization of the
Seller and/or its operation as a corporation under applicable Laws (as defined
in Section 5.8(b));
(f) shares of the capital stock of the Seller; and
(g) all assets set forth on Schedule 1.2.
1.3 Consents. To the extent that the assignment of any Contract shall
require the Consent (as defined in Section 5.4(c)) of the other parties thereto
or of any third parties, this Agreement shall not constitute an agreement to
assign the same if an attempted assignment would constitute a breach thereof or
of other obligations or commitments of the Seller. The Seller shall take any and
all action necessary to obtain all such Consents prior to the Closing Date. If
any such Consent is not obtained, and the Buyer waives the obtaining of such
Consent as a condition precedent hereunder, then the Seller shall continue such
efforts after the Closing Date and until such Consent is obtained and shall
cooperate with the Buyer in any arrangement requested by the Buyer intended to
provide for the Buyer all of each of the benefits of the Seller under such
Contract.
2. Non-Assumption of Liabilities.
2.1 Non-Assumption. Upon the sale and purchase of the Acquired Assets,
the Buyer shall not assume nor agree to pay or discharge when due any debt,
obligation, responsibility, claim or liability of the Seller, whether known or
unknown, contingent or absolute or otherwise, except as set forth in Schedule
2.1. The Buyer shall not be assuming, and the Seller shall remain responsible
for and shall promptly pay, perform and discharge, all of its liabilities and
obligations such that the Buyer will incur no liability whatsoever in connection
therewith, and the Seller and
the Parent shall indemnify the Buyer with respect to and shall hold the Buyer
harmless from and against all such liabilities and obligations, including but
not limited to the following:
(a) any obligation or liability of the Seller arising from a
breach of a representation or warranty herein on its part or its failure to
fully, faithfully and promptly perform any agreement or covenant on its part
contained herein;
(b) any obligation or liability related to any present or
former officer, director, shareholder, employee or agent of the Seller or any
person or organization controlled by, controlling, or under common control with
the Seller;
(c) all other liabilities, obligations, contracts and
commitments arising out of the ownership and operation of the Business of the
Seller prior to the Closing Date;
(d) all liabilities of the Seller of any kind whatsoever
arising before, on or after the Closing Date;
(e) any obligation or liability of the Seller to the extent
the same arose prior to the Closing Date out of or resulting from noncompliance
with any federal, state or local Laws (as hereinafter defined), whether relating
to the environment, the health and safety standards applicable to employees,
employee benefit plans, wage and hour Laws or other labor related matters or
otherwise;
(f) any obligation or liability of the Seller to the extent
that the Seller shall be indemnified by an insurer;
(g) any expenses of the Seller incurred in connection with the
transactions contemplated hereunder (including but not limited to fees and
expenses of finders, investment bankers, business brokers, attorneys and
accountants), it being understood that all such expenses shall be paid by the
Seller out of the Excluded Assets or the consideration to be delivered to the
Seller pursuant to this Agreement, and not out of any of the Acquired Assets;
(h) any obligations relating to an Excluded Asset;
(i) any indebtedness for borrowed money or any guaranty
thereof;
(j) any amount due to any affiliate of the Seller or the
Parent;
(k) any pension, profit-sharing or workmen's compensation or
other employee benefit or post retirement plan and any liability or obligation
arising thereunder;
(l) any liability or obligation as a result of any injury to
persons or property;
(m) any liability for any maintenance or other contract or
agreement relating to products not included in the Acquired Assets; and
(n) all claims of employees arising out of events, conditions
and circumstances existing or occurring prior to the Closing Date, including,
but not limited to, medical and health claims and disability claims.
3. Purchase Price, Payment, Etc.
3.1 Purchase Price. Subject to the terms and conditions of this
Agreement, in consideration of the sale, conveyance, assignment, transfer and
delivery of the Acquired Assets, the Buyer shall pay to the Seller an amount
equal to $1,000,000 (the "Purchase Price").
3.2 Promissory Note. On the Closing Date, the Buyer shall deliver to the Seller
a promissory note in the principal amount of the Purchase Price substantially in
the form annexed hereto as Exhibit 3.2 (the "Note").
3.3 Transfer Taxes. All sales, use, transfer, excise and similar taxes
imposed by any state, county, local or other governmental entity or Taxing
Authority (as defined in Section 5.12(a)) as a result of the transfer of the
Acquired Assets hereunder and the other transactions contemplated hereby shall
be duly and timely paid by the Buyer. The Buyer shall cooperate with Seller in
connection with the filing of any Tax Returns in connection with such Taxes.
3.4 Allocation of Purchase Price.
(a) The Buyer and the Seller shall, on or prior to the
Closing, agree to an allocation of the Purchase Price in accordance with the
relative fair market value of the Acquired Assets. The Buyer and the Seller
shall be bound for such allocation for all purposes, including determining any
Tax (as defined in Section 5.12(c)), shall prepare and file all Tax Returns (as
defined in Section 5.12(c)), including Forms 8594, in a manner consistent with
such allocations, and shall not take any position inconsistent with such
allocations in any Tax Return, any proceeding before any Taxing Authority or
otherwise. In the event that any allocation is questioned, audited or disputed
by any Taxing Authority, the party receiving notice thereof shall promptly
notify and consult with the other party concerning the strategy for the
resolution thereof, and shall keep the other party apprised of the status of
such question, audit or dispute and the resolution thereof.
(b) The Buyer and the Seller shall duly and timely file their
respective Forms 8594, and with respect to each payment pursuant to this
Agreement, in accordance with this Section. Each party shall furnish a copy of
each Form 8594 filed by it to the other party promptly after filing. For
purposes of the preparation of Form 8594, the name and address of the Buyer and
the Seller, respectively, is as set forth in Section 12.2.
4. Time and Place of Closing. The closing of the purchase and sale provided for
in this Agreement (the "Closing") occurred at the same time this Agreement was
executed, on February 25, 1999 (the "Closing Date").
5. Representations and Warranties of the Seller and the Parent.
The Seller and the Parent jointly and severally represent and warrant
to the Buyer as follows:
5.1 Organization. The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as it is now being
conducted. The Seller is duly qualified or licensed to do business and in good
standing as a foreign corporation in each of the jurisdictions in which the
ownership or use of its properties or assets, or the nature of the activities
conducted by it, requires such qualification. The Seller has delivered to the
Buyer true, correct and complete copies of its respective certificate of
incorporation and bylaws, as currently in effect.
5.2 Capitalization. The Parent all of the issued and outstanding
capital stock of the Seller. All of the capital stock of Seller is validly
issued, fully-paid and nonassessable. There are no (a) outstanding warrants,
options or other rights granted by the Seller to purchase or acquire, or
preemptive rights with respect to the issuance or sale of, the capital stock of
the Seller; (b) other securities of the Seller directly or indirectly
convertible into or exchangeable for shares of capital stock of the Seller; or
(c) restrictions on the transfer of the Seller's capital stock.
5.3 Authorization; Validity of Agreement. The Seller and the Parent
have the requisite capacity and authority to execute, deliver and perform all
obligations pursuant to this Agreement and each of the other agreements,
instruments, documents and certificates to be executed and delivered pursuant to
this Agreement, including but not limited to, any item referred to in Section 8
(collectively, with this Agreement, the "Transaction Documents") to which it is
a party and to assume and perform its obligations hereunder and thereunder, and
to consummate the transactions contemplated hereby and thereby. Each of this
Agreement and the other Transaction Documents has been duly executed, authorized
and delivered by the Seller and the Parent to the extent such is a party thereto
and is a valid and binding obligation of the Seller and the Parent, as the case
may be, enforceable against each such party in accordance with their respective
terms, except as such enforceability may be subject to or limited by applicable
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally.
5.4 No Violations; Consents and Approvals.
(a) The execution, delivery and performance of each of this
Agreement and the other Transaction Documents by the Seller and the Parent to
the extent such is a party thereto
does not, and the consummation by the Seller and the Parent of the transactions
contemplated hereby and thereby will not, (i) violate any provision of the
certificate of incorporation or bylaws of the Seller, (ii) result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under any of the terms, conditions or provisions
of any Contract to which the Seller is a party or by which any of the properties
or assets of the Seller may be bound or otherwise subject or (iii) violate any
order, writ, judgment, injunction, decree, law, statute, rule or regulation
applicable to the Seller or any of its properties or assets.
(b) Except as set forth in Schedule 5.4(b), no filing or
registration with, notification to, or authorization, consent or approval of,
any foreign, provincial, United States federal, state, county, municipal or
other local jurisdiction, political entity, body, organization, subdivision or
branch, legislative or executive agency or department or other regulatory
service, authority or agency (a "Governmental Entity") is required in connection
with the execution, delivery and performance of this Agreement or any of the
other Transaction Documents to which the Seller is a party or the consummation
by the Seller of the transactions contemplated hereby and thereby.
(c) No filing or consent, approval, order, authorization,
notification to, notice to, estoppel certificate, registration, ratification,
declaration, waiver, exemption or variance (collectively, together with the
filings, registrations, notifications, authorizations, consents and approvals of
Governmental Entities set forth in Section 5.4(c), "Consents") of any individual
or entity (a "Person") is required in connection with the execution, delivery
and performance of this Agreement or any of the other Transaction Documents to
which the Seller is a party or the consummation by the Seller of the
transactions contemplated hereby and thereby, except for such Consents as are
set forth on Schedule 5.4(c) hereof.
5.5 Sales Reports. The Seller has heretofore delivered to the Buyer
certain sales reports in connection with the Acquired Assets relating to the
financial condition and results of operations thereof for the period from August
1, 1998 through December 31, 1998 (the "Sales Reports"). The Sales Reports are
accurate in all respects and the information contained therein fairly represents
the financial condition and results of operations of the Acquired Assets.
5.6 No Material Adverse Change. Except as set forth on Schedule 5.6,
since December 31, 1998, (a) no event, condition or circumstance has occurred
that could, or could be reasonably likely to, have a material adverse effect on
the Business or the Acquired Assets, or on the condition (financial or
otherwise), results of operations or prospects of the Seller or the Business;
and (b) the Business has been conducted in the ordinary course and consistent
with past
practice. Since December 31, 1998, the Seller has not (i) made any change in any
method of accounting or accounting practice, principle or policy used by the
Seller, (ii) incurred any indebtedness, obligation or liability or paid,
satisfied or discharged any indebtedness, obligation or liability prior to the
due date or maturity thereof, except current indebtedness, obligations and
liabilities in the ordinary course of business, or (iii) made any change or
modification in any manner of the Seller's (A) billing and collection policies,
procedures and practices with respect to accounts receivable or unbilled
charges, (B) policies, procedures and practices with respect to the provision of
discounts, rebates or allowances, or (C) payment policies, procedures and
practices with respect to accounts payable.
5.7 No Undisclosed Liabilities. There is no fact which materially
adversely affects, or may in the future materially adversely affect, the
business, properties, or operations of the Seller, including the Business, that
has not been specifically disclosed herein or in a Schedule furnished herewith.
Furthermore, and without limiting the foregoing, neither the Seller nor the
Parent have any knowledge of any claim for indemnity against the Seller, the
Acquired Assets or the Business for or in connection with any claim whatsoever.
5.8 Litigation; Compliance with Law; Licenses and Permits.
(a) There is no claim, suit, action or proceeding
("Proceeding") pending, nor, to the best knowledge of the Seller and the Parent,
is there any investigation or Proceeding threatened, that involves or affects
the Seller or the Business, by or before any Governmental Entity, court,
arbitration panel or any other Person.
(b) The Seller and the Business have, and on the Closing Date
will have, complied with all applicable foreign, provincial, United States
federal, state, county, municipal or other local criminal, civil or common laws,
statutes, ordinances, orders, codes, rules, regulations, permits, policies,
guidance documents, judgments, decrees, injunctions, or agreements of any
Governmental Entity (collectively, "Laws"), including but not limited to Laws
relating to zoning, building codes, antitrust, occupational safety and health,
industrial hygiene, environmental protection, water, ground or air pollution,
the generation, treatment, storage or disposal of any Hazardous Substance (as
defined in Section 5.13), consumer product safety, product liability, hiring,
wages, hours, employee benefit plans and programs, collective bargaining and the
payment of withholding and social security taxes. Since January 1, 1995, neither
the Seller nor the Parent has received any notice of any violation of any Law.
(c) The Seller and the Business have every license, permit,
certification, qualification or franchise issued by any Governmental Entity
(each, a "License") and every
approval, authorization, waiver, variance, exemption, consent or ratification by
or on behalf of any Person that is not a party to this Agreement (each, a
"Permit") required for them to conduct their business as presently conducted.
Schedule 5.8(c) sets forth a list of such Licenses and Permits. All such
Licenses and Permits are in full force and effect and neither the Seller nor the
Parent has received notice of any pending cancellation or suspension of any
thereof nor, to the best knowledge of the Seller and the Parent, is any
cancellation or suspension thereof threatened. The applicability and validity of
each such License and Consent will not be adversely affected by the consummation
of the transactions contemplated by this Agreement.
5.9 Accounts, Intellectual Property; Computer Software.
(a) The names, addresses and telephone numbers of each and
every Account has been provided in the Acquired Assets. The Seller owns or has
the right to use, free and clear of all claims or rights of others, all
Accounts, and the Seller has the right to transfer all Accounts. Neither the
Seller nor the Parent are using any confidential or proprietary information or
trade secrets (including customer list and mailing lists) of the Seller's past
or present employees. The Seller has adopted all reasonable measures to protect
the Accounts. Copies of all forms of nondisclosure or confidentiality agreements
utilized by the Seller to protect the Accounts have been provided to Buyer and
are listed in Schedule 5.9(a).
(b) Schedule 1.1(f) lists all Intellectual Property that is
owned by the Seller or any other Person and used by the Seller in the operation
of the Business, and there are no pending or threatened claims by any Person
relating to the Seller's ownership or use of any Intellectual Property. The
Seller has such rights of ownership (free and clear of all Liens) of, or such
rights by license, lease or other agreement to use (free and clear of all Liens)
the Intellectual Property as are necessary to permit the Seller to conduct its
business as currently conducted and the Seller is not obligated to pay any
royalty or similar fee to any Person in connection with its use or license of
any of the Intellectual Property.
(c) The Seller has such rights of ownership (free and clear of
all Liens) of, or such rights by license, lease or other agreement to use (free
and clear of all Liens), all computer software programs including, without
limitation, application software that are used by the Seller and that are
necessary and material to the conduct of the Business as currently conducted.
None of the Seller's ownership rights or rights to use any of the computer
programs referred to above will be adversely affected by any of the transactions
contemplated hereby.
5.10 Title to Acquired Assets.
(a) The Seller has good and marketable title to the Acquired
Assets, free and clear of all Liens, other than (i) Liens, if any, for personal
property taxes and assessments not yet due and payable and (ii) Liens disclosed
on Schedule 5.10(a). At the Closing, the Seller will have caused each Lien
referred to on Schedule 5.10(a) to have been terminated, and the Buyer will
obtain good and marketable title to all of the Acquired Assets free and clear of
all Liens.
(b) All items of tangible personal property owned or leased by
the Seller and used in the conduct of the Business (collectively, the "Personal
Property"), conforms in all respects to all requirements of applicable Laws. All
of the items included within the Personal Property are fully operational and
operating in the ordinary course of the Business, are in good operating
condition and in a good state of maintenance and repair, are adequate for use in
the conduct of the Business, as previously conducted and as proposed to be
conducted and are capable of operation in the Business on an efficient and
profitable basis.
5.11 Material Contracts.
(a) Schedule 5.11(a) sets forth a true, complete and correct
list of every Contract that is material to the rights, properties, assets,
business or operations of the Seller or the Acquired Assets (the foregoing,
collectively, "Material Contracts"). The Seller has heretofore provided true,
complete and correct copies of all Material Contracts to the Buyer.
(b) Except as set forth in Schedule 5.11(b), (i) there is not
and has not been claimed or alleged by any Person with respect to any Material
Contract, any existing default, or event that with notice or lapse of time or
both would constitute a default or event of default, on the part of the Seller
or, to the best knowledge of the Seller and the Parent, on the part of any other
party thereto and (ii) no consent, approval, authorization or waiver from, or
notice to, any Governmental Entity or other Person is required in order to
maintain in full force and effect any of the Material Contracts, other than such
consents and waivers that have been obtained and are unconditional and in full
force and effect and such notices that have been duly given and copies of such
consents, waivers and notices have been delivered to the Buyer.
5.12 Taxes.
(a) Except as set forth in Schedule 5.12(a):
(i) the Seller has duly and timely filed or caused to
be filed with the Internal Revenue Service or other applicable Governmental
Entity (collectively, "Taxing Authorities") all Tax Returns (as defined below)
that are required to be filed by or on behalf of the
Seller or that include or relate to the Acquired Assets or the Business, which
Tax Returns are true, correct and complete, and (B) duly and timely paid in full
or caused to be paid in full, or recorded a provision for such payment on the
books and records of the Seller in accordance with GAAP for the payment of, all
Taxes that are due and payable that could result in a Lien on any Acquired Asset
or the Business and has recorded a provision for such payment on the books and
records of the Seller in accordance with GAAP for the payment of all Taxes that
are not due and payable;
(ii) the Seller has duly and timely complied with all
applicable Laws relating to the collection or withholding of Taxes, and the
reporting and remittance thereof to the applicable Taxing Authorities;
(iii) no audit, examination, investigation,
reassessment or other administrative or court proceeding (collectively, a "Tax
Proceeding") is pending or proposed with regard to any Tax or Tax Return
referred to in clause (i) above; and
(iv) there is no Lien for any Tax upon any of the
Acquired Assets or the Business;
(b) The Seller has provided to the Buyer true, complete and
correct copies of (i) all Tax Returns relating to, and (ii) all audit reports
relating to, each proposed adjustment, if any, made by any Taxing Authority with
respect to any taxable period ending after December 31, 1993 any and all Taxes
with respect to which a Lien may be imposed on any Acquired Asset or the
Business.
(c) As used herein, (i) "Tax Return" means any return,
declaration, report, information return or statement, and any amendment thereto,
including without limitation any consolidated, combined or unitary return or
other document (including any related or supporting information), filed or
required to be filed with any Taxing Authority in connection with the
determination, assessment, collection, payment, refund or credit of any federal,
state, local or foreign Tax or the administration of any Laws relating to any
Tax or ERISA, and (ii) "Tax" or "Taxes" means any and all taxes, charges, fees,
levies, deficiencies or other assessments of whatever kind or nature including,
without limitation, all net income, gross income, profits, gross receipts,
excise, real or personal property, sales, ad valorem, withholding, social
security, retirement, excise, employment, unemployment, minimum, estimated,
severance, stamp, property, occupation, environmental, windfall profits, use,
service, net worth, payroll, franchise, license, gains, customs, transfer,
recording and other taxes, customs duty, fees assessments or charges of any kind
whatsoever, imposed by any Taxing Authority, including any liability therefor as
a
transferee (including without limitation under Section 6901 of the Code or any
similar provision of applicable Law), as a result of Treasury Regulation
ss.1.1502-6 or any similar provision of applicable Law, or as a result of any
Tax sharing or similar agreement, together with any interest, penalties or
additions to tax relating thereto.
5.13 Environmental Matters.
(a) the Seller is in compliance with, and the Business has
been conducted in material compliance with, all Environmental Laws (as defined
below) and Environmental Permits (as defined below);
(b) Neither the Seller nor the Parent has received any notice
that remains pending or outstanding with respect to the Business from any
Governmental Entity or Person alleging that the Seller is not in material
compliance with any Environmental Law;
(c) there are no past or pending, or to the best knowledge of
the Seller and the Parent, threatened, any Environmental Claims against the
Seller or with respect to the Business or the Acquired Assets and neither the
Seller nor the Parent are aware of any facts or circumstances which could be
expected to form the basis for any Environmental Claim against the Business; and
(d) As used herein, (i) "Environment" means all air, surface
water, groundwater, or land, including land surface or subsurface, including all
fish, wildlife, biota and all other natural resources; (ii) "Environmental
Claim" means any and all administrative or judicial actions, suits, orders,
claims, liens, notices, notices of violations, investigations, complaints,
requests for information, proceedings or other communications (written or oral),
whether criminal or civil, (collectively, "Claims") pursuant to or relating to
any applicable Environmental Law by any person (including, but not limited to,
any Governmental Entity, Person and citizens' group) based upon, alleging,
asserting, or claiming any actual or potential (x) violation of or liability
under any Environmental Law, (y) violation of any Environmental Permit, or (z)
liability for investigatory costs, cleanup costs, removal costs, remedial costs,
response costs, natural resource damages, property damage, personal injury,
fines, or penalties arising out of, based on, resulting from, or related to the
presence, Release, or threatened Release into the Environment, of any Hazardous
Substances at any location, including, but not limited to, any off-Site location
to which Hazardous Substances or materials containing Hazardous Substances were
sent for handling, storage, treatment, or disposal; (iii) "Environmental Law"
means any and all Laws relating to the protection of health and the Environment,
worker health and safety, and/or governing the handling, use, generation,
treatment, storage, transportation, disposal, manufacture, distribution,
formulation, packaging, labeling, or Release of Hazardous Substances, whether
now existing or
subsequently amended or enacted, and the state analogies thereto, all as amended
or superseded from time to time; and any common law doctrine, including, but not
limited to, negligence, nuisance, trespass, personal injury, or property damage
related to or arising out of the presence, Release, or exposure to a Hazardous
Substance; (iv) "Environmental Permit" means any permits, licenses, approvals,
consents or authorizations required by any Governmental Entity under or in
connection with any Environmental Law; and (v) "Hazardous Substance" means
petroleum, petroleum hydrocarbons or petroleum products, petroleum by-products,
radioactive materials, asbestos or asbestos-containing materials, gasoline,
diesel fuel, pesticides, radon, urea formaldehyde, lead or lead-containing
materials, polychlorinated biphenyls; and any other chemicals, materials,
substances or wastes in any amount or concentration which are now included in
the definition of "hazardous substances," "hazardous materials," "hazardous
wastes," "extremely hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants," "pollutants," "regulated substances," "solid
wastes," or "contaminants" or words of similar import, under any Environmental
Law.
5.14 No Brokers. Except with respect to KPMG Peat Marwick LLP, neither
the Seller nor the Parent have employed, or otherwise engaged, any broker or
finder or incurred any liability for any brokerage or investment banking fees,
commissions, finders' fees or other similar fees in connection with the
transactions contemplated by this Agreement, and the Seller and the Parent shall
be jointly and severally liable for any fees, commissions or other costs payable
in connection therewith.
5.15 Assets Utilized in the Business. The assets, properties and rights
owned, leased or licensed by the Seller or used in connection with the Business
and that will be owned, leased or licensed by the Seller as of the Closing Date,
and all the agreements to which the Seller is a party, constitute all of the
properties, assets and agreements necessary to the Seller in connection with the
operation and conduct by the Seller of the Business as presently and as proposed
to be conducted.
5.16 Labor Matters. There are no labor strikes, slow-downs or stoppages
or other labor troubles pending or, to the best knowledge of the Seller and the
Parent, threatened with respect to the employees of the Seller; to the best
knowledge of the Seller and the Parent, no representation questions exist; there
is no collective bargaining agreement binding on the Seller and there is no
agreement which restricts the Seller from relocating or closing any or all of
its businesses or operations; there are no grievances asserted that might have
an adverse effect upon the Business, or the financial condition or prospects of
the Seller, nor is there pending any arbitration proceeding arising out of or
under any labor union agreement; the Seller has not experienced any work
stoppage during the last five years.
5.17 Year 2000. All of the Seller's systems, software, data and
databases, including without limitation, any of such systems, software, data and
databases relating to the Acquired Assets (collectively, the "Systems") are (or
with the purchase and use of updated software will be) Year 2000 Compliant (as
hereinafter defined). For purposes of this Agreement, "Year 2000 Compliant"
shall mean: (i) the occurrence in or use by the Systems of dates before, on or
after January 1, 2000 will not adversely affect the performance of the Systems
with respect to date-dependent data, computations, output or other functions,
including without limitation, calculating, comparing and sequencing; (ii) the
Systems will not abnormally end or provide invalid or incorrect results as a
result of date-dependant data; and (iii) the Systems can accurately recognize,
manage, accommodate and manipulate date-dependant data, including, without
limitation, single century formulas and leap years.
5.18 No Misstatements or Omissions. No representation or warranty by
the Seller and the Parent contained in this Agreement and no statement contained
in any certificate, list, Schedule, Exhibit or other instrument specified or
referred to in this Agreement, whether heretofore furnished to the Buyer or
hereafter furnished to the Buyer pursuant to this Agreement, contains or will
contain any untrue statement of a material fact or omits or will omit any
material fact necessary to make the statements contained therein, in light of
the circumstances under which it was made, not misleading.
5.19 Absence of Sensitive Payments. Neither the Seller nor the Parent
(together with any such party's directors, officers, brokers, sub-brokers,
agents or employees) on behalf of the Seller:
(a) has made or has agreed to make any contributions, payments
or gifts of funds or property to any governmental official, employee or agent
where either the payment or the purpose of such contribution, payment or gift
was or is illegal under the laws of the United States, any state thereof or any
jurisdiction (foreign or domestic);
(b) has established or maintained any unrecorded fund or asset
for any purpose, or has made any false or artificial entries on any of its books
or records for any reason; or
(c) has made or agreed to make any contribution or
expenditure, or has reimbursed any political gift or contribution or expenditure
made by any other person to candidates for public office, whether federal, state
or local (foreign or domestic) where such contributions were or would be a
violation of applicable law.
6. Representations and Warranties of the Buyer. The Buyer represents and
warrants to the Seller as follows:
6.1 Organization. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of New Jersey and has
all requisite power and authority to own, lease and operate its properties and
to carry on its business as it is now being conducted. Except to the extent
which would not be reasonably likely to have a material adverse effect on the
Buyer's financial condition, results of operations, properties or assets (a
"Material Adverse Effect"), the Buyer is duly qualified or licensed to do
business as a corporation and is in good standing in each jurisdiction in which
the nature of the business conducted by it makes such qualification or licensing
necessary.
6.2 Authorization; Validity of Agreement. The Buyer has the requisite
corporate power and authority to execute, deliver and perform this Agreement and
each other agreement executed or to be executed by it pursuant to the terms of
this Agreement (collectively, the "Buyer Agreements") and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance by the Buyer of this Agreement and the other Buyer Agreements to
which it is a party and the consummation of the transactions contemplated hereby
and thereby have been duly and validly authorized by the Buyer, and no other
proceedings on the part of the Buyer are necessary to authorize the execution,
delivery and performance of this Agreement and the other Buyer Agreements to
which the Buyer is a party and the consummation of the transactions contemplated
hereby and thereby. This Agreement and each other Buyer Agreement to which the
Buyer is a party has been duly executed and delivered by the Buyer and, assuming
due authorization, execution and delivery of this Agreement and each other Buyer
Agreement by the Seller and the Parent party thereto, is a valid and binding
obligation of the Buyer, enforceable against the Buyer in accordance with its
terms, except as such enforceability may be subject to or limited by applicable
bankruptcy, insolvency, reorganization, or other similar laws, now or hereafter
in effect, affecting the enforcement of creditors' rights generally.
6.3 No Violations; Consents and Approvals.
(a) The execution, delivery and performance of this Agreement
and the Buyer Agreements by the Buyer, do not, and the consummation by the Buyer
of the transactions contemplated hereby and thereby will not, (i) violate any
provision of the certificate of incorporation or bylaws of the Buyer, (ii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any material note, bond, mortgage, indenture, guarantee, other evidence of
indebtedness, license, contract,
agreement or other instrument to which the Buyer is a party or by which the
Buyer or any of its properties or assets may be bound or otherwise subject or
(iii) violate any order, writ, judgment, injunction, decree, law, statute, rule
or regulation applicable to the Buyer or any of its respective properties or
assets, except in each instance set forth in clauses (i), (ii) or (iii) above,
where any such violation, breach or default would not be reasonably likely to
have a Material Adverse Effect.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any Governmental Entity is required in
connection with the execution, delivery and performance of this Agreement or the
other Buyer Agreements by the Buyer or the consummation by the Buyer of the
transactions contemplated hereby and thereby, except filings as may be required
under state and federal securities laws to give effect to the issuance of the
Shares pursuant to this Agreement and except when the failure to file, register
or obtain consent or approval would not be likely to have Material Adverse
Effect.
6.4 No Brokers. The Buyer has not employed or otherwise engaged any
broker or finder or incurred any liability for any fees relating thereto in
connection with the transactions contemplated in this Agreement
7. Other Agreements of the Parties.
7.1 Public Statements. No press releases or any public disclosure,
either written or oral, of the transactions contemplated by this Agreement shall
be made without the prior written notice and written consent of the Buyer.
7.2 Other Actions. Each of the parties hereto shall use all reasonable
efforts to (i) take, or cause to be taken, all actions, (ii) do, or cause to be
done, all things, and (iii) execute and deliver all such documents, instruments
and other papers, as in each case may be necessary, proper or advisable under
applicable Laws, or reasonably required in order to carry out the terms and
provisions of this Agreement and to consummate and make effective the
transactions contemplated hereby.
7.3 Cooperation on Taxes. The Seller and the Buyer shall cooperate with
each other by executing or causing to be executed any required documents and by
making available to the other, all books and records relating to the Acquired
Assets or the Business (including work papers, records and notes of any kind) at
all reasonable times, for the purpose of allowing the appropriate party to
complete its Tax Returns, respond to defend or prosecute any Tax Proceeding,
make any determination required under this Agreement (including, but not limited
to,
determinations as to which period any asserted Tax liability is attributable)
and verify issues.
7.4 Employees.
(a) On or prior to the Closing, the Buyer and the Seller shall
prepare a mutually agreeable list of employees of the Seller to be attached to
this Agreement as Schedule 7.4(a). The Buyer may offer employment effective as
of such dates, and upon such terms and conditions, as determined in the sole
discretion of the Buyer to all employees of the Seller listed on Schedule 7.4(a)
(all such employees who accept such offer of employment being the "Transferred
Employees"). The Seller shall obtain, and provide the Buyer with the written
agreement of each Transferred Employee applicable to it to the Buyer's review of
the personnel file of such Transferred Employee, prior to the Buyer's review of
such personnel file. In addition to the obligation of the Seller set forth
below, all responsibility for employees of the Seller, other than Transferred
Employees, including, without limitation, claims arising out of the decision not
to include such employees on Schedule 7.4(a), shall be liabilities of the
Seller.
(b) The Buyer shall not be responsible for any payments,
expenses and costs paid or required to be paid in connection with the employment
or termination of employment of any employees of the Seller who are not listed
on Schedule 7.4(a), or who are listed on Schedule 7.4(a) and do not accept the
Buyer's offer of employment with the Buyer.
(c) The Seller shall remain responsible for (i) payment of any
and all wages, accrued vacation pay, bereavement pay, jury duty pay, disability
income, supplemental unemployment benefits, fringe benefits or other perquisites
of employment, termination indemnities or similar benefits (whether arising
under any plan, program, policy or arrangement of the Seller or under applicable
local law), payroll taxes and other payroll related expenses and (ii) payments
to or under employee benefit plans (within the meaning of Section 3(3) of ERISA)
maintained or contributed to by the Seller, in either case arising out of or
relating to the employment of any of the Transferred Employees by the Seller
prior to the Closing.
(d) The Seller shall retain responsibility and liability for
all workers' compensation claims of the Transferred Employees to the extent
relating to events, conditions or circumstances that occur or exist prior to the
Closing. Notwithstanding the foregoing, the Buyer may, at its election, assume
responsibility for the supervision, defense or settlement of any such workers'
compensation claims at the Seller's cost and expense. The Buyer shall keep the
Seller reasonably apprised of the status of such workers' compensation claims.
The Seller may, at its own expense, participate in the supervision, defense or
settlement of any such workers' compensation claims, and shall cooperate in the
supervision, defense or settlement of any such
workers' compensation claims if requested to do so by the Buyer. The Buyer shall
have sole responsibility and liability for any workers' compensation claims of
Transferred Employees to the extent relating to any event, condition or
circumstance that occurs after the Closing.
(e) In respect of grievances or claims made with the U.S.
Equal Employment Opportunity Commission ("EEOC Claims") of Transferred Employees
to the extent relating to their employment by the Seller including, without
limitation, any such grievances or EEOC Claims filed before state or local
authorities for which payment has not been made prior to the Closing, the Seller
shall retain responsibility and liability for all amounts due with respect
thereto including, without limitation, the payment of any amounts in the nature
of back pay or employee compensation, and any state or federal taxes in
connection with such back pay or employee compensation. Handling of such
grievances and EEOC Claims shall be at the Seller's cost and expense.
(f) Nothing in this Section 7.4 shall limit the at-will nature
of the employment of the Transferred Employees or the right of the Buyer to
alter or terminate any employee benefit plan.
7.5 Consents; Releases. The Seller and the Parent shall cause the
Seller to receive all Consents on or prior to the Closing Date, each of which
Consent is set forth on Schedule 5.4(c). At or prior to the Closing, the Seller
and the Parent shall cause the Business and the Acquired Assets to be released
from all liabilities, liens or other obligations.
7.6 Bulk Sales. The Seller and the Parent hereby (i) irrevocably waive
any and all compliance by any party hereto in connection with any "bulk
transfer" or similar statute, rule or regulation ("Bulk Transfer Laws") and (ii)
jointly and severally indemnify and hold harmless the Buyer and each of its
directors, officers, employees, shareholders and agents from and against any and
all liabilities (including without limitation, attorneys' fees thereof) arising
out of any failure by any party to comply with any Bulk Transfer Laws.
7.7 Inventory Pricing. The Seller hereby agrees to sell certain
inventory of the Seller to the Buyer at the prices set forth in Schedule 7.7
annexed hereto. This sale will be separately documented and is not included in
the Acquired Assets.
7.8 Access to the Seller's Retained Books and Records. From and after
the Closing Date, at all reasonable times and as often as the Buyer reasonably
may request, the Seller shall, and shall cause each of its affiliates to, permit
the Buyer (and its accountants, other representatives or attorneys), to have
complete and unrestricted access to all books, records and
other factual information retained by the Seller relating to the Acquired Assets
or the Business as the Buyer may reasonably require, and to make copies and
excerpts thereof and to discuss the same with the Seller's officers, directors,
employees, accountants and agents, in connection with (a) the preparation,
filing or audit of the federal, state, local or foreign income or other Tax
Returns of the Buyer or any affiliate of the Buyer, or with respect to any
dispute, refund, claim or litigation relating to those returns and the taxes due
pursuant to those returns, (b) the collection of any account receivable, (c) the
initiation, prosecution or defense of any other litigation by the Buyer or any
affiliate of the Buyer, (d) compliance by the Buyer or any of its affiliates
with any legal or regulatory obligation of those entities, (e) any Acquired
Asset, (f) the release or defense of any Excluded Liability or any Lien, or (g)
the administration, enforcement or adjudication of this Agreement and the other
Transaction Documents. The Seller acknowledges that all such retained books,
records and information constitute confidential information and may be disposed
of only by destruction or delivery to the Buyer. The Seller shall maintain all
retained books, records and information for at least six years following the
Closing Date, except that the Seller from time to time at its cost and expense
may deliver portions thereof to the Buyer.
7.9 Action relating to Accounts. Without the prior written consent of
the Buyer, which consent may be withheld in its reasonable discretion, neither
the Seller nor the Parent shall commence any litigation or take any action
whatsoever in connection with the collection of any amounts due on behalf of the
Seller with respect to any Accounts.
7.10 Indemnification of Brokers. Each of the parties hereby indemnifies
and holds harmless the other parties against any and all liabilities or damages
whatsoever (including reasonable attorneys' thereof) arising out of or relating
to any fees, commissions or other payments payable by such party to any brokers,
finders or other financial advisors of any kind.
7.11 Office Space License.
(a) The Seller will license to the Buyer, and the Buyer will
license from the Seller, the right to use and occupy approximately 4,000 square
feet of space in the building with the street address 0000 Xxxxx Xxxxx Xxxxxxx,
Xxxxxxx, Xxxxxxxxxx, for a period not exceeding three months at a rate of $1.00
per square foot per month. Buyer agrees to execute a standard commercial lease
to evidence such rental prior to occupying the premises.
8. Conditions Precedent to the Closing.
8.1 Conditions Precedent to the Buyer's Obligations to Close. The
obligation of the Buyer to enter into this Agreement and to consummate the
transactions contemplated hereby is
subject to the satisfaction prior to or on the Closing Date of each of the
following conditions; provided, however, that the Buyer shall have the right to
waive all or any part of each such condition and to close the transactions
contemplated hereby without, however, releasing the Seller or the Parent from
any covenant, obligation, agreement or condition contained herein or from any
liability for any loss or damage sustained by the Buyer by reason of the breach
by the Seller or the Parent of any covenant, obligation, agreement or condition
contained herein or by reason of any misrepresentation made by the Seller or the
Parent; and provided further, however, that the Buyer's participation in the
Closing shall not in any way be deemed to be a waiver of any claim it may have
hereunder for any breach of any representation, warranty, covenant or agreement:
(a) The representations and warranties of the Seller and the
Parent contained in this Agreement shall have been true and correct when made
and shall be true and correct as of the Closing Date, with the same force and
effect as if made on the Closing Date, except for such representations and
warranties as are made as of a specific date, which shall be true and correct in
all material respects as of such date.
(b) The covenants and agreements of the Seller and the Parent
contained in this Agreement and required to be complied with or performed on or
prior to the Closing Date shall have been complied with or performed in all
respects.
(c) The Buyer shall have received, each in form and substance
reasonably satisfactory to the Buyer, all Consents of, and estoppel certificates
and releases from, any Governmental Entity or other Person that is required for
the consummation of the transactions contemplated hereby and for the Buyer to
conduct and operate the Business, which Consents, notices and estoppel
certificates are listed in Schedule 5.4(c).
(d) No event or events shall have occurred between the date
hereof and the Closing Date which, individually or in the aggregate, have, or
are reasonably likely to have, a material adverse effect on the Acquired Assets
or the Business.
(e) The Buyer shall have received a Xxxx of Sale substantially
in the form annexed hereto as Exhibit 8.1(e), duly executed by the Seller.
(f) The Seller and the Parent shall have executed and
delivered to the Buyer a non-competition agreement substantially in the form
annexed hereto as Exhibit 8.1(f).
(g) The Seller shall have signed and delivered to the Buyer a
letter addressed
to the customers of the Seller in form and substance satisfactory to the Buyer
advising such customers of the sale by the Seller to the Buyer of the Acquired
Assets.
(h) The Seller shall have executed and delivered to the Buyer
an Assignment of Patents, Trademarks and Tradenames substantially in the form
annexed hereto as Exhibit 8.1(h) together with such other documents and
instruments necessary to effectuate the transfer of any Intellectual Property
from the Seller to the Buyer and record the transfer or transfers thereof.
(i) There shall be no order, decree or injunction of a court
of competent jurisdiction or other Governmental Entity that prevents the
consummation of the transactions contemplated by this Agreement or Proceeding
that threatens to prevent such transactions.
8.2 Conditions Precedent to the Seller' Obligations to Close. The
obligation of the Seller to consummate the transactions contemplated hereby is
subject to the satisfaction prior to or on the Closing Date of each of the
following conditions; provided, however, that the Seller shall have the right to
waive all or any part of each such condition, and to close the transactions
contemplated hereby without, however, releasing the Buyer from any covenant,
obligation, agreement or condition contained herein or from any liability for
any loss or damage sustained by the Seller by reason of the breach by the Buyer
of any covenant, obligation, agreement or condition contained herein, by reason
of any misrepresentation made by the Buyer; and provided further, however, that
the Seller' participation in the Closing shall not in any way be deemed to be a
waiver of any claim it may have hereunder for any breach of any representation,
warranty, covenant or agreement:
(a) The representations and warranties of the Buyer contained
in this Agreement shall have been true and correct when made and shall be true
and correct as of the Closing Date, with the same force and effect as if made as
of the Closing Date, other than such representations and warranties as are made
as of a specific date, which shall be true and correct in all material respects
as of such date.
(b) The covenants and agreements contained in this Agreement
to be complied with by the Buyer on or before the Closing Date shall have been
complied with or performed in all respects.
(c) The Buyer shall have delivered the Note duly executed by
an authorized officer thereof.
(d) There shall be no order, decree or injunction of a court
of competent
jurisdiction or other Governmental Entity that prevents the consummation of the
transactions contemplated by this Agreement or Proceeding that threatens to
prevent such transactions.
9. Termination.
(a) This Agreement may be terminated at any time prior to the
Closing:
(i) by the mutual agreement of the Buyer and the
Seller;
(ii) by the Buyer or the Seller (if such party is not
in breach of or default under this Agreement) giving written notice to such
effect to the other party if the Closing shall not have occurred on or before
March 31, 1999, or such later date as the parties shall have agreed upon prior
to the giving of such notice; or
(iii) by either the Buyer or the Seller in the event
of a material breach by or default of the other party hereto.
(b) Upon termination of this Agreement pursuant to Section
9(a), all obligations of the parties shall terminate except those under Section
11; provided, however, that no such termination shall relieve the Seller or the
Parent of any liability to the Buyer, or the Buyer of any liability to the
Seller, by reason of any breach of or default under this Agreement.
10. Survival of Representations and Warranties; Rights and Obligations
Subsequent to Closing.
10.1 Survival of Representations and Warranties of the Seller and the
Parent. Notwithstanding any right of the Buyer fully to investigate the affairs
of the Seller and the Parent and notwithstanding any knowledge of facts
determined or determinable by the Buyer pursuant to such investigation or right
of investigation, the Buyer has the right to rely fully upon the representations
and warranties of the Seller and the Parent contained in this Agreement or in
any other Transaction Document. All such representations and warranties shall
survive the execution and delivery of this Agreement and the Closing hereunder
and shall thereafter continue in full force and effect until the third
anniversary of the Closing Date, and any liability of the Seller and the Parent
in respect of any breach of any such representation or warranty shall terminate
on the third anniversary of the Closing Date, except for liability with respect
to which notice shall have been given on or prior to such date to the party
against which such claim is asserted pursuant to Section 11.3, which such
liability shall remain an obligation of the party against whom such claim is
asserted, provided that, any liability of the Seller or the Parent arising out
of or relating to
breaches of the representations and warranties contained in Sections 5.12 and
5.13 shall continue in full force and effect and shall survive the execution and
delivery of this Agreement in perpetuity.
10.2 Survival of Representations and Warranties of the Buyer. The
Seller has the right to rely fully upon the representations and warranties of
the Buyer contained in this Agreement or in any other Transaction Document. All
such representations and warranties shall survive the execution and delivery of
this Agreement and the Closing hereunder and shall thereafter continue in full
force and effect until the third anniversary of the Closing Date, and Buyer's
liability in respect of any breach of any such representation or warranty shall
terminate on the third anniversary of the Closing Date, except for liability
with respect to which notice shall have been given on or prior to such date to
the party against which such claim is asserted pursuant to Section 11.3, which
such liability shall remain an obligation of the party against whom such claim
is asserted.
10.3 Collection of Assets. Subsequent to the Closing, the Buyer shall
have the right and authority to collect all items transferred to it by the
Seller, and the Seller agrees that it will promptly transfer or deliver to the
Buyer from time to time, any cash or other property that the Seller may receive
with respect to any claims, contracts, licenses, leases, commitments, sales
orders, purchase orders, or any other item required to be transferred to the
Buyer pursuant to this Agreement.
10.4 Letters to Customers. In addition to the letters to the customers
of the Seller advising such customers of the sale of the Acquired Assets by the
Seller to the Buyer, which letters the Seller is required to sign and deliver to
the Buyer on or prior to the Closing Date pursuant to Section 8.1(h), the Seller
and the Parent agree to cooperate fully with the Buyer after the Closing in the
drafting, signing, delivering and sending out of follow-up letters to the
customers of the Seller.
11. Indemnification.
11.1 Indemnification by the Seller and the Parent. Subject to the
limitations contained in Section 10, the Seller and the Parent shall jointly and
severally indemnify and defend the Buyer and each of its officers, directors,
employees, shareholders, agents, advisors or representatives (each, a "Buyer
Indemnitee") against, and hold each Buyer Indemnitee harmless from, any loss,
liability, obligation, deficiency, damage or expense including without
limitation, interest, penalties, reasonable attorneys' and consultants' fees and
disbursements (collectively, "Damages"), that any Buyer Indemnitee may suffer or
incur based upon, arising out of, relating to or in connection with
any of the following (whether or not in connection with any third party claim):
(a) any breach of any representation or warranty made by the
Seller and the Parent contained in this Agreement or in any other Transaction
Document or in respect of any claim made based upon facts alleged which, if
true, would constitute any such breach;
(b) the failure by the Seller or the Parent to perform or to
comply with any covenant or condition required to be performed or complied with
by any such party contained in this Agreement or in any other Transaction
Document; or
(c) the ownership or operation of the Business or Acquired
Assets prior to the Closing Date, including payment and/or non-assumption of
liabilities in accordance with Section 2.1.
11.2 Indemnification by the Buyer. Subject to the limitations contained
in Section 10, the Buyer shall indemnify and defend the Seller and the Seller's
officers, directors, employees, shareholders, agents, advisors or
representatives (each, a "Seller Indemnitee") against, and hold each Seller
Indemnitee harmless from, any Damages that such Seller Indemnitee may suffer or
incur arising from, related to or in connection with any of the following:
(a) any breach of any representation or warranty made by the
Buyer contained in this Agreement or in any other Transaction Document or in
respect of any claim made based upon facts alleged which, if true, would
constitute any such breach;
(b) the Buyer's failure to perform or to comply with any
covenant or condition required to be performed or complied with by the Buyer
contained in this Agreement or in any other Transaction Document; or
(c) the ownership or operation of the Business or Acquired
Assets on or after the Closing Date, including assumed liabilities set forth in
Schedule 2.1.
11.3 Indemnification Procedures.
(a) Promptly after notice to an indemnified party of any claim
or the commencement of any Proceeding, including any Proceeding by a third
party, involving any Damage referred to in Sections 11.1 or 11.2, such
indemnified party shall, if a claim for indemnification in respect thereof is to
be made against an indemnifying party pursuant to this Section 11, give written
notice to the latter of the notice of such claim or the commencement of
such Proceeding, setting forth in reasonable detail the nature thereof and the
basis upon which such party seeks indemnification hereunder; provided, however,
that the failure of any indemnified party to give such notice shall not relieve
the indemnifying party of its obligations under such Section, except to the
extent that the indemnifying party is actually prejudiced by the failure to give
such notice.
(b) (i) In the case of any Proceeding by a third party against
an indemnified party, if the indemnifying party acknowledges in writing its
obligation to indemnify the indemnified party therefor, the indemnifying party
will be entitled to assume the defense thereof (at the expense of the
indemnifying party), with counsel reasonably satisfactory to the indemnified
party, and, after notice from the indemnifying party to the indemnified party of
its acknowledgment of liability and assumption of the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof (but the indemnified party shall have the right, but
not the obligation, to participate at its own cost and expense in such defense
by counsel of its own choice) or for any amounts paid or foregone by the
indemnified party as a result of any settlement or compromise thereof that is
effected by the indemnified party (without the written consent of the
indemnifying party), except as provided in Section 11.3(b)(ii) below.
(ii) Anything in Section 11.3(b)(i) notwithstanding,
if the indemnified party determines with advise of counsel that a conflict of
interest exists between the indemnifying party and the indemnified party in
respect of any Proceeding or if both the indemnifying party and the indemnified
party are named as parties or subject to any Proceeding and either such party
determines with advice of counsel that there may be one or more legal defenses
available to it that are different from or additional to those available to the
other party, then the indemnified party will have the right to employ separate
counsel to represent itself, and in that event, after notice to such effect is
duly given hereunder to the other party, the reasonable fees and expenses of
such separate counsel will be paid by the indemnifying party.
(c) Each of the indemnifying and indemnified party shall
cooperate fully with the other in the defense of any Proceeding hereunder,
including without limitation, appearing and giving testimony, producing
documents and other tangible evidence, allowing the other party access to the
books and records of such party and otherwise assisting the other party in
conducting such defense. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
or compromise which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or Proceeding. Provided that proper notice is
duly given, if the indemnifying party shall fail promptly and diligently to
properly assume the defense thereof, then the indemnified party may respond to,
contest and defend against such Proceeding and may make in good faith any
compromise or settlement with respect thereto, and recover from the indemnifying
party the entire cost and expense thereof including, without limitation,
reasonable attorneys' fees and disbursements and all amounts paid or foregone as
a result of such Proceeding, or the settlement or compromise thereof. The
indemnification required hereunder shall be made by periodic payments of the
amount thereof during the course of the investigation or defense, as and when
bills or invoices are received or loss, liability, obligation, damage or expense
is actually suffered or incurred.
(d) Any notice of a claim hereunder which does not involve a
third party shall include a statement in prominent and conspicuous type, that if
the indemnifying party does not dispute its liability to the indemnified party
with respect to such claim by notice to the indemnified party prior to the
expiration of a 45 calendar day period following the indemnifying party's
receipt of notice of such claim, the claim will be conclusively deemed a
liability of the indemnifying party. If the indemnifying party does not notify
the indemnified party prior to the expiration of a 45 calendar day period
following its receipt of such notice that the indemnifying party disputes its
liability to the indemnified party under this Agreement, such claim specified by
the indemnified party in such notice will be conclusively deemed a liability of
the indemnifying party under this Agreement and the indemnifying party shall pay
the amount of such liability to the indemnified party on demand or, in the case
of any notice in which the amount of the claim (or any portion thereof) is
estimated, on such later date when the amount is determined. If the indemnifying
party has timely disputed its liability with respect to such claim, as provided
above, the indemnifying party and the indemnified party will proceed in good
faith to negotiate a resolution of such dispute and, if not resolved through
negotiation by the 90th day after notice of such claim was given to the
indemnifying party, such dispute will be resolved: (i) by arbitration to be
conducted by a single arbitrator pursuant to the Rules of the American
Arbitration Association, which arbitration shall be conducted in New York, New
York, or (ii) by such other methods or procedures as the indemnifying party and
the indemnified party mutually agree. If arbitration is used, the parties will
complete all submissions to the arbitrator within 45 days of choosing the
arbitrator, and the arbitrator will provide a final ruling on each dispute
within 30 days of the final submission by the parties. The arbitrator shall
award to the party that obtains substantially the relief sought that party's
costs and fees, including reasonable attorneys' fees.
12. Miscellaneous.
12.1 Transaction Fees and Expenses. Each party hereto shall bear such
costs, fees and expenses as may be incurred by it in connection with this
Agreement and the transactions contemplated hereby.
12.2 Notices. Any notice, demand, request or other communication which
is required, called for or contemplated to be given or made hereunder to or upon
any party hereto shall be deemed to have been duly given or made for all
purposes if (a) in writing and sent by (i) messenger or a recognized national
overnight courier service for next day delivery with receipt therefor, or (ii)
certified or registered mail, postage paid, return receipt requested, or (b)
sent by facsimile transmission with a written copy thereof sent on the same day
by postage paid first-class mail or (c) by personal delivery to such party at
the following address:
To the Buyer:
MicroFrame, Inc., Inc.
00 Xxxxxxxx Xxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxx X. XxXxxxx, Chief Financial Officer
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
To the Seller or the Parent:
c/o LeeMAH Datacom Security Corporation
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxx Xxx, Vice President-Finance
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxx Nemerovski Xxxxxx Xxxx & Rabkin
0 Xxxxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile No.: 415) 217-5910
or such other address as either party hereto may at any time, or from time to
time, direct by notice given to the other party in accordance with this Section.
12.3 Amendment. Except as otherwise provided herein, no amendment of
this Agreement shall be valid or effective unless in writing and signed by or on
behalf of the party
against whom the same is sought to be enforced.
12.4 Waiver. No course of dealing of any party hereto, no omission,
failure or delay on the part of any party hereto in asserting or exercising any
right hereunder, and no partial or single exercise of any right hereunder by any
party hereto shall constitute or operate as a waiver of any such right or any
other right hereunder. No waiver of any provision hereof shall be effective
unless in writing and signed by or on behalf of the party to be charged
therewith. No waiver of any provision hereof shall be deemed or construed as a
continuing waiver, as a waiver in respect of any other or subsequent breach or
default of such provision, or as a waiver of any other provision hereof unless
expressly so stated in writing and signed by or on behalf of the party to be
charged therewith.
12.5 Governing Law. This Agreement shall be governed by, and
interpreted and enforced in accordance with, the laws of the State of New York
without giving effect to principles of conflicts or choice of law thereof.
12.6 Jurisdiction. Each of the parties hereto hereby irrevocably
consents and submits to the exclusive jurisdiction of the United States District
Court for the Southern District of New York in connection with any Proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby, waives any objection to venue in such district and waives any right to
claim that such district may be an inconvenient forum.
12.7 Remedies. In the event of any actual or prospective breach or
default by any party hereto, the other parties shall be entitled to equitable
relief, including remedies in the nature of rescission, injunction and specific
performance. All remedies hereunder are cumulative and not exclusive. Nothing
contained herein and no election of any particular remedy shall be deemed to
prohibit or limit any party from pursuing, or be deemed a waiver of the right to
pursue, any other remedy or relief available now or hereafter existing at law or
in equity (whether by statute or otherwise) for such actual or prospective
breach or default, including the recovery of damages.
12.8 Severability. The provisions hereof are severable and if any
provision of this Agreement shall be determined to be legally invalid,
inoperative or unenforceable in any respect by a court of competent
jurisdiction, then the remaining provisions hereof shall not be affected, but
shall, subject to the discretion of such court, remain in full force and effect,
and any such invalid, inoperative or unenforceable provision shall be deemed,
without any further action on the part of the parties hereto, amended and
limited to the extent necessary to render such provision valid, operative and
enforceable.
12.9 Further Assurances. Each party hereto covenants and agrees
promptly to execute, deliver, file or record such agreements, instruments,
certificates and other documents and to perform such other and further acts as
the other party hereto may reasonably request or as may otherwise be necessary
or proper to consummate and perfect the transactions contemplated hereby.
12.10 Assignment. Except as provided herein, this Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto, their heirs and their respective successors and permitted
assignees and may not be assigned or transferred by the Seller or the Parent
without the prior written consent of the Buyer.
12.11 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective legal representatives,
successors and permitted assigns.
12.12 No Third Party Beneficiaries. Nothing contained in this
Agreement, whether express or implied, is intended, or shall be deemed, to
create or confer any right, interest or remedy for the benefit of any Person
other than as otherwise provided in this Agreement.
12.13 Entire Agreement. This Agreement, together with the Exhibits,
Schedules, certificates and other documentation referred to herein or required
to be delivered pursuant to the terms hereof, contains the terms of the entire
agreement among the parties with respect to the subject matter hereof and
supersedes any and all prior agreements, commitments, understandings,
discussions, negotiations or arrangements of any nature relating thereto.
12.14 Headings. The headings contained in this Agreement are included
for convenience and reference purposes only and shall be given no effect in the
construction or interpretation of this Agreement.
12.15 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed or caused to be
executed this Agreement to be executed as of the date first written above.
Seller: LEEMAH DATACOM SECURITY CORPORATION
By: /s/ Xxxxxx Xxx
--------------------------------------
Name: Xxxxxx Xxx
Title: Chief Financial Officer
Parent: LEEMAH CORPORATION
By: /s/ Xxxxxx Xxx
-----------------------------------------
Name: Xxxxxx Xxx
Title: Vice President-Finance
Buyer: MICROFRAME, INC.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President-Business Development
Schedule 1.1(a)
Machinery, Hardware and Software
(ALL TAKEN AS, IS WHERE IS, WITHOUT ANY WARRANTIES, INCLUDING ANY
WARRANTIES OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE)
Schedule 1.1(f)
Trade Names
Schedule 1.2
Excluded Assets
1. Any office furniture and equipment not listed in Schedule 1.1(a)
2. All inventory for resale and packing
3. All leases and leasehold improvements
Schedule 2.1
Assumed Liabilities
1. All Seller's warranties concerning software, of every kind and nature
whatsoever (not including those involving "Bandwagon" products).
2. All Seller's warranties concerning all products, other than software
and not these including "Bandwagon" products, of every kind and nature
whatsoever; provided, however, that Buyer's reasonable costs in
honoring such warranties concerning products other than software shall
not in the aggregate exceed $30,000.
3. All claims of product liability concerning the Acquired Assets, of
every kind and nature whatsoever.
4. All obligations of Seller under all contracts assumed by Buyer,
including but not limited to, all obligations under that certain
contract between LeeMah DataCom Security Corporation and Siemens
Corporation dated December 13, 1994, and as amended to date.
Schedule 5.4(b)
Governmental Approvals
None
Schedule 5.6
Material Adverse Changes
None
Schedule 5.8(c)
Licenses and Permits
None
Schedule 5.10(a)
Liens
None
Schedule 5.11(a)
Material Contracts
1. That certain contract between LeeMah DataCom Security Corporation and
Siemens Corporation dated December 13, 1994, and as amended to date.
Schedule 5.11(b)
Defaults or Events of Default
None
Schedule 5.12(a)
Taxes
None
Schedule 7.4(a)
Employees
Schedule 7.7
Inventory Pricing
Exhibit 3.2
Form of Promissory Note
Schedule 8.1(e)
Form of Xxxx of Sale
Exhibit 8.1(f)
Form of Non-Competition Agreement
Exhibit 8.1(h)
Form of Assignment of Patents, Trademarks and Tradenames
