EXHIBIT 99
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and entered into as of
the 11th day of August, 2010, by and between ALANCO/TSI PRISM, INC., an Arizona
corporation ("Seller"), and BLACK CREEK INTEGRATED SYSTEMS CORP., an Alabama
corporation ("Purchaser").
RECITALS
The Seller owns a business which manufactures and markets RFID systems
designed to monitor persons in confined environments such as prisons and jails,
known as the TSI Prism business (the Business). The Purchaser desires to acquire
substantially all of the assets of the Seller and the Business and the Seller is
willing to sell such assets to Purchaser upon the terms and conditions contained
herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements and subject to the
terms and conditions set forth in this Agreement, the parties agree as follows:
1.0 Sale of Assets of Seller to Purchaser. Upon and subject to the terms
and conditions herein stated, Purchaser agrees to acquire from Seller and Seller
agrees to transfer, assign and convey to Purchaser upon the Closing Date (as
hereinafter defined), free and clear of all debts, liens and encumbrances, all
of the assets and properties used in connection with the Business (the "Assets")
including all of the business, goodwill, assets, properties and rights of every
nature, kind and description, whether tangible or intangible, real, personal or
mixed, which are owned by Seller or in which Seller has any interest, excepting
only the Excluded Assets. The Assets shall include, but are not limited to, the
following:
1.1 Inventories. All inventories, whether located on Seller's business
premises, in transit to or from such premises, in storage facilities, at dealer
customer facilities, at customer locations or otherwise, including, but not
limited to, Sellers inventory of parts, materials and supplies. A list of such
inventory as of May 31, 2010 and its location is attached hereto as Schedule
1.1.
1.2 Tangible Personal Property. All tangible personal property of Seller,
wherever located owned by Seller or in which Seller has any interest, including
all machinery, equipment, furniture, supplies, spare parts, tools, stores and
other tangible personal property, other than the Inventories. Attached hereto as
Schedule 1.2 is a complete list of such Tangible Personal Property indicating
the location thereof as of the date hereof.
1.3 Intangible Personal Property. All intangible personal property
including all intangible properties owned by Seller or in which Seller has any
interest, including, but not limited to (i) the name "TSI Prism" and any other
registered or unregistered trademarks, service marks, trade names and slogans,
all applications therefor, and all associated goodwill; (ii) all statutory,
common law or registered copyrights, all applications therefore and all
associated goodwill; (iii) all patents and patent applications, all associated
technical information, shop rights, know-how, trade secrets, processes,
operating, maintenance, and other manuals, drawings and specifications, process
flow diagrams and related data, and all associated goodwill; (iv) all "software"
and documentation thereof, (including all electronic data processing systems and
program specifications, source codes, input data and report layouts and formats,
records, files, layouts, or diagrams, functional specifications and narrative
descriptions, or flow charts); (v) all other inventions, discoveries,
improvements, processes, formulae (secret or otherwise), data, drawings,
specifications, trade secrets, confidential information know-how and ideas
(including those in possession of third-parties, but which are the property of
Seller), and all drawings, records, books or other tangible media embodying the
foregoing; and (vi) the domain name "xxxxxxxx.xxx", the content of all websites
used in the Business. Attached hereto as Schedule 1.3 is a complete list of such
Intangible Personal Property as of the date hereof.
1.4 Prepaid Items. Those prepaid items shown on Schedule 1.4 attached
hereto, and no others.
1.5 Licenses and Permits. All licenses and permits issued to Seller in
which Seller has any interest. Attached hereto as Schedule 1.5 is a complete
list of all such licenses and permits, in each case indicating whether or not
such license or permit is assignable.
1.6 Contracts, Leases and Other Agreements. Only those contracts and other
agreements listed on Schedule 1.6 attached hereto.
1.7 Warranties. All warranties or other rights of Seller under express or
implied warranties from suppliers or contractors with respect to the Assets to
the extent assignable as well as all claims of Seller against third parties
relating to the Assets, whether known or unknown, contingent or non-contingent.
1.8 Books and Records. All books and records of Seller including customer
ledgers, customer lists, files, correspondence, copies of employee records for
employees to be hired by Purchaser, and other written records of every kind
owned by Seller or in which Seller has any interest, which relate to the Assets
other than those, if any, which constitute Excluded Assets.
1.9 Goodwill. All goodwill of the Business as a going concern.
1.10 Other Properties. All other properties, tangible and intangible, not
otherwise referred to above which are owned by Seller or in which it has any
interest, other than those, if any, which constitute Excluded Assets.
Excluded specifically from the Assets which Seller has agreed to sell to
Purchaser are the following Assets ("Excluded Assets") which shall be retained
by Seller:
1.11 Cash and Cash Equivalents. All cash or cash equivalents, including
actual cash, bank accounts, certificates of deposits, banker's acceptances,
United States Government (or agency) securities, or other securities owned by
Seller or in which Seller has any interest.
1.12 Accounts Receivable. All accounts receivable of Seller, including all
accounts, notes, accounts receivable, contract rights, drafts, and other forms
of claims, demands, instruments, receivables and rights to the payment of money
or other forms of consideration, whether for goods sold or leased, services
performed or to be preformed, or otherwise, owned by Seller or in which Seller
has any interest, together with all guarantees, security agreements and rights
and interests securing the same.
1.13 Corporate Books and Records. All books and records of Seller including
general ledgers, employee records (provided, however, Seller shall provide
Purchaser copies of the employee records of those employees hired by Purchaser
following the Closing at no cost to Purchaser), files, correspondence, documents
and records relating to the organization of Seller, all of Seller's tax and
information returns, and all other financial records of Seller which do not
relate in any way to Seller's ownership of the Assets and other written records
of every kind; provided, however, that upon reasonable notice from Purchaser to
Seller based upon reasonable cause, Seller shall provide Purchaser with access
to any of the foregoing described material and with copies (at Purchaser's
expense) of said documents.
1.14 Claims Against Shareholders, Etc. All of Seller's claims, causes of
action, chosen in action, and rights of set-off of any kind against or
pertaining to its shareholders, officers and directors.
1.15 Claims Against Vendors, Etc. All of Seller's claims, causes of action,
chosen in action, and rights of set-off of any kind against or pertaining to its
vendors, suppliers and others, including warranty claims, concerning past or
current projects to the extent not assumed or paid for by Purchaser hereunder.
1.16 Agreement Rights. The rights of Seller under this Agreement.
1.17 Non-Assumed Contracts. All Contracts and Other Agreements of Seller
not specifically set forth on Schedule 1.6.
1.18 Inventory on Open Jobs. Inventory listed on Schedule 1.18 related to
the Open Jobs (as defined in Section 2.2(c)).
1.19 Other Prepaid Items. Any prepaid item not shown on Schedule 1.4.
2.0 Assumption of Liabilities.
2.1 Assumed Liabilities. Upon and subject to the terms and conditions
herein stated, Purchaser agrees to assume as of the Closing Date and to pay,
perform and discharge the following liabilities of Seller (the "Assumed
Liabilities"):
(a) the obligations of Seller under the license agreements described on
Schedule 2.1(a) (the "Assigned License Agreements"), to the extent such
liabilities and obligations arise after the Effective Date, it being understood
and agreed that Purchaser shall not assume any liability or obligation of any
kind to the extent such liability or obligation arises out of or relates to any
occurrence or breach by Seller under such licenses prior to the Effective Date;
and
(b) accrued vacation as described in Schedule 2.1(b) for those employees of
seller hired by Purchaser at Closing.
2.2 Excluded Liabilities. All of the liabilities not specifically assumed
by Purchaser pursuant to paragraph 2.1 above shall remain the liabilities of
Seller (the "Excluded Liabilities"). The Excluded Liabilities include, but are
not limited to the following:
(a) All obligations and liabilities with respect to employee wages and
benefits (other than the accrued vacation expense as described in Schedule
2.1(b)), and any taxes related thereto.
(b) Any liability for taxes.
(c) Any liability or obligation of Seller with respect to the open jobs set
forth on Schedule 2.2(c) (the "Open Jobs").
(d) Any liability or obligation of Seller under the International
Distribution and License Agreement, dated March 31, 2009 between Seller and G4S
Justice Services, Inc. and the Manufacturing Participation Agreement , dated
March 31, 2009 between Seller and G4S Justice Services, Inc. (the "G4S
Agreements"); and
(e) Any and all other liabilities known or unknown, not specifically
assumed by Purchaser under the provisions of Section 2.1 above.
3.0 Consideration For Assets. In consideration of and in exchange for the
transfer, assignment and conveyance of the Assets, in addition to the assumption
of Assumed Liabilities, Purchaser shall pay to Seller the sum of $2,000,000 (the
Purchase Price), in accordance with Section 3.1 and subject to adjustment as set
forth in this Section 3.
3.1 Payment of Purchase Price. The Purchase Price shall be paid in
immediately available funds on the Closing Date (as hereinafter defined),
subject to adjustment as set forth in Sections 3.2, 3.4 and 3.5 below.
3.2 Adjustment to Purchase Price.
(a) The Purchase Price is subject to adjustment if the Inventory at closing
differs from that shown on Schedule 1.1 as the Inventory as of May 31, 2010,
except no adjustment shall be made with respect to software licenses. The
adjustment shall be dollar for dollar for any changes in the Inventory at
Closing from that shown on Schedule 1.1.
(b) Seller shall prepare an inventory schedule (the "Inventory Schedule")
as of the Closing Date on the same basis and applying the same accounting
principles, policies and practices set forth used in preparation of the May 31,
2010 balance sheet of Seller. Seller shall delivery the Inventory Schedule to
Purchaser within thirty (30) days after the Closing Date. Purchaser shall be
permitted to have representatives present for any physical inventory count and
Seller will coordinate with Purchaser in the preparation of the Inventory
Schedule. If Purchaser does not object to the Inventory Schedule delivered by
Seller, then the inventory amount as reflected on the Inventory Schedule will be
used to determine any adjustment to the base amount of the Purchase Price as set
forth in subsection (a) above. Any adjustment amount shall be paid by the
Purchaser or Seller, as applicable, within fifteen (15) days of Seller's
delivery of the Inventory Schedule, unless Purchaser provides notice of
objection to the Inventory Schedule in accordance with subsection (c) below.
(c) If, within fifteen (15) days of receipt of the Inventory Schedule,
Purchaser objects to the inventory amount as reflected on the Inventory
Schedule, and if Seller and Purchaser then fail to resolve the issues
outstanding with respect to the Inventory Schedule within fifteen (15) days of
Purchaser's notice of objection, Seller and Purchaser shall submit the issues
remaining in dispute to Xxxxxx, Xxxxxx & Marshal, independent public accountants
(the "Independent Accountants") for resolution applying the principles, policies
and practices referred to in Section 3.2(b). If issues are submitted to the
Independent Accountants for resolution, (i) Seller and Purchaser shall furnish
or cause to be furnished to the Independent Accountants such work papers and
other documents and information relating to the disputed issues as the
Independent Accountants may request and are available to that party or its
agents and shall be afforded the opportunity to present to the Independent
Accountants any material relating to the disputed issues and to discuss the
issues with the Independent Accountants; (ii) the determination by the
Independent Accountants, as set forth in a notice to be delivered to both Seller
and Purchaser within sixty (60) days of the submission to the Independent
Accountants of the issues remaining in dispute, shall be final, binding and
conclusive on the parties and shall be used in finally determining the
adjustment to the Base Amount as set forth in subsection (a) above; and (iii)
Seller and Buyer will each bear fifty percent (50%) of the fees and costs of the
Independent Accountants for such determination. Any adjustment amount shall be
paid by the Purchaser or Seller, as applicable, within ten (10) days of receipt
of such determination from the Independent Accountants.
3.3 Northrop Grumman DRO Project. Seller has issued certain quotations to
Northrop Grumman with respect to Northrop Grumman's DRO project (the "NG DRO
Project"). All quotations have lapsed and there is no open or unfilled order or
contract with respect to the NG DRO Project. Purchaser agrees that in the event
that Seller or Purchaser is awarded the NG DRO Project at any time before or
within twelve (12) months of the Closing Date, Purchaser will assume the NG PRO
Project and Seller shall be entitled to 5% of the gross revenue from the NG DRO
Project upon receipt of payment by Purchaser. This provision shall survive the
Closing of this Agreement.
3.4 Purchaser Payment of Certain Excluded Liabilities. In the event that
Purchaser deems it necessary to pay any critical supplier of Seller for any
amounts owing such supplier by Seller in order to maintain an appropriate
relationship with such supplier, or otherwise, such payment shall be deemed to
be in addition to other amounts comprising the Purchase Price. Notwithstanding
the foregoing, Purchaser shall have no obligation to pay any such supplier for
any such Excluded Liability, and any such payment or other consideration given
by Purchaser with respect thereto shall be at Purchasers sole discretion.
3.5 Pro-Rations and Other Adjustments.
(a) The items set forth on Schedule 3.5 shall be prorated as of the close
of business on August 9, 2010.
(b) Purchaser agrees to reimburse Seller, at Closing, for Seller's payroll
and independent contractor expense paid by Seller for the period from August 9,
2010 for those employees of Seller hired by Purchaser at Closing and prepaid
amounts for un-worked hours for Xxxxxxx Xxxxxxxx (independent contractor), as
well as such other operating expenses during such period as shall be mutually
agreed upon between Purchaser and Seller.
3.6 Allocation of Purchase Price Among Assets. The allocation of the
Purchase Price and the Assumed Liabilities is set forth on Schedule 3.5 and
shall be made in accordance with (i)the reasonable fair market value of such
items and (ii) the provisions of Section 1060 of the Internal Revenue Code of
1986, as amended (the Code), and the rules and regulations promulgated
thereunder, and shall be binding, to the extent not in conflict with applicable
law, upon Purchaser and Seller for all purposes (including financial and
regulatory reporting purposes and tax purposes). Purchaser and Seller each
further agree to file, as applicable, its U.S. federal income Tax returns and
Form 8594 and, to the extent not in conflict with applicable law, its other Tax
returns reflecting such allocation and any other reports required by Section
1060 of the Code, in accordance with said allocation. Each party hereto agrees
to prepare and timely file all applicable IRS forms, to cooperate with the other
party in the preparation of such forms. In addition, each party hereto agrees to
notify the other in the event any taxing authority takes or purports to take a
position inconsistent with the agreed-upon allocations.
4.0 Representations and Warranties of Seller. Seller represents and
warrants to Purchaser as follows, and acknowledges and confirms that Purchaser
is relying upon such representations and warranties in connection with the
execution, delivery and performance of this Agreement, notwithstanding any
investigation made by Purchaser or on its behalf:
4.1. Organization and Standing. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Arizona,
has all of the requisite power and authority and has all of the licenses,
permits, authorities and consents that are necessary to own, operate and lease
its properties and to carry on its business as now being conducted. Seller is
duly qualified to do business and is in good standing as a foreign corporation
in the jurisdictions where necessary. Seller is not a party to or subject to any
agreement, consent decree or order, or other understanding or arrangement with,
or any directive of, any governmental authority or other person which imposes
any restriction or otherwise affects in any material way the conduct of its
business in any jurisdiction or location.
4.2. Capitalization. Presently and at the Closing Date, the authorized
capital of Seller consists solely of 1,000,000 shares of common stock, of which
1,000 shares have been validly issued and are now outstanding, all of which are
owned by Alanco Technologies, Inc., an Arizona corporation. All such shares of
capital stock have been validly authorized and issued and are fully paid and
nonassessable.
4.3. Subsidiaries. Seller has no continuing subsidiaries or affiliated
companies (other than Alanco Technologies, Inc. and StarTrak Systems, LLC) and
does not otherwise presently own or control or have an interest in, directly or
indirectly, any other corporation, association, or other business entity.
4.4. Authorization. Seller has all the requisite legal power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. All action on the part of Seller necessary for the
authorization, execution, delivery, and performance of all obligations of Seller
under this Agreement has been (or will be) taken prior to the Closing. This
Agreement, when executed and delivered, shall constitute a legal, valid and
binding obligation of Seller enforceable in accordance with its terms.
4.5. Governmental Consents. No consent, approval, order, or authorization
of, or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority is required on the part of Seller
in connection with the execution, delivery or performance of this Agreement or
consummation of the transactions contemplated hereby.
4.6. Compliance with Other Instruments. Except as set forth on Schedule
4.6, Seller will not be, as a result of the execution, delivery or performance
of this Agreement, in violation of or default under any provision of any
instrument, contract or lease to which it is a party, or of any provision of any
federal or state judgment, writ, decree, order, statute, rule, or governmental
regulation applicable to Seller or the Company.
4.7. Financial Statements. Unaudited balance sheets and income statements
of the Seller as of and for the fiscal year ending June 30, 2010, and an
unaudited balance sheet and income statement of Seller as of and for the periods
ending May 31, 2010 and July 31, 2010 (collectively, the "Financial
Statements"), are attached hereto as Schedule 4.7.
The Financial Statements have been prepared by management from the books
and records of Seller in accordance with GAAP, consistently applied, are true
and correct and fairly present the financial position of Seller as of their
respective dates and the results of its operations for the periods then ended
and contain all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation. Except to the extent reflected or reserved
against or disclosed in the Financial Statements, as of their respective dates,
Seller has not incurred any liabilities or obligations of any kind, whether
accrued, absolute, contingent or otherwise, which should have been so reflected
or reserved against or disclosed. The June 30, 2010 and July 31, 2010 financial
statements are subject to normal year-end audit adjustments not yet concluded
the Seller and its auditor.
4.8. Undisclosed Liabilities. Except as set forth on Schedule 4.8, Seller
has no liabilities or obligations, either absolute, accrued, contingent or
otherwise, which individually or in the aggregate are reasonably materially
adverse to the financial condition and business of Seller, which (i) have not
been reflected in the Financial Statements, (ii) have not been described in this
Agreement or in any of the Schedules hereto, or (iii) have not been incurred in
the ordinary course of business since May 31, 2010, consistent with past
practices.
4.9 Inventory. The inventory of Seller, net of reserves, as reflected in
the Financial Statements, consists of a quality and quantity usable and saleable
in the ordinary course of business. The inventory is stored and/or located at
premises owned or leased by Seller or at Seller's suppliers as set forth on
Schedule 1.1. The value at which Seller's inventory is reflected in the
Financial Statements is the cost thereof on a first-in, first-out basis and
reflects write-downs for damaged or obsolete items in accordance with inventory
policy and practices of Seller. Seller has not transferred inventory on
consignment or granted return privileges to any purchaser of its goods, other
than in the ordinary course of business.
4.10 Changes. Except as set forth in the Financial Statements or in
Schedule 4.10, since May 31, 2010:
(a) Seller has not entered into any transaction which was not in the
ordinary course of its business;
(b) There has been no adverse change in the condition (financial or
otherwise), business, property, assets or liabilities of Seller other than
changes in the ordinary course of business, none of which, individually or in
the aggregate, has been material;
(c) There has been no damage to, destruction of or loss of physical
property (whether or not covered by insurance) adverse to the business or
operations of Seller;
(d) There has been no labor dispute involving Seller or any of its
employees and none is pending or, to the best of Seller's knowledge, threatened;
(e) There has been no litigation or administrative agency charges or
proceedings commenced involving, relating to or affecting Seller;
(f) Neither Seller nor any affiliate of Seller has (i) paid any judgment
resulting from any action or (ii) made any payment to any person of more than
$25,000 (or equivalent value if payment made other than with money) in
settlement of any action relating to the Business or the Assets;
(g) there has been no sale, transfer, lease or other disposition of any
material asset or assets which relate to the conduct of the Business, other than
sales of inventory in the ordinary course of business; and
(h) There has been no other event or condition of any character pertaining
to and materially adverse to Seller.
4.11 Title to Assets; Liens, etc. The Assets, both real, personal and
mixed, tangible and intangible, necessary or useful to the operation of the
business of Seller are in good condition and repair, ordinary wear and tear
excepted, and suitable for the uses intended. The Assets are being maintained in
a state of good repair, and, in all respects, comply with and are operated in
conformity with all applicable laws, ordinances, regulations, orders, permits
and other requirements relating thereto adopted or currently in effect. Seller
has good and marketable title to the Assets, which as of the Closing Date will
be free and clear of all liens, other than the lien for current taxes not yet
due and payable. Schedule 4.11 identifies and sets forth a complete list of each
parcel
of real estate or interest therein leased by Seller. The buildings and
improvements leased by Seller and the uses thereof do not contravene any zoning
or building law or ordinance or violate any restrictive covenant. Each lease of
real property creates a legal, valid and enforceable leasehold interest in favor
of Seller, free and clear of all liens. No default or event of default on the
part of Seller, as lessee exists with respect to any lease with respect to such
real property. Except for the Excluded Assets, the Assets, taken as a whole,
constitute all the properties and assets relating to or used or held for use in
connection with the Business.
4.12 Patents and Other Intangible Intellectual Assets.
(a) Schedule 4.12 sets forth a complete and correct list of Seller's
intellectual property, including but not limited to domestic and foreign
patents, patent applications, written records of inventions, registered and
unregistered trademarks, trade names, service marks, certification marks,
copyrights and registration applications for the above, and licenses to and from
third parties relating to any of the above.
(b) Except as set forth in Schedule 4.12, Seller (i) has legal and
equitable title to, or has by valid license or other grant, the right to use,
free and clear of all liens and claims, all proprietary technology or
information, patents, both domestic and foreign, all registered and unregistered
trademarks, trade names, service marks, certification marks, copyrights, and
applications for any and all of the above used in the conduct of its business as
now conducted; (ii) does not infringe upon the patent, trademark, trade name,
service xxxx, copyright or proprietary information rights of any third party;
(iii) is not obligated or under any liability whatsoever to make any payments by
way of royalties, fees or otherwise to any owner of, licensor of, or other
claimant to any patent, trademark, trade name, service xxxx, certification xxxx,
copyright or proprietary technology or information with respect to the use
thereof or in connection with the conduct of its business or otherwise; and (iv)
has not licensed or granted any rights to any third parties under its patents,
trademarks, trade names, service marks, certification marks, copyrights or
proprietary technology or information used in the conduct of its business.
Seller's patents, trademarks, trade names, service marks, certification marks or
copyrights are valid, and all registrations, where filed, are subsisting and are
registered in the name of Seller. No technology or information used in the
conduct of its business was illegally obtained.
(c) No purchase orders or sales have taken place under the G4S Agreements,
and upon consummation of the transactions contemplated by this Agreement and
thirty (30) days written notice to G4S by Seller, the G4S Agreements will
terminate.
4.13. Contracts and Obligations.
(a) Set forth in Schedule 4.13(a) is a list of all written and oral
agreements, contracts, indebtedness, liabilities and other obligations to which
Seller is a party or by which it is bound which (a) involve strategic
arrangements or cooperation agreements; (b) involve commitments in excess of
$10,000; or (c) involve receipts or expenditures by Seller greater than $10,000
in any three-month period. Copies of written, and summaries of oral, agreements,
contracts, indebtedness, liabilities and obligations have been delivered or made
available to Purchaser. All such agreements are legal, valid and binding
obligations and are in full force and effect in all respects. Seller is not
currently in default under any such contracts or agreements other than as may
exist with respect to the Open Jobs and delinquent accounts payable..
(b) Schedule 4.13(b) sets forth all unfilled customer purchaser orders as
of the date hereof issued by customers of the Business. For the avoidance of
doubt, Purchaser is not assuming any such orders.
4.14 Products; Warranty Provisions.
(a) Except as set forth on Schedule 4.14(a), Seller has not received any
notice of, and has no knowledge of, any material Products Liability arising at
any time with respect to any product manufactured or distributed by Seller on or
before the date of this Agreement. For the purposes of this Agreement, Products
Liability means any liability to which Seller, any affiliate of Seller, or their
successors or assigns may become subject insofar as such liability is based
upon, arises out of or is otherwise in respect of any express or implied
representation, warranty, agreement or guaranty to a customer, user or purchaser
made or claimed to have been made by Seller or any affiliate of Seller or
arising out of or due to, or asserted to be arising out of or due to, any
product manufactured or distributed by Seller prior to the Closing Date. A
listing of all pending customer or product warranty claims and the status of all
such claims is set forth on Schedule 4.14(a). Seller has no pattern of claims or
actions based upon allegations of the same or similar product defect for any of
its products.
(b) Except as set forth on Schedule 4.14(b), there has not been any product
recall, rework or retrofit relating to any line of product manufactured, shipped
or sold by Seller.
4.15 Employees. Except as set forth on Schedule 4.15, Seller has no
employment contracts with any of its employees which are not terminable at will
or any consulting or independent contractor agreements with any individual or
entity, and it does not have any collective bargaining agreements covering any
of its employees. There are no employee or labor disagreements or union
organization activities pending or threatened between Seller and its employees,
and Seller is not a party to any union or collective bargaining agreement.
Seller complied with all applicable federal and state equal employment
opportunity laws and other laws related to employment. Seller is not aware that
any officer or key employee, or that any group of key employees, intends to
terminate their employment with Seller (or Purchaser if Purchaser elects to
employ said persons subsequent to the Closing Date), whether as a result of the
transactions contemplated hereby or otherwise, nor does Seller have a present
intention to terminate the employment of any of the foregoing (except on the
Closing Date). To Seller's knowledge, no employee of Seller is in violation of
any term of any employment contract, patent, proprietary information disclosure
agreement or any other contract or agreement relating to the right of any such
employee to be employed by Seller because of the nature of the business
conducted by Seller or for any other reason, and the continued employment by
Seller of its present employees will not result in any such violation.
4.16 Employee Benefit Plans.
* (a) Schedule 4.16(a) sets forth all pension, thrift, savings, profit
sharing, retirement, incentive bonus or other bonus, medical, dental, life,
accident insurance, benefit, employee welfare, disability, group insurance,
stock purchase, stock option, stock appreciation, stock bonus, executive or
deferred compensation, hospitalization and other similar fringe or employee
benefit plans, programs and arrangements, and any employment or consulting
contracts, "golden parachutes," collective bargaining agreements, severance
agreements or plans, vacation and sick leave plans, programs, arrangements and
policies, including, without limitation, all "employee benefit plans" (as
defined in Section 3(3) of ERISA), all employee manuals and all written or
binding oral statements of policies, practices or understandings relating to
employment, which are provided to, for the benefit of, or relate to, any persons
employed by Seller to be hired by Purchaser following the Closing. The items
described in the foregoing sentence are hereinafter sometimes referred to
collectively as "Plans" and each individually as a "Plan". True and correct
copies of all the Plans, including all amendments thereto, have heretofore been
provided to Purchaser. No Plan is a "multiemployer plan" (as defined in Section
401 of ERISA), and Seller has never contributed or been obligated to contribute
to any such multiemployer plan.
* (b) No event or omission has occurred which would subject Purchaser or
any of the Assets to any liability under ERISA or the Internal Revenue Code.
With respect to each Plan, (i) all payments due from Seller or any affiliate to
date have been made and (ii) all amounts properly accrued to date as liabilities
of Seller or any affiliate of Seller which have not been paid have been properly
recorded on the books of Seller or such affiliate.
(c) Purchaser will incur no liability for any Plan of Seller or any Seller
affiliate in connection with the execution of this Agreement, the Closing of the
transaction contemplated hereby, or the operation of the Assets subsequent to
the Closing.
4.17 Taxes. Seller has filed all federal, state, county, local and foreign
tax returns, reports and forms for income, excise, social security, property,
payroll, unemployment and other taxes which are required to be filed by it,
including all sales tax returns ("Tax Returns"). Seller has paid, or adequate
provision has been made on the Financial Statements for the payment of, all
federal, state, county, local and foreign taxes, assessments, levies or duties,
howsoever measured or imposed, and related interest and penalties, if any
(collectively, "Taxes"). No unexpired waiver of the applicable statute of
limitations with respect to any taxable year has been executed by Seller. There
are no tax examinations or audits underway involving Seller.
4.18 No Sales or Conveyance Tax Due. No sales, use or other transfer or
conveyance taxes are or will become payable by any of the parties to this
Agreement as a consequence of the execution, delivery or performance of this
Agreement, other than taxes based upon the net income of the parties. Seller
shall be responsible for and shall promptly pay any such sales, use, transfer or
conveyance taxes which become payable with respect thereto.
4.19 Insurance. Sellers product liability insurance policies are on an
occurrence basis. There are no material claims, actions, suits or proceedings
arising out of or based upon any of such policies of insurance, and, to the
knowledge of Seller, no basis for any such material claim, action, suit or
proceeding exists. There are no notices of any pending or threatened
terminations or substantial premium increases with respect to any of such
policies, and Seller is in compliance with all conditions contained therein.
4.20 Disposal of Waste. Neither Seller, nor any of Sellers employees,
agents or contractors has disposed, spilled or deposited at any time on any of
the properties previously or currently owned or leased by it, nor does Seller
have any knowledge of such disposal, spill or deposit on any of the properties
currently owned or leased by Seller, any "Hazardous Substance" in excess of the
corresponding "Reportable Quantity" (as those terms are defined in the
Comprehensive Environmental Response compensation and Liability Act, as amended
("CERCLA") or its state or local equivalent), oil or petroleum in excess of 100
kilograms, or "Hazardous Waste" in any quantity (as that term is defined in the
Resource Conservation and Recovery Act, as amended, or its state or local
equivalent), or disposed, spilled or deposited any Hazardous Substances, oil,
petroleum, or Hazardous Waste (collectively, "Materials"), the nature, amount,
or concentration of which would enable the United States Environmental
Protection Agency or any state regulatory agency to undertake or require the
removal or remediation of such Materials.
4.21 Other Environmental Matters. As to all operations relating to the
Business: (a) Seller has complied with all applicable federal, state and local
laws, regulations, rulings and guidelines (collectively referred to as
"Environmental Laws") in all material respects relating to any materials used,
generated, managed, handled, treated, stored or disposed of at, or moved or
transported from, the sites where its business is conducted; (b) Seller has not
received any notices that it has been designated as a "Potentially Responsible
Party," a "Responsible Party," (as those terms are defined, used or construed
pursuant to CERCLA or its state or local counterparts) or a defendant in any
action, suit or proceeding pursuant to any Environmental Law; (c) no materials
have been delivered to any site listed by the United States Environmental
Protection Agency (i.e., CERCLA) or by any state as a site that actually or
potentially requires investigation or remedial action; (d) Seller is not a party
to, have received notice of, or is aware of any actual or threatened litigation
or administrative proceedings concerning environmental claims or liabilities;
and (e) there are no environmental studies or reports in the possession or
control of Seller.
4.22 Compliance With Laws.
(a) Seller is in full compliance with and operates its business in
accordance with all laws, rules and regulations applicable to or affecting it or
the conduct of its business and has secured all governmental licenses, permits
and approvals necessary to its business. All such licenses, permits and
authorizations are set forth on Schedule 1.5.
(b) Other than as set forth on Schedule 1.5, no government licenses,
permits or appraisals are otherwise issued to or relied upon by Seller to
conduct its business.
4.23 Litigation. There is no action, suit, arbitration, or proceeding
pending against Seller before any court or administrative agency, and to the
knowledge of Seller, no such action, suit, arbitration or proceeding is
threatened against Seller. Seller has not received any opinion or memorandum or
legal advice or notice from legal counsel to the effect that it is likely, from
a legal standpoint, that it will incur any liability which may be material to
its business.
4.24 Brokers. Neither the Seller, nor any of its affiliates, has incurred
any liabilities for any financial advisory fees, brokerage fees, commissions or
finders fees in connection with this Agreement.
4.25 Customers and Suppliers. Except as set forth on Schedule 4.25, Seller
has no sole source suppliers of significant goods, equipment or services
relating to the Business (other than public utilities). Seller has not received
notice: (a) that any supplier (including, without limitation, suppliers of
energy) intends to discontinue or substantially diminish or change its
relationship with Seller or (b) that any supplier of the Business (including,
without limitation, suppliers of energy) intends to increase prices or charges
for goods or services presently supplied.
5.0 Representations and Warranties of Purchaser. Purchaser represents and
warrants to Seller as follows, and acknowledges and confirms that Seller is
relying upon such representations and warranties in connection with the
execution, delivery and performance of this Agreement, notwithstanding any
investigation made by Seller or on its behalf:
5.1. Organization and Standing. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Alabama,
has all of the requisite corporate power and authority and has all of the
licenses, permits, authorities and consents that are necessary to own, operate
and lease its properties and to carry on its business as now being conducted.
Neither Purchaser nor any Subsidiary of Purchaser is a party to or subject to
any agreement, consent decree or order, or other understanding or arrangement
with, or any directive of, any governmental authority or other person which
imposes any restriction or otherwise affects in any material way the conduct of
their business in any jurisdiction or location.
5.2 Authorization. Purchaser has all the requisite legal power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. All action on the part of Purchaser necessary
for the authorization, execution, delivery, and performance of all obligations
of Purchaser under this Agreement has been (or will be) taken prior to the
Closing. This Agreement, when executed and delivered, shall constitute a legal,
valid and binding obligation of Purchaser, enforceable in accordance with its
terms.
5.3 Governmental Consents. No consent, approval, order, or authorization
of, or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority is required on the part of
Purchaser in connection with the execution, delivery or performance of this
Agreement or consummation of the transactions contemplated hereby.
5.4 Compliance with Other Instruments. Purchaser will not be, as a result
of the execution, delivery or performance of this Agreement, in violation of or
default under any provision of any instrument or agreement to which they are a
party, or of any provision of any federal or state judgment, writ, decree,
order, statute, rule, or governmental regulation applicable to Purchaser.
5.5 Litigation. There is no action, suit, arbitration, proceeding or
investigation pending or threatened against Purchaser before any court or
administrative agency, nor does Purchaser, after due investigation, know or have
any reason to know of any basis for any such action, proceeding or
investigation. Purchaser has not received any opinion or memorandum or legal
advice or notice from legal counsel to the effect that it is likely, from a
legal standpoint, that it will incur any liability or disadvantage which may be
material to Purchaser.
6.0 Pre-Closing Covenants.
6.1 Access to Information; Confidentiality.
(a) From the date hereof to the Closing Date, Seller will (i) afford to
representatives of Purchaser, including its counsel and auditors, during normal
business hours, access to any and all of the assets and information with respect
to the Business of Seller so that Purchaser may have a reasonable opportunity to
make such a full investigation of the Assets and Business in advance of the
Closing Date as Purchaser shall reasonably desire, and (ii) will furnish to
Purchaser, either orally or by means of such records, documents, and memoranda
as are available or reasonably capable of preparation, such information as
Purchaser may reasonably request.
(b) Purchaser hereby acknowledges that the information to be provided by
Seller is confidential and proprietary to Seller (the "Confidential
Information"). Purchaser hereby agrees that it will keep in confidence all
Confidential Information that has been or may be provided by Seller, and that
Purchaser will use the same for the sole purpose of completing its due diligence
inquiry of Seller. Purchaser hereby agrees not to use or disclose the
Confidential Information to any person except those of its employees and
advisors who have a reasonable need to know such information to advise Purchaser
in connection with the transactions contemplated hereby. This Section 6.1(b)
shall be inoperative as to such portions of Confidential Information which (i)
are or become generally available to the public, other than as a result of a
disclosure by Purchaser or its employees or advisors; (ii) become available to
Purchaser on a non-confidential basis from a third party who has the right to
disclose the same; or (iii) were known to Purchaser on a non-confidential basis
prior to its disclosure by Seller or one of Sellers representatives.
6.2 Interim Operations of the Business. Seller hereby covenants and agrees
that between the date hereof and the Closing Date:
(a) Seller shall conduct its business diligently and in the ordinary course
and in accordance with past practice, and use its best efforts to (i) preserve
its business organization intact, and (ii) keep available the services of its
present employees.
(b) Seller shall not mortgage or encumber any Asset.
(c) All Assets shall be used, operated, maintained and repaired in
accordance with normal and prudent business practices.
(d) Seller shall (i) maintain all Assets in substantially the same
condition as they are now (reasonable wear and tear, which are not such as to
adversely affect the operation of its business, excepted), (ii) maintain
insurance upon the Assets and with respect to the conduct of the business, all
such insurance to be comparable in amount, scope and coverage to that in effect
on the date of this Agreement, and (iii) give Purchaser immediate written notice
of any material damage to Seller's Assets by fire or other casualty.
(e) Seller shall maintain its books, records and accounts in the usual,
regular and ordinary manner, on a basis consistent with prior periods.
(f) Seller shall duly comply with all laws applicable to it, the Assets and
the conduct of its business.
(g) Without the prior written consent of Purchaser, Seller shall not enter
into any new material contracts or agreements, or cancel, amend, modify
adversely, waive any material rights under, assign, encumber or terminate any of
the existing contracts or agreements.
(h) Seller shall not, directly or indirectly, sell, lease or otherwise
dispose of any of the Assets or make any capital expenditures, except in the
ordinary course of business and consistent with the past practices of Seller, or
acquire any other business.
(i) Seller shall not increase the compensation payable or to become payable
to any employee, officer or director of Seller.
(j) Seller will not engage in any transaction which would be inconsistent
with any representation, warranty or covenant of Seller set forth herein or
which would cause a breach of any such representation, warranty or covenant.
6.3. No Public Disclosure. The parties hereto hereby covenant and agree
that they shall not publicly disclose the existence of this Agreement or the
terms (including, without limiting the generality of the foregoing, the Purchase
Price) of the transactions contemplated by this Agreement except (i) with the
prior written consent of the other parties, (ii) if such disclosure is compelled
by an order of a court or governmental agency having competent jurisdiction, and
after consultation by the disclosing party with the other parties, (iii) if such
disclosure shall be determined by such party's counsel to be required or
necessary for purposes of such party's compliance with applicable stock exchange
regulations or foreign, federal or state securities laws and the rules and
regulations promulgated thereunder, and after consultation by such party with
the other parties, (iv) if such disclosure is required by lawful discovery in
any judicial proceeding, and after consultation by the disclosing party with the
other parties, or (v) in any action by any party to enforce this Agreement.
6.4 Exclusive Dealings. During the period from the date of this Agreement
to the Closing Date or earlier termination of this Agreement, neither Seller nor
any of their representatives, directors, officers, stockholders, agents or
affiliates will (i) entertain or discuss a possible sale, lease or other
disposition or similar transaction of any kind of the Business or any of the
Assets thereof or any interest therein with any other person or entity or
provide any information to any other person or entity in connection therewith,
or (ii) disclose to any other person or entity (other than Sellers lenders,
accountants, attorneys and other representatives and as required for compliance
with securities laws applicable to Seller) the contents of this Agreement or the
details of the transactions set forth herein.
7.0 Additional Covenants.
7.1 Agreement Expenses. Each of the parties shall bear their own expenses
in connection with the transactions covered or contemplated by this Agreement,
and each represents and warrants to the other that there is no broker, agent or
other person entitled to compensation or a fee in connection with this Agreement
or with the transactions contemplated hereby, except such fees or compensations
as each of the parties is hereby representing and warranting that it is
exclusively liable to pay.
7.2 Open Jobs. Subject to agreement on scope and fees, Purchaser agrees to
provide such additional assistance to Seller in order to allow Seller to
complete its deliverable obligations under the remaining Open Jobs. The
foregoing agreement of Purchaser is in no way an assumption by Purchaser of any
obligations under the Open Jobs or an agreement by Purchaser to perform, at any
time, Seller's obligations under the Open Jobs.
7.3 Assigned License Agreements. Purchaser and Seller will notify the
licensors under each of the Assigned License Agreement of the consummation of
the transactions contemplated by this Agreement and request that each such
licensor consent to the assignment of the Assigned License Agreements to
Purchaser. The form of such consent shall be mutually agreed upon between
Purchaser, Seller and such licensor; provided, however, Purchaser shall only
liable for obligations under the Assigned License Agreement arising after the
Closing Date.
8.0 Conditions Precedent to Closing.
8.1. Conditions to the Obligations of Purchaser. The performance of the
obligations of Purchaser hereunder is subject to the fulfillment, or waiver by
Purchaser, on or before the Closing Date of the following conditions:
(a) Authorization. All action necessary to authorize the execution,
delivery and performance of this Agreement by Seller and the consummation of the
transactions contemplated hereby and thereby shall have been duly and validly
taken by Seller, and Seller shall have full power and right to consummate the
transactions contemplated hereby and thereby.
(b) Conduct of Business in Ordinary Course. To the Closing Date, the
Company shall have conducted its business only in the ordinary course,
consistent with the past practices of the Company, except for actions expressly
permitted by this Agreement, matters incident to carrying out this Agreement, or
such further matters as may be consented to in writing by Purchaser.
(c) Consents and Approvals. Seller shall have obtained all consents and
approvals and waivers and given such notices as may be necessary to consummate
the transactions contemplated hereby.
(d) No Litigation or Legislation. No federal, state, local or foreign
statute, rule or regulation shall have been enacted or litigation, proceeding,
government inquiry or investigation commenced or threatened which prohibits,
restricts or delays the consummation of the transactions contemplated by this
Agreement or any of the conditions to the consummation of such transactions or
adversely affects the desirability of consummating the transactions contemplated
hereby. All consents, authorizations, orders or approvals of, and filings or
registrations with, any federal, state or local governmental commission, board
or other regulatory body which is required for or in connection with the
execution, delivery, and performance of this Agreement by Seller and the
consummation of the transactions contemplated hereby shall have been obtained.
(e) Accuracy of Representations and Warranties. Each of the representations
and warranties of Seller set forth in Section 4 hereof shall be true and correct
on and as of the Closing Date.
(f) Delivery of Closing Documents. Purchaser shall have received the
closing documents set forth in Section 10.1 hereof.
(g) Financing. Purchaser shall have obtained financing for its acquisition
of the Assets upon commercially reasonable terms acceptable to Purchaser.
(h) Assurance concerning Suppliers. Purchaser shall be reasonably assured
that it will be able to maintain the Business critical suppliers after the
Closing.
(i) No Adverse Change. There shall not have occurred a material adverse
change to the Seller, the Business, or the Assets.
(j) Due Diligence. Purchaser shall be satisfied with its due diligence
investigation of Seller, the Assets and the Business, and shall have until
closing to review and approve all Schedules attached hereto.
(k) Name Change. At Closing, Seller will change its corporate and business
names such that the name TSI/Prism, or any derivation thereof, is no longer used
by Seller or any affiliate of Seller.
8.2. Conditions to the Obligations of Seller. The performance of the
obligations of Seller hereunder is subject to the fulfillment, or waiver by
Seller, on or before the Closing Date of the following conditions:
(a) Authorization. All action necessary to authorize the execution,
delivery and performance of this Agreement, and the consummation of the
transactions contemplated hereby and thereby, shall have been duly and validly
taken by Purchaser, and Purchaser shall have full power and right to consummate
the transactions contemplated hereby and thereby.
(b) Delivery of Closing Documents. Seller shall have received the closing
documents set forth in Section 10.2 hereof.
(c) No Litigation or Legislation. No federal, state, local or foreign
statute, rule or regulation shall have been enacted or litigation, proceeding,
government inquiry or investigation commenced or threatened which prohibits,
restricts or delays the consummation of the transactions contemplated by this
Agreement or any of the conditions to the consummation of such transactions or
adversely affects the desirability of consummating the transactions contemplated
hereby and thereby.
(d) Accuracy of Representations and Warranties. Each of the representations
and warranties of Purchaser set forth in Section 5 hereof shall be true and
correct in all respects on and as of the Closing Date.
8.3. Termination. This Agreement and the transactions contemplated hereby
may be terminated at any time prior to Closing by written notice delivered by
Seller to Purchaser or by Purchaser to Seller, as the case may be, in the
following instances and no other:
(a) By the Purchaser by written notice to Seller if (i)the representations
and warranties of Seller shall not have been true and correct in all respects as
of the date when made or (ii) if any of the conditions set forth in Section 8.1
shall not have been, or if it becomes apparent that any of such conditions will
not be, fulfilled as of the Closing Date, unless such failure shall be due to
the failure of the Purchaser to perform or comply with any of the covenants,
agreements or conditions hereof to be performed or complied with by it prior to
the Closing.
(b) By Seller by written notice to the Purchaser if (i)the representations
and warranties of Purchaser shall not have been true and correct in all respects
as of the date when made or (ii) if any of the conditions set forth in Section
8.2 shall not have been, or if it becomes apparent that any of such conditions
will not be, fulfilled as of the Closing Date, unless such failure shall be due
to the failure of Seller to perform or comply with any of the covenants,
agreements or conditions hereof to be performed or complied with by it prior to
the Closing.
(c) This Agreement shall automatically terminate in the event that the
Closing has not taken place on or before August 17, 2010, unless such date shall
be extended by mutual written consent of the parties.
(d) At any time prior to Closing, by the mutual consent in writing of the
parties.
(e) By Purchaser or Seller, upon written notice to the other party, upon a
material breach by the other party of the covenants or obligations of such party
as set forth in this Agreement.
Each party's right of termination under Section 8.3 is in addition to any
other rights it may have under this Agreement or otherwise, and the exercise of
such right of termination will not be an election of remedies. If this Agreement
is terminated pursuant to Section 8.3, all obligations of the parties under this
Agreement will terminate, except that the obligations of the parties in Section
6.3 and Sections 12 through 21 will survive, provided, however, that, if this
Agreement is terminated because of a breach of this Agreement by the
nonterminating party or because one or more of the conditions to the terminating
party's obligations under this Agreement is not satisfied as a result of a
party's failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive such
termination unimpaired.
9.0 Closing. The closing ("Closing") shall occur at the office of the
Seller, 00000 Xx. 00xx Xxx, Xxxxx 0, Xxxxxxxxxx, Xxxxxxx 00000 at 10:00 a.m. on
August 17, 2010, or such other time or in such other manner as the parties
mutually agree (the "Closing Date"). The Closing shall constitute the acts which
take place on the Closing Date by which the transactions contemplated by this
Agreement are consummated. The Closing shall be effective as of the close of
business on the Closing Date.
10.0 Closing Documents. On the Closing Date, the parties shall exchange
documents as follows:
10.1 Delivery by Seller. Seller shall deliver to Purchaser:
(a) A copy of the resolutions duly adopted by the Board of Directors and
shareholder of Seller authorizing and approving the execution, delivery and
performance of this Agreement, and the execution and delivery of any and all
other documents and agreements contemplated hereunder, certified by the
Secretary or an Assistant Secretary of Seller.
(b) A certificate signed by Seller to the effect that Seller has fully
performed all of its pre-closing commitments hereunder and that all its
warranties and representations contained herein continue to be true and accurate
as of the Closing Date.
(c) The opinion of counsel to Seller dated as of the Closing Date to
Purchaser to the following effect:
(1) Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Arizona, and is entitled to own its
properties and to carry on its business in the places where such properties are
located.
(2) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary corporate action of Seller and this Agreement
has been duly executed and delivered by Seller and constitutes a valid and
binding obligation of Seller in accordance with its terms, except as the same
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditor's rights and the
remedies of specific performance and injunction and other forms of equitable
relief which may be subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought. No further corporate
authorization or by any other person is necessary with respect to the execution
and delivery of this Agreement by Seller or its obligations hereunder.
(3) To the best of said counsel's knowledge Seller has the right to
transfer the business, properties and assets as set forth in paragraph 1.0
hereof to Purchaser pursuant hereto.
(4) Except as may be specified by such counsel, they do not know of any
litigation, proceeding or governmental investigation pending or threatened
against, or relating to, Seller or Seller's properties or business or the
transactions contemplated under this Agreement.
(d) The Assets to be conveyed pursuant hereto shall be conveyed by bills of
sale, assignments or other instruments of transfer as shall be appropriate to
carry out the intent of this Agreement and as shall be sufficient to convey to
Purchaser all of the rights, title and interest of Seller in and to the Assets
to be conveyed hereunder. Any sales and transfer taxes imposed upon Seller in
connection with the sale and transfer of assets hereunder shall be paid by
Seller.
(e) A Non-Compete Agreement in such form as may be reasonably acceptable to
Purchaser pursuant to which Seller and Alanco Technologies, Inc. agree for a
period of five (5) years after the Closing Date not to engage directly or
indirectly in the Business in the territory in which the Business is currently
conducted.
(f) Such further instruments or documents as Purchaser or its counsel may
reasonably request to assure the effective carrying out of the transactions
contemplated hereby.
(h) Seller shall have requested a Tax Clearance Certificate from Arizona,
but the parties do not anticipate that such Certificate will be available at
Closing.
10.2. Delivery by Purchaser. Purchaser shall deliver to Seller:
(a) A copy of the resolutions duly adopted by the Board of Directors of
Purchaser authorizing and approving the execution, delivery and performance of
this Agreement, and the execution and delivery of any and all other documents
and agreements contemplated hereunder, certified by the Secretary or an
Assistant Secretary of Purchaser.
(b) A certificate signed by Purchaser to the effect that Purchaser has
fully performed all of Purchasers pre-closing commitments hereunder and that all
of Purchasers warranties and representations contained herein continues to be
true and correct as of the Closing Date.
(c) Immediately available funds for the portion of the Purchase Price due
at Closing in accordance with section 3.0 above.
(d) Such further instruments or other documents as Seller or its counsel
may reasonably request to assure the effective carrying out of the transactions
contemplated hereby.
10.3. Form of Closing Documents. All closing documents shall be in form and
substance reasonably satisfactory to counsel for the respective parties.
10.4 Additional Documents. The parties further agree that at any time
subsequent to the Closing Date, they will, upon request and at the expense of
the requesting party, do, execute, acknowledge and deliver, or cause to be done,
executed, acknowledged and delivered, all such further acts, assignments,
transfers, conveyances, powers of attorney or assurances as may be required for
the better assigning, transferring, granting, conveying and assuring to the
parties any of the transactions contemplated herein.
10.5 Employees.
(a) Purchaser is not obligated to hire any employees of Seller but may
interview all employees. Purchaser will provide Seller with a list of employees
to whom Purchaser has made an offer of employment that has been accepted to be
effective on the Closing Date (the "Hired Employees"). Effective immediately
before the Closing, Seller will terminate the employment of all of its Hired
Employees.
(b) It is understood and agreed that Purchaser's expressed intention to
extend offers of employment as set forth in this section shall not constitute
any commitment, contract or understanding (expressed or implied) of any
obligation on the part of Purchaser to a post-Closing employment relationship of
any fixed term or duration or upon any terms or conditions other than those that
Purchaser may establish pursuant to individual offers of employment. Nothing in
this Agreement shall be deemed to prevent or restrict in any way the right of
Purchaser to terminate, reassign, promote or demote any of the Hired Employees
after the Closing or to change adversely or favorably the title, powers, duties,
responsibilities, functions, locations, salaries, other compensation or terms or
conditions of employment of such employees.
(c) Subject to the provisions of Section 3.5, Seller shall be responsible
for (A) the payment of all wages and other remuneration due to its employees
with respect to their services as employees of Seller through the close of
business on the Closing Date, including any pro rata bonus payments; (B) the
payment of any termination or severance payments and the provision of health
plan continuation coverage in accordance with the requirements of COBRA and
Sections 601 through 608 of ERISA; and (C) any and all payments to employees
required under the WARN Act.
(d) Purchaser shall not have any responsibility, liability or obligation,
whether to current employees, former employees, their beneficiaries or to any
other person, with respect to any employee benefit plans, practices, programs or
arrangements (including the establishment, operation or termination thereof and
the notification and provision of COBRA coverage extension) maintained by
Seller.
(e) Notwithstanding the foregoing, Seller shall assume the accrued vacation
liability with respect to any Hired Employee.
11.0 Indemnification.
11.1 Indemnification by Seller. Subject to the terms hereof, Seller agrees
to defend, indemnify and hold Purchaser, its officers, directors, managers,
agents, representatives, subsidiary and parent entities and affiliates, harmless
from and against any claim, liability, expense, loss or other damage (including,
without limitation, reasonable attorneys' fees and expenses) (Claims) in respect
of:
(a) any Products Liability claim (other than breach of warranty or breach
of contract) with respect to products manufactured or sold prior to the Closing;
(b) any breach of any representation or warranty contained in this
Agreement, or any misrepresentation in or omission from any other agreement,
certificate or other instrument furnished or to be furnished to Purchaser by
Seller pursuant to this Agreement; and
(c) the breach or nonfulfillment of any covenant or agreement on the part
of Seller contained in this Agreement, or the breach or nonfulfillment of any
covenant on the part of Seller contained in any other agreement, certificate or
other instrument furnished or to be furnished to Purchaser by Seller pursuant to
this Agreement.
11.2 Indemnification by Purchaser. Purchaser agrees to defend, indemnify
and hold Seller , its officers, directors, managers, agents, representatives,
subsidiary and parent entities and affiliates, harmless from and against any
Claim (including, without limitation, reasonable attorneys' fees and expenses)
in respect of:
(a) any Products Liability claim (other than breach of warranty or breach
of contract) with respect to products manufactured or sold or events occurring
after the Closing;
(b) any and all Claims resulting from any breach of a representation or
warranty in this Agreement made by Purchaser hereunder or in any certificate
furnished or to be furnished by Purchaser hereunder, including, without
limitation, any certificate or instruments furnished at Closing; and
(c) any and all Claims resulting from any breach or violation of any
covenant made by Purchaser hereunder or in any certificate furnished or to be
furnished by Purchaser hereunder, including, without limitation, any certificate
or instruments furnished at Closing.
11.3 Indemnification Procedure.
(a) Upon obtaining knowledge thereof, the party to be indemnified hereunder
(the Indemnitee) shall promptly notify the indemnifying party hereunder (the
Indemnitor) in writing of any Claim which the Indemnitee has determined has
given or could give rise to a claim for which indemnification rights are granted
hereunder (such written notice referred to as the Notice of Claim); provided,
however, that the giving of a Notice of Claim shall not be a condition precedent
to any liability of the Indemnitor under the provisions for indemnification
contained in this Agreement, unless (and only to the extent that) failure to
give such notice materially prejudices the rights of the Indemnitor with respect
to the applicable matter. The Notice of Claim shall specify, in all reasonable
detail, the nature and estimated amount of any such claim giving rise to a right
of indemnification to the extent then known.
(b) With respect to any matter set forth in a Notice of Claim relating to a
third party claim, the Indemnitee may compromise or defend, at the Indemnitor's
expense, and by the Indemnitee's own counsel (which counsel shall be subject to
the Indemnitor's reasonable approval), any such matter involving the asserted
liability of the Indemnitee; provided, however, that the Indemnitor may, in its
sole discretion, participate in such defense at such Indemnitor's expense and
(b) no compromise or settlement thereof may be effected by the Indemnitee
without the Indemnitor's consent (which shall in any event not be unreasonably
withheld). In any event, the Indemnitee, the Indemnitor and the Indemnitee's
counsel (and, if applicable, the Indemnitor's counsel) shall cooperate in good
faith in the compromise of, or the defense against, any such asserted liability.
11.4 Guaranty. By execution of this Agreement, Alanco Technologies, Inc.
hereby unconditionally and irrevocably guarantees each and every obligation of
Seller under this Article 11.
12.0 Benefits of this Agreement. Nothing in this Agreement shall be
construed to give any benefits to any person (including, without limiting the
generality of the foregoing, any present or former employee of Seller) or
corporation or other entity, other than Seller and Purchaser, and this Agreement
shall be for the sole and exclusive benefit of Seller and Purchaser.
13.0 Successors and Assigns. This Agreement shall inure to the benefit of,
and be binding upon, the successors, heirs, executors, administrators and
permitted assigns of the parties hereto. This Agreement may not be assigned by
any of the parties hereto without the prior written consent of the other
parties.
14.0 Notices. Any notice from one party to the other shall be deemed given
when delivered to, or on the day after being sent by a nationally recognized
overnight courier service addressed to, the person at the address listed below
or to such other person and/or address as may be designated from time to time in
writing:
(a) If to Seller:
Alanco/TSI Prism, Inc.
c/o Alanco Technologies, Inc.
00000 X. 00xx Xxx, Xxxxx 0
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Chief Financial Officer
with a copy to:
Xxxxxx X. Xxxx, Esq.
0000 X. Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
(b) If to Purchaser:
Black Creek Integrated Systems Corp.
0000 Xxxxxxxxx Xxxx.
Xxxxxxxx, XX 00000
Attn: Chief Executive Officer
with a copy to:
Xxxxxx X. Xxxxxxxxx
Xxxx & Xxxxxx LLP
000 Xxxxx 00xx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
15.0 Severability. In the event any covenant, condition or other provision
of this Agreement is held to be invalid or unenforceable by a final judgment of
a court of competent jurisdiction, then such covenant, condition or other
provision shall be automatically terminated and performance thereof waived, and
such invalidity or unenforceability shall in no way affect any of the other
covenants, conditions or provisions hereof, and the parties hereto shall
negotiate in good faith to agree to such amendments, modifications or
supplements of or to this Agreement or such other appropriate actions as, to the
maximum extent practicable, shall implement and give effect to the intentions of
the parties as reflected herein.
16.0 Entire Agreement. This Agreement contain all of the terms agreed upon
by the parties with respect to the subject matter hereof and thereof and there
are no representations or understandings between the parties except as provided
herein and therein. This Agreement may not be amended or modified in any way
except by a written amendment to this Agreement duly executed by the parties.
17.0 Waiver. No waiver of a breach of, or default under, any provision of
this Agreement shall be deemed a waiver of such provision or of any subsequent
breach or default of the same or similar nature or of any other provision or
condition of this Agreement.
18.0 Applicable Law. This Agreement shall be governed by and construed
(both as to validity and performance) and enforced in accordance with the laws
of the State of Arizona.
19.0 Attorneys' Fees. In any action brought to enforce the provisions of
this Agreement, the prevailing party shall be entitled to recover its attorneys'
fees and costs as determined by the court and not the jury.
20.0 Equitable Relief. The parties agree that the remedies at law for any
breach of the terms of this Agreement are inadequate. Accordingly, the parties
consent and agree that an injunction may be issued to restrain any breach or
alleged breach of such provisions. The parties agree that terms of this
Agreement shall be enforceable by a decree of specific performance. Such
remedies shall be cumulative and not exclusive, and shall be in addition to any
other remedies which the parties may have at law or in equity.
21.0 Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument, but all of such counterparts taken together shall be
deemed to constitute one and the same instrument. No party shall be bound until
each party has signed at least one (1) such counterpart.
22.0 Survival. All representations and warranties in this Agreement and any
other certificate or document delivered pursuant to this Agreement shall survive
the Closing and the consummation of the transactions contemplated hereby for a
period of 18 months, except that warranties concerning title (Section 4.11) and
Taxes (Section 4.17) shall survive until 30 days after the expiration of the
statute of limitations applicable to such violations. Any representation or
warranty the violation of which is made the basis of a claim for indemnification
pursuant to Section 11.1(b) or Section11.2(b) will survive until such claim is
finally resolved if Purchaser notifies Seller, or if Seller notifies Purchaser,
as applicable, of such claim in reasonable detail prior to the date on which
such representation or warranty would otherwise expire hereunder. Without
limiting the foregoing, no claim for indemnification pursuant to Section11.1(b)
or Section 11.2(b) based on the breach or alleged breach of a representation or
warranty may be asserted after the date on which such representation or warranty
expires hereunder. The covenants and agreements of the Seller and Purchaser made
in or pursuant to this Agreement will survive the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
indefinitely.
(See next page for signatures.)
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in
their respective names as of the day and year first above written.
SELLER:
ALANCO/TSI PRISM, INC.
an Arizona corporation
By: ____________________________________
Its: ____________________________________
PURCHASER:
BLACK CREEK INTEGRATED SYSTEMS CORP.
an Alabama corporation
By: ____________________________________
Its: ____________________________________
For Purposes of Article 11 only:
ALANCO TECHNOLOGIES, INC.
an Arizona corporation
By: ____________________________________
Its: ____________________________________
