--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
By and among
AHEAD TECHNOLOGY, INC.,
NORTRONICS ACQUISITION CORPORATION,
NORTRONICS COMPANY, INC.,
XXXX XXXXXXXX,
XXXXXX XXXXXXXXX
AND
XXXXXX XXXXXX
DATED: as of October 22, 1996
--------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
----
ARTICLE I................................................................. 1
DEFINITIONS............................................................... 1
ARTICLE II................................................................ 9
PURCHASE AND SALE OF ASSETS............................................... 9
Section 2.1. Purchase and Sale of the Assets...................... 9
Section 2.2. Closing; Deliveries.................................. 9
Section 2.3. Assumption of Liabilities............................ 10
Section 2.4. Exclusion of Liabilities............................. 10
ARTICLE III............................................................... 11
REPRESENTATIONS AND WARRANTIES OF BUYER AND AHEAD......................... 11
Section 3.1. Corporate Existence.................................. 11
Section 3.2. Authority Relative to this
Agreement and Transaction Documents.................. 11
Section 3.3. No Litigation........................................ 12
Section 3.4. No Brokers, Finders, etc............................. 12
ARTICLE IV................................................................ 12
REPRESENTATIONS AND WARRANTIES............................................ 12
Section 4.1. Corporate Existence.................................. 12
Section 4.2. Authority Relative to this
Agreement and Transaction Documents.................. 12
Section 4.3. No Litigation........................................ 13
Section 4.4. Title to Assets and Real Property.................... 13
Section 4.5. Compliance with Laws; Permits and Licenses........... 14
Section 4.6. Intellectual Property................................ 15
Section 4.7. Litigation........................................... 15
Section 4.8. Contracts............................................ 16
(a) Material Contracts................................... 16
(b) Government Contracts................................. 17
PAGE
----
(i) Government Contracts Compliance................. 17
(ii) Investigation and Claims........................ 18
(iii) No Debarment or Suspension...................... 19
(iv) Test and Inspection............................. 19
Section 4.9. Foreign Government Contracts......................... 20
Section 4.10. Labor Union Contracts................................ 20
Section 4.11. Employees, Labor Matters, etc........................ 20
Section 4.12. ERISA................................................ 21
Section 4.13. Brokers' or Finders' Fees, etc....................... 23
Section 4.14. Financial Information; Undisclosed Liabilities....... 23
Section 4.15. Taxes................................................ 24
Section 4.16. Absence of Changes................................... 25
Section 4.17. Accounts Receivable.................................. 27
Section 4.18. Insurance............................................ 27
Section 4.19. Sufficiency of Assets and Real Property.............. 27
Section 4.20. Foreign Assets....................................... 28
Section 4.21. Propriety of Past Payments........................... 28
Section 4.22. Affiliate Transactions............................... 28
Section 4.23. Suppliers and Customer............................... 29
Section 4.24. Environmental Conditions and
Governmental Authorizations.......................... 29
Section 4.25. Leases of Personal Property.......................... 30
Section 4.26. Books and Records.................................... 30
Section 4.27. Accounts............................................. 30
Section 4.28. Products Liability................................... 30
Section 4.29. Interest in Competitors.............................. 31
Section 4.30. Inventories.......................................... 31
Section 4.31. Joint Ventures....................................... 31
Section 4.32. Full Disclosure...................................... 32
ARTICLE V................................................................. 32
COVENANTS................................................................. 32
PAGE
----
Section 5.1. Covenants of Buyer.................................... 32
(a) Compliance with Laws.................................. 32
(b) Maintain Accuracy of Representations.................. 32
(c) Consents and Permits.................................. 33
Section 5.2. Covenants of the Company.............................. 33
(a) Compliance with Laws.................................. 33
(b) Maintain Accuracy of Representations.................. 33
(c) No Shop............................................... 33
(d) Access to Information; Confidentiality................ 33
(e) Conduct of Business................................... 34
(f) Third Party Consents; Further Actions................. 35
(g) Renewal of Permits.................................... 35
(h) Powers of Attorney.................................... 35
(i) Notification of Certain Matters....................... 35
(j) Disclosure Schedules.................................. 36
Section 5.3. Closing Conditions.................................... 36
Section 5.4. Net Worth Statements; Adjustment to Purchase Price.... 36
ARTICLE VI................................................................ 36
CONDITIONS PRECEDENT TO THE CLOSING....................................... 36
Section 6.1. Conditions Precedent to Obligations of Buyer......... 36
(a) Tender of All Assets................................. 36
(b) Documents............................................ 37
(c) Satisfactory Completion of Due Diligence............. 38
(d) Representations and Warranties....................... 38
(e) Performance.......................................... 38
(f) No Material Adverse Change........................... 38
(g) Net Worth............................................ 38
(h) Consents, etc........................................ 38
(i) No Proceeding or Litigation.......................... 39
(j) Licenses; Permits.................................... 39
(k) Release of Lien, etc................................. 39
(l) Other................................................ 39
PAGE
----
(m) Availability of Certain Employees..................... 39
Section 6.2. Conditions Precedent to
Obligations of the Company............................ 39
(a) Documents............................................. 39
(b) Representations and Warranties........................ 40
(c) Performance........................................... 40
(d) Consents, etc......................................... 40
(e) No Proceeding or Litigation........................... 41
(f) Assumption of Lease................................... 41
(g) Other................................................. 41
(h) Payments.............................................. 41
ARTICLE VII............................................................... 41
ADDITIONAL AGREEMENTS..................................................... 41
Section 7.1 Bulk Transfer Laws.................................... 41
Section 7.2. Covenant of Seller and Certain
Shareholder/Employees................................. 41
Section 7.3. Remedies.............................................. 42
(a) Reasonableness of Restraints.......................... 42
(b) Injunctive Relief..................................... 43
(c) Extension of Period of Restraints..................... 43
(d) Court Ordered Reduction of Restraints................. 43
Section 7.4. Further Assurances.................................... 43
Section 7.5. Tax Payment........................................... 43
ARTICLE VIII.............................................................. 43
INDEMNIFICATION........................................................... 44
Section 8.1. Survival of Representations and Warranties............ 44
Section 8.2. Indemnification by the Parties........................ 44
Section 8.3. General Indemnification Provisions.................... 44
Section 8.4. Limitations........................................... 45
Section 8.5. Effect of Due Diligence on Indemnification............ 45
Section 8.6. Effect and Conditions................................. 46
ARTICLE IX................................................................ 46
TERMINATION............................................................... 46
PAGE
----
Section 9.1. Termination of Agreement............................. 46
Section 9.2. Procedure and Effect of Termination.................. 47
ARTICLE X................................................................. 47
RESOLUTIONS OF DISPUTES................................................... 47
Section 10.1. Dispute Defined...................................... 47
Section 10.2. Dispute Resolution Procedures........................ 47
Section 10.3. Provisional Remedies................................. 48
Section 10.4. Tolling Statute of Limitations....................... 48
Section 10.5. Performance to Continue.............................. 48
Section 10.6. Extension of Deadlines............................... 48
Section 10.7. Enforcement.......................................... 48
Section 10.8. Costs................................................ 49
Section 10.9. Replacement.......................................... 49
ARTICLE XI................................................................ 49
MISCELLANEOUS............................................................. 49
Section 11.1. Taxes................................................ 49
Section 11.2. Expenses............................................. 49
Section 11.3. Consents............................................. 49
Section 11.4. Assignment........................................... 49
Section 11.5. Entire Agreement..................................... 50
Section 11.6. Amendment............................................ 50
Section 11.7. Waiver............................................... 50
Section 11.8. Headings............................................. 50
Section 11.9. Notices.............................................. 50
Section 11.10. Law Governing........................................ 51
Section 11.11. Counterparts......................................... 51
Section 11.12. Severability......................................... 51
Section 11.13. No Third Party Beneficiaries......................... 53
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of October 22, 1996 ("AGREEMENT")
by and between AHEAD TECHNOLOGY, INC., a Delaware corporation ("Ahead"),
NORTRONICS ACQUISITION CORPORATION, a Delaware corporation and subsidiary of
Ahead ("BUYER"), NORTRONICS COMPANY, INC., a Minnesota corporation (the "SELLER"
or the "COMPANY"), XXXX XXXXXXXX, XXXXXX XXXXXXXXX and XXXXXX XXXXXX.
W I T N E S S E T H:
WHEREAS, the Company desires to sell or transfer to the Buyer and the Buyer
desires to purchase all of the Assets from the Company on the terms and
conditions and for the consideration hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements and
on the terms and conditions contained herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Certain Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:
"Accountants" means Froehling, Anderson, Xxxxxxx & Egnell, Ltd., the
independent public accountants of the Company.
"Affiliate" means, when used with reference to a specified Person, (i) any
Person that directly or indirectly through one or more intermediaries controls
or is controlled by or is under common control with the specified Person or (ii)
any Person that is an executive officer or director of, partner in, or trustee
of, or serves in a similar capacity with respect to, the specified Person or of
which the specified Person is an officer, partner or trustee, or with respect to
which the specified Person serves in a similar capacity and, (iii) when used
with reference to a natural Person, any Person that is related to the specified
Person by blood or marriage in the first degree of consanguinity; provided,
however, that no natural Person shall be deemed to be controlled by any other
Person.
"Applicable Law" shall have the meaning specified in Section 4.5(a).
"Assets" shall mean all of the assets of the Company as reflected on the
Company's Balance Sheet or used in the business of the Company, as said assets
may change as permitted by this Agreement in the ordinary course of business
from the date hereof through the Closing Date, including the following:
(i) Machinery and Equipment. All right, title and interest in and to
all machinery and equipment, patterns, furniture, furnishings, fixtures,
plant and office equipment, leasehold improvements, vehicles, supplies and
tools and dies of Seller including, without limitation, those listed on
Schedule 4.4 hereto.
(ii) Inventory and Receivables. All inventory of raw materials,
work-in-process and finished products of Seller.
(iii) Contracts and Commitments. All right, title and interest of
Seller in and to the agreements, contracts, commitments and leases of real
and personal property and purchase or sale orders of Seller including,
without limitation, those listed on Schedules 4.8(a) and 4.8(b) hereto;
provided that to the extent the assignment of any agreement, contract,
lease or purchase or sale order requires the consent of the other party
thereto, this Agreement shall not constitute an agreement to assign the
same if an attempted assignment would constitute a breach thereof, but the
Buyer and the Seller agree that Buyer and Seller will use their best
efforts to obtain the written consent of the other parties to such
agreements, contracts, leases and purchase and sale orders to the
assignment thereof to the Buyer as soon as practicable, and if such consent
is not obtained, then Buyer and Seller will cooperate in any reasonable
arrangements (including, but not limited to, subcontracting, sublicensing
or subleasing) designed to provide for the Buyer the benefits -- subject to
Buyer, to the extent it receives the benefits, performing or providing for
the performance of any related obligations associated with receiving such
benefits such as but not limited to paying for the same -- under all such
agreements, contracts, leases and purchase and sale orders, including
enforcement for the benefit of the Buyer, of any and all rights thereof
against any other parties thereto arising out of the breach or cancellation
thereof by any other party thereto.
(iv) Books and Records.
(A) All books and records, including but not limited to, all
correspondence, books, files, documents, sales literature,
customer lists, customer records, engineering drawings and
records, research and development records, operating
2
records, records with respect to intellectual property and
other records of Seller, but excluding Seller's minute
books, stock records and records relating to taxes, to which
tax records Buyer shall be afforded reasonable access upon
its request.
(B) The records relating to the Real Property which are in
Seller's possession or control, including but not limited to
all design drawings, surveys, back title information, plot
plans, building systems drawings for heating, ventilation
and air conditioning and the correspondence files from the
Seller's engineering department.
(C) After the Closing, the Buyer shall give the Seller and its
representatives reasonable access (including without
limitation for the purposes of preparing tax returns and
responding to any inquiries from tax authorities) to the
aforesaid books and records and the Buyer shall give the
Seller written notice prior to the removal or destruction of
such books and records. The notice prior to removal shall
contain the new location where the books and records are to
be stored, and shall be given so as to provide the Seller
sufficient time to copy the documents to be removed if the
Seller chooses. The Buyer shall, in the event of a decision
to destroy the books and records, give the Seller the books
and records if so requested by the Seller.
(v) Intellectual Property. All right, title and interest of Seller in
and to all patents, patent applications, trademarks, trademark rights,
trade names, trade name rights, service marks, copyrights, know how, trade
secrets, confidential and proprietary information, processes, technologies
and methods of Seller including, without limitation, those listed on
Schedule 4.6 hereto, and the goodwill relating to the foregoing. The Seller
shall transfer the patents, patent applications and trademarks referred to
in this subparagraph (v) by executing and delivering to the Buyer at the
Closing the assignments referred to in Section 6.1(b).
(vi) Permits. All Federal, state, regional and local permits,
licenses, certificates, approvals and similar authorizations of Seller to
the extent they are assignable or transferable. To the extent that any
permit, license, certificate, approval or other authorization is not
assignable or transferable, the Seller shall use its best efforts and will
cooperate with the Buyer in order for the Buyer to obtain such
3
permit license, certificate, approval or authorization as soon as possible.
(vii) Software. All right, title and interest of the Seller in and to
the computer software programs of Seller.
(viii) Cash on Hand, Etc. All right, title and interest of the Seller
in and to cash on hand, xxxxx cash and travel and other advances of Seller.
"Assumed Liabilities" shall mean all of those and only those liabilities
expressly assumed pursuant to Section 2.3.
"Best Efforts" shall mean diligent efforts to obtain a specified result,
but shall not be deemed to require the payment of any amounts to any third party
as such (other than fees required to obtain any necessary permit or similar
consent, with fees required to obtain business or operating permits issued to
Buyer to be the responsibility of Buyer and fees charged by other parties to
contracts for consents to be split equally by the Buyer and Seller; provided,
however, that Buyer's portion of such fees for consents shall not exceed $2,000
and that any amount in excess of that shall be the subject of a separate
agreement).
"Buyer's Accountants" shall mean KPMG Peat Marwick LLP.
"Closing" shall have the meaning specified in Section 2.2.
"Closing Date" shall have the meaning specified in Section 2.2.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contracts" means all contracts, subcontracts, agreements, options,
guarantees, orders, commitments, undertakings and arrangements, whether written
or oral.
"Environmental Damages" means all claims, judgments, damages, losses,
penalties, fines, liabilities (including strict liability), costs and expenses,
including costs and expenses of defense of any claim and of any settlement of
claims, including, without limitation, reasonable attorneys' fees and
consultants' fees, which are incurred at any time as a result of the existence
of Hazardous Material upon, about or beneath the Premises or migrating or
threatening to migrate to or from the Premises, or arising in any manner
whatsoever out of any violation of Environmental Requirements pertaining to the
Premises and/or the activities thereon by the Company or to the past, present or
future operations of the Company, including without limitation:
(i) damages for personal injury, or injury to property or natural
resources, including but not limited to claims brought by or on behalf of
employees of the Company, occurring upon or off of the Premises, whether
foreseeable or unforeseeable, including, without limitation interest and
penalties;
4
(ii) diminution in the value of the Premises and damages for the loss
of or restriction on the use of or adverse impact on the marketing of
rentable or usable space or of any amenity of the real property containing
the Premises;
(iii) reasonable fees incurred for the services of attorneys,
consultants, contractors, experts, laboratories and all other costs and
liabilities (including liabilities to indemnify any Person for costs)
incurred in connection with the investigation or remediation of such
Hazardous Materials or violation of Environmental Requirements including,
but not limited to, the preparation of any feasibility studies or reports
or the performance of any cleanup, remedial, removal, containment,
restoration or monitoring work required by any Governmental Authority, or
reasonably necessary to make full economic use of the Premises or any other
property or otherwise expended in connection with such conditions; and
(iv) damages and claims resulting from the off-site disposal of
Hazardous Materials which derived from the use, generation, storage,
treatment, transportation or disposal of Hazardous Materials by the
Company.
"Environmental Requirements" means all Applicable Law relating to the
protection of human health or the environment, including, without limitation:
(i) all requirements pertaining to reporting, licensing, permitting,
investigation or remediation of emissions, discharges, releases or
threatened releases of Hazardous Materials into the air, surface water,
groundwater or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials; and
(ii) all requirements pertaining to the protection of the health and
safety of employees or the public.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended (P.L. 93-406).
"Escrow Agent" means a commercial bank in Minnesota to be selected by the
parties hereto.
"Escrow Agreement" means the agreement by and among the Buyer, the Company
and the Escrow Agent pursuant to which $200,000 of the Purchase Price shall be
held for one year following the Closing Date in order to support the
indemnification obligations of the Company and the Shareholders.
"Excluded Liabilities" means all liabilities, obligations and commitments
of the Company or relating to the Assets which are not expressly denominated as
Assumed Liabilities including, without limitation, those Excluded Liabilities
delineated in Section 2.4.
5
"GAAP" means generally accepted accounting principles in the United States
of America in effect from time to time, applied consistently throughout the
periods involved.
"Governmental Approval" means an authorization, consent, approval, permit,
license or exemption of, registration or filing with, or report or notice to,
any Governmental Authority, including, without limitation, federal environmental
authorities and environmental authorities of the states in which the Company
conducts business.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
including, without limitation, any government authority, agency, department,
board, commission or instrumentality of the United States, any State of the
United States or any political subdivision thereof and any tribunal or
arbitrator(s) of competent jurisdiction.
"Hazardous Materials" means any chemical substance:
(i) the presence of which requires investigation, removal or
remediation under any Applicable Law; or
(ii) which is defined as a "hazardous waste" or "hazardous substance"
under any Applicable Law, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section
9601 et seq.) or the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.); or
(iii) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic, or otherwise hazardous and is
regulated by any Governmental Authority or Applicable Law; or
(iv) the presence of which causes or threatens to cause a nuisance
upon the Premises or to adjacent properties or poses or threatens to pose a
hazard to the Premises or to the health or safety of any Person on or about
the Premises; or
(v) without limitation which contains gasoline, diesel fuel or other
petroleum hydrocarbons; or
(vi) without limitation which contains PCBs or asbestos.
"IRS" means the United States Internal Revenue Service.
"Improvements" has the meaning specified in Section 4.4.
6
"Intellectual Property Rights" means any and all trademarks, trademark
applications, service marks, service xxxx applications, licensing agreements and
similar Contracts, technology, trade secrets, trade names, division names,
registered copyrights and other information, property or rights used in the
business or operations of the Company, as more specifically set forth in
Schedule 4.6 hereof.
"Inventories" means all inventories of the Company including, without
limitation, all finished goods, work in progress, raw materials, stores, all
production, shipping and packaging supplies and all spare parts.
"knowledge", as may be used herein, shall mean actual or constructive
knowledge; "to the knowledge of the Company" means the actual or constructive
knowledge of any or all officers and directors of the Company including, without
limitation, Xxxx Xxxxxxxxxxx.
"Landlord" means Applied Magnetics Corporation.
"Liens" has the meaning specified in Section 4.4.
"Material Adverse Effect" means an effect which, directly or indirectly,
subjects the Company to any liability, damage, deficiency, loss, cost or expense
of $25,000 or more or which otherwise has or will have a material adverse effect
on the operations, results of operations, prospects or condition (financial or
other) of the business of the Company.
"Material Contract" shall have the meaning specified in Section 4.8.
"Notice" shall have the meaning specified in Section 11.9.
"Permitted Liens" shall have the meaning specified in Section 4.4.
"Person" means any individual, firm, partnership, corporation, trust,
estate, limited liability company, limited liability partnership, or other
entity.
"Personal Property Leases" shall have the meaning specified in Section
4.25.
"Plan(s)" shall have the meaning specified in Section 4.12.
"Preliminary Net Worth Statement" shall have the meaning specified in
Section 5.4.
"Premises" means those locations owned or leased by the Company or
otherwise occupied thereby for the business operations of the Company, including
the facilities located at: (i) 000 Xxxxx Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxx 00000;
(ii) 0000 Xxxxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxxxx 00000; and (iii) 000 Xxxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxx 00000.
7
"Real Property" has the meaning specified in Section 4.4.
"Return" shall mean all reports, estimates, declarations, information
statements and returns due under all foreign, federal, state or local laws or
regulations, as appropriate, relating to Taxes.
"Securities Act" shall mean the Securities Act of 1933, as amended (15
U.S.C. Section 77a et seq.).
"Security Interest" shall have the meaning specified in Section 4.31.
"Shareholders" shall mean Xxxx Xxxxxxxx, Xxxxxx Xxxxxxxxx, Xxxxxx Xxxxxx,
Xxxxx Xxxxxx and Xxxxxx Page, which persons in the aggregate own one hundred
percent (100%) of the issued and outstanding stock of the Company.
"Subsidiary" of any Person means any corporation or other entity of which
more than 50% of the outstanding capital stock or other equity having ordinary
voting power to elect a majority of the Board of Directors or other managers of
such corporation (irrespective of whether at the time capital stock of any other
class or classes of such corporation shall or might have voting power upon the
occurrence of any contingency) or other entity is at the time directly or
indirectly owned by such Person, by such Person and one or more of such Person's
other subsidiaries or by one or more of such Person's other subsidiaries.
"Taxes" means all federal, state and local taxes, assessments and
governmental charges, of any nature, kind or description (including, without
limitation, all income taxes, franchise taxes, withholding taxes, estimated
taxes, unemployment insurance, social security taxes, payroll taxes, sales and
use taxes, excise taxes, occupancy taxes, real and personal property taxes,
stamp taxes, transfer taxes, workers' compensation and withholding taxes) and
all interest, additions to tax and penalties with respect thereto, whether such
interest, additions or penalties arise before or after the Closing Date.
"Transaction Documents" shall mean the collective reference to this
Agreement, and all other agreements and documents to be delivered pursuant
hereto on the Closing Date, in each case with such changes as may be agreed
among the parties.
8
ARTICLE II.
PURCHASE AND SALE OF ASSETS
SECTION 2.1 Purchase and Sale of the Assets.
(a) Subject to the terms and conditions hereof, the Seller will sell,
transfer, convey, assign and deliver all of the Assets to the Buyer and the
Buyer will purchase all of the Assets from the Seller for a purchase price equal
to TWO MILLION FOUR HUNDRED THOUSAND DOLLARS ($2,400,000) (the "PURCHASE
PRICE"), reduced by the amount of any payment of deferred compensation
obligations made by the Company prior to the Closing Date, subject to adjustment
as set forth in Section 5.4 below, and payable as set forth in Section 2.1(b).
(b) The parties agree to allocate the aggregate of the Purchase Price (as
may be adjusted pursuant to Section 5.4) among the respective Assets. The
parties shall prepare an allocation schedule in accordance with Section 1060 of
the Code, and the parties shall cooperate with each other and provide such
information as either of them shall reasonably request. The parties shall each
report the federal, state, local and other Tax consequences of the purchase and
sale contemplated hereby in a manner consistent with such allocation schedule.
SECTION 2.2 Closing; Deliveries.
(a) Subject to the conditions set forth in this Agreement, the purchase and
sale of the Assets pursuant to this Agreement (the "Closing") shall take place
at the offices of Xxxx, Plant, Xxxxx, Xxxxx & Xxxxxxx, P.A. at 9:00 a.m. on
October 22, 1996, or at such other time as the Company and the Buyer may agree
to in writing (the "Closing Date"). Provided the Closing occurs as provided
herein, the benefits (and liabilities as limited by this Agreement) of the
business and operations conducted with the Assets shall be conducted for the
benefit of and be the responsibility of the Buyer from and after June 29th,
1996. However, the parties further agree that the Company's transfer of the
Assets to the Buyer will take place on the Closing Date. The parties agree that
the Buyer shall (and the Seller shall not) report the income from the operations
of the business conducted with the Assets from June 29th, 1996 to the Closing
Date on its income tax returns.
(b) At the Closing:
(i) the Seller shall deliver to the Buyer:
(A) free and clear of any Lien, all of the Assets by delivery of
instruments of conveyance and such other documents, certificates and
opinions as are specified herein.
9
(B) all opinions, certificates and other instruments and
documents required to be delivered by the Company and the Shareholders
at or prior to the Closing or otherwise required in connection
herewith;
(ii) Buyer shall deliver to the Company:
(A) subject to paragraph 2.1(a) above, cash by wire from transfer
or certified check in the amount of $2,200,000;
(B) all opinions, certificates and other instruments and
documents required to be delivered by Buyer at or prior to the Closing
or otherwise required in connection herewith; and
(iii) Buyer shall deliver to the Escrow Agent $200,000,
representing the remainder of the Purchase Price, to be held by
the Escrow Agent and distributed in accordance with the terms of
the Escrow Agreement.
SECTION 2.3. Assumption of Liabilities. Subject to the terms and conditions
set forth herein, at the Closing, Buyer will assume and Buyer and Ahead agree to
pay or satisfy all of (and only) the following liabilities relating to the
Assets and existing at or arising after the Closing Date (collectively, the
"Assumed Liabilities"):
(a) all liabilities, obligations and commitments set forth on Schedule
2.3 hereto relating exclusively to the Assets that are (a) reflected on the
Company's Balance Sheet, or (b) incurred after the Balance Sheet Date,
defined in Section 4.14 below, in the ordinary course of business
consistent with past practice and in accordance with the terms of this
Agreement. Schedule 2.3 contains a detailed listing of all accounts payable
as of the latest practicable date prior to the Closing Date;
(b) all liabilities, obligations and commitments arising out of the
agreements, contracts and commitments, if any, assigned to Buyer pursuant
to the Assignment of Contracts, for the period subsequent to June 29, 1996,
but not including any liabilities in respect of any breach thereof
occurring prior to the Closing Date.
SECTION 2.4. Exclusion of Liabilities. In furtherance and not in limitation
of Section 2.3 above, the following liabilities shall be Excluded Liabilities
and shall not be assumed by the Buyer:
(a) that certain obligation of the Company to Applied Magnetics
Corporation, which obligation has been satisfied by the Corporation;
(b) any and all obligation for deferred compensation owed by the
Company to its officers and other employees (the "Deferred Compensation
Obligation"), which Deferred Compensation Obligation may be satisfied by
the Company on or before the Closing Date;
10
(c) accrued income taxes relating to periods prior to the Effective
Date;
(d) accrued sales and use taxes relating to periods prior to the
Effective Date; and
(e) accrued payroll and related costs relating to periods prior to the
Effective Date such as accrued vacation obligations.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF BUYER AND AHEAD
Representations and Warranties of Buyer and Ahead. Buyer and Ahead
represent and warrant to the Company as follows:
SECTION 3.1. Corporate Existence. Buyer is, or on the Closing Date will be,
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has or will have all requisite corporate
power and authority to own its properties and assets and conduct its business as
it is now being, or on the Closing Date will be, conducted. Buyer, is or on the
Closing Date will be, duly qualified as a foreign corporation in each
jurisdiction where the nature of its activities makes such qualification
necessary.
SECTION 3.2. Authority Relative to this Agreement and Transaction
Documents. The execution, delivery and performance by the Buyer of this
Agreement and each Transaction Document to which it is, or on the Closing Date
will be, a party and the consummation of the transactions contemplated hereby
and thereby have been duly authorized and approved by all requisite corporate
action, and no other corporate action on the part of the Buyer is necessary for
the execution, delivery and performance by the Buyer of this Agreement or any
Transaction Document to which it is, or on the Closing Date will be, a party and
the consummation by the Buyer of the transactions contemplated hereby and
thereby. Neither the execution nor the delivery by the Buyer of this Agreement
or any Transaction Document to which it is, or on the Closing Date will be, a
party, nor the consummation by the Buyer of the transactions contemplated hereby
or thereby, nor compliance with nor fulfillment by the Buyer of the terms and
provisions hereof or thereof, will (i) conflict with or result in a breach of
the terms, conditions or provisions of or constitute a default under (A) its
Certificate of Incorporation or Bylaws or (B) any lease, Contract, instrument,
mortgage, deed of trust, deed evidencing or securing indebtedness for borrowed
money, financing lease, any law, rule, regulation, judgment, order, award,
decree or other restriction of any kind to which the Buyer is, or on the Closing
Date will be, a party or by which it is bound, or (ii) require the Buyer to
obtain the consent, approval, authorization or other order or action of, or
filing with, any court, governmental authority or regulatory body.
11
SECTION 3.3. No Litigation. There is no action, lawsuit, claim,
counterclaim, proceeding, or investigation (or group of related actions,
lawsuits, claims, proceedings or investigations) pending or, to the knowledge of
Buyer, threatened against or affecting Buyer that seeks to restrain or enjoin
the consummation of the transactions contemplated by this Agreement or any
Transaction Document.
SECTION 3.4. No Brokers, Finders, etc. All negotiations relating to this
Agreement and the transactions contemplated hereby have been carried on without
the participation of any Person acting on behalf of the Buyer (other than the
employees or agents of the Buyer) in such manner as to give rise to any valid
claim against the Shareholders or the Company for any brokerage or finder's
commission, fee or similar compensation.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDERS
Representations and Warranties of the Company and the Shareholders. The
Company and the Shareholders jointly and severally represent and warrant to the
Buyer that:
SECTION 4.1. Corporate Existence. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota, and has all requisite corporate power and authority to own its
properties and assets and conduct its business as it is now being conducted. The
Company is duly qualified as a foreign corporation in each jurisdiction where
the nature of its activities makes such qualification necessary, and the failure
to be so qualified would have a material adverse effect.
SECTION 4.2. Authority Relative to this Agreement and Transaction
Documents. The execution, delivery and performance by the Company of this
Agreement and each Transaction Document to which it is, or on the Closing Date
will be, a party and the consummation of the transactions contemplated hereby
and thereby have been duly authorized and approved by all requisite corporate
action, and no other corporate action is necessary for the execution, delivery
and performance by the Company of this Agreement or any Transaction Document to
which it is, or on the Closing Date will be, a party, and the consummation by
the Company of the transactions contemplated hereby and thereby. Neither the
execution nor the delivery by the Company of this Agreement, and/or any
Transaction Document to which it is, or on the Closing Date will be, a party,
nor the consummation by the Company of the transactions contemplated hereby or
thereby, nor compliance with nor fulfillment by the Company of the terms and
provisions hereof or thereof, will (i) conflict with or result in a breach of
the terms, conditions or provisions of or constitute a default under (A) the
Articles of Incorporation or Bylaws of the Company or (B) except as set forth on
Schedule 4.2, any lease, Contract, instrument, mortgage, deed of trust, deed
evidencing or securing indebtedness for borrowed money, financing lease, any
12
law, rule, regulation, judgment, order, award, decree or other restriction of
any kind to which the Company is, or on the Closing Date will be, a party or by
which it is or will be bound, or (ii) require the Company to obtain the consent,
approval, authorization or other order or action of, or filing with, any court,
governmental authority or regulatory body. This Agreement has been duly executed
and delivered by the Company and, together with each other Transaction Document
and other agreement and instrument required to be delivered by the Company, is
or will be, as the case may be, a legal, valid and binding obligation thereof,
enforceable in accordance with its respective terms.
SECTION 4.3. No Litigation. There is no action, lawsuit, claim,
counterclaim, proceeding, or investigation (or group of related actions,
lawsuits, claims, proceedings or investigations) pending or, to the knowledge of
the Company, threatened against or affecting the Company that seeks to restrain
or enjoin the consummation of the transactions contemplated by this Agreement or
any Transaction Document.
SECTION 4.4. Title to Assets and Real Property. (a) Schedule 4.4 lists all
of the machinery, equipment, Intellectual Property Rights, furniture, fixtures,
personalty, and other items constituting the Assets. The Company has good and
marketable title to all of the Assets, which are free and clear of all liens
(including environmental liens), mortgages, deeds of trust, trust deeds, deeds
to secure debt, pledges, encumbrances, defects, security interests,
restrictions, conditional and installment sale agreements, options, easements
and other legal or equitable encumbrances and claims or charges of any kind
(collectively, "Liens"), except as disclosed in Schedule 4.4 (collectively,
"Permitted Liens").
(b) Set forth on Schedule 4.4 is a list of all interests in real
property owned by or leased to the Company (including all interests in real
property used in the business of the Company) and of all options or other
contracts to acquire any such interest (collectively, the "Real Property"),
specifying the location of each such Real Property and any improvements
thereon ("Improvements"), and, as to all Real Property not owned by the
Company, a legal description (if available), address and approximate size
and boundaries of each leased or subleased premises, the present use to
which each of the leased or subleased premises is being put, the name and
address of the landlord and, if appropriate, the sublandlord with respect
to each lease, a listing of any amendments, modifications, extensions or
renewals which comprise a part of each lease, the expiration date of each
lease, any renewal or extension right under each lease and the current base
fixed annual rent due under each lease. The Company has the unrestricted
right to use in accordance with the terms of its leases and in accordance
with Applicable Law all Real Property and Improvements, and each such
property is held free and clear of (i) all subleases, licenses and other
rights to occupy or use such property and (ii) all Security Interests,
rights of way, easements, restrictions, exceptions, variances,
reservations, covenants or other title defects or limitations of any kind,
except (with respect to all such properties) those set forth on Schedule
4.4 or disclosed on the Company Balance Sheet or the notes thereto, none of
which disclosed defects or limitations, except as specified on Schedule
4.4(b), has an adverse effect on such property, its present use or, to the
knowledge of the Company, any contemplated increase in the capacity of the
business conducted with the Assets (provided that such increase in capacity
takes place within the confines of
13
the existing building). No financing statement under the Uniform Commercial
Code with the Company as debtor with respect to any of the foregoing
properties has been filed in any jurisdiction, and the Company has not
signed any such financing statement or any security agreement authorizing
any secured party thereunder to file any such financing statement, except
as set forth on Schedule 4.4 hereto. The present and contemplated use of
the Real Property, Improvements and tangible property conforms in all
material respects with all applicable building, fire, zoning, environmental
and other land use, laws, ordinances, rules and regulations, Applicable Law
and all necessary occupancy and other certificates and Permits for the
occupancy and lawful use thereof have been issued and are presently in full
force and effect. All notices of violations of Applicable Law issued to the
Company by any state, county, municipal or local department having
jurisdiction against or affecting any of the Real Property, Improvements or
tangible property have been complied with in all material respects. To the
knowledge of the Company, no use of the Real Property, Improvements or
tangible property is dependent upon the continuance of a nonconforming use
or a special permit or license. The Company is not obligated to pay any fee
or commission to any broker, finder, consultant or other intermediary as a
result of the purchase or leasing of any of the Real Property.
SECTION 4.5. Compliance with Laws; Permits and Licenses. (a) Except as
disclosed in Schedule 4.5(a), to its knowledge, the Company is in compliance in
all respects with all applicable statutes, orders, rules and regulations
promulgated by Governmental Authorities (collectively, "Applicable Law")
relating to the operation or conduct of the business of the Company, or the use
of the properties of the Company, including, without limitation, any applicable
statute, order, rule or regulation relating to (i) wages, hours, hiring,
non-discrimination, promotion, retirement, benefits, pensions and working
conditions, (ii) health and safety, (iii) zoning and building codes or municipal
ordinances, violation of which would interfere with the ability of the Company
to operate, (iv) the production, storage, processing, advertising, sale,
transportation, distribution, disposal, use and warranty of products of the
business of the Company (v) obligations of the Company to disabled persons, or
(vi) trade and antitrust regulations, and the Company has not received any
notice of alleged violation of any such statute, order, rule or regulation. The
transactions contemplated by this agreement will not result in any violation
described in clauses (i) through (v) above. Except as disclosed in Schedule
4.5(a), the Company is not in default under or in violation of, any applicable
franchise, permit or license, its Articles of Incorporation or other charter
document, Bylaws, any promissory note, indenture or any evidence of indebtedness
or security therefor, lease, Contract or any other instrument to which it is a
party or by which it or any of its properties or assets is or may be bound.
(b) Schedule 4.5(b) lists all governmental licenses, permits, product
registrations, authorizations, approvals and indicia of authority and any
pending applications therefor. Except as disclosed in Schedule 4.5(b), such
licenses, permits, product registration, authorizations, approvals and
indicia of authority are (i) to the knowledge of the Company, all the
governmental licenses, permits, product registrations, authorizations,
approvals and indicia of authority necessary to conduct the business of the
Company, and (ii) valid and in full force and effect, assuming the related
consents referenced in Section 5.2(f) have been obtained prior to the
Closing.
14
SECTION 4.6. Intellectual Property. (a) Schedule 4.6(a) sets forth a true
and complete list of all Intellectual Property Rights of the Company. The
Intellectual Property Rights constitute all such material property forming a
part of the business of the Company and, except as disclosed in Schedule 4.6(a),
do not conflict with or infringe on the rights of others.
(b) Except as disclosed in Schedule 4.6(b) (i) all the Intellectual
Property Rights are owned by or are licensed to the Company under licenses
or written agreements; (ii) no claims have been made and are pending or, to
the knowledge of the Company, are threatened against the Company alleging
that any services provided or products manufactured or sold by the Company,
or any Intellectual Property Rights are being provided, manufactured, sold
or used in violation of any patents or trademarks, or any other rights of
any Person (nor, to the knowledge of the Company, is there a basis in fact
which could result in such a claim); (iii) the Company has not granted any
license to any Person with respect to any Intellectual Property Rights;
(iv) to the knowledge of the Company, no other Person is infringing on any
Intellectual Property Rights; (v) all Intellectual Property Rights of the
Company are legal, valid and binding, in full force and effect and are
freely assignable to the Buyer, if as and when required; (vi) the Company
has duly made punctual payments of all royalties or fees required to be
made by it under or in connection with any Intellectual Property Right; and
(vii) to the knowledge of the Company, no event has occurred which (with
the passing of time and/or the giving of notice) would result in or permit
the termination of any Intellectual Property Right or the acceleration of
any obligation thereunder without the consent of the Company.
(c) Except as disclosed in Schedule 4.6(c), following the transactions
contemplated hereby, the Buyer shall own or possess adequate and
enforceable licenses or other rights to use as the Company has in the past,
without payment of any fee other than as disclosed in Schedule 4.6(c), all
of the Intellectual Property Rights.
SECTION 4.7. Litigation. Except as disclosed in Schedule 4.7, there is no
action, lawsuit, claim, counterclaim, proceeding, or investigation (or group of
related actions, lawsuits, claims, proceedings or investigations) pending or, to
the knowledge of the Company, threatened against or affecting the Company in any
court, or before any federal, state, provincial, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind, and the Company does not know of
any reasonable basis for any such action, lawsuit, claim, proceeding, or
investigation (or group of related actions, lawsuits, claims, proceedings or
investigations). The Company is not in default, and no condition exists that
with notice or the lapse of time or both would constitute a default, with
respect to any judgment, order, writ, injunction or decree of any court or
before any federal, state, provincial, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting or relating to the business of the Company. No condemnation
proceeding has been commenced or, to the knowledge of the Company, is threatened
to be commenced against any of the Assets or Real Property.
15
SECTION 4.8. Contracts.
(a) Material Contracts. Schedule 4.8(a) contains a complete and
correct list as of the date hereof of all agreements, contracts and
commitments of the following types, written or material oral, to which the
Company is a party or by which the Company or its properties are bound as
of the date hereof: (a) mortgages, indentures, security agreements, letters
of credit, loan agreements and other agreements, guaranties and instruments
relating to the borrowing of money or extension of credit; (b) employment,
consulting, severance or agency agreements; (c) collective bargaining
agreements; (d) bonus, profit-sharing, compensation, stock option, pension,
retirement, deferred compensation or other plans, trusts or funds for the
benefit of employees, officers, agents and directors (whether or not
legally binding); (e) sales agency, manufacturer's representative or
distributorship agreements; (f) agreements, orders or commitments for the
purchase of raw materials, supplies or finished products exceeding $5,000;
(g) agreements, orders or commitments for the sale of its products
exceeding $5,000; (h) licenses of patent, copyright, tradenames, trademark,
transfer of technology or know how and other intellectual property rights;
(i) agreements or commitments for capital expenditures in excess of $7,500
for any single project (it being warranted that all undisclosed agreements
or commitments for capital projects do not exceed $15,000 in the aggregate
for all projects); (j) brokerage or finder's agreements; (k) joint venture,
partnership and development agreements; and (1) other agreements, contracts
and commitments which in any case involve payments or receipts of more than
$5,000. The Company has delivered to the Buyer complete and correct copies
of all such written agreements, contracts and commitments, together with
all amendments thereto, and accurate descriptions of all oral agreements
listed in Schedule 4.8(a). Except as set forth in Schedule 4.8(a), all such
agreements, contracts and commitments governed by this Section 4.8(a) are
in full force and effect, are enforceable by the Company, against the other
parties thereto in accordance with their terms and there does not exist
thereunder any violation or any default or event or condition or course of
dealing which, after notice or lapse of time or both, would constitute a
default thereunder on the part of the Company, or, to the knowledge of the
Company, any other party thereto or would provide a basis for any creditor
of the Company, or, to the knowledge of the Company, any party to such
agreements, contracts or commitments, to challenge the extent, validity or
priority of the interest of any other party to such agreements, contracts
or commitments; except as set forth in Schedule 4.8(a), consummation of the
transactions contemplated under this Agreement and the Transaction
Documents shall not give rise to any violation or any default or event or
condition which, after notice or lapse of time or both, would constitute a
default thereunder on the part of the Company or any other party thereto.
To the knowledge of the Company, no agreement, contract or commitment to
which the Company is a party, or by which it or any of its properties is
bound, has a Material Adverse Effect on the business of the Company. No
agreement, contract or commitment to which the Company is a party, or by
which it or any of its properties is bound, is in conflict, whether by way
of violation of any term or condition or by way of default, with any other
agreement, contract or commitment to which the Company is a party, or by
which it or any of its properties is bound. All agreements, contracts or
commitments with Affiliates of the Company to which the Company is a party
or by which it or any of its properties is bound reflect terms no less
favorable to the Company than could be obtained from unaffiliated third
parties. Except as set forth on Schedule 4.8(a) The Company has no
outstanding powers of
16
attorney, except routine powers of attorney relating to representation
before governmental agencies or given in connection with qualification to
conduct business in another jurisdiction.
(b) Government Contracts.
(i) Government Contracts Compliance. The Company is not in, nor
will the consummation of this Agreement, the Transaction Documents or
the transactions contemplated hereby and thereby result in, any
violation, breach or default of any term or provision of (i) any
contract, subcontract or agreement between the United States
Government and the Company and (ii) any bid, proposal or quote
submitted to the United States Government by the Company. The Company
is not, nor will the consummation of this Agreement, the Transaction
Documents or the transactions contemplated hereby and thereby result
in, any violation, breach or default of any provision of any federal
order, statute, rule or regulation governing any contract,
subcontract, bid, proposal, quote, arrangement or transaction of any
kind between the United States Government and the Company. The
representations in the two immediately preceding sentences are made
after consideration of, but are not limited to, the following laws,
regulations, standards, and agreements, to the extent, if any, they
are applicable to or incorporated into contracts, subcontracts,
agreements:
(A) The Truth in Negotiations Act of 1962, as amended;
(B) The Service Contract Act of 1965, as amended;
(C) The Contract Dispute Act of 1978, as amended;
(D) The Federal Acquisition Regulations and any applicable
agency supplements thereto, as well as applicable predecessor
procurement regulations;
(E) The Cost Accounting Standards;
(F) Agreement with the Contract Audit Agency;
(G) Relevant rules and arrangements governing the allowance
of costs charged to overhead and general and administrative cost
pools allocable to government contracts;
(H) The Defense Industrial Security Manual DoD 5220.22-M,
the Defense Industrial Security Regulation DoD 5220.22-R and
related security regulations;
(I) The Procurement Integrity Provisions of the OFPP Act
Amendments of 1988, P.L. 100-679, as amended and implemented.
17
(ii) Investigation and Claims. Schedule 4.8(b) sets forth
descriptions of all audit reports, final decisions, claims, consent
orders in effect, outstanding Forms 1, ongoing government
investigations or prosecutions, or internal investigations conducted
or initiated by or in respect of the Company and identifies any
corrective action, restitution or disciplinary action initiated or
taken by or in respect of the Company relating in any sense to the
subjects listed below in paragraphs (A) through and including (G).
Except as disclosed in Schedule 4.8(b), the Company has not engaged in
nor has been charged with, received a claim related to, or been under
investigation or conducted or initiated any internal investigation or
has reason to conduct, initiate or report any internal investigation
or made a voluntary disclosure, with regard to any of the following
since November 6, 1991:
(A) Defective Pricing within the meaning of P.L. 87-653, as
amended;
(B) Failure to correct accounting, inventory, material
requirements planning, or purchasing system deficiencies;
(C) Mischarging of direct and/or indirect costs in
connection with U.S. Governmental contracts or subcontracts;
(D) Delivery to the U.S. Government or to a U.S. Government
prime contractor or subcontractor of material, components, items
or services that do or did not meet specifications or standards
therefor, or delivery to the U.S. Government or a U.S. Government
prime contractor or subcontractor of foreign-made material,
components or items where domestic-made material, components or
items were required;
(E) Improper payments or any payments or activities for
obtaining non-public source selection information;
(F) Unallowable costs, including unallowable direct or
indirect costs;
(G) Violations of any of the following statutes, as amended,
or the regulations promulgated thereunder:
(I) False Statements Act (18 U.S.C. 1001),
(II) False Claims Act (18 U.S.C. 287),
(III) False Claims Act (31 U.S.C. 3729),
(IV) Briberies, Gratuities and Conflicts of Interest
(18 U.S.C. 201),
18
(V) Anti-Kickback Act (41 X.X.X. 00, 00),
(XX) Anti-Kickback Enforcement Act of 1986 (P.L.
99-634),
(VII) Arms Export Control Act (22 U.S.C. 277, et seq.),
(VIII) Foreign Corrupt Practices Act (15 U.S.C. 78m,
78dd-1, 78ff),
(IX) Export Administration Act (P.L. 99-64),
(X) War and National Defense Act (18 U.S.C. 793),
(XI) Racketeer Influenced Corrupt Organizations Act
(18 U.S.C. 1901-68),
(XII) Conspiracy to Defraud the Government (18 U.S.C.
371),
(XIII) Program Fraud Civil Remedies Act (P.L. 99-509),
(XIV) "Revolving Door" Legislation (18 U.S.C. 207,
281(a)(11) and 10 U.S.C. 2397), and
(XV) Defense Production Act (50 U.S.C. App. 2061).
(iii) No Debarment or Suspension. The Company is not nor has ever
been informed that it is or will be subject to any proceeding which
could result in or otherwise contemplates debarment or suspension.
(iv) Test and Inspection. All test and inspection results of the
Company have provided to any government agency pursuant to any
government contract or any subcontract or as a part of the delivery to
the government of any article designed, engineered or manufactured by
the Company were true, complete and correct. Except as set forth in
Schedule 4.8(b), the Company has provided all test and inspection
results to government agencies as required by law or pursuant to
government contracts or subcontracts, or may have been required as
part of the delivery of any article designed, engineered or
manufactured by the Company.
19
SECTION 4.9. Foreign Government Contracts. To the extent that the Company
is party to a prime contract or subcontract with a government other than the
U.S. Government (a "Foreign Government Contract"), then: (a) if the Foreign
Government Contract incorporates by reference, or is otherwise subject to, any
or all of the regulations cited in Section 4.8(b) above (or their foreign
equivalents), the representations made in Section 4.8(b) above shall be deemed
applicable to such Foreign Government Contract, and (b) if the Foreign
Government Contract incorporates by reference or is otherwise subject to other
applicable laws ("Foreign Laws") the representations made hereinabove regarding
compliance, investigations and claims, debarment or suspension and test and
inspection results shall be deemed made in respect of the appropriate Foreign
Laws.
SECTION 4.10. Labor Union Contracts. The Company is not a party to any
collective bargaining or other labor union Contract applicable to persons
employed by the Company. There are no unfair labor practice complaints nor are
there any current union representation questions involving persons employed in
the business of the Company. Except as disclosed on Schedule 4.10, the Company
does not know of any current activities or proceedings of any labor union (or
representatives thereof) to organize any unorganized employees of the Company or
of any strikes, slowdowns, work stoppages, lockouts or threats thereof, by or
with respect to any employees of the Company. Except as set forth on Schedule
4.10, during the 24-month period preceding the date hereof, there have not been
any formally filed grievances involving employees of the Company.
SECTION 4.11. Employees, Labor Matters, etc.
(a) Schedule 4.11(a) contains a complete and correct list of the names of
all directors and officers of the Company. There is no payment that has not been
paid for more than 30 days past the date on which such payment became due that
is owed by the Company to any of its directors, officers, employees, trustees,
agents, brokers, representatives or other personnel, current and former, or any
beneficiaries, dependents or survivors of the foregoing (including, without
limitation, expense reimbursement and severance payments), in accordance with
the terms of their respective employment arrangements or under their employment,
severance or agency agreements, if any.
(b) Except as set forth in Schedule 4.11(b), there has not been since
November 6, 1991 any (i) unfair labor practice complaint against the Company
before the National Labor Relations Board; (ii) labor strike, dispute, or work
stoppage actually pending or, to the knowledge of the Company after due inquiry,
threatened against or affecting the Company; (iii) representation petition
respecting the employees of the Company filed with the National Labor Relations
Board; or (iv) arbitration proceeding arising out of or under collective
bargaining agreements pending against the Company.
(c) Certain Benefit and Compensation Arrangements:
20
(i) Set forth on Schedule 4.11(c) hereto is a true and complete list
of each employee of the Company whose aggregate compensation for the fiscal
year ended September 30, 1995 exceeded $40,000 or who is employed as a
manager or supervisor, as well as any and all agreements, arrangements,
commitments or understandings of any kind, whether written or material
oral, applicable to each (as well as to current and former directors and
consultants and former officers of the Company) pursuant to which payments
of any kind are required to be made following the date hereof (including,
without limitation, any employment, deferred compensation, consulting,
severance, termination or supplemental pension payments) (the "Compensation
Commitments"). True and complete copies of all of the written Compensation
Commitments have been provided to Buyer together with, where prepared by or
for the Company, any valuation, actuarial or accountant's opinion or other
financial reports with respect to each Compensation Commitment for the last
three years. An accurate and complete written summary has been provided to
Buyer with respect to any Compensation Commitment which is unwritten.
(ii) Each Compensation Commitment:
(A) since its inception, has been operated by the Company in all
material respects in accordance with its terms;
(B) is not currently under investigation, audit or review by the
IRS or any other federal or state agency and, to the knowledge of the
Company, no such action is contemplated or under consideration;
(C) has no liability for any federal, state, local or foreign
Taxes except for those Taxes routinely imposed in connection with
ordinary course compensation of employees;
(D) has no claims subject to dispute or litigation; and
(E) has met all applicable requirements, if any, of the Code;
SECTION 4.12. ERISA. Schedule 4.12 lists (i) all employee benefit plans (as
defined in Section 3(3) of ERISA) and all bonus, stock option, stock purchase,
restricted stock, incentive, deferred compensation, retiree medical, disability
or life insurance, supplemental retirement, or severance benefit plans, programs
or arrangements, and all employment, termination, or severance contracts to
which the Company is a party, with respect to which the Company has any
obligation, or that are maintained, contributed to or sponsored by the Company
for the benefit of any current or former employee, officer or director, (ii)
each employee benefit plan for which the Company could incur liability under
Section 4069 of ERISA in the event such plan has been or were to be terminated
and (iii) any plan in respect of which the Company could incur liability under
Section 4212(c) of ERISA (collectively, the "Plans"). The parties hereto
21
acknowledge and agree that the Company maintains a 401(k) plan which plan (and
the assets of which) shall not be transferred to or assumed by the Buyer.
(a) Each Plan that is intended to qualify under Section 401(a) of the Code
or similar provision of foreign law is so qualified. The Company has performed
all obligations required to be performed by it by the terms of the Plans and
Applicable Law, rules and regulations. The Company has complied in all material
respects with all Applicable Law, rules and regulations relating to each Plan.
(b) The Company has not and has no knowledge that any other "party in
interest" (as defined in Section 3(14) of ERISA) to any Plan has engaged in any
transaction with respect to any Plan in connection with which the Company or any
other party in interest could be subjected to either a civil penalty assessed
pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the
Code.
(c) No Plan which is a "defined benefit plan" (as defined in Section 3(35)
of ERISA) or any trust created under any such Plan has been terminated since
September 2, 1974. No material liability to the Pension Benefit Guaranty
Corporation (the "PBGC"), other than annual premium payments, has been or is
expected by the Company to be incurred by the Company with respect to any Plan.
There has been no reportable event (within the meaning of Section 4043 of
ERISA), which at the time of such event required notification within 30 days to
the PBGC. There has been no other reportable event with respect to any Plan
which could result in a liability to the Company as a result thereof. There has
been no event or condition which presents a risk of termination of any such Plan
by the PBGC.
(d) Full payment has been made of all amounts which the Company is required
under the terms of each Plan to have paid as contributions to such Plan as of
the last day of the most recent fiscal year of such Plan ended prior to the date
hereof or, if later, the most recent date as of which such amount is required to
be paid under such Plan (and, with respect to any Plan that is subject to
Section 412(m) of the Code, all payments required to be made have been paid on
or before each required installment due date (as defined in Section 412(m) of
the Code) preceding the date hereof), and, with respect to any Plan, no
accumulated funding deficiency (as defined in section 302 of ERISA and Section
412 of the Code), whether or not waived, exists. There has been no failure to
make any payment due prior to the date hereof that is or could become a
liability of the Company under Section 412(c) of the Code.
(e) The present value as of December 31, 1994 of all accrued benefits under
all Plans subject to Section 412 of the Code did not, as of such date, exceed
the current value of the assets of such Plans allocable to such accrued
benefits. The terms "present value," "current value" and "accrued benefit" have
the meanings specified in Section 3 of ERISA.
(f) No Plan is a "multiemployer plan" (as defined in Sections 3(37) and
4001(3) of ERISA) and the Company has not withdrawn or partially withdrawn from
any multiemployer plan under circumstances giving rise to a withdrawal liability
under ERISA.
22
(g) Neither the Company nor any corporation, trade or business under common
control with the Company (within the meaning of Sections 414(b), (c), (m) or (o)
of the Code) has engaged in any transaction since January 1, 1986 described in
Section 4069(a) of ERISA.
(h) No Plan provides for the payment of any welfare benefit (as described
in Section 3(1) of ERISA) to any former or retired employee of the Company or
any of its Affiliates, except as may be required by Section 4980B of the Code or
Section 601 of ERISA.
(i) Except as set forth in Schedule 4.12(i), no Plan provides for the
payment of severance benefits upon termination of employment.
SECTION 4.13. Brokers' or Finders' Fees, etc.. All negotiations relating to
this Agreement and the transactions contemplated hereby have been carried on
without the participation of any Person acting on behalf of the Company (other
than the Company or employees thereof) in such manner as to give rise to any
valid claim by such Person against the Buyer or the Company for any brokerage or
finder's commission, fee or similar compensation.
SECTION 4.14. Financial Information; Undisclosed Liabilities.
(a) Attached hereto as Schedule 4.14 is a copy of the balance sheet of the
Company (the "Company's Balance Sheet") as of June 29, 1996 (the "Balance Sheet
Date"). The Company's Balance Sheet, together with the books and records of the
business of the Company, present fairly in accordance with GAAP the financial
condition of the business of the Company as of the Balance Sheet Date.
(b) The books of account of the Company reflect all items of income and
expense and all assets and liabilities of the business of the Company in
accordance with GAAP.
(c) The Company has delivered to Buyer a copy of its balance sheets,
together with the notes thereto, as of September 30, 1993, 1994 and 1995 and the
related statement of operations and retained earnings and of cash flows for the
year then ended. Such financial statements, together with the notes thereto, (i)
are in accordance with the books and records of the Company, (ii) present fairly
the financial condition of the Company as of the date thereof, (iii) present
fairly the result of operations of the Company for the periods covered by such
statements, (iv) have been prepared in accordance with GAAP by the Accountants
and (v) include all adjustments that are necessary for a fair presentation of
the financial condition of the Company and the results of the Company's business
operations for the periods covered by such statements.
(d) To the knowledge of the Company, there are no material liabilities of
the Company of any kind whatsoever, whether or not accrued or fixed, absolute or
contingent, determined or determinable, known or unknown, other than liabilities
(i) reflected on and
23
adequately provided for in the Company's Balance Sheet attached hereto as
Schedule 4.14, or (ii) incurred since the Balance Sheet Date in the ordinary
course of the operation of the Company's business and not as a result of any
violation of law or regulation, or (iii) disclosed in Schedule 4.14.
(e) Prior to the date hereof, the Company has satisfied in full its
obligation to Applied Magnetics Corporation, which obligation was reflected on
the Company's Balance Sheet as a liability of $659,230.00 (the "AMC
Obligation").
SECTION 4.15. Taxes.
(a) Except as disclosed in Schedule 4.15(a), The Company and, for any
period during all or part of which the tax liability of any other corporation
was determined on a combined or consolidated basis with the Company, any such
other corporation, have filed timely all federal, state, local and foreign tax
returns, reports and declarations required to be filed (or have obtained or
timely applied for an extension with respect to such filing) correctly
reflecting the Taxes and all other information required to be reported thereon
and have paid, or made adequate provision for the payment of, all Taxes which
are due pursuant to such returns or pursuant to any assessment received by the
Company or any such other corporation. Copies of all tax returns for the fiscal
years ended since September 30, 1992 have been furnished to the Buyer or its
representatives and such copies are accurate and complete as of the date hereof.
The Company has also furnished to the Buyer correct and complete copies of all
notices and correspondence sent or received since November 6, 1991, by the
Company to or from any federal, state, local or foreign tax authorities. The
Company has adequately reserved for the payment of all Taxes with respect to
periods ended on, prior to or through the Closing Date for which tax returns
have not yet been filed. In the ordinary course, the Company makes adequate
provision on its books for the payment of all Taxes (including for the current
fiscal period) owed by the Company. Except to the extent reserves therefor are
reflected on the Company's Balance Sheet, the Company is not liable, nor will
become liable, for any Taxes for any period ending on or, prior to the date of
the Company's Balance Sheet. Except as disclosed in Schedule 4.15(a), the Taxes
payable set forth in the Company Balance Sheet are adequate to cover all
liabilities for Taxes of the Company with respect to all assets held and
activities conducted by the Company on or prior to the Closing Date, other than
liabilities for Taxes incurred in the ordinary course of business subsequent to
the date of the Company Balance Sheet and permitted by this Agreement. No tax
liens have been filed and neither the Internal Revenue Service nor any other
taxing authority is now asserting or, to the best knowledge of the Company after
due inquiry, threatening to assert against the Company any deficiency or claim
for additional Taxes. Except as provided in Schedule 4.15(a), no Return of the
Company is currently under audit by the Internal Revenue Service or by the
taxing authorities of any other jurisdiction. The Company has not granted any
waiver of any statute of limitations with respect to, or any extension of a
period for the assessment of any federal, state or local Tax.
(b) The Company's taxable year for federal and state income and franchise
tax purposes has, since November 6, 1991, been a taxable year ending in
September.
24
SECTION 4.16. Absence of Changes. Except as reflected on the Company's
Balance Sheet or specified in Schedule 4.16, the Company has not:
(a) since September 30, 1995, undergone any material adverse change in
its condition (financial or other), properties, assets, liabilities,
business, operations or prospects, other than changes in the ordinary
course of business;
(b) since September 30, 1995, declared, set aside, made or paid any
dividend or other distribution in respect of its capital stock or otherwise
purchased or redeemed, directly or indirectly, any shares of its capital
stock;
(c) since September 30, 1995, issued or sold any shares of its capital
stock of any class or any options, warrants or conversion or other rights
to purchase any such shares or any securities convertible into or
exchangeable for such shares;
(d) since June 30, 1996, incurred any indebtedness for borrowed money,
issued or sold any debt securities or prepaid any debt outstanding as of
the Balance Sheet Date;
(e) since June 30, 1996, mortgaged, pledged or subjected to any Lien
any of its properties or assets, tangible or intangible;
(f) since June 30, 1996, other than the sale of inventory and the
collection of accounts receivable in the ordinary course of business,
acquired or disposed of any assets or properties, or entered into any
agreement or other arrangement for such acquisition or disposition;
(g) since June 30, 1996, forgiven or canceled any debts or claims, or
waived any rights;
(h) since June 30, 1996, entered into any agreement, commitment or
other transaction other than agreements involving an expenditure up to
$5,000 whether singly or in the aggregate, or entered into any similarly
material agreement which, pursuant to its terms, is not cancelable without
penalty on less than 30 days' notice;
(i) since September 30, 1995, paid any bonus to any officer or
director, or since June 30, 1996, granted to any officer, director or
employee any other increase in compensation outside the ordinary course of
business in any form, or granted any increase in the compensation or
benefits of employees outside the ordinary course of business or entered
into any employment or severance agreement or arrangement with any of
officer, director or employee;
(j) since June 30, 1996, adopted or amended in any respect, any
employment, collective bargaining, bonus, profit-sharing, compensation,
stock option, pension,
25
retirement, deferred compensation or other plan, agreement, trust, fund or
arrangement for the benefit of employees (whether or not legally binding);
(k) since June 30, 1996, suffered any damage, destruction or loss
(whether or not covered by insurance) to any property or assets;
(l) since September 30, 1995, suffered any strike or other employment
related problem;
(m) since September 30, 1995, suffered any loss of employees or
customers outside the ordinary course of business;
(n) since September 30, 1995, amended its certificate of incorporation
or bylaws (or comparable documents);
(o) since June 30, 1996, changed in any respect its accounting
practices, policies or principles;
(p) since June 30, 1996, incurred any liability or obligation (whether
absolute, accrued, contingent or otherwise and whether direct or as
guarantor or otherwise) with respect to the obligations of others;
(q) since June 30, 1996, granted any rights or licenses under any of
its trademarks, tradenames or patents or entered into any licensing or
distributorship agreements;
(r) since June 30, 1996, made any changes in policies or practices
relating to selling practices, returns, discounts or other terms of sale or
accounting therefor;
(s) since September 30, 1995, failed to discharge or satisfy any Lien
or pay or satisfy any obligation or liability when due (whether absolute,
accrued, contingent or otherwise);
(t) since September 30, 1995, defaulted on any obligation;
(u) since June 30, 1996, written down the value of any inventory or
written off as uncollectible any accounts receivable or any portion thereof
not reflected in the Company Balance Sheet;
(v) since June 30, 1996, laid off any employees or made any changes in
policies of employment;
(w) since June 30, 1996, discontinued the sale of any products or
product lines or programs; or
26
(x) entered into any agreement or made any commitment (whether or not
legally binding) to do any of the foregoing.
SECTION 4.17. Accounts Receivable. Except as disclosed on Schedule 4.17,
all accounts receivable reflected on the Company Balance Sheet (subject to the
reserve for bad debts reflected on such Company Balance Sheet) are: (i) good and
have been collected or are collectible, without resort to litigation or
extraordinary collection activity, within 90 days of the Closing Date, and are
subject to no defenses, set-offs or counterclaims other than normal cash
discounts accrued in the ordinary course of business of the Company, or (ii)
have been adequately reserved against, with such reserves reflected on the
Company Balance Sheet. Set forth on Schedule 4.17 hereto is a list of all
accounts receivable of the Company as of the latest practicable date prior to
the Closing Date showing separately those receivables which as of such date have
been outstanding (i) 1 to 29 days, (ii) 30 to 59 days, (iii) 60 to 89 days, (iv)
90 to 119 days and (v) more than 119 days. Except as disclosed on Schedule 4.17,
all accounts receivable are bona fide, have arisen in the ordinary course of the
Company's business, to the knowledge of the Company, are good and collectible
and subject to no defenses, set-offs or counterclaims.
SECTION 4.18. Insurance. The operations and assets of the Company are
covered by valid and currently effective insurance policies issued in favor of
the Company. Schedule 4.18 contains a list and brief description (including the
name of the insurer, the type of coverage provided, the amount of the annual
premium for the current policy period, the amount of remaining coverage and
deductibles and the coverage period) of all policies and contracts of insurance
held by the Company. All premiums due thereon have been paid when due, and the
Company and its Affiliates have complied in all material respects with the
provisions of such policies. Such policies (i) are sufficient for compliance
with all requirements of law and are substantially consistent with all (A)
Contracts to which the Company is a party and (B) leases, mortgages, deeds of
trust, trust deeds and deeds to secure debt to which the Company is a party, and
(ii) to the knowledge of the Company, are reasonable in scope and amount, in
light of the risks attendant to the businesses and activities in which the
Company is or has been engaged. There is no default with respect to any
provision contained in any such policy and there has not been any failure to
give any notice or present any claim under any such policy in a timely fashion
or in the manner or detail required by the policy. Except as disclosed in
Schedule 4.18, no notice of cancellation or non-renewal with respect to, or
disallowance of any claim under, any such policy has been received; neither has
the Company been refused insurance with respect to its assets or operations, nor
has its coverage been previously canceled or materially limited, by any insurer
to which it has applied for such insurance or with which it has held insurance.
SECTION 4.19. Sufficiency of Assets and Real Property.
(a) The Assets comprise all of those assets necessary or sufficient to
conduct the business of the Company as currently conducted. The properties owned
by or leased to the Company are adequate for the conduct of the business of the
Company. Except as disclosed in Schedule 4.19(a), all of the Assets are suitable
for the uses in which they are currently employed, are in good operating
condition and are free from any defects, except such minor
27
defects as do not interfere with the continued use of such properties and
equipment in the conduct of the normal operations of the business of the Company
and except for normal maintenance and routine repair requirements, and the
Assets include supplies of spare parts for the equipment and machinery included
in the Assets in amounts consistent with past practices.
(b) None of the Assets or Real Property is used by the Company or any of
its Affiliates in connection with any business or enterprise other than the
business of the Company.
SECTION 4.20. Foreign Assets. The Assets do not include any interest in any
real property or tangible or intangible personal property or other assets
located outside the continental limits of the United States of America except
that the Company ships inventory to and has receivables owed by customers
outside of the United States of America.
SECTION 4.21. Propriety of Past Payments. No funds or assets of the Company
have been used for illegal purposes; no unrecorded funds or assets of the
Company have been established for any purpose; no accumulation or use of the
Company's corporate funds or assets has been made without being properly
accounted for in the books and records of the Company; all payments by or on
behalf of the Company have been duly and properly recorded and accounted for in
their respective books and records; no false or artificial entry has been made
in the books and records of the Company for any reason; no payment has been made
by or on behalf of the Company with the understanding that any part of such
payment is to be used for any purpose other than that described in the documents
supporting such payment; and the Company has not made, directly or indirectly,
any illegal contributions to any political party or candidate, either domestic
or foreign. The Company has complied with the Foreign Corrupt Practices Act of
1977, as amended, and the rules and regulations thereunder ("FCPA") and has not
made any payment to or on behalf of any person with respect to which a deduction
could be disallowed under Section 162(c) of the Code. Neither the IRS nor any
other federal, state, local or foreign government agency or entity has initiated
or threatened any investigation of any payment made by the Company of, or
alleged to be of, the type described in this Section 4.21 nor is there a basis
in fact for such investigation.
SECTION 4.22. Affiliate Transactions. Schedule 4.22 contains a complete and
correct list of all agreements or arrangements (whether or not written) between
the Company and any shareholder, officer, director or employee (or immediate
family member thereof) of the Company currently in effect or to be performed in
the future. Other than such agreements or arrangements, if any, or as further
disclosed on Schedule 4.22, there has been no transaction between the Company
and any shareholder, officer, director or, to the knowledge of the Company,
employee (or immediate family member of any thereof) of the Company in effect
within the three-year period immediately preceding the date hereof which
involved payments to, or from, or for the benefit of, any such shareholder,
officer, director or employee (or immediate family member of any thereof) with
the exception of proper reimbursement of expenses incurred in the ordinary
course of business. Except as set forth in Schedule 4.22, no shareholder,
officer, director or employee (or immediate family member of any thereof) of the
Company owns directly or
28
indirectly, on an individual or joint basis, greater than a 5% interest in, or
serves as an officer, director or employee of, any customer, competitor or
supplier of the Company or any person or entity which has a contract or
arrangement with the Company.
SECTION 4.23. Suppliers and Customer. (a) Except as disclosed on Schedule
4.23(a), to the knowledge of the Company, none of the suppliers of inventory,
equipment or services to the Company will cease to sell such equipment or
services thereto as a result of the transactions contemplated by this Agreement.
(b) Except as disclosed on Schedule 4.23(b), no single customer of the
Company accounted for in excess of 5% of the combined gross revenues of the
Company for the twelve month period ending June 29, 1996.
SECTION 4.24. Environmental Conditions and Governmental Authorizations.
Except as specified in Schedule 4.24:
(a) All real property owned, leased or occupied by the Company is free
from contamination from any Hazardous Materials. The Company has not caused
or suffered, nor, to the knowledge of the Company, has any other party
previously involved in operations at any such property caused or suffered,
any Environmental Damages.
(b) Neither the Company nor, to the knowledge of the Company after due
inquiry, any prior owner or occupant of real property owned, leased,
occupied or used by the Company has received notice of any alleged
violation of Environmental Requirements, or notice of any alleged liability
for Environmental Damages, and there exists no writ, injunction, decree,
order or judgment outstanding, nor any claim, suit, proceeding, citation,
fine, penalty, directive, summons or investigation, pending or, to the
knowledge of the Company, threatened, relating to the ownership, use,
maintenance or operation of the Premises by any Person, or to alleged
violation of Environmental Requirements, or to the suspected presence of
Hazardous Material thereon (other than in compliance with Applicable Laws),
nor does there exist any basis for such claim, suit, proceeding, citation,
fine, penalty, directive, summons or investigation being instituted or
filed.
(c) There is not constructed, placed, deposited, stored, disposed of
or located on any real property owned, leased, occupied or used by the
Company any polychlorinated biphenyls ("PCBs") or transformers, capacitors,
ballasts, or other equipment which contains dielectric fluid containing
PCBs, or any asbestos.
(d) The Company has no knowledge of any alleged liability for
Environmental Damages of any alleged violation of Environmental
Requirements asserted against any of the owners or occupants of any related
property located in the vicinity of any of any real property owned, leased,
occupied or used by the Company.
29
(e) The Company has in its possession all permits required to operate
in compliance with all Environmental Requirements, and the Company is
presently in full and complete compliance with each of such permits.
SECTION 4.25. Leases of Personal Property (a) Schedule 4.25(a) correctly
describes each lease under which the Company is the lessee of any personal
property (collectively, the "Personal Property Leases"). The property described
in all of the Personal Property Leases is presently and exclusively used in the
business of the Company. The Company has all right, title and interest of the
lessee under the terms of all of the Personal Property Leases to which it is a
party. Other than any related consents listed in Schedule 4.25(a), no consent is
necessary for the assignment of any Personal Property Lease for the consummation
of this Agreement or any Transaction Document or the transactions contemplated
hereby or thereby.
(b) No event has occurred (to the knowledge of the Company with respect to
events occurring by or with respect to the other parties to such Leases) which
(with the passage of time or the giving of notice) would materially impair any
right of the Company to exercise and obtain the benefits of any options
contained in any Personal Property Lease. There is no substantial default by the
Company or basis for acceleration or termination, nor has any event occurred
which (with the passage of time or the giving of notice) would constitute such a
default or result in or permit the acceleration of any Personal Property Lease.
SECTION 4.26. Books and Records. The Company has previously furnished to
Buyer true and correct copies of the Articles of Incorporation and, the Bylaws
of the Company as in effect on the date hereof and has made available the minute
books and stock books of the Company which are correct and complete as of the
date hereof in all respects, and will be correct and complete at the Closing.
SECTION 4.27. Accounts. Schedule 4.27 correctly identifies each bank
account maintained by or on behalf or for the benefit of the Company and the
name of each Person with any power or authority to act with respect thereto.
SECTION 4.28. Products Liability.
(a) Except as disclosed in Schedule 4.28(a) hereto, (i) there is no notice,
demand, claim, action, suit, inquiry, hearing, proceeding, notice of violation
or investigation of a civil, criminal or administrative nature before any court
or governmental or other regulatory or administrative agency, commission or
authority against or involving any product, service, substance or material
(collectively, a "Product"), or class of claims or lawsuits involving the same
or similar Product manufactured, produced, distributed, performed or sold by or
on behalf of the Company which is pending or, to the knowledge of the Company,
threatened, resulting from an alleged defect in design, implementation,
manufacture, materials or workmanship of any Product manufactured, produced,
distributed, performed or sold by or on behalf of the Company, or any alleged
failure to warn, or from any breach of implied warranties or representations,
(ii) there has not been any Occurrence (as defined in Section 4.28(b)), and
(iii) there has not been, nor is there
30
under consideration or investigation by the Company, any Product recall, rework,
retrofit or post-sale warning conducted by or on behalf of the Company
concerning any products manufactured, produced, distributed, performed or sold
by or on behalf of the Company or any product recall conducted by or on behalf
of any entity as a result of any alleged defect in any Product supplied by the
Company
(b) For purposes of this Section 4.28, the term "Occurrence" shall mean any
accident, happening or event which takes place at any time before the Closing
Date which is caused or allegedly caused by any alleged hazard or alleged defect
in manufacture, design, materials or workmanship, including, without limitation,
any alleged failure to warn or any breach of express or implied warranties or
representations with respect to, or any such accident, happening or event
otherwise involving a Product (including any parts or components) manufactured,
produced, distributed or sold by or on behalf of the Company which is likely to
result in a claim or loss.
SECTION 4.29. Interest in Competitors. Except as disclosed on Schedule
4.29, neither the Company, nor any of its officers, directors, shareholders or,
to the knowledge of the Company, employees, has any interest, either by way of
contract or by way of investment or otherwise, directly or indirectly, in any
person that provides any services or designs, produces or sells any product or
product lines or engages in any activity similar to or competitive with any
activity currently proposed to be conducted by the Company, excluding, however,
for these purposes ownership of one percent (1%) or less of the stock of any
publicly traded entity.
SECTION 4.30. Inventories. The values at which inventories are carried on
the Company Balance Sheet of the Company reflect the normal inventory valuation
policies of the Company, and such values (including the calculation of any LIFO
reserve) are in conformity with GAAP consistently applied. All inventories
reflected on the Company Balance Sheet of the Company or arising since the date
thereof and reflected on interim financial statements of the Company are: (i)
currently marketable and can be anticipated to be sold in the ordinary course of
business, or (ii) have been adequately reserved against, with such reserves
reflected on the Company Balance Sheet (and/or the interim financial statements
of the Company), except for spare parts inventory which inventory is good and
usable.
SECTION 4.31. Joint Ventures. Set forth on Schedule 4.31 is a true and
complete list of any and all partnerships and joint ventures in which the
Company participates, stating, with respect to each, its jurisdiction of
incorporation, capitalization, equity ownership and jurisdictions in which each
is qualified to do business. Each is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its formation or
incorporation, as the case may be, has the power and authority to own, lease and
operate the properties and assets used in its business and to carry on its
business as now being conducted, and is duly qualified to do business and in
good standing as a foreign corporation or entity, as the case may be, in each
jurisdiction where qualification is required. All of the outstanding shares of
capital stock of each corporate entity listed on Schedule 4.31 have been validly
authorized and issued, are fully paid and non-assessable, have not been issued
in violation of any preemptive rights or of any federal or
31
state securities law, and are owned by the Company of record and beneficially
free and clear of any security interest, pledge, lien, charge, claim, option,
equity, right, restriction on transfer or encumbrance of any nature whatsoever
("Security Interest"). Except as set forth on Schedule 4.31 hereto, the Company
does not own, directly or indirectly, any ownership, equity, profits or voting
interest in any corporation, partnership, joint venture or other Person, nor has
any right, agreement or commitment to purchase any such interest. The Company
has previously delivered to Buyer complete and correct copies of the charter and
by-laws (including comparable governing instruments with different names) of
each of the entities listed on Schedule 4.31, as amended and presently in
effect.
SECTION 4.32. Full Disclosure. No representation or warranty herein by the
Company, the Shareholders or any Affiliate thereof, nor any statement or
certificate furnished to Buyer pursuant hereto or in connection with the
transactions contemplated hereby, contains any untrue statement of a material
fact, or, to the knowledge of the Company, omits to state a fact necessary to
make the statements contained herein or therein, in light of the circumstances
in which they were made and, together with the Schedules attached hereto, not
misleading. The Schedules attached hereto completely and correctly present the
information required by this Agreement to be set forth therein, do not contain
any untrue statement of a fact and do not, to the knowledge of the Company, omit
to state any facts necessary to make the statements contained therein, together
with the representations and warranties herein by the Company, the Shareholders
or any Affiliates thereof, not misleading. The representations and warranties
made in this Section 4.32 are in addition to, and not in limitation of, the more
particular representations and warranties contained elsewhere in this ARTICLE
IV.
ARTICLE V.
COVENANTS
SECTION 5.1. Covenants of Buyer. Buyer covenants with the Company that:
(a) Compliance with Laws. Buyer is and will continue to be in all
material respects in compliance with all laws applicable to it;
(b) Maintain Accuracy of Representations. Buyer will not take or omit
to take any action which would result in the inaccuracy on the Closing Date
of any of their representations and warranties (including any and all
Schedules thereto) contained in Article III. It is expressly understood by
the Company that a change in control of Buyer, whether by merger,
acquisition, share exchange, sale or pledge of stock or otherwise, shall
not by such change of control alone constitute a breach of any
representation or warranty or otherwise breach this Agreement.
32
(c) Consents and Permits. Buyer shall use its best efforts to
cooperate with the Company in obtaining consents, waivers, licenses,
authorizations and the like required in connection with the transactions
contemplated by this Agreement or any Transaction Document.
SECTION 5.2. Covenants of the Company. The Company and the Shareholders
covenant with Buyer that:
(a) Compliance with Laws. The Company is and will continue to be in
all material respects in compliance with all laws applicable to it;
(b) Maintain Accuracy of Representations. The Company will not take or
omit to take (or cause to be taken or omitted) any action which would
result in the inaccuracy on the Closing Date of any of the representations
and warranties (including any and all Schedules thereto) contained in
Article IV;
(c) No Shop. Until the earlier of the termination of this Agreement in
accordance with its terms or the Closing, neither the Company nor the
Shareholders, or any of them, shall directly or indirectly, through any
Affiliate, agent or otherwise, solicit, initiate or encourage the
submission of any proposal or offer from any Person relating to any
acquisition or purchase of all or (other than in the ordinary course of
business) any portion of the assets or stock of the Company or any business
combination with the Company or participate in any negotiations regarding,
or furnish to any other Person any information with respect to, or
otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other Person to do or
seek any of the foregoing. The Company immediately shall cease and cause to
be terminated any existing discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing. The Company
shall notify Buyer promptly of any such proposal or offer, or any inquiry
or contract with any Person with respect thereto, is made and shall, in any
such notice to Buyer, indicate in reasonable detail the identity of the
Person making such proposal, offer, inquiry or contact;
(d) Access to Information; Confidentiality.
(i) From the date hereof to the Closing Date, the Company shall
and shall cause any Affiliates, employees, auditors and agents of the
Company to, afford the officers, employees and agents of Buyer access
during regular business hours to the officers, employees, agents,
properties, offices, plants and other facilities, books and records of
the Company, and shall make available to Buyer all financial,
operating and other data and information as Buyer, through its
officers, employees or agents, may reasonably request;
(ii) All information obtained by Buyer pursuant to this Section
5.2 shall be kept confidential pursuant to that certain
confidentiality agreement entered into by the Company and the Buyer
and dated March 20, 1996; and;
33
(iii) No investigation or knowledge of any matter or condition by
the Buyer or the employees, agents or representatives of Buyer shall
affect any representation or warranty or any condition to its
obligations or any right to terminate this Agreement;
(e) Conduct of Business. Between the date hereof and the Closing Date,
without the consent of Buyer, not to be unreasonably withheld or delayed,
and except as contemplated by the Transaction Documents, the Company shall:
(i) conduct its business only in the usual, regular and ordinary
course of business consistent with past practice;
(ii) refrain from declaring any dividend or making any other
distribution to the shareholders of the Company; and
(iii) except either in the usual, regular and ordinary course of
business and consistent with past practice or as necessary to comply
with the provisions of this Agreement, refrain from:
(A) making any purchases, sales, transfers, or leases of any
Assets or Real Property or mortgaging, pledging or otherwise
creating a security interest in, or any encumbrance of, any of
the Assets or Real Property (other than Permitted Liens);
(B) entering into any Contract, license, or lease in
relation to the business of the Company or taking any other
action which would, if entered into or taken on the date hereof,
be required to be disclosed on a Schedule to this Agreement;
(C) making any change in the compensation or benefits
payable or to become payable to any employee or making any new
bonus payment or arrangement or benefit to or with any such
employee;
(D) making any changes in the customary methods of operation
of the business of the Company, including marketing, selling and
pricing practices and policy; and
(E) taking any other action which would have a negative
impact on the business of the Company or on the prospects of the
business of the Company;
(iv) use all reasonable efforts to preserve its business
organization intact, to keep its insurance policies intact, to keep
available the services of its present employees and officers, and to
preserve the relationships with and the goodwill of all suppliers,
customers, sales representatives and others having business relations
with the Company;
34
(v) maintain the Premises and all of the other properties used in
the operation of its business in customary repair, order and
condition, reasonable wear and tear excepted, and perform all of its
obligations under any leases;
(vi) maintain its books, accounts and records in connection with
its business in the usual manner on a basis consistent with past
practices;
(vii) refrain from amending, modifying in any material respect or
consenting to the termination of any Contract or the Company's
material rights with respect thereto;
(viiii) except in the ordinary course of business, refrain from
increasing the total number of employees employed in connection with
its business; and
(ix) refrain from agreeing, whether in writing or otherwise, to
do any of the foregoing;
(f) Third Party Consents; Further Actions.
(i) The Company shall use its best efforts to obtain at the
earliest practicable date after the date hereof, and, in any event,
prior to the Closing Date, all necessary consents to the transactions
contemplated by this Agreement or any Transaction Document from
parties to Contracts and Governmental Authorities;
(ii) The Company shall use its best efforts to obtain, and to
assist Buyer in obtaining, all waivers, licenses, authorizations,
qualifications, orders, permits, consents and approvals required to be
obtained by it or them and to effect, and to assist Buyer in
effecting, all registrations, filings and notices with or to third
parties or governmental or public bodies or authorities required to be
made which are necessary or desirable in connection with the
transactions contemplated by this Agreement or any Transaction
Documents;
(g) Renewal of Permits. The Company shall take such steps as are
customary in the industry to file any necessary applications for the
renewals of all licenses and permits referred to in Section 4.24 including,
without limitation, Environmental Permits, if any such license or permit is
required to be obtained prior to the Closing;
(h) Powers of Attorney. Upon the Closing, the Company shall revoke all
powers of attorney relating to its business and operation of the Assets;
(i) Notification of Certain Matters. The Company shall give prompt
notice to Buyer of (i) the occurrence, or non-occurrence, of any event the
occurrence, or non-occurrence, of which would be likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate and (ii) any failure of the Company to comply with or satisfy in
any material respect any covenant, condition or agreement to be complied
with or
35
satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 5.2(i) shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice;
(j) Disclosure Schedules. On or before the Closing Date, the Company
shall deliver to Buyer complete Schedules to this Agreement and the
Transaction Documents which are to be provided by the Company together with
any supporting documentation which Buyer may reasonably request and, within
ten business days after receipt of such Schedules and supporting
documentation either (i) Buyer will accept such Schedules in which case
they shall become a part of this Agreement and the appropriate Transaction
Documents, or (ii) the parties hereto will agree upon mutually acceptable
revisions to such Schedules in which case such revised Schedules shall
become a part of this Agreement and the appropriate Transaction Documents.
SECTION 5.3. Closing Conditions. Each party agrees to use its best efforts
to satisfy the conditions precedent to Closing specified in Article VI.
SECTION 5.4. Net Worth Statements; Adjustment to Purchase Price. The
Company has prepared and Buyer's Accountants have audited the Company's Balance
Sheet in accordance with GAAP, and, based on the Company's Balance Sheet, the
Company has prepared and Buyer's Accountants shall audit a statement of net
worth (the "Company's Net Worth Statement") which reflects agreed-upon
adjustments to the net worth of the Company as reported on the Company's Balance
Sheet and which excludes liabilities which are not being assumed by Buyer
herewith. To the extent that the Company's Net Worth Statement reflects a net
worth of the Company as at June 29, 1996 (the "Effective Net Worth") which is
less than $1,530,000, (after taking into account agreed-upon adjustments to the
net worth of the Company effected on or prior to the Closing Date) then, subject
to Section 6.1 below, for each dollar of such deficit below $1,530,000, the
Purchase Price shall be reduced accordingly. Regardless of the net worth of the
Company, the parties hereto understand and acknowledge that the cash delivered
in respect of the Purchase Price shall be adjusted in order to accommodate the
cash reconciliation necessary in order to transfer to Buyer various Company
accounts. Such cash reconciliation shall take place as soon as practicable
following the Closing Date.
ARTICLE VI.
CONDITIONS PRECEDENT TO THE CLOSING
SECTION 6.1. Conditions Precedent to Obligations of Buyer. The obligation
of Buyer to perform its other obligations hereunder and under the Transaction
Documents is subject to the satisfaction or waiver of the conditions precedent
that:
(a) Tender of All Assets. At the Closing, the Seller shall have
tendered all of the Assets for purchase as provided in Section 2.2(b)(i).
36
(b) Documents. Buyer shall have received on or before the Closing Date
the following, each dated the Closing Date, in form and substance
satisfactory to Buyer:
(i) Counterparts of each of the following Transaction Documents
duly executed and, to the extent appropriate, acknowledged by all
appropriate parties other than Buyer and its Affiliates, together with
all documents to be delivered to Buyer thereunder on the Closing Date:
(1) the Escrow Agreement;
(2) Assignments of Intellectual Property;
(3) Assignment and Assumption of Leases;
(4) Assignments of Contracts;
(5) a Xxxx of Sale; and
(6) such other documents and instruments of conveyance as
may be reasonably requested by Buyer.
(ii) A Certificate of the Company, signed on behalf of the
Company by the President or a Vice President and the Secretary or any
Assistant Secretary (the statements made in which Certificate shall be
true on and as of the Closing Date), certifying fulfillment of the
conditions specified in subsections (d) and (e) below; and
(iii) copies of resolutions of the board of directors and the
shareholders of the Company, certified by the Secretary of the
Company, authorizing the execution, delivery and performance of this
Agreement and the Transaction Documents and all other documents and
instruments to be delivered pursuant hereto and thereto;
(iv) Opinion of counsel to the Company, substantially in the form
attached as Exhibit D;
(v) termination statements on form UCC-3 evidencing the discharge
of any and all Liens on the Assets or any part thereof;
(vi) Leases. The Company shall obtain a certificate from its
landlord(s) stating that all of the Company's leases, listed in
Schedule 4.4, are in full force and effect;
37
(vii) Letter of the Company's Accountants. The Buyer shall have
received from the Accountants a letter, addressed to it, dated the
Closing Date, stating in effect that (a) they are independent public
accountants with respect to the Company and (b) they are issuing an
unqualified opinion with respect to financial statements as at
September 30, 1993, 1994 and 1995, which statements the Accountants
audited, and a letter indicating that they have no knowledge which
would indicate that the Company's Balance Sheet does not present
fairly the financial condition of the Company as at the date
indicated.
(c) Satisfactory Completion of Due Diligence. The Buyer shall have
completed its due diligence inquiry in accordance with the provisions of
Section 5.2(d). The Buyer shall have been satisfied that the Company and
the Shareholders have complied with all covenants and conditions set forth
in Section 5.2 and Section 6.1, and that all representations and warranties
contained in Article IV remain true and accurate. In the event that any of
the provisions contained in this Section 6.1 have not been satisfied in the
opinion of the Buyer, Buyer shall be relieved of all obligations under this
Agreement, including the obligation to consummate the transactions
contemplated hereunder.
(d) Representations and Warranties. The representations and warranties
of the Company and the Shareholders contained in this Agreement, as
modified by any Schedules delivered by the Company pursuant to Section
5.2(j) hereof, shall be true and correct in all respects on the date hereof
and as of the Closing Date with the same effect as though such
representations and warranties had been made or given again at and as of
the Closing Date, except for any representation and warranty expressly
stated to have been made or given as of a specified date, which, at the
Closing Date, shall be true and correct in all respects as of the date
expressly stated.
(e) Performance. The Company shall have performed and complied in all
respects with all of its agreements, covenants and conditions required by
this Agreement and each Transaction Document to be performed or complied
with by it prior to or at the Closing Date.
(f) No Material Adverse Change. Since the date of the Company Balance
Sheet there shall not have occurred an event or condition which has or
which reasonably may be expected to adversely affect the Company.
(g) Net Worth. The Buyer shall have received from the Company a net
worth statement, in a form satisfactory to Buyer evidencing an adjusted net
worth as of the Closing Date not less than $1,500,000.
(h) Consents, etc. All notices to, and declarations, filings and
registrations with, and consents, approvals and waivers from governmental
and regulatory agencies required to consummate the transactions
contemplated hereby and all consents, approvals and waivers from third
parties required to have been obtained in connection with the transactions
38
contemplated by this Agreement and the Transaction Documents shall have
been obtained prior to Closing.
(i) No Proceeding or Litigation.
(i) No preliminary or permanent injunction or other order shall
have been issued by any court of competent jurisdiction, whether
federal, state or foreign, or by any governmental or regulatory body,
whether federal, state or foreign, nor shall any statute, rule,
regulation or executive order promulgated or enacted by any
governmental authority, whether federal, state or foreign, be in
existence or effect, which prevents the consummation of the
transactions contemplated by this Agreement or any Transaction
Document.
(ii) No suit, action, claim, proceeding or investigation before
any court, arbitrator or administrative, governmental or regulatory
body or authority, whether federal, state or foreign, shall have been
commenced and be pending against either Buyer, the Company or any of
their respective Affiliates, associates, officers or directors seeking
to prevent the consummation of the transactions contemplated by this
Agreement or any Transaction Document or asserting that such
transactions would be illegal.
(j) Licenses; Permits. All operating licenses and permits necessary
for the operation of the businesses of the as conducted on the Closing Date
(including, without limitation, Environmental Permits) shall have been
obtained.
(k) Release of Lien, etc. In connection with its satisfaction of the
AMC Obligation, the company shall have obtained the release of any and all
released liens, pledges, proxies and encumbrances affecting the Assets or
the Company's ability to transfer the Assets to Buyer free and clear of
liens, pledges or encumbrances.
(l) Other. Buyer shall have received such further assurances and
documents as it may reasonably request.
(m) Availability of Certain Employees. Pursuant to letters offering
employment o Xxxx Xxxxxxxx, Xxxxxx Xxxxxxxxx and Xxxxxx Xxxxxx, each of
these individuals will be available for employment in accordance with the
terms of such letters. Additionally, substantially all of the Company's
sales and technical employees will be available for hire by the Buyer.
SECTION 6.2. Conditions Precedent to Obligations of the Company. The
obligations of the Company to perform its other obligations hereunder and under
the Transaction Documents are subject to satisfaction or waiver of the
conditions precedent that:
(a) Documents. The Company shall have received on or before the
Closing Date the following, each dated the Closing Date, in form and
substance reasonably satisfactory to the Company:
39
(i) Counterparts of each of the following Transaction Documents
duly executed and, to the extent appropriate, acknowledged by all
appropriate parties, together with all documents to be delivered
thereunder on the Closing Date, all in form and substance reasonably
satisfactory to the Company:
(1) the Escrow Agreement;
(2) Assignments of Intellectual Property;
(3) Assignment and Assumption of Leases; and
(4) Assignment of Contracts.
(ii) A Certificate of Buyer, signed on behalf of Buyer by the
President or a Vice President and the Secretary or any Assistant
Secretary of Buyer certifying as to the fulfillment of the conditions
specified in subsections (b) and (c) below;
(iii) copies of resolutions of the board of directors of Buyer,
certified by the Secretary of Buyer authorizing the execution,
delivery and performance of this Agreement and the Transaction
Documents to which each is a party and all other documents and
instruments to be delivered pursuant hereto and thereto;
(iv) Opinion of counsel to Buyer, substantially in the form
attached as Exhibit E.
(b) Representations and Warranties. The representations and warranties
of Buyer contained in this Agreement shall be true and correct in all
respects on the date hereof and as of the Closing Date with the same effect
as though such representations and warranties had been made or given again
at and as of the Closing Date, except for any representation or warranty
expressly stated to have been made or given as of a specified date, which,
at the Closing Date, shall be true and correct in all respects as of the
date expressly stated.
(c) Performance. Buyer shall have performed and complied in all
respects with all of its agreements, covenants and conditions required by
this Agreement and each Transaction Document to be performed or complied
with by it prior to or at the Closing Date.
(d) Consents, etc. All notices to, and declarations, filings and
registrations with, and consents, approvals and waivers from, governmental
and regulatory agencies required to consummate the transactions
contemplated hereby and all consents, approvals and waivers from third
parties required to have been obtained in connection with the transactions
contemplated by this Agreement and the Transaction Document shall have been
obtained prior to Closing.
40
(e) No Proceeding or Litigation.
(i) No preliminary or permanent injunction or other order shall
have been issued by any court of competent jurisdiction, whether
federal, state or foreign, or by any governmental or regulatory body,
whether federal, state or foreign, nor shall any statute, rule,
regulation or executive order promulgated or enacted by any
governmental authority, whether federal, state or foreign, be in
existence or effect, which prevents the consummation of the
transactions contemplated by this Agreement or any Transaction
Document.
(ii) No suit, action, claim, proceeding or investigation before
any court, arbitrator or administrative, governmental or regulatory
body or authority, whether federal, state or foreign, shall have been
commenced and be pending against either Buyer or the Company or any of
their respective Affiliates, associates, officers or directors seeking
to prevent the consummation of the transactions contemplated by this
Agreement or any Transaction Document or asserting that such
transactions would be illegal.
(f) Assumption of Lease. The Landlord shall have given its consent to
Buyer's assumption of that certain lease dated November 6, 1991 by and
between Landlord and the Company, and Buyer shall assume each lease
effective the Closing Date.
(g) Other. The Company shall have received such further assurances and
documents as it may reasonably request.
(h) Payments. The payments required by Section 2.2 and 7.2 hereof
shall be tendered at Closing.
(i) No Known Breach. The Company shall not know of any breach by it of
its representations, warranties or other obligations hereunder.
ARTICLE VII.
ADDITIONAL AGREEMENTS
SECTION 7.1. Bulk Transfer Laws. Buyer acknowledges that the Company will
not comply with the provisions of any bulk transfer laws of any jurisdiction in
connection with the transactions contemplated by this Agreement, and Buyer
waives such compliance in consideration of the indemnification of Buyer by the
Company and the Shareholders from and against any Loss sustained by Buyer in
connection with such noncompliance.
SECTION 7.2. Covenant of Seller and Certain Shareholder/Employees. Seller
and Xxxx Xxxxxxxx, Xxxxxx Xxxxxxxxx and Xxxxxx Xxxxxx each agrees that for the
period (the "Term") beginning on the Closing Date under this Agreement and
ending on the later of the third
41
anniversary of the Closing Date or the termination of such Shareholders'
employment, if that be the case, with the Buyer, neither the Seller nor Xxxx
Xxxxxxxx, Xxxxxx Xxxxxxxxx and/or Xxxxxx Xxxxxx nor any of their Affiliates will
own, manage, operate, join or control, or participate in the ownership,
management, operation or control of, or assist in any manner with, or be
connected with or have any interest in, as a stockholder, agent, consultant,
partner, director, officer, employee or otherwise: (i) any business which
develops, manufactures and markets and/or sells any product competitive with a
product developed, manufactured, marketed and/or sold by the Buyer in connection
with the Assets or (ii) any entity which otherwise competes directly or
indirectly with the business conducted in connection with the Assets, except
that the Seller and Xxxx Xxxxxxxx, Xxxxxx Xxxxxxxxx and Xxxxxx Xxxxxx may make
passive investments in a competitive enterprise the shares of which are publicly
traded if such investment constitutes less than one half of one percent of the
equity of such enterprise. The Seller and each of Xxxx Xxxxxxxx, Xxxxxx
Xxxxxxxxx and Xxxxxx Xxxxxx additionally agree that during the Term each shall
not, directly or indirectly, in any capacity whatsoever:
(a) hire or solicit for employment, directly or indirectly, any
personnel of the Buyer in any capacity whatsoever (which shall be deemed to
include, without limitation, any existing or prospective employee of the
Buyer or any person who has been an employee of the Company within one
hundred eighty (180) days prior to the Closing Date);
(b) attempt directly or indirectly to induce any such personnel to
leave the employ of, or discontinue such person's business association
with, the Company and/or the Buyer;
(c) solicit, directly or indirectly, any client or account or bona
fide prospective client or account of the Buyer for business which is
directly or indirectly competitive with that of the Buyer; or
(d) interfere with, disrupt, or attempt to disrupt, the business
relationships, contractual or otherwise, between the Buyer and any of its
customers, suppliers or employees.
In consideration for the covenants not to compete of Xxxx Xxxxxxxx, Xxxxxx
Xxxxxxxxx and Xxxxxx Xxxxxx, Buyer shall pay at Closing $420,000 to Xxxx
Xxxxxxxx and $140,000 to each of Xxxxxx Xxxxxxxxx and Xxxxxx Xxxxxx.
SECTION 7.3. Remedies.
(a) Reasonableness of Restraints. The Seller and each of Xxxx Xxxxxxxx,
Xxxxxx Xxxxxxxxx and Xxxxxx Xxxxxx hereby acknowledge that: (i) it or he is
fully familiar with the restrictions, restraints and limitations imposed upon
him in Section 7.2 hereof (collectively, the "Restraints"); (ii) the Buyer would
not undertake the transactions contemplated hereunder without the imposition of
the Restraints and their agreement herein to abide by such
42
Restraints; (iii) the imposition of the Restraints is necessary for the
reasonable, adequate protection of the business of the Buyer as conducted with
the Assets; and (iv) each and every Restraint is reasonable with respect to its
subject matter, geographic area and length of time.
(b) Injunctive Relief. The Seller and each of Xxxx Xxxxxxxx, Xxxxxx
Xxxxxxxxx and Xxxxxx Xxxxxx acknowledge that monetary damages alone will not
adequately compensate the Buyer in the event of a breach or a threatened breach
by him of the Restraints and therefore each hereby agrees that in addition to
all remedies available to the Buyer at law or in equity, the Buyer shall be
entitled to interim restraints and permanent injunctive relief for the
enforcement thereof, and to an accounting and payment over of all receipts
realized as a result of such breach.
(c) Extension of Period of Restraints. In the event that the Seller or any
of Xxxx Xxxxxxxx, Xxxxxx Xxxxxxxxx and Xxxxxx Xxxxxx shall be in violation of
any Restraints, then the time limitation therefor shall be extended for a period
of time equal to the period of time during which such breach or breaches
occurred. In the event the Buyer shall be required to seek relief in any court
or other tribunal, and Buyer prevails in such proceeding, then the Restraints
shall be extended for a period of time equal to the pendency of such
proceedings, including appeals, and excluding any periods during which the court
or other tribunal has ordered the Seller or any of Xxxx Xxxxxxxx, Xxxxxx
Xxxxxxxxx and Xxxxxx Xxxxxx to honor the Restraints.
(d) Court Ordered Reduction of Restraints. In the event that any of the
restrictions, limitations or restraints contained in this Agreement are deemed
to be unreasonable or unenforceable by any court of competent jurisdiction, then
each party hereto agrees to submit to such reduction of said restrictions,
limitations or restraints as the court shall deem reasonable.
SECTION 7.4. Further Assurances. Following the Closing Date, the Company
shall, from time to time, execute and deliver such additional instruments,
documents, conveyances and assurances as reasonably requested by Buyer and
prepared at its expense to confirm, assure and further the rights, purposes,
effects and obligations set forth herein.
SECTION 7.5. Tax Payment. If the Company is required to pay income tax,
interest, and/or penalties (the "Tax Payment") upon the income to be reported by
Buyer pursuant to Section 2.2(a) as a result of an audit by a taxing authority,
the Buyer shall reimburse the Company for the Tax Payment net of the Company's
income tax benefit from the Company's payment of the Tax Payment provided that
the Company gave prompt notice of such audit to Buyer. The parties agree that
the provisions contained in Section 8.3 shall govern the handling of any audit
and any refund payments to Company by the Buyer made under this Section 7.5.
Subject to the above, the Buyer shall pay the Company within thirty (30) days
after the Company provides Buyer with documentation of the payment of such Tax
Payment.
43
ARTICLE VIII.
INDEMNIFICATION
SECTION 8.1. Survival of Representations and Warranties. Except as set
forth in Section 8.4(c) below, the representations and warranties of the Company
and the Shareholders shall survive the Closing for a period of three years from
the Closing Date.
SECTION 8.2. Indemnification by the Parties. Except as otherwise limited by
this Article VIII, each of the Buyer and its corporate Affiliates, officers,
directors, employees, agents, successors and assigns (each an "Indemnified
Party") shall be indemnified and held harmless by the Company and Xxxx Xxxxxxxx,
Xxxxxx Xxxxxxxxx and Xxxxxx Xxxxxx (each an "Indemnifying Party"), on the one
hand, and each of the Shareholders and the Company, on the other hand (an
"Indemnified Party"), shall be indemnified and held harmless by the Buyer (an
"Indemnifying Party"), for any and all liabilities, losses, damages, claims,
costs and expenses, interest, awards, judgments and penalties (including,
without limitation, reasonable legal costs and expenses and environmental
engineering consultants' fees) actually suffered or incurred by the Indemnified
Party (hereinafter a "Loss"), actually arising out of or resulting from:
(a) the breach of any representation or warranty contained herein; or
(b) the breach of any covenant or agreement contained herein.
SECTION 8.3. General Indemnification Provisions. An Indemnified Party shall
promptly give the Indemnifying Party notice of any matter which an Indemnified
Party has determined has given or could give rise to a right of indemnification
under this Agreement, stating the amount of the Loss, if known, and method of
computation thereof, all with reasonable particularity and containing a
reference to the provisions of this Agreement in respect of which such right of
indemnification is claimed or arises. The obligations and liabilities of an
Indemnifying Party under this Article with respect to Losses arising from claims
of any third party that are subject to the indemnification provided for in this
Article ("Third Party Claims") shall be governed by and contingent upon the
following additional terms and conditions: if an Indemnified Party shall receive
notice of any Third Party Claim, the Indemnified Party shall give the
Indemnifying Party notice of such Third Party Claim and shall permit the
Indemnifying Party, at its option, to participate in the defense of such Third
Party Claim by counsel of its own choice and at its expense. If, however, the
Indemnifying Party acknowledges in writing its obligation to indemnify the
Indemnified Party hereunder against any Losses that may result from such Third
Party Claims (subject to the limitations set forth herein), then the
Indemnifying Party shall be entitled, at its option, to assume and control the
defense of such Third Party Claim at its expense and through counsel of its
choice if it gives prompt notice of intention to do so to the Indemnified Party.
In the event the Indemnifying Party exercises its right to undertake the defense
against any such Third Party Claim as provided above, the Indemnified Party
shall cooperate with the Indemnifying Party in such defense and make available
to the Indemnifying Party, at the Indemnifying Party's expense, all witnesses,
pertinent records, materials and information in its possession or under its
control relating thereto as is reasonably required by the Indemnifying Party.
Similarly, in the event the
44
Indemnified Party is, directly or indirectly, conducting the defense against any
such Third Party Claim, the Indemnifying Party shall cooperate with the
Indemnified Party in such defense and make available to it all such witnesses,
records, materials and information in its possession or under its control
relating thereto as is reasonably required by the Indemnified Party. No such
Third Party Claim, except the settlement thereof which involves the payment of
money only and for which the Indemnified Party is totally indemnified by the
Indemnifying Party, may be settled by the Indemnifying Party without the written
consent of the Indemnified Party (which consent shall not be unreasonably
withheld). Similarly, no Third Party Claim which is being defended in good faith
by the Indemnifying Party shall be settled by the Indemnified Party without the
written consent of the Indemnifying Party (which consent shall not be
unreasonably withheld).
SECTION 8.4. Limitations. All claims for indemnification by Buyer are
subject to the following conditions, limitations and restrictions:
(a) No claim shall be made by Buyer unless, in the aggregate, claimed
amounts exceed $35,000. If indemnifiable Losses exceed $35,000, the Buyer
shall receive the entire amount of such Losses, net of the $35,000
deductible amount and subject to subparagraph (b) below;
(b) The maximum amount that can be recovered by the Buyer, in the
aggregate, for all claims for indemnification shall not exceed $1,600,000;
provided, however, that this limitation shall not apply to damages for
breach of the representations and warranties set forth in Sections 4.2,
4.4(a), 4.15, and/or 4.12.
(c) All claims (except claims relating to representations and
warranties set forth in Section 4.4(a) above, which have no temporal
limitation; Sections 4.15 and 4.12 above, which shall survive until 90 days
following the expiration of the statute of limitations in respect of any
relevant claim; and Sections 4.28 and 4.24 above which shall survive for 7
years following the Closing Date) must be made within three years of the
Closing Date; provided, however, this time limitation shall not apply to
claims for breach of covenants (unrelated to Sections 4.4(a), 4.12, 4.15,
4.24 and 4.28) to be performed after the Closing Date. In the event of a
breach of any such covenants, the claim must be made within two years of
the occurrence of the breach. For purposes of this subsection a claim shall
be deemed made within the applicable time period of the claim is made in
good faith and in writing in reasonable detail before the expiration of the
applicable time period. Where a claim is thus made, the claim can be
pursued until it is finally resolved;
(d) In no event shall there be any liability for any consequential
damages.
SECTION 8.5. Effect of Due Diligence on Indemnification. Buyer shall not be
entitled to indemnification from and against the relevant provisions of Sections
4.4(b), 4.5, 4.6, 4.9, 4.14, 4.16, 4.17, 4.18, 4.19, 4.14, 4.23, 4.29 and 4.30
hereunder if, as a consequence of its due diligence review, Buyer had, prior to
the Closing Date, actual specific knowledge which was
45
not disclosed to the Company that the relevant provision of any such
representation or warranty had, in fact, been breached and that the known breach
had, in fact, met the requisite level of materially specified in the relevant
representation or warranty; provided, however, that Buyer shall not be required
to disclose a breach to the Company if, prior to the Closing Date, the Company
discloses the breach to the Buyer.
SECTION 8.6. Effect and Conditions. The conditions, limitations and
provisions governing indemnification set forth above shall apply to all claims
made by Buyer under or in connection with this Agreement regardless of whether
such claims are styled as a claim for indemnification hereunder; provided,
however, that such limitations shall not apply (i) to any claim by Buyer to the
extent that such claim is based upon a knowing or intentional misrepresentation
of a material fact by the Company or upon a knowing or intentional omission of a
material fact by the Company, and (ii) to any claim by Buyer which arises
pursuant to the provisions of any governmental statute or regulation and as a
result of a claim by a governmental entity versus Buyer.
ARTICLE IX.
TERMINATION
SECTION 9.1. Termination of Agreement. This Agreement may be terminated at
any time prior to the Closing:
(a) By mutual written consent of the parties hereto; or
(b) By either Buyer or the Company, if the Closing shall not have
occurred on or before October 31, 1996; or
(c) By any party hereto if a court of competent jurisdiction (whether
federal, state or foreign) or any governmental body or agency (whether
federal, state or foreign) shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement or any Transaction Document,
and such order, decree, ruling or other action shall have become final and
nonappealable; or
(d) At any time before the Closing Date, by Buyer if, at any time in
the course of its legal, accounting, financial, operational or
environmental due diligence investigation as to the business of the Company
and the liabilities thereof (whether disclosed, undisclosed, direct,
indirect, absolute, contingent, secured, unsecured, accrued or otherwise,
whether known or unknown) including, without limitation, its continuing
review of the Schedules delivered by the Company and any other materials
delivered to Buyer, whether prior or subsequent to the date hereof, it
shall have become aware of any facts or circumstances that adversely affect
the basis upon which Buyer determined to enter into the transactions
contemplated hereby.
46
SECTION 9.2. Procedure and Effect of Termination. In the event of
termination of this Agreement pursuant to Section 9.1, written notice thereof
shall forthwith be given to the other party or parties specifying the provision
hereof pursuant to which such termination is made and this Agreement shall
forthwith become void and there shall be no liability on the part of the parties
hereto (or their respective officers, directors or affiliates), except nothing
herein shall relieve either party from liability for any willful breach hereof
and except that the provisions of the Confidentiality Agreement entered into by
the Company and the Buyer on March 20, 1996 and the provisions of Section 11.2
dealing with payment of expenses shall survive such termination. The parties
shall consult with each other before any public announcement of the termination,
or of discussions regarding the termination, of this Agreement is made.
ARTICLE X.
RESOLUTIONS OF DISPUTES
SECTION 10.1. Dispute Defined. As used in this Agreement, "Dispute" shall
mean any dispute or disagreement between the Buyer, on the one hand, and the
Company and its Shareholders, on the other hand, concerning the interpretation
of this Agreement, the validity of this Agreement, any breach or alleged breach
by any party under this Agreement or any other matter relating in any way to
this Agreement.
SECTION 10.2. Dispute Resolution Procedures.
(a) If a Dispute arises, the parties shall follow the procedures specified
in this Article X. The parties shall promptly attempt to resolve any Dispute by
negotiations between themselves. Either the Buyer, on the one hand, or the
Company and its Shareholders, on the other hand, may give the other party(ies)
written notice of any Dispute not resolved in the normal course of business. The
parties shall meet at a mutually acceptable time and place within 15 calendar
days after delivery of such notice, and thereafter as often as they reasonably
deem necessary, to exchange relevant information and to attempt to resolve the
Dispute. If the Dispute has not been resolved by the parties within 30 calendar
days of the disputing party's notice, or if the parties fail to meet within such
15 calendar days, either party may initiate mediation as provided in Section
10.2.(a)of this Agreement. If a negotiator intends to be accompanied at a
meeting by legal counsel, the other negotiator shall be given at least three
business days' notice of such intention and may also be accompanied by legal
counsel.
(b) If the Dispute is not resolved by negotiation pursuant to Section
10.2(a), the parties shall attempt in good faith to resolve any such Dispute by
nonbinding mediation. Either the Buyer on the one hand, or the Company and its
Shareholders, on the other hand, may initiate a nonbinding mediation proceeding
by a request in writing to the other party or parties (the "Mediation Request"),
and all disputing parties will then be obligated to engage in a mediation. The
proceeding will be conducted in accordance with the then current Center for
Public
47
Resources ("CPR") Model Procedure for Mediation of Business Disputes, with the
following exceptions:
(i) if the parties have not agreed within 30 calendar days of the
Mediation Request on the selection of a mediator willing to serve, CPR,
upon the request of either party, shall appoint a member of the CPR Panels
of Neutrals as the mediator; and
(ii) efforts to reach a settlement will continue until the conclusion
of the proceedings, which shall be deemed to occur upon the earliest of the
date that: (A) a written settlement is reached, or (B) the mediator
concludes and informs the parties in writing that further efforts would not
be useful, or (C) the parties agree in writing that an impasse has been
reached, or (D) a period of 60 calendar days has passed since the Mediation
Request and none of the events specified in the foregoing clauses (A) (B)
or (C) has occurred. No party may withdraw before the conclusion of the
proceeding.
(iii) If a Dispute is not resolved by negotiation pursuant to Section
10.2(a) of this Agreement or by mediation pursuant to Section 10.2(b) of
this Agreement, within 100 calendar days after initiation of the
negotiation process pursuant to Section 10.2(a), such Dispute and any other
claims arising out of or relating to this Agreement may be heard,
adjudicated and determined in an action or proceeding filed in any state or
federal court specified in Section 11.10.
SECTION 10.3. Provisional Remedies. At any time during the procedures
specified in Section 10.2(a) and 10.2(b) of this Agreement, a party may seek a
preliminary injunction or other provisional judicial relief if in its judgment
such action is necessary to avoid irreparable damage or to preserve the status
quo. Despite such action, the parties will continue to participate in good faith
in the procedures specified in Section 10.2(a) and 10.2(b).
SECTION 10.4. Tolling Statute of Limitations. All applicable statutes of
limitation and defenses based upon the passage of time shall be tolled while the
procedures specified in Sections 10.2(a) and 10.2(b) of this Agreement are
pending. The parties will take such action, if any, as is required to effectuate
such tolling.
SECTION 10.5. Performance to Continue. Each party shall continue to perform
its or his obligations under this Agreement pending final resolution of any
Dispute.
SECTION 10.6. Extension of Deadlines. All deadlines specified in this
Article may be extended by mutual agreement between the parties.
SECTION 10.7. Enforcement. The parties regard the obligations in this
Article to constitute an essential provision of this Agreement and one that is
legally binding on them. In case of a violation of the obligations in this
Article by either the Buyer, on the one hand, or the Company and/or its
Shareholders, on the other hand, the other party may bring an action to seek
enforcement of such obligations in any state or federal court specified in
Section 11.10.
48
SECTION 10.8. Costs. The parties shall pay their own costs, fees, and
expenses incurred in connection with the application of the provisions of
Section 10.2(a) and 10.2(b) of this Agreement. In addition, the fees and
expenses of CPR and the mediator in connection with the application of the
provisions of Section 10.2(b) of this Agreement shall be borne 50% by the Buyer,
on the one hand, and 50% by the Company and its Shareholders, on the other hand.
SECTION 10.9. Replacement. If CPR is no longer in business or is unable or
refuses or declines to act or to continue to act under Section 10.2(b) of this
Agreement for any reason, then the functions specified in Section 10.2(b) to be
performed by CPR shall be performed by another Person engaged in a business
equivalent to that conducted by CPR as is agreed to by the parties (the
"Replacement"). If the parties cannot agree on the identity of the Replacement
within 10 calendar days after a Request, the Replacement shall be selected by
the Chief Judge of a United States District Court upon application. If a
Replacement is selected by either means, Section 10.2(b) shall be deemed
appropriately amended to refer to such Replacement.
ARTICLE XI.
MISCELLANEOUS
SECTION 11.1. Taxes. Each party shall pay any and all stamp and other taxes
payable or determined to be payable by it in connection with the execution and
delivery of this Agreement and the other documents to be delivered by it
hereunder, and agrees to save the other party harmless from and against any and
all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes.
SECTION 11.2. Expenses. Whether or not the transactions contemplated in
this Agreement are consummated, Buyer, on the one hand, and the Company and the
Shareholders, on the other hand, shall each pay its own expenses incident to
this Agreement and the Transaction Documents and in preparing to consummate the
transactions provided for herein and therein.
SECTION 11.3. Consents. Whenever this Agreement requires or permits
consents by or on behalf of any party hereto, such consent shall be given in
writing in a manner consistent with the requirements specified in Section 11.7.
SECTION 11.4. Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of, and be enforceable by, the
parties hereto and their respective successors and permitted assigns, but
neither this Agreement nor any of the rights, interests or obligations herein
shall be assigned by either party without the prior written consent of the other
party; provided, however, that (a) Buyer can assign its obligations hereunder
49
to a corporate Affiliate thereof, and (b) in the event of its liquidation and as
a part thereof, the Company can assign its rights, interests and obligations
under this Agreement to its shareholders or to an entity owned by such
shareholders.
SECTION 11.5. Entire Agreement. This Agreement, the other documents
referred to herein or delivered pursuant hereto which form a part hereof and
other writings of even date herewith, together with the Transaction Documents
and other writings referred to therein or delivered pursuant thereto, contain
the entire understanding of the parties with respect to the subject matter
hereof. This Agreement supersedes all prior agreements with respect to the
subject matter hereof, including that Nonbinding Letter of Intent dated July 10,
1996, but not including that Confidentiality Agreement dated March 20, 1996.
SECTION 11.6. Amendment. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 11.7. Waiver. Except as otherwise provided in this Agreement, any
failure of any of the parties to comply with any obligation, covenant, agreement
or condition herein may be waived by the party entitled to the benefit thereof
only by a written instrument signed by the party granting such waiver, but the
failure to insist upon strict compliance with such obligation, representation,
warranty, covenant, agreement or condition shall not operate as a waiver of or
estoppel with respect to said compliance and such failure shall not operate as a
waiver of or estoppel with respect to any subsequent or other failure.
SECTION 11.8. Headings. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 11.9. Notices. All notices, claims, certificates, requests, demands
and other communications hereunder will be in writing and will be deemed to have
been duly given when personally delivered, telexed, sent by facsimile
transmission (with telephone confirmation) or on the date of receipt or refusal
indicated on the return receipt if mailed (registered or certified mail, postage
prepaid, return receipt requested) as follows:
(a) If to Buyer:
Diagnostic/Retrieval Systems, Inc.
Media Technology Group
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
50
with a copy to:
Xxxxxxx Xxxxxxx
A Professional Corporation
0 Xxxxxx Xxxx Xxxx
Xxxxxxxx, XX 00000-0000
Attn: Xxxx Xxxxxxxx Xxxx, Esq.
(b) If to the Company or the Shareholders:
Nortronics Company, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxx, XX 00000
Attn: Xx. Xxxx X. Xxxxxxxx
with a copy to:
Xxxx, Plant, Xxxxx, Xxxxx & Xxxxxxx, P.A.
3400 City Center
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Attn: Xxxx X. Xxxxxx, Esq.
or to such other address as the person to whom notice is to be given may have
previously furnished to the other in writing in the manner set forth above.
SECTION 11.10. LAW GOVERNING. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF
THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF
LAWS THEREOF. BUYER AND THE COMPANY HEREBY AGREE THAT MAILING OF PROCESS OR
OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN SUCH MANNER AS
MAY BE PERMITTED BY LAW SHALL BE VALID AND SUFFICIENT SERVICE THEREOF.
SECTION 11.11. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which when
taken together shall constitute one and the same agreement.
SECTION 11.12. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other
51
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic substance of the transactions
contemplated hereby is not affected in any manner adverse to any party hereto.
[THIS SPACE INTENTIONALLY LEFT BLANK]
52
SECTION 11.13. No Third Party Beneficiaries. Nothing in this Agreement
shall confer any rights upon any person or entity other than the parties hereto
and their respective heirs, successors and permitted assigns.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their respective duly authorized signatories as of the date first
above written.
ATTEST: NORTRONICS COMPANY, INC.
By: /s/ XXXXXX X. XXXXXX By: /s/ XXXX X. XXXXXXXX
------------------------------ -------------------------------
Xxxxxx X. Xxxxxx Xxxx X. Xxxxxxxx
Title: Assistant Secretary Its: President
ATTEST: NORTRONICS ACQUISITION CORPORATION
By: /s/ XXXX XXXXXXXX XXXX By: /s/ XXXXXXX X. XXXXXXX
------------------------------ ----------------------------------
Xxxx Xxxxxxxx Xxxx Xxxxxxx X. Xxxxxxx
Title: Assistant Secretary Its: Vice President
ATTEST: AHEAD TECHNOLOGY, INC.
By: /s/ XXXX XXXXXXXX XXXX By: /s/ XXXXXXX X. XXXXXXX
------------------------------- ----------------------------------
Xxxx Xxxxxxxx Xxxx Xxxxxxx X. Xxxxxxx
Title: Assistant Secretary Its: Vice President
WITNESS:
/s/ X. X. XXXXX /s/ XXXX XXXXXXXX
------------------------------------ --------------------------------------
X. X. Xxxxx Xxxx Xxxxxxxx
/s/ X. X. XXXXX /s/ XXXXXX XXXXXXXXX
------------------------------------ --------------------------------------
X. X. Xxxxx Xxxxxx Xxxxxxxxx
/s/ X. X. XXXXX /s/ XXXXXX XXXXXX
------------------------------------ --------------------------------------
X. X. Xxxxx Xxxxxx Xxxxxx
------------------------------------ --------------------------------------
