SECOND AMENDMENT TO
ASSET PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT (this "Amendment") is
entered into as of March 31, 1999, by and among PCB GROUP, INC., a New York
corporation ("PCB"), BEEHIVE ACQUISITION CORP., a Delaware corporation and
wholly-owned subsidiary of PCB (the "Buyer"), and LARSONoDAVIS INCORPORATED, a
Nevada corporation ("LDI"), and LARSONoDAVIS LABORATORIES, a Utah corporation
and wholly-owned subsidiary of LDI (the "Seller"), based on the following:
Premises
A. PCB, the Buyer, LDI, and the Seller are parties to the Asset Purchase
Agreement dated November 30, 1998, as amended February 16, 1999 (the "Purchase
Agreement"), pursuant to which the Buyer is acquiring the Subject Assets from
the Seller.
B. In the course of the due diligence investigation of the status of the
Owned Property, certain matters have come to the attention of the parties that
cannot be satisfactorily resolved prior to the closing of the transaction
contemplated by the Purchase Agreement. The parties have agreed to proceed with
the proposed transaction without transfer of the Owned Property at the initial
closing and wish to set forth the terms and conditions of this modification in
writing.
C. This Amendment is entered into in conformance with Section 13.2 of the
Purchase Agreement which requires that any modification of the Purchase
Agreement be set forth in writing and signed by all parties.
Agreement
NOW, THEREFORE, based on the foregoing premises and in consideration of the
mutual representations, warranties, and covenants contained herein, the parties
agree as follows:
1. Defined Meanings. Capitalized terms used in this Amendment and not
defined shall have the meanings given to them in the Purchase Agreement.
2. Exclusion of Owned Property from Initial Closing. The parties agree
to proceed with the Closing on or before March 31, 1999, without transfer of the
Owned Property that was included as a portion of the Subject Assets under the
terms of the Purchase Agreement. The agreed to fair market value of the Owned
Property of One Million Four Hundred Thousand Dollars and 00/100 ($1,400,000.00)
shall be excluded from the assets being transferred for purposes of calculating
the Net Asset Value as of the December Balance Sheet and the liability secured
by a deed of trust on the Owned Property of Six Hundred Eighty-Two Thousand Nine
Hundred Eighty-Two Dollars and 30/100 ($682,982.30) shall be excluded as a
liability for purposes of calculating the Net Asset Value as of the December
Balance Sheet. The resulting Purchase Price Reduction shall reduce the Initial
Cash Payment by Seven Hundred Seventeen Thousand Seventeen Dollars and 70/100
($717,017.70). Attached hereto as Exhibit "A" is a copy of the December Balance
Sheet that has been agreed to by all of the parties for purposes of calculating
the Purchase Price as of the Closing.
3. Purchase of Owned Property. Within thirty (30) days after the Seller
has completed all actions set forth below necessary to cause title to the Owned
Property to be good and marketable, the Buyer shall acquire the Owned Property
from the Seller for an agreed price of One Million Four Hundred Thousand Dollars
and 00/100 ($1,400,000.00):
(a) obtain and record a release for that portion of the Mountain Fuel
Supply Company easement which runs under the building located on parcel 2;
(b) obtain and record a release for that portion of the Mountain
States Telephone & Telegraph easement which runs under the building located
on parcel 2;
(c) (i) obtain and record an easement from the property owner to the
East (apparently Press Publishing Co.) for the area East of parcel 2 which
is enclosed within the fencing; or (ii) remove the fence and provide
evidence satisfactory to the Buyer that the foregoing easement is not
required for adequate access to the utilities; or (iii) relocate all of
such items such that none (including the fence) encroaches onto the area
East of parcel 2;
(d) obtain from the property owner to the West (apparently 3 W
Partners and others) and record (i) a waiver from any claim of boundary by
acquiescence due to the encroachment of the fence along the westerly
boundary line onto the Owned Property, and (ii) an easement agreement
regarding the transformer and other utility improvements which encroach
onto parcel 1 from the property to the West;
(e) eliminate exception 10 on Schedule B, Section 2, of the title
commitment from First American Title Insurance Company, Utah Division,
Order No. 4040-63246, 1st Amendment;
(f) (i) obtain and record an easement for the area enclosed within
fencing along the southern boundary of the property, which includes, among
other things, asphalt; or (ii) move the existing fencing to, or within, the
property boundary and remove the asphalt encroaching on the property to the
South;
(g) obtain a variance from Provo City for any rear yard set back
requirements or other zoning restrictions with respect to which the Owned
Property is not in compliance; and
(h) correct to the satisfaction of the Buyer any other matters that
materially affect the marketability or financing of the Owned Property.
The parties agree to mutually cooperate in resolving any title and zoning issues
and agree to work in good faith to encourage GE Capital Mortgage or another
purchase money lender to accept any minor defects that do not materially
adversely affect the insurability or marketability of the Owned Property.
4. Zoning Action. Notwithstanding any other provision of this Amendment,
if at any time Provo City commences an action in any court seeking any remedy
based on a zoning violation with respect to the Owned Property, or if there is a
casualty to the improvements located on the Owned Property resulting in the
destruction of twenty-five percent (25%) or more of such improvements, the Buyer
shall no longer have an obligation to purchase the Owned Property.
5. Lease of the Owned Property. The parties agree to enter into a lease
of the facilities located on the Owned Property in the form attached hereto as
Exhibit "B" pursuant to which the Seller will lease to the Buyer that portion of
the Owned Property described herein, with such Lease commencing on the Closing
Date and continuing through the earlier of the sale of the Owned Property to the
Buyer or July 15, 2000. This lease can be terminated on at least ninety (90)
days prior written notice given at any time subsequent to September 30, 1999, or
at such earlier time as provided in the Lease.
6. Reimbursement of Certain Expenses. The Seller agrees to reimburse the
Buyer on demand for any amounts charged by GE Capital Mortgage to extend its
loan commitment until July 15, 1999, up to an amount of Five Thousand Three
Hundred Dollars and 00/100 ($5,300.00). In the event that the sale of the Owned
Property is not completed on or before the expiration of the loan commitment
from GE Capital Mortgage solely or primarily as a result of title and/or zoning
issues with respect to the Owned Property, the Seller agrees to reimburse the
Buyer on demand for the commitment fee of Fifty-Two Thousand Dollars and 00/100
($52,000.00), the non-utilization fee, and any miscellaneous fees such as legal,
engineering, and surveying costs, required to be paid to GE Capital Mortgage in
connection with such financing by the Buyer.
7. Replacement Lender. In the event that the lending commitment from GE
Capital Mortgage expires and the Seller subsequently resolves all title and
zoning issues in accordance with paragraph 3 hereof, the Buyer shall use its
commercially reasonable efforts to obtain a new commitment from GE Capital
Mortgage and/or another lender and to proceed with the purchase of the Owned
Property. Notwithstanding the foregoing, the Buyer shall not be obligated to
accept a new commitment which provides for an interest rate in excess of eight
percent (8%) or that has materially different terms than the loan commitment
from GE Capital Mortgage that are not acceptable to the Buyer, in its sole
discretion. In the event that the Buyer is required to obtain a new loan
commitment and proceeds to closing of the acquisition of the Owned Property, the
Seller shall pay at the Closing Fifty Thousand Dollars and 00/100 ($50,000.00)
to the Buyer to compensate the Buyer for a portion of its loan costs.
Notwithstanding any other provision of this Amendment, in the event that the
Owned Property transaction has not closed on or before September 30, 1999, the
Buyer shall have no further obligation to (but may) purchase the Owned Property.
8. Moving Costs. In the event that the Owned Property sale has not
closed on or before September 30, 1999, and the Buyer elects to move the
operations of the acoustics business on or before July 15, 2000, to a location
within a fifty (50) mile radius of Provo, Utah, the Seller shall reimburse the
Buyer for any costs paid to third-parties for parking, loading, transportation,
unloading, and unpacking all of the assets of the business located at the Owned
Property; provided that, in no event shall the Seller's obligations under this
paragraph exceed One Hundred Fifty Thousand Dollars and 00/100 ($150,000.00).
9. Reduction of Promissory Note. To the extent that the Seller is
obligated to pay any amounts to the Buyer under the provisions of paragraphs 6,
7, or 8 of this Amendment, such amounts shall be paid by an immediate credit
against the outstanding principal balance of the Promissory Note, except that
the Seller will pay the Buyer any amounts due with respect to commitment
extension fees as provided in paragraph 5 within ten (10) days of receipt of the
appropriate documentation; provided, however, that in the event that no amounts
remain outstanding under the Promissory Note, the Seller will pay any amounts
owing pursuant to paragraphs 6, 7, or 8 of this Amendment on demand of the
Buyer.
10. Lease to Sensar Corporation. It is anticipated that Sensar
Corporation will continue to occupy a portion of the Owned Property for a
limited time. Sensar Corporation agrees to use its commercially reasonable
efforts to obtain its own facilities on or before September 30, 1999, and agrees
in any event to vacate on or before December 31, 1999. If the Owned Property is
acquired by the Buyer on or before September 30, 1999, the Buyer agrees to lease
a portion of the Owned Property to Sensar Corporation in accordance with a Lease
Agreement, a form of which is attached hereto as Exhibit "C."
11. Non-Disturbance Agreement. On or before the date of this Amendment,
the Seller shall obtain the written agreement of Key Bank acknowledging the
lease of the facilities to the Buyer and agreeing that such lease can remain in
effect even in the event of a foreclosure of its security interest in the Owned
Property.
12. Commitment from Lender. The Buyer shall deliver to the Seller a
letter from Buyer's lender stating that the Buyer has a sufficient and adequate
line of credit with which to pay the difference between the purchase price of
the Owned Property and the lending commitment of GE Capital Mortgage and that
amounts advanced under such line of credit are permitted to be used for the
acquisition of the Owned Property.
13. Indemnification of the Buyer. The Seller agrees to indemnify and hold
the Buyer harmless from any cost and expense relating to any zoning violation
existing as of the date of this Amendment with respect to the Owned Property;
provided that, to the extent that such costs and expenses are related to moving
costs, they shall be governed by the provisions of paragraph 8 of this
Amendment.
14. Payment to Key Bank. In the event that the total payment to Key Bank
of Utah and/or KeyCorp Leasing, Ltd. required to obtain releases of all UCC
financing statements held by them exceeds Three Hundred Ten Thousand Eight
Hundred Thirty-Two Dollars and 00/100 ($310,832.00), such excess shall be paid
by the Seller.
15. Taxes. The Seller shall be responsible for the payment of real
property taxes with respect to the Owned Property; provided that, if the Buyer
acquires the Owned Property, it agrees to pay all real property taxes accruing
subsequent to January 1, 1999.
16. Post-Closing Payable. Section 5(a)(ii) of the Purchase Agreement is
hereby deleted in its entirety and the parties agree that the liabilities
included in the Post-Closing Payable shall not be included on the December 31,
1998, Balance Sheet.
17. Cash Account. The parties have reviewed the cash account maintained
under Section 1.4(f) of the Purchase Agreement and have agreed to resolve all of
the items listed on Exhibit "D" attached hereto for a payment to the cash
account by Sensar Corporation of Thirty-Three Thousand Dollars and 00/100
($33,000.00). Such payment shall be made within ten (10) days of this
Amendment. Such resolution shall not affect the Buyer's rights with respect to
any items not included on Exhibit "D."
18. Ratification of Purchase Agreement. Except as specifically provided
in paragraphs 1 through 17 hereof, the parties specifically ratify, confirm, and
adopt as binding and enforceable, all of the terms and conditions of the
Purchase Agreement.
EXECUTED effective the date first above written.
PCB GROUP, INC.
By /s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx, Vice-President
Special Project
BEEHIVE ACQUISITION CORP.
By /s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx, Vice-President
LARSONoDAVIS INCORPORATED
By /s/ Xxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxxxxx, President
LARSONoDAVIS LABORATORIES
By /s/ Xxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxxxxx, President
