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EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
BETWEEN
CCIR OF CALIFORNIA CORP.
AND
FLEXIBLE CIRCUITS TECHNOLOGY
DATED AS OF NOVEMBER 17, 1997
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TABLE OF CONTENTS
Page
RECITALS ................................................................1
ARTICLE 1
DEFINITIONS.....................................................1
1.1 "Account Payment".....................................1
1.2 "Accrued Employee Benefits"...........................1
1.3 "Agreement"...........................................1
1.4 "Assumed Liabilities".................................2
1.5 "Xxxx of Sale"........................................2
1.6 "Business"............................................2
1.7 "Buyer"...............................................2
1.8 "Buyer's Closing Certificate".........................2
1.9 "CERCLA"..............................................2
1.10 "Closing".............................................2
1.11 "Closing Date.........................................2
1.12 "Code"................................................2
1.13 "Contracts"...........................................2
1.14 "Corporate Documents".................................2
1.15 "Damages".............................................2
1.16 "Deposit".............................................3
1.17 "Dollars".............................................3
1.18 "Employee Benefit Plans"..............................3
1.19 "Environmental Claim".................................3
1.20 "Environmental Laws"..................................3
1.21 "Environmental Release"...............................3
1.22 "ERISA"...............................................3
1.24 "Escrow Agent"........................................4
1.25 "Escrow Instructions".................................4
1.26 "Financial Information"...............................4
1.27 "Fixed Assets"........................................4
1.28 "Hazardous Materials".................................4
1.29 "Insurance Contracts".................................4
1.30 "Intangible Assets"...................................4
1.31 "Inventory"...........................................5
1.32 "Inventory Payment"...................................5
1.33 "Knowledge"...........................................5
1.34 "Law".................................................5
1.35 "Lien"................................................5
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1.36 "Permits"...............................................5
1.37 "Premises"..............................................5
1.38 "Purchase Price"........................................5
1.39 "Purchased Accounts"....................................5
1.40 "Purchased Assets"......................................6
1.41 "Records"...............................................6
1.42 "Retained Accounts".....................................6
1.43 "Retained Assets".......................................6
1.44 "Retained Liabilities"..................................6
1.45 "Seller"................................................6
1.46 "Seller's Closing Certificate"..........................6
1.47 "WARN Act"..............................................6
ARTICLE 2
PURCHASE AND SALE OF PURCHASED ASSETS;
OTHER AGREEMENTS..................................................6
2.1 Purchase and Sale.......................................6
2.2 Payment of Purchase Price...............................7
2.3 Calculation of Inventory Payment........................7
2.4 Allocation of Purchase Price............................7
2.5 Prorations..............................................7
2.6 Referrals and Deliveries................................8
2.7 Risk of Loss............................................8
2.8 Access to Records.......................................8
2.9 Employee Matters........................................8
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER..........................9
3.1 Organization; Business..................................9
3.2 Authorization; Enforceability...........................9
3.3 No Violation or Conflict................................9
3.4 Purchased Assets.......................................10
3.5 Financial Information..................................10
3.6 Absence of Certain Changes; Conduct of Business........11
3.7 Contracts..............................................12
3.8 Performance of Contracts; Business Relationships.......12
3.9 Accounts...............................................12
3.10 Intangible Assets......................................13
3.11 Licenses...............................................13
3.12 Violations of Law......................................13
3.13 Books of Account.......................................14
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3.14 Disclosure.............................................14
3.15 Brokers................................................14
3.16 Taxes..................................................14
3.17 Permits................................................14
3.18 Environmental Matters..................................15
3.19 Employment Matters.....................................16
3.20 Litigation.............................................17
3.21 Insurance..............................................17
3.22 Nondisclosure Agreements...............................18
3.23 Products...............................................18
3.24 Pricing................................................18
3.25 Distributors...........................................18
3.26 Transactions with Related Parties......................19
3.27 Customers and Suppliers................................19
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER..........................19
4.1 Organization...........................................19
4.2 Authorization; Enforceability..........................19
4.3 No Violation or Conflict...............................20
4.4 Brokers................................................20
ARTICLE 5
CERTAIN MATTERS PENDING THE CLOSING..............................20
5.1 Full Access............................................20
5.2 Conduct of Business....................................20
5.3 Prohibited Action......................................21
5.4 Preservation of Relationships..........................21
5.5 No Default.............................................22
5.6 Publicity..............................................22
5.7 Compliance with Laws...................................22
5.8 Exclusive Dealing......................................22
5.9 Cooperation............................................22
ARTICLE 6
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER.................23
6.1 Compliance with Agreement..............................23
6.2 Proceedings and Instruments Satisfactory...............23
6.3 Litigation.............................................23
6.4 Representations and Warranties.........................23
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6.5 No Adverse Change......................................23
6.6 Due Diligence..........................................23
6.7 Inventory Payment......................................24
6.8 Accrued Employee Benefits..............................24
6.9 Leases.................................................24
6.10 Deliveries at Closing..................................24
6.11 Other Deliveries.......................................24
6.12 Approvals and Consents.................................24
ARTICLE 7
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER................25
7.1 Compliance with Agreement..............................25
7.2 Proceedings and Instruments Satisfactory...............25
7.3 Litigation.............................................25
7.4 Representations and Warranties.........................26
7.5 Payment of Purchase Price..............................26
7.6 Inventory Payment......................................26
7.7 Deliveries at Closing..................................26
7.8 Other Documents........................................26
7.9 Approvals and Consents.................................26
ARTICLE 8
INDEMNITY; TERMINATION; MISCELLANEOUS............................26
8.1 Seller's Indemnity.....................................26
8.2 Buyer's Indemnity......................................28
8.3 Termination............................................29
8.4 Rights on Termination; Waiver..........................29
8.5 Breakup Fee............................................29
8.6 Further Assurances.....................................30
8.7 Survival of Representations and Warranties.............30
8.8 Entire Agreement; Amendment............................30
8.9 Expenses...............................................31
8.10 Governing Law..........................................31
8.11 Assignment.............................................31
8.13 Counterparts; Headings.................................32
8.14 Income Tax Position....................................32
8.15 Taxes and Fees.........................................32
8.16 Interpretation.........................................32
8.17 Severability...........................................32
8.18 No Reliance............................................32
8.19 Bulk Sales Compliance..................................32
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8.20 Legal Proceedings......................................33
SIGNATURES..................................................................25
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EXHIBITS
Exhibit Description
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1 Xxxx of Sale
2 Buyer's Closing Certificate
3 Seller's Closing Certificate
4 Escrow Instructions
5 Payment of Purchase Price
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SCHEDULES
Schedule No. Description
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1.4 Assumed Liabilities
1.13 Contracts
1.27 Fixed Assets
1.31 Inventory
1.36 Permits
1.42 Retained Accounts
2.4 Allocation of Purchase Price
3.10(a) Intangible Assets
3.10(b) Intangible Asset Licenses
3.19(a) Employees
3.19(b) Employee Benefit Plans
3.19(e) Unemployment Compensation
3.21(a) Insurance Policies
3.21(b) Insurance Claims
3.22 Nondisclosure Agreements
3.23 Products
3.24 Pricing
3.25 Distributors
3.26 Customers and Suppliers
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of this 17th day of
November, 1997, by and among CCIR OF CALIFORNIA CORP., a California corporation
("Buyer") and FLEXIBLE CIRCUITS TECHNOLOGY dba Dynaflex Technology, a California
corporation ("Seller").
RECITALS
WHEREAS, Seller, is and has been engaged for many years in the
ownership and operation of the Business; and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, certain of the assets, rights and properties relating to
the Business, on the terms and conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the Recitals and of the mutual
covenants, conditions, and agreements set forth herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is hereby agreed that:
ARTICLE 1
DEFINITIONS
When used in this Agreement, the following terms shall have the
meanings specified:
1.1 "Account Payment" shall mean $243,405, the amount of the
Purchased Accounts net of Seller's accounts payable, discounted by ten percent.
1.2 "Accrued Employee Benefits" shall have the meaning set forth in
Section 2.9(a).
1.3 "Agreement" shall mean this Asset Purchase Agreement, together
with the Schedules and Exhibits hereto, as the same shall be amended from time
to time in accordance with the terms hereof.
1.4 "Assumed Liabilities" shall mean only the obligations under the
real and personal property leases of Seller which are specifically assigned to
and assumed by Buyer and are listed and set forth on Schedule 1.4 hereto.
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1.5 "Xxxx of Sale" shall mean the Xxxx of Sale and Assumption of
Liabilities, substantially in the form of Exhibit 1 hereto.
1.6 "Business" shall mean the business conducted by Seller which
consists of supplying flexible printed circuits and related interconnect
technology products to original equipment manufacturers in the computer, data
storage, medical device, aerospace, telecommunications and automotive
industries.
1.7 "Buyer" shall mean CCIR of California Corp., a California
corporation.
1.8 "Buyer's Closing Certificate" shall mean a certificate of Buyer,
substantially in the form of Exhibit 2 hereto.
1.9 "CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C.A. Section 9601, et
seq., and the rules, regulations and orders promulgated thereunder.
1.10 "Closing" shall mean the conference to be held on the Closing
Date at the offices of Seller at 10:00 a.m. or such other time and place as the
parties may mutually agree at which the transactions contemplated by this
Agreement shall be consummated.
1.11 "Closing Date" shall mean November 17, 1997, or such other date
as Buyer and Seller may actually consummate the transactions contemplated by
this Agreement.
1.12 "Code" shall mean the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder.
1.13 "Contracts" shall mean all of the agreements whether written,
oral or implied, under which Seller conducts the Business. Said Contracts are
listed and briefly described on or attached to Schedule 1.13 hereto.
1.14 "Corporate Documents" shall mean Seller's corporate seal, minute
books, charter documents, corporate stock, corporate record books and such other
books and records as pertain to the organization, existence or share
capitalization of Seller and such records as are necessary to enable Seller to
file its tax returns and reports, and such other books and records not a part of
the Records.
1.15 "Damages" shall have the meaning set forth in Section 8.1(a)
hereof.
1.16 "Deposit" shall mean the deposit in the amount of $500,000 paid
into the Escrow Account by Buyer contemporaneously with the Closing under this
Agreement.
1.17 "Dollars" shall mean the lawful currency of the United States of
America.
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1.18 "Employee Benefit Plans" shall mean any pension plan, profit
sharing plan, bonus plan, incentive compensation plan, stock purchase plan,
stock option plan, stock appreciation plan, benefit plan, benefit policy,
retirement plan, fringe benefit program, insurance plan, severance plan or any
other plan or program to provide income or benefits to active or former
employees of Seller.
1.19 "Environmental Claim" shall mean any and all administrative,
regulatory, judicial, or third party actions, suits, demands, demand letters,
directives, claims, Liens, investigations, proceedings or notices of
noncompliance or violation (written or oral) by any person or entity alleging
damage or other adverse effect on the environment, or potential liability
(including, without limitation, potential liability for enforcement,
investigatory costs, cleanup costs, governmental response costs, removal costs,
remedial costs, natural resources damages, property damages, personal injuries,
or penalties) arising out of, based on or resulting from: (i) the presence, or
release into the environment, of any Hazardous Materials, contaminant, odor,
audible noise, or other release into the environment from or at any location,
whether or not owned by any Seller; or (ii) environmental aspects of the
transportation, storage, treatment or disposal of Hazardous Materials in
connection with the operation of the Business; or (iii) circumstances forming
the basis of any violation or alleged violation of any Environmental Law; or
(iv) any and all claims by any person or entity seeking damages, contribution,
indemnification, cost, recovery, compensation or injunctive relief resulting
from the presence or release of any Hazardous Materials.
1.20 "Environmental Laws" shall mean all federal, state, local,
foreign, and other applicable jurisdiction Laws relating to the environment or
the use, disposal, existence, or release of any Hazardous Materials, including
but not limited to any and all Laws concerning, affecting, controlling, or in
any way relating to, whether in whole or in part, noise levels, ground
vibrations, air pollutants, water pollutants, process waste water, or Hazardous
Materials.
1.21 "Environmental Release" shall mean any release, spill, emission,
leaking, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the atmosphere, soil, surface water, groundwater or property.
1.22 "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and the regulations promulgated thereunder.
1.23 "Escrow Account" shall mean the deposit account or accounts
established with the Escrow Agent for the Deposit.
1.24 "Escrow Agent" shall mean Arizona Escrow Agency, which is the
escrow agent selected by the parties hereto to monitor and service the Escrow
Account.
1.25 "Escrow Instructions" shall mean the agreement between the
Escrow Agent and the parties hereto with respect to their various rights and
obligations regarding the Escrow Account, the form of which is attached hereto
as Exhibit 4.
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1.26 "Financial Information" shall mean (a) the unaudited financial
statements of the Business for the fiscal year ended December 31, 1996; (b) the
unaudited interim financial statements of the Business for the quarter ended
September 30, 1997; (c) the books and records of account of Seller relating to
the Business; and (d) all other financial information relating to the financial
condition of the Business delivered or to be delivered by Seller to Buyer.
1.27 "Fixed Assets" shall mean the manufacturing, production,
maintenance, packaging and/or testing machinery, equipment, supplies, furniture,
office equipment, fixtures, molds, tools, spare and maintenance parts, any
products currently under development, and all other real or tangible property
owned by Seller and used by or useful to Seller in the operation of the
Business, including but not limited to those assets which are listed and set
forth on Schedule 1.27 hereto.
1.28 "Hazardous Materials" shall mean: (a) any waste, hazardous
waste, pollutant, contaminant, or hazardous or toxic substance as specified,
listed, identified, or defined in (i) the Resource Conservation and Recovery
Act, 42 U.S.C.A. Section 6901, et seq., and the rules, regulations and orders
promulgated thereunder; (ii) CERCLA; (iii) the Clean Water Act, 33 U.S.C. 1251,
et seq., and the rules, regulations and orders promulgated thereunder; (iv) the
Clean Air Act, 42 U.S.C. 7401 et seq., and the rules, regulations and orders
promulgated thereunder; (v) the Toxic Substances Control Act, 15 U.S.C. 2601, et
seq., and the rules, regulations and orders promulgated thereunder; (vi) the
Hazardous Materials Transportation Act, 49 U.S.C. 1801, et seq., and the rules,
regulations and orders promulgated thereunder; (vii) the Occupational Safety and
Health Act, 29 U.S.C. 651 et seq., and the rules, regulations, and orders
promulgated thereunder; and (viii) any other applicable U.S. federal, state,
local, foreign, or other statutes or Laws, and the rules, regulations, and
orders promulgated thereunder; (b) asbestos; (c) formaldehyde; (d)
polychlorinated biphenyls; (e) radioactive materials; (f) waste oil and other
petroleum products; and (g) any other substance which constitutes a nuisance or
hazard to the environment or to the public health, safety, or welfare.
1.29 "Insurance Contracts" shall mean all contracts of insurance,
insurance proceeds or claims made by Seller, relating to property or equipment
repaired, replaced or restored by Seller prior to the Closing Date.
1.30 "Intangible Assets" shall mean, all of the intangible assets
owned or used by Seller in the Business, including but not limited to trade
secrets, know-how, operating methods and procedures, proprietary information,
processes, technical knowledge, formulae, advertising formats, logos,
trademarks, trade designations, service marks, tradenames (including the name
"Dynaflex Technology"), patents, copyrights, applications for any of the
foregoing, goodwill, advertising and promotional rights, franchise rights,
customer lists, telephone number(s), and related rights.
1.31 "Inventory" shall mean all of Seller's inventories of raw
materials and supplies, work in process, and finished goods owned or used in the
Business, descriptions and quantities of which are listed and set forth on
Schedule 1.31 hereto.
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1.32 "Inventory Payment" shall mean the payment for the Inventory set
forth in Section 2.3 hereof.
1.33 "Knowledge" shall mean, with respect to a corporate party, the
knowledge of any stockholder, officer, manager, or supervisor of such party, or
knowledge which any such person reasonably should have by virtue of his or her
position with such party and, with respect to an individual party, the knowledge
of such party after due inquiry.
1.34 "Law" shall mean any federal, state, foreign, local or other
law, ordinance, rule, regulation, or governmental requirement or restriction of
any kind, including any rules, regulations, and orders promulgated thereunder,
and any final orders, decrees, consents, or judgments of any regulatory agency
or court.
1.35 "Lien" shall mean with respect to any asset: any mortgage,
pledge, lien, charge, claim, restriction, reservation, condition, easement,
covenant, lease, encroachment, title defect, imposition, security interest,
inchoate lien, or other encumbrance of any kind and the interest of a vendor or
lessor under any conditional sale agreement, financing lease or other title
retention agreement related to such asset.
1.36 "Permits" shall mean those permits, licenses, approvals,
registrations, filings, notices, and governmental authorizations required for
the conduct of the Business as presently conducted and the use of the Purchased
Assets. Said Permits are listed and briefly described on Schedule 1.36 hereto.
1.37 "Premises" shall mean the building in San Jose, California at
which Seller conducts the Business.
1.38 "Purchase Price" shall mean six million dollars ($6,000,000),
the Inventory Payment, the Account Payment, and the assumption of the Assumed
Liabilities.
1.39 "Purchased Accounts" shall mean Seller's accounts receivable
less than 90 days past due. Buyer shall have the right to payment of the
Purchased Accounts that are not paid within 180 days after the Closing Date from
the funds in the Escrow Account established with the Escrow Agent pursuant to
the Escrow Instructions.
1.40 "Purchased Assets" shall mean all assets of Seller used or
useful in the conduct of the Business except the Retained Assets, including but
not limited to the Purchased Accounts, Contracts, Fixed Assets, Intangible
Assets, Inventory, Permits and Records.
1.41 "Records" shall mean the books, documents and records owned or
used by Seller in connection with the Purchased Assets, including personnel
records, correspondence, governmentally required records, manuals, engineering
data, designs, drawings, blueprints, plans, specifications,
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lists, customer lists, computer media, software and software documentation,
property records, manufacturing records, and other written materials.
1.42 "Retained Accounts" shall mean Seller's accounts receivable more
than 90 days past due, rights to payment for goods and services sold, notes and
associated rights related to the Business, which are listed and set forth on
Schedule 1.42 hereto.
1.43 "Retained Assets" shall mean the following assets of Seller as
of the Closing Date which, although they relate to the Business, are not
Purchased Assets and are to be retained by Seller: Retained Accounts, Corporate
Documents, the name "Flexible Circuits Technology", all cash accounts, employee
loans, and all other assets not included in the Purchased Assets.
1.44 "Retained Liabilities" shall mean all liabilities of Seller
which are not Assumed Liabilities
1.45 "Seller" shall mean Flexible Circuits Technology dba Dynaflex
Technology, a California corporation.
1.46 "Seller's Closing Certificate" shall mean a certificate of the
Seller, substantially in the form of Exhibit 3 hereto.
1.47 "WARN Act" shall mean the Worker Adjustment and Retraining
Notification Act, as amended.
ARTICLE 2
PURCHASE AND SALE OF PURCHASED ASSETS;
OTHER AGREEMENTS
2.1 Purchase and Sale. At the Closing, and upon all of the terms and
subject to all of the conditions of this Agreement:
(a) Seller shall sell, assign, convey, and deliver to Buyer, and
Buyer shall purchase and accept from Seller, the Purchased Assets; and
(b) Buyer shall assume and agree to perform in accordance with
and be bound by all of the covenants, terms, and obligations under the Assumed
Liabilities. Except as otherwise specifically provided for herein, Buyer is not
assuming any liabilities or obligations of Seller, and Seller shall satisfy all
of the Retained Liabilities in the ordinary course of business.
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2.2 Payment of Purchase Price. At the Closing, Buyer shall pay the
cash portion of the Purchase Price, less the Deposit, as set forth on Exhibit 5
hereto, and assume the Assumed Liabilities.
2.3 Calculation of Inventory Payment. The Inventory Payment which
shall be part of the Purchase Price shall be calculated as follows: (a) raw
material and supplies shall be priced at the cost to Seller, and (b) work in
process and finished goods shall be priced at the cost to Seller plus labor;
provided, however, that (i) any raw material which has been in Seller's
inventory for more than six months prior to the Closing Date, (ii) any raw
material which has not been used by Seller against an order in the six months
prior to the Closing Date, and (iii) any work in process and finished goods not
supported by a current, non-cancellable customer order, will be excluded from
calculation of the Inventory Payment and will be transferred by Seller to Buyer
hereunder free of charge. For the purposes of this Section 2.3, "cost" shall
mean the amount set forth on the original vendor invoice for the inventory. The
descriptions and quantities of Inventory shall be listed and set forth by Seller
on Schedule 1.31 hereto, and shall be validated through a physical inventory by
Buyer at Buyer's expense prior to the Closing. The calculation of the Inventory
payment shall be set forth in writing and approved by Buyer and Seller two days
prior to the Closing Date.
2.4 Allocation of Purchase Price. The Purchase Price shall be
allocated in accordance with Section 1060 of the Code and substantially as set
forth on Schedule 2.4 hereto. Buyer and Seller shall cooperate with each other
in the preparation and filing of I.R.S. Form 8594 in connection with the
Purchase Price allocation. Neither Buyer nor Seller, nor any of their respective
affiliates, shall take any position (whether in financial statements, audits,
tax returns or otherwise) which is inconsistent with the allocation of the
consideration unless required to do so by applicable Law.
2.5 Prorations. All personal property taxes, real property expenses,
rent, utility expenses, and other similar expenses in connection with the
Purchased Assets if any, payable after the Closing shall be prorated, whereby
Seller shall be responsible for that portion of the prorated expenses accrued
for the period ending as of the Closing, and Buyer shall be responsible for that
portion of the prorated expenses attributable to the period beginning as of the
Closing. Prorated expenses shall be settled between the parties promptly after
the determination from time to time of said prorated expenses.
2.6 Referrals and Deliveries. After the Closing, Buyer shall
promptly:
(a) Deliver to Seller, in the form received with the addition of
any required endorsements by Buyer, any cash, checks, or other payments received
after the Closing Date by Buyer relating to the Accounts as well as the conduct
of the Business after the Closing, but not relating to the Purchased Assets; and
(b) Refer to Seller any and all inquiries or purchase orders from
customers or suppliers of Seller or other persons relating to the Business.
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2.7 Risk of Loss. Risk of loss with respect to the Purchased Assets
shall remain with Seller until the Closing and shall pass to Buyer upon the
Closing.
2.8 Access to Records. Seller shall permit Buyer, and its attorneys,
accountants, agents and designees, such access to, and right to copy, all books,
papers and records of Seller which are not a part of the Purchased Assets, from
and after the Closing Date hereof as Buyer may deem necessary or desirable. Any
such examination shall be at the expense of Buyer, shall be performed during
normal business hours at the place where such records are regularly maintained
by Seller and shall not unreasonably interfere with the normal business
activities of Seller. Seller shall notify Buyer at any time within the five (5)
year period after the Closing Date if it intends to destroy any or all of the
books, papers, and records described above, and Buyer shall have the right to
review and remove any of such books, papers and records at Buyer's expense.
2.9 Employee Matters.
(a) After Closing, Buyer will offer employment to all employees
of Seller other than the senior management employees identified on Schedule
3.19(a). Immediately prior to the Closing, Seller shall terminate the employment
of any employees to be hired by Buyer. Seller and Buyer shall cooperate to
provide an orderly transfer of accrued employee vacation and sick leave benefits
from Seller to Buyer in order to preserve the benefits available to such
employees. Seller shall prepare a comprehensive list of such accrued benefits by
employee, as of the date ten (10) days prior to the Closing Date, shall value
such benefits at the rates of pay in effect as of such date, and shall pay Buyer
at the Closing cash equal to the value of such benefits (the "Accrued Employee
Benefits").
(b) With respect to employees of Seller who are not offered
continuing employment with Buyer, Seller shall provide any notices to such
employees required by the WARN Act, if applicable, and, Seller shall make all
payments to said employees for wages, commissions, bonuses, vacations, severance
and other similar forms of compensation owing to or accrued by such employees.
(c) Subject to subsections (a) and (b) above, Buyer shall not be
obligated to Seller or any other party for any labor-related obligations or
liabilities arising out of any person's employment with Seller, and Seller
agrees to satisfy said obligations and/or liabilities.
(d) Seller and Buyer agree that the responsibilities for
furnishing Form W-2s for the 1997 calendar year with respect to employees of the
Business hired by Buyer in accordance with Section 2.10(a) hereof shall be
Buyer's pursuant to the Alternative Procedure described in Section 5 of Rev.
Proc. 83-66. Seller shall provide Buyer with all payroll and other records and
documents (including, without limitation, Form W-4s) necessary for Buyer to
comply with such Alternative Procedure.
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(e) Xxxxxxxx X. Xxxxxxxx shall provide services to Buyer for 180
days after the Closing Date sufficient to ensure that a smooth transition of the
operation of the Business to the Buyer has occurred. For such services, (1) Xxxx
Xxxxxxxx shall be retained as an employee of Buyer at a salary of $80,000 per
year paid monthly, and (2) Xxxxxxxx X. Xxxxxxxx shall receive compensation a
rate of $10,000 per month starting 60 days from the Closing Date for the
remaining 120 days in the 180-day period.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that:
3.1 Organization; Business. Seller is a corporation duly and validly
organized and existing and in good standing under the Laws of the State of
California and has full corporate power to own its assets and to convey the
Purchased Assets to Buyer pursuant to this Agreement. Seller is duly qualified
to do business as a foreign corporation and is in good standing in all
jurisdictions in which Seller conducts business.
3.2 Authorization; Enforceability. The execution, delivery, and
performance of this Agreement, and all of the documents and instruments required
hereby, by Seller are within the corporate power of Seller and have been duly
authorized by all necessary corporate action by Seller. This Agreement is, and
the other documents and instruments required hereby will be, when executed and
delivered by Seller, the valid and binding obligations of Seller, enforceable
against Seller in accordance with their respective terms, and sufficient to
transfer and convey to Buyer all of Seller's right, title, and interest in and
to the Purchased Assets.
3.3 No Violation or Conflict. The execution, delivery and performance
of this Agreement and the other documents and instruments to be executed and
delivered by Seller pursuant hereto, and the consummation by Seller of the
transactions contemplated herein or therein:
(a) will not violate or conflict with any applicable Law;
(b) will not require any authorization, consent, approval,
exemption or other action by or notice to any government entity (including,
without limitation, under any "plant closing" or similar law); or
(c) will not violate or conflict with, or constitute a default
(or event which, with notice or lapse of time, or both, would constitute a
default) under, or will not result in the termination of, or accelerate the
performance required by, or result in the creation of any Lien upon any of the
Purchased Assets under, any term or provision of the Seller's articles of
incorporation or bylaws, or any contract, commitment, understanding,
arrangement, agreement or restriction of any kind or
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character to which Seller is a party or by which Seller or any of the Purchased
Assets may be bound or affected.
3.4 Purchased Assets.
(a) Seller owns and will convey to Buyer at Closing good and
marketable title to all of the Purchased Assets (not including the Assumed
Liabilities set forth on Schedule 1.4 hereto), free and clear of all Liens of
any nature whatsoever. Seller is in sole possession of, and has sole control of,
the Purchased Assets. None of the Purchased Assets is leased, rented, licensed,
or otherwise not owned by Seller.
(b) The Purchased Assets include all of the assets of Seller
which are used in or necessary for the operation of the Business, excepting
therefrom only any Retained Assets.
(c) The Purchased Assets are in good operating condition and
repair, normal wear and tear excepted, free from any defects (except minor
defects as do not interfere with the use thereof in the conduct of the normal
operations of the Business), have been maintained consistent with the standards
generally followed in the industry, and are sufficient to carry on the Business
as previously conducted by Seller.
(d) All of the tangible Purchased Assets are physically located
on the Premises.
3.5 Financial Information.
(a) The Financial Information is accurate and complete in all
material respects, was prepared in accordance with generally accepted accounting
principles consistently applied throughout all periods, was prepared on a
consistent basis, and presents fairly the financial condition and the results of
operations of the Business as of the relevant dates thereof and for the periods
covered thereby.
(b) Seller has no material liabilities or indebtedness,
contingent, absolute, accrued, or otherwise, in connection with the Business,
other than as set forth in the Financial Information.
3.6 Absence of Certain Changes; Conduct of Business.
Except as set forth in this Agreement or the Exhibits hereto,
since the date of the Financial Statements:
(a) there has not been any material adverse change in the
business, financial condition, results of operations or prospects (financial or
otherwise) of Seller;
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(b) no event has occurred (or to the Knowledge of Seller is
likely to occur) which so far as reasonably can be foreseen at this time, may
result in any such change;
(c) there has not been any loss, damage or destruction to the
properties of the Seller (whether or not covered by insurance) materially
adversely affecting Seller's business or properties;
(d) there has not been any labor dispute or disturbance which has
or may materially adversely affect the Seller's business;
(e) the Seller has conducted its business only in, and has not
taken any action other than in, the usual and ordinary course of its business;
and
(f) the Seller has not:
(i) entered into any commitment or transaction (including,
without limitation, any capital expenditure) other than in the ordinary
course of business;
(ii) granted any security interest in, mortgage, pledge or other
lien or encumbrance affecting or relating to any of its properties or
assets;
(iii) sold or otherwise disposed of any assets or properties
other than in the ordinary course of business or entered into any joint
venture, partnership or other agreement with respect thereto;
(iv) entered into any fixed term employment contract or deferred
compensation arrangement with or granted any material increase in the
compensation payable or to become payable to, any of its key employees,
made any material increase in any bonus, insurance, pension or other
employee benefit plan, payment or arrangement made to, for, or with any
of its employees or instituted any retirement plan or policy for the
issuance of severance pay; or
(v) incurred or guaranteed any material liability (whether
absolute or contingent and whether or not currently due and payable),
or entered into or assumed any material contract, agreement,
arrangement, lease (as lessor or lessee), license or other commitment,
whether written or oral, other than in the ordinary course of business.
(g) Seller knows of no facts, circumstances, or proposed or
contemplated events which would materially adversely affect the operations,
results, or prospects of the Business after the Closing Date.
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3.7 Contracts. Seller is not a party to any written or unwritten
agreement that is material to the ongoing operations of the Business and that is
not otherwise contained on Schedule 1.13 hereto and being assigned to Buyer
hereunder.
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3.8 Performance of Contracts; Business Relationships.
(a) Seller and, to the Knowledge of Seller, each party to each
Contract, have performed in all material respects each term, covenant, and
condition of each Contract which is to be performed by them at or before the
date hereof. Each of the Contracts is in full force and effect and constitutes
the legal and binding obligation of Seller and, to the Knowledge of Seller, the
other parties thereto. Except as conspicuously disclosed on Schedule 1.13, no
Contract requires the written consent of, or prior notice to, any third party in
order for Seller to assign such contract to Buyer hereunder.
(b) Seller maintains a good business relationship with each of
the customers and suppliers of the Business, and Seller knows of no unresolved
complaint or dispute which presently exists.
(c) Buyer will not be obligated or liable to any of Seller's
vendors, suppliers, or other parties who may have or may have had a contractual
relationship with Seller, unless said relationship arises from a Contract being
assigned pursuant to Section 2.1 above or is otherwise an Assumed Liability.
3.9 Accounts.
(a) All of the Accounts have arisen from bona fide transactions
by Seller, are collectable in the ordinary course, and no portion of any such
Account is subject to counterclaim or set-off or, to Seller's Knowledge, is in
dispute.
(b) Since September 30, 1997, Seller has not discounted any
accounts receivable relating to the Business in order to collect same or
implemented any other collection procedures not consistent with Seller's past
practices.
3.10 Intangible Assets.
(a) Schedule 3.10(a) lists all Intangible Assets relating to the
Business in which Seller now has any interest, specifying whether such
Intangible Assets are owned, controlled, used or held (under license or
otherwise) by Seller, and also indicating which of such Intangible Assets are
registered. All Intangible Assets shown as registered in Schedule 3.10(a) have
been properly registered, all pending registrations and applications have been
properly made and filed and all annuity, maintenance, renewal and other fees
relating to registrations or applications are current.
(b) Schedule 3.10(b) hereto sets forth all license and similar
agreements that Seller is a party to with respect to intellectual property
either licensed by or licensed to Seller in relation to the Business.
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(c) Seller owns the entire right, title, and interest in and to
each of the patents, trademarks, and licenses set forth on Schedules 3.10(a) and
3.10(b) hereto, and all other Intangible Assets of the Business. Neither the
Purchased Assets, nor the Business infringes on any intellectual property rights
of others. There are no claims, demands or proceedings instituted, pending or,
to the Knowledge of Seller, threatened, by any third party pertaining to or
challenging Seller's rights to any of the intellectual property rights used in
the Business. Seller knows of no facts which would render any of the
intellectual property rights used in the Business invalid or unenforceable. All
patents, patent applications, and rights to discoveries or inventions (whether
or not patentable) owned or held by any officer, director, employee, former
employee, or independent contractor engaged by Seller and relating to the
Business have been, or on or prior to the Closing Date shall have been, duly and
effectively transferred to Seller.
3.11 Licenses.
There are no license or similar agreements that Seller is a party to
with respect to intellectual property either licensed by or licensed to Seller
in relation to the Purchased Assets.
3.12 Violations of Law.
(a) None of the present or past operation of the Business, the
products of the Business, or the Purchased Assets violates or conflicts, in any
material respect, with any Permits, any Law (including Environmental Laws),
governmental specification, authorization, or requirement, or any decree,
judgment, order, or similar restriction. To the Knowledge of Seller, neither
Seller nor any supplier of Seller is the subject of an inspection or inquiry
regarding violations or alleged violations of any Law by any other state,
federal, or local agency.
(b) There are no proceedings, threatened proceedings, orders,
notice of violations, inspection reports, and other similar occurrences, if any,
relating to the conduct of the Business or the Purchased Assets.
(c) Seller has not been the subject of an Occupational and Safety
Health Administration inspection, or found by any agency to be in violation of
any state or federal occupational safety or health Law in the conduct of the
Business.
3.13 Books of Account. The books of account of the Business relating
to the Purchased Assets are complete and correct in all material respects, and
reflect all transactions entered into by Seller or to which Seller is a party
and which relate to the Purchased Assets.
3.14 Disclosure. Seller has furnished to Buyer complete and accurate
copies or originals of all documents and/or information requested by Buyer. No
disclosure (including the Schedules hereto) or statement of fact by Seller
contained in this Agreement and no disclosure or statement of fact furnished or
to be furnished by Seller to Buyer pursuant to this Agreement or pursuant to
Buyer's due diligence contains or will contain any untrue statement of a
material fact or omits or will
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omit to state any item or a material fact necessary in order to make the
statements herein or therein contained not misleading. The Schedules to this
Agreement are complete and accurate in all material respects with respect to the
information the Schedules purport to provide.
3.15 Brokers. Seller shall pay and be responsible for any brokers',
finders', or similar fee it has incurred in connection with the transactions
contemplated by this Agreement.
3.16 Taxes. Seller has paid or made provision for all federal, state,
and local taxes or other governmental charges with respect to the Business
and/or Purchased Assets that may or could follow the Purchased Assets or
otherwise affect Buyer after the consummation of the transactions contemplated
herein. All required returns and reports with respect to such taxes and charges
have been duly and timely filed.
3.17 Permits. The Permits listed on Schedule 1.36 constitute all
licenses, permits, approvals, qualifications, and governmental specifications,
authorizations, registrations, or requirements which Seller currently has in
connection with the Purchased Assets or the Business (including the products
thereof) and constitute all such licenses, permits, approvals, qualifications,
and governmental specifications, authorizations, registrations, and requirements
necessary for the ownership or use of the Purchased Assets or conduct of the
Business as currently conducted by Seller.
3.18 Environmental Matters.
Buyer and Seller have reviewed the Phase I Environmental Assessment
conducted by Aquifer Sciences, Inc. in November 1997 for the two buildings at
the site located at 1756 and 0000 Xxxxxxxx Xxxxxx in San Diego, California, and
agree that the information set forth in such assessment shall form the basis for
Seller's "Knowledge" of environmental matters set forth in this Section 3.18, to
the extent such assessment relates to such matters.
(a) The Purchased Assets and the Business are in conformance with
all applicable Environmental Laws, and there are no past or present (or, to the
Knowledge of Seller, future) events, conditions, circumstances, activities,
practices, incidents, actions, omissions or plans (i) which, in connection with
the Business or the Purchased Assets, may interfere with or prevent compliance
or continued compliance with Environmental Laws or with any order issued,
entered, promulgated or approved thereunder, or (ii) which may subject Seller or
Buyer to damages (including liability under CERCLA), penalties, injunctive
relief, or cleanup costs under any Environmental Laws or pursuant to any
third-party claim, or which require or are likely to require reporting, cleanup,
removal, remedial action, or other response pursuant to Environmental Laws or a
third party claim.
(b) To the Knowledge of Seller, there are not now, nor have there
ever been, tanks or other facilities in, on, or under any property that is or
was owned, leased, used, or occupied by Seller in connection with the conduct of
the Business or the use of the Purchased Assets or at any time in its care,
custody, or control, that contain materials which, if known to be present in
soils or
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groundwater, would require reporting, clean up, removal, or some other action
under Environmental Laws.
(c) Neither Seller, nor, to the Knowledge of Seller, any other
person or entity has caused or permitted any Environmental Releases of materials
on, under, or at the Premises, or at any other real estate previously owned or
occupied by Seller or at any time in its care, custody, or control, which
materials, if known to be present, would require reporting, clean-up, removal,
or some other action under Environmental Laws.
(d) Seller is not subject to any judgment, decree, order, or
citation related to or arising out of applicable Environmental Laws in
connection with the conduct of the Business or the use of the Purchased Assets.
(e) Seller possesses all permits, licenses, and approvals, if
any, required under applicable Environmental Laws in connection with the conduct
of the Business, all of which are included on Schedule 1.33 hereto.
(f) Seller has not received (nor, to the Knowledge of Seller, has
there been issued) any notice, whether from a public or governmental authority,
citizens' group, employee or any other person or entity, that alleges that the
Business is or may not be in compliance with any Environmental Law or Permit.
(g) No friable asbestos or asbestos requiring remediation under
applicable Environmental Laws is present on or at the Premises.
(h) No real property at any time owned, operated, used or
controlled by Seller in the conduct of the Business is currently listed on the
National Priorities List or the Comprehensive Environmental Response,
Compensation and Liability Information System, both promulgated under CERCLA, or
on any comparable state or foreign list, and Seller has not received any written
notice from under or relating to CERCLA or any comparable state or local Law.
(i) No off-site location at which Seller has disposed or arranged
for the disposal of any waste is listed on the National Priorities List or on
any comparable state or foreign list and Seller has not received any written
notice with respect to any off-site location, of potential or actual liability
or a written request for information under or relating to CERCLA or any
comparable state or local Law.
3.19 Employment Matters.
(a) Schedule 3.19(a) hereto lists all employees of the Business,
their current rates of compensation and most recent pay increase, date of hire,
benefits, location of employment, whether such employee is a senior management
employee, and other related information requested
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by Buyer. Seller has not increased the rate of compensation of any employee of
the Business since September 30, 1997, except as set forth on Schedule 3.19(a)
hereto.
(b) Schedule 3.19(b) hereto lists and describes all of Seller's
present or past Employee Benefit Plans. Each Employee Benefit Plan is and at all
times has been in full compliance with all applicable Laws (including ERISA).
Seller is not contributing to, and has not contributed to any multi-employer
plan, as defined in ERISA. Any past Employee Benefit Plan that has been
terminated was done so in full compliance with all applicable Laws, and there is
no basis for further liability or obligation of Seller pursuant to any and all
past Employee Benefit Plans.
(c) Seller has no Employee Benefit Plan or other agreements
(including collective bargaining agreements), arrangements, or plans which would
bind or in any way affect Buyer after the Closing Date, regardless of whether
Buyer employs any such employees.
(d) Seller is in material compliance with all federal, foreign,
state, or other applicable laws respecting employment and employment practices,
terms and conditions of employment, wages and hours, and has not and is not
engaged in any unfair labor practice that would in any way affect Buyer after
the Closing Date.
(e) No present or former employee of the Business has any claim
against Seller (whether under federal, foreign or state Law, under any employee
agreement or otherwise), that would in any way affect Buyer after the Closing
Date, on account of or for (i) overtime pay, other than overtime pay for the
current payroll period; (ii) wages or salaries, other than wages or salaries for
the current payroll period; or (iii) vacations, time off or pay in lieu of
vacation or time off, other than vacation or time off (or pay in lieu thereof)
earned in the past twelve-month period.
(f) Schedule 3.19(e) sets forth Seller's unemployment
compensation contribution and solvency rates. Seller has made all required
payments to its unemployment compensation reserve account with the appropriate
governmental department under California law, such accounts have positive
balances and, except as set forth on Schedule 3.18(e) and to the Knowledge of
Seller, there are no current or former employees (i) receiving unemployment
compensation benefits which are being charged against such account, (ii) that
are eligible for such benefits, or (iii) that are claiming such benefits.
3.20 Litigation.
(a) There is not now, nor has there been, any (i) litigation;
(ii) charge, grievance or other labor-related claim, strikes, lockouts or union
organizing drives; (iii) product liability claim; (iv) Environmental Claim; (v)
arbitration; (vi) proceeding; (vii) governmental investigation or inquiry;
(viii) citation; (ix) action of any kind; or (x) order, notice of violation or
inspection report, pending, or, to the Knowledge of Seller, proposed or
threatened against Seller, relating to the Business or any of the Purchased
Assets, nor is there any basis known to Seller for any such action.
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(b) There are no actions, suits or proceedings pending, or, to
the Knowledge of Seller, proposed or threatened, by any person or governmental
agency which question the legality, validity, or propriety of the transactions
contemplated by this Agreement.
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3.21 Insurance.
(a) Schedule 3.21(a) hereto lists and describes all of Seller's
insurance policies covering any of the Purchased Assets or the Business. Said
policies are in full force and effect.
(b) Schedule 3.21(b) hereto lists and summarizes all claims in
excess of $10,000 under said insurance policies made or pending since January 1,
1995.
(c) During the last five (5) years, no lapse of insurance
coverage has occurred, and Seller has not had any application for such insurance
coverage denied or any insurance policy or coverage thereunder canceled,
withdrawn, or not renewed.
(d) The insurance policies, with respect to their amounts and
types of coverage, are adequate to insure fully against risks to which the
Purchased Assets and the Business are normally exposed.
3.22 Nondisclosure Agreements. Schedule 3.22 hereto lists all persons
who have executed nondisclosure or secrecy agreements relating to the Business
with Seller within the past two years. At the request of Buyer, Seller shall
diligently enforce said nondisclosure agreements for a five (5) year period
commencing on the Closing Date. Said enforcement shall be at the specific
request of Buyer and any legal fees or costs incurred as a result of said
request shall be borne solely by Buyer. Seller shall assign its rights under
said agreements to Buyer.
3.23 Products.
(a) Schedule 3.23 hereto lists all products of Seller relating to
the Business, including all products offered for sale since January 1, 1995.
Such products meet all product and/or process specifications (including product
testing procedures) that they purport or are required to meet.
(b) The Products of the Business satisfy all applicable United
States Environmental Protection Agency, United States Department of
Transportation, and all other governmental agency requirements, including
registration, notice, and label requirements, and Seller is current on all
applicable fees, renewals, reports, and other similar obligations.
3.24 Pricing. Schedule 3.24 describes all special (i.e., differs from
published price list) pricing and rebate arrangements and/or commitments of
Seller currently in effect which relate to the Business. Except as set forth on
Schedule 3.25, no customer of the Business will be entitled to or, to the
Knowledge of Seller will be expectant of, any rebates, or similar commitments
after the Closing Date.
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3.25 Distributors.
(a) Schedule 3.25 hereto: (i) lists all persons or entities that
purchased Seller's products as distributors during the last fiscal year of
Seller; (ii) lists all nonemployee persons or entities that serve as a
manufacturer's representative for Seller's products; and (iii) describes and
sets forth the terms of the arrangement or agreement (written or unwritten) with
each such distributor or representative.
(b) Except as set forth on Schedule 3.25, all contracts with
distributors and/or manufacturer's representatives of the Business can be
terminated by Seller upon sixty (60) days' notice, with or without cause,
without liability, penalty, or premium or any nature whatsoever.
3.26 Transactions with Related Parties. Seller is not a party to any
transaction or proposed transaction, including, without limitation, the leasing
of property, the purchase or sale of raw materials or finished goods, the
furnishing of services or the borrowing or lending of money with any director,
officer or stockholders of Seller, or any person or entity who is an affiliate
of such director, officer or stockholders of Seller. No director, officer or
stockholders of Seller, nor any of their affiliates, own or have any ownership
interest in any corporation or other entity which is in competition with the
Business.
3.27 Customers and Suppliers. Schedule 3.27 hereto sets forth a list
of Seller's ten (10) largest customers relating to the Business and Seller's ten
(10) largest suppliers relating to the Business during Seller's fiscal year
ended December 31, 1996 and and for the period from the beginning of the current
fiscal year to September 30, 1997 determined on the basis of the total dollar
amount of net sales to such customers and purchases from such suppliers.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that:
4.1 Organization. Buyer is a corporation duly and validly organized
and existing and in current status under the laws of the State of California and
has full corporate power to consummate the transactions contemplated in and
pursuant to this Agreement.
4.2 Authorization; Enforceability. The execution, delivery, and
performance of this Agreement, and all of the documents and instruments required
hereby, are within the corporate power of Buyer and have been duly authorized by
all necessary corporate action by Buyer. This Agreement is, and the other
documents and instruments required hereby will be, when executed and
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delivered by Buyer, the valid and binding obligations of Buyer, enforceable in
accordance with their respective terms.
4.3 No Violation or Conflict. The execution, delivery, and
performance of this Agreement (and the transactions contemplated herein) by
Buyer do not and will not conflict with or violate any Law, judgment, order,
decree, the Articles of Incorporation or Bylaws of Buyer, or any contract or
agreement to which Buyer is a party or by which Buyer is bound.
4.4 Brokers. Buyer shall pay and be responsible for any brokers',
finders', or similar fee it has incurred in connection with the transactions
contemplated by this Agreement.
ARTICLE 5
CERTAIN MATTERS PENDING THE CLOSING
From and after the date of this Agreement and until the Closing Date:
5.1 Full Access.
(a) Buyer and its authorized agents, officers, and
representatives shall have full and complete access to the Seller, Seller's key
personnel, and the Purchased Assets and Seller's books, records, facilities and
other documents and materials relating to Seller's assets, liabilities and
business during normal business hours in order to conduct such examination and
investigation of the Purchased Assets as it deems necessary, provided that such
examinations shall not unreasonably interfere with Seller' operations and
activities. Access to Seller's key personnel shall be determined by mutual
agreement of Buyer and Seller.
(b) If the transactions provided for herein are not consummated,
Buyer and its respective officers, agents, and representatives will hold in
strict confidence all information obtained from Seller and their officers,
agents, or representatives, and will promptly return to Seller, or destroy at
the request of Seller, all documents obtained from Seller and their officers,
agents, or representatives, and all copies of such documents made by Buyer and
its officers, agents, and representatives, excepting however, any such
information or documents which: (i) was, is, or becomes in the public domain;
(ii) was in fact lawfully known or lawfully furnished to Buyer prior to
disclosure to Buyer by Seller or their officers, agents, or representatives; or
(iii) is lawfully disclosed or lawfully furnished to Buyer by a third party
(other than officers, directors, employees, and agents of Seller) after
disclosure to Buyer by Seller.
5.2 Conduct of Business. With regard to the Business, Seller shall:
(a) carry on its business in the regular course and substantially
in the same manner as heretofore carried on by the Seller.
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(b) satisfy its obligations under all material agreements and
commitments;
(c) maintain its books of account and records in the usual,
regular and ordinary manner in accordance with generally accepted accounting
principles applied on a consistent basis;
(d) continue to withhold and deposit all payroll withholding
taxes as and when due; and
(e) maintain its properties in customary repair, order and
condition, reasonable wear and tear excepted.
Seller shall promptly advise the Buyer of any adverse change in
the financial condition, properties, business, results of operations or
prospects (financial or otherwise) of the Seller's business, including the
Purchased Assets and the Assumed Liabilities.
5.3 Prohibited Action. With regard to the Purchased Assets, except
with the prior consent of Buyer or as expressly contemplated by this Agreement,
Seller shall not:
(a) sell or otherwise dispose of, or grant any mortgage, pledge
security interest in, lien or encumbrance on, any of its assets or properties
other than in the ordinary course of business, or enter into any agreement with
respect thereto;
(b) enter into any employment contract or deferred compensation
arrangement with or grant any material increase in the compensation payable or
to become payable to any of its employees, make any material increase in any
bonus, insurance, or other employee benefit plan, payment, arrangement or policy
made to, for or with any such or employees, or institute any employee benefit
plan within the meaning of Section 3(3) of ERISA or institute any retirement
plan or policy for the issuance of severance pay; and
(c) waive any rights of substantial value in connection with its
operations or take any other material action which is not in the ordinary course
of business.
5.4 Preservation of Relationships. Seller will use its best efforts
to preserve its business relationships and will generally assist Buyer in
arranging for the orderly transfer and reception of the Purchased Assets from
Seller to Buyer.
5.5 No Default. The Seller shall not do any act or omit to do any
act, or permit any act or omission to act, which will cause a breach of any of
the Permits.
5.6 Publicity. All general notices, releases, statements and
communications to employees, suppliers, and customers of the Business and to the
general public and the press relating to the transactions covered by this
Agreement shall be made only at such times and in such manner as may be mutually
agreed upon by Buyer and Seller; provided however, that any party shall be
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entitled to make a public announcement of the proposed transaction if, in the
opinion of its counsel, such announcement is required to comply with any Law or
any rule or regulation of any securities exchange or securities quotation system
and such party shall, to the extent practicable, consult with the other parties
with respect to such announcement and give reasonable prior written notice of
its intent to issue such announcement.
5.7 Compliance with Laws. Seller shall comply in all material
respects with all applicable Laws and orders of any court or federal, state,
municipal, or other governmental department.
5.8 Exclusive Dealing. Seller shall not, and shall not permit its
officers, directors, or shareholders to, negotiate or have discussions with any
other party relating to a sale of any portion of the Business or the Purchased
Assets, without the prior written consent of Buyer.
5.9 Cooperation. Seller and Buyer shall:
(a) fully cooperate with each other and their respective legal
counsel and accountants in connection with any steps to be taken as part of
their obligations under this Agreement;
(b) use their reasonable efforts to satisfy those conditions set
forth in Articles VI and VII which are to be satisfied by them; and
(c) promptly give notice to the other party of the existence or
occurrence of any fact or condition which would make any representation or
warranty contained herein untrue in any material respect or which might
reasonably be expected to prevent the consummation of the transactions
contemplated hereby.
ARTICLE 6
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
Each and every obligation of Buyer to be performed on the Closing
Date shall be subject to the satisfaction prior to or at the Closing of the
following express conditions precedent (any or all of which Buyer may expressly
waive in writing):
6.1 Compliance with Agreement. Seller shall have performed and
complied with all of their obligations under this Agreement which are to be
performed or complied with by them prior to or on the Closing Date.
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6.2 Proceedings and Instruments Satisfactory. All proceedings,
corporate or other, to be taken in connection with the transactions contemplated
by this Agreement, and all documents incident thereto, shall be reasonably
satisfactory in form and substance to Buyer and Buyer's counsel, and Seller
shall have made available to Buyer for examination the originals or true and
correct copies of all documents which Buyer may reasonably request in connection
with the transactions contemplated by this Agreement.
6.3 Litigation. No investigation, suit, action, or other proceeding
shall be threatened or pending before any court or governmental agency that
seeks the restraint, prohibition, damages, or other relief in connection with
this Agreement or the consummation of the transactions contemplated by this
Agreement.
6.4 Representations and Warranties. The representations and
warranties made by Seller shall be true and correct in all material respects as
of the date hereof and as of the Closing Date with the same force and effect as
though said representations and warranties had been made at such times.
6.5 No Adverse Change. During the period from the date of this
Agreement to the Closing Date there shall not have occurred or been discovered,
and there shall not exist on the Closing Date, any material damage to the
Purchased Assets, or any condition or fact which is or may be materially adverse
to the Purchased Assets.
6.6 Due Diligence. During the period from the date of this Agreement
to the Closing Date, Buyer shall have completed, to its sole satisfaction, its
due diligence investigation of Seller and the Purchased Assets, and nothing
shall have come to its attention that materially and adversely affects the value
of the Purchased Assets.
6.7 Inventory Payment. Buyer shall have validated the list of
Inventory set forth by Seller on Schedule 1.31 hereto, and Buyer and Seller
shall have approved the written calculation of the Inventory Payment as set
forth in Section 2.3 hereto.
6.8 Accrued Employee Benefits. Seller shall have paid to Buyer the
Accrued Employee Benefits in immediately available funds.
6.9 Leases. Buyer shall have (a) entered into a lease of the Premises
with the current landlord of the Premises on terms that are satisfactory to
Buyer, and (b) received assignments of the real and personal property leases
listed on Schedule 1.4 hereto.
6.10 Deliveries at Closing. Seller shall have delivered to Buyer the
following documents, each properly executed and dated as of the Closing Date:
(a) the Xxxx of Sale;
(b) the Seller's Closing Certificate; and
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(c) the Escrow Instructions.
6.11 Other Deliveries. Seller shall have delivered to Buyer prior to
or at Closing:
(a) such certificates and documents of officers of Seller and
public officials as shall be reasonably requested by Buyer's counsel to
establish the existence and good standing of Seller and the due authorization of
this Agreement and the transactions contemplated by this Agreement by Seller;
(b) UCC terminations and releases for any security interests
encumbering the Purchased Assets (unless they relate to an Assumed Liability);
(c) legal title to and legal possession of the Purchased Assets;
and
(d) such deeds, bills of sale, endorsements, assignments and
other good and sufficient instruments of conveyance and transfer as shall be
effective to vest in Buyer free and clear title to the Purchased Assets as
contemplated by this Agreement.
6.12 Approvals and Consents.
(a) Seller shall have filed all notices and obtained, in writing,
and conveyed to Buyer such permissions, approvals, determinations, consents and
waivers, if any, as may be required by Law, regulatory authorities, the
Contracts, the Permits, secured creditors of Seller or from any third party
pursuant to any contract to which Seller is a party, in order to consummate the
transactions contemplated by this Agreement and to vest in Buyer good and
marketable title to the Purchased Assets as contemplated by this Agreement.
(b) Seller shall have obtained the necessary approvals of their
respective shareholders and Board of Directors to enter into this Agreement and
consummate the transactions contemplated by this Agreement.
(c) Buyer shall have filed all notices and obtained in writing,
and conveyed to Seller such permissions, approvals, determinations, consents and
waivers, if any, as may be required by law, regulatory authorities or from any
third party pursuant to any contract to which Buyer is a party, in order to
consummate the transactions contemplated by this Agreement.
(d) Buyer shall have obtained, at Buyer's expense, all approvals,
authorizations, and permits, governmental and otherwise, that it deems necessary
and appropriate to conduct the Business and use the Purchased Assets in
substantially the same manner in which the Business is currently conducted and
the Purchased Assets are used on and after the Closing Date.
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ARTICLE 7
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
Each and every obligation of Seller to be performed on the Closing
Date shall be subject to the satisfaction prior to or at the Closing of the
following express conditions precedent (any or all of which Seller may expressly
waive):
7.1 Compliance with Agreement. Buyer shall have performed and
complied with all of its obligations under this Agreement which are to be
performed or complied with by it prior to or on the Closing Date.
7.2 Proceedings and Instruments Satisfactory. All proceedings,
corporate or other, to be taken in connection with the transactions contemplated
by this Agreement by Buyer, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to Seller and Seller's counsel.
7.3 Litigation. No investigation, suit, action, or other proceeding
shall be threatened or pending before any court or governmental agency that
seeks the restraint, prohibition, damages, or other relief in connection with
this Agreement or the consummation of the transactions contemplated by this
Agreement.
7.4 Representations and Warranties. The representations and
warranties made by Buyer in this Agreement shall be true and correct in all
material respects as of the date hereof and as of the Closing Date with the same
force and effect as though such representations and warranties had been made at
such times.
7.5 Payment of Purchase Price. Buyer shall have paid to Seller the
Purchase Price as described in Section 2.2(a) of this Agreement.
7.6 Inventory Payment. Buyer and Seller shall have approved the
written calculation of the Inventory Payment as set forth in Section 2.3 hereto.
7.7 Deliveries at Closing. Buyer shall have delivered to Seller the
following documents, each properly executed and dated as of the Closing Date:
(a) the Xxxx of Sale;
(b) the Buyer's Closing Certificate; and
(c) the Escrow Instructions.
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7.8 Other Documents. Buyer shall have delivered to Seller such
certificates and documents of officers of Buyer and of public officials as shall
be reasonably requested by Seller's counsel to establish the existence and
current status of Buyer and the due authorization of this Agreement and the
transactions contemplated by this Agreement by Buyer.
7.9 Approvals and Consents. Buyer shall have obtained the necessary
approvals of its Board of Directors to enter into this Agreement and to
consummate the transactions contemplated by this Agreement.
ARTICLE 8
INDEMNITY; TERMINATION; MISCELLANEOUS
8.1 Seller's Indemnity.
(a) Seller shall indemnify and hold Buyer harmless from and
against and shall defend promptly Buyer from and reimburse Buyer for any and all
losses, damages, costs, expenses, liabilities, obligations, and claims of any
kind (including, without limitation, reasonable attorneys' fees and other costs
and expenses) (collectively, "Damages") which Buyer may at any time suffer or
incur, or become subject to, as a result of or in connection with:
(i) any breach of this Agreement or inaccuracy of any of the
representations and warranties made by Seller in or pursuant to this Agreement;
(ii) any failure by Seller to carry out, perform, satisfy, and
discharge any of its covenants, agreements, undertakings, liabilities, or
obligations under this Agreement or under any of the documents delivered by
Seller pursuant to this Agreement;
(iii) the Retained Liabilities;
(vi) the ownership, and/or operation of the Purchased Assets
or any property occupied or used by Seller in connection with the Business,
prior to the Closing;
(vii) noncompliance by Seller, the Business, the Purchased
Assets or any property occupied or used by Seller with any Law, required
specification, Environmental Law, or the infringement of property rights of
others;
(viii) any Environmental Claim arising out of conditions
existing as of or prior to the Closing at the Premises, former properties owned
or occupied by Seller, or present or former off-site disposal locations used by
Seller;
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(ix) any remedial action reasonably taken by Buyer to prevent
an Environmental Claim or to achieve compliance with any Environmental Laws with
which Seller is not in compliance on or prior to the Closing;
(x) any other Environmental Claim with respect to the conduct
of the Business as of or prior to the Closing;
(xi) noncompliance with any bulk transfer laws in connection
with the sale of the Purchased Assets, if applicable; and
(xii) any suit, action or other proceeding brought by any
governmental authority or person arising out of any of the matters referred to
in this section 8.1(a) of this Agreement.
(b) Buyer shall promptly notify Seller of any claim, demand,
action, or proceeding for which indemnification will be sought under this
section 8.1 of this Agreement and, if such claim, demand, action, or proceeding
is a third party claim, demand, action, or proceeding, Seller shall have the
right at their expense to assume the defense thereof using counsel reasonably
acceptable to Buyer. Buyer shall have the right to participate, at its own
expense, with respect to any such third party claim, demand, action, or
proceeding. In connection with any such third party claim, demand, action, or
proceeding, Buyer and Seller shall cooperate with each other and provide each
other with access to relevant books and records in their possession. No such
third party claim, demand, action, or proceeding shall be settled without the
prior written consent of Buyer and Seller. If a firm written offer is made to
settle any such third party claim, demand, action, or proceeding and Buyer
refuses to consent to such settlement, then: (i) Seller shall be excused from,
and Buyer shall be solely responsible for, all further defense of such third
party claim, demand, action, or proceeding; and (ii) the maximum liability of
Seller relating to such third party claim, demand, action, or proceeding shall
be the amount of the proposed settlement if the amount thereafter recovered from
Buyer on such third party claim, demand, action, or proceeding is greater than
the amount of the proposed settlement.
8.2 Buyer's Indemnity.
(a) Buyer shall indemnify and hold Seller harmless from and
against, and shall defend promptly Seller from and reimburse Seller for, any and
all Damages which Seller may at any time suffer or incur, or become subject to,
as a result of or in connection with:
(i) any breach or inaccuracy of any representations and
warranties made by Buyer in or pursuant to this Agreement;
(ii) any failure by Buyer to carry out, perform, satisfy and
discharge any of its covenants, agreements, undertakings, liabilities, or
obligations under this Agreement or under any of the documents and materials
delivered by Buyer pursuant to this Agreement;
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(iii) the ownership, and/or operation of the Purchased Assets
after the Closing;
(v) the Assumed Liabilities; and
(vi) any suit, action, or other proceeding brought by any
governmental authority or person arising out of any of the matters referred to
in Section 8.2 of this Agreement.
(b) Seller shall promptly notify Buyer of any claim, demand,
action, or proceeding for which indemnification will be sought under this
section 8.2 of this Agreement and, if such claim, demand, action, or proceeding
is a third party claim, demand, action, or proceeding, Buyer will have the right
at its expense to assume the defense thereof using counsel reasonably acceptable
to Seller. Seller shall have the right to participate, at its own expense, with
respect to any such third party claim, demand, action, or proceeding. In
connection with any such third party claim, demand, action, or proceeding, Buyer
and Seller shall cooperate with each other and provide each other with access to
relevant books and records in their possession. No such third party claim,
demand, action, or proceeding shall be settled without the prior written consent
of Seller and Buyer. If a firm written offer is made to settle any such third
party claim, demand, action, or proceeding and Seller refuse to consent to such
settlement, then: (i) Buyer shall be excused from, and Seller shall be solely
responsible for, all further defense of such third party claim, demand, action,
or proceeding; and (ii) the maximum liability of Buyer relating to such third
party claim, demand, action, or proceeding shall be the amount of the proposed
settlement if the amount thereafter recovered from Seller on such third party
claim, demand, action, or proceeding is greater than the amount of the proposed
settlement.
8.3 Termination. Time is of the essence. Unless otherwise agreed to
in writing, this Agreement may be terminated and the transactions contemplated
by this Agreement may be abandoned at any time as follows: (a) by mutual written
agreement of Seller and Buyer; (b) by Buyer (provided that it is not otherwise
in breach hereof) if any of the conditions set forth in Article VI of this
Agreement shall not have been fulfilled on or prior to the Closing Date; (c) by
Seller (provided that it is not otherwise in breach hereof) if any of the
conditions set forth in Article VII of this Agreement shall not have been
fulfilled on or prior to the Closing Date.
8.4 Rights on Termination; Waiver. If this Agreement is terminated
pursuant to Section 8.3 hereof, all further obligations of the parties under or
pursuant to this Agreement shall terminate without further liability of either
party to the other, except for Section 8.5 (breakup fee), except for violation
of Section 5.9 (cooperation), and except that Buyer's obligations contained in
Section 5.1(b) (confidentiality) of this Agreement shall survive any such
termination. If any of the conditions set forth in Article VI of this Agreement
have not been satisfied, Buyer may nevertheless elect to proceed with the
consummation of the transactions contemplated by this Agreement and, if any of
the conditions set forth in Article VII of this Agreement have not been
satisfied, Seller may nevertheless elect to proceed with the consummation of the
transactions contemplated by this Agreement.
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8.5 Breakup Fee.
(a) If this Agreement is terminated before the Closing hereunder and
Seller materially breaches Section 5.8 hereof, and if (a) Buyer shall not have
breached materially any provision of this Agreement, and (b) Buyer shall have
acted in good faith at all times in its negotiation and dealings with Seller and
shall have proceeded diligently toward the Closing hereunder, and (c) Seller
shall not have received or discovered any information about Buyer which could
reasonably be expected to have a material adverse effect on Seller's willingness
to proceed to the Closing hereunder, and (d) within six months after the date of
such termination or breach, Seller signs a binding definitive acquisition
agreement with an unrelated third party providing for the acquisition by such
unrelated third party of all or a majority of its stock, assets or Business,
through purchase, merger, consolidation or otherwise, and such acquisition is
ultimately consummated by such unrelated third party pursuant to such
acquisition agreement and results in a change in control of Seller, then,
immediately upon the closing of such acquisition, Seller shall pay Buyer the sum
of $125,000. Because of the difficulty of determining actual damages, in any
such case, such $125,000 will constitute liquidated damages and will serve as
the sole remedy for Buyer.
(b) If this Agreement is terminated before the Closing hereunder, and
if (a) Seller shall not have breached materially any provision of this
Agreement, and (b) Seller shall have acted in good faith at all times in its
negotiation and dealings with Buyer and shall have proceeded diligently toward
the Closing hereunder, and (c) Buyer shall not have received or discovered any
information about Seller which could reasonably be expected to have a material
adverse effect on Buyer's willingness to proceed to the Closing hereunder, Buyer
will pay Seller the sum of $125,000. Because of the difficulty of determining
actual damages, in any such case, such $125,000 will constitute liquidated
damages and will serve as the sole remedy for Seller.
8.6 Further Assurances. From time to time after the Closing Date,
upon the request of Buyer, and without further cost or expense to Buyer, Seller
shall execute and deliver, and cause to be executed and delivered, such further
documents, including but not limited to instruments of conveyance, assignment,
and transfer and securities law filings and take such further action as Buyer
may reasonably request in order more effectively to sell, assign, convey,
transfer, reduce to possession, and record title to any of the Purchased Assets,
to assign and transfer the Permits to Buyer and to comply with any federal or
state securities laws. Seller agree to cooperate with Buyer in all reasonable
respects to assure to Buyer the continued title to and possession of the
Purchased Assets in the condition and manner contemplated by this Agreement.
8.7 Survival of Representations and Warranties. All representations
and warranties of Buyer and Seller contained in this Agreement or made pursuant
to this Agreement shall survive the Closing Date and the consummation of the
transactions contemplated by this Agreement.
8.8 Entire Agreement; Amendment. This Agreement and the documents
referred to herein and to be delivered pursuant hereto constitute the entire
agreement between the parties pertaining to the subject matter hereof, and
supersede all prior and contemporaneous agreements,
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understandings, negotiations, and discussions of the parties, whether oral or
written, and there are no warranties, representations, or other agreements
between the parties or on which any of the parties have relied in connection
with the subject matter hereof, except as specifically set forth in this
Agreement. No amendment, supplement, modification, waiver, or termination of
this Agreement shall be binding unless executed in writing by the party to be
bound thereby. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision of this Agreement,
whether or not similar, nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
8.9 Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, each of the parties hereto shall pay the fees and
expenses incurred by it, including the fees of respective counsel, accountants,
brokers, investment bankers, and other experts incident to the negotiation and
preparation of this Agreement and consummation of the transactions contemplated
by this Agreement.
8.10 Governing Law. This Agreement shall be construed and interpreted
according to the laws of the State of Arizona.
8.11 Assignment. This Agreement shall not be assigned by Seller or
Buyer without the prior written consent of the other party; provided, however,
that Buyer shall have the right to assign all or any portion of its rights under
this Agreement or to delegate all or any portion of its obligations under this
Agreement, in each case with reference to all or any portion of the Purchased
Assets, to a subsidiary or affiliate of Buyer without Seller's consent. Any such
assignment shall not release Buyer from its obligations herein.
8.12 Notices. All communications or notices required or permitted by
this Agreement shall be in writing and shall be deemed to have been given at the
earlier of the date when actually delivered to an officer of a party or the
second business day after having deposited the notice or communication in the
United States mail, certified or registered mail, postage prepaid, return
receipt requested, or upon delivery by courier or facsimile with receipt of
confirmation, and addressed as follows, unless and until any of such parties
notifies the others in accordance with this section of a change of address:
If to Seller: Flexible Circuits Technology
0000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxx,
President
Fax #: 000-000-0000
If to Buyer: CCIR of California Corp.
0000 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx 000000
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Attention: Xxxxxx X. Xxxxxxxx,
Vice President, Secretary and Treasurer
Fax #: 000-000-0000
with a copy to: Xxxxxxx & Xxxxx
Xxx Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: P. Xxxxxx Xxxx, Esq.
Fax #: 000-000-0000
8.13 Counterparts; Headings. This Agreement may be executed in
several counterparts, each of which shall be deemed an original, but such
counterparts shall together constitute but one and the same Agreement. The Table
of Contents and Article and Section headings in this Agreement are inserted for
convenience of reference only and shall not constitute a part of this Agreement.
8.14 Income Tax Position. Neither Buyer nor Seller shall take a
position for income tax purposes which is inconsistent with this Agreement.
8.15 Taxes and Fees. Buyer shall pay all transfer and sales taxes of
any kind which arise as a result of the conveyance of the Purchased Assets to
Buyer pursuant to this Agreement. Buyer and Seller shall each pay fifty percent
of all use or other taxes and all escrow, documentary, stamp, recording and
filing taxes or fees which arise as a result of the conveyance of the Purchased
Assets to Buyer pursuant to this Agreement.
8.16 Interpretation. Unless the context requires otherwise, all words
used in this Agreement in the singular number shall extend to and include the
plural, all words in the plural number shall extend to and include the singular,
and all words in any gender shall extend to and include all genders.
8.17 Severability. If any provision, clause, or part of this
Agreement, or the application thereof under certain circumstances, is held
invalid, the remainder of this Agreement, or the application of such provision,
clause, or part under other circumstances, shall not be affected thereby.
8.18 No Reliance. Except for any assignees permitted by section 1.10
of this Agreement: (a) no third party is entitled to rely on any of the
representations, warranties, and agreements of Buyer or Seller contained in this
Agreement; and (b) Buyer and Seller assume no liability to any third party
because of any such reliance.
8.19 Bulk Sales Compliance. Buyer hereby waives compliance by Seller
with the provisions of the bulk sales law of any state, and Seller warrants and
agrees to pay and discharge when due all claims of creditors which could be
asserted against Buyer by reason of such non-compliance. Seller hereby
indemnifies and agree to hold Buyer harmless from, against and in respect of
(and shall on demand reimburse Buyer for) any loss, liability, cost or expense,
including,
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without limitation, attorneys' fees, suffered or incurred by Buyer by reason of
the failure of Seller to pay or discharge such claims.
8.20 Legal Proceedings. If a dispute arises between the parties
relating to this Agreement or any of the other agreements to be delivered
hereunder, the parties agree to use the following procedure prior to either
party pursuing other available remedies:
(a) A meeting shall be held promptly between the parties,
attended by individuals with decision-making authority regarding the dispute, to
attempt in good faith to negotiate a resolution of the dispute.
(b) If, within 30 days after such meeting, the parties have not
succeeded in negotiating a resolution of the dispute, they will jointly appoint
a mutually acceptable neutral person not affiliated with either of the parties
(the "neutral"), seeking assistance in such regard from the Center for Public
Resources if they have been unable to agree upon such appointment within 40 days
from the initial meeting. The fees of the neutral shall be shared equally by the
parties.
(c) In consultation with the neutral, the parties will select or
devise an alternative dispute resolution procedure ("ADR") by which they will
attempt to resolve the dispute, and a time and place for the ADR to be held,
with the neutral making the decision as to the procedure, and/or place and time
(but unless circumstances require otherwise, not later than 60 days after
selection of the neutral) if the parties have been unable to agree on any of
such matters within 20 days after initial consultation with the neutral.
(d) The parties agree to participate in good faith in the ADR to
its conclusion as designated by the neutral. If the parties are not successful
in resolving the dispute through the ADR, then the parties may agree to submit
the matter to binding arbitration or a private adjudicated resolution through
the appropriate court.
(e) In the event legal proceedings through the courts are
commenced to enforce the parties' respective rights and obligations herein, the
prevailing party shall be entitled to reimbursement for its related costs and
expenses, including reasonable legal fees, incurred with respect to said legal
proceedings.
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IN WITNESS WHEREOF, the parties have caused this Asset Purchase
Agreement to be duly executed as of the day and year first above written.
CCIR OF CALIFORNIA CORP.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Xxxxxx X. Xxxxxxxx, Vice President,
Secretary and Treasurer
FLEXIBLE CIRCUITS TECHNOLOGY
By: /s/ Xxxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Its: President
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EXHIBITS
Exhibit Description
------- -----------
1 Xxxx of Sale
2 Buyer's Closing Certificate
3 Seller's Closing Certificate
4 Escrow Instructions
5 Payment of Purchase Price
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SCHEDULES
Schedule No. Description
------------ -----------
1.4 Assumed Liabilities
1.13 Contracts
1.27 Fixed Assets
1.31 Inventory
1.36 Permits
1.42 Retained Accounts
2.4 Allocation of Purchase Price
3.10(a) Intangible Assets
3.10(b) Intangible Asset Licenses
3.19(a) Employees
3.19(b) Employee Benefit Plans
3.19(e) Unemployment Compensation
3.21(a) Insurance Policies
3.21(b) Insurance Claims
3.22 Nondisclosure Agreements
3.23 Products
3.24 Pricing
3.25 Distributors
3.26 Customers and Suppliers
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EXHIBIT 1
XXXX OF SALE AND ASSUMPTION OF LIABILITIES
THIS XXXX OF SALE AND ASSUMPTION OF LIABILITIES is made as of November
__, 1997, by Flexible Circuits Technology dba Dynaflex Technology, a California
corporation ("Seller"), and CCIR of California Corp., a California corporation
("Buyer").
WHEREAS, pursuant to the Asset Purchase Agreement dated as of November
___, 1997 (the "Purchase Agreement") by and between Seller and Buyer, Seller
desires to sell and assign to Buyer and Buyer wishes to purchase, assume and
accept from Seller, for the consideration and upon the terms and conditions set
forth in the Purchase Agreement, certain of the assets, properties, rights and
obligations of Seller. Terms used but not defined herein shall have the meanings
given to such terms in the Purchase Agreement.
NOW, THEREFORE, pursuant to the Purchase Agreement and in consideration
of the premises, and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed that:
1. Conveyance. Seller does hereby sell, assign, convey and deliver to
Buyer those assets and properties described in the Purchase Agreement as the
Purchased Assets, which include the Seller's right, title and interest in and to
the following:
(a) the Purchased Accounts;
(b) the Contracts;
(c) the Fixed Assets;
(d) the Intangible Assets;
(e) the Inventory;
(f) the Permits; and
(g) the Records.
2. Exception. It is hereby understood and agreed that Seller does not
sell, convey, transfer, assign or deliver to Buyer any of the Retained Assets or
Retained Liabilities.
3. Representation and Warranty. Seller represents and warrants that at
the time of execution and delivery of this Xxxx of Sale, Seller owns good and
marketable title to, and the requisite power to sell, assign, transfer, convey
and deliver to Buyer, the Purchased Assets free and clear all liens of any
nature whatsoever, and is hereby conveying the same to Buyer.
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4. Assignment of Liabilities. Seller hereby assigns to Buyer the Assumed
Liabilities.
5. Acceptance and Assumption. Buyer hereby accepts the foregoing sale and
assignment, and hereby agrees to assume and to perform in accordance with and be
bound by all of the terms and conditions under the Assumed Liabilities.
6. Power of Attorney. Seller hereby appoints Buyer, its successors or
assigns, the true and lawful attorney of Seller with full power of substitution,
for the benefit and at the expense of Buyer and provided Seller does not incur
any liability, actual or contingent, in connection therewith, to institute and
prosecute all proceedings which Buyer may deem proper in order to collect,
assert or enforce any claim, right or title of any kind in or to any of the
Purchased Assets or Assumed Liabilities, to defend or compromise any and all
actions, suits or proceedings in respect of any of the Purchased Assets or
Assumed Liabilities, and to do all such acts and things in relation thereto as
Buyer shall deem advisable, all subject to the requirements of the Purchase
Agreement. Seller acknowledges that the foregoing power shall be irrevocable by
Seller in any manner or for any reason. Buyer shall be entitled to retain for
its own account any amounts collected pursuant to the foregoing power, including
any amounts payable as interest in respect thereto.
7. Defined Terms. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings given them in the Purchase Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Xxxx of Sale to
be executed in their names as of the date first above written.
FLEXIBLE CIRCUITS TECHNOLOGY
By:________________________________
Name:
Title:
CCIR OF CALIFORNIA CORP.
By:________________________________
Xxxxxx X. Xxxxxxxx, Vice President,
Secretary and Treasurer
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EXHIBIT 2
BUYER'S CLOSING CERTIFICATE
I, Xxxxxx X. Xxxxxxxx, do hereby certify that:
1. I am the duly elected, qualified and acting Vice President, Secretary
and Treasurer of CCIR of California Corp., a California corporation ("Buyer").
2. I am familiar with the terms of the Asset Purchase Agreement dated as
of November __, 1997 (the "Purchase Agreement") by and between Buyer and
Flexible Circuits Technology dba Dynaflex Technology, a California corporation.
3. Buyer has performed and complied with all of its obligations under the
Purchase Agreement in all material respects which are to be performed or
complied with by it prior to or on the date hereof.
4. The representations and warranties made by Buyer in the Purchase
Agreement are true and correct as of the date hereof with the same force and
effect as though said representations and warranties had been made on the date
hereof.
IN WITNESS WHEREOF, I have executed this Certificate in my official
capacity this ___ day of November, 1997.
CCIR OF CALIFORNIA CORP.
By:___________________________
Xxxxxx X. Xxxxxxxx, Vice President,
Secretary and Treasurer
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EXHIBIT 3
SELLER'S CLOSING CERTIFICATE
I, Xxxxxxxx X. Xxxxxxxx, do hereby certify that:
1. I am the duly elected, qualified and acting President of Flexible
Circuits Technology dba Dynaflex Technology, a California corporation
("Seller").
2. I am familiar with the terms of the Purchase and Sale Agreement dated
as of November ___, 1997 (the "Purchase Agreement") by and among Seller and CCIR
of California Corp., a California corporation.
3. Seller has performed and complied with all of its respective
obligations under the Purchase Agreement in all material respects which are to
be performed or complied with by it prior to or on the date hereof.
4. Subject to the Schedules, the representations and warranties made by
Seller in the Purchase Agreement are true and correct as of the date hereof with
the same force and effect as though said representations and warranties had been
made on the date hereof.
IN WITNESS WHEREOF, I have executed this Certificate in my official
capacity this ___ day of November, 1997.
FLEXIBLE CIRCUITS TECHNOLOGY
By:____________________________
Xxxxxxxx X. Xxxxxxxx
President
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EXHIBIT 4
ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement") is made this day of November,
1997, by and among FLEXIBLE CIRCUITS TECHNOLOGY dba Dynaflex Technology, a
California corporation ("Seller"), CCIR OF CALIFORNIA CORP., a California
corporation ("Buyer") and ARIZONA ESCROW & FINANCIAL CORPORATION, an Arizona
corporation ("Escrow Agent").
WHEREAS, Seller and Buyer have entered into an Asset Purchase Agreement
(as the same may hereafter be amended, modified or supplemented from time to
time, the "Purchase Agreement"), dated as of November , 1997, providing for
the purchase of certain assets of Seller by Buyer.
WHEREAS, pursuant to Section 1.16 of the Purchase Agreement, Buyer is
obligated to deposit Five Hundred Thousand Dollars ($500,000.00) of the Purchase
Price in cash or immediately available funds into an Escrow Account which shall
be disbursed according to the provisions of this Agreement (the "Escrow
Deposit").
WHEREAS, Seller and Buyer desire for the Escrow Deposit to be received,
held and disposed of by Escrow Agent in accordance with the terms and conditions
expressed herein; and
WHEREAS, the execution and delivery of this Agreement is a condition
precedent to the obligation of Buyer to consummate the transactions contemplated
by the Purchase Agreement.
NOW, THEREFORE, as an inducement to Buyer to consummate the transactions
contemplated by the Purchase Agreement, and in consideration of these premises
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by the parties hereto, the parties agree as follows:
ARTICLE I
ESCROW DEPOSIT
1.0. Definitions. Capitalized terms used herein which are defined in the
Purchase Agreement shall have the same meanings herein as given to them therein,
unless otherwise defined herein or in the recitals hereto.
1.1. Appointment of Escrow Agent; Escrow Instructions. Buyer and Seller
hereby appoint Escrow Agent as the "Escrow Agent" contemplated by the Purchase
Agreement and Escrow Agent hereby accepts such appointment and agrees to act in
such capacity in accordance with the terms hereof. This Agreement is the "Escrow
Instructions" contemplated under the Purchase Agreement.
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1.2. Escrow Deposit. Concurrently with the execution hereof, Buyer has
deposited the Escrow Deposit with Escrow Agent to be held subject to the terms
and conditions hereof.
1.3. Rights to Escrow Deposit. Except as expressly provided herein,
neither Buyer nor Seller shall have any right, title or interest in or
possession of all or any portion of the Escrow Deposit. Specifically and without
limiting the generality of the foregoing, (i) neither Buyer nor Seller shall
have the ability to pledge, convey, hypothecate or grant a security interest in
the Escrow Deposit unless and until such Escrow Deposit have been released to
such party in accordance with Article II below and (ii) until released pursuant
to Article II below, Escrow Agent shall be in sole possession of the Escrow
Deposit and will not act or be deemed to act as custodian for any party for
purposes of perfecting a security interest therein. Accordingly, no person
(including any creditor of Buyer or of Seller) shall have any right to have or
to hold the Escrow Deposit as collateral for any obligation and shall not be
able to obtain a security interest in the Escrow Deposit.
1.4. Investment. Escrow Agent shall invest the Escrow Deposit in such
manner as Seller and Buyer from time to time jointly may instruct. Initially,
the Escrow Deposit shall be invested in a money market account. Escrow Agent
shall only be required to invest the Escrow Deposit in accounts or securities
that are FDIC insured and located in the State of Arizona. All interest earnings
shall accrue to the benefit of Seller and Seller shall bear the risk of any loss
of principal from the Escrow Deposit (such that any right or claim remaining
after satisfying the Escrow Deposit, which Buyer could have asserted against any
principal portion of the Escrow Deposit lost through investments, may be
asserted against Seller; provided, however, that any income tax payable on any
earnings from the investment of the Escrow Deposit shall be paid by Seller.
ARTICLE II
RELEASE OF ESCROW DEPOSIT
2.1. Disbursements. Escrow Agent shall release the Escrow Deposit only as
expressly provided in this Agreement.
2.2. Payment of Escrow Deposit. Unless a written claim is filed against
the Escrow Deposit by Buyer, 180 days after the date the Transaction closes,
Escrow Agent shall deliver to Seller the Escrow Deposit, together with any
interest earned thereon, free and clear of the escrow created by this Agreement.
Buyer shall provide such written claim to Escrow Agent if, during such 180 day
period, (a) Xxxxxxx X. Xxxxxxxx, has not provided services to Buyer sufficient
to ensure the smooth transition of the operation of the Business to Buyer, or
(b) any of the Seller's accounts receivable purchased by Buyer pursuant to the
Purchase Agreement (the "Purchased Accounts") have not yet been paid.
If Buyer in its sole discretion does not feel that Xxxxxxxx X. Xxxxxxxx
has provided services to Buyer sufficient to ensure that a smooth transition of
the operation of the Business to Buyer has
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occurred, then Buyer, 180 days after the date the Transaction closes, shall
deliver to Escrow Agent and Seller, in writing, a request for the release of the
Escrow Deposit to Buyer detailing the insufficiencies of Seller to effect the
smooth transition of the operation of the Business. Seller shall then have 5
days in which to answer Buyer's claim to the Escrow Deposit in writing to Escrow
Agent and Buyer.
If any of the Purchased Accounts have not yet been paid, then Buyer, 180
days after the Transaction closes, shall deliver to Escrow Agent and Seller, in
writing, a request for the release to Buyer of that portion of the Escrow
Deposit equaling the unpaid Purchased Accounts, with the balance of the Escrow
Deposit, if any, to be released to Seller. Seller shall then have 5 days to
answer Buyer's claim to the Escrow Deposit in writing to Escrow Agent and Buyer.
If a dispute arises between the parties relating to the release of the
Escrow Deposit under this Agreement, the parties agree to use the following
procedure prior to either party pursuing other available remedies:
(a) A meeting shall be held promptly between the parties, attended by
individuals with decision-making authority regarding the dispute, to attempt in
good faith to negotiate a resolution of the dispute.
(b) If, within 30 days after such meeting, the parties have not
succeeded in negotiating a resolution of the dispute, they will jointly appoint
a mutually acceptable neutral person not affiliated with either of the parties
(the "neutral"), seeking assistance in such regard from the Center for Public
Resources if they have been unable to agree upon such appointment within 40 days
from the initial meeting. The fees of the neutral shall be shared equally by the
parties.
(c) In consultation with the neutral, the parties will select or
devise an alternative dispute resolution procedure ("ADR") by which they will
attempt to resolve the dispute, and a time and place for the ADR to be held,
with the neutral making the decision as to the procedure, and/or place and time
(but unless circumstances require otherwise, not later than 60 days after
selection of the neutral) if the parties have been unable to agree on any of
such matters within 20 days after initial consultation with the neutral.
(d) The parties agree to participate in good faith in the ADR to its
conclusion as designated by the neutral. If the parties are not successful in
resolving the dispute through the ADR, then the parties may agree to submit the
matter to binding arbitration or a private adjudicated resolution through the
appropriate court.
(e) In the event legal proceedings through the courts are commenced
to enforce the parties' respective rights and obligations herein, the prevailing
party shall be entitled to reimbursement for its related costs and expenses,
including reasonable legal fees, incurred with respect to said legal
proceedings.
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ARTICLE III
ESCROW AGENT
3.1. Compensation. Contemporaneously with the execution of this
Agreement, Buyer and Seller agree to pay to Escrow Agent fees and expenses as
set forth on Schedule "A" attached hereto, one-half by Seller and one-half by
Buyer.
3.2. Duties and Responsibilities. Escrow Agent shall have no duties or
responsibilities, except those expressly set forth herein. All parties
acknowledge and agree that Escrow Agent is acting solely and exclusively as a
depository hereunder. Escrow Agent may rely on any notice, instruction,
agreement or other instrument which it believes to be genuine and to have been
signed or presented by the parties hereto. Escrow Agent shall be deemed to have
no notice of, or duties with respect to, any agreement or arrangements with
respect to the Escrow Deposit, other than as set forth in this Agreement.
3.3. Ability to Consult Counsel. Escrow Agent may confer with legal
counsel in the event of any dispute or questions as to the construction of any
of the provisions hereof, or its duties hereunder, and it shall incur no
liability and it shall be fully protected in acting in accordance with the
opinions of such counsel.
3.4. Right to Interplead. In the event of any conflicting or inconsistent
claims or demands being made in connection with the subject matter of this
Agreement, or in the event that Escrow Agent is in doubt as to what action it
should take hereunder, Escrow Agent may, at its option, refuse to comply with
any claims or demands on it, or refuse to take any other action hereunder so
long as such disagreement continues or such doubt exists, and in any such event,
Escrow Agent shall not be or become liable in any way or to any person for its
failure or refusal to act, and Escrow Agent shall be entitled to continue to
refrain from acting until (i) the rights of all parties have been fully and
finally adjudicated by a court of competent jurisdiction, or (ii) all
differences shall have been settled and all doubt resolved by agreement among
Buyer and Seller, and Escrow Agent shall have been notified thereof in writing.
In addition to the foregoing rights, in the event Escrow Agent has any doubt as
to the course of action it should take under this Agreement, Escrow Agent is
hereby authorized to petition any Superior Court of Maricopa County, Arizona or
the United States District Court of Arizona for instructions or to interplead
the funds or assets so held into such court. The parties agree to the
jurisdiction of either of said courts over their persons as well as the Escrow
Deposit, waive personal service of process, and agree that service of process by
certified or registered mail, return receipt requested, to the address set forth
below each party's signature to this Agreement shall constitute adequate
service. Buyer and Seller hereby agree to indemnify and hold Escrow Agent
harmless from any liability or losses occasioned thereby and to pay any and all
of its fees, costs, expenses, and reasonable counsel fees and expenses incurred
in any such action and agree that, on such petition or interpleader action,
Escrow Agent, its servants, agents, employees or officers will be relieved of
further liability.
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3.5. Indemnification. Notwithstanding anything to the contrary in the
foregoing, Seller and Buyer, jointly and severally, shall hold Escrow Agent
harmless from any and all costs, liabilities, losses, damages, claims, expenses
(including reasonable counsel fees and expenses), regardless of nature, arising
out of or because of this Agreement and exonerate Escrow Agent from any
liability in connection with this Agreement, except such as may arise because of
Escrow Agent's negligence or willful misconduct in performing its duties as
Escrow Agent.
3.6. Successor. Escrow Agent, or any successor, may resign at any time
upon giving written notice to Seller and Buyer thirty (30) days before such
resignation shall take effect. In the event Escrow Agent shall resign or be
unable to serve, it shall be succeeded by such bank or trust company as Seller
and Buyer shall mutually appoint. If no appointment is made, Escrow Agent may
deliver the assets held by it to any court of competent jurisdiction in Maricopa
County, Arizona. The resigning Escrow Agent shall transfer to its successor or
the court all monies, securities, and investments then held subject to the
escrow and all pending notices, instructions, and directions then in its
possession, and shall thereupon be discharged, and the successor shall thereupon
succeed to all the rights, powers and duties and shall assume all the
obligations of the resigning Escrow Agent. A termination under this paragraph
shall in no way discharge Section 3.1 or Section 3.5 affecting reimbursement of
expenses, indemnity and fees.
3.7. Collected Funds. It is strictly understood that Escrow Agent has no
duty to disburse any funds to any party until such funds have been collected by
Escrow Agent and those funds are available in accordance with normal banking
procedures and/or policy.
ARTICLE IV
TERMINATION
4.1 Termination. This Agreement shall be terminated upon the earlier of
(a) the release of the full amount of the Escrow Deposit, or (b) by written
mutual consent of the Seller Buyer. This Agreement shall terminate, and Escrow
Agent shall be discharged of all responsibility hereunder, at such time as
Escrow Agent shall have completed its duties hereunder, provided, however,
Escrow Agent's rights to indemnity and to receive payment of its fees and
expenses shall survive any termination of this Agreement.
ARTICLE V
OTHER PROVISIONS
5.1. Notices. Any notice, demand, request or other document required or
permitted to be given or delivered under the provisions of this Agreement shall
in every case be in writing and be deemed properly served (a) upon personal
delivery, (b) on the business day on which a telecopy is sent to another party
or if sent on a non-business day, the next business day after such telecopy is
sent, (c) one (1) business day after delivery to a recognized overnight courier
service to the addresses as set forth below or at such other addresses as may be
furnished in writing, or (d) four business days
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after having been deposited in the United States Mail, if sent by certified or
registered mail, return receipt requested, postage paid.
(i) If to Seller:
Flexible Circuits Technology
0000 Xxxxxxxx Xxxx.
Xxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxxxxx
Facsimile No.: (000) 000-0000
Phone No.: (000) 000-0000
(ii) If to Escrow Agent:
Arizona Escrow & Financial Corporation
0000 Xxxxx 00xx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: X. X. Xxxxxx
Facsimile No.: (000) 000-0000
Phone No.: (000) 000-0000
(iii) If to Buyer:
CCIR of California Corp.
0000 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attn.: Xxxxxx X. Xxxxxxxx,
Vice President, Secretary and Treasurer
Facsimile No.: (000) 000-0000
Phone No.: (000) 000-0000
With a copy to:
P. Xxxxxx Xxxx, Esq.
Xxxxxxx & Xxxxx
Xxx Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Phone No.: (000) 000-0000
5.2. Benefit and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, but shall not be assignable or delegable by any party without
the prior written consent of the other party.
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5.3. Entire Agreement; Amendment; Conflict with Purchase Agreement. This
Agreement supersedes any other agreement, whether written or oral, that may have
been made or entered into by Buyer or Seller (or by any director, officer or
representative thereof) relating to the matters contemplated hereby. Except for
the Purchase Agreement, this Agreement constitutes the entire agreement by and
among the parties with respect to the Escrow Deposit. This Agreement may be
amended or supplemented at any time by additional written agreements executed by
all parties hereto. Notwithstanding anything to the contrary contained herein,
in the event of any conflict between this Agreement and the Purchase Agreement,
the terms, conditions and provisions of the Purchase Agreement shall control.
5.4. Titles and Headings; References to Sections. Titles and headings to
sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement. References to a "section" when used without further attribution shall
refer to the particular section of this Agreement.
5.5. Governing Law. The validity, performance and enforcement of this
Agreement shall be governed by the laws of the State of Arizona, without giving
effect to the principles of conflicts of law thereof.
5.6. Execution in Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same Agreement.
5.7 Additional Documents. Buyer and Seller agree, if and when necessary,
to execute Escrow Agent's standard forms.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
SELLER: FLEXIBLE CIRCUITS TECHNOLOGY dba Dynaflex
Technology, a California corporation
By:
Name:
Title:
BUYER: CCIR OF CALIFORNIA CORP., a California corporation
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By:
Xxxxxx X. Xxxxxxxx, Vice President,
Secretary and Treasurer
ESCROW AGENT: ARIZONA ESCROW & FINANCIAL CORPORATION,
an Arizona corporation
By:
Name:
Title:
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