ASSET PURCHASE AGREEMENT
among
XXXXXX, INC.
XXXXXX TECHNICAL SERVICES, INC.
SPECIALIZED TECHNOLOGY RESOURCES, INC.
and
STR ACQUISITION SUB, INC.
Dated as of August 27, 2002
TABLE OF CONTENTS
Page
----
SECTION 1 SALE OF ASSETS AND ASSUMPTION OF LIABILITIES.....................6
1.1. Sale of Assets...................................................6
1.2. Purchased Assets.................................................6
1.3. Excluded Assets..................................................8
1.4. Assumed Liabilities..............................................9
1.5. Excluded Liabilities............................................10
SECTION 2 PURCHASE PRICE..................................................10
2.1. Purchase Price..................................................10
2.2. Payment of Purchase Price.......................................11
2.3. Post-Closing Adjustment to Purchase Price.......................11
2.4. Wal-Mart Receivable.............................................12
SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLER........................13
3.1. Corporate Existence.............................................13
3.2. Corporate Authority.............................................13
3.3. Governmental Approvals; Consents................................13
3.4. Financial Statements............................................14
3.5. Absence of Changes..............................................14
3.6. Real and Personal Properties....................................14
3.7. Contracts.......................................................15
3.8. Litigation, Agencies............................................15
3.9. Intangible Property Rights......................................15
3.10. Insurance.......................................................16
3.11. Tax Matters.....................................................16
3.12. Employment and Benefits.........................................16
3.13. Compliance with Laws............................................17
3.14. Finders; Brokers; Consultants...................................18
3.15. Environmental Matters...........................................18
3.16. Accounts Receivable.............................................19
3.17. Accounts Payable................................................19
3.18. Sufficiency of Assets...........................................19
3.19. Condition of Facilities.........................................19
3.20. No Other Representations or Warranties..........................19
3.21. Expiration of Representations and Warranties....................20
SECTION 4 REPRESENTATIONS OF BUYER........................................20
4.1. Corporate Existence.............................................20
4.2. Corporate Authority.............................................20
4.3. Governmental Approvals; Consents................................21
4.4. Finders; Brokers; Consultants...................................21
4.5. Financial Capacity..............................................21
4.6. No Other Representations or Warranties..........................21
(i)
4.7. Investigation...................................................21
4.8. Expiration of Representations and Warranties....................21
SECTION 5 AGREEMENTS OF BUYER AND SELLER..................................22
5.1. Operation of the Business.......................................22
5.2. Investigation of Business.......................................23
5.3. Mutual Cooperation; No Inconsistent Action......................23
5.4. Public Disclosures..............................................24
5.5. Access to Records and Personnel.................................24
5.6. Employee Relations and Benefits.................................24
5.7. "As Is" Condition...............................................27
5.8. Confidentiality Letter..........................................28
5.9. Financing.......................................................28
5.10. Administration of Accounts; Customer Inquiries..................28
5.11. Assignment of Contracts.........................................28
5.12. Outstanding Checks..............................................28
5.13. Named Insured...................................................29
5.14. Use of Name.....................................................29
5.15. Purchase Price Allocation.......................................29
5.16. Buyer's Operation of the Business...............................29
SECTION 6 CONDITIONS......................................................29
6.1. Conditions Precedent to Obligations of Buyer and Seller.........29
6.2. Conditions Precedent to Obligation of Seller....................30
6.3. Conditions Precedent to Obligation of Buyer.....................31
SECTION 7 CLOSING.........................................................32
7.1. Closing Date....................................................32
7.2. Buyer Deliveries................................................32
7.3. Seller Deliveries...............................................32
SECTION 8 INDEMNIFICATION.................................................32
8.1. Indemnification by Xxxxxx and Seller............................32
8.2. Indemnification by STR and Buyer................................34
8.3. Indemnification Calculations....................................35
SECTION 9 TERMINATION.....................................................35
9.1. Termination Events..............................................35
9.2. Effect of Termination...........................................36
SECTION 10 ALTERNATIVE DISPUTE RESOLUTION..................................36
SECTION 11 MISCELLANEOUS...................................................36
11.1. Notices.........................................................36
11.2. Bulk Transfers..................................................38
11.3. Transfer Taxes..................................................38
11.4. Further Assurances; Asset Returns...............................38
11.5. Other Covenants.................................................38
(ii)
11.6. Expenses........................................................39
11.7. Non-Assignability...............................................39
11.8. Amendment; Waiver...............................................39
11.9. Representations and Warranties; Schedules and Exhibits..........39
11.10. Third Parties...................................................40
11.11. Governing Law...................................................40
11.12. Consent to Jurisdiction.........................................40
11.13. Certain Definitions.............................................40
11.14. Entire Agreement................................................41
11.15. Section Headings; Table of Contents.............................41
11.16. Severability....................................................41
11.17. Counterparts....................................................41
EXHIBITS
EXHIBIT A-1- Xxxx Employment Agreement
EXHIBIT A-2- Damon Employment Agreement
EXHIBIT B - Form of Assignment and Assumption of Lease
EXHIBIT C - Form of Xxxx of Sale, Assignment and Assumption Agreement
EXHIBIT D - Form of Intellectual Property Assignment
EXHIBIT E - Form of Opinion of Xxxxxxx Xxxx & Xxxxxxxxx
(iii)
INDEX OF DEFINED TERMS
PAGE
1060 Forms....................................................................29
Accounts Receivable............................................................6
Actual Deficiency.............................................................12
affiliate.....................................................................41
Agreement......................................................................6
Annual Financial Statements...................................................14
Asset Purchase.................................................................6
Assets.........................................................................6
Assignment and Assumption of Lease............................................30
Assumed Liabilities...........................................................10
Benefit Plans.................................................................17
Xxxx of Sale Agreement........................................................31
Blue Cross....................................................................25
Business.......................................................................6
Business Employees............................................................17
Buyer..........................................................................6
Buyer Employee Plan...........................................................25
Buyer Indemnifying Parties....................................................34
Buyer Indemnitees.............................................................33
Buyer Losses..................................................................33
Buyer Material Adverse Effect.................................................20
Buyer Savings Plan............................................................26
Buyer Threshold...............................................................35
Cash Purchase Price...........................................................11
Closing.......................................................................32
Closing Date..................................................................32
Closing Working Capital.......................................................12
COBRA.........................................................................27
Code..........................................................................29
Collection Statement..........................................................13
Confidentiality Letter........................................................23
Contracts......................................................................8
Copyright Rights...............................................................7
Disclosed Contracts...........................................................15
Disclosure Schedule...........................................................13
Environmental Laws............................................................19
Environmental Liability.......................................................19
ERISA.........................................................................17
Excluded Assets................................................................8
Excluded Liabilities..........................................................10
Financing.....................................................................21
Hazardous Substance...........................................................19
Xxxxxx........................................................................39
(iv)
Independent Accounting Firm...................................................12
Internet Rights................................................................7
knowledge.....................................................................41
Leased Real Property..........................................................15
Licenses and Permits..........................................................18
Losses........................................................................34
Machinery......................................................................7
Material Adverse Effect.......................................................13
Offer Employees...............................................................25
Owned Real Property............................................................8
Permitted Liens...............................................................15
person........................................................................41
Policy........................................................................25
Proposed Adjustments..........................................................12
Purchase Price................................................................11
Remedial Action...............................................................19
Required Consents.............................................................30
Security Deposit...............................................................8
Seller.........................................................................6
Seller DC Plan................................................................26
Seller Indemnifying Parties...................................................33
Seller Indemnitees............................................................34
Seller's Losses...............................................................34
subsidiaries..................................................................41
subsidiary....................................................................41
Taxes.........................................................................16
Technology.....................................................................7
Threshold.....................................................................34
Trademark Rights...............................................................7
Transfer Taxes................................................................38
Transferred Employees.........................................................25
Vacation Policy...............................................................27
Wal-Mart Receivable...........................................................11
WARN..........................................................................27
WC Determination Date.........................................................11
Working Capital...............................................................11
Working Capital Holdback......................................................11
(v)
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of August 27, 2002 (hereinafter
"Agreement"), among XXXXXX, INC., a Delaware corporation ("Xxxxxx"), XXXXXX
TECHNICAL SERVICES, INC., a Delaware corporation ("Seller"), Specialized
Technology Resources, Inc., a Delaware corporation ("STR"), and STR ACQUISITION
SUB, INC., a Delaware corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller is a wholly owned subsidiary of Xxxxxx;
WHEREAS, through its Xxxxxxx Laboratories division in Canton,
Massachusetts, Seller is engaged in the businesses of technical and management
consulting, product development, product evaluation and testing, laboratory
testing, laboratory affairs, auditing, consumer testing and sensory research,
and claims substantiation to manufacturers and marketers of foods,
pharmaceuticals, dietary supplements, household and personal care products, and
specialty industrial products (collectively, but excluding the Excluded Assets
(as defined herein) and the Excluded Liabilities (as defined herein), the
"Business"); and
WHEREAS, Buyer desires to purchase from Seller and Seller desires to sell
to Buyer, on the terms and subject to the conditions of this Agreement,
substantially all of the assets and liabilities of Seller principally related to
the Business (such purchase, the "Asset Purchase").
NOW, THEREFORE, in consideration of the foregoing representations,
warranties, covenants and agreements herein contained, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1
SALE OF ASSETS AND ASSUMPTION OF LIABILITIES
1.1. Sale of Assets. Subject to the satisfaction or waiver of the
conditions set forth in this Agreement, at the Closing and effective as of the
Closing Date, Seller shall sell, assign, transfer, convey and deliver to Buyer,
and Buyer shall purchase or assume, as the case may be, all of the Assets,
wherever located, other than the Excluded Assets described in Section 1.3. As of
the Closing, risk of loss as to the Assets shall pass from Seller to Buyer.
1.2. Purchased Assets. Subject to Section 1.3 hereof, the following assets
shall be purchased by Buyer at the Closing (collectively, the "Assets"):
(a) Accounts Receivable. All accounts receivable and other receivables
of the Business (the "Accounts Receivable").
(b) Fixed Assets and Equipment. All machinery, vehicles, furniture,
fixtures, equipment and other items of personal property owned by Seller and
used principally in connection with the Business, including, but not limited to,
those items set forth on Schedule
1.2(b) hereto (the "Machinery") and all warranties and guarantees, if any,
express or implied, existing for the benefit of Seller in connection with the
Machinery, to the extent transferable.
(c) Intangible Property.
(i) Intellectual Property Rights. All of Seller's right, title
and interest in:
(A) plans, designs, research data, trade secrets and other
proprietary know-how, formulae and manufacturing processes, operating manuals,
drawings, technology, methods and manuals, data, records, procedures, research
and development records, and, to the extent transferable, all licenses or other
rights to use any such technical information and know-how of others, in each
case, only as and to the extent set forth on Schedule 1.2(c)(i)(A) (the
"Technology");
(B) all trademarks and service marks (registered or
unregistered), trade dress and trade names and all applications or registrations
in any jurisdiction pertaining to the foregoing and all goodwill associated
therewith and any and all licenses or other rights to use trademarks owned by
others, in each case, only as and to the extent set forth on Schedule
1.2(c)(i)(B) (the "Trademark Rights");
(C) all copyright registrations, copyright applications and, to
the extent transferable, all licenses or other rights to use the copyrights of
others (including, but not limited to, licenses to use software necessary for
the operation of the Business), in each case, only as and to the extent set
forth on Schedule 1.2(c)(i)(C) (the "Copyright Rights"); and
(D) all domain name registrations used by Seller and listed on
Schedule 1.2(c)(i)(D) (the "Internet Rights").
(ii) Business Information. All business information, management
systems (to the extent transferable) and related books, files and records
currently used principally by Seller and relating principally to the operation
of the Business, including, but not limited to, advertising, marketing and sales
programs, business and strategic plans, customer lists, rolodexes, databases and
telephone numbers;
(iii) Goodwill. All goodwill of Seller relating to the Business;
and
(iv) Name. The names "Xxxxxxx(R)," "Xxxxxxx Laboratories" and
"Xxxxxxx Labs" or any variation thereof and any derivations thereof.
(d) Contracts. All commitments, contracts and agreements, written or
oral, to which Seller is a party or by which Seller is bound that relate
principally to the operation of the Business as of the Closing Date, including,
without limitation, the Machinery or other personal property leases, service or
maintenance agreements, broker agreements, sales representative agreements,
license agreements, the lease of the Leased Real Property (as defined in Section
3.6(b)), the Disclosed Contracts (as defined in Section 3.7(a)) and the Blue
Cross Blue Shield health policy (collectively, the "Contracts").
(e) Licenses and Permits. To the extent transferable, all Licenses and
Permits (as defined in Section 3.13) owned by Seller and which relate
principally to the operation of the Business.
(f) Information Systems. Any information systems of the Business
listed on Schedule 1.2(f).
(g) Real Property Lease. The lease of the Leased Real Property listed
on Schedule 3.6(b), together with Seller's right, title and interest in and to
all improvements, fixtures and all appurtenances thereto.
(h) Books and Records. All books and records of the Business,
including, without limitation, all data and records, including client and
customer lists and records, referral sources, research and development reports
and records, production reports and records, service and warranty records,
equipment logs, operating guides and manuals, financial and accounting records,
creative materials, advertising materials, promotional materials, studies,
reports, correspondence and other similar documents and records, and personnel
records (the "Books and Records"), subject to legal requirements.
(i) Deposits, Prepaid Expenses, Etc. Solely with respect to the
Business, all rights relating to deposits and prepaid expenses, claims for
refunds and rights to offset in respect thereof that are not excluded under
Section 1.3.
(j) Security Deposit Amount. Any and all rights to the security
deposit currently in the amount of $333,333.33 (and interest) existing with
respect to the lease of the Leased Real Property (the "Security Deposit" ).
(k) Other Assets. All other assets utilized in the Business owned by
Seller included in the Financial Statements (as defined in Section 3.4), or
subsequently acquired in the operation of the Business, to the extent still in
existence on the Closing Date, excluding the Excluded Assets (as defined in
Section 1.3).
1.3. Excluded Assets. Notwithstanding anything herein to the contrary, it
is expressly agreed that Seller will retain and Buyer will not acquire the
following assets (the "Excluded Assets"):
(a) Non-Business Assets. Any assets utilized by Seller principally in
connection with businesses other than the Business or used by Seller at
facilities which are not owned or used by Seller principally in the operation of
the Business.
(b) Owned Real Property. All real property owned by Seller, including
all facilities thereon, and all easements, privileges, rights-of-way, riparian
and other water rights, lands underlying any adjacent streets or roads and
appurtenances pertaining to or accruing to the benefit of such property to which
Seller has title (collectively, the "Owned Real Property").
(c) Cash and Cash Equivalents. Cash and cash equivalents, including,
without limitation, checking accounts, bank deposits, investments in so-called
"money market"
funds, commercial paper funds, certificates of deposit, Treasury bills and
accrued interest thereon.
(d) Tax Losses, Refunds and Credits. All losses, loss carry-forwards
and rights to receive refunds, credits and loss carry-forwards with respect to
any and all Taxes (as defined in Section 3.11(a)) of Seller that constitute
Excluded Liabilities.
(e) Insurance Contracts. Any contracts of insurance in respect of the
Business; and any reimbursement for, or other benefit associated with prepaid
insurance, and any rights associated with any prepaid expense for which Buyer
will not receive the benefit after the Closing Date.
(f) Employee Benefit Assets. Except as expressly provided in Section
5.6 hereof, assets relating to the Benefit Plans (as defined in Section
3.12(b)).
(g) Transferred or Disposed Assets. Any assets transferred or
otherwise disposed of by Seller in the ordinary course of the Business prior to
the Closing.
(h) Xxxxxx Name. The names "Xxxxxx, Inc.," "Xxxxxx," "Xxxxxx Technical
Services, Inc." or any related or similar trade names, trademarks, service
marks, email addresses or logos to the extent the same incorporate the names
"Xxxxxx, Inc.," "Xxxxxx" "Xxxxxx Technical Services, Inc." or any variation
thereof and any derivations thereof.
(i) Minute Books and Stock Records. The minute books, stock records
and corporate seal of Seller.
(j) Certain Personnel Records. All personnel records, if any, that
Seller is required by law to retain in its possession provided that Buyer shall
be permitted to inspect and copy such records to the extent permitted by law.
1.4. Assumed Liabilities.
On the Closing Date, Buyer shall assume and agree to pay, perform and
discharge when due (without limiting any defenses available to Buyer against
third parties), (i)(a) accrued and unpaid payroll relating to the employees of
the Business, (b) accrued vacation relating to the employees of the Business,
(c) accounts payable of the Business, (d) all debts, obligations and liabilities
to Seller's suppliers to the extent related to the Business and to the extent
they are still in existence on the Closing Date, as well as all debts,
obligations and liabilities incurred in the ordinary course of business
subsequent to the date of the Financial Statements to the extent related to the
Business, (e) all debts, obligations and liabilities of Seller under the
Contracts, (including, without limitation, the Disclosed Contracts and the lease
of the Leased Real Property) and the Licenses and Permits, (f) client
prepayments as they relate to the Business, (g) accrued sales taxes of the
Business, (h) accrued commissions as they relate to the Business, (i) all
obligations and liabilities relating to the purchase of the HPLC units, (j) all
obligations and liabilities related to the assumption of the Policy (as defined
herein) to the extent permitted by the Policy as administered by Blue Cross (as
defined herein) and (k) other liabilities listed on Schedule 1.4, and (ii) any
and all debts, liabilities and obligations, other than Excluded Liabilities (as
defined in Section 1.5) of Seller, which arise on account of Buyer's operation
of
the Business or the use of the Assets from and after the Closing Date, whether
known or unknown, fixed or contingent (collectively, the "Assumed Liabilities").
1.5. Excluded Liabilities. Notwithstanding anything herein to the contrary,
it is expressly agreed that Seller will retain and Buyer shall not assume any of
the following liabilities (the "Excluded Liabilities"):
(a) all debts, liabilities and obligations principally arising out of
or relating to the Excluded Assets;
(b) all debts, liabilities or obligations of Seller that do not arise
out of or are not principally related to the Business;
(c) all debts, liabilities, payables or other obligations due to
Xxxxxx or any of its affiliates in respect of any inter-company loan or similar
indebtedness;
(d) all income or similar Taxes of Seller;
(e) all other Taxes applicable to the Business, the Assets or the
Assumed Liabilities, in each case, attributable to periods (or portions thereof)
ending on or prior to the Closing Date, except for those Taxes assumed in
Section 1.4 herein and Buyer's percentage of the Transfer Taxes, if any;
(f) all customer claims arising principally from the conduct of the
Business prior to the Closing Date, except to the extent such customer claims
are attributable to Buyer's conduct of the Business from and after the Closing
Date;
(g) unless expressly assumed pursuant to Sections 1.4(i), (j) and (k)
herein, all liabilities not reflected in the Financial Statements or incurred
since the date of the Financial Statements in the ordinary course of business;
(h) remaining unpaid liabilities, if any, relating to the initial
capital expenditure in the approximate amount of $278,950 for a Flourescence
Detector, Millennium Server, Millennium Network and a Replacement Server, which
amount is $80,740.76 as of the date hereof; and
(i) all debts, liabilities or obligations of Seller pursuant to any
bank loans or similar indebtedness.
SECTION 2
PURCHASE PRICE
2.1. Purchase Price. Upon the terms and conditions set forth in this
Agreement, and in reliance on the representations, warranties, covenants and
agreements of the parties contained herein, at the Closing and effective as of
the Closing, Seller shall sell, assign, transfer, convey and deliver to Buyer,
and Buyer shall purchase from Seller, the Assets and Buyer shall assume the
Assumed Liabilities for an aggregate cash purchase price of SEVEN MILLION SEVEN
HUNDRED THIRTY TWO THOUSAND NINE HUNDRED SEVEN DOLLARS AND EIGHT
CENTS ($7,732,907.08) (the "Purchase Price"), which shall consist of (i) SEVEN
MILLION DOLLARS ($7,000,000) in cash to be paid to Seller at the Closing (the
"Cash Purchase Price") , (ii) TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000) to
be held by Buyer (the "Working Capital Holdback") , all or a portion of which
may be released to Seller subject to a final determination of the Closing
Working Capital pursuant to Section 2.3(b) below, and (iii) the receivable from
Wal-Mart in the amount of FOUR HUNDRED EIGHTY TWO THOUSAND NINE HUNDRED SEVEN
DOLLARS AND EIGHT CENTS ($482,907.08) owed by Wal-Mart pursuant to invoice
number 0011866 (the "Wal-Mart Receivable" ), which Wal-Mart Receivable shall be
paid in accordance with Section 2.4 herein. The Purchase Price is payable in
accordance with this Section 2.
2.2. Payment of Purchase Price. On the Closing Date, Buyer and Seller shall
execute the Xxxx of Sale Agreement (as defined in Section 6.2(b)) and Buyer
shall (i) pay the Cash Purchase Price by wire transfer of immediately available
federal funds to such bank account(s) as shall be designated by Seller prior to
the Closing and (ii) place the Working Capital Holdback in reserve for payment
in accordance with Section 2.3(c) herein. The Wal-Mart Receivable shall be paid
to Seller in accordance with Section 2.4 herein.
2.3. Post-Closing Adjustment to Purchase Price. The Purchase Price shall be
subject to adjustment after the Closing as follows:
(a) Working Capital. For purposes of this Agreement, "Working Capital"
shall mean the current assets of the Business included in the Assets (exclusive
of (i) the Wal-Mart Receivable, (ii) $125,000 of the $250,000 Food Logic LLC
receivable and (iii) the Security Deposit; but including current assets of Buyer
occurring in the ordinary of business from the Closing Date through and
including the WC Determination Date (as defined below)), including, without
limitation, the Accounts Receivable (except as provided above), prepaid expenses
and any cash (but only that cash) received in respect of Accounts Receivable
that have been paid after the Closing Date (which shall not be used on or prior
to the WC Determination Date for any purpose other than paying accounts payable
of Buyer), each as of the WC Determination Date, less the accounts payable and
other current liabilities of Buyer included in the Assumed Liabilities
(exclusive of (i) the Waters Millennium liability retained by Seller pursuant to
Section 1.5(h) herein, if any, and (ii) any liabilities relating to the HPLC
units; but including (x) any current liabilities of Buyer incurred in the
ordinary course of business from the Closing Date through and including the WC
Determination Date and (y) any intercompany indebtedness to STR or its
affiliates incurred by Buyer after the Closing Date to the extent such
intercompany indebtedness is used to pay the current liabilities of Buyer on or
prior to the WC Determination Date) as of the WC Determination Date, all as
determined in a manner consistent with the Business' internal accounting
practices applied consistently and in a manner consistent with generally
accepted accounting principles. On August 31, 2002 (the "WC Determination
Date"), Working Capital shall be no less than $1,900,000.
(b) Post-Closing Determination. Within thirty (30) days after the WC
Determination Date, Buyer shall prepare a statement setting forth the Working
Capital as of the close of business on the WC Determination Date (the "Closing
Working Capital" ). During the period of any dispute with respect to the
application of this Section 2.3, Buyer shall provide Seller full access to the
books, records, facilities and employees of Buyer, and shall cooperate
with Seller to the extent reasonably requested by Seller to investigate the
basis for such dispute. Not later than thirty (30) calendar days after receipt
of the Closing Working Capital statement, Seller shall provide Buyer with a list
of those items, if any, to which Seller takes exception and Seller's proposed
adjustments (the "Proposed Adjustments" ). If Seller fails to deliver to Buyer
the Proposed Adjustments within thirty (30) calendar days following receipt of
the Closing Working Capital statement, Seller shall be deemed to have accepted
the Closing Working Capital statement for the purposes of any Purchase Price
adjustment under Section 2.3(c) hereof. Any items not disputed shall be deemed
to be accepted and agreed to by Seller. If Buyer does not give Seller notice of
objections within ten (10) calendar days following receipt of the Proposed
Adjustments, Buyer shall be deemed to have accepted the Proposed Adjustments for
the purposes of any Purchase Price adjustment under Section 2.3(c) hereof. Any
items not disputed shall be deemed to be accepted and agreed to by Buyer. If
Buyer gives Seller notice of objections to the Proposed Adjustments, and if
Buyer and Seller are unable, within five (5) calendar days after receipt by
Seller of the notice by Buyer of objections, to resolve the disputed exceptions,
such disputed exceptions will be referred to a firm of independent certified
public accountants ("Independent Accounting Firm" ) mutually acceptable to Buyer
and Seller. The Independent Accounting Firm shall, within thirty (30) days
following its selection, deliver to Buyer and Seller a written report
determining such disputed exceptions, and its determinations will be conclusive
and binding upon the parties thereto for the purposes of any Purchase Price
adjustment under Section 2.3(c) hereof. The fees and disbursements of the
Independent Accounting Firm acting under this Section shall be shared equally by
Buyer and Seller.
(c) Purchase Price Adjustment. Within two (2) business days following
the computation and final determination, pursuant to Section 2.3(b) hereof, of
the Closing Working Capital, and based upon such final determination, if the
Closing Working Capital is less than $1,900,000 (the amount of such deficiency,
the "Actual Deficiency" ), Seller shall, pursuant to Section 2.3(d) hereof, pay
to Buyer an amount equal to the Actual Deficiency. If the Closing Working
Capital is equal to or greater than $1,900,000, no adjustment to the Purchase
Price shall be made and the Working Capital Holdback shall be paid to Seller
pursuant to Section 2.3(d) herein.
(d) Working Capital Payment. In the event of an Actual Deficiency, the
amount of such Actual Deficiency shall be paid first from the Working Capital
Holdback and then, if necessary, by Seller (without regard to the Threshold (as
defined herein) or any other limitation). In the event that either (i) the
Actual Deficiency is less than the Working Capital Holdback or (ii) the Closing
Working Capital is equal to or greater than $1,900,000, Buyer shall promptly
(and in any event within two (2) business days after determination of the
Closing Working Capital) pay Seller the Working Capital Holdback less the Actual
Deficiency, if any.
2.4. Wal-Mart Receivable. In the event the Wal-Mart Receivable is not
received by Seller prior to the Closing Date, upon receipt by Buyer of all or
any portion of the Wal-Mart Receivable, Buyer shall promptly (but in no event
later than two (2) business days after receipt of all of any portion of the
Wal-Mart Receivable) pay such amount to Seller. Until Seller has received the
entire Wal-Mart Receivable, Buyer shall deliver to Seller a monthly statement
(each a "Collection Statement" ) setting forth in reasonable detail the amount
of cash collected in respect of the Wal-Mart Receivable. Buyer covenants and
agrees that from and after the Closing
Date, Buyer will use commercially reasonable efforts to collect the Wal-Mart
Receivable in accordance with past practice.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that, and as to Sections 3.1, 3.2
and 3.3 herein, Xxxxxx represents and warrants to Buyer that, as of the date of
this Agreement and except as set forth on the correspondingly numbered section
of the disclosure schedule delivered to Buyer in connection herewith (the
"Disclosure Schedule"):
3.1. Corporate Existence. Each of Xxxxxx and Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Seller has the requisite corporate power and authority to own, lease
and operate the properties and assets used in the Business being sold or
assigned hereunder and to carry on the Business as the same is now being
conducted. Seller is duly authorized, qualified or licensed to do business as a
foreign corporation and is in good standing in every jurisdiction wherein, by
reason of the nature of the Business or the character of the Assets, the failure
to be so qualified would have a material adverse effect on the results of
operations, financial condition or business of the Business taken as a whole or
on the ability of Seller to consummate the transactions contemplated hereby,
other than as a result of normally recurring seasonal changes, changes relating
to the economy in general or changes relating to the industry in which the
Business operates in general (a "Material Adverse Effect"). References to
Material Adverse Effect in this Section 3 shall include those items of the same
kind (determined by reference to the relevant representation) occurring
individually or in the aggregate. For purposes of this Section 3, and without
limitation, any such adverse effect on the results of operations, financial
condition or business of the Business exceeding forty thousand dollars ($40,000)
(after giving effect to any applicable insurance) shall be deemed material.
3.2. Corporate Authority. This Agreement and the consummation of all of the
transactions provided for herein have been duly authorized by all requisite
corporate action, and each of Xxxxxx and Seller has full power and authority to
execute and deliver this Agreement and to perform their obligations hereunder.
This Agreement has been duly executed and delivered by Xxxxxx and Seller, and
constitutes a valid and legally binding obligation of Xxxxxx and Seller,
enforceable in accordance with its terms except as enforceability may be (a)
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditor's rights, or (b) subject to general principles of
equity. Neither the execution and delivery of this Agreement by each of Xxxxxx
and Seller nor the consummation by Xxxxxx and Seller of the transactions
contemplated hereby will violate or conflict with any provision of the
Certificate of Incorporation or By-Laws of either Xxxxxx or Seller, as
applicable, or result in any breach or constitute any default under any
contract, indenture, mortgage, lease, note or other agreement or instrument to
which either Xxxxxx or Seller is subject or is a party, except for any such
violation, conflict, breach or default which would not have a Material Adverse
Effect.
3.3. Governmental Approvals; Consents. Neither Xxxxxx nor Seller is subject
to any order, judgment or decree which would prevent the consummation of the
transactions contemplated hereby. No claim, legal action, suit, arbitration,
governmental investigation,
action, or other legal or administrative proceeding is pending or, to the
knowledge of Xxxxxx or Seller, threatened against Xxxxxx or Seller which would
enjoin or delay the transactions contemplated hereby. No consent, approval,
order or authorization of, license or permit from, notice to or registration,
declaration or filing with, any governmental authority or entity, domestic or
foreign, or of any third party, is or has been required on the part of either
Xxxxxx or Seller in connection with the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby except for such
consents, approvals, orders or authorizations of, licenses or permits,
declarations, registrations, filings or notices the failure of which to obtain
or make would not have a Material Adverse Effect or which have been obtained.
3.4. Financial Statements. Schedule 3.4 contains a copy of the unaudited
balance sheet and internally prepared statements of income of the Business for
the current fiscal year as of July 31, 2002 (the "Financial Statements"). The
Financial Statements are true, correct and complete and present fairly the
financial condition and the results of the operations of the Business as of the
dates and for the periods indicated. The Financial Statements have been prepared
in accordance with Seller's internal accounting practices applied consistently
and in a manner consistent with generally accepted accounting principles. Seller
makes no representation with respect to any financial information for the
Business delivered to Buyer other than as contained in or pursuant to this
Agreement. Seller makes no other representation or warranty with respect to such
financial information presented in the Financial Statements other than as
contained in or pursuant to this Agreement.
3.5. Absence of Changes. Except as otherwise disclosed in the Financial
Statements or as contemplated by this Agreement, since the date of the Financial
Statements, (a) the Business has been conducted in all material respects in the
ordinary course consistent with past practice and (b) to Seller's knowledge,
there has not been any and no fact or condition exists which would have, or
could reasonably be expected to have, a Material Adverse Effect.
3.6. Real and Personal Properties. Seller has good title to the personal
property included in the Assets and a valid leasehold interest in the Leased
Real Property (as defined in Section 3.6(b)), free and clear of all material
liens, charges and other encumbrances, except (i) as disclosed in the Financial
Statements or as sold or otherwise disposed of in the ordinary course of
business since the date of the Financial Statements; (ii) liens for Taxes,
assessments and other governmental charges not yet due and payable or, if due,
(A) not delinquent or (B) being contested in good faith by appropriate
proceedings during which collection or enforcement against the property is
stayed; (iii) mechanics', workmen's, repairmen's, warehousemen's, carriers' or
other like liens arising or incurred in the ordinary course of business if the
underlying obligations are not past due, original purchase price conditional
sales contracts and equipment leases with third parties entered into in the
ordinary course of business; (iv) liens arising from the Amended and Restated
Credit Agreement, dated as of December 7, 2001, as amended, among, Xxxxx Fargo
Bank, N.A., Xxxxxx, Inc., Xxxxxx Technical Services, Inc., Botanicals
International Extracts, Inc. and Zetapharm, Inc. and documents and agreements
related thereto; and (v) other liens, charges or other encumbrances which would
not have a Material Adverse Effect (such liens, charges and encumbrances
described in clauses (i)-(v) hereof are referred to herein as "Permitted
Liens").
(b) Schedule 3.6(b) contains a list of all leases of real property
principally used by Seller in the Business ("Leased Real Property"), which
Leased Real Property includes all buildings, structures and other improvements
situated thereon leased by Seller. To Seller's knowledge, there are no parties
in possession of any portion of the Leased Real Property as lessees, tenants at
sufferance or trespassers other than Seller. Seller does not own any real
property used in connection with the Business.
3.7. Contracts. Except for the Disclosed Contracts (as defined below),
there are no outstanding Contracts that (i) involve commitments by Seller for
terms of twelve (12) months or longer and involve payment after the Closing Date
of more than $50,000; (ii) involve payment after the Closing Date of more than
$50,000; or (iii) involve payment on an annualized basis of more than $50,000,
except for Contracts, the loss of which would not have a Material Adverse
Effect. Contracts disclosed in Schedule 3.7 are hereafter referred to as the
"Disclosed Contracts".
(b) Seller has furnished or made available to Buyer a true and correct
copy of each Disclosed Contract. Each Contract which is to be assigned to Buyer
pursuant to this Agreement is valid and in full force and effect according to
its terms, and to Seller's knowledge, the parties thereto are not in material
default or breach under any such Contract and there are no claims affecting the
same of any kind pending as of which Seller has notice except where such failure
to be valid or in full force or effect or such breach or claim would not have a
Material Adverse Effect.
3.8. Litigation, Agencies. Except as disclosed in the Financial Statements,
there are no actions, suits, proceedings (whether adjudicatory, rulemaking,
licensing, or otherwise) or investigations pending or, to the knowledge of
Seller, threatened in law or in equity, or before any governmental agency.
Seller is not in default under any judgment, order, injunction or decree of any
court or government agency relating to the Business except for such defaults,
judgments, orders, injunctions or decrees which would not have a Material
Adverse Effect.
3.9. Intangible Property Rights. To Seller's knowledge: (i) Seller owns, is
licensed or has the right to use the Technology free and clear of all liens,
encumbrances, equities and other restrictions; and (ii) there are no pending
claims challenging the validity or ownership of such Technology or Seller's
right to use such Technology.
(b) (i) Seller owns, is licensed or has the full right to use the
Trademark Rights; (ii) all such registered Trademark Rights are valid and
subsisting, free and clear of any encumbrances or rights of third parties which
would restrict Buyer's right to use such registered Trademark Rights; and (iii)
there are no pending or, to Seller's knowledge, threatened claims by or against
Seller with respect to any Trademark Rights and none of such Trademark Rights
is, to Seller's knowledge, now being infringed by others.
(c) (i) Seller owns, is licensed or has the full right to use the
Copyright Rights; (ii) all such registered Copyright Rights are valid and
subsisting, free and clear of any encumbrances or rights of third parties which
would restrict Buyer's right to use such registered Copyright Rights; and (iii)
there are no pending or, to Seller's knowledge, threatened claims by
or against Seller with respect to any Copyright Rights and, to Seller's
knowledge, none of such Copyright Rights is now being infringed by others.
(d) (i) Seller owns, is licensed or has the right to use and transfer
the Internet Rights; (ii) all such Internet Rights are valid and subsisting,
free and clear of any encumbrances or rights of third parties which would
restrict Buyer's right to use or transfer such Internet Rights; and (iii) there
are no pending or, to Seller's knowledge, threatened claims by or against Seller
with respect to any Internet Rights and, to Seller's knowledge, none of such
Internet Rights is now being infringed by others.
3.10. Insurance. Seller has in full force and effect the policies of
insurance set forth on Schedule 3.10 and will continue in force to the Closing
Date policies of insurance of substantially the same character and coverage.
3.11. Tax Matters. For purposes of this Agreement, "Taxes" shall mean any
federal, state, provincial, local, territorial and foreign income, profits,
franchise, gross receipts, payroll, sales, employment, use, property, real
estate, excise, value added, estimated, stamp, alternative or add-on minimum,
environmental, withholding and any other taxes, duties or assessments, together
with all interest, penalties and additions imposed with respect to such amounts.
(b) Seller has filed all Tax returns that it was required to file and
has paid all Taxes as shown to be due on such returns except where the failure
to file such returns or to pay such Taxes would not have a Material Adverse
Effect. All such tax returns were correct and complete in all material respects.
Seller is not the beneficiary of any extension of time within which to file any
Tax return.
(c) There is no material dispute or claim concerning any Tax liability
of Seller either (A) claimed or raised by any authority in writing or (B) as to
which Seller has knowledge, based upon verbal discussion of any Tax liability
with any agent of such authority.
(d) Seller has withheld from employee salaries, wages and other
compensation of Transferred Employees, all material Taxes related to the
Business and required to be so withheld, for all periods for which the statutory
period of limitations for the assessment of Taxes has not yet expired and has
filed or will file all required withholding tax returns and paid or will pay all
such withheld Taxes as required by law.
(e) There are no liens for Taxes (other than for Taxes not yet due and
payable and Permitted Liens) on any Asset except those liens that would not have
a Material Adverse Effect.
3.12. Employment and Benefits. Labor Controversies. Except for any matter
that would not have a Material Adverse Effect, in respect of the Business, (i)
Seller is in compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
(ii) there is no unfair labor practice complaint against Seller pending before
the National Labor Relations Board, (iii) there is no labor strike, dispute,
slowdown or stoppage actually pending or threatened against or affecting Seller,
(iv) within the past five (5) years, Seller has not experienced any strike, work
stoppage or other labor difficulty,
and (v) Seller is not a party to, or subject to, a collective bargaining
agreement, and no collective bargaining agreement relating to employees of
Seller is currently being negotiated.
(b) Employee Benefit Plans. For purposes of this Agreement, "Benefit
Plans" shall mean all "employee benefit plans" (within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), including, without limitation, "multiemployer plans" within the
meaning of Sections 3(37) and 4001(a)(3) of ERISA), retirement, savings, stock
purchase, stock option, severance, employment, change-in-control, fringe
benefit, collective bargaining, bonus, incentive, deferred compensation and all
other employee benefit plans, agreements, programs, policies or other
arrangements (whether or not subject to ERISA as to which both (A) any employee
or former employee of the Business (collectively, the "Business Employees") has
any present or future right to benefits and (B) Seller or any of its
subsidiaries has any present or future liability). Schedule 3.12(b)(i) sets
forth a summary of each material Benefit Plan.
(ii) With respect to each Benefit Plan, Seller has made available
to Buyer a copy or written description thereof.
(iii) Each Benefit Plan has been established and administered in
accordance with its terms and in compliance with the applicable provisions of
ERISA, the Code and other applicable laws, except where a failure to do so would
not have a Material Adverse Effect. Each Benefit Plan that is intended to be
qualified under Section 401(a) of the Code is so qualified, and Seller has no
knowledge of any circumstances that will or could result in the loss of such
qualification. Each trust created under any Benefit Plan has been determined to
be exempt from taxation under Section 501(a) of the Code, and Seller is not
aware of any circumstances that will or could result in revocation of such
exemption.
(iv) The transactions contemplated by this Agreement will not
cause Buyer to incur any liability under Title IV of ERISA with respect to any
Benefit Plan or any "multiemployer plan" (as defined in Section 3(37) of ERISA)
in which any Business Employee participates. Seller has no liability nor
knowledge of any facts or circumstances that would incur any liability, and the
transactions contemplated by this Agreement will not result in any liability,
(i) for any Lien imposed under Section 302(f) of ERISA or Section 412(n) of the
Code, (ii) for any interest payments required under Section 302(e) of ERISA or
Section 412(m) of the Code, (iii) for any excise tax imposed by Section 4971 of
the Code, or (iv) for any minimum funding contributions under Section 302(e)(11)
of ERISA or Section 412(e)(11) of the Code.
(c) Employment Contracts. Except as set forth on Schedule 3.12(c),
there are no employment contracts between Seller or any affiliate of Seller, on
the one hand, and any Business Employees, on the other hand, other than
contracts representing the standard terms and conditions of employment
prevailing between Seller and their Business Employees.
3.13. Compliance with Laws. To Seller's knowledge, (i) with respect to the
Business, Seller has all licenses, permits or franchises issued by any United
States or foreign, federal, state, provincial, municipal or local authority or
regulatory body and other governmental certificates, authorizations and
approvals (collectively "Licenses and Permits") required by every United States
or foreign, federal, state, provincial, municipal and local governmental or
regulatory body
for the operation of the Business and the use of its properties as presently
operated or used; (ii) with respect to the Business, all such Licenses and
Permits are in full force and effect and no action, claim or proceeding is
pending, nor to the knowledge of Seller is threatened, to suspend, revoke,
revise, limit, restrict or terminate any of such Licenses and Permits or declare
any such License and Permit invalid; (iii) with respect to the Business, Seller
has filed all necessary reports and maintained and retained all necessary
records pertaining to such Licenses and Permits in all material respects; and
(iv) with respect to the Business, Seller has otherwise substantially complied
with all of the laws, ordinances, regulations and orders applicable to its
existence, financial condition, operations, properties or Business, and Seller
has not received any notice to the contrary. Schedule 3.13 contains a complete
list of all material Licenses and Permits.
3.14. Finders; Brokers; Consultants. Seller is not a party to any agreement
with any finder, broker or consultant, or in any way obligated to any finder,
broker or consultant for any commissions, fees or expenses in connection with
the origin, negotiation, execution or performance of this Agreement, except
Xxxxxxx Associates, Inc. and Xxxxx X. Xxxxxxx Company Limited, the fees of which
will be paid by Seller.
3.15. Environmental Matters. (a) (i) in respect of the Business, Seller is
in compliance with all Environmental Laws (as defined in Section 3.15(b)(i))
applicable to the nature, scope and extent of the Business as presently
conducted by Seller, except for violations of Environmental Laws that would not
have a Material Adverse Effect;
(ii) in respect of the Business, Seller holds, and is in
compliance with, all Licenses and Permits, required under Environmental Laws
applicable to the nature, scope and extent of the Business as presently
conducted by Seller, except for the absence of, or noncompliance with, such
Licenses and Permits that would not have a Material Adverse Effect;
(iii) prior to the date of this Agreement, in respect of the
Business, Seller has not received any written notice of the institution or
pendency of any lawsuit, action, proceeding, investigation or claim by any
person alleging any Environmental Liability arising from or relating to the
conduct of the Business, except for all such cases that would not have a
Material Adverse Effect; and
(iv) to the knowledge of Seller, there have been no spills or
releases of Hazardous Substances by or in connection with the Business. Except
as disclosed on Schedule 3.15, Seller has not disposed of, arranged for or
permitted the disposal of, transported, handled or released any Hazardous
Substances.
(b) As used herein:
(i) "Environmental Laws" means any domestic, foreign, federal,
state, interstate or local statute, law or regulation in effect in any
jurisdiction where the Business is presently conducted by Seller, which has been
properly promulgated, is in effect and is binding upon Seller as of the Closing
Date or any order, injunction, judgment, decree, common law or other enforceable
requirement of any governmental entity, and relating to the protection of the
environment, including any of the foregoing related to: (A) Remedial Actions;
(B) the
reporting, licensing, permitting, or investigating of the emission, discharge,
release or threatened release of Hazardous Substances into the air, surface
water, groundwater or land; or (C) the manufacture, release, distribution, use,
generation, treatment, storage, disposal, transport or handling of Hazardous
Substances.
(ii) "Environmental Liability" means any liability or obligation
arising under Environmental Laws in connection with the Assets or the Business
to the extent arising from any condition existing or any act or omission of
Seller at or prior to the Closing Date.
(iii) "Hazardous Substance" means (A) any substance or material
regulated under applicable Environmental Laws or (B) gasoline, diesel fuel or
other petroleum hydrocarbons or polychlorinated biphenyls or asbestos.
(iv) "Remedial Action" means any response action, removal action,
remedial action, corrective action, monitoring program, sampling program,
investigation or other cleanup activity pertaining to any Hazardous Substance.
3.16. Accounts Receivable. All Accounts Receivable that are reflected on
the accounting records of the Business as of the Closing Date represent or will
represent valid obligations arising from sales actually made or services
actually performed by the Business in the ordinary course of business net of any
reserve for doubtful accounts as of the Closing Date maintained in accordance
with past practice. There is no contest, claim, defense or right of setoff,
other than returns in the ordinary course of business of Seller, under any
Contract with any account debtor of an Account Receivable relating to the amount
or validity of such Account Receivable.
3.17. Accounts Payable. Seller shall pay all accounts payable for products
or services furnished to the Business prior to the Closing Date in a manner
consistent with its prior practice and which would not reasonably be expected to
impair relations with such client, consultant, auditor or supplier. Seller has
no dispute with any client, consultant, auditor or supplier and shall not
withhold or offset payments to such consultant, auditor or supplier nor
institute or threaten litigation or take any other extraordinary actions.
3.18. Sufficiency of Assets. The Assets (a) constitute all of the assets,
tangible and intangible, of any nature whatsoever, necessary to operate, or
intended for use in connection with, the Business in the manner presently
operated by Seller and (b) include all of the operating assets used by Seller in
the operation of the Business.
3.19. Condition of Facilities. Each item of tangible personal property
included in the Assets is in good repair and good operating condition, ordinary
wear and tear excepted, is suitable for immediate use in the ordinary course of
business. No item of tangible personal property included in the Assets is in
need of repair or replacement other than as part of routine maintenance in the
ordinary course of business. Except as disclosed in Schedule 3.19, all tangible
personal property used in the Business is in the possession of Seller.
3.20. No Other Representations or Warranties. Except for the
representations and warranties contained in this Section 3, neither Xxxxxx,
Seller, any advisor to Xxxxxx or Seller nor
any other person makes any other express or implied representation or warranty
on behalf of Xxxxxx or Seller, including, without limitation, as to the probable
success or profitability of the ownership, use or operation of the Business, and
the Assets by STR or Buyer after the Closing, and each of Xxxxxx and Seller
hereby disclaims any such representation or warranty.
3.21. Expiration of Representations and Warranties. Subject to Section 8
hereof, the respective representations and warranties of Xxxxxx and Seller
contained herein shall expire and be terminated and extinguished on the day
twelve (12) months following the Closing Date; provided, however, the
representations and warranties of Xxxxxx and/or Seller, as applicable, in (a)
Section 3.11 shall continue until sixty (60) days after the expiration of the
time period, including any extensions thereof, within which any Tax relating to
the Business may be assessed against Seller, (b) Section 3.15 shall continue
until three (3) years following the Closing Date and (c) Sections 3.1, 3.2 and
3.6 shall continue until the applicable statute of limitations has run, and
thereafter neither Xxxxxx nor Seller shall have any liability whatsoever with
respect to any such representation or warranty.
SECTION 4
REPRESENTATIONS OF BUYER
Buyer represents and warrants to Seller that, and as to Sections 4.1, 4.2
and 4.3 herein, STR represents and warrants to Seller that, as of the date of
this Agreement:
4.1. Corporate Existence. Each of STR and Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite power and authority to
own, lease and operate the properties and assets used in the Business being
purchased hereunder and to carry on the Business as the same is now being
conducted. Buyer is duly authorized, qualified or licensed to do business as a
foreign corporation and in good standing in every jurisdiction wherein, by
reason of the nature of the Business or the character of the Assets, the failure
to be so qualified would have a material adverse effect on the ability of Buyer
to consummate the transactions contemplated hereby (a "Buyer Material Adverse
Effect"). References to Buyer Material Adverse Effect in this Section 4 shall
include those items of the same kind (determined by reference to the relevant
representation) occurring individually or in the aggregate. For purposes of this
Section 4, and without limitation, any such adverse effect on the ability to
consummate the transactions contemplated by this Agreement exceeding forty
thousand dollars ($40,000) (after giving effect to any applicable insurance)
shall be deemed material.
4.2. Corporate Authority. This Agreement and the consummation of all of the
transactions provided for herein have been duly authorized by the Board of
Directors of each of STR and Buyer and by all requisite corporate action, and
each of STR and Buyer has full power and authority to execute and deliver this
Agreement and to perform their obligations hereunder. This Agreement has been
duly executed and delivered by each of STR and Buyer, and constitutes a valid
and legally binding obligation of each of STR and Buyer, enforceable in
accordance with its terms except as enforceability may be (a) limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditor's rights, or (b) subject to general principles of equity. Neither the
execution and delivery of this Agreement by STR and Buyer nor the consummation
by either STR and Buyer of the transactions contemplated hereby will
violate or conflict with any provision of the Articles of Incorporation or
By-Laws of either STR or Buyer, as applicable, or result in any breach or
constitute any material default under any contract, indenture, mortgage, lease,
note or other agreement or instrument to which either STR or Buyer is subject or
is a party, except for any such violation, breach or default which would not
have a Buyer Material Adverse Effect.
4.3. Governmental Approvals; Consents. Neither STR nor Buyer is subject to
any order, judgment or decree which would prevent the consummation of the
transactions contemplated hereby. No claim, legal action, suit, arbitration,
governmental investigation, action, or other legal or administrative proceeding
is pending or, to the knowledge of either STR or Buyer, threatened against STR
or Buyer which would enjoin or delay the transactions contemplated hereby.
Except as set forth in Schedule 4.3 hereto, no consent, approval, order or
authorization of, license or permit from, notice to or registration, declaration
or filing with, any governmental authority or entity, domestic or foreign, or of
any third party, is or has been required on the part of either STR or Buyer in
connection with the execution and delivery of this Agreement or any of the
transactional documents, or the consummation of the transactions contemplated
hereby and thereby except for such consents, approvals, orders or authorizations
of, licenses or permits, declarations, filings or notices the failure of which
to obtain or make would not have a Buyer Material Adverse Effect.
4.4. Finders; Brokers; Consultants. Buyer is not a party to any agreement
with any finder, broker or consultant, or in any way obligated to any finder,
broker or consultant for any commissions, fees or expenses, in connection with
the origin, negotiation, execution or performance of this Agreement.
4.5. Financial Capacity. Buyer has in hand sufficient cash or financing
necessary to consummate the transactions contemplated by this Agreement, to pay
all fees and expenses of Buyer related to the transactions contemplated hereby
and to fund all disbursements of the Business as of the Closing Date (the
"Financing").
4.6. No Other Representations or Warranties. Except for the representations
and warranties contained in this Section 4, neither STR, Buyer, any advisor to
STR or Buyer nor any other person makes any other express or implied
representation or warranty on behalf of STR or Buyer, and each of STR and Buyer
hereby disclaims any such representation or warranty.
4.7. Investigation. Buyer has conducted its own independent review and
analysis of the Business, including, but not limited to, its operations,
technology, assets, liabilities, results of operations, financial condition and
the prospects of the Business and acknowledges that Seller has provided Buyer
with access to the personnel, properties, premises and records of Seller for
this purpose.
4.8. Expiration of Representations and Warranties. Subject to Section 8
hereof, the respective representations and warranties of STR and Buyer contained
herein shall expire and be terminated and extinguished on the day twelve (12)
months following the Closing Date; provided, however, the representations and
warranties of STR and/or Buyer, as applicable, in Sections 4.1, 4.2 and 4.3
shall continue until the applicable statute of limitations has run, and
thereafter neither STR nor Buyer shall have any liability whatsoever with
respect to any such representation or warranty.
SECTION 5
AGREEMENTS OF BUYER AND SELLER
5.1. Operation of the Business. (a) Except as otherwise contemplated by
this Agreement, during the period from the date of this Agreement until the
Closing, Seller will use all reasonable efforts to continue, in a manner
consistent with the past practices of the Business, to maintain and preserve
intact the Business and to maintain the ordinary and customary relationships of
the Business with its material suppliers, customers and others having business
relationships with it with a view toward preserving for Buyer, to and after the
Closing Date, the Business, the Assets and the goodwill associated therewith.
(b) During the period from the date of this Agreement until the
Closing Date, Seller shall continue to operate and conduct the Business in the
ordinary course, and maintain its books and records in accordance with past
practices and will not, without the prior written approval of Buyer or as
otherwise contemplated by this Agreement, take any of the following actions:
(i) sell, transfer or otherwise dispose of any of its properties
or assets pertaining to the Business, other than (A) in the ordinary course of
business and, (B) any property or asset which is not material to the results of
operations, financial condition or business of the Business taken as a whole;
(ii) cancel any debts or waive any claims or rights pertaining to
the Business, except in the ordinary course of business;
(iii) grant any increase in the compensation of officers or
employees primarily engaged in the Business, except for increases (A) in the
ordinary course of business and consistent with past practice or (B) as required
by any Benefit Plan (as defined in Section 3.12);
(iv) make any capital expenditure or commitment pertaining to the
Business in excess of the amount set forth in the budget, other than (A) in the
ordinary course of business, (B) pursuant to existing commitments or business
plans or (C) which is not material to the results of operations, financial
condition or business of the Business taken as a whole;
(v) except with respect to endorsement of negotiable instruments
in the ordinary course of its Business, incur, assume or guarantee any
indebtedness for borrowed money other than (A) purchase money borrowings, (B)
indebtedness for borrowed money incurred in the ordinary course of business, (C)
refundings of existing indebtedness and (D) other indebtedness for borrowed
money which is not material to the results of operations, financial condition,
or business of the Business taken as a whole;
(vi) delay the payment of any payables or accelerate the
collection of any Accounts Receivable of the Business, whether by offering more
favorable terms of payment or otherwise, in a manner inconsistent with past
practice; or
(vii) agree, whether in writing or otherwise, to do any of the
foregoing unless such agreement is expressly conditioned upon the approval of
Buyer.
5.2. Investigation of Business. (a) Buyer may, prior to the Closing Date,
make or cause to be made such investigation of the business and properties of
the Business and of its financial and legal condition as Buyer deems necessary
or advisable. Seller will permit Buyer and its authorized agents or
representatives, including its independent accountants, to have full access to
the properties, books and records of the Business at reasonable hours to review
information and documentation relative to the properties, books, contracts,
commitments and other records of the Business. Seller will permit and cooperate
with Buyer in discussing the acquisition of the Business by Buyer with customers
of the Business, including the five customers that paid the highest amount of
fees to the Business during the twelve (12) months preceding the date of this
Agreement.
(b) STR and its representatives and affiliates (including Buyer) will
hold in confidence all confidential information obtained from Xxxxxx, Seller, or
their respective officers, agents, representatives or employees in accordance
with the provisions of the confidentiality agreement dated March 8, 2001, as
extended March 28, 2002, between STR and Xxxxxx ("Confidentiality Letter").
5.3. Mutual Cooperation; No Inconsistent Action. (a) Subject to the terms
and conditions hereof, Seller and Buyer agree to use their reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
the transactions contemplated by this Agreement, including all of the following:
(i) obtain prior to Closing all licenses, certificates, permits, approvals,
authorizations, qualifications and orders of governmental authorities as are
necessary for the consummation of the transactions contemplated hereby; and (ii)
effect all necessary registrations and filings. Seller and Buyer shall cooperate
fully with each other to the extent reasonable in connection with the foregoing.
(b) Buyer and Seller shall timely and promptly make all filings which
may be required by each of them in connection with the consummation of the
transactions contemplated hereby. Each party shall furnish to each other such
necessary information and assistance as the other party may reasonably request
in connection with the preparation of any necessary filings or submissions by it
to any governmental agency.
(c) Each of Seller and Buyer shall notify and keep the other advised
as to (i) any litigation or administrative proceeding pending and known to such
party, or to its knowledge threatened, which challenges the transactions
contemplated hereby and (ii) any event or circumstance which would constitute a
breach of their respective representations and warranties in this Agreement,
provided, that the failure of Seller or Buyer to comply with clause (ii) shall
not subject Seller or Buyer to any liability hereunder except as and to the
extent Seller or Buyer would be responsible for a breach of such representations
and warranties pursuant to Section 8 (including, without limitation, the
limitations on recovery and the time periods for bringing claims thereunder).
Subject to the provisions of Section 10 hereof, Seller and Buyer shall not take
any action inconsistent with their obligations under this Agreement or which
would
materially hinder or delay the consummation of the transactions contemplated by
this Agreement.
5.4. Public Disclosures. Prior to the Closing Date, no party to this
Agreement will issue any press release or make any other public disclosures
concerning this transaction or the contents of this Agreement without the prior
consent of the other party, which consent shall not be unreasonably withheld.
Notwithstanding the above, (i) nothing in this Section 5.4 will preclude any
party from making any disclosures required by law or regulation or necessary and
proper in conjunction with the filing of any tax return or other document
required to be filed with any federal, state or local governmental body,
authority or agency, including to comply with the accounting and the Securities
and Exchange Commission disclosure obligations and (ii) Buyer acknowledges that
Seller will file a Current Report on Form 8-K with the Securities and Exchange
Commission to disclose this Agreement and, promptly after the Closing Date, the
consummation of the transactions contemplated hereby.
5.5. Access to Records and Personnel. (a) Following the Closing Date, the
parties shall retain the Books and Records relating to the Business and the
Assets in their possession for the period of time set forth in their respective
records retention policies on the Closing Date or for such longer period as may
be required by law or any applicable court order.
(b) The parties will allow each other reasonable access to such Books
and Records, and to personnel having knowledge of the whereabouts and/or
contents of such Books and Records, for legitimate business reasons, such as the
preparation of tax returns or the defense of litigation. Each party shall be
entitled to recover its reasonable out-of-pocket costs (including, without
limitation, copying costs) incurred in providing such records and/or personnel
to the other party. The requesting party will hold in confidence all
confidential information identified as such by, and obtained from, the
disclosing party, any of its officers, agents, representatives or employees,
provided, however, that information which was in the public domain; (ii) was in
fact known to the requesting party prior to disclosure by the disclosing party,
its officers, agents, representatives or employees; or (iii) becomes known to
the requesting party from or through a third party not under an obligation of
non-disclosure to the disclosing party, shall not be deemed to be confidential
information.
5.6. Employee Relations and Benefits.
(a) Conduct Prior to Closing Date. Prior to the Closing Date, without
the prior consent of Buyer, Seller shall take no action to terminate the
employment of any key employee of the Business, and Seller shall be under no
obligation to terminate any employee of the Business.
(b) Continuity of Employment. The parties hereto intend that there
shall be continuity of employment with respect to all employees who were
employed in the Business immediately prior to the Closing Date.
(c) Offers of Employment. Prior to the Closing Date, Buyer shall, in
accordance with hiring practices and procedures that are similar to those used
by STR in the ordinary course of its business, offer employment to (i) the
employees set forth on Schedule
5.6(c)(i) and (ii) all other persons employed in the Business from or after the
date of this Agreement and which continue to be employed by the Business
immediately prior to Closing (the "Offer Employees"), provided that Buyer has
approved the hire of any such new persons by the Business after the date hereof
and prior to the Closing Date. Such offers shall be at substantially the same
remuneration that such employees received immediately prior to Closing. Offer
Employees who accept Buyer's offer of employment are referred to collectively as
"Transferred Employees".
(d) Comparable Benefits. Buyer shall provide such benefits (including,
but not limited to, health, welfare, 401(k) plan, vacation, savings and
severance benefits), effective as of the Closing Date, to the Transferred
Employees that are substantially equivalent in the aggregate to the benefits in
effect for such employees immediately prior to the Closing Date. To the extent
that any Transferred Employee is receiving benefits under any employee benefit
plan of Buyer (a "Buyer Employee Plan"), each Transferred Employee shall,
without duplication of benefits, be given credit for all service with Seller, as
applicable, prior to the Closing Date, for purposes of eligibility to
participate, vesting and determination of level of benefits (excluding, however,
benefit accrual under any defined benefit plans). Seller intends to transfer to
Buyer the health insurance policy (the "Policy" ) issued by Blue Cross Blue
Shield ("Blue Cross" ). To the extent permitted under the Policy and as
administered by Blue Cross, Buyer shall use commercially reasonable efforts to
cause Blue Cross to waive all limitations as to preexisting conditions,
exclusions and waiting periods with respect to participation and coverage
requirements applicable to the Transferred Employees under any Buyer Employee
Plans that such employees may be eligible to participate in on or after the
Closing Date, other than limitations or waiting periods that are already in
effect with respect to such employees and that have not been satisfied as of the
Closing Date under any welfare plan maintained for the Transferred Employees by
Seller immediately prior to the Closing Date, and (ii) provide each Transferred
Employee with credit for any co-payments and deductibles paid prior to the
Closing Date and during the applicable plan year in which the Closing Date
occurs in satisfying any applicable deductible or out-of-pocket requirements
under any welfare plans that such employees are eligible to participate in after
the Closing Date.
(e) Benefit Plan Participation. Except as expressly provided in this
Section 5.6 or except as otherwise required by applicable law, Transferred
Employees shall cease active participation in (and accrual of additional
benefits under) all Benefit Plans as of the Closing Date.
(f) Employment Liabilities.
(i) With respect to claims for welfare benefits by Transferred
Employees (including any beneficiary or dependent thereof), Seller shall retain
(1) all liabilities and obligations arising under any Benefit Plan to the extent
that such liability or obligation relates to claims that are covered by such
Benefit Plans and were incurred (whether or not reported) prior to the Closing
Date, and (2) all liabilities and obligations arising under any workers'
compensation arrangement to the extent such liability or obligation relates to
claims incurred prior to the Closing Date, including liability for any
retroactive worker's compensation premiums attributable to such period. Buyer
shall be responsible, in accordance with the terms of the Buyer Employee Plans,
for (X) all liabilities and obligations arising under any such Buyer
Employee Plan to the extent that such liability or obligation relates to claims
that are covered by such Buyer Employee Plans and were incurred (whether or not
reported) on or after the Closing Date, and (Y) all liabilities and obligations
arising under any workers' compensation arrangement to the extent such liability
or obligation relates to claims incurred on or after the Closing Date, including
liability for any retroactive workers' compensation premiums attributable to
such period.
(ii) For purposes of Section 5.6(f)(i), claims shall be deemed to
have been incurred:
(A) with respect to all death or dismemberment claims, on the
actual date of death, dismemberment or injury resulting in death;
(B) with respect to all disability claims, other than short-term
disability, on the date the claimant became unable to (X) perform his or her
regular duties of employment, in the case of an employee claimant, or (Y)
perform the normal day-to-day responsibilities that would reasonably be expected
of someone of similar age and lifestyle, in the case of a dependent claimant;
(C) with respect to short-term disability claims, on each day for
which income benefits are payable to the claimant;
(D) with respect to all medical, drug or dental claims, on the
date the service was received or the supply was purchased by the claimant;
provided, however, a medical claim relating to a claimant's hospitalization
shall be deemed to be incurred on the date the claimant was first hospitalized;
and
(E) with respect to workers' compensation claims, on the date the
incident giving rise to the claim occurred.
(g) Defined Contribution Plans. For purposes of this Agreement,
"Seller DC Plan" means a Benefit Plan which is a defined contribution pension
plan. Transferred Employees shall be entitled to distributions of their account
balances under each Seller DC Plan as soon as practicable following the Closing
Date, in accordance with the provisions of the applicable Seller DC Plan and
applicable law. Buyer shall accept rollover contributions from a Seller DC Plan
into a defined contribution or 401(k) Plan maintained by Buyer (the "Buyer
Savings Plan") of the account balances distributed to the Transferred Employees
from a Seller DC Plan; provided, however, that the Buyer Savings Plan shall not
be required to permit distributions or transfers by such Transferred Employees
to the extent it would adversely effect the tax-qualified status of the Buyer
Savings Plan.
(h) Accrued Vacation. With respect to any accrued but unused vacation
time to which any Transferred Employee is entitled pursuant to the vacation
policy applicable to such employee immediately prior to Closing herein (the
"Vacation Policy"), Buyer shall allow such Transferred Employee to use such
accrued vacation; provided, however, that if Buyer deems it necessary to
disallow such employee from taking such accrued vacation, Buyer shall be liable
for and pay in cash to such employee an amount equal to such vacation time in
accordance with terms of the Vacation Policy; provided, further, that Buyer
shall be liable for and pay in cash an
amount equal to such accrued vacation time to any Transferred Employee whose
employment terminates for any reason subsequent to Closing. Notwithstanding the
foregoing, nothing in this Section 5.6(h) shall require Buyer to make any cash
payments in lieu of vacation in violation of the Vacation Policy.
(i) WARN Act. Buyer agrees to provide any required notice under the
Worker Adjustment and Retraining Notification Act and any other applicable law
("WARN") and to otherwise comply with any such statute with respect to any
"plant closing" or "mass layoff" (as defined in WARN) or similar event affecting
Transferred Employees and occurring on or after Closing or arising as a result
of the transactions contemplated hereby.
(j) COBRA. Seller will provide any required notice under the
Consolidated Omnibus Budget Reconciliation Act of 1986, as amended ("COBRA"),
and any other applicable law with respect to any "qualifying event" (as defined
for purposes of COBRA) occurring with respect to any Offer Employees at or prior
to the Closing Date. Buyer will provide any required notice under COBRA and any
other applicable law with respect to any "qualifying event" (as so defined)
occurring with respect to any Transferred Employee after the Closing Date.
(k) Employment Agreements. Buyer shall make offers to enter into
employment agreements substantially in the form attached hereto as Exhibits A-1
and A-2, respectively, with respect to the employment of Xxxxxx Xxxx and Xxxxxx
Xxxxx; provided, however, the effectiveness of such employment agreements shall
be conditioned upon the closing of the transactions contemplated herein.
(l) Blue Cross Blue Shield Policy. From and after the Closing Date,
Buyer shall be responsible for all obligations existing or arising under the
Policy, which Policy shall be assumed by Buyer at the Closing to the extent
permitted by Blue Cross. If assumption of the Policy at the Closing is not
permitted by Blue Cross, Buyer shall use commercially reasonable efforts to
cause the Policy to be assumed by Buyer at or as soon as reasonably possible
following the Closing Date and shall provide Seller with evidence of such
assumption. For such time following the Closing Date, if any, that the Policy
has not been assumed by Buyer, Buyer shall reimburse Seller for all costs
related to the Policy (including premiums) incurred by Seller in maintaining the
Policy.
(m) No Rights Conferred on Employees. Nothing herein, expressed or
implied, shall confer upon any employee or former employee of Seller or Buyer or
any of their affiliates (including, without limitation, the Transferred
Employees), any rights or remedies including, without limitation, any right to
employment or continued employment for any specified period) of any nature or
kind whatsoever, under or by reason of this Agreement.
5.7. "As Is" Condition. Except as expressly provided in Section 3 hereof,
Buyer agrees that it shall accept all Assets in an "As Is" "Where Is" condition
at the Closing Date. Except as expressly provided in Section 3 hereof, Seller
makes no warranty with respect to the value, condition or use of the assets,
whether expressed or implied, including, without limitation, any implied
warranty of merchantability or fitness for a particular purpose.
5.8. Confidentiality Letter. Until the Closing shall actually have
occurred, Buyer acknowledges that it remains subject to the Confidentiality
Letter, including but not limited to the provisions thereof relating to the
solicitation of employees (except as expressly contemplated by Section 5.6(c)).
5.9. Financing. Effective as of the Closing Date, Buyer shall be
responsible for funding all disbursements of the Business. Any cash, cash
equivalents, similar investments, certificates of deposit, Treasury bills and
other marketable securities held by the Business at the Closing shall be treated
by the parties consistent with Section 1.3.
5.10. Administration of Accounts; Customer Inquiries. (a) All payments and
reimbursements made in the ordinary course of business by any third party in the
name of or to Seller or any affiliate thereof in connection with or arising out
of the Assets or Assumed Liabilities after the Closing Date shall be held by
such person in trust for the benefit of Buyer and, immediately upon receipt by
such person of any such payment or reimbursement, such person shall pay over to
Buyer the amount of such payment or reimbursement without right of set off.
(b) All payments and reimbursements made in the ordinary course of
business by any third party in the name of or to Buyer or any affiliate thereof
in connection with or arising out of the Excluded Assets or Excluded Liabilities
after the Closing Date shall be held by such person in trust for the benefit of
Seller and, immediately upon receipt by such person of any such payment or
reimbursement, such person shall pay over to Seller the amount of such payment
or reimbursement without right of set off.
(c) Seller shall promptly forward to Buyer any mail (physical,
electronic or otherwise), facsimile or telephone inquiries of actual or
potential clients, customers, suppliers and vendors of or relating to the
Business, including, without limitation, customer orders.
5.11. Assignment of Contracts. At the Closing and effective as of the
Closing Date, Seller shall assign to Buyer all its rights under the Contracts.
Notwithstanding the foregoing, no Contract shall be assigned contrary to law or
the terms of such Contract and, with respect to Contracts that cannot be
assigned to Buyer at the Closing Date, the performance obligations of Seller
thereunder shall, unless not permitted by such Contract, be deemed to be
subleased or subcontracted to Buyer until such Contract has been assigned. Buyer
shall assist Seller in obtaining any necessary approvals to such subleases and
subcontracts, provided Buyer shall not be required to agree to any materially
adverse terms or modifications in order to obtain such approvals. Seller shall
use its commercially reasonable efforts to obtain all necessary consents and
Buyer shall take all necessary actions to perform and complete all Contracts in
accordance with their terms if neither assignment, subleasing nor subcontracting
is permitted by the other party, and Seller shall pay over to Buyer any amounts
received by Seller after the Closing Date as a result of performance by Buyer of
such Contracts.
5.12. Outstanding Checks. Seller shall cause all outstanding checks issued
in connection with the operation of the Business prior to the Closing Date to be
honored whether such checks are presented for payment from any accounts of
Seller or the Business before or after the Closing Date.
5.13. Named Insured. As of the Closing Date, Xxxxxx shall have Buyer named
as an additional insured beneficiary under its professional liability insurance
policy, which policy shall provide insurance coverage of not less than
$1,000,000. At Buyer's reasonable request, Seller shall provide Buyer with a
copy of the certificate of insurance and documentation relating to such
insurance. Xxxxxx'x obligations pursuant to this Section 5.13 shall
automatically terminate on the date which is one (1) year from the Closing Date.
5.14. Use of Name. Seller shall cease all use of the names "Xxxxxxx(R),"
"Xxxxxxx Laboratories" and "Xxxxxxx Labs" or any variation thereof or any
derivations thereof as promptly as practicable after the Closing Date and in no
event later than three (3) months after the Closing Date. Buyer shall have the
royalty-free right from and after the Closing Date to use, for a period of three
(3) months following the Closing Date, any letterhead, invoices or other
supplies which bear the name "Xxxxxx" or "Xxxxxx Technical Services" alone or in
combination with other words if such signs or supplies (i) were included in the
Assets or (ii) were contracted for by the Seller for use in the Business prior
to the Closing Date, and provided that any such use shall also include a clear
and conspicuous disclaimer stating that the Business is no longer affiliated
with Seller or Xxxxxx and providing appropriate contact information for the
Business substituting for any Seller or Xxxxxx contact information contained on
such signs or supplies.
5.15. Purchase Price Allocation. Within thirty (30) days from the Closing
Date, Buyer and Seller agree to act in good faith to allocate the Purchase Price
and the Assumed Liabilities among the Assets in accordance with section 1060 of
the Internal Revenue Code of 1986, as amended (the "Code") and the Treasury
Regulations promulgated thereunder (the "Purchase Price Allocation"). Buyer and
Seller recognize that the Purchase Price does not include Buyer's acquisition
expenses and that Buyer will allocate such expenses appropriately. Seller and
Buyer agree to act in accordance with the computations and allocations contained
in the Purchase Price Allocation (including any modifications thereto reflecting
any post-closing adjustments) in any relevant Tax returns or filings, including
any forms or reports required to be filed pursuant to Section 1060 of the Code,
the Treasury Regulations promulgated thereunder or any provisions of local,
state and foreign law ("1060 Forms"), and to cooperate in the preparation of any
1060 Forms and to file such 1060 Forms in the manner required by applicable law.
5.16. Buyer's Operation of the Business. From and after the Closing Date
through and including the WC Determination Date, Buyer shall not delay the
payment of any payables or accelerate the collection of any Accounts Receivable
of the Business, whether by offering more favorable terms of payment or
otherwise, in a manner inconsistent with the past practice of the Business the
effect of which would cause a material obligation or liability to Seller.
SECTION 6
CONDITIONS
6.1. Conditions Precedent to Obligations of Buyer and Seller. The
respective obligations of Buyer and Seller to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing Date of the following conditions:
(a) No Injunction, etc. At the Closing Date, there shall be no
injunction, restraining order or decree of any nature of any court or
governmental agency or body of competent jurisdiction that is in effect that
restrains or prohibits the consummation of the Asset Purchase or the transfer to
Buyer by Seller of any Assets, except for the transfer of any Assets the failure
of which to transfer would not, individually or in the aggregate, be material to
the operations of the Business taken as a whole.
(b) Regulatory Authorizations. All consents, approvals, authorizations
and orders of federal, state and foreign governmental and regulatory authorities
as are necessary in connection with the transfer of the Assets to Buyer or which
if not obtained would be reasonably likely to subject Buyer or Seller, or any
stockholder, officer, director or agent of any such person to civil or criminal
liability or could render such transfer void or voidable (the "Required
Consents") shall have been obtained, except for Required Consents the failure to
obtain which, individually or in the aggregate, are not material to the
operations of the Business taken as a whole and the failure of which to obtain
would not subject Buyer, Seller, or any stockholder, officer, director, or agent
of any such person to civil or criminal liability.
(c) Leased Real Property. Buyer and Seller shall have executed an
assignment and assumption agreement of the lease of the Leased Real Property,
the form of which is attached hereto as Exhibit B (the "Assignment and
Assumption of Lease") with such changes as are reasonably requested by counsel
to Buyer and Seller, provided that such assignment shall not modify the rights
and obligations set forth in this Agreement or the Xxxx of Sale Agreement (as
defined herein).
6.2. Conditions Precedent to Obligation of Seller. The obligation of Seller
to consummate the transactions provided for in this Agreement is subject to
fulfillment of each of the following conditions:
(a) Accuracy of Buyer's Representations and Warranties; Covenants of
Buyer. (i) The representations and warranties of STR and Buyer contained in this
Agreement (except as affected by the transactions contemplated in this
Agreement) that are qualified as to materiality shall be true and correct and
the representations and warranties of STR and Buyer set forth in this Agreement
and that are not so qualified shall be true and correct in all material
respects, in each case on the date of this Agreement (except to the extent cured
prior to the Closing Date) and on the Closing Date as though made on the Closing
Date, except to the extent such representations and warranties speak as of an
earlier date; (ii) STR and Buyer shall have complied in all material respects
with all covenants contained in this Agreement to be performed by them prior to
Closing; and (iii) Seller shall have received (A) a certificate signed by an
officer of STR to such effect and (B) a certificate signed by an officer of
Buyer to such effect.
(b) Xxxx of Sale, Assignment and Assumption Agreement. Buyer shall
have executed an undertaking (the "Xxxx of Sale Agreement") substantially in the
form of Exhibit C attached hereto, pursuant to which Buyer, among other things,
agrees to purchase the Assets of the Business and assume all Assumed
Liabilities.
(c) Exemption Certificates. Buyer shall have executed and delivered to
Seller all certificates required by all relevant taxing authorities that are
necessary to support any exemption from the imposition of any sales or similar
Tax on the transfer of the Assets.
(d) Bank Consent. Seller shall have received the consent of Xxxxx
Fargo Bank, N.A. to the transactions contemplated herein and a release of all
liens on the Assets.
(e) Landlord. Seller shall have received the consent of the landlord
of the Leased Real Property to the assignment thereof to Buyer.
(f) Release. Seller shall have received a release from the landlord of
the Leased Real Property which releases Seller from any and all obligations of
Seller to such landlord.
(g) Fairness Opinion. The Board of Directors of Xxxxxx shall have
received an opinion from Xxxxx X. Xxxxxxx Company Limited that the consideration
to be received from the sale of the Business is fair from a financial point of
view to Xxxxxx.
6.3. Conditions Precedent to Obligation of Buyer. The obligation of Buyer
to consummate the transactions provided for in this Agreement is subject to
fulfillment of each of the following conditions:
(a) Accuracy of Representations and Warranties of Seller; Covenants of
Seller. (i) The representations and warranties of Xxxxxx and Seller contained in
this Agreement (except as affected by the transactions contemplated in this
Agreement) that are qualified as to materiality shall be true and correct and
the representations and warranties of Xxxxxx and Seller set forth in this
Agreement and that are not so qualified shall be true and correct in all
material respects, in each case on the date of this Agreement (except to the
extent cured prior to the Closing Date) and on the Closing Date as though made
on the Closing Date, except to the extent such representations and warranties
speak as of an earlier date; (ii) Xxxxxx and Seller shall have complied in all
material respects with all covenants contained in this Agreement to be performed
by it prior to Closing; and (iii) Buyer shall have received (A) a certificate
signed by an officer of Xxxxxx to such effect and (B) a certificate signed by an
officer of Seller to such effect.
(b) Xxxx of Sale, Assignment and Assumption Agreement. Seller shall
have executed the Xxxx of Sale Agreement, pursuant to which Seller agrees, among
other things, to sell and assign the Assets relating to the Business.
(c) Certain Seller Conditions to be Met. The conditions set forth in
Section 6.2(d), (e) and (f) shall have been satisfied.
(d) Intellectual Property Assignments. Seller shall have executed and
delivered an assignment substantially in the form attached hereto as Exhibit D,
which assignment assigns all Assets that constitute intellectual property,
including Copyright Rights, Internet Rights, Trademark Rights and Technology.
(e) Material Adverse Change. Since the date of this Agreement, there
shall not have occurred with respect to the Business any material adverse change
in the condition
(financial or otherwise), nature or amount of liabilities, results of
operations, Assets, business or prospects of the Business, or any events which,
individually or in the aggregate, could reasonably be expected to have such a
material adverse change.
(f) Legal Opinion. Seller shall have caused its counsel, Xxxxxxx Xxxx
& Xxxxxxxxx, to issue an opinion addressed to Buyer substantially in the form
attached hereto as Exhibit E.
SECTION 7
CLOSING
7.1. Closing Date. Unless this Agreement shall have been terminated and the
transactions herein shall have been abandoned pursuant to Section 9 hereof, the
closing of the transactions contemplated by this Agreement (the "Closing") shall
take place at the offices of Xxxxxxx Xxxx & Xxxxxxxxx, 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, XX 00000, at 10:00 a.m., New York City time, on August 27, 2002 (or as
soon as practicable thereafter as all of the conditions to the Closing set forth
in Section 6 hereof are satisfied or waived), or such other date, time and place
as shall be agreed upon by Seller and Buyer (the actual date and time being
herein called the "Closing Date").
7.2. Buyer Deliveries. At the Closing, Buyer shall deliver to Seller:
(a) the Purchase Price as provided in Section 2.1 hereof;
(b) the documents described in Section 6.2 hereof; and
(c) such other documents and instruments as counsel for Buyer and
Seller mutually agree to be reasonably necessary to consummate the transactions
described herein.
7.3. Seller Deliveries. At the Closing, Seller shall deliver to Buyer:
(a) the documents described in Section 6.3 hereof; and
(b) such other documents and instruments as counsel for Buyer and
Seller mutually agree to be reasonably necessary to consummate the transactions
described herein.
SECTION 8
INDEMNIFICATION
8.1. Indemnification by Xxxxxx and Seller. Xxxxxx and Seller, jointly and
severally (together, the "Seller Indemnifying Parties"), shall defend, indemnify
and hold STR and Buyer and their respective affiliates (the "Buyer Indemnitees")
harmless from and against and in respect of any and all actual losses,
liabilities, damages, judgments, settlements and expenses, including reasonable
attorneys' fees, incurred directly by the Buyer Indemnitees (hereinafter "Buyer
Losses") which arise out of (i) any breach of any of the representations and
warranties contained in Section 3 hereof, without regard to any cures thereof
after the date hereof, (ii) any breach by the Seller Indemnifying Parties of any
of their respective covenants (other than the covenant set forth in clause (ii)
of the first sentence of Section 5.3(c)) in this
Agreement which survive the Closing, (iii) the ownership, operation or use of
any of the Assets prior to the Closing Date (except for any Assumed
Liabilities), (iv) any noncompliance by the Seller Indemnifying Parties with any
applicable bulk sales laws or fraudulent transfer laws in connection with the
transactions contemplated in this Agreement, or (v) any Excluded Liabilities.
The Buyer Indemnitees shall give the Seller Indemnifying Parties prompt written
notice of any third party claim which may give rise to any indemnity obligation
under this Section 8.1, together with the estimated amount of such claim, and
the Seller Indemnifying Parties shall have the right to assume the defense of
any such claim through counsel of its own choosing, by so notifying the Buyer
Indemnitees promptly after receipt of the Buyer Indemnitees' written notice;
provided, however, that the Seller Indemnifying Parties' counsel shall be
reasonably satisfactory to the Buyer Indemnitees. Failure to give prompt notice
shall not affect the indemnification obligations hereunder in the absence of
actual prejudice. If the Buyer Indemnitees desire to participate in any such
defense assumed by the Seller Indemnifying Parties, they may do so at their sole
cost and expense. If the Seller Indemnifying Parties decline to assume any such
defense, they shall be liable for all reasonable costs and expenses of defending
such claim incurred by the Buyer Indemnitees, including reasonable fees and
disbursements of counsel. None of the parties shall, without the prior written
consent of the other parties, which shall not be unreasonably withheld, settle,
compromise or offer to settle or compromise any such claim or demand on a basis
which would result in the imposition of a consent order, injunction or decree
which would restrict the future activity or conduct of the other parties or any
subsidiary or affiliate thereof or if such settlement or compromise does not
include an unconditional release of the other parties for any liability arising
out of such claim or demand or any related claim or demand.
(b) The foregoing obligation to indemnify the Buyer Indemnitees set
forth in Section 8.1(a) shall be subject to each of the following limitations:
(i) The indemnification obligation of the Seller Indemnifying
Parties under Section 8.1(a)(i) and any breach of the agreements and covenants
to be performed by the Seller Indemnifying Parties prior to Closing shall
survive the Closing Date for only the periods specified in Section 3.21 hereof,
and thereafter all such representations, warranties and covenants of the Seller
Indemnifying Parties under this Agreement shall be extinguished. No claim for
the recovery of such Buyer Losses may be asserted by the Buyer Indemnitees after
such periods specified in Section 3.21 hereof; provided, however, that claims
first asserted in writing with specificity within 30 days of such period shall
not thereafter be barred;
(ii) No reimbursement for Buyer Losses asserted against the
Seller Indemnifying Parties under Section 8.1(a)(i), above shall be required
unless and until the cumulative aggregate amount of such Buyer Losses equals or
exceeds $250,000 (the "Threshold"). In the event that Buyer Losses exceed the
Threshold, then all such Buyer Losses shall be subject to indemnification
hereunder without regard to the Threshold; provided that the Threshold shall not
apply to any claims with respect to any breach of the representations contained
in Section 3.11 herein.
(iii) The Seller Indemnifying Parties' liability to the Buyer
Indemnitees under Section 8.1(a)(i) for Buyer Losses in excess of the Threshold
shall not exceed twenty percent (20%) of the Purchase Price; provided, however,
Buyer Losses attributable to any breach
of the representations and warranties contained in Section 3.11 herein shall be
excluded in calculating such limitations.
(c) The indemnities provided in this Section 8.1 shall survive the
Closing without regard to any prior investigation or knowledge by or of the
Buyer Indemnitees. The indemnity provided in this Section 8.1 shall be the sole
and exclusive remedy of the Buyer Indemnitees against the Seller Indemnifying
Parties at law or equity for any matter covered by Sections 8.1(a), except for
Buyer Losses attributable to fraud by any of the Seller Indemnifying Parties.
(d) In no event shall the Seller Indemnifying Parties be liable to the
Buyer Indemnitees for special, indirect, incidental, consequential or punitive
damages.
8.2. Indemnification by STR and Buyer. STR and Buyer, jointly and severally
(together, the "Buyer Indemnifying Parties") shall defend, indemnify and hold
Xxxxxx and Seller and their respective affiliates (the "Seller Indemnitees")
harmless from and against and in respect of any and all actual losses,
liabilities, damages, judgments, settlements and expenses, including reasonable
attorney fees, incurred directly by the Seller Indemnitees (hereinafter
"Seller's Losses"; together with Buyer Losses, "Losses") arising out of (i) any
breach of any of the representations and warranties contained in Section 4
hereof, without regard to any cures thereof after the date hereof, (ii) any
breach by the Buyer Indemnifying Parties of any of their respective covenants
(other than the covenant set forth in clause (ii) of the first sentence of
Section 5.3(c)) in this Agreement which survives the Closing, (iii) the
ownership, operation or use of the Assets on or after the Closing Date or (iv)
all Assumed Liabilities. The Seller Indemnitees shall give the Buyer
Indemnifying Parties prompt written notice of any third party claim which may
give rise to any indemnity obligation under this Section 8.2, together with the
estimated amount of such claim, and the Buyer Indemnifying Parties shall have
the right to assume the defense of any such claim through counsel of its own
choosing, by so notifying the Seller Indemnitees promptly following the receipt
of the Seller Indemnitees' written notice; provided, however, that the Buyer
Indemnifying Parties' counsel shall be reasonably satisfactory to the Seller
Indemnitees. Failure to give prompt notice shall not affect the indemnification
obligations hereunder in the absence of actual prejudice. If the Seller
Indemnitees desire to participate in any such defense assumed by the Buyer
Indemnifying Parties they may do so at their sole cost and expense. If the Buyer
Indemnifying Parties decline to assume any such defense, they shall be liable
for all costs and expenses of defending such claim incurred by the Seller
Indemnitees, including reasonable fees and disbursements of counsel. None of the
parties shall, without the prior written consent of the other parties, which
shall not be unreasonably withheld, settle, compromise or offer to settle or
compromise any such claim or demand on a basis which would result in the
imposition of a consent order, injunction or decree which would restrict the
future activity or conduct of the other parties or any subsidiary or affiliate
thereof or if such settlement or compromise does not include an unconditional
release of the other parties for any liability arising out of such claim or
demand.
(b) The foregoing obligation to indemnify the Seller Indemnitees set
forth in Section 8.2(a) shall be subject to each of the following limitations:
(i) The Buyer Indemnifying Parties indemnification obligation
under Section 8.2(a)(i) and any breach of the agreements and covenants of Buyer
to be performed prior to Closing shall survive the Closing Date for only the
periods specified in Section 4.8 hereof, and thereafter all such
representations, warranties and covenants of the Buyer Indemnifying Parties
under this Agreement shall be extinguished. No claim for the recovery of such
Seller's Losses may be asserted by the Seller Indemnitees after periods
specified in Section 4.8 hereof; provided, however, that claims first asserted
in writing with specificity within 30 days of such period shall not thereafter
be barred.
(ii) No reimbursement for Seller's Losses asserted against the
Buyer Indemnifying Parties under Section 8.2(a)(i), above shall be required
unless and until the cumulative aggregate amount of such Seller's Losses equals
or exceeds $250,000 (the "Buyer Threshold"). In the event that Seller's Losses
exceed the Buyer Threshold, then all such Seller Losses shall be subject to
indemnification hereunder without regard to the Buyer Threshold.
(iii) The Buyer Indemnifying Parties' liability to the Seller
Indemnitees under Section 8.2(a)(i) for Seller's Losses in excess of the Buyer
Threshold shall not exceed twenty percent (20%) of the Purchase Price.
(c) The indemnities provided in this Section 8.2 shall survive the
Closing without regard to any prior investigation or knowledge by or of the
Seller Indemnitees. The indemnity provided in this Section 8.2 shall be the sole
and exclusive remedy of the Seller Indemnitees against the Buyer Indemnifying
Parties at law or equity for any matter covered by Sections 8.2(a), except for
Seller Losses attributable to fraud by any of the Buyer Indemnifying Parties.
(d) In no event shall the Buyer Indemnifying Parties be liable to the
Seller Indemnitees for special, indirect, incidental, consequential or punitive
damages.
8.3. Indemnification Calculations. (a) The amount of any Seller's Losses or
Buyer Losses for which indemnification is provided under this Section 8 shall be
computed net of any insurance proceeds received by the indemnified party in
connection with such Losses.
(b) The parties agree that any indemnification payments made pursuant
to this Agreement shall be treated for all federal, state and local income tax
purposes as an adjustment to the Purchase Price, unless otherwise required by
applicable law.
SECTION 9
TERMINATION
9.1. Termination Events. Without prejudice to other remedies which may be
available to the parties by law or this Agreement, this Agreement may be
terminated and the transactions contemplated herein may be abandoned:
(a) by mutual written consent of Buyer and Seller;
(b) by Seller, in its sole discretion, after the date which is ten
(10) days after the date of this Agreement, if Seller shall not have received
evidence, in form and substance
reasonably satisfactory to Seller, that Buyer has sufficient cash or financing
on hand to consummate the transactions contemplated by this Agreement; or
(c) by either Buyer or Seller by written notice to the other party if
the Closing shall not have been consummated on or before August 31, 2002, unless
the failure to consummate the sale and purchase of the Assets is the result of a
breach of this Agreement by the party seeking to terminate this Agreement.
9.2. Effect of Termination. In the event of any termination of the
Agreement as provided in Section 9.1, this Agreement shall forthwith become
wholly void and of no further force and effect and there shall be no liability
on the part of Buyer or Seller, except that (i) the obligations of Buyer and
Seller under Sections 5.2(b), 5.8 and 11.6 of this Agreement shall remain in
full force and effect and (ii) termination shall not preclude either party from
suing the other party for breach of this Agreement.
SECTION 10
ALTERNATIVE DISPUTE RESOLUTION
The parties shall attempt in good faith to resolve any dispute arising out
of or relating to this Agreement promptly by negotiations between executives who
have authority to settle the controversy. Any party may give the other
party(ies) written notice of any dispute not resolved in the normal course of
business. Within twenty (20) days after delivery of said notice, executives of
both parties shall meet at a mutually acceptable time and place, and thereafter
as often as they reasonably deem necessary, to exchange relevant information and
to attempt to resolve the dispute. If the matter has not been resolved within
sixty (60) days of the disputing party's original notice, or if the parties fail
to meet within twenty (20) days, either party may initiate legal proceedings to
resolve the controversy or claim. If a party's negotiator intends to be
accompanied at a meeting by an attorney, the other party's negotiator shall be
given at least three (3) business days' notice of such intention and may also be
accompanied by an attorney. All negotiations pursuant to this clause are
confidential and shall be treated as compromise and settlement negotiations for
purposes of the Federal Rules of Evidence and state rules of evidence.
SECTION 11
MISCELLANEOUS
11.1. Notices. All communications provided for hereunder shall be in
writing and shall be deemed to be given when delivered in person or by private
courier with receipt, when telefaxed and received, or three (3) days after being
deposited in the United States mail, first-class, registered or certified,
return receipt requested, with postage paid to the appropriate address below, or
to such other address as any such party shall designate by written notice to the
other party hereto.
If to STR:
Specialized Technology Resources, Inc.
00 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
Fax: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxxx LLP
CityPlace I
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Xx., Esq.
Fax: (000) 000-0000
If to Buyer:
c/o Specialized Technology Resources, Inc.
00 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
Fax: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxxx LLP
CityPlace I
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Xx., Esq.
Fax: (000) 000-0000
If to Xxxxxx:
Xxxxxx, Inc.
00000 X. Xxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx
Fax: (000) 000-0000
With a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
If to Seller:
Xxxxxx Technical Services, Inc.
c/x Xxxxxx, Inc.
00000 X. Xxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx
Fax: (000) 000-0000
With a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
11.2. Bulk Transfers. Buyer waives compliance with the provisions of all
applicable laws relating to bulk transfers in connection with the Asset
Purchase.
11.3. Transfer Taxes. All transfer, documentary, sales, use, registration,
value-added and other similar Taxes and related fees (including any penalties,
interest and additions to Tax) (collectively, "Transfer Taxes") incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid fifty percent (50%) by Seller and fifty percent (50%) by Buyer. Seller and
Buyer shall cooperate in timely making all filings, returns, reports and forms
as may be required to comply with the provisions of such Transfer Tax laws and
to the extent any exemptions from such taxes are available Buyer and Seller
shall cooperate to prepare any certificates or other documents necessary to
claim such exemptions.
11.4. Further Assurances; Asset Returns. Upon request from time to time,
Seller shall execute and deliver all documents, take all rightful oaths, and do
all other acts that may be reasonably necessary or desirable, in the reasonable
opinion of counsel for Buyer, to perfect or record the title of Buyer, or any
successor of Buyer, to the Assets transferred or to be transferred under this
Agreement, or to aid in the prosecution, defense, or other litigation of any
rights arising from said transfer (provided that Buyer shall reimburse Seller
for all out-of-pocket costs and expenses resulting from any such request). In
the event that Buyer receives any assets of Seller that are not intended to be
transferred pursuant to the terms of this Agreement, whether or not related to
the Business, Buyer agrees to promptly return such assets to Seller at Seller's
expense.
11.5. Other Covenants. Without limiting Section 5.11 herein, to the extent
that any consents needed to assign to Buyer any of the Assets have not been
obtained on or prior to the
Closing Date, this Agreement shall not constitute an assignment or attempted
assignment thereof if such assignment or attempted assignment would constitute a
breach thereof. If any such consent shall not be obtained on or prior to the
Closing Date, then (a) Seller and Buyer, if required under applicable law, shall
use their reasonable efforts in good faith to obtain such consent as promptly as
practicable thereafter and (b) if in the reasonable judgment of Buyer such
consent may not be obtained, the parties shall use reasonable efforts in good
faith to cooperate, and to cause each of their respective affiliates to
cooperate, in any lawful arrangement designed to provide for Buyer the benefits
under any such Assets.
11.6. Expenses. Subject to Section 11.3, Seller and Buyer shall each pay
their respective expenses (such as legal, investment banking and accounting
fees) incurred in connection with the origination, negotiation, execution and
performance of this Agreement.
11.7. Non-Assignability. This Agreement shall inure to the benefit of and
be binding on the parties hereto and their respective successors and permitted
assigns. This Agreement shall not be assigned by either party hereto without the
express prior written consent of the other party, and any attempted assignment,
without such consents, shall be null and void; provided, however, that Buyer may
assign its rights, but not its obligations, to STR (provided STR may only assign
such rights to any direct or indirect wholly owned subsidiary of STR and/or to
Xxxxxx (as defined below)), any direct or indirect wholly owned subsidiary of
Buyer or to Xxxxxx Financial, Inc. ("Xxxxxx") in its capacity as agent for the
lenders party to the Credit Agreement, dated August 15, 2001, among STR, Xxxxxx
and the parties thereto, as amended; provided, further, that STR may assign its
rights, but not its obligations, to Xxxxxx, as agent.
11.8. Amendment; Waiver. This Agreement may be amended, supplemented or
otherwise modified only by a written instrument executed by the parties hereto.
No waiver by either party of any of the provisions hereof shall be effective
unless explicitly set forth in writing and executed by the party so waiving.
Except as provided in the preceding sentence, no action taken pursuant to this
Agreement, including, without limitation, any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representations, warranties, covenants, or
agreements contained herein, and in any documents delivered or to be delivered
pursuant to this Agreement and in connection with the Closing hereunder. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach.
11.9. Representations and Warranties; Schedules and Exhibits.
(a) Buyer acknowledges and agrees that Seller is not making any
representation or warranty whatsoever, express or implied, including, without
limitation, in respect of Seller, the Business or the Assets, except those
representations and warranties of Seller explicitly set forth in Section 3 of
this Agreement. Each of Buyer and Seller agrees that neither Seller nor any of
the respective officers, directors, stockholders, employees, affiliates,
representatives or agents of Seller shall have any liability or responsibility
arising out of, or relating to, any information (whether written or oral),
documents or materials furnished by Seller or any of its officers, directors,
stockholders, employees, affiliates or any of their respective representatives
or agents, including the Confidential Memoranda, relating to the Business, dated
November 16, 2001 (as amended or supplemented), and any information, documents
or materials
made available to Buyer in certain "data rooms", management presentations or any
other form in expectation of the transactions contemplated by this Agreement,
except as reflected in the representations, warranties, covenants and agreements
contained in this Agreement.
(b) All exhibits and schedules hereto are hereby incorporated by
reference and made a part of this Agreement. All references to schedules are
deemed to be references to the specific schedule of the Disclosure Schedules.
All statements contained in schedules, exhibits, certificates and other
instruments attached hereto or delivered or furnished on behalf of Seller
pursuant hereto or in connection with the transactions contemplated hereby,
shall be deemed representations and warranties by Seller under Section 3 hereof.
Any fact or item which is clearly disclosed on any Schedule or Exhibit to this
Agreement or in the Financial Statements in such a way as to make its relevance
to a representation or representations made elsewhere in this Agreement or to
the information called for by another Schedule or other Schedules (or Exhibit or
other Exhibits) to this Agreement readily apparent shall be deemed to be an
exception to such representation or representations or to be disclosed on such
other Schedule or Schedules (or Exhibit or Exhibits), as the case may be,
notwithstanding the omission of a reference or cross-reference thereto. Any fact
or item disclosed on any Schedule or Exhibit hereto shall not by reason only of
such inclusion be deemed to be material and shall not be employed as a point of
reference in determining any standard of materiality under this Agreement.
11.10. Third Parties. This Agreement does not create any rights, claims or
benefits inuring to any person that is not a party hereto nor create or
establish any third party beneficiary hereto.
11.11. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
11.12. Consent to Jurisdiction. Each of the parties hereto, irrevocably
submits to the exclusive jurisdiction of the State of New York, for the purposes
of any suit, action or other proceeding arising out of this Agreement or any
transaction contemplated hereby. Each of the parties hereto, further agrees that
service of any process, summons, notice or document by U.S. registered mail to
such party's respective address set forth in Section 11.1 shall be effective
service of process for any action, suit or proceeding in New York with respect
to any matters to which it has submitted to jurisdiction as set forth above in
the immediately preceding sentence. Each of the parties hereto, irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in the State of New York and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
11.13. Certain Definitions. (a) For purposes of this Agreement, the terms
below shall have the following meanings:
(i) "affiliate" of a person means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned person;
(ii) "person" means an individual, corporation, partnership,
association, trust, limited liability company, limited partnership, limited
liability partnership, partnership, incorporated organization, other entity or
group (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended);
(iii) "subsidiary" or "subsidiaries" of Xxxxxx, Buyer, STR,
Seller or any other person means any person of which Xxxxxx, Buyer, STR, Seller
or such other person, as the case may be (either alone or through or together
with any other subsidiary), owns, directly or indirectly, 50% or more of the
stock or other equity interests the holder of which is generally entitled to
vote for the election of the board of directors or other governing body of such
person; and
(iv) "knowledge" a party hereto when modifying any representation
and warranty shall mean that such party has no knowledge that such
representation and warranty is not true and correct to the same extent as
provided in the applicable representation and warranty, and that: (A) such party
has made appropriate investigations and inquiries of its officers and
responsible employees; and (B) nothing has come to its attention in the course
of such investigation and inquiries or otherwise which would cause such party,
in the exercise of due diligence, to believe that such representation and
warranty is not true and correct in all material respects.
(b) Seller shall be deemed to have satisfied the requirements of
Section 11.13(a)(iv) by making appropriate investigations and inquiries of the
officers and employees of Seller listed on Schedule 11.13(a)(iv), and no
knowledge of any other officer or employee of Seller shall be imputed to the
persons listed on Schedule 11.13(a)(iv) or to Seller.
11.14. Entire Agreement. This Agreement, and the Schedules and Exhibits
hereto set forth the entire understanding of the parties hereto with respect to
the transactions contemplated hereby, and supersedes all prior discussions,
communications or writings.
11.15. Section Headings; Table of Contents. The section headings contained
in this Agreement and the Table of Contents to this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
11.16. Severability. If any provision of this Agreement shall be declared
by any court of competent jurisdiction to be illegal, void or unenforceable, all
other provisions of this Agreement shall not be affected and shall remain in
full force and effect.
11.17. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
[The remainder of this page intentionally left blank]
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
XXXXXX, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President and Chief Executive
Officer
XXXXXX TECHNICAL SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President
SPECIALIZED TECHNOLOGY RESOURCES, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Name: Xxxxxx X. Xxxxx
Title: President and Chief Executive
Officer
STR ACQUISITION SUB, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Name: Xxxxxx X. Xxxxx
Title: President and Chief Executive
Officer
