ASSET PURCHASE AGREEMENT
By and Among
NETWORK IMAGING CORPORATION
("NIC"),
SYMMETRICAL TECHNOLOGIES, INC.
("Seller"),
and
NETWORK STORAGE SOLUTIONS, INC.
("Buyer")
BA0DOCS1/0039024.07
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is
effective this 30th day of September, 1996, by and among
Symmetrical Technologies, Inc., a Delaware corporation with
its principal place of business at 000 Xxxxxxx Xxxxxxx,
Xxxxxxx, Xxxxxxxx 00000 ("Seller"), Network Storage Solutions,
Inc., a Delaware corporation with its principal place of
business at 000 Xxxxxxx Xxxxxxx, Xxxxxxx, Xxxxxxxx 00000
("Buyer"), and Network Imaging Corporation, a Delaware
corporation with its principal place of business at 000
Xxxxxxx Xxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000-0000 ("NIC").
RECITALS
WHEREAS, Seller is engaged in the business of
designing, manufacturing, assembling, marketing and
distributing computer storage devices for computer networks
(the "Business") at its facility located in Herndon, Virginia
(the "Facility"); and
WHEREAS, Seller is a wholly owned subsidiary of NIC,
which is engaged in the business of developing imaging
software and involved in systems integration; and
WHEREAS, subject to the terms and conditions
hereinafter set forth, Seller desires to sell to Buyer, and
Buyer desires to purchase from Seller, the Business and
substantially all of the property and assets of the Business.
NOW, THEREFORE in consideration of the mutual
representations, warranties, covenants, agreements and
conditions hereinafter set forth and the mutual benefits to be
derived from this Agreement, and intending to be legally
bound, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
Section 1.1. Assets to be Transferred. Upon and
subject to the terms and conditions set forth in this
Agreement (including without limitation Section 1.2), Seller
does hereby sell, transfer, convey, assign and deliver to
Buyer, and Buyer does hereby purchase and accept from Seller,
all of the business, property and assets owned by Seller which
are used by Seller in connection with the Business, including
the business, property and assets identified below in this
Section 1.1, wherever located and whether or not reflected on
the books of Seller, all as the same shall exist on the date
hereof (the "Closing Date") (collectively, the "Purchased
Assets"). The Retained Assets (as defined in Section 1.2 of
this Agreement) are specifically excluded from the business,
property and assets to be purchased and sold pursuant to this
Agreement. The Purchased Assets shall include without
limitation the following:
(a) Cash. All cash and cash equivalents of Seller,
including, without limitation, those monies deposited in
the accounts and financial institutions listed in
Schedule 1.1(a) of this Agreement;
(b) Inventory. All inventories of raw materials, work in
process and finished goods (including all such in
transit) owned by Seller on the Closing Date which are
used in the Business (the "Inventory");
(c) Machinery and Equipment. All machinery, equipment,
tools, dies, supplies and spare parts and all
accessories, attachments and ancillary devices relating
to any of the foregoing, owned by Seller (including such
items which are owned by Seller but are in the possession
of third parties) which are used in the Business on the
Closing Date, including without limitation those items
listed on Schedule 1.1(c) of this Agreement (the
"Machinery and Equipment");
(d) Office Equipment. All office furnishings, equipment,
data processing equipment and supplies which are located
in the Facility or used by Seller in the Business (the
"Office Equipment");
(e) Receivables. All accounts receivable of the Business
(collectively, the "Receivables").
(f) Vehicles. All vehicles owned by Seller which are used in
the Business, including without limitation the vehicles
listed on Schedule 1.1(f) of this Agreement (the
"Vehicles");
(g) Intellectual Property. The patents, trademarks, trade
names, trade styles, service marks and copyrights and the
applications and registrations therefor and licenses
thereof listed on Schedule 1.1(g) of this Agreement (the
"Intellectual Property"). Such Schedule currently lists
"None"; however, in the event such IP exists, upon such
discovery Seller agrees to assign such IP to Purchaser;
(h) Technical Information. All technical, engineering,
manufacturing, drawings, or marketing information
relating to the Business, including new developments,
inventions, know-how, processes, ideas and trade secrets
and all documentation thereof and all claims and rights
relating thereto;
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(i) Contracts. All rights existing under leases, contracts,
agreements and commitments relating to the Business under
(i) purchase and sale commitments of Seller relating to
the Business with respect to open unfilled purchase
orders issued to suppliers and open unfilled sales orders
received from customers, which have been entered into in
the ordinary course of business; and (ii) the personal
property leases, license agreements, software license
agreements, dealer, distributorship and sales
representation agreements, consulting agreements,
maintenance and service agreements, and all other similar
contracts and commitments specifically identified on
Schedule 1.1(i) of this Agreement (collectively, the
"Contracts"; provided, however, that the term "Contracts"
shall not include the Hardware and Software Maintenance
Agreement dated May 17, 1994 between NIC and Price
Waterhouse relating to the Student Loan Marketing
Association (Xxxxxx Xxx));
(j) Records and Files. Originals or copies of books, records
and files of Seller relating to the Business;
(k) Licenses; Permits. All governmental licenses, permits,
approvals and identification numbers of Seller to the
extent transferable or temporarily usable and relating to
the Business;
(l) Computer Software. All information systems, programs,
and software and documentation thereof wherever located
which relates to the Business, either owned by Seller or
which Seller has the unrestricted right to transfer to
Buyer;
(m) Goodwill. All goodwill of the Business;
(n) Prepaid Expenses/Deposits. All prepaid expenses and
deposits relating to the Business, excluding certain
deposits, prepaid expenses and accrued expenses;
(o) Advertising Materials. All advertising and marketing
plans, strategies and materials relating to the Business,
including without limitation all catalogues; and
(p) Telephone Numbers. The right to use all telephone and
telecopier numbers and postal addresses of the Business.
Section 1.2. Retained Assets. Notwithstanding the
provisions of Section 1.1 of this Agreement, Seller shall not
sell, transfer, assign, convey or deliver to Buyer, and Buyer
shall not purchase or accept from Seller, the following assets
of Seller, whether relating exclusively or nonexclusively to
the Business (collectively the "Retained Assets"):
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(a) Tax Refunds. All tax refunds for periods ending on or
before the Closing Date;
(b) Insurance. All insurance policies owned by Seller and
rights to collect insurance proceeds under policies owned
by Seller;
(c) Corporate Records. Seller s franchise to be a
corporation, its Certificate of Incorporation, corporate
seal, minute books, stock books and other corporate
records relating to the corporate organization and
capitalization of Seller;
(d) Scheduled Assets. The assets listed on Schedule 1.2(f)
of this Agreement (including, without limitation, the
Hardware and Software Maintenance Agreement dated May 17,
1994 between NIC and Price Waterhouse relating to the
Student Loan Marketing Association (Xxxxxx Xxx)).
ARTICLE II
ASSUMPTION OF LIABILITIES
Section 2.1. Liabilities to be Assumed. Subject to
the terms and conditions of this Agreement and the
consummation of the transactions contemplated by this
Agreement, Buyer does hereby assume and shall pay, discharge
and perform when due only the following liabilities and
obligations of Seller arising and accruing in connection with,
and relating exclusively to, the operation of the Business
(collectively, the "Assumed Liabilities"):
(a) Stated Liabilities. As of the Closing Date, the accounts
payable, accrued personal property, sales and use taxes,
and certain other accrued expenses and liabilities up to
the Closing Date, all of which shall be set forth on the
"Statement of Purchased Assets and Assumed Liabilities"
(as defined in Section 4.4 hereof) delivered to Buyer on
the date hereof and prepared in accordance with generally
accepted accounting principles ("GAAP") except as
otherwise specifically described on Schedule 4.4 of this
Agreement;
(b) Contracts. All liabilities and obligations after the
Closing Date under the Contracts;
(c) Transferring Employees. All liabilities and obligations
of the Buyer as and to the extent specifically provided
in Section 8.1 of this Agreement; and
(d) Sales/Transfer Taxes. Any sales tax liabilities and any
transfer taxes related to the sale by Seller of the
Purchased Assets to Buyer under this Agreement.
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Section 2.2. Retained Liabilities. Seller shall
retain all obligations and responsibilities for any claims,
debts, defaults, duties or liabilities of the Business or of
Seller, whether known or unknown, contingent or fixed, not
specifically assumed by Buyer, or which Buyer is not
specifically responsible for, under this Agreement
(collectively, the "Retained Liabilities"), including without
limitation:
(a) Taxes. All Taxes (as defined in Section 4.16(a) of this
Agreement) concerning the Business or Seller, excluding,
however, any sales tax liabilities and any transfer taxes
related to the sale of the Purchased Assets to Buyer,
which shall be the responsibility of Buyer as an Assumed
Liability;
(b) Product Liability. Any liability or obligation of Seller
arising out of or in any way relating to or resulting
from any products manufactured or shipped by Seller on or
prior to the Closing Date (including any liability or
obligation of Seller for claims made for death, injury to
person or damage to property, whether based in product
liability, tort, breach of warranty or otherwise);
(c) Retained Assets. Any liability or obligation of Seller
relating to or arising out of the Retained Assets;
(d) Real Estate Lease. All rights and obligations of Seller
contained in the office lease for the Facility between
Monroe Parkway Joint Venture, as landlord, and NIC, as
tenant, dated January 24, 1994 ("Real Estate Lease")
except as otherwise set forth herein;
(e) Environmental. All liabilities and obligations of Seller
arising out of any environmental or regulatory matter or
condition of the Business, the Purchased Assets or Seller
prior to the Closing Date, including without limitation
any environmental matter or condition existing at or
relating to any Leased Real Estate, whether or not caused
by the act or omission of Seller;
(f) Employee Benefit Plans. Any obligations of Seller
pertaining to any employee pension or benefit plan of
Seller relating to the former or current employees of the
Business (union or non-union) and arising prior to the
Closing Date;
(g) Employees. All obligations and liabilities pertaining to
the employees of the Business as provided in Section 8.1
of this Agreement; and
(h) Intercompany Payable. All liabilities and obligations of
whatever nature to NIC, whether or not recorded on
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Seller s financial statements including, without
limitation, those Intercompany Payables recorded on the
Seller s balance sheet on the Closing Date.
Buyer shall have no obligation under this Agreement,
by operation of law or otherwise to assume, pay or discharge
any of the Retained Liabilities. Seller agrees to satisfy in
due course the Retained Liabilities, except those being
contested or denied by Seller in good faith.
Section 2.3. NIC Assets. NIC shall also assign to
Buyer capital lease agreements covering certain personal
property used in the Business ("Leased Assets") which include,
without limitation, the personal property listed in Schedule
2.3 of this Agreement (collectively ("Lease Agreements"). To
the extent that any of the Lease Agreements are not assignable
without the consent of another party, this Agreement shall not
constitute an assignment or an attempted assignment thereof if
such assignment or attempted assignment would constitute a
breach thereof. Until the closing, in a single transaction or
in a series of related transactions, of an equity investment
in Buyer in an amount at least equal to $4,000,000, which
closing is anticipated by the parties to occur after (and
shall not include) the closing of an initial equity investment
in Buyer that is currently being negotiated and that is
expected to close on or before November 13, 1996, NIC agrees
to use its best efforts to obtain the written consent of the
other party to any such Lease Agreements designated in
Schedule 2.3 of this Agreement as requiring such consent. If
consent is not obtained with respect to any of the Lease
Agreements, (i) each of the parties agrees to cooperate with
the other in any reasonable arrangement designed to enable NIC
to perform its obligations under, and to provide for Buyer the
benefits of the Leased Assets, including cooperating with
Buyer in its efforts to obtain third party financing so that
Buyer is able to purchase such Leased Assets free and clear of
all encumbrances whatsoever in consideration for an amount not
to exceed the net present value of the aggregate lease
payments thereon, plus any amount NIC is required to pay
Lessor.
ARTICLE III
PURCHASE PRICE - PAYMENT
Section 3.1. Purchase Price. In consideration of
the sale and transfer to Buyer of the Purchased Assets as
provided in Section 1.1 of this Agreement, Buyer shall pay
Seller an amount (the "Purchase Price") equal to $1,560,000.
Section 3.2. Payment of Purchase Price. Buyer
shall pay to Seller the amount set forth in Section 3.1 as
follows:
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(a) an amount equal to $500,000 shall be payable in
cash by Buyer to Seller on or before November 13, 1996; and
(b) the remainder ($1,060,000) shall be payable in
the form of an unsecured promissory note (the "Promissory
Note"), in the form attached as Exhibit A hereto, to be
delivered by Buyer to Seller on or before November 13, 1996.
Section 3.3. Allocation of Purchase Price. The
Purchase Price shall be allocated among the Purchased Assets
as set forth by Buyer s independent certified public
accountants. Buyer s independent certified public accountants
will deliver such allocation to Seller for its reasonable
review within ninety (90) days after the Closing Date. Seller
and Buyer agree that such allocation is fair and equitable.
Seller and Buyer further agree to act in a manner consistent
with such allocation for all purposes, including the filing
and preparation of all federal, state and local tax returns
filed by them subsequent to the Closing Date, the preparation
and filing of Internal Revenue Service Form 8594 with respect
to the transactions contemplated by this Agreement, and the
determination by Seller of taxable gain or loss of the
Purchased Assets and the determination by Buyer of its tax
basis with respect to the Purchased Assets.
Section 3.4. Additional Financing by Seller and
NIC. [intentionally omitted]
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller makes the following representations and
warranties to Buyer:
Section 4.1. Corporate Existence. Seller is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
Section 4.2. Corporate Authority. Seller has full
power and authority to enter into this Agreement and to effect
the transactions contemplated by this Agreement. This
Agreement has been duly authorized, executed and delivered by
Seller and is a valid and binding obligation of Seller
enforceable against it in accordance with its terms subject
to: (a) applicable bankruptcy, insolvency, reorganization and
moratorium laws and other laws of general application
affecting enforcement of creditors rights generally; and (b)
limitations on the availability of equitable remedies.
Section 4.3. No Conflict or Violation. Except as
set forth on Schedule 4.3 of this Agreement, neither the
execution and delivery of this Agreement nor consummation of
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the transactions contemplated hereby will result in: (a) a
violation of or conflict with any provision of the charter
documents of Seller; (b) a violation or breach of or material
default under any term or provision of any indenture,
mortgage, contract, agreement, lease, commitment, license,
franchise, permit, authorization or concession to which Seller
is a party or to which it or any of its property may be bound
or constitute an event which with notice, lapse of time, or
both, would result in any such violation, breach or default;
or (c) a violation by Seller of any statute, rule, regulation,
ordnance, code, order, judgment, writ, injunction, decree or
award, or constitute an event which with notice, lapse of
time, or both, would result in any such violation.
Section 4.4. Financial Information. Attached to
this Agreement as Schedule 2.1(a) is the unaudited statement
of Seller regarding the Purchased Assets and Assumed
Liabilities of the Business at June 30, 1996 (the "Statement
of Purchased Assets and Assumed Liabilities"). Except as
otherwise set forth on Schedule 4.4 of this Agreement, the
Statement of Purchased Assets and Assumed Liabilities: (a) was
prepared from the books and records of Seller in accordance
with GAAP, and (b) is complete and fairly presents, in all
material respects, the Purchased Assets and the Assumed
Liabilities. The Seller represents and warrants that the
Intercompany Payable of Seller at June 30, 1996, calculated in
accordance with generally accepted accounting principles,
consistently applied, is $6,036,788.
Section 4.5. Undisclosed Liabilities. With respect
to the Assumed Liabilities, Seller has no liability, known or
unknown, absolute or contingent, which is not shown or
provided for on the Statement of Purchased Assets and Assumed
Liabilities set forth on Schedule 2.1(a) of this Agreement,
except obligations or liabilities incurred in the ordinary
course of business since September 30, 1996 or otherwise
disclosed in this Agreement.
Section 4.6. No Material Adverse Changes. Except
as set forth on Schedule 4.6 of this Agreement, or as
otherwise disclosed in this Agreement, since December 31, 1995
(except as otherwise noted below), there have not been any:
(a) changes which, individually or in the aggregate, are
materially adverse to the Business, Leased Assets or the
Purchased Assets, or any changes in the Business, Leased
Assets, or the Purchased Assets which, individually or in the
aggregate, have materially and adversely affected the
Business, Leased Assets, or the Purchased Assets; (b) damage,
destruction or loss of a material nature affecting the
Business, Leased Assets, or the Purchased Assets whether or
not adequately covered by insurance; (c) incurrence of any
material obligation or liability relating to the Business
(absolute or contingent) except current liabilities incurred,
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and obligations under contracts entered into, in the ordinary
course of business; (d) incurrence of any mortgage, pledge or
subjecting to liens, charges, security interests or any other
encumbrances, of any of the Purchased Assets except in the
ordinary course of business; (e) sale, assignment, transfer or
license (or agreement to do any of the foregoing) of any
Intellectual Property or any other Purchased Asset (except
performance of Contracts, and sales of Inventory, in the
ordinary course of business); (f) sufferance of any
extraordinary loss or waiver of any right of substantial value
with respect to the Business; (g) change in employee
compensation with respect to employees of the Business other
than normal salary increases in the ordinary course of
business or other increases required by any union contracts;
(h) material transactions with respect to the Business other
than in the ordinary course of business; (i) amendment or
termination of any Contract; (j) actual or, to Seller s
knowledge, threatened labor trouble, strike or other
occurrence or condition of a similar character (or any receipt
of notice of any of the foregoing) which had or might have a
material adverse effect on the Business; or (k) since December
31, 1995, changes in the accounting methodology and procedures
pertaining to the Business.
Section 4.7. Purchased Assets. Except for the
Retained Assets referred to in Section 1.2 of this Agreement,
the Purchased Assets constitute substantially all the
properties and assets used in connection with the Business and
the operation of the Business as being conducted as of the
date of this Agreement and constitute all the assets necessary
for the conduct of the Business as being conducted as of the
date of this Agreement. Except as set forth on Schedules 4.7
or 4.8 of this Agreement, Seller now has and hereby conveys to
Buyer good and marketable title to all of the Purchased Assets
free from all liens, charges, pledges, security interests,
claims and encumbrances of every kind.
Section 4.8. Real Estate. Seller owns no real
property.
Section 4.9. Leased Real Estate. Schedule 4.9 of
this Agreement sets forth and describes: (a) the real estate
which is leased by Seller and used in connection with the
conduct of the Business (the "Leased Real Estate"); and
(b) the lease agreement pursuant to which Seller leases or
otherwise makes use of the Leased Real Estate (the "Real
Estate Lease"). Except as disclosed in Schedule 4.9 of this
Agreement, neither the Seller, nor, to the Seller s knowledge,
the landlord is in default under the Real Estate Lease, nor
has the landlord under the Real Estate Lease given Seller any
oral or written notice of any claim, action or suit at law or
in equity arising out of the Real Estate Lease.
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Section 4.10. Contracts. Except for (a) purchase
and sale commitments of Seller relating to the Business with
respect to open unfilled purchase orders issued to suppliers
and open unfilled sales orders received from customers, which
have been entered into in the ordinary course of business; and
(b) contracts, agreements, arrangements and commitments
specifically set forth on other Schedules of this Agreement,
Schedule 1.1(i) is a list of all material leases, licenses,
contracts, commitments and agreements to which Seller is a
party or by which it is bound, and which relate to the
Business. Except as set forth on Schedule 4.10 of this
Agreement, each of the Contracts is in full force and effect
and is valid and enforceable in all material respects by
Seller in accordance with their respective terms, and Seller
is not in default in the observance or the performance of any
term or obligation to be performed by it under each of the
Contracts. NIC is not in default in the observance or the
performance of any term or obligation to be performed by it
under the Real Estate Lease and any of the Lease Agreements,
and to the best knowledge of Seller, there exists no event or
condition which with the giving of notice or lapse of time, or
both, would constitute a default thereunder. To the best of
Seller s knowledge, no other person is in material default in
the observance of the performance of any term or obligation to
be performed by it under each of the Contracts, and there are
no material unresolved disputes under any of the Contracts,
the Lease Agreements or the Real Estate Lease. True and
correct copies of all Contracts, the Lease Agreements, and the
Real Estate Lease are included in a binder delivered to Buyer
on or prior to the date hereof as part of Schedule 1.1(i)
hereof, to the extent that the Contract is in writing. If any
Contract is not in writing, Schedule 1.1(i) sets forth the
parties to such contract and describes in reasonable detail
all material terms thereof, or in the case of any oral
agreement affecting a written Contract, the material terms of
such oral agreement.
Section 4.11. Inventory. All items comprising the
Inventory shall be valued on the Closing Date using standard
costs, using first-in, first-out (FIFO) method adjusted to
reflect slow moving and obsolete items at the lower of cost or
market. All items comprising the work in process and finished
goods are valued at no more than the sum of the Seller s cost
of direct material, direct labor, and manufacturing costs, but
shall not include any selling or administrative expenses. All
items which comprise the inventory shall be of a quantity and
quality which are usable and readily saleable in the Buyer s
ordinary course of business, are without defects and are fit
for the purposes intended by the Buyer and are actively
marketed to customers.
Section 4.12. Intellectual Property. The list of
Intellectual Property set forth on Schedule 1.1(g) of this
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Agreement contains all of the patents, trademarks, trade
names, trade styles, service marks and copyrights used in
connection with the Business, including all registrations
therefor and licenses thereof. To the extent indicated on
Schedule 1.1(g) of this Agreement, the Intellectual Property
has been duly registered in, filed in or issued by the United
States Patent and Trademark Office. Except as set forth on
Schedule 4.12 of this Agreement: (a) Seller is the sole and
exclusive owner of the Intellectual Property; (b) Seller has
the sole and exclusive right to use the Intellectual Property;
(c) Seller has received no notice from any other person
challenging the right of Seller to use the Intellectual
Property; (d) Seller has not, in its operation of the
Business, infringed and is not now infringing, on any patent,
trademark, trade name, trade secret or copyright held by any
other person, firm, or company, in any manner which materially
affects the Business or the Purchased Assets; (e) Seller has
not granted any outstanding licenses or other rights and has
no obligations to grant licenses or other rights under any of
the Intellectual Property; (f) no claims have been made by
Seller for any violation or infringement by others of the
rights of Seller with respect to any Intellectual Property and
Seller does not know of any basis for the making of any such
claim; (g) with respect to any pending applications with
respect to any Intellectual Property, there are no
interferences or other contested proceedings, either pending
or, to the knowledge of the Seller, threatened, in the United
States Patent and Trademark Office or any federal, state or
local court; and (h) Seller has the right to sell, assign and
transfer to Buyer all of the Intellectual Property.
Section 4.13. Legal Proceedings, etc.
(a) Except as described on Schedule 4.13 of this Agreement,
there is no litigation, proceeding, government
investigation or labor dispute or grievance by or against
Seller (or NIC with respect to the Leased Assets) pending
or to Seller s knowledge threatened with respect to the
transactions contemplated by this Agreement, the
Business, its employees, the Purchased Assets or the
Leased Assets at law, in equity or admiralty, or by or
before any federal, state or municipal court, government
department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or any
arbitrations, nor are there any order, writs, injunctions
or decrees of any court or arbitrator or federal, state,
local or other government department, commission, board,
bureau, agency or instrumentality, domestic or foreign,
in existence relating to the transactions contemplated by
this Agreement, the Business, its employees, the
Purchased Assets or the Leased Assets.
(b) Except as listed on Schedule 4.13 of this Agreement,
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neither Seller nor NIC is aware of any material facts,
events or occurrences by reason of which any material
claim, action or proceeding may be brought by or against
Seller with respect to the transactions contemplated by
this Agreement, the Business, its employees, the
Purchased Assets or the Leased Assets taken as a whole.
(c) Except as set forth on Schedule 4.13 of this Agreement,
during the two years preceding the date of this Agreement
neither Seller nor NIC has received any notice of any
claims with respect to the Business, its employees, the
Purchased Assets or Leased Assets, including but not
limited to claims for product liability, defects or
breaches of warranty in connection with the manufacture,
production, sale or use of products which were
manufactured, produced or sold by Seller in connection
with the Business, or personal injury or property damage
caused by the Seller s past waste handling, storage,
transportation or disposal, including but not limited to
hazardous substances in connection with the Business.
Section 4.14. Compliance With Law. The Business,
the Purchased Assets, the Leased Assets as conducted or held
by Seller on the date of this Agreement do not violate, in any
respect, any statute, code, ordinance, regulation, requirement
or order of any governmental body, the enforcement of which
would have an adverse effect on the operation of the Business,
the Purchased Assets or the Leased Assets taken as a whole.
Section 4.15. Employees; Labor Relations.
(a) Schedule 4.15(a) of this Agreement contains, as of
September 30, 1996, accurate and complete information as
to names and rates of compensation (whether in the form
of salaries, bonuses, commissions or other supplemental
compensation) now or hereafter payable, of all employees
of Seller relating to the Business, together with
information as to any employment contracts or severance
arrangements with any such employees, any arrangements
involving the indebtedness of such employees to Seller, a
statement of the full amount of any bonuses, profit
sharing or other remuneration paid to each such person
during 1996, and any arrangements involving the
indebtedness of Seller to such employees in any amount.
(b) Except as described on Schedule 4.15(b) of this
Agreement, to Seller s knowledge, since January 1, 1996,
there has been no adverse change in the relationship of
employees of the Business with Seller (including any
threatened union organization or renegotiation of any
union contract) nor any strike or material labor
disturbance by any such employees affecting Seller.
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(c) Seller is not a party to any labor union agreement, nor
to any written or oral employment agreement with any of
its employees which is not terminable by Seller at will
or on thirty (30) days notice. Seller is in compliance
with all material laws respecting employment and
employment practices, terms and conditions of employment
and wages and hours. Except as described on Schedule
4.15(c) of this Agreement, within three (3) years
preceding the date of this Agreement, there has not been,
nor was there or is there threatened or contemplated, any
strike, slowdown, picketing, or work stoppage by an union
or other group of employees against Seller or any of its
employees, any organizational activity by nonunion
employees or other occurrence, event or condition of a
similar character affecting, or which may affect Seller.
(d) Except as set forth on Schedule 4.15(d), Seller does not
maintain or contribute to any employee benefit plan
("Employee Benefit Plan"), as that term is defined in
Section 3(3) of ERISA or any severance plans or
arrangements. No Employee Benefit Plan is a
multiemployer plan (as that term is defined in Section
4001(a)(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")).
(e) Each Employee Benefit Plan has been maintained in
compliance (including all material filing requirements)
with the requirements of ERISA and the Internal Revenue
Code of 1986, as amended.
Section 4.16. Taxes and Tax Liens.
(a) Neither the Purchased Assets nor the Leased Assets shall
be subject to any liens, claims or encumbrances with
respect to federal, state, local or foreign income,
franchise, sales, use, occupation, net worth, property,
wage withholding, accumulated earnings, personal holding
company, excise, transfer or other taxes, assessments,
interest, penalties, deficiencies, fees, rents and other
governmental charges and impositions (collectively, the
"Taxes"), pertaining to the Business or NIC attributable
to periods up to the Closing Date.
(b) Except with respect to the affiliated group to which
Seller is a part, there are no pending or to Seller s
knowledge threatened examinations, reviews, audits or
investigations of the federal, state or local income Tax
returns or reports of Seller relating to the Business.
(c) Seller has withheld proper and accurate amounts from
employees of the Business in full and complete compliance
with all withholding and similar provisions of the
Internal Revenue Code of 1986, as amended, and any and
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all other applicable laws, statutes, codes, ordinances,
rules and regulations, and Seller has timely filed proper
and accurate federal, state and local returns, reports
and estimates with respect to employee income tax
withholding, social security taxes and unemployment taxes
relating to the Business for all years and periods up
through the Closing Date (and portions thereof) for which
such returns and reports were due; and any and all
amounts shown on such returns and reports to be due and
payable have been paid in full. All payments (including
interest and penalties) due or to become due from Seller
with respect to the Business for employee income tax
withholding, social security taxes and unemployment taxes
for any year or accounting period (or portion thereof)
ended on or prior to the Closing Date have been paid in
full prior to, or will be paid shortly after, the Closing
Date. With respect to the Business, Seller, either
separately or as part of an affiliated group of which
Seller is a part, has filed all federal, state, local and
foreign tax returns, reports and notices required to be
filed prior to the Closing Date and has paid or will pay
all such taxes due as shown on such returns and all such
taxes otherwise due.
Section 4.17. Customers and Suppliers. Schedule
4.17 of this Agreement contains a list of the ten (10) largest
customers and the ten (10) largest suppliers of the Business,
together with the dollar amounts of sales made to each such
customer, and purchases made from each such supplier, during
the period from January 1, 1995 through September 30, 1996.
Section 4.18. Subsidiaries - Joint Venture Parties.
Seller has no subsidiaries or joint venture affiliates or any
interest, direct or indirect, through stock ownership or
otherwise, in any other individual corporation, limited
liability company association, partnership, trust, estate,
unincorporated association or any other entity.
Section 4.19. Environmental Matters. Except as set
forth on Schedules 4.19(a) and 4.19(b) of this Agreement:
(a) The licenses and permits listed on Schedule 4.19(a) of
this Agreement or specifically referenced in the reports
attached to Schedule 4.19(b) are the only governmental
licenses, approvals, permits and authorizations currently
required for the ownership, use or occupancy of the
Leased Real Estate or for the operation of the Business
as now being conducted and of the Purchased Assets, the
failure to obtain which would have a material adverse
effect on the Business or the Purchased Assets or on
Seller s operation of the Leased Real Estate. Except as
otherwise disclosed on Schedules 4.19(a) or 4.19(b) of
this Agreement: (i) all such licenses and permits are
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valid and in full force and effect; and (ii) Seller has
not received any notice that any appropriate authority
has revoked, suspended or terminated, or intends to
revoke, suspend or terminate, any of such licenses and
permits.
(b) Neither the operation of the Business, nor the
manufacture or sale of the processes, results or products
of the Business, violate any Environmental Requirement
(as hereinafter defined) in existence on the date of this
Agreement.
(c) Seller has not, nor, to the knowledge of Seller, has any
other person, stored, treated, disposed, dumped, buried,
spilled or otherwise released any material, including any
chemical substance, "Hazardous Substance," "Pollutants,"
"Contaminants," petroleum, including crude oil or any
fraction thereof, natural gas, liquefied natural gas,
synthetic gas or any "Solid Waste" on, beneath or about
the Leased Real Estate, except for inventories of such
materials or solid waste used or generated in the
ordinary course of the Business. Further, any such
inventories of materials or solid waste were and are
stored in compliance with any and all applicable
Environmental Requirements such that there has been and
is no release of any such material or solid waste to the
environment which could cause the incurrence of response
or removal costs or other liabilities or obligations
under CERCLA, any other Environmental Requirement or at
common law.
(d) Seller has not received in connection with the Business
or the Purchased Assets any notice from any governmental
authority or private or public entity advising that
Seller is potentially responsible for response, removal
or other costs with respect to a release or threatened
release of Hazardous Substance, Pollutants, Contaminants
or Solid Waste under CERCLA, any other Environmental
Requirements or at common law.
(e) Seller has not received notice of any violation of any
Environmental Requirement relating to the Leased Real
Estate or the operation of the Business, or any of the
processes followed, results obtained or products made by
or on behalf of the Business.
"Environmental Requirements" shall mean all applicable
statutes, regulations, rules, ordinances, codes, licenses,
permits, orders, approvals, plans, authorizations,
concessions, franchises and similar items in effect as of the
date hereof relating to the protection of human health or the
environment of all governmental agencies, departments,
commissions, boards, bureaus or instrumentalities of the
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Xxxxxx Xxxxxx, the states and political subdivisions thereof,
and all applicable judicial and administrative and regulatory
decrees, judgments and orders relating to the protection of
human health or the environment, including, without
limitation:
(i) all requirements, including but not limited to
those pertaining to reporting, licensing, permitting,
investigation and remediation of emissions, discharges,
releases or threatened releases of any Hazardous Substance,
Pollutant, Contaminant or Solid Waste;
(ii) all requirements pertaining to the protection
of the health and safety of employees or the public;
(iii) all requirements pertaining to the
reclamation or restoration of land; and
(iv) all requirements pertaining to storage tanks,
whether above or below ground.
"Hazardous Substances," "Pollutants" and "Contaminants"
shall be as defined under the Comprehensive Environmental
Response Compensation and Liability Act ("CERCLA"), as amended
up to the date of this Agreement.
"Solid Waste" shall be as defined under the Solid Waste
Disposal Act, 42 U.S.C. Section 6901, et seq., as amended up to the
date of this Agreement.
Section 4.20. Brokers and Finders. Neither Seller
nor NIC has employed any broker or finder or incurred any
liability for any other brokers , finders or agents fees for
which Buyer is or could become liable in connection with, or
as a result of, the transactions contemplated by this
Agreement.
Section 4.21. Accounts Receivable. All Receivables
as of September 30, 1996 have been incurred only in the
ordinary course of business and are valid, binding and
enforceable obligations due to the Seller, without any claim
or offset against the Seller by the customer thereunder,
except as may otherwise be provided in Schedule 4.21 of this
Agreement. All such accounts receivable will be fully
collectible in the aggregate (in the ordinary course of
business without resort to collection action or litigation or
otherwise incurring any additional expense) within ninety (90)
days following the Closing Date. In the event that Buyer is
(i) unable to collect the face amount of any account
receivable within ninety (90) days following the Closing Date
without incurring any additional expense or (ii) collects an
account receivable only after incurring additional expense,
then Buyer shall be permitted, at its option, to receive in
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cash within ten (10) days after a written request made by
Buyer against Seller to set off against the balance owed
pursuant to the Promissory Note any such uncollected accounts
receivable or amounts expended against any amounts owed Buyer.
Section 4.22. No Untrue Statements. No statement
by Seller made in this Agreement contains or will contain any
untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the
statements therein contained not materially misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and
warranties to Seller:
Section 5.1. Corporate Existence. Buyer is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
Section 5.2. Corporate Authority. Buyer has full
power and authority to enter into this Agreement and to effect
the transactions contemplated by this Agreement. This
Agreement has been duly authorized, executed and delivered by
Buyer and is a valid and binding obligation of Buyer
enforceable against it in accordance with its terms subject
to: (a) applicable bankruptcy, insolvency, reorganization and
moratorium laws and other laws of general application
affecting enforcement of creditors rights generally; and (b)
limitations on the availability of equitable remedies.
Section 5.3. No Conflict or Violation. Except as
set forth on Schedule 5.3 of this Agreement, neither the
execution and delivery of this Agreement nor consummation of
the transaction contemplated hereby will result in: (a) a
violation of or conflict with any provision of the charter
documents of Buyer; (b) a violation or breach of or default
under any term or provision of any indenture, mortgage,
contract, agreement, lease, commitment, license, franchise,
permit, authorization or concession to which Buyer is a party
or to which it or any of its property may be bound or
constitute an event which with notice, lapse of time, or both,
would result in any such violation, breach or default; or (c)
a violation by Buyer of any statute, rule, regulation,
ordinance, code, order, judgment, writ, injunction, decree or
award, or constitute an event which with notice, lapse of
time, or both, would result in any such violation.
Section 5.4. Litigation and Proceedings. Except as
set forth in Schedule 5.4 of this Agreement, there is no
action, temporary restraining order, injunction, suit,
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proceeding, inquiry or investigation at law or in equity,
before or by any judicial or administrative court or agency,
pending or threatened against or affecting, or involving the
properties or business of Buyer which can be expected to have
an adverse effect on the transactions contemplated by this
Agreement, or the delivery, validity or enforceability of this
Agreement.
Section 5.5. Brokers and Finders. Buyer has not
employed any broker or finder or incurred any liability for
any brokers , finders or agents fees for which Seller is or
could become liable in connection with, or as a result of, the
transactions contemplated by this Agreement.
ARTICLE VI
SURVIVAL OF REPRESENTATIONS;
INDEMNIFICATION
Section 6.1. Survival. All obligations and
covenants contained in this Agreement and in any exhibit,
schedule or other instrument delivered pursuant to this
Agreement shall survive indefinitely except (i) as expressly
provided otherwise herein, (ii) the indemnification
obligations of Seller under Section 6.2(b) of this Agreement
and of Buyer under Section 6.3(b) of this Agreement shall
survive for a period of four (4) years commencing on the
Closing Date and (iii) that those representations, warranties
and covenants relating to tax matters shall survive the full
period of any applicable statute of limitations (including any
appeals) plus ninety (90) days thereafter.
Section 6.2. Indemnification by Seller. Seller
shall indemnify, defend and hold harmless Buyer against and in
respect of any and all claims, demands, costs, expenses,
obligations, liabilities, damages, recoveries and
deficiencies, including interest, penalties, and reasonable
attorneys fees and expenses (collectively, the
"Liabilities"), that Buyer shall incur or suffer, which arise,
result from or relate to:
(a) any failure by Seller to perform to fulfill any
agreement, covenant or obligation set forth in this
Agreement to be so performed or fulfilled;
(b) any breach of the representations and warranties of
Seller set forth in this Agreement;
(c) the Retained Liabilities;
(d) any and all liabilities and obligations of Seller arising
on or after the Closing Date out of (i) actions taken by
Seller or (ii) any of the assets of Seller not
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transferred hereunder; or
(e) Seller s non-compliance with any applicable bulk transfer
laws.
Section 6.3. Indemnification by Buyer. Buyer
agrees to indemnify, defend and hold harmless Seller against
and in respect of any and all Liabilities that Seller shall
incur or suffer, which arise, result from or relate to:
(a) any failure by Buyer to perform or fulfill any agreement,
covenant or obligation set forth in this Agreement to be
performed or fulfilled;
(b) any breach of the representations and warranties of Buyer
set forth in this Agreement;
(c) the Assumed Liabilities, including without limitation the
liabilities and obligations with respect to (1) certain
product liability as provided in Section 2.1(d) of this
Agreement and (2) the Transferring Employees as provided
in Section 2.1(c) of this Agreement (including those
liabilities and obligations under Section 8.1(b) of this
Agreement relating to the termination of employment by
Buyer of any Transferring Employees after the Closing
Date as provided therein); or
(d) debts, obligations or liabilities arising from the
conduct of the Business by Buyer on or after the Closing
Date.
Section 6.4. Limitation on Indemnification. Any
claim for indemnity pursuant to Sections 6.2(b) or 6.3(b) of
this Agreement must be made in writing by the party to be
indemnified (the "Indemnified Party") to the other party (the
"Indemnifying Party") within the applicable time period
referred to in Section 6.1 of this Agreement.
Section 6.5. Claims by Third Parties. Upon the
assertion by any third party of a claim that may give rise to
a liability of Seller under Section 6.2 of this Agreement, or
Buyer under Section 6.3 of this Agreement, the Indemnified
Party shall promptly notify the Indemnifying Party in writing
of the existence of such claim. Upon written notification to
the Indemnified Party delivered within seven (7) days after
receipt of notice from the Indemnified Party of the assertion
of any such claim, the Indemnifying Party may undertake the
defense, compromise or settlement of such claim, provided
that:
(a) the Indemnifying Party shall timely provide to the
Indemnified Party all information with respect to such
defense, compromise or settlement as such Indemnified
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Party may request; and
(b) such Indemnifying Party shall not assume any position or
take any action in connection with such defense,
compromise or settlement that would impose an obligation
of any kind or restrict the actions of the Indemnified
Party, it being understood that such Indemnifying Party
would be acting solely on its own behalf, for its own
account and at its own risk.
In the event that such Indemnifying Party does not undertake
the defense, compromise or settlement of such claim as
provided in the foregoing, the Indemnified Party shall have
the right to undertake the defense, compromise or settlement
of such claim on behalf of, for the account of, and at the
risk and expense of the Indemnifying Party. The Indemnified
Party shall, however, promptly notify the Indemnifying Party
of any compromise or settlement of any such claim. The
Indemnifying Party shall be obligated to pay any compromise or
settlement within thirty (30) days after receipt of written
notice from the Indemnified Party describing such compromise
or settlement in reasonable detail.
Section 6.6. Payment. In the event that Seller or
NIC is required to make any payment under this Article VI or
under Section 9.1, and the Buyer as Indemnified Party is not
paid in full within thirty (30) days after any claim therefor
has been submitted by Buyer in accordance with the provisions
of this Article VI and such claim has not been contested in
good faith by Seller or NIC, as the case may be, then Buyer
shall have the right, notwithstanding any other rights that it
may have against Seller, NIC, any other person, firm or
corporation, to setoff the unpaid amount of any such claim
against any amounts owed by it to Seller under this Agreement
or any agreements or instruments entered into pursuant to this
Agreement including, without limitation, the Promissory Note.
ARTICLE VII
CONDITIONS PRECEDENT TO PAYMENT OF PURCHASE PRICE
Section 7.1. Conditions Precedent to Payment of
Purchase Price by Buyer. The obligation of Buyer to pay any
portion of the Purchase Price hereunder (including its
obligation to make any cash payment under Section 3.2(a) or
any payment under the Promissory Note delivered under Section
3.2(b)) shall be subject to the delivery by Seller, on or
prior to the date any such payment is due, of the following in
form and substance reasonably satisfactory to Buyer as shall
be effective to vest in Buyer all of Seller s rights in and
under the Purchased Assets as provided for in this Agreement:
(a) a general xxxx of sale transferring the Purchased Assets
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to Buyer, and such other similar instruments of
conveyance, transfer and assignment as may be necessary
to convey to Buyer good and marketable title to all
personal property included in the Purchased Assets;
(b) assignments of the Intellectual Property in a form
sufficient for filing;
(c) all consents to the assignment to Buyer of the Contracts
designated on Schedules 1.1(i) and 4.9 of this Agreement
not previously provided to Buyer;
(d) certified copies of resolutions duly adopted by the Board
of Directors of Seller authorizing the execution and
delivery of this Agreement and the sale and transfer of
the Purchased Assets to Buyer;
(e) such assignments, transfers, consents and other documents
as Buyer may reasonably request to vest in Buyer all
right, title and interest in the Purchased Assets
intended to be assigned and transferred to Buyer pursuant
to this Agreement; and
(f) an executed (including by Monroe Parkway Joint Venture)
counterpart of the Sublease Agreement relating to the
Facility ("Sublease"), providing for a lease of the
Facility to Buyer for a period of sixty (60) days
beginning on the date hereof, with two separate options
in Buyer to renew the Sublease, each for an additional
period of thirty (30) days, and otherwise in form and
substance satisfactory to Buyer, Seller and NIC.
The obligation of Buyer to pay any portion of the Purchase
Price hereunder (including its obligation to make any cash
payment under Section 3.2(a) or any payment under the
Promissory Note delivered under Section 3.2(b)) shall also be
subject to the delivery by NIC, on or prior to the date any
such payment is due, of the following in form and substance
reasonably satisfactory to Buyer:
(i) an executed counterpart of the Sublease; and
(ii) all releases and UCC-3 termination statements duly
executed and delivered by NIC s secured creditors which
will, when filed with the appropriate filing office,
release all liens and encumbrances against the Leased
Assets except for the rights of the lessor under the
"Nelco" leases identified on Schedule 2.3 hereto.
ARTICLE VIII
ADDITIONAL AGREEMENTS OF BUYER AND SELLER
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Section 8.1. Employees; Retirement and Benefit
Plans.
(a) Termination of Transferring Employees. Seller shall, as
of the Closing Date, terminate all active employees of
the Business on the Closing Date. Seller and NIC agree
that for a period of equal to the lesser of (i) two (2)
years commencing with the Closing Date, or (ii) so long
as the employment of such Transferring Employee is not
terminated by Buyer, neither Seller nor NIC will directly
solicit or hire for employment with Seller or NIC after
the Closing Date any Transferring Employee (as defined in
Section 8.1(b) of this Agreement).
(b) Hiring of Transferring Employees. Buyer shall offer
employment as of the Closing Date to those employees who
are listed on Schedule 8.1(b), which shall be appended to
this Agreement prior to the Closing Date, of the Business
on the Closing Date, and such employees who accept
employment with Buyer as of the Closing Date shall be
considered "Transferring Employees." So long as the
employment of any such Transferring Employee is continued
by Buyer, coverage for such Transferring Employee shall
be continued under the Seller s medical, dental, long-
term disability, life insurance and 401(k) plans and
other insured employee welfare plans until November 30,
1996 (the "Coverage Termination Date"). The employer s
portion of the premium cost of such coverage continuation
under Seller s plans shall be borne by Buyer.
Immediately following the Coverage Termination Date,
Buyer shall offer to all Transferring Employees health
and medical insurance following the Coverage Termination
Date, and such other welfare-type employee benefits as
Buyer in its sole discretion elects to offer, except that
coverage extended to Transferring Employees under any
such insurance and benefits shall not be subject to any
waiting period requirement other than as provided under
the terms of any insurance contracts under which such
insurance and benefits are provided. Buyer will give all
Transferring Employees credit for service with Seller
under all vacation and holiday plans maintained by Buyer
for the benefit of Transferring Employees. Buyer
(i) will assume and pay all obligations, if any, for
severance pay and all other obligations and Liabilities
(including, but not limited to, those resulting from any
wrongful discharge action or failure to comply with the
Worker Adjustment and Restraining Notification Act)
arising in connection with the termination by Buyer of
any Transferring Employee after the Closing Date, and
(ii) will provide continuance of any health benefits in
accordance with and subject to the provisions of the
Consolidated Budget Reconciliation Act of 1985, as in
effect from time to time ("COBRA"), arising in connection
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with the termination by Buyer of any Transferring
Employees after the Coverage Termination Date. The
foregoing obligations of Buyer in clause (i) above will
not in any event include obligations based upon facts or
circumstances arising as a result of actions by Seller
prior to the Closing Date, and Seller shall in any event
be responsible for any severance or other obligations,
and shall provide continuance of any health benefits in
accordance with and subject to the provisions of COBRA,
for any employees of the Business who do not receive or
do not accept Buyer s offer of employment as provided
herein (and their covered spouses and dependents).
Additionally, Seller shall provide continuance of any
health benefits in accordance with, and subject to, the
provisions of COBRA, for any Transferring Employee (and
their covered spouses and dependents) who terminate
employment with Buyer prior to the Coverage Termination
Date.
(c) Employee and Third Party Rights. Nothing contained in
this Agreement shall be deemed to give any employee of
Seller the right to be retained in the employ of Buyer
after the Closing Date or to interfere with Buyer s right
to discharge any employee at any time. Nothing contained
in this Section 8.1 or elsewhere in this Agreement shall
be deemed to create in any employee any right as a third
party beneficiary.
(d) Disability Claims. Seller shall continue to be
responsible after the Closing Date for disability
benefits for employees of the Business who are absent
from work as of the Closing Date due to disability,
illness or injury, including those arising under any
worker s compensation laws or plans ("Disabled
Employees"), consistent with the terms of Seller s
disability benefit plans or the provisions of any
worker s compensation laws. A true and complete list of
all Disabled Employees existing as of the date hereof is
attached hereto as Schedule 8.1(b), along with a
description for each person listed thereon (whether
covered by Seller s disability benefit plans or worker s
compensation laws) of the following information: their
current disability period and the nature of their
disability. Seller s obligation to any such Disabled
Employee(s) shall continue until such employee attains
maximum medical recovery and receives a doctor s release
to return to work or until Seller s obligations under its
disability benefit plans or any worker s compensation
laws expire. Upon such employee s attaining such
recovery and receiving such release, Seller shall
terminate such employee consistent with its obligations
under Section 8.1(a) of this Agreement and Buyer shall
make such employee an offer of employment consistent with
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Buyer s obligations under Section 8.1(b) of this
Agreement if Buyer or Seller has a contractual or other
legal obligation to provide such employment. If any such
employee accepts the Buyer s offer of employment, Seller
shall have no further obligations with respect to
disability benefits for such employee.
(e) Worker s Compensation Claims. Seller shall be liable for
worker s compensation claims filed by employees of the
Business which arise solely out of work-related injuries
which occur prior to the Closing Date. Notwithstanding
the above, with respect to worker s compensation claims
filed after the Closing Date by Transferring Employees,
where the claim arises out of exposures occurring both
prior to and on and after the Closing Date, Buyer s and
Seller s liability with respect to said claims shall be
allocated in accordance with the law of the Commonwealth
of Virginia. Buyer shall be liable for worker s
compensation claims filed by Transferring Employees which
arise solely out of work-related injuries which occur on
or after the Closing Date.
(f) Vacation. The parties agree that obligations owing to
Transferring Employees with respect to accrued vacation
as of the Closing Date shall be assumed by Buyer.
Section 8.2. Covenant Not to Compete. For a period
of five (5) years commencing with the Closing Date, neither
Seller nor NIC shall anywhere in North America, Europe and
Asia directly or indirectly, whether as a partner, investor,
shareholder (other than as a holder of less than 2 percent of
the outstanding capital stock of a publicly traded
corporation), consultant, agent or otherwise, manufacture for
sale, sell or represent to any third party the products being
manufactured by the Business as of the Closing Date or any
products similar thereto.
Section 8.3. Confidentiality. Buyer acknowledges
that prior to the Closing Date it was furnished with or become
exposed to certain information which is considered to be
confidential and proprietary, regardless of whether such
information is marked or otherwise identified as confidential
or proprietary, including, without limitation: (a) technical
information, drawings and other confidential or proprietary
information owned by Seller and related to the Business or the
Purchased Assets (the "Confidential Information"); (b)
technical information, drawings and other confidential or
proprietary information relating to Seller s other businesses
and product lines (the "Seller Confidential Information"); and
(c) technical information, drawings and other confidential or
proprietary information owned by customers, licensors or other
third parties ("Other Confidential Information"). Buyer
agrees that it will keep the Confidential Information, the
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Seller Confidential Information and the Other Confidential
Information confidential, and neither it nor its agents or
employees will, without the prior written consent of Seller or
the proper owner of such information, disclose in any manner
whatsoever, in whole or in part, or use the Confidential
Information, the Seller Confidential Information or the Other
Confidential Information, other than consistent with the terms
of this Agreement. Notwithstanding anything to the contrary
in this Agreement, the provisions of this Section shall not
apply to information which: (a) is permitted in writing by
Seller or the proper owner of such information to be disclosed
or used; or (b) is within the public domain or becomes part of
the public domain without any breach of this Agreement; or (c)
is known to Buyer prior to the disclosure of such information;
or (d) is received from a third party having the right to
impart such information; or (e) is independently developed by
Buyer s employees who did not have access to such information;
or (f) is required to be disclosed by judicial or
administrative process or, in the opinion of counsel, by other
mandatory requirements of law. All obligations of Buyer with
respect to the Confidential Information shall terminate
immediately upon the closing of the transaction contemplated
by this Agreement. If the transaction contemplated by this
Agreement is not consummated, Buyer shall promptly return to
Seller all documents, work papers, and other materials
(including all copies made thereof) obtained or made pursuant
to this Agreement.
Section 8.4. Bulk Sales Laws. Buyer hereby waives
compliance by Seller with the provisions of any so-called bulk
transfer law of any jurisdiction in connection with the sale
of the Business and the Purchased Assets to Buyer.
Section 8.5. Expenses. Except as otherwise
provided in this Agreement, and whether or not the transaction
contemplated hereby is consummated, each party to this
Agreement shall pay its own expenses incident to this
Agreement and the transaction contemplated hereby including,
without limitation, all legal and accounting fees and
disbursements.
Section 8.6. Sales, Use, Transfer and Other Taxes.
Buyer shall determine and pay when due all sales, use,
transfer and other taxes arising from the sale of the
Purchased Assets by Seller to Buyer. Buyer s agreement to pay
such taxes shall not affect Buyer s ability to rely on the
representations and warranties of Seller contained in Section
4.16 of this Agreement. Seller shall pay wen due all federal,
state or local taxes measured by or with respect to the income
or gross receipts of the Business for all periods ending prior
to the Closing Date. Personal property taxes relating to the
Purchased Assets shall be prorated between Seller and Buyer as
of the Closing Date (with Seller being responsible for such
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items for all periods ending prior to the Closing Date and
Buyer being responsible for such items beginning on and after
the Closing Date), and Seller and Buyer each agree to pay its
respective share of such items when due.
Section 8.7. Books and Records. Buyer agrees that
as long as the books, records and files delivered to Buyer
under this Agreement, to the extent that they pertain to the
Purchased Assets or the Business prior to or on the Closing
Date, remain in existence and available (but in no event more
than four (4) years after the Closing Date, except for those
items relating to tax matters prior to the Closing Date which
will be available for any applicable statute of limitations
period), Seller (at its expense) shall have the right to
inspect and to make copies of the same at any time during
business hours for any purpose identified below. Buyer will
not destroy, without first having offered to deliver to
Seller, any of such books, records and files for a period of
time equal to that which it would be required to retain such
books, records or files, as the case may be, under applicable
law as in effect on the date of this Agreement or, in the case
of federal tax matters, not less than the applicable statute
of limitation, plus extensions thereof agreed to by Seller.
Buyer agrees that it will cooperate with and make available to
Seller, during normal business hours, all books, records,
information and employees (without substantial disruption of
employment) necessary and useful in connection with any tax
inquiry, audit, investigation, dispute, claim, litigation or
any other matter requiring any such books, records,
information or employees for any reasonable business purpose,
to the extent that any of the foregoing pertain to the
Purchased Assets or the Business prior to the Closing Date.
Seller shall bear all of the out-of-pocket costs and expenses
(including without limitation, attorneys fees, but excluding
reimbursement for employee benefits) reasonably incurred in
connection with providing such books, records, information or
employees. Seller will require certain financial information
for periods on or prior to the Closing Date for the purpose of
filing federal, state, local and foreign tax returns and other
governmental reports, and Buyer agrees to furnish such
information to Seller at Seller s request and expense.
Section 8.8. Publicity. Neither Seller, Buyer nor
NIC shall make any public announcement of the transactions
contemplated by this Agreement except as required by law or as
mutually agreed to, and then, only when, and in the form,
mutually agreed upon by them.
ARTICLE IX
NIC GUARANTY
Section 9.1. NIC Guaranty. NIC hereby
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unconditionally guarantees the performance (and not merely the
collection) of the obligations of Seller under the terms of
this Agreement, waives notice of acceptance of guarantee,
waives notice of modification or change to the terms hereof,
waives any extensions or forbearance given by Buyer, and
waives any requirement that suit first be brought against
Seller in order to enforce any of such obligations.
ARTICLE X
MISCELLANEOUS PROVISIONS AND AGREEMENTS
Section 10.1. Assurances. After the Closing Date,
for no further consideration, Seller shall perform all such
other action and shall execute, acknowledge and deliver, all
such assignments, transfers, consents and other documents as
Buyer may reasonably request to vest in Buyer all right, title
and interest in the Purchased Assets intended to be assigned
and transferred to Buyer pursuant to this Agreement; and Buyer
shall similarly perform all such other action and shall
execute, acknowledge and deliver all such other documents as
Seller may reasonably request to confirm Buyer s assumption of
the Assumed Liabilities.
Section 10.2. Notices. All notices, requests,
demands and other communications made under this Agreement
shall be in writing and shall be deemed duly given upon
receipt if sent by registered or certified mail, return
receipt requested, postage prepaid, as follows, or to such
other address or person as either party may designate by
notice to the other party under this Agreement:
If to SELLER:
c/o Network Imaging Corporation
000 Xxxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxxxx, Chief Financial Officer
Telecopier No.: 703/478-5386
If to BUYER:
Network Storage Solutions, Inc.
000 Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Chairman
Telecopier No.: 703/834-0787
Section 10.3. Amendments; Termination. This
Agreement cannot be changed or terminated orally and no waiver
of compliance with any provision or condition of this
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Agreement and no consent provided for in this Agreement shall
be effective unless evidenced by an instrument in writing duly
executed by both parties. This Agreement (except for the
provisions of Section 8.3 of this Agreement, which shall
continue in effect) and the transactions contemplated by this
Agreement may be terminated and abandoned at any time prior to
the Closing Date: (a) by mutual written agreement of Buyer
and Seller; and (b) by Buyer or Seller upon written notice
given to the other party after entry of an order or injunction
restraining or prohibiting the sale or purchase of the
Business and the Purchased Assets.
Section 10.4. Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties and their
respective successors, legal representatives and permitted
assigns. This Agreement shall not be assigned by any party
without the prior written consent of the others, which consent
shall not be unreasonably withheld or delayed. The parties
hereby agree and consent to the assignment by Seller to NIC of
Seller s right to receive payment under Section 3.2 hereof,
and to the assignment by Seller to NIC of Seller s obligation
to make additional financing available to Buyer under Section
3.4 hereof, and Seller does hereby assign such rights and
obligations.
Section 10.5. Entire Agreement. This Agreement and
the Schedules attached to this Agreement and any other
agreements in writing among the parties subsequent to the date
hereof contain the entire agreement among the parties to this
Agreement with respect to the transactions contemplated in
this Agreement and supersede all previous written or oral
negotiations, commitments and writings, including without
limitation that certain letter agreement dated as of September
30, 1996 by and among Seller, NIC and Xxxxxx X. Xxxxxx,
Xxxxxxx X. XxXxxxx and Xxxxxxx X. Xxxxxxxx, as agents for
Buyer.
Section 10.6. Severability. If any one or more of
the provisions of this Agreement shall be held to be invalid,
illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions of this Agreement
shall not be affected thereby. To the extent permitted by
applicable law, each party waives any provision of law which
renders any provision of this Agreement invalid, illegal or
unenforceable in any respect.
Section 10.7. Applicable Law. This Agreement shall
be governed by and construed and enforced in accordance with
the laws of the Commonwealth of Virginia.
Section 10.8. Headings. Headings and captions
contained in this Agreement are inserted only as a matter of
convenience and in no way define, limit or extend the scope of
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this Agreement or any provision hereof.
Section 10.9. Counterparts. Any number of
counterparts of this Agreement may be signed and delivered and
each will be considered one and the same instrument.
Section 10.10. Limitation of Personal Liability.
Seller agrees that Buyer shall be the only entity obligated
hereunder or under any other document or agreement relating to
or arising out of the purchase of the Purchased Assets and the
assumption of the Assumed Liabilities, and that neither Xxxxxx
X. Xxxxxx, Xxxxxxx X. XxXxxxx nor Xxxxxxx X. Xxxxxxxx, nor any
other stockholder, officer or director of Buyer, shall have
any obligation or personal liability hereunder or under any
such other document or agreement.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the day and year
first above written.
SYMMETRICAL TECHNOLOGIES, INC. NETWORK STORAGE SOLUTIONS,
INC.
By: By:
Name: Name:
Title: Title:
NETWORK IMAGING CORPORATION
By:
Name:
Title:
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EXHIBIT A
PROMISSORY NOTE
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