EXHIBIT 2
ASSET PURCHASE AGREEMENT
BETWEEN
PHAZAR AEROCORP, INC.
AND
PHAERO LLC
JUNE 3, 2003
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ASSET PURCHASE AGREEMENT
Dated: May 31, 2003
The parties to this Agreement are Phaero LLC, a Texas limited
liability company ("Buyer"), Phazar Aerocorp, Inc., a Texas corporation (the
"Seller"), Phazar Corp., a Delaware corporation which owns all of the
outstanding capital stock of the Seller (the "Shareholder"), Xxxx Xxxxxxx, the
President of Seller ("Xxxxxxx") and Xxxxx Xxxxxxxx, the Vice President of Seller
("Xxxxxxxx").
WITNESSETH
The Seller is in the business of providing complete
refurbishment for a full range of corporate and executive aircraft interiors,
including design and fabrication of seats, side panels, headliners, alleys,
cabinets, lighting entertainment systems and cabinet management systems (the
"Business").
The Buyer desires to purchase from the Seller, and the Seller
desires to sell to the Buyer, all of the Seller's assets and properties relating
to the Business excluding only certain assets specified below, in consideration
for the assumption of the liabilities specified below, on the terms and subject
to the conditions set forth herein.
It is therefore agreed as follows:
1. Sale and Purchase of Assets.
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1.1 Sale and Purchase Upon the terms and subject to the
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conditions contained in this Agreement, at the Closing (as defined in section
4), the Seller shall sell, assign, transfer and deliver to the Buyer, and the
Buyer shall purchase and accept from the Seller, all of the assets and rights of
every nature, kind and description, tangible and intangible, wherever located,
that are owned, used or held for use by the Seller in or for the Business, as
the same shall exist on the Closing Date (collectively, the "Acquired Assets"),
free and clear of any and all Liens (as defined in section 5.6(a)), including,
without limitation, the following:
(a) cash, cash equivalents and securities on hand or on
deposit;
(b) accounts receivable, notes receivable, drafts or other
similar instruments;
(c) inventory, including but not limited to finished goods,
work in process, raw materials and supplies;
(d) prepaid expenses and deposits;
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(e) machinery, equipment, tools and dies, hand tools,
vehicles, computers and other data processing hardware (and all software related
thereto or used therewith) and other tangible personal property of similar
nature, including but not limited to all items set forth on Seller's fixed asset
ledger attached to this Agreement on Schedule 5.11(b) (collectively, the
"Machinery and Equipment");
(f) office furniture, office equipment, fixtures and other
tangible personal property of similar nature (collectively, the "Furniture and
Fixtures");
(g) interests in any patent, copyright, trademark, trade name,
brand name, service xxxx, logo, symbol, trade dress, design or representation or
expression of any thereof, or registration or application for registration
thereof, or any other invention, trade secret, technical information, know-how,
proprietary right or intellectual property, technologies, methods, designs,
drawings, software (including documentation and source code listings), processes
and other proprietary properties or information (collectively, the "Intellectual
Property");
(h) to the extent not included above, and subject to section
1.3, all contracts, agreements, options, commitments, understandings, licenses,
leases and instruments (collectively, the "Contracts") relating to the Business,
including, without limitation, customer and supplier Contracts, sales
representative and distributor Contracts and commission Contracts with respect
thereto, and each of the Material Contracts as listed on Schedule 5.12
(collectively, the "Assigned Contracts");
(i) customer and supplier lists, mailing lists, catalogs,
brochures and handbooks relating to the Business;
(j) other books, records, files, contracts, plans, notebooks,
production and sales data and other data of the Seller relating to its Business,
whether or not in tangible form or in the form of intangible computer storage
media such as optical disks, magnetic disks, tapes and all similar storage
media;
(k) the name Phazar Aerocorp and the goodwill associated
therewith, together with all trademarks, service marks and trade names of the
Seller;
(l) rights related to any portion of the Business or the
Acquired Assets, including third party warranties and guarantees and other
similar contractual rights, as to third parties held by or in favor of the
Seller and arising out of, resulting from or relating to the Business or the
Acquired Assets; and
(m) rights to insurance and condemnation proceeds relating to
any damage, destruction, taking or other similar impairment of any of the
Acquired Assets.
1.2 Excluded Assets. The only assets of the Seller that the
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Buyer is not acquiring hereby (the "Excluded Assets") are:
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(a) the consideration to be delivered to the Seller pursuant
to this Agreement for the Acquired Assets to be sold to the Buyer hereunder and
the rights of the Seller hereunder;
(b) the certificate of incorporation, corporate seals, minute
books, stock books, tax returns and supporting data prepared expressly in
connection therewith, and other records prepared directly in connection with the
corporate organization and capitalization of the Seller and/or its operation as
a corporation under applicable Laws (as defined in section 5.8(b)); and
(c) shares of the capital stock of the Seller.
1.3 Consents To the extent that the assignment of any Assigned
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Contract shall require the Consent (as defined in section 5.4(b)) of the other
parties thereto or of any third parties, this Agreement shall not constitute an
agreement to assign the same if an attempted assignment would constitute a
breach thereof or of other obligations or commitments of the Seller. The Seller
shall take any and all action necessary to obtain all such Consents prior to the
Closing Date. If any such Consent is not obtained, and the Buyer waives the
obtaining of such Consent as a condition precedent hereunder, then the Seller
shall continue such efforts after the Closing Date and until such Consent is
obtained and shall cooperate with the Buyer in any arrangement (such as
subcontracting, sublicensing or subleasing) reasonably requested by the Buyer
intended to provide for the Buyer all of the benefits of the Seller under such
Contract.
2. Assumption of All Liabilities.
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2.1 Assumption Upon the terms and subject to all of the
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conditions contained herein, at the Closing, the Buyer shall assume, and agree
to pay, perform and discharge, those certain obligations and liabilities of the
Seller that are itemized below and that are reflected as Current Liabilities and
Long Term Liabilities on the April 30, 2003 balance sheet of the Seller (the
"April 30 Balance Sheet") not discharged by the Seller before the Closing, and
the liabilities and obligations of the Seller constituting Current Liabilities
and Long Term Liabilities incurred since April 30, 2003 in the ordinary course
of business and related to the ordinary operation of the Business (all of the
foregoing, collectively, the "Assumed Liabilities") as follows:
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1) 020200 Accounts Payable*
2) GE Corporate Plus
3) 020160 Frost National, Current Portion
4) 020300 Accrued Payroll Taxes
5) 020310 Accrued FICA Taxes
6) 020320 Accrued Withholding Taxes
7) 020330 Accrued Federal Unemployment**
8) 020340 Accrued State Unemployment**
9) 021000 Accrued Expenses - Other
10) 021010 Accrued Vacation
11) 021020 Accrued Payroll
12) 021040 Accrued Bonus
13) 021050 Accrued Warranty
14) 021070 Xxxxxxxx in Exc. Of C & E Earnings
15) 026100 Notes - Frost Long Term Portion
* Including any accrued 401k contributions.
** Note: Because these items are paid quarterly, the definitive amounts being
assumed by Buyer shall be determined on or before July 31, 2003.
2.2 Personal Property Taxes. The ad valorem Taxes payable on
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the Acquired Assets shall be prorated as of the Effective Date.
2.3 Sinan Indebtedness. Upon the terms and subject to all of
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the conditions contained herein, at the Closing, the Buyer shall assume, and
agree to apply, perform and discharge, the $800,000 principal amount note
payable to Sinan Corp (the "Sinan Note") that is the obligation of Shareholder's
subsidiary, Antenna Products Corporation. Xxxxxxx and Buyer shall, at the
Closing, cause Sinan Corp to release Antenna Products Corporation from any and
all obligations to pay any accrued interest on and the principal of the Sinan
Note and all collateral and liens securing same.
3. Additional Consideration..
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3.1 Release of Liens. As additional consideration for the
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sale, assignment, transfer and delivery of the Acquired Assets by the Seller to
the Buyer, and upon the terms and subject to the conditions contained herein, at
the Closing or no later than July 31, 2003, the Buyer or Xxxxxxx shall obtain
from Frost Bank and deliver to Shareholder full and complete releases of liens,
pledges and/or security interests in assets owned by Shareholder, its subsidiary
Thirco, Inc. or its subsidiary Antenna Products Corporation that secures the
long term note of Seller payable to Frost Bank that is reflected in Seller's
April 30 Balance Sheet and that is hereby being assumed by Buyer.
3.2 Cancellation of Employment Agreement and Assignment of
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Shares. As additional consideration for the sale, assignment, transfer and
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delivery of the Acquired Assets, and upon the terms and subject to the
conditions herein, at the Closing Xxxxxxxx shall and hereby agrees to (i) the
cancellation of that certain Employment Agreement dated January 27, 2000 and
Amendment dated October 8, 2002 between Seller and Xxxxxxxx and (ii) transfer
and assign to Shareholder all of the shares of common stock of Seller that are
owned by him.
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3.3 Assumption of Warranty Obligations. As additional
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consideration for the sale, assignment, transfer and delivery of the Acquired
Assets by the Seller to the Buyer, and upon the terms and subject to the
conditions contained herein, at the Closing the Buyer shall assume all warranty
and repair obligations of Seller that now exist, exist at Closing or that may
exist following the Closing on products and with respect to services performed
by Seller.
4. Closing. The closing (the "Closing") of the transactions
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contemplated by this Agreement shall take place at the offices of Xxxxxxx at
10:00 a.m. local time on June 3, 2003, or at such other date and time on which
all the conditions set forth in section 8 of this Agreement are satisfied (the
"Closing Date"). Not withstanding the actual date of the Closing Date, the
Closing shall be effective on and as of May 31, 2003 (the "Effective Date"). The
execution and/or delivery of each document to be executed and/or delivered at
the Closing (including the Release of Liens provided for by section 3.1 which
may be provided on or prior to July 31, 2003) and each other action to be taken
at the Closing shall be subject to the condition that every other document to be
executed and/or delivered at the Closing is so executed and/or delivered and
every other action to be taken at the Closing is so taken, and all such
documents and actions shall be deemed to be executed and/or delivered or taken,
as the case may be, simultaneously, and on and as of the Effective Date.
5. Representations and Warranties of the Seller, Xxxxxxx and
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Xxxxxxxx.
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The Seller, Xxxxxxx and Xxxxxxxx jointly and severally
represent and warrant to the best of their respective knowledge, information and
belief, to the Buyer and the Shareholder as follows:
5.1 Organization. The Seller is a corporation duly organized,
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validly existing and in good standing under the laws of the jurisdiction of its
incorporation. The Seller has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as it is now
being conducted. The Seller is duly qualified or licensed to do business as a
foreign corporation and is in good standing in each jurisdiction in which the
nature of the business conducted by it makes such qualification or licensing
necessary. The Seller has delivered to the Buyer true, correct and complete
copies of the Seller's certificate of incorporation and bylaws, as currently in
effect.
5.2 Capitalization.
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(a) The authorized capital stock of the Seller consists of 1000 shares
of Common Stock, no par value per share ("Common Stock"); 100 shares of Common
Stock are issued and outstanding; 100 of those shares are owned of record and
beneficially by the Shareholder free and clear of all liens, and no shares of
Common Stock are issued and held in the treasury of the Seller. All of the
issued and outstanding shares of Common Stock are duly authorized, validly
issued, fully paid and non-assessable. There are no (i) options, warrants,
calls, preemptive rights, subscriptions or other rights, convertible securities,
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agreements or commitments of any character obligating the Seller or Shareholder
to issue, transfer or sell any shares of capital stock, options, warrants, calls
or other equity interest of any kind whatsoever in the Seller or securities
convertible into or exchangeable for such shares or equity interests, (ii)
contractual obligations of the Seller to repurchase, redeem or otherwise acquire
any capital stock or equity interest of the Seller or (iii) voting trusts,
proxies or similar agreements to which the Seller or the Shareholder is a party
with respect to the voting of the capital stock of the Seller.
(b) The Seller does not own any outstanding shares of capital
stock (or other equity interests of entities other than corporations) of any
partnership, joint venture, trust, corporation, limited liability company or
other entity (collectively, an "Entity").
5.3 Authorization; Validity of Agreement. Each of the Seller,
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Xxxxxxx and Xxxxxxxx has the requisite capacity and authority to execute,
deliver and perform this Agreement and each of the other agreements,
instruments, documents and certificates to be executed and delivered pursuant to
this Agreement, including but not limited to, any item referred to in Section 9
(collectively, with this Agreement, the "Transaction Documents") to which it is
a party and to assume and perform its obligations hereunder and thereunder, and
to consummate the transactions contemplated hereby. This Agreement has been duly
executed, authorized and delivered by each of the Seller, Xxxxxxx and Xxxxxxxx
and is a valid and binding obligation of each of the Seller, Xxxxxxx and
Xxxxxxxx, enforceable against each of the Seller, Xxxxxxx and Xxxxxxxx in
accordance with its terms, except as such enforceability may be subject to or
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally.
5.4 No Violations.
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(a) The execution, delivery and performance of this Agreement
by each of the Seller, Xxxxxxx and Xxxxxxxx do not, and the consummation by each
of the Seller, Xxxxxxx and Xxxxxxxx of the transactions contemplated hereby will
not, (i) violate any provision of the certificate of incorporation or bylaws of
the Seller, (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceleration) under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
guarantee, other evidence of indebtedness, license, lease, option, contract,
undertaking, understanding, covenant, agreement or other instrument or document
(collectively, a "Contract") to which the Seller, Xxxxxxx or Xxxxxxxx is a party
or by which any of the properties or assets of either of the Seller, Xxxxxxx or
Xxxxxxxx may be bound or otherwise subject or (iii) violate any order, writ,
judgment, injunction, decree, law, statute, rule or regulation applicable to
either of the Seller, Xxxxxxx or Xxxxxxxx or any of their respective properties
or assets.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any foreign, provincial, United States
federal, state, county, municipal or other local jurisdiction, political entity,
body, organization, subdivision or branch, legislative or executive agency or
department or other regulatory service, authority or agency (a "Governmental
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Entity") or any other individual or other entity (a "Person") is required in
connection with the execution, delivery and performance of this Agreement by
either of the Seller, Xxxxxxx or Xxxxxxxx or the consummation by either of the
Seller, Xxxxxxx or Xxxxxxxx of the transactions contemplated hereby.
5.5 Financial Statements. Attached to Schedule 5.5(a) are
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unaudited balance sheets of the Seller as of April 30, 2002, April 30, 2003 and
May 31, 2002, (all of the foregoing, the "Financial Statements"). The Financial
Statements have been derived from, and agree with, the books and records of the
Seller and fairly present the financial position of the Seller as of the
respective dates thereof and the results of operations and cash flows of the
Seller for the respective periods set forth therein, in each case as if the
Seller was a stand-alone entity and not a Subsidiary of the Shareholder Each of
the Financial Statements has been prepared in accordance with GAAP as of the
dates and for the periods involved.
5.6 No Material Adverse Change. Since the date of the April 30
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Balance Sheet, there has been no material change in the Business or the Acquired
Assets or the Assumed Liabilities, or in the condition, financial or otherwise,
or in the results of operations, or in the prospects of, the Seller or Business.
Since the date of the April 30 Balance Sheet, the Business has been conducted in
the ordinary course and consistent with past practice. As amplification and not
limitation of the foregoing, since the date of the April 30 Balance Sheet, the
Seller has not:
(a) created, incurred, assumed or granted, or permitted or
allowed any of the Acquired Assets to be subject to, any lien other than a
"Permitted Encumbrance" ("Lien"). A "Permitted Encumbrance" shall mean any
mechanic's, workmen's and similar statutory liens, or any liens arising out of
or relating to Taxes not yet due and payable;
(b) made any change in any method of accounting or accounting
practice, principle or policy used by the Seller;
(c) amended, terminated, canceled, or compromised any claims
of the Seller, canceled, forgave or discharged any debt owed to the Seller, or
waived any other material rights of value to the Seller;
(d) sold, transferred, leased, subleased, licensed, assigned,
or otherwise disposed of any Acquired Assets or any interest therein, whether
real, personal or mixed, other than in the ordinary course of the Business
consistent with past practice;
(e) issued or sold any capital stock, notes, bonds or other
securities, or any option, warrant or other right to acquire the same;
(f) redeemed any of the Seller's outstanding securities or
declared, set aside, made, committed to make, or paid any dividends,
distributions, bonuses or fees (whether in cash, securities or property);
(g) made any capital expenditures or commitment for any
capital expenditure in excess of $1,000 in the aggregate;
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(h) made any changes in the customary methods of operations of
the Seller including, but not limited to, payments to vendors and suppliers.
(i) merged or consolidated with any corporation, acquired
control or acquired any capital stock or other securities of any corporation or
business entity, or took steps incident to or in furtherance of any such actions
whether by entering into an agreement providing there for or otherwise;
(j) entered into any employment agreement or became liable for
any bonus, profit-sharing or incentive payment to any of its officers or
directors, except pursuant to existing plans, arrangements or agreements
disclosed in a schedule hereto;
(k) committed a material breach under, or amended or
terminated, any Material Contract (as defined in section 5.13) or any License
(as defined in section 5.8) or other right of the Seller;
(l) incurred any damage, destruction or similar loss, whether
or not covered by insurance, adversely affecting the Seller, the Business or the
Acquired Assets;
(m) incurred any indebtedness, obligation or liability
(including any guaranty, indemnity, make-whole agreement for or with respect to
any indebtedness, obligation or liability of another Person), or paid, satisfied
or discharged any indebtedness, obligation or liability prior to the due date or
maturity thereof, except current indebtedness, obligations and liabilities in
the ordinary course of business;
(n) effected any change in the Seller's business policies or
practices, accounting methods, conventions, principles or assumptions or any
change in the nature of the business relationships with its clients, or effected
any transaction not in the ordinary course of business;
(o) amended or terminated any Contract to which it is a party
or entered into or become a party to any Contract under which the reasonably
anticipated costs and expenses will exceed the reasonably anticipated revenues
or which would materially and adversely affect the Business or the Acquired
Assets;
(p) failed to continue in full force and effect all of its
insurance policies;
(q) increased the compensation payable or to become payable to
any of its officers, directors, employees or agents, or made any bonus payment
to or similar arrangement with any such person, other than pursuant to existing
plans, arrangements or agreements disclosed herein or in a schedule hereto;
(r) effected any capital reorganization, or acquired the
business or assets, substantially as a whole, of any other Person; and
(s) entered into any new lease or renewed an existing lease.
5.7 No Undisclosed Liabilities.
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(a) The Seller does not have, and as of the Closing will not
have, any liabilities (whether accrued, contingent, known, or otherwise) other
than those that (i) are set forth or reserved against in the balance sheets
referred to in section 5.5; or (ii) were incurred since April 30, 2003 in the
ordinary course of business, none of which, individually or in the aggregate, is
material to the business, operations, condition or prospects of the Business.
(b) The accounts payable of the Seller set forth in the
balance sheets referred to in section 5.5. or arising subsequent thereto are the
result of bona fide transactions in the ordinary course of business and have
been paid or are not yet due and payable.
5.8 Litigation; Compliance with Law; Licenses and Permits.
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(a) There is no claim, suit, action, investigation or
proceeding ("Proceeding") pending, or to the best knowledge either of the
Seller, Xxxxxxx or Xxxxxxxx, threatened, that involves or affects the Seller or
the Business, by or before any Governmental Entity, court, arbitration panel or
any other Person.
(b) The Seller and Business have, and on the Closing Date will
have, complied with all applicable foreign, provincial, United States federal,
state, county, municipal or other local criminal, civil or common laws,
statutes, ordinances, orders, codes, rules, regulations, permits, policies,
guidance documents, judgments, decrees, injunctions, or agreements of any
Governmental Entity (collectively, "Laws"), including but not limited to Laws
relating to zoning, building codes, antitrust, occupational safety and health,
industrial hygiene, environmental protection, water, ground or air pollution,
the generation, treatment, storage or disposal of Hazardous Substance (as
defined in section 5.16), consumer product safety, product liability, hiring,
wages, hours, employee benefit plans and programs, collective bargaining and the
payment of withholding and social security taxes. Since January 1, 2000, the
Seller has not received any notice of any violation of any Law.
(c) The Seller and Business have every license, permit,
certification, qualification or franchise issued by any Governmental Entity
(each, a "License") and every approval, authorization, waiver, variance,
exemption, consent or ratification by or on behalf of any Person that is not a
party to this Agreement (each, a "Permit") required for it to conduct its
business as presently conducted. All such Licenses and Permits are in full force
and effect and neither the Seller, Xxxxxxx nor Xxxxxxxx has received notice of
any pending cancellation or suspension of any thereof nor, to the best knowledge
of the Seller, Xxxxxxx and Xxxxxxxx, is any cancellation or suspension thereof
threatened. The applicability and validity of each such License and Consent will
not be adversely affected by the consummation of the transactions contemplated
by this Agreement.
5.9 Employee Benefit Plans; ERISA.
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(a) Schedule 5.9(a) lists each "employee benefit plan" (as
defined in section 3(3) of ERISA), and all other material employee benefit
(including, without limitation, any non-qualified plans), bonus, deferred
compensation, incentive, stock option (or other equity-based), severance,
change-in-control, medical insurance and fringe benefit plans maintained for the
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benefit of, or contributed to by the Seller or any trade or business, whether or
not incorporated (an "ERISA Affiliate"), that would be deemed a "single
employer" within the meaning of section 4001 of the Employee Retirement Income
Security Act of 1974 ("ERISA"), for the benefit of any employee or former
employee of the Seller (the "Plans"). The Seller has heretofore delivered to the
Buyer or will at Buyer's request, true, correct and complete copies of each of
the Plans, including all amendments to date.
(b) Each of the Plans that is subject to ERISA complies with
ERISA and the applicable provisions of the Internal Revenue Code of 1986 (the
"Code") and has been administered in accordance with ERISA and, where
applicable, the Code. Each of the Plans intended to be `qualified" within the
meaning of section 401(a) of the Code has received a timely determination letter
from the Internal Revenue Service that it is so qualified and neither the
Seller, Xxxxxxx nor Xxxxxxxx knows of any facts or circumstances that would
materially adversely affect such qualification prior to and including the close
of business on the day immediately preceding the Closing Date. Except as set
forth in Schedule 5.9(b), none of the Plans is subject to Title IV of ERISA. No
"reportable event", as such term is defined in section 4043(b) of ERISA (for
which the 30-day notice requirement to the Pension Benefit Guaranty Board
("PBGC") has not been waived), has occurred with respect to any Plan. There are
no pending or, to the best knowledge of the Seller, Xxxxxxx and Xxxxxxxx,
threatened claims (other than routine claims for benefits), actions, suits or
proceedings by, on behalf of or against any of the Plans or any trusts related
thereto.
(c) No Plan provides benefits, including, without limitation,
death or medical benefits (whether or not insured), with respect to any
employees or former employees of the Seller beyond their retirement or other
termination of service (other than (i) coverage mandated by applicable law, (ii)
death benefits or retirement benefits under any "employee pension plan," as that
term is defined in section 3(2) of ERISA, or (iii) benefits the full cost of
which is borne by the current or former employee (or his or her beneficiary)).
(d) With respect to each Plan, neither the Seller, Xxxxxxx,
Xxxxxxxx nor any ERISA Affiliate has engaged in a "prohibited transaction" (as
such term is defined in section 4975 or section 406 of ERISA) that would subject
the Seller or the Buyer to any taxes, penalties or other liabilities resulting
from prohibited transactions under section 4975 of the Code or section 409 or
502(i) of ERISA.
(e) The Seller has complied with the notice and continuation
of coverage requirements of section 4980B of the Code and the regulations
thereunder with respect to each plan that is, or was during any taxable year of
the Seller for which the statute of limitations on the assessment of federal
income taxes remains open, by consent or otherwise, a group health plan within
the meaning of section 4980B (g) of ERISA.
(f) No Plan has incurred an "Accumulated Funding Deficiency"
(as defined in section 302(a) of ERISA or section 412(a) of the Code), whether
or not waived.
(g) None of the Seller or any ERISA Affiliate has incurred or
would incur a "withdrawal" or "partial withdrawal", as defined in sections 4203
and 4205 of ERISA, from any Plan that has resulted or would result in a
withdrawal liability of the Seller or any ERISA Affiliate under such Plan.
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5.10 Intellectual Property; Computer Software.
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(a) Seller has possession of all Intellectual Property,
including without limitation, trademarks, trade names, service marks, service
names, xxxx registrations, logos, assumed names, copyrights, copyright
registrations, patents, know-how and all applications therefore that are owned
by (i) the Seller or (ii) any other Person and used by the Seller in the
operations of the Business, and there are no pending or threatened claims by any
Person relating to the Seller's use of any Intellectual Property. The Seller has
such rights of ownership (free and clear of all Liens) of, or such rights by
license, lease or other agreement to use (free and clear of all Liens) the
Intellectual Property as are necessary to permit the Seller to conduct its
business and the Seller is not obligated to pay any royalty or similar fee to
any Person in connection with the Seller's use or license of any of the
Intellectual Property.
(b) The Seller has such rights of ownership (free and clear of
all Liens) of, or such rights by license, lease or other agreement to use (free
and clear of all Liens), the computer software programs including, without
limitation, application software that are used by the Seller and that are
material to the conduct of its business as currently conducted, as are necessary
to permit the conduct of its business as currently conducted. None of the
Seller's ownership rights or rights to use any of the computer programs referred
to above will be adversely affected by any of the transactions contemplated
hereby.
5.11 Title to Acquired Assets
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(a) The Seller has good and marketable title to the Acquired
Assets, including, without limitation, all assets shown on the Financial
Statements, free and clear of all Liens, other than (i) Liens, if any, for
personal property taxes and assessments not yet due and payable, (ii)
inventories sold since the date of the Financial Statements in the ordinary
course of business and consistent with past practice and (iii) the Lien securing
the Promissory Note dated Jauary 26, 2000 in the original principal amount of
$1,750,000 payable to Frost Bank. At the Closing, the Buyer will obtain good and
marketable title to all of the Acquired Assets subject to such foregoing Liens.
(b) All material items of machinery, equipment, tooling and
other tangible personal property owned or leased by the Seller and used in the
conduct of its business (other than items of inventory) are listed in the
detailed fixed assets ledger of the Seller attached to Schedule 5.11(b)
(collectively, the "Personal Property"). The Personal Property conforms in all
material respects to all requirements of applicable Laws. All of the items of
machinery, equipment and tooling included within the Personal Property are fully
operational and operating in the ordinary course of the Seller's business, are
in good operating condition and in a good state of maintenance and repair, are
adequate for use in the conduct of the Seller's business as previously conducted
and as proposed to be conducted and are capable of manufacturing the products of
the Seller's business on an efficient and profitable basis.
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5.12 Material Contracts.
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(a) Schedule 5.12 sets forth a true, complete and correct list
of every Contract that (i) provides for aggregate future payments by the Seller
or to the Seller of more than $5,000; (ii) was entered into by the Seller with
Havener, Perryman, or an officer, director or significant employee of the Seller
or Shareholder; (iii) is a collective bargaining or similar agreement; (iv)
guarantees or indemnifies or otherwise causes the Seller to be liable or
otherwise responsible for the obligations or liabilities of any other Person or
provides for a charitable contribution by the Seller; (v) involves an agreement
with any bank, finance company or similar organization; (vi) restricts the
Seller or Business from engaging in any business or activity anywhere in the
world; (vii) is an employment agreement, consulting agreement or similar
arrangement with any employee of the Seller or any other Person; or (viii) any
other Contract that is material to rights, properties, assets, business or
operations of the Seller or Business (the foregoing, collectively, "Material
Contracts"). The Seller has heretofore provided true, complete and correct
copies of all Material Contracts to the Buyer and Shareholder.
(b) There is not, and to the best knowledge of the Seller,
Xxxxxxx and Xxxxxxxx there has not been claimed or alleged by any Person with
respect to any Material Contract, any existing default, or event that with
notice or lapse of time or both would constitute a default or event of default,
on the part of the Seller or, to the best knowledge of the Seller, Xxxxxxx and
Xxxxxxxx, on the part of any other party thereto and (ii) no consent, approval,
authorization or waiver from, or notice to, any Governmental Entity or other
Person is required in order to maintain in full force and effect any of the
Material Contracts, other than such consents and waivers that have been obtained
and are unconditional and in full force and effect and such notices that have
been duly given and copies of such consents, waivers and notices have been
delivered to the Buyer and Shareholder.
(c) The Contracts to which the Seller is a party and that are
not listed on Schedule 5.12 do not involve the payment by the Seller thereunder
of more than $5,000 per year in the aggregate and are not otherwise material,
individually or in the aggregate, to the Seller or its Business.
5.13 Taxes.
-----
(a) (i) The Seller has complied with all applicable Laws
relating to the collection or withholding of Taxes, and the remittance thereof
and filing of Tax Returns with the applicable Taxing Authorities;
(ii) no audit, examination, investigation, reassessment or
other administrative or court proceeding (collectively, a "Tax Proceeding") is
pending or proposed, or to the best knowledge of the Seller, Xxxxxxx or Xxxxxxxx
threatened, with regard to any matter referred to in clause (i) above or any Tax
for which the Seller is or may be liable;
(iii) there is no Lien for Taxes upon any property of the
Seller;
26
(iv) (A) there is no pending request for a ruling from any
Taxing Authority and (B) there is no outstanding subpoena or request for
information by any Taxing Authority, with respect to any Tax for which the
Seller is or may be liable or with respect to the Seller's income, assets or
business;
(b) No Tax Return referred to in clause (a)(i) has been
examined by the applicable Governmental Entity since 2000.
(c) The Seller has provided or will provide upon request to
the Buyer and Shareholder (i) a copy of all Tax Returns relating to, and (ii)
all audit reports relating to each proposed adjustment, if any, made by any
Taxing Authority with respect to any taxable period ending after January 1, 2000
to any Taxes for which the Seller is or may be liable with respect to the
Seller's income, assets or business.
(d) Any Tax allocation or Tax sharing agreement, arrangement
or understanding to which the Seller was a party has been terminated as of the
Closing Date without further obligation of the Seller.
(e) As used herein, (i) "Tax Return" means any return,
declaration, report, information return or statement, and any amendment thereto,
including without limitation any consolidated, combined or unitary return or
other document (including any related or supporting information), filed or
required to be filed with any Taxing Authority in connection with the
determination, assessment, collection, payment, refund or credit of any federal,
state, local and foreign Tax or the administration of any Laws relating to any
Tax or ERISA, and (ii) "Taxes" means any and all taxes, charges, fees, levies,
deficiencies or other assessments of whatever kind or nature, including, without
limitation, all net income, gross income, profits, gross receipts, excise, real
or personal property, sales, ad valorem, withholding, social security,
retirement, excise, employment, unemployment, minimum, estimated, severance,
stamp, property, occupation, environmental, windfall profits, use, service, net
worth, payroll, franchise, license, gains, customs, transfer, recording and
other taxes, customs duty, fees assessments or charges of any kind whatsoever,
imposed by any Taxing Authority, including any liability therefore as a
transferee (including without limitation under section 6901 of the Code or any
similar provision of applicable Law), as a result of Treasury Regulation ss.
1.1502-6 or any similar provision of applicable Law, or as a result of any Tax
sharing or similar agreement, together with any interest, penalties or additions
to tax relating thereto.
5.14 Affiliated Party Transactions. There are no amounts owed
------------------------------
by the Seller to Xxxxxxx or Xxxxxxxx or any of their Affiliates or by either
Xxxxxxx or Xxxxxxxx to Seller or to any of its Affiliates. The Seller has not,
directly or indirectly, purchased, leased or otherwise acquired any material
assets or property or monies, or obtained any material services from, or sold,
leased or otherwise disposed of any material assets or property, or furnished
any material services to, in the ordinary course of business or otherwise, in
any transaction involving Xxxxxxx or Xxxxxxxx or any Affiliates. Except for
obligations arising under this Agreement, as of the Closing Date the Seller will
not have, directly or indirectly, any obligation to or claim against the
Business and neither Xxxxxxx nor Xxxxxxxx will have, directly or indirectly, any
obligation to or cause of action or claim against the Seller.
27
5.15 Environmental Matters.
----------------------
(a) the Seller is in compliance with, and the Business has
been conducted in material compliance with, all Environmental Laws (as defined
below) and Environmental Permits (as defined below);
(b) no Site (as defined below) is a treatment, storage or
disposal facility, as defined in and regulated under the Resource Conservation
and Recovery Act, 42 U.S.C.ss.6901 et seq., is on or ever was listed or is
-------
proposed for listing on the National Priorities List pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C.ss.9601 et seq., or on any similar state list of sites requiring
-------
investigation or cleanup;
(c) neither the Seller, Xxxxxxx nor Xxxxxxxx has received any
notice that remains pending or outstanding with respect to its business or any
Site from any Governmental Entity or Person alleging that the Seller is not in
material compliance with any Environmental Law;
(d) there has been no Release (as defined below) of a
Hazardous Substance (as defined below) at, from, in, to, on or under any Site
and no Hazardous Substances are present in, on, about or migrating to or from
any Site that could give rise to an Environmental Claim (as defined below)
against the Seller;
(e) there are no pending or outstanding corrective actions
requested, required or being conducted by any Governmental Entity for the
investigation, remediation or cleanup of any Site, and there have been no such
corrective actions, whether still pending or otherwise;
(f) the Business has obtained and holds all necessary
Environmental Pennits, and those Environmental Permits will remain in full force
and effect after the consummation of the transactions contemplated hereby;
(g) there are no past or pending, or to the best knowledge of
the Seller, Xxxxxxx or Xxxxxxxx threatened, Environmental Claims against the
Seller or the Shareholder, and neither of the Seller, Xxxxxxx nor Xxxxxxxx is
aware of any facts or circumstances which could reasonably be expected to form
the basis for any Environmental Claim against the Business;
(h) neither the Seller, any predecessor of the Seller, nor any
entity previously owned by the Seller, has transported or arranged for the
treatment, storage, handling, disposal, or transportation of any Hazardous
Substance to any off-Site location that could result in an Environmental Claim
against the Seller;
(i) there are no (i) underground storage tanks, active or
abandoned, (ii) polychlorinated biphenyl containing equipment, or (iii) asbestos
containing material at any Site; and
28
(j) there have been no environmental investigations, studies,
audits, tests, reviews or other analyses (which have been reduced to writing)
conducted by, on behalf of, or that are in the possession of the Seller with
respect to any Site or any transportation, handling or disposal of any Hazardous
Substance that has not been delivered to the Buyer prior to execution of this
Agreement.
(k) As used herein, (i) "Environment" means all air, surface
water, groundwater, or land, including land surface or subsurface, including all
fish, wildlife, biota and all other natural resources; (ii) "Environmental
Claim" means any and all administrative or judicial actions, suits, orders,
claims, liens, notices, notices of violations, investigations, complaints,
requests for information, proceedings or other communications (written or oral),
whether criminal or civil, (collectively, "Claims") pursuant to or relating to
any applicable Environmental Law by any person (including, but not limited to,
any Governmental Entity, Person and citizens' group) based upon, alleging,
asserting, or claiming any actual or potential (x) violation of or liability
under any Environmental Law, (y) violation of any Environmental Permit, or (z)
liability for investigatory costs, cleanup costs, removal costs, remedial costs,
response costs, natural resource damages, property damage, personal injury,
fines, or penalties arising out of, based on, resulting from, or related to the
presence, Release, or threatened Release into the Environment, of any Hazardous
Substances at any location, including, but not limited to, any off-Site location
to which Hazardous Substances or materials containing Hazardous Substances were
sent for handling, storage, treatment, or disposal; (iii) "Environmental Law"
means any and all Laws relating to the protection of health and the Environment,
worker health and safety, and/or governing the handling, use, generation,
treatment, storage, transportation, disposal, manufacture, distribution,
formulation, packaging, labeling, or Release of Hazardous Substances, whether
now existing or subsequently amended or enacted, and the state analogies
thereto, all as amended or superseded from time to time; and any common law
doctrine, including, but not limited to, negligence, nuisance, trespass,
personal injury, or property damage related to or arising out of the presence,
Release, or exposure to a Hazardous Substance; (iv) "Environmental Permit" means
any permits, licenses, approvals, consents or authorizations required by any
Governmental Entity under or in connection with any Environmental Law; (v)
"Hazardous Substance" means petroleum, petroleum hydrocarbons or petroleum
products, petroleum by-products, radioactive materials, asbestos or
asbestos-containing materials, gasoline, diesel fuel, pesticides, radon, urea
formaldehyde, lead or lead-containing materials, polychlorinated biphenyls; and
any other chemicals, materials, substances or wastes in any amount or
concentration which are now or hereafter become defined as or included in the
definition of "hazardous substances," "hazardous materials," "hazardous wastes,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants," "pollutants," "regulated substances," "solid wastes," or
"contaminants" or words of similar import, under any Environmental Law; (vi)
"Release" means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, or disposing of a Hazardous
Substance into the Environment; and (vii) "Site" means any of the real
properties currently or previously owned, leased, used or operated by the
Seller, any predecessors of the Seller or any entities previously owned by the
Seller, including all soil, subsoil, surface waters and groundwater thereat.
29
5.16 No Brokers. Neither the Seller, Xxxxxxx nor Xxxxxxxx has
-----------
employed, or otherwise engaged, any broker or finder or incurred any liability
for any brokerage or investment banking fees, commissions, finders' fees or
other similar fees in connection with the transactions contemplated by this
Agreement.
5.17 Receivables All accounts receivable of the Seller have
-----------
arisen, and as of the Closing Date will have arisen, from bona fide transactions
in the ordinary course of the Seller's business consistent with past practice
and will be collected in the ordinary course of the Seller's business consistent
with past practice and none have been deferred for collection after the Closing
Date.
5.18 Inventories. As reflected on the Financial Statements,
-----------
the Seller does not maintain or carry any inventory item.
5.19 Product Claims No product liability claim is pending, or
--------------
to the best knowledge of the Seller, Xxxxxxx or Xxxxxxxx threatened, against the
Seller or against any other party with respect to the products or services of
the Business.
5.20 Bank Accounts. Schedule 5.20 sets forth the names and
--------------
locations of all banks, depositories and other financial institutions in which
the Seller has an account or safe deposit box and the names of all persons
authorized to draw thereon or to have access thereto.
5.21 Directors, Officers and Certain Employees. Schedule 5.21
------------------------------------------
sets forth a complete and correct list of the names, current annual salary,
bonus and title, for each director and officer and each other employee of the
Seller who is a party to an employment agreement with the Seller or who received
annual compensation during the Seller's most recently ended fiscal year or, who
is entitled to receive compensation, on an annualized basis, whether or not paid
to date, in excess of $50,000.
5.22 No Misstatements or Omissions No representation or
-----------------------------
warranty by the Seller, Xxxxxxx or Xxxxxxxx contained in this Agreement and no
statement contained in any certificate, list, Schedule, or other instrument
specified or referred to in this Agreement, whether heretofore furnished to the
Buyer or Shareholder or hereafter furnished to the Buyer or Shareholder pursuant
to this Agreement, contains or will contain any untrue statement of a material
fact or omits or will omit any material fact necessary to make the statements
contained therein, in light of the circumstances under which it was made, not
misleading.
6. Representations and Warranties of the Buyer. The Buyer
--------------------------------------------
represents and warrants to the Seller and Shareholder as follows:
30
6.1 Organization. The Buyer is a limited liability company
-------------
duly organized, validly existing and in good standing under the laws of Texas
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as it is now being conducted. The
Buyer is duly qualified or licensed to do business as a foreign corporation and
is in good standing in each jurisdiction in which the nature of the business
conducted by it makes such qualification or licensing necessary. The Buyer has
heretofore delivered to the Seller and Shareholder true, correct and complete
copies of its certificate of organization regulations as currently in effect.
6.2 Authorization: Validity of Agreement The Buyer has the
--------------
requisite power and authority to execute, deliver and perform this Agreement and
to consummate the transactions contemplated hereby. The execution, delivery and
performance by the Buyer of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
manager of the Buyer, and no other proceedings on the part of the Buyer are
necessary to authorize the execution, delivery and performance of this Agreement
by the Buyer and the consummation of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Buyer and, assuming due
authorization, execution and delivery of this Agreement by the Seller, Xxxxxxx,
Xxxxxxxx and the Shareholder, is a valid and binding obligation of the Buyer
enforceable against the Buyer in accordance with its terms, except as such
enforceability may be subject to or limited by applicable bankruptcy,
insolvency, reorganization, or other similar laws, now or hereafter in effect,
affecting the enforcement of creditors' rights generally.
6.3 No Violations.
--------------
(a) The execution, delivery and performance of this Agreement
by the Buyer does not, and the consummation by the Buyer of the transactions
contemplated hereby will not, (i) violate any provision of the certificate of
organization or regulations of the Buyer, (ii) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any material note, bond,
mortgage, indenture, guarantee, other evidence of indebtedness, license,
contract, agreement or other instrument to which the Buyer is a party or by
which the Buyer or any of its properties or assets may be bound or otherwise
subject or (iii) violate any order, writ, judgment, injunction, decree, law,
statute, rule or regulation applicable to the Buyer, or any of its properties or
assets.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any Governmental Entity is required in
connection with the execution, delivery and performance of this Agreement by the
Buyer or the consummation by the Buyer of the transactions contemplated hereby.
6.4 Litigation. There is no Proceeding pending or, to the best
-----------
knowledge of the Buyer, threatened, which involves or affects the Buyer, by or
before any court, Governmental Entity or arbitration panel or any other Person.
31
7. Other Agreement of the Parties.
-------------------------------
7.1 Conduct of Business. From the date hereof through the
--------------------
Closing Date, the Seller shall conduct the Business in the ordinary course and
consistent with past practice, and the Seller shall not, except as the Buyer and
Shareholder may otherwise consent to in writing:
(i) engage in any practice, take any action, fail to take
any action or enter into any transaction which could cause any representation or
warranty of the Seller to be materially untrue or result in a material breach of
any covenant or agreement made by the Seller in this Agreement; and
(ii) take, permit to be taken or suffer to occur any of
the actions set forth in items (a) through (s) of section 5.6
7.2 Access and Information From the date hereof until the
----------------------
Closing Date, the Seller shall, and shall cause each of the Seller's officers,
directors, employees, agents, accountants and counsel to, upon reasonable
notice, (i) afford the officers, employees and authorized agents, accountants,
counsel and representatives of the Buyer and Shareholder reasonable access,
during normal business hours, to (A) the offices, properties, plants, other
facilities, books, Contracts and records of the Seller and any records
concerning the Seller maintained and accumulated by its representatives, and (B)
those officers, directors, employees, agents, accountants and counsel of the
Seller who have any knowledge relating to the Seller or the Acquired Assets, and
(ii) furnish to the officers, employees and authorized agents, accountants,
counsel and representatives of the Buyer and Shareholder such additional
financial and operating data and other information regarding the Acquired Assets
(including, without limitation, any Contracts, licenses and patents in effect as
of the date hereof and any Contracts or licenses being negotiated or entered
into between the date hereof and the Closing Date), properties and goodwill of
the Seller as the Buyer may from time to time reasonably request.
7.3 Tax Returns: Taxes All Tax Returns with respect to the
------------------
Seller shall be timely filed by the Seller on a basis consistent with prior Tax
Returns except to the extent required under applicable Law. The Seller shall
timely pay all Taxes required to be paid by it. The Seller shall promptly
forward to the Buyer a copy of all written communications from any Taxing
Authority received by it in any way relating to the Business or Acquired Assets.
7.4 Other Actions. Each of the parties hereto shall use all
--------------
reasonable efforts to (i) take, or cause to be taken, all actions, (ii) do, or
cause to be done, all things, and (iii) execute and deliver all such documents,
instruments and other papers, as in each case may be necessary, proper or
advisable under applicable Laws, or reasonably required in order to carry out
the terms and provisions of this Agreement and to consummate and make effective
the transactions contemplated hereby.
32
7.5 Change of Name. Simultaneously with the Closing, the
---------------
Seller shall take such action necessary to change its name to a name that does
not include the words "Phazar Aerocorp." Buyer shall have the right to use the
name "Phazar Aerocorp" Notwithstanding the foregoing, Shareholder and its
subsidiaries shall retain and continue to have the right to use the name and
xxxx "Phazar".
7.6 Cooperation on Taxes. The Seller and the Buyer shall
---------------------
cooperate with each other by executing or causing to be executed any required
documents and by making available to the other, all books and records relating
to the Acquired Assets or the Business (including work benefits (whether arising
under any plan, program, policy or arrangement of the Seller or under applicable
local law), payroll taxes and other payroll related expenses and (B) payments to
or under employee benefit plans (within the meaning of section 3(3) of ERISA)
maintained or contributed to by the Seller, in either case arising out of or
relating to the employment of the Transferred Employees by the Seller prior to
the Closing.
7.7 Accrued Vacation.The Buyer shall assume all responsibility
-----------------
for the Seller's liability for accrued vacation pay whether or not such
liability is expressly included in the Assumed Liabilities.
7.8 Workers' Compensation. The Seller shall assume and retain
----------------------
responsibility and liability for all workers' compensation claims of the
Transferred Employees relating to events, conditions or circumstances that occur
or exist prior to the Closing. The Buyer shall have sole responsibility and
liability for any workers' compensation claims of Transferred Employees to the
extent relating to any event, condition or circumstance that occurs after the
Closing.
7.9 EEOC Claims. In respect of grievances or EEOC Claims of
------------
Transferred Employees to the extent relating to their employment by Seller,
including, without limitation, any such grievances or EEOC Claims filed before
state or local authorities for which payment has not been made prior to the
Closing, the Seller shall assume and retain responsibility and liability for all
amounts due with respect thereto, including, without limitation, the payment of
any amounts in the nature of back pay or employee compensation, and any state or
federal taxes in connection with such back pay or employee compensation.
Handling of such grievances and EEOC Claims shall be at the Seller's cost and
expense. The Buyer shall have sole responsibility and liability for any EEOC
Claims of Transferred Employees that relate to their employment with Buyer.
7.10 Transferred Employees. "Transferred Employees" refers
----------------------
to and includes all employees, present and former, of Seller who become
employees of Buyer at or after the Closing.
33
7.11 Fairness Opinion. In accordance with the requirements of
-----------------
the Board of Directors of the Shareholder, the parties agree to obtain, prior to
July 31, 2003, from a third party business appraiser an opinion that the
consummation of this Agreement is fair to all of the shareholders of the
Shareholder. In the event such fairness opinion cannot be by such time secured,
Seller or Shareholder may rescind this Agreement.
8. Conditions Precedent to the Closing
-----------------------------------
8.1 Conditions Precedent to the Buyer's and Shareholder's
-----------------------------------------------------
Obligations to Close. The obligation of the Buyer and Shareholder to enter into
---------------------
this Agreement and to consummate the transactions contemplated hereby is subject
to the satisfaction prior to or on the Closing Date of each of the following
conditions; provided, however, that the Buyer and Shareholder shall have the
right to waive all or any part of each such condition, and to close the
transactions contemplated hereby without however, releasing the Seller, Xxxxxxx
or Xxxxxxxx from any covenant, obligation, agreement or condition contained
herein or from any liability for any loss or damage sustained by the Buyer or
Shareholder by reason of the breach by the Seller, Xxxxxxx or Xxxxxxxx of any
covenant, obligation, agreement or condition contained herein, by reason of any
misrepresentation made by the Seller, Xxxxxxx or Xxxxxxxx; and provided further,
however, that the Buyer and Shareholder's participation in the Closing shall not
in any way be deemed to be a waiver of any claim it may have hereunder for any
breach of any representation, warranty, covenant or agreement:
(a) The representations and warranties of the Seller, Xxxxxxx
and the Xxxxxxxx contained in this Agreement shall have been true and correct
when made and shall be true and correct in all material respects as of the
Closing Date, with the same force and effect as if made on the Closing Date,
except for such representations and warranties as are made as of a specific
date, which shall be true and correct in all material respects as of such date.
(b) The covenants and agreements of the Seller, Xxxxxxx or
Xxxxxxxx and the Shareholder contained in this Agreement and required to be
complied with or performed on or prior to the Closing Date shall have been
complied with or performed in all respects.
(c) The Buyer and Shareholder shall have received a
certificate of the Seller (the "Seller Secretary's Certificate") certifying the
resolutions duly and validly adopted by the Board of Directors of the Seller,
their respective authorization of the execution and delivery of this Agreement
and the other Transaction Documents to which the Seller is a party and the
consummation of the transactions contemplated hereby and thereby, and the names
and signatures of the officers of the Seller authorized to sign this Agreement
and the other Transaction Documents.
8.2 Conditions Precedent to the Seller's Obligations to Close
---------------------------------------------------------
The obligation of the Seller to consummate the transactions contemplated hereby
is subject to the satisfaction prior to or on the Closing Date of each of the
34
following conditions; provided, however, that the Seller shall have the right to
waive all or any part of each such condition, and to close the transactions
contemplated hereby without however, releasing the Buyer from any covenant,
obligation, agreement or condition contained herein or from any liability for
any loss or damage sustained by the Seller by reason of the breach by the Buyer
of any covenant, obligation, agreement or condition contained herein, by reason
of any misrepresentation made by the Buyer; and provided further, however, that
the Seller's participation in the Closing shall not in any way be deemed to be a
waiver of any claim it may have hereunder for any breach of any representation,
warranty, covenant or agreement:
(a) The representations and warranties of the Buyer, Xxxxxxx
or Xxxxxxxx contained in this Agreement shall have been true and correct when
made and shall be true and correct in all material respects as of the Closing
Date, with the same force and effect as if made as of the Closing Date, other
than such representations and warranties as are made as of a specific date,
which shall be true and correct in all material respects as of such date.
(b) The covenants and agreements contained in this Agreement
to be complied with by the Buyer on or before the Closing Date shall have been
complied with in all material respects.
(c) The Seller shall have received a certificate of the
Secretary of the Buyer (the "Buyer Secretary's Certificate") certifying the
resolutions duly and validly adopted by the Buyer evidencing its authorization
of the execution and delivery of this Agreement and the other Transaction
Documents to which the Buyer is a party and the consummation of the transactions
contemplated hereby and thereby, and the names and signatures of the officers of
the Buyer authorized to sign this Agreement and the other Transaction Documents
to be delivered hereunder.
(d) The form and substance of all certificates, opinions,
consents, instruments and other documents delivered to the Seller under this
Agreement shall be satisfactory in all reasonable respects to the Seller, the
Shareholder and their counsel.
(e) The Seller and Shareholder shall have received an
assumption agreement duly executed by the Buyer, in which the Buyer agrees to
assume the Assumed Liabilities, in the form of Schedule 8.2(f) attached hereto.
9. Documents to be Delivered at the Closing.
----------------------------------------
9.1 Deliveries of the Seller At the Closing, the Seller shall
------------------------
deliver or cause to be delivered the following items to the Buyer:
(a) the following documents with respect to the transfer of
interests in real property:
(i) an assignment in the form attached hereto as Schedule
9. 1 (a)(i) (the "Assignment") of all of the Leases (including, without
limitation, any security interests/pledge liens created thereby), collateral
guarantees and all security deposits made thereunder, containing a covenant of
good title and the Seller's representation and warranty that (a) there have been
no prior assignments of the Leases,
35
(b) such Leases are in full force and effect and are
enforceable in accordance with their terms, and
(c) neither the Leases nor the security deposits made
thereunder are then subject to any liens, security interests or adverse claims.
(ii) The Assignment shall be in recordable form and duly
executed and acknowledged.
(b) a xxxx of sale in the form attached hereto as Schedule
9.1(b) (the "Xxxx of Sale") conveying, transferring and selling to the Buyer all
right, title and interest of the Seller in and to the Acquired Assets;
(c) the certificates referred to in section 8. 1(c) duly
executed by an officer of the Seller, Xxxxxxx and Xxxxxxxx;
9.2 Deliveries of the Buyer. At the Closing, the Buyer and
-----------------------
Xxxxxxx shall deliver or cause to be delivered the following items to the Seller
and the Shareholder:
(a) an assumption and release of the $800,000 note payable by
Antenna Products Corporation to Sinan Corp and all liens and collateral securing
such note;
(b) the Buyer's assumption of the Seller's liabilities set
forth in section 2.1 hereof.;
(c) the Buyer Secretary's Certificate referred to in section
8.2(c) duly executed by the Secretary of the Buyer
10. Termination.
-----------
(a) This Agreement may be terminated at any time prior to the
Closing:
(i) by the mutual agreement of the Buyer, Shareholder and
the Seller;
(ii)by either the Buyer, Shareholder or the Seller in the
event of a material breach by or default of another party hereto.
(b) Upon termination of this Agreement pursuant to section
10(a), all obligations of the parties shall terminate except those under section
11; provided, however, that no such termination shall relieve the Seller,
Xxxxxxx or Xxxxxxxx of any liability to the Buyer or Shareholder, or the Buyer
of any liability to the Seller, by reason of any breach of or default under this
Agreement.
11. Indemnification.
----------------
11.1 Indemnification by the Seller, Xxxxxxx and Xxxxxxxx. The
----------------------------------------------------
Seller, Xxxxxxx and Xxxxxxxx shall jointly and severally indemnify and defend
the Buyer and Shareholder and each of their officers, directors, employees,
36
shareholders, agents, advisors or representatives (each, a "Buyer Indemnitee")
against, and hold each Buyer Indemnitee harmless from, any loss, liability,
obligation, damage or expense, including without limitation, reasonable
attorneys' and consultants' fees and disbursements (collectively, "Damages"),
that any Buyer Indemnitee may suffer or incur arising out of, relating to or in
connection with any of the following (whether or not in connection with any
third party claim):
(a) irrespective of the fact that representations and
warranties are made on the basis of their best information and belief, the
failure of any representation or warranty made by the Seller, Xxxxxxx or
Xxxxxxxx to be true and correct on the date hereof and on the Closing Date;
(b) the Seller's, Xxxxxxx'x or Xxxxxxxx'x failure to perform
or to comply with any covenant or condition required to be performed or complied
with by the Seller, Xxxxxxx or Xxxxxxxx hereunder;
(c) any Excluded Liability; or
(d) the ownership or operation of the Business or Acquired
Assets prior to the Closing Date except, with respect to Seller, for the Assumed
Liabilities.
11.2 Indemnification by the Buyer The Buyer shall indemnify
----------------------------
and defend the Seller and each of its officers, directors, employees,
shareholders, agents, advisors or representatives (each, a "Seller Indemnitee")
against, and hold each Seller Indemnitee harmless from, any Damages that such
Seller Indemnitee may suffer or incur arising from, related to or in connection
with any of the following:
(a) the failure of any representation or warranty made by the
Buyer to be true and correct on the date hereof and on the Closing Date; or
(b) the Buyer's failure to perform or to comply with any
covenant or condition required to be performed or complied with by the Buyer
hereunder.
11.3 Indemnification Procedures.
--------------------------
(a) Promptly after notice to an indemnified party of any claim
or the commencement of any Proceeding, including any Proceeding by a third
party, involving any Damage referred to in section 11.1 or 11.2, such
indemnified party shall, if a claim for indemnification in respect thereof is to
be made against an indemnifying party pursuant to this section 11, give written
notice to the latter of the commencement of such claim or Proceeding, setting
forth in reasonable detail the nature thereof and the basis upon which such
party seeks indemnification hereunder; provided, however, that the failure of
--------- --------
any indemnified party to give such notice shall not relieve the indemnifying
party of its obligations under such section, except to the extent that the
indemnifying party is actually prejudiced by the failure to give such notice.
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(b) (i) In the case of any such Proceeding by a third party
against an indemnified party, the indemnifying party shall, upon notice as
provided above, assume the defense thereof with counsel reasonably satisfactory
to the indemnified party, and, after notice from the indemnifying party to the
indemnified party of its assumption of the defense thereof the indemnifying
party shall not be liable to such indemnified party for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof (but the indemnified party shall have the right, but not the
obligation, to participate at its own cost and expense in such defense by
counsel of its own choice) or for any amounts paid or foregone by the
indemnified party as a result of the settlement or compromise thereof (without
the written consent of the indemnifying party).
(ii) Anything in section 11 .3(b)(i) notwithstanding, if
both the indemnifying party and the indemnified party are named as parties or
subject to such Proceeding and either such party determines with advice of
counsel that there may be one or more legal defenses available to it that are
different from or additional to those available to the other party or that a
material conflict of interest between such parties may exist in respect of such
Proceeding, then the indemnifying party may decline to assume the defense on
behalf of the indemnified party or the indemnified party may retain the defense
on its own behalf and, in either such case, after notice to such effect is duly
given hereunder to the other party, the indemnifying party shall be relieved of
its obligation to assume the defense on behalf of the indemnified party, but
shall be required to pay any legal or other expenses including, without
limitation, reasonable attorneys' fees and disbursements, incurred by the
indemnified party in such defense.
(c) If the indemnifying party assumes the defense of any such
Proceeding, the indemnified party shall cooperate fully with the indemnifying
party and shall appear and give testimony, produce documents and other tangible
evidence, allow the indemnifying party access to the books and records of the
indemnified party and otherwise assist the indemnifying party in conducting such
defense. No indemnifying party shall, without the consent of the indemnified
party, consent to entry of any judgment or enter into any settlement or
compromise which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or Proceeding. Provided that proper notice is
duly given, if the indemnifying party shall fail promptly and diligently to
assume the defense thereof then the indemnified party may respond to, contest
and defend against such Proceeding (but the indemnifying party shall have the
right to participate at its own cost and expense in such defense by counsel of
its own choice) and may make in good faith any compromise or settlement with
respect thereto, and recover from the indemnifying party the entire cost and
expense thereof including, without limitation, reasonable attorneys' fees and
disbursements and all amounts paid or foregone as a result of such Proceeding,
or the settlement or compromise thereof. The indemnification required hereunder,
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills or invoices are received or
loss, liability, obligation, damage or expense is actually suffered or incurred.
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11.3 Survival of Representations and Warranties. The
-------------------------------------------
representations and warranties of each of the parties shall survive the Closing,
notwithstanding any investigation or inquiry made by any other party, and
continue until the fifth anniversary of the Closing Date.
12. Miscellaneous.
-------------
12.1 Transaction Fees and Expenses Each party hereto shall
-----------------------------
bear such costs, fees and expenses as may be incurred by it or him in connection
with this Agreement and the transactions contemplated hereby.
12.2 Notices. Any notice, demand, request or other
--------
communication which is required, called for or contemplated to be given or made
hereunder to or upon any party hereto shall be deemed to have been duly given or
made for all purposes if (a) in writing and sent by (i) messenger or an
overnight courier service for next day delivery with receipt therefore, or (ii)
certified or registered mail, postage paid, return receipt requested, or (b)
sent by telegram, facsimile transmission, telex or similar electronic means,
with a written copy thereof sent on the same day by postage paid first-class
mail, to such party at the following address:
To the Buyer, Xxxxxxx or Xxxxxxxx at:
Phaero LLC
X.X. Xxx 000000
Xxxx Xxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Fax: (000) 000-0000
with a copy to:
Xxxx Xxxxxx, Esq.
000 X. 0xx Xxxxxx
Xxxxx 000
Xxxx Xxxxx, XX 00000
Fax: (000) 000-0000
To the Seller at:
Phazar Corp
000 X.X. 00xx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Fax (000) 000-0000
Telecopier No.: (000) 000-0000
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with a copy to:
Xxxx X. Xxxxxxx
0000 Xxxx Xxxxxx Xxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
or such other address as either party hereto may at any time, or from time to
time, direct by notice given to the other party in accordance with this section.
The date of giving or making of any such notice or demand shall be, in the case
of clause (a) (i), the date of the receipt; in the case of clause (a) (ii), five
(5) business days after such notice or demand is sent; and, in the case of
clause (b), the business day next following the date such notice or demand is
sent. A copy of any notice to the Shareholder shall be sent concurrently to the
Seller and a copy of any notice to the Seller shall be sent concurrently to the
Shareholder.
12.3 Amendment Except as otherwise provided herein, no
---------
amendment of this Agreement shall be valid or effective unless in writing and
signed by or on behalf of the party against whom the same is sought to be
enforced.
12.4 Waiver No course of dealing of any party hereto, no
------
omission, failure or delay on the part of any party hereto in asserting or
exercising any right hereunder, and no partial or single exercise of any right
hereunder by any party hereto shall constitute or operate as a waiver of any
such right or any other right hereunder. No waiver of any provision hereof shall
be effective unless in writing and signed by or on behalf of the party to be
charged therewith. No waiver of any provision hereof shall be deemed or
construed as a continuing waiver, as a waiver in respect of any other or
subsequent breach or default of such provision, or as a waiver of any other
provision hereof unless expressly so stated in writing and signed by or on
behalf of the party to be charged therewith.
12.5 Governing Law This Agreement shall be governed by, and
-------------
interpreted and enforced in accordance with, the laws of the State of Texas.
12.6 Jurisdiction Each of the parties hereto hereby
------------
irrevocably consents and submits to the exclusive jurisdiction of the Tarrant
County State District Courts in connection with any Proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby, waives any
objection to venue in such Courts, and agrees that service of any summons,
complaint, petition, notice or other process relating to such Proceeding may be
effected in the manner provided by clause (a)(ii) of section 12.2.
12.7 Remedies In the event of any actual or prospective breach
--------
or default by any party hereto, the other parties shall be entitled to equitable
relief, including remedies in the nature of rescission, injunction and specific
performance. All remedies hereunder are cumulative and not exclusive. Nothing
contained herein and no election of any particular remedy shall be deemed to
40
prohibit or limit any party from pursuing, or be deemed a waiver of the right to
pursue, any other remedy or relief available now or hereafter existing at law or
in equity (whether by statute or otherwise) for such actual or prospective
breach or default, including the recovery of damages.
12.8 Severability The provisions hereof are severable and if
------------
any provision of this Agreement shall be determined to be legally invalid,
inoperative or unenforceable in any respect by a court of competent
jurisdiction, then the remaining provisions hereof shall not be affected, but
shall, subject to the discretion of such court, remain in full force and effect,
and any such invalid, inoperative or unenforceable provision shall be deemed,
without any further action on the part of the parties hereto, amended and
limited to the extent necessary to render such provision valid, operative and
enforceable.
12.9 Further Assurances Each party hereto covenants and agrees
------------------
promptly to execute, deliver, file or record such agreements, instruments,
certificates and other documents and to perform such other and further acts as
the other party hereto may reasonably request or as may otherwise be necessary
or proper to consummate and perfect the transactions contemplated hereby.
12.10 Assignment This Agreement, and each right, interest and
----------
obligation hereunder, may not be assigned by any party hereto without the prior
written consent of all of the other parties hereto. Notwithstanding the
foregoing, each of the Buyer and its successors shall have the right to assign
its rights and obligations hereunder to any Affiliate thereof or to any Person
who (i) acquires all or a substantial part of the assets of the Buyer, and (ii)
agrees in writing to be bound by and to assume the Buyer's obligations under
this Agreement.
12.11 Binding Effect This Agreement shall be binding upon and
--------------
inure to the benefit of the parties hereto and their respective legal
representatives, heirs, successors and permitted assigns.
12.12 No Third Party Beneficiaries Nothing contained in this
----------------------------
Agreement, whether express or implied, is intended, or shall be deemed, to
create or confer any right, interest or remedy for the benefit of any Person
other than as otherwise provided in this Agreement.
12.13 Entire Agreement This Agreement (including all the
----------------
schedules and exhibits hereto), together with the Exhibits, Schedules,
certificates and other documentation referred to herein or required to be
delivered pursuant to the terms hereof, contains the terms of the entire
agreement among the parties with respect to the subject matter hereof and
supersedes any and all prior agreements, commitments, understandings,
discussions, negotiations or arrangements of any nature relating thereto.
41
12.14 Headings The headings contained in this Agreement are
--------
included for convenience and reference purposes only and shall be given no
effect in the construction or interpretation of this Agreement.
12.15 Counterparts This Agreement may be executed in any
------------
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
12.16 Bulk Sales Law. The parties waive compliance with the
--------------
provisions of any bulk sales law that may be applicable to the transactions
contemplated hereby.
Seller: PHAZAR AEROCORP, INC.
By:__________________________
Name: Xxxx Xxxxxxx,
Title: President
Buyer: PHAERO LLC
By:___________________________
Name: Xxxx Xxxxxxx,
Title: Manager
Shareholder: PHAZAR CORP.
By:___________________________
Name: Xxxxx Xxxxxxx
Title: Vice President
Xxxxxxx: _____________________________
Xxxx X. Xxxxxxx
Xxxxxxxx: _____________________________
Xxxxx Xxxxxxxx
42
