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ASSET PURCHASE AGREEMENT
BY AND BETWEEN
AETRIUM INCORPORATED
AND
FORWARD SYSTEMS AUTOMATION, INC.
DATED AS OF MARCH 28, 1997
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TABLE OF CONTENTS
Page
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ARTICLE I
SALE AND PURCHASE OF ASSETS....................................................1
1.1 Transfer of Assets...........................................1
1.2 Excluded Assets..............................................3
1.3 Obtaining Permits and Licenses...............................3
1.4 Assumed Liabilities of Buyer.................................3
1.5 Liabilities Not Assumed......................................4
1.6 Assignments Requiring Consents...............................4
1.7 Purchase Price...............................................5
1.8 Payment of Purchase Price....................................5
1.9 Allocation of Purchase Price.................................6
ARTICLE II
CLOSING........................................................................7
2.1 The Closing..................................................7
2.2 Deliveries of Seller.........................................7
2.3 Deliveries of Buyer..........................................7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER.......................................8
3.1 Corporate Organization.......................................8
3.2 Authorization................................................8
3.3 Non-Contravention............................................9
3.4 Consents and Approvals.......................................9
3.5 Financial Statements.........................................9
3.6 Absence of Certain Changes or Events........................10
3.7 Title to Assets.............................................10
3.8 Real Properties.............................................11
3.9 Machinery, Equipment, Vehicles and Personal Property........11
3.10 Inventories.................................................11
3.11 Warranty and Product Defect or Return Claims................11
3.12 Accounts Receivable.........................................12
3.13 Bank Accounts; Powers of Attorney...........................12
3.14 Insurance...................................................12
3.15 Intellectual Property Rights................................12
3.16 Commitments.................................................13
3.17 Taxes.......................................................13
3.18 Employee Benefit Plans......................................14
3.19 Labor Matters...............................................15
3.20 Permits and Other Operating Rights..........................15
3.21 Compliance with Laws........................................15
3.22 Environment.................................................15
3.23 Litigation..................................................16
3.24 Business Generally..........................................17
3.25 Absence of Certain Business Practices.......................17
3.26 Brokers.....................................................17
3.27 Accuracy of Information.....................................17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER.......................................17
4.1 Buyer's Organization........................................17
4.2 Due Authorization, Execution and Delivery; Effect of
Agreement................................................18
4.3 Non-Contravention...........................................18
4.4 Consents....................................................18
4.5 Litigation..................................................18
ARTICLE V
COVENANTS OF SELLER...........................................................18
5.1 Cooperation and Assignments.................................18
5.2 Conduct of Business.........................................19
5.3 Access......................................................19
5.4 No Solicitation.............................................19
5.5 Termination of 401(k) Plan..................................19
5.6 Name Change.................................................19
6.1 Cooperation and Assumption..................................20
ARTICLE VII
ADDITIONAL COVENANTS..........................................................20
7.1 Books and Records; Personnel................................20
7.2 Further Assurances..........................................21
7.3 Confidentiality Agreement of Seller After Closing...........21
7.4 Registration Rights.........................................22
ARTICLE VIII
CONDITIONS TO BUYER'S OBLIGATIONS.............................................23
8.1 Representations, Warranties and Covenants of Seller.........24
8.2 No Prohibition..............................................24
8.3 Xxxxxxxxx Employment........................................24
8.4 Lease Amendment.............................................24
8.5 Further Action..............................................24
8.6 Deliveries..................................................24
ARTICLE IX
CONDITIONS TO SELLER'S OBLIGATIONS............................................24
9.1 Representations, Warranties and Covenants of Buyer..........24
9.2 No Prohibition..............................................25
9.3 Xxxxxxxxx Employment........................................25
9.4 Further Action..............................................25
9.5 Deliveries..................................................25
ARTICLE X
INDEMNIFICATION AND RELATED MATTERS...........................................25
10.1 Indemnification by Seller...................................25
10.2 Indemnification by Buyer....................................25
10.3 Notice of Indemnification...................................26
10.4 Indemnification Procedure for Third-Party Claims............26
10.5 Right of Offset.............................................26
ARTICLE XI
TERMINATION PRIOR TO CLOSING..................................................27
11.1 Termination.................................................27
11.2 Effect on Obligations.......................................27
ARTICLE XII
MISCELLANEOUS.................................................................27
12.1 Entire Agreement............................................27
12.2 Successors and Assigns......................................27
12.3 Counterparts................................................28
12.4 Headings....................................................28
12.5 Modifications and Waivers...................................28
12.6 Broker's Fees...............................................28
12.7 Expenses....................................................28
12.8 Notices.....................................................29
12.9 Arbitration.................................................30
12.10 Governing Law; Consent to Jurisdiction......................30
12.11 Confidentiality.............................................30
12.12 Public Announcements........................................31
12.13 Severability................................................32
12.14 Disclosure Schedule; Buyer's Knowledge; Effect on Seller
Representations and Warranties; Effect of Materiality Qualification..32
12.15 No Third Party Beneficiaries................................32
12.16 Rule of Construction........................................32
EXHIBITS
A - Closing Balance Sheet Instructions
B - Form of Opinion of Counsel for Seller
C - Form of Opinion of Counsel for Buyer
D - Form of Lease Amendment and Assumption
DEFINITIONS
Defined Term Page
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Accounts Receivable............................................................2
Affiliate(s)...................................................................6
Allocation Schedule............................................................6
Alternative Transaction.......................................................19
Arbitrator Accountants.........................................................5
Assets.........................................................................1
Assumed Liabilities............................................................3
Authorit(y)(ies)...............................................................9
Black-Out Period..............................................................22
Board.........................................................................22
Business.......................................................................1
Business Confidential Information.............................................21
Buyer..........................................................................1
Buyer Accountants..............................................................5
Cash Consideration.............................................................5
Closing........................................................................7
Closing Balance Sheet..........................................................5
Closing Date...................................................................7
Closing Net Worth..............................................................5
Code..........................................................................13
Commission....................................................................22
Commitment(s).................................................................13
Consent(s).....................................................................9
Derivatives....................................................................6
Disclosure Schedule............................................................1
Disposal......................................................................15
Disposed Of...................................................................15
Employee Benefit Plans........................................................14
Encumbrances...................................................................1
Environmental Laws............................................................16
Environmentally Regulated Materials...........................................16
Equipment......................................................................1
ERISA.........................................................................14
Excluded Assets................................................................3
Financial Statements...........................................................9
Forfeiture Event...............................................................6
Form S-3......................................................................22
Former Real Property..........................................................15
GAAP...........................................................................5
Indebtedness..................................................................33
Indemnitee....................................................................26
Indemnitor....................................................................26
Intellectual Property Rights..................................................12
Interests......................................................................4
Latest Balance Sheet...........................................................9
Law(s).........................................................................9
Liabilities....................................................................9
Litigation....................................................................16
Loss..........................................................................25
Material Adverse Effect........................................................8
Purchase Price.................................................................5
Real Property..................................................................1
Release.......................................................................15
Released......................................................................15
Representatives...............................................................30
Xxxxxxxxx......................................................................6
Securities Act................................................................22
Seller.........................................................................1
Seller Accountants.............................................................5
Seller Confidential Information...............................................30
Shares.........................................................................5
Shares Designee(s).............................................................6
Tax Returns...................................................................13
Taxes.........................................................................13
ASSET PURCHASE AGREEMENT
THIS AGREEMENT, made and entered into this 28th day of March, 1997, is
by and between Forward Systems Automation, Inc., a Texas corporation ("SELLER"),
and Aetrium Incorporated, a Minnesota corporation ("BUYER").
RECITALS:
FIRST, Seller is primarily engaged in the business of development,
manufacture and distribution of production equipment for the electronic
component industry (the "BUSINESS"); and
SECOND, Buyer desires to purchase and Seller desires to sell
substantially all of the assets of Seller;
NOW, THEREFORE, in consideration of the recitals and the mutual
representations, warranties, covenants and agreements contained herein, and upon
the terms and subject to the conditions hereinafter set forth, the parties
hereby agree as follows:
ARTICLE I
SALE AND PURCHASE OF ASSETS
1.1 Transfer of Assets. Subject to the terms and conditions of this
Agreement, and except as otherwise provided in Sections 1.2 and 1.6 hereof, on
the Closing Date (as hereinafter defined), Seller will sell, assign, transfer,
and convey to Buyer, and Buyer will purchase, acquire and accept from Seller,
all of Seller's right, title and interest in and to all of the assets,
properties, rights, contracts and claims employed in connection with the
Business, wherever located, whether tangible or intangible, real, personal or
mixed, as the same exist at the Closing (as hereinafter defined) (collectively,
the "ASSETS"), free and clear of all liens, security interests, or other
encumbrances of any character whatsoever ("ENCUMBRANCES"), except as set forth
in the disclosure schedule delivered by Seller to Buyer in connection herewith
(the "DISCLOSURE SCHEDULE"). The Assets include, without limitation, the assets,
properties, rights, contracts and claims described in the following paragraphs
(a) through (l):
(a) all cash, depository accounts, certificates of deposit and
securities;
(b) Seller's leasehold interests in the real property leased
by Seller and described in the Disclosure Schedule ("REAL PROPERTY");
(c) title to, or Seller's leasehold interests in, all the
furnishings, furniture, office supplies, vehicles, spare parts, tools, machinery
and equipment that are used in the operation of the Business (the "EQUIPMENT");
(d) title to, or Seller's leasehold interests in, all fixed
assets, other than the Equipment, that are used in connection with the Business;
(e) all quantities of inventory, including without limitation
raw materials, work-in-process, finished goods and supplies, used in connection
with the Business;
(f) all accounts receivable and all notes receivable (whether
short-term or long-term) from third parties arising out of the operation of the
Business, together with any unpaid interest accrued thereon and any security or
collateral therefor, including without limitation recoverable deposits (the
"ACCOUNTS RECEIVABLE");
(g) all rights of Seller under or pursuant to all warranties,
representations and guarantees made by suppliers, manufacturers and contractors
in connection with products or services of the Business, or affecting the
Assets;
(h) all rights and interests of Seller in and to patents and
patent applications owned by Seller or licensed to Seller by third parties and
used in connection with the Business, including without limitation those that
are listed in the Disclosure Schedule, and all rights and interests of Seller in
and to research, development and commercially practiced processes, trade
secrets, know-how, inventions and manufacturing, engineering and other technical
information, whether owned by Seller or licensed from third parties by Seller,
which are used in connection with the Business;
(i) all rights and interests of Seller in and to Seller's name
and all trademarks, trade names and service marks, and registrations and
applications for such trademarks, trade names and service marks, used in
connection with the Business, including without limitation those that are listed
in the Disclosure Schedule, and all rights and interests of Seller in and to
copyrights, and registrations and applications for such copyrights, used in
connection with the Business, including without limitation those that are listed
in the Disclosure Schedule;
(j) all contracts, agreements, arrangements and/or commitments
of any kind which relate to the Business or the Assets, including without
limitation those contracts listed in the Disclosure Schedule, exclusive,
however, of those contracts Buyer elects not to assume pursuant to Section 1.6
hereof;
(k) all customer and vendor lists relating to the Business,
and all files and documents (including credit information) relating to such
customers and vendors, and other business and financial records, files, books
and documents relating to the Assets and/or the Business, including without
limitation computer programs (including computer modeling programs), manuals and
data, sales and advertising materials, sales, distribution and purchase
correspondence and trade association memberships relating to the Assets and/or
the Business; and
(l) all prepaid charges, sums and fees and all rights to
refunds pertaining to the Business, including without limitation tax refunds and
prepaid casualty insurance premiums.
1.2 Excluded Assets. Notwithstanding any other terms contained herein,
Seller is not hereunder selling, assigning, transferring or conveying to Buyer
the following assets, rights and properties (the "EXCLUDED ASSETS"):
(a) any policies of liability insurance relating to the
Business or the Assets or any rights thereunder;
(b) 1994 Jeep Cherokee VIN #0X0XX00X0XX000000;
(c) cash equal to uncontributed payroll deductions to Seller's
401(k) plan;
(d) except as otherwise set forth in the last sentence of
Section 1.6 hereof, any right, title and interest under all leases, contracts,
agreements, licenses, permits, exemptions, franchises, variances, waivers,
consents, approvals and other authorizations which are not transferable without
consent (unless such consent has been obtained);
(e) Seller's Asset Purchase Account #1018011447 at Xxxxxxx
Bank & Trust, with zero balance immediately preceding Closing; and
(f) minute books, stock record books and corporate
certificates of authority.
1.3 Obtaining Permits and Licenses. Seller will assign, transfer or
convey to Buyer at the Closing those governmental permits and licenses described
in the Disclosure Schedule which are held or used by Seller in connection with
the Business and with respect to which any necessary third party consents to
assignment have been obtained or which can be assigned without having to obtain
the consent of any third party. Subsequent to the Closing, to the extent
permitted by law, Seller will have the right to cancel any permits or licenses
and any bonds, guarantees or undertakings by Seller now applicable to the Assets
or the Business to the extent such is not so assigned or transferred to Buyer
pursuant to this Section 1.3 and is not subject to Seller's continuing
obligations under Section 1.6 hereof.
1.4 Assumed Liabilities of Buyer. Subject to Section 1.6 hereof, Buyer
will assume and pay, perform and discharge as and when due the following
liabilities and obligations, whether known, unknown, contingent, absolute,
determined, indeterminable or otherwise on the Closing Date and whether incurred
or accruing prior to, on or after the Closing Date, to the extent relating to or
arising from the Business ("ASSUMED LIABILITIES"):
(a) all liabilities and obligations of Seller not performed or
satisfied as of the Closing Date under all of the contracts, agreements and
commitments listed on Schedule 3.16 of the Disclosure Schedule;
(b) all liabilities of Seller disclosed in the Disclosure
Schedule; and
(c) all other liabilities of Seller reflected or reserved
against in the Latest Balance Sheet (as hereinafter defined) or incurred since
December 31, 1996 in the ordinary course of business and consistent with past
practice (exclusive of liabilities for income Taxes (as hereinafter defined)
incurred on the sale of Assets contemplated hereby, and liabilities incurred by
Seller in connection with the negotiation and consummation of this Agreement as
set forth in Section 12.7(a) hereof);
provided that, notwithstanding the foregoing, Buyer will not assume and will not
be liable for Retail Installment Contract 112367*RC264083 dated March 3, 1994 in
the stated principal amount of Twenty-Five Thousand Five Hundred Twenty-Two and
43/100 Dollars ($25,522.43) payable to NationsBank of Texas, N.A. or sponsorship
of Seller's 401(k) plan or any liabilities in connection therewith.
1.5 Liabilities Not Assumed. Except as specifically set forth in
Section 1.4 hereof, Buyer will not assume and will not be liable for any
liabilities or obligations of Seller, whether known, unknown, contingent,
absolute, determined, indeterminable or otherwise on the Closing Date, whether
incurred or accruing prior to, on or after the Closing Date, and whether or not
relating to or arising from the Business.
1.6 Assignments Requiring Consents. Seller will use reasonable efforts,
and Buyer will cooperate with Seller, to obtain all non-governmental approvals,
consents or waivers necessary to assign to Buyer all leases, contracts,
licenses, agreements, sales or purchase orders, commitments, property interests,
qualifications or other assets described in Section 1.1 hereof or any claim,
right or benefit arising thereunder or resulting therefrom (the "INTERESTS") as
soon as practicable; provided, however, that neither Seller nor Buyer will be
obligated to pay any consideration therefor (except for filing fees and other
ordinary administrative charges which will be paid by Buyer) to the third party
from whom such approval, consent or waiver is requested.
To the extent any of the approvals, consents or waivers referred to
above have not been obtained by Seller as of the Closing, Buyer may elect by
written notice to Seller to exclude the applicable Interests and liabilities in
connection therewith from the Assets and the Assumed Liabilities. In the event
Buyer does not make such election, and without limiting the rights of Buyer
under this Agreement, Seller will (a) take all reasonable steps necessary to
obtain the consent of any such third party, (b) cooperate with Buyer in any
reasonable and lawful arrangements designed to provide the benefits of such
Interests to Buyer so long as Buyer fully cooperates with Seller in such
arrangements and promptly reimburses Seller for all payments, charges or other
liabilities made or suffered by Seller in connection therewith, and (c) enforce,
at the request of Buyer and at the expense and for the account of Buyer, any
rights of Seller arising from such Interests against such issuer thereof or the
other party or parties thereto (including the right to elect to terminate any
such Interests in accordance with the terms thereof upon the written advice of
Buyer). To the extent that Seller enters into lawful arrangements designed to
provide the benefits of any Interests as set forth
in clause (b) above, such Interests will be deemed to have been assigned to
Buyer for purposes of Section 1.1 hereof.
1.7 Purchase Price. The aggregate consideration to be paid by Buyer to
Seller for the Assets (the "PURCHASE PRICE") will be Four Million Dollars
($4,000,000) (the "CASH CONSIDERATION") and one hundred eighty-six thousand
(186,000) shares of the common stock of Aetrium Incorporated (the "SHARES"),
subject to reduction pursuant to the remainder of this Section 1.7 or Section
1.8(b) hereof:
(a) In the event Buyer elects to proceed under Section 1.7(b)
hereof, the Cash Consideration will be reduced on a dollar-for-dollar basis by
the amount, if any, by which Seller's Closing Net Worth (as hereinafter defined)
on Closing is less than the sum of Two Hundred Fifty- Five Thousand Dollars
($255,000) plus an amount equal to fifty percent (50%) of the excess, if any, of
gross revenues of Seller for the period January 1, 1997 through the Closing
Date, exclusive of revenues from the sale of Assets hereunder, over Nine Hundred
Two Thousand Dollars ($902,000).
(b) In the event Buyer elects to proceed under this Section
1.7(b) by written notice to Seller within thirty (30) days after Closing,
promptly thereafter, Buyer and Seller will cooperate to prepare a balance sheet
of Seller as of Closing in accordance with United States generally accepted
accounting principles ("GAAP") on a basis consistent with the Latest Balance
Sheet (as hereinafter defined), provided that such balance sheet will be
prepared in accordance with the instructions listed on Exhibit A hereto
regardless of whether such instructions conform to GAAP or are consistent with
the Latest Balance Sheet. Such balance sheet will be prepared by Buyer, and
Seller and Seller's representatives will be provided access to review the
workpapers of Buyer and full opportunity to raise with Buyer any issues Seller
may have with respect to such balance sheet. In the event any such issues raised
by Seller are not resolved by mutual agreement of the parties, such unresolved
issues will be submitted to Ernst & Young, Minneapolis office (the "ARBITRATOR
ACCOUNTANTS"), whose decision on any such issues will be final and binding on
the parties. The "CLOSING BALANCE SHEET" means such balance sheet after
resolution as hereinabove provided of all issues raised by Seller with respect
thereto. "CLOSING NET WORTH" means Seller's stockholder's equity as of Closing
as reported on the Closing Balance Sheet. The Closing Net Worth as so determined
will be binding upon the parties. Buyer and Seller will use their best efforts
to cause the Closing Balance Sheet to be completed and the Closing Net Worth to
be determined within ninety (90) days after Closing. Buyer and Seller will each
bear their respective costs and will share equally any fees of the Accountant
Arbitrator incurred in the preparation of the Closing Balance Sheet and
determination of the Closing Net Worth as hereinabove provided.
1.8 Payment of Purchase Price. The Purchase Price will be payable as
follows:
(a) The Cash Consideration will be paid at Closing to Seller
by wire transfer of immediately available funds to accounts designated by Seller
prior to Closing.
(b) On each of the first three (3) anniversary dates of the
Closing Date, sixty-two thousand (62,000) Shares, together with all securities
and other property which would have been issued thereon or in exchange therefor
or on or for any thereof if such Shares had been issued on the Closing Date (any
of the same with respect to any Shares hereinafter "DERIVATIVES"), will be
issued in the names of Seller or Xxxxx Xxxxxxxxx ("XXXXXXXXX"), as designated by
Seller in writing to Buyer prior to the applicable issuance date (individually
and collectively, the "SHARES DESIGNEE(s)"), unless with respect to each such
anniversary date a Forfeiture Event (as hereinafter defined) has occurred
thereon or prior thereto. "FORFEITURE EVENT" means the voluntary termination by
Xxxxxxxxx or termination for Cause of Sabounchi's employment with Buyer and any
other corporation or other business entity directly or indirectly controlling,
controlled by, or under common control with Buyer (individually and
collectively, the "AFFILIATE(s)"). "CAUSE" means any willful and intentional
tortious or felonious act or omission of Xxxxxxxxx materially and adversely
affecting the Business or Buyer or any Affiliate, or any willful and intentional
breach by Xxxxxxxxx of any employment, service, confidentiality or
noncompetition agreement entered into with Buyer or any Affiliate. Upon any
Forfeiture Event, all Shares not then issued, together with all Derivatives with
respect thereto, will be forfeited to Aetrium Incorporated. Notwithstanding the
foregoing, in the event Sabounchi's employment with Buyer or an Affiliate
terminates because of Sabounchi's death or permanent disability, all Shares not
then issued or forfeited will be immediately issued to the Shares Designees, or
the legal representative or estate thereof if applicable. No interest in the
Shares or the Derivatives may be assigned prior to the issuance thereof except
to a Shares Designee, and any attempted such transfer will be null and void and
of no force or effect.
(c) Immediately upon final determination of the Closing
Balance Sheet, any adjustment to the Cash Consideration pursuant to Section
1.7(a) hereof will be reimbursed by Seller to Buyer in immediately available
funds. In the event of any delay in the payment of such amount, such amount will
bear interest from the due date until paid in full at the annual rate of
thirteen percent (13%).
1.9 Allocation of Purchase Price.
(a) Buyer will prepare (or cause to be prepared) an allocation
(the "ALLOCATION SCHEDULE") of the Purchase Price (plus Assumed Liabilities and
Buyer's expenses of the transaction) among the Assets. Such allocation will be
made in accordance with Code (as hereinafter defined) Section 1060 and any
applicable rules or regulations thereunder. Seller will have the right to review
and reasonably approve the Allocation Schedule, and Seller and Buyer will
consult and resolve in good faith any issues arising as a result of Seller's
review of such Allocation Schedule. Seller and Buyer agree that the fair market
value of each category of Assets as categorized on the Latest Balance Sheet is
not more than the book value thereof.
(b) Seller and Buyer (1) will be bound by the allocation
contained in the Allocation Schedule for purposes of determining any and all
consequences with respect to Taxes of the transactions contemplated herein, (2)
will prepare and file all tax returns to be filed with any tax authority in a
manner consistent with such Allocation Schedule (including Form 8594, "Asset
Acquisition Statement"), and (3) will take no position inconsistent with such
Allocation Schedule in any tax return, any discussion with or proceeding before
any tax authority, or otherwise. In the event that such Allocation Schedule is
disputed by any tax authority, the party receiving notice of such dispute will
promptly notify the other party thereof.
ARTICLE II
CLOSING
2.1 The Closing. The closing of the transactions contemplated hereby
(the "CLOSING") will take place at the offices of Xxxxxxxxxxx Xxxxx & Xxxxxxxx,
Minneapolis, Minnesota, at 10:00 a.m. on April 1,1997 or, if later, two (2)
business days following the satisfaction or waiver of all of the conditions to
the parties' obligations set forth in Articles VIII and IX, unless the parties
otherwise mutually agree (the "CLOSING DATE"). All matters at the Closing will
be considered to take place simultaneously effective immediately prior to the
beginning of business on March 31, 1997 and no delivery of any document will be
deemed complete until all transactions and deliveries of documents are
completed.
2.2 Deliveries of Seller. At the Closing, Seller will deliver the
following documents to Buyer:
(a) such bills of sale, endorsements, assignments (together
with any necessary consents), deeds and other good and sufficient instruments of
conveyance and transfer, in form and substance reasonably satisfactory to Buyer
and its counsel, to vest in Buyer valid legal title to the Assets;
(b) resolutions of the board of directors and shareholders of
Seller authorizing the execution, delivery and performance of this Agreement and
consummation of the transactions contemplated hereby by Seller certified by the
Secretary of Seller to be complete, correct and as in effect as of the Closing
Date;
(c) the certificate required of Seller pursuant to Section 8.1
hereof;
(d) an opinion of counsel for Seller, substantially in the
form of Exhibit B attached hereto; and
(e) any other documents reasonably requested by Buyer, to
confirm the accuracy of the representations and warranties and the performance
of the agreements of Seller hereunder.
2.3 Deliveries of Buyer. At the Closing, Buyer will deliver to Seller
the following:
(a) the Cash Consideration in accordance with Section 1.8(a)
hereof;
(b) resolutions of the board of directors of Buyer authorizing
the execution, delivery and performance of this Agreement and consummation of
the transactions contemplated hereby by Buyer, certified by the Secretary of
Buyer to be complete, correct and as in effect as of the Closing Date;
(c) the certificate required of Buyer pursuant to in Section
9.1 hereof;
(d) the opinion of counsel for Buyer, in the form of Exhibit C
attached hereto; and
(e) any other documents reasonably requested by Seller, to
confirm the accuracy of the representations and warranties and the performance
of the agreements of Buyer hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that:
3.1 Corporate Organization. Seller is a corporation duly organized,
validly existing and in good standing under the Laws (as hereinafter defined) of
the state of Texas, has full corporate power and authority to carry on its
business as it is now being conducted and to own, lease and operate its
properties and assets, and is duly qualified or licensed to do business as a
foreign corporation in good standing in every other jurisdiction in which the
character or location of the properties and assets owned, leased or operated by
it or the conduct of its business requires such qualification or licensing,
except in such jurisdictions in which the failure to be so qualified or licensed
and in good standing would not, individually or in the aggregate, have a
material adverse effect on the condition (financial or otherwise), working
capital, assets, properties, liabilities, obligations, reserves, businesses,
prospects, customers, customer relations, goodwill or going concern value
("MATERIAL ADVERSE EFFECT") with respect to Seller. Schedule 3.1 of the
Disclosure Schedule contains for Seller a list of all jurisdictions in which it
is qualified or licensed to do business. The charter, bylaws, minute books,
stock transfer books and other corporate records of Seller, all of which have
been made available to Buyer, are complete and correct in all material respects,
have been maintained in accordance with reasonable business practices, and
contain accurate and complete records of all formal meetings held of, and
corporate actions taken by, the shareholders, board of directors and committees
of the board of directors of Seller. Seller does not own or control, directly or
indirectly, fifty percent (50%) or more of the voting securities or other voting
interests, or the equity interests, in any other corporation or other business
entity.
3.2 Authorization. Seller has all requisite corporate power and
authority to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
Seller of this Agreement and the consummation by Seller of the transactions
contemplated hereby have been duly authorized by all necessary corporate action.
This Agreement has been duly and validly executed by Seller and constitutes the
valid and binding
legal obligation of Seller, enforceable against Seller in accordance with its
terms, except to the extent that such enforceability (a) may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights generally, and (b) is subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
3.3 Non-Contravention. Except as set forth in Schedule 3.3 of the
Disclosure Schedule, neither the execution, delivery and performance of this
Agreement nor the consummation of the transactions contemplated hereby will (a)
violate or be in conflict with any provision of the articles or certificates of
incorporation or bylaws of Seller, or (b) be in conflict with, or constitute a
default, however defined (or an event which, with the giving of due notice or
lapse of time, or both, would constitute such a default), under, or cause or
permit the acceleration of the maturity of, or give rise to any right of
termination, cancellation or imposition of fees or penalties under, any debt,
instrument, agreement, permit or other obligation, commitment or authorization
to which Seller is a party or by which Seller or any of Seller's properties or
assets is or may be bound, or (c) result in the creation or imposition of any
Encumbrance upon any property or assets of Seller, or (d) violate any treaty,
law, rule, regulation, order, judgment or decree (individually and collectively,
"LAW(s)") of any foreign, federal, state or local governmental or
quasi-governmental administrative, regulatory or judicial court, department,
commission, agency, board, bureau, instrumentality or other authority
(individually and collectively, "AUTHORIT(Y)(ies)") to which Seller is subject.
3.4 Consents and Approvals. Except as set forth in Schedule 3.4 of the
Disclosure Schedule, with respect to Seller, no consent, approval, order or
authorization of or from, or registration, notification, declaration or filing
with, any Authority or any individual or other private entity (individually and
collectively, "CONSENT(s)") is required in connection with the execution,
delivery or performance of this Agreement by Seller or the consummation by
Seller of the transactions contemplated hereby.
3.5 Financial Statements. Seller has furnished to Buyer its unaudited
balance sheets as of December 31, 1994, 1995 and 1996 (the December 31, 1996
balance sheet is hereinafter referred to as the "LATEST BALANCE SHEET") and
related statements of operations and retained earnings and cash flows for the
years then ended respectively (together, the "FINANCIAL STATEMENTS"). Except as
set forth in Schedule 3.5 of the Disclosure Schedule, the Financial Statements
are in accordance with the books and records of Seller, have been prepared in
conformity with GAAP consistently applied throughout the periods (except as
stated therein or in the notes thereto), and are true, complete and accurate in
all material respects and fairly present the financial position of Seller as of
the respective dates thereof, and the operations and retained earnings and cash
flows for the periods then ended. Except as set forth in Schedule 3.5 of the
Disclosure Schedule, Seller has no liabilities or other obligations (whether
fixed, absolute or contingent, accrued or unaccrued, matured or unmatured, known
or unknown, direct or indirect, joint or several, or otherwise) ("LIABILITIES")
except (a) Liabilities which are reflected or reserved against in the Latest
Balance Sheet, which reserves reflected therein are appropriate and reasonable,
and (b) Liabilities incurred in the ordinary course of business and consistent
with past practice since the date of the Latest Balance Sheet and not
resulting from, arising out of, relating to, in the nature of or caused by any
breach of contract, tort, infringement of third party rights, violation of Law
or application of doctrines of strict liability.
3.6 Absence of Certain Changes or Events. Except as set forth in
Schedule 3.6 of the Disclosure Schedule, since the date of the Latest Balance
Sheet, Seller has not (a) suffered any damage, destruction or casualty loss
resulting in any Material Adverse Effect with respect to Seller or experienced
any event or failed to take any action which reasonably could be expected to
result in a Material Adverse Effect with respect to Seller, (b) discharged or
incurred any material obligation or liability with respect to the Business,
except in the ordinary course of business, (c) entered into any transaction with
respect to the Business not in the ordinary course of its business, except as
permitted in or contemplated by other Sections of this Agreement, (d) suffered
any loss of key employees, sales representatives, distributors, customers or
suppliers or other favorable business relationships, (e) declared, set aside or
paid any dividend or other distribution (whether in cash, stock, property or any
combination thereof) in respect of its capital stock, or redeemed or acquired
any of its capital stock, (f)(1) increased the rate or terms of compensation
payable or to become payable to any director, officer or employee of Seller or
modified or entered into any Employee Benefit Plan (as hereinafter defined) to
increase any bonus, insurance, pension or other employee benefit for any such
directors, officers or employees, except increases in compensation or benefits
and new hires of employees occurring in the ordinary course of business in
accordance with its customary practices (which includes normal periodic
performance reviews and related compensation and benefit increases) or (2) paid,
lent or advanced any amount to, or sold, transferred or leased any properties or
assets (real, personal or mixed, tangible or intangible) to, or entered into any
agreement or arrangement with any such directors, officers or employees, other
than the regular payment of salaries and travel advances in the ordinary course
of business and consistent with past practice, (g) sold, otherwise disposed of
or encumbered any asset, except sales and other dispositions in the ordinary
course of business consistent with past practice of inventory or of other
tangible property that has been replaced with property of at least equivalent
usefulness to the operation of the Business or that was not material to the
operation of the Business, (h) entered into any commitment for capital
expenditures for additions to plant, property or equipment, or (i) incurred or
guaranteed any indebtedness for borrowed money.
3.7 Title to Assets. Seller has good title or a valid lease with
respect to all Assets (including without limitation all assets reflected on the
Latest Balance Sheet, except for such assets sold, consumed or otherwise
disposed of in the ordinary course of business since the date of the Latest
Balance Sheet), free and clear of all Encumbrances, except (a) as set forth in
Schedule 3.7 of the Disclosure Schedule, and (b) mechanics', carriers', workers'
or other like liens arising in the ordinary course of the Business with respect
to obligations not yet due and payable, liens for current Taxes (as hereinafter
defined) not yet due and payable, and other Encumbrances which, individually or
in the aggregate, do not have a Material Adverse Effect with respect to Seller.
3.8 Real Properties.
(a) Seller has no ownership interest in any real property.
Schedule 3.8 of the Disclosure Schedule sets forth a list of all Real Property
in which Seller has a leasehold interest, and a list of each lease of each Real
Property to which Seller is a party or is bound.
(b) Except as set forth in Schedule 3.8 of the Disclosure
Schedule, each Real Property is free from structural defects, in good operating
condition and repair, with no material maintenance, repair or replacement having
been deferred or neglected, suitable for the intended use and free from other
material defects.
(c) With respect to each Real Property, except as set forth in
Schedule 3.8 of the Disclosure Schedule, (1) all certificates of occupancy,
permits and licenses of all Authorities having jurisdiction over the Real
Property required to have been issued to Seller to enable the Real Property to
be lawfully occupied and used for all of the principal purposes for which it is
currently occupied and used have been lawfully issued and are, as of the date
hereof, in effect, (2) such Real Property and its present use conform in all
respects to all occupational, safety, health, zoning, planning, subdivision,
platting and similar Laws, (3) all public utilities necessary for the use and
operation of such Real Property and the facilities located thereon are available
for use or access at such Real Property, and (4) there is no legal or physical
impairment to free ingress to or egress from such Real Property.
(d) With respect to each Real Property, except as set forth in
Schedule 3.8 of the Disclosure Schedule, Seller has not received any written
notice of any pending, threatened or contemplated condemnation proceeding
affecting such Real Property or any part thereof, or of any sale or other
disposition of such Real Property or any part thereof in lieu of condemnation.
3.9 Machinery, Equipment, Vehicles and Personal Property. Except as set
forth in Schedule 3.9 of the Disclosure Schedule, to Seller's knowledge all
items of Equipment which are necessary to the conduct of the Business are in
good operating condition and repair and fit for the intended purposes thereof
and no material maintenance, replacement or repair has been deferred or
neglected. Schedule 3.9 of the Disclosure Schedule sets forth a list of all
Equipment leased by or to Seller and each lease thereof.
3.10 Inventories. Except as set forth in Schedule 3.10 of the
Disclosure Schedule, all inventory of Seller consists of a quality and quantity
usable and salable in the ordinary course of business consistent with past
practice, and the present quantities of all inventory of Seller are reasonable
in the present circumstances of the Business as currently conducted.
3.11 Warranty and Product Defect or Return Claims. Schedule 3.11 of the
Disclosure Schedule sets forth a list of all pending warranty and other product
defect or return claims against Seller which individually exceed $5,000 in cost
of remedy. Except for those so listed, all pending
warranty and other product defect or return claims against Seller do not exceed
in the aggregate $5,000 in cost of remedy.
3.12 Accounts Receivable. Except as set forth in Schedule 3.12 of the
Disclosure Schedule, all Accounts Receivable have arisen only from bona fide
transactions in the ordinary and regular course of business and, to Seller's
knowledge, are collectible in the aggregate amounts thereof through the
continuation of existing collection procedures, after allowance for credits in
the ordinary course of business and subject to bad debt reserves established by
Seller consistent with past practice, and there are no known claims, refusals to
pay or other rights of set-off against any thereof. All Accounts Receivable due
from Seller's employees are subject to payroll deduction arrangements referenced
on Schedule 3.12 of the Disclosure Schedule, which arrangements are valid and
binding on the applicable employee and will be enforceable by Buyer in
accordance with their terms.
3.13 Bank Accounts; Powers of Attorney. Schedule 3.13 of the Disclosure
Schedule sets forth (a) the names of all financial institutions, investment
banking and brokerage houses, and other similar institutions at which Seller
maintains accounts, deposits, safe deposit boxes of any nature, the names of all
persons authorized to draw thereon or make withdrawals therefrom, and any
limitations or restrictions as to use, withdrawal or otherwise, and (b) the
names of all persons or entities holding general or special powers of attorney
from Seller and a summary of the terms thereof.
3.14 Insurance. Schedule 3.14 of the Disclosure Schedule contains an
accurate and complete list of all policies of fire and other casualty, general
liability, theft, life, workers' compensation, health, directors and officers,
business interruption and other forms of insurance owned or held by Seller,
specifying the insurer, the policy number, the term of the coverage and, in the
case of any "occurrence" coverage, the same information as to predecessor
policies since Seller's inception. All present policies are in full force and
effect and all premiums with respect thereto have been paid. Seller has not been
denied any form of insurance and no policy of insurance has been revoked or
rescinded since Seller's inception, except as described on Schedule 3.14 of the
Disclosure Schedule. Schedule 3.14 also describes all third party administered
self-insurance arrangements, if any, that Seller has.
3.15 Intellectual Property Rights. Except as disclosed in Schedule 3.15
of the Disclosure Schedule, (a) Seller owns or possesses adequate licenses or
other valid rights to use all patents, patent rights, trademarks, service marks,
trade names, copyrights, applications for any thereof, trade secrets, know-how
and other intellectual property ("INTELLECTUAL PROPERTY RIGHTS") used in or
necessary for the conduct of the Business, (b) the conduct of the Business does
not conflict with or infringe on any valid Intellectual Property Rights of
others in any way which might result in a Material Adverse Effect with respect
to Seller, and (c) to Seller's knowledge no third party has come into conflict
with or infringed on any Intellectual Property Rights of Seller. Schedule 3.15
of the Disclosure Schedule sets forth a list of all material United States and
foreign patents, trademarks, service marks, trade names and registered
copyrights, and applications for any thereof, used by Seller
in the conduct of the Business and all licenses to or by Seller of Intellectual
Property Rights which Seller owns or uses in the conduct of the Business.
3.16 Commitments. Schedule 3.16 of the Disclosure Schedule contains a
list of or cross references to other applicable Schedules of the Disclosure
Schedule with respect to all contracts, agreements and other commitments to
which Seller is a party or by which Seller or any of its properties is bound and
which are individually material to the Business (individually and collectively,
the "COMMITMENT(s)"). Except as disclosed in Schedule 3.16 of the Disclosure
Schedule, (a) all Commitments are valid and in full force and effect and
enforceable against Seller and any other party thereto in accordance with their
terms (subject to bankruptcy, insolvency, creditors' rights, equitable
considerations and public policy, and except that no representation or warranty
is given concerning the availability of specific performance or other equitable
remedies), and (b) neither Seller nor to Seller's knowledge any other party
thereto is in material default thereunder, nor are there circumstances which
with the giving of notice or passing of time or both would constitute a material
default thereunder by Seller or to Seller's knowledge any other party thereto,
nor has Seller received any notice claiming any such default or circumstance.
3.17 Taxes.
(a) Except as set forth in Schedule 3.17 of the Disclosure
Schedule, (1) Seller and its shareholders have duly and timely filed (and until
the Closing Date will duly and timely file or obtain valid extensions to file)
all tax and information reports, returns, declarations, statements and related
documents required to be filed by them with any Authority ("TAX RETURNS") with
respect to net or gross income, profits, windfall profits, franchise, gross
receipts, premium, sales, use, ad valorem, service, service use, license, lease,
occupation, employment, withholding, excise, transfer, real and personal
property, customs, duties and other taxes, charges and levies relating to
Seller's operations and all interest, penalties, assessments and deficiencies
with respect thereto ("TAXES") and have duly paid, or made adequate provision
for the due and timely payment of, all such Taxes due or claimed to be due from
them by any Authority, (2) all Tax Returns were (or will be) true, correct and
complete in all material respects when filed for all periods ending on or before
the Closing Date, (3) no deficiencies for any Taxes for which Seller or any
shareholder of Seller may be liable have been asserted in writing or assessed
against Seller or any such shareholder or former subsidiary for which Seller or
any such shareholder may be liable which remain unpaid nor has Seller or any
such shareholder received notification of any pending or proposed examination by
any taxing Authority, (4) there are no outstanding agreements or waivers
extending the statutory period of limitation applicable to any such Tax Returns
for any period, and (5) for purposes of computing Taxes and the filing of Tax
Returns, Seller and its shareholders have not failed to treat as an "employee"
any individual providing services to Seller who would be classified as an
"employee" under the applicable rules or regulations of any Authority with
respect to such classification.
(b) Seller is not a foreign person within the meaning of
Section 1445(b)(2) of the Internal Revenue Code of 1986, as amended (the
"CODE").
(c) Seller has had in effect a valid election under Code
Section 1362 to be treated as an "S corporation" for each of its taxable years
ended after December 31, 1990. Seller has not taken any action to revoke such
election. Seller is not aware of any basis or the existence of any facts that
would permit the Internal Revenue Service to revoke such election for any period
prior to the Closing Date. Except as described on Schedule 3.17 of the
Disclosure Schedule, since the effective date of its election as an S
corporation to and including the Closing Date, Seller will not have incurred or
become liable for the payment of any corporate-level income tax, or any related
penalties or interest.
3.18 Employee Benefit Plans. Schedule 3.18 of the Disclosure Schedule
sets forth a true and complete list of each "employee benefit plan" (as that
term is defined under Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) and any other plan, practice, policy,
procedure, program, arrangement or agreement that is maintained by Seller
related to the employment of any present or former director, officer or employee
of Seller under which Seller has any present or future obligation or liability
(the "EMPLOYEE BENEFIT PLANS"). With respect to each such Employee Benefit Plan,
Seller has delivered or made available to Buyer copies of and has scheduled on
Schedule 3.18 of the Disclosure Schedule all (a) plans and related trust
documents and other instruments under which the applicable Employee Benefit Plan
is established or operated, (b) the most recent summary plan description and any
summary of material modifications thereto, (c) the three (3) most recent annual
reports on Treasury Form 5500, including all schedules and attachments thereto,
with respect to any Employee Benefit Plan for which such report is required, and
(d) the most recent determination letter received from the Internal Revenue
Service and the full and complete application therefor submitted to the Internal
Revenue Service. No event has occurred for which, and there exists no condition
or set of circumstances under which, Seller could, directly or indirectly, be
subject to any liability under ERISA Section 502(i) or Code Section 4975, or to
any other material tax or penalty under ERISA or the Code. No Employee Benefit
Plan is subject to Section 302 or Title IV of ERISA or to Code Section 412. With
respect to each Employee Benefit Plan, except as set forth in Schedule 3.18 of
the Disclosure Schedule, (1) Seller is in compliance with the requirements
prescribed by all applicable Laws, including without limitation ERISA and the
Code, (2) each Pension Plan intended to qualify under Code Section 401(a) has
received a favorable determination letter from the Internal Revenue Service with
respect to such qualification, its related trust has been determined to be
exempt from taxation under Code Section 501(a), and nothing has occurred since
the date of such letter that would adversely affect such qualification or
exemption, and (3) there are no actions or proceedings (other than routine
claims for benefits) pending with respect to any Employee Benefit Plan or
against the assets of any Employee Benefit Plan. With respect to each Employee
Benefit Plan that is a "group health plan" within the meaning of ERISA Section
601(a) and that is subject to Code Section 4980B, including but not limited to
any medical plan, dental plan, health care reimbursement plan or employee
assistance program, Seller has operated such plans in material compliance with
the continuation coverage requirements of those provisions and Part 6 of Title I
of ERISA and any applicable comparable state Laws, and no Employee Benefit Plan
provides for medical, health, life or other welfare benefits for present or
future terminated employees or their spouses or dependents in excess of those
required to be provided under such Laws. Seller has timely made all
contributions or payments of any kind
required pursuant to any Employee Benefit Plan or to maintain in full force and
effect any insurance policy maintained in connection with any such Employee
Benefit Plan. The transactions contemplated herein will not result in the
acceleration of accrual, vesting, funding or payment of any contribution or
benefit under any Employee Benefit Plan. No action or omission of Seller or any
director, officer, employee, or agent thereof in any way restricts, impairs or
prohibits Seller or any successor thereof from amending, merging, or terminating
any Employee Benefit Plan in accordance with the express terms thereof and
applicable Laws. Neither Seller nor any former subsidiary has taken any action
which has or could result in any liability to Seller under the Worker Adjustment
and Retraining Notification Act.
3.19 Labor Matters. Except as set forth in Schedule 3.19 of the
Disclosure Schedule, (a) Seller is not obligated by or subject to any collective
bargaining agreement or collective bargaining obligation, (b) there are no
strikes, slowdowns or picketing against Seller previously experienced or
pending, or to Seller's knowledge threatened, nor are there nor have there been
any efforts, to Seller's knowledge, to organize any unions or employee
associations at the Business, and (c) there are no pending, or to Seller's
knowledge threatened, grievances or unfair labor charges.
3.20 Permits and Other Operating Rights. Except as set forth in
Schedule 3.20 of the Disclosure Schedule, Seller does not require the Consent of
any Authority to permit it to operate in the manner in which it presently is
being operated, and possesses and is in compliance with the requirements of all
permits, licenses and other authorizations from all Authorities presently
required necessary to permit it to operate the Business in the manner in which
it presently is conducted. Each of such permits, licenses and other
authorizations is scheduled on Schedule 3.20 of the Disclosure Schedule, and no
action is pending to revoke, terminate, modify or restrict any thereof.
3.21 Compliance with Laws. Except as set forth in Schedule 3.21 of the
Disclosure Schedule, Seller has operated and is operating the Business in
compliance with all Laws applicable to the Business the failure to comply with
which could have, either individually or in the aggregate, a Material Adverse
Effect with respect to Seller.
3.22 Environment.
(a) Schedule 3.22 of the Disclosure Schedule lists all
environmental studies made by or furnished to Seller relating to any Real
Property or any other property formerly owned, leased or operated by Seller or
any former subsidiary (individually and collectively, "FORMER REAL PROPERTY"),
each of which studies has been delivered or made available to Buyer.
(b) Except as set forth in Schedule 3.22 of the Disclosure
Schedule, Seller nor any former subsidiary nor any prior or current other owner
or lessee has generated, handled, manufactured, treated, stored, used,
transported, or discharged, leaked, pumped, injected, spilled, emitted,
dispersed, leached, migrated or otherwise released ("RELEASED" and any thereof
being a "RELEASE"), or deposited, placed, buried, dumped or otherwise disposed
of ("DISPOSED OF" and any thereof being a "DISPOSAL"), any Environmentally
Regulated Materials (as defined below) on,
beneath, to, from or about any Real Property or Former Real Property or been
responsible therefor, except for the generation, handling, manufacture,
treatment, storage, use, transportation, Release and Disposal, in compliance
with all applicable Environmental Laws (as defined below) and other applicable
Laws, of such substances used in the ordinary course of the Business.
(c) Except as set forth in Schedule 3.22 of the Disclosure
Schedule, no Environmentally Regulated Material has been generated, handled,
manufactured, treated, stored, used, transported, Released or Disposed Of on,
from or off any Real Property or Former Real Property which may give rise to a
clean-up responsibility, personal injury liability or property damage claim
against Seller, or give rise to Seller being named a potentially responsible
party for any such clean-up costs, personal injuries or property damage, or
create any cause of action by any third party against Seller under any
Environmental Laws.
(d) Except as set forth in Schedule 3.22 of the Disclosure
Schedule, Seller has not received any notices or claims of any inquiries,
evaluations, investigations, remediations, violations or liabilities relating to
Environmentally Regulated Materials or Environmental Laws involving Seller, any
former subsidiary, or any Real Property or Former Real Property.
(e) Except as set forth in Schedule 3.22 of the Disclosure
Schedule, no Real Property or to Seller's knowledge Former Real Property
contains any (1) underground or aboveground storage tanks, (2) asbestos, (3)
equipment using PCBs, (4) underground injection xxxxx, or (5) septic tanks into
which process waste water or any Environmentally Regulated Materials have been
Disposed Of or Released.
(f) The term "ENVIRONMENTALLY REGULATED MATERIALS" means any
element, compound pollutant, contaminant, substance, material or waste, or any
mixture thereof, designated, listed, referenced, regulated or identified
pursuant to any Environmental Laws. The term "ENVIRONMENTAL LAWS" means the
National Environmental Policy Act, 42 U.S.C. xx.xx. 4321 et seq., the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
xx.xx. 9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
xx.xx. 6901 et seq., the Federal Water Pollution Control Act, 33 U.S.C. xx.xx.
1251 et seq., the Federal Clean Air Act, 42 U.S.C. xx.xx. 7401 et seq., the
Toxic Substances Control Act, 15 U.S.C. xx.xx. 2601 et seq., the Emergency
Planning and Community Right to Know Act, 42 U.S.C. (paragraph). 11001, the
Hazard Communication Act xx.xx. 651 et seq., and the Federal Insecticide,
Fungicide and Rodenticide Act, 7 U.S.C. ss. 136, each as amended, and the
regulations thereunder and applicable state and local counterparts.
3.23 Litigation. Except as set forth in Schedule 3.23 of the Disclosure
Schedule, there is no action, order or proceeding, or to Seller's knowledge
investigation, in, before or by any court or other Authority or before or by any
arbitrator or mediator ("LITIGATION") pending, or to Seller's knowledge
threatened, (a) by or against or involving Seller or any of its properties or
any of its officers, directors, agents or employees (but only in such
capacities) or the Business, or (b) which seeks to enjoin or obtain damages in
respect of the consummation of the transactions contemplated hereby, nor to
Seller's knowledge is there any basis therefor.
3.24 Business Generally. Except as set forth in Schedule 3.24 of the
Disclosure Schedule, there has been no event, transaction or information which
has come to the attention of Seller which, as it relates directly to the
Business, could, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect with respect to the Business.
3.25 Absence of Certain Business Practices. Neither Seller nor any
officer, employee or agent of any thereof, nor any other person acting on behalf
of any thereof, has, directly or indirectly, within the past three (3) years
given or agreed to give any gift or similar benefit to any customer, supplier,
governmental employee or other person who is or may be in a position to help or
hinder the Business (or assist Seller in connection with any actual or proposed
transaction) which (a) might subject Seller or Buyer to any damage or penalty in
any civil, criminal or governmental litigation proceeding, (b) if not given in
the past, might have resulted in a Material Adverse Effect with respect to
Seller, or (c) if not continued in the future, might have a Material Adverse
Effect with respect to Seller or Buyer, or subject Seller or Buyer to suit or
penalty in any private or governmental litigation or proceeding.
3.26 Brokers. Except as set forth in Schedule 3.26 of the Disclosure
Schedule, neither Seller nor any directors, officers or employees thereof, nor
any other person acting on behalf of any thereof, has employed any broker,
finder or financial advisor or incurred any liability for any brokerage fee or
commission, finder's fee or financial advisory fee in connection with the
transactions contemplated hereby, nor is there any basis known to Seller for any
such fee or commission to be claimed by any person or entity.
3.27 Accuracy of Information. No representation or warranty made by
Seller in this Agreement, the Disclosure Schedule or any agreement, instrument,
document, certificate, statement or letter furnished or to be furnished to Buyer
at the Closing by or on behalf of Seller in connection with any of the
transactions contemplated by this Agreement contains or will contain any untrue
statement of material fact or omits or will omit to state any material fact
necessary in order to make the statements herein or therein not misleading in
light of the circumstances in which they are made, and all of the foregoing do
or will when made completely and correctly present the information required or
purported to be set forth herein or therein.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Buyer's Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the Laws of the state of Minnesota,
and has all requisite corporate power and authority to carry on its business as
it is now being conducted, and to execute, deliver and perform this Agreement
and to consummate the transactions contemplated hereby.
4.2 Due Authorization, Execution and Delivery; Effect of Agreement. The
execution, delivery and performance by Buyer of this Agreement and the
consummation by Buyer of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Buyer. This
Agreement has been duly and validly executed and delivered by Buyer and
constitutes the valid and binding legal obligations of Buyer, enforceable
against it in accordance with its terms, except to the extent that such
enforceability (a) may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally, and
(b) is subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
4.3 Non-Contravention. Neither the execution, delivery and performance
of this Agreement nor the consummation of the transactions contemplated hereby
will (a) violate or be in conflict with any provision of the articles of
incorporation or bylaws of Buyer, or (b) be in conflict with, or constitute a
default, however defined (or an event which, with the giving of due notice or
lapse of time, or both, would constitute such a default), under, or cause or
permit the acceleration of the maturity of, or give rise to any right of
termination, cancellation or imposition of fees or penalties under, any debt,
instrument, commitment, contract or other agreement or obligation to which Buyer
is a party or by which Buyer or any of its properties or assets is or may be
bound, or (c) result in the creation or imposition of any Encumbrance upon any
property or assets of Buyer, or (d) violate any Laws of any Authority to which
Buyer is subject.
4.4 Consents. No Consent from any Authority or any individual or other
private entity is required in connection with the execution, delivery or
performance by Buyer of this Agreement or the taking of any other action
contemplated hereby.
4.5 Litigation. There is no Litigation pending or, to Buyer's
knowledge, threatened which seeks to enjoin or obtain damages in respect of the
consummation of the transactions contemplated hereby.
ARTICLE V
COVENANTS OF SELLER
From and after the date hereof and until the Closing Date, Seller
hereby covenants and agrees with Buyer as follows:
5.1 Cooperation and Assignments. Seller will use its best efforts, and
will cooperate with Buyer, to secure all necessary consents, approvals,
authorizations, exemptions and waivers from third parties as are required in
order to enable Seller to effect the transactions contemplated hereby, and
otherwise will use its best efforts to cause the consummation of such
transactions in accordance with the terms and conditions hereof, provided that
Seller will not be obligated to incur any liability
or expense in connection therewith, except the cost and expense of its
employees, agents and representatives engaged in such efforts or as otherwise
expressly set forth herein.
5.2 Conduct of Business. Except as otherwise may be contemplated by
this Agreement or any of the documents listed in the Disclosure Schedule and
except as Buyer otherwise may consent to in writing (which consent will not be
unreasonably withheld), in consultation with Buyer Seller will (a) operate the
Business in the ordinary course in all material respects, (b) use its best
efforts to preserve the Business as a whole intact, (c) use its best efforts to
continue in effect all material existing policies of insurance (or comparable
insurance) with third-party carriers of or relating to the Business, (d) use its
best efforts to keep available the services of the present officers, employees
and agents of the Business, (e) use its best efforts to preserve its
relationships with its material suppliers, customers, licensors and licensees
and others having material business dealings with it such that the Business will
not be substantially impaired, and (f) not take any action which would result in
a breach of the representations and warranties contained in Section 3.6 or
otherwise contained in Article III as though made on and as of the Closing Date.
5.3 Access. Seller will provide Buyer with such information as Buyer
from time to time reasonably may request with respect to the Business and to
personnel of Seller and the transactions contemplated by this Agreement, and
will permit Buyer and its representatives reasonable access, during regular
business hours and upon reasonable notice, to the properties, books and records
of the Business and to personnel of Seller, as Buyer from time to time
reasonably may request.
5.4 No Solicitation. Seller will not and will cause its directors,
officers, employees, agents and representatives not to encourage, solicit,
initiate or enter into, directly or indirectly, any discussions or negotiations
concerning any disposition (through a sale of assets, sale of stock, merger,
consolidation, exchange or otherwise) of all or substantially all of the assets
or capital stock of Seller (other than pursuant to this Agreement), or any
proposal therefor, or furnish or cause to be furnished any nonpublic information
concerning the Business or the assets or capital stock of Seller to any third
party in connection with any transaction or proposed transaction involving the
acquisition of the assets or capital stock of Seller by any third party (any
such proposed disposition being hereinafter referred to as an "ALTERNATIVE
TRANSACTION"). Seller will promptly inform Buyer of any inquiry (including the
terms and the identity of the third party making such inquiry) which it receives
in respect of an Alternative Transaction and furnish to Buyer a copy of any such
written inquiry.
5.5 Termination of 401(k) Plan. Prior to Closing Seller will take all
actions necessary to terminate its 401(k) plan in accordance with the
requirements of ERISA.
5.6 Name Change. On or before Closing Seller will change its name to a
name substantially dissimilar from Forward Automation Systems and FSA.
ARTICLE VI
COVENANTS OF BUYER
From and after the date hereof and until the Closing Date, Buyer hereby
covenants and agrees with Seller as follows:
6.1 Cooperation and Assumption. Buyer will use its best efforts, and
will cooperate with Seller, to secure all necessary consents, approvals,
authorizations, exemptions and waivers from third parties as are required in
order to enable Buyer to effect the transactions contemplated hereby, and will
otherwise use its best efforts to cause the consummation of the transactions
contemplated hereby in accordance with the terms and conditions hereof, provided
that Buyer will not be obligated to incur any liability or expense in connection
therewith, except the cost and expense of its employees and representatives
engaged in such efforts or as otherwise expressly set forth herein.
ARTICLE VII
ADDITIONAL COVENANTS
7.1 Books and Records; Personnel. For a period of five (5) years after
the Closing (or such longer period as may be required by any governmental agency
or ongoing Litigation or in connection with any administrative proceeding):
(a) Buyer will not dispose of or destroy any of the business
records and files of the Business. If Buyer wishes to dispose of or destroy such
records and files after that time, it will first give thirty (30) days' prior
written notice to Seller and Seller will have the right, at its option and
expense, upon prior written notice to Buyer within such thirty (30) day period,
to take possession of the records and files within sixty (60) days after the
date of Seller's notice to Buyer.
(b) Buyer will allow Seller and its representatives access,
when there is a legitimate business purpose not injurious to Buyer, to all
business records and files of the Business which are transferred to Buyer in
connection herewith, during regular business hours and upon reasonable notice at
Buyer's principal place of business or at any location where such records are
stored, and Seller will have the right, at their own expense, to make copies of
any such records and files; provided, however, that any such access or copying
will be had or done in such a manner so as not to interfere with the normal
conduct of Buyer's business or operations.
(c) Buyer will make available to Seller, upon written request
and at Seller's expense personnel of the Business to assist Seller in locating
and obtaining records and files of the Business or whose assistance or
participation is reasonably required by Seller in anticipation of, or
preparation for, existing or future Litigation, tax return preparation or other
matters in which Seller or any of its affiliates are involved and which is
related to the Business, provided that Buyer will not
be obligated to provide such personnel to the extent that Buyer, in its
reasonable discretion, believes that such assistance would adversely affect the
operations of the Business.
7.2 Further Assurances. At any time or from time to time after the
Closing Date, either party will, at the request of the other party and at such
other party's expense, execute and deliver any further instruments or documents
and take all such further action as such party reasonably may request in order
to consummate and make effective the transactions contemplated by this
Agreement.
7.3 Confidentiality Agreement of Seller After Closing.
(a) From and after the Closing Date, except as otherwise
consented to by Buyer in writing, (1) Seller will not directly or indirectly
disclose or use in a manner adverse to Buyer any Business Confidential
Information (as defined below) except as required by the terms of a valid and
effective subpoena or order issued by a court of competent jurisdiction or by a
governmental body, (2) Business Confidential Information will be the exclusive
property of Buyer and, any time on or after the Closing Date, if requested by
Buyer, Seller will promptly deliver to Buyer all Business Confidential
Information, including all copies thereof, which are in the possession, or under
the control, of Seller or any of its agents or representatives, without making
or retaining any copies or extracts thereof, and (3) if Seller or any of its
agents or representatives receive a request to disclose all or any part of
Business Confidential Information, Seller will (A) immediately notify Buyer of
the existence, terms and circumstances surrounding such request, (B) consult
with Buyer on the advisability of taking legally available steps to resist or
narrow such request, and (C) if disclosure of such information is required, and
at Buyer's cost and expense, exercise its best efforts to obtain an order or
other reliable assurance that confidential treatment will be accorded such
portion of the disclosed information which Buyer so designates.
(b) "BUSINESS CONFIDENTIAL INFORMATION" means any and all
information relating to the management, operations, finances, products, trade
secrets, technology or services of Seller, including but not limited to any and
all financial data, computer programs and systems, computer based information,
plans, projections, existing and proposed and contemplated projects or
investments, formulae, processes, methods, products, manuals, drawings, supplier
lists, customer lists, purchase and sales records, marketing information,
commitments, correspondence and other information relating to the Business,
whether written, oral or computer generated, other than such information from
and after such time as it may be or become lawfully available to the general
public through no fault of Seller.
(c) The covenants and undertakings contained in this Section
7.3 relate to matters which may be of a special, unique and extraordinary
character and a violation of any of the terms of this Section 7.3 may cause
irreparable injury to Buyer, the amount of which may be impossible to estimate
or determine and for which adequate compensation may not be available.
Therefore, Buyer may be entitled to an injunction, restraining order or other
equitable relief from a court of competent jurisdiction, restraining any
violation or threatened violation of any such terms by Seller and such other
persons as the court orders.
7.4 Registration Rights.
(a) In the event that Rule 144 under the Securities Act of
1933 (the "SECURITIES ACT"), or any successor rule providing for the public sale
of unregistered securities promulgated by the Securities and Exchange Commission
(the "COMMISSION"), is unavailable to a Shares Designee with respect to Shares
issued to such Shares Designee pursuant to Section 1.8(b) hereof, such Shares
Designee may by written notice to Aetrium Incorporated require Aetrium
Incorporated to prepare and file a registration statement under the Securities
Act on Form S-3 or any successor form promulgated by the Commission ("FORM S-3")
covering such Shares. Aetrium Incorporated may delay the filing of any such
registration statement for not more than sixty (60) days if (1) in the good
faith judgment of Aetrium Incorporated's Board of Directors (the "BOARD"), there
is a material development relating to the condition (financial or other) of
Aetrium Incorporated that has not been disclosed to the general public and the
Board determines that, under such circumstances, it would be in Aetrium
Incorporated's best interests to delay such registration, or (2) in the good
faith judgment of the Board or Aetrium Incorporated's principal investment
banker, if an investment banker is involved, such delay is necessary in order
not to affect adversely financing efforts underway at Aetrium Incorporated.
Aetrium Incorporated will also take reasonable measures to qualify the Shares
included in any registration statement pursuant to this Section 7.4 for sale
under applicable blue sky laws of such states as Aetrium Incorporated determines
are reasonably necessary for the sale of the Shares. Aetrium Incorporated will
use its best efforts to cause such registration statement to remain effective
for such period as may reasonably be necessary to effect the sale of the Shares
but in no event beyond the date after which all Shares covered by such
registration statement could be sold pursuant to Rule 144 under the Securities
Act . The costs and expenses of the offering, including but not limited to legal
fees, special audit fees, printing expenses, filing fees, fees and expenses
relating to qualifications under state securities or blue sky laws and the
premiums for insurance, if any, incurred by Aetrium Incorporated in connection
with any such Form S-3 registration made pursuant to this Section 7.4 will be
borne by Aetrium Incorporated; provided, however, that a Shares Designee
participating in such registration will bear his or its own underwriting
discounts and commissions and the fees and expenses of his or its own counsel or
accountants in connection with any such registration.
(b) In the event that the Board determines in good faith that
compliance by Aetrium Incorporated with its disclosure obligations under such
registration statement would require disclosure of material information that
Aetrium Incorporated has a bona fide business purpose for preserving as
confidential, Shares Designees included as part of the registration statement
will not be entitled to sell the included Shares pursuant to such registration
statement, and Aetrium Incorporated will not be obligated to supplement or amend
such registration statement or the prospectus forming a part thereof, for a
period (the "BLACK-OUT PERIOD") expiring on the earlier to occur of (1) the date
on which such material information is disclosed to the public or ceases to be
material or Aetrium Incorporated is otherwise able to comply with its disclosure
obligations, or (2) sixty (60) days after the Board makes such good faith
determination. Aetrium Incorporated will give prompt written notice to each
Shares Designee included as a part of the registration statement
of the commencement of the Black-Out Period. Each such Shares Designee will keep
the fact and subject matter of such notice confidential and refrain from any
further sales or other transfers of Shares pursuant to the registration
statement until the Shares Designee receives either copies of a supplemented or
amended prospectus or a notice from Aetrium Incorporated advising the Shares
Designee that the use of the existing prospectus may be resumed.
(c) Upon the exercise of registration rights pursuant to this
Section 7.4, and as a condition to participation in any such registration, each
participating Shares Designee will supply Aetrium Incorporated with such
information as may be required by Aetrium Incorporated to register or qualify
the applicable Shares. By participating in any such registration, each
participating Shares Designee will have agreed to indemnify Aetrium
Incorporated, its officers and directors, and each person, if any, who controls
Aetrium Incorporated within the meaning of Section 15 of the Securities Act,
with respect to losses, claims, damages and liabilities caused by any untrue
statement or omission made in reliance upon and in conformity with any such
information furnished by such Shares Designee to Aetrium Incorporated expressly
for use in such registration statement or prospectus, provided that the
obligation of each Shares Designee hereunder will not exceed the amount of
proceeds received by such Shares Designee from the sale of Shares under this
Section 7.4.
(d) In the event of any registration of Shares pursuant to
this Section 7.4, Aetrium Incorporated will indemnify each Shares Designee
participating in such registration, and the officers and directors and each
person, if any, who controls Seller as such a Shares Designee within the meaning
of Section 15 of the Securities Act, against all losses, claims, damages and
liabilities caused by any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or prospectus (and as
amended or supplemented) relating to such registration, or caused by any
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances under which they are made unless such statement or omission
was made in reliance upon and in conformity with information furnished in
writing to Aetrium Incorporated by such Shares Designee expressly for use
therein.
(e) The registration rights granted hereby are exercisable
only by a Shares Designee, and with respect to any Share, only for the first
transfer. Such registration rights may not be transferred, and will not inure to
the benefit of, any subsequent holder of Shares.
ARTICLE VIII
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer to consummate the purchase of the Assets under
this Agreement will be subject to the satisfaction (or waiver by Buyer) on or
prior to the Closing Date of all of the following conditions:
8.1 Representations, Warranties and Covenants of Seller. Seller will
have complied in all material respects with all of their agreements and
covenants contained herein to be performed at or prior to the Closing Date, and
all the representations and warranties of Seller contained herein will be true
in all material respects on and as of the Closing Date with the same effect as
though made on and as of the Closing Date, except (a) as otherwise contemplated
hereby, and (b) to the extent that such representations and warranties were made
as of a specified date (and as to such representations and warranties the same
continue on the Closing Date to have been true as of the specified date). Buyer
will have received a certificate of Seller, dated as of the Closing Date and
signed by the chief executive officer of Seller, certifying as to the
fulfillment of the conditions set forth in this Section 8.1.
8.2 No Prohibition. No statute, rule or regulation or order of any
court or other Authority will be in effect which prohibits Buyer from
consummating the transactions contemplated hereby.
8.3 Xxxxxxxxx Employment. Xxxxxxxxx will have accepted employment with
Buyer or an Affiliate as President of the Business reporting directly to the
President of Aetrium Incorporated, effective the Closing Date.
8.4 Lease Amendment. Seller and the lessor under the lease of the Real
Property will have entered into a Lease Amendment and Assumption in the form of
Exhibit D hereto.
8.5 Further Action. All consents, approvals, authorizations, exemptions
and waivers from third parties that are required in order to enable Buyer to
consummate the transactions contemplated hereby will have been obtained (except
where the failure to obtain any such consents, approvals, authorizations,
exemptions and waivers would not have a Material Adverse Effect with respect to
the Business).
8.6 Deliveries. Seller will have made or caused to be made delivery to
Buyer of the items set forth in Section 2.2 hereof.
ARTICLE IX
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to consummate the sale of the Assets under
this Agreement will be subject to the satisfaction (or waiver by Seller) on or
prior to the Closing Date of all of the following conditions:
9.1 Representations, Warranties and Covenants of Buyer. Buyer will have
complied in all material respects with all of its agreements and covenants
contained herein to be performed at or prior to the Closing Date, and all of the
representations and warranties of Buyer contained herein will be true in all
material respects on and as of the Closing Date with the same effect as though
made on and as of the Closing Date, except (a) as otherwise contemplated hereby,
and (b) to the extent that
such representations and warranties were made as of a specified date (and as to
such representations and warranties the same continue on the Closing Date to
have been true as of the specified date). Seller will have received a
certificate of Buyer, dated as of the Closing Date and signed by an officer of
Buyer reasonably acceptable to Seller, certifying as to the fulfillment of the
conditions set forth in this Section 9.1.
9.2 No Prohibition. No statute, rule or regulation or order of any
court or other Authority will be in effect which prohibits Seller from
consummating the transactions contemplated hereby.
9.3 Xxxxxxxxx Employment. Xxxxxxxxx will have been offered employment
with Buyer or an Affiliate as President of the Business reporting directly to
the President of Aetrium Incorporated, effective the Closing Date, which offer
is made open for acceptance to the Closing Date.
9.4 Further Action. All consents, approvals, authorizations, exemptions
and waivers from third parties that are required in order to enable Seller to
consummate the transactions contemplated hereby will have been obtained (except
where the failure to obtain any such actions, consents, approvals,
authorizations, exemptions and waivers would not have a Material Adverse Effect
with respect to the Business).
9.5 Deliveries. Buyer will have made or caused to be made delivery to
Seller of the items set forth in Section 2.3 hereof.
ARTICLE X
INDEMNIFICATION AND RELATED MATTERS
10.1 Indemnification by Seller. Subject to the provisions of this
Article X, Seller will indemnify and hold harmless Buyer and each director,
officer, employee, stockholder, partner or affiliate thereof from and against
any and all damages, loss, cost or expense (including reasonable attorney's fees
and expenses actually incurred) (collectively, "LOSS") suffered by reason of,
arising out of or resulting from (a) any misrepresentation or breach of warranty
made by Seller in or pursuant to this Agreement (other than, with respect to any
such director, officer, stockholder, affiliate or employee who is an officer or
director of Seller on the date of this Agreement, any such misrepresentation or
breach of warranty known to such officer or director on the Closing Date), (b)
any failure by Seller to fulfill any covenants or agreements under this
Agreement, or (c) any and all liabilities of Seller not expressly assumed by
Buyer hereunder, or third party claims therefor.
10.2 Indemnification by Buyer. Buyer will indemnify and hold harmless
Seller and its officers and directors from and against any and all Loss suffered
by reason of, arising out of or resulting from (a) any material
misrepresentation or breach of warranty made by Buyer in or pursuant to this
Agreement, (b) any failure by Buyer to fulfill any covenants or agreements under
this Agreement, or (c) any and all Assumed Liabilities, or third party claims
therefor.
10.3 Notice of Indemnification. In the event any legal proceeding is
threatened or instituted or any claim or demand is asserted by any person
(including a party hereto) in respect of which payment may be sought by one
party hereto from the other party under the provisions of this Article X, the
party seeking indemnification (the "INDEMNITEE") will promptly cause written
notice of the assertion of any such claim of which it has knowledge which is
covered by this indemnity to be forwarded to the other party (the "INDEMNITOR").
Any notice of a claim by reason of any of the representations, warranties or
covenants contained in this Agreement will state specifically the
representation, warranty or covenant with respect to which the claim is made,
the facts giving rise to an alleged basis for the claim, and the amount of the
liability asserted against the Indemnitor by reason of the claim.
10.4 Indemnification Procedure for Third-Party Claims. In the event of
the initiation of any legal proceeding against an Indemnitee by a third party,
the Indemnitor will have the absolute right after the receipt of notice, at its
option and at its own expense, to be represented by counsel of its choice, and
to defend against, negotiate, settle or otherwise deal with any proceeding,
claim, or demand which relates to any loss, liability or damage indemnified
against hereunder; provided, however, that the Indemnitee may participate in any
such proceeding with counsel of its choice and at its expense. The parties will
cooperate fully with each other in connection with the defense, negotiation or
settlement of any such legal proceeding, claim or demand. To the extent the
Indemnitor elects not to defend such proceeding, claim or demand, and the
Indemnitee defends against or otherwise deals with any such proceeding, claim or
demand, the Indemnitee may retain counsel, at the expense of the Indemnitor, and
control the defense of such proceeding. Neither the Indemnitor nor the
Indemnitee may settle any such proceeding without the consent of the other
party, such consent not to be unreasonably withheld. After any final judgment or
award has been rendered by a court, arbitration board or administrative agency
of competent jurisdiction and the time in which to appeal therefrom has expired,
or a settlement has been consummated, or the Indemnitee and the Indemnitor have
arrived at a mutually binding agreement with respect to each separate matter
alleged to be indemnified by the Indemnitor hereunder, the Indemnitee will
forward to the Indemnitor notice of any sums due and owing by it with respect to
such matter and the Indemnitor will pay all of the sums so owing to the
Indemnitee by wire transfer, certified or bank cashier's check within thirty
(30) days after the date of such notice.
10.5 Right of Offset. Buyer will have the right to offset against
Shares and Derivatives held or issuable by Aetrium Incorporated hereunder any
liability of Seller to Buyer hereunder. In the event any proceeding is commenced
on any claim of Buyer against Seller hereunder, and in addition to all other
rights and remedies of Buyer hereunder or at law, Buyer may deposit in such
proceeding any Shares or Derivatives otherwise to be released hereunder for
purposes of offset in the event such claim is adjudicated in Buyer's favor.
ARTICLE XI
TERMINATION PRIOR TO CLOSING
11.1 Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by the mutual written consent of Buyer and Seller; or
(b) by either Seller or Buyer in writing (provided the
conditions to such party's obligations stated in the applicable sections of
Article VIII or IX are not then satisfied or waived) if the Closing has not
occurred on or before May 1, 1997; or
(c) by either Seller or Buyer in writing, if there is in
effect a non-appealable order of a court of competent jurisdiction prohibiting
the consummation of the transactions contemplated hereby.
11.2 Effect on Obligations. Termination of this Agreement pursuant to
this Article will terminate all obligations of the parties hereunder, provided,
however, that termination pursuant to clause (b) of Section 11.1 hereof will not
relieve any defaulting or breaching party from any liability to the other party
hereto, and provided, further, that the provisions of this Section 11.2 and
Article XII will survive termination of this Agreement.
ARTICLE XII
MISCELLANEOUS
12.1 Entire Agreement. This Agreement (including the Exhibits and the
Disclosure Schedule delivered pursuant hereto) constitutes the entire agreement
of the parties with respect to the matters provided for herein and supersedes
all prior and contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written, of the parties. No amendment, modification
or alteration of the terms or provisions of this Agreement will be binding
unless the same is in writing and duly executed by the parties hereto.
12.2 Successors and Assigns. The terms and conditions of this Agreement
will inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties hereto. This Agreement may not be assigned by
either party without the prior written consent of the other party hereto, except
that Buyer may, at its election, assign its rights under this Agreement to any
direct or indirect wholly-owned business entity. Notwithstanding the foregoing,
no assignment of this Agreement or any of the rights or obligations hereof by
Buyer will relieve Buyer of its obligations under this Agreement to Seller and,
upon any such assignment, the representations, warranties, covenants and
agreements contained in this Agreement will be deemed to have been made by
Buyer's assignee as well as by Buyer. Further notwithstanding the foregoing,
Aetrium Incorporated may not assign its obligations under Sections 1.8(b) and
7.4. Any attempted
assignment of this Agreement contrary to the terms hereof will be null and void
and of no force or effect.
12.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will for all purposes be deemed to be an original
and all of which will constitute the same instrument.
12.4 Headings. The headings of the articles and sections of this
Agreement are included for convenience only and will not be deemed to constitute
part of this Agreement or to affect the construction hereof.
12.5 Modifications and Waivers. No waiver of any of the terms or
conditions of this Agreement or any right hereunder will be effective unless
given in a signed writing by the party entitled to the benefits thereof. No
waiver of any of the provisions of this Agreement or any rights hereunder will
be deemed to or will constitute a waiver of any other provisions hereof or
rights hereunder (whether or not similar). No failure or delay on the part of a
party in exercising any right hereunder will operate as a waiver of, or impair,
any such right. No single or partial exercise of any such right will preclude
any other or further exercise thereof or the exercise of any other right.
12.6 Broker's Fees. Each of the parties hereto represents and warrants
to the other that it has had no dealings with any broker or finder in connection
with the transactions contemplated by this Agreement. Seller will indemnify and
hold harmless Buyer from and against any and all liability to which Buyer may be
subjected by reason of any broker's or finder's fee with respect to the
transactions contemplated hereby to the extent such fee is attributable to any
action undertaken by or on behalf of Seller. Buyer will indemnify and hold
harmless Seller from and against any and all liability to which Seller may be
subjected by reason of any broker's or finder's fee with respect to the
transaction contemplated hereby to the extent such fee is attributable to any
action undertaken by or on behalf of Buyer.
12.7 Expenses.
(a) Seller will pay all costs and expenses incurred by or on
behalf of Seller, and Buyer will pay all costs and expenses incurred by or on
behalf of it, in connection with this Agreement, the negotiations in connection
herewith, and the transactions contemplated hereby, including without limitation
fees and expenses of their respective brokers, finders, financial consultants,
accountants and counsel.
(b) If any dispute between Seller and Buyer, either occurring
under, relating to or in connection with any of the provisions of this
Agreement, is submitted to a court, arbitrator or other appropriate tribunal,
then all costs and expenses of the parties (including tribunal costs and
reasonable attorneys' fees) will be paid by the party against whom a
determination by such court, arbitrator or other tribunal is made or, in the
absence of a determination wholly against one party, as such court, arbitrator
or other tribunal directs.
12.8 Notices. Any notice, request, instruction or other document to be
given hereunder by any party hereto to any other party will be in writing and
delivered personally or by telephonic facsimile transmission or sent by
registered or certified mail, postage prepaid (and if by telephonic facsimile
transmission with a copy sent by mail),
if to Seller to:
Forward Automation Systems, Inc.
000 Xxxx Xxxxx Xxxxxxx Xxxxxxx
Xxxxx Xxxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxx & Xxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxx
Facsimile No.: (000) 000-0000
if to Buyer to:
Aetrium Incorporated
0000 Xxxxx Xxxxxx
Xxxxx Xx. Xxxx, Xxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxxxxxxx Xxxxx & Xxxxxxxx
3400 Plaza VII Building
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
or at such other address for a party as may be specified by like notice. Any
notice which is delivered personally or by telephonic facsimile transmission in
the manner provided herein will be deemed to have been duly given to the party
to whom it is directed upon actual receipt by such party (or its agent for
notices hereunder). Any notice which is addressed and mailed in the manner
herein
provided will be conclusively presumed to have been duly given to the party to
which it is addressed at the close of business, local time of the recipient, on
the third day after the day it is so placed in the mail.
12.9 Arbitration. Subject to the last sentence of this Section, any
controversy or claim arising out of or relating to any provisions of this
Agreement or the breach hereof, unless resolved by mutual agreement of the
parties, will be finally settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association in effect
on the effective date of this Agreement by a single arbitrator appointed in
accordance with said Rules. The determination of the arbitrator will be final
and binding upon the parties to the arbitration and judgment upon the award
rendered by the arbitrator will be entered in any court of competent
jurisdiction. The place of arbitration will be St. Xxxx, Minnesota.
Notwithstanding the foregoing, either party may seek injunctive relief with
respect to any controversy or claim arising out of or relating to any provisions
of this Agreement in any court of competent jurisdiction.
12.10 Governing Law; Consent to Jurisdiction. This Agreement will be
construed in accordance with and governed by the laws of the State of Minnesota
applicable to agreements made and to be performed in such jurisdiction without
reference to conflicts of law principles. Each of Buyer and Seller irrevocably
consents that any legal action or proceeding against it under, arising out of or
in any manner relating to this Agreement or any other agreement, document or
instrument arising out of or executed in connection with this Agreement may be
brought only in an arbitration proceeding as provided in Section 12.9 or in a
court of the State of Minnesota or in the United States District Court for the
District of Minnesota. Each of Buyer and Seller by the execution and delivery of
this Agreement, expressly and irrevocably assents and submits to the personal
jurisdiction of the arbitrators selected pursuant to Section 12.9 or any of such
courts in any such action or proceeding. Each of Buyer and Seller further
irrevocably consents to the service of any complaint, summons, notice or other
process relating to any such action or proceeding by delivery thereof to it by
hand or by mail in the manner provided for in Section 12.8 hereof. Each of Buyer
and Seller hereby expressly and irrevocably waives any claim or defense in any
action or proceeding based on any alleged lack of personal jurisdiction,
improper venue or forum non conveniens or any similar basis.
12.11 Confidentiality.
(a) "SELLER CONFIDENTIAL INFORMATION" means information
received by Buyer or any of its agents, directors, officers, employees, counsel,
consultants, affiliates or advisors ("REPRESENTATIVES") from Seller or its
Representatives in the course of Buyer's investigation of Seller and negotiation
and performance of this Agreement, including without limitation trade secret and
other proprietary technical, financial and other information relating to the
Business or Seller's products, whether past, present or anticipated, including
information about Seller's research, development, manufacturing, purchasing,
accounting, engineering, marketing, selling or servicing, and any analyses,
compilations, studies, materials, memoranda, data, notes or documents prepared
by Buyer or its Representatives and concerning such information received by
Buyer or its Representatives.
(b) The Seller Confidential Information will be kept
confidential and will not, without the prior written consent of Seller, be
disclosed by Buyer or its Representatives in any manner whatsoever, in whole or
in part, and will not be used by Buyer or its Representatives other than in
connection with the transactions contemplated hereunder. The Seller Confidential
Information will be disclosed by Buyer and its Representatives only to Buyer's
Representatives who have a "need to know" such Seller Confidential Information
and who have been informed by Buyer of the confidential nature of the Seller
Confidential Information and who have first agreed to be bound by the terms and
conditions of this Section 12.11.
(c) Immediately upon termination of this Agreement, the Seller
Confidential Information which consists of analyses, compilations, studies,
material, memoranda, data, notes or other documents prepared by Buyer or its
Representatives in that capacity will be destroyed and such destruction will be
certified in writing to Seller by an authorized officer supervising such
destruction, and all other Seller Confidential Information will be returned to
Seller without Buyer retaining any copies thereof.
(d) In the event that Buyer or anyone to whom Buyer transmits
the Seller Confidential Information pursuant to the provisions of this Section
12.11 becomes legally compelled to disclose any of the Seller Confidential
Information, Buyer will provide Seller with prompt notice before such Seller
Confidential Information is disclosed so that Seller may seek a protective order
or other appropriate remedy and/or waive compliance with the provisions of this
Section 12.11. In the event that such protective order or other remedy is not
obtained, Buyer will furnish only that portion of the Seller Confidential
Information which Buyer is advised by written reasonable opinion of counsel is
legally required and will exercise Buyer's best efforts to assist Seller in
obtaining a protective order or other reliable assurance that confidential
treatment will be accorded to the Seller Confidential Information that is
disclosed.
(e) Nothing contained in this Section 12.11 will in any way
restrict or impair Buyer's right to use, disclose or otherwise deal with (1)
Seller Confidential Information which at the time of its disclosure is, or which
thereafter becomes through no fault of Buyer or its Representatives, part of the
public domain by publication or otherwise, and (2) Seller Confidential
Information which Buyer can show was in Buyer's possession or the possession of
one or more of its Representatives at the time of disclosure, and was not
acquired, directly or indirectly, under any secrecy obligation to Seller or
another party.
(f) The provisions of this Section 12.11 will lapse and be of
no further force or effect upon Closing.
12.12 Public Announcements. Neither Seller (nor any of its affiliates)
nor Buyer (nor any of its affiliates) will make any public statements, including
without limitation any press releases, with respect to this Agreement and the
transactions contemplated hereby without the prior written consent of the other
party (which consent may not be unreasonably withheld), except as may be
required by law and except that the party required to make such announcement
will, whenever practicable, consult with the other party concerning the timing
and content of such announcement before such announcement is made.
12.13 Severability. If any provision hereof is held by any court of
competent jurisdiction to be illegal, void or unenforceable, such provision will
be of no force and effect, but the illegality or unenforceability will have no
effect upon and will not impair the enforceability of any other provision of
this Agreement.
12.14 Disclosure Schedule; Buyer's Knowledge; Effect on Seller
Representations and Warranties; Effect of Materiality Qualification. Nothing in
the Disclosure Schedule will be deemed adequate to disclose an exception to a
representation or warranty of Seller made herein, unless the Disclosure Schedule
identifies the exception with reasonable particularity and describes the
relevant facts in reasonable detail. Without limiting the generality of the
foregoing, the mere listing (or inclusion of a copy) of a document or other item
will not be deemed adequate to disclose an exception to a representation or
warranty made herein (unless the representation or warranty has to do with the
existence of the document or other item itself). Disclosures in any schedule of
the Disclosure Schedule will constitute disclosure only for purposes of such
schedule's counterpart section herein, and will not constitute disclosure for
purposes of any other section of this Agreement or any exhibit to or other
writing which is designated herein as being part of this Agreement. No
disclosure whatsoever during Buyer's due diligence investigation of Seller will
constitute an enlargement or restriction of the warranties or representations of
Seller hereunder or exceptions thereto beyond those specifically set forth in
this Agreement and the Disclosure Schedule. No representation or warranty of
Seller will be deemed waived in whole or part, and no Loss resulting from the
breach thereof will be reduced, by reason of the fact that Buyer or its
representatives knew or should have known on or before the Closing Date that
such representation or warranty is or might be inaccurate in any respect. If any
representation or warranty of Seller that is qualified by materiality (including
a Material Adverse Effect) is breached after giving effect to such materiality
qualification, then Loss resulting from such breach includes all Loss resulting
from such breach from first dollar as if there were no such materiality
qualification.
12.15 No Third Party Beneficiaries. Except as expressly permitted by
this Agreement, nothing in this Agreement will confer any rights upon any person
or entity which is not a party or permitted assignee of a party to this
Agreement.
12.16 Rule of Construction. The parties hereto acknowledge and agree
that each has negotiated and reviewed the terms of this Agreement, assisted by
such legal and tax counsel as they desired, and has contributed to its
revisions. The parties further agree that the rule of construction that any
ambiguities are resolved against the drafting party will be subordinated to the
principle that the terms and provisions of this Agreement will be construed
fairly as to all parties and not in favor of or against any party.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf as of the date first above written.
AETRIUM INCORPORATED
By (illegible signature)
---------------------------------
Its President
FORWARD SYSTEMS AUTOMATION, INC.
By /s/ Xxxxx Xxxxxxxxx
---------------------------------
Its President
GUARANTY AND COVENANT
The undersigned absolutely, irrevocably and unconditionally guarantees to Buyer
the payment and performance when due of all liabilities and obligations of
Seller under Section 10.1 of this Agreement ("INDEBTEDNESS"). Buyer may at any
time and from time to time, without the consent of or notice to the undersigned,
without incurring responsibility to the undersigned, without releasing,
impairing or affecting the liability of the undersigned hereunder, upon or
without any terms or conditions and in whole or in part: (a) sell, pledge,
surrender, compromise, settle, release, renew, subordinate, extend, substitute,
exchange, change, or otherwise dispose or deal with in any manner and in any
order any Indebtedness, any evidence thereof, or any security therefor, (b)
accept any security for or other guarantors of any Indebtedness, (c) fail,
neglect or omit to obtain, realize upon or protect any Indebtedness or any
security therefor, to exercise any lien upon or right to any money, credit or
property toward the liquidation of the Indebtedness, or to exercise any other
right against Seller, the undersigned or any other person, and (d) apply any
payments and credits to the Indebtedness in any manner and in any order. No act
or thing, except full payment and discharge of the Indebtedness, which but for
this provision could act as a release or impairment of the liability of the
undersigned hereunder, will in any way release, impair or affect the liability
of the undersigned hereunder. The undersigned will have the benefit of any and
all defenses of Seller pertaining to the Indebtedness, excluding discharge
pursuant to bankruptcy or similar proceedings. This guaranty is a primary
obligation of the undersigned and Buyer will not be required to first resort for
payment of the Indebtedness to Seller or any other person, their properties or
estates, or any security or other rights or remedies whatsoever. If any payment
applied by Buyer to the
Indebtedness is thereafter set aside, recovered, rescinded or required to be
returned for any reason (including without limitation the bankruptcy, insolvency
or reorganization of Seller or any other person), the Indebtedness to which such
payment was applied will for the purposes of this guaranty be deemed to have
continued in existence, notwithstanding such application, and this guaranty will
be enforceable as to such Indebtedness as fully as if such application had never
been made. The undersigned waives presentment, protest, demand for payment,
notice of dishonor, notice of nonpayment, and all other demands and notices to
the undersigned or any other person and all other actions to establish the
liability of the undersigned hereunder. Any claim under this guaranty may be
brought only pursuant to the provisions of Section 12.9 of this Agreement, and
the undersigned will be bound by the provisions of Sections 10.5, 12.7(b), 12.9
and 12.10 of this Agreement as fully as if a party thereto, the undersigned's
service address for purposes thereof being that of Seller pursuant to Section
12.8 of this Agreement. During the undersigned's employment with Buyer or any
Affiliate until all Shares are released or forfeited, the undersigned will
devote his full employment time to such employment.
/s/ Xxxxx Xxxxxxxxx
-----------------------
Xxxxx Xxxxxxxxx
Exhibit A
CLOSING BALANCE SHEET INSTRUCTIONS
The Closing Balance Sheet will be prepared in accordance with GAAP on a basis
consistent with the Latest Balance Sheet, provided that such balance sheet will
be prepared in accordance with the following instructions regardless of whether
such instructions conform to GAAP or are consistent with the Latest Balance
Sheet:
1. No inventory write-down will be made from amounts included on the
Latest Balance Sheet for MSOP handler 1107 or SOT handler 1102A.
2. No accounts receivable write-down or bad debt reserve accrual will be
made for the Account Receivable from Maxim in the amount of $143,444
from amounts with respect thereto included on the Latest Balance Sheet.
3. No accrual will be included for vacation, payroll and related taxes,
commissions or warranty reserve.
4. No liability will be included for building finish-out under the lease
of Seller's Real Property.
Exhibit B
FORM OF OPINION OF COUNSEL FOR SELLER
At the Closing, Buyer will receive an opinion from counsel for Seller,
dated the Closing Date and substantially to the effect that]:
(a) Seller is a corporation duly organized, validly existing
and in good standing under the Laws of the state of Texas, has full
corporate power and authority to carry on its business as it is now
being conducted and to own, lease and operate its properties and
assets, and is duly qualified or licensed to do business as a foreign
corporation in good standing in every other jurisdiction in which the
character or location of the properties and assets owned, leased or
operated by it or the conduct of its business requires such
qualification or licensing, except in such jurisdictions in which the
failure to be so qualified or licensed and in good standing would not,
individually or in the aggregate, result in a Material Adverse Effect
with respect to Seller. Schedule 3.1 of the Disclosure Schedule
contains for Seller a list of all jurisdictions in which it is
qualified or licensed to do business. To such counsel's knowledge, the
minute books, stock transfer books and other corporate records of
Seller have all been made available to Buyer, are complete and correct
in all material respects, have been maintained in accordance with
reasonable business practices, and contain accurate and complete
records of all formal meetings held of, and corporate actions taken by,
the shareholders, board of directors and committees of the board of
directors of Seller. Seller does not own or control, directly or
indirectly, fifty percent (50%) or more of the voting securities or
other voting interests, or the equity interests, in any other
corporation or other business entity.
(b) Seller has all requisite corporate power and authority to
execute, deliver and perform the Agreement and to consummate the
transactions contemplated thereby. The execution, delivery and
performance by Seller of the Agreement and the consummation by Seller
of the transactions contemplated thereby have been duly authorized by
all necessary corporate action. The Agreement has been duly and validly
executed by Seller and constitutes the valid and binding legal
obligation of Seller, enforceable against Seller in accordance with its
terms, except to the extent that such enforceability (1) may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to creditors' rights generally, and (2) is subject to
general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(c) Except as set forth in the Schedule 3.3 of the Disclosure
Schedule, neither the execution, delivery and performance of the
Agreement nor the consummation of the transactions contemplated thereby
will (1) violate or be in conflict with any provision of the articles
or certificates of incorporation or bylaws of Seller, or (2) be in
conflict with, or constitute a default, however defined (or an event
which, with the giving of due notice or
lapse of time, or both, would constitute such a default), under, or
cause or permit the acceleration of the maturity of, or give rise to
any right of termination, cancellation, imposition of fees or penalties
under, any debt, instrument, agreement, permit or other obligation,
commitment or authorization known to such counsel to which Seller is a
party or by which Seller or any of Seller's properties or assets is or
may be bound, or (3) to such counsel's knowledge result in the creation
or imposition of any Encumbrance upon any property or assets of Seller,
or (4) violate any treaty, law, rule or regulation, or any order,
judgment or decree known to such counsel, of any Authority to which
Seller is subject.
(d) Except as set forth in Schedule 3.4 of the Disclosure
Schedule, with respect to Seller, no Consent of any Authority, or to
such counsel's knowledge any individual or other private entity, is
required in connection with the execution, delivery or performance of
the Agreement by Seller or the consummation by Seller of the
transactions contemplated thereby.
(e) To such counsel's knowledge, except as set forth in
Schedule 3.23 of the Disclosure Schedule, there is no Litigation
pending or threatened (1) by or against or involving Seller or any of
its properties or any of its officers, directors, agents or employees
(but only in such capacities) or the Business, or (2) which seeks to
enjoin or obtain damages in respect of the consummation of the
transactions contemplated by the Agreement.
Exhibit C
FORM OF OPINION OF COUNSEL FOR BUYER
At the Closing, Seller will receive an opinion from counsel for Buyer,
dated the Closing Date and substantially to the effect that:
(a) Buyer is a corporation duly organized, validly existing
and in good standing under the Laws of the state of Minnesota, and has
all requisite corporate power and authority to carry on its business as
it is now being conducted, and to execute, deliver and perform the
Agreement and to consummate the transactions contemplated thereby.
(b) The execution, delivery and performance by Buyer of the
Agreement and the Note and the consummation by Buyer of the
transactions contemplated thereby have been duly authorized by all
necessary corporate action on the part of Buyer. The Agreement and the
Note have been duly and validly executed and delivered by Buyer and
constitute the valid and binding legal obligations of Buyer,
enforceable against it in accordance with their terms, except to the
extent that such enforceability (1) may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating
to creditors' rights generally, and (2) is subject to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(c) Neither the execution, delivery and performance of the
Agreement or the Note nor the consummation of the transactions
contemplated thereby will (1) violate or be in conflict with any
provision of the articles of incorporation or bylaws of Buyer, or (2)
be in conflict with, or constitute a default, however defined (or an
event which, with the giving of due notice or lapse of time, or both,
would constitute such a default), under, or cause or permit the
acceleration of the maturity of, or give rise to any right of
termination, cancellation, imposition of fees or penalties under, any
debt, instrument, commitment, contract or other agreement or obligation
known to such counsel to which Buyer is a party or by which Buyer or
any of its properties or assets is or may be bound, or (3) to such
counsel's knowledge result in the creation or imposition of any
Encumbrance upon any property or assets of Buyer, or (4) violate any
treaty, law, rule or regulation, or any order, judgment or decree known
to such counsel, of any Authority to which Buyer is subject.
(d) No Consent from any Authority, or to such counsel's
knowledge any individual or other private entity, is required in
connection with the execution, delivery or performance by Buyer of the
Agreement or the taking of any other action contemplated thereby.
(e) To such counsel's knowledge, there is no Litigation
pending or threatened which seeks to enjoin or obtain damages in
respect of the consummation of the transactions contemplated by the
Agreement.
Exhibit D
LEASE AMENDMENT AND ASSUMPTION
THIS LEASE AMENDMENT AND ASSUMPTION, dated effective March 31, 1997, by
and between Damavand, Ltd., a Texas limited partnership ("LANDLORD"), Forward
Systems Automation, Inc., a Texas corporation ("TENANT") and _____________
("ASSIGNEE"), is to that certain Lease Agreement dated June 26, 1996 by and
between Landlord and Tenant with respect to property located at 000 X. Xxxxx
Xxxxxxx Xxxxxxx, Xxxxx Xxxxxxx, Xxxxx (the "LEASE").
RECITALS:
FIRST, concurrently with execution hereof, Assignee is acquiring
substantially all of the assets of Tenant, and as a part thereof is assuming
certain liabilities and obligations Tenant, including without limitation the
liabilities and obligations of Tenant under the Lease; and
SECOND, Landlord and Assignee wish to make certain representations,
warranties and/or covenants with respect to the Lease and wish to make certain
amendments to the Lease;
NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants contained herein, the parties agree as follows:
1. Landlord represents and warrants to Assignee that (a) the Lease is
valid and in full force and effect and enforceable against Landlord in
accordance with its terms (subject to bankruptcy, insolvency, creditors' rights,
equitable considerations and public policy, and except that no representation or
warranty is given concerning the availability of specific performance or other
equitable remedies) and has not been amended except as hereinafter provided, (b)
neither Landlord nor Tenant is in default thereunder, nor are there
circumstances which with the giving of notice or passing of time or both would
constitute a default thereunder by Landlord or Tenant, (c) Landlord holds the
Security Deposit (as defined under the Lease), and (d) all liabilities of Tenant
under the Lease accruing through March 1997 have been paid, except that (1)
Tenant is responsible for the costs of repair of the air compressor for the air
conditioning unit for the Premises (as defined in the Lease), and (2) Tenant is
responsible for Sixty Thousand Dollars ($60,000) of building finish-out costs
under Section 2.3 of the Lease.
2. Tenant hereby sells, assigns, transfers and conveys to Assignee, its
successors and assigns, forever, all right, title and interest in, to and under
the Lease, and Tenant hereby assigns to Assignee and Assignee hereby irrevocably
assumes and agrees to pay, perform and discharge, as the same become due and
payable or when required to be performed, all of the liabilities and obligations
of Tenant under the Lease, whether known, unknown, contingent, absolute,
determined, indeterminable or otherwise on the date hereof and whether incurred
or occurring prior to, on or after the date hereof.
3. Landlord and Assignee hereby agree to the following amendments to
the Lease:
(a) Section 1.1(i) is hereby amended to read as follows:
"Term": The period of eighty-three (83) months
beginning on the Commencement Date and ending on the
Expiration Date.
(b) Section 5.4 is hereby amended by adding to the end
thereof:
Notwithstanding the foregoing, Tenant may contest in
good faith the validity or amount of any taxes,
assessments or governmental charges on the Premises,
provided that no such contest involves the
possibility of forfeiture, sale or disturbance of
Landlord's interest in the Premises. So long as a
contest stays Landlord's obligation to pay any tax,
assessment or governmental charge, Tenant's
obligation hereunder to pay the same shall also be
stayed, provided that upon final determination of any
such contest, Tenant shall immediately pay its
portion of such contested tax, assessment or
governmental charge as finally determined.
IN WITNESS WHEREOF, the parties have executed this Lease Amendment and
Assumption effective the date first above written.
DAMAVAND, LTD., a Texas limited partnership
By: Octavo Enterprises, Inc., General Partner
By:
---------------------------------
Its President
FORWARD SYSTEMS AUTOMATION, INC.
By:
---------------------------------
Its President
By:
---------------------------------
Its Chief Executive Officer
