EXHIBIT 10.8
ASSET PURCHASE AGREEMENT
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ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of April
4, 1997, by and among Milwaukee Land Company, a Delaware corporation ("MLC"), PG
Newco Corp., a Delaware corporation and a wholly-owned subsidiary of MLC ("PG
Newco," and together with MLC, the "Purchasers"), PG Design Electronics, Inc., a
Michigan corporation (the "Seller" or the "Company"), and each of the Seller's
shareholders listed on the signature pages hereto (individually, a "Shareholder
Indemnitor" and collectively the "Shareholder Indemnitors").
W I T N E S S E T H:
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WHEREAS, the Seller is engaged in the business of designing
and manufacturing printed circuit boards, printer PODS and related services and
products (the "Business"); and
WHEREAS, the Purchasers desire to purchase, and the Seller
desires to sell, all of the assets and properties of the Seller employed in the
Business and, as part of such purchase and sale, PG Newco is willing to assume
certain obligations and liabilities of the Business, subject, in each case, to
the exceptions, terms and conditions set forth herein; and
WHEREAS, certain capitalized terms used herein are defined in
Section 14.1 hereof;
NOW, THEREFORE, in consideration of the premises and the
mutual representations, warranties, covenants and agreements hereinafter set
forth, and upon the terms and subject to the conditions hereinafter set forth,
the Purchasers, the Seller and the Shareholder Indemnitors hereby agree as
follows:
ARTICLE I
SALE AND PURCHASE OF ASSETS
1.1 Acquisition and Transfer of Assets. Upon the terms and
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subject to the conditions hereinafter set forth, on the Closing Date (as defined
in Section 3.1 hereof) the Seller shall sell, assign, transfer, convey and
deliver to the Purchasers, and the Purchasers shall purchase, acquire and accept
from the Seller, free and clear of all Liens,
other than Permitted Exceptions, and in such allocation as set forth on Exhibit
B hereof, all of the Seller's assets, properties, rights, contracts and claims,
including the assets, properties, rights, contracts and claims employed in, or
identified on the books and records of, the Business (except as otherwise set
forth in Section 1.2 hereof), of every kind and description, wherever located,
whether tangible or intangible, real, personal or mixed, as the same shall exist
on the Closing Date (collectively, the "Assets"). The Assets shall include,
without limitation, all of the Seller's right, title and interest in and to all
assets, properties, rights, contracts and claims described in the following
paragraphs (a) through (p):
(a) all furnishings, furniture, office equipment and
supplies, vehicles, spare parts, tools, dies, machinery and equipment and other
tangible personal property;
(b) all items of inventory, including, without limitation,
raw materials, work-in-process, finished goods, supplies, spare parts and
samples (collectively, the "Inventory");
(c) all accounts receivable and all notes receivable
(whether short-term or long-term) from third parties and all deposits with third
parties, together with all unpaid interest accrued thereon from the respective
obligors and all security or collateral therefor, including recoverable deposits
(collectively, the "Accounts Receivable");
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(d) all of the leased real property set forth on Schedule
1.1(d) hereto (collectively, the "Leased Real Property"), including all
buildings and improvements located thereon, all of the fixtures attached
thereto, all prepaid rent, security deposits and options to renew or purchase in
connection therewith and all Permits relating thereto;
(e)(i) all patents and patent applications owned by the Seller
or licensed to the Seller by third parties, including, without limitation, those
listed on Schedule 1.1(e) hereto, (ii) all research, development and
manufacturing processes, trade secrets, know-how, inventions (whether or not
patentable), designs, concepts, specifications, diagrams, drawings, schematics,
blueprints, documentation, plans, proposals, financial, marketing and business
data, business and marketing plans, customer and supplier lists, and
manufacturing, engineering and other technical information, whether owned by the
Seller or licensed to the Seller by third parties, (iii) all mask works (whether
or not registered), whether embodied in semiconductor chips, layout drawings,
computer plots, masks, magnetic tape or other physical media, and registration
or application therefor, and (iv) all notebooks, records, reports and data
relating to, and any tangible embodiment of, any of the foregoing (the assets
referred to in clauses (i) through (iv) are collectively referred to herein as
the "Patent-Related Assets");
(f) all trademarks, trade names, service marks and
copyrights, all applications and registrations for any of the foregoing, and all
computer systems, computer hardware, databases and software programs, including,
without limitation, databases and software programs developed by the Seller in
the operation of the Business, object codes, source codes and user manuals, in
each case, owned by the Seller or licensed to the Seller by third parties,
listed on Schedule 1.1(f) hereto (collectively, together with the Patent-Related
Assets, the "Intangible Assets");
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(g) all catalogues, marketing brochures and materials and
other printed and written materials relating to the Business;
(h) all rights under or pursuant to all warranties,
representations and guarantees made by vendors, suppliers, manufacturers and
contractors in connection with the operation of the Business or affecting the
Assets;
(i) all Permits held by the Seller including, without
limitation, those listed on Schedule 1.1(i) hereto;
(j) all Contracts including, without limitation, those
listed on Schedule 1.1(j) hereto;
(k) all cash, bank accounts, certificates of deposit,
treasury bills, notes and marketable securities;
(l) all deferred and prepaid charges, sums and fees, and
all insurance premiums;
(m) all claims, credits, causes of action or rights of set-
off against third parties;
(n) all customer and vendor lists and all files, documents,
books, records and other data relating to the Business;
(o) all goodwill relating to the foregoing Assets; and
(p) to the extent assignable, the real and personal
property tax abatements awarded to Seller by Seller's local taxing authority.
Seller makes no warranties as to the assignability of the abatements. It shall
be the obligation of Purchasers to pursue, at their expense, the assignment of
such abatements. Seller will cooperate with Purchasers in pursuit of such
assignment.
I.2 Excluded Assets. Notwithstanding anything to the
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contrary contained in Section 1.1 hereof, the Seller, the Shareholder
Indemnitors and the Purchasers expressly
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understand and agree that the Seller is not hereunder selling, assigning,
transferring, conveying or delivering to the Purchasers any of the following
assets, properties, rights, contracts and claims (collectively, the "Excluded
Assets"):
(a) pension or other funded employee benefit plan assets;
(b) Contracts that relate solely to the Excluded Assets or
the Excluded Liabilities;
(c) all prepaid charges, sums and fees pertaining to any of
the Excluded Assets or the Excluded Liabilities;
(d) except as otherwise set forth in Section 11.1(c)
hereof, any of Seller's right, title and interest under any Contracts,
agreements, licenses, Permits, exemptions, franchises, variances, waivers,
consents, approvals or other authorizations or arrangements that are not
transferrable without consent (unless such consent has been obtained);
(e) any claims for refunds or rebates of any previously
paid taxes, levies or duties and funds paid by Seller for corporate income,
state and local taxes accruing up to the Closing; and
(f) the other assets listed on Schedule 1.2(f) hereto.
I.3 Assumed Liabilities. (a) Upon the terms and subject to
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the conditions hereinafter set forth, effective as of the Closing, PG Newco
shall assume and be liable for the liabilities and obligations of the Business
reflected on the Closing Balance Sheet to the extent such liabilities and
obligations so reflected (i) are of a type which were reflected on the Initial
Balance Sheet and (ii) were incurred in the ordinary course of business since
the date of the Initial Balance Sheet, consistent with past practice in
accordance with Section 6.3 hereof, and (iii) have been
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approved by PG Newco, but excluding any liability for the payment of Taxes
(collectively, the "Assumed Liabilities").
(b) Notwithstanding any provisions in this Agreement or any
other writing to the contrary, PG Newco is assuming only the Assumed Liabilities
and is not assuming any other liability or obligation of the Seller (or any
predecessor owner of all or part of the Business) of whatever nature whether in
existence on the Closing Date or arising thereafter. All such other liabilities
and obligations shall be retained by and remain obligations and liabilities of
the Seller, all such liabilities and obligations not being assumed being herein
referred to as the "Excluded Liabilities".
ARTICLE II
PURCHASE PRICE
II.1 Purchase Price and Payment. In consideration of the
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sale of the Assets by the Seller to the Purchasers, PG Newco shall, on the
Closing Date, deliver to the Seller (i) $12,000,000 plus (ii) an amount in cash
sufficient to pay in full all of the outstanding balance of the Seller's bank
debt (currently estimated to be $1,400,000), as of the Closing Date, but in no
event more than $ 2,500,000, all in U.S. dollars by wire transfer of immediately
available funds, in the case of the payment referred to in clause (i), to the
account or accounts designated by the Seller and, in the case of the payment
referred to in clause (ii), to the account designated by the Seller's bank
lenders (the "Cash Consideration"), and MLC shall, on the Closing Date, deliver
to the Seller two promissory notes signed by MLC, each in the aggregate
principal amount of $1,500,000 (the "Notes"), which Notes shall be substantially
in the form attached hereto as Exhibit G. Payment on the Notes is subject to
certain terms and conditions, all as set forth therein. The Notes plus the Cash
Consideration shall be referred to herein as the "Purchase Price."
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2.2 Allocation of Purchase Price. The Purchasers and the
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Seller hereby agree that the Purchase Price of the Assets plus the Assumed
Liabilities will be allocated as set forth on Exhibit B hereto. Subject to the
requirements of any applicable tax law, all tax returns (including amended
returns and claims for refunds) and information reports filed by the Purchasers,
the Seller and the Shareholder Indemnitors shall be prepared consistently with
such allocation and such parties shall use their reasonable best efforts to
sustain such allocation in any subsequent tax audit or tax dispute. In the event
of any adjustment to the Purchase Price hereunder, the Purchasers and the Seller
agree to adjust such allocation to reflect such adjustment and the Purchasers,
the Seller and the Shareholder Indemnitors hereby agree to file consistently any
tax returns and reports required as a result of such adjustment. Each of the
parties agrees to cooperate with the other party in the preparation and filing
of any tax returns required under any applicable law.
ARTICLE III
THE CLOSING
3.1 Closing Date. The Closing shall take place at the
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offices of Weil, Gotshal & Xxxxxx LLP, located at 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, on the third business day following the date that the conditions
to Closing set forth herein have been satisfied or waived, or at such other
place and at such other time and date as may be mutually agreed upon by the
Purchasers and the Seller. The date of the Closing is referred to in this
Agreement as the "Closing Date."
3.2 Proceedings at Closing. All proceedings to be taken and
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all documents to be executed and delivered by the Seller in connection with the
consummation of the transactions contemplated hereby shall be reasonably
satisfactory in form and substance to the Purchasers and their counsel. All
proceedings to be taken and all documents to be executed and delivered by the
Purchasers in
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connection with the consummation of the transactions contemplated hereby shall
be reasonably satisfactory in form and substance to the Seller and its counsel.
All proceedings to be taken and all documents to be executed and delivered by
all parties at the Closing shall be deemed to have been taken, executed and
delivered simultaneously, and no proceedings shall be deemed taken nor any
documents executed or delivered until all have been taken, executed and
delivered.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE
SHAREHOLDER INDEMNITORS
The Seller and each Shareholder Indemnitor, hereby represents
and warrants to the Purchasers as follows:
4.1 Organization, Good Standing and Corporate Records. (a)
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The Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Michigan and has all requisite corporate
power and authority to carry on its business as it is now being conducted. The
Seller is duly qualified or authorized to do business as a foreign corporation
and is in good standing under the laws of (a) each jurisdiction in which it owns
or leases real property and (b) each other jurisdiction in which the conduct of
its business or the ownership of its properties requires such qualification or
authorization. Schedule 4.1 sets forth a true, correct and complete list of each
jurisdiction in which the Seller is qualified or authorized to do business as a
foreign corporation.
(b) The Seller has delivered to the Purchasers true,
correct and complete copies of the certificate of incorporation (certified by
the Secretary of State or other appropriate official of the applicable
jurisdiction of organization) and by-laws (certified by the secretary, assistant
secretary or other appropriate officer) or comparable organizational documents
of the Company.
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(c) The minute books of the Company previously made
available to the Purchasers contain complete and accurate records of all
meetings and accurately reflect all other corporate action of the stockholders
and board of directors (including committees thereof) of the Company. The stock
certificate books and stock transfer ledgers of the Company previously made
available to the Purchasers are true, correct and complete.
4.2 Authorization of Agreement. The Seller and the
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Shareholder Indemnitors have full power and authority to execute and deliver
this Agreement and each other agreement, document, instrument or certificate
contemplated by this Agreement or to be executed by them in connection with the
consummation of the transactions contemplated by this Agreement (all such other
agreements, documents, instruments and certificates required to be executed by
the Seller and the Shareholder Indemnitors being hereinafter referred to,
collectively, as the "Seller Documents"), and to perform fully their obligations
hereunder and thereunder. The execution, delivery and performance by the Seller
of this Agreement and each of the Seller Documents has been duly authorized by
all necessary corporate action on the part of the Seller, including the approval
of the company's shareholders. This Agreement has been, and each of the Seller
Documents will be at or prior to the Closing, duly executed and delivered by the
Seller and the Shareholder Indemnitors, and (assuming the due authorization,
execution and delivery by the other parties hereto and thereto) this Agreement
constitutes, and the Seller Documents when so executed and delivered will
constitute, legal, valid and binding obligations of the Seller and the
Shareholder Indemnitors, enforceable against them in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity).
4.3 No Violations; Consents. None of the execution and
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delivery by the Seller and the Shareholder
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Indemnitors of this Agreement and the Seller Documents, or the consummation of
the transactions contemplated hereby or thereby, or compliance by them with any
of the provisions hereof or thereof will (a) conflict with, or result in the
breach of, any provision of the articles of incorporation or by-laws of the
Seller, (b) conflict with, violate, result in the breach or termination of, or
constitute a default or give rise to any "takeback" right or right of
termination or acceleration or right to increase the obligations or otherwise
modify the terms under any Contract or Order to which the Seller is a party or
by which it or any of its properties or assets is bound or subject, (c)
constitute a violation of any Law applicable to the Seller or the Shareholder
Indemnitors, or (d) result in the creation of any Lien (other than any Lien in
favor of the Purchasers) upon the Assets. Except as set forth on Schedule 4.3,
no consent, waiver, approval, Order, Permit or authorization of, or declaration
or filing with, or notification to, any Person, including, without limitation,
any Governmental Body, is required on the part of the Seller or the Shareholder
Indemnitors in connection with the execution, delivery and performance of this
Agreement or the Seller Documents, or the compliance by the Seller or the
Shareholder Indemnitors with any of the provisions hereof or thereof.
4.4 Title to Assets Other than Leased Real Property. (a)
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The Seller owns and has good and valid, marketable title to or, in the case of
leased properties, a valid leasehold interest in, all of the Assets other than
the Leased Real Property, including all of such Assets reflected on the Initial
Balance Sheet, except Assets disposed of in the ordinary course of business
after November 30, 1996, free and clear of all Liens, other than Permitted
Exceptions.
(b) Upon consummation of the transactions contemplated
hereby, the Purchasers will have acquired, on and as of the Closing Date, good
and valid title in and to, or a valid leasehold interest in, the Assets other
than the Leased Real Property, free and clear of all Liens, other than Permitted
Exceptions.
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4.5 Leased Real Property. (a) The Seller does not own or
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hold any interest in real property other than its leasehold interests in the
Leased Real Property, as described on Schedule 1.1(d).
(b) The Seller has a valid leasehold interest in all of the
Leased Real Property free and clear of all Liens, other than Permitted
Exceptions. All leases in respect of the Leased Real Property are valid, binding
and enforceable in accordance with their respective terms, and there does not
exist under any such lease any default on the part of the Seller or any event
which with notice or lapse of time or both would constitute such a default. No
such lease has been modified or amended in writing except as evidenced by the
instruments attached to Schedule 1.1(d) hereof. The Seller has not received from
any party to any such lease any written notice of, or written claim with respect
to, any breach or default thereof. The Seller has not granted any sublease,
license or other agreement granting to any person or entity any right to the use
or occupancy of the Leased Real Property or any portion thereof, or the right to
purchase such Leased Real Property or any portion thereof, and has no knowledge
of any such grant by any other Person.
(c) The plants, buildings, structures and equipment
included in the Leased Real Property are in good operating condition, free of
any material defects or deferred maintenance, and are substantially suited for
their present uses (giving due account to the age and length of use of same).
(d) No violation of any law, regulation or ordinance
(including laws, regulations or ordinances relating to zoning, city planning or
similar matters) relating to the Leased Real Property currently exists, except
for violations which would not have a Material Adverse Effect. Seller has not
received notice of any contemplated governmental actions which might reasonably
be expected to materially detract from the value of any Leased Real Property,
materially interfere with any present use of any Leased Real Property or
materially adversely affect the
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marketability of any Leased Real Property. There is no action pending or, to
Seller's knowledge, threatened to initiate a condemnation in respect of any
Leased Real Property.
(e) Upon consummation of the transactions contemplated
hereby, Purchasers will have acquired, on and as of the Closing Date, a valid
leasehold interest in the Leased Real Property, free and clear of all Liens,
other than Permitted Exceptions.
4.6 Financial Statements. As set forth on Schedule 4.6, the
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Seller has delivered to the Purchasers copies of (i) the unaudited balance
sheets of the Company as at June 30, 1995 and June 30, 1996, and the related
unaudited statements of income and of cash flows of the Company for the years
then ended and (ii) the unaudited balance sheets of the Company as at November
30, 1996 and December 31, 1996 and the related statements of income and cash
flows of the Company for the one month period then ended (such unaudited
statements, including the related notes and schedules thereto, are referred to
herein as the "Financial Statements"). In addition, Purchasers are in possession
of an audited balance sheet and related statement of income and retained
earnings prepared by Ernst & Young LLP, retained by Purchasers for purposes of
conducting such audit. Each of the Financial Statements is complete and correct
in all material respects, has been prepared in accordance with GAAP (subject to
normal year-end adjustments) and in conformity with the practices consistently
applied by the Company and consistent with the books and records of the Company,
without modification of the accounting principles used in the preparation
thereof and presents (or will present) fairly the financial position, results of
operations and cash flows of the Company as at the dates and for the periods
indicated.
4.7 Absence of Certain Developments. Since November 30,
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1996:
(a) The Seller has operated the Business in the ordinary
course consistent with past practice;
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(b) There has not been any Material Adverse Change;
(c) There has not been any damage, destruction or loss,
whether or not covered by insurance, with respect to the Assets;
(d) Except as set forth on Schedule 4.7(d), the Seller has
not entered into any employment, deferred compensation, severance or similar
agreement (nor amended any such existing agreement) or agreed to increase the
compensation payable or to become payable by it to any of its directors,
officers, employees, agents or representatives or agreed to increase the
coverage or benefits available under any severance pay, termination pay,
vacation pay, company awards, salary continuation or disability, sick leave,
deferred compensation, bonus or other incentive compensation, insurance, pension
or other employee benefit plan, payment or arrangement made to, for or with such
directors, officers, employees, agents or representatives (other than normal
increases in the ordinary course of business consistent with past practice and
that in the aggregate have not resulted in a material increase in the benefits
or compensation expense of the Seller);
(e) Except as set forth on Schedule 4.7(e), the Seller has
not entered into any transaction or Contract (other than purchase orders with
customers of the Seller, entered into in the ordinary course of business)
having, in the aggregate, a value or requiring payments in excess of $10,000;
(f) The Seller has not failed to pay and discharge current
liabilities within 90 days, except where disputed in good faith by appropriate
proceedings (if such proceedings are necessary);
(g) The Seller has not made any loans, advances or capital
contributions to, or investments in, any Person, other than loans or advances to
employees in the ordinary course of business of the Seller and which, in the
aggregate, do not exceed $10,000;
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(h) Except as set forth on Schedule 4.7(e), the Seller has
not mortgaged, pledged or subjected to any Lien any of the Assets, or acquired
or sold, assigned, transferred, conveyed, leased or otherwise disposed of any
property, right or asset or any interest therein that otherwise would have been
included as part of the Assets, except for (i) Permitted Exceptions, and (ii)
any such properties, rights or assets or interests therein acquired or sold,
assigned, transferred, conveyed, leased or otherwise disposed of in the ordinary
course of business consistent with past practice of the Seller and which do not,
in the aggregate, have a value in excess of $10,000;
(i) The Seller has not amended, canceled, terminated,
relinquished, waived or released any Contract or right that otherwise would have
been included as part of the Assets, except for any such Contract that has
terminated in accordance with its terms due solely to the lapse of time;
(j) The Seller has not suffered any Extraordinary Loss or
Extraordinary Losses (as defined in Opinion No. 30 of the Accounting Principles
Board of the American Institute of Certified Public Accountants and any
amendments thereto);
(k) Except as set forth on Schedules 4.7(e) and 4.7(k)
hereto, the Seller has not made or committed to make any capital expenditures or
capital additions or betterments to any of the Business in excess of $35,000
individually or $175,000 in the aggregate;
(l) The Seller has not made any change in any method of
accounting or accounting practice with respect to the Business except for any
such change after the date hereof required by reason of a concurrent change in
GAAP;
(m) Except as set forth on Schedule 4.7(m) hereto, the
Seller has not paid any dividend or made any distribution or other payment, in
cash or otherwise, to the Shareholder Indemnitors; and
(n) The Seller has not agreed to do any of the foregoing.
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4.8 Material Contracts. (a) Schedule 1.1(j) hereto accurately
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identifies each Contract with respect to the Assets or the Business to which the
Seller is a party, which is being assigned to the Purchasers hereunder and which
involves the payment to or from the Seller of amounts in excess of $10,000 per
year or which is otherwise material to the Business (collectively, the "Material
Contracts").
(b) All of the Material Contracts are valid, binding and
enforceable in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity), and there does not exist under any Material
Contract any default on the part of the Seller or any event which with notice or
lapse of time or both would constitute such a default on the part of the Seller.
The Seller has not received from any other party to any Material Contract any
written notice of, and Seller has no actual knowledge of, any default on the
part of such other party or any event which with notice or lapse of time or both
would constitute such a default on the part of such other party. No Material
Contract has been modified or amended in writing except as evidenced by the
instruments attached to Schedule 1.1(j) hereto.
(c) Seller has not received any notice or communication
from any party to a Material Contract relating to such party's intent to modify,
terminate or fail to renew the arrangements and relationships set forth therein.
(d) Except as set forth on Schedule 1.1(j) hereto, Seller
is not a party to or subject to:
(i) any agency, dealer, sales representative, resale or
similar agreement;
(ii) any agreement, contract or commitment that
substantially limits the freedom of Seller to compete in any line
of business or with any Person or
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in any area, or to own, operate, sell, transfer, pledge or otherwise
dispose of or encumber any Asset or which would so limit the freedom of the
Purchasers after the Closing Date; or
(iii) any agreement, contract or commitment between the Seller
and any affiliate of the Seller.
(e) From and after the Closing, the Purchasers shall enjoy all
of the benefits of each of the Material Contracts without the necessity of any
consent, authorization or agreement from or with any Person.
4.9 Intangible Property. Schedules 1.1(e) and 1.1(f) hereto set
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forth a complete and accurate list of all patents, trademarks, trade names,
service marks and copyrights included in the Intangible Assets as well as a list
of all registrations thereof and pending applications therefor. Except as set
forth in Schedules 1.1(e) and 1.1(f), each of the Intangible Assets is owned by
the Seller, and upon the consummation of the transaction contemplated herein
will be owned by the Purchaser, free and clear of any and all Liens (other than
Permitted Exceptions) and no other Person has any claim of ownership or rights
with respect thereto. The Seller has adequate licenses or other valid rights to
use all of the Intangible Assets which it does not own and which are material to
the conduct of the Business as presently conducted. The Seller's use of the
Intangible Assets does not conflict with, infringe upon, violate or interfere
with any intellectual property rights, including, without limitation, any
patent, copyright, trademark, trade secret, moral rights, mask works rights, or
other proprietary rights of any other Person. Except as set forth in Schedules
1.1(e) and 1.1(f), Seller has not granted to any Person any license or right,
whether written or oral, in or to the Intangible Assets. No claims have been
asserted or threatened by Seller against any Person, or by any Person against
Seller, challenging the use of, or the validity or enforceability of any
Intangible Assets, and Seller is not aware of any facts that would serve as a
basis for any such claim.
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4.10 Tax and Other Returns and Reports. (a) Except as set
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forth in Schedule 4.10: (1) all federal Tax Returns required to be filed by
Seller have been filed on a timely basis with the appropriate governmental
agencies in all jurisdictions in which such Tax Returns are required to be filed
and all Taxes shown as due thereon have been timely paid; (2) all Taxes due from
Seller (A) have been fully and timely paid or (B) adequately provided for on the
Financial Statements and are being contested in good faith by appropriate
proceedings and are not material, individually or in the aggregate, to Seller;
(3) Seller will pay in full all Taxes which are due and payable in respect of
any taxable period ending on or prior to the date of the Closing whether or not
shown on any Tax Return; (4) no claim has been made by an authority in a
jurisdiction where Seller does not file Tax Returns that may be subject to
taxation by that jurisdiction; (5) Seller has withheld all Taxes required to
have been withheld under all applicable statutes and regulations in connection
with amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party and such withholdings have either been paid to
the appropriate governmental agencies as and when due in accordance with Law or
set aside in accounts for such purpose; and (6) no waivers of statutes of
limitation have been given by or requested of Seller in connection with its Tax
Returns or with respect to any Taxes payable by it. Schedule 4.10 lists all Tax
Returns of, or covering, Seller which have been examined or which are currently
under examination by the Internal Revenue Service or by other appropriate taxing
authorities, or with respect to which the applicable statute of limitations
(including all extensions and tolling periods) has not yet run and, except as
and to the extent shown on such Schedule or provided for on the Financial
Statements, all deficiencies asserted or assessments made as a result of such
examinations have been fully paid, and there are no other unpaid deficiencies
asserted or assessments made by any taxing authority against, Seller. Seller has
delivered to Purchasers correct and complete copies of all Tax Returns of Seller
or its respective operations or assets filed since June 30, 1994, all
examination reports relating to Tax Returns filed by
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Seller, and statements of deficiencies assessed against or agreed to by Seller
in respect of any Taxes of Seller.
(b) Except as set forth in Schedule 4.10, none of the Assets
of Seller is (1) "tax-exempt use property" within the meaning of Section
168(h)(1) of the Code, (2) used predominantly outside the United States within
the meaning of Prop. Reg. ? 1.168-2(g)(5), (3) "tax-exempt bond financed
property" within the meaning of Section 168(g)(5) of the Code, or (4) "limited
use property" as that term is used in Rev. Proc. 76-30. Following the Closing,
none of the Assets of Seller will be property that Purchasers will be required
to treat as being owned by any other Person pursuant to the provisions of
Section 168(f)(8) of the 1954 Code, as amended and in effect immediately before
the enactment of the Tax Reform Act of 1986.
(c) Seller is not a foreign person within the meaning of
Section 1445 of the Code; Seller is not a party to any Tax allocation or sharing
agreement or is or has been a member of an affiliated group filing a
consolidated federal income Tax Return or a combined, consolidated or unitary
group for state or local tax purposes.
(d) With respect to Leased Assets placed in service on or
before the date hereof, and except as a result of acts, errors or omissions,
including breaches of representation, by the lessee thereunder, each of the
Lease Contracts (excluding property sold on installment sales contracts) will be
treated as a "true lease" for federal income tax purposes.
(e) The transactions contemplated by this Agreement are not
subject to tax withholding pursuant to the provisions of Section 3406 or
Subchapter A of Chapter 3 of the Code or any other provision of applicable law.
(f) There are no liens as a result of any unpaid Taxes
encumbering any of the Assets.
4.11 Employees and Employee Benefits.
-------------------------------
18
(a)(i) The Seller is not a party to any collective bargaining
agreement applicable to the Employees; (ii) none of the Employees is represented
by any labor organization, and (iii) there is no labor strike, work stoppage or
slowdown pending against the Seller and no pending lockout by the Seller, in
each case, with respect to the Business.
(b) Schedule 4.11(b)(i) hereto lists all employee benefit
plans as defined in Section 3(3) of ERISA of the Seller covering any employee or
former employee of the Business ("Employee Benefit Plans"). Schedule 4.11(b)(ii)
hereto lists all employment severance contracts, consulting agreements, and all
bonus or other incentive compensation, deferred compensation, salary
continuation during any absence from active employment for disability or other
reasons, severance, sick days, stock award, stock option, stock purchase,
tuition assistance, and vacation pay arrangements, all plans and arrangements
providing for termination or similar coverage and all written compensation
policies and practices maintained by the Seller covering any employee or former
employee of the Business and that is not an Employee Benefit Plan ("Benefit
Arrangements").
(c) Each Employee Benefit Plan is in compliance with the
applicable requirements of ERISA and the Code.
4.12 Litigation. Except as set forth on Schedule 4.12, there
----------
is no Legal Proceeding pending or, to the knowledge of the Seller, threatened
(a) against the Seller in connection with the operation of the Business or in
respect of any of the Assets; (b) that seeks to enjoin or obtain damages in
respect of the consummation of the transactions contemplated by this Agreement;
or (c) that questions the validity of this Agreement, any of the Seller
Documents or any action taken or to be taken by the Seller in connection with
the consummation of the transactions contemplated hereby or thereby.
4.13 Compliance with Law. (a) The Business is currently
-------------------
operating in compliance with all applicable Laws and Orders of Governmental
Bodies. The Seller has neither received, nor knows of the issuance of, any
notice of any
19
violation or alleged violation of any applicable Laws and Orders of Governmental
Bodies.
(b) To Seller's knowledge, Seller is not under investigation
with respect to any violation of any Law, Order or judgment entered by any
court, arbitrator or Governmental Body, applicable to the Assets or the conduct
of the Business.
4.14 Receivables. All of the Accounts Receivable reflected on
-----------
the Initial Balance Sheet have arisen from bona fide transactions in the
ordinary course of business consistent with past practice and are properly
reflected therein in accordance with GAAP. All of the Accounts Receivable
generated since the date of the Initial Balance Sheet have arisen from bona fide
transactions in the ordinary course of business consistent with past practice.
To the Seller's knowledge, all of the Accounts Receivable are collectible in the
ordinary course of business consistent with past practice; provided, however,
-------- -------
that nothing in this Section 4.14 shall be construed as a guaranty by the Seller
or the Shareholder Indemnitors that such Accounts Receivable shall be collected
in full.
4.15 Inventory. The Inventory of the Business as of the date
---------
hereof is of a quality sufficient for its use in the ordinary course of the
Business consistent with past practice and is owned free and clear of all Liens,
other than Permitted Exceptions.
4.16 Assets Necessary to Conduct Business. The Assets
------------------------------------
comprise all of the assets used in the operation of the Business as presently
being conducted, other than the Excluded Assets.
4.17 Environmental Matters. (a) There are no pending or, to
---------------------
the best of the Seller's knowledge, threatened claims, suits or proceedings
arising out of or related to any noncompliance with any environmental law in
connection with the Business or the ownership or use of the Assets, including,
without limitation, statutes related to air quality, water quality, solid waste
management,
20
hazardous or toxic substances or protection of health or the environment,
including, but not limited to, the Federal Insecticide, Fungicide and
Rodenticide Act (7 U.S.C. 136 et seq. as amended), the Federal Water Pollution
-- ---
Control Act (33 U.S.C. 1251 et seq. as amended), the Resource Conservation and
-- ---
Recovery Act (42 U.S.C. 6901 et seq. as amended), the Comprehensive
-- ---
Environmental Response Compensation and Liability Act ("CERCLA") (42 U.S.C. 9601
et seq. as amended), the Clean Air Act (42 U.S.C. 7401 et seq. as amended), the
-- --- -- ---
Toxic Substances Control Act (15 U.S.C. 2601 et seq. as amended), and any
-- ---
similar state or local laws, rules and regulations (collectively, "Environmental
Laws"). The Seller has received all Permits necessary for the operation of the
Business, including all air, water and waste Permits and Permits for emission
and/or disposal of solid, liquid and gaseous materials from manufacturing
operations, and the Business is operating in conformance with such Permits. The
Seller has kept all records and made all filings required by applicable Law with
respect to emissions into the environment (including solids, liquids and gases)
and the proper disposal of such materials (including solid waste materials).
(b) The Seller is not in violation of any Environmental Laws
with respect to the Assets or the conduct of the Business.
4.18 Brokers. Except as described on Schedule 4.18 hereof,
-------
the fees and expenses of which Person shall be borne solely by the Seller, no
other Person has acted directly or indirectly as a broker, finder or financial
advisor for the Seller or any of the Shareholder Indemnitors in connection with
the negotiations relating to or the transactions contemplated by this Agreement,
and no other Person is entitled to any fee, commission or like payment in
respect thereof based in any way on any agreement, arrangement or understanding
made by or on behalf of the Seller or any of the Shareholder Indemnitors.
4.19 Permits. Schedule 1.1(i) is a complete list of all
-------
Permits issued by any Government Body in respect of the Business. Such Permits
constitute all licenses,
21
franchises, permits or similar authorizations required by any Law for the Seller
to own and conduct the Business, and there are no outstanding violations of any
such Permits, and no action pending or, to the knowledge of Seller threatened,
to cancel, modify or not renew any such Permit.
4.20 Ownership; Subsidiaries. (a) The authorized capital
-----------------------
stock of the Seller consists of [50,000] shares of common stock, par value $1.00
per share, of which 1,200 shares are issued and outstanding and none of which
are held by the Seller as treasury stock (the "Seller Shares"). All of the
Seller Shares are owned, beneficially and of record and free and clear of any
Liens, by each of the Shareholder Indemnitors. The Seller Shares were duly
authorized for issuance, are validly issued, fully paid and non-assessable, and
constitute 100% of the issued and outstanding shares of capital stock of the
Seller. There is no existing option, warrant, call, right, commitment or other
agreement of any character to which the Seller or any Shareholder Indemnitor is
a party requiring, and there are no securities of the Seller outstanding which
upon conversion or exchange would require, the issuance, sale or transfer of any
additional shares of capital stock or other securities of the Seller or other
securities convertible into, exchangeable for or evidencing the right to
subscribe for or purchase shares of capital stock or other securities of the
Seller. Neither the Seller nor any of the Shareholder Indemnitors is a party to
any voting trust or other voting agreement with respect to any of the Seller
Shares or to any agreement relating to the issuance, sale, redemption, transfer
or other disposition of the capital stock or other securities of the Seller.
(b) The Seller has no subsidiaries.
4.21 No Undisclosed Liabilities. Except as set forth on
--------------------------
Exhibit 4.7(e), the Company has no indebtedness, obligations or liabilities of
any kind (whether accrued, absolute, contingent or otherwise, and whether due or
to become due) other than indebtedness, obligations or liabilities, reflected
in, reserved against or otherwise described in the Initial Balance Sheet or the
notes thereto
22
or incurred in the ordinary course of business consistent with past practice
since November 30, 1996.
4.22 Insurance. Schedule 4.22 sets forth a complete and
---------
accurate list of all policies of insurance of any kind or nature covering the
Company or any of its employees, properties or assets, including, without
limitation, policies of life, disability, fire, theft, workers compensation,
employee fidelity and other casualty and liability insurance. All such policies
are in full force and effect, and, to the Seller's knowledge, the Company is not
in default of any provision thereof, except for such defaults as would not,
individually or in the aggregate, have a Material Adverse Effect.
4.23 Related Party Transactions. Except as set forth on
--------------------------
Schedule 4.23, none of the Shareholder Indemnitors nor any Affiliate of any
Shareholder Indemnitor or of the Company has borrowed any moneys from or has
outstanding any indebtedness or other similar obligations to the Company. Except
as set forth in Schedule 4.23, none of the Shareholder Indemnitors nor any
Affiliate of any Shareholder Indemnitor or of the Company nor any officer or
employee of any of them (i) owns any direct or indirect interest of any kind in,
or controls or is a director, officer, employee or partner of, or consultant to,
or lender to or borrower from or has the right to participate in the profits of,
any Person which is (A) a competitor, supplier, customer, landlord, tenant,
creditor or debtor of the Company, (B) engaged in a business related to the
business of the Company, or (C) a participant in any transaction to which the
Company is a party or (ii) is a party to any Contract with the Company.
4.24 Customers and Suppliers. Schedule 4.24 sets forth a list
-----------------------
of the ten (10) largest customers and the ten (10) largest suppliers of the
Company, as measured by the dollar amount of purchases therefrom or thereby,
during each of the fiscal years ended June 30, 1995 and June 30, 1996, showing
the approximate total sales by the Company to each such customer and the
approximate total purchases by the Company from each such supplier, during such
period. Since November 30, 1996, there has not been any material adverse
23
change in the business relationship of the Company with any customer or supplier
listed on Schedule 4.24.
4.25 Banks. Schedule 4.25 contains a complete and correct
-----
list of the names and locations of all banks in which Company has accounts or
safe deposit boxes and the names of all persons authorized to draw thereon or to
have access thereto. Except as set forth on Schedule 4.25, no person holds a
power of attorney to act on behalf of the Company.
4.26 No Misrepresentation. No representation or warranty of
--------------------
the Seller or any Shareholder Indemnitor contained in this Agreement or in any
schedule hereto or in any certificate or other instrument furnished by the
Seller or any Shareholder Indemnitor to the Purchasers pursuant to the terms
hereof, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby represents and warrants to the Seller
and the Shareholder Indemnitors that:
5.1 Organization and Good Standing. Such Purchaser is a
------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and has all requisite corporate power and authority to
carry on its business as it is now being conducted.
5.2 Authorization of Agreement. Such Purchaser has full
--------------------------
corporate power and authority to execute and deliver this Agreement and each
other agreement, document, instrument or certificate contemplated by this
Agreement or to be executed by such Purchaser in connection with the
consummation of the transactions contemplated by this
24
Agreement (all such other agreements, documents, instruments and certificates
required to be executed by the Purchasers being hereinafter referred to,
collectively, as the "Purchaser Documents") and, subject to receipt of the
approval of the stockholders and the Board of Directors of MLC, to perform fully
its obligations hereunder and thereunder. The execution, delivery and
performance by such Purchaser of this Agreement and each Purchaser Document has
been duly authorized by all necessary action on the part of such Purchaser. This
Agreement has been, and the Purchaser Documents will be at or prior to the
Closing, duly executed and delivered by such Purchaser and (assuming the due
authorization, execution and delivery by the other parties hereto and thereto)
this Agreement constitutes, and the Purchaser Documents when so executed and
delivered will constitute, legal, valid and binding obligations of such
Purchaser, enforceable against such Purchaser in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity).
5.3 No Violations; Consents. None of the execution and
-----------------------
delivery by such Purchaser of this Agreement and the Purchaser Documents, or the
consummation of the transactions contemplated hereby or thereby, or compliance
by such Purchaser with any of the provisions hereof or thereof will (a) conflict
with, or result in the breach of, any provision of the certificate of
incorporation or by-laws of such Purchaser; (b) conflict with, violate, result
in the breach or termination of, or constitute a default or give rise to any
right of termination or acceleration or right to increase the obligations or
otherwise modify the terms under any Contract or Order to which such Purchaser
is a party or by which it or any of its properties or assets is bound or
subject; or (c) subject to receipt of the approval of the stockholders and the
Board of Directors of MLC, constitute a violation of any Law applicable to such
Purchaser. Subject to receipt of the approval of the stockholders and the Board
of Directors of MLC, no consent, waiver, approval, Order,
25
Permit or authorization of, or declaration or filing with, or notification to,
any Person, including, without limitation, any Governmental Body, is required on
the part of such Purchaser in connection with the execution and delivery of this
Agreement or the Purchaser Documents, or the compliance by such Purchaser with
any of the provisions hereof or thereof, except, in each case, for violations,
conflicts, breaches or defaults which individually or in the aggregate would not
materially hinder or impair the transactions contemplated hereby.
5.4 Litigation. There is no Legal Proceeding pending or, to
----------
the knowledge of such Purchaser, threatened, that seeks to enjoin or obtain
damages in respect of the consummation of the transactions contemplated by this
Agreement or that questions the validity of this Agreement, the Purchaser
Documents or any action taken or to be taken by such Purchaser in connection
with the consummation of the transactions contemplated hereby or thereby.
5.5 Brokers. No Person (other than the officers and directors
-------
of such Purchaser) has acted directly or indirectly as a broker, finder or
financial advisor for such Purchaser in connection with the negotiations
relating to or the transactions contemplated by this Agreement and no Person is
entitled to any fee or commission or like payment (other than from such
Purchaser) in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of such Purchaser.
ARTICLE VI
COVENANTS OF THE SELLER AND THE SHAREHOLDER INDEMNITORS
From and after the date hereof and until the Closing, the
Seller and the Shareholder Indemnitors hereby covenant and agree with the
Purchasers that:
6.1 Cooperation. (a) The Seller and the Shareholder
-----------
Indemnitors shall use their reasonable best efforts to cause the consummation of
the transactions
26
contemplated hereby in accordance with the terms and conditions hereof.
(b) At the request of either Purchaser on a case-by-case
basis, the Seller shall execute and deliver instruments sufficient to constitute
and appoint, effective as of the Closing Date, such Purchaser and its successors
and assigns as the true and lawful attorney of Seller with full power of
substitution in the name of such Purchaser or in the name of Seller, but for the
benefit of such Purchaser (i) to collect for the account of such Purchaser any
Assets specified in such Purchaser's request and (ii) to institute and prosecute
all proceedings which such Purchaser may in its sole discretion deem proper in
order to assert or enforce any right, title or interest in, to or under the
Assets, and to defend or compromise any and all actions, suits or proceedings in
respect of such Assets or the Assumed Liabilities.
6.2 Access to the Shareholder Indemnitors' Documents;
-------------------------------------------------
Opportunity to Ask Questions. The Seller and the Shareholder Indemnitors shall
----------------------------
provide either Purchaser with such information as such Purchaser from time to
time reasonably may request with respect to the Business, and shall permit such
Purchaser and any of the directors, officers, employees, counsel,
representatives, accountants and auditors (collectively, the "Purchaser
Representatives") reasonable access, during normal business hours and upon
reasonable prior notice, to the properties, corporate records and books of
accounts of the Business, as such Purchaser from time to time reasonably may
request. No investigation pursuant to this Section shall affect any
representation or warranty given by the Seller and the Shareholder Indemnitors
in this Agreement.
6.3 Conduct of Business.
-------------------
(a) Except as otherwise expressly contemplated by this
Agreement or with the prior written consent of both Purchasers, the Seller and
the Shareholder Indemnitors shall, and shall cause the Company to:
27
(i) conduct the business of the Company only in the ordinary
course consistent with past practice;
(ii) use their best efforts to (A) preserve its present
business operations, organization (including, without limitation,
management and the sales force) and goodwill of the Company and (B)
preserve their present relationship with Persons having business
dealings with the Company;
(iii) maintain (A) all of the assets and properties of the
Company in their current condition, ordinary wear and tear excepted and
(B) insurance upon all of the properties and assets of the Company in
such amounts and of such kinds comparable to that in effect on the date
of this Agreement;
(iv) (A) maintain the books, accounts and records of the
Company in the ordinary course of business consistent with past
practices, (B) continue to collect accounts receivable and pay accounts
payable utilizing normal procedures and without discounting or
accelerating payment of such accounts, and (C) comply with all
contractual and other obligations applicable to the operation of the
Company; and
(v) comply in all material respects with applicable laws,
including, without limitation, Environmental Laws.
(b) Except as otherwise expressly contemplated by this
Agreement or with the prior written consent of both Purchasers, the Seller and
the Shareholder Indemnitors shall not, and shall cause the Company not to:
(i) declare, set aside, make or pay any dividend or other
distribution in respect of the capital stock of the Company or
repurchase, redeem or otherwise acquire any outstanding shares of the
capital stock or other securities of, or other ownership interests in,
the Company;
28
(ii) transfer, issue, sell or dispose of any shares of
capital stock or other securities of the Company or grant options,
warrants, calls or other rights to purchase or otherwise acquire shares
of the capital stock or other securities of the Company;
(iii) effect any recapitalization, reclassification, stock
split or like change in the capitalization of the Company;
(iv) amend the certificate of incorporation or by-laws of the
Company;
(v) (A) materially increase the annual level of compensation
of any employee of the Company, (B) increase the annual level of
compensation payable or to become payable by the Company to any of its
executive officers, (C) grant any unusual or extraordinary bonus,
benefit or other direct or indirect compensation to any employee,
director or consultant, except that the Company may, immediately prior
to the Closing, grant a bonus to Xxxxx X. XxxXxxxxxx in an amount up to
50% of the Income Before Taxes (as such term is defined in Section 14.1
hereof) of the Company, provided that, any such bonus will be paid on
an estimated basis, subject to a post-Closing adjustment following the
closing of Seller's books and review by Seller's and Purchasers'
auditors, other than in the ordinary course consistent with past
practice and in such amounts as are fully reserved against in the
Financial Statements, (D) increase the coverage or benefits available
under any (or create any new) severance pay, termination pay, vacation
pay, company awards, salary continuation for disability, sick leave,
deferred compensation, bonus or other incentive compensation,
insurance, pension or other employee benefit plan or arrangement made
to, for, or with any of the directors, officers, employees, agents or
representatives of the Company or otherwise modify or amend or
terminate any such plan or arrangement or (E) enter into any
employment, deferred compensation, severance, consulting,
non-competition or similar agreement (or amend any such agreement) to
29
which the Company is a party or involving a director, officer or
employee of the Company in his or her capacity as a director, officer
or employee of the Company;
(vi) except for trade payables and for indebtedness for
borrowed money incurred in the ordinary course of business and
consistent with past practice, borrow monies for any reason or draw
down on any line of credit or debt obligation, or become the guarantor,
surety, endorser or otherwise liable for any debt, obligation or
liability (contingent or otherwise) of any other Person;
(vii) subject to any Lien (except for leases that do not
materially impair the use of the property subject thereto in their
respective businesses as presently conducted), any of the properties or
assets (whether tangible or intangible) of the Company;
(viii) acquire any material properties or assets or sell,
assign, transfer, convey, lease or otherwise dispose of any of the
material properties or assets (except for fair consideration in the
ordinary course of business consistent with past practice) of the
Company;
(ix) cancel or compromise any debt or claim or waive or
release any material right of the Company except in the ordinary course
of business consistent with past practice;
(x) enter into any commitment for capital expenditures of
the Company in excess of $35,000 for any individual commitment and
$150,000 for all commitments in the aggregate;
(xi) enter into, modify or terminate any labor or collective
bargaining agreement of the Company or, through negotiation or
otherwise, make any commitment or incur any liability to any labor
organization with respect to the Company;
30
(xii) introduce any material change with respect to the
operation of the Company, including any material change in the types,
nature, composition or quality of its products or services, experience
any material change in any contribution of its product lines to its
revenues or net income, or, other than in the ordinary course of
business, make any change in product specifications or prices or terms
of distributions of such products;
(xiii) permit the Company to enter into any transaction or to
make or enter into any Contract which by reason of its size or
otherwise is not in the ordinary course of business consistent with
past practice;
(xiv) permit the Company to enter into or agree to enter into
any merger or consolidation with, any corporation or other entity, and
not engage in any new business or invest in, make a loan, advance or
capital contribution to, or otherwise acquire the securities of any
other Person;
(xv) except for transfers of cash pursuant to normal cash
management practices, permit the Company to make any investments in or
loans to, or pay any fees or expenses to, or enter into or modify any
Contract with, any Shareholder Indemnitor or any Affiliate of any
Shareholder Indemnitor; or
(xvi) agree to do anything prohibited by this Section 6.3 or
anything which would make any of the representations and warranties of
the Seller or any Shareholder Indemnitor in this Agreement or the
Seller Documents untrue or incorrect in any material respect as of any
time through and including the Closing Date.
6.4 Consents and Conditions; Assignment of Assets. The Seller
---------------------------------------------
and the Shareholder Indemnitors shall use their reasonable best efforts to
obtain all approvals, consents or waivers from all Persons, including, without
limitation, Governmental Bodies, necessary to assign to the
31
Purchasers all of the Seller's interest in the Assets or any claim, right or
benefit arising thereunder or resulting therefrom (each, an "Interest") as soon
as practicable.
6.5 Notices of Certain Events. The Seller and the Shareholder
-------------------------
Indemnitors shall promptly notify the Purchasers of:
(a) any notice or other communication (i) alleging that the
consent of any person is or may be required in connection with the transactions
contemplated by this Agreement, or (ii) from any person to the effect that such
person intends not to continue to conduct business with either Purchaser (as
successor to the Business) after the Closing;
(b) any notice or other communication from any Government Body
in connection with the transactions contemplated by this Agreement; and
(c) any action, suits, claims, investigations or proceedings
to its knowledge commenced or threatened against, relating to or involving or
otherwise affecting the Seller or the Business that, if pending on the date of
this Agreement, would have been required to have been disclosed pursuant to
Section 4.12 hereof or that relate to the consummation of the transactions
contemplated by this Agreement.
6.6 Non-Competition Agreement. The Seller hereby agrees that,
-------------------------
on or prior to the Closing Date, it shall execute and deliver to the Purchasers
a Non-Competition Agreement, substantially in the form of Exhibit E hereto (the
"Non-Competition Agreement").
ARTICLE VII
COVENANTS OF THE PURCHASER
32
From and after the date hereof, and until the Closing Date,
each Purchaser hereby covenants and agrees with the Seller that:
7.1 Reasonable Best Efforts. Subject to such Purchaser's
-----------------------
satisfaction, in its sole discretion, of the results of the due diligence
investigation and review referred to in Section 9.6 hereof, such Purchaser shall
use its reasonable best efforts to cause the consummation of the transactions
contemplated hereby in accordance with the terms and conditions hereof.
7.2 Consents and Conditions. Such Purchaser shall use its
-----------------------
reasonable efforts to obtain all approvals, consents or waivers from Persons,
including, without limitation, Governmental Bodies, necessary to consummate the
transactions contemplated by this Agreement.
ARTICLE VIII
COVENANTS RELATING TO EMPLOYMENT AND EMPLOYEE MATTERS
81. Offer of Employment. (a) Schedule 8.1 hereof is a
-------------------
preliminary list of all Employees as of the date hereof. Within fifteen days
prior to the Closing Date, the Seller shall deliver to the Purchasers a final
list of the employees of Seller, which list shall separately identify those
employees of the Seller (i) who are active employees as of that date (including
those on vacation, sickness, or a leave of absence of less than ninety days for
any reason, including disability) (the "Active Employees"), and (ii) who are not
actively working on such date by reason of a leave of absence of more than
ninety days (the "Inactive Employees").
(b) PG Newco shall employ, effective as of the Closing Date,
all of the Active Employees who have not retired on or prior to the Closing
Date, who have not rejected on or prior to Closing Date PG Newco's offer of
employment, and who are actually at work on the Closing Date; provided, however,
that notwithstanding the foregoing,
33
any temporary or employment agency employees shall be included as Active
Employees solely at the discretion of PG Newco. For any Active Employee who has
not retired or rejected PG Newco's offer of employment on or prior to the
Closing Date but is not actually at work on the Closing Date, the offer of
employment shall continue for a ninety-day period from the Closing Date and the
date of effective employment shall be the date of return to employment within
such ninety-day period.
8.2 Health Plan Benefits. Seller and Purchasers shall take
--------------------
all necessary action and cooperate in good faith with the objective of obtaining
health plan benefits without any pre-existing condition exclusions for the
Transferred Employees effective as of the Closing Date.
ARTICLE IX
CONDITIONS PRECEDENT TO THE PURCHASERS' OBLIGATIONS
The obligation of each Purchaser to consummate the purchase of
the Assets and the assumption of the Assumed Liabilities on the Closing Date is,
at the option of such Purchaser, subject to the satisfaction of the following
conditions:
9.1 Representations, Warranties and Covenants
-----------------------------------------
(a) Each of the representations and warranties of the Seller
and the Shareholder Indemnitors contained herein shall be true and correct in
all material respects on and as of the Closing Date with the same force and
effect as though the same had been made on and as of the Closing Date.
(b) The Seller and the Shareholder Indemnitors shall have
performed and complied in all material respects with the covenants and
provisions of this Agreement required to be performed or complied with by them
at or prior to the Closing Date.
9.2 Deliveries by the Seller to the Purchasers
------------------------------------------
34
At the Closing, the Seller shall deliver, or shall cause to be
delivered, to the Purchasers the following:
(a) a certificate of the Seller, dated as of the Closing Date
and signed by the President of the Seller, certifying as to the fulfillment of
the conditions set forth in Section 9.1;
(b) (i) a Xxxx of Sale, dated the Closing Date, substantially
in the form of Exhibit C, duly executed and delivered by the Seller, and (ii)
executed deeds, assignments, patent assignments, trademark assignments in
recordable form, certificates of title, and such other instruments and documents
as the Purchasers shall reasonably request, transferring to the Purchasers all
of the Seller's right, title and interest in and to the Assets;
(c) an employment agreement in form and substance satisfactory
to the Purchasers, executed and delivered by Xxxxx X. XxxXxxxxxx (the
"Employment Agreement");
(d) an opinion of counsel for the Seller, dated the Closing
Date, substantially in the form attached hereto as Exhibit D;
(e) an affidavit, in a form reasonably satisfactory to the
Purchasers, of the Seller stating under penalties of perjury the Seller's United
States taxpayer identification number and that the Seller is not a foreign
person within the meaning of Section 1445(b)(2) of the Code;
(f) a receipt for the Purchase Price (including the Notes);
(g) a good standing certificate for the Seller from the
Secretary of State of the State of Michigan, dated as soon as practicable prior
to the Closing Date;
(h) a non-competition agreement, dated the Closing Date,
substantially in the form of Exhibit E, duly executed and delivered by Xxxxx X.
XxxXxxxxxx (the "Non-Competition Agreement");
35
(i) a certificate of the Secretary of the Seller as to the
resolutions adopted by the Seller's Board of Directors and shareholders relating
to the transactions contemplated hereby;
(j) copies of all documents evidencing all third party
approvals, licenses, consents, including those listed on Schedule 4.3, and
waivers of rights of first refusal and other rights, necessary on the part of
Seller to consummate the transactions contemplated hereby;
(k) if NEC Corporation ("NEC") has not been invoiced by Seller
in full for certain materials it purchased from Seller for the Midas 3 and Midas
4 Programs, in the approximate amount of $500,000, a letter from NEC (the "NEC
Letter") indicating that NEC will pay Seller for such materials by December 31,
1997, which letter will be validly assigned to PG Newco at the Closing; and
(l) all written representations and warranties of the Seller
and the Shareholder Indemnitors, as required pursuant to the Securities Act of
1933, as amended, in connection with Seller's acquisition of the Notes.
9.3 No Prohibition. No Law or Order of any court or
--------------
administrative agency shall be in effect which prohibits either Purchaser from
consummating the transactions contemplated hereby.
9.4 No Proceeding or Litigation. Except as set forth on
---------------------------
Schedule 4.12, there shall not be instituted, pending, or, to the knowledge of
either Purchaser or the Seller, threatened, any suit, action, investigation,
inquiry, or other proceeding by or before any court or administrative agency or
by any other Person which seeks to enjoin or otherwise prevent consummation of
the transactions contemplated by this Agreement.
9.5 Regulatory Approvals. All Orders, permits, and regulatory
--------------------
approvals applicable to either Purchaser or the Seller and necessary to permit
the consummation of the
36
transactions contemplated by this Agreement shall have been obtained and be in
full force and effect.
9.6 Due Diligence Investigation. The Purchasers shall have
---------------------------
completed their due diligence investigation and review in respect of the Assets
and the Business with satisfactory results in its sole discretion.
9.7 MLC Stockholder Approval. MLC shall have received the
------------------------
requisite consent of its stockholders to the consummation of the transactions
contemplated by this Agreement.
9.8 MLC Board Approval. MLC shall have received the
------------------
requisite approval of its Board of Directors to the consummation of the
transactions contemplated by this Agreement.
ARTICLE X
CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATIONS
The obligation of the Seller to consummate the sale, transfer
and assignment to the Purchasers of the Assets and the assignment of the Assumed
Liabilities on the Closing Date is, at the option of the Seller, subject to the
satisfaction of the following conditions.
10.1 Representations, Warranties and Covenants
-----------------------------------------
(a) Each of the representations and warranties of the
Purchasers contained herein shall be true and correct in all material respects
as of the Closing Date with the same force and effect as though the same had
been made on and as of the Closing Date.
(b) Each Purchaser shall have performed and complied in all
material respects with the covenants and provisions in this Agreement required
herein to be performed or complied with by it at or prior to the Closing Date.
37
10.2 Deliveries by the Purchasers to the Seller. At the
------------------------------------------
Closing, the Purchasers shall deliver to the Seller the following:
(a) a certificate of each Purchaser, dated as of the Closing
Date and signed by an officer of such Purchaser, certifying as to the
fulfillment of the conditions set forth in Section 10.1;
(b) immediately available funds for the Cash Consideration
referred to in Section 2.1 hereof, by wire transfer as provided in Section 2.1
hereof;
(c) the two Notes signed by MLC, each in the aggregate
principal amount of $1,500,000, as described in Section 2.1 hereof;
(d) a certificate of the Secretary of each Purchaser as to the
resolutions adopted by such Purchaser's Board of Directors relating to the
transactions contemplated hereby;
(e) an assumption agreement, substantially in the form of
Exhibit F hereto (the "Assumption Agreement"), dated the Closing Date, duly
executed by PG Newco, evidencing PG Newco's assumption of the Assumed
Liabilities; and
(f) the Employment Agreement, duly executed by PG Newco.
10.3 No Prohibition. No Law or Order of any court or
--------------
administrative agency shall be in effect which prohibits the Seller from
consummating the transactions contemplated hereby.
10.4 No Proceeding or Litigation. There shall not be
---------------------------
instituted, pending, or, to the knowledge of the Seller, threatened, any suit,
action, investigation, inquiry, or other proceeding by or before any court or
administrative agency or by any other Person which seeks to enjoin or otherwise
prevent consummation of the transactions contemplated by this Agreement.
38
10.5 Regulatory Approvals. All Orders, permits, and
--------------------
regulatory approvals applicable to either Purchaser or the Seller and necessary
to permit the consummation of the transactions contemplated by this Agreement
shall have been obtained and be in full force and effect.
ARTICLE XI
ADDITIONAL COVENANTS
11.1 Further Assurances
------------------
(a) From time to time after the Closing Date, the Seller and
the Shareholder Indemnitors shall, at their sole cost and expense (unless
specified otherwise in this Agreement), at the reasonable request of either
Purchaser, execute and deliver such other and further instruments of sale,
assignment, assumption, transfer and conveyance and take such other and further
action as such Purchaser may reasonably request in order to vest in such
Purchaser and put such Purchaser in possession of the Assets as of the Closing
and to transfer to such Purchaser as of the Closing any Contracts and rights of
the Seller relating to the Assets and assure to such Purchaser the benefits
thereof, and, at the reasonable request of the Seller, to give effect, as of the
Closing, to such Purchaser's assumption of the Assumed Liabilities.
(b) To the extent any of the approvals, consents or waivers
referred to in Section 6.4 hereof have not been obtained by the Seller as of the
Closing, the Seller shall use its reasonable best efforts to do the following:
(i) cooperate with the Purchasers in any reasonable and
lawful arrangements designed to provide the benefits of such Interest
to the Purchasers as long as the Purchasers promptly reimburse the
Seller for all payments, charges or other liabilities made or suffered
by the Seller in connection therewith; and
39
(ii) enforce, at the request of the Purchasers and at the
expense and for the account of the Purchasers, any and all rights of
the Seller arising from such Interest against such issuer or grantor
thereof or the other party or parties thereto (including the right to
elect to terminate such Interest in accordance with the terms thereof
upon the written advice of the Purchasers).
(c) To the extent that the Seller enters into lawful
arrangements designed to provide the benefits of any Interest as set forth in
clause (b)(i) above, such Interest shall be deemed to have been assigned to the
Purchasers as of the Closing for purposes of Section 1.1 hereof.
11.2 Public Announcements. Neither the Seller (nor any of its
--------------------
affiliates) nor the Purchasers (nor any of their affiliates) shall make any
public statement, including, without limitation, any press release, 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 (a) by Law, and (b) in the case of MLC,
pursuant to its obligations resulting from the inclusion of its common stock in
the American Stock Exchange, in either case, as advised by counsel.
11.3 Joint Post-closing Covenant of the Seller and the
-------------------------------------------------
Purchasers. The Seller and the Purchasers jointly covenant and agree that, from
----------
and after the Closing Date, the Seller and the Purchasers will cooperate with
each other in defending or prosecuting any action, suit, proceeding,
investigation or audit of the other relating to (a) the preparation and audit of
the Seller's and the Purchasers' tax returns, and (b) any audit of the
Purchasers and/or the Seller with respect to the sales, transfer and similar
taxes imposed by the laws of any state, in each of cases (a) and (b) relating to
the transactions contemplated by this Agreement, and in each such case at the
sole cost and expense of the party requesting cooperation or assistance. In
furtherance hereof, the Purchasers and the Seller further covenant and agree to
respond to all reasonable inquiries
40
related to such matters and to provide, to the extent possible, substantiation
of transactions and to make available and furnish appropriate documents and
personnel in connection therewith.
11.4 Books and Records; Personnel. For a period of six years
----------------------------
after the Closing Date (or such longer period as may be required by any
Governmental Body or ongoing Legal Proceeding):
(a) The Purchasers shall not dispose of or destroy any of the
business records and files of the Business. If the Purchasers wish to dispose of
or destroy such records and files after that time, they shall first give 30
days' prior written notice to the Seller and the Seller shall have the right, at
its option and expense, upon prior written notice to the Purchasers within such
30 day period, to take possession of the records and files within 60 days after
the date of the Seller's notice to the Purchasers.
(b) The Purchasers shall allow the Seller and its
Representatives access to all business records and files of the Business which
are transferred to the Purchasers in connection herewith, during regular
business hours and upon reasonable notice at PG Newco's principal place of
business or at any location where such records are stored, and the Seller shall
have the right, at its own expense, to make copies of any such records and
files; provided, however, that any such access or copying shall be had or done
-------- -------
in such a manner so as not to interfere with the normal conduct of the
Purchasers' business or operations. To the extent commercially practicable, the
Purchasers shall send copies of such business records and files to the Seller,
at the expense of the Purchasers, by overnight courier or other delivery
service, as reasonably requested by the Seller.
(c) The Purchasers shall make available to the Seller, upon
written request and at the Seller's expense (i) the Purchasers' personnel to
assist the Seller in locating and obtaining records and files maintained by the
Purchasers and (ii) any of the Purchasers' personnel previously in the
41
Seller's employ whose assistance or participation is reasonably required by the
Seller in anticipation of, or preparation for, existing or future litigation,
arbitration, administrative proceeding, tax return preparation or other matters
in which the Seller or any of its affiliates is involved and which is related to
the Business.
ARTICLE XII
INDEMNIFICATION AND RELATED MATTERS
12.1 Indemnification
---------------
(a) Irrespective of any due diligence investigation conducted
by the Purchasers or the Purchaser Representatives with regard to the
transactions contemplated hereby, the Seller and each Shareholder Indemnitor
jointly and severally agree to indemnify and hold each Purchaser harmless from
and against any and all liabilities, obligations, damages, losses, deficiencies,
costs, penalties, interest and expenses (collectively, "Losses") arising out of,
based upon, attributable to or resulting from:
(i) any and all Losses incurred or suffered by such
Purchaser resulting from or arising out of any misrepresentation or
breach of warranty made by the Seller or any of the Shareholder
Indemnitors in this Agreement or in any of the Seller Documents;
(ii) any and all Losses incurred or suffered by such
Purchaser resulting from or arising out of the failure of the Seller or
any Shareholder Indemnitor to comply with any of the covenants
contained in this Agreement or in any of the Seller Documents which are
required to be performed by Seller or any Shareholder Indemnitor;
(iii) any and all Losses incurred or suffered by such
Purchaser resulting from or arising out of Excluded Liabilities;
42
(iv) any claims for any injury to person or property
attributable to any goods manufactured or services rendered by the
Seller prior to the Closing, regardless of whether such claims are
asserted prior to or after the Closing (it being understood and agreed
that Losses under this clause (iv) shall be net of any proceeds
received by such Purchaser under any policy of insurance maintained by
such Purchaser in respect of such claims);
(v) any claims for damages, compensation and/or
other employee benefits (including, but not limited to, severance pay,
disability benefits, health, workers' compensation, and death benefits)
(A) accruing at any time with respect to persons who were employed in
the Business and do not become Transferred Employees, (B) accruing
prior to the date a person becomes a Transferred Employee, and (C)
accruing with respect to employment or termination of employment with
the Seller, and related costs and liabilities, regardless of whether
such claims and related costs and liabilities are made or incurred
before, on or after the Closing Date, except wages and vacation to the
extent accrued or reflected on the Closing Balance Sheet;
(vi) any Environmental Claim or any Remedial Action
arising out of or based upon anything relating to the use of the Assets
prior to the Closing, or the operation of the Business prior to the
Closing;
(vii) any third party claims with respect to
occurrences or events which occurred on or prior to the Closing Date
and relate to the Seller and/or its Employees; and
(viii) all actions, suits, proceedings, demands,
assessments, judgments, costs, penalties and expenses, including
reasonable attorneys' fees, incident to the foregoing.
43
(b) PG Newco agrees to indemnify and hold the Seller
harmless from and against any and all Losses arising out of, based upon,
attributable to or resulting from:
(i) any and all Losses incurred or suffered by the
Seller resulting from or arising out of any misrepresentation or breach
of warranty made by PG Newco in this Agreement or in any of the
Purchaser Documents;
(ii) any and all Losses incurred or suffered by the
Seller resulting from or arising out of the failure of PG Newco to
comply with any of the covenants contained in this Agreement or in any
of the Purchaser Documents which are required to be performed PG Newco;
(iii) the Assumed Liabilities;
(iv) any and all claims by Transferred Employees (A)
for compensation and vacation accrued on or prior to the Closing Date
to the extent reflected on the Closing Balance Sheet, and (B) for
damages, compensation, vacation and/or other employee benefits
(including, but not limited to, severance pay, disability benefits,
health, workers' compensation, and death benefits) as provided by PG
Newco accruing at any time after the date a person becomes a
Transferred Employee;
(v) any Environmental Claim or any Remedial Action
arising out of or based upon anything relating to the use of the Assets
after the Closing, or the operation of the Business after the Closing;
(vi) any third party claims with respect to
occurrences or events which occur after the Closing Date and relate to
the operation of the Business by PG Newco after the Closing; and
44
(vii) all actions, suits, proceedings, demands,
assessments, judgments, costs, penalties and expenses, including
reasonable attorneys' fees, incident to the foregoing.
(c) If any indemnification payment under Article XII is
determined to be taxable to the party receiving such payment by any taxing
authority, the paying party shall also indemnify the party receiving such
payment for any Taxes incurred by reason of the receipt of such payment (taking
into account any actual reduction in tax liability to the receiving party) and
any related costs incurred by the party receiving such payment in connection
with such Taxes (or any asserted deficiency, claim, demand, action, suit,
proceeding, judgment or assessment, including the defense or settlement thereof,
relating to such Taxes).
(d) Notwithstanding anything to the contrary contained in
this Agreement, neither the Seller nor any Shareholder Indemnitor, on the one
hand, nor PG Newco, on the other hand, shall be liable for any Losses under this
Article XII unless the aggregate amount of Losses and expenses finally
determined to arise hereunder based upon, attributable to or resulting from the
failure of any representation or warranty to be true and correct, other than the
representations and warranties set forth in Sections 4.9, 4.10, 4.11, 4.12,
4.17, 4.18 and 4.20 hereof (with respect to which the limitations set forth in
this Section 12.1(d) shall not apply), exceeds $50,000 (the "Basket") and, in
such event, the indemnifying party shall be required to pay the entire amount of
such Losses and expenses in excess of $50,000 (the "Deductible").
12.2 Survival of Representations and Warranties. The
------------------------------------------
parties hereto hereby agree that the representations and warranties contained in
this Agreement or in any certificate, document or instrument delivered in
connection herewith, shall survive the execution and delivery of this Agreement,
and the Closing hereunder, regardless of any investigation made by the parties
hereto; provided, however, that any claims or actions with respect thereto
(other than
45
claims for indemnifications with respect to the representation and warranties
contained in Sections 4.9, 4.10, 4.11, 4.12, 4.17, 4.18 and 4.20 which shall
survive for periods coterminous with any applicable statutes of limitation)
shall terminate unless within thirty-six (36) months after the Closing Date
written notice of such claims is given to the Seller and the Shareholder
Indemnitors or such actions are commenced.
12.3 Indemnification Procedures. (a) In the event that any
--------------------------
Legal Proceedings shall be instituted or that any claim or demand ("Claim")
shall be asserted by any Person in respect of which payment may be sought under
Section 12.1 hereof (regardless of the Basket or the Deductible referred to
above), the indemnified party shall reasonably and promptly cause written notice
of the assertion of any Claim of which it has knowledge which is covered by this
indemnity to be forwarded to the indemnifying party. The indemnifying party
shall have the right, at its sole option and expense, to be represented by
counsel of its choice, which must be reasonably satisfactory to the indemnified
party, and to defend against, negotiate, settle or otherwise deal with any Claim
which relates to any Losses indemnified against hereunder. If the indemnifying
party elects to defend against, negotiate, settle or otherwise deal with any
Claim which relates to any Losses indemnified against hereunder, it shall within
ten (10) days (or sooner, if the nature of the Claim so requires) notify the
indemnified party of its intent to do so. If the indemnifying party elects not
to defend against, negotiate, settle or otherwise deal with any Claim which
relates to any Losses indemnified against hereunder, fails to notify the
indemnified party of its election as herein provided or contests its obligation
to indemnify the indemnified party for such Losses under this Agreement, the
indemnified party may defend against, negotiate, settle or otherwise deal with
such Claim. If the indemnified party defends any Claim, then the indemnifying
party shall reimburse the indemnified party for the Expenses of defending such
Claim upon submission of periodic bills. If the indemnifying party shall assume
the defense of any Claim, the indemnified party may participate, at his or its
own expense, in the defense of
46
such Claim; provided, however, that such indemnified party shall be entitled to
-------- -------
participate in any such defense with separate counsel at the expense of the
indemnifying party if, (i) so requested by the indemnifying party to participate
or (ii) in the reasonable opinion of counsel to the indemnified party, a
conflict or potential conflict exists between the indemnified party and the
indemnifying party that would make such separate representation advisable; and
provided, further, that the indemnifying party shall not be required to pay for
-------- -------
more than one such counsel for all indemnified parties in connection with any
Claim. The parties hereto agree to cooperate fully with each other in connection
with the defense, negotiation or settlement of any such Claim.
(b) After any final judgment or award shall have been rendered
by a court, arbitration board or administrative agency of competent jurisdiction
and the expiration of the time in which to appeal therefrom, or a settlement
shall have been consummated, or the indemnified party and the indemnifying party
shall have arrived at a mutually binding agreement with respect to a Claim
hereunder, the indemnified party shall forward to the indemnifying party notice
of any sums due and owing by the indemnifying party pursuant to this Agreement
with respect to such matter and the indemnifying party shall be required to pay
all of the sums so due and owing to the indemnified party by wire transfer of
immediately available funds within 10 business days after the date of such
notice.
(c) The failure of the indemnified party to give reasonably
prompt notice of any Claim shall not release, waive or otherwise affect the
indemnifying party's obligations with respect thereto except to the extent that
the indemnifying party can demonstrate actual loss and prejudice as a result of
such failure.
12.4 Tax Matters. (a) Seller and Purchasers shall cooperate
-----------
fully with each other and make available or cause to be made available to each
other in a timely fashion such tax data, prior tax returns and filings and other
information as may be reasonably required for the
47
preparation by Purchasers or Seller of any tax returns, elections, consents or
certificates required to be prepared and filed by Purchasers or Seller and any
audit or other examination by any taxing authority, or judicial or
administrative proceeding relating to liability for Taxes. Purchasers and Seller
will each retain and provide to the other party all records and other
information which may be relevant to any such Tax Return, audit or examination,
proceeding or determination, and will each provide the other party with any
final determination of any such audit or examination, proceeding or
determination that affects any amount required to be shown on any Tax Return of
the other party for any period. Without limiting the generality of the
foregoing, each of the Purchasers and Seller will retain copies of all Tax
Returns, supporting work schedules and other records relating to tax periods or
portions thereof ending prior to or on the Closing Date.
(b) Seller and each Shareholder Indemnitor jointly and
severally agree to be responsible for, and indemnify and hold harmless each
Purchaser against all losses, claims, damages, liabilities (liquidated or
unliquidated, accrued, contingent, or otherwise), obligations, judgments,
settlements, reasonable out-of-pocket costs, expenses and attorneys' fees
(including such costs, expenses and attorneys' fees incurred in connection with
any investigation or in enforcing such right of indemnification against any
Indemnitor), fines and penalties, if any (collectively "Damages") attributable
to all Taxes with respect to the ownership, use or leasing of the Assets on or
prior to the Closing Date and PG Newco shall be responsible for, and shall
indemnify and hold harmless Seller, in respect of any Damages attributable to
all Taxes with respect to the ownership, use or leasing of the Assets after the
Closing Date. Seller's share of all real and personal property Taxes, state and
local ad valorem Taxes and assessments applicable to the Assets for any period
commencing on or prior to the Closing Date and ending after the Closing Date
shall be determined on a pro rata basis based on the length of such period and
when the Closing Date occurs therein. Seller and each Shareholder Indemnitor
jointly and severally agree to indemnify and hold
48
harmless each Purchaser, in respect of any Damages attributable to Taxes of
Seller in respect of periods prior to the Closing (which Taxes shall be
determined on the basis of an interim closing of the books).
(c) Seller agrees to furnish either Purchaser upon request
clearance certificates or similar documents that may be required by any state,
local or other taxing authority to relieve such Purchaser of any obligations to
withhold any portion of the purchase consideration to be transferred pursuant to
Article II hereof.
ARTICLE XIII
TERMINATION
13.1 Termination. This Agreement may be terminated:
-----------
(a) by the written agreement of each Purchaser and the Seller;
(b) by either Purchaser or by the Seller if there shall be in
effect a non-appealable order of a court of competent jurisdiction permanently
prohibiting the consummation of the transactions contemplated hereby;
(c) by either Purchaser or by the Seller or the Shareholder
Indemnitors if the stockholders of MLC fail to approve the transactions to be
consummated in connection herewith at any meeting of the stockholders of MLC
called and held for such purpose; and
(d) by either Purchaser or by the Seller if the Closing shall
not have occurred on or before June 30, 1997.
13.2 Liabilities After Termination. Upon any termination of
-----------------------------
this Agreement pursuant to Section 13.1 hereof, no party hereto shall thereafter
have any further liability or obligation hereunder, but no such termination
shall relieve either party hereto of any liability to the
49
other party hereto for any breach of this Agreement prior to the date of such
termination.
ARTICLE XIV
MISCELLANEOUS
14.1 Certain Defintions. As used in this Agreement, the
------------------
following terms have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Accounts Receivable" has the meaning set forth in Section
-------------------
1.1(c) hereof.
"Active Employees" has the meaning set forth in Section 8.1(a)
----------------
hereof.
"Affiliate" means, with respect to any Person, any other
---------
Person controlling, controlled by or under common control with such Person.
"Assets" has the meaning set forth in Section 1.1 hereof.
------
"Assumed Liabilities" has the meaning set forth in Section 1.3
-------------------
hereof.
"Benefit Arrangements" has the meaning set forth in Section
--------------------
4.11(b).
"Business" has the meaning set forth in the recitals hereto.
--------
"Cash Consideration" has the meaning set forth in Section 2.1
------------------
hereof.
"Closing" means the consummation of the transactions
-------
contemplated by this Agreement.
50
"Closing Balance Sheet" means that certain Statement of Assets
---------------------
and Assumed Liabilities for the Business as of the Closing Date, prepared by the
Purchasers and Seller as soon as practicable (but in no event later than 30
days) following the Closing Date, and delivered to Ernst & Young LLP
(Purchasers' accountant).
"Closing Date" has the meaning set forth in Section 3.1
------------
hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Contract" means any contract (including, without limitation,
--------
any resale agreement and any manufacturer authorization or medallion or sales or
distribution contract), agreement, indenture, note, bond, loan, instrument,
lease, conditional sale contract, mortgage, license, franchise, insurance
policy, commitment or other arrangement or agreement, whether written or oral.
"Employee Benefit Plan" has the meaning set forth in Section
---------------------
4.11(b) hereof.
"Employees" means all persons employed in the Business,
---------
including any persons on disability, sick leave, layoff or leave of absence from
the Business.
"Environmental Claim" means any allegation, notice of
-------------------
violation, action, claim, Lien, demand, abatement or other Order or direction
(conditional or otherwise) by any Governmental Body or any other Person for
personal injury (including sickness, disease or death), tangible or intangible
property damage, damage to the environment, nuisance, pollution, contamination
or other adverse effects on the environment, or for fines, penalties, or
restrictions resulting from or based upon (a) the existence, or the continuation
of the existence, of a Release (including, without limitation, sudden or
non-sudden accidental or non-accidental Releases) of, or exposure to, any
Hazardous Material or other substance, chemical, material, pollutant,
contaminant, odor, audible noise, or other Release in, into
51
or onto the environment (including, without limitation, the air, soil, surface
or groundwater) at, in, by, from or related to any of the Leased Real Estate or
any activities conducted thereon; (b) the environmental aspects of the
transportation, storage, treatment or disposal of Hazardous Materials in
connection with the operation of any of the Business; or (iii) the violation, or
alleged violation, of any Environmental Law, Order or Permit of or from any
Governmental Body relating to environmental matters connected with the Business.
"Environmental Law" has the meaning set forth in Section
-----------------
4.17(a).
"ERISA" means the Employee Retirement Income Security Act of
-----
1974, as amended.
"Excluded Assets" has the meaning set forth in Section 1.2
---------------
hereof.
"Financial Statements" has the meaning set forth in Section
--------------------
4.6 hereof.
"GAAP" means generally accepted accounting principles in the
----
United States as in effect from time to time.
"Governmental Body" means any government or governmental or
-----------------
regulatory body thereof, or political subdivision thereof, whether federal,
state, local or foreign, or any agency or instrumentality thereof, or any court
or arbitrator (public or private).
"Hazardous Material" means any substance, material or waste,
------------------
or any constituent thereof, which is regulated by any local Governmental Body,
Governmental Body in any jurisdiction in which the Seller or any Subsidiary or
affiliate of the Seller conducts business, or the United States or other
national government, or is regulated by or forms the basis of liability under
any Environmental Law, including, without limitation, any material or substance
which is defined as a "hazardous waste," "hazardous
52
material," "hazardous substance," "extremely hazardous waste" or "restricted
hazardous waste," "subject waste," "contaminants," "toxic waste" or "toxic
substance" under any provision of Law, including but not limited to, petroleum
products, asbestos and polychlorinated biphenyls.
"Inactive Employees" has the meaning set forth in Section
------------------
8.1(a) hereof.
"Income Before Taxes" shall mean that amount which is equal to
-------------------
the increase in the income before taxes of the Seller, for the period beginning
December 1, 1996 and ending on the Closing Date. For purposes of such
calculation, the income before taxes of the Seller as of December 1, 1996 are
agreed to be $1,850,212.47, as set forth on Seller's income statement for the
period from July 1, 1996 to November 30, 1996 (the "Income Statement"). For
----------------
purposes of the calculation of Income Before Taxes, such income is calculated
without regard to federal, state or local income taxes. The Income Before Taxes
shall be jointly determined by the respective accountants for Seller and
Purchasers using the same methods employed by Seller's accountants in
determining the income before taxes shown on the Income Statement. If the
respective accountants for Seller and Purchasers cannot agree on the Income
Before Taxes, they shall together select a third accounting firm to render a
binding determination, the costs of which third firm shall be shared equally by
Seller and Purchasers.
"Indemnitee" has the meaning set forth in Section 12.3(a)
----------
hereof.
"Indemnitor" has the meaning set forth in Section 12.3(a)
----------
hereof.
"Initial Balance Sheet" means the unaudited balance sheet of
---------------------
the Business at November 30, 1996, attached as part of Schedule 4.6 hereto.
"Insolvency Event" means any of the following events: (a) any
----------------
Person, pursuant to or within the meaning of any bankruptcy or insolvency law:
(i) commences a
53
voluntary case; (ii) consents to the entry of an order for relief against it in
an involuntary case; (iii) consents to the appointment of a custodian of it or
for all or substantially all of its property; (iv) makes a general assignment
for the benefit of its creditors; (v) is unable or admits it is unable to pay
its debts as the same become due; (vi) commences, or has commenced against it,
any proceeding for liquidation or dissolution; or (vii) takes any steps to
accomplish any of the foregoing; or (b) a court of competent jurisdiction enters
an order or decree under any bankruptcy or insolvency law that: (i) is for
relief against such Person in an involuntary case; (ii) appoints a custodian of
such Person or for all or substantially all of its property; or (iii) orders the
liquidation or dissolution of such Person.
"Intangible Assets" has the meaning set forth in Section
-----------------
1.1(f) hereof.
"Interest" has the meaning set forth in Section 6.4 hereof.
--------
"Law" means any federal, state, local or foreign law
---
(including common law), statute, code, ordinance, rule, or regulation.
"Leased Real Property" has the meaning set forth in Section
--------------------
1.1(d) hereof.
"Legal Proceeding" means any judicial, administrative or
----------------
arbitral action, suit, proceeding (public or private), claim, investigation or
governmental proceeding.
"Lien" means any lien, pledge, mortgage, deed of trust,
----
security interest, claim, lease, charge, option, right of first refusal,
easement or other real estate declaration, covenant, condition, restriction or
servitude, transfer restriction under any shareholder or similar agreement,
encumbrance or any other restriction or right in favor of any third party.
54
"Material Adverse Change" means any material adverse change
-----------------------
on, or in, any material portion of the Assets or the business, condition
(financial or otherwise), results of operations or liabilities of the Business.
"Material Adverse Effect" means an effect that results in or
-----------------------
causes, or has a reasonable likelihood of resulting in or causing, a Material
Adverse Change.
"NEC Letter" has the meaning set forth in Section 9.2(k)
----------
hereof.
"Notes" has the meaning set forth in Section 2.1 hereof.
-----
"Notice of Hearing" has the meaning set forth in Section 4.3
-----------------
hereof.
"Order" means any order, injunction, judgment, decree, ruling,
-----
writ, assessment or arbitration award.
"Patent-Related Assets" has the meaning set forth in Section
---------------------
1.1(e) hereof.
"Permit" means any written approval, authorization, consent,
------
franchise, license, permit or certificate by any Governmental Body.
"Permit Application" has the meaning set forth in Section 4.3
------------------
hereof.
"Permitted Exceptions" means (a) statutory Liens for current
--------------------
taxes, assessments or other governmental charges not yet delinquent or the
amount or validity of which is being contested in good faith by appropriate
proceedings, (b) mechanics', carriers', workers', repairers' and similar Liens
arising or incurred in the ordinary course of business that are not in the
aggregate material to the Business or the Assets, (c) zoning, entitlement and
other land use and environmental regulations by Governmental Bodies, provided
that such regulations have not been violated, and (d) purchase money Liens or
purchase money security interests
55
upon or in any Inventory acquired or held by the Seller in the ordinary course
of business to secure the purchase price of such Inventory or to secure
indebtedness incurred solely for the purpose of financing the acquisition of
such Inventory, as set forth on Schedule 14.1 hereto.
"Person" means any individual, corporation, partnership, firm,
------
joint venture, association, joint-stock company, limited liability company,
trust, unincorporated organization or Governmental Body.
"Purchase Price" has the meaning set forth in Section 2.1
--------------
hereof.
"Purchasers" has the meaning set forth in the recitals hereto.
----------
"Purchaser Documents" has the meaning set forth in Section 5.2
-------------------
hereof.
"Purchaser Representatives" has the meaning set forth in
-------------------------
Section 6.2 hereof.
"Remedial Action" means any action, including, without
---------------
limitation, any capital expenditure, required or voluntarily undertaken to (a)
clean up, remove, treat, or in any other way address any Hazardous Material or
other substance in the indoor or outdoor environment, (b) prevent the Release or
threat of Release, or minimize the further Release of any Hazardous Material or
other substance so it does not migrate or endanger or threaten to endanger
public health or welfare of the indoor or outdoor environment, (c) perform
pre-remedial studies and investigations or post-remedial monitoring and care, or
(d) bring any Asset into compliance with all Environmental Laws and Permits.
"Seller" has the meaning set forth in the recitals hereto.
------
"Seller Documents" has the meaning set forth in Section 4.2
----------------
hereof.
56
"Tax Returns" shall mean any report, return, information
-----------
return or other information required to be supplied to a taxing authority in
connection with Taxes.
"Taxes" means (i) all federal, state, local or foreign taxes,
-----
charges, fees, imposts, levies or other assessments, including, without
limitation, all net income, gross receipts, capital, sales, use, ad valorem,
value added, transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise,
severance, stamp, occupation, property and estimated taxes, customs duties,
fees, assessments and charges of any kind whatsoever, (ii) all interest,
penalties, fines, additions to tax or additional amounts imposed by any taxing
authority in connection with any item described in clause (i) and (iii) any
transferee liability or liability pursuant to contract or other arrangement in
respect of any items described in clauses (i) and/or (ii).
"Transferred Employees" means all Active Employees who accept
---------------------
offers of employment from PG Newco on or after the Closing Date.
"Transferred Plans" has the meaning set forth in Section 8.2
-----------------
hereof.
14.2 Prorations. (a) PG Newco and the Seller hereby agree as
----------
follows with regard to prorations applicable to the consummation of the
transactions contemplated hereby. The parties agree that all operational
expenses incurred directly in the operation of the Business, including, without
limitation, utility bills, the expense of supplies, the expense of fuel, and the
like, shall be prorated between the parties as of the Closing Date, and as of
the Closing Date shall become the obligation and responsibility of PG Newco.
Prorations which are to be effected on the Closing Date shall be made on the
Closing Date or, if such prorations cannot reasonably be made as of the Closing
Date, as soon thereafter as possible and "as of" the Closing Date.
57
(b) All personal and real property taxes and special and
general assessments relating to the Assets shall be prorated by the parties as
of the Closing Date, and all such taxes applicable to periods of time prior to
and through such date shall be the sole obligation, responsibility and expense
of the Seller, and shall be paid by the Seller. All such assessments and taxes
applicable to periods following the Closing Date shall be the sole obligation,
responsibility and expense of PG Newco.
14.3 Wavier of Compliance with Bulk Transfer Laws. The
--------------------------------------------
Purchasers hereby waive compliance by Seller with the provisions of the "bulk
sales", "bulk transfer" or similar laws of any state of the United States. The
Seller and each Shareholder Indemnitor hereby jointly and severally indemnify
the Purchasers from any Losses resulting from Seller's failure to comply with
any such "bulk sales," "bulk transfer" or similar laws.
14.4 Intentionally left blank
14.5 Entire Agreements. This Agreement (with its Schedules and
-----------------
Exhibits) contains, and is intended as, a complete statement of all of the terms
and the arrangements between the parties hereto with respect to the matters
provided for herein, and supersedes any and all previous agreements and
understandings between the parties hereto with respect to those matters.
14.6 Governing Law. This Agreement shall be construed in
-------------
accordance with and governed by the laws of the State of Delaware applicable to
agreements made and to be performed in such jurisdiction. Except as expressly
set forth in Article XII hereof, any action to enforce, which arises out of or
in any way relates to, any of the provisions of this Agreement or the
instruments, agreements and other documents contemplated hereby shall be brought
and prosecuted in the courts of the State of Delaware or of the United States
for the District of Delaware. Each party irrevocably: (a) submits to the
exclusive jurisdiction of the aforesaid courts, and (b) waives any objection
which it may have at any time to the laying of venue of any suit,
58
action or proceeding ("Proceedings") brought in any such court, waives any claim
that such Proceedings have been brought in an inconvenient forum and further
waives the right to object, with respect to such Proceedings, that such court
does not have jurisdiction over such party. The parties irrevocably consent to
service of process given in the manner provided for notices in Section 14.10.
Nothing in this Agreement will affect the right of any party to serve process in
any other manner permitted by law.
14.7 Transfer and Other Taxes. The Seller shall be responsible
------------------------
for the cost of all transfer and documentary taxes and fees imposed with respect
to instruments of conveyance in the transaction contemplated hereby and shall
bear the cost of all sales, use, gains, excise and other transfer or similar
taxes applicable in respect of the transfer of the Assets contemplated
hereunder. The Seller shall execute and deliver to the Purchasers at the Closing
any certificates or other documents as the Purchasers may reasonably request to
perfect any exemption from any such transfer, documentary, sales, gains, excise
or use tax.
14.8 Expenses. Each of the parties hereto shall bear its own
--------
expenses (including, without limitation, fees and disbursements of its counsel,
accountants, investment bankers, brokers and other experts), incurred by it in
connection with the preparation, negotiation, execution, delivery and
performance of this Agreement, each of the other documents and instruments
executed in connection with or contemplated by this Agreement and the
consummation of the transactions contemplated hereby and thereby.
14.9 Table of Contents and Headings. The table of contents and
------------------------------
section headings of this Agreement are for reference purposes only and are to be
given no effect in the construction or interpretation of this Agreement.
14.10 Notices. All notices and other communications under this
-------
Agreement shall be in writing (including, without limitation, telegraphic,
telex, telecopy or cable communication) and mailed, telegraphed, telexed,
telecopied, cabled or delivered by hand or by a nationally
59
recognized courier service guaranteeing overnight delivery to a party at the
following address (or to such other address as such party may have specified by
notice given to the other party pursuant to this provision):
If to the Seller or any of its stockholders, to:
Xxxxx X. XxxXxxxxxx
c/o PG Design Electronics Inc.
00000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
With a copy to:
Xxxxx X. Xxxxxxx, Esq.
Colombo & Colombo
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
X.X. Xxx 0000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000-0000
Facsimile: (000) 000-0000
If to either Purchaser, to:
PG Newco Corp.
c/o Milwaukee Land Company
000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Facsimile: (000) 000-0000
60
With a copy to:
Xxxxxxx X. Xxxxx, Esq.
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
All such notices and communications shall, when mailed, telegraphed, telexed,
telecopied, cabled or delivered, be effective three days after deposit in the
mails, delivered to the telegraph company, confirmed by telex answerback,
telecopied with confirmation of receipt, delivered to the cable company,
delivered by hand to the addressee or one day after delivery to the courier
service.
14.11 Severability. The invalidity or unenforceability of any
------------
provision of this Agreement shall not affect the validly or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect.
14.12 Binding Effect; No Assignment. This Agreement shall be binding
-----------------------------
upon and inure to the benefit of the parties and their respective successors and
assigns. Nothing in this Agreement shall create or be deemed to create any third
party beneficiary rights in any person or entity not party to this Agreement. No
assignment of this Agreement or of any rights or obligations hereunder may be
made by any party (by operation of law or otherwise) without the prior written
consent of each of the other parties hereto and any attempted assignment without
such required consents shall be void.
14.13 Amendments. (a) Any provision of this Agreement may be amended
----------
or waived prior to the Closing Date if, and only if, such amendment or waiver is
in writing and signed, (i) in the case of an amendment, by both Purchasers, the
Seller, and the Shareholder Indemnitors, and (ii) in the case of a waiver, by
the party against whom the waiver is to be effective.
61
(b) No failure or delay by either party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or future exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
14.14 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
62
IN WITNESS WHEREOF, the parties hereto have executed this instrument as
of the date and year first above written.
MILWAUKEE LAND COMPANY
By: /s/ Xxxxx Xxxxxxxx
-----------------------------
Name: Xxxxx Xxxxxxxx
Title: President and Chief
Executive Officer
PG NEWCO CORP.
By: /s/ Xxxx X. Xxxxxxxxxx
-----------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Vice President - Finance
PG DESIGN ELECTRONICS, INC.
By: /s/ Xxxxx X. XxxXxxxxxx
-----------------------------
Name: Xxxxx X. XxxXxxxxxx
Title: President
/s/ Xxxxx X. XxxXxxxxxx
-----------------------------
Xxxxx X. XxxXxxxxxx, as
Shareholder Indemnitor
/s/ Xxxxxx X. XxxXxxxxxx
-----------------------------
Xxxxxx X. XxxXxxxxxx, as
Shareholder Indemnitor
/s/ Xxxxx XxxXxxxxxx
-----------------------------
Xxxxx XxxXxxxxxx, as
Shareholder Indemnitor
63
ASSET PURCHASE AGREEMENT
AMONG
MILWAUKEE LAND COMPANY
AND
PG NEWCO CORP.
as Purchasers
AND
PG DESIGN ELECTRONICS, INC.
as Seller
AND
THE SHAREHOLDER INDEMNITORS NAMED HEREIN
Dated as of April 4, 1997
Table of Contents
-----------------
Page
----
ARTICLE I
SALE AND PURCHASE OF ASSETS
1.1 Acquisition and Transfer of Assets............................. 1
1.2 Excluded Assets................................................ 4
1.3 Assumed Liabilities............................................ 5
ARTICLE II
PURCHASE PRICE
2.1 Purchase Price and Payment..................................... 5
2.2 Allocation of Purchase Price................................... 6
ARTICLE III
THE CLOSING
3.1 Closing Date................................................... 6
3.2 Proceedings at Closing......................................... 6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE
SHAREHOLDER INDEMNITORS
4.1 Organization, Good Standing and Corporate Records.............. 7
4.2 Authorization of Agreement..................................... 8
4.3 No Violations; Consents........................................ 8
4.4 Title to Assets Other than Leased Real Property................ 9
4.5 Leased Real Property........................................... 9
4.6 Financial Statements........................................... 10
4.7 Absence of Certain Developments................................ 11
4.8 Material Contracts............................................. 13
4.9 Intangible Property............................................ 14
4.10 Tax and Other Returns and Reports............................. 14
4.11 Employees and Employee Benefits............................... 16
4.12 Litigation.................................................... 17
4.13 Compliance with Law........................................... 17
(i)
Page
----
4.14 Receivables................................................... 17
4.15 Inventory..................................................... 18
4.16 Assets Necessary to Conduct Business.......................... 18
4.17 Environmental Matters......................................... 18
4.18 Brokers....................................................... 18
4.19 Permits....................................................... 19
4.20 Ownership; Subsidiaries....................................... 19
4.21 No Undisclosed Liabilities.................................... 20
4.22 Insurance..................................................... 20
4.23 Related Party Transactions.................................... 20
4.24 Customers and Suppliers....................................... 20
4.25 Banks......................................................... 21
4.26 No Misrepresentation.......................................... 21
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
5.1 Organization and Good Standing................................. 21
5.2 Authorization of Agreement..................................... 21
5.3 No Violations; Consents........................................ 22
5.4 Litigation..................................................... 23
5.5 Brokers........................................................ 23
ARTICLE VI
COVENANTS OF THE SELLER AND THE SHAREHOLDER INDEMNITORS
6.1 Cooperation.................................................... 23
6.2 Access to the Shareholder Indemnitors'
Documents; Opportunity to Ask Questions..................... 24
6.3 Conduct of Business............................................ 24
6.4 Consents and Conditions; Assignment of Assets.................. 27
6.5 Notices of Certain Events...................................... 28
6.6 Non-Competition Agreement...................................... 28
ARTICLE VII
COVENANTS OF THE PURCHASER
7.1 Reasonable Best Efforts........................................ 29
7.2 Consents and Conditions........................................ 29
ARTICLE VIII
COVENANTS RELATING TO EMPLOYMENT AND EMPLOYEE MATTERS
(ii)
Page
----
8.1 Offer of Employment............................................ 29
8.2 Health Plan Benefits........................................... 30
ARTICLE IX
CONDITIONS PRECEDENT TO THE PURCHASERS' OBLIGATIONS
9.1 Representations, Warranties and Covenants...................... 30
9.2 Deliveries by the Seller to the Purchasers..................... 30
9.3 No Prohibition................................................. 32
9.4 No Proceeding or Litigation.................................... 32
9.5 Regulatory Approvals........................................... 32
9.6 Due Diligence Investigation.................................... 32
9.7 MLC Stockholder Approval....................................... 32
9.8 MLC Board Approval............................................. 32
ARTICLE X
CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATIONS
10.1 Representations, Warranties and Covenants..................... 33
10.2 Deliveries by the Purchasers to the Seller.................... 33
10.3 No Prohibition................................................ 33
10.4 No Proceeding or Litigation................................... 34
10.5 Regulatory Approvals.......................................... 34
ARTICLE XI
ADDITIONAL COVENANTS
11.1 Further Assurances............................................. 34
11.2 Public Announcements........................................... 35
11.3 Joint Post-Closing Covenant of the Seller and
the Purchasers............................................. 35
11.4 Books and Records; Personnel................................... 36
ARTICLE XII
INDEMNIFICATION AND RELATED MATTERS
12.1 Indemnification............................................... 37
12.2 Survival of Representations and Warranties.................... 40
12.3 Indemnification Procedures.................................... 40
12.4 Tax Matters................................................... 41
ARTICLE XIII
(iii)
Page
----
TERMINATION
13.1 Termination................................................... 43
13.2 Liabilities After Termination................................. 43
ARTICLE XIV
MISCELLANEOUS
14.1 Certain Definitions........................................... 43
14.2 Prorations.................................................... 50
14.3 Waiver of Compliance with Bulk Transfer Laws.................. 51
14.4 Intentionally left blank...................................... 51
14.5 Entire Agreement.............................................. 51
14.6 Governing Law................................................. 51
14.7 Transfer and Other Taxes...................................... 51
14.8 Expenses...................................................... 52
14.9 Table of Contents and Headings................................ 52
14.10 Notices...................................................... 52
14.11 Severability................................................. 53
14.12 Binding Effect; No Assignment................................ 53
14.13 Amendments................................................... 53
14.14 Counterparts................................................. 54
SCHEDULES AND EXHIBITS
Schedule 1.1(d) -- Leased Real Property
Schedule 1.1(e) -- Patents and Patent Applications
Schedule 1.1(f) -- Intangible Assets
Schedule 1.1(i) -- Permits
Schedule 1.1(j) -- Included Contracts
Schedule 1.2(b) -- Excluded Contracts
Schedule 1.2(f) -- Excluded Assets
Schedule 4.1 -- Foreign Qualifications
Schedule 4.3 -- Consents
Schedule 4.6 -- Financial Statements
Schedule 4.7(d) -- Severance Agreement
Schedule 4.7(e) -- Contracts for Equipment
Schedule 4.7(k) -- Capital Expenditures
Schedule 4.7(m) -- Certain Distributions
Schedule 4.10 -- Tax Returns and Other Reports
Schedule 4.11(b)(i) -- Employee Benefit Plans
(iv)
Schedule 4.11(b)(ii) -- Employment and Severance Contracts
Schedule 4.12 -- Litigation
Schedule 4.18 -- Brokers
Schedule 4.22 -- Insurance Policies
Schedule 4.23 -- Related Party Transactions
Schedule 4.24 -- Customers and Suppliers
Schedule 4.25 -- Banks
Schedule 6.3(b)(viii) -- Material Properties and Assets
Schedule 8.1 -- Certain Employees
Schedule 14.1 -- Purchase Money Liens
Exhibit A -- Form of Employment Agreement
Exhibit B -- Purchase Price Allocation
Exhibit C -- Form of Xxxx of Sale
Exhibit D -- Form of Opinion of Seller's Counsel
Exhibit E -- Form of Non-Competition Agreement
Exhibit F -- Form of Assumption Agreement
Exhibit G -- Form of Notes
(v)
