E-5
Exhibit 10.11
ASSET PURCHASE AGREEMENT
EFFECTIVE AS OF
February 28, 1998
among
CAE U.S. INC.
(Buyer)
and
NEY ULTRASONICS INC.
(Seller)
and
XXXXXXXX GROUP, INC.
(Xxxxxxxx)
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is effective as of February
28, 1998, among CAE U.S. INC., a Delaware corporation ("Buyer"), NEY ULTRASONICS
INC., a Delaware corporation ("Seller") and XXXXXXXX GROUP, INC., a Connecticut
corporation ("Xxxxxxxx").
R E C I T A L S:
The Seller desires to sell to Buyer, and Buyer desires to acquire from
the Seller, all of the assets used by Seller in the operation of its business,
except as specifically excluded herein (the "Business") for the consideration
and on the terms and conditions set forth in this Agreement.
Xxxxxxxx is the ultimate parent company of Seller and has agreed to
make certain representations and warranties contained in this Agreement and
indemnify the Buyer pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and undertakings hereinafter set forth, the parties hereto, intending
to be legally bound, do hereby agree as follows:
1. DEFINITIONS
Certain capitalized terms used in this Agreement have the
meanings specified in the Glossary attached hereto. Other capitalized terms are
defined in the body of this Agreement.
2. SALE AND TRANSFER OF ASSETS
2.1 ASSETS
(a) Subject to the terms and conditions of this Agreement, at the Closing,
the Seller will sell, transfer and convey all of the following assets to Buyer,
and Buyer will purchase all of the following assets and business from the
Seller:
(i) all inventory, including without limitation, raw materials,
work-in-progress, finished goods and replacement parts (collectively, the
"Inventory") which exists on the Closing Date (as defined below);
(ii) all office supplies, maintenance supplies, packaging materials, spare
parts and similar items of the Business (collectively, the "Office Supplies")
which exist on the Closing Date (as defined below);
(iii) all accounts, accounts receivable, notes and notes receivable
relating to the Business existing on the Closing Date which are payable to the
Seller, including any security held by the Seller for the payment thereof (the
accounts, accounts receivable, notes and notes receivable, including any related
security therein, to be transferred to the Buyer pursuant hereto are
collectively referred to herein as the "Accounts Receivable");
(iv) all prepaid expenses of the Seller relating to the Business existing
on the Closing Date other than those related to Excluded Assets (as defined
below).
(v) all rights of the Seller under the contracts, agreements, leases,
licenses and other instruments relating to the Business all as set forth in Part
3.17(a) and Part 3.17(b) of the Disclosure Schedule (as defined below);
(vi) originals or copies of all of the Seller's books, records and
accounts, correspondence, production records, technical, accounting,
manufacturing and procedural manuals, customer lists, employment records,
studies, reports or summaries relating to any environmental conditions or
consequences of any operation relating to the Business, present or former, as
well as all studies, reports or summaries relating to any environmental aspect
or the general condition of the Assets (as defined below), and any confidential
information which has been reduced to writing relating to or arising out of the
Business;
(vii) all rights of the Seller under express or implied warranties from the
suppliers of the Business;
(viii) all of the machinery, computer and other equipment, tools, hardware,
maintenance, machinery and equipment and furniture, vehicles, and personal
property relating to the Business owned, leased or used by the Seller on the
Closing Date unless specifically excluded herein as an Excluded Asset (as
defined below), whether or not reflected as capital assets in the accounting
records of the Seller relating to the Business (collectively, the "Fixed
Assets");
(ix) all of the Seller's right, title and interest in and to all
Intellectual Property Assets, as defined in Section 3.22; and
(x) except as specifically provided in Subsection 2.1(b) hereof, all other
assets, properties, claims, rights and interests of the Seller relating to the
Business which exist on the Closing Date, of every kind and nature and
description, whether tangible or intangible, real, personal or mixed.
(b) Notwithstanding the provisions of paragraph (a) above, the assets to be
transferred to the Buyer under this Agreement shall not include those assets
listed in Part 2.1(b) of the Disclosure Schedule (the "Excluded Assets").
(c) The Inventory, Office Supplies, Accounts Receivable, Assumed Contracts,
Fixed Assets, Intellectual Property Assets, Software and other properties,
assets and business of the Seller relating to the Business described in
paragraph (a) above, other than the Excluded Assets, shall be referred to
collectively as the "Assets."
2.2 ASSUMPTION OF LIABILITIES
(a) On and after the Closing Date, the Buyer shall be responsible for and
hereby assumes and agrees to perform, pay and discharge the following
liabilities, obligations and commitments of the Seller relating to the Business
(the "Assumed Liabilities"):
(i) all trade accounts payable and accrued expenses of the Seller relating
to the Business incurred in the ordinary course of business through the Closing
Date, other than liabilities and liens for Taxes or deferred Taxes, accounts
payable which are outstanding for more than three (3) months as of the Closing
Date and accounts payable that are contingent or are not fixed in amount as of
the Closing Date;
(ii) all obligations of the Seller relating to the Business continuing
after the Closing under the Assumed Contracts set forth in Part 3.17(a) of the
Disclosure Schedule;
(iii) all other liabilities and obligations of the Seller specifically set
forth in Part 2.2 of the Disclosure Schedule; and
(iv) any liability in respect of product liability, product warranty and
other claims and obligations respecting products and services as contemplated in
Section 2.3(a).
(b) The Buyer shall not at the Closing assume or agree to perform, pay or
discharge, and the Seller shall remain unconditionally liable for, all
obligations, liabilities and commitments, fixed or contingent, of the Seller
other than the Assumed Liabilities including, but not limited to, all
pre-Closing Date obligations and liabilities of the Seller, of any nature
whatsoever.
(c) Notwithstanding any provision herein to the contrary, the Buyer shall
be solely liable for the prompt and full discharge of the Assumed Liabilities
and also for any liabilities arising from, or in connection with the Assets
acquired by the Buyer after the consummation of the transactions contemplated
hereby.
(d) For greater certainty, and without limiting the generality of Section
2.2(b), Seller shall remain liable for and shall pay, satisfy, discharge,
perform and fulfill, all other obligations and liabilities of Seller which are
not Assumed Liabilities existing, accrued or accruing (whether direct or
indirect, known or unknown) as at the Closing (the "Excluded Liabilities"),
including, without limitation, the following obligations and liabilities:
(i) any liability for Taxes payable, collectible or remittable by the
Seller in respect of the Business and the Assets in respect of the period prior
to the Closing Date, and, for greater certainty real property and other similar
Taxes levied with respect to the Assets for a taxable period that includes but
does not end on the Closing Date shall be apportioned between the Seller and the
Buyer such that the Seller shall be liable for the amount determined by
multiplying the Taxes to be apportioned by a fraction, the numerator of which is
the number of days in the taxable period up to and including the Closing Date
and the denominator of which is the total number of days in the period, and the
Buyer shall be liable for the balance.
(ii) any liability owing to any lender of the Seller, including without
limitation, any bank overdrafts or bank indebtedness and any indebtedness or
liabilities owing under any trust indenture, mortgage, promissory note, loan
agreement, guaranty or other contract for the borrowing of money;
(iii) any liability in respect of a Contract not disclosed in this
Agreement;
(iv) any liability of Seller owing to Buyer or any Affiliate of Buyer;
(v) any liability or obligation in respect of the causes of action and
grievances described in the Disclosure Schedules;
(vi) any liability or obligation relating to the Excluded Assets; and
(vii) any intercompany payables from Seller to any Affiliate of Seller.
2.3 PRODUCT LIABILITY AND WARRANTY OBLIGATIONS
(a) The Buyer shall assume any and all Liability arising out of or
resulting from any product liability, product warranty and other claims,
liabilities and obligations arising from the products manufactured by the
Seller.
(b) The Seller shall indemnify and hold harmless the Buyer from and against
any and all Liability, subject to the limitations provided in Section 2.3(c)
arising out of Section 2.3(a) to the extent that such Liability relates to:
(i) products manufactured, sold or delivered and/or services provided, by
the Seller in connection with the shop order numbers identified on Part 2.3(a)
of the Disclosure Schedule;
(ii) any Recurring Defect (as defined below) existing on or before the
Closing Date and contained in the Inventory comprising the Assets, whether such
Liability arose before or after the Closing and whether known or unknown as of
the Closing Date. Recurring Defect shall mean a specific defect in workmanship,
design or component that arises in twenty-five percent (25%) or more of a
particular type of product sold by the Seller.
Notwithstanding anything contained herein to the contrary, with respect to
any claim that may involve an obligation by the Seller pursuant to this Section
2.3(b), the Buyer shall provide the Seller with an opportunity to assess the
claim and comment on its validity and the proposed response by the Buyer.
(c) For purposes of calculating the indemnity provided in Section 2.3(b),
all product warranty work shall be performed by Buyer at Buyer's Loaded Labor
Cost plus material cost and reasonable out-of-pocket expenses, including freight
costs, travel, lodging and meals. In any such case, provided such product
warranty obligation was a valid and enforceable obligation or liability of the
Seller and the claim in respect thereof was valid, the Seller shall reimburse
the Buyer forthwith following demand by the Buyer for all costs set forth herein
incurred by the Buyer in repairing or replacing products.
(d) Notwithstanding the foregoing, nothing contained in this Section 2.3
shall affect the rights of the Buyer under Section 9 hereof in respect of any
Liability suffered or incurred by it as a result of or arising out of any
inaccuracy of any representation or warranty.
2.4 ADDITIONAL SELLER LIABILITIES
[RESERVED]
2.5 PURCHASE PRICE
Subject to the adjustment as set forth in Section 2.10, the purchase price
("Purchase Price") for the Assets will be Two Million Nine Hundred Thousand and
00/100 Dollars ($2,900,000.00) and shall be payable as follows:
(a) Two Million Four Hundred Thousand and 00/100 Dollars ($2,400,000.00)
shall be paid in immediately available funds at the Closing; and
(b) the remainder of the Purchase Price shall be paid into escrow pursuant
to the terms of the Escrow Agreement (as hereinafter defined) and disbursed in
accordance with Section 2.10 of this Agreement.
2.6 OTHER CONSIDERATION
In addition to the payment of the Purchase Price, Buyer shall enter into
the Technology Assignment Agreement in the form of Exhibit 2.6 attached hereto
(the "Technology Assignment Agreement").
2.7 CLOSING
The closing of the purchase and sale of the Assets (the "Closing") provided
for in this Agreement will take place at the offices of Xxxxxxx & Xxxxxx, 000
Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 at 10:00 a.m. (local time) on March 4,
1998 or at such other time and place as the parties may agree. Subject to the
provisions of Section 8.1(d), failure to consummate the purchase and sale
provided for in this Agreement on the date and time and at the place determined
pursuant to this Section 2.7 will not result in the termination of this
Agreement and will not relieve any party of any obligation under this Agreement.
2.8 APPORTIONMENT
If the amounts of any common area charges under real property leases
transferred to the Buyer have not been determined at the Closing Date, they
shall be apportioned on the basis of such charges assessed for the preceding
year, with a reapportionment upon and in the event of any new apportionment or
valuation method or scheme; and if such charges which are to be apportioned
shall thereafter be reduced, the amount of such reduction shall be apportioned
between the Buyer and the Seller.
2.9 CLOSING OBLIGATIONS
(a) At the Closing, the Seller will deliver to Buyer:
(i) the Xxxx of Sale in the form of Exhibit 2.9(a)(i) (the "Xxxx of Sale");
(ii) the assignments and such other certificates, documents and instruments
of sale, transfer, conveyance and assignment as Buyer and its counsel may
reasonably request;
(iii) the Technology Assignment Agreement in form and substance
satisfactory to the Buyer;
(iv) a certificate executed by the Seller and Xxxxxxxx representing and
warranting to Buyer that Seller's and Xxxxxxxx'x representations and warranties
in this Agreement were accurate in all respects as of the date of this Agreement
and are accurate in all respects as of the Closing Date as if made on the
Closing Date (giving full effect to any supplements to the Disclosure Schedules
that were delivered by the Seller to Buyer prior to the Closing Date in
accordance with this Agreement);
(v) the Disclosure Schedule in form and substance satisfactory to the
Buyer;
(vi) the New Lease as set forth in Section 5.8(a);
(vii) the Escrow Agreement in the form of Exhibit 2.9(a)(vii) (the "Escrow
Agreement");
(viii) the Trademark Assignment Agreement in the form of Exhibit
2.9(a)(viii) (the "Trademark Assignment Agreement"); and
(ix) the Agreement and Use of Name and Logo, in the form of Exhibit
2.9(a)(ix).
(b) At the Closing, Buyer will deliver to the Seller:
(i) the Purchase Price in accordance with Section 2.5;
(ii) a certificate executed by Buyer to the effect that, each of Buyer's
representations and warranties in this Agreement were accurate in all respects
as of the date of this Agreement and are accurate in all respects as of the
Closing Date as if made on the Closing Date (giving full effect to any
supplements to the Disclosure Schedule that were delivered by the Buyer to
Seller prior to the Closing Date in accordance with this Agreement);
(iii) the Technology Assignment Agreement executed by Buyer;
(iv) the New Lease as set forth in Section 5.8(a) executed by the Buyer;
(v) the Escrow Agreement;
(vi) the Trademark Assignment Agreement; and
(vii) the Agreement and Use of Name and Logo.
2.10 PURCHASE PRICE ADJUSTMENT
(a) Buyer and Seller have based the Purchase Price on the assumption that
(i) the Capital Employed of the Seller contained on the August 1, 1997 Balance
Sheet was One Million Nine Hundred Thousand and 00/100 Dollars ($1,900,000.00)
("Estimated Capital Employed"); and (ii) the Operating Income of the Seller for
the period ending Februaryy28, 1998 will be Four Hundred Sixty-Eight Thousand
and 00/100 Dollars ($468,000.00) ("Estimated Operating Income"). The Purchase
Price will be adjusted as follows: (i) if the Capital Employed shown on the
Closing Financial Statements exceeds the Estimated Capital Employed, the
Purchase Price shall be increased dollar-for-dollar by the amount of the
increase; (ii) if the Capital Employed shown on the Closing Financial Statements
is less than the Estimated Capital Employed, the Purchase Price shall be reduced
dollar-for-dollar by the amount of the decrease; (iii) if the Operating Income
on the Closing Financial Statements exceeds the Estimated Operating Income, the
Purchase Price shall not be adjusted; and (iv) if the Operating Income on the
Closing Financial Statements, after giving effect to the audit adjustment
referred to in Section 2.11(c), is less than Four Hundred Twenty One Thousand
and 00/100 Dollars ($421,000.00), the Purchase Price shall be reduced Five and
00/100 Dollars ($5.00) for every One Dollar ($1.00) of the amount of the
difference between the Operating Income on the Closing Financial Statements
after giving effect to such adjustments in Section 2.11(c), and the Estimated
Operating Income.
(b) Solely for purposes of calculating the adjustment to Operating Income
referred to in Section 2.10(a)(iv) in connection with the preparation of the
Closing Financial Statements, there shall be a post closing adjustment equal to
the difference between (i) the amount of revenue, cost and income recognized by
Seller in preparing the Closing Financial Statements, for the Xxxxx and Whitney
job, and two Xxxxxxx & Xxxxxxx jobs (shop order numbers 34244 and 34905) and
(ii) the final revenue, cost and income attributable to the Xxxxx & Whitney job
and the Xxxxxxx & Xxxxxxx jobs (shop order numbers 34244 and 34905).
(c) The amount of the adjustment to the Purchase Price set forth in Section
2.10(a) shall be added to the sum of Five Hundred Thousand and 00/100 Dollars
($500,000.00), if an increase is due, and subtracted from the sum of Five
Hundred Thousand and 00/100 Dollars ($500,000.00), if a reduction is due, and
paid by Buyer in accordance with the time periods set forth in Section 2.11
below. If the amount of the adjustment pursuant to Section 2.10(a) exceeds Five
Hundred Thousand and 00/100 Dollars ($500,000.00), and is a reduction, Seller
shall pay the additional amount in excess of Five Hundred Thousand and 00/100
Dollars ($500,000.00) to Buyer in accordance with the time periods set forth in
Section 2.11 below.
2.11 ADJUSTMENT PROCEDURE
(a) The Seller will prepare and the Buyer's Auditors, Price Waterhouse
L.L.P., will audit the Closing Financial Statements of the Seller. The Seller
will deliver the Closing Financial Statements to Buyer and the Buyer's Auditor
within forty-five (45) days after the Closing Date. The Buyer and the Buyer's
Auditor shall have forty-five (45) days after receipt of the Closing Financial
Statements from the Seller to review the Closing Financial Statements and
deliver to the Buyer and the Seller the Auditor's Report stating that the
Closing Financial Statements fairly present (1) the Balance Sheet and the
statement of Net Assets of Seller at February 28, 1998 in conformity with
Generally Accepted Accounting Principles applied on a consistent basis with the
past practices of Seller and with the August 1, 1997 Balance Sheet and (2) the
Operating Income of Seller for the fiscal year ended February 28, 1998 in
conformity with Generally Accepted Accounting Principles applied on a consistent
basis with the past practices of the Seller and with Seller's Operating Income
Statement for the five (5) months ended July 31, 1997 and the March 1997
Forecast. If within ten (10) days following delivery of the Auditor's Report,
either party has not given notice of its objection to the Closing Financial
Statements (such notice must contain a statement of the basis of such
objection), then the Capital Employed and Operating Income reflected in the
Closing Financial Statements will be used in computing the adjustment amount set
forth in Section 2.10(c). If either party gives such notice of objection, the
Buyer and the Seller shall attempt in good faith to resolve the matter or
matters in dispute. If the Buyer and the Seller, notwithstanding such good faith
effort, shall have failed to resolve the matter or matters in dispute within
twenty (20) business days after receipt of the written notice of dispute, then
any remaining disputed matters shall be finally and conclusively determined by
an independent auditing firm of recognized national standing (the "Arbiter")
selected by the Buyer and the Seller, which shall be Xxxxxx Xxxxxxxx L.L.P.,
unless such firm shall have a conflict of interest with the Buyer or the Seller
which is not waived by the appropriate party. Promptly, but not later than
twenty (20) business days after its acceptance of its appointment, the Arbiter
shall determine (based upon a review of work papers and other documents and
information relating to the disputed issues as the Arbiter may request) only
those issues in dispute and shall render a report as to the disputes, which
report shall be conclusive and binding upon the parties hereto. If within twenty
(20) business days of the receipt of a written notice of dispute the parties
determine that Xxxxxx Xxxxxxxx cannot serve as the Arbiter because of a conflict
of interest with either the Buyer or the Seller and the parties cannot agree
upon a substitute within such period, the parties shall submit the matter of the
selection of the Arbiter to the American Arbitration Association ("AAA") for
resolution. Any such arbitration shall take place in, and shall be in accordance
with the Commercial Arbitration Rules of the AAA in Hartford, Connecticut. Each
of the Buyer and the Seller shall promptly select a single arbitrator and file
with the AAA a notice of appointment. The two (2) arbitrators so chosen shall
select a third arbitrator who shall act as chairperson of the arbitration. If
either the Buyer or the Seller should abstain from selecting an arbitrator, or
should the two arbitrators selected above fail to select a third, then at the
request of either party, the President of the AAA shall select an arbitrator, to
fill the vacant position within ten (10) business days of such request. The
arbitration panel shall thereafter select the Arbiter, and the Buyer and the
Seller agree to cooperate with the arbitration panel to facilitate the speedy
selection of the Arbiter. The fees and expenses of the arbitration panel shall
be borne fifty percent (50%) by the Buyer and fifty percent (50%) by the Seller.
In resolving any disputed item, the Arbiter may not assign a value to any
particular item greater than the greatest value for such item claimed by either
party or less than the smallest value for such item claimed by either party in
each case, as presented to the Arbiter. The fees and disbursements of the
Arbiter shall be allocated between the Buyer and the Seller based upon the
percentage ratio that the sum of the net amounts subject to dispute resolved
against each of the parties bears to the total of the net amounts subject to
dispute. For this purpose, the "net amounts subject to dispute" shall represent
the difference between the amount of such items as proposed by the Buyer and the
corresponding amount of such items proposed by the Seller, in each case as
submitted to the Arbiter.
(b) On the tenth (10th) business day following the date on which the
Closing Financial Statements are agreed to in accordance with Section 2.11(a),
the final determination of the Purchase Price Adjustment shall be made, and paid
in accordance with Section 2.10(c).
(c) For purposes of complying with the terms set forth herein, each party
shall cooperate with and promptly make available to the other party and its
auditors and representatives, all information, records, data, auditors' working
papers, and access to its personnel, shall permit access to its facilities and
shall permit the other party and its auditors and representatives to make copies
of all information, records, data and auditors' working papers, in each case as
may be reasonably required in connection with the analysis of the Closing
Financial Statements, the calculation of the Capital Employed and Operating
Income and the resolution of any dispute(s) thereunder. Buyer acknowledges that
the Percentage-of-Completion Method of Accounting shall be used in the
preparation of the Closing Financial Statements in connection with shop orders
related to the Xxxxx and Whitney job and the Xxxxxxx & Xxxxxxx jobs (shop order
numbers 34244 and 34905). Seller represents that the Xxxxxxx & Xxxxxxx jobs are
scheduled for substantial completion in February 1998 and actual delivery in
February or March 1998 and the Xxxxx & Whitney job is scheduled for actual
delivery in April 1998. Seller agrees that the consideration required to be paid
by Buyer under the Technology Assignment Agreement shall not apply to the Xxxxx
and Xxxxxxx job and the Xxxxxxx and Xxxxxxx jobs (shop order numbers 34244 and
34905).
Buyer and Seller agree that any audit adjustments (excluding the
adjustment pursuant to Section 2.10(b) proposed by Buyer's Auditor to the
Closing Financial Statements will be included only to the extent such audit
adjustments exceed Ten Thousand and 00/100 Dollars ($10,000.00) and such audit
adjustments will not include any adjustments to (1) the Intellectual Property
Assets, as long as the Intellectual Property Assets are accounted for
consistently with the past practices of Seller (2) Taxes and (3) Environmental
Laws.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND XXXXXXXX
The Seller and Xxxxxxxx, jointly and severally, represent and
warrant to Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING
(a) The Seller is a corporation duly organized, validly existing and in
good standing under the laws of Delaware, with full corporate power and
authority to conduct its business as it is now being conducted and to own or use
the properties and assets that it purports to own or use. The Seller is
qualified to do business and is in good standing as a foreign corporation under
the laws of each jurisdiction in which it is required to be so qualified, except
where its failure to qualify would not have Material Adverse Effect on the
Business.
(b) Xxxxxxxx is a corporation duly organized, validly existing and in good
standing under the laws of Connecticut, with full corporate power and authority
to conduct its business as it is now being conducted and to own or use the
properties and assets that it purports to own or use. Xxxxxxxx is qualified to
do business and is in good standing as a foreign corporation under the laws of
each jurisdiction in which it is required to be so qualified, except where its
failure to qualify would not have a Material Adverse Effect on Xxxxxxxx.
(c) The Seller and Xxxxxxxx have delivered to Buyer copies of its
respective Organizational Documents, as currently in effect, and such
Organization Documents have not been amended, modified or terminated.
3.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding obligation of
the Seller and Xxxxxxxx, enforceable against the Seller and Xxxxxxxx in
accordance with its terms. Each of Seller and Xxxxxxxx has the full corporate
power and authority to execute and deliver this Agreement and the other
documents contemplated to be executed and delivered at the Closing by the Seller
and Xxxxxxxx and to perform its respective obligations under this Agreement and
such other documents.
(b) Except as set forth in Part 3.2 of the Disclosure Schedule, neither the
execution and delivery of this Agreement nor the consummation or performance of
any of the transactions contemplated hereby will, directly or indirectly (with
or without notice or lapse of time):
(i) contravene, conflict with, or result in
a violation of (A) any provision of the
Organizational Documents of the Seller or Xxxxxxxx,
or (B) any resolution adopted by the Board of
Directors of Xxxxxxxx or Seller or the stockholders
of the Seller;
(ii) contravene, conflict with, or result in
a violation of, or give any Governmental Body or
other Person the right to challenge any of the
transactions contemplated hereby or to exercise any
remedy or obtain any relief under, any Legal
Requirement or any Order to which the Seller or
Xxxxxxxx may be subject;
(iii) contravene, conflict with, or result
in a violation of any of the terms or requirements
of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or
modify, any material Governmental Authorization that
is held by the Seller or that otherwise relates to
the Seller's Business;
(iv) cause Buyer to become subject to, or to
become liable for the payment of any Tax (except as
relates to Buyer's ownership of the Assets or conduct
of the Seller's Business after the Closing);
(v) cause any of the Seller's Assets to be
reassessed or revalued by any taxing authority or
other Governmental Body (except as relates to Buyer's
purchase or ownership of the Seller's Assets or
conduct of the Seller's Business after the Closing);
(vi) contravene, conflict with, or result in
a violation or breach of any provision of, or give
any Person the right to declare a default or exercise
any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify,
any material Contract; or
(vii) result in the imposition or creation
of any Encumbrance upon or with respect to any of the
Seller's Assets.
Except as set forth in Part 3.2 of the Disclosure Schedule, the Seller
is not required to give any notice to or obtain any Consent from any
Person in connection with the execution and delivery of this Agreement
or the consummation or performance of any of the transactions
contemplated hereby.
3.3 OWNERSHIP OF SELLER
The Stockholders set forth in Part 3.3 of the Disclosure Schedule are and
will be on the Closing Date all of the record and beneficial owners and holders
of all of the issued and outstanding shares of Seller. There are no outstanding
or authorized options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights or other contracts that could require Seller
to issue, sell or otherwise cause to become outstanding any of its capital
stock. There are no outstanding or authorized stock appreciation, phantom stock,
or other similar agreements with respect to Seller except as disclosed in Part
3.3 of the Disclosure Schedule.
3.4 FINANCIAL STATEMENTS
(a) The Seller has delivered to the Buyer (or will deliver to the Buyer in
accordance with this Agreement) (i) unaudited Operating Income statements of the
Seller for the fiscal years ended February 1997 and 1998 and (ii) the interim
Operating Income statements of the Seller for periods within Seller's fiscal
year ending February 28, 1998, including, the Seller's Operating Income
statements of Seller for the five months ended July 31, 1997 dated August 1,
1997 (the "Income Statements"), copies of which are attached to Part 3.4(a) of
the Disclosure Schedule. Such Income Statements fairly present in all material
respects the results of operations of the Seller for the periods referred to in
such Income Statements in conformity with Generally Accepted Accounting
Principles applied on a basis consistent with the past practices of the Seller
(except for certain inter-company allocations reflected on Part 3.4(a) of the
Disclosure Schedule which are consistent with the past practices of the Seller
and except for the absence of income tax expense or benefit).
(b) The Seller has delivered to the Buyer (or will deliver to the Buyer in
accordance with this Agreement) (i) Balance Sheet of Seller as of February 28,
1997 and the Balance Sheet and statement of Net Assets of Seller at February 28,
1998, and (ii) the August 1, 1997 Balance Sheet, (collectively the "Balance
Sheet Information"), copies of which are attached to Part 3.4(b) of the
Disclosure Schedule. The Balance Sheet Information (i) was prepared based upon
the books of accounts and other financial records of the Seller, (ii) presents
fairly the Balance Sheet Information of the Seller as of the date thereof in
conformity with Generally Accepted Accounting Principles applied on a basis
consistent with the past practices of the Seller, and (iii) as of the Closing
Date, the Balance Sheet Information will include all adjustments that are
necessary for a fair presentation of the such information as of the date hereof.
3.5 BOOKS AND RECORDS
The books of account, minute books, stock record books and other records of
the Seller or the relevant portions of such documents relating to Seller, copies
of which have been made available to Buyer, are true, complete, accurate and
correct in all respects and have been maintained in accordance with sound
business practices, including the maintenance of an adequate system of internal
controls.
3.6 TITLE TO ASSETS; ENCUMBRANCES
(a) Except as otherwise indicated in Parts 3.6 or 3.22 of the Disclosure
Schedule, the Seller has good and marketable title to, or a valid leasehold
interest in and has the right to convey, all the Assets owned by it, located on
the Property or shown on the August 1, 1997 Balance Sheet or acquired after the
date thereof, including all of the Assets reflected in the Financial Statements
(except for personal property sold since the date of the Financial Statements,
as the case may be, in the Ordinary Course of Business), and all of the Assets
purchased or otherwise acquired by the Seller since the date of such Financial
Statements (except for personal property acquired and sold since the date of
such Financial Statements in the Ordinary Course of Business and consistent with
past practice). All of the Assets are free and clear of all Encumbrances other
than the Permitted Encumbrances. The delivery to the Buyer of the instruments of
transfer of ownership contemplated by this Agreement will vest good and
marketable title to the Assets in the Buyer, free of any Encumbrances, except
Permitted Encumbrances.
(b) Upon the consummation of the transactions contemplated by this
Agreement, the Buyer will own, lease or have the legal right to use all the
Assets (used in the conduct of the Business or otherwise owned, leased or used
by the Seller) and, with respect to Assumed Contracts, will become a party to or
enjoy the right to the benefits of all contracts, agreements and other
arrangements relating to the conduct of the Business or otherwise retain
Seller's interest in the Assets without incurring any material penalty or other
materially adverse consequence, including, without limitation, any material
increase in rentals, royalties, or licenses or other fees imposed as a result
of, or arising from, the consummation of the transactions contemplated by this
Agreement. Immediately following the Closing, the Buyer shall own and possess
all documents, books, records, agreement and financial data or the relevant
portions of such documents of any sort used by the Seller in the conduct of the
Business or otherwise.
(c) The Assets and the Excluded Assets constitute all the properties,
assets and rights forming a part of, used, held or intended to be used in, and
all such properties, assets and rights as are necessary in the conduct of, the
Business.
3.7 REAL PROPERTY
(a) All real property (including, without limitation, all interests in and
rights to real property) and improvements located thereon which are leased by
Seller and used in connection with the Seller's Business are listed on the
Disclosure Schedule in Section 3.7 in response to this section (the "Real
Property"). Seller does not own any Real Property.
(b) With respect to the Real Property that is leased by Seller, which is
identified on the Disclosure Schedule:
(i) Seller has delivered to Buyer a true and
complete copy of every lease and sublease to which
Seller is a tenant or subtenant (the "Leases"), and
shall describe each Lease on the Disclosure Schedule
by listing the name of the landlord or sublandlord, a
description of the lease premises, the commencement
and expiration dates of the current term, the
security deposited by Seller with the landlord or
sublandlord, if any, the monthly rental (including
base and all additional rents), and whether Seller
may assign the Lease to Buyer (if the consent of the
landlord or sublandlord is required for such an
assignment, that should be set forth on the
Disclosure Schedule); and
(ii) each Lease is, and at Closing shall be,
in full force and effect and has not been assigned,
modified, supplemented or amended except as listed on
the Disclosure Schedule in Section 3.7, and neither
Seller nor the landlord or sublandlord under any
Lease is in default under any of the Leases, and no
circumstances or state of facts presently exists
which, with the giving of notice or passage of time,
or both, would permit the landlord or sublandlord
under any Lease to terminate any lease.
(c) Except as disclosed on Part 3.7(c) of the Disclosure Schedules, to the
Seller's Knowledge, the water, electric, gas and sewer utility services and the
septic tank and storm drainage facilities currently available to the Real
Property have been properly and lawfully operated and are adequate for the
present use of the Real Property by Seller in conducting the Seller's Business,
are not being appropriated by Seller but rather are being supplied to Seller by
utility companies or municipalities pursuant to valid and enforceable contracts,
and there is no condition which will result in the termination of the present
access from the Real Property to such utility services and other facilities.
(d) Seller has not received any notices, oral or written, from any
governmental body, and otherwise has no Knowledge that the assessed value of the
Real Property has been determined to be greater than that upon which any tax was
paid for the 1997 tax year applicable to each such tax, or from any insurance
carrier of Seller of fire hazards with respect to the Real Property or any
portion thereof is affected by any assessment which is or may become payable in
annual installments, of which one or more is then payable or has been paid, then
for the purpose of this Agreement, all the unpaid installments of any such
assessment including, without limitation, those which are to become due and
payable after Closing, shall be deemed to be liens on the Real Property and
shall be paid or discharged at or prior to Closing.
(e) Seller has not received any notices, oral or written, and otherwise has
no Knowledge, that any governmental body having the power of eminent domain over
the Real Property has commenced or intends to exercise the power of eminent
domain or a similar power with respect to all or any part of the Real Property.
If between the date of this Agreement and Closing, the Real Property or any
portion thereof or interest therein shall be taken or condemned as a result of
the exercise of the power of eminent domain, or if a governmental body having
the power of eminent domain informs Seller or the Buyer that it intends to take
or condemn all or part of the Real Property then the Buyer may elect to
terminate this Agreement. If the Buyer does not elect to terminate this
Agreement (a) the Buyer shall have the sole right, in the name of Seller, if the
Buyer so elects, to negotiate for, claim, consent and receive all damages on
account thereof, (b) Seller shall be relieved of its obligation to convey to the
Buyer the Real Property taken or condemned, (c) at Closing, Seller shall assign
to the Buyer all of Seller's rights to all damages payable for such taking or
injury of the Real Property and shall pay to the Buyer all damages theretofore
paid to Seller by reason thereof, and (d) following Closing, Seller shall give
the Buyer such further assurances of such rights and assignment as the Buyer may
from time to time reasonably request.
(f) The Real Property and the present uses thereof
comply with all Regulations of
all governmental bodies having jurisdiction over the Real Property, and Seller
has received no notices, oral or written, from any governmental body, and
otherwise has no Knowledge, that the Real Property or any improvements erected
or situated thereon, or the uses conducted thereon or therein, violate any
regulations of any governmental body having jurisdiction over the Real Property.
(g) The improvements located on the Real Property are in good condition and
are structurally sound, and all mechanical and other systems located therein are
in good operating condition, subject to normal wear, and no condition exists
requiring material repairs, alterations or corrections.
(h) Between the date of this Agreement and Closing, Seller shall not sell,
mortgage or encumber the Real Property, or do or permit any act which diminishes
title to or value of the Real Property.
(i) To the Seller's Knowledge, no work for municipal improvements has been
commenced on or in connection with the Real Property or any street adjacent
thereto. To the Seller's Knowledge, no assessment for public improvements has
been made against the Real Property which remains unpaid. To the Seller's
Knowledge, no notice from any county, township or other governmental body has
been served upon the Real Property or received by Seller requiring or calling
attention to the need for any work, repair, construction, alteration or
installation on or in connection with the Real Property which has not been
complied with.
3.8 CONDITION AND SUFFICIENCY OF ASSETS
(a) Section 3.8 of the Disclosure Schedule sets forth a true, correct and
complete list of all Fixed Assets, including a description and the book value
thereof. The Fixed Assets of the Seller are structurally sound, are in good
operating condition and repair, ordinary wear and tear excepted, and are
adequate for the uses to which they are being put, and none of such Fixed Assets
are in need of maintenance or repairs except for ordinary, routine maintenance
and repairs that are not material in nature or cost. The Fixed Assets are
sufficient for the continued conduct of the Seller's Business after the Closing
in substantially the same manner as conducted prior to the Closing.
3.9 ACCOUNTS RECEIVABLE
All Accounts Receivable of Seller that are reflected on the Seller's
Closing Date Financial Statements or on the aged list of receivables that
identifies as of such date had been outstanding (i) current (ii) one to fifteen
(15) days past due (iii) sixteen (16) to sixty (60) days past due, (iv)
sixty-one (61) to ninety (90) days past due, and (v) over ninety (90) days past
due represent or will represent valid obligations arising from sales actually
made or services actually performed in the Ordinary Course of Business. Unless
paid prior to the Closing Date, the Accounts Receivable are or will be as of the
Closing Date current and collectible. There is no contest, claim, or right of
set-off, other than returns in the Ordinary Course of Business, under any
contract or arrangement with any obligor of an Accounts Receivable relating to
the amount or validity of such Accounts Receivable. Part 3.9 of the Disclosure
Schedule contains a complete and accurate list of all Accounts Receivable as of
the Closing Date.
3.10 INVENTORY
All Inventory of the Seller, whether or not reflected in the Closing
Financial Statements, has been maintained in the Ordinary Course of Business,
consists of tangible property that is, of a good and merchantable quality,
quantity and condition, usable and saleable in the Ordinary Course of Business
and is valued under the job order cost system in accordance with Generally
Accepted Accounting Principles consistent with past practice based upon the
Ordinary Course of Business of the Seller, and is not subject to any write-down
or write-off. As of the Closing Date, Seller is not under any liability or
obligation to any Person with respect to the return of Inventory sold or
delivered prior to Closing.
3.11 NO UNDISCLOSED LIABILITIES
Except as set forth in Part 3.11 of the Disclosure Schedule, the Seller has
no liabilities or obligations of any nature (whether absolute, accrued,
contingent, or otherwise) except for liabilities or obligations reflected or
reserved against in the Closing Financial Statements and current liabilities
incurred in the Ordinary Course of Business since the respective dates thereof.
3.12 TAXES
(a) The Seller, Xxxxxxxx or Xxx has filed or caused to be filed or will
file or cause to be filed (on a timely basis, giving effect to allowable
extensions, since April 20, 1992) all Tax Returns that are or were required to
be filed by or with respect to the Seller or the Seller's Business, pursuant to
applicable Legal Requirements. The Seller has delivered to Buyer copies of all
such Tax Returns filed since April 20, 1992. All Tax Returns filed by the Seller
are true, correct and complete in all material respects as such and to the
extent that such Tax Returns may affect the transactions contemplated by this
Agreement. The Seller, Xxxxxxxx or Ney has paid or will pay, or made provision
for the payment of, all Taxes that have or may have become due pursuant to those
Tax Returns or pursuant to any assessment received by the Seller, except such
Taxes, if any, as are listed in Part 3.12 of the Disclosure Schedule and are
being contested in good faith and as to which adequate reserves have been
provided in the Closing Financial Statements.
(b) Except as set forth in Part 3.12(b) of the Disclosure Schedule, there
are no outstanding liabilities for Taxes payable, collectible or remittable by
the Seller, whether assessed or not, which may result in a material Encumbrance
on or other claim against or seizure or sale of all or any part of the Assets or
would otherwise adversely affect the Business or would result in the Buyer
becoming liable or responsible therefor. There are no actions, suits,
proceedings, or, to the knowledge of the Seller, investigations or claims
pending or threatened against the Seller in respect of Taxes which may result in
a material Encumbrance on or other claim against or seizure or sale of any of
the Assets or liability or responsibility on the part of the Buyer for Taxes
payable, collectible or remittable by the Seller nor are any material matters
under discussion by Seller or its representatives with any governmental
authority relating to Taxes. The Seller, Xxxxxxxx or Xxx has withheld from all
remuneration (including taxable benefits) of employees of the Business all Taxes
and other deductions required to be withheld therefrom and has remitted the same
to the proper tax or other receiving authority within the time required under
applicable legislation.
3.13 NO MATERIAL ADVERSE CHANGE
Except as otherwise expressly permitted under this Agreement, since August
1, 1997 there has not been any Material Adverse Change in the Seller's Business,
operations, properties, prospects, assets, or condition of the Seller or the
Seller's Business, and no event has occurred or circumstance exists that may
result in such a Material Adverse Change in the Seller or the Seller's Business.
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
(a) Except as set forth in Part 3.14 of the Disclosure Schedule:
(i) The Seller is in compliance in all
material respects with each Legal Requirement that is
or was applicable to it or to the conduct or
operation of the Seller's Business or the ownership,
lease, or use of any of its Assets or any Facilities;
and
(ii) The Seller has not received any notice
or other communication (whether oral or written) from
any Governmental Body or any other Person and, to the
Seller's Knowledge, no event has occurred or
circumstance exists that (with or without notice or
lapse of time) (A) may constitute or result in a
violation by the Seller of, or a failure on the part
of the Seller to comply with, any Legal Requirement,
or (B) may give rise to any obligation on the part of
the Seller to undertake, or to bear all or any
portion of the cost of, any remedial action of any
nature with respect to any Legal Requirement.
(b) Part 3.14 of the Disclosure Schedule contains a complete and accurate
list of each material Governmental Authorization that is held by the Seller or
that otherwise relates to the Seller's Business. Each material Governmental
Authorization listed or required to be listed in Part 3.14 of the Disclosure
Schedule is valid and in full force and effect.
3.15 LEGAL PROCEEDINGS
(a) Except as set forth in Part 3.15 of the Disclosure Schedule, there is
no pending Proceeding:
(i) that has been commenced by or against
the Seller or that otherwise relates to or may affect
the Seller's Business or any Facilities, or
concerning any other property or person, who has been
affected by the Seller's Business; or
(ii) that challenges, or that may have the
effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the transactions
contemplated hereby.
To the Seller's Knowledge, (1) no such Proceeding has been Threatened,
and (2) Seller has no reason to believe any such Proceeding will be
commenced based upon facts existing as of the Closing Date other than
as set forth in Part 3.15 of the Disclosure Schedule. The Seller has
delivered to Buyer copies of all pleadings, correspondence, and other
documents relating to each Proceeding listed in Part 3.15 of the
Disclosure Schedule. The Proceedings listed in Part 3.15 of the
Disclosure Schedule will not have a material adverse effect on the
Seller's Business, Assets, operations, condition, or prospects of the
Seller's Business.
(b) Except as set forth in Part 3.15 of the
Disclosure Schedule:
(i) The Seller is not subject to any Order that relates in any respect to
the Seller's Business, any of the Assets or any Facility; and
(ii) To the Seller's Knowledge, no employee
or agent of Seller is subject to any Order that
prohibits such agent or employee from engaging in or
continuing any conduct, activity or practice relating
to the Seller's Business.
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Part 3.16 of the Disclosure Schedule or as otherwise
expressly permitted in this Agreement, since March 1, 1997, the Seller has
conducted the Seller's Business only in the Ordinary Course of Business and
there has not been any:
(a) change in the Seller's authorized or issued capital stock; grant of any
stock option or right to purchase shares of capital stock of the Seller;
issuance of any security convertible into such capital stock; grant of any
registration rights; purchase, redemption, retirement, or other acquisition by
the Seller of any shares of any such capital stock; or declaration or payment of
any dividend or other distribution or payment in respect of shares of capital
stock;
(b) amendment to the Organizational Documents of the Seller;
(c) except in the Ordinary Course of Business, payment or increase by the
Seller of any bonuses, salaries, or other compensation to any stockholder,
director, officer, or employee or entry into any employment, severance, or
similar contract with any director, officer, or employee;
(d) adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of the
Seller;
(e) damage to or destruction or loss of any asset or property of the
Seller, whether or not covered by insurance, materially and adversely affecting
the properties, Assets, business, financial condition, or prospects of the
Seller (including, the loss or prospective loss of any material business
relationships);
(f) entry into, termination of, or receipt of notice of termination of (i)
any license, exclusive contract or arrangement, joint venture, credit, or
similar agreement, or (ii) any contract or transaction involving a total
remaining commitment by or to the Seller (determined on an individual basis) of
at least Ten Thousand and 00/100 Dollars ($10,000.00);
(g) other than in the Ordinary Course of Business, sale, lease, or other
disposition of any Asset or property of the Seller or mortgage, pledge, or
imposition of any lien or other encumbrance on any material Asset or property of
the Seller, including the sale, lease, or other disposition of any of the
Intellectual Property Assets;
(h) cancellation or waiver of any claims or rights with a value (determined
individually) to the Seller in excess of Ten Thousand and 00/100 Dollars
($10,000.00);
(i) change in the accounting methods used by the Seller;
(j) capital expenditures or commitments for capital expenditures in excess
of Ten Thousand and 00/100 Dollars ($10,000.00) individually or Fifty Thousand
and 00/100 Dollars ($50,000.00) in the aggregate.
(k) loan to, guaranty of any indebtedness of or incurrence of any
indebtedness on behalf of any Person;
(l) failure to pay any creditor any amount owed to such creditor when due;
(m) sale of Inventory other than in the Ordinary Course of the Business
consistent with past practice;
(n) material changes in the customary methods of operations of the Seller,
including, without limitation, practices and policies relating to manufacturing,
purchasing, Inventories, marketing, selling and pricing;
(o) merger with, consolidation with or acquisition of any Person or
acquisition of a substantial portion of the assets or business of any Person or
any division or line of business thereof, or other acquisition of any material
assets other than in the ordinary course of business consistent with past
practice;
(p) agreement, arrangement or transaction with any of its directors,
officers, employees or shareholders (or with any relative, beneficiary, spouse
or Affiliate of such Person); or
(q) agreement, whether oral or written, by the Seller to do any of the
foregoing;
3.17 CONTRACTS; NO DEFAULTS
(a) Part 3.17(a) of the Disclosure Schedule contains a complete and
accurate list, of each of the Contracts of the Seller which has an amount
requiring payment (i) to the Seller, in the aggregate, or in any individual
payment, in excess of Ten Thousand and 00/100 Dollars ($10,000.00), (ii) by the
Seller in the aggregate, or in any individual payment in excess of Ten Thousand
and 00/100 Dollars ($10,000.00) and (iii) all open purchase orders of Seller
entered into on the form attached in Part 3.17(a) of the Disclosure Schedule
(collectively (i), (ii) and (iii) and the agreements set forth on Part 3.17(b)
of the Disclosure Schedule the "Assumed Contracts"). Seller has delivered or
made available to Buyer, or will deliver or make available to Buyer, true and
complete copies of all of the contracts referred to in 3.17(a) (i) and (ii)
hereof.
(b) Except as set forth in Part 3.17(b) of the Disclosure Schedule, the
Seller has no rights under, and has not or may not become subject to any
obligation or liability under, any other contract that relates in any respect to
Seller's Business or the Assets.
(c) Except as set forth in Part 3.17(c) of the Disclosure Schedule, each
Assumed Contract identified or required to be identified in Part 3.17(a) of the
Disclosure Schedule is in full force and effect and is valid and enforceable in
accordance with its terms.
(d) Except as set forth in Part 3.17(d) of the Disclosure Schedule:
(i) the Seller is in compliance in all
material respects with all applicable terms and
requirements of each of the Assumed Contracts;
(ii) to the Seller's Knowledge, each other
Person that has or had any obligation or liability
under any of the Assumed Contracts is in compliance
in all material respects with all applicable terms
and requirements of such Assumed Contract;
(iii) to the Seller's Knowledge, no event
has occurred and no circumstance exists that (with or
without notice or lapse of time) may contravene,
conflict with, or result in a material violation or
breach of, or give the Seller or other Person the
right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance
of, or to cancel, terminate, or modify, any Assumed
Contract; and
(iv) the Seller has not given to or received
from any other Person, at any time since August 1,
1997, any notice or other communication (whether oral
or written) regarding any actual, alleged, possible,
or potential violation or breach of, or default
under, any Assumed Contract.
(e) Other than in the Ordinary Course of Business, there are no pending
renegotiations of, attempts to renegotiate, or outstanding rights to renegotiate
any material amounts paid or payable to the Seller under current or completed
contracts with any Person included in the Assumed Contracts and no such Person
has made an oral or written demand for such renegotiation.
3.18 INSURANCE
(a) The Seller has delivered or will deliver to Buyer on the Closing Date:
(i) true and complete copies of all policies
of insurance to which the Seller is a party or under
which the Seller is or has been covered at any time
within the five (5) years preceding the date of this
Agreement;
(ii) true and complete copies of all pending
applications for policies of insurance; and
(iii) there are no claims or loss history
with respect to such policies for the five (5) years
preceding the date of this Agreement.
With respect to each current insurance policy: (A) the policy
is legal, valid, binding, enforceable, and in full force and effect; (B) neither
Seller nor any other party to the policy is in breach or default (including with
respect to the payment of premiums or the giving of notices), and no event has
occurred which, with notice or the lapse of time, would constitute such a breach
or default, or permit termination, modification or acceleration, under the
policy; and (C) no party to the policy has repudiated any provision thereof.
Seller has been covered during the past ten (10) years by insurance in scope and
amount customary and reasonable for the businesses in which it has engaged
during the aforementioned period. Part 3.18 of the Disclosure Schedule describes
any self-insurance arrangements affecting the Seller.
(b) Part 3.18(b) of the Disclosure Schedule describes:
(i) any self-insurance arrangement by or
affecting the Seller or the Seller's Business,
including any reserves established thereunder;
(ii) any contract or arrangement, other than
a policy of insurance, for the transfer or sharing of
any risk by the Seller's Business; and
(iii) all obligations of the Seller to third
parties with respect to insurance (including such
obligations under leases and service agreements) and
identifies the policy under which such coverage is
provided.
3.19 ENVIRONMENTAL MATTERS
Except as set forth in Part 3.19 of the Disclosure Schedule:
(a) The Seller is, and at all times has been, in compliance in all material
respects with all Environmental Laws and has no material liability thereunder.
The Seller has obtained all Environmental Permits and is and has been in
compliance with their requirements. Seller has not received any order, notice,
or other communication from (i) any Governmental Body or private citizen acting
in the public interest, or (ii) the current or prior owner or operator of any
Facilities, of any actual or potential violation, liability or failure by Seller
to comply with any Environmental Law, or of any actual or Threatened obligation
to undertake or bear the cost of any Environmental, Health, and Safety
Liabilities with respect to any of the Facilities or any other properties or
assets (whether real, personal, or mixed) in which the Seller has had an
interest, or with respect to any property or Facility at or to which Hazardous
Materials were generated, manufactured, disposed, stored, treated, transported,
recycled, refined, transferred, imported, or processed by or on behalf of the
Seller or any other Person for whose conduct it is or may be held responsible.
(b) There are no pending or, to the Seller's Knowledge, Threatened claims,
Encumbrances, or other restrictions of any nature, resulting from any
Environmental, Health, and Safety Liabilities or arising under or pursuant to
any Environmental Law, with respect to or affecting any of the Facilities or any
other properties and assets (whether real, personal, or mixed) in which the
Seller has or had an interest.
(c) Neither the Seller or, to the Seller's Knowledge, any other Person for
whose conduct it is or may be held responsible, has any Environmental, Health,
and Safety Liabilities with respect to the Facilities or, to the Seller's
Knowledge with respect to any other properties and assets (whether real,
personal, or mixed) in which the Seller (or any predecessor), has or had an
interest.
(d) To the Seller's Knowledge, there has been no Release or Threat of
Release, of any Hazardous Materials that would constitute a material violation
of or create any material liability under any Environmental Laws at or from the
Facilities or at any other locations where any Hazardous Materials were
generated, manufactured, disposed, stored, treated, transported, recycled,
refined, transferred, produced, imported, used, or processed from or by the
Facilities, or from or by any other properties and assets (whether real,
personal, or mixed) in which the Seller has or had an interest.
(e) Attached to the Disclosure Schedule in Part are true, complete and
accurate copies of all Environmental Permits, environmental reports, studies,
notices, disclosures and documentation pertaining to the Facilities, including,
without limitation any and all notices, reports or other documents submitted to
or received from any Governmental Body or any private citizen acting in the
public interest.
3.20 EMPLOYEES
(a) Part 3.20 of the Disclosure Schedule contains a complete and accurate
list of the following information for each employee of the Seller, including
each employee on leave of absence or layoff status: employee name; job title;
current compensation paid or payable and any change in compensation since
February 28, 1997; vacation accrued; and service credited for purposes of
vesting and eligibility to participate under the Seller's fringe benefit plans.
(b) To the Seller's Knowledge, except as set forth in Part 3.20 of the
Disclosure Schedule, no Seller employee is a party to, or is otherwise bound by,
any agreement or arrangement, including any confidentiality, noncompetition, or
proprietary rights agreement, between such employee and any other Person
("Proprietary Rights Agreement") that in any way adversely affects or will
affect (i) the performance of his duties as an employee in the Seller's
Business, or (ii) the ability of the Buyer to conduct the Seller's Business.
(c) Except as set forth in Part 3.20 of the Disclosure Schedule, all
officers, management, employees, technical employees and all other employees of
the Seller are under written obligation to the Seller to maintain in confidence
all confidential information acquired by them in the course of their employment
and to assign to the Seller all inventions made by them within the scope of
their employment during such employment and for a reasonable period thereafter.
3.21 LABOR RELATIONS; COMPLIANCE
Since February 28, 1997, the Seller has not been or is not a party to any
collective bargaining or other labor Contract. Since February 28, 1997, there
has not been, there is not presently pending or existing, and there is not to
the Seller's Knowledge, Threatened, (a) any strike, slowdown, picketing, work
stoppage, or employee grievance process, (b) any Proceeding against or affecting
the Seller's Business relating to the alleged violation of any Legal Requirement
pertaining to labor relations or employment matters, including any charge or
complaint filed by an employee or union with Governmental Body, organizational
activity, or other labor or employment dispute against or affecting the Seller
or its Business, or (c) any application for certification of a collective
bargaining agent. To the Seller's Knowledge, no event has occurred or
circumstance exists that could provide the basis for any work stoppage or other
labor dispute. There is no lockout of any employees by the Seller, and no such
action is contemplated by the Seller. To the Seller's Knowledge, the Seller has
complied in all material respects with all Legal Requirements relating to
employment, equal employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, collective bargaining, the payment of social security and
similar taxes, occupational safety and health, and plant closing. The Seller is
not liable for the payment of any compensation, damages, taxes, fines,
penalties, or other amounts, however designated, for failure to comply with any
of the foregoing Legal Requirements.
3.22 INTELLECTUAL PROPERTY
(a) Intellectual Property Assets--For the purposes of this Agreement the
term "Intellectual Property Assets" includes:
(i) the name "Ney Ultrasonics" and all
fictional business names, trading names, registered
and unregistered trademarks, service marks, and
applications used in the Business and owned, used or
licensed by Ney or the Seller and listed on Part
3.22(c) (collectively, "Marks");
(ii) all copyrights in both published works
and unpublished works used in the Business and owned,
used or licensed by Ney or Seller and listed on Part
3.22(a) (collectively, "Copy rights");
(iii) the computer software and all related
software code documentation, and commentaries, owned
or licensed by the Seller or Ney in the conduct of
the Business and listed at Part 3.22(c) of the
Disclosure Schedule (the "Software").
(b) Agreements -- Part 3.22(b) of the Disclosure Schedule contains a
complete and accurate list and summary description, including any royalties paid
or received by the Seller, of all Contracts relating to the Intellectual
Property Assets to which the Seller is a party or by which the Seller is bound,
except for any license implied by the sale of a product and perpetual, paid-up
licenses for commonly available software programs with a value of less than
$2,000 under which the Seller is the licensee. There are no outstanding and, to
the Seller's Knowledge, no Threatened disputes or disagreements with respect to
any such agreement.
(c) Trademarks.
(i) Part 3.22(c) of the Disclosure Schedule
contains a complete and accurate list and summary
description of all Marks.
(ii) Except as set forth on Part 3.22(c) of
the Disclosure Schedule, all Marks that have been
registered with the applicable Trademark Office are
currently in compliance with all formal legal
requirements (including the timely post-registration
filing of affidavits of use and incontestability and
renewal applications), are valid and enforceable, and
are not subject to any maintenance fees or taxes or
actions falling due within ninety (90) days after the
Closing Date.
(iii) Except as set forth on Part 3.22(c) of
the Disclosure Schedule, no Xxxx has been or is now
involved in any opposition, invalidation, or
cancellation and, to the Seller's Knowledge, no such
action is Threatened with the respect to any of the
Marks.
(iv) Except as set forth on Part 3.22(c) of
the Disclosure Schedule, to the Seller's Knowledge,
there is no potentially interfering trademark or
trademark application of any third party.
(d) Non-Infringement.
(i) Except as listed on Part 3.22(d) of the
Disclosure Schedule, no action is pending or, to the
Seller's Knowledge Threatened with respect to the
Seller's ownership of, or potential infringements of
or any other claims as to the Intellectual Property
Assets or current products of Seller. None of the
Intellectual Property Assets including, the current
products manufactured by the Seller infringe, violate
or constitute a misappropriation (or to Seller's
Knowledge in the past infringed, violated or
constituted a misappropriation) of any intellectual
property rights of any other person or entity.
Neither Seller, Ney or Xxxxxxxx has received any
complaint, claim or notice alleging any such
infringement, violation or misappropriation, and to
the Seller's Knowledge, there is no threatened
complaint, claim or notice.
(ii) Seller has taken all reasonable
measures to protect the proprietary nature and value
of each of the Intellectual Property Assets. No other
person or entity has any rights to any of the
Intellectual Property Assets owned or used by Seller
and to the Seller's Knowledge, no other person or
entity is infringing, violating or misappropriating
any of the Intellectual Property Assets.
(e) Software.
(i) The Software of the Seller included in
the Intellectual Property Assets as defined above
performs materially in accordance with the
documentation and other written descriptions used in
connection with the Software and is free of material
defects in programming and operation, is in
machine-readable form, and contains all currently
available computer programs, materials, tapes,
know-how, object and source codes, other written
materials, know-how and processes related to the
Software. Seller has delivered to the Buyer complete
and correct copies of all user and technical
documentation currently available related to the
Software.
(f) Ownership of Intellectual Property Assets -- Except as contemplated by
the Technology Agreements, Seller owns and has the right to use and on the
Closing Date shall own and have the right to use and sell the products
incorporating all of the Intellectual Property Assets used in the operation of
the Seller's Business or necessary for the operation of the Seller's Business as
presently conducted.
3.23 EMPLOYEE BENEFIT MATTERS
(a) Part 3.23(a) of the Disclosure Schedule contains a list of each
employee pension benefit plan (within the meaning of section 3(2) of ERISA) to
which Seller contributes or is required to contribute on behalf of its
employees. Also attached to the Disclosure Schedule with respect to each of such
plans are the most recent summary plan descriptions.
With respect to each of the plans listed in the Disclosure Schedule:
(i) A determination letter has been received
to the effect that any such qualified plan is
qualified under Section 401 of the Code and the
trusts maintained pursuant thereto are exempt from
the Federal income taxation under Section 501 of the
Code.
(ii) No reportable event, as such term is
defined in Section 4043(b) of ERISA, has occurred and
is continuing with respect to any of such plans which
are subject to Section 4043(b) of ERISA, other than
those which might arise as a result of the
transactions contemplated by this Agreement.
(iii) Neither Seller nor any ERISA Affiliate
has incurred any outstanding liability to the Pension
Benefit Guaranty Corporation (other than for the
payment of premiums) and will not incur any liability
to the Pension Benefit Guaranty Corporation as a
result of the transactions contemplated by this
Agreement which would have a Material Adverse Effect.
(iv) No "prohibited transaction" as such
term is defined in Section 4975 of the Code and
Section 406 of ERISA, has occurred with respect to
such plans which could subject Buyer to a tax or
penalty for such prohibited transactions imposed by
either Section 502 of ERISA or Section 4975 of the
Code.
(v) With respect to any plan that is subject
to Title IV of ERISA, no such plan has an accumulated
funding deficiency.
(vi) Neither Seller nor any ERISA Affiliate
has incurred any withdrawal liability with respect to
any multi-employer plan under Section 4201 of ERISA
nor has received any notification that any
multi-employer plan is in reorganization or has
terminated.
(vii) All employees of Seller who accept
employment by Buyer will, as of the Closing Date, be
fully vested in benefits accrued under any plan
qualified under Section 401 of the Code and
maintained by Seller or any ERISA Affiliate of
Seller.
(b) Seller shall comply with the health care continuation coverage
requirements of Section 162(k) and 4980B of the Code and Sections 601 through
608 of ERISA, for all Employees of Seller who have a qualifying event as a
result of this Agreement.
(c) Entry into this Agreement and performing the obligations hereunder will
not violate any law, regulation, or contract relating to any employee benefit
plan (within the meaning of Section 3(3) of ERISA) maintained by Seller or
subject or expose Buyer to any excise tax or recapture of investment tax credit.
Buyer will have no responsibility with respect to any employee benefit plan
(within the meaning of Section 3(3) of ERISA) maintained by Seller or any ERISA
Affiliate of the Seller.
3.24 CUSTOMERS
Listed in Part 3.24 of the Disclosure Schedule are the names and addresses
of the customers (by revenue) of the Seller for each of the last three (3)
fiscal years and the eleven (11) months ended January 31, 1998, and the amount
for which each such customer was invoiced during each such period. Except as
disclosed in Part 3.24 of the Disclosure Schedule, the Seller has not received
any notice or has any Knowledge that any customer of the Seller, as listed in
Part 3.24 of the Disclosure Schedule, for the year ended February 28, 1997 or
the eleven (11) months ended January 31, 1998, has ceased, or will cease, to use
the products, equipment, goods or services of the Seller, or has substantially
reduced, or will substantially reduce, the use of such products, equipment,
goods or services at any time.
3.25 SUPPLIERS
Listed in Part 3.25 of the Disclosure Schedule are the names and addresses
of the suppliers of Seller for each of the last three (3) fiscal years and the
eleven (11) months ended Januaryy31, 1998 and the amount of raw materials,
suppliers, merchandise or other goods purchased by Seller. Except as disclosed
in Part 3.25 of the Disclosure Schedule, the Seller has not received any notice
and does not have any Knowledge that any significant supplier will not sell raw
materials, supplies, merchandise or other goods to the Seller at any time after
the Closing Date on terms and conditions substantially similar to those used in
its current sales to the Seller. Except as disclosed in Part 3.25 of the
Disclosure Schedule, each of the Seller's outstanding blanket orders for raw
materials, supplies, merchandise and other goods can be terminated at any time
by the Seller without incurring any penalty or payment.
3.26 DISCLOSURE
(a) No representation or warranty of the Seller in this Agreement and no
statement in the Disclosure Schedule omits to state a material fact required to
be made in such representation or warranty or in the Disclosure Schedule and
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
(b) There is no fact known to the Seller that has specific application to
the Seller's Business (other than general economic or industry conditions) and
that could have a Material Adverse Effect on Seller or Seller's Business that
has not been set forth in this Agreement or the Disclosure Schedule.
3.27 TRANSACTIONS WITH AFFILIATES
Except as disclosed in Part 3.27 of the Disclosure Schedule, no
stockholder, director, officer or employee of Seller, or any member of his or
her immediate family or any other of its, his or her affiliates, owns or has any
ownership interest in any corporation or other entity, or any Related Person,
that is or was during the last three years a party to, or in any property which
is or was during the last three years the subject of, any material contract,
agreement or understanding, business arrangement or relationship with Seller.
3.28 BROKERS OR FINDERS
The Seller and its agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly organized, validly existing, and in good
standing under Delaware law, with full corporate power and authority to conduct
its business as it is now being conducted and to own or use the properties and
assets that it purports to own or use except where its failure to qualify would
not have a Material Adverse Effect on Buyer. Buyer has delivered to the Seller
copies of its Organizational Documents, as currently in effect.
4.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms. Buyer has the
full corporate power and authority to execute and deliver this Agreement and the
other documents contemplated to be executed and delivered at the Closing by
Buyer and to perform its obligations under this Agreement and such other
documents.
(b) Except as set forth in Part 4.2 of the Disclosure Schedule, neither the
execution and delivery of this Agreement nor the consummation or performance of
any of the transactions contemplated hereby will give any Person the right to
prevent, delay, or otherwise interfere with any of the transactions contemplated
hereby pursuant to:
(i) any provision of Buyer's Organizational
Documents;
(ii) any resolution adopted by the board of
directors of the Buyer;
(iii) any Legal Requirement or Order to
which Buyer may be subject; or
(iv) any material contract to which Buyer is
a party or by which Buyer may be bound.
Except as set forth in Part 4.2 of the Disclosure Schedule, Buyer is not and
will not be required to obtain any Consent from any Person in connection with
the execution and delivery of this Agreement or the consummation or performance
of any of the transactions contemplated hereby.
4.3 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been commenced against Buyer and
that challenges, or may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, any of the transactions contemplated hereby. To
Buyer's Knowledge, no such Proceeding has been Threatened.
5. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Assets and to take the
other actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Buyer, in whole or in part):
5.1 ACCURACY OF REPRESENTATIONS
After giving effect to the matters set forth in the Disclosure Schedules,
all of the representations and warranties of the Seller and Xxxxxxxx in this
Agreement (considered collectively), and each of these representations and
warranties (considered individually), must have been accurate in all material
respects (other than representations and warranties having materiality
qualifiers, which shall be accurate in all respects) as of the date of this
Agreement, and must be accurate in all material respects (other than
representations and warranties having materiality qualifiers, which shall be
accurate in all respects) as of the Closing Date as if made on the Closing Date,
after giving effect to any supplement to the Disclosure Schedules.
5.2 SELLER'S PERFORMANCE
(a) All of the covenants and obligations that the Seller is required to
perform or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been duly performed and complied with in
all material respects.
(b) Each document required to be delivered pursuant to Section 2.9 must
have been delivered.
5.3 CONSENTS
Except as set forth in Section 7.1(b), each of the Consents identified in
Part 3.2 of the Disclosure Schedule, must have been obtained and must be in full
force and effect.
5.4 ADDITIONAL DOCUMENTS
Each of the following documents must have been
delivered to Buyer by the Seller:
(a) an opinion of Xxxxxxx & Xxxxxx, dated the Closing Date, in the form of
Exhibit 5.4(a);
(b) such other documents as Buyer may reasonably request for the purpose of
(i) enabling its counsel to provide the opinion referred to in Section 6.4(a),
(ii) evidencing the accuracy of any of the Seller's representations and
warranties, (iii)yevidencing the performance by the Seller of, or the compliance
by the Seller with, any covenant or obligation required to be performed or
complied with by the Seller, and (iv)yevidencing the satisfaction of any
condition referred to in this Section 5;
(c) a certified copy of the corporate proceedings required on the part of
Seller to authorize and carry out this Agreement and to convey, assign, transfer
and deliver the Assets to Buyer;
(d) within fifteen (15) days after Closing Date, unless otherwise provided,
an update of the following Disclosure Schedules with a true, correct and
complete list and amount, as of February 28, 1998:
(i) the Fixed Assets;
(ii) the Accounts Receivable, including an
Aging thereof;
(iii) the trade accounts payable assumed
under this Agreement;
(iv) the accrued expenses assumed under this
Agreement, upon delivery of Closing Financial
Statements;
(v) all unfilled customers orders; and
(vi) all shipments made during the period
from August 1, 1997 through February 28, 1998; the
nature of which information shall not be materially
different from the information supplied by Seller as
of the date hereof.
5.5 NO PROCEEDINGS
Since the date of this Agreement, there must not have been commenced or
Threatened against Buyer, or against any Person affiliated with Buyer, any
Proceeding (a) involving any challenge to, or seeking damages or other relief in
connection with, any of the transactions contemplated hereby, or (b) that may
reasonably have the effect of preventing, delaying, making illegal, or otherwise
interfering with any of the transactions contemplated hereby.
5.6 NO CLAIM REGARDING ASSETS OR SALE PROCEEDS
There must not have been made or Threatened by any Person any claim
asserting that such Person (a) is the holder or the beneficial owner of, or has
the right to acquire or to obtain beneficial ownership of, the Assets, or (b) is
entitled to all or any portion of the Purchase Price payable for the Assets.
5.7 NO PROHIBITION
Neither the consummation nor the performance of any of the transactions
contemplated hereby will, directly or indirectly (with or without notice or
lapse of time), materially contravene, or conflict with, or result in a material
violation of, or cause Buyer or any Person affiliated with Buyer to suffer any
material adverse consequence under, (a) any applicable Legal Requirement or
Order, or (b) any Legal Requirement or Order that has been published,
introduced, or otherwise proposed by or before any Governmental Body.
5.8 OTHER AGREEMENTS
(a) Seller shall have negotiated and delivered a New Lease acceptable to
Buyer with respect to the property located at 0000 Xxxx Xxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxx 00000 (the "New Lease") that provides for the lease of
the premises to Buyer and the termination of the existing lease on or before the
Closing Date.
(b) Buyer shall have negotiated employment agreements with key employees of
the Seller which are set forth in Part 5.8(b) of the Disclosure Schedule.
6. CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATION TO CLOSE
The Seller's obligation to sell the Assets and to take the other actions
required to be taken by the Seller at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Seller, in whole or in part):
6.1 ACCURACY OF REPRESENTATIONS
All of Buyer's representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), must have been accurate in all material respects (other than
representations and warranties having materiality qualifiers, which shall be
accurate in all respects) as of the date of this Agreement and must be accurate
in all material respects (other than representations and warranties having
materiality qualifiers, which shall be accurate in all respects) as of the
Closing Date as if made on the Closing Date, after giving effect to any
supplement to the Disclosure Schedules.
6.2 BUYER'S PERFORMANCE
(a) All of the covenants and obligations that Buyer is required to perform
or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been performed and complied with in all
material respects.
(b) Buyer must have delivered each of the documents required to be
delivered by Buyer pursuant to Section 2.9 and must have paid the Purchase
Price.
6.3 CONSENTS
Each of the Consents identified in Part 4.2 of the Disclosure Schedule must
have been obtained and must be in full force and effect.
6.4 ADDITIONAL DOCUMENTS
Buyer must have caused the following documents to be delivered to Seller:
(a) an opinion of Xxxxxxx, Xxxxxxxx & Xxxxxxx, dated the Closing Date, in
the form of Exhibit 6.4(a); and
(b) such other documents as the Seller may reasonably request for the
purpose of (i) enabling its counsel to provide the opinion referred to in
Section 5.4(a), (ii) evidencing the accuracy of any representation or warranty
of Buyer, (iii) evidencing the performance by Buyer of, or the compliance by
Buyer with, any covenant or obligation required to be performed or complied with
by Buyer, or (iv) evidencing the satisfaction of any condition referred to in
this Section 6.
6.5 NO INJUNCTION
There must not be in effect any Legal Requirement or any injunction or
other Order that (a) prohibits the sale of the Assets by the Seller to Buyer,
and (b) has been adopted or issued, or has otherwise become effective, since the
date of this Agreement.
7 ADDITIONAL AGREEMENTS
7.1 PRE-CLOSING CONDITIONS
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing, except as otherwise indicated.
(a) Each of the Parties will use its reasonable best efforts to take all
action and to do all things necessary in order to consummate and make effective
the transactions contemplated by this Agreement.
(b) Seller will give any notices to third parties, and shall obtain any
third party consents that are required or that the Buyer may reasonably request
in connection with the matters referred to in this Agreement. Each of the
Parties will give any notices to, make any filings with, and use its best
efforts to obtain any authorizations, consents, and approvals of governments and
governmental agencies in connection with the matters referred to in this
Agreement and the Disclosure Schedules. If any such consents or approvals
relating to an Assumed Contract have not been obtained prior to the Closing Date
and the assignment of any such Assumed Contract would constitute a breach
thereof, then Seller shall hold such Assumed Contract and all benefits derived
therefrom (economic or otherwise) in trust for the Buyer. Seller shall continue
to use its best efforts to obtain any such consents or approvals relating to
Assumed Contracts after the Closing Date. Until such consent or approval has
been obtained, or if it cannot be obtained, Seller shall continue to maintain
the existence of such Assumed Contract, as agent and trustee for Buyer, at
Seller's expense (net of expenses Buyer would have incurred had the applicable
Assumed Contract been assigned or transferred), and for the benefit of Buyer.
(c) The Seller will not engage in any practice, take any action, or enter
into any transaction outside the Ordinary Course of Business.
(d) Except as set forth herein, the Seller will keep its business and
properties substantially intact, including its present operations, physical
facilities, working conditions, and relationships with lessors, licensors,
suppliers, customers and employees.
(e) The Seller will permit representatives of the Buyer to have full
access, at all reasonable times, and in a manner so as not to interfere with the
normal business operations of the Seller, to all premises, properties,
personnel, books, records (including Tax records or the relevant portions
thereof), contracts, and documents of or pertaining to the Seller.
(f) The Seller will give prompt written notice to the Buyer of any material
adverse development causing a breach of any of the representations and
warranties in Section 3 above. Each Party will give prompt written notice to the
others of any material adverse development causing a breach of any of its own
representations and warranties in this Agreement. No disclosures by any Party
pursuant to this Section 7.1(f), however, shall be deemed to amend or
supplement, the Disclosure Schedules or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
(g) Prior to the Closing Date, Ney, Xxxxxxxx and Seller will not (i)
solicit, initiate, or encourage the submission of any proposal or offer from any
Person relating to the acquisition of any capital stock or other voting
securities, or any substantial portion of the Assets, of the Seller (including
any acquisition structured as a merger, consolidation, or share exchange) or
(ii) participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing. The Seller will notify the Buyer immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
7.2 POST-CLOSING COVENANTS
The Parties agree as follows with respect to the period following the
Closing.
(a) In case at any time after the Closing any further action is necessary
to carry out the purposes of this Agreement, each of the Parties will take such
further action (including the execution and delivery of such further instruments
and documents) as any other Party may request, all at the sole cost and expense
of the requesting Party. The Seller acknowledges and agrees that from and after
the Closing, the Buyer will be entitled to copies of all documents, books,
records (including the relevant portions of Tax records), agreements, and
financial data of any sort relating to the Seller's Business.
(b) In the event and for so long as any Party actively is contesting or
defending against any action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand in connection with (i) any transaction contemplated
under this Agreement or (ii) any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction or prior to the Closing Date involving the
Seller, each of the other Parties will cooperate with it and provide such
testimony and access to their books and records as shall be necessary in
connection with the contest or defense, all at the sole cost and expense of the
contesting or defending Party.
(c) Seller will not take any action that is designed or intended to have
the effect of discouraging any lessor, licensor, customer, supplier or other
business associate of the Seller from maintaining the same business
relationships with the Buyer after the Closing as it maintained with the Seller
prior to the Closing. The Seller will refer all customer inquiries relating to
the business of the Seller to the Buyer from and after the Closing.
(d) The Seller will treat and hold as such all of the Confidential
Information, refrain from using any of the Confidential Information, except in
connection with this Agreement, and deliver promptly to the Buyer or destroy, at
the request and option of the Buyer, all tangible embodiments (and all copies)
of the Confidential Information which are in its possession. In the event that
Seller is requested or required (by oral question or request for information or
documents in any legal proceeding, interrogatory, subpoena, civil investigative
demand, or similar process) to disclose any Confidential Information, that
Seller will notify the Buyer promptly of the request or requirement so that the
Buyer may seek an appropriate protective order or waive compliance with the
provisions of this Section 7.2(d). If, in the absence of a protective order or
the receipt of a waiver hereunder, the Seller is, on the advice of counsel,
compelled to disclose any Confidential Information to any tribunal or else stand
liable for contempt, that Seller may disclose the Confidential Information to
the tribunal; provided, however, that Seller shall use its order or other
assurance that confidential treatment will be accorded to such portion of the
Confidential Information required to be disclosed as the Buyer shall designate.
The foregoing provisions shall not apply to any Confidential Information which
is generally available to the public immediately prior to the time of
disclosure.
(e) With respect to the collection of the Accounts
Receivable:
(i) After the Closing Date, Buyer shall use
reasonable efforts to attempt to collect all of the
Accounts Receivable with reasonable diligence
consistent with Buyer's general business practice for
a period of ninety (90) days following the Closing
Date (the "Collection Period"), but shall not be
required to institute any legal proceedings or use a
collection agency to enforce the collection of any
such Accounts Receivable. Upon the expiration of the
Collection Period, Buyer shall furnish Seller with a
collection report setting forth the Accounts
Receivables which remain uncollected. Within ten (10)
days after receipt of such collection report, Seller
shall pay to Buyer an amount equal to the Gross
Accounts Receivable (as defined below) which have not
been collected. Upon receipt of such payment, Buyer
shall deliver to the Seller all right, title and
interest in and any tangible evidence of the
uncollected Accounts Receivable then in the
possession of Buyer and Seller shall be entitled to
use such customary and reasonable actions as it deems
necessary or desirable in order to collect such
unpaid accounts; provided that Seller shall consult
with Buyer prior to taking any collection action
which might reasonably be expected to jeopardize the
Buyer's relationship with such customer. For purposes
of this Section, Gross Accounts Receivable means, the
gross Accounts Receivable as of the Closing Date less
any reserve for Accounts Receivable shown on the
Closing Financial Statements.
(ii) The Seller will, if requested by Buyer,
cooperate with Buyer in collecting any Accounts
Receivable. The Buyer will, if requested by Seller,
cooperate with Seller in collecting any Accounts
Receivable.
(iii) The Seller hereby authorizes Buyer to
open any and all mail addressed to Seller if received
on or after the Closing Date and hereby grants to the
Buyer a power of attorney to endorse and cash any
checks or instruments made payable or endorsed to
Seller or its order and received by Buyer.
(iv) The Seller agrees that it will forward
promptly to Buyer any monies, checks or instruments
received by Seller after the Closing Date with
respect to the Accounts Receivable.
(v) Any sums received by the Buyer in
respect of Accounts Receivable after payment for such
receivable by the Seller shall be promptly
transmitted by the Buyer to the Seller.
(f) Buyer shall operate the Business in the Ordinary Course of Business
consistent with Seller's past practices for the period from the date of this
Agreement until the Closing Date.
(g) Within thirty (30) days after the Closing Date, Seller shall remove all
containerized Hazardous Waste (as that term is defined by the Environmental
Laws) generated by Seller prior to the Closing Date.
(h) Within ten (10) days after the Closing Date, Seller and Buyer shall
execute any and all documents required to comply with the Connecticut Property
Transfer Law.
7.3 TAX MATTERS
The following provisions shall govern the allocation of responsibility as
between Buyer and Seller for certain tax matters following the Closing Date:
(a) Buyer and Seller shall cooperate fully, as and to the extent reasonably
requested by the other party, in connection with the filing of Tax Returns
pursuant to this Section and any audit, litigation or other proceeding with
respect to Taxes. Such cooperation shall include the retention and (upon the
other party's request) the provision of records and information which are
reasonably relevant to any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. The Seller
agrees (A) to retain all books and records with respect to Tax matters pertinent
to the Seller relating to any taxable period beginning before the Closing Date
until the expiration of the statute of limitations (and, to the extent notified
by Buyer, any extensions thereof) of the respective taxable periods, and to
abide by all record retention agreements entered into with any taxing authority,
and (B) to give the other party reasonable written notice prior to transferring,
destroying or discarding any such books and records and, if the transferring,
destroying or discarding any such books and records and, if the other party so
requests, the Seller shall allow the other party to take possession of such
books and records.
(b) Buyer and Seller further agree, upon request, to use their best efforts
to obtain any certificate or other document from any governmental authority or
any other Person as may be necessary to mitigate, reduce or eliminate any Tax
that could be imposed (including, but not limited to, with respect to the
transactions contemplated hereby).
(c) Buyer and Seller further agree, upon request, to provide the other
party with all information that either party may be required to report.
(d) All tax sharing agreements or similar agreements with respect to or
involving the Seller shall not be assumed by Buyer after the Closing Date, the
Buyer shall not be bound thereby or have any liability thereunder.
(e) All transfer, documentary, sales, use, stamp, registration and other
such Taxes and fees (including any penalties and interest) incurred in
connection with this Agreement shall be paid by Seller when due, and Seller
will, at their own expense, file all necessary Tax Returns and other
documentation with respect to all such transfer, documentary, sales, use, stamp,
registration and other Taxes and fees, and, if required by applicable law, Buyer
will, and will cause its affiliates to, join in the execution of any such Tax
Returns and other documentation.
7.4 SEVERANCE MATTERS
Seller shall pay all severance, termination and other payments (whether in
the form of cash or otherwise) pursuant to any written or oral agreements of
Seller or its Affiliates and expenses applicable to the employees of Seller,
including, but not limited to, any other compensation payable to employees of
Seller under applicable plant closing or similar laws with respect to employees
of Seller who are not offered employment by the Buyer.
7.5 NONCOMPETITION BY SELLER AND STOCKHOLDERS
(a) For a period of five years after the Closing (the "Restricted Period")
neither the Seller, Xxxxxxxx, Xxx or any Affiliate thereof shall engage,
directly or indirectly, in any business anywhere in the United States that
develops, designs, manufactures, sells or markets products or services of the
kind developed, designed, manufactured, sold and marketed by the Business or the
Seller as of the Closing Date or, without the prior written consent of the
Buyer, directly or indirectly, own an interest in, manage, operate, join,
control, lend money or render financial or other assistance to or participate in
or be connected with, as an officer, employee, partner, stockholder, consultant
or otherwise, any Person that competes with the Buyer, the Business or the
Seller in developing, designing, manufacturing, selling or marketing products or
services of the kind developed, designed, manufactured, sold or marketed by the
Business or the Seller as of the Closing; provided, however, that, for the
purposes of this section ownership of securities having no more than five
percent (5%) of the outstanding voting power of any competitor which are listed
on any national securities exchange or traded actively in the national
over-the-counter market shall not be deemed to be in violation of this section
so long as the Person owning such securities has no other connection or
relationship with such competitor.
(b) As a separate and independent covenant, the Seller agrees with the
Buyer that, for a period of five years following the Closing, neither the
Seller, Xxxxxxxx, Xxx or any Affiliate thereof shall, in any way, directly or
indirectly, for the purpose of conducting or engaging in any business that
develops, designs, manufactures, sells or markets products or services of the
kind developed, designed, manufactured, sold or marketed by the Business or the
Seller as of the Closing, call upon, solicit, advise or otherwise do, or attempt
to do, business with any customers of the Business or the Seller in order to
take away or interfere or attempt to interfere with any custom, trade, business
or patronage of the Business or the Seller, or interfere with or attempt to
interfere with any officers, employees, representatives or agents of the
Business or the Seller, or induce or attempt to induce any of them to leave the
employ of the Seller or violate the terms of their contracts, or any employment
arrangements, with the Company.
(c) The Restricted Period shall be extended by the length of any period
during which the Seller is in breach of the terms of this Section 7.5.
8. TERMINATION
8.1 TERMINATION EVENTS
This Agreement may, by notice given prior to or at
the Closing, be terminated:
(a) by either Buyer or the Seller if a material Breach of any provision of
this Agreement has been committed by the other party and such Breach has not
been waived or cured within 10 days after notice of such breach;
(b) (i) by Buyer if any of the conditions in Section 5 has not been
satisfied as of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such condition on or
before the Closing Date; or (ii) by the Seller, if any of the conditions in
Section has not been satisfied as of the Closing Date or if satisfaction of such
a condition is or becomes impossible (other than through the failure of the
Seller to comply with its obligations under this Agreement) and Seller has not
waived such condition on or before the Closing Date;
(c) by mutual consent of Buyer and the Seller; or
(d) by either Buyer or the Seller if the Closing has not occurred (other
than through the failure of any party seeking to terminate this Agreement to
comply fully with its obligations under this Agreement) on or before March 4,
1998 or such later date as the parties may agree upon.
8.2 EFFECT OF TERMINATION
Each party's right of termination under Section 8.1 is in addition to any
other rights it may have under this Agreement or otherwise, and the exercise of
a right of termination will not be an election of remedies. If this Agreement is
terminated pursuant to Section 8.1, all further obligations of the parties under
this Agreement will terminate, except that the obligations in Section 10.1 will
survive; provided, however, that if this Agreement is terminated by a party
because of the Breach of the Agreement by the other party or because one or more
of the conditions to the terminating party's obligations under this Agreement is
not satisfied as a result of the other party's failure to comply with its
obligations under this Agreement, the terminating party's right to pursue all
legal remedies will survive such termination unimpaired.
9. INDEMNIFICATION; REMEDIES
9.1 SURVIVAL
All representations, warranties, covenants, and obligations in this
Agreement, the Disclosure Schedule, the supplements to the Disclosure Schedule,
the certificate delivered pursuant to Section 2.9(a)(iv) and Section 2.9(b)(ii)
and any other certificate or document delivered pursuant to this Agreement will
survive the Closing. However, the written waiver of any condition based on the
accuracy of any representation or warranty in this Agreement, or on the
performance of or compliance with any covenant or obligation in this Agreement,
will eliminate the right to indemnification, payment of Damages, or other remedy
based on such representations, warranties, covenants and obligations.
9.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY
THE SELLER AND XXXXXXXX
The Seller and Xxxxxxxx, jointly and severally, hereby indemnify and hold
harmless Buyer and its Representatives, stockholders, controlling persons, and
affiliates (collectively, the "Indemnified Persons") for, and will pay to the
Indemnified Persons the amount of, any loss, liability, claim, damage (including
incidental and consequential damages), expense (including costs of investigation
and defense and reasonable attorneys' fees) or diminution of value, whether or
not involving a third-party claim (collectively, "Damages"), arising, directly
or indirectly, from or in connection with:
(a) any Breach of any representation or warranty made by the Seller or
Xxxxxxxx in this Agreement or any other certificate or document delivered by the
Seller or Xxxxxxxx pursuant to this Agreement;
(b) any Breach of any representation or warranty made by the Seller or
Xxxxxxxx in this Agreement as if such representation or warranty were made on
and as of the Closing Date;
(c) any Breach by the Seller or Xxxxxxxx of any covenant or obligation in
this Agreement;
(d) any product shipped or manufactured by, or any services provided by,
the Seller on or prior to the Closing Date, including, without limitation, any
damages arising out of allegations of personal injury or property suffered by
any third party, or activities or omissions of the Seller that occurred on or
prior to the Closing Date;
(e) any claim by any Person for brokerage or finder's fees or commissions
or similar payments based upon any agreement or understanding alleged to have
been made by any such Person with the Seller (or any Person acting on their
behalf) in connection with any of the transactions contemplated hereby;
(f) any Environmental, Health and Safety Liabilities that relate to the
business or operation of the Seller, the Assets or the Facilities on or prior to
the Closing Date, whether or not the facts underlying such Environmental, Health
and Safety Liabilities are disclosed in the Disclosure Schedule, known or
unknown to the Seller; or
(g) any Tax liabilities or obligations of the Seller.
9.3 TIME LIMITATIONS
If the Closing occurs, the Seller and Xxxxxxxx will have no liability (for
indemnification or otherwise) with respect to any representation or warranty, or
covenant or obligation to be performed and complied with prior to the Closing
Date, other than those in Sections 2.3(b), 3.6 (title only), 3.10, 3.12, 3.15
and 3.19, unless on or before the second anniversary of the Closing Date, Buyer
notifies the Seller and Xxxxxxxx of a claim specifying the factual basis of that
claim in reasonable detail to the extent then known by Buyer, a claim with
respect to Section 3.6 (title only), 3.12 or 3.15, or a claim for
indemnification or reimbursement not based upon any representation or warranty
or any covenant or obligation to be performed and complied with prior to the
Closing Date, may be made at any time within the applicable statute of
limitations; a claim with respect to Section 3.19, which must be made within the
seventh anniversary date from the Closing Date; a claim with respect to Section
3.10 which must be made within ninety (90) days from the Closing Date; and a
claim with respect to Section 2.3(b) which must be made within the time period
provided by Seller's warranty with respect to such product.
9.4 LIMITATIONS ON AMOUNT -- SELLER
The Seller and Xxxxxxxx will have no liability (for indemnification or
otherwise) with respect to the matters described in Section 9.2 until the total
of all Damages actually paid or incurred by Buyer with respect to such matters
(excluding, however, any individual matter in the amount of Five Hundred and
00/100 Dollars ($500.00) or less) exceeds Twenty Thousand and 00/100 Dollars
($20,000.00) and then for the full amount of such Damages (excluding, however,
any individual matter in the amount of Five Hundred and 00/100 Dollars ($500.00)
or less). However, this Section 9.4 will not apply to any intentional Breach by
the Seller or Xxxxxxxx of any covenant or obligation, and the Seller and
Xxxxxxxx will be liable for all Damages with respect to such Breaches in an
amount not to exceed the Purchase Price, as adjusted, plus the total of all
payments made under the Technology Assignment Agreement as of the date the claim
is asserted nor shall this section apply to claims by Buyer with respect to
Sections 2.3(b), 3.6 (title only), 3.9, 3.10, 3.12, 3.15 and 3.19 of this
Agreement for which Seller and Xxxxxxxx shall be liable for the full amount of
such Damages.
9.5 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
(a) Promptly after receipt by the Indemnified Persons under Section 9.2 of
notice of the commencement of any Proceeding against it, such Indemnified
Persons will, if a claim is to be made against an indemnifying party under such
Section, give notice to the indemnifying party of the commencement of such
claim, but the failure to notify the indemnifying party will not relieve the
indemnifying party of any liability that it may have to any Indemnified Persons,
except to the extent that the indemnifying party demonstrates that the defense
of such action is prejudiced by the indemnifying party's failure to give such
notice.
(b) If any Proceeding referred to in Section 9.5(a) is brought against the
Indemnified Persons and it gives notice to the indemnifying party of the
commencement of such Proceeding, the indemnifying party will, unless the claim
involves Taxes, be entitled to participate in such Proceeding and, to the extent
that it wishes (unless (i) the indemnifying party is also a party to such
Proceeding and the Indemnified Persons determine in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the Indemnified Party of its financial capacity
to defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel satisfactory
to the indemnified Persons and, after notice from the indemnifying party to the
Indemnified Persons of its election to assume the defense of such Proceeding,
the indemnifying party will not, as long as it diligently conducts such defense,
be liable to the Indemnified Persons under this Section 9.5 for any fees of
other counsel or any other expenses with respect to the defense of such
Proceeding, in each case subsequently incurred by the Indemnified Persons in
connection with the defense of such Proceeding, other than reasonable costs of
investigation. If the indemnifying party assumes the defense of a Proceeding,
(i) it will be conclusively established for purposes of this Agreement that the
claims made in that Proceeding are within the scope of and subject to
indemnification; (ii) no compromise or settlement of such claims may be effected
by the indemnifying party without the Indemnified Persons' consent unless (A)
there is no finding or admission of any violation of Legal Requirements or any
violation of the rights of any Person and no effect on any other claims that may
be made against the Indemnified Persons, and (B) the sole relief provided is
monetary damages that are paid in full by the indemnifying party; and (iii) the
Indemnified Persons will have no liability with respect to any compromise or
settlement of such claims effected without its consent. If notice is given to an
indemnifying party of the commencement of any Proceeding and the indemnifying
party does not, within ten (10) days after the Indemnified Persons' notice is
given, give notice to the indemnified party of its election to assume the
defense of such Proceeding, the indemnifying party will be bound by any
determination made in such Proceeding or any compromise or settlement effected
by the Indemnified Persons.
(c) Notwithstanding the foregoing, if an Indemnified Person determines in
good faith that there is a reasonable probability that a Proceeding may
adversely affect it or its Affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, the
Indemnified Persons may, by notice to the indemnifying party, assume the
exclusive right to defend, compromise, or settle such Proceeding, but the
indemnifying party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent (which may
not be unreasonably withheld).
9.6 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS
A claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the Seller and Xxxxxxxx from whom
indemnification is sought.
9.7 EXCLUSIVE REMEDIES
Nothing in this Section 9.7 is intended to restrict any remedies which may
be available to Buyer with respect to any breach of or other default under any
separate agreement executed in connection with any matter described in this
Agreement, including (without limitation) breaches of or defaults under the
Technology Assignment Agreement.
9.8 RIGHT TO SET OFF; EFFECT OF INDEMNIFICATION PAYMENT
In the event that amounts are owed for indemnification pursuant to Section
9 of this Agreement by the Seller and Xxxxxxxx and such amounts remain unpaid at
the date upon which the Buyer must pay consideration to the Seller pursuant to
the Technology Assignment Agreement, the Buyer may set off such amounts against
the payments owed to the Seller at such date.
10. GENERAL PROVISIONS
10.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each party to
this Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the transactions
contemplated hereby, including all fees and expenses of agents, representatives,
counsel and accountants. In the event of termination of this Agreement, the
obligation of each party to pay its own expenses will be subject to any rights
of such party arising from a breach of this Agreement by another party.
10.2 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with respect to this Agreement
or the transactions contemplated hereby will be issued at such time as required
by applicable law and as agreed upon by the parties hereto. The Seller and Buyer
will consult with each other in good faith concerning the means by which the
Seller's employees, customers, and suppliers and others having dealings with the
Seller's Business will be informed of the transactions contemplated hereby, and
Buyer and the Seller will have the right to be present for any such
communication.
10.3 NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), or (c) when received by the addressee,
if sent by a nationally recognized overnight delivery service, in each case to
the appropriate addresses and telecopier numbers set forth below (or to such
other addresses and telecopier numbers as a party may designate by notice to the
other parties):
The Seller: Ney Ultrasonics Inc.
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxx
Facsimile No.: 860/242-8388
with a copy to: Xxxxxxx X. Xxxxxxx III, Esq.
Xxxxxxxx Group, Inc.
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxx 00000
Facsimile No.: 860/242-8388
with a copy to: Xxxxxxx & Xxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
Facsimile No.: 617/439-4170
Buyer: CAE U.S. Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxx, Vice President
Facsimile No.: 513/870-1778
with a copy to: CAE Blackstone
0 Xxxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxx
Facsimile No.: 716/665-2480
with a copy to: Xxxxxxx, Xxxxxxxx & Klekamp, P.L.L.
1800 Provident Tower
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile No.: 513/579-6956
10.4 FURTHER ASSURANCES; RECORDS RETENTION
The parties agree: (a) to furnish upon request to each other such further
information; (b) to execute and deliver to each other such other documents; and
(c) to do such other acts and things, all as the other party or parties may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement. Buyer shall retain all files,
books and other records relating to the operation of the Seller's Business after
the Closing in a manner that is consistent with Buyer's general records
retention policy (under which Buyer currently retains most records for seven (7)
years) and shall, after the Closing, give the Seller and its respective
representative(s) access thereto during regular business hours on reasonable
prior notice.
10.5 WAIVER
Except as otherwise provided in Section 9.2, the rights and remedies of the
parties to this Agreement are cumulative and not alternative. Neither the
failure nor any delay by any party in exercising any right, power or privilege
under this Agreement or the documents referred to in this Agreement will operate
as a waiver of such right, power or privilege, and no single or partial exercise
of any such right, power, or privilege will preclude any other or further
exercise of such right, power, or privilege or the exercise of any other right,
power, or privilege. To the maximum extent permitted by applicable law, (a) no
claim or right arising out of this Agreement or the documents referred to in
this Agreement can be discharged by one party, in whole or in part, by a waiver
or renunciation of the claim or right unless in writing signed by the other
party; (b) no waiver that may be given by a party will be applicable except in
the specific instance for which it is given; and (c) no notice to or demand on
one party will be deemed to be a waiver of any obligation of such party or of
the right of the party giving such notice or demand to take further action
without notice or demand as provided in this Agreement or the documents referred
to in this Agreement.
10.6 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements, arrangements or
understandings between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by all the parties hereto.
10.7 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither Buyer nor the Seller may assign any of its rights under this
Agreement without the prior consent of the other parties, which will not be
unreasonably withheld, except that Buyer may assign any of its rights under this
Agreement to any Subsidiary of Buyer. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy or
claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and assigns.
10.8 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
10.9 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
10.10 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
10.11 GOVERNING LAW
This Agreement will be governed by and construed under the laws of
Connecticut without regard to conflicts of laws principles.
10.12 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement.
[The Remainder of this Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
BUYER:
CAE U.S. INC.
By: /s/ Xxxx X. Xxxxxx
-------------------
Title: Vice President-Finance and Secretary
SELLER:
NEY ULTRASONICS INC.
By: /s/ Xxxxxxx X. Xxxxxxx, III
---------------------------
Title: Assistant Secretary
XXXXXXXX:
XXXXXXXX GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------
Title: Secretary
Solely for purposes for Section of the Agreement.
NEY:
THE X. X. XXX COMPANY
By: /s/ Xxxxxx X. X'Xxxx
---------------------
Title: Chief Financial Officer
GLOSSARY
"Accounts Receivable" -- as defined in Section 2.1(a).
"Affiliate" -- with respect to any specified Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person.
"Affiliated Group" -- means an affiliated group as defined in Section 1504 of
the Code (or any analogous combined, consolidated or unitary group defined under
state, local or foreign income Tax law) of which the Seller is or has been a
member.
"Agreement" -- as defined in the first paragraph of this Agreement.
"Assets" -- as defined in Section 2.1 hereof.
"Assumed Contracts" -- as defined in Section 3.17(a).
"Assumed Liabilities" -- as defined in Section 2.2(a).
"Auditors" -- as defined in Section 2.11(a).
"August 1, 1997 Balance Sheet" -- means the balance sheet dated August 1, 1997
delivered by Seller to Buyer which reflects the financial condition of Seller at
July 31, 1997.
"Breach" -- a "Breach" of a representation, warranty, covenant, obligation or
other provision of this Agreement or any instrument delivered pursuant to this
Agreement will be deemed to have occurred if there is or has been: (a) any
inaccuracy in or breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation or other provision; or (b) any
claim (by any Person) or other occurrence or circumstance that is or was
inconsistent with such representation, warranty, covenant, obligation, or other
provision, and the term "Breach" means any such inaccuracy, breach, failure,
claim, occurrence, or circumstance.
"Business" -- as defined in the Recitals.
"Buyer" -- as defined in the first paragraph of this Agreement.
"Capital Employed" -- assets less current liabilities as reflected on the
Balance Sheet of Seller at February 28, 1998 determined in accordance with
Generally Accepted Accounting Principles consistently applied as presented on
the August 1, 1997 Balance Sheet.
"Closing" -- as defined in Section 2.7.
"Closing Date" -- the date and time as of which the Closing actually takes
place.
"Closing Financial Statements" -- the Balance Sheet and statement of Net Assets
of the Seller as of February 28, 1998 and the Operating Income Statement of the
Seller for the fiscal year ending February 28, 1998.
"Code" -- the Internal Revenue Code of 1986, as amended from time to time.
"Consent" -- any approval, consent, ratification, waiver or other authorization
(including any Governmental Authorization).
"Contracts" -- all contracts, commitments or other arrangements to which the
Seller is a party and related to the Seller's Business.
"Copyrights" -- as defined in Section 3.22(a)(ii).
"Damages" -- as defined in Section 9.2.
"Disclosure Schedule" -- the disclosure schedule delivered by the Seller to
Buyer concurrently with the execution and delivery of this Agreement.
"Encumbrance" -- any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income or exercise of any other attribute of ownership.
"Environment" -- soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins and
wetlands), ground waters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"Environmental, Health, and Safety Liabilities" -- any cost, damages, expense,
liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to:
(a) any environmental, health, or safety matters or
conditions (including on-site or off-site
contamination, occupational safety and health, toxic
exposure, and regulation of chemical substances or
products);
(b) fines, penalties, judgments, awards, settlements,
legal or administrative proceedings, damages, losses,
claims, demands and response, investigative,
oversight, remedial or inspection costs and expenses
arising under Environmental Law or Occupational
Safety and Health Law;
(c) financial responsibility under Environmental Law or
Occupational Safety and Health Law for cleanup costs
or corrective action, including any investigation,
cleanup, removal, containment, or other remediation
or response actions ("Cleanup") required by
applicable Environmental Law or Occupational Safety
and Health Law (whether or not such Cleanup has been
required or requested by any Governmental Body or any
other Person) and for any natural resource damages;
or
(d) any other compliance, corrective, investigative or
remedial measures required under Environmental Law or
Occupational Safety and Health Law.
"Environmental Laws" -- any Legal Requirement, now in effect, and any
judicial or administrative interpretation thereof, including any judicial,
administrative order, consent decree or judgment, relating to the environment,
health, safety or Hazardous Materials, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act, 4288
U.S.C. 9601 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C.
ss.ss.6901 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C.
ss.ss.6901 et seq.; the Clean Water Act, 33 U.S.C. ss.ss.1251 et seq.; the Toxic
Substances Control Act, 15 U.S.C. ss.ss.2601 et seq.; the Clean Air Act, 42
U.S.C. ss.ss.7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. xx.xx. 300f et
seq.; the Atomic Energy Act, 42 U.S.C. ss.ss.2011 et seq.; the Federal
Insecticide, Fungicide and Rodenticide Act 7 U.S.C. ss.ss.136 et seq.; and the
Federal Food, Drug and Cosmetic Act, 21 U.S.C. ss.ss.301 et seq.
"Environmental Permits" -- all permits, approvals, identification numbers,
licenses and other authorizations required under any applicable Environmental
Law.
"ERISA" -- the Employee Retirement Income Security Act of 1974, as amended from
time to time.
"ERISA Affiliates" -- in relation to any Person, any trade or business (whether
or not incorporated) which is a member of a group of which that Person is a
member and which is under common control within the meaning of Section 414 of
the Code.
"Excluded Assets" -- as defined in Section 2.1(b).
"Excluded Liabilities" -- as defined in Section 2.2(d).
"Facilities" -- any real property, leaseholds, or other interests currently
owned or operated by Seller in the conduct of the Seller's Business and any
buildings, plants, structures, or equipment (including motor vehicles) currently
owned or operated by Seller in the conduct of the Seller's Business.
"Financial Statements" -- as defined in Section 3.4.
"Governmental Authorization" -- any approval, consent, license, permit, waiver,
or other authorization issued, granted, given or otherwise made available by or
under the authority of any Governmental Body or pursuant to any Legal
Requirement, other than Environmental Permits.
"Governmental Body" -- any:
(a) nation, state, county, city, town, village, district or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other government;
(c) governmental or quasi-governmental authority of any nature (including
any governmental agency, branch, department, official or entity and any court or
other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory or taxing authority or
power of any nature.
"Hazardous Materials" -- (a) petroleum or petroleum products, radioactive
materials, asbestos in any form that is or could become friable, urea
formaldehyde foam insulation, transformers or other equipment that contain
polychlorinated biphenyls, and radon gas, (b) any other chemicals, materials or
substances defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous wastes",
"restricted hazardous wastes", "toxic substances", "toxic pollutants",
"contaminants" or "pollutants", or words of similar import, under any applicable
Environmental Law, and (c) any other chemical, material or substance exposure to
which is regulated by any Governmental Authority.
"Indemnified Persons" -- as defined in Section 9.2.
"Intellectual Property Assets" -- as defined in Section 3.22.
"Knowledge" or "Seller's Knowledge" -- Seller will be deemed to have "Knowledge"
of a particular fact or other matter if an individual set forth on Schedule I
attached hereto, which lists certain employees of Seller, Ney and Xxxxxxxx, is
actually aware of such fact or other matter or would reasonably be expected to
discover or otherwise become aware of such fact or other matter in the ordinary
course of conducting his or her duties in the absence of gross negligence.
"Leases" -- as defined in Section 3.7(b)(i).
"Legal Requirement" -- any federal, state, local, municipal, foreign,
international, multinational or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"Liability" -- any and all debts, liabilities and obligations, whether accrued
or fixed, absolute or contingent, matured or unmatured or determined or
determinable, including, without limitation, those arising under any Legal
Requirement (including, without limitation, any Environmental Laws) Governmental
Body and those arising under any contract, agreement, arrangement, commitment or
undertaking.
"Loaded Labor Cost" -- means Buyer's direct labor cost, plus 35% of such direct
labor cost to cover all benefit costs with respect to the employees of Buyer.
"March 1997 Forecast" -- means the financial forecast dated March 1997 delivered
by Seller to Buyer.
"Marks" -- as defined in Section 3.22(a)(i).
"Material Adverse Change" or "Material Adverse Effect" -- means any event or
change which either individually or in combination with other events or changes
had or is likely to have a material adverse effect on the assets, business,
prospects, financial condition, or results of operations of the Person.
"Net Assets" -- assets less current liabilities of Seller as reflected on the
Seller's Balance Sheets determined in accordance with Generally Accepted
Accounting Principles consistently applied.
"New Lease" -- as defined in Section 5.8(a).
"Ney" -- means The X.X. Xxx Company, a Delaware corporation.
"Occupational Safety and Health Law" -- any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards and any program, whether governmental or private (including
those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
"Operating Income" -- revenue less the cost of goods sold and related operating
expenses incurred in the ordinary course of business and before income tax
deductions determined in accordance with Generally Accepted Accounting
Principles consistently applied and consistent with the Operating Income
Statements of Seller as of July 31, 1997 dated Augusty1, 1997.
"Order" -- any award, decision, injunction, judgment, order, ruling, subpoena,
or verdict entered, issued, made or rendered by any court, administrative
agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business" -- an action taken by a Person will be deemed to
have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such
Person and is taken in the ordinary course of the normal
day-to-day operations of such Person;
(b) such action is not required to be specifically authorized by
the board of directors of such Person (or by any Person or
group of Persons exercising similar authority); and
(c) such action is similar in nature and magnitude to actions
customarily taken, without any specific authorization by the
board of directors (or by any Person or group of Persons
exercising similar authority), in the ordinary course of the
normal day-to-day operations of other Persons that are in the
same line of business as such Person.
"Organizational Documents" -- (a) the Certificate of Incorporation and By-laws
of a corporation; and (b) any amendment to any of the foregoing.
"Percentage-of-Completion Method of Accounting" -- the method of accounting
relating to percentage of completion determined in accordance with Generally
Accepted Accounting Principles.
"Permitted Encumbrances" -- means liens for Taxes not yet due and payable.
"Person" -- any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other entity or
Governmental Body.
"Proceeding" -- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Purchase Price" -- as defined in Section 2.5.
"Real Property" -- as defined in Section 3.7(a).
"Related Person" -- with respect to a particular individual:
(a) each other member of such individual's family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's family;
(c) any Person in which such individual or members of such
individual's family hold (individually or in the aggregate) a
material interest; and
(d) any Person with respect to which such individual or one or
more members of such individual's family serves as a director,
officer, partner, executor or trustee (or in a similar
capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly
or indirectly controlled by, or is directly or indirectly
under common control with such specified Person;
(b) any Person that holds a material interest in such specified
Person;
(c) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar
capacity);
(d) any Person in which such specified Person holds a material
interest;
(e) any Person with respect to which such specified Person serves
as a general partner or a trustee (or in a similar capacity);
and
(f) any Related Person of any individual described in clause (b)
or (c).
For purposes of this definition, (a) the "Family" of an individual
includes (i) the individual, (ii) the individual's spouse, (iii) any other
natural person who is related to the individual or the individual's spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) "material interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of voting securities or other voting interests representing at least ten percent
(10%) of the outstanding voting power of a Person or equity securities or other
equity interests representing at least ten percent (10%) of the outstanding
equity securities or equity interests in a Person.
"Release" -- any disposal, abandonment, spilling, leaking, emitting,
discharging, depositing, escaping, leaching, dumping, or other releasing into
the Environment, whether intentional or unintentional.
"Representative" -- with respect to a particular Person, any director, officer,
employee, agent, consultant, advisor, or other representative of such Person,
including legal counsel, accountants, and financial advisors.
"Seller" -- as defined in the first paragraph of this Agreement.
"Software" -- as defined in Section 3.22(a)(iii).
"Subsidiary" -- with respect to any Person (the "Owner"), any corporation or
other Person of which securities or other interests having the power to elect a
majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries; when
used without reference to a particular Person, "Subsidiary" means a Subsidiary
of the Seller.
"Tax Returns" -- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax. "Taxes" --means
any (A) federal, state, local or foreign income, gross receipts, franchise,
estimated, alternative minimum, add-on minimum, sales, use, transfer,
registration, value added, excise, natural resources, severance, stamp,
occupation, premium, windfall profit, environmental, customs, duties, real
property, capital stock, social security, unemployment, disability, payroll,
license, employee or other withholding, or other tax, of any kind whatsoever,
whether disputed or not, including any interest, penalties or additions to tax
or additional amounts in respect of the foregoing; (B) liability of Seller or
Ney for the payment of any amounts of the type described in clause (A) arising
as a result of being (or ceasing to be) a member of any Affiliated Group (or
being included (or required to be included) in any Tax Return relating thereto
or as a party to any Tax allocation or Tax sharing agreement or any other
contractual obligation to indemnify any other person with respect to Taxes); and
(C) liability of Seller or Ney for the payment of any amounts of the type
described in clause (A) as a transferee or successor, by contract (including as
result of any express or implied obligation to indemnify or otherwise assume or
succeed to the liability of any other person), or otherwise.
"Technology Agreements" -- means the (i) Microsonic License Agreement dated
September 1, 1996 between Electronic Power Components, Inc., Xxxxxxx X. Xxxxxx
and The X.X. Xxx Company, (ii) Ultrasonic License Agreement dated March 1, 1993,
as amended, between Electronic Power Components, Inc., Xxxxxxx X. Xxxxxx and The
X.X. Xxx Company, and (iii) the Commercial Ultrasonic Cleaners Agreement dated
June 1, 1996.
"Threat of Release" -- a substantial likelihood of a Release that may require
action in order to prevent or mitigate damage to the Environment that may result
from such Release.
"Threatened" -- a claim, Proceeding, dispute, action, or other matter will be
deemed to have been "Threatened" if any demand or statement has been made
(orally or in writing) or any notice has been given (orally or in writing), or
if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken or otherwise
pursued in the future.
"Warranty Provision" -- as defined in Section 2.3.
