ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT ("this Agreement") is made as of December 31,
2003 among LASER FARE, INC., a Rhode Island corporation ("Seller"), INFINITE
GROUP, INC., a Delaware corporation (the "Shareholder"); and LFI, INC., a
Rhode Island corporation ("Buyer").
RECITALS:
A. Seller is engaged in the business of (a) laser engraving and (b)
manufacturing and assembling medical products (collectively, the "Business"), as
well as other business activities.
B. The Shareholder owns all of the issued and outstanding capital stock of
Seller; and
C. Buyer desires to purchase substantially all of the business and assets
of Seller relating to the Business, and Seller and the Shareholder desire that
Seller sell such business and assets relating to the Business to Buyer under the
terms of this Agreement.
NOW THEREFORE, in consideration of the mutual promises contained in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 Assets to be Purchased and Sold. At the Closing (defined in Section
4.1), Seller shall sell and convey to Buyer, and Buyer shall purchase and
acquire from Seller, all of the business and tangible and intangible assets of
Seller relating to the Business existing and owned by Seller on the Closing Date
other than the Excluded Assets (defined in Section 1.2). The assets of Seller to
be purchased hereunder (which exclude the Excluded Assets) are referred to as
the "Purchased Assets". The Purchased Assets shall include without limitation
all goodwill relating to the Business and the following assets and property, and
all additions thereto relating to the Business, less dispositions in the
ordinary course of business and permitted under this Agreement, before the
Closing Date (defined in Section 4.1):
(a) all furniture and equipment and other tangible personal
property, (the "Equipment"), including, without limitation, the items of
Equipment described in Exhibit 1.1(a);
(b) all inventory, including raw materials, work-in-process,
finished goods and packaging materials (the "Inventory");
(c) all rights under the contracts, leases and agreements described
or referred to in Exhibit 1.1(c) hereto (the "Operating Agreements"), true and
correct copies of which are being delivered to Buyer concurrently with this
Agreement;
(d) all intellectual properties, including, without limitation,
trade secrets, trademarks, trade names, copyrights and other rights or
registrations, (collectively, the "Intellectual Property");
(e) all executory or continuing agreements and other contracts or
commitments for the procurement of products entered into in the ordinary course
of the Business ("Customer Orders"), listed in Exhibit 1.1(d) hereto;
(f) all lists and records relating to the Business, including lists
and records of Seller's present and former customers, vendors, suppliers, and
customers (the "Business Records");
(g) all Licenses (as defined below); and
(h) all accounts receivable, deposits, pre-paid rent and similar
property, and all payments thereunder (collectively, "Accounts Receivable").
1.2 Excluded Assets. The Purchased Assets shall not include any assets or
properties of Seller existing on the Closing Date that are not related to the
Business or cash, the name "Laser Fare" or any Internet domain name (the
"Excluded Assets").
ARTICLE II
LIMITED ASSUMPTION OF LIABILITIES
2.1 Assumption of Liabilities. At the Closing, Buyer shall assume and be
responsible for performance of the executory obligations of Seller under the
Operating Agreements and Customer Orders, but only such obligations which are in
existence on the Closing Date and under which Seller is not in default at that
time (the "Assumed Orders"). On the Payment Date (defined below), Buyer shall
assume and be responsible for performance of the obligations of Seller listed in
Exhibit 2.1 (the "Assumed Payables"). The obligations assumed by Buyer pursuant
to the Section 2.1 are called the "Assumed Liabilities".
2.2 Excluded Liabilities. Apart from the Assumed Liabilities, Buyer will
neither assume nor have any responsibility for any obligations, liabilities or
indebtedness of Seller of any kind. All such obligations, liabilities and
indebtedness of Seller, except the Assumed Liabilities, are referred to as the
"Excluded Liabilities".
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ARTICLE III
PURCHASE PRICE AND PAYMENT
3.1 Purchase Price. In addition to the Assumed Liabilities, Buyer shall
pay Seller, by wire transfer or bank check on the Payment Date an amount equal
to (a) the principal amount and current month's accrued interest thereon,
payable as of the Closing Date under Seller's promissory note to First
International Bank (the "Bank") dated March 9, 1998 in the original principal
amount of $525,000, as amended and restated November 7, 2001 plus (b) the fair
market value as of the Closing Date of the Equipment listed in Exhibit 3.1,
securing promissory notes of Seller to the Bank dated June 29, 1999 in the
original principal amount of $1,260,000 and dated February 13, 1996 in the
original principal amount of $1,250,000 respectively (identified by the Bank as
# 001-0001-0000000-0001 and # 001-0001-30011-0002, respectively) (the "Purchase
Price"). Seller agrees that it will not modify or amend, or increase any
borrowing under, any of such promissory notes.
3.2 Allocation of Purchase Price. The consideration for the Purchased
Assets will be allocated between Seller and among the Purchased Assets as set
forth on Exhibit 3.2, which allocation shall be within classes or categories as
provided in Section 1060 of the Internal Revenue Code of 1986, as amended. Each
of Buyer and Seller agrees that it will adopt and utilize the amounts so
allocated for purposes of all federal, state and other tax returns filed by it
and it will not voluntarily take any position inconsistent therewith upon
examination of any such tax return, in any claim, in any litigation or otherwise
with respect to such tax returns. The provisions of this Section 3.2 shall
survive the Closing Date without limitation.
3.3 Payment Date. The Payment Date shall be the date on which the
conditions set forth in Sections 8.1 (b) and (h) shall have been satisfied.
ARTICLE IV
CLOSING
4.1 Closing; Closing Date. The Closing of the purchase and sale of the
Purchased Assets provided in this Agreement (the "Closing") shall take place at
the offices of Cameron & Xxxxxxxxx LLP at 10:00 a.m. on December 31, 2003 or at
such earlier time and place as the parties may agree. The time and the date of
Closing are referred to as the "Closing Date".
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER
To induce Buyer to enter into this Agreement and to purchase the Purchased
Assets, Seller and the Shareholder, jointly and severally, represent and warrant
to Buyer that, except as otherwise known by Xxxxxxxx X. Xxxxxxxxx ("CGB") or
Xxxxxx Xxxxxxxx (together, "Buyer's Principals"):
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5.1 Corporate Organization and Authority.
(a) Seller is a corporation duly organized and validly existing in
good standing under the laws of Rhode Island with full corporate power and
authority to conduct its business as now conducted, to own its assets and enter
into and perform its obligations under this Agreement. Seller's execution,
delivery and performance of this Agreement and the sale to Buyer of the
Purchased Assets have been duly authorized by all requisite corporate action on
the part of Seller. This Agreement constitutes, and all bills of sale,
assignments, agreements and other instruments and documents to be executed and
delivered by Seller hereunder will constitute, Seller's legal, valid and binding
obligations, enforceable against Seller in accordance with their respective
terms.
(b) The Shareholder is a corporation duly organized and validly
existing in good standing under the laws of Delaware with full corporate power
and authority to conduct its business as now conducted, to own its assets and
enter into and perform its obligations under this Agreement. The Shareholder's
execution and delivery and performance of this Agreement have been duly
authorized by all requisite corporate action on the part of the Shareholder.
This Agreement constitutes, and all documents and instruments to be executed and
delivered by the Shareholder hereunder will constitute, the Shareholder's legal,
valid and binding obligations, enforceable against the Shareholder in accordance
with their respective terms.
5.2 Subsidiaries, Foreign Qualification and Ownership.
(a) Seller has no subsidiaries and no other equity investments in
any other corporation, partnership or other business entity. Seller is not
required to qualify to transact business as a foreign corporation in any
jurisdiction.
(b) Seller's authorized capital stock consists of 2,000 shares of no
par value common stock, of which 1,173 shares have been duly authorized for
issuance, have been validly issued and are outstanding, are fully paid and
non-assessable, and are owned of record and beneficially by the Shareholder.
5.3 Absence of Conflicts and Consent Requirements.
(a) Seller's execution and delivery of this Agreement and
performance of its obligations hereunder will not (i) conflict with, violate or
result in any breach or default or, with notice or lapse of time constitute a
default, under (A) Seller's Articles of Incorporation or Bylaws, or (B) any
mortgage, indenture, agreement, instrument or other contract to which Seller is
a party or by which Seller or its property is bound, (ii) result in the creation
of any mortgage, pledge, lien, encumbrance or charge upon any assets or
properties of Seller, or (iii) violate any judgment, order, decree, law,
statute, regulation or other judicial or governmental restriction to which
Seller or any of its assets is subject or by which it is bound. Except as set
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forth in Exhibit 5.3 hereto, Seller's execution and delivery of this Agreement
and performance of its obligations hereunder, including the sale of the
Purchased Assets, will not require the consent of, or any prior filing with or
notice to, any governmental authority, lender or other third party, and any such
consent, filing or notice will be received or delivered, as the case may be, on
or prior to the Closing Date.
(b) The Shareholder's execution and delivery of this Agreement and
performance of its obligations hereunder will not (i) conflict with, violate or
result in any breach or default or, with notice or lapse of time constitute a
default, under (A) the Shareholder's Certificate of Incorporation or Bylaws, or
(B) any mortgage, indenture, agreement, instrument or other contract to which
the Shareholder is a party or by which the Shareholder or its property is bound,
(ii) result in the creation of any mortgage, pledge, lien, encumbrance or charge
upon any of the purchased assets, or (iii) violate any judgment, order, decree,
law, statute, regulation or other judicial or governmental restriction to which
the Shareholder or any of its assets is subject or by which it is bound. Except
as set forth in Exhibit 5.3 hereto, the Shareholder's execution and delivery of
this Agreement and performance of its obligations hereunder, will not require
the consent of, or any prior filing with or notice to, any governmental
authority, lender or other third party, and any such consent, filing or notice
will be received or delivered, as the case may be, on or prior to the Closing
Date.
5.4 Financial Statements. Seller has delivered to Buyer true and correct
copies of the unaudited balance sheet for the period ended ___________, 2003
(the "Current Balance Sheet") and its related statements of income and retained
earnings and cash flows (the "Financial Statements"). The Financial Statements
(a) present fairly the financial position of Seller at the periods then ended
and the results of its operations and cash flows for the periods then ended, (b)
have been prepared in accordance with GAAP consistently applied, (c) show all
material liabilities, absolute and contingent, of Seller required to be shown by
generally accepted accounting principles ("GAAP") and (d) contain no
misrepresentations, misstatements or omissions of material facts.
5.5 Absence of Certain Changes. Since the date of the Current Balance
Sheet, there has not been any material adverse change in the financial position
of Seller or in the results of its operations or to its assets, properties or
business.
5.6 Title to Assets.
(a) Contract Rights. The rights of Seller under the Operating
Agreements and the Customer Orders are valid and enforceable by Seller and will,
at the Closing, be validly assigned to and thereupon enforceable by Buyer, in
each case in accordance with their respective terms. Neither Seller nor any of
the other parties thereto is in default in any material respect (nor does any
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circumstance exist which, with notice or the passage of time or both, would
result in such a default) under any of the Operating Agreements or Customer
Orders, and the assignment by Seller of its rights thereunder to Buyer will not
violate the terms thereof.
(b) Purchased Assets. Except for security interests described in
Exhibit 5.6 (the "UPS Security Interests") which UPS Security Interests shall be
released and terminated prior to the Payment Date, Seller has good and
marketable title to the Purchased Assets, free and clear of all liens, claims,
security interests and encumbrances and has the right to convey the Purchased
Assets to Buyer. At the Closing, Seller shall have conveyed to Buyer good and
marketable title to the Purchased Assets free and clear of all liens, claims,
security interests and encumbrances except the UPS Security Interest, and Seller
will warrant and defend the title to the Purchased Assets in Buyer against the
lawful claims of all persons whomsoever. The Purchased Assets described in
Exhibit 8.1(b) are owned free and clear of any lien or security interest granted
by the Shareholder, and the representations in this sentence shall not be
limited by any knowledge of the Principals.
5.7 Loss Contingencies. There are no claims, actions, suits or other
proceedings pending, or to the knowledge of Seller threatened, against Seller or
any of the Purchased Assets before any court, agency or other judicial,
administrative or other governmental body or arbitrator, and to Seller's
knowledge, no state of facts exists which would be likely to give rise to any
such claim, action, suit or other proceeding.
5.8 Compliance With Law. Seller has complied with, and is in compliance
with, all laws, statutes, regulations, rules and other requirements of any
governmental authority applicable to Seller, its assets and properties and the
conduct of its business. The permits and licenses (the "Licenses") listed in
Exhibit 5.8 are the only licenses, permits or authorizations of any governmental
authority required in connection with Seller's business. All of the Licenses are
in full force and effect.
5.9 Taxes.
(a) Returns and Payment of Taxes. All Federal, state and local
income, excise or franchise tax returns, real estate and personal property tax
returns, sales and use tax returns and all other tax returns required to be
filed on or prior to the Payment Date by Seller with all taxing authorities have
been or prior to the Payment Date will have been filed. All amounts shown to be
due and payable on such returns, all other taxes, duties and other governmental
charges payable by Seller or imposed upon any of the Purchased Assets and for
the payment of which there may arise any lien upon the Purchased Assets sold
hereunder subsequent to such sale, and all deficiencies, assessments, penalties
and interest with respect thereto, in each case due and payable on or before the
Closing Date, have been or prior to the Closing Date will have been paid.
(b) Sales, Use and Excise Taxes. All sales, use and excise taxes
collectible with respect to all transactions connected with Seller's business
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through the Closing Date have been or will be collected, all amounts due in
connection therewith to state and local revenue authorities have been or will be
remitted to the appropriate authorities, and no lien or claim with respect
thereto will be asserted by such authorities before or after the Closing Date.
(c) Withholding of Taxes. There has been withheld or collected from
each payment made to each employee of Seller the amount of all taxes (including
without limitation federal income taxes, Federal Insurance Contributions Act
taxes, and state and local income, payroll and wage taxes) required to be
withheld or collected therefrom prior to the date hereof and the same have been
paid to the proper tax depositories or collecting authorities. Seller shall
withhold, collect and pay all such amounts required during the period between
the date hereof and the Payment Date.
5.10 Employee Benefit Plans. Buyer, by reason of the transactions
contemplated by this Agreement, will not incur any claims, losses, damages,
costs, and expenses with respect to or in connection with any pension, welfare,
fringe, or other employee benefit plan maintained or contributed to by Seller or
any predecessor that provides or provided benefits to any current or former
employees or other parties who performed services for Seller (or their
beneficiaries or dependents).
5.11 Employee Relations. To Seller's knowledge, no officer or employee of
Seller is subject to any agreement with any other person or entity which
requires such officer or employee to keep confidential any trade secrets,
proprietary data, customer lists or other business information or which
restricts such officer or employee from engaging in competitive activities or
solicitation of customers.
5.12 Prospective Changes. Except as described in Exhibit 5.12 hereto,
neither Seller nor the Shareholder knows of any impending changes in its assets,
liabilities, relations with employees, competitive situation or relations with
its suppliers or customers, or in any governmental actions or regulations
affecting the Business, which, if they occur, could have a material adverse
effect on the Business.
5.13 Products. There are no orders, decrees, statements, citations or
decisions by any court or governmental or regulatory body, or other claim
pending or threatened that any product, procured, sold or distributed by Seller
within the last five (5) years is defective or fails to meet in any material
respect any standards promulgated by any such governmental or regulatory body.
There have been no recalls ordered by any such governmental or regulatory body
with respect to any such product.
5.14 No Material Misstatements or Omissions. The representations and
warranties of Seller in this Agreement do not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made therein not misleading.
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5.15 Continued Representations. Each of the representations and warranties
contained in this Article V or in any certificate or document delivered pursuant
to the provisions of this Agreement, shall be true and correct upon and as of
the Closing Date and the Payment Date as though such representations and
warranties were made at and as of the Closing Date and the Payment Date, all of
which shall be deemed to be restated and fully applicable on and as of the
Closing Date.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
To induce Seller to enter into this Agreement and to sell the Purchased
Assets, Buyer hereby represents and warrants to the Seller that:
6.1 Corporate Organization and Authority. Buyer is a corporation duly
organized and validly existing in good standing under the laws of Rhode Island,
with full corporate power and authority to conduct its business as now conducted
and to enter into and perform its obligations under this Agreement. Buyer's
execution, delivery and performance of this Agreement and its acquisition of and
payment for the Purchased Assets have been duly authorized by all requisite
corporate action on the part of Buyer and this Agreement constitutes, and all
agreements and other instruments and documents to be executed and delivered by
Buyer hereunder will constitute, Buyer's legal, valid and binding obligations,
enforceable against Buyer in accordance with its terms.
6.2 Absence of Conflicts and Consent Requirements. Buyer's execution and
deliver of this Agreement and performance of its obligations hereunder,
including the purchase of and payment for the Assets hereunder, do not and will
not conflict with, violate or result in any breach or default or, with notice or
lapse of time, or both, constitute a default, under Buyer's Articles of
Incorporation or Bylaws or any mortgage, indenture, agreement, instrument or
other contract to which Buyer is a party or any judgment, order, decree, law,
statute, regulation or other judicial or governmental restriction to which Buyer
is subject. Buyer's execution and delivery of this Agreement and performance of
its obligations hereunder, including the purchase of and payment for the
Purchased Assets, do not and will not require the consent of, or any prior
filing with or notice to, any governmental authority or other third party.
6.3 Continued Representations. Each of the foregoing representations and
warranties contained in Article VI or in any certificate or document delivered
by Buyer pursuant to the provisions of this Agreement, shall be true and correct
upon and as of the Closing Date and the Payment Date as though such
representations and warranties were made at and as of the Closing Date and the
Payment Date, all of which shall be deemed to be restated and fully applicable
on and as of the Closing Date and the Payment Date.
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ARTICLE VII
CERTAIN COVENANTS AND AGREEMENTS
7.1 Conduct Prior to Closing.
(a) Ordinary Course of Business. Through the Closing Date, unless
Buyer otherwise, consents in writing, Seller will not and the Shareholder will
not permit Seller to, conduct the Business, except in the ordinary course, will
not dispose of any of the Equipment, will not enter into any contract, lease,
agreement, transaction or arrangement which, if existing on the date hereof,
would be required to be disclosed herein in response to any of the
representations or warranties set forth in Article V hereof, and will not take
any other action which would cause any representation or warranty made in
Article V hereof to be incorrect in any material respect if such representation
or warranty were made on any date through the Closing Date.
(b) Access. Through the Closing Date, Seller and the Shareholder
shall give Buyer and its agents, lenders, attorneys and representatives full
access to such of its properties, books, records and documents as Buyer may
reasonably request.
(c) Press Releases and Announcements. Through the Payment Date,
Buyer and Seller will cooperate in the preparation and dissemination of any
press releases, announcements and other disclosures to others relating to the
transactions contemplated hereby, and neither party shall make any such press
releases, announcements or other disclosures, without the prior written consent
of the other party; provided, however, that this section shall not preclude
either party from making any disclosure as to the transactions contemplated
hereby which the disclosing party reasonably believes is required by applicable
law or is necessary in order to obtain any third-party consent or approval to
the transactions contemplated by this Agreement.
(d) Buyer's Conduct of the Business. Through the Payment Date,
unless Seller and the Shareholder otherwise consent in writing, Buyer will not
conduct the Business except in the ordinary course, will not dispose of any of
the Equipment, will not enter into any contract, lease, agreement, transaction
or arrangement not in the ordinary course of Business, and will not take any
other action which would cause any representation or warranty made in Article VI
hereof to be incorrect in any material respect if such representation or
warranty were made on any date through the Closing Date and the Payment Date.
Through the Payment Date, Buyer will not declare any dividends on its capital
stock or any cash bonuses or other distributions to any employee or
representative of Buyer except in the ordinary course of Business or as
otherwise expressly authorized in writing by Seller and Shareholder.
7.2 Seller's Employees. Concurrently with or prior to the Closing, Buyer
may offer employment to Seller's employees currently engaged in the Business
(and only such employees) on such terms and conditions as Buyer may deem
appropriate in its sole discretion. In no event shall Buyer be or become liable
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to Seller or its employees on account of wages, vacation pay, severance pay,
benefit or any other matter relating to or arising in connection with such
employees' employment by Seller or the Shareholder, except as expressly included
in the Assumed Liabilities.
7.3 Further Assurances. Each of Seller and Buyer agrees that at any time
and from time to time it will promptly execute and deliver to the other such
further assurances, instruments and documents and take such further action as
the other may reasonably request in order to carry out the full intent and
purpose of this Agreement.
7.4 Fees, Expenses and Sales Taxes. Whether or not the transactions
contemplated by this Agreement are consummated, Seller, Buyer, and the
Shareholder shall each pay its or his own fees and other costs or expenses
incident to the negotiation, preparation and execution of this Agreement and the
transactions contemplated hereby, including the fees and expenses of its or her
own counsel, accountants, appraisers and other experts.
7.5 No Brokers. Each of Seller and Buyer represents that no broker or
finder has been involved or engaged by it in connection with the transactions
contemplated hereby.
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 Conditions to Buyer's Obligations. The obligations of Buyer to
complete the Closing are contingent upon the fulfillment of each of the
following conditions on or before the Closing Date or the Payment Date, as the
case may be, except to the extent that Buyer may, in its absolute discretion,
waive in writing any one or more thereof, in whole or in part:
(a) Bringdown. The representations and warranties of Seller and the
Shareholder set forth in this Agreement shall be true and correct in all
material respects on the Closing Date and the Payment Date with the same force
and effect as though made on the Effective Date; all terms, covenants and
conditions to be complied with and performed by Seller and the Shareholder under
this Agreement on or before the Closing Date and/or the Payment Date shall have
been duly complied with and duly performed; and Seller and the Shareholder shall
have delivered to Buyer at Closing a certificate, dated the Closing Date or the
Payment Date as the case may be, to such effect;
(b) The Shareholder shall have delivered written confirmation
acceptable to Buyer that the equipment described in Exhibit 8.1(b), is, and has
been at least since December, 31, 2001, owned by Seller, free and clear of all
liens, claims and encumbrances of every kind, whatsoever except UPS Security
Interests, but free and clear of security interests granted to Laurus Master
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Fund, Ltd. by the Shareholder. The parties expressly agree and acknowledge that
such equipment is included in the Purchased Assets to be sold to Buyer
hereunder;
(c) Instruments of Transfer. Seller shall have delivered to Buyer
such assignments, bills of sale, certificates of title, and other instruments of
transfer, all in form reasonably satisfactory to Buyer, as are necessary to
fully and effectively convey to Buyer all of the Purchased Assets in accordance
with the terms hereof;
(d) Consents; Estoppel Certificates. The consents described in
Exhibit 5.3 hereto, and all other consents required for Seller to perform its
obligations hereunder, shall have been obtained in form and substance reasonably
satisfactory to Buyer. Buyer shall have received estoppel certificates in form
and substance reasonably satisfactory to Buyer from each of the parties to the
Operating Agreements and Customer Orders;
(e) No Adverse Proceedings. No action, suit or proceeding before any
court or governmental or regulatory authority shall have been commenced, no
investigation by any governmental or regulatory authority shall have been
commenced, and no action, suit or proceeding by any governmental or regulatory
authority shall have been threatened, against any of the parties to this
Agreement, or any of the principals, officers or directors of any of them, or
any of the Purchased Assets seeking to restrain, prevent or change the
transactions contemplated hereby or questioning the validity or legality of any
of such transactions or seeking damages in connection with any of such
transactions.
(f) Seller Closing Deliveries. Seller shall have provided to Buyer
on or before the Closing Date or the Payment Date, as applicable, the following:
(i) a good standing certificate issued by the Secretary of
State of Rhode Island;
(ii) certified copies of resolutions of the Shareholder and
board of directors of Seller authorizing the execution, delivery and
performance by Seller of this Agreement, the conveyance of the Purchased
Assets and the transactions contemplated hereby;
(iii) UCC-11 Information Statements from all relevant
jurisdictions relating to the existence of any Uniform Commercial Code
financing statements and any statements of assignment thereof with respect
to the Purchased Assets and shall cause its counsel to provide a report of
such search to Buyer at the Closing;
(iv) copies of all required notices to appropriate taxing
authorities with respect to the sale of the Purchased Assets and evidence
of payment of all required taxes, together with tax lien releases or
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waivers to enable the Purchased Assets to be sold hereunder to the Buyer
free and clear of all liens and encumbrances; and
(iv) all information reasonably requested by Buyer;
(g) Indemnification Agreement. Seller and the Shareholder shall have
delivered to CGB an Indemnification Agreement in form and substance satisfactory
to him, under which Seller and the Shareholder agree to indemnify and hold
harmless CGB against and from all liability of CGB to Rhode Island Industrial
Facilities Corporation, UPS Capital Business Credit (f/k/a First International
Bank) or any of their respective successors or assigns.
(h) UCC Termination Statements. Seller shall have delivered to Buyer
written evidence satisfactory to Buyer that all security interests in and liens
against the Purchased Assets, including the UPS Security Interests, have been
released and terminated.
(i) Other Assurances. Each of Seller and the Shareholder shall have
delivered to Buyer such other and further certificates, assurances and documents
as Buyer may reasonably request in order to evidence the accuracy of Seller's
and the Shareholder's representations and warranties, the performance of its
covenants and agreements to be performed at or prior to the Closing, and the
fulfillment of the conditions to Buyer's obligations.
8.2 Conditions to Seller's Obligations. The obligations of Seller to
complete the Closing are contingent upon the fulfillment of each of the
following conditions on or before the Closing Date or the Payment Date as the
case may be, except to the extent that Seller may, in its absolute discretion,
waive any one or more thereof in whole or in part:
(a) Bringdown. The representations and warranties of Buyer set forth
in the Agreement shall be true and correct in all material respects on the
Closing Date or the Payment Date, as applicable, with the same force and effect
as though made on the Closing Date or the Payment Date, as applicable; all
terms, covenants and conditions to be complied with and performed by Buyer under
this Agreement on or before the Closing Date or Payment Date, as applicable,
shall have been duly complied with and duly performed; and Buyer shall have
delivered to Seller at Closing a certificate, dated the Closing Date or Payment
Date, as applicable, to such effect.
(b) Corporate Approval. Buyer shall have delivered to Seller copies
of any resolutions approving the transactions contemplated by this Agreement,
certified by the Secretary of the Buyer.
(c) No Adverse Proceedings. No action, suit or proceeding before any
court or governmental or regulatory authority shall have been commenced, no
investigation by any governmental or regulatory authority shall have been
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commenced, and no action, suit or proceeding by any governmental or regulatory
authority shall have been threatened, against any of the parties to this
Agreement, or any of the principals, officers or directors of any of them, or
any of the Purchased Assets seeking to restrain, prevent or change the
transactions contemplated hereby or questioning the validity or legality of any
of such transactions or seeking damages in connection with any of such
transactions.
(d) CGB Agreement. By written agreement, effective as of the Payment
Date, CGB shall have (i) acknowledged and approved in writing the assumption by
Buyer of the agreements and obligations of Seller and/or the Shareholder to CGB
listed in Exhibit 8.2(d) and (ii) released Seller and the Shareholder on account
of all liability under such agreements and obligations.
(e) Other Assurances. Buyer shall have delivered to Seller such
other and further certificates, assurances and documents as Seller may
reasonably request in order to evidence the accuracy of Buyer's representations
and warranties, the performance of its covenants and agreements to be performed
at or prior to the Closing, and the fulfillment of the conditions to Seller's
obligations.
8.3 Payment of Purchase Price and Assumption of Obligations. On the
Payment Date, Buyer shall pay the Purchase Price to Seller, and shall assume
the Assumed Liabilities.
ARTICLE IX
TERMINATION; RIGHTS TO PROCEED
9.1 Termination. At any time prior to the Closing, this Agreement
may be terminated as follows:
(a) by mutual written consent of all the parties to this Agreement;
or
(b) at the election of the affected party, whether Buyer or Seller,
subject to the limitations contained in Section 11.5, if any of the conditions
to its obligations set forth in Article VIII of this Agreement has not been
satisfied at or prior to the Closing, by written notice given to the other and
setting forth such conditions which have not been so satisfied.
9.2 Effect of Termination. All obligations of the parties hereunder shall
cease upon any termination pursuant to Section 9.1; provided, however that
nothing herein shall relieve any party from any liability or a material error or
omission in any of its representations or warranties contained herein or a
material failure to comply with any of its covenants, conditions or agreements
contained herein.
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ARTICLE X
RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING
10.1 Survival of Representations and Warranties. All representations,
warranties, agreements, covenants and obligations herein or in any schedule,
exhibit, certificate or financial statement delivered by any party or the other
party incident to the transaction contemplated hereby are material, shall be
deemed to have been relied upon by the other party and shall survive the Closing
regardless of any investigation and shall not merge in the performance of any
obligation by either party hereto.
10.2 Collection of Assets. Seller agrees that it will promptly transfer or
deliver to Buyer from time to time, any cash or other property that Seller may
receive with respect to any claims, contracts, licenses, leases, commitments,
sales orders, purchase orders, receivables of any character or any other items
included in the Purchased Assets.
10.3 Payment of Obligations. Seller shall pay, and the Shareholder shall
cause Seller to pay, all of the Excluded Liabilities in the ordinary course of
business as they become due.
ARTICLE XI
INDEMNIFICATION
11.1 Indemnification of Buyer by Seller and the Shareholder. Seller and
the Shareholder, jointly and severally, shall indemnify and hold Buyer, Buyer's
Principals and its and their attorneys, affiliates, representatives, agents,
officers, directors, successors or assigns harmless from and against any
liability, loss, cost, expense, judgment, order, settlement, obligations,
deficiency, claim, suit, proceeding (whether formal or informal), investigation,
Lien or other damage, including, without limitation, reasonable attorneys' fees
and expenses (collectively, "Damages"), resulting from, arising out of or
incurred with respect to:
(a) a breach of any representation, warranty, covenant or agreement
of Seller or the Shareholder contained herein, including, without limitation,
agreements under Article XIII hereof; or
(b) the Excluded Liabilities.
11.2 Indemnification of Seller. Buyer shall indemnify and hold Seller and
its attorneys, affiliates, representatives, agents, officers, directors,
successors or assigns, harmless from and against any Damages resulting from,
arising out of, or incurred with respect to:
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(a) a breach of any representation, warranty, covenant or agreement
by Buyer contained herein; or
(b) the Assumed Liabilities.
ARTICLE XII
NON-COMPETITION
12.1 In consideration of Buyer's consummation of the transaction
contemplated by this Agreement, and as a material inducement to Buyer to enter
into this Agreement, Seller and the Shareholder covenant and agree as follows:
(a) During the period beginning on the Closing Date and ending on
the second anniversary of the Closing Date (the "Noncompete Period"), neither
Seller nor the Shareholder will at any time, in any capacity, directly or
indirectly, do any of the following: (i) be a Competing Organization or provide
any management, consulting, financial, administrative or other service to any
Competing Organization, including, without limitation, participating directly or
indirectly as an officer, director, stockholder (excluding a less than 1%
stockholder in a publicly held corporation), member, operator, sole proprietor,
independent contractor, consultant, franchisor, franchisee, owner, employee,
agent, representative or partner of, or having any direct or indirect financial
interest (including, without limitation, the interest of a creditor) in, any
Competing Organization, or (ii) knowingly allow Seller's name or any derivation
thereof to be used by any Competing Organization. "Competing Organization" will
include any individual, corporation, partnership, joint venture, limited
liability company, organization, business or other enterprise (A) located or
doing business anywhere in the United States (the "Geographic Area"), and (B)
then engaged in or about to become engaged in, a business identical to or
similar to the Business.
(b) During the Noncompete Period, neither Seller nor the
Shareholder will at any time in any capacity, directly or indirectly, (i) induce
or attempt to induce any employee (including leased employees) of Buyer or any
of its Affiliates to leave their employ, or otherwise solicit the employment of
any such employee of Buyer or any of its Affiliates, hire any such employee or
in any way interfere with the relationship between Buyer or any of its
Affiliates and any of such employees, (ii) induce or attempted to induce any
customer, supplier, licensee, licensor, franchisee, or other business relation
of either Buyer or any of its Affiliates to cease doing business with them or in
any way interfere with the relationship between Buyer or any of its Affiliates
and any of their respective customers or business relations, or (iii) solicit
the business of any then existing customer of Buyer or any of its Affiliates
relating to the Business.
(c) If, at the time of enforcement of any of the provisions of this
Article XII, a court of competent jurisdiction holds that the restrictions
stated in Article XII are unreasonable under the circumstance then existing or
are otherwise illegal, invalid or unenforceable in any respect by reason of its
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duration, definition of Geographic Area or scope of activity, or any other
reason, the parties agree that the maximum period, scope or geographical area
reasonable or otherwise enforceable under such circumstances will be substituted
for the state period, scope or area.
(d) Without limiting any of Buyer's rights under this Agreement, the
parties hereto acknowledge that Buyer will be entitled to enforce its rights
under this Article XII specifically, to recover damages and costs (including
reasonable attorney's fees) caused by any breach of any provisions of this
Article XII and to exercise all other rights existing in its favor. The parties
acknowledge and agree that the breach of any term or provision of this Article
XII by Seller or the Shareholder will materially and irreparably harm Buyer,
that money damages will accordingly not be an adequate remedy for any breach of
the provisions of this Article XII by Seller or the Shareholder and that Buyer
in its sole discretion and in addition to any other remedies it may have at law
or in equity may apply to any court of law or equity of competent jurisdiction
(without posting any bond or deposit) for specific performance and/or other
injunctive relief in order to enforce or prevent any violations of the
provisions of this Article XII.
12.2 In consideration of Seller's consummation of the transaction
contemplated by this Agreement, and as a material inducement to Seller to enter
into this Agreement, Buyer and the Principals covenant and agree as follows:
(a) During the Non-Compete Period, neither Buyer nor the Principals
will at any time, in any capacity, directly or indirectly, do any of the
following: (i) be a Seller Competing Organization or provide any management,
consulting, financial, administrative or other service to any Seller Competing
Organization, including, without limitation, participating directly or
indirectly as an officer, director, stockholder (excluding a less than 1%
stockholder in a publicly held corporation), member, operator, sole proprietor,
independent contractor, consultant, franchisor, franchisee, owner, employee,
agent, representative or partner of, or having any direct or indirect financial
interest (including, without limitation, the interest of a creditor) in, any
Seller Competing Organization, or (ii) knowingly allow Seller's name or any
derivation thereof to be used by any Seller Competing Organization. "Seller
Competing Organization" will include any individual, corporation, partnership,
joint venture, limited liability company, organization, business or other
enterprise (A) located or doing business anywhere in the United States (the
"Geographic Area"), and (B) then engaged in or about to become engaged in, the
business now conducted by Seller, other than the Business.
(b) During the Noncompete Period except as contemplated by this
Agreement, neither Buyer nor the Principals will at any time in any capacity,
directly or indirectly, (i) induce or attempt to induce any employee (including
leased employees) of Seller or any of its Affiliates to leave their employ, or
otherwise solicit the employment of any such employee of Seller or any of its
Affiliates, hire any such employee or in any way interfere with the relationship
between Seller or any of its Affiliates and any of such employees, (ii) induce
or attempted to induce any customer, supplier, licensee, licensor, franchisee,
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or other business relation of either Seller or any of its Affiliates to cease
doing business with them or in any way interfere with the relationship between
Seller or any of its Affiliates and any of their respective customers or
business relations, or (iii) solicit the business of any then existing customer
of Seller or any of its Affiliates relating to Seller's business other than the
Business.
(c) If, at the time of enforcement of any of the provisions of this
Article XII, a court of competent jurisdiction holds that the restrictions
stated in Article XII are unreasonable under the circumstance then existing or
are otherwise illegal, invalid or unenforceable in any respect by reason of its
duration, definition of Geographic Area or scope of activity, or any other
reason, the parties agree that the maximum period, scope or geographical area
reasonable or otherwise enforceable under such circumstances will be substituted
for the state period, scope or area.
(d) Without limiting any of Seller's rights under this Agreement,
the parties hereto acknowledge that Seller will be entitled to enforce its
rights under this Article XII specifically, to recover damages and costs
(including reasonable attorney's fees) caused by any breach of any provisions of
this Article XII and to exercise all other rights existing in its favor. The
parties acknowledge and agree that the breach of any term or provision of this
Article XII by Buyer or the Principals will materially and irreparably harm
Seller, that money damages will accordingly not be an adequate remedy for any
breach of the provisions of this Article XII by Buyer or the Principals and that
Seller in its sole discretion and in addition to any other remedies it may have
at law or in equity may apply to any court of law or equity of competent
jurisdiction (without posting any bond or deposit) for specific performance
and/or other injunctive relief in order to enforce or prevent any violations of
the provisions of this Article XII.
ARTICLE XIII
PAYMENT DATE TERMINATION
13.1 Termination. In the event the Payment Date has not occurred on or
before February 15, 2004, or such later date, not later then March 15, 2004, as
Buyer may designate (the "Termination Date"), the parties agree that any and all
obligations of Buyer, CGB and/or Xxxxxx Xxxxxxxx to Seller and/or the
Shareholder under or in connection with this Agreement and the transactions
contemplated hereby (collectively, "Buyer's Obligations") shall terminate and be
of no force or effect in the same manner as if this Agreement had not been
executed and delivered. The Shareholder and Seller expressly acknowledge and
agree that in no event shall Buyer, CGB and/or Xxxxxx Xxxxxxxx have any
liability on account of the Assumed Liabilities in the event of termination in
accordance with this Section 13.1.
13.2 Reconveyance; Assumption.
(a) On the Termination Date, Buyer shall transfer and assign to
Seller: (i) the Purchased Assets, except those sold, transferred or converted to
cash in the ordinary course of business since the Closing Date; (ii) all
customer orders in existence as of such date, including all Assumed Orders to
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the extent not then completed; and (iii) all accounts receivable and inventory
of Buyer owned as of such date. Such transfer and assignment shall be without
representation or warranty of any kind whatsoever except Buyer shall warrant
that title to such property will be free of liens and encumbrances created by
Buyer.
(b) Seller and the Shareholder, jointly and severally, agree to (i)
pay Buyer on the Termination Date an amount equal to (A) all liabilities and
indebtedness of every kind whatsoever of Buyer arising in connection with the
formation and organization of Buyer and the conduct of Buyer's business and (B)
all capital contributions made to Buyer and (ii) assume in writing on the
Termination Date all customer orders, including all Assumed Order to the extent
not then completed and similar obligations of Buyer.
(c) The provisions of Sections 11.1 and 13.2 shall survive the
termination of this Agreement pursuant to Section 13.1.
ARTICLE XIV
MISCELLANEOUS
14.1 Merger Clause. This Agreement contains the final, complete and
exclusive statement of the agreement between the parties with respect to the
transactions contemplated herein and all prior or contemporaneous written or
oral agreements with respect to the subject matter hereof are merged herein.
14.2 Amendments. No change, amendment, qualification or cancellation
hereof shall be effective unless in writing and executed by each of the parties
hereto by their duly authorized officers.
14.3 Benefits and Binding Effect. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. Buyer may form a wholly-owned subsidiary or other business entity
for the purpose of assuming all of Buyer's rights and obligations under this
Agreement.
14.4 Notices. All notices, requests and demands and other communications
hereunder must be in writing and shall be deemed to have been duly given when
personally delivered, or when place in the United States Mails and forwarded by
Registered or Certified Mail, return receipt requested, postage prepaid, or
delivered pre-paid by a nationally recognized courier service, addressed to the
party to whom such notice is being given at the following addresses:
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If to Seller or the Shareholder:
Infinite Group, Inc.
000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx, President
If to Buyer:
LFI, Inc.
x/x Xxxxxxxx X. Xxxxxxxxx
0 Xxxxxxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Any party may change the address(es) to which notices to it are to be sent by
giving notice of such change to the other parties in accordance with this
Section.
14.5 Captions. The captions are for convenience of reference only and
shall not be construed as a part of this Agreement.
14.6 Governing Law. This Agreement shall be construed, interpreted,
enforced and governed by and under the laws of Rhode Island.
14.7 Exhibits. All of the Exhibits hereto referred to in this Agreement
are hereby incorporated herein by reference and shall be deemed and construed to
be a part of this Agreement for all purposes.
14.8 Severability. The invalidity or unenforceability of any one or more
phrases, sentences, clauses or provisions of this Agreement shall not affect the
validity or enforceability of the remaining portions of this Agreement or any
part thereof.
14.9 Counterparts. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument.
14.10 Time. Time is of the essence of this Agreement and all of its terms
and conditions.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Seller, the Shareholder and Buyer have each executed
this Agreement or caused this Agreement to be executed by their respective duly
authorized officers as of the day and year first above written.
LASER FARE, INC.
By:
-----------------------------
President
INFINITE GROUP, INC.
By:
-----------------------------
President
LFI, INC.
By:
-----------------------------
President
