Exhibit 10.1
======================================
STOCK PURCHASE AGREEMENT
dated as of
February 8, 2000
by and among
TRIDEX CORPORATION,
ULTIMATE TECHNOLOGY CORPORATION
a subsidiary of Tridex Corporation
and
CFG CAPITAL MANAGEMENT II, L.P.
===================================
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of
this 8th day of February, 2000, by and among TRIDEX CORPORATION, a Connecticut
corporation ("Seller"), ULTIMATE TECHNOLOGY CORPORATION, a New York corporation
which is a wholly-owned subsidiary of Tridex Corporation ("Ultimate"), and CFG
CAPITAL MANAGEMENT II, L.P., a New York limited partnership ("Purchaser").
INTRODUCTION
WHEREAS, Ultimate is engaged in the business of designing, manufacturing
and selling hardware solutions and related products and services for
point-of-sale applications in the retail sector (the "Business");
WHEREAS, upon the terms and subject to the conditions set forth herein,
Seller desires to sell to Purchaser, and Purchaser desires to purchase from
Seller, all of the issued and outstanding capital stock of Ultimate; and
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, Purchaser, Seller and Ultimate, intending to be legally bound,
do hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Terms Defined. In addition to other words and terms
defined elsewhere in this Agreement, as used herein the following words and
terms shall have the following meanings, unless the context expressly or by
necessary implication otherwise requires:
"Accounts Receivable" means the accounts receivable of Ultimate that are
(i) reflected on the Balance Sheet, or (ii) due or recorded on the accounting
records of Ultimate as being due and owing as of the Closing Date.
"Acquisition Proposal" shall have the meaning set forth in Section 5.4
hereof.
"Affiliate" shall mean any Person which directly or indirectly controls,
is controlled by or is under common control with another Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agreement" or "this Agreement" shall mean this Stock Purchase Agreement
as originally executed and delivered, or, if amended or supplemented, as so
amended or supplemented.
"Arbitrator" shall have the meaning set forth in Section 13.3 hereof.
"Balance Sheet" shall have the meaning set forth in Section 3.5 hereof.
"Balance Sheet Date" shall mean December 31, 1999.
2
"Benefit Arrangement" shall have the meaning set forth in Section 3.15
hereof.
"Benefit Plan" shall have the meaning set forth in Section 3.15 hereof.
"Business" shall have the meaning set forth in the Introduction to this
Agreement.
"Closing" means the taking of the actions required to consummate the sale
and purchase of the Shares by the Seller, Ultimate and the Purchaser pursuant to
this Agreement.
"Closing Date" shall have the meaning set forth in Section 11.1 hereof.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, Section 4980B of the Code, Title I, Part 6 of ERISA, and any
regulations and proposed regulations issued thereunder.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor Law, and the rules and regulations issued by the IRS pursuant to the
Code or any successor Law.
"Contracts" means all sales, supplier or service agreements, agreements
with manufacturers, and all other contracts, subcontracts, leases and
commitments necessary for or useful in the conduct of the Business and not fully
performed as of the Closing (other than the Leases).
"Election" shall have the meaning set forth in Section 6.4(a) hereof.
"Employees" shall have the meaning set forth in Section 7.5(a) hereof.
"Environmental Laws" shall mean all federal, state, regional or local
statutes, laws, rules, regulations, codes, orders, injunctions, decrees,
rulings, and changes or ordinances or judicial or administrative interpretations
thereof, or similar laws of foreign jurisdictions where Seller conducts
business, whether currently in existence or hereafter enacted or promulgated,
any of which govern (or purport to govern) or relate to pollution, protection of
the environment, public health and safety, air emissions, water discharges,
hazardous or toxic substances, solid or hazardous waste or occupational health
and safety, as any of these terms are or may be defined in such statutes, laws,
rules, regulations, codes, orders, injunctions, decrees, rulings and changes or
ordinances, or judicial or administrative interpretations thereof, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendment and Reauthorization
Act of 1986, 42 U.S.C. ss.9601, et seq. (collectively "CERCLA"); the Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976
and subsequent Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. ss.6901
et seq. (collectively "RCRA"); the Hazardous Materials Transportation Act, as
amended, 49 U.S.C. ss.1801, et seq.; the Clean Water Act, as amended, 33 U.S.C.
ss.1311, et seq.; the Clean Air Act, as amended (42 U.S.C. ss.7401-7642); the
Toxic Substances Control Act, as amended, 15 U.S.C. ss.2601 et seq.; the Federal
Insecticide, Fungicide, and Rodenticide Act, as amended, 7 U.S.C. ss.136-136y
("FIFRA"); the Emergency Planning and Community Right-to-Know Act of 1986, as
amended, 42 U.S.C. ss.11001, et seq. (Title III of XXXX) ("EPCRA"); the
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. ss.651, et
seq. ("OSHA"); and any and all applicable laws, statutes, ordinances,
regulations and executive orders (but only, with respect to executive orders,
those orders that have the force of law), federal, state and local, related to
the protection of human health or the environment and any other Law of any
Governmental Authority having a similar subject.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
3
"ERISA Affiliate" means, with respect to any Person, any other Person that
is a member of a "controlled group of corporations" with, or is under "common
control" with or is a member of the same "affiliated service group" with such
Person as such terms are defined in Section 414 of the Code.
"Escrow Agreement" means the agreement to be entered into effective as of
the Closing among Seller, Purchaser and an escrow agent to be designated by
mutual agreement of the parties.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any successor Law, and the rules and regulations of the SEC promulgated
thereunder or under any successor Law.
"Financial Statements" shall have the meaning set forth in Section 3.5
hereof.
"GAAP" shall mean United States generally accepted accounting principles
in effect as of the date of this Agreement.
"Governmental Authority" shall mean any federal, state, municipal or local
government or political subdivision or any regulatory or administrative agency,
authority, bureau, commission, department, board, bureau or instrumentality of
either, or any court, tribunal, grand jury or arbitrator or arbitral body, in
every case whether foreign or domestic.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of
1976, as amended.
"Hazardous Materials" shall mean chemicals products, compounds,
by-products, pollutants, contaminants, hazardous wastes or toxic or hazardous
substances regulated under any Environmental Law, including, but not limited to,
asbestos or asbestos-containing materials, polychlorinated biphenyls, pesticides
and oils, petroleum and petroleum products.
"Inventory" shall have the meaning set forth in Section 3.12 hereof.
"Knowledge" shall mean, as to any party, (i) the actual knowledge of such
party's elected or appointed officers having the title of Vice President or
Treasurer or any title senior thereto, and (ii) the knowledge that such persons
would reasonably be expected to have through the course of performance of their
duties to such party.
"Law" shall mean any applicable constitution, statute, ordinance,
principle of common law, rule, regulation, statute, code, directive, ordinance,
treaty, judgment or order enacted, promulgated, issued, enforced or entered by
any Governmental Authority.
"Leases" shall have the meaning set forth in Section 3.11 hereof.
"License" shall mean a license, certificate of authority, franchise,
permit or other authorization to transact an activity or business, whether
granted by a Governmental Authority or any other Person.
"Lien" shall have the meaning set forth in Section 3.2 hereof.
"Losses" shall have the meaning set forth in Section 13.1 hereof.
4
"Material Adverse Effect" shall mean a material adverse effect on the
business, assets, liabilities, results of operations or financial condition of
any party, or on the ability of such party to consummate the transactions
contemplated by this Agreement, provided, however, that the effects of changes
that are generally applicable to the Seller's or Ultimate's respective
industries shall be excluded from the determination of a Material Adverse Effect
with respect to Seller or Ultimate, as the case may be.
"Net Working Capital" shall mean (i) the sum of Ultimate's Accounts
Receivables (less allowances for doubtful and uncollectable accounts),
Inventory, and prepaid items (such as prepaid insurance, municipal, local or
franchise tax payments or deposits, and other security or similar deposits owned
by Ultimate or in which Ultimate has any interest), minus (ii) Ultimate's
current accounts payable, customer deposits and accrued expenses (other than
current lease payments and accrued interest expense) reflected on the Initial
Net Working Capital Statement or the Closing Net Working Capital Statement, as
applicable. Net Working Capital shall not include cash, cash equivalents or
negative cash balances, any accrued income Taxes, indebtedness for capitalized
leases, any bank indebtedness, or intercompany accounts between Seller and
Ultimate. The items included in Ultimate's Net Working Capital shall include
only those accounts which are set forth in the statement of Ultimate's initial
Net Working Capital as of October 31, 1999, attached hereto as Schedule A (the
"Initial Net Working Capital Statement"), which was prepared in accordance with
GAAP, consistently applied.
"Person" shall mean an individual, corporation, partnership, limited
partnership, limited liability company, unincorporated organization, voluntary
association, joint stock company, business trust joint venture, Governmental
Authority or any other entity.
"Post-Closing Period" shall have the meaning set forth in Section 6.2
hereof.
"Pre-Closing Period" shall have the meaning set forth in Section 6.1(a)
hereof.
"Pro Forma Tax Payment" shall have the meaning set forth in Section 2.4(a)
hereof.
"Proprietary Rights" shall have the meaning set forth in Section 3.10
hereof.
"Purchase Price" shall have the meaning set forth in Section 2.2 hereof.
"Purchaser Defined Contribution Plan" shall have the meaning set forth in
Section 8.5 hereof.
"Purchaser Plans" shall have the meaning set forth in Section 7.5(a)
hereof.
"Purchaser's Indemnified Parties" shall have the meaning set forth in
Section 13.1 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
successor Law, and the rules and regulations of the SEC promulgated thereunder
or under any successor Law.
"SEC" shall mean the United States Securities and Exchange Commission or
any successor agency.
"Seller's Indemnified Parties" shall have the meaning set forth in Section
13.2 hereof.
"Shares" shall have the meaning set forth in Section 2.1 hereof.
"Short Period" shall have the meaning set forth in Section 6.1(a) hereof.
5
"Taxes" shall mean all taxes, however denominated, including any interest,
penalties or additions to tax that may become payable in respect thereof,
imposed by any federal, state, local or foreign government or any agency or
political subdivision of any such government, which taxes shall include, without
limiting the generality of the foregoing, all income taxes, estimated taxes,
payroll and employee withholding taxes, backup withholding taxes, unemployment
insurance taxes, social security taxes, sale and use taxes, excise taxes,
franchise taxes, gross receipts taxes, occupation taxes, real and personal
property taxes, stamp taxes, transfer taxes, workers' compensation taxes,
capital stock taxes, taxes on services, and other obligations of the same or of
a similar nature, whether arising before, on or after the date hereof.
"Tax Gross-Up Payment" shall have the meaning set forth in Section 2.4(a)
hereof.
"Tax Return" shall mean any return, report, filing, estimate, declaration,
or information statement related to, or required to be filed in connection with,
any Tax pursuant to statutes, rules and regulations of any federal, state, local
or foreign government taxing authority.
"Total Retirement Savings Plan Transfer Amount" shall have the meaning set
forth in Section 8.5 hereof.
"Transfer Date" shall have the meaning set forth in Section 8.5 hereof.
"Unaudited Financial Statements" shall have the meaning set forth in
Section 3.5 hereof.
"$" means United States dollars.
"Year 2000 Compliant" shall have the meaning set forth in Section 3.26
hereof.
"Year 2000 Problem" shall have the meaning set forth in Section 3.26
hereof.
Section 1.2. In this Agreement, unless the context otherwise requires, the
words "hereby", "hereof", "hereto", "herein", "hereunder", and any similar words
refer to this Agreement; and the word "hereafter" means after, and the word
"heretofore" means before, the date of this Agreement.
Section 1.3. Section and subsection titles are for convenience of
reference only and are not to be considered in the interpretation or
construction of any of the provisions hereof.
ARTICLE II
PURCHASE AND SALE OF SHARES
Section 2.1 Purchase and Sale of Shares. Subject to the terms and
conditions set forth in this Agreement, Seller agrees to sell to the Purchaser,
and the Purchaser agrees to purchase from Seller, 500,000 shares of issued and
outstanding Class A common stock and 497,000 shares of Class B common stock of
Ultimate, representing all of the issued and outstanding capital stock of
Ultimate (the "Shares").
Section 2.2 Purchase Price and Terms. As consideration for the Shares, on
the Closing Date, Purchaser shall pay to Seller the estimated purchase price in
an amount equal to Thirteen Million Dollars ($13,000,000) (the "Purchase
Price"), adjusted in accordance with the Estimated Net Working Capital Statement
referred to below, payable by wire transfer of immediately available funds in an
amount equal to Five Hundred
6
Thousand Dollars $500,000.00 into escrow pursuant to Escrow Agreement and the
balance to an account designated by Seller on the Closing Date.
Section 2.3 Working Capital Adjustment.
(a) At least one day prior to the Closing, Seller, in consultation
with Purchaser, shall prepare and deliver to Purchaser an estimate of the Net
Working Capital of Ultimate as of the Closing Date (the "Estimated Net Working
Capital Statement"), and the estimated Purchase Price payable by Purchaser at
the Closing shall be adjusted, upward or downward, by the amount by which
Ultimate's Net Working Capital as reflected on the Estimated New Working Capital
Statement exceeds, or is less than, Ultimate's Net Working Capital reflected on
the Initial Net Working Capital Statement.
(b) As soon as reasonably practicable following the Closing Date,
and in any event within thirty (30) days thereafter, Seller's accountant,
PricewaterhouseCoopers LLP ("PWC") shall prepare and deliver to Seller and
Purchaser a final statement of the Net Working Capital of Ultimate as of the
Closing Date (the "Closing Net Working Capital Statement"). Purchaser shall have
access to the individual at PWC who is preparing the Closing Net Working Capital
Statement and full access to such person's work papers. The parties agree that
the statements contemplated by this Section 2.3 are solely intended to show
changes in working capital from October 31, 1999 to the Closing Date and,
accordingly, that the Closing Net Working Capital Statement shall be prepared in
accordance with GAAP in a manner consistent with the preparation of the Initial
Net Working Capital Statement (without regard to any purchase accounting
adjustments arising out of the consummation of the transactions contemplated
hereby).
(c) After the Closing Net Working Capital Statement has been
presented to Seller and Purchaser pursuant to Section 2.3(b), Purchaser may
formally dispute the calculation of any element of the Closing Net Working
Capital Statement, by notifying Seller of such disagreement in writing, setting
forth in detail the particulars of such disagreement, within thirty (30) days
after its receipt of the Closing Net Working Capital Statement. In the event
that Purchaser does not provide such a notice of disagreement within such thirty
(30) day period, Purchaser shall be deemed to have accepted the Closing Net
Working Capital Statement, which shall be final, binding and conclusive for all
purposes hereunder. In the event any such notice of disagreement is timely
provided, Purchaser and Seller shall use their reasonable best efforts for a
period of thirty (30) days following the date of such notice (or such longer
period as they may mutually agree) to resolve any disagreements with respect to
the calculation of the items reflected on the Closing Net Working Capital
Statement. If, at the end of such period, they are unable to resolve such
disagreements, the dispute shall be submitted to Xxxxxx Xxxxxxxx LLP (or, if
Xxxxxx Xxxxxxxx LLP has historically been the accountant for Purchaser, another
national independent accounting firm, mutually agreeable to the parties
("Independent Accountant")) for resolution. The Independent Accountant shall
review the Closing Net Working Capital Statement and such underlying information
as it deems appropriate and deliver within 30 calendar days its written
determination ("Accountant's Determination") of the Closing Net Working Capital
Statement. The fees and expenses of the Independent Accountant shall be borne
equally by the parties. The Accountant's Determination shall be final,
conclusive and binding on the parties. The date on which the Accountant's
Determination is delivered to the parties in accordance with this Section 2.3(c)
is hereinafter referred to as the "Determination Date."
(d) Upon the later of acceptance of the Closing Net Working Capital
Statement or the Determination Date, Purchaser and Seller shall determine the
amount (the "Working Capital Adjustment") by which Net Working Capital as
reflected on the Closing Net Working Capital Statement differs from Net Working
Capital as reflected on the Estimated Net Working Capital Statement. In the
event that the Net Working Capital of Ultimate as reflected on the Closing Net
Working Capital Statement is greater than the Net
7
Working Capital amount reflected on the Estimated Net Working Capital Statement,
then, promptly and in any event within ten (10) days following the later of the
Determination Date or the acceptance of the Closing Net Working Capital
Statement, Purchaser shall pay to Seller, by wire transfer of immediately
available funds to an account designated in writing by Seller, an amount equal
to the difference. In the event that the Net Working Capital of Ultimate as
reflected on the Estimated Net Working Capital Statement exceeds the Net Working
Capital of Ultimate as reflected on the Closing Net Working Capital Statement,
then, promptly and in any event within ten (10) days following the later of the
Determination Date or the acceptance of the Closing Net Working Capital
Statement, Seller shall pay to Purchaser, by wire transfer of immediately
available funds, to an account designated in writing by Purchaser, an amount
equal to the difference.
Section 2.4 Additional Payment for Tax Election.
(a) If the Election is made pursuant to Section 6.4(a), the Purchase
Price paid by Purchaser to Seller hereunder shall be increased by an amount (the
"Tax Gross-Up Payment") equal to the "Pro Forma Incremental Tax" divided by the
"Gross-Up Percentage." For purposes of this Section 2.4, the "Pro Forma
Incremental Tax" shall be equal to (A) the difference between Seller's total Tax
on the gain recognized by Seller (on a consolidated basis) (including the amount
of any investment tax credit recapture) calculated giving effect to the
Election, minus (B) Seller's total Tax on the gain recognized by Seller
calculated without regard to the Election, in both cases calculated without
regard to any net operating loss carryforwards ("NOL's") which may be available
to offset the gain arising from sale of the Shares and/or the Election. The
payment to Seller under this Section 2.4 shall be calculated and paid as
follows:
(i) Gross-Up Percentage. The Tax Gross-Up Payment shall be
determined by dividing the Pro Forma Incremental Tax by the "Gross-Up
Percentage", which shall be computed by subtracting from the number one (1) the
sum of (i) the federal income tax rate applicable to corporations in the year
the additional tax liability is incurred plus (ii) the state income tax rate
applicable to corporations in the year the additional tax liability is incurred
for each state in which Seller would be subject to income tax (without regard to
any NOL's) with respect to the sale of the Shares or the Election.. The parties
agree that the federal income tax rate applicable to Seller is 34%, the
Connecticut income tax rate applicable to Seller is 8.5% and the New York income
tax rate applicable to Seller is 9%. The parties further agree that the Gross-Up
Percentage to be applied to the Pro Forma Incremental Tax to calculate the Tax
Gross-Up Payment equals the Pro Forma Incremental Tax divided by 48.50
determined as follows:
Tax Gross-Up Payment = Pro Forma Incremental Tax /[1-(federal rate + state rates]
(ii) Calculation of Pro Forma Incremental Tax and Tax Gross-Up
Payment. If the Election is made, Seller's certified public accountant shall
prepare a calculation of each of the Pro Forma Incremental Tax and the Tax
Gross-Up Payment, without regard to Seller's NOL's. Seller shall deliver the
calculations to Purchaser.
(iii) Acceptance of Tax Gross-Up Payment. If Purchaser
disputes the correctness of the Tax Gross-Up Payment calculation, Purchaser
shall notify the Seller of its objections in writing within ten (10) business
days of its receipt of the calculation and shall set forth in reasonable detail
the reasons for such objections. If Purchaser fails to deliver such notice of
objection within such time period, it shall be deemed to have accepted the
Seller's accountant's calculation of the Tax Gross-Up Payment. If Purchaser
delivers such notice, Purchaser and Seller shall attempt in good faith to
resolve the dispute within thirty (30) days of Seller's receipt of the notice of
objection. If they are unable to do so, the dispute shall be submitted to the
Independent Accountant, who shall resolve the dispute within thirty (30) days.
The decision of the Independent Accountant
8
shall be final, conclusive and binding upon the parties. Purchaser shall pay the
fees and expenses of the Independent Accountant.
(b) Payment. The Tax Gross-Up Payment shall be made not later than
the 10th day following the date Seller's accountant provides the calculations
set forth above in Section (ii) or the date on which the Independent Accountant
makes a determination as to the Tax Gross-Up Payment calculation. Purchaser
shall pay an amount which is equal to the Tax Gross-Up Payment by wire transfer
of immediately available funds to an account designated by Seller. Purchaser
shall pay the fees and expenses of Seller's accountant in connection with the
Election.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND ULTIMATE
Seller and Ultimate jointly and severally represent and warrant to
Purchaser, as of the date of this Agreement and as of the Closing, that, except
as has been otherwise disclosed by Seller or Ultimate to Purchaser in any
Schedule hereto:
Section 3.1 Corporate Organization and Authority of Seller and Ultimate.
(a) Seller. Seller has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Connecticut. Seller
has the corporate power and authority to own or lease its properties and to
enter into this Agreement and to perform its obligations hereunder. The
execution and delivery of this Agreement by Seller and the consummation of the
transactions contemplated hereby have been duly and validly authorized and
approved by the Board of Directors of Seller, and no other corporate proceeding
on the part of Seller is necessary to authorize this Agreement or the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Seller and constitutes a legally valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms.
(b) Ultimate. Ultimate has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of New York.
Ultimate is duly licensed or qualified and in good standing as a foreign
corporation in each jurisdiction in which the ownership of its property or the
character of its activities is such as to require it to be so licensed or
qualified, except where the failure to be so licensed or qualified would not
have a Material Adverse Effect. Ultimate has the corporate power and authority
to own or lease its properties and to conduct the Business as it is now being
conducted, to enter into this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement by Ultimate and the
consummation of the transactions contemplated hereby have been duly and validly
authorized and approved by the Board of Directors and sole shareholder of
Ultimate and no other corporate proceeding on the part of Ultimate is necessary
to authorize this Agreement or the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Ultimate and
constitutes a legally valid and binding obligation of Ultimate, enforceable
against Ultimate in accordance with its terms.
Section 3.2 No Conflict. Except as set forth in Schedule 3.2, the
consummation of the transactions contemplated by this Agreement by Seller and
Ultimate will not result in or constitute any of the following: (a) a default or
an event that, with notice or passage of time or both, would be a default,
breach, or violation of the articles of incorporation or bylaws of Seller or
Ultimate, any Contract, lease, License, promissory note, conditional sales
contract, commitment, indenture, mortgage, or other agreement, instrument, or
arrangement to which Seller or Ultimate (or the Business) is a party or by which
the Shares or any of Ultimate's assets or
9
properties are bound; (b) an event that would permit any party to terminate any
agreement relating to the Business or which would violate or conflict with any
law, statute, ordinance, rule, regulation, decree, writ, injunction, judgment or
order of any Governmental Authority or any arbitration award which is either
applicable to, binding upon or enforceable against, Seller, Ultimate or the
Business; (c) result in the creation or imposition of any mortgage, deed of
trust, pledge, hypothecation, encumbrance, security interest, restriction or
lien of any kind (a "Lien") upon any of the Shares or the assets or properties
of Ultimate, or constitute an event which, after notice or lapse of time or
both, would result in any such violation, breach, acceleration, termination or
creation of a Lien upon any of the Shares or the assets or properties of
Ultimate; or (d) require the consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, any court or
tribunal or any other Person, except any SEC and other filings required to be
made by the Seller.
Section 3.3 Capitalization. (a) The authorized capital stock of Ultimate
consists of 500,000 shares of Class A common stock, of which 500,000 shares are
issued and outstanding as of the date hereof, and 500,000 shares of Class B
common stock, of which 497,000 shares are issued and outstanding as of the date
hereof. All of the Shares are duly authorized, validly issued, fully paid and
non-assessable, and the full consideration has been received therefor by
Ultimate. There are no outstanding options, warrants, rights or other securities
exercisable or exchangeable for any capital stock or other equity security of
Ultimate, any other commitments or agreements providing for the issuance of
additional shares or other equity securities, the sale of treasury shares, or
for the repurchase or redemption of shares of Ultimate's capital stock or other
equity securities, or any agreements of any kind which may obligate Ultimate to
issue, purchase, register for sale, redeem or otherwise acquire any of
Ultimate's capital stock or other equity securities.
(b) Title to Shares. Seller owns of record and beneficially all of the
Shares, which constitute all of the issued and outstanding capital stock of
Ultimate. Except as set forth on Schedule 3.3(b), Seller has good title to the
Shares, free of all liens, claims, charges, restrictions, encumbrances and
proxies. Upon consummation of the transactions contemplated hereby, Purchaser
will hold good title to all of the Shares, free and clear of all liens, claims,
charges, encumbrances, restrictions and proxies arising through Seller.
Section 3.4 Subsidiaries. Ultimate has no subsidiaries. Ultimate does not
own, directly or indirectly, any capital stock or other equity or ownership or
proprietary interest in any other corporation, partnership, association, trust,
joint venture or other entity.
Section 3.5 Financial Statements. Seller has furnished Purchaser with (a)
the unaudited financial statements of Ultimate for the years ended December 31,
1997, December 31, 1998 and December 31, 1999, attached hereto as Schedule
3.5(a) (the "Unaudited Financial Statements"), which unaudited financial
statements have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby (except that the Unaudited
Financial Statements are not accompanied by footnotes) and present fairly the
financial position and the results of operations and cash flows of Ultimate as
at the respective dates and for the periods indicated; and (b) the unaudited
statement of operations and balance sheet of Ultimate as of October 31, November
30 and December 31, 1999, attached hereto as Schedule 3.5(b) (the "Balance
Sheets"), which balance sheets have been prepared in accordance with GAAP
applied consistently with prior accounting periods of Ultimate; and (the
Unaudited Financial Statements, the Balance Sheets shall be referred to
collectively herein as the "Financial Statements").
Section 3.6 Title to and Condition of Assets. Except as set forth on
Schedule 3.6, and except with respect to property which is the subject of the
Leases as to which certain representations are made pursuant to Section 3.11
hereof, Ultimate owns and has good and marketable title to all of the properties
and assets reflected as owned on the Balance Sheet and all properties and assets
acquired by Ultimate since the Balance Sheet Date in the ordinary course of
business, with full power to sell, transfer and assign the same, free and clear
of any
10
Liens, other than (a) those disclosed in the Financial Statements, and (b) as
set forth in Schedule 3.6 to this Agreement. Except as disclosed on Schedule
3.6, the properties and assets of Ultimate are in good operating condition and
repair, normal wear and tear excepted, and have been maintained in accordance
with all applicable specifications and warranties and normal industry practice.
Ultimate does not own fee interests (in whole or in part) in any real property.
Section 3.7 Customers and Suppliers. (a) Set forth in Schedule 3.7(a) is
an accurate and current listing of the ten (10) largest customers of Ultimate
for each of the two most recent fiscal years. Except as set forth in Schedule
3.7(a), neither Seller nor Ultimate has any Knowledge that any of Ultimate's
customers intend to cease doing business with Ultimate, or alter the amount of
the business that it is presently doing with Ultimate to the extent that such
alteration would have a Material Adverse Effect.
(b) Schedule 3.7(b) contains a correct and current list of the ten
(10) largest suppliers of Ultimate during the two (2) most recent fiscal years.
Except as indicated in Schedule 3.7(b), neither Seller nor Ultimate has any
Knowledge that any of Ultimate's suppliers intend to cease doing business with
Ultimate, or materially alter the amount of the business that they are presently
doing with Ultimate to the extent that such alteration would have a Material
Adverse Effect.
Section 3.8 Contracts. Except as set forth in Schedule 3.8, all Contracts
are in full force and effect and there exists no default or event of default or
event, occurrence, condition or act (including but not limited to the purchase
of the Shares hereunder) which, with the giving of notice, the lapse of time or
the happening of any other event or condition, would become a default or event
of default thereunder. Except as set forth in Schedule 3.8, Ultimate is not a
party to and is not bound by any:
(a) agreement, contract or commitment relating to the employment of
any person by Ultimate, including but not limited to collective bargaining
agreements and employment agreements, or bonus arrangements or commitments;
(b) agreement, contract or commitment relating to capital
expenditures in excess of $10,000;
(c) loan or advance to, or investment in, any other Person or any
agreement, contract or commitment relating to the making of any such loan,
advance or investment;
(d) guarantee or other contingent liability in respect of any
indebtedness or obligation of any other Person (other than the endorsement of
negotiable instruments for collection in the ordinary course of business);
(e) agreement, contract or commitment limiting the freedom of
Ultimate to engage in any line of business or to compete with any other person;
(f) agreement, contract or commitment not entered into in the
ordinary course of business which involves $25,000 or more in annual payments
and is not cancelable without penalty within thirty (30) days;
(g) distributor's, manufacturer's, sales representative or agency
agreements;
(h) output or requirements agreements;
11
(i) agreements obligating Ultimate to issue shares of its capital
stock, or granting rights to acquire shares of its capital stock or instruments
convertible into capital stock;
(j) any agreement with any customer or supplier other than in the
ordinary course of business;
(k) any agreement, indenture or other instrument pursuant to which
Ultimate has borrowed money ("Loan Agreements"); or
(l) agreements, contracts or commitments which might reasonably be
expected to have a Material Adverse Effect.
Ultimate has not violated any of the terms or conditions of any contract or
agreement set forth in Schedule 3.8 in any material respect.
Section 3.9 Books and Records. The books of account, minute books, stock
record books, and other records of Ultimate, all of which have been made
available to Purchaser, are complete and correct and have been maintained in
accordance with sound business practices. The minute books of Ultimate contain
accurate and complete records of all meetings held of, and corporate action
taken by, the stockholders, the Board of Directors, and committees of the Boards
of Directors of Ultimate, and no meeting of any such stockholders, Board of
Directors, or committee has been held for which minutes have not been prepared
and are not contained in such minute books.
Section 3.10 Intellectual Property. Set forth in Schedule 3.10 is a
complete and accurate list of all patents, patent applications, trademarks,
trade names, service marks, and copyrights owned or (as indicated) licensed by
Ultimate. To Seller's and Ultimate's Knowledge, Ultimate is not infringing,
violating or otherwise acting adversely to, the rights of any person under or in
respect of any Proprietary Rights. Except as set forth in Schedule 3.10, there
are no claims that Ultimate or the operation of the Business infringes, violates
or otherwise is adverse to, the rights of any person under or in respect of any
Proprietary Rights. Except as set forth in Schedule 3.10, Ultimate is not a
party to any license agreement, or arrangement, whether written or oral, express
or implied, or whether as licensee, licensor, or otherwise, with respect to any
Proprietary Rights. "Proprietary Rights" means any one or more of the following:
(a) letters patent and any applications therefor, whether foreign or domestic
and all rights associated therewith; (b) trademarks, service marks, collective
marks, and certificate marks, whether registered (state and/or federal) or
unregistered, and whether foreign or domestic and the goodwill and all rights
associated therewith; (c) copyrights, whether registered or unregistered, and
whether foreign or domestic, and all rights associated therewith; (d) trade
names and business identifications, including, but not limited to, the name
"Ultimate Technology Corporation"; (e) trade secrets and other legally
protectable proprietary information, data or knowledge, (f) methods, processes,
inventions, technology and know-how; and (g) all other similar proprietary
rights and intellectual property.
Section 3.11 Leases. Set forth in Schedule 3.11 is an accurate and
complete list of (i) all leases for real property used or held for use in the
Business, including the lease for the real property housing the headquarters of
Ultimate located in Xxxxxx, New York, and (ii) all leases for personal property
used or held in connection with the Business to which Ultimate is a party (as
lessee or lessor) (the "Leases"). Each Lease set forth in Schedule 3.11 is in
full force and effect; all rents and additional rents due to date on each such
Lease have been paid; in each case, Ultimate has been in possession since the
commencement of the original term of such Lease and is not in default thereunder
and no waiver, indulgence or postponement of Ultimate's obligations thereunder
has been requested by Ultimate or granted by the lessor; and, to Ultimate's and
Seller's Knowledge, there exists no event of default or event, occurrence,
condition or act (including but not limited to
12
the purchase of the Shares hereunder) which, with the giving of notice, the
lapse of time or the happening of any further event or condition, would become a
default under such conditions under any such Lease by either lessor or lessee in
each instance.
Section 3.12 Inventory. The inventory of supplies, raw materials, work in
process, finished goods, supplies and spare parts held, including any such item
which is in transit or on order as of the Closing Date relating to the Business
(collectively, the "Inventory") consists of items of a quality and quantity
usable and salable in the ordinary course of business before and after the
Closing, net of reserves on the Financial Statements. Neither Ultimate nor
Seller has any Knowledge that any customer of Ultimate intends to request that
Ultimate take back or otherwise repurchase or give credit for any amount of the
Inventory, other than in the ordinary and usual course of Ultimate's Business as
conducted consistent with Ultimate's past experience. All items included in the
Inventory are the property of Ultimate, except as set forth on Schedule 3.12.
Except as set forth on Schedule 3.12, no items included in the Inventory have
been pledged as collateral or are held by Ultimate on consignment from others.
The Inventories shown on the Balance Sheet are based on quantities determined by
physical count or measurement, taken within the preceding twelve (12) months,
and are valued on a basis consistent with that of prior years as described in
the Financial Statements.
Section 3.13 Litigation and Proceedings. Except as set forth in Schedule
3.13, there is no suit, action, claim, arbitration, investigation or legal,
administrative or other proceeding pending, or, to Seller's or Ultimate's
Knowledge, threatened, against or affecting Ultimate or the Business or the
condition (financial or otherwise), properties, assets, rights, results of
operations, operations or prospects of Ultimate or the Business. Schedule 3.13
sets forth all such matters that to Seller's and Ultimate's Knowledge have been
commenced, asserted or settled in the last three (3) years. Seller has furnished
or made available to Purchaser relevant court papers and other documents
relating to the matters set forth in Schedule 3.13. Ultimate is not subject to
any judgment, order or decree entered in any lawsuit or proceeding. Ultimate is
not in default with respect to any order, writ, injunction or decree of any
federal, state, local or foreign court, department, agency or instrumentality.
Section 3.14 Employee Relations. Ultimate is in compliance with all
applicable Laws and regulations respecting labor, employment, wages and hours
and occupational safety and health. There is no pending or, to the Knowledge of
Seller or Ultimate, threatened labor dispute, strike or work stoppage which
would reasonably be likely to interfere with continued operations of the
Business. There has been no strike, walkout or work stoppage involving any of
the employees of Ultimate during the twenty-four (24) months prior to the date
hereof. Ultimate has not received written notice of pending or threatened
changes with respect to (including, without limitation, resignation of) the
senior management or key supervisory personnel of the Business.
Section 3.15 Benefit Arrangements.
(a) Schedule 3.15 lists all employee benefit plans and collective
bargaining, employment or severance agreements or other similar arrangements
which Seller or Ultimate currently sponsor, maintain or to which contributions
are made, or for which obligations have been incurred and are outstanding, for
the benefit of employees of Ultimate, including, without limitation, (1) any
"employee benefit plan" (within the meaning of Section 3(3) of ERISA) (the
"Benefit Plans"), (2) any profit-sharing, deferred compensation, bonus, stock
option, stock purchase, pension, retainer, consulting, retirement, severance,
welfare or incentive plan, agreement or arrangement, (3) any plan, agreement or
arrangement providing for "fringe benefits" or perquisites to employees,
officers, directors or agents, including but not limited to benefits relating to
automobiles, clubs, vacation, child care, parenting, sabbatical, sick leave,
medical, dental, hospitalization, life insurance and other types of insurance,
and (4) any employment agreement. The plans, agreements and arrangements
described in this Section 3.15 are referred to herein as "Benefit Arrangements."
13
(b) None of the Benefit Arrangements is (i) a plan subject to Title
IV of ERISA or (ii) a "multiemployer plan" (within the meaning of Section 3(37)
of ERISA).
(c) Neither Seller nor Ultimate nor any ERISA Affiliate of Seller or
Ultimate has ever contributed to, or had an obligation to contribute to, any
multiemployer plan (within the meaning of Section 3(37) of ERISA) or any plan
subject to Title IV of ERISA.
(d) Seller or Ultimate has delivered to Purchaser true and complete
copies of all documents and summary plan descriptions of the Benefit
Arrangements or summary descriptions of any such Benefit Arrangement not
otherwise in writing. Seller or Ultimate has delivered to Purchaser true and
complete copies of the most recent determination letters and Form 5500s filed in
the most recent three plan years with respect to any Benefit Plan, including all
schedules thereto and financial statements with attached opinions of independent
accountants.
(e) Each Benefit Arrangement (and any related trust agreement) has
been administered in accordance with its terms, and Seller and Ultimate are in
material compliance with the applicable provisions of ERISA, the Code and other
laws applicable thereof.
(f) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid to each
Benefit Arrangement.
(g) All reports, returns and similar documents with respect to each
Benefit Arrangement required to be filed with any governmental agency or
distributed to any participant of each Benefit Arrangement have been duly and
timely filed or distributed.
(h) No actions, suits or claims (other than routine claims for
benefits in the ordinary course) are pending or, to Seller's and Ultimate's
Knowledge, threatened with respect to any Benefit Arrangement.
(i) Neither Seller, Ultimate nor any Benefit Arrangement fiduciary
has, with respect to the Benefit Arrangements, engaged in a prohibited
transaction, as such term is defined in Section 4975 of the Code or Section 406
of ERISA and no event or condition exists with respect to any Benefit
Arrangement which constitutes a reportable event within the meaning of Section
4043 of ERISA, as to which a waiver is not applicable.
(j) Each Benefit Plan that is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the
Internal Revenue Service that such Benefit Plan is qualified under Section
401(a) of the Code. To Seller's and Ultimate's Knowledge, no event has occurred
that will or could give rise to disqualification or loss of tax-exempt status of
any such Benefit Plan or trust under Sections 401(a) or 501(a) of the Code.
(k) Each of the Benefit Arrangements can be terminated within a
period of thirty (30) days following the Closing Date, without any additional
contribution to such Benefit Arrangement or the payment of any additional
compensation or amount or acceleration of any benefits.
Section 3.16 Compliance with Laws. To the Knowledge of Seller and
Ultimate, Ultimate has complied with, is not in violation of and has received no
notices or communication from any Governmental Authority relative to alleged,
actual or potential violation of any applicable foreign, federal, state or local
statutes, Laws and regulations (including but not limited to any applicable
building, zoning or other Law, but
14
specifically excluding Environmental Laws as to which Section 3.17 shall govern)
affecting Ultimate's properties and assets or the operation of the Business,
including but not limited to under the Occupational Safety and Health Act of
1970, as amended.
Section 3.17 Environmental Matters. Except as disclosed in Schedule 3.17,
(a) Ultimate does not currently, and in the past did not, generate,
manufacture, use, store, release, transport or have transported or dispose of
Hazardous Materials, except in material compliance with Environmental Laws;
(b) Ultimate is currently, and in the past has been, in material
compliance with all Environmental Laws and no notice, request, investigation,
administrative order, consent order, agreement, litigation or settlement is
proposed, threatened, anticipated or in existence with respect to the material
violation of any Environmental Law;
(c) Ultimate is in possession of all material permits required under
any applicable Environmental Law for the conduct and operation of the Business
or any part thereof, and Ultimate is in compliance with all of the material
requirements and limitations included in such permits; and
(d) without in any way limiting the generality of the foregoing:
(i) all on-site locations where Ultimate has stored, treated
or disposed or arranged for disposal of Hazardous Materials are identified in
Schedule 3.17(d)(i),
(ii) to Seller's and Ultimate's Knowledge, all above ground
and underground storage tanks used for storage of Hazardous Materials and the
capacity and contents of such tanks located on property owned or leased by
Ultimate, are identified in Schedule 3.17(d)(ii),
(iii) except as set forth in Schedule 3.17(d)(iii), to
Seller's and Ultimate's Knowledge, there is no asbestos contained in or forming
part of any building, building component, equipment, structure or office space
owned or leased by Ultimate, which asbestos is friable, deteriorating or
reasonably in need of removal or replacement for the purpose of human health,
and
(iv) Schedule 3.17(d)(iv) lists (A) all environmental
investigation, clean up, remediation and/or audit reports prepared for, or in
the possession or control of, Ultimate with respect to each parcel of real
property owned or leased by Ultimate or with respect to Ultimate's operations,
and (B) all material written communications between Ultimate or any Ultimate
Affiliate, and any Governmental Authorities arising under or related to
Environmental Laws. Ultimate has provided Purchaser with accurate and complete
copies of such environmental reports and communications.
For purposes of this Section 3.17, a matter shall not be deemed "material"
unless and until all Purchaser's Claims for indemnification under this section,
individually or in the aggregate, equal at least $10,000, which amount shall
count toward the Threshold set forth in Section 13.6 hereof.
Section 3.18 Taxes. Except as disclosed on Schedule 3.18, (i) within the
times and in the manner prescribed by Law, Seller has filed or caused to be
filed all consolidated federal, state, local and foreign tax returns and tax
reports which are required by Law and has paid all Taxes, assessments, interest
and penalties that are due and payable arising from its ownership of Ultimate
and operation of Ultimate's Business (other than amounts that are being
contested in good faith); and (ii) there are no Liens for Taxes upon the Shares
or upon
15
any of the assets of Ultimate. Ultimate has filed all Tax Returns that it was
required to file and all such Tax Returns were correct and complete in all
material respects. Ultimate has paid all taxes that are due and payable (other
than amounts being contested in good faith). To Ultimate's Knowledge, no claim
has ever been made by an authority in a jurisdiction where Ultimate does not
file Tax Returns that it is or may be subject to tax in such jurisdiction.
Ultimate has no liability for the Taxes of Seller or any other person for any
reason, including, without limitation: (a) under Treasury Reg. ss.1.1502-6 (or
any similar provision of state, local or foreign law), (b) as a transferee or
successor, or (c) by contract. To Seller's and Ultimate's Knowledge, the
charges, accruals and reserves in the Financial Statements in respect of Taxes
relating to Ultimate are adequate for all federal, state and local Taxes and any
penalties, interest or other charges for the period ended December 31, 1999 and
for all prior periods, whether or not disputed, and Seller and Ultimate have
withheld and paid or accrued all Taxes to the appropriate Governmental Authority
required to have been withheld and paid by each of them in connection with
amounts paid or owing to any employee, independent contractor or other party as
a result of Ultimate's conduct of the Business. Except as set forth on Schedule
3.18, no examination of any Tax Return of Ultimate is currently in progress.
There are no outstanding agreements or waivers extending the statutory period of
limitation applicable to any Tax Return of Ultimate.
Section 3.19 Authority and Consents. Schedule 3.19 lists all consents of
Persons or entities which are necessary to permit Seller or Ultimate to carry
out their respective obligations under this Agreement (the "Consents"). Except
as set forth in Schedule 3.19, Seller and Ultimate have the right, power, legal
capacity, and authority to enter into, and perform the obligations under, this
Agreement, and no approval, Consent, authorization, waiver, License, clearance
or order of, any declaration or notice to, or any filing or registration with,
any other Persons (including any Governmental Authority) with respect thereto is
necessary in connection with this Agreement. Except as set forth in Schedule
3.19, neither Seller nor Ultimate is subject, or a party to, any charter, bylaw,
mortgage, Lien, lease, License, permit, agreement, contract, instrument, Law,
rule, ordinance, regulation, order, judgment, decree or any other restriction of
any kind or character which would prevent consummation of the transactions
contemplated by this Agreement or compliance by Seller or Ultimate with the
terms, conditions and provisions hereof or the continued operation of the
Business after the date hereof or the Closing Date on substantially the same
basis as heretofore operated.
Section 3.20 Licenses, Permits and Authorizations. Schedule 3.20 lists all
Licenses, franchises and other permits held by Ultimate. Except as set forth in
Schedule 3.20, all Licenses, franchises and other permits held by Ultimate are
in full force and effect and such Licenses, franchises and permits (i)
constitute all of the Licenses, franchises and permits necessary to allow
Ultimate to conduct the Business as currently conducted and (ii) after Closing,
will, subject to obtaining any necessary consents, constitute all of the
Licenses, franchises and permits necessary to allow for the conduct of the
Business in the same manner as currently conducted by Ultimate.
Section 3.21 Insurance. Seller has delivered to Purchaser true and
complete copies of all policies of insurance to which Ultimate is a party or
under which any of Ultimate's properties or assets are covered (collectively,
the "Insurance Policies"). Schedule 3.21 sets forth the following information
with respect to each Insurance Policy: (a) the name of the insurer, (b) the
period of coverage and (c) the type and amount of coverage.
Section 3.22 Brokers' Fees. No broker, finder, investment banker or other
person or entity, other than BancBoston Xxxxxxxxx Xxxxxxxx, is entitled to any
brokerage fee, finders' fee or other commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
Seller or Ultimate. Seller is solely responsible for all fees, costs and
expenses in connection with its engagement of BancBoston Xxxxxxxxx Xxxxxxxx, and
Ultimate has no liability therefor.
16
Section 3.23 Absence of Certain Changes or Events. Except as set forth in
Schedule 3.23, since the Balance Sheet Date, there has not been any:
(a) transaction by Ultimate except in the ordinary course of
business as conducted during the twelve (12) month period ending on that date;
(b) event, whether as a result of any legislative or regulatory
change, revocation of any License or rights to do business, fire, explosion,
accident, casualty, labor, trouble, flood, drought, riot, storm, condemnation or
act of God or other public force or otherwise, which has had a Material Adverse
Effect on Ultimate or the Business;
(c) material adverse change in the business or condition (financial
or otherwise), liabilities, properties, assets, rights, operations, results of
operations or prospects of Ultimate;
(d) change in Ultimate's authorized or issued capital stock, grant
of any stock option or right to purchase shares of capital stock of Ultimate,
issuance of any security convertible into capital stock of Ultimate, grant of
any registration rights by Ultimate, purchase, redemption, retirement or other
acquisition by Ultimate of any shares of such capital stock, or declaration or
payment of any dividend or other distribution or payment in respect of shares of
capital stock (except as effected pursuant to the lockbox arrangement
established between Seller's lenders and Ultimate providing for a daily sweep by
such lenders of Ultimate's cash accounts);
(e) change in accounting methods or practices as they relate to
Ultimate (including, without limitation, any change in depreciation or
amortization policies or rates) by Seller, or revaluation of any of Ultimate's
assets;
(f) payment, discharge or satisfaction of any existing claims,
liabilities, obligations or indebtedness of Ultimate, except in the ordinary
course of business;
(g) loans or advances to third parties or any employees, except in
the ordinary course of business; or
(h) agreement, the performance of which will result in any of the
things described in the preceding clauses (a) through (g).
Section 3.24 Absence of Undisclosed Liabilities. Ultimate has no claims
against it, indebtedness, liabilities or obligations of any nature, whether
accrued, absolute, contingent or otherwise, and whether due or to become due,
that are not reflected or reserved against in the Financial Statements except
for: (a) those that are set forth in Schedule 3.24; (b) those that may have been
incurred after the Balance Sheet Date in the ordinary and usual course of
business and are usual and normal in amount both individually and in the
aggregate; or (c) those that are not required by GAAP to be included in a
balance sheet. Other than as set forth at Schedule 3.24, neither Seller nor
Ultimate is in default in respect of the terms and conditions of any
indebtedness. Ultimate has no indebtedness other than (i) indebtedness incurred
by Seller listed on Schedule 3.24, and (ii) indebtedness associated with the
Leases, or purchase money indebtedness incurred in the ordinary course of
business which is not material in the aggregate. Ultimate has no negative cash
balances.
Section 3.25 Accounts Receivable. Except as set forth on Schedule 3.25,
all Accounts Receivable of Ultimate shown or reflected on the Balance Sheets
represent bona fide transactions at arm's length and arose in the ordinary
course of Ultimate's Business. To Ultimate's Knowledge, none of such Accounts
Receivable is or as of the Closing Date will be subject to any counterclaim or
set off, except to the extent of any provision or
17
reserve therefor, and Ultimate has no Knowledge that any Account Receivable will
not be fully collectible when due (except to the extent of any reserve).
Schedule 3.25 contains a complete and accurate schedule of the Accounts
Receivable of Ultimate as at October 31, 1999, together with an accurate aging
of such Accounts Receivable.
Section 3.26 Year 2000 A. D. (a) Seller has (i) initiated a review and
assessment of all areas within Ultimate's business and operations (including
those affected by suppliers, vendors and customers) that could be adversely
affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by Ultimate (or its suppliers, vendors or customers) may be
unable to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999), (ii) developed a
plan and timeline for addressing the Year 2000 Problem on a timely basis, and
(iii) to date, implemented that plan in accordance with that timetable. Based on
the foregoing, Seller believes that all computer applications (including those
of suppliers, vendors and customers) that are material to the business and
operations of Ultimate are reasonably expected on a timely basis to be able to
perform properly date-sensitive functions for all dated before and after January
1, 2000 (that is, be "Year 2000 Compliant"), except to the extent that a failure
to do so could not reasonably be expected to have a Material Adverse Effect on
Ultimate or the Business.
(b) Except as provided on Schedule 3.26 hereto, to Ultimate and
Seller's Knowledge, (i) all products manufactured by Ultimate, and (ii) all
products sold by Ultimate, are designed to, and can be, used prior to, during,
and after the calendar year 2000 A.D., and such products have been designed or
modified, as applicable, to be, and are, Year 2000 Compliant.
Section 3.27 Accuracy of Representations and Warranties. No representation
or warranty of either Seller or of Ultimate contained in this Agreement
(including the Financial Statements, Schedules and Exhibits hereto) or in any
certificate delivered to Purchaser by Seller or Ultimate pursuant to this
Agreement contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller, as of the date of this
Agreement and as of the Closing, that, except as has otherwise been disclosed by
Purchaser to Seller, its agents or representatives:
Section 4.1 Organization and Authority of Purchaser. Purchaser has been
duly organized and is validly existing as a limited partnership in good standing
under the laws of the state of New York and has the power and authority to enter
into and perform its obligations under this Agreement. The execution and
delivery of this Agreement by Purchaser and the consummation of the transactions
contemplated hereby have been duly and validly authorized and approved by the
general partner of Purchaser, and no other proceeding on the part of Purchaser
is necessary to authorize this Agreement or the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
Purchaser and constitutes a legally valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms. Purchaser has used
or will use its best efforts prior to the Closing Date to take all action
required by Law (including, without limitation, federal and state securities
laws), its Certificate of Limited Partnership and Agreement of Limited
Partnership, this Agreement and all other action necessary to consummate,
deliver and perform each of the transactions and its obligations contemplated
under this Agreement.
18
Section 4.2 No Conflict. The execution and delivery of this Agreement by
Purchaser and the consummation of the transactions contemplated hereby does not
and will not violate any provision of, or result in the breach of any applicable
Law, rule or regulation of any Governmental Authority, the Certificate of
Limited Partnership, Agreement of Limited Partnership, or other organizational
documents of Purchaser or any agreement, indenture or other instrument to which
Purchaser is a party or by which Purchaser may be bound, or of any order,
judgment or decree applicable to Purchaser , or terminate or result in the
termination of any such agreement, indenture or instrument, or result in the
creation of any Lien upon any of the properties or assets of Purchaser or
constitute an event which, after notice or lapse of time or both, would result
in any such violation, breach, acceleration, termination or creation of a Lien.
Section 4.3 Litigation and Proceedings. There are no lawsuits, actions,
suits, claims or other proceedings at law or in equity, or, to the Knowledge of
Purchaser, investigations before or by any court or Governmental Authority or
before any arbitrator pending or, to the Knowledge of Purchaser, threatened,
against Purchaser. There is no unsatisfied judgment or any open injunction
binding upon Purchaser.
Section 4.4 Authority and Consents. Except as set forth in Schedule 4.4,
no consent, approval or authorization of, or designation, declaration or filing
with, any Governmental Authority or other third party is required on the part of
Purchaser with respect to Purchaser's execution or delivery of this Agreement or
the consummation of the transactions contemplated hereby.
Section 4.5 Financing; Financial Ability. Purchaser has the financial
resources necessary to consummate the transactions contemplated by this
Agreement, including, without limitation, the ability to pay the Purchase Price
at Closing and any adjustment thereto. Purchaser has received and furnished
copies to Seller of a commitment letter (the "Commitment Letter") pursuant to
which a reputable financial institution has committed, subject to the terms and
conditions thereof, to provide to Purchaser a $10,425,000 credit facility. The
commitment in the Commitment Letter is referred to herein as the "Financing
Commitment" and the financing provided thereunder is referred to herein as the
"Financing." The aggregate proceeds of the Financing (along with cash held by or
available to Purchaser) will be in an amount sufficient to (i) consummate the
transaction contemplated hereby, and (ii) pay all related fees and expenses
allocated to the Purchaser hereunder.
Section 4.6 Brokers' Fees. No broker, finder, investment banker or other
person, other than Capital Formation Group of Rochester, L.P., is entitled to
any brokerage fee, finders' fee or other commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
Purchaser.
Section 4.7 Antitrust Requirements. Purchaser and its "ultimate parent
entity" (as such term is defined under the HSR Act), after full and diligent
inquiry, has determined that there is no filing required under the HSR Act as a
result of or in relation to the transaction contemplated by this Agreement.
Section 4.8 Accuracy of Representations and Warranties. No representation
or warranty of Purchaser contained in this Agreement (including the Schedules
and Exhibits hereto) or in any certificate delivered by Purchaser pursuant to
this Agreement contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
Section 4.9 Purchase for Investment. Purchaser is purchasing the Shares
for investment for its own account and not with a view to, or for sale in
connection with, any distribution thereof, and Purchaser will not offer to sell
or otherwise dispose of the Shares so acquired by it in violation of any of the
registration requirements of the Securities Act.
19
ARTICLE V
COVENANTS AND AGREEMENTS OF SELLER AND ULTIMATE
From the date of this Agreement until the Closing Date, Seller and
Ultimate hereby agree as follows:
Section 5.1 Termination of Liens. Seller and Ultimate shall cause (a) all
Liens encumbering the assets or properties of Ultimate to be terminated and (b)
Ultimate to be released of liability under or in respect of all Loan Agreements,
in each case concurrent with the Closing.
Section 5.2 Business Operating Covenants.
(a) Conduct of the Business. From the date hereof through Closing,
Ultimate will, except to the extent consented to by Purchaser, which consent
shall not be unreasonably withheld: (i) conduct the Business only in the
ordinary and usual course in a manner consistent with past practices, and (ii)
use commercially reasonable efforts to keep available (in the ordinary and usual
course of business consistent with past practice and without any obligation to
spend money other than in the ordinary and usual course of business) the
services of the employees of the Business and take all reasonable actions to
preserve contracts and other business relationships with licensors, suppliers,
dealers, customers and others having contracts or business relationships with
the Business.
(b) Forbearance by Seller and Ultimate. Neither Seller nor Ultimate
will, after the date hereof and prior to Closing, without the prior written
consent of Purchaser which consent will not be unreasonably withheld or delayed,
take any affirmative action, or fail to take any reasonable action within its
control, as a result of which any of the events or changes set forth in Section
3.23 is likely to occur; except that (i) Seller and Ultimate may cancel
intercompany accounts in accordance with the provisions of Section 8.2, and (ii)
Ultimate may make distributions of cash and cash equivalents to Seller prior to
the Closing Date.
Section 5.3 Access to Premises and Information. From the date hereof
through the Closing, Seller and Ultimate shall afford to Purchaser and its
accountants, counsel and other representatives reasonable access during normal
business hours, to the properties, books, contracts, commitments, Tax Returns,
records and appropriate officers and employees of Seller and Ultimate and shall
furnish such representatives with all financial and operating data and other
information concerning the affairs of Ultimate as they may reasonably request in
connection with this Agreement or for any reasonable business purpose relating
to the Business.
Section 5.4 No Solicitations. From the date hereof until the Closing Date,
neither Seller nor Ultimate shall (a) enter into any discussions or transactions
with any third party relating to the sale or disposition, directly or
indirectly, of the stock or substantially all the assets or Business of
Ultimate, or a merger, consolidation or similar transaction involving Ultimate
(other than in the ordinary course of business), or (b) disclose to any other
person (other than Seller's and Ultimate's officers, directors, management
employees, and lenders) the nature of the transaction contemplated by this
Agreement; provided, however, that nothing herein shall prohibit the Board of
Directors of Seller from (i) complying with Rule 14e-2 promulgated under the
Exchange Act with regard to an Acquisition Proposal; or (ii) furnishing
information to, or entering into negotiations or discussions with, any person or
entity that makes an unsolicited proposal (an "Acquisition Proposal") to acquire
Ultimate pursuant to a merger, consolidation, share exchange, business
combination or other similar transaction, but only to the extent that Seller's
Board of Directors, after having consulted with and received the advice of legal
counsel and Seller's lenders, reasonably determines in good faith that such
action is
20
required for the Board of Directors of Seller to comply with its fiduciary
duties to Seller's shareholders imposed by Connecticut law, in which case the
Company shall provide notice to the Purchaser to the effect that it has
furnished information to, or entered into discussions or negotiations with such
person or entity and disclose to Purchaser the material terms of any such
Acquisition Proposal or the substance of any such discussions and, if Seller's
Board of Directors determines that it should accept such Acquisition Proposal,
of the acceptance of such Acquisition Proposal.
Section 5.5 Maintenance of Insurance. Between the date hereof and Closing,
Seller shall maintain the Insurance Policies in full force and effect.
Section 5.6 Consents, Approvals and Filings. As soon as reasonably
possible after the execution and delivery of this Agreement, and in any event on
or before the Closing Date, Seller and Ultimate will obtain the written Consents
of all Persons or entities listed on Schedule 3.19 and will furnish to Purchaser
executed copies of such Consents. Seller and Ultimate will use their
commercially reasonable best efforts to comply as promptly as practicable with
any governmental requirements, domestic or foreign, applicable to the
consummation of the transactions contemplated hereby, and to obtain on or before
the Closing Date all necessary approvals, authorizations, Consents, Licenses and
clearances of such Governmental Authorities required to be obtained by Seller
and Ultimate in connection with the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby. Seller will provide
Purchaser with copies of all filings made by Seller with any Governmental
Authority in connection with this Agreement and the transactions contemplated
hereby.
Section 5.7 Subsequent Events. Seller and Ultimate will promptly advise
Purchaser of (i) any event occurring prior to the Closing Date which would
render any representation or warranty of Seller and/or Ultimate contained
herein, if made on the date of such event or on the Closing Date, untrue or
inaccurate; and (ii) any material adverse change in the Business.
Section 5.8 Resignations. At the Closing, Seller shall deliver or cause to
be delivered to Purchaser duly signed resignations, effective immediately after
the Closing, of all directors of Ultimate (other than those directors and
officers designated in writing by Purchaser at least five (5) days prior to the
Closing Date).
Section 5.9 COBRA Requirements. Notwithstanding anything in this Agreement
to the contrary, on and after the Closing Date, Seller will comply in all
respects with the group health plan continuation coverage requirements of COBRA
with regard to employees of Ultimate, their spouses and dependents, that were
terminated on or prior to the Closing Date.
ARTICLE VI
TAX MATTERS
Section 6.1 Apportionment.
(a) The parties hereto will, to the extent permitted by applicable
law, elect with the relevant taxing authority to treat for all purposes the
Closing Date as the last day of a taxable period of Ultimate (a "Short Period")
and such period shall be treated as a taxable period ending on or before the
Closing Date (a "Pre-Closing Period") for purposes of this Agreement. Seller
shall prepare and file on a timely basis any Tax Return attributable to such
Short Period and pay any Tax liability due with respect thereto.
21
(b) In any case where applicable law does not permit the parties
hereto to treat the Closing Date as the last day of a taxable period, then for
purposes of this Agreement, the portion of each such Tax that is attributable to
the income, properties or operations of Ultimate for the period that would have
included the Closing Date if the Closing Date were permitted to be treated as
the last day of a taxable period shall be (A) in the case of a Tax that is not
based on net income, the total amount of such Tax for the taxable period that
includes the Closing Date, multiplied by a fraction, the numerator of which is
the number of days from the first day of such period through the Closing Date,
and the denominator of which is the total number of days in such period, and (B)
in the case of a Tax that is based on net income, the Tax that would be due with
respect to such period if the Closing Date were permitted to be treated as the
last day of the taxable period.
(c) Except as otherwise provided in subparagraph (a) of this Section
6.1, Purchaser shall be responsible for the preparation and filing of all Tax
Returns of Ultimate with respect to any period ending after the Closing Date.
Upon reasonable notice from Purchaser and delivery to Seller of evidence
reasonably satisfactory to Seller of the amount to be paid by Seller, to the
extent not reserved on the Financial Statements, Seller shall promptly pay
Purchaser an amount equal to Seller's liability in respect of such Taxes
attributable to any Pre-Closing Period (actually reflected in any such Tax
Return).
Section 6.2 Cooperation in Tax Return Preparation. Seller and Purchaser
will cooperate fully with each other in connection with the preparation of all
Tax Returns and all audit examinations of, or claims or assertions against
Ultimate by any governmental taxing authority with respect to (i) any
Pre-Closing Period and (ii) any taxable period ending after the Closing Date (a
"Post-Closing Period") to the extent that the audit, claim or assertion relates
to property, income or operations of Ultimate, in each case including but not
limited to the furnishing or making available of records, books of account or
other materials and appropriate personnel necessary or helpful for the defense
against the assertions of any taxing authority.
Section 6.3 Contests. Promptly upon receipt by any party hereto of notice
of the assertion of any claim by a taxing authority with respect to Taxes
relating to Ultimate that, if successful, would result in the imposition of any
Tax for which Seller would be obligated to indemnify Purchaser pursuant to this
Agreement, such party shall promptly notify Seller in writing of such fact.
Seller shall have right, at its option, and at its own expense to assume the
defense of any such claim; provided, however, that Seller shall not settle,
compromise or abandon without Purchaser's prior written consent any claim for
Tax which would adversely affect the tax liability of Purchaser or Seller with
respect to any taxable period ending after the Closing Date to any extent. Such
consent shall not be unreasonably withheld.
Section 6.4 Tax Election.
(a) 338(h)(10) Election. The parties hereby agree, at the option of
Purchaser, jointly to make a valid, timely and effective election under Section
338(h)(10) of the Code, with respect to Purchaser's purchase of the Shares, to
treat the acquisition of the Shares as an asset acquisition (the "Election"). If
Purchaser determines to make the Election, it shall timely notify Seller in
writing, and Purchaser and Seller shall cooperate and provide each other with
all necessary and appropriate documentation (including filing such forms,
returns, elections, schedules and other documents as may be required) to effect
and preserve a timely Election.
(b) If Purchaser notifies Seller of its determination to make the
Election, Purchaser and Seller shall act together in good faith to (i) determine
and agree upon the amount of the "adjusted grossed-up basis" of Ultimate's
assets (within the meaning of Treas. Reg. ss. 1.338(h)(10)-1), which adjusted
grossed-up basis shall be determined in a manner consistent with the Purchase
Price for purposes of Treas. Reg. ss. 1.338(h)(10)-1 and (ii) agree upon the
proper allocations of the adjusted grossed-up basis of Ultimate's assets among
the assets of Ultimate in accordance with Section 338(b)(5) of the Code and the
Treasury Regulations promulgated
22
thereunder. Seller shall calculate gain or loss, if any, resulting from the
Election in a manner consistent with the allocations and shall not take any
position inconsistent with the allocations in any Tax Return or otherwise.
Purchaser shall allocate the adjusted grossed-up basis of Ultimate's assets
among the assets of Ultimate in a manner consistent with the allocations and
shall not take any position inconsistent with the allocations in any Tax Return
or otherwise.
(c) In the event that Purchaser or Seller receives notice, whether
orally or in writing, of any pending or threatened federal, state, local,
municipal or foreign Tax examination, claim, settlement, proposed adjustment,
assessment or related matter with respect to Taxes that could affect Seller, or
if Seller receives notice of matters that could affect Purchaser or Seller, the
party receiving notice shall notify in writing the potentially affected party
within 10 days thereof. The failure of any party to give the notice required by
this paragraph shall not impair that party's rights under this Agreement except
to the extent that the other parties demonstrate that they have been materially
damaged thereby.
(d) Each of Seller and Purchaser (as applicable, the "Controlling
Party") shall have the right to control any audit or examination by any taxing
authority, initiate any claim for refund, file any amended return, and contest,
resolve and defend against any assessment, notice of deficiency or other
adjustment or proposed adjustment relating to or with respect to those Tax
Returns, and only those Tax Returns, that each is required to prepare and file
pursuant to this Section 6.4(d); provided, that, in the event that any
adjustment could have an adverse effect on the tax liability of the other party
(the "Affected Party"), the Controlling Party (A) shall give the Affected Party
written notice of any such adjustment, (B) shall permit the Affected Party to
participate in the proceeding to the extent the adjustment may affect the tax
liability of the Affected Party and (C) shall not settle or otherwise compromise
such proceeding without the prior written consent of the Affected Party, which
consent shall not be unreasonably withheld. Seller and Purchaser shall each be
entitled to retain for its own account any refunds of Taxes attributable to
those Tax Returns that each is required to prepare and file pursuant to this
Section 6.4(d) and shall pay to the other the amount of any refund to which the
other is entitled
Section 6.5 Tax Sharing Agreements. Any tax sharing agreement between
Seller and Ultimate is terminated as of the Closing Date and will have no
further effect for any taxable year, whether current, past or future.
ARTICLE VII
COVENANTS AND AGREEMENTS OF PURCHASER
From and after the date of this Agreement, Purchaser hereby agrees as
follows:
Section 7.1 Product Warranties. Purchaser shall honor Ultimate's product
warranty claims with respect to goods or products manufactured or sold by
Ultimate shipped before the Closing Date ("Warranty Claims").
Section 7.2 Retention of Records; Inspection.
(a) Unless otherwise consented to in writing by Seller, which
consent shall not be unreasonably withheld, Purchaser shall at no time after the
Closing cause or permit Ultimate to destroy or otherwise dispose of any of its
books and records existing as of the Closing, which books and records are less
23
than seven years old at the time of such proposed destruction, without first
offering to surrender to Seller such books and records or any portion thereof.
(b) Purchaser shall afford to Seller and its accountants, counsel
and other authorized representatives reasonable access, after the Closing,
during normal business hours and in a manner so as not to interfere with normal
business operations, to the properties, books, contracts, commitments, Tax
Returns, records and appropriate officers and employees of Ultimate, and shall
furnish such representatives with all financial and operating data and other
information concerning the Business as they may reasonably request in connection
with this Agreement or for any reasonable business purpose relating to the
Business, including but not limited to the preparation of tax returns and
responding to Tax audits, the preparation of periodic financial statements, and
other governmental filings and legal proceedings or inquiries. Seller shall be
entitled, at its own expense, to make copies of such items.
Section 7.3 Consents, Approvals and Filings. Purchaser will use its best
efforts to comply as promptly as practicable with any governmental requirements,
domestic or foreign, applicable to the consummation of the transactions
contemplated hereby, and to obtain on or before the Closing Date all necessary
approvals, authorizations, consents (including those listed on Schedule 4.4),
Licenses and clearances of such Governmental Authorities required to be obtained
by Purchaser in connection with the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby. Purchaser will provide
Seller with copies of all filings made by Purchaser with any Governmental
Authority in connection with this Agreement and the transactions contemplated
hereby.
Section 7.4 Subsequent Events. Purchaser will promptly advise Seller of
(i) any event occurring prior to the Closing Date which would render any
representation or warranty of Purchaser contained herein, if made on the date of
such event or on the Closing Date, untrue or inaccurate in any material respect;
and (ii) any material adverse change in the business or properties of Purchaser.
Section 7.5 Employee Benefit Plans. Effective at the Closing, Purchaser
will offer to the employees of Ultimate who continue employment after the
Closing Date (the "Employees") for the period of one (1) year after the Closing
Date, the Benefit Arrangements which are substantially similar to the benefit
arrangements offered by Ultimate to its employees immediately prior to the
Closing Date and disclosed on Schedule 3.15 on substantially the same terms and
conditions as are currently offered by Ultimate to its employees, under which
such Employees shall be entitled to pension and other benefits (including, but
not limited to, medical, life and disability insurance), provided that Purchaser
shall not be obligated to offer any arrangements similar to the Tridex 1997 Long
Term Incentive Plan, the Tridex 1998 Non-Executive Long-Term Incentive Plan or
the Stock Incentive Compensation Agreement between Xxxxxx Xxxxx, Xxxx German and
Xxxx Xxxx dated March 1997. Notwithstanding the foregoing, Purchaser shall not
be subject to any ongoing employment obligation regarding the employees of
Ultimate following the Closing Date and Purchaser shall not assume sponsorship
of any existing Benefit Arrangements.
Section 7.6 Employment Contract. Purchaser shall assume all of Seller's
rights and obligations from and after the Closing Date under that certain
Employment Agreement between Seller and Xxxxxx X. Xxxxxxxx dated as of March 26,
1999.
24
ARTICLE VIII
JOINT COVENANTS AND AGREEMENTS
From the date of this Agreement until the Closing Date, Seller, Ultimate
and Purchaser hereby agree as follows:
Section 8.1 Support of Transaction. Purchaser, Seller and Ultimate shall
each (i) use reasonable best efforts to assemble, prepare and file any
information (and, as needed, to supplement such information) as may be
reasonably necessary to obtain as promptly as practicable any and all consents
required to be obtained in connection with the transactions contemplated hereby,
(ii) use its reasonable best efforts to obtain all consents and approvals of
third parties that any of Purchaser or Seller or Ultimate are required to obtain
in order to consummate the transactions contemplated hereby, (iii) take such
other action as may reasonably be necessary or as another party may reasonably
request to satisfy the conditions of Articles IX and X or otherwise to comply
with this Agreement, and (iv) take all appropriate actions, and do, or cause to
be done, all things necessary, proper or advisable under any applicable laws,
regulations and Contracts to consummate and make effective the transactions
contemplated herein. Each of the parties agrees to cooperate with the other in
the preparation and filing of, and the provision of information for, all forms,
notifications, reports and information, if any, required or reasonably deemed
advisable pursuant to any Law, rule or regulation or the rules of The NASDAQ
Stock Market, Inc., the Securities Act, the Exchange Act or any Governmental
Authority, in connection with the transactions contemplated by this Agreement,
and to use their respective best efforts to agree jointly on a method to
overcome any objections by any Governmental Authority to any such transactions.
The parties also agree to use reasonable best efforts to defend all lawsuits or
other legal proceedings challenging this Agreement or the consummation of the
transactions contemplated hereby and to lift or rescind any injunction or
restraining order or other adversely affecting the ability of the parties to
consummate the transactions contemplated hereby.
Section 8.2 Intercompany Accounts. Seller and Purchaser agree that all
intercompany accounts between Seller and Ultimate shall be canceled effective as
of the Closing Date automatically and without any repayment or other action by
either Seller or Ultimate, which cancellation shall be treated as a distribution
and/or a contribution to capital, as the case may be.
Section 8.3 Confidentiality. Unless and until the Closing has been
consummated, the parties and their Affiliates, officers, directors, members,
managers, agents, employees and other representatives will hold in strict
confidence, and will not use to the detriment of the other party, any and all
secret and confidential data and information with respect to the other party's
business obtained in connection with the transactions contemplated by this
Agreement. If the transactions contemplated by this Agreement are not
consummated, the parties will return to each other all data and information
relating to the other party's business, including, but not limited to,
worksheets, reports, lists, memoranda and other documents delivered in
connection with this transaction, and thereafter shall not use any information
so obtained, shall not disclose or divulge such information to any other person
and shall keep confidential all information so obtained; provided, however, (i)
that any disclosure of such information may be made to the extent required by
applicable Law or regulation or judicial or regulatory process; (ii) neither
party shall not be obligated to treat as confidential any information with
respect to the other party which is publicly available or readily ascertainable
from public sources, or which is lawfully known to it at the time that such
information is disclosed to it by the other party or which is rightfully
received from a third party, and (iii) that the parties shall be permitted to
discuss the terms and conditions of this Agreement with any lenders or potential
lenders who execute a confidentiality agreement. The obligations of this
provision shall survive any termination or abandonment of this Agreement. The
obligations of the parties under this Section 8.3 are supplemental to, and do
not supersede, the Confidentiality Agreement dated June 29, 1999, 1999 between
the Purchaser and BancBoston Xxxxxxxxx Xxxxxxxx, as attorney
25
in fact for the Seller.
Section 8.4 Disclosure; Publicity. Except as may be required by Law or any
Governmental Authority or as otherwise permitted or expressly contemplated
herein, no party hereto or their respective Affiliates, employees, agents and
representatives shall disclose to any third party this Agreement or the subject
matter or terms hereof without the prior consent of the other parties hereto.
Subject to the parties' respective obligations under federal securities law, no
press release or other public announcement related to this Agreement or the
transactions contemplated hereby shall be issued by any party hereto without the
prior approval of the other parties, which shall not be unreasonably withheld.
Section 8.5 Transfer of Defined Contribution Plan Assets.
(a) As of the Closing Date, each Employee who is a participant in
the Tridex Corporation Retirement Savings Plan shall become fully vested in his
account balance in the Tridex Corporation Retirement Savings Plan. Purchaser
agrees to establish, designate or maintain a defined contribution employee
pension benefit plan that is qualified under Section 401(a) of the Code (the
"Purchaser Defined Contribution Plan"), effective no later than the Transfer
Date. In accordance with the provisions of this Section 8.5, Seller agrees to
cause the trustee of the Tridex Corporation Retirement Savings Plan to transfer,
to the trustee of the Purchaser Defined Contribution Plan, the Total Retirement
Savings Plan Transfer Amount.
(b) The "Total Retirement Savings Plan Transfer Amount" shall be the
amount equal to the account balances in the Tridex Corporation Retirement
Savings Plan attributable to the participants and beneficiaries in such plan who
are Employees as shown on the valuation report for the valuation date occurring
on, or immediately before, the Transfer Date (including any amounts accrued as
of such date but not yet contributed to the Tridex Corporation Retirement
Savings Plan or not yet allocated to the account of an Employee under the Tridex
Corporation Retirement Savings Plan). The Total Retirement Savings Plan Transfer
Amount shall take into account any distributions, in-service withdrawals or
participant loans received by Employees, including any such distributions,
withdrawals or loans received after the Closing Date. The Total Retirement
Savings Plan Transfer Amount shall be transferred to the trustee of the
Purchaser Defined Contribution Plan entirely in (a) cash or other assets
acceptable to the trustee of the Purchaser Defined Contribution Plan, and (b)
notes which represent the participant loans of Employees.
(c) Seller shall cause the trustee of the Tridex Corporation
Retirement Savings Plan to make a transfer to the Purchaser Defined Contribution
Plan, in an amount equal to the Total Retirement Savings Plan Transfer Amount,
as soon as practicable after Seller has completed the allocation of investment
earnings on, and reconciliation of, the account balances of participants and
beneficiaries in the Tridex Corporation Retirement Savings Plan as of the
valuation date occurring on, or immediately preceding the date that Seller
receives an initial request from Purchaser for transfer of the Total Retirement
Savings Plan Transfer Amount (the "Transfer Date"), provided that such transfer
shall be made as soon as administratively feasible after the Transfer Date.
(d) Seller agrees to prepare and provide to Purchaser, as soon as
practicable following the Closing Date, a list of the Employees who were
participants in or otherwise entitled to benefits under the Tridex Corporation
Retirement Savings Plan as of the Closing Date, together with a listing of each
such Employee's term of service for eligibility and vesting purposes under the
Tridex Corporation Retirement Savings Plan and a listing of each such Employee's
account balance thereunder, and Purchaser and Seller agree to provide one
another with such additional information in the possession of one company and
not already in the possession of the other as may be reasonably requested by
either of them and necessary in order for Purchaser to establish and administer
the transferred account balances of Employees. In addition, with respect to any
amounts payable prior to the Transfer Date by Employees on participant loans
received from the Tridex Corporation Retirement
26
Savings Plan, Purchaser shall execute whatever actions and make whatever
arrangements may be necessary to permit the periodic repayment of such amounts
through payroll deduction and the remittance of the payments to the Tridex
Corporation Retirement Savings Plan.
ARTICLE IX
CONDITIONS PRECEDENT TO PURCHASER'S PERFORMANCE
The obligations of Purchaser under this Agreement are subject to the
satisfaction, at or before the Closing, of all the conditions set forth below.
Purchaser may waive any or all of such conditions in whole or in part without
prior notice; provided, however, that no such waiver shall constitute a waiver
by Purchaser of any of Purchaser's other rights or remedies, at Law or in
equity, if Seller or Ultimate is in default of any of the representations,
warranties or covenants contained in this Agreement.
Section 9.1 Truth of Seller's and Ultimate's Representations and
Warranties. The representations and warranties of Seller and Ultimate contained
in this Agreement or in any Schedule, Exhibit or written statement delivered by
Seller or Ultimate, under, in connection with or pursuant hereto shall be true
and correct in all material respects on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
such date, and Seller and Ultimate shall each have delivered to Purchaser on the
Closing Date a certificate, dated the Closing Date, to such effect.
Section 9.2 Seller's and Ultimate's Performance of Agreements. Seller and
Ultimate shall have performed, satisfied and complied with all covenants,
agreements and conditions required by this Agreement to be performed or complied
with by them on or before the Closing Date, and Seller and Ultimate shall each
have delivered to Purchaser, on the Closing Date a certificate, dated the
Closing Date, to such effect.
Section 9.3 No Material Adverse Change. Prior to the Closing Date, there
shall be no material adverse change in the liabilities, the business or
condition (financial or otherwise), the properties, assets, rights, operations,
results of operations or prospects of Ultimate, whether as a result of any
legislative or regulatory change, revocation of any License or rights to do
business, fire, explosion, accident, casualty, labor trouble, flood, drought,
riot, storm, condemnation or act of God or other public force or otherwise,
except for changes in the ordinary course of business.
Section 9.4 Opinion of Seller's and Ultimate's Counsel. Purchaser will
have received from Xxxxxxxx, Xxxxx & Xxxxxx LLP, counsel to Seller and Ultimate,
a favorable opinion dated the Closing Date, in form and substance satisfactory
to Purchaser and Purchaser's counsel, that: (a) Seller is a corporation duly
organized and validly existing and in good standing under the laws of the state
of Connecticut and has all necessary corporate power to enter into and perform
its obligations under this Agreement; (b) Ultimate is a corporation duly
organized and validly existing and in good standing under the laws of the state
of New York and has all necessary corporate power to own its properties as now
owned and operate its business as now operated; (c) this Agreement has been duly
authorized, executed and delivered by each of Seller and Ultimate and is valid
and binding on Seller and Ultimate and enforceable in accordance with its terms,
except as limited by bankruptcy and insolvency laws and by other laws affecting
the rights of creditors generally; (d) except as set forth in Schedule 3.13 to
this Agreement, counsel has no knowledge of any suit, action, arbitration or
legal, administrative or other proceeding or governmental investigation pending
or threatened against or affecting Ultimate or any of its businesses or
properties, or financial or other condition; and (e) neither the execution nor
the delivery of this Agreement nor the consummation of the transactions
contemplated in this Agreement will constitute (i) a default, or an event that
would with notice or passage of time or both constitute a default under,
27
or violation or breach of, Seller's or Ultimate's certificate of incorporation,
bylaws or any indenture, License, lease, franchise, mortgage, instrument or
other agreement of which such counsel has knowledge and to which Seller or
Ultimate is a party or by which the properties of Ultimate may be bound, or (ii)
an event that would permit any party to any such agreement or instrument to
terminate it or to accelerate the maturity of any indebtedness or other
obligation of Ultimate, or (iii) an event that would result in the creation or
imposition of any Lien, charge or encumbrance on any asset of Ultimate Purchaser
acknowledges and agrees that Xxxxxxxx, Xxxxx & Xxxxxx LLP may rely in its
opinion on the written legal opinion of Xxxxxx & Xxxx as to the corporate
proceedings required to be effected by Seller under Connecticut Law with respect
to the authorization of this Agreement and the transaction contemplated hereby.
Section 9.5 Absence of Litigation. No action, suit or proceeding before
any court or any governmental body or authority, or by any public authority,
pertaining to the transaction contemplated by this Agreement will have been
instituted or threatened on or before the Closing Date.
Section 9.6 Good Standing and Tax Certificates. Seller and Ultimate shall
have delivered to Purchaser (a) copies of Seller's certificate of incorporation,
including all amendments thereto, certified by the Secretary of the State of
Connecticut; (b) copies of Ultimate's articles of incorporation, including all
amendments thereto, certified by the Secretary of the State of New York; (c) a
certificate from the Secretary of State or other appropriate official in each
state in which Ultimate is qualified to do business to the effect that Ultimate
is in good standing in such state; and (d) certificates as to the tax status of
Ultimate in the State of New York and each state in which Ultimate is qualified
to do business.
Section 9.7 Consents and Approvals. All governmental and other consents
and approvals, if any, necessary to permit the consummation of the transactions
contemplated by this Agreement shall have been obtained, including but not
limited to the Consents listed on Schedule 3.19.
Section 9.8 Approval of Proceedings and Documentation. All proceedings to
be taken in connection with the transactions contemplated by this Agreement and
all documents incident thereto, and all certificates, instruments, opinions and
other documents delivered to Purchaser under this Agreement, shall be reasonably
satisfactory in form and substance to Purchaser and its counsel, and Purchaser
shall have received copies of all such documents and other evidences as it or
its counsel may reasonably request in order to establish the consummation of
such transactions and the taking of all proceedings in connection therewith.
Section 9.9 Transfer of Shares. At the Closing, Seller shall have
delivered certificates representing the Shares, duly endorsed or accompanied by
duly endorsed stock powers for transfer to Purchaser.
Section 9.10 Purchaser Financing. Purchaser's Financing Commitment shall
not have been retracted or substantially reduced as a result of (i) a
determination by Xxxx'x Companies, Inc. ("Lowe's"), communicated to Ultimate,
that Ultimate will not be a supplier to Lowe's for Lowe's next generation of POS
hardware, or (ii) Lowe's advising Ultimate that the terms and conditions on
which Ultimate may supply such POS hardware to Lowe's differ materially and
adversely from the terms and conditions contained in Ultimate's proposal to
Lowe's to supply Ultimate's Model 40 hardware; or (iii) failure of Ultimate to
obtain either (a) a waiver from Ithaca Peripherals, Inc. ("Ithaca") for the
benefit of Purchaser's lender(s) of the purchase money security interest granted
to Ithaca under Section 10 of the Printer Supply Agreement between Ultimate and
Ithaca or (b) the subordination of such purchase money security interest to the
security interest to be granted by Ultimate to Purchaser's lender(s) in a form
or on terms acceptable to Purchaser's lender(s).
28
ARTICLE X
CONDITIONS PRECEDENT TO SELLER'S AND ULTIMATE'S PERFORMANCE
The obligations of each of Seller and Ultimate under this Agreement are
subject to the satisfaction, at or before the Closing, of the conditions set
forth below. Seller may waive any or all of such conditions in whole or in part
without prior notice.
Section 10.1 Truth of Purchaser's Representations and Warranties. All
representations and warranties by Purchaser contained in this Agreement or in
any written statement delivered by Purchaser under, in connection with or
pursuant to this Agreement will be true and correct in all material respects on
and as of the Closing as though such representations and warranties were made on
and as of that date, and Purchaser shall have delivered to Seller on the Closing
Date a certificate, dated the Closing Date, to such effect.
Section 10.2 Purchaser's Performance of Agreements. Purchaser will have
performed and complied with all covenants and agreements and satisfied all
conditions which Purchaser is required by this Agreement to perform, comply
with, or satisfy, before or at the Closing, and shall have delivered to Seller
on the Closing Date a certificate, dated the Closing Date, to such effect.
Section 10.3 Opinion of Purchaser's Counsel. Seller will have received
from Xxxxxx, Xxxxxxx & Xxxxx LLP, counsel for Purchaser, an opinion dated the
Closing Date, in form and substance satisfactory to Seller and counsel for
Seller, to the effect that: (a) Purchaser is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
New York and has all requisite corporate power to perform its obligations under
this Agreement; (b) all corporate proceedings required by Law or by the
provisions of this Agreement to be taken by Purchaser on or before the Closing
Date, in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement, have been duly
and validly taken; (c) this Agreement has been duly authorized, executed and
delivered by Purchaser and is valid and binding on Purchaser and enforceable in
accordance with its terms, except as limited by bankruptcy and insolvency laws
and by other laws affecting the rights of creditors generally; and (d) neither
the execution nor the delivery of this Agreement nor the consummation of the
transactions contemplated in this Agreement will constitute a default, or an
event that would with notice or passage of time or both constitute a default
under, or violation or breach of, Purchaser's certificate of limited partnership
or agreement of limited partnership or any indenture, License, lease, franchise,
mortgage, instrument or other agreement of which such counsel has knowledge to
which Purchaser is a party or by which the properties of Purchaser may be bound,
or an event that would permit any party to any such agreement or instrument to
terminate it or to accelerate the maturity of any indebtedness or other
obligation of Purchaser.
Section 10.4 Absence of Litigation. No action, suit or proceeding before
any court or any governmental body or authority, or by any public authority,
pertaining to the transaction contemplated by this Agreement will have been
instituted or threatened on or before the Closing Date.
Section 10.5 Consents and Approvals. All governmental and other consents
and approvals, if any, necessary to permit Purchaser's consummation of the
transactions contemplated by this Agreement shall have been obtained.
Section 10.6 Approval of Proceedings and Documentation. All proceedings to
be taken in connection with the transactions contemplated by this Agreement and
all documents incident thereto, and all certificates,
29
instruments, opinions and other documents delivered to Seller under this
Agreement, shall be reasonably satisfactory in form and substance to Seller and
its counsel, and Seller shall have received copies of all such documents and
other evidences as it or its counsel may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
Section 10.7 Release of Seller. Seller shall have been released from any
and all agreements, contracts, commitments, understandings and arrangements
entered into by Seller for, on behalf of or for the benefit of, Ultimate
(including, but not limited to, any guarantees by Seller of obligations of
Ultimate).
Section 10.8 Good Standing Certificates. Purchaser shall have delivered to
Seller (a) copies of Purchaser's Certificate of Limited Partnership, including
all amendments thereto, certified by the Secretary of State of New York, and (b)
a certificate of good standing relating to Purchaser issued by the Secretary of
State of New York.
Section 10.9 Fairness Opinion. Seller shall have received on or before
February 16, 2000, an opinion from KPMG LLP to the effect that, in the opinion
of such firm, the consideration to be received by Seller in connection with the
sale of the Shares is fair, from a financial point of view, to Tridex.
ARTICLE XI
CLOSING
Section 11.1 Closing. The Closing shall take place at 10:00 a.m., Eastern
Standard Time, on February 15, 2000, at the offices of Xxxxxxxx, Xxxxx & Xxxxxx
LLP, counsel to Seller and Ultimate, 0000 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxx
00000, or at such other time and place as the parties may agree (the "Closing
Date").
Section 11.2 Seller and Ultimate Deliveries at Closing. At the close of
business on the Closing Date, Seller shall deliver, or shall cause to be
delivered, to Purchaser:
(a) certificates representing the Shares, duly endorsed or
accompanied by duly executed stock powers, with signatures guaranteed by a
commercial bank or by a member firm of [stock exchange], for transfer to
Purchaser;
(b) the opinion of counsel as provided in Section 9.4;
(c) the certificates, dated the Closing Date, as provided in
Sections 9.1, 9.2 and 9.6;
(d) certified corporate votes of the Board of Directors of each of
Seller and Ultimate, in form satisfactory to counsel for Purchaser, authorizing
the execution and performance of this Agreement and all actions to be taken by
Seller and Ultimate under this Agreement;
(e) the Escrow Agreement; and
(f) such other documents and instruments as Purchaser reasonably may
request to effectuate the transactions contemplated by this Agreement.
Section 11.3. Purchaser Deliveries at Closing. At the Closing, Purchaser
shall cause to be executed and delivered or paid to Seller:
30
(a) the Purchase Price;
(b) the opinion of the counsel as provided in Section 10.3;
(c) the certificates, dated the Closing Date, as provided in
Sections 10.1, 10.2 and 10.8;
(d) certified votes of Purchaser's board of directors, in form
satisfactory to counsel for Seller, authorizing the execution and performance of
this Agreement and all actions to be taken by Purchaser under this Agreement;
and
(e) the Escrow Agreement.
ARTICLE XII
TERMINATION
Section 12.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby abandoned:
(a) By mutual written consent of the parties at any time prior to
the Closing.
(b) Prior to the Closing, by written notice to Seller from
Purchaser, if (i) the Closing has not occurred on or before February 22, 2000,
other than as a result of a breach of a representation, warranty, covenant or
agreement of Purchaser, or (ii) there is any material breach of any
representation, warranty, covenant or agreement on the part of Seller or
Ultimate set forth in this Agreement, or if a representation or warranty of
Seller or Ultimate shall be untrue in any material respect, in either case, such
that the condition specified in Section 9.1 hereof would not be satisfied at the
Closing (a "Terminating Seller Breach"), except that, if such Terminating Seller
Breach is curable by Seller through the exercise of its reasonable best efforts,
then, for a period of up to thirty (30) days, but only as long as Seller
continues to use its reasonable best efforts to cure such Terminating Seller
Breach (the "Seller Cure Period"), such termination shall not be effective, and
such termination shall become effective only if the Terminating Seller Breach is
not cured within the Seller Cure Period, or (iii) consummation of any of the
transactions contemplated hereby is enjoined, prohibited or otherwise restrained
by the terms of a final, non-appealable order or judgment of a court of
competent jurisdiction. Notwithstanding the foregoing, in the event any
condition precedent to the performance of Purchaser under this Agreement has not
been satisfied as of the Closing Date, Purchaser may elect to proceed with the
transaction.
(c) Prior to the Closing, by written notice to Purchaser from
Seller, if (i) the Closing has not occurred on or before February 22, 2000 other
than as a result of a breach of a representation, warranty, covenant or
agreement of Seller or Ultimate, or (ii) there is any material breach of any
representation, warranty, covenant or agreement on the part of Purchaser set
forth in this Agreement, or if a representation or warranty of Purchaser shall
be untrue in any material respect, in either case, such that the condition
specified in Section 10.1 hereof would not be satisfied at the Closing (a
"Terminating Purchaser Breach"), except that, if such Terminating Purchaser
Breach is curable by Purchaser through the exercise of its reasonable best
efforts, then, for a period of up to thirty (30) days, but only as long as
Purchaser continues to exercise such reasonable best efforts to cure such
Terminating Purchaser Breach (the "Purchaser Cure Period"), such termination
shall not be effective, and such termination shall become effective only if the
Terminating Purchaser Breach is not cured
31
within Purchaser Cure Period, or (iii) consummation of any of the transactions
contemplated hereby is enjoined, prohibited or otherwise restrained by the terms
of a final, non-appealable order or judgment of a court of competent
jurisdiction. Notwithstanding the foregoing, in the event any condition
precedent to the performance of Seller under this Agreement has not been
satisfied as of the Closing Date, Seller may elect to proceed with the
transaction.
(d) Prior to the Closing, by either Seller or Purchaser by written
notice to the other, if Seller has accepted an Acquisition Proposal as permitted
under Section 5.4 hereof.
Section 12.2 Effect of Termination. In the event of termination of this
Agreement pursuant to Section 12.1, this Agreement shall forthwith become void
and have no effect, without any liability on the part of any party hereto or
their respective affiliates, officers, directors or stockholders, other than
liability for an intentional breach or violation by Seller or Purchaser, as the
case may be, occurring prior to such termination, provided that the provisions
of Section 14.5 hereof shall survive any termination of this Agreement.
ARTICLE XIII
INDEMNIFICATION
Section 13.1 Indemnification of Purchaser. Seller shall indemnify, defend
and hold harmless Purchaser and its Affiliates and their respective officers,
directors, employees, and agents (collectively, the "Purchaser's Indemnified
Parties") from and against any and all losses, damages, costs, expenses, fines,
penalties, settlement payments and expenses, liabilities, obligations and claims
of any kind, including, without limitation, reasonable attorney's fees and other
reasonable legal and professional costs and expenses (hereinafter referred to
collectively as "Losses"), that any of the Purchaser's Indemnified Parties may
at any time suffer or incur, or become subject to, as a result of or in
connection with the following: (i) any breach or inaccuracy of any of the
representations and warranties made by the Seller or Ultimate in or pursuant to
this Agreement, and (ii) any failure of the Seller or Ultimate to carry out,
perform, satisfy and discharge any of its covenants, agreements, undertakings,
liabilities or obligations under this Agreement or under any of the documents
and instruments delivered by the Seller or Ultimate pursuant to this Agreement.
In addition, Seller shall indemnify, defend and hold harmless Purchaser's
Indemnified Parties from and against any and all Losses that any of the
Purchaser's Indemnified Parties might at any time suffer or incur in connection
with, arising out of, resulting from or relating to (i) any fact inconsistent
with, or any untruth or inaccuracy of, any representation or warranty of or by
the Seller contained in Section 3.18; (ii) all Taxes with respect to all
Pre-Closing Periods; (iii) all Taxes with respect to any Tax period beginning
before the Closing Date and ending after the Closing Date (including the Federal
Tax Period commencing January 1, 1999 and ending after the Closing Date), but
only with respect to the Pre-Closing Period and excluding Taxes attributable to
the Election (the Seller is not indemnifying and shall not be required to
indemnify the Purchaser for Taxes with respect to any Post-Closing Period); and
(iv) any Tax liability not directly imposed on Ultimate but arising out of
Ultimate's relationship with the Seller or any Seller Affiliate, including
without limitation, Taxes imposed: (x) under Treasury Reg. ss.1.1502-6 (or any
similar provision of state, local or foreign law), (y) as a transferee or
successor, or (z) by contract.
Section 13.2 Indemnification of Seller. Purchaser shall indemnify, defend
and hold harmless Seller and its Affiliates and their respective officers,
directors, employees, and agents (collectively, the "Seller's Indemnified
Parties") from and against any and all Losses that any of Seller's Indemnified
Parties may at any time suffer or incur, or become subject to, as a result of or
in connection with the following: (i) any breach or inaccuracy of any of the
representations and warranties made by the Purchaser in or pursuant to this
Agreement or under any of the documents and instruments delivered by the
Purchaser pursuant to this Agreement; (ii) any failure of the Purchaser to carry
out, perform, satisfy and discharge any of its covenants, agreements,
32
undertakings, liabilities or obligations under this Agreement or under any of
the documents and instruments delivered by the Purchaser pursuant to this
Agreement; (iii) all federal and state income and other taxes which relate to
the Purchaser's conduct of the Business from and after the Closing Date; and
(iv) any event or occurrence subsequent to the Closing Date relating to the
Business. In addition, Purchaser and Ultimate agree, after the Closing Date,
jointly and severally to indemnify and hold harmless Seller's Indemnified
Parties from and against any and all Losses (including, but not limited to,
Taxes attributable to the loss of any tax benefits arising from any NOL's of
Seller as of the Closing Date) that such parties may incur, or become subject
to, as a result of or in connection with the Election, to the extent that such
Losses exceed, in the aggregate, the Tax Gross-Up Payment. Purchaser's and
Ultimate's indemnification obligations under the preceding sentence shall not be
subject to any limitations of or Threshold relating to liability set forth in
Section 13.6 hereof.
Section 13.3 Notice of Claim. Each party to this Agreement shall give
prompt written notice to the other party or parties to this Agreement of each
claim for indemnification under this Article 13 (a "Claim"), specifying the
amount and nature of the Claim, and of any matter which is likely to give rise
to an indemnification Claim. The indemnifying party shall have thirty (30) days
within which to review the notice provided by the indemnified party. If the
indemnifying party agrees to pay the Claim for indemnification as presented, the
indemnifying party shall promptly pay the indemnified party the amount of such
Claim, and if the indemnifying party fails to dispute the Claim for
indemnification within the thirty (30) day review period, the Claim shall be
paid in the amount originally claimed. If the indemnifying party disputes the
Claim, the indemnifying party shall provide written notice of such dispute to
the indemnified party prior to the expiration of the thirty (30) day review
period. If the indemnifying party and the indemnified party cannot resolve such
dispute through negotiation within thirty (30) days of the date of the
indemnifying party's notice of dispute, the parties shall submit the dispute to
binding arbitration under the Commercial Arbitration Rules of the American
Arbitration Association in New York, New York (the "Arbitrator"). The
arbitration award shall be final and binding upon the indemnifying party and
indemnified party and, if so directed by the award, the Claim shall be paid by
the indemnifying party in the amount determined thereby. The indemnifying party
and the indemnified party shall share equally the fees, costs and expenses of
the arbitration. If the indemnifying party and the indemnified party are able to
resolve a disputed Claim, the Claim shall be paid in the amount agreed. Failure
to dispute a Claim, resolution of a dispute through negotiation of the parties,
or an arbitration award shall constitute final determination of a Claim for
indemnification.
Section 13.4 Right to Assume Defense. If a claim for indemnification shall
arise from a claim or action involving a third party (a "Third Party Claim"),
the indemnified party shall permit the indemnifying party to assume its defense.
If the indemnifying party assumes the defense of such Third Party Claim, it
shall take all reasonable steps necessary to investigate, defend or settle such
claim and shall, subject to Section 13.7, hold the indemnified party harmless
from and against any and all damages caused by or arising out of any settlement
approved by the indemnifying party or any judgment in connection with such Third
Party Claim. Without the written consent of the indemnified party, the
indemnifying party shall not consent to entry of any judgment or enter into any
settlement that does not include an unconditional and complete release of the
indemnified party with respect to the Third Party Claim by the claimant making
the Third Party Claim. The indemnified party may participate in such defense or
settlement through its own counsel, but at its own expense. Any settlement shall
be subject to the indemnified party's consent, which consent shall not be
unreasonably withheld or delayed.
Section 13.5 Survival of Representations and Warranties. The
representations and warranties of the parties hereto shall survive the Closing
for a period of fifteen (15) months after the Closing Date. Notwithstanding the
foregoing, (i) the representations and warranties of Seller set forth in Section
3.3 shall survive without limitation, expiration or termination; (ii) the
representations and warranties of Seller set forth in Section 3.15 (as to
matters governed by ERISA) and Section 3.18 shall survive for the applicable
statute of
33
limitations period; and (iii) the representations and warranties of Seller set
forth in Section 3.17 shall survive for six (6) years after the Closing Date.
Section 13.6 Limitation of Liability. Notwithstanding any other provision
hereof to the contrary (i) no Claim for indemnification shall be asserted by
Purchaser against Seller until, and only to the extent that, the aggregate
amount of all Claims exceeds $250,000 (the "Threshold"). Once the aggregate
amount of a party's Claims for indemnification exceeds the Threshold, then the
party seeking indemnification will be entitled to make a claim for the full
amount, including the Threshold. The foregoing notwithstanding, the Threshold
shall not apply to the failure of Seller's representations and warranties in
Sections 3.3(a), 3.15 (as to matters governed by ERISA) and 3.18. In no event
shall the aggregate indemnification obligation of Seller pursuant to this
Article 13 exceed $1,500,000, other than the failure of Seller's representations
and warranties in Sections 3.3(a), 3.15 (as to matters governed by ERISA) and
3.18, as to which such limitation shall not apply. In all cases, recovery shall
be made first under the Escrow Agreement in accordance with the terms thereof
until the funds held by the escrow agent thereunder are exhausted.
Indemnification under this Article 13 shall be the sole and exclusive remedy for
all matters subject to indemnification, other than Taxes.
Section 13.7 Damages; Mitigation. Neither party hereto shall be
responsible for any damages pursuant to this Article 13 to the extent that such
damages are: (a) caused, contributed to or exacerbated by the actions of any
Purchaser's Indemnified Parties (in the case of the Seller's indemnification
obligations) or any Seller's Indemnified Parties (in the case of the Purchaser's
indemnification obligations) after notice of any claim to such indemnified
party, or (b) recovered by the indemnified party from any third party (including
insurers).
ARTICLE XIV
MISCELLANEOUS
Section 14.1 Waiver. Either party to this Agreement may, at any time prior
to the Closing, waive any of the terms or conditions of this Agreement or agree
to an amendment or modification to this Agreement by an agreement in writing
executed in the same manner as this Agreement.
Section 14.2 Notices. All notices and other communications among the
parties shall be in writing and shall be deemed to have been duly given when (i)
delivered in person, or (ii) five (5) days after posting in the United States
mail having been sent registered or certified mail return receipt requested, or
(iii) two (2) days after being sent by a reputable, nationally recognized
overnight courier, or (iv) delivered by telecopy and promptly confirmed by
delivery in person or in first class mail in each case, with postage prepaid,
addressed as follows:
(a) If to Purchaser, to:
CFG Capital Management II, L.P.
000 Xxxx Xxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
34
with a copy to:
Xxxxxx, Xxxxxxx & Xxxxx LLP
000 Xxxxxxx xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxx, Esquire
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
and
Key Equity Capital Group
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Xxxx Xxxx
and
Xxxxx & Xxxxxxxxx LLP
3200 National City Center
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx XxXxxxxx, Esquire
(b) If to Seller or Ultimate, to:
Ultimate Technology Corporation
c/o Tridex Corporation
00 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Chief Executive Officer
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
and
Xxxxxxxx, Xxxxx & Xxxxxx LLP
0000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esquire
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
or to such other address or addresses as the parties may from time to time
designate in writing.
35
Section 14.3 Assignment. Neither party hereto shall assign this Agreement
or any part hereof without the prior written consent of the other party, except
that Purchaser may assign all of its rights under this Agreement to a
corporation to be formed prior to the Closing Date; provided, however, that such
assignment of its rights hereunder will not relieve Purchaser of any of its
duties or obligations under this Agreement. This Agreement shall be binding upon
and inure to the benefit of the heirs, legal representatives, successors and
assigns of each party hereto.
Section 14.4 Rights of Third Parties. Nothing expressed or implied in this
Agreement is intended or shall be construed to confer upon or give any person or
entity, other than the parties hereto, any right or remedies under or by reason
of this Agreement.
Section 14.5 Expenses. Each party hereto shall bear its own expenses
incurred in connection with this Agreement and the transactions herein
contemplated, including, without limitation, all fees of its legal counsel,
financial advisers and accountants, except as otherwise provided herein;
provided, however, that all transfer, conveyance, sales and similar taxes
imposed as a result of the sale of the Shares, including, without limitations,
any applicable transfer and any similar taxes, shall be paid by Purchaser. In
the event the transactions contemplated hereby are not consummated each party
hereto shall pay its own costs and expenses including, without limitation, all
fees of its legal counsel, financial advisers and accountants; provided, that in
the event that this Agreement is terminated by either Purchaser or Seller
pursuant to the provisions of Section 12.1(d), upon the earlier to occur of (x)
the consummation of the transaction contemplated by the Acquisition Proposal, or
(y) six months from the date of termination of this Agreement, Seller shall pay
to Purchaser a breakup fee in the amount of $250,000, whereupon Seller shall
have no further liability to Purchaser.
Section 14.6 Captions; Counterparts. The captions in this Agreement are
for convenience only and shall not be considered a part of or affect the
construction or interpretation provision of this Agreement. This Agreement may
be executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
Section 14.7 Entire Agreement. This Agreement (together with the Schedules
and Exhibits to this Agreement, which, although they may be bound separately,
constitute part of this Agreement), constitute the entire agreement the parties
and supersede any other agreements, whether written or oral, that may have made
or entered into by or among any of the parties hereto relating to the
transactions contemplated hereby. No representations, warranties,
understandings, agreements, oral or otherwise, relating to the transactions
contemplated by this Agreement exist between the parties except as expressly set
forth in this Agreement.
Section 14.8 Severability. If any term of provision of this Agreement, or
the application thereof to any person or under any circumstance, shall to any
extent be invalid or unenforceable, the remainder of this Agreement, or the
application of such terms to the persons or under circumstances other than those
as to which it is invalid or unenforceable, shall be considered severable and
shall not be affected thereby, and each term of this Agreement shall be valid
and enforceable to the fullest permitted by Law. The invalid or unenforceable
provisions shall, to the extent permitted by Law, be deemed amended and given
such interpretation as to achieve the economic intent of this Agreement.
Section 14.9 Amendment. This Agreement may be amended or modified in whole
or in part, only by a duly authorized agreement in writing executed in the same
manner as this Agreement and which makes reference to this Agreement.
Section 14.10 Publicity. All press releases or other public communications
of any nature whatsoever relating to the transactions contemplated by this
Agreement issued prior to or concurrent with the Closing, and
36
the method of the release for publication thereof, shall be subject to the prior
mutual approval of Purchaser and Seller, which approval shall not be
unreasonably withheld by any party.
Section 14.11 Further Assurances. Each of Seller and Purchaser covenants
that at any time, and from time to time, after the Closing Date, it will execute
such additional instruments and take such actions as may be reasonably requested
by another party to confirm or perfect or otherwise to carry out the
conveyances, intent and purposes of this Agreement.
Section 14.12 Non-Exclusivity of Remedies. Subject to Section 13.6, the
remedies specifically provided for in this Agreement are intended to be
cumulative and shall not be deemed to exclude any other right or remedy that the
parties may have at Law or in equity.
Section 14.13 Governing Law. This Agreement has been made in and its
validity, interpretation, construction and performance shall be governed by and
be in accordance with the laws of the State of New York, without reference to
its laws governing conflicts of law. Each party irrevocably agrees that any
legal action or proceedings against with respect to this Agreement may be
brought in the courts of the State of New York, or in the United States District
Court for the Western District of New York, and, by its execution and delivery
of this Agreement, each party hereby irrevocably submits to each such
jurisdiction and hereby irrevocably waives any and all objections which it may
have as to venue in any of the above courts. Each party further consents and
agrees that any process or notice of motion or other application to either of
said Courts or any judge thereof, or any notice in connection with any
proceedings hereunder, may be served inside or outside the State of New York or
the Western District of New York by registered or certified mail, return receipt
requested, postage prepaid, and be effective as of the receipt thereof, or in
such other manner as may be permissible under the rules of said Courts. Each
party hereby waives trial by jury in any action or proceeding in connection with
this Agreement.
37
IN WITNESS WHEREOF, the parties have hereunto caused this Agreement to be
duly executed as of the date first above written.
TRIDEX CORPORATION ULTIMATE TECHNOLOGY CORPORATION
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxx
---------------------- ----------------------
Name: Xxxx X. Xxxxxx Name: Xxxx X. Xxxxxx
Title: Chairman CEO Title: Chairman CEO
CFG CAPITAL MANAGEMENT II, L.P.
By: /s/ Xxxxxx X. Xxxxxx
----------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Managing Director
38
