1
ASSET PURCHASE AGREEMENT
by and among
XXXXXXX TECHNOLOGY CORPORATION
AND
SYSTEMS TECHNOLOGY, INC.
2
TABLE OF CONTENTS
1. Agreement to Sell and Agreement to Purchase.............................1
1.1 Assets to be Conveyed..............................................1
1.2 Excluded Assets....................................................3
1.3 Further Assurances.................................................3
2. Consideration...........................................................3
2.1 Purchase Price.....................................................3
2.2 Allocation of Purchase Price.......................................5
3. Representations and Warranties of Seller................................5
3.1 Organization and Good Standing.....................................5
3.2 Authorization of Agreement.........................................5
3.3 Ownership of Acquisition Assets....................................6
3.4 Financial Condition................................................6
3.4.1 Financial Statements.....................................6
3.4.2 Accounting Standards.....................................6
3.4.3 Absence of Certain Changes...............................7
3.5 Property of Seller.................................................8
3.5.1 Real Property............................................8
3.5.2 Tangible Personal Property...............................8
3.5.3 Intangible Personal Property.............................8
3.6 Agreement Not in Breach of Other Instruments.......................9
3.7 Labor and Employment Matters.......................................9
3.8 Litigation and Compliance with Laws...............................10
3.8.1 Litigation Pending or Threatened........................10
3.8.2 Violation of Law........................................10
3.9 Powers of Attorney and Suretyships................................11
3.10 Insurance.........................................................11
3.11 No Undisclosed Liabilities........................................11
3.12 Prospects.........................................................12
3.13 Taxes.............................................................12
3.14 Brokerage.........................................................12
3.15 Limitation........................................................12
4. Representations and Warranties of Buyer................................12
4.1 Organization and Corporate Authority..............................12
4.2 Agreement Not in Breach of Other Instruments......................12
4.3 Regulatory Approvals..............................................13
4.4 Brokerage.........................................................13
4.5 Financial Capacity................................................13
-i-
3
5. Closing..................................................................13
6. Certain Understandings and Agreements of the Parties.....................13
6.1 Prorations..........................................................13
6.2 Condition to Transfer of Certain Contracts..........................13
6.3 Use of Name.........................................................14
6.4 Employees...........................................................14
6.5 Public Announcements................................................14
6.6 Best Efforts........................................................14
6.7 Post-Closing Covenants..............................................15
7. Conditions to Obligations of Seller......................................15
7.1 Correctness of Representations and Warranties.......................16
7.2 Performance of Covenants and Agreements.............................16
7.3 Opinion of Counsel for Buyer........................................16
7.4 Exhibits and Schedules..............................................16
7.5 Mapics..............................................................16
7.6 Additional Closing Documents........................................16
7.7 No Legal Bar........................................................16
8. Conditions to Obligations of Buyer.......................................16
8.1 Correctness of Representations and Warranties.......................17
8.2 Performance of Covenants and Agreements.............................17
8.3 Opinion of Counsel for Seller.......................................17
8.4 Exhibits and Schedules..............................................17
8.5 Mapics..............................................................17
8.6 Additional Closing Documents........................................17
8.7 No Legal Bar........................................................17
8.8 Material Adverse Effect.............................................18
8.9 Covenant Not to Compete.............................................18
8.10 Third-Party Consents and Approvals..................................18
8.11 Board of Directors Approval.........................................18
8.12 Transfer Documents..................................................18
9. Indemnification..........................................................18
9.1 Indemnification by Seller...........................................18
9.2 Indemnification by Buyer............................................19
9.3 Indemnification Limitations.........................................19
9.4 Claims..............................................................20
9.5 Defense by Seller...................................................20
9.6 Notice..............................................................20
-ii-
4
10. Termination..............................................................20
10.1 Termination of Agreement...........................................20
10.2 Effect of Termination..............................................21
11. Miscellaneous Provisions.................................................21
11.1 CONSTRUCTION.......................................................21
11.2 Notices............................................................21
11.3 Assignment.........................................................22
11.4 Amendments and Waivers.............................................22
11.5 Survival...........................................................23
11.6 Remedies...........................................................23
11.7 Attorneys' Fees....................................................23
11.8 Binding Nature of Agreement........................................23
11.9 Expenses...........................................................23
11.10 Entire Agreement...................................................23
11.11 Severability.......................................................23
11.12 Counterparts.......................................................23
11.13 Section Headings...................................................24
11.14 Knowledge..........................................................24
12. Arbitration..............................................................24
12.1 Agreement to Arbitrate.............................................24
12.2 Selection of Arbitrator............................................24
12.3 Expenses...........................................................24
12.4 Aid to Arbitration.................................................25
13. Submission to Jurisdiction; Agent for Service............................25
Schedules
Schedule 1.1(f) Real Property Lease
Schedule 1.1(g) Motor Vehicles Owned/Tangible Personal Property
Schedule 1.1(h) Fixed Assets
Schedule 1.1(i) Intangible Personal Property
Schedule 1.2(d) Excluded Intangible Personal Property
Schedule 2.1(b) Accounts & Notes Payable
Schedule 2.2 Allocation of Purchase Price
Schedule 2.2(b) Liabilities or Obligations
Schedule 3.3 Acquisition Assets
Schedule 3.4.3 Absence of Certain Changes
Schedule 3.5.3 Matters Relating to Intangible Personal Property
-iii-
5
Schedule 3.7 Labor & Employment Matters
Schedule 3.8.1 Pending Litigation
Schedule 3.10 Insurance
Schedule 3.13 Taxes
Schedule 6.2 Consent of Contracts
Schedule 6.4 Employees
-iv-
6
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of this 7th day of September, 2000 by and among, Xxxxxxx Technology
Corporation, a Connecticut corporation ("Seller"), and Systems Technology, Inc.,
a Delaware corporation ("Buyer") Seller and Buyer shall individually be
referenced as a "Party" and collectively as the "Parties."
RECITALS
A. Seller is engaged in the business of manufacturing and selling: (i)
post-press signature handling equipment including, stackers, stacker-bundlers,
conveying and other auxiliary equipment, palletizers, and bindery xxxxxx
loaders to the global printing and graphic arts market and (ii) high-speed
cartoning equipment targeted toward fulfillment and distribution centers
focused on printed material, books, music and video products through its
Xxxxxxx-Xxxxx Division (the "Division").
B. Pursuant to the terms of this Agreement, Buyer will purchase
substantially all of the assets of the Division in return for cash and the
assumption of certain liabilities.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises herein made, and in consideration of the representations,
warranties and covenants contained herein, the parties hereto agree as follows:
1. Agreement to Sell and Agreement to Purchase.
1.1 Assets to be Conveyed. On the Closing Date (as hereinafter
defined) Seller shall convey, transfer, assign, sell and deliver to Buyer, and
Buyer shall acquire, accept and purchase, all of the following assets,
properties and rights of Seller (hereinafter collectively referred to as the
"Acquisition Assets"):
(a) All inventories of raw material, work-in-process and
new or used finished goods of Seller used in the Division which exist on the
Closing Date (collectively, the "Inventory"), whether located at Seller's
premises or elsewhere, including without limitation any inventory owned by
Seller and held by third parties on consignment.
(b) All office equipment and supplies, containers, tote
bins and other packaging material, equipment, spare parts, safety equipment,
maintenance supplies and other similar items of Seller used in the Division
which exist on the Closing Date, whether or not reflected in the Seller's books
and records;
1
7
(c) All goodwill of the Division, customer lists, sales
brochures, computer software, books, records and accounts, correspondence,
production records and employment records relating to or arising out of the
Division;
(d) All trade and intercompany accounts receivable, notes
and notes receivable of the Division existing on the Closing Date which are
payable to the Division or the Seller (the "Accounts Receivable");
(e) All rights of Seller under express or implied
warranties from the suppliers of Seller with respect to the Acquisition Assets;
(f) All of Seller's right, title and interest in and to
each real property lease, equipment or other lease, license, contract,
agreement, purchase or sales order, indenture or commitment, written or oral, to
the extent related to the Division to which Seller is a party on the closing
Date or by which any of the Acquisition Assets is then bound (collectively, the
"Contracts"), including, without limitation, that lease set forth on Schedule
1.1(f) (the "Real Property Lease") of the real property located at 0000 X.
Xxxxxxxxx Xxxxx, Xxx Xxxxxxxxxx, Xxxxxxxxxx (the "Real Property");
(g) The motor vehicles owned or used by Seller on the
Closing Date in connection with the Division that are listed in Schedule 1.1(g)
attached hereto;
(h) All of the machinery, equipment, tooling, dies, tools,
furnaces, furniture, fixtures, cranes and craneways owned or used by Seller for
the Division on the Closing Date (hereinafter referred to together with the
motor vehicles specified in Schedule 1.1(g), collectively, as the "Fixed
Assets"), whether or not fully depreciated on the books and records of Seller,
including, without limitation, those assets set forth in Schedule 1.1(h)
attached hereto;
(i) Each patent and patent application, copyright,
copyright application, trademark, trademark application, service xxxx, service
xxxx application, trade name and trade name registration (in any such case,
whether registered or to be registered in the United States of America or
elsewhere) applied for, issued to or owned by Seller and used primarily by the
Division and all processes, inventions, trade secrets, trade names used
primarily by the Division (including but not limited to the name "Xxxxx" and the
Xxxxx trademark) and computer programs, formula, know how and other intangible
personal property used by Seller in the Division (all of the foregoing in this
Section (1.1)(i) being hereinafter referred to collectively as the "Intangible
Personal Property") including, without limitation, those items set forth in
Schedule 1.1(f) attached hereto;
(j) All of Seller's right, title and interest in and to
all prepaid expenses, deposits, or other related assets of Seller related to the
Division (the "Prepaid Expenses"); and federal, state, and local or foreign
licenses, permits and other governmental authorizations relating to the
Division, including, without limitation, those listed in Schedule 1.1(j); and
2
8
(k) Except as specifically provided in Section 1.2 hereof, all other
assets, properties and rights of Seller or any affiliate or subsidiary of Seller
primarily used by the Division which exist on the Closing Date, whether tangible
or intangible, real or personal.
1.2 Excluded Assets. Notwithstanding Section 1.1 hereof, Seller is not
selling, and Buyer is not purchasing, pursuant to this Agreement, any of the
following (the "Excluded Assets"), all of which shall be retained by Seller;
(a) The Division's cash and cash equivalents;
(b) Seller's corporate charter, taxpayer and other identification
numbers, seals, minute books, stock transfer books, blank stock certificates,
and other documents relating to the organization, maintenance, and existence of
the Seller as a corporation;
(c) Seller's rights under the liability insurance policies disclosed
in Schedule 3.10 attached hereto, but only to the extent in respect of all
occurrences insured thereunder which occur prior to the Closing Date;
(d) All rights to the name "Xxxxxxx" (except as provided in Section
6.3 hereof) and the Intangible Personal Property set forth on Schedule 1.2(d);
and
(e) Seller's rights under this Agreement.
1.3 Further Assurances. On the Closing Date and from time to time
thereafter Seller will execute and deliver to Buyer such instruments of sale,
transfer, conveyance, assignment and delivery, consents, assurances, powers of
attorney and other instruments as may be reasonably requested by Buyer in order
to vest in Buyer all right, title and interest in and to the Acquisition Assets
and otherwise in order to carry out the purpose and intent of this Agreement.
2. Consideration
2.1 Purchase Price. As consideration for the Acquisition Assets and the
Covenant Not to Compete (as defined in Section 8.7):
(a) Buyer shall pay to Seller the sum of: (i) Six Million Seven
Hundred Fifty Thousand Dollars ($6,750,000); minus (ii) all payments (including
deposits) received by or on behalf of the Division for the period commencing on
July 1, 2000, and continuing until the Closing Date; and plus (iii) all
obligations paid by or on behalf of the Division (excluding taxes) for the
period commencing on July 1, 2000 and continuing until the Closing Date. Such
purchase price shall be paid by wire transfer of immediately available funds,
provided, that Buyer may pay a portion of the purchase price in any alternate
form agreed to by Seller in Seller's sole discretion.
3
9
(b) As further consideration for the Acquisition Assets and the Covenant
Not to Compete, subject to Section 2.3, hereof, at the Closing, Buyer shall
assume and agree to thereafter pay when due and discharge and indemnify Seller
and hold Seller harmless with respect to the following liabilities of the
Division (the "Assumed Liabilities"):
(i) the executory liabilities and obligations of the Division to be
performed after the Closing Date under each Contract in effect on the Closing
Date and transferred to Buyer in pursuant to Section 1.1(f);
(ii) the accounts payable and notes payable of the Division as of the
Closing Date but only to the extent reflected on Schedule 2.1(b);
(iii) the accrued expenses of the Division arising in the ordinary
course of the business of the Division, including accrued payroll,
compensation, vacation, and current benefits expenses, as of the Closing Date
(the "Accrued Expenses");
(iv) except for (A) liabilities or obligations set forth on Schedule
2.2(b) or (B) claims that become known after the Closing Date and are covered
under Seller's insurance policies in effect as of the Closing Date, any
liabilities or obligations of the Division arising out of defects in, or damages
to persons or property arising from, products sold or services manufactured or
sold by the Division prior to the Closing Date, including without limitation,
any warranty obligations;
(v) Any liabilities or obligations arising from the employment
practices of the Division, including claims of discrimination and harassment
based on age, gender, race, religion or other protected category; and
(vi) Any liabilities or obligations of or relating to the Division
with respect to environmental matters, including without limitation those
arising under Environmental Health and Safety Requirements. "Environmental,
Health and Safety Requirements" shall mean all federal, state, local and
foreign statutes, regulations, and ordinances concerning public health and
safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances,
or wastes, as such requirements are enacted and in effect on or prior to the
Closing Date.
(c) Buyer shall not be deemed by anything contained in this Agreement to
have assumed and Seller hereby agrees to fully pay and perform in a prompt and
timely manner and, pursuant to Section 9, to indemnify Buyer and hold Buyer
harmless with respect to the following (collectively, the "Retained
Liabilities"):
4
10
(i) Any liability of Seller to any person or entity the
existence of which constitutes a breach of any covenant, agreement,
representation or warranty of Seller contained in this Agreement;
(ii) Any negative cash balances, book overdrafts, held checks
or similar liabilities of Seller;
(iii) Any liability of Seller for any Federal, state or local
income, franchise or payroll taxes, state or local sales, use or property taxes
or other taxes of any kind or description;
(iv) Any liability or obligation (contingent or otherwise) of
Seller arising out of any threatened or pending litigation, including without
limitation worker's compensation claims, whether or not set forth in Schedule
3.8.1;
(v) Any liabilities or obligations of Seller under any
Contract which are required to be paid or performed prior to the Closing Date;
and
(vi) Any indebtedness, liabilities or obligations of any
nature of Seller, whether absolute or contingent, liquidated or unliquidated,
accrued or unaccrued, known or unknown, or due or to become due, unless
specifically assumed by Buyer under Section 2.1(b).
2.2 Allocation of Purchase Price. The parties hereof agree that the
Purchase Price shall be allocated among the Acquisition Assets and the Covenant
Not to Compete in accordance with Schedule 2.2. The Seller and Buyer shall
jointly complete and separately file Form 8594 with their respective federal
income tax returns for the tax year in which the Closing Date occurs in
accordance with such allocation, and each of the parties shall refrain from
taking a position on any income, transfer or gains tax return, before any
governmental agency charged with the collection of any such tax or in any
judicial proceeding that is in any manner inconsistent with the terms of any
such allocation without written consent of the other in each instance.
3. Representations and Warranties of Seller. Seller represents and warrants
to Buyer, as follows:
3.1 Organization and Good Standing. Seller is organized, validly
existing and in good standing under the laws of the State of Connecticut and
Seller has the full corporate power to carry on the business of the Division as
it is now and has since its organization been conducted and to own, lease or
operate the Acquisition Assets.
3.2 Authorization of Agreement. Seller has all requisite power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement and all other agreements and instruments to
be executed by Seller in connection herewith have been (or upon execution will
have been) duly executed and delivered by Seller, have been effectively
5
11
authorized by all action, corporate or otherwise necessary on the part of
Seller, and constitute (or upon execution by all parties thereto will
constitute) legal, valid and binding obligations of Seller enforceable against
Seller in accordance with their respective terms, except as such enforceability
may be limited or affected by (i) bankruptcy, insolvency, reorganization,
moratorium, liquidation, arrangement, fraudulent transfer, fraudulent
conveyance and other similar laws (including, without limitation, court
decisions) now or hereafter in effect and affecting the rights and remedies of
creditors generally or providing for the relief of debtors and (ii) general
principles of equity (regardless of whether such remedies are sought in a
proceeding in equity or at law).
3.3 Ownership of Acquisition Assets. Except as set forth in Schedule
3.3, Seller is the lawful owner of or, in the case of leased assets, has the
right to use and transfer to Buyer each of the Acquisition Assets, and the
Acquisition Assets are free and clear of all Liens other than Permitted Liens.
As used herein, "Liens" shall mean liens, mortgages, pledges, security
interests, restrictions, prior assignments, encumbrances, easements,,
covenants, conditions, options or claims of any kind or nature whatsoever. The
delivery to Buyer of the instruments of transfer of ownership contemplated by
this Agreement will vest good and marketable title to the Acquisition Assets in
Buyer, free and clear of all Liens. As used herein, "Permitted Liens" shall
mean (i) any Lien for taxes not yet due or delinquent or being contested in
good faith by appropriate proceedings for which adequate reserves have been
established in accordance with GAAP, (ii) contractual and statutory landlord's
Liens which in the aggregate shall not exceed $2,000, (iii) mechanic's,
materialman's, repairman's and other similar Liens arising in the ordinary
course of business which in the aggregate shall not exceed $2,000, and (iv) any
minor imperfection of title or similar Lien which individually or in the
aggregate with other such Liens does not impair the value or marketability of
the property subject to such Lien or interfere with the use of such property in
the conduct of the Division and which does not secure obligations for money
borrowed.
3.4 Financial Condition.
3.4.1 Financial Statements. Seller has furnished to Buyer financial
statements of the Division at and for the years ended June 30, 1998, June 30,
1999 and June 30, 2000 consisting of balance sheets and the related statements
of operations, statements of cash flows and statements of stockholders' equity
(collectively, the "Financial Statements").
3.4.2 Accounting Standards. The Financial Statements: (i) have been
prepared in accordance with the books and records of Seller; (ii) have been
prepared in accordance with GAAP consistently applied throughout the periods
covered; (iii) to the knowledge of Seller, reflect and provide adequate
reserves and disclosures in respect of all liabilities of the Division,
including all contingent liabilities, as of their respective dates to the
extent required by GAAP; (iv) to the knowledge of Seller, present fairly the
financial position and results of operations of the Division at and for the
fiscal periods indicated therein provided, however, that the Financial
Statements are subject to normal year-end adjustments and lack footnotes and
other presentation items; and (v) to the knowledge of Seller, with respect to
contracts and commitments for the sale of
6
12
goods or the provision of services by the Division, contain and reflect adequate
reserves for all reasonably anticipated losses and costs and expenses in excess
of expected receipts.
3.4.3 Absence of Certain Changes. To the knowledge of Seller and except as
set forth on Schedule 3.4.3, since June 30, 2000 there has not been:
(a) any sale, distribution, transfer or subjection to any Lien of any
of the Acquisition Assets, except sales of inventory in the ordinary and usual
course of business;
(b) any transaction by the Division not in the ordinary and usual
course of business;
(c) any event causing a Material Adverse Effect (as defined below in
this Section 3.4.3) for the Division;
(d) any damage, destruction or loss, whether or not covered by
insurance, to the Acquisition Assets, which has a Material Adverse Effect;
(e) any alteration in the manner in which Seller keeps the books,
accounts or records of the Division or in the accounting practices therein
reflected, including the recognition and computation of accrued expenses for the
Division;
(f) a termination, or a threatened termination, or material
modification of any material Contract of the Division or the relationship of the
Seller with any material customer or supplier of the Division or the occurrence
of any adverse event affecting any product or process used by or in the
Division;
(g) except as provided elsewhere herein, any acquisitions or leases of
or commitments to acquire or lease any realty, or any item of personal property,
other than inventory purchased in the ordinary course of business, for the
Division; or
(h) any change in the operations, business or manner of conducting the
business of the Division, other than changes in the ordinary and usual course of
business consistent with past practice, none of which, individually or in the
aggregate, has had or is expected to have a Material Adverse Effect.
As used in this Agreement, "Material Adverse Effect" means any change
in or effect on the business of the Division that is or is reasonably likely to
be materially adverse to the business, operations, properties, condition
(financial or otherwise), assets or liabilities of the Division.
7
13
3.5 Property of Seller.
3.5.1 Real Property.
(a) Except for the Real Property Lease, there is no parcel of
real property, building or other improvement owned or leased by Seller and used
primarily by the Division;
(b) To the knowledge of Seller, the Real Property Lease is
valid and effective in accordance with its terms, and Seller is not in default
thereunder, except where the lack of such validity or effectiveness or the
existence of such default or event of default would not have a Material Adverse
effect on the ability of Seller to perform its obligations under this Agreement;
(c) To the knowledge of Seller, Seller holds valid and
effective certificates of occupancy, underwriters' certificates relating to
electrical work, zoning, building, housing, safety, fire and health approvals
and all other permits and licenses required by applicable law relating to the
operation of the Real Property; and
(d) There is no condemnation or eminent domain proceeding
pending which relates to the Real Property and, to the knowledge of Seller,
there is no such proceeding threatened by any relevant governmental authority
nor any such proceeding to which the Seller is not a party but as to which its
properties are subject which materially and adversely affects any or such
properties.
3.5.2 Tangible Personal Property. There is listed in Schedule 1.1(g):
(i) each item of tangible personal property (other than Inventory) owned by
Seller or in the possession of Seller which is to be transferred to Buyer
pursuant hereto; and (ii) an identification of the owner of, and any agreement
relating to the use of, each item of tangible personal property the rights to
which are to be transferred to Buyer pursuant hereto under leases or other
similar agreements included in the Contracts. Except as otherwise indicated on
such Schedule 1.1(g) or Schedule 1.1(h), Seller owns all of the tangible
personal property used in the Division free and clear of all Liens (other than
Permitted Liens), and except as set forth in Section 1.2, all such property will
be transferred to Buyer at the Closing free and clear of all Liens (other than
Permitted Liens). Each item of tangible personal property is being sold "as is"
and is not being sold with any warranties, either express or implied.
3.5.3 Intangible Personal Property. There is listed in Schedule
1.1(i), (i) an identification of items of Intangible Personal Property owned by
Seller and used by Seller in the conduct of the Division and (ii) a true and
complete list of all licenses or similar agreements or arrangements to which
Seller is a party either as licensee or licensor for each such item of
Intangible Personal Property. Except as otherwise indicated on Schedule 1.1(i),
Seller owns all of such Intangible Personal Property free and clear of all Liens
(other than Permitted Liens), and, except as set forth in Section 1.2, all such
Intangible Personal Property will be transferred to Buyer at the
8
14
Closing free and clear of all Liens (other than Permitted Liens). Except as set
forth in Schedule 3.5.3:
(a) There have not been any actions or other judicial or adversary
proceedings involving Seller concerning any of the Intangible Personal Property,
nor, to the knowledge of Seller, is any such action or proceeding threatened;
(b) Seller has the right and authority to use all items of Intangible
Personal Property in connection with the conduct of the Division in the manner
presently conducted and to convey such right and authority to Buyer, and, such
use does not conflict with, infringe upon or violate any patent, copyright,
trademark, service xxxx, trade secret, trade name or other right of any other
person, firm or corporation;
(c) There are no outstanding, nor, to the knowledge of Seller, are
there any threatened, disputes or disagreements with respect to any licenses or
similar agreements or arrangements included in the Intangible Personal Property;
and
(d) The conduct of the Division does not conflict with, infringe upon
or violate any patent, copyright, trademark, service xxxx, trade secret, trade
name or other similar rights of others.
3.6 Agreement Not in Breach of Other Instruments. The execution, delivery
and performance of this Agreement by Seller and the consummation of the
transactions contemplated hereby will not result in a breach of any of the terms
and provisions of, or constitute a default under, or conflict with, and Contract
or any other material agreement, indenture or other instrument to which Seller
is a party or by which it is bound, the Articles of Incorporation or Bylaws of
Seller or any judgment, decree, order or award of any court, governmental body
or arbitrator, or any law, rule or regulation applicable to Seller.
3.7 Labor and Employment Matters.
(a) Except as set forth in Schedule 3.7 attached hereto, there is no
(i) collective bargaining agreement or other labor agreement related to the
Division to which Seller is a party or by which it is bound; (ii) employment,
profit sharing, deferred compensation, bonus, stock option, stock purchase,
retainer, consulting, retirement, welfare, incentive or severance plan, policy
or similar contract related to the Division to which Seller is a party or by
which it is bound; or (iii) plan or agreement under which "fringe benefits"
(including, but not limited to, vacation plans or programs, sick leave plans or
programs and related benefits) are afforded any of the employees of the
Division. Any bonus to be paid in 2000 to an employee of the Division pursuant
to a bonus plan set forth on Schedule 3.7 shall be consistent with the past
practices of Division and accrued on the Financial Statements at the Closing
Date.
9
15
(b) No party to any such agreement, plan or contract is in default
with respect thereto, nor has any event occurred which through the passage of
time or the giving of notice, or both, would constitute a default thereunder or
would cause the acceleration of any obligation of any party thereto except to
the extent such default would not have a Material Adverse Effect.
(c) The Division has complied with all applicable laws, rules and
regulations relating to the employment of labor, including those related to
wages, hours, collective bargaining and the payment and withholding of taxes and
other sums as required by appropriate governmental authorities and has withheld
and paid to the appropriate governmental authorities or is holding for payment
not yet due to such authorities, all amounts required to be withheld from such
employees of the Division and is not liable for any arrearages of wages, taxes,
penalties or other sums for failure to comply with any of the foregoing. To the
knowledge of Seller, there is no unfair labor practice compliant against Seller
related to the Division pending before the National Labor Relations Board or any
state or local agency or any basis for any such complaint; pending labor strike
or other material labor trouble affecting the Division; labor grievance pending
against Seller related to the Division or any basis for any such grievance;
pending representation question respecting the employees of the Division;
pending arbitration proceedings arising out of or under any collective
bargaining agreement related to the Division to which Seller is a party; basis
for which a claim may be made under any collective bargaining agreement related
to the Division to which Seller is a party; or any pending or threatened claim
related to the Division against Seller regarding the discharge or dismissal of
any employee of the Division and there is no basis for any such claim. All
reasonably anticipated obligations of Seller relating to the Division (whether
arising by operation of law, by contract, by past custom or otherwise), for
salaries, vacation and holiday pay, sick pay, bonuses and other forms of
compensation payable to the officers, directors or other employees of the
Division in respect of the services rendered by any of them have been paid or
adequate accruals therefore have been made in the ordinary course of business in
the Financial Statements for obligations accrued through the date thereof, and
in the books and records of the Seller for obligations accruing thereafter.
3.8 Litigation and Compliance with Laws.
3.8.1 Litigation Pending or Threatened. Except as set forth in
Schedule 3.8.1 there is no action, suit, arbitration, proceeding, grievance or
investigation, pending or, to the knowledge of Seller, threatened, before any
court, tribunal, panel, master or governmental agency, authority or body in
which Seller is a party and to which the Division or the Acquisition Assets are
subject, nor is Seller, any Shareholder of Seller or any officer or employee
of Seller enjoined from any action or subject to any continuing restriction
which may adversely affect the Division including, without limitation,
litigation with customers or with contractors or suppliers who have performed
work on or supplied equipment or materials relating to the Division.
3.8.2 Violation of Law. To the knowledge of Seller, the Division
is not in violation of any provision of any law, decree, order or regulation
(including, without limitation, those relating to antitrust or prohibiting
other anti-competitive business practices, those relating to employment
practices, such as discrimination, OSHA, health and safety, and those relating
to
10
16
minority business enterprises), applicable to Seller or the Division except
where such violation would not have a Material Adverse Effect. Seller has all
federal, state, local, foreign and other licenses, permits and other
governmental authorizations required in the operation of the Division and its
properties. Except as provided by this Agreement, no notice to, filing with, or
approval or consent of, any governmental agency or body issuing any of the
permits, licenses or other governmental authorizations, or otherwise having
jurisdiction over Seller or the Division or the operations or properties of the
Division, is required in order to permit the execution, delivery or performance
of this Agreement, the consummation of the transactions contemplated hereby or
the sale, transfer and delivery of the Acquisition Assets. The Seller is not a
party to any consent decree issued by any governmental agency, authority or body
relating to the Division.
3.9 Powers of Attorney and Suretyships. Seller has no general or
special powers or attorney outstanding (whether as grantor or grantee thereof)
and has no obligation or liability (whether actual accrued, accruing, contingent
or otherwise) as guarantor, surety, cosigner, endorser, co-maker, indemnitor or
otherwise in respect of the obligation of any person relating to the Acquisition
Assets or Assumed Liabilities.
3.10 Insurance. Schedule 3.10 sets forth a true and correct list of
all insurance policies of any nature whatsoever maintained by Seller and related
to the Division at any time during the three (3) years prior to the date of this
Agreement and the annual or other premiums payable thereunder. Such insurance
policies in effect shall be maintained until the Closing Date and shall
constitute a reasonable insurance program for Seller. All product liability
insurance policies of Seller are on an occurrence basis and will continue to
provide coverage to Seller after the Closing Date for occurrences prior to the
Closing Date. To the knowledge of Seller, there are no outstanding requirements
or recommendations by any insurance company that issued any such policy or by
any Board of Fire Underwriters or other similar body exercising similar
functions or by any governmental authority exercising similar functions which
requires or recommends any changes in the conduct of the Division of, or any
repairs or other work to be done on or with respect to any of the properties or
assets of the Division. Seller has not received any notice or other
communication from any such insurance company within the three (3) years
preceding the date hereof, canceling or materially amending or materially
increasing the annual or other premiums payable under any of said insurance
policies and, to the knowledge of the Seller, no such cancellation, amendment or
increase of premiums is threatened.
3.11 No Undisclosed Liabilities. Except as and to the extent
specifically reflected or reserved against in the Financial Statements at June
30, 2000, and except for accounts payable to suppliers incurred after June 30,
2000 in the ordinary course of business consistent in nature and amounts to the
accounts payable reflected in the Financial Statements for comparable periods,
Seller has no liability or obligation related to the Division and which would
constitute an Assumed Liability of any nature, whether absolute, accrued,
contingent or otherwise, and whether due or to become due (including, without
limitation, any liability for taxes and interest, penalties and other charges
payable with respect to any such liability or obligation).
11
17
3.12 Prospects. Seller has no actual knowledge of any facts that would
have a Material Adverse Affect on the prospect of the Division that have not
been disclosed to Buyer.
3.13 Taxes. Except as set forth on Schedule 3.13, within the times and
in the manner prescribed by law, Seller has filed all federal, state, local,
foreign and other tax returns related to the Division required by law and has
paid all such taxes, assessments and penalties due and payable, including
without limitation, all federal, state, local, foreign and other income,
franchise, withholding, payroll, sales, use, transfer, property and other taxes.
All such returns are true, correct and complete and accurately set forth all
items to the extent required to be reflected or included in such returns by
applicable federal, state, local foreign or other tax laws, regulation or rules.
There are no present disputes or audits (other than those audits conducted in
the ordinary course of business) as to taxes of any nature payable by Seller
relating to the Division.
3.14 Brokerage. Except for the fees payable to FleetBoston Xxxxxxxxx
Xxxxxxxx, Seller has not dealt with, or is obligated to make any payment to, any
finder, broker, investment banker or financial advisor in connection with any of
the transactions contemplated by this Agreement or the negotiations looking
toward the consummation of such transactions.
3.15 Limitation. Except as expressly set forth in this Section 3,
Seller makes no other representation or warranty, express or implied, at law or
in equity.
4. Representations and Warranties of Buyer. Buyer represents and warrants
to Seller that:
4.1 Organization and Corporate Authority. Buyer is duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Buyer has all requisite power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. This Agreement and all other
agreements herein contemplated to be executed in connection herewith have been
(or upon execution will have been) duly executed and delivered by Buyer, have
been effectively authorized by all necessary action, corporate or otherwise, and
constitute (or upon execution will constitute) legal, valid and binding
obligations of Buyer, enforceable against Buyer in accordance with their
respective terms except as such enforceability may be limited or affected by (i)
bankruptcy, insolvency, reorganization, moratorium, liquidation, arrangement,
fraudulent transfer, fraudulent conveyance and other similar laws (including,
without limitation, court decisions) now or hereafter in effect and affecting
the rights and remedies of creditors generally or providing for the relief of
debtors and (ii) general principles of equity (regardless of whether such
remedies are sought in a proceeding in equity or at law).
4.2 Agreement Not in Breach of Other Instruments. The execution,
delivery and performance of this Agreement by Buyer and the consummation of the
transactions contemplated hereby will not result in a breach of any of the terms
or provisions of, or constitute a default under, or conflict with, any
agreement, indenture or other instrument to which Buyer is a party or by which
12
18
it is bound, Buyer's Certificate of Incorporation or Bylaws, any judgment,
decree, order or award of any court, governmental body or arbitrator, or any
law, rule or regulation applicable to Buyer.
4.3 Regulatory Approvals. All consents, approvals, authorizations and
other requirements prescribed by any law, rule or regulation which must be
obtained or satisfied by Buyer and which are necessary for the consummation of
the transaction contemplated by this Agreement have been obtained and satisfied.
Buyer has complied with the requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, if applicable.
4.4 Brokerage. Buyer has not dealt with, and is not obligated to make
any payment to, any finder, broker or investment banker or financial advisor in
connection with any of the transactions contemplated by this Agreement or the
negotiations looking toward to consummation of such transactions.
4.5 Financial Capacity. To the knowledge of Buyer, Buyer has
sufficient funds, and/or commitments from reputable financial institutions to
provide to Buyer sufficient funds to effect the Closing and all other
transactions provided for in this Agreement.
5. Closing. The closing of the transactions herein contemplated (the
"Closing") shall, unless another date, time or place is agreed to in writing by
the parties hereto, take place in Riverside, California at the offices of
Xxxxxx, Saleson & Xxxxxx LLP at 10:00 a.m., local time, on September 20, 2000
(the "Closing Date") or such other time and date agreed upon by the parties.
6. Certain Understandings and Agreements of the Parties.
6.1 Prorations. Any personal property taxes with respect to the
Acquisition Assets to be conveyed to Buyer pursuant hereto and any charges for
utilities or similar costs of the Division shall be prorated through the
Closing Date and shall be adjusted between the parties hereto from time to time
when such amounts become fixed. On or promptly after the Closing and any such
adjustment, the resulting amount payable by Buyer or Seller shall be paid
immediately upon demand by such party to the party to whom such payment is owed.
6.2 Condition to Transfer of Certain Contracts.
(a) Seller shall use commercially reasonable efforts to procure
all consents, approvals or waivers which must be obtained by Seller and which
are necessary for completion of the transactions described herein, including
all required consents from third parties under the Contracts or otherwise and
all required consents of any governmental agency or body issuing any permits,
licenses or other governmental authorizations affecting Seller or its
businesses or properties so that the Division may continue to be operated by
Buyer without interruption or any material adverse effect following the
Closing. As provided in Section 8.10 hereof, it is a condition
13
19
precedent to the obligations of Buyer to close the transactions contemplated
hereby that all required consents be obtained for each of the Contracts listed
in Schedule 6.2 attached hereto (collectively the "Contracts Requiring
Consents").
(b) At the Closing, Buyer may elect to close the transactions
contemplated hereby notwithstanding the fact that Seller may have failed to
obtain consents to the transfer of one or more Contracts which by their terms
require the consent of any other contracting party thereto to the assignment
thereof to Buyer. The terms of this Section 6.2(b) shall govern the transfer of
the benefits of each such Contract. Notwithstanding anything herein to the
contrary,the parties hereto acknowledge and agree that at the Closing, the
Seller will not assign to Buyer any such Contract which by its terms requires
the consent of any other contracting party thereto unless each such consent has
been obtained prior to the Closing Date. With respect to each such unassigned
Contract, after the Closing Date Seller shall continue to deal with the other
contracting party(ies) to such Contract as the prime contracting party and shall
use commercially reasonable efforts to obtain the consent of all required
parties to the assignment of such Contract, but Buyer shall be entitled to the
benefits of such Contract accruing after the Closing Date to the extent that
Seller may provide Buyer with such benefits without violating the terms of such
Contract. Buyer agrees to perform at its sole expense all of the obligations of
Seller to be performed under any such Contract the benefits of which Buyer is
receiving after the Closing Date.
6.3 Use of Name. Except in connection with (i) any filing with any
governmental authority or (ii) any press release permitted hereunder, Buyer
shall not, and shall cause each of its subsidiaries not to, use the name
"Xxxxxxx-Xxxxx" or any derivative thereof other than "Xxxxx", or any logo or
other trademark or service xxxx of Seller in any way whatsoever at any time
after the Closing, provided, that for a period of eighteen (18) months after
the Closing Date, Buyer may (i) identify itself as formerly being the
Xxxxxxx-Xxxxx division of Seller and (ii) continue to use any brochure,
catalogue or other promotional material (such material not to include any
letterhead or other stationary of Xxxxxxx) currently in existence, provided,
that Buyer affix to any such material a statement that Buyer is no longer
affiliated with Seller.
6.4 Employees. Except as set forth in Schedule 6.4, Buyer shall offer
employment to all of the current employees of the Division.
6.5 Public Announcements. No party shall issue any press release or make
any public announcement relating to the subject matter of this Agreement without
the prior written approval of the other party; provided, however, that any
party may make any public disclosure it believes in good faith is required by
applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing party will use its
best efforts to advise the other party prior to making the disclosure).
6.6 Best Efforts. Prior to the Closing, Seller shall use its best efforts
to cause the conditions set forth in Section 8, and Buyer shall use its best
efforts to cause the conditions set forth in Section 7, to be satisfied on a
timely basis, and neither party shall take or omit to take any action.
14
20
the taking or omission of which would or could reasonably be expected to result
in any of the representations and warranties made by it in this Agreement
becoming untrue, or in any of the conditions set forth in Section 8 or
Section 7 not being satisfied.
6.7 Post-Closing Convenants. With respect to the period following the
Closing.
(a) In case at any time any further action is necessary or desirable
to carry out the purposes of this Agreement, each of the parties hereto will
take such further action (including the execution and delivery of such further
instruments and documents) as any other party reasonably may request, all at
the sole cost and expense of the requesting party (unless the requesting party
is entitled to indemnification therefor under Section 9 below).
(b) In the event and for so long as any party actively is contesting
or defending against any action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand in connection with (i) any transaction
contemplated under this Agreement or (ii) any fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction on or prior to the Closing Date involving
the operation of the Division by Seller, the other party shall cooperate with
it and its counsel in the defense or contest, make available its personnel
within reason, and provide such testimony and access to its books and records
within reason as shall be necessary in connection with the defense or contest,
all at the sole cost and expense of the contesting or defending party (unless
the contesting or defending party is entitled to indemnification therefor under
Section 9 below).
(c) Buyer and Seller shall use commercially reasonable efforts to
cooperate in sales efforts of their respective products for a period ending
December 31, 2001 and in this regard: (i) Buyer shall provide competitive
pricing upon request of Seller for Buyer's products to the extent such products
would be most effectively bundled in sales efforts: and (ii) Seller will use
commercially reasonable efforts through its global sales and service
organization to promote Buyer's products in markets where Buyer currently sells
its products through one of Seller's distribution channels, at terms and
conditions to be agreed upon between Buyer and Seller that are mutually
acceptable to Buyer and Seller.
(d) Seller agrees to: (i) promptly forward to Buyer all written,
telephonic, and electronic inquiries for Buyer's products for a period of two
(2) years from the Closing Date; and (ii) provide a link to Buyer's website, at
Buyer's cost and expense.
(e) Buyer and Seller agree to timely pay all intercompany debts
relating to the Acquired Assets or the Assumed Liabilities in accordance with
their respective terms.
7. Conditions to Obligations of Seller. The obligations of Seller to
make the deliveries contemplated at the Closing shall, in addition to the
conditions set forth elsewhere herein, be subject to satisfactory completion on
or prior to the Closing Date of each of the following conditions, any of which
may be waived by Seller.
15
21
7.1 Correctness of Representations and Warranties. All of the
representations and warranties of Buyer contained in this Agreement shall have
been true and complete in all material respects on the date hereof and shall be
true and complete in all material respects on the Closing Date with the same
effect as if made on the Closing Date, and Buyer shall have executed and
delivered to Seller at Closing a certificate to such effect.
7.2 Performance of Covenants and Agreements. All of the covenants and
agreements of Buyer contained in this Agreement and required to be performed by
Buyer on or before the Closing Date shall have been performed in all material
respects, and Buyer shall have executed and delivered to Seller at Closing a
certificate to such effect.
7.3 Opinion of Counsel for Buyer. Seller shall have received an
opinion of counsel for Buyer, the form and substance reasonably satisfactory to
and addressed to Seller and dated the Closing Date. In rendering such opinions,
counsel may rely upon certificates of public officials and upon certificates of
officers of Buyer as to factual matters and on opinions of other counsel of good
standing whom such counsel believes to be reliable.
7.4 Exhibits and Schedules. Buyer and Seller shall mutually agree to
the Exhibits and Schedules referenced in this Agreement.
7.5 Mapics. Buyer and Seller shall have resolved, on terms mutually
agreeable to Buyer and Seller the issue regarding the assignability of the
Mapics, Inc. software license.
7.6 Additional Closing Documents. Buyer shall have delivered to
Seller at or prior to the Closing such documents (including a certificate of
officers of Buyer) as Seller may reasonably request in order to enable Seller to
determine whether the conditions to Seller's obligations under this Agreement
have been met and otherwise to carry out the provisions of this Agreement.
7.7 No Legal Bar.
7.7.1 There shall not have been instituted or threatened any
legal proceeding seeking to prohibit the consummation of the transactions
contemplated by this Agreement or to obtain substantial damages with respect
thereto.
7.7.2 None of the parties hereto shall be prohibited by any
order, writ, injunction or decree of any governmental body of competent
jurisdiction from consummating the transactions contemplated by this Agreement,
and no action or proceeding shall then be pending which questions the validity
of this Agreement, any of the transactions contemplated hereby or any action
which has been taken by any of the parties or their representatives, in
connection herewith, in connection with any of the transactions contemplated
hereby.
8. Conditions to Obligations of Buyer. The obligations of Buyer to make
the deliveries contemplated at the Closing shall, in addition to conditions set
forth elsewhere herein, be subject to
16
22
the satisfactory completion on or prior to the Closing Date of each of the
following conditions, any of which may be waived by Buyer:
8.1 Correctness of Representations and Warranties. All representations and
warranties of Seller contained in this Agreement shall have been true and
complete in all material respects on the date hereof and shall be true and
complete in all material respects on the Closing Date with the same effect as if
made on the Closing Date, and Seller shall have executed and delivered to Buyer
at Closing a certificate to that effect.
8.2 Performance of Covenants and Agreements. All of the covenants and
agreements of Seller contained in this Agreement and required to be performed by
Seller on or before the Closing Date shall have been performed in all material
respects, and seller shall have delivered to Buyer at Closing a certificate to
that effect.
8.3 Opinion of Counsel for Seller. Buyer shall have received an opinion of
counsel for Seller, in form and substance reasonably satisfactory to and
addressed to Buyer and dated the Closing Date. In rendering such opinions,
counsel may rely upon certificates of public officials and upon certificates of
officers of Seller as to factual matters and on opinions of other counsel of
good standing, whom such counsel believes to be reliable.
8.4 Exhibits and Schedules. Buyer and Seller shall mutually agree to the
Exhibits and Schedules referenced in this Agreement.
8.5 Mapics. Buyer and Seller shall have resolved, on terms mutually
agreeable to Buyer and Seller the issue regarding the assignability of the
Mapics, Inc. software license.
8.6 Additional Closing Documents. Seller shall have delivered to Buyer at
or prior to the Closing such additional documents as Buyer may reasonably
request in order to enable Buyer to determine whether the conditions to its
obligations under this Agreement have been met and otherwise to carry out the
provisions of this Agreement.
8.7 No Legal Bar.
8.7.1 There shall not have been instituted or threatened any legal
proceeding seeking to prohibit the consummation of the transactions contemplated
by this Agreement or to obtain substantial damages with respect thereto.
8.7.2 None of the parties hereto shall be prohibited by any order,
writ, injunction or decree of any governmental body of competent jurisdiction
from consummating the transactions contemplated by this Agreement and no action
or proceeding shall then be pending which questions the validity of this
Agreement, any of the transactions contemplated hereby or any action which has
been taken by any of the parties or their representative in connection herewith
or in connection with any of the transactions contemplated hereby.
17
23
8.8 Material Adverse Effect. The Division shall not have experienced a
Material Adverse Effect since June 30, 2000, provided, that Buyer's obligations
shall not be subject to this condition with respect to any Material Adverse
Effect known to Buyer as of the date hereof.
8.9 Covenant Not to Compete. Seller shall have executed and delivered to
Buyer the Covenant Not to Compete and Confidentiality Agreement attached hereto
as Exhibit A (the "Covenant Not to Compete").
8.10 Third-Party Consents and Approvals. Seller shall have obtained all
consents and approvals of third parties required under the Contracts Requiring
Consent or otherwise in connection with the consummation of the transactions
contemplated hereby, which consents and approvals shall be in forms reasonably
satisfactory to Buyer.
8.11 Board of Directors Approval. The Board of Directors of Buyer shall
have approved the consummation of the transactions contemplated herein.
8.12 Transfer Documents. Seller shall have executed and delivered to Buyer
such bills of sale and other instruments of sale, transfer, conveyance,
assignment and delivery covering the Acquisition Assets or any part thereof as
Buyer may reasonably require to assure the full and effective sale, transfer,
conveyance, assignment and delivery to Buyer of the Acquisition Assets free and
clear of all Liens other than Permitted Liens.
9. Indemnification.
9.1 Indemnification by Seller. Subject to the limitations set forth in
Section 9.3, Seller covenants and agrees to indemnify and hold harmless Buyer
and each affiliate, director, officer, agent and representative of Buyer (the
"Buyer Indemnified Parties") in respect of any and all claims, actions, causes
of action, arbitrations, proceedings, losses, damages, liabilities and expenses
(including, without limitation, settlement costs, reasonable attorneys' fees
and any other expenses of investigating or defending any actions or threatened
actions) (collectively, the "Losses") incurred by Buyer or any other Buyer
Indemnified Party arising out of or relating to:
9.1.1 Any misrepresentation or breach of warranty or nonfulfillment of
or failure to perform any covenant or agreement on the part of Seller contained
in this Agreement or any other agreement to be delivered in connection with
this Agreement, provided, however, notwithstanding anything herein to the
contrary, Seller shall have no liability under this Agreement or any such other
agreement to Buyer for any fact or omission known by Buyer at the date hereof
or at the Closing; and
9.1.2 The Retained Liabilities;
18
24
9.1.3 Except as otherwise provided herein, any obligations or
liabilities relating to the operation of the Division prior to the Closing
Date, including any liability or obligation arising from any act, occurrence or
event which occurs prior to the Closing Date; and
9.2 Indemnification by Buyer. Subject to the limitations set forth in
Section 9.3, Buyer hereby covenants and agrees to indemnify and hold harmless
Seller and each affiliate, director, officer, agent and representative of
Seller (the "Seller Indemnified Parties") in respect of any and all Losses
arising out of or relating to:
9.2.1 Any misrepresentation or breach of warranty or nonfulfillment
of or failure to perform any covenant or agreement on the part of Buyer
contained in this Agreement or any other agreement to be delivered in
connection with this Agreement, provided, however, notwithstanding anything
herein to the contrary, Buyer shall have no liability under this Agreement or
any such other agreement to Seller for any fact or omission known by Seller at
the date hereof or at the Closing.
9.2.2 The Assumed Liabilities; and
9.2.3 Except as otherwise provided herein, any obligations or
liabilities relating to the operation of the Division after the Closing Date,
including any liability or obligation arising from any act, occurrence or event
which occurs after the Closing Date.
9.3 Indemnification Limitations.
9.3.1 Claims for indemnification made under this Agreement may be
made only during the period from the Closing Date until the date eighteen (18)
months after the Closing Date; provided, however, that: (a) claims based upon a
willful, fraudulent or intentional misrepresentation contained in this
Agreement or the exhibits and schedules hereto ("Fraud Claims") and claims for
breach of Seller's obligation to consummate the transaction contemplated hereby
or any covenant, agreement or obligation to be performed by Seller after the
Closing may be made only until barred by applicable statutes of limitation; (b)
claims made under Section 9.1.2, 9.1.3, 9.2.2 and 9.2.3 (including without
limitation the obligation to pay the tax liabilities described in Section
2.3(d)) may be made up to and until any claims by a third party (including any
applicable governmental or other taxing authority) giving rise to any such
claim are barred by the applicable statutes of limitations, if any, and (c)
claims of breach of the representations and warranties set forth in Section 3.3
may be made up to and until any claims by a third party giving rise to any such
claim are barred by the applicable statutes of limitations, if any.
9.3.2 Notwithstanding any other provision of this Agreement, Seller
shall not be liable to Buyer for any matter that could be made the subject of a
claim under Section 9.1 regarding any Losses, (exclusive of interest thereon
and without regard to any materiality qualification) that do not exceed in the
aggregate $10,000 (the "Threshold"); provided however, that when the aggregate
amount of all such claims, losses, expenses, obligations, and liabilities not
19
25
exceeding the Threshold reaches the Threshold, Seller shall thereafter be liable
in full regarding all such claims, losses, expenses, obligations, and
liabilities (including the amount of the Threshold), subject to other
limitations contained in this Section 9.
9.4 Claims. Whenever any claim shall arise for indemnification, the
indemnified party shall notify the Seller of the claim pursuant to Section 9.6
hereunder and, when known, the facts constituting the basis for such claim and
the amount or estimate of the amount of the liability arising from such claim.
Buyer shall not settle or compromise any claim by a third party which is
entitled to indemnification hereunder without the prior written consent of
Seller unless (i) suit shall have been instituted against Buyer and (ii) Seller
shall have not have taken control of such suit within 10 days after notification
thereof as provided in Section 9.6.
9.5 Defense by Seller. In connection with any claim giving rise to
indemnity hereunder resulting from or arising out of any claim or legal
proceeding by a person other than Buyer or any other indemnified party, Seller,
at its sole cost and expenses, may, upon written notice to Buyer, assume the
defense of any such claim or legal proceeding provided that Seller acknowledges
its obligation to indemnify Buyer in respect of the claims asserted therein. If
Seller assumes the defense of any such claim or legal proceeding, Seller shall
select counsel reasonably acceptable to Buyer to conduct the defense of such
claims or legal proceedings and at its sole cost and expense shall take all
steps necessary in the defense or settlement thereof. Buyer shall be entitled to
participate in (but not control) the defense of any such action, with its own
counsel and at its own expense. If Seller does not assume the defense of any
such claim or litigation resulting therefrom in accordance with the terms
hereof, Buyer may defend against such claim or litigation in such manner as it
may deem appropriate, including, but not limited to, settling such claim or
litigation, after giving notice of the same to Seller, on such terms as Buyer
may deem appropriate. Seller shall be entitled to participate in any defense of
any action by Buyer, which participation shall be limited to contributing
information to the defense and being advised of its status. In any action by
Buyer seeking indemnification from Seller in accordance with the provisions of
this Section, Seller shall be entitled to question the manner in which Buyer
defended such claim or litigation or the amount of or nature of any such
settlement.
9.6 Notice. Buyer agrees that in the event of any occurrence which may
give rise to a claim by an indemnified party against Seller thereunder, Buyer
will give notice thereof as soon as practicable to Seller, provided, however,
that failure of Buyer to timely give the notice provided in this Section shall
not be a defense to the liability of Seller for such claim unless Seller is
materially prejudiced by such failure, but Seller may recover from Buyer any
actual damages arising from Buyer's failure to give such timely notice.
10. Termination.
10.1 Termination of Agreement. Buyer and Seller may terminate this
Agreement as provided below:
20
26
(a) the Buyer and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(b) the Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing (i) in the event the
Seller has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, the Buyer has notified the
Seller of the breach, and the breach has continued without cure for a period of
ten (10) days after the notice of breach; or (ii) if the Closing shall not have
occurred on or before September 30, 2000, by reason of the failure of any
condition precedent under Section 8 hereof (unless the failure results
primarily from the Buyer itself breaching any representation, warranty, or
covenant contained in this Agreement); and
(c) the Seller may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing: (i) in the event the
Buyer has breached any material representation, warranty, or covenant contained
in this Agreement in any material respect, the Seller has notified the Buyer of
the breach, and the breach has continued without cure for a period of ten (10)
days after the notice of breach; or (ii) if the Closing shall not have occurred
on or before September 30, 2000, by reason of the failure of any condition
precedent under Section 7 hereof (unless the failure of results primarily from
the Seller itself breaching any representation, warranty, or covenant contained
in this Agreement).
10.2 Effect of Termination. If any party terminate this Agreement pursuant
to Section 10.1 above, all rights and obligations of the Parties hereunder
shall terminate without any liability of any Party to any other Party (except
for any liability of any Party then in breach). Provided, however, that the
confidentiality provisions contained in Section 6.5 above shall survive
termination.
11. Miscellaneous Provisions.
11.1 CONSTRUCTION. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA.
11.2 Notices. All notices, requests, demands and other
communications called for or contemplated hereunder shall be writing and shall
be deemed to have been duly given when delivered to the party to whom addressed
or when sent by telecopy, telegram, telex or wire (if promptly confirmed by
registered or certified mail, return receipt requested, prepaid and addressed)
to the parties, their successors in interest, or their assignees at the
following addresses, or at such other addresses as the parties may designate by
written notice in the manner aforesaid:
21
27
If to Buyer: Systems Technology, Inc.
0000 X. Xxxxxxxxx Xxxxx
Xxx Xxxxxxxxxx, XX 00000
Attn: Xxxx X. St. Xxxx
Facsimile: (000) 000-0000
With copies to: Xxxxxx, Saleson & Xxxxxx LLP
0000 Xxxxxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
If to Seller: Xxxxxxx Technology Corporation
00 Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: President
Facsimile: (000) 000-0000
With copies to: Xxxxxx Xxxxx & Bockius
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxxx
Facsimile: (000) 000-0000
With copies to: FleetBoston Xxxxxxxxx Xxxxxxxx
000 Xxxxxxx Xxxxxx, 00xx Floor
Mail Stop: MA DE 1001 1H
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
11.3 Assignment. Neither this Agreement nor any right, remedy, obligation
or liability arising hereunder or by reason hereof nor any of the documents
executed in connection herewith may be assigned by any party without the
consent of the other party; provided, however, that Buyer shall have the right
to assign its rights hereunder for security purposes to any financing
institution extending credit to Buyer or any affiliates.
11.4 Amendments and Waivers. This Agreement and all Exhibits and Schedules
hereto may be modified only by a written instrument duly executed by each
party. No condition to any party's obligations and no breach of any covenant,
agreement, warranty or representation shall be deemed waived unless expressly
waived in writing by the party whose obligations are subject to such condition
or who might assert such breach. No waiver of any right hereunder shall operate
as a waiver of any other right or of the same or a similar right on another
occasion.
22
28
11.5 Survival. All representations and warranties contained in Section 3
(with respect to Seller) and in Section 4 (with respect to Buyer) shall survive
until the date eighteen (18) months after the Closing Date.
11.6 Remedies. The indemnification obligations of Seller and Buyer under
Section 9 shall constitute the sole and exclusive remedies of Buyer and Seller,
respectively, with respect to the matters described in Section 9.1 and 9.2,
respectively.
11.7 Attorneys' Fees. In the event that any action or proceeding,
including arbitration, is commenced by any party hereto for the purpose of
enforcing any provision of this Agreement, the parties to such action,
proceeding or arbitration may receive as part of any award, judgment, decision
or other resolution of such action, proceeding or arbitration their costs and
reasonable attorneys' fees as determined by the person or body making such
award, judgment, decision or resolution.
11.8 Binding Nature of Agreement. This Agreement includes each of the
Schedules and Exhibits which are referred to herein or attached hereto, all of
which are incorporated by reference herein. All the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective executors, heirs, legal representatives, successors
and assigns.
11.9 Expenses. The costs and expenses of Buyer, including the legal fees
and disbursements of Xxxxxx, Saleson & Xxxxxx LLP shall be borne by Buyer. The
costs and expenses of Seller, including the legal fees and disbursements of
Xxxxxx, Xxxxx & Xxxxxxx, shall be borne by Seller. All sales, use and transfer
taxes and fees imposed in connection with the transactions contemplated hereby
shall be borne by Seller, provided, that all sales taxes imposed in connection
with the transactions contemplated hereby in excess of $60,000 shall be borne
equally by Buyer and Seller.
11.10 Entire Agreement. This Agreement contains the entire understanding
of the parties, supersedes all prior agreements and understandings relating to
the subject matter hereof.
11.11 Severability. Any provision of this Agreement which is invalid,
illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability,
without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provision of this Agreement
invalid, illegal or unenforceable in any other jurisdiction.
11.12 Counterparts. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
23
29
11.13 Section Headings. The headings of each Section, subsection or
other subdivision of this Agreement are for reference only and shall not limit
or control the meaning thereof.
11.14 Knowledge. Certain of the representations and warranties are
made "to the best knowledge" or "to the knowledge." The parties hereto agree
that the meaning of such expression shall in all cases be understood as
comprising actual knowledge and belief of the party or parties making such
representations and warranties or any officer or director of such party after
reasonable inquiry of such party's employees and representatives and reasonable
review of such party's files, books and records, provided, that Seller's
"knowledge" shall not include the knowledge of any officer, director or
employee of the Division or any obligation to inquire of any such person or
review any files, books or records of the Division that are in the possession
and control of the Division but shall include knowledge of any officer,
director or employee of the Division to the extent communicated in writing to
an officer or director of Seller or its affiliates that is not employed at the
Division.
12. Arbitration.
12.1 Agreement to Arbitrate. Except (a) as provided in Section 12.4,
and (b) for claims of fraud, any controversy, dispute or claim arising out of,
in connection with, or in relation to the interpretation, performance or
breach of this Agreement, including any claim based on contract, tort or
statute, shall be settled, at the request of either party, by arbitration
conducted in Los Angeles, California or such other location upon which the
parties may mutually agree, before and in accordance with the then existing
Rules of Commercial Arbitration of the American Arbitration Association ("AAA"),
and judgment upon any award rendered by the arbitrator may be entered by any
State or Federal court having jurisdiction thereof. Any controversy concerning
whether a dispute is an arbitrable dispute shall be determined by the
arbitrator. The parties intend that this agreement to arbitrate be valid,
specifically enforceable and irrevocable. The designation of a situs or
specifically a governing law for this agreement or the arbitration shall not be
deemed an election to preclude application of the Federal Arbitration Act, if it
would be applicable.
12.2 Selection of Arbitrator. The sole arbitrator, who shall be
selected in accordance with the procedures of the AAA, shall be a retired or
former judge of any Federal court appointed under Article III of the United
States Constitution who presided in a court located in the State in which the
arbitration is conducted, or a retired or former judge of a trial court of
general jurisdiction or a higher court of the State in which the arbitration is
conducted.
12.3 Expenses. The arbitrator shall award to the prevailing party in
any arbitration proceeding commenced thereunder, and the court shall include
in its judgment for the prevailing party in any claim arising under this
Agreement or relating to the transactions contemplated hereby, the prevailing
party's costs and expenses (including expert witness expenses and reasonable
attorneys' fees) of investigating, preparing and presenting such arbitration
claim or cause of action.
24
30
12.4 Aid to Arbitration. Any party hereto may request a court of
competent jurisdiction, as set forth in Section 13, hereof, to grant
provisional injunctive relief to such party solely for the purpose of
maintaining the status quo until an arbitrator can render an award on the
matter in question and such award can be confirmed by a court having
jurisdiction thereof.
13. Submission to Jurisdiction Agent for Service. EACH OF THE PARTIES
HERETO CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED
WITHIN THE STATE OF CALIFORNIA, AND IRREVOCABLY AGREES THAT ALL ACTIONS OR
PROCEEDINGS RELATING TO THIS AGREEMENT OR ANY AGREEMENT OR INSTRUMENT EXECUTED
THEREUNDER, OTHER THAN ANY ACTION OR PROCEEDING REQUIRED BY SECTION 11, TO BE
SUBMITTED TO ARBITRATION, SHALL BE LITIGATED IN SUCH COURTS, AND EACH OF THE
PARTIES WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER VENUE OR FORUM
NON CONVENIENS TO THE CONDUCT OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND CONSENTS
TO ALL SUCH SERVICE OF PROCESS MADE IN THE MANNER SET FORTH IN SECTION 11.
Nothing contained in this Section 12 shall affect the right of any party to
serve legal process on any other party in any other manner permitted by law.
25
31
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
"Seller"
XXXXXXX TECHNOLOGY CORPORATION, a
Connecticut corporation
By:
-------------------------------
Its:
-------------------------------
"Buyer"
SYSTEMS TECHNOLOGY, INC. a Delaware
corporation
By: [illegible]
-------------------------------
Its: President
-------------------------------
