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ASSET PURCHASE AGREEMENT
by
INTERTEK INC.
(Seller)
and
UNITEK TECHNICAL SERVICES INC.
(Buyer)
dated
February 22, 2000
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TABLE OF CONTENTS
Page
----
1. ASSETS SUBJECT TO THIS AGREEMENT..........................................1
1.1 Purchased Assets...................................................1
1.2 Excluded Assets....................................................3
2. ASSUMPTION OF LIABILITIES.................................................3
2.1 Liabilities Assumed................................................4
2.2 Liabilities Not Assumed............................................4
3. PURCHASE PRICE, CLOSING AND PAYMENT TERMS.................................5
3.1 Purchase Price.....................................................5
3.2 Closing and Effective Date.........................................5
3.3 Payment of Purchase Price..........................................5
4. REPRESENTATIONS, WARRANTIES AND COVENANTS BY SELLER.......................5
4.1 Corporate Organization.............................................5
4.2 Title to Purchased Assets..........................................6
4.3 Pending or Threatened Claims.......................................6
4.4 Due Authorization..................................................6
4.5 Authority of Seller................................................6
4.6 Effect of this Agreement...........................................6
4.7 Consents...........................................................7
4.8 Enforceability.....................................................7
4.9 Trade Rights.......................................................7
4.10 Personal Property..................................................7
4.11 Licenses, Permits, Approvals and Regulatory Matters; Compliance....7
4.12 Environmental Protection...........................................8
4.13 Major Customers and Suppliers......................................8
4.14 Absence of Changes.................................................8
4.15 Disclosure.........................................................8
4.16 Books and Records..................................................9
4.17 Agreements with Third Parties......................................9
4.18 Tax Returns........................................................9
4.19 Financial Statements...............................................9
4.20 Ordinary Course of Business........................................9
4.21 Accuracy of Representations and Warranties.........................9
4.22 Employment Compensation...........................................10
4.23 Assets Necessary to Business......................................10
4.24 Labor Matters.....................................................10
4.25 Employee Benefit Plans............................................10
4.26 Insurance.........................................................12
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5. REPRESENTATIONS AND WARRANTIES OF BUYER..................................12
5.1 Corporate Organization............................................12
5.2 Authorization and Approval of Agreement...........................12
5.3 Accuracy of Representations and Warranties........................12
6. EMPLOYEES - EMPLOYEE BENEFITS............................................13
6.1 Affected Employees................................................13
6.2 Retained Responsibilities.........................................13
6.3 Payroll Tax.......................................................13
6.4 Termination and Other Benefits....................................13
7. OTHER MATTERS............................................................14
7.1 Access to Certain Records of Buyer................................14
7.2 Availability of Affected Employees................................14
8. CONDITIONS TO CLOSING....................................................14
8.1 Compliance with Agreement.........................................14
8.2 Satisfactory Investigation........................................14
8.3 Absence of Litigation.............................................14
9. DOCUMENTS DELIVERED AT CLOSING...........................................15
9.1 Documents to be delivered by Seller...............................15
9.2 Documents to be delivered by Buyer................................15
10. POST-CLOSING COVENANTS...................................................16
10.1 Post-Closing Covenants............................................16
10.2 Covenant Not to Compete...........................................16
11. INDEMNIFICATION; EXPENSES................................................16
11.1 Obligations of Seller to Indemnify................................16
11.2 Obligations of Buyer to Indemnify.................................17
11.3 Amount Limitation.................................................17
11.4 Each Party to Bear Own Expenses...................................17
12. SPECIFIC PERFORMANCE.....................................................17
13. MISCELLANEOUS PROVISIONS.................................................18
13.1 Survival..........................................................18
13.2 Notices...........................................................19
13.3 Binding Effect....................................................19
13.4 Applicable Law....................................................20
13.5 Positions For Income Tax Purposes.................................20
13.6 Public Announcements..............................................20
13.7 Entire Agreement..................................................20
13.8 Modifications and Waivers.........................................20
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ASSET PURCHASE AGREEMENT
This asset purchase agreement ("Agreement") is made as of February 22,
2000 by Intertek Inc. ("Seller") and Unitek Technical Services Inc., a Delaware
corporation ("Buyer"), who agree as follows.
Recitals
1. Seller owns and operates a source inspection and quality control
business known as ITS-Technical Services Division in Centreville, Virginia (the
"Business"); and
2. Buyer desires to purchase from Seller, and Seller desires to sell
to Buyer, certain of the assets and contractual rights of Seller relating to the
Business, upon the terms and conditions set forth in this Agreement.
Agreement
1. Assets subject to this Agreement.
--------------------------------
1.1 Purchased Assets.
----------------
Other than those assets specifically excluded by Section 1.2 below,
Seller sells, transfers, conveys, assigns, and delivers to Buyer, and Buyer
purchases and accepts, effective as of the close of business on the Closing Date
(as hereinafter defined), all of the business, rights, claims and assets (of
every kind, nature, character and description, whether real, personal or mixed,
tangible or intangible, accrued, contingent or otherwise, and wherever situated)
of Seller, used, held for use or acquired or developed for use in the Business,
or developed in the course of conducting the Business or by persons employed in
the Business (collectively, the "Purchased Assets"). The Purchased Assets
include, but are not limited to, all of the following assets or rights of
Seller, to the extent used, held, acquired or developed for purposes directly
related to the Business, in the amounts as shown on the Business' Balance Sheet
as of January 31, 2000 described on Schedule 1.1 (the "Purchased Balance
Sheet"):
(a) Personal Property. All furniture, machinery, equipment, fixtures,
vehicles, laboratory testing equipment, supplies, forms, manuals, spare
parts and all other personal property (except to the extent subject to
personal property leases from third parties) described on Schedule 1.1(a)
(the "Personal Property").
(b) Personal Property Leases. All leases of equipment, furniture and
other personal property leased by Seller described on Schedule 1.1(b) (the
"Personal Property Leases").
(c) Phone Numbers. All phone numbers used by Seller in the Business.
(d) Contracts. All contracts (including, without limitation, all
testing or service contracts), leases, subleases, purchase orders and sales
orders, including, without limitation, those described on Schedule 1.1(d)
(the "Assumed Contracts"), and all contractual rights of Seller necessary
to operate the Business, including, without
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limitation, any security deposits and retainers relating thereto. If any
Assumed Contract assigned to Buyer is not assignable without the consent of
another party, this Agreement will not constitute an assignment or an
attempted assignment if the assignment or attempted assignment is a breach
of that Assumed Contract. Seller and Buyer will use their reasonable best
efforts (without any requirement on the part of Buyer to pay any money or
agree to any change in the terms of any Assumed Contract) to obtain the
consent of the other party to the assignment of any Assumed Contract to
Buyer if a consent is or may be required for assignment. If any consent is
not obtained, Seller will appoint Buyer to act as Seller's agent so that
Buyer can receive the benefits intended to be assigned to Buyer under the
relevant Assumed Contract, including enforcement at the cost and for the
account of Buyer of any and all rights of Seller against the other party
thereto arising out of the breach or cancellation thereof by the other
party or otherwise.
(e) Notes and Accounts Receivable. All notes, drafts, accounts
receivable relating to work completed prior to the Effective Date (as later
defined) as described on Schedule 1.1(e) and the Other Receivables shown on
the Purchased Balance Sheet (the "Notes and Accounts Receivable").
(f) Computer Software. All computer programs and other software of
Seller, including all machine readable code, printed listings of code,
documentation and related property and information of Seller.
(g) Literature. All sales literature, promotional literature, catalogs
and similar materials of Seller.
(h) Records and Files. All books, records, files, invoices, customer
and vendor lists, accounting records, business records, operating data and
other data of Seller.
(i) Licenses and Permits. If transferable, all licenses, permits,
approvals, certifications and listings.
(j) Trade Rights. Except as provided in Section 1.2 (c), all of
Seller's interest in any Trade Rights used in connection with the Purchased
Assets or the Business. As used herein, the term "Trade Rights" means: (i)
all trademarks rights, business identities, trade dress, service marks,
trade names and brand names, all related registrations and applications,
and all goodwill associated with the foregoing; (ii) all copyrights,
copyright registrations and copyright applications, and all other rights
associated with the foregoing and the underlying works of authorship; (iii)
all patents and patent applications and all international proprietary
rights associated therewith; (iv) all contracts or agreements granting any
right, title, license or privilege under the intellectual property rights
of any third party; (v) all inventions, mask works and mask work
registrations, know-how, discoveries, improvements, designs, trade secrets,
shop and royalty rights, employee covenants and agreements respecting
intellectual property and non-competition and all other types of
intellectual property; and (iv) all claims for infringements or breach of
any of the foregoing.
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(k) Security Deposits and Retainers. Amounts that are security
deposits and retainers relating to the Assumed Contracts, which are part of
the Purchased Assets.
(l) General Intangibles. All prepaid items (including, without
limitation, customer deposits related to the Assumed Contracts and all
lease deposits), all causes of action arising out of occurrences before or
after the Closing Date that relate to the other Purchased Assets and not
the Excluded Assets, and other intangible rights and assets.
(m) Real Property Leases. All leases of real property leased by Seller
for the Business described on Schedule 1.1(m) (the "Real Property Leases").
1.2 Excluded Assets.
---------------
Notwithstanding any other provision of this Agreement, Seller may not
sell, transfer, assign, convey or deliver to Buyer, and Buyer may not purchase
or accept, the following assets of Seller (collectively, the "Excluded Assets"):
(a) Corporate Franchise. Any corporate franchise, articles of
incorporation, corporate seal, stock books, minute books, and other
corporate records exclusively related to the corporate organization and
capitalization of Seller or not otherwise respecting the Business, but the
Buyer or its designated agents will have reasonable access to books and
records and may make copies and/or excerpts.
(b) Tax-Related Assets. Federal, state, local income and franchise tax
credits, tax refund claims, and associated returns and records.
(c) Intertek Name. The name of Intertek, Intertek Testing Services,
and ITS.
(d) Insurance Policies. Ownership of Seller's insurance policies as
described on Schedule 4.27.
(e) Cash and Bank Accounts. All cash and cash equivalents in the
amounts shown on the Purchased Balance Sheet, including xxxxx cash balances
and all Seller's interest in any of its bank accounts.
2. Assumption of Liabilities.
-------------------------
The term "Liability" means any direct or indirect indebtedness,
guaranty, endorsement, claim, loss, damage, deficiency, cost, expense,
liability, obligation or responsibility, fixed or contingent, known or unknown,
asserted or unasserted, liquidated or unliquidated, secured or unsecured.
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2.1 Liabilities Assumed.
-------------------
Subject to the terms and conditions of this Agreement, as of the
Effective Date, Buyer will assume and agree to perform and discharge the
following Liabilities (collectively, the "Assumed Liabilities") in the amounts
shown on the Purchased Balance Sheet:
(a) Liabilities. The trade accounts payable incurred after the
Effective Date and other liabilities directly related to the operation of
the Business incurred after the Effective Date and accounts payable and
other payables in the amounts shown on the Purchased Balance Sheet.
(b) Assumed Contracts. Liabilities arising after the Effective Date
under the Assumed Contracts, the Personal Property Leases, license
agreements relating to the Trade Rights and other contracts and agreements
described on Schedule 1.1(d).
2.2 Liabilities Not Assumed.
-----------------------
Buyer is not assuming, and Seller is not deemed to have transferred to
Buyer, the following Liabilities of Seller (the "Retained Liabilities"):
(a) Income and Franchise Taxes. Any Liability of Seller for Federal
income taxes and any foreign, state, county or local income, profit, or
franchise taxes (and any penalties or interest due on account thereof).
(b) Service Liability. Any Liability of Seller arising out of or
resulting from any services performed by Seller prior to the Effective Date
for claims made for injury to person, damage to property or other damage
(whether made in product or service liability, tort or otherwise).
(c) Litigation Matters. Any Liability with respect to these actions,
suits, proceedings, arbitration, investigations, or inquiries (i) pending
as of the Effective Date, whether civil or administrative, whether or not
described in Schedule 4.3, or (ii) instituted after the Effective Date
arising out of actions of the Seller or events occurring prior to the
Effective Date.
(d) Transaction Expense. All Liabilities incurred by Seller in
connection with this Agreement and the transactions contemplated herein.
(e) Retiree Benefits and Accrued Employee Benefits. Any Liabilities to
current or retired employees of Seller for retiree benefits or accrued
employee benefits under any employee plan of Seller.
(f) Environmental Liabilities. Liabilities resulting from conditions
existing prior to the Effective Date which were or are in violation of
applicable federal, state and local laws relating to the environment.
(g) Other Liabilities. All other Liabilities of Seller not expressly
assumed above in Section 2.1.
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3. Purchase Price, Closing and Payment Terms.
-----------------------------------------
3.1 Purchase Price.
--------------
The purchase price for the Purchased Assets (the "Purchase Price") is
One Million Six Hundred Fifty Thousand US Dollars (US$1,650,000) in cash plus
the assumption of the Assumed Liabilities and payment, if applicable, for the
Pending Contract described in Section 3.3 (c).
3.2 Closing and Effective Date.
--------------------------
The signing of this Agreement and closing (the "Closing") for the
transactions contemplated herein are being held on February 22, 2000 (the
"Closing Date") at the offices of the Business or at any other place and time as
the parties may agree. The effective date for this Agreement will be February
22, 2000 (the "Effective Date").
3.3 Payment of Purchase Price.
-------------------------
Buyer will pay the Purchase Price on the Closing Date as follows:
(a) Assumption of Liabilities. On the Closing Date, Buyer will assume
the Assumed Liabilities as of the Effective Date.
(b) Cash to Seller. On the Closing Date, Buyer will pay to Seller One
Million Six Hundred Fifty Thousand US Dollars (US$1,650,000) by delivery of
a check payable to the order of Seller.
(c) Pending Contract. Should a contract with U. S. Postal Service be
awarded to the Business within 180 days from the Closing Date, Seller will
be entitled to ten percent (10%) of the pretax operating profit from this
contract over the duration of the contract, not to exceed five (5) years.
4. Representations, Warranties and Covenants by Seller.
---------------------------------------------------
Seller represents, warrants and covenants that the following
representations, warranties, and covenants are true and correct as of the
Effective Date. The following representations, warranties, and covenants are the
only representations, warranties, and covenants made by Seller with respect to
this Agreement.
4.1 Corporate Organization.
----------------------
Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Virginia and has all necessary corporate
powers to own its properties and carry on the Business.
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4.2 Title to Purchased Assets.
-------------------------
Seller has good and marketable title to all of the Purchased Assets
free and clear of all liens, encumbrances, and restrictions on transfer.
4.3 Pending or Threatened Claims.
----------------------------
Except as set forth in Schedule 4.3, there are no claims, actions,
litigation, disputes, lawsuits, proceedings or governmental investigations
pending or threatened against Seller relating to or affecting the Purchased
Assets or the Business, and no order, writ, injunction or decree affecting the
Purchased Assets or the Business has been threatened or is in effect.
4.4 Due Authorization.
-----------------
The execution, delivery and performance by Seller of this Agreement
and the other documents and instruments to be executed and delivered pursuant
hereto, and the consummation of the transactions contemplated hereby or thereby,
have been duly and validly authorized and approved by all necessary corporate
action on the part of Seller. No other corporate act or proceeding on the part
of Seller is necessary to authorize this Agreement or the other documents and
instruments to be executed and delivered by Seller pursuant hereto or the
consummation of the transactions hereby or thereby.
4.5 Authority of Seller.
-------------------
Seller has the legal power, capacity and authority to execute, deliver
and perform this Agreement. Neither the execution, nor delivery nor performance
by Seller of this Agreement or the other documents and instruments to be
executed and delivered pursuant hereto, or the consummation by Seller of the
transactions contemplated hereby and thereby, will cause Seller to violate any
provisions of Seller's certificate of incorporation or by-laws or result in the
breach of any provision of, or constitute a default under, any indenture,
agreement, contract or other instrument to which Seller is a party or by which
Seller or any of the Purchased Assets may be bound.
4.6 Effect of this Agreement.
------------------------
The execution, delivery and consummation of this Agreement and the
other instruments and documents to be executed and delivered by Seller in
connection with this Agreement, and the consummation of the contemplated
transactions, will not, with or without the passage of time or the giving of
notice or both, result in or constitute any of the following: (i) a violation of
any statute, rule, judgment, regulation, writ, decree, or order of any court or
governmental entity to which Seller or the Purchased Assets are or may be
subject, or (ii) the creation or imposition of any lien, encumbrance, charge,
equity or restriction of any nature whatsoever in favor of any third party upon
the Purchased Assets.
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4.7 Consents.
--------
No consent or approval is required of any person or entity pursuant to
the terms of any contract or otherwise in order to permit the execution,
delivery and performance by Seller of this Agreement and the consummation of the
transactions contemplated hereby.
4.8 Enforceability.
--------------
This Agreement is a valid and binding obligation of Seller, subject to
performance by Buyer as provided herein, enforceable in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization or
other laws affecting creditors' rights generally, and by general equitable
principles.
4.9 Trade Rights.
------------
Schedule 4.9 lists all material Trade Rights of the type described in
Section 1.1(j), in which Seller now has any interest, specifying whether the
Trade Rights are owned, controlled, used, or held (under license or otherwise)
by Seller, and also indicating which of these Trade Rights are registered. All
Trade Rights shown as registered on Schedule 4.9 have been properly registered,
all pending registrations and applications have been properly made and filed and
all annuity, maintenance, renewal and other fees relating to registration or
application are current. The Trade Rights included in the Purchased Assets
constitute all of the Trade Rights used by Seller in the conduct of the Business
as conducted by Seller. Seller, to the best of Seller's knowledge, is not
infringing and has not infringed any Trade Rights of another in the operation of
the Business, nor is any other person infringing the Trade Rights of Seller.
Seller has not granted any license or made any assignment of any Trade Right
listed on Schedule 4.9. Seller does not pay any royalties or other consideration
for the right to use any Trade Rights of others.
4.10 Personal Property.
-----------------
All items of Seller's personal property included in the Purchased
Assets are in good operating condition for the operations of the Business as
currently conducted, taking into consideration age and ordinary wear and tear,
and are adequate and sufficient for all operations conducted by the Business,
and constitute all personal property necessary or appropriate for the operations
of the Business as currently conducted.
4.11 Licenses, Permits, Approvals and Regulatory Matters; Compliance.
---------------------------------------------------------------
All governmental and regulatory licenses, permits and approvals
necessary to the conduct of the Business as currently conducted ("Licenses") are
set forth in Schedule 4.11 and are in full force and effect. Seller is not a
party to any pending dispute with respect to the Licenses and, within the past
five (5) years, there have been no material violations by Seller of any Licenses
or any claims or proceedings, pending or threatened, challenging the validity of
or seeking to discontinue any License. To the best of Seller's knowledge, Seller
is in compliance in all material respects with all applicable laws, regulations
and administrative orders of any country, state or municipality or of any
subdivision thereof to which the Business is subject.
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4.12 Environmental Protection.
------------------------
Seller, to the best of its knowledge, is in compliance with all
foreign, federal, state, local and other laws, regulations and ordinances
relating to the environment.
4.13 Major Customers and Suppliers.
-----------------------------
(a) Major Customers. Schedule 4.13(a) contains a list of the ten (10)
largest customers of the Business for each of the two (2) most recent
fiscal years (determined on the basis of the total dollar amount of net
sales) showing the total dollar amount of net sales to each such customer
during each such year. Seller has no knowledge or information of any facts
indicating, nor any other reason to believe, that any of the customers
listed on Schedule 4.13(a) will not continue to be customers of the
business of Seller after the Closing at substantially the same level of
purchases as heretofore.
(b) Major Suppliers. Schedule 4.13(b) contains a list of the five (5)
largest suppliers to the Business for each of the two (2) most recent
fiscal years (determined on the basis of the total dollar amount of
purchases) showing the total dollar amount of purchases from each such
supplier during each such year. Seller has no knowledge or information of
any facts indicating, nor any other reason to believe, that any of the
suppliers listed on Schedule 4.13(b) will not continue to be suppliers to
the business of Seller after the Closing and will not continue to supply
the business with substantially the same quantity and quality of goods at
competitive prices.
4.14 Absence of Changes.
------------------
Since November 30, 1999, there has been no material adverse change in
the Purchased Assets, liabilities, financial condition, Business, operations or
prospects of Seller, financial or otherwise, and since that date, the Business
has been conducted in the usual, regular and ordinary manner in all respects.
4.15 Disclosure.
----------
All facts material to the Purchased Assets or the results of
operations, financial condition or prospects of the Business known to Seller
have been Disclosed to Buyer in this Agreement.Books and Records.
The books of account and all other corporate records of Seller
relating to the Purchased Assets and the Business are substantially complete and
correct, have been maintained in accordance with reasonable business practices
and fully and accurately reflect the results of operations of the Business as of
the respective periods indicated.
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4.16 Agreements with Third Parties.
-----------------------------
Seller has made available to Buyer true and complete copies of all
agreements relating to the conduct and operation of the Business being acquired
by Buyer and all the agreements are Assumed Contracts. Seller has in all
material respects performed all obligations required to be performed by it under
all these agreements and is not in default under any of them. All agreements
constituting part of the Purchased Assets are valid, binding and in full force
and effect.
4.17 Tax Returns.
-----------
Buyer will not be liable for payment of any taxes or penalties due to
the conduct of the Business prior to the date hereof. Seller has made all
deposits required by law to be made with respect to employees' withholding
taxes. Seller has duly filed with all appropriate governmental agencies and
bodies, whether federal, state or local, all tax returns which were required to
be filed and has paid, or has established adequate reserves for payment of, all
taxes shown to be due on these returns.
4.18 Financial Statements.
--------------------
The financial information provided to Buyer is true and correct in all
material respects and was prepared in accordance with United States generally
accepted accounting practices.
4.19 Ordinary Course of Business.
---------------------------
Since December 31, 1999, Seller has conducted its business in the
ordinary and usual course including, without limitation, the ordinary and usual
invoicing of work in process to its customers, and has not incurred any
Liability other than in the ordinary and usual course of business, encumbered
any of its assets, disposed of any property, entered into any lease or agreement
respecting real property, or with the exception of contract employees entered
into any employment agreement or other contract relating to the Purchased Assets
or the Business with a term of more than one (1) month or involving payments of
more than $5,000 other than as set forth on Schedule 4.19. In addition, Seller
has not entered into any oral or written agreement with any party, other than
Buyer, purporting to transfer the Purchased Assets.
4.20 Accuracy of Representations and Warranties.
------------------------------------------
No representation or warranty in this Agreement by Seller and no
statement , certificate, exhibit, document, instrument, report or other
information furnished or to be furnished by Seller pursuant to this Agreement
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein not misleading.
4.21 Employment Compensation.
-----------------------
Schedule 4.21 contains a true and correct list of all full time
employees to whom Seller is paying compensation, including bonuses and
incentives, at an annual rate in excess of Twenty
9
Thousand Dollars ($20,000) for services rendered to the Business; and in the
case of salaried employees such list identifies the current annual rate of
compensation for each employee and in the case of hourly or commission employees
identifies certain reasonable ranges of rates and the number of employees
falling within each range.
4.22 Assets Necessary to Business.
----------------------------
The Purchased Assets include all property and assets (except for the
Excluded Assets), tangible and intangible, and all leases, licenses and other
agreements, which are necessary to permit Buyer to carry on, or currently used
or held for use in, the business of Seller as presently conducted.
4.23 Labor Matters.
-------------
Except as set forth in Schedule 4.23, within the last five years the
Business has not experienced any labor disputes, union organization attempts or
any work stoppage due to labor disagreements in connection with its business.
Except as set forth in Schedule 4.23, (a) the Business is in compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and is not engaged in any unfair
labor practice; (b) there is no unfair labor practice charge or complaint
against Seller related to the Business and none are pending or threatened; (c)
there is no labor strike, dispute, request for representation, slowdown or
stoppage actually pending or threatened against or affecting Seller related to
the Business nor any secondary boycott with respect to products or services of
the Business; (d) no question concerning representation has been raised or is
threatened respecting the employees of Seller who work in the Business; (e) no
grievance that might have a material adverse effect on the Business, nor any
arbitration proceeding arising out of or under collective bargaining agreements,
is pending and no claim therefor exists; and (f) there are no administrative
charges or court complaints against Seller related to the Business concerning
alleged employment discrimination or other employment related matters pending or
threatened before the U.S. Equal Employment Opportunity Commission or any
Government Entity.
4.24 Employee Benefit Plans.
----------------------
Buyer will not be liable for any payments under the employee benefit
plans of Seller. Seller has complied with all laws and regulations relating to
employee benefit plans provided to persons who worked in the Business. Seller
will hold harmless Buyer for any liabilities under the Seller's employee benefit
plans provided to persons who worked in the Business.
4.25 Contracts and Commitments.
-------------------------
(a) Personal Property Leases. Except as set forth in Schedule 1.1 (b),
Seller has no leases of personal property the involving consideration or
other expenditure in excess of $5,000 or involving performance over a
period of more than six months.
(b) Real Property Leases. Except as set forth in Schedule 1.1(m),
Seller has no leases of real property.
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(c) Purchase Commitments. Seller has no purchase commitments for
inventory items or supplies that, together with amounts on hand, constitute
in excess of six months normal usage, or which are at an excessive price.
(d) Sales Commitments. Seller has no sales contracts or commitments
except those made in the ordinary course of business, at arm's length, and
no such contracts or commitments are for a sales price that would result in
a loss to Seller.
(e) Contracts for Services. Seller has no agreement, understanding,
contract or commitment (written or oral) with any officer, employee, agent,
consultant, distributor, dealer or franchisee that is not cancelable by
Seller on notice of not longer than 90 days without liability, penalty or
premium of any nature or kind whatsoever.
(f) Powers of Attorney. Seller has not given a power of attorney,
which is currently in effect, to any person, firm or corporation for any
purpose whatsoever.
(g) Collective Bargaining Agreements. Seller is not a party to any
collective bargaining agreements with any unions, guilds, shop committees
or other collective bargaining groups. Copies of all such agreements have
heretofore been delivered to Buyer.
(h) Loan Agreements. Seller is not obligated under any loan agreement,
promissory note, letter of credit, or other evidence of indebtedness as a
signatory, guarantor or otherwise.
(i) Guarantees. Seller has not guaranteed the payment or performance
of any person, firm or corporation, agreed to indemnify any person or act
as a surety, or otherwise agreed to be contingently or secondarily liable
for the obligations of any person.
(j) Contracts Subject to Renegotiation. Seller is not a party to any
contract with any governmental body that is subject to renegotiation.
(k) Burdensome or Restrictive Agreements. Seller is not a party to nor
is it bound by any agreement, deed, lease or other instrument which is so
burdensome as to materially affect or impair the operation of Seller.
Without limiting the generality of the foregoing, except as set forth in
Schedule 4.26 (k), Seller is not a party to nor is it bound by any
agreement requiring Seller to assign any interest in any trade secret or
proprietary information, or prohibiting or restricting Seller from
competing in any business or geographical area or soliciting customers or
otherwise restricting it from carrying on its business anywhere in the
world.
(l) Other Material Contracts. Seller has no lease, license, contract
or commitment of any nature involving consideration or other expenditure in
excess of $ 5,000, or involving performance over a period of more than six
months, or which is otherwise individually material to the operations of
Seller, except as explicitly described the Schedules.
11
(m) No Default. Seller is not in default under any lease, contract or
commitment, nor has any event or omission occurred which through the
passage of time or the giving of notice, or both, would constitute a
default thereunder or cause the acceleration of any of Seller's obligations
or result in the creation of any Lien on any of the assets owned, used or
occupied by Seller. No third party is in default under any lease, contract
or commitment to which Seller is a party, nor has any event or omission
occurred which, through the passage of time or the giving of notice, or
both, would constitute a default thereunder or give rise to an automatic
termination, or the right of discretionary termination, thereof.
4.26 Insurance.
---------
Set forth in Schedule 4.26 is a complete and accurate list of all
insurance policies. All of the policies are valid, outstanding, and enforceable
up to the Closing Date and provide insurance coverage for the properties,
assets, and operations of the Seller of the kinds, in the amounts, and against
risk customarily maintained by organizations similarly situated. Seller has duly
and timely made all claims it has been entitled to make under each policy of
insurance. There is no claim by Seller pending under any such policies, and
Seller does not know of any basis for denial for any claim under any such
policy.
5. Representations and Warranties of Buyer.
---------------------------------------
Buyer represents and warrants that the following representations and
warranties are true and correct as of the Closing Date.
5.1 Corporate Organization.
----------------------
Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware.
5.2 Authorization and Approval of Agreement.
---------------------------------------
Buyer has the right, power, legal capacity, and authority to enter
into and perform its obligations under this Agreement, and this Agreement
constitutes the valid and binding obligation of Buyer enforceable in accordance
with its terms. The execution, delivery, consummation, and performance of this
Agreement by Buyer has been duly authorized by all necessary corporate action on
the part of Buyer.
5.3 Accuracy of Representations and Warranties.
------------------------------------------
No representation or warranty made by Buyer in this Agreement and no
statement, certificate, exhibit, document, instrument, report or other
information furnished or to be furnished by Buyer in connection with the
negotiation of, or pursuant to, this Agreement, or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of material fact, or omits or will omit to state a material fact necessary to
make the statements contained herein or therein not misleading.
12
6. Employees - Employee Benefits.
-----------------------------
6.1 Affected Employees.
------------------
"Affected Employees" means employees of the Seller who are employed by
Buyer immediately after the Closing Date. Buyer has no obligation to hire any
employees of Seller.
6.2 Retained Responsibilities.
-------------------------
Seller will satisfy, or cause its insurance carriers to satisfy, all
claims for benefits, whether insured or otherwise (including, but not limited
to, workers' compensation, life insurance, medical and disability programs),
under Seller's employee benefit programs brought by, or in respect of, Affected
Employees and other employees and former employees of Seller, which claims arise
out of events occurring on or prior to the Closing Date, in accordance with the
terms and conditions of these programs or applicable workers' compensation
statutes regardless of the employment by Buyer of any these employees after the
Closing Date.
6.3 Payroll Tax.
-----------
Seller will make a clean cut-off of payroll and payroll tax reporting
with respect to the Affected Employees paying over to the federal, state, and
city governments those amounts respectively withheld or required to be withheld
for periods ending on or prior to the Closing Date. Seller will issue, by the
date prescribed by IRS Regulations, Forms W-2 for wages paid through the Closing
Date. Except as set forth in this Agreement, Buyer will be responsible for all
payroll and payroll tax obligations after the Closing Date for Affected
Employees.
6.4 Termination and Other Benefits.
------------------------------
Buyer is solely responsible for, and will pay or cause to be paid,
severance payments and other termination benefits, back pay, damages, costs or
expenses, if any, to Affected Employees who may become entitled to benefits or
amounts by reason of any events occurring after the Closing Date, and Buyer will
indemnify and hold harmless Seller against this liability. Seller is solely
responsible for, and will pay or cause to be paid, severance payments and other
termination benefits, if any, back pay, damages, costs or expenses to all of its
employees including, without limitation, any amounts payable as a result of
these employees' withdrawal from any pension and/or savings plans maintained by
Seller, which have accrued prior to and including the Closing Date, and Seller
will indemnify and hold harmless Buyer against this liability.
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7. Other Matters.
-------------
7.1 Access to Certain Records of Buyer.
----------------------------------
Buyer will maintain the records received pursuant to this Agreement
for a period of seven (7) years and will, during regular business hours and upon
reasonable prior notice, furnish reasonable access thereto to Seller for audit,
tax, accounting or legal purposes.
7.2 Availability of Affected Employees.
----------------------------------
For a period of two (2) years after the Closing Date, upon reasonable
prior notice from Seller, Buyer will use its reasonable best efforts to make
available to Seller any Affected Employees to serve as witnesses in any
litigation. Seller will promptly reimburse Buyer at 130% of the actual rate of
hourly compensation for the Affected Employee and will reimburse the Affected
Employees for their reasonable out-of-pocket costs and expenses.
8. Conditions to Closing.
---------------------
8.1 Compliance with Agreement.
-------------------------
(a) Condition to Buyer's Obligation. The following will be conditions
precedent to Buyer's obligation to close: Seller will have in all material
respects performed and complied with all of its agreements and obligations
under this Agreement which are to be performed or complied with by it prior
or on the Closing Date, including the delivery of the closing documents
specified in Section 9.1.
(b) Condition to Seller's Obligation. It will be a condition to the
obligation of Seller that Buyer will have in all material respects
performed and complied with all of its agreements and obligations under
this Agreement which are to be performed or complied with by it prior to or
on the Closing Date, including the delivery of the closing documents
specified in Section 9.2.
8.2 Satisfactory Investigation.
--------------------------
(a) Buyer will be satisfied, in its sole discretion (and without any
liability of Seller for a breach of the representations and warranties made
by it in this Agreement), with the condition and nature of the Purchased
Assets and the Assumed Contracts.
8.3 Absence of Litigation.
---------------------
(a) No litigation will have been commenced or threatened, and no
investigation by any government entity will have been commenced, against
Buyer, Seller or any of the affiliates, officers or directors of either of
them, with respect to the transactions contemplated hereby.
14
9. Documents Delivered at Closing.
------------------------------
9.1 Documents to be delivered by Seller.
-----------------------------------
In addition to the documents specifically required by the foregoing
provisions hereof, the obligations of Buyer hereunder are subject to the
delivery by Seller to Buyer on or prior to the Closing Date, of the following
documents:
(a) An Assignment and Xxxx of Sale sufficient to vest in Buyer, its
successors and assigns, all of Seller's right, title and interest in and to
the Purchased Assets attached as Exhibit A.
(b) An Assignment and Assumption Agreement relating to the Assumed
Liabilities attached as Exhibit B.
(c) Advance approval by agent of Bedminster Capital Funding, LLC,
Seller's landlord, as to assumption by Buyer of that certain lease between
Seller and the landlord dated as of October , 1997 and relating to the
property commonly known as 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxx,
Xxxxxxxx and attached as Exhibit C. A formal consent by Seller's landlord
will be furnished to Buyer within thirty (30) days after the closing date.
(d) Certificate of Secretary in substantially the same form as Exhibit
D.
(e) Physical possession of all Purchased Assets.
(f) Letter from Seller granting the right for Buyer to act as Seller's
agent on all contracts with customers listed on Schedule 4.13 not providing
their consent to the transactions contemplated under this Agreement.
(g) Fully executed employment agreements between Buyer and the
following seven key employees of Seller: Xxxxxx Xxxxxx, Xxxx XxXxxx, Xxxxx
Xxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxx Xxxxxxx, Xxxxxx Xxxxxxxxxx, and Xxxxxx
Xxxxxxxx.
9.2 Documents to be delivered by Buyer.
----------------------------------
The obligations of Seller hereunder are subject to the delivery by
Buyer to Seller on or prior to the Closing Date, of the following documents:
(a) An Assignment and Assumption Agreement attached as Exhibit B.
(b) The payment under Section 3.3(b).
15
10. Post-Closing Covenants.
----------------------
10.1 Post-Closing Covenants.
----------------------
At any time and from time to time after the Closing Date upon the
request of Buyer, Seller and its successors or assigns will execute,
acknowledge, and deliver to Buyer any further instruments of conveyance,
assignment, transfer, consents, and assurances and will take any other action as
Buyer may reasonably request in order to more effectively convey, assign,
transfer, and deliver any of the properties or assets intended to be conveyed,
assigned, transferred, and delivered under this Agreement, and assist in the
collection or reduction to possession of any of the properties and assets. This
covenant includes, without limitation, the obligation of Seller to assist Buyer
in obtaining all consents, approvals, and waivers from regulatory authorities
and all licenses, permits, and registrations necessary to operate the Business
and the obligation of Seller to promptly remit to Buyer any accounts receivable
from the Assumed Contracts that it receives in error.
10.2 Covenant Not to Compete.
-----------------------
For a period of three (3) years after this Agreement's date, Seller
may not for itself or on behalf of any other person or entity (except Buyer, at
Buyer's request), directly or indirectly:
(a) engage in, or enter into, any aspect of the business that
ITS-Technical Services has been involved in prior to the Closing Date
within the continental United States;
(b) solicit persons who have been customers or suppliers of the
Business during the period beginning three (3) years prior to the date of
this Agreement or who are, at the time of such solicitation, current or
prospective customers or suppliers of the Business or take any other action
the effect of which is to interfere with the business relationship between
the Business and such customers or suppliers; or
(c) hire persons who have been employees of Seller working in the
Business during the period beginning on the date of this Agreement, or
otherwise interfere with the relationship between the Business and any
persons.
11. Indemnification; Expenses.
-------------------------
11.1 Obligations of Seller to Indemnify.
----------------------------------
Seller will indemnify Buyer and hold it harmless upon demand from and
against any damages, deficiency, action, demands, judgments, costs, and expenses
of or against Buyer (including attorneys' fees) resulting from (a) any
misrepresentation, breach of warranty or non-fulfillment of any agreement,
covenant, or condition on the part of Seller contained herein or in any exhibit,
certificate, document, or instrument delivered hereunder or in connection
herewith, or (b) any claim for any debt, liability, or obligation of Seller that
may be asserted against Buyer
16
not specifically assumed by Buyer hereunder including, without limitation, any
claim arising in litigation or other proceeding relating to acts or omissions of
Seller occurring on or prior to the Closing Date.
11.2 Obligations of Buyer to Indemnify.
---------------------------------
Buyer will indemnify Seller and hold it harmless upon demand from and
against any damages, deficiency, action, demands, judgments, costs and expenses
of or against Seller (including attorneys' fees) resulting from (a) any
misrepresentation, breach of warranty or non-fulfillment of any agreement,
covenant or condition on the part of Buyer contained herein or in any exhibit,
certificate, document or instrument delivered hereunder or in connection
herewith, or (b) any claim for any debt, liability or obligation of Buyer that
may be asserted against Seller arising out of any liability specifically assumed
by Buyer hereunder, or arising in litigation or other proceeding relating to
acts or omissions of Buyer occurring after the Closing Date.
11.3 Amount Limitation.
-----------------
An Indemnified Party will not be entitled to indemnification under
this Section 11 for breach of a representation or warranty unless the aggregate
of the Indemnifying Party's indemnification obligations to the Indemnified Party
under this Section 11 exceeds twenty five thousand dollars ($25,000); but in
this event, the Indemnified Party will be entitled to indemnification in full
for all breaches of representations and/or warranties. An Indemnified Party will
be entitled to indemnification under this Section 11 for breach of a
representation or warranty of only up to an aggregate of the Purchase Price
actually paid.
11.4 Each Party to Bear Own Expenses.
-------------------------------
Regardless of whether or not the transactions contemplated hereby are
consummated:
(a) Professional Fees. Each party is solely responsible for all fees
and expenses of that party's legal, accounting, investment banking, and
other professional counsel or advisors employed in connection with this
Agreement.
(b) Transfer Taxes. Buyer is solely responsible for any sales, use,
excise, transfer, or other similar tax imposed on Seller with respect to
the transactions provided for in this Agreement, and any interest or
penalties related thereto and will coordinate the payment of the taxes with
Seller.
(c) Broker's and Finder's Fee. Each party is solely responsible for
all fees and expenses of the party for any broker or finder retained,
employed or used by the party in connection with the contemplated
transactions.
12. Specific Performance.
--------------------
The parties declare that it is impossible to measure in money the
damages that will accrue to a party by reason of the failure of a party to
perform any of its obligations under this Agreement. Therefore, if any party
institutes any action or proceeding to enforce the
17
provisions of this Agreement, the party against whom the action or proceeding is
brought hereby waives the claim or defense that the party has or may have an
adequate remedy at law and the party will not urge in any action or proceeding
the claim or defense that any remedy at law exists.
13. Miscellaneous Provisions.
------------------------
13.1 Survival.
--------
Except for any wilful or knowing breach or misrepresentation, as to
which claims may be brought without limitation as to time:
(a) No claim or action will be brought under Section 11 for breach of
a representation or warranty after the lapse of two (2) years following the
Closing Date. Regardless of the foregoing, however, or any other provisions
of this Agreement:
(i) There will be no time limitation on claims on actions brought
for breach of any representation or warranty made by Seller in or
under Sections 4.1, 4.2, and 4.12, and Seller hereby waives all
applicable statutory limitation periods with respect thereto.
(ii) Any claim or action brought for breach of any representation
or warranty made by Seller in or pursuant to Section 4.18 may be
brought at any time until the underlying obligation is barred by the
applicable period of limitation under federal and state laws relating
thereto (as such period my be extended by waiver).
(iii) If any act, omission, disclosure or failure to disclosure
forms the basis for a claim for breach of more than one representation
or warranty, and such claims have different periods of survival
hereunder, the termination of the survival period of one claim will
not affect a party's right to make a claim based on the breach of
representation or warranty still surviving.
18
13.2 Notices.
-------
All notices required under this Agreement are sufficient if in writing
and will be deemed given upon actual receipt (i) when personally delivered, (ii)
when mailed, certified mail, return receipt requested postage prepaid, (iii)
when sent by confirmed facsimile transmission, or (iv) when delivered by
reputable overnight courier, to the address of the party receiving the notice as
set forth below, or any other address as the party may designate by notice duly
given:
(a) If to Seller: ITS Ltd
00 Xxxxxxx Xxx
Xxxxxx X0X0XX, X.X.
Facsimile:441713963480
Telephone: 000000000000
Attention: Xxxxx Xxxxxx, Secy
With a copy, Bradley, Campbell, Xxxxxx & Xxxxxx
which will not 0000 Xxxxxxxxxx Xxxxxx
constitute notice, to: Xxxxxx, XX 00000
Facsimile: 000-000-0000
Telephone: 000-000-0000
Attention: Xxx Xxxxxxxx
(b) If to Buyer: Unitek Technical Services Inc.
c/o U. S. Laboratories, Inc.
0000 Xxxxxx Xxxxx, Xxxxx 00
Xxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attn: Xxxxxxxxx Xxxxxx
With a copy, Xxxxx & Lardner
which will not 000 Xxxx Xxxxxxxx, Xxxxx 0000
constitute notice, to: Xxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attn: Xxxxxx Xxxxx
13.3 Binding Effect.
--------------
This Agreement is binding on and will inure to the benefit of the
parties and their respective successors, assigns, heirs, administrators,
personal representatives and permitted assigns, and may not be assigned to any
third party without the prior written consent of the other parties. This
Agreement is solely for the benefit of the parties and no third party may have
any right or claim to the benefits afforded any party.
19
13.4 Applicable Law.
--------------
The rights and obligations of the parties to this Agreement are
governed by, construed, and enforced in accordance with the laws of the State of
Virginia applicable to agreements made and to be performed in the State of
Virginia. Each and every unresolved dispute between Seller and Buyer shall be
submitted to the American Arbitration Association in Virginia for arbitration.
13.5 Positions For Income Tax Purposes.
---------------------------------
Neither Seller nor Buyer may take a position for income tax purposes
that is inconsistent with this Agreement.
13.6 Public Announcements.
--------------------
Seller may not make any public announcements regarding the sale and
purchase under this Agreement without the prior written consent of Buyer.
13.7 Entire Agreement.
----------------
This Agreement and the agreements attached as exhibits contain the
entire agreement and understanding of the parties with respect to the subject
matter hereof, and no other representations, promises, agreements or
understandings regarding the subject matter hereof is of any force or effect
unless in writing, executed by the party to be bound, and dated on or subsequent
to the date hereof.
13.8 Modifications and Waivers.
-------------------------
No change, modification, or waiver of any provision of this Agreement
is valid or binding unless it is in writing dated on or subsequent to the date
hereof and signed by the parties intended to be bound. No waiver of any breach,
term, or condition of this Agreement by either party constitutes a subsequent
waiver of the same or any other breach, term or condition.
[The remainder of this page is intentionally left blank.]
20
SELLER:
Intertek, Inc.
By:____________________________________
Xxxx Xxxxx, Chairman
BUYER:
Unitek Technical Services Inc., a Delaware
corporation
By:____________________________________
Xxxxxx Xxxxxx, President
21
