EXHIBIT 2.1
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ASSET PURCHASE AGREEMENT
by and among
XXXXXX AUTOMATION, INC.,
GENERAL PRECISION, INC.,
GPI-XXXXXX, INC.,
NASR FAMILY TRUST DATED SEPTEMBER 7, 1999,
XXXXXXXX X. XXXX
and
XXXXX X. XXXX
October 5, 2001
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ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
PAGE
ASSET PURCHASE AGREEMENT..........................................................................................1
ARTICLE I. DEFINITIONS............................................................................................1
1.1 Definitions...........................................................................................1
ARTICLE II. PURCHASE AND SALE OF PURCHASED ASSETS.................................................................8
2.1 Purchased Assets......................................................................................8
2.2 Excluded Assets.......................................................................................9
2.3 Assumption of Liabilities.............................................................................9
2.4 Retained Liabilities.................................................................................10
2.5 Taxes; Documents of Assignment.......................................................................12
2.6 Other Documents; Further Assurances..................................................................13
ARTICLE III. AGGREGATE CONSIDERATION.............................................................................13
3.1 Aggregate Consideration and Payment..................................................................13
3.2 Determination of Closing Net Book Value; Adjustment of the Aggregate Consideration...................14
3.3 Allocation of Aggregate Consideration................................................................15
3.4 Escrowed Purchase Shares.............................................................................16
3.5 Regulation D.........................................................................................16
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE PRINCIPAL STOCKHOLDERS.........................16
4.1 Organization and Qualification of the Sellers........................................................16
4.2 Authority; No Violation..............................................................................17
4.3 Capitalization.......................................................................................18
4.4 Subsidiaries; Other Investments......................................................................19
4.5 Financial Statements.................................................................................19
4.6 Absence of Undisclosed Liabilities...................................................................19
4.7 Conduct of Business; Absence of Certain Changes......................................................20
4.8 Payment of Taxes.....................................................................................23
4.9 Title to Properties; Liens; Condition of Properties..................................................24
4.10 Collectibility of Receivables........................................................................25
4.11 Inventories..........................................................................................25
4.12 Intellectual Property Rights.........................................................................26
4.13 Contracts and Commitments............................................................................28
4.14 Employees............................................................................................32
4.15 Labor and Employee Relations.........................................................................32
4.16 Employee Benefits....................................................................................33
4.17 Environmental Matters................................................................................36
4.18 Government Authorizations/Compliance with Laws.......................................................37
4.19 Warranty or Other Claims.............................................................................38
4.20 Litigation...........................................................................................38
4.21 Borrowings and Guarantees............................................................................39
4.22 Insurance............................................................................................39
4.23 Corporate Books, Records and Accounts................................................................40
4.24 Finder's Fee.........................................................................................40
4.25 Transactions with Interested Persons.................................................................40
4.26 Absence of Sensitive Payments........................................................................41
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4.27 Investment Intent....................................................................................41
4.28 Restricted Securities................................................................................41
4.29 Payables.............................................................................................42
4.30 Disclosure of Material Information...................................................................42
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF BUYER...............................................................42
5.1 Organization of Buyer................................................................................42
5.2 Authorization of Transaction.........................................................................42
5.3 No Conflict of Transaction With Obligations and Laws.................................................42
5.4 Reports and Financial Statements.....................................................................43
5.5 Capitalization.......................................................................................44
5.6 Litigation...........................................................................................44
5.7 Disclosure of Material Information...................................................................44
ARTICLE VI. COVENANTS OF THE SELLERS.............................................................................44
6.1 Conduct of Business..................................................................................44
6.2 Access to Information................................................................................47
6.3 Governmental Permits and Approvals; Consents.........................................................47
6.4 Assignment of Contracts..............................................................................48
6.5 Maintenance of Government Authorizations.............................................................48
6.6 Collection of Receivables............................................................................48
6.7 Risk of Loss.........................................................................................48
6.8 Employee/Employee Compensation.......................................................................48
6.9 Breach of Representations and Warranties.............................................................48
6.10 Consummation of Agreement............................................................................49
6.11 Exclusivity..........................................................................................49
6.12 Deferred Revenues....................................................................................49
6.13 Change of Name.......................................................................................49
6.14 Certain Filings......................................................................................50
6.15 401(k) Issues........................................................................................50
ARTICLE VII. COVENANTS OF BUYER..................................................................................50
7.1 Reasonable Best Efforts..............................................................................50
7.2 Notices and Consents.................................................................................50
7.3 Breach of Representations and Warranties.............................................................50
7.4 Listing of Purchase Shares...........................................................................51
7.5 Registration of the Purchase Shares on Form S-3......................................................51
ARTICLE VIII. CONDITIONS TO OBLIGATIONS OF BUYER.................................................................53
8.1 Representations; Warrantees; Covenants...............................................................53
8.2 Lien Terminations....................................................................................54
8.3 Delivery of Financial Information....................................................................54
8.4 Certain Ancillary Agreements.........................................................................54
8.5 Nasr Agreements......................................................................................55
8.6 Noncompetition Agreements............................................................................55
8.7 Authorization from Others; Termination or Expiration of Waiting Period...............................55
8.8 Absence of Certain Litigation........................................................................55
8.9 No Bankruptcy........................................................................................56
8.10 Opinion of Counsel for the Sellers...................................................................56
8.11 Fairness Opinion.....................................................................................56
8.12 Payment of Indebtedness..............................................................................56
8.13 No Material Adverse Effect...........................................................................56
8.14 Approval of Buyer's Counsel..........................................................................56
ARTICLE IX. CONDITIONS TO OBLIGATIONS OF THE SELLERS.............................................................57
9.1 Representations; Warrantees; Covenants...............................................................57
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9.2 Certain Ancillary Documents..........................................................................57
9.3 Governmental Consents and Approvals; Termination or Expiration of HSR Waiting Period.................57
9.4 Absence of Certain Litigation........................................................................57
9.5 No Bankruptcy........................................................................................58
9.6 Opinion of Buyer's Counsel...........................................................................58
9.7 Instructions to Transfer Agent.......................................................................58
ARTICLE X. INDEMNIFICATION.......................................................................................59
10.1 Indemnification by the Sellers and Principal Stockholders............................................59
10.2 Indemnification by Buyer.............................................................................62
10.3 Defense of Third Party Actions.......................................................................63
10.4 Miscellaneous........................................................................................63
10.5 Payment of Indemnification...........................................................................64
ARTICLE XI. TERMINATION OF AGREEMENT.............................................................................64
11.1 Termination..........................................................................................64
11.2 Termination by the Buyer.............................................................................64
11.3 Termination by the Sellers...........................................................................65
11.4 Procedure for Termination............................................................................65
11.5 Effect of Termination................................................................................65
11.6 Right to Proceed.....................................................................................65
ARTICLE XII. MISCELLANEOUS.......................................................................................66
12.1 Survival of Warranties...............................................................................66
12.2 Fees and Expenses....................................................................................66
12.3 Notices..............................................................................................66
12.4 Publicity and Disclosures............................................................................67
12.5 Confidentiality......................................................................................68
12.6 Entire Agreement.....................................................................................68
12.7 Severability.........................................................................................68
12.8 Assignability........................................................................................69
12.9 Amendment............................................................................................69
12.10 Governing Law; Venue.................................................................................69
12.11 Remedies.............................................................................................69
12.12 Counterparts.........................................................................................70
12.13 Effect of Table of Contents and Headings.............................................................70
12.14 Interpretation.......................................................................................70
12.15 Disposition of Purchase Shares.......................................................................70
12.16 Product Warranty/Liability...........................................................................70
List of Schedules and Exhibits................................................................................73
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "AGREEMENT") dated as of October 5,
2001, is entered into by and among Xxxxxx Automation, Inc., a Delaware
corporation (the "BUYER"), General Precision, Inc., a California corporation
(the "GPI COMPANY"), GPI-Xxxxxx, Inc., a California corporation (the "XXXXXX
COMPANY"), the Nasr Family Trust formed pursuant to the Declaration of Trust of
Xxxxxxxx X. Xxxx and Xxxxx X. Xxxx dated September 7, 1999, a trust formed under
the laws of the State of California (the "TRUST"), Xxxxxxxx X. Xxxx and Xxxxx X.
Xxxx.
This Agreement, including the exhibits and schedules hereto, sets forth the
terms and conditions upon which the Buyer or one or more Subsidiaries of the
Buyer will, in exchange for a total of 850,000 (subject to adjustment) shares of
Buyer Common Stock, acquire substantially all of the assets of the Sellers and
assume certain identified liabilities of the Sellers.
In consideration of the mutual representations, warranties and covenants
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I. DEFINITIONS
1.1. DEFINITIONS. For the purposes of this Agreement and, unless otherwise
set forth therein, for the purposes of all schedules and exhibits to this
Agreement, all capitalized words or expressions used in this Agreement
(including the schedules and exhibits annexed thereto) shall have the meanings
specified in this Article I (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
"ACQUISITION TRANSACTION" means any merger, consolidation or other business
combination involving either of the Sellers, acquisition of any portion of the
Purchased Assets except in the ordinary course of business and consistent with
past practices, acquisition of capital stock of either of the Sellers, or
inquiries or proposals concerning, or which could reasonably be expected to lead
to, any of the foregoing.
"AFFILIATE" means a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the other Person in question.
"AGGREGATE CONSIDERATION" is defined in Section 3.1(a) hereof.
"AGREEMENT" is defined in the preamble hereof.
"ANCILLARY DOCUMENTS" means all of the documents or agreements entered into
or executed in conjunction with the execution, delivery and performance of this
Agreement, including, but not limited to, those documents and agreements
referenced in Sections 8.4, 8.5, 8.6 and 9.2 hereof.
"ASSUMED LIABILITIES" is defined in Section 2.3 hereof.
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"BALANCE PURCHASE SHARES" is defined in Section 3.1(b)(iii) hereof.
"BASE BALANCE SHEET" means the audited consolidated balance sheet of the
Sellers as of June 30, 2001.
"BASE BALANCE SHEET DATE" is defined in Section 4.5(b) hereof.
"BASE NET BOOK VALUE" is defined in Section 3.2(a) hereof.
"BASKET" is defined in Section 10.1(b) hereof.
"BUYER" is defined in the preamble hereof.
"BUYER COMMON STOCK" means shares of Buyer's common stock, par value $.01
per share.
"BUYER FINANCIAL STATEMENTS" is defined in Section 5.4 hereof.
"BUYER PURCHASE RIGHT" means an associated preferred stock purchase right
pursuant to the Rights Agreement, as amended, between the Buyer and the Rights
Agent named therein.
"BUYER'S BASKET" is defined in Section 10.2(c) hereof.
"BUYER'S INDEMNIFIED PERSONS" means the Buyer, its parent, Subsidiaries,
Affiliates, their respective present and former directors, officers, employees,
stockholders, representatives and agents.
"BUYER REPORTS" is defined in Section 5.4 hereof.
"CLOSING" means the closing of the transactions contemplated herein, which
shall be held at the offices of Brown, Rudnick, Freed & Gesmer, Xxx Xxxxxxxxx
Xxxxxx, Xxxxxx, XX 00000 at 10:00 a.m., on October [ ], 2001 or at such other
place, date or time as may be fixed by mutual agreement of the parties (the
"CLOSING DATE").
"CLOSING BALANCE SHEET" is defined in Section 3.2(a) hereof.
"CLOSING DATE" is defined in the definition of "Closing."
"CLOSING NET BOOK VALUE" is defined in Section 3.2(a) hereof.
"CLOSING STATEMENT" is defined in Section 3.2(a) hereof.
"CODE" means the Internal Revenue Code of 1986, as amended, or any
successor law.
"CONFIDENTIAL INFORMATION" is defined in Section 12.5 hereto.
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"CONSTITUENT DOCUMENTS" means the certificate of incorporation, articles of
incorporation, articles of organization, agreement of association, by-laws
and/or equivalent documents pursuant to which a corporation is organized and
operates under its governing law.
"CONTRACT" means any agreement, contract, obligation, promise, commitment
or undertaking (whether written or oral), other than those that have been
terminated.
"COPYRIGHTS" as defined in the definition of "Intellectual Property
Assets."
"COURT ORDER" means court order, judgment, administrative or judicial
order, writ, decree, stipulation, arbitration award or injunction.
"CUSTOMER CONTRACTS" is defined in Section 2.1(b) hereof.
"DEFERRED AMOUNT" is defined in Section 6.12 hereof.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as defined in
Section 3(3) of ERISA and any other plan, policy, program, practice, agreement,
understanding or arrangement (whether written or oral) providing compensation or
other benefits (other than ordinary cash compensation) to any current or former
director, officer, employee or consultant (or to any dependent or beneficiary
thereof), of either of the Sellers or any of their Subsidiaries, which are now,
or were within the past three years, maintained by either of the Sellers or any
of their Subsidiaries, or under which either of the Sellers or any of their
Subsidiaries has or could have any obligation or liability, whether actual or
contingent, including, without limitation, all incentive, bonus, deferred
compensation, vacation, holiday, cafeteria, medical, disability, stock purchase,
stock option, stock appreciation, phantom stock, restricted stock or other
stock-based compensation plans, policies, programs, practices or arrangements.
"ENCUMBRANCE" means any mortgage, charge, claim, community property
interest, equitable interest, lien, option, pledge, security interest, right of
first refusal or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income or exercise of any other attribute of
ownership; and the verb "Encumber" shall be construed accordingly.
"ENVIRONMENTAL LAWS" means Laws, Court Orders and Government Authorizations
concerning the environment, or activities that might threaten or result in
damage to the environment or human health, or any Laws, Court Orders and
Government Authorizations that are concerned, in whole or in part, with: (1) the
environment and with protecting or improving the quality of the environment and
human and employee health and safety issues; or (2) the management of pollution
or Hazardous Materials, including, but not limited to, the: (a) Comprehensive
Environmental Response, Compensation and Liability Act; (b) Resource
Conservation and Recovery Act; (c) Clean Air Act; (d) Clean Water Act; (e) Toxic
Substances Control Act; (f) Emergency Planning and Community Right-to-Know Act
of 1986; (g) Hazardous Materials Transportation Act; (h) Federal Water Pollution
Control Act; and (i) the Federal Insecticide, Fungicide and Rodenticide Act, as
such laws have been amended or supplemented, and the regulations promulgated
pursuant thereto, and any and all analogous state
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or local statutes, and the regulations promulgated pursuant thereto, or any
successor laws and any similar laws, rules, or regulations.
"ENVIRONMENTAL SITE" means any properties or facilities currently or
formerly owned or leased by either of the Sellers, or, to the best knowledge of
either of the Sellers or the Principal Stockholders, any current or former
Affiliates or predecessors-in-interest of either of the Sellers.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor law.
"ERISA AFFILIATE" is defined in Section 4.16(d) hereof.
"ESCROW" is defined in Section 3.4 hereof.
"ESCROW AGENT" is defined in Section 3.4 hereof.
"ESCROWED PURCHASE SHARES" is defined in Section 3.1(b) hereof.
"EXCLUDED ASSETS" is defined in Section 2.2 hereof.
"FULL REMEDY PRODUCT LIABILITY CLAIMS" is defined in Section 2.4(f) hereof.
"GOVERNMENTAL AUTHORITY" means any court, tribunal, authority, agency,
commission, bureau, department, official or other instrumentality of the United
States, any foreign county or any domestic, foreign, state, local, county, city
or other political subdivision.
"GOVERNMENT AUTHORIZATIONS" means any license, permit, order, franchise
agreement, concession, grant, authorization, consent or approval from a
Government Authority.
"GPI 401(K) PLAN" is defined in Section 6.16 hereof.
"GPI COMPANY" is defined in the preamble hereof.
"GPI EMPLOYEES" is defined in Section 6.8(b) hereof.
"GPI HEALTH CONTRACT" is defined in Section 2.4(h) hereof.
"XXXX-XXXXX-XXXXXX ACT" is defined in Section 5.3(b) hereof.
"HAZARDOUS MATERIALS" means any substance, material or waste which is
regulated by an Environmental Law, including, without limitation, any material
or substance which is defined as a "hazardous waste," "hazardous material,"
"hazardous substance," "extremely hazardous waste" or "restricted hazardous
waste," "subject waste," "contaminant," "toxic waste" or "toxic substance" under
any provision of Environmental Law, including, but not limited to, petroleum
products, asbestos and polychlorinated biphenyls.
"HOLDBACK SHARES" is defined in Section 3.1(b) hereof.
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"INCOMPLETE REMEDY PRODUCT LIABILITY CLAIMS" is defined in Section 2.4(g)
hereof.
"INDEMNIFIED PERSON" means any person entitled to be indemnified under
Article X hereof.
"INDEMNIFYING PERSON" means any person obligated to indemnify another
person under Article X hereof.
"INDEPENDENT CPA" means Deloitte & Touche, LLP.
"INTELLECTUAL PROPERTY ASSETS" means all worldwide intellectual property
rights including without limitation: (a) all trademarks, service marks, trade
names, common law trademarks, business names, Internet domain names and
addresses, trade dress, slogans, and all registrations or applications therefor,
and the goodwill associated therewith (collectively, "MARKS"); (b) all patents,
patent applications and inventions and discoveries that may be patentable,
including any patents issuing therefrom, and any reissues, reexaminations,
divisions, continuations in whole or in part, extensions and foreign
counterparts thereof (collectively, "Patents"); (c) all copyrights in both
published works and unpublished works, including training manuals, marketing and
promotional materials, internal reports, business plans, mask works, software,
programs and related documentation, and videos and any other expressions,
whether registered or unregistered, and all registrations or applications in
connection therewith (collectively, "COPYRIGHTS"); and (d) all trade secrets,
know-how, confidential information, customer lists, sales and marketing
information, technical information and documentation (which reproduce the types
of information otherwise listed in the definition of Trade Secrets herein),
proprietary information, technologies, designs, procedures, processes and
formulae, source code, algorithms, architecture, structure, display screens and
development tools, data, patterns, plans, designs, drawings, models and blue
prints, specifications, flow sheets, equipment and parts lists, whether tangible
or intangible and whether stored, compiled, or memorialized physically,
electronically, photographically, or otherwise, and all descriptions and related
instructions, manuals, data, records and procedures related thereto
(collectively, "TRADE SECRETS"); owned, used or licensed by either of the
Sellers as licensee or licensor and that are used in or material to the conduct
of their business as it is currently conducted or as proposed to be conducted.
"KEY EMPLOYEES" is defined in Section 6.8(b) hereof.
"LAWS" means all statutes, laws, ordinances, rules and regulations issued
by any Government Authority.
"LIABILITIES" means all the actual or contingent liabilities of each of the
Sellers existing at the time of the Closing or any such liabilities incurred as
a direct result of the Closing.
"LIENS" means, with respect to any asset, any mortgage, deed of trust,
pledge, hypothecation, assignment, security interest, lien, charge, restriction,
adverse claim by a third party, title defect or encumbrance of any kind
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any assignment or other conveyance of any right to receive
income and any assignment of receivables with recourse against assignor), any
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filing of any financing statement as debtor under the Uniform Commercial Code or
comparable law of any jurisdiction and any agreement to give or make any of the
foregoing.
"LOSSES" means all losses, damages (including, without limitation, punitive
and consequential damages and lost profits, lost revenues and opportunity
costs), fines, penalties, payments, obligations and all liabilities and all
expenses related thereto incurred by an Indemnified Person. Losses shall include
any reasonable legal fees and costs incurred by any of the Indemnified Persons
subsequent to the Closing in defense of or in connection with any alleged or
asserted liability, payment or obligation, whether or not any liability or
payment, obligation or judgment is ultimately imposed against the Indemnified
Persons and whether or not the Indemnified Persons are made or become parties to
any such action.
"MARKS" is defined in the definition of "Intellectual Property Assets."
"MATERIAL ADVERSE EFFECT" means a material adverse change in the business,
operations, properties, assets, liabilities, results of operations or condition
(financial or otherwise) of the Buyer and its Subsidiaries considered as a
single enterprise, or the Sellers and their Subsidiaries considered as a single
enterprise (as applicable).
"MATERIAL PERSONAL PROPERTY" is defined in Section 4.9(b) hereof.
"MATERIAL REAL PROPERTY" is defined in Section 4.9(a) hereof.
"XXXXXX COMPANY" is defined in the preamble hereof.
"PATENTS" is defined in the definition of "Intellectual Property Assets."
"PENSION PLAN" is defined in Section 4.16(h) hereof.
"PERSON" means any individual, firm, partnership, association, trust,
corporation, limited liability company, governmental body or other entity.
"PRINCIPAL STOCKHOLDERS" means: (a) the Trust; and (b) Xxxxxxxx X. Xxxx and
Xxxxx X. Xxxx, both individually and as Trustees and beneficiaries of the Trust.
"PROCEEDING" means any pending formal or informal claim, action,
investigation, arbitration, litigation or other judicial, regulatory or
administrative proceeding.
"PURCHASE SHARES" means 850,000 (subject to adjustment) shares of Buyer
Common Stock to be delivered as payment for the Purchased Assets in accordance
with Sections 3.1 and 3.2 hereof.
"PURCHASED ASSETS" is defined in Section 2.1 hereof.
"RECEIVABLES" is defined in Section 4.10 hereof.
"REGISTRATION STATEMENT" is defined in Section 7.5(a) hereof.
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"REGULATION D" is defined in Section 3.5 hereof.
"RELATED PERSON" is defined in Section 4.25 hereof.
"RESOLUTION PERIOD" is defined in Section 3.2(d) hereof.
"RETAINED LIABILITIES" is defined in Section 2.4 hereof.
"RETURNS" is defined in Section 4.8(a) hereof.
"REVIEW PERIOD" is defined in Section 3.2(b) hereof.
"RULE 144" is defined in Section 4.28 hereof.
"SEC" means the U.S. Securities and Exchange Commission.
"SANTA XXXXX LEASE" is defined in Section 2.1(i) hereof.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLERS" means the GPI Company and the Xxxxxx Company, collectively.
"SELLERS' AUDITED FINANCIAL STATEMENTS" is defined in Section 4.5(a)
hereof.
"SELLERS' INDEMNIFIED PERSONS" means each of the GPI Company, the Xxxxxx
Company, their Subsidiaries and Affiliates and their respective present and
former directors, officers, employees, stockholders, representatives and agents,
including, but not limited to the Principal Stockholders.
"SELLERS' INSURANCE" is defined in Section 12.16 hereof.
"SELLERS' IP REPRESENTATIVES" is defined in Section 4.12(i) hereof.
"SUBSIDIARY" means with respect to any Person, any corporation, joint
venture, limited liability company, partnership, association or other business
entity of which more than 50% of the total voting power of stock or other equity
entitled to vote generally in the election of directors or managers or
equivalent persons thereof is owned or controlled, directly or indirectly, by
such Person.
"TAXES" (including, with correlative meaning, the terms "Tax" and
"Taxable") means all income, profit, franchise, gross receipts, sales, use, real
property, personal property, ad valorem, excise, value added, alternative
minimum, employment, payroll, social security and withholding taxes, severance,
stamp, gains, transfer, license, documentary, customs, occupation,
environmental, windfall, and other taxes, duties, or assessments of any kind
whatsoever, and any interest or fines, and any and all penalties and additions
relating to such amounts, imposed by any Governmental Authority (a "TAX
AUTHORITY").
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"THIRD PARTY ACTION" means any written assertion of a claim, or the
commencement of any action, suit, or proceeding, by a third party as to which
any Person believes it may be an Indemnified Person hereunder.
"TRADE SECRETS" is defined in the definition of "Intellectual Property
Assets."
"TRANSFER" is defined in Section 7.5(i) hereof.
"TRANSFER TAX RETURNS" is defined in Section 2.5(a) hereof.
"TRUST" is defined in the preamble hereto.
"US GAAP" means generally accepted accounting principles in the United
States of America, applied on a basis consistent with past practices.
ARTICLE II. PURCHASE AND SALE OF PURCHASED ASSETS
2.1. PURCHASED ASSETS. Subject to the provisions of this Agreement and
except as expressly excluded in Section 2.2 below, the Sellers agree to sell and
the Buyer agrees to purchase, at the Closing, all of the properties, assets and
business of the Sellers of every kind and description, tangible and intangible,
real, personal or mixed, and wherever located, including, without limitation,
all assets shown or reflected on the Base Balance Sheet and all of the Sellers'
good will and the exclusive right to use the names of the Sellers as all or part
of a trade or corporate name. The assets, property and business of the Sellers
to be sold to and purchased by the Buyer under this Agreement are hereinafter
sometimes referred to as the "PURCHASED ASSETS." The Purchased Assets include,
but are not limited to, the following assets and business of Sellers:
(a) all of the Receivables, machinery and equipment and other assets
shown on the Base Balance Sheet plus any assets listed on SCHEDULE 2.1(a) hereto
and any assets owned by the Sellers which previously have been written off, with
only such changes with respect to such Receivables as have occurred since the
date of the Base Balance Sheet and such changes to such machinery, equipment and
other assets as have occurred in the ordinary course of the Sellers consistent
with past practice since the date of the Base Balance Sheet;
(b) all rights and interests of the Sellers in and to executory
contracts, commitments, plans, agreements, understandings, licenses and personal
property leases, other than in respect of any Retained Liability, including,
without limitation, those listed on SCHEDULE 2.1(b) hereto (the "CUSTOMER
CONTRACTS");
(c) all rights and interests of the Sellers in and to customer
purchase orders;
(d) (i) all of the GPI Company's books, records and accounts,
correspondence and any confidential information relevant to the operation of its
business which has been reduced to writing (which may be provided on computer
disks, tape or comparable media), including, but not limited to, engineering
records, purchase and sales records since January 1, 1998, production
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flow chart records; credit records since January 1, 1998, copies of accounting
records, and customer and vendor lists and records since January 1, 1998 and
personnel records, payroll records and employee benefit summaries; and (ii) all
of the Xxxxxx Company's books, records and accounts, correspondence and any
confidential information relevant to the operation of its business which has
been reduced to writing (which may be provided on computer disks, tape or
comparable media), including, but not limited to, engineering records, purchase
and sales records since April 5, 2001, production flow chart records; credit
records since April 5, 2001, copies of accounting records, and customer and
vendor lists and records since April 5, 2001 and personnel records, payroll
records and employee benefit summaries;
(e) all of Sellers' rights, title and interest in and to the
Intellectual Property Assets and agreements concerning such Intellectual
Property Assets including, without limitation, those listed on SCHEDULE 4.12(b)
hereof;
(f) all of Sellers' right, title and interest in, to and under
third-party manufacturers' warranties, other than in respect to any Retained
Liabilities;
(g) any and all of the Sellers' Government Authorizations to the
extent that the same are transferable; and
(h) all of the GPI Company's right, title and interest in the American
Industrial Real Estate Association Standard Industrial/Commercial Single-Tenant
Lease - Net dated October 13, 2000 by and between F&W Investment Co. and the GPI
Company for the premises located at 0000 Xxxxxxx Xxxx Xxxxx, Xxxxx Xxxxx, XX
(the "SANTA XXXXX LEASE").
2.2. EXCLUDED ASSETS. The following assets shall be excluded from the
Purchased Assets (collectively, the "EXCLUDED ASSETS"):
(a) assets and property disposed of since the date of the Base Balance
Sheet in the ordinary course of business and such other assets as have been
disposed of pursuant to this Agreement;
(b) the Sellers' corporate franchise, stock record books, corporate
record books containing minutes of meetings of directors and stockholders and
such other records as have to do exclusively with the Sellers' organization or
stock capitalization;
(c) the GPI Company's capital stock ownership in the Xxxxxx Company;
(d) all real property owned or leased by either of the Sellers,
provided however, that the GPI Company shall assign the Santa Xxxxx Lease to the
Buyer; and
(e) all of the Sellers' cash and cash equivalents.
2.3. ASSUMPTION OF LIABILITIES. Upon the sale and purchase of the Purchased
Assets, the Buyer shall assume, pay, perform or discharge when due those
liabilities and obligations of the
Page 9
Sellers set forth below to the extent existing as of the Closing or subsequent
thereto (the "ASSUMED LIABILITIES"). The Assumed Liabilities shall consist only
of the following:
(a) all the liabilities of the Sellers shown on the Base Balance Sheet
which are outstanding at the time of the Closing, except to the extent such
liabilities are Retained Liabilities (as defined below); and
(b) all liabilities and obligations incurred by the Sellers in the
ordinary course of business and consistent with the terms hereof since the date
of the Base Balance Sheet which are outstanding at the time of the Closing,
including payroll obligations incurred by the Sellers during the period of
September 15, 2001 through the Closing Date in an amount not to exceed $200,000,
except to the extent such liabilities are Retained Liabilities (as defined
below).
The assumption of Assumed Liabilities by the Buyer hereunder shall be treated as
independent of the Buyer's existing business and shall not enlarge any rights of
third parties under contracts or arrangements with the Buyer or the Sellers or
any of their respective Subsidiaries. Nothing herein shall prevent the Buyer
from contesting in good faith any of the Assumed Liabilities.
2.4. RETAINED LIABILITIES. Except to the extent expressly assumed pursuant
to Section 2.3 above, the Buyer does not assume and shall not be liable for any
debt, obligation, responsibility or liability of the Sellers, or any Affiliate
of the Sellers, or any claim against any of the foregoing, whether known or
unknown, contingent absolute or otherwise (collectively, the "RETAINED
LIABILITIES"). Without limiting the foregoing sentence, the Buyer shall have no
responsibility with respect to the following, whether or not disclosed in the
Base Balance Sheet or a schedule hereto:
(a) any liabilities and obligations related to or arising from
transactions among any or all of the Sellers, the Principal Stockholders or any
Affiliate of either of the Sellers;
(b) any liabilities and obligations for Taxes of any kind arising
before the Closing, including Taxes related to or arising from the transfers
contemplated hereby (except as set forth in Section 2.5(a) hereof);
(c) any liabilities and obligations for damage or injury to person or
property based upon events occurring prior to the Closing Date;
(d) any liabilities and obligations to present and/or former employees
of either of the Sellers, whether for accident, disability, or workers
compensation insurance or benefits, benefits under employee benefit plans
(except for liabilities and obligations arising after the Closing Date and
assumed by the Buyer under the GPI Health Contract (as defined below)), back
pay, accrued vacation, or obligations related to or resulting from severance of
employment by either of the Sellers or the consummation by the Sellers of the
transactions contemplated hereby;
(e) any workmen's liens on any of the Purchased Assets;
(f) any liabilities and obligations of the Sellers to customers or
third parties in connection with their business with respect to shortages and
defects in goods, including, but not
Page 10
limited to, liabilities and obligations for product warranty and product
liability claims, delivered to customers or in transit to customers prior to the
Closing or placed in finished goods inventory prior to the Closing and shipped
to customers after the Closing (provided such goods shipped after the Closing
are identifiable), which liabilities and obligations, if resulting in damage,
will be remedied in whole solely by replacing the goods in question
(collectively, "FULL REMEDY PRODUCT LIABILITY CLAIMS");
(g) any liabilities and obligations of the Sellers to customers or
third parties in connection with their business with respect to shortages and
defects in goods, including, but not limited to, any liabilities and obligations
for product warranty and product liability claims, delivered to customers or in
transit to customers prior to the Closing or placed in finished goods inventory
prior to the Closing and shipped to customers after the Closing (provided such
goods shipped after the Closing are identifiable), which liabilities and
obligations, if resulting in damage, will not be remedied in whole by replacing
the goods in question (collectively, "INCOMPLETE REMEDY PRODUCT LIABILITY
CLAIMS");
(h) any liability under any Employee Benefit Plan, except for those
liabilities arising after the Closing Date associated with the Group Agreement
(Purchaser ID No. 226250; Contract ID No. 1.4) by and between the GPI Company
and Xxxxxx Permanente (the "GPI HEALTH CONTRACT");
(i) any liability relating to government grants, subsidies or other
assistance including, without limitation, any liability for reimbursement to a
Governmental Authority for any research and development grants, subsidies or
assistance previously paid by the Governmental Authority relating to or arising
out of either of the Sellers' business;
(j) liabilities incurred by the Sellers in connection with this
Agreement and the transactions provided for herein, including counsel and
accountant's fees, filing fees and expenses related to the Sellers' performance
of their obligations hereunder;
(k) liabilities of the Sellers with respect to any options, warrants,
agreements or convertible or other rights to acquire any shares of their capital
stock of any class;
(l) the following judgment liens: (i) Xxxxxxx Xxxxx, dba Collection
Network x. Xxxxxxxx X. Xxxx & Xxxxx X. Xxxx Family Trust; Xxxxxxxx X. Xxxx;
Xxxxx X. Xxxx; General Precision, Inc., a corporation, Judgment entered December
14, 2000 in Superior Court of California, Los Angeles County, Los Cerritos
Justice District, for $4,732.00; and (ii) Automation Controls v. General
Precision, Inc., Judgment entered March 9, 2001 in Superior Court of California,
Los Angeles County, North Valley District-Newhall, for $1,737.88. Notice of Lien
issued May 29, 2001;
(m) payroll obligations incurred by the Sellers during the period of
September 15, 2001 through the Closing Date in excess of $200,000;
(n) Deed of Trust, Assignment of Rents and Fixture Filing by and
between Xxxxxxxx X. Xxxx, Xxxxx X. Xxxx, Trustees of the Nasr Family Trust dated
September 7, 1999 as
Page 11
Trustor, and Equitable Deed Company, as Trustee, for the benefit of Bank of
America, N.A. dated May 8, 2000; and
(o) $250,000 of professional fees accrued on the Base Balance Sheet.
2.5. TAXES; DOCUMENTS OF ASSIGNMENT.
(a) The Sellers and the Principal Stockholders shall be solely
responsible (jointly and severally) for all Taxes required by any Governmental
Authority in any relevant jurisdiction which arise out of or result from the
sale of the Purchased Assets or the receipt of the Aggregate Consideration,
provided however, that the Buyer shall reimburse the Sellers' sales taxes paid
by them in connection with the transactions contemplated by this Agreement in an
amount not to exceed $300,000. In addition, the Sellers and Principal
Stockholders shall, at their own expense, properly complete, sign, and timely
file any and all required Returns ("TRANSFER TAX RETURNS") and, if required by
applicable law, the Buyer will join in the execution of any such Transfer Tax
Returns.
(b) At the Closing, each of the Sellers shall deliver or cause to be
delivered to the Buyer good and sufficient instruments of transfer transferring
to the Buyer or its designee title to all the Purchased Assets sold by that
Seller. Such instruments of transfer: (i) shall be in the form and will contain
the warranties, covenants and other provisions (not inconsistent with the
provisions hereof) which are usual and customary for transferring the type of
property involved under the laws of the jurisdictions applicable to such
transfers; (ii) shall be in form and substance reasonably satisfactory to
counsel for the Buyer; and (iii) shall effectively vest in the Buyer good and
marketable title to all the Purchased Assets, free and clear of all Liabilities,
Liens or Encumbrances not specifically assumed by the Buyer or its designee
hereunder.
(c) At the Closing, each of the Sellers shall deliver or cause to be
delivered to the Buyer or its designee all of that Seller's Contracts included
among the Purchased Assets, with such assignments thereof and consents to
assignments as are necessary to assure the Buyer of the full benefit of the
same. Each of the Sellers shall also deliver to the Buyer or its designee at the
Closing copies of all of that Seller's business records, tax returns, books and
other data relating to the Purchased Assets, and the business and operations
(except the Excluded Assets) of each of the Sellers and shall take all requisite
steps to put the Buyer in actual possession and operating control of the
Purchased Assets under its control. After the Closing, the Buyer shall afford to
each of the Sellers, the Principal Stockholders and their accountants and
attorneys reasonable access to the books and records of the Sellers delivered to
the Buyer under this Section 2.5 and shall permit the Sellers to make extracts
and copies therefrom for the purpose of preparing such tax returns of the
Sellers as may be required after the Closing and for other proper purposes
approved by the Buyer.
Page 12
2.6. OTHER DOCUMENTS; FURTHER ASSURANCES.
(a) At the Closing, each of the Sellers and the Principal Stockholders
shall deliver or cause to be delivered to the Buyer such other documents as may
be required by any Ancillary Agreement.
(b) Each of the Sellers and the Principal Stockholders from time to
time after the Closing at the request of the Buyer and without further
consideration shall execute and deliver further instruments of transfer and
assignment and take such other action as the Buyer may reasonably require to
more effectively transfer and assign to, and vest in, the Buyer each of the
Purchased Assets. To the extent that the assignment of any lease, contract,
commitment or right shall require the consent of other parties thereto, this
Agreement shall not constitute an assignment thereof; however, each of the
Sellers and the Principal Stockholders shall use his, her or its reasonable best
efforts before and after the Closing to obtain any necessary consents or waivers
to assure the Buyer of the benefits of such leases, contracts, commitments or
rights. If such consent is not obtained, the Sellers and the Principal
Stockholders agree to cooperate with the Buyer in any reasonable arrangement
designed to provide for the Buyer the benefits thereunder, including, but not
limited to, having: (i) the Buyer act as agent for the Sellers and/or the
Principal Stockholders; and (ii) the Sellers and/or the Principal Stockholders
enforce for the benefit of the Buyer any and all rights of the Sellers and/or
the Principal Stockholders against the other party thereto arising out of the
cancellation by such other party or otherwise. Each of the Sellers and the
Principal Stockholders shall cooperate with the Buyer to permit the Buyer to
enjoy each of the Sellers' rating and benefits under the xxxxxxx'x compensation
laws and unemployment compensation laws of applicable jurisdictions, to the
extent permitted by such laws. Nothing herein shall be deemed a waiver by the
Buyer of its right to receive at the Closing an effective assignment of each of
the leases, contracts, commitments or rights of the Sellers.
ARTICLE III. AGGREGATE CONSIDERATION
3.1. AGGREGATE CONSIDERATION AND PAYMENT.
(a) Subject to the adjustment contained in Section 3.2 below, the
aggregate consideration to be paid by the Buyer to the Sellers (the "AGGREGATE
CONSIDERATION") in consideration of the sale of the Purchased Assets shall be
equal to:
(i) the aggregate amount of the Assumed Liabilities as of the
Closing; and
(ii) 850,000 (subject to adjustment) shares of Buyer Common Stock
(the "PURCHASE SHARES").
(b) The Aggregate Consideration shall be paid by Buyer as follows:
(i) 85,000 of the Purchase Shares shall be delivered to the
Escrow Agent promptly after the Closing Date under the
Escrow Agreement as provided by Section 3.4 below (the
"ESCROWED PURCHASE SHARES");
Page 13
(ii) 25,000 of the Purchase Shares (the "HOLDBACK SHARES")
shall be reserved for issuance by the Buyer pending
adjustment in accordance with Section 3.2 below; and
(iii) 740,000 of the Purchase Shares (the "BALANCE PURCHASE
SHARES") shall be delivered to the Sellers promptly after
the Closing Date.
3.2. DETERMINATION OF CLOSING NET BOOK VALUE; ADJUSTMENT OF THE AGGREGATE
CONSIDERATION.
(a) Not later than fourteen (14) days after the Closing Date, the
Sellers shall prepare and deliver to the Buyer: (i) a balance sheet (the
"CLOSING BALANCE SHEET") which shall reflect the book value of both the
Purchased Assets and the Assumed Liabilities as of the Closing Date; and (ii) a
statement (the "CLOSING STATEMENT") indicating the difference between the
aggregate net book value of the Purchased Assets (which, among other things,
excludes all cash and cash equivalents) and the aggregate net book value of the
Assumed Liabilities as of the Closing Date (the "CLOSING NET BOOK VALUE"). The
Closing Balance Sheet shall be prepared on a basis consistent with the
preparation of the Base Balance Sheet and in accordance with US GAAP. The
Closing Balance Sheet delivered to the Buyer by the Sellers shall be accompanied
by a compilation report from Xxxxxx & Xxx, CPA, the accountants of the Sellers,
that the Closing Balance Sheet has been prepared on a basis consistent with the
preparation of the Base Balance Sheet and in accordance with US GAAP. The
Closing Balance Sheet shall also be accompanied by all necessary and appropriate
supporting work papers and materials. If these work papers and materials have
not been provided or prepared in a professional and workmanlike manner, the
Review Period referenced in Section 3.2(b) hereof shall be extended to give the
Buyer's accountants sufficient time to complete their audit of the Closing
Balance Sheet. Inventory shall be valued as provided in Section 4.11 hereof by
the Buyer as of the close of business on the Closing Date based on a physical
count undertaken by the Buyer at its expense on a mutually agreed upon date that
is on or near the Closing Date at which all parties or their representatives may
be present to observe. To the extent that the Closing Net Book Value differs
from the comparable net book value as derived from the Base Balance Sheet (which
figure assumes that: (A) cash and cash equivalents are $0.00 regardless of the
actual amount of cash and cash equivalents of the Sellers on June 30, 2001; and
(B) the Sellers have Receivables of $ 2,800,000 regardless of the actual amount
of Receivables of the Sellers on June 30, 2001) (the "BASE NET BOOK VALUE"),
then the Aggregate Consideration shall be adjusted as hereinafter set forth. The
Base Net Book Value equals $6,280,112.
(b) Following receipt of the Closing Balance Sheet, the Buyer and the
Buyer's accountants will be afforded a period of 120 calendar days (the "REVIEW
PERIOD") to audit, at the Buyer's cost, the Closing Balance Sheet. During such
Review Period, the Buyer and the Buyer's accountant will be afforded reasonable
access to any of the Sellers' employees involved in the preparation of the
Closing Balance Sheet and the records, work papers, trial balances and similar
materials prepared by the Sellers or their accountants in connection with the
preparation of the audit and certification of the Closing Balance Sheet;
provided, however, that the Buyer shall provide reasonable prior notice of any
such investigation to the Sellers. At or before the end of
Page 14
the Review Period, the Buyer will either: (i) accept the Closing Balance Sheet
and the Closing Statement in their entirety, in which case the Closing Net Book
Value will be deemed to be as set forth on the Closing Statement, and the
Closing Balance Sheet and the Closing Statement shall become final, binding and
conclusive on the Sellers, the Principal Stockholders and the Buyer; or (ii)
deliver to the Sellers and the Principal Stockholders a written notice in
accordance with paragraph (d) of this Section 3.2 disputing the Closing Balance
Sheet or the Closing Statement.
(c) Within ten (10) days following the later of: (x) the date the
Closing Balance Sheet and the Closing Statement is accepted by Buyer; or (y) the
final, binding and conclusive determination of any dispute with respect to the
Closing Balance Sheet or the Closing Statement as provided in paragraph (d) of
this Section 3.2:
(i) if the Closing Net Book Value is less than the Base Net Book
Value and such difference is less than or equal to
$1,000,000, then the Buyer shall transfer and deliver to the
Sellers that number of Holdback Shares, based upon a value
of $40.00 per share, equal to: (A) $1,000,000; minus (B)
such difference;
(ii) if the Closing Net Book Value is less than the Base Net Book
Value and such difference is greater than $1,000,000, then
the Sellers and/or the Principal Stockholders (as
applicable) shall transfer and deliver to the Buyer that
number of shares of Balance Purchase Shares, based upon a
value of $40.00 per share, equal to: (A) the Base Net Book
Value; minus (B) the Closing Book Value; minus (C)
$1,000,000; and
(iii) if the Closing Net Book Value is greater than or equal to
the Base Net Book Value, then the Buyer shall transfer and
deliver to the Sellers all of the Holdback Shares.
(d) In the event that any dispute shall arise as to the manner of
preparation or the accuracy of the Closing Balance Sheet or Closing Statement
prior to the expiration of the Review Period, the Buyer shall provide the
Sellers with written notice of each disputed item. In the event of such a
dispute, the Buyer and the Sellers shall attempt to reconcile in good faith
their differences as to such items within twenty (20) calendar days (the
"RESOLUTION PERIOD") of the Sellers' receipt of such notice, and any resolution
by them as to any disputed items shall be final, binding and conclusive on the
Sellers, the Principal Stockholders and the Buyer. If the Buyer and the Sellers
are unable to reach a resolution with such effect within the Resolution Period,
the Buyer and the Sellers shall submit the dispute to the Independent CPA. The
determination of such dispute by the Independent CPA shall be final, binding and
conclusive on the Sellers, the Principal Stockholders and the Buyer. The fees
and expenses of the Independent CPA shall be assessed by the Independent CPA
fifty percent (50%) against the Sellers and fifty percent (50%) against the
Buyer, and shall be paid by each of them in those proportions.
3.3. ALLOCATION OF AGGREGATE CONSIDERATION. The Buyer, the Sellers and the
Principal Stockholders agree that on or before thirty (30) days after the Buyer
has obtained an appraisal of
Page 15
the Purchased Assets, which appraisal the Buyer shall undertake in good faith to
obtain no later than 90 days after the Closing Date, the parties shall allocate
the Aggregate Consideration among the Purchased Assets in a manner consistent
with such appraisal, subject to any adjustment to the Aggregate Consideration
which shall be made pursuant to Section 3.2 hereof. The parties hereto
acknowledge and agree that such allocation will reflect the respective fair
market values of the Purchased Assets and that they will not take a position
inconsistent with such allocation for federal, state, provincial or local Tax
purposes.
3.4. ESCROWED PURCHASE SHARES. Promptly after the Closing Date, the Buyer
shall deliver to State Street Bank and Trust Company or any successor escrow
agent (the "ESCROW AGENT"), the Escrowed Purchase Shares, such shares to be held
by the Escrow Agent to secure the payment of indemnification payable to the
Buyer hereunder by reason of the breach of any of the representations and
warranties of the Sellers or the Principal Shareholders or failure of the
Sellers or the Principal Shareholders to perform any of their obligations
hereunder (the "Escrow"). Such Escrow shall terminate upon the one year
anniversary of the Closing Date. In order to set forth the terms and conditions
of the Escrow, the Buyer, the Sellers and the Escrow Agent shall enter into an
Escrow Agreement, substantially in the form attached hereto as EXHIBIT A.
3.5. REGULATION D. Each party shall use all reasonable efforts to cause the
Purchase Shares to be issued in accordance with the applicable provisions of
Regulation D promulgated under the Securities Act ("REGULATION D"), shall
cooperate in all filings required pursuant to Regulation D and shall not
knowingly take any action or fail to act which action or failure to act would
jeopardize the issuance of the Purchase Shares in accordance with Regulation D.
Until the registration of the Purchase Shares on Form S-3 contemplated by
Section 7.5 hereof is effective, all Purchase Shares issued pursuant to this
Agreement will be subject to certain resale restrictions pursuant to the
Securities Act and Regulation D.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE PRINCIPAL
STOCKHOLDERS
Each of the Sellers and the Principal Stockholders hereby, jointly and
severally, represent and warrant to the Buyer as follows:
4.1. ORGANIZATION AND QUALIFICATION OF THE SELLERS.
(a) GPI COMPANY. The GPI Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of California,
with full power and authority to own, operate or lease its properties and to
conduct its business in the manner and in the places where such properties are
owned or leased or such business is conducted by it. The copies of the GPI
Company's Constituent Documents which are attached as SCHEDULE 4.1(a) hereto,
are complete and correct. The GPI Company is not duly qualified to do business
and is not in good standing as a foreign corporation in any jurisdiction and it
is not required to be licensed or qualified to conduct its business or own its
property in any jurisdiction (other than the State of California).
(b) XXXXXX COMPANY. The Xxxxxx Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California, with full power
Page 16
and authority to own, operate or lease its properties and to conduct its
business in the manner and in the places where such properties are owned or
leased or such business is conducted by it. The copies of the Xxxxxx Company's
Constituent Documents which are attached as SCHEDULE 4.1(b) hereto, are complete
and correct. The Xxxxxx Company is not duly qualified to do business and is not
in good standing as a foreign corporation in any jurisdiction and it is not
required to be licensed or qualified to conduct its business or own its property
in any jurisdiction (other than the State of California).
4.2. AUTHORITY; NO VIOLATION. Each of the Sellers has all requisite
corporate power and authority to enter into and deliver this Agreement and each
Ancillary Document to which it is a party and to carry out the transactions and
perform its obligations contemplated hereby and thereby. The execution, delivery
and performance of this Agreement and each Ancillary Document to which it is a
party by each of the Sellers and all transactions contemplated herein and
therein have been duly and validly authorized and approved by all necessary
corporate action. Each such agreement constitutes the legal, valid and binding
obligation of each of the Sellers, enforceable in accordance with its terms.
Assuming the accuracy of the representations and warranties of the Buyer
hereunder, the entering into of this Agreement and the Ancillary Documents to
which it is a party by each of the Sellers does not, and the consummation by
each of the Sellers of the transactions contemplated hereby and thereby will
not: (i) violate the provisions of any national, regional or local Law of the
jurisdictions where the Sellers do business; (ii) violate any provision of the
Sellers' respective Constituent Documents; (iii) breach, result in a default or
acceleration of any obligation under, or cause the loss of any right under, any
contract, agreement, license, lease, instrument, indenture, order, arbitration
award, judgment, or decree to which either Seller is a party or by which either
Seller is bound, or to which either of the Sellers' properties (other than the
Excluded Assets) are subject; (iv) violate or conflict with any resolution
adopted by the Board of Directors or the stockholders of either Seller; (v)
violate any legal requirement or Court Order to which either of the Sellers or
any of the assets or properties owned or used by the Sellers is subject; or (vi)
violate any Governmental Authorization which is held or used by either of the
Sellers. The execution, delivery and performance of this Agreement and the
Ancillary Documents and the transactions contemplated hereby and thereby do not
require the consent, waiver, approval, authorization, exemption of or giving of
notice to any Governmental Authority except as otherwise provided for in this
Agreement. In addition, Xxxxxxxx Xxxx and Xxxxx Xxxx are the sole trustees and
sole beneficiaries of the Trust and, in their capacities as trustees of the
Trust, they have all requisite power and authority to enter into and deliver
this Agreement and each Ancillary Document to which the Trust is a party and to
carry out the transactions on behalf of the Trust contemplated hereby and
thereby and to perform the Trust's obligations contemplated hereby and thereby.
Furthermore, the entering into of this Agreement and the Ancillary Documents to
which the Trust is a party by the Trust does not, and the consummation by the
Trust of the transactions contemplated hereby and thereby will not: (i) violate
the provisions of the Declaration of Trust pursuant to which the Trust was
formed; (ii) violate any national, regional or local Law to which the Trust is
subject; (iii) breach, result in a default or acceleration of any obligation
under, or cause the loss of any right under, any contract, agreement, license,
lease, instrument, indenture, order, arbitration award, judgment, or decree to
which the Trust is a party or by which the Trust is bound, or to which the
Trust's properties are subject; or (iv) violate any legal requirement or
Page 17
Court Order to which the Trust or any of the assets or properties owned or used
by the Trust is subject.
4.3. CAPITALIZATION.
(a) As of the date hereof, the authorized equity securities of the GPI
Company consists of 1,000,000 shares of GPI Company Common Stock, no par value
per share, of which 100,000 shares are issued and outstanding, all of which are
issued and outstanding in the name of the Trust. No Options to purchase shares
of GPI Company Common Stock, no warrants to purchase shares of GPI Company
Common Stock or similar rights are and shall be issued and outstanding at the
date hereof and immediately prior to Closing. The GPI Company has never
declared, set aside, made or paid any dividend or other distribution or
repurchase or repayment in respect of shares of the GPI Company's capital stock.
All of the outstanding equity securities of the GPI Company have been duly
authorized and validly issued and are fully paid and nonassessable. SCHEDULE
4.3(a) hereto sets forth all outstanding securities of the GPI Company,
including, but not limited to, all debt securities outstanding or authorized for
issuance and all securities or rights convertible or exercisable into, or
exchangeable for, capital stock. Except as set forth on SCHEDULE 4.3(a) hereto,
there are no voting trusts or other contracts, agreements or understandings to
which the GPI Company or any GPI Company stockholder is a party with respect to
the voting of the capital stock of the GPI Company. Except as set forth on
SCHEDULE 4.3(a) hereto, there are no contracts, agreements or understandings
relating to the issuance, sale or transfer of any equity securities or other
securities of the GPI Company. Except as set forth on SCHEDULE 4.3(a) hereto, no
Person has any preemptive rights with respect to any security of the GPI
Company.
(b) As of the date hereof, the authorized equity securities of the
Xxxxxx Company consists of 100,000 shares of Xxxxxx Company Common Stock, no par
value per share, of which 100,000 shares are issued and outstanding, all of
which are issued and outstanding in the name of the GPI Company. No Options to
purchase shares of Xxxxxx Company Common Stock, no warrants to purchase shares
of Xxxxxx Company Common Stock or similar rights are and shall be issued and
outstanding at the date hereof and immediately prior to Closing. The Xxxxxx
Company has never declared, set aside, made or paid any dividend or other
distribution or repurchase or repayment in respect of shares of the Xxxxxx
Company's capital stock. All of the outstanding equity securities of the Xxxxxx
Company have been duly authorized and validly issued and are fully paid and
nonassessable. SCHEDULE 4.3(b) hereto sets forth all outstanding securities of
the Xxxxxx Company, including, but not limited to, all debt securities
outstanding or authorized for issuance and all securities or rights convertible
or exercisable into, or exchangeable for, capital stock. Except as set forth on
SCHEDULE 4.3(b) hereto, there are no voting trusts or other contracts,
agreements or understandings to which the Xxxxxx Company or any Xxxxxx Company
stockholder is a party with respect to the voting of the capital stock of the
Xxxxxx Company. Except as set forth on SCHEDULE 4.3(b) hereto, there are no
contracts, agreements or understandings relating to the issuance, sale or
transfer of any equity securities or other securities of the Xxxxxx Company.
Except as set forth on SCHEDULE 4.3(b) hereto, no Person has any preemptive
rights with respect to any security of the Xxxxxx Company.
Page 18
4.4. SUBSIDIARIES; OTHER INVESTMENTS. Except as disclosed in SCHEDULE 4.4
hereto, neither Seller owns, directly or indirectly, any capital stock or
ownership interest of any corporation or other business organization. Except as
disclosed in SCHEDULE 4.4 hereto, neither of the Sellers is a partner or
participant in any joint venture or partnership of any kind.
4.5. FINANCIAL STATEMENTS.
(a) Attached as SCHEDULE 4.5(a) hereto are the following audited
consolidated financial statements of the Sellers (the "SELLERS' AUDITED
FINANCIAL STATEMENTS"), together with all related compilations, reviews and
other reports issued by the Sellers' independent certified public accountants
with respect thereto, all of which statements (including the notes thereto) are
complete and correct in all material respects and present fairly the assets,
liabilities and financial position of the Sellers on the date of such
statements, and the results of operations and changes in the financial condition
of the Sellers for the periods covered thereby. The Sellers' Audited Financial
Statements have been prepared in accordance with US GAAP consistently applied
throughout the periods involved and prior periods:
(i) Audited Consolidated Balance Sheet as of December 31, 2000
and Audited Consolidated Statements of Operations and Cash
Flows for the year ending December 31, 2000 for the Sellers;
and
(ii) Audited Consolidated Balance Sheet as of June 30, 2001 and
Audited Consolidated Statements of Operations and Cash Flows
for the three months ending June 30, 2001 for the Sellers.
(b) The consolidated audited balance sheet of the Sellers dated June
30, 2001 (the "BASE BALANCE SHEET DATE") included in the above financial
statements is sometimes referred to hereinafter as the "BASE BALANCE SHEET".
(c) The books of account of the Sellers for the past three (3) years
are complete and correct in all material respects and have been maintained on a
consistent basis. The Sellers have not received any auditor's letters to
management for fiscal years 2000, 1999 or 1998.
4.6. ABSENCE OF UNDISCLOSED LIABILITIES. There are no material liabilities
of any nature, known or unknown, with respect to the Sellers, whether accrued,
absolute, contingent or otherwise (including, without limitation, liabilities as
guarantor or otherwise with respect to obligations of others, or liabilities for
Taxes due or then accrued or to become due), except: (a) liabilities stated or
adequately reserved against on the Base Balance Sheet; (b) liabilities incurred
since the Base Balance Sheet Date in the ordinary course of business consistent
with past practices (none of which is a claim for breach of contract, breach of
duty, breach of warranty, tort, or infringement of an intellectual property
right), which liabilities, to the extent outstanding on the Closing Date, will
be reflected on the Closing Balance Sheet; and (c) liabilities disclosed on
SCHEDULE 4.6 hereto. There is no fact which has a Material Adverse Effect, or
may in the
Page 19
future (so far as can now be reasonably foreseen) have a Material Adverse Effect
on the Sellers which has not been specifically disclosed herein or in a schedule
hereto.
4.7. CONDUCT OF BUSINESS; ABSENCE OF CERTAIN CHANGES. Since the Base
Balance Sheet Date, the Sellers have conducted their businesses only in the
ordinary course, consistent with prior practices and, whether or not in the
ordinary course of business, there has not been any change in the financial
condition (including working capital, earnings, reserves, properties, assets,
liabilities, business or operations), of either of the Sellers which change, by
itself or in conjunction with all other such changes, whether or not arising in
the ordinary course of business, has had a Material Adverse Effect on the
Sellers. Without limiting the generality of the foregoing, except as disclosed
on SCHEDULE 4.7 hereto, since the Base Balance Sheet Date there has not been:
(a) any amendment or other modification to the Constituent Documents
of either of the Sellers;
(b) any contingent liability incurred by either of the Sellers as
guarantor or otherwise, with respect to the obligations of
others;
(c) any sale, lease or other disposition, or any agreement or other
arrangement for the sale, lease or other disposition, of any of
asset or property of the Sellers with a value individually, or in
the aggregate, in excess of $25,000, other than in the ordinary
course of business consistent with past practice;
(d) any Lien or Encumbrance placed on any of the Purchased Assets
which remains in existence on the date hereof;
(e) any obligation or liability incurred by either of the Sellers,
other than obligations and liabilities incurred in the ordinary
course of business consistent with past practice (none of which
is a claim for breach of contract, breach of duty, breach of
warranty, tort or infringement of an intellectual property
right);
(f) any entry into Contracts or agreements by the Sellers, except
contracts made in the ordinary course of business consistent with
past practices;
(g) any entry into, termination of, or receipt of notice of
termination of any Contract or transaction involving a total
remaining commitment by or to either of the Sellers or a
Subsidiary of at least $25,000 including the entry into: (i) any
document evidencing any indebtedness; (ii) any capital or other
lease; or (iii) any guaranty;
(h) cancellation, compromise, release or waiver of any debt, claim or
right with a value to either of the Sellers in excess of $10,000;
(i) creation, incurrence or assumption of any indebtedness for
borrowed money or guarantee of any obligation by either Seller in
an aggregate
Page 20
amount in excess of $10,000, except for endorsements of
negotiable instruments for collection in the ordinary course of
business;
(j) payment, discharge or satisfaction of any material obligation or
liability, absolute, accrued, contingent or otherwise, whether
due or to become due, except for any current liabilities, and the
current portion of any long-term liabilities, shown on the
Sellers' financial statements (or not required as of the date
thereof to be shown thereon in accordance with US GAAP) or
incurred since the date of the Base Balance Sheet in the ordinary
course of business consistent with past practice;
(k) institution or settlement of any Proceeding before any
Governmental Authority relating to either of the Sellers;
(l) except in the ordinary course of business consistent with past
practice, commitment by either of the Sellers to provide services
or goods for an indefinite period or a period of more than six
(6) months;
(m) any capital investment, capital expenditure, commitment or capital
improvement, addition or betterment in amounts which exceed
$10,000 in the aggregate or lease or agreement to lease assets
with an annual rental which exceeds $10,000 in the aggregate;
(n) any damage to or destruction of any asset or property of the
Sellers whether covered by insurance or not, or loss of any
customer, which would have a Material Adverse Effect on either
Seller;
(o) any declaration, setting aside or payment of any dividend on, or
the making of any other distribution in respect of, the capital
stock of either of the Sellers, direct or indirect redemption,
purchase or other acquisition by either of the Sellers of their
capital stock, or any issuance of any securities of either of the
Sellers;
(p) issuance, sale, disposition, Lien or Encumbrance of, or
authorization for issuance, sale, disposition, Lien or
Encumbrance of, or grant or issue of any options, warrants or
rights to acquire with respect to, any shares of the Sellers'
capital stock or any other of their securities or any security
convertible or exercisable into or exchangeable for any such
shares or securities, or any change in their outstanding
securities or shares of capital stock or their capitalization,
whether by reason of a reclassification, recapitalization, stock
split, combination, exchange or readjustment of shares, stock
dividend or otherwise;
(q) any intercorporate loan or transfer between either of the Sellers
and any of their Affiliates;
Page 21
(r) any material labor trouble or claim of unfair labor practices
involving either of the Sellers;
(s) any change in the compensation or other amounts payable or to
become payable by either of the Sellers to any of their
directors, officers, employees, consultants, representatives or
agents; or any change in any bonus, pension or profit sharing
payment, entitlement or arrangement made to or with any of such
directors, officers, employees, consultants, representatives or
agents; or any grant of any loans or severance or termination pay
(other than as set forth on SCHEDULE 4.7); entry into or
variation of any employment, severance or similar contract with
any director, officer, employee, consultant, representative or
agent; payment of any bonuses, salaries or other compensation to
any shareholder, director, officer, consultant, agent or sales
representative or (except in the ordinary course of business
consistent with past practice) employee; or any entrance into or
variation of the terms of any employment agreement or consulting
agreement or adoption of, or increase in, the benefits under any
Employee Benefit Plan;
(t) any change with respect to the management or supervisory personnel
of either of the Sellers;
(u) any payment or discharge of a material Lien, Encumbrance, claim,
obligation or liability of either of the Sellers which was not
shown on the Base Balance Sheet or incurred in the ordinary
course of business thereafter;
(v) any obligation or liability incurred by either of the Sellers to
any of its officers or directors or any other Person or any loans
or advances made by either of the Sellers to any of its officers
or directors or any other Person, except normal compensation and
expense allowances payable to officers in the ordinary course of
business consistent with past practices;
(w) any acquisition of any capital stock or other securities of or any
ownership interest in, or a significant portion of the assets of,
any other business enterprise;
(x) any write-downs of the value of any inventory included in the
Purchased Assets (including write-downs by reason of shrinkage or
xxxx-down) or write-offs as uncollectible of any notes or
accounts receivable included in the Purchased Assets, except for
write-downs or write-offs that are in the aggregate less than
$10,000 incurred in the ordinary course of business;
(y) any disposal, sale, assignment, license or lapse of any rights to
the use of any Intellectual Property Asset, or the license or
disposal, sale, assignment, or disclosure to any person other
than the Buyer of any trade secret,
Page 22
technology, formula, process, know-how or other confidential
information not theretofore a matter of public knowledge other
than pursuant to confidentiality agreements;
(z) any change in any method of accounting or accounting practice
except as required by US GAAP; or
(aa) any agreement, whether in writing or otherwise, to take any
action described in this Section 4.7.
4.8. PAYMENT OF TAXES.
(a) Each of the Sellers and their Subsidiaries have filed or caused to
be filed with the appropriate Tax Authorities in a timely manner all Tax
returns, reports and forms, statements, declarations, claims for refund, and
other documents and information with respect to Taxes, including any schedule or
attachment thereto, and including any amendment thereof ("RETURNS") required to
be filed by them with a Tax Authority.
(b) The information reported on such Returns is complete and accurate.
(c) Each of the Sellers and their Subsidiaries have paid in full on a
timely basis all Taxes or made adequate provision in the Sellers' financial
statements for all Taxes (whether or not shown on any Return) required to be
paid by them (including any Taxes of another Person for which the Sellers or
their Subsidiaries may have liability pursuant to Treasury Regulation Section
1.1502-6, or any similar provision of state, local, or foreign law, as a
transferee or successor, by contract or otherwise).
(d) There are no Encumbrances or Liens for Taxes upon the assets or
properties of any of the Sellers or their Subsidiaries other than for Taxes not
yet due and payable.
(e) No deficiencies for Taxes have been claimed, proposed, or assessed
in writing or otherwise to the Sellers knowledge by any Tax Authority or other
Governmental Authority with respect to any of the Sellers or their Subsidiaries,
and there are no pending or, to the Sellers' knowledge, threatened audits,
investigations or claims for or relating to any liability in respect of Taxes of
any of the Sellers or their Subsidiaries.
(f) The Sellers have delivered or made available to the Buyer correct
and complete copies of all income tax returns filed by each of the Sellers and
their Subsidiaries since December 31, 1997.
(g) The Sellers have no examination reports and statements or notices
of deficiency asserted, proposed, or assessed against or agreed to by any of the
Sellers or their Subsidiaries.
(h) There are no outstanding Contracts or written waivers with respect
to any of the Sellers or their Subsidiaries extending the statutory period of
limitation applicable to any
Page 23
Taxes, and neither of the Sellers nor their Subsidiaries have requested any
extension of time within which to file any Return, which has not yet been filed.
(i) Each of the Sellers and their Subsidiaries have withheld and
timely paid to the appropriate Tax Authority all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, shareholder or other third Person.
4.9. TITLE TO PROPERTIES; LIENS; CONDITION OF PROPERTIES.
(a) The Purchased Assets do not include any real property. The Sellers
do not and have never owned real property. Set forth on SCHEDULE 4.9(a) hereto
is a listing of all real property leased by either of the Sellers, including a
description of the real estate and any Liens or Encumbrances on the property
(collectively, the "MATERIAL REAL PROPERTY").
(b) Set forth on SCHEDULE 4.9(b) hereto is a listing of: (i) all
machinery, equipment and other tangible personal property with an original cost
in excess of $10,000 used or owned by either of the Sellers; and (ii) a listing
of all leases under which either of the Sellers leases any personal property
requiring annual rental payments in excess of $10,000, together with a
description of such property (collectively, the "MATERIAL PERSONAL PROPERTY").
SCHEDULE 4.9(B) hereto lists all locations where Material Personal Property is
located.
(c) Except for assets or properties acquired since the Base Balance
Sheet Date and set forth on SCHEDULE 4.9(c) hereto, all of the assets and
properties of both of the Sellers are reflected on the Base Balance Sheet
(except to the extent not required to be so reflected by US GAAP). The only
intangible assets and properties owned or used by either of the Sellers are the
GPI Company and the Xxxxxx Company Intellectual Property Assets described in
Section 4.12. The Purchased Assets include all of the assets owned or leased by
both of the Sellers that are useful in their business.
(d) Each of the Sellers is in compliance with all terms and conditions
of each lease of Material Real Property or Material Personal Property and no
event has occurred nor, to either of the Sellers' knowledge, does any
circumstance exist that (with or without notice or the passage of time or both)
would constitute a material violation or default under any such lease and
neither of the Sellers has given nor received notice of any alleged violation or
of any default under any such agreement.
(e) Each of the Sellers has good and marketable title in fee simple to
all of its owned personal property included in the Purchased Assets. Except as
set forth on SCHEDULE 4.9(e) hereto, none of the Material Real Property or
Material Personal Property owned or used by either of the Sellers is subject to
any Lien or Encumbrance (other than for taxes not yet due and payable) of any
kind against any such Seller's rights in such property and, to the extent such
property is used by either of the Sellers but owned by a third party, to the
knowledge of the Sellers, there are no Liens or Encumbrances (other than for
taxes not yet due and payable) of any kind against such third party's rights in
such property.
Page 24
(f) All buildings, machinery and equipment used or owned by either of
the Sellers are in satisfactory condition, are presently in working order and
repair, normal wear and tear excepted, and are adequate for the uses to which
they are being put, and have been adequately maintained.
(g) There are no outstanding contracts, agreements or understandings
made by either of the Sellers for the construction or repair of any improvements
to the Material Real Property that have not been fully paid for.
(h) Neither of the Sellers has received any written notice from any
insurance carrier of any defects or inadequacies in the Material Real Property,
or in any portion thereof, that would adversely affect the insurability thereof
or the cost of such insurance, or that requires corrective action. There are no
pending insurance claims of either of the Sellers related to the Material Real
Property.
4.10. COLLECTIBILITY OF RECEIVABLES. All of the accounts receivable, trade
accounts, notes receivable, contract receivables, unbilled invoices and other
receivables ("RECEIVABLES") of both of the Sellers shown or reflected on the
Base Balance Sheet are, and those to be reflected on the Closing Balance Sheet
will be: (a) valid and enforceable claims; (b) which arose out of transactions
with unaffiliated parties; (c) fully collectible within ninety (90) days of
invoice date through normal means of collection, other than allowances for
doubtful Receivables reflected on the Closing Balance Sheet as determined in
compliance with US GAAP; and (d) subject to no set-off, defense or counterclaim.
4.11. INVENTORIES.
(a) All inventories of finished goods and raw materials of each of the
Sellers reflected on the Base Balance Sheet are, and those to be reflected on
the Closing Balance Sheet will be, of a quantity and quality normally salable in
the ordinary course of business at commercially reasonable prices consistent
with each of the Sellers' prior experience, except to the extent of the obsolete
inventory reserve in the amount shown on the Base Balance Sheet or to be shown
on the Closing Balance Sheet. All such inventories are valued on a lower of cost
or market basis and in accordance with each of the Sellers' normal valuation
methods and policies, consistently applied, which methods and policies are in
accordance with US GAAP. Purchase commitments for raw materials and parts are
not in excess of normal requirements and none are at prices in excess of current
market prices. Except as set forth on SCHEDULE 4.11 hereto, since the date of
the Base Balance Sheet, no inventory items have been sold or disposed of except
through sales in the ordinary course of business at prices no less than
prevailing market prices and in no event less than cost.
(b) The value of the finished goods inventory on the Base Balance
Sheet Date, and on the Closing Date, when added to the cost of the variable
expenses of freight, commissions and discounts, shall not exceed the market
price. The inventories of finished goods value on the Closing Balance Sheet
shall thereafter be salable at prices equal to or in excess of the amount
necessary, after variable expenses, to sell such inventory at a price equal to
no less than cost. All inventories of finished goods existing on the Base
Balance Sheet Date and on the Closing Date
Page 25
and included in the Purchased Assets will be salable on or before the date 180
days after the Closing Date, in a manner consistent with each of the Sellers'
normal and ordinary course of business and consistent with the past practices of
each of the Sellers.
4.12. INTELLECTUAL PROPERTY ASSETS.
(a) The Sellers, as applicable: (i) own all right, title and interest
in and to each of the Intellectual Property Assets, free and clear of all
Encumbrances and Liens; or (ii) license or otherwise possesses legally valid and
enforceable rights to use each of the Intellectual Property Assets, and, in each
case of clause (i) or (ii), each of the Sellers may transfer such rights as
contemplated by this Agreement. Each of the Sellers has made all necessary
filings and recordations to protect and maintain its interest in the
Intellectual Property Assets except where the failure to so protect or maintain
does not relate to a material Intellectual Property Asset.
(b) SCHEDULE 4.12(b) hereto contains a true, correct and complete list
and summary description, including any royalties paid or received by the
Sellers, of all contracts, agreements or understandings relating to the
Intellectual Property Assets to which either Seller is a party or by which
either Seller is bound. Other than as set forth on SCHEDULE 4.12(b), neither
Seller is, nor will it be as a result of the execution and delivery of this
Agreement or the performance of its obligations hereunder, in breach or
violation of any agreement described on SCHEDULE 4.12(b). Each license of
Intellectual Property Assets listed in SCHEDULE 4.12(b) is valid, subsisting,
and enforceable, and shall continue in effect on its current terms upon
consummation of the transactions contemplated by this Agreement.
(c) Except as set forth on SCHEDULE 4.12(c) hereto, the Sellers and/or
the Principal Stockholders own no Patents. Any Patents disclosed on SCHEDULE
4.12(c) are valid and subsisting and all maintenance fees, annuities and the
like have been paid and, to the knowledge of the Sellers, none of the Patents is
infringed or has been challenged or threatened in any way by any Person.
(d) (i) SCHEDULE 4.12(d) hereto contains a true, correct and complete
list of all Marks; (ii) all Marks are valid and subsisting; (iii) to the
knowledge of the Sellers, none of the Marks is infringed; (iv) none of the Marks
has been challenged or threatened in any way by any Person, and no claims exist
against the use by either of the Sellers of any Marks in their business as
currently conducted or as proposed to be conducted; (v) all materials
encompassed by the Marks have been marked with appropriate trademark and
registration notices; and (vi) all uses of registered Marks are in conformance
with applicable statutory and common law so as not to compromise the strength
and integrity of the Marks.
(e) (i) SCHEDULE 4.12(e) hereto contains a true, correct and complete
list of all Copyrights; (ii) all the Copyrights owned by either of the Sellers,
whether or not registered, are valid and enforceable; (iii) to the knowledge of
the Sellers, none of the Copyrights is infringed or has been challenged or
threatened in any way; (iv) no claims exist against the use by either of the
Sellers of any writings or other expressions used in their business as currently
conducted or as proposed to be conducted; and (v) all works encompassed by the
Copyrights have been marked with appropriate copyright notices.
Page 26
(f) SCHEDULE 4.12(f) hereto contains a true, correct and complete list
of all Trade Secrets. Except as set forth on SCHEDULE 4.12(f) hereto, each of
the Sellers has taken reasonable precautions to protect the secrecy,
confidentiality and value of its Trade Secrets. To the knowledge of the Sellers
and except as set forth on SCHEDULE 4.12(f), the Trade Secrets have not been
used, divulged or appropriated either for the benefit of any Person (other than
the Sellers) or to the detriment of the Sellers. None of the Trade Secrets is
subject to any material adverse claim or, to the knowledge of the Sellers, has
been challenged or threatened in any way. Appropriate policies are in place to
ensure the continued secrecy, confidentiality and value of the Sellers' Trade
Secrets, including, but not limited to, appropriate marking of Trade Secrets as
"proprietary" and/or "confidential"; appropriate limiting of access to Trade
Secrets by employees on a "need-to-know" basis; and appropriate confidentiality
provisions in agreements executed by employees, contractors, joint venturers and
any and all Persons potentially or actually having access to Trade Secrets.
(g) None of the products or technology used, sold, offered for sale or
licensed or proposed for use, sale, offer for sale or license by the Sellers
conflicts with or infringes or is alleged to conflict with or infringe any
proprietary rights owned, possessed or used by any Person.
(h) To the knowledge of the Sellers, no Intellectual Property Asset is
subject to any outstanding Court Order, Proceeding (other than pending
applications for patent, trademark registration or copyright registration) or
stipulation restricting in any manner the licensing thereof by either of the
Sellers. Neither Seller has entered into any agreement to indemnify any other
person against any charge of infringement of any Intellectual Property Asset.
(i) All employees, contractors, agents and consultants of the Sellers
listed on SCHEDULE 4.12(i) hereto (the "SELLERS' IP REPRESENTATIVES") have
executed a nondisclosure and assignment of inventions agreement in the form
attached to SCHEDULE 4.12(i) hereto to protect the confidentiality and to vest
in either of the Sellers exclusive ownership of such Intellectual Property
Assets. The Sellers' IP Representatives are the only former or current
employees, contractors, agents and consultants of the Sellers' who have: (A)
participated in the creation of the Sellers' Intellectual Property Assets; and
(B) had access to the Sellers' Trade Secrets. To the knowledge of the Sellers,
no former or current employee, contractor, agent or consultant of the Sellers
has used any Trade Secrets or other confidential information of any other person
in the course of their work for the Sellers. Neither of the Sellers has written
or oral agreements with former or current employees, contractors, agents or
consultants with respect to the ownership of the Intellectual Property Assets
created by them as a result of which any such former or current employee,
contractor, agent or consultant may have exclusive or nonexclusive rights to the
portions of the Intellectual Property Assets so created by such individual.
(j) To the knowledge of the Sellers, no officer, employee, contractor,
agent or consultant of either of the Sellers is, or is now expected to be, in
violation of any term of any employment contract, patent disclosure agreement,
proprietary information agreement, noncompetition agreement, nonsolicitation
agreement, confidentiality agreement, or any other similar contract or agreement
or any restrictive covenant relating to the right of any such officer, employee,
contractor, agent or consultant to be employed or engaged by the Sellers because
of
Page 27
the nature of the business conducted or to be conducted by the Sellers or
relating to the use of Trade Secrets or proprietary information of others, and
to the Sellers' knowledge and belief, the continued employment or retention of
its officers, employees, contractors, agents or consultants does not subject
either of the Sellers to any liability with respect to any of the foregoing
matters.
(k) Neither of the Sellers has deposited, or is obligated to deposit,
any source code regarding its products into any source code escrows or similar
arrangements and neither of the Sellers is under any contractual or other
obligation to disclose the source code or any other material proprietary
information included in or relating to its products.
4.13. CONTRACTS AND COMMITMENTS.
(a) SCHEDULE 4.13(a) contains a complete and accurate list, and the
Sellers have delivered to Xxxxxx true, correct and complete copies, of:
(i) each Contract involving payments of at least $25,000 that
involves performance of services or delivery of goods or
materials by either of the Sellers;
(ii) each Contract involving payments of at least $25,000 that
involves performance of services or delivery of goods or
materials to either of the Sellers;
(iii) each Contract providing for the purchase of all or
substantially all of a Seller's requirements of a particular
product from a supplier;
(iv) each Contract or plan, including, without limitation, any
stock option plan, stock appreciation right plan or stock
purchase plan, any of the benefits of which will be
increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement;
(v) each Contract for joint marketing, teaming or development;
(vi) each Contract with any dealer, franchiser, original
equipment manufacturer, value-added reseller, or
manufacturer's representative;
(vii) each Contract pertaining to either of the Sellers'
maintenance or support of its products, services or
supplies;
(viii) each Contract for the sale of its products not made in the
ordinary course of business;
Page 28
(ix) each Contract with any sales agent or distributor of
products of either of the Sellers;
(x) each Contract for a license (other than off-the-shelf, fully
paid up, shrink wrap software licenses) or franchise (as
licensor or licensee or franchisor or franchisee);
(xi) each Contract involving any arrangement or obligation with
respect to the return of products other than on account of a
defect in condition, or failure to conform to the applicable
Contract;
(xii) each Contract with a Governmental Authority;
(xiii) each Contract which is material to the assets or business
of the Sellers considered as one enterprise;
(xiv) each lease, license and other Contract affecting any
leasehold or other interest in any Material Real Property or
Material Personal Property to which either of the Sellers is
a party;
(xv) each licensing agreement or other Contract to which either
of the Sellers is a party with respect to Intellectual
Property Assets, including agreements with current or former
employees, consultants or contractors regarding the use or
disclosure of any Intellectual Property Assets;
(xvi) each collective bargaining agreement and other Contract to
or with any labor union or other employee representative of
a group of employees involving or affecting either of the
Sellers;
(xvii) each joint venture, partnership and other Contract
involving a sharing of profits, losses, costs or liabilities
by either of the Sellers with any other Person or requiring
either of the Sellers to make a capital contribution;
(xviii) each Contract to which either of the Sellers is a party
containing covenants that in any way purport to restrict the
business activity of either of the Sellers or any of the
employees of either of the Sellers or limit the freedom of
either of the Sellers or any of the employees to engage in
any line of business or to compete with any Person or hire
any Person;
(xix) each employment or consulting agreement between either of
the Sellers and its employees and consultants (other than
agreements that are terminable on 30 days notice or less
without penalty);
Page 29
(xx) each agreement between either of the Sellers and an officer
or director of either of the Sellers or any Affiliate of any
of the foregoing;
(xxi) each power of attorney granted by either of the Sellers that
is currently effective and outstanding;
(xxii) each Contract for capital expenditures by either of the
Sellers in excess of $25,000;
(xxiii) each agreement of either of the Sellers under which any
money has been or may be borrowed or loaned or any note,
bond, factoring agreement, indenture or other evidence of
indebtedness has been issued or assumed (other than those
under which there remain no ongoing obligations of either of
the Sellers), and each guaranty by either of the Sellers of
any evidence of indebtedness or other obligation, or of the
net worth, of any Person (other than endorsements for the
purpose of collection in the ordinary course of business);
(xxiv) each agreement of either of the Sellers containing
restrictions with respect to the payment of dividends or
other distributions in respect of its capital stock;
(xxv) each stock purchase, merger or other similar agreement
pursuant to which either of the Sellers acquired any
material amount of assets (other than capital expenditures),
and all relevant documents and agreements delivered in
connection therewith;
(xxvi) each material agreement to which either of the Sellers is a
party containing a change of control provision applicable to
the transactions contemplated by this Agreement;
(xxvii) each other agreement to which either of the Sellers is a
party having an indefinite term or a fixed term of more than
one (1) year (other than those that are terminable at will
or upon not more than thirty (30) days' notice by either of
the Sellers without penalty) or requiring payments by either
of the Sellers of more than $25,000 per year; and
(xxviii) each standard form of agreement pursuant to which either
of the Sellers provides services or goods to customers.
Page 30
(b) Each of the Contracts to which either of the Sellers is a party,
including those listed on SCHEDULE 4.13(a) hereto is valid, binding and
enforceable against the relevant Seller and, to the knowledge of each of the
Sellers, against the other parties thereto; the relevant Seller thereto is in
full compliance with all terms and conditions of each Contract; and, except as
set forth on SCHEDULE 4.13(b) hereto, no event has occurred or circumstance
exists that (with or without notice or the passage of time or both) would
constitute a material violation of or default under such Contract by either of
the Sellers or, to the knowledge of the Sellers, by the other party or parties
thereto, and neither of the Sellers has either given or received notice of any
alleged violation of or default under any such Contract. Except as listed on
SCHEDULE 4.13(b)(1) hereto, neither the execution and delivery of this Agreement
by the Sellers nor the consummation or performance by the Sellers of the
transactions contemplated hereby will, directly or indirectly, with or without
notice or lapse of time or both give rise to a right of termination,
cancellation or acceleration or require the consent, authorization or approval
of or any notice to or filing with any third Person under any Contract included
among the Purchased Assets. Except as described in SCHEDULE 4.13(b)(2) hereto,
neither of the Sellers have received prepayments of any kind on any Contract.
(c) Except as set forth on SCHEDULE 4.13(c) hereto, to the knowledge
of the Sellers, neither of the Sellers is a party to any Contract or order for
the sale of goods or the performance of services which, if performed by either
of the Sellers in accordance with its terms, could only be performed with a
negative gross profit margin or which has no reasonable likelihood of being
performed within the time limits therein provided.
(d) Since January 1, 2000, neither of the Sellers has experienced any
termination, cancellation, limitation or modification or change in any business
relationship with any material supplier or customer, nor have either of the
Sellers received notice or otherwise have knowledge that any material customer
or supplier intends to cease, or materially reduce or change the terms of, doing
business with either of the Sellers or to terminate any agreement with either of
the Sellers where such action has had or would have a Material Adverse Effect on
the business of either of the Sellers. SCHEDULE 4.13(d) hereto lists every
material customer or supplier of the Sellers and the amount of business with
that customer. To the knowledge of the Sellers, there are no facts or
circumstances, including the consummation of the transactions contemplated by
this Agreement, that are reasonably likely to result in the loss of any material
customer or material supplier of either of the Sellers or a material change in
the relationship of either of the Sellers with such a material customer or a
material supplier. For purposes hereof, "material customers" mean the top ten
(10) customers of each of the Sellers based upon revenue recognized since
January 1, 2000. For purposes hereof, "material suppliers" mean the top five (5)
suppliers to each of the Sellers based upon expenses incurred or accrued since
January 1, 2000.
(e) The backlog of each of the Sellers (including all accepted and
unfulfilled sales orders) is not materially less than the backlog amount for
that Seller set forth on SCHEDULE 4.13(e) hereto, and the aggregate of all
outstanding purchase orders issued by each Seller with respect to their business
(including all contracts or commitments for the purchase by that Seller of
materials or other supplies) is not materially more than the purchase order
amount set forth on
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such SCHEDULE 4.13(e) hereto. All such sales and purchase commitments were made
in the ordinary course of business.
4.14. EMPLOYEES. SCHEDULE 4.14 hereto sets forth a true and complete list
of: (a) all employees of each of the Sellers currently employed or employed
since January 1, 2000; and (b) all technical and business consultants and
independent contractors retained by either of the Sellers currently or since
January 1, 1998. Also shown on SCHEDULE 4.14 are the name, job title, base
salary (or base rate of compensation), bonus, vacation accrued, and service
credited for purposes of vesting and eligibility to participate under any
Employee Benefit Plan of any nature for each persons listed on SCHEDULE 4.14.
4.15. LABOR AND EMPLOYEE RELATIONS.
(a) Complete and accurate copies of all written employment and
consulting agreements of the persons required to be listed on SCHEDULE 4.14 to
which either of the Sellers is a party or of which either of the Sellers is a
beneficiary have been made available to the Buyer.
(b) Except as shown on SCHEDULE 4.15(b) hereto: (i) none of the
employees of either of the Sellers are covered by any collective bargaining
agreement with any trade or labor union, employees' association or similar
association or any industry-wide labor agreement; (ii) no labor organization or
group of employees has made a pending demand for recognition; (iii) there are no
labor representation questions involving either of the Sellers; and (iv) there
is no organizing activity involving either of the Sellers pending by any labor
organization or group of employees. There are no representation elections,
arbitration proceedings, labor strikes, slowdowns or stoppages, material
grievances, lockouts, or other labor troubles pending, or threatened, with
respect to the employees of either of the Sellers, nor has either of the Sellers
experienced any work stoppage or other material labor difficulty during the
three (3) years immediately preceding the date of this Agreement.
(c) Except as set forth on SCHEDULE 4.15(c) hereto, each of the
Sellers has complied in all material respects with all applicable Laws of each
relevant jurisdiction (including the United States) relating to the employment
of labor, including, without limitation, those relating to dismissal,
redundancy, minimum notice, wages, hours, unfair labor practices,
discrimination, civil rights, plant closings, immigration and the collection and
payment of social security and similar taxes.
(d) Except as set forth on SCHEDULE 4.15(d) hereto, there are no
complaints that have been served to either of the Sellers and, to the Sellers'
knowledge, there are no other complaints, proceedings, investigations or charges
against either of the Sellers pending or threatened before any Governmental
Authority in the United States or elsewhere, by or on behalf of any employee or
former employee of either of the Sellers.
(e) Except as set forth on SCHEDULE 4.15(e) hereto, each of the
Sellers has paid in full (or made provisions for payment in full) to its
employees, agents and contractors all wages, salaries, commissions, bonuses and
other direct compensation for all services performed by them. Neither of the
Sellers has, or will have on the Closing Date, any contingent liability for
Page 32
sick leave, vacation time, holiday pay, severance pay or similar items, whether
arising as a matter of law, labor agreement, or otherwise, other than as set
forth on the Base Balance Sheet or arising after the date thereof in the
ordinary course of business consistent with past practices and set forth on the
Closing Balance Sheet. Except as set forth in SCHEDULE 4.15(e) hereto, the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby will not trigger any severance pay
obligation under any contract or at law.
(f) Except as set forth on SCHEDULE 4.15(f) hereto, since January 1,
2000 there has not been any fine or penalty imposed or asserted against either
of the Sellers under any laws (whether national, regional or local) of any
applicable jurisdiction relating to employment, immigration or occupational
safety matters.
4.16. EMPLOYEE BENEFITS
(a) SCHEDULE 4.16(a) hereto sets forth a brief description of every
plan, arrangement or policy, written or oral, relating to current or former
employees of either of the Sellers, including any Employee Benefit Plan.
(b) There are no agreements or commitments of either of the Sellers,
whether or not legally binding, to create any additional Employee Benefit Plan
not listed on SCHEDULE 4.16(a) hereto. Except as set forth on SCHEDULE 4.16(a)
hereto, there are no Employee Benefit Plans for which either of the Sellers has
any liability, either for funding, benefit payments, withdrawal or termination
liability, or otherwise. For any Employee Benefit Plan for which a liability
exists, the liability is identified on SCHEDULE 4.16(a).
(c) Except for the Employee Benefit Plans listed on SCHEDULE 4.16(a),
neither of the Sellers (either individually or collectively) maintains, has an
obligation to contribute to, or has any actual or contingent liability with
respect to, any Employee Benefit Plan. The Sellers have delivered to the Buyer
or its counsel prior to the date hereof true and complete copies of: (i) plan
instruments and amendments thereto for all Employee Benefit Plans (or written
summaries of any Employee Benefit Plans that are unwritten) and, if applicable,
related trust agreements, insurance and other contracts, summary plan
descriptions, and summaries of material modifications, and material
communications distributed to the participants of each Employee Benefit Plan;
(ii) to the extent annual reports on Form 5500 are required with respect to any
Employee Benefit Plan, the three most recent annual reports and attached
schedules for each Employee Benefit Plan as to which such report is required to
be filed; and (iii) where applicable, the most recent (A) opinion, notification
and determination letters, (B) audited financial statements, (C) actuarial
valuation reports, and (D) nondiscrimination and coverage tests performed under
the Code (including 401(k), 401(m) and 410(b) tests) for each Employee Benefit
Plan.
(d) Neither of the Sellers has or ever has had an ERISA Affiliate.
"ERISA AFFILIATE" means any entity (whether or not incorporated) other than the
Sellers that, together with either of the Sellers, is a member of: (i) a
controlled group of corporations within the meaning of Section 414(b) of the
Code; (ii) a group of trades or businesses under common
Page 33
control within the meaning of Section 414(c) of the Code; or (iii) an affiliated
service group within the meaning of Section 414(m) of the Code.
(e) Neither of the Sellers maintains or has ever maintained or
contributes to or has ever contributed to an Employee Benefit Plan subject to
Title IV of ERISA (including a multiemployer plan) and no facts exist under
which either of the Sellers could incur any liability under Title IV of ERISA.
(f) With respect to each Employee Benefit Plan: (i) no party in
interest or disqualified person (as defined in Section 3(14) of ERISA and
Section 4975 of the Code, respectively) has at any time engaged in a transaction
which could subject the Buyer or the Sellers, directly or indirectly, to a tax,
penalty or liability for prohibited transactions imposed by ERISA or the Code;
and (ii) no fiduciary (as defined in Section 3(21) of ERISA) with respect to any
Employee Benefit Plan, for whose conduct either of the Sellers could have any
liability (by reason of indemnities or otherwise), has breached any of the
responsibilities or obligations imposed upon the fiduciary under Title I of
ERISA.
(g) Each Employee Benefit Plan which is a "welfare plan" within the
meaning of Section 3(1) of ERISA and which provides health, disability or death
benefits is fully insured; neither of the Sellers is obligated to directly pay
any such benefits or to reimburse any third Person payor for the payment of such
benefits.
(h) Each Employee Benefit Plan which is an "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA (a "PENSION PLAN") and which
is subject to Sections 201, 301 or 401 of ERISA has received a favorable
determination letter from the Internal Revenue Service covering all amendments
required by the Tax Reform Act of 1986 and prior legislation and there are no
circumstances that are likely to result in revocation of any such favorable
determination letter. Except as noted on SCHEDULE 4.16(a) hereto, no Pension
Plan has assets other than securities listed on a public exchange, mutual fund
shares registered under federal law, publicly traded debt or government debt
instruments, or participant loans extended in accordance with terms of the
relevant Employee Benefit Plan. Each Employee Benefit Plan is and has been
operated in material compliance with its terms and all applicable Laws, Court
Orders or governmental rules and regulations currently in effect with respect
thereto, and by its terms can be amended and/or terminated at any time. As of
and including the Closing Date, the Sellers: (i) shall have performed all
material obligations required to be performed by them under, and shall not be in
material default under or in material violation of any Employee Benefit Plan;
and (ii) shall have made all contributions or payments required to be made by
them up to and including the Closing Date with respect to each Employee Benefit
Plan, or adequate accruals (including accruals for 401(k) matching
contributions, if any) therefor will have been provided for on the Sellers'
Audited Financial Statements. All notices, filings and disclosures required by
ERISA or the Code (including notices under Section 4980B of the Code and
certifications under the Health Insurance Portability and Accountability Act)
will have been timely made as of and including the Closing Date.
(i) Neither of the Sellers has received notice of or is aware of any
Proceeding (other than routine claims for benefits) pending or threatened with
respect to any Employee
Page 34
Benefit Plan or against any fiduciary of any Employee Benefit Plan, and there
are no facts that could give rise to any such Proceeding. There has not occurred
any circumstances by reason of which either of the Sellers may be liable for an
act, or a failure to act, by a fiduciary with respect to any Employee Benefit
Plan.
(j) There are no complaints, charges or claims against either of the
Sellers pending or threatened to be brought by or filed with any Governmental
Authority and no facts exist as a result of which either of the Sellers could
have any liability based on, arising out of, in connection with or otherwise
relating to the classification of any individual by the Sellers as an
independent contractor or "leased employee" (within the meaning of Section
414(n) of the Code) rather than as an employee.
(k) NO current or former employee, officer or director of either of
the Sellers holds: (i) any option to purchase GPI Company Common Stock or Xxxxxx
Company Common Stock; (ii) any shares of GPI Company Common Stock and Xxxxxx
Company Common Stock that are restricted as a result of an agreement with either
of the Sellers or any stock plan of either of the Sellers; and (iii) any other
right, directly or indirectly, to receive GPI Company Common Stock or Xxxxxx
Company Common Stock or any other compensation based in whole or in part on the
value of GPI Company Common Stock or Xxxxxx Company Common Stock.
(l) SCHEDULE 4.16(l) hereto sets forth a true and complete list of:
(i) all agreements with consultants obligating either of the Sellers to make
annual cash payments in an amount exceeding $25,000; and (ii) all agreements
with respect to the services of independent contractors or leased employees who
are individuals or individuals doing business in a corporate form whether or not
they participate in any of the Employee Benefit Plans.
(m) (i) No Employee Benefit Plan is an employee stock ownership plan
(within the meaning of Section 4975(e)(7) of the Code) or otherwise invests in
GPI Company Common Stock or Xxxxxx Company Common Stock; and (ii) the
consummation of the transactions contemplated by this Agreement will not, alone
or together with any other event, (A) entitle any employee or former employee of
the either of the Sellers to any payment, (B) result in an increase in the
amount of compensation or benefits or accelerate the vesting or timing of
payment of any benefits or compensation payable in respect of any employee or
former employee, or (C) result in any parachute payment under Section 280G of
the Code, whether or not such payment is considered reasonable compensation for
services rendered.
(n) No Employee Benefit Plan listed on SCHEDULE 4.16(a) hereto
provides benefits, including, without limitation, death or medical benefits
(through insurance or otherwise) with respect to any employee or former employee
of either of the Sellers beyond their retirement or other termination of service
other than: (i) coverage mandated by applicable Law; (ii) retirement or death
benefits under any Pension Plan; (iii) disability benefits under any welfare
plan that have been fully provided for by insurance or otherwise; (iv) deferred
compensation benefits accrued as liabilities on the consolidated books of either
of the Sellers; or (v) benefits in the nature of severance pay.
Page 35
(o) No Employee Benefit Plan is a "multiple employer plan" as
described in Section 3(40) of ERISA or Section 413(c) of the Code.
(p) No Employee Benefit Plan listed on SCHEDULE 4.16(a) hereto, other
than a Pension Plan, is funded through a trust intended to be exempt from tax
pursuant to Section 501 of the Code.
(q) Except as set forth on SCHEDULE 4.16(q) hereto, neither of the
Sellers has proposed, agreed to or announced any changes to any Employee Benefit
Plan listed on SCHEDULE 4.16(a) that would cause an increase in benefits under
any such Employee Benefit Plan (or the creation of new benefits or plans) or to
change any employee coverage which would cause an increase in the expense of
maintaining any such plan.
4.17. ENVIRONMENTAL MATTERS.
(a) Except as disclosed on SCHEDULE 4.17(a) hereto, any Hazardous
Materials used or generated by either of the Sellers have always been and are
being generated, used, stored, treated and disposed on and at any Environmental
Site in compliance in all material respects with all applicable Laws, Court
Orders, Government Authorizations, including Environmental Laws. The Sellers are
in compliance in all material respects with all Environmental Laws.
(b) Except as set forth on SCHEDULE 4.17(b) hereto, neither of the
Sellers has become subject to Court Order, or has received, or, to the knowledge
of the Sellers, become subject to any written claim, notice, complaint or
request for information from any Governmental Authority of the United States or
other relevant Governmental Authority or any private party: (i) alleging
violation of or noncompliance with any Environmental Law; (ii) asserting
potential liability under any Environmental Law; or (iii) requesting
investigation or clean-up of any Environmental Site under any Environmental Law.
(c) Except as disclosed in SCHEDULE 4.17(c) hereto, no Hazardous
Materials used or generated by either of the Sellers, their present and former
Affiliates, or, to their knowledge, any predecessors-in-interest to the Sellers,
have ever been, are being, or are intended to be or are threatened with being
spilled, released, discharged, disposed, placed, leaked, or otherwise caused to
become located in the air, soil or water in, under or upon an Environmental Site
or any land adjacent thereto in material violation of any Environmental Law.
(d) Except as disclosed in SCHEDULE 4.17(d) hereto, no Hazardous
Materials have ever been shipped by or for the Sellers, their present and former
Affiliates, or, to the knowledge of the Sellers, any predecessor-in-interest to
the Sellers, to other sites or facilities for treatment, storage or disposal,
and the Sellers have not received any notice that any sites or facilities to
which any such wastes have been shipped or sent to are subject to or threatened
to become subject to any governmental response action or clean up order.
(e) Except as set forth on SCHEDULE 4.17(e) hereto, neither of the
Sellers, their present and former Affiliates, nor, to the knowledge of the
Sellers, any predecessor-in-interest to the Sellers has treated, stored for more
than ninety (90) days, disposed of or recycled any
Page 36
Hazardous Materials on any Environmental Site nor has anyone else treated,
stored for more than ninety (90) days, disposed of or recycled any of the
foregoing on any Environmental Site.
(f) Except as disclosed in SCHEDULE 4.17(f) hereto, Hazardous
Materials have been collected, managed, recycled, shipped and disposed by the
Sellers and their present and former Affiliates in accordance with all
Environmental Laws.
(g) All underground tanks and other storage facilities for Hazardous
Materials located at any Environmental Site are disclosed in SCHEDULE 4.17(g)
hereto and, to the knowledge of the Sellers, no other underground tanks or other
storage facilities for Hazardous Materials have been located on an Environmental
Site and copies of all notifications made to federal, state or local authorities
pursuant to Environmental Laws relating to underground storage tanks have been
provided to the Buyer. As of the date hereof, none of such tanks and other
underground storage facilities are in violation of any Environmental Law in any
respect.
(h) Except as disclosed in SCHEDULE 4.17(h) hereto, all xxxxx, water
discharges and other water diversions and all air emission sources on any
Environmental Site are properly registered and/or permitted and do not violate
any applicable law.
(i) Except as set forth on SCHEDULE 4.17(i) hereto, there are no
asbestos containing materials, capacitors, transformers or other equipment or
fixtures containing PCBs located at any Environmental Site.
(j) The Sellers do not produce, purchase or use in their products, or
purchase or use any material, part, component or subassembly incorporated into
their products, containing any chemical or other material to which local
packaging and/or disclosure laws apply except as set forth on SCHEDULE 4.17(j)
hereto.
(k) There are no Liens or Encumbrances under Environmental Laws on any
Environmental Site chargeable against the rights of either of the Sellers with
respect to their businesses or on any Purchased Assets and, to the knowledge of
the Sellers, no government actions have been taken or are in process which could
subject any Environmental Site or any such Purchased Assets to such
encumbrances, and neither of the Sellers would be required to place any notice
or restriction relating to Hazardous Materials at any Environmental Site in any
deed to such property except as set forth on SCHEDULE 4.17(k) hereto.
(l) [Intentionally Omitted].
(m) Except as disclosed on SCHEDULE 4.17(m) hereto, the Sellers are in
compliance with all federal and state worker safety laws and requirements,
including, but not limited to, applicable requirements under the Occupational
Safety and Health Act.
4.18. GOVERNMENT AUTHORIZATIONS/COMPLIANCE WITH LAWS.
(a) Each of the Sellers holds all Government Authorizations which are
required to own its properties and assets and to permit it to conduct its
businesses as presently
Page 37
conducted. All such Government Authorizations are listed on SCHEDULE 4.18
hereto, together with the applicable expiration date. All such Governmental
Authorization are now, and, will be at the Closing, valid and in full force and
effect. Except as described on SCHEDULE 4.18 hereto, the Buyer shall have full
benefit of the same. No proceeding is pending or, to the knowledge of either of
the Sellers, threatened seeking the revocation or limitations of any Government
Authorization.
(b) Each of the Sellers and each of their Subsidiaries is in
compliance in all material respects with all applicable Laws, Court Orders and
Governmental Authorizations affecting the assets or properties owned or used by
each of the Sellers and each of their Subsidiaries or the business or operations
of each of the Sellers and their Subsidiaries. Neither of the Sellers nor any
Subsidiary has been charged with violating, or to the knowledge of the Sellers,
threatened with a charge of violating, nor, to the Sellers' knowledge, are
either of the Sellers or any of their Subsidiaries under investigation with
respect to a possible violation of, any applicable Law, Court Order or
Governmental Authorization relating to any of its or their assets or properties
or any aspect of its or their business.
4.19. WARRANTY OR OTHER CLAIMS.
(a) Except as set forth on SCHEDULE 4.19(a) hereto, neither of the
Sellers knows of any existing or threatened claims, or any facts upon which a
claim is likely to be asserted against either of the Sellers, for services or
merchandise which are defective or fail to meet any service or product
warranties. No claim has been asserted against either of the Sellers for
material renegotiation or price redetermination of any business transaction, and
neither of the Sellers has knowledge of any facts upon which any such claim is
likely to be asserted.
(b) All products that have been designed, manufactured or sold and all
services that have been rendered by each of the Sellers complied with applicable
contracts, product specifications, Laws and standards (whether established by
the Sellers, Governmental Authority or industry), and, to the Sellers'
knowledge, there are no defects in such products. SCHEDULE 4.19(b) hereto sets
forth each of the Sellers': (i) experience with returns of products sold by it
for the preceding fiscal year and for the portion of the current fiscal year
(including claims or notices that products may or will be returned, whether by
reason of alleged overshipments, defective merchandise or otherwise); and (ii)
aggregate expenses incurred by such Seller's customer support and service center
in fulfilling its obligations under its guaranty, warranty and right of return
provisions during the periods covered by the Sellers' Audited Financial
Statements and the Sellers know of no reason why such expenses should
significantly increase as a percentage of sales in the future.
4.20. LITIGATION. Except for matters described in SCHEDULE 4.20 hereto,
there is no Proceeding pending (or, to the knowledge of either of the Sellers,
threatened) against or otherwise involving either of the Sellers, the Principal
Stockholders, or any of the officers, directors, former officers or directors,
employees, shareholders or agents of either of the Sellers (in their capacities
as such) and there are no outstanding Court Orders to which the either of the
Sellers or the Principal Stockholders is a party or by which any of the
Purchased Assets are bound, any of which: (i) question this Agreement or any
Ancillary Documents or any action to be
Page 38
taken hereby or thereby or affect the transactions contemplated hereby or
thereby; (ii) materially restrict the present business properties, operations,
prospects, assets or condition, financial or otherwise, of either of the
Sellers'; or (iii) will result in any Material Adverse Effect to either of the
Sellers or the Purchased Assets. Neither of the Sellers has any reason to
believe that any such Proceeding may be brought against either of the Sellers,
the Principal Stockholders, the Purchased Assets, the business of either Seller
or any of the officers, directors, former officers or directors, employees,
shareholders or agents of either of the Sellers.
4.21. BORROWINGS AND GUARANTEES. Except as shown on SCHEDULE 4.21 hereto,
there are no agreements or undertakings pursuant to which either of the Sellers,
either singly or together: (a) are borrowing or are entitled to borrow any
money; (b) are lending or have committed themselves to lend any money; or (c)
are a guarantor or surety with respect to the obligations of any Person.
Complete and accurate copies of all such written agreements have been delivered
to the Buyer and are attached to SCHEDULE 4.21 hereto.
4.22. INSURANCE.
(a) Each of the Sellers maintains: (i) insurance on all of its
property (including leased or owned real or personal property) that insures
against loss or damage by fire or other casualty (including extended coverage);
and (ii) insurance against liabilities, claims and risks of a nature and in such
amounts as are normal and customary in its industry.
(b) SCHEDULE 4.22 hereto contains a complete and correct list of all
policies of insurance maintained by or on behalf of each of the Sellers
(including insurance providing benefits for employees) in effect on the date
hereof, together with complete and correct information with respect to the
premiums, coverages, insurers, expiration dates, and deductibles in respect of
such policies. The policies listed on SCHEDULE 4.22 hereto: (i) provide
sufficient coverage to enable the Sellers to comply with all requirements of Law
and all agreements to which any of them is subject; and (ii) will not be
adversely affected by, or terminate or lapse by reason of, the transactions
contemplated by this Agreement. SCHEDULE 4.22 hereto also sets forth all other
insurance policies in effect at any time during the last two full fiscal years
and the current fiscal year, under which either of the Sellers may currently be
entitled to give notice or otherwise assert a claim.
(c) Except for amounts deductible under the policies of insurance
described on SCHEDULE 4.22 hereto or with respect to risks assumed as a
self-insurer and described on such schedule, neither of the Sellers is, nor have
either of the Sellers at any time been, subject to any liability as a
self-insurer of the business or assets of any of the Sellers.
(d) Except as set forth on SCHEDULE 4.22 hereto, there are no claims
dending under any of said policies, or disputes with insurers, and all premiums
due and payable thereunder have been paid, and all such policies are in full
force and effect in accordance with their respective terms. SCHEDULE 4.22 hereto
also sets forth the insurance claims expenses of the Sellers for the last two
full fiscal years and the current fiscal year. No notice of cancellation or
termination has been received with respect to any such policy and there is no
basis upon which the insurance company would have the right to terminate any
such policy during the policy term and no notice relating to non-renewal,
reduction of coverage or increase in premium has been
Page 39
received by either of the Sellers with respect to any such policy. Neither of
the Sellers has been refused any insurance, nor has its coverage been limited by
any insurance carrier with which it has applied for any such insurance or with
which it has carried insurance. Neither of the Sellers has knowledge of any
insurance carrier's insolvency or inability to perform its obligations or pay
any claims pursuant to any of the insurance policies maintained by either of the
Sellers.
(e) Except as set forth on SCHEDULE 4.22 hereto, neither of the
Sellers has a current or prior insurance policy which remains subject to a
retrospective adjustment of the premiums payable thereunder.
4.23. CORPORATE BOOKS, RECORDS AND ACCOUNTS.
(a) The minute books and stock records of each of the Sellers, and any
of their Subsidiaries, accurately record all action taken by the stockholders,
board of directors and committees thereof of the Sellers, and any of their
Subsidiaries, and all issuances and transfers of capital stock of the Sellers,
and any of their Subsidiaries. Complete and accurate copies of all minute books
and stock records of the Sellers and any of their Subsidiaries have been
delivered to or made available for inspection by Buyer.
(b) The books, records and accounts of the Sellers fairly and
accurately reflect transactions and dispositions of assets by each of the
Sellers, and the system of internal accounting controls of each of the Sellers
is sufficient to assure that: (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with US
GAAP and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
4.24. FINDER'S FEE. Neither the Sellers nor the Principal Stockholders have
incurred or become liable for any broker's commission or finder's fee relating
to or in connection with the transactions contemplated by this Agreement.
4.25. TRANSACTIONS WITH INTERESTED PERSONS. Except as set forth on SCHEDULE
4.25 hereto, no shareholder, Affiliate, officer, director or employee of either
of the Sellers or a Subsidiary, nor any spouse or child of any of them or any
Person associated with any of them ("RELATED PERSON"), has, in a capacity other
than as shareholder, Affiliate, officer, director or employee, any interest in
any assets or properties used in or pertaining to the business of the Sellers or
a Subsidiary. None of the shareholders, Affiliates, officers or directors of
either of the Sellers or a Subsidiary nor, to the Sellers' knowledge, any
employee of either of the Sellers or any Related Person has owned, directly or
indirectly, and whether on an individual, joint or other basis, any equity
interest or any other financial or profit interest in a Person (other than less
than two percent (2%) of the outstanding capital stock of a Person subject to
the reporting requirements of the Securities Exchange Act of 1934, as amended)
that has: (a) had business dealings with either of the Sellers or a Subsidiary;
or (b) engaged in competition with either of the Sellers or a Subsidiary. None
of the shareholders, Affiliates, officers or directors of either of the Sellers
or a
Page 40
Subsidiary or any Related Person has owned, directly or indirectly, and whether
on an individual, joint or other basis, any equity interest or any other
financial or profit interest in excess of 10% of the aggregate equity interest
or any other financial or profit interest in a Person that has: (i) had business
dealings with either of the Sellers or a Subsidiary; or (ii) engaged in
competition with either of the Sellers or a Subsidiary. Except as set forth on
SCHEDULE 4.25, no shareholder, Affiliate, officer, director or employee of
either of the Sellers or a Subsidiary nor, to the Sellers' knowledge, any
Related Person is a party to any Contract with, or has any claim or right
against, or owes any amounts to, either of the Sellers or a Subsidiary.
4.26. ABSENCE OF SENSITIVE PAYMENTS. None of the Sellers or their
directors, officers or stockholders or the Principal Stockholders have, nor to
the knowledge of any of the Sellers or the Principal Stockholders have, any of
the Sellers' agents or employees or any other person associated with or acting
on behalf of any of the Sellers:
(a) made or agreed to make any solicitations, contributions, payments
or gifts of funds or property to any governmental official, employee or agent
where either the payment or the purpose of such solicitation, contribution,
payment or gift was or is illegal under the Laws of any applicable jurisdiction
or prohibited by the policy of either of the Sellers or of any of their
suppliers or customers;
(b) established or maintained any unrecorded fund or asset for any
purpose, or has made any false or artificial entries on any of its books or
records for any reason; or
(c) made or agreed to make any contribution or expenditure, or
reimbursed any political gift or contribution or expenditure made by any other
person to candidates for public office, whether national, regional or local
where such contributions were or would be a violation of applicable Law.
4.27. INVESTMENT INTENT. The Sellers and the Principal Stockholders (if
applicable) are purchasing or acquiring the Purchase Shares for their own
account for investment and not with a present view to, or for sale in connection
with, any distribution thereof in violation of the Securities Act. The Sellers
and the Principal Stockholders (if applicable) hereby consent to the imposition
of a legend substantially similar to the following on the certificate(s) for the
Purchase Shares and agree to abide by the restrictions contained therein:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"),
and may not be sold, transferred or assigned unless such shares are
registered under the Securities Act or an opinion of counsel,
acceptable to the Corporation, is obtained to the effect that such
sale, transfer or assignment is exempt from the registration
requirements of the Securities Act."
4.28. RESTRICTED SECURITIES. The Sellers and the Principal Stockholders
understand that the Purchase Shares have not been registered under the
Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among
Page 41
other things, the bona fide nature of the Sellers' and the Principal
Stockholders' investment intent as expressed herein. Subject to the provisions
of Section 7.5 below, the Sellers' and the Principal Stockholders' acknowledge
that the Purchase Shares, when received, must be held indefinitely unless they
are subsequently registered under the Securities Act or an exemption from such
registration is available. Furthermore, the Sellers and the Principal
Stockholders acknowledge that if the Purchase Shares are registered under the
Securities Act pursuant to Section 7.5 below: (a) such shares shall be
"restricted securities" within the meaning of Rule 144 promulgated pursuant to
the Securities Act ("RULE 144"); and (b) for so long as such Registration
Statement is effective and the Buyer has not suspended the use of the
Registration Statement, the shares may be sold if the applicable prospectus
delivery requirements under the Securities Act are satisfied. The Sellers and
the Principal Stockholders represent and warrant that each of them is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation D.
4.29. PAYABLES. There has been no Material Adverse Effect upon either of
the Sellers or a Subsidiary since the date of the Base Balance Sheet in
connection with the amount or delinquency of accounts payable of either of the
Sellers or a Subsidiary (either individually or in the aggregate).
4.30. DISCLOSURE OF MATERIAL INFORMATION. Neither this Agreement, any
Ancillary Document, document or certificate delivered by or on behalf of any of
the Sellers or the Principal Stockholders pursuant to this Agreement, nor any
exhibit or schedule to any of the foregoing (including financial statements and
footnotes), contains any untrue statement of a material fact, or omits to state
a material fact necessary to make the statements herein or therein not
misleading. To the knowledge of the Sellers, there is no fact which has had or
may have a Material Adverse Effect upon either of the Sellers which has not been
set forth herein.
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Sellers as follows:
5.1. ORGANIZATION OF BUYER. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
with full power and authority to own, operate or lease its properties and to
conduct its business in the manner and in the places where such properties are
owned or leased or such business is conducted by it.
5.2. AUTHORIZATION OF TRANSACTION. All necessary action, corporate or
otherwise, has been taken by the Buyer to authorize the execution, delivery and
performance of this Agreement and each of the Ancillary Documents to which it is
a party, and each such agreement is the valid and binding obligation of the
Buyer, enforceable against the Buyer in accordance with its terms, except: (a)
as such enforceability may be limited by bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally; and (b) that the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to the equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
5.3. NO CONFLICT OF TRANSACTION WITH OBLIGATIONS AND LAWS.
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(a) Neither the execution, delivery or performance of this Agreement
nor the Ancillary Documents to which the Buyer is a party, nor the performance
of the transactions contemplated hereby and thereby, will: (i) constitute a
breach or violation of the Buyer's Constituent Documents; (ii) require any
consent, approval or authorization of or declaration, filing or registration
with any person other than a Governmental Authority described in paragraph (b)
below; (iii) conflict with or constitute (with or without the passage of time or
the giving of notice) a breach of, or default under any debt instrument to which
the Buyer is a party, or give any person the right to accelerate any
indebtedness or terminate, modify or cancel any material right; (iv) constitute
(with or without the passage of time or giving of notice) a default under or
breach of any other material agreement, instrument or obligation to which the
Buyer is a party or by which it or its assets are bound; or (v) result in a
violation of any Law or Court Order applicable to the Buyer or its business or
assets, except where such breach, violation, default, failure to obtain any
consent, approval, authorization or declaration, or make any filing or
registration would not, either individually or in the aggregate, have a Material
Adverse Effect upon the Buyer or materially impair or preclude the Buyer's
ability to consummate the transactions contemplated by this Agreement.
(b) The execution, delivery and performance of this Agreement and the
Ancillary Documents to which the Buyer is a party and the transactions
contemplated hereby and thereby by the Buyer do not require the consent, waiver,
approval, authorization, exemption of or giving of notice by the Buyer to any
Governmental Authority, except for those: (i) which may be required under the
Xxxx-Xxxxx-Xxxxxx Anti-Trust Improvements Act of 1976, as amended (the
"XXXX-XXXXX-XXXXXX ACT"); (ii) provided for in this Agreement; and (iii) which
would not, either individually or in the aggregate, have a Material Adverse
Effect upon the Buyer or materially impair or preclude the Buyer's ability to
consummate the transactions contemplated by this Agreement.
5.4. REPORTS AND FINANCIAL STATEMENTS. The Buyer has previously furnished
to the Sellers complete and accurate copies, as amended or supplemented, of its:
(a) Annual Report on Form 10-K for the fiscal year 2000, as filed with the SEC;
(b) proxy statements relating to all meetings of its stockholders (whether
annual or special) since January 1, 2001; and (c) all other reports or
registration statements, other than Registration Statements on Form S-8, filed
by the Buyer with the SEC since October 30, 2000 (such annual reports, proxy
statements, registration statements and other filings, together with any
amendments or supplements thereto, are collectively referred herein as the
"BUYER REPORTS"). The Buyer Reports constitute all of the documents filed by the
Buyer with the SEC since October 30, 2000, other than any Registration Statement
on Form S-8. As of their respective dates, the Buyer Reports did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
audited financial statements and consolidated unaudited interim financial
statements of the Buyer included in the Buyer Reports (together, the "BUYER
FINANCIAL STATEMENTS"): (i) comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto; (ii) have been prepared in accordance with US GAAP
applied on a consistent basis throughout the periods covered thereby (except as
may be indicated by Form 10-Q under the Securities Exchange Act of
Page 43
1934, as amended, and subject to normal recurring year-end adjustments); (iii)
fairly present the consolidated financial condition, results of operations and
cash flows of the Buyer and each of its Subsidiaries as of the respective dates
thereof and for the periods referred to therein; and (iv) are consistent in all
material respects with the books and records of the Buyer.
5.5. CAPITALIZATION. All of the Purchase Shares will be, when issued in
accordance with this Agreement, duly authorized, validly issued, fully paid,
nonassessable and free of all preemptive rights. The authorized capital stock of
the Buyer consists of: (a) 43,000,000 shares of Buyer Common Stock, of which, as
of August 31, 2001, 18,942,922 shares were validly issued and outstanding, fully
paid and nonassessable; and (b) 1,000,000 shares of Buyer Preferred Stock, $0.01
par value per share, of which, as of June 30, 2001, no shares were validly
issued or outstanding. Each Purchase Share shall be accompanied by one Buyer
Purchase Right.
5.6. LITIGATION. There is no Proceeding pending (or, to the knowledge of
the Buyer, threatened) against or otherwise involving the Buyer or any of the
officers, directors, former officers or directors, employees, shareholders or
agents of the Buyer (in their capacities as such) and there are no outstanding
Court Orders to which the Buyer is a party or by which any of the Buyer's assets
are bound, any of which: (a) question this Agreement or any Ancillary Documents
or any action to be taken hereby or thereby or affect the transactions
contemplated hereby; or (b) will result in any Materially Adverse Effect to the
Buyer.
5.7. DISCLOSURE OF MATERIAL INFORMATION. Except as set forth on SCHEDULE
5.7 hereto, this Agreement does not contain any untrue statement of a material
fact, or omits to state a material fact necessary to make the statements herein
or therein not misleading.
ARTICLE VI. COVENANTS OF THE SELLERS
Each of the Sellers and the Principal Stockholders covenants and agrees
with the Buyer as follows:
6.1. CONDUCT OF BUSINESS. Between the date of this Agreement and the
Closing, each of the Sellers will do the following with respect to its business
unless the Buyer shall otherwise consent in writing:
(a) (i) maintain its corporate existence in good standing; (ii)
maintain the general character of its business; (iii) maintain in effect all of
its presently existing insurance coverage (or substantially equivalent insurance
coverage) in the amount and with the insurers set forth in SCHEDULE 4.22 hereto
or equivalent insurance with any substitute insurers approved by the Buyer; (iv)
preserve intact in all material respects its business organization, preserve its
goodwill and the confidentiality of its Trade Secrets exercise commercially
reasonable efforts to keep available to each Seller the services of its current
officers and employees and preserve its present material business relationships
with its collaborators, licensor, customers, suppliers and other Persons with
which such Seller has material business relations; and (v) in all respects
conduct its business only in the ordinary course consistent with past practice
and refrain from changing or introducing any method of management or operations
for its business except in the ordinary course and consistent with prior
practices;
Page 44
(b) refrain from: (i) making any purchase, sale or disposition of any
Purchased Assets, except with respect to the sale of inventory in the ordinary
course of business and for a cash consideration equal to the fair value thereof
at the time of such sale; (ii) purchasing any capital asset costing more than
$10,000; or (iii) mortgaging, pledging, subjecting to a Lien or Encumbrance any
of the Purchased Assets;
(c) maintain the Purchased Assets in good working condition and repair
according to the standards that it maintained to the date of this Agreement,
subject only to ordinary wear and tear;
(d) refrain from instituting or settling any Proceeding before any
Governmental Authority relating to it or its assets or properties;
(e) refrain from making any material capital investment or expenditure
or capital improvement, addition or betterment;
(f) perform all of its obligations under all Contracts and other
agreements relating to each of the Sellers, including the discharge of all
accounts payable of each of the Sellers according to the terms and conditions of
all invoices therefore, except when the amount thereof is being contested in
good faith, by appropriate proceedings and with adequate reserves therefore
being set aside on the books of each of the Sellers;
(g) refrain from entering into any material contract, agreement or
license, or amending or terminating any material contract, agreement or license
to which it is a party or waiving or releasing any material right or claim;
(h) refrain from entering into any contract or commitment providing
for payments in excess of $25,000 in any fiscal year, except in the ordinary
course of business after consultation with the Buyer;
(i) refrain from taking or omitting to take any action that would
constitute a material violation of or a material default under, or waive any
rights under any contract;
(j) refrain from canceling, compromising, waiving or releasing any
material debt, right or claim;
(k) use its best efforts to prevent any change with respect to its
banking arrangements;
(l) refrain from creating, incurring, assuming or otherwise becoming
liable (alone or with any Subsidiary) for any indebtedness in an aggregate
amount in excess of $50,000, provided however, that the Sellers, may create,
incur, assume or otherwise become liable for trade payables incurred in the
ordinary course of business with third parties on an arms length basis in an
aggregate amount of up to $75,000 without the prior written consent of the
Buyer;
Page 45
(m) refrain from paying, discharging or satisfying any obligation or
liability, absolute, accrued, contingent or otherwise, whether or to become due,
(alone or with any Subsidiary) in an aggregate amount in excess of $50,000;
(n) refrain from incurring any contingent liability as a guarantor or
otherwise with respect to the obligations of others, and from incurring any
other contingent or fixed obligations or liabilities except those that are usual
and normal in the ordinary course of business;
(o) refrain from making any loan or advance to any Person other than
travel and other similar routine advances in the ordinary course of business
consistent with past practice;
(p) refrain from: (i) making any change or incurring any obligation to
make a change in the Constituent Documents of the Sellers; (ii) authorizing any
additional or issuing any additional capital stock or, if applicable, other
securities of the Sellers, including warrants and options; or (iii) acquiring
any capital stock or other securities or any ownership interest in, or
substantially all of the assets of, any other business enterprise;
(q) refrain from declaring, setting aside or paying any dividend or
making any other distribution in respect of capital stock, or making any direct
or indirect redemption, purchase or other acquisition of capital stock or other
securities of the Sellers;
(r) refrain from merging, consolidating or reorganizing either of the
Sellers with, or having either of the Sellers acquire, any entity;
(s) refrain from adopting a plan of dissolution or liquidation with
respect to such Seller or any of its Subsidiaries;
(t) refrain from entering into any employment or consulting contract
(other than as may be contemplated by this Agreement) or making any change in
the compensation payable or to become payable to any of the directors, officers,
employees or agents of the Sellers;
(u) promptly upon its knowledge thereof, advise the Buyer in writing
of the termination or resignation of any Key Employee and the circumstances
therefore;
(v) refrain from prepaying any loans from its stockholders, officers
or directors (if any) or making any change in its borrowing arrangements;
(w) refrain from instituting, terminating, changing, making any
unscheduled contribution to, or making any representations, either oral or
written, to increase or change any Employee Benefit Plan or adopting any new
Employee Benefit Plan;
(x) refrain from making any new election with respect to Taxes or any
change in current elections with respect to Taxes, or settle or compromise any
federal, state, local or foreign Tax liability or agree to an extension of a
statute of limitations;
Page 46
(y) withhold or turn over to taxing authorities all employment Taxes;
(z) refrain from making any change in accounting methods or practices
(except as otherwise provided in this Agreement);
(aa) refrain from agreeing to any audit assessment by any taxing
authority or filing any income or franchise tax return or amendment thereto,
unless copies of such tax returns have been delivered to the Buyer for its
review and approval prior to filing, or from revoking any tax election or making
any agreement or settlement with any taxing authority;
(bb) maintain true, correct and complete books of accounts and records
relating to its business;
(cc) comply in all respects with all Laws applicable to the conduct of
its business and the Purchased Assets;
(dd) pay all Taxes, assessments, governmental charges or levies
imposed upon it or its income, profits or assets, or otherwise required to be
paid by it, nor fail to pay when due any liability or charge that if, unpaid,
might become a Lien or Encumbrance upon any of the Purchased Assets;
(ee) promptly upon its knowledge thereof, advise the Buyer in writing
of: (i) any Material Adverse Effect upon its business; (ii) any event, condition
or circumstance occurring from the date hereof until the Closing Date that would
constitute a violation or breach of any representation, warranty, covenant,
agreement or provision contained in this Agreement or any of the Ancillary
Documents (provided, however, that such disclosure shall not be deemed to cure
any violation or breach of any such representation, warranty, covenant,
agreement or provision); or (iii) any event, occurrence, transaction or other
item that would have been or required to have been disclosed on any schedule to
this Agreement or any Ancillary Document, delivered to the Buyer, had such
event, occurrence, transaction or item existed on the date hereof; and
(ff) not take or permit to be taken any action that is represented or
warranted in Section 4.7 above not to have been taken since the Base Balance
Sheet Date.
6.2. ACCESS TO INFORMATION. The Sellers shall permit representatives of the
Buyer to have access (at all reasonable times and in a manner so as not to
interfere with the normal business operations of the Sellers) to all premises,
properties, financial and accounting records, contracts, other records and
documents, and personnel of or pertaining to the Sellers. No investigation or
examination by the Buyer shall diminish, obviate or constitute a waiver of the
enforcement of any of the representations, warranties, covenants or agreements
of the Sellers or the Principal Stockholders under this Agreement or any of the
Ancillary Documents.
6.3. GOVERNMENTAL PERMITS AND APPROVALS; CONSENTS. Each of the Sellers
shall use its best efforts (with the reasonable assistance of the Buyer to the
extent required to obtain such approvals) to obtain promptly: (i) all Government
Authorizations required to be obtained for the
Page 47
lawful consummation of the Closing; and (ii) the consents necessary to give the
Buyer the full benefit of all Governmental Authorizations set forth or required
to be set forth on SCHEDULE 4.18 hereto.
6.4. ASSIGNMENT OF CONTRACTS. To the extent that the sale of the Purchased
Assets constitutes an assignment under the terms of any contract to which either
of the Sellers is a party (including leases for real property) or any
Governmental Authorization which requires the consent of another party, each of
the Sellers agrees to use its best efforts (with the reasonable assistance of
the Buyer to the extent necessary to obtain such consents) to obtain the consent
of such other party to an assignment in all cases in which consent is required.
6.5. MAINTENANCE OF GOVERNMENT AUTHORIZATIONS. Each Seller shall at all
times prior to the Closing Date cause themselves to preserve and maintain each
of the Government Authorizations free and clear of all Liens and Encumbrances.
In addition, the Sellers shall not take any action or permit any of any of their
representatives to take any action which would cause any Governmental Authority
to institute proceedings regarding any of the Government Authorizations or take
any other action which would result in any either Seller being in noncompliance
in any material respect with the requirements of any Governmental Authority
having jurisdiction thereof.
6.6. COLLECTION OF RECEIVABLES. Between the date hereof and the Closing
Date, each of the Sellers will use prudent practices in collection procedures in
order to collect the Receivables so as not to jeopardize the Buyer's future
customer relations.
6.7. RISK OF LOSS. Legal title and risk of loss with respect to the
Purchased Assets shall not pass to the Buyer until the Closing. Prior to the
Closing Date, if any of the assets of either of the Sellers, including the
Purchased Assets, are destroyed or damaged by fire or other casualty, the Buyer
may, at its option, if the amount of such destruction or damage is in excess of
$2,000,000, terminate this Agreement. In the event that the Buyer elects not to
terminate this Agreement, the amount of any insurance proceeds shall not be
taken into account in connection with the determination of any adjustment to the
Aggregate Consideration.
6.8. EMPLOYEE/EMPLOYEE COMPENSATION.
(a) The Sellers agree to pay when due all compensation and benefits to
any employee of the Sellers under all pay and compensation practices and under
any employment agreements applicable to their business which are payable in the
ordinary course of business.
(b) Each of the Sellers shall use its best efforts to retain up until
the Closing those employees listed on SCHEDULE 6.8(B)(1) attached hereto (the
"GPI EMPLOYEES") and to cause the GPI Employees to agree to accept employment
with the Buyer following the Closing. Furthermore, the GPI Employees who are
listed on Schedule 6.8(b)(2) attached hereto are sometimes referred to herein as
the "KEY EMPLOYEES."
6.9. BREACH OF REPRESENTATIONS AND WARRANTIES. Promptly upon the
occurrence of, or promptly upon either of the Sellers becoming aware of the
impending or threatened occurrence
Page 48
of, any event which would cause or constitute a breach, or would have caused or
constituted a breach had such event occurred or been known to it prior to the
date hereof, of any of the representations and warranties of the Sellers or the
Principal Stockholders contained in or referred to in this Agreement, the
Sellers shall give detailed written notice thereof to the Buyer and shall use
their reasonable best efforts to prevent or promptly remedy the same (provided,
however, that such disclosure shall not be deemed to cure any violation or
breach of any such representation or warranty).
6.10. CONSUMMATION OF AGREEMENT. Each of the Sellers shall use its
reasonable best efforts to perform and fulfill all conditions and obligations on
their part to be performed and fulfilled under this Agreement, to the end that
the transactions contemplated by this Agreement shall be fully carried out. To
this end, each of the Sellers will obtain all necessary authorizations or
approvals, including of the stockholders and boards of directors of each of the
Sellers.
6.11. EXCLUSIVITY. From the date hereof until 45 days after the Sellers
have delivered to the Buyer the Sellers' Audited Financial Statements, neither
the Sellers nor the Principal Stockholders, individually or collectively, shall:
(i) solicit, engage in discussions or negotiate with any Person (whether or not
such discussions or negotiations are initiated by either of the Sellers or the
Principal Stockholders), or take any other action intended or designed to
facilitate the efforts of any Person, other than the Buyer, relating to an
Acquisition Transaction; (ii) provide information with respect to the either of
the Sellers or the Purchased Assets to any Person, other than the Buyer,
relating to a possible Acquisition Transaction; (iii) enter into an agreement
with any Person, other than the Buyer, providing for a possible Acquisition
Transaction; or (iv) make or authorize any statement, recommendation or
solicitation in support of any possible Acquisition Transaction by any Person,
other than by the Buyer.
6.12. DEFERRED REVENUES. The Sellers shall pay to the Buyer the full amount
of any invoices from the Buyer for products provided or services performed by
the Buyer under any Customer Contract for which either of the Sellers previously
received cash in the form of deferred revenue, customer deposit or other
prepayment (each a "DEFERRED AMOUNT"). Any invoice relating to a Deferred Amount
shall reflect the Buyer's fully loaded costs of providing the product or service
for which either of the Sellers was prepaid, provided, that if such Deferred
Amount is not included in the Receivables set forth on the Closing Balance
Sheet, then such invoice shall be increased by 10%. The Sellers shall pay the
Buyer within 30 days of its receipt of the invoice. The Sellers shall also
reimburse the Buyer for any refunds the Buyer is required to pay under any such
Customer Contract to the extent of such applicable deferred revenue, customer
deposit or prepayment.
6.13. CHANGE OF NAME. Immediately following the Closing, each of the
Sellers shall make an amendment to their respective Constituents Document and
make all filings and take all steps required in their respective jurisdictions
in order to change the name of each of the Sellers to a name which does not
include the words "GPI", "General", "Precision" or "Xxxxxx". In addition, in
connection with the Closing, each of the Sellers shall deliver to the Buyer
consents, in forms satisfactory to the Secretary of State of the State of
California, consenting to the use of the name General Precision, Inc., GPI and
GPI-Xxxxxx, Inc. by the Buyer or any affiliate thereof.
Page 49
6.14. CERTAIN FILINGS. The Sellers shall cooperate with the Buyer with
respect to all filings with Governmental Authorities that are required to be
made by either of the Sellers to carry out the transactions contemplated by this
Agreement. The Sellers shall assist the Buyer in making all such filings,
applications and notices as may be necessary or desirable in order to obtain the
authorization, approval or consent of any Governmental Authority which may be
reasonably required or which the Buyer may reasonably request in connection with
the consummation of the transactions contemplated hereby. Without limiting the
generality of the foregoing, if the transactions contemplated hereby are subject
to the Xxxx-Xxxxx-Xxxxxx Act, the parties hereto shall promptly and in good
faith file or cause to be filed the appropriate notifications with respect to
the transactions contemplated hereby, respond to any requests for additional
information and documents and provide the necessary information and make the
necessary filings under such Act.
6.15. 401(k) ISSUES. Prior to the Closing, the Board of Directors of the
GPI Company will vote to effectuate an amendment to the General Precision, Inc.
Profit Sharing 401(k) Plan (the "GPI 401(k) PLAN") providing that all
participants in the GPI 401(k) Plan shall be fully vested, effective as of the
Closing Date, in their account balances. Furthermore, the GPI Company shall
cause the GPI 401(k) Plan's fiduciary to authorize participant directed
distributions of their account balances in accordance with Code Section
401(k)(10); and, if participants in the GPI 401(k) Plan so elect, to make direct
rollovers, including participant loans, to a qualified plan maintained by the
Buyer.
ARTICLE VII. COVENANTS OF BUYER
7.1. REASONABLE BEST EFFORTS. Except as otherwise contemplated herein, the
Buyer shall use reasonable best efforts to take all actions and to do all things
necessary, proper or advisable to consummate the Agreement and the transactions
contemplated by this Agreement, including, but not limited to, the delivery of
certificates reasonably requested in connection with any opinions to be
delivered hereunder.
7.2. NOTICES AND CONSENTS. The Buyer shall use reasonable best efforts to
obtain, at its reasonable expense, all such waivers, permits, consents,
approvals or other authorizations from third parties and governmental entities
or authorities, and to effect all such registrations, filings and notices with
or to third parties and governmental entities or authorities, as may be
necessary or desirable in connection with the transactions contemplated by this
Agreement.
7.3. BREACH OF REPRESENTATIONS AND WARRANTIES. Promptly upon the occurrence
of, or promptly upon the Buyer becoming aware of the impending or threatened
occurrence of, any event which would cause or constitute a breach, or would have
caused or constituted a breach had such event occurred or been known to it prior
to the date hereof, of any of the representations and warranties of the Buyer
contained in or referred to in this Agreement, the Buyer shall give detailed
written notice thereof to the Sellers and shall use its reasonable best efforts
to prevent or promptly remedy the same.
Page 50
7.4. LISTING OF PURCHASE SHARES. On or within 30 days after the Closing
Date, the Buyer shall at its sole expense list the Purchase Shares on the Nasdaq
National Market and shall take all steps necessary to accomplish the same.
7.5. REGISTRATION OF THE PURCHASE SHARES ON FORM S-3.
(a) On or before 60 days after the Closing Date, the Buyer shall file
with the SEC, a Registration Statement on Form S-3 (or any successor short form
registration involving a similar amount of disclosure; or if then ineligible to
use any such form, then any other available form of registration statement) (the
"REGISTRATION STATEMENT") for resale of all of the Purchase Shares then
outstanding to be made on a continuous basis pursuant to Rule 415 of the
Securities Act. The Buyer will use its commercially reasonable efforts to cause
such Registration Statement to become effective (subject to review of such
Registration Statement by the SEC) as soon as possible thereafter, and remain
continuously effective until the earlier of: (i) two years after the Closing
Date; or (ii) such time as all of the Purchase Shares may be sold pursuant to
Rule 144 promulgated under the Securities Act on a single day. The Buyer may,
upon written notice to the selling shareholders listed therein, from time to
time suspend use of the Registration Statement for a reasonable period if the
Buyer in its reasonable judgment believes it may possess material nonpublic
information the disclosure of which at that point in time in its reasonable
judgment would have a Material Adverse Effect on the Buyer and its Subsidiaries
taken as a whole.
(b) The Sellers agree to use a broker acceptable to the Buyer, in its
reasonable discretion, in connection with sales of the Purchase Shares under the
Registration Statement.
(c) The Buyer shall pay all expenses of registration for the Purchase
Shares pursuant to Section 7.5(a) above, except brokerage commissions, legal
expenses and such other expenses as may be required by law to be paid by the
Sellers which shall be paid by the Sellers.
(d) To the extent permitted by law, the Buyer will indemnify and hold
harmless each of the Sellers, their respective officers and directors and each
person, if any, who controls the Sellers within the meaning of the Securities
Act, against any losses, claims, damages or liabilities, joint or several, to
which any of them may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (including reasonable
attorneys' fees), arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained or expressly incorporated by reference
in any such Registration Statement, including any preliminary prospectus or
final prospectus contained therein or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each of the Sellers and
their respective officers and directors and each such controlling person for any
legal or other expenses reasonably incurred by any of them in connection with
investigating or defending any such loss, claim, damage, liability or action;
PROVIDED, HOWEVER, that the indemnity agreement contained in this Section 7.5(d)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Buyer (which consent shall not be unreasonably withheld) nor shall the Buyer be
liable in any such case for any such
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loss, claim, damage, liability or action to the extent that it arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in connection with such Registration Statement,
preliminary prospectus, final prospectus or amendment or supplement thereto in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by either of the Sellers or any person
controlling the Sellers.
(e) To the extent permitted by law, the Sellers and the Principal
Stockholders will, severally and jointly, indemnify and hold harmless the Buyer,
its directors, its officers who have signed such Registration Statement and each
person, if any, who controls the Buyer within the meaning of the Securities Act
against any losses, claims, damages or liabilities to which the Buyer or any
such director, officer or controlling person may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (including reasonable attorneys' fees) arise out of or are based
upon any untrue or alleged untrue statement of any material fact contained or
expressly incorporated by reference in such Registration Statement, including
any preliminary prospectus or final prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in such Registration
Statement, preliminary prospectus, final prospectus or amendments or supplements
thereto, in reliance upon and in conformity with written information furnished
by the either of the Sellers or any of the Principal Stockholders expressly for
use in connection with such registration; and the Sellers and the Principal
Stockholders, jointly and severally, will reimburse any legal or other expenses
reasonably incurred by the Buyer or any such director, officer and controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action. It is agreed that the indemnity agreement contained
in this Section 7.5(e) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the indemnifying party (which consent shall not be unreasonably
withheld).
(f) If the indemnification provided for in Sections 7.5(d) and (e)
hereof is unavailable to a person entitled to indemnification hereunder, then
each Person that would have been an indemnifying party hereunder will, in lieu
of indemnifying such indemnified party, contribute to the amount paid or payable
by such indemnified person for which indemnification is provided herein in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and such indemnified party, respectively, in connection with the
statements or omissions which resulted in the costs or expenses (including
reasonable attorney's fees), judgments, fines, losses, claims, damages,
liabilities or amounts paid in settlement underlying such indemnification
obligations. Relative fault will be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or such indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Buyer, the Sellers and the Principal
Stockholders agree that it would not be just and equitable if contribution
pursuant to this Section 7.5(f) were determined by PRO RATA allocation or by any
other method of allocation
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that does not take account of the equitable considerations referred to above in
this Section 7.5(f). No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(g) Promptly after receipt by a party indemnified under this Section
7.5 of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against any indemnifying party under
this Section 7.5, notify the indemnifying party in writing of the commencement
thereof and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; PROVIDED HOWEVER, that if the defendants
in any such action include both the indemnified party and the indemnifying party
and, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of the indemnified party and the
indemnifying party exists, the indemnified party or parties shall have the right
to select one separate law firm, at the indemnifying party's or parties'
expense, to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties. The
failure to notify any indemnifying party promptly of the commencement of any
such action, shall not relieve such indemnifying party of any liability to the
indemnified party under this Section 7.5, except to the extent that such
indemnifying party is actually prejudiced thereby.
(h) After registration of the Purchase Shares pursuant to Section
7.5(a) above, if: (i) the Registration Statement has not been suspended or
withdrawn; and (ii) the Sellers provide the Buyer with any documentation
reasonably requested by the Buyer in order to comply with the securities laws of
the United States of America, the Buyer shall effect the removal of the
restrictive legend set forth in Section 4.27 above from the certificate(s)
surrendered by the Sellers.
(i) For purposes of this Article VII: (i) if the Sellers transfer all,
but not less than all, of the Purchase Shares to any of the Principal
Stockholders (a "TRANSFER"), the rights and obligations of the Sellers under
this Article VII shall inure to the benefit of and be binding upon such
Principal Stockholders; and (ii) the Principal Stockholders do hereby
acknowledge and agree that in the event of a Transfer, they (as applicable)
shall assume all of the obligations and agreements of the Sellers under this
Article VII.
ARTICLE VIII. CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of the Buyer to consummate this Agreement and the
transactions contemplated hereby are subject to the condition that on or before
the Closing the actions required by this Article will have been accomplished.
8.1. REPRESENTATIONS; WARRANTEES; COVENANTS. Without giving effect to any
qualification of materiality (or any variation of such term) contained in any
representation or warranty, the representations and warranties of the Sellers
and the Principal Stockholders contained in Article IV hereof or contained the
Ancillary Documents, individually or in the aggregate, shall be true
Page 53
and correct in all material respects as though made on and as of the Closing
Date and each of the Sellers and the Principal Stockholders shall, on or before
the Closing have performed all of their obligations hereunder and under the
Ancillary Documents which by the terms hereof and thereof are to be performed by
them on or before the Closing.
8.2. LIEN TERMINATIONS. The Sellers shall have delivered to the Buyer
evidence satisfactory to the Buyer and its counsel that the Sellers are able to
deliver the Purchased Assets free and clear of all Liens and Encumbrances,
except as otherwise provided herein with respect to the Assumed Liabilities.
8.3. DELIVERY OF FINANCIAL INFORMATION. The Sellers, at their own cost,
shall have delivered to the Buyer the Sellers' Audited Financial Statements and
historical financial statements and any other financial information with respect
to their business required by Item 7 of Form 8-K and Regulation S-X of the SEC
for a business acquisition required to be described in answer to Item 2 of Form
8-K, including information required in order for the Buyer to prepare the pro
forma financial information required by Item 7 of Form 8-K.
(i) The audit reports included with the Sellers' Audited
Financial Statements shall not be qualified or subject to
modification.
8.4. CERTAIN ANCILLARY DOCUMENTS. Each of the Sellers and/or the Principal
Stockholders (as applicable) shall have executed the following agreements and
documents and delivered them to the Buyer:
(a) an Escrow Agreement substantially in the form attached hereto as
EXHIBIT A;
(b) a lease agreement for the property located at 00000 Xxxxxx
Xxxxxxxx, Xxxxxxxx, XX 00000 with the Buyer substantially in the form attached
hereto as EXHIBIT B;
(c) Bills of Sale from both Sellers transferring title to the
Purchased Assets to the Buyer, each substantially in the form attached hereto as
EXHIBIT C-1 and C-2, respectively;
(d) Invention Assignment Agreements from both Sellers, each
substantially in the form attached hereto as EXHIBIT D-1 and D-2, respectively;
(e) Trademark Assignment Agreements from both Sellers, each
substantially in the form attached hereto as EXHIBIT E-1 and E-2, respectively;
(f) Copyright Assignment Agreements from both Sellers, each
substantially in the form attached hereto as EXHIBIT F-1 and F-2, respectively;
(g) certificates of the Principal Stockholders and President and CEO
of both the GPI Company and the Xxxxxx Company to the effect that each of the
conditions specified in Section 8.1 above has been satisfied;
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(h) releases executed by each of the Sellers and all of the directors
and officers of each of the Sellers and the Principal Stockholders, each
substantially in the forms attached hereto as EXHIBIT G-1 and G-2, respectively;
and
(i) a Noncompetition and Proprietary Information Agreement executed by
the GPI Company and the Xxxxxx Company in the form attached hereto as EXHIBIT H.
8.5. NASR AGREEMENTS. Xxxxxxxx Xxxx shall have executed and delivered to
the Buyer an Employment Agreement substantially in the form attached hereto as
EXHIBIT I and a Noncompetition Agreement substantially in the form attached
hereto as EXHIBIT J. Xxxxx Xxxx shall have executed and delivered to the Buyer a
Noncompetition Agreement substantially in the form attached hereto as EXHIBIT K.
8.6. NONCOMPETITION AGREEMENTS. Each of the persons listed on SCHEDULE
6.8(b)(2) hereto shall have executed and delivered to the Buyer: (a) an
Invention, Noncompetition and Proprietary Information Agreement (except for
Xxxxxxxx Xxxx) substantially in the form attached hereto as EXHIBIT L; and (b) a
completed and executed Form I-9 (with complete supporting documentation).
8.7. AUTHORIZATION FROM OTHERS; TERMINATION OR EXPIRATION OF WAITING
PERIOD. All consents and permits of others required to permit the Sellers to
complete the transactions contemplated by this Agreement and the Ancillary
Agreements shall have been received by the Sellers and presented to the Buyer in
a form acceptable to the Buyer, including, but not limited to, an assignment of
the San Xxxx Lease from the GPI Company to the Buyer and a landlord consent
relative to such assignment in substantially the form attached hereto as EXHIBIT
M. The applicable waiting period under the Xxxx-Xxxxx-Xxxxxx Act and any other
laws applicable to this transaction shall have been terminated or shall have
expired without a request for further information under the Xxxx-Xxxxx-Xxxxxx
Act, or in the event of such a request for further information, the waiting
period following delivery of such information shall have expired without the
objection of either the Federal Trade Commission or the U.S. Justice Department
or any other governmental authority.
8.8. ABSENCE OF CERTAIN LITIGATION. There shall not be any: (a) Court Order
of any nature issued by any court of competent jurisdiction which directs that
this Agreement or any material transaction contemplated hereby shall not be
consummated as herein provided; (b) Proceeding by any federal, state, local or
foreign government (or any agency thereof) pending before any court or
governmental agency, or threatened to be filed or initiated, wherein such
complainant seeks the restraint or prohibition of the consummation of any
material transaction contemplated by this Agreement or asserts the illegality
thereof; or (c) Proceeding by a private party pending before any court or
governmental agency, or threatened to be filed or initiated, which in the
reasonable opinion of counsel for the Buyer is likely to result in the restraint
or prohibition of the consummation of any material transaction contemplated
hereby or the obtaining of an amount in payment (or indemnification) of material
damages from or other material relief against any of the parties or against any
directors or officers of the Buyer, in connection with the consummation of any
material transaction contemplated hereby.
Page 55
8.9. NO BANKRUPTCY. Neither of the Sellers shall: (a) have commenced a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
substantially all of its property, or have consented to any such relief or to
the appointment of or taking possession by any such official in an involuntary
case or other proceeding commenced against it, or have made a general assignment
for the benefit of its creditors; or (b) have an involuntary case or other
proceeding commenced against it seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereinafter in effect or seeking the appointing of a trustee,
receiver, liquidator, custodian or similar official of it or substantially all
of its property; or (c) have an attachment placed on all or a significant
portion of its assets.
8.10. OPINION OF COUNSEL FOR THE SELLERS.
(a) At the Closing, the Buyer shall have received from counsel for the
Sellers, an opinion dated as of the Closing, substantially in the form set forth
as EXHIBIT N hereto.
(b) In rendering the foregoing opinion, such counsel for the Sellers
may state their opinions on specific matters of fact to the best of their
knowledge and, to the extent they deem such reliance proper, may rely on: (i)
certificates of public officials; (ii) certificates, in form and substance
satisfactory to the Buyer and its counsel, of officers of each of the Sellers;
and (iii) an opinion or opinions of other counsel, satisfactory to the Buyer and
its counsel, which opinions are in form and substance satisfactory to the Buyer
and its counsel. In the event such counsel rely upon any such certificate or
opinion, a counterpart of each thereof shall be delivered to the Buyer and its
counsel.
8.11. FAIRNESS OPINION. The Buyer's Board of Directors shall have received
a written opinion from Banc of America Securities LLC, dated as of or prior to
the Closing Date to the effect that as of the date of such opinion the Aggregate
Consideration is fair, from a financial point of view, to Buyer.
8.12. PAYMENT OF INDEBTEDNESS. The Sellers shall have paid in full the
principal of and interest and premium, if any, on all indebtedness for borrowed
money and shall have provided the Buyer with written evidence of the payoff and
full satisfaction of all such indebtedness for borrowed money, provided however,
that the Sellers need not have paid in full the principal of and interest and
premium on the indebtedness set forth on SCHEDULE 8.12 hereto.
8.13. NO MATERIAL ADVERSE EFFECT. Except for changes which have been
disclosed to and accepted in writing by the Buyer prior to the Closing, there
shall have been no Material Adverse Effect upon either of the Sellers or the
Purchased Assets taken as a whole since the date of this Agreement, including,
but not limited to, there being no material change in the net tangible asset
value of the either of the Sellers' business.
8.14. APPROVAL OF BUYER'S COUNSEL. All actions, proceedings, instruments
and documents required to carry out this Agreement and all related legal matters
contemplated by this
Page 56
Agreement, including, without limitation, opinions of counsel, shall have been
approved by counsel for the Buyer, provided that the approval of such counsel
shall not be unreasonably withheld.
ARTICLE IX. CONDITIONS TO OBLIGATIONS OF THE SELLERS
The obligations of the Sellers to consummate this Agreement and the
transactions contemplated hereby are subject to the condition that on or before
the Closing the actions required by this Article will have been accomplished.
9.1. REPRESENTATIONS; WARRANTEES; COVENANTS. Without giving effect to any
qualification of materiality (or any variation of such term) contained in any
representation or warranty, the representations and warranties of the Buyer
contained in Article V, and contained in the Ancillary Documents, individually
or in the aggregate, shall be true and correct in all material respects as
though made on and as of the Closing Date and the Buyer shall, on or before the
Closing have performed all of its obligations hereunder and under the Ancillary
Documents which by the terms hereof and thereof are to be performed by it on or
before the Closing.
9.2. CERTAIN ANCILLARY DOCUMENTS. The Buyer shall have executed the
following agreements and documents and delivered them to the Sellers:
(a) Instrument of Assumption of Liabilities agreements in favor of
each of the Sellers substantially in the forms attached hereto as EXHIBIT O-1
and EXHIBIT O-2;
(b) an Escrow Agreement substantially in the form attached hereto as
EXHIBIT A; and
(c) a certificate of the Senior Vice President, Finance &
Administration and Chief Financial Officer of the Buyer to the effect that each
of the conditions specified in Section 9.1 above has been satisfied.
9.3. GOVERNMENTAL CONSENTS AND APPROVALS; TERMINATION OR EXPIRATION OF HSR
WAITING PERIOD. All consents and permits of others required to permit the Buyer
to complete the transaction shall have been received by the Buyer. The
applicable waiting period under the Xxxx-Xxxxx-Xxxxxx Act and any other laws
applicable to this transaction shall have been terminated or shall have expired
without a request for further information under the Xxxx-Xxxxx-Xxxxxx Act and
any other laws applicable to this transaction, or in the event of such a request
for further information, the waiting period following delivery of such
information shall have expired without the objection of either the Federal Trade
Commission or the U.S. Justice Department.
9.4. ABSENCE OF CERTAIN LITIGATION. There shall not be any: (a) Court Order
of any nature issued by any court of competent jurisdiction which directs that
this Agreement or any material transaction contemplated hereby shall not be
consummated as herein provided; (b) Proceeding by any federal, state, local or
foreign government (or any agency thereof) pending before any court or
governmental agency, or threatened to be filed or initiated, wherein such
complainant seeks the restraint or prohibition of the consummation of any
material transaction contemplated by this
Page 57
Agreement or asserts the illegality thereof; or (c) Proceeding by a private
party pending before any court or governmental agency, or threatened to be filed
or initiated, which in the reasonable opinion of counsel for the Sellers is
likely to result in the restraint or prohibition of the consummation of any
material transaction contemplated hereby or the obtaining of an amount in
payment (or indemnification) of material damages from or other material relief
against any of the parties or against any directors or officers of the Sellers,
in connection with the consummation of any material transaction contemplated
hereby.
9.5. NO BANKRUPTCY. The Buyer shall not: (a) have commenced a voluntary
case or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or substantially
all of its property, or have consented to any such relief or to the appointment
of or taking possession by any such official in an involuntary case or other
proceeding commenced against it, or have made a general assignment for the
benefit of its creditors; or (b) have an involuntary case or other proceeding
commenced against it seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar law
now or hereinafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or similar official of it or substantially all of its
property; or (c) have an attachment placed on all or a significant portion of
its ASSETS.
9.6. OPINION OF BUYER'S COUNSEL.
(a) At the Closing, the Sellers shall have received from Brown,
Rudnick, Freed & Gesmer, counsel for Buyer, an opinion dated as of the Closing,
substantially in the form of EXHIBIT P hereto.
(b) In rendering said opinion, such counsel may state their opinions
on specific matters of fact to the best of their knowledge and, to the extent
they deem such reliance proper, may rely on: (i) certificates of public
officials; (ii) certificates, in form and substance satisfactory to the Sellers
and their counsel; (iii) certificates of officers of the Buyer; and (iv) an
opinion or opinions, in form and substance satisfactory to Sellers and their
counsel, of other counsel satisfactory to the Sellers and their counsel. In the
event such counsel for the Buyer relies upon any such certificate or opinion, a
counterpart of each thereof shall be delivered to the Sellers and their counsel.
9.7. INSTRUCTIONS TO TRANSFER AGENT. At the Closing, the Buyer shall have
delivered to its transfer agent, Equiserve, an irrevocable letter in the form of
EXHIBIT Q hereto.
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ARTICLE X. INDEMNIFICATION
10.1. INDEMNIFICATION BY THE SELLERS AND PRINCIPAL STOCKHOLDERS.
(a) Subject to the limitations in paragraph (b) below, the Sellers and
the Principal Stockholders, jointly and severally, shall defend, indemnify and
hold harmless the Buyer's Indemnified Persons from and against all Losses
directly or indirectly incurred by or sought to be imposed upon any of them and
whether or not caused by negligence or willful act:
(i) resulting from or arising out of any breach of any of the
representations or warranties (other than those in Sections
4.2, 4.10, 4.11, 4.12 and, solely to the extent relating to
title, Sections 4.1 and 4.9) made by the Sellers or the
Principal Stockholders in or pursuant to this Agreement or
in any agreement, document or instrument executed and
delivered pursuant hereto or thereto in connection with the
Closing;
(ii) resulting from or arising out of any breach of any of the
representations or warranties made by the Sellers or the
Principal Stockholders pursuant to Sections 4.2 and 4.12
and, solely to the extent related to title, Sections 4.1 and
4.9;
(iii) resulting from or arising out of any breach of any of the
representations and warranties made by the Sellers or the
Principal Stockholders pursuant to Sections 4.10 and 4.11;
(iv) resulting from or arising out of any breach of any covenant
or agreement made by the Company or the Principal
Stockholders in or pursuant to this Agreement or any
Ancillary Agreement, provided however, that any breach of a
covenant or agreement contained in an agreement executed
pursuant to Section 8.6 by an entity or individual other
than the Principal Stockholders shall not impose upon the
Principal Stockholders the indemnity obligations of this
Section 10.1;
(v) in respect of any Retained Liabilities, except for any
liability arising out of a Full Remedy Product Liability
Claim;
(vi) resulting from any liability arising out of a Full Remedy
Product Liability Claim;
(vii) resulting from or arising out of any liability, payment or
obligation arising out of any litigation or similar matter
required to be described on SCHEDULE 4.20 hereto;
(viii) resulting from or arising out of the intentional
misrepresentation or breach of warranty of the Sellers or
the
Page 59
Principal Stockholders or any intentional failure of any of
them to perform or comply with any of their respective
covenants or agreements;
(ix) resulting from or arising out of any liability, payment or
obligation in respect of any Taxes owing by any of the
Sellers, by the Principal Stockholders or the Buyer, as
successor to the Sellers' businesses, of any kind or
description (including interest and penalties with respect
thereto) for all periods, or portions thereof, up to and
including the Closing Date;
(x) resulting from or arising out of any third party action,
whether by a Governmental Authority or other third party for
damages, including fines or penalties, or clean-up costs or
other compliance costs under any Environmental Law or from
the violation of any Environmental Law arising out of the
operations of any of the Companies on or before the Closing
Date; or
(xi) resulting from or arising out of any Third Party Action
(including a binding arbitration or an audit by any taxing
authority), that it is instituted or threatened against any
of Buyer's Indemnified Persons.
(b) The right to indemnification under paragraph (a) is subject to the
following limitations:
(i) The Sellers and the Principal Stockholders shall have no
liability under paragraph (a) unless one or more of the
Buyer's Indemnified Persons gives written notice to the
Sellers or the Principal Stockholders asserting a claim for
Losses, including reasonably detailed facts and
circumstances pertaining thereto, before the expiration of
the period set forth below:
(1) for claims under clauses (i), (iii) and (xi) (insofar as
a claim under clause (xi) relates to any matter included
under clause (i) or (iii)), of paragraph (a) above, a
period of two (2) years from the Closing Date;
(2) for claims under clauses (vii), (ix), (x) and (xi)
(insofar as a claim under clause (xi) relates to any
matter included under clause (vii), (ix) or (x)) of
paragraph (a) above, for so long as any claim may be made
in respect of such matters under any applicable statute
of limitations, as it may be extended; and
Page 60
(3) for claims under clauses (ii), (iv), (v), (vi), (viii)
and (xi) (insofar as a claim under clause (xi) relates to
any matter included under clause (ii), (iv), (v), (vi) or
(viii)) of paragraph (a) above, without limitation as to
time.
(ii) Indemnification for claims under paragraph (a) above (other
than under clauses (a)(ii), (iii), (iv), (v), (vii), (viii)
(ix), (x) and (xi) (insofar as the claim under clause (xi)
relates to any matter included under clause (a)(ii), (iii),
(iv), (v), (vii), (viii), (ix) or (x)) shall be payable by
the Sellers and the Principal Stockholders only if the
aggregate amount of all Losses hereunder by the Buyer's
Indemnified Persons shall exceed Three Hundred and Fifty
Thousand Dollars ($350,000) (the "BASKET"), at which point
the Sellers and the Principal Stockholders shall be
responsible for all Losses, including the Basket. The
Sellers' and the Principal Stockholders' aggregate liability
for indemnification under paragraph (a) above (other than
under clauses (a)(ii), (iv), (v), (vii), (viii), (ix), (x)
and (xi) (insofar as a claim under clause (xi) relates to
any matter included under clause (a)(ii), (iv), (v), (vii),
(viii), (ix) or (x)) shall not exceed the total purchase
price.
(iii) For the purpose of this Section 10.1, any qualification of
any representations and warranties by reference to the
materiality of matters stated therein, and any limitations
of any representations and warranties as being "to the
knowledge of" or "known to" or words of similar effect,
shall be disregarded in determining any breach thereof or
any Losses.
(iv) At their option, either of the Sellers or the Principal
Stockholders may repurchase from the Buyer, for an amount
equal to the unpaid balance thereof, all or any part of the
accounts receivable included in the Purchased Assets which
are subject to any claims for Losses under clause (iii) of
paragraph (a) above. Upon payment by either of the Sellers
or the Principal Stockholders of any claims for Losses with
respect to any account receivable under clause (iii) of
paragraph (a) above, the Buyer shall concurrently therewith
assign such account receivable to such Seller or Principal
Stockholder free and clear of any Liens or Encumbrances.
(v) At their option, either of the Sellers or the Principal
Stockholders may repurchase from the Buyer, for an amount
equal to the value reflected in the Closing Balance Sheet,
all or any part of the inventory included in the Purchased
Assets which is subject to any claims for Losses under
clause (iii) of paragraph (a) above. Upon payment by such
Seller or Principal Stockholder for any claim for Losses
with respect to any inventory under clause (iii) of
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paragraph (a) above, the Buyer shall concurrently therewith
assign such inventory to such Seller or Principal
Stockholder free and clear of any Liens or Encumbrances.
10.2. INDEMNIFICATION BY BUYER.
(a) Subject to the limitations in paragraph (b) below, from and after
the Closing Date, the Buyer shall indemnify and hold harmless the Sellers'
Indemnified Persons from any and all Losses directly or indirectly incurred by
or sought to be imposed upon them and regardless of whether or not caused by
negligence or willful act:
(i) resulting from or arising out of any breach of any of the
representations or warranties made by the Buyer, in or
pursuant to this Agreement or in any agreement, document or
instrument executed and delivered pursuant hereto or in
connection with the Closing;
(ii) resulting from or arising out of any breach of any covenant
or agreement made by the Buyer in or pursuant to this
Agreement or any Ancillary Agreement;
(iii) resulting from or arising out of the Buyer's fraud; or
(iv) in respect of any Assumed Liability.
(b) The Buyer shall have no liability under paragraph (a) above unless
a Sellers' Indemnified Person gives written notice to the Buyer asserting a
claim for Losses, including reasonably detailed facts and circumstances
pertaining thereto, before the expiration of the period set forth below:
(i) for claims under clause (i) of paragraph (a) above, two (2)
years from the Closing Date; and
(ii) for claims under clauses (ii), (iii) and (iv) of paragraph
(a) above, without limitation as to time.
(c) Indemnification for claims under clause (i) above shall be payable
by the Buyer only if the aggregate amount of all Losses hereunder by Sellers
Indemnified Persons shall exceed Three Hundred and Fifty Thousand Dollars
($350,000) (the "BUYER'S BASKET"), at which point the Buyer shall be responsible
for all losses including the Buyer's Basket. The Buyer's aggregate liability for
indemnification under paragraph (a) above shall not exceed the total purchase
price.
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10.3. DEFENSE OF THIRD PARTY ACTIONS.
(a) Promptly after receipt of notice of any Third Party Action, any
person who believes he, she or it may be an Indemnified Person will give notice
to the potential Indemnifying Person of such action. The omission to give such
notice to the Indemnifying Person will not relieve the Indemnifying Person of
any liability hereunder unless it was prejudiced thereby, nor will it relieve it
of any liability which it may have other than under this Article.
(b) Upon receipt of a notice of a Third Party Action, the Indemnifying
Person shall have the right, at its option and at its own expense, to
participate in and be present at the defense of such Third Party Action, but not
to control the defense, negotiation or settlement thereof, which control shall
remain with the Indemnified Person, unless the Indemnifying Person makes the
election provided in paragraph (c) below.
(c) By written notice within forty-five (45) days after receipt of a
notice of a Third Party Action, an Indemnifying Person may elect to assume
control of the defense, negotiation and settlement thereof, with counsel
reasonably satisfactory to the Indemnified Person; provided, however, that the
Indemnifying Person agrees: (i) to promptly indemnify the Indemnified Person for
its expenses to date; and (ii) to hold the Indemnified Person harmless from and
against any and all Losses caused by or arising out of any settlement of the
Third Party Action approved by the Indemnifying Person or any judgment in
connection with that Third Party Action. The Indemnifying Persons shall not in
the defense of the Third Party Action enter into any settlement which does not
include as a term thereof the giving by the third party claimant of an
unconditional release of the Indemnified Person, or consent to entry of any
judgment except with the consent of the Indemnified Person.
(d) Upon assumption of control of the defense of a Third Party Action
under paragraph (c) above, the Indemnifying Person will not be liable to the
Indemnified Person hereunder for any legal or other expenses subsequently
incurred in connection with the defense of the Third Party Action, other than
reasonable expenses of investigation.
(e) If the Indemnifying Person does not elect to control the defense
of a Third Party Action under paragraph (c), the Indemnifying Person shall
promptly reimburse the Indemnified Person for expenses incurred by the
Indemnified Person in connection with defense of such Third Party Action, as and
when the same shall be incurred by the Indemnified Person.
(f) Any person who had the right hereunder but did not assume control
of the defense of any Third Party Action shall have the duty to cooperate with
the party which assumed such defense.
10.4. MISCELLANEOUS.
(a) Buyer's Indemnified Persons shall be entitled to indemnification
under Section 10.1(a) and Sellers' Indemnified Persons shall be entitled to
indemnification under Section 10.2(a), regardless of whether the matter giving
rise to the applicable liability, payment, obligation or expense may have been
previously disclosed to any such person, unless expressly assumed on the
particular Schedule.
Page 63
(b) If any Loss is recoverable under more than one provision hereof,
the Indemnified Person shall be entitled to assert a claim for such Loss until
the expiration of the longest period of time within which to assert a claim for
Loss under any of the provisions which are applicable.
(c) The Buyer may, at its option, recover any amount owing by either
of the Sellers or the Principal Stockholders for indemnification hereunder by
setoff against any amounts that may otherwise be due from the Buyer to the
Sellers or the Principal Stockholders, or any of them, whether hereunder or
otherwise; provided that the Buyer shall not be required to recover such claims
in such manner and may proceed against the Indemnified Party at any time or
times for recovery of indemnification claims.
10.5. PAYMENT OF INDEMNIFICATION. Claims for indemnification under this
Article X shall be paid or otherwise satisfied by Indemnifying Persons within
thirty (30) days after notice thereof is given by the Indemnified Person. Any
amount which may become due and payable to any of the Buyer's Indemnified
Persons under Section 10.1(a) above shall first be paid or otherwise satisfied
out of the Escrow until the same has been exhausted, provided that such claims
may be satisfied, at the Buyer's election by the Buyer (but the Buyer's
Indemnified Persons shall not be obligated to seek such satisfaction) out of
amount owing by the Buyer to either Seller as a set off before proceeding
against the Escrow. Any claims in excess of the amount of the Escrow and any
amounts of set off may be recovered by whatever remedy is available at law or
equity
ARTICLE XI. TERMINATION OF AGREEMENT
11.1. TERMINATION. The parties have agreed that this Agreement shall not be
terminated, except in accordance with the provisions of this Article XI, all
strictly construed against the party seeking such termination. This Agreement
may be terminated any time prior to the Closing:
(a) by mutual written consent of the Buyer and the Sellers; or
(b) by either the Buyer or the Sellers, if, without fault of such
terminating party, the Closing shall not have been consummated on or before 45
days after the day that the Sellers deliver to the Buyer the Sellers' Audited
Financial Statements.
11.2. TERMINATION BY THE BUYER. This Agreement may be terminated by action
of the Board of Directors of the Buyer, at any time prior to Closing if:
(a) any Seller or Principal Stockholder shall have failed to comply
with any of the covenants or agreements contained in this Agreement or any
Ancillary Document such that the Closing condition set forth in Section 8.1
above would not be satisfied; and provided that if such breach or breaches are
capable of being cured prior to the Closing, such breach or breaches shall not
have been cured within 15 days of delivery to the Sellers and Principal
Stockholders of written notice of such breach;
(b) there exists a breach or breaches of any representation or
warranty by any Seller or Principal Stockholder contained in this Agreement or
any Ancillary Document such that the Closing condition set forth in Section 8.1
would not be satisfied; and provided that if such
Page 64
failure or failures are capable of being cured prior to the Closing, such
failure or failures shall not have been cured within 15 days of delivery to the
Sellers and Principal Stockholders of written notice of such failure;
(c) any of the Sellers or Principal Stockholder or their
representatives engages in any conduct or takes any action concerning an
Acquisition Transaction not permitted by Section 6.11 above; or
(d) any of the Purchased Assets, are destroyed or damaged by fire or
other casualty and the Buyer elects to exercise its option to terminate this
Agreement in accordance with the terms of Section 6.7 above.
11.3. TERMINATION BY THE SELLERS. This Agreement may be terminated by
action of the Board of Directors of both Sellers at any time prior to the
Closing if:
(a) the Buyer shall have failed to comply with any of the covenants or
agreements contained in this Agreement or any Ancillary Document such that the
closing condition set forth in Section 9.1 would not be satisfied, and provided
that if such failure or failures are capable of being cured prior to the
Closing, such failure or failures shall not have been cured within 15 days of
delivery to the Buyer of written notice of such failure; or
(b) there exists a breach or breaches of any representation or
warranty of the Buyer contained in this Agreement or any Ancillary Document such
that the Closing condition set forth in Section 9.1 would not be satisfied, and
provided that if such breach or breaches are capable of being cured prior to the
Closing, such breach or breaches shall not have been cured within 15 days of
delivery to Buyer of written notice of such breach.
11.4. PROCEDURE FOR TERMINATION. In the event of termination and
abandonment of the transaction by the Buyer or the Sellers pursuant to this
Article XI, written notice thereof shall forthwith be given to the other.
11.5. EFFECT OF TERMINATION. In the event of termination of this Agreement
in accordance with the provisions of this Article XI, this Agreement shall
forthwith become void and no party to this Agreement shall have any liability or
further obligation to any other party, except as provided in Sections 12.2, 12.4
and 12.5 of this Agreement, which provisions shall survive such termination, and
except that nothing herein shall relieve any party from liability for any breach
of this Agreement.
11.6. RIGHT TO PROCEED. Anything in this Agreement to the contrary
notwithstanding, if any of the conditions specified in Article VIII hereof have
not been satisfied, the Buyer shall have the right to waive the satisfaction of
any such condition contained in Article VIII and to proceed with the
transactions contemplated hereby. If any of the conditions specified in Article
IX hereof has not been satisfied, then both Sellers, jointly, shall have the
right to waive the satisfaction of any such condition contained in Article IX
and to proceed with the transactions contemplated hereby.
Page 65
ARTICLE XII. MISCELLANEOUS
12.1. SURVIVAL OF WARRANTIES. All representations, warranties, agreements,
covenants and obligations herein or in any schedule, certificate or financial
statement delivered by any party to another party incident to the transactions
contemplated hereby are material, shall be deemed to have been relied upon by
the other party and shall survive the Closing for the applicable periods set
forth in Article X and shall be further actionable subject to the limitations
set forth therein, regardless of any investigation and shall not merge in the
performance of any obligation by either party hereto.
12.2. FEES AND EXPENSES. Except as otherwise expressly provided in this
Agreement, the Sellers and the Principal Stockholders will pay their respective
legal, accounting and other expenses in connection with this Agreement and the
transactions contemplated herein and the Buyer will pay its legal, accounting
and other expenses in connection with this Agreement and the transactions
contemplated herein.
12.3. NOTICES. All notices, requests, demands and other communications
required or permitted to be given hereunder by any party hereto shall be in
writing and shall be deemed to have been duly given: (a) when received if
delivered personally; (b) one business day after delivered to a prepaid
domestically recognized overnight receipted courier if sent domestically; (c)
three business days after delivered to a prepaid internationally recognized
overnight receipted courier if sent internationally; (d) when receipt
telephonically acknowledged if sent by telecopier transmission on a business day
or, if not a business day, on the next following business day; or (e) when
answered back if sent by telex, if on a business day, or if not a business day,
on the next following business day, to the parties at the following addresses
(or at such other addresses as shall be specified by the parties by like
notice):
If to the Sellers and/or the Principal Stockholders:
Xx. Xxxxxxxx Xxxx
General Precision, Inc.
00000 Xxxxxx Xxxxxxxx
Xxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxx Xxxxxx, Esq.
Xxxxx Xxxxxxx XxXxxxxx & Xxxxxxx
00000 Xxxxxxxx Xxxxxxxxx
00xx Xxxxx
Xxx Xxxxxxx, XX 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
Page 66
If to the Buyer, to:
Xxxxxx Automation, Inc.
00 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxxx, Senior Vice President, Finance & Administration
and Chief Financial Officer
with a copy to:
Brown, Rudnick, Freed & Gesmer
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
and in any case at such other address as the addressee shall have specified by
written notice. All periods of notice shall be measured from the date of
delivery thereof.
12.4. PUBLICITY AND DISCLOSURES. Unless required by law, any public
announcement or similar publicity with respect to this Agreement, the Closing or
any transaction contemplated by this Agreement will be issued, if at all, at
such time and in such manner as the Buyer determines with the concurrence of the
Sellers, which concurrence shall not be unreasonably withheld or delayed by the
Sellers. Pursuant to this Section 12.4, the parties agree that the Buyer shall
issue a press release as soon as practical after the execution of this Agreement
(unless such disclosure is required to be made prior to the execution of this
Agreement under applicable law, in which case such press release shall be issued
at a time determined by the Buyer in its sole discretion) in such form as shall
be approved by the Sellers which such approval shall not be unreasonably
withheld or delayed. Unless disclosure is consented to by the Buyer in advance
or required by law or disclosure has otherwise already been made, the Sellers
and the Principal Stockholders shall keep this Agreement and the transactions
contemplated hereby strictly confidential and may not make disclosure of this
Agreement or such transactions to any Person other than the Sellers' directors,
officers, employees or agents who need to know such information to enable the
Sellers to comply with this Agreement, provided that each such director,
officer, employee or agent shall agree, for the benefit of the Buyer, to
maintain the confidentiality of such information as provided in this Section
12.4. The Sellers, the Principal Stockholders and the Buyer will consult with
each other concerning the means by which the Sellers' employees, customers and
suppliers and other Persons having dealings with the Sellers will be informed of
this Agreement, the Closing, and the transactions contemplated hereby, and
representatives of the Buyer may at the Buyer's option be present for any such
communication.
Page 67
12.5. CONFIDENTIALITY. The parties agree that they will keep confidential
and not disclose or divulge any confidential, proprietary or secret information
which they may obtain from any of the other parties to this Agreement in
connection with the transactions contemplated herein, or pursuant to inspection
rights granted hereunder, or reveal the financial or other terms and conditions
of this Agreement unless such information (collectively, the "CONFIDENTIAL
INFORMATION"): (a) is now, or hereafter becomes, through no act or failure to
act on behalf of the receiving party, generally known or available to the
public; (b) was known by the receiving party before receiving such information
from the disclosing party; (c) is hereafter received by the receiving party from
a third party without breach of any obligation to the disclosing party; (d) is
independently developed by the receiving party without use of or reference to
the Confidential Information of the disclosing party by persons who had no
access to the Confidential Information of the disclosing party; or (e) is
required to be disclosed by applicable law or a Court Order, including
applicable securities laws or stock exchange rules or regulations, PROVIDED
HOWEVER, that in the event that a receiving party intends to disclose the
providing party's Confidential Information pursuant to this Section 12.5(e), the
receiving party shall provide the disclosing party with prompt written notice of
such intended disclosure such that the disclosing party may seek an appropriate
protective order or other appropriate remedy. Upon any termination of this
Agreement pursuant to Article XI, all of the parties shall, within 10 business
days of such termination, return all Confidential Information of the other
parties to the other parties without retaining copies of the same and shall
destroy all notes, abstracts and other documents that contain the other parties'
Confidential Information. The obligations of this Section 12.5 shall survive any
termination of this Agreement pursuant to Article XI. The obligations of the
Buyer under this Section 12.5 shall terminate upon the Closing.
12.6. ENTIRE AGREEMENT. This Agreement together with the Ancillary
Documents (including all exhibits or schedules appended to this Agreement and
all documents delivered pursuant to or referred to in this Agreement, all of
which are hereby incorporated herein by reference) constitutes the entire
agreement between the parties, and all promises, representations,
understandings, warranties and agreements with reference to the subject matter
hereof and inducements to the making of this Agreement relied upon by any party
hereto, have been expressed herein, in the Ancillary Documents or in the
documents incorporated herein by reference.
SEVERABILITY. 12.7. If any provision of this Agreement or the application
of any such provision to any party or circumstances shall be determined by any
court of competent jurisdiction to be invalid or unenforceable to any extent,
the remainder of this Agreement, or the application of such provision to such
party or circumstances other than those to which it is so determined to be
invalid or unenforceable, shall not be affected thereby, and each provision
hereof shall be enforced to the fullest extent permitted by law. If the final
judgment of a court of competent jurisdiction declares that any item or
provision hereof is invalid or unenforceable, the parties hereto agree that the
court making the determination of invalidity or unenforceability shall have the
power to reduce the scope, duration or area of the term or provision, to delete
specific words or phrases and to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified.
Page 68
12.8. ASSIGNABILITY. This Agreement may not be assigned otherwise than by
operation of law: (a) by Buyer without the prior written consent of the Sellers,
PROVIDED HOWEVER, that the Buyer may assign any of its rights under this
Agreement or in any agreement, document or instrument executed and delivered
pursuant hereto or in connection with the Closing (without the prior written
consent of the Sellers): (i) to any successor to all or substantially all of its
business and assets relating to the subject matter of this Agreement, to the
extent that such entity agrees to assume all of the Buyer's obligations
hereunder; or (ii) to one or more Affiliates of the Buyer, to the extent that
any such entity agrees to assume all of the Buyer's obligations hereunder; or
(b) by either Seller without the prior written consent of Buyer. Furthermore,
any or all rights of the Buyer to receive performance (but not the obligations
of the Buyer hereunder) and rights to assert claims against the Sellers or the
Principal Stockholders in respect of breaches of representations, warranties or
covenants of the Sellers or the Principal Stockholders hereunder, may be
assigned by the Buyer to any Affiliate of the Buyer, but any assignee of such
rights shall take such rights subject to any defenses, counterclaims and rights
of setoff to which any Seller might be entitled under this Agreement. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. Nothing expressed or
referred to in this Agreement will be construed to give any Person other than
the parties to this Agreement any legal or equitable right, remedy or claim
under or with respect to this Agreement or any provision of this Agreement.
12.9. AMENDMENT. This Agreement may be amended only by a written agreement
executed by the Buyer and each of the Sellers.
12.10. GOVERNING LAW; VENUE. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts
(other than the choice of law principles thereof), except that any
representations and warranties with respect to real and tangible property shall
be governed by and construed in accordance with the laws of the jurisdiction
where such property is situated if other than in the Commonwealth of
Massachusetts. Any claim, action, suit or other proceeding initiated by any of
the Sellers, the Principal Stockholders or Sellers' Indemnified Persons against
the Buyer, or by the Buyer or any of the Buyer's Indemnified Persons against any
Seller or Principal Stockholder, arising under or in connection with this
Agreement may be asserted, brought, prosecuted and maintained in any Federal or
state court in the United States where jurisdiction and venue properly lie,
provided however, that the Sellers, the Principal Stockholders and the Buyer
covenant and agree that they shall not assert, bring, prosecute or maintain any
claim, action, suit or other proceeding arising under or in connection with this
Agreement or any Ancillary Agreement in any Federal or state court in the State
of California.
12.11. REMEDIES. The parties hereto acknowledge that the remedy at law for
any breach of the obligations undertaken by the parties hereto is and will be
insufficient and inadequate and that the parties hereto shall be entitled to
equitable relief, in addition to remedies at law. In the event of any action to
enforce the provisions of this Agreement, the parties shall waive the defense
that there is an adequate remedy at law. The Sellers hereby acknowledge that the
Purchased Assets are unique and cannot be obtained on the open market. Without
limiting any remedies any party may otherwise have hereunder or under applicable
law, in the event any other
Page 69
party refuses to perform its obligations under this Agreement, the first party
shall have, in addition to any other rights at law or equity, the right to
specific performance.
12.12. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
12.13. EFFECT OF TABLE OF CONTENTS AND HEADINGS. Any table of contents,
title of an article or section heading herein contained is for convenience of
reference only and shall not affect the meaning of construction of any of the
provisions hereof.
12.14. INTERPRETATION. The parties hereto acknowledge and agree that: (a)
each party and its counsel reviewed and negotiated the terms and provisions of
this Agreement and have contributed to its revision; (b) the rule of
construction to the effect that any ambiguities are resolved against the
drafting party shall not be employed in the interpretation of this Agreement;
and (c) the terms and provisions of this Agreement shall be construed fairly as
to all parties hereto and not in favor of or against any party, regardless of
which party was generally responsible for the preparation of this Agreement.
12.15. DISPOSITION OF PURCHASE SHARES. The Sellers agree that they will not
sell or otherwise dispose of any of the Purchase Shares in violation of the
registration requirements of the Securities Act or in violation of any other
federal or state laws or regulations governing the sale or other disposition of
securities.
12.16. PRODUCT WARRANTY/LIABILITY. Although the Buyer does not assume any
of Sellers' product warranty obligations for products sold prior to the Closing
Date, the Buyer shall have the obligation after the Closing Date, on the
Sellers' behalf, to perform the Sellers' obligations under the Sellers' product
warranties for such products. The performance by the Buyer of any of the
Sellers' product warranty obligations for such products shall not give rise to
any rights in the Sellers. The Sellers agree to reimburse the Buyer upon demand
for the Buyer's costs in performing such obligations for the Sellers, including,
but not limited to, reasonable out-of-pocket costs and internal labor, material
and overhead costs at the Buyer's normal rates. In addition, the Sellers shall
keep in force and shall name the Buyer as an additional insured party under the
product liability and commercial general and excess liability insurance policies
related to the Sellers' business ("SELLERS' INSURANCE") as maintained prior to
the Closing Date by Sellers for a period continuing after the Closing Date until
the second anniversary of the Closing Date. The Sellers shall provide the Buyer
with evidence of such insurance prior to the Closing by delivering one copy of a
Certificate of Insurance, completed by its insurance carrier(s) or agents
certifying that insurance coverage is in effect and will not be canceled or
materially changed until thirty (30) days after written notice.
[SIGNATURE PAGES TO FOLLOW]
Page 70
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as an instrument under seal in multiple counterparts as of the date set
forth above by their duly authorized representatives.
XXXXXX AUTOMATION, INC.
By:
--------------------------------------------
Name:
Title:
GENERAL PRECISION, INC.
By:
--------------------------------------------
Xxxxxxxx X. Xxxx
President and CEO
GPI-XXXXXX, INC.
By:
--------------------------------------------
Xxxxxxxx X. Xxxx
President and CEO
Page 71
PRINCIPAL STOCKHOLDERS:
NASR FAMILY TRUST DATED SEPTEMBER 7, 1999
By:
-------------------------------------------
Xxxxxxxx X. Xxxx
Trustee
By:
-------------------------------------------
Xxxxx X. Xxxx
Trustee
-----------------------------------------------
Xxxxxxxx X. Xxxx
-----------------------------------------------
Xxxxx X. Xxxx
Page 72
ASSET PURCHASE AGREEMENT
LIST OF SCHEDULES AND EXHIBITS
EXHIBIT DOCUMENT
------- --------
Exhibit A Escrow Agreement
Exhibit B Lease Agreement for Valencia, CA
Exhibit C-1 GPI Company Xxxx of Sale
Exhibit C-2 Xxxxxx Company Xxxx of Sale
Exhibit D-1 GPI Company Invention Assignment Agreement
Exhibit D-2 Xxxxxx Company Invention Assignment Agreement
Exhibit E-1 GPI Company Trademark Assignment Agreement
Exhibit E-2 Xxxxxx Company Trademark Assignment Agreement
Exhibit F-1 GPI Company Copyright Assignment Agreement
Exhibit F-2 Xxxxxx Company Copyright Assignment Agreement
Exhibit G-1 Sellers' Release
Exhibit G-2 Principal Stockholders' Release
Exhibit H Sellers' Non-Competition Agreement
Exhibit I Xxxxxxxx Xxxx Employment Agreement
Exhibit J Xxxxxxxx Xxxx Non-Competition Agreement
Exhibit K Xxxxx Xxxx Non-Competition Agreement
Exhibit L Form of Employee Non-Solicitation and Proprietary
Information Agreement
Exhibit M Form of Assignment and Consent for San Xxxx Lease
Exhibit N Opinion of Xxxxx Xxxxxxx XxXxxxxx & Xxxxxxx
Exhibit O-1 Buyer Instrument of Assumption of Liabilities for the GPI
Company
Exhibit O-2 Buyer Instrument of Assumption of Liabilities for the Xxxxxx
Company
Exhibit P Opinion of Xxxxx Xxxxxxx Xxxxx & Gesmer
Exhibit Q Letter to Transfer Agent
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