Exhibit 10.55
ASSET PURCHASE AGREEMENT
by and among
XXXXXXX KANSA CORPORATION
AND
XXXXXX X. XXXXXXX,
XXXXXX X. XXXXX,
AND
VEKTEK, INC.
TABLE OF CONTENTS
I. DEFINITIONS
II. PURCHASE AND SALE OF ASSETS
2.1 Purchase and Sale
2.2 Consideration
2.3 Adjustment to Cash Consideration
2.4 Final Statement
2.5 Post-Closing Settlement
2.6 Lease
2.7 Condition of Assets
2.8 Allocation of Consideration
2.9 Consents
2.10 Excluded Liabilities
2.11 Real Property
III. CLOSING
3.1 Closing Date
3.2 Closing Deliveries by Buyer
3.3 Closing Deliveries by Seller
IV. REPRESENTATIONS AND WARRANTIES OF SELLER
4.1 Organization and Standing
4.2 Authority
4.3 No Violation
4.4 Consents
4.5 Financial Statements
4.6 Absence of Certain Changes
4.7 Taxes
4.8 Litigation
4.9 Contracts
4.10 Compliance with Law
4.11 Permits
4.12 Title to Assets
4.13 Intellectual Property
4.14 Employee Matters
4.15 Insurance
4.16 Real Property
4.17 Environmental Matters
4.18 Agreements Restricting Business
4.19 Accuracy of Information
V. REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 Organization and Standing
5.2 Authority
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5.3 No Violation
5.4 Consents
5.5 Financing
5.6 Litigation
VI OTHER OBLIGATIONS
6.1 Access to Information
6.2 Conduct of Business
6.3 Public Information
6.4 Finder's Fees
6.5 Commercially Reasonable Efforts
6.6 Certain Filings
6.7 Employment of Employees
6.8 Use of Business Names by the Buyer
6.9 Collection of Accounts Receivable
6.10 Collections
6.11 Records
VII CONDITIONS TO CLOSING
7.1 Conditions to Buyer's Obligations
7.2 Conditions to Seller's Obligations
VIII TERMINATION, AMENDMENT AND WAIVER
8.1 Termination of Agreement
8.2 Effect of Termination
8.3 Amendment, Extension and Waiver
IX MISCELLANEOUS
9.1 Confidentiality
9.2 Expenses
9.3 Further Assurances
9.4 Survival
9.5 Indemnification
9.6 Parties in Interest
9.7 Entire Agreement
9.8 Interpretation
9.9 Notices
9.10 Equitable Relief
9.11 Law Governing
9.12 Arbitration
9.13 Counterparts
9.14 Severability
9.15 Waiver
9.16 Ongoing Business Relationship
9.17 Non-solicitation
9.18 Schedules
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SIGNATURES
Exhibit A - Fixed Assets
Exhibit B - Employees
Exhibit C - Equipment Leases
Exhibit D - Statement of Net Book Value
Exhibit E - Lease
Exhibit F - Allocation of Consideration
Exhibit G - Assumption Agreement
Exhibit H - Assignment Agreements
SCHEDULES
Schedule 1 - Excluded Assets
Schedule 2.9 - Contract Consents
Schedule 4.3 - Violations
Schedule 4.4 - Consents
Schedule 4.8 - Litigation
Schedule 4.9 - Material Contracts
Schedule 4.1 - Permits
Schedule 4.13 - Intellectual Property
Schedule 4.14 - Employee Matters
Schedule 4.15 - Insurance
Schedule 4.16 - Real Property
Schedule 4.17 - Materials of Environmental Concern
Schedule 6.2 - Exceptions to Conduct of Business
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made as of October 3, 2002 between XXXXXXX KANSA
CORPORATION, a Kansas corporation with an office and principal place of business
at 0000 Xxxxx Xxxxx, Xxxxxxx, Xxxxxx (hereinafter "Seller"), and XXXXXX X.
XXXXXXX, an individual residing at 0000 Xxxx 00xx Xxxx Xxxxx, Xxxxxxx, Xxxxxx
("Xxxxxxx") XXXXXX X. XXXXX, an individual residing at 0000 Xxxx X, Xxxxxxx,
Xxxxxx 00000 ("Xxxxx") and VEKTEK, INC., a Kansas corporation with an office and
principal place of business at 0000 X. 0xx Xxxxxx, Xxxxxxx, XX 00000 ("Vektek"
and collectively with Xxxxxxx and Xxxxx, the "BUYER" or "BUYERS").
WHEREAS, Seller, a wholly owned subsidiary of Xxxxxxx Technology
Corporation ("BTC" and sometimes, with its Affiliate companies, "Xxxxxxx"), is
in the business of manufacturing and selling to the newspaper printing industry
material handling equipment and products, including inserters, (the "Business");
and
WHEREAS, subject to and upon the terms and conditions set forth in this
Agreement, Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, substantially all of the assets and properties owned by Seller and used
in the conduct of the Business, in return for cash and the assumption of certain
liabilities.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
For the purpose of this Agreement, any amendment hereto and any Exhibit
or Schedule attached hereto, and in addition to terms defined in the recitals
and elsewhere herein, the following terms have the following meanings, except as
otherwise expressly provided or unless the context otherwise requires.
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling or controlled by, or under direct or indirect
common control with, such Person. A Person shall be deemed to control another
Person if such Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of such other Person, whether
through the ownership of voting securities or other ownership interests, by
contract or otherwise.
"ASSETS" means all of the assets and properties (of every kind, nature,
character and description, whether real, personal or mixed and whether tangible
or intangible) as the same shall exist as of the Closing owned by Seller and
used in the conduct of the Business (other than the Excluded Assets) including,
without limitation, the following:
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(a) all machinery, equipment, furniture, fixtures, computer
hardware and software, furnishings, vehicles and other fixed assets
owned by Seller and used in the conduct of the Business including those
set forth on Exhibit A;
(b) all finished products, work-in-process, raw materials,
spare parts, stores and supplies, and other inventory items owned by
Seller and used in the conduct of the Business (the "INVENTORY");
(c) all trade accounts receivable owned by Seller arising out
of the conduct of the Business (the "ACCOUNTS RECEIVABLE");
(d) all the prepaid assets owned by Seller related to the
Business;
(e) all of Seller's rights in, to or under the Contracts;
(f) to the extent that the same are transferable, all of
Seller's rights in, to or under the Permits;
(g) all Intellectual Property owned by Seller or owned by an
Affiliate of Seller but used exclusively in the Business and all rights
of Seller or its Affiliate thereunder or in respect thereof, including,
but not limited to, rights to xxx for and remedies against past,
present and future infringements thereof, and rights of priority and
protection of interests therein under the laws of any jurisdiction
worldwide;
(h) all Records as defined herein, except as provided in
Section 6.11;
(i) all unliquidated claims of every kind and description
which Seller may have against any Person exclusively arising out of, or
relating to, the Business or any item included within the definition of
the "Assets";
(j) the Real Property
(k) Property Plant and Equipment; and
(l) all of Seller's rights in and to the name "Kansa" and any
other name used by Seller in connection with the Business except the
name "Xxxxxxx"; and Sellers rights in and to all telephone numbers,
post office addresses and boxes, email addresses, internet domain names
and websites related to the Business, provided however that Buyer may
only use the existing email addresses, internet domain names and
websites which contain the name "Xxxxxxx" for a transition period of up
to six months; and all marketing information or research in the
possession of or commissioned or conducted by Seller respecting the
Business.
"ASSUMED LIABILITIES" means the following liabilities and obligations
of Seller arising out of or relating exclusively to the Business or the Assets:
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(a) all obligations and liabilities of Seller under the
Contracts and the assignable Permits accruing from and after the
Closing, but, except as provided in clauses (b) and (c) of this
definition, no such obligations and liabilities accruing prior thereto;
(b) express warranty work, including any obligations to
return, repair or replace, for sales of product of the Business, but
excluding any product liability claims relating to product manufactured
or sold by Seller prior to the Closing; and
(c) all trade accounts payable and customer deposits of Seller
relating exclusively to the Business which are reflected in the
Post-Closing Statement of Book Value.
"BENEFIT PLAN" means any plan, agreement, program, arrangement or
policy of Seller or its Affiliate companies providing profit sharing,
retirement, pension, savings, thrift, deferred compensation, group insurance,
accident, medical, dental, disability or life insurance benefits, vacation pay
or benefits, severance pay or benefits, incentive compensation, bonus, welfare,
dependant care assistance, educational assistance or other employee benefits
currently established or maintained for the benefit of the Employees or any
retiree of the Seller or with respect to which Seller or Xxxxxxx is currently
making contributions for the benefit of the Employees or any retiree of the
Seller, regardless of whether such plans, agreements, programs, arrangements or
policies constitute "employee benefit plans" within the meaning of Section 3(3)
of ERISA.
"BUSINESS SYSTEM" means the Fourth Shift software and/or licenses
associated therewith which are used by Seller to prepare financial data, operate
the manufacturing, track inventory, and handle certain other aspects of
operating the Business.
"BUYER TRANSACTION DOCUMENTS" means this Agreement and any other
agreement, instrument, document or certificate executed and delivered by Buyer
pursuant to this Agreement or in connection with the transactions contemplated
hereby, as the same may be modified, supplemented or amended from time to time.
"CLOSING" means the closing as provided for in Section 3.
"CLOSING DATE" means the date of the Closing.
"CODE" means the Internal Revenue Code of 1986, as amended, including
any rules or regulations promulgated thereunder.
"CONFIDENTIALITY" means the obligations of confidentiality under
Paragraph 11 of the Letter of Intent signed by the Buyer and Seller on September
12, 2002.
"CONTRACTS" means all contracts, leases, agreements, understandings,
arrangements, commitments, purchase orders or sales orders to which Seller is a
party or by which it is bound and relating in each case to the Business or the
Assets, in each case, as the same may exist as of the Closing; provided,
however, that the term "Contracts" shall not include any Benefit Plans.
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"EMPLOYEES" means all of the following persons:
(a) all persons employed by Seller in the conduct of the
Business as of the Closing and
(b) all persons employed by Seller exclusively in the conduct
of the Business who are absent from work on account of disability,
layoff, leave of absence, vacation or for other reasons, whether or not
they return to active employment with Buyer after the Closing, and
whose last day of active employment prior to the Closing was with
Seller exclusively in the conduct of the Business; and
"ENVIRONMENTAL LAW" means any federal, state, local or other law,
statute, rule, regulation, ordinance, order or requirement relating to public
health, safety, pollution, contamination or the environment, including relating
to: (i) the release (or threatened release), discharge, emission, injection,
spillage, leakage or disposal to ambient air, land surface (or subsurface
strata) or surface or ground water of Materials of Environmental Concern, (ii)
to the withdrawal or use of ground or surface water, (iii) the use, manufacture,
processing, generation, distribution, transport, storage, possession, handling
or disposal of Materials of Environmental Concern, (iv) the exposure to
Materials of Environmental Concern, (v) air, water or noise pollution, (vi) soil
or water contamination, (vii) the protection of wildlife, marine sanctuaries and
wetlands, (viii) the protection of natural resources, (ix) storage tanks,
vessels and related equipment, or (x) abandoned or discarded barrels, containers
and other closed receptacles.
"EQUIPMENT LEASES" means the leases of automobiles, machinery and
equipment listed or described on Exhibit C.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, including any rules or regulations promulgated thereunder.
"ERISA AFFILIATE" means any corporation or unincorporated trade or
business which is a member of the same controlled group of corporations (within
the meaning of Section 414(b) of the Code) as is Seller or is under common
control (within the meaning of Section 414(c) of the Code) with Seller or any
member of an affiliated service group (within the meaning of Section 414(m) of
the Code) which includes Seller.
"EXCLUDED ASSETS" means all of the following assets:
(a) all cash and cash equivalents held by Seller;
(b) Seller's corporate charter, taxpayer and other
identification numbers, seals, minute books, stock transfer books,
blank stock certificates, and other documents relating to the
organization, maintenance, and existence of the Seller as a
corporation;
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(c) Seller's rights under the liability insurance policies
disclosed in Schedule 4.16 attached hereto, but only to the extent in
respect of all occurrences insured thereunder which occur prior to the
Closing Date;
(d) all rights of Seller to the name "Xxxxxxx" (except as
provided in Section 6.8 hereof) or any derivation thereof or in any
logo or other identifying xxxx of Seller regarding the name "Xxxxxxx";
(e) all prepaid insurance applicable to the Business;
(f) any assets physically located at the Premises, which are
not used in the Business, including but not limited to those assets
listed on Schedule 1;
(g) Seller's rights under this Agreement; and
(h) Seller's original Records as defined herein, except as
otherwise set forth in Section 6.11.
"GOVERNMENTAL AUTHORITY" means any court, government (or governmental
or political subdivision thereof) or governmental department, commission, board,
bureau, arbiter, agency, body, instrumentality or authority, whether domestic
(federal, state or local) or foreign.
"INTELLECTUAL PROPERTY" means all trademarks, service marks, trade
names, trade dress, domain names, copyrights, and similar rights, including all
rights in and to the name "Kansa" and any logo or other identifying xxxx
regarding the name "Kansa", and including registrations and applications to
register or renew the registration of any of the foregoing, patents and patent
applications, and inventions, processes, designs, formulae, trade secrets,
know-how, confidential information and other proprietary information (including
Seller's customer lists and mailing lists), software, firmware, and all similar
intellectual property rights (whether or not patentable), tangible embodiments
of any of the foregoing (in any medium including electronic media), and licenses
of any of the foregoing which are owned by Seller and which relate to or are
used in connection with the Business.
"KNOWLEDGE" or any other similar knowledge qualification in this
Agreement means, except as otherwise set forth elsewhere in this Agreement, the
actual knowledge and belief of the party or parties making such representations
and warranties or any officer or director of such party after reasonable inquiry
of such party's employees and representatives and reasonable review of such
party's files, books and records, and shall include knowledge of any officer,
director or employee of the Business to the extent communicated to an officer or
director of any of Seller's Affiliates.
"LEASED EQUIPMENT" means the automobiles, machinery and equipment
subject to the Equipment Leases.
"LETTER OF INTENT" means the letter agreement executed by the Buyer and
Seller on September 12, 2002.
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"LIEN" means any mortgage, deed of trust, pledge, assignment,
hypothecation, security interest, deposit arrangement, claim, encumbrance, lien
(including statutory liens), preference, priority or other security agreement or
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement or any lease which is or should be capitalized
in accordance with generally accepted accounting principles) or any other
charge, option, restriction, easement, equity, exception, reservation or similar
or other encumbrance.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, assets, condition (financial or other) or results of operations of the
Business, except any such effect in any way resulting from or arising in
connection with (i) changes or conditions generally affecting the business in
which the Seller is engaged, or (ii) changes in economic, regulatory or
political conditions generally.
"MATERIALS OF ENVIRONMENTAL CONCERN" means any hazardous, toxic,
controlled, prohibited or regulated materials, substances or wastes under any
Environmental Law (including petroleum (its derivatives, by-products or other
hydrocarbons), perchloroethylene, asbestos, polychlorinated biphenyls, urea
formaldehyde and other reactive, corrosive, carcinogenic, flammable or polluting
materials, substances or wastes).
"NET BOOK VALUE OF THE BUSINESS" means the sum of the following: Gross
accounts receivable, raw materials, work in process, finished goods and prepaid
computer expenses of the Business, less the sum of the trade accounts payable
and customer deposits relating to the Business.
"PERMITS" means the federal, state, local and other governmental
licenses, permits, approvals and authorizations obtained by Seller which relate
to the Business or the Assets and which are listed on Schedule 4.13.
"PERMITTED EXCEPTIONS" means those exceptions and conditions that
affect or may affect title to the Real Property that are approved or deemed
approved by Buyer in accordance with Section 2.11.
"PERSON" means any individual, sole proprietorship, firm, corporation,
partnership, limited liability company, association, joint venture, trust or
other entity or enterprise or any Governmental Authority.
"POST-CLOSING STATEMENT OF BOOK VALUE" means the unaudited statement of
the Net Book Value of the Business as of the Closing Date.
"PREMISES" means the building in which the Business is conducted at
0000 Xxxxx Xxxxx, Xxxxxxx, Xxxxxx 00000.
"PROPERTY, PLANT AND EQUIPMENT" means the land, buildings, machinery,
equipment, furniture, fixtures, computer equipment and software included in the
Assets.
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"REAL PROPERTY" means the land on which the Premises are located as
more completely described in an attachment to Exhibit E.
"RECORDS" means originals or copies of all property records, production
records, engineering records, purchasing and sales records, personnel and
payroll records, accounting records, records of accounts receivable, accounts
payable and customer deposit, customer and vendor lists and other records and
files used in, or related to, the Business or the Assets.
"REPRESENTATIVE" means any director, officer, employee, agent or
representative of a party, including any attorney, accountant, consultant or
advisor retained by any party.
"SCHEDULE" means any of the schedules attached to and made a part of
this Agreement.
"SELLER TRANSACTION DOCUMENTS" means this Agreement and any other
agreement, instrument, document or certificate executed and delivered by Seller
pursuant to this Agreement or in connection with the transactions contemplated
hereby, as the same may be modified, supplemented or amended from time to time.
"STATEMENT OF NET BOOK VALUE" means the unaudited statement of the Net
Book Value of the Business as of the Statement of Net Book Value Date, attached
hereto as Exhibit D.
"STATEMENT OF NET BOOK VALUE DATE" means July 31, 2002.
"TAXES" means all federal, state, local or foreign taxes, charges,
fees, levies or other assessments, including any net income, alternative (or
add-on minimum), gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, withholding, payroll, employment, social security,
unemployment, excise, estimated, stamp, occupation, property or other tax,
custom duty, fee, assessment or charge of any kind whatsoever, including all
interest and penalties thereon and additions to tax or additional amounts,
imposed by any Governmental Authority.
"TRANSACTION DOCUMENTS" means the Buyer Transaction Documents and the
Seller Transaction Documents.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 PURCHASE AND SALE. Subject to the terms and conditions of this
Agreement, Seller shall sell, convey, assign, transfer and deliver to Buyer,
free and clear of all Liens, claims, charges, restrictions or encumbrances of
every kind, nature and description, and Buyer shall purchase, and acquire from
Seller, the Assets at the Closing.
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2.2 CONSIDERATION. As consideration (the "Consideration") for the
Assets, at the Closing, Buyer will (i) pay to Seller $4,200,000 in cash (THE
"CASH CONSIDERATION"), subject to adjustment as provided for in Section 2.3
through 2.5, and (ii) assume the Assumed Liabilities.
2.3 ADJUSTMENT TO CASH CONSIDERATION. Seller and Buyer acknowledge and
agree that the Cash Consideration has been determined based on the Net Book
Value of the Business as set forth on the Statement of Net Book Value. At the
Closing, the Cash Consideration shall be adjusted, if at all, upward or downward
on a dollar-for-dollar basis, based on the difference between Net Book Value of
the Business as set forth on the Statement of Net Book Value and the Net Book
Value of the Business as it existed as of September 30, 2002. The parties shall
agree on the Net Book Value of the Business as it existed on September 30, 2002.
After the Closing, and in a manner provided in Section 2.3 through 2.5, the Cash
Consideration shall be further adjusted (the "Final Adjustment to Cash
Consideration"), if at all, upward or downward on a dollar-for-dollar basis,
based on the difference between Net Book Value of the Business as it existed as
of September 30, 2002 and the Net Book Value of the Business as set forth on the
Post-Closing Statement of Net Book Value. Notwithstanding the foregoing, there
shall be no adjustment to the Cash Consideration for any increase or decrease in
Property, Plant and Equipment.
The Final Adjustment to Cash Consideration, if any, shall be paid by
Buyer or Seller, as the case may be, in accordance with the provisions of
Section 2.5.
2.4 FINAL STATEMENT. As soon as practical after the Closing Date,
Seller shall prepare a Post-Closing Statement of Net Book Value which presents
fairly, the Net Book Value of the Business as of the Closing Date. Such
Post-Closing Statement of Net Book Value shall be completed by Seller not more
than thirty (30) days after the Closing Date and shall be promptly delivered by
Seller to Buyer, along with the determination of the Final Adjustment to Cash
Consideration, if any (collectively, the "Final Statement"). Seller and its
representatives shall be given full access during normal business hours to the
pertinent books and records, and if needed, Employees of Buyer, to enable Seller
to prepare the Post-Closing Statement, if required.
2.5 POST-CLOSING SETTLEMENT. Buyer shall review the Final Statement
and, for such purposes, Buyer and its representatives shall be given full access
during normal business hours to the pertinent books and records of Seller. If
Buyer disapproves of any determination contained in the Final Statement, it
shall give Seller written notice (the "FINAL STATEMENT DISPUTE NOTICE") stating
its objections thereto and identifying the reasons therefor within fifteen (15)
days after receipt of the Final Statement. If Seller has not received a Final
Statement Dispute Notice within such fifteen (15) day period, the Final
Statement shall be final. If Buyer has delivered a Final Statement Dispute
Notice to Seller within such fifteen (15) day period, Buyer and Seller shall
negotiate in good faith for a period of fifteen (15) days from Buyer's receipt
of the Final Statement Dispute Notice. If the parties are unable to resolve the
dispute within such fifteen (15) day period, Buyer and the Seller shall select
an independent accounting firm that has not represented Buyer or Seller within
the preceding three (3) years and is one of the four largest accounting firms in
the United States (the "NEW ACCOUNTING FIRM") to review the amount in dispute on
the Final Statement to determine the amount, if any, the Final Statement is in
error. The New Accounting Firm shall make its determination of the Final
Statement (the "Revised
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Final Statement") within fifteen (15) days of its selection. The Revised Final
Statement shall be final and binding on the parties. The payment, if any,
required under the Final Statement, or the Revised Final Statement, as the case
may be, shall be made by Buyer or Seller, as the case may be, promptly and in
any event within ten (10) business days after the date of the determination of
the appropriate payment, as determined pursuant to this Section 2.5. The costs
for the review and determination by the New Accounting Firm shall be prorated
between the parties based inversely upon the proportionate share of the disputed
amount received by that party (e.g., if Seller receives 80% of the disputed
amount, Seller shall pay 20% of the costs).
2.6 LEASE. At the Closing, Seller and Buyer shall enter into a Lease
substantially in the form of Exhibit E attached hereto (the "LEASE") under
which, as of the Closing Date, Buyer shall lease a portion of the Premises to
Seller. During the term of the Lease, Buyer shall permit Seller to use the
Business System at no additional charge as long as such use does not interfere
with Buyer's use of the Business System. Buyer will provide Seller, with Buyer's
then existing personnel and expertise, at the Premises, and at times reasonably
convenient to Buyer, with reasonable support in connection with the operation of
the Business System and transition to the Seller's business system, during the
term of the Lease; provided, however, that Buyer shall not be liable to Seller
for any claims, losses, damages, costs or expenses incurred by Seller in
connection with the operation of the Business System or any failures of the
Business System. In addition, Seller hereby leases to Buyer, subject to Seller's
continuing right to occupy said premises, which Seller shall reasonable try to
maintain, approximately 4000 square feet of the property described on Schedule
4.16(b) of this Agreement until Seller has vacated sufficient space in the
Premises to allow Buyer to move its property and operations from the property
described on Schedule 4.16(b) to the Premises. During Buyer's occupancy, Buyer
shall pay to Seller 30% of the monthly rent paid by Seller to the landlord.
2.7 CONDITION OF ASSETS. The Assets shall be transferred and assigned
by Seller to Buyer on an "as is, where is" basis with all faults and without
representation or warranty of any kind, express or implied, except such
representations and warranties as are expressly set forth in this Agreement or
in the instruments of conveyance and assignment to be delivered to Buyer
pursuant to Section 3.3(c).
2.8 ALLOCATION OF THE CONSIDERATION. The Consideration shall be
allocated in accordance with Exhibit F. Exhibit F shall be adjusted in
accordance with the Final Adjustment to Cash Consideration, as described in
Section 2.3 of this Agreement, in proportion to the adjustment in those accounts
which compose the Net Book Value of the Business as it existed as of September
30, 2002 when compared to the Net Book Value of the Business as set forth on the
Post-Closing Statement of Net Book Value. Seller shall pay all federal and state
sales and use taxes and other like charges properly payable with respect to the
sale of the Assets. Seller and Buyer shall not take any action, whether in the
preparation of tax returns, financial statements or otherwise, that is
inconsistent with the allocations set forth in Exhibit F. All personal property
and other similar taxes payable with respect to the Assets for the full calendar
year 2002, shall be apportioned between the parties in accordance with their
respective periods of ownership before and after the Closing.
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2.9 CONSENTS. All Contracts and all Permits, where possible, shall be
assigned by Seller to the Buyer at Closing without amendment. If an attempted
assignment or transfer thereof, without the consent of a third Person, would
constitute a breach thereof or in any way adversely affect the rights of Buyer
or Seller thereunder, or if the consent of a third Person to any such transfer
or assignment is otherwise required, Seller shall use its best efforts to
obtain, and Buyer agrees to cooperate with Seller in its efforts to obtain the
consent of any such third Person to the assignment or transfer of the Contracts
and the Permits to Buyer in all cases in which consent is required for
assignment or transfer. If such consent is not obtained, Buyer, in its sole
discretion, may refuse to assume such Contract and/or Permit and thereafter
proceed to Closing, Seller and Buyer shall cooperate in any reasonable
arrangements designed to provide for Buyer the benefits thereunder, including
enforcement for the benefit of Buyer of any and all rights of Seller against any
such third Person arising out of the cancellation by such third Person or
otherwise, or if such Contract or Permit is material, Buyer may terminate this
Agreement, all at the election of Buyer. Those material Contracts or Permits
requiring consent are listed on Schedule 2.9
2.10 EXCLUDED LIABILITIES. Seller shall remain liable for any and all
liabilities and obligations of any nature (whether known or unknown, disclosed
or undisclosed, matured or unmatured, accrued, absolute, contingent or
otherwise) relating to Seller, the Business, or the Assets which are not
expressly assumed by Buyer in Section 2.1 of this Agreement, including the
following:
(a) Subject to Section 2.8, the obligation to pay any Taxes relating to
the Seller or, to the extent they relate to the period up to and including the
Closing Date, the Assets or the conduct of the Business;
(b) all trade and other accounts payable (except the Assumed
Liabilities) and expenses accrued and all bank and any other debt and
liabilities together with interest thereon relating to the ownership or use of
the Assets or to the conduct of the Business at any time during the period up to
and including the Closing Date;
(c) all liabilities and obligations related to the employees of Seller;
(d) all Liens and indebtedness, whether due or to become due, direct or
indirect, known or unknown, contingent or absolute, existing at any time up to
and including the Closing Date or arising from facts or circumstances existing
at the time up to and including the Closing Date, relating to the Assets, the
Business or the Seller; and
(e) obligations of that real estate lease listed on Schedule 4.1(b).
2.11 REAL PROPERTY. (a) All real estate taxes, general and special, and
all special assessments against the Real Property which are due and have
accrued, on or prior to the Closing Date, shall be paid by Seller. Any such
taxes becoming due and accruing during calendar year 2002 shall be prorated
between Seller and Buyer on the basis of said calendar year, as of the Closing
Date. If Closing shall occur before the tax rate is fixed for the then current
tax year, the
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apportionment of taxes shall be upon the basis of the tax rate for the preceding
year applied to the latest assessed valuation of the Real Property.
(b) Buyer shall, within five (5) days after the execution of this
Agreement, obtain a commitment for the issuance of an Owner's Title Insurance
Policy issued by Chicago Title Insurance Company (the "Title Company") in an
amount equal to One Million Fifty Thousand Dollars ($1,050,000), showing title
to the Real Property in Seller ("Title Commitment"). At the Closing, Buyer, at
both party's equally shared cost and expense, shall cause the Title Company to
issue its form ALTA Owner's Policy -- Form B, covering title to the Real
Property on the date thereof to be issued to Buyer. The commitment shall show
title to the Real Property as being subject only to (i) Permitted Exceptions (as
hereinafter defined); and (ii) Title Exceptions (the "Removable Exceptions")
pertaining to liens and encumbrances of a definite or ascertainable amount which
may be removed by the payment of money on the Closing Date and which Seller will
so remove at that time by using the funds to be paid to Seller hereunder. The
Policy shall provide extended coverage over the standard and general exceptions
contained therein and shall insure title to the Real Property in Buyer, subject
only to the Permitted Exceptions and shall, at Buyer's option, contain a 3.0
zoning endorsement, tax parcel endorsement, mechanics lien endorsement, and a
restrictions endorsement.
(c) Seller shall deliver to Buyer copies of all documents listed as
exceptions on the Title Commitment; provided, however, Seller shall not be
required to deliver copies of documents which constitute Removable Exceptions.
(d) Buyer shall examine the same and to advise the Seller in writing of
any objections which Buyer may have to the state of the title shown therein.
Seller shall have such objections removed from the Title Commitment or, with
Buyer's approval, insured over by the Title Company. If such unpermitted
exceptions are not removed or, with Buyers prior written approval, insured over
by the Closing, Buyer may elect, upon written notice to Seller, to terminate
this Agreement, in which event the parties shall have no further obligations
pursuant to this Agreement. Any exceptions to title to which Buyer does not
object in writing in accordance with the provisions of this Section shall be
"Permitted Exceptions".
(e) The Title Policy shall be issued by the Title Company in the amount
of $1,050,000, and shall insure that Buyer has good and indefeasible fee simple
title to the Property, subject only to the Permitted Exceptions.
ARTICLE III
CLOSING
3.1 CLOSING DATE. The Closing under this Agreement shall take place at
the offices of Seller at 0000 Xxxxx Xxxxx, Xxxxxxx, Xxxxxx on October 10, 2002,
or at such other time and place as may be mutually agreed upon by Seller and
Buyer.
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3.2 CLOSING DELIVERIES BY BUYER. At the Closing, Buyer shall, subject
to the fulfillment to its reasonable satisfaction of the conditions set forth in
Section 7.1 hereof or its waiver thereof, deliver, or cause to be delivered, to
Seller:
(a) the Cash Consideration, as adjusted, by wire transfer in
immediately available funds;
(b) copies of Vektek's Certificate of Incorporation certified
as of a recent date by the Secretary of State of the State of Kansas;
(c) a Certificate of Good Standing of Vektek issued as of a
recent date by the Secretary of State of the State of Kansas;
(d) the Lease dated as of the Closing Date, and duly executed
by Xxxxxxx, Xxxxx and an authorized officer of Vektek;
(e) the certificates of Vektek, Xxxxxxx and Xxxxx referred to
in Section 7.2(b);
(f) the secretary's certificate of Vektek referred to in
Section 7.2(d);
(g) the Assignment and Assumption Agreement in substantially
the form of Exhibit G, dated as of the Closing Date and duly executed
by Buyer and Seller; and
(h) such other documents and instruments as are required to be
delivered to Seller by Buyer pursuant to this Agreement at or prior to
the Closing.
3.3 CLOSING DELIVERIES BY SELLER. At the Closing, Seller shall, subject
to fulfillment to its reasonable satisfaction of the conditions set forth in
Section 7.2, hereof or its waiver thereof, deliver to Buyer the following:
(a) a copy of Seller's Articles of Incorporation certified as
of a recent date by the Secretary of State of the State of Kansas;
(b) a certificate of Good standing of Seller issued as of a
recent date by the Secretary of State of the State of Kansas;
(c) all assignments, bills of sale, certificates of title,
corporate warranty deeds, Records, and other instruments of conveyance
necessary or appropriate to validly transfer good and marketable title
to each of the Assets to Buyer, including assignments of the Contracts
and assignable Permits, free and clear of all Liens, encumbrances,
charges and exceptions, except for the Permitted Exceptions, in form
and substance satisfactory to Buyer;
(d) to the extent possible, such assignments and consents
necessary to transfer all telephone numbers, listings, yellow pages
advertising and other Contracts related to
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the Business and all other Assets described in this Agreement not
otherwise conveyed to Buyer;
(e) all consents, waivers or approvals obtained by Seller with
respect to the Assets or the consummation of the transactions
contemplated by this Agreement;
(f) the Lease dated as of the Closing Date, and duly executed
by an authorized officer of Seller;
(g) the officers certificate referred to in Section 7.1(b);
(h) the secretary's certificate referred to in Section 7.1(d);
(i) the Assignment and Assumption Agreement in substantially
the form of Exhibit G, dated as of the Closing Date and duly executed
by Buyer and Seller;
(j) the Assignment Agreements in substantially the form of
Exhibit H, dated as of the Closing Date and duly executed by Seller;
and
(k) such other documents and instruments as are required to be
delivered to Buyer by Seller pursuant to this Agreement at or prior to
the Closing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller represents and warrants
to Buyer that:
4.1 ORGANIZATION AND STANDING. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Kansas with
the corporate power and authority to conduct its business and to own or lease
and operate its assets. Seller is duly qualified or licensed to do business as a
foreign corporation, and is in good standing, under the laws of each
jurisdiction in which the nature of its business or the ownership, leasing or
operation of its assets makes such qualification or licensing necessary, except
for those jurisdictions in which the failure to be so qualified or licensed
would not, individually or in the aggregate, have a Material Adverse Effect.
4.2 AUTHORITY. Seller has the corporate power and authority to execute,
deliver and perform the Seller Transaction Documents and has taken all necessary
corporate action on its part (including any necessary action of its board of
directors or shareholders) to authorize the execution, delivery and performance
of the Seller Transaction Documents and the consummation of the transactions
contemplated thereby. This Agreement is, and each of the other Seller
Transaction Documents, upon its execution and delivery, will be, the legal,
valid and binding obligation of Seller, enforceable against Seller in accordance
with its terms.
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4.3 NO VIOLATION. Neither the execution, delivery and performance by
Seller of the Seller Transaction Documents, nor the consummation by Seller of
the transactions contemplated thereby, (i) violates any provision of its
Certificate of Incorporation, By-Laws or other constituent instrument or
document, (ii) assuming compliance with the matters referred to in Section 4.4,
violates, conflicts with, or results in the breach of any applicable law, rule
or regulation or any judgment, decree, writ, injunction or order of any
Governmental Authority, or (iii) except as described in Schedule 4.3 or as to
matters which would not have a Material Adverse Effect, violates or conflicts
with, constitutes a default (or an event which, with notice or lapse of time or
both, would constitute a default) or requires any consent under, results in the
termination of, or results in the creation of any Lien upon any of its
properties or assets under any agreement or instrument to which it is a party or
by which it or any of its properties or assets may be bound or affected.
4.4 CONSENTS. To the knowledge of Seller, no authorization, consent,
approval, order, license or validation of, filing, recording or registration
with, notice to, or exemption by, any Governmental Authority is necessary in
connection with the execution, delivery and performance of any of the Seller
Transaction Documents by Seller or the consummation by Seller of the
transactions contemplated thereby other than (i) as set in Schedule 4.4 or (ii)
any authorization, consent, approval, order, license, validation, filing,
recording, registration, notice, exemption or similar action as to which the
failure to make or obtain would not have a Material Adverse Effect.
4.5 FINANCIAL STATEMENTS. The audited financial statements of Seller
for the fiscal years ended on June 30, 2000, 2001 & 2002 have been provided by
Seller to Buyer. The unaudited financial statements for the three months ended
September 30, 2002 will be provided by Seller to Buyer at the Closing. All such
financial statements present, or when provided will present, fairly the revenue,
expenses, earnings and results of operations of Seller for the periods covered.
The unaudited Statement of Net Book Value as of Statement of Net Book Value
Date, a copy of which is attached hereto as Exhibit D, presents fairly in all
material respects, the Net Book Value of the Business as of such date.
4.6 ABSENCE OF CERTAIN CHANGES. Since the Statement of Net Book Value
Date, the Business has been operated in the ordinary course consistent with past
practices and no material change has been instituted in the Business and Seller
has not incurred any material liability or obligation in connection with or
relating to the Business other than in the ordinary course of business
consistent with past practices and, since the Statement of Net Book Value Date,
there has not been any event, occurrence or development in connection with or
relating to the Business which has had a Material Adverse Effect and Seller has
not, on behalf of, in connection with or relating to the Business or the Assets:
(a) sold, leased, transferred, assigned or otherwise disposed
of any material assets, except in the ordinary course of business;
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(b) experienced any damage, destruction, casualty or loss
(whether or not covered by insurance), or any condemnation by a
Government Authority, which, in any case, has had a Material Adverse
Effect;
(c) experienced any strike, lockout or other material labor
difficulties;
(d) increased the salary or general level of compensation or
benefits payable to any of the Employees, except for normal increases
in the ordinary course of business consistent with past practices;
(e) entered into any material contract or transaction,
incurred any material obligations or liabilities other than in the
ordinary course of business consistent with past practices or waived
any material right or claim;
(f) mortgaged, pledged, subjected to Lien, granted a security
interest in or otherwise encumbered any of the Assets, whether tangible
or intangible;
(g) purchased or otherwise acquired any property or assets
other than in the ordinary course of business consistent with past
practices.
4.7 Taxes. There are no Liens against the Assets relating to Taxes,
except for Taxes not yet due and payable. Seller has timely filed all reports
and returns of Taxes required to be filed and has timely paid all Taxes and
other charges due as shown on such returns. Seller has received no notice of,
and there are no pending claims for, any proposed deficiency for any duty, tax,
assessment or governmental charge.
4.8 LITIGATION. Except as disclosed in Schedule 4.8, there is no
judgment, decree, injunction, rule or order of any Governmental Authority that
would and there is no suit, action, litigation, investigation, grievance or
proceeding, including appeals and applications for review, in progress, or to
the knowledge of Seller, pending or threatened against or related to Seller, the
Business or Premises before any Governmental Authority that, if determined
adversely to Seller would, (i) materially and adversely effect the Business
and/or Assets, future prospects or financial condition of the Business or the
Assets, (ii) enjoin, restrict or prohibit the transfer of all or part of the
Business and/or Assets as contemplated by this Agreement, or (iii) prevent
Seller from fulfilling all of its obligations set out in this Agreement or
arising from this Agreement, and Seller has no knowledge of any existing ground
on which any such action, suit, litigation, or proceeding might be commenced
with any reasonable likelihood of success.
4.9 CONTRACTS. (a) Except for the Contracts listed or described in
Schedule 4.9, a true and correct copy of each of which has been furnished to
Buyer, and except for purchase or sales orders in the ordinary course of
business, Seller is not a party to, or bound or affected by any material
contracts, agreements or leases, relating to the Business or the Assets.
Schedule 4.9 contains a true and complete list of all material Contracts.
(b) Each of the Contracts is in full force and effect and is
binding upon Seller. Except as set forth in Schedule 4.9, Seller is not in
default under, or in
19
violation of, any Contract and, to the knowledge of Seller, no other party to
any of the Contracts is in default or in violation, thereunder, except, in each
case, for any such defaults or violations which would not have a Material
Adverse Effect. Except as set forth in Schedule 4.9, the consummation of the
transactions contemplated hereby will not constitute a violation of, or a
default under, any of the Contracts and will not give rise to any right to
terminate any of the Contracts. To the knowledge of Seller, those material
Contracts requiring the consent of a third party are listed on Schedule 2.9
4.10 COMPLIANCE WITH LAW. To the knowledge of Seller, the operation of
the Business has been conducted in accordance with, and Seller is, with respect
to the Business and the Assets, otherwise in compliance with, all applicable
laws, statutes, rules, regulations and orders of any Governmental Authority
(including all Environmental Laws), except for any violation of any such law,
statute, rule, regulation or order that has not had, and would not reasonably be
expected to have, a Material Adverse Effect. Seller has used, processed,
treated, stored, possessed, handled, transported and disposed of all Materials
of Environmental Concern in all material respects in accordance with all
applicable Environmental Laws. Seller has not received any notification of any
asserted present or past failure to comply with, or violation of, any such laws,
statutes, rules, regulations or orders.
4.11 PERMITS. To the knowledge of Seller, Seller has obtained all
federal, state, local and other governmental licenses, permits, consents,
franchises, approvals or authorizations (including any of the foregoing required
under any Environmental Law) which are necessary for the conduct of the Business
as presently conducted, except in those instances where the failure to obtain
any of the foregoing has not had, and would not reasonably be expected to have,
a Material Adverse Effect. Seller is not in default under or in violation of any
of the Permits, except for any default or violation which has not had, and would
not reasonably be expected to have, a Material Adverse Effect. Seller has not
received any notice of the proposed revocation, termination, cancellation or
withdrawal of any of the Permits. Schedule 4.11 contains a true and complete
list of all Permits which Seller has obtained.
4.12 TITLE TO ASSETS. Seller is the sole legal and beneficial owner of
the Assets and has good and marketable title thereto, free and clear of all
Liens, other than Permitted Exceptions, and the Assets constitute all of the
property and assets necessary and advisable for the conduct of the Business as
it is currently conducted and the Assets are all located on the Premises or at
customer locations or in a warehouse leased by the Business.
4.13 INTELLECTUAL PROPERTY. (a) Schedule 4.13 contains a complete list
of all federally registered trademarks and patents owned by Seller and/or
exclusively related to, used in, held for use in connection with, or necessary
for the conduct of the Business. Seller has, to the best of its knowledge, the
valid right to use the trademarks, service marks and trade names listed on
Schedule 4.13 in the conduct of the Business as currently being conducted.
(b) No Intellectual Property is subject to any outstanding
judgment, injunction, order, decree or agreement restricting the use thereof by
Seller, except for any judgment, injunction, order, decree or agreement which
would not reasonably be expected to have a Material Adverse Effect. To the
knowledge of Seller, the use of the Intellectual Property
20
by Seller does not conflict with or violate, the intellectual property rights of
any other Person and Seller has not received written notice from any Person
asserting any such conflict or violation.
4.14 EMPLOYEE MATTERS. (a) Except as set forth in Schedule 4.14, Seller
is not a party to any employment or similar agreement with any of the Employees
or a party to any collective bargaining or other labor agreement with any union
or labor organization representing any of the Employees. Seller is not the
subject of any pending union organization campaign or any pending strike,
slowdown, picketing, work stoppage or other material labor disturbances by any
labor union or group of employees.
(b) Schedule 4.14 contains a true and correct list of all Benefit
Plans. Seller has furnished to Buyer a true and correct copy of each written
Benefit Plan.
(c) The Seller's 401(k) Plans are intended to be "qualified" within
the meaning of Section 401(a) of the Code.
(d) Schedule 4.14 sets forth a true and complete list of all
employees of Seller who are employed in the Business, their respective
positions, dates of hire, 2002 salaries, benefits and other remuneration, and
indicates which employees are parties to written or oral employment agreements
(including non-competition and confidentiality agreements) or collective
agreements; and except as set for in Schedule 4.14 there are no independent
contractors engaged by Seller with respect to the Business.
(e) Seller has not caused there to occur a "mass lay-off" as defined
in Section 693.3 of the regulations under the Worker Adjustment and Retention
Notification Act at any time;
(f) There are no outstanding, pending or, to the knowledge of
Seller, threatened or anticipated claims against Seller pursuant to or under any
applicable law, statutes, rules, regulations or orders, with respect to Seller's
employees, including social security, unemployment insurance, income tax,
employment standards, labor relations, occupational health and safety, human
rights and workers' compensation and pay equity and, to the knowledge of Seller,
nothing has occurred which might lead to a complaint against Seller under any
such legislation. There are no outstanding decisions or settlements, or pending
settlements under the employment standards legislation which place any direct
obligation upon the Seller or the Business to do or refrain from doing any act;
and
(e) All current assessments under all applicable workers'
compensation legislation in relation to Seller and the Business have been paid
or accrued and Seller has not been subject to any special or penalty assessment
under such legislation which has not been paid.
4.15 INSURANCE. Schedule 4.15 sets forth a true and correct list of all
insurance policies of any nature whatsoever maintained by Seller and related to
the Business at any time during the three (3) years prior to the date of this
Agreement and the annual or other premiums payable thereunder. Such insurance
policies in effect as of the date of this Agreement shall be maintained until
the Closing Date. All product liability insurance policies of Seller are on an
21
occurrence basis and will continue to provide coverage to Seller after the
Closing Date for occurrences prior to the Closing Date. To the knowledge of
Seller, there are no outstanding requirements or recommendations by any
insurance company that issued any such policy or by any Board of Fire
Underwriters or other similar body exercising similar functions or by any
governmental authority exercising similar functions which requires or recommends
any changes in the conduct of the Business or any repairs or other work to be
done on or with respect to any of the properties or assets of the Business.
Seller has not received any notice or other communication from any such
insurance company within the three (3) years preceding the date hereof canceling
or materially amending or materially increasing the annual or other premiums
payable under any of said insurance policies and, to the knowledge of the
Seller, no such cancellation, amendment or increase of premiums is threatened.
4.16 REAL PROPERTY. (a) Schedule 4.16 contains a full legal description
of the Real Property owned by Seller which constitutes the principal place where
the Business is conducted;
(b) Schedule 4.16(b) contains a listing of all Real Property Leases
where the Business is conducted;
(c) Except for the Real Property and the Real Property Leases, there
is no parcel of real property, building or other improvement owned or leased by
Seller and used primarily by the Business;
(d) To the knowledge of Seller, the Real Property Lease is valid and
effective in accordance with its terms, and Seller is not in default thereunder,
except where the lack of such validity or effectiveness or the existence of such
default or event of default would not have a Material Adverse effect on the
ability of Seller to perform its obligations under this Agreement;
(e) To the knowledge of Seller, Seller holds valid and effective
certificates of occupancy, underwriters' certificates relating to electrical
work, zoning, building, housing, safety, fire and health approvals and all other
permits and licenses required by applicable law relating to the operation of the
Real Property; and
(d) There is no condemnation or eminent domain proceeding pending
which relates to the Real Property, and, to the knowledge of Seller, there is no
such proceeding threatened by any relevant Governmental Authority nor any such
proceeding to which the Seller is not a party but as to which its properties are
subject which materially and adversely affects any of such properties used in
the Business.
(e) Seller has not received and to its knowledge, there is no order
or directive of any applicable department of building, safety, health or any
other Governmental Authority that any works, repairs, maintenance or
improvements be performed on the Premises nor, to the knowledge of Seller, has
any such order or directive been threatened. Seller has received no notices from
insurers of defects in the improvements which have not been corrected.
(f) Except as otherwise set forth in this Agreement or Schedules
hereto, the Premises are all of the real property used or occupied in connection
with the Business and are
22
free and clear of all Liens other than Permitted Exceptions, of any nature and
kind whatsoever, and no Person other than Seller has any right in respect of the
Premises including any right of occupancy.
4.17 ENVIRONMENTAL MATTERS. To the knowledge of Seller, all operations
of the Business, the Assets and the Premises have been and are now in compliance
with all and do not violate any, Environmental Law, except for any failure to
comply or violation that would not have a Material Adverse Effect. The Seller
has not received any written or oral notice of any alleged non-compliance with
and/or has never been charged with or convicted of an offense for non-compliance
with any Environmental Law. During the period of Seller's ownership of the
Premises, the Premises have not been used by Seller to generate, manufacture,
receive, refine, treat, transport, use, handle, store, dispose of, transfer,
produce or process any Materials of Environmental Concern, except as set forth
on Schedule 4.17. Schedule 4.17 contains a true and complete list of all such
Materials of Environmental Concern. Neither the Business, the Premises or the
Assets have been, during the period of Seller's ownership thereof, or are now
the subject of any remedial order of any Governmental Authority nor does Seller
have any knowledge of any investigation or evaluation commenced as to whether
any such remedial order is necessary nor, to the knowledge of Seller, has any
threat of any such remedial order been made nor, to the knowledge of Seller, are
there any circumstances which could result in the issuance of any such remedial
order. All environmental data and studies (including, without limitation, the
results of any environmental audit with respect to the Premises, the Business
and/or the Assets that are in the possession of or are known to exist by Seller
have been delivered or made available to Buyer.
4.18 AGREEMENTS RESTRICTING BUSINESS. To the knowledge of Seller,
Seller is not a party to or bound or affected by any commitment, agreement or
document containing any covenant expressly limiting the freedom of Seller to
compete in any line of business, transfer or remove any of its assets or
operations or which materially or adversely affects the business practices,
operations or conditions of the Business or Premises or the continued operation
of the Business or Premises after the Closing on substantially the same basis as
it is currently carried on.
4.19 ACCURACY OF INFORMATION. All information provided to Buyer or its
advisors and representatives in connection with the due diligence and all
information in the Schedules attached hereto are true, correct and complete in
all material respects.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, Buyer represents and warrants
to Seller that:
5.1. ORGANIZATION AND STANDING. Vektek is a corporation duly organized,
validly existing and in good standing under the laws of the State of Kansas with
the corporate power and authority to conduct its business and to own or lease
and operate its assets.
23
5.2 AUTHORITY. Vektek has the corporate power and authority to execute,
deliver and perform the Buyer Transaction Documents and has taken all necessary
corporate action on its part (including any necessary action of its board of
directors or shareholders) to authorize the execution, delivery and performance
of the Buyer Transaction Documents and the consummation of the transactions
contemplated thereby. This Agreement is, and each of the other Buyer Transaction
Documents, upon its execution and delivery, will be, the legal, valid and
binding obligation of the Buyer, enforceable against the Buyer in accordance
with its terms.
5.3 NO VIOLATION. Neither the execution, delivery and performance of
the Buyer Transaction Documents by Buyer, nor the consummation by Buyer of the
transactions contemplated thereby, (i) violates any provision of the Certificate
of Incorporation, Bylaws or other constituent instrument or document of Vektek,
(ii) violates or conflicts with any applicable law, rule or regulation or any
judgment, decree, writ, injunction or order of any Governmental Authority or
(iii) violates or conflicts with, constitutes a default (or an event which, with
notice or lapse of time or both, would constitute a default) or requires any
consent under, results in the termination of, any agreement or instrument to
which Buyer is a party or by which it or any of its properties or assets may be
bound or affected.
5.4 CONSENTS. No authorization, consent, approval, order, license or
validation of, filing, recording or registration with, notice to, or exemption
by, any Governmental Authority is necessary in connection with the execution,
delivery and performance of any of the Buyer Transaction Documents by Buyer or
the consummation by Buyer of the transactions contemplated thereby.
5.5 FINANCING. Buyer has sufficient cash, available lines of credit or
other sources of immediately available funds to enable it to make payment of the
Purchase Price at the Closing and any other amounts to be paid by it hereunder.
5.6 LITIGATION. There is no action, suit, arbitration proceeding or
administrative, investigative or other governmental proceeding pending or, to
the knowledge of Buyer, threatened against or affecting Buyer before or by any
Governmental Authority or arbitration panel which in any manner challenges or
seeks to prevent, enjoin, alter or materially delay the transactions
contemplated by this Agreement.
ARTICLE VI
OTHER OBLIGATIONS
6.1 ACCESS TO INFORMATION. (a) From the date hereof until the Closing
Date (or the earlier termination of this Agreement pursuant to Section 8) and
subject to the terms of Confidentiality, Seller will (i) give Buyer and its
Representatives reasonable access to the offices, properties, books and records
of the Business, (ii) furnish to Buyer and its Representatives such financial
and operating data and other information relating to the Business or the Assets
as Buyer or any of its Representatives may reasonably request and (iii) instruct
its Representatives to cooperate with Buyer and its Representatives in their
investigation of the
24
Business and the Assets. Any investigation pursuant to this Section 6.1 shall be
conducted in such manner as not to unreasonably interfere with the conduct of
business by Seller. Notwithstanding the foregoing, (i) Seller need not furnish
Buyer with any information which Seller is under a legal obligation not to
furnish, but must notify Buyer that it is doing so, (ii) Seller shall not be
required to take any action which might constitute a waiver of the
attorney/client privilege, but must notify Buyer that it is doing so, and (iii)
Buyer shall not have access to personnel records of Seller relating to
individual performance or evaluation records, medical histories or other
information the disclosure of which could subject Seller to risk of liability.
(b) In the event the transactions contemplated hereby shall not be
consummated, Buyer shall, and shall cause its Representatives to, hold all
information obtained pursuant to Section 6.1(a) and any other information
relating to the Assets, the Business, Seller or any of Seller's Affiliates
obtained in connection with the transactions contemplated hereby from Seller or
its Representatives in confidence pursuant to the terms of Confidentiality and
shall make no use thereof, except that Buyer may disclose such information to
the extent that it is required to be so disclosed in accordance with applicable
law. Buyer shall, and shall cause its Representatives to, promptly return all
such information and all copies thereof to Seller and all documents, memoranda,
notes or other writings whatsoever prepared by Buyer or its Representatives
based on any such information shall be promptly destroyed and Buyer shall
certify to Seller that such destruction has been effected.
(c) After the Closing, Buyers shall return to Seller (or give Seller
and its Representatives reasonable access to the offices, properties, books and
records to allow Seller to retrieve) all Seller's or Seller's Affiliates'
intellectual property, books and records, drawings, files and other documents
related to the Excluded Assets or assets not purchased by Buyers or related to
the Business.
6.2 CONDUCT OF BUSINESS. Except as disclosed in Schedule 6.2 or except
as contemplated hereby or in connection with the consummation of the
transactions contemplated hereby or as may be consistent with the
transactions contemplated by this Agreement, during the period from the date
hereof until the Closing or unless Buyer shall otherwise agree in writing,
Seller:
(a) shall continue to operate the Business in the ordinary course
consistent with past practices and shall not institute any material change
in the conduct or the nature of the Business;
(b) shall use commercially reasonable efforts to preserve intact the
business organization of the Business, to keep available the services of the
Employees and to preserve the present relationships with and goodwill of
those Persons having business relationships with the Business;
(c) shall not grant any increase in the salary or general level of
compensation or benefits to any of the Employees, except for normal
increases in the ordinary course of business consistent with past practices;
25
(d) shall not sell, lease, transfer, assign or otherwise dispose of
any material assets relating to the Business, except in the ordinary course
of business;
(e) shall not enter into any material contract, commitment or
transaction relating to the Business other than in the ordinary course of
business;
(f) shall not waive any material right or claim relating to the
Business other than in the ordinary course of business;
(g) shall not purchase or otherwise acquire any material property or
assets for or relating to the Business other than in the ordinary course of
business consistent with past practices;
(h) shall not amend in any material respect or terminate any
Contract, except in the ordinary course of business;
(i) shall not amend, modify or terminate in any material respect any
Benefit Plan; and
(j) shall maintain in full force and effect its existing insurance
coverage.
6.3 PUBLIC INFORMATION. Prior to the Closing, the parties shall consult
with each other before issuing any press releases or otherwise making any public
announcements or statements with respect to this Agreement or the transactions
contemplated hereby (including the terms and conditions thereof) and shall not
issue any such press releases or make any such public announcements or
statements prior to such consultation and (i) without, in the case of any such
press release or other public announcement or statement by Buyer, the prior
written approval of Seller or, in the case of any such press release or other
public announcement or statement by Seller the prior written approval of Buyer
(such approvals, in either case, not to be unreasonably withheld) or (ii) unless
the same may be required by applicable law or legal process.
6.4 FINDER'S FEES. (a) Seller shall hold Buyer harmless from any
liability for any brokerage or finders' fees or other commissions based on
agreements, arrangements or understanding made by Seller for services rendered
for or on behalf of Seller in connection with the transactions contemplated
hereby.
(b) Buyer shall hold Seller harmless from any liability for any
brokerage or finders' fees or other commissions based on agreements,
arrangements or understandings made by Buyer for services rendered for or on
behalf of Buyer in connection with the transactions contemplated hereby.
6.5 COMMERCIALLY REASONABLE EFFORTS. Subject to the terms and
conditions of this Agreement, each of Buyer and Seller will use commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary or desirable under applicable law to
consummate the transactions contemplated by this Agreement.
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6.6 CERTAIN FILINGS. Buyer and Seller shall cooperate with one another
(i) in determining whether any action by or in respect of, or filing with, any
Governmental Authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material Contracts, in
connection with the consummation of the transactions contemplated by this
Agreement and (ii) in taking such actions or making any such filings, furnishing
information required in connection therewith and seeking timely to obtain any
such actions, consents, approvals or waivers.
6.7 EMPLOYMENT OF EMPLOYEES. (a) Buyer presently intends to offer
employment, effective as of the Closing Date, to the Employees listed on Exhibit
B, conditioned upon such Employees voluntarily resigning their employment with
Seller. Buyer presently intends to offer employment to such Employees at
substantially the same wage or salary levels, as applicable, and with employee
benefits that are substantially the same as the Employees then existing
compensation and benefits. If Buyer employs, effective as of the Closing Date,
any of the Employees identified on Exhibit B as "Key Employees", Buyer agrees,
subject to Section 9.16, to make each of said Key Employees that it employs
available to train another of Seller's Employees for a period of time not to
exceed one hundred eighty (180) days after the Closing.
(b) Seller shall be solely responsible for all claims relating to any
employee of Seller, including claims of Employees of the Seller who are employed
by the Buyer following Closing to the extent that they relate to events arising
prior to the Closing, including claims for salary, bonuses, commissions,
vacation, holiday and sick pay, pension or any other benefits whatsoever,
severance pay or pay in lieu of notice, any unfair labor complaint, grievance or
arbitration and all Taxes relating thereto.
(c) Seller shall pay all wages, salaries, fees and bonuses, and all
amounts due in lieu of holiday pay, to all employees of Seller who are employed
in connection with the Business up to and including the Closing Date.
(d) Buyer shall be solely responsible for all claims relating to any
employee of Seller who is employed by Buyer following Closing to the extent that
they relate to events arising following Closing, including claims involving
salary, bonuses, commissions, vacation, holiday and sick pay, pension or any
other benefits whatsoever, severance pay or pay in lieu of notice, or any unfair
labor complaint, grievance or arbitration.
6.8 USE OF BUSINESS NAMES BY THE BUYER (a) Except in connection with
(i) any filing with any governmental authority or (ii) any press release
permitted hereunder, Buyer shall not use the name "Xxxxxxx Kansa" or any
derivative thereof, or any name confusingly similar thereto, other than "Kansa"
or any logo or other trademark or service xxxx of Seller, other than relating to
"Kansa" and not relating in any way to "Xxxxxxx" or any name confusingly similar
thereto at any time after the Closing; provided, that for a period of six (6)
months after the Closing Date, Buyer may (i) identify itself as formerly being
Xxxxxxx Kansa Corporation, a wholly owned subsidiary of Xxxxxxx Technology
Corporation, (ii) continue to use any brochure, catalogue or other promotional
material (such material not to include any letterhead or other stationary of
Xxxxxxx Kansa) currently in existence, provided that Buyer affix to any such
27
material a statement that Buyer is no longer affiliated with Seller, and (iii)
continue to use the email, domain name or web site currently in existence,
provided that Buyer provide notice to third parties that Buyer is no longer
affiliated with Seller through an automatic response on email or through a
temporary link on the web site.
(b) From and after the Closing, Seller should not be permitted to use
the name "Kansa" other than for the administration of the accounts of Seller,
and the filing of tax returns and other similar necessary corporate activities,
nor shall Seller hold itself out as being associated with any business of that
name or any derivative thereof, or any name confusingly similar thereto; and
(c) Seller shall dissolve or change its name (and shall provide Buyer
with proof of such dissolution or name change) no later than October 30, 2002.
6.9 COLLECTION OF ACCOUNTS RECEIVABLE. After the Closing, Buyer shall
have the right to notify any customers of Seller who owe Seller any amounts
represented by the Accounts Receivable to deliver their payments directly to
Buyer. After the Closing, Seller shall promptly remit to Buyer any payments of
Accounts Receivable received by Seller; provided, however, that Seller shall
have no other obligations with respect to the collection of the Accounts
Receivable.
6.10 COLLECTIONS. After the Closing, Buyer shall promptly remit to
Seller any payments received by Buyer which are attributable to the period prior
to Closing.
6.11 RECORDS. To the extent that any of the items included within the
definition of Records are not separable from records and files of Seller also
maintained for, or otherwise related to, the operations of Seller other than the
Business or the Assets, or necessary to Seller in its continued conduct of its
business and operation as a corporate entity, in lieu of delivery of such item,
Seller shall provide Buyer with reasonable access to the relevant portions of
such item (with the right to copy) during ordinary business hours and upon
reasonable notice. Seller shall provide to Buyer the original records as they
relate to the Business, the Assumed Liabilities and the Assets being purchased
hereunder, including but not limited to property, production, engineering,
purchasing and sales, accounts receivable, accounts payable, and customer
deposit records regarding the receivables, payables, and customer deposits
purchased or assumed by Buyer, and customer and vendor lists. Seller will retain
original records as they relate to Excluded Assets or Excluded Liabilities,
including but not limited to files related to the continued corporate existence,
legal, tax, personnel, payroll, corporate, accounting, accounts receivable and
payable (other than those purchased or assumed hereunder).
ARTICLE VII
CONDITIONS TO CLOSING
7.1 CONDITIONS TO BUYER'S OBLIGATIONS. The obligations of Buyer to
consummate the Closing are subject to the fulfillment, prior to or at the
Closing, of each of the following conditions failing any of which the Buyer may
in its sole discretion terminate this Agreement
28
without incurring any liability whatsoever to any Person thereby (provided that
all or any of which may be waived in whole or in part by Buyer):
(a) the representations and warranties of Seller contained in
this Agreement, and the statements contained in the Exhibits and
Schedules, shall have been true and correct in all material respects
when made and, except as contemplated or permitted herein or therein or
except as consented to by Buyer in writing, shall continue to be true
and correct in all material respects on and as of the Closing with the
same effect as though made at the Closing and Seller shall have
performed and complied with, in all material respects, all agreements,
obligations and conditions required by this Agreement to be performed
or complied with by it prior to or at the Closing;
(b) Buyer shall have completed and been satisfied, in its sole
discretion, with the results of its due diligence reviews regarding the
Assets, the Business and the financial information provided by Seller;
(c) no lawsuit, investigation, inquiry or other legal
proceeding shall have been commenced, whether by a third party or any
Governmental Authority, seeking to enjoin, delay or otherwise assert an
adverse claim with respect to any of the transactions contemplated by
this Agreement;
(d) no law shall have been enacted, introduced or announced
which materially and adversely affect the Assets or the Business as a
whole;
(e) Seller shall have delivered to Buyer a certificate, dated
the Closing Date and executed by the President or a Vice President of
Seller, certifying to the fulfillment of the conditions set forth in
Section 7.1(a);
(f) Buyer shall have received executed counterparts of the
consents listed in Schedule 2.9, all of which consents shall be in form
and substance reasonably satisfactory to Buyer; ------------
(g) Seller shall have delivered to Buyer copies of all
resolutions of Seller's Board of Directors relating to this Agreement
and the transactions contemplated hereby, certified by the Secretary
(or an Assistant Secretary) of Seller as being in full force and effect
on the Closing Date. Seller shall have also delivered to Buyer a
certificate, dated the Closing Date and executed by the Secretary (or
an Assistant Secretary) of Seller, certifying the titles, names and
true signatures of each of the officers of Seller executing this
Agreement and the other agreements, documents and instruments executed
and delivered by Seller at or prior to the Closing in connection with
this Agreement or the transactions contemplated hereby; and
(h) no provision of any applicable law or regulation and no
judgment, injunction, order or decree of any court or other
Governmental Authority shall prohibit the consummation of the Closing.
29
(i) Buyer shall have received, properly executed, all Closing
Deliveries of Seller referenced in Section 3.3 of this Agreement.
7.2 CONDITIONS TO SELLER'S OBLIGATIONS. The obligations of Seller under
this Agreement are subject to the fulfillment, prior to or at the Closing, of
each of the following conditions failing any of which the Seller may in its sole
discretion terminate this Agreement without incurring any liability whatsoever
to any Person thereby (provided that all or any of which may be waived in whole
or in part by Seller):
(a) the representations and warranties of Buyer contained
herein shall have been true and correct in all material respects when
made and, except as otherwise provided or permitted herein or except as
consented to by Seller in writing, shall continue to be true and
correct in all material respects on and as of the Closing with the same
effect as though made at the Closing and Buyer shall have performed and
complied with, in all material respects, all agreements, obligations
and conditions required by this Agreement to be performed or complied
with by it prior to or at the Closing;
(b) Buyer shall have delivered to Seller (i) a certificate,
dated the Closing Date and executed by the President or a Vice
President of Vektek, (ii) a certificate, dated the Closing Date and
executed by Xxxxxxx, and (iii) a certificate, dated the Closing Date
and executed by Xxxxx, certifying to the fulfillment of the conditions
set forth in Section 7.2(a);
(c) Seller shall have received executed counterparts of the
consents listed in Schedule 7.9, all of which consents shall be in form
and substance reasonably satisfactory to Seller;
(d) Buyer shall have delivered to Seller copies of all
resolutions of Buyer's Board of Directors relating to this Agreement
and the transactions contemplated hereby, certified by the Secretary
(or an Assistant Secretary) of Buyer as being in full force and effect
on the Closing Date. Buyer shall have also delivered to Seller a
certificate, dated the Closing Date and executed by the Secretary (or
an Assistant Secretary) of Buyer, certifying the titles, names and true
signatures of each of the officers of Buyer executing this Agreement
and the other agreements, documents and instruments executed and
delivered by Buyer at or prior to the Closing in connection with this
Agreement or the Transactions contemplated hereby;
(e) no provision of any applicable law or regulation and no
judgment, injunction, order or decree of any court or other
Governmental Authority shall prohibit the consummation of the Closing;
and
(f) Seller shall have received, properly executed, all Closing
Deliveries of Buyer referenced in Section 3.2 of this Agreement.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 TERMINATION OF AGREEMENT. This Agreement may be terminated at any
time prior to, or at, the Closing:
(a) by mutual agreement of the Seller and Buyer;
(b) by Buyer if there has been a breach by Seller of any of
its agreements, representation or warranties contained in this
Agreement unless the Seller has informed Buyer that such breach will be
(and the same is) cured on or before the Closing Date;
(c) by the Seller if there has been a breach by Buyer of any
of its agreements, representations or warranties contained in this
Agreement unless Buyer has informed the Seller that such breach will be
(and the same is) cured on or before the Closing Date;
(d) by either the Seller or Buyer if consummation of the
transactions contemplated hereby would violate any nonappealable final
order, decree or judgment of any court or other Governmental Authority
having competent jurisdiction; or
(e) by either Seller or Buyer if the Closing shall not have
occurred on or before October 10, 2002; provided, however, that no
party which is in material default of its obligations hereunder may
terminate this Agreement.
(f) by Buyer if the Conditions to Buyer's Obligations
referenced in Section 7.1 of this Agreement are not fulfilled.
(g) by Seller if the Conditions to Seller's Obligations
referenced in Section 7.2 of this Agreement are not fulfilled.
8.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 8.1, this Agreement shall forthwith be of no
further force or effect (except that the provisions of Sections 6.4, 9.1 and 9.2
shall continue in full force and effect) and there shall be no liability on the
part of any party (or any of its Representatives), except based upon: (i) a
willful breach by a party of any of its obligations under this Agreement
occurring prior to such termination or (ii) the obligations set forth in
Sections 6.4, 9.1 and 9.2.
8.3 AMENDMENT, EXTENSION AND WAIVER. At any time prior to the Closing
Date, the parties may (a) amend this Agreement, (b) extend the time for the
performance of any of the obligations of the parties, (c) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto or (d) waive compliance with any of the agreements or
conditions contained herein. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties. Any agreement on
the part of a party to any extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party.
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ARTICLE IX
MISCELLANEOUS
9.1 CONFIDENTIALITY. The parties agree that the terms of
Confidentiality shall continue in full force and effect after the date hereof
until the Closing, or if the Closing shall not occur, indefinitely.
9.2 EXPENSES. Except as otherwise provided herein, each party will pay
all fees and expenses incurred by it in connection with this Agreement and the
transactions contemplated hereby.
9.3 FURTHER ASSURANCES. Each party shall at the request of any other
party, do and perform or cause to be done and performed all such further acts
and furnish, execute and deliver such other documents, instruments,
certificates, notices or other further assurances as counsel for the requesting
party may reasonably request, from time to time, in connection with the
transactions contemplated by this Agreement.
9.4 SURVIVAL. The representations and warranties of the parties
contained in this Agreement or any other Transaction Document shall survive the
Closing and such representations and warranties shall terminate and expire on a
date twenty-four (24) months after the Closing Date; provided, however, that the
representations and warranties set forth in Section 4.8 shall survive until the
expiration of the applicable statute of limitations. Notwithstanding the
foregoing, any representation or warranty in respect of which indemnity may be
sought under Section 9.5 shall survive the time at which it would otherwise
terminate and expire pursuant to the foregoing if notice of the breach of such
representation or warranty (with reasonable specificity) shall have been given
to the party against whom indemnity may be sought prior to such time. The
covenants and agreements set forth in this Agreement and the other Transaction
Documents shall survive in accordance with their terms or, if no term is
specified, until the expiration of this applicable statute of limitations.
9.5 INDEMNIFICATION. (a) Subject to the terms and conditions and
limitations of this Section 9.5, if the Closing shall occur: Seller shall
indemnify Buyer and hold it harmless from and against any liability, loss,
damage, cost or expense (including reasonable fees and expenses of counsel)
(collectively, "LOSSES") which are incurred or suffered by Buyer by reason of
(i) any breach of any of the representations or warranties made by Seller in
this Agreement or (ii) any failure of Seller to perform or comply with any of
the covenants or agreements set forth in this Agreement or any of the other
Seller Transaction Documents to be performed or complied with by Seller or (iii)
any liabilities or obligations of, or claims against Buyer, which arise out of
the Excluded Liabilities referenced in Section 2.10 of this Agreement.
(b) Subject to the terms and conditions of this Section 9.5, if the
Closing shall occur, Buyer shall indemnify Seller and hold Seller harmless from
and against any Losses which are incurred or suffered by Seller by reason of (i)
any breach of any of the representations or warranties made by Buyer in this
Agreement, (ii) any failure of Buyer to perform or comply with
32
any of the covenants or agreements set forth in this Agreement or any of the
other Buyer Transaction Documents to be performed or complied with by Buyer,
(iii) the Assumed Liabilities, or (iv) any liabilities, obligations or claims
which arise out of the operations of the Business or the Assets after the
Closing.
(c) In the event that any party or parties shall incur or suffer any
Losses in respect of which indemnification may be sought by such party or
parties pursuant to this Section 9.5, the party or parties seeking to be
indemnified hereunder (the "INDEMNITEE") shall assert a claim for
indemnification by written notice (a "NOTICE") to the party or parties from whom
indemnification is sought (the "INDEMNITOR") stating the nature and basis of
such claim, and, if such claim is with respect to a third party claim,
accompanied by a copy of any written notice from such third party claimant, such
notice to be delivered within 30 days of discovery of such Losses, or in the
case of Losses arising by reason of any third party claim, within 30 days of the
filing or other written assertion of any such claim against the Indemnitee. The
failure of the Indemnitee to give a Notice within such time period shall not
relieve the Indemnitor of any liability to the Indemnitee except to the extent
that the Indemnitor is prejudiced thereby.
(d) The Indemnitee shall provide to the Indemnitor on request all
information and documentation reasonably necessary to support and verify any
Losses which the Indemnitee believes gives rise to a claim for indemnification
hereunder and shall give the Indemnitor reasonable access to all books, records
and personnel in the possession or under the control of the Indemnitee which
would have bearing on such claims.
(e) In the case of third party claims for which indemnification is
sought, the Indemnitor shall have the option, (x) to conduct and control any
proceedings or negotiations in connection therewith, (y) to take all other steps
to settle (and as part of any settlement, to obtain a full release of the
Indemnitee) or defend any such claim (provided that in no event shall the
Indemnitor have the authority to agree to any relief other than the payment of
money damages by the Indemnitor without the prior written consent of the
Indemnitee (which consent shall not be unreasonably withheld)) and (z) to employ
counsel to contest any such claim or liability in the name of the Indemnitee or
otherwise. In any event, the Indemnitee shall be entitled to participate at its
own expense and by its own counsel in any proceedings relating to any third
party claim. The Indemnitor shall, within 45 days of receipt of the Notice,
notify the Indemnitee of its intention to assume the defense of such claim.
Until the Indemnitee has received notice of the Indemnitor's election to defend
any claim, the Indemnitee shall take reasonable steps to defend (but may not
settle) such claim. If the Indemnitor shall decline to assume the defense of any
such claim, or shall fail to notify the Indemnitee within 45 days after receipt
of the Notice of the Indemnitor's election to defend such claim, the Indemnitee
shall defend against such claim (provided that the Indemnitee shall not have the
authority to settle, compromise or discharge such claim without the prior
written consent of the Indemnitor, which consent shall not be unreasonably
withheld). The expenses of all proceedings, contests or lawsuits in respect of
such claims (other than those incurred by the Indemnitee which are referred to
in the second sentence of this Section 9.5(e)) shall be borne by the Indemnitor
but only if the Indemnitor is responsible pursuant hereto to indemnify the
Indemnitee in respect of the third party claim. Regardless of which party shall
assume the defense of the claim, the parties agree to cooperate fully with one
another in connection therewith. Such cooperation shall include the providing of
records and
33
information which are relevant to such third party claim and making personnel
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder and to act as a witness or
respond to legal process. In the case of a claim for indemnification in respect
of a third party claim, (i) if (and to the extent) the Indemnitor is responsible
pursuant hereto to indemnify the Indemnitee in respect of the third party claim,
then within ten days after the occurrence of a final nonappealable determination
or settlement with respect to such third party claim, the Indemnitor shall pay
the Indemnitee, in immediately available funds, the amount of any Losses (or
such portion thereof as the Indemnitor shall be responsible for pursuant to the
provisions hereof), subject to the limitations set forth in this Section 9.5 and
(ii) in the event that any Losses incurred by the Indemnitee do not involve
payment by the Indemnitee of a third party claim, then, if (and to the extent)
the Indemnitor is responsible pursuant hereto to indemnify the Indemnitee
against such Losses, the Indemnitor shall within ten days after agreement on the
amount of Losses or the occurrence of a final nonappealable determination of
such amount pay to the Indemnitee, in immediately available funds, the amount of
such Losses (or such portion thereof as the Indemnitor shall be responsible for
pursuant to the provisions hereof), subject to the limitations set forth in this
Section 9.5.
(f) Notwithstanding the foregoing, no single claim for indemnity
under Section 9.5(a)(i) and (ii) but excluding 9.5(a)(iii) may be made against
Seller that does not involve, and Seller shall have no liability to Buyer with
respect to, any single claim (or series of claims arising from or relating to
the same facts or events) that does not result in Losses that exceed $5,000 and,
accordingly, the amount of the Losses relating to any such claims (or series of
claims) involving Losses that do not exceed $5,000 shall not be taken into
account in determining the limitation on Losses set forth in the next sentence.
Any indemnification of Buyer pursuant to Section 9.5(a)(i) and (ii), but
excluding 9.5(a)(iii), (an "Indemnifiable Claim") shall be limited as follows:
(i) Buyer shall not be entitled to any recovery for any Indemnifiable Claim
unless such claim for indemnification is made within the time period of survival
set forth in Section 9.4, (ii) Buyer shall not be entitled to any recovery for
any Indemnifiable Claim unless and until the amount which Buyer is entitled to
recover from Seller in respect of all Indemnifiable Claims exceeds, in the
aggregate, $37,500 and (iii) the maximum amount recoverable by Buyer from Seller
for all Indemnifiable Claims shall not exceed $750,000 in the aggregate.
(g) Upon making any payment to an Indemnitee for any indemnification
claim pursuant to this Section 9.5, the Indemnitor shall be subrogated, to the
extent of such payment, to any rights which the Indemnitee may have against any
other parties with respect to the subject matter underlying such indemnification
claim.
(h) In calculating any Losses, there shall be deducted (i) any
insurance recovery in respect thereof and (ii) the amount of any tax benefit to
the Indemnitee (or any of its Affiliates) with respect to such Loss.
(i) If the Closing shall occur, the provisions of Sections 9.5 and
9.10 shall be the sole and exclusive remedy in respect of any breach of
representation or warranty or failure to perform any covenant or agreement
herein.
34
(j) Notwithstanding anything in this Agreement to the contrary,
Seller shall have no liability or obligation of indemnification under this
Agreement for a breach by Seller of a representation or warranty with respect to
a fact or omission known by Xxxxxx X. Xxxxxxx or Xxxxxx X. Xxxxx at the date
hereof or at the Closing. For purposes of this subsection (j), "known" shall be
defined to mean what is in the actual current conscious awareness of those
individuals based upon their regular participation in the day-to-day operations
of the Business, and not based on any independent factual investigation.
9.6 PARTIES IN INTEREST. This Agreement is for the sole benefit of the
parties and shall not create any rights in any Person not a party. Prior to the
Closing, this Agreement may not be assigned by any party without the prior
written consent of the other parties. Subject to the foregoing, this Agreement
shall be binding upon, inure to the benefit of, and be enforceable by the
respective successors and assigns of the parties, but no assignment shall, of
itself, relieve any party of any of its obligations hereunder. Notwithstanding
the above, Seller hereby agrees and consents to an assignment of this Agreement
and all of its terms and conditions prior to Closing to an entity formed by
Buyer and upon such assignment Buyer is hereby released from any and all
liability to Seller hereunder, provided that (i) a substantial portion of the
equity interests of said entity shall be owned by the Buyer, (ii) the net worth
at Closing of said entity shall be not less than $750,000, (iii) Buyer shall
remain liable to Seller pursuant to the confidentiality provisions in the Letter
of Intent, and (iv) the entity/assignee shall agree to be bound by the terms and
conditions of this agreement and to pay, perform and discharge all the
liabilities and obligations of Buyers hereunder.
9.7 ENTIRE AGREEMENT. This Agreement and the Letter of Intent set forth
the entire agreement and understanding of the parties with respect to the
transactions contemplated hereby and supersedes all prior agreements,
arrangements and understandings relating to the subject matter hereof.
9.8 INTERPRETATION. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Words used in this Agreement in the
singular number shall include the plural, and vice versa, unless the context
requires otherwise. Words of gender used in this Agreement may be read as
masculine, feminine or neuter as the context may require. The terms "this
Agreement," "hereto," "herein," "hereby," "hereunder," "hereof" and similar
expressions refer to this Agreement (including the Schedules and Exhibits
hereto) in its entirety and not to any particular provision or portion of this
Agreement. When a reference is made to Sections, Schedules or Exhibits, such
reference shall be to a Section of, or a Schedule or Exhibit to, this Agreement,
unless otherwise indicated. Whenever the words "include," "includes" or
"including" are used herein, they shall be deemed to be followed by the words
"without limitation."
9.9 NOTICES. All notices, requests, demands or other communications to
or upon the parties shall be in writing and shall be deemed to have been given
or made, when (i) delivered personally, (ii) upon receipt after being sent by
the use of a courier service, (iii) sent by a facsimile transmission (which is
confirmed) or (iv) upon receipt after being mailed by certified or registered
mail, postage prepaid, addressed as follows:
35
If to Seller: Xxxx Xxxxx, Operations Manager
Xxxxxxx Kansa Corporation
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxx 00000
With a copy to: Xxxxx X. Xxxxx, Esq.
Xxxxxxx Technology Company, Inc.
00 Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
If to Buyer: Xxxxxx X. Xxxxxxx
0000 Xxxx 00xx Xxxx Xxxxx
Xxxxxxx, Xxxxxx 00000
Xxxxxx X. Xxxxx
0000 Xxxx X
Xxxxxxx, Xxxxxx 00000
Vektek, Inc.
0000 X. 0xx Xxxxxx
Xxxxxxx, Xxxxxx 00000
With a copy to: Xxxx X. Xxxxxxxx, Esq.
Xxxxxxxx Thomson & Xxxxxx
0000 Xxxxxxxxx Xxxxxx,
X.X. Xxx 0000
Xx. Xxxxxx, Xxxxxxxx 00000
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in writing in the manner set forth above.
9.10 EQUITABLE RELIEF. Each party acknowledges that any other party may
be irreparably injured by any breach of this Agreement; accordingly, the party
alleging a breach (or threatened breach) of this Agreement shall be entitled to
seek specific performance and injunctive relief as remedies for any such breach
(or threatened breach), in addition to all other remedies available at law or in
equity, and the other parties shall not raise the claim or defense that an
adequate remedy at law exists.
9.11 LAW GOVERNING. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Kansas without regard
to its conflict of laws rules.
9.12 ARBITRATION. (a) Except for claims of fraud or as otherwise
expressly provided in this Agreement, the parties agree that any controversy,
dispute or claim arising out of, in connection with, or in relation to the
interpretation, performance or breach of this Agreement,
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including any claim based on contract, tort or statute, shall be settled, at the
request of either party, by arbitration conducted in Kansas City, Missouri or
such other location upon which the parties may mutually agree, before and in
accordance with the then existing Rules of Commercial Arbitration of the
American Arbitration Association ("AAA"), and judgment upon any award rendered
by the arbitrator may be entered by any State or Federal court having
jurisdiction thereof. Any controversy concerning whether a dispute is an
arbitrable dispute shall be determined by the arbitrator. The parties intend
that this Agreement to arbitrate be valid, specifically enforceable and
irrevocable. The designation of a situs or specifically a governing law for this
agreement or the arbitration shall not be deemed an election to preclude
application of the Federal Arbitration Act, if it would be applicable.
(b) A sole arbitrator shall be selected by the parties in accordance
with the procedures of the AAA.
(c) The arbitrator shall award to the prevailing party in any
arbitration proceeding commenced hereunder, the prevailing party's costs and
expenses (including expert witness expenses and reasonable attorneys' fees) of
investigating, preparing and presenting such arbitration claim.
9.13 COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original but all of which
taken together shall constitute one and the same instrument.
9.14 SEVERABILITY. If any provision of this Agreement or the
application thereof to any party or circumstance shall be held invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provision to another party or circumstance shall not be affected thereby
and such provision shall be enforced to the greatest extent permitted by
applicable law.
9.15 WAIVER. The failure or delay on the part of any party to insist
upon strict performance of any of the terms or conditions of this Agreement will
not constitute a waiver of any of its rights hereunder. No right or remedy
herein conferred upon or reserved to any party is intended to be exclusive of
any other right or remedy and all such rights and remedies shall be cumulative.
9.16 ONGOING BUSINESS RELATIONSHIP. On or before the Closing, Buyer and
Seller will enter into an Agreement documenting their intention to cooperate
after the Closing, in order to allow both the Business and Xxxxxxx'x and
Seller's remaining operations to continue to function effectively. As long as
the same does not interfere with Buyer's Business operations, and subject to
Buyer's then existing personnel and expertise, and at time reasonably convenient
to Buyer, Buyer and Seller will agree to make available to each other, at the
Premises and at no cost, reasonable resources to provide training, assembly
expertise, engineering expertise, computer and information systems expertise, as
may be required to assist the Business and Xxxxxxx'x and the Seller's remaining
operations to fulfill their respective customer commitments and efficiently
complete the transition to separate the Business from Xxxxxxx'x and the Seller's
remaining operations, for a period not to exceed one hundred eighty (180) days
after the Closing. Immediately after the Closing, Xxxxxxx will issue to Buyer
purchase orders for components
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which are work in process in the machine shop of the Business at the time of
Closing. The purchase price for such components will be determined by
multiplying the part routing remaining standard hours (some of the hours may
have already been performed while Seller owned the Business) by an hourly rate
of thirty-seven ($37.00) dollars plus the cost of materials. If Xxxxxxx or
Seller wish to continue procuring new components from Buyer after the Closing,
they will ask Buyer to quote price and delivery terms, and upon acceptance,
Xxxxxxx or Seller will issue purchase orders on the new agreed upon pricing and
delivery. After the Closing, Seller will communicate regularly with Buyer
regarding any cash payments received by Seller on behalf of Buyer from
customers, and will forward said payments to Buyer.
9.17 NON-SOLICITATION. After the Closing, and for a period of one
hundred eighty (180) days thereafter, Seller agrees not to solicit for
employment any employees of Buyer and Buyer agrees not to solicit for employment
any employees of Seller.
9.18 SCHEDULES. The schedules and exhibits attached to this Agreement
will be updated if required for accuracy and completeness, and agreed to by the
parties, effective as of the Closing.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
XXXXXXX KANSA CORPORATION
By /s/Xxxxx X. Xxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxx
Title President
----------------------------------
/s/Xxxxxx X. Xxxxxxx
-----------------------------------------
XXXXXX X. XXXXXXX
/s/Xxxxxx X. Xxxxx
-----------------------------------------
XXXXXX X. XXXXX
VEKTEK, INC.
By /s/Xxxxx X. Xxxxx
-------------------------------------
Title President & CEO
----------------------------------
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