ASSET PURCHASE AGREEMENT
among
XXXX MICROPRODUCTS INC.,
ALMO CORPORATION,
Almo Distributing Pennsylvania, Inc.
Almo Distributing Maryland, Inc.
Almo Distributing Minnesota, Inc.
Almo Distributing Wisconsin, Inc.
and
Almo Distributing Inc.
November 5, 1998
TABLE OF CONTENTS
Page
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ARTICLE I SALE AND PURCHASE OF ASSETS.........................................1
1.1 Sale and Purchase of Assets.................................1
1.2 Assets to be Transferred....................................1
1.3 Assumption of Liabilities...................................3
1.4 All Other Liabilities Not Assumed...........................4
ARTICLE II PURCHASE PRICE; CLOSING............................................4
2.1 Purchase Price..............................................4
2.2 Closing.....................................................6
2.3 Transaction Taxes...........................................6
2.4 Allocation of Consideration.................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ALMO AND THE SELLERS............7
3.1 Organization of the Seller..................................7
3.2 Authority...................................................7
3.3 Division Financial Statements...............................8
3.4 Absence of Changes..........................................8
3.5 Absence of Undisclosed Liabilities.........................10
3.6 Legal and Other Compliance.................................10
3.7 Taxes......................................................10
3.8 Restrictions on Business Activities........................10
3.9 Title to Properties; Absence of Liens; Condition of
Equipment................................................11
3.10 Intellectual Property......................................11
3.11 Agreements, Contracts and Commitments......................13
3.12 Powers of Attorney.........................................14
3.13 Litigation.................................................14
3.14 Insurance..................................................15
3.15 Environmental, Health, and Safety Matters..................15
3.16 Employee Benefit Plans and Compensation....................16
3.17 Insolvency.................................................21
3.18 Consents...................................................21
3.19 Books and Records..........................................21
3.20 Year 2000 Compliance.......................................21
3.21 Product Warranties; Product Returns; Defects;
Liabilities..............................................21
3.22 Inventory..................................................22
3.23 Accounts Receivable........................................22
3.24 Representations Complete...................................22
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3.25 Brokers' and Finders' Fees; Third-Party Expenses...........22
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER...........................23
4.1 Organization of Buyer......................................23
4.2 Authority..................................................23
4.3 No Conflicts...............................................23
4.4 Warrant Shares.............................................23
4.5 SEC Documents; Buyer Financial Statements..................23
4.6 No Material Adverse Change.................................24
4.7 Litigation.................................................24
4.8 Brokers' and Finders' Fees; Third-Party Expenses...........24
ARTICLE V SECURITIES ACT COMPLIANCE; REGISTRATION............................24
5.1 Securities Act Exemption...................................24
5.2 Stock Restrictions.........................................25
5.3 Representations Regarding Securities Law Matters...........25
5.4 Registration Rights........................................25
ARTICLE VI CONDUCT PRIOR TO THE CLOSING DATE.................................26
6.1 Conduct of Business of each of Almo and the Sellers........26
ARTICLE VII ADDITIONAL AGREEMENTS............................................27
7.1 Approval...................................................27
7.2 Access to Information......................................28
7.3 Access to Records After Closing............................28
7.4 Confidentiality............................................28
7.5 Public Disclosure..........................................28
7.6 Contractual Consents.......................................29
7.7 Legal Conditions to Acquisition............................29
7.8 Best Efforts; Additional Documents and Further
Assurances...............................................29
7.9 Notification of Certain Matters............................29
7.10 Payment of Trade and Other Creditors.......................30
7.11 No Solicitation............................................30
7.12 Facilities.................................................30
7.13 Post-Closing Collection Practices for Accounts
Receivable...............................................31
7.14 Year 2000 Preventative Measures............................31
7.15 Use of Almo Name...........................................31
7.16 Reports on Warranty Claims.................................31
7.17 Release of Liens, Etc......................................32
7.18 Physical Inventory.........................................32
7.19 Payment of HSR Act Filing Fee..............................32
7.20 Software License Agreement.................................32
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ARTICLE VIII CONDITIONS TO OBLIGATIONS TO CLOSE..............................32
8.1 Conditions to Obligations of each Party....................32
8.2 Additional Conditions to Obligations of each of Almo
and the Sellers..........................................33
8.3 Additional Conditions to the Obligations of Buyer..........33
ARTICLE IX NONCOMPETITION AGREEMENTS.........................................34
9.1 Agreement of Seller........................................34
9.2 Nonsolicitation............................................34
9.3 Restriction Period.........................................35
9.4 Permitted Investments......................................35
9.5 Remedies for Breach........................................35
ARTICLE X SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION........35
10.1 Indemnification............................................35
10.2 Arbitration................................................40
ARTICLE XI TERMINATION, AMENDMENT AND WAIVER.................................41
11.1 Termination................................................41
11.2 Effect of Termination......................................42
11.3 Amendment..................................................42
11.4 Extension; Waiver..........................................42
ARTICLE XII GENERAL PROVISIONS...............................................42
12.1 Notices....................................................42
12.2 Expenses...................................................43
12.3 Interpretation.............................................43
12.4 Counterparts...............................................44
12.5 Entire Agreement; Assignment...............................44
12.6 Severability...............................................44
12.7 Other Remedies.............................................44
12.8 Governing Law; Arbitration.................................44
12.9 Rules of Construction......................................45
12.10 No Third Party Beneficiaries...............................45
12.11 Specific Performance.......................................45
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INDEX OF EXHIBITS
Exhibit Description
------- -----------
Exhibit A HyperText Link Agreement
Exhibit B Trade Name Assignment Agreement
Exhibit C Warrant
Exhibit D Xxxx of Sale and General Assignment
Exhibit E Domain Name Transfer Agreement
Exhibit F Investment Representation Statement
Exhibit G Declaration of Registration Rights
Exhibit H-1 Philadelphia Facility Agreement
Exhibit H-2 Philadelphia Warehouse and Employee Leasing Agreement
Exhibit H-3 Minnesota Facility Agreement
Exhibit H-4 Maryland Facility Agreement
Exhibit H-5 Massachusetts Assignment and Assumption Agreement
Exhibit I Trade Name License Agreement
Exhibit J Software License Agreement
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INDEX OF SCHEDULES
Schedule Description
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1.2(a) Inventory
1.2(b) Accounts Receivable
1.2(c) Contracts; Specific Obligations to be Performed
Post-Closing
1.2(d) Equipment and Tangible Assets
1.2(g) Telephone Numbers
1.2(h) Prepaid Expenses and Other Assets
1.3(b) Schedule of Assumed Accounts Payable, Payables Arising
in Connection with Goods in Transit, Placed Orders.
1.3(c) TradeMark Computer Warranty Reserve
1.3(d) Vacation Pay Accrued
1.3(e) Inventory Reserve Procedure
1.3(f) Accrued Expenses
2.1 Book or Agreed Value of Acquired Assets; Book or Agreed
Value of Assumed Liabilities
2.4 Allocation Schedule
3.2 Authority
3.3(c) Division Financial Statements
3.4 Absence of Charges
3.4(i) Key Employees
3.4(ii) Revaluation of Assets
3.10(a) Schedule of Seller Registered Intellectual Property
3.10(b) Title Exceptions: Seller Registered Intellectual Property
3.10(c) Seller Registered Intellectual Property Licenses
3.10(d) Seller Intellectual Property Contracts, Licenses and
Agreements
3.10(e) Intellectual Property Infringement
3.11 Agreements, Contracts and Commitments Exception
3.13 Litigation
3.14 Insurance
3.15 Environmental Permits, Licenses and Other Authorizations
3.16(b)(a) Employee Plans
3.16(e) Pension Plan Matters
3.16(j) Employment Matters
3.16(o) Transferred Employees Title and Base Salary
3.18 Required Consents
3.21 Terms of Sale; License
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3.25 Brokers and Finders
6.1 Conduct of Business Exceptions
7.13 Post-Closing Accounts Receivable and Accounts Payable
Practices
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of November 5, 1998 among Xxxx Microproducts Inc., a California
corporation (the "Buyer"), Almo Corporation, a Pennsylvania corporation
("Almo"), Almo Distributing Pennsylvania, Inc., a Pennsylvania corporation, Almo
Distributing Maryland, Inc., a Maryland corporation, Almo Distributing
Minnesota, Inc., a Minnesota corporation, Almo Distributing Wisconsin, Inc. an
Illinois corporation, and Almo Distributing, Inc., a Pennsylvania corporation.
Almo Distributing Pennsylvania, Inc., Almo Distributing Maryland, Inc., Almo
Distributing Minnesota, Inc., Almo Distributing Wisconsin, Inc., and Almo
Distributing, Inc. are collectively referred to herein as the "Sellers."
RECITALS
WHEREAS, Almo and Sellers maintain a division of their corporations
known as the Computer Products division which distributes computer products (the
"Business");
WHEREAS, pursuant to this Agreement, the Buyer (directly or through one
of its wholly owned subsidiaries) wishes to purchase from Almo and the Sellers,
and Almo and the Sellers wish to sell to the Buyer, all the Acquired Assets (as
defined herein);
NOW, THEREFORE, in consideration of the covenants, promises, and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
SALE AND PURCHASE OF ASSETS
1.1 Sale and Purchase of Assets. Subject to the terms and conditions
contained in this Agreement, Almo and the Sellers agree to sell, assign,
transfer, and deliver to the Buyer all of Almo's and the Sellers' right, title,
and interest in and to each of the Acquired Assets (defined below), and Buyer
agrees to purchase such assets on the Closing Date.
1.2 Assets to be Transferred. At the Closing, Almo and the Sellers
shall collectively sell and deliver to Buyer (or a wholly owned subsidiary of
Buyer to be designated by Buyer), and Buyer (either directly or through a wholly
owned subsidiary of Buyer to be designated by Buyer) shall purchase and accept
from Almo and the Sellers, certain of the assets related to the Business (the
"Acquired Assets"), including:
(a) Inventory. All of Sellers' inventory relating to the
Business as shall be identified in Schedule 1.2(a) to be based on the physical
inventory taken by the parties hereto and attached hereto immediately after the
Closing (including goods which have been ordered but not yet
received by Sellers and goods in transit, but excluding any items manufactured
or sold by Micropolis and Maxtor).
(b) Accounts Receivable. All of Seller's rights to receive
payments owed to the Seller by its customers (except receivables related to
"floor plan" financing arrangements, receivables owing by customers where all
receivables owing from any single customer are older than 90 days, certain
credit balances relating to, among other things, inactive customers, employee
loans, and receivables from customers where the payment was effected by C.O.D.)
as shall be identified in Schedule 1.2(b) to be attached hereto immediately
after Closing.
(c) Rights Under Contracts. All of Sellers' rights under any
equipment lease, real property lease, contract, agreement, plan or arrangement
identified in Schedule 1.2(c) to be agreed to by the parties and attached hereto
at Closing. It is the intent of the parties hereto that all of the Acquired
Assets and all of Sellers' backlog, if any, arising out of the operation of the
Business be transferred to Buyer. Accordingly, the parties agree to use their
reasonable best efforts to facilitate such transfer of customers at the Closing.
Included on Schedule 1.2(c) will be (i) a list of all outstanding written
customer orders, purchase orders, and other customer commitments from Sellers'
current customers of the Business in effect on the Closing Date, and (ii) the
names of all current customers of the Business.
(d) Equipment; Tangible Assets. Certain fixed assets,
equipment, and other tangible assets along with the prices that Buyer will pay
for such fixed assets, equipment, and tangible assets used in the Business
identified in Schedule 1.2(d) to be agreed to by the parties and attached hereto
at Closing (excluding, among other things, assets listed as "Almo Retained
Assets" on Schedule 1.2(d).
(e) Books and Records. All transferable books and records
related to any Acquired Assets, including, without limitation, all financial
records, books, ledgers, supplier lists, customer and marketing lists or
databases, marketing plans, management plans, distribution and reseller methods,
advertising materials, manuals, and other materials of the Seller.
(f) Domain Name and Link. The domain name
xxxxxxxxxxxxxxxxxx.xxx and a link from Almo's web site to the Buyer's site,
which link is more fully described in the HyperText Link Agreement attached
hereto as Exhibit A.
(g) Phone Numbers. The phone numbers used in the Business
identified in Schedule 1.2(g).
(h) Prepaid Expenses and Other Assets. The prepaid expenses
and other assets listed on Schedule 1.2(h) to be agreed to by the parties and
attached hereto as of the Closing Date.
(i) Rights Under Leases. All of Sellers' rights under the real
property lease agreements identified in Schedule 1.2(c) (the "Assumed Leases").
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(j) Other Assets. All of Sellers' claims against any parties
relating exclusively or primarily to any Acquired Asset, the Business or any
contract rights assigned to Buyer, including without limitation, unliquidated
rights under manufacturers' or vendors' warranties or guarantees.
(k) Trade Name Assignment. The registered trade name
"TradeMark" will be assigned to Buyer pursuant to a Trade Name Assignment
Agreement attached hereto as Exhibit B.
(l) To the extent delivery of the Acquired Assets involves
physical delivery, Sellers shall be required to so deliver the Acquired Assets
at the Closing (as defined below) in place unless otherwise directed by Buyer,
in which case Buyer will bear the costs of moving any Acquired Assets to the
chosen location.
1.3 Assumption of Liabilities. On the terms and subject to the
conditions set forth herein, from and after the Closing, the Buyer will assume
and satisfy or perform when due only the following specified liabilities of the
Sellers (the "Assumed Liabilities"):
(a) Sellers' obligations to be performed after the Closing
Date (as defined below) under the contracts or agreements identified in Schedule
1.2(c); and
(b) Certain accounts payable, payables arising in connection
with goods in transit, placed orders (including products received from Seller's
vendors but not yet invoiced by Seller's vendors at closing), in each case only
as set forth on Schedule 1.3(b) (such Schedule to include any credits in favor
of Sellers owing to Sellers by Sellers' vendors but excluding any payables
related to goods delivered from Micropolis, Maxtor, Maxtech and excluding any
payables owing to discontinued vendors), to be attached hereto immediately after
the Closing Date; and
(c) Warranty liability related only to the TradeMark computers
in an amount set forth on Schedule 1.3(c) to be agreed upon by the parties and
attached hereto at Closing for only TradeMark Computer warranty returns and
replacements after the Closing; and
(d) Vacation pay accrued in an amount set forth on Schedule
1.3(d) to be agreed upon by the parties and attached hereto at Closing; and
(e) The reserve for inventory in an amount set forth on
Schedule 1.3(e) to be agreed upon by the parties and attached hereto at Closing;
and
(f) Accrued Expenses. The pro rata portion of the accrued
expenses for goods or services to be provided to the Business after the Closing
Data (as defined below) identified in Schedule 1.3(f) to be agreed to by the
parties and attached hereto at Closing; and
(g) obligations, without liability to Buyer, to customers of
the Business only to send to the proper manufacturer, products sold prior to the
Closing that are returned to the Business for a refund or credit because they
are defective and under manufacturer's warranties; provided that Buyer shall
have no other obligation or liability whatsoever with respect to these returns
other than to return the product to the manufacturer for such credit, refund, or
replacement;
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provided, however, that Buyer shall have no obligation pursuant to any contract
or agreement of Seller identified in Schedule 1.2(c) hereof which by its terms
requires a consent to assignment unless a written consent thereto has been
obtained or, with respect to any such contract or agreement, or the Buyer and
the counterparty to the contract or agreement continue to perform pursuant to
the terms of such agreement or contract in the absence of a consent.
1.4 All Other Liabilities Not Assumed. Other than the Assumed
Liabilities set forth in Section 1.3 above, it is expressly agreed that, except
as set forth in Section 2.3 hereof to pay one-half of the sales or use taxes
arising out of this transaction, Buyer shall not assume or perform any other
liabilities or obligations of any kind or amount, including but not limited to
those for employment, income, sales, property or other taxes of any kind or
amount, including taxes if any attributable to the Acquired Assets.
ARTICLE II
PURCHASE PRICE; CLOSING
2.1 Purchase Price.
(a) Payment of Purchase Price. As consideration for the sale,
assignment, transfer, and delivery by Almo and the Sellers to the Buyer (or a
wholly owned subsidiary of Buyer to be designated by Buyer) of the Acquired
Assets, Buyer, on the terms and conditions set forth herein, shall deliver to
Almo or the Sellers by wire transfer in immediately available funds at the
Closing a dollar amount equal to the book or agreed value of the Acquired Assets
as reflected on Schedule 2.1 prepared by Almo and the Sellers as of the Friday
preceding the Closing Date and agreed to by Buyer minus the book or agreed value
or amount of the Assumed Liabilities as reflected on Schedule 2.1, plus
$2,500,000, subject to adjustment as provided below (the "Purchase Price"). In
addition, Buyer will issue to Almo a warrant (the "Warrant") exercisable until
the fifth anniversary of the Closing Date, to purchase 350,000 shares of
Seller's Common Stock at $12 per share (the "Warrant Shares") as consideration
for the covenant not to compete set forth in Article IX hereof, such warrant to
be in substantially the form attached hereto as Exhibit C.
(b) Post-Closing Adjustment
(a) Within 30 calendar days after the Closing Date,
Buyer, with the assistance of any necessary Almo and Seller personnel at no cost
to Buyer, will prepare and deliver to the Sellers a draft Closing Date Schedule
2.1 (the "Draft Closing Date Schedule") for the Business as of the close of
business on the Closing Date. The Draft Closing Date Schedule will be prepared
in the same manner as Schedule 2.1, with the inventory reserve to be as set
forth on 1.3(e) and the equipment value to be as set forth on Schedule 1.2(d).
(b) If the Sellers have any objections to the Draft
Closing Date Schedule, they will deliver a detailed statement describing their
objections to the Buyer within ten business days after receiving the Draft
Closing Date Schedule. The Buyer and the Sellers will use reasonable
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efforts to resolve any such objections themselves. If the parties do not obtain
a final resolution within ten calendar days from the delivery of Sellers'
objections, the objections to the Draft Closing Date Schedule will be submitted
to Deloitte & Touche within seven days of the termination of the ten-day
resolution period referred to above for binding resolution. The Buyer will bear
one-half of the fees and expenses of the accounting firm, and the Sellers will
bear the other one-half of the fees. Both parties will make their work papers
and other materials available to the accounting firm. The determination of the
accounting firm shall be made within 30 days after the submission of the
objections for resolutions, and the determination shall be conclusive, final,
and binding on the parties.
(c) The Purchase Price will be adjusted as follows:
1. If the book or agreed value of the
Acquired Assets minus the book or agreed value of the Assumed Liabilities, as
reflected on the agreed to (or resolved or determined) Draft Closing Date
Schedule (the "Closing Date Schedule") plus $2,500,000, is less than the cash
amount paid by Buyer at the Closing, then Almo or the Sellers will pay to the
Buyer within three days of the agreement to the Closing Date Schedule (or within
three days of resolution, or determination by the accounting firm, of any
objections thereto) an amount equal to the difference between (A) the cash
amount paid by Buyer minus $2,500,000 and (B) the actual book or agreed value of
the Acquired Assets minus the actual book or agreed value of the Assumed
Liabilities as reflected on the agreed to (or resolved or determined) Draft
Closing Date Schedule.
2. If the book or agreed value of the
Acquired Assets minus the book or agreed value of the Assumed Liabilities, as
reflected on the agreed to (or resolved or determined) Closing Date Schedule
plus $2,500,000, is more than the cash amount paid by Buyer at the Closing then
the Buyer will pay to the Sellers within three days of the agreement to the
Closing Date Schedule (or within three days of resolution, or determination by
the accounting firm, of any objections thereto) an amount equal to the
difference between (A) the book or agreed value of the Acquired Assets minus the
book or agreed value of the Assumed Liabilities as reflected on the agreed to
(or resolved or determined) Closing Date Schedule and (B) the cash amount paid
by Buyer minus $2,500,000.
3. If the book or agreed value of the
Acquired Assets minus the book or agreed value of the Assumed Liabilities, as
reflected on the agreed to (or resolved or determined) Closing Date Schedule, is
equal to the amount paid by Buyer minus $2,500,000 then there will be no
adjustment to the Purchase Price.
(d) Any amounts required to be paid pursuant to
Sections 2.1(c) 1 or 2 above shall be paid by wire transfer in immediately
available funds.
(c) Adjustments to Warrant Shares. The number of Warrant
Shares to be issued at the Closing shall be adjusted to reflect fully the effect
of any stock split, reverse split, stock dividend (including any dividend or
distribution of securities convertible into Buyer's Common
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Stock), reorganization, recapitalization or other like change with respect to
Buyer's Common Stock occurring after the date hereof and prior to the Closing
Date.
2.2 Closing.
(a) Delivery. The closing of the purchase and sale of the
Acquired Assets and the transfer of the Assumed Liabilities hereunder shall be
held at the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C., 000 Xxxx Xxxx
Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000-0000, at 10:00 a.m. (local time), on November
13, 1998 (the "Closing") or at such other time and place upon which the Buyer
and Almo or the Sellers shall agree in writing (the date of the Closing is
hereinafter referred to herein as the "Closing Date"). The Closing will be
deemed effective as of the close of business on the Closing Date.
(b) Closing Deliveries. At the Closing, Buyer shall deliver
the Purchase Price and the Warrant against delivery by Almo and the Sellers of
such transfer documents relating to the sale and transfer of the Acquired Assets
as the Buyer shall reasonably request, including, without limitation, (i) the
Xxxx of Sale and General Assignment of Assets in the form attached hereto as
Exhibit D, and (ii) the Domain Name Transfer Agreement in the form attached
hereto as Exhibit E. At the Closing, Almo and the Sellers shall put Buyer into
full possession and enjoyment of all the Acquired Assets.
At any time and from time to time after the Closing,
at the request of the Buyer and without further consideration, Almo and the
Sellers shall execute and deliver such further instruments of sale, transfer,
conveyance, assignment, and confirmation and take such actions as Buyer may
reasonably determine necessary to transfer, convey, and assign to the Buyer (or
such wholly owned subsidiary as Buyer may designate), and to confirm Buyer's
title to or interest in, the Acquired Assets, to put Buyer in actual possession
and operating control thereof, and to assist Buyer in exercising all rights with
respect thereto.
2.3 Transaction Taxes. Almo and the Sellers will pay and promptly
discharge when due all Taxes (as defined below) and recording fees imposed or
levied by reason of, in connection with or attributable to this Agreement, the
transactions contemplated hereby, and the sale of the Acquired Assets to Buyer;
provided, however, with respect to sales or use taxes arising out of this
transaction, Almo and the Sellers on the one hand, and Buyer, on the other, will
each pay one-half of such taxes. For the purposes of this Agreement, a reference
to "Tax" or, collectively, "Taxes," means any and all federal, state, local and
foreign taxes, assessments and other governmental charges, duties, impositions
and liabilities, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts and any obligations under any agreements or arrangements
with any other person with respect to such amounts and including any liability
for taxes of a predecessor entity. The parties agree to prepare, execute,
deliver to the other party and maintain on file all required sales tax exemption
certificates in connection with the Acquired Assets.
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Any personal property taxes attributable to the Acquired Assets shall be pro
rated through the Closing.
2.4 Allocation of Consideration. Buyer, Almo, and Sellers will allocate
the Purchase Price and the Warrant (the "Consideration") among the Acquired
Assets and the covenant not to compete set forth in Article IX (the
"Allocation") in accordance with Schedule 2.4 to be attached to this Agreement
at or prior to the Closing in a form and substance mutually agreeable to the
parties. No party will take a position on any federal or state tax return,
before any governmental agency charged with the collection of any income tax, or
in any judicial proceeding that is in any way inconsistent with the (i)
allocation of both the type and the amount of the components of the
Consideration specified in the Allocation; or (ii) the tax treatment of the
components of the Consideration specified in the Allocation. To the extent
required by Section 1060 of the Code and any regulations promulgated thereunder,
the Allocation will be revised for any adjustment of the Consideration pursuant
to Section 2.1. The parties shall each prepare Internal Revenue Service Form
8594 and send to each other a copy of such form prior to filing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ALMO AND THE SELLERS
Almo and the Sellers hereby jointly and severally represent and warrant
to Buyer subject to the specific exceptions disclosed in the specified schedules
(each referencing the appropriate section numbers of this Article III as to
which an exception exists) delivered by Almo and the Sellers to Buyer, and dated
as of the date hereof, as follows:
3.1 Organization of the Seller . Each of Almo and the Sellers is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation. Each has the corporate power and authority
to own, lease, and operate its assets and property and to carry on its business
as now being conducted and as proposed to be conducted and is duly qualified or
licensed to do business and is in good standing in each jurisdiction where the
character of the properties owned, leased, or operated by it or the nature of
its activities makes such qualification or licensing necessary, except where the
failure to be so qualified would not have a material adverse effect on the
Business. Almo and the Sellers have made available to Buyer a true and correct
copy of the constituent documents (articles or certificate of incorporation and
bylaws) of Almo and the Sellers, each as amended to date, and each such
instrument is in full force and effect.
3.2 Authority. Each of Almo and the Sellers has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action. This Agreement has been duly
executed and delivered by each of Almo and the Sellers and constitutes the valid
and binding obligation of each of them enforceable against them in accordance
with its terms. Except as disclosed in Schedule 3.2, the execution and delivery
of this Agreement by Almo and the Sellers does not, and, as of the Closing Date,
the consummation of the transactions contemplated hereby and
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thereby will not, conflict with, or result in any violation of, or default under
(with or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
benefit under (any such event, a "Conflict") (i) any provision of the
constituent documents of the Seller or (ii) any mortgage, indenture, lease,
contract or other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Almo or the Sellers or any of its properties or assets. No
consent, waiver, approval, order, or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other federal, state, county or local governmental authority, instrumentality,
agency or commission (any of the foregoing authorities, instrumentalities,
agencies, or commissions, a "Governmental Entity") or any third party (so as not
to trigger any Conflict), except such filing required under the
Xxxx-Xxxxx-Xxxxxx AntiTrust Improvements Act of 1976, as amended (the "HSR Act")
is required by or with respect to Almo or the Sellers in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby and thereby, including any other assignment or instrument of
transfer to be delivered by Almo or the Sellers at the Closing pursuant to
Section 2.2(b).
3.3 Division Financial Statements. (a) The statements of income of the
Business for each of the fiscal years ended April 30, 1998, 1997, and 1996, (ii)
the balance sheets of the Business for each such fiscal year, (iii) the
unaudited statements of income of the Business for the three months ended
September 30, 1998, and (iv) the unaudited balance sheet of the Business as of
September 30 have been prepared in good faith and fairly present the financial
position of the Business, as of the respective dates and for the respective
periods indicated. The Business' balance sheet at September 30, 1998 is
hereinafter referred to as the "Division Balance Sheet," and all such financial
statements are hereinafter referred to as the "Division Financial Statements."
(b) The Business has no liability, indebtedness, obligation,
expense, claim, deficiency, guaranty or endorsement of any type, whether
accrued, absolute, contingent, matured, unmatured or other which (i) has not
been reflected in the Division Balance Sheet, or (ii) has not arisen in the
ordinary course of business since September 30, 1998 consistent in nature and
amount with past practices and which does not exceed $15,000 individually or
$35,000 in the aggregate, or (iii) is not listed in Schedule 1.3(b), or does not
arise under a contract listed in Schedule 1.2(c).
(c) A true and correct copy of the Division Financial
Statements is attached to the Seller Schedules as Schedule 3.3(c).
3.4 Absence of Changes. Except as set forth in Schedule 3.4, since the
date of the Division Balance Sheet (or such other date specifically set forth
herein), Almo and the Sellers have conducted the business of the Computer
Products Division only in the ordinary course of business and, except to the
extent the following has occurred in the ordinary course of Business:
(a) There has not been any material adverse change in the
business, financial condition, operations, or results of operations of the
Business;
-8-
(b) The Sellers have not sold, leased, licensed, or disposed
of any of its assets relating to the Business (whether by way of merger,
purchase, or otherwise);
(c) The Sellers have not accelerated, terminated, modified or
cancelled any agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) which relates to the Acquired
Assets;
(d) The Sellers have not delayed or postponed the payment of
material accounts payable and other liabilities relating to the Acquired Assets
beyond their due date, except with respect to accounts or liabilities that are
subject to dispute in good faith by a Seller;
(e) The Sellers have not cancelled, compromised, waived, or
released any right or claim (or series of related rights and claims) relating to
any Acquired Asset involving payments of more than $10,000 in the aggregate;
(f) To Almo's and the Sellers' knowledge, Sellers have no
reason to believe that any vendors, licensors, licensees, distributors, or
customers related to any Acquired Asset intends to discontinue with the Buyer a
business relationship any such vendor licensor, licensee, distributor, or
customer currently has with the Sellers;
(g) No Acquired Asset has been materially damaged, destroyed,
or lost (whether or not covered by insurance), and no material customer (a
customer accounting for 5% or more of the revenues of the Business in the last
twelve month-period) of the Sellers has been lost;
(h) The Sellers have not entered into any employment contract
or collective bargaining agreement, or modified the terms of any existing
employment contract or collective bargaining agreement, relating to the Acquired
Assets;
(i) The Sellers have not changed employment or compensation
terms for any employee specified on Schedule 3.4(i) hereto ("Key Employees");
(j) To Almo's and the Sellers' knowledge, Sellers have not
taken any action involving the Acquired Assets, or failed to act with respect to
the Acquired Assets, in a manner which would have a material adverse effect on
the Acquired Assets and the business associated therewith;
(k) Neither Almo nor the Sellers have entered into any capital
commitments in relation to any of the Acquired Assets or the business associated
therewith;
(l) Neither Almo nor the Sellers have accelerated the
collection or conversion of accounts receivable or notes receivable relating to
the Acquired Assets by offering any incentive for such acceleration, including
but not limited to prepayment discounts, allowances, or enhancements;
(m) Except as set forth in Schedule 3.4(m), neither Almo nor
the Sellers have revalued any of the assets of the Business;
-9-
(n) Neither Almo nor the Sellers have effected any change in
its accounting methods or policies (including any change in depreciation or
amortization policies or rates);
(o) Neither Almo nor the Sellers have received notice of any
claim or potential claim of ownership of the Acquired Assets by any person, and
to the best knowledge of the Sellers, no basis exists for any such claim of
ownership;
(p) Neither Almo nor the Sellers have received notice of any
claim or potential claim, and to the best knowledge of Almo and the Sellers, no
basis exists for any claim or potential claim that the Sellers have infringed
the intellectual property rights of any person or entity; and
(q) Neither Almo nor the Sellers have negotiated with respect
to or otherwise committed or agreed to do any of the foregoing (other than
negotiations with Buyer and its representatives regarding the transactions
contemplated by this Agreement).
3.5 Absence of Undisclosed Liabilities. Except as set forth in the
Division Financial Statements or in Schedule 1.3(b) or obligations specified in
the contracts listed in Schedule 1.2(c), there is no liability and, to the best
knowledge of the Sellers, no threatened action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand, which could give rise to any
liability with respect to any Acquired Asset.
3.6 Legal and Other Compliance. Almo and the Sellers are in material
compliance with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state and local governments (and all agencies thereof), the violation
of which would have a material adverse effect on the Acquired Assets or the
business of Almo and Sellers associated with the Acquired Assets or on the
ability of Almo or the Sellers to consummate the transactions contemplated by
this Agreement.
3.7 Taxes. To the extent a failure to do so would adversely affect
Buyer, any Acquired Asset, or Buyer's use of any Acquired Asset, Almo and the
Sellers have (i) timely filed within the time period for filing or any extension
granted with respect thereto all Tax returns which it is required to file
relating to or pertaining to any and all Taxes attributable or levied upon any
Acquired Asset and (ii) paid any all Taxes it is required to pay in connection
with the periods to which such Tax returns relate. There are (and immediately
following the Closing there will be) no liens on any Acquired Asset relating to
or pertaining to Taxes, except with respect to Taxes not yet due and payable. No
basis exists or will exist for the assertion of any claim which, if adversely
determined, would result in a lien on any Acquired Asset or otherwise adversely
affect Buyer, any Acquired Asset, or Buyer's use of any Acquired Asset.
3.8 Restrictions on Business Activities. Except as set forth in Section
3.8 of the Disclosure Schedule, there is no agreement (noncompetition, field of
use, or otherwise), judgment, injunction, order or decree which has or
reasonably could be expected to have the effect of prohibiting or impairing any
business practice utilizing any Acquired Asset. Without limiting the foregoing,
neither Almo nor the Sellers have not entered into any agreement which restricts
the sale,
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license, or distribution of any product, service, or technology to any class of
customers, in any geographic area, during any period of time or in any segment
of the market.
3.9 Title to Properties; Absence of Liens; Condition of Equipment. (a)
The Seller does not own any real property that is used in the Business. Almo and
the Sellers have delivered to the Buyer a true and correct copy of each Assumed
Lease. The Assumed Leases are in full force and effect, are valid and effective
in accordance with its terms, and there is not, under any of such leases, any
material existing default or event of default of Sellers (or event which with
notice or lapse of time, or both, would constitute a material default). To the
best knowledge of the Sellers, neither the business operations conducted on the
real property owned by Almo and the Sellers, or conducted by Seller on any other
real property, nor the real property owned by Almo and the Sellers, including
improvements thereon, violate any applicable law, building code, zoning
requirement, or classification, or pollution control ordinance or statute
relating to the particular property or such operations, and such non-violation
is not dependent, in any instance, on so-called non-conforming use exceptions.
To the best knowledge of the Sellers, all approvals of governmental authorities
(including licenses and permits) required in connection with the operation of
the Business on such real property have been obtained.
(b) Almo or the Sellers have good and valid title to, or, in
the case of leased properties and assets, valid leasehold interests in, each
Acquired Asset being transferred to the Buyer, free and clear of any liens,
except as reflected in the Division Financial Statements or on Schedule 3.9.
(c) Sellers and Almo know of no material defect in each item
of equipment, and to their knowledge, each item of equipment is reasonably fit
and usable for the purposes for which it is presently being used.
(d) The Sellers are in custody and control of all the Acquired
Assets being sold and transferred to the Buyer pursuant to this Agreement or any
assignments or other instruments of transfer delivered or to be delivered to
Buyer pursuant hereto or thereto.
3.10 Intellectual Property.
(a) Schedule 3.10(a) lists all registered intellectual
property owned by, or filed in the name of, Almo and the Sellers and included in
the Acquired Assets (the "Seller Registered Intellectual Property") and lists
any proceedings or actions before any court, tribunal (including the United
States Patent and TradeMark Office (the "PTO") or equivalent authority anywhere
in the world) related to any of the Seller Registered Intellectual Property.
Schedule 3.10(a) also lists all of Almo's and the Seller's unregistered
copyrights, trade marks, and trade names used in the Business.
(b) Sellers are the exclusive owner of, and have good title
to, the Seller Registered Intellectual Property.
(c) Schedule 3.10(c) sets forth a complete list of all
licenses, sublicenses, and other agreements pursuant to which any person is
authorized to use the Seller Registered Intellectual
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Property or any of Almo's or Sellers' trade secrets material to the Acquired
Assets, and includes the identity of all parties thereto, a description of the
nature and subject matter thereof, the applicable royalty, and the term thereof.
The execution and delivery of this Agreement by Almo and the Sellers, and the
consummation of the transactions contemplated hereby, will not cause any such
license, sublicense, or agreement to terminate, nor entitle any other party to
any such license, sublicense, or agreement to terminate or modify such license,
sublicense, or agreement.
(d) The contracts, licenses and agreements listed in Section
3.10(d) of the Disclosure Schedule constitute all contracts, licenses and
agreements (other than those set forth in Schedule 1.2(c)) to which Almo or the
Sellers are a party with respect to any intellectual property included in the
Acquired Assets.
(e) Except as set forth in Schedule 3.10(e), the operation of
the Business as currently conducted by the Seller or as reasonably contemplated
to be conducted (including but not limited to the design, development,
distribution, marketing, use, import, manufacture, license and sale of the
products, technology or services (including products, technology or services
currently under development) of Almo and the Sellers) has not, does not and will
not infringe or misappropriate the intellectual property of any person, violate
the rights of any person (including rights to privacy or publicity), or
constitute unfair competition or trade practices under the laws of any
jurisdiction. Almo and the Sellers have not received notice nor have any claims
been asserted or threatened against any of them or any of their customers, from
any person claiming that such operation or any act, product, technology or
service (including products, technology or services currently under development)
of Almo or the Sellers infringes or misappropriates the intellectual property of
any person or that the Seller has engaged in unfair competition or trade
practices under the laws of any jurisdiction (nor to the best knowledge of the
Seller is there any basis therefor).
(f) All necessary registration, maintenance and renewal fees
in connection with the Seller Registered Intellectual Property have been paid
and all necessary documents and certificates in connection with Seller
Registered Intellectual Property have been filed with the relevant patent,
copyright, trademark or other authorities in the United States or foreign
jurisdictions, as the case may be, for the purposes of maintaining such Seller
Registered Intellectual Property.
(g) Neither Almo nor the Sellers have any currently pending
claim against any person for infringing or misappropriating the Seller
Registered Intellectual Property.
(h) No Seller Registered Intellectual Property of Almo or the
Sellers is subject to any proceeding or outstanding decree, order, judgment,
agreement or stipulation that restricts in any manner the use, transfer or
licensing thereof by Almo or the Sellers or may affect the validity, use or
enforceability of the Seller Registered Intellectual Property.
(i) No (i) product, technology, service or publication of the
Business or (ii) material published or distributed by Almo or the Sellers in
connection with the Business is obscene, defamatory, or constitutes false
advertising or otherwise violates any law or regulation.
-12-
3.11 Agreements, Contracts and Commitments. Except as contemplated by
this Agreement or as set forth on Schedule 3.11, neither Almo nor the Sellers
currently has or is a party to, or bound by with respect to any Acquired Asset
or Key Employee (as defined in Section 3.4(i) hereof):
(a) any collective bargaining agreements;
(b) any agreements or arrangements that contain any severance
pay or post-employment liabilities or obligations;
(c) any stock option, stock purchase, stock appreciation,
bonus, deferred compensation, pension, severance, profit sharing or retirement
plans, or any other employee benefit plans or arrangements;
(d) any agreement, contract, or commitment relating to the
disposition or acquisition of assets or any interest in any business enterprise
except in the ordinary course of business;
(e) any employment or consulting agreement with an employee or
individual consultant or salesperson or consulting or sales agreement;
(f) any agreement (or group of related agreements) for the
lease of personal property to or from any person or entity having a value
individually in excess of $10,000;
(g) any agreement of indemnification or guaranty;
(h) any agreement entered otherwise than in the ordinary
course of business;
(i) to Almo and the Sellers' knowledge, any agreement that is
likely to result in a loss in excess of $25,000 on completion of performance;
(j) any agreement (or group of related agreements) containing
any covenant limiting the freedom of Almo or the Sellers to engage in any line
of business or to compete with any person or entity that could reasonably be
expected to impair or encumber the Acquired Assets (including, without
limitation, any restrictions on the marketing, license, and distribution of the
Seller Registered Intellectual Property);
(k) any agreement (or group of related agreements) relating to
capital expenditures and involving future payments in excess of $15,000;
(l) any agreement (or group of related agreements) under which
payment in excess of $1,000 has already been received by Almo or the Sellers
(whether in whole or in part) but which requires the performance of services
after the Closing Date, except for credit balances included in Schedule 1.2(b);
-13-
(m) any fidelity or surety bond or completion bond;
(n) any agreement pursuant to which Almo or the Sellers have
advanced or loaned any amount to any director, officer, employee, or consultant
other than business travel advances in the ordinary course of business;
(o) any mortgages, indentures, loans or credit agreements,
security agreements or other agreements or instruments relating to the borrowing
of money by Almo or the Sellers or extension of credit to Almo or the Sellers
exclusive of routine trade payables, involving obligations in excess of $5,000
or under which Almo or the Sellers have imposed any lien on any of the Acquired
Assets;
(p) any purchase order or contract for the purchase of
materials (excluding capital expenditures) involving $15,000 or more;
(q) any agreement concerning confidentiality, except in the
ordinary course;
(r) any construction contracts;
(s) any distribution, joint marketing, development, or
partnership or joint venture agreement;
(t) any agreement pursuant to which Almo or the Sellers has
granted, or may grant in the future, to any party a source-code license or
option or other right to use or acquire source-code; or
(u) any other agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) that involves
payment of $10,000 or more.
Almo and the Sellers have delivered to the Buyer a correct and complete
copy of each written agreement listed in Schedule 3.11. Neither Almo nor the
Sellers have breached, violated, or defaulted under, or received notice that any
of them have breached, violated, or defaulted under, any of the terms of or
conditions of any agreement, contract, or commitment required to be identified
in Schedule 1.2(c) (any such agreement, contract, or commitment, a "Contract").
Each Contract is in full force and effect and, except as otherwise disclosed in
Schedule 3.11, is not subject to any default thereunder of which Almo or the
Sellers have knowledge by any party obligated to Almo or a Seller pursuant
thereto.
3.12 Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of Almo or the Sellers in respect of any Acquired Asset.
3.13 Litigation. Except as set forth in Schedule 3.13, there is no
action, suit, proceeding, claim, arbitration, or investigation pending before
any court or administrative agency against Almo or the Sellers or any officer or
director thereof in their capacity as such that may result in any adverse
-14-
change in the Business or to the Acquired Assets or that questions the validity
of this Agreement or of any action taken to or to be taken pursuant to or in
connection with this Agreement. To the best knowledge of Almo and the Sellers,
no such action, proceeding, claim, arbitration, or investigation has been
threatened. There are no judgments, orders, decrees, citations, fines, or
penalties heretofore assessed against Almo or the Sellers affecting the Business
or the Acquired Assets under any federal, state or local law. No governmental
entity has at any time challenged or questioned the legal right of Almo or
Sellers to manufacture, offer, or sell any product related to the Acquired
Assets in the present manner or style thereof.
3.14 Insurance. Schedule 3.14 lists all material insurance policies
covering the Business and the Acquired Assets. There is no claim by Almo or the
Sellers pending under any of such policies or bonds as to which coverage has
been questioned, denied, or disputed by the underwriters of such policies or
bonds. All premiums payable under all such policies and bonds have been paid,
and Almo and the Sellers are otherwise in compliance with the terms of such
policies and bonds.
3.15 Environmental, Health, and Safety Matters.
(a) Almo and Sellers have complied and are in compliance with
all Environmental, Health, and Safety Requirements except where the failure to
comply does not result in a material adverse effect on the Business.
(b) Without limiting the generality of the foregoing, Almo and
Sellers have obtained and complied with, and are in compliance with, all
permits, licenses and other authorizations that are required pursuant to
Environmental, Health, and Safety Requirements (as defined below) for the
occupation of its facilities and the operation of its business; a list of all
such permits, licenses and other authorizations is set forth on the attached
Schedule 3.15 except where the failure to comply does not result in a material
adverse effect on the Business.
(c) Almo and Sellers have not received any written or oral
notice, report or other information regarding any actual or alleged violation of
Environmental, Health, and Safety Requirements, or any liabilities or potential
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise),
including any investigatory, remedial or corrective obligations, relating to any
of them or its facilities arising under Environmental, Health, and Safety
Requirements.
(d) Except as set forth on Schedule 3.15, to Almo and the
Sellers' knowledge, none of the following exists at any property or facility
owned or operated by Almo or Sellers: (1) underground storage tanks, (2)
asbestos-containing material in any form or condition, (3) materials or
equipment containing polychlorinated biphenyls, or (4) landfills, surface
impoundments, or disposal areas.
(e) Except as set forth on Schedule 3.15, Almo and Sellers
have not treated, stored, disposed of, arranged for or permitted the disposal
of, transported, handled, or released any substance, including without
limitation any hazardous substance, or owned or operated any property or
facility in a manner that has given or would give rise to liabilities, including
any liability for
-15-
response costs, corrective action costs, personal injury, property damage,
natural resources damages or attorney fees, pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), the Solid Waste Disposal Act, as amended ("SWDA") or any other
Environmental, Health, and Safety Requirements.
(f) Neither this Agreement nor the consummation of the
transaction that is the subject of this Agreement will result in any obligations
for site investigation or cleanup, or notification to or consent of government
agencies or third parties, pursuant to any of the so-called
"transaction-triggered" or "responsible property transfer" Environmental,
Health, and Safety Requirements.
(g) Almo and Sellers have not either expressly or by operation
of law, assumed or undertaken any liability, including without limitation any
obligation for corrective or remedial action, of any other Person relating to
Environmental, Health, and Safety Requirements.
(h) No facts, events or conditions involving Almo or the
Sellers and relating to the past or present facilities, properties or operations
of Almo or the Sellers will prevent, hinder or limit continued compliance with
Environmental, Health, and Safety Requirements, give rise to any investigatory,
remedial or corrective obligations pursuant to Environmental, Health, and Safety
Requirements, or give rise to any other liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise) pursuant to Environmental, Health, and
Safety Requirements, including without limitation any relating to onsite or
offsite releases or threatened releases of hazardous materials, substances or
wastes, personal injury, property damage or natural resources damage.
(a) "Environmental, Health, and Safety Requirements"
shall mean for purposes of this Section 3.15 all federal, state, local and
foreign statutes, regulations, ordinances and other provisions having the force
or effect of law, all judicial and administrative orders and determinations, all
contractual obligations and all common law concerning public health and safety,
worker health and safety, and pollution or protection of the environment,
including without limitation all those relating to the presence, use,
production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, each as amended and as now or hereafter in
effect.
3.16 Employee Benefit Plans and Compensation.
(a) Definitions. For purposes of this Section 3.16, the
following terms shall have the meanings set forth below:
(a) "Affiliate" means any other person or entity
under common control with the Seller within the meaning of Section 414(b), (c),
(m) or (o) of the Code and the regulations thereunder.
-16-
(b) "Employee Plan" shall refer to any plan, program,
policy, practice, contract, agreement or other arrangement providing for
bonuses, severance, termination pay, deferred compensation, pensions, profit
sharing, performance awards, stock or stock-related awards, fringe benefits or
other employee benefits or remuneration of any kind, whether formal or informal,
written or otherwise, funded or unfunded and whether or not legally binding,
including without limitation, each plan (each an "employee benefit plan" within
the meaning of Section 3(3) of ERISA) which is or has been maintained,
contributed to, or required to be contributed to, by the Seller for the benefit
of any Key Employee, and pursuant to which the Seller has or may have any
material liability, contingent or otherwise.
(c) "Key Employee" means those employees listed on
Schedule 3.4(i) hereto.
(d) "Employee Agreement" shall refer to each
employment, severance, consulting or similar agreement or contract and any
amendments thereto, whether written or oral and whether or not legally binding,
between Almo or the Sellers and any Key Employee.
(b) Schedules.
(a) Schedule 3.16(b)(a) contains an accurate and
complete list of each Employee Plan applicable to the Key Employees and each
Employee Agreement, together with a schedule of all liabilities under each such
Employee Plan applicable to the Key Employees. Except as set forth in Schedule
3.16(b)(a), Almo or Sellers do not have any plan or commitment, whether legally
binding or not, to establish any new Employee Plan applicable to the Key
Employees or Employee Agreement, to modify any Employee Plan applicable to the
Key Employees or Employee Agreement (except to the extent required by law or to
conform any such Employee Plan applicable to the Key Employee or Employee
Agreement to the requirements of any applicable law, in each case as previously
disclosed to Buyer in writing, or as required by this Agreement), or to enter
into any Employee Plan applicable to the Key Employees or Employee Agreement,
nor does it have any intention or commitment to do any of the foregoing.
(b) The names of all Key Employees involved in the
Business are set forth on Schedule 3.4(i).
(c) Documents. Almo and Sellers have provided to Buyer (i)
correct and complete copies of all documents embodying each Employee Plan and
each Employee Agreement including all amendments thereto and copies of all forms
of agreement and enrollment used therewith; (ii) the most recent annual
actuarial valuations, if any, prepared for each Employee Plan; (iii) all taxing
or other governmental authority opinion, notification or determination letters
and rulings relating to Employee Plans and copies of all applications and
correspondence to or from any taxing or other governmental authority with
respect to any Employee Plan; (iv) if the Employee Plan is funded, the three
most recent years of annual and periodic accounting of Employee Plan assets; (v)
all material agreements and contracts relating to each Employee Plan, including
but not limited to, administrative service agreements, group annuity contracts
and group insurance contracts; and
-17-
(vi) all communications material to any Key Employee relating to any Employee
Plan and any proposed Employee Plans, in each case, relating to any amendments,
terminations, establishments, increases or decreases in benefits, acceleration
of payments or vesting schedules or other events which would result in any
liability to Almo or the Sellers.
(d) Employee Plan Compliance. (i) Each of Almo and the Sellers
has performed all obligations required to be performed by it under each Employee
Plan, each Employee Agreement and with respect to its workers' representative
committee, and each Employee Plan and each Employee Agreement; (ii) there are no
actions, suits or claims pending, or, to the best knowledge of each of Almo and
the Sellers threatened or anticipated (other than routine claims for benefits)
against any Employee Plan or against the assets of any Employee Plan or under
any Employee Agreement or relating to the workers' representative committee;
(iii) each Employee Plan can be amended, terminated or otherwise discontinued
after the Closing in accordance with its terms, without liability to Buyer
(other than ordinary administration expenses typically incurred in a termination
event); (iv) there are no inquiries or proceedings pending or, to the best
knowledge of each of Almo and the Sellers, threatened by any governmental
authority with respect to any Employee Plan or any Employee Agreement; (v) each
of Almo and the Sellers is not subject to any penalty or tax with respect to any
Employee Plan or any Employee Agreement; (vi) no prohibited transaction within
the meaning of Section 4975 of the Code or Section 406 or 407 of ERISA, and not
otherwise exempt under Section 408 of ERISA or Section 4975 of the Code, has
occurred with respect to any Employee Plan; and (vii) each Employee Plan
intended to qualify under Section 401(a) of the Code and each trust intended to
qualify under Section 501(a) of the Code has either received a favorable
determination letter with respect to each such Employee Plan from the United
States Internal Revenue Service or has remaining a period of time under
applicable Treasury regulations or IRS pronouncements in which to apply for such
determination letter and make any amendments necessary to obtain a favorable
determination, and nothing has occurred since the date of such letter that could
reasonably be expected to affect the qualified status of such Employee Plan.
(e) Pension Plans. Except as set forth in Schedule 3.16(e),
each of Almo and the Sellers does not now have, nor has it ever, maintained,
established, sponsored, participated in, or contributed to, any pension plan
which is subject to Part 3 of Subtitle B of Title I of ERISA, Title IV of ERISA
or Section 412 of the Code. The Seller does not have any retirement or pension
plans other than as set forth on Schedule 3.16(e).
(f) Multiemployer Plans. Buyer shall have no liability under
any of Almo's or Sellers' "multiemployer plans" (as such term is defined in
Section 3(37) of ERISA.
(g) No Post-Employment Obligations. No Employee Plan provides,
or imposes any obligation to provide life insurance, health or other employee
benefits to any Employee upon his or her retirement or termination of employment
for any reason, except as may be required by applicable law, and each of Almo
and the Sellers has not represented, promised or contracted (whether in oral or
written form) to any Employee (either individually or to Employees as a group)
that such Employee(s) would be provided with life insurance, health or other
employee welfare benefits upon their retirement or termination of employment,
except to the extent required by
-18-
applicable law. Except to the extent (if any) to which provision or allowance
has been made in the Division Financial Statements or is otherwise required in
connection with the transactions contemplated by this Agreement, no liability
has been incurred by each of Almo and the Sellers to make any redundancy
payments or any protective awards or to pay damages or compensation (or wrongful
or unfair dismissal or for failure to comply with any order for the
reinstatement or re-engagement of any employee) and no gratuitous payments has
been made or promised by each of Almo and the Sellers in connection with the
actual or proposed termination or suspension of employment or variation or any
contract of employment of any present or former director or employee.
(h) No Violations. Each of Almo and the Sellers has not, prior
to the Closing and in any material respect, violated any of the health care
continuation requirements of Section 4980B(f) of the Code (and Sections 600-608
of ERISA) or any similar provisions of U.S. state law applicable to its
Employees. Each of Almo and the Sellers has complied in all respects with ERISA
and all applicable laws relating to the Employees or the Employee Plans, and
there are no outstanding claims against or payments due from each of Almo and
the Sellers thereunder.
(i) Effect of Transaction. The execution of this Agreement and
the consummation of the transactions contemplated hereby will not cause or
create any liability to Buyer (either alone or upon the occurrence of any
additional or subsequent events) under any Employee Plan, Employee Agreement,
trust or loan, or constitute an event that will or may result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any Employee.
(j) Employment Matters. Except as set forth on Schedule
3.16(j), each of Almo and the Sellers (i) is in compliance with all applicable
laws respecting employment and employment practices, including without
limitation, those relating to discrimination in employment, terms and conditions
of employment, election of employee representatives (where applicable),
obligations to consult with and inform employee representatives, calculations
and accruals of vacations and of other accruals, seniority bonuses (if any), and
wages and hours; (ii) is in compliance with all applicable safety laws, except
where failure to so comply would not materially adversely affect the Business;
(iii) has withheld all amounts required by law or by agreement to be withheld
from the wages, salaries and other payments to Employees or other persons who by
virtue of their activities performed on behalf of each of Almo and the Sellers
may be deemed employees within the meaning of applicable law; (iv) is not liable
for any arrears of wages or any taxes or any penalty for failure to comply with
any of the foregoing; and (v) is not liable for any payment to any trust or
other fund or to any governmental or administrative authority, with respect to
unemployment compensation benefits, social security or other benefits or
obligations for Employees or other persons who by virtue of their activities
performed on behalf of each of Almo and the Sellers may be deemed employees
within the meaning of applicable law (other than routine payments to be made in
the normal course of business and consistent with past practice).
(k) Labor. No work stoppage or labor strike against each of
Almo and the Sellers is pending, nor to the best knowledge of each of Almo and
the Sellers, threatened. Each of Almo
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and the Sellers is not involved in nor has been threatened with any labor
dispute, grievance, or litigation relating to labor, safety or discrimination
matters involving any Employee, including, without limitation, charges of unfair
labor practices or discrimination complaints, which, if adversely determined,
would, individually or in the aggregate, result in Liability to each of Almo and
the Sellers or Buyer. Each of Almo and the Sellers has not engaged in any unfair
labor practices which could, individually or in the aggregate, directly or
indirectly result in a liability to each of Almo and the Sellers. Each of Almo
and the Sellers is not presently, nor has it in the past, been a party to, or
bound by, any agreement negotiated with its Employees and no collective
bargaining agreement is being negotiated by each of Almo and the Sellers.
(l) No Interference or Conflict. To the Knowledge of each of
Almo and the Sellers, no shareholder, officer, employee or consultant of each of
Almo and the Sellers is obligated under any contract or agreement or is subject
to any judgement, decree or order of any court or administrative agency, that
would interfere with such person's efforts to promote the interests of each of
Almo and the Sellers or that would interfere with the Business. Neither the
execution nor delivery of this Agreement, nor the carrying on of the Business
nor any activity of such officers, directors, employees or consultants in
connection with the carrying on of the Business as presently conducted or
proposed to be conducted, will, to each of Almo and the Sellers' knowledge,
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any contract or agreement under which any of such
officer's, directors, employees or consultants is now bound.
(m) Fixed Term Agreements. There is no existing or previous
employee of each of Almo and the Sellers under a fixed term employment contract
who could make a valid claim that he or she has an agreement of indefinite
duration.
(n) No Liability. Buyer will not have any liability for making
payments or providing benefits of any kind to any Employee or former Employee of
each of Almo and the Sellers who does not become an Employee of Buyer including,
without limitation, (A) as a result of the sale of the Acquired Assets or as a
result of the termination by each of Almo and the Sellers of any Employees or
decision by the Buyer not to hire any such Employee, (B) any obligation to
provide former Employees of each of Almo and the Sellers (including individuals
who become former Employees by reason of the consummation of the transactions
contemplated by this Agreement) so-called COBRA continuation coverage (with
respect to U.S. Employees of Seller), (C) any liability in respect of medical
and other benefits for existing and future retirees of each of Almo and the
Sellers and for claims made after Closing in respect of costs and expenses
incurred prior to Closing, (D) any liability in respect of work-related employee
injuries or worker's compensation claims by employees or former employees of
each of Almo and the Sellers, and (E) any liability in respect of employee
bonuses payable to former employees of each of Almo and the Sellers.
(o) Transferred Employees. Schedule 3.16(o) sets forth the
current job title and the annual base salary of certain employees identified by
Buyer to whom Buyer expects to make an offer of either at-will or term
employment.
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3.17 Insolvency. No insolvency proceedings of any character, including
bankruptcy, receivership, reorganization, winding up, or arrangement with
creditors, voluntary or involuntary, affecting any of the Acquired Assets are
pending or, to the best knowledge of each of Almo and the Sellers, are
threatened, and each of Almo and the Sellers has not made any assignment for the
benefit of creditors, nor taken any other action which would constitute the
basis for the institution of such insolvency proceedings.
3.18 Consents. Schedule 3.18 sets forth a true, correct, and complete
list of the identities of any person or entity (including a governmental entity)
whose consent or approval is required, and the matter, agreement, or contract to
which such consent relates, in connection with the transfer, assignment or
conveyance by each of Almo and the Sellers of any Acquired Asset.
3.19 Books and Records. The books and records of each of Almo and the
Sellers related to the businesses associated with the Acquired Assets (i) have
been fully and accurately maintained in accordance with applicable laws and with
generally accepted practices and standards in the jurisdiction(s) in which each
of Almo and the Sellers operates and (ii) are in each of Almo and the Sellers'
possession or under its control. The Acquired Assets include all such records,
although Seller is not transferring to Buyer any rights to continue to maintain
such records on Seller's computer systems or databases.
3.20 Year 2000 Compliance. Provided the Buyer complies with the
covenant set forth in Section 7.15 hereof, Almo and the Sellers represent and
warrant that all TradeMark computers sold for which Almo or the Sellers have
warranty or other liability are designed to be used prior to, during, and after
the calendar year 2000 A.D. and that TradeMark Computers will operate during
each such time period without error relating to date data, specifically
including any error relating to, or the product of, date data which represents
or references different centuries or more than a century. This warranty relating
to Year 2000 compliance shall apply only to computer hardware (including the
BIOS and any firmware, microcode, or chip-resident software resident on the
hardware) and does not include software installed on such computers, including
but not limited to, any operating systems and applications software. Without
limiting the generality of the foregoing, each of Almo and the Sellers further
represents and warrants that such TradeMark computers (i) will not abnormally
end or provide invalid or incorrect results as a result of date data,
specifically including date data which represents or references different
centuries or more than one century; and (ii) has been designed to ensure year
2000 compatibility, including, but not limited to, date data century
recognition, calculations which accommodate same century and multi-century
formulas and date values, and date data interface values that reflect the
century.
3.21 Product Warranties; Product Returns; Defects; Liabilities. Each
product manufactured, sold, licensed, leased, or delivered by each of Almo and
the Sellers in the Business has been in conformity with all applicable
contractual commitments and all express and implied warranties. Except as
reflected in the reserve for warranty claims for the TradeMark computers on the
Division Balance Sheet each of Almo and the Sellers has no liability (and to the
best knowledge of each of Almo and the Sellers, there is no basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against each of Almo and the Sellers
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giving rise to any liability) for replacement or repair thereof or other damages
in connection therewith where such liability is not collectible in full from the
applicable vendor. The qualifications as to best knowledge of Almo and the
Sellers in the parenthetical in the previous sentence shall not apply to
TradeMark computers. No product manufactured, sold, licensed, leased, or
delivered by each of Almo and the Sellers in the Business is subject to any
guaranty, warranty, return right, or other indemnity beyond the applicable
standard terms and conditions of sale, license, or lease or beyond that implied
or imposed by applicable law. Schedule 3.21 includes a copy of the standard
terms and conditions of sale, license, or lease of each of Almo and the Sellers.
3.22 Inventory. The inventory of the Business as reflected on the
Division Balance Sheet consists of raw materials and supplies, manufactured and
purchased parts, goods in process, and finished goods, all of which is
merchantable and fit for the purpose for which it was procured or manufactured
all of which is reflected on such balance sheet at the lower of cost or market
value. All items of inventory included in the Acquired Assets are subject to an
agreement with the supplier of such items regarding the return of such items.
Copies of such agreements have been provided to Buyer and indexed to the items
of inventory.
3.23 Accounts Receivable. Each of Almo and the Sellers has delivered to
Buyer a complete and accurate aging of all accounts receivable of the Company as
of a week prior to Closing. No account receivable reflected on Schedule 1.2(b)
and in the Division Balance Sheet and no account receivable arising after the
date of the Division Balance Sheet and reflected on the books of the Company and
the Closing Date Schedule is uncollectible, subject to counterclaim or offset,
except to the extent reserved against thereon, and all accounts receivable will
be collected within 90 days of the Closing. Except as set forth in Section 3.23
of the Disclosure Schedule, no such accounts receivable are subject to discount
on volume or rebate or any other reduction. All accounts receivable have been
generated in the ordinary course of business and reflect a bona fide obligation
for the payment of goods or services provided by the Company.
3.24 Representations Complete. To the knowledge of Almo and Sellers,
none of the representations or warranties made by each of Almo and the Sellers
(as modified by each of Almo and the Sellers Schedules), nor any statement made
in any schedule or certificate furnished by each of Almo and the Sellers
pursuant to this Agreement contains or will contain at the Closing Date, any
untrue statement of a material fact, or omits or will omit at the Closing Date
to state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which they were made,
not misleading.
3.25 Brokers' and Finders' Fees; Third-Party Expenses. Except as set
forth in Schedule 3.25, Almo and Sellers have not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to each of Almo and the Sellers as
follows:
4.1 Organization of Buyer. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
California. Buyer has the corporate power to own its properties and to carry on
its business as now being conducted.
4.2 Authority. Buyer has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Buyer. This Agreement has been duly executed and
delivered by Buyer and constitutes the valid and binding obligation of Buyer,
enforceable in accordance with its terms.
4.3 No Conflicts. The execution and delivery of this Agreement by the
Buyer does not, and, as of the Closing Date, the consummation of the
transactions contemplated hereby and thereby will not, conflict with, or result
in any violation of, or default under (with or without notice or lapse of time,
or both), or give rise to a right of termination, cancellation or acceleration
of any obligation or loss of any benefit under (any such event, a "Conflict")
(i) any provision of the constituent documents of the Buyer or (ii) any
mortgage, indenture, lease, contract or other agreement or instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Buyer or any of its properties
or assets. No consent, waiver, approval, order, or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other federal, state, county or local governmental authority,
instrumentality, agency or commission except under the HSR Act (any of the
foregoing authorities, instrumentalities, agencies, or commissions, a
"Governmental Entity") or any third party (so as not to trigger any Conflict),
is required by or with respect to the Buyer in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby and thereby, including any other assignment or instrument of transfer to
be delivered by the Buyer at the Closing pursuant to Section 2.2(b).
4.4 Warrant Shares. The Warrant Shares to be issued upon exercise of
the Warrant pursuant to this Agreement will, when issued and delivered in
accordance with this Warrant, be duly authorized, validly issued, fully paid,
and non-assessable; provided, however, that the Warrant Shares to be issued
hereunder will be subject to restrictions on transfer under applicable federal
and state securities laws in the United States.
4.5 SEC Documents; Buyer Financial Statements. Buyer has filed all
forms, reports, and documents required to be filed by Buyer with the Securities
and Exchange Commission (the "SEC") and has furnished or made available to each
of Almo and the Sellers true and complete copies of its Annual Report on Form
10-K for the fiscal year ended December 31, 1998 and its Quarterly Report
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on Form 10-Q for the quarter ended June 30, 1998 (collectively, the "SEC
Documents"), which Buyer has filed with the SEC under the Exchange Act. As of
their respective filing dates, the SEC Documents complied in all material
respects with the requirements of the Exchange Act, and none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading, except to the extent corrected by a document subsequently filed
with the SEC. The consolidated financial statements of Buyer, including the
notes thereto, included in the SEC Documents (the "Buyer Financial Statements")
comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods indicated (except as may be indicated in
the notes thereto or, in the case of unaudited statements, as permitted by Form
10-Q of the SEC), and fairly present the consolidated financial position of
Buyer and the results of its operations and cash flows as of the respective
dates and for the periods indicated therein (subject, in the case of unaudited
statements, to normal audit adjustments). There has been no change in Buyer's
accounting policies except as described in the notes to the Buyer Financial
Statements.
4.6 No Material Adverse Change. Since the date of the most recent SEC
Documents, there has not been any material adverse change in the Buyer's
business, results of operations, or financial condition.
4.7 Litigation. There is no action, suit or proceeding of any nature
pending or, to Buyer's knowledge, threatened against Buyer that could reasonably
be expected to interfere with the consummation of the transactions contemplated
by this Agreement or that questions the validity of this Agreement or of any
action taken or to be taken pursuant to or in connection with the provisions of
this Agreement.
4.8 Brokers' and Finders' Fees; Third-Party Expenses. Buyer has not
incurred, nor will it incur, directly or indirectly, any liability for brokerage
or finders' fees or agents' commissions or any similar charges in connection
with this Agreement or any transaction contemplated hereby.
ARTICLE V
SECURITIES ACT COMPLIANCE; REGISTRATION
5.1 Securities Act Exemption. The Warrant Shares to be issued pursuant
to exercise of the Warrant will not be registered under the Securities Act in
reliance on the exemptions from the registration requirements of Section 5 of
the Securities Act set forth in Section 4(2) thereof. Simultaneous with the
execution and delivery of this Agreement, each of Almo and the Sellers has
delivered to Buyer an investment representation statement in the form attached
hereto as Exhibit F. Prior to the Closing Date, each of Almo and the Sellers
shall have provided Buyer such additional representations, warranties,
certifications, and additional information as Buyer may reasonably request to
ensure the availability of an exemption from the registration requirements of
the Securities Act.
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5.2 Stock Restrictions. In addition to any legend imposed by applicable
state securities laws or by any contract which continues in effect after the
Closing Date, the Warrant issued pursuant to this Agreement, and any Warrant
Shares issued upon exercise of the Warrant shall bear a restrictive legend (and
stop transfer orders shall be placed against the transfer thereof with Buyer's
transfer agent), stating substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO, OR AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE ACT, OR A NO-ACTION LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION. THIS CERTIFICATE MUST BE
SURRENDERED TO THE COMPANY OR ITS TRANSFER AGENT PRIOR TO ANY
TRANSFER OF ANY INTEREST IN THE SECURITIES REPRESENTED
HEREBY.
5.3 Representations Regarding Securities Law Matters. Each of Almo and
the Sellers shall be bound by the following provisions:
(a) Each of Almo and the Sellers will not offer, sell, or
otherwise dispose of any Warrant Shares except in compliance with the Securities
Act and the rules and regulations thereunder.
(b) Each of Almo and the Sellers will not sell, transfer or
otherwise dispose of any Warrant Shares unless (i) such sale, transfer or other
disposition is within the limitations of and in compliance with Rule 144
promulgated by the SEC under the Securities Act and each of Almo and the Sellers
furnishes Buyer with reasonable proof of compliance with such Rule, (ii) in the
opinion of counsel, reasonably satisfactory to Buyer and its counsel, some other
exemption from registration under the Securities Act is available with respect
to any such proposed sale, transfer, or other disposition of Buyer Shares, or
(iii) the offer and sale of the Warrant Shares is registered under the
Securities Act.
5.4 Registration Rights. Buyer agrees that the recipients of the
Warrant Shares shall be entitled to the registration rights set forth in the
Declaration of Registration Rights of even date herewith in the form attached
hereto as Exhibit G.
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ARTICLE VI
CONDUCT PRIOR TO THE CLOSING DATE
6.1 Conduct of Business of each of Almo and the Sellers. During the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Closing, each of Almo and the Sellers
agrees (except to the extent that Buyer shall otherwise consent in writing) to
carry on its Computer Products Division business in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted, to pay
all debts and taxes when due, to pay or perform other obligations when due, and,
to the extent consistent with such actions, to use all reasonable efforts
consistent with past practice and policies to preserve intact its present
business organization, keep available the services of Key Employees and preserve
its relationships with customers, suppliers, distributors, licensors, licensees,
and others having business dealings with it, all with the goal of preserving
unimpaired the goodwill and ongoing businesses associated with the Acquired
Assets on the Closing Date. Each of Almo and the Sellers shall promptly notify
Buyer of any event which materially adversely effects the Business or any
Acquired Assets. Except as expressly contemplated by this Agreement or disclosed
in Schedule 6.1, each of Almo and the Sellers will not, without the prior
written consent of Buyer:
(a) Enter into any commitment or transaction related to any
Acquired Asset not in the ordinary course of business;
(b) Transfer to any person or entity any rights to the Seller
Registered Intellectual Property or Almo's or any of the Seller's trade secrets
applicable to the Business (other than end-user licenses for software granted to
customers of each of Almo and the Sellers in the ordinary course of business);
(c) Enter into any license agreement with respect to the
intellectual property of any person or entity affecting the Business, except in
the ordinary course of business;
(d) Enter into or amend any agreements pursuant to which any
other party is granted marketing, distribution, or similar rights of any type or
scope with respect to any products or technology of the Computer Products
Division, except in the ordinary course of business;
(e) Amend or otherwise modify (or agree to do so), except in
the ordinary course of business, or violate the terms of, any of the agreements
set forth or described in each of Almo and the Sellers schedules;
(f) Commence or settle any litigation, except to enforce its
rights under or to interpret this Agreement or any other agreement, obligation
or arrangement contemplated hereby or entered into or established in connection
herewith which affects the Business, except in the ordinary course of business;
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(g) Sell, lease, license, pledge, or otherwise dispose of any
Acquired Asset, (other than end-user licenses for software granted to customers
of each of Almo and the Sellers in the ordinary course of business and other
than sales of inventory in the ordinary course of business);
(h) Cause or permit any amendments to its charter documents,
bylaws, membership agreements, partnership agreements, or like documents which
would materially affect the Business or any Acquired Asset;
(i) Acquire or agree to acquire by merging or consolidating
with, or by purchasing any assets or equity securities of, or by any other
manner, any business or any corporation, partnership, association, or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to the
business of each of Almo and the Sellers in each case to the extent any such
action would impair Buyer's rights to acquire the Acquired Assets under this
Agreement;
(j) Revalue any of the Acquired Assets, including without
limitation writing down the value of inventory or writing off notes and accounts
receivable other than in the ordinary course of business;
(k) Adopt or amend any Employee Plan, or enter into any
written employment contract with a Key Employee, pay or agree to pay any special
bonus or special remuneration to any Key Employee, or increase the salaries or
wage rates of any Key Employee.
(l) Effect or agree to effect, including by way of hiring or
involuntary termination, any change in the Key Employees other than in the
ordinary course of business;
(m) Enter into any strategic alliance, joint development or
joint marketing agreement affecting the Business or any Acquired Asset; or
(n) Take, or agree in writing or otherwise to take, any of the
actions described in Sections 6.1(a) through (m) above, or any other action that
would prevent each of Almo and the Sellers from performing or cause each of Almo
and the Sellers not to perform its covenants hereunder.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Approval. Each of Almo and the Sellers shall promptly after the
date hereof take all action necessary in accordance with applicable law and the
constituent documents of each of Almo and the Sellers to obtain all requisite
corporate, membership, or partnership approvals, as the case may be, of this
Agreement and the transactions contemplated hereby. Each of Almo and the Sellers
agrees to use its best efforts to take all action necessary or advisable to
secure the necessary votes or consents required to approve this Agreement and
the transactions contemplated hereby.
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7.2 Access to Information. Each of Almo and the Sellers shall afford
Buyer and its accountants, legal counsel, and other representatives reasonable
access during normal business hours during the period prior to the Closing Date
to (i) all of the properties, books, inventory, contracts, commitments, and
records of each of Almo and the Sellers relating to the Acquired Assets and (ii)
all other information concerning the Business, properties, and personnel of each
of Almo and the Sellers which are associated with the Acquired Assets as Buyer
may reasonably request. Each of Almo and the Sellers agrees to provide Buyer and
its accountants, legal counsel, and other representatives copies of internal
financial statements promptly upon request. No information or knowledge obtained
in any investigation pursuant to this Section 7.2 shall affect or be deemed to
modify any representation or warranty contained herein (or the indemnification
obligations of Seller) or the conditions to the obligations of the parties to
consummate the transactions contemplated hereby.
7.3 Access to Records After Closing. For a period of three years after
the Closing Date, each of Almo and the Sellers and its representatives, on the
one hand, and the Buyer and its representatives, on the other hand, shall have
reasonable access to any books, records, documents, files, and correspondence to
the extent that such access may reasonably be required in connection with
matters relating to or affected by the operation of the businesses conducted
with the Acquired Assets, in the case of each of Almo and the Sellers prior to
the Closing Date and, in the case of the Buyer, after the Closing Date. Such
access shall be afforded upon reasonable advance written notice, during normal
business hours and at the expense of the party seeking access.
7.4 Confidentiality. From the date hereof to and including the Closing
Date, the parties hereto shall maintain, and cause their directors, employees,
agents, and advisors to maintain, in confidence and not to disclose or use for
any purpose, except for the evaluation of the transactions contemplated hereby
and the accuracy of the respective representations and warranties of the parties
contained herein, information concerning the other parties hereto and obtained
directly or indirectly from such parties, or their directors, employees, agents,
or advisors, except such information as is or becomes (i) available to the
non-disclosing party from third parties not subject to an undertaking of
confidentiality; (ii) generally available to the public other than as a result
of a breach by the non-disclosing party hereunder; or (iii) required to be
disclosed under applicable law; and except such information as was in the
possession of such party prior to obtaining such information from such other
party as to which the fact of prior possession such possessing party shall have
the burden of proof. In the event that the transactions contemplated hereby
shall not be consummated, all such information which shall be in writing shall
be returned to the party furnishing the same, including to the extent reasonably
practicable, copies or reproductions thereof which may have been prepared.
7.5 Public Disclosure. Unless otherwise required by law (including,
without limitation, applicable securities laws) or, as to Buyer, by the rules
and regulations of the Nasdaq National Market, prior to the Closing Date, no
disclosure (whether or not in response to an inquiry) of the subject matter of
this Agreement shall be made by any party hereto unless approved by both parties
prior to release, provided that such approval shall not be unreasonably
withheld.
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7.6 Contractual Consents.
(a) Buyer will use reasonable commercial efforts to obtain the
consents to the assignments of the agreements with Viewsonic, CTX, and Seagate.
Almo and the Sellers will reasonably assist Buyer in obtaining prior to the
Closing the consent of Seagate, Viewsonic and CTX to an assignment of their
contracts with Almo or the Sellers to Buyer. Almo and the Sellers will
reasonably assist Buyer in applying for or otherwise seeking all other consents
and approvals desired by Buyer to be obtained for the consummation of the
transactions contemplated hereby. Almo and the Sellers will list all of the
supplier and similar agreements (including any franchise agreements) that the
Business currently has in force on the date of this Agreement, and Almo and
Sellers will use reasonable commercial efforts to assist Buyer in effecting
assignments of all such agreements, except those identified in writing by Buyer
as not material to the Business.
(b) Buyer will use its reasonable commercial efforts to obtain
all consents and approvals required to be obtained it for the consummation of
the transactions contemplated hereby.
7.7 Legal Conditions to Acquisition. The Buyer and each of Almo and the
Sellers shall take all reasonable actions necessary to comply promptly with all
legal requirements which may be imposed on such party with respect to this
Agreement and the transactions contemplated hereby and will promptly cooperate
with and furnish information to any other party hereto in connection with any
such requirements imposed upon such other party in connection herewith. Each
party will take all reasonable actions to obtain (and will cooperate with the
other parties in obtaining) any consent, authorization, order or approval of, or
any registration, declaration, or filing (including any filing required under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the
regulations promulgated thereunder (the "HSR Act")) with, or an exemption by,
any governmental entity, or other third party, required to be obtained or made
by such party or its subsidiaries in connection with this Agreement and
consummating the transactions contemplated hereby or the taking of any action
contemplated thereby or by this Agreement.
7.8 Best Efforts; Additional Documents and Further Assurances. Each of
the parties to this Agreement shall use its best efforts to effectuate the
transactions contemplated hereby and to fulfill and cause to be fulfilled the
conditions to closing under this Agreement. Each party hereto, at the request of
another party hereto, shall execute and deliver such other instruments and do
and perform such other acts and things as may be reasonably necessary or
desirable for effecting completely the consummation of the transactions
contemplated by this Agreement.
7.9 Notification of Certain Matters. Each of Almo and the Sellers shall
give prompt notice to Buyer, and Buyer shall give prompt notice to each of Almo
and the Sellers, of (i) the occurrence or non-occurrence of any event, the
occurrence or non-occurrence of which is likely to cause any representation or
warranty of each of Almo and the Sellers or the Buyer, as the case may be,
contained in this Agreement to be untrue or inaccurate in any material respect
at or prior to the Closing Date except as contemplated by this Agreement
(including each of Almo and the Sellers Schedules) and (ii) any failure of each
of Almo and the Sellers or Buyer, as the case may be, to comply with or satisfy
in any material respect any covenant, condition or agreement to be complied
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with or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 7.9 shall not limit or otherwise affect any
remedies available to the party receiving such notice.
7.10 Payment of Trade and Other Creditors. Each of Almo and the Sellers
shall comply with its obligation to satisfy amounts due to trade and other
creditors of each of Almo and the Sellers to the extent required prior to
Closing consistent with past practice and consistent with maintaining the
relationships for the Buyer. Each of Almo and the Sellers shall continue to pay
on a current basis and shall be responsible for all obligations included in the
Assumed Liabilities up to the Closing Date. The accounts payable agreed upon
among the parties and to be attached hereto as Schedule 1.3(b) shall be included
in the Assumed Liabilities.
7.11 No Solicitation. From and after the date of this Agreement until
the earlier to occur of the Closing Date or termination of this Agreement
pursuant to its terms, Seller will not, and each of Almo and the Sellers will
instruct their respective directors, officers, employees, representatives,
investment bankers, agents, and affiliates not to, directly or indirectly (i)
solicit or encourage submission of any Acquisition Proposal (as defined herein)
by any person, entity, or group (other than Buyer and its Affiliates (as defined
herein), agents, and representatives) or (ii) participate in any discussions or
negotiations with, or disclose any non-public information concerning any of each
of Almo and the Sellers to, or afford access to the properties, books, or
records of each of Almo and the Sellers to, or otherwise assist or facilitate,
or enter into any agreement or understanding with, any person, entity, or group
(other than Buyer and its Affiliates, agents, and representatives) in connection
with any Acquisition Proposal with respect to each of Almo and the Sellers. For
purposes of this Agreement, an "Acquisition Proposal" means any proposal or
offer relating to any merger, consolidation, sale or license of substantial
assets or similar transactions involving the Business or the Acquired Assets
(other than sales or licenses of software in the ordinary course of business or
as permitted by this Agreement). Each of Almo and the Sellers will immediately
cease any and all existing activities, discussion, or negotiations with any
parties conducted heretofore with respect to the foregoing. Each of Almo and the
Sellers will promptly (i) notify Buyer if it receives any proposal or written
inquiry or written request for information in connection with an Acquisition
Proposal or potential Acquisition Proposal and (ii) notify Buyer of all terms
and conditions of any such Acquisition Proposal. In addition, from and after the
date of this Agreement, until the earlier to occur of the Closing Date or
termination of this Agreement pursuant to its terms, each of Almo and the
Sellers will not, and will instruct its respective directors, officers,
employees, representatives, investment bankers, agents, and affiliates not to,
directly or indirectly, make or authorize any public statement, recommendation,
or solicitation in support of any Acquisition Proposal made by any person,
entity, or group other than Buyer.
For purposes of this Agreement, an "Affiliate" means any entity or
person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with the particular
party.
7.12 Facilities. Seller and Buyer will enter into a Facility Agreement
in substantially the form attached hereto as Exhibit H-1 pursuant to which Buyer
will utilize a portion Seller's
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Philadelphia office facility for the conduct of the Business for a period of up
to six months after the Closing, and Seller will provide certain facility
services to Buyer's operations in such facility; provided, however, that if
Buyer requires the space for additional time not to exceed an additional 90
days, the parties will negotiate in good faith an extension of the Facility
Agreement for this period. In addition, Almo and Buyer will enter into a
warehouse and employee-leasing agreement attached hereto as Exhibit H-2 relating
to Buyer's use of Almo's warehouse facility and warehouse employees in
Philadelphia, which agreement shall terminate on or before April 30, 1999.
Seller and Buyer will also (i) enter into a facility agreement attached hereto
as Exhibit H-3 with respect to a portion of Seller's Minnesota facility, the
term of which shall be coterminous with Sellers' lease of such facility, and
(ii) enter into an office facility agreement attached hereto as Exhibit H-4 with
respect to a portion of Sellers' Maryland facility for a term coterminous with
Sellers' lease of such facility. In addition, pursuant to an Assignment and
Assumption Agreement attached hereto as Exhibit H-5, Almo and Sellers will
assign to Buyer the rights and obligations under their lease for the
Massachusetts facility, and Buyer will assume the obligations under such lease,
and Almo and Sellers will be released from such obligations.
7.13 Post-Closing Collection Practices for Accounts Receivable. After
the Closing, the Buyer and Almo and the Sellers will deal with the accounts
receivable listed on Schedule 1.2(b) and the accounts payable listed in Schedule
1.3(b) in accordance with the procedures listed in Schedule 7.13.
7.14 Year 2000 Preventative Measures. Buyer agrees to take only those
measures detailed by Almo and Sellers on Schedule 7.14 with respect to making
the TradeMark computers year 2000 compliant together with such additional
commercially reasonable modifications to such measures, which shall be
communicated to the Buyer from time to time by Almo and the Sellers. The cost of
all such measures described above and any additional modifications shall be
borne by Almo and the Sellers.
7.15 Use of Almo Name. Almo and Sellers agree that Buyer shall be
permitted to use the name "Xxxx Xxxx" either alone or as "Xxxx Xxxx Computer
Products" in the Business in any and all media (including but not limited to the
Internet) without charge to the Buyer until the first anniversary of the Closing
pursuant to the Trade Name License Agreement attached hereto as Exhibit I.
7.16 Reports on Warranty Claims. Until the third anniversary of the
Closing, Buyer agrees to provide to Almo and Sellers monthly reports on the
number of warranty returns and the cost incurred by Buyer relating to such
warranty claims for the TradeMark computers whether such computers were sold
before or after Closing. The costs incurred shall include only freight,
replacement parts, and direct labor, and shall not include any allocation of
overhead. Almo and the Sellers will have the right to review these reports and
the supporting documentation from which the reports were prepared. The reports
and their associated information and documentation, and the review rights, will
not affect Buyer's rights to indemnification under this Agreement.
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7.17 Release of Liens, Etc. At the Closing, Almo and Sellers will have
all liens, security interests, and encumbrances on the Acquired Assets released,
and will deliver at Closing signed agreements necessary to evidence the complete
release of any Acquired Assets from liens, security interests, and encumbrances
from all of Almo's or Sellers' lenders who have imposed such liens, security
interests, and encumbrances. In addition, to the extent reasonably requested by
the Buyer, Almo and Sellers will deliver any and all signed termination
statements or forms, completed and prepared for filing with the proper state and
local Governmental Agencies, necessary under the applicable state Uniform
Commercial Codes to terminate any financing statements filed that gave public
notice of the existence of such liens, security interests and encumbrances.
7.18 Physical Inventory. On the Closing Date or immediately thereafter,
the parties hereto agree that Sellers' representative, Buyer and Buyer's
accountants will jointly take a physical inventory, with the results thereof
being final for the purpose of the Closing Date Schedule. Almo and Sellers will
allow Buyer and its accountants access to the inventory during regular business
hours and at other reasonably necessary times for the purpose of taking the
physical inventory of the Acquired Assets.
7.19 Payment of HSR Act Filing Fee. Buyer will pay the HSR Act filing
fee of $45,000.
7.20 Software License Agreement. On the Closing Date, Buyer and Almo
will enter into a Software License Agreement, substantially in the form attached
hereto as Exhibit J pursuant to which Almo will license to Buyer the right to
access its web page, Almo's web configurator software and other related
proprietary software and the PC order entry system of Almo.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS TO CLOSE
8.1 Conditions to Obligations of each Party. The respective obligations
of each party to this Agreement shall be subject to the satisfaction at or prior
to the Closing of the following conditions:
(a) Government Approvals. All applicable waiting periods (and
any extensions thereof) under the HSR Act shall have expired or otherwise been
terminated, and all authorizations, consents, orders, or approvals of, or
declarations or filings with, or expiration of waiting periods imposed by, any
governmental entity necessary for the consummation of the transactions
contemplated by this Agreement, including the issuance of the Warrant, shall
have been obtained.
(b) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the transactions contemplated hereby
shall be in effect.
(c) All Schedules and Exhibits to be attached hereto shall be
acceptable to both parties in form and substance, and to the extent any document
identical in form and substance to any
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Exhibit requires execution by any party, such document shall be so executed and
delivered to the other parties to such document.
8.2 Additional Conditions to Obligations of each of Almo and the
Sellers. The obligations of each of Almo and the Sellers to consummate the
transactions contemplated by this Agreement shall be subject to the satisfaction
at or prior to the Closing of each of the following conditions, any of which may
be waived, in writing, exclusively by each of Almo and the Sellers:
(a) Representations, Warranties, and Covenants. The
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects on the date of this Agreement and on
the Closing Date, except for changes contemplated by this Agreement, and except
to the extent such representations and warranties address matters only as of a
particular date (which shall remain true and correct as of such date), with the
same force and effect as if made on and as of the Closing Date, and the Buyer
shall have performed and complied in all material respects with all covenants
including the payment of the Consideration, obligations, and conditions of this
Agreement required to be performed and complied with by it as of the Closing
Date.
(b) Certificate of Buyer. The Buyer shall have provided each
of Almo and the Sellers with a certificate executed on behalf of Buyer by its
President, or any Vice President, and its Chief Financial Officer to the effect
that as of the Closing Date:
(a) all representations and warranties made by the
Buyer under this Agreement are true and complete; and
(b) all covenants, obligations, and conditions of
this Agreement to be performed by the Buyer on or before such date have been so
performed in all material respects.
(c) Registration Rights Agreement. The Buyer shall have
executed and delivered the Declaration of Registration Rights.
8.3 Additional Conditions to the Obligations of Buyer. The obligations
of Buyer to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction at or prior to the Closing of each of the following
conditions, any of which may be waived, in writing, exclusively by Buyer:
(a) Representations, Warranties, and Covenants. The
representations and warranties of each of Almo and the Sellers contained in this
Agreement shall be true and correct in all material respects on the date of this
Agreement and on the Closing Date, except for changes contemplated by this
Agreement, and except to the extent such representations and warranties address
matters only as of a particular date (which shall remain true and correct as of
such date), with the same force and effect as if made on and as of the Closing
Date, and each of Almo and the Sellers shall have performed and complied in all
material respects with all covenants, obligations, and conditions of this
Agreement required to be performed and complied with by it as of the Closing
Date.
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(b) Certificate of each of Almo and the Sellers. Buyer shall
have been provided with certificates executed on behalf of each of Almo and the
Sellers by its respective President and Chief Financial Officer to the effect
that as of the Closing Date:
(a) all representations and warranties made by such
entity under this Agreement are true and complete; and
(b) all covenants, obligations, and conditions of
this Agreement to be performed by such entity on or before such date have been
so performed.
(c) Third Party Consents. Any and all consents, waivers, and
approvals required from third parties relating to the contracts, licenses,
leases, and other agreements and instruments of each of Almo and the Sellers
shall have been obtained.
(d) Satisfactory Form of Legal and Accounting Matters. There
shall have been no material adverse change in the Business, Buyer shall have had
the opportunity to conclude the audit of the Business, and the Seagate,
Viewsonic, CTX agreements shall have been assigned to Buyer with the consent of
such suppliers.
ARTICLE IX
NONCOMPETITION AGREEMENTS
9.1 Agreement of Seller. In consideration of the issuance of the
Warrant, and for other good and valuable consideration, each of Almo and the
Sellers agrees, for itself and its successors, assigns, and any entity which it
controls that, in consideration of Buyer's purchase of the Acquired Assets, it
will not during the Restriction Period:
(a) engage anywhere in the world in any capacity (whether as
an employee, agent, consultant, investor, advisor, independent contractor,
proprietor, partner, officer, director, or otherwise) in selling computer
products similar to those currently sold or distributed in the Business to
current customers of the Business; or
(b) sell, license, market, distribute, or otherwise provide
any service, support, product or technology (including any hypertext link) to
any person or entity, or directly or indirectly engage in, run, own, manage,
operate, control or invest in any business venture or activity, if such service,
support, product, technology, business, venture or activity involves or relates
to selling computer products similar to those currently sold or distributed in
the Business to current customers of the Business anywhere in the world.
9.2 Nonsolicitation. In consideration of the issuance of the Warrant,
and for other good and valuable consideration, Buyer and Seller further agree
that they will not during the Restriction Period (as defined below):
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(a) personally or through others, encourage, induce, attempt
to induce, solicit or attempt to solicit (on its own behalf or on behalf of any
other person or entity) any employee of the other's or any of the other's
subsidiaries to leave his or her employment with the other party or any of the
other party's subsidiaries; or
(b) personally or through others, interfere or attempt to
interfere with the relationship or prospective relationship of the other party
or any of the other party's subsidiaries with any person or entity that is, was
or is expected to become a customer or client of the other party or any of the
other party's subsidiaries.
9.3 Restriction Period. The "Restriction Period" means the period
beginning on the Closing Date and ending on the fifth anniversary of the Closing
Date.
9.4 Permitted Investments. Nothing in this ARTICLE IX shall prevent
each of Almo and the Sellers or any of Seller's Affiliates from owning as a
passive investment less than 1% of the outstanding shares of capital stock of a
publicly held company if (i) such shares are actively traded on an established
national securities market in the United States or on The Nasdaq Stock Market
and (ii) each of Almo and the Sellers is not otherwise associated directly or
indirectly with such corporation or any Affiliate of such corporation.
9.5 Remedies for Breach. Notwithstanding any other provision of this
Agreement, for purposes of this ARTICLE IX, the parties shall be entitled (in
addition to any other remedy that may be available to the parties) to the extent
permitted by applicable law (a) a decree or order of specific performance to
enforce the observance and performance of the covenants, obligations, or other
provisions, and (b) an injunction restraining such breach or threatened breach.
The rights and remedies of the parties hereunder are not exclusive of or limited
by any other rights or remedies which the parties may have, whether at law, in
equity, by contract or otherwise, all of which shall be cumulative (and not
alternative). Without limiting the generality of the foregoing, the rights and
remedies of the parties hereunder, and the obligations and liabilities of each
of the parties hereunder, are in addition to their respective rights, remedies,
obligations and liabilities under the law of unfair competition,
misappropriation of trade secrets and the like.
ARTICLE X
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
10.1 Indemnification.
(a) Indemnification by each of Almo and the Sellers. Subject
to the qualifications and limitations in this Section 10.1, if the Closing is
consummated, Almo and each Seller jointly and severally shall indemnify and
defend and hold Buyer, its subsidiaries, directors, officers, agents, and other
Affiliates harmless against and with respect to, any and all Damages (as defined
in subsection 10.1(c) below) incurred by Buyer, its subsidiaries, directors,
officers, agents or other Affiliates as a result of any of the following:
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(a) any inaccuracy or misrepresentation in, or breach
of any representation or warranty of, Almo or the Sellers in this Agreement or
the related documents executed and delivered by Almo or the Sellers in
connection with this Agreement (the "Operative Documents");
(b) any breach or failure by Almo or the Sellers to
perform any of their covenants or agreements under this Agreement or any of the
other Operative Documents;
(c) any liability not identified in Section 1.3 and
not expressly being assumed by Buyer hereunder; and
(d) except for the Assumed Liabilities, any liability
or obligation with respect to the Business or the Acquired Assets with respect
to acts occurring or taken or conditions existing on or prior to the Closing
Date (including any liability or obligation arising by virtue of successor
liability).
(b) Indemnification by Buyer. Subject to the qualifications
and limitations in this Section 10.1, if the Closing is consummated, Buyer shall
indemnify and defend and hold Almo and the Sellers and their directors,
officers, agents, and other Affiliates harmless against and with respect to, any
and all Damages (as defined in subsection 10.1(c) below) incurred by each of
Almo or the Sellers or any of its directors, officers, agents or other
Affiliates as a result of any of the following:
(a) any inaccuracy or misrepresentation in, or breach
of any representation or warranty of Buyer in this Agreement or the other
Operative Documents;
(b) any breach or failure by Buyer to perform any of
its covenants or agreements under this Agreement or any of the other Operative
Documents;
(c) any Assumed Liabilities; and
(d) any liability or obligation with respect to the
Buyer's use of the Acquired Assets or its conduct of the Business after the
Closing Date.
(c) Damages. For purposes of this Section 10.1, "Damages"
means all demands, claims, claims for reimbursement, actions or causes of
action, assessments, losses, damages, costs, expenses, liabilities,
deficiencies, judgments, awards, fines, sanctions, penalties, charges and
amounts paid in settlement, whether civil, criminal or administrative in nature,
including the reasonable costs, fees and expenses of attorneys, experts,
accountants, appraisers, consultants, witnesses, investigators and agents and
all such costs, fees and expenses incurred in defending against any of the
foregoing or in enforcing this Agreement or the Operative Documents.
Notwithstanding the foregoing definition, when used with reference to amounts
recoverable as the result of any breach of a representation, warranty or
covenant contained in this Agreement or any other Operative Document, Damages
shall not include amounts recoverable solely as lost profits or based on a
multiple of earnings, incidental damages, indirect damages, special damages,
punitive damages or consequential damages unless such damages arise from a
third-party claim.
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(d) Procedure for Indemnification. The procedure for
indemnification shall be as follows:
(a) The party claiming indemnification ("Claimant")
shall, within thirty (30) days after its discovery of any claim for which
indemnification will be sought as provided in this Agreement (the "Claim"), give
notice to the party from whom indemnification is sought ("Indemnitor") of its
Claim, specifying in reasonable detail the factual basis for the Claim and, to
the extent known, the amount of the Claim. Notwithstanding the foregoing, the
failure by Claimant to provide notice of any Claim within the period specified,
or any delay in providing such notice, shall not affect or impair the
obligations of Indemnitor hereunder, except and only to the extent that
Indemnitor has been adversely affected by such failure or delay.
(b) With respect to Claims between the parties,
following receipt of notice from Claimant of a Claim, Indemnitor shall have
sixty (60) days to make any investigation that Indemnitor deems necessary or
desirable of the Claim. For purposes of this investigation, Claimant agrees to
make available to Indemnitor and its authorized representatives the information
relied upon by Claimant to substantiate the Claim. If Claimant and Indemnitor
cannot agree as to the validity and amount of the Claim within the sixty (60)
day period (or any mutually agreed upon extension thereof), Claimant may seek
appropriate legal remedy, subject to the provisions of Section 10.2.
(c) With respect to any Claim by a third party as to
which Claimant is entitled to indemnification hereunder, Indemnitor shall have
the right, exercisable by written notice to Claimant within 30 days after
receipt of written notice from Claimant of the commencement or assertion of any
such Claim, at its own expense to participate in or assume control of the
defense of the Claim, and Claimant shall cooperate fully with Indemnitor, with
the right to reimbursement for actual out-of-pocket expenses incurred by
Claimant as a result of any such request by the Indemnitor for Claimant's
cooperation. If Indemnitor does not elect to assume control or otherwise
participate in the defense of any third party Claim within thirty (30) days of
its receipt of notice of the Claim (or any extended period mutually agreed upon
in writing by the parties), Claimant shall have the right to undertake the
defense, compromise or settlement of the Claim for the account of Indemnitor
subject to the right of Indemnitor, at its expense, to assume the defense of the
Claim at any time prior to final settlement, compromise or determination
thereof. In no event shall Indemnitor be liable or otherwise have any obligation
with respect to any settlement, compromise or determination of any Claim agreed
to by Claimant without the prior written consent of Indemnitor (which consent
will not be withheld unreasonably).
(d) The defending party shall have reasonable access
to the books, records and personnel which are pertinent to the defense and which
are in control of the other party. The parties agree to furnish such records,
information and testimony, and attend such conferences, discovery proceedings,
hearings, trials and appeals, as may be reasonably requested by the other party
in connection with defending any third party Claim.
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(e) Limitations and Conditions Applicable to Buyer. The right
of Buyer to obtain indemnification from Almo and the Sellers pursuant to Section
10.1(a) of this Agreement is subject to the following limitations:
(a) Buyer shall not be entitled to indemnification
from Almo and the Sellers pursuant to Section 10.1(a) until the aggregate
Damages for which Almo and the Sellers are liable under Section 10.1(a) exceed
$50,000, whereupon Buyer shall be entitled to indemnification by Almo and the
Sellers for all Damages in excess the first $50,000; provided that for
liabilities arising under or related to those matters referred to in Sections
10.1(a)(c), or 10.1(a)(d), or 10.1(a) but only with respect to matters
represented and warranted in Section 3.23 or as set forth in Section 10(e)(g)
below, , this $50,000 deductible shall not apply, and Buyer would be entitled to
indemnification from the first xxxxx of damages.
(b) Buyer shall not be entitled to indemnification
from Almo and the Sellers pursuant to Section 10.1(a) for that amount of Buyer's
aggregate Damages arising from Claims between the parties for which Almo and the
Sellers are liable under Section 10.1(a) which is in excess of $2,000,000;
provided, however, that this limitation shall not apply with respect to (a) all
third-party Claims, (b) Claims between the parties that arise from or relate to
third-party Claims, (c) Claims arising from or relating to those matters
referred to in Section 10.1(a)(c) or 10.1(a)(d), (d) Claims arising from or
related to matters represented and warranted to Buyer in Section 3.9(b) and (d)
of the Agreement, and (e) Claims arising from or related to matters represented
and warranted to Buyer in Sections 3.21 (as such Section relates to the
TradeMark Computer business only), 3.23, and 3.22, which are governed,
respectively, by the provisions of Sections 10.1(e)(g), 10.1(e)(e) and
10.1(e)(f) below.
(c) No Claim shall be brought by Buyer against Almo
and the Sellers under Section 10.1(a) unless notice in writing of such Claim
shall have been given to Almo (which notice shall be deemed given to the
Sellers) on or prior to 5:00 p.m. Pacific Standard Time on June 30, 2000, except
for Claims related to Tax or Tax Returns, Employee Benefit Matters,
Environmental, Health and Safety Matters, and Claims arising under or related to
those matters referred to in Section 10.1(a)(c) or 10.1(a)(d), for which Claims
may be brought against Almo and the Sellers at any time prior to expiration of
the applicable statutes of limitations or extensions thereof, and Claims arising
from or related to matters represented and warranted to Buyer in Section 3.21
(as such Section relates to the TradeMark Computer business only), which Claims
may be brought against Almo and Sellers at any time on or prior to 5:00 p.m.
Pacific Standard Time on or prior to the third anniversary of the Closing Date.
Claims may be brought against Almo and the Sellers as to any Damages (or any
potential claim by an appropriate party) for which notice has been provided to
Almo prior to such dates.
(d) Buyer shall not be entitled to recover Damages in
respect of any Claim or otherwise obtain reimbursement or restitution more than
once with respect to any Claim hereunder. An adjustment of the Purchase Price
pursuant to Section 2.1(b) shall be deemed to be reimbursement for any matter
(to the extent of the dollar amount of such adjustment) for which the Purchase
Price was adjusted.
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(e) With respect to Claims arising from or related to
matters represented and warranted to Buyer in Section 3.23, Almo and the Sellers
guarantee that all the accounts receivable listed in the closing accounts
receivable schedule (Schedule 1.2 (b)) will be collected in full by Buyer within
90 days of the Closing Date without any discount, rebate or other similar
reduction; and upon payment made to Buyer by Almo and the Sellers the right to
receive payment with respect to each such unpaid account is receivable shall be
assigned without any further action on the part of Buyer or Almo and the
Sellers, to Almo and the Sellers.
(f) With respect to Claims arising from or related to
matters represented and warranted to Buyer in Section 3.22, Buyer will not be
entitled to indemnification.
(g) With respect to Claims arising from or related to
matters represented and warranted to Buyer in Section 3.21 with respect to the
TradeMark Computer business only, Buyer will not be entitled to indemnification
until the aggregate amount of all Damages incurred from such Claims exceeds 125%
of the reserve for returns, warranty claims, and the like for the TradeMark
Computers business reflected on the Closing Schedule at which point Buyer will
be entitled to indemnification for all amounts in excess of 125% of such
reserve; provided, however, that if Damages incurred from the above-referenced
Claims exceed 200% of such reserve, then Buyer will be entitled to
indemnification for all amounts in excess of such reserve. Any payments which
Almo and the Sellers are required to make under this Section 10(e)(g) will not
be subject to the $50,000 deductible set forth in Section 10(e)(a) above.
(f) Limitations and Conditions Applicable to each of Almo and
the Sellers. The right of Almo and the Sellers to obtain indemnification from
Buyer pursuant to Section 10.1(b) of this Agreement is subject to the following
limitations:
(a) Each of Almo and the Sellers shall not be
entitled to indemnification from Buyer pursuant to Section 10.1(b) until the
aggregate Damages for which Buyer is liable under Section 10.1(b) exceed
$50,000, whereupon the party or parties incurring the Damages shall be entitled
to indemnification by Buyer for all such Damages in excess of the first $50,000;
provided, however, that this $50,000 deductible will not apply for failure of
Buyer to pay the Consideration or for failure of Buyer to pay any Assumed
Liabilities, in which case Almo and the Sellers would be entitled to
indemnification from the first xxxxx of damages.
(b) Almo and the Sellers shall not be entitled to
indemnification from Buyer pursuant to Section 10.1(b) for that amount of its
aggregate Damages for which Buyer is liable under Section 10.1(b) which is in
excess of $2,000,000; provided, however, that the above limitation shall not
apply as to (i) Damages arising from failure by the Buyer to pay the
Consideration, and (ii) all third party Claims.
(c) No Claim shall be brought by Seller against Buyer
under Section 10.1(b) unless notice in writing of such Claim shall have been
given to Buyer on or prior to 5:00 p.m. Pacific Standard Time on June 30, 2000,
but Claims may be brought against Buyer as to any Damages (or a potential Claim
by an appropriate party) for which notice has been provided to
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Buyer prior to such date, except for Claims arising under or related to those
matters referred to in Section 10.1(b)(c) or 10.1(b)(d), which Claims may be
brought against Buyer at any time prior to the expiration of the applicable
statutes of limitations or extensions thereof.
(d) Seller shall not be entitled to recover Damages
in respect of any Claim or otherwise obtain reimbursement or restitution more
than once with respect to any Claim hereunder. An adjustment of the Purchase
Price pursuant to Section 2.3 shall be deemed to be reimbursement for any matter
(to the extent of the dollar amount of such adjustment) for which the Purchase
Price was adjusted.
(g) Remedies Exclusive. Except for equitable relief available
for breaches of Sections 7.4, 9.1, and 9.2, the remedies provided in this
Section 10.1 shall be exclusive as to any Claims by a party under this Agreement
or any other Operative Document or arising out of the transactions provided for
herein and therein and shall preclude assertion by any party of any other rights
or the seeking of any other remedies against another party; provided, however,
that nothing in this Section 10.1(g) shall limit rights or remedies expressly
provided for in this Agreement or any other Operative Document for fraud,
deceit, or intentional non-disclosure, or rights or remedies which, as a matter
of applicable law or public policy, cannot be limited or waived.
(h) Interpretation. Solely for purposes of this Section 10.1,
the existence and extent of any breach of any representation or warranty under
Article III and Article IV referred to in Section 10(a)(i) or Section 10(b)(i)
shall be determined by reading such representation or warranty as if all
materiality standards contained in such representation or warranty (i.e.,
without reference to the qualifier "material," "materially," "material to the
Business as a whole," "in all material aspects," "in any material respect,"
"material adverse effect" or similar qualifiers), have been deleted from such
representation or warranty in its entirety.
10.2 Arbitration. Any controversy involving a Claim by an indemnified
party pursuant to this Article X shall be finally settled by arbitration in
Santa Clara, California in accordance with the then current Commercial
Arbitration Rules of the American Arbitration Association; and judgment upon the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof. Such arbitration shall be conducted by an arbitrator chosen by mutual
agreement of Buyer, on the one hand, and Almo and the Sellers on the other.
Failing such agreement, the arbitration shall be conducted by three independent
arbitrators, none of whom shall have any competitive interests with Buyer or
Almo and the Sellers. Buyer shall choose one such arbitrator, Almo and the
Sellers shall choose one such arbitrator, and such two arbitrators shall
mutually select a third arbitrator. Any decision of two such arbitrators shall
be binding on Buyer and Almo and the Sellers. Each party shall pay its own costs
and expenses (including counsel fees) of any such arbitration except that the
arbitrator can compel one party to pay all or a portion of the other party's
costs and expenses.
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ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
11.1 Termination. Except as provided in Section 11.2 below, this
Agreement may be terminated at any time prior to the Closing Date:
(a) by mutual consent of Buyer and each of Almo and the
Sellers;
(b) by Buyer or each of Almo and the Sellers if (i) the
Closing Date has not occurred by December 31, 1998 (provided that the right to
terminate this Agreement under this clause 11.1(b)(i) shall not be available to
any party whose willful failure to fulfill any obligation hereunder has been the
cause of, or resulted in, the failure of the Closing Date to occur on or before
such date); (ii) there shall be a final nonappealable order of a federal, state,
or foreign court in effect preventing consummation of the transactions
contemplated hereby; or (iii) there shall be any statute, rule, regulation or
order enacted, promulgated or issued or deemed applicable hereto by any
Governmental Entity that would make consummation of the transactions
contemplated hereby illegal;
(c) by Buyer if there shall be any action taken, or any
statute, rule, regulation or order enacted, promulgated or issued or deemed
applicable hereto, by any Governmental Entity, which would (i) prohibit Buyer's
ownership or operation of any portion of the business associated with the
Acquired Assets or (ii) compel Buyer to dispose of or hold separate, as a result
of the transactions contemplated hereby, any portion of the business or assets
of the Buyer, in either case, the unavailability of which assets or business
would have a material adverse effect on Buyer's business, financial condition,
or results of operations or would reasonably be expected to have a material
adverse effect on Buyer's ability to realize the benefits expected from
acquisition of the Acquired Assets.
(d) by Buyer if it is not in material breach of its
obligations under this Agreement and there has been a material breach of any
representation, warranty, covenant or agreement contained in this Agreement on
the part of each of Almo and the Sellers; provided, however, that if such breach
is curable by each of Almo and the Sellers within ten days through the exercise
of their reasonable best efforts, then for so long as each of Almo and the
Sellers continues to exercise such reasonable best efforts Buyer may not
terminate this Agreement under this Section 11.1(d) unless such breach is not
cured within ten days (but no cure period shall be required for a breach which
by its nature cannot be cured);
(e) by Buyer if there has been a material adverse change in
the Business, or if Buyer and its accountants determine in the course of due
diligence that a representation or warranty is materially untrue or incorrect,
or if any of the Seagate, CTX, or Viewsonic agreements shall have not been
assigned with the consent of the supplier or other party where such consent is
required for such assignment;
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(f) by each of Almo and the Sellers if none of them are in
material breach of their obligations under this Agreement and there has been a
material breach of any representation, warranty, covenant or agreement contained
in this Agreement on the part of Buyer; provided, however, that if such breach
is curable by Buyer within ten days through the exercise of its reasonable best
efforts, then for so long as Buyer continues to exercise such reasonable best
efforts each of Almo and the Sellers may not terminate this Agreement under this
Section 11.1(f) unless such breach is not cured within ten days (but no cure
period shall be required for a breach which by its nature cannot be cured);
11.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 11.1(b), this Agreement shall forthwith become
void and, there shall be no liability or obligation on the part of Buyer or each
of Almo and the Sellers, or their respective officers, directors or
stockholders, provided that (i) the provisions of Section 7.4 (Confidentiality)
and this Article XI shall remain in full force and effect and survive any
termination of this Agreement, and (ii) the termination of this Agreement shall
not relieve any party from any liability for any willful and knowing breach of
this Agreement.
11.3 Amendment. Except as is otherwise required by applicable law,
prior to the Closing, this Agreement may be amended by the parties hereto at any
time by execution of an instrument in writing signed by the Buyer and each of
Almo and the Sellers. Except as is otherwise required by applicable law, after
the Closing, this Agreement may be amended by the parties hereto at any time by
execution of an instrument in writing signed by Buyer and each of Almo and the
Sellers.
11.4 Extension; Waiver. At any time prior to the Closing, Buyer and
each of Almo and the Sellers may, to the extent legally allowed, (i) extend the
time for the performance of any of the obligations of the other party hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto, and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE XII
GENERAL PROVISIONS
12.1 Notices. Any request, communication, or other notice required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if sent by facsimile or delivered by recognized overnight or international
courier service or personal delivery (as the situation may require) at the
respective address or facsimile number of the party receiving notice as set
forth below. Any party hereto may by notice so given change its address or
facsimile number for future notice hereunder. All such notices and other
communications hereunder shall be deemed given (i) upon confirmation of
delivery, if sent by facsimile and (ii) upon delivery, if sent by recognized
overnight or international courier service or personal delivery.
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(a) if to Buyer, to:
Xxxx Microproducts Inc.
0000 Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxx, Chief Financial Officer
Telephone No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxxxx, Esq. And Xxxxxx X. Xxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(b) if to each of Almo and the Sellers, to:
Almo Corporation
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, President
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx X. Xxxxxxxx, Esq.
White and Xxxxxxxx L.L.P.
0000 Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
12.2 Expenses. All fees and expenses incurred in connection with this
Agreement including, without limitation, all legal, accounting, financial
advisory, consulting and all other fees and expenses of third parties incurred
by a party hereto, in connection with the negotiation and effectuation of the
terms and conditions of this Agreement and the transactions contemplated hereby,
shall be the obligation of the respective party incurring such fees and
expenses.
12.3 Interpretation. The words "include," "includes" and "including"
when used herein shall be deemed in each case to be followed by the words
"without limitation." The word "agreement" when used herein shall be deemed in
each case to mean any contract, commitment or other agreement, whether oral or
written, that is legally binding. The table of contents and headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the
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meaning or interpretation of this Agreement. The possessive form "Sellers"
refers to the Sellers individually and together, and the plural Sellers refers
to the Sellers individually and together. "To Almo's and the Sellers' knowledge"
refers to the actual collective knowledge of Xxxxxx Xxxxxxx, Xxxxxx Xxxxxxx,
Xxxxxxx Xxxxx, Xxxxxx Xxxxxxx, and Xxxxxx Xxxx, and "to the best of Almo's and
Sellers' knowledge" refers to the collective knowledge of such individuals after
reasonable investigation.
12.4 Counterparts. This Agreement may be executed in counterparts, both
of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other party.
12.5 Entire Agreement; Assignment. Except for that certain
Confidentiality Letter between Xxxx Xxxxx Xxxx Xxxxxx Incorporated and Buyer
dated April 24, 1998, this Agreement, the schedules and exhibits hereto, and the
documents and instruments and other agreements among the parties hereto
referenced herein: (a) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof; (b) are not intended to confer upon any other person any
rights or remedies hereunder; and (c) shall not be assigned by operation of law
or otherwise except as otherwise specifically provided.
12.6 Severability. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
12.7 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.
12.8 Governing Law; Arbitration. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of California,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof. Except for the equitable remedies provided by
Section 10.1(g) hereof, any claim or dispute arising out of or related to this
Agreement, or the interpretation, making, performance, breach or termination
thereof, shall be finally and exclusively settled by binding arbitration in San
Jose, California under the AAA Commercial Arbitration Rules and Supplemental
Procedures for Large Complex Disputes by a single arbitrator mutually agreeable
to the Buyer and each of Almo and the Sellers. In the event that within 45 days
after the submission of any dispute to arbitration, the Buyer and each of Almo
and the Sellers cannot mutually agree on a single arbitrator, the Buyer and each
of Almo and the Sellers shall each select
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one arbitrator and the AAA shall select a third arbitrator. The arbitrator(s)
shall have the authority to grant any equitable and legal remedies that would be
available in any judicial proceeding instituted under California substantive law
to resolve a dispute. Judgment on the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. The arbitrator(s) may award to
the prevailing party, if any, as determined by the arbitrator(s), all of its
costs and fees, including, without limitation, AAA administrative fees,
arbitrator fees, attorneys' fees, expert fees, witness fees, travel expenses and
out-of-pocket expenses (including, without limitation, such expenses as copying,
telephone, facsimile, postage and courier fees). The parties agree that, any
provision of applicable law notwithstanding, they will not request, and the
arbitrator(s) shall have no authority to award, punitive or exemplary damages
against any party.
12.9 Rules of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
12.10 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person or entity other than the parties hereto and
their respective successors and permitted assigns.
12.11 Specific Performance. The parties hereto agree that irreparable
damage will occur in the event that any of the provisions of this Agreement are
not performed in accordance with their specific terms or are otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Buyer and each of Almo and the Sellers have
caused this Asset Purchase Agreement to be signed as of the date first written
above.
"BUYER" XXXX MICROPRODUCTS INC.
a California corporation
By: /s/ W. Xxxxxx Xxxx
--------------------------
Name: W. Xxxxxx Xxxx
--------------------------
Title: President and CEO
--------------------------
"ALMO" ALMO CORPORATION
a Pennsylvania corporation
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxxx
--------------------------
Title: CEO
--------------------------
"SELLERS" ALMO DISTRIBUTING PENNSYLVANIA,
INC.
A Pennsylvania corporation
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxxx
--------------------------
Title: CEO
--------------------------
ALMO DISTRIBUTING MARYLAND, INC.
A Maryland corporation
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxxx
--------------------------
Title: CEO
--------------------------
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ALMO DISTRIBUTING MINNESOTA, INC.
A Minnesota corporation
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxxx
--------------------------
Title: CEO
--------------------------
ALMO DISTRIBUTING WISCONSIN, INC.
an Illinois corporation
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxxx
--------------------------
Title: CEO
--------------------------
ALMO DISTRIBUTING, INC.
A Pennsylvania corporation
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxxx
--------------------------
Title: CEO
--------------------------
[Signature Page to Asset Purchase Agreement]
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