EXECUTION COPY
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of April 30, 2003, by and
between MF Electronics Corp., a New York corporation with its principal place of
business at 00 Xxxxxxxx Xxxxx, Xxx Xxxxxxxx, Xxx Xxxx 00000 ("Seller"), Xxxxxxx
Xxxxx, residing at 000 Xxxxxxxxx Xxxxxxxxx, Xxx Xxxx, XX 00000, ("Xxxxx"), and
Xxxxxx Xxxxxxxxxxx, residing at 00 Xxxx Xxxxxxxxx, Xxxxxxxxx, XX 00000
("Xxxxxxxxxxx"), on the one hand, and Xxxxxx-Xxxxxx Corporation, a Maryland
corporation with offices at 00 Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000 ("Buyer"), on
the other hand. Seller and Xxxxxxxxxxx are sometimes hereinafter referred to,
jointly and severally, as the "Seller Group", and Xxxxxxxxxxx is sometimes
referred to as the "Shareholder".
RECITALS
A. Seller is engaged in the business of design, production, import and
sale of frequency control devices (the "Business") at its facility at 00
Xxxxxxxx Xxxxx, Xxx Xxxxxxxx, Xxx Xxxx 00000 (the "Facility").
X. Xxxxxxxxxxx is the sole shareholder of Seller, and Xxxxx is the
President of Seller.
C. The Seller Group desires the Seller to sell, and the Buyer desires
to purchase, certain assets of Seller used in the Business on the terms and
conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
promises contained herein, the parties hereto covenant and agree as follows:
1. AGREEMENT TO SELL AND AGREEMENT TO PURCHASE.
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1.1 ASSETS TO BE CONVEYED. On the terms and subject to the conditions
set forth in this Agreement, on the Closing Date (as that term is hereinafter
defined), Seller shall convey, transfer, assign, sell, and deliver to Buyer, and
Buyer shall acquire, accept, and purchase the assets, properties and rights,
specified in this Section 1.1 used in the Business other than Excluded Assets
(as that term is hereinafter defined) (such assets, properties and rights other
than the Excluded Assets hereinafter collectively referred to as the
"Acquisition Assets") including, without limitation:
(a) All inventories of raw materials, work in process, finished goods,
packaging materials, supplies and other similar items of Seller which exist on
the Closing Date and which relate to the Business including the inventory which
is listed on Schedule 1.1(a) except such inventory that is disposed of in the
ordinary course of business between the date of
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this Agreement and the Closing consistent with past practice (the inventories to
be conveyed to Buyer pursuant hereto are hereinafter collectively called the
"Inventory");
(b) All machinery, equipment, spare parts, supplies, jigs, fixtures and
tooling owned by Seller on the Closing Date, located at the Facility, which has
been used or are intended for use in the Business including that which is listed
on Schedule 1.1(b) (the assets to be conveyed to Buyer pursuant to this clause
(b) are hereinafter collectively called the "Machinery and Equipment");
(c) All accounts receivable relating to the Business, except accounts
receivable denoted by Seller as uncollectible, including the accounts receivable
listed on Schedule 1.1 (c), which are outstanding at the Closing (the "Accounts
Receivable");
(d) All rights of Seller under express or implied warranties from the
suppliers of Seller with respect to the Acquisition Assets;
(e) All of Seller's right, title and interest in and to each contract,
agreement, purchase order, sales order, lease, license, or commitment whether
written or oral, express or implied relating to the Business which is listed on
Schedule 1.1(e)-(1) and purchase and sales orders entered into in the ordinary
course of business consistent with past practice by Seller between the date of
this Agreement and the Closing which purchase and sales orders will be listed on
a Schedule 1.1 (e)-(2) which Schedule will be delivered at Closing
(collectively, the "Assumed Contracts", and individually, an "Assumed
Contract");
(f) All prepaid items, deposits and other similar assets of the Seller
existing on the Closing Date, including the accounts receivable insurance, which
are specifically listed in Schedule 1.1(f) hereto (all of which are hereinafter
collectively referred to as the "Prepaid Items");
(g) All material books, records and accounts, correspondence,
production records, sales records, customer lists, supplier records, drawings,
plans, specifications and other records relating to operating procedures,
processes, inventions and know-how of the Seller relating to or arising out of
the Business, in electronic or other form or copies thereof where in Seller's
judgment it is appropriate for Seller to retain the originals (all of which are
hereinafter called the "Records");
(h) All of Seller's right, title and interest in each patent, patent
application, copyright, copyright application, trade names including "MF
Electronics", trademark or service xxxx and trademark or service xxxx
registration applied for, issued to or owned by Seller and relating to the
Business and each process, invention, trade secret, technical knowledge,
know-how, computer program and other computer software listed by type or
category all as set forth in Schedule 1.1(h) hereto, and each formula owned by
Seller or which Seller has the right to use and assign to Buyer, substantially
relating to the Business and, in each case, the goodwill
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associated therewith (the assets to be conveyed to Buyer pursuant to this clause
(h) are hereinafter collectively called the "Proprietary Rights"); and
(i) Subject to Section 1.5, the governmental or other licenses, permits
and other authorizations relating to the conduct of the Business listed in
Schedule 1.1(i) (collectively, the "Permits").
1.2 EXCLUDED ASSETS. Notwithstanding anything contained in Section 1.1
hereof to the contrary, Seller is not selling, and Buyer is not purchasing,
pursuant to this Agreement, any of the following, all of which shall be retained
by Seller (hereinafter referred to collectively as the "Excluded Assets"):
(a) all of Seller's cash, cash equivalents, deposit accounts,
certificates of deposit and other securities;
(b) any prepaid items of Seller existing on the Closing Date not listed
in Schedule 1.1(f);
(c) Seller's policies of insurance and any prepaid expenses relating to
insurance premiums, except the accounts receivable insurance which is being
transferred by Seller to Buyer pursuant to Section 1.1(f).
(d) land and buildings constituting the Facility and fixtures and any
office furnishings, computers and related equipment and software licenses
therefor used for non- manufacturing purposes listed on Schedule 1.2 (d),
kitchen equipment and telephone system;
(e) any federal, state and local income and franchise tax credits,
prepaid taxes and tax refund claims;
(f) those other assets, rights or properties of the Seller which are
listed on Schedule 1.2 (f);
(g) all of the Employee Benefit Plans; and
(h) all accounts receivable denoted by Seller as uncollectible.
1.3 FURTHER ASSURANCES. From time to time after the Closing, Seller,
will execute and deliver to Buyer such instruments of sale, transfer,
conveyance, assignment and delivery, consents, assurances, powers of attorney
and other instruments and take such other action as may reasonably be requested
by Buyer in order to vest in Buyer all right, title and interest of Seller in
and to the Acquisition Assets, to put Buyer in possession or control of the
Acquisition Assets and otherwise in order to carry out the purpose and intent of
this Agreement.
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1.4 CLOSING. The closing of the transactions herein contemplated shall,
unless another date, time or place is agreed to in writing by the parties
hereto, take place at the offices of Seller at the Facility, at 1:00 p.m., local
time, on May 28, 2003 (the "Closing" or the "Closing Date").
1.5 NON-ASSIGNABLE CONTRACTS. To the extent that any of the contracts,
rights or commitments set forth on Schedule 1.1(e) or for which assignment to
Buyer is otherwise provided herein are not assignable without the consent of
another party, this Agreement shall not constitute an assignment or an attempted
assignment if such assignment or attempted assignment would constitute a breach
thereof. Seller agrees to use reasonable efforts to obtain the consent of each
other party to any contract, right or commitment to the assignment thereof to
Buyer in all cases in which such consent is required for assignment or transfer.
If such consent is not obtained at or prior to the Closing and Buyer shall have
waived the condition in Section 8.2.8 hereof with respect thereto, Seller agrees
to cooperate with Buyer in subsequently seeking such consent and in any
reasonable arrangements designed to provide for Buyer the benefits under any
such contract, right or commitment, including enforcement at the cost and for
the account of Buyer of any and all rights of Seller against each other party
thereto arising out of the cancellation by such other party, or otherwise. If
and to the extent that such arrangements cannot be made, Buyer shall have no
obligation with respect to any such contract, right or commitment.
2. CONSIDERATION TO BE PAID BY BUYER.
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2.1 AMOUNT OF PURCHASE PRICE. The purchase price (the "Purchase Price")
for the Acquisition Assets shall be the sum of
(a) $650,000 plus or minus the Backlog Adjustment provided in Section
2.4(b);
(b) plus the amount, if any, by which the value as of the Closing Date
of the Accounts Receivable exceeds the Trade Accounts Payable (as hereinafter
defined) as provided in Section 2.4; and
(c) less the amount, if any, by which the value of the Accounts
Receivable on the Closing Date is less than the Trade Accounts Payable as
provided in Section 2.4.
2.2 ALLOCATION OF PURCHASE PRICE. Seller and Buyer agree that, to the
extent required to be capitalized for tax purposes, they will allocate the
Purchase Price other than the Assumed Contracts and Trade Accounts Payable
referred to in Section 3 for all tax purposes (including in preparing all
relevant tax returns, information reports, and other tax documents and forms) in
accordance with an allocation to be mutually agreed to as soon as practicable,
but in any event on or before the Closing Date. Each party hereto agrees that it
will adopt and utilize the allocation so agreed to for purposes of all tax
returns filed by Buyer and Seller. Each of Buyer and Seller agrees to prepare
and timely file all applicable Internal Revenue Service and applicable state tax
forms relating to such purchase price allocation, to cooperate with the other in
the preparation of
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such forms, and to furnish the other with a copy of such forms prepared in
draft, within a reasonable period before the filing due date thereof. Neither
Buyer nor Seller will assert that such purchase price allocation was not
separately bargained for at arm's-length and in good faith. Each party hereto
recognizes that the consideration does not include Buyer's acquisition expenses
and that Buyer will allocate such expenses appropriately. If, within a
reasonable period of time after the Closing Date, Seller and Buyer are unable,
in good faith, to reach an agreement as to the allocation of the Purchase Price,
Seller and Buyer may respectively use their own respective allocation
methodologies and statements for purposes of any tax returns and proceedings
contemplated by this Section 2.2.
2.3 PAYMENT OF PURCHASE PRICE. The Purchase Price for the Acquisition
Assets shall be paid by Buyer as follows:
(a) At the Closing, Buyer shall pay the purchase price by (i)
depositing by wire transfer in escrow $100,000 with an escrow agent to be
reasonably agreed to by Buyer and Seller (the "Escrow Agent") to be held by
Escrow Agent subject to the Escrow Agreement substantially in the form of
Exhibit 2.3 hereto, and, (ii) by paying by wire transfer to Seller the balance
of the Purchase Price subject to Section 2.4.
(b) At the Closing, subject to Section 1.5, Buyer shall assume and
thereafter discharge the Assumed Contracts and Trade Accounts Payable.
2.4 ADJUSTMENTS TO PURCHASE PRICE. (a) The components of the Purchase
Price provided in Sections 2.1(b) and 2.1 (c) above shall be subject to the
following adjustment. For purposes of the Closing, the Purchase Price shall be
tentatively calculated based upon the Accounts Receivable, less any payments
therefor received on the Closing Date, and the Trade Accounts Payable, each as
of the open of business on the Closing Date. On or before the 92nd day after
Closing, Buyer shall deliver to Seller a calculation of the Accounts Receivable
as of Closing which have been paid as of the close of business on the 90th day
after Closing less the Trade Accounts Payable as of Closing. If such calculation
is greater or lesser than the amount tentatively calculated as of the opening of
business on the Closing Date pursuant to this Section 2.4, the amount of such
increase or decrease shall be an adjustment to the purchase price (the "Accounts
Adjustment"). If the adjustment is a decrease in the Purchase Price, the
Purchase Price shall be reduced by an amount equal to the Accounts Adjustment
and such Accounts Adjustment amount shall be paid by Seller to Buyer no later
than 105 days after Closing from the funds held by the Escrow Agent up to a
maximum $50,000. If the Accounts Adjustment results in an increase in the
Purchase Price such Accounts Adjustment amount shall be paid by Buyer to Seller
no later than 105 days after Closing by check. Any Accounts Receivable not paid
by the 90th day after Closing shall be assigned by Buyer to Seller.
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(b) If the Backlog as hereinafter defined in Section 4.18 at Closing is
less than $600,000, the Purchase Price component set forth in Section 2.1(a)
shall be reduced by $350 for each $1,000 by which such Backlog is less than
$600,000. If the Backlog at Closing is in excess of $700,000 then the Purchase
Price component set forth in Section 2.1(a) shall be increased by $350 for each
$1,000 by which such Backlog is more than $700,000. For the purposes of this
Section 2.4(b), Backlog shall be calculated based on written purchase orders
committing customers of Seller to purchase and pay for product deliverable in
less than 6 months, PROVIDED HOWEVER that up to $100,000 may be for products
deliverable in less than 12 months.
(c) Any portion of the Escrow Funds up to a maximum of $50,000 held for
the adjustments pursuant to this Section 2.4 not paid or payable to Buyer as of
106 days after Closing, shall be released to Seller pursuant to the Escrow
Agreement.
3. ASSUMPTION OF CONTRACTS AND CERTAIN OTHER LIABILITIES.
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3.1 EXECUTORY LIABILITIES ASSUMED BY BUYER. As further consideration
for consummation of the transactions contemplated hereby, subject to Section 1.5
hereof, at the Closing Buyer shall assume and agree to thereafter pay when due
and discharge and indemnify Seller and hold Seller harmless with respect to the
executory liabilities and obligations of Seller under each Assumed Contract in
effect on the Closing Date and assigned to Buyer pursuant to Section 1.1(e)
hereof.
3.2 TRADE ACCOUNTS PAYABLE. At the Closing, Buyer shall assume and
agree to pay when due trade accounts payable of Seller outstanding at the
Closing listed on Schedule 3.2 or incurred in the ordinary course of business
between the date of this Agreement and Closing to the extent included in the
calculation provided by Section 2.1(b) and 2.1(c) (the "Trade Accounts
Payable"). Buyer shall provide Seller with a record of payments of Trade
Accounts Payable monthly until all Trade Accounts Payable have been paid.
3.3 LIABILITIES NOT ASSUMED BY BUYER. Buyer shall not be deemed by
anything contained in this Agreement to have assumed and Seller hereby agrees to
indemnify Buyer and hold it harmless with respect to:
(a) Any liability or obligation of Seller for any federal, state or
local income or franchise taxes, state or local property taxes, or other taxes
of any kind or description;
(b) Any liability or obligation with respect to the employment and/or
termination of employment by Seller of its employees, including, without
limitation, salaries, payroll taxes, unemployment compensation, accrued
vacation, workers compensation and any accrued or other liability for
contributions or payments to be made in respect of service under any employee
pension benefit plan (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) or other employee benefit
plan (including, without limitation, any health or accident plan) maintained for
the employees of the Seller;
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(c) Any liability or obligation (contingent or otherwise) of Seller
arising out of any pending or threatened litigation whether or not set forth in
Schedule 4.7;
(d) Any liabilities or obligations arising out of, or damages to
persons (including death and physical or emotional injury) or property arising
out of, products shipped by Seller prior to the Closing Date; and
(e) Any other liability or obligation of Seller except for executory
liabilities and obligations and Trade Accounts Payable specifically assumed by
Buyer pursuant to Section 3.1 and Section 3.2.
4. REPRESENTATIONS AND WARRANTIES OF SELLER.
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The Seller Group, jointly and severally, represent and warrant to Buyer
that:
4.1 ORGANIZATION AND GOOD STANDING. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York, with full corporate power to carry on its business as it is now being
conducted, and to own, lease or operate the properties and assets it now owns,
leases or operates. Seller is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of its business or the
character of its properties makes such qualification necessary except where
failure to be so qualified would not have a material adverse effect on the
financial condition or results of operations of Seller.
4.2 SUBSIDIARIES; INVESTMENTS IN OTHERS. Except as set forth in
Schedule 4.2, Seller does not own, directly or indirectly, any capital stock or
other equity securities of any corporation, nor does it have any direct or
indirect equity or ownership interest in any other business.
4.3 AUTHORIZATION OF AGREEMENT. Seller has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby and to transfer legal and beneficial title and
ownership of the Acquisition Assets to Buyer. This Agreement and all other
agreements and instruments to be executed by Seller, Shareholder and Xxxxx in
connection herewith have been (or upon execution will have been) duly executed
and delivered by Seller, Shareholder and Xxxxx, respectively, have been
effectively authorized by all necessary action, corporate or otherwise, and
constitute (or upon execution will constitute) legal, valid and binding
obligations of each of Seller, Shareholder and Xxxxx as the case may be.
4.4 OWNERSHIP OF ACQUISITION ASSETS. Seller is the lawful owner of or
has the right to use and transfer to Buyer each of the Acquisition Assets, and
the Acquisition Assets are free and clear of all liens, mortgages, pledges,
security interests, restrictions, prior assignments, encumbrances and claims of
any kind or nature whatsoever, except for any of the foregoing disclosed in
Schedule 4.4 annexed hereto. The delivery to Buyer of the instruments of
transfer
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of ownership contemplated by this Agreement will vest good and marketable title
to the Acquisition Assets in Buyer, free and clear of all liens, mortgages,
pledges, security interests, restrictions, prior assignments, encumbrances and
claims of any kind or nature whatsoever.
4.5 TANGIBLE PERSONAL PROPERTY. Schedule 1.1(b) sets forth the
Machinery and Equipment owned by Seller or in the possession of Seller which are
to be transferred to Buyer. Schedule 1.1(e) also contains an identification of
the owner of, and any agreement relating to the use of, each item of tangible
personal property, the rights to which are to be transferred to Buyer pursuant
hereto under leases or other similar agreements. There exists no default by the
Seller or, to Seller's knowledge, any other party, under the terms of the leases
or similar agreements with respect thereto. The Machinery and Equipment and
other tangible assets included in the Acquisition Assets are adequate to conduct
the operation of the Business as it is currently conducted by Seller and the
items of Machinery and Equipment being used currently in the Business and listed
on Schedule 1.1(b) are in good operating condition, except as set forth on
Schedule 4.5 or except as occurs in the ordinary course of business from the
date hereof through the Closing Date.
4.6 AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS. Except as indicated
in Schedule 4.6 annexed hereto, the execution and delivery of this Agreement by
Seller, Shareholder and Xxxxx and the consummation of the transactions
contemplated hereby will not result in a breach of any of the terms and
provisions of, or constitute a default under, or conflict with, or give rise to
any termination or acceleration under, any Assumed Contract or any other
material agreement, indenture or other instrument to which Seller, Shareholder
or Xxxxx is a party or by which it or he is bound, the Certificate of
Incorporation or Bylaws of Seller, any judgment, decree, writ, injunction, order
or award of any court, governmental body or arbitrator, or any law, rule or
regulation applicable to Seller, Shareholder and Xxxxx.
4.7 LITIGATION. Except as disclosed in Schedule 4.7 annexed hereto,
there are no material claims, disputes, actions, proceedings or investigations
of any nature pending or, to the knowledge of Seller, threatened against or
involving the Business or assets of Seller or any of the officers, directors or
employees of Seller in connection with the Business conducted by Seller.
4.8 CONTRACTS.
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(a) Schedule 1.1 (e) lists all Assumed Contracts, copies of which have
been provided to Buyer.
(b) Except as referred to in Schedule 1.1(e), Seller is not a party to
any:
(i) contract for the employment of any officer, director,
employee or consultant or with any labor union or
association;
(ii) contract pursuant to which any person who is or was an
officer, director, employee, consultant or an affiliate of
any such person has a material interest;
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(iii) contract relating to the borrowing or lending of money or
the guarantee of any obligations for borrowed money,
excluding trade payables, or endorsements made for purposes
of collection in the ordinary course of business;
(iv) contract having an unexpired term of more 12 months after
the Closing or involving payments after the Closing in
excess of $10,000 in any twelve-month period;
(v) lease of tangible personal property under which it is the
lessee having unexpired terms of more than 12 months after
the Closing or involving rent or other payments after the
Closing in excess of $10,000 for any such lease;
(vi) contract or purchase order for the production or supply by
it of goods or services having unexpired terms (including
any periods covered by options to renew exercisable by other
parties) of more than 90 days after the Closing;
(vii) contract or purchase order for capital expenditures or the
purchase by it of materials, supplies, equipment or services
which requires payments by Seller in excess of $5,000 after
the Closing;
(viii) license or royalty agreement;
(ix) distributor, dealer, manufacturer's representative, sales
agency, franchise or advertising Contracts not terminable on
30 days or less notice without penalty by it;
(x) contract granting to any person a right to purchase any
Asset other than in the ordinary course of the Business;
(xi) contract or license with respect to the release, discharge
or removal of effluent wastes, pollutants or Hazardous
Materials of any nature;
(xii) contract containing covenants not to compete in any
business or geographical area or restricting it from the use
or disclosure of any information in its possession; or
(xiii) contract not made in the ordinary course of the Business
and consistent with past practices.
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(c) Except as referred to in Schedule 1.1(e):
(i) Each Assumed Contracts is in all material respects valid and
in full force and effect;
(ii) Seller, and each other party thereto, has in all material
respects performed all obligations required to be performed
by such Assumed Contracts, and neither Seller nor any other
party thereto is in breach or default (and with the giving
of notice or lapse of time will not be in breach or
default), and will not be in breach or default (and with the
giving of notice or the lapse of time will not be in breach
or default) as a result of the consummation of the
transactions contemplated by this Agreement, under any such
Assumed Contract;
(iii) Seller has not received notice that any party to any such
Assumed Contract intends or may intend to cancel or
terminate any such Assumed Contract or to exercise or not
exercise options or rights under any such Assumed Contract;
(iv) all liabilities and obligations of Seller required to be
paid or per formed by Seller on or before the Closing under
all such Contracts have been, or will have been on the
Closing, duly paid in full or performed by the Seller in all
material respects; and
(v) the consummation of the transactions contemplated by this
Agreement (A) does not require any consent under any
contract material to the Business or the Acquired Assets
which consent will not have been obtained by Seller as of
the Closing, and (B) will not result in a right to terminate
or modify any material right or privilege now enjoyed by
Seller under any such contract.
(d) Schedule 4.8(d) lists all contracts that are not Assumed
Contracts.
4.9 FINANCIAL STATEMENTS. Set forth in Schedule 4.9 are, (a) the
balance sheets of Seller as at December 31, 2001 and 2000 and the related
statements of income and cash flow for the years ended December 31, 2001 and
2000 audited by BDO Xxxxxxx LLP, and (b) in draft form, the balance sheet of
Seller as at December 31, 2002 and the related statements of income and cash
flow for the year ended December 31, 2002 which financial statements in final
form audited by BDO Xxxxxxx LLP will be delivered at Closing (all such audited
financial statements
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for 2002, 2001 and 2000, the "Audited Financial Statements"). As of Closing, the
Audited Financial Statements will be in accordance with the books and records of
Seller and accurately account in all material respects for the financial
transactions of Seller, (ii) will have been prepared in accordance with
generally accepted accounting principles applied on a basis consistent
throughout the periods indicated, and (iii) present fairly the financial
condition and the results of operations of Seller as of the dates and for the
periods indicated. Except to the extent reflected on or reserved against in the
Audited Financial Statements or otherwise disclosed in this Agreement or the
exhibits or schedules hereto, Seller had, as of December 31, 2002, no material
liabilities or obligations of any nature, whether absolute, accrued, contingent
or otherwise and whether due or to become due including, without limitation,
liabilities for taxes (with interest and penalties thereon).
4.10 INTANGIBLE PERSONAL PROPERTY. Schedule 4.10 contains a complete
and correct list and description of all the Trademarks, Trade Names, Patents,
Licenses and copyrights used by the Seller in the Business. Except as set forth
on Schedule 4.10, Seller is the beneficial and, where applicable, the registered
or common law owner of each such Trademark, Trade Name, Patent, License or
copyright. Seller has not received notice of any claim of adverse ownership or
invalidity of any Trademarks, Trade Names, or Patents listed in such Schedule
4.10 and, to the knowledge of Seller, no such claim has been made. Except as set
forth in such Schedule 4.10, Seller is not subject to any commitment to pay
royalties for the use of any Trademark, Trade Name or Patent of another person
and is not the licensee of any Trademark, Trade Name or Patent. Except as
disclosed in such Schedule 4.10, to the knowledge of Seller, the conduct of the
Business has not infringed and does not infringe any Intellectual Property
Rights of others and the conduct of others has not infringed and does not
infringe any Intellectual Property Rights of Seller used in the Business, nor to
the knowledge of Seller, has there been any claim to such effect. Seller is not
aware of any pending matter which would materially interfere with the continued
use by Buyer from and after the Closing of the Intellectual Property Rights
included in the Acquisition Assets or materially detract from the value thereof.
For purposes of the foregoing, the following terms have the following meanings:
(a) The term "Intellectual Property Rights" shall mean (i) Patents,
(ii) Trademarks, (iii) Trade Names, (iv) Know-how, (v) Licenses, and (vi) shop
rights, copyrights, inventions, service marks and any other intellectual or
industrial property rights.
(b) The term "Know-how" shall mean all proprietary lab journals, trade
secrets, know-how (including, without limitation, proprietary know-how and use
and application know-how), product designs, manufacturing, engineering and other
drawings, computer software, technology, other intangibles, technical
information, safety information, engineering data and design and engineering
specifications, research records, market surveys, and all promotional
literature, customer and supplier lists and similar data.
(c) The term "Licenses" shall mean all licenses (whether as licensor or
licensee) to use any of the following owned by another: (i) Patents, (ii)
Trademarks, (iii) Trade
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Names, (iv) Know-how, and (v) copyrights, inventions, service marks and any
other intellectual or industrial property rights.
(d) The term "Patents" shall mean patents (including all reissues,
divisions, continuations and extensions thereof), patent applications, patent
disclosures docketed and all other patent rights.
(e) The term "Trademarks" shall mean trademarks and trademark
applications.
(f) The term "Trade Names" shall mean names, trade names and all other
names and slogans embodying business or product goodwill for which no trademark
registration has been obtained or applied for.
4.11 FACILITY. Except as set forth in Schedule 4.11 hereto, Seller is
in compliance with respect to the Facility with all local and municipal
ordinances including all applicable zoning ordinances and with all applicable
rules, policies and regulations of all governmental authorities having
jurisdiction over the Facility, all utilities, public ventilation, heating, air
conditioning and sewage systems at the Facility shall be in good operating
condition and the roof at the Facility shall be free of leaks.
4.12 LABOR AND EMPLOYMENT MATTERS.
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4.12.1 LABOR RELATIONS. Seller is not a party to any collective
bargaining agreement, and to Seller's knowledge there are no petitions with
respect to unfair labor practices pending before the National Labor Relations
Board or any other federal or state labor commission relating to any of Seller's
employees nor has Seller received any notice of any actual or alleged violation
of law with respect to its labor practices within the past three years. There is
no labor strike, dispute, slowdown or stoppage actually pending or threatened
against or affecting Seller, and Seller has not experienced any work stoppage or
other material labor difficulty within the past three years. Seller has not
experienced or been threatened with any material union organizing effort with
respect to its employees within the past three years.
4.12.2 EMPLOYEE BENEFIT PLANS. All employee benefit plans, as that term
is defined in Section 3(3) of ERISA, as well as any other plans, contracts or
arrangements, whether formal or informal and whether or not legally binding or
involving direct or indirect compensation (including, without limitation, all
employment, bonus, deferred compensation, severance, vacation, pension,
profit-sharing and retirement plans, contracts or arrangements, retiree benefit
plans including worker's compensation, unemployment compensation and other
government mandated programs) maintained or required to be maintained for the
benefit of any employees of Seller are listed in Schedule 4.12.2. The written
terms of the Seller's benefit plans for employees are and, to the knowledge of
Seller, have been administered in compliance with the requirements of ERISA and,
where applicable, Section 401 of the Internal Revenue Code of 1986, as amended
(the "Code") and other applicable law. There are no accumulated funding
deficiencies as defined
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in Section 302 of ERISA or Section 412 of the Code, whether or not waived, with
respect to the Seller's benefit plans for employees. To the best knowledge of
Seller, there is not now, nor has there been, any prohibited transaction (as
defined in Section 406 of ERISA or Sections 503 or 4975 of the Code) involving
the Seller's benefit plans for employees. There are no pending or, to the
knowledge of Seller, threatened claims by or on behalf of such benefit plans for
employees or by any employee alleging a breach or breaches of such plans, or
fiduciary duties thereunder, violations of other applicable law with respect to
such benefit plans for employees or arising out of events relating to the
employment of the Employees which could result in material liability on the part
of Seller under ERISA or any other law, nor, to the best knowledge of Seller, is
there any basis for such a claim. In respect of employees, Seller has not
established or maintained or contributed to or been under any obligation to
contribute to a multi-employer plan (as defined in Section 3(37) of ERISA) and
has no liability to any multi-employer plan.
4.12.3 COMPLIANCE. Within the past three years, Seller has complied in
all material respects with all applicable laws, rules, and regulations relating
to the employment of labor, including, without limitation, those related to
wages, hours and the payment and withholding of taxes and other sums as required
by appropriate governmental authorities; and Seller has withheld and paid to the
appropriate governmental authorities, or is holding for payment not yet due to
such authorities, all amounts required to be withheld from Employees, and is not
liable for any arrearages of wages, taxes, penalties or other sums for failure
to comply with any of the foregoing.
4.13 APPROVALS AND CONSENTS. Except as set forth in Schedule 4.13, no
approval, consent or authorization of, or declaration or filing with, any
governmental or judicial authority or other person is required in connection
with the due execution and delivery of this Agreement by Seller, Shareholder and
Xxxxx or the consummation by each of Seller, Shareholder and Xxxxx of the
transactions contemplated hereby.
4.14 COMPLIANCE WITH LAW; PERMITS.
(a) Except as disclosed in Schedule 4.14(a), to the best knowledge of
Seller the conduct of the Business by the Seller as currently conducted does not
violate, in any material respect any laws, regulations or orders (including, but
not limited to, any of the foregoing relating to employment discrimination,
occupational safety, or corrupt practices, but excluding environmental matters,
which matters are the subject of Section 4.16), the enforcement of which would
have a material and adverse effect on the results of operations, condition
(financial or otherwise), assets, properties, business or prospects of Seller.
(b) There is set forth in Section 4.14(b) a list of all permits,
licenses or other authorizations of or registrations with governmental
authorities now, in effect applicable to any of the Acquisition Assets or the
Business including, without limitation, the provision of supplies to Seller by
suppliers or contractors (for the purpose hereof, all such permits, licenses and
authorizations issued pursuant to any requirement of law relating to the
discharge, disposal or
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storage of toxic or other hazardous substances or wastes or otherwise concerned
with the environment are material). Except as disclosed in Schedule 4.14 the
Business is and has been conducted in all material respects in compliance with
the requirements of all such permits, licenses, authorizations or registrations
and in accordance with the requirements of all governmental authorities having
jurisdiction over the Business to the extent the same have the force of law.
Except as set forth in Schedule 4.14(b), Seller has timely performed all
commitments on its part provided for in or in connection with any such permit,
license or registration or required for the validity or future validity thereof.
(c) Seller is duly registered as a New York State sales tax vendor.
4.15 INVENTORY. The Inventory consists of raw materials, work in
process, finished goods, packing materials, supplies and other similar items all
of which is merchantable and fit for the purpose for which it was procured or
manufactured. Such inventory consists of items of a quality and quantity usable
and salable in the ordinary course of business of Seller.
4.16 COMPLIANCE WITH CERTAIN ENVIRONMENTAL LAWS. Except as set forth on
Schedule 4.16, to the knowledge of Seller, Seller is in material compliance with
all statutes, regulations, norms, ordinances, directives and orders of every
federal, state, municipal and other governmental authority which has or claims
jurisdiction relative thereto relating to the ownership, occupation or operation
of the Facility. Except as set forth on Schedule 4.16, Seller has no knowledge
of, and is not subject to any outstanding notification of, any condition
relating to any potential or known release or threat of release of any hazardous
material from the Facility as would subject Seller in any individual
circumstance or taken as a whole, to liabilities, losses or expenses in
connection with the assessment, containment, removal or remediation of any such
release or threat of release which would have a material adverse effect upon the
assets, business or financial condition of Seller. Except as set forth on
Schedule 4.16, to the best knowledge of Seller, the Seller is in substantial
compliance with all statutes, regulations, ordinances, directives and orders of
every federal, state, municipal and other governmental authority which has or
claims jurisdiction relative thereto relating to the disposal including
transportation, importation, exportation of or arranging for disposal of
hazardous material, with only such resulting obligations and liabilities as
would not subject Seller in any individual circumstance or taken as a whole, to
losses or expenses which would have a material adverse effect upon the assets,
business or financial condition of Seller. Hazardous materials shall mean any
substances defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," or "toxic substances" under any
applicable federal or state laws or regulations (collectively referred to
hereinafter as "Hazardous Materials").
4.17 ACCOUNTS RECEIVABLE; TRADE ACCOUNTS PAYABLE.
-------------------------------------------
(a) The Accounts Receivable reflected on Schedule 1.1(c)
represent amounts receivable for merchandise actually delivered, have arisen in
the ordinary course of business, are not subject to any offsets, and have been
billed and are generally due within ninety (90) days after
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such billing. Schedule 4.17 (a) is an accounts receivable aging report as of
April 30, 2003 which accurately reflects all accounts receivable of the Seller.
Such Schedules 1.1(c) and 4.17(a) will be updated as of the opening of business
on the Closing Date and delivered to the Buyer at the Closing.
(b) Schedule 4.17(b) lists Trade Accounts Payable of the Seller as of
April 30, 2003. Such Schedule will be up-dated by Seller as of the Closing and
delivered to Buyer at Closing.
4.18 NO MATERIAL CHANGES. Except as set forth in Schedule 4.18, since
December 31, 2002, the business of Seller has been only in the ordinary course
and there has not been:
(a) any change in the financial or other condition, assets, liabilities
or business of the Seller relating to the Business, except changes in the
ordinary course of business none of which individually or in the aggregate has
been materially adverse to Seller;
(b) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the business, or any property of
Seller; or
(c) any strike, lockout, labor trouble, or any similar event or
condition of any character involving employees of Seller materially adversely
affecting the Business.
4.19 TAXES. Except as set forth in Schedule 4.19, Seller has no
liability for Taxes which have been assessed or are due and payable as of the
date hereof which would create or permit the imposition of any lien on the
Acquisition Assets being transferred to Buyer pursuant to the terms hereof. For
purposes of this Agreement, the term "Taxes" shall mean all taxed, levies,
charges or withholdings, including but not limited to income (on the corporate
or shareholder level), franchise, sales, use, gross receipts, transfer,
property, capital stock, employment, and excise taxes and shall also include
interest, penalties and additions to tax.
4.20 SCHEDULES; TRUTHFULNESS. No representation or warranty of the
Seller Group in this Agreement (including the Schedules) contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading. All
written materials provided from time to time by a member of the Seller Group to
the Buyer on and prior to the Closing Date are true and correct copies of the
documents that they purport to be and they contain no untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein not misleading. Prior to Closing, the Seller Group shall
provided the Buyer with access to or copies of all documents and information
requested in writing by the Buyer or its counsel (to the extent such documents
and information exist).
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5. REPRESENTATIONS AND WARRANTIES OF BUYER.
---------------------------------------
Buyer represents and warrants to Seller that:
5.1 ORGANIZATION AND CORPORATE AUTHORITY. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Maryland and has all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. This Agreement
and all other agreements herein contemplated to be executed in connection
herewith have been (or upon execution will have been) duly executed and
delivered by Buyer, have been effectively authorized by all necessary action,
corporate or otherwise, and constitute (or upon execution will constitute)
legal, valid and binding obligations of Buyer.
5.2 AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS. The execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby and the fulfillment of the terms hereof will not result in a breach of
any of the terms or provisions of, or constitute a default under, or conflict
with, any material agreement, indenture or other instrument to which Buyer is a
party or by which it is bound, Buyer's Articles of Incorporation or Bylaws, any
judgment, decree, order or award of any court, governmental body or arbitrator,
or any law, rule or regulation applicable to Buyer.
5.3 REGULATORY APPROVALS. All consents, approvals, authorizations and
other requirements prescribed by any law, rule or regulation which must be
obtained or satisfied by Buyer and which are necessary for the consummation of
the transactions contemplated by this Agreement have been or will have been
obtained and satisfied on or before the Closing Date.
6. CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES.
----------------------------------------------------
6.1 ACCESS. Between the date hereof and the Closing Date, (i)
authorized representatives of Buyer shall have reasonable access during regular
business hours to all properties, books, records, contracts and documents of the
Seller relating to the Business, (ii) Seller will furnish to Buyer all
information with respect to the affairs and business of the Business that Buyer
may reasonably request, and (iii) Buyer shall have the right to discuss the
Business with the employees, customers and suppliers of Seller. Until the
Closing, all information relating to the Business obtained by Buyer and its
authorized representatives pursuant to this Section 6.1 or otherwise in
connection with the transactions contemplated hereby shall be kept confidential
by Buyer and shall not be used by it for any purpose other than in connection
with the transactions contemplated hereby.
6.2 CONDUCT OF BUSINESS. The Business of Seller will be conducted from
the date hereof through the Closing Date in accordance with prior practice and
in the ordinary course of business, and without limiting the generality of the
foregoing, Seller shall not (except with the prior written consent of Buyer):
(i) enter into any material transaction not in the ordinary course
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of business; (ii) sell or transfer any of the assets of Seller or any rights
therein except sales in the ordinary course of business of inventory or
immaterial amounts of other tangible personal property not required in the
Business; (iii) mortgage, pledge or encumber any of the properties or assets of
Seller, except liens for taxes not due; (iv) materially amend, modify or
terminate any material Contract affecting the Business other than in the
ordinary course of business; (v) materially alter the manner of keeping the
books, accounts or records of Seller or the accounting practices therein
reflected; (vi) waive or release any material rights; (vii) make any purchase
commitments in excess of normal business requirements or at prices higher than
current market prices or other than for normal operating inventories; or (viii)
agree to do any of the foregoing.
6.3 PRESERVATION OF ORGANIZATION. The Seller Group shall use its
reasonable efforts to preserve the Business and its organization of Seller, and
to preserve for Buyer the Seller's favorable business relationships with its
suppliers, customers and others with whom business relationship exist.
6.4 UNDERTAKINGS WITH RESPECT TO EMPLOYEES. The Seller Group shall
remain responsible for and hereby indemnifies Buyer and agrees to hold Buyer
harmless from and against all liabilities and obligations (financial or
otherwise) of Seller relating to the employment or termination of any employees
or former employees of Seller that do not become employees of Buyer, including
without limitation those employees of Seller performing services under the
Services Agreement, and including without limitation any and all obligations for
severance or termination pay, vacation pay, and pursuant to COBRA and WARN.
Buyer shall have not successor liability and shall not be deemed to be a
successor of Seller with respect to claims or administrative expenses arising or
accruing under any Employee Benefit Plan or COBRA.
6.5 ACCESS TO BOOKS AND RECORDS. Seller shall have the right for a
period of six (6) years following the Closing Date to have reasonable access to
and the opportunity to obtain copies of any books and records as are transferred
to Buyer pursuant to the terms of this Agreement.
6.6 ADJUSTMENTS FOR PRE-CLOSING SALES. In the event that after the
Closing Date and on or before the first anniversary of this Agreement any
customer of the Business for any finished product sold on or before the Closing
Date shall claim that such product did not conform to the customer's order,
Buyer shall use all reasonable efforts to adjust the claim including, without
limitation, exchanging the finished product for the finished product rejected or
returned by the customer. All such adjustments shall be made by Buyer in good
faith and shall conform to the Seller's customary policy in effect at the
Closing Date in making such adjustments. All costs of Buyer in effecting such
adjustments shall be borne by Seller, and shall be paid to Buyer by Seller from
up to $50,000 of the Escrow Funds dedicated to this Section 6.6. No adjustments
shall be made if the returned item conforms with the item originally ordered and
does not suffer from manufacturing defects, PROVIDED HOWEVER, an adjustment
shall be made in such circumstance if the purchase order provided for adjustment
even if the product met specifications. At the time of Buyer making any request
to Escrow Agent for payment pursuant to this Section 6.6, Buyer shall inform
Seller of the facts and circumstances known to it which are relevant to its
having made
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such adjustment and the basis of the cost determination. Any portion of the
Escrow Funds dedicated to this Section 6.6 not paid or payable to Buyer as of
the first anniversary of the Closing Date shall be released to Seller pursuant
to the Escrow Agreement.
6.7 USE AND OCCUPANCY AGREEMENT WITH SELLER. Subject to the Closing
having occurred, Buyer will enter into a Use and Occupancy Agreement with
Seller, in substantially the form attached hereto as Exhibit 6.7 with respect to
the Facility the term of which shall commence on the Closing Date.
6.8 SERVICES AGREEMENT. Subject to the Closing having occurred, Buyer
will enter into a Services Agreement with Seller, in substantially the form
attached hereto as Exhibit 6.8, the term of which shall commence on the Closing
Date.
6.9 CONSENTS. Seller shall use its best efforts to obtain prior to the
Closing Date all licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities and parties to contracts
with Seller pertaining to the Business as are necessary for consummation of the
transactions contemplated hereby other than those which, if not obtained, would
not, in the aggregate, have a material adverse effect on the transactions
contemplated hereby or the financial condition, results of operations or
business or prospects of the Business.
6.10 SALES TAXES. Any sales, transfer, use or similar taxes levied by
reason of the transaction consummated pursuant to this Agreement shall be borne
by Buyer. Buyer shall furnish to Seller a New York State and Local Sales and Use
Tax, "Exempt Use Certificate", checking the applicable box(es) in Part I
"Exemptions related to production", and a New York State and Local Sales and Use
Tax, "Resale Certificate", checking the appropriate box in Part 1."
6.11 TAX "BULK SALE" NOTICE REQUIREMENTS.
-----------------------------------
(a) Buyer and Seller acknowledge that Buyer may not comply with Section
1141(c) of the New York State Tax Law with respect to the sale and transfer
hereunder;
(b) Seller will indemnify and hold harmless Buyer and will reimburse
Buyer for any loss, damages, expenses, liabilities, including without limitation
state and local sales and compensating use taxes and penalties and interest, and
reasonable attorneys fees and expenses, arising from or in connection with any
noncompliance with the provisions of Section 1141(c) of the New York State Tax
Law and the regulations thereunder, with respect to the sale and transfer
hereunder, except with respect to any liability for sales taxes expressly
assumed by Buyer hereunder.
6.12 FULFILLMENT OF CONDITIONS PRECEDENT. Seller and Buyer shall each
use all reasonable efforts to cause each of the conditions to the consummation
of the transactions contemplated herein applicable to it to be fulfilled as soon
as practicable after the date hereof.
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7. INDEMNIFICATION.
---------------
The following Sections 7.2 through 7.3 provide for the payment of certain
indemnities by the parties. Payment of indemnity for items specified in this
Section 7 shall be governed exclusively by the terms of this Section 7.
7.1 INDEMNIFICATION BY SELLER GROUP. The Seller and Shareholder,
jointly and severally, shall indemnify and hold harmless Buyer and its
successors, assigns, directors and officers from, against, for and in respect of
any and all claims, losses, damages, liabilities, expenses and any other
obligations (including, without limitation, settlement costs and any legal,
accounting and other expenses for investigating or defending any actions or
threatened actions) reasonably incurred by them, in connection with each and all
of the following:
(a) any breach of any representation or warranty made by any member of
the Seller Group in this Agreement;
(b) the breach of any covenant, agreement or obligation of any member
of the Seller Group contained in this Agreement or any other instrument
contemplated by this Agreement;
(c) any misrepresentation contained in any statement or certificate
furnished by any member of the Seller Group pursuant to this Agreement or in
connection with the transactions contemplated by this Agreement; and
(d) any claims against, or liabilities or obligations of, any member of
Seller Group not specifically assumed by Buyer pursuant to this Agreement.
7.2 INDEMNIFICATION BY BUYER. Buyer shall indemnify and hold harmless
Seller and each member of the Seller Group and its successors, assigns,
directors and officers from, against, for and in respect of any and all claims,
losses, damages, liens, liabilities, expenses and any other obligations
(including, without limitation, settlement costs and any legal, accounting or
other expenses for investigating or defending any actions or threatened actions)
reasonably incurred by them, in connection with each and all of the following:
(a) any breach of any representation or warranty made by Buyer in this
Agreement;
(b) the breach of any covenant, agreement or obligation of Buyer
contained in this Agreement or any other instrument contemplated by this
Agreement; and
(c) any misrepresentation contained in any statement or certificate
furnished by Buyer pursuant to this Agreement or in connection with the
transactions contemplated by this Agreement.
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7.3 NOTICE, ETC. Each indemnified party agrees to give the indemnifying
party prompt written notice of any action, claim, demand, discovery of fact,
proceeding or suit (collectively, "Claims") for which such indemnified party
intends to assert a right to indemnification under this Agreement, identify all
provisions of this Agreement under which the Claims arise, and set forth the
Claim in reasonable detail. The indemnifying party shall have the right to
participate jointly with the indemnified party in the indemnified party's
defense, settlement or other disposition of any Claim. With respect to any Claim
relating solely to the payment of money damages and which will not result in the
indemnified party's becoming subject to injunctive or other relief or otherwise
adversely affect the business of the indemnified party in any manner, and as to
which the indemnifying party shall have acknowledged in writing the obligation
to indemnify the indemnified party hereunder, the indemnifying party shall have
the sole right to defend, settle or otherwise dispose of such Claim, on such
terms as the indemnifying party, in its sole discretion, shall deem appropriate.
The indemnifying party shall obtain the written consent of the indemni fied
party, which shall not be unreasonably withheld, prior to ceasing to defend,
settling or otherwise disposing of any Claim if as a result thereof the
indemnified party would become subject to injunctive or other equitable relief
or the business of the indemnified party would be adversely affected in any
manner.
7.4 LIMITATIONS ON INDEMNIFICATION. All representations and warranties
made by the parties herein or in any instrument or document furnished in
connection herewith shall survive the Closing and any investigation at any time
made by or on behalf of the parties hereto and shall expire on May 31, 2004
except that the representatives and warrants set forth in Sections 4.3, 4.4,
4.6, 4.16 and 4.19 shall expire on May 31, 2006. No claim or action for
indemnity under this Section 7 for breach of any representation or warranty
shall be asserted or maintained by either party hereto after the expiration of
such representation or warranty pursuant to the preceding sentence except for
claims made in writing prior to such expiration and actions (whether instituted
before or after such expiration) based on any claim made in writing prior to
such expiration. Notwithstanding the terms of Sections 7.1, 7.2 and 7.3 of this
Agreement, neither party hereto shall be entitled to receive, nor shall the
other party be obligated to pay, any amount of the indemnity obligations
otherwise payable by such party to the other until the amount payable shall have
reached Ten Thousand Dollars ($10,000), whereupon the entire amount shall be
payable immediately upon submission of appropriate documentation establishing,
to the reasonable satisfaction of the indemnifying party, the amount of such
claims, losses, damages, liens, liabilities, expenses and other obligations
giving rise to the obligation to indemnify up to a maximum amount equal to 50%
of the Purchase Price calculated pursuant to Section 2.1(a) but in no event less
than $275,000 (the "Cap") PROVIDED HOWEVER that the Cap shall not apply to any
amount payable by Seller to Buyer by reason of any breach of representation,
warranty, covenant, agreement or obligation relating to compliance by Seller
with environmental laws.
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8. CONDITIONS TO CLOSING.
---------------------
8.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The obligations of each
party to consummate the transactions contemplated hereby shall be subject to the
fulfillment, at or prior to the Closing Date, of the following conditions:
8.1.1 NO ACTION OR PROCEEDING. No claim, action, suit, investigation or
other proceeding shall be pending or threatened before any court or governmental
agency which presents a substantial risk of the restraint or prohibition of the
transactions contemplated by this Agreement or the obtaining of material damages
or other relief in connection therewith.
8.1.2 COMPLIANCE WITH LAW. There shall have been obtained all permits,
approvals and consents of all governmental bodies or agencies which counsel for
Buyer or for Seller may reasonably deem necessary or appropriate so that
consummation of the transactions contemplated by this Agreement will be in
compliance with applicable laws.
8.2 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to
consummate the transactions contemplated hereby shall be, at the option of
Buyer, subject to the fulfillment, at or prior to the Closing Date, of the
following additional conditions:
8.2.1 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Seller contained in this Agreement or in any other document of
Seller delivered pursuant hereto shall be true and correct in all material
respects on the Closing Date with the same effect as if made on the Closing
Date, and at the Closing Seller shall have delivered to Buyer a certificate to
such effect signed by the President of Seller.
8.2.2 SELLER'S PERFORMANCE. Each of the obligations of Seller to be
performed by it on or before the Closing Date pursuant to the terms of this
Agreement shall have been duly performed in all material respects on or before
the Closing Date, and at the Closing Seller shall have delivered to Buyer a
certificate to such effect signed by the President.
8.2.3 AUTHORITY. All actions required to be taken by, or on the part
of, Seller and Shareholder to authorize the execution, delivery, and performance
of this Agreement and the consummation of the transactions contemplated hereby
shall have been duly and validly taken by Seller and Shareholder.
8.2.4 OPINION OF SELLER'S COUNSEL. Buyer shall have been furnished at
the Closing with an opinion of counsel to Seller, dated the Closing Date,
addressed to and in form of Exhibit 8.2.4 hereto.
8.2.5 NAME CHANGE. Seller shall have delivered to Buyer certificates
properly executed for filing with the Secretary of the State of New York,
changing Seller's name to a name dissimilar to that presently used.
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8.2.6 ADDITIONAL CLOSING DOCUMENTS OF SELLER. Buyer shall have received
at the Closing the following documents, dated the Closing Date:
(a) Copies, certified by the Secretary or an Assistant Secretary of
Seller, of resolutions of the Board of Directors and Shareholder of Seller
thereof authorizing the execution, delivery and performance of this Agreement
and all other agreements, documents and instruments relating hereto and the
consummation of the transactions contemplated hereby;
(b) Bills of sale and assignment, in form and substance reasonably
satisfactory to counsel for Buyer, covering the items of personal property
included in the Acquisition Assets to be transferred or assigned to Buyer at the
Closing;
(c) Such further instruments of sale, transfer, conveyance, assignment
and delivery covering the Acquisition Assets or any part thereof as Buyer may
reasonably require to assure the full and effective sale, transfer, conveyance
of title, assignment and delivery to it of the Acquisition Assets to be
transferred to Buyer under this Agreement;
(d) Employment Services Agreement with respect to each of Xxxxx and
Xxxxxxxxxxx in the form of Exhibits 8.2.6-1 and 8.2.6-2;
(e) Certificate of good standing of Seller from the State of New York;
(f) Use and Occupancy Agreement in form of Exhibit 6.7; and
(g) Services Agreement in the form of Exhibit 6.8;
(h) Escrow Agreement in the form of Exhibit 2.3;
(i) Such revised or additional schedules and documents as are required
to be delivered pursuant to this Agreement; and
(j) Such other documents as Buyer may reasonably request.
8.2.7 NO ADVERSE CHANGES. Between the date of this Agreement and the
Closing there shall not have occurred any damage, destruction, or loss of any of
the assets of Seller, whether or not covered by insurance, which has had or may
reasonably be expected to have a material and adverse effect on the Business or
any prospects of Seller nor shall there have occurred any other event or
condition which has had or which may reasonably be expected to have a material
and adverse effect on the results of operations, condition (financial or
otherwise), assets, properties, the Business or prospects of Seller.
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8.2.8 LICENSES, PERMITS AND CONSENTS. Buyer shall have received
evidence, in form and substance reasonably satisfactory to it, that such
licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities and parties to contracts with the Seller
pertaining to the Business as are necessary for consummation of the transactions
contemplated hereby have been obtained, other than those which, if not obtained,
would not, in the aggregate, have a material adverse effect on the transactions
contemplated hereby or on the financial condition, results of operations or
business or prospects of the Business.
8.3 CONDITIONS TO OBLIGATIONS OF SELLER. The obligation of Seller to
consummate the transactions contemplated hereby shall be, at the option of
Seller, subject to the fulfillment, at or prior to the Closing Date, of the
following additional conditions:
8.3.1 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Buyer contained in this Agreement or in any document delivered
pursuant thereto shall be true and correct in all material respects on the
Closing Date with the same effect if made on the Closing Date, and at the
Closing Buyer shall have delivered to Seller a certificate to such effect,
signed by the President or any Vice President and the Treasurer or Secretary of
Buyer.
8.3.2 PERFORMANCE OF COVENANTS. Each of the obligations of Buyer to be
performed on or before the Closing Date pursuant to the terms of this Agreement
shall have been duly performed on or before the Closing Date, and at the Closing
Buyer shall have delivered to Seller a certificate to such effect signed by the
President or any vice President and the Treasurer or Secretary of Buyer.
8.3.3 AUTHORITY. All actions required to be taken by, or on the part
of, Buyer to authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby shall have been
duly and validly taken by the Board of Directors of Buyer.
8.3.4 OPINION OF BUYER'S COUNSEL. Seller shall have been furnished with
an opinion of Xxxxxxx Xxxxxxxx Xxxxxx Xxxxx & Xxxxxxxx LLC, counsel to Buyer,
dated the Closing Date, in the form of Exhibit 8.3.4 hereto.
8.3.5 ADDITIONAL CLOSING DOCUMENTS OF BUYER. Seller shall have received
at the Closing the following documents, each dated the Closing Date:
(a) Copies, certified by the Secretary of Buyer, of resolutions of its
Board of Directors authorizing the execution and delivery of this Agreement and
all other agreements, documents or instruments relating hereto and the
consummation of the transactions contemplated hereby;
(b) Evidence of the wire transfer of the funds to be delivered by Buyer
at the Closing pursuant to Section 2.3 hereof;
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(c) Use and Occupancy Agreement in the form of Exhibit 6.7; and
(d) Employment Services Agreements with respect to each of Xxxxx and
Xxxxxxxxxxx in the form of Exhibits 8.2.6-1 and 8.2.6-2;
(e) Services Agreement in the form of Exhibit 6.8;
(f) Escrow Agreement in the form of Exhibit 2.3;
(g) Certificates of good standing of Buyer from the State of Maryland
and Commonwealth of Massachusetts; and
(h) Such other documents as Seller may reasonably request.
9. MISCELLANEOUS.
-------------
9.1 NOTICES. All notices, requests, demands, and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
(by hand delivery, commercial messenger, or confirmed telecopy) or five (5) days
after mailing by certified or registered mail, postage prepaid, return receipt
requested, to the parties, their successors in interest or their assignees at
the following addresses, or at such other addresses as the parties may designate
by written notice in the manner aforesaid:
If to Seller:
Xxxxxxx Xxxxx
000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxx 0x
Xxx Xxxx, XX 00000
If to Shareholder:
Xxxxxx Xxxxxxxxxxx
00 Xxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
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With respect to all notices to Seller, Xxxxx and Xxxxxxxxxxx,
a copy shall be sent to:
Xxxxx Xxxxxx, Esq.
00 Xxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Fax No. 000-000-0000
If to Buyer:
Xxxxxx Xxxxxx Corporation
00 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: President
Fax No: 000-000-0000
with a copy to:
Xxxx Xxxxx-Xxxx, Esq.
Xxxxxxx Xxxxxxxx Xxxxxx Xxxxx & Xxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax No: 000-000-0000
9.2 ASSIGNABILITY AND PARTIES IN INTEREST.
-------------------------------------
(a) The respective rights and obligation of either party hereto shall
not be assignable by such party without the written consent of the other party
except that Buyer without such consent may assign its rights under this
Agreement to any wholly owned subsidiary of Buyer.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective permitted assignees. Nothing herein
expressed or implied is intended to confer upon any person, other than the
parties hereto and their respective permitted assignees, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
9.3 GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the New York applicable to
agreements made and to be performed wholly within such state.
9.4 COUNTERPARTS. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original, but all of
which shall constitute but one and the same instrument.
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9.5 PUBLICITY. Buyer agrees that press releases and other announcements
to be made by it with respect to the transactions contemplated hereby shall be
subject to the advance agreement of Seller as to content and timing.
9.6 COMPLETE AGREEMENT. This Agreement, the Exhibits hereto, the
Schedules annexed hereto and the documents delivered or to be delivered pursuant
to this Agreement contain or will contain the entire agreement between the
parties hereto with respect to the transactions contemplated herein and shall
supersede all previous oral and written and all contemporaneous oral
negotiations, commitments, and understandings.
9.7 MODIFICATIONS, AMENDMENTS AND WAIVERS. At any time prior to the
Closing Date or the termination of this Agreement, the parties hereto may, by
written agreement, amend, supplement, or waive any of the provisions of this
Agreement.
9.8 INTERPRETATION. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.9 SEVERABILITY. Any provision of this Agreement which is invalid,
illegal, or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability,
without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provision of this Agreement invalid,
illegal or unenforceable in any other jurisdiction.
9.10 EXPENSES OF TRANSACTIONS. Except as otherwise specifically
provided in this Agreement all fees, costs and expenses incurred by Buyer or
Seller in connection with the transactions contemplated by this Agreement shall
be borne by the party incurring them.
9.11 EFFECT OF TERMINATION. In the event that the Closing does not
occur prior to July 15, 2003, or an extended date for the Closing agreed to in
writing by the parties hereto, either party may thereafter terminate this
Agreement by written notice to the other. No termination of this Agreement shall
relieve any party of liability for its breach of any of the provisions of this
Agreement.
9.12 BROKERS. Seller represents and warrants to Buyer, and Buyer
represents and warrants to Seller, that neither such party nor any party acting
on such party's behalf has incurred any liability, either express or implied, to
any "broker" or "finder" or similar person in respect of any of the transactions
contemplated hereby. Buyer agrees to indemnify Seller against, and hold it
harmless form, and Seller agrees to indemnify Buyer against, and hold Buyer
harmless from, any liability, cost or expense (including, but not limited to,
fees and disbursements of counsel) resulting from any agreement, arrangement or
understanding made by such party with any third party for brokerage or finders'
fees or other commissions in connection with this Agreement or the transactions
contemplated hereby.
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9.13 NON-COMPETE; REMEDY AT LAW.
--------------------------
(a) NON-COMPETE. Each of Seller, Xxxxx and Xxxxxxxxxxx agrees that, for
the Non-Compete Period as that term is hereinafter defined, neither it nor he
nor its nor his respective Affiliates will in any way, directly or indirectly,
take away or interfere or attempt to interfere with Buyer's frequency control
business relating to the Business, and will not, without Buyer's prior written
consent, (x) engage in any business, directly or indirectly, that competes with
the Buyer's frequency control business including the Business or (y) disclose or
use, in any manner, any confidential information related to Buyer's frequency
control business including the Acquired Assets. The Non-Compete Period shall be
(i) as to Seller, the period from the Closing Date until two years after the
termination of the last to terminate of the Employment Services Agreements with
Xxxxx and Xxxxxxxxxxx, (ii) as to Xxxxx, the period from the Closing Date until
two years after termination of the Employment Services Agreement with Xxxxx and
(iii) as to Xxxxxxxxxxx, the period from the Closing Date until two years after
the termination of the Employment Services Agreement with Xxxxxxxxxxx. Nothing
herein contained shall be deemed to prohibit ownership by Xxxxx and Xxxxxxxxxxx
of two percent (2%) or less of the outstanding stock of any class of any
corporation whose shares are publicly traded on a regular basis.
(b) REMEDY AT LAW INADEQUATE. Each Seller, Xxxxx and Xxxxxxxxxxx
acknowl edges that its or his failure to comply with the provisions of Section
9.13(a) will result in irreparable and continuing damage for which there will be
no adequate remedy at law and that, in the event of a failure to comply, the
aggrieved party and their successors, legal representatives and assigns shall be
entitled to injunctive relief and to such other and further relief as may be
proper and necessary to ensure compliance with the provisions of Section
9.13(a).
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
MF ELECTRONICS CORPORATION
By: /s/ Xxxxxxx Xxxxx
----------------------
Name: Xxxxxxx Xxxxx
Title: President
/s/Xxxxxx Xxxxxxxxxxx
-----------------------
Xxxxxx Xxxxxxxxxxx
As to Section 6.3, 6.4 and 9.13 only
/s/ Xxxxxxx Xxxxx
-----------------------
Xxxxxxx Xxxxx
XXXXXX-XXXXXX CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: President
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