EXHIBIT 2.1
PURCHASE AGREEMENT
This Agreement is entered into as of October 13, 2001 (the
"AGREEMENT") by and among Xxxxxxx-Xxxxxx, Inc., a Delaware corporation (the
"BUYER"), Xxxxxxx-Xxxxxx International Inc., a Delaware corporation
("MTII") and Rainin Instrument Company, Inc., a Massachusetts corporation
("SELLER") and Xxxxxxx Xxxxxx ("RAININ").
Preliminary Statement
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WHEREAS, the Seller is the holder, beneficially and of record, of all
of the issued and outstanding membership units (the "UNITS") of Rainin
Instrument, LLC, a Delaware limited liability company (the "COMPANY"); and
WHEREAS, Rainin is the holder, beneficially and of record, of all of
the issued and outstanding shares of capital stock of the Seller; and
WHEREAS, the Seller has historically been engaged in the design,
engineering, manufacturing, marketing and distribution of pipettes and
associated products (the "BUSINESS"); and
WHEREAS, the Seller has entered into that certain Assignment and
Assumption Agreement with the Company whereby the Seller has transferred
substantially all assets and liabilities of the Business to the Company for
all of the membership interests in the Company; and
WHEREAS, after the date hereof but prior to the Closing Date (as
herein defined) the Seller will formalize the transfer of record to the
Company of substantially all assets and liabilities of the Business, as
herein further described, such that the Company shall continue the
Business; and
WHEREAS, following such transfer to the Company the Buyer desires to
purchase, and the Seller desires to sell all of the Units of the Company,
subject to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties
and covenants herein contained, the parties agree as follows.
ARTICLE I
THE PURCHASE
1.1 Definitions.
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"AFFILIATE" means, with respect to any person any other person directly or
indirectly controlling, controlled by, or under common control with such
other person, and in the case of an individual, includes the individual's
immediate family, and the trustees of a trust the beneficiaries of which
include any one or more of the foregoing.
"AGREEMENT" shall have the meaning set forth in the first paragraph hereof.
"ASSET PURCHASE AGREEMENT (INVENTORY/ACCOUNTS RECEIVABLE)" shall be the
agreement attached hereto as Exhibit A.
"AUTHORITY" means any foreign, federal, state or local governmental,
regulatory, judicial or administrative authority or agency.
"BALANCE SHEET" shall have the meaning set forth in Section 2.4.
"BALANCE SHEET DATE" shall have the meaning set forth in Section 2.4.
"BUSINESS" shall have the meaning set forth in the preliminary statement
set forth above.
"BUYER" means Xxxxxxx-Xxxxxx, Inc., a Delaware corporation.
"CALIFORNIA COMMISSIONER" shall have the meaning set forth in Section
6.2(a).
"CALIFORNIA PERMIT" shall have the meaning set forth in Section 6.2(a).
"CASH PROCEEDS" shall have the meaning set forth in Section 1.3(a).
"CODE" means the United States Internal Revenue Code of 1986, as amended.
"COMPANY" means Rainin Instrument, LLC, a Delaware limited liability
company.
"CONTINGENT PAYMENT" shall have the meaning set forth in Section 1.5.
"CONTRACTS" means all leases, contracts, grants, licenses, sales orders and
all other agreements, whether written or oral, to which the Company is a
party or by which it is legally bound or which are conveyed to the Company
pursuant to the Transfer Documents.
"COPYRIGHTS" means original works of authorship fixed in any tangible
medium of expression including mask and other copyrightable works, United
States and foreign copyrights, whether registered or unregistered, and
pending applications to register the same.
"CUSTOMS LITIGATION" shall mean the litigation entitled Rainin Instrument
Company, Inc. vs. The United States of America pending in the U.S. Court of
International Trade, and other proceedings or appeals in connection
therewith.
"CURRENT EMPLOYEE" means any Employee who is actively working for or
providing services to the Company or on approved leave of absence and has a
right to return to employment as of the Closing Date.
"EMPLOYEE AGREEMENT" means each management, employment, consulting,
non-compete, change-in-control, confidentiality, agreement or contract
entered into by the Seller or the Company with any Employee.
"EMPLOYEE PLAN" means each plan, program, policy, payroll practice,
contract, or other arrangement (other than any Employee Agreement)
providing for compensation, termination pay, performance awards, profit
related pay schemes, stock or stock-related awards, life and health
insurance, hospitalization, saving, bonus, pensions, supplemental pensions,
deferred compensation, incentive compensation, holidays, profit sharing,
vacations, sick pay, sick leave, disability benefits, tuition refunds,
service awards, company cars, scholarships, relocation benefits, patent
awards, fringe benefits or other employee benefits of any kind, whether
formal or informal, funded or unfunded and whether or not in writing or
legally binding.
"ENCUMBRANCES" shall mean any liens, claims, charges, security interests,
pledges, mortgages, rights of set off, preemptive rights, trust
arrangements or other encumbrances (whether arising from contract, by
operation of law or otherwise), except for (i) liens for Taxes and other
governmental charges and assessments arising in the ordinary course of
business which are not yet due and payable, (ii) liens of landlords and
liens of carriers, warehousemen, mechanics and materialmen and other like
liens arising in the ordinary course of business for sums not yet due and
payable, and (iii) any encumbrances created by or through Buyer or any of
Buyer's Affiliates.
"ERISA" means the U.S. Employee Retirement Income Security Act of 1974, as
amended.
"ESCROW AGREEMENT" means the agreement attached hereto as Exhibit B.
"EXCLUDED ASSETS" means (i) the Seller Leased Real Property located in
Woburn, Massachusetts, (ii) The Xxxx Xxxxxxx Variable Life Insurance
Policies with the following policy numbers: #623 663 16; #623 537 52; #632
027 02; #636 222 87; and #636 222 88, (iii) the membership interests in
Rainin Air LLC, (iv) all contracts related to the construction and
equipping of the Seller Leased Real Property located in Oakland,
California, except those relating to "Tenant Improvements"; (v) subject to
the other terms of this Agreement, the Xxxxxxx Litigation and the Customs
Litigation and (vi) Xx. Xxxxxxx'x and Xx. Xxxxxxxx'x company cars, (vii)
the corporate charter, qualifications to conduct business as a foreign
corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals, minute
books, stock transfer books, blank stock certificates, and other documents
relating to the organization, maintenance and existence of Seller as a
corporation and (viii) the rights of Seller under this Agreement or the
Transfer Documents.
"EXCLUDED LIABILITIES" shall mean (i) all liabilities and obligations of
the Seller and the Company for income Taxes, (ii) liability for U.S. profit
sharing and U.S. incentive compensation, (iii) liability of Seller for
taxes arising in connection with the consummation of the transactions
provided for in the Transfer Documents, (iv) any liability or obligation of
Seller under this Agreement, the Transfer Documents or the Asset Purchase
Agreement (Inventory/Accounts Receivable) and (v) liabilities relating to
the Excluded Assets.
"FINANCIAL STATEMENTS" shall have the meaning set forth in Section 2.4.
"GAAP" shall mean United States generally accepted accounting principles.
"XXXXXXX LITIGATION" means the litigation between Rainin Instrument
Company, Inc. and Xxxxxxx Labortechnik GmbH pending in the District Court
of Dusseldorf, Germany, and the Federal Patent Court of Germany, and any
other proceeding or appeals in connection therewith.
"HOLDBACK AMOUNT" shall have the meaning set forth in Section 1.3(b).
"HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, or any successor law, and regulations and rules issued
pursuant to that act or any successor law.
"INDEMNIFIED PARTY" and "INDEMNIFYING PARTY" shall have the meaning set
forth in Section 7.3.
"INTELLECTUAL PROPERTY" means the Seller's and the Company's Copyrights,
Patent Rights, Trademarks and Trade Secrets and all agreements, contracts,
licenses, sublicenses, assignments and indemnities which relate or pertain
to any of the foregoing. "Intellectual Property" does not include
intellectual property owned by PTI or intellectual property that is
developed through the Closing Date specifically for the business of PTI but
does not relate to the Business.
"INITIAL PURCHASE PRICE" shall have the meaning set forth in Section
1.3(a).
"KNOWLEDGE" shall mean with respect to any party hereto, the actual
knowledge or conscious awareness of such party after reasonable inquiry,
which in the case of the Company, the Seller or Rainin shall mean that such
person has made reasonable inquiry of one or more employees of Rainin
and/or the Company whom such person reasonably believes would have actual
knowledge of the matters represented. As used in Section 2.12, the term
knowledge as to any party shall not require the conducting of any patent
search or investigation regarding patents, trademarks, Copyrights, software
or other Intellectual Property of the Seller or the Company, such party or
any other Person.
"LAWS" means any applicable law, ordinance, code, rule or regulation or any
court, administrative, arbitral or mediator's judgment, order, award or
decree.
"LICENSED INTELLECTUAL PROPERTY" means any licenses or agreements in
relation to the use of intellectual property rights from third parties used
in the conduct of the Business and to which the Seller or the Company is a
party.
"MATERIAL ADVERSE EFFECT" means with respect to any entity, any change,
event or effect that is materially adverse to the business, financial
condition, operations or capitalization of such entity and its
subsidiaries, taken as a whole; provided, however, that in no event shall
any of the following, alone or in combination, be deemed to constitute, nor
shall any of the following be taken into account in determining whether
there has been or will be, a Material Adverse Effect on any entity: (i) any
change, event or effect that results from changes affecting any of the
industries in which such entity operates generally; or (ii) any change,
event or effect that results from changes affecting the United States
economy generally; or (iii) any change, event or effect resulting from or
relating to the disruption or loss of existing or prospective customers,
distributors, suppliers, employees or other relationships that result from
or relates to the public announcement or pendency of the transactions
contemplated hereby, and, provided further, that the failure of an entity
to meet internal financial projections, estimates or forecasts, in and of
itself, will not constitute a Material Adverse Effect on such entity.
"METTLER STOCK" means the shares of MTII common stock, per value $0.01 per
share, issuable pursuant to this Agreement. Such stock is listed for
trading on the New York Stock Exchange under the symbol "MTD."
"MTII" means Xxxxxxx-Xxxxxx International Inc., a Delaware corporation and
the parent company of the Buyer.
"RAININ" means Xxxxxxx Xxxxxx, the sole shareholder of the Seller.
"ORDINARY COURSE OF BUSINESS." An action taken by a Person will be deemed
to have been taken in the "ORDINARY COURT OF BUSINESS" only if:
(a) such action is consistent with the past practices of such Person
(or in the case of the Company, consistent with the past
practices of the Seller) and is taken in the ordinary course of
the normal day-to-day operations of such Person (or in the case
of the Company, taken in the ordinary course of the normal
day-to-day operations of the Seller prior to the consummation of
the Transfer Documents); and
(a) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons
exercising similar authority) and is not required to be
specifically authorized by the parent company (if any) of such
Person.
"PATENT RIGHTS" means United States and foreign patents and patent
applications, including continuations, continuations-in-part, divisions and
reissues thereof; patent disclosures; inventions (whether or not patentable
or reduced to practice) and improvements thereto.
"PERMITS" means all permits, licenses, registrations, certificates, orders,
approvals, franchises, variances and similar rights, whether issued by or
under authority of an Authority or any other person.
"PERSON" means an individual, corporation, company, partnership, trust or
unincorporated organization or a government or any agency or political
subdivision thereof or any other entity.
"PTI" means Protein Technologies, Inc.
"PURCHASE PRICE" shall have the meaning set forth in Section 1.3(a) hereof.
"SELLER" means Rainin Instrument Company, Inc., a Massachusetts
corporation, and the parent of the Company.
"SELLER LEASED REAL PROPERTY" means the facilities utilized or to be
utilized by the Company in connection with the Business located at Rainin
Road, Woburn, Massachusetts, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxx and
0000 Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxx.
"TAX" means any Federal, state, local or foreign income, gross receipts,
license, occupation, capital gains, environmental (including Taxes under
Section 59A of the Code), customs, duties, profits, disability,
registration, documentary, alternative or add-on minimum, estimated,
withholding, payroll, employment, unemployment, insurance, social security
(or similar), excise, sales, use, value-added, occupancy, franchise, real
property, personal property, business and occupation, windfall profits,
capital stock, stamp, transfer, worker's compensation or other tax of any
kind whatsoever, including any interest, penalties or additions to tax, and
any interest in respect of such penalties or additions, whether or not
disputed.
"TAX RETURN" means any return, report, notice, form, declaration, claim for
refund, estimate, election, or information statement or other document
filed or required to be filed in connection with the determination,
assessment or collection of Taxes of any party, including any schedule or
attachment thereto and any amendment thereof.
"TRADEMARKS" means United States, state and foreign trademarks, service
marks, logos, trade dress and trade names (including all assumed or
fictitious names under which the Company or the Seller is conducting
business or has within the previous five years conducted business), whether
registered or unregistered, and pending applications to register the
foregoing.
"TRADE SECRETS" means, without limitation, all ideas, know-how, concepts,
methods, processes, formulae, reports, data, customer lists, mailing lists,
business plans and information, financial information and records and all
other information which has been maintained in confidence by and provides
an economic benefit to its proprietor.
"TRADING PRICE" means $43.65.
"TRANSFER DOCUMENTS" means the Assignment and Assumption Agreement between
the Seller and the Company attached at Schedule 2.2(e), and the assumption,
assignment, transfer and conveyancing documents executed and delivered
pursuant thereto.
"UNITS" means the issued and outstanding membership units of the Company.
1.2 Sale and Transfer of Units. Upon and subject to the terms and
conditions of this Agreement, at the Closing the Seller shall sell,
transfer, convey, assign and deliver the Units to the Buyer, free and clear
of all Encumbrances, and the Buyer shall purchase the Units.
1.3 Purchase Price.
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(a) The purchase price to be paid by the Buyer for the Units
shall be One Hundred Twenty-Two Million, One Hundred Fifty-Seven Thousand
Thirty-Eight Dollars ($122,157,038.00) paid in cash (the "CASH PROCEEDS")
plus 3,388,132 shares of Mettler Stock (the "INITIAL PURCHASE PRICE"), plus
the Contingent Payment (as herein defined), if any, subject to adjustment
as provided in Section 1.7 hereof (the "PURCHASE PRICE").
(b) 687,285 shares of the Mettler Stock included in the Initial
Purchase Price (the "HOLDBACK AMOUNT") will not be paid at Closing but will
be held in escrow in accordance with the provisions of the Escrow Agreement
to satisfy, in part, the indemnification obligations of the Seller and
Rainin pursuant to Article VII hereof. That portion of the Holdback Amount
not subject to claims made in accordance with Article VII and the Escrow
Agreement as of January 2, 2003 shall be disbursed to the Seller on or
before January 10, 2003 in accordance with the terms of the Escrow
Agreement.
(c) Fractional shares will be paid in cash and will not be
issued.
1.4 The Closing.
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(a) The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place commencing at 10:00 a.m. local
time on or before the fifth (5th) business day after all conditions to
closing set forth in Article IV hereof shall have been satisfied or waived,
or on such other date and at such place and by such means as the parties
shall agree (the "CLOSING DATE").
(b) Immediately prior to the Closing:
(i) the Company shall distribute to the Seller the
Company's profits accrued to the Closing Date.
(ii) the Buyer and the Company shall execute the Asset
Purchase Agreement (Inventory/Accounts Receivable), and
consummate the transactions contemplated thereby, and the Company
shall distribute to the Seller the proceeds from such transaction
and the right or obligation of the Company, as the case may be,
to receive a Positive Adjustment Amount or pay a Negative
Adjustment Amount, each as defined in and pursuant to the Asset
Purchase Agreement (Inventory/Accounts Receivable).
(c) At the Closing:
(i) the Seller shall deliver the Units to the Buyer;
(ii) the Seller shall deliver to the Buyer the various
certificates, instruments and documents referred to in Section
4.2;
(iii) the Buyer shall deliver to the Seller the various
certificates, instruments and documents referred to in Section
4.3;
(iv) the Buyer shall pay the Initial Purchase Price,
less the Holdback Amount, in the amount and the manner specified
in Section 1.3; (v) the Buyer shall deposit the Holdback Amount
with the Escrow Agent;
(vi) the Seller shall deliver to the Buyer, or
otherwise put the Buyer in possession and control of, all of the
company and other records of the Company; and
(vii) the Buyer and the Seller shall execute and
deliver to each other a cross-receipt evidencing the transactions
referred to above.
1.5 Contingent Payment. The Seller shall be eligible to earn
additional consideration as provided in this Section 1.5.
(a) Subject to the terms and conditions of this Agreement, the
Buyer shall pay to the Seller as additional consideration an aggregate sum
(the "CONTINGENT PAYMENT") based on EBIT of the Company for the eighteen
(18) month period commencing October 1, 2001 (the "18-MONTH EBIT"; such
period called the "CONTINGENT PERIOD") as follows:
LEVEL PAYMENT
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For every 1 dollar of EBIT in excess of $10.00
$45,875,000 and up to $47,875,000
For every 1 dollar of EBIT in excess of $5.00
$47,875,000 and up to $55,875,000
, up to a maximum Contingent Payment of Sixty Million Dollars
($60,000,000.00).
(b) As used herein, the term "EBIT" means earnings before
interest and taxes, calculated in accordance with GAAP. In the event of the
issuance after the date hereof of accounting pronouncements which change
reporting methods in accordance with GAAP, the method to be applied for
purposes of this Section 1.5 shall be the GAAP in effect on the date
hereof. For purposes of calculating EBIT in accordance with this Section
1.5, the following items will be added back: (i) non-recurring charges
arising directly from the transactions contemplated by this Agreement, (ii)
amortization of intangible assets arising directly from the transactions
contemplated by this Agreement (provided that intangibles from past
acquisitions made by the Seller shall be included on a pro forma basis),
(iii) amounts received by the Company from the Xxxxxxx Litigation and the
Customs Litigation to the extent same are payable to the Seller pursuant to
Section 6.10 hereof, and (iv) $428,000 of leasehold write-offs associated
with the Seller Leased Real Property located in Emeryville, California. For
purposes of calculating EBIT in accordance with this Section 1.5,
accounting for trade-ins will be performed using the Seller's historical
practices.
(c) Within 30 days after the end of the Contingent Period, the
Buyer shall prepare and deliver to the Seller a statement showing the
18-month EBIT (the "EBIT CALCULATION"). The Seller shall be given
reasonable access to work papers, accounting records and such other
material as is reasonably necessary or desirable for the Seller's
independent evaluation of the EBIT Calculation. The Seller shall deliver to
the Buyer a statement describing any objection to the EBIT Calculation
within thirty (30) days after receiving the initial EBIT Calculation,
absent which the EBIT Calculation as delivered by the Buyer shall be deemed
accepted. The Buyer and the Seller shall use reasonable efforts to resolve
any such objections, but if they do not reach a final resolution within ten
(10) days after the Buyer's receipt of the statement of objections, the
Buyer and the Seller shall select a nationally recognized accounting firm
mutually acceptable to them (the "Neutral Accountants") to resolve any
remaining objections, the costs of which shall be shared equally by the
Buyer and the Seller. The Buyer and the Seller shall jointly instruct the
Neutral Accountants to resolve any unresolved objections within thirty (30)
days after referral of the matter to them, and the decision of the Neutral
Accountants shall be conclusive and binding upon the Buyer and the Seller,
absent fraud or manifest error.
(d) Payment of any undisputed portion of the Contingent Payment
will be made within five (5) business days after such undisputed portion is
agreed. The disputed portion will be paid within five (5) business days
after final resolution of the EBIT Calculation, whether by agreement of the
parties or by determination of the Neutral Accountants. Such disputed
amount will accrue interest at a rate of 60-day U.S. dollar LIBOR plus 25
basis points per annum from the date such amount should have been paid
until the date actually paid.
(e) At the Buyer's election, up to one-half of the Contingent
Payment may be paid by the issuance to the Seller of Mettler Stock. The
number of shares of Mettler Stock to be issued pursuant to the Contingent
Payment shall be calculated on the basis of the average closing price of
the Mettler Stock on the ten (10) trading days preceding the last day of
the Contingent Period. The remaining portion of the Contingent Payment
shall be paid by delivery to the Seller of immediately available funds,
unless the Seller and the Buyer shall mutually agree in writing to another
form of consideration.
1.6 Other Considerations.
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(a) The parties agree that from the Closing Date until the end of
the Contingent Period, for purposes of Section 1.5 hereof, (i) the Company
will be accounted for as a separate entity; (ii) the Buyer and its
Affiliates will make resources and services available to the Company as the
Company may elect to receive on arm's length terms; and (iii) the Buyer
will not charge the Company an overhead allocation.
(b) In the event of a change in control of MTII, then after such
change in control and during the balance of the Contingent Period, the
Buyer and MTII agree that they will not make any significant changes in the
employees, operations, or practices of the Company that could reasonably be
expected to have a material adverse effect on EBIT, unless such change is
consented to in writing by Rainin, absent which consent the threshholds for
the Contingent Payment shall be reduced by the amount by which EBIT is
affected by such unapproved change.
1.7 Adjustment. The Initial Purchase Price will be subject to
adjustment as a consequence of the adjustment of the purchase price
pursuant to the Asset Purchase Agreement (Inventory/Accounts Receivable).
The Initial Purchase Price will be increased by the Negative Adjustment
Amount, or decreased by the Positive Adjustment Amount (in each case as
such terms are defined in the Asset Purchase Agreement (Inventory/Accounts
Receivable). The Seller will pay to the Buyer the Positive Adjustment
Amount, or the Buyer will pay to the Seller the Negative Adjustment Amount,
as the case may be, contemporaneously with the payment of the adjusted
purchase price pursuant to the Asset Purchase Agreement (Inventory/Accounts
Receivable).
1.8 Allocation of Purchase Price. The parties agree to allocate the
Purchase Price, any assumed liabilities, and all other capitalizable costs
among the assets owned by the Company at the Closing in the manner required
by Section 1060 of the Code. If the parties are unable to agree on such
allocation within 60 days after the Closing Date, the Buyer and the Seller
shall select Neutral Accountants to resolve any disputed matters, the costs
of which shall be shared equally by the Buyer and the Seller. The Buyer and
the Seller shall jointly instruct the Neutral Accountants to resolve any
disputed matters regarding the purchase price allocation within 15 days
after referral of the matter to them, and the decision of the Neutral
Accountants shall be conclusive and binding upon the Buyer and the Seller,
absent fraud or manifest error. The parties agree to prepare and file IRS
Form 8594, including any amendments thereto, in a manner consistent with
the purchase price allocation determined in accordance with the foregoing.
To the extent that the Purchase Price is adjusted after the Closing Date,
the parties agree to revise and amend the purchase price allocation and IRS
Form 8594 in the same manner and according to the same procedure set forth
above. The determination and allocation of the Purchase Price derived
pursuant to this Section 1.8 shall be binding on the parties for all Tax
reporting purposes.
1.9 Matters Concerning Mettler Stock.
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(a) The Seller or Rainin may sell, offer, contract for sale, make
a short sale, pledge or otherwise transfer or dispose of one half of the
total number of shares of Mettler Stock received by the Seller at any time
after issuance thereof to the Seller, subject to (i) any limitations or
restrictions imposed by the Securities Act of 1933, as amended (the
"Securities Act") and other applicable federal and state securities laws,
(ii) for so long as Rainin is an employee of the Company, the Buyer or
their Affiliates, compliance with MTII's xxxxxxx xxxxxxx policy, and (iii)
compliance with the Right of First Refusal set forth in subsection (c)
hereof.
(b) The Seller and Rainin agree that it and he will not, directly
or indirectly, sell, offer, contract for sale, make any short sale, engage
in any hedging transaction, pledge or otherwise transfer or dispose of the
other one half of the total number of shares of Mettler Stock received by
the Seller in connection with the transactions contemplated hereby until
after the end of the Contingent Period; provided, however, that the Seller
and Rainin shall continue to be bound by such restriction on transfer or
disposition after such date and until the later of (i) January 1, 2005 or
(ii) the termination of Rainin's employee relationship, unless the
contemplated transfer or disposition shall be approved in writing by the
President of the Buyer, which approval will not be unreasonably withheld or
delayed, and which will be communicated within four (4) business days of
Seller's or Rainin's written request therefor. Such approval shall be valid
for a period of thirty (30) days, unless revoked by the Buyer in writing
upon exercise of its reasonable business judgment. Any such sale at any
time shall remain subject to the limitations or restrictions imposed by the
Securities Act and other applicable federal and state securities laws, and
the Right of First Refusal set forth in subsection (c) hereof.
(c) For so long as Rainin is an employee of the Company, the
Buyer or their Affiliates, MTII shall have a right of first refusal to
purchase all or any part of the Mettler Stock received by the Seller
pursuant to this Agreement as set forth below. Prior to consummating any
sale of Mettler Stock, the Seller shall provide to MTII a written notice
setting forth the number of shares the Seller desires to sell. As soon as
practicable, but in no event longer than four (4) business days after
receipt of Seller's notice, MTII shall provide written notice to Seller
informing Seller whether MTII will exercise its right of first refusal and
specifying the total number of shares of Mettler Stock it is electing to
purchase, if less than the full amount set out in Seller's notice.
(i) If MTII elects not to exercise its right of first
refusal in whole or in part, Seller shall be entitled to sell up to the
number of shares of Mettler Stock set out in Seller's notice which MTII has
not elected to purchase during the 30 trading-day period following MTII's
election not to exercise its right of first refusal in whole or in part.
(ii) If MTII elects to exercise its right of first refusal,
the per share price to be paid to Seller shall be calculated by taking the
average of the closing prices for shares of MTII as such prices are
reported by the New York Stock Exchange on each of the three trading days
immediately preceding the date of Seller's notice. The purchase shall take
place on the date of MTII's notice and payment to Seller shall be made by
wire transfer within four (4) business days following such date.
(iii) Seller and MTII shall execute and deliver such other
instruments of sale and take such action as may be reasonably necessary or
desirable to transfer the shares of Xxxxxxx Stock being sold to MTII or to
third parties, as the case may be. This shall include Seller's delivery of
a share certificate or certificates evidencing the Xxxxxxx Stock to MTII's
transfer agent.
(iv) At any time during the four (4) business days after
receipt of Seller's notice set forth above and prior to MTII's election to
exercise its right of first refusal, Seller may elect to revoke its
election to sell.
(v) Immediately upon sending MTII's notice, MTII shall use
its commercially reasonable best efforts to remove the right of first
refusal legend set forth on Seller's certificates, which Seller has
indicated that it desires to sell in the Seller's notice.
(vi) Buyer's and MTII's rights under this Section 1.9(c)
shall terminate upon (A) any consolidation, merger or change of control of
Buyer whereby the stockholders of Buyer immediately prior to such
consolidation, merger or change of control own less than 50% of Buyer's
voting power immediately after such consolidation, merger or change of
control or (B) the sale or disposition of all or substantially all of the
assets of Buyer.
(d) The Seller and Rainin agree not to directly or indirectly
sell, offer, contract for sale, make any short sale, pledge or otherwise
transfer or dispose of any shares of Xxxxxxx Stock in the Holdback Amount
until such shares are delivered to the Seller.
(e) In the event that prior to the Closing Date, MTII shall
subdivide or split-up the outstanding shares of its common stock, combine
its outstanding common stock into a smaller number of shares of capital
stock or declare a dividend (or the like) on its common stock, then the
number of shares of Xxxxxxx Stock which the Seller is entitled to receive
on the Closing Date shall be appropriately adjusted so that the Seller
shall be entitled to receive the number of shares of MTII common stock that
it would have received after such subdivision, split-up, combination,
dividend or the like, as the case may be, if the Closing had occurred
immediately prior to such event or record date for such event, as the case
may be.
(f) Notwithstanding the provisions set forth in this Section 1.9,
the Seller shall be permitted to transfer the Xxxxxxx Stock to such
entities or persons as Seller shall so designate for purposes of estate and
tax planning, provided however that the transferee will be subject to the
terms set forth in this Section 1.9 to the same extent as if such
transferee were the Seller.
1.10 Further Assurances. At any time and from time to time after the
Closing, at the request of the Buyer, the Seller and Rainin shall execute
and deliver such other instruments of sale, transfer, conveyance and
assignment and take such action as the Buyer may determine are reasonably
necessary or desirable to transfer, convey and assign to the Buyer, and to
evidence and confirm the Buyer's rights to, title in and ownership of, the
Units, and to carry out the purpose and intent of this Agreement. Any
additional reasonable out-of-pocket costs incurred by the Seller or Rainin
in accommodating Buyer's requests shall be reimbursed by Buyer.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND RAININ
The Seller and Rainin represent and warrant to the Buyer and MTII
that, except as disclosed in the Disclosure Schedule, the statements
contained in this Article II are true and correct.
2.1 Organization, Qualification and Corporate Power.
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(a) The Seller is a corporation duly organized, validly existing
and in good standing as a corporation under the laws of the State of
Massachusetts. The Seller has all requisite corporate power and authority
to own or lease and operate its properties and assets and to carry on its
business. The Seller is duly qualified to do business in all jurisdictions
where the nature of the properties owned or leased by it or the activities
conducted by it make such qualification necessary.
(b) The Company is a limited liability company duly organized,
validly existing and in good standing as a limited liability company under
the laws of the State of Delaware. The Company has all requisite power and
authority to own or lease and operate its properties and assets and to
carry on its business. The Company is duly qualified to do business in all
jurisdictions where the nature of the properties owned or leased by it or
the activities conducted by it make such qualification necessary.
(c) The Seller has delivered true and complete copies of the
Company's Certificate of Formation and Agreement of Limited Liability
Company, including all amendments thereto, as in effect as of the date of
the Agreement, which are attached hereto at Schedule 2.1(c).
(d) The managers and officers of the Company are set forth on
Schedule 2.1(d) hereto.
2.2 Capital of the Company and Debt Obligations; Subsidiaries.
---------------------------------------------------------
(a) All of the issued and outstanding Units of the Company have
been duly authorized and validly issued, are fully paid and non-assessable
and are owned beneficially and of record by the Seller, free and clear of
any Encumbrances or any unitholder agreements, voting agreements, proxies
or similar agreements.
(b) Except as set forth on Schedule 2.2(b), there are no
outstanding securities convertible into or exchangeable for or carrying the
right to acquire any equity or other security of any description of the
Company and no outstanding options, rights, warrants or other agreements or
commitments that relate to, or require the issuance, sale or other
disposition of, any equity or other securities of any description of the
Company.
(c) Schedule 2.2(c) sets forth all obligations of the Seller or
the Company, direct and indirect, contingent or otherwise, for borrowed
money, including unutilized lines of credit in excess of $50,000.
(d) Except as set forth in Schedule 2.2(d), the Seller (except
for the Company) and the Company do not have any subsidiaries and do not
otherwise own any shares of capital stock or any interest in, or control,
directly or indirectly, any other corporation, partnership, association,
joint venture or other business entity.
(e) The Assignment and Assumption Agreement which forms part of
the Transfer Documents is attached hereto at Schedule 2.2(e). When
executed, the Transfer Documents will constitute (and the Assignment and
Assumption Agreement constitutes) the valid and binding obligation of the
Seller and the Company, and will effectively convey to the Company all
assets of the Seller except the Excluded Assets, subject to all liabilities
of the Seller except the Excluded Liabilities.
2.3 Authority and Noncontravention.
------------------------------
(a) The Seller has all requisite power and authority and Rainin
has all requisite capacity to execute and deliver this Agreement and the
ancillary agreements contemplated hereby to which the Seller or Rainin or
both are a party and to perform their obligations hereunder and thereunder.
The execution and delivery of this Agreement and the ancillary agreements
contemplated hereby by Seller and the performance thereof and the
consummation by Seller of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary corporate action on
the part of Seller and no further action is required on the part of Seller
to authorize this Agreement or any ancillary agreements to which it is a
party and the transactions contemplated hereby and thereby. This Agreement
has been duly and validly executed and delivered by the Seller and Rainin
and constitutes valid and binding obligations of the Seller and Rainin,
assuming in each case the due and valid authorization, execution and
delivery by Buyer and MTII, enforceable against the Seller and Rainin in
accordance with its respective terms, except to the extent that such
enforceability (i) may be limited by bankruptcy, insolvency, relief of
debtors or other laws relating to creditors rights generally and (ii) is
subject to general principles of equity, including the discretion of a
court in granting equitable remedies.
(b) Neither the execution and delivery of this Agreement or the
ancillary agreements contemplated hereby by the Seller or Rainin, nor the
consummation by the Seller or Rainin of the transactions contemplated
hereby or thereby, nor the execution, delivery and consummation of the
transactions contemplated by the Transfer Documents, will (a) (i) conflict
with or violate any provision of the Certificate of Incorporation, as
amended or By-laws of the Seller or the Certificate of Formation or
Agreement of Limited Liability Company of the Company, (ii) violate,
conflict with, or result in a breach of, or default or loss of benefit
under, or give rise to a right of termination, acceleration, modification
or cancellation under, or require any notice, consent or waiver under, any
contract, lease, sublease, license, sublicense, franchise, permit,
instrument of indebtedness or agreement, obligation or commitment to which
the Seller, Rainin or the Company is a party or by which he or it or his or
its assets is bound (including, without limitation, the Contracts), (iii)
violate or result in the loss of any benefit under any provision of any
applicable Law to which the Seller, Rainin or the Company is subject, (iv)
result in the imposition of any Encumbrance upon any of the Units or upon
any assets of the Seller or the Company, or (b) except for the filing
required pursuant to the HSR Act and the filing contemplated by Section
6.2, require on the part of the Seller or Rainin any filing with, or
permit, authorization, consent or approval of, any Authority or give any
Authority the right to challenge any of the transactions contemplated by
this Agreement or the ancillary agreements contemplated hereby, or (c)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Seller, Rainin or the Company or any of their respective
properties or assets.
2.4 Financial Statements and Other Data. Schedule 2.4 sets forth (i)
the audited financial statements of the Seller as of December 31, 1999 and
December 31, 2000 and (ii) the reviewed financial statements of the Seller
as of June 30, 2001 (the "Balance Sheet Date"; the balance sheet included
in such June 30, 2001 financial statements being herein referred to as the
"Balance Sheet"). The foregoing financial statements are herein referred to
as the "Financial Statements". The Financial Statements have been prepared
in accordance with GAAP consistently applied, and the Financial Statements
fairly present the financial condition and results of operations of the
Seller as at the dates and for the periods concerned therein. The profits
and losses reflected in the Financial Statements in any one period have not
been affected to a material extent (except as disclosed in the footnotes
thereto or Schedule 2.4) by any extraordinary, nonrecurring, exceptional or
unusual item, event or circumstance or by any other factor rendering such
profits or losses unusually high or low. The Financial Statements include
the Excluded Assets and the Excluded Liabilities.
2.5 Undisclosed Liabilities. Neither the Seller nor the Company has
any liability, indebtedness, obligation, expense, claim, deficiency,
guaranty or endorsement, whether accrued, absolute, contingent, matured,
unmatured or other, in excess of $100,000 individually (or in the aggregate
in the case of any of the foregoing arising out of a common set of facts),
other than those (i) incurred in the Ordinary Course of Business, (ii)
reflected in the Financial Statements or (iii) set forth on Schedule 2.5.
2.6 No Material Changes. Except as set forth on Schedule 2.6 and
except as contemplated by the Assignment and Assumption Agreement included
in the Transfer Documents, between the Balance Sheet Date and the date of
this Agreement, neither the Seller nor the Company has:
(a) acquired, sold, leased, encumbered or disposed of any
material assets, other than purchases, leases and sales of assets in the
Ordinary Course of Business;
(b) created, incurred or assumed any debt in excess of $100,000
(including obligations in respect of capital leases) other than in the
Ordinary Course of Business (excluding debt in connection with the Seller
Leased Real Property located in Oakland, California);
(c) entered into, adopted or amended any Employee Plan or any
employment or severance agreement or arrangement of the type described in
Section 2.16, paid any significant benefits not required by the terms in
effect on the date hereof of any existing Employee Plan or hired any new
employees or consultants; or significantly increased in any manner the
compensation or fringe benefits of, or modified the terms of any employment
contract of any of its employees or consultants except changes made in the
Ordinary Course of Business;
(d) changed its accounting methods, principles or practices;
(e) made any new elections with respect to Taxes or any changes
in current elections with respect to Taxes;
(f) paid, discharged or satisfied claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) aggregating $100,000 or more, excluding any payment, discharge
or satisfaction in the Ordinary Course of Business;
(g) amended, terminated or waived any material rights under any
Contract other than in the Ordinary Course of Business, or taken or omitted
to take any action that would constitute a material violation of or
material default under any Contract;
(h) made or committed to make any capital expenditure in excess
of $500,000 per item or total capital expenditures in excess of $1,000,000
in the aggregate;
(i) assumed, guaranteed or otherwise become liable for the
obligations of any other Person (excluding endorsements of negotiable
instruments made in the Ordinary Course of Business);
(j) made a distribution on its capital stock, whether in the
nature of a dividend or otherwise; or
(k) agreed orally or in writing to take any of the actions
described in clauses (a) through (j) above, other than as contemplated by
this Agreement.
Except as set forth in Schedule 2.6, to Seller's knowledge no event
has occurred that could reasonably be expected to have a Material Adverse
Effect on the Seller or the Company.
2.7 Taxes.
-----
(a) Each of the Seller and the Company has filed all Tax Returns
required to be filed by it, and has paid all Taxes due and payable by it
(whether or not shown as due on such returns). All such Tax Returns were
correct in all material respects when filed.
(b) No Tax Return of the Seller or the Company is currently being
audited by any taxing Authority. No waivers of statutes of limitation with
respect to the Tax Returns of the Seller or the Company have been given by
or requested in writing from the Seller or the Company.
(c) There are no liens for Taxes (other than for Taxes not yet
due and payable) on any assets of the Seller or the Company.
(d) The Seller is an "S Corporation" as defined in Code Section
1361 and has been an S Corporation since the S Corporation election as of
December, 1981 under Code Section 1362. The Company has not elected to be
treated as a taxpaying entity separate from the Seller for Tax purposes.
2.8 Personal Property.
-----------------
(a) Schedule 2.8(a) contains a list of all machinery, equipment,
vehicles, furniture and other personal property owned by the Seller or the
Company with a net book value greater than $100,000. The Seller has, and
upon consummation of the Transfer Documents the Company will have, good and
marketable title to all of the personal property reflected in the Balance
Sheet or acquired after such date by the Seller or the Company, free and
clear of all Encumbrances that are otherwise not reflected in the Balance
Sheet.
(b) There is no lease or other agreement or right, whether
written or oral under which the Seller or the Company is lessee of, or
holds or operates, any machinery, equipment, vehicle or other tangible
personal property owned by a third Person which involves the payment by the
Seller or the Company of rentals of $50,000 per year or more.
(c) All personal property of the Seller and the Company (other
than accounts receivable and inventory) which is material to the Business
is free from material defects, has been maintained in accordance with
normal industry practice, is in good operating condition and repair
(subject to normal wear and tear) and is suitable for the purposes for
which it is presently used.
(d) Schedule 2.8(d) lists all material assets utilized in the
Business which are owned by the Seller or Rainin (or their Affiliates other
than the Company).
2.9 Real Property.
-------------
(a) Schedule 2.9(a) lists all real property leased or subleased
by the Seller or the Company. Except as set forth on Schedule 2.9(a) with
respect to each lease and sublease:
(i) the lease or sublease is the legal, valid, binding and
enforceable obligation of the Seller or the Company and the other party or
parties thereto and is in full force and effect;
(ii) neither the Company nor the Seller, nor to Seller's
knowledge any other party to the lease or sublease, is in breach or
default, and no event has occurred which, with notice or lapse of time, or
both would constitute a breach or default or permit termination,
modification or acceleration thereunder;
(iii) there are no disputes, oral agreements or forbearance
programs to which the Company or the Seller is a party in effect as to the
lease or sublease;
(iv) neither the Company nor the Seller has assigned,
transferred, conveyed, mortgaged, deeded in trust or encumbered any
interest in the leasehold or subleasehold; and
(v) all facilities leased or subleased are supplied with
utilities necessary for the operation of said facilities.
(b) Except as set forth in Schedule 2.9(a), the Company does not
have ownership of any real property.
(c) All real property leased or otherwise occupied by the Seller
or the Company is in good operating condition and repair, and to Seller's
knowledge is free of any structural or engineering defect.
2.10 Intentionally Omitted.
---------------------
2.11 Intentionally Omitted.
---------------------
2.12 Intellectual Property Rights. Schedule 2.12 lists all
Intellectual Property and all licenses of the same as well as all Licensed
Intellectual Property. Except as set forth in Schedule 2.12, (i) the Seller
or the Company is the sole legal and beneficial owner of the Intellectual
Property, free from any Encumbrances and all Licensed Intellectual Property
has been validly granted to the Seller or the Company and each license is
used by the Seller or the Company in accordance with its terms; (ii)
neither the Seller nor the Company has received written notice or otherwise
has knowledge that any of the Intellectual Property or the Licensed
Intellectual Property is being infringed upon or appropriated by others;
(iii) all Trademarks which have been applied for or registered have been
registered or applied for in the name of the Seller, and will be assigned
by the Seller to the Company, and any registrations have been properly
maintained and renewed in accordance with all applicable Laws; (iv) all
patents which have been applied for have been applied for in the name of
the Seller and will be assigned to the Company and have been maintained in
accordance with all applicable Laws; (v) the Seller and the Company have
been and are taking all reasonable steps necessary to prevent any
impairment of the right of the Company to use the Intellectual Property
Rights and the Licensed Intellectual Property which are used in the conduct
of the Business; (vi) the Seller and/or the Company has filed all necessary
renewals, extensions, affidavits of continued use and/or incontestability,
and has paid all necessary fees associated therewith, necessary to maintain
any Intellectual Property which are used in the conduct of the Business;
(vii) to the Seller's knowledge, the Intellectual Property (except pending
patent applications) and Licensed Intellectual Property is not subject to
any outstanding order, ruling, decree, judgment or stipulation by or with
any Authority; (viii) no dispute or litigation is pending, or to the
knowledge of the Seller, threatened, with respect to the Seller's or the
Company's use of any of the Intellectual Property or Licensed Intellectual
Property; (ix) neither the Seller nor the Company is obligated to pay any
amount, whether as a royalty, license fee or other payment, to any person
in order to use any of the Intellectual Property and in respect of all
Licensed Intellectual Property which requires payment to be made such
payment has been made in accordance with the terms of the relevant license;
(x) the conduct of the Business has not and does not infringe or otherwise
conflict with, any intellectual property rights of any third party; (xi) to
the Seller's knowledge, the Seller or the Company has sufficient right,
title and ownership of all Intellectual Property and sufficient Licensed
Intellectual Property necessary for the conduct of the Business; (xii)
neither the Seller, Rainin nor the Company has granted or is obligated to
grant any licenses or assign any rights of any Intellectual Property; and
(xiii) no independent contractor and no person other than employees of the
Seller or the Company has been engaged to prepare, maintain or modify any
proprietary software or computer programs used in relation to the Business
except under written obligations to treat as confidential all information
regarding the Business thereby obtained and to assign to the Seller or the
Company the full ownership and other right to use such software and
computer programs without payment, limit in time or other restriction.
2.13 Contracts.
---------
(a) The following Contracts are identified on Schedule 2.13:
(i) any written employment or consulting agreement, contract
or offer letter with a key employee or consultant or salesperson
or consulting or sales agreement that is not terminable "at will"
by the Seller or the Company;
(ii) any Contract with customers creating annual revenues to
the Seller or the Company of $500,000 or more, or with suppliers
calling for payment by the Seller or the Company in excess of
$500,000 per year;
(iii) any Contract with any non-employee sales agent,
distributor or representative;
(iv) any agreement containing a grant to or by the Seller or
the Company of any sole or exclusive rights to deal in the
Seller's or the Company's products or services as such relates to
territory, product, service, or type of customer or supplier;
(v) any collective bargaining agreement with any labor
union;
(vi) any Contract granting to any person a right at such
person's option to purchase or acquire any asset or property of
the Seller or the Company other than Inventory;
(vii) any joint venture, consortium or partnership Contract
with any person;
(viii) any research, development or cooperation agreement
with any person;
(ix) any indenture, mortgage, loan, note, bond, debenture,
or other evidence of indebtedness valued at more than $100,000,
any credit, loan, overdraft facility or similar Contract under
which the Seller or the Company has borrowed more than $100,000;
any guarantee of or agreement to acquire any such obligation
(without reference to amount), or agreement to guarantee or
acquire any liability of any other person, or any loan by the
Seller or the Company to any other Person (other than loans to
employees of the Seller or the Company of less than $10,000);
(x) any contract for the building or modification of any
building or structure, or for the incurrence of any other capital
expenditure which is reasonably estimated to involve $500,000 or
more;
(xi) any contract relating to the Seller Leased Real
Property located in Oakland, California to be leased by the
Company;
(xii) any Contract that restricts the Seller or the Company
from entering into any new or existing line of business, or that
contains geographic restrictions on the Company's ability to
conduct its business activities;
(xiii) any Contract which by its terms: (A) entitles any
party thereto (other than the Seller or the Company) to terminate
it in the event of any change in the underlying ownership or
control or management of the Seller or the Company, or (B)
entitles such party to renegotiate the terms or otherwise alter
the operation or duration thereof in the event of any such change
except for those Contracts or arrangements as to which the other
party may terminate without cause;
(xiv) any Contract relating to the acquisition or
disposition of assets valued at $1,000,000 or more (by way of
merger, consolidation, purchase, sale or otherwise) other than
the acquisition or disposition of assets in the Ordinary Course
of Business and other than as contemplated by this Agreement or
the Transfer Documents;
(xv) any other Contract not in the Ordinary Course of
Business that involves $100,000 or more.
(b) Except as set forth in Schedule 2.13(b), (i) each Contract
with a value of $100,000 or more is valid, in full force and effect and
enforceable in accordance with its terms, (ii) the Company and the Seller
have complied in all material respects with the provisions of all the
Contracts and are not in default thereunder, and (iii) to the Seller's
knowledge there has not occurred any default by others or any event which,
with notice, the lapse of time or both will become a default by others
under any of the Contracts with a value of $50,000 or more.
2.14 Litigation. Schedule 2.14 lists all unsatisfied judgments,
orders, decrees, stipulations and injunctions against the Seller or the
Company. Except as set forth in Schedule 2.14, there is no action, suit,
proceeding, hearing or investigation that is currently pending, or to the
Seller's knowledge threatened, against the Seller or the Company.
2.15 Insurance. Schedule 2.15 sets forth (i) a list of all of the
policies of insurance and fidelity or surety bonds maintained, held or
owned for the benefit of the Seller or the Company or their assets; and
(ii) the name of the beneficiary thereunder. Except as set forth in
Schedule 2.15, such insurance coverage is adequate for the protection of
the Seller and the Company. All such policies and other instruments are in
full force and effect and all premiums with respect thereto, which are due
and payable as of the date of this Agreement, are reflected on the books of
the Company. Neither the Seller nor the Company has failed to give any
notice or present any claim under any insurance policy in due and timely
fashion or as required by any of such insurance policies or has otherwise,
through any act, omission or nondisclosure, jeopardized or impaired full
recovery under such policies. Except as otherwise set forth on Schedule
2.15, there are no claims by the Seller or the Company under any of such
policies as to which any insurance company is denying liability or
defending under a reservation of rights or similar section. Except as
otherwise set forth on Schedule 2.15, neither the Seller nor the Company
has received notice of any pending or threatened termination of any of such
policies for the current policy period with respect to any of such
policies.
2.16 Employees and Employee Benefits.
-------------------------------
(a) Employee Plans
(i) Schedule 2.16(a)(i) contains a list of each Employee
Plan. The Company has no plan or commitment, whether legally binding or
not, to establish or to enter into any new Employee Plan or to modify or to
terminate any Employee Plan or the funding thereof, nor has any intention
to do any of the foregoing been communicated to Employees.
(ii) Rainin and the Company have performed all obligations
required to be performed by them under each Employee Plan and (A) each
Employee Plan has been established and maintained in accordance with its
terms and in compliance in all material respects with all applicable laws,
statutes, orders, rules and regulations, including but not limited to ERISA
and the Code, (B) each Employee Plan intended to qualify under Section 401
of the Code is, and since its inception has been, so qualified and a
determination letter has been issued by the Internal Revenue Service (the
"IRS") to the effect that each such Employee Plan is so qualified and that
each trust forming a part of any such Employee Plan is exempt from tax
pursuant to Section 501(a) of the Code; (C) no non-exempt "prohibited
transaction," within the meaning of Section 4975 of the Code or Section 406
of ERISA, has occurred with respect to any Employee Plan; (D) each Employee
Plan can be amended, terminated or otherwise discontinued without liability
to the Company; (E) to the knowledge of the Seller, no Employee Plan is
under audit or investigation by the IRS, the Department of Labor or the
Pension Benefit Guaranty Corporation, and to the knowledge of the Seller,
no such audit or investigation is pending or threatened; and (F) there are
no actions, proceedings, suits or claims pending, threatened or anticipated
(other than routine claims for benefits) against the Seller or the Company
by or in respect of any Employee arising out of any Employee Plan.
(iii) Except as set forth on Schedule 2.16(a)(iii), no
Employee Plan provides, nor does the Company have any liability to provide,
life insurance, medical or other employee welfare benefits to any Employee
upon his or her retirement or termination of employment, except to the
extent required by law. Schedule 2.16(a)(iii) sets forth a complete
description of all such benefits being provided to any persons who are not
Current Employees (as herein defined).
(iv) Neither the Seller nor the Company sponsors, maintains,
contributes to, or is required to contribute to, nor has the Seller or the
Company ever sponsored, maintained, contributed to, or been required to
contribute to, an Employee Plan which is subject to Title IV of ERISA.
(b) Employees
(i) No work stoppage or labor strike against the Company is
pending, anticipated or to the Seller's knowledge threatened. No labor
union is conducting any union organizing activities with respect to any of
the Employees. The Company is not presently a party to, or bound by, any
collective bargaining agreement or union contract with respect to
Employees, and no collective bargaining agreement, union contract or
recognition agreement is currently being negotiated.
(ii) Except as set forth on Schedule 2.16(b)(ii), neither
the Seller nor the Company has had a complaint made to it by any Employee
in relation to discrimination on the basis of race, sex or disability or
otherwise or in its remuneration rates and policies, promotion policies and
practices, employment conditions or practices in the last two (2) years.
Except as set forth on Schedule 2.16(b)(ii), neither the Seller nor the
Company is involved in or, to the Seller's knowledge, threatened with any
dispute, grievance, or litigation relating to the employment of the
Employees, safety or discrimination matters involving any Employee, in each
case including, without limitation, violation of any federal, state, local
or foreign labor or employment laws.
(iii) Schedule 2.16(b)(iii) sets forth the name, position,
title or function, and the salary or wages and commission entitlement, date
of birth and date of commencement of employment of each Current Employee as
of the date of this Agreement. Except as set forth in Schedule
2.16(b)(iii), no exempt Current Employee has notified the Seller or the
Company of his or her intention to resign or retire. There is no
outstanding commitment to increase the remuneration of any Current
Employee. Except as set forth on Schedule 2.16(b)(iii), the execution of,
and performance of the transactions contemplated by, this Agreement and the
Transfer Documents will not (either alone or upon the occurrence of any
additional or subsequent events) (i) constitute an event under any Employee
Plan or Employee Agreement that will or may result in any payment (whether
of severance pay or otherwise), forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund benefits with
respect to any Employee, or any obligation to make payment to any Tax
Authority, or (ii) result in the triggering or imposition of any
restrictions or limitations on the right of the Company to amend or
terminate any Employee Plan and receive the full amount of any excess
assets remaining or resulting from such amendment or termination, subject
to applicable taxes. Schedule 2.16(b)(iii) lists each arrangement the
benefits of which are contingent, or the terms of which are altered, upon
the occurrence of a transaction of the nature contemplated by this
Agreement or the Transfer Documents. No payment or benefit which will or
may be made by the Company or the Seller, or any of their respective
Affiliates with respect to any Employee will be characterized as an "excess
parachute payment," within the meaning of Section 280G(b)(1) of the Code.
(iv) Each of the Company and the Seller (A) is in compliance
in all material respects with all applicable Laws respecting employment,
employment practices, terms and conditions of employment and hours, in each
case, with respect to Employees; (b) has withheld all amounts required by
law or by agreement to be withheld from the wages, salaries and other
payments to Employees; (C) is not liable for any arrears of wages or any
Taxes or any penalty for failure to comply with any of the foregoing; and
(D) 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 for Employees
other than in the Ordinary Course of Business.
2.17 Intentionally Omitted.
---------------------
2.18 Environmental Matters. Except as set forth in Schedule 2.18:
(a) The Company, the Seller and the operations of the Business
have been and are in compliance in all material respects with all
applicable Environmental Laws, which compliance includes the possession by
the Seller and the Company of all permits and other governmental
authorizations required under applicable Environmental Laws, and compliance
with the terms and conditions thereof. Neither the Seller nor the Company
has received any notice or other communication, whether from a governmental
body, citizens group, employee or other third party, that alleges that the
Seller or the Company is not in compliance with any Environmental Law, and,
to the Seller's knowledge, there are no circumstances that may prevent or
interfere with the compliance by the Seller or the Company with any
Environmental Law in the future.
(b) All property that is leased to or owned by the Seller or the
Company, and all surface water, groundwater and soil under or on such
property, is free of any material environmental contamination of any
nature. None of the property leased to or used by the Seller or the Company
contains any septic tanks in which process wastewater or any Materials of
Environmental Concern have been disposed. None of the property leased to or
owned by the Seller or the Company contains any underground storage tanks.
(c) To the Seller's knowledge, neither the Seller nor the Company
has ever sent or transported, or arranged to send or transport, any
Materials of Environmental Concern to a site that, pursuant to any
applicable Environmental Law (i) has been placed on the "National
Priorities List" of hazardous waste sites or any similar state list, (ii)
is otherwise designated or identified as a potential site for remediation,
cleanup, closure or other environmental remedial activity, or (iii) is
subject to a Legal Requirement to take "removal" or "remedial" action as
detailed in any applicable Environmental Law or to make payment for the
cost of cleaning up the site.
(d) For purposes of this Section 2.18: (i) "Environmental Law"
means any existing federal, state, local or foreign Law relating to
pollution or protection of human health or the environment (including
ambient air, surface water, ground water, land surface or subsurface
strata), including any law or regulation relating to emissions, discharges,
releases or threatened releases of Materials of Environmental Concern, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Materials of
Environmental Concern; and (ii) "Materials of Environmental Concern"
include chemicals, pollutants, contaminants, wastes, toxic substances,
petroleum and petroleum products and any other substance that is now
regulated by any Environmental Law or that is otherwise a danger to health,
reproduction or the environment.)
2.19 Services.
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(a) Neither the Seller nor the Company has sold or distributed
any products or performed any services which did not materially comply (i)
with any express or implied warranties or representations made by, or on
behalf of the Seller or the Company, or (ii) with all applicable Laws,
legislation, standards and requirements, or which could otherwise give rise
to a claim for warranty or for damages. Except as set forth on Schedule
2.19 or Schedule 2.14, no litigation has been threatened, commenced,
settled or concluded in the past two (2) years which involves an assertion
inconsistent with the preceding sentence.
(b) The Seller and the Company use commercially reasonable best
efforts, consistent with industry standards and market conditions to ensure
that services sold by the Seller or the Company are sold and supplied on
the Seller's standard terms and conditions for sale or supply of such
services.
2.20 Books and Records. The books and records of the Seller and the
Company have been maintained in accordance with commercially reasonable
business practices.
2.21 Affiliate Transactions.
----------------------
(a) Schedule 2.21(a) sets forth all Contracts and agreements
valued at more than $60,000 between the Company on the one hand and the
Seller or any of the Seller's Affiliates, on the other hand, currently in
effect, and all Contracts and agreements valued at more than $60,000
between the Seller on the one hand and Rainin or Seller's Affiliates on the
other hand. All of such obligations have been incurred on an arm's-length
basis.
(b) The Seller and Rainin have no (other than its or his
ownership interest in the Company or the Seller) direct or indirect
interest in any liquid handling business; provided however, that ownership
of no more than five percent (5%) of the outstanding voting stock of a
publicly traded corporation shall not be deemed an interest in any entity
for purposes of this Section 2.21.
2.22 Customers and Suppliers. Except as set forth on Schedule 2.22:
(a) The Seller has no knowledge of any termination, cancellation
or threatened termination or cancellation of or limitation of, or any
material modification or change in, or material dissatisfaction with, the
business relationship between the Seller or the Company and any of the
significant customers of the Seller or the Company. The Seller has no
knowledge that any significant customer of the Seller or the Company might
prior to or as a result of the Closing or otherwise cease to contract with
the Company or might substantially reduce its business with the Company.
(b) The Seller has no knowledge of any termination, cancellation
or threatened termination or cancellation of, or any material modification
or change in, or material dissatisfaction with, the business relationship
between the Seller or the Company and any of its significant suppliers. The
Seller has no knowledge that any significant supplier of the Seller or the
Company intends to cease to contract with or supply to the Company or
intends to substantially reduce its business with the Company.
2.23 Legal Compliance. The Seller and the Company are in compliance in
all material respects with all Laws that are applicable to the Business.
Neither the Seller nor the Company has received any notice or communication
from any Authority alleging noncompliance with any applicable Laws.
2.24 Broker's and Finder's Fee. Neither the Seller, Rainin nor the
Company has employed any broker, finder, consultant or intermediary in
connection with the transactions contemplated by this Agreement that would
be entitled to a broker's, finder's or similar fee or commission in
connection therewith which was or will be payable by the Seller, the
Company or the Buyer.
2.25 Banking Facilities and Powers of Attorney.
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(a) Schedule 2.25(a) sets forth a list of:
(i) each bank, savings and loan or similar financial
institution at which the Seller or the Company has an account, safety
deposit box, line of credit or credit facility and the numbers of the
accounts or safety deposit boxes maintained by the Seller or the
Company thereat; and
(ii) the names of all persons authorized to draw on each
such account or to have access to any such safety deposit box or other
facility.
(b) Except as set forth in Schedule 2.25(b), there are no
outstanding powers of attorney executed on behalf of the Seller or the
Company.
2.26 Disclosure. To Seller's knowledge, no representation or
warranty by the Seller and Rainin contained in this Agreement, and no
statement contained in the Schedules or any other document, certificate or
other instrument delivered pursuant to this Agreement contains any untrue
statement of a material fact or omits to state any material fact necessary,
in light of the circumstances under which it was made, in order to make the
statements herein or therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND MTII
The Buyer and MTII represent and warrant to the Seller and Rainin as
follows:
3.1 Organization.
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(a) The Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Buyer has the
corporate power to own its properties and to carry on its business as now
being conducted and as currently contemplated to be conducted and is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the failure to be so qualified or licensed would have
a Material Adverse Effect on Buyer.
(b) MTII is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. MTII has the
corporate power to own its properties and to carry on its business as now
being conducted and as currently contemplated to be conducted and is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the failure to be so qualified or licensed would have
a Material Adverse Effect on MTII.
3.2 Authorization of Transaction. The Buyer and MTII have all
requisite power and authority to execute and deliver this Agreement and the
ancillary agreements contemplated hereby and to perform their obligations
hereunder and thereunder. The execution and delivery of this Agreement and
the ancillary agreements contemplated hereby by the Buyer and MTII and the
performance thereof and the consummation by the Buyer and MTII of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of the Buyer and
MTII and no further action is required on the part of Buyer or MTII to
authorize the Agreement and any ancillary agreements to which it is a party
and the transactions contemplated hereby and thereby. This Agreement has
been duly and validly executed and delivered by the Buyer and MTII and
constitutes the legal, valid and binding obligation of the Buyer and MTII,
assuming the due and valid authorization, execution and delivery by the
Seller and Rainin, enforceable against them in accordance with its terms,
except to the extent that such enforceability (i) may be limited by
bankruptcy, insolvency, relief of debtors or other laws relating to
creditors rights generally and (ii) is subject to general principles of
equity, including the discretion of a court in granting equitable remedies.
No vote of the stockholders or approval of the New York Stock Exchange is
required to enter into this Agreement, any of the ancillary agreements,
issue the Xxxxxxx Stock or to close the transaction contemplated by this
agreement, but the listing of the Xxxxxxx Stock with the New York Stock
Exchange will require the submission and acceptance of a Supplemental
Listing Application.
3.3 Noncontravention. Neither the execution and delivery of this
Agreement or the ancillary agreements contemplated hereby by the Buyer and
MTII, nor the consummation by the Buyer and MTII of the transactions
contemplated hereby or thereby, will (a) (i) conflict with or violate any
provision of the Certificate of Incorporation, as amended or By-laws of the
Buyer or MTII, (ii) violate, conflict with, or result in a breach of, or
default or loss of benefit under, or give rise to a right of termination,
acceleration, modification or cancellation under, or require any notice,
consent or waiver under, any contract, lease, sublease, license,
sublicense, franchise, permit, instrument of indebtedness or agreement,
obligation or commitment to which the Buyer or MTII is a party or by which
it or its assets is bound, or (iii) violate or result in the loss of any
benefit under any provision of any applicable Law to which the Buyer or
MTII is subject, (b) except for the filing required pursuant to the HSR
Act, the filing contemplated by Section 6.2 and the filing of a
supplemental listing application with the New York Stock Exchange, require
on the part of the Buyer or MTII any filing with, or permit, authorization,
consent or approval of, any Authority or give any Authority the right to
challenge any of the transactions contemplated by this Agreement or the
ancillary agreements contemplated hereby, or (c) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Buyer,
MTII or any of their respective properties or assets.
3.4 Brokers' Fees. The Buyer has no liability or obligation to pay any
fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
3.5 Xxxxxxx Stock. The Xxxxxxx Stock to be issued by MTII to the
Seller pursuant to this Agreement has been duly authorized. Upon
consummation of the transactions contemplated by this Agreement, the
Xxxxxxx Stock to be issued at the Closing will be validly issued, fully
paid and nonassessable. Upon fulfillment of the conditions specified herein
concerning the Contingent Payment, the Xxxxxxx Stock to be issued in
connection therewith will be validly issued, fully paid and nonassessable.
3.6 SEC Documents; Financial Statements. Buyer has made available to
Seller and Rainin a true and complete copy of each annual, quarterly and
other report, registration statement and proxy statement filed by MTII with
the Securities and Exchange Commission (the "SEC") since January 1, 2000
(the "MTII SEC DOCUMENTS"). As of their respective filing dates, the MTII
SEC Documents complied with the requirements of the Securities Act and the
Securities Exchange Act of 1934 (the "EXCHANGE ACT"), as the case may be,
and the rules and regulations of the SEC promulgated thereunder applicable
to such MTII SEC Documents. The financial statements of MTII included in
the MTII SEC Documents (the "MTII FINANCIAL STATEMENTS") complied as to
form with the published rules and regulations of the SEC with respect
thereto, were 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 financial statements, as
permitted under Form 10-Q under the Exchange Act) and fairly presented the
consolidated financial position of MTII and its consolidated subsidiaries
as of the respective dates thereof and the consolidated results of MTII's
operations and cash flows for the periods indicated (subject, in the case
of unaudited statements, to normal and recurring year-end audit
adjustments).
3.7 No Undisclosed. Liabilities MTII has no liability, indebtedness,
obligation, expense, claim, deficiency, guaranty or endorsement of any
type, whether accrued, absolute, contingent, matured, unmatured or other,
which as of the date of the latest balance sheet included in the MTII SEC
Documents were of a type required by GAAP to be reflected in the latest
balance sheet and were not so reflected in the latest balance sheet, or if
incurred after such date, are of such a nature as to require prompt
disclosure thereof under the Exchange Act.
3.8 Certain Events. Since the date of the last balance sheet included
in the XXXX XXX Xxxxxxxxx, XXXX has not experienced any event or condition
of any character that would be required to be reported on Form 8-K of the
Exchange Act.
3.9 No Litigation. Except as reflected in the MTII SEC Documents,
there is no material action, suit, claim or proceeding of any nature
pending or threatened against MTII, its properties or assets (whether
tangible or intangible),or any of its officers.
3.10 Disclosure. To Buyer's knowledge, no representation or warranty
by the Buyer contained in this Agreement, and no statement contained in the
Schedules, MTII SEC Documents or any other document, certificate or other
instrument delivered pursuant to this Agreement contains any untrue
statement of a material fact or omits to state any material fact necessary,
in light of the circumstances under which it was made, in order to make the
statements herein or therein not misleading.
3.11 Investment Representation. The Units are being acquired by Buyer
for its own account for investment, and not with a view to the sale or
distribution of any part thereof without registration under the Securities
Act or pursuant to an applicable exemption therefrom.
3.12 Capitalization. The share capital of MTII as of September 30,
2001 consists of 125,000,000 authorized common shares, par value $0.01 per
share, 40,157,813 of which are issued and outstanding, and 10,000,000
authorized preferred shares, par value $0.01 per share, none of which are
issued and outstanding. At September 30, 2001 there are outstanding options
to purchase 4,329,372 common shares of MTII. Except as set forth herein, as
of September 30, 2001 there are no outstanding securities convertible into
or exchangeable for or carrying the right to acquire any equity or other
security of any description of MTII and no outstanding options, rights,
warrants or other agreements or commitments that relate to, or require the
issuance, sale or other disposition of, any equity or other securities of
any description of MTII.
ARTICLE IV
CONDITIONS TO CLOSING
4.1 Conditions to Obligations of Each Party to Effect the Transaction.
The respective obligations of the Seller and Rainin and the Buyer and MTII
to effect the transaction shall be subject to the satisfaction at or prior
to the Closing Date of the following conditions:
(a) California Permit. The California Commissioner shall have
approved the terms and conditions of the transactions contemplated by this
Agreement, and the fairness of such terms and conditions following a
hearing pursuant to Section 25142 of the California Corporate Securities
Law of 1968 for such purpose, and shall have issued a California Permit.
(b) No Order. No Authority shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive
order, decree, injunction or other order (whether temporary, preliminary or
permanent) which is in effect and which has the effect of making the
transaction illegal or otherwise prohibiting consummation of the
transaction.
(c) 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 restraint or
prohibition (i) preventing the consummation of the transaction or (ii)
materially adversely affecting the right of the Buyer to own, operate or
control any of the material assets of the Company or to conduct the
Business as currently conducted shall be in effect, nor shall any
proceeding seeking or resulting in any of the foregoing be pending.
(d) HSR Act. All waiting periods under the HSR Act relating to
the transactions contemplated hereby will have expired or terminated early
and all material foreign antitrust approvals required to be obtained prior
to the transaction in connection with the transactions contemplated hereby
shall have been obtained. (e) Other Agreements. The Buyer and the Company
shall have executed and delivered the Asset Purchase Agreement
(Inventory/Accounts Receivable) substantially in the form of Exhibit A
hereto and shall have consummated the transactions contemplated thereby,
and the Buyer, the Seller and the Escrow Agent shall have entered into the
Escrow Agreement substantially in the form of Exhibit B hereto.
(f) Employment Agreements. The Company and Rainin shall have
entered into an employment agreement in substantially the form attached
hereto as Exhibit C. The Company shall have entered into employment
agreements with each of Xxxxxx Xxxxxxxx, Xxxxx Xxxxxxx, Xxxxx Xxxxxx, Xxxxx
Xxxxxxx and Xxxxxxx Xxxxxxx in substantially the form attached hereto as
Exhibit D.
(g) Leases. The Company and the Seller or KR Properties, Inc., as
relevant, shall have entered into leases with respect to the Seller Leased
Real Property, in accordance with the term sheets attached hereto as
Exhibit E and otherwise reasonably acceptable to the Seller and the Buyer.
4.2 Conditions to Obligations of the Buyer and MTII. The obligation of
the Buyer and MTII to consummate the transactions to be performed by it in
connection with the Closing is subject to the satisfaction, or waiver by
the Buyer and MTII, of the following conditions:
(a) Consents and Waivers. The Seller at its own expense shall
have obtained the consent of PTI to the transaction contemplated by the
Transfer Documents and the change of control of the Company contemplated by
this Agreement.
(b) Representations and Warranties. The representations and
warranties of the Seller and Rainin set forth in Article II shall be true
and correct in all material respects at and as of the Closing; provided,
however, that such representations and warranties that address matters as
of a particular date shall be true and correct in all material respects as
of such particular date; provided further, that for purposes of determining
the accuracy of such representations and warranties for purposes of this
Section 4.2(b) only, (i) any inaccuracy that does not have a Material
Adverse Effect on the Seller or the Company shall be disregarded, (ii) any
inaccuracy that results from or relates to general business or economic
conditions shall be disregarded, (iii) any inaccuracy that results from or
relates to conditions generally affecting the industry in which Seller or
the Company competes shall be disregarded, and (iv) any inaccuracy that
results from or relates to the announcement or pendency of the transactions
contemplated by this Agreement shall be disregarded.
(c) Covenants. The Seller and Rainin shall have performed or
complied in all material respects with its or his agreements and covenants
required to be performed or complied with under this Agreement as of or
prior to the Closing.
(d) No Material Adverse Change. There shall have been no material
adverse change in the financial condition or results of operations of the
Seller or the Company since the date of this Agreement; provided, however,
that for purposes of determining whether there shall have been any such
material adverse change, (i) any adverse change resulting from or relating
to general business or economic conditions shall be disregarded, (ii) any
adverse change resulting from or relating to conditions generally affecting
the industry in which the Seller or the Company competes shall be
disregarded, (iii) any adverse change resulting from or relating to the
announcement or pendency of this transaction or any of the other
transactions contemplated by this Agreement shall be disregarded, and (iv)
any adverse change resulting from or relating to the taking of any action
contemplated by this Agreement shall be disregarded.
(e) Compliance Certificate. The Seller shall have delivered to
the Buyer a certificate (without qualification as to knowledge or
materiality or otherwise) to the effect that each of the conditions
specified in clauses (a) through (d) of this Section 4.2 is satisfied in
all respects.
(f) Opinion of Counsel to Seller. The Buyer shall have received
from counsel to the Seller and Rainin an opinion dated as of the Closing
Date in a form reasonably acceptable to Buyer;
(g) Closing Certificates. The Buyer shall have received from the
Seller and the Company all customary closing certificates as it shall have
requested at least 3 days prior to Closing.
4.3 Conditions to Obligations of the Seller and Rainin. The obligation
of the Seller and Rainin to consummate the transactions to be performed by
it or him in connection with the Closing is subject to the satisfaction, or
waiver by the Seller and Rainin, of the following conditions:
(a) Consents and Waivers. The Buyer and MTII shall have obtained
at their own expense all of the waivers, permits, consents, approvals or
other authorizations from third parties and Authorities and effected all of
the registrations, filings and notices with or to third parties or
Authorities as may be necessary or desirable to permit the Buyer and MTII
to consummate the transactions contemplated by this Agreement and the
ancillary agreements contemplated hereby.
(b) Representations and Warranties. The representations and
warranties of the Buyer and MTII set forth in Article III shall be true and
correct in all material respects at and as of the Closing; provided,
however, that such representations and warranties that address matters as
of a particular date shall be true and correct in all material respects as
of such particular date; provided, further that for purposes of determining
the accuracy of such representations and warranties, (i) any inaccuracy
that does not have a Material Adverse Effect on the Buyer or MTII shall be
disregarded, (ii) any inaccuracy that results from or relates to general
business or economic conditions shall be disregarded, (iii) any inaccuracy
that results from or relates to conditions generally affecting the industry
in which Buyer or MTII competes shall be disregarded, and (iv) any
inaccuracy that results from or relates to the taking of any action
contemplated by this Agreement shall be disregarded.
(c) Covenants. The Buyer and MTII shall have performed or
complied in all material respects with its agreements and covenants
required to be performed or complied with under this Agreement as of or
prior to the Closing.
(d) Compliance Certificate. The Buyer and MTII shall have
delivered to the Seller a certificate (without qualification as to
knowledge or materiality or otherwise) to the effect that each of the
conditions specified in clauses (a), (b), (c), (f) and (g) of this Section
4.3 is satisfied in all respects.
(e) Closing Certificates. The Seller shall have received from the
Buyer all customary closing certificates as Seller shall have requested at
least 3 days prior to Closing.
(f) No Material Adverse Change. There shall have been no material
adverse change in the financial condition or results of operations of the
Buyer or MTII since the date of this Agreement; provided, however, that for
purposes of determining whether there shall have been any such material
adverse change, (i) any adverse change resulting from or relating to
general business or economic conditions shall be disregarded, (ii) any
adverse change resulting from or relating to conditions generally affecting
the industry in which the Buyer or MTII competes shall be disregarded,
(iii) any adverse change resulting from or relating to the announcement or
pendency of this transaction or any of the other transactions contemplated
by this Agreement shall be disregarded, and (iv) any adverse change
resulting from or relating to the taking of any action contemplated by this
Agreement shall be disregarded.
(g) Listing. The Xxxxxxx Stock shall have been accepted for
listing on the New York Stock Exchange.
(h) Opinions of Counsel to Buyer. The Seller shall have received
from counsel to the Buyer and MTII opinions dated as of the Closing Date in
forms reasonably acceptable to Seller.
ARTICLE V
PRE-CLOSING COVENANTS
5.1 Conduct of Business. From the date hereof and continuing until the
earlier of the termination of this Agreement or the Closing Date, except as
required to effect the transactions contemplated by the Transfer Documents
and except as contemplated by this Agreement or the Asset Purchase
Agreement (Inventory/Accounts Receivable), or to the extent that Buyer
shall otherwise consent in writing, which consent shall not be unreasonably
withheld and shall be deemed delivered by Buyer if Buyer has not responded
to the Seller's written request for consent within five (5) days after
receiving such Seller request, the Seller will cause the Business (whether
conducted by the Seller or the Company) to be conducted in the Ordinary
Course of Business (including, without limitation, using their commercially
reasonable best efforts consistent with past practices to keep the business
relationships and goodwill with lessors, suppliers, customers, employees
and representatives). In addition, except as set forth in Schedule 5.1, as
required to effect the transactions contemplated by the Transfer Documents,
the Asset Purchase Agreement (Inventory/Accounts Receivable) or this
Agreement, or as otherwise agreed to in writing (or acquiesced to in
accordance with this Section 5.1) by the Buyer, the Seller will cause the
Company:
(a) Not to enter into any new employment, consulting or
collective bargaining agreements, not to grant any increases in the
compensation payable to any Employees of the Seller (in connection with the
Business) or the Company outside of the Ordinary Course of Business and not
to make any change in any Employee Plan except (i) increases in cash
compensation made in the Ordinary Course of Business and (ii) the making of
bonuses to certain Employees; provided that the Seller will advise the
Buyer in writing of any such increases in compensation or the making of
bonuses;
(b) Not to enter into any contract to provide goods or services
at a price substantially less than the Seller's or the Company's existing
pricing;
(c) Not to sell, dispose of or encumber or contract to sell,
dispose of or encumber any of the material assets of the Seller or the
Company other than the Excluded Assets, sales of inventory in the Ordinary
Course of Business, and disposal of obsolete or non-functioning assets;
(d) Not to make or enter into any contract or agreement for any
capital expenditure in excess of $250,000, or enter into any lease of
capital equipment or real estate with aggregate yearly rentals in excess of
$250,000;
(e) Not to modify or amend in any material respect or cancel any
material Contract relating to the Seller Leased Real Property located in
Oakland, California;
(f) Not to modify or amend in any material respect or cancel any
of the Contracts required to be disclosed in a Schedule hereto (other than
Contracts relating to the Oakland Facility) or take any action or incur any
liability or obligation with respect to a Contract which if taken or
incurred prior to the date hereof would be required to be disclosed in any
Schedule hereto, except in the Ordinary Course of Business;
(g) Not to make any change in arrangements for sourcing,
including without limitation payment practices in connection therewith,
which are adverse to the Company in any material respect;
(h) Except as provided in subsection (d) hereof, not to incur
more than $100,000 of indebtedness, except for normal payables incurred in
the Ordinary Course of Business, and not to guarantee indebtedness of any
third Person;
(i) Not to issue, sell, redeem, purchase or otherwise dispose of
or acquire any membership interests of the Company or instruments
convertible into membership interests of the Company;
(j) Not to make any material change in business policy or
practices (including, without limitation, concerning the payment of trade
payables), credit criteria, internal management accounting principles or
practices;
(k) Not to make any amendments to or changes in the Seller's
certificate of incorporation (other than changing the Seller's name) or
by-laws or the Company's Certificate of Formation or Agreement of Limited
Liability Company;
(l) Not to perform any act, or attempt to do any act, or permit
any omission to act, which will knowingly cause a material breach of any
Contract;
(m) Not to waive any material claim or right or agree to any
settlement of a material matter; and
(n) To promptly notify the Buyer of the commencement of any
litigation involving the Seller or the Company.
Notwithstanding the foregoing, it is agreed that prior to the
consummation of the Closing, the Company shall distribute to the Seller (i)
the Company's profits accrued to the Closing Date and (ii) the proceeds
received by the Company pursuant to the Asset Purchase Agreement
(Inventory/Accounts Receivable) and the right or obligation of the Company,
as the case may be, to receive a Positive Adjustment Amount or to pay a
Negative Adjustment Amount, each as defined in and pursuant to the Asset
Purchase Agreement (Inventory/Accounts Receivable).
5.2 Transfer Documents. Prior to the Closing Date, the Seller and the
Company will consummate the transactions contemplated by the Transfer
Documents. All expenses relating to the transactions contemplated by the
Transfer Documents will be borne by the Seller.
5.3 Representations and Warranties.
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(i) To the extent known by the Seller or Rainin, the Seller shall
promptly notify the Buyer in writing if any of the representations or
warranties in Article II should no longer be true in any material respect.
(ii) To the extent known by the Buyer or MTII, the Buyer shall
promptly notify the Seller in writing if any of the representations or
warranties in Article III should no longer be true in any material respect.
5.4 Inconsistent Activities; No Solicitation. Unless and until this
Agreement has been terminated by its terms, the Seller will not and will
cause the Company not to (a) solicit or entertain, directly or indirectly,
any offer to acquire the Seller or the Company (whether securities or
assets) or their respective assets (other than the Excluded Assets), (b)
afford any person or organization that to Seller's knowledge may be
considering the acquisition of the Seller or the Company (whether
securities or assets(other than the Excluded Assets)) (other than the Buyer
and its agents and advisors) access to the Seller or the Company or
information relating thereto for that purpose, or (c) negotiate or enter
into any agreement with any other party concerning the sale of the Seller
or the Company (whether securities or assets (other than the Excluded
Assets)).
5.5 Access to Facilities and Documents. Until the Closing Date or any
earlier termination of this Agreement, the Seller shall provide and shall
cause the Company to provide to the Buyer and its counsel, accountants,
auditors, advisors, consultants and other representatives, reasonable
access during normal business hours to all relevant management personnel
of, and properties, books, contracts, and records pertaining to the Seller
and the Company and shall furnish the Buyer with all such financial,
business, legal and other information concerning the affairs of the Seller
and the Company as the Buyer may reasonably request.
ARTICLE VI
ADDITIONAL AGREEMENTS.
6.1 Non-Competition and Non-Solicitation.
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(a) During the Noncompetition Period (as herein defined), the
Seller and Rainin each agree not to engage, directly or indirectly
(including, without limitation, any form of investment or funding), in any
business relating to liquid handling, or otherwise competitive with the
business of the Company (as it exists at the termination of Rainin's
employment with the Company) or the Relevant Business (as herein defined)
of the Buyer; provided that the foregoing restriction shall not prevent the
Seller or Rainin from being the passive owner of no more than five percent
(5%) of the stock of a publicly traded company which may engage in such
business. "NONCOMPETITION PERIOD" means the period commencing on the
Closing Date and ending five (5) years after termination of Rainin's
employment with the Company, the Buyer or their Affiliates, howsoever
occasioned. "RELEVANT BUSINESS" means (i) the design, manufacture, sale and
servicing of instruments in the lab balances and titration sectors and (ii)
areas of the Buyer's business with which the Seller or Rainin become
knowledgeable as a result of strategic or product development tasks
performed by Rainin for the Buyer.
(b) During the Noncompetition Period, the Seller and Rainin each
agrees not to, directly or indirectly, solicit or attempt to induce any
employee of the Company to terminate his employment with the Company or any
Affiliate of the Company. From and after the date hereof until two (2)
years after termination of Rainin's employment with the Company, the Buyer
or any of their Affiliates, the Seller and Rainin each agrees not to,
directly or indirectly, hire or attempt to hire any employee of the Company
without the prior written consent of the Buyer.
(c) The Seller and Rainin each hereby acknowledges that a
violation or threatened violation of the covenants set forth above will
cause irreparable damage to the Buyer, its Affiliates, successors and
assigns, the exact amount of which would not be subject to reasonable or
accurate ascertainment and, therefore, the Seller and Rainin each hereby
consents that in the event of such violation or threatened violation, the
Buyer, its Affiliates, successors and assigns, shall be entitled to
injunctive relief restraining the Seller and Rainin from violating the said
covenants, said remedy, however, to be cumulative and in addition to such
other remedies as the Buyer, its Affiliates, successors and assigns, may
then be entitled to.
(d) The Seller and Rainin each acknowledges that the scope of
these covenants is reasonable and necessary to protect the legitimate
business interests of the Buyer.
(e) If any portion of the covenants herein contained, or the
application thereof, is hereafter construed to be invalid or unenforceable,
the same shall not affect the remainder of the covenant, the other
covenants or the application thereof, and the said remaining portions shall
be given full effect without regard to the invalid or ineffectual portions.
(f) In the event that any of the negative or restrictive covenant
provisions herein are held to be unenforceable because of the area covered
by such provision, or because of the duration of such provision, or because
of the business covered thereby, the parties hereto consent that the
arbitral tribunal or court making such determination shall have the power
to reduce the area and/or the duration of such provision and/or limit the
business affected thereby, as the case may require, and in their reduced
form, said provisions shall then be enforceable against the Seller and
Rainin.
6.2 Fairness Hearing; Stockholder Approval.
--------------------------------------
(a) As soon as reasonably practicable following the execution of
this Agreement, the Seller and Buyer shall prepare and cause to be filed
with the California Commissioner of Corporations (the "CALIFORNIA
COMMISSIONER") the necessary documents and MTII shall apply to obtain a
permit (a "CALIFORNIA PERMIT") from the California Commissioner (after a
hearing before such Commissioner) pursuant to Section 25121 of the
California Corporate Securities Law of 1968, so that the issuance of
Xxxxxxx Stock pursuant to this Agreement shall be exempt from registration
under Section 3(a)(10) of the Securities Act. The Seller and the Buyer will
respond to any comments from the California Department of Corporations and
use their commercially reasonable efforts to have the California Permit
granted as soon as practicable after such filing. As promptly as practical
after the date of this Agreement, the Buyer and the Seller shall prepare
and make such filings as are required under applicable blue sky laws
relating to the transactions contemplated by this Agreement. The Seller
shall use reasonable and good faith efforts to assist Buyer as may be
necessary to comply with the securities and blue sky laws relating to the
transactions contemplated by this Agreement.
(b) The application for the California Permit shall include the
recommendation of the Board of Directors of the Seller in favor of adoption
and approval of this Agreement and approval of the transaction.
6.3 Restrictions on Transfer. All certificates representing Xxxxxxx
Stock deliverable to Seller pursuant to this Agreement and any certificates
subsequently issued with respect thereto or in substitution therefor
(including any shares issued or issuable in respect of any such shares upon
any stock split, stock dividend, recapitalization, or similar event) also
shall bear any legend required by the California Commissioner or such as
are required pursuant to any federal, state, local or foreign law governing
such securities.
6.4 Registration Rights. In the event the California Commissioner does
not issue a California Permit or should the parties not pursue a California
Permit, then Buyer and MTII agree to enter into an agreement with Seller
thereby granting Seller certain demand and piggy-back registration rights
with respect to the Xxxxxxx Stock. In such event, the execution and
delivery of such agreement shall be a Condition to Closing.
6.5 HSR Act Filing. Within three (3) business days after the date of
this Agreement, the parties will make the filing required by the HSR Act.
6.6 Press Releases and Announcements. Subject to the requirements of
applicable securities laws, neither the Buyer or MTII nor the Seller or
Rainin shall issue any press release or make any public announcement
relating to the subject matter of this Agreement without the prior written
approval of the other party.
6.7 Taxes.
-----
(a) All Taxes arising in connection with the transactions
contemplated by the Transfer Documents and the Asset Purchase Agreement
(Inventory/Accounts Receivable) shall be paid by the Seller when due, and
the Seller will, at its own expense, file all necessary Tax Returns and
other documentation with respect to all such Taxes. The Buyer will furnish
to the Seller such exemption certificates as the Seller may reasonably
request in connection therewith.
(b) The Seller and Rainin shall be liable for and shall indemnify
the Buyer against all Taxes resulting from the Transfer Documents, the
Inventory and Accounts Receivable Agreement and the transactions
contemplated thereby. The Buyer will furnish to the Seller such exemption
certificates as the Seller may reasonably request in connection therewith.
6.8 Name. Prior to or contemporaneously with the Closing, the Seller
will change its corporate name to Rainin Group, Inc. The Buyer and the
Company (and their successors in interest) shall have the right to use the
name "Rainin" in connection with the Business and on any products relating
to liquid measurement. The Buyer and the Company may use the name "Rainin"
in connection with other products with the Seller's prior written consent.
6.9 Employee Benefits.
-----------------
(a) For a period of two (2) years from the Closing Date Buyer and
MTII shall not terminate without cause the employment of any person
identified in Section 4.1(f) without the prior written consent of Rainin.
Rainin's consent shall not be unreasonably withheld or delayed.
(b) All Employee Plans listed on Schedule 2.16(a)(i) shall remain
in effect for each Current Employee listed on Schedule 2.16(b)(iii) and
each new employee hired by the Company until June 30, 2003 (September 30,
2003 in the case of the Seller's profit sharing plan). During this time,
the Buyer and MTII shall not change or amend any provision of any Employee
Plan in any material respect without the written consent of Rainin.
Rainin's consent shall not be unreasonably withheld or delayed.
(c) The Buyer shall provide each employee of Seller service
credit for the Current Employee's past service with Seller as of the
Closing Date for all purposes under any employee benefit plan sponsored by
Buyer which may, at any time, provide benefits or coverage to a Current
Employee at the time that coverage is commenced; provided that the Buyer
will not provide such service credit in connection with its defined benefit
plans.
(d) The Buyer shall not subject any Current Employee to any
waiting periods or limitations on the benefits for pre-existing conditions
under any employee benefit plan sponsored by Buyer, including any group
health and disability plans, except to the extent such employees were
subject to similar limitations under the Seller's Employee Plans.
(e) In the event that the Buyer shall change the insurer under
any group health plan, the Buyer will credit each Current Employee for any
deductible amount previously met by the Current Employee in that plan year
which otherwise would be lost.
(f) The Buyer will honor accrued vacation and accrued sick leave
earned by Current Employees when employed by the Seller.
(g) The Seller will pay when due the liabilities corresponding to
the U.S. profit sharing and U.S. incentive compensation included in the
Excluded Liabilities.
6.10 Certain Litigation. The parties acknowledge that the Xxxxxxx
Litigation and the Customs Litigation are valuable assets of the Seller,
but are of a nature that cannot be assigned to the Company. However, the
parties intend that the costs and benefits of the Xxxxxxx Litigation and
the Customs Litigation be borne by and accrue to the Company. In
furtherance of the foregoing, the parties agree as follows:
(a) The Seller will continue to prosecute and/or defend the
Xxxxxxx Litigation and the Customs Litigation in its name, but the course
and conduct of such litigation shall be controlled by and expenses relating
thereto shall be borne by, the Buyer and the Company. Without limiting the
generality of the foregoing, the Seller will not settle any such litigation
without the Buyer's prior written consent, which consent shall not be
unreasonably withheld.
(b) The Seller shall join in any motion made by the Company to be
added as a plaintiff or defendant in such litigation, or to otherwise
obtain the benefits of such litigation (except as provided in subsection
(c)).
(c) The amount of any payments actually received by the Seller or
the Company from the defendants in such litigations attributable to the
period prior to the Closing Date shall be the property of the Seller and
shall be considered additional Purchase Price.
(d) The Seller will take all reasonable actions to cause the
Company to obtain all benefits of such litigations (except as provided in
subsection (c)).
6.11 Cooperation. At any time and from time to time after the Closing,
at the request of the Buyer and for no further consideration, the Seller
and Rainin shall execute and deliver such other instruments of sale,
transfer, conveyance and assignment and take such action as the Buyer may
determine are reasonably necessary or desirable to (i) transfer, convey and
assign to the Company, and effect, perfect and confirm the record and
beneficial transfer of all assets of the Seller (except the Excluded
Assets) subject to all liabilities of the Seller (except the Excluded
Liabilities), and (ii) to carry out the purpose and intent of the Transfer
Documents.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by the Seller. The Seller and Rainin shall jointly
and severally indemnify the Buyer, MTII and their respective officers,
directors and Affiliates in respect of, and hold the Buyer, MTII and their
respective officers, directors and Affiliates harmless against, any and all
debts, obligations and other liabilities, monetary damages, fines, fees,
penalties, interest, obligations, deficiencies, diminutions in value of
assets, losses and reasonable expenses, reasonable court costs, reasonable
fees and expenses of attorneys, accountants, financial advisors and other
experts, and other expenses of litigation ("Damages"), to the extent
incurred or suffered by the Buyer, MTII or their respective officers,
directors and Affiliates (including the Company) as a result of:
(a) any inaccuracy or breach of a representation or warranty made
by the Seller and Rainin contained in this Agreement, any inaccuracy or
breach of a representation or warranty made by the Company in the Asset
Purchase Agreement (Inventory/Accounts Receivable), or any inaccuracy or
breach of a representation or warranty made by the Seller, Rainin or the
Company in any certificate, document or instrument furnished by the Seller,
Rainin or the Company pursuant to this Agreement;
(b) any failure to perform or comply with any covenant or
agreement of the Seller or Rainin contained in this Agreement;
(c) (i) the ownership or operation of the Excluded Assets and the
Excluded Liabilities; (ii) any failure of the Transfer Documents to
effectively convey to the Company all assets and liabilities of the Seller
as of the date of such Transfer Documents, excluding the Excluded Assets
and the Excluded Liabilities, (iii) any liability arising by virtue of the
entering into and consummation of the Transfer Documents;
(d) any liability (including without limitation costs of cleanup
and remediation) resulting from (i) any releases of any Materials of
Environmental Concern into the environment prior to the Closing Date; (ii)
the existence of any Materials of Environmental Concern at any site on
which the business or operations of the Seller or the Company or any
predecessor business or company was conducted prior to the Closing Date or
to which any such Materials of Environmental Concern migrated or were
transported; (iii) any release of any Materials of Environmental Concern at
any such location if such release could give rise under any Environmental
Law to liability on the part of the Seller or the Company; or (iv) any
violation of any Environmental Law by the Seller or the Company or any
predecessor business or company which occurred prior to the Closing Date;
and
(e) any liability of the Seller or Rainin for income Taxes,
whether with respect to any period before or after the Closing Date and any
liability of the Company for income Taxes with respect to any period prior
to the Closing Date.
7.2 Indemnification by the Buyer. The Buyer and MTII shall jointly and
severally indemnify the Seller and Rainin in respect of, and hold the
Seller and Rainin harmless against, any and all Damages incurred or
suffered by the Seller or Rainin as a result of:
(a) any inaccuracy or breach of a representation or warranty made
by the Buyer and MTII contained in this Agreement, or in any certificate,
document or instrument furnished by the Buyer or MTII pursuant to this
Agreement;
(b) any failure to perform or comply with any covenant or
agreement of the Buyer or MTII contained in this Agreement.
7.3 Claims for Indemnification. Whenever any claim shall arise for
indemnification hereunder, the party seeking indemnification (the
"Indemnified Party") shall promptly notify in writing the party from whom
indemnification is sought (the "Indemnifying Party") of the claim and, when
known, the facts constituting the basis for such claim; provided, however,
that except for the provisions of Section 7.6, no delay on the part of the
Indemnified Party in notifying the Indemnifying Party shall relieve the
Indemnifying Party from any liability or obligation hereunder except to the
extent of any damage or liability caused by or arising out of such delay.
In the event of any such claim for indemnification hereunder resulting from
or in connection with any claim or legal proceedings by a third party, the
notice to the Indemnifying Party shall specify, if known, the amount or an
estimate of the amount of the liability arising therefrom. The Buyer shall
conduct the defense of all third-party claims, whether it is the
Indemnified Party or the Indemnifying Party, except claims arising out of
Section 7.1(e), which shall be the responsibility of the Seller and Rainin.
The Seller and Rainin shall be entitled, at its or his expense, to
participate in, but not to determine or conduct, the defense of such claim
(other than claims arising out of Section 7.1(e)). The Indemnified Party
shall not settle or compromise any claim by a third party for which it is
seeking indemnification hereunder without the prior written consent of the
Indemnifying Party (which consent shall not be unreasonably withheld or
delayed).
7.4 Resolution of Conflicts; Arbitration.
------------------------------------
(a) In case the Indemnifying Party has not consented in writing
to any claim or claims made by the Indemnified Party to recover Damages
within thirty (30) days after delivery of written demand therefor, the
parties shall attempt in good faith to agree upon the rights of the
respective parties with respect to each of such claims. If the parties
should so agree, a memorandum setting forth such agreement shall be
prepared and signed by both parties.
(b) If no such agreement can be reached after good faith
negotiation, either Buyer or Seller may demand arbitration of the matter
unless the amount of the Damages is at issue in pending litigation with a
third party, in which event arbitration shall not be commenced until such
amount is ascertained or both parties agree to arbitration, and in either
such event the matter shall be settled by arbitration conducted by one
arbitrator mutually agreeable to Buyer and Seller. In the event that,
within thirty (30) days after submission of any dispute to arbitration,
Buyer and Seller cannot mutually agree on one arbitrator, then, within
fifteen (15) days after the end of such thirty (30) day period, Buyer and
Rainin shall each select one arbitrator. The two arbitrators so selected
shall select a third arbitrator.
(c) Any such arbitration shall be held in Chicago, Illinois,
under the rules then in effect of the American Arbitration Association. The
arbitrator(s) shall determine how all expenses relating to the arbitration
shall be paid, including without limitation, the respective expenses of
each party, the fees of each arbitrator and the administrative fee of the
American Arbitration Association. The arbitrator or arbitrators, as the
case may be, shall set a limited time period and establish procedures
designed to reduce the cost and time for discovery while allowing the
parties an opportunity, adequate in the sole judgment of the arbitrator or
majority of the three arbitrators, as the case may be, to discover relevant
information from the opposing parties about the subject matter of the
dispute. The arbitrator or a majority of the three arbitrators, as the case
may be, shall rule upon motions to compel or limit discovery and shall have
the authority to impose sanctions, including attorneys' fees and costs, to
the same extent as a competent court of law or equity, should the
arbitrators or a majority of the three arbitrators, as the case may be,
determine that discovery was sought without substantial justification or
that discovery was refused or objected to without substantial
justification. The decision of the arbitrator or a majority of the three
arbitrators, as the case may be, as to the validity and amount of any claim
shall be final, binding, and conclusive upon the parties to this Agreement.
Such decision shall be written and shall be supported by written findings
of fact and conclusions which shall set forth the award, judgment, decree
or order awarded by the arbitrator(s). Within thirty (30) days of a
decision of the arbitrator(s) requiring payment by one party to another,
such party shall make the payment to such other party.
(d) Judgment upon any award rendered by the arbitrator(s) may be
entered in any court having jurisdiction. The foregoing arbitration
provision shall apply to any dispute between the parties under this Article
VII.
7.5 Escrow Fund. Until January 2, 2003 in cases where the Seller and
Rainin are the Indemnifying Party, Damages pursuant to this Article VII
shall first be funded from the Holdback Amount pursuant to the terms of the
Escrow Agreement, it being understood that Seller and Rainin shall be
liable for any excess Damages.
7.6 Survival. All representations, warranties, covenants, agreements
and obligations set forth in this Agreement shall survive the Closing as
herein provided. Unless otherwise stated, all representations, warranties
and covenants shall expire on the date eighteen (18) months from the
Closing Date except that:
(a) the representations and warranties of the Seller and Rainin
in Sections 2.2, 2.3(a) and 2.24 and the representations and warranties of
the Buyer and MTII contained in Sections 3.2, 3.5 and 3.12 shall survive
without limitation, and the provisions of Section 7.1(a) and 7.2(a) as they
relate to such representations and warranties shall similarly survive
without limitation;
(b) the representations and warranties of the Seller and Rainin
in Section 2.7 shall survive for a period of sixty (60) days after
expiration of the relevant statute of limitations, and the provisions of
Section 7.1(a) as they relate to such representation and warranty, and the
provisions of Section 7.1(e), shall similarly survive for such period; (c)
the representations and warranties of the Seller and Rainin in Section 2.18
shall survive for a period of three (3) years from and after the Closing
Date (provided that such representations and warranties as they relate to
the Seller Leased Real Property located in Emeryville, California shall
survive without limitation), and the provisions of Section 7.1(a) as they
relate to such representation and warranty, and the provisions of Section
7.1(d), shall similarly survive for such period;
(d) the covenants of the parties shall survive the Closing for
the period therein specified or, if no period is specified, without
limitation, and the provisions of Section 7.1(b) shall similarly survive
for such period; and
(e) the provisions of Section 7.1(c) shall survive without
limitation.
Any claim asserted in writing prior to the expiration as provided
in this Section 7.6 of the representation, warranty, covenant or indemnity
that is the basis for such claim shall survive until finally resolved and
satisfied in full.
7.7 Limitations on Indemnification.
------------------------------
(a) Except as set forth herein, neither party shall make a claim
under this Article VII unless and until its Damages are $1,500,000 or more
in the aggregate (the "BASKET"; provided that in computing the Basket each
single indemnity amount (or any series of amounts relating to a series of
claims arising out of a common set of facts) of less than $50,000 (the
"THRESHHOLD") shall be disregarded). Each party may make claims for
indemnification to the extent the Damages exceed the Basket; provided that
after the Basket is exceeded, neither party may recover Damages unless the
individual claim for Damages (or series of Damages relating to a series of
claims arising out of a common set of facts) exceeds the Threshhold. The
Basket and the Threshhold shall not apply to (i) breaches of the Seller's
and Rainin's representations and warranties in Section 2.2, 2.3(a), 2.7 and
2.24, (ii) Buyer's and MTII's representations and warranties in Sections
3.2, 3.4, 3.5 or 3.12, (iii) breaches of the Seller's and Rainin's
covenants in Section 5.4, 6.1, 6.7 and 6.9(g), (iv) Damages arising out of
Section 2.18 or Section 7.1(d) relating to the Seller Leased Real Property
located in Emeryville, California (v) Damages arising out of Section 7.1(c)
(except the Threshhold shall apply to Section 7.1(c)(ii)), and (vi) damages
arising out of Section 7.1(e); it being understood that Damages with
respect to such sections shall be recoverable from the first dollar (except
the Threshhold shall apply to Section 7.1(c)(ii) as aforesaid).
(b) The Seller's and Rainin's maximum liability pursuant to
Section 7.1(a) which arises out of Section 2.18 or pursuant to Section
7.1(d), except any such liability relating to the Seller Leased Real
Property located in Emeryville, California, shall be an amount equal to 40%
of the sum of (i) the Initial Purchase Price, (ii) the amount paid pursuant
to the Asset Purchase Agreement (Inventory/Accounts Receivable) and (iii)
the Contingent Payment. The Seller's and Rainin's maximum liability
pursuant to Section 7.1(a) which arises out of Section 2.12 shall be an
amount equal to 25% the sum of (i) the Initial Purchase Price, (ii) the
amount paid pursuant to the Asset Purchase Agreement (Inventory/Accounts
Receivable) and (iii) the Contingent Payment. The Seller's and Rainin's
maximum liability pursuant to Section 7.1(a) (exclusive of liability
arising out of Section 2.12 and 2.18) shall be an amount equal to 10% of
the sum of (i) the Initial Purchase Price, (ii) the amount paid pursuant to
the Asset Purchase Agreement (Inventory/Accounts Receivable) and (iii) the
Contingent Payment.
(c) In no event shall Seller's and Rainin's maximum liability
under any and all claims for indemnification made pursuant to this
Agreement and the Asset Purchase Agreement (Inventory/Accounts Receivable)
exceed the Purchase Price.
(d) The amount that the Indemnifying Party is required to pay to
an Indemnified Party pursuant to this Article VII shall be reduced
(including, without limitation, retroactively) by any net insurance
proceeds actually recovered by the Indemnified Party in reduction of the
related Damages. Each party agrees that its insurance policies will contain
a waiver of subrogation clause so long as the same is obtainable and
includable at no extra cost.
ARTICLE VIII
TERMINATION OF AGREEMENT
8.1 Grounds. This Agreement and the transactions contemplated by it
may be terminated at any time on or before the Closing Date as follows,
provided the terminating party gives written notice to the other
party(ies):
(a) By mutual written consent of the Seller and the Buyer;
(b) By the Buyer if the conditions provided in Section 4.1 or 4.2
have not been satisfied or have become impossible of fulfillment on or
prior to the Closing Date and by the Seller if the conditions provided in
Section 4.1 or 4.3 have not been satisfied or have become impossible of
fulfillment on or prior to the Closing Date;
(c) By either the Seller or the Buyer if the Closing has not
occurred on or before December 31, 2001 or such other date agreed upon in
writing by the Seller and the Buyer;
(d) by Buyer in the event of any material breach by the Seller or
Rainin of any of Seller's or Rainin's agreements, representations or
warranties contained herein and the failure of Seller or Rainin, as the
case may be, to cure such breach within 30 days after receipt of written
notice from Buyer requesting such breach to be cured; or
(e) by the Seller in the event of any material breach by Buyer or
MTII of any of Buyer's or MTII's agreements, representations or warranties
contained herein and the failure of Buyer or MTII, as the case may be, to
cure such breach within 30 days after receipt of written notice from Seller
requesting such breach to be cured.
8.2 Effect. In the event this Agreement is terminated pursuant to
Section 8.1 without fault of either party or breach of this Agreement, all
obligations of the Seller and Rainin and the Buyer and MTII hereunder will
terminate without liability. In such event, each party hereto shall pay all
legal and other costs and expenses incurred by such party in connection
with this Agreement and the transactions contemplated hereby. Unless this
Agreement is terminated pursuant to Section 8.1, if any of the conditions
to the obligations of the Buyer and MTII in Section 4.1 and 4.2 or of the
Seller and Rainin in Section 4.1 and 4.3 have not been satisfied by the
Closing, the Buyer and MTII or the Seller and Rainin as the case may be, in
addition to any other rights that may be available to them, will have the
right to waive their respective conditions and to proceed with the Closing
and the consummation of the transactions contemplated by this Agreement. In
the event a party waives one of their respective conditions and closes the
transaction, then such party shall be precluded from claiming such waived
condition is a breach of the Agreement, and it may not seek indemnification
for such breach. Except as set forth in the preceding sentence, nothing set
forth in this Article VIII shall relieve any party from liability for any
breach by it of its obligations under this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their
respective successors and permitted assigns.
9.2 Entire Agreement. This Agreement (including the ancillary
agreements) constitutes the entire agreement between the parties and
supersedes any prior understandings, agreements, or representations by or
between the parties, written or oral, that may have related in any way to
the subject matter hereof.
9.3 Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties named herein and their respective
successors and permitted assigns. No party may assign either this Agreement
or any of its rights, interest, or obligations hereunder, whether by
operation of law or otherwise, without the prior written approval of the
other parties; provided that the Buyer may assign its rights, interests
and/or obligations hereunder to an Affiliate of the Buyer.
9.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
9.5 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Agreement.
9.6 Notices. Any notice, request, demand, claim or other communication
shall be in writing and shall be deemed duly delivered five business days
after it is sent by registered or certified mail, return receipt requested,
postage prepaid, or two business days after it is sent via a reputable
worldwide overnight courier service, in each case to the intended recipient
as set forth below:
If to the Buyer or MTII: Copies to:
------------------------ ----------
Xxxxxxx-Xxxxxx, Inc. Drake, Sommers, Loeb, Xxxxxxx & Xxxxxxx, PLLC
Im Langacher Xxx Xxxxxx Xxxxx
XX-0000 Xxxxxxxxxx, Xxxxxxxxxxx Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxxx Attention: Xxxxxxxx X. Xxxxxxx
If to the Seller or Rainin: Copies to:
-------------------------- ----------
Xxxxxxx Xxxxxx Holme Xxxxxxx & Xxxx LLP
0000 Xxxxxx Xxxxxx 0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxxxx 00000 Xxxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxxxx
Xxxxxx Xxxxxxxx
Xxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Any party may give any notice, request, demand, claim or other
communication hereunder by personal delivery or telecopy, but no such
notice, request, demand, claim, or other communication shall be deemed to
have been duly given unless and until it actually is received by the party
or individual for whom it is intended. Any notice sent by telecopy shall be
followed by a confirmation copy sent by reputable overnight business
courier service. Any party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other party notice in the manner herein set forth.
9.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the law of
conflicts) of the State of Delaware.
9.8 Amendments and Waivers. The parties may amend any provision
of this Agreement at any time by a written instrument signed by each of the
parties. No waiver by either party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation,
or breach of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence.
9.9 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision
in any other situation or in any other jurisdiction. If the final judgment
of a court of competent jurisdiction declares that any term or provision
hereof in invalid or unenforceable, the parties agree that the court making
the determination of invalidity or unenforceability shall have the power to
reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term
or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be enforceable as
so modified after the expiration of the time within which the judgment may
be appealed.
9.10 Expenses. Each party shall bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby, except that any
additional audit expenses incurred by Seller which are incurred at the
request of Buyer shall be borne by Buyer and $40,000 of the filing fee
Rainin is required to pay in connection with the filing required under the
HSR Act shall be paid by Buyer.
9.11 Specific Performance. Each party acknowledges and agrees
that the other party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each party agrees
that the other party shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state thereof
having jurisdiction over the parties and the matter, in addition to any
other remedy to which it may be entitled, at law or in equity.
9.12 Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against
either party. Any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise.
9.13 Joint and Several. The liability and obligations of the
Seller and Rainin shall be joint and several. The liability and obligations
of the Buyer and MTII shall be joint and several.
9.14 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
XXXXXXX-XXXXXX, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
Chief Financial Officer
XXXXXXX-XXXXXX INTERNATIONAL INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxxx
Chief Financial Officer
RAININ INSTRUMENT COMPANY, INC.
By: /s/ Xxxxxxx Xxxxxx
----------------------------------
Xxxxxxx Xxxxxx
President
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Xxxxxxx Xxxxxx
Exhibits B through E to the Purchase Agreement, as summarized below, have
been omitted for the purposes of this Xxxxx filing. A copy of these
exhibits can be obtained at no cost from the Company:
Exhibit B: Escrow Agreement
Exhibit C: Employment Agreement
Exhibit D: Employment Agreements
Exhibit E: Seller Leased Real Property term sheets.
